HECLA MINING COMPANY AND 0963708 B.C. Ltd. AND AURIZON MINES LTD.

 

(a)

rights, title or interests of any First Nations Group by virtue of its status as a First Nations Group;

 

(b)

treaty rights;

 

(c)

Métis rights, title or interests; or

 

(d)

specific or comprehensive claims being considered by the Government of Canada,

 

(a)

any multinational or supranational body or organization, sovereign nation, government, state, province, country, territory, municipality, quasi-government, administrative, judicial or regulatory entity, agency, board, body, bureau, commission (including any Securities Authorities), instrumentality, court, or tribunal or any political subdivision thereof, or any central bank (or similar monetary or regulatory authority) thereof, any taxing authority, any ministry or department or agency of any of the foregoing;

 

(b)

any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any court;

 

(c)

any self-regulatory organization or stock exchange, including, without limitation, the Exchanges; or

 

(d)

any corporation or other entity owned, controlled or directed by, directly or indirectly, through stock or capital ownership or otherwise, by any of the forgoing entities;

 

(a)

any person qualifying as a public official or public employee under the Laws of Canada or the United States or the Laws of any other jurisdiction in which Aurizon carries on business including, but not limited to:

 

(i)

a person holding an official position, such as an employee, officer or director, with any Governmental Entity or state-owned or controlled enterprise or a candidate for political office;

 

(ii)

any individual “acting in an official capacity,” such as a delegation of a Governmental Entity, from a Governmental Entity to carry out official responsibilities; and

 

(iii)

an official of a public international organization such as the United Nations, the World Bank, the International Monetary Fund, or regional development banks;

 

(b)

any other person who would constitute a “foreign public official” under the Corruption of Foreign Public Officials Act (Canada); a “foreign official” under the U.S. Foreign Corrupt Practices Act; or any individual who would constitute a “foreign official” under the provisions of similar Laws in any other jurisdiction prohibiting corruption, bribery or money laundering, including without limitation, under the U.K Bribery Act 2010;

 

(a)

Aurizon shall apply to the Court, in a manner acceptable to Hecla, acting reasonably, pursuant to section 291 of the BCBCA for the Interim Order and the Final Order as follows:

 

(i)

As soon as reasonably practicable following the date of execution of this Agreement and, in any event, in sufficient time to permit the Aurizon Meeting to be held in accordance with Section 2.3(a), Aurizon shall file, proceed with and diligently prosecute an application to the Court for the Interim Order which shall provide, among other things:

 

(A)

the class of persons to whom notice is to be provided in respect of the Arrangement and the Aurizon Meeting and the manner in which such notice is to be provided;

 

(B)

that the requisite approval for the Arrangement Resolution (the “Aurizon Securityholder Approval”) shall be (i) 66 2/3% of the votes cast on the Arrangement Resolution by the Aurizon Shareholders and the Aurizon Optionholders, voting as a single class, present in person or by proxy at Aurizon Meeting; and (ii) 66 2/3% of the votes cast on the Arrangement Resolution by the Aurizon Shareholders present in person or by proxy at the Aurizon Meeting;

 

(C)

that in all other respects, the terms, conditions and restrictions of Aurizon constating documents, including quorum requirements and other matters, shall apply in respect of the Aurizon Meeting;

 

(D)

for the grant of Dissent Rights to registered Aurizon Shareholders;

 

(E)

for notice requirements with respect to the presentation of the application to the Court for the Final Order;

 

(F)

that the Aurizon Meeting may be adjourned or postponed from time to time by management of Aurizon in accordance with the terms of this Agreement without the need for additional approval of the Court;

 

(G)

that the record date for Aurizon Securityholders entitled to notice of and to vote at Aurizon Meeting will not change in respect of any adjournment(s) or postponement(s) of Aurizon Meeting;

 

(H)

that it is Hecla’s intention to rely upon Section 3(a)(10) of the U.S. Securities Act to issue, based on the Court’s approval of the Arrangement, Hecla Shares to Aurizon Securityholders who are resident in the United States in exchange for Aurizon Shares without registration under the U.S. Securities Act; and

 

(I)

that each Aurizon Securityholder will have the right to appear before the Court at the hearing of the Court to approve the application for the Final Order.

 

(ii)

subject to obtaining the approvals contemplated by the Interim Order, and as may be directed by the Court in the Interim Order, take all steps necessary or desirable to submit the Arrangement to the Court and to apply for the Final Order.

 

(a)

Aurizon agrees to convene and conduct the Aurizon Meeting in accordance with the Interim Order, Aurizon’s constating documents and applicable Laws as soon as practicable following the date of this Agreement.

 

(b)

Aurizon will use its commercially reasonable efforts to solicit proxies in favour of the approval of the Arrangement Resolution and against any resolution submitted by any person that is inconsistent with, or which seeks (without Hecla’s consent) to hinder or delay the Arrangement Resolution and the completion of the transactions contemplated by this Agreement, including, if so requested by Hecla, using proxy solicitation services.

 

(c)

Aurizon will permit Hecla to, on behalf of management of Aurizon, directly or through a soliciting dealer, actively solicit proxies in favour of the Arrangement in compliance with applicable Laws and Aurizon shall disclose in the Aurizon Circular that Hecla is permitted to make such solicitations.

 

(d)

Aurizon will provide Hecla with copies of or access to information regarding the Aurizon Meeting generated by any dealer or proxy solicitation firm, as may be reasonably requested by Hecla from time to time.

 

(e)

Aurizon will advise Hecla as Hecla may reasonably request, and at least on a daily basis on each of the last ten business days prior to the date of Aurizon Meeting, as to the tally of the proxies received by Aurizon in respect of the Arrangement Resolution.

 

(f)

Aurizon will not adjourn, postpone or cancel Aurizon Meeting without the prior written consent of Hecla and the obligations of Aurizon under this Section 2.3(f) will not be affected by the commencement, public proposal, public disclosure or communication to Aurizon or another person of any Acquisition Proposal.

 

(g)

Aurizon will promptly advise Hecla of any written notice of dissent or purported exercise by any Aurizon Shareholder of Dissent Rights received by Aurizon in relation to the Arrangement Resolution and any withdrawal of Dissent Rights received by Aurizon and, subject to applicable Law, any written communications sent by or on behalf of Aurizon to any Aurizon Shareholder exercising or purporting to exercise Dissent Rights in relation to the Arrangement Resolution.

 

(h)

Within five days of the date of execution of this Agreement, Aurizon will use its commercially reasonable efforts to prepare or cause to be prepared and provide to Hecla a list of securityholders of all classes, as well as a security position listing from each depository of its securities, including CDS Clearing and Depositary Services Inc., and will obtain and will deliver to Hecla thereafter on demand supplemental lists setting out any changes thereto, all such deliveries to be in printed form and, if available, in computer-readable format.

 

(i)

As soon as reasonably practicable and in any event not later than five business days following approval of the disclosure in the Aurizon Circular concerning Hecla by Hecla, Aurizon will convene a meeting of Aurizon Board to approve the Aurizon Circular.

 

(j)

Notwithstanding the receipt by Aurizon of a Superior Proposal, unless otherwise agreed to by Hecla, continue to take all reasonable steps necessary to hold the Aurizon Meeting and to cause the Arrangement Resolution to be voted on at the Aurizon Meeting and not agree to adjourn or postpone the Aurizon Meeting.

 

(a)

Aurizon shall prepare the Aurizon Circular, in consultation with Hecla in compliance with applicable Securities Laws and file the Aurizon Circular as soon as practicable in all jurisdictions where the same is required to be filed and mail the same as required by the Interim Order and in accordance with all applicable Laws, in all jurisdictions where the same is required, complying with all applicable Laws on the date of mailing thereof.  Without limiting the generality of the foregoing, Aurizon shall, in consultation with Hecla, use all commercially reasonable efforts to abridge the timing contemplated by National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer, as provided in section 2.20 thereof.

 

(b)

The Aurizon Circular will, subject to the other terms of this Agreement, include: (i) statements that the Aurizon Board has unanimously determined that the Consideration to be received by the Aurizon Shareholders is fair to Aurizon Shareholders, is in the best interest of Aurizon and that it unanimously recommends that the Aurizon Shareholders and Aurizon Optionholders vote in favour of the Arrangement Resolution and the rationale for that recommendation; (ii) the Fairness Opinions; and (iii) a statement that each of the Locked-up-Shareholders intends to vote in favour of the Arrangement Resolution, subject to the terms of the Voting Agreements.

 

(c)

Aurizon shall ensure that the Aurizon Circular complies in all material respects with all applicable Laws, and, without limiting the generality of the foregoing, that the Aurizon Circular will not contain any Misrepresentation (provided that Aurizon makes no covenant with respect to any information relating to Hecla and its affiliates, including the Hecla Shares, provided by Hecla to Aurizon for inclusion in the Aurizon Circular) and shall provide Aurizon Securityholders with information in sufficient detail to permit them to form a reasoned judgment concerning the matters to be placed before them at the Aurizon Meeting and to allow Hecla to rely upon the exemption from registration provided under Section 3(a)(10) of the U.S. Securities Act with respect to the issuance of the Hecla Shares pursuant to the transactions described herein.

 

(d)

Hecla will furnish to Aurizon all such information regarding Hecla, its affiliates and the Hecla Shares, as may be reasonably required by Aurizon (including, as required by Section 14.2 of Form 51-102 F5 of National Instrument 51-102 – Continuous Disclosure Obligations) in the preparation of the Aurizon Circular and other documents related thereto. Hecla shall also use commercially reasonable efforts to obtain any necessary consents from “qualified persons” (as defined in NI 43-101) and its auditors to the use of any financial information required to be included in the Aurizon Circular. Hecla shall ensure that no such information will include any Misrepresentation and shall constitute full, true and plain disclosure of such information concerning Hecla, Acquireco and the Hecla Shares.

 

(e)

Hecla and its legal counsel shall be given a reasonable opportunity to review and comment on the Aurizon Circular, prior to the Aurizon Circular being printed and mailed to Aurizon Securityholders and filed with the Securities Authorities, and reasonable consideration shall be given to any comments made by Hecla and its counsel, provided that all information relating solely to Hecla and Acquireco included in the Aurizon Circular shall be in form and content satisfactory to Hecla, acting reasonably. Aurizon shall provide Hecla with a final copy of the Aurizon Circular prior to mailing to Aurizon Securityholders.

 

(f)

Aurizon and Hecla shall each promptly notify the other if at any time before the Effective Date it becomes aware (in the case of Aurizon only with respect to Aurizon or this Agreement and in the case of Hecla only with respect to Hecla) that the Aurizon Circular contains a Misrepresentation or that otherwise requires an amendment or supplement to the Aurizon Circular, and the Parties shall co-operate in the preparation of any amendment or supplement to the Aurizon Circular, as required or appropriate, and Aurizon shall promptly mail or otherwise publicly disseminate any amendment or supplement to the Aurizon Circular to Aurizon Securityholders and, if required by the Court or applicable Laws, file the same with the Securities Authorities and as otherwise required.

 

(g)

Aurizon shall keep Hecla informed of any requests or comments made by the Securities Authorities in connection with the Aurizon Circular.

 

(a)

 Subject to the terms and conditions of this Agreement, pursuant to the Arrangement, all outstanding RSUs, whether vested or unvested, will be cancelled in exchange for a cash payment by Aurizon to each holder of an RSU, in respect of each RSU held by such holder, of an amount equal to the Cash Consideration, less any applicable Tax, and Aurizon shall take all such actions as may be necessary or desirable to give effect to the foregoing.

 

(b)

Subject to the terms and conditions of this Agreement, pursuant to the Arrangement, following the resignation by, or removal of, a holder of a DSU as a director of Aurizon, all outstanding DSUs will be cancelled in exchange for a cash payment by Aurizon to each holder of a DSU, in respect of each DSU held by such holder, of an amount equal to the Cash Consideration, less any applicable Tax, and Aurizon shall take all such actions as may be necessary or desirable to give effect to the foregoing.

 

(a)

Board Approval.  As of the date hereof, the Aurizon Board, upon recommendation of the Special Committee and after consultation with its financial and legal advisors, has determined that the Plan of Arrangement is fair to Aurizon Shareholders and is in the best interests of Aurizon and has resolved unanimously to recommend to Aurizon Securityholders that they vote in favour of the Arrangement Resolution. The Aurizon Board has approved the Arrangement and the execution and performance of this Agreement.

 

(b)

Fairness Opinion. The Aurizon Board has received an oral Fairness Opinion from Scotia Capital Inc. and the Special Committee has received an oral Fairness Opinion from CIBC World Markets Inc., and each has indicated that a written opinion in customary form will be included in the Aurizon Circular which state that, as of the date of this Agreement, subject to the assumptions and limitations set out therein, the consideration to be received by Aurizon Shareholders in connection with the transactions contemplated by this Agreement is fair, from a financial point of view, to such Aurizon Shareholders other Hecla and its affiliates.

 

(c)

Organization and Qualification. Aurizon is a corporation validly existing under the Laws of British Columbia and has all necessary corporate power and capacity to own its property and assets as now owned and to carry on its business as it is now being conducted.  Aurizon: (i) has all material Permits necessary to conduct its business substantially as now conducted; and (ii) is duly registered or otherwise authorized and qualified to do business and is in good standing in each jurisdiction in which the character of its properties, owned, leased, licensed or otherwise held, or the nature of its activities makes such qualification necessary, except where the failure to be so registered or in good standing would not reasonably be expected to have a Material Adverse Effect on Aurizon.

 

(d)

Subsidiaries.  Except as disclosed in Schedule 3.1(d) of the Disclosure Letter, Aurizon has no subsidiaries and the aggregate amount of all of the liabilities (whether actual, contingent, vested or unvested or otherwise) and assets of all such subsidiaries does not exceed $15,000.

 

(e)

Authority Relative to this Agreement.  Aurizon has the requisite corporate power and capacity to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by Aurizon and the performance by Aurizon of its obligations under this Agreement have been duly authorized by Aurizon Board and except for Aurizon Securityholder Approval, no other corporate proceedings on its part are necessary to authorize this Agreement or the Arrangement.  This Agreement has been duly executed and delivered by Aurizon and, constitutes a legal, valid and binding obligation of Aurizon, enforceable against Aurizon in accordance with its terms, subject to the qualification that such enforceability may be limited by bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting rights of creditors and that equitable remedies, including specific performance, are discretionary and may not be ordered.

 

(f)

No Violation.  Neither the authorization, execution and delivery of this Agreement by Aurizon nor the completion of the transactions contemplated by this Agreement or the Arrangement, nor the performance of its obligations thereunder, nor compliance by Aurizon with any of the provisions hereof will:

 

(1)

violate, conflict with, or result (with or without notice or the passage of time) in a violation or breach of any provision of, or require, other than the Key Third Party Consents, any consent, approval or notice under, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) or except as disclosed in Section 3.1(f)(1) of the Disclosure Letter, result in a right of termination or acceleration of indebtedness under, or result in the creation of any Encumbrance upon, any of its properties or assets or cause any indebtedness to come due before its stated maturity or cause any credit commitment to cease to be available or cause any payment or other obligation to be imposed on Aurizon under any of the terms, conditions or provisions of:

 

(A)

its notice of articles, articles or charters or other comparable organizational documents; or

 

(B)

any Permit or Material Contract to which it is a party or to which it, or any of its properties or assets, may be subject or by which it is bound; or

 

(2)

subject to obtaining the Key Regulatory Approvals,

 

(A)

result (with or without notice or the passage of time) in a violation or breach of or constitute a default under any provisions of any Laws applicable it or any of its properties or assets; or

 

(B)

cause the suspension or revocation of any Permit currently in effect with respect to it;

 

 (3)

give rise to any rights of first offer, first refusal or any similar provisions or any restrictions or limitation under any such note, bond, mortgage, indenture, Material Contract, license, franchise or Permit.

 

(g)

Capitalization.  The authorized share capital of Aurizon consists of an unlimited number of Aurizon Shares and an unlimited number of preferred shares (“Preferred Shares”) issuable in a series, of which a maximum of 8,050,000 Series “A” convertible Preferred Shares and 1,135,050 Series “B” convertible Preferred Shares may be issued. As of the date hereof, there are issued and outstanding 164,562,827 Aurizon Shares, no Preferred Shares, 260,480 DSUs and 244,287 RSUs. As of the date hereof, an aggregate of up to 10,500,675 Aurizon Shares are issuable upon the exercise of Aurizon Options. Except as disclosed in Schedule 3.1(g) of the Disclosure Letter and except for the Aurizon Options, there are no other options, warrants, conversion privileges or other rights, shareholder rights plans (other than the Aurizon Shareholder Rights Plan), agreements, arrangements or commitments (pre-emptive, contingent or otherwise) of any character whatsoever requiring or which may require the issuance, sale or transfer by Aurizon of any securities of Aurizon (including Aurizon Shares), or any securities or obligations convertible into, or exchangeable or exercisable for, or otherwise evidencing a right or obligation to acquire, any securities of Aurizon (including Aurizon Shares). All outstanding Aurizon Shares have been duly authorized and validly issued, are fully paid and non-assessable, and all Aurizon Shares issuable upon the exercise of Aurizon Options in accordance with their respective terms have been duly authorized and, upon issuance, will be validly issued as fully paid and non-assessable, and are not and will not be subject to, or issued in violation of, any pre-emptive rights. All securities of Aurizon (including Aurizon Shares, Aurizon Options, DSUs and RSUs) have been issued in compliance with all applicable Laws and Securities Laws.  Other than the Aurizon Shares, there are no securities of Aurizon outstanding which have the right to vote generally (or are convertible into or exchangeable for securities having the right to vote generally) with Aurizon Shareholders on any matter.  There are no outstanding contractual or other obligations of Aurizon to repurchase, redeem (other than under the DSU Plan and the RSU Plan) or otherwise acquire any of its securities or with respect to the voting or disposition of any outstanding securities of any of its subsidiaries. There are no outstanding bonds, debentures or other evidences of indebtedness of Aurizon or any of its subsidiaries having the right to vote with the holders of the outstanding Aurizon Shares on any matter.

 

(h)

Aurizon Shareholder Rights Plan.  Aurizon has taken all corporate action under  the Aurizon Shareholder Rights Plan required for it to perform its obligations under Section 5.2(a) hereof.

 

(i)

Reporting Status and Securities Laws Matters.  Aurizon is a “reporting issuer” and not on the list of reporting issuers in default under applicable Canadian provincial Securities Laws in each of the Provinces of and Territories of Canada.  No delisting, suspension of trading in or cease trading order with respect to any securities of Aurizon and, to the knowledge of Aurizon, and except as disclosed in Schedule 3.1(i) of the Disclosure Letter, no inquiry or investigation (formal or informal) of any Securities Authority or Exchange is in effect or ongoing or, to the knowledge of Aurizon, expected to be implemented or undertaken prior to the Effective Time.

 

(j)

Public Filings.  Aurizon has filed all documents required to be filed by it in accordance with applicable Securities Laws with the Securities Authorities and the Exchanges. All such documents and information comprising Aurizon Public Disclosure Record, as of their respective dates (and the dates of any amendments thereto), (i) did not contain any Misrepresentation; and (ii) complied in all material respects with the requirements of applicable Securities Laws, and any amendments to Aurizon Public Disclosure Record required to be made have been filed on a timely basis with the Securities Authorities or the Exchanges. Aurizon has not filed any confidential material change report with any Securities Authorities that at the date of this Agreement remains confidential.

 

(k)

Aurizon Financial Statements.  Aurizon’s audited financial statements as at and for the fiscal years ended December 31, 2011, 2010 and 2009 (including the notes thereto) and related management’s discussion and analysis (“MD&A”) and Aurizon’s unaudited financial statements as at and for the nine months ended September 30, 2012 (collectively, the “Aurizon Financial Statements”) were prepared in accordance with GAAP consistently applied and fairly present in all material respects the consolidated financial position, results of operations and cash flows of Aurizon and its subsidiaries as of the dates thereof and for the periods indicated therein (subject, in the case of any unaudited interim financial statements, to normal period-end adjustments) and reflect reserves required by GAAP in respect of all material contingent liabilities, if any, of Aurizon and its subsidiaries on a consolidated basis.  There has been no material change in Aurizon’s accounting policies, except as described in the notes to the Aurizon Financial Statements, since December 31, 2011.

 

(l)

Auditors. Aurizon’s auditors are independent public accountants as required by applicable Laws and there is not now, and there has never been, any reportable event (as defined in National Instrument 51-102 − Continuous Disclosure Obligations) with the present or any former auditors of Aurizon.

 

(m)

Internal Controls and Financial Reporting. Aurizon: (i) has designed disclosure controls and procedures to provide reasonable assurance that material information relating to Aurizon is made known to the Chief Executive Officer and the Chief Financial Officer of Aurizon by others, particularly during the periods in which filings are being prepared; (ii) has designed internal controls to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP; and (iii) has disclosed in its MD&A for its most recently completed financial year, for each material weakness relating to design existing at the financial year end (i) a description of the material weakness, (ii) the impact of the material weakness on Aurizon’s financial reporting and internal controls over financial reporting; and (iii) Aurizon’s further plans, if any, or any actions already undertaken, for remediating the material weakness.

 

(n)

Books and Records.  The financial books, records and accounts of Aurizon have in all material respects, been maintained in accordance with applicable Law, in accordance with GAAP and are stated in reasonable detail and accurately and fairly reflect the material transactions and dispositions of the assets of Aurizon and accurately and fairly reflect the basis for the Aurizon Financial Statements.

 

(o)

Minute Books.  The minute books of Aurizon are true and correct in all material respects; they contain the duly signed minutes of all meetings of the Aurizon Board and shareholders and all resolutions passed by the Aurizon Board and the shareholders thereof.

 

(p)

No Undisclosed Liabilities.  Aurizon has no outstanding indebtedness or liabilities and is not party to or bound by any suretyship, guarantee, indemnification or assumption agreement, or endorsement of, or any other similar commitment with respect to the obligations, liabilities or indebtedness of any person, other than those specifically identified in the Aurizon Financial Statements, or as disclosed in Schedule 3.1(p) of the Disclosure Letter, or such as may have been incurred in the ordinary course of business consistent with past practice since the date of the most recent financial statements of Aurizon filed on SEDAR which have not had and are not reasonably expected to have a Material Adverse Effect on Aurizon.

 

(q)

Litigation.  Except as disclosed in Schedule 3.1(q) of the Disclosure Letter, there are no material claims, actions, suits, grievances, complaints or proceedings pending or, to the knowledge of Aurizon, threatened, affecting Aurizon or affecting any of its property or assets at law or in equity before or by any Governmental Entity, including matters arising under Environmental Laws. Neither Aurizon nor its assets or properties is subject to any outstanding material judgment, order, writ, injunction or decree.

 

(r)

Taxes.

 

(i)

Aurizon has duly and timely filed all Returns required to be filed by it prior to the date hereof, other than those which have been administratively waived, and all such Returns are complete and correct in all material respects.

 

(ii)

Aurizon has paid on a timely basis all Taxes which are due and payable and all assessments and reassessments, other than those which are being or have been contested in good faith and in respect of which reserves have been provided in the most recently published Aurizon Financial Statements.

 

(iii)

Except as provided for in Aurizon Financial Statements, no material deficiencies, litigation, proposed adjustments or matters in controversy exist or have been asserted with respect to Taxes of Aurizon, and Aurizon is not a party to any action or proceeding for assessment or collection of Taxes and no such event has been asserted or, to the knowledge of Aurizon, threatened against Aurizon or any of its assets, that would reasonably be expected to have a Material Adverse Effect.

 

(iv)

No claim has been made by any Governmental Entity in a jurisdiction where Aurizon does not file Returns that Aurizon is or may be subject to Tax by that jurisdiction.

 

(v)

There are no Encumbrances for unpaid Taxes (other than in respect of Taxes not yet due and payable) upon any of the assets of Aurizon.

 

(vi)

Aurizon has withheld or collected all amounts required to be withheld or collected by it on account of Taxes and has remitted all such amounts to the appropriate Governmental Entity when required by Law to do so, except where the failure to do so would not, individually or in the aggregate, result in a Material Adverse Effect.

 

(vii)

There are no outstanding agreements extending or waiving the statutory period of limitations applicable to any claim for, or the period for the collection or assessment or reassessment of, Taxes due from Aurizon for any taxable period and no request for any such waiver or extension is currently pending.

 

(viii)

Aurizon has provided Hecla with, or with access to, true, correct and complete copies of all Returns for taxable periods, or transactions consummated, for which the applicable statutory periods of limitations have not expired, in respect of Aurizon.

 

(ix)

The Aurizon Shares are listed on a “recognized stock exchange” as defined by the Tax Act.

 

(x)

Aurizon is not a non-resident of Canada for purposes of the Tax Act and has, at all relevant times, been and is a “taxable Canadian corporation” within the meaning of subsection 89(1) of the Tax Act.

 

(xi)

Aurizon has not claimed any reserves in computing its income for purposes of the Tax Act.

 

(xii)

The Aurizon Shares to be acquired on the exercise of Aurizon Options would be “prescribed shares” under Regulation 6204 of the Tax Act if the options were exercised on the date hereof, and the exercise price in respect of each issued and outstanding Aurizon Option is not less than the fair market value of the Aurizon Shares at the time each Aurizon Option was granted;

 

(xiii)

Aurizon is not a party to any indemnification, allocation or sharing agreement with respect to Taxes that could give rise to a payment or indemnification obligation;

 

(xiv)

No amount in respect of any outlay or expense that is deductible for the purposes of computing the income of Aurizon for Tax purposes has been owing by Aurizon, for longer than two years to a person not dealing at “arm’s length” (for the purposes of the Tax Act) with Aurizon at the time the outlay or expense was incurred.

 

(xv)

There are no circumstances which exist and would result in, or which have existed and resulted in, sections 80 to 80.04 of the Tax Act applying to Aurizon.

 

(xvi)

Aurizon has not either directly or indirectly transferred property to or supplied services to or acquired property or services from a person, corporation, partnership, trust or other taxpayer with whom it was not dealing at “arm’s length” (for the purposes of the Tax Act) for consideration other than consideration equal to the fair market value of the property or services at the time of the transfer, supply or acquisition of the property or services.

 

(s)

Property.

 

(i)

Except as disclosed in Schedule 3.1(s) of the Disclosure Letter, Aurizon does not own or have an option or right to acquire any interests in real or immoveable property, including licenses, leases, rights of way, surface rights, easements, permits for the use of land, superficies, servitudes or other real property.

 

(ii)

Except as disclosed in Schedule 3.1(s) of the Disclosure Letter, Aurizon does not have any right, title or interest in any Concessions.  Included in the Concessions and the Real Property Interests are the only mining concessions, claims, leases, licenses, permits or other rights that are required to conduct the activities of Aurizon as currently conducted in respect of the Material Properties.

 

(iii)

Except as set out in Schedule 3.1(s) Aurizon has good and sufficient title, free and clear of any material title defect or material Encumbrances, to all of its interests in real property, including fee simple estates, leases, surface rights, rights of way, superficies, servitudes, easements and licences from landowners or other authorities permitting the use of land but excluding the Concessions (collectively, the “Real Property Interests”). Schedule 3.1(s) of the Disclosure Letter lists all of the Real Property Interests and, other than real property in respect of which it is the lessee, in which case it has a valid leasehold interest, and the Real Property Interests permit the use of land by Aurizon necessary to permit the operation of its businesses as presently conducted or contemplated to be conducted.

 

(iv)

Except as disclosed in Schedule 3.1(s) of the Disclosure Letter, Aurizon holds all its Concessions, free and clear of any material Encumbrances, and Aurizon does not have any liability or obligation to pay any commission, royalty, licence fee or similar payment to any person with respect to the Concessions.

 

(v)

Applying customary standards in the mining industry:

 

(A)

except as disclosed in Schedule 3.1(s) of the Disclosure Letter, Aurizon is the legal and/or beneficial owner of all right, title and interest in and to the Real Property Interests and the Concessions pursuant to valid, subsisting and enforceable title documents or other recognized and enforceable agreements or instruments, and Aurizon is not in default of any of the material provisions of such documents, agreements and instruments nor, to the knowledge of Aurizon, has any such default been alleged;

 

(B)

the Real Property Interests and Concessions have been properly located and recorded in compliance with applicable Laws and the Concessions are comprised of valid and subsisting mineral claims;

 

(C)

the Real Property Interests and Concessions are in good standing under applicable Laws, all assessment work required to be performed and filed under the Real Property Interests and Concessions has been performed and filed, all related Taxes and other payments have been paid and all related filings have been made;

 

(D)

there is no material adverse claim against or challenge to the title of Aurizon or its ownership of, the Real Property Interests or Concessions, which if determined adversely to Aurizon, would materially and adversely affect the ability of Aurizon to make use of, transfer or otherwise exploit the Real Property Interests or Concessions;

 

(E)

except as disclosed in Schedule 3.1(s) of the Disclosure Letter, no other person has any material interest in the Real Property Interests or Concessions or the production from any of the underlying properties or mineral deposits or any right to acquire any such interest;

 

(F)

except as disclosed in Schedule 3.1(s) of the Disclosure Letter, there are no back-in rights, earn-in rights, rights of first refusal or similar provisions which would affect the interest of Aurizon in the Real Property Interests or Concessions;

 

(G)

except as disclosed in Schedule 3.1(s) of the Disclosure Letter, Aurizon has not entered into streaming agreements, royalty agreements or any similar types of agreements or rights of first agreements related to streaming agreements, royalty agreements or any similar types of agreements; and

 

(H)

Aurizon has not received any notice, whether written or oral, from any Governmental Entity of any revocation or intention to revoke any of its interests in any of the Real Property Interests or Concessions.

 

(vi)

Except as disclosed in Schedule 3.1(r)(viii) of the Disclosure Letter, Aurizon has provided Hecla with access to full and complete copies of all exploration information and data within its possession or control including, without limitation, all geological, geophysical and geochemical information and data (including all drill, sample and assay results and all maps) and all technical reports, feasibility studies and other similar reports and studies concerning the Concessions and Aurizon has the sole right, title and ownership of all such information, data, reports and studies.

 

(vii)

All work and activities carried out on the Concessions by Aurizon or, to the knowledge of Aurizon, by any other person appointed by Aurizon have been carried out in all material respects in compliance with all applicable Laws, and neither Aurizon, nor, to the knowledge of Aurizon, any other person, has received any notice of any material breach of any such applicable Laws.

 

(viii)

Aurizon has made or will make available to Hecla all material information in its possession or under its control relating to the Concessions.

 

(ix)

The execution, delivery and performance of this Agreement by Aurizon will not violate, conflict with or result in a violation or breach of any provision of, or require a consent, approval or notice under or constitute a default under or result in a right of termination under or with respect to any Concession.

 

(t)

Operational Matters.

 

(i)

all rentals, royalties, overriding royalty interests, production payments, net profits, interest burdens and other payments due or payable on or prior to the date hereof under or with respect to the direct or indirect assets of Aurizon have been duly paid;

 

(ii)

all rentals, payments, and obligations due and payable or performable on or prior to the date hereof under or on account of any of the direct or indirect assets of Aurizon have been duly paid, performed, or provided for prior  to the date hereof; and

 

(iii)

all costs, expenses, and liabilities payable on or prior to the date hereof under the terms of any contracts and agreements to which Aurizon is directly or indirectly bound have been duly paid, except for such expenses that are being currently paid prior to delinquency in the ordinary course of business.

 

(u)

Contracts. Schedule 3.1(u) of the Disclosure Letter includes a complete and accurate list of all Material Contracts to which Aurizon is a party and that are currently in force.  All Material Contracts are in full force and effect, and Aurizon is entitled to all rights and benefits thereunder in accordance with the terms thereof.  Aurizon has made available to Hecla for inspection true and completed copies of all Material Contracts, and all such Material Contracts are contained in the Data Room Information. All of the Material Contracts are valid and binding obligations of Aurizon, enforceable in accordance with their respective terms, except as may be limited by bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights generally and subject to the qualification that equitable remedies may only be granted in the discretion of a court of competent jurisdiction.  Aurizon has complied in all material respects with all terms of such Material Contracts, has paid all amounts due thereunder of, as and when due, has not waived any rights thereunder and no material default or breach exists in respect thereof on the part of Aurizon or, to the knowledge of Aurizon, on the part of any other party thereto, and no event has occurred which, after the giving of notice or the lapse of time or both, would constitute such a default or breach or trigger a right of termination of any of the Material Contracts.  As at the date hereof, Aurizon has not received notice that any party to a Material Contract intends to cancel, terminate or otherwise modify or not renew such Material Contract, and to the knowledge of Aurizon, no such action has been threatened.  Aurizon is not a party to any Material Contract that contains any non-competition obligation or otherwise restricts in any material way its business.

 

(v)

Permits.  Schedule 3.1(v) of the Disclosure Letter sets out all of the material Permits required by applicable Laws for Aurizon to conduct its current business as now being conducted and as currently contemplated to be conducted.  Aurizon has obtained and is in compliance with all material Permits required by applicable Laws, necessary to conduct its current business as now being conducted or as currently contemplated to be conducted.  There are no facts, events or circumstances that would reasonably be expected to result in a failure to obtain or be in compliance with such material Permits as are necessary to conduct its business as it is currently being conducted or as it is currently contemplated.

 

(w)

Intellectual Property.  There is no action, suit, proceeding or claim pending or to the knowledge of Aurizon, threatened by others challenging Aurizon’s rights in or to any Intellectual Property which is used for the conduct of Aurizon’s business as currently carried on or as currently contemplated.

 

(x)

HSR Act.  As determined in accordance with the HSR Act and regulations thereunder, (i) Aurizon is a “foreign issuer” and (ii) Aurizon and all entities it controls made aggregate sales in or into the United States in excess of US $70.9 million in Aurizon’s most recent fiscal year.

 

(y)

Environmental Matters.  Aurizon in respect of its businesses and operations:

 

(i)

is and has been in material compliance with all Environmental Laws;

 

(ii)

is in possession of, and in material compliance with, all Environmental Permits necessary for the operation of its businesses; has not received any order, request, notice, complaint, penalty or other claim from any person or Government Entity alleging a material violation of any Environmental Law;

 

(iii)

(A) is not a party to any litigation or administrative proceeding, nor is any litigation or administrative proceeding threatened against it or its property or assets, which in either case (1) asserts or alleges that it violated any Environmental Laws, (2) asserts or alleges that it is required to clean up, remove or take remedial or other response action due to the Release of any Hazardous Substances, or (3) asserts or alleges that it is required to pay all or a portion of the cost of any past, present or future cleanup, removal or remedial or other response action which arises out of or is related to the Release of any Hazardous Substances; and (B) is not subject to any judgment, decree, order or citation related to or arising out of applicable Environmental Law and has not been named or listed as a potentially responsible party by any Governmental Entity in a matter arising under any Environmental Laws; and

 

(iv)

is not involved in remediation operations and does not know of any facts, circumstances or conditions, including any Release of Hazardous Substance, that would reasonably be expected to result in any Environmental Liabilities;

 

(v)

Aurizon has not received any written notice, complaint or claim from an environmental group or organization (an “Environmental Claim”) which affects Aurizon nor, to the knowledge of Aurizon, has any Environmental Claim or action been threatened by an environmental group or organization which relates to the operation by Aurizon of its businesses in the areas in which such operations are carried on or in which the Material Properties are located and Aurizon does not have any material outstanding agreements, memorandums of understanding or similar arrangements with any environmental group or other non-governmental organization and, to the knowledge of Aurizon, there are no material ongoing or outstanding discussions, negotiations, or similar communications with or by any environmental group or other non-governmental organization concerning Aurizon or its business, operations or assets.

 

(z)

Mine Safety.  Aurizon conducts its activities at its mine sites in accordance with all applicable Laws in all material respects and in a manner consistent with the standards observed by mining companies in Canada.  There have been no incidents of material non-compliance with safety legislation in connection with operations or activities at its mine sites in the 12 months preceding the date of this Agreement and the list provided in Schedule 3.1(z) of the Disclosure Letter includes a description of all compensable injuries or deaths sustained by employees, contractors or visitors to Aurizon’s mine site since January 1, 2011 to the date hereof.

 

(aa)

Relationships with Customers and Suppliers. Aurizon’s relationships with its customers, contractors and suppliers are good, there are no material disputes or disagreements with any of them, and Aurizon has not received any written or other notice or communication that any customer, contractor or supplier intends to cancel, terminate or otherwise modify or not renew its relationship with Aurizon, and, to the knowledge of Aurizon, no such action has been threatened.

 

(bb)

Mineral Reserves and Resources.  The estimated proven and probable mineral reserves and estimated indicated, measured and inferred mineral resources disclosed in the Aurizon Public Disclosure Record have been prepared and disclosed in all material respects in accordance with accepted mining, engineering, geoscience and other approved industry practices, and all applicable Laws. The information provided by Aurizon to the “qualified persons” (as defined in NI 43-101) in connection with the preparation of such estimates was complete and accurate at the time such information was furnished. No material mineral deposits of the Material Properties are subject to illegal occupation.  There has been no material reduction in the aggregate amount of estimated mineral reserves or estimated mineral resources of Aurizon from the amounts disclosed in the Aurizon Public Disclosure Record.

 

(cc)

Employee Benefits.

 

(i)

Aurizon has complied, in all material respects, with the terms of all agreements, health, medical, hospitalization, dental, life, or other insurance plan, program or arrangement, welfare, supplemental unemployment benefit, bonus, incentive, compensation, profit sharing, deferred compensation, stock purchase, stock compensation, stock option, stock appreciation, disability, pension or retirement plans, supplemental pension, retirement savings and other employee compensation or benefit plans, policies, arrangements, programs, practices or undertakings, whether oral or written, formal or informal, funded or unfunded, insured or uninsured which are maintained or contributed to, by or on behalf of Aurizon or which are binding upon Aurizon or in respect of which Aurizon has any actual or potential liability (collectively, the “Aurizon Benefit Plans”) and with all applicable Laws and collective bargaining agreements relating thereto.

 

(ii)

Schedule 3.1(cc) of the Disclosure Letter sets forth a complete list of the Aurizon Benefit Plans all of which are contained in the Data Room Information.

 

(iii)

Each Aurizon Benefit Plan is and has been established, registered (if required), qualified, amended, invested and administered, in all material respects, in compliance with the terms of such Aurizon Benefit Plan (including the terms of any documents in respect of such Aurizon Benefit Plan), all applicable Laws and any collective bargaining agreement relating thereto.

 

(iv)

All obligations of Aurizon regarding the Aurizon Benefit Plans have been satisfied in all material respects and no Taxes are owing or exigible under any of the Aurizon Benefit Plans by Aurizon. All employer and employee payments, contributions and premiums required to be remitted, paid to or in respect of each Aurizon Benefit Plan have been paid or remitted in a timely fashion in accordance with its terms and all applicable Laws.

 

(v)

Each Aurizon Benefit Plan is insured or funded in compliance with the terms of such Aurizon Benefit Plan and all applicable Laws and is in good standing with such Governmental Entities as may be applicable and, as of the date hereof, no currently outstanding notice of under-funding, non-compliance, failure to be in good standing or otherwise has been received by Aurizon from any such Governmental Entities.

 

(vi)

(i) No Aurizon Benefit Plan is subject to any pending investigation, examination or other proceeding, action or claim initiated or to the knowledge of Aurizon, threatened, by any Governmental Entity, or by any other person (other than routine claims for benefits), and (ii) except as disclosed in Schedule 3.1(cc) of the Disclosure Letter, to the knowledge of Aurizon there exists no state of facts which after notice or lapse of time or both would reasonably be expected to give rise to any such investigation, examination or other proceeding, action or claim or to affect the registration or qualification of any Aurizon Benefit Plan required to be registered or qualified.

 

(vii)

Aurizon has no formal plan and has made no promise or commitment, whether legally binding or not, to create any additional Aurizon Benefit Plan or to improve or change the benefits provided under any Aurizon Benefit Plan.

 

(viii)

There is no entity other than Aurizon participating in any Aurizon Benefit Plan.

 

(ix)

Except as disclosed in Schedule 3.1(cc) of the Disclosure Letter, none of Aurizon Benefit Plans provide benefits beyond retirement or other termination of service to employees or former employees or to the beneficiaries or dependants of such employees and where there are such Aurizon Benefit Plans disclosed in Schedule 3.1(cc), each such Aurizon Benefit Plan may be amended or terminated at any time by Aurizon without incurring any liability thereunder other than in respect of claims incurred prior to such amendment or termination.

 

(x)

Aurizon has no “registered pension plan” (as defined in the Tax Act), including going concern unfunded liabilities, solvency deficiencies and wind-up deficiencies.

 

(xi)

Except as disclosed in Schedule 3.1(cc)  or Schedule 5.9 of the Disclosure Letter, neither the execution and delivery of this Agreement by Aurizon nor completion of the Arrangement pursuant to the Plan of Arrangement nor compliance by Aurizon with any of the provisions hereof shall, subject to Section 5.9, result in any payment (including severance, unemployment compensation, bonuses or otherwise) becoming due to any director or employee of Aurizon or result in any increase or acceleration of contributions, liabilities or benefits or acceleration of vesting, under any Aurizon Benefit Plan or restriction held in connection with a Aurizon Benefit Plan.

 

(xii)

All data necessary to administer each Aurizon Benefit Plan is in the possession of Aurizon and is in a form which is sufficient for the proper administration of Aurizon Benefit Plan in accordance with its terms and all applicable Laws and such data is complete and correct.

 

(dd)

Labour and Employment.

 

(i)

Schedule 3.1(dd)(i) of the Disclosure Letter sets forth a complete list of all employees of Aurizon as at the date hereof, together with their titles, service dates, current wages, salaries or hourly rate of pay, and, in respect of salaried employees, profit sharing bonus payable for 2012 (whether monetary or otherwise).  No such employee is on long-term disability leave, extended absence or worker’s compensation leave. As at the date hereof, Aurizon has good relationships with its employees, there are no material disputes or disagreements with any of them and none of the employees of Aurizon has indicated an intention to resign their employment. All current assessments under applicable workers compensation legislation in relation to the employees listed in Schedule 3.1(dd)(i) of the Disclosure Letter have been paid or accrued by Aurizon, and Aurizon is not subject to any special or penalty assessment under such legislation which has not been paid.

 

(ii)

Except for employees of Aurizon identified in Schedule  3.1(dd)(ii)  of the Disclosure Letter, with each of whom Aurizon has a written agreement, there are no written or oral contracts of employment.  Except for those agreements or provisions described in Schedule 3.1(dd)(ii) or Schedule 5.9 of the Disclosure Letter, no employee of Aurizon is party to a change of control, severance, termination, golden parachute or similar agreement or provision or would receive payments under such agreement or provision as a result of the Arrangement.

 

(iii)

There is no collective agreement in force with respect to the employees of Aurizon nor is there any Contract with any employee association in respect of the employees of Aurizon.

 

(iv)

There are no outstanding labour tribunal proceedings of any kind or other event of any nature whatsoever, including any proceedings which could result in certification, interim certification, voluntary recognition, or succession rights of a trade union, council of trade unions, employee bargaining agencies, affiliated bargaining agent or any other person as bargaining agent for any employees of Aurizon.  No trade union, council of trade unions, employee bargaining agency or affiliated bargaining agent holds bargaining rights with respect to any of the employees of Aurizon by way of certification, interim certification, voluntary recognition, or succession rights, or has applied, or to Aurizon’s knowledge threatened to apply to be certified as the bargaining agent of any employees of Aurizon.

 

(v)

There are no pending or to Aurizon’s knowledge threatened union organizing activities involving any employees of Aurizon.  There is no labour strike, dispute, work slowdown or stoppage pending or involving or threatened against Aurizon and no such event has occurred within the last five years.

 

(vi)

Aurizon has not engaged in any lay-off activities within the past three  years that would violate or in any way subject Aurizon to the group termination, collective dismissal or lay-off requirements of the applicable provincial employment standards Law or other Law.

 

(vii)

No trade union has applied to have Aurizon declared a common, related or successor employer pursuant to the labour laws or any similar legislation in any jurisdiction in which Aurizon carries on business.

 

(viii)

All amounts due or accrued for all salary, wages, bonuses, commissions, vacation pay, sick days and benefits under any employee plans have either been paid or are accurately reflected in the books and records of Aurizon.

 

(ee)

Absence of Certain Changes. Except as disclosed in Schedule 3.1(ee) of the Disclosure Letter, since December 31, 2011:

 

(i)

except as disclosed in the Aurizon Public Disclosure Record, Aurizon has conducted its business only in the ordinary course consistent with past practice;

 

(ii)

there has not been any event, occurrence, development or state of circumstances or facts that has had or would be reasonably expected to have a Material Adverse Effect;

 

(iii)

Aurizon’s current mine plans with respect to its operating mines are viable and to Aurizon’s knowledge no circumstances exist which would require Aurizon to amend such mine plans in any material respect;

 

(iv)

there has not been any material write-down by Aurizon of the value of any of its assets;

 

(v)

other than in the normal course or in respect of publicly disclosed projects, there has not been any expenditure or commitment to expend by Aurizon with respect to capital expenses where Aurizon’s proportionate share of such expenditures and commitments exceeded $250,000 in the aggregate;

 

(vi)

other than in the ordinary course of business, there has not been any material change in the level of accounts receivable or payable, inventories or inventory employees of Aurizon;

 

(vii)

there has not been any acquisition or sale, lease, license or other disposition by Aurizon of any interest in the Material Properties or any other material assets except for sales of inventory in the ordinary course of business;

 

(viii)

there has not been any incurrence, assumption or guarantee by Aurizon of any material debt for borrowed money, any creation or assumption by Aurizon of any Encumbrance, or any making by Aurizon of any loan, advance or capital contribution to or material investment in any other person in excess of $250,000 in the aggregate;

 

(ix)

there has not been any satisfaction or settlement of any material claim, liability or obligation of Aurizon  (other than liabilities or obligations incurred in the ordinary course of business consistent with past practice);

 

(x)

Aurizon has not suffered any casualty, damage, destruction or loss to any of its properties or assets in excess of $500,000  for any one event or in excess of $1,000,000 in the aggregate;

 

(xi)

Aurizon has not declared, set aside or paid any dividends or made any distribution or payment or return of capital in respect of the Aurizon Shares;

 

(xii)

Aurizon has not effected or passed any resolution to approve a split, division, consolidation, combination or reclassification of the Aurizon Shares or any other securities;

 

(xiii)

other than in the ordinary course of business or as specifically disclosed in the Data Room Information, there has not been any material increase in or modification of the compensation payable to or to become payable by Aurizon to any of its directors, officers, employees or consultants or any grant to any such director, officer, employee or consultant of any increase in severance or termination pay or any increase or modification of any Aurizon Benefit Plan to, for or with any of such directors, officers, employees or consultants; and

 

(xiv)

Aurizon has not agreed, announced, resolved or committed to do any of the foregoing.

 

(ff)

First Nations Claims. Set out in Section 3.1(ff) of the Disclosure Letter is a summary of the current agreements, memoranda of understanding, negotiations or similar arrangements with all First Nations Groups with whom Aurizon has any such dealings. Other than in connection with the matters set out in Section 3.1(ff) of the Disclosure Letter, Aurizon has not received any written First Nations Claim which affects Aurizon nor, to the knowledge of Aurizon, has any First Nations Claim been threatened which relates to any of the operation by Aurizon of its businesses in the areas in which such operations are carried on or in which the Material Properties are located and Aurizon does not have any material outstanding agreements, memorandums of understanding or similar arrangements with any First Nations Group and, to the knowledge of Aurizon, there are no material ongoing or outstanding discussions, negotiations, or similar communications with or by any First Nations Group concerning Aurizon or its business, operations or assets.

 

(gg)

Anti-Corruption. Neither Aurizon nor to the knowledge of Aurizon any director, officer, agent, employee, affiliate, consultant, or representative of Aurizon is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder, or any similar provisions of any country, state, province, or Governmental Entity of applicable jurisdiction (“FCPA”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any Government Official or Person of Concern, in contravention of the FCPA and Aurizon has conducted its businesses in compliance with the FCPA and has instituted and maintains policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.

 

(hh)

Compliance with Laws.  Aurizon has complied with and is not in violation of any applicable Laws in any material respect.

 

(ii)

Absence of Cease Trade Orders.  No order ceasing or suspending trading in Aurizon Shares (or any of them) or any other securities of Aurizon is outstanding and no proceedings for this purpose have been instituted or, to the knowledge of Aurizon, are pending, contemplated or threatened.

 

(jj)

Related Party Transactions.  Except for compensation, indemnification or agreements or arrangements entered into in the ordinary course, there are no Contracts or other transactions currently in place between Aurizon, on the one hand, and: (i), any officer or director of Aurizon; (ii) any holder of record or beneficial owner of 10% or more of Aurizon Shares; and (iii) any affiliate or associate of any such, officer, director, holder of record or beneficial owner, on the other hand.

 

(kk)

Expropriation.  No part of the property or assets of Aurizon has been taken, condemned or expropriated by any Governmental Entity nor has any written notice or proceeding in respect thereof been given or commenced nor does Aurizon know of any intent or proposal to give such notice or commence any such proceedings.

 

(ll)

Registration Rights.  No Aurizon Shareholder has any right to compel Aurizon to register or otherwise qualify Aurizon Shares (or any of them) for public sale or distribution.

 

(mm)

Rights of Other persons.  No person has any right of first refusal or option to purchase or any other right of participation in any of the material properties or assets owned by Aurizon, or any part thereof.

 

(nn)

Restrictions on Business Activities.  There is no arbitral award, judgment, injunction, constitutional ruling, order or decree binding upon Aurizon that has or could reasonably be expected to have the effect of prohibiting, restricting, or impairing any business practice, any acquisition or disposition of property, or the conduct of the business as currently conducted, which could reasonably be expected to have a Material Adverse Effect on Aurizon.

 

(oo)

Brokers.  Except as disclosed in writing by Aurizon to Hecla, no broker, investment banker, financial advisor or other person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Aurizon.

 

(pp)

Insurance.  As of the date hereof, Aurizon has such policies of insurance as are listed in Schedule 3.1(pp) of the Disclosure Letter.  Such policies are in amounts, with such deductibles, and insure against such risks and losses as are customary for businesses similar to the business carried on by Aurizon.  All insurance maintained by Aurizon is in full force and effect and in good standing and Aurizon is not in default, whether as to payment of premium or otherwise, under the terms of any such insurance nor has Aurizon failed to give any notice or present any material claim under any such insurance in a due and timely fashion or received notice or otherwise become aware of any intent of an insurer to either claim any default on the part of Aurizon or not to renew any policy of insurance on its expiry or to increase any deductible or cost, except where such failure or default or other event would not reasonably be expected to have a Material Adverse Effect.

 

(qq)

Data Room Information.  All Data Room Information is true and correct in all respects and does not contain any omissions as at its respective date as stated therein, or, if any Data Room Information is undated, as of the date of its delivery to the Data Site for purposes of the transactions contemplated by this Agreement.    None of the Data Room Information has been amended except as provided in the Data Room Information.  Additionally, all information provided to Hecla in relation to Hecla due diligence requests, including information not provided in the Data Room Information, is true and correct in all respects and does not contain any omissions as at its respective date as stated therein and has not been amended except as provided to Hecla.  Aurizon acknowledges that Hecla and Acquireco are relying on all information provided by Aurizon to them in entering into this Agreement.

 

(rr)

 

(i)

Aurizon is a “foreign private issuer” as defined in Rule 3b-4 under the U.S. Exchange Act;

 

(ii)

The Aurizon Shares are listed on the NYSE MKT and registered under Section 12 of the U.S. Exchange Act; and

 

(iii)

Aurizon is not required to be registered as an “investment company” as defined in the United States Investment Company Act of 1940, as amended.

 

(ss)

Funds Available. Aurizon has sufficient funds available to pay the Termination Fee.

 

(a)

Authority Relative to this Agreement.  Hecla has the requisite corporate power and capacity to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by Hecla and the performance of its obligations thereunder have been duly authorized by its board of directors and no other corporate proceedings on its part are necessary to authorize this Agreement or the Arrangement and no approval of the shareholders of Hecla is required to enter into this Agreement or to perform its obligations hereunder, including the payment of the Consideration.  This Agreement has been duly executed and delivered by Hecla and constitutes a legal, valid and binding obligation of Hecla enforceable against it in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization or other similar affecting the rights of creditors, general principles of equity or concerns of public policy including specific performance.

 

(b)

Organization and Qualification.  Hecla and each of its material subsidiaries is a corporation duly incorporated or an entity duly created and validly existing under all the applicable Laws of its jurisdiction of incorporation, continuance or creation and has all necessary corporate or other power and capacity to own its property and assets as now owned and to carry on its business as it is now being conducted. Hecla is duly registered or otherwise authorized and qualified to do business and is in good standing in each jurisdiction in which the character of its properties, owned, leased, licensed or otherwise held, or the nature of its activities makes such qualification necessary, except where the failure to be so registered or in good standing would not reasonably be expected to have a Material Adverse Effect on Hecla.

 

(c)

No Violations. Neither the execution and delivery of this Agreement by Hecla nor the completion of the transactions contemplated by the Agreement or the Arrangement nor the performance of its obligations thereunder nor compliance by Hecla with any of the provisions thereof will violate, conflict with, or result in a breach of any material provision of, require any consent, approval or notice under, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under: (i) the articles of incorporation or other constating documents of Hecla or any of its subsidiaries; or (ii) any material contract or other instrument or obligation to which Hecla or any of its subsidiaries is a party or to which it, or any of its properties or assets, may be subject or by which Hecla or any of its subsidiaries is bound and, in each case, individually or in the aggregate would materially adversely affect Hecla’s ability to perform its obligations under this Agreement; or (iii) violate, breach or constitute a default under any Law applicable to Hecla or any of its subsidiaries or any of its properties or assets.

 

(d)

Capitalization.  The authorized share capital of Hecla consists of 500,000,000 Hecla Shares and 5,000,000 preferred stock, par value of U.S.$0.25 (“Preferred Stock”). As of the date hereof, 286,001,512 Hecla Shares and 157,816 Series B Preferred Stock were issued and outstanding, an aggregate of up to 938,408 Hecla Shares were issuable upon the exercise of Hecla Options and an aggregate of up to 22,332,623 Hecla Shares were issuable upon the exercise of Hecla Warrants and there are no options, warrants, conversion privileges or other rights, shareholder rights plans, agreements, arrangements or commitments (pre-emptive, contingent or otherwise) of any character whatsoever requiring or which may require the issuance, sale or transfer by Hecla of any securities of Hecla (including Hecla Shares or Preferred Stock), or any securities or obligations convertible into, or exchangeable or exercisable for, or otherwise evidencing a right or obligation to acquire, any securities of Hecla (including Hecla Shares or Preferred Stock) or subsidiaries of Hecla.  There are no securities of Hecla or of any of its subsidiaries outstanding which have the right to vote generally (or are convertible into or exchangeable for securities having the right to vote generally) with Hecla Shareholders on any matter.  There are no outstanding contractual or other obligations of Hecla or any subsidiary to repurchase, redeem or otherwise acquire any of its securities or with respect to the voting or disposition of any outstanding securities of any of its subsidiaries. There are no outstanding bonds, debentures or other evidences of indebtedness of Hecla or any in its subsidiaries having the right to vote with the holders of the outstanding Hecla Shares on any matters.

 

(e)

Securities Laws Matters.  The Hecla Shares are registered under Section 12(b) of the U.S. Exchange Act and listed on the NYSE. No delisting, suspension of trading in or cease trading order with respect to any securities of Hecla and, to the knowledge of Hecla, no inquiry or investigation (formal or informal) of any Securities Authority or the NYSE, is in effect or ongoing or, to the knowledge of Hecla, expected to be implemented or undertaken.

 

(f)

Public Filings.  Hecla has filed all documents in the Hecla Public Disclosure Record required to be filed by it in accordance in all material respects with applicable Securities Laws with the Securities Authorities or the NYSE, as applicable. All such documents and information comprising the Hecla Public Disclosure Record, as of their respective dates (and the dates of any amendments thereto), (1) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, and (2) complied in all material respects with the requirements of applicable Securities Laws, and any amendments to the Hecla Public Disclosure Record required to be made have been filed with the Securities Authorities or the NYSE, as applicable.

 

(g)

Issuance of Hecla Shares. The Hecla Shares to be issued as part of the Consideration will, when issued pursuant to the Arrangement, be duly and validly issued as fully paid and non-assessable common shares in the capital of Hecla.

 

(h)

Availability of Cash Consideration. Hecla has sufficient funds on hand, or funds available under committed financing arrangements, that will be sufficient to provide Acquireco with the funds necessary to pay the aggregate Cash Consideration pursuant to the Arrangement at the Effective Time.

 

(i)

Absence of Cease Trade Orders.  No order ceasing or suspending trading in the Hecla Shares (or any of them) or any other securities of Hecla is outstanding and, to the knowledge of Hecla, no proceedings for this purpose have been instituted or are pending or threatened.

 

(j)

Ownership of Aurizon Shares.  Hecla currently owns less than one percent of the outstanding Aurizon Shares.

 

(a)

(i) amend its articles, charter or by-laws or other comparable organizational documents; (ii) split, combine or reclassify any shares in its capital; (iii) issue, grant, deliver, sell or pledge, or agree to issue, grant, deliver, sell or pledge, any Aurizon Shares, or any rights convertible into or exchangeable or exercisable for, or otherwise evidencing a right to acquire, Aurizon Shares or other securities of Aurizon, other than: (A) the issuance of Aurizon Shares pursuant to the terms of the outstanding Aurizon Options; and (B) as required under applicable Law or existing Material Contracts set forth in Schedule 3.1(t) of the Disclosure Letter; (iv) redeem, purchase or otherwise acquire, or offer to redeem, purchase or otherwise acquire, any outstanding securities of Aurizon; (v) amend the terms of any of its securities; (vi) adopt a plan of liquidation or resolution providing for the liquidation or dissolution of Aurizon; (vii) amend its accounting policies or adopt new accounting policies, in each case except as required and disclosed in accordance with GAAP; or (viii) enter into any agreement with respect to any of the foregoing;

 

(b)

except for the sale of inventory or immaterial equipment  in the ordinary course of business consistent with past practice, (i) sell, pledge, hypothecate, lease, license, sell and lease back, mortgage, dispose of or encumber or otherwise transfer, any assets, securities, properties, interests or businesses; (ii) acquire (by merger, arrangement, amalgamation, consolidation or acquisition of shares or assets or otherwise), directly or indirectly, any assets, securities, properties, interests, businesses, corporation, partnership or other business organization or division thereof, or make any investment either by the purchase of securities, contribution of capital, property transfer, or, except as disclosed in its 2013 budget report which is contained in the Data Room Information, purchase of any other property or assets of any other person, for an amount greater than $250,000; (iii) draw down on the Existing Credit Facilities in any amount whatsoever; (iv) incur, create, assume or otherwise become liable for, any indebtedness for borrowed money or, except as disclosed in its 2013 budget report which is contained in the Data Room Information, any other liability or obligation, or issue any debt securities or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other person, or make any loans, capital contributions, investments or advances; (v) except as disclosed in its 2013 budget report which is contained in the Data Room Information, pay, discharge or satisfy any material liabilities or obligations; (vi) waive, release, grant or transfer any rights of material value; or (vii) authorize or propose any of the foregoing, or enter into any agreement to do any of the foregoing;

 

(c)

other than as disclosed in Schedule 5.1(c) of the Disclosure Letter or as is necessary to comply with applicable Laws or the current terms of any Contracts by which it is bound or in accordance with Aurizon Benefit Plans: (i) grant to any officer, employee or director an increase in compensation in any form, or grant any general salary increase; (ii) make any loan to any officer, employee, or director; (iii) take any action with respect to the grant of any severance, retention, change of control, bonus or termination pay to, or enter into any employment agreement, deferred compensation or other similar agreement (or amend any such existing agreement) with, or hire or terminate the employment (except for just cause) of, any officer, employee or director provided that Aurizon will not be restricted from taking any action in respect of hiring or terminating the employment of employees having a position below that of mine manager or superintendent if such action is taken in the ordinary course consistent with past practice so long as Aurizon provides Hecla with prompt written notice when the total number of such persons hired or terminated exceeds five from, in the first instance, the date of this Agreement and following such first notice, from the date of the last notice provided to Hecla by Aurizon pursuant to this Section; (iv) increase any benefits payable under any existing severance or termination pay policies or employment agreements, or adopt or materially amend or make any contribution to any Aurizon Benefit Plan or other bonus, profit sharing, option, pension, retirement, deferred compensation, insurance, incentive compensation, compensation or other similar plan, agreement, trust, fund or arrangement for the benefit of directors, officers or employees or former directors, officers, employees; (v) increase bonus levels or other benefits payable to any director, executive officer or employee; (vi) provide for accelerated vesting, removal of restrictions or an exercise of any stock-based or stock-related awards (including stock options, stock appreciation rights, deferred share units, performance units and restricted share awards) upon a change of control occurring on or prior to the Effective Time; or (vii) establish, adopt or amend (except as required by applicable Law) any collective bargaining agreement or similar agreement;

 

(d)

settle, pay, discharge, satisfy, compromise, waive, assign or release (i) any material action, claim or proceeding brought against it; or (ii) any action, claim or proceeding brought by any present, former or purported holder of its securities in connection with the transactions contemplated by this Agreement or the Plan of Arrangement;

 

(e)

enter into any agreement or arrangement that limits or otherwise restricts it from competing in any manner;

 

(f)

waive, release or assign any material rights, claims or benefits;

 

(g)

other than in the ordinary course of business consistent with past practice: (i) enter into any agreement that if entered into prior to the date hereof would be a Material Contract; (ii) modify, amend in any material respect, transfer or terminate any Material Contract, or waive, release or assign any material rights or claims thereto or thereunder;

 

(h)

change any method of Tax accounting, make or change any Tax election, file any materially amended Return, settle or compromise any Tax liability, agree to an extension or waiver of the limitation period with respect to the assessment, reassessment or determination of Taxes, enter into any closing agreement with respect to any Tax or surrender any right to claim a material Tax refund;

 

(i)

take any action or fail to take any action which action or failure to act would result in the material loss, expiration or surrender of, or the loss of any material benefit under, or reasonably be expected to cause any Governmental Entity to institute proceedings for the suspension, revocation or limitation of rights under, any material Permits necessary to conduct its businesses as now conducted or as proposed to be conducted; or fail to prosecute with commercially reasonable due diligence any pending applications to any Governmental Entities for Permits;

 

(j)

take any action or fail to take any action that is intended to, or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede its ability to consummate the Arrangement or the other transactions contemplated by this Agreement other than in connection with a Pre-Acquisition Reorganization;

 

(k)

except for any Pre-Acquisition Reorganization, take any action or enter into any transaction that would preclude the Canadian tax “bump” rules from applying upon an amalgamation or winding-up of Aurizon (or its successor by amalgamation) including pursuant to paragraph 88(1)(c) of the Tax Act, in calculating the tax cost of capital property distributed to Acquireco for purposes of paragraph 88(1)(d) of the Tax Act, the amount determined under paragraph 88(1)(d); or

 

(l)

agree, resolve or commit to do any of the foregoing.

 

(a)

immediately defer the “separation time” (as such term is defined in Aurizon Shareholder Rights Plan) of the SRP Rights and continue to defer the separation time until the SRP is waived or cease traded on March 4, 2013;

 

(b)

promptly, and in any event within five business days following the date of this Agreement, provide to Hecla (if such agreement remains in effect and if providing a copy of such agreement is not prohibited by the terms of such agreement) a copy of each confidentiality and/or standstill agreement which has been entered into by Aurizon and any third party pursuant to which confidential information of Aurizon has been provided;

 

(c)

on or prior to the Effective Date, waive, suspend the operation of or otherwise render the Aurizon Shareholder Rights Plan inoperative or ineffective as regards to the Plan of Arrangement;

 

(d)

subject to obtaining confirmation that insurance coverage is maintained as contemplated in Section 7.6.1, and provided that the Effective Date has occurred, it shall use its reasonable commercial efforts to cause such members of the Aurizon Board to resign as Hecla may require, at the time and in the manner requested by Hecla, as of the Effective Date, with a nominee of Hecla to be appointed to the Aurizon Board immediately after each such resignation;

 

(e)

use its best efforts to obtain as soon as practicable following execution of this Agreement all third party consents, approvals and notices required under any of the Material Contracts, and all Key Third Party Consents;

 

(f)

defend all lawsuits or other legal, regulatory or other proceedings against Aurizon challenging or affecting this Agreement or the consummation of the transactions contemplated hereby; and

 

(g)

allow representatives of Hecla (including legal and financial advisors) to attend the Aurizon Meeting and allow officers of Hecla to speak to any motion relating to the Arrangement Resolution.

 

(a)

use all commercially reasonable efforts to assist Aurizon in obtaining the Key Third Party Consents;

 

(b)

apply for and use commercially reasonable efforts to obtain conditional approval of the listing and posting for trading on the NYSE of Hecla Shares included in the Consideration; and

 

(c)

subject to the terms and conditions of this Agreement and of the Plan of Arrangement and applicable Laws, pay the aggregate Consideration to be paid pursuant to the Arrangement at the time provided herein.

 

(a)

make any amendment to its constating documents that would have a Material Adverse Effect on its ability to consummate the transactions contemplated hereby or change its authorized share capital; and

 

(b)

split, combine, subdivide or reclassify its capital stock.

 

(a)

it shall, and shall cause its subsidiaries to, use commercially reasonable efforts to satisfy (or cause the satisfaction of) the conditions precedent to its obligations hereunder as set forth in Article 6 to the extent the same is within its control and to take, or cause to be taken, all other action and to do, or cause to be done, all other things necessary, proper or advisable under all applicable Laws to complete the Plan of Arrangement, including using its commercially reasonable efforts to: (i) obtain all Key Regulatory Approvals required to be obtained by it; (ii) effect all necessary registrations, filings and submissions of information requested by Governmental Entities required to be effected by it in connection with the Plan of Arrangement; (iii) oppose, lift or rescind any injunction or restraining order against it or other order or action against it seeking to stop, or otherwise adversely affecting its ability to make and complete, the Plan of Arrangement; and (iv) co-operate with the other Party in connection with the performance by it and its subsidiaries of their obligations hereunder; in addition, subject to the terms and conditions of this Agreement, none of the Parties shall knowingly take or cause to be taken any action which would reasonably be expected to prevent or materially delay the consummation of the transactions contemplated hereby; and

 

(b)

it shall not take any action, refrain from taking any commercially reasonable action, or permit any action to be taken or not taken, which is inconsistent with this Agreement or which would reasonably be expected to significantly impede the making or completion of the Plan of Arrangement except as permitted by this Agreement;

 

(a)

Aurizon shall effect such reorganization of its business, operations, subsidiaries and assets or such other transactions (each, a “Pre-Acquisition Reorganization”) as Hecla may reasonably request prior to the Effective Date, and the Plan of Arrangement, if required, shall be modified accordingly; provided, however, that Aurizon need not effect a Pre-Acquisition Reorganization which would impede or materially delay the consummation of the Arrangement.

 

(b)

Without limiting the foregoing and other than as set forth in clause (a) above, Aurizon shall use its best efforts to obtain all necessary consents, approvals or waivers from any persons to effect each Pre-Acquisition Reorganization, and Aurizon shall cooperate with Hecla in structuring, planning and implementing any such Pre-Acquisition Reorganization.  Hecla shall provide written notice to Aurizon of any proposed Pre-Acquisition Reorganization at least ten business days prior to the date of the Aurizon Meeting.  In addition:

 

(i)

any Pre-Acquisition Reorganization shall not unreasonably interfere in Aurizon’s material operations prior to the Effective Time;

 

(ii)

any Pre-Acquisition Reorganization shall not require Aurizon to contravene any applicable Laws, its organizational documents or any Material Contract; and

 

(iii)

Aurizon shall not be obligated to take any action that could result in any Taxes being imposed on, or any adverse Tax or other consequences to, any Aurizon Securityholder incrementally greater than the Taxes or other consequences to such party in connection with the consummation of the Arrangement in the absence of any Pre-Acquisition Reorganization.

 

(c)

Hecla acknowledges and agrees that the planning for and implementation of any Pre-Acquisition Reorganization shall not be considered a breach of any covenant under this Agreement and shall not be considered in determining whether a representation or warranty of Aurizon hereunder has been breached. Hecla and Aurizon shall work cooperatively and use reasonable commercial efforts to prepare prior to the Effective Time all documentation necessary and do such other acts and things as are necessary to give effect to such Pre-Acquisition Reorganization. For greater certainty, Aurizon shall not be liable for the failure of Hecla to benefit from any anticipated Tax efficiency as a result of a Pre-Acquisition Reorganization.

 

(d)

If the Arrangement is not completed, Hecla will forthwith reimburse Aurizon for all reasonable fees and expenses actually incurred by Aurizon in considering and effecting a Pre-Acquisition Reorganization and shall be responsible for the reasonable costs actually incurred by Aurizon in reversing or unwinding any Pre-Acquisition Reorganization that was effected at Hecla’s request.  The obligation of Hecla to reimburse Aurizon as set out in this section will be in addition to any other obligation and shall survive termination of this Agreement indefinitely.

 

(a)

The Parties shall, as promptly as practicable, prepare and file all necessary documents, registrations, statements, petitions, filings and applications for the Key Regulatory Approvals and use their commercially reasonable efforts to obtain and maintain all Key Regulatory Approvals.  In any event, no later than 15 business days after the date of execution of this Agreement, the Parties shall prepare and file their respective notification and report form pursuant to the HSR Act and Hecla shall file a request to the Commissioner for an Advance Ruling Certificate or, in the alternative, a No-Action Letter and an application for review under Part IV of the Investment Canada Act.

 

(b)

If the Competition Act Approval has not been obtained within 15 business days following Hecla’s submission of a request to the Commissioner for an Advance Ruling Certificate or No-Action Letter then, at any time thereafter, either Party may notify the other Party of its intention to submit a Notification, in which case both Parties shall submit a Notification as soon as reasonably practicable, and in any event within ten business days following the delivery of such notice (or such other period of time mutually agreed to in writing between the Parties), both Hecla and Aurizon shall submit a Notification, unless the Competition Act Approval has been obtained.

 

(c)

The Parties shall cooperate with one another in connection with obtaining the Key Regulatory Approvals including promptly providing one another with all information necessary to file all necessary, or in the reasonable opinion of either Party, documents, registrations, statements, petitions, filings and applications for the Key Regulatory Approvals and providing one another with copies of all notices and information or other correspondence supplied to, filed with or received from any Governmental Entity (except for notices and information which a Party reasonably considers to be confidential or commercially sensitive, which such Party shall provide on an “external counsel only” basis). Each Party shall permit the other Party with reasonable advance opportunity to review and comment upon, and will consider in good faith the views of the other Party, any proposed written communications with any Governmental Entity in connection with the Key Regulatory Approvals (except for information which a Party reasonably considered to be confidential or sensitive, which such Party shall provide on an “external counsel only” basis). Neither Party shall participate in any material communication or participate in any meeting with any Governmental Entity in connection with the Key Regulatory Approvals without first notifying the other Party and providing the other Party or its counsel with a reasonable opportunity to participate or attend, unless specifically requested otherwise by any Governmental Entity.

 

(d)

The Parties shall use their commercially reasonable efforts to satisfy, as soon as reasonably practicable, any requests for information and documentation received from any Governmental Entity in connection with the Key Regulatory Approvals.

 

(e)

Each Party shall promptly notify the other Party if it becomes aware that any (i) application, filing, document or other submission for a Regulatory Approval contains a Misrepresentation, or  (ii) any Regulatory Approval or other order, clearance, consent, ruling, exemption, no-action letter or other approval applied for as contemplated by this Agreement contains, reflects or was obtained following the submission of any application, filing, document or other submission containing a Misrepresentation, such that an amendment or supplement may be necessary or advisable.

 

(f)

The Parties shall request that the Key Regulatory Approvals be processed by the applicable Governmental Entity on an expedited basis and, to the extent that a public hearing is held, the Parties shall request the earliest possible hearing date for the consideration of the Key Regulatory Approvals.

 

(g)

If any objections are asserted with respect to the transactions contemplated by this Agreement under any Law, or if any proceeding is instituted or threatened by any Governmental Entity challenging or which could lead to a challenge of any of the transactions contemplated by this Agreement as not in compliance with Law, the Parties shall use their commercially reasonable efforts consistent with the terms of this Agreement to resolve such proceeding so as to allow the Effective Time to occur on or prior to the Outside Date.

 

(h)

Filing fees payable to any Governmental Entity in connection with the Key Regulatory Approvals shall be shared equally between Hecla and Aurizon.

 

(i)

Despite anything to the contrary contained in this Agreement, Hecla is under no obligation to take any steps or actions nor to agree to any behavioural remedy including an interim or permanent hold separate order relating to any Key Regulatory Approval that would, in its sole discretion affect Hecla’s right to own, use or exploit Hecla’s or Aurizon’s businesses, operations or assets or any part thereof or to negotiate or agree to the sale, divestiture or disposition by Hecla of those businesses, operations or assets or any part thereof.

 

(a)

Aurizon shall use its reasonable commercial efforts to have its officers, directors, employees and its advisors to provide such cooperation to Hecla as it may reasonably request in connection with the arrangements by Hecla or Acquireco to obtain new credit facilities, amend or terminate any of their existing credit facilities or issue securities publicly or privately, for the purpose of financing, in whole or in part, the Cash Consideration (provided that: (A) to the extent reasonably practicable, such request is made on reasonable notice; and (B) Aurizon shall not be required to provide cooperation that involves any binding commitment by it), including one or more of the following cooperative actions as so requested:

 

(i)

participating in meetings (including meetings with rating agencies) and drafting sessions;

 

(ii)

furnishing Hecla and its proposed lenders or underwriters with such financial information regarding itself as may be reasonably requested by Hecla and assisting Hecla in the preparation of pro forma consolidated financial statements reflecting the acquisition of all of the Aurizon Shares;

 

(iii)

cooperating with Aurizon in connection with applications to obtain such consents, approvals or authorizations which may be reasonably necessary or desirable in connection with such financing;

 

(iv)

using its reasonable commercial efforts to provide: (A) monthly financial statements as soon as possible and in no event later than 25 days after the end of each month; (B) quarterly financial statements as soon as possible and in no event later than 45 days after the end of each fiscal quarter (other than the fourth quarter);

 

(b)

Notwithstanding Section 5.8(a), Aurizon shall not be required by Hecla to: (i) pay any commitment, consent or other similar fee or incur any other liability in connection with any such financing prior to the Effective Time; (ii) take any action or do anything that would: (A) contravene any applicable Law; (B) contravene its agreements that relate to borrowed money; or (C) be capable of impairing or preventing the satisfaction of any condition set forth in Article 6; or (iii) except as required to comply with applicable Laws, disclose any information that in the reasonable judgment of Aurizon would result in the disclosure of any trade secrets or similar information or violate any obligations of Aurizon or any other person with respect to confidentiality.

 

(a)

the Arrangement Resolution shall have been approved and adopted by the Aurizon Securityholders at the Aurizon Meeting in accordance with the Interim Order;

 

(b)

the Interim Order and the Final Order shall each have been obtained on terms consistent with this Agreement, and shall not have been set aside or modified in a manner unacceptable to Aurizon and Hecla, acting reasonably, on appeal or otherwise;

 

(c)

there shall not exist any prohibition at Law, including a cease trade order, injunction or other prohibition or order at Law or under applicable legislation, against Hecla or Aurizon which shall prevent the consummation of the Arrangement;

 

(d)

the Hecla Shares to be issued in the United States pursuant to the Arrangement shall be exempt from the registration requirements of the U.S. Securities Act pursuant to Section 3(a)(10) of the U.S. Securities Act; provided, however, that Aurizon shall not be entitled to rely on the provisions of this Section 6.1(d) in failing to complete the transactions contemplated by this Agreement in the event that Aurizon fails to advise the Court prior to the hearing in respect of the Final Order, as required by the terms of the foregoing exemptions, that Hecla will rely on the foregoing exemptions based on the Court’s approval of the transaction;

 

(e)

the distribution of the Hecla Shares pursuant to the Arrangement shall be exempt from the prospectus and registration requirements of applicable Canadian securities laws either by virtue of exemptive relief from the securities regulatory authorities of each of the provinces of Canada or by virtue of applicable exemptions under Canadian Securities Laws and shall not be subject to resale restrictions under applicable Canadian Securities Laws; and

 

(f)

this Agreement shall not have been terminated in accordance with its terms.

 

(a)

no person or group of persons acting jointly and in concert shall have acquired ownership of, or control or direction over Aurizon Shares which represent 33⅓% or more of the issued and outstanding Aurizon Shares;

 

(b)

Hecla shall have received from Aurizon’s Quebec legal counsel opinions on customary terms as to Aurizon’s title to the Casa Berardi Gold Mine satisfactory to Hecla, acting reasonably;

 

(c)

all covenants of Aurizon under this Agreement to be performed on or before the Effective Time which have not been waived by Hecla shall have been duly performed by Aurizon in all material respects, and Hecla shall have received a certificate of Aurizon addressed to Hecla and dated the Effective Time, signed on behalf of Aurizon by two senior executive officers of Aurizon (on Aurizon’s behalf and without personal liability), confirming the same as at the Effective Date;

 

(d)

all representations and warranties of Aurizon set forth in this Agreement shall be true and correct in all material respects, without regard to any materiality or Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except where any failure or failures of all such representations and warranties (other than those contained in Sections 3.1(c), 3.1(e), 3.1(g), 3.1(r)(viii), 3.1(y), 3.1(z) and 3.1(bb)) to be so true and correct in all respects would not reasonably be expected to have a Material Adverse Effect on Aurizon (it being a separate condition that the representations and warranties of Aurizon made in Sections 3.1(c), 3.1(e), 3.1(g), 3.1(r)(viii) 3.1(y), 3.1(z) and 3.1(bb)) must be accurate in all respects when made and, except as contemplated by this Agreement, on and as of the Effective Time, as though made on and as of the Effective Time  (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date)); and Hecla shall have received a certificate of Aurizon addressed to Hecla and dated the Effective Time, signed on behalf of Aurizon by two senior executive officers of Aurizon (on Aurizon’s behalf and without personal liability), confirming the same as at the Effective Date;

 

(e)

no Governmental Entity shall have taken any action that could impose or could lead to the imposition of any restriction on the ability of Hecla to derive the full value and benefit of the indirect ownership of Aurizon’s assets;

 

(f)

the Key Third Party Consents shall have been obtained;

 

(g)

the Key Regulatory Approvals shall have been obtained;

 

(h)

the Aurizon Board shall not have made a Change in Recommendation;

 

(i)

there shall not have occurred a Material Adverse Effect with respect to Aurizon;

 

(j)

holders of no more than 21% of the issued and outstanding Aurizon Shares shall have exercised Dissent Rights; and

 

(k)

the Pre-Acquisition Reorganization, if any, shall have been completed in a manner satisfactory to Hecla.

 

(a)

all covenants of Hecla under this Agreement to be performed on or before the Effective Time shall have been duly performed by Hecla in all material respects, and Aurizon shall have received a certificate of Hecla, addressed to Aurizon and dated the Effective Time, signed on behalf of Hecla by two of its senior executive officers (on Hecla’s behalf and without personal liability), confirming the same as of the Effective Date;

 

(b)

all representations and warranties of  Hecla set forth in this Agreement shall be true and correct in all respects, without regard to any materiality or Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), except where the failure or failures of all such representations and warranties (other than those contained in Section 4.1(a), 4.1(b) and 4.1(d) to be so true and correct in all respects would not reasonably be expected to have a Material Adverse Effect on Aurizon or Hecla (it being a separate condition that the representations and warranties of Hecla made in Section 4.1(a), 4.1(b) and 4.1(d) must be accurate in all respects when made and, except as contemplated by this Agreement, on and as of the Effective Time, as though made on and as of the Effective Time  (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date)); and Aurizon shall have received a certificate of  Hecla, addressed to Aurizon and dated the Effective Time, signed on behalf of each of Hecla by two senior executive officers of each of  Hecla (on Hecla’s behalf and without personal liability), confirming the same as at the Effective Date;

 

(c)

Hecla shall have delivered evidence satisfactory to Aurizon of the approval of the listing and posting for trading on the NYSE of Hecla Shares comprising the Share Consideration, subject only to satisfaction of the standard listing conditions, including notice of issuance.

 

(a)

cause any of the representations or warranties of any Party contained herein to be untrue or inaccurate in any material respect on the date hereof or at the Effective Time; or

 

(b)

result in the failure to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by any Party hereunder prior to the Effective Time.

 

(a)

furnish information with respect to Aurizon to the person making such Acquisition Proposal; and/or

 

(b)

enter into, participate, facilitate and maintain discussions or negotiations with, and otherwise cooperate with or assist, the person making such Acquisition Proposal,

 

(a)

Aurizon has complied with its obligations under Section 7.2 including providing to Hecla a copy of any agreement to implement the Superior Proposal and any supporting documents, including the terms of any proposal to provide financing for such Superior Proposal;

 

(b)

the person making the Superior Proposal was not restricted from making such Superior Proposal pursuant to an existing confidentiality, standstill, non-disclosure, use, business purpose or similar restriction in favour of Aurizon;

 

(c)

Aurizon has delivered a written notice to Hecla of its determination that such Acquisition Proposal is a Superior Proposal and that it intends to accept, endorse, approve, recommend or enter into an agreement with respect to such Superior Proposal together with a written notice from the Aurizon Board setting out the value and financial terms that the Aurizon Board has determined should be ascribed to any non-cash consideration offered under such Superior Proposal and the basis for such determination in reasonable detail;

 

(d)

a period (the “Response Period”) of five business days has elapsed from the date that is the later of (i) the date on which Hecla receives written notice from the Aurizon Board that the Aurizon Board has determined, subject only to compliance with this Section 7.3, to accept, approve, endorse, recommend or enter into a binding agreement to proceed with such Superior Proposal; and (ii) the date Hecla receives a copy of the Superior Proposal and all related documentation described in Section 7.2.4;

 

(e)

during any Response Period, Hecla has had the opportunity (but not the obligation) to offer to amend this Agreement and the Arrangement in order for such Acquisition Proposal to cease to be a Superior Proposal;

 

(f)

if Hecla has offered to amend this Agreement and the Arrangement under Section 7.3.1(e), the Aurizon Board (i) has determined in good faith, after consultation with its outside legal counsel and financial advisors, that such Acquisition Proposal continues to constitute a Superior Proposal (compared to the terms of the Arrangement as proposed to be amended by Hecla under Section 7.3.1(e)); and (ii) has determined in good faith, after consultation with its outside legal counsel, that it is necessary for the Aurizon Board to enter into a definitive agreement with respect to such Superior Proposal in order to properly discharge its fiduciary duties; and

 

(g)

prior to entering into any definitive agreement with respect to a Superior Proposal, Aurizon terminates this Agreement and pays the Termination Fee pursuant to Section 7.4.

 

(a)

by Hecla pursuant to Section 8.2.1(c)(i), Section 8.2.1(c)(iii), Section 8.2.1(c)(iv) or Section 8.2.1(c)(v);

 

(b)

by Aurizon pursuant to Section 8.2.1(d)(i);

 

(c)

by either Party pursuant to Section 8.2.1(b)(i) or Section 8.2.1(b)(ii) or by Hecla pursuant to Section 8.2.1(c)(ii), but only if an Acquisition Proposal is publicly announced prior to the termination of this Agreement and within twelve months following the date of such termination:

 

(i)

an Acquisition Proposal is consummated by Aurizon; or

 

(ii)

Aurizon and/or one or more of its subsidiaries enters into a definitive agreement in respect of, or the Aurizon Board approves or recommends, an Acquisition Proposal which is subsequently consummated at any time thereafter;

 

(d)

by either Party pursuant to Section 8.2.1(b)(i) or Section 8.2.1(b)(ii) or by Hecla pursuant to Section 8.2.1(c)(ii), but only if within twelve months following the date of such termination:

 

(i)

an Acquisition Proposal is consummated by Alamos Gold Inc. or any person acting jointly or in concert with Alamos Gold Inc.; or

 

(ii)

Aurizon and/or one or more of its subsidiaries enters into a definitive agreement in respect of, or the Aurizon Board approves or recommends, an Acquisition Proposal with Alamos Gold Inc. or any person acting jointly or in concert with Alamos Gold Inc. which is subsequently consummated at any time thereafter.

 

(a)

by mutual written agreement of Aurizon and Hecla ; or

 

(b)

by either Aurizon or Hecla, if:

 

(i)

the Effective Time shall not have occurred on or before the Outside Date, except that the right to terminate this Agreement under this Section 8.2.1(b)(i) shall not be available to any Party whose failure to fulfill any of its obligations or breach of any of its representations and warranties under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur by such Outside Date;

 

(ii)

the Aurizon Securityholder Approval is not obtained at the Aurizon Meeting in accordance with the Interim Order provided that a Party may not terminate this Agreement pursuant to this Section 8.2.1(b)(ii) if the failure to obtain the Aurizon Securityholder Approval has been caused by, or is a result of, a breach by such Party of any of its representations or warranties or the failure of such Party to perform any of its covenants or agreements under this Agreement;  or

 

(iii)

after the date of this Agreement, any Law is enacted, made, enforced or amended, as applicable, that makes the consummation of the Arrangement illegal or otherwise permanently prohibits or enjoins Aurizon or Hecla from consummating the Arrangement, and such Law has, if applicable, become final and non-appealable;

 

(c)

by Hecla, if:

 

(i)

the Aurizon Board fails to recommend or withdraws, amends, modifies or qualifies, in a manner adverse to Hecla, or fails to reaffirm its recommendation of the Arrangement within three business days (and in any case prior to the Aurizon Meeting) after having been requested in writing by Hecla to do so (it being understood that the taking of a neutral position or no position with respect to an Acquisition Proposal beyond a period of three business days or beyond the date which is the day prior to the date proxies in respect of the Aurizon Meeting must be deposited shall be considered an adverse modification) (a “Change in Recommendation”); or

 

(ii)

subject to Section 7.1.2, a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Aurizon set forth in this Agreement (other than as set forth in Section 7.2) shall have occurred that would cause the conditions set forth in Section 6.1 or Section 6.2 not to be satisfied, and such conditions are incapable of being satisfied by the earlier of the expiry of any applicable cure period or Outside Date; provided that Hecla is not then in breach of this Agreement so as to cause any of the conditions set forth in Section 6.1 or Section 6.3 not to be satisfied; or

 

(iii)

Aurizon is in breach or in default of any of its obligations or covenants set forth in Section 7.2;

 

(iv)

the Aurizon Board authorizes Aurizon to enter into a binding written agreement relating to a Superior Proposal; or

 

(v)

any person or group of persons acting jointly and in concert acquires ownership of, or control or direction over, Aurizon Shares which represent 33⅓% or more of the issued and outstanding Aurizon Shares.

 

(d)

by Aurizon, if:

 

(i)

the Aurizon Board authorizes Aurizon, subject to complying with the terms of this Agreement, to enter into a legally binding agreement with respect to a Superior Proposal; provided that concurrently with such termination, Aurizon pays the Termination Fee payable pursuant to Section 7.4; or

 

(ii)

subject to Section 7.1.2, a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Hecla set forth in this Agreement shall have occurred that would cause the conditions set forth in Section 6.1 or Section 6.3 not to be satisfied, and such conditions are incapable of being satisfied by the earlier of the expiry of any applicable cure period or the Outside Date; provided that Aurizon is not then in breach of this Agreement  so as to cause any of the conditions set forth in Section 6.1 or Section 6.2 not to be satisfied.

 

(a)

change the time for performance of any of the obligations or acts of the Parties;

 

(b)

waive any inaccuracies or modify any representation or warranty contained herein or in any document delivered pursuant hereto;

 

(c)

waive compliance with or modify any of the covenants herein contained and waive or modify performance of any of the obligations of the Parties; and/or

 

(d)

waive compliance with or modify any mutual conditions precedent herein contained.

 

(a)

for purposes other than those for which such Transaction Personal Information was collected by Aurizon prior to the Effective Date; and

 

(b)

which does not relate directly to the carrying on of Aurizon’s business or to the carrying out of the purposes for which the transactions contemplated by this Agreement were implemented.

 

(a)

if to Hecla:

 

Hecla Mining Company

 

6500 N. Mineral Drive, Suite 200

 

Coeur D’Alene Idaho

 

83815

 

Attention:

David Sienko

 

K&L Gates LLP

 

70 W. Madison St., Ste. 3100

 

Chicago, Illinois  60602-4207

 

Attention:

Donald Bingle

 

Email:

***@***; and

 

***@***

 

(b)

if to Aurizon:

 

Aurizon Mines Ltd.

 

Suite 1120, Cathedral Place

 

925 West Georgia Street

 

Vancouver, British Columbia

 

V6C 3L2

 

Attention:

George Paspalas

 

Attention:

Corey M. Dean/Jason T. Sutherland

 

Email:

***@*** and

 

***@***

By:

Name: Authorized Signatory

By:

Name: Authorized Signatory

By:

Name: Authorized Signatory

 

(a)

to amend the Arrangement Agreement or the Plan of Arrangement to the extent permitted by the Arrangement Agreement or the Plan of Arrangement; or

 

(b)

subject to the terms of the Arrangement Agreement, not to proceed with the Arrangement;

 

(a)

all actions required to be taken by or on behalf of Aurizon, and all necessary filings and obtaining the necessary approvals, consents and acceptances of appropriate regulatory authorities; and

 

(b)

the signing of the certificates, consents and other documents or declarations required under the Arrangement Agreement or otherwise to be entered into by Aurizon;

 

·

Competition Act Approval

 

·

ICA Approval

 

·

HSR Approval