8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 12, 2008

HECLA MINING COMPANY

(Exact Name of Registrant as Specified in Its Charter)

Delaware	1-8491	77-0664171
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6500 North Mineral Drive, Suite 200

Coeur d’Alene, Idaho 83815-9408

(Address of Principal Executive Offices) (Zip Code)

(208) 769-4100

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12(b))

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01.   Entry into a Material Definitive Agreement

Acquisition of 70.27% of Greens Creek Mine

On February 12, 2008, Hecla Mining Company (“Hecla”) and our wholly owned subsidiary, Hecla Admiralty Company (“Hecla Admiralty”), entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Kennecott Minerals Holdings Company (“Kennecott”) an affiliate of Rio Tinto plc. Under the terms of the Stock Purchase Agreement, Hecla Admiralty will acquire all of the issued and outstanding shares of capital stock of Kennecott Greens Creek Mining Company (“KGCMC”) and Kennecott Juneau Mining Company (“KJMC”, and together with KGCMC, the “Companies”) for $750 million, composed of $700 million in cash and $50 million in Hecla common stock. (the “Greens Creek Acquisition”). Hecla has received $400 million in committed debt financing from Scotia Capital LLC, which together with available cash will be used to fund the Greens Creek Acquisition.

Pursuant to the Restated Mining Venture Agreement dated as of May 6, 1994, the Companies and a Hecla subsidiary jointly own the Greens Creek mine near Juneau, Alaska (“Greens Creek”). The Companies are wholly owned subsidiaries of Kennecott, and together own approximately 70.27% interest of Greens Creek with Hecla’s subsidiary owning the remaining interest in Greens Creek. The Greens Creek Acquisition is currently expected to close in the second quarter of 2008 and is subject to customary closing conditions, including expiration of the waiting period under the Hart-Scott-Rodino Act. A copy of the Stock Purchase Agreement is attached hereto as Exhibit 2.1 and is incorporated herein by reference.

The Stock Purchase Agreement has been incorporated by reference herein to provide you with information regarding its terms. It is not intended to provide any other factual information about us. Such information can be found elsewhere in other public filings we have made with the Securities and Exchange Commission, which are available without charge at www.sec.gov.

The Stock Purchase Agreement contains representations and warranties we made. The assertions embodied in those representations and warranties are qualified by information in confidential disclosure schedules that we have exchanged in connection with signing the Stock Purchase Agreement. While we do not believe that they contain information securities laws require us to publicly disclose other than information that has already been so disclosed, the disclosure schedules do contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Stock Purchase Agreement. Accordingly you should not rely on the representations and warranties as characterizations of the actual state of facts, since they are modified in important part by the underlying disclosure schedules.

The disclosure schedules contain information that has been included in our general prior public disclosures, as well as potential additional non-public information. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of the Stock Purchase Agreement, which subsequent information may or may not be fully reflected in public disclosures.

2

Acquisition of the Assets of Independence Lead Mines Company

On February 12, 2008, Hecla Mining Company and our wholly owned subsidiary, Hecla Merger Company (“Merger Sub”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Independence Lead Mines Company (“ILM”). Under the terms of the Asset Purchase Agreement, Merger Sub will acquire substantially all of the assets of ILM in exchange for 6,936,884 shares of Hecla common stock, par value $0.25 per share (the “ILM Acquisition”). The ILM Acquisition is currently expected to close in the second quarter of 2008 and is subject to customary closing conditions necessary regulatory approvals and an affirmative vote by ILM’s shareholders. A copy of the Asset Purchase Agreement is attached hereto as Exhibit 2.2 and is incorporated herein by reference.

Since 1958, we have owned and operated the Lucky Friday unit, a deep underground silver, lead and zinc mine located in the Coeur d’Alene Mining District in northern Idaho. During 1991, we discovered several mineralized structures containing some high-grade silver ores in an area known as the Gold Hunter property, approximately 5,000 feet northwest of the then existing Lucky Friday workings. This discovery led to the development of the Gold Hunter property on the 4900 level. We currently control the Gold Hunter property under certain agreements with ILM, that entitle us, as operator, to an 81.48% interest in the net profits from operations from the Gold Hunter property. After we have recouped our costs to explore, develop, and operate the property, ILM may elect, within two years, to take a participating interest in the property. If ILM does not take a participating interest, it will be entitled to an 18.52 percent net profits interest. As of December 31, 2007, unrecouped costs totaled approximately $14.7 million. Our ability to recoup those costs, and the projected timing of such event, depends on future metal prices and our level of capital investments. We are currently studying the level of capital expenditures necessary for continued production from the Gold Hunter property.

In March 2002, ILM, notified us of certain alleged defaults by us under a 1968 lease agreement relating to the Gold Hunter area (also known as the DIA properties) of our Lucky Friday unit. ILM alleged that we violated the “prudent operator obligations” implied under the lease by undertaking the development of the Gold Hunter project on the 4900 level, and violated certain other provisions of the Agreement.

In June 2002, ILM filed a lawsuit in Idaho State District Court seeking termination of the lease agreement and requesting unspecified damages. Trial of the case occurred in late March 2004. In July 2004, the Court issued a decision that found in our favor on all issues and subsequently awarded us approximately $0.1 million in attorneys’ fees and certain costs, which ILM has paid. In August 2004, ILM filed its Notice of Appeal with the Idaho Supreme Court. Oral arguments were heard by the Idaho Supreme Court in February 2006. In April 2006, the Idaho Supreme Court ruled in our favor on all of ILM’s claims.

In December 2006, ILM filed a lawsuit in the United States District Court for the District of Idaho seeking monetary damages and injunctive relief. ILM alleged that the April 2006 decision by the Idaho Supreme Court violated their civil rights and their constitutional right to due process, and also alleged that Hecla engaged in mail fraud and securities fraud during the term of the lease. In September 2007, the United States District Court for the District if Idaho granted our motion to dismiss the case in its entirety. In October 2007, ILM filed a Notice of Appeal to the United States Court of Appeals for the Ninth Circuit. In addition, in January 2007, ILM filed an action in Idaho State District Court for Shoshone County seeking rescission of the lease based upon the theory of mutual mistake. In May 2007, the District Court of the First Judicial District of the State of Idaho granted our motion for summary judgment. In July 2007, ILM filed a Notice of Appeal to the Idaho Supreme Court. We believe that the existing decisions of the Idaho State District Court and Idaho Supreme Court in our favor are correct and controlling in these cases, and we believe that we have complied fully with the terms of the lease. We have moved to dismiss both lawsuits by ILM. We believe that we will prevail in both cases and will be able to continue to operate under the lease.

3

If the ILM Acquisition is consummated, among the terms of the Asset Purchase Agreement is that all litigation between us and ILM will be dismissed, and we will acquire all of ILM’s right, title and interest to the Gold Hunter area/DIA properties and the related agreements between us and ILM.

The Asset Purchase Agreement has been incorporated by reference herein to provide you with information regarding its terms. It is not intended to provide any other factual information about us. Such information can be found elsewhere in other public filings we have made with the Securities and Exchange Commission, which are available without charge at www.sec.gov.

The Asset Purchase Agreement contains representations and warranties we made. The assertions embodied in those representations and warranties are qualified by information in confidential disclosure schedules that we have exchanged in connection with signing the Asset Purchase Agreement. While we do not believe that they contain information securities laws require us to publicly disclose other than information that has already been so disclosed, the disclosure schedules do contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Asset Purchase Agreement. Accordingly you should not rely on the representations and warranties as characterizations of the actual state of facts, since they are modified in important part by the underlying disclosure schedules.

The disclosure schedules contain information that has been included in our general prior public disclosures, as well as potential additional non-public information. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of the Asset Purchase Agreement, which subsequent information may or may not be fully reflected in public disclosures.

Item 3.02.   Unregistered Sales of Equity Securities.

The Greens Creek Acquisition

In connection with the Greens Creek Acquisition as described in Item 1.01 above, the consideration to Kennecott upon closing will, in part, include $50 million in Hecla common stock pursuant to the Stock Purchase Agreement entered into by Hecla on February 12, 2008. Under the Stock Purchase Agreement, Kennecott has represented and warranted that it is an accredited investor under the Securities Act of 1933, as amended (the “Securities Act”) and that it is acquiring such Hecla common stock for investment for Kennecott’s own account and not with a view to the resale or distribution of any part thereof. Upon the closing of the Greens Creek Acquisition, Hecla will issue such unregistered shares of common stock to Kennecott as an “accredited investor” pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Regulation D.

Hecla Charitable Foundation

On January 18, 2008, Hecla issued 550,000 unregistered shares of Hecla common stock as a charitable donation to the Hecla Charitable Foundation. The Hecla Charitable Foundation has applied for status as a Section 501(c)(3) organization under the Internal Revenue Code. To the extent such gift may be deemed a “sale,” it is made pursuant to Section 4(2) of the Securities Act and Regulation D.

Silver Valley

On January 25, 2008, Hecla issued 188,333 unregistered shares of Hecla common stock in private placements pursuant to Section 4(2) of the Securities Act and Regulation D to an “accredited investor” to acquire properties in the Silver Valley of Northern Idaho.

Item 8.01.   Other Events.

On February 12, 2008, we issued a press release announcing the execution of the Stock Purchase Agreement. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.

On February 13, 2008, we issued a press release announcing the execution of the Asset Purchase Agreement. A copy of the press release is attached hereto as Exhibit 99.2 and incorporated by reference herein.

Item 9.01.   Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description
2.1	Stock Purchase Agreement, dated as of February 12, 2008, by and among Kennecott Minerals Holdings Company, Hecla Admiralty Company, and Hecla Mining Company
2.2	Asset Purchase Agreement, dated as of February 13, 2008, by and among Hecla Mining Company, Hecla Merger Company and Independence Lead Mines Company
99.1	Press release, dated February 12, 2008
99.2	Press release, dated February 13, 2008

4

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:   February 18, 2008

Hecla Mining Company
By:	/s/ Philip C. Wolf
	Philip C. Wolf Senior Vice President, General Counsel and Secretary

5

EX-2.1

Exhibit 2.1

STOCK PURCHASE AGREEMENT

AMONG

KENNECOTT MINERALS HOLDINGS COMPANY

(“Kennecott”),

HECLA ADMIRALTY COMPANY

(“Buyer”)

AND

HECLA MINING COMPANY

(“Hecla”)

February 12, 2008

LIST OF EXHIBITS, ANNEXES AND SCHEDULES

Exhibit A Venture Agreement

Exhibit B Unaudited Venture Financial Statement & Company Financial Statement

Exhibit C Form of Stock Power

Exhibit D Form of Kennecott Closing Certificate

Exhibit E Form of FIRPTA Certificate

Exhibit F Form of Opinion of Counsel to Kennecott

Exhibit G Form of Kennecott Guaranty

Exhibit H Form of Transition Services Agreement

Exhibit I Form of Buyer’s Closing Certificate

Exhibit J Form of Hecla Guaranty

Exhibit K Form of Opinion of Counsel to Buyer

Annex I Exceptions to Kennecott’s Representations and Warranties

Annex II Exceptions to Buyer’s and Hecla’s Representations and Warranties

Annex III Disclosures to Representations and Warranties Regarding the Companies

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement is entered into as of February 12, 2008, by and among Kennecott Minerals Holdings Company, a Delaware corporation (“Kennecott”), Hecla Admiralty Company, a Delaware corporation (“Buyer”), and Hecla Mining Company, a Delaware corporation (“Hecla”).

RECITALS

A.        Kennecott owns all of the issued and outstanding shares of common stock of Kennecott Greens Creek Mining Company, a Delaware corporation (“KGCMC”), and Kennecott Juneau Mining Company, a Delaware corporation (“KJMC”, and together with KGCMC, the “Companies”). KGCMC owns an undivided 57.7505% interest, and KJMC owns an undivided 12.5164% interest, in the Greens Creek Joint Venture, the principal operations of which are located on Admiralty Island in Alaska. KGCMC is the manager of the Venture.

B.        Buyer desires to purchase all of the issued and outstanding shares of common stock of the Companies (collectively, the “Shares”) from Kennecott and Kennecott is willing to sell the Shares to Buyer.

C.        Nothing in this Agreement is intended by the Parties to terminate the Venture.

D.        This Agreement sets forth the terms and conditions of the purchase and sale of the Shares.

AGREEMENT

In consideration of the mutual representations, warranties, and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, Kennecott, Buyer and Hecla agree as follows.

1.         Definitions.  In addition to the definitions contained elsewhere in this Agreement, the following capitalized terms have the meanings set forth in this Section 1:

(a)       “Adverse Consequences” means the losses, claims, liabilities and damages actually incurred that arise from or are incurred as a result of actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, dues, penalties, fines, costs, reasonable amounts paid in settlement, liabilities, obligations, taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses, but, in each case, excluding incidental, punitive, indirect, and consequential damages and normal operating and commercial risk.

(b)       “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act.

(c)       “Agreement” means this Stock Purchase Agreement.

1

(d)       “Applicable Rate” means the interest rate published as the Prime Rate in the “Money Rates” column of The Wall Street Journal, as said rate may change from day to day, or if said column sets forth a range of rates on a single day, the arithmetic mean thereof.

(e)       “Business Day” means any day other than (i) Saturday or Sunday or (ii) any other day on which banks in Salt Lake City, Utah, are permitted or required to be closed.

(f)       “Buyer” has the meaning set forth in the preface above.

(g)       “Buyer Material Adverse Effect” means a change, effect, event, occurrence or state of facts that is materially adverse to the business or the financial condition, operations, results of operations, assets or properties of the Buyer and Hecla, taken as a whole, or Hecla as Guarantor, other than any change, effect, event, occurrence or state of facts arising in whole or in part by (i) general economic or political conditions or a decline or deterioration in the capital markets generally (including any changes to interest rates or exchange rates) or conditions generally affecting the base and precious metals mining industry (except to the extent that such change, effect, event, occurrence or state of facts materially and disproportionately has a greater adverse impact on Buyer as compared to the adverse impact such changes have on other Persons operating in the base and precious metals mining industry, but taking into account for purposes of determining whether a Buyer Material Adverse Effect has occurred only the materially disproportionate adverse change, effect, event, occurrence or state of facts), (ii) any change or prospective change in law, GAAP or IAS, or any interpretation of any of the foregoing, (iii) the execution of this Agreement, the public announcement hereof or the consummation of the transactions contemplated hereby (including compliance with the terms of this Agreement), (iv) any existing event or occurrence disclosed on the Schedules attached hereto, and (v) changes caused by acts of terrorism or war (whether or not declared) occurring after the date of this Agreement.

(h)       “CERCLA” means Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq., as amended, and the rules and regulations promulgated thereunder.

(i)       “Closing” has the meaning set forth in Subsection 2(d) below.

(j)       “Closing Date” has the meaning set forth in Subsection 2(d) below.

(k)       “Closing Statement” has the meaning set forth in Subsection 2(f) below.

(l)       “Code” means the Internal Revenue Code of 1986, as amended.

(m)       “Companies” means, collectively, KGCMC and KJMC.

(n)       “Companies Material Adverse Effect” means a change, effect, event, occurrence or state of facts that is materially adverse to the business or the financial condition, operations, results of operations, assets or properties of the Companies, taken as a whole, other than any change, effect, event, occurrence or state of facts arising in whole or in part by (i) general economic or political conditions or a decline or deterioration in the capital markets

2

generally (including any changes to interest rates or exchange rates) or conditions generally affecting the base and precious metal mining industry (except to the extent that such change, effect, event, occurrence or state of facts materially and disproportionately has a greater adverse impact on the Companies, taken as a whole, as compared to the adverse impact such changes have on other Persons operating in the base and precious metal mining industry, but taking into account for purposes of determining whether a Companies Material Adverse Effect has occurred only the materially disproportionate adverse change, effect, event, occurrence or state of facts), (ii) any change or prospective change in law, GAAP or IAS, or any interpretation of any of the foregoing, (iii) the execution of this Agreement, the public announcement hereof or the consummation of the transactions contemplated hereby (including compliance with the terms of this Agreement), (iv) any action taken by (or at the request of) Buyer, (v) any existing event or occurrence disclosed on the Schedules attached hereto, and (vi) changes caused by acts of terrorism or war (whether or not declared) occurring after the date of this Agreement.

(o)       “Company Financial Statement” means the unaudited pro forma balance sheet for each of KGCMC and KJMC as at December 31, 2007, which will reflect the assets, liabilities and shareholder equity of the Companies after eliminating all assets and liabilities of the Other Businesses to be transferred out or eliminated prior to the Closing and a reconciliation to the Venture Financial Statement as set forth on Exhibit B.

(p)       “Confidential Information” means any confidential or proprietary information relating to or concerning the businesses and affairs of Kennecott, KGCMC, KJMC, and the Rio Tinto Group, the Venture, or Hecla and its Affiliates that is related to the transactions contemplated by this Agreement, excluding information (i) that is already generally available to the public, or (ii) that Hecla or its Affiliates are entitled to receive pursuant to the Venture Agreement and which will be held as confidential thereunder or except as required to be disclosed by law or applicable stock exchange rules. Confidential Information includes, without limitation, all notes, analyses, compilations, studies, inspections, reports or other documents (whether in hard copy or electronic format or otherwise) prepared by the recipient of any Confidential Information that contains, reflects or are based on any Confidential Information disclosed to a Party, its Affiliates or representatives.

(q)       “Environmental, Health, and Safety Requirements” shall mean all applicable federal, state, local and foreign statutes, regulations, and ordinances concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all those relating to operations of the Venture, including without limitation all those relating to mining health and safety, occupational health and safety, reclamation, closure and remediation requirements, and the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes.

(r)       “ERISA” has the meaning set forth in Section 4(m) below.

(s)       “Event of Default” has the meaning set forth in Section 9.

(t)        “GAAP” means United States generally accepted accounting principles as in effect from time to time.

3

(u)       “Hart - Scott - Rodino Act” means the Hart - Scott - Rodino Antitrust Improvements Act of 1976, 15 USCA § 18a, as amended, and the rules and regulations promulgated thereunder.

(v)       “Hecla” means Hecla Mining Company, a Delaware corporation.

(w)      “Hecla Group” means from time to time, Hecla, Buyer, Hecla Limited and each of their Affiliates and, with respect to any indemnification given by any member of the Rio Tinto Group in this Agreement, includes their respective permitted successors and assigns, directors, officers, employees and agents.

(x)       “Hecla Guaranty” has the meaning set forth in Subsection 2(e)(ii)(D).

(y)       “Hecla Shares” is defined in Section 2(c).

(z)       “IAS” means the International Accounting Standards adopted by the International Accounting Standards Board as in effect from time to time.

(aa)     “Income Taxes” means any federal, state, local, or foreign Tax based on or measured by reference to net income, including any interest, penalty, or addition thereto, whether disputed or not.

(bb)     “Income Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Income Taxes, including any schedule or attachment thereto, and including any amendment thereof.

(cc)     “Indemnified Party” has the meaning set forth in Subsection 10(d) below.

(dd)     “Indemnifying Party” has the meaning set forth in Subsection 10(d) below.

(ee)     “Kennecott” has the meaning set forth in the preface above.

(ff)      “Kennecott Guarantor” means Kennecott Holdings Corporation, a Delaware corporation.

(gg)     “Kennecott Guaranty” has the meaning set forth in Section 2(e)(i)(E).

(hh)     “Kennecott Material Adverse Effect” means a change, effect, event, occurrence or state of facts that is materially adverse to the business or the financial condition, operations, results of operations, assets or properties of Kennecott or Kennecott Guarantor, other than any change, effect, event, occurrence or state of facts arising in whole or in part by (i) general economic or political conditions or a decline or deterioration in the capital markets generally (including any changes to interest rates or exchange rates) or conditions generally affecting any segment in the industry in which the Buyer operates (except to the extent that such change, effect, event, occurrence or state of facts materially and disproportionately has a greater adverse impact on Kennecott as compared to the adverse impact such changes have on other Persons operating in the same industries as the Kennecott operates, but taking into account for purposes of determining whether a Kennecott Material Adverse Effect has occurred only the materially

4

disproportionate adverse change, effect, event, occurrence or state of facts), (ii) any change or prospective change in law, GAAP or IAS, or any interpretation of any of the foregoing, (iii) the execution of this Agreement, the public announcement hereof or the consummation of the transactions contemplated hereby (including compliance with the terms of this Agreement), (iv) any existing event or occurrence disclosed on the Schedules attached hereto, and (v) changes caused by acts of terrorism or war (whether or not declared) occurring after the date of this Agreement.

(ii)       “Knowledge of Hecla” means the actual knowledge of Phillips S. Baker, a director and the Chief Executive Officer of Hecla, Ron Clayton, the Chief Operating Officer of Hecla, and Lewis Walde, the Chief Financial Officer of Hecla, after due inquiry of personnel directly reporting to such Persons having the following responsibilities: the primary legal, financial, environmental, employee benefits, and operating responsibilities for Hecla and/or Buyer.

(jj)       “Knowledge of Kennecott” means the actual knowledge of David Salisbury, a director and the President and Chief Executive Officer of Kennecott and each of the Companies, and Clayton Walker, General Manager and Chief Operating Officer of each of the Companies, after due inquiry of personnel directly reporting to such Persons, having the following responsibilities: the primary legal, financial, environmental, employee benefits, and operating responsibilities for Kennecott and/or the Companies.

(kk)     “Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

(ll)       "Other Businesses" means businesses, ventures, activities or operations engaged in by either of the Companies prior to the Closing Date except for businesses, ventures, activities or operations related to the Venture or any of the Venture’s assets.

(mm)     “Participant” is defined in the Venture Agreement.

(nn)     “Party” means Kennecott, Buyer or Hecla (including in its capacity as Guarantor) and “Parties” means Kennecott, Buyer and Hecla (including in its capacity as Guarantor).

(oo)     “Person” means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof).

(pp)     “Purchase Price” has the meaning set forth in Subsection 2(a) below and consists of the payments described in Subsection 2(b) and 2(c) below.

(qq)     “Rio Tinto Group” means Rio Tinto plc and Rio Tinto Limited and any “affiliated group” of such companies (as defined in Section 1504(a) of the Code without regard to the limitations contained in Section 1504(b) of the Code) that includes Kennecott as of the Closing Date (except that the Venture and the Companies shall not be included in the Rio Tinto Group from and after the Closing), and, with respect to any indemnification given by any

5

member of the Hecla Group in this Agreement, includes their respective permitted successors and assigns, directors, officers, employees and agents.

(rr)      “Securities Act” means the Securities Act of 1933, 15 USCA § 77a et seq., as amended and the rules and regulations promulgated thereunder.

(ss)      “Securities Exchange Act” means the Securities Exchange Act of 1934, 15 USCA § 78a et seq., as amended and the rules and regulations promulgated thereunder.

(tt)       “Shares” means all of the issued and outstanding shares of the common stock of KGCMC and KJMC.

(uu)     “Straddle Period” means a Taxable period beginning on or before and ending after the Closing Date.

(vv)     “Subsidiary” means any corporation with respect to which a specified Person (or a Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors.

(ww)   “Tax” or “Taxes” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

(xx)     “Tax Returns” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

(yy)     “Third Party Claim” has the meaning set forth in Subsection 10(d) below.

(zz)     “Transfer Tax” means any documentary, stamp, excise, transfer, sales or use Tax resulting from the transfer of the Shares to Buyer.

(aaa)    “Transition Services Agreement” has the meaning set forth in Subsection 2(e)(i)(F).

(bbb)    “USCA” means United States Code Annotated.

(ccc)    “Venture” means the Greens Creek Joint Venture between the Companies and Hecla or its Affiliates pursuant to the Venture Agreement.

(ddd)   “Venture Agreement” means the Restated Mining Venture Agreement executed and effective as of May 6, 1994, a copy of which is attached hereto as Exhibit A, as amended.

6

(eee)    “Venture Financial Statement” means the unaudited balance sheet of the Venture dated as at December 31, 2007 attached hereto as Exhibit B.

(fff)    “$” means dollars, currency of the United States of America.

2. Purchase and Sale of the Shares.

(a)       Basic Transaction.  On and subject to the terms and conditions of this Agreement, Buyer agrees to purchase all of Kennecott’s rights, titles and interests in and to the Shares, and Kennecott agrees to sell all of its rights, titles and interests in and to the Shares to Buyer, for consideration in the aggregate amount of $750,000,000 as specified in Subsections 2(b) and 2(c) (collectively, the “Purchase Price”).

(b)       Payments.  Buyer agrees to pay to Kennecott, as the cash portion of the Purchase Price, the sum of $700,000,000, in each case to be paid in immediately available funds on the date of transfer, by wire transfer to the account of Kennecott as furnished to Buyer upon the execution of this Agreement. Any amount above not paid when due shall bear interest at the Applicable Rate plus two percent (2%), from the date due until the date paid. Payments shall be made as follows:

(i)        Initial Payment.  Concurrently with the execution of this Agreement, Buyer will wire transfer to Kennecott the sum of $15,000,000 in immediately available funds to the above-referenced account; and

(ii)       Payment at Closing.  At the Closing, Buyer shall wire transfer to Kennecott the sum of $685,000,000 in immediately available funds to the above-referenced account in payment of the remainder of the cash portion of the Purchase Price.

(c)       Other Consideration.  At the Closing, Buyer shall deliver to Kennecott in a private placement such number of ordinary shares of Hecla common stock as is obtained by dividing $50,000,000 by the volume-weighted average trading price on the New York Stock Exchange for the twenty (20) trading days immediately prior to the second trading day immediately preceding the Closing Date (the “Hecla Shares”).

(d)       Closing.  Closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Kennecott in Salt Lake City, Utah, on the date that is two (2) Business Days following each Party’s notification of the other of the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby as provided in Section 7 of this Agreement (other than conditions with respect to actions the respective Parties will take at the Closing itself), commencing at 9:00 a.m. local time, but, in any event, no later than 180 days following the execution of this Agreement, or such other date as Buyer and Kennecott may mutually determine (the “Closing Date”).

(e)       Deliveries at Closing.  At the Closing, the Parties shall make the following deliveries:

 

7

(i)         Kennecott Deliveries.  Kennecott shall deliver to Buyer:

(A)      One or more certificates representing all of the Shares endorsed in blank or accompanied by duly executed stock powers in the form attached hereto as Exhibit C;

(B)      a certificate in the form attached hereto as Exhibit D, duly executed by an officer of Kennecott, to the effect that each of the conditions set out in Subsections 7(a)(i) - (iii) is satisfied or waived in all respects;

(C)      a FIRPTA certificate in the form of attached hereto as Exhibit E, duly executed by an officer Kennecott as described in Section 7(a)(vi);

(D)      a signed original opinion substantially in the form attached as Exhibit F, dated as of the Closing Date;

(E)       a signed original of the Kennecott Guaranty from Kennecott Guarantor substantially in the form attached as Exhibit G, duly executed by an officer of Kennecott Guarantor (the “Kennecott Guaranty”);

(F)       the Transition Services Agreement substantially in the form attached hereto as Exhibit H, duly executed by an officer of Rio Tinto Services Inc. (the “Transition Services Agreement”); and

(G)      the resignations of all officers and directors of the Companies, as described in Subsection 7(a)(vii).

 

(ii)         Buyer Deliveries.  Buyer shall deliver to Kennecott:

(A)      Confirmation of wire transfer of the immediately available funds specified in Subsection 2(b)(ii);

(B)      The Hecla Shares described in Section 2(c)(ii), issued in the name of Kennecott or with the consent of Buyer, which consent shall not be unreasonably withheld, in the name of a Kennecott Affiliate;

(C)      a certificate in the form attached hereto as Exhibit I, duly executed by an officer of the Buyer, to the effect that each of the conditions specified in Subsection 7(b)(i) - (iii) is satisfied or waived in all respects;

(D)      a signed original of the Hecla Guaranty from Hecla substantially in the form attached as Exhibit J, duly executed by an officer of Hecla (the “Hecla Guaranty”);

(E)       a signed original opinion substantially in the form attached as Exhibit L, dated as of the Closing Date; and

8

(F)       the Transition Services Agreement substantially in the form attached hereto as Exhibit H, duly executed by an officer of Buyer or its designee.

(f) Closing Statement and Adjustment.

(i)        Procedure.  Within ten (10) Business Days following the Closing, Kennecott will prepare and deliver to Buyer a post-closing reconciliation statement (the “Closing Statement”), which shall contain a calculation of an adjustment to the Purchase Price (the “Adjustment Amount”). The Adjustment Amount, which may be a positive or a negative number, shall be (x) the sum of any dividends or distributions in cash or in kind from the Venture made by the Companies to Kennecott in the period between the date of this Agreement and the Closing Date; minus (y) the sum of any cash contributions made by Kennecott to the Companies in order to meet net cash calls made under the Venture Agreement in the period between the date of this Agreement and the Closing Date; minus (z) for the period commencing on May 1, 2008 and ending on the Closing Date, interest on $735,000,000, calculated at an annual interest rate of 6% compounded monthly (using a 360 day year and 30 day months).

(A)      The Closing Statement will include copies of the bank transfers evidencing flows of funds included under (x) or (y) above.

(B)      If the Adjustment Amount is positive, the Adjustment Amount shall be paid by Kennecott to Buyer within five (5) Business Days of the delivery of the Closing Statement to Buyer by wire transfer in immediately available funds to an account designated by Buyer.

(C)      If the Adjustment Amount is negative, a sum equal to the absolute value of the Adjustment Amount shall be paid by Buyer to Kennecott within five (5) Business Days of Buyer’s receipt of the Closing Statement by wire transfer in immediately available funds to the account referenced in Subsection 2(b) above.

(D)      Both Parties shall have access to, and the right to investigate and audit, the records and figures used for the various credit calculations made in preparation of the Closing Statement and Buyer’s detailed written explanation of any disagreements, if any.

(E)       For purposes of clarity, trade payables paid to Kennecott or any Affiliate of Kennecott in the Ordinary Course of Business shall not be deemed to constitute a dividend or distribution hereunder.

(ii)       Dispute.  If within five (5) days following delivery of the Closing Statement by notice to the other, either Party disputes the calculation set forth above, the undisputed portion will be paid, and the Party disputing the amount shall specify the basis for the dispute and the matter shall be submitted to Deloitte & Touche, or in the event of their failure or inability to act, to another firm agreed upon by Kennecott and Buyer, as an independent accounting firm, to make the calculations within 10 days and whose determinations shall be final. Any adjustments to the payments required as a result of

9

such dispute resolution shall be immediately upon such determination paid by the Party owing the same to the Party owed the same.

(g) Insurance Recovery.

(i)        Kennecott and its Affiliates are engaged in litigation to recover environmental clean-up costs from various insurers that historically provided insurance coverage to the predecessors-in-interest of Kennecott. The insurance policies involved were in effect on or prior to January 1, 1993 (the “Historic Policies”). Kennecott represents and warrants that the Companies are not parties to the litigation, and that the assets of the Companies, including their interests in the Venture, are not specifically named in the litigation. In the course of the litigation, some settlements have been reached or will be reached, and as a part of such settlements the insurers have required or may require Kennecott and its Affiliates to release all claims and to indemnify the insurers from potential future claims covered by the settlement with respect to the Historic Policies. Buyer acknowledges Kennecott’s authority to carry on the litigation and to effectuate any settlements with such insurers as it deems appropriate, including the execution of any releases or settlement agreements by Kennecott on its behalf and on behalf of its Affiliates, including the Companies and the Venture, with respect to the Historic Policies for all periods prior to the Closing Date. Buyer further acknowledges that such actions taken on behalf of the Companies and the Venture, whether taken before or after Closing, shall not be outside the Ordinary Course of Business of the Companies and shall be binding on the Companies and Buyer, provided that Kennecott shall indemnify and reimburse Buyer and any member of the Hecla Group for any Adverse Consequences that result from the settlements and releases referred to in this Section 2(g), without any of the limitations set forth in Section 10(b). Buyer agrees that, if such settlement is finalized, the Companies will no longer be an insured under the Historic Policies and covenants that, after Closing, the Companies will make no new claim under such policies. Buyer also acknowledges that it shall have no right to any proceeds received in settlement or litigation either before or after Closing and that such proceeds shall not be included in the calculation of the Purchase Price or reflected in the Statement prepared pursuant to Subsection 2(f) above.

(ii)       Notwithstanding the foregoing Section 2(g)(i) above, should any Party or its Affiliates receive an insurance recovery pertaining to Venture operations based on occurrences prior to the Closing, such Party agrees to deliver to Kennecott or the other Venture Participants, as the case may be, their proportional share of such recovery promptly, but only to the proportion that such Participant bore the liability to which such insurance recovery relates.

(h)       Other Businesses.  Prior to the Closing Date, one or both of the Companies may have engaged in Other Businesses. In this Agreement, the Parties intend to protect Buyer from and against any and all Adverse Consequences relating to the Companies, whether arising before, on or after the Closing Date, associated with the Other Businesses. Prior to Closing, Kennecott will cause the Companies to transfer to Kennecott and/or another member of the Rio Tinto Group all of the assets and liabilities (including all known and unknown or contingent liabilities, specifically including all liabilities relating to Environmental, Health and Safety

10

Requirements, CERCLA, or mining operations other than the Venture) related solely to such Other Businesses, but not related to the Venture. Kennecott shall retain all rights, obligations and liabilities attributable to, and shall be entitled to all benefits of ownership of, all Other Businesses, and Kennecott shall, or shall cause such transferee to, fully and unconditionally indemnify, defend and hold harmless the Hecla Group from and against any and all Adverse Consequences in connection with, incident to or arising out of the operations of the Companies with respect to such Other Businesses, and any such transfer, including, without limitation, Adverse Consequences under any Environmental, Health and Safety Requirement or any contract, warranty, tort, or other theory of law.

3. Representations and Warranties Concerning the Transaction.

(a)       Representations and Warranties of Kennecott.  Kennecott represents and warrants to Buyer that the statements contained in this Subsection 3(a) are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date, except as set forth in Annex I attached to this Agreement.

(i)        Organization of Kennecott.  Kennecott is a corporation, duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation.

(ii)       Authorization of Transaction.  Kennecott has full corporate power and authority to execute and deliver this Agreement and the other agreements required to be delivered in connection herewith and to perform its obligations hereunder and thereunder. Upon execution and delivery hereof by each Party, this Agreement constitutes the valid and legally binding obligation of Kennecott, enforceable in accordance with its terms and conditions. The execution, delivery and performance of this Agreement and the other agreements required to be delivered in connection herewith have been duly authorized by Kennecott, including any actions required to be taken by its stockholder and board of directors.

(iii)      Noncontravention.  Neither the execution and the delivery of this Agreement, nor the closing of the transactions contemplated hereby, will (A) violate any provision of Kennecott’s certificate of incorporation or bylaws, (B) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Kennecott is subject, except as has not had and would not reasonably be expected to have a Companies Material Adverse Effect or a Buyer Material Adverse Effect, (C) violate, conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, mortgage, deed of trust, contract, lease, license, instrument, or other arrangement to which Kennecott is a party or by which it is bound or to which any of its properties are subject, except as has not had and would not reasonably be expected to have a Companies Material Adverse Effect or a Buyer Material Adverse Effect, or (D) result in the imposition or creation of a lien or any other encumbrance upon or with respect to the Shares. Kennecott is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any governmental agency

11

in order to consummate the transactions contemplated by this Agreement (other than under the Hart-Scott-Rodino Act, and applicable federal and state securities laws relating to private placements), except where the failure to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any governmental agencywould not reasonably be expected to have a Companies Material Adverse Effect or a Buyer Material Adverse Effect.

(iv)      Brokers’ Fees.  Kennecott has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Buyer or any of the Companies could become liable or obligated.

(v)       The Shares.  Kennecott holds of record and owns beneficially all of the Shares, free and clear of any restrictions on transfer (other than applicable restrictions under the Securities Act and state securities laws relating to a private placement of such Shares), taxes, pledges, security interests, liens, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands. Kennecott is not a party to any option, warrant, purchase right, or other contract or commitment that could require Kennecott to sell, transfer, or otherwise dispose of the Shares (other than this Agreement). Kennecott is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of the Shares.

(vi)      Investment.  Kennecott acknowledges that the Hecla Shares will not, as of the Closing Date, have been registered under the Securities Act or any state securities law. Kennecott is an “accredited investor” under such Act and laws and is acquiring the Hecla Shares for investment for Kennecott’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that Kennecott has no present intention of selling, granting any participation in, or otherwise distributing the same. Kennecott further acknowledges that the certificates evidencing the Hecla Shares will bear the following legend: “THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.”

(vii)     Information to Kennecott.  Prior to the Closing Date, each of the Companies has been and is a Participant in the Venture and an active participant in various member and committee meetings and has received various reports and information from the Manager of the Venture. Kennecott shall be deemed to have actual knowledge of such received information. None of the representations or warranties given or made by Buyer and/or Hecla in this Agreement are, to the Knowledge of Kennecott, inaccurate or incomplete.

12

(viii)     Compliance with Venture Agreement.  To the Knowledge of Kennecott, Hecla and each Hecla Affiliate who has been a Participant in the Venture is in full compliance in all material respects with all applicable terms in its capacity as a Participant pursuant to all applicable terms and requirements of the Venture Agreement and no breach of the Venture Agreement by any member of the Hecla Group has occurred and is continuing or any event or circumstance exists that (with or without notice or the passage of time) may give any of the Companies the right to declare a default or exercise any remedies under, or to cancel, terminate or modify the Venture Agreement.

(b)       Representations and Warranties of Buyer.  Buyer represents and warrants to Kennecott that the statements contained in this Subsection 3(b) are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date, except as set forth in Annex II attached to this Agreement.

(i)        Organization of Buyer.  Buyer is a corporation, duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation.

(ii)       Authorization of Transaction.  Buyer has full corporate power and authority to execute and deliver this Agreement and the other agreements required to be delivered in connection herewith and to perform its obligations hereunder and thereunder. Upon execution and delivery hereof by each Party, this Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms and conditions. The execution, delivery and performance of this Agreement and the other agreements required to be delivered in connection herewith have been duly authorized by Buyer, including any actions required to be taken by its stockholder and board of directors.

(iii)      Noncontravention.  Neither the execution and the delivery of this Agreement, nor the closing of the transactions contemplated hereby, will (A) violate any provision of Buyer’s certificate of incorporation or bylaws, (B) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Buyer is subject or except as has not had and would not reasonably be expected to have a Buyer Material Adverse Effect or a Kennecott Material Adverse Effect, or (C) violate, conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, mortgage, deed of trust, contract, lease, license, instrument, or other arrangement to which Buyer is a party or by which it is bound or to which any of its properties are subject, except as has not had and would not reasonably be expected to have a Buyer Material Adverse Effect or a Kennecott Material Adverse Effect. Buyer is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any governmental agency in order to consummate the transactions contemplated by this Agreement (other than under the Hart-Scott-Rodino Act and applicable federal securities laws relating to private placements), except where the failure to give any notice to, make any filing with, or obtain any authorization, consent, or

13

approval of any governmental agency would not reasonably be expected to have a Buyer Material Adverse Effect or a Kennecott Material Adverse Effect.

(iv)      Brokers’ Fees.  Buyer has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Kennecott, or, if the Closing does not occur, any of the Companies could become liable or obligated.

(v)       Investment.  Buyer acknowledges that the Shares have not been and will not be registered under the Securities Act or any state securities law. Buyer is an “accredited investor” under such Act and laws and is acquiring the Shares for investment for Buyer’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that Buyer has no present intention of selling, granting any participation in, or otherwise distributing the same. Buyer further acknowledges that the certificates evidencing the Shares may bear the following legend: "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."

(c)       Representations and Warranties of Hecla.  Hecla represents and warrants to Kennecott that the statements contained in this Subsection 3(c) are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date, except as set forth in Annex II attached to this Agreement.

(i)        Organization of Hecla.  Hecla is a corporation, duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation.

(ii)       Authorization of Transaction.  Hecla has full corporate power and authority to execute and deliver this Agreement and the other agreements required to be delivered in connection herewith and to perform its obligations hereunder and thereunder. Upon execution and delivery hereof by each Party, this Agreement constitutes the valid and legally binding obligation of Hecla, enforceable in accordance with its terms and conditions. The execution, delivery and performance of this Agreement and the other agreements required to be delivered in connection herewith have been duly authorized by Hecla, including any actions required to be taken by its stockholders and board of directors.

(iii)      Noncontravention.  Neither the execution and the delivery of this Agreement, nor the closing of the transactions contemplated hereby, will (A) violate Hecla’s certificate of incorporation or bylaws, (B) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Hecla is subject, except as has not had and would not reasonably be expected to have a Buyer Material Adverse Effect

14

or a Kennecott Material Adverse Effect, (C) violate, conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, mortgage, deed of trust, contract, lease, license, instrument, or other arrangement to which Hecla is a party or by which it is bound or to which any of its properties are subject, except as has not had and would not reasonably be expected to have a Buyer Material Adverse Effect or a Kennecott Material Adverse Effect or (D) result in the imposition or creation of a lien or any other encumbrance upon or with respect to the Hecla Shares. Hecla is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any governmental agency in order to consummate the transactions contemplated by this Agreement (other than under the Hart-Scott-Rodino Act, and applicable federal laws relating to private placements), except where the failure to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any governmental agency would not reasonably be expected to have a Buyer Material Adverse Effect or a Kennecott Material Adverse Effect.

(iv)      Valid Issuance.  The Hecla Shares that are being delivered to Kennecott or its assignee under this Agreement, when issued, sold, and delivered in accordance with the terms of this Agreement for the consideration expressed in this Agreement, will be duly and validly issued, fully paid and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under applicable state and federal securities laws.

(v)       SEC Documents.  Since January 1, 2006, Hecla has timely filed all reports, proxy statements, registrations statements, forms, schedules and other documents (including all exhibits, schedules and annexes thereto) required to be filed by it under the Securities Act or the Exchange Act, as the case may be, with the Securities and Exchange Commission (the “Hecla SEC Documents”). The Hecla SEC Documents (i) complied in all material respects with the applicable requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder applicable to the Hecla SEC Documents, in each case as in effect at the time of its filing and (ii) did not, and any Hecla SEC Documents filed or furnished subsequent to the date of this Agreement but within eighteen (18) months following the Closing Date, will 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 under which they weremade, not misleading.

(vi)      Buyer’s Funding.  Hecla will cause Buyer to have or Hecla has or will have as of the date of execution of this Agreement, cash or a lending commitment for all funds necessary to pay the Purchase Price and any other amounts payable at Closing as contemplated by this Agreement, including, without limitation, pursuant to a lending commitment from the Bank of Nova Scotia as evidenced by a letter dated February 6, 2008 from such bank to Hecla (the “Commitment”). Hecla will cause Buyer to have or Hecla has or will have as of the Closing Date, all funds necessary to pay the Purchase Price and any other amount payable at Closing under this Agreement.

15

(d)       Buyer and Hecla.  Each of Buyer and Hecla represents and warrants to Kennecott that the statements contained in this Subsection 3(d) are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date.

(i)        Information to Buyer and Hecla.  Prior to the Closing Date, one or more members of the Hecla Group has been or is a Participant in the Venture and an active participant in various member and committee meetings and has received various reports and information from the Manager of the Venture. Buyer and Hecla shall be deemed to have actual knowledge of such received information. None of the representations and warranties given or made by Kennecott in this Agreement are, to the Knowledge of Hecla, inaccurate or incomplete. Buyer and Hecla have examined this Agreement including its Annexes, Exhibits and Schedules, and are relying on their own economic and financial analyses of the Companies and their business in establishing the Purchase Price.

(ii)       Compliance With Venture Agreement.  To the Knowledge of Hecla, each of the Companies is in full compliance in all material respects with all applicable terms in its capacity as a Participant pursuant to all applicable terms and requirements of the Venture Agreement and no breach of the Venture Agreement by any member of the Rio Tinto Group has occurred and is continuing or any event or circumstance exists that (with or without notice or the passage of time) may give any member of the Hecla Group the right to declare a default or exercise any remedies under, or to cancel, terminate or modify the Venture Agreement.

(iii)      Disclaimer of Other Representations and Warranties.  EXCEPT AS TO THE REPRESENTATIONS, WARRANTIES AND INDEMNITIES EXPRESSLY SET FORTH HEREIN AND SUBJECT TO SUBSECTION 3(c)(v) ABOVE, NO COMPANY IN THE HECLA GROUP NOR ANY OF ITS RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS SHALL HAVE ANY LIABILITY FOR ANY STATEMENTS, PROJECTIONS, OPINIONS, INFORMATION OR OTHER MATTERS, WHETHER EXPRESS OR IMPLIED, ARISING OUT OF, CONTAINED IN OR DERIVED FROM, ANY INFORMATION PROVIDED TO ANY MEMBER OF THE RIO TINTO GROUP AND THE COMPANIES OR FOR ANY OMISSIONS FROM, OR FAILURE TO CORRECT ANY INFORMATION CONTAINED IN, SUCH INFORMATION AS AFORESAID. EACH COMPANY IN THE HECLA GROUP EXPRESSLY DISCLAIMS ANY AND ALL LIABILITY RELATING TO OR RESULTING FROM THE USE OF SUCH OTHER INFORMATION BY THE COMPANIES OR ANY MEMBER OF THE RIO TINTO GROUP OR ANY OF THEIR AFFILIATES OR REPRESENTATIVES. ONLY THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS SECTION 3, SUBJECT TO THE OTHER LIMITATIONS AND RESTRICTIONS SPECIFIED IN THIS AGREEMENT, WILL HAVE ANY LEGAL EFFECT WITH RESPECT TO ANY INFORMATION PROVIDED TO ANY MEMBER OF THE RIO TINTO GROUP OR THE COMPANIES. WITHOUT LIMITING THE FOREGOING, EXCEPT AS TO THE REPRESENTATIONS, WARRANTIES AND INDEMNITIES EXPRESSLY SET FORTH HEREIN AND SUBJECT TO SUBSECTION 3(c)(v) ABOVE, NO COMPANY IN THE HECLA GROUP MAKES OR GIVES ANY REPRESENTATION OR

16

WARRANTY, WHETHER EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF ANY COMPANY IN THE HECLA GROUP, ITS RESPECTIVE ASSETS, LIABILITIES, OBLIGATIONS, OR OPERATIONS, INCLUDING, WITHOUT LIMITATION, AS TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION (WHETHER COMMUNICATED IN WRITTEN, ORAL, GRAPHIC, ELECTRONIC OR ANY OTHER FORM) TRANSMITTED OR MADE AVAILABLE TO ANY MEMBER OF THE RIO TINTO GROUP OR THE COMPANIES AT ANY TIME PRIOR TO THE CLOSING AND IN ALL CASES, HECLA AND EACH COMPANY IN THE HECLA GROUP SPECIFICALLY EXCLUDE ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE, AND THESE AND ANY OTHER SUCH REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

4.         Representations and Warranties Concerning the Companies.  Kennecott represents and warrants to Buyer that the statements contained in this Section 4 are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date, except as set forth in the disclosure schedule attached as Annex III to this Agreement.

(a)       Organization, Qualification, and Corporate Power.  Each of the Companies is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each other state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities currently conducted by it, requires such qualification, except where the failure to be so qualified or in good standing in foreign jurisdictions has not had or would not be reasonably expected to have a Companies Material Adverse Effect or a Buyer Material Adverse Effect. Each of the Companies has full corporate power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it. Annex III lists the directors and officers of each of the Companies. KJMC is not qualified to do business in any foreign jurisdiction.

(b)       Noncontravention.  Neither the execution and the delivery of this Agreement, nor the closing of the transactions contemplated hereby, will (A) violate any provision of any of the Companies’ certificate of incorporation or bylaws (B) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which any of the Companies is subject or except as has not had and would not reasonably be expected to have a Companies Material Adverse Effect or a Buyer Material Adverse Effect, (C) violate, conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, mortgage, deed of trust, contract, lease, license, instrument, or other arrangement to which any of the Companies is a party or by which it is bound or to which any of its properties are subject, except as has not had and would not reasonably be expected to have a Companies Material Adverse Effect or a Buyer Material Adverse Effect, or (D) result in the imposition or creation of a lien or any other encumbrance upon or with respect to the Shares. Except as set forth in Annex III, the Companies need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any governmental agency or any other Person in order to consummate the

17

transactions contemplated by this Agreement except as not had or would not reasonably be expected tohave a Companies Material Adverse Effect or a Buyer Material Adverse Effect.

(c)       Capitalization.  The entire authorized capital stock of KGCMC consists of 1,000 shares, $1.00 par value, of which 1,000 shares are issued and outstanding. The entire authorized capital stock of KJMC consists of 1,000 shares, $1.00 par value, of which 1,000 shares are issued and outstanding. The Shares represent all of the issued and outstanding shares of the capital stock of the Companies. All of the Shares that are issued and outstanding have been duly authorized, are validly issued, fully paid, and nonassessable, and are held of record by Kennecott. No preferred shares are issued or outstanding. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require any of the Companies to issue, sell, or otherwise cause to become outstanding any of its capital stock. KGCMC owns an undivided 57.7505% interest, and KJMC owns an undivided 12.5164% interest, in the Venture pursuant to the Venture Agreement.

(d)       Brokers’ Fees.  Neither of the Companies has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

(e)       Royalties.  Except for royalties paid by the Venture prior to distributions of proceeds, neither of the Companies has any obligation or has received any written demand to pay royalties or make any other material payments out of the proceeds of its respective share of production from the Venture.

(f)        Subsidiaries; Other Businesses.  Neither of the Companies has any subsidiaries. Neither of the Companies currently has any Other Businesses.

(g)        Financial Statements.

(i)        Prior to the execution of this Agreement, Kennecott has delivered to Buyer the Company Financial Statement.

(ii)       The Venture Financial Statement has been prepared in all material respects in accordance with GAAP and fairly presents the financial position of the Venture as at December 31, 2007.

(h)       Events Subsequent to the Venture Financial Statement.  Since the date of the Venture Financial Statement, except as contemplated by this Agreement or disclosed to Buyer and, except for actions approved in connection with the Venture Agreement, neither of the Companies on behalf of the Venture has taken any material action (or omitted to take any material action) or entered into any material transaction (or omitted to enter into any material transaction) outside the Ordinary Course of Business.

(i)        Legal Compliance.  To the Knowledge of Kennecott, neither of the Companies has directly or on behalf of the Venture received any written notice that remains outstanding that asserts noncompliance with any material applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state

18

or local governments (and all agencies thereof), except those which have not had or would not reasonably be expected to have a Companies Material Adverse Effect and except with respect to Environmental, Health and Safety Matters, which are covered in Subsection 4(p) below.

(j)        Tax Matters.

(i)        Except where the failure to pay or establish adequate reserves in accordance with IAS for Taxes has not had or would not be reasonably expected to have a Companies Material Adverse Effect or a Buyer Material Adverse Effect, all Tax Returns required to be filed by Kennecott in respect of the Companies or by any of the Companies have been filed in a timely manner (taking into account all extensions of due dates), and Kennecott has paid, or established adequate reserves in accordance with IAS on behalf of it and the Companies, for all Taxes required to be paid (whether or not shown on any Tax Return). Except where a claim has not had or would not reasonably be expected to have a Companies Material Adverse Effect or a Buyer Material Adverse Effect, no claim has ever been made by an authority in a jurisdiction where one of the Companies does not file Tax Returns that such Company is or may be subject to tax in that jurisdiction.

(ii)       Except for any deficiency, notice of audit, or waiver of statute of limitation that has not had or would not be reasonably expected to have a Companies Material Adverse Effect or a Buyer Material Adverse Effect, (A) no deficiencies for any Taxes have been asserted or assessed in writing against Kennecott in respect of the Companies or against any of the Companies that remain unpaid, (B) neither Kennecott nor any of the Companies have received notice of any audit or other proceeding with respect to Taxes, and (C) no waivers of statutes of limitation are in effect in respect of Taxes for any of the Companies.

(iii)      Kennecott filed a consolidated federal Income Tax Return with each of the Companies for the taxable year immediately preceding the current taxable year and is eligible to make a Code Section 338(h)(10) election to treat the sale of the stock of each of the Companies as a sale of its assets.

(iv)      Except as where a liability has not had or would not be reasonably expected to have a Companies Material Adverse Effect or a Buyer Material Adverse Effect and excepting liabilities indemnified under Section 8 or agreements or other arrangements subject to termination under Section 8(j), none of the Companies has any liability for the Taxes of any Person (other than such Company): (A) under Reg. Sec. 1.1502-6, or any similar provision of state, local or foreign law, except for liabilities of any member of the consolidated group of which Kennecott is a member, (B) as a transferee or successor, (C) by contract or (D) otherwise.

(k)       Corporate Records.  To the Knowledge of Kennecott, the copies of the Certificate of Incorporation and the Bylaws, and all amendments thereto, of each of the Companies that will be delivered to Buyer as at Closing are true, correct, and complete copies. To the Knowledge of Kennecott, the minutes and other corporate record books of the Companies, copies of which will be delivered to Buyer at Closing, will contain minutes of all meetings of, and consents to all

19

actions requiring consent that have been taken without meetings by, the board of directors (and committees thereof) and stockholder of each of the Companies.

(l)        Contracts; Permits.  Annex III lists each material contract or agreement pertaining to the Venture and having a financial obligation in excess of $500,000 or a term of more than one year to which the Companies or the Venture is a party or by which any of the assets of the Companies or the Venture are bound (collectively, the “Material Contracts”), and each material permit, license, lease or similar document pertaining to the Venture to which the Companies or the Venture is a party or by which any of the assets of the Companies or the Venture are bound (“Material Permits”). Kennecott has made or will make available to Buyer copies of the Material Contracts and the Material Permits that will continue on behalf of the Venture following the Closing. Neither the execution of this Agreement, nor the Closing, nor any of the other transactions contemplated hereby shall require any consent or approval or give rise to any breach, termination, adjustment, fee, or escalator under any of the Material Contracts and Material Permits. None of the Companies has received any notice in writing that remains outstanding asserting a material breach of any of the Material Contracts or the Material Permits.

(m)      Litigation.  There are no actions, suits, or proceedings pending or, to the Knowledge of Kennecott, no actions, suits, proceedings, inquiries, or investigations threatened in writing against or affecting either of the Companies at law or in equity before, and there are no orders, judgments or decrees of or before, any court or administrative agency, in each case, which has had or would reasonably be expected to have a Companies Material Adverse Effect.

(n)       Employees.  Annex III sets forth a list of job titles of current employees of the Companies, their birth dates, hire dates and current earnings. Certain personnel are foreign employees as to whom Buyer will need to revise and reapply for worker authorization. In addition, Annex III sets forth the names of certain employees who will be transferred from the Companies to other Kennecott Affiliates prior to Closing. Provided, however, pursuant to the Transition Services Agreement, the services of such employees will be provided for a transition period. The closing of the purchase of the Shares by Buyer as contemplated by this Agreement will not give rise to any termination, severance, change-in-control, 280(G), or similar payment, benefit, or tax with respect to any employees of the Companies for which the Companies, the Venture, Hecla, or Buyer shall have any liability.

(o)       Employee Benefits.  Annex III sets forth a list of, and Kennecott has delivered to Buyer summaries of all "employee pension benefit plans" (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) ("Pension Plans") and all "employee welfare benefit plans" (as defined in Section 3(1) of ERISA), bonus, stock option, stock purchase, deferred compensation plans or arrangements, and other employee fringe benefit plans maintained, or contributed to, by the Companies for the benefit of any current or former officers or employees of the Companies or with respect to which the Companies have any liability (all of the foregoing, including Pension Plans, being herein referred to as "Benefit Plans"). Kennecott has delivered or will promptly deliver copies of all such plans.

20

(p)       Environmental, Health, and Safety Matters.

(i)        Material Permits.  Each of the Companies possesses (or has applied for) all the necessary environmental, health safety and applicable permits, licenses, registrations, and governmental approvals and authorizations in connection with the Venture, or its operations or facilities except where the failure to possess the same would not reasonably be expected to have a Companies Material Adverse Effect. Kennecott has made or will promptly make available to Buyer copies of all such documents and materials and all bonds or other forms of surety obtained by any of the Companies or joined in by Kennecott in connection with the Venture, or its operations or facilities.

(ii)       Notice of Violations.  Annex III lists, to the Knowledge of Kennecott, any written notice that remains outstanding from any governmental agency regarding any actual or alleged material violation of Environmental, Health and Safety Requirements, relating to the Companies, the Venture, or its operations or facilities, which has had or would reasonably be expected to have a Companies Material Adverse Effect or a Buyer Material Adverse Effect.

(iii)      Exclusive Representations and Warranties.  This Subsection 4(p) contains the sole and exclusive representations and warranties of Kennecott with respect to any environmental, health, or safety matters, including without limitation any arising under any Environmental, Health and Safety Requirements.

(q)       Sufficiency of Assets.  Except as set forth in Annex III, and subject to the obligation of each Participant pursuant to the Venture Agreement, the assets of the Companies and the Venture constitute in all material respects, the assets reasonably necessary to operate the business of the Companies and the Venture in the manner presently operated.

(r)        Compliance with Venture Agreement.  To the Knowledge of Kennecott, the Companies are in full compliance in all material respects with all applicable terms and requirements in their capacities as Participants, and, in the case of KGCMC, also in its capacity as Manager, pursuant to the Joint Venture Agreement.

(s)       Disclaimer of Other Representations and Warranties.  EXCEPT AS TO THE REPRESENTATIONS, WARRANTIES AND INDEMNITIES EXPRESSLY SET FORTH HEREIN, NO COMPANY IN THE RIO TINTO GROUP NOR ANY OF ITS RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS SHALL HAVE ANY LIABILITY FOR ANY STATEMENTS, PROJECTIONS, OPINIONS, INFORMATION OR OTHER MATTERS, WHETHER EXPRESS OR IMPLIED, ARISING OUT OF, CONTAINED IN OR DERIVED FROM, ANY INFORMATION PROVIDED TO BUYER OR FOR ANY OMISSIONS FROM, OR FAILURE TO CORRECT ANY INFORMATION CONTAINED IN, SUCH INFORMATION AS AFORESAID. EACH COMPANY IN THE RIO TINTO GROUP EXPRESSLY DISCLAIMS ANY AND ALL LIABILITY RELATING TO OR RESULTING FROM THE USE OF SUCH INFORMATION BY BUYER OR ANY OF ITS AFFILIATES OR REPRESENTATIVES. ONLY THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN SECTION 3 AND THIS SECTION 4, SUBJECT TO THE OTHER LIMITATIONS AND RESTRICTIONS SPECIFIED IN THIS AGREEMENT, WILL HAVE

21

ANY LEGAL EFFECT WITH RESPECT TO ANY INFORMATION PROVIDED TO BUYER OR HECLA. WITHOUT LIMITING THE FOREGOING, EXCEPT AS TO THE REPRESENTATIONS, WARRANTIES AND INDEMNITIES EXPRESSLY SET FORTH HEREIN, NO COMPANY IN THE RIO TINTO GROUP MAKES OR GIVES ANY REPRESENTATION OR WARRANTY, WHETHER EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF ANY OF THE COMPANIES, ITS RESPECTIVE ASSETS, LIABILITIES, OBLIGATIONS, OR OPERATIONS, INCLUDING, WITHOUT LIMITATION, AS TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION (WHETHER COMMUNICATED IN WRITTEN, ORAL, GRAPHIC, ELECTRONIC OR ANY OTHER FORM) TRANSMITTED OR MADE AVAILABLE TO BUYER AND HECLA AT ANY TIME PRIOR TO THE CLOSING AND IN ALL CASES, KENNECOTT AND EACH COMPANY IN THE RIO TINTO GROUP SPECIFICALLY EXCLUDE ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE, AND THESE AND ANY OTHER SUCH REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. BUYER AND HECLA ACKNOWLEDGE AND AGREE THAT, EXCEPT TO THE EXTENT SPECIFICALLY SET FORTH IN SECTION 3 AND THIS SECTION 4, BUYER IS PURCHASING THE SHARES ON AN "AS-IS, WHERE IS” BASIS.

5.         Pre-Closing Covenants.  The Parties agree as follows with respect to the period between the date of this Agreement and the Closing.

(a)       General.  Each of the Parties will cooperate with the other and use its reasonable commercial efforts to take all action and to do all things necessary to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in Section 7 below).

(b)       Notices and Consents.  Each of the Parties shall use its commercially reasonable efforts to (i) take, or cause to be taken, all appropriate action, and do, or cause to be done, all things necessary, proper or advisable under applicable law or otherwise to promptly consummate and make effective the transactions contemplated by this Agreement; (ii) obtain all authorizations, consents, orders and approvals of, and give notices to and make all filings with, all governmental authorities, including, but not limited to, the Federal Trade Commission and the Antitrust Division of the United States Department of Justice, that may be or become necessary for the performance of its obligations under this Agreement and the consummation of the transactions contemplated by this Agreement; (iii) lift or rescind any injunction or restraining order or other order adversely affecting the ability of the Parties to this Agreement to consummate the transactions contemplated hereby; and (iv) fulfill all conditions to such Party’s obligations under this Agreement, provided that nothing herein shall require Hecla or Buyer to divest any assets in connection therewith. Each Party to this Agreement shall cooperate fully with the other Parties to this Agreement in promptly seeking to obtain and causing the Companies to obtain all authorizations, consents, orders and approvals, giving such notices, and making such filings. The Parties to this Agreement shall not take any action that is reasonably likely to have the effect of unreasonably delaying, impairing or impeding the receipt of any required authorizations, consents, orders or approvals.

22

(c)       Hart-Scott-Rodino Act.  Each of Parties shall file, or cause to be filed, a Notification and Report Form pursuant to the Hart-Scott-Rodino Act with respect to the transactions contemplated by this Agreement within ten (10) business days of the date of this Agreement, shall request early termination of the applicable waiting period under the Hart-Scott-Rodino Act and shall supply promptly any additional information and documentary material that may reasonably be requested by any governmental authority (including, but not limited to, the Federal Trade Commission and the Antitrust Division of the United States Department of Justice) pursuant to the Hart-Scott-Rodino Act or any applicable foreign antitrust law, and shall reasonably cooperate in connection with any filing under any applicable antitrust law and in connection with resolving any investigation or other inquiry concerning the transactions contemplated by this Agreement commenced by any governmental authority, including, but not limited to, the Federal Trade Commission and the Antitrust Division of the United States Department of Justice; provided that neither Buyer nor Hecla shall be required to divest any assets in connection therewith. Buyer and Kennecott shall share equally the cost of the filing fee in connection therewith.

(d)       Operation of Business.

(i)        The Companies.  Between the date of this Agreement and the Closing, Kennecott will not, (A) grant or issue any option, warrant or other right to purchase or acquire the Shares, (B) take any action to encumber, or permit any encumbrance to be created with respect to the Shares, (C) dissolve, reorganize or otherwise change the corporate structure of any of the Companies except as contemplated by this Agreement, or (D) allow the Companies to issue any new shares or redeem any of the Shares. Between the date of this Agreement and the Closing, and except as contemplated by this Agreement, or except in the Ordinary Course of Business or except with the consent of the Buyer, which consent will not be unreasonably withheld, delayed or conditioned, Kennecott will cause each of the Companies not to (t) sell, transfer or otherwise dispose of, or encumber in any material way any of its assets, (u) terminate or fail to renew any material contracts or other agreements, (v) terminate or fail to renew or apply for renewal any material licenses or permits, (w) change in any material respect any method of keeping its books of account or accounting practices, (x) enter into any material transaction, agreement or event, (y) cancel any insurance coverage currently in effect (it being understood that all insurance coverage of the Companies will be terminated as of the Closing), or (z) make any dividends or distributions not permitted by Subsection 2(f) above, except for the transfer and elimination of the assets and liabilities of the Other Businesses.

(ii)       The Venture.  Kennecott shall cause the Companies not to take or omit to take any actions outside the Ordinary Course of Business of the Venture except as contemplated by this Agreement or as required under the Venture Agreement.

(e)       Full Access.  Kennecott will continue to permit, and Kennecott will cause the Companies to continue to permit, representatives of Buyer and its accountants, and attorneys to continue to have full access at all reasonable times, and in a manner so as not to interfere with the normal business operations of the Companies or the Venture, to all premises, properties, personnel, books, non-privileged records (including relevant tax records), contracts with respect

23

to the Venture to be continued after the Closing, and documents of or pertaining to the Companies. Kennecott will permit representatives of the Bank of Nova Scotia and of other lenders participating in the financing under the Commitment to have similar access provided that all such representatives and lenders execute and deliver confidentiality agreements reasonably satisfactory to Kennecott, provided, that the form of confidentiality agreement contained in or provided under the Venture Agreement shall be deemed to be reasonably satisfactory, in favor of the Rio Tinto Group pertaining to Rio Tinto Group Confidential Information (other than Venture information). Hecla shall also cause the Buyer to comply with the confidentiality obligations contained in Section 17.1 of the Venture Agreement and Buyer will treat and hold as such any Confidential Information it receives from Kennecott and the Companies and their Affiliates in the course of the reviews contemplated by this Subsection 5(e) as though it were its own Confidential Information, will not use any of the Confidential Information except to conduct due diligence regarding solely the transactions contemplated hereby and, if this Agreement is terminated for any reason whatsoever, will return to Kennecott or the Companies, as applicable, all tangible embodiments (and all copies) of the Confidential Information which are in its possession, other than Confidential Information to which Hecla is entitled to retain pursuant to the Venture Agreement. Any entry onto any Kennecott or Company facilities or Venture property shall be subject to the generally applicable rules and regulations pertaining to visitors, including compliance with all applicable safety, security, and confidentiality requirements. Such access shall be at Buyer’s sole risk, cost and expense.

(f)       Notice of Developments.

(i)        With Respect to Section 4.  Kennecott may elect at any time to notify Buyer in writing pursuant to Subsection 12(f) below if Kennecott determines that any of the representations and warranties in Section 4 above will be untrue as of the Closing Date. Unless Buyer has the right to terminate this Agreement pursuant to Subsection 11(a)(iii) below and exercises that right within the period of 10 business days referred to in Subsection 11(a)(iii) below, the written notice pursuant to this Subsection 5(f)(i) will be deemed to have amended Annex III, to have qualified the representations and warranties contained in Section 4 above, and to have cured any misrepresentation or breach of warranty that otherwise might have existed hereunder by reason of the development.

(ii)       With Respect to Subsections 3(c)(iv)-(vi) and 3(d).  Hecla and/or Buyer may elect at any time to notify Kennecott in writing pursuant to Subsection 12(f) if Hecla and/or Buyer determines that any of the representations and warranties in Subsection 3(c)(iv)-(vi) and 3(d) above will be untrue as of the Closing Date. Unless Kennecott has the right to terminate this Agreement pursuant to Subsection 11(a)(v) below and exercises that right within the period of 10 business days referred to in Subsection 11(a)(v) below, the written notice pursuant to this Subsection 5(f)(ii) will be deemed to have amended Annex II, to have qualified the representations and warranties contained in Subsection 3(c)(iv)-(vi) and 3(d) above, and to have cured any misrepresentation or breach of warranty that otherwise might have existed hereunder by reason of the development.

 

24

(iii)       With Respect to Section 3(c)(iv)-(vi) and 3(d).  Each Party will give prompt written notice to the other if it determines that any of the representations and warranties in Section 3 above will be untrue as of the Closing Date. No disclosure by any Party pursuant to this Subsection 5(f)(iii), however, shall be deemed to amend or supplement Annex I or Annex II (except as pursuant to Subsection 5(f)(ii) above), or to prevent or cure any misrepresentation or breach of warranty.

(g)       Governmental Authorities.  Except with respect to the filing described in Subsection 5(c) above, Buyer and Hecla hereby agree, and shall cause their representatives to agree, not to consult with any representatives or personnel of the United States Forest Service regarding the various mining rights of the Venture, without Kennecott’s prior consultation and consent, except as otherwise provided in this Agreement.

(h)       Assumption of Employment Obligations.  Except for the non-transferring employees and non-resident alien workers referred to in Subsection 4(n) above, as of and immediately after the Closing, Buyer shall cause the Companies to continue to employ their employees at salaries and wages (including bonus and incentive compensation programs) on terms and conditions as are in the aggregate reasonably comparable to those in effect pertaining to such employees immediately prior to the Closing Date; provided that such continued employment shall not be a condition to Closing. Nothing contained in the previous sentence in any way limits the rights of any of the Companies to discharge or terminate employees or change the terms of their employment subsequent to and independent of the Closing.

(i)        Transfer of Employees to Buyer’s Benefit Plans.  As of the Closing Date, Kennecott and the Companies shall cease to be participating employers in the Benefit Plans. Kennecott shall take, or cause to be taken, all such action as may be necessary to effect such cessation of participation.

(i)        Pension Plans.  As of the Closing Date, employees of the Companies that participated in the Pension Plans (“Kennecott Pension Participants”) shall fully vest in all such Pension Plans. On and after the Closing Date, Kennecott Pension Participants shall not be entitled to accrue additional benefits. Kennecott Pension Participants’ accrued benefits shall remain in the Pension Plans and be administered by Kennecott in accordance with plan terms. As of the Closing Date, the Buyer shall amend its “employee pension benefit plans” (as defined in section 3(2) of ERISA) (hereafter, “Buyer Pension Plans”), to provide that Kennecott Pension Participants (A) shall be participants in such plans; (B) shall be credited with the service each such participant earned on and before the Closing Date under the Pension Plans (including any “defined contribution plan” as defined in Section 414(i) of the Code); and (C) shall be entitled to a benefit under the Buyer Pension Plans, which will be offset by the accrued benefit under the Pension Plans to which each such participant is entitled (with such offset being only applicable to Kennecott Pension Participants’ service under the Kennecott “defined benefit plan” as defined in Section 414(j) of the Code). In addition, Kennecott Pension Participants participating in Kennecott’s Section 401(k) Pension Plan shall, on and after the Closing Date, be eligible to participate in the Buyer’s Section 401(k) Plan.

25

(ii)       Welfare Plans.  Employees of the Companies eligible to participate in the Welfare Plans providing for health care coverage benefits (“Kennecott Health Plans”) as listed in Annex III will cease to be eligible to participate in such plans as of the later of the Closing Date, or December 31, 2008 (or such earlier date as Buyer may determine) (the “Cessation Date”), with the cost (including administrative costs) of such coverage being borne by the Buyer. Employees of the Companies that were eligible to participate in the Kennecott Health Plans will continue to be eligible to participate in the Buyer’s “employer welfare benefit plans” (as defined in Section 3(1) of ERISA) providing for health care coverage benefits (“Buyer Health Plans”) on and after the Cessation Date, without a break in coverage. Buyer shall waive, or cause to be waived, any waiting period which may exist for any pre-existing conditions under the Buyer Health Plans. Notwithstanding anything to the contrary herein, the Buyer shall not provide health care coverage benefits of any kind to employees who have retired from the Companies prior to the Closing Date which health care coverage, if any, shall continue to be provided by Kennecott, subject to its right to terminate the same at any time.

(j)        Buyer’s Commitment.  Buyer shall, as soon as practicable, notify Kennecott of any termination, modification or reduction of the Commitment or of any event which is likely to result in a termination, modification or reduction of the Commitment.

(k)       Pre-Closing Tax Covenants.  Without the prior written consent of Buyer, neither Kennecott nor either of the Companies shall, except with regards to Income Taxes and Income Tax Returns of any kind, make or change any election, change an annual accounting period, adopt or change any accounting method, file any amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment relating to either of the Companies, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to either of the Companies, or take any other similar action relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent or other action would have the effect of increasing the Tax liability of either of the Companies for any period ending after the Closing Date or decreasing any Tax attribute of either of the Companies existing on the Closing Date.

(l)        Transition.  Kennecott will not take any action that is designed and intended to have the effect of discouraging any entity with which any of the Companies has a written contract from continuing a business relationship with such Company after Closing, except for those that will terminate as shown on Annex III and contracts related to the provision of intercompany services by Kennecott and its Affiliates, which, in the latter case, shall be terminated as of the Closing and provided if at all solely as contemplated in the Transition Services Agreement. Any other existing agreement with Kennecott or any other member of the Rio Tinto Group shall terminate as of the Closing Date (but not the Venture Agreement). Buyer will cause all accounts payable for such services to be paid promptly after the Closing Date upon receipt of the invoices for the same.

26

6.         Post-Closing Covenants.  The Parties agree as follows with respect to the period following Closing.

(a)       General.  In case at any time after Closing any further action is necessary to carry out the purposes of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as the other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under this Agreement).

(b)       Litigation Support.  In the event and for so long as any Party actively is contesting or defending against any third party action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving any of the Companies or the Venture (and, in the case of Kennecott, its Affiliates), the other Party will cooperate with it and its counsel in the defense or contest including by making available its relevant books and records.

(c)       Intellectual Property.  To the extent any of the Companies use any intellectual property in connection with the Venture that is owned by any member of the Rio Tinto Group, Kennecott shall, upon Buyer’s request made within one year following the Closing Date, cause such member to grant to Buyer a site-specific, non-transferable, perpetual, royalty-free, paid up license to use the same from and after the Closing Date with no obligation to update or maintain the same following the Closing.

(d)       Name Change.  Promptly after the Closing and in any event within twenty (20) business days following the Closing Date, Buyer shall cause each of the Companies to remove the name “Kennecott” and any derivative thereof from its corporate name (including, in particular, from its certificate of incorporation in Delaware and its certificate of authority in Alaska and any other jurisdiction in which it has authority to conduct business as a foreign corporation, if any) and to discontinue the use of such name, or any derivative thereof, in all contracts, on all signs and letterhead and in all other respects.

(e)       Corporate Records.  As soon as practicable after the Closing, Kennecott shall deliver to Buyer all corporate and other (financial, permitting, accounting, employment, etc.) records of the Companies that relate to the organization or past internal governance of the Companies relating to the Venture, and are maintained by Kennecott, provided that Kennecott and Buyer shall coordinate and agree upon a mutually acceptable schedule for the assembly and delivery of such documents, and provided further that Kennecott may retain a copy of all such documents as well as all other documents provided to Buyer prior to the Closing Date. Following the Closing, Buyer shall afford Kennecott reasonable access to the documents delivered by Kennecott upon reasonable notice and during regular business hours.

(f)        Return of Rio Tinto Group Materials.  Except as provided in Subsection 6(d) above, as soon as practicable following the Closing, Buyer shall deliver to Kennecott all intellectual property and other materials owned by or standing in the name of the Rio Tinto Group and not required for the operation of the Venture or delivered pursuant to the Venture Agreement or this Agreement.

27

(g)       Acquisitions within the Area of Interest.  For a period of two years following the Closing, neither Kennecott nor any of its Affiliates shall acquire any interest in properties (including any mining claims) adverse to the Buyer within the Area of Interest described in the Venture Agreement, as such area currently exists. If any such acquisition in violation of the foregoing is made, upon demand, Kennecott will cause the quit claim of such interest as so acquired to an entity specified by the Buyer without cost to Buyer.

(h)       Reclamation Bonding.  In the event it is determined that, after the Closing Date, Kennecott or its Affiliates remain directly or indirectly obligated under any bonds or other forms of surety that are required for operations of the Venture under the Environmental, Health and Safety Requirements, Buyer will use its reasonable commercial efforts to meet with any relevant agencies and seek to obtain the full and unconditional release of Kennecott and its Affiliates from any such bonds or other forms of surety. Buyer will provide reasonable advance notice of all such meetings to Kennecott and Kennecott shall be entitled to have a representative present at all such meetings. For any bonds needed for the Venture operations as to which Buyer is unable to effect such releases, Buyer will indemnify, defend and hold harmless Kennecott from any liabilities (whether absolute, contingent or otherwise) relating to the same.

(i)        Non-Solicitation.  Except with respect to the non-transferring employees shown on Annex III, from the date of this Agreement and for one hundred eighty (180) days following the Closing or termination of this Agreement, as the case may be, no Party shall directly or indirectly solicit for employment any Person who is currently employed by either of the Companies, provided, however, nothing herein shall be deemed to preclude the employing of any such Person whose employment is otherwise terminated by the Companies or employment or solicitation of a Person pursuant to a general solicitation of employment.

(j)        Rule 144.  Hecla shall provide current public information within the meaning of Rule 144(c)(1) for at least one year following the Closing Date.

7. Conditions to Obligation to Close.

(a)       Conditions to Obligation of Buyer.  The obligation of Buyer to consummate the transactions to be performed by it in connection with Closing is subject to satisfaction of the following conditions:

(i)        Representations and Warranties.   The representations and warranties set forth in Subsection 3(a) and Section 4 above shall not have been determined to be untrue or incorrect in any material respect at and as of the Closing Date. For purposes of this Subsection 7(a)(i) only, the representations and warranties shall be deemed to have been materially untrue or incorrect only if the Adverse Consequences reasonably anticipated to arise in the aggregate for all such breaches exceed $7,500,000.

(ii)       No Default.  No Event of Default by Kennecott or any of the Companies hereunder shall have occurred and be continuing (excluding an Event of Default pursuant to Subsection 9(c) below).

28

(iii)      No Prohibitions.  There shall not be any injunction, judgment, order, decree, ruling, or charge in effect prohibiting consummation of any of the transactions contemplated by this Agreement.

(iv)      Waiting Periods.  All applicable waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Act and any applicable foreign antitrust laws shall have expired or otherwise been terminated.

(v)       Consents.  Each of the consents identified in item 4(b) of Annex III shall have been obtained and shall be in full force and effect.

(vi)      FIRPTA Certificate.  Kennecott shall have delivered to Buyer a certificate of the Companies prepared in accordance with Section 1445(b)(2) of the Code and the regulations promulgated thereunder and dated as of the Closing Date.

(vii)     Resignations.  Kennecott shall have delivered to Buyer the duly executed resignations of the officers and directors of each of the Companies effective upon Closing and as of the Closing Date.

Buyer may waive any condition specified in this Subsection 7(a) if it executes and delivers to Kennecott a writing so stating at or prior to the Closing.

(b)       Conditions to Obligation of Kennecott.  The obligation of Kennecott to consummate the transactions to be performed by it in connection with Closing is subject to satisfaction of the following conditions:

(i)        Representations and Warranties.  The representations and warranties set forth in Subsection 3(b), 3(c) and 3(d) above shall not have been determined to be untrue or incorrect in any material respects at and as of the Closing Date.

(ii)       No Default.  No Event of Default by Buyer shall have occurred and be continuing (excluding an Event of Default pursuant to Subsection 9(c) below).

(iii)      No Prohibitions.  There shall not be any injunction, judgment, order, decree, ruling, or charge in effect prohibiting consummation of any of the transactions contemplated by this Agreement.

(iv)      Waiting Periods.  All applicable waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated.

(v)       Consents.  Each of the consents identified in Section 4(b) of Annex III shall have been obtained and shall be in full force and effect.

Kennecott may waive any condition specified in this Subsection 7(b) if it executes and delivers to Buyer a writing so stating at or prior to the Closing.

29

8. Tax Matters.

(a)       Indemnification.

(i)        To the extent any Taxes or other liabilities are not taken into account in determining the Post Closing Adjustments under Section 2(f), Kennecott shall be responsible for and shall indemnify and hold harmless Buyer and its Affiliates (including the Companies) against all (A) liabilities for Taxes of the Companies, in each case in respect of Taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date of any Straddle Period (such liability to be determined on a closing of the books method), (B) liabilities pursuant to Treasury Regulation § 1.1502-6 (or any analogous or similar state, local, or foreign Law) for Taxes of Kennecott or any consolidated, combined or unitary group of which Kennecott or either of the Companies is or was a member on or before the Closing Date, and (C) any and all Taxes of any Person (other than the Companies) imposed on either of the Companies as a transferee or successor, which Taxes related to an event or transaction occurring on or before the Closing Date. Notwithstanding anything to the contrary in this Agreement, Kennecott shall not be responsible for any Taxes resulting from events that occur or are deemed to occur after the Closing that are not in the ordinary course of business or specifically contemplated by this Agreement, and Buyer shall indemnify Kennecott for any such Taxes. Subject to Section 8(d) below, Kennecott shall pay to Buyer or the relevant authorities any portion of Taxes which are the responsibility of Kennecott pursuant to this Section 8(a)(i) on the later of (x) five days after Kennecott receives written notice from Buyer requesting such payment and (y) two days prior to the date such Taxes are required to be paid.

(ii)       Buyer shall be responsible for and shall indemnify and hold harmless Kennecott and its Affiliates against all (A) liabilities for Taxes of the Companies, in each case in respect of Taxable periods beginning after the Closing and (B) liabilities for Taxes of the Companies for the portion of any Straddle Period after the Closing (such liability to be determined on a closing of the books method). Notwithstanding anything to the contrary in this Agreement, Buyer shall not be responsible for any Taxes resulting from events that occur or are deemed to occur before the Closing Date that are not in the ordinary course of business or specifically contemplated by this Agreement, and Kennecott shall indemnify Buyer for any such Taxes. Subject to Section 8(d) below, Buyer shall pay to Kennecott or the relevant authorities any portion of Taxes which are the responsibility of Buyer pursuant to this Section 8(a)(ii) on the later of (x) five days after Buyer receives written notice from Kennecott requesting such payment and (y) two days prior to the date such Taxes are required to be paid.

(b)       Filing Responsibility.

(i)        Kennecott shall timely prepare and file, or cause to be timely prepared and filed, all relevant Tax Returns of any of the Companies for all Tax periods ending on or before the Closing Date, and shall timely pay, or cause to be paid, when due, all Taxes due on such returns. Tax Returns other than Income Tax Returns shall be prepared in a manner consistent with prior practice of Kennecott and the respective Companies

30

concerning the income, properties or operations (including all elections and accounting methods and conventions) of the Companies, except as otherwise required by law, rule or regulation. Kennecott shall include the income of each of the Companies (including without limitation any deferred items triggered into income by Reg. Sec. 1.1502-13 and any excess loss account taken into income under Reg. Sec. 1.1502-19) on Kennecott’s consolidated federal Income Tax Returns for all periods through the Closing Date and pay any federal Income Taxes attributable to such income.

(ii)       Kennecott shall timely prepare and file, or cause to be timely prepared and filed, all relevant Income Tax Returns of all Companies for all Straddle Periods (“Straddle Income Returns”), and shall timely pay, or cause to be paid, when due, all Income Taxes relating to Straddle Income Returns. Kennecott shall provide, or cause to be provided, to Buyer a substantially final draft of Straddle Income Returns at least fifteen (15) days prior to the due date for filing such returns, or at least fifteen (15) days prior to the due date for paying Income Taxes due, if any, as shown on such returns, in the event according to the applicable Income Tax provisions, this date comes before such Straddle Income Return’s filing due date, for Buyer’s review and comment. Kennecott shall discuss with Buyer in good faith such revisions to such Straddle Income Returns as Buyer may reasonably request, but shall not be obligated to make such revisions. Buyer shall be responsible for the payment of Income Taxes due with respect to Straddle Income Returns to the extent provided in Section 8(a)(ii).

(iii)      Buyer shall timely prepare and file, or cause to be timely prepared and filed, all relevant Tax Returns other than Income Tax Returns described in Section 8(b)(ii) of all Companies for all Straddle Periods (“Non-IncomeStraddle Returns”), and shall timely pay, or cause to be paid, when due, all Taxes relating to such Non-Income Straddle Returns. Such Non-Income Straddle Returns shall be prepared in a manner consistent with prior practice of Kennecott and the respective Companies concerning the income, properties or operations (including all elections and accounting methods and conventions) of the Companies, except as otherwise required by law, rule or regulation. Buyer shall provide, or cause to be provided, to Kennecott a substantially final draft of such Non-Income Straddle Returns at least ten (10) days prior to the due date for filing such returns, or at least ten (10) days prior to the due date for paying Taxes due, if any, as shown on such returns, in the event according to the applicable Tax provisions, this date comes before such Non-Income Straddle Return’s filing due date, for Kennecott’s review and comment. Buyer shall discuss with Kennecott in good faith such revisions to such Non-Income Straddle Returns as Kennecott may reasonably request, but shall not be obligated to make such revisions. Kennecott shall be responsible for the payment of Taxes due with respect to such Non-Income Straddle Returns to the extent provided in Section 8(a)(i).

(iv)      Buyer and Kennecott shall provide each other with copies of any Tax Returns of the Companies that it files or causes to be filed pursuant to Sections 8(b)(i), (ii) or (iii) after the Closing (not including any consolidated or combined Tax Return which includes Kennecott or any Affiliate of Kennecott (other than any of the Companies)) no later than 10 days after the filing of such Tax Returns.

31

(c)       Refunds.  Any refunds or credits of Taxes (including any interest thereon) received by any of the Companies, or by Kennecott with respect to any of the Companies, or credited to any of the Companies attributable to periods ending on or prior to the Closing Date or to portions of Straddle Periods ending as of the Closing Date (as determined on a closing of the books method) (“Kennecott’s Refunds”), shall be for the benefit of Kennecott, and Kennecott shall have the sole right, at its expense, to pursue any Kennecott’s Refunds (including filing amended returns and applying for competent authority or analogous relief) and Buyer shall cause the Companies to pay over to Kennecott any Kennecott’s Refunds immediately upon receipt thereof. In the case of a Kennecott’s Refund that is a credit to any of the Companies, Buyer shall cause such Kennecott entity to pay such Kennecott’s Refund to Kennecott immediately upon receipt of the benefit of such credit through a reduction in any Tax payment required to be made by any of the Companies after the Closing. In addition, if the Taxes with respect to the pre-Closing portion of a Straddle Period of any of the Companies are less than the payments previously made (or deemed made) by the Companies with respect to the pre-Closing portion of such Straddle Period and to the extent such difference has not previously been taken into account in determining the Post Closing Adjustments under Section 2(f), Buyer shall cause the Companies to pay to Kennecott the excess of such previous payments over such Taxes immediately upon the Companies’ receiving the benefit of such excess payments through a reduction in any Tax payment required to be made by the Companies after the Closing. Notwithstanding anything to the contrary herein, Kennecott shall not file an amended return in respect of a Tax Return other than an Income Tax Return in a manner which is inconsistent with Kennecott’s past practices unless, either (i) such amended return is not disadvantageous to Buyer, or (ii) Kennecott obtains Buyer’s consent, not to be unreasonably withheld.

(d)       Audits. Buyer shall promptly notify Kennecott in writing upon receipt by Buyer or its Affiliates of notice of any pending or threatened Tax audits or assessments which may affect the Tax liabilities or indemnification obligations of, or otherwise relate to, Kennecott in respect of Tax periods ending on or prior to the Closing Date or for Straddle Periods. Kennecott shall have the sole right, at its expense, to represent all interests in any such Tax matter (other than a Tax matter directly relating to a Non-Income Straddle Return), including any Tax audit or administrative or court proceeding (“Tax Matters”), and to employ counsel of its choice. Buyer agrees that it will cooperate fully with Kennecott and its counsel in the defense against or compromise of any claim in any said proceeding. Buyer shall have the sole right, at its expense, to represent all interests in any Tax Matter for Tax periods ending after the Closing Date, and with respect to any Non-Income Straddle Return, and to employ counsel of its choice; provided, however, that with respect to any Tax Matter directly relating to a Non-Income Straddle Return, Kennecott shall be kept informed of the progress of such Tax Matter, and Kennecott’s consent shall be required prior to the settlement of any such Tax Matter, which consent shall not be unreasonably withheld.

(e)       Cooperation.  After the Closing, Buyer and Kennecott shall, to the extent relevant to a Tax Matter or Tax Return, promptly make available or cause to be made available to the other, as reasonably requested, and to any Taxing authority, all information, records or documents relating to Tax liabilities, potential Tax liabilities, or refunds of or relating to the Companies for all periods prior to or including the period prior to the day after the Closing Date, other than any information relating to (i) federal income tax obligations of the Companies, (ii) state or local income tax obligations with respect to jurisdictions in which a 338(h)(10) election

32

or a similar type of election was or will be filed, and (iii) any information relating to combined, consolidated or unitary Income Tax Returns. Buyer and Kennecott shall preserve all information, records and documents that might be reasonably requested under this Section 8(e) until the expiration of the applicable statute of limitations relating to Taxes. Buyer and Kennecott shall cooperate with respect to the filing of any Tax Return pursuant to Section 8(b) and Buyer shall cause the Companies to sign or provide any necessary powers of attorney in respect of Tax Returns to be filed by Kennecott pursuant to Sections 8(b)(i) or 8(b)(ii). Buyer shall, and shall cause the Companies to, cooperate with Kennecott with respect to any claim for Kennecott’s Refunds (including filing, at Kennecott’s request, any such claim). Buyer and Kennecott shall cooperate with each other with respect to any Tax Matter. Buyer shall prepare and provide to Kennecott any federal, state, local and foreign Tax information packages requested by Kennecott for Kennecott’s use in preparing its or either Company’s Straddle Income Returns and Tax Returns not related to Income Taxes which Kennecott is required to file pursuant to Sections 8(b)(i) and (ii). Such Tax information packages shall be completed by Buyer and provided to Kennecott within 45 days after Kennecott’s request therefor. Each party shall bear its own expenses in complying with the foregoing provisions.

(f)        Coordination with Other Provisions.  Notwithstanding anything in this Agreement to the contrary, the provisions of this Section 8 shall be the sole basis for indemnification with respect to Taxes.

(g)       Transfer Taxes.  Buyer and Seller shall each assume one-half of the liability for all sales, use, transfer, real property transfer, documentary, recording, gains, stock transfer and similar Taxes and fees, and any deficiency, interest or penalty asserted with respect thereof (collectively, “Transfer Taxes”) arising out of or in connection with the transactions effected pursuant to this Agreement.

(h)       Tax Elections and Forms.  With respect to Buyer’s acquisition of the Shares in the Companies hereunder, Kennecott and Buyer hereby covenant and agree with each other that they will join in making an election under Section 338(h)(10) of the Code, and the Treasury Regulations promulgated thereunder and any comparable provision of state or local Tax law (the “Section338(h)(10) Election”). Kennecott will pay any Income Tax attributable to the making of the Section 338(h)(10) Election and will indemnify Buyer and the Company against any adverse consequences arising out of any failure to pay such Income Tax. Kennecott and Buyer shall be jointly responsible for the preparation and timely filing of Form 8023 (or any successor form) in connection with the Section 338(h)(10) Election and Kennecott shall cooperate with Buyer to enable Buyer to prepare and file such form and to complete the Section 338(h)(10) Election. For each Kennecott entity for which a Section 338(h)(10) Election is made, the portion of the Purchase Price allocable to such Kennecott entity, the liabilities of such Company and other relevant items shall be allocated to the assets of such Company in accordance with the rules of Section 338(h)(10) of the Code and the Treasury Regulations promulgated thereunder. Such allocation shall be set forth on a schedule which shall be jointly prepared by Buyer and Kennecott within 75 days following the Closing Date. All allocations contained in such schedule shall be used by Kennecott, Buyer, the Companies and their Affiliates in preparing Form 8883 (or any successor form) and all relevant Tax Returns.

33

(i)        Period of Limitation.  Any claim for indemnification for Taxes under this Section 8 shall be brought no later than 30 days after the expiration of the statute of limitations for the assessment of Taxes that are the subject of the indemnification claim.

(j)        Termination of Tax Allocation Agreements.  Any tax allocation or sharing agreement or arrangement, whether or not written, that may have been entered into by Kennecott or any of its Affiliates and any of the Companies shall be terminated as to the Companies effective as of the Closing Date, and payments that are owed by any of the Companies pursuant thereto shall be paid, and all other rights and obligations resulting from such agreements or arrangements with respect to the Companies shall cease at such time and shall be of no further force or effect.

(k)       Survival of Obligations.  The obligations of the Parties set forth in this Section 8 shall be unconditional and absolute and shall survive the Closing.

(l)        Closing Date.  Solely for purposes of this Section 8, the term “Closing Date,” when applied to Taxes other than Income Taxes, shall mean the date of this Agreement, and the “closing of the books method” for such Taxes other than Income Taxes shall be applied as of such date.

9.         Events of Default.  The occurrence of any of the following events shall constitute an Event of Default hereunder (whether any such event shall be voluntary or involuntary or result from or be effected by operation of law or pursuant to or in compliance with any judgment, decree, or order of any court or any order, rule, or regulation of any administrative governmental body) and shall be just cause for termination of this Agreement by the non-defaulting Party:

(a)       A Party’s failure to make any payment due hereunder on any due date thereof, which is not fully cured within two (2) Business Days after written notice of the same has been given by the non-defaulting Party;

(b)       A Party’s failure to observe or perform any of its other covenants and obligations hereunder which is not fully cured within ten (10) days Business Days after written notice of the same has been given by the non-defaulting Party;

(c)       The breach of representations or warranties of a Party herein or in any document or certificate given to the other Party in connection herewith or pursuant hereto would be expected, by the end of the period set forth in Section 2(d), to give rise, in the aggregate, to the amount set forth in Section 7(a)(i);

(d)       A Party or any Affiliate of a Party that controls such Party shall (i) become insolvent; (ii) generally not pay its debts (trade or other) as they become due; (iii) file, or consent by answer or otherwise to the filing against it of, a petition of relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction; (iv) make an assignment for the benefit of its creditors; (v) consent to the appointment of a custodian, receiver, trustee or other officer with similar powers of itself or of any substantial part of its property; or (vi) take corporate action for the purpose of any of the foregoing; (vii) or if a court or governmental authority of competent

34

jurisdiction shall enter an order appointing, without consent by a party, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of a party, or if any such petition shall be filed against a party and such condition is not reversed or such petition shall not be dismissed within thirty (30) days; or (viii) any similar event in any jurisdiction in which a Party is in operation has occurred; or

(e)       Buyer’s Commitment shall be terminated or materially reduced for any reason prior to the receipt by Kennecott of the full Purchase Price.

10. Remedies for Breach of this Agreement.

(a)       Survival of Representations and Warranties. Except as otherwise expressly provided, all representations and warranties of the Parties in this Agreement and any other certificate or document delivered pursuant to this Agreement shall survive the Closing and the consummation of the transactions contemplated hereby and continue in full force and effect for a period of eighteen (18) months following the Closing, after which period neither Party shall have any cause of action whatsoever for the breach of any such representation or warranty, regardless of whether such breach occurred or was discovered before or after Closing, except as follows:

(i)        The representations and warranties contained in Section 3 above shall survive the Closing and continue in full force and effect following the Closing without limitation as to time.

(ii)       The representations and warranties contained in Subsection 4(f) shall survive the Closing and continue in full force and effect following the Closing without limitation as to time, subject to applicable statutes of limitation.

(iii)      The representation and warranties contained in Subsection 4(j) shall terminate as of the Closing.

(iv)      The covenants contained in Subsections 2(g), 2(h), 5(e), 5(g), Section 8 and this Section 10 shall survive the Closing and continue in full force and effect following the Closing without limitation as to time, subject to applicable statutes of limitations.

(b)       Indemnification Provisions for Benefit of Buyer.  In the event Kennecott breaches any of its representations and warranties contained herein or in any other certificate or document delivered pursuant to this Agreement and provided that Buyer makes a written claim for indemnification against Kennecott in accordance with Subsection 12(f) below within the survival period set forth in Section 10(a) above, then Kennecott agrees to indemnify, defend and hold harmless Buyer and the Hecla Group from and against any Adverse Consequences Buyer or any member of the Hecla Group shall actually incur through and after the date of the claim for indemnification (including any Adverse Consequences of the Buyer or the Hecla Group after the

35

end of any applicable survival period) caused proximately by the breach to the extent set forth below:

(i)        Maximum Liability.  The maximum aggregate amount of Adverse Consequences that Buyer and the Hecla Group may recover from Kennecott for all breaches by Kennecott of such representations and warranties contained herein (other than for breaches of Subsections 2(h), 3(a), 4(c), 4(f) and Section 8 above) is an amount equal to $75,000,000. For breaches of Subsections 3(a), 4(c), 4(f) and Section 8, the maximum aggregate amount of Adverse Consequences that Buyer and the Hecla Group may recover from Kennecott is an amount equal to 100% of the Purchase Price. For any breach of Section 2(h), the maximum aggregate amount that Buyer and the Hecla Group may recover is an amount equal to their Adverse Consequences. In no event (other than breach of Subsection 2(h)) shall Buyer’s and the Hecla Group’s aggregate recovery of Adverse Consequences from Kennecott exceed an amount equal to 100% of the Purchase Price.

(ii)       Thresholds.  Kennecott is not liable to make any payment to Buyer or the Hecla Group for any breach of such representations and warranties (other than for breaches of Subsections 2(h), 3(a), 4(c), 4(f), and Section 8 above) (A) if the amount of Adverse Consequences in respect of the breach, or a series of related breaches, is less than $50,000, and (B) until the total of all such Adverse Consequences exceeds $7,500,000, at which point such indemnification obligations shall apply back to the first dollar of Adverse Consequences. This Subsection 10(b)(ii) shall not apply to breaches by Kennecott of Subsections 2(a), 2(h), 3(a), 4(c), 4(f), and Section 8 above.

(iii)      Special Indemnity.  In addition to the foregoing, Kennecott hereby represents and warrants that there are no liabilities relating in any way to the Venture as to which Kennecott or the Companies had actual knowledge or as to which they should have known, acting as prudent operators in the mining industry, which if known, would have been properly shown on the Venture Financial Statement in accordance with GAAP. The foregoing representation shall survive the Closing for a period of eighteen (18) months. If Buyer makes a written claim for indemnification for a breach of the foregoing representation within such survival period, then Kennecott agrees to fully and unconditionally, indemnify, defend and hold harmless Buyer and the Hecla Group from and against any Adverse Consequences that Buyer or Hecla may actually incur through and after the date of the claim for indemnification, including any Adverse Consequences after the end of the applicable survival period; provided, however, the amount of the Adverse Consequences under this clause 10(b)(3) shall be subject to and included in the aggregate thresholds in clause 10(b)(ii) and the limitation in clause 10(b)(ii) that the aggregate recovery of Adverse Consequences from Kennecott under all provisions of this Agreement shall not exceed 100% of the Purchase Price.

(c)       Assumption of Liabilities for Benefit of Kennecott.

(i)        Except with respect to Other Businesses and the matters covered by Section 10(b) or as limited by Section 10(a) above or Section 8 or otherwise expressly provided in this Agreement and the Exhibits, including the Kennecott Guaranty and the

36

Transition Services Agreement (collectively, the “Kennecott Indemnifications”), as of the Closing Date, no member of the Rio Tinto Group shall have any liabilities (whether absolute, contingent or otherwise) relating in any way to the Companies, the Venture, or any of the Venture’s operations, whether the same arose prior to, on or after the Closing. In addition to the foregoing, and not by way of limitation, subject to the Kennecott Indemnifications, Buyer hereby expressly assumes all liabilities (whether actual, contingent or otherwise) of Kennecott under Section 15.2(c) of the Venture Agreement and expressly waives any right, whether arising at law or in equity, to seek contribution, cost recovery, damages, or any other recourse or remedy from Kennecott or any other member of the Rio Tinto Group, and, subject to the Kennecott Indemnifications, Hecla on its own behalf and on behalf of any member of the Hecla Group that has been a participant in the Venture, hereby expressly releases Kennecott and every other member of the Rio Tinto Group from any obligation under Section 15.2(c) of the Venture Agreement. Subject to the Kennecott Indemnifications, Buyer further assumes all claims, demands and liabilities (whether absolute, contingent or otherwise) with respect to the Venture or any past, current or future facilities, properties or operations of each of the Companies and all of their respective predecessors relating solely to the Venture and not the Other Businesses, including, without limitation, any matters arising under any Environmental, Health, and Safety Requirements, including any matter related to closure reclamation or remediation of the properties of the Venture or any matter arising under CERCLA, any analogous state law, or the common law.

(ii)       If any member of the Rio Tinto Group incurs any Adverse Consequences (which need not be a final determination or exhaustion of remedies or be required to be accrued according to GAAP) with respect to any such assumptions and releases, then such member of the Rio Tinto Group may immediately commence an action against the Venture, its Participants, the Buyer and Hecla in its capacity as guarantor of the obligations hereunder. Any Adverse Consequences of the Rio Tinto Group pertaining to the same shall be deemed to be “Liabilities and Obligations” as defined in and pursuant to the Hecla Guaranty.

(d)       Matters Involving Third Parties.

(i)        Notice of Claim.  If any third party shall notify a Party (the “Indemnified Party”) with respect to any matter (a “Third Party Claim”) that may give rise to a claim for indemnification against the other Party (the “Indemnifying Party”) under this Section 10, then the Indemnified Party shall promptly (and in any event within the earlier of five business days (A) after receiving notice of the Third Party Claim, or (B) prior to the date on which an answer or other response is due) notify the Indemnifying Party thereof in writing.

(ii)       Defense of Claim.  The Indemnifying Party will have the right at any time to assume and thereafter conduct the defense of the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party; provided, however, that the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably) unless the judgment or proposed

37

settlement involves only the payment of money damages and does not impose an injunction or other equitable relief upon the Indemnified Party. The Indemnified Party shall have the right to participate in any such defense with counsel of its own choosing and at its own cost; provided, however, that the Indemnifying Party shall be solely responsible for all decisions regarding such litigation; provided further, that, to the extent the provisions of Section 8 above conflict with any provision in this Section 10(d), the provisions of Section 8 shall govern.

(iii)      Interim Measures.  Unless and until the Indemnifying Party assumes the defense of the Third Party Claim as provided in Subsection 10(d)(ii) above, however, the Indemnified Party may defend against the Third Party Claim in any manner it reasonably may deem appropriate.

(e)       Determination of Adverse Consequences.  The Parties shall make appropriate adjustments for its pro rata portion of insurance coverage and take into account the time cost of money (using the Applicable Rate as the discount rate) in determining Adverse Consequences for purposes of this Section 10.

(f)        Waiver Based on Knowledge.  Upon the Closing, each Party shall be deemed to have waived in full (i) any breach of any representation, warranty, covenant or obligation known to such Party prior to or as of the Closing, and (ii) any right to indemnification or any other remedy therefor (except as contemplated by Section 8).

(g)       Exclusive Remedy.  The Parties acknowledge and agree that, if the Closing shall occur, the foregoing indemnification provisions in this Section 10 and the indemnification provisions of Subsections 2(g), 2(h), 6(h) and Section 8 shall be the sole and exclusive remedy of the Parties with respect to each of the Companies and the transactions contemplated by this Agreement, except that the provisions of Section 8 above shall be the sole basis for indemnification with respect to Taxes. In particular, Hecla and its Affiliates, effective as of the Closing, hereby release Kennecott and every other member of the Rio Tinto Group from the operation of Section 15.2(c) of the Venture Agreement and agree that the sole and exclusive remedy of Hecla and its Affiliates for any matter that would have been subject to Section 15.2(c) of the Venture Agreement but for the foregoing release shall be as set forth in this Agreement. In no event shall any Party be required to indemnify or otherwise be responsible under this Agreement for consequential, incidental, punitive or indirect damages (including, without limitation, damages related to diminution in value).

11. Termination.

(a)       Termination of Agreement.  The Parties may terminate this Agreement as provided below:

(i)        Mutually.   Buyer and Kennecott may terminate this Agreement by mutual written consent at any time prior to the Closing.

(ii)       By Buyer.  Buyer may terminate this Agreement by giving written notice to Kennecott at any time prior to the Closing if the Closing shall not have occurred on or before 180 days following the execution of this Agreement by reason of the failure of any

38

condition precedent under Subsection 7(a) above (other than through the failure of Buyer to comply with its obligations under this Agreement), and Buyer has not waived such claim.

(iii)      By Buyer.  Buyer may terminate this Agreement by giving written notice to Kennecott at any time prior to the Closing as a result of an Event of Default by Kennecott.

(iv)      By Kennecott.  Kennecott may terminate this Agreement by giving written notice to Buyer at any time prior to the Closing if the Closing shall not have occurred on or before 180 days following the execution of this Agreement by reason of the failure of any condition precedent under Subsection 7(b) above (other than through the failure of Kennecott to comply with its obligations under this Agreement), and Kennecott has not waived such claim.

(v)       By Kennecott.  Kennecott may terminate this Agreement by giving written notice to Buyer at any time prior to the Closing as a result of an Event of Default by Buyer or Hecla.

(b)       Effect of Termination.  If this Agreement is terminated pursuant to Subsection 11(a)(i) above, all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to any other Party; provided further, in the event of any other termination pursuant to Subsection 11(a) above, Kennecott shall retain the payment described in Subsection 2(b)(i) above, unless termination is due to the conditions described in Subsection 11(a)(i) or 11(a)(iii) above; and provided, further, that the confidentiality provisions contained in Subsection 5(e) above shall survive any termination of this Agreement. In addition to the foregoing, if Kennecott terminates this Agreement pursuant to Subsection 11(a)(v) above, Hecla and any member of the Hecla Group that is a Participant in the Venture agree that the price they shall pay pursuant to Section 15.6(a) of the Venture Agreement for the interest of KGCMC shall be 115% of the price stated in the notice referred to in said Section 15.6 and Hecla and any member of the Hecla Group that is a Participant in the Venture and the Companies covenant and agree to promptly amend the Venture Agreement to reflect the same.

12. Miscellaneous.

(a)       Press Releases and Public Announcements.  Except for the announcements of the Parties and/or their Affiliates that have been pre-approved by Hecla and Kennecott for release upon the execution hereof, no Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement prior to the Closing without (i) affording the other Parties an opportunity to review and comment on the same and (ii) the prior written approval of the other Parties; provided, however, that any Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly traded securities (in which case the disclosing Party will advise the other Parties prior to making the disclosure and shall provide the other Parties with an advance copy of such required disclosure, it being agreed that the extent and content of such required disclosure shall be strictly limited to the requirements of applicable laws, listings or trading agreements).

39

(b)       No Third-Party Beneficiaries.  Except as expressly provided in this Agreement, this Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns.

(c)       Succession and Assignment.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the Parties, which approval will not be unreasonably withheld, delayed or conditioned.

(d)       Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.

(e)       Headings.  The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

(f)        Notices.  All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:

If to Kennecott:

Kennecott Minerals Holding Company

2711 Centerville Road, Suite 400

Wilmington DE  19808

Attention:  President

With a copy to:

Kennecott Minerals Holding Company

224 North 2200 West

Salt Lake City, Utah  84116

If to Buyer or Hecla:

Hecla Mining Company

6500 Mineral Drive, Suite 200

Coeur d’Alene, Idaho  83815

Attention:  CEO & President

40

Any may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the name or address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving to each other notice in the manner herein set forth.

(g)       Governing Law. The interpretation and enforcement of this Agreement shall be governed by and construed in accordance with the domestic laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York; provided, however, the provisions of this Agreement regarding the corporate approvals and statutory procedures necessary to effect the transactions contemplated by this Agreement shall be interpreted and construed in accordance with domestic laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each of the Parties further agree that any suit for the enforcement of this Agreement may be brought in the federal district court in New York in the borough of Manhattan or the federal district court in Delaware and consent to the nonexclusive jurisdiction of such courts and the service of process in any such suit being made upon such Party by mail at the address forth above. Each of the Parties hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient court.

(h)       Amendments and Waivers.  No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by Buyer and Kennecott. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

(i)        Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

(j)        Expenses.  Except as expressly provided in this Agreement, each Party will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.

(k)       Disclosures.  Any disclosure made in this Agreement or in any Annex or Schedule attached hereto is not limited to the particular provision in the Section or Subsection of this Agreement to which it expressly relates, but relates to all applicable provisions of this Agreement. Any disclosure made by a Party shall be deemed a disclosure made to all other Parties hereunder.

41

(l)        Construction.  The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation.

(m)      Waiver.  Each Party hereby waives any and all of its rights to consequential, incidental, indirect and punitive damages of any nature whatsoever on account of any breach of this Agreement.

(n)       Incorporation of Exhibits, Annexes and Schedules. The Exhibits, Annexes and Schedules identified in this Agreement are incorporated by reference and made a part of this Agreement.

(o)       No Admissions.  This Agreement is for the sole benefit of the Parties hereto and their permitted assigns and nothing herein expressed or implied shall give or shall e deemed or construed to give any other Person any legal or equitable rights hereunder. All references herein to the enforceability of agreements with third parties, the existence or non-existence of third party rights, the absence of breaches or defaults by third parties, or similar matters or statements, are intended only to allocate rights and risks between the Parties and were not intended to be admissions against interests, give rise to any inference or proof of accuracy, be admissible against any Party by any-non-Party, or give rise to any claim or benefit to any non-Party.

(p)       Entire Agreement.  This Agreement (including the Venture Agreement (which shall survive) and the Exhibits, Annexes and Schedules and the documents referred to herein) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they have related in any way to the subject matter hereof.

42

The Parties have executed this Agreement to be effective as of the day and year first above written.

KENNECOTT
Kennecott Minerals Holdings Company, a Delaware corporation
By:	/s/ Kay G. Priestly
	Kay G. Priestly
Title:	Authorized Agent

BUYER
Hecla Admiralty Company, a Delaware corporation
By:	/s/ Lewis E. Walde
	Lewis E. Walde
Title:	Vice President

HECLA
Hecla Mining Company, a Delaware corporation
By:	/s/ Phillips S. Baker, Jr.
	Phillips S. Baker, Jr.
Title:	President and Chief Executive Officer

43

EXHIBIT G

FORM OF KENNECOTT GUARANTY

This Guaranty (the “Guaranty”), made effective as of _________, 2008 is made by Kennecott Holdings Corporation, a Delaware corporation (“Guarantor”) in favor of Hecla Admiralty Company, a Delaware corporation (“Buyer”) and Hecla Mining Company, a Delaware corporation (together with Buyer, collectively, “Beneficiary”).

RECITALS

A.        Beneficiary and Kennecott Minerals Holdings Company, a Delaware corporation (“Seller”) have entered into that certain Stock Purchase Agreement dated February 12, 2008 (together with the exhibits, annexes and documents incorporated therein by reference, and as may be modified from time to time, the “Purchase Agreement”), pursuant to which Seller has agreed to sell to Buyer all of the issued and outstanding shares of the capital stock of Kennecott Greens Creek Mining Company and Kennecott Juneau Mining Company (the “Acquisition”).

B.        Guarantor owns all of the capital stock of Seller.

C.        In consideration of the Purchase Agreement and the benefits to be obtained by Guarantor, and Seller thereunder, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Guarantor has agreed to guarantee all of the liabilities and obligations of Seller under the Purchase Agreement.

GUARANTY

For good and valuable consideration, Guarantor and Beneficiary agree as follows:

1.         Guaranty.  Guarantor and its permitted successors unconditionally and irrevocably guarantee to the Beneficiary, its successors and assigns, the due and punctual payment and performance of all obligations and liabilities (whether absolute, contingent or otherwise) owed by Seller to Beneficiary and their directors, officers agents and employees under the Purchase Agreement (the “Liabilities and Obligations”).

2.         Nature of Guaranty.  Guarantor agrees that this Guaranty is an absolute, unconditional, present and continuing guarantee of payment and performance, not of collection, and that its obligations under this Guaranty shall be primary obligations, it being agreed by Guarantor that its obligations under this Guaranty shall not be discharged until the payment and performance in full of the Liabilities and Obligations by Seller. Guarantor expressly waives all rights it may have now or in the future under any statute, or at common law, or at law or in equity, or otherwise, to compel the Beneficiary to proceed in respect of the Liabilities and

44

Obligations against Seller or any other party or against any security for the payment and performance of the Liabilities and Obligations before proceeding against, or as a condition to proceeding against, Guarantor. In no event shall the Beneficiary have any obligation (although it is entitled, at its option) to proceed against Seller before seeking satisfaction from Guarantor. The Beneficiary may proceed under the Purchase Agreement, prior or subsequent to, or simultaneously with, the enforcement of the Beneficiary’s rights hereunder.

3.         Waiver.  Guarantor unconditionally waives to the fullest extent permitted by law, (a) notice of any matters described herein, (b) all notices which may be required by statute, rule or law to preserve intact any rights against Guarantor, including, without limitation, any demand, presentment and protest, proof of notice of nonpayment under the Purchase Agreement and notice of default or any failure of Seller to perform or comply with any term, covenant or condition of the Purchase Agreement, (c) any requirement of diligence or to exhaust any remedies or to mitigate damages resulting from default under the Purchase Agreement, (d) any defense based on any statute of limitations, and (e) any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge, release or defense of a guarantor or surety or which might otherwise limit recourse against Guarantor. Beneficiary, in its sole discretion, may, without any prejudice to its rights under this Guaranty, at any time or times, without notice to or the consent of Guarantor, modify or amend Seller’s Liabilities or Obligations under the Purchase Agreement. The provisions of this Guaranty are for the benefit of the Beneficiary, and nothing herein contained shall impair, as between Seller and the Beneficiary, the obligations of Seller under the Purchase Agreement.

4.         Continued Effectiveness.  This Guaranty shall remain in full force and effect and continue to be effective in the event any petition is filed by or against Seller for dissolution, liquidation or reorganization; in the event Seller becomes insolvent or makes an assignment for the benefit of creditors; in the event a receiver or trustee is appointed for all or any significant part of Seller’s assets; and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Liabilities and Obligations, or any part hereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by the Beneficiary, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Liabilities and Obligations shall be reinstated and deemed reduced only by such amount paid or performed and not so rescinded, reduced, restored or returned.

5.         Representations and Warranties of Guarantor.  Guarantor represents and warrants to beneficiary that:

(i)        Organization.  Guarantor is a corporation, duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation.

(ii)       Authorization of Transaction.  Guarantor has full corporate power and authority to execute and deliver this Guaranty and to perform its obligations hereunder. The execution, delivery and performance of this Guaranty have been duly authorized by

45

Guarantor, including any action required to be taken by its stockholder and director. Upon execution and delivery hereof by Guarantor, this Guaranty constitutes the valid and legally binding obligation of Guarantor, enforceable in accordance with its terms and conditions.

(iii)      Noncontravention.  Neither the execution and the delivery of this Guaranty, nor the closing of the transactions contemplated hereby, will violate any provision of Guarantor’s certificate of incorporation or bylaws or any indenture, mortgage, deed of trust, agreement or instrument to which Guarantor is a party, or by which Guarantor or any of its property, as the case may be, is bound except as has not had and would not reasonably be expected to have a material adverse effect. Guarantor is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any governmental agency in order to execute, deliver and perform its obligations hereunder except where the failure to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any governmental agencywould not reasonably be expected to have a material adverse effect.

6. Miscellaneous.

(a)       Entire Agreement.  This Guaranty (including the documents referred to herein), and the Purchase Agreement (and Exhibits, Annexes and Schedules thereto, including the Venture Agreement) constitute the entire agreement between Guarantor and Beneficiary relating to the Acquisition and supersedes any other prior understandings, agreements, or representations made by or among the Guarantor or the Beneficiary, written or oral, to the extent they have related in any way to the subject matter hereof.

(b)       Capitalized Terms.  Capitalized terms not defined herein have the meanings given to them in the Purchase Agreement.

(c)       Succession and Assignment.  This Guaranty shall inure to the benefit of the Beneficiary and its successors and assigns and shall be binding on Guarantor and its successors and permitted assigns. Guarantor shall not assign, delegate or otherwise transfer its obligations hereunder, in whole or in part, and any attempt to so transfer in violation of the foregoing shall be void ab initio. Guarantor acknowledges and agrees that Beneficiary may assign its rights hereunder to any member of the Rio Tinto Group.

(d)       Headings.  The section headings contained in this Guaranty are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Guaranty.

(e)       Notices.  All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then three business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:

46

If to Beneficiary:

Hecla Mining Company

6500 Mineral Drive, Suite 200

Coeur d’Alene, Idaho  83815

Attention:  CEO & President

If to Guarantor:

Kennecott Holdings Corporation

224 North 2200 West

Salt Lake City, Utah 84116

Attention:  President

Any notice, request, demand, claim, or other communication hereunder may be sent to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Guarantor’s and Beneficiary’s respective addresses set forth in this Section may be changed by written notice given to the other party in accordance with this Section.

(f)WAIVER OF RIGHT TO JURY TRIAL.GUARANTOR AND, BY ITS ACCEPTANCE OF THIS GUARANTY, BENEFICIARY, EACH IRREVOCABLY WAIVES ALL RIGHTS TO A JURY TRIAL IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN ANY WAY RELATING TO THIS GUARANTY. THE JURY TRIAL WAIVER CONTAINED IN THIS SECTION IS INTENDED TO APPLY, TO THE FULLEST EXTENT PERMITTED BY LAW, TO ANY AND ALL DISPUTES AND CONTROVERSIES THAT ARISE OUT OF OR IN ANY WAY RELATE TO ANY OR ALL OF THE MATTERS DESCRIBED IN THE PRECEDING SENTENCE, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS OF ANY KIND. THIS GUARANTY MAY BE FILED WITH ANY COURT OF COMPETENT JURISDICTION AS GUARANTOR'S WRITTEN CONSENT TO GUARANTOR'S WAIVER OF A JURY TRIAL.

(g)       Governing Law.  This Guaranty shall be governed by and construed in accordance with the domestic laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

47

(h)       Amendments and Waivers.  No amendment of any provision of this Guaranty shall be valid unless the same shall be in writing and signed by Guarantor and Beneficiary. No waiver by Beneficiary of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

(i)        Severability.  Any term or provision of this Guaranty that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

(j)        Construction.  Guarantor and Beneficiary have participated jointly in the negotiation and drafting of this Guaranty. In the event an ambiguity or question of intent or interpretation arises, this Guaranty shall be construed as if drafted jointly by Guarantor and Beneficiary and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Guaranty. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation.

Guarantor has executed this Guaranty to be effective as of the day and year first above written.

GUARANTOR:

Kennecott Holdings Corporation, a Delaware corporation

By:

Its:

48

EXHIBIT J

FORM OF HECLA GUARANTY

This Guaranty (the “Guaranty”), made effective as of _________, 2008 is made by Hecla Mining Company, a Delaware corporation (“Guarantor”) in favor of Kennecott Minerals Holdings Company, a Delaware corporation (“Beneficiary”).

RECITALS

A.        Beneficiary, Hecla Admiralty Company, a Delaware corporation (“Buyer”) and Guarantor have entered into that certain Stock Purchase Agreement dated February 12, 2008 (together with the exhibits, annexes and documents incorporated therein by reference, and as may be modified from time to time, the “Purchase Agreement”), pursuant to which Beneficiary has agreed to sell to Buyer all of the issued and outstanding shares of the capital stock of Kennecott Greens Creek Mining Company and Kennecott Juneau Mining Company (the “Acquisition”).

B.        Guarantor owns all of the capital stock of Buyer.

C.        In consideration of the Purchase Agreement and the benefits to be obtained by Guarantor, and Buyer thereunder, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Guarantor has agreed to guarantee all of the liabilities and obligations of Buyer under the Purchase Agreement.

GUARANTY

For good and valuable consideration, Guarantor and Beneficiary agree as follows:

1.         Guaranty.  Guarantor and its permitted successors unconditionally and irrevocably guarantee to the Beneficiary, its successors and assigns, the due and punctual payment and performance of all obligations and liabilities (whether absolute, contingent or otherwise) owed by Buyer to Beneficiary and its Affiliates and their directors, officers agents and employees under the Purchase Agreement (the “Liabilities and Obligations”).

2.         Nature of Guaranty.  Guarantor agrees that this Guaranty is an absolute, unconditional, present and continuing guarantee of payment and performance, not of collection, and that its obligations under this Guaranty shall be primary obligations, it being agreed by Guarantor that its obligations under this Guaranty shall not be discharged until the payment and performance in full of the Liabilities and Obligations by Buyer or Guarantor. Guarantor expressly waives all rights it may have now or in the future under any statute, or at common law, or at law or in equity, or otherwise, to compel the Beneficiary to proceed in respect of the Liabilities and Obligations against Buyer or any other party or against any security for the payment and performance of the Liabilities and Obligations before proceeding against, or as a

49

condition to proceeding against, Guarantor. In no event shall the Beneficiary have any obligation (although it is entitled, at its option) to proceed against Buyer before seeking satisfaction from Guarantor. The Beneficiary may proceed under the Purchase Agreement, prior or subsequent to, or simultaneously with, the enforcement of the Beneficiary’s rights hereunder.

3.         Waiver.  Guarantor unconditionally waives (but only in its capacity as Guarantor and not as a party to the Purchase Agreement), to the fullest extent permitted by law, (a) notice of any matters described herein, (b) all notices which may be required by statute, rule or law to preserve intact any rights against Guarantor, including, without limitation, any demand, presentment and protest, proof of notice of nonpayment under the Purchase Agreement and notice of default or any failure of Buyer to perform or comply with any term, covenant or condition of the Purchase Agreement, (c) any requirement of diligence or to exhaust any remedies or to mitigate damages resulting from default under the Purchase Agreement, (d) any defense based on any statute of limitations, and (e) any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge, release or defense of a guarantor or surety or which might otherwise limit recourse against Guarantor. Beneficiary, in its sole discretion, may, without any prejudice to its rights under this Guaranty, at any time or times, without notice to or the consent of Guarantor, modify or amend Buyer’s Liabilities or Obligations under the Purchase Agreement. The provisions of this Guaranty are for the benefit of the Beneficiary, and nothing herein contained shall impair, as between Buyer and the Beneficiary, the obligations of Buyer under the Purchase Agreement.

4.         Continued Effectiveness.  This Guaranty shall remain in full force and effect and continue to be effective in the event any petition is filed by or against Buyer or Guarantor for dissolution, liquidation or reorganization; in the event Buyer or Guarantor becomes insolvent or makes an assignment for the benefit of creditors; in the event a receiver or trustee is appointed for all or any significant part of Buyer or Guarantor’s assets; and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Liabilities and Obligations, or any part hereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by the Beneficiary, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Liabilities and Obligations shall be reinstated and deemed reduced only by such amount paid or performed and not so rescinded, reduced, restored or returned.

5. Miscellaneous.

(a)       Representations and Warranties.  The representations and warranties of Guarantor in Section 3(c)(i)-(iii) in the Purchase Agreement are incorporated herein by reference and repeated mutatis mutandis with respect to Guarantor in its capacity as Guarantor, as if fully set forth herein.

(b)       Entire Agreement.  This Guaranty (including the documents referred to herein), and the Purchase Agreement (and Exhibits, Annexes and Schedules thereto, including the Venture Agreement) constitute the entire agreement between Guarantor and Beneficiary relating

50

to the Acquisition and supersedes any other prior understandings, agreements, or representations made by or among the Guarantor or the Beneficiary, written or oral, to the extent they have related in any way to the subject matter hereof.

(c)       Capitalized Terms.  Capitalized terms not defined herein have the meanings given to them in the Purchase Agreement.

(d)       Succession and Assignment.  This Guaranty shall inure to the benefit of the Beneficiary and its successors and assigns and shall be binding on Guarantor and its successors and permitted assigns. Guarantor shall not assign, delegate or otherwise transfer its obligations hereunder, in whole or in part, and any attempt to so transfer in violation of the foregoing shall be void ab initio. Guarantor acknowledges and agrees that Beneficiary may assign its rights hereunder to any member of the Rio Tinto Group.

(e)       Headings.  The section headings contained in this Guaranty are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Guaranty.

(f)        Notices.  All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then three business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:

If to Beneficiary:

Kennecott Minerals Holdings Company

224 North 2200 West

Salt Lake City, Utah 84116

Attention:  President

If to Guarantor:

Hecla Mining Company

6500 Mineral Drive, Suite 200

Coeur d’Alene, Idaho  83815

Attention:  CEO & President

Any notice, request, demand, claim, or other communication hereunder may be sent to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Guarantor’s and

51

Beneficiary’s respective addresses set forth in this Section may be changed by written notice given to the other party in accordance with this Section.

(g)WAIVER OF RIGHT TO JURY TRIAL.GUARANTOR AND, BY ITS ACCEPTANCE OF THIS GUARANTY, BENEFICIARY, EACH IRREVOCABLY WAIVES ALL RIGHTS TO A JURY TRIAL IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN ANY WAY RELATING TO THIS GUARANTY. THE JURY TRIAL WAIVER CONTAINED IN THIS SECTION IS INTENDED TO APPLY, TO THE FULLEST EXTENT PERMITTED BY LAW, TO ANY AND ALL DISPUTES AND CONTROVERSIES THAT ARISE OUT OF OR IN ANY WAY RELATE TO ANY OR ALL OF THE MATTERS DESCRIBED IN THE PRECEDING SENTENCE, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS OF ANY KIND. THIS GUARANTY MAY BE FILED WITH ANY COURT OF COMPETENT JURISDICTION AS GUARANTOR'S WRITTEN CONSENT TO GUARANTOR'S WAIVER OF A JURY TRIAL.

(h)       Governing Law.  This Guaranty shall be governed by and construed in accordance with the domestic laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

(i)        Amendments and Waivers.  No amendment of any provision of this Guaranty shall be valid unless the same shall be in writing and signed by Guarantor and Beneficiary. No waiver by Beneficiary of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

(j)        Severability.  Any term or provision of this Guaranty that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

(k)       Construction.  Guarantor and Beneficiary have participated jointly in the negotiation and drafting of this Guaranty. In the event an ambiguity or question of intent or interpretation arises, this Guaranty shall be construed as if drafted jointly by Guarantor and Beneficiary and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Guaranty. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation.

52

Guarantor has executed this Guaranty to be effective as of the day and year first above written.

GUARANTOR:

HECLA MINING COMPANY

By:

Its:

53

EX-2.2

Exhibit 2.2

ASSET PURCHASE AGREEMENT

BY AND AMONG

INDEPENDENCE LEAD MINES COMPANY,

HECLA MINING COMPANY,

and

HECLA MERGER COMPANY

Dated as of

February 13, 2008

ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of February 13, 2008, by and among Independence Lead Mines Company, an Arizona corporation (the “Company”), Hecla Mining Company, a Delaware corporation (“Parent”), and Hecla Merger Company, a Delaware corporation and a wholly-owned direct Subsidiary (as defined below) of Parent (“Buyer”). Each of Parent, Buyer and the Company are referred to herein as a “Party” and together as “Parties.”

RECITALS

WHEREAS, the Board of Directors of the Company (the “Company Board”) has determined that it is in the best interests of the Company and its shareholders, and has declared it advisable, to enter into this Agreement with Parent and Buyer providing for the sale of substantially all of the Company’s assets to, and the assumption of certain expressly identified liabilities by, Buyer on the terms and conditions set forth in this Agreement (the “Asset Sale”), and in accordance with the Business Corporation Act of the State of Arizona (“ABCA”), and the Company Board has approved this Agreement, upon the terms and subject to the conditions set forth herein, and has, upon such terms and subject to such conditions, recommended that the shareholders of the Company vote in favor of the approval of the principal terms of this Agreement and the Asset Sale;

WHEREAS, the Parties intend that the Asset Sale will qualify as a reorganization within the meaning of Section 368(a)(1)(C) of the United States Internal Revenue Code of 1986, as amended (the “Code”).

WHEREAS, the Board of Directors of Buyer has unanimously approved and declared advisable this Agreement;

WHEREAS, Parent, on its own behalf and as the sole shareholder of Buyer, has adopted this Agreement and approved the Asset Sale and the other transactions contemplated hereby;

WHEREAS, Buyer desires to purchase from the Company, and the Company desires to sell to Buyer, all of the Acquired Assets (as defined below) and the Assumed Liabilities (as defined below) of the Company for the consideration and on the terms set forth in this Agreement;

WHEREAS, as soon as practicable after receipt of the consideration for the Acquired Assets and the Assumed Liabilities sold by the Company hereunder, the Company will distribute the consideration it receives pro rata to its shareholders and subsequently liquidate;

WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement to Buyer’s and Parent’s willingness to enter into this Agreement, certain shareholders of the Company are entering into a Shareholder Agreement with Buyer in the form of Exhibit A attached hereto (the “Shareholder Agreement”); and

WHEREAS, Parent, Buyer and the Company wish to make certain representations, warranties, covenants and agreements in connection with the Asset Sale and also to prescribe certain conditions to the Asset Sale, as set forth herein.

1

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and intending to be legally bound hereby, the Parties agree as follows:

Article 1.

Defined Terms and Interpretation

Section 1.1    Certain Definitions. For purposes of this Agreement, the term:

“Affiliate” shall mean, as to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” (including the terms “controlled by” and “under common control with”), when used with respect to a specific Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by Contract or otherwise.

“Assigned Claims” shall mean any Claims the Company has against Parent, Buyer, and any of their respective Affiliates, officers, directors, employees, shareholders, agents, representatives, or attorneys, and any other Person relating to Company Properties and Contracts relating thereto or to any Parent disclosures or non-disclosures prior to the date of this Agreement.

“Business Day” shall mean any day that is not a Saturday, Sunday, or a legal holiday under the Laws of the State of Idaho or the State of Arizona.

“Claims” means all claims, causes of action, choses in action, rights of recovery and rights of set-off of whatever kind or description against any person or entity arising out of or relating to the Acquired Assets, the Company’s business, or relating to the Company or any of its Affiliates, predecessors, or Subsidiaries.

“Company Material Adverse Effect” shall mean any event, change, circumstance, trend or occurrence that, individually or in the aggregate, has a material adverse effect on the Acquired Assets or the business, prospects, results of operations, or financial condition of the Company.

“Company Stock” shall mean the common stock of the Company, par value $0.10 per share.

“Employee Benefit Plan” shall mean any “Employee Pension Benefit Plan” or “Employee Welfare Benefit Plan” as defined under ERISA (whether or not subject to ERISA), and any incentive compensation plan, benefit plan for retired employees, plan or agreement providing for bonuses, commissions, pensions, profit-sharing, stock options, stock purchase rights, restricted stock, phantom stock, deferred compensation, accident, health or sickness insurance, retirement benefits, vacation, severance, disability, compensation, employee assistance or counseling, educational assistance, §125/cafeteria/flexible benefits, adoption

2

assistance, group legal (taxable or nontaxable, direct or indirect), fringe, or payroll practice of any nature, covering any current or former (including retired) employees of the Company.

“Equity Interest” shall mean any share, capital stock, partnership or membership unit or similar interest in any entity and any option, warrant, right, or security convertible, exchangeable or exercisable therefor.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“Governmental Entity” shall mean the United States or any state, local or foreign government, or instrumentality, division, subdivision, agency, department or authority of any thereof.

“Knowledge” shall mean (a) in the case of the Company, the actual knowledge of the Persons listed in Section 1.1 of the Company Disclosure Schedule and (b) in the case of Parent or Buyer, the actual knowledge of the Persons listed in Section 1.1 of the Parent Disclosure Schedule.

“Law” shall mean any domestic or foreign law, statute, code, ordinance, rule, regulation or Order.

“Lock-up Date” shall mean March 12, 2008.

“Material Adverse Change” shall mean a change or series of changes the consequence of which is a Company Material Adverse Effect.

“Parent Common Stock” shall mean the common stock, par value $0.25 per share, of the Parent.

“Pending Litigation” shall mean any existing lawsuits the Company has pending against Buyer, Parent, or any of their Affiliates, including the Company’s existing lawsuits (a) pending in the United States District Court For The District Of Idaho, Case No. CV06-495-C-EJL, with Notice Of Appeal filed on October 5, 2007, to the United States Court Of Appeals For The Ninth Circuit; and (b) pending in the District Court Of The First Judicial District Of The State Of Idaho In And For The County Of Shoshone, Case No. CV-2007-3, with Notice Of Appeal filed in the Idaho Supreme Court on July 16, 2007, Supreme Court Docket No. 34400.

“Person” shall mean an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization or other entity.

“Retained Liabilities” shall mean any liabilities or obligations of the Company or any of its Affiliates or predecessors, including, without limitation, those related to or associated with the Acquired Assets or the operation or condition of the Company’s business, whether due or to become due, absolute or contingent, whether direct or indirect, asserted or unasserted, known or unknown, choate or inchoate including, without limitation, any collective bargaining agreement, any debts, liabilities, Claims (but excluding Assigned Claims) or obligations of any kind or nature, including, without limitation, those of any employee or former employee or relating to or

3

arising out of any Employee Benefit Plan and any Claims (but excluding Assigned Claims), grievances, lawsuits, arbitrations, administrative or other legal proceedings or investigations, but excluding the Assumed Liabilities.

“Shareholder Ratification” shall mean the ratification by the Company’s shareholders at the Company Shareholders’ Meeting, in compliance with the Company Articles, the Company Bylaws, and all applicable Laws, including, without limitation, the ABCA (collectively, the “Voting Requirements”), of all past actions purportedly taken by the Company that, under the Voting Requirements, required the consent of the Company’s shareholders at a validly called and duly held meeting of the Company’s shareholders at which a valid quorum as required by the Voting Requirements was present, but which consent was obtained at a shareholders’ meeting that for any reason did not comply with the Voting Requirements, including, but not limited to, because a valid quorum as required by the Voting Requirements was not present at any such meeting, including the following past actions of the Company: (i) amending the Company Articles to increase the number of authorized shares of Company Stock from 5,000,000 shares to 10,000,000 shares, as the Company attempted to do at a special shareholders meeting held on or about September 23, 2005, (ii) all issuances of Company Common Stock in excess of 5,000,000 shares, and (iii) the election of the Company’s board of directors at every purported annual meeting of the Company’s shareholders held between 1998 and 2007.

“Stay Order” shall mean the Stipulations and proposed Orders (if any proposed order is required) to stay the existing Pending Litigation as provided in Section 2.10 of this Agreement. The forms of such Stipulations and proposed Orders (if any proposed order is required) shall be those set forth in Exhibit D.

“Subsidiary” or “Subsidiaries” of the Company, Parent, Buyer or any other Person shall mean any corporation, limited liability company, partnership or other legal entity of which the Company, Parent, Buyer or such other Person, as the case may be (either alone or through or together with any other Affiliate or Subsidiary thereof), owns, directly or indirectly, a majority of the stock or other Equity Interests, the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.

“Superior Proposal” shall mean a bona fide Takeover Proposal which the Company Board determines in good faith (after consultation with its outside legal counsel and financial advisors) (a) is reasonably likely to be consummated and (b) if consummated, would result in a transaction more favorable to the holders of Company Stock than the transactions provided for in this Agreement, in each case with respect to clauses (a) and (b), taking into account, in the reasonable good faith business judgment of the Company Board after consultation with its legal counsel and financial advisors, such factors as identity, reputation, and financial wherewithal of the Third Party making such Takeover Proposal and the legal, financial, regulatory, fiduciary and other aspects of this Agreement and such Takeover Proposal, including any conditions relating to financing, regulatory approvals or other events or circumstances.

4

“Takeover Proposal” shall mean any inquiry, proposal or offer from any Third Party relating to, in a single transaction or series of related transactions, (a) a merger, reorganization, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving a direct or indirect acquisition of the Company, (b) the acquisition (including by way of tender or exchange offer) in any manner, directly or indirectly, of over 20 percent of (i) the Company Stock then outstanding or (ii) the consolidated total assets (based on fair market value) of the Company in each case other than the Asset Sale, or (c) the assignment of any substantial portion of the Company’s existing contractual rights relating to Parent, Buyer or the Lucky Friday mine or any real estate or mining right, prospect, or property.

“Third Party” shall mean any Person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) other than the Company, Parent or Buyer or any of their Subsidiaries.

Section 1.2Terms Defined Elsewhere. The following terms are defined elsewhere in this Agreement, as indicated below:

“2007 Financial Statements”	Section 6.1.4
“ABCA”	Recitals
“Acquired Assets”	Section 2.1
“Agreement”	Preamble
“Asset Sale”	Recitals
“Assumed Contracts”	Section 2.9
“Assumed Liabilities”	Section 2.3
“Bankruptcy and Equity Exceptions”	Section 4.3.1
“Buyer”	Preamble
“Cash On Hand”	Section 4.8
“Closing”	Section 2.5
“Closing Date”	Section 2.5
“Code”	Recitals
“Company”	Preamble
“Company Adverse Recommendation Change”	Section 6.4.2
“Company Articles”	Section 4.4.1
“Company Board”	Recitals
“Company Bylaws”	Section 4.4.1
“Company Contract”	Section 4.10.1
“Company Disclosure Schedule”	Article 4
“Company Expenses”	Section 8.4.3

5

“Company Financial Statements”	Section 4.6.2
“Company Leased Premises”	Section 4.15
“Company Owned Properties”	Section 4.15
“Company Permits”	Section 4.5
“Company Properties”	Section 4.15
“Company Recommendation”	Section 4.3.2
“Company Representatives”	Section 6.3.1
“Company SEC Filings”	Section 4.6.1
“Company Shareholders’ Meeting”	Section 6.2.2
“Confidentiality Agreement”	Section 6.3.2
“Contract”	Section 4.4.1
“Environmental Laws”	Section 4.12
“Exchange Act”	Section 4.4.2
“Excluded Assets”	Section 2.2
“GAAP”	Section 4.6.2
“HSR Act”	Section 4.4.3
“Intellectual Property”	Section 4.13
“Liens”	Section 4.4.1
“NYSE”	Section 5.3.2
“Order”	Section 4.11
“Parent”	Preamble
“Parent Disclosure Schedule”	Article 5
“Parent Expenses”	Section 8.4.1
“Parent Representatives”	Section 6.3.1
“Parent Shares”	Section 2.4
“Party”	Preamble
“Proxy Statement”	Section 6.2.1
“Real Property Leases”	Section 4.15
“Representative”	Section 6.3.1
“S-4 Registration Statement”	Section 6.2.1
“SEC”	Section 4.6.4
“Securities Act”	Section 4.6.1

6

“Share Consideration”	Section 2.4
“Shareholder Approval”	Section 4.3.1
“Shareholder Agreement”	Recitals
“State Takeover Statute”	Section 4.23
“Taxes”	Section 4.14.12
“Tax Return”	Section 4.14.12
“Termination Date”	Section 8.1(b)(ii)
“Termination Fee”	Section 8.4.1
“Voting Requirements”	Section 1.1

Section 1.3Interpretation. In this Agreement, unless otherwise specified, the following rules of interpretation apply:

(a)       references to Sections, Schedules, Annexes, Exhibits, clauses and Parties are references to sections or subsections, schedules, annexes, exhibits and clauses of and parties to, this Agreement;

(b)       references to any Person include references to such Person’s successors and permitted assigns;

(c)       words importing the singular include the plural and vice versa;

(d)       words importing one gender include the other gender;

(e)       references to the word “including” do not imply any limitation;

(f)       references to months are to calendar months;

(g)       the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement;

(h)       references to “$” or “dollars” refer to U.S. dollars;

(i)        a defined term has its defined meaning throughout this Agreement and in each Exhibit and Schedule to this Agreement, regardless of whether it appears before or after the place where it is defined; and

(j)        references to any specific provision of any Law shall also be deemed to be references to any successor provisions or amendments thereof and to any rules or regulations promulgated thereunder.

7

Article 2.

The Asset Sale; Related Transactions

Section 2.1Transfer of Assets. On and subject to the terms and conditions of this Agreement, the Company agrees to sell, transfer, convey and deliver, and Buyer agrees to purchase from the Company, on the Closing Date, free and clear of all Liens, all of the properties and rights listed on Annex 2.1 hereto (“Acquired Assets”).

Section 2.2Excluded Assets. Notwithstanding anything to the contrary herein, the assets and Contracts listed on Annex 2.2 hereto (the “Excluded Assets”) are not part of the sale and purchase contemplated hereunder, are excluded from the Acquired Assets and shall remain the property of the Company after the Closing.

Section 2.3Assumption of Liabilities. Buyer does not and will not assume any obligation or liability of the Company or the Business other than obligations under the liabilities listed on Annex 2.3 hereto (the “Assumed Liabilities”). Without limiting the foregoing, Buyer will not, and shall not be deemed to, assume or otherwise succeed to, the Retained Liabilities, even if imposed upon Buyer as a successor to the Company.

Section 2.4Purchase Price. In consideration of the acquisition of the Acquired Assets and in addition to the assumption of the Assumed Liabilities by Buyer, Buyer agrees to pay the aggregate consideration of 6,936,884 shares of Parent Common Stock duly registered for distribution under the Securities Act (the “Share Consideration”), but subject to the restrictions set forth in Section 6.11 hereof. At the Closing, Buyer shall pay the Purchase Price by delivering to the Company the shares of Parent Common Stock that comprise the Share Consideration (“Parent Shares”). Subject to the limits set forth in Section 8.3 hereof, Buyer shall bear the fees and costs of any stock certificates representing Parent Shares that are issued to shareholders of the Company pursuant to Section 6.11 hereof.

Section 2.5Closing. The closing of the transactions contemplated hereby (“Closing”) shall be held at the offices of Parent, 6500 North Mineral Drive, Suite 200, Coeur d’Alene, Idaho 83815, on February __, 2008, at 10:00 a.m. Pacific time or, if later, the second Business Day following waiver or satisfaction of the conditions to Closing set forth herein, or at such other time and place as may be mutually agreed upon in writing by the Parties (the “Closing Date”); provided, however, that this Agreement may be terminated pursuant to and in accordance with Section 8.1 such that the Parties shall not be required to effect the Closing.

Section 2.6Deliveries at Closing. At the Closing, (a) the Company shall deliver to Parent and Buyer the various agreements, certificates, instruments and documents referred to in Section 7.2; (b) Parent and Buyer shall deliver to the Company the various agreements, certificates, instruments and documents referred to in Section 7.3; (c) the Company shall execute, acknowledge (if appropriate) and deliver to Buyer (i) a bill of sale and assignment and assumption agreement in substantially the form attached hereto as Exhibit B (the “Bill of Sale”) and (ii) such other instruments of sale, transfer, conveyance and assignment as Buyer and its counsel may reasonably request; (d) Buyer shall execute, acknowledge and deliver to the Company (i) the Bill of Sale and (ii) such other instruments of assumption as the Company and its counsel may reasonably request; (e) the Parties shall have delivered the documents and

8

performed the obligations set forth in Section 7.1 hereof; (f) the Company will deliver the Acquired Assets to Buyer; and (g) Buyer will deliver to the Company the Purchase Price payable at the Closing as specified in Section 2.4.

Section 2.7FIRPTA Certificate. On or prior to the Closing, the Company shall deliver to Parent a certification, in a form reasonably satisfactory to Parent, that the Company is not a foreign person in accordance with Treasury Regulations under section 1445 of the Code. If the Company has not provided the certification described above to Parent on or prior to the Closing, Buyer shall be permitted to reduce the Purchase Price by an amount equal to any required withholding tax under section 1445 of the Code.

Section 2.8Risk and Loss Prior to Closing. Possession of the Acquired Assets will be given to Buyer at the Closing, and assumption of the Assumed Liabilities will occur at the Closing. Buyer will not acquire any title to the Acquired Assets or assume any of the Assumed Liabilities until possession has been given to it in accordance with this Section 2.8, and, accordingly, all risk and loss with respect to the Acquired Assets will be borne by the Company until possession has been given to Buyer.

Section 2.9Assignment of Assumed Contracts and Rights. Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any Contract or any claim or right or any benefit arising thereunder or resulting therefrom if an attempted assignment thereof, without the consent of a third party thereto, would constitute a breach or other contravention thereof or in any way adversely affect the rights of Buyer or the Company thereunder. The Company will use its best efforts to obtain the consent of the other parties to any Contract included in the Acquired Assets (each an “Assumed Contract”) or any claim or right or any benefit arising thereunder for the assignment thereof to Buyer as Buyer may request. If such consent is not obtained, or if an attempted assignment thereof would be ineffective or would adversely affect the rights of the Company thereunder so that Buyer would not in fact receive all such rights, the Company and Buyer will cooperate in any reasonable arrangement designed to provide for Buyer all benefits under such Assumed Contract, including enforcement for the benefit of Buyer of any and all rights of the Company against any other Person arising out of breach or cancellation by such other Person and including, if so requested by Buyer, acting as an agent on behalf of Buyer or as Buyer may otherwise reasonably require. The Company will promptly pay to Buyer when received all monies received by the Company with respect to any Acquired Asset or any claim or right or any benefit arising thereunder.

Section 2.10Stay Order. Contemporaneously with the execution hereof, the Company and Parent agree to execute Stipulations for an Order staying the existing Pending Litigation in substantially the form of Exhibit D hereto and in accordance with the applicable Rules of Procedure on the grounds that the parties have entered into this Agreement which, if successfully concluded in accordance with its terms, will result in dismissal of the pending appeals by further stipulation of the parties and notice to the courts. Such stipulation shall further provide that upon termination of this Agreement, either party may move the courts to lift the stay on the grounds of unsuccessful conclusion of the same.

9

Article 3.

Intentionally Omitted

Article 4.

Representations and Warranties of the Company

The Company represents and warrants to Parent and Buyer that the statements contained in this Article 4 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for date of this Agreement throughout this Article 4), except as set forth herein or in the disclosure schedule delivered by the Company to Buyer on the date hereof (the “Company Disclosure Schedule”). Nothing in the Company Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, however, unless the Company Disclosure Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail. Without limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty has to do with the existence of the document or other item itself). The Company Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Article 4.

Section 4.1Organization and Qualification; Subsidiaries. The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Arizona. The Company has no Subsidiaries and never has had any Subsidiaries except for Independence Resources, Inc., a Nevada corporation. Except as set forth in Section 4.1 of the Company Disclosure Schedule, the Company has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted or contemplated as of the date hereof. Subject to Section 4.1 of the Company Disclosure Schedule, the Company is duly qualified to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or good standing necessary, except for such failures to be so qualified or in good standing that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Set forth in Section 4.1 of the Company Disclosure Schedule is a list of each jurisdiction where the Company is qualified to do business. Attached to Section 4.1 of the Company Disclosure Schedule are complete and correct copies of the Company Articles and Company Bylaws, and all amendments thereto, as currently in effect. Except as set forth in Section 4.1 of the Company Disclosure Schedule, the Company is not in violation of its organizational or governing documents.

Section 4.2Capitalization. Except as set forth in Section 4.2 of the Company Disclosure Schedule, the entire authorized capital stock of the Company consists of 10,000,000 shares of common stock, par value $0.10 per share, of which 5,780,737 shares are issued and outstanding and no shares are held in treasury. Except as set forth in Section 4.2 of the Company Disclosure Schedule, all of the outstanding shares of Company Stock have been duly authorized, are validly issued, fully paid, and nonassessable, and have been issued in compliance with all applicable Laws. There are no outstanding or authorized options, warrants, purchase rights, preemptive rights, rights of first refusal, subscription rights, conversion rights, exchange rights,

10

or other contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to the Company. Except as set forth in Section 4.2 of the Company Disclosure Schedule, the Company is not a party or subject to any agreement or understanding, and there is no agreement or understanding between any Persons, that affects or relates to the voting or giving of written consents with respect to any securities of the Company or the voting by any director of the Company. A table reflecting all sales, purchases, issuances, and redemptions by the Company of shares of its capital stock for the last three years is set forth in Section 4.2 of the Company Disclosure Schedule.

Section 4.3Authority.

Section 4.3.1Company Authorization. Except as set forth in Section 4.3.1 of the Company Disclosure Schedule, the Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. Except as set forth in Section 4.3.1 of the Company Disclosure Schedule, the execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby, other than (i) the affirmative vote of holders of a majority of outstanding shares of Company Stock to approve the principal terms of this Agreement and the Asset Sale (the “Shareholder Approval”) and (ii) the affirmative vote of holders of that number of outstanding shares of Company Stock as required under the Voting Requirements for the Company to validly obtain the Shareholder Ratification. Except as set forth in Section 4.3.1 of the Company Disclosure Schedule, this Agreement has been duly authorized and validly executed and delivered by the Company and, assuming this Agreement is a valid and binding obligation of Parent and Buyer, this Agreement constitutes a legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, subject to the effect of bankruptcy, insolvency (including all Laws relating to fraudulent transfers), reorganization, moratorium and similar Laws relating to or affecting creditors’ rights or remedies and the effect of general principles of equity, whether considered in a proceeding in equity or at law (including the possible unavailability of specific performance or injunctive relief), and the discretion of the court before which a proceeding is brought (the “Bankruptcy and Equity Exceptions”).

11

Section 4.3.2   Board Action. Subject to Section 6.4, the Company Board, by resolutions duly adopted at meetings duly called and held, has (a) determined that this Agreement and the transactions provided for herein are fair to and in the best interest of the Company and the holders of Company Stock, (b) approved and declared advisable this Agreement and the transactions contemplated hereby, including the Asset Sale and the Shareholder Ratification, (c) determined that the Company is solvent under the ABCA and all other applicable Laws, (d) determined that the Purchase Price received by it represents fair value for the Acquired Assets, and (e) resolved to recommend in accordance with applicable Law that the holders of Company Stock vote in favor of the approval of this Agreement and the Asset Sale (the “Company Recommendation”) and the Shareholder Ratification; provided, however, that the foregoing representations and warranties by the Company that the board resolutions were duly adopted at meetings called and held, are subject to the disclosure contained in Section 4.3.2 of the Company Disclosure Schedule.

Section 4.4No Conflict; Required Filings and Consents.

Section 4.4.1No Conflict. The execution, delivery and performance by the Company of this Agreement do not, and the consummation by the Company of the transactions contemplated hereby will not, (a) assuming the Shareholder Approval and the Shareholder Ratification is obtained, conflict with or violate any provision of the Articles of Incorporation of the Company (as amended), as in effect on the date hereof (the “Company Articles”), or the Bylaws of the Company (as amended), as in effect on the date hereof (the “Company Bylaws”), (b) assuming that all consents, approvals and authorizations described in Section 4.4.2 have been obtained prior to the Closing and all filings and notifications described in Section 4.4.2 have been made and any waiting periods thereunder have terminated or expired prior to the Closing, conflict with or violate any Law applicable to the Company or by which any property or asset of the Company is bound or (c) require any consent or approval under, result in any breach of or any loss of any benefit under, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, suspension, revocation, amendment, acceleration or cancellation of, or result in the creation of any pledges, liens, charges, mortgages, encumbrances or security interests of any kind whatsoever (collectively, “Liens”) on any property or asset of the Company pursuant to, any note, bond, mortgage, indenture, lease, license, permit, concession, franchise, contract, agreement or other instrument or obligation (each, a “Contract”) to which the Company is a party or by which any of its properties or assets are bound, except, with respect to clauses (b) and (c), for matters that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

Section 4.4.2Consents. Except in the case of the contingent event described in Section 6.14, the execution, delivery and performance of this Agreement by the Company do not, and the consummation of the transactions contemplated hereby will not, require the Company to obtain any consent, approval or authorization of, or make any filing with or notification to, any Governmental Entity, except (a) under the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”) (including the filing of the Proxy Statement) and any applicable state securities, takeover or “blue sky” Laws and (b) where the failure to obtain such consents, approvals or authorizations, or to make such filings or notifications would not (i) prevent or materially delay or impede performance by

12

the Company of any of its obligations under this Agreement or (ii) individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

Section 4.4.3HSR Act. The Company is its own “ultimate parent entity” as that term is defined under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”), and the Company has annual net sales of less than $12 million and has total assets of less than $12 million, determined in accordance with the HSR Act.

Section 4.5Compliance with Laws. Except for matters that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (i) the Company holds all permits, licenses, franchises, approvals, registrations, qualifications, rights, variances, certificates, certifications and consents granted by Governmental Entities (collectively, “Company Permits”) necessary for the ownership, use and operation of its assets and properties, and such Company Permits are in full force and effect and (ii) the Company is not in violation of any Law applicable to the Company. Section 4.5 of the Company Disclosure Schedule lists all Company Permits.

Section 4.6SEC Filings; Financial Statements.

Section 4.6.1Company SEC Filings. Except as set forth in Section 4.6.1 of the Company Disclosure Schedule, the Company has filed all reports, schedules, forms, statements or other documents required to be filed by it under the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”), and the Exchange Act since January 1, 2002 (collectively, the “Company SEC Filings”). Except as set forth in Section 4.6.1 of the Company Disclosure Schedule, each Company SEC Filing (a) as of its date, complied as to form in all material respects with the applicable requirements of the Securities Act or the Exchange Act, as the case may be, as in effect on the date so filed, (b) did not, at the time it was filed (or, if subsequently amended or supplemented, at the time of such amendment or supplement), contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading, and (c) which contains annual financial statements, such financial statements have been audited by an independent certified public accounting firm.

13

Section 4.6.2Financial Statements. Except as set forth in Section 4.6.2 of the Company Disclosure Schedule, each of the consolidated financial statements (including, in each case, any notes thereto) of the Company contained in the Company SEC Filings (collectively, the “Company Financial Statements”) was audited (or reviewed and consented to in the case of Form 10-Q or 10-QSB) by an independent certified public accounting firm and prepared in accordance with United States generally accepted accounting principles (“GAAP”), applied (except as may be indicated in the notes thereto and, in the case of unaudited quarterly financial statements, as permitted by Form 10-Q or 10-QSB under the Exchange Act) on a consistent basis during the periods indicated (except as may be permitted or required under GAAP and indicated in the Company SEC Filings), and each of the Company Financial Statements presents fairly, in all material respects, the consolidated financial position of the Company as of the respective dates thereof and the consolidated statements of income, stockholders’ equity and cash flows of the Company for the respective periods indicated therein (subject, in the case of unaudited financial statements, to normal period-end adjustments).

Section 4.6.3No Undisclosed Liabilities. The Company has no contingencies, liabilities or obligations of a nature (whether accrued, absolute, contingent or otherwise), except for contingencies, liabilities or obligations (a) which would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (b) that were incurred after September 30, 2007 in the ordinary course of business, consistent with past practice, and which are disclosed in Section 4.6.3 of the Company Disclosure Schedule, (c) that were incurred under this Agreement or in connection with the transactions contemplated hereby or (d) that were disclosed or reserved against in the Company Financial Statements (including the notes thereto).

Section 4.6.4Internal Controls. Except as set forth in Section 4.6.4 of the Company Disclosure Schedule, since January 1, 2004, the Company has not disclosed to the Company’s auditors or the audit committee of the Company Board, and to the Company’s Knowledge there are not any significant deficiencies or material weaknesses in the design or operation of the Company’s internal control over financial reporting that are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information. Except as set forth in Section 4.6.4 of the Company DisclosureSchedule, since January 1, 2004, there has not been any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. The Company maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraph (e) and (f) of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. Except as set forth in Section 4.6.4 of the Company Disclosure Schedule, since January 1, 2004, the Company has been in compliance in all material respects with the applicable provisions of the United States Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated by the Securities and Exchange Commission (the “SEC”) thereunder.

Section 4.7Affiliate Transactions. Except as otherwise disclosed in a Shareholder Rights Agreement, as set forth in Form 8-K, filed May 14, 2007, no executive officer or director of the Company or any Person who beneficially owns five percent or more of the Company Stock is a party to any Contract with or binding upon the Company or any of its properties or assets or has any

14

interest in any property owned by the Company or has engaged in any transaction with the Company within the 12-month period preceding the date of this Agreement.

Section 4.8Absence of Certain Changes. Except for the transactions contemplated hereby or related hereto, (i) from December 31, 2006 through the date of this Agreement, the Company has, in all material respects, conducted its business in the ordinary course consistent with past practice, and (ii) since December 31, 2006, there has not been any Company Material Adverse Effect. For the 90 days preceding the date of this Agreement, the Company has not issued or sold any shares of capital stock, or any options, warrants or other rights to acquire shares of capital stock. Section 4.8 of the Company Disclosure Schedule sets forth the Company’s current cash, cash equivalents and marketable securities (collectively, “Cash On Hand”), and the changes (if any) to the Cash On Hand for the 90 days preceding the date of this Agreement that, in the aggregate, total more than $10,000.

Section 4.9Employees and Benefits.

Section 4.9.1 The Company has no employees, and has not had any employees since January 1, 2000.

Section 4.9.2 The Company is not a party to or bound by any Employee Benefit Plan.

Section 4.9.3 The Company does not maintain, contribute to or have an obligation to contribute to, or have any Liability under or with respect to any Employee Benefit Plan.

Section 4.9.4 The Company does not maintain, contribute to or have an obligation to contribute to, or have any Liability under or with respect to any “multiemployer plan” (as defined in Section 3(37) of ERISA).

Section 4.10Material Contracts; Indebtedness.

Section 4.10.1Contracts. Set forth in Section 4.10 of the Company Disclosure Schedule is a list of all Contracts to which the Company is party or by which the Company is bound:

(i)        which, as of the date hereof, is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K promulgated by the SEC);

(ii)       with respect to (i) any joint venture or partnership arrangements that are material to the Company, or (ii) the purchase of any Equity Interest in any other entity;

(iii)      pursuant to which any indebtedness for borrowed money of the Company is outstanding or may be incurred;

(iv)      relating to a guarantee by the Company of indebtedness of any Third Party;

15

(v)       relating to any lease or pending acquisition or disposition by the Company of properties or assets;

(vi)      which contains covenants limiting the ability of the Company to engage in any of its principal lines of business, or to compete with any Person or operate at any geographic location with respect to any of its principal lines of business;

(vii)     any employment or consulting agreement, contract or commitment with any officer, director, or employee of the Company;

(viii)    any Contract the performance of which will involve consideration in excess of $5,000 in the aggregate; or

(ix)      which relate to any interest in any real property, mining claim, mineral interest, or operating business, including any environmental claim or remediation obligation relating thereto.

Each Contract of the type described in this Section 4.10.1 is referred to herein as a “Company Contract.”

Section 4.10.2Binding Obligations. Except for matters that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (a) the Company and each other party thereto, has performed all obligations required to be performed by it under each Company Contract (excluding performance obligations not yet due) and (b) the Company has not received written notice of a default under any Company Contract or of any event or condition which, after notice or lapse of time or both, will constitute a default on the part of the Company under any Company Contract.

Section 4.11Litigation. Except for matters that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect and the Pending Litigation, (a) there are no claims, actions, suits, proceedings or investigations pending or, to the Knowledge of the Company, threatened against the Company, (b) the Company is not subject to any outstanding order, judgment, writ, stipulation, award, injunction, decree, arbitration award or finding of any Governmental Entity (“Order”), and (c) all claims, actions, suits, proceedings or investigations pending and, to the Knowledge of the Company, threatened against the Company, and any Order to which the Company is subject, including, in all cases where the Company is or was the plaintiff, are disclosed in Section 4.11 of the Company Disclosure Schedule.

Section 4.12Environmental Matters. Except for matters that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect: (a) the Company is in compliance with all applicable Laws relating to the protection of the environment or to occupational health and safety (“Environmental Laws”), (b) the Company possesses all Company Permits issued pursuant to Environmental Laws that are required to conduct the business of the Company as it is currently conducted, and to lease, own, use and operate its properties (including the Company Properties) and assets, (c) to the Knowledge of the Company, there has been no release of any waste, material or substance defined as a “hazardous substance,” “hazardous material,” or “hazardous waste” under any applicable Environmental Law into the environment as a result of the operations or activities of the Company at any of the Company Properties or any

16

properties formerly owned or operated by the Company, in each case that would reasonably be expected to result in any liability to the Company under any Environmental Law and (d) the Company has never received any written claim or notice of violation from any Governmental Entity that remains outstanding alleging that the Company is in violation of, or liable under, any Environmental Law.

Section 4.13Intellectual Property. Section 4.13 of the Company Disclosure Schedule sets forth a list of all patents, patent applications, registered trademarks and service marks and material internet domain names owned by the Company. Except for matters that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (a) the Company owns (free and clear of any Liens), or possesses valid rights to use, all Intellectual Property necessary to conduct the business of the Company as it is currently conducted or is currently contemplated, and to lease, own, use and operate its properties (including the Company Properties) and assets, (b) to the Company’s Knowledge, no Third Party is currently infringing or misappropriating any material Intellectual Property owned by the Company, and (c) the Company has not infringed or misappropriated any Intellectual Property of any Third Party or received any material written claim of infringement or misappropriation of any Intellectual Property of any Third Party. For purposes of this Section 4.13, “Intellectual Property” means the (a) patents and patent applications, (b) trademarks, service marks, trade dress, trade names, internet domain names and registrations and applications for registration thereof, (c) copyrights and registrations and applications for registration thereof, (d) trade secrets and know-how, (e) all renewals and extensions of any registrations or applications thereof, and (f) all software.

Section 4.14Taxes.

4.14.1Required Taxes. All Tax Returns required to be filed by or with respect to the Company have been timely filed (taking into account any extension of time within which to file) and all such Tax Returns are true, correct, and complete in all respects.

4.14.2Tax Matters. All Taxes of the Company due and payable have been timely paid (other than Taxes being contested in good faith by appropriate proceedings). The unpaid Taxes of the Company did not, as of the date of the most recent Company Financial Statements, materially exceed the reserve for Tax liabilities (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the balance sheet (rather than in any notes thereto) contained in such Company Financial Statements, and are described in Section 4.14.2 of the Company Disclosure Schedule.

4.14.3No Deficiency. No deficiency for any amount of Taxes has been proposed, asserted or assessed in writing by any Governmental Entity against the Company that remains unpaid or unresolved. There are no audits, examinations or other administrative or judicial proceedings currently ongoing or pending with respect to any Taxes of the Company. There are no waivers or extensions of any statute of limitations currently in effect or requested with respect to Taxes of the Company.

4.14.4Tax Withholding. All Taxes required to be withheld or collected by the Company in connection with amounts paid or owing to any employee, independent contractor,

17

creditor or stockholder have been withheld and collected and, to the extent required by Law, timely paid to the appropriate Governmental Entity.

4.14.5Liens. There are no Liens for Taxes upon any property or assets of the Company (including the Company Owned Properties), except for Liens for current Taxes not yet due and payable and Liens for Taxes being contested in good faith by appropriate proceedings.

4.14.6Section 355. The Company has never been a party to any transaction treated by the parties as a distribution to which Code Section 355 applies.

4.14.7Treasury Regulation §1.1502-6. The Company is not liable for the Taxes of any other Person under (i) Treasury Regulation §1.1502-6 or any similar provision of state, local or foreign Tax Law, (ii) any contract or agreement or (iii) otherwise.

4.14.8Real Property Holding Corporation Status. The Company is a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period described in Code Section 897(c)(1)(A)(ii) and its common stock is traded on the Electronic Over-the-Counter Bulletin Board.

4.14.9Section 481 Adjustments. The Company has not agreed to make nor is it required to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise that has not yet been taken into account.

4.14.10 Section 280G or Section 162(m) Payments. There is no contract, agreement, plan or arrangement covering any individual or entity treated as an individual included in the business or assets of the Company that, individually or collectively, could give rise to the payment by the Company, Buyer or Parent of any material amount that would not be deductible by reason of Sections 280G or 162(m) of the Code.

4.14.11 Tax Basis. Section 4.14.11 of the Company Disclosure Schedule sets forth the Company’s Tax basis in each of the Acquired Assets.

4.14.12 Definitions. As used in this Agreement, (a) ”Taxes” shall mean any and all taxes, assessments, levies, duties, tariffs, imposts and other charges in the nature of a tax (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Entity, including income, estimated income, franchise, windfall or other profits, gross receipts, property, sales, use, net worth, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation, excise, withholding, ad valorem, stamp, transfer and value-added taxes and (b) ”Tax Return” shall mean any return (including any information return), report, statement, schedule, notice, form, election, estimated Tax filing, claim for refund or other document (including any attachments thereto and amendments thereof) required to be filed with any Governmental Entity with respect to any Tax.

Section 4.15Real Estate. Section 4.15 of the Company Disclosure Schedule sets forth all of the real property owned or leased by the Company, and all of its patented and unpatented mining claims. Except as set forth in such Schedule, with respect to each item of real property set forth in

18

(or required to be set forth in) in Section 4.15 of the Company Disclosure Schedule, the Company (i) owns fee simple title to all of the owned real property set forth thereon, (ii) owns good and marketable title to all of the patented mining claims set forth thereon, and (iii) owns and possesses in compliance with all applicable Laws, subject to the paramount title in the United States, all of the unpatented mining claims set forth thereon (the “Company Owned Properties”) and has valid leasehold interests in all of its leased real property set forth in (or required to be set forth in) Section 4.15 of the Company Disclosure Schedule (the “Company Leased Premises,” and together with the Company Owned Properties, the “Company Properties”), in each case free and clear of all Liens. Except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, (a) all leases under which the Company leases any real property (the “Real Property Leases”) are valid and in full force and effect and constitute binding obligations of the Company and the counterparties thereto, in accordance with their respective terms, (b) there is not any existing default by the Company under any of the Real Property Leases that would give the lessor under such Real Property Lease the right to terminate such Real Property Lease or amend or modify such Real Property Lease in a manner adverse to the Company, and (c) no event has occurred which, after notice or lapse of time or both, would constitute a default by the Company under any Real Property Lease where such default if uncured would give the lessor under such Real Property Lease the right to terminate such Real Property Lease or amend or modify such Real Property Lease in a manner adverse to the Company. Attached to Section 4.15 of the Company Disclosure Schedule are true and complete copies of all Real Property Leases, and, with respect to the Company Owned Properties, true and complete copies of all deeds, title insurance policies, surveys, and similar documents.

Section 4.16Proxy Statement. The Proxy Statement will not at the time of the mailing of the Proxy Statement to the holders of Company Stock, at the time of the Company Shareholders’ Meeting, or at the time of any amendments thereof or supplements thereto, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided that no representation is made by the Company with respect to information supplied by, or the sufficiency of disclosures supplied by, Parent, Buyer or any Parent Representative. At the time of the Company Shareholders’ Meeting, the Proxy Statement will comply as to form in all material respects with the requirements of the Exchange Act.

Section 4.17Brokers. No broker, finder, financial advisor, investment banker or other Person is entitled to any brokerage, finder’s, financial advisor’s or other similar fee or commission in connection with the Asset Sale based upon arrangements made by or on behalf of the Company.

Section 4.18Title to Acquired Assets; Condition of Acquired Assets.

Section 4.18.1  The Company owns and possesses all right, title and interest in and to the Acquired Assets free and clear of all Liens or other restrictions on transfer. The Company has the right, power and capacity to convey, transfer, assign and deliver to Buyer the Acquired Assets free and clear of any Lien or other restrictions on transfer, and the Company enjoys peaceful and quiet possession of the Acquired Assets. As of the Closing, Buyer will enjoy peaceful and quiet possession of and will have good and marketable title to the Acquired Assets, free and clear of all Liens. The Acquired Assets comprise all assets of any kind or character necessary or useful for the

19

conduct and operation of the Company’s business as it was operated by the Company during the twelve (12) month period prior to the Closing. The Acquired Assets to be transferred to Buyer will constitute at least 90 percent of the fair market value of the net assets and at least 70 percent of the fair market value of the gross assets held by the Company immediately prior to the Closing.

Section 4.18.2   The Acquired Assets are in good condition and repair, and are useable in the ordinary course of business.

Section 4.18.3   Section 4.18.3 of the Company Disclosure Schedule sets forth a true, correct and complete list and description of all equipment, owned or leased, by the Company or otherwise pertaining to the Acquired Assets and true, correct and complete copies of all leases pertaining to leased equipment have been delivered to Buyer.

Section 4.19Access to Information; Disclaimer. The Company acknowledges and agrees that it (a) has had an opportunity to discuss the business of Parent with the management of Parent, (b) has had reasonable access to the books and records of Parent for purposes of the transactions contemplated by this Agreement, (c) has been afforded the opportunity to ask questions of and receive answers from the management of Parent, and (d) has conducted its own independent investigation of Parent, its businesses and the Asset Sale and the other transactions contemplated hereby, and the Company has not relied on any representation, warranty or other statement by any Person on behalf of Parent or Buyer, other than the representations and warranties of Parent and Buyer expressly contained in Article 5.

Section 4.20Investment. The Company is not acquiring the Parent Shares or the Subsidiary with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act, except in connection with the pro rata distribution of the Parent Shares to the holders of Company Stock as soon as possible after the Closing Date in accordance with Section 6.11.

Section 4.21Affiliate Status. Neither the Company nor any of its directors or officers own any shares of Parent Common Stock or any other Equity Interests of Parent.

Section 4.22Solvency. The Company is solvent under the ABCA and all other applicable Laws.

Section 4.23State Takeover Statutes. The Company has, or will have prior to the Closing, taken all necessary action so that, assuming compliance by Parent and Buyer with its obligations hereunder and the accuracy of the representations and warranties made by Parent and Buyer herein, no “business combination,” “moratorium,” “fair price,” “control share acquisition” or other state antitakeover statute or regulation (each a “State Takeover Statute”), nor any takeover-related provision in the Company Articles or the Company By-laws or any shareholder rights or similar plan, would (i) prohibit or restrict the Company’s ability to perform its obligations under this Agreement or any related agreement or its ability to consummate the transactions contemplated hereby and thereby, (ii) have the effect of invalidating or voiding this Agreement or any provision hereof or thereof, or (iii) adversely affect Buyer, Parent, or the cost of the Acquired Assets and Assumed Liabilities or Buyer’s ability to utilize the Acquired Assets or Assumed Liabilities post-Closing.

20

Section 4.24Representations. The representations and warranties of the Company contained in this Agreement (including the Company Disclosure Schedule and all other certificates and instruments delivered pursuant to this Agreement), are true and correct, and do not omit to state any fact necessary in order to make any statement contained therein not false or misleading.

Article 5.

Representations and Warranties of Parent and Buyer

Parent and Buyer each severally represent and warrant to the Company that the statements contained in this Article 5 relating to it are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for date of this Agreement throughout this Article 5), except as set forth herein or in the disclosure schedule delivered by the Company to Parent on the date hereof (the “Parent Disclosure Schedule”). Nothing in the Parent Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, however, unless the Parent Disclosure Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail. Without limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty has to do with the existence of the document or other item itself). The Parent Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Article 5.

Section 5.1Organization and Qualification. Parent is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. Each of Parent and Buyer, as the case may be, has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted. Each of Parent and Buyer, as the case may be, is duly qualified to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or good standing necessary, except for such failures to be so qualified or in good standing that would not, individually or in the aggregate, prevent or materially delay or impede performance by Parent or Buyer, as the case may be, of any of their material obligations under this Agreement. Parent has heretofore made available to the Company complete and correct copies of the certificate (or articles) of incorporation and bylaws of Parent and Buyer, and all amendments thereto, as currently in effect. Neither Parent nor Buyer, as the case may be, is in violation of its certificate (or articles) of incorporation or bylaws.

21

Section 5.2Authority. Each of Parent and Buyer, as the case may be, has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by each of Parent and Buyer, as the case may be, and the consummation by Parent and Buyer, as the case may be, of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of Parent and Buyer, as the case may be, and no other corporate proceedings on the part of Parent or Buyer, as the case may be, are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly authorized and validly executed and delivered by Parent and Buyer, as the case may be, and, assuming this Agreement is a valid and binding obligation of the Company, this Agreement constitutes a legal, valid and binding obligation of Parent and Buyer, as the case may be, enforceable against it in accordance with its terms, subject to the Bankruptcy and Equity Exceptions.

Section 5.3No Conflict; Required Filings and Consents.

Section 5.3.1No Conflict. The execution, delivery and performance by Parent and Buyer, as the case may be, of this Agreement do not, and the consummation by Parent and Buyer, as the case may be, of the transactions contemplated hereby will not, (a) conflict with or violate any provision of the certificate (or articles) of incorporation or bylaws of Parent or Buyer, as the case may be, (b) assuming that all consents, approvals and authorizations described in Section 5.3.2 have been obtained prior to the Closing and all filings and notifications described in Section 5.3.2 have been made and any waiting periods thereunder have terminated or expired prior to the Closing, conflict with or violate any Law applicable to Parent and Buyer, as the case may be, or by which any property or asset of Parent or Buyer, as the case may be, is bound or (c) require any consent or approval under, result in any breach of or any loss of any benefit under, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of any Liens on any property or asset of Parent or Buyer, as the case may be, pursuant to, any Contract to which Parent or Buyer, as the case may be, is a party or by which any of their respective properties or assets are bound, except with respect to clauses (b) and (c), for (i) consents which will have been obtained by the Closing Date, or (ii) matters that, individually or in the aggregate, would not prevent or materially delay or impede performance by Parent or Buyer, as the case may be, of any of their material obligations under this Agreement.

Section 5.3.2Consents. The execution, delivery and performance of this Agreement by Parent and Buyer, as the case may be, do not, and the consummation of the transactions contemplated hereby will not, require Parent or Buyer, as the case may be, to obtain any consent, approval, or authorization of, or make any filing with or notification to, any Governmental Entity, except (a) under the Exchange Act (including a Schedule 13D with respect to the Shareholder Agreement), any applicable state securities, takeover or “blue sky” Laws, and the New York Stock Exchange (“NYSE”), or (b) where the failure to obtain such consents, approvals or authorizations, or to make such filings or notifications would not prevent or materially delay or impede performance by Parent or Buyer, as the case may be, of any of their material obligations under this Agreement.

22

Section 5.4Orders. No Order has been entered or issued which restrains, enjoins or prohibits the consummation of the Asset Sale or any of the other transactions provided for herein.

Section 5.5Ownership of Buyer. Parent owns 100 percent of the issued and outstanding Equity Interests of Buyer.

Section 5.6Vote Required. No vote of the holders of any class or series of capital stock or other Equity Interests of Parent or Buyer, as the case may be, is necessary to approve or adopt this Agreement or the transactions contemplated hereby, other than the vote of Parent as the sole stockholder of Buyer, which has been received as of the date of this Agreement.

Section 5.7Brokers. No broker, finder, financial advisor, investment banker or other Person is entitled to any brokerage, finder’s, financial advisor’s or other similar fee or commission payable by the Company in connection with the Asset Sale based upon arrangements made by or on behalf of Parent or Buyer, as the case may be.

Section 5.8Proxy Statement. The information supplied or to be supplied by Parent or Buyer, as the case may be, for inclusion or incorporation by reference in the Proxy Statement, considered as a whole, will not at the time of the mailing of the Proxy Statement to holders of Company Stock, at the time of the Company Shareholders’ Meeting, or at the time of any amendments thereof or supplements thereto, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Parent and Buyer, as the case may be, will use their reasonable best efforts to supply information about Parent or Buyer necessary for the preparation of the Proxy Statement (or any amendment thereof or supplement thereto) as promptly as practicable.

Section 5.9Access to Information; Disclaimer. Each of Parent and Buyer acknowledges and agrees that it (a) has had an opportunity to discuss the business of the Company with the management of the Company, (b) has had reasonable access to the books and records of the Company for purposes of the transactions contemplated by this Agreement, (c) has been afforded the opportunity to ask questions of and receive answers from the management of the Company, and (d) has conducted its own independent investigation of the Company, its respective businesses and the Asset Sale and the other transactions contemplated hereby, and neither Parent nor Buyer has relied on any representation, warranty or other statement by any Person on behalf of the Company, other than the representations and warranties of the Company expressly contained in Article 4.

Section 5.10Solvency. The Parent is solvent under the Delaware Business Corporation Act and all other applicable Laws.

Article 6.

Covenants

Section 6.1Conduct of Business Pending the Closing.

23

Section 6.1.1Conduct of Business of the Company. The Company agrees that, between the date of this Agreement and the Closing, except as permitted or contemplated by this Agreement or as consented to in writing by Buyer, the Company will in all material respects (it being understood that in no event shall the Company’s participation in the negotiation (including activities related to due diligence), execution, delivery, public announcement or pendency of this Agreement or any of the transactions contemplated herein or any actions taken in compliance herewith or otherwise with the consent of Buyer be considered a breach of any of the provisions of this Section 6.1), conduct its business in the ordinary course consistent with past practice, provided that, except as permitted or contemplated by this Agreement, as required by applicable Law or as consented to in writing by Buyer, the Company shall not, between the date of this Agreement and the Closing, directly or indirectly, do, or agree to do, any of the following:

(a)       amend or otherwise change any material provision of the Company Articles or the Company Bylaws, except as contemplated by the Shareholder Ratification;

(b)       issue, deliver, sell, pledge or encumber, or authorize, propose or agree to the issuance, delivery, sale, pledge or encumbrance of, any shares of the capital stock of the Company, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of any class or series of the capital stock of the Company;

(c)       declare, set aside, make or pay any dividend or other distribution (whether payable in cash, stock, property or a combination thereof) with respect to any of its capital stock;

(d)       reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock;

(e)       acquire (including by merger, consolidation, or acquisition of stock or assets) or make any investment in any Equity Interest in any Person or any assets, loans or debt securities thereof, acquire or divest any Real Property Leases or other interest in real estate or enter into any material Contract, partnership, arrangement, joint development agreement or strategic alliance;

(f)        incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the indebtedness of any Person for borrowed money;

(g)       grant any Lien in any of the Acquired Assets;

(h)       enter into any new line of business outside of its existing business;

(i)        pay, discharge, settle or satisfy any material claims, liabilities or obligations (absolute, accrued, contingent or otherwise), other than (i) performance of contractual obligations in accordance with their terms, (ii) payment, discharge, settlement or satisfaction in the ordinary course of business or (iii) payment, discharge, settlement or satisfaction in accordance with their terms, of claims, liabilities or obligations that have been (A) disclosed in the most recent Company Financial Statements (or the notes

24

thereto) included in the Company SEC Filings filed prior to the date hereof or contemplated by documents made available to Parent prior to the date hereof or (B) incurred since the date of such financial statements in the ordinary course of business;

(j)        adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company (other than the Asset Sale);

(k)       commence any litigation other than where the Company in good faith determines that failure to commence suit prior to the anticipated Closing Date would result in the material impairment of a valuable aspect of the business of the Company, provided that the Company consults with the Parent prior to the filing of such a suit and keeps Parent advised of the status and details of such litigation;

(l)        sell, transfer, assign, lease, license, encumber or otherwise dispose of any of the Acquired Assets or terminate or waive any Assumed Contracts, claims, or rights;

(m)      except as required by applicable Tax law, make or change any material election in respect of Taxes, adopt or change in any material respect any accounting method in respect of Taxes, file any material Return or any amendment to a material Return, enter into any closing agreement, settle any claim or assessment in respect of Taxes (except settlements effected solely through payment of immaterial sums of money), or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes; or

(n)       knowingly commit or agree to take any of the actions described in Sections 6.1.1(a) through 6.1.1(m) above or any action which would reasonably be expected to result in any of the conditions to the Asset Sale set forth in Article 7 not being satisfied.

Section 6.1.2Conduct of Business of Parent and Buyer. Each of Parent and Buyer agrees that, between the date of this Agreement and the Closing, it shall not, and it shall cause its Subsidiaries not to, directly or indirectly, take any action that would, or would reasonably be expected to, individually or in the aggregate, materially delay or impede the consummation of the Asset Sale.

Section 6.1.3No Control of Other Party’s Business. Nothing contained in this Agreement shall give Parent or Buyer, directly or indirectly, the right to control or direct the Company’s operations prior to the Closing, and nothing contained in this Agreement shall give the Company, directly or indirectly, the right to control or direct Parent’s or Buyer’s operations prior to the Closing. Prior to the Closing, each of the Company, Parent and Buyer shall exercise, consistent with the terms and conditions of this Agreement, complete and independent control and supervision over its and its Subsidiaries’ respective operations.

Section 6.1.4Audit of the Company’s 2007 Financial Statements. The Company agrees that, between the date of this Agreement and the mailing of the Proxy Statement, it shall obtain and deliver a copy thereof to Parent, an audit by an independent certified public accounting firm and prepared in accordance with GAAP applied (except as may be indicated in

25

the notes thereto) on a consistent basis during the periods indicated (except as may be permitted or required under GAAP) of each of the consolidated financial statements (including, in each case, any notes thereto) of the Company that will be required to be contained in the Company’s Annual Report on Form 10-K (or 10-KSB if appropriate) for 2007 due to be filed with the SEC in March 2008 (collectively, the “2007 Financial Statements”), and each of the 2007 Financial Statements will present fairly, in all material respects, the consolidated financial position of the Company as of the respective dates thereof and the consolidated statements of income, stockholders’ equity and cash flows of the Company for the respective periods indicated therein (subject, in the case of unaudited financial statements, to normal period-end adjustments).

Section 6.2Proxy Statement; Company Shareholders’ Meeting.

Section 6.2.1Proxy Statement. Subject to the terms and conditions of this Agreement, as promptly as reasonably practicable after the date hereof, the Company and Parent shall prepare and file with the SEC a proxy statement/prospectus and a form of proxy that will be part of Parent’s previously filed registration statement on Form S-4 (the “S-4 Registration Statement”) in connection with the vote of the Company’s shareholders with respect to the adoption of this Agreement and approval of the Asset Sale and the Shareholder Ratification, and in order to offer and sell under the Securities Act the Parent Shares issuable to the Company in connection with the Asset Sale (such proxy statement/prospectus, together with any amendments thereof or supplements thereto, in each case in the form or forms mailed to the Company’s shareholders is herein called the “Proxy Statement”). The Company, after consultation with Parent, will use reasonable best efforts to respond promptly to any comments made by the SEC with respect to the Proxy Statement. Parent and Buyer shall furnish all information relating to Parent and Buyer as the Company may reasonably request (or as may be required to be included in the Proxy Statement) in connection with such actions and the preparation of the Proxy Statement. Subject to the terms and conditions of this Agreement, as promptly as reasonably practicable after the clearance of the Proxy Statement by the SEC, the Company shall mail the Proxy Statement to the holders of shares of Company Stock. Subject to and without limiting the rights of the Company Board pursuant to Section 6.4.2, the Proxy Statement shall include the Company Recommendation. The Company will advise Parent, as promptly as reasonably practicable, after it receives notice thereof, of any request by the SEC for amendment of the Proxy Statement or comments thereon and responses thereto or requests by the SEC for additional information. If at any time prior to the Closing, any information, event or circumstance relating to any Party hereto, or their respective officers, directors, Affiliates or Representatives, should be discovered by any Party hereto which should be set forth in an amendment or a supplement to the Proxy Statement so that the Proxy Statement does not contain any untrue statement of material fact, or omit to state any material fact required to be stated therein in order to make the statements therein, in light of the circumstances under which they were made, not misleading, the Party discovering such information, event or circumstance shall promptly inform the other Parties hereto and, to the extent required by Law, an appropriate amendment or supplement describing such information, event or circumstance shall be promptly prepared and filed by the Company with the SEC and, if required, disseminated to the holders of shares of Company Stock. Parent shall also take any action required to be taken under state blue sky or other securities laws in connection with the issuance of Parent Shares to the Company in connection with the Asset Sale.

26

Section 6.2.2Company Shareholders’ Meeting. Subject to Section 6.4, the Company shall call and hold a meeting of the holders of Company Stock (the “Company Shareholders’ Meeting”) as promptly as reasonably practicable following the date on which the Proxy Statement is cleared by the SEC (but taking into account any advance notice or other requirements under applicable Law) for the purpose of obtaining the Shareholder Approval and the Shareholder Ratification. Subject to Section 6.4.2, the Company shall use its best efforts to obtain Shareholder Approval and the Shareholder Ratification and the vote necessary to approve the Asset Sale at the Company Shareholders’ Meeting or any adjournment thereof. The Company will deliver to Buyer promptly after the conclusion of the Company Shareholders’ Meeting a certificate of its Secretary stating the number of shares voted for and against the Asset Sale proposal and the Shareholder Ratification proposal, as well as, for both proposals, the number of abstentions and broker non-votes.

Section 6.3Access to Information; Confidentiality.

Section 6.3.1Access to Information. Subject to Section 6.3.2, from the date of this Agreement to the Closing or the earlier termination of this Agreement pursuant to Section 8.1, the Company shall, and shall instruct each of its directors, officers, employees, accountants, consultants, legal counsel, advisors, and agents and other representatives (collectively, “Company Representatives”) to: (a) provide to Parent and Buyer and each of their respective officers, directors, employees, accountants, consultants, legal counsel, advisors, agents and other representatives (collectively, “Parent Representatives,” and, each, together with each of the Company Representatives, a “Representative”) access at reasonable times and upon reasonable prior notice to the Company, to the officers, employees, agents, properties, offices and other facilities of the Company and to the books and records thereof and (b) furnish, or cause to be furnished, such reasonably available information concerning the business, properties, Contracts, assets, liabilities, personnel and other aspects of the Company as Parent, Buyer or the Parent Representatives may reasonably request. Notwithstanding the foregoing, the Company shall not be required to provide access to or disclose information where such access or disclosure would contravene any Law, privilege recognized by Law, binding Contract to which the Company is party or any privacy policy applicable to the Company’s customer information.

Section 6.3.2Confidentiality and Restrictions. With respect to any information (i) disclosed or provided by the Company or any Company Representative to Parent, Buyer or any Parent Representative, and (ii) disclosed or provided by Parent or any Parent Representative to the Company or any Company Representative pursuant to, or in accordance with, this Agreement, the Parties shall comply with, and shall cause the Parent Representatives and the Company Representatives, respectively, to comply with, that certain confidentiality letter agreement, dated as of October 2, 2007, between the Company and Parent (as such agreement may be amended from time to time, the “Confidentiality Agreement”). The Confidentiality Agreement shall survive any termination of this Agreement.

Section 6.4No Solicitation of Transactions.

Section 6.4.1Limitations on Solicitation. The Company shall, and shall instruct the Company Representatives to, immediately cease and cause to be terminated any discussions or negotiations with any Third Parties (other than the Parent Representatives) that may be

27

ongoing as of the date hereof with respect to a Takeover Proposal. The Company shall not, and shall instruct the Company Representatives not to, (a) directly or indirectly solicit, initiate, or knowingly encourage any Takeover Proposal, (b) enter into any agreement or agreement in principle with respect to a Takeover Proposal or (c) engage in any negotiations or discussions regarding, or furnish or disclose to any Third Party any information with respect to, any Takeover Proposal; provided, however, that at any time prior to obtaining the Shareholder Approval, in response to a bona fide Takeover Proposal received by the Company after the date hereof that was not solicited in violation of this Section 6.4.1 and that the Company Board determines in good faith (after consultation with its outside legal counsel and financial advisors) constitutes, or could reasonably be expected to lead to, a Superior Proposal and after the Company gives Parent written notice of its intention to do so, the Company may, subject to compliance with Section 6.4.2, (x) provide access to its properties, Contracts, personnel, books and records and furnish information, data and/or draft agreements with respect to the Company to the extent Parent, Buyer or the Parent Representatives had the right to such access to the Person making such Takeover Proposal (and its officers, directors, employees, accountants, consultants, legal counsel, advisors, agents and other representatives) if the Company Board receives from such Person a customary confidentiality agreement and (y) participate in discussions or negotiations with the Person making such Takeover Proposal (and its officers, directors, employees, accountants, consultants, legal counsel, advisors, agents and other representatives) regarding such Takeover Proposal.

Section 6.4.2Company Adverse Recommendation Change. Notwithstanding any provision of this Section 6.4 or Section 6.2 to the contrary, the Company Board may (a) withdraw (or not continue to make) or modify, or publicly propose to withdraw (or not continue to make) or modify, the Company Recommendation, (b) approve, recommend or adopt, or publicly propose to approve, recommend or adopt, a Superior Proposal (any action described in the foregoing clause (a) or this clause (b), a “Company Adverse Recommendation Change”) and/or (c) enter into an agreement regarding a Superior Proposal, if (w) in the case of an action described in clause (a), clause (b) or clause (c) above, (A) the Company Board has determined in good faith (after consultation with its outside legal counsel) that the failure to take such action is reasonably likely to be inconsistent with the fiduciary duties of the members of the Company Board to the holders of shares of Company Stock under applicable Law and (B) the Company Board shall have considered in good faith (after consultation with its outside legal counsel and financial advisors) any changes or revisions to this Agreement proposed in writing by Parent and shall have determined in good faith (after consultation with its outside legal counsel and financial advisors) that the Superior Proposal would still constitute a Superior Proposal if such changes were to be given effect, (x) in the case of the Company Board’s withdrawal or modification of the Company Recommendation, the Company has given Parent prior notice of its intention to take such action, (y) in the case of an action described in clause (b) or clause (c) above, (A) the Company has given Parent two Business Days’ prior written notice of its intention to take such action and (B) the Company has complied in all material respects with its obligations under this Section 6.4 and (z) in the case of an action described in clause (c) above, the Company shall have terminated this Agreement in accordance with the provisions of Section 8.1(c)(ii) hereof and (provided that neither Parent nor Buyer is in material default hereunder) the Company pays Parent the Company Termination Fee and the Parent Expenses in accordance with Section 8.4.1.

28

Section 6.4.3Notice. The Company shall promptly (and in any event within twenty-four (24) hours) advise Parent of the Company’s receipt of any bona fide Takeover Proposal and the material terms thereof and promptly keep Parent informed of the status thereof including any material change to the terms of any Takeover Proposal. Following determination by the Company Board that a Takeover Proposal constitutes a Superior Proposal pursuant to Section 6.4.2, the Company shall deliver to Parent a written notice advising it that the Company Board has made such determination and specifying the material terms of such Superior Proposal.

Section 6.4.4Rule 14d-9, Etc. Notwithstanding anything to the contrary contained herein, nothing in this Section 6.4 shall prohibit or restrict the Company or the Company Board from (a) taking and/or disclosing to the shareholders of the Company a position contemplated by Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act or (b) making any disclosure to the shareholders of the Company if, in the good faith judgment of the Company Board, such disclosure would be reasonably necessary under applicable Law (including Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act); provided, however, that in no event shall this Section 6.4.4 affect the obligations of the Company specified in Section 6.4.2.

29

Section 6.5Reasonable Best Efforts; Further Assurances. Subject to the terms and conditions of this Agreement, including Section 6.4, each Party shall use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other Parties in doing, all things necessary, proper or advisable under applicable Laws to consummate and make effective the Asset Sale and the other transactions contemplated hereby. Without limiting the generality of the foregoing, at or after the Closing, at the request of Buyer, the Company shall (i) promptly execute and deliver or cause to be executed and delivered to Buyer all such deeds, assignments, bills of sale, endorsements, contract amendments, powers of attorney, and other documents, in addition to those otherwise required by this Agreement and (ii) take or cause to be taken such actions, in form and substance reasonably satisfactory to Buyer and its counsel, as Buyer may reasonably request in order to (a) vest in Buyer title to and possession of the Acquired Assets (including, but not limited to, obtaining consents of third parties under any of the Contracts) and (b) perfect and record, if necessary, the sale, transfer, assignment, conveyance, and delivery to Buyer of the Acquired Assets.

Section 6.6Certain Notices. From and after the date of this Agreement until the earlier of the Closing or the termination of this Agreement pursuant to Section 8.1, the Company shall give prompt written notice to Buyer, and Buyer and Parent shall give prompt written notice to the Company, of (a) any material notice or other material communication received by such Party from any Governmental Entity in connection with this Agreement, the Asset Sale or the other transactions contemplated hereby or from any Person alleging that the consent of such Person is or may be required in connection with this Agreement, the Asset Sale or the other transactions contemplated hereby, (b) any material claims, actions, suits, proceedings or investigations commenced or, to such Party’s knowledge, threatened against, relating to or involving or otherwise affecting such Party or any of its Subsidiaries which relate to this Agreement, the Asset Sale or the other transactions contemplated hereby and (c) any fact, event or circumstance known to such Party that would cause or constitute, or would reasonably be expected to cause or constitute, a breach in any material respect of such Party’s representations, warranties, covenants or agreements contained herein or would prevent, delay or impede, or would reasonably be expected to prevent, delay or impede, the consummation of the Asset Sale or any other transaction contemplated by this Agreement; provided, however, that the delivery of any notice pursuant to this Section 6.6 shall not limit or otherwise affect any remedies available to the Party receiving such notice or prevent or cure any misrepresentations, breach of warranty or breach of covenant or failure to satisfy the conditions to the obligations of the Parties under this Agreement.

Section 6.7Public Announcements. Except as set forth in this Section 6.7, the Parties agree that Parent will prepare and disseminate any press release or public announcement pertaining to the Asset Sale, and Parent shall consult in good faith with the Company as to the text of any such press release or public announcement, provided that all decisions with respect to such press releases and public announcements shall ultimately rest with Parent. Notwithstanding the foregoing, nothing herein shall prevent Company from meeting its disclosure requirements under the Exchange Act of this Asset Sale. The Company shall not issue any press release or public statement pertaining to the Asset Sale without consulting with, and obtaining the consent of Parent, which consent shall not be unreasonably withheld or delayed, except as required to comply with any Law. The Parties will prepare a joint release for the announcement of the

30

execution of this Agreement.

Section 6.8NYSE Listing. Parent agrees to authorize for listing on the NYSE the shares of Parent Common Stock issuable in connection with the Asset Sale, upon official notice of issuance. Parent shall take all steps reasonably necessary to maintain the listing of the Parent Common Stock on the NYSE.

Section 6.9Transfer Taxes. The Company shall cause to be paid promptly when due all Taxes and/or amounts owed by the Company by reason of the consummation of the transactions contemplated hereby under any applicable tax Law of any jurisdiction, foreign or domestic.

Section 6.10State Takeover Statutes. If any State Takeover Statute or similar statute becomes applicable to this Agreement (including the Asset Sale and the other transactions contemplated hereby), each of Parent, Buyer, the Company and their respective Boards of Directors shall take all reasonable action necessary so that such transactions may be consummated as promptly as practicable on the terms contemplated hereby or otherwise act to eliminate or minimize the effect of such statute or regulation on this Agreement or the transactions contemplated hereby.

Section 6.11Pro Rata Distribution of the Parent Shares. As soon as possible after the Closing Date, unless the Closing Date shall occur before the Lock-up Date, in which case as soon as possible after the Lock-up Date, and in any event, within 10 days after the later to occur of the Closing Date and the Lock-up Date, the Company shall distribute pro rata the Parent Shares to the holders of Company Common Stock. In no event will the Company sell any of the Parent Shares. In no event will the Parent or its affiliates, unreasonably impede or restrict the sale or other disposition of the Parent Shares by the holders of Company Common Stock, except as may be required under any applicable Law. The Company agrees to effect the distribution of Parent Shares to the holders of Company Common Stock in compliance with all applicable Laws and as Parent and its counsel may reasonably request, including by executing, acknowledging, and delivering such instruments necessary or useful to deliver the Parent Shares to the holders of Company Common Stock as Parent and its counsel may reasonably request, and at the Company’s sole expense.

Section 6.12Liquidation of the Company. The Company agrees that it will liquidate and dissolve promptly following the later to occur of the Closing or the Lock-up Date in compliance with all applicable Laws.

Section 6.13Court Order. In the event the Company is unable to obtain either (or both) the Shareholder Approval or the Shareholder Ratification because it is unable to obtain a valid quorum under the Voting Requirements at the Company Shareholders’ Meeting, including any adjournment thereof, and in the further event that Parent elects not to terminate this Agreement, the Company shall use its best efforts to obtain from the Superior Court of the State of Arizona in the County of Maricopa, an order in form and substance satisfactory to Parent in its sole discretion, that orders that the transactions contemplated by this Agreement, including the Asset Sale and the Shareholder Ratification, be approved by the actions of the Company’s shareholders taken at the Company Shareholders’ Meeting, despite there not being a valid quorum under the

31

Voting Requirements at such meeting.

Article 7.

Closing Conditions

Section 7.1Conditions to Obligations of Each Party Under This Agreement. The respective obligations of each Party to effect the Asset Sale and the other transactions contemplated hereby shall be subject to the satisfaction, or waiver, at or prior to the Closing Date, of the following conditions:

Section 7.1.1Shareholder Approval. The Shareholder Approval shall have been obtained.

Section 7.1.2No Injunctions or Restraints. No Law or Order issued by any court or other Governmental Entity of competent jurisdiction preventing the consummation of the Asset Sale or any other transaction contemplated by this Agreement shall be in effect; provided, however, that the right to assert that this condition has not been satisfied shall not be available to any Party who has not used its reasonable best efforts to prevent, resist, appeal, obtain consent under, resolve or lift, as applicable, such Law or Order or who has not complied in all material respects with its obligations under Section 6.5.

7.1.3SEC Matters. No stop order suspending the effectiveness of the S-4 Registration Statement or any part thereof shall have been issued and no proceeding for that purpose, and no similar proceeding in respect of the Proxy Statement, shall have been initiated or threatened in writing by the SEC; and all requests for additional information on the part of the SEC shall have been complied with to the reasonable satisfaction of the Parties.

7.1.4NYSE Matters. The Parent Shares issuable to the Company pursuant to this Agreement shall have been authorized for listing on the NYSE upon official notice of issuance.

Section 7.2Additional Conditions to Obligations of Parent and Buyer. The obligations of Parent and Buyer to effect the Asset Sale and the other transactions contemplated hereby are also subject to the satisfaction of the following conditions, any one or more of which may be waived in writing by Parent in accordance with Section 8.5.

Section 7.2.1Representations and Warranties. The representations and warranties of the Company set forth in Article 4 shall be true and correct as of the Closing Date as if made at and as of the Closing Date (except for those representations and warranties which address matters only as of an earlier date which shall have been true and correct as of such earlier date).

Section 7.2.2Agreements and Covenants. The Company shall have performed or complied in all material respects with all material agreements and covenants required by this Agreement to be performed or complied with by the Company on or prior to the Closing Date.

Section 7.2.3Litigation Dismissal and Release. The Company shall have dismissed all of the existing Pending Litigation it has instituted against Parent, Buyer and any of

32

their Affiliates, and the Company shall have delivered a release to Parent and Buyer in the form of Exhibit C attached hereto.

Section 7.2.4No Material Adverse Changes. There shall have been no Material Adverse Change.

Section 7.2.5Instruments of Transfer. The Company shall have executed and delivered to the Buyer good and sufficient instruments of transfer transferring to Buyer title to all of the Acquired Assets as required pursuant to Section 2.6. The instruments of transfer must be in form and substance reasonably satisfactory to Buyer and its counsel, which form is usual and customary for transferring the type of property involved under the Laws of the jurisdictions applicable to such transfer.

Section 7.2.6Evidence of Board and Shareholder Action. Parent shall have received evidence of the authorization of this Agreement and the transactions contemplated or required under this Agreement by the Company Board and the holders of Company Stock.

Section 7.2.7Officer’s Certificate. Parent shall have received a certificate of an officer of the Company confirming the satisfaction of the conditions set forth in Sections 7.2.1 through 7.2.6.

Section 7.2.8Due Diligence. Parent shall be satisfied, in its sole discretion, with the results of its continuing business, legal, environmental, and accounting due diligence regarding the Company.

Section 7.2.9Shareholder Agreement. Each of the following individuals shall have entered into a Shareholder Agreement with Parent in the form of Exhibit A attached hereto: Bernard C. Lannen, Wayne L. Schoonmaker, Gordon Berkhaug, and Robert Bunde.

Section 7.2.10Shareholder Ratification. The Shareholder Ratification shall have been obtained.

Section 7.3Additional Conditions to Obligations of the Company. The obligation of the Company to effect the Asset Sale and the other transactions contemplated hereby are also subject to the satisfaction of the following conditions, any one of which may be waived in writing by the Company in accordance with Section 8.5.

Section 7.3.1Representations and Warranties. The representations and warranties of Parent and Buyer set forth in Article 5 shall be true and correct as of the Closing Date as if made at and as of the Closing Date (except for those representations and warranties which address matters only as of an earlier date which shall have been true and correct as of such earlier date).

Section 7.3.2Agreements and Covenants. Parent and Buyer shall have performed or complied in all material respects with all material agreements and covenants required by this Agreement to be performed or complied with by Parent and/or Buyer, as applicable, on or prior to the Closing Date.

33

Section 7.3.3Officer’s Certificate. The Company shall have received a certificate of an officer of Parent confirming the satisfaction of the conditions set forth in Sections 7.3.1 and 7.3.2.

Section 7.3.4Litigation Dismissal and Release. The Parent shall have dismissed all of the existing Pending Litigation they have instituted against the Company and any of their Affiliates, and the Parent shall have delivered a release to the Company in the form of Exhibit C attached hereto.

Section 7.4Frustration of Closing Conditions. None of the Company, Parent or Buyer may rely on the failure of any condition set forth in Article 7 to be satisfied if such failure was caused by such Party’s failure to act in good faith to comply with this Agreement or use its reasonable best efforts to consummate and make effective the transactions provided for herein.

Article 8.

Termination, Amendment and Waiver

Section 8.1Termination. This Agreement may be terminated, and the Asset Sale contemplated hereby may be abandoned, at any time prior to the Closing, by action taken or authorized by the Board of Directors of the terminating Party, whether before or after the Shareholder Approval:

(a) by mutual written consent of Parent and the Company;

(b) by either Parent or the Company:

(i)        if the Shareholder Approval is not obtained at the Company Shareholders’ Meeting or any adjournment or postponement thereof at which adoption of this Agreement is voted upon; provided that the Company’s right to terminate this Agreement under this Section 8.1(b)(i) shall not be available to the Company if the Company has not complied in all material respects with its obligations under Sections 6.2, 6.4 and 6.13 or Shareholder Approval is not obtained because of a breach of a Shareholder Agreement;

(ii)       if the Asset Sale shall not have been consummated by the date that is six (6) months from the date hereof (the “Termination Date”); provided, however, that the right to terminate this Agreement under this Section 8.1(b)(ii) shall not be available to any Party if any action of such Party or the failure by any Party to perform any of its obligations under this Agreement has been the cause of, or resulted in, the failure of the Asset Sale and the other transactions contemplated by this Agreement to be consummated on or before the Termination Date; or

(iii)      if (A) any Law prohibits or makes illegal the consummation of the Asset Sale or (B) any Order of any Governmental Entity having competent jurisdiction is entered enjoining the Company, Parent or Buyer from consummating the Asset Sale and such Order has become final and nonappealable, and, in either case, prior to termination pursuant to this Section 8.1(b)(iii), the Party terminating this Agreement shall have used its reasonable best efforts to prevent, resist, appeal, obtain consent under, resolve or lift,

34

as applicable, the Law or Order and shall have complied in all material respects with its obligations under Section 6.5; provided, however, that the right to terminate this Agreement pursuant to this Section 8.1(b)(iii) shall not be available to any Party if any action of such Party or the failure by any Party to perform any of its obligations under this Agreement has been the cause of, or resulted in, the imposition of any such Order or the failure of such Order to be resisted, resolved or lifted, as applicable;

(c) by the Company:

(i)        if (A) Parent or Buyer shall have breached any of the covenants or agreements contained in this Agreement to be complied with by Parent or Buyer such that the closing condition set forth in Section 7.3.2 would not be satisfied or (B) there exists a breach of any representation or warranty of Parent or Buyer contained in this Agreement such that the closing condition set forth in Section 7.3.1 would not be satisfied, and, in the case of clause (A) or clause (B), such breach is incapable of being cured or, if capable of being cured, shall not have been cured prior to the earlier of (x) the Termination Date, and (y) 30 Business Days after Parent or Buyer receives written notice of such breach from the Company; provided, however, that the Company shall not have the right to terminate this Agreement pursuant to this Section 8.1(c)(i) if the Company is then in material breach of any of its covenants or agreements contained in this Agreement or there exists a breach of any representation or warranty of the Company such that the closing condition set forth in Section 7.2.1 would not be satisfied if the Closing Date were at the time of such termination; or

(ii)       if, prior to the obtaining of the Shareholder Approval, (A) the Company Board has received a Superior Proposal, (B) the Company Board has determined in good faith (after consultation with its outside legal counsel) that the failure to accept such Superior Proposal is reasonably likely to be inconsistent with the fiduciary duties of the members of the Company Board to the holders of shares of Company Stock under applicable Law, (C) the Company has complied in all material respects with Section 6.4 and (D) the Company pays the Parent Expenses to Parent in accordance with Section 8.4; or

(d) by Parent:

(i)        if (A) the Company shall have breached any of the covenants or agreements contained in this Agreement to be complied with by the Company such that the closing condition set forth in Section 7.2.2 would not be satisfied or (B) there exists a breach of any representation or warranty of the Company contained in this Agreement such that the closing condition set forth in Section 7.2.1 would not be satisfied, and, in the case of clause (A) or clause (B), such breach is incapable of being cured or, if capable of being cured, shall not have been cured prior to the earlier of (x) the Termination Date, and (y) 30 Business Days after the Company receives written notice of such breach from Parent; provided, however, that Parent shall not have the right to terminate this Agreement pursuant to this Section 8.1(d)(i) if Parent or Buyer is then in material breach of any of its covenants or agreements contained in this Agreement or there exists a breach of any representation or warranty of Parent or Buyer such that the closing condition set

35

forth in Section 7.3.1 would not be satisfied if the Closing Date were at the time of such termination;

(ii)       if (A) prior to the obtaining of the Shareholder Approval, (1) a Company Adverse Recommendation Change shall have occurred, (2) the Company has failed to include the Company Recommendation in the Proxy Statement or (3) the Company Board approves, recommends or adopts, or publicly proposes to approve, recommend or adopt, a Takeover Proposal or approves or recommends that holders of Company Stock tender their shares of Company Stock in any tender offer or exchange offer that is a Takeover Proposal or (B) the Company shall not have obtained the Shareholder Ratification;

(iii)      at any time if under Sections 7.2.4 or 7.2.8, Parent shall decide in good faith that the Asset Sale is not in its best interests; or

(iv)      there exists any Order against Parent, which causes Parent to determine, in good faith, that the Asset Sale is not in its best interests.

Section 8.2Effect of Termination. Except as otherwise set forth in this Section 8.2, in the event of a termination of this Agreement by either the Company or Parent as provided in Section 8.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of Parent, Buyer or the Company hereunder; provided, however, that the provisions of this Section 8.2, Sections 6.3.2, 8.3, 8.4, 8.5 and Article 9 and the Confidentiality Agreement shall remain in full force and effect and survive any termination of this Agreement; provided, further, that no Party shall be relieved or released from any liabilities or damages arising out of its willful and material breach of any provision of this Agreement. In no event shall any Party be liable for punitive damages.

Section 8.3Fees and Expenses. Except as otherwise expressly set forth in this Agreement, all fees and expenses incurred in connection herewith and the transactions contemplated hereby shall be paid by the Party incurring, or required to incur, such expenses, whether or not the Asset Sale is consummated, except that Buyer shall bear and pay 50 percent of the fees, costs and expenses of the Company incurred in connection with the negotiation and execution of this Agreement that are incurred on or before the Closing (“Company Transaction Fees”), including, but not limited to the filing, printing and mailing of the Proxy Statement (including any SEC filing fees) and the opinions described in Annex 8.3; provided, however, the Company Transaction Fees payable by Buyer shall not include any fees or payments to any director, officer, shareholder, independent auditor or Affiliate of the Company or any Affiliate of the foregoing; further, provided, that under no circumstances will the Buyer be liable to pay more than the lesser of (i) 50 percent of the aggregate amount of the Company Transaction Fees, or (ii) $100,000 of the Company Transaction Fees. The Company shall promptly provide detailed documentation in a form reasonably acceptable to Buyer evidencing (1) the Company Transaction Fees for which the Company seeks payment from Buyer under this Section 8.3, and (2) the Company’s satisfaction of the Company Transaction Fees for which it is responsible under this Section 8.3.

Section 8.4Termination Fee and Expenses.

36

Section 8.4.1Termination Fee.      If this Agreement is terminated by the Company pursuant to Section 8.1(c)(ii) or by Parent pursuant to Section 8.1(b)(i) (but only if Shareholder Approval is not obtained because of a breach of a Shareholder Agreement) or Section 8.1(d)(ii), and neither Parent nor Buyer is in material default under this Agreement at the time of such termination, then the Company shall pay to Parent (or as directed by Parent), by wire transfer of same day funds, (x) $1,250,000 (the “Termination Fee”) plus (y) all of Parent’s actual and reasonably documented fees and expenses (including legal fees and expenses) incurred by Parent and its Affiliates in connection with the transactions contemplated by this Agreement (the “Parent Expenses”) as promptly as reasonably practicable (and, in any event, within ten Business Days following such termination).

Section 8.4.2Parent Expenses.       If this Agreement is terminated by either the Company or Parent (subject to Section 8.4.1) pursuant to Section 8.1(b)(i) or by Parent pursuant to Section 8.1(d)(i), and neither Parent nor Buyer is in material default under this Agreement at the time of such termination, then the Company shall pay to Parent (or as directed by Parent), by wire transfer of same day funds, all of the Parent Expenses as promptly as reasonably practicable (and, in any event, within ten Business Days following such termination).

Section 8.4.3Company Expenses. If this Agreement is terminated by Parent pursuant to Section 8.1(d)(iii) or by the Company pursuant to Section 8.1(c)(i), and the Company is not in material default under this Agreement at the time of such termination, then Parent shall pay to the Company (or as directed by Parent), by wire transfer of same day funds, all of the Company’s actual and reasonably documented fees and expenses (including legal fees and expenses) incurred by the Company in connection with the transactions contemplated by this Agreement (the “Company Expenses”) as promptly as reasonably practicable (and, in any event, within ten Business Days following such termination).

Section 8.4.4Acknowledgement. The Parties acknowledge that the agreements contained in this Section 8.4 are an integral part of the transactions contemplated by this Agreement and that, without these agreements, the Parties would not enter into this Agreement. If the Company fails to pay the Termination Fee and/or Parent Expenses when due, and, in order to obtain such payment Parent commences a suit which results in a judgment against the Company for all or any portion of the Parent Expenses, the Company shall pay to Parent its reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) in connection with such suit. If Parent fails to pay the Company Expenses when due, and, in order to obtain such payment the Company commences a suit which results in a judgment against Parent for all or any portion of the Company Expenses, Parent shall pay to the Company its reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) in connection with such suit.

Section 8.5Extension; Waiver. At any time prior to the Closing, Parent or the Company may, to the extent permitted by applicable Law, (a) extend the time for the performance of any of the obligations or other acts of the other Party under this Agreement, (b) waive any inaccuracies in the representations and warranties of the other Party contained herein or in any instrument delivered pursuant hereto or (c) waive compliance with any of the covenants or agreements of the other Party or conditions to the obligations of the waiving Party contained herein; provided, however, that after any approval of this Agreement by the shareholders of the Company, no extension or waiver that, by Law or in accordance with the

37

rules of any relevant stock exchange, requires further approval by such shareholders may be made without such shareholder approval. Any agreement on the part of a Party to any such extension or waiver shall be valid only if set forth in a written instrument signed by such Party. The failure or delay of any Party to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights, nor shall any single or partial exercise of any right under this Agreement preclude any other or further exercise of any rights hereunder.

Section 8.6Amendment. At any time prior to the Closing, this Agreement may be amended by the Parties by action taken by or on behalf of their respective Boards of Directors; provided, however, that, after approval of the Agreement by the shareholders of the Company, no amendment that, by Law or in accordance with the rules of any relevant stock exchange, requires further approval by such shareholders may be made without such shareholder approval. This Agreement may not be amended except by an instrument in writing signed by Parent, Buyer and the Company.

Section 8.7Acknowledgment. The Parties acknowledge that neither the Company Termination Fee nor the Parent Termination Fee shall be relevant in terms of determining levels of materiality for purposes of this Agreement.

38

Article 9.

General Provisions

Section 9.1Survival of Representations and Warranties. With the exception of the representations and warranties of the Company contained in Sections 4.1 (Organization and Qualification; Subsidiaries), 4.2 (Capitalization), 4.3 (Authority), 4.6.3 (No Undisclosed Liabilities), 4.8 (Absence of Certain Changes), and 4.20 (Investment), each of which shall survive the Closing for a period of six (6) months after the Closing Date, none of the representations and warranties of the Parties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Closing. None of the covenants or agreements of the Parties in this Agreement shall survive the Closing, other than (a) the covenants and agreements of the Parties contained in this Article 9 and in Section 6.3.2 and (b) those other covenants and agreements contained herein that by their terms apply, or that are to be performed in whole or in part, after the Closing, which shall survive the consummation of the Asset Sale until fully performed.

Section 9.2Notices. Any notices or other communications required or permitted under, or otherwise made in connection with, this Agreement, shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) upon confirmation of receipt when transmitted by facsimile transmission or by electronic mail (but, in the case of electronic mail, only if followed by transmittal by national overnight courier or hand for delivery on the next Business Day), (c) upon receipt after dispatch by registered or certified mail, postage prepaid or (d) on the next Business Day if transmitted by national overnight courier (with confirmation of delivery), in each case, addressed as follows:

If to the Company, addressed to it at:
Independence Lead Mines Company
510 Cedar Street
Wallace, ID 83873
Attention:	Bernard Lannen
Facsimile:	(208) 753-2525

with a mandated copy (which shall not constitute notice) to:
Charles A. Cleveland, P.S.
Suite 660, 316 West Boone Avenue
Spokane, WA 99201-2353
Attention:	Charles A. Cleveland
Facsimile:	(509) 326-1872

39

If to Parent or Buyer, addressed to it at:
6500 North Mineral Drive, Suite 200
Coeur d’ Alene, ID 83815
Attention:	Philip C. Wolf
Facsimile:	(208) 282-5525

with a mandated copy (which shall not constitute notice) to:
Bell, Boyd & Lloyd LLP
70 West Madison Street, Suite 3100
Chicago, IL 60602
Attention:	Donald J. Bingle
Facsimile:	(312) 827-4248

Section 9.3Headings. The headings and table of contents contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 9.4Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon a determination that any term or other provision of this Agreement is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the greatest extent possible.

Section 9.5Entire Agreement; Parties in Interest. This Agreement (together with the Annexes, Exhibits, Parent Disclosure Schedule, Company Disclosure Schedule and the other instruments delivered pursuant hereto) and the Confidentiality Agreement constitute the entire agreement of the Parties and supersede all prior agreements and undertakings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof and thereof. Nothing in this Agreement, express or implied, shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.

Section 9.6Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties (whether by operation of Law or otherwise) without the prior written consent of the other Parties, and any such assignment shall be null and void. No assignment by any Party shall relieve such Party of any of its obligations hereunder. Subject to the foregoing, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.

40

Section 9.7Mutual Drafting. Each Party has participated in the drafting of this Agreement, which each Party acknowledges is the result of extensive negotiations between the Parties.

Section 9.8Governing Law; Consent to Jurisdiction; Enforcement; Waiver of Trial by Jury.

Section 9.8.1Delaware Law. This Agreement, and all claims and causes of action arising out of, based upon, or related to this Agreement or the negotiation, execution or performance hereof, shall be governed by, and construed, interpreted and enforced in accordance with, the Laws of the State of Delaware, without regard to choice or conflict of law principles that would result in the application of any Laws other than the Laws of the State of Delaware, except and only to the extent that the ABCA mandatorily applies.

Section 9.8.2Exclusive Jurisdiction. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE DISTRICT COURT OF THE STATE OF IDAHO AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF IDAHO SOLELY IN CONNECTION WITH ANY DISPUTE THAT ARISES IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND THE DOCUMENTS REFERRED TO IN THIS AGREEMENT OR IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR INTERPRETATION OR ENFORCEMENT HEREOF OR ANY SUCH DOCUMENT THAT IT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION, SUIT OR PROCEEDING SHALL BE HEARD AND DETERMINED EXCLUSIVELY BY SUCH AN IDAHO STATE OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH SUCH ACTION, SUIT OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 9.2 OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.

Section 9.8.3Right to Injunctive Relief. The Parties agree that irreparable damage would occur in the event that any provision of this Agreement were not performed in accordance with its specific terms or was otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement exclusively in any state or federal court within the State of Idaho and any state appellate court therefrom within the State of Idaho, and any such injunction shall be in addition to any other remedy to which any Party is entitled, at law or in equity.

41

Section 9.8.4Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY AND ALL RIGHT SUCH PARTY MAY HAVE TO TRIAL BY JURY IN ANY LEGAL ACTION, SUIT OR PROCEEDING BETWEEN THE PARTIES HERETO ARISING OUT OF, BASED UPON OR RELATING TO THIS AGREEMENT OR THE NEGOTIATION, EXECUTION OR PERFORMANCE HEREOF.

Section 9.8.5Attorneys’ Fees. If any party to this Agreement brings an action to enforce its rights under this Agreement, the prevailing party shall be entitled to recover its costs and expenses, including without limitation reasonable legal fees, incurred in connection with such action, including any appeal of such action.

Section 9.9Counterparts. This Agreement may be executed by facsimile and in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement, and which shall become effective when one or more counterparts have been signed by each of the Parties and delivered (by facsimile or otherwise) to the other Parties.

*  *  *  *  *

(signature page follows)

IN WITNESS WHEREOF, Parent, Buyer and the Company have caused this Agreement to be executed and delivered as of the date first written above.

INDEPENDENCE LEAD MINES COMPANY
By:	/s/ Bernard Lannen
Name:	Bernard Lannen
Title:	President
HECLA MINING COMPANY
By:	/s/ Phillips S. Baker, Jr.
Name:	Phillips S. Baker, Jr.
Title:	President & CEO
HECLA MERGER COMPANY
By:	/s/ Philip C. Wolf
Name:	Philip C. Wolf
Title:	Vice President

42

EX-99.1

Exhibit 99.1

NEWS RELEASE

HECLA ACQUIRES 70.3% OF GREENS CREEK MINE FOR $750 MILLION

FOR IMMEDIATE RELEASE

February 12, 2008

COEUR D’ALENE, IDAHO — Hecla Mining Company (HL:NYSE) today announced an agreement with Kennecott, a subsidiary of Rio Tinto, to acquire the companies owning 70.3% of the Greens Creek mine near Juneau, Alaska.

Highlights

• Hecla will control 100% of the world’s fifth largest silver mine

• Almost doubles Hecla’s annual silver production to approximately 11 million ounces

• Increases silver reserves by about 150% and gold reserves by about 140%

• Greens Creek is among the lowest cash cost silver mines in North America

• Accretive on major metrics

Hecla President and Chief Executive Officer, Phillips S. Baker, Jr., said, “We are extremely excited about acquiring the rest of Greens Creek, giving us a tremendous world-class silver asset. We know the operation intimately and believe the operational risks are low. The cash cost per ounce of silver produced at Greens Creek, including by-product credits, is among the lowest in North America. Greens Creek has a strong track record of environmental and safety performance, a long mine life, and an excellent cadre of talented people. And it nearly doubles our silver production while improving our position as the lowest-cost silver producer.”

Baker continued, “The Greens Creek mine has continuously replaced reserves and has excellent exploration potential, not only within the current mining area, but perhaps even more importantly, has the potential for discovery within the highly-prospective 12-square-mile land position in this great mining district.”

Pursuant to the acquisition, Hecla will purchase all of the equity of the Rio Tinto subsidiaries that hold the 70.3% interest in the Greens Creek mine. The $750 million purchase price is comprised of $700 million in cash and $50 million in Hecla common stock. Hecla has received $400 million in committed debt financing from Scotia Capital, which together with available cash will be used to fund the acquisition. Closing is expected to occur in the second quarter and is subject to customary conditions, including expiration of the waiting period under the Hart-Scott-Rodino Act.

In 2007, on a 100% basis, Greens Creek produced approximately 8.6 million ounces of silver, 68,000 ounces of gold, 63,000 tons of zinc and 21,000 tons of lead. Because the by-product metals more than pay for the silver production, the total average cash cost of silver was negative $5.27 per ounce. Even at metals prices significantly lower than they are today, Hecla estimates a 10-year average cash cost of $1.88 per ounce of silver at Greens Creek.

Baker said, “Hecla has 117 years of experience as a precious metals mining company, with a particular expertise in underground mining. We have worked closely with the management of Greens Creek for more than two decades. Rest assured that we fully intend to uphold the strong tradition and great reputation of the Greens Creek mine and its people as we become more involved in the operation and the community of Juneau. Because of our long participation in the joint venture, we anticipate a smooth transition.”

Scotia Capital acted as a financial advisor to Hecla on the transaction. Hecla’s management will conduct a web cast conference call to discuss the Greens Creek transaction and its benefits and impacts on Hecla Mining Company on Tuesday, February 12, 2008, at 3 p.m. Eastern time. The web cast can be heard at www.hecla-mining.com, in the Investor Relations segment of the website. The call will be archived for a period of time for re-play purposes.

Hecla Mining Company, headquartered in Coeur d’Alene, Idaho, mines, processes and explores for silver and gold in the United States, Venezuela and Mexico. A 117-year-old company, Hecla has long been well known in the mining world and financial markets as a quality producer of silver and gold. Hecla’s common shares are traded on the New York Stock Exchange under the symbol HL.

Statements made which are not historical facts, such as anticipated payments or purchases are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and involve a number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, expected or implied. These risks and uncertainties include, but are not limited to, metals price volatility, volatility of metals production and costs, exploration risks and results, political risks, project development risks, labor issues and ability to raise financing. Refer to the company’s Form 10-Q and 10-K reports for a more detailed discussion of factors that may impact expected future results. The company undertakes no obligation and has no intention of updating forward-looking statements.

Cautionary Note to Investors - The United States Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms in this news release, such as “resource,” “reserve,” and “inferred resource” that the SEC guidelines strictly prohibit us from including in our filing with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K. You can review and obtain copies of these filings from the SEC’s website at http://www.sec.gov/edgar.shtml.

Investor Relations Contact: Vicki Veltkamp, Vice President – Investor and Public Relations, 208-769-4128

Hecla’s Home Page can be accessed on the Internet at: http://www.hecla-mining.com

EX-99.2

Exhibit 99.2

Independence Lead Mines Company

NEWS RELEASE

HECLA TO ACQUIRE ASSETS OF INDEPENDENCE LEAD MINES

FOR IMMEDIATE RELEASE

For Release: February 13, 2008

COEUR D’ALENE, IDAHO — Hecla Mining Company (HL:NYSE) and Independence Lead Mines (ILDS.PK) today announced that they have signed an agreement for Hecla to acquire substantially all of the assets of Independence Lead Mines Company (ILM), located in northern Idaho’s Silver Valley. Included in the ILM assets are the West Independence property and ILM’s mining claims pertaining to the DIA agreement with the Lucky Friday mine, which includes any future interest or royalty obligation to ILM. The transaction is subject to approval by shareholders of ILM.

In exchange for the assets, Hecla will distribute 6,936,884 of its common shares to ILM shareholders. There is a $1.25 million transaction break-up fee associated with the agreement. The transaction is expected to be completed later in the first quarter of 2008.

ILM President Bernard C. Lannen said, “Our management and board are completely supportive of this transaction. We feel the agreement is best for our shareholders, giving good value and the opportunity to continue to participate in the metals market as Hecla shareholders.”

Hecla President and Chief Executive Officer Phillips S. Baker, Jr., said, “This transaction not only guarantees that Hecla will receive 100% of the future profits of the Lucky Friday Mine, but also helps to consolidate our land position in the Star Morning district. We believe that the future potential of the Lucky Friday mine is tremendous. We look forward to moving ahead expeditiously with our plans for operating improvements, future increases in the resource and the work on our prefeasibility study for possible expansion of production there.”

Hecla Mining Company, headquartered in Coeur d’Alene, Idaho, mines, processes and explores for silver and gold in the United States, Mexico and Venezuela. A 117-year-old company, Hecla has long been well known in the mining world and financial markets as a quality producer of silver and gold. Hecla’s common and preferred shares are traded on the New York Stock Exchange under the symbols HL, HL-PrB and HL-PrC.

Statements made which are not historical facts, such as anticipated payments, litigation outcome, production, sales of assets, exploration results and plans, costs, and prices or sales performance are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and involve a number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, expected or implied. These risks and uncertainties include, but are not limited to, metals price volatility, volatility of metals production and costs, exploration risks and results, political risks, project development risks, labor issues and ability to raise financing. Refer to the company’s Form 10-Q and 10-K reports for a more detailed discussion of factors that may impact expected future results. The company undertakes no obligation and has no intention of updating forward-looking statements.

2008-03

Cautionary Note to Investors - The United States Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms in this news release, such as “resource,” “reserve,” and “inferred resource” that the SEC guidelines strictly prohibit us from including in our filing with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K. You can review and obtain copies of these filings from the SEC’s website at http://www.sec.gov/edgar.shtml.

Contact:

Vicki Veltkamp, Vice President – Investor and Public Relations, 208-769-4128

Hecla Mining Company news releases can be accessed on the

Internet at: http://www.hecla-mining.com/

6500 N Mineral Drive, Suite 200 • Coeur d’Alene, Idaho 83815-9408 • 208/769-4100 • FAX 208/769-7612