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Exhibit 10.1
EMPLOYMENT
AGREEMENT
AGREEMENT
by and between Hecla Mining Company, a Delaware corporation (the
“Company”) and PHILLIPS S. BAKER, JR. (the
“Executive”), dated as of the 1st day of June
2007.
The
Board of Directors of the Company (the “Board”) has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below) of
the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive’s full attention
and dedication to the Company, and to the Company currently and in
the event of any threatened or pending Change of Control, and to
provide the Executive with compensation and benefits arrangements
upon a Change of Control which ensure that the compensation and
benefits expectations of the Executive will be satisfied and which
are competitive with those of other corporations. Therefore, in
order to accomplish these objectives, the Board has caused the
company to enter into this Agreement.
NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1.
Certain Definitions.
(a)
The “Effective Date” shall be the first date during the
“Change of Control Period” (as defined in
Section 1(b)) on which a Change of Control occurs. Anything in
this Agreement to the contrary notwithstanding, if the
Executive’s employment with the Company is terminated or the
Executive ceases to be an officer of the Company prior to the date
on which a Change of Control occurs, and it is reasonably
demonstrated that such termination of employment (1) was at
the request of a third party who has taken steps reasonably
calculated to effect the Change of Control or (2) otherwise
arose in connection with or anticipation of the Change of Control,
then for all purposes of this Agreement the “Effective
Date” shall mean the date immediately prior to the date of
such termination of employment.
(b)
The “Change of Control Period” is the period commencing
on the date hereof and ending on June 1, 2010; provided, however,
that commencing on June 1, 2010, and on each subsequent anniversary
of such date (each such anniversary is hereinafter referred to as
the “Renewal Date”), the Change of Control Period shall
be automatically extended so as to terminate three years from such
Renewal Date, unless at least 60 days prior to the Renewal Date the
Company shall give notice to the Executive that the Change of
Control Period shall not be so extended.
(c)
The “Deemed Retirement Benefit” means the aggregate
benefits that would be payable to the Executive under the Hecla
Mining Company Qualified Retirement Plan and/or any successor
defined benefit plan (the “Retirement Plan”) and any
supplemental and/or excess retirement plans in which the Executive
participates (the “SERP”), assuming that (i) the
Executive’s age as of the Date of Termination were increased
by three years for purposes of calculating the pension reduction
but not for purposes of determining covered compensation (as those
terms are defined in the Retirement Plan), (ii) the
Executive’s average annual earnings were calculated by
assuming that the Executive had continued to receive the
compensation required by Section 4(b) of this Agreement for three
years, (iii) the Executive’s years of service were
increased by three years, and (iv) the Executive’s benefits
under the Retirement Plan and the SERP were fully
vested.
(d)
The “Actual Retirement Benefit” means the aggregate
benefits that actually are payable to the Executive under the
Retirement Plan and the SERP as of the Date of Termination,
determined in accordance with the applicable terms of the
Retirement Plan and the SERP.
2.
Change of Control . For the purpose of this
Agreement, a “Change of Control” shall mean:
(a)
Any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) (a “Person”)
becomes the “beneficial owner” (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or
(ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this
Section 2(a), the following acquisitions shall not constitute a
Change of Control: (I) any acquisition directly from the Company or
approved by the Incumbent Directors, following which such Person
owns not more than 40% of the Outstanding Company Common Stock or
the Outstanding Company Voting Securities, (II) any
acquisition by an underwriter temporarily holding securities
pursuant to an offering of such securities, (III) any
acquisition by the Company, (IV) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company, or
(V) any acquisition pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of Section 2(c) below;
or
(b)
Individuals who, as of the date hereof, constitute the Board (the
“Incumbent Directors”) cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least a
majority of the Incumbent Directors then on the Board (either by a
specific vote or by approval of the proxy statement of the Company
in which such person is named as a nominee for director, without
written objection to such nomination) shall be considered as though
such individual were an Incumbent Director, but excluding, for this
purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(c)
Consummation of a reorganization, merger or consolidation (or
similar corporate transaction) involving the Company or any of its
subsidiaries, a sale or other disposition of all or substantially
all of the assets of the Company, or the acquisition of assets
or
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stock of another entity (a
“Business Combination”), in each case, unless,
immediately following such Business Combination, (i) more than 60%
of, respectively, the then outstanding shares of common stock and
the total voting power of (A) the corporation resulting from such
Business Combination (the “Surviving Corporation”), or
(B) if applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 80% of the voting securities
eligible to elect directors of the Surviving Corporation (the
“Parent Corporation”), is represented by Outstanding
Company Common Stock and Company Voting Securities that were
outstanding immediately prior to such Business Combination (or, if
applicable, is represented by shares into which such Outstanding
Company Common Stock or Outstanding Company Voting Securities, as
the case may be, were converted pursuant to such Business
Combination), and such beneficial ownership of common stock or
voting power among the holders thereof is in substantially the same
proportion as the beneficial ownership of Outstanding Company
Common Stock and the voting power of such Company Voting Securities
among the holders thereof immediately prior to the Business
Combination, (ii) no person (other than any employee benefit plan
(or related trust) sponsored or maintained by the Surviving
Corporation or the Parent Corporation), is or becomes the
beneficial owner, directly or indirectly, of 30% or more of the
outstanding shares of common stock and the total voting power of
the outstanding voting securities eligible to elect directors of
the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation), unless such acquisition is pursuant to a
Business Combination that is an acquisition by the Company or a
subsidiary of the Company of the assets or Stock of another entity
that is approved by the Incumbent Directors, following which such
person owns not more than 40% of such outstanding shares and voting
power, and (iii) at least a majority of the members of the
board of directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) following the
consummation of the Business Combination were Incumbent Directors
at the time of the Board’s approval of the execution of the
initial agreement providing for such Business Combination;
or
(d)
Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, a
Change of Control of the Company shall not be deemed to occur
solely because any person acquires beneficial ownership of 20% or
more of the Outstanding Company Common Stock or Outstanding Company
Voting Securities as a result of the acquisition of Outstanding
Company Common Stock or Outstanding Company Voting Securities by
the Company which reduces the number of shares of Outstanding
Company Common Stock or Outstanding Company Voting Securities;
provided, that if after such acquisition by the Company such
person becomes the beneficial owner of additional shares of
Outstanding Company Common Stock or Outstanding Company Voting
Securities that increases the percentage of Outstanding Company
Common Stock or Outstanding Company Voting Securities beneficially
owned by such person, a Change of Control of the Company shall then
occur.
3.
Employment Period . The Company hereby agrees to continue
the Executive in its employ for the period commencing on the
Effective Date and ending on the third anniversary of such date
(the “Employment Period”). The Employment Period shall
terminate upon the Executive’s termination of employment for
any reason.
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4.
Terms of Employment .
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(a)
Position and Duties .
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(i)
During the Employment Period, (A) the Executive’s
position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at
least commensurate in all material respects with the most
significant of those held, exercised and assigned at any time
during the 90-day period immediately preceding the Effective Date
and (B) the Executive’s services shall be performed at
the location where the Executive was employed immediately preceding
the Effective Date or any office or location less than 35 miles
from such location.
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(ii)
During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal
business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to
the Executive hereunder, to use the Executive’s reasonable
best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a
violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage-personal investments, so long as such
activities do not significantly interfere with the performance of
the Executive’s responsibilities as an employee of the
Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the
Company.
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(b)
Compensation .
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(i)
Base Salary . During the Employment Period, the Executive
shall receive an annual base salary (“Annual Base
Salary”), which shall be paid at a monthly rate, at least
equal to twelve times the highest monthly base salary paid or
payable to the Executive by the Company and its affiliated
companies in respect of the twelve-month period immediately
preceding the month in which the Effective Date occurs. During the
Employment Period, the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to
time as shall be substantially consistent with increases in base
salary awarded in the ordinary course of business to other peer
executives of the Company and its affiliated companies. Any
increase in Annual Base Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement. Annual
Base Salary shall not be reduced after any such increase and the
term Annual Base Salary as utilized in this Agreement shall refer
to Annual Base Salary as so increased. As used in this Agreement,
the term “affiliated companies;” includes any company
controlled by, controlling or under common control with the
Company.
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(ii)
Annual Bonus . In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year beginning or
ending during the Employment Period, an annual bonus (the
“Annual Bonus”) in cash at least equal to the highest
bonus paid or payable, including by reason of deferral, to the
Executive by the Company and its affiliated companies, including
pursuant to both the Company’s Short-Term Performance Pay
Compensation Plan and the Company’s Executive and Senior
Management Long-Term Performance Payment Plan for any fiscal year,
in respect of the three fiscal years immediately preceding the
fiscal year in which the Effective Date occurs (annualized for any
fiscal year during the Employment Period consisting of less than
twelve full, months or with respect to which the Executive has been
employed by the Company for less than twelve full months) (the
“Recent Annual Bonus”). Each such Annual Bonus shall be
paid no later than two and a half months after the first fiscal
year next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect, if applicable, to defer
the receipt of such Annual Bonus pursuant to the Company’s
Key Employee Deferred Compensation Plan.
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(iii)
Incentive, Savings and Retirement Plans . In addition to
Annual Base salary and Annual Bonus payable as hereinabove
provided, the Executive shall be entitled to participate during the
Employment Period in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other peer
executives of the Company and its affiliated companies, but in no
event, shall such plans, practices, policies and programs provide
the Executive with incentive, savings and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than
(x) the most favorable of those provided by the Company and
its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during
the 90-day period immediately preceding the Effective Date of
(y) if more favorable to the Executive, those provided at any
time after the Effective Date to other peer executives of the
Company and its affiliated companies.
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(iv)
Welfare Benefit Plans . During the Employment Period, the
Executive and/or the Executive’s family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs)
to the extent generally applicable to other peer executives of the
Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with
benefits which are less favorable, in the aggregate, than (x) the
most favorable of such plans, practices, policies and programs in
effect for the Executive at any time during the 90-day period
immediately preceding the Effective Date or (y) if more favorable
to the Executive, those provided at any time after the Effective
Date generally to other peer executives of the Company and its
affiliated companies.
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(v)
Expenses . During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and its
affiliated companies in effect for the Executive at any time during
the 90-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies.
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(vi)
Fringe Benefits . During the Employment Period, the
Executive shall be entitled to fringe benefits in accordance with
the most favorable plans, practices, programs and policies of the
company and its affiliated companies in effect for the Executive at
any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
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(vii)
Office and Support Staff . During the Employment Period, the
Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most
favorable of the foregoing provided to the Executive by the Company
and its affiliated companies at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
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(viii)
Vacation . During the Employment Period, the Executive shall
be entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its
affiliated companies as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer incentives of the Company and
its affiliated companies.
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5.
Termination of Employment .
(a)
Death or Disability . The Executive’s employment shall
terminate automatically upon the Executive’s death during the
Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment
Period (pursuant to the definition of Disability set forth below),
it may give to the Executive written notice in accordance with
Section 12(b) of this Agreement of its, intention to terminate
the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the
Executive (the “Disability Effective Date”), provided
that, within the 30 days after such receipt, the Executive shall
not have returned to full-time performance of the Executive’s
duties. For purposes of this Agreement, “Disability”
means the absence of the Executive from the Executive’s
duties with the Company on a fulltime basis for 180 consecutive
business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to
the Executive or the Executive’s legal representative (such
agreement. as to acceptability not to be withheld
unreasonably).
(b)
Cause . The Company may terminate the Executive’s
employment during the Employment Period for Cause. For purposes of
this Agreement, “Cause” means:
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(i)
the willful and continued failure of the Executive to perform
substantially the Executive’s duties (as contemplated by
Section 4(a)) with the Company or any affiliated company (other
than any such failure resulting from incapacity due to physical or
mental illness or following the Executive’s delivery of a
Notice of Termination for Good Reason), after a written demand for
substantial performance is delivered to the Executive by the Board
or the Chief Executive Officer of the Company that specifically
identifies the manner in which the Board or the Chief Executive
Officer of the Company believes that the Executive has not
substantially performed the Executive’s duties, or
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(ii)
the willful engaging by the Executive in illegal conduct or gross
misconduct that is materially and demonstrably injurious to the
Company.
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For purposes of this
Section 5(b), no act, or failure to act, on the part of the
Executive shall be considered “willful” unless it is
done, or omitted to be done, by the Executive in bad faith and
without reasonable belief that the Executive’s action or
omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chief
Executive Officer of the Company or a senior officer of the Company
or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
The cessation of employment of the Executive shall not be deemed to
be for Cause unless and until there shall have been delivered to
the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board (excluding the Executive if the Executive
is a member of the Board) at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with
counsel for the Executive, to be heard before the Board), finding
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