<PAGE> 1
Exhibit 10.2
EMPLOYMENT AGREEMENT
AGREEMENT by and between Hecla Mining Company, a Delaware
corporation (the "Company") and ARTHUR BROWN (the "Executive")
dated as of the 1st day of June, 2000.
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 the third anniversary of the
date hereof; provided, however, that commencing on the first
anniversary of the date hereof, 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.
<PAGE> 2
(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 one year 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 one year, (iii) the Executive's years
of service were increased by one year, 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
<PAGE> 3
(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 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 20% 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
<PAGE> 4
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 more than 20% 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 first anniversary of such
date (the "Employment Period"). The Employment Period shall
terminate upon the Executive's termination of employment for any
reason.
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(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.
(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
<PAGE> 5
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.
(b) COMPENSATION.
(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.
(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 in respect of the three
fiscal years immediately preceding the fiscal year in, which the
Effective Date
<PAGE> 6
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 the end of the
third month of the fiscal year next following the fiscal year for
which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.
(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.
(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.
(v) EXPENSES. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in
<PAGE> 7
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.
(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.
(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.
(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.
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
<PAGE> 8
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:
(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
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct that is materially and demonstrably
injurious to the Company.
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 that, in the good faith opinion of the
Board, the Executive is guilty of the conduct described in
Section 5(b)(i) or 5(b)(ii), and specifying the particulars
thereof in detail.
<PAGE> 9
(c) GOOD REASON. The Executive's employment may be
terminated during the Employment Period by the Executive for Good
Reason or by the Executive voluntarily without Good Reason. For
purposes of this Agreement, "Good Reason" means
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or any other diminution in such position,
authority, duties or responsibilities (whether or not occurring
solely as a result of the Company's ceasing to be a publicly
traded entity), excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an
isolated, insubstantial and inadvertent failures not occurring in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in Section
4(a)(i)(B) hereof, or the Company's requiring the Executive to
travel on Company business to a substantially greater extent than
required immediately prior to the Effective Date;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.
For purposes of this Agreement, any good faith determination
of Good Reason made by the Executive shall be conclusive. The
Executive's mental or physical incapacity following the
occurrence of an event described above in clauses (i) through (v)
shall not affect the Executive's ability to terminate employment
for Good Reason.
(d) NOTICE OF TERMINATION. Any termination by the Company
for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent
<PAGE> 10
applicable sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii)
if the Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving
of such notice). In the case of a termination of the Executive's
employment for Cause, a Notice of Termination shall include a
copy of a resolution duly adopted by the affirmative vote of not
less than two-thirds of the entire membership of the Board at a
meeting of the Board called and held for the purpose (after
reasonable notice to the Executive and reasonable opportunity for
the Executive, together with the Executive's counsel, to be heard
before the Board prior to such vote), finding that in the good
faith opinion of the Board the Executive was guilty of conduct
constituting Cause. No purported termination of the Executive's
employment for Cause shall be effective without a Notice of
Termination. The failure by the Executive to set forth in the
Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason shall not waive any right of the
Executive hereunder or preclude the Executive from asserting such
fact or circumstance in enforcing the Executive's rights
hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means the
date of receipt of the Notice of Termination or any later date
specified therein (which date shall be not more than 30 days
after the giving of such notice), as the case may be; provided,
however, that (i) if the Executive's employment is terminated by
the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the
Executive of such termination and (ii) if the Executive's
employment is terminated by reason of death or Disability, the
Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period,
this Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other
than the following obligations: (i) payment of the Executive's
Annual Base Salary through the Date of Termination to the extent
not theretofore paid, (ii) payment of the product of (x) the
greater of (A) the Annual Bonus paid or payable, including by
reason of deferral, (and annualized for any fiscal year
consisting of less than twelve full months or for which the
Executive has been employed for less than twelve full months) for
the most recently completed fiscal year during the Employment
Period, if any, and (B) the Recent Annual Bonus (such greater
amount hereafter referred to as the "Highest Annual
<PAGE> 11
Bonus") and a fraction, the numerator of which is the number of
days in the current fiscal year through the Date of Termination,
and the denominator of which is 365 and (iii) payment of any
compensation previously deferred by the Executive (together with
any accrued interest thereon) and not yet paid by the Company and
any accrued vacation pay not yet paid by the Company (the amounts
described in paragraphs (i), (ii) and (iii) are hereafter
referred to as "Accrued Obligations"). All Accrued Obligations
shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of
Termination. In addition, the Executive's estate or designated
beneficiaries shall be entitled to receive the Executive's Annual
Base Salary for the balance of the Employment Period. Anything
in this Agreement to the contrary notwithstanding, the
Executive's estate and family shall be entitled to receive
benefits at least equal to the most favorable benefits provided
generally by the Company and any of its affiliated companies to
the estates and surviving families of peer executives of the
Company and such affiliated under such plans, programs, practices
and policies relating to death benefits, if any, as in effect
generally with respect to other peer executives and their estate
and families at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect on the date
of the Executive's death generally with respect to other peer
executives of the Company and its affiliated companies and their
families.
(b) DISABILITY. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment period, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obligations.
All Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination. In
addition, the Executive shall be entitled to receive the
Executive's Annual Base Salary for the balance of the Employment
Period; provided, however, that such payments of Annual Base
Salary shall be reduced by any benefits paid to the Executive
under the Retirement Plan by reason of Disability. Anything in
this Agreement to the contrary notwithstanding, the Executive
shall be entitled after the Disability Effective Date to receive
disability and other benefits at least equal to the most
favorable of those generally provided by the Company and its
affiliated companies to disable executives and/or their families
in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with
respect to other peer executives and their families at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter generally with
respect to other peer executives of the Company and its
affiliated companies and their families.
<PAGE> 12
(c) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay the
Executive Annual Base Salary through the Date of Termination plus
the amount of any compensation previously deferred by the
Executive, in each case to the extent theretofore unpaid. If the
Executive terminates employment during the Employment Period
other than for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for
Accrued Obligations. In such case, all Accrued Obligations shall
be paid to the Executive in a lump sum in cash within 30 days of
the Date of Termination.
(d) GOOD REASON; OTHER THAN FOR CAUSE OR DISABILITY. If,
during the Employment Period, the Company shall terminate the
Executive's employment other than for Cause or Disability, or if
the Executive shall terminate employment under this Agreement for
Good Reason:
(i) the Company shall pay, to the Executive in a lump sum
in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. all Accrued Obligations; and
B. the product of (x) one and (y) the sum of (i) Annual
Base Salary and (ii) the Highest Annual Bonus; and
C. a lump-sum retirement benefit equal to the excess of
(a) the actuarial equivalent of the Deemed Retirement Benefit
over (b) the actuarial equivalent of the Executive's Actual
Retirement Benefit; and for purposes of determining the amount
payable pursuant to this Section 5(d)(i)C, the actuarial
assumptions utilized shall be no less favorable to the Executive
than those in effect with respect to the Retirement Plan and the
SERP during the 90-day period immediately prior to the Effective
Date; and
(ii) for one additional year, or such longer period as any
plan, program, practice or policy may provide, the Company shall
continue benefits to the Executive and/or the Executive's family
at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies
described in Section 4 (b) (iv) of this Agreement if the
Executive's employment had not been terminated in accordance with
the most favorable plans, practices, programs or policies of the
Company and its affiliated companies applicable generally to
other peer executives and their families during the 90-day period
<PAGE> 13
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 and their families; and
for purposes of determining eligibility of the Executive for
retiree benefits pursuant to such plans, practices, programs
and policies, the Executive shall be considered to have
remained employed for one additional year, and to have then
retired; and
(iii) the Company shall, at its sole expense as
incurred, provide the Executive with outplacement services the
scope and provider of which shall be selected by the Executive in
the Executive's sole discretion; PROVIDED, that the cost of such
outplacement shall not exceed $20,000; and
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or that the
Executive is eligible to receive under any plan, program, policy
or practice or contract or agreement of the Company and the
Affiliated Companies.
Notwithstanding the provisions of clause (ii) of this Section
6(d), if after using its reasonable best efforts to obtain life
insurance, long-term disability or travel accident insurance
coverage for the Executive as required by said clause (ii) at the
lowest available rates, the Company is unable to obtain such
coverage for an aggregate annual cost to the Company of not more
than two percent of the Annual Base Salary, the Executive shall
be required to elect to either (i) waive one or more of such
coverages, or (ii) have the amount or duration of one or more of
such coverages reduced, in either case so as to reduce such
aggregate annual cost to not more than two percent of the Annual
Base Salary. If any of such coverages cannot be obtained, or if
the Executive elects to waive any of such coverages as provided
in the preceding sentence, then the Company shall pay the
Executive cash in lieu thereof, in the amount of two-thirds of
one percent of the Annual Base Salary for each such coverage that
is not provided.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any benefit, bonus, incentive or other plans,
programs, policies or practices, provided by the Company or any
of its affiliated companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any other agreements with
the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of the
Company or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such
<PAGE> 14
plan, policy, practice or program except as explicitly modified
by this Agreement. Notwithstanding the foregoing, if the
Executive receives payments and benefits pursuant to Section 6(d)
of this Agreement, the Executive shall not be entitled to any
severance pay or benefits under any severance plan, program or
policy of the Company and the affiliated companies, unless
otherwise specifically provided therein in a specific reference
to this Agreement.
8. FULL SETTLEMENT. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any setoff,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others. In
no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement. The Company agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of any contest (regardless of
the outcome thereof) by the Company, the Executive or others of
the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to Section 9 of this
Agreement), plus in each case interest at the applicable Federal
rate provided for in section 7872(f)(2) of the Internal Revenue
Code of 1986, as amended (the "Code'').
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it
shall be determined that any Payment would be subject to the
Excise Tax, then the Executive shall be entitled to receive an
additional payment (the "Gross-Up Payment") in an amount such
that, after payment by the Executive of all taxes (and any
interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payments. Notwithstanding the foregoing provisions of
this Section 9(a), if it shall be determined that the Executive
is entitled to the Gross-Up Payment, but that the Parachute Value
of all Payments do not exceed 110% of the Safe Harbor Amount,
then no Gross-Up Payment shall be made to the Executive and the
amounts payable under this Agreement shall be reduced so that the
Parachute Value of all Payments, in the aggregate, equals the
Safe Harbor Amount. The reduction of the amounts payable
hereunder, if applicable, shall be made by first reducing the
payments under Section 6(d)(i), unless an alternative method of
reduction is elected by the Executive, and in any event shall be
<PAGE> 15
made in such a manner as to maximize the Value of all Payments
actually made to the Executive. For purposes of reducing the
Payments to the Safe Harbor Amount, only amounts payable under
this Agreement (and no other Payments) shall be reduced. If the
reduction of the amount payable under this Agreement would not
result in a reduction of the Parachute Value of all Payments to
the Safe Harbor Amount, no amounts payable under the Agreement
shall be reduced pursuant to this Section 9(a). The Company's
obligation to make Gross-Up Payments under this Section 9 shall
not be conditioned upon the Executive's termination of employment.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9,
including whether and when a Gross-Up Payment is required, the
amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by
PricewaterhouseCoopers or such other nationally recognized
certified public accounting firm as may be designated by the
Executive (the "Accounting Firm"). The Accounting Firm shall
provide detailed supporting calculations both to the Company and
the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment or such earlier
time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, the
Executive may appoint another nationally recognized accounting
firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the
Company to the Executive within 5 days of the receipt of the
Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up
Payments that will not have been made by the Company should have
been made (the "Underpayment"), consistent with the calculations
required to be made hereunder. In the event the Company exhausts
its remedies pursuant to Section 9(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful,
would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable, but no
later than 10 business days after the Executive is informed in
writing of such claim. The Executive shall apprise the Company
<PAGE> 16
of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date
on which the Executive gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that
the Company desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
PROVIDED, HOWEVER, that the Company shall bear and pay directly
all costs and expenses (including additional interest and
penalties) incurred in connection with such contest, and shall
indemnify and hold the Executive harmless, on an after-tax basis,
for any Excise Tax or income tax (including interest and
penalties) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing
provisions of this Section 9(c), the Company shall control all
proceedings taken in connection with such contest, and, at its
sole discretion, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at
its sole discretion, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; PROVIDED, HOWEVER, that,
if the Company directs the Executive to pay such claim and sue
for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax (including interest or
penalties) imposed with respect to such advance or with respect
to any imputed income in connection with such advance; and
PROVIDED, FURTHER, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is
<PAGE> 17
claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be
limited to issues with respect to which the Gross-Up Payment
would be payable hereunder, and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive
becomes entitled to receive any refund with respect to such
claim, the Executive shall (subject to the Company's complying
with the requirements of Section 9(c)) promptly pay to the
Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), a determination is made that
the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid
and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
(e) Notwithstanding any other provision of this Section 9,
the Company may, in its sole discretion, withhold and pay over to
the Internal Revenue Service or any other applicable taxing
authority, for the benefit of the Executive, all or any portion
of the Gross-Up Payment, and the Executive hereby consents to
such withholding.
(f) DEFINITIONS. The following terms shall have the
following meanings for purposes of this Section 9.
(i) "Excise Tax" shall mean the excise tax imposed by Section
4999 of the Code, together with any interest or penalties imposed
with respect to such excise tax.
(ii) The "Net After-Tax Amount" of a Payment shall mean the Value
of a Payment net of all taxes imposed on the Executive with
respect thereto under Sections 1 and 4999 of the Code and
applicable state and local law, determined by applying the
highest marginal rates that are expected to apply to the
Executive's taxable income for the taxable year in which the
Payment is made.
(iii) "Parachute Value" of a Payment shall mean the present
value as of the date of the change of control for purposes of
Section 280G of the Code of the portion of such Payment that
constitutes a "parachute payment" under Section 280G(b)(2), as
determined by the Accounting Firm for purposes of determining
whether and to what extent the Excise Tax will apply to such
Payment.
<PAGE> 18
(iv) A "Payment" shall mean any payment or distribution in the
nature of compensation (within the meaning of Section 280G(b)(2)
of the Code) to or for the benefit of the Executive, whether paid
or payable pursuant to this Agreement or otherwise.
(v) The "Safe Harbor Amount" means the maximum Parachute Value
of all Payments that the Executive can receive without any
Payments being subject to the Excise Tax.
(vi) "Value" of a Payment shall mean the economic present value
of a Payment as of the date of the change of control for purposes
of Section 280G of the Code, as determined by the Accounting Firm
using the discount rate required by Section 280G(d)(4) of the
Code.
10. CONFIDENTIAL INFORMATION. The Executive shall hold in
a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of the
Company, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by
it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this
Agreement.
11. SUCCESSORS.
(a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable
by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. Except
as provided in Section 11(c), without the prior written consent
of the Executive, this Agreement shall not be assignable by the
Company.
(c) The Company will require any successor (whether
director or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
<PAGE> 19
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
12. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall
have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt. requested,
postage prepaid, addressed as follows:
If to the Executive:
Arthur Brown
Hecla Mining Company
6500 Mineral DriveCoeur d'Alene, Idaho 83815-8788
IF TO THE COMPANY:
Hecla Mining Company6500 Mineral DriveCoeur d'Alene,
Idaho 83815-8788
Attention: Executive Vice President
WITH A COPY TO:
Vice President - General Counsel
Hecla Mining Company
6500 Mineral Drive
Coeur d'Alene, Idaho 83815-8788
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
<PAGE> 20
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's failure to insist upon strict
compliance with any provision hereof or the failure to assert any
right the Executive may have hereunder, including, without
limitation, the right to terminate employment for Good Reason
pursuant to Section 5(c)(i) - (v), shall not be deemed to be a
waiver of such provision or right or any other provision or right
thereof.
(f) The Executive and the Company acknowledge that, except
as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the
Executive by the Company is "at will" and, subject to Section
1(a), prior to the Effective Date, the Executive's employment may
be terminated by either the Executive or the Company at any time
prior to the Effective Date, in which case the Executive shall
have no further rights under this Agreement. From and after the
Effective Date, this Agreement shall supersede any other
agreement between the parties with respect to the subject matter
hereof.
IN WITNESS WHEREOF, the Executive has hereunder set the
Executive's hand and, pursuant to the authorization from its
Board of Directors, the Company has caused these presents to be
executed in its name on its behalf, all as of the day and year
first above written.
EXECUTIVE HECLA MINING COMPANY
/s/ Arthur Brown By: /s/ Roger A. Kauffman
-------------------------- -------------------------
Arthur Brown Roger A. Kauffman
President and CEO Executive Vice President -
Chief Operating Officer
