Exhibit 10.3

 

HECLA MINING COMPANY STOCK PLAN FOR NONEMPLOYEE DIRECTORS

(Approved by shareholders on May 25, 2017)

 

1.     Name of Plan. This plan shall be known as the “Hecla Mining Company Stock
Plan for Nonemployee Directors” and is hereinafter referred to as the “Plan.”

 

2.     Purpose of Plan. The purpose of the Plan is to enable Hecla Mining
Company, a Delaware corporation (the “Corporation”), to attract and retain
qualified persons to serve as members of the Corporation’s Board of Directors
(the “Board”) from time to time (each, a “Director”), to enhance the equity
interest of Directors in the Corporation and to solidify the common interests of
Directors and stockholders of the Corporation (“Stockholders”) in enhancing the
value of the Corporation’s common stock, par value $0.25 per share (the “Common
Stock”). The Plan seeks to encourage the highest level of Director performance
by providing Directors with a proprietary interest in the Corporation’s
performance and progress by crediting them with shares of Common Stock annually
in satisfaction of their annual retainer.

 

3.     Effective Date and Term. The Plan shall be effective as of February 21,
2017 (the “Effective Date”) (the date that it was approved by the Board), and
shall remain in effect until (a) May 15, 2027 if approved by the Stockholders at
the 2017 Annual Meeting of Stockholders, or (b) July 17, 2017 if not so approved
by the Stockholders.

 

4.     Eligible Participants. Each Director who is not a full-time employee of
the Corporation or any of its affiliates (“Nonemployee Director”) shall be a
participant (“Participant”) in the Plan. Each credit of shares of Common Stock
pursuant to the Plan shall be evidenced by a written agreement duly executed and
delivered by or on behalf of the Corporation and a Participant, if such an
agreement is required by the Corporation to ensure compliance with applicable
laws and regulations. Following the Effective Date, no Participant shall be
eligible to receive awards under any other equity compensation plan of the
Corporation or an affiliate while a Participant in the Plan.

 

5.     Credit of Shares. (a) Commencing as of the Effective Date, in
satisfaction of the annual retainer payable to each Participant for service on
the Board (the “Annual Retainer”), each Participant shall be credited with
shares of Common Stock subject to applicable restrictions set forth in Section 6
below with respect to payment. Subject to Section 5(b) below, each Participant
shall be credited each year for service on the Board with a number of shares of
Common Stock determined by dividing the amount of the Annual Retainer for the
applicable year by the average closing price for the Common Stock on the New
York Stock Exchange (or if not listed on such exchange on any other national
securities exchange on which the shares of Common Stock are listed) for the
prior calendar year (the “Stock Retainer”). The Stock Retainer for each year
shall be credited by September 30 of each year during the term of the Plan (with
the actual date of crediting being the “Credit Date”), commencing as of the
Effective Date. A minimum of 25% of each Stock Retainer (or a greater percentage
up to 100% if the Participant so elects prior to the first day of the year in
which the applicable Stock Retainer is to be credited) shall be contributed to a
grantor trust established by the Corporation pursuant to Section 6(g) below and
subject to its terms (the “Trust Shares”). The portion of the applicable Stock
Retainer that is not contributed to a grantor trust shall be transferred to the
Participant as soon as administratively practicable following the applicable
Credit Date.

 

 

 
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(b)     Any person who becomes a Nonemployee Director following the Credit Date
of any year during the term of the Plan, whether by appointment or election as a
Director or by change in status from a full-time employee, shall be credited, on
becoming a Nonemployee Director, with a portion of the compensation to be paid
to such Participant until the Corporation’s next Annual Meeting of Stockholders,
with a number of shares of Common Stock equal to the product of the number of
shares determined pursuant to Section 5(a) above times a fraction, the numerator
of which is the number of full weeks remaining until the first anniversary of
the Credit Date for the year in which the person becomes a Nonemployee Director
and the denominator of which is 52; provided that no fractional shares shall be
credited and the number of shares of Common Stock to be credited pursuant to
this Section 5(b) shall be rounded up to the next whole number. A minimum of 25%
of any Stock Retainer payable pursuant to this Section 5(b) (or a greater
percentage up to 100% if the Participant so elects within 30 days after becoming
a Participant in the Plan (or such other time period permitted under Section
409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended)) shall
be Trust Shares and any portion the applicable Stock Retainer that is not
contributed to a grantor trust shall be transferred to the Participant as soon
as administratively practicable following the time the Participant becomes a
Nonemployee Director.

 

6.     Delivery of Trust Shares. (a) The Trust Shares, together with the
“Dividend Equivalent Amount” (as defined in Section 6(c) below) with respect
thereto, shall be delivered to the Participant or the Participant’s estate or
legal guardian in shares of Common Stock on, or beginning on, the Delivery Date
(as defined in Section 6(b) below), in accordance with this Section 6.

 

(b)     The “Delivery Date” means the first date upon which one of the following
events occurs:

 

 

(i)

Death of the Participant;

 

 

(ii)

Disability of the Participant as defined in Section 6(f) below;

 

 

(iii)

Retirement of the Participant from service as a Director in accordance with the
Corporation’s By-Laws then in effect;

 

 

(iv)

Cessation of service as a Director for any reason other than those specified in
clauses (i), (ii) or (iii) immediately above;

 

 

(v)

Change in Control as defined in Section 8 below; or

 

 

(vi)

At a specified date at least 24 months after the applicable Credit Date for the
Stock Retainer, pursuant to an election made by the Participant prior to the
first day of the year in which the applicable notional shares of Common Stock
are credited to the Participant under Section 5 above.

 

(c)     The “Dividend Equivalent Amount” with respect to any Trust Shares means
(i) the amount of cash, plus the fair market value as determined by the Board on
the date of distribution of any property, other than stock of the Corporation,
plus (ii) any shares of stock of the Corporation, in each case which the
Participant would have received as dividends or other distributions with respect
to the Trust Shares, if the Trust Shares had been delivered to the Participant
as shares of Common Stock at the time they were credited to the Participant
under this Plan, plus (iii) interest on the amount described in clauses (i) plus
(ii) at a rate equal to the Corporation’s cost of funds, from the date or
date(s) such dividends or other distributions would have been received through
the date the Trust Shares are delivered.

 

 

 
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(d)     If a Participant’s Delivery Date is described in clause (iv) (normal
cessation of service), clause (v) (Change in Control) or clause (vi) (specified
date) of Section 6(b) above, all Trust Shares and all Dividend Equivalent
Amounts with respect thereto shall be delivered at one time, as soon as
practicable after the Delivery Date. If a Participant’s Delivery Date is
described in clause (i) (death), clause (ii) (Disability) or clause (iii)
(retirement) of Section 6(b) above, the Trust Shares and the Dividend Equivalent
Amounts with respect thereto shall be delivered at one time, as soon as
practicable after the Delivery Date, unless the Participant has in effect a
valid Installment Delivery Election pursuant to Section 6(e) below to have the
Trust Shares and Dividend Equivalent Amounts delivered in yearly installments
over 5, 10 or 15 years (the “Applicable Delivery Period”). If the Participant
does have in effect a valid Installment Delivery Election, then the Trust
Shares, together with the Dividend Equivalent Amounts with respect thereto,
shall be delivered in equal yearly installments over the Applicable Delivery
Period, with the first such installment being delivered on the first anniversary
of the Delivery Date; provided, that if in order to equalize such installments,
fractional shares would have to be delivered, such installments shall be
adjusted by rounding to the nearest whole share. If any Trust Shares and
Dividend Equivalent Amounts of a Participant are to be delivered after the
Participant has died or become legally incompetent, they shall be delivered to
the Participant’s estate or legal guardian, as the case may be, in accordance
with the foregoing schedules; provided, that if the Participant dies with a
valid Installment Delivery Election in effect, and the legal representatives of
the Participant’s estate so request, the Board may (but shall not be obligated
to) deliver all remaining undelivered Trust Shares and Dividend Equivalent
Amounts to the Participant’s estate immediately. References to the Participant
in this Plan shall be deemed to refer to the Participant’s estate or legal
guardian, where appropriate.

 

(e)     An “Installment Delivery Election” means a written election by a
Participant, on such form as may be prescribed by the Board, to receive delivery
of Trust Shares and Dividend Equivalent Amounts in installments over a period of
5, 10 or 15 years, as more fully described in Section 6(d) above. Once made, an
Installment Delivery Election may be superseded by another Installment Delivery
Election. However, in order for any initial or superseding Installment Delivery
Election to be valid, it must be received by the Corporation prior to the first
day of the year in which the applicable shares of Common Stock are credited to
the Participant under Section 5. In the case of multiple Installment Delivery
Elections and/or revocations by any Participant, the most recent valid
Installment Delivery Election or revocation in effect as of the Delivery Date
shall be controlling. No Delivery Elections once made can be accelerated and any
elections to further defer Delivery Elections must be made in accordance with
the following:

 

 

(i)

Such election will not take effect until 12 months after the election is made;

 

 

(ii)

Any subsequent election other than under Section 6(b)(i) or Section 6(b)(ii)
above must be for a period of at least 5 years from the date such Delivery
Election issuance would otherwise have been made under the Plan; and

 

 

 
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(iii)

With respect to any Delivery Election issuance to be made at a specified time or
pursuant to a fixed schedule pursuant to an election at the time of such initial
deferral, such election must be made at least 12 months prior to the date of the
first scheduled Delivery Election issuance under such initial election.

 

(f)     “Disability” shall mean (i) the Participant is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, (ii) the Participant
is, by reason of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than three months under an accident and health plan covering
service providers of the Corporation or (iii) any other definition provided
under Section 409A. Unless otherwise provided by the Board, in the event that
the timing of payments under the Plan (that would otherwise be considered
“deferred compensation” subject to Section 409A) would be accelerated upon the
occurrence of a Disability, no such acceleration shall be permitted unless the
Disability also satisfies the definition of “disability” pursuant to Section
409A.

 

(g)     The Corporation has created a grantor trust (the “Trust”) to assist it
in accumulating the shares, cash and other property needed to fulfill its
obligations under this Section 6. On each date when a Stock Retainer is credited
to a Participant, the Corporation shall contribute Trust Shares to the Trust.
However, Participants shall have no beneficial or other interest in the Trust
and the assets thereof, and their rights under the Plan shall be as general
creditors of the Corporation, unaffected by the existence or nonexistence of the
Trust, except that deliveries of Trust Shares and payments of cash and other
property to Participants from the Trust shall, to the extent thereof, be treated
as satisfying the Corporation’s obligations under this Section 6.

 

7.     Share Certificates; Voting and Other Rights. The certificates for shares
delivered to a Participant or the trustee of the Trust, if any (the “Trustee”),
pursuant to Section 6 above shall be issued in the name of the Participant or
the Trustee, as the case may be, and the Participant or the Trustee, as the case
may be, shall be entitled to all rights of a Stockholder with respect to Common
Stock for all such shares issued in his name, including the right to vote the
shares; provided, however, that the Participant or the Trustee, as the case may
be, shall not receive dividends and other distributions paid or made with
respect to such shares in addition to the Dividend Equivalent Amounts.

 

 

 
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8.     Change in Control. A “Change in Control” shall be deemed to have occurred
if any of the following events shall have happened:

 

 

(i)

An acquisition by 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”) (including in connection with a merger,
consolidation, purchase or acquisition of Common Stock, or similar business
transaction) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either (1) the fair market
value of then outstanding shares of Common Stock of the Corporation (the
“Outstanding Corporation Common Stock”) or (2) the combined voting power of the
then outstanding voting securities of the Corporation entitled to vote generally
in the election of Directors (the “Outstanding Corporation Voting Securities”);
excluding, however, the following: (1) any acquisition directly from the
Corporation, other than an acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself acquired directly
from the Corporation; (2) any acquisition by the Corporation (other than an
increase in the percentage of Common Stock owned by a Person caused as a result
of a transaction in which the Corporation acquires its Common Stock in exchange
for property); (3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any corporation controlled
by the Corporation; (4) any acquisition of additional beneficial ownership in
Common Stock by a Person that is already considered to own more than 50% of more
of the total fair market value or total voting power of the Corporation; or (5)
any transaction in which the Common Stock of the Corporation does not remain
outstanding after the transaction; or

  

 

(ii)

An acquisition by any Person (including in connection with a merger,
consolidation, purchase or acquisition of Common Stock, or similar business
transaction) of beneficial ownership of 30% or more of the combined voting power
of the Corporation during a 12-month period; excluding, however, the following:
(1) any acquisition directly from the Corporation, other than an acquisition by
virtue of the exercise of a conversion privilege unless the security being so
converted was itself acquired directly from the Corporation; (2) any acquisition
by the Corporation (other than an increase in the percentage of Common Stock
owned by a Person caused as a result of a transaction in which the Corporation
acquires its Common Stock in exchange for property); (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any corporation controlled by the Corporation; or (4) any
acquisition of additional beneficial ownership in Common Stock by a Person that
is already considered to own more than 30% of more of the total voting power of
the Corporation; or

 

 

(iii)

A change in the composition of the Board such that a majority of the Directors
(such Directors shall be hereinafter referred to as the “Incumbent Directors”)
are replaced during any 12-month period by Directors whose appointment or
election is not endorsed by a majority of the Incumbent Directors before the
date of the appointment or election; or

 

 

 
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(iv)

An acquisition by any Person of assets from the Corporation, during a 12-month
period, that have a total gross fair market value equal to or more than 40% of
the total gross fair market value of all the assets of the Corporation
immediately before such acquisition or acquisitions; excluding, however, an
acquisition by any Person that is an entity controlled by the shareholders of
the Corporation immediately after the transfer (within the meaning of Section
409A).

 

Notwithstanding any provision of this definition to the contrary, in the event
that any amount or benefit under the Plan constitutes deferred compensation
under Section 409A and the settlement of or distribution of such amount or
benefit is to be triggered by a Change in Control, then such settlement or
distribution shall be subject to the event constituting the Change in Control
also constituting a “change in control event” under Section 409A.

 

9.     General Restrictions. (a) Notwithstanding any other provision of the Plan
or agreements made pursuant thereto, the Corporation shall not be required to
issue or deliver any certificate or certificates for shares of Common Stock
under the Plan prior to fulfillment of all the following conditions:

 

 

(i)

Listing or approval for listing upon notice of issuance of such shares on The
New York Stock Exchange, or such other securities exchange as may at the time be
the principal market for the Common Stock;

 

 

(ii)

Any registration or other qualification of such shares of the Corporation under
any state or federal law or regulation, or maintaining in effect any such
registration or other qualification which the Board shall deem necessary or
advisable; and

 

 

(iii)

Obtaining any other consent, approval or permit from any state or federal
governmental agency which the Board shall determine to be necessary or
advisable.

  

(b)     Nothing contained in the Plan shall prevent the Corporation from
adopting other or additional compensation arrangements for the Participants.

 

(c)     The Corporation shall not be required to issue or deliver any shares of
Common Stock under the Plan if such issuance or delivery would constitute a
violation of any provision of any law or regulation of any governmental
authority.

 

10.     Shares Available. (a) Subject to Section 11 below, the maximum number of
shares of Common Stock which may be credited as Stock Retainers pursuant to the
Plan is (i) 1,000,000 as of the Effective Date, and (ii) 3,000,000 as of the
Corporation’s 2017 Annual Meeting of Stockholders, subject to the approval of
the Stockholders at the 2017 Annual Meeting. Shares of Common Stock issuable
under the Plan shall be taken from authorized but unissued shares or from
treasury shares of the Corporation as shall from time to time be necessary for
issuance pursuant to the Plan.

 

 

 
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(b)     The maximum value of Stock Retainers credited during any calendar year
to any Nonemployee Director, taken together with any cash fees paid to such
Nonemployee Director for Board service during the calendar year and the value of
awards granted to the Nonemployee Director under any other equity compensation
plan of the Corporation or an affiliate during the calendar year, shall not
exceed the following in total value (calculating the value of any Stock
Retainers or other equity compensation plan awards based on the grant date fair
value for financial reporting purposes): (i) $900,000 for the Chair of the Board
and (ii) $675,000 for each Nonemployee Director other than the Chair of the
Board; provided, however, that awards granted to Nonemployee Directors upon
their initial election to the Board or the board of directors of an affiliate
shall not be counted against the limits under this paragraph.

 

11.     Change in Capital Structure. Subject to any required action by the
Stockholders, in the event of any change in the Common Stock effected without
receipt of consideration by the Corporation, whether by reason of any stock
dividend, stock split, split-up, split-off, spin-off, combination of shares,
exchange of shares, warrants or rights offering to purchase Common Stock at a
price below its fair market value, reclassification, recapitalization,
reorganization, reincorporation, merger, consolidation or other change in
capitalization, appropriate adjustment shall be made by the Board in the number
and kind of shares subject to the Plan and any other relevant provisions of the
Plan, in order to prevent dilution or enlargement of Participants’ rights under
the Plan.

 

12.     Administration; Amendment. (a) The Board shall have such powers and
authorities related to the administration of the Plan as are consistent with the
Corporation’s certificate of incorporation and bylaws and applicable law. The
Board shall have the power and authority to delegate its responsibilities
hereunder to its Compensation Committee or such other committee as determined by
the Board (the “Committee”), which shall have full authority to act in
accordance with its charter (as in effect from time to time), and with respect
to the power and authority of the Board to act hereunder, all references to the
Board shall be deemed to include a reference to the Committee, unless such power
or authority is specifically reserved by the Board. Except as may be required by
applicable law, regulatory requirement or the certificate of incorporation or
the bylaws of the Corporation, the Board shall have full power and authority to
take all actions and to make all determinations required or provided for under
the Plan, and shall have full power and authority to take all such other actions
and make all such other determinations that the Board deems to be necessary or
appropriate to the administration of the Plan. All actions, determinations and
decisions by the Board or the Committee under the Plan shall be in the sole
discretion of the Board (or the Committee, as applicable) and shall be final,
binding and conclusive on all persons.

 

(b)     The Board may, at any time and from time to time, amend or suspend the
Plan. An amendment shall be contingent on approval of the Stockholders to the
extent stated by the Board, required by applicable law or required by applicable
securities exchange listing requirements. No amendment or suspension of the Plan
shall, without the consent of the affected Participant, materially impair rights
or obligations of such Participant.

 

(c)     The Board may terminate the Plan at any time subject to the requirements
of Section 409A.

 

 

 
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13.     Grandfathered Amounts. Notwithstanding anything in this Plan to the
contrary, any amounts accrued and vested by Participants under the Plan prior to
January 1, 2005 will be paid under the terms of the Plan as then in effect.

 

14.     Miscellaneous. (a) Nothing in the Plan shall be deemed to create any
obligation on the part of the Board to nominate any Director for reelection by
the Stockholders or to limit the rights of the Stockholders to remove any
Director.

 

(b)     The Corporation shall have the right to require, prior to the issuance
or delivery of any shares of Common Stock pursuant to the Plan, payment by a
Participant of any taxes required by law with respect to the issuance or
delivery of such shares.

 

15.     Section 409A. (a) Notwithstanding any provision of the Plan to the
contrary, it is intended that the provisions of the Plan comply with Section
409A, and all provisions of the Plan shall be construed and interpreted in a
manner consistent with the requirements for avoiding taxes or penalties under
Section 409A. Each Participant is solely responsible and liable for the
satisfaction of all taxes and penalties that may be imposed on or in respect of
such Participant in connection with the Plan (including any taxes and penalties
under Section 409A), and the Corporation shall not have any obligation to
indemnify or otherwise hold any Participant (or beneficiary) harmless from any
or all such taxes or penalties. With respect to any amount under the Plan that
is considered “deferred compensation” subject to Section 409A, references in the
Plan to “termination of employment” (and substantially similar phrases) shall
mean “separation from service” within the meaning of Section 409A. For purposes
of Section 409A, each of the payments that may be made under the Plan is
designated as a separate payment.

 

(b)     Notwithstanding anything in the Plan to the contrary, if a Participant
is a “specified employee” within the meaning of Section 409A, no payments under
the Plan that are “deferred compensation” subject to Section 409A and that would
otherwise be payable upon the Participant’s “separation from service” (as
defined in Section 409A) shall be made to such Participant prior to the date
that is six months after the date of such Participant’s “separation from
service” or, if earlier, the date of the Participant’s death. Following any
applicable six-month delay, all such delayed payments will be paid in a single
lump sum on the earliest date permitted under Section 409A that is also a
business day.

 

16.     Governing Law. The Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware.

 

 

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