SUPPLEMENTAL DEFERRED COMPENSATION AGREEMENT
BETWEEN
HUNT CORPORATION
AND
JOHN W. CARNEY
THIS AGREEMENT, entered into this ____ day of __________, 2002, by and
between Hunt Corporation (the "Employer") and John W. Carney (the "Officer"),
WITNESSETH:
WHEREAS, the Officer has rendered and will continue to render valuable
services to the Employer, and the Employer desires to provide supplemental
deferred compensation to the Officer;
NOW, THEREFORE, in consideration of the Officer's continued services to
the Employer, the parties hereto, intending to be legally bound hereby, agree as
follows:
Section 1. Definitions. For purposes of this Agreement, the following
definitions shall apply:
(a) "Agreement" shall mean this Supplemental Deferred
Compensation Agreement between the Employer and the Officer.
(b) "Applicable Compensation" shall mean all compensation
reported on the Officer's Form W-2 (Wages, tips, other compensation
box) for a calendar year, including, but not limited to, any overtime
and bonuses and cash awards under the Employer's Long Term Incentive
Plan (terminated on February 14, 1996) actually paid by the Employer to
the Officer during the calendar year, but adding thereto any amount
which is contributed by the Employer pursuant to a salary reduction
agreement and which is not includible in the Officer's gross income
under section 125, 402(e)(3), 402(h)(1)(B), or 403(b) of the Code, and
excluding therefrom amounts received as stock awards under the
Employer's Long Term Incentive Plan (terminated on February 14, 1996),
and excluding therefrom any taxable employee benefits of any kind
(e.g., reimbursements of moving and relocation expenses, insurance
premiums, automobile, health, medical, and dental expenses, the cost of
group term life insurance, compensation arising from the exercise of a
nonqualified stock option or from a stock grant, and any fringe benefit
which is not excluded from gross income under section 132 of the Code).
(c) "Average Monthly Compensation" shall mean the total
Applicable Compensation received by the Officer from the Employer
during the five consecutive calendar years out of his last ten calendar
years of employment ending with the calendar year in which occurs the
earlier of the Officer's retirement or termination of employment, which
will produce the highest Average Monthly Compensation, divided by 60.
For purposes of the preceding sentence, any part-year in which the
Officer is employed shall be included within the
five-consecutive-calendar-year period if the inclusion thereof produces
a higher Average Monthly Compensation; in all other cases, part-years
shall be disregarded. If a part-year is included, the Applicable
Compensation received by the Officer during such part-year shall not be
annualized, and the part-year shall be treated, for purposes of the
calculation, as a full year.
(d) "Board" shall mean the Board of Directors of the Employer.
(e) "Cause" shall mean the Officer's:
(1) Dishonesty, fraud, willful malfeasance, gross
negligence, or other gross misconduct, which is materially
injurious to the Employer; or
(2) Conviction of or plea of guilty to a felony.
(f) "Change in Control" shall mean the occurrence of any of
the following:
(1) Any person (a "Person"), as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (other than (i) the
Employer and/or its wholly-owned subsidiaries, (ii) any
employee stock ownership plan or other employee benefit plan
of the Employer, and any trustee or other fiduciary in such
capacity holding securities under such plan, (iii) any
corporation owned, directly or indirectly, by the shareholders
of the Employer in substantially the same proportions as their
ownership of stock of the Employer, or (iv) the Officer or any
group of Persons of which he voluntarily is a part), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of
the Employer representing 30% or more of the combined voting
power of the Employer's then outstanding securities, or such
lesser percentage of voting power, but not less than 15%, as
the Board shall determine; provided, however, that a Change in
Control shall not be deemed to have occurred under the
provisions of this paragraph (1) by reason of the beneficial
ownership of voting securities by members of the Bartol Family
(as defined below) unless and until the beneficial ownership
of all members of the Bartol Family (including any other
individuals or entities who or which, together with any member
or members of the Bartol Family, are deemed under Sections
13(d) or 14(d) of the Exchange Act to constitute a single
Person) exceeds 50% of the combined voting power of the
Employer's then outstanding securities.
(2) During any two-year period, Directors of the
Employer in office at the beginning of such period plus any
new Director designated by a Person who has entered into an
agreement with the Employer to effect a transaction within the
purview of paragraph (1) or (3) whose election by the Board,
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or whose nomination for election by the Employer's
shareholders, was approved by a vote of at least two-thirds of
the Directors then still in office who either were Directors
at the beginning of the period or whose election or nomination
for election was previously so approved, shall cease for any
reason to constitute at least a majority of the Board; or
(3) The Employer's shareholders or the Board shall
approve (i) any consolidation or merger of the Employer in
which the Employer is not the continuing or surviving
corporation or pursuant to which the Employer's voting common
shares (the "Common Shares") would be converted into cash,
securities, or other property, other than a merger of the
Employer in which holders of Common Shares immediately prior
to the merger have the same proportionate ownership of common
shares of the surviving corporation immediately after the
merger as they had in the Common Shares immediately before,
(ii) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all or
substantially all the assets or earning power of the Employer,
or (iii) the liquidation or dissolution of the Employer.
As used in this subsection (f), "members of the Bartol Family"
shall mean the wife, children, and descendants of such children of the
late George E. Bartol III, their respective spouses and estates, any
trusts primarily for the benefit of any of the foregoing, and the
administrators, executors, and trustees of any such estates or trusts.
Whether a Change in Control has occurred shall be determined
by the Compensation Committee of the Board (as it is constituted on the
day preceding the date of the Change in Control), subject to the
provisions of Section 3.7(d) of the Trust Agreement.
(g) "Change in Control Agreement" shall mean the Change in
Control Agreement between the Officer and the Employer.
(h) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(i) "Committee" shall mean the Pension Committee appointed by
the Board.
(j) "Employer" shall mean Hunt Corporation, a Pennsylvania
corporation, or any successor thereto.
(k) "Joint and Survivor Annuity" shall mean an immediate
annuity for the life of the Officer, with a survivor annuity for the
life of his Spouse which is equal to 50 percent of the amount of the
annuity payable during the joint lives of the Officer and his Spouse.
(l) "Officer" shall mean John W. Carney, an officer of the
Employer.
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(m) "Pension Plan" shall mean the Hunt Corporation Pension
Plan, as amended from time to time.
(n) "Retirement Date" shall mean the first day of the month
coinciding with or immediately following the date of the Officer's
termination of employment.
(o) "Spouse" shall mean the Officer's spouse to whom he is
married at the earlier of his Retirement Date or date of death.
(p) "Supplemental Plan" shall mean the Hunt Corporation
Supplemental Executive Benefits Plan, as amended from time to time.
(q) "Trust Agreement" shall mean the Hunt Corporation
Supplemental Executive Benefits Plan Trust Agreement.
Section 2. Supplemental Benefit. Except as provided inss.4, the Officer
shall be entitled to a monthly retirement pension, commencing at his Retirement
Date and continuing until the first day of the month in which his death occurs,
equal to the following:
(a) 60% of the Officer's Average Monthly Compensation; reduced
by
(b) The sum of:
(1) The monthly retirement pension payable to the
Officer at his Retirement Date under the Pension Plan in the
form of and Joint and Survivor Annuity (whether or not the
Officer actually receives his benefit under the Pension Plan
in such form or on such date); plus
(2) The monthly retirement pension payable to the
Officer at his Retirement Date under Article IV of the
Supplemental Plan in the form of a Joint and Survivor Annuity
(whether or not the Officer actually receives his benefit
under the Supplemental Plan in such form or on such date).
Section 3. Survivor Annuity. Except as provided in ss.4, upon the
Officer's death, his surviving Spouse (if any) shall be entitled to a monthly
survivor pension, commencing as of the first day of the month following the
Officer's death and continuing until the first day of the month in which the
Spouse's death occurs. If the Officer dies on or after his Retirement Date, the
amount of the monthly survivor pension shall be one-half of the amount of the
supplemental benefit to which the Officer was entitled. If the Officer dies
prior to his Retirement Date, the amount of the monthly survivor pension shall
be one-half of the amount of the supplemental benefit determined under ss.2 as
of the Officer's date of death. If the Officer's Spouse does not survive him, no
benefits shall be payable under this Agreement after the Officer's death.
Section 4. Forfeiture of Benefits. No benefits shall be payable
underss.2 orss.3 of this Agreement if:
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(a) The Officer voluntarily terminates employment prior to age
62 (unless the Officer's termination of employment is in connection
with a Change in Control and constitutes a "Covered Termination" as
defined in Section 6(b) of the Change in Control Agreement); or
(b) The Officer is terminated for Cause.
Section 5. Withholding; Payroll Taxes. The Employer shall withhold from
payments made under this Agreement any taxes required to be withheld for
Federal, state, or local taxes.
Section 6. Source of Funds.
(a) This Agreement shall be unfunded, and, except as provided
in subsection (b), payment of any benefits hereunder shall be made from
the general assets of the Employer. Any assets which may be set aside,
earmarked, or identified as being intended for the payment of benefits
under this Agreement shall remain assets of the Employer and shall be
subject to the claims of its general creditors. The Officer and his
Spouse shall be general and unsecured creditors of the Employer to the
extent of the value of the amounts payable hereunder, and shall have no
right, title, or interest in any specific asset that the Employer may
set aside, earmark, or identify as for the payment of benefits under
this Agreement. The Employer's obligation under this Agreement shall be
merely that of an unfunded and unsecured promise of the Employer to pay
money in the future.
(b) Notwithstanding subsection (a), assets shall be set aside
in a grantor trust under the Trust Agreement and earmarked for the
payment of benefits under this Agreement, provided that the Officer and
his Spouse shall continue to be general and unsecured creditors of the
Employer with respect to assets set aside in such trust.
Section 7. Administrator.
(a) This Agreement shall be administered by the Pension
Committee appointed by the Board, except that the Officer shall not
take part in any action or decision by the Committee under this
Agreement. Unless this Agreement specifically provides otherwise, the
Committee shall have sole discretion to construe and interpret the
provisions of this Agreement and to determine all questions concerning
benefit entitlements, including the power to construe and determine
disputed and doubtful terms. To the maximum extent permissible under
law, the determinations of the Committee on all such matters shall be
final and binding upon all persons involved.
(b) The Committee shall keep a record of its proceedings and
actions and shall maintain all books of account, records, and other
data as shall be necessary for the proper administration of this
Agreement. Such records shall contain all relevant data pertaining to
the Officer and his rights under this Agreement. The Committee shall
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have the duty to carry into effect all rights or benefits provided
hereunder to the extent assets of the Employer are properly available
therefor.
(c) The Employer shall pay all expenses of administering this
Agreement. Such expenses shall include any expenses incident to the
functioning of the Committee.
(d) The Employer shall indemnify the members of the Committee
and the employees of the Employer to whom the Committee delegates
duties under this Agreement against any and all claims, losses,
damages, expenses, and liabilities arising from their responsibilities
in connection with this Agreement, unless the same is determined to be
due to gross negligence or willful malfeasance. The Employer may
purchase insurance covering its liabilities under this subsection (d).
Section 8. Claims Procedure.
(a) If the Officer or his Spouse (hereinafter referred to as the
"Applicant," which reference shall include the legal representative, if any, of
the Officer or Spouse) does not receive the timely payment of the benefits to
which the Applicant believes he or she is entitled under the terms of this
Agreement, the Applicant may make a claim for benefits in the manner hereinafter
provided.
All claims for benefits under this Agreement shall be made in writing
and shall be signed by the Applicant. Claims shall be submitted to a
representative designated by the Committee and hereinafter referred to as the
"Claims Coordinator." The Claims Coordinator may, but need not, be a member of
the Committee. If the Applicant does not furnish sufficient information with the
claim for the Claims Coordinator to determine the validity of the claim, the
Claims Coordinator shall furnish the Applicant with forms prescribed by the
Committee within ten days of receipt of the initial claim, indicating any
additional information which is necessary for the Claims Coordinator to
determine the validity of the claim.
Each claim hereunder shall be acted on and approved or disapproved by
the Claims Coordinator within 60 days following the receipt by the Claims
Coordinator of the information necessary to process the claim. The written or
electronic notice which the Claims Coordinator shall provide to the Applicant in
the event of a denial of a claim for benefits shall set forth in a manner
calculated to be understood by the Applicant:
(1) The specific reason or reasons for the denial;
(2) Specific references to pertinent provisions of this
Agreement on which the denial is based;
(3) A description of any additional material or information
necessary for the Applicant to perfect the claim and an explanation of
why the material or information is necessary; and
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(4) A description of the review procedures under this
Agreement and the time limits applicable to such procedures, including
a statement of the Applicant's right to bring a civil action under
section 502(a) of ERISA (if applicable) following an adverse benefit
determination on review.
If no action is taken by the Claims Coordinator on an Applicant's claim
within 60 days after receipt by the Claims Coordinator, such application shall
be deemed to be denied for purposes of the following appeals procedure.
(b) An Applicant whose claim for benefits is denied in whole
or in part (such Applicant being hereinafter referred to as the
"Claimant") may appeal from such denial to the Committee for a review
of the decision by the entire Committee. Such appeal must be made
within six months after the Claimant has received written notice of the
denial as provided above. An appeal must be submitted in writing within
such period and must:
(1) Request a review by the entire Committee of the
claim for benefits under this Agreement;
(2) Set forth all of the grounds upon which the
Claimant's request for review is based and any facts in
support thereof; and
(3) Set forth any issues or comments which the
Committee deems pertinent to the appeal.
The Committee shall make its decision on review within 60 days
after receipt of the Claimant's request for review, unless special
circumstances require an extension of the time for processing the
Claimant's request for review, in which case written notice of the
extension and circumstances shall be provided to the Claimant prior to
the termination of the initial 60-day period and a decision shall be
rendered as soon as possible but not later than 120 days after receipt
of the request for review; provided, however, that if the Claimant
fails to submit information necessary to make a benefit determination
on review, such period shall be tolled from the date on which the
extension notice is sent to the Claimant until the date on which the
Claimant responds to the request for additional information.
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The Committee shall make a full and fair review of the appeal
and any written materials submitted by the Claimant or the Employer in
connection therewith. The Committee may require the Claimant and the
Employer to submit such additional facts, documents, or other evidence
as the Committee in its discretion deems necessary or advisable in
making its review. The Claimant shall be provided, upon request and
free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the Claimant's claim for
benefits. The Claimant shall also have the opportunity to submit
written comments, documents, records, and other information relating to
the claim for benefits, and the Committee shall take into account all
such information submitted without regard to whether such information
was submitted or considered in the initial benefit determination.
On the basis of its review, the Committee shall make an
independent determination of the Claimant's eligibility for benefits
under this Agreement. The decision of the Committee on any claim for
benefits shall be final and conclusive upon all parties thereto.
In the event the Committee denies an appeal, in whole or in
part, the Committee shall give written or electronic notice of the
decision to the Claimant, which notice shall set forth in a manner
calculated to be understood by the Claimant the specific reasons for
such denial and which shall make specific reference to the pertinent
provisions of this Agreement on which the Committee decision was based.
The decision on review shall also include (i) a statement that the
Claimant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records, and other
information relevant to the Claimant's claim for benefits; and (ii) a
statement describing any voluntary appeal procedures offered under this
Agreement, and a statement of the Claimant's right to bring an action
under section 502(a) of ERISA (if applicable).
It is intended that the claims procedure under this Agreement
be administered in accordance with the claims procedure regulations of
the Department of Labor set forth in 29 C.F.R. ss.2560.503-1.
Section 9. Nonalienation of Benefits. Except as otherwise required by
applicable law, the right of the Officer or his Spouse to any benefit or
interest hereunder shall not be subject to encumbrance, attachment, execution,
garnishment, assignment, pledge, alienation, sale, transfer, or anticipation,
either by the voluntary or involuntary act of the Officer or his Spouse or by
operation of law, nor shall such payment, right, or interest be subject to any
other legal or equitable process.
Section 10. Amendment and Termination. The Board may amend or terminate
this Agreement only with the written consent of the Officer (or, after the
Officer's death, his Spouse).
Section 11. Miscellaneous.
(a) No Contract of Employment. Nothing contained herein shall
be construed as conferring upon the Officer the right to continue in
the employ of the Employer.
(b) Relationship to Change in Control Agreement, Severance
Plan. The payment of benefits hereunder shall not affect the Officer's
entitlement to payments under the Change in Control Agreement or the
Hunt Corporation Officer Severance Plan, nor shall any payments made
under the Change in Control Agreement or under the Hunt Corporation
Severance Plan affect the Officer's entitlement to benefits hereunder.
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(c) Costs and Expenses of Enforcement. In the event that it
shall be necessary or desirable for the Officer to retain legal counsel
or incur other costs and expenses in connection with the enforcement of
any and all of his rights under this Agreement, the Employer shall pay
(or the Officer shall be entitled to recover from the Employer, as the
case may be) his reasonable attorneys' fees and cost and expenses in
connection with the enforcement of his said rights, regardless of the
final outcome, unless a court shall determine that under the
circumstances recovery by the Officer of all or a part of any such fees
and costs and expenses would be unjust.
(d) Applicable Law. The provisions of this Agreement shall be
construed and interpreted according to the laws of the Commonwealth of
Pennsylvania (without regard to principles of conflict of laws), to the
extent not superseded by Federal law.
(e) Successors. The provisions of this Agreement shall bind
and inure to the benefit of the Employer and its successors and
assigns. The term "successors" as used herein shall include any
corporate or other business entity which shall, whether by merger,
consolidation, purchase, or otherwise, acquire all or substantially all
of the business and assets of the Employer, and successors of any such
corporation or other business entity.
(f) Headings. The headings of the sections and subsections of
this Agreement are for reference only. In the event of a conflict
between a heading and the contents of a section or subsection, the
contents of the section or subsection shall control.
IN WITNESS WHEREOF, the Employer and the Officer have caused this
Supplemental Deferred Compensation Agreement to be duly executed this ____ day
of _________, 2002.
Attest: HUNT CORPORATION
By:
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John W. Carney
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