Exhibit 10
TRANSITION AGREEMENT
This Transition Agreement (the "Agreement") is entered into this
13th day of June, 1995, between HUNT MANUFACTURING CO., a Pennsylvania
corporation (the "Company"), and RONALD J. NAPLES ("Naples").
BACKGROUND
Naples currently is serving as Chairman of the Board of the Company
and has served the Company in varying executive capacities for over 19 years,
most recently as Chief Executive Officer of the Company. The parties now wish by
this Agreement to set forth the terms of Naples's transition out of the Company.
THEREFORE, in consideration of the mutual obligations and
agreements contained herein and intending to be legally bound, the Company and
Naples hereby agree as follows:
1. Resignation; Continued Employment/Consultancy.
(a) Resignation. Naples resigned all of his positions as an officer of the
Company and its subsidiaries on April 19, 1995, and shall resign as Chairman of
the Board and director of the Company and its subsidiaries not later than July
19, 1995.
(b) Employment and Consultancy. Naples currently is continuing as a
non-executive employee of the Company and its subsidiary, Hunt Management
Company, Inc., and shall continue in that capacity until: (i) July 19, 1998;
(ii) Naples's commencement of other employment (as defined in Section 4(a)
hereof); (iii) Naples's death; or (iv) Naples's discharge for "Cause," whichever
shall first occur. (Where applicable, the term "Company" shall also include Hunt
Management Company, Inc., Naples's employer.)
In the event of termination of Naples's employment pursuant to
clause (ii) of this subsection (b), Naples shall continue as a consultant to the
Company until July 19, 1998, or until his earlier termination for Cause or
death.
For purposes of this Agreement, "Cause" shall mean: (1) Naples's
willful and material breach of this Agreement (including, without limitation,
the provisions of Section 6 hereof); or (2) Naples's dishonesty, fraud, willful
malfeasance, gross negligence or other gross misconduct relating to the
performance of Naples's employment or consultancy hereunder which is materially
injurious to the Company. Such "Cause" shall be determined by a resolution
approved by at least two-thirds of the Directors of the Company after having
afforded Naples the opportunity to appear before the Board of Directors of the
Company and present his position.
The Company shall give Naples not less than 60 days prior written
notice of any intended termination of Naples's employment with or consultancy to
the Company hereunder for Cause, with termination to occur no earlier than the
expiration of such 60-day period. Such notice shall specify the grounds for
such intended termination, and the Company shall only be entitled to terminate
Naples for Cause if Naples shall have failed to remedy such Cause within said
60-day notice period. Naples shall give the Company not less than 15 days prior
written notice of any proposed resignation by him as an employee of or
consultant to the Company.
(c) Duties. During the term of his employment and consultancy hereunder, Naples
shall perform such services for the Company and its subsidiaries as may
reasonably be assigned to him, from time to time, by the Chairman (if other than
Naples), the Vice Chairman, the Chief Executive Officer or the President of the
Company (each an "Authorized Officer"). Such duties may include, without
limitation, the following:
(i) advising, consulting and assisting in transition matters
relating to the transfer of responsibilities to a
successor Chief Executive Officer;
(ii) reviewing the Company's quarterly and annual reports, and
offering comments for improving the Company's performance
as reflected on such reports;
(iii) advising and consulting with respect to strategic
opportunities;
(iv) advising, consulting and assisting in the development of
business opportunities and the maintenance of customer
relations.
Unless expressly authorized by the Company's Board of Directors,
Chairman of the Board (if other than Naples) or Chief Executive Officer, Naples
shall not have, and shall not hold himself out as having, any authority to make
any representations on behalf of the Company nor to execute any agreements on
behalf of the Company or otherwise to bind the Company to any obligation to
third parties.
During the term of his employment hereunder, Naples shall not be
required to spend more than 90 hours per month, and during the term of any
consultancy hereunder not more than 45 hours per month, on the performance of
his duties. Naples shall record the time spent by him on the duties assigned by
an Authorized Officer and shall submit a statement of such time to the Chairman
of the Company promptly after the end of each month. Further, such duties may be
performed via telephone and/or by written communication and shall not require
Naples's presence at the Company's facilities or his travel outside of the
greater Philadelphia area unless otherwise mutually agreed by the parties. The
Company shall reimburse Naples in accordance with the Company's normal
reimbursement policies for all authorized, reasonable and documented expenses
incurred by him in the performance of his duties hereunder.
2. Compensation; Benefits; etc..
(a) Salary. Up through July 19, 1995, the Company shall continue to
pay Naples his present salary of $400,000 per year. Commencing July 20, 1995 the
Company, subject to Section 4 hereof, shall pay Naples a salary at the rate of
$565,000 per year for the three-year period ended July 19, 1998. Naples's salary
shall be paid to him in accordance with the Company's normal payroll practices
and schedule, less applicable withholding and deductions, and shall be sent to
him at such address as he shall specify in writing to the Company from time
to time.
(b) Annual Bonus. The Company shall pay Naples a pro rata bonus, if
any, earned for fiscal year 1995 under the Company's annual bonus program based
upon service through April 30, 1995, but Naples shall not be entitled to any
bonus with respect to any period after April 30, 1995. Such pro rata bonus, if
earned, shall be paid at such time as other executives of the Company receive
their annual bonuses for fiscal 1995, and shall be based upon the Company's
profits before taxes per share as determined under the Annual Bonus Plan for the
executives of the Company.
(c) Long-Term Incentive Compensation Plan. Naples's unvested awards
under the Company's Long-Term Incentive Compensation Plan (the "LTIC Plan")
shall be proportionately vested through April 30, 1995 and shall be paid to
Naples as and when provided in the LTIC Plan. These include awards under the
LTIC Plan for the FY 93-95 performance period and the FY 94-96 performance
period. With respect to the FY 93-95 performance period, Naples shall be
entitled to 28/36 of a full award, and with respect to the FY 94-96 performance
period, Naples shall be entitled to 16/36 of a full award. Naples shall not be
entitled to participate in the LTIC Plan with respect to any period after April
30, 1995.
(d) Benefits. Up through July 19, 1995, Naples shall continue his
present participation in Company benefit plans and programs except as otherwise
expressly provided in this Agreement. Subsequent to July 19, 1995, Naples shall
continue to participate in the Company benefit plans and programs listed in
Schedule 2(d) hereto as and to the extent specified in such Schedule; however,
he shall not participate in any other benefit plans and programs of the Company
including, without limitation, those listed in Paragraph V of Schedule 2(d).
(e) Automobile; Perquisites; etc. On or about August 1, 1995, the
Company shall transfer to Naples title to the 1993 Buick Roadmaster Estate
automobile presently leased by the Company for him and to the cellular telephone
affixed to the automobile. Such transfer shall be without cost to Naples except
for any withholding taxes and licensing and registration fees as may be
required, and, on the date of such transfer, Naples shall return to the Company
all Company credit cards issued by gasoline companies. Naples agrees to accept
such automobile in its then condition and shall thereafter be responsible for
such automobile, its maintenance and the securing of all insurance thereon and
for the cost of operation of the cellular telephone located in such automobile.
Naples further agrees to indemnify and hold the Company harmless against any
liability or obligation with respect to such automobile or its use following
such transfer of title.
Any items of Company-owned equipment, as well as Company credit
cards furnished by the Company to Naples for his use, shall be returned to the
Company (if not previously returned) on the date of his resignation as Chairman
of the Board and director of the Company, unless otherwise expressly agreed by
the Company.
The Company shall continue to furnish to Naples the other
perquisites listed on Schedule 2(e) hereto through December 31, 1995, or until
the earlier termination of Naples's employment hereunder; however, he shall not
be entitled to any perquisites not listed on or expressly excluded by Schedule
2(e).
3. Certain Additional Payments.
(a) Vacating of Office; Allowance; etc.. Naples shall vacate his
office at the Company not later than July 20, 1995. The Company shall pay Naples
$6,000 if he vacates his office by May 15, 1995 or $4,000 if he vacates said
office after May 15, 1995 but by June 15, 1995. Further, the Company shall pay
Naples $4,167 per month for the 12 calendar months following the month in which
he vacates his office and $2,084 per month for the succeeding 12 calendar months
as an allowance for rent, secretarial help and/or outplacement services. Any
payments required under the first sentence of this subsection (a) shall be made
on or before the 10th day of the month following the month Naples vacates his
office, and the monthly payments required by the second sentence of this
subsection (a) shall be payable on or before the 10th day of each month
commencing with the month following the month in which he vacates his office.
(b) Legal Fees. The Company shall pay Naples's legal fees, up to a
maximum aggregate of $10,000, incurred by him in connection with the negotiation
and implementation of this Agreement. Such payment shall be made promptly by the
Company upon receipt of reasonable documentation of such fees.
4. Termination of Employment; Conversion to Consultancy;
Mitigation; Effects.
(a) Other Employment. Naples shall be under no obligation to seek
or accept other employment during the period ending July 19, 1998. If Naples
does commence other employment, as defined in this subsection (a), during such
period, his employment by the Company, his entitlement to participate in the
Company's benefit plans and programs (except as otherwise expressly provided in
such plans and programs or in Schedule 2(d) hereto or by applicable law), and
his entitlement to the payments set forth in Section 3(a) hereof shall terminate
concurrently with commencing such other employment, but Naples shall continue as
a consultant to the Company, and the Company shall continue to pay him the
salary specified in Section 2(a) hereof ("Salary") through July 19, 1998 or
until his earlier death or termination of his consultancy for Cause. Naples
shall be deemed to have commenced other employment if (i) he becomes actively
involved on a substantially full-time basis in any business as a general partner
in a partnership, or (ii) he is employed (whether as an employee or as an
independent contractor) on a substantially full-time basis by any other entity,
not more than 30% of which is owned by Naples and/or members of his family, for
a period of more than eight weeks in any calendar quarter, in which case
Naples's other employment shall be considered to have commenced on the first day
following such eight-week period. (A "substantially full-time basis" shall mean
employment on a basis which requires Naples to spend three days a week or more
of his normal working time in such other activity. Naples's "family" shall mean
his parents, his siblings and their spouses, his children and their spouses, and
Naples's spouse and her parents and siblings.) Naples shall notify the Company
not later than the day such partnership initially commences and, in the case of
employment, shall provide preliminary notice on the date such employment
commences and confirmatory notice on the completion of the eighth week of such
employment. Naples shall cease to be an employee of the Company on the first day
following such eight-week period.
(b) Mitigation. Notwithstanding subsection (a) above, during the
year commencing July 20, 1997 and ending July 19, 1998 (the "mitigation year"),
the Salary or consulting fees to which Naples shall be entitled hereunder shall
be reduced by the amount of compensation earned by Naples from other employment
(as defined above) during such mitigation year. Compensation earned by Naples
during the mitigation year from any such other employment shall be deemed to
include compensation or other earned income reported on IRS Form W-2,
Schedule K-1, or Form 1099, for the calendar years 1997 and 1998, subject
to the following guidelines: any bonus received by Naples with respect to the
1997 or 1998 calendar years shall be prorated, on a monthly basis, throughout
such calendar years; any amounts attributable to the grant or exercise of stock
options or currently nontaxable benefits shall be excluded; nonqualified
deferred compensation shall be included, when earned, if such deferred amounts
are not subject to a substantial risk of forfeiture, and shall be excluded if
subject to a substantial risk of forfeiture; and any amounts attributable to
grants of restricted stock shall be included on the date of grant without
regard to the date or dates on which the restrictions on such stock lapse. The
parties shall cooperate with one another in good faith to determine the amount
of such reduction in Salary or consulting fees and the method of effecting same.
(c) Death. If Naples's employment or consultancy hereunder shall be
terminated prior to July 20, 1998 due to his death, Naples's entitlement to
participate in the Company's benefit plans and programs (except as otherwise
expressly provided in such plans and programs or in Schedule 2(d) hereto or by
applicable law) and his entitlement to the payments set forth in Section 3(a)
hereof immediately shall terminate (if not previously terminated), but the
Company shall continue to pay Naples's Salary through July 19, 1998 to his
estate.
(d) Cause. If Naples's employment or consultancy hereunder shall be
terminated prior to July 19, 1998 for "Cause", his entitlement to participation
in the Company's benefit plans and programs and his entitlement to the payments
set forth in Section 3(a) hereof shall immediately terminate as and to the
extent provided in subsection (c) above, and Naples shall not be entitled to
Salary with respect to any period subsequent to the termination of his
employment or consultancy.
(e) Disability. If Naples becomes disabled, as defined in the
Company's Group Long-Term Disability Plan, while employed by or acting as a
consultant hereunder to the Company, Naples's entitlement to participate in the
Company's benefit plans thereafter shall be determined as expressly provided by
the terms of the applicable plans and as provided under the terms of this
Agreement, but the Company shall continue to pay to Naples his Salary through
July 19, 1998, except that such Salary shall be reduced by the amount of any
disability payments which may be payable to Naples under the Company's
disability plans with respect to the period from the date of Naples's disability
through July 19, 1998.
5. Repayment of Indebtedness.
Naples currently has outstanding loans from the Company, in the
aggregate principal amount of $533,871, made pursuant to the terms of a Loan and
Security Agreement, as last amended on April 20, 1988, which loans are
represented by Promissory Notes. Subject to Naples's right to prepay them in
whole or in part at any time without penalty, the currently outstanding
Promissory Notes shall remain outstanding in accordance with their current
terms. Naples shall repay such Promissory Notes in full not later than the
earliest of: (a) September 17, 1998, (b) 60 days following termination of his
employment and any consultancy hereunder if such termination occurs prior to
July 19, 1998, or (c) the date such Notes become due and payable in accordance
with their respective terms.
6. Certain Covenants of Naples.
(a) Confidentiality. Naples shall hold in a fiduciary capacity for the benefit
of the Company and its subsidiaries all secret or confidential information,
knowledge or data relating to the Company or any of its subsidiaries and their
respective businesses which shall have been or shall be obtained by Naples
during his prior or future employment by or consultancy with the Company or any
of its subsidiaries and which shall not have become public knowledge (other than
by acts by Naples or his representatives in violation of this Agreement). For a
period of three years following the termination of Naples's employment with or
consultancy to the Company and its subsidiaries for any reason, Naples shall
not, without prior written consent of the Company, use for his own benefit or
communicate or divulge to anyone other than the Company and those designated by
it any such information, knowledge or data.
(b) Noncompetition. Naples agrees that prior to July 20, 1998 he shall not: (i)
directly or indirectly, anywhere in the world, manufacture, produce, sell or
market, or cause or assist any other person or entity to manufacture, produce,
sell or market any product, in direct competition with any product which was
being sold or marketed by the Company or any of its subsidiaries at April 19,
1995, or which as of that date the Company was planning to market and sell, or
(ii) be an employee, officer, director, partner, or trustee of, or be the
beneficial owner of more than 5% of the outstanding common stock of or
equivalent equity interest in, any person or entity that is engaged in any such
activities. However, this subsection (b) shall not restrict Naples from becoming
an employee of another entity which is engaged as part of its business in any
such competing activities, provided that Naples reasonably can demonstrate to
the Company that his position and activities with such other entity do not
involve, to any material extent, such competing activities, and provided further
that Naples continues strictly to abide by the provisions of subsections (a) and
(c) of this Section 6.
(c) Noninducement. Naples agrees that prior to July 20, 1998, he will not,
directly or indirectly, take any action to induce any supplier or customer of
the Company or any of its subsidiaries to cease doing business, or to reduce the
amount of its business, with the Company or any of its subsidiaries, or to
solicit any person in the employ of the Company or any of its subsidiaries to
terminate such employment and become employed elsewhere.
(d) Equitable Relief. Naples acknowledges that the covenants contained in
subsections (a), (b) and (c) above are reasonable and necessary for the
protection of the Company's legitimate interests. However, in the event that the
duration and/or scope of any such covenant are finally determined by any court
or arbitration panel of applicable jurisdiction to be of such length or breadth
as to render the covenant unenforceable, the duration and/or scope of such
covenant shall be reduced to such length and/or breadth as shall render such
covenant enforceable. Notwithstanding the provisions of Section 10 hereof, the
Company shall be entitled to seek equitable remedies, including injunctive
relief, in any court of applicable jurisdiction in the event of any breach or
threatened breach by Naples of the covenants contained in subsection (a) above
(but no such equitable judicial remedy shall be available for a breach of
subsections (b) and (c) above).
(e) Damages. In the event that it is determined by a court or arbitration
panel pursuant to Sections 6(d) or 10 hereof, respectively, that Naples has
materially and willfully violated the provisions of Section 6(a), (b) or (c)
hereof, the court or arbitration panel may award damages to the Company;
provided, however, that such damages, in the case of a violation of Section 6(b)
hereof, shall not exceed the amount of the compensation and the cost to the
Company of the benefits received by Naples under this Agreement during the
period that the violation existed, plus interest thereon. In no event shall an
asserted violation of the provisions of Section 6(a), (b) or (c) hereof
constitute a basis for deferring or withholding any compensation or benefits
otherwise payable to Naples under this Agreement unless and until the existence
of a material and willful violation is determined by a court or by arbitration
pursuant to Sections 6(d) or 10 hereof, respectively.
7. Cooperation in Litigation.
During the period of his employment and consultancy hereunder and
for two years thereafter, Naples, upon reasonable notice, shall furnish such
information and proper assistance to the Company as may reasonably be required
in connection with any litigation or administrative proceedings or
investigations in which the Company may be or become involved.
8. Indemnification.
To the extent not in contravention of applicable law, the Company
shall provide to Naples with respect to periods prior hereto and with respect to
such future periods as he remains an employee of or a consultant to the Company
hereunder the same rights to indemnification and advances of expenses as Naples
presently has under the By-laws of the Company.
9. Mutual Release.
The Compensation and benefits provided for in this Agreement
constitute the entire compensation and benefits which Naples shall be entitled
to receive. Further, the parties concurrently herewith shall execute the Mutual
Release attached hereto as Appendix I.
10. Arbitration.
Except as otherwise provided in Section 6(d) hereof, any
controversy or claim arising out of or relating to this Agreement or the breach
hereof which cannot promptly be resolved by the parties shall be promptly
submitted to and settled exclusively by arbitration in the City of Philadelphia,
Pennsylvania, in accordance with the laws of the Commonwealth of Pennsylvania by
three arbitrators, one of whom shall be appointed by the Company, one by Naples
and the third of whom shall be appointed by the first two arbitrators. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this Section 10. Judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof.
11. Knowing and Voluntary Agreement.
Naples acknowledges that he has carefully read and fully
understands all of the provisions and effects of this Agreement, that he has
received the assistance and advice of legal counsel of his choice in connection
herewith and through the negotiation hereof, that he knowingly and voluntarily,
of his own free will without any duress, being fully informed and after due
deliberation accepts the terms hereof, and that the Company has provided him
with no less than twenty-one days to consider this Agreement before executing
it.
12. Effective Date; Notices.
This Agreement will become effective on the date first above
written, provided that it has not been rescinded by Naples by his written notice
to the Company within a period of seven days after such date.
Any notices, requests, demands and other communications provided
for by this Agreement shall be sufficient if in writing and if hand delivered or
if sent by registered or certified mail, if to Naples, at the last address he
has filed in writing with the Company or, if to the Company, to the attention of
the Chief Executive Officer at the Company's then principal executive offices.
Notices, requests, etc. shall be effective when actually received by the
addressee or at such address.
13. Assignment and Benefit.
(a) Nonassignable by Naples. This Agreement is personal to Naples
and shall not be assignable by Naples by operation of law or otherwise, without
prior written consent of the Company otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by Naples's heirs and legal representatives.
(b) Assignment by Company. This Agreement shall inure to the
benefit of and be binding upon the Company and its successors and assigns,
including without limitation, any subsidiary of the Company to which the Company
may assign any of its rights hereunder; provided, however, that no assignment of
this Agreement by the Company, by operation of law or otherwise, shall relieve
it of its obligations hereunder, except an assignment of this Agreement to and
its assumption by, a successor pursuant to subsection (c) below.
(c) Successor to Company. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation operation of law
or otherwise) to all or substantially all of the business and/or 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, but, irrespective of any such assignment
or assumption, this Agreement shall inure to the benefit of and be binding upon
such a successor. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid.
14. Governing Law.
The provisions of this Agreement shall be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania without reference
to principles of conflicts of laws.
15. Entire Agreement.
This Agreement represents the entire agreement and understanding of
the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, including, without limitation, the Change in
Control Agreement dated as of December 30, 1994, and ss.4.10 of the Company's
SERP. This Agreement may not be altered or amended except by an agreement in
writing signed by or on behalf of the party to be bound.
16. No Waiver.
The failure to insist upon strict compliance with any provision of
this Agreement by any party shall not be deemed to be a waiver of any future
noncompliance with such provision or of noncompliance with any other provision.
17. Severability.
In the event that any provision or portion of this Agreement shall
be determined to be invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect.
IN WITNESS WHEREOF, Naples has hereunto set his hand and, pursuant
to the authorization from its duly authorized Compensation Committee of the
Board of Directors of the Company, the Company has caused these presents to be
executed in its name and on its behalf by its duly authorized officers all as of
the day and year first above written.
/s/ Ivy Peterson /s/ Ronald J. Naples
- ----------------------------- ---------------------------
Witness Ronald J. Naples
ATTEST: HUNT MANUFACTURING CO.
/s/ William E. Chandler By /s/ John W. Carney
- ----------------------------- ---------------------------
Secretary Its V.P.- H.R.
--------------------------
Approved on behalf of the
Compensation Committee of the
Board of Directors of Hunt
Manufacturing Co., being
authorized so to do:
By /s/ Robert H. Rock
------------------------------
Chairman
Compensation Committee
Date June 13, 1995
--------------------------
SCHEDULE 2(d) to
TRANSITION AGREEMENT
BENEFITS
I. Stock Options.
Naples shall no longer be eligible to receive new grants of options
or new stock grants under the Company's existing or future stock option or grant
plans.
Naples currently holds stock options under the Company's 1983 and
1993 Stock Option Plans as follows: 1983 Plan - 192,621 shares and 1993 Plan -
109,000 shares. Except as provided below, as long as Naples remains an employee
of the Company or any of its subsidiaries, such options shall remain outstanding
and continue to vest, expire etc. in accordance with the terms of the governing
option plans.
Upon termination (otherwise than for Cause) of Naples's employment
under the Agreement, any of his then outstanding options under the 1983 Plan
which have been outstanding for at least one year immediately shall become
exercisable in full, and such options (together with any of his non-accelerated
options under the 1983 Plan to the extent they were exercisable at the time of
termination of Naples's employment) shall remain exercisable for three months
(or one year if termination of employment is due to death or disability) or
until their earlier expiration or termination under the terms of the 1983 Plan.
Upon termination (otherwise than for Cause) of Naples's employment
or consultancy under the Agreement, whichever is later, any of his then
outstanding options under the 1993 Plan shall be accelerated and remain
exercisable in the same manner as is provided in the preceding paragraph with
respect to options under the 1983 Plan.
Upon termination of Naples's employment or consultancy for Cause,
there shall be no acceleration of Naples's options under the 1983 or 1993 Plans,
but otherwise the treatment of such options shall be as provided in the
preceding two paragraphs.
In the event of a "corporate transaction" involving the Company (as
provided in Section 8 of the 1983 and 1993 Plans) if the Compensation Committee
determines to terminate any of Naples's options outstanding under those Plans as
authorized thereunder, the options to be so terminated shall immediately become
exercisable in full. Further, if the Compensation Committee pursuant to Section
8 of the 1983 and/or 1993 Plans accelerates the exercisability of any options
outstanding under the 1983 and 1993 Plans, the Committee shall simultaneously
accelerate the exercisability of all of Naples's options then outstanding under
the 1983 and 1993 Plans.
Except as expressly otherwise provided above, Naples's stock
options shall remain subject to the provisions of the applicable option plans
and option agreements thereunder.
II. Pension Plan and Savings Plan.
Naples shall continue to participate in the Hunt Manufacturing Co.
Pension Plan (the "Pension Plan") and the Hunt Manufacturing Co. Savings Plan
(the "Savings Plan") under and subject to the terms of such Plans, including
applicable service requirements. Naples shall not be eligible for Basic and
Matching Contributions under the Savings Plan.
III. Supplemental Executive Benefits Plan.
Naples shall continue to participate in the Hunt Manufacturing Co.
Supplemental Executive Benefits Plan (the "Supplemental Executive Benefits
Plan"), which provides supplemental retirement benefits, life insurance
benefits, and salary deferral benefits (including matching employer
contributions), subject to and in accordance with the terms of the Supplemental
Executive Benefits Plan, provided that Naples may continue to make salary
deferrals (without matching employer contributions) with respect to consulting
payments. Life insurance benefits for Naples under the Supplemental Executive
Retirement Plan shall continue until July 19, 1997, or, if later, until the
termination of his employment with the Company. The Supplemental Executive
Benefits Plan, as amended, provides that any participant who retires after age
52 with at least 20 years of service shall be able to commence receiving
payments under Article IV thereof at such time. Such payments shall be
actuarially reduced in accordance with the terms of the Supplemental Executive
Benefits Plan, as thus amended.
The Supplemental Executive Benefits Plan, as amended, also provides
that for purposes of calculating his benefit under Article IV thereof, Naples
shall be credited with years of service from July 20, 1995 through July 19, 1998
and compensation during such time at the rate of $565,000 per year (without
regard to any mitigation pursuant to Section 4(b) of the Agreement during the
period from July 20, 1997 through July 19, 1998). The Supplemental Executive
Benefits Plan, as amended, further provides that Naples shall have the ability
to elect to take ownership of certain life insurance policies held by the Trust
under the Plan for benefits pursuant to salary deferrals and matching employer
contributions, in lieu of receiving such benefits under the Supplemental
Executive Benefits Plan.
The Company has provided Naples with an estimate of his
supplemental retirement benefits under the Supplemental Executive Benefits Plan.
Such estimate is attached hereto as Appendix II. The calculations on Appendix II
are merely an estimate based on the assumptions contained therein. As stated in
the exhibit, Naples's compensation for computing benefits for calendar year 1995
shall include any pro rata bonuses for 1995.
The Supplemental Executive Benefits Plan shall be amended to
provide that the cash value of any separate insurance contracts purchased on
Naples's life pursuant to the normal operation of the Plan and grantor trust
(the "Trust") created thereunder shall be used solely for the payment of
benefits under the Plan to Naples (to the extent such cash value does not exceed
the Company's obligation to Naples under the Plan). Upon Naples's termination of
employment, a separate subfund shall be established within the Trust for such
contracts. The Company agrees to pay the premiums on such contracts as they come
due, until June 1, 1998, and expects to continue to make contributions to the
Trust thereafter in accordance with the normal funding procedures of the Plan.
Notwithstanding the foregoing, the proceeds of any death benefit
received pursuant to such contracts may be used for any purpose under the Plan
and Trust. Naples shall have only the rights of a general, unsecured creditor
against the Company for any distributions due under the Plan and Trust, and
shall not have any property interest in such insurance contracts or any other
assets of the Plan and Trust.
IV. Other Benefit Plans and Programs for Which Naples is Eligible.
While his employment with the Company continues, Naples shall be
eligible to participate in the Company's Group Life and Medical Plans, Selected
Medical Benefits Plan, Flexible Benefits Plan, Group Long-Term Disability Plan,
Short-Term Disability Plan, Preferred Professional Long-Term Disability Plan,
Business Travel Accident Insurance Plan, Employee Assistance Program, and Family
Resource Service Program in accordance with the terms of such Plans and
Programs, and any amendments or modifications thereof, so long as such Plans and
Programs remain in effect at the Company. During the consultancy, Naples shall
be eligible for Business Travel Accident Insurance coverage while travelling on
authorized Company business.
V. Other Benefit Plans and Programs for Which Naples is Not Eligible.
Naples shall not be eligible for any severance or termination
benefits under any Company plans, policies, or procedures providing for such
benefits, including, but not limited to, the Hunt Manufacturing Co. Officers'
Severance Plan and the Hunt Manufacturing Co. Non-Officer Severance Plan, and
any predecessor or successor plan. Naples shall not be eligible for
participation in or benefits under the Company's Employee Stock Purchase Plan,
Universal Life Insurance Plan, Tuition Reimbursement Program, Matching Gift
Program, or Foundation Scholarship Program. Naples shall also not be entitled to
any benefits to which he may have been entitled to under his Change in Control
Agreement with the Company. Naples shall cease accruing vacation time as of July
19, 1995 and shall not be entitled to any payments for unused vacation time at
any time during or after his employment with the Company.
SCHEDULE 2(e)
to
TRANSITION AGREEMENT
PERQUISITES
I. Company Physical.
Naples shall be entitled to an annual Company provided physical
examination at the Ben Franklin Clinic, in accordance with the availability of
such a physical examination for other employees of the Company.
II. Tax Preparation.
Naples shall be entitled to tax preparation services on the same
terms and conditions as he was entitled to while an executive and director of
the Company.
III. Lunch Club.
Naples shall be entitled to Company provided membership in a lunch
club on the same terms and conditions as Naples was entitled to while employed
as an executive and director of the Company.
IV. Financial Planning.
The Company does not provide financial planning assistance to any
employees, and Naples shall not be entitled to any such assistance.
V. Automobile and Cellular Telephone
Prior to transfer of title, Naples shall be entitled to use of a
Company-owned or leased automobile and cellular telephone, subject to taxability
for personal use. Upon the transfer of title, the Company will cease to provide
an automobile to Naples, but Naples may be reimbursed for all authorized,
reasonable and documented expenses incurred by him for the use of the automobile
in the performance of his duties for the Company.