Exhibit 10(f)
HUNT CORPORATION
NON-EMPLOYEE DIRECTOR COMPENSATION PLAN
Article I - Purpose
This HUNT CORPORATION NON-EMPLOYEE DIRECTOR COMPENSATION PLAN
(the "Plan"), effective June 25, 1997, is intended to provide a means whereby
HUNT CORPORATION (the "Company") may compensate its Non-Employee Directors (as
defined in Article III), not only through cash fees but also through the grants
of shares ("Stock Grants") of common stock of the Company ("Common Shares") and
of non-qualified stock options to purchase such Common Shares ("Options") in
order to attract and retain capable independent directors and to motivate such
independent directors to promote the best interests of the Company and its
affiliates.
Article II - Administration
The Plan shall be administered by the Company's Compensation
Committee, which shall consist of not less than three "non-employee directors"
of the Company (within the meaning of Rule 16b-3(b)(3) under the Securities
Exchange Act of 1934, as amended, or any successor thereto) and who shall be
appointed by, and shall serve at the pleasure of, the Company's Board of
Directors (the "Board"). Each member of such Committee, while serving as such,
shall be deemed to be acting in his or her capacity as a director of the
Company.
The Committee shall have full authority, subject to the terms
of the Plan, to administer the Plan in accordance with its terms, but shall have
no discretion with respect to the selection of Non-Employee Directors to receive
cash fees, Stock Grants, and Options, the number of Common Shares subject to the
Plan, setting the purchase price for Common Shares subject to Stock Grants and
Options at other than Fair Market Value (as defined in Section 5.1), the method
or methods for determining the amount of cash fees, Stock Grants, or Options to
be awarded to each Non-Employee Director, or the timing of payment, grants, or
awards hereunder. Subject to the foregoing, the Committee may correct any
defect, supply any omission, and reconcile any inconsistency in the Plan and in
any Stock Grant or Option granted hereunder in the manner and to the extent it
shall deem desirable. The Committee also shall have the authority to establish
such rules and regulations, not inconsistent with the provisions of the Plan,
for the proper administration of the Plan, to amend, modify, or rescind any such
rules and regulations, and to make such determinations and interpretations
under, or in connection with, the Plan, as it deems necessary or advisable. All
such rules, regulations, determinations, and interpretations shall be binding
and conclusive upon the Company, its shareholders, and all directors, officers,
and employees and
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former directors, officers, and employees of the Company, their respective legal
representatives, beneficiaries, successors, and assigns, and all other persons
claiming under or through any of them.
No member of the Board or the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
Stock Grant or Option granted hereunder.
Article III - Participation
Each director of the Company who is a Non-Employee Director
shall be eligible to participate and shall participate in the Plan on the date
he or she becomes a Non-Employee Director. As used herein, "Non-Employee
Director" shall mean a director who is not, and during the immediately preceding
12-month period has not been, an employee of the Company or of any corporate
parent or subsidiary of the Company.
Article IV - Cash Fees
Section 4.1. Retainer Fee. Effective July 1, 1997, each
Non-Employee Director shall be entitled to receive a fee of $1,250 in cash as of
the last day of each quarter of the Company's fiscal year ("fiscal quarter"),
provided he or she is a Non-Employee Director on such day.
Section 4.2 Meeting Fees. In addition to the fees described in
Section 4.1, the following cash fees shall be paid to each Non-Employee
Director:
(a) $1,000 for each Board meeting attended by such
Non-Employee Director;
(b) $1,250 for each committee meeting chaired by
such Non-Employee Director; and
(c) $1,000 for each other committee meeting
attended by such Non-Employee Director.
The fees described in this Section 4.2 shall be paid as soon as practicable
after the date on which the applicable meeting occurs.
Article V - Stock Grants
Section 5.1. Stock Grants. Each Non-Employee Director shall be
entitled to receive a Stock Grant consisting of Common Shares with a Fair Market
Value of $6,000 as of June 25, 1997, and as of the date of each April and
October meeting of the Committee for each year after 1997, provided he or she is
a Non-Employee Director on such date.
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For purposes of the Plan, "Fair Market Value" shall mean:
(a) If the principal market for the Common Shares
is a registered securities exchange, the mean between the highest and
lowest quoted selling prices of such Common Shares on the date of
grant, or, if there are no such reported sales on that date but there
are sales on dates within a reasonable period both before and after the
date of grant, the weighted average of the means between the highest
and lowest sales on the nearest date before and the nearest date after
the date of grant; or
(b) Such other method of determining fair market
value as shall be authorized by the Code, or the rules and
regulations thereunder, and adopted by the Committee.
Section 5.2. Deferral Elections. A Non-Employee Director who
is entitled to receive a Stock Grant under Section 5.1 may elect in writing, at
any time prior to the beginning of the Non-Employee Director's taxable year in
which such Stock Grant is to be made, to defer receipt of the Common Shares
subject to such Stock Grant until the earlier of a date specified in such
election (the "Deferral Date") or the date on which he or she ceases to be a
Non-Employee Director; provided, however, that the Deferral Date must be at
least six months after the date on which the Stock Grant would otherwise be
payable under ss.5.1.
Section 5.3. Deferral Accounts. In the event a Non-Employee
Director makes an election under Section 5.2 to defer the receipt of Common
Shares subject to a Stock Grant, an amount equal to the Fair Market Value of
Common Shares subject to such Stock Grant shall be credited to the Non-Employee
Director's Deferral Account as of the date such Common Shares would otherwise
have been delivered to such Non-Employee Director. Any amounts credited to a
Non-Employee Director's Deferral Account shall be merely book entries, and no
assets shall be held in such Deferral Account.
Section 5.4. Grantor Trust. In the event a Non-Employee
Director makes an election under Section 5.2 to defer the receipt of Common
Shares subject to a Stock Grant, Common Shares equal to the number of Common
Shares subject to such election shall be set aside by the Company in a grantor
trust (the "Trust") under the Hunt Corporation Non-Employee Director
Compensation Plan Trust Agreement (the "Trust Agreement"). Under the provisions
of Section 5 of the Trust Agreement, dividends on Common Shares held by the
Trust shall be invested in a money market fund selected by the trustee of the
Trust.
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Section 5.5. Adjustment of Deferral Account for Income or
Loss. As of the last day of each fiscal year of the Company, or as of each other
date on which the amounts credited to a Non-Employee Director's Deferral Account
are to be determined (a "Valuation Date"), there shall be credited or debited to
such Account an amount equal to the income (or loss) of the Trust since the
preceding Valuation Date to reflect any dividends paid on the Common Shares
contributed to the Trust as a result of such Non-Employee Director's deferral
election, as described in Section 5.4, and any earnings or losses of the Trust
attributable to the investment of such dividends (or to the investment of any
assets substituted by the Company for such Common Shares under Section 5 of the
Trust Agreement). In no event, however, shall the balance of a Non-Employee
Director's Deferral Account be less than the Fair Market Value of his or her
deferred Common Shares as of the Valuation Date.
Section 5.6. Distribution of Deferral Account. As of the
earlier of the date specified in the Non-Employee Director's deferral election
under Section 5.2 or the date on which he or she ceases to be a Non-Employee
Director, the Company shall distribute to the Non-Employee Director the Common
Shares deferred under Section 5.2, plus, if the amount credited to his or her
Deferral Account as of such date exceeds the Fair Market Value of such Common
Shares, an amount in cash equal to such excess.
Section 5.7. Designation of Beneficiary. A Non-Employee
Director shall have the right to designate a beneficiary or beneficiaries to
receive any benefits under this Article V which may become payable upon the
death of such Non-Employee Director.
Section 5.8. Benefits Unfunded. Nothing contained in this
Article V and no action taken pursuant to the provisions of this Article V shall
create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and the Non-Employee Director, his or her
designated beneficiary, or any other person. Any funds which may be invested
under the provisions of this Article V shall continue for all purposes to be a
part of the general funds of the Company, and no person other than the Company
shall by virtue of the provisions of this Article V have any interest in such
funds. To the extent that any person acquires a right to receive payments from
the Company under this Article V, such right shall be no greater than the right
of an unsecured creditor of the Company.
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Article VI - Stock Options
Section 6.1. Granting of Options. As of June 25, 1997, the
Company shall grant to each individual who is a Non-Employee Director on such
date an Option to purchase 1,000 Common Shares, subject to the terms and
conditions described in this Article VI. As of the date of the June meeting of
the Committee for 1998 and each year thereafter, the Company shall grant to each
individual who is a Non-Employee Director on such date an Option to purchase
2,000 Common Shares, subject to the terms and conditions of this Article VI.
Section 6.2. Price. The exercise price of each Option granted
under ss.6.1 shall be equal to 100 percent of the Fair Market Value of the
optioned Common Shares on the date the Option is granted.
Section 6.3. Term. Subject to earlier termination as provided
in Section 6.6 below, the term of each Option granted under Section 6.1 shall be
ten years from the date of grant.
Section 6.4. Exercise. Options granted under Section 6.1 shall
become exercisable two years from the date of grant.
Any Common Shares the right to the purchase of which has
accrued under an Option may be purchased at any time up to the expiration or
termination of the Option. Exercisable Options may be exercised, in whole or in
part, from time to time by giving written notice of exercise to the Company at
its principal office, specifying the number of Common Shares to be purchased and
accompanied by payment in full of the aggregate Option exercise price for such
Common Shares. Only full Common Shares shall be issued under the Plan, and any
fractional Share which might otherwise be issuable upon the exercise of an
Option shall be forfeited.
Section 6.5. Manner of Payment. The Option price shall be
payable:
(a) In cash or its equivalent;
(b) In whole or in part through the surrender or
delivery of Common Shares previously acquired by the Optionee;
(c) By delivering a properly executed notice of
exercise of the Option to the Company and a broker, with irrevocable
instructions to the broker promptly to deliver to the Company the
amount of sale or loan proceeds necessary to pay the exercise price of
the option; or
(d) In any combination of the above methods.
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In the event such purchase price is paid, in whole or in part, with Common
Shares, the portion of the purchase price so paid shall be equal to the Fair
Market Value, on the date of exercise of the Option, of the Common Shares
surrendered or delivered in payment of such purchase price.
Section 6.6. Termination of Service. If a Non-Employee
Director ceases to be a Non-Employee Director prior to the expiration date of
his or her Option for any reason, his or her then outstanding Option shall
remain outstanding and shall continue to become exercisable in accordance with
its terms (except that if such cessation is due to death, such then outstanding
Option shall immediately accelerate and become exercisable in full), but only
for a period of one year following such cessation as a Non-Employee Director or
until the earlier expiration of the stated term of such Option or its earlier
termination pursuant to Section 7.3.
Section 6.7. Rights as Shareholder. A Non-Employee Director
shall have no rights as a shareholder with respect to any Common Shares covered
by his or her Option until the issuance of a stock certificate to him or her for
such Common Shares.
Section 6.8. Option Agreements. Options granted under this
Article VI shall be evidenced by written documents ("Option Agreements") in such
form as the Committee shall from time to time approve and shall contain such
provisions, not inconsistent with the terms of the Plan, as the Committee shall
deem advisable. Each Non-Employee Director who receives Options hereunder shall
enter into and be bound by the terms of the Option Agreements.
Section 6.9. Nontransferability. No Option shall be assignable
or transferable by the Non-Employee Director otherwise than by will or by the
laws of descent and distribution, and during the lifetime of the Non-Employee
Director, any Options shall be exercisable only by the Non-Employee Director or
by his or her guardian or legal representative. If a Non-Employee Director is
married at the time of exercise of an Option and if the Non-Employee Director so
requests at the time of exercise, the certificate or certificates issued shall
be registered in the name of the Non-Employee Director and his or her spouse,
jointly, with right of survivorship.
Section 6.10. Sign-On Option Award. The Options described in
the foregoing provisions of this Article VI shall be in addition to any
non-qualified stock options to which the Non-Employee Director may be entitled
under the terms of the Company's 1994 Non-Employee Directors' Stock Option Plan.
Article VII - Miscellaneous
Section 7.1. Treasury Shares. All Common Shares issuable under
the Plan shall be treasury shares.
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Section 7.2. Minimum Stock Ownership Requirement. Each
Non-Employee Director shall, as a condition of his or her continued
participation in this Plan, be required to own Common Shares with a Fair Market
Value at least equal to two times the sum of:
(a) The annual amount of fees to which he or she is
entitled under Section 4.1; plus
(b) The annual dollar amount of Stock Grants to
which he or she is entitled under Section 5.1.
This minimum stock ownership requirement must be met within three years from the
date the Plan is adopted or within three years from the date the individual
becomes a Non-Employee Director, if later.
Section 7.3. Capital Adjustments, Acceleration, and
Cancellation of Options. The number of Common Shares to which Non-Employee
Directors are entitled under Section 5.1 and Section 6.1, the number of Common
Shares issuable upon exercise of outstanding Options under the Plan (as well as
the purchase price for such Common Shares), and the number of deferred Common
Shares issuable under Section 5.6 shall, in accordance with the provisions of
Code Section 424, be adjusted proportionately to reflect any stock dividend,
stock split, share combination, or similar change in the capitalization of the
Company. In the event of a corporate transaction (as that term is described in
Code Section 424(a) and the Treasury regulations issued thereunder, such as, for
example, a merger, consolidation, acquisition of property or stock, separation,
reorganization, or liquidation), if provision is not made for the continuance
and assumption of Options and of rights to deferred Common Shares under the
Plan, or the substitution for such Options and rights to deferred Common Shares
of new Options and similar rights relating to securities or other property to be
delivered in connection with the transaction, all deferred Common Shares (and
other amounts described in Section 5.6) shall become immediately payable, and
all unexercised Options shall accelerate and become fully exercisable, but all
unexercised Options shall terminate on the day immediately prior to the
consummation of such corporate transaction. The Committee shall give the holders
of outstanding Options not less than ten days' prior written notice of any such
acceleration and termination pursuant to this Section 7.3, and such outstanding
Options thereafter may be exercised in whole or in part up to and including the
date of such termination or until their earlier stated expiration date or their
earlier termination pursuant to Section 6.6.
Section 7.4. Listing and Registration of Common Shares. Each
Option and each Stock Grant under the Plan shall be subject to the requirement
that, if at any time the Board shall determine, in its discretion, that the
listing, registration, or qualification of the Common Shares covered thereby
upon any securities exchange or under the laws of any jurisdiction, or the
consent or approval of any regulatory body, is necessary or desirable as a
condition of, or in
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connection with, the granting of an Option or receipt of a Stock Grant, then no
such Option may be exercised in whole or in part, and no certificate
representing Common Shares shall be issued pursuant to such Stock Grant, unless
and until such listing, registration, qualification, consent, or approval shall
have been effected or obtained, on conditions acceptable to the Board. Each
Non-Employee Director, or his or her legal representative or beneficiaries, also
may be required to give satisfactory assurance that Common Shares purchased upon
the exercise of an Option or received pursuant to a Stock Grant are being
acquired for investment and not with a view to distribution, and certificates
representing such Common Shares may be legended accordingly.
Section 7.5. Amendment or Discontinuance of Plan. The Board
may amend, suspend, or terminate the Plan at any time and from time to time,
provided that no such amendment, suspension, or termination shall materially
impair the rights of a Non-Employee Director with regard to any outstanding
Option or with regard to any deferred Stock Grant. In addition, the Committee
may, in its discretion, from time to time amend the Plan to adjust the dollar
amounts and/or numbers of Common Shares described in Section 4.1, Section 4.2,
Section 5.1, and Section 6.1. Notwithstanding the foregoing, no amendment to the
Plan shall be made if such amendment would cause the terms and conditions of
Stock Grants made pursuant to Article V or of Options granted pursuant to
Article VI to fail to be fixed in advance, within the meaning of Securities and
Exchange Commission interpretations under section 16(b) of the Securities
Exchange Act of 1934.
Section 7.6. Governing Law. The Plan and any Option Agreements
entered into thereunder shall be governed by applicable Federal law and
otherwise by the laws of the Commonwealth of Pennsylvania.
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