EXHIBIT 10(a)
STANDEX INTERNATIONAL CORPORATION
EXECUTIVE SECURITY PROGRAM
STANDEX INTERNATIONAL CORPORATION
EXECUTIVE SECURITY PROGRAM
WHEREAS, STANDEX INTERNATIONAL CORPORATION, a Delaware
corporation with its executive offices at 6 Manor Parkway,
Salem, New Hampshire 03079 (hereinafter referred to as the
"Corporation") is desirous of assisting certain key executives
in saving for their retirement and in providing benefits to
their families in the event of death;
WHEREAS, the executives have unique and outstanding
abilities and have performed their duties in a capable and
efficient manner; and
WHEREAS, the Corporation desires to retain the services of
the executives;
NOW, THEREFORE, the following program of benefits is hereby
established for certain executives of the Corporation:
1. DEFINITIONS
The following words and phrases are used in the Program and
shall have the meanings set forth in this Section unless a
different meaning is clearly required by the context:
1.01 "Age" shall mean age at nearest birthday.
1.02 "Annual Earnings" shall mean all earnings and/or net
commissions of the Executive from the Corporation paid or made
available which are reportable for Federal income tax purposes
on Form W-2, or its successor, but not including, any
reimbursement for expenses, or any income attributable to any of
the following:
(i) payment made by the Corporation in connection with a
relocation;
(ii) premiums paid by the Corporation for life
insurance coverage from the Corporation;
(iii) the exercise of any stock appreciation rights;
(iv) the exercise of any stock option;
(v) interest on a home purchase loan;
(vi) the use of any Corporation-leased automobile.
1.03 "Beneficiary" shall mean any individual(s) or legal
entity designated by an Executive to receive any benefit arising
under this Program upon the death of such Executive.
1.04 "Change of Control" shall mean the purchase or other
acquisition by any person, entity or group of persons, within
the meaning of section 13(d) or 14(d) of the Securities Exchange
Act of 1934 (the "Act"), or any comparable successor provisions,
of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Act) of 20 percent or more of either the
outstanding shares of common stock or the combined voting power
of the Corporation's then outstanding voting securities entitled
to vote generally, or the approval by the stockholders of the
Corporation of a reorganization, merger, or consolidation, in
each case, with respect to which persons who were stockholders
of the Corporation immediately prior to such reorganization,
merger or consolidation do not, immediately thereafter, own more
than 50 percent of the combined voting power entitled to vote
generally in the election of directors of the reorganized,
merged or consolidated Corporation's then outstanding
securities, or during any period of twelve consecutive calendar
months, individuals, who were directors of the Corporation on
the first day of such period shall cease to constitute a
majority of the Board of Directors of the Corporation, or a
liquidation or dissolution of the Corporation or of the sale of
all or substantially all of the Corporation's assets.
1.05 "Effective Date" shall mean January 1, 1982.
1.06 "Executive" shall mean any person who was either a
Division President or Senior Corporate officer of the
Corporation on the Effective Date or was an Executive Vice
President of the Corporation on September 1, 1989 and who serves
the Corporation in one of these capacities up to his date of
retirement or death.
1.07 "Fiduciary" shall mean and include the Corporation and
any other entity or person who:
(a) exercises any discretionary authority or
exercises any authority or control respecting
management or disposition of assets under this
Program;
(b) renders investment advice for a fee or other
compensation, direct or indirect, with respect to any
monies or other property which is an asset under this
Program, or has any authority or responsibility to do
so; or
(c) is described as a "Fiduciary" in Section 3(14) or
(21) of the Employee Retirement Income Security Act of
1974 or is designated to carry out Fiduciary
responsibilities pursuant to this Program.
1.08 "Program" shall mean this Executive Security Program and the
benefits for Executives provided hereunder.
1.09 "Trust" shall mean any trust which is the owner of one
(or more) life insurance contracts on the life of an Executive,
which contract(s) originally was purchased by the Corporation.
2. PRE-RETIREMENT BENEFITS
In the event of the death of an Executive while employed by
the Corporation, the Beneficiary shall be entitled to receive a
death benefit which is calculated by multiplying the Annual
Earnings of the Executive by a Death Benefit Factor derived from
the following schedule:
Age of Death
Executive Benefit
at Death Factor
Less than 45 years 4.5
45 to 49 years 4.0
50 to 54 years 3.5
55 and over years 3.0
The Annual Earnings of the Executive used in the above
calculation shall depend on whether the Executive's date of
death occurs before March 1st of any calendar year or on or
after March 1st. If the date of death is before March 1st in
any calendar year, the Annual Earnings used in the calculation
shall be the Annual Earnings of the calendar year in which falls
the day which is exactly two years prior to the date of death.
If the date of death is on or after March 1st in any calendar
year, the Annual Earnings shall be those of the immediately
preceding calendar year.
Such pre-retirement death benefit shall be payable pursuant
to a life insurance contract maintained by the Corporation or a
Trust, only if and to the extent that the life insurance
contract provides for such payment, and any balance of the pre-
retirement death benefit shall be payable directly by the
Corporation and not pursuant to the life insurance contract.
3. POST-RETIREMENT BENEFITS
In the event that the Executive's employment with the
Corporation shall terminate by reason of his retirement as
defined in Section 4 hereof, the post-retirement death benefit
payable to the Beneficiary in the event of the Executive's
subsequent death shall be an amount equal to the higher of three
times the Executive's Annual Earnings:
(i) in the calendar year in which he retires;
(ii) in the calendar year immediately preceding the year in which
he retires;
(iii)in the calendar year two years preceding the year in
which he retires; or
(iv) in the calendar year three years preceding the year in which
he retires
(whichever year results in the greater Annual Earnings).
The post-retirement death benefit shall be payable pursuant
to the life insurance contract only to the extent that the life
insurance contract provides for such payment. The balance of
the post-retirement death benefit shall be payable directly by
the Corporation and not pursuant to the life insurance contract.
The Corporation in its sole and absolute discretion may
determine that, in lieu of the post-retirement death benefit set
forth in the immediately preceding two paragraphs, the Executive
shall receive supplemental retirement income payable to the
Executive in 120 equal monthly installments commencing within 30
days after the Executive begins to receive his pension under the
Standex Retirement Plan. The total amount of such retirement
income shall equal the post-retirement death benefit without
discount to present value. The amount of each monthly
installment shall be the post-retirement death benefit divided
by 120.
In the event of the Executive's death while receiving such
supplemental retirement income, any unpaid monthly payments
shall be paid to the Beneficiary from the Corporation or Trust
in an undiscounted lump sum, if the Beneficiary shall have
survived the Executive. If the Beneficiary shall not have
survived the Executive, any unpaid monthly payments shall be
paid in an undiscounted lump sum to the estate of the Executive.
4. RETIREMENT
For purposes of this Program, the date of retirement shall
mean the date an Executive has terminated employment with the
Corporation such that, under the Standex International
Corporation Retirement Plan, he is considered as retired and
receiving a pension. In addition, for purposes of this Program,
an Employee shall be deemed to have retired on the date of a
Change of Control of the Corporation when within six months of
the Change of Control the Executive chooses to terminate his
employment because of:
(i) a change in the Executive's general area of responsibility,
title or place of employment; or
(ii) the Executive's salary or benefits are lessened or
diminished.
5. DISTRIBUTION OF BENEFIT UPON A CHANGE OF CONTROL.
Upon a Change of Control of the Corporation, the
Corporation must pay within 5 calendar days, directly or
indirectly to the Insurer the maximum amount the Insurer will
accept as premium payments on the Policy existing on the
Participant's life. If the Corporation, in its reasonable
discretion determines that more funding is likely to be
necessary to pay the anticipated premiums on the Policy than the
Insurer will accept at that time, then these additional sums
will be paid by the Corporation into any trust which is the
owner of the Policy and exists at the relevant time. The
Trustee of the trust shall hold these additional sums and invest
them and pay from them to the Insurer annually or more often, in
the Trustee's discretion.
6. OFFSET FOR OBLIGATIONS TO CORPORATION.
If, at such time as the Participant becomes entitled to
receive Supplemental Retirement Income Benefit payments pursuant
to this Article 4, the Participant has any debt, obligation or
other liability representing an amount due and owing to the
Corporation, the Corporation may offset the amount owed it
against the amount of benefits otherwise distributable
hereunder.
7. LIFE INSURANCE
The Corporation or a Trust shall pay all premiums for the
life insurance contract mentioned in Sections 2 and 3 hereof.
The Corporation may, in its sole discretion, purchase and
be the owner of permanent insurance policies on the life of an
Executive. Any proceeds payable pursuant to such corporate-
owned insurance policies shall be payable to the Corporation.
By accepting this Program, the Executive agrees to take any
action required to enable the Corporation to purchase and
maintain such insurance.
8. NON-SECURED PROMISE
Any asset or investment held by the Corporation or a Trust
in connection with the liabilities assumed by the Corporation it
hereunder shall be a general asset of the Corporation, and shall
not be pledged for the payment or to secure any obligation of
the Corporation, and the promise to pay any benefit hereunder is
a non-secured, general liability of the Corporation. This Plan
is intended to be unfunded both for income tax purposes and for
purposes of Title I of the Employee Retirement Income Security
Act of 1974.
9. ASSIGNMENT
No Executive nor any Beneficiary shall have any right to
commute, sell, assign, transfer, pledge or hypothecate or
otherwise convey the right to receive any payment hereunder
(whether by operation of law or otherwise) nor shall any such
rights be subject to execution, attachment or similar process.
Such payments and the right thereto are expressly declared to be
non-assignable and non-transferable. Any such attempted
assignment, transfer, levy of any attachment or similar process
shall have no effect or validity.
10. INDEPENDENCE OF PROGRAM
The benefits provided under this Program shall be
independent of, and in addition to, any other benefits provided
by the Corporation or any compensation payable by the
Corporation to the Executive. This Program shall not be deemed
to constitute a contract for services between the Corporation
and any Executive, nor shall any provision hereof restrict the
right of the Corporation to discharge an Executive or restrict
the right of an Executive to terminate his services.
11. NO VESTING OF BENEFITS
All benefits and all rights of each Executive covered under
this Program shall terminate in the event that the Executive's
employment with the Corporation shall terminate for any reason
other than death or retirement as provided in Section 4.
12. RELATED TRUST(S).
If any Trust exists, the Trust itself and the
administration of all assets held by the Trust shall be
consistent with the terms of the model trust provided in
Internal Revenue Service Revenue Procedure 92-64.
13. WRITTEN MATERIALS.
Unless the Participant advises the Corporation in writing
that he does not want such material, the Corporation must give a
copy of all written materials received regarding the Policy on
the Participant's life to the Participant within thirty (30)
days of the Corporation's receipt of such material.
14. MODIFICATION OR REVOCATION OF PROGRAM
The Corporation reserves the right to modify or revoke this
Program in whole or in part at any time, provided that no such
modification or revocation shall reduce or terminate any pre-
retirement benefits or post-retirement benefits to an Executive
or his Beneficiary.
15. NAMED FIDUCIARY
15.01. Edward F. Paquette, is hereby designated as the
Named Fiduciary of the Program, in accordance with the Employee
Retirement Income Security Act of 1974 (ERISA), and shall serve
in such capacity until resignation or removal by the Board of
Directors of the Corporation and appointment of a successor by
duly adopted resolution of the Board.
15.02 The Named Fiduciary shall have the authority to
control and manage the operation and administration of the
Program. However, the Named Fiduciary may in his discretion
allocate his responsibilities for the operation and
administration of the Program, including the designation of
persons who are not Named Fiduciaries to carry out fiduciary
responsibilities. The Named Fiduciary shall effect such
allocation of his responsibilities by delivering to the
Corporation a written instrument signed by him that specifies
the nature and extent of the responsibilities allocated,
including, if appropriate, the persons, not Named Fiduciaries,
who are designated to carry out fiduciary responsibilities under
the Program.
15.03 The Named Fiduciary designated or appointed under
the terms of Paragraph 15.01 above, is hereby designated as the
Plan Administrator of the Program.
16. CLAIMS PROCEDURE
The following Claims Procedure shall control the
determination of benefit payments under this Program:
16.01 Filing of a Claim for Benefits
If the Executive or his Beneficiary believes he is entitled
to receive benefits under the Program, he must submit a written
claim for benefits, on a form supplied by said Fiduciary, to the
Named Fiduciary. The Named Fiduciary's independent decision on
the claimant's claim for benefits shall be determinative of
whether or not the Executive or his Beneficiary shall be
entitled to receive benefits under this Program.
16.02 Denial of Claim
A claim for benefits under the Program will be denied if
the Named Fiduciary determines that the claimant is not entitled
to receive benefits under the Program. Notice of a denial shall
be furnished to the claimant within a reasonable period of time
after receipt of the claim for benefits by the Named Fiduciary.
16.03 Content of Notice
The Named Fiduciary shall provide to every claimant who is
denied a claim for benefits written notice setting forth, in a
manner reasonably calculated to be understood by the claimant,
the following:
(i) The specific reason or reasons for the denial;
(ii) Specific reference to pertinent Program provisions on
which the denial is based;
(iii) A description of any additional material or
information necessary to the claimant to perfect the
claim, and an explanation of why such material or
information is necessary; and
(iv) An explanation of the Program's Claim Review Procedure
as set forth below.
16.04 Review Procedure
The purpose of this Review Procedure is to provide a method
by which a claimant may have a reasonable opportunity to appeal
a denial of a claim to the Named Fiduciary for a full and fair
review. To accomplish that purpose, the claimant or his duly
authorized representative:
(i) May request a review upon written application to the
Named Fiduciary;
(ii) May review pertinent Program documents; and
(iii)May submit issues and comments in writing.
A claimant (or his duly authorized representative) shall
request a review by filing a written application for review with
the Named Fiduciary at any time within 60 days after receipt by
the claimant of written notice of the denial of his claim.
16.05 Decision on Review
A decision on review of a denied claim shall be made in the
following manner:
(i) The decision on review shall be made by the
Salary and Employee Benefits Committee of the Board of
Directors of the Corporation, which may in its
discretion hold a hearing on the denied claim. Such
decision shall be made promptly, and not later than 60
days after receipt of the request for review, unless
special circumstances (such as the determination to
hold a hearing) make an extension of time for
processing helpful, in which case a decision shall be
rendered as soon as possible, but not later than 120
days after receipt of the request for review.
(ii) The decision on review shall be in writing and
shall include specific reasons for the decision,
written in a manner reasonably calculated to be
understood by the claimant, and specific references to
the pertinent Program provisions upon which the
decision is based.
17. MISCELLANEOUS
The singular where used in this Program shall include the
plural and vice versa, wherever the context so requires. Any
provision in the masculine gender shall be defined where
appropriate to include the feminine or neuter gender.
18. GOVERNING LAW
It is the intention of the parties that this Program and
the performance of the parties hereunder and all suits and
special proceedings hereunder be construed in accordance with
and under and pursuant to the laws of the State of New Hampshire
and that in any action, special proceeding or other proceeding
that may be brought arising out of, in connection with, or by
reason of this Program, the laws of such State shall be
applicable and shall govern to the exclusion of the law of any
other forum, without regard to the jurisdiction in which any
action or special proceeding may be instituted. If any
provision of this Program shall be held invalid or illegal for
any reason, such determination shall not affect the remaining
provisions of this Program, and it shall be construed as if said
invalid or illegal provision had never been included.