This Employment Agreement involves
Title: EMPLOYMENT AGREEMENT
Governing Law: New Hampshire Date: 8/25/2016
Industry: Misc. Capital Goods Sector: Capital Goods
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into effective the 20th day of January, 2014 (the "Effective Date") by and between STANDEX INTERNATIONAL CORPORATION, a Delaware corporation with its executive offices in Salem, New Hampshire (hereinafter referred to as the "Employer"), and
DAVID A. DUNBAR
(hereinafter referred to as the "Executive")
WHEREAS, Employer is desirous of retaining the services of Executive and Executive is desirous of providing services to the Employer in a senior executive capacity upon the terms and conditions herein set forth;
NOW, THEREFORE in consideration of the mutual covenants and agreements of the parties herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, it is agreed by and between the parties as follows:
Employment. Employer hereby agrees to employ Executive on a full-time basis and Executive agrees to serve Employer on a full-time basis as President/Chief Executive Officer, subject to the direction and control of the Board of Directors of Employer (the "Board"), said employment being upon the terms and conditions herein set forth. Executive shall be appointed to the Board upon becoming Chief Executive Officer and shall be nominated for reelection to the Board at the end of each term thereafter so long as the Executive's employment is not terminated.
Term. The initial term (the "Initial Term") of this Agreement shall commence on the Effective Date of this Agreement and continue through midnight on December 31, 2016, unless otherwise terminated in accordance with the provisions of Sections 6 or 15. Unless terminated, this Agreement shall automatically renew for additional terms of three years (each such term shall be referred to as a "Renewal Term"). In addition to the right to terminate set forth in Sections 6 and 15, either the Employer or the Executive shall have the right to terminate this Agreement at any time during or at the end of the Term or any Renewal Term by giving the other party thirty (30) days' advance written notice (the "Notice Period") at any time stating his/its intention to terminate the Agreement. Such termination will be effective at the end of the Notice Period and, if notice is given by the Employer, shall be treated as a termination without Cause.
Best Efforts. Executive agrees that during the Term he shall devote his best efforts, time and attention to the business of Employer. Notwithstanding the foregoing, during the Term the Executive may be involved in charitable and professional activities (including serving on boards and committees), serve, with the prior written consent of the Board, on other boards and manage his and his family's personal passive investments so long as they do not interfere, in the sole opinion of the Board with the performance of the Executive's duties hereunder.
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Non-Compete. Except as set forth in the third paragraph of this Section 4 and in Section 3, Executive shall not, as long as this Agreement is in effect, engage in, or be interested in, in any active capacity, any business other than that of Employer or any affiliate, associate or subsidiary corporation of Employer. It is the express intent of the Employer and the Executive that: (i) the covenants and affirmative obligations in this Section be binding obligations to be enforced to the fullest extent permitted by law; (ii) in the event of any determination of unenforceability of the scope of any covenant or obligation, its limitation which a court of competent jurisdiction deems fair and reasonable, shall be the sole basis for relief from the full enforcement thereof; and (iii) in no event shall the covenants or obligations in this Section be deemed wholly unenforceable.
In addition, except as set forth in the third paragraph of this Section 4, Executive shall not for a period of two years after the termination of employment with Employer (whether such termination is by reason of the expiration of this Agreement or for any other reason) compete with or directly or indirectly own, control, manage, operate, join or participate in the ownership, control, management or operation of any business which competes with any present or future business of Employer at the time of such termination. In addition, the Executive covenants and agrees that he will not, for a period of two years after termination of employment with the Employer, directly or indirectly solicit for employment or retain or hire any employees of the Employer.
No provision contained in this paragraph shall restrict Executive from making investments in other ventures which are not competitive with Employer, or restrict Executive from engaging, during non-business hours, in any other such non-competitive business or restrict Executive from owning less than five per cent of the outstanding securities of companies which compete with any present or future business of Employer and which are listed on a national stock exchange or actively traded on the NASDAQ National Market System.
Base Compensation. Employer agrees to compensate Executive for his services at a minimum annual base salary rate of $700,000. Such base salary shall be payable at least monthly and shall be increased (but not decreased) as determined (in its sole discretion) by Employer.
Signing Bonus. On January 22, 2014, the Employer shall pay the Executive a onetime cash signing bonus in the amount of $500,000 (the "Signing Bonus"). The Executive covenants and agrees that in the event Executive terminates his employment in accordance with the provisions of Section 2 (other than in accordance with Section 6(c)) or is terminated by the Employer in accordance with the provisions of Section 6(c) of this Agreement within 12 months of the Effective Date, the Executive shall be required to promptly, but in no event less than forty-five (45) days after termination, reimburse the Employer for the full amount of the Signing Bonus.
Buy-Out Grant. On the Effective Date of this Agreement, the Executive shall receive a restricted stock grant equal to 175% of the Executive's initial base compensation in the amount of $1,225,000 (the "Buy-Out Grant"). The Buy-Out Grant shall consist of restricted stock of Standex International Corporation valued based on the closing price of the stock on the Effective Date. Vesting of this Buy-Out Grant will occur in two equal installments on October 1, 2014 and October 1, 2015, respectively, provided that corporate performance criteria as set out in the Buy-Out Grant Agreement are satisfied, and further provided that if the Executive terminates his employment in accordance with the provisions of Section 2 (other than in accordance with Section 6(c)) or is terminated by the Employer in accordance with the provisions of Section 6(c) of this Agreement within 12 months of the Effective Date, the Executive shall be required to transfer back to the Employer, within forty five (45) days after such termination, any shares of stock which have been delivered to him, or repay the Employer the value received upon the sale of any such shares, if they have been sold,
Inducement Grant. As an inducement, on the Effective Date, the Employer will grant an award for fiscal 2014 under its Long Term Incentive Plan having a value equal to 175% of the Executive's initial annualized base salary of $700,000. The award and payouts made under it will be governed by the terms established for all such awards granted by the Compensation Committee of the Board of Directors on August 29, 2013.
Annual Cash Bonus. Employer agrees to provide Executive an annual incentive bonus opportunity, payable each September after the close of the fiscal year, at a target of 85% of base compensation and variable from 0% to 200% of target based on the achievement of certain financial metrics set by the Compensation Committee of the Board of Directors. The target for the bonus may increase from year to year as determined by the Compensation Committee of the Board of Directors of the Employer. For fiscal year 2014 only, Employer agrees to pay no less than Executive's target bonus pro-rated from his start date.
Long Term Incentive Plan. Executive will participate in the Standex Long Term Incentive Plan at an initial target of 175% of base compensation which may be adjusted upward from time to time by the Compensation Committee of the Board of Directors of the Employer.
Legal Expenses. Employer also agrees to pay Executive's legal fees directly related to the revision and modification of this Agreement; provided, however, that in no event shall the Employer pay more than $[15,000] for such legal fees and related expenses. All such legal fees payable by the Employer shall be fully and completely documented, identifying each service provided and with a breakdown of the time and dates on which such services are performed.
Other Benefit Plans and Programs. Executive shall also be entitled to participate in the Standex Long Term Incentive Program, the Standex Annual Incentive Program, the Standex Retirement Savings Plan, the Standex Deferred Compensation Plan, and in such other benefit plans and programs as are made available from time to time to senior executives of the Employer. Executive shall be entitled to use of an automobile furnished at the expense of Employer in accordance with Employer's policy on this subject, as such policy shall be revised from time to time.
Relocation Expenses. Employer will pay for all reasonable and customary relocation expenses incurred in calendar year 2014 associated with the Executive's move from Switzerland to the Salem, New Hampshire or surrounding area. The total relocation expenses, including related tax assistance to be paid by the Employer shall not exceed $125,000. In addition, the Employer will pay for all reasonable and customary expenses related to the sale of the Executive's home in Pennsylvania including the broker's fee and the cost of moving personal items and household possessions from Pennsylvania to the Salem, New Hampshire or surrounding area. [Tax gross up.] The Executive covenants and agrees that in the event Executive terminates his employment in accordance with the provisions of Section 2 (other than in accordance with Section 6(c)) or is terminated in accordance with the provisions of Section 6(c) of this Agreement within 12 months of the Effective Date, the Executive shall be required to promptly, but in no event more than forty five (45) days after the date of termination, reimburse the Employer for the full amount of the relocation expenses paid by the Employer.
Death. Executive's employment shall terminate forthwith upon his death and all liability of Employer under this Agreement or otherwise shall thereupon cease except for any compensation for past services remaining unpaid (including any bonus due for any previously completed year, paid when it would otherwise have been paid), for benefits due to Executive's estate or to others under the terms of any benefit plan or agreement then in effect, as provided herein or with regard to indemnification and directors and officers liability insurance coverage ("Accruals"). In addition, Executive shall fully vest in the Buy-Out Grant.
Disability. In the event that Executive becomes disabled during the term of this Agreement for a period of at least six (6) consecutive months, as the term "disabled" is defined in any applicable long-term disability plan or arrangement sponsored by the Employer and covering the Employee, then Employer, at its option, may terminate Executive's employment and this Agreement upon at least six (6) additional months advance written notification to Executive. Until such termination option is exercised and the six month period has been satisfied, or as otherwise mutually agreed in writing, Executive will continue to receive his full salary and fringe benefits during any period of illness or other disability, regardless of duration. Upon such termination Executive shall receive his Accruals and fully vest in the Buy-Out Grant.
Material Breach. In the event of a material breach of the terms of this Agreement by Executive or Employer, the non-breaching party may cause this Agreement to be terminated on 10 days written notice, provided, however, that termination by Employer for material breach following a change of control, as defined in Section 15, shall be effective only upon twelve (12) months prior written notice. Employer may remove Executive from all duties and authority commencing on the first day of any such notice period, however, payment of compensation and participation in all benefits shall continue through the last day of such notice period. For purposes of this Agreement material breach by the Executive shall be defined as:
an act or acts of dishonesty on the Executive's part which are intended to result in his substantial personal enrichment at the expense of the Employer; or
the Executive willfully, deliberately and continuously fails to materially and substantially perform his duties hereunder and which result in material injury to the Employer (other than such failure resulting from the Executive's incapacity due to physical or mental disability) after demand for substantial performance is given by the Employer to the Executive specifically identifying the manner in which the Employer believes the Executive has not materially and substantially performed his duties hereunder.
No action, or failure to act, shall be considered "willful" if it is done by the Executive in good faith and with reasonable belief that his action or omission was in the best interest of the Employer.
Severance. In the event that Executive's employment is terminated by the Employer pursuant to Section 2 or Section 6(b) of this Agreement (exclusive of a termination after a change in control where severance is governed by the provisions contained in Section 15 herein and exclusive of termination pursuant to Section 6(a) or 6(c)), the Executive shall receive severance pay in an amount equal to twice the Executive's then current annual base compensation plus Accruals and full vesting of the Buy-Out Grant. Such severance amount shall be paid as follows: (i) an amount equal to twice the limit on annual compensation that may be taken into account for qualified plan purposes under Section 401(a)17 of the