FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1998 Commission File Number 1-7233
STANDEX INTERNATIONAL CORPORATION
(Exact name of Registrant as specified in its Charter)
DELAWARE 31-0596149
(State of incorporation) (I.R.S. Employer Identification No.)
6 MANOR PARKWAY, SALEM, NEW HAMPSHIRE 03079
(Address of principal executive offices) (Zip Code)
(603) 893-9701
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. YES X .
NO __.
The number of shares of Registrant's Common Stock outstanding on
March 31, 1998 was 13,119,202.
STANDEX INTERNATIONAL CORPORATION
I N D E X
Page No.
PART I. FINANCIAL INFORMATION:
Item 1.
Statements of Consolidated Income for the Three and Nine
Months Ended March 31, 1998 and 1997 2
Consolidated Balance Sheets, March 31, 1998 and June
30, 1997 3
Statements of Consolidated Cash Flows for the Nine
Months Ended March 31, 1998 and 1997 4
Notes to Financial Information 5-6
Item 2.
Management's Discussion and Analysis 7-10
Item 3.
Quantitative and Qualitative Disclosures About
Market Risk 11
PART II. OTHER INFORMATION:
Item 6.
Exhibits and Reports on Form 8-K 12
<TABLE>
PART I. FINANCIAL INFORMATION
<CAPTION>
STANDEX INTERNATIONAL CORPORATION
Statements of Consolidated Income
(000 Omitted)
Three Months Ended Nine Months Ended
March 31 March 31
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net Sales $148,549 $130,454 $457,700 $422,968
Cost of Products Sold 100,562 88,836 307,067 284,523
Gross Profit Margin 47,987 41,618 150,633 138,445
Selling, General & Administrative
Expenses 36,963 32,444 109,076 99,839
Income from Operations 11,024 9,174 41,557 38,606
Other Income/(Expense):
Interest Expense (2,880) (2,064) (7,850) (6,400)
Interest Income 192 102 417 256
Other Income/(Expense) - net (2,688) (1,962) (7,433) (6,144)
Income Before Income Taxes 8,336 7,212 34,124 32,462
Provision for Income Taxes 3,349 3,043 13,156 12,624
Net Income $ 4,987 $ 4,169 $20,968 $19,838
Earnings Per Share:
Basic $ .38 $ .31 $ 1.60 $ 1.48
Diluted $ .38 $ .31 $ 1.59 $ 1.47
Average Shares Outstanding:
Basic 13,047 13,335 13,072 13,373
Diluted 13,164 13,480 13,227 13,534
Cash Dividends Per Share $ .19 $ .19 $ .57 $ .56
</TABLE>
<TABLE>
<CAPTION>
STANDEX INTERNATIONAL CORPORATION
Consolidated Balance Sheets
(000 Omitted)
March 31 June 30
1998 1997
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 15,165 $ 6,149
Receivables net of allowances for
doubtful accounts 92,831 86,852
Inventories (approximately 45%
finished goods, 25% work in
process, and 30% raw materials
and supplies) 125,630 109,454
Prepaid expenses 6,386 4,631
Total current assets 240,012 207,086
PROPERTY, PLANT AND EQUIPMENT 244,878 223,519
Less accumulated depreciation 141,498 137,921
Property, plant and equipment, net 103,380 85,598
OTHER ASSETS:
Goodwill, net 33,607 15,195
Prepaid pension cost 27,501 24,320
Other 9,564 8,839
Total other assets 70,672 48,354
TOTAL $414,064 $341,038
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion
of long-term debt $ 2,972 $ 2,030
Accounts payable 37,351 31,380
Income taxes 5,352 4,481
Accrued expenses 32,874 32,249
Total current liabilities 78,549 70,140
LONG-TERM DEBT (less current portion
included above) 167,235 112,347
DEFERRED INCOME TAXES AND OTHER LIABILITIES 16,888 17,366
STOCKHOLDERS' EQUITY:
Common stock 41,976 41,976
Additional paid-in capital 8,263 5,663
Retained earnings 327,435 313,908
Cumulative translation adjustment (2,564) (1,082)
Less cost of treasury shares (223,718) (219,280)
Total stockholders' equity 151,392 141,185
TOTAL $414,064 $341,038
</TABLE>
<TABLE>
<CAPTION>
STANDEX INTERNATIONAL CORPORATION
STATEMENTS OF CONSOLIDATED CASH FLOWS
(000 OMITTED)
Nine Months Ended
March 31
1998 1997
Cash Flows from Operating Activities:
<S> <C> <C>
Net income $ 20,968 $ 19,838
Depreciation and amortization 10,289 9,633
Net changes in assets and liabilities (7,582) (3,308)
Net Cash Provided by Operating Activities 23,675 26,163
Cash Flows from Investing Activities:
Expenditures for property and equipment (10,664) (9,660)
Expenditures for acquisitions (49,289) (2,259)
Other 2,187 5,149
Net Cash Used for Investing Activities (57,766) (6,770)
Cash Flows from Financing Activities:
Proceeds from additional borrowings 56,208 1,581
Net payments of debt (377) (3,299)
Cash dividends paid (7,441) (7,483)
Purchase of treasury stock (7,838) (9,664)
Other, net 2,966 1,882
Net Cash Provided by (Used for) Financing
Activities 43,518 (16,983)
Effect of Exchange Rate Changes on Cash (411) (145)
Net Change in Cash and Cash Equivalents 9,016 2,265
Cash and Cash Equivalents at Beginning of Year 6,149 5,147
Cash and Cash Equivalents at March 31 $15,165 $ 7,412
Supplemental Disclosure of Cash Flow Information:
Cash paid during the nine months for:
Interest $ 8,409 $ 7,246
Income taxes $12,285 $11,537
</TABLE>
NOTES TO FINANCIAL INFORMATION
1. Management Statement
The financial statements as reported in Form 10-Q reflect all adjustments
(including those of a normal recurring nature) which are, in the opinion
of management, necessary to a fair statement of results for the three
and nine months ended March 31, 1998 and 1997.
These financial statements should be read in conjunction with the audited
financial statements as of June 30, 1997. Accordingly, footnote
disclosures that would substantially duplicate the disclosure contained
in the latest audited financial statements have been omitted from this
filing.
2. Per Share Calculation
In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard (SFAS) No. 128, "Earnings Per
Share." This standard changed the method of calculating and presenting
earnings per share, and was adopted by the Company in December, 1997.
Accordingly, the earnings per share as presented in the Statements of
Consolidated Income have been retroactively restated for all periods
presented.
<TABLE>
<CAPTION>
The following table sets forth the number of shares (in thousands) used
in the computation of basic and diluted earnings per share:
Three Months Ended Nine Months Ended
March 31 March 31
1998 1997 1998 1997
Basic - Average Shares
<S> <C> <C> <C> <C>
Outstanding 13,047 13,335 13,072 13,373
Effect of Dilutive Securities:
Stock Options 117 145 155 161
Diluted - Average Shares
Outstanding 13,164 13,480 13,227 13,534
Both basic and diluted income are the same for computing earnings per
share.
</TABLE>
Cash dividends per share have been computed based on the shares
outstanding at the time the dividends were paid. The shares (in
thousands) used in this calculation for the nine months ended
March 31, 1998 and 1997 are 13,056 and 13,362, respectively.
3. Contingencies
The Company is a party to various claims and legal proceedings related
to environmental and other matters generally incidental to its business.
Management has evaluated each matter based, in part, upon the advice of
its independent environmental consultants and in-house counsel and has
recorded an appropriate provision for the resolution of such matters in
accordance with SFAS No. 5, "Accounting for Contingencies." Management
believes that such provision is sufficient to cover any future payments,
including legal costs, under such proceedings.
4. Acquisitions and Dispositions
On October 6, 1997, the Company completed the acquisition of the net
assets of ACME Manufacturing Company for cash and a note. ACME
Manufacturing is a manufacturer of heating, ventilation, and air
conditioning pipe, duct, and fittings for the home building industry in
the Northeast, Mid-West, and Southern United States. ACME, with annual
sales of approximately $60 million, has seven manufacturing facilities.
During the second quarter, the Company purchased for cash certain assets
of an unrelated company's hardware product line which is complementary
to an existing Standex division. In February, 1998, the acquisition of
ATR Coil Company, Inc. for stock and cash was completed. ATR Coil is a
manufacturer of electronic coils and windings for the industrial,
automotive, and consumer markets. All three acquisitions were accounted
for as purchases, and, accordingly, the respective purchase prices were
allocated to the assets acquired based on their fair value and resulted
in the recognition of goodwill of approximately $19 million.
Also in February, the Company sold the remaining product lines of its
Doubleday Bros. & Co. division for cash and notes. Doubleday Bros. had
sales in fiscal year 1997 of approximately $16.5 million.
5. Revolving Credit Agreement
In May, 1998 the Company re-negotiated its Revolving Credit Agreement
which increased the maximum credit line available from $125 million to
$175 million and extended payment terms to May, 2003 from October, 1999.
The financial covenants, conditions, and warranties are similar to the
prior Revolving Credit Agreement.
STANDEX INTERNATIONAL CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
MATERIAL CHANGES IN FINANCIAL CONDITION
During the nine months ended March 31, 1998, net operating cash flows of
$23.7 million and $56.2 million in proceeds from additional borrowings
were used to purchase $7.8 million of the Company's Common Stock, invest
$10.7 million in plant and equipment, pay out $7.4 million in cash
dividends to the Company's shareholders and pay $49.3 million for
acquisitions.
During the first nine months of fiscal 1998, the Company acquired 100% of
the net assets of ACME Manufacturing Company, the assets of ATR Coil, and
certain assets of the hardware product line of an unrelated company. All
three of these acquisitions were financed from existing bank credit
agreements and the issuance of Standex Common Stock. Also, in the third
quarter of 1998, the Company sold the remaining product lines of it's
Doubleday Bros. & Co. division for cash and notes.
The Company intends to continue its policy of using its funds to acquire
property, plant and equipment, pay dividends, purchase its Common Stock and
make acquisitions when conditions are favorable.
In May, 1998, the Company re-negotiated its Revolving Credit Agreement
which increased the maximum credit line available from $125 million to $175
million and extended repayment terms from October, 1999 to May, 2003. The
financial covenants, conditions and warranties will be similar to the prior
Revolving Credit Agreement. While existing cash flows and bank credit
agreements are sufficient to meet anticipated cash needs, the re-negotiated
Revolving Credit Agreement will enhance the Company's financial
flexibility.
In June, 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The Company has reviewed both of
these standards and does not expect their adoption to have a significant
effect on the Company's operating results or disclosure.
Recently the AICPA released two statements of position, No. 98-1 and No. 98-
5, that prescribe accounting for internally developed software and start-up
costs. The latter statement will not have a significant impact on the
Company's financial statements. The former is currently being studied and
its future impact is unknown at this time.
In February of 1998, the FASB issued SFAS No.132, "Employers' Disclosure
about Pensions and Other Postretirement Benefits." SFAS No. 132 revises and
standardizes pension and other benefit plan disclosures that are to be
included in the employer's financial statements and is effective for fiscal
years beginning after December 15, 1997. The Company is evaluating this
standard and does not expect its adoption to have a material impact on the
Company's financial statements.
OPERATIONS
Quarter Ended March 31, 1998
as compared to the Quarter Ended March 31, 1997
For the quarter ended March 31, 1998, Net Sales increased by $18.1 million
as compared to the same period of the prior year. This latest quarter
generated the highest third quarter sales level in the Company's history.
The majority of this increase came from acquisitions which were partially
off-set by the absence of sales from businesses disposed of in the prior
year. Excluding these acquisitions, management believes the majority of
fluctuations in Net Sales reported by each segment are primarily due to
changes in unit volumes and consumer demand. In addition, although changes
in the average foreign exchange rates from March 31, 1997 to March 31, 1998
have had a negative impact on Net Sales for the quarter, the total effect
was not significant.
Net Sales in the Food Service Segment increased by $3.4 million as compared
to the prior year due to improved demand at several divisions. In the
Industrial Segment Net Sales remained approximately the same as the prior
year. However, there was significant growth in sales at several divisions
due to increased demand which was offset by the absence of sales from
dispositions in the second half of fiscal 1997 and continued sluggishness
in some of our European companies. The Consumer segment reported and
increase of $15 million in Net Sales due to acquisitions and improved
demand.
The Gross Profit Margin Percentage (GPMP) increased to 32.3%, as compared
to the prior year's percentage of 31.9%. The Food Service Segment reported
an increase in GPMP from 26.6% in 1997 to 30.1% in 1998 as a result of
reduced costs. The GPMP reported in the Industrial Segment increased
slightly from the previous year's percentage of 30.9% to 31.6%; however
none of the changes were individually significant. The GPMP reported in
the Consumer Segment fell to 34.5%, a decline from the previous year's
percentage of 38.4% primarily due to lower initial margins of an
acquisition.
Selling, General and Administrative Expense (SG&A) rose approximately $4.5
million in 1998 as compared to 1997. However, as a percentage of Net
Sales, SG&A remained stable at approximately 24.9% for both periods. The
Food Service and Consumer Segments reported increases in SG&A primarily due
to the changes in Net Sales discussed above. These increases were partially
offset by a decline in SG&A reported by the Industrial Segment where
dispositions in the second half of 1997 account for most of the decline in
these expenses. None of the remaining fluctuations reported by the
Company's three segments were individually significant and corresponded
with the changes in Net Sales discussed above.
Interest Expense increased by 39.5%, or $816,000, as compared to the third
quarter of fiscal 1997 primarily due to increased borrowing to finance
acquisitions and to higher interest rates.
The above factors resulted in a $306,000 increase in Income Before Income
Taxes as compared to the same period of the prior year. A larger portion
of the Company's income was derived from U.S. operations in the current
quarter as compared to the same quarter last year. Since the U.S. tax
rates are generally lower than non-U.S. rates, the effective tax rate for
the latest quarter declined to 40.2% from the prior year's third quarter of
42.2%
As a result of the above activity, Net Income for the third quarter of
fiscal 1998 increased $818,000, or 19.6%, over the same period in the prior
year.
Nine Months Ended March 31, 1998
as compared to the Nine Months Ended March 31, 1997
Net Sales for the nine months ended March 31,1998 increased $34.7 million
as compared to the same period of the prior year. As indicated in the
discussion of quarterly results the majority of this increase ($28.3
million) resulted from acquisitions. Excluding sales from acquisitions,
management believes that the majority of the fluctuations in Net Sales
reported by each segment were primarily due to changes in unit volumes and
consumer demand. Also, the effect of changes in average foreign exchange
rates on operating results was not significant.
The Food Service Segment registered growth in Net Sales of $4.3 million due
to increased demand at several divisions. In the Industrial Segment Net
Sales remained flat as compared to the prior year. While increased demand
resulted in higher sales at several divisions, these increases were offset
by the absence of sales from dispositions made in 1997 and continued
sluggishness in some of our European companies. The Consumer Segment's Net
Sales increased by $32.7 million due to acquisitions and improved demand.
The Gross Profit Margin Percentage (GPMP) registered a slight increase in
1998 to 32.9% from 32.7% in 1997. The Food Service Segment and the
Industrial Segment reported minor changes in GPMP, neither of which was
individually significant. However, the Consumer Segment reported a
decrease in the GPMP to 35.4% in 1998 as compared to 38.3% in 1997. This
reduction was primarily due to the same reason discussed in the analysis of
quarterly results.
Selling, General and Administrative Expenses (SG&A) rose $9.2 million to
represent 23.8% of Net Sales for the nine months ended March 31, 1998 as
compared to 23.6% for the same period of fiscal 1997. The primary reason
for this increase was the additional SG&A costs ($4 million) of
acquisitions. Excluding acquisitions, the fluctuations reported in both
the Consumer and Food Service Segments were primarily due to the changes in
Net Sales discussed above. However, the Industrial Segment reported a 5.4%
reduction in SG&A due to dispositions in the second half of fiscal 1997.
The remaining fluctuations reported by the Company's three segments were
not individually significant and were in line with the changes in Net Sales
discussed above.
Interest Expense increased by $1.5 million due to increased borrowings to
finance acquisitions and to higher interest rates.
For the nine months ended March 31, 1998, Income Before Taxes increased
$1.7 million for the reasons described above. The effective tax rate
remained fairly stable at 38.6% in 1998 which represents a slight decline
from the 38.9% effective tax rate reported in 1997.
Due to the factors mentioned above, Net Income rose $1.1 million, or 5.7%.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
NOT APPLICABLE.
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10. Employment Agreement between the Company and David R.
Crichton, dated as of February 1, 1998
27. Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K with the Securities and
Exchange Commission during the quarter ended December 31, 1997.
ALL OTHER ITEMS ARE INAPPLICABLE
STANDEX INTERNATIONAL CORPORATION
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
STANDEX INTERNATIONAL CORPORATION
Date: May 12, 1998 /s/ Robert R. Kettinger
Robert R. Kettinger
Corporate Controller
Date: May 12, 1998 /s/ Lindsay M. Sedwick
Lindsay M. Sedwick
Sr. Vice President of Finance/CFO
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 15,165
<SECURITIES> 0
<RECEIVABLES> 96,084
<ALLOWANCES> 3,253
<INVENTORY> 125,630
<CURRENT-ASSETS> 240,012
<PP&E> 244,878
<DEPRECIATION> 141,498
<TOTAL-ASSETS> 414,064
<CURRENT-LIABILITIES> 78,549
<BONDS> 167,235
0
0
<COMMON> 41,976
<OTHER-SE> 109,416
<TOTAL-LIABILITY-AND-EQUITY> 414,064
<SALES> 457,700
<TOTAL-REVENUES> 458,117
<CGS> 307,067
<TOTAL-COSTS> 307,067
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,850
<INCOME-PRETAX> 34,124
<INCOME-TAX> 13,156
<INCOME-CONTINUING> 20,968
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,968
<EPS-PRIMARY> 1.59
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 10
EMPLOYMENT AGREEMENT
THIS IS AN AGREEMENT made and entered into as of this first
day of February, 1998, by and between STANDEX INTERNATIONAL
CORPORATION, a Delaware corporation with its principal office in
Salem, New Hampshire (hereinafter referred to as "Employer"), and
DAVID R. CRICHTON
of Windham, New Hampshire (hereinafter referred to as
"Executive").
WHEREAS, Executive has heretofore been and is now employed
by Employer in a senior executive, managerial and supervisory
capacity, currently serving as Executive Vice
President/Operations; and
WHEREAS, Employer is desirous of retaining the services of
Executive 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, it is agreed by and
between the parties as follows:
1. Employment. Employer hereby agrees to employ Executive
on a full-time basis and Executive agrees to serve Employer on a
full-time basis as Executive Vice President/Operations or other
senior executive, managerial and supervisory capacity, subject to
the direction and control of the Chief Executive Officer of
Employer, said employment being upon the terms and conditions
herein set forth. It is the intention of the parties that this
Agreement supersedes and replaces in its entirety that Employment
Agreement dated as of January 29, 1993 between the Employer and
the Executive.
2. Term. The term of this Agreement shall be three years
and 11 months from February 1, 1998 to December 31, 2002 unless
otherwise terminated in accordance with the provisions of Section
6.
3. Best Efforts. Executive agrees, as long as this
Agreement is in effect, to continue to devote his same best
efforts and the same time and attention to the business of
Employer that he is presently devoting to said business of
Employer, and to the performance of such executive, managerial
and supervisory duties of a similar nature to those performed for
Employer during the period of service preceding this Agreement.
4. Non-Compete. Except as set forth in the third paragraph
of this Section 4, 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.
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.
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.
5. Compensation; Benefits. Employer agrees to compensate
Executive for his services at a minimum annual base salary during
any year of this Agreement (January 1 to December 31) of the
higher of $350,000 or the base salary at the end of the
immediately preceding year of this Agreement; provided, however,
that the first year of this Agreement shall consist of eleven
months and the minimum base salary shall commence as of the
effective date of February 1, 1998. Such base salary shall be
payable at least monthly and shall be increased as determined (in
its sole discretion) by Employer.
Executive shall also be entitled to participate in the
Standex Executive Bonus Program and in such other benefit plans
and programs as are made available to executives of the Employer.
Executive shall be entitled to use 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.
6. Termination.
A. 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 and for benefits due to
Executive's estate or to others under the terms of any benefit
plan or agreement then in effect.
B. Disability. In the event that Executive becomes
substantially disabled during the term of this Agreement for a
period of six consecutive months so that he is unable, in the
reasonable opinion of Employer, to perform the services as
contemplated herein, 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 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.
C. 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 90
days written notice, provided, however, that termination by
Employer for material breach following a change of control, as
defined in Section 14, 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
shall be defined as:
(i) 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
(ii) 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.
D. Legal Expenses. It is further agreed that Employer will pay
all reasonable legal expenses of Executive in the event that
Executive defends or brings any action under this Agreement,
provided, however, that Employer shall not be obligated to pay
the legal expenses of Executive if, in good faith, the Board of
Directors determines that, Executive acted in a manner Executive
believed to be adverse to the best interests of Employer or that
Executive should have known that his conduct was unlawful.
Notwithstanding such a determination, the Board shall be
obligated to reimburse Executive for said legal expenses if he
successfully defends or successfully prosecutes his case.
7. Notices. Any notice to be given pursuant to this
Agreement shall be sent by certified mail, postage prepaid, or by
fax or delivered in person to the parties at the following
addresses or at such other address as either party may from time
to time in writing designate:
To Executive:
David R. Crichton
7 Highland Road
Windham, NH 03087
To Employer:
Standex International Corporation
6 Manor Parkway
Salem, New Hampshire 03079
Attention: Edward J. Trainor
8. Invention and Trade Secret Agreement. Executive agrees
that the Invention and Trade Secret Agreement dated June 22,
1976, by and between Executive and Standex International
Corporation and signed by Executive shall remain in full force
and effect while this Agreement is in effect and, as provided in
the Invention and Trade Secret Agreement, after termination
hereof.
9. Specific Performance. It is acknowledged by both
parties that damages will be an inadequate remedy to Employer in
the event that Executive breaches or threatens to breach his
commitments under Section 4 or under the Invention and Trade
Secret Agreement. Therefore, it is agreed that Employer, may
institute and maintain an action or proceeding to compel the
specific performance of the promises of Executive contained
herein and therein. Such remedy shall, however, be cumulative,
and not exclusive, to any other remedy which Employer may have.
10. Survival. The obligations contained in Sections 4 and
8 shall survive the termination of this Agreement. In addition,
the termination of this Agreement shall not affect any of the
rights or obligations of either party arising prior to or at the
time of the termination of this Agreement or which may arise by
any event causing the termination of this Agreement.
11. Covenants Severable. In the event that any covenant of
this Agreement shall be determined invalid or unenforceable and
the remaining provisions can be given effect, then such remaining
provisions shall remain in full force and effect.
12. Entire Agreement; Amendment. This Agreement supersedes
any employment understanding or agreement (except the Invention
and Trade Secret Agreement) which may have been previously made
by Employer or its respective subsidiaries or affiliates with
Executive. This Agreement, together with the Invention and Trade
Secret Agreement, represents all the terms and conditions and the
entire agreement between the parties hereto with respect to the
employment of Executive by Employer. This Agreement may be
modified or amended only by written agreement signed by Employer
and Executive.
13. Assignment. This Agreement is personal between
Employer and Executive and may not be assigned; provided,
however, that Employer shall have the absolute right at any time,
or from time to time, to sell or otherwise dispose of its assets
or any part thereof or to reconstitute the same into one or more
subsidiary corporations or divisions or to merge, consolidate or
enter into similar transactions. In the event of any such
transaction, the term "Employer" as used herein shall mean and
include such successor corporation.
14. Change of Control.
A. In the event of a change in control of Employer required
to be reported under Item 6(e) of Schedule 14A of Regulation 14A
of the Securities Exchange Act of 1934:
(i) Employer may terminate Executive's employment only upon
conclusive evidence of substantial and indisputable intentional
personal malfeasance in office such as a conviction for
embezzlement of Employer's funds; and
(ii) Executive may terminate his employment at any time if
there is a change in his general area of responsibility, title or
place of employment, or if his salary or benefits are lessened or
diminished.
B. Following a change of control of Employer, any
termination of Executive's employment either by Executive
pursuant to Section 14.A.(ii) or by Employer under any
circumstances other than involving conclusive evidence of
substantial and indisputable intentional personal malfeasance in
office, then:
(i) Executive shall be promptly paid a lump sum payment equal to
three times his current annual base salary plus three times the
most recent annual bonus paid to him;
(ii) Executive shall become 100% vested in all benefit plans
in which he participates including but not limited to the Standex
Employee Stock Ownership Plan (ESOP), all shares issued under the
Profit Improvement Participation Shares Plan and all options
granted under the Stock Option Plans;
(iii) Three years of benefit service shall be added to the
years of service credited to Executive under the Standex
Retirement Plan;
(iv) The salary and bonus paid under Section 8.B.(i) shall
be deemed the Executive's compensation during such three
additional years for purposes of the computation of his pension
under the Standex Retirement Plan; and
(v) All life insurance and medical plan benefits covering the
Executive shall be continued at the expense of Employer for the
three-year period following such termination.
15. Governing Law; Binding Nature of Agreement. This
Agreement shall be construed in accordance with the laws of the
State of New Hampshire and shall be binding upon and inure to the
benefit of the parties hereto, their respective heirs, executors,
administrators, successors and assigns.
IN WITNESS WHEREOF, Employer has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized
and its corporate seal to be hereto affixed, and Executive has
executed the within instrument as a sealed document, all as of
the day and year first above written.
STANDEX INTERNATIONAL CORPORATION
By: /s/Edward J. Trainor
Edward J. Trainor, President/CEO
ATTEST:
/s/Deborah A. Rosen
Deborah A. Rosen, Secretary
/s/David R. Crichton
Witness David R. Crichton
