Exhibit 10.5

 

ESPEY MFG. & ELECTRONICS CORP.
DIRECTOR CONTINGENT SEVERANCE COMPENSATION PROGRAM

 

This Director Contingent Severance Compensation Program (the “Program”) has been
adopted by the Board of Directors (the “Board”) of Espey Mfg. & Electronics
Corp. (the “Corporation”) as of March 2, 2018. The Program supersedes, in all
respects, the Corporation’s Retired Director Compensation Program, most recently
amended effective June 2, 2017 (the “Prior Program”).

 

The mandatory retirement age of Directors, as set forth below applies to all
Directors, except for Directors, if any, who continue to participate in the
Prior Program. The contingent severance compensation elements of this Program
apply only to the Directors currently serving as non-executive members of the
Board, each of whom has served as a member of the Board of Directors since at
least 1999. No other individuals shall accrue any contingent severance rights
under the Program.

 

Mandatory Retirement. A Director shall retire from service on the Board
effective immediately prior to the Annual Meeting of Shareholders held during
the calendar year in which the Director attains the age of 82, whether or not
such Director is at the end of his term.

 

Contingent Severance Compensation for Eligible Directors.

(a)       Any Director who voluntarily retires or is not re-nominated and/or
re-elected for service on the board, unless the reason is for cause, shall
receive contingent severance compensation from the Corporation in an annual
amount equal to the base board fee at the time of retirement. Such contingent
severance compensation will be paid, subject to clause (f) below, until the
earliest to occur of (i) four years following the cessation of service, (ii)
attaining age 82, or (iii) death.

(b)       Individuals receiving the contingent severance compensation and who
were participating in the Corporation’s insurance programs (either individually
or with a spouse) at the time of the cessation of service as a Director will be
entitled to continue to participate in the insurance programs on the same terms
and at the same cost the Corporation offers its employees for as long as the
individual is receiving the contingent severance compensation under the Program.

(c)       A Director who is removed from the Board for cause shall not be
eligible to receive the contingent severance compensation or health insurance
benefits.

(d)       A Director who is an employee of the Corporation shall not be eligible
to receive the contingent severance compensation provided for in the Program.

(e)       Nothing in this Program shall entitle a Director to re-nomination for
election to the Board.

(f)       Notwithstanding any provision herein to the contrary, in the case of
Directors who have attained the age of 76, for each year served as a director
subsequent to the end of the term in which the director attains age 76, one (1)
year shall be subtracted from the Program (i.e. if the director serves an
additional 3 year term then only one (1) year shall remain available under the
Program). Upon serving 4 additional years as a director no years shall remain
under the Program.

 

Miscellaneous. This Program shall be evidenced by individual severance contracts
entered into between the Corporation and the Directors eligible for contingent
severance compensation. Upon execution of such contract the eligible Director
waives all rights under the Prior Program. Eligible Directors who do not sign
contracts under the Program will continue under the Prior Program.

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