EXHIBIT 10.1
EMPLOYMENT AGREEMENT
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AGREEMENT made and entered into as of April 4, 2005 between Tulip
Development Laboratory, Inc., a Pennsylvania corporation (the "Company), and
Xxxxxxx X. Xxxxxxxxxxxx ("Employee").
W I T N E S S E T H
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WHEREAS, the Employee has entered into on December 13, 2004, a Stock
Purchase Agreement (the "SPA") by and among the Company, Orbit International
Corp. ("Parent"), TDL Manufacturing Inc. ("TDLM") and the respective
shareholders of the Company, including the Employee, and of TDLM, which SPA
provides in Paragraph 9.12 therein, for the Company and the Employee to enter
into an employment agreement; and
WHEREAS, the Company desires to enter into this Employment Agreement with
the Employee and the Employee desires to be employed by the Company on the terms
and conditions set forth in this Employment Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the premises and the
mutual covenants herein contained, hereby agree as follows:
1. Term of Employment.
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(a) Subject to the terms and conditions hereinafter set forth, the
Company shall employ Employee and Employee shall be employed by the Company, for
an employment term commencing as of the date hereof and terminating three years
from the date hereof unless sooner terminated pursuant to the provisions of
Paragraph 8 hereof (the "Initial Term").
(b) At least 90 days prior to the expiration of the Initial Term,
the Employee shall give written notice to the Company of his election to either
extend this Employment Agreement for an additional 2 year period on the same
terms and conditions as set forth in this Employment Agreement (the "Option
Term") or to become a consultant to the Company under terms to be mutually
agreed upon, but not to exceed 40 hours per week (the Initial Term and the
Option Term are collectively referred to herein as the "Term"). At the
expiration of the Initial Term or the Option Term, as the case may be, the
Company shall have no further obligation to the Employee, and the Employee shall
have no further obligation to the Company except with respect to (i) Employee's
obligations to the Company pursuant to Paragraphs 9, 10, 11 and 15; (ii) the
Company's obligations to Employee pursuant to Paragraphs 4-8; and, (iii) any
other obligations the Company may have to Employee and/or Employee may have to
the Company under applicable law governing the relationship of an employer to an
employee and/or an employee to an employer upon and following termination of
such relationship.
2. Scope of Employment. During the Term, Employee shall be employed as
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President and Chief Operating Officer of the Company and of TDLM and shall
perform such duties customarily expected to be performed by such officer. In
addition, Employee shall faithfully render and perform such other reasonable
executive and managerial services as may be assigned to him, from time to time,
by or under the authority of the Board of Directors of the Company or of the
Parent, or by the Chief Executive Officer of the Company. Employee will devote
his full working time and efforts to the business and affairs of the Company, as
now or hereafter conducted, and shall be at all times subject to the direction
and control of the Board of Directors of the Company or of the Parent, or of the
Chief Executive Officer of the Company. Employee shall render such services to
the best of his ability and shall use his best efforts to promote the interests
of the Company. Employee will not engage in any capacity or activity which is,
or reasonably may be, contrary to the welfare, interest or benefit of the
business now or hereafter conducted by the Company.
3. Location of Employment. Employee shall render services primarily at
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the Company's offices that are located in Quakertown, Pennsylvania. During the
Term, the Company shall continue to provide Employee with an office and staff at
the Company's Quakertown offices consistent with the practice of the Company
prior to the effective date of this Agreement. Notwithstanding the foregoing,
Employee acknowledges and agrees that Employee's duties hereunder from
time-to-time may include such reasonable travel outside of Quakertown,
Pennsylvania consistent with past practices of the Company, as the performance
of Employee's duties may require. Employee shall not be required to relocate to
any other location.
4. Compensation.
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(a) As full compensation for all services provided for herein, the
Company will pay, or cause to be paid, to Employee, and Employee will accept, a
base salary (as increased from time to time, the "Base Salary") during the Term
at an annual rate of not less than Three Hundred Fifty Thousand and 00/100
($350,000.00), provided that as of each anniversary of the date of this
Agreement, the Base Salary shall be increased by an amount equal to the annual
percentage increase in the "All-Urban" consumer price index published by the
United States Bureau of Labor Statistics for the Philadelphia, Pennsylvania area
for the immediately preceding 12-month period (or, if such index is no longer
published, by an amount equal to the annual percentage increase in the most
closely comparable index). The Board of Directors shall review Employee's
performance annually and may, in its sole discretion, increase the Base Salary
by an amount greater than that provided for in the preceding sentence. The Base
Salary shall be paid in regular installments in accordance with the Company's
usual paying practices, but not less frequently than monthly.
(b) During the Term of this Agreement, the Employee shall also have use
of an automobile owned or leased by the Company ("Employee's Company Car"), at
least comparable to the one currently used by Employee. Employee shall also be
entitled to reimbursement of costs related to the use by Employee of Employee's
Company Car, including, but not limited to, insurance, repairs, maintenance,
mileage charges and fuel costs, reasonably incurred on the Company's behalf,
upon submission of a detailed accounting for such car expenses by Employee to
the Company in accordance with the Company's expense reimbursement policy and
procedures then in effect.
(c) In addition to the compensation set forth in subparagraphs (a) and (b)
of this Paragraph 4, Employee shall be entitled to receive an annual incentive
bonus, which amount shall be computed as follows: For each fiscal year during
the Term, or any pro rated portion thereof, Employee shall be entitled to
participate in a bonus pool, to be distributed among employees of the Company,
which shall consist of an aggregate amount equal to five (5) % of the pre-tax
income of the Company and TDLM. "Pre-Tax Income" shall mean the net income
generated by the Company and by TDLM on a combined basis (exclusive of any
extraordinary gains, extraordinary losses, or any interest expense, with the
exception of interest paid to the Sellers under the Orbit Note (as defined in
Section 2.02(iii) of the SPA), as set forth in the respective financial
statements of the Company and TDLM, determined in accordance with generally
accepted accounting principles consistently applied, and which shall also
include an agreed upon allocation of administrative and overhead costs of the
Parent.
The Employee shall participate equally with other members of senior management
of the Parent in the determination of the amount of the distribution from the
bonus pool. Such payment shall be made within ten (10) days following completion
of the annual audit of the Company's and TDLM's respective financial statements,
and with regard to that period remaining in the Term after the conclusion of the
final complete fiscal year of the Term (the "Stub Period"), within forty five
(45) days after the end of the Stub Period. Pre-Tax Income for the Stub Period
shall be taken from the unaudited financial statements of the Company and TDLM.
The Base Salary and any bonus payments will be subject to such deductions
by the Company as the Company is from time to time required to make pursuant to
law, government regulations or order or by agreement with, or consent of,
Employee. Such payments may be made by check or checks of the Company or any of
its parent, subsidiaries or affiliates as the Company may, from time to time,
find proper and appropriate.
5. Vacation. During the Term, Employee shall be entitled to vacations
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in accordance with past practice of the Company prior to the date of this
Agreement. It is hereby acknowledged by both Employee and the Company that the
Schedule of vacation days and availability attached to this Agreement
constitutes past practice prior to the effective date of this Agreement.
6. Benefits.
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(a) During the Term, Employee shall be entitled to participate in all
group insurances as are presently being offered by the Company or which may
hereafter, during the Term, be offered to its executive and/or non-executive
employees on a company wide basis (including group life insurance, group
disability insurance, group medical and hospitalization plans, pension and
profit sharing plans). During the Term, Employee shall be entitled to medical
and hospitalization coverage for himself, his spouse, and dependents under the
BlueCross Personal Choice Plan (including prescription drug coverage) pursuant
to which he currently has coverage. In the event the Company fails to provide
such coverage, or such coverage is otherwise unavailable, then the Company shall
provide Employee, his spouse, and dependents with at least equivalent coverage
(including healthcare provider choices, deductibles, co-pays, etc.).
(b) During the Term, if the Company shall further maintain a simplified employee
pension plan ("SEP") it shall make contributions of at least Twenty Thousand and
00/100 ($20,000.00) Dollars each year to Employee's SEP account. The Company
shall make such contributions to Employee's SEP account on or before the due
date for the Company's tax return for each year. The Company's SEP shall not be
terminated until all employees covered by SEP are transferred to participate in
the Parent's Orbit International Corp Employee Savings Plan.
(c) From and after the date of this Employment Agreement, the terms
"compensation" as used in any pension or profit sharing plan maintained by the
Company shall include only the Base Salary (exclusive of any bonus payments)
payable hereunder, unless the plan or applicable law provides otherwise.
7. Expenses. Employee shall be entitled to reimbursement by the Company
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for reasonable expenses actually incurred by him on its behalf or on behalf of
the Parent or TDLM, in the course of his employment by the Company, upon the
presentation by Employee, from time to time, of an itemized account of such
expenditures together with such vouchers and other receipts as the Company may
request, in accordance with Company policy and Internal Revenue Service
regulations.
8. Termination.
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(a) Disability. If, during the Term, Employee shall be unable, for a
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period of more than six (6) consecutive months or for periods aggregating more
than twenty-six (26) weeks in any fifty-two (52) consecutive weeks to perform
the services provided for herein as a result of illness, incapacity or a
physical or other disability of any nature, the Company may, upon not less than
thirty (30) days' written notice, terminate Employee's employment and the Term
hereunder. Employee shall be considered unable to perform the services provided
for herein if he is unable, with or without reasonable accommodation, to attend
to the essential duties required of him.
(b) Death. If Employee shall die during the Term, Employee's employment
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hereunder and the Term shall terminate upon Employee's death. Employee's estate
shall continue to receive the compensation specified in Paragraph 4 hereof until
the end of the month in which Employee's death occurs. Medical and
hospitalization insurance coverage, as provided for in Paragraph 6(a), will
continue for Employee's spouse and dependents for a period of six (6) months
thereafter, without prejudice to the rights of his spouse and dependents) under
Section 4980B of the Internal Revenue Code.
(c) For Cause. In addition to the provisions for the cancellation
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and/or termination hereof hereinabove provided, the Company may, at any time and
in its sole discretion, terminate and/or cancel the Term and this Employment
Agreement for cause (as hereinafter defined) by sending written notice to the
Employee of its intention to so cancel and/or terminate. Cancellation and/or
termination under this paragraph shall become effective within ten (10) business
days of Employee's receipt of the notice provided for under this paragraph.
For purposes of this Employment Agreement, "cause" shall be defined to
mean: (i) fraud, dishonesty or similar malfeasance; (ii) substantial refusal to
comply or default in complying with the reasonable, ethical, and lawful
directions of the Board of Directors of the Company or the Parent, or the Chief
Executive Officer and/or failure to comply with or perform any of the material
terms and/or obligations of this Employment Agreement and such refusal, default
or failure continues for a period of more than ten (10) days after receipt by
Employee of written notice from the Company setting forth in reasonable detail
the activity by Employee which the Company deems to be cause for termination of
this Employment Agreement; (iii) Employee's repeated and intemperate use of
alcohol or illegal drugs after written notice from the Company that such use, if
continued, will result in termination of Employee's employment; (iv) Employee's
conviction of a felony involving personal dishonesty, moral turpitude, or
willfully violent conduct; or, (v) Employee materially breaching any provision
of this Employment Agreement, which breach continues for a period of more than
ten (10) days after receipt by Employee of written notice from the Company
setting forth in reasonable detail the breach by Employee which the Company
deems to be cause for termination of this Employment Agreement.
(d) Resignation for Good Reason. Employee's employment and the Term may be
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terminated by Employee for "Good Reason" if any of the following occurs without
Employee's written consent:
(i) a substantial and adverse alteration of Employee's position, duties, and
responsibilities under this Agreement such that they are no longer consistent
with the position, duties, and/or responsibilities of an executive level
employee;
(ii) a material breach of this Agreement by the Company or the Parent;
(iii) a change in Employee's principal place of employment to a location at
least twenty (20) miles from the Quakertown, Pennsylvania offices;
(iv) a material and adverse change in the compensation and benefits provided
to Employee under this Agreement; and/or
(v) the Company or the Parent materially breaches the SPA and/or the Orbit
Note.
In order to be eligible for the severance benefits referred to in Paragraph 8(e)
below, Employee shall be required to provide the Company with written notice of
Good Reason to resign within twenty (20) days after Employee becomes aware of
the circumstances constituting Good Reason. The Company shall have a period of
ten (10) days after Employee provides such written notice within which to take
measures to correct the circumstances constituting Good Reason. Should Employee
fail to provide twenty (20) days written notice of Good Reason and/or should the
Company correct the circumstances within ten (10) days after receiving written
notice from the Employee, Good Reason for Employee's resignation shall cease to
exist.
(e) Severance.
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(i) In the event the Company terminates Employee's employment,
other than for the reasons set forth in Paragraphs 8(a), (b), or (c), or
Employee resigns for Good Reason, Employer will pay to Employee a severance
benefit. Severance shall be in an amount equal to Employee's Base Salary for
the immediately preceding calendar year, plus bonuses paid to Employee for the
immediately preceding calendar year (the "Severance Benefit"). The Severance
Benefit will be subject to payroll deductions required by law and/or authorized
by Employee. The Severance Benefit shall be payable in substantially equal
installments on regularly scheduled paydays commencing with the regularly
scheduled payday following the effective date of the termination of employment
and continuing for one (1) year or the end of the Term of this Agreement,
whichever is shorter. Should Employee resign where no Good Reason exists, or
should Employee's employment terminate pursuant to Paragraphs 8 (a), (b), and/or
(c), Employee shall not be entitled to the Severance Benefit.
(ii) In the event the Company terminates Employee's employment pursuant to
Paragraph 8(b) for the reason that Employee suffers from a disability, and in
the event Employee is not receiving long-term disability benefits under either a
group long-term disability insurance program maintained by the Company or a
personal policy maintained by Employee at a rate of at least sixty-six and
two-thirds (66 2/3%) percent of Employee's then current Base Salary, the Company
will pay to Employee the difference between sixty-six and two-thirds (66 2/3%)
percent of Employee's then current Base Salary and such amount Employee is
receiving, if any, (less payroll deductions required by law and/or authorized by
Employee) in substantially equal installments on regularly scheduled paydays
commencing with the regularly scheduled payday following the effective date of
the termination of employment and continuing for six (6) months.
(iii) Employee will also be entitled, subject to the terms and conditions of
the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the
Company's policies, to make a COBRA election to continue the medical and
hospitalization benefits referred to in Paragraph 6(a) for Employee, his spouse,
and his eligible dependents. In the event Employee elects COBRA coverage, the
Employee will reimburse the Company for premium payments made on behalf of
Employee to keep medical and/or hospitalization coverage in effect for a period
of eighteen (18) months from the effective date of the termination of
employment.
(iv) Employee shall have no duty to seek other employment or to engage in
self-employment in mitigation of the Severance Benefit and premium reimbursement
provided for hereunder, and any compensation which Employee may receive in the
course of any such employment or self-employment shall not reduce the Company's
obligations hereunder.
9. Disclosure. Except as may be required or appropriate in connection
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with Employee's carrying out his duties under this Agreement, Employee will not,
without the prior written consent of the Company, or unless otherwise required
by law or any legal process, at any time, directly or indirectly, disclose or
furnish to any other person, firm or corporation:
(a) any of the Company's confidential non-public information concerning
the methods of conducting or obtaining business, of manufacturing or advertising
products, or of obtaining customers;
(b) any of the Company's confidential non-public information acquired by
Employee during the course of his employment by the Company, including without
limiting the generality of the foregoing, the name of any customers or
prospective customers of, or any person, firm or corporation who or which have
or shall have traded or dealt with, the Company (whether such customers have
been obtained by Employee or otherwise); and/or
(c) any of the Company's confidential non-public information relating
to the products, designs, processes, discoveries, materials, ideas, creations,
inventions or properties of the Company.
10. Covenants Not to Compete.
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(a) During the Term, Employee agrees not to engage, directly or
indirectly, in any business which is competitive with the business now, or at
any time during the Term, conducted by the Company.
(b) During the Term, or if the Employee is terminated for cause, until the
scheduled expiration of the Term, Employee agrees not to directly or indirectly,
on behalf of himself or any business in which he may, directly or indirectly, be
engaged, recruit, solicit, induce (or attempt to induce), or have any part in,
the diversion of any of the Company's employees or sales representatives from
their relationships with the Company, or retain or employ any of the Company's
employees or sales representatives
(c) In addition, Employee shall not at any time, during or after the
termination of this Employment Agreement, engage in any business which uses as
its name, in whole or in part, Tulip Development Laboratory, Inc., TDL
Manufacturing, Inc. and/or Orbit International Corp., or any other name used by
the Company, and known by Employee to be so used, during or prior to the Term.
For the purpose of this Paragraph 10, Employee will be deemed directly or
indirectly engaged in a business if he participates in such business as
proprietor, partner, joint venturer, stockholder, director, officer, lender,
manager, employee, consultant, advisor or agent, or if he controls such
business. Employee shall not for purposes of this paragraph be deemed a
stockholder or lender if he holds less than two (2%) percent of the outstanding
equity or debt of any publicly owned corporation engaged in the same or similar
business to that of the Company,
provided that Employee shall not be in a control position with regard to such
corporation.
11. Inventions. As between Employee and the Company, all products,
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designs, processes, discoveries, materials, ideas, creations, inventions and
properties, whether or not furnished by Employee, created, developed, invented,
or used in connection with Employee's employment hereunder or prior to this
Employment Agreement, will be the sole and absolute property of the Company for
any and all purposes whatever in perpetuity, whether or not conceived,
discovered and/or developed during regular working hours. Employee will not
have, and will not claim to have, under this Employment Agreement or otherwise,
any right, title or interest of any kind or nature whatsoever in or to any such
products, designs, processes, discoveries, materials, ideas, creations,
inventions and properties.
12. Arbitration. Any controversy arising out of or relating to this
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Employment Agreement, including any modification or amendment thereof, shall be
resolved by arbitration, by a single arbitrator pursuant to the employment
dispute resolution rules then obtaining of the American Arbitration Association.
The venue for arbitration shall be in Quakertown, Pennsylvania. The parties
consent to the application of the Pennsylvania or Federal Arbitration Statutes
and to the jurisdiction of the Bucks County Court of the Commonwealth of
Pennsylvania, and of the United States District Court for the Eastern District
of Pennsylvania, for judgment on an award and for all other purposes in
connection with said arbitration. Judgment upon the written award rendered may
be entered by any Court having jurisdiction. Any provisional remedy which, but
for this provision to arbitrate disputes, would be available at law, shall be
available to the parties hereto pending the final word of the arbitrator.
13. Injunctive Relief. The parties hereto recognize that irreparable damage
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may result to the Company and its business and properties if Employee fails or
refuses to perform his obligations under this Employment Agreement and that the
remedy at law for any such failure or refusal may be inadequate. Accordingly,
notwithstanding the provisions of Paragraph 12 hereof to arbitrate disputes
arising hereunder, it is understood that the Company has not waived its rights
to seek any provisional remedies (including, without limitation, injunctive
relief) and damages. The institution of any arbitration proceedings shall not
bar injunctive relief, or any other provisional remedy, pending the final award
of the arbitrators.
14. Absence of Restrictions. Employee represents and warrants that he
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is not a party to any agreement or contract pursuant to which there is any
restriction or limitation upon his entering into this Employment Agreement or
performing the services called for by this Employment Agreement.
15. Further Instruments. Employee will execute and deliver all such other
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further instruments and documents as may be reasonably necessary, to carry out
the purposes of this Employment Agreement, or to confirm, assign or convey to
the Company any products, designs, processes, discoveries, materials, ideas,
creations, inventions or properties referred to in Paragraph 11 hereof,
including the execution of all patent, design patent, copyright, trademark or
trade name applications.
16. Invalidity and Severability. If any provisions of this Employment
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Agreement are held invalid or unenforceable, such invalidity or unenforceability
shall not affect the other provisions of this Employment Agreement, and, to that
extent, the provisions of this Employment Agreement are intended to be and shall
be deemed severable. In particular and without limiting the foregoing sentence,
if any provision of Paragraph 10 of this Employment Agreement shall be held to
be invalid or unenforceable by reason of geographic or business scope or the
duration thereof, such invalidity or unenforceability shall attach only to such
provisions and shall not affect or render invalid or unenforceable any other
provisions of this Employment Agreement, and any such provision of this
Employment Agreement shall be construed as if the geographic or business scope
or the duration of such provision had been more narrowly drawn so as not to be
invalid or unenforceable.
17. Notices. Any notice required or permitted to be given under this
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Employment Agreement shall be sufficient if in writing and if sent by registered
or certified mail, telegram, or overnight courier as follows:
As to Employee: Xxxxxxx X. Xxxxxxxxxxxx
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Tulip Development Laboratory, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
with a copy to: Xxxx X. Xxxx, Esq.
Xxxxxxxxxxx Xxxxx & Bubba, P.C.
0000 Xxxxxxxxxxx Xxxx
X.X. Xxx 000
Xxxxxx Xxxxxx, XX 00000
As to the Company: Tulip Development Laboratory, Inc.
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c/o Orbit International Corp.
00 Xxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Chief Executive Officer
with a copy to: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-0000
or to such other address as either party hereto may designate by notice given in
accordance with this Employment Agreement.
18. Assignment. A party hereto may not assign this Employment Agreement
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or any rights or obligations hereunder without the consent of the other party
hereto; provided, however, that upon the sale or transfer of all or
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substantially all of the assets of the Company, or upon the merger by the
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Company into, or the combination with, another corporation, this Employment
Agreement will inure to the benefit of and be binding upon the person, firm or
corporation purchasing such assets, or the corporation surviving such merger or
consolidation, as the case may be, and the Company shall require any such
person, firm or corporation to expressly assume the Company's obligations and
liabilities hereunder. The provisions of this Employment Agreement, where
applicable, are binding upon the heirs of Employee and upon the successors and
assigns of the parties hereto.
19. Waiver of Breach. Waiver by either party of a breach of any provision of
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this Employment Agreement by the other shall not operate or be construed as a
waiver of any subsequent breach by such other party.
20. Entire Employment Agreement. This document, together with the SPA and
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Note, contains the entire agreement of the parties as to the subject matter
hereof and supersedes and replaces all prior oral or written agreements between
the parties. This Agreement may not be changed orally, but only by an amendment
in writing signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
21. Applicable Law. This Employment Agreement shall be construed, enforced
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and governed by and under the laws of the Commonwealth of Pennsylvania, without
regard to conflict of laws principles.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.
EMPLOYEE:
/s/ Xxxxxxx Xxxxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxxxx
TULIP DEVELOPMENT LABORATORY, INC.
By: /s/ Xxxxxx Sunshine
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Xxxxxx Sunshine
Chief Executive Officer
ORBIT INTERNATIONAL CORP.
By: /s/ Xxxxxx Sunshine
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Xxxxxx Sunshine
Chief Executive Officer
