EMPLOYMENT AGREEMENT, dated as of the 1st day of April 1996, by and
between ORBIT INTERNATIONAL CORP., a Delaware corporation (the
"Company"), with an office at 00 Xxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx, and
XXXXXXXX XXXXXX ("Employee"), with an address at 000 Xxxxxxxx Xxxx,
Xxxxxxxxxx, Xxx Xxxx 00000.
W I T N E S S E T H :
WHEREAS, Employee is presently employed by the Company in a
senior executive capacity pursuant to the terms of a certain
Employment Agreement dated as of July 1, 1992, between the Company and
Employee (the "1992 Employment Agreement"). The Company and Employee
desire to cancel the 1992 Employment Agreement effective April 1, 1996
and to enter into an employment agreement which will set forth the
terms and conditions upon which Employee shall continue in the employ
of the Company.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter set forth, the parties hereto have agreed, and
do hereby agree, as follows:
EMPLOYMENT TERM; CANCELLATION OF 1992 EMPLOYMENT AGREEMENT
0.1 The Company will continue to employ Employee in its
business and Employee will continue to work for the Company for a term
commencing as of April 1, 1996 and continuing for the duration of the
Employment Period (as hereinafter defined). During the Employment
Period, Employee will, if so requested, serve as an officer or director
of any subsidiary of the Company. Employment Period shall mean the
period commencing as of April 1, 1996 and terminating on the date on
which the Employment Period is terminated in accordance with the
provisions of Section 1.3 below.
0.2 Upon the execution of this Agreement by both the Company
and Employee, the 1992 Employment Agreement shall be deemed to have
been cancelled and terminated as of midnight March 31, 1996, and
thereafter to be of no further force and effect.
0.3 The Employment Period shall terminate on the earlier to
occur of
(i) Employee's death or at the election of the Company
at any time after Employee's Disability (as such term is hereinafter
defined);
(ii) At the election of the Company on not less than
three years' prior written notice to Employee;
(iii) At the election of Employee on not less than
six months' prior written notice to the Company, or upon a "change of
control" in accordance with the provisions of Section 7.1 below; or
(iv) At the election of the Company for "cause" (as such
term is hereinafter defined).
As used herein the term "cause" means (i) willful and
repeated failure by Employee to perform his duties hereunder which are
not remedied within thirty days after written notice from the Company,
(ii) conviction of Employee for a felony, (iii) Employee's dishonesty
or willfully engaging in conduct that is demonstrably and materially
injurious to the Company or (iv) willful violation by Employee of any
provisions of this Agreement which is not remedied within thirty days
after written notice from the Company.
1. DUTIES
1.1 During the Employment Period, Employee shall perform the
duties of Vice President - Finance and Chief Financial Officer or such
other or additional executive duties consistent with such office as
shall, from time to time, be reasonably delegated or assigned to him by
the Board of Directors of the Company consistent with Employee's
abilities.
1.2 During the term of this Agreement, Employee shall, if
elected, serve as a member of the Board of Directors of the Company and
such other committees of the Board to which Employee may be appointed.
2. DEVOTION OF TIME
During the Employment Period, Employee shall expend
substantially all of his working time for the Company; shall devote his
best efforts, energy and skill to the services of the Company and the
promotion of its interests; and shall not take part in activities which
are detrimental to the best interests of the Company or which are
directly competitive to the business of the Company.
3. COMPENSATION DURING EMPLOYMENT PERIOD
3.1 In respect of services to be performed by Employee
during the Employment Period, the Company agrees to pay Employee an
annual salary of Two Hundred Thirty Five Thousand One Hundred Twenty
Five ($235,125) Dollars ("Basic Compensation"), payable in accordance
with the Company's customary payroll practices for executive employees.
3.2 Employee's Basic Compensation shall be increased by an
amount established by reference to the "Consumer Price Index for Urban
Wage Earners and Clerical Workers, New York, New York, all items -
Series A-01 (1982 - 84=100)" published by the Bureau of Labor
Statistics of the United States Department of Labor (the "Consumer
Price Index"). The base period shall be the month ended March 31, 1996
(the "Base Period"). If the Consumer Price Index for the month of
March in any year, commencing in 1997, is greater than the Consumer
Price Index for the Base Period, Basic Compensation shall be increased
to the amount obtained by multiplying Basic Compensation by a fraction,
the numerator of which is the Consumer Price Index for the month of
March of the year in which such determination is being made and the
denominator of which is the Consumer Price Index for the Base Period.
3.3 In addition to his Basic Compensation, during the
Employment Period Employee shall also be entitled to receive for all
services rendered hereunder an annual cash bonus ("Incentive
Compensation") equal to 1.46% percent of the first $5,000,000 of the
Company's "Pre-Tax Earnings" and 2.20% of the Company's Pre-Tax
Earnings in excess of $5,000,000, as hereinafter defined, to be paid on
or before March 15 of each year based on the Company's Pre-Tax Earnings
for its fiscal year ended immediately prior thereto. In the event that
the Employment Period shall end on any day other than the last day of a
fiscal year the Incentive Compensation payable to Employee hereunder
shall be prorated based on the ratio that the number of days in that
fiscal year which are included in the Employment Period bears to the
total number of days in that fiscal year.
3.4 As used herein, the term Pre-Tax Earnings shall mean the
net income of the Company and its subsidiaries, as determined on a
consolidated basis as shown on the Company's statement of operations
which is included in its audited financial statements, in accordance
with generally accepted accounting principles applied consistently with
those employed in the preparation of the Company's audited financial
statements, as adjusted as follows:
(i) No deduction or provision shall be made for taxes
(which term shall not include any related interest or penalties) based
on income or profits of any nature whatsoever (including but not
limited to all federal, state, municipal and or other income,
franchise, excess profit, sales value added, gross receipts, surtaxes
or other taxes upon the Company or any of its subsidiaries or arising
from or related to the income of the Company or any of its subsidiaries
in any jurisdiction);
(ii) No deduction shall be made for any Incentive
Compensation payable to Employee hereunder or any incentive
compensation, bonus or similar payment made to any other executive
employee of the Company which is based upon or measured by the earnings
of the Company (however defined);
(iii) Pre-tax earnings (or losses) of consolidated
subsidiaries of the Company which are less than 100% owned by the
Company shall be included in the computation of "Pre-Tax Earnings" only
to the extent of the Company's percentage ownership interest in each
such subsidiary; and
(iv) Pre-Tax Earnings shall not include: (A)
extraordinary gains or extraordinary losses; or (B) any gain or loss
from discontinued business operations.
The amounts earned by Employee hereunder shall be initially
computed by the Company and any dispute between the Company and
Employee as to the computation thereof shall be determined by the
independent certified public accountants then regularly retained by the
Company based upon financial statements certified by said accountants
and such determination shall be final and binding upon the Company and
Employee.
3.5 Employee shall also be entitled to such additional
increments and bonuses as shall be determined from time to time by the
Board of Directors of the Company.
3.6 As used in this Agreement the term "Total Compensation"
shall mean, with respect to any period, the total amounts paid or
payable to Employee with respect to such period whether as Basic
Compensation, Incentive Compensation, or as additional payments made
pursuant to Paragraph 4.5.
4. BENEFITS; REIMBURSEMENT OF EXPENSES
4.1 Employee shall at all times have the use of a Company-
owned or leased automobile with full maintenance and insurance. All
costs of such automobile, including lease costs or purchase price,
gasoline and oil and garaging (except at Employee's home) shall be paid
by the Company.
4.2 The Company shall pay directly, or reimburse Employee,
for all other reasonable and necessary expenses and disbursements
incurred by him for and on behalf of the Company in the performance of
his duties during the Employment Period in accordance with the regular
practices of the Company regarding the reimbursement of such expenses.
4.3 Employee and any beneficiary of Employee shall be
accorded the right to participate in and receive benefits under and in
accordance with the provisions of any pension, insurance, medical and
dental insurance or reimbursement, or other similar plan or program of
the Company now in existence or hereafter adopted for the benefit of
its executive employees.
4.4 The Company shall maintain keyman life insurance on
Employee in the minimum amount of $1 million. Upon termination of
employment, Employee may continue to pay premiums due under such policy
and designate beneficiaries thereunder.
5. DISABILITY
5.1 If the Employment Period is terminated by reason of
Employee's Disability, as defined below, Employee shall be paid a sum
equal to 50% of the Total Compensation paid or payable to him with
respect to the immediately preceding full fiscal year, such payment to
be made to him in six substantially equal monthly installments
commencing promptly following any such termination of the Employment
Period.
5.2 "Disability" shall mean the inability of Employee, for a
continuous period of more than six (6) months, to perform substantially
all of his regular duties and carry out substantially all of his
responsibilities hereunder because of physical or mental incapacity.
The Company shall have the right to have Employee examined by a
competent doctor for purposes of determining his physical or mental
incapacity.
5.3 The obligations of the Company under Article 6.1 may be
satisfied, in whole or in part, by payments to Employee under
disability insurance provided by the Company, and under laws providing
disability benefits for employees.
6. CHANGE IN CONTROL
6.1 In the event at any time after March 31, 1996, a
majority of the Board of Directors is composed of persons who are not
"Continuing Directors," as hereinafter defined, (i) all stock options
and the Shares granted to Employee under any of the Company's stock
option plans, which stock options are currently outstanding and not
vested, shall immediately become fully vested and (ii) Employee shall
have the option, to be exercised by written notice to the Company, to
resign as an employee and terminate this Agreement, effective as of
such date as may be specified in his written notice of resignation.
6.2 In the event Employee exercises such option under (ii)
above, he shall be entitled to receive, as termination pay, a lump sum
equal to the maximum amount that can be paid to Employee, after giving
effect to all other benefits accruing to Employee upon the termination
of his employment, without any portion thereof constituting an "excess
parachute payment" as defined in 280G(b)(1) of the Internal Revenue
Code of 1986, as amended (the "Code"), or any successor section of the
Code. The computation of the termination payment to be made to
Employee under (ii) above shall be performed, at the sole cost and
expense of the Company, by the independent auditors then retained by
the Company, or if such auditors notify the Company that they are
unwilling to perform such computation, then by any nationally or
regionally recognized independent public accounting firm selected by
Employee. The computation provided by such auditors shall be final and
binding on the Company and Employee. The Company and Employee shall
provide such auditors with any documents and other information that the
auditors may reasonably request.
6.3 "Continuing Directors" shall mean (i) the directors of
the Company at the close of business on March 31, 1996, and (ii) any
person who was or is recommended to (A) succeed a Continuing Director
or (B) become a director as a result of an increase in the size of the
Board, in each case, by a majority of the Continuing Directors then on
the Board.
7. CONFIDENTIAL INFORMATION; INVENTIONS; RESTRICTIVE COVENANT
7.1 Employee agrees not to divulge, furnish or make
available to anyone (other than in the regular course of business of
the Company) any confidential knowledge or information with respect to
the Company, or with respect to any other confidential or secret aspect
of the Company's activities.
7.2 Any methods, developments, inventions and/or
improvements, whether patentable or unpatentable, which Employee may
conceive or make along the lines of the Company's business while in its
employ as an employee or consultant, shall be and remain the property
of the Company. Employee further agrees on request to execute patent
applications based on such methods, developments, inventions and/or
improvements, including any other instruments deemed necessary by the
Company for the prosecution of such patent application or the
acquisition of Letters Patent of this and any foreign country.
7.3 Employee agrees to communicate and make known to the
Company all knowledge possessed by him relating to any methods,
developments, inventions and/or improvements, whether patented,
patentable or unpatentable, which concern in any way the business of
the Company, whether acquired by him before or during the term hereof,
provided, however, that nothing herein shall be construed as requiring
any such communication where the method, development, invention and/or
improvement is lawfully protected from disclosure as the trade secret
of a third party or by any other lawful bar to such communication.
8.4 The services of Employee are unique and extraordinary
and essential to the business of the Company, especially since Employee
shall have access to the Company's customer lists, trade secrets and
other privileged and confidential information essential to the
Company's business. Therefore, Employee agrees that if his employment
services hereunder shall at any time be terminated for any reason other
than a termination resulting from a breach by the Company of any
provision of this Agreement, Employee will not at any time within one
(1) year after such termination, without the prior written approval of
the Company, directly or indirectly, within one-hundred (100) miles of
the Company's corporate headquarters in Hauppauge, New York, or any
other area in which the Company shall then conduct substantial
operations, engage in any business activity which is similar to the
business of the Company; and further, Employee agrees that during such
one (1) year period he shall not solicit, directly or indirectly, any
employee or customer or account of the Company who at the time of such
termination was then actively being solicited by the Company.
8. VACATIONS
Employee shall be entitled to reasonable vacations consistent
with the Company's vacation policy, not less than three weeks per year,
during each twelve-month period until June 30, 1998 and not less than
four weeks per year, during each twelve-month period thereafter, the
time and duration thereof to be determined by mutual agreement between
Employee and the Company. In the event Employee does not use his
entire vacation in a twelve-month period, he shall be entitled to
receive a cash payment in lieu thereof based upon Basic Compensation.
9. INJUNCTIVE RELIEF
Employee acknowledges and agrees that, in the event he shall
violate any of the restrictions of Articles 3 and 8 hereof, the Company
will be without adequate remedy at law and will therefor be entitled to
enforce such restrictions by temporary or permanent injunctive or
mandatory relief obtained in an action or may have at law or in equity,
and Employee hereby consents to the jurisdiction of such Court for such
purpose, it being understood that such injunction shall be in addition
to any remedy which the Company may have at law or otherwise.
10. ASSIGNMENT, ETC.
This Agreement, as it relates to the employment of Employee,
is a personal contract and the rights and interests of Employee
hereunder may not be sold, transferred, assigned, pledged or
hypothecated.
11. RIGHT TO PAYMENTS, ETC.
Employee shall not under any circumstances have any option or
right to require payments hereunder otherwise than in accordance with
the terms hereof. To the extent allowed by law, Employee shall not
have any power of anticipation, alienation or assignment of payments
contemplated hereunder, or any rights and benefits of Employee, and no
other person shall acquire any right, title or interest hereunder by
reason of any sale, assignment, transfer, claim or judgment or
bankruptcy proceedings against Employee.
12. NOTICES, ETC.
Any notice required or permitted to be given to Employee
pursuant to this Agreement shall be sufficiently given if sent to
Employee by certified mail addressed to him at the following address:
00 Xxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx, 00000, or at any such other
address as he shall designate by notice to the Company, and any notice
required or permitted to be given to the Company pursuant to this
Agreement shall be sufficiently given if sent to the Company by
certified mail addressed to it at 00 Xxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx,
attention of Corporate Secretary, or such other address as the Company
shall designate by notice to Employee, with a copy to Squadron,
Ellenoff, Plesent & Xxxxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, 00000, Attention: Xxxxxxx X. Xxxx.
13. GOVERNING LAW
This Agreement shall be governed by, and construed in
accordance with the laws of the State of New York, applicable to
agreements made and to be performed solely within such state.
14. WAIVER OF BREACH; PARTIAL INVALIDITY
The waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any
subsequent breach. If any provisions of this Agreement shall be held
to be invalid or unenforceable, such invalidity or unenforceability
shall attach only to such provision and not in any way affect or render
invalid or unenforceable any other provisions of this Agreement, and
this Agreement shall be carried out as if such invalid or unenforceable
provision were not embodied therein.
15. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the
parties hereto and there are no representations, warranties or
commitments except as set forth herein. This Agreement supersedes all
prior and contemporaneous agreements, understandings, negotiations and
discussions, whether written or oral, of the parties hereto relating to
the transactions contemplated by this Agreement. This Agreement may be
amended only in writing executed by the parties hereto affected by such
amendment.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the day and year above-written.
ORBIT INTERNATIONAL CORP.
By: /s/ Xxxxxx Sunshine
Xxxxxx Sunshine, President
and Chief Executive Officer
By: /s/ Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx
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