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 XXXXX XXXXXXXX ("Employee"), with an address at 000
Xxxxx Xxxxx, Xxxxxxx, 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 Executive Vice President and Chief Operating
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 Three Hundred Thirteen Thousand Five Hundred
($313,500) 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 1.77% percent of the first $5,000,000 of
the Company's "Pre-Tax Earnings" and 2.65% 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 $2 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 four
weeks per year, during each twelve-month period of the term
hereof, 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, President
Xxxxxx Sunshine, President
and Chief Executive Officer
By: /s/ Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
Q:\SSDATA1\COGENER2\138646.1
Q:\SSDATA1\COGENER2\138646.1
14
13
