Document:

ex10_1.htm

Exhibit 10.1

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (the “Agreement”) dated August 22, 2011 and made effective as of June 1, 2011 (the “Effective Date”) by and between ORBIT INTERNATIONAL CORP., a Delaware corporation, (the “Company”) and MITCHELL BINDER (the “Executive”) (collectively, the “Parties”)

WHEREAS, Executive is presently employed by the Company in a senior executive capacity pursuant to an Employment Agreement dated as of January 1, 2008, as amended on December 22, 2009 (the “Original Agreement”);

WHEREAS, the Company desires to continue to employ Executive and to enter into an agreement embodying the terms of such employment; and

WHEREAS, Executive desires to continue his employment with the Company on the terms and conditions set forth herein and enter into such agreement.

NOW THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the Parties agree as follows:

1.             EFFECTIVENESS; TERM OF EMPLOYMENT.

A.          EFFECTIVENESS. This Agreement shall constitute a binding agreement between the parties as of the date hereof.

B.          TERM OF EMPLOYMENT. The term of this Agreement shall commence on the date first set forth above and shall continue until the earlier of December 31, 2014 or terminated pursuant to Paragraph 9 below (the “Term”)

2.             POSITION.

A.          During the Term, Executive shall serve as the Company’s Chief Executive Officer. Executive shall have and perform such duties and authority generally associated with an Chief Executive Officer of a publicly owned defense electronics corporation. Executive will have and perform other duties as shall be determined from time to time by the Company’s Board of Directors (the “Board”) consistent with Executive’s position.

B.           During the Term, Executive shall, if elected, and for no additional compensation, serve as a member of the Board and such other committees of the Board to which Executive may be appointed and/or as an officer or director of any subsidiary of the Company.

C.           During the Term, Executive will devote substantially all of his business time and efforts (excluding periods of vacation and sick days) to the performance of Executive’s duties hereunder, and will not engage in any other business, profession or occupation which would conflict or interfere with the rendition of such services, either directly or indirectly, without the prior written consent of the Board. Executive may: (i) engage in personal investment activities (including for Executive’s immediate family); (ii) serve on the boards of nonprofit organizations and business entities; and/or (iii) be involved in other organizations, in each case provided that any of such activities do not materially interfere with Executive’s performance of his duties for the Company or create a conflict of interest with that of the Company.

 

  

  

  

 

D.          Subject to such travel as the performance of Executive’s duties may reasonably require, Executive shall perform the duties required of him by this Agreement in Hauppauge, New York.

3.             COMPENSATION.

A.          BASE SALARY. Executive’s Gross Base Salary, is hereinafter referred to as “Base Salary.” During the Term, the Company shall pay to Executive an annual Base Salary at the rate of $349,000, paid in accordance with the Company’s regular payroll practices, but not less frequently than monthly. Executive’s Base Salary will be subject to all legally required tax deductions.

B.          ANNUAL INCENTIVE PLAN. During the Term, Executive shall be eligible to participate in the Company’s Executive Annual Incentive Plan, or such other individual annual incentive arrangement for Executive’s benefit approved by the Company’s Compensation Committee (the “AIP”). Pursuant to such AIP, for each year during the Term, Executive’s annual target incentive will be fifty percent (50%) of Executive’s Base Salary, with an incentive range of zero percent (0%) to one hundred fifty percent (150%) of Executive’s Base Salary annually (the “Annual Incentive”). The Company shall make payment of the Annual Incentive in a lump sum payment consistent with the terms of the AIP on the March 15th following each year during the Term for which such Annual Incentive is earned, subject to the release of the Company’s audited financial statements. Executive’s Annual Incentive will be based on strategic objectives submitted to and approved by the Board each year during the Term.  Executive’s Annual Incentive will be subject to all appropriate legally required tax deductions.

C.          DISCRETIONARY BONUS. During the Term, Executive may submit a written request to the Company’s Compensation Committee detailing specifics for the Compensation Committee to consider a discretionary bonus. The determination of whether to authorize a discretionary bonus and the timing and amount of such discretionary bonus, shall be made by the Company’s Compensation Committee, at its sole discretion.

4.             BENEFITS AND INSURANCE.

A.          EXECUTIVE BENEFITS. During the Term, Executive shall be entitled to participate in the Company’s employee and/or executive benefit plans (other than any annual incentive or other compensation or severance plans or programs, which benefits are set forth in this Agreement), as in effect from time to time (collectively “Executive Benefits”), on the same basis as those benefits are generally made available to other senior Company executives. Such Executive Benefits shall include, but not be limited to health, dental, defined contribution plan, disability and life insurance benefits. The Company reserves the right to change or cancel any Executive Benefits, at its sole discretion, except as specifically set forth in this Agreement.

 

  

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B.           LIFE INSURANCE. During the Term, the Company may maintain key person life insurance on Executive in the amount of one million dollars or such other amount as the Company in its discretion may determine.  Executive shall cooperate, at no cost to Executive, in any Company efforts to obtain and maintain such key person life insurance.  In addition, during the Term, the Company shall maintain life insurance on Executive in the amount of two million dollars.  Executive shall have the right to designate the beneficiary under this policy, which policy shall be in full satisfaction of any obligation to provide life insurance benefits under Section 4A hereof.

C.           DIRECTORS AND OFFICERS LIABILITY INSURANCE. During the Term, and for a reasonable period (not less than two years) thereafter, the Company shall maintain Directors and Officers liability insurance coverage for Executive in a total coverage amount determined by the Board to be reasonable, provided that, if Executive’s employment is terminated for “Cause” or Executive resigns his employment without “Good Reason,” each term as defined herein, the Company may, at its discretion, elect not to maintain Directors and Officers liability insurance coverage for Executive after Executive’s termination date.

5.             BUSINESS EXPENSES. During the Term, the Company shall reimburse Executive for, or pay on behalf of Executive, all reasonable and customary business expenses, including, but not limited to, travel expenses incurred by Executive in the performance of Executive’s duties hereunder.

6.            TAX PLANNING. During the Term, the Company shall reimburse Executive for, or pay on behalf of Executive, reasonable expenses for Executive’s taxation and tax planning services, not to exceed $1,500 per year in the aggregate.

7.            VEHICLE EXPENSES. During the Term, the Company shall provide Executive with (or reimburse Executive for, as applicable) a Company-leased, individually-owned or individually-leased vehicle as follows: for the remaining term of Executive’s existing leased vehicle, the Company will pay or reimburse Executive for the cost of such leased vehicle, and thereafter the Company will pay or reimburse Executive, provided that the total expense to the Company for such vehicle shall not exceed $1,100 per month (exclusive of, but not limited to, one time charges for taxes, bank fees and registration costs).  The Company shall pay for Executive's use and operation of such vehicle, including but not limited to costs for maintaining, insuring and fueling such vehicle.

8.             VACATIONS. During the Term, Executive shall be entitled to 25 paid days of vacation annually. Up to one week of paid vacation time unused at the end of a calendar year may be carried over until March 31 of the following year, at which time it shall be forfeited if unused. One week of unpaid vacation shall be available to Executive on an annual basis. Such unpaid vacation shall not carry over from year to year and shall be forfeited if unused at the end of a calendar year.

 

  

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9.             TERMINATION. The Term and Executive’s employment hereunder shall continue from the effective date of this Agreement through December 31, 2014, unless terminated earlier by the Company or by Executive pursuant to this Paragraph 9.  The Company and Executive agree to enter into good faith negotiations for a successor Agreement or extension of the Term no later than 5 months prior to the expiration of the Term, unless the Company responds to Executive’s Notice (as defined below) by stating its intention not to extend the Term or enter into a successor Agreement with Executive.  Accordingly, no later than 6 months prior to the expiration of the Term, Executive shall submit a written notice (“Executive’s Notice”) to the Company requesting that the Company state whether or not it intends to initiate negotiations for a successor Agreement or an extension of the Term.  The Company shall respond to Executive, in writing, no later than 10 days after receipt of Executive’s Notice.

A.          TERMINATION BY THE COMPANY FOR CAUSE; RESIGNATION BY EXECUTIVE WITHOUT GOOD REASON.

 

(I)            The Term and Executive’s employment hereunder may be terminated by the Company for Cause. Additionally, Executive’s employment shall terminate automatically upon Executive’s resignation without Good Reason (as hereinafter defined).

(II)           For purposes of this Agreement, “Cause” shall mean: (A) Executive’s willful misconduct in the performance of Executive’s duties hereunder that has an adverse effect on the Company; (B) Executive’s indictment for, or plea of nolo contendere to a felony under the laws of the United States or any state thereof or a misdemeanor involving moral turpitude; (C) Executive’s willful malfeasance or willful misconduct in connection with Executive’s duties hereunder which is materially injurious to the financial condition or business reputation of the Company; provided, that no such termination shall be effective as a termination for “Cause” unless Executive has been given written notice by the Board of its intention to terminate Executive’s employment for Cause, stating the grounds for such purported termination; (E) the refusal or failure of Executive to comply with any of his material obligations under this Agreement that is not cured by Executive within fifteen (15) business days after a written demand therefore is delivered to Executive by the Board which specifically identifies the manner in which the Board believes Executive has materially breached this Agreement.

(III)          If Executive’s employment is terminated by the Company for Cause or if Executive resigns without Good Reason (as hereinafter defined), Executive shall be entitled only to receive:

(A)           Executive’s Base Salary earned through the date of Executive’s termination, paid in one lump sum within the payroll period immediately following Executive’s date of termination;

(B)           reimbursement for any business expenses properly incurred by Executive in accordance with Company policy prior to the date of Executive’s termination; and

 

  

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(C)           such Executive Benefits, if any, pursuant to Paragraph 4 herein as to which Executive may be entitled as of the effective date of termination under the employee benefit plans of the Company.

The amounts described in clauses 9(A) (iii) (A) through (C) are referred to herein as the “Accrued Rights.”

B.           TERMINATION BY THE COMPANY WITHOUT CAUSE; RESIGNATION BY EXECUTIVE FOR GOOD REASON; OR NON-EXTENSION OF AGREEMENT BY THE COMPANY.

(I)            The Term and Executive’s employment hereunder may be terminated by the Company without Cause, by Executive’s resignation for Good Reason (as defined below) or if Executive’s employment terminates upon the expiration of the Term due to the Company’s decision not to extend this Agreement or enter into a successor employment agreement with Executive, at the Company’s election.

(II)           For purposes of this Agreement, “Good Reason” shall mean only: (A) the failure of the Company to pay or cause to be paid, or to provide or cause to be provided, any part of Executive’s compensation, benefits or perquisites when due hereunder, that is not applicable to all other senior executives; (B) any diminution in Executive’s title, position, authority responsibilities from those described herein, except in connection with the Company’s successorship plan or planning as duly authorized by the Board; or (C) failure of any successor company that acquires all or substantially all of the assets of the Company to assume the Agreement and the obligations hereunder, except in connection with the Company’s successorship plan or planning as duly authorized by the Board; provided that the events described in clauses (A) through (C) of this Paragraph 9(B) (II) shall constitute Good Reason only if the Company fails to cure such event to Executive’s reasonable satisfaction within 30 days after receipt from Executive of written notice of the event which constitutes Good Reason. Executive’s determination that Good Reason exists shall be subject to review, at the Company’s election, through arbitration in accordance with Paragraph 17 herein.

(III)          For purposes of this Agreement, Executive’s employment terminates upon “Expiration of the Term due to the Company’s decision not to extend Executive’s Agreement or enter into a successor employment agreement with Executive” only if: (A) the Company does not, on or before December 31, 2014, offer to Executive to extend the Term of the Agreement for a period of at least one year; or (B) the Company does not, on or before December 31, 2014, offer Executive a successor employment agreement for a period of at least one year on at least as favorable terms as contained in this Agreement.

(IV)          If the Term and Executive’s employment is terminated by the Company without Cause, if Executive resigns for Good Reason, or if Executive’s employment terminates upon Expiration of the Term due to the Company’s decision not to extend Executive’s Agreement or enter into a successor employment agreement with Executive (each term as defined above), Executive shall be entitled only to receive:

 

  

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(A)           an amount equal to 2.65 multiplied by Executive’s Base Salary ($349,000) (and which, solely for purposes of the calculation to be made under this Paragraph 9(B)(IV)(A), shall be deemed to have been reduced by $50,000 on December 31, 2012 and by additional reductions of $50,000 on each December 31 thereafter), payable in consecutive monthly installments equal to Executive’s most recent actual monthly Base Salary until paid in full, the first such installment to be paid on the Company’s first payroll date following Executive’s date of termination;

(B)           all non-vested shares of Company stock or other non-vested option or equity grants to Executive shall vest on the date of termination;

(C)           reimbursement for any business expenses properly incurred by Executive in accordance with Company policy prior to the date of Executive’s termination on or before the Company’s payroll period immediately following Executive’s date of termination;

(D)           payment of any accrued but unused vacation days on or before the Company payroll period immediately following Executive’s date of termination;

(E)           for a period ending on the earlier to occur of the second anniversary of the date of termination or the date of Executive’s 65 birthday payment of the Company’s portion of health insurance premiums (on policies similar to those generally made available to other senior Company executives);

(F)           if termination of Executive occurs prior to December 31, 2012, payment of automobile lease payments, including end of term costs, for Executive’s Company-owned or Company-leased vehicle through the end of the lease term; and

(G)           Directors and Officers liability insurance coverage in a total coverage amount determined by the Board to be reasonable for a period of two years after Executive’s termination date; or, in the Company’s discretion, the Company may purchase a tail insurance policy for the benefit of Executive.

(V)           If the Term and Executive’s employment with the Company terminates at the expiration of the Term as a result of Executive’s refusal of the Company’s offer to extend the Term of the Agreement or offer of a successor employment agreement on at least as favorable terms as contained in this Agreement as provided in Paragraph 9(B)(III) herein (or refusal to execute an Agreement consistent therewith), Executive shall be entitled only to receive the Accrued Rights.

C.           Termination Due to Sale of Assets or Merger.

(I)            If (i) the Company sells all or substantially all of its assets and this Agreement is not expressly assumed by the purchaser or (ii) this Agreement does not remain an obligation of the Company or its successor in any merger, consolidation or other similar agreement, Executive shall be deemed to have been terminated without Cause and shall be entitled to receive those payments, benefits and rights set forth in Paragraph 9(B)(IV).

 

  

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D.          Termination Due to Death.

(I)            The Term and Executive’s employment hereunder shall terminate upon Executive’s death. Upon termination of the Term and Executive’s employment hereunder for Executive’s death, Executive’s spouse or estate (as the case may be) shall be entitled only to receive:

(A)           the Accrued Rights; and

(B)           the death benefit provided by the Policy or otherwise as set forth in Paragraph 4(b) herein, payable to the beneficiary or beneficiaries designated by Executive.

E.           Termination Due to Disability.

(I)            The Term and Executive’s employment may be terminated by the Company upon Executive’s “Disability”, which shall mean if Executive becomes physically or mentally incapacitated and is therefore unable to perform the essential functions of Executive’s position as Chief Executive Officer for a consecutive period or aggregate of three (3) months during the Term.

 

Prior to the termination of the Term and Executive’s employment for Disability as described above, a written report from Executive’s physician must be submitted to the Board, and include, at a minimum, a diagnosis of Executive’s condition, together with an assessment of the activities Executive can and cannot perform with or without reasonable accommodation. Any question as to the existence of Executive’s Disability where Executive and the Company cannot agree shall be reviewed by a qualified physician mutually acceptable to Executive and the Company. Upon reviewing the diagnosis and prognosis of Executive, such mutually accepted and qualified physician shall provide a report of his/her findings to the Board and Executive, and shall be final and conclusive.

(II)           Upon termination of the Term and Executive’s employment hereunder for Executive’s Disability, Executive shall be entitled only to receive:

(A)           the Accrued Rights;

(B)           for the first six months of Executive’s Disability, the Executive’s Base Salary;

 

(C)           for the second six months of Executive’s Disability (which six month period shall commence on the first day after the period set forth in 9(E)(II)(B) above), the Executive’s Base Salary less all amounts Executive received pursuant to applicable disability insurance policies covering Executive for such period (including but not limited to all disability insurance policies provided to Executive by the Company);

 

  

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(D)           all non-vested shares of Company stock or equity grants, together with all non-vested options granted to Executive shall immediately vest on the date of Executive’s termination due to Disability.

F.           NOTICE OF TERMINATION. Any purported termination of the Term and Executive’s employment by the Company or by Executive (other than due to Executive’s death) shall be communicated by written Notice of Termination to the other party. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated, provided that the procedures set forth in Paragraph 9(A)(II) herein must be complied with in respect of any termination by the Company for Cause and provided further that the procedures set forth in Paragraph 9(B) (II) herein must be complied with in respect of any resignation by Executive for “Good Reason.”

G.           BOARD/COMMITTEE RESIGNATION. Upon termination of the Term and Executive’s employment for any reason, Executive agrees to resign, as of the date of such termination and to the extent applicable, from the Company’s Board of Directors (and any committees thereof) and the Board of Directors (and any committees thereof) of any of the Company’s subsidiaries.

10.           NON-COMPETITION.

A.          Executive acknowledges and recognizes the highly competitive nature of the business of the Company and that he provides essential and unique services to the Company. Accordingly, despite that the terms contained herein may limit Executive’s ability to engage in certain business pursuits during the Restricted Period (as defined below), Executive hereby agrees as follows:

 

  During the Term and for the period ending two years following the termination of the Term and Executive’s employment with the Company for any reason other than an involuntary termination without Cause or a voluntary resignation by Executive, each within one (1) year of a Change of Control (as defined herein) of the Company (the “Restricted Period”), Executive will not, whether on Executive’s own behalf or on behalf of or in conjunction with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”):

(I)             become an officer, director, joint venturer, employee, agent, consultant or five percent (5%) or more shareholder (either directly or indirectly) of, or promote, provide services to or assist in any way, any person or entity which directly competes with any business of the Company or any of its affiliates in which the Company or such affiliates are engaged as of the date of Executive’s termination of employment with the Company, and which constitutes, on a consolidated basis, at least ten percent (10%) of the Company’s revenues (hereinafter, engage in a “Competing Business”). Executive acknowledges that such restriction may limit his ability to engage in certain business pursuits during the Restricted Period, but also acknowledges that the Company has provided significantly higher remuneration and benefits from the Company, as provided herein, than that which he otherwise would have received to adequately compensate him for such restriction. Executive has had an opportunity to consult with an attorney with respect to these restrictions;

 

  

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(II)            interfere with, or attempt to interfere with, business relationships (whether formed before, on or after the date of this Agreement) between the Company and customers, clients, suppliers, partners, members or investors of the Company.

B.           It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Paragraph 10 to be reasonable, if a final determination is made by an arbitrator or arbitrators, or by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

11.           NON-SOLICITATION.

A.          Executive acknowledges and recognizes the highly competitive nature of the business of the Company and that he provides essential and unique services to the Company. Accordingly, despite that the terms contained herein may limit Executive’s ability to engage in certain business pursuits during the Restricted Period (as defined above), Executive hereby agrees as follows:

 

  During the Restricted Period (as defined above), Executive will not, whether on Executive’s own behalf or on behalf of or in conjunction with any Person (as defined above):

(I)            directly or indirectly solicit or encourage any employee of the Company to leave the employment of the Company; or enter into an Employment Agreement or Independent Contractor Agreement with any such employee;

(II)           directly or indirectly solicit or enter into any business relationship with any person or entity who, at the time of the termination of Executive’s employment with the Company was a customer of the Company or actively was being solicited by the Company to be a customer of the Company;

(III)          directly or indirectly, encourage any consultant then under contract with the Company to cease to work with the Company;

(IV)           directly or indirectly, encourage any of the Company’s customers or suppliers to cease doing business or reduce the amount of business it does with the Company.

 

  

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B.           It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Paragraph 11 to be reasonable, if a final determination is made by an arbitrator or arbitrators, or by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

12.           CONFIDENTIAL INFORMATION.

A.          Executive will not at any time (whether during or after Executive’s employment with the Company) retain or use for the benefit, purposes or account of Executive or any other Person or disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company (other than its professional advisers who are bound by confidentiality obligations or as otherwise required in connection with the proper performance of their duties on behalf of the Company), any non-public, proprietary or confidential information -- including without limitation trade secrets, know-how, research and development, strategies, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, profits, pricing, costs, products, services, vendors, customers, clients, partners, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions -- concerning the past, current or future business, activities and operations of the Company and/or any third party that has disclosed or provided any of same to the Company on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.

B.           “Confidential Information” shall not include any information that is: (a) generally known to the industry on the public other than as a result of Executive’s breach of this covenant or any breach of other confidentiality obligations by third parties; (b) made legitimately available to Executive by a third party without breach of any confidentiality obligation; or (c) required by law or legal process to be disclosed; provided that Executive shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and reasonably cooperate with any attempts by the Company to obtain a protective order or similar treatment at the Company’s sole expense.

C.           Upon termination of Executive’s employment with the Company for any reason, Executive shall cease and not thereafter commence use of any Confidential Information owned or used by the Company, and upon notification from the Company shall destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Executive’s possession or control (including any of the foregoing stored or located in Executive’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information or is otherwise the property of the Company, except that Executive may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information.

 

  

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  The provisions of this Paragraph 12 shall survive the termination of Executive’s employment with the Company for any reason.

13.           INTELLECTUAL PROPERTY.

A.          If Executive creates, invents, designs, develops, contributes to or improves any United States or foreign works of authorship, design, program, software, source code, inventions, materials, documents, inventions, trade secrets, processes, patent applications, patents, know-how, copyrightable subject matter, and/or other intellectual property or work product of any kind (including without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, or audiovisual materials), either alone or with third parties, at any time during the Term and within the scope of Executive’s employment and/or with the use of any the Company resources (“Company Works”), Executive shall promptly and fully disclose same to the Company, hereby irrevocably relinquishes for the benefit of the Company and its assigns any rights Executive may have to the Company Works, and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company, without further consideration.

B.           During or after the Term, Executive shall take all requested actions and execute all requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Company Works.

C.           The provisions of this Paragraph 13 shall survive the termination of Executive’s employment for any reason.

14.           SPECIFIC PERFORMANCE. Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Paragraphs 10, 11, 12 or 13 would be inadequate and the Company would suffer irreparable damages as a result of such breach. In recognition of this fact, Executive agrees that, in the event of such a breach, in addition to any remedies at law, the Company, without posting any bond, and without the necessity of proof of actual damages, shall be entitled to obtain injunctive relief restraining any threatened or further breach, or any other equitable remedy which may then be available.

15.            INDEMNIFICATION.

A.          The Company shall defend, indemnify and hold harmless Executive to the fullest extent of the law from and against any and all loss, liability, damage or expense (including reasonable attorney’s fees and expenses incurred in connection with the investigation, defense or negotiation of a settlement thereof or otherwise) (collectively, “Losses”) arising from any claim or threatened claim by any third party with respect to, or in any way related to, the Company, this Agreement or Executive’s services hereunder (collectively “Claim”) . Executive shall give the Company prompt notice of any such Claim known to him, and the Company, in its sole discretion, then may take such action as it deems advisable to defend the Claim on behalf of the Executive. (The failure by Executive to give such a prompt notice shall not affect the right to indemnification except to the extent the Company is materially prejudiced thereby.) The Company shall have the sole and exclusive right to use counsel of its own choosing, shall control the defense of any such Claim in all respects, and shall have the sole and exclusive right to negotiate and settle any such Claim on behalf of Executive. Notwithstanding the foregoing, Executive shall have the right to employ his own legal counsel in defense of any Claim, with the reasonable fees and expenses of such counsel to be paid by the Company, provided that the Company determines that there exists a conflict of interest by reason of having common counsel in any such Claim. Executive shall cooperate fully with the Company and its counsel in all respects in connection with the defense of any Claim and in any attempt made to settle the matter. Such indemnification shall be deemed to apply solely to (a) the amount of the judgment, if any, against Executive, (b) any sums paid by Executive in settlement, and (c) the expenses (including reasonable attorneys’ fees and expenses) incurred by Executive in connection with its defense. Notwithstanding anything to the contrary contained herein, Executive shall not be entitled to indemnification for Losses under this Paragraph 15 for any claim or allegation made by the Company against Executive arising out of Executive’s breach of this Agreement; or if it is adjudicated by a court of competent jurisdiction that any Losses were the direct result of the gross negligence or willful misconduct by Executive and, if so proven, Executive shall reimburse the Company for the costs of defense incurred by the Company.

 

  

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B.          Notwithstanding anything elsewhere to the contrary, this Paragraph 15 shall survive the termination of this Agreement and shall survive any termination of Executive’s employment.

16.           NO MITIGATION; NO SET OFF. In the event of any termination of employment hereunder, Executive shall be under no obligation to seek other employment and there shall be no offset against any amounts due Executive under this Agreement on account of any remuneration attributable to any subsequent employment that Executive may obtain.

17.           ARBITRATION. Any dispute between the parties arising out of this Agreement, including but not limited to any dispute regarding any aspect of this Agreement, its formation, validity, interpretation, effect, performance or breach, or the Executive’s employment (“Arbitrable Dispute”) shall be submitted to arbitration in the City of New York, pursuant to the Rules of the American Arbitration Association, before a single experienced employment arbitrator who is either licensed to practice law in New York, or is a retired judge having practiced law in New York. The arbitrator in any Arbitrable Dispute shall not have authority to modify or change this Agreement in any respect. The Company shall be responsible for payment of the amount of the fees of the American Arbitration Association and the arbitrator. In the event the arbitrator specifically finds that any claim or defense of either party is unreasonable, he may in his discretion direct that reasonable legal fees of the prevailing party be paid by the non-prevailing party. In the event the arbitrator specifically finds that the claims by Executive against the Company are meritorious, the arbitrator shall direct that Executive’s reasonable legal fees incurred in connection with arbitrating such claims pursuant to this Agreement shall be paid by the Company. The arbitrator’s decision and/or award will be fully enforceable and subject to entry of judgment by any court of competent jurisdiction. Notwithstanding the provisions of this Paragraph 17, the Company may, at its sole discretion seek appropriate injunctive relief for Executive’s breach of Paragraphs 10, 11, 12 or 13 in the Supreme Court of the State of New York, New York and Suffolk Counties and the United States District Court for the Southern and Eastern Districts of New York. Executive hereby consents to the jurisdiction and venue of such courts for all such controversies.

 

  

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18.           SECTION 409A. The intent of the parties is that payments and benefits under this Agreement comply with Internal Revenue Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. The provisions of this Paragraph 18 shall survive the termination of this Agreement and shall survive any termination of Executive’s employment. Notwithstanding anything herein to the contrary, if at the time of an Executive’s termination of employment the Executive is a “specified employee” of a publicly traded company as defined in Code Section 409A (and any related regulations or other pronouncements thereunder) and the deferral of any payments otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Code Section 409A, then the Company shall defer such payments (without any reduction in such payments ultimately paid or provided to the Executive) until the date that is six months following the Executive’s termination of employment (or the earliest date as is permitted under Code Section 409A).

19.           MISCELLANEOUS.

A.         GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles thereof.

B.          ENTIRE AGREEMENT/AMENDMENTS. This Agreement contains the entire understanding of the parties with respect to the employment of Executive by the Company and supersedes all prior agreements, oral or written, including, without limitation, the Original Agreement, with respect to the subject matter hereof. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto.

C.          NO WAIVER. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

D.          SEVERABILITY. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining pro-visions of this Agreement shall not be affected thereby.

 

  

13

  

E.           ASSIGNMENT. This Agreement, and all of Executive’s rights and duties hereunder, shall not be assignable or delegable by Executive. Any purported assignment or delegation by Executive in violation of the foregoing shall be null and void ab initio and of no force and effect. This Agreement may be assigned by the Company solely to a person or entity which is an affiliate or a successor in interest to substantially all of the business operations of the Company. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such affiliate or successor person or entity.

F.           SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure to the benefit of and be binding upon the personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees of the Parties. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company and any successor to its business and/or assets, which assumes and agrees to perform this Agreement by operation of law, or otherwise. If Executive should die while any accrued amount would still be payable to him hereunder had he continued to live, the accrued amounts, with the exception of any life, disability or health insurance premiums, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to his devisee, legatee or other designee, or if there is no such designee, to his estate.

G.           NOTICE. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three days after it has been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

If to the Company:

Orbit International Corp.

80 Cabot Court

Hauppauge, New York 11788

Attn:  Board of Directors

With a copy to:

Ruskin Moscou Faltischek, P.C.

1425 RXR Plaza

East Tower, 15th Floor

Uniondale, New York 11556

Attn:  Irvin Brum, Esq.

Facsimile:  (516) 663-6610

 

  

14

  

If to Executive:

Mitchell Binder

Orbit International Corp.

80 Cabot Court

Hauppauge, New York  11788; and

200 East 57th Street, Apt. 17D

New York, NY  10028

(or Executive’s most recent address set forth in the Company’s personnel record)”

H.          EXECUTIVE REPRESENTATIONS. Executive hereby represents to the Company that the execution and delivery of this Agreement by Executive and the Company and the performance by Executive of Executive’s duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any employment agreement or other agreement or policy to which Executive is a party or otherwise bound. Executive further represents that he has been advised by, or has consulted with his own independent counsel with respect to the negotiation of, and his decision to enter into, this Agreement and acknowledges that he understands the meaning and effect of each and every term and provision contained herein.

I.           WITHHOLDING TAXES. The Company shall withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

J.           COUNTERPARTS. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

 

	MITCHELL BINDER	 	 
	
 

	
 

	 
	/s/ Mitchell Binder	 	Dated: August 22, 2011
	 	 	 
	 	 	 
	ORBIT INTERNATIONAL CORP.	 	 
	 	 	 
	/s/ David Goldman	 	Dated: August 22, 2011
	By:  David Goldman	 	 
	Title: Chief Financial Officer	 	 
	 	 	 
	 	 	 
	 	 	 

 

 

15ex10_2.htm

EXHIBIT 10.2

 

SECOND AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT

 

THIS SECOND AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT (this “Amendment”), dated as of November 2, 2011, is entered into by and among, IMAGE ENTERTAINMENT, INC., a Delaware corporation (“Image”), IMAGE/MADACY HOME ENTERTAINMENT, LLC, a California limited liability company (“IMHE”) (Image and IMHE, each a “Borrower”, and collectively “Borrowers”), the Lenders signatory hereto and PNC BANK, NATIONAL ASSOCIATION (“PNC”), in its capacity as administrative and collateral agent on behalf and for the benefit of itself and the Lenders (PNC, in such capacity, the “Agent”).  Terms used herein without definition shall have the meanings ascribed to them in the Credit Agreement defined below.

 

RECITALS

 

A.           The Lenders, Agent and Borrowers have previously entered into that Revolving Credit and Security Agreement dated as of June 23, 2011 and as amended by that First Amendment to Revolving Credit and Security Agreement dated as of July 13, 2011 (as further amended, modified and supplemented from time to time, the “Credit Agreement”), pursuant to which the Lenders have made certain loans and financial accommodations available to Borrowers.

 

B.           The Lenders, Agent and Borrowers now wish to amend the Credit Agreement on the terms and conditions set forth herein.

 

C.           Borrowers are entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of Agent’s or any Lender’s rights or remedies as set forth in the Credit Agreement or any Other Document is being waived or modified by the terms of this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1.            Amendments to Credit Agreement.

 

(a)           Section 1.2 of the Credit Agreement is hereby amended as follows:

 

(i)           The definition of the term “EBITDA” is hereby amended and restated to read in its entirety as follows:

 

  

  

  

 

“EBITDA” shall mean, as determined for Borrowers on a Consolidated Basis as at the last day of each fiscal quarter of Image for the four consecutive fiscal quarters ended on such date, the sum of Earnings Before Interest and Taxes for such period plus (without duplication) (a) depreciation expenses for such period, (b) amortization expenses for such period (provided that amortization expenses shall not include any amortization expenses attributable to production costs), (c) in an amount not to exceed $1,350,000 annually during the Term, non-cash charges resulting from the grant of stock options or other equity related incentives to any director, officer or employee of Image pursuant to a written plan or agreement approved by Image’s board of directors and (d)in an aggregate amount not to exceed $1,350,000, legal expenses incurred and paid through March 31, 2012 that are related to matters disclosed in that certain letter from Borrower to Agent dated November 2, 2011.

 

(ii)           The following new definition of “Second Amendment” is inserted in proper alphabetical order into Section 1.2 of the Credit Agreement:

 

“Second Amendment” means that Second Amendment to Revolving Credit and Security Agreement dated as of November 2, 2011, amending this Agreement, among Borrowers, the Lenders and Agent.

 

2.             Effectiveness of this Amendment.  This Amendment shall become effective upon the satisfaction of each of the following conditions:

 

(a)           Amendment.  Receipt by Agent of this Amendment, fully executed in a sufficient number of counterparts for distribution to all parties.

 

(b)           Accommodation Fee.  Receipt by Agent, for the account of PNC as the sole Lender, of an accommodation Fee equal to $25,000.

 

(c)           Representations and Warranties.  The representations and warranties set forth in Section 3 hereof shall be true and correct.

 

(d)           Other Required Documentation.  All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed or recorded, as required by Agent.

 

3.             Representations and Warranties.  Borrower represents and warrants as follows:

 

(a)           Authority.  Each Borrower has the full power, authority and legal right to enter into this Amendment and the Other Documents (as amended or modified hereby) and to perform all of its respective obligations hereunder and thereunder.  The execution, delivery and performance of this Amendment by each Borrower:  (i) have been duly authorized by all necessary corporate or limited liability company action, as applicable; (ii) are not in contravention of law or the terms of such Borrower’s by-laws, certificate of incorporation, operating agreement, articles of organization or other applicable documents relating to such Borrower’s formation or to the conduct of such Borrower’s business or of any material agreement or undertaking to which such Borrower is a party or by which such Borrower is bound; (iii) will not conflict with or violate any law or regulation, or any judgment, order or decree of any Governmental Body; and (iv) will not require the Consent of any Governmental Body or any other Person.

 

(b)           Enforceability.  This Amendment has been duly executed and delivered by each Borrower and no other corporate or limited liability company proceedings are necessary to consummate such transactions.  This Amendment (as amended or modified hereby) and each Other Document is the legal, valid and binding obligation of each Borrower, enforceable against each Borrower in accordance with its terms, and is in full force and effect, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally.

 

  

  

  

 

(c)           Representations and Warranties.  The representations and warranties made by any Borrower in or pursuant to this Amendment, each Other Document and any related agreements to which it is a party, and each of the representations and warranties contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Amendment, the Other Documents or any related agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date, unless made specifically as of an earlier date, in which case they shall be true and correct in all material respects as of such earlier date.

 

(d)           No Default.  No event has occurred and is continuing that constitutes a Default or an Event of Default.

 

4.             Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York applied to contracts to be performed wholly within the State of New York, without regard to principals of conflicts of law other than New York General Obligations Law 5-1401 and 5-1402.

 

5.             Counterparts; Facsimile Signatures.  This Amendment may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement.  Any signature delivered by a party by facsimile or other similar form of electronic transmission shall be deemed to be an original signature hereto.

 

6.             Reference to and Effect on the Other Documents.

 

(a)           Upon and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the Other Documents to “the Credit Agreement”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as modified and amended hereby.

 

(b)           Except as specifically amended above, the Credit Agreement and all Other Documents, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed and shall constitute the legal, valid, binding and enforceable obligations of Borrower to Agent and the Lenders.

 

(c)           The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Agent and/or the Lenders under any of the Other Documents, nor constitute a waiver of any provision of any of the Other Documents.

 

  

  

  

 

(d)           To the extent that any terms and conditions in any of the Other Documents shall contradict or be in conflict with any terms or conditions of the Credit Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Credit Agreement as modified or amended hereby.

 

7.             Integration.  This Amendment, together with the Other Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

 

8.             Severability.  If any part of this Amendment is contrary to, prohibited by, or deemed invalid under Applicable Laws, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible.

 

[signature pages follow]

 

  

  

  

 

IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above written.

 

	 	IMAGE ENTERTAINMENT, INC.	 
	 	 	 
	 	 	 
	 	 	 
	
 

	
By: 

	/s/ JOHN AVAGLIANO	 

	 	 	Name:	John Avagliano	 
	 	 	Title:	COO/CFO	 

 

 

 

	 	

IMAGE/MADACY HOME ENTERTAINMENT, LLC,

	 
	 	 	 
	 	 	 
	 	 	 
	
 

	
By: 

	/s/ JOHN AVAGLIANO	 

	 	 	Name:	John Avagliano	 
	 	 	Title:	COO/CFO	 

 

(Second Amendment)

 

  

  

  

 

	 	

PNC BANK, NATIONAL ASSOCIATION,

	 
	 	as Agent and as a Lender	 
	 	 	 
	 	 	 
	 	 	 
	
 

	
By: 

	/s/ STEVE C. ROBERTS 	 

	 	 	Name:	Steve C. Roberts	 
	 	 	Title:	Vice President	 

 

 

 

(Second Amendment)

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