<PAGE>
SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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Orbit International Corporation
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(Name of Registrant as Specified In Its Charter)
Orbit International Corporation
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<PAGE>
ORBIT INTERNATIONAL CORP.
80 Cabot Court
Hauppauge, New York 11788
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Orbit International Corp.:
The Annual Meeting of Stockholders of Orbit International Corp. (the
"Company") will be held at the offices of Orbit International Corp., 80 Cabot
Court, Hauppauge, New York, at 9:30 a.m., Eastern Daylight Savings
Time, on December 18, 1995, for the following purposes:
1. To elect the Board of Directors for the ensuing year.
2. To consider and act upon a proposal to amend the Company's
Certificate of Incorporation to create a class of 1,000,000
shares of preferred stock which may be issued in one or more
series and to authorize the Company's Board of Directors to
determine the voting powers, designations, preferences, and
rights, and the qualifications, limitations, or restrictions
thereof, of each such series.
3. To consider and act upon a proposal to adopt the Company's
1995 Employee Stock Option Plan.
4. To consider and act upon a proposal to adopt the Company's
1995 Stock Option Plan for Non-Employee Directors.
5. To ratify the appointment of Richard A. Eisner & Company, LLP as
the independent accountants for the Company for the year
ending December 31, 1995.
6. To consider and act upon a shareholder proposal which is OPPOSED
by the Board of Directors.
7. To transact such other business as may properly come before the
meeting.
All stockholders are invited to attend the meeting. Stockholders of
record at the close of business on October 27, 1995, the record date fixed by
the Board of Directors, are entitled to notice of, and to vote at, the
meeting. A complete list of stockholders entitled to notice of, and vote at,
the meeting will be open to examination by the stockholders beginning ten days
prior to the meeting for any purpose germane to the meeting during normal
business hours at the office of the Secretary of the Company at 80 Cabot Court,
Hauppauge, New York 11788.
Whether or not you intend to be present at the meeting, please sign and
date the enclosed proxy and return it in the enclosed envelope.
By Order of the Board of Directors
HARLAN SYLVAN
Secretary
Hauppauge, New York
November __, 1995
<PAGE>
ORBIT INTERNATIONAL CORP.
80 Cabot Court
Hauppauge, New York 11788
(516) 435-8300
______________________
PROXY STATEMENT
______________________
The accompanying proxy is solicited by the Board of Directors of Orbit
International Corporation (the "Company") for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at 9:30 a.m., Eastern Daylight
Savings Time, on December 18, 1995, at the offices of Orbit International Corp.,
80 Cabot Court,
Hauppauge, New York, and any adjournment thereof.
VOTING SECURITIES; PROXIES
The Company will bear the cost of solicitation of proxies. In addition to
the solicitation of proxies by mail, certain officers and employees of the
Company, without additional remuneration, may also solicit proxies personally
by telefax and by telephone. In addition to mailing copies of this material to
stockholders, the Company may request persons, and reimburse them for their
expenses in connection therewith, who hold stock in their names or custody or
in the names of nominees for others to forward such material to those persons
for whom they hold stock of the Company and to request their authority for
execution of the proxies.
One third of the outstanding shares of Common Stock, par value $.10 per
share (the "Common Stock"), present in person or represented by proxy shall
constitute a quorum at the Annual Meeting. The approval of a plurality of
the outstanding shares of Common Stock present in person or represented by
proxy at the Annual Meeting is required for election of the nominees as
directors. In all matters other than the election of directors, the affirmative
vote of the majority of the outstanding shares of Common Stock present in
person or represented by proxy at the Annual Meeting is required for adoption of
such matters.
The form of proxy solicited by the Board of Directors affords stockholders
the ability to specify a choice among approval of, disapproval of, or
abstention with respect to each matter to be acted upon at the Annual
Meeting. Shares of Common Stock represented by the proxy will be voted, except
as to matters with respect to which authority to vote is specifically
withheld. Where the solicited stockholder indicates a choice on the form
of proxy with respect to any matter to be acted upon, the shares will be
voted as specified. Abstentions and broker non-votes will not have the
effect of votes in opposition to a director or "against" any other proposal to
be considered at the Annual Meeting.
All shares of Common Stock represented by properly executed proxies which
are returned and not revoked will be voted in accordance with the
instructions, if any, given therein. If no instructions are provided in a
proxy, the shares of Common Stock represented by such proxy will be voted FOR
the Board's nominees for director, FOR the approval of Proposals 2, 3, 4 and
5 and AGAINST the approval of Proposal 6 and in accordance with the
proxy-holder's best judgment as to any other matters raised at the Annual
Meeting.
A stockholder who has given a proxy may revoke it at any time prior to its
exercise by giving written notice of such revocation to the Secretary of the
Company, executing and delivering to the Company a later dated proxy
reflecting contrary instructions or appearing at the Annual Meeting and
taking appropriate steps to vote in person.
At the close of business on October 27, 1995, 5,886,093 shares of Common
Stock were outstanding and eligible for voting at the meeting. Each
stockholder of record is entitled to one vote for each share of Common
Stock held on all matters that come before the meeting. Only stockholders of
record at the close of business on October 27, 1995 are entitled to notice
of, and to vote at, the meeting.
<PAGE>
No Dissenter's Rights
Under Delaware law, stockholders are not entitled to dissenter's
rights of appraisal with respect to Proposals 2, 3, 4, 5 and 6.
This proxy material is being mailed to stockholders commencing on or about
November __, 1995.
PROPOSAL 1
ELECTION OF DIRECTORS
The bylaws of the Company provide that each director serves from the date
of election until the next annual meeting of stockholders and until his
successor is elected and qualified. The specific number of directors
is set by a resolution adopted by a majority of the entire Board of Directors.
The number of directors is currently fixed at seven, and the number of
current Directors is six. The Company has nominated Dennis Sunshine, Bruce
Reissman, Mitchell Binder, Nathan A. Greenberg, John Molloy and Stanley
Morris, each a current Director, for reelection to the Board of Directors and
has decided not to fill the vacancy at this time.
The persons named in the accompanying proxy intend to vote for the election
as director of the nominees listed herein. Each nominee has consented to
serve if elected. The Board of Directors has no reason to believe that any
nominee will not serve if elected, but if any of them should become unavailable
to serve as a director, and if the Board of Directors designates a substitute
nominee or nominees, the persons named as proxies will vote for
the substitute nominee or nominees designated by the Board of Directors.
The following table sets forth certain information with respect to each
person who is currently a director or executive officer of the Company and
the individuals nominated and recommended to be elected by the Board
of Directors of the Company and is based on the records of the Company and
information furnished to it by such persons. Reference is made to "Security
Ownership of Certain Beneficial Owners and Management" for information
pertaining to stock ownership by each director and executive officer of the
Company and the nominees.
DIRECTORS AND OFFICERS OF THE COMPANY
The directors and executive officers of the Company, their positions held
with the Company, and their agesare as follows:
<TABLE>
<CAPTION>
Name of Director or Executive Officer
Age
Position
<S>
Dennis Sunshine
<C>
49
President, Chief Executive
Officer and Director
Bruce Reissman
45
Executive Vice President, Chief
Operating Officer and Director
Mitchell Binder
40
Vice President - Finance, Chief
Financial Officer and Director
Harlan Sylvan
45
Treasurer, Secretary and
Controller
Nathan A. Greenberg
78
Director
John Molloy
66
Director
Stanley Morris
52
Director
</TABLE>
<PAGE>
The following is a brief summary of the background of each director and
executive officer of the
Company:
Dennis Sunshine has been President and Chief Executive Officer of the
Company since March 1995. He has held various positions with the Company
since 1976, including Secretary and Vice President of Operations from
April 1988 to March 1995 and Director of Operations from June 1983 to April
1988. He has been a director of the Company since 1988.
Bruce Reissman has been Executive Vice President and Chief Operating
Officer of the Company since March 1995. He has held various positions with
the Company since 1975, including Vice President-Marketing from April 1988 to
February 1995 and Director of Sales and Marketing from 1976 to April 1988. He
has been a director of the Company since 1992.
Mitchell Binder has been Vice President-Finance of the Company since 1986
and Chief Financial Officer since 1983. He has held various positions with
the Company since 1983, including Treasurer and Assistant Secretary from 1983
to March 1995. He has been a director of the Company since 1985.
Harlan Sylvan has been Treasurer and Secretary of the Company since March
1995 and Controller of the Company since 1987.
Nathan A. Greenberg has been a financial and accounting consultant since
retiring in 1982 as a partner in a New York City-based public accounting
firm. He has been a director of the Company since 1991.
John Molloy has been a part-time consultant for Montgomery Associates, a
consulting company for the defense industry since November 1991. Prior
thereto he served as Vice President, Business Development of Ocean
Technologies Inc., a defense electronics company, from September 1986 to
October 1991. He has been a director of the Company since 1992.
Stanley Morris has been President of Rampart Brokerage Corporation
("Rampart"), an insurance agency since 1989. He has been a director of the
Company since 1995.
Committees of the Board - Board Meetings
The Board has established an audit, a compensation and a stock option
committee to assist it in the discharge of its responsibilities. The
principal responsibilities of each committee and the members of each
committee are described in the succeeding paragraphs. Actions taken by any
committee of the Board are reported to the Board of Directors, usually at its
next meeting or by written report. The Company's Board of Directors held
five meetings during the fiscal year ended December 31, 1994.
The Audit Committee of the Board of Directors currently consists of Nathan
A. Greenberg, John Molloy and Stanley Morris. The Audit Committee held one
meeting during the fiscal year ended December 31, 1994. Each year it
recommends the appointment of a firm of independent public accountants to
examine the financial statements of the Company and its subsidiaries for the
coming year. In making this recommendation, it reviews the nature of audit
services rendered, or to be rendered, to the Company and its subsidiaries. It
reviews with representatives of the independent public accountants the
auditing arrangements and scope of the independent public accountants'
examination of the financial statements, results of those audits, their fees and
any problems identified by the independent public accountants regarding
internal accounting controls, together with their recommendations. It also
meets with the Company's Controller to review reports on the functioning of the
Company's programs for compliance with its policies and procedures regarding
ethics and those regarding financial controls and internal auditing. This
includes an assessment of internal controls within the Company and its
subsidiaries based upon the
<PAGE>
activities of the Company's internal auditing staffs as well as an evaluation of
the performance of those staffs. The Audit Committee is also prepared to
meet at any time upon request of the independent public accountants or the
Controller to review any special situation arising in relation to any of the
foregoing subjects.
The Compensation Committee of the Board of Directors currently consists of
John Molloy, Stanley Morris and Dennis Sunshine. The Compensation Committee
did not meet during the fiscal year ended December 31, 1994. This Committee
makes recommendations to the Board of Directors as to the salaries of the
President, sets the salaries of the other elected officers and reviews
salaries of certain other senior executives. It grants incentive
compensation to elected officers and other senior executives and reviews
guidelines for the administration of the Company's incentive programs. It
also reviews and approves or makes recommendations to the Board of Directors
on any proposed plan or program which would benefit primarily the senior
executive group.
The Stock Option Committee of the Board of Directors currently consists of
Stanley Morris and John Molloy. The Stock Option Committee was formed on
September 1, 1995 and has met one time since its formation. This Committee
is responsible for administering the Company's stock option plans.
Specifically, the Committee determines the persons to be granted options as
well as the exercise price and term of such. The members of the Stock Option
Committee are not eligible to participate in the stock option plans they
administer.
The Board of Directors does not have a nominating committee. This function
is performed by the Board as a whole. The Board of Directors met five times
during the fiscal year ended December 31, 1994. All directors attended at
least 75% of the meetings held except for John Molloy and Bruce Russman.
There are no family relationships among any of the directors or executive
officers of the Company except that Bruce Reissman and Dennis Sunshine are
brothers-in-law. The Company's executive officers serve in such capacity at
the pleasure of the Board of Directors.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth, for the fiscal years ended December 31,
1994 and 1993 and June 30, 1993, compensation paid by the Company to the
Chief Executive Officer and to each other executive officer of the Company
that received more than $100,000 in salary and bonus during the fiscal year
ended December 31, 1994, including salary, bonuses, stock options and certain
other compensation (each, a "Named Executive"):
Annual Compensation(1)
<TABLE>
<CAPTION>
Name and
Principal Position
Year
Salary ($)
Bonus ($)
All Other
Compensation ($)
<S>
Max Reissman, (2)
President and Chief
Executive Officer
<C>
1994
1993
June 30, 1993
<C>
330,000
309,000
296,000
<C>
--
87,000
769,000
<C>
145,000(3)
214,000(3)
236,000(3)
Dennis Sunshine, (2)
President and Chief
Executive Officer
1994
1993
June 30, 1993
252,000
236,000
227,000
--
58,000
465,000
- --
- --
- --
Bruce Reissman,
Executive Vice
President and Chief
Operating Officer
1994
1993
June 30, 1993
252,000
236,000
227,000
- --
58,000
465,000
- --
- --
- --
Mitchell Binder,
Vice President, Finance
and Assistant Secretary
</TABLE>
1994
1993
June 30, 1993
210,000
197,000
185,000
- --
48,000
386,000
22,000(4)
22,000(4)
22,000(4)
(1) The Company has no long-term incentive compensation plan other than its
several stock option plans described herein and various individually
granted options. The Company does not award stock appreciation rights,
restricted stock awards or long-term incentive plan pay-outs.
(2) After Max Reissman's death on February 24, 1995, Mr. Sunshine was elected
President and Chief Executive Officer.
(3) Consists of the value of the terminated right of the Company to repurchase,
for $.10 per share, 460,000 shares of Common Stock which the Company issued
to Mr. Reissman in 1985 for $.10 per share. See "Employment Agreements."
(4) Consists of forgiveness of indebtedness to the Company. See "Certain
Relationships and Related
Transactions."
<PAGE>
Option Grants In Last Fiscal Year
The Company's Board of Directors approved the 1994 Employee Stock Option
Plan (the "1994 Plan") on June 23, 1994. The 1994 Plan was subject to
stockholder approval within one-year, which was neither sought nor obtained.
Because all grants of options pursuant to the 1994 Plan were made subject to
stockholder approval, all such grants are invalid. Accordingly, no options
were granted during the fiscal year ended December 31, 1994 to the Chief
Executive Officer or any Named Executive. In addition, no options were held or
exercised by the Chief Executive Officer or by any Named Executive during the
fiscal year ended December 31, 1994.
EMPLOYMENT CONTRACTS
Until his death on February 24, 1995, Max Reissman was employed by the
Company pursuant to an employment agreement, dated as of July 1, 1992, which
provided for annual base compensation of $275,000 (subject to cost-of-living
increases), plus an annual cash bonus equal to 4% of the Company's pretax
earnings. Under the agreement, Mr. Reissman's estate has the right to require
the Company to register, under federal and state securities laws, any securities
of the Company owned by him. As a result of his death, Mr. Reissman's estate is
entitled to receive approximately $165,000 per year for three years following
his death. In addition, the Company received $1.5 million of key man life
insurance upon Mr. Reissman's death.
Pursuant to Mr. Reissman's prior employment agreement, Mr. Reissman
purchased from the Company 460,000 shares of the Company's Capital Stock at a
purchase price of $. 10 per share. The stock was subject to repurchase by the
Company, at the same price, which right of repurchase terminated upon Mr.
Reissman's death.
Each of Messrs. Bruce Reissman and Dennis Sunshine is employed pursuant to
employment agreements, dated as of July 1, 1992, which provide for annual base
compensation of $210,000 (subject to cost-of-living increases), plus an annual
cash bonus equal to 1.77% of the first $5 million of the Company's pretax
earnings and 2.65% of any additional pretax earnings. The respective agreements
may be terminated by the Company on not less than three years' prior notice,
and by each of Messrs. Reissman and Sunshine on not less than six months' prior
notice or upon a "change of control" (as defined in the agreements). If Messrs.
Reissman or Sunshine terminates his employment in connection with a change in
control of the Company, then Messrs. Reissman and Sunshine, as the case may
be, shall be entitled to receive, as termination pay, the maximum amount that
can be paid without any portion thereof constituting an "excess parachute
payment" as defined in Section 280G(b)(1) of the Internal
Revenue Code of 1986, as amended (the "IRC").
Mitchell Binder is employed pursuant to an employment agreement, dated as
of July 1, 1992, which provides for annual base compensation of $175,000
(subject to cost-of-living increases), plus an annual cash bonus equal to 1.46%
of the first $5 million of the Company's pretax earnings and 2.20% of any
additional pretax earnings. The agreement may be terminated by the Company on
not less than three years' prior notice, and by Mr. Binder on not less than
six months' prior notice or upon a "change of control" (as defined in the
agreement). If Mr. Binder terminates his employment in connection with a change
in control of the Company, then Mr. Binder shall be entitled to receive, as
termination pay, the maximum amount that can be paid without any portion thereof
constituting an "excess parachute payment" as defined in Section 280G(b)(1) of
the IRC.
DIRECTOR'S COMPENSATION
Directors of the Company who are not employed by the Company receive
directors fees of $3,750 per quarter. Employee directors are not compensated
for services as a director. All directors are reimbursed for expenses
incurred on behalf of the Company.
<PAGE>
John Molloy served as a consultant to the Company pursuant to a Consulting
Agreement, dated as of January 27, 1993, pursuant to which Mr. Molloy provided
consulting services regarding the defense industry at a rate of $600 per day.
Such agreement provided for a consulting term through December 31, 1994. During
the fiscal year ended December 31, 1994, Mr. Molloy received $2,550 in
consulting fees from the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Nathan A. Greenberg and
John Molloy, each of whom is a non-employee member of the Company's Board of
Directors.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The Compensation Committee of the Board of Directors is responsible for
determining the compensation of executive officers of the Company, other than
compensation awarded pursuant to the Company's Plans which is administered by
the Stock Option Committee of the Board of Directors. Messrs. Greenberg, Molloy
and Sunshine comprise the Compensation Committee. Mr. Sunshine abstains from
any vote regarding his compensation.
The Stock Option Committee is responsible for granting and setting the
terms of stock options under the Company's 1992 Option Plan. Messrs. Greenberg
and Molloy serve on the Stock Option Committee.
General Policies Regarding Compensation of Executive Officers
The Company's executive compensation policies are intended (1) to attract
and retain high quality managerial and executive talent and to motivate these
individuals to maximize shareholder returns, (2) to afford appropriate
incentives for executives to produce sustained superior performance, and (3) to
reward executives for superior individual contributions to the achievement of
the Company's business objectives. The Company's compensation structure
consists of base salary, annual cash bonuses and stock options. Together these
components link each executive's compensation directly to individual and
Company performance.
Salary. Base salary levels reflect individual positions, responsibilities,
experience, leadership, and potential contribution to the success of the
Company. Actual salaries vary based on the Compensation Committee's subject
assessment of the individual executive's performance and the Company's
performance.
Bonuses. Executive officers are eligible to receive cash bonuses based on the
Compensation Committee's subject assessment of the respective executive's
individual performance and the performance of the Company. In its evaluation
of executive officers and the determination of incentive bonuses, the
Compensation Committee does not assign quantitative relative weights to
different factors and follow mathematical formula. Rather, the Compensation
Committee makes its determination in each case after considering the factors it
deems relevant, which may include consequences for performance that is below
expectations.
Stock Options. Stock options, which are granted at the fair market value of the
Common Stock on the date of grant, are currently the Company's sole long term
compensation vehicle. The stock options are intended to provide employees with
sufficient incentive to manage from the perspective of an owner with an equity
stake in the business.
In determining the size of individual options grants, the Stock Option
Committee considers the aggregate number of shares available for grant, the
number of individuals to be considered for an award of stock options, and
the range of potential compensation levels that the option awards may yield.
The number and timing of stock option grants to executive officers are decided
by the Stock Option Committee based on its subjective assessment of the
performance of each grantee. In determining the size and timing of option
grants, the Stock Option Committee weighs any factors it considers relevant and
gives such factors the relative weight it considers appropriate under the
circumstances then prevailing. While an ancillary goal of the Stock Option
Committee in awarding stock options is to increase the stock ownership of the
Company's management, the Stock Option
<PAGE>
Committee does not, when determining the amount of stock options to award,
consider the amount of stock already owned by an officer. The Stock Option
Committee believes that to do so could have the effect of inappropriately
or inequitably penalizing or rewarding executives based upon their personal
decisions as to stock ownership and option exercises.
In 1993, the Internal Revenue Code was amended to limit the deductibility
of compensation paid to certain executives in excess of $1 million.
Compensation not subject to the limitation includes certain compensation
payable solely because an executive attains performance goals ("performance-
based compensation"). Stock options granted under the 1995 Stock Option Plan,
described in Proposal No. 4, will not qualify as performance-based
compensation. The Company's compensation deduction for a particular executive's
total compensation, including compensation realized from the exercise of stock
options, will be limited to $1 million. The Compensation Committee believes
that the compensation paid by the Company in fiscal 1995 will not result in any
material loss of tax deductions for the Company.
Compensation Committee Stock Option Committee
Stanley Morris Stanley Morris
John Molloy John Molloy
Dennis Sunshine
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Common Stock for the last five fiscal years with the cumulative total return
on the NASDAQ Stock Market-U.S. Index and a peer group of comparable companies
(the "Peer Group") selected by the Corporation over the same period (assuming
the investment of $100 in the Common Stock, the NASDAQ Stock Market-U.S. and the
Peer Group on June 30, 1990, and the reinvestment of all dividends).
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ORBIT INTERNATIONAL, THE NASDAQ
STOCK MARKET-US INDEX AND A PEER GROUP
(in dollars)
<TABLE>
<S>
ORBIT INTERNATIONAL CORP.
<C>
100
<C>
100
<C>
93
<C>
133
<C>
157
<C>
123
<C>
47
PEER 1
100
63
52
67
79
84
69
PEER 2
100
78
58
123
153
188
180
NASDAQ
100
108
114
137
172
189
185
</TABLE>
* $100 invested on 6/30/90 in stock or index -- including reinvestment of
dividends. Fiscal year ending June 30 through June 30, 1993. Thereafter,
fiscal years presented are December 31.
The Peer Group is comprised of six companies in the defense electronics
industry -- Aeroflex Inc., NAI Technologies Inc., Miltope Group Inc., Megadata
Corp., La Barge Inc. and Astrosystems Inc.; and five companies in the apparel
industry - Oneita Industries Inc., Authentic Corp., Garan, Inc., Nautica
Enterprises, Inc. and GIII Apparel Ltd. Such companies were chosen for the
Peer Group because they have similar market capitalizations to the Company and
because they represent the two lines of business in which the Company is
engaged. Each of the 11 Peer Group issuers is weighted according to its
respective market capitalization.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is stock ownership information as of September 30, 1995 as
to each person who owns, or is known by the Company to own beneficially (within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934), more than
5% of the Company Common Stock, and the number of shares of Common Stock owned
by its directors, by all persons named in the Summary Compensation Table and by
all officers and directors as a group.
<TABLE>
<CAPTION>
Name and Address of
Beneficial Owner
Amount and Name of
Beneficial Ownership(1)
Percent
of Class
<S>
Lydia Reissman
7883 Glengarry Road
Del Ray Beach, Florida
<C>
1,363,860(2)
<C>
22.9%
Dennis Sunshine
c/o 80 Cabot Court
Hauppauge, New York
276,024(2)(3)
4.5%
Bruce Reissman
c/o 80 Cabot Court
Hauppauge, New York
345,368(2)(3)
5.6%
Mitchell Binder
c/o 80 Cabot Court
Hauppauge, New York
190,200(2)
3.1%
Nathan A. Greenberg
7235 Promenade Drive
Boca Raton, Florida
- -0-
0%
John Molloy
1815 Paliament Road
Leucadia, California
- -0-
0%
Stanley Morris
2470 Cove Court
Bellmore, New York 11710
5,000
All officers and directors as a group (5
persons)
816,592(2)
12.4%
</TABLE>
<PAGE>
(1) Except as otherwise noted in the footnotes to this table, the named person
owns directly and exercises sole voting and investment power over the
shares listed as beneficially owned by such persons.
(2) Includes as to the Estate of Max Reissman, Dennis Sunshine, Bruce Reissman
and Mitchell Binder 65,000, 275,000, 260,000 and 175,000 shares of Common
Stock which may be acquired by them, respectively, pursuant to stock
options which are presently exercisable or exercisable within 60 days.
The respective option shares are deemed to be outstanding for purposes of
calculating that person's respective percentage ownership, and all such
option shares are deemed to be outstanding for purposes of calculating the
percentage ownership of all officers and directors as a group.
(3) Does not include shares held by Lydia Reissman which will be purchased by
Francine Sunshine and Bruce Reissman during the last quarter of 1995.
Francine Sunshine is the wife of Dennis Sunshine and the daughter of Lydia
Reissman.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October and November 1987 the Company loaned Mitchell Binder an
aggregate of $178,000, due on demand, bearing interest at prime and unsecured,
to permit him to meet personal obligations. $67,250 of such amount remained
outstanding at July 1, 1992, $22,250 was forgiven by the Company during the
fiscal year ended June 30, 1993 and $11,000 of such amount remained outstanding
at December 31, 1994, which balance was subsequently forgiven.
In September 1982, the Company loaned $200,000 to Bruce Reissman, for the
purchase of a residence in connection with his relocation to California to
manage the Company's California operations and sales and marketing activities.
The loan, which is collateralized by a mortgage on the residence, is non-
interest bearing and repayable at the rate of $6,000 annually. At
December 31, 1993 the amount due on the loan was $134,000 and at December 31,
1994 the amount due on the loan was $128,000.
All of the Company's insurance policies (including general liability and
directors' and officers' insurance) are written by Rampart, a Company for which
Mr. Morris serves as President. The aggregate annual premiums paid to Rampart
under the policies are approximately $250,000. The Company believes it obtains
insurance on terms no less favorable than it could obtain from a third party.
PROPOSAL 2
AMENDMENT TO AUTHORIZE PREFERRED STOCK
The Board of Directors has unanimously declared it advisable and
unanimously recommends to the Company's stockholders that Article FOURTH of the
Company's Certificate of Incorporation be amended to authorize the issuance of
a class of 1,000,000 shares of preferred stock, par value, $.10 per share, which
may be issued in one or more series and to authorize the Board of Directors to
determine the voting powers, designations, preferences, and rights and the
qualifications, limitations, and restrictions thereof, of each such series,
including dividend rates, conversion prices, redemption prices, liquidation
preferences and voting and other rights. A copy of Article FOURTH of the
Company's Certificate of Incorporation, as proposed to be amended by the
resolution adopted by the Board of Directors, is attached as Annex A.
The Company does not anticipate seeking further stockholder approval for
the issuance of any preferred stock. The authorization of a class of preferred
stock, as proposed, will permit the Board of Directors to issue up
<PAGE>
to 1,000,000 additional shares which could be issued for corporate purposes
without further stockholder approval unless required by applicable law or
stock exchange regulations, and the Company will not likely seek further
stockholder authorization for the issuance of any additional shares prior to
such issuance. Such purposes could include effecting acquisitions of other
businesses or meeting requirements for working capital or capital expenditures
through issuance of additional shares. Preferred stock will be issued only upon
a determination by the Board of Directors that a proposed issuance is in the
best interests of the Company.
To the extent that any shares of preferred stock may be issued, such
preferred stock may (a) have priority over the Company's Common Stock with
respect to dividends and the assets of the Company upon liquidation; (b)
have significant voting power; (c) provide for representation of the holders of
the preferred stock on the Company's Board of Directors upon the occurrence of
certain events; and (d) require the approval of the preferred stock for the
taking of certain corporate actions, such as mergers. To the extent that any
shares of preferred stock (including preferred stock convertible into Common
Stock) may be issued on other than a pro rata basis to current stockholders,
the present ownership position of current stockholders may be diluted. Such
shares also could be used to dilute the stock ownership of persons seeking to
obtain control of the Company, and thereby defeat a possible takeover attempt
which (if stockholders were offered a premium over the market value of their
shares) might be viewed as being beneficial to stockholders of the Company.
Management of the Company is not aware of any possible takeover attempts at
this time. The proposed authorization of a class of preferred stock is not part
of a plan by management to adopt a series of "anti-takeover" amendments. There
are no other existing "anti-takeover" measures that are currently part of the
Company's by-laws, Certificate of Incorporation, or debt agreements, except
for (i) the authorized but unissued shares of Common Stock which, like the
preferred stock, could be used to dilute stock ownership of persons seeking to
obtain control of the Company, (ii) a by-law provision requiring that directors
be only removed for cause, only at a special meeting called for that purpose and
only with a 66 2/3% vote, (iii) a by-law provision requiring a 66 2/3% vote to
rescind such removal provision and, (iv) certain provisions in the employment
agreements of Mitchell Binder, Bruce Reissman and Dennis Sunshine which provide
for certain termination payments upon a "change of control" (as defined in the
employment agreements). In addition, the Company has granted options to certain
officers, which options become exercisable in installments, unless the Company
is acquired or agrees to be acquired, in which case the options become
immediately exercisable.
The audited financial statements and the related Management's Discussion
and Analysis of Financial Condition and Results of Operations contained in the
Company's Annual Report to Stockholders (which accompanies this Proxy Statement)
are hereby incorporated herein by reference. Unaudited financial information
with respect to the Company for the quarters ended June 30, 1994 and June 30,
1995 and the related Management's Discussion and Analysis of Financial Condition
and Results of Operations are incorporated herein by reference to the Company's
quarterly report on Form 10-Q for the period ended June 30, 1995.
The Board of Directors recommends a vote FOR the approval of an amendment
to the Company's Certificate of Incorporation to create a class of preferred
stock which is designated as proposal 2 on the enclosed proxy card.
PROPOSAL 3
1995 EMPLOYEE STOCK OPTION PLAN
Approval of the 1995 Employee Stock Option Plan
<PAGE>
The Company's Board of Directors has recommended, and at the meeting the
stockholders will be asked to approve, the adoption of the Orbit International
Corporation 1995 Employee Stock Option Plan (the "1995 Plan"). A description
of the 1995 Plan, which is attached hereto as Annex C, appears below.
The 1984 Plan, 1985 Plan and 1988 Plan. If adopted by the stockholders,
the 1995 Employee Stock Option Plan will supersede and replace any grants of
options made under the 1984 Employees' Stock Option Plan (the "1984 Plan"),
1985 Employees' Stock Option Plan (the "1985 Plan") and 1988 Stock Option Plan
(the "1988Plan") (collectively the "Plans"). An aggregate of 563,000 shares of
Common Stock remain available for future grant under the Plans. Options granted
under the 1984 and 1988 Plans are not intended to be incentive stock options
("ISO's") within the meaning of Section 422 (formerly Section 422A) of the
Internal Revenue Code of 1986, as amended (the "Code"). Options granted under
the 1985 Plan may be ISO's or non-ISO's, in the discretion of the Board's Stock
Option Committee, or if no committee has been appointed, by the Board as a whole
(the "Committee"), which administers the Plans. Under the terms of the Plans,
all directors, officers and key employees of the Company and all its
subsidiaries are eligible for option grants, provided, except in the case of
options granted under the 1988 Plan, that they agree to remain in the service of
the Company or a subsidiary for one year from the date of grant or such other
date as may be fixed by the Committee. The Committee determines in its
discretion which persons will receive option grants, the number of shares
subject to each option, the exercise price which may not be less than the par
value of the shares subject to the option, except that in the case of ISO's, the
exercise price must be at least 100% of the fair market value of the optioned
shares on the date of grant, or 110% of such fair market value if the optionee
is the owner of more than 10% of the total combined voting power of all classes
of voting stock of the Company (a "10% Holder"), and the term thereof (which may
be not more than ten years from the date of grant, or five years in the case
of ISO's granted to a 10% Holder). The members of the Committee are not
eligible to participate in the Plans.
The 1988 Plan permits options granted thereunder to be exercised by the
tender of shares of Common Stock having a fair market value equal to the
exercise price of such option or by the tender of cash equal in amount to the
aggregate par value of the shares covered by such option, together with a ten-
year unsecured note (bearing interest at prime, which interest is payable on
the fifth and tenth anniversary of the note) for the balance of the option
exercise price. As amended by the Board on March 27, 1989, options thereafter
granted under the 1988 Plan may, in the discretion of the Board, be
exercisable upon the tender of cash equal in the amount to the aggregate par
value of the shares covered by such options, together with a one-year note
bearing interest at prime and providing for a required prepayment upon any
disposition of the acquired shares.
The 1995 Plan. The purpose of the 1995 Plan is to afford an incentive to
employees, corporate officers and other key persons to acquire a proprietary
interest in the Company and to attract and retain key personnel. A total of
1,500,000 shares of Common Stock are authorized and have been reserved for
issuance under the 1995 Plan. The 1995 Plan replaces the Company's 1994
Employee Stock Option Plan (the "1994 Plan") which was approved by the Board
of Directors on June 23, 1994, subject to stockholder approval within one-year,
which was neither sought nor obtained. Accordingly, options to purchase 879,500
shares of Common Stock granted under the 1994 Plan, subject to stockholder
approval of such 1994 Plan are invalid. If the 1995 Plan is approved, the
Company intends to regrant options under such 1995 plan to the persons who were
awarded grants under the 1994 Plan, including the persons listed below. All
options so granted will have exercise prices equal to the fair market
value on the date of the grant. The 1995 Plan provides for the granting of both
non-qualified stock options and "incentive stock options" within the meaning
of Section 422 of the Code. Incentive stock options may be granted to
individuals who, at the time of grant, are employees of the Company or any of
its subsidiaries. Non-qualified stock options may be granted to directors who
are also employees, officers, consultants, agents or independent contractors
of the Company or any of its subsidiaries. Under the 1995 Plan, no options may
be granted after September 1, 2005.
The 1995 Plan is administered by a committee (the "Stock Option Committee")
appointed by the Board consisting of Messrs. Morris and Molly, each a non-
employee director. Subject to the terms of the 1995 Plan, the Stock Option
Committee has full and final authority to (a) determine the persons to be
granted options, (b) determine the number of shares subject to each option and
whether or not options shall be incentive stock options
<PAGE>
or non-qualified stock options, (c) determine the exercise price per share of
the options (which, in the case of incentive and non-qualified stock options,
may not be less per share than 100%, and in the case of incentive stock
options granted to 10% stockholders, may not be less per share than 110%, of the
fair market value per share of the Common Stock on the date the option is
granted), (d) determine the time or times when each option shall be granted
and become exercisable and (e) make all other determinations under the 1995
Plan. In determining persons who are to receive options and the number of
shares to be covered by each option, the Stock Option Committee will consider
the person's position, responsibilities, service, accomplishments, present and
future value to the Company, the anticipated length of his or her future
service, and other relevant factors. Members of the Stock Option Committee
are not eligible to receive options under the 1995 Plan.
Options granted under the 1995 Plan are not transferable by the optionee
other than by will or the laws of descent and distribution, and each option is
exercisable, during the lifetime of the optionee, only by such optionee.
An optionee whose relationship with the Company or any related corporation
ceases for any reason (other than termination for cause, death or total
disability, as such terms are defined in the 1995 Plan) may exercise options
in the three-month period following such cessation (unless such options
terminate or expire sooner by their terms), or in the 12-month period
following such cessation in the case of non-qualified stock options.
Unexercised options granted under the 1995 Plan shall terminate upon a merger,
reorganization or liquidation of the Company; however, immediately prior to
such a transaction, optionees may exercise such options without regard to
whether the vesting requirements have been satisfied. No option granted under
the Plan may be exercised by an optionee following termination of such
optionee's employment for cause. In the event of the death of an optionee while
serving as an employee or within one year (or in the case of incentive stock
options, three months) after the termination of such service otherwise than for
cause, such option may be exercised (if and to the extent that the deceased
individual was entitled to do so at the date of his or her death) by his or her
personal representative at any time within 12 months after his or her death,
but in no event after the expiration of the term of the option.
It is estimated that 478 individuals are currently eligible to participate
in the 1995 Plan.
The following table sets forth the number of options to be granted under
the 1995 Plan, assuming stockholder approval, to the Chief Executive Officer
and the Company's four most highly compensated executive officers whose total
annual salary and bonus exceeded $100,000 for the fiscal year ended December 31,
1994:
NEW PLAN BENEFITS
1995 EMPLOYEE STOCK OPTION PLAN
<TABLE>
<CAPTION>
Name and Position
Dollar Value
Number of Shares
Underlying Options
<S>
Dennis Sunshine
<C>
$343,750
<C>
275,000
Bruce Reissman
325,000
260,000
Mitchell Binder
218,750
175,000
Harlan Sylvan
31,250
25,000
Other Executive Officers as a
Group
0
0
Non-Executive Directors as a
Group
0
0
Non-Executive Employees as a
Group
252,500
202,000
</TABLE>
<PAGE>
Certain Federal Income Tax Consequences of the 1995 Plan Under Current Law
An optionee will recognize no taxable income at the time an option is
granted.
An optionee will recognize no taxable income at the time of exercise of an
incentive stock option. If the optionee makes no disposition of the acquired
shares within two years after the date of grant of the incentive stock option,
or within one year after the transfer of such shares, the employee will
recognize no taxable income and any gain or loss that is realized on a
subsequent disposition of such shares will be treated as long-term capital
gain or loss. As to options exercised, the excess, if any, of the fair market
value of the shares on the date of exercise over the option price will be an
item of tax preference for purposes of computing the alternative minimum tax.
If the foregoing holding period requirements are not satisfied, the
optionee will realize (i) ordinary income for federal income tax purposes in
the year of disposition in an amount equal to the lesser of (a) the excess, if
any, of the fair market value of the shares on the date of exercise over the
option price thereof, or (b) the excess, if any, of the selling price over the
optionee's adjusted basis of such shares (provided that the disposition is a
sale or exchange with respect to which a loss (if sustained) would be recognized
by such individual) and (ii) capital gain equal to the excess, if any, of the
amount realized upon the disposition of shares over the fair market value of
such shares on the date of exercise.
Employees, directors, officers, consultants, agents and independent
contractors of the Company will be required to include in their gross income
in the year of exercise of a non-qualified stock option the difference
between the fair market value on the exercise date of the shares transferred and
the option price.
The Company will be entitled (provided it collects required withholding
taxes with respect to the income received by the employee) to a deduction for
federal income tax purposes at the same time and in the same amount as the
optionee is considered to be in receipt of compensation income in connection
with the exercise of non-qualified stock options or, in the case of an
incentive stock option, a disqualifying disposition of shares received upon
exercise thereof. If the holding period requirements outlined above are met, no
deduction will be available to the Company in connection with an incentive stock
option. Under the Revenue Reconciliation Act of 1993, for fiscal years
beginning after January 1, 1994, the Company may not be able to deduct
compensation to certain employees to the extent compensation exceeds one
million dollars per tax year. Covered employees include the chief executive
officer and the four other highest compensated officers of the Company for that
tax year. Certain performance-based compensation including stock options are
exempt provided that, among other things, the stock options are granted by a
compensation committee of the Board of Directors which is comprised solely of
two or more outside directors and the plan under which the options are granted
is approved by stockholders. The 1995 Employee Stock Option Plan will not
qualify as performance-based compensation.
The Board of Directors recommends a vote FOR the adoption of the Company's
1995 Employee Stock Option Plan, which is designated as Proposal 3 on the
enclosed proxy card.
PROPOSAL 4
<PAGE>
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Approval of the 1995 Stock Option Plan for Non-Employee Directors
The Company's Board of Directors has recommended, and at the meeting the
stockholders will be asked to approve, the adoption of the Orbit International
Corporation's 1995 Stock Option Plan for Non-Employee Directors (the "1995
Non-Employee Director Plan").
A description of the 1995 Non-Employee Director Plan, which is attached
hereto as Annex C, appears below.
The purpose of the 1995 Non-Employee Director Plan is to promote the
interests of the Company and its stockholders by increasing the proprietary
and vested interest of non-employee directors in the growth and performance of
the Company.
The 1995 Non-Employee Director Plan provides for awards of nonqualified
options to directors ("Eligible Directors") of the Company who are not employees
of the Company or its affiliates and who have not, within one year immediately
preceding the determination of such director's eligibility, received any award
under any other plan of the Company or its affiliates that entitles the
participants therein to acquire stock, stock options or stock appreciation
rights of the Company or its affiliates (other than any other plan under which
participants' entitlements are governed by provisions meeting the requirements
of Rule 16b-3(c)(2)(ii) promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act")). The options shall be exercisable in
whole or in part at all times during the period beginning on the date of grant
until the earlier of (i) ten years from the date of grant and (ii) one
year from the date on which an optionee ceases to be an Eligible Director. The
exercise price per share of Common Stock shall be 100% of the fair market value
per share on the date the option is granted.
Pursuant to the 1995 Non-Employee Director Plan, subject to stockholder
approval, each of Messrs. Greenberg, Molloy and Morris has been granted an
option to purchase 5,000 shares of Common Stock. In addition, (i) upon first
election or appointment to the Board, each newly elected Eligible Director will
be granted an option to purchase 5,000 shares of Common Stock and (ii)
immediately following each Annual Stockholders Meeting commencing with the
meeting following the close of fiscal year 1995, each Eligible Director, other
than an Eligible Director first elected to the Board within the 12 months
immediately preceding and including such meeting, will be granted an option
to purchase 1,000 shares of Common Stock as of the date of such meeting.
The maximum number of shares of Common Stock in respect of which awards may
be granted under the 1995 Non-Employee Director Plan is 150,000. Shares of
Common Stock subject to awards that are forfeited, terminated, cancelled or
settled without the delivery of Common Stock will again be available for awards.
Also, shares tendered to the Company in satisfaction or partial satisfaction of
the exercise price of any award will increase the number of shares available
for awards to the extent permitted by Rule 16b-3 under the Exchange Act. The
shares of Common Stock to be delivered under the 1995 Non-Employee Director Plan
will be made available from the authorized but unissued shares of Common Stock
or from treasury shares.
The 1995 Non-Employee Director Plan will be administered by the Board of
Directors. Subject to the provisions of the 1995 Non-Employee Director Plan,
the Board shall be authorized to interpret the 1995 Non-Employee Director Plan,
to establish, amend, and rescind any rules and regulations relating to it and to
make all other determinations necessary or advisable for its administration;
provided, however, that the Board shall have no discretion with respect to the
selection of directors to receive options, the number of shares of Common Stock
subject to any such options, the purchase price thereunder or the timing of
grants of options. The determinations of the Board in the administration of the
1995 Non-Employee Director Plan, as described herein, shall be final and
conclusive. The Secretary of the Company shall be authorized to implement the
1995 Non-Employee Director Plan in accordance with its terms and to take such
actions of a ministerial nature as shall be necessary to effectuate the intent
and purposes thereof. The validity, construction and effect of the 1995 Non-
Employee Director Plan and any rules and regulations relating to it shall be
determined in accordance with the laws of the State of Delaware.
<PAGE>
The exercise price of options may be satisfied in cash or, unless otherwise
determined by the Board, by exchanging shares of Common Stock owned by the
optionee, or by a combination of cash and shares of Common Stock. The ability
to pay the option exercise price in shares of Common Stock would enable an
optionee to engage in a series of successive stock-for-stock exercises of an
option (sometimes referred to as "pyramiding") and thereby fully exercise an
option with little or no cash investment. However, the Board's current policy
is to require any shares tendered in satisfaction of the option exercise price
to have been owned by the exercising optionee for at least six months.
In the event of a stock split, stock dividend, subdivision or combination
of the shares of Common Stock or other change in corporate structure affecting
the shares of Common Stock, the number of shares of Common Stock authorized by
the 1995 Non-Employee Director Plan shall be increased or decreased
proportionately, as the case may be, with appropriate corresponding adjustment
in the purchase price per share thereunder.
The options granted under the 1995 Non-Employee Director Plan may not be
assigned or transferred, except by will or the laws of descent and distribution
or pursuant to a qualified domestic relations order.
No award may be granted under the 1995 Non-Employee Director Plan after the
day following the tenth Annual Stockholders Meeting at which Directors are
elected succeeding the annual meeting at which the 1995 Non-Employee Director
Plan was approved by stockholders.
The 1995 Non-Employee Director Plan may be amended by the Board, as it
shall deem advisable or to conform to any change in any law or regulation
applicable thereto; provided, that the Board may not, except in the limited
circumstances described above, without the authorization and approval of
stockholders: (i) increase the number of shares of Common Stock which may be
purchased pursuant to options, either individually or in the aggregate, (ii)
change the requirement that option grants be priced at fair market value, (iii)
modify in any respect the class of individuals who constitute Eligible
Directors or (iv) materially increase benefits. The provisions governing
eligibility and the grant, terms and conditions of the options may not be
amended more often than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules under either such statute.
Set forth below is a summary of the awards made during fiscal 1995 pursuant
to the 1995 Non-Employee Director Plan:
NEW PLAN BENEFITS
1995 Non-Employee Director Plan
Name and Position
Dollar Value ($)
Number of Units
Non-Executive Director
Group
n/a
150,000(1)
(1) This represents the total number of shares of the Company's Common Stock,
which may be purchased upon exercise of options issued or issuable under
the 1995 Non-Employee Director's Plan.
Certain Federal Income Tax Consequences of the 1995 Non-Employee Director Option
Plan Under Current Law
When an optionee exercises an option, the difference between the option
price and any higher fair market value of the shares of Common Stock, generally
on the date of exercise, will be ordinary income to the optionee and generally
will be allowed as a deduction for federal income tax purposes to the Company.
Any gain or loss realized by an optionee on disposition of the Common Stock
acquired upon exercise of an option generally will be capital gain or loss to
such optionee, long-term or short-term depending on the
<PAGE>
holding period, and will not result in any additional tax consequences to the
Company. The optionee's basis in the shares for determining gain or loss on
the disposition will generally be the fair market value of such shares
determined generally at the time of exercise. Certain additional special rules
apply if the exercise price for an option is paid in shares of Common Stock
previously owned by the optionee rather than in cash.
The foregoing discussion summarizes the federal income tax consequences of
the 1995 Non-Employee Director Plan based on current provisions of the Internal
Revenue Code which are subject to change. This summary does not cover any
state or local tax consequences of participation in the 1995 Non-Employee
Director Plan.
The 1995 Non-Employee Director Plan is not subject to any provision of
ERISA and is not qualified under Section 401(a) of the Code.
The Board of Directors recommends a vote FOR the approval of the 1995 Non-
Employee Director Plan, which is designated as Proposal No. 4 on the enclosed
proxy card.
PROPOSAL 5
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed Richard A. Eisner &
Company, LLP as independent accountants for the 1995 fiscal year and to
render other professional services as required.
The appointment of Richard A. Eisner & Company, LLP is being submitted to
stockholders for ratification.
Representatives of Richard A. Eisner & Company, LLP will be present at the
Annual Meeting, where they will have the opportunity to make a statement if
they desire to do so, and are expected to be available to respond to
appropriate questions.
The Board of Directors recommends a vote FOR the ratification of Richard A.
Eisner & Company, LLP as independent auditors of the Company, which is
designated as Proposal 5 on the enclosed proxy card.
PROPOSAL 6
STOCKHOLDER PROPOSAL
A stockholder proponent has stated his intention to present the following
proposal at the 1995 Annual Meeting. In accordance with applicable proxy
regulations of the Securities and Exchange Commission, the stockholdings of the
proponent will be furnished by the Company to any person, orally or in writing
as requested, promptly upon the receipt of any oral or written request therefor
addressed to the Secretary of the Company. The proposal and supporting
statement, for which the Board of Directors and the Company accept no
responsibility, are set forth herein. The Board opposes this proposal for
the reasons stated after the proposal.
This proposal was submitted by Mr. William Steiner, William Steiner
Investments, 4 Radcliff Drive, Great Neck, New York 11024.
Independent Board
Whereas the board of directors is meant to be an independent body elected
by shareholders charged by law and shareholders with the duty, authority and
responsibility to formulate and direct corporate policies and is to be held
to the highest standards of fiduciary care, duty and loyalty.
<PAGE>
Now therefore be it "resolved that the shareholders request that the
company's board of directors becomprised of a truly independent board, meaning
that the majority of the board will be non-family members and individuals who
do not currently work or consult with the company, have been employed by the
company or have consulted with the company in the past. This is meant to be
applied only to nominees for directors at meetings subsequent to the 1995
annual meeting."
Supporting Statement
I believe that shareholders will be better served when the majority of the
board is truly independent. Such independent individuals hopefully will bring
true objectivity to serious issues facing our company.
As matters stand today the members of the board of directors are either
family members, individuals who either are employed by, do work for, or have
been employed by the Company in the past. There is an apparent conflict of
interest each time matters concerning executive compensation policies, possible
takeover offers and corporate governance issues arise. I am a founding member
of the Investors Rights Association of America and I believe this is a matter
that is urgent and must be presented to the shareholders for action.
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION.
Board of Directors Statement in Opposition
The Board of Directors believes that this proposal would not serve the
Company's best interests and recommends a vote AGAINST it.
The Company has consistently sought to add to its Board of Directors
eminently qualified individuals whom the Company believes would provide
substantial benefit and guidance to the Company. However, the Company finds
this shareholder proposal to be unduly restrictive and wholly inappropriate.
The proposal seeks to impose "independence" requirements that are broad and
arbitrary. To restrict the election of any individual who has been "employed by
the Company or has consulted with the Company in the past" is excessively
broad. An individual who has been previously employed or engaged by the Company
will not necessarily lack the independence and "true objectivity" discussed by
the proponent in the supporting statement.
Similarly, it cannot be assumed that a director who is currently employed
by or consults with the Company will not act with objectivity or in the best
interest of the shareholders. Individuals who have a financial stake in the
Company are often well suited to protect and advance the interests of all
shareholders. If the Board of Directors were to adopt the narrow concept of
"independence" set forth in this shareholder proposal, it would be precluded
from seeking as directors many persons who, through past or present employment
or consulting relationships with the Company, are often the most knowledgeable
and familiar with the Company and its operations and are, thus, in the best
position to further the interests of the Company and its shareholders.
Furthermore, the proposal places limitations on the election of individuals
who have familial ties with members of the Company's management even though
such ties would not necessarily undermine a person's independence or
objectivity.
The Board feels that this proposal too narrowly defines the concept of
"independence" as it applies to Directors. The Company believes that it
would be imprudent to adopt and apply the criteria as set forth in the proposal
without evaluating the substance of each relationship in question and the
overall qualifications of a Board nominee. This proposal restricts rather
than enhances the Company's ability to locate the most qualified individuals
to serve as directors. Shareholders ultimately decide on the composition of the
Board, and any shareholder who feels that a particular nominee is not qualified
to serve as a director by reason of lack of independence or objectivity is free
to vote as he or she deems best. The shareholder proposal, if implemented,
would merely limit the freedom of choice presently enjoyed by the Company's
shareholders.
<PAGE>
For all of the foregoing reasons, the Board of Directors recommends a vote
AGAINST this Proposal.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED AGAINST THE RESOLUTION
UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be considered for inclusion in the proxy
statement for presentation at the Company's 1996 Annual Meeting of Stockholders
must be received at the Company's at its offices at 80 Cabot Court, Hauppauge,
New York 11788 no later than February 12, 1996, for inclusion in the Company's
proxy statement and form of proxy relating to such meeting. All proposals must
comply with applicable Commission rules and regulations.
OTHER MATTERS
The Board of Directors is not aware of any other matter other than those
set forth in this proxy statement that will be presented for action at the
meeting. If other matters properly come before the meeting, the persons named
as proxies intend to vote the shares they represent in accordance with their
best judgment in the interest of the Company.
THE COMPANY UNDERTAKES TO PROVIDE ITS STOCKHOLDERS WITHOUT CHARGE A COPY
OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES FILED THEREWITH. WRITTEN REQUESTS FOR SUCH REPORT
SHOULD BE ADDRESSED TO THE OFFICE OF THE SECRETARY, ORBIT INTERNATIONAL, 80
CABOT COURT, HAUPPAUGE, NEW YORK 11788.
<PAGE>
ORBIT INTERNATIONAL CORPORATION
Annual Meeting of Stockholders - December 18, 1995
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder in Orbit International Corporation ("Corporation")
hereby constitutes and appoints Dennis Sunshine, Bruce Reissman, and Mitchell
Binder, and each them, his true and lawful attorneys and proxies, with full
power of substitution in and for each of them, to vote all shares of the
Corporation which the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held at the offices of Orbit International Corp., 80 Cabot
Court, Hauppauge, New York, on Monday, December 18, 1995, 9:30 a.m., Eastern
Daylight Savings Time, or at any postponement or adjournment thereof, on any
and all of the proposals contained in the Notice of the Annual Meeting of
Stockholders, with all the powers the undersigned would possess if present
personally at said meeting, or at any postponement or adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED ON THE REVERSE SIDE, FOR THE APPROVAL OF PROPOSALS 2,
3, 4 and 5 AND AGAINST THE APPROVAL OF PROPOSAL 6.
(Continued and to be signed and dated on the other side)
<PAGE>
The Directors recommend a vote FOR Proposals 1, 2, 3, 4 and 5 and AGAINST
Proposal 6
Please mark
your votes
as this
example
COMMON
FOR
AGAINST
ABSTAIN
1.
Election of Directors
FOR All nominees
listed (except as marked
in the contrary, see
instruction below)
WITHHOLD
AUTHORITY
in vote for all
nominees listed
at left
2.
Proposal to approve an amendment to the
Company's Certificate of Incorporation to
create a class of preferred stock.
Mitchell Binder, Dennis Sunshine, Nathan
A. Greenberg, John Molloy, Bruce
Reissman and Stanley Morris
3.
Proposal to approve the Orbit International
Corporation 1995 Employee Stock Option Plan
INSTRUCTION: To withhold authority to vote for any individual
nominee, line through the name of the nominee above.
4.
Proposal to approve the Orbit International
Corporation 1995 Non-Employee Director
Stock Option Plan.
5.
Proposal to ratify Richard A. Eisner, LLP as
independent auditors
6.
Stockholder proposal
The above named proxies are granted the authority, in their discretion, to act
upon such other matters as may properly come before the meeting or any
postponement or adjournment thereof.
Dated , 1995
Signature(s)
Signatures
Please sign exactly as your name appears and return this proxy
immediately in the enclosed stamped self-addressed envelope.
<PAGE>
ANNEX A
PROPOSED AMENDMENT TO ARTICLE FOURTH OF
THE COMPANY'S CERTIFICATE OF INCORPORATION
(Amends Article Fourth by replacing it in its entirety the following paragraph)
"The aggregate number of shares of stock ("Shares") which the corporation
shall be authorized to issue is Twenty-Six Million (26,000,000) Shares, of
which 1,000,000 Shares of the par value of $.10 per share shall be
designated "Preferred Stock" and Twenty-Five Million (25,000,000) shares of
the par value of $.10 per share shall be designated "Common Stock".
<PAGE>
ANNEX B
ORBIT INTERNATIONAL CORP.
1995 EMPLOYEE STOCK OPTION PLAN
(Approved and adopted by the
Board of Directors on September 1, 1995)
STATEMENT OF PURPOSE
The 1995 Employee Stock Option Plan (the "Plan") is intended to afford an
incentive to employees, corporate officers and other key persons employed or
retained by ORBIT INTERNATIONAL CORP., (the "Company") and its subsidiaries
(within the meaning of Section 424(f) of the Internal Revenue Code of 1986, as
amended, hereinafter referred to as the "Code") and affiliates to acquire a
proprietary interest in the Company and to enable the Company and its
subsidiaries and affiliates to attract and retain such persons.
STATEMENT OF THE PLAN
1. Shares Subject to the Plan
Subject to the provisions of Paragraph 10, the total number of shares of
stock which may be subject to options granted under the Plan shall be 1,500,000
shares of the Common Stock, par value $.10 per share, of the Company ("Common
Stock"). Options granted hereunder may be either Incentive Stock Options (as
hereinafter defined) or non-incentive stock options. The Company shall at
all times while the Plan is in effect reserve such number of shares of Common
Stock as will be sufficient to satisfy the requirements of outstanding options
granted under the Plan. The shares of Common Stock to be issued upon
exercise of options granted under the Plan shall be either authorized and
unissued shares or treasury shares. In the event any option granted under the
Plan shall expire or terminate for any reason without having been exercised
in full or shall cease for any reason to be exercisable in whole or in part,
the unpurchased shares subject thereto may again be subjected to an option under
the Plan.
2. Eligibility
Options may be granted only to employees, salaried officers and other key
persons employed or retained by the Company or its subsidiaries ("Eligible
Persons"). As used in this Plan, the term "subsidiaries" shall include
subsidiaries of a subsidiary. Directors who are not salaried officers or
employees of the Company or its subsidiaries or who are members of the
Committee (as hereinafter defined) shall not be eligible for the grant of
options under this Plan. Subject to Section 5, nothing contained in the Plan
shall be construed to prohibit the grant of one or more options under the
Plan to an Eligible Person by reason of his or her holding options to purchase
shares of Common Stock or any other securities of the Company granted otherwise
than under the Plan.
<PAGE>
3. Administration of the Plan
(a) The Plan shall be administered by a committee (the "Committee") composed
of at least two non-employee directors, each of whom shall be a disinterested
person, as defined by Rule 16b-3 (c) (2) (i) under the Securities Exchange
Act of 1934, as amended (the "34 Act"), which Committee shall be appointed by
the Board. Within the limits of the express provisions of the Plan, the
Committee shall have the authority to determine, in its absolute discretion,
the individuals to whom, and the time or times at which, options shall be
granted, the number of shares to be subject to each option, the option
exercise price of the shares covered by each option and the term of each option.
In making such determinations, the Committee may take into account such factors
as the Committee, in its absolute discretion, shall deem relevant. Subject to
the express provisions of the Plan, the Committee shall also have the
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it, to determine the terms and provisions of the
respective option instruments or agreements (which need not be identical)
and to make all other determinations and take all other actions necessary or
advisable for the administration of the Plan. The Committee's determinations
on the matters referred to in this Paragraph 3 shall be conclusive. Any
determination by a majority of the members of the Committee shall be deemed to
have been made by the whole Committee.
(b) Each member of the Committee shall be indemnified and held harmless by
the Company against any cost or expense (including counsel fees) reasonably
incurred by him or her, or liability (including any sum paid in settlement of
a claim with the approval of the Company) arising out of any act or omission to
act in connection with the Plan unless arising out of such members' own fraud
or bad faith, to the extent permitted by applicable law. Such indemnification
shall be in addition to any rights of indemnification the members may have as
directors or otherwise under the By-laws of the Company, any agreement or vote
of stockholders or disinterested directors or otherwise.
4. Option Exercise Price
Except for Incentive Stock Options, the exercise price of each option granted
under the Plan shall be determined by the Committee in its absolute discretion,
but in no event shall such price be less than the par value of the shares of
Common Stock subject to the option. The exercise price for Incentive Stock
Options shall not be less than 100% of the fair market value per share of the
Common Stock at the time the option is granted, nor less than 110% of such fair
market value in the case of an Incentive Stock Option granted to an individual
who, at the time the option is granted, is a 10% Holder (as hereinafter
defined). The fair market value of shares of Common Stock shall be determined
in good faith by the Committee, with the approval of the Board.
5. Maximum Option Grant
With respect to options which are intended to qualify as Incentive Stock
Options, the aggregate fair market value (determined as of the time the
option is granted) of the Common Stock with respect to which Incentive Stock
Options granted to any optionee (whether under this Plan or under any other
stock option plan of the Company or its subsidiaries) become exercisable for
the first time in any calendar year may not exceed $100,000. The number
of shares of Common Stock for which any optionee, in any calendar year, may be
granted options under the Plan not treated as Incentive Stock Options shall
be limited to not more than 200,000.
6. Exercise of Options
(a) The Committee, in its absolute discretion, shall determine the time or
times at which any option granted under the Plan may be exercised; provided,
however, that each such option (i) shall be exercisable by an optionee only if
such optionee was an Eligible Person (and in the case of an Incentive Stock
Option, was an employee or salaried officer of the Company or any of its
subsidiaries) at all times beginning from the date of the grant of the option
to a date not more than three months (except as provided in Section 8 below)
before exercise of the option, (ii) may not be exercised prior to the
expiration of at least six months from the date of grant except in the case of
<PAGE>
the death or disability of the optionee or otherwise with the approval of the
Committee or the Board of Directors or, if the option agreement evidencing
such option so provides, upon a "change of control", (iii) shall expire no later
than the expiration of ten years (five years in the case of an Incentive Stock
Option granted to a 10% Holder) from the date of its grant, and (iv) shall not
be exercisable by an optionee until such optionee executes and delivers a
written representation to the effect that he or she is acquiring the Common
Stock for investment and not with the intent of distributing the same (unless
such Common Stock shall be appropriately registered under the Securities Act
of 1933 or exempt from registration thereunder). As a condition of the grant of
an option, the Committee, in its absolute discretion, may require an Eligible
Person to enter into an employment agreement with the Company or any affiliate
of the Company covering a period of at least one year following the grant, and
if the grant specifically requires, compliance with all terms and conditions of
any such employment agreement shall be a condition to the exercise by the
optionee of his or her option (provided, however, that such compliance may be
waived by the Committee in its absolute discretion).
(b) Options granted under the Plan shall be exercised by the delivery by the
holder thereof to the Company at its principal offices (to the attention of the
Secretary) of written notice of the number of shares with respect to which the
option is being exercised, accompanied by payment in full of the option exercise
price of such shares. The exercise price shall be payable in cash; provided,
however, that in lieu of payment in cash, an optionee may, with the approval
of the Company's Board of Directors and on the recommendation of the Committee,
pay for all or part of the shares to be purchased upon exercise of his or her
option (i) by tendering to the Company shares of the Company's Common Stock
owned by such optionee and having a fair market value (as determined pursuant to
Paragraph 4) equal to the exercise price (or the balance thereof) applicable to
such optionee's option or (ii) by payment to the Company in cash of a per share
price equal to one-tenth of the exercise price (but in no event less than the
par value of the Common Stock) with the remainder of the exercise price
satisfied by the issuance of a promissory note (the "Note"), in form
satisfactory to counsel to the Company at the time of grant, subject to the
following conditions:
(c) The Note will mature and be payable on the tenth anniversary of the
exercise date, shall bear interest and be payable at such time or times as
the Committee, in its absolute discretion, may determine; provided, however,
that interest payments shall be required to be made not less frequently than
annually. The interest rate on the outstanding principal amount of the Note
shall not be less than the applicable federal rate (determined pursuant to
Section 1274 of the Code) on the date of the Note. The optionee will have the
right to prepay at any time the entire, and from time to time any portion of
the, unpaid principal of the Note. Any such prepayments shall be applied to
the payments to be made under the Note in the inverse order of their maturity.
No prepayment shall in any way obligate the Company to forgive or accelerate the
forgiveness of any portion of the Note.
(d) The Company shall have the right to require the optionee to pledge the
shares acquired pursuant to any exercise of an option pursuant to this Section
6(b) as security for payment of the Note and to require such optionee to enter
into a pledge agreement with respect to such shares in form and substance
satisfactory to counsel to the Company.
(e) Upon the termination of employment with the Company or its subsidiaries
or affiliates for any reason whatsoever, other than death, disability, or
retirement, the entire unpaid balance due on the Note shall become and be
immediately due and payable, with accrued interest, on the sixtieth day after
such termination. Upon the termination of employment by reason of death,
disability or retirement, the payment terms of the Note shall not accelerate
and the Note shall remain the obligation of the optionee or the optionee's
estate.
(f) The holder of an option shall have none of the rights of a stockholder
with respect to the shares covered by his or her option until such shares
shall be issued to him or her upon the exercise of his or her option.
<PAGE>
7. Termination of Service
In the event that the service of an individual to whom an option has been
granted under the Plan shall terminate (otherwise than by reason of his or her
death, dishonesty or wrongful conduct), such option may be exercised (if and
to the extent that such individual was entitled to do so at the date of
termination of his or her service) at any time within one year (or in the case
of ISO's three months) after such termination and in no event after the
expiration of the term of the option. No option granted under the Plan may be
exercised by an optionee following termination of such optionee's employment
by reason of his or her dishonesty or wrongful conduct.
8. Death of an Option Holder
In the event of the death of an individual to whom an option has been granted
under the Plan (i) while serving as an Eligible Person or (ii) within one year
(or in the case of ISO's three months) after the termination of such service,
otherwise than by reason of dishonesty or wrongful conduct, such option may be
exercised (if and to the extent that the deceased individual was entitled to
do so at the date of his or her death) by a legatee or legatees of such optionee
under such individual's last will and testament or by his or her personal
representatives or distributees, at any time within twelve months after his or
her death, but in no event after the expiration of the term of the option.
9. Non-transferability of Options
Except as provided in the following sentence, an option shall not be
transferable otherwise than by will or the laws of descent and distribution and
is exercisable during the lifetime of the employee only by him or his guardian
or legal representative. The Committee shall have discretionary authority to
grant options which will be transferable to members of an optionee's immediate
family, including trusts for the benefit of such family members and partnerships
in which such family members are the only partners. A transferred option would
be subject to all of the same terms and conditions as if such option had not
been transferred. Upon any attempt to transfer an option granted under this
Plan otherwise than as permitted hereunder, or upon the levy of attachment or
similar process upon such option, such option shall automatically become null
and void and of no further force and effect.
10. Adjustments Upon Change in Capitalization
In the event of changes in the outstanding shares of Common Stock of the
Company by reason of stock dividends, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, separations,
reorganizations or liquidations, the number and class of shares available under
the Plan, the number and class of shares or the amount of cash or other assets
or securities available upon the exercise of any option granted hereunder
and the number of shares as to which options are to be granted to an optionee
shall be correspondingly adjusted, to the end that the optionee's proportionate
interest in the Company, any successor thereto or in the cash, assets or other
securities into which shares are converted or exchanged shall be maintained to
the same extent, as near as may be practicable, as immediately before the
occurrence of any such event. All references in this Plan to "Common Stock"
from and after the occurrence of such event shall be deemed for all purposes of
this Plan to refer to such other class of shares or securities issuable upon the
exercise of options granted pursuant hereto.
11. Form of Option
Each option granted pursuant to the Plan shall be evidenced by an agreement
(the "Option Agreement") which shall clearly identify the status of the' options
granted thereunder (i.e, whether an Incentive Stock Option or non-incentive
stock option) and which shall be in such form as the Committee shall from time
to time approve. The Option Agreement shall comply in all respects with the
terms and conditions of the Plan and may contain such additional provisions,
including, without limitation, restrictions upon the exercise of the option, as
the Committee shall deem advisable.
12. Liquidation or Dissolution of the Company
<PAGE>
(a) In the event of the dissolution or liquidation the Company, whether
voluntary or otherwise, and unless in connection therewith the obligations of
the Company under all outstanding options granted under this Plan have been
assumed or all options outstanding under this Plan and currently exercisable
shall be replaced in accordance with Section 10 hereof, all options exercised,
if at all, within the ninety (90) day period commencing on the date specified
in subparagraph (b) below. All options which become exercisable during the
ninety (90) day period commencing on the date specified in subparagraph (b)
below, shall terminate at the end of such ninety (90) day period to the extent
not exercised prior thereto.
(b) The date specified in this subparagraph (b) is the date of the earliest
to occur of the following events:
(c) The entry, in a court having jurisdiction, of an order that the Company
be liquidated or dissolved;
(d) Adoption by the stockholders of the Company of a resolution resolving
that the Company be liquidated or dissolved voluntarily; or
(e) Adoption by the stockholders of the Company of a resolution to the effect
that the Company cannot, by reason of its liabilities, continue its business and
that it is advisable to liquidate or dissolve the Company.
Notwithstanding anything herein to the contrary, in no event may any option
granted hereunder be exercised after the expiration of the term of such option.
13. Further Conditions of Exercise
Each option granted under the Plan shall be subject to the requirement that
if at any time the Committee shall determine, in its absolute discretion, that
it is necessary or desirable as a condition of, or in connection with the grant
of such option or the exercise thereof, to effect or obtain, as the case may be,
(i) the listing, registration or qualification of the shares subject to such
option upon any securities exchange or under any state or federal law; or
(ii) the consent or approval of any governmental body; or (iii) any investment
representation or agreement by the individual desiring to exercise such option;
or (iv) an opinion of counsel for the Company, then, no such option may be
exercised in whole or in part unless such listing, registration, qualification,
consent, approval, investment or representation agreement or opinion shall have
been effected or obtained, as the case may be, free of any condition not
acceptable to the Board or the Committee.
14. Termination, Modification and Amendment
(a) The Plan (but not options previously granted under the Plan) shall
terminate on, and no options shall be granted after, the tenth anniversary of
its adoption by the Board; provided that the Board may at any time terminate
the Plan prior thereto.
(b) The Board shall have complete power and authority to modify or amend the
Plan (including the form of Option Agreement) from time to time in such
respects as it shall deem advisable; provided, however, that the Board shall
not, without the approval of the votes represented by a majority of the
outstanding Common Stock of the Company present or represented and entitled
to vote at a meeting of stockholders duly held in accordance with the
applicable laws of the Company's jurisdiction of incorporation or by the written
consent of stockholders owning stock representing a majority of the votes of
the Company's outstanding stock entitled to vote, (i) increase the maximum
number of shares which in the aggregate are subject to options under the Plan
(except as provided by Section 10), (ii) extend the term of the Plan or the
period during which options may be granted or exercised, (iii) reduce the
option price, in the case of Incentive Stock Options below 100% (110% in the
case of an Incentive Stock Option granted to a 10% Holder) of the fair market
value of the Stock issuable upon exercise of options at the time of the granting
thereof, other than to change the manner of determining the fair market value
thereof, (iv) increase the maximum number of shares of Common Stock for which
any employee may be granted options under the Plan
<PAGE>
pursuant to Section 5, (v) materially increase the benefits accruing to
participants under the Plan, (vi) modify the requirements as to eligibility
for participation in the Plan, or (vii) with respect to options which are
Incentive Stock Options amend the Plan in any respect which would cause such
options to no longer qualify for Incentive Stock Option treatment pursuant to
the Internal Revenue Code; provided, however, that none of the provisions
referred to in Section (c) (2) (ii) of Rule 16b-3 promulgated under the 34 Act,
may be amended more frequently than once every six months other than to
comport with changes in the Internal Revenue Code, the Employee Retirement
Income Security Act or the rules thereunder. No termination or amendment of the
Plan shall, without the consent of the individual optionee, adversely affect
the rights of such optionee under an option theretofore granted to him or under
such optionee's Option Agreement.
15. Taxes
The Company may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection with
any options granted under the Plan or the exercise of such options, including
the withholding of shares purchased upon exercise. The Company may further
require notification from the optionees upon any disposition of Common Stock
acquired pursuant to the exercise of options granted hereunder.
16. Effectiveness Of The Plan
The Plan shall become effective immediately upon its approval and adoption by
the Board, subject to approval by a majority of the votes of the outstanding
shares of capital stock of the Company cast at any duly called annual or
special meeting of the Company's stockholders held within one year from the date
of Board adoption and approval.
17. Code References and Definitions
Whenever reference is made in this Plan to a section of the Internal Revenue
Code, the reference shall be to said section as it is now in force or as it may
hereafter be amended by any amendment which is applicable to this Plan. The term
"subsidiary" shall have the meaning given to the term "subsidiary corporation"
by Section 424(f) of the Internal Revenue Code. The term "Incentive Stock
Option" shall have the meaning given to it by Section 422 of the Internal
Revenue Code. The term "10% Holder" shall mean any person who, for purposes of
Section 422 of the Internal Revenue Code owns more than 10% of the total
combined voting power of all classes of stock of the employer corporation or
of any subsidiary corporation.
18. Miscellaneous
With respect to persons subject to Section 16 of the 34 Act, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the 1934 Act. To the extent any provision of
the Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
<PAGE>
ANNEX C
ORBIT INTERNATIONAL CORP.
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purpose
The purpose of the Orbit International Corp. 1995 Stock Option Plan for Non-
Employee Directors (the "Plan") is to promote the interests of Orbit
International Corp. (the "Company") and its stockholders by increasing the
proprietary and vested interest of non-employee directors in the growth and
performance of the Company by granting such directors options to purchase shares
of Common Stock, par value $.10 per share (the "Shares"), of the Company.
2. Administration
The Plan shall be administered by the Company's Board of Directors (the
"Board"). Subject to the provisions of the Plan, the Board shall be authorized
to interpret the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan and to make all other determinations necessary
or advisable for the administration of the Plan; provided, however, that the
Board shall have no discretion with respect to the selection of directors to
receive options, the number of Shares subject to any such options, the purchase
price thereunder or the timing of grants of options under the Plan. The
determinations of the Board in the administration of the Plan, as described
herein, shall be final and conclusive. The Secretary of the Company shall be
authorized to implement the Plan in accordance with its terms and to take such
actions of a ministerial nature as shall be necessary to effectuate the intent
and purposes thereof. The validity, construction and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Delaware.
3. Eligibility
The class of individuals eligible to receive grants of options under the Plan
shall be directors of the Company who are not employees of the Company or its
affiliates and who have not, within one year immediately preceding the
determination of such director's eligibility, received any award under any other
plan of the Company or its affiliates that entitles the participants therein
to acquire stock, stock options or stock appreciation rights of the Company or
its affiliates (other than any other plan under which participants' entitlements
are governed by provisions meeting the requirements of Rule 16b-3(c)(2)(ii)
promulgated under the Securities Exchange Act of 1934) ("Eligible Directors").
Any holder of an option granted hereunder shall hereinafter be referred to as a
"Participant."
4. Shares Subject to the Plan
Subject to adjustment as provided in Section 6, an aggregate of 150,000
Shares shall be available for issuance upon the exercise of options granted
under the Plan. The Shares deliverable upon the exercise of options may be
made available from authorized but unissued Shares or treasury Shares. If any
option granted under the Plan shall terminate for any reason without having
been exercised, the Shares subject to, but not delivered under, such option
shall be available for other options. If any option granted under the Plan is
exercised through the delivery of Shares, the number of Shares available for
issuance upon the exercise of options shall be increased by the number of Shares
surrendered, to the extent permissible under Rule 16b-3.
5. Grant, Terms and Conditions of Options
(a) Effective September 1, 1995, subject to approval of the Plan by the
stockholders of the Company, each Eligible Director has been granted an
option hereunder to purchase 5,000 Shares.
<PAGE>
(b) Upon first election or appointment to the Board, each newly elected
Eligible Director will be granted an option to purchase 5,000 Shares.
(c) Immediately following each Annual Stockholders Meeting, commencing with
the meeting following the close of fiscal year 1995, each Eligible Director,
other than an Eligible Director first elected to the Board within the 12 months
immediately preceding and including such meeting, will be granted an option to
purchase 1,000 Shares as of the date of such meeting.
(d) The options granted will be nonstatutory stock options not intended to
qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), and shall have the following terms and conditions:
(i) Price. The purchase price per Share deliverable upon the exercise
of each option shall be 100% of the Fair Market Value per Share on the date
the option is granted. For purposes of this Plan, Fair Market Value shall
be the closing sales price as reported on the NASDAQ National Market on the
date in question, or, if the Shares shall not have traded on such date,
the closing sales price on the first date prior thereto on which the Shares
were so traded.
(ii) Payment. Options may be exercised only upon payment of the
purchase price thereof in full. Such payment shall be made in cash or, unless
otherwise determined by the Board, in Shares, which shall have a Fair Market
Value (determined in accordance with the rules of paragraph (i) above) at
least equal to the aggregate exercise price of the Shares being purchased, or
a combination of cash and Shares.
(iii) Exercisability and Term of Options. Options shall be exercisable
in whole or in part at all times during the period beginning on the date of
grant until the earlier of ten years from the date of grant and the
expiration of the one year period provided in paragraph (iv) below.
(iv) Termination of Service as Eligible Director. Upon termination of a
participant's service as a Director for any reason, all outstanding options
shall be exercisable in whole or in part for a period of one year from the
date upon which the participant ceases to be a Director, provided that in no
event shall the options be exercisable beyond the period provided for in
paragraph (iii) above.
(v) Nontransferability of Options. No option may be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered
by a participant otherwise than by will or the laws of descent and
distribution, and during the lifetime of the participant to whom an option is
granted it may be exercised only by the participant or by the participant's
guardian or legal representative. Notwithstanding the foregoing, options may
be transferred pursuant to a qualified domestic relations order.
(vi) Listing and Registration. Each option shall be subject to the
requirement that if at any time the Board shall determine, in its discretion,
that the listing, registration or qualification of the Shares subject to
such option upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body, is necessary
or desirable as a condition of, or in connection with, the granting of such
option or the issue or purchase of Shares thereunder, no such option may be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any condition not acceptable to the Board.
(vii) Option Agreement. Each option granted hereunder shall be evidenced
by an agreement with the Company which shall contain the terms and provisions
set forth herein and shall otherwise be consistent with the provisions of
the Plan.
<PAGE>
6. Adjustment of and Changes in Shares
In the event of a stock split, stock dividend, subdivision or combination of
the Shares or other change in corporate structure affecting the Shares, the
number of Shares authorized by the Plan shall be increased or decreased
proportionately, as the case may be, and the number of Shares subject to any
outstanding option shall be increased or decreased proportionately, as the
case may be, with appropriate corresponding adjustment in the purchase price
per Share thereunder.
7. No Rights of Stockholders
Neither a Participant nor a Participant's legal representative shall be, or
have any of the rights and privileges of, a shareholder of the Company in
respect of any Shares purchasable upon the exercise of any option, in whole
or in part, unless and until certificates for such Shares shall have been
issued.
8. Plan Amendments
The Plan may be amended by the Board, as it shall deem advisable or to
conform to any change in any law or regulation applicable thereto; provided,
that the Board may not, without the authorization and approval of stockholders
of the Company: (i) increase the number of Shares which may be purchased
pursuant to options hereunder, either individually or in the aggregate, except
as permitted by Section 6, (ii) change the requirement of Section 5(d) that
option grants be priced at Fair Market Value, except as permitted by Section 6,
(iii) modify in any respect the class of individuals who constitute Eligible
Directors or (iv) materially increase the benefits accruing to Participants
hereunder. The provisions of Sections 3 and/or 5 may not be amended more often
than once every six months, other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security Act, or the
rules under either such statute.
9. Effective Date and Duration of Plan
The Plan shall become effective on the day of the Company's Annual
Stockholders Meeting at which the Plan is approved by Stockholders. The Plan
shall terminate the day following the seventh Annual Stockholders Meeting
at which Directors are elected succeeding the Annual Stockholders Meeting at
which the Plan was approved by Stockholders, unless the Plan is extended or
terminated at an earlier date by Stockholders or is terminated by exhaustion
of the Shares available for issuance hereunder.
