SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule 14a-6
(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule14a-12
ORBIT INTERNATIONAL CORP.
---------------------------
(Name of Registrant as Specified In Its Charter)
SAME
----
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
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[ ] Fee previously paid with the preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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 the Company at 80 Cabot Court,
Hauppauge, New York 11788, at 10:00 a.m., Eastern Daylight Savings Time, on June
25, 2004, 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 1995 Stock
Option Plan for Non-Employee Directors.
3. To ratify the appointment of Goldstein Golub Kessler LLP as independent
auditors and accountants for the Company for the fiscal year ending December 31,
2004.
4. 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 May 10, 2004, 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 to 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. Returning a
proxy will not deprive you of your right to attend the annual meeting and vote
your shares in person.
BY ORDER OF THE BOARD OF DIRECTORS
MARK TUBLISKY
Secretary
Hauppauge, New York
May 12, 2004
ORBIT INTERNATIONAL CORP.
80 CABOT COURT
HAUPPAUGE, NEW YORK 11788
(631) 435-8300
______________________
PROXY STATEMENT
______________________
The accompanying proxy is solicited by the Board of Directors of Orbit
International Corp. (the "Company") for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at 10:00 a.m., Eastern Daylight
Savings Time, on June 25, 2004, at the offices of the Company at 80 Cabot Court,
Hauppauge, New York 11788, 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 effect the outcome of the election of directors or
the ratification of the appointment of the independent auditors. With respect
to all other matters, if any, to be voted on by stockholders at the Annual
Meeting, abstentions will have the same effect as "no" votes, and broker
non-votes will have no effect on the outcome of the vote.`
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 adoption of the amendment to the Company's 1995 Stock
Option Plan for Non-Employee Directors, and FOR the ratification of the
appointment of Goldstein Golub Kessler LLP 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 April 16, 2004, there were 2,776,785 shares of
Common Stock outstanding and eligible for voting at the Annual Meeting. Each
stockholder of record is entitled to one vote for each share of Common Stock
held on all matters that come before the Annual Meeting. Only stockholders of
record at the close of business on May 10, 2004, are entitled to notice of, and
to vote at, the Annual Meeting.
NO DISSENTER'S RIGHTS
Under Delaware law, stockholders are not entitled to dissenter's rights of
appraisal with respect to Proposals 1, 2 or 3.
This proxy material is being mailed to stockholders commencing on or about
May 12, 2004.
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 directors is
currently seven. The Company has nominated seven persons consisting of Dennis
Sunshine, Bruce Reissman, Mitchell Binder, John Molloy, Bernard Karcinell, Denis
Feldman and Lee Feinberg, each a current Director, for re-election to the Board
of Directors. Proxies cannot be voted for a greater number of persons than the
number of nominees named.
The persons named in the accompanying proxy intend to vote for the election
of the nominees listed herein as directors. 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 the
nominees and executive officers 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 the nominees and executive officers
of the Company.
Name of Nominee Age Position
- ----------------- --- --------
Dennis Sunshine 57 President,
Chief Executive Officer
and Director
Bruce Reissman 54 Executive Vice President,
Chief Operating
Officer and Director
Mitchell Binder 48 Vice President - Finance,
Chief Financial Officer
and Director
Mark Tublisky 66 Secretary
David Goldman 34 Controller
John Molloy 74 Director
Bernard Karcinell 65 Director
Denis Feldman 56 Director
Lee Feinberg 57 Director
BIOGRAPHICAL INFORMATION
Dennis Sunshine has been President and Chief Executive Officer of the
Company since March 1995 and a director of the Company since 1988. Mr. Sunshine
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.
Bruce Reissman has been Executive Vice President and Chief Operating
Officer of the Company since March 1995 and a director of the Company since
1992. Mr. Reissman 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.
Mitchell Binder has been Vice President-Finance of the Company since 1986
and its Chief Financial Officer since 1983. He has been a director of the
Company since 1985. Mr. Binder has held various positions with the Company
since 1983, including Treasurer and Assistant Secretary from 1983 to March 1995.
Mark Tublisky has been Secretary of the Company since March 2003 and has been
President of Behlman Electronics, Inc. since its acquisition by the Company from
Astrosystems, Inc. in 1996. Mr. Tublisky held various positions at
Astrosystems, Inc from 1969 to 1996, including General manager of its Automatic
Test Division and then as General Manager of the Behlman Division.
David Goldman has been Controller of the Company since April 2003. Prior
thereto, he was Assistant Controller of Frequency Electronics, Inc., a
commercial and defense electronics supplier, from April 1999 until April 2003
and Accounting Supervisor from May 1995 to April 1999.
John Molloy has been a director of the Company since 1992. Mr. 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 of Marketing for Ocean Technologies Inc., a defense electronics
company, from 1986 to 1992.
Bernard Karcinell has been a Director of the Company since 2000. Mr.
Karcinell is a practicing certified public accountant licensed in Florida since
1989. He also acts as a financial advisor to several individuals and
corporations. Prior thereto, he was a Partner at KPMG and former President and
CEO of Designcraft Jewel Industries and CCR Video Corp.
Denis Feldman has been a Director of the Company since 2000. Mr. Feldman
is currently the founder and President of Market-Matrix, Inc., an e-knowledge
and marketing Company and through a strategic relationship, is currently serving
as a Director of Business Development of Magill Associates, Inc., a staffing and
personnel business. He is also the founder and President of
Millennium3Partners, a paperless networking organization. Prior thereto, Mr.
Feldman was a founding member of Corporate National Realty, Inc. a commercial
real estate broker and Senior Director from 1987 to 2002. Mr. Feldman also
serves on the board of directors of several not-for profit organizations.
Lee Feinberg was appointed to the Board of Directors in February 2004. Mr.
Feinberg is currently a Senior Vice President of UBS Financial Services Inc. and
has functional responsibility as the Director of the Private Client Group's
Special Investment Products and Deputy Director of Banking and Transactional
Solutions. Mr. Feinberg has been with UBS Financial Services, formerly
PaineWebber, since 1987.
STOCKHOLDER VOTE REQUIRED
Election of each director requires a plurality of the votes of the shares
of Common Stock present in person or requested by Proxy at the meeting and
entitled to vote on the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS NAMED ABOVE.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors (the "Board") held seven (7) meetings and conducted
other business by unanimous written consent during the fiscal year ended
December 31, 2003. All directors attended at least 75% of the meetings held by
the Board and by all committees of the Board.
Stockholders may contact the Board by mail addressed to the entire Board, or to
one or more individual directors, at 80 Cabot Court, Hauppauge, New York 11788,
Attn: Secretary. All communications directed to the Board or individual
directors in this manner will be relayed to the intended recipients.
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.
The Board has established an audit, nominating and corporate governance,
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.
Audit Committee
The Audit Committee of the Board currently consists of John Molloy, Bernard
Karcinell, Denis Feldman and Lee Feinberg, each of whom is independent as such
term is defined in Rule 4200(a)(15) of the Nasdaq listing standards, as amended.
The Audit Committee held five (5) meetings during the fiscal year ended December
31, 2003. 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. The Audit Committee 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 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. Pursuant to Rule
4310(c)(26)(A) of the Nasdaq listing standards, as amended, the Board has
adopted an Audit Committee Charter which sets forth the composition of the Audit
Committee, the qualifications of Audit Committee members and the
responsibilities and duties of the Audit Committee. A current copy of the Audit
Committee charter accompanies the Company's proxy statement filed on May 27,
2003 as Appendix A.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee was formed in March 2003, held
one (1) meeting during the fiscal year ended December 31, 2003 and currently
consists of John Molloy, Denis Feldman, Bernard Karcinell and Lee Feinberg, each
of whom is independent as such term is defined in Rule 4200(a)(15) of the Nasdaq
listing standards, as amended. The Committee evaluates the appropriate size of
the Board, recommends a change in the composition of members of the Board to
reflect the needs of the business, interviews prospective candidates and
formally proposes the slate of directors to be elected at each Annual Meeting of
Stockholders. A current copy of the Nominating and Corporate Governance
Committee's charter accompanies this proxy statement as Appendix A.
-----------
Although the Nominating and Corporate Governance Committee has not established
minimum qualifications for director candidates, it will consider, among other
factors:
- Broad experience; diversity
- Wisdom and integrity
- Judgment and skill
- Understanding of the Company's business environment
- Experience with businesses and other organizations of
comparable size
- Ability to make independent analytical inquiries
- The interplay of the candidate's experience with the experience
of other Board members
- The extent to which the candidate would be a desirable
addition to the Board and any committees of the Board
- Willingness to devote adequate time to the Board
The Nominating and Corporate Governance Committee will consider all director
candidates recommended by stockholders. Any stockholder who desires to recommend
a director candidate may do so in writing, giving each recommended candidate's
name, biographical data and qualifications, by mail addressed to the Chairman of
the Nominating and Corporate Governance Committee, in care of Orbit
International Corp., 80 Cabot Court, Hauppauge, New York 11788. Members of the
Nominating and Corporate Governance Committee will assess potential candidates
on a regular basis.
Compensation Committee
The Compensation Committee of the Board currently consists of John Molloy,
Denis Feldman and Bernard Karcinell. The Compensation Committee held two (2)
meetings during the fiscal year ended December 31, 2003. This Committee makes
recommendations to the Board 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 on any proposed plan or program which would benefit
primarily the senior executive group.
Stock Option Committee
The Stock Option Committee of the Board currently consists of John Molloy
and Denis Feldman. The Stock Option Committee was formed on September 1, 1995.
All activities of the Stock Option Committee for the year ended December 31,
2003 were performed by the Compensation Committee.
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including the systems of
internal controls. Each member of the committee is an independent director as
determined by our Board of Directors and pursuant to Nasdaq Corporate Governance
Rules. In addition, the Board of Directors has determined that Bernard
Karcinell is an "audit committee financial expert," as defined by SEC rules.
We reviewed with Goldstein Golub Kessler LLP ("GGK"), who are responsible
for expressing an opinion on the conformity of our audited financial statements
with generally accepted accounting principles, their judgments as to the quality
and acceptability of our accounting principles and any other matters that we are
required to discuss under generally accepted auditing standards. In addition,
we have discussed GGK's independence from management and the Company including
matters set forth in the written disclosures required by Independence Standards
Board Standard No. 1 and matters required to be discussed by Statement on
Auditing Standards No. 61 pertaining to communications with the Audit Committee.
We discussed with GGK the overall scope and plans of their audit. We also
discussed with GGK, without management present, the results of their
examinations, their evaluations of our internal controls and the overall quality
of our financial reporting. Relying on the reviews and discussions referred to
above, we recommended to the Board that the audited financial statements be
included in the Annual Report on Form 10-KSB for the fiscal year ended December
31, 2003.
AUDIT COMMITTEE
Bernard Karcinell
John Molloy
Denis Feldman
Lee Feinberg
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth, for the fiscal years ended December 31,
2003, 2002 and 2001, compensation paid by the Company to the Chief Executive
Officer and to each other executive officer of the Company who received more
than $100,000 in salary and bonus during the fiscal year ended December 31, 2003
including salary, bonuses, stock options and certain other compensation (each, a
"Named Executive Officer"):
ANNUAL COMPENSATION(1)
- --------------------------------------------------------
NAME AND
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ALL OTHER COMPENSATION($)
- -------------------------------------------------------- ---- ---------- --------- -------------------------
Dennis Sunshine, 2003 376,000 103,000 4,000(2)
- -------------------------------------------------------- ---- ---------- --------- -------------------------
President and Chief 2002 356,000 72,000 7,791(3)
- -------------------------------------------------------- ---- ---------- --------- -------------------------
Executive Officer 2001 340,000 41,000 6,600(4)
- -------------------------------------------------------- ---- ---------- --------- -------------------------
Bruce Reissman, 2003 341,000 101,000 4,000(2)
- -------------------------------------------------------- ---- ---------- --------- -------------------------
Executive Vice President and 2002 302,000 55,000 6,871(3)
- -------------------------------------------------------- ---- ---------- --------- -------------------------
Chief Operating Officer 2001 281,000 35,000 5,794(4)
- -------------------------------------------------------- ---- ---------- --------- -------------------------
Mitchell Binder, 2003 283,000 73,000 4,000(2)
- -------------------------------------------------------- ---- ---------- --------- -------------------------
Vice President - Finance and 2002 267,000 35,000 5,640(3)
- -------------------------------------------------------- ---- ---------- --------- -------------------------
Chief Financial Officer 2001 255,000 27,000 4,569(4)
- -------------------------------------------------------- ---- ---------- --------- -------------------------
Mark Tublisky 2003 161,000 15,000 2,461(2)
- -------------------------------------------------------- ---- ---------- --------- -------------------------
Secretary and 2002 152,000 9,000 2,692(3)
- -------------------------------------------------------- ---- ---------- --------- -------------------------
President, Behlman Electronics, Inc. 2001 149,000 5,000 1,086(4)
- -------------------------------------------------------- ---- ---------- --------- -------------------------
<FN>
__________________
(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) Includes $4,000, $4,000, $4,000 and $2,461 of matching contributions made by the Company pursuant to the
Company's 401(k) Plan for each of Messrs. Sunshine, Reissman, Binder and Tublisky, respectively.
(3) Includes $4,146, $4,098, $3,188 and $2,692 of matching contributions made by the Company pursuant to the
Company's 401(k) Plan for each of Messrs. Sunshine, Reissman, Binder and Tublisky, respectively. Also includes
the portion of the insurance premium attributable to the employee and paid by the Company under split dollar
insurance policies maintained by the Company for the benefit of Messrs. Sunshine, Reissman and Binder in the
amounts of $3,645, $2,773 and $1,452, respectively. No payments have been made by the Company for the benefit of
these officers since the passage of the Sarbanes-Oxley Act of 2002.
(4) Includes $3,200, $3,200, $3,200 and $1,086 of matching contributions made by the Company pursuant to the
Company's 401(k) Plan for each of Messrs. Sunshine, Reissman, Binder and Tublisky, respectively. Also includes
the portion of the insurance premium attributable to the employee and paid by the Company under split dollar
insurance policies maintained by the Company for the benefit of Messrs. Sunshine, Reissman and Binder in the
amounts of $3,400, $2,594 and $1,369, respectively.
-14-
The following table sets forth certain information concerning options
granted to the Named Executive Officers during the fiscal year ended December
31, 2003.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
-----------------
Number of Percent of
Securities Total Options Exercise
Underlying Granted to or Base
Options Employees in Price Expiration
Name Granted Fiscal Year ($/Share) Date
- ---- -------- -------------- ---------- ----------
Dennis Sunshine 25,000 17.39% $5.64 7/29/13
Bruce Reissman 25,000 17.39% $5.64 7/29/13
Mitchell Binder 25,000 17.39% $5.64 7/29/13
Mark Tublisky 18,750 13.04% $5.64 7/29/13
AGGREGATED OPTION EXERCISES DURING THE FISCAL YEAR ENDED DECEMBER 31, 2003 AND
FISCAL YEAR END OPTION VALUES
The following table sets forth certain information concerning the number
and value of securities underlying exercisable and unexercisable stock options
as of the fiscal year ended December 31, 2003 by the Named Executive Officers.
No options were exercised by any of the Named Executive Officers during the
fiscal year ended December 31, 2003.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year End at Fiscal Year End(1)
----------------------------- ------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
Dennis Sunshine 170,833 25,000 $862,000 $46,500
Bruce Reissman 164,583 25,000 $834,000 $46,500
Mitchell Binder 236,287 25,000 $1,196,000 $46,500
Mark Tublisky 24,999 18,750 $130,000 $34,875
___________________
(1) The closing price for the common stock of the Company on December 31, 2003
was $7.50.
EMPLOYMENT AGREEMENTS
Dennis Sunshine entered into an amended and restated employment agreement
with the Company which commenced in February 1999 and was last amended in
February 2004 (the "Sunshine Employment Agreement"). Under the terms of the
Sunshine Employment Agreement, Mr. Sunshine is entitled to receive an annual
base salary of $342,600 (subject to an annual cost of living adjustment) and a
bonus equal to 3.2% of the Company's pre-tax earnings between $500,000 and
$1,000,000; 4% of the Company's pre-tax earnings between $1,000,001 and
$2,000,000; 4.8% of the Company's pre-tax earnings between $2,000,001 and
$3,000,000; and 6% of the Company's pre-tax earnings in excess of $3,000,001.
The Sunshine Employment Agreement provides that the employment of Mr. Sunshine
may be terminated by the Company for "cause." "Cause" is defined as (i) willful
and repeated failure by Mr. Sunshine to perform his duties under the Sunshine
Employment Agreement, which failure is not remedied within 30 days after written
notice from the Company; (ii) conviction of Mr. Sunshine for a felony; (iii) Mr.
Sunshine's dishonesty or willfully engaging in conduct that is demonstrably and
materially injurious to the Company or (iv) willful violation by Mr. Sunshine of
any provision of the Sunshine Employment Agreement which violation is not
remedied within 30 days after written notice from the Company. The Sunshine
Employment Agreement may also be terminated by the Company on not less than
three years' prior notice and contains a provision prohibiting Mr. Sunshine from
competing with the Company for a one year period following termination of his
employment.
Bruce Reissman entered into an amended and restated employment agreement
with the Company which commenced in February 1999 and was last amended in
February 2004 (the "Reissman Employment Agreement"). Under the terms of the
Reissman Employment Agreement, Mr. Reissman is entitled to receive an annual
base salary of $309,500 (subject to an annual cost of living adjustment) and a
bonus equal to 3.2% of the Company's pre-tax earnings between $500,000 and
$1,000,000; 4% of the Company's pre-tax earnings between $1,000,001 and
$2,000,000; 4.8% of the Company's pre-tax earnings between $2,000,001 and
$3,000,000; and 6% of the Company's pre-tax earnings in excess of $3,000,001.
The Reissman Employment Agreement provides that the employment of Mr. Reissman
may be terminated by the Company for "cause" (as defined above). The agreement
may also be terminated by the Company on not less than three years' prior
notice.
Mitchell Binder entered into an amended and restated employment agreement
with the Company (the "Binder Employment Agreement") which commenced in February
1999. Under the terms of the Binder Employment Agreement, Mr. Binder is
entitled to receive an annual base salary of $257,500 (subject to an annual cost
of living adjustment) and a bonus equal to 1.6% of the Company's pre-tax
earnings between $500,000 and $1,000,000; 2% of the Company's pre-tax earnings
between $1,000,001 and $2,000,000; 2.4% of the Company's pre-tax earnings
between $2,000,001 and $3,000,000; and 3% of the Company's pre-tax earnings in
excess of $3,000,001. The Binder Employment Agreement provides that the
employment of Mr. Binder may be terminated by the Company for "cause" (as
defined above). The agreement may also be terminated by the Company on not less
than three years' prior notice.
Mark Tublisky entered into an employment agreement with a subsidiary of the
Company in April 1996 that was amended April 2002 for a period of three years.
Under the terms of the employment agreement, Mr. Tublisky is currently entitled
to a base salary of $149,000 (subject to an annual cost of living adjustment)
and the right to participate in a bonus pool equal to 5% of the pre-tax earnings
of Behlman Electronics, Inc., a subsidiary of the Company. The agreement
provides that the employment of Mr. Tublisky may be terminated for "cause",
defined as (i) fraud, dishonesty or similar malfeasance; (ii) refusal to comply
with the Company's reasonable directions and/or failure to perform any of the
material terms of the employment agreement; and (iii) alcohol or drug abuse.
Each of the Sunshine Employment Agreement, the Reissman Employment Agreement and
the Binder Employment Agreement (the "Employment Agreements") provide that the
employee is entitled to receive benefits offered to the Company's employees
generally. The Employment Agreements also provide for termination by the
employee on not less than six months' prior notice or upon a "change of control"
(as defined in the Employment Agreements). If the employee terminates his
employment in connection with a change in control of the Company, then the
employee 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.
COMPENSATION OF DIRECTORS
Directors of the Company who are not employed by the Company receive
directors fees of $2,000 per quarter. Employee directors are not compensated for
services as a director. All directors are reimbursed for expenses incurred on
behalf of the Company. Pursuant to the Company's 1995 Stock Option Plan for
Non-Employee Directors, non-employee Directors are entitled to receive annual
grants of options to purchase Common Stock. See "Proposal 2 - Amendment to 1995
Stock Option Plan for Non-Employee Directors" below.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Denis Feldman, Bernard
Karcinell and John Molloy, each of whom is a non-employee member of the
Company's Board of Directors, who was never employed by the Company and has no
interlocks with any other Company other than as set forth under "Certain
Relationships and Related Transactions".
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. Feldman,
Karcinell and Molloy comprise the Compensation Committee.
The Stock Option Committee is responsible for granting and setting the
terms of stock options under the Company's 1995 Stock Option Plan fro
Non-Employee Directors, 1995 Employee Stock Option Plan, 2000 Employee Stock
Option Plan and 2003 Employee Stock Incentive Plan. Messrs. Feldman 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 a discretionary bonus during a year of excellent financial
performance or 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 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 Employee Stock Option Plan
did 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 2003 will not result in any material loss of tax deductions
for the Company.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Sunshine's base salary and bonus for the fiscal year ended December 31,
2003 was determined by the terms of the Sunshine Employment Agreement which was
entered into in February 1999 and is described elsewhere in this proxy
statement. The Compensation Committee believes that Mr. Sunshine's base salary
level and bonus formula as set forth in the Sunshine Employment Agreement fairly
reflect the outstanding contributions Mr. Sunshine has made to the Company's
market and financial position as well as Mr. Sunshine's commitment to the
continued success of the Company. In addition, during 2003, the Committee
awarded Mr. Sunshine (as well as each of the two other senior executives) an
additional discretionary bonus of $30,000 for the Company's excellent financial
performance. During 2003, Mr. Sunshine also actively sought new strategic
markets for many of the Company's existing and new products that resulted in a
significant increase in revenues and profitability for 2003 as well as a
significant increase in the Company's market capitalization. Mr. Sunshine was
instrumental in hiring an investment banker to advise the Company in its ongoing
expansion opportunities and continues to explore other opportunities that could
enhance shareholder value.
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Denis Feldman Denis Feldman
John Molloy John Molloy
Bernard Karcinell
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 Company over the same period (assuming the
investment of $100 in the Common Stock, the Nasdaq Stock Market-U.S. and the
Peer Group on December 31, 1998, 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)
Orbit
International Peer
Corp. Group NASDAQ
12/98 100.00 100.00 100.00
12/99 29.93 64.52 186.20
12/00 11.91 234.63 126.78
12/01 57.25 186.13 96.96
12/02 99.05 119.84 68.65
12/03 204.09 155.88 108.18
* The Peer Group is comprised of seven companies in the defense
electronics industry - Aeroflex Inc., Megadata Corp., La Barge, Inc., Miltope
Group Inc., DRS Technologies, Inc., Esterline Technologies Corp., and Espey
Manufacturing and Electronics Corp. Such companies were chosen for the Peer
Group because they have similar market capitalizations to the Company and
because they represent the line of business in which the Company is engaged.
Each of the Peer Group issuers is weighted according to its respective market
capitalization.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is stock ownership information as of April 16, 2004, 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's 2,776,785 shares of Common Stock issued and outstanding as of
April 16, 2004, 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.
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership(1) Percent of Class
- -------------------- ------------------------ ------------------
Dennis Sunshine
c/o 80 Cabot Court
Hauppauge, New York 460,474(2) 15.62%
Bruce Reissman
c/o 80 Cabot Court
Hauppauge, New York 459,214(3) 15.61%
Mitchell Binder
c/o 80 Cabot Court
Hauppauge, New York 244,702(4) 8.12%
Mark Tublisky
c/o 80 Cabot Court
Hauppauge, New York 24,999(5) *
John Molloy
1815 Parliament Road
Leucadia, California 6,243(6) *
Bernard Karcinell
3015 South Ocean Blvd.
Highland Beach, Florida 3,331(7) *
Denis Feldman
7600 Jericho Turnpike
Woodbury, New York 3,331(7) *
Lee Feinberg
251 E. 51st Street
New York, New York 2,083(8) *
Al Frank Asset Management, Inc.
32392 Coast Highway
Laguna Beach, California 331,396 11.93%
All officers and directors
as a group
(8 persons)(2)(3)(4)(5)(6)(7)(8) 1,204,377 35.55%
_________________
* Less than one percent.
<FN>
(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. Includes any securities that
such person has the right to acquire within sixty days pursuant to options, warrants, conversion privileges or other
rights.
(2) Includes 288,173 shares held by Mr. Sunshine's wife, Francine Sunshine, and 1,250 shares held in her IRA. Also
includes options to purchase 170,833 shares of Common Stock.
(3) Includes options to purchase 164,583 shares of Common Stock.
(4) Includes options to purchase 236,287 shares of Common Stock.
(5) Includes options to purchase 24,999 shares of Common Stock.
(6) Includes options to purchase 5,411 shares of Common Stock.
(7) Includes options to purchase 3,331 shares of Common Stock.
(8) Includes options to purchase 2,083 shares of Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 2001, the Company completed a sale-leaseback transaction whereby it
sold its land and building and entered into a twelve-year net lease with the
buyer of the property. In connection with this transaction, Corporate National
Realty, Inc., a company that Denis Feldman, a director of the Company, was a
senior managing director, earned a commission of $165,000. The Company had
competitively priced the sale-leaseback transaction with other real estate
brokers and believes the terms of the transaction and the commission paid
thereon was no less favorable than it could have obtained from a third party.
See sections entitled "Executive Compensation", "Employment Agreements" and
"Compensation Committee Report to Stockholders" with respect to related
transactions between executive officers and the Company.
PROPOSAL 2
AMENDMENT TO
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The Company's Board of Directors has unanimously recommended, and at the
meeting the stockholders will be asked to approve, the adoption of an amendment
to the Orbit International Corp. 1995 Stock Option Plan for Non-Employee
Directors (the "Plan") in order to:
(i) increase the number of Shares available under the Plan from 62,500
Shares to 100,000 Shares; and
(ii) increase the number of Shares to be granted under an option to each
Eligible Director from 416 Shares to 1,000 Shares, commencing with the Annual
Stockholders meeting following the close of fiscal year 2003; and
(iii) extend the termination date of the Plan for an additional five
years.
A description of the Plan appears below.
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The following discussion, which summarizes certain provisions of the Plan
is qualified in its entirety by reference to the text of the Plan, a copy which
is attached hereto as Exhibit A. The Plan is intended 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
by granting such directors options to purchase shares of Common Stock, par value
$.10 per share ("Shares") of the Company.
Administration of the Plan The Plan shall be administered by the
-----------------------------
Compensation Committee consisting of independent members of the Company's Board
-
of Directors.
___________________
Reflects the one-for three reverse stock split effected by the Company on
October 4, 1999 and the Company's 25% stock dividend effective on August 15,
2003.
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").
Shares Subject to the Plan An aggregate of 100,000 Shares shall be
------------------------------
available for issuance upon the exercise of options granted under the Plan.
Grant of Options Following the adoption by Stockholders of this
------------------
Proposal 2, upon first election or appointment to the Board, each newly elected
--
Eligible Director will be granted an option to purchase 2,083 Shares .
Immediately following each Annual Stockholders Meeting, commencing with the
meeting following the close of fiscal year 2003, 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.
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").
Price and Payment of Options 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.
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.
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 ten year period from the date of
grant.
Nontransferability of Options Unless transferred pursuant to a
-------------------------------
qualified domestic relations order, 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.
___________________
Reflects the one-for three reverse stock split effected by the Company on
October 4, 1999 and the Company's 25% stock dividend effective on August 15,
2003.
- ------
Amendment to Plan 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 otherwise permitted, (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.
Duration of Plan The Plan shall terminate the day following the fifteenth
- ------------------
Annual Stockholders Meeting at which Directors are elected succeeding the 1995
- --
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.
As of April 12, 2004, 16,655 options to purchase Shares have been granted,
of which 2,499 options have been exercised.
NEW PLAN BENEFITS
1995 Stock Option Plan for Non-Employee Directors
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF SHARES
----------------- ---------------
Dennis Sunshine 0 0
----------------- ---------------
Bruce Reissman 0 0
----------------- ---------------
Mitch Binder 0 0
----------------- ---------------
Mark Tublisky 0 0
----------------- ---------------
Executive Officer Group 0 0
----------------- ---------------
Non-Executive Directors Group $ 57,281 14,156
----------------- ---------------
Non-Executive Officer Employee Group 0 0
- ------------------------------------ ----------------- ---------------
The closing price of our common stock on the Nasdaq SmallCap Market on
April 21, 2004, was $7.84 per share.
OTHER STOCK OPTION PLANS
The 1995 Plan. The 1995 Employee Stock Option Plan (the "1995 Plan") was
approved by the Shareholders at the 1996 Annual Meeting. A total of 625,000
shares of Common Stock were authorized and have been reserved for issuance under
the 1995 Plan. As of April 16, 2004, all of the options to purchase such shares
have been granted.
The 2000 Plan. The 2000 Employee Stock Option Plan (the "2000 Plan") was
approved by the Shareholders at the 2000 Annual Meeting. A total of 250,000
shares of Common Stock were authorized and have been reserved for issuance under
the 2000 Plan. As of April 16, 2004, all of the options to purchase such shares
have been granted.
The 2003 Plan. The 2003 Employee Stock Incentive Plan (the "2003 Plan") was
approved by the Shareholders at the 2003 Annual Meeting. A total of 437,500
shares of Common Stock were authorized and have been reserved for issuance under
the 2003 Plan. As of April 16, 2004, 125,000 options to purchase such shares
have been granted.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table sets forth, as of December 31, 2003:
- - the number of shares of the Company's common stock issuable upon exercise
of outstanding options, warrants and rights, separately identified by those
granted under equity incentive plans approved by the Company's stockholders
and those granted under plans, including individual compensation contracts, not
approved by the Company's stockholders (column A),
- - the weighted average exercise price of such options, warrants and rights,
also as separately identified (column B), and
- - the number of shares remaining available for future issuance under such
plans, other than those shares issuable upon exercise of outstanding options,
warrants and rights (column C).
EQUITY COMPENSATION PLAN INFORMATION TABLE
(a) (b) (c)
Plan Category Number of securities Weighted-average Number of securities
to be issued upon exercise price of remaining available
exercise of outstanding for future issuance
outstanding options, options, warrants under equity
warrants and rights and rights compensation plans
(excluding securities
reflected in
column (a))
- ------------- ------------------- ----------------- --------------------
Equity 871,677 $2.97 365,204
compensation
plans approved
by security
holders
- -----------------------------------------------------------------------------
Equity - 0 - N/A - 0 -
compensation
plans not
approved by
security holders
- ------------------------------------------------------------------------------
Total 871,677 $2.97 365,204
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN UNDER CURRENT LAW
The Company has been advised by counsel that in general, under the Internal
Revenue Code, as presently in effect a participant will not be deemed to
recognize any income for Federal Income Tax purposes at the time an option or
stock appreciation right ("SAR") is granted or a restricted stock award is made,
nor will the Company be entitled to a tax deduction at that time. However, when
any part of an option or SAR is exercised, when restrictions on restricted stock
lapse, or when an unrestricted stock award is made, the federal income tax
consequences may be summarized as follows:
1. In the case of an exercise of a stock option other than an incentive
stock option, the participant will generally recognize ordinary income in an
amount equal to the excess of the fair market value of the shares on the
exercise date over the option price.
2. In the case of an exercise of an SAR, the participant will generally
recognize ordinary income on the exercise date in an amount equal to any cash
and the fair market value of any unrestricted shares received.
3. In the case of an exercise of an option or SAR payable in restricted
stock, or in the case of an award of restricted stock, the immediate federal
income tax effect for the participant will depend on the nature of the
restrictions. Generally, the fair market value of the stock will not be taxable
as ordinary income until the year in which the participant's interest in the
stock is freely transferable or is no longer subject to a substantial risk of
forfeiture. However, the participant may elect to recognize income when the
stock is received, rather than when the interest in the stock is received, the
stock is freely transferable or is no longer subject to a substantial risk of
forfeiture. If the participant makes this election, the amount taxed to the
participant as ordinary income is determined as of the date of receipt of the
restricted stock.
4. In the case of incentive stock options, there is generally no tax
liability at time of exercise. However, the excess of the fair market value of
the stock on the exercise date of over the option price is included in the
participant's income for purposes of the alternative minimum tax. If no
disposition of the incentive stock option stock is made before the later of one
year from the date of exercise and two years from the date of grant, the
participant will realize a capital gain or loss upon a sale of the stock, equal
to the difference between the option price and the sale price, if the stock is
not held for the required period, ordinary income tax treatment will generally
apply to the excess of the fair market value of the stock on the date of
exercise (or, if less, the amount of gain realized on the disposition of the
stock) over the option price, and the balance of any gain or any loss will be
treated as capital gain or loss. In order for incentive stock options to be
treated as described above, the participant must remain employed by the Company
(or a subsidiary in which the Company holds at least 50 percent of the voting
power) from the incentive stock option grant date until three months before the
incentive stock option is exercised. The three-month period is extended to one
year if the participant's employment terminates on account of disability. If the
participant does not meet the employment requirement, the option will be treated
for federal income tax purposes as an option as described in paragraph 5 below.
A participant who exercises an incentive stock option might also be subject to
an alternative minimum tax.
5. Upon the exercise of a stock option other than an incentive stock option,
the exercise of a SAR, the award of stock, or the recognition of income on
restricted stock, the Company will generally be allowed an income tax deduction
equal to the ordinary income recognized by a participant. The Company will not
receive an income tax deduction as a result of the exercise of an incentive
stock option, provided that the incentive stock option stock is held for the
required period as described above. When a cash payment is made pursuant to the
award, the recipient will recognize the amount of the cash payment as ordinary
income, and the Company will generally be entitled to a deduction in the same
amount.
6. Pursuant to section 162(m) of the Code, the Company may not deduct
compensation of more than $1,000,000 that is paid in a taxable year to an
individual who, on the last day of the taxable year, is the Company's chief
executive officer or among one of its four other highest compensated officers
for that year. The deduction limit, however, does not apply to certain types of
compensation, including qualified performance-based compensation. The Company
believes that compensation attributable to stock options and stock appreciation
rights granted under the 2003 Plan will be treated as qualified
performance-based compensation and therefore will not be subject to the
deduction limit. The 2003 Plan also authorizes the grant of long-term
performance incentive awards utilizing the performance criteria set forth in the
2003 Plan that may likewise be treated as qualified performance-based awards.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE COMPANY'S
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS, WHICH IS DESIGNATED AS
PROPOSAL 2 ON THE ENCLOSED PROXY CARD.
PROPOSAL 3
INDEPENDENT ACCOUNTANTS
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board Of Directors, upon the recommendation of the Audit Committee, has
appointed Goldstein Golub Kessler LLP ("GGK") as independent accountants for the
Company to audit the books and accounts of the Company for the current fiscal
year ending December 31, 2004.
GGK has a continuing relationship with American Express Tax and Business
Services, Inc ("TBS") from which it leases auditing staff who are full time,
permanent employees of TBS and through which its partners provide non-audit
services. As a result of this arrangement, GGK has no full time employees and
therefore, none of the audit services performed were provided by permanent
full-time employees of GGK. GGK manages and supervises the audit and audit
staff, and is exclusively responsible for the opinion rendered in connection
with its examination.
In accordance with the Audit Committee's charter and pursuant to SEC
rules, the Audit Committee reviewed all services performed by GGK for the
Company in 2003, within and outside the scope of their quarterly and annual
auditing function. The aggregate fees billed by the Company's independent
auditors for each of the last two fiscal years are as follows:
December 31, 2002 December 31, 2003
-------------------- -------------------
Audit fees $100,000 $100,000
Audit Related Fees $ 0 $ 0
Tax Fees $ 0 $ 0
All Other Fees $ 20,000 $ 40,000
Other services which solely include Tax Fees have been provided by TBS and total
$30,000 for each the Company's fiscal years ended December 31, 2002 and December
31, 2003.
Representatives of GGK are expected to be available at the meeting to respond to
appropriate questions and will be given the opportunity to make a statement if
they desire to do so. If the stockholders do not ratify the appointment of this
firm, the appointment of another firm of independent certified public
accountants will be considered by the Board of Directors.
THE BOARD OF DIRECTORS DEEMS THE RATIFICATION OF THE APPOINTMENT OF
GOLDSTEIN GOLUB KESSLER LLP AS THE AUDITORS FOR THE COMPANY TO BE IN THE
COMPANY'S BEST INTEREST AND RECOMMENDS A VOTE "FOR" SUCH RATIFICATION.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's directors and executive officers, and persons who
beneficially own more than ten percent of a registered class of the Company's
equity securities, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of Common Stock and the
other equity securities of the Company. Officers, directors, and persons who
beneficially own more than ten percent of a registered class of the Company's
equities are required by the regulations of the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 2003, all
Section 16(a) filing requirements applicable to its officers, directors, and
greater than ten percent beneficial owners were complied with, except that Mark
Tublisky, Secretary of the Company, did not file on a timely basis a Form 3 and
Form 4 in connection with his appointment as Secretary of the Company and the
grant of options to him, respectively; and each of Dennis Sunshine, President,
Chief Executive Officer and a Director of the Company, Bruce Reissman, Executive
Vice President, Chief Operating Officer and a Director of the Company and Mitch
Binder, Vice President - Finance, Chief Financial Officer and a Director of the
Company, did not file on a timely basis a Form 4 in connection with the grant
of options to each of them.
STOCKHOLDER PROPOSALS
No person who intends to present a proposal for action at a forthcoming
stockholders' meeting of the Company may seek to have the proposal included in
the proxy statement or form of proxy for such meeting unless that person (a) is
a record beneficial owner of at least 1% or $2,000 in market value of shares of
Common Stock, has held such shares for at least one year at the time the
proposal is submitted, and such person shall continue to own such shares through
the date on which the meeting is held, (b) provides the Company in writing with
his name, address, the number of shares held by him and the dates upon which he
acquired such shares with documentary support for a claim of beneficial
ownership, (c) notifies the Company of his intention to appear personally at the
meeting or by a qualified representative under Delaware law to present his
proposal for action, and (d) submits his proposal timely. A proposal to be
included in the proxy statement or proxy for the Company's next annual meeting
of stockholders, will be submitted timely only if the proposal has been received
at the Company's executive offices at 80 Cabot Court, Hauppauge, New York 11788
no later than January 11, 2005. If the date of such meeting is changed by more
than 30 calendar days from the date such meeting is scheduled to be held under
the Company's By-Laws, or if the proposal is to be presented at any meeting
other than the next annual meeting of stockholders, the proposal must be
received at the Company's principal executive office at a reasonable time before
the solicitation of proxies for such meeting is made.
Even if the foregoing requirements are satisfied, a person may submit only
one proposal of not more than 500 words with a supporting statement if the
latter is requested by the proponent for inclusion in the proxy materials, and
under certain circumstances enumerated in the Securities and Exchange
Commission's rules relating to the solicitation of proxies, the Company may be
entitled to omit the proposal and any statement in support thereof from its
proxy statement and form of proxy.
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-KSB, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES FILED THEREWITH. WRITTEN REQUESTS FOR SUCH REPORT SHOULD BE ADDRESSED
TO THE OFFICE OF THE SECRETARY, ORBIT INTERNATIONAL CORP., 80 CABOT COURT,
HAUPPAUGE, NEW YORK 11788.
ORBIT INTERNATIONAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS -JUNE 25, 2004
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 of 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 the Company at 80 Cabot Court,
Hauppauge, New York 11788, on Friday, June 25, 2004, at 10:00 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 DIRECTORS AND FOR THE REMAINING
PROPOSALS 2 AND 3.
(Continued and to be signed and dated on the other side)
Please mark
your votes
as this
example
THE DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 1
1. Election of Directors FOR All nominees WITHHOLD AUTHORITY
listed (except as marked to vote for all
to the contrary, see nominees listed
instruction below) at left
Dennis Sunshine, Bruce Reissman,
Mitchell Binder, John Molloy,
Bernard Karcinell, Denis
Feldman and Lee Feinberg
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, DRAW A LINE THROUGH THE NAME OF THE NOMINEE ABOVE.
THE DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 2.
2.Proposal to approve the amendment
to the 1995 Stock Option
Plan for Non-Employee
Directors
For Against Abstain
THE DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 3
3. Proposal to ratify
Goldstein Golub
Kessler LLP
as independent
auditors. For Against Abstain
4. 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.
5.The above named proxies are granted the authority, in their discretion,
to vote their proxies to adjourn the meeting to solicit more votes for
Proposal 2, or any adjournment or adjournments thereof.
Dated _________________________________________,2004
Signature(s) _______________________________________
Signature(s) _______________________________________
Please sign exactly as your name appears on the stock certificate and return
this proxy immediately in the enclosed stamped self-addressed envelope.
APPENDIX A
ORBIT INTERNATIONAL CORP.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER
APRIL 16, 2004
I. PURPOSE OF COMMITTEE.
The purpose of the Nominating and Corporate Governance Committee (the
"Committee") of the Board of Directors (the "Board") of Orbit International
Corp. (the "Company") is to determine the slate of director nominees for
election to the Company's Board of Directors and to fill vacancies occurring
between annual meetings of shareholders, and recommend individuals to the Board
for nomination as members of the standing committees of the Board. The Committee
shall report to the Board on a regular basis, but not less than once a year.
II. COMMITTEE MEMBERSHIP.
Except as provided by NASD Rule 4350(c)(4), the Committee shall consist
solely of "independent directors," i.e., those directors who neither are
officers or employees of the Company or its subsidiaries nor have a relationship
which, in the opinion of the Board, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director, and who
are otherwise "independent" under the rules of the Nasdaq Stock Market, Inc.
The members of the Committee shall be appointed by the Board. Candidates to
fill subsequent vacancies on the Committee shall be appointed by the Board based
on nominations by the Committee. Members shall serve at the pleasure of the
Board and for such term or terms as the Board may determine.
If the Committee is comprised of at least three members, one director who
is not independent and is not a current officer or employee, or a spouse,
parent, child or sibling, whether by blood, marriage or adoption, of, or a
person who has the same residence as, any current officer or employee, may be
appointed to the Committee if the Board, under exceptional and limited
circumstances, determines that such individual's membership on the Committee is
required by the best interests of the Company and its shareholders, and the
Board discloses, in the next annual meeting proxy statement subsequent to such
determination, the nature of the relationship, and the reasons for the
determination. Any such member appointed to the Committee may only serve for up
to two years.
III. COMMITTEE STRUCTURE AND OPERATIONS.
The Board shall designate one member of the Committee as its chairperson.
In the event of a tie vote on any issue, the chairperson's vote shall decide the
issue. The Committee shall meet in person or telephonically at least twice a
year, and perhaps more frequently, in conjunction with regularly scheduled
meetings of the Board at regularly scheduled times and places determined by the
Committee chairperson, with further meetings to occur, or actions to be taken by
unanimous written consent, when deemed necessary or desirable by the Committee
or its chairperson.
IV. COMMITTEE DUTIES AND RESPONSIBILITIES.
The following are the duties and responsibilities of the Committee:
1. To make recommendations to the Board from time to time as to changes
that the Committee believes to be desirable to the size of the Board or any
committee thereof.
2. To identify individuals believed to be qualified to become Board
members, consistent with criteria approved from time to time, if any, by the
Board, and to select, or recommend to the Board, the nominees to stand for
election as directors at each annual meeting of shareholders or, if applicable,
at a special meeting of shareholders. In the case of a vacancy on the Board
(including a vacancy created by an increase in the size of the Board), the
Committee shall recommend to the Board an individual to fill such vacancy either
through appointment by the Board or through election by shareholders. In
selecting or recommending candidates, the Committee shall take into
consideration any criteria approved by the Board, which may be set forth in any
Corporate Governance Guidelines adopted by the Board and such other factors as
it deems appropriate. These factors may include:
Broad experience; diversity
Wisdom and Integrity
Judgment and Skill
Understanding of the Company's business environment
Experience with businesses and other organizations of comparable size
Ability to make independent analytical inquiries
The interplay of the candidate's experience with the experience of
other Board
members
The extent to which the candidate would be a desirable addition to the
Board and any committees of the Board
Willingness to devote adequate time to the Board
The Committee shall consider all candidates recommended by the Company's
shareholders in accordance with the procedures set forth in the Company's annual
proxy statement and in accordance with Item 7(d)(2)(ii) of Schedule 14A under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Committee may consider candidates proposed by management, but is not required to
do so.
3. To identify Board members qualified to fill vacancies on any
committee of the Board and to recommend that the Board appoint the identified
member or members to the respective committee. In nominating a candidate for
committee membership, the Committee shall take into consideration any criteria
approved by the Board, which may be set forth in any Corporate Governance
Guidelines adopted by the Board, and the factors set forth in the charter of
that committee, if any, as well as any other factors it deems appropriate,
including without limitation the consistency of the candidate's experience with
the goals of the committee and the interplay of the candidate's experience with
the experience of other committee members.
4. To develop and recommend to the Board standards to be applied in
making determinations as to the absence of material relationships between the
Company and a director.
5. In its discretion, to develop and recommend to the Board a set of
corporate governance principles applicable to the Company, and to review those
principles at least once a year.
6. To assist management in the preparation of the disclosure in the
Company's annual proxy statement regarding the operations of the Committee in
accordance with Item 7(d)(2) of Schedule 14A under the Exchange Act.
7. To report to the Board on a regular basis, but not less than once
per year.
8. To perform any other duties or responsibilities expressly delegated
to the Committee by the Board from time to time relating to the nomination of
Board and committee members.
V. DELEGATION TO SUBCOMMITTEE.
The Committee may, in its discretion, delegate all or a portion of its
duties and responsibilities to a subcommittee of the Committee.
VI. RESOURCES AND AUTHORITY OF THE COMMITTEE.
The Committee shall have the resources and authority appropriate to
discharge its duties and responsibilities, including the authority to select,
retain, terminate, and approve the fees and other retention terms of special
counsel or other experts or consultants, as it deems appropriate, without
seeking approval of the Board or management. With respect to consultants or
search firms used to identify director candidates, this authority shall be
vested solely in the Committee.