[LOGO]
EMPLOYMENT AGREEMENT
--------------------
This Agreement
("Agreement") is made in Saratoga Springs, New York by
and between Espey Mfg. & Electronics Corp. (hereinafter
"Espey"), a New York
corporation with its principal place of business at 233 Ballston
Avenue,
Saratoga Springs, N.Y., and David O'Neil (hereinafter "O'Neil") and
is effective
as of August 17, 2009 (which is referred to herein as the
"Effective Date"),
WHEREAS, subject
to the terms and considerations hereinafter set forth,
Espey and O'Neil wish to have a written agreement for the position
of Principal
Financial Officer which O'Neil presently holds;
NOW, THEREFORE, in
consideration of the foregoing premises and the
mutual promises, terms, provisions, and conditions set forth in
this Agreement,
the parties hereby agree:
1. Employment:
----------
a. Employment: O'Neil agrees to be employed by Espey at will
until the starting
date of this agreement and thereafter for the Term
of this Agreement
upon the terms and subject to the conditions set
forth herein.
O'Neil shall serve as the Principal Financial Officer of
Espey with
responsibilities and duties heretofore assumed by him as
well as
responsibilities and duties to be assigned to him in the future
by the Chief
Executive Officer (hereinafter "CEO"). During the Term of
this Agreement,
O'Neil shall report directly to the CEO and the Board
of Directors
(hereinafter the "Board").
b. Performance of Duties: Throughout the Term of this
Agreement, O'Neil
shall faithfully and diligently perform his duties in
conformity with
the directions of the CEO and Board of Directors and
will serve Espey
to the best of his ability.
c. O'Neil is also subject to the Confidentiality and
Restriction on
Competition Agreement that is attached hereto as exhibit
A.
2. Term: Subject
to the termination provisions as hereafter provided,
----
O'Neil's employment under this agreement shall commence on August
17, 2009 and
continue through August 31, 2012 (hereinafter the "Term").
3. Compensation
and Benefits: As full and complete compensation for all
-------------------------
services performed by O'Neil and subject to the performance of
O'Neil's
obligations in this Agreement:
a. O'Neil's salary will be the same as the salary he is
getting at the
start of the term of this agreement. This salary may be
increased from
time to time at the discretion of the Board of Directors
(hereinafter the
"Board")
<PAGE>
b.
O'Neil may receive bonuses during the term of this
agreement as
recommended by management and approved by the Board
c. O'Neil may be awarded options in any year of the term of
the agreement
solely in the discretion of the Board.
d. Other Benefits:
i. Employment Benefits: O'Neil shall be
entitled to participate in, to the extent O'Neil is
otherwise eligible under the terms thereof, the
employee benefit plans and programs of Espey, as may
be provided to Espey's employees from time to time,
and receive the benefits and perquisites generally
provided to Espey's administrators of the same level
and responsibility as O'Neil. Nothing in this
Agreement shall preclude Espey from terminating or
amending,
from time to time, any employee benefit
plan or program.
ii. Holidays, Vacation and Leave: O'Neil
shall be entitled at a minimum to the holidays,
vacation and leave presently being received by him.
e. Business Expenses: O'Neil shall be entitled to
reimbursement for
reasonable travel and business expenses duly incurred
by him in the
performance of his duties under this Agreement. Such
reimbursement
shall be in accordance with the policies and procedures
established by the
CEO from time to time.
f. Cessation of Employment by O'Neil: In the event O'Neil
desires to
terminate his employment with Espey, he may do so for any
reason upon giving
Espey thirty (30) days notice. Under such
circumstances, on
the date O'Neil ceases to be employed by Espey,
O'Neil's
compensation and Employment Benefits shall cease and Espey
shall have no
further obligation to O'Neil to make any further payments
of any kind except
for salary and benefits previously earned by O'Neil.
Espey will have no
obligation to pay O'Neil any bonuses or make any
further grants of
options after his last day of employment.
g. Cessation of Employment by Espey: During the term of this
agreement, Espey
may discharge O'Neil without cause should it decide to
do so. However
should Espey decide to terminate O'Neil without cause
during the term of
this agreement, on the date that O'Neil's employment
ceases and
thereafter for the period of six months, Espey shall be
obligated to pay
O'Neil at his then current salary, but in no event
lower than the
salary in effect on the date of the signing of this
agreement, and to
provide him the benefits he was receiving at the time
of discharge
including, but not limited to, health care benefits, with
the exception of
options and bonuses during this six month period.
Should Espey
discharge O'Neil without cause pursuant to this
subparagraph,
Espey shall be obligated to pay O'Neil any accrued, but
not paid, salary
and benefits. Notwithstanding any provisions of this
agreement, should
Espey discharge O'Neil under the provisions of this
subparagraph "g.",
Espey shall have no obligation to pay O'Neil
2
<PAGE>
any further
bonuses or award any further options to him or to make
payments other
than as set forth in this paragraph. During the
aforementioned six
month period referred to in subparagraph "g", if O'
Neil begins other
employment as a W-2 employee during this period, then
all payments and
benefits provided to O'Neil by Espey shall cease on
the date of the
start of such other employment.
h. Expiration of this Agreement: This agreement shall
terminate on
August 30, 2012 unless the parties decide to enter into
another such
agreement for which there is no obligation on the part of
either party.
4. No Other
Compensation or Benefits: O'Neil specifically agrees that,
---------------------------------
except for the compensation and benefits outlined in Sections 3 of
this
Agreement he is not entitled to any other compensation or benefits
from Espey
5. Termination of
Employment/Severance Benefits as a Result of Death or
--------------------------------------------------------------------
for Cause:
---------
a. Death. In the event that O'Neil's employment hereunder is
terminated during
the Agreement Term by reason of his death, Espey
shall pay to
O'Neil's designated beneficiary or, if no beneficiary has
been designated by
Espey, to his estate (all as the specific case may
be), any accrued
but unpaid Base Salary, as well as payment or
reimbursement of
business expenses accrued prior to termination of this
Agreement.
b. Cause. During the term of this agreement, O'Neil may be
terminated for
cause. For purposes of this Agreement, "Cause" is
defined as: (i)
any act established or recognized by law as a serious
criminal act; (ii)
any act of moral turpitude; (iii) other egregious
acts or a series
of egregious acts or conduct which would be considered
in the community
to be grossly inappropriate or unprofessional; (iv)
gross negligence
or gross misconduct in the conduct of O'Neil's duties;
(v) willful or
repeated failure or refusal to perform the duties of his
position as
Principal Financial Officer or such other duties as may be
delegated or
assigned to O'Neil by the CEO, and, that as to any conduct
concerning this
subsection 5(b)(v), such conduct is not corrected by
O'Neil within
fourteen (14) days following receipt by O'Neil of written
notice from the
CEO, conveyed in accordance with Section 10, such
notice to state
the willful or repeated failure or refusal to perform
the
dutie
