EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “
Agreement ”) is made and entered into as of
September 30, 2008 (the “ Effective Date
”) by and between Precision Aerospace Components, Inc., a
Delaware corporation (the “ the Company
”), and Andrew S. Prince (the “ Executive
”).
a.
Title; Office
. Executive has been
employed by and is serving as the President and Chief Executive
Officer of the Company. Executive’s office will be
located at the Company’s headquarters at 2200 Arthur Kill
Road, Staten Island, New York.
b.
Duties . Executive shall report to the
Company’s Board of Directors (the “ Board of
Directors ”) and shall perform such duties as the
Board of Directors may from time to time require, consistent with
the general level and type of duties and responsibilities
customarily associated with the position of Chief Executive
Officer. For as long as Executive is a member of the
Board of Directors, during the term of this Agreement, Executive
shall serve as a member of the Board of Directors without
additional consideration other than what is provided in this
Agreement.
c.
Other Obligations
. Executive agrees to
the best of Executive’s ability and experience that he will
at all times loyally and conscientiously perform all of the duties
and obligations required of Executive pursuant to the terms of this
Agreement, and will do so to the reasonable satisfaction of the
Board of Directors. During the term of Executive’s
employment, Executive may engage in other activities while he
manages the Company provided that such activities neither
unreasonably interfere with his management of and duties to the
Company nor adversely reflect on the Company’s
reputation. Executive shall notify the Board of
Directors if an outside activity would be expected to take more
than ten hours of normal work time during the month on a regular
basis.
The Company hereby agrees to employ Executive,
and Executive hereby agrees to be employed by the Company, subject
to the terms and conditions of this Agreement, for a term
commencing on the Effective Date and continuing until September 30,
2009 unless sooner replaced or terminated as provided in Section 5
below ( the “ Employment Term ”
) . This Agreement shall be deemed to be renewed
for additional one-year terms after its initial term (or any
subsequent renewal term), unless either party delivers written
notice of its intent not to renew this Agreement.
a.
Base Salary
. During the Employment
Term, Executive will be paid an annual salary of two hundred ten
thousand dollars and no cents
($210,000.00). Executive’s salary will be payable
in equal weekly installments pursuant to the Company’s
regular payroll practices (or in the same manner as other employees
of the Company), and shall be subject to the usual, required
withholding of income and employment
taxes. Executive’s annual salary of two hundred
ten thousand dollars and no cents ($210,000.00), together with any
changes thereto, shall be referred to in this Agreement as “
Base Salary .” Base Salary will be
subject to review by, and change at, the sole discretion of the
Board of Directors, acting or through a Compensation Committee of
the Board of Directors if it so chooses (the “
Compensation Committee ”).
b.
Incentive Bonus
. During the Employment
Term, Executive will be eligible for incentive bonuses based on the
achievement of specified financial or other performance objectives
as determined by the Compensation Committee each year (or such
other period as determined by the Compensation Committee) in its
sole discretion (the “ Incentive Bonus
”). The initial bonus elements shall be as
follows:
(i) Cash bonuses and/or other form of
consideration received bonuses not to exceed 50% of pretax income,
calculated without including expenses for non cash compensation,
are to be calculated and paid upon the achievement of the
following:
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1% of net sales
from Freundlich subsidiary greater than 10 Million dollars for the
12 month period ending on September 30, 2009 (the
“Anniversary Date”) payable at the time of filing of
the Company’s 10 Q for the third quarter 2009.
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2% of
net equity or 1% of
debt raised by the Company or its subsidiaries; this shall include
any such funding which refinances existing credit obligations of
the Company or its subsidiaries, but shall not include the
extension of existing obligations or lines of credit; payable at
the time of first funding from the financing. (Recognizing the
unique role Mr. Prince is presently playing within the
Company.)
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3% of net
pretax consolidated profits in excess of prior year pretax
consolidated profits for the 12 month period ending on the
Anniversary Date payable at the time of filing of the
Company’s 10 Q for the third quarter 2008.
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2% of any sale
price of a major asset of the Company payable in form of
consideration received for sale of asset – e.g. if either the
Freundlich operation or any other direct subsidiary or subsidiary
of a subsidiary or the Company as a whole is sold either in one or
more asset sales, stock sales or mergers.
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In any event
total cash bonus or form of consideration received not to exceed
50% of pretax income, calculated without including expenses for
non-cash compensation expenses.
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ii) Stock
Option or other equity plan that will be calculated valued and vest
pursuant to a plan to be developed within the first six months of
the Effective date of this Agreement Such
incentive award shall take into account the Executive's positions,
duties and responsibilities at the Company.
During the
Employment Term, Executive shall be eligible to participate in the
employee benefits plans currently and hereafter maintained from
time to time by the Company, in its sole discretion, including
family group health insurance and a 401(k) savings plan, provided
the Company in its sole discretion elects to adopt such
plans. In the event Executive does not avail himself of
such health insurance, he shall be paid the premiums which would
have been paid by the Company had he and his spouse participated in
the plan Executive shall be entitled to 20 days of vacation per
calendar year accrued at the rate of 1.67 days per month in
addition to Company paid holidays. Executive may, at his
election, carry over or be paid for all or any portion of his
unused vacation. Additionally, if Executive obtains a
disability insurance policy or a term life insurance policy on his
life, up to $500,000, each at a cost that is acceptable to the
Company, the Company shall reimburse the Executive for the
associated disability or life insurance premiums incurred by the
Executive during the Employment Term. The Company
reserves the right, at its discretion, to cancel or change the
employee benefit plans and programs it offers to its employees and
consequently to Executive at any time. Executive will be
given a copy of, and must abide by, the Company’s employee
handbook and employee benefit plan documents which will describe
more fully these and other benefits of Executive’s
employment, as well as the personal policies and procedures which
apply to employment with the Company.
Executive will be authorized to incur ordinary,
necessary and reasonable travel, entertainment and other business
expenses in connection with Executive’s duties and in
accordance with the Company policy. The Company shall
also reimburse Executive for reasonable out-of-pocket travel and
living expenses incurred by Executive to commute to and work from
the Company’s headquarters, up to a maximum amount of $3,000
per month. Executive shall receive reimbursement for
out-of-pocket continuing professional education fees and expenses
required to maintain Executive’s CLE requirements for the New
York Bar and for out-of-pocket Bar licensing
fees. Executive shall also be entitled to receive
reimbursement for attorney’s fees for services incurred for
review and advice regarding this Agreement, up to a maximum amount
of one thousand dollars ($1,000.00). All expenses
subject to reimbursement shall require Executive to present
appropriate supporting documentation and receipts in accordance
with the Company’s standard reimbursement policy.
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TERMINATION OF EMPLOYMENT
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This Agreement and the Executive’s
employment may be terminated as provided in this Section 5, subject
to the respective continuing obligations of the Company and the
Executive under Sections 5, 6, 7, 8, 9, 10 and 11
below. The date this Agreement and the Executive’s
employment with the Company are terminated in accordance with this
Section 5 is herein referred to as the “Termination
Date.”
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Termination by the
Company
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For
Cause : The Company may terminate the
Executive’s employment immediately for “Cause”
which means serious misconduct or cause, which will
include:
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The
Executive’s material breach of any of the Executive’s
duties under this Agreement, or the Executive’s failure or
refusal to satisfactorily perform his or her duties,
responsibilities, and obligations as an executive of the Company,
for reasons other than disability;
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Any dishonesty
or other breach of the duty of loyalty to the Company by the
Executive, which adversely affects the Company;
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Indictment of
the Executive of any crime related to or arising from the operation
of the Company’s business, or conviction of (or guilty plea
or plea of nolo contendere regarding) a felony;
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Indictment by
the Executive of any other intentional act which the Company
reasonably concludes would be likely to injure the reputation,
business or regulatory status of the Company;
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The existence
of any court order or settlement agreement prohibiting the
Executive’s continued employment with the Company;
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Any violation
of the Company’s policies, procedures, or standards with
respect to equal employment opportunity, prohibition of unlawful
discrimination or harassment;
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Abuse, misuse,
or misappropriation of the Company’s property or business
opportunities.
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Without
Cause : The Company may terminate the
Executive’s employment without Cause upon one hundred and
eighty (180) days written notice to the Executive.
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b.
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Resignation. The Executive may terminate his
employment at any time and for any reason upon one hundred and
eighty (180) days written notice to the
Company. Upon receiving such notice, the Company may, in
its sole discretion, opt not to have the Executive provide active
employment services during some or all of the notice period, and
place him on a paid leave of absence for some or all of the notice
period, or accelerate the effective date of the Executive’s
resignation. In either case, unless the Company waives
the notice period as described below, the Company will
prov
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