EXECUTION COPY
AMENDED AND
RESTATED EMPLOYMENT AGREEMENT
AGREEMENT dated as of
December 1, 2006 between VINCENT PALAZZOLO, residing at 1595 James
Road, Wantagh, New York 11793
(‘‘Executive’’), and CPI AEROSTRUCTURES,
INC., a New York corporation having its principal office at 60
Heartland Blvd., Edgewood, New York 11717
(‘‘Company’’);
WHEREAS, Executive has
served as the Company’s Chief Financial Officer pursuant to
an Employment Agreement, dated February 7, 2005
(‘‘Prior Employment Agreement’’);
and
WHEREAS, the Company and
Executive desire to amend and restate the Prior Employment
Agreement (as so amended and restated, this
‘‘Agreement’’) to provide for continued
employment of Executive by the Company for the period and upon the
terms and conditions set forth herein;
IT IS AGREED:
1.
Employment, Duties and Acceptance .
1.1
General . The Company hereby agrees
to the continued employment of Executive as its Chief Financial
Officer (‘‘CFO’’). All of Executive’s
powers and authority in any capacity shall at all times be subject
to the direction and control of the Company’s Board of
Directors. The Board may assign to Executive such management and
supervisory responsibilities and executive duties for the Company
or any subsidiary of the Company, including serving as an executive
officer and/or director of any subsidiary, as are consistent with
Executive’s status as CFO. The Company and Executive
acknowledge that Executive’s primary functions and duties as
CFO shall be to manage and supervise the Company’s financial
operations.
1.2
Full-Time Position . Executive
accepts such employment and agrees to devote substantially all of
his business time, energies and attention to the performance of his
duties hereunder. Nothing herein shall be construed as preventing
Executive from making and supervising personal investments,
provided they will not interfere with the performance of
Executive’s duties hereunder or violate the provisions of
Section 5.4 hereof.
1.3
Location . The Company will maintain
its principal executive offices within a 30-mile radius of its
current location in Edgewood, New York. Executive shall undertake
such occasional travel, within or outside the United States, as is
reasonably necessary in the interests of the Company.
2.
Term . The term of Executive’s
employment hereunder shall commence on January 1, 2007 and shall
continue until December 31, 2009 (‘‘Term’’)
unless terminated earlier as hereinafter provided in this
Agreement, or unless extended by mutual written agreement of the
Company and Executive. Unless the Company and Executive have
otherwise agreed in writing, if Executive continues to work for the
Company after the expiration of the Term, his employment thereafter
shall be under the same terms and conditions provided for in this
Agreement, except that his employment will be on an
‘‘at will’’ basis and the provisions of
Sections 4.4 and 4.6(c) shall no longer be in effect.
3.
Compensation and Benefits .
3.1
Salary . The Company shall pay to
Executive a salary (‘‘Base Salary’’) at the
annual rate of (i) $200,000 from January 1, 2007 until December 31,
2007, (ii) $208,000 from January 1, 2008 until December 31, 2008
and (iii) $216,300 from January 1, 2009 to December 31, 2009.
Executive’s compensation shall be paid in equal, periodic
installments in accordance with the Company’s normal payroll
procedures.
3.2
Bonus . In addition to Base Salary,
for each of the years ending December 31, 2007, 2008 and 2009,
Executive shall be paid a bonus (‘‘Bonus’’)
to be calculated in the manner set forth on Schedule A
annexed hereto. The amount of the Bonus shall be pro-rated to the
date of termination of Executive’s employment. The Bonus with
respect to any year shall be paid on or prior to April 15 of the
following year.
3.3
Options .
(a) As
additional compensation for Executive entering into this Agreement
and agreeing to be bound by its terms (including Article 5 hereof)
and for the services to be rendered by Executive hereunder, the
Company hereby grants to Executive a ten-year option
(‘‘Option’’) to purchase 25,000 shares of
the Company’s common stock under the Company’s
Performance Equity Plan 2000
(‘Plan’’).
(b) The
Option shall be evidenced by a Stock Option Agreement in the form
attached hereto as Exhibit A . The Option shall be an
incentive option and shall have an exercise price equal to the
closing price of the Company’s common stock on the date of
grant. Except as otherwise provided in the Stock Option Agreement,
the Option will vest in three equal annual installments commencing
on the first anniversary of the date of grant of such Option and
shall expire on the date immediately preceding the tenth
anniversary of the date of grant of such option.
3.4
Benefits . Executive shall be
entitled to such medical, life, disability and other benefits as
are generally afforded to other executives of the Company, subject
to applicable waiting periods and other conditions.
3.5
Vacation . Executive shall be
entitled to such paid vacation days in each year during the Term
and to a reasonable number of other days off for religious and
personal reasons in accordance with customary Company
policy.
3.6
Automobile . During the Term, the
Company shall provide a luxury class automobile (reasonably
satisfactory to Executive) for Executive to be used in connection
with the business of the Company. The Company shall reimburse
Executive for all costs associated with the use of such automobile,
including lease and insurance costs, repairs and
maintenance.
3.7
Expenses . The Company shall pay or
reimburse Executive for all transportation, hotel and other
expenses reasonably incurred by Executive on business trips and for
all other ordinary and reasonable out-of-pocket expenses actually
incurred by him in the conduct of the business of the Company
against itemized vouchers submitted with respect to any such
expenses and approved in accordance with customary
procedures.
3.8 Club
Membership . During the Term, Executive
shall be entitled to a country club membership, as long as the
Company maintains a group membership at such club.
4.
Termination .
4.1
Death . If Executive dies during the
Term, Executive’s employment hereunder shall terminate and
the Company shall pay to Executive’s estate the amount set
forth in Section 4.6(a).
4.2
Disability . The Company, by written
notice to Executive, may terminate Executive’s employment
hereunder if Executive shall fail because of illness or incapacity
to render services of the character contemplated by this Agreement
for six consecutive months. Upon such termination, the Company
shall pay to Executive the amount set forth in Section
4.6(a).
4.3 By
Company for ‘‘Cause
’’. The Company, by written
notice to Executive, may terminate Executive’s employment
hereunder for ‘‘Cause’’. As used herein,
‘‘Cause’’ shall mean: (a) the refusal or
failure by Executive to carry out specific directions of the Board
which are of a material nature and consistent with his status as
CFO (or whichever positions Executive holds at such time), or the
refusal or failure by Executive to perform a material part of
Executive’s duties hereunder; (b) the commission by Executive
of a material breach of any of the provisions of this Agreement;
(c) fraud or dishonest action by Executive in his relations with
the Company or any of its subsidiaries or affiliates
(‘‘dishonest’’ for these purposes shall
mean Executive’s knowingly or recklessly making of a material
misstatement or omission for his personal benefit); or (d) the
conviction of Executive of a felony under federal or state law.
Notwithstanding the foregoing, no ‘‘Cause’’
for termination shall be deemed to exist with respect to
Executive’s acts described in clauses (a) or (b) above,
unless the Company shall have given written notice to Executive
specifying the ‘‘Cause’’ with reasonable
particularity and, within thirty calendar days after such notice,
Executive shall not have cured or
2
eliminated the problem
or thing giving rise to such ‘‘Cause;’’
provided, however, no more than two cure periods need be provided
during any twelve-month period. Upon such termination, the Company
shall pay to Executive the amount set forth in Section
4.6(b).
4.4 By
Executive for ‘‘Good Reason
’’. The Executive, by written
notice to the Company, may terminate Executive’s employment
hereunder if a ‘‘Good Reason’’ exists. For
purposes of this Agreement, ‘‘Good Reason’’
shall mean the occurrence of any of the following circumstances
without the Executive’s prior written consent: (a) a
substantial and material adverse change in the nature of
Executive’s title, duties or responsibilities with the
Company that represents a demotion from his title, duties or
responsibilities as in effect immediately prior to such change; (b)
material breach of this Agreement by the Company; (c) a failure by
the Company to make any payment to Executive when due, unless the
payment is not material and is being contested by the Company, in
good faith; or (d) a liquidation, bankruptcy or receivership of the
Company. Notwithstanding the foregoing, no ‘‘Good
Reason’’ shall be deemed to exist with respect to the
Company’s acts described in clauses (a), (b) or (c) above,
unless Executive shall have given written notice to the Company
specifying the ‘‘Good Reason’’ with
reasonable particularity and, within thirty calendar days after
such notice, the Company shall not have cured or eliminated the
problem or thing giving rise to such ‘‘Good
Reason’’; provided, however, that no more than two cure
periods shall be provided during any twelve-month period of a
breach of clauses (a), (b) or (c) above. Upon such termination, the
Company shall pay to Executive the amount set forth in Section
4.6(c).
4.5 By
Company Without ‘‘Cause
’’. The Company may terminate
Executive’s employment hereunder without
‘‘Cause’’ by giving at least 30 days
written notice to Executive. Upon such termination, the Company
shall pay to Executive the amount set forth in Section
4.6(c).
4.6
Compensation Upon Termination . In the event that
Executive’s employment hereunder is terminated, the Company
shall pay to Executive the following compensation:
(a)
Payment Upon Death or Disability . In
the event that Executive’s employment is terminated pursuant
to Sections 4.1 or 4.2, the Company shall no longer be under any
obligation to Executive or his legal representatives pursuant to
this Agreement except for: (i) the Base Salary due Executive
pursuant to Section 3.1 hereof through the d
