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EXECUTION COPY
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
AGREEMENT dated as of July 18, 2007,
between EDWARD J. FRED, residing at 58 West 6 th Street,
Deer Park, New York 11729 (“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 Executive Officer and President pursuant to
an Employment Agreement, dated February 7, 2005 (the “Prior
Agreement”); and
WHEREAS, the Company and Executive
desire to amend and restate the Prior 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 Executive Officer (“CEO”) and President.
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 CEO
and President.
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.
1.4 Board of Directors Position
. If, at any time during the Term,
Executive is not serving as a director of the Company, he shall
nonetheless be invited to attend each meeting of the Board of
Directors of the Company.
2. Term . The
term of Executive’s employment hereunder shall commence on
July 18, 2007 and shall continue until December 31, 2010
(“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
4.5 and 4.7(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) $283,150 from July 18,
2007 until December 31, 2007; (ii) $300,000 from January 1, 2008
until December 31, 2008; (iii) $318,000 from January 1, 2009 until
December 31, 2009; and (iv) $337,000 from January 1, 2010 until
December 31, 2010. 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, 2009 and 2010, 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.
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3.3 Benefits .
Executive shall be entitled to such medical, dental, life,
disability and other benefits as are generally afforded to other
executives of the Company, subject to applicable waiting periods
and other conditions.
3.4 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.
3.5 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.
3.6 Expenses .
The Company shall pay or reimburse Executive for all
transportation, hotel and other expenses reasonably incurred by
Executive on business trips (including business class air travel if
the scheduled flight is more than two (2) consecutive hours) 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.
3.7 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
4.7(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 4.7(a).
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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 CEO and President, 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 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 4.7(b).
4.4 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 4.7(c).
4.5 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)
Executive is not nominated or is removed from service as a director
of the Company; (c) material breach of this Agreement by the
Company; (d) a failure by the Company to make any payment to
Executive when due, unless the payment is not material and is
being
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contested by the Company, in good
faith; (e) any person or entity other than the Company and/or any
officers or directors of the Company as of the date of this
Agreement acquires securities of the Company (in one or more
transactions) having 50% or more of the total voting power of all
the Company’s securities then outstanding; or (f) 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), (c) or (d) 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), (c) or (d) above. Upon such termination, the
Company shall pay to Executive the amount set forth in Section
4.7(c).
4.6 By Executive Without Reason
. The Executive may terminate his
employment hereunder by giving at least 75 days written notice to
the Company. Upon such termination, the Company shall pay to
Executive the amount set forth in Section 4.7(a).
4.7 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 or by Executive
Without Reason . In the
event that Executive’s employment is terminated pursuant to
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