EXHIBIT 10.24
EXECUTION COPY
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AGREEMENT dated February 7, 2005 between XXXXXXX XXXXXXXXX, residing at
0000 Xxxxxxxx Xxxx., Xxxxxxx, Xxx Xxxx 00000 ("Executive"), and CPI
AEROSTRUCTURES, INC., a New York corporation having its principal office at 00
Xxxxxxxxx Xxxx., Xxxxxxxx, Xxx Xxxx 00000 ("Company");
WHEREAS, the Company and Executive entered into an agreement dated May 17,
2004 governing the terms and conditions of Executive's employment by the Company
for a term ending on December 31, 2006 (the "Prior Agreement"); and
WHEREAS, the Company and Executive have agreed to modify the Prior
Agreement in certain respects, including the salary and bonus provisions, and to
add other and additional terms governing the terms and conditions of Executive's
employment by the Company.
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1. Prior Agreements. The Prior Agreement is hereby terminated and is
hereby superseded in its entirety by the terms, conditions and agreements set
forth in this Agreement.
1.2. General. The Company shall continue to employ Executive from January
1, 2005 until December 31, 2006 as its Chief Financial Officer ("CFO") under the
terms hereof. 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.
1.3. 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.
1.4. 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 without the United States, as
is reasonably necessary in the interests of the Company.
2. Compensation and Benefits.
2.1. Salary. The Company shall pay to Executive a salary ("Base Salary") at
the annual rate of $175,000 from January 1, 2005 until July 31, 2005 and at the
annual rate of $183,750 from August 1, 2005 until December 31, 2006. Executive's
compensation shall be paid in equal, periodic installments in accordance with
the Company's normal payroll procedures.
2.2. Bonus. In addition to Base Salary, Executive shall be paid a bonus
("Bonus") equal to 1% of the Company's consolidated net income for the year
ended December 31, 2004 (pro-rated to account for Executive's May 17 start
date), as determined by reference to the Company's audited financial statements
for such year. Consolidated net income shall not give effect to any
extraordinary items of gain or loss. For the years ending December 31, 2005 and
2006, Executive shall be paid a 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.
2.3. 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.
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2.4. Vacation. Executive shall be entitled to such paid vacation days in
each year during the Employment Term and to a reasonable number of other days
off for religious and personal reasons in accordance with customary Company
policy.
2.5. Automobile.
(a) The Company shall reimburse Executive for all reasonable costs
associated with the use of an automobile, including lease and insurance costs,
repairs and maintenance, upon the presentation of appropriate receipts or other
evidence of such expenditures, not to exceed $3,000 per annum until August 15,
2005 (pro rated for partial years).
(b) Commencing August 16, 2005, the Company shall lease a luxury class
automobile (reasonably satisfactory to Executive) for Executive during the
remainder of the term of this Agreement to be used in connection with the
business of the Company. The Company shall reimburse Executive for all costs
associated with the use of this luxury automobile, including lease and insurance
costs, repairs and maintenance.
2.6. 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.
2.7. Club Membership. During the term of this Agreement, Executive shall be
entitled to a country club membership, as long as the Company maintains a group
membership at such club.
3. Term. The term of Executive's employment hereunder shall commence as of
January 1, 2005 and shall continue until December 31, 2006 (as it may be
extended, the "Employment Term"), unless sooner terminated as herein provided.
The Employment Term shall be automatically renewed for successive one-year
periods unless terminated by the Company or Executive by written notice to the
other party at least thirty (30) days before the end of the Employment Term or
any renewal thereof.
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4. Termination.
4.1. Death. If Executive dies during the term of this Agreement,
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, for six consecutive months, services of the character
contemplated by this Agreement. 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 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 Company Without "Cause". The Company may terminate Executive's
employment hereunder without "Cause" by giving at least 30 days written notice
to Executive.
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Upon such termination, the Company shall pay to Executive the amount set forth
in Section 4.6(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) 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).
4.6. 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 pay
to Executive (or his executor, administrator or personal representative), (i)
the Base Salary due Executive pursuant to Section 2.1 hereof through the date of
termination; (ii) any Bonus which would have become payable under Section 2.2
for the year in which the employment was terminated prorated by multiplying the
full amount of the Bonus by a fraction, the numerator of which is the number of
"full calendar months" worked by Executive during the year of termination and
the denominator of which is 12 (a "full calendar month" is a month in which the
Executive worked
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at least two weeks); (iii) all earned and previously approved but unpaid Bonuses
for any year prior to the year of termination; (iv) all valid expense
reimbursements, and (v) all accrued but unused vacation pay.
(b) Payment Upon Termination by the Company For "Cause". In the event
that the Company terminates Executive's employment hereunder pursuant to Section
4.3, the Company shall pay to Executive his Base Salary, all valid expense
reimbursements and all unused vacation pay required by law through the date of
termination.
(c) Payment Upon Termination by Company Without Cause or Executive for
Good Reason. In the event that Executive's employment is terminated pursuant to
Sections 4.4 or 4.5, the Company shall continue to pay to Executive (or in the
case of his death, the legal representative of Executive's estate or such other
person or persons as Executive shall have designated by written notice to the
Company), all payments, compensation and benefits required under Section 2
hereof through December 31, 2006. Notwithstanding the foregoing, if any person
or entity other than the Company and/or any officer or director of the Company
as of the date of this Agreement and/or their respective affiliates acquires
securities of the Company (in one or more transactions) having 50% or more of
the total voting power of all of the Company's securities then outstanding
("Change In Control"), prior to December 31, 2006 and thereafter Executive's
employment is terminated pursuant to Sections 4.4 or 4.5, then at the election
of Executive, in lieu of the above compensation and benefits, the Company shall
pay to Executive a lump sum payment of $50,000 within ten days of such election.
(d) Payment Upon Termination by Executive Upon Change in Control. If
at any time prior to December 31, 2006, a Change In Control of the Company (as
described in Section 4.6(c)) occurs, then within ten days of the consummation of
the Change In Control, Executive shall have the right to terminate his
employment by written notice to the Company. In such event, the Company shall
pay to Executive the lesser of (i) $50,000 in a lump sum within ten days after
receipt of notice of termination from Executive or (ii) the Base Salary due
Executive pursuant to Section 2.1 hereof through December 31, 2006.
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(e) Executive shall have no duty to mitigate awards paid or payable to
him pursuant to this Agreement, and any compensation paid or payable to
Executive from sources other than the Company will not offset or terminate the
Company's obligation to pay to Executive the full amounts pursuant to this
Agreement.
5. Protection of Confidential Information; Non-Competition.
5.1. Acknowledgment. Executive acknowledges that:
(a) As a result of his current and prior employment with the Company,
Executive has obtained and will obtain secret and confidential information
concerning the business of the Company and its subsidiaries (referred to
collectively in this Section 5 as the "Company"), including, without limitation,
financial information, proprietary rights, trade secrets and "know-how,"
customers and sources ("Confidential Information").
(b) The Company will suffer substantial damage which will be difficult
to compute if, during the period of his employment with the Company or
thereafter, Executive should enter a business competitive with the Company or
divulge Confidential Information.
(c) The provisions of this Agreement are reasonable and necessary for
the protection of the business of the Company.
5.2. Confidentiality. Executive agrees that he will not at any time, during
the Employment Term or thereafter, divulge to any person or entity any
Confidential Information obtained or learned by him as a result of his
employment with the Company, except (i) in the course of performing his duties
hereunder, (ii) with the Company's prior written consent; (iii) to the extent
that any such information is in the public domain other than as a result of
Executive's breach of any of his obligations hereunder; or (iv) where required
to be disclosed by court order, subpoena or other government process. If
Executive shall be required to make disclosure pursuant to the provisions of
clause (iv) of the preceding sentence, Executive promptly, but in no event more
than 48 hours after learning of such subpoena, court order, or other government
process, shall notify, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend
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against the enforcement of such subpoena, court order or other government
process, and (b) permit the Company to intervene and participate with counsel of
its choice in any proceeding relating to the enforcement thereof.
5.3. Documents. Upon termination of his employment with the Company,
Executive will promptly deliver to the Company all memoranda, notes, records,
reports, manuals, drawings, blueprints and other documents (and all copies
thereof) relating to the business of the Company and all property associated
therewith, which he may then possess or have under his control; provided,
however, that Executive shall be entitled to retain copies of such documents
reasonably necessary to document his financial relationship with the Company.
5.4. Non-competition. During the Employment Term and for a period of two
years thereafter, Executive, without the prior written permission of the
Company, shall not, anywhere in the world, (i) be employed by, or render any
services to, any person, firm or corporation engaged in any business
("Competitive Business") which is directly in competition with any "material"
business conducted by the Company or any of its subsidiaries at the time of
termination (as used herein "material" means the business generated at least 10%
of the Company's consolidated revenues for the last full fiscal year for which
audited financial statements are available); (ii) engage in any Competitive
Business for his or its own account; (iii) be associated with or interested in
any Competitive Business as an individual, partner, shareholder, creditor,
director, officer, principal, agent, employee, trustee, consultant, advisor or
in any other relationship or capacity; (iv) employ or retain, or have or cause
any other person or entity to employ or retain, any person who was employed or
retained by the Company while Executive was employed by the Company (other than
Executive's personal secretary and assistant); or (v) solicit, interfere with,
or endeavor to entice away from the Company, for the benefit of a Competitive
Business, any of its customers or other persons with whom the Company has a
contractual relationship. Notwithstanding the foregoing, nothing in this
Agreement shall preclude Executive from investing his personal assets in any
manner he chooses, provided, however, that Executive may not, during the period
referred to in this Section 5.4, own more than 4.9% of the equity securities of
any Competitive Business.
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5.5. Injunctive Relief. If Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5.2 or 5.4, the Company
shall have the right and remedy to seek to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by Executive that the services being rendered hereunder
to the Company are of a special, unique and extraordinary character and that any
such breach or threatened breach will cause irreparable injury to the Company
and that money damages will not provide an adequate remedy to the Company. The
rights and remedies enumerated in this Section 5.5 shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company under law
or equity. In connection with any legal action or proceeding arising out of or
relating to this Agreement, the prevailing party in such action or proceeding
shall be entitled to be reimbursed by the other party for the reasonable
attorneys' fees and costs incurred by the prevailing party.
5.6. Modification. If any provision of Sections 5.2 or 5.4 is held to be
unenforceable because of the scope, duration or area of its applicability, the
tribunal making such determination shall have the power to modify such scope,
duration, or area, or all of them, and such provision or provisions shall then
be applicable in such modified form.
5.7. Survival. The provisions of this Section 5 shall survive the
termination of this Agreement for any reason, except in the event Executive is
terminated by the Company without "Cause, " or if Executive terminates this
Agreement with "Good Reason," in either of which events, Section 5.4 shall be
null and void and of no further force or effect.
6. Miscellaneous Provisions.
6.1. Notices. All notices provided for in this Agreement shall be in
writing, and shall be deemed to have been duly given when (i) delivered
personally to the party to receive the same, or (ii) when mailed first class
postage prepaid, by certified mail, return receipt requested, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given as of the date of personal delivery or mailing
thereof.
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If to Executive:
Xxxxxxx Xxxxxxxxx
0000 Xxxxxxxx Xxxx.
Xxxxxxx, Xxx Xxxx 00000
If to the Company:
CPI Aerostructures, Inc.
00 Xxxxxxxxx Xxxx.
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxx
With a copy in either case to:
Xxxxxxxx Xxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxx Xxxxxx, Esq.
6.2. Entire Agreement; Waiver. This Agreement sets forth the entire
agreement of the parties relating to the employment of Executive and is intended
to supersede all prior negotiations, understandings and agreements. No
provisions of this Agreement may be waived or changed except by a writing by the
party against whom such waiver or change is sought to be enforced. The failure
of any party to require performance of any provision hereof or thereof shall in
no manner affect the right at a later time to enforce such provision.
6.3. Governing Law. All questions with respect to the construction of this
Agreement, and the rights and obligations of the parties hereunder, shall be
determined in accordance with the law of the State of New York applicable to
agreements made and to be performed entirely in New York.
6.4. Binding Effect; Nonassignability. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the Company. This
Agreement shall not be assignable by Executive, but shall inure to the benefit
of and be binding upon Executive's heirs and legal representatives.
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6.5. Severability. Should any provision of this Agreement become legally
unenforceable, no other provision of this Agreement shall be affected, and this
Agreement shall continue as if the Agreement had been executed absent the
unenforceable provision.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
CPI AEROSTRUCTURES, INC.
/s/ Xxxxxx X. Xxxx
-----------------------------------
By: Xxxxxx X. Xxxx
Chief Executive Officer
/s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
XXXXXXX XXXXXXXXX
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SCHEDULE A
BONUS: Based on our common understanding of the significance of your
participation in the budgeting process of the Company, your bonus shall be based
on specific revenue and earnings before interest, taxes, depreciation and
amortization ("EBITDA") goals, which shall allow you to earn a target annual
bonus equal to forty-five percent (45%) of your annual base salary if a 10%
annual increase is achieved. The Company's auditors will determine EBITDA after
taking into account all necessary provisions and the accrual of all bonuses,
including your own bonus, and excluding all extraordinary items. Twenty-five
percent (25%) of the bonus amount will be determined by revenues (the "revenue
bonus") and seventy-five percent (75%) by EBITDA (the "EBITDA bonus").
EBITDA BONUS
1. At 100% of EBITDA target (i.e., 10% growth), your EBITDA bonus will equal
100% of 75% of 45% of base salary.
2. Should EBITDA fall short or exceed EBITDA target, your EBITDA bonus will
decrease or increase based on the grid, below. For example, if there is a 50%
increase in EBITDA, the EBITDA bonus would equal 150% of 75% of 45% of base
salary; and if there is a 10% decrease in EBITDA, the EBITDA bonus would equal
25% of 75% of 45% of base salary.
3. If the decrease in EBITDA is 15% or more, no EBITDA bonus will be paid.
REVENUE BONUS
1. At 100% of revenue target (i.e., 10% growth), your revenue bonus will equal
100% of 25% of 45% of base salary.
2. Should revenue fall short or exceed revenue target, your revenue bonus will
decrease or increase based on the grid, below. For example, if there is a 50%
increase in revenue, the revenue bonus would equal 150% of 25% of 45% of base
salary; and if there is a10% decrease in revenue, the revenue bonus would equal
25% of 25% of 45% of base salary.
3. If the decrease in revenue is 15% or more, no revenue bonus will be paid.
GENERAL
1. Both bonuses will be adjusted pro rata if EBITDA and/or revenues fall in
between two grid percentages.
2. The first $75,000 of bonus would be paid in cash. The balance would be paid
half in cash and half in shares of the Company's common stock, valued at the
VWAP for the five trading days ending two days before issuance. They will be
issued under the Company's Performance Equity Plan 2000.
3. The Company and executive to mutually agree on how to handle all
acquisitions.
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GRID
Growth Bonus
------ -----
Decrease greater than 15% No bonus
Decrease 10% 75% Decrease
Decrease 5% 50% Decrease
Flat 25% Decrease
Increase 5% 10% Decrease
Increase 10% Baseline bonus
Increase 15% 5% Increase
Increase 25% 10% Increase
Increase 50% 50% Increase
Increase 100% or greater 75% Increase
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