Cto Employment Agreement

EXHIBIT 10.7


EMPLOYMENT AGREEMENT


This Employment Agreement (the "Agreement") is entered into as of April 1, 2000 by and between Compass Aerospace Corporation, a Delaware corporation (the "Company") and Jerome C. David (the "Executive").


RECITALS


WHEREAS, Company wishes to employ the Executive and Executive wishes to accept employment subject to the terms and conditions of this Agreement.


NOW, THEREFORE, in consideration of the mutual agreements contained herein and other good and valuable consideration, the parties hereto agree as follows:


1. EMPLOYMENT.


Company hereby employs and engages the services of Executive in the position of Director of Operations Finance, for the Term of Employment set forth in Section 2. Executive agrees to serve the Company for the Term of Employment as provided herein.


2. TERM OF EMPLOYMENT.


Executive's "Term of Employment" shall be for a period of three (3) years commencing on the effective date hereof and ending three (3) years thereafter (the "Term" or "Term of Employment").


3. POSITION AND DUTIES.


During the Term of Employment:


(a) Executive shall perform services as Director of Operations Finance of the Company subject to the direction and control of the Executive Vice President and Chief Operating Officer of the Company (the "Chief Operating Officer"). Executive shall perform such services and duties to the best of his abilities, and shall perform such services and duties at such of the Company's facilities as may be requested by the Company. Executive shall also provide such services and duties to any of the Company's subsidiaries and affiliates as shall be directed from time to time by the Chief Operating Officer.


(b) Executive agrees to devote his full business time to the business and affairs of the Company, and to use his best efforts to promote the interests of Company and to perform faithfully and efficiently the responsibilities assigned to him in accordance with the terms of this Agreement to the extent necessary to satisfactorily discharge such responsibilities. Executive shall not, without the Chief Executive Officer's prior written consent, render to others services of any kind for compensation, or engage in any other business activity that would materially interfere with the performance of his responsibilities under this Agreement. It is expressly understood and agreed that it shall not be a violation of this Agreement for Executive


-1-


to serve on corporate, civic or charitable boards or committees, so long as such activities do not materially interfere with the performance of such responsibilities or reflect adversely on Company to any material extent.


4. RESULTS AND PROCEEDS.


As Executive's employer, Company shall, by virtue of such relationship, own all rights in and to the results and proceeds directly or indirectly connected with, or arising out of, Executive's services hereunder.


5. COMPENSATION AND BENEFITS.


5.1 BASE SALARY. During the Term, Company shall compensate Executive for the services to be rendered hereunder at an annual rate of One Hundred and Twenty-five Thousand Dollars ($125,000) (the "Base Salary"). Executive understands and agrees that Company has no obligation to increase his Base Salary. Such Base Salary shall be payable to Executive in equal bi-weekly installments or at such other intervals as salary is normally paid by Company to its executive employees (except during any unpaid vacation), subject to the usual or required employee payroll deductions and withholdings.


5.2 REIMBURSEMENT OF EXPENSES. During the Term of Employment, Executive shall be entitled to receive prompt reimbursement for all reasonable and necessary business expenses incurred by Executive in connection with his performance of services under this Agreement in accordance with Company's then prevailing policies and procedures (which requirements shall include appropriate itemization and substantiation of all such expenses incurred). Executive shall be personally liable for any violation of these terms.


5.3 VACATION. Executive shall be entitled to three (3) weeks paid vacation in accordance with the policy applicable to Company employees.


5.4 STOCK OPTIONS.


(a) On October 1, 2000, executive shall be granted a stock option under the Compass Aerospace Corporation 1998 Stock Incentive Plan (the "Stock Incentive Plan") to purchase 20,000 shares of common stock of the Company (the "Common Stock") with an exercise price equal to $1.47 per share. Such option will vest 25% per year on each of the four (4) anniversary dates of October 1, 2000 beginning on the first such anniversary date provided that, Executive is employed by the Company on each such date. To the maximum extent possible under the Internal Revenue Code of 1986, the stock options granted pursuant to this Section 5.4(a) shall be intended to qualify as "incentive stock options" within the meaning of Section 422 of the Code.


(b) Fair market value will be as agreed by the parties, or, if the parties cannot agree, it shall be the last price paid for Company's Common Stock in an arm's-length transaction, including by way of conversion of any of Company's other securities.


-2-


(c) Customary antidilution protection shall apply as relates to the number of shares subject to any stock option (e.g., in the event of stock splits) but excluding antidilution protection as relates to the percentage of Common Stock subject to such option (e.g., in the event of new stock issuances). Furthermore, there shall be immediate vesting of all options in the event that Executive dies or becomes disabled or is a change in control (which shall occur if any entity other than the shareholders as of the effective date hereof or their succeessors acquire 51% or more of the Common Stock or if Company sells all or substantially all of Company's assets).


5.5 EXECUTIVE'S REPRESENTATIONS REGARDING STOCK. Executive represents that he will retain and consult with his own professional advisors to review and evaluate the economic, tax and other consequences of the Stock Options. Executive further represents that any interest he may acquire will be acquired for investment purposes only and that he understands that there is no public market for any of the securities comprising the Stock Options and that the securities he will receive are subject to restrictions on both transferability and resale, and may not be transferred or resold except as permitted under the Securities Act of 1933, as amended, and the applicable state securities laws, pursuant to registration or exemption therefrom. The shares of stock issuable to Executive shall bear an appropriate legend setting out restrictions on transfer and the fact that the securities have not been registered.


5.6 WITHHOLDING ON STOCK OPTIONS. The Company shall deduct from all stock issued under the Stock Options any federal, state, or local taxes required by law to be withheld with respect to such payments. In the alternative, Executive may pay to the Company the amount of any such taxes which the Company is required to withhold with respect to the grant or delivery of stock.


5.7 RESTRICTIONS ON TRANSFER OF SHARES. Shares of Common Stock issued to Executive pursuant to the stock options will be transferable only in accordance with the terms of this Agreement and the Stockholders Agreement (in the form and substance set forth in Exhibit A attached hereto) and Section 21 of the Stock Incentive Plan. Notwithstanding anything to the contrary in Section 21 of the Stock Incentive Plan, however, the purchase price shall be fair market value as agreed by the parties or, if the parties cannot agree, it shall be the last price paid for Company's Common Stock in an arm's-length transaction, including by way of conversion of any of Company's other securities. As permitted under Section 21 of the Stock Incentive Plan, it is hereby provided that the restrictions on transfer of the shares issued to Executive shall lapse and cease to have effect upon any of the following: (1) the first date on which the Common Stock is held of record by more than 500 persons, (2) determination by the Board that a public market exist for the outstanding shares of Common Stock or (3) the consummation of an initial public offering.


5.8 BENEFITS. In addition to the other benefits provided herein, Executive shall be entitled to participate in such medical, dental, prescription drug, vision, health care spending account, 401(k) saving and retirement, short-term disability insurance, long-term disability insurance, or other employee welfare benefit plans as the Company may offer to and maintain for the benefit of its Corporate officers and as changed from time-to-time, subject to Executive's fulfilling all applicable eligibility requirements of each such plan. No statement concerning


-3-


benefits or compensation to which Executive is entitled alters in any way the Term of Employment or the termination of this Agreement.


5.9 TRANSITION AND MOVING EXPENSES. Company shall pay relocati ...