EMPLOYMENT AGREEMENT
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AGREEMENT made effectively as of this 5th day of December, 2006, by and
between AEROFLEX INCORPORATED, a Delaware corporation (hereinafter called the
"Company"), and XXXX X. XXXXX residing at 00 Xxxxxxxx Xxxxx, Xxx Xxxxx, Xxx Xxxx
00000 (hereinafter called the "Employee").
W I T N E S S E T H:
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WHEREAS, the Company desires to enter into an Employment Agreement with
Employee; and
WHEREAS, Employee desires to enter into an Employment Agreement with the
Company;
NOW, THEREFORE, it is agreed as follows:
1. PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes any employment
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agreements, oral or written, entered into between Employee and the Company or
any of its subsidiaries prior to the date of this Agreement.
2. RETENTION OF SERVICES. The Company hereby retains the services of
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Employee, and Employee agrees to furnish such services, upon the terms and
conditions hereinafter set forth.
3. TERM. Subject to earlier termination on the terms and conditions herein
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provided, the term of this Agreement shall be for a period commencing on
December 5, 2006, or such other date as may be mutually agreed to by the
parties, and ending on December 31, 2009.
4. DUTIES AND EXTENT OF SERVICES DURING PERIOD OF EMPLOYMENT. During the
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period of employment, Employee shall be employed as an Executive Vice President
of the Company and as the President of the Aeroflex Microelectronics Solutions
business unit of the Company. In his capacity as Executive Vice President,
Employee agrees that he shall serve the Company under the direction of the
Chairman of the Board and the President of the Company to the best of his
ability, shall perform all duties incident to his office on behalf of the
Company, and shall perform such other duties as may from time to time be
assigned to him by the Chairman of the Board and the President of the Company
and as otherwise prescribed by the Board of Directors of the Company (sometimes
referred to herein as "the Board"), including, but not limited to, serving as
the President of the Aeroflex Microelectronics Solutions business unit of the
Company under the direction of the Chairman of the Board and the President of
the Company. It is understood and agreed that the duties of the Employee during
the period of employment shall not be inconsistent with his respective positions
as an Executive Vice President and the President of the Aeroflex
Microelectronics Solutions business unit and as otherwise set forth above.
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5. REMUNERATION. During the period of employment, Employee shall be
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entitled to receive the following compensation for his services:
(a)(i) The Company shall pay to Employee a salary at the rate of
$350,000 per annum ("Base Salary"), payable in accordance with the customary
payroll practices of the Company;
(ii) During the term of employment, Employee's Base Salary shall be
increased (but not decreased) annually by an amount equal to the increase in the
cost of living for the immediately preceding twelve calendar months as reported
in the "Consumer Price Index, New York and Northeastern New Jersey, All Items"
published by the U.S. Department of Labor, Bureau of Labor Statistics (or if
such index is no longer published, a successor or comparable index which is
published) ("COLA"). Such amount shall be calculated and paid to Employee in a
single sum on or before the third month following the applicable twelve month
period, and thereafter his Base Salary shall be deemed to include the amount of
any such increase. The first calculation shall be made on or before the third
month of the second year of the employment term. If the Employee's employment
shall terminate during any such twelve month period, the COLA increase provided
in this Section 5(a)(ii) shall be prorated accordingly.
(b) For the Fiscal years 2006/2007/2008/2009, the Employee shall be
entitled to receive a bonus as and to the extent that the same may be authorized
and determined by, and in the sole discretion of, the Chairman of the Board, the
President of the Company and the Board of Directors.
6. EMPLOYEE BENEFIT - EXPENSES.
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(a) During the period of employment, Employee shall be eligible to
participate in the Company's stock option plans to the extent determined in the
sole discretion of the Board of Directors of the Company or a committee thereof.
(b) During the period of employment, Employee shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; he shall be provided with the perquisites customarily
associated with the position of an Executive Vice President of the Company and
President of Aeroflex Microelectronic Solutions, and he shall be entitled to
regular vacations during each calendar year of not less than three weeks in the
aggregate.
(c) It is contemplated that, during the period of employment, Employee
may be required to incur out-of-pocket expenses in connection with the
performance of his services hereunder, including expenses incurred for travel
and business entertainment. Accordingly, the Company shall pay, or reimburse
Employee, for all reasonable out-of-pocket expenses in accordance with the usual
procedures of the Company. Notwithstanding the foregoing, in recognition that
Employee will be required during the term of this Agreement to do a considerable
amount of local driving in connection with his services hereunder, the Company
shall provide Employee with a car allowance of $750.00 per month.
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(d) All benefits to Employee specifically provided for herein shall be
in addition to, and shall not diminish, (i) such other benefits and/or
compensation as may hereinafter be granted to or afforded to Employee by the
Board of Directors of the Company and (ii) any rights which Employee shall have
or shall acquire under any hospitalization, life insurance, pension,
profit-sharing, incentive compensation or other present or future employee
benefit plan or plans of the Company.
7. NON-COMPETITION AGREEMENT; CONFIDENTIALITY.
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(a) Employee agrees that during the term of this Agreement that he will
not, directly or indirectly:
(i) become associated with, render services to, invest in, represent,
advise or otherwise participate in as an officer, employee, director,
stockholder, partner, promoter, agent of, consultant for or otherwise, or have a
financial interest in any business which is then directly competitive to the
business of the Company or is then manufacturing any article or product or
performing any services which is the same as any articles or products
manufactured, or service performed by the Company. It is expressly understood
that this provision shall not preclude Employee from owning less than five (5%)
percent of any publicly traded corporation (as such term is hereinafter defined)
even though such company is engaged in a similar business of, or competes with,
the Company, so long as such involvement with the issuer of any such securities
is solely that of a passive investor. A publicly traded corporation shall be any
corporation with at least 250 shareholders and with more than one million shares
of stock issued and outstanding.
(ii) for his account or for the account of any other person or entity
interfere with the Company's relationship with any of its suppliers, customers,
representatives or agents; or
(iii) employ or otherwise engage, or solicit, entice or induce on
behalf of himself or any other person or entity, the services, retention or
employment of any person who has been an employee, sales representative,
consultant to or agent of the Company within one year of the date of such offer
or solicitation.
The parties hereto acknowledge that this covenant not to compete is
intended to conform with the laws of the State of New York. Any court of
competent jurisdiction is hereby authorized to expand or contract the
restrictions of this covenant not to compete in order to conform with the laws
of New York so that it shall bind the parties hereto.
(b) In the course of Employee's employment by the Company, Employee
will have access to an possession of valuable and important confidential or
proprietary data or information of the Company and its operations. Employee will
not during Employee's employment by the Company or at any time thereafter
divulge or communicate to any person nor shall Employee direct any Company
employee, representative or agent to divulge or communicate to any person or
entity (other than to a person or entity bound by confidentiality obligations
similar to those contained herein and other than as necessary in performing
Employee's duties hereunder) or use to the detriment of the Company or for the
benefit of any other person or entity, any of such
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confidential or proprietary data or information or make or remove any copies
thereof, whether or not market or otherwise identified as "confidential" or
"secret". Employee shall take all reasonable precautions in handling the
confidential or proprietary data or information within the Company to a strict
need-to-know basis and shall comply with any and all security systems and
measures adopted from time to time by the Company to protect the confidentiality
of confidential or proprietary data or information.
(c) The term "confidential or proprietary data or information" as used
in this Agreement shall mean information not generally available to the public,
including, without limitation, all database information, personnel information,
financial information, customer lists, supplier lists, trade secrets, patented
or proprietary information, forms, information regarding operations, systems,
services, know how, computer and any other processed or collated data, computer
programs, pricing, marketing and advertising data.
(d) All written materials, records and documents made by Employee or
coming into Employee's possession during Employee's employment by the Company
concerning any products, processes or equipment manufactured, used, developed,
investigated, purchased, sold or considered by the Company or otherwise
concerning the business or affairs of the Company shall be the sole property of
the Company, and upon termination of Employee's employment by the Company, or
upon request of the Company during Employee's employment by the Company,
Employee shall promptly deliver the same to the Company. In addition, upon
termination of Employee's employment by the Company, Employee will deliver to
the Company all other Company property in Employee's possession or under
Employee's control, including, but not limited to, financial statements,
marketing and sales data, customer and supplier lists, database information and
other documents, and any Company credit cards.
(e) The provisions of this Section 8 shall survive the termination of
this Employment Agreement.
(f) With respect to the covenants contained in Section 8 of this
Agreement, Employee agrees that any remedy at law for any breach or threatened
or attempted breach of such covenant may be inadequate and that the Company
shall be entitled to specific performance or any other mode of injunctive and/or
other equitable relief to enforce its rights hereunder or any other relief a
court might award without the necessity of showing any actual damage or
irreparable harm or the posting of any bond or furnishing of other security.
8. TERMINATION.
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(a) Death or Disability. The Employee's employment shall terminate
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automatically upon the Employee's death during the Employment Period. If a
Disability (as defined below) of the Employee has occurred during the Employment
Period, the Company may give to the Employee written notice of its intention to
terminate the Employee's employment. In such event, the Employee's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Employee (the "Disability Effective Date"); provided, that within
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the 30 days after such receipt, the Employee shall not have returned to
full-time performance of the Employee's duties. For purposes of this Agreement,
"Disability" shall mean
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the Employee's inability to perform his duties and obligations hereunder for a
period of 90 consecutive days due to mental or physical incapacity as determined
by a physician selected by the Company or its insurers.
(b) Cause. The Company may terminate the Employee's employment during
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the Employment Period with or without Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) Activities of Employee which result in injury to the Company and
its business reputation;
(ii) Infidelity or dishonesty of Employee in his dealings with or on
behalf of the Company;
(iii) The incurring of obligations by Employee on behalf of the Company
not in the ordinary course of business which have not been authorized
by the Company;
(iv) The disclosure to any competitor or potential competitor of any
trade secret or confidential business information of the Company;
(v) The failure or refusal of Employee to perform the Employee
functions required hereunder as may be required by the Chairman of the
Board, the President or the Board of Directors of the Company;
(vi) Conviction of a felony; and
(vii) the knowing failure of the Executive to perform or otherwise
comply with his obligations under the Company's Ethical Code of
Conduct, dated December 12, 2001, or such Ethical Code of Conduct as
may hereafter be in effect (provided that any changes thereto after the
date hereof are not inconsistent with the terms of this Agreement).
In the event that Employee is terminated other than for "Cause" as set
forth above, Employee's base salary shall be paid to him as provided hereunder
for the remainder of the term of this Agreement. If the Company terminates
Employee's employment hereunder for "Cause," Employee shall not be entitled to
receive any further compensation hereunder other than any salary which is
accrued and unpaid through the date of such termination plus all unreimbursed
expenses and any other accrued but unpaid compensation.
(c) Termination for Good Reason by the Employee. The Employee may
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terminate this Agreement for Good Reason and such termination shall constitute a
termination without Cause by the Company. "Good Reason" shall mean the
occurrence of a breach by the Company of any of its material obligations to the
Employee, which breach is not cured within ten (10) business days of the receipt
by the Company of written notice thereof from the Employee.
(d) Notice of Termination. Any termination (i) by the Company, whether
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for Cause or without Cause, or (ii) the Employee, whether or not for Good
Reason, shall be communicated by Notice of Termination (as defined below) to the
other party hereto given in accordance with
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Section 13. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon,(ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances, if any, claimed to provide a basis for
termination of the Employee's employment under the provision so indicated and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date. The failure by the
Employee or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Cause shall not waive any right
of the Employee or the Company hereunder or preclude the Employee or the Company
for asserting such fact or circumstance in enforcing the Employee's or the
Company's rights hereunder.
9. TRADE NAME. Employee acknowledges that the name "AEROFLEX" is the
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exclusive property for the Company, and Employee further agrees that he will
never use such names, or any variation thereof, and use his best efforts to
prevent any person or any family members to use such names, or authorize the use
of such names as or in the name of any corporation, partnership, firm or venture
which manufacturers any article, product, special process or service
manufactured or performed by the Company, or as in the name of any such articles
or product.
10, PATENTS AND TRADEMARKS. Employee will at all times promptly
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disclose to the Company in such form and manner as the Company may reasonably
require, any inventions, improvements or procedural or methodological
innovations, programs, methods, forms, systems, services, designs, marketing
ideas, products or processes (whether or not capable of being trademarked,
copyrighted or patented) conceived or developed or created by Employee during or
in connection with Employee's employment hereunder and which relate to the
business of the Company ("Intellectual Property"). Employee agrees that all such
Intellectual Property shall be "work-for-hire" and shall be the sole property of
the Company. To the extent any such Intellectual Property does not constitute a
"work-for-hire" under U.S. law, Employee hereby assigns to Company all right,
title and interest in such Intellectual Property. Employee further agrees that
Employee will execute such instruments and perform such acts as may reasonably
be requested by the Company to effectuate such assignment and otherwise to
transfer to and perfect in the Company all rights in such Intellectual Property.
11. CONTRACTS. Employee shall not, enter into any contract on behalf of
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the Company other than those in the ordinary course of business of the Company
unless approved in writing by the Board of Directors of the Company.
12. CHANGE OF CONTROL. No benefits shall be payable hereunder unless
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there shall have been a Change in Control, as set forth below, and the
Employee's employment by the Company shall thereafter have been terminated in
accordance with Section 8 hereof.
(a) Definition. For purposes of this Agreement, a "Change in
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Control" shall mean the occurrence of any of the following events
after the date of this Agreement:
(i) the acquisition, directly or indirectly, by a "person"
(within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended from time to time,
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including rules thereunder and successor provisions and rules
thereto (the "Exchange Act") (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of more than 35% of the combined voting power of the voting
securities of the Company entitled to vote generally in the
election of directors (the "Voting Securities"); provided,
however, that the following acquisitions shall not constitute a
Change in Control: (A) any acquisition by or from the Company or
any corporation or other entity in which the Company owns or
controls directly or indirectly at least 50 percent of the total
combined voting power represented by all classes of stock issued
by such corporation, or in the case of a noncorporate entity, at
least 50% of the profits or capital interest in such entity (a
"Subsidiary,") or by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary, (B) any
acquisition by an individual who as of the effective date of the
Plan is a member of the Board, (C) any acquisition by any
underwriter in any firm commitment underwriting of securities to
be issued by the Company, or (D) any acquisition by any
corporation (or other entity) if, immediately following such
acquisition, 65% or more of the then outstanding shares of common
stock (or other equity unit) of such corporation (or other
entity) and the combined voting power of the then outstanding
voting securities of such corporation (or other entity), are
beneficially owned, directly or indirectly, by all or
substantially all of the individuals or entities who, immediately
prior to such acquisition, were the beneficial owners of the then
outstanding Voting Securities in substantially the same
proportions, respectively, as their ownership immediately prior
to the acquisition of the stock and Voting Securities; or
(ii) the following individuals cease for any reason to
constitute a majority of the Board: individuals who, as of the
date of the this Agreement, constitute the Board and any new
director (other than a director whose initial assumption of
office is in connection with an actual or threatened election
contest, including, but not limited to, a consent solicitation
relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election
by the stockholders of the Company was approved and recommended
by a vote of at least two-thirds of the directors then still in
office who either were directors on the effective date of the
Plan or whose appointment, election or nomination for election
was previously so approved or recommended; or
(iii) the consummation of the sale or other disposition of
all or substantially all of the assets of the Company, other than
to an entity, at least 65% of the Voting Securities of which are
owned by Persons in substantially the same proportions as their
ownership of the Company immediately prior to such sale; or
(iv) the consummation of a merger, consolidation, statutory
share exchange or similar form of corporate transaction involving
the Company or any of its Subsidiaries that requires the approval
of the Company's stockholders, whether for such transaction or
the issuance of securities in the transaction (a "Business
Combination"), unless immediately following such Business
Combination: (A) more than 65% of the total voting power of (x)
the corporation resulting from such Business Combination (the
"Surviving Corporation"), or (y) if applicable, the ultimate
parent corporation that directly or indirectly has beneficial
ownership of 100% of the voting securities eligible to elect
directors of the Surviving Corporation (the "Parent
Corporation"), is represented by Voting Securities that were
outstanding immediately prior to such Business Combination (or,
if applicable, is represented by shares into which such
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Corporation Voting Securities were converted pursuant to such
Business Combination), and (B) such voting power among the
holders thereof is in substantially the same proportion as the
voting power of such Voting Securities among the holders thereof
immediately prior to the Business Combination; or
(v) the consummation of a plan of complete liquidation or
substantial dissolution of the Company, other than a liquidation
or substantial dissolution, which would result in the Voting
Securities of the entity after such liquidation or dissolution,
if any, continuing to represent (whether by remaining outstanding
or by being converted to voting securities of the surviving
entity) 65% or more of the Voting Securities or the voting power
of the voting securities of such surviving entity outstanding
immediately after such liquidation or dissolution, and such
voting power among the holders thereof is in substantially the
same proportion as the voting power of such Voting Securities
among the holders thereof immediately prior to the such
liquidation or dissolution; or
(vi) the sale, transfer, assignment, distribution or other
disposition by the Company and/or one of its Subsidiaries, in one
transaction, or in a series of related transactions within any
period of 18 consecutive calendar months (including, without
limitation, by means of the sale, transfer, assignment,
distribution or other disposition of the capital stock of any
Subsidiary or Subsidiaries), of assets which account for an
aggregate of 50% or more of the consolidated revenues of the
Company and the Subsidiaries of the Company, as applicable, as
determined in accordance with U.S. generally accepted accounting
principles, for the fiscal year most recently ended prior to the
date of such transaction (or, in the case of a series of
transactions as described above, the first such transaction);
provided, however, that no such transaction shall be taken into
account if substantially all the proceeds thereof (whether in
cash or in kind) are used after such transaction in the ongoing
conduct by the Company and/or its Subsidiaries) of the business
conducted by the Company and/or its Subsidiaries prior to such
transaction.
(b) Termination. If any of the events described in Section 12(a)
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hereof constituting a Change in Control of the Company shall have
occurred, the Employee, if terminated during the twenty four (24)
months following such Change in Control, shall be entitled to the
benefits provided in Section 12(c) hereof, unless such termination is
due to the Employee's death or Disability, is by the Company for
Cause, or is by the Employee for other than Good Reason. In the event
that, upon the occurrence of a Change in Control, the Employee is
eligible for retirement in accordance with the terms and conditions of
any applicable corporate retirement plan or program in effect
immediately preceding such Change in Control, the Employee's
eligibility for immediate retirement benefits, and any request
therefor, shall not preclude the Employee's receipt of severance
benefits under Section 12(c) hereof as a result of a termination by
the Company without Cause.
(c) Severance Benefits on Termination. If, after any Change in
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Control (as defined herein) shall have occurred, the Employee's
employment shall be terminated during the twenty-four (24) months
following the date of such Change in Control by the Company other than
for death, Disability or Cause, or by the Employee for Good Reason,
the Employee shall be entitled to certain severance benefits
(hereinafter "the Severance Benefits") as provided below:
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(i) The Company shall pay the Employee's full base salary
through the date of termination at the rate which is the higher
of the (then) current annual rate or the annual rate in effect
immediately prior to the date of any Change in Control. The
Company shall also pay the Employee the amount, if any, of any
unpaid earned annual bonus for the preceding fiscal year, as well
as a pro rata portion of the higher of (i) the earned annual
bonus for the preceding fiscal year or (ii) the target or
projected annual bonus for the fiscal year in which the
termination of employment occurs. In addition, the Company shall
continue in full force and effect through the date of termination
the Employee's participation in all stock ownership, stock
purchase or stock option plans, all health and welfare benefit
plans, and all insurance and disability plans as may be in effect
at the date of the Change in Control.
(ii) Subject to Sections 12(c)(iv) and 12(c)(v) hereof, the
Company shall pay as Severance Benefits to the Employee on or
before the fifth (5th) day following the date of termination of
employment, a lump sum payment ("the lump sum payment") equal to
two and fifty one hundredths (2.50) times the sum of (A) the
Employee's base salary at the rate which is the higher of the
(then) current annual rate or the annual rate in effect
immediately prior to the date of any Change in Control and (B)
the average of the annual bonuses received by the Employee for
each of the last three fiscal years of the Company. Such lump sum
payment shall be subject to all applicable Federal, state and
local income and FICA taxes including all required withholding
amounts.
(iii) For the continued benefit of the Employee and the
Employee's eligible dependents, the Company shall maintain in
full force and effect until the earlier of (A) December 31 of the
second calendar year following the calendar year of termination
or (B) the Employee's commencement of full-time employment with a
new employer, at the same cost as is paid by similarly-situated
continuing employees all medical and health plans and programs
for which the Employee was eligible immediately prior to the date
of termination, provided that the Employee's continued
participation is possible under the general terms and provisions
of such plans and programs, and subject further to such periodic
changes in such plans and programs as are generally applicable to
all participants in such plans and programs. The Employee will be
responsible for any income tax liability arising out of any
continued participation in such health and medical plans and
programs, and notwithstanding the provision of this Section
12(c)(iii), no additional employment service credits shall be
given for the period of such continued participation.
(iv) The Severance Benefits to be provided to the Employee
hereunder and all other payments or benefits which are "parachute
payments" (as defined in Section 280(G)(b)(2)(A) of the Internal
Revenue Code of 1986, as amended (the "Code") payable to the
Employee under other arrangements or agreements (the "Total
Payments") shall be adjusted as set forth in this Section
12(c)(iv). If the Total Payments as a result of any Change in
Control would (in the aggregate) result in an amount not being
deductible under Code Section 280G or an excise tax under Section
4999, the Total Payments shall be reduced to the extent necessary
so that the deductibility of the full amount of such reduced
Total Payments is not limited by Code Section 280G or such Total
Payment is not subject to an excise tax under Section 4999.
(v) Notwithstanding anything herein to the contrary, if any
payments due under this Agreement would subject Employee to any
tax imposed under Section 409A of
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the Code if such payments were made at the time otherwise
provided herein, then the payments that cause such taxation shall
be payable in a single lump sum on the first day which is at
least six months after the date of the Employee's "separation of
service" as set forth in Code Section 409A and the regulations
issued thereunder."
13. NOTICES. Any notice to be given to the Company hereunder shall be
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deemed sufficient if addressed to the Company in writing and delivered or mailed
by certified or registered mail to its offices c/o: Kramer, Coleman, Wactlar &
Xxxxxxxxx, P.C., or its successor at 000 Xxxxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxxx,
XX 00000, or such other address as to the Company may hereafter designate. Any
notice to be given to Employee hereunder shall be delivered or mailed by
certified mail or registered mail to him at the address set forth on Page 1
hereof, or such other address as he may hereafter designate.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
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inure to the benefit of the successors and assigns of the Company. Reference
herein to the Company shall be deemed to include any such successor. In
addition, this Agreement shall be binding and inure to the benefit of the
Employee and his heirs, executors, legal representatives and assigns; provided,
however, that the obligations of Employee hereunder may not be delegated without
the prior written approval of the Board of Directors of the Company.
15. AMENDMENTS. This Agreement may not be altered, modified, amended or
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terminated except by a written instrument signed by each of the parties hereto.
16. APPLICABLE LAW. This Agreement shall be governed by, construed, and
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enforced in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
AEROFLEX INCORPORATED
By: /s/Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx, President
/s/Xxxx Xxxxx
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Employee
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