Exhibit 10.2
AMENDMENT NO. 6 TO EMPLOYMENT AGREEMENT
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AMENDMENT NO. 6 TO THE EMPLOYMENT AGREEMENT (this "Amendment") made as of
the 21st day of November, 2006 by and between AEROFLEX INCORPORATED, a Delaware
corporation (hereinafter the "Company") and XXXXXX X. XXXX (hereinafter the
"Executive").
WITNESSETH:
WHEREAS, the Company and Executive entered into an Employment Agreement
dated March 1, 1999, as amended subsequently by Amendment Agreements dated
September 1, 1999 and August 13, 2001, November 8, 2001, May 13, 2004 and August
17, 2005 (hereinafter the "Employment Agreement"); and
WHEREAS, the Company and Executive desire to further modify the said
Employment Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Section 1(l) shall be amended and restated in its entirety to read as
follows, effective as of the date hereof:
"(l) `Retirement' shall mean the voluntary termination of Blau's
employment by Blau with eligibility to receive a benefit under
the terms of Aeroflex's Supplemental Executive Retirement Plan as
then in effect, other than a termination due to Disability or
death, or for Good Reason."
2. A new sentence shall be added at the end of Section 9(b), which shall
read in its entirety as follows, effective as of the date hereof:
"Notwithstanding the foregoing, if, in the mutual good faith
determination and agreement of Blau and Aeroflex, such
lifetime benefits may not be provided without subjecting Blau
to any tax, interest or penalty imposed under Section
409A(a)(1)(B) of the Code (or any regulation or any guidance
promulgated thereunder or with respect to), then on the second
anniversary of the later of (a) a termination of employment or
(b) a termination of the Consultancy Period, in lieu of such
lifetime benefits, Blau shall receive a lump sum payment equal
to the discounted net present value (as of the date of such
payment in good faith and agreed to by Blau and Aeroflex) of
such lifetime benefits Blau and his Spouse would otherwise
have been entitled to receive under this Section. The interest
rate used to determine the present value of any such payment
shall be the mid-term Applicable Federal Rate
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compounded semi-annually for the month in which such payment
occurs.
Notwithstanding any other provisions of the Agreement to the
contrary, if Blau has received a lump sum payment of his and
his Spouse's lifetime retiree medical benefits under either
Section 10(g)(ii)(C) or Section 10(h)(iii), Aeroflex shall no
longer be responsible for the provision of such benefits under
this Section 9(b)."
3. Section10(g)(ii)(B) shall be amended and restated in its entirety to
read as follows, effective as of the date hereof:
"(B) annual bonuses for the remainder of the Employment Term
(including, without limitation, a prorated bonus for any
partial Fiscal Year) equal to the average of the three highest
annual bonuses awarded to Blau during the ten Fiscal Years (or
portions thereof) preceding the termination of Blau's
employment as an employee (including, without limitation, any
bonus awarded to Blau in the year of termination, which is
unpaid as of the date of termination), such bonuses to be paid
at the same time annual bonuses are regularly paid by Aeroflex
to Blau;"
4. Section 10(g)(ii)(C) shall be amended and restated in its entirety to
read as follows, effective as of the date hereof:
"(C) continued medical reimbursement, as described in Section
9(b) above for the lesser of: (a) two years after any
termination of employment or (b) the remainder of the
Employment Term; provided however, that if, in the mutual good
faith determination and agreement of Blau and Aeroflex, such
medical reimbursement may be provided without subjecting Blau
to any tax, interest or penalty imposed under Section
409A(a)(1)(B) of the Code (or any regulation or any guidance
promulgated thereunder or with respect to), then the period of
medical reimbursement shall continue for the remainder of the
Employment Term, without regard to the two year period
referred to above. Upon the expiration of the relevant period
referred to above, Blau shall receive the lifetime medical
benefits in accordance with Section 9(b) above;"
5. Section 10(g)(ii)(E) shall be amended and restated in its entirety to
read as follows, effective as of the date hereof:
"(E) continued participation in all employee benefit plans or
programs available to Aeroflex employees generally in which
Blau was participating on the date of termination of his
employment
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until the end of the Employment Term; provided; however,
that (x) if Blau is either precluded from continuing
his participation in any employee benefit plan or program as
provided in this clause (E) or if Blau's continued
participation would subject Blau to any tax, interest or
penalty imposed under Section 409A(a)(1)(B) of the Code (or
any regulation or any guidance promulgated thereunder or with
respect to), then Blau shall be entitled to the after-tax
economic equivalent of the benefit foregone under the plan or
program in which he is unable to participate until the end of
the Employment Term (which shall be paid in one lump sum as
soon as administratively feasible after his termination of
participation), and (y) the "economic equivalent of the
benefit foregone" shall be deemed to be the lowest cost that
Blau would incur in obtaining such benefit on an individual
basis; further provided that if such benefit cannot be
obtained at any cost, Blau shall be entitled to a lump sum
payment equal to the aggregate benefit payments he would
reasonably be expected to receive through the end of the
Employment Term, and the valuation of such lump sum benefit
payment amount shall be equal to the discounted net present
value of such foregone benefits as determined in good faith by
Blau and Aeroflex. The interest rate used to determine the
present value of any such payment shall be the mid-term
Applicable Federal Rate compounded semi-annually for the month
in which such payment occurs; and"
6. Section 10(g)(ii)(F) shall be amended and restated in its entirety to
read as follows, effective as of the date hereof:
"(F) other benefits in accordance with applicable plans and
programs of the Aeroflex; provided however, that if such other
benefits would subject Blau to any tax, interest or penalty
imposed under Section 409A(a)(1)(B) of the Code (or any
regulation or any guidance promulgated thereunder or with
respect to), then Blau shall receive a lump sum payment, which
shall be valued in accordance with the principles set forth in
Section 10(g)(ii)(E) above."
7. Section 10(h) shall be amended and restated in its entirety to read as
follows, effective as of the date hereof:
"(h) Change in Control. Notwithstanding anything to the
contrary in this Section 10, upon a termination of Blau's
employment within the one-year period following a change in
Control for any reason other than Cause, Retirement, death or
disability, Blau shall be entitled to:
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(i) a lump sum payment equal to the net present value of his
Salary for the remainder of the Employment Term at the Salary
amount in effect immediately before such termination (or, if
greater, at the Salary in effect immediately before the Change in
Control). The interest rate used to determine the present value
of these payments shall be the mid-term Applicable Federal Rate
compounded semi-annually for the month in which the termination
occurs;
(ii) a lump sum payment equal to the net present value of all
of the annual bonuses otherwise payable under Section
10(g)(ii)(B) for the remainder of the Employment Term
(including, without limitation, a prorated bonus for any
partial Fiscal Year) with each such bonus equal to the average
of the three highest annual bonuses awarded to Blau during the
ten Fiscal Years (or portions thereof) preceding such
termination (including, without limitation, any bonus awarded
to Blau in the year of his termination, which is unpaid as of
the date of the Change in Control). The interest rate used to
determine the present value of these payments shall be the
mid-term Applicable Federal Rate compounded semi-annually for
the month in which the termination occurs and such bonuses
shall be discounted to present value from the time such annual
bonuses would otherwise normally be paid by Aeroflex to Blau;
(iii) continued medical reimbursement, as described in Section
9(b) above for the lesser of: (a) two years after the later to
occur of a termination of employment or, if applicable, a
termination of the Consulting Period following a Change in
Control or (b) the remainder of the Employment Term; provided
however, that if, in the mutual good faith determination and
agreement of Blau and Aeroflex, such medical reimbursement may
be provided without subjecting Blau to any tax, interest or
penalty imposed under Section 409A(a)(1)(B) of the Code (or
any regulation or any guidance promulgated thereunder or with
respect to), then the period of medical reimbursement shall
continue for the remainder of the Employment Term, without
regard to the two year period referred to above. Upon the
expiration of the relevant period referred to above, Blau
shall receive the lifetime medical benefits in accordance with
Section 9(b) above;
(iv) a lump-sum payment equal to the then present value of the
excess, if any, of (x) the retirement benefit to which Blau
would have been entitled if he had remained employed under
this Agreement until age 70 over (y) the early retirement
benefit actually payable to him, both as calculated and
payable under the
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SERP, provided such amount is not otherwise paid to Blau
under the terms of the SERP; and
(v) continued participation in all employee benefit plans or
programs available to Aeroflex employees generally in which
Blau was participating on the date of any termination of his
employment until the end of the Employment Term; provided;
however, that (x) if Blau is either precluded from continuing
his participation in any employee benefit plan or program as
provided in this clause or if Blau's continued participation
would subject Blau to any tax, interest or penalty imposed
under Section 409A(a)(1)(B) of the Code (or any regulation or
any guidance promulgated thereunder or with respect to), then
Blau shall be entitled to the after-tax economic equivalent of
the benefit foregone under the plan or program in which he is
unable to participate until the end of the Employment Term
(which shall be paid in one lump sum as soon as
administratively feasible after his termination of
participation), and (y) the "economic equivalent of the
benefit foregone" shall be deemed to be the lowest cost that
Blau would incur in obtaining such benefit on an individual
basis; further provided that if such benefit cannot be
obtained at any cost, Blau shall be entitled to a lump sum
payment equal to the aggregate benefit payments he would
reasonably be expected to receive through the end of the
Employment Term, and the valuation of such lump sum benefit
payment amount shall be equal to the discounted net present
value of such foregone benefits as determined in good faith by
Blau and Aeroflex. The interest rate used to determine the
present value of any such payment shall be the mid-term
Applicable Federal Rate compounded semi-annually for the month
in which such payment occurs; and
(vi) other benefits in accordance with applicable plans and
programs of the Aeroflex; provided however, that if such other
benefits would subject Blau to any tax, interest or penalty
imposed under Section 409A(a)(1)(B) of the Code (or any
regulation or any guidance promulgated thereunder or with
respect to), then Blau shall receive a lump sum payment, which
shall be valued in accordance with the principles set forth in
Section 10(h)(v) above.
Notwithstanding the foregoing, if Blau is terminated following
a Change in Control prior to January 1, 2007, the lump sum
payments provided under Sections 10(h)(i), 10(h)(ii) and
10(h)(iv) of this Agreement shall be made on January 2, 2007,
provided however, that if Blau's employment is terminated
prior to January 2, 2007, Blau shall be entitled to the
benefits in accordance with the provisions of Sections
10(g)(ii)(A), 10(g)(ii)(B) and
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10(g)(ii)(D) until January 2, 2007 and the payments under
Sections 10(h)(i), 10(h)(ii) and 10(h)(iv) shall then be made on
January 2, 2007 (less the present value of any payments actually
made to Blau under this sentence prior to January 2, 2007).
Payments under this Section 10(h) shall be in full
satisfaction of any payments or benefits Blau would otherwise
be entitled to under Section 10(g)."
8. Section 10(i) shall be added, which shall read in its entirety as
follows, effective as of the date hereof
"10(i) Notwithstanding the foregoing, if (a) Blau or his
estate is to receive payments or benefits under Section 10 for
any reason other than due to Blau's death, and (b) Blau is a
"specified employee" within the meaning of Code Section 409A
for the period in which the payment or benefits would
otherwise commence, and (c) such payment or benefit would
otherwise subject Blau to any tax, interest or penalty imposed
under Section 409A(a)(1)(B) of the Code (or any regulation or
any guidance promulgated thereunder or with respect to) if the
payment or benefit would commence within six months of a
termination of Blau's employment, then such payment or benefit
required under Section 10 shall not commence until the first
day which is at least six months after the termination of
Blau's employment. Such payments or benefits, which would have
otherwise been required to be made over such six month period,
shall be paid to Blau in one lump sum payment or otherwise
provided to Blau, as soon as administratively feasible after
the first day which is at least six months after the
termination of Blau's employment. Thereafter, payments or
benefits shall continue, if applicable, for the relevant
period set forth above."
9. Section 13(a) shall be amended and restated in its entirety to read as
follows, effective as of the date hereof:
"(a) General. Effective upon the end of the Employment Term
(but only if the Employment Term ends by reason of its
expiration or, if earlier, upon termination of Blau's
employment (i) by mutual agreement, (ii) by Retirement or
(iii) within the one-year period following a Change in Control
for any reason other than for Cause), Blau shall become a
consultant to Aeroflex, in recognition of the continued value
to Aeroflex of his extensive knowledge and expertise. Unless
earlier terminated, as provided in Section 13(e), the
Consulting Period shall continue for three years."
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10. Except as specifically provided in and modified by this Amendment, the
Employment Agreement is in all other respects hereby ratified and
confirmed and references to the Employment Agreement shall be deemed
to refer to the Employment Agreement as modified by this Amendment.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the day and year first above written.
AEROFLEX INCORPORATED
By:/s/Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx, President
/s/Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
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