DEFERRED COMPENSATION AGREEMENT
Deferred Compensation Agreement dated as of May __, 1997 between Aeroflex
Incorporated, a Delaware corporation, with its principal office located at 00
Xxxxx Xxxxxxx Xxxx, Xxxxxxxxx, XX 00000 (the "Company") and Xxxxxx X. Xxxx, who
resides at 000 Xxxxxxxx Xxxx, Xxx Xxxxxxxx, XX 00000 (the "Executive").
WHEREAS, the Company and the Executive entered into an Employment Agreement
dated as of July 1, 1994 (the "Employment Agreement"), pursuant to which the
Executive receives compensation from the Company;
WHEREAS, the Company and the Executive wish to provide that the Executive
may, at his election, defer certain of the compensation payable to Executive
pursuant to the terms of the Employment Agreement.
NOW, THEREFORE, it is agreed as follows:
1. DEFINITIONS. All capitalized terms not otherwise defined herein shall
have the meanings provided in the Employment Agreement.
2. DEFERRED COMPENSATION.
(a) Not later than the later of (i) the last day of each Fiscal Year of the
Company prior to a Fiscal Year with respect to which an Annual Bonus is payable
to Executive in accordance with Section 4 of the Employment Agreement and (ii)
five (5) days from the date of this Agreement, Executive may elect in writing to
defer all or any portion of such Annual Bonus for such Fiscal Year, as Executive
desires.
(b) At the same time as the Executive elects to defer compensation under
this Agreement, the Executive shall elect whether such deferred compensation
shall be payable in cash or in the Company's common stock, par value $.10 per
share ("Common Stock"), or a combination thereof. In the event that the
Executive determines that all or a portion of his deferred compensation shall
be paid in Common Stock of the Company, the Common Stock shall be valued at its
Fair Market Value on 31st trading day of the Fiscal Year next succeeding the
Fiscal Year for which such Annual Bonus was deferred (each such 31st day, a
"Valuation Date"). For the purposes of the foregoing, "Fair Market Value" shall
mean the average market price of the Common Stock on the New York Stock
Exchange consolidated reporting system for the 30 consecutive trading days
immediately preceding the applicable Valuation Date. If no sales shall have
been reported on the New York Stock Exchange consolidated reporting system on
such dates, Fair Market Value shall be determined by the Committee in
accordance with the Treasury Regulations applicable to incentive stock options
under Section 422 of the Internal Revenue Code of 1986, as amended.
(c) All amounts deferred under this Agreement above shall be one hundred
percent (100%) vested and non-forfeitable at all times. Payments of said
deferred compensation shall begin upon the earliest to occur of (i) the failure
to the stockholders of the Company to approve this Agreement by the affirmative
vote of a majority of such stockholders at the annual or special meeting of the
stockholders next succeeding the date of this Agreement, (ii) termination of
the Executive's employment in accordance with Section 9 of the Employment
Agreement, (iii) in the event of any emergency or necessity as shall be solely
determined by the Board of Directors or (iv) an adverse change of financial
condition of the Company deemed to be perceived inability to pay the amounts
deferred pursuant to this Agreement. Amounts payable to the Executive pursuant
to this Agreement shall be in addition to any amounts payable to the Executive
pursuant to Section 9 of the Employment Agreement.
(d) In order to meet its contingent deferred obligation hereunder, the
Company may (i) each year set aside or earmark funds in an amount equal to the
total cash amount allocated and deferred for such year and (ii) purchase or
otherwise allocate shares of Common Stock in an amount equal to the amount
designated by the Executive pursuant to Section 2(b) hereof.
(e) Funds set aside or earmarked to meet the Company's contingent cash
deferred obligation hereunder may be kept in cash, or invested and reinvested
in the discretion of the Company. To the extent that such funds are kept in
cash, they shall be deemed to accrue interest at the rate of five (5%) percent
per annum.
(f) Investments of funds set aside or earmarked for the Company's
contingent deferred obligation hereunder may be made in stock, bonds or other
securities; provided, however, that except as provided in Section 2(d), no
portion of such funds shall be invested in any securities of the Company.
(g) In the event that amounts become payable in accordance with this
Agreement, (i) to the extent that the Executive has elected that such amounts
shall be paid in cash, said payment shall be in an amount equal to the value,
determined as of the date of such event, of all deferred amounts plus all
amounts earned or deemed earned thereon, and shall be made as soon as feasible
in one lump sum and (ii) to the extent that the Executive has elected that any
such amounts shall be paid in Common Stock, the Company shall deliver to the
Executive the total number of shares of Common Stock determined by dividing the
amount of Annual Bonus which the Executive deferred and elected to have paid in
Common Stock in respect of any Fiscal Year by the Fair Market Value of the
Common Stock on the Valuation Date for each respective Fiscal Year calculated
in accordance with Section 2(b) hereof, and shall be delivered as soon as
feasible after such number of shares of Common Stock have been determined.
(h) Nothing contained herein shall be deemed to create a trust
relationship. Funds invested hereunder shall continue for all purposes to be
part of the general funds of the Company, subject to the claims of creditors of
the Company, and no entity or person other than the Company shall, by virtue of
the provisions of this Agreement, have any interest in such funds. To the
extent that Executive acquires a right to receive payments from the Company
under this Agreement, such right shall be non-forfeitable and secured to the
full extent that the law will allow.
(i) Subject to the approval of this Agreement by the affirmative vote of a
majority of such stockholders at the annual or special meeting of the
stockholders next succeeding the date of this Agreement, Executive hereby
elects (i) to defer all of the Annual Bonus payable to him in respect of the
Fiscal Year ending June 30, 1998 and (ii) that such deferred compensation shall
be payable to Executive in Common Stock.
3. EFFECT OF AGREEMENT ON OTHER BENEFITS. The existence of this Agreement
shall not prohibit or restrict the Executive's entitlement to participate fully
in the executive compensation, employee benefit and other plans or programs of
the Company in which senior executives are eligible to participate.
4. ASSIGNABILITY; BINDING NATURE. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors, heirs (in
the case of the Executive) and assigns. No rights or obligations of the Company
under this Agreement may be assigned or transferred by the Company except that
such rights or obligations may be assigned or transferred pursuant to (a) a
merger or consolidation in which the Company is not the continuing entity or (b)
sale or liquidation of all or substantially all of the assets of the Company,
provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
the Employment Agreement and this Agreement, either contractually or as a matter
of law. The Company further agrees that, in the event of a sale of assets or
liquidation as described in the preceding sentence, it will use its best efforts
to cause such assignee or transferee expressly to assume the liabilities,
obligations and duties of the Company hereunder.
5. ENTIRE AGREEMENT. Except to the extent otherwise provided herein, this
Agreement contains the entire understanding and agreement between the Parties
concerning the subject matter hereof and supersedes any prior agreements,
whether written or oral, between the Parties concerning the subject matter
hereof.
6. AMENDMENT OR WAIVER. No provision in this Agreement may be amended
unless such amendment is agreed to in writing and signed by both the Executive
and an authorized officer of the Company other than the Executive. No waiver by
either Party of any breach by the other Party of any condition or provision
contained in this Agreement to be performed by such other Party shall be deemed
a waiver of a similar or dissimilar condition or provision at the same or any
prior or subsequent time. Any waiver must be in writing and signed by the
Executive or an authorized officer of the Company other than the Executive, as
the case may be.
7. SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.
8. SURVIVORSHIP. The respective rights and obligations of the Parties
hereunder shall survive any termination of the Executive's employment with the
Company to the extent necessary to the intended preservation of such rights and
obligations as described in this Agreement.
9. BENEFICIARIES/REFERENCES. The Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
the Executive's death by giving the Company written notice thereof. In the event
of the Executive's death or of a judicial determination of his incompetence,
reference in this Agreement to the Executive shall be deemed to refer to his
beneficiary, and if the Executive shall not have designated a beneficiary, his
Spouse.
10. GOVERNING LAW/JURISDICTION. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of New York, without
reference to principles of conflict of laws.
11. NOTICES. Any notice given to either Party shall be in writing and shall
be deemed to have been given when delivered either personally, by fax, by
overnight delivery service (such as Federal Express) or sent by certified or
registered mail, postage prepaid, return receipt requested, duly addressed to
the Party concerned at the address indicated below or to such changed address as
such Party may subsequently give such notice of.
If to the Company or the Board:
Aeroflex Incorporated
00 Xxxxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx FAX: (000) 000-0000
If to the Executive:
Xxxxxx X. Xxxx
000 Xxxxxxxx Xxxx
Xxx Xxxxxxxx, XX 00000
12. HEADINGS. The headings of the sections contained in this Agreement are
for convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
AEROFLEX INCORPORATED
By: /s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title:Treausrer
/s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
