EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
this 9th day of November, 2005 (the "Effective Date"), by and between Aeroflex
Incorporated, a Delaware corporation (together with its successors and assigns
permitted hereunder, the "Company"), and Xxxx Xxxxxxxxx, Xx. (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its stockholders to employ
the Executive, and the Executive desires to be employed by the Company, on the
terms and conditions set forth herein.
NOW, THEREFORE, the Company and the Executive agree as follows:
1. EMPLOYMENT PERIOD. Subject to Section 3, the Company hereby agrees to
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employ the Executive, and the Executive hereby agrees to be employed by the
Company, in accordance with the terms and provisions of this Agreement, for the
period commencing as of the Effective Date and ending at midnight on November 8,
2007 (the "Employment Period").
2. TERMS OF EMPLOYMENT.
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(a) Positions and Duties.
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(i) During the term of the Executive's employment hereunder, the
Executive shall serve as Chief Financial Officer of the Company and, in so
doing, shall report directly to the President and the Board of Directors of the
Company. The Executive shall have such management, supervisory and operational
functions and other powers, functions and duties consistent with the Executive's
title and duties as may from time to time reasonably be prescribed by the Board.
(ii) During the term of the Executive's employment hereunder, and
excluding any periods of vacation, paid holiday, and sick and personal leave to
which the Executive is entitled, the Executive agrees to devote substantially
all of his business time to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully,
effectively and efficiently such responsibilities. During the term of the
Executive's employment, it shall not be a violation of this Agreement for the
Executive to (1) serve on corporate, civic or charitable boards or committees,
(2) manage personal investments and (3) serve as an officer of one or more
affiliates of the Company, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement.
(b) Compensation.
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(i) (1) Base Salary. During the term of the Executive's
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employment hereunder, the Executive shall receive an annual salary (the "Base
Salary") of Three Hundred Eighty Thousand Dollars ($380,000), which shall be
paid in accordance with the customary payroll practices of the Company for
services rendered as Chief Financial Officer of the Company.
(2) COLA. Executive's Base Salary shall be increased
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during the second year of the Employment Period by an amount equal to the
increase in the cost-of-living during the first year of the Employment Period,
as reported in the "Consumer Price Index, New York and Northeastern New Jersey,
All Items", published by the U.S. Department of Labor (or if such index is no
longer published, the successor or comparable index which is published). Such
amount shall be calculated and paid to Executive in a single sum on or before
the third month of the second year of the Employment Period.
(ii) Bonus. The Executive shall receive a bonus (the "Bonus"),
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of Two Hundred Thousand Dollars ($200,000) in each year of the Employment
Period, and, except as otherwise provided herein, subject to continued
employment during each such yearly period. Such Bonus shall be payable no later
than December 31, 2006 and December 31, 2007, respectively. At the discretion of
the Board of Directors, the Executive may be entitled to additional bonuses
based upon evaluation of the Executive and his performance by the President and
the Board of Directors. The $200,000 Bonus for the second year of the Employment
Term shall be increased by the cost-of-living adjustment formula provided for in
Paragraph 2(b)(i)(2).
(iii) Investment Plans. During the term of the Executive's
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employment hereunder, the Executive shall be entitled to participate in all
savings and retirement plans, practices, policies and programs ("Investment
Plans") appertaining to his position in accordance with practices established by
the Board, including 401K and supplemental life insurance plans, but Executive
shall not participate in the Company's Supplemental Executive Retirement Plan.
(iv) Welfare Benefit Plans. During the term of the Executive's
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employment hereunder, the Executive shall be eligible for participation in and
shall receive all benefits under welfare benefit plans, practices, policies and
programs ("Welfare Plans") provided by the Company (including, without
limitation, medical, prescription, dental, disability, salary continuance, group
life, accidental death and travel accident insurance plans and programs) to the
extent applicable to executive employees generally in accordance with practices
established by the Board.
(v) Expenses. During the term of the Executive's employment
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hereunder, the Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in performing his duties
hereunder, including, without limitation, transportation, hotel, and living
expenses and other business and entertainment expenses, in accordance with the
policies, practices and procedures of the Company.
(vi) Vacation and Holidays. During each complete twelve month
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period of the Executive's employment hereunder, the Executive shall be entitled
to 20 paid vacation days and such paid holiday and leave time as are in
accordance with the plans, policies, programs and practices of the Company.
(vii) Restricted Stock.
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(1) Within ninety (90) days after the execution and
delivery of this Agreement, the Executive shall receive 10,000 shares of the
Company's Common Stock, $.10 par value. Such shares ("Restricted Stock") shall
vest fifty (50%) percent if the Executive is employed hereunder at the end of
the first year of the Employment Period, and one hundred (100%) percent if the
Executive is employed hereunder at the end of the second year of the Employment
Period, or immediately upon termination of Executive's employment by reason of
the Executive's death or disability, or by the Company other than for "Cause".
All title and interest to the Restricted Stock which does not vest shall revert
to the Company.
(2) The Restricted Stock shall not be sold, transferred
or encumbered otherwise than by will or the laws of descent and distribution
during the Employment Period.
(3) The Company shall, if permitted by the rules
governing registration statements on Form S-8, cause a registration statement on
Form S-8 covering the Restricted Stock to be filed with the Securities and
Exchange Commission prior to November 1, 2006 or within ninety (90) days of
termination of the Executive's employment if such termination occurs prior to
November 1, 2006.
(4) If any law, regulation of the Securities and
Exchange Commission, or any regulation of any other commission or agency having
jurisdiction shall require the Company or the Executive to take any action with
respect to the Restricted Stock, then the date upon which the Company shall
deliver or cause to be delivered the certificate or certificates for the
Restricted Stock shall be postponed until full compliance has been made with all
such requirements of law or regulation.
(5) Executive represents that the Restricted Stock will
be acquired in good faith for investment and not for resale or distribution, and
agrees that the Restricted Stock being so acquired will not be sold except in
compliance with applicable securities laws and, to the extent required, in
accordance with the volume and time and other restrictions of Rule 144 of the
Securities Act of 1933.
(viii) Stock Options. Aeroflex shall grant to Executive options
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to purchase 250,000 shares of its Common Stock, $.10 par value, in accordance
with the stock option agreement annexed hereto as Exhibit "A" and made a part
hereof.
(ix) Car Allowance. The Company will provide the Executive with
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a car allowance of One Thousand ($1,000) per month.
3. TERMINATION OF EMPLOYMENT.
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(a) Death or Disability. The Executive's employment shall terminate
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automatically upon the Executive's death during the Employment Period. If a
Disability (as defined below) of the Executive has occurred during the
Employment Period, the Company may give to the Executive written notice in
accordance with Section 12(b) of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"); provided, that within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the Executive'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 and acceptable to the Executive or the Executive's legal representative
(such agreement as to acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment
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during the Employment Period for Cause or without Cause. For purposes of this
Agreement, "Cause" shall mean (i) a breach by the Executive of the Executive's
material obligations under Section 2(a) which is not cured within ten (10) days
of the receipt by the Executive of written notice thereof from the Company; (ii)
commission by the Executive of an act of fraud upon, or willful misconduct of a
material nature toward, the Company, as reasonably determined by a majority of
the Board, (iii) a material breach by the Executive of Section 6, 7 or 8; (iv)
the conviction of the Executive of any felony or any misdemeanor involving moral
turpitude (or a plea of nolo contendere thereto); (v) the Executive being found
liable in any civil proceeding for an act by the Executive constituting work
place harassment; or (vi) the willful and continuing failure of the Executive to
carry out, or comply with, in any material respect any reasonable directive of
the Board consistent with the terms of this Agreement.
(c) Termination for Good Reason by the Executive. The Executive
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may 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 its material obligations to the
Executive, which breach is not cured within ten (10) Business Days of the
receipt by the Company of written notice thereof from the Executive.
(d) Notice of Termination. Any termination (i) by the Company,
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whether for Cause or without Cause, or (ii) the Executive, 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 Section 12(b). 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
Executive'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 Executive 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 Executive or
the Company hereunder or preclude the Executive or the Company for asserting
such fact or
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circumstance in enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
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Executive's employment is terminated by the Company for Cause, the date of the
Notice of Termination or any later date specified therein, as the case may be;
(ii) if the Executive's employment is terminated by the Company other than for
Cause, the date on which the Company notifies the Executive of such termination
or any later date specified by the Board; and (iii) if the Executive's
employment is terminated by reason of death or Disability, the date of death of
the Executive or the Disability Effective Date, as the case may be.
4. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
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(a) Without Cause. If during the Employment Period, the Company
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shall terminate the Executive's employment without Cause, the Company shall pay
to the Executive or his heirs (1) within ten (10) days after the Date of
Termination the sum of the Executive's Base Salary through the Date of
Termination to the extent not theretofore paid, plus all accrued vacation pay,
unreimbursed business expenses and other accrued but unpaid compensation
described in Section 2(b) above (the "Accrued Obligations"); (2) an amount equal
to the Executive's Base Salary for the one-year period immediately following the
Date of Termination, payable in such increments and at such intervals as is in
accordance with the Company's normal payroll practices, as if the Executive had
remained an employee of the Company through the expiration of such period; (3)
any amount arising from the Executive's participation in, or benefits under, any
Investment Plans ("Accrued Investments"), which amounts shall be payable in
accordance with the terms and conditions of such Investment Plans; (4) the
unpaid Bonus provided in Section 2(b)(ii) applicable for the year in which the
Date of Termination occurs; and (5) the members of the Executive's family shall
be entitled to continue and participate in the Company's Welfare Plans for said
one-year period.
(b) Death or Disability. If the Executive's employment is
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terminated by reason of the Executive's death or Disability during the
Employment Period, the Company shall pay to his legal representatives (i) in a
lump sum in cash within twenty (20) days after the Date of Termination the
Accrued Obligations; (ii) the Accrued Investments which shall be payable in
accordance with the terms and conditions of the Investment Plans; and (iii) the
unpaid Bonus provided for in Section 2(b)(ii) applicable for the years in which
death or Disability occurs. In addition, the members of the Executive's family
shall be entitled to continue their participation at the Company's expense in
the Company's Welfare Plans for a period of 12 months after the Date of
Termination.
(c) Cause. If the Executive's employment shall be terminated by
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the Company for Cause during the Employment Period, the Company shall have no
further payment obligations to the Executive other than for payment of Accrued
Obligations, Accrued Investments (which shall be payable in accordance with the
terms and conditions of the Investment Plans), and the continuance of benefits
under the Welfare Plans to the Date of Termination.
5. FULL SETTLEMENT, MITIGATION. In no event shall the Executive be
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obligated to seek
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other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced whether or not the Executive obtains other
employment. Neither the Executive nor the Company shall be liable to the other
party for any damages in addition to the amounts payable under Section 4 arising
out of the termination of the Executive's employment prior to the end of the
Employment Period; provided, however, that the Company shall be entitled to seek
damages for any breach of Sections 6, 7, or 8, or criminal misconduct.
6. CONFIDENTIAL INFORMATION.
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(a) The Executive acknowledges that the Company and their
affiliates have trade, business and financial secrets and other confidential and
proprietary information (collectively, the "Confidential Information"). As
defined herein, Confidential Information shall not include (i) information that
is known to other persons or entities generally, (ii) information required to be
disclosed by the Executive pursuant to a subpoena or court order, or pursuant to
a requirement of a governmental agency or law of the United States of America or
a state thereof or any governmental or political subdivision thereof, and (iii)
information that the Executive possessed on or prior to the Effective Date.
(b) The Executive agrees (i) to hold such Confidential Information
in confidence and (ii) not to release such information to any person (other than
Company employees and other persons to whom the Company has authorized the
Executive to disclose such information and then only to the extent that such
Company employees and other persons authorized by the Company have a need for
such knowledge or to the Executive's attorneys, accountants and personal
representatives for purposes of representing the Executive).
(c) The Executive further agrees not to use any Confidential
Information for the benefit of any person or entity other than the Company or as
authorized by the Company.
(d) As used in this Section 6 and in Section 7 and 8, "Company"
shall include the Company and any of its subsidiaries.
7. SURRENDER OF MATERIALS UPON TERMINATION. Upon any termination of the
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the Executive's employment, the Executive shall immediately return to the
Company all copies, in whatever form, of any and all Confidential Information
and other properties of the Company and their affiliates which are in the
Executive's possession custody or control and shall cause any third parties to
whom he has entrusted such information whether or not in compliance with Section
6, to return such information to the Company.
8. NON-COMPETITION. During the Employment Period, the Executive will not,
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without the Company's express written consent, engage in any other employment or
business activity directly related to the business in which the Company is at
the time involved or actively considering becoming involved, nor will the
Executive engage in any other activities which conflict with his obligations to
the Company. During the Employment Period and (a) in the case of termination by
the Company for Cause or termination by the Executive without Good Reason, for
one year after the Date of Termination, (x) directly or indirectly, either as
principal, agent,
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employee, consultant, officer, director, stockholder, or in any other capacity,
engage in or have a financial interest in, any business, or the relevant
division or subsidiary of any such business, which is competitive with the
business of the Company or any of its subsidiaries or affiliates, provided,
however, that the Executive's ownership of not more than two percent (2%) of the
outstanding stock of a publicly traded company shall not be prohibited by this
clause (x); (y) induce employees of the Company or any of its subsidiaries or
affiliates to join with the Executive in any capacity, direct or indirect, in
any business in which the Executive may be or become interested whether or not
competitive with the Company; or (z) solicit customers of the Company. If any
restriction set forth in this Section is found by any court of competent
jurisdiction to be unenforceable cause it extends for too long a period of time
or over too great a range of activities or in too broad a geographic areas, it
shall be interpreted to extend only over the maximum period of time, range of
activities or geographic areas as to which it may be enforceable.
9. EFFECT OF AGREEMENT ON OTHER BENEFITS. The existence of this Agreement
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shall not prohibit or restrict the Executive's entitlement to full participation
in the executive compensation, employee benefit and other plans or programs
appertaining to his position in accordance with any policy or practice
established by the Board.
10. OWNERSHIP AND DISCLOSURE OF INFORMATION, IDEAS, CONCEPTS, IMPROVEMENTS,
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DISCOVERIES AND INVENTIONS, AND ALL ORIGINAL WORKS OF AUTHORSHIP. All
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information, ideas, concepts, improvements, discoveries and inventions, whether
patentable or not, which are conceived, made, developed or acquired by the
Company or which are created by the Executive in the course and scope of his
employment or which are disclosed or made known to the Executive, individually
or in conjunction with others, during the Executive's employment by the Company
whether during or outside of usual working hours, and whether on the Company's
premises or not, and which relate to the Company's past, present or reasonably
anticipated business, products or services (including all such information
relating to research, formulations, processes, computer programs, simulations,
and data bases, manufacturing techniques, designs, financial and sales models
and other data, pricing and trading terms, evaluations, opinions,
interpretations, the identity of customers or their requirements or of key
contacts within the customer's organizations, or marketing and merchandising
techniques), operating and acquisition strategies, are and shall be (insofar s
the Executive is concerned) the sole and exclusive property of the Company.
Moreover, all drawings, memoranda, notes, records, files, correspondence,
drawings, manuals, models, specifications, computer programs, maps and all other
writings or materials of any type embodying any of such information, ideas,
concepts, improvements, discoveries and inventions are and shall be (insofar the
Executive is concerned) the sole and exclusive property of the Company.
11. INDEMNIFICATION. The Company shall indemnify and hold harmless the
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Executive from and against all liabilities and expenses (including amounts paid
in satisfaction of judgments, in compromise, as fines and penalties, and as
counsel fees) (collectively, "Losses") incurred by the Executive in connection
with the investigation, defense or disposition of any action, suit or other
proceeding in which the Executive may be involved or with which the Executive
may be threatened (whether arising out of or relating to matters asserted by
third parties or incurred or sustained by the Executive in the absence of a
third-party claim), by reason
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of his being a director, officer or employee of the Company or of any subsidiary
or affiliate of the Company, or that arises out of or results from any act
taken, or any failure to act, by the Executive which was, in his good faith
judgment, in the best interests of the Company, whether within the course of
performance of his duties or otherwise; provided, however, that the Company
shall not be required to indemnify or hold the Executive harmless from any
Losses which arise out of or result from the Executive's gross negligence or
willful misconduct.
12. MISCELLANEOUS.
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(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have nor force or effect. Whenever the terms
"hereof", "hereby", "herein", or words of similar import are used in this
Agreement, they shall be construed as referring to this Agreement in its
entirely rather than to a particular section or provision, unless the context
specifically indicates to the contrary. Any reference to a particular "Section"
or "paragraph" shall be construed as referring to the indicated section or
paragraph of this Agreement unless the context indicates to the contrary. The
use of the term "including" herein shall be construed as meaning "including
without limitation." This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered by hand,
overnight courier or given by electronic facsimile transmission or mailed by
first class, certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: Xx. Xxxx Xxxxxxxxx, Xx.
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00 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to: Xx. Xxx D. Unternam
Xxxxxxx, Karelsen & Xxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to the Company: Aeroflex Incorporated
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00 Xxxxx Xxxxxxx Xxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxx 11803-0622
Attention: President
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
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with a copy to: Kramer, Coleman, Wactlar & Xxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effective during the term
of this Agreement, such provision shall be fully severable; this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a portion of this Agreement; and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from this
Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder shall not be deemed to be
a waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive acknowledges that money damages would be both
incalculable and an insufficient remedy for a breach of Sections 6, 7 and 8 by
the Executive and that any such breach would cause the Company irreparable harm.
Accordingly, the Company, in addition to any other remedies at law or in equity
it may have, shall be entitled to seek equitable relief, including injunctive
relief and specific performance, in connection with a breach of Sections 6, 7
and 8 by the Executive.
(g) The provisions of this Agreement constitute the complete
understanding and agreement, and supersede and entirely replace any other
agreement, between the parties with respect to the subject matter hereof.
(h) This Agreement may be executed in two or more counterparts.
(i) As used in this Agreement, "affiliate" means, with respect to
a person, any other person controlling, controlled by or under common control
with the first person; the term "Control", and correlative terms, means the
power, whether by contract, equity ownership or otherwise, to direct the
policies or management of a person; and "person" means an individual,
partnership, corporation, limited liability company, trust or unincorporated
organization, or a
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government or agency or political subdivision thereof.
(j) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's heirs,
successors, estate and legal representatives. This Agreement shall inure to the
benefit of and be binding upon the Company and its successors and assigns.
(k) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from the Board, the Company has caused
this Agreement to be executed in its name on its behalf, all as of the day and
year first above written.
EXECUTIVE:
/s/ Xxxx Xxxxxxxxx, Xx.
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Xxxx Xxxxxxxxx, Xx.
AEROFLEX INCORPORATED
By: /s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx, President
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