-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gs9vf6FnZZ0lmn2F5nGvpDTJpeTv993zIWTuI+pM8DtY/yklx0aHGkYVfeN5W31c 1GhOS6ijnRFOIViVILboIA== 0000932214-06-000381.txt : 20061122 0000932214-06-000381.hdr.sgml : 20061122 20061122101017 ACCESSION NUMBER: 0000932214-06-000381 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20061121 ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061122 DATE AS OF CHANGE: 20061122 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AEROFLEX INC CENTRAL INDEX KEY: 0000002601 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 111974412 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08037 FILM NUMBER: 061234719 BUSINESS ADDRESS: STREET 1: 35 S SERVICE RD CITY: PLAINVIEW STATE: NY ZIP: 11803 BUSINESS PHONE: 5166946700 MAIL ADDRESS: STREET 1: 35 S SERVICE ROAD CITY: PLAINVIEW STATE: NY ZIP: 11803 FORMER COMPANY: FORMER CONFORMED NAME: ARX INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AEROFLEX LABORATORIES INC DATE OF NAME CHANGE: 19851119 8-K 1 form8k.txt CURRENT REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): November 21, 2006 AEROFLEX INCORPORATED (Exact Name of Registrant as Specified in Charter) Delaware 000-02324 11-1974412 (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification Number) 35 South Service Road Plainview, New York 11803 (Address of Principal Executive Offices) (Zip Code) (516) 694-6700 (Registrant's telephone number, including area code) ------------------------------------------------------------------------------ (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers. Amendment to Key Employee Deferred Compensation Plan On November 21, 2006, Aeroflex Incorporated (the "Registrant") entered into an amendment (the "Plan Amendment") to the Aeroflex Incorporated Key Employee Deferred Compensation Plan (the "Plan"). The principal purpose of the Plan Amendment was to make certain changes to bring the Plan into compliance with Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A"). The Plan Amendment includes the following material terms: o The definition of a change in control has been modified to relate to the acquisition of 35% of the voting securities or outstanding shares of common stock of the Registrant. This replaces the prior threshold of 20%. o In order to comply with Section 409A, modifications have been made with respect to deferral elections and distributions of amounts deferred on and after January 1, 2005. o Payments due to participants with respect to amounts deferred or vested on or after January 1, 2005 must be delayed at least six months if such payments would violate Section 409A. The above is a brief summary of the Plan Amendment and does not purport to be complete. Reference is made to the Plan Amendment for a full description of its terms, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference. Amendment to Harvey R. Blau and Leonard Borow Employment Agreements On November 21, 2006, the Registrant entered into amendments (the "Amendments") to the Employment Agreements (the "Agreements") with each of Harvey R. Blau and Leonard Borow, each of whom is an executive officer of the Registrant (each an "Executive"). The purpose of the Amendments was in part to bring the severance provisions of the Agreements into compliance with Section 409A and clarify some existing ambiguities. The following material terms are included in the Amendments: o Severance payments to Executive after termination upon a change in control would become payable in a lump sum. o A provision has been added that payments due to a separation from service (other than due to death or a change in control) must be delayed at least six months if such payments would otherwise result in additional taxation under Section 409A. o Under the Agreements, the Registrant is obligated to provide the Executive with lifetime medical benefits after termination of service. In the event that these benefits would become subject to a tax under Section 409A after two years, then, pursuant to the Amendments, the Executives will forego such benefits after two years and receive instead a lump sum payment equal to the foregone economic benefit. o Clarifications have been made to the definition of retirement, the determination of the severance payment (to include the consideration of partial year bonuses and other compensation), and the events upon which the post-termination consulting services would commence. 2 The above is a brief summary of the Amendments and does not purport to be complete. Reference is made to the Amendments for a full description of their terms, copies of which are attached hereto as Exhibits 10.2 and 10.3 and incorporated herein by reference. Amendment to John Adamovich, Jr. Employment Agreement On November 21, 2006, the Registrant entered into an amendment to the Employment Agreement with John Adamovich, Jr. (the "Adamovich Amendment") to include the following material terms: o Mr. Adamovich's employment term has been extended to December 31, 2009. o The bonus provisions have been amended to provide for an annual bonus of $200,000 for the first two years of the employment period and for a discretionary bonus thereafter. o In the event of termination of Mr. Adamovich's employment (and provided the termination is not caused by Mr. Adamovich for other than good reason, or due to cause, death or disability) within twenty four months following a change of control of the Registrant, Mr. Adamovich will be entitled to certain severance benefits. The above is a brief summary of the Adamovich Amendment and does not purport to be complete. Reference is made to the Adamovich Amendment for a full description of its terms, a copy of which is attached hereto as Exhibit 10.4 and incorporated herein by reference. Item 9.01. Financial Statements and Exhibits. (d) Exhibits. 10.1 First Amendment to the Aeroflex Incorporated Key Employee Deferred Compensation Plan 10.2 Amendment No. 6 to Employment Agreement by and between Aeroflex Incorporated and Harvey R. Blau 10.3 Amendment No. 6 to Employment Agreement by and between Aeroflex Incorporated and Leonard Borow 10.4 Amendment No. 1 to Employment Agreement by and between Aeroflex Incorporated and John Adamovich, Jr. 3 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AEROXFLEX INCORPORATED By: /s/Charles Badlato ------------------------------------ Name: Charles Badlato Title: Vice President Date: November 21, 2006 4 Exhibit Index 10.1 First Amendment to the Aeroflex Incorporated Deferred Compensation Plan 10.2 Amendment No. 6 to Employment Agreement by and between Aeroflex Incorporated and Harvey R. Blau 10.3 Amendment No. 6 to Employment Agreement by and between Aeroflex Incorporated and Leonard Borow 10.4 Amendment No. 1 to Employment Agreement by and between Aeroflex Incorporated and John Adamovich, Jr. EX-10.1 2 exhibit10-1.txt DEF. COMP. PLN FIRST AMD. Exhibit 10.1 FIRST AMENDMENT TO THE AEROFLEX INCORPORATED KEY EMPLOYEE DEFERRED COMPENSATION PLAN AMENDMENT NO. 1 TO THE AEROFLEX INCORPORATED KEY EMPLOYEE DEFERRED COMPENSATION PLAN (the "Amendment") made as of the 21st day of November, 2006. The Aeroflex Incorporated Key Employee Deferred Compensation Plan (the "Plan") provides for employees to elect to defer compensation that would otherwise be paid in a given year. The purpose of this Amendment is to make certain changes to the Plan to conform with Code Section 409A. To effectuate these changes, the Plan is hereby amended as follows, effective as of January 1, 2005: 1. All references to 20 percent with regard to an amount of voting securities or outstanding shares of common stock in Section 1.2(i) and 1.2(iii) shall henceforth be read to mean 35 percent, effective as of the date hereof. 2. Section 1.2(i) of the Plan shall be amended and restated in its entirety to read as follows: "`Deferral Election Form' means the form provided by the Company pursuant to which a Participant elects to defer a portion of his or her Compensation, as provided in Section 2.1." 3. Section 1.2(k) of the Plan shall be amended and restated in its entirety to read as follows: "`Early Distribution' means withdrawal by a Participant of amounts from his or her Deferred Compensation Account (but only with regard to such portion of his or her account deferred prior to January 1, 2005, including the Earnings thereon) before he or she would otherwise be entitled to such amounts, as provided in Section 3.8 below." 4. Section 1.2(o) of the Plan shall be amended and restated in its entirety to read as follows: "`Hardship' means for amounts deferred prior to January 1, 2005 (and the Earnings thereon), a severe financial stringency to a Participant resulting from a sudden and unexpected illness or accident of the Participant or his or her dependent (as defined in Code Section 154(a)), loss of his or her property due to casualty, or other similar or extraordinary and unforeseeable circumstance arising as a result of events beyond the control of the Participant. For amounts deferred on and after January 1, 2005 (and the Earnings thereon) `Hardship' means a severe financial hardship to the Participant resulting from: (i) an illness or accident of the Participant, a Participant's spouse or a dependant (within the meaning of Code Section 152(a)); (ii) loss of the Participant's property due to casualty; or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant." 5. Section 1.2(s) of the Plan shall be amended and restated in its entirety to read as follows: "`Total Disability' means for amounts deferred prior to January 1, 2005 (and the Earnings thereon), bodily injury or sickness that wholly and continuously disables a Participant. For amounts deferred on and after January 1, 2005 (and the Earnings thereon) `Total Disability' means (A) a Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expect to last for a continuous period of not less than 12 months, or (B) a Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Company The Committee shall make any determination of Total Disability, which shall be final, and based on the finding of an independent physician selected by the Board, to the extent applicable." 6. Section 2.1 shall be amended and restated in its entirety to read as follows: "2.1 Deferral Election Form For deferrals made on and after January 1, 2005, in order to participate in the Plan, a Participant shall execute and file with the Company one or more Deferral Election Forms, designating the portion of his or her Compensation and/or other amounts earned from the Company, to be deferred hereunder. Any such Deferral Election Form shall be filed in accordance with the following deferral rules. a. Salary. A Participant must elect to defer salary under the Plan, under an applicable Deferral Election Form on or prior to December 31 of the calendar year prior to the Year in which such deferrals will occur. A Participant may not defer more of his or her salary to be earned for any Year than the percentage specified by the Company and in effect at the time of execution and filing of the applicable Deferral Election Form. b. Bonus. A Participant may defer up to 100 percent of his or her bonus to be earned for any Year, pursuant to execution and filing of the applicable Deferral Election Form on or prior to the last day of the fiscal Year prior to the Year in which the services relevant to the payment of the bonus are to be performed. Notwithstanding the foregoing, to the extent that the bonus amount payable to a Participant would be nondeductible by the Company in the tax year in which such bonus payment would otherwise be deductible by the Company, then, any nondeductible portion of such bonus will be automatically deferred in accordance with the Plan. c. Deferral Increments. Deferrals of salary or bonus shall be in increments of 1 percent, but may be stated as the dollar amount to which a specified percentage translates; provided, however, that a Participant may elect to receive currently a specified dollar amount of his or her bonus and defer the balance. d. Deferral of Other Amounts or Items. Pursuant to a Deferral Election Form executed by a Participant and filed with the Company, a Participant may defer any other amount or item that the Company authorizes to be deferred (as, for example, settlement of rights to restricted shares of Common Stock), provided that the deferral of such compensation is permitted under Code Section 409A. Any such deferrals must be made timely in accordance Code Section 409A(a)(3) and the regulations thereunder. e. Annual Deferral Election Required. A Deferral Election Form executed by a Participant and filed with the Company for any Year shall apply only to the elements of Compensation or other amounts or items added to his or her Deferred Compensation Account for such Year, and the Company shall require timely execution and filing of a Deferral Election Form for new deferrals for each subsequent Year. Once filed with the Company for any Year, a Participant's Deferral Election Form shall be irrevocable for such Year. f. New Participants During Any Year. Notwithstanding the forgoing, once an individual first becomes eligible to be a Participant, he or she shall execute and file with the Company within 30 days of the date such eligibility, one or more Deferral Election Forms with respect to any amounts to be deferred for such Year; provided however, that any such Deferral Election shall only be valid with respect to compensation earned after the election becomes valid, unless otherwise permitted under Code Section 409A and the rules thereunder." 7. Section 3.1(b) of the Plan shall be amended and restated in its entirety to read as follows: "b. Revision of Date. A Participant may extend the benefit commencement date for payment of the portion of his or her Deferred Compensation Account attributable to any Year's deferral, provided such change occurs at least one year before the scheduled benefit commencement date. In addition to the above requirement, with respect to amounts deferred on or after January 1, 2005 (and the Earnings thereon), any extension of the benefit commencement date shall not commence until at least 5 years from the date any such payment would otherwise have been made (or with respect to installment payments, 5 years from the date such payments would otherwise have begun to be made) and any such revised election will not be effective for 12 months from the date on which the revised election is made." 8. Section 3.6 of the Plan shall be amended and restated in its entirety to read as follows: "3.6 Change in Control Notwithstanding the provisions of Section 3.1, in the event of a Change in Control each Participant's benefit commencement date shall be the date of such event; provided however, that if management losses a proxy contest, as described in Section 2.3.c., prior to the date of a Change in Control, then, with respect only to amounts deferred prior to January 1, 2005 (and the Earnings thereon) the benefit commencement date shall be the date of such event." 9. The second sentence of Section 3.7 of the Plan shall be amended and restated in its entirety to read as follows: "The Committee shall make a determination that the requested distribution is due to Hardship and shall also determine whether such Hardship is applicable to amounts deferred prior to January 1, 2005 (and the Earnings thereon) and/or amounts deferred on and after January 1, 2005 (and the Earnings thereon)." 10. Section 3.8 of the Plan shall be amended and restated in its entirety to read as follows: "3.8 Early Distribution A Participant may elect an Early Distribution from his or her Deferred Compensation Account, but only with respect to amounts deferred by such Participant prior to January 1, 2005 (and the Earnings thereon) (the "Pre-2005 Account"), of an amount up to 50 percent of the Pre-2005 Account balance, by filing an election form with the Committee. Any such election shall be subject to the approval of the Committee, and the Committee's determination whether or not to allow such election shall be final. To the extent that the Committee allows any such election, the amount of the Participant's Pre-2005 Account balance to which the approved Early Distribution percentage translates shall be determined as of the end of the calendar quarter coincident with or next following the Committee's approval, and such amount shall be paid to the Participant in a lump sum as soon as practicable thereafter; provided, however, that, any such Early Distribution shall be made pro rata from the Participant's Pre-2005 Account and, to the extent that shares of Common Stock are part thereof, the cash payment shall be adjusted to reflect the value, as of the same determination date, of the shares distributed. When an Early Distribution is made, the Participant shall forfeit 10 percent of (a) such Early Distribution or (b) the remaining balance of his or her Pre-2005 Account, whichever is less, and the Company shall have no obligation to the Participant or his or her Beneficiary, as the case may be, with respect to such forfeited amount. A Participant who receives an Early Distribution while employed by the Company will remain eligible to participate in the Plan for the balance of the Year in which such Early Distribution is made." 11. Section 3.9 of the Plan shall be amended and restated in its entirety to read as follows: "3.9 Certain Withdrawals with Committee Approval Subject to approval of the Committee, in its sole and complete discretion, a Participant may withdraw from his or her Pre-2005 Account any amount (or portion thereof) deferred for any Year (or portion thereof prior to 2005 (plus the earnings thereon) that need not be deferred to preserve the deductibility of Compensation paid to the Participant for any Year under Section 162(m) of the Code." 12. A new Section 3.10 shall be added, which shall read in its entirety as follows: "3.10 Delay of Payment - Deferrals On and After January 1, 2005 Notwithstanding the foregoing, if the Participant is a "specified employee" within the meaning of Code Section 409A, then payments of the portion of such Participant's Deferred Compensation Account (and Earnings thereon), which was deferred on or after January 1, 2005, as required under Section 3.2 or Section 3.5, as applicable, shall not commence until the first day which is at least six months after the date on which the Participant's employment terminates. All such payments, which would have otherwise been required to be made over such six month period, shall be paid to the Participant in one lump sum payment, as soon as administratively feasible after the first day which is at least six months after the date on which the Participant's employment terminates. Thereafter, such payments shall continue as so provided in the applicable Section 3.2 or Section 3.5. This Section 3.10 shall not effect payment of such portion of a Participant's Pre-2005 Account." 13. Except as specifically provided in and modified by this Amendment, all of the terms and conditions of the Plan are hereby ratified and confirmed and references to the Plan shall be deemed to refer to the Plan as modified by this Amendment. 14. This Amendment shall also be deemed an amendment to any provision of (a) the employment agreement between the Company and Harvey R. Blau, dated March 1, 1999 and (b) the employment agreement between the Company and Leonard Borow, dated March 1, 1999 (collectively, with any amendments thereto, the "Employment Agreements") which addresses the deferral of compensation. IN WITNESS WHEREOF, the Company has caused this First Amendment to the Aeroflex Incorporated Key Employee Deferred Compensation Plan to be executed by its duly authorized officers the date first above written. Attest: AEROFLEX INCORPORATED /s/Charles Badlato - ------------------ By: /s/John Adamovich, Jr. ------------------------------ Name: John Adamovich, Jr. Title: Senior Vice President and Chief Financial Officer /s/Harvey R. Blau --------------------------------- Harvey R. Blau /s/Leonard Borow --------------------------------- Leonard Borow EX-10.2 3 exhibit10-2.txt AMD. 6 BLAU EMP. AGMT. Exhibit 10.2 AMENDMENT NO. 6 TO EMPLOYMENT AGREEMENT --------------------------------------- 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 HARVEY R. BLAU (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 1 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 2 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: 3 (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 4 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 5 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." 6 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/Leonard Borow ------------------------------- Leonard Borow, President /s/Harvey R. Blau ------------------------------- Harvey R. Blau 7 EX-10.3 4 exhibit10-3.txt AMD. 6 BOROW EMPLY. AGMT Exhibit 10.3 AMENDMENT NO. 6 TO EMPLOYMENT AGREEMENT 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 LEONARD BOROW (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 Borow's employment by Borow 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 Borow and Aeroflex, such lifetime benefits may not be provided without subjecting Borow 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, Borow 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 Borow and Aeroflex) of such lifetime benefits Borow 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 1 compounded semi-annually for the month in which such payment occurs. Notwithstanding any other provisions of the Agreement to the contrary, if Borow 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 Borow during the ten Fiscal Years (or portions thereof) preceding the termination of Borow's employment as an employee (including, without limitation, any bonus awarded to Borow 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 Borow;" 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 Borow and Aeroflex, such medical reimbursement may be provided without subjecting Borow 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, Borow 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 2 Borow was participating on the date of termination of his employment until the end of the Employment Term; provided; however, that (x) if Borow is either precluded from continuing his participation in any employee benefit plan or program as provided in this clause (E) or if Borow's continued participation would subject Borow 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 Borow 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 Borow would incur in obtaining such benefit on an individual basis; further provided that if such benefit cannot be obtained at any cost, Borow 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 Borow 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 Borow 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 Borow 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 Borow's employment within the one-year period following a change in Control for any reason other than Cause, Retirement, death or disability, Borow shall be entitled to: 3 (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 Borow during the ten Fiscal Years (or portions thereof) preceding such termination (including, without limitation, any bonus awarded to Borow 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 Borow; (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 Borow and Aeroflex, such medical reimbursement may be provided without subjecting Borow 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, Borow 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 Borow 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 4 SERP, provided such amount is not otherwise paid to Borow under the terms of the SERP; and (v) continued participation in all employee benefit plans or programs available to Aeroflex employees generally in which Borow was participating on the date of any termination of his employment until the end of the Employment Term; provided; however, that (x) if Borow is either precluded from continuing his participation in any employee benefit plan or program as provided in this clause or if Borow's continued participation would subject Borow 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 Borow 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 Borow would incur in obtaining such benefit on an individual basis; further provided that if such benefit cannot be obtained at any cost, Borow 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 Borow 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 Borow 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 Borow 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 Borow 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 Borow's employment is terminated prior to January 2, 2007, Borow shall be entitled to the benefits in 5 accordance with the provisions of Sections 10(g)(ii)(A), 10(g)(ii)(B) and 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 Borow under this sentence prior to January 2, 2007). Payments under this Section 10(h) shall be in full satisfaction of any payments or benefits Borow 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) Borow or his estate is to receive payments or benefits under Section 10 for any reason other than due to Borow's death, and (b) Borow 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 Borow 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 Borow'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 Borow's employment. Such payments or benefits, which would have otherwise been required to be made over such six month period, shall be paid to Borow in one lump sum payment or otherwise provided to Borow, as soon as administratively feasible after the first day which is at least six months after the termination of Borow'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 Borow'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), Borow 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 6 Section 13(e), the Consulting Period shall continue for three years." 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. 7 IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the day and year first above written. AEROFLEX INCORPORATED By: /s/Harvey R. Blau ------------------------------- Harvey R. Blau, Chairman /s/Leonard Borow ------------------------------- Leonard Borow 8 EX-10.4 5 exhibit10-4.txt AMD. 6 ADAMOVICH EMPLY. AGT. Exhibit 10.4 AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT made effectively as of the 21st day of November, 2006 by and between AEROFLEX INCORPORATED., a Delaware corporation (hereinafter the "Company") and JOHN ADAMOVICH, JR. (hereinafter the "EXECUTIVE"). W I T N E S S E T H: WHEREAS, the Company and Executive entered into an Employment Agreement dated November 9, 2005 (hereinafter the "Employment Agreement"); and WHEREAS, the Company and Employee desire to modify the said Employment Agreement. NOW, THEREFORE, the parties hereto agree as follows: 1. Section 1 shall be amended and restated as follows: "Employment Period. Subject to Section 3, the Company hereby agrees to ------------------- 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 December 31, 2009 (the "Employment Period")." 2. Section 2(b)(i)(2) shall be amended and restated as follows: "COLA. Executive's Base Salary shall be increased during the second, third ------ and fourth years of the Employment Period by an amount equal to the increase in the cost-of-living during the first, second and third years of the Employment Period, respectively, 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 respective amounts shall be calculated and paid to Executive in each instance in a single sum on or before the third month of the second, third and fourth years of the Employment Period." 3. Section 2(b)(ii) shall be amended and restated as follows: "Bonus. The Executive shall receive a bonus (the "Bonus") of Two Hundred ------- Thousand Dollars ($200,000) in each of the first two years of the Employment Period and, except as otherwise may be provided herein, subject to continued employment during such years. Such Bonus shall be payable no later than December 31, 2006 and December 31, 2007, respectively. For the fiscal years 2008 and 2009 occurring during the Employment Period, the Executive shall be entitled to such bonus, if any, as the Chairman of the Board, the President and the Board of Directors shall authorize and determine in the exercise of their sole discretion. 4. Section 3(a) shall be amended to change the Section reference in the fourth line from "12(b)" to "13(b)" 5. Section 3(b) shall be amended to change the Section references in the eighth line from "Section 6, 7 or 8"; to "Section 7, 8 or 9". 6. Section 3(d) shall be amended to change the Section reference in the fourth line from "Section 12(b)" to "Section 13(b)". 7. The following shall be inserted as Section 5: "5. Change in Control. ---------------------- No benefits shall be payable hereunder unless there shall have been a Change in Control, as set forth below, and the Executive's employment by the Company shall thereafter have been terminated in accordance with Section 5(b) hereof. (a) Definition. For purposes of this Agreement, a "Change in 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, 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 2 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 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 3 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 5(a) hereof ----------- constituting a Change in Control of the Company shall have occurred, the Executive, if terminated during the twenty four (24) months following such Change in Control, shall be entitled to the benefits provided in Section 5(c) hereof, unless such termination is due to the Executive's death or Disability, or is by the Company for Cause, or is by the Executive for other than Good Reason. In the event that, upon the occurrence of a Change in Control, the Executive 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 Executive's eligibility for immediate retirement benefits, and any request therefor, shall not preclude the Executive's receipt of severance benefits under Section 5(c) hereof as a result of any termination without Cause or for Good Reason. (c) Severance Benefits on Termination. If, after any Change in Control (as --------------------------------- defined herein) shall have occurred, the Executive's employment shall be terminated during the twenty-four (24) months following the date of such Change in Control (A) by the Company other than for death, Disability or Cause or (B) by the Executive for Good Reason, the Executive shall be entitled to certain severance benefits (hereinafter "the Severance Benefits") as provided below: (i) The Company shall pay the Executive'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 Executive 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 Executive'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 5(c)(iv) and 5(c)(v) hereof, the Company shall pay as Severance Benefits to the Executive 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 Executive'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 Executive 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 Executive and the Executive'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 Executive'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 4 Executive was eligible immediately prior to the date of termination, provided that the Executive'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 Executive 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 5(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 Executive 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 Executive under other arrangements or agreements (the "Total Payments") shall be adjusted as set forth in this Section 5(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 Executive to any tax imposed under Section 409A of 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 Executive's "separation of service" as set forth in Code Section 409A and the regulations issued thereunder." 8. Section 5 shall be renumbered as Section 6 and amended and restated as follows: "Full Settlement, Mitigation. In no event shall the Executive be obligated ----------------------------- to seek 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 Sections 4 or 5 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 7, 8, or 9 or criminal misconduct." 9. Section 6 shall be renumbered as Section 7 and subsection (d) shall be amended and restated as follows: "(d) As used in this Section 7 and in Section 8 and 9, "Company" shall include the Company and any of its subsidiaries." 10. Section 7 shall be renumbered as Section 8 and shall be amended to change the Section reference in the sixth line from "Section 6" to "Section 7". 5 11. Sections 8, 9, 10 and 11 shall be renumbered as Sections 9, 10, 11 and 12 respectively. 12. Section 12 shall be renumbered as Section 13 and subsection (f) shall be amended to change the Section references on the second and sixth lines, respectively, from "Sections 6, 7 and 8" to "Sections 7, 8 and 9". 13. Except as specifically provided in this Amendment, the Employment Agreement is in all other respects hereby ratified and confirmed without amendment. IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the day and year first above written. AEROFLEX INCORPORATED By:/s/Leonard Borow ------------------------ Leonard Borow, President /s/John Adamovich, Jr. ------------------------ John Adamovich, Jr. 6 -----END PRIVACY-ENHANCED MESSAGE-----