Exhibit 10.26


 




	
   

  	
  Execution Copy

  






 


EXECUTIVE EMPLOYMENT AGREEMENT


 


THIS
EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is entered into effectively as
of 1st day of July 2010 (the “Effective Date”), by and between Aeroflex
Incorporated, a Delaware corporation (together with its successors and assigns
permitted hereunder, the “Company”), and Edward S. Wactlar (the “Executive”).


 


WHEREAS,
the Board of Directors of the Company (the “Board”) has determined that it is
in the best interests of the Company 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 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 a period commencing as of the Effective Date
and continuing for a three (3) year period, renewing daily, unless either
party provides notice of non-renewal (the “Employment Period”).  Upon such notice of non-renewal, the
Employment Period shall continue for a period of three (3) years from the
date such notice is received by the non-notifying party; provided,
however, if no such non-renewal notice is received by the
non-notifying party prior to the five year anniversary of the Effective Date,
the Employment Period shall continue for a period of one (1) year from the
date such notice of non-renewal is thereafter received by the non-notifying
party.


 


2.                                      Terms
of Employment.


 


(a)                                 Positions and
Duties.


 


(i)            During the term of the Executive’s
employment hereunder, the Executive shall serve as, and have the title of
Senior Vice President, General Counsel and Secretary 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, or (2) manage personal investments, or (3) serve as an
officer of one or more affiliates of the Company, including the Company’s
parent, so long as such activities, either individually or in the aggregate, 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.


 


(i)            Base Salary.  During the term of the Executive’s employment
hereunder, the Executive shall receive an annual salary of Three Hundred
Seventy Five Thousand Dollars ($375,000.00), as the same may be increased (but
not decreased) from time to time by the Board in its sole discretion (the “Base
Salary”), which shall be paid in accordance with the customary payroll
practices of the Company for services rendered by officers of the Company.


 


(ii)           Bonus.  For each Fiscal Year ending during the
Employment Period, the Executive shall be eligible to receive an annual bonus
of between 50% and 75% of his Base Salary based upon the achievement of the
Company’s  EBITDA target for such Fiscal
Year (the “FY EBITDA Target”) as established by the Board of Directors of the
Company (the “Board”).  More
particularly, 50% of his Base Salary will be awarded to the Executive as a
bonus if the Company’s EBITDA is $10,000,000 less than the FY EBITDA Target
established by the Board (the “Threshold EBITDA”), and, correspondingly, 75% of
his Base Salary will be awarded to the Executive as a bonus if the Company’s
EBITDA is $10,000,000 or more than the FY EBITDA Target established by the
Board (the “Maximum EBITDA”) The Executive’s bonus shall be determined by
linear interpolation as follows:


 


(A) if
the Company’s  EBITDA is between the FY
EBITDA Target and the Threshold EBITDA (but not less than the Threshold
EBITDA), then the amount of the bonus to be paid to the Executive shall be
calculated by (w) dividing
by $10 million, the total of $10 million minus
 the difference between the FY
EBITDA Target and the EBITDA achieved by the Company, (x) multiplying the result by 12.5% (y) adding the resultant percentage amount
(rounded to the nearest hundredth of a percent) to 50% to obtain the “Multiplier
Percentage”, and then (z) multiplying the Base Salary by the Multiplier
Percentage.


 


(B) if
the Company’s EBITDA is equal to or greater than the FY EBITDA Target, then the
amount of the bonus to be paid to the Executive shall be calculated by (w) dividing by $10 million, the sum of $10
million plus the difference
between the EBITDA achieved by the Company (up to an amount no greater than $10
million more than the FY EBITDA Target) and the FY EBITDA Target, (x) multiplying the result by 12.5%, (y) adding the resultant percentage amount
(rounded to the nearest hundredth of a percent) to 


 


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50%
to obtain the Multiplier Percentage, and then (z) multiplying the Base Salary by the
Multiplier Percentage.


 


No
annual bonus will be paid if the Company’s EBITDA is below the Threshold EBITDA
for any Fiscal Year. The FY EBITDA Target shall be equitably adjusted by the
Board in the event of any divestiture, acquisition or other extraordinary
event. Any annual bonus payable hereunder shall be paid on or prior to March 15
of the year following the year such bonus is earned. In the event the Threshold
EBITDA and the Maximum EBITDA parameters are revised by the Board and the
employment agreements of the other senior executive officers are amended
accordingly, the Threshold EBITDA and the Maximum EBITDA parameters herein
shall be deemed amended as well in a manner commensurate therewith.


 


(iii)            Investment Plans.  During the term of the Executive’s employment
hereunder, the Executive shall be entitled to participate in all savings,
equity 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 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
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 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)         Equity Awards.  The Company shall grant to Executive an
option to purchase
            shares
of the common stock of Aeroflex Holding Corp., on or after the effective date
of the initial public offering of Aeroflex Holding Corp., which shall not be
mutually exclusive of any other equity grants or awards as the Board (or any
committee thereof) shall grant to the Executive from time to time during the
Employment Period. The option granted
hereunder will be subject to the terms of an option award


 


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agreement
and may be subject to the terms of an applicable equity plan of the Company or
its affiliates.  The per share exercise
price of the option will be no less than the fair market value of a share of
the common stock of Aeroflex Holding Corp. on the date of grant.


 


(viii)        Car Allowance.   The Company will provide the Executive with
a car allowance of One Thousand Dollars ($1,000.00) per month, such amount to
be paid monthly in accordance with the normal payroll practices of the Company.


 


3.                                      Termination
of Employment.


 


(a)           Death or Disability.  The Executive’s employment shall terminate
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 13(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). Notwithstanding
the foregoing, no such condition shall be considered a “Disability” unless such
condition also meets the requirements of being “disabled” under Section 409A(a)(2)(C) of
the Internal Revenue Code of 1986, as amended (the “Code”).


 


(b)           Cause.  The Company may terminate the Executive’s
employment 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  any of Sections 6, 8 or 10; (iv) the
conviction of the Executive of any felony or the conviction of the Executive of
any misdemeanor involving any acts of dishonesty including embezzlement, fraud
or any other act that results or reasonably could be expected to result in an
economic loss or harm to the Employer (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 or the President consistent with the terms of this Agreement.


 


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(c)           Termination for Good Reason by the
Executive.  The Executive 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 is not cured within ten (10) Business
Days of the receipt by the Company of written notice thereof from the Executive
and shall include, without limitation,  (i) 
the loss of, or an  adverse change in,
the Executive’s position or titles; (ii) a diminution or materially
adverse change in the duties and responsibilities of the Executive or the
assignment to the Executive of duties and responsibilities which are
inconsistent with the Executive’s position in the Company; (iii) a reduction
in the Executive’s Base Salary or the failure to pay the same or any bonus or
other benefits hereunder when due or within a reasonable period of time
thereafter, (iv) the relocation of the Executive’s office to a location
which is more than 25 miles from the current location of corporate headquarters
of the Company.


 


(d)           Notice of Termination.  Any termination (i) by the Company,
whether for Cause or without Cause, or (ii) by 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 13(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 circumstance in enforcing the Executive’s or
the Company’s rights hereunder.


 


(e)           Date of Termination.  “Date of Termination” means (i) if the
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.


 


(a)           Without Cause.  If during the Employment Period, the Company
shall terminate the Executive’s employment without Cause or the Executive shall
terminate his employment for Good Reason, except in either such case within
eighteen (18) months following a Change in Control (as defined below), the
Company shall pay to the Executive or his heirs (1) within ten (10) days
after the Date of Termination, the sum


 


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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 remainder of the Employment Period immediately following the
Date of Termination, but no event less than one (1) year if such
termination shall occur after the 5 year anniversary of the Effective Date,
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; and (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; and (4) annual
bonuses for the remainder of the Employment Period in accordance with Section 2(b) (ii),
as if the Executive had not been terminated, such bonuses, if any, shall be
paid at the time the company pays bonuses to other senior executives of the
Company; provided, however, if such termination
occurs after the five year anniversary of the Effective Date, then the bonus
applicable for the Fiscal Year in which the Date of Termination occurs, shall
be prorated to the Date of Termination, but in no event less than 50% of the
bonus to which the Executive otherwise would have been entitled for that Fiscal
Year pursuant to Section 2(b)(ii). In addition, all outstanding equity
compensation awards, including the equity awards described in Section 2(b) (vii),
shall immediately vest, and the Executive and qualifying members of the
Executive’s family shall be entitled to continue to participate, at the Company’s
expense, in the Company’s Welfare Plans, including medical, dental and
prescription coverage, for the remainder of such Employment Period, but in no
event less than one year.


 


(b)           Death or Disability.  If the Executive’s employment is 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; and (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 year
in which the Executive’s death or Disability occurs, based on the actual
performance of the Company for such year, paid at the time the Company pays
such bonuses to other senior executives of the Company.  In addition, the qualifying 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 twenty-four
months after the Date of Termination.


 


(c)           Cause.  If the Executive’s employment shall be
terminated by 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.


 


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(d)           Change of Control.  In the event there shall be, and only upon
the occurrence of, a Change in Control as hereinafter defined, then, if the
Executive’s employment is terminated by the Company without Cause (including by
a notice of non-renewal by the Company pursuant to Section 1), or by the
Executive for Good Reason, in either case within eighteen (18) months
thereafter, the Company shall pay to the Executive or his heirs within ten (10) days
of the Date of Termination (subject to Section 4(e)), the following: (i) the
Accrued Obligations, (ii) the Accrued Investments, and (iii) a lump
sum severance payment equal to (A) the amount of the Executive’s Base
Salary for the remainder of the Employment Period, but in no event less than
three years, if such termination shall occur prior to the five year anniversary
of the Effective Date or (B)  the Executive’s Base Salary for one year if
such termination shall occur at any time after the five year anniversary of the
Effective Date, together with an amount equal to either (x) three times
the average of the annual bonuses received by the Executive for the prior three
Fiscal Years of the Company if the termination occurs prior to the 5 year
anniversary of the Effective Date or (y) one times the average of the
annual bonuses received by the Executive for each of the prior three Fiscal
Years of the Company if the termination occurs after the 5 year anniversary of
the Effective Date. In addition, all outstanding equity compensation awards,
including the equity awards described in Section 2(b) (vii), shall
vest immediately, and the Executive and the qualifying members of the Executive’s
family shall continue their participation at the Company’s expense in all of
the Company’s Welfare Plans, including medical, dental and prescription
coverage, for the balance of the Employment Period but in no event less than
one year.  Notwithstanding the foregoing,
if all or any portion of the payments and/or benefits provided under this
Agreement, and/or any other payments and benefits that the Executive receives
or is entitled to receive from the Company, its subsidiaries or any of its
affiliates, constitutes an excess “parachute payment” within the meaning of Section 280G(b) of
the Internal Revenue Code of 1986, as amended, (the “Code”) (each such
parachute payment, a “Parachute Payment”) and will result in the imposition on
the Executive of an excise tax under Section 4999 of the Code, then, the
Parachute Payments shall instead be reduced to the aggregate amount of
Parachute Payments that may be made to the Executive without incurring such
excise tax, as determined by the Company’s auditors.  Any such reduction in the preceding sentence
shall be done first by reducing any cash payments with the last payment reduced
first; next any equity or equity derivatives that are included under Section 280G
of the Code at full value rather than accelerated value; next any equity or
equity derivatives based on acceleration value shall be reduced with the
highest value reduced first (as such values are determined under Treasury Regulation
Section 1.280G-1, Q&A 24); finally any other non-cash benefits will be
reduced.  For the purpose of this
Section, a “Change in Control” (which in all respects shall satisfy the
requirements of a “change in control event” as set forth in Treasury Regulations
§ 1.409A-3(i) (5)), shall mean the occurrence of a “change in the
ownership”, a “change in the effective control” or a “change in the ownership
of a substantial portion of the assets” of the Company determined as follows:


 


(i)                a “change in the ownership” of
the Company shall occur on the date on which any one person or more than one
person acting as a group, directly or indirectly, acquires ownership of stock
of the Company that, together with the stock held


 


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by
such person or group, constitutes more than 50% of the total fair market value
or total voting power of the stock of the Company, as determined in accordance
with Treasury Regulations § 1.409A-3(i)(5)(v); provided,
however, if any one person or more than one person acting as a group
is considered to own already more than 50% of the total fair market value or
total voting power of the stock of the Company, the acquisition of additional
stock by the same person or persons is not considered to cause a “change in the
ownership” of the Company (or to cause a “change in the effective control” of
the Company as contemplated in subsection (ii) or (iii) below); 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 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 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, 50% 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 of the Company in substantially the same proportions,
respectively, as their ownership immediately prior to the acquisition of the
stock and Voting Securities (collectively with (A), (B), and (C), the “Exempt
Acquisitions”)


 


(ii)           a “change in the effective control”
of the Company shall occur on the date any one person, or more than one person
acting as a group, acquires (or has acquired during the 12-month period ending
on the date of the most recent acquisition by such person or persons) ownership
of stock of the Company possessing 30 percent or more of the total voting power
of the stock of the Company; provided, however, that none of the Exempt
Acquisitions shall constitute a Change in Control;


 


(iii)          a “change in the effective control” of
the Company shall occur on the date on which a majority of the members of the
Company’s Board of Directors is replaced during any 12 month period by
directors whose appointment or election is not endorsed by a majority of the
members of the Company’s Board of Directors before the date of the appointment
or election, as determined in accordance with Treasury Regulations §
1.409A-3(i)(vi); and


 


(iv)          a “change in the ownership of a
substantial portion of the assets” of the Company shall occur on the date on
which any one person or more than one person acting as a group, acquires (or
has acquired during the 12 month period ending on the date of the most recent
acquisition by such person or persons), directly or indirectly, assets from the
Company that have a total gross fair market value equal to or


 


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more
than 50% of the total gross fair market value of all of the assets of the
Company immediately before such acquisition or acquisitions, as determined in
accordance with Treasury Regulation § 1.409A-3(i)(5) (viii); provided, however, a transfer of assets shall not be treated
as a “change in the ownership of a substantial portion of the assets” of the
Company when such transfer is made to an entity that is controlled by the
shareholders of the Company, as determined in accordance with Treasury
Regulation § 1.409A-3(i)(5)(vii)(B).


 


(e)           Payments; Compliance with Section 409A
of the Code. Notwithstanding anything herein to the contrary, if (i) the
Executive is to receive payments or benefits under Section 4 by reason of
his separation from service (as such term is defined in Section 409A of
the Code) other than as a result of his death, (ii) the Executive is a “specified
employee” within the meaning of Code Section 409A for the period in which
the payment or benefits would otherwise commence, and (iii) such payment
or benefit would otherwise subject the Executive to any tax, interest or
penalty imposed under Section 409A of the Code (or any regulation
promulgated thereunder) if the payment or benefit would commence within six months
of a termination of the Executive’s employment, then such payment or benefit
required under Section 4 shall not commence until the first day which is
at least six months after the termination of the Executive’s employment.  Such payments or benefits, which would have
otherwise been required to be made over such six month period, shall be paid to
the Executive in one lump sum payment or otherwise provided to the Executive as
soon as administratively feasible after the first day which is at least six months
after the termination of the Executive’s employment.  Thereafter, the payments and benefits shall
continue, if applicable, for the relevant period set forth in Section 4.  Each severance installment contemplated under
Section 4 shall be treated as a separate payment in a series of separate
payments under Treasury Regulation Section 1.409A-2(b)(2)(iii). For
purposes of this Agreement, all references to “termination of employment” and
other similar language shall be deemed to refer to the Executive’s “separation
from service” as defined in Treasury Regulation Section 1.409A-1(h).


 


5.             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 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, 8, 10 or criminal misconduct.


 


6.             Confidential
Information.


 


(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, 


 


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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
Sections 7, 8 and 10, “Company” shall include the Company and any of its
subsidiaries.


 


7.             Surrender
of Materials Upon Termination. 
Upon any termination of 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, 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 except as provided in Section 2(a)(ii) above.  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, 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 


 


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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 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, Discoveries and
Inventions, and All Original Works of Authorship.  All 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, 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 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 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 or any other
action  


 


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or
non-action that would constitute a basis for termination for cause by the
Company pursuant to Section 3(b).


 


12.          Compliance with Code Section 409A.  It is intended that any expense reimbursement
made under this Agreement shall be exempt from Code Section 409A.
Notwithstanding the foregoing, if any expense reimbursement shall be determined
to be “deferred compensation” within the meaning of Code Section 409A,
including, without limitation, any reimbursement under Sections 2(b)(v) or
4(a), then the reimbursement shall be made to the Executive as soon as
practicable after submission of the reimbursement request, but no later than December 31
of the year following the year during which the expense was incurred.


 


13.          Miscellaneous.


 


(a)           This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to such states conflict of laws principles. For all actions or
proceedings arising under, or relating to, this Agreement, the parties
unconditionally and irrevocably consent to the personal jurisdiction of the
courts of the State of New York situated in Nassau County, and agree not to
commence any such action in any other courts. The captions of this Agreement
are not part of the provisions hereof and shall have no 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:

  	
  Mr. Edward
  S. Wactlar

  4
  Westchester Avenue

  Jericho,
  New York 11753

  Mobile
  Telephone No.:  (516) 382-4022

  
	
   

  	
   

  
	
  If to the Company:

  	
  Aeroflex
  Incorporated

  35
  South Service Road

  P.O. Box
  6022

  Plainview,
  New York 11803-0622

  Attention:  President

  



 


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  Telecopier
  No.:  (516)  694-4823

  Telephone
  No.:  (516)  694-6700

  
	
   

  	
   

  
	
  with
  a copy to:

  	
  Moomjian,
  Waite, Wactlar & Coleman, LLP.

  100
  Jericho Quadrangle, Suite 225

  Jericho,
  New York 11753

  Attention: Lonnie Coleman, Esq.

  Telecopier No.: 
  (516) 937-5900

  Telephone
  No.:  (516) 937-5050

  



 


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, 8 and 10 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, including a claim for damages, shall be entitled to seek
equitable relief, including injunctive relief and specific performance, in
connection with a breach of Sections 6, 7, 8 and 10 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.


 


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(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 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/
  Edward S. Wactlar

  
	
   

  	
  Edward
  S. Wactlar

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AEROFLEX
  INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Leonard Borow

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Leonard
  Borow, President, Chief Executive Officer

  



 


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