Document:

Exhibit 10.39

 

Aeroflex Holding Corp.

Aeroflex Incorporated

35 South Service Road

Plainview, New York  11803

 

November [  ], 2010

 

Veritas
Capital Fund Management, L.L.C.

590
Madison Avenue

New
York, New York  10022

 

GGC
Administration LLC

One
Embarcadero Center, 33rd Floor

San
Francisco, California  94111

 

Goldman,
Sachs & Co.

200
West Street

New
York, New York  10282

 

Dear
Sirs:

 

Reference
is made to the Advisory Agreement, initially dated as of August 15, 2007,
as amended to date (the “Advisory Agreement”), by and among VGG Holding LLC, a
Delaware limited liability company, Aeroflex Holding Corp. (formerly known as
AX Holding Corp.), a Delaware corporation (“Holding”), Aeroflex Incorporated, a
Delaware corporation (“Aeroflex” and, together with Holding, the “Companies”
and each, a “Company”), Veritas Capital Fund Management, L.L.C., a Delaware
limited liability company (“Veritas”), GGC Administration, LLC, a Delaware
limited liability company (“Golden Gate”), and Goldman, Sachs & Co. (“Goldman”
and, together with Veritas and Golden Gate, the “Advisors” and each, an “Advisor”).  Capitalized terms used but not defined herein
shall have the meaning ascribed to them in the Advisory Agreement.

 

The
parties hereto acknowledge that the Advisory Agreement, and the obligations of
the Advisors to provide Services pursuant to the Advisory Agreement, will
terminate upon the consummation of the initial public offering of shares of
common stock of Holding (the “IPO”), except that the Companies’ obligations to
indemnify each of the Advisors and their respective officers, directors,
employees, members, partners, agents, representatives, Affiliates and
controlling persons (if any), as set forth in Section 6 of the Advisory
Agreement, and to reimburse each of the Advisors and any of their Affiliates
for any Expenses accruing prior to the execution of this letter agreement, as
set forth in Section 5(d) of the Advisory Agreement, will survive
termination.  The parties hereto further
acknowledge and agree that in consideration of such termination, and
simultaneously therewith, Holding shall pay a termination fee in the aggregate
amount of $16,900,000.00 in cash to the Advisors (of which $7,971,698.13 will
be

 

 

paid
to Veritas, $5,580,188.68 will be paid to Golden Gate and $3,348,113.19 will be
paid to Goldman).  In addition, and
without limiting or modifying anything in this letter agreement, Holding will
separately pay to the Advisors under the Advisory Agreement, simultaneously
with the consummation of the IPO, a Transaction Fee in the aggregate amount of
$2,500,000.00 in cash (of which $1,179,245.28 will be paid to Veritas,
$825,471.70 will be paid to Golden Gate and $495,283.02 will be paid to
Goldman).

 

This
letter agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this letter and all of which, when
taken together, will be deemed to constitute one and the same instrument.

 

This
letter agreement shall be governed by the laws of the State of New York.

 

[Remainder of the Page Intentionally
Left Blank]

 

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  AEROFLEX
  INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AEROFLEX
  HOLDING CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VGG
  HOLDING LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
  Agreed
  to and accepted by:

  
	
   

  
	
  VERITAS
  CAPITAL FUND MANAGEMENT, L.L.C.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GGC ADMINISTRATION, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GOLDMAN, SACHS & CO.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:Exhibit 10.40

 

Execution version

 

DEALER MANAGERS AGREEMENT

 

November 5, 2010

 

Credit Suisse Securities (USA) LLC

Goldman, Sachs & Co.,

As Dealer Managers,

c/o Credit Suisse Securities (USA) LLC

Eleven Madison Avenue

New York, New York 10010

 

Ladies and Gentlemen:

 

Aeroflex Incorporated, a Delaware corporation (the “Company”),
plans to commence a tender offer (the “Tender Offer”) for certain of the
Company’s outstanding 11.75% Senior Notes due 2015 (the “Securities”) such that
the aggregate amount that the Company would be required to pay for the purchase
of the Securities shall not exceed $187,250,000 (which amount is subject to
change), upon the terms and subject to the conditions set forth in the tender
offer materials (the “Offer Material”) which the Company has caused to be
prepared and furnished to you on or prior to the date hereof for use in
connection with the Tender Offer, including (a) the offer to purchase
dated the date hereof (the “Offer to Purchase”), (b) the letter of
transmittal to be used by holders to tender Securities (the “Letter of
Transmittal”) and (c) any press releases or newspaper advertisements
relating to the Tender Offer.  Any other
offering materials and information relating to the Tender Offer that the
Company or any of its affiliates may prepare or approve shall be called “Additional
Material.”

 

The Tender Offer is being conducted in connection
with the initial public offering and sale (the “IPO”) by Aeroflex Holding
Corp., a Delaware corporation, of its common stock (the “Common Stock”), a
portion of the proceeds from which will be contributed to the Company and used
by the Company to (i) purchase and cancel a portion of the outstanding
balance under its existing Senior Subordinated Unsecured Credit and Guaranty
Agreement, dated as of September 21, 2007, among the Company, certain
subsidiaries of the Company, as guarantors, the lenders party thereto, and
Goldman Sachs Credit Partners L.P., as administrative agent, sole lead
arranger, sole bookrunner and syndication agent, (ii) consummate the
Tender Offer and (iii) pay related fees and expenses.  The consummation of the IPO will be a
condition to the settlement of the Tender Offer.

 

1.  Appointment of Dealer Managers

 

The Company hereby appoints you as dealer managers
in connection with

 

 

the Tender Offer (the “Dealer Managers”) and
authorizes you to act on its behalf in accordance with this agreement and the
terms of the Offer Material and Additional Material.

 

The Company has prepared and approved the Offer
Material and authorizes you and any other securities dealer or any commercial
bank or trust company to use the Offer Material and Additional Material in
connection with the solicitation of tenders. 
You agree to furnish no written material to holders of Securities in
connection with the Tender Offer other than the Offer Material and Additional
Material.  It is understood that nothing
in this agreement nor the nature of your services shall be deemed to create a
fiduciary or agency relationship between you, on the one hand, and the Company,
on the other hand.

 

2.  Mailing of Offer Material

 

The Company shall cause to be delivered to each
registered holder of any Securities, to each participant in the Depository
Trust Company (“DTC”) appearing in the most recent available DTC securities
position listing as a holder of Securities and to each Non Objecting Beneficial
Owner (“NOBO”) appearing in the most recent available NOBO list as an owner of
Securities (each such registered holder, participant or owner, a “Registered or
Beneficial Owner”), as soon as practicable, by hand, by overnight courier or by
another means of expedited delivery, copies of the Offer to Purchase and other
appropriate Offer Material and Additional Material.  Thereafter, to the extent practicable until
the expiration of the Tender Offer, the Company shall use its best efforts to
cause copies of such material to be mailed to each person who becomes a
Registered or Beneficial Owner of Securities.

 

3.  Solicitation of Tenders

 

(a)                                  You agree to use your customary reasonable efforts to solicit tenders of
Securities pursuant to the Tender Offer. 
Neither you nor any of your affiliates, nor any partners, directors,
officers, agents, employees or controlling persons (if any) of you or any of
your affiliates, shall have any liability to the Company or any other person
for any act or omission on the part of any securities broker or dealer (other
than yourselves), commercial bank or trust company that solicits tenders, and
neither you nor any of such persons or entities referred to above shall have
any liability to the Company or any person asserting claims on behalf of or in
right of the Company in connection with or as a result of either your
engagement or any matter referred to in this agreement except, as to each
Dealer Manager, severally and not jointly, to the extent that such liability
results from the gross negligence or bad faith of such Dealer Manager in
performing the services that are the subject of this agreement. In soliciting
tenders, no securities broker or dealer (other than yourselves), commercial
bank or trust company shall be 

 

 

deemed to act as your agent or the agent of
the Company, and you, as Dealer Managers, shall not be deemed the agent of any
other securities broker or dealer or of any commercial bank or trust
company.  Anything herein to the contrary
notwithstanding, the obligations of you, as Dealer Managers, shall be several
and not joint and no Dealer Manager shall be liable for any action or omission
of the other Dealer Managers.

 

(b)                                 The Company agrees to furnish to you as many copies as you may
reasonably request of the Offer Material and Additional Material in final form
for use by you in connection with the Tender Offer.  The Company shall not amend or supplement the
Offer Material, or prepare or approve any Additional Material for use in
connection with the Tender Offer, without your consent, which consent shall not
be unreasonably withheld.

 

(c)                                  The Company agrees to advise you promptly of (i) the occurrence of
any event which could cause the Company to withdraw, rescind, terminate or
modify the Tender Offer, (ii) any proposal or requirement to amend or
supplement the Offer Material or Additional Material or (iii) any other
information relating to the Tender Offer which you may from time to time reasonably
request.

 

(d)                                 The Company will not use or publish any material in connection with the
Tender Offer, or refer to you in any such material, without your consent, which
consent shall not be unreasonably withheld. 
The Company will promptly inform you of any litigation or administrative
action or claim with respect to the Tender Offer.

 

(e)                                  The Company agrees to furnish to you, to the extent the same is
available to the Company, cards or lists or copies thereof showing the names
and addresses of, and principal amount of Securities held by, the Registered or
Beneficial Owners of Securities as of a recent date, and shall use its best
efforts to advise you from day to day during the period of the Tender Offer as
to any changes in identity of the Registered or Beneficial Owners of
Securities.  You agree to use such
information only in connection with the Tender Offer and not to furnish such
information to any other person except in connection with the Tender Offer.

 

(f)                                    The Company shall arrange for the depositary named in the Letter of
Transmittal orally to inform you during each business day during the Tender
Offer (to be followed on a daily basis by written confirmation) as to the
principal amount of Securities which have been tendered pursuant to the Tender
Offer during the interval since its previous daily report to you under this
provision, and the 

 

 

names and addresses of any registered holder
tendering $50,000 or more aggregate principal amount of Securities.

 

4.  Compensation and Expenses

 

(a)                                  The Company shall pay to you in the aggregate, as compensation for your
services as Dealer Managers, a fee of $2.50  for each
$1,000 principal amount of Securities tendered pursuant to the Tender Offer,
which shall be allocated between the Dealer Managers as set forth on Schedule 1
hereto.  Such fee shall be payable
concurrently with the payment for Securities under the Tender Offer.

 

(b)                                 Whether or not any Securities are tendered pursuant to the Tender Offer,
the Company shall pay all expenses of the preparation, printing, mailing and
publishing of the Offer Material and Additional Material, all fees payable to
securities dealers (including you), commercial banks, trust companies and
nominees as reimbursement of their customary mailing and handling expenses incurred
in forwarding the Offer Material and Additional Material to their customers,
all fees and expenses of the depositary referred to above, the trustee under
the indenture governing the Securities and any information agent, all
advertising charges, any applicable transfer taxes payable in connection with
the Tender Offer and all other expenses of the Company in connection with the
Tender Offer.  The Company shall
reimburse you for all of your reasonable and documented out-of-pocket expenses
incurred by you in connection with your services under this agreement,
including, without limitation, your reasonable internal expenses such as
duplicating, telephone and facsimile and binding and the reasonable fees and
the disbursements of one counsel acting for all of the Dealer Managers.

 

5.  Representations and Warranties by the
Company

 

The Company represents and warrants to, and agrees
with, you that:

 

(a)                                  The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.

 

(b)                                 The Company has the requisite power and authority (corporate and
otherwise) and has duly taken all necessary corporate action to authorize the
making and consummation of the Tender Offer, the execution, delivery and performance
of this agreement and the consummation of the transactions contemplated hereby;
and this

 

 

agreement has been duly executed and
delivered by, and constitutes a valid and binding agreement of, the Company,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors’ rights and to general equity principles
(regardless of whether enforcement is considered in a proceeding in equity or
at law).

 

(c)                                  Neither the Company nor any of its subsidiaries have sustained since the
date of the latest audited financial statements included or incorporated by
reference in the Offer to Purchase any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Offer to
Purchase; and, since the respective dates as of which information is given in
the Offer to Purchase, there has not been any material change in the capital
stock  or long-term debt of the Company or
any of its subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the general
affairs, management, financial position, stockholders’ equity or results of
operations of the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Offer to Purchase.

 

(d)                                 The Offer Material and Additional Material comply and (as amended or
supplemented, if amended or supplemented) will comply in all material respects
with all applicable requirements of the federal securities laws; and the Offer
Material and Additional Material do not and (as amended or supplemented, if
amended or supplemented) will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.

 

(e)                                  The making and consummation of the Tender Offer, the execution, delivery
and performance by the Company of this agreement and the consummation of the
transactions contemplated hereby do not and will not (i) conflict with, or
result in the acceleration of any obligation under or in a breach of, or
constitute a default under, any of the provisions of any indenture, agreement
or undertaking to which the Company is a party or by which the Company is bound
or to which any of the property or assets of the Company is subject, except as
would not individually or in the aggregate have a material adverse effect on
the business, prospects, condition (financial or

 

 

otherwise), earnings or results of
operations of the Company and its subsidiaries, taken as a whole,
(ii) result in any violation of the Certificate of Incorporation or
Bylaws, as amended, applicable to the Company or (iii) result in the
violation of the provisions of any federal, state or local law, rule or
regulation applicable to the Company, or any order applicable to the Company of
any court or of any other governmental agency or instrumentality having
jurisdiction over it or any of its property.

 

(f)                                    No consent, approval, authorization or order of, or registration,
qualification or filing with, any court or regulatory authority or other
governmental agency or instrumentality is required in connection with the
making and consummation of the Tender Offer, the execution, delivery and
performance of this agreement or the consummation of the transactions
contemplated hereby.

 

(g)                                 Upon the issuance and sale of the Common Stock, the Company will have
sufficient funds, and will have sufficient authority to use such funds under
applicable law, to pay the full purchase price of the Securities that the
Company may become committed to purchase pursuant to the Tender Offer and all
related fees and expenses.

 

(h)                                 The Company agrees to pay promptly, in accordance with the terms and
subject to the conditions of the Offer Material and Additional Material, the
consideration for Securities validly tendered and not withdrawn and all related
fees and expenses of the Tender Offer.

 

(i)                                     The Company has made appropriate arrangements with DTC to allow for the
book-entry movement of tendered Securities between depository participants and
the depositary referred to above.

 

6.  Conditions of Obligation

 

The obligation of each of you to act as Dealer
Managers hereunder shall at all times be subject, in your individual
discretion, to the conditions that:

 

(a)                                  All representations, warranties and other statements of the Company
contained herein are now, and at all times during the Tender Offer will be,
true and correct.

 

(b)                                 The Company at all times during the Tender Offer shall have performed
all of its obligations hereunder theretofore required to have been performed.

 

 

(c)                                  No stop order, restraining order or injunction shall have been issued
(and not subsequently stayed or vacated) by, and no proceeding, litigation or
investigation shall have been initiated by or before, any agency, court or
other governmental body with respect to the making or the consummation of the
Tender Offer, which you, in good faith after consultation with your legal
counsel and after consultation with the Company and its legal counsel, believe
makes it inadvisable for you to continue to render services as Dealer Managers
hereunder.

 

(d)                                 Schulte Roth & Zabel LLP, counsel to the Company, shall have
furnished to you, as Dealer Managers, (a) concurrently with the execution
of this agreement, their opinion and negative assurance letter dated the date
of the commencement of the Tender Offer and (b) on the settlement date,
their opinion and negative assurance letter dated as of the settlement date, in
each case, substantially to the effect set forth in Exhibit A hereto.

 

7.  Indemnity and Survival of Certain
Provisions

 

(a)                                  The Company agrees (i) to indemnify and hold each Dealer Manager
harmless against any and all losses, damages, liabilities or claims (or actions
in respect thereof) (A) that arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the Offer
Material or any Additional Material or in any of the documents incorporated by reference
therein or in any amendment or supplement to any of the foregoing, or that
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, (B) that arise out of or are based upon any breach
by the Company of any representation or warranty or failure by the Company to
comply with any obligation set forth herein or (C) that arise out of or
are based upon a withdrawal, rescission, termination or modification of or a
failure to make or consummate the Tender Offer; and (ii) to indemnify and
hold each Dealer Manager harmless against any and all other losses, damages,  liabilities or claims (or actions in respect
thereof) that otherwise arise out of or are based upon or asserted against it
by any person, including stockholders of the Company in connection with or as a
result of its acting as a Dealer Manager or rendering financial advisory
services in connection with the Tender Offer or that arise in connection with
any other matter referred to in this agreement, except, however, that the
Company shall not be obligated to indemnify and hold harmless a Dealer Manager
to the extent that any such losses, 

 

 

damages, liabilities or claims referred to in this
clause (ii) were finally judicially determined to have resulted from the
gross negligence or bad faith of such Dealer Manager in performing the services
that are the subject of this agreement. 
In the event that either Dealer Manager becomes involved in any capacity
in any action, proceeding or investigation brought by or against any person,
including stockholders of the Company in connection with any matter referred to
in this agreement, the Company agrees periodically to reimburse such Dealer
Manager for its reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith.  The Company also agrees that neither Dealer
Manager nor any of its affiliates, nor any partners, directors, officers,
agents, employees or controlling persons (if any), as the case may be, of
either Dealer Manager or any of its affiliates, shall have any liability to the
Company or any person asserting claims on behalf of or in right of the Company
for or in connection with any matter referred to in this agreement except that
each Dealer Manager, severally and not jointly, shall be liable to the extent
that any loss, damage, expense, liability or claim incurred by the Company was
finally judicially determined to have resulted from the gross negligence or bad
faith of such Dealer Manager in performing the services that are the subject of
this agreement.

 

(b)                                 Promptly after receipt by either Dealer Manager of notice of its
involvement in any action, proceeding or investigation, it shall, if a claim in
respect thereof is to be made against the Company under subsection (a) of
this Section 7, notify the Company in writing of such involvement, but the
failure to so notify the Company shall not relieve it from any liability which
it may otherwise have to such Dealer Manager under subsection (a) of this Section 7
except to the extent that the Company did not otherwise know of such matter and
suffers actual prejudice as a result of such failure, and in no event shall
such failure relieve the Company from any obligation to provide reimbursement
and contribution to such Dealer Manager. 
In case any such action shall be brought against a Dealer Manager and
such Dealer Manager shall notify the Company of the commencement thereof, the
Company shall be entitled to participate therein and, to the extent that it
shall wish, to assume the defense thereof, with counsel reasonably satisfactory
to such Dealer Manager (who shall not, except with such Dealer Manager’s
consent, be counsel to the Company), and, after notice from the Company to such
Dealer Manager of its election so to assume the defense thereof, the Company
shall not be liable to such Dealer Manager under such subsection for any legal
expenses of other counsel or any other expenses (other than for which the

 

 

indemnified party is entitled to be
indemnified hereunder), in each case subsequently incurred by such Dealer
Manager, in connection with the defense thereof other than reasonable costs of
investigation.  The Company shall not,
without such Dealer Manager’s written consent, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not such Dealer Manager is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release from all
liability arising out of such action or claim for each Dealer Manager and (ii) does
not include a statement as to or an admission of fault, culpability or a
failure to act, by any Dealer Manager or on behalf of any Dealer Manager.  The Company shall not be required to
indemnify any Dealer Manager for any amount paid or payable by any Dealer
Manager in the settlement or compromise of, or entry into any judgment with
respect to, any pending or threatened action or claim in respect of which indemnification
or contribution may be sought hereunder without the written consent of the
Company, which consent shall not be unreasonably withheld.

 

(c)                                  Notwithstanding the foregoing, each Dealer Manager shall have the right
to employ its own counsel in any such action, but the reasonable fees and
expenses of such counsel shall be at your expense unless (i) the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such action, (ii) the Company shall not
have employed counsel to take charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) the
named parties to such action (including any impleaded parties) include such
Dealer Manager and the Company (or the Company has assumed the defense of such
action), and such Dealer Manager shall have reasonably concluded that there may
be defenses available to such Dealer Manager that are different from or
additional to those available to the Company (in which case the Company shall
not have the right to direct the defense of such action on such Dealer Manager’s
behalf).

 

(d)                                 If for any reason the indemnification provided for in subsection (a) of
this Section 7 is unavailable or insufficient to hold either Dealer
Manager harmless, then the Company shall contribute to the amount paid or
payable by such Dealer Manager as a result of such loss, damage, expense,
liability or claim (or action in respect thereof) referred to therein in such
proportion as is appropriate to reflect the relative benefits of the Company
and its stockholders on

 

 

the one hand and you on the other hand in
the matters contemplated by this agreement as well as the relative fault of the
Company and such Dealer Manager with respect to such loss, damage, expense,
liability or claim (or action in respect thereof) and any other relevant
equitable considerations.  The relative
benefits of the Company and its stockholders on the one hand and a Dealer
Manager on the other hand in the matters contemplated by this agreement shall
be deemed to be in the same proportion as the maximum aggregate value of the
consideration proposed to be paid by the Company to acquire Securities pursuant
to the Tender Offer bears to the maximum aggregate fee proposed to be paid to
such Dealer Manager pursuant to Section 4(a) of this agreement as a
result of such acquisition of Securities. 
The relative fault of the Company and a Dealer Manager shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by, or relating to, the
Company and its affiliates or such Dealer Manager and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.  The Company
and each Dealer Manager agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this subsection (d).  Notwithstanding the foregoing, no Dealer
Manager shall be obligated to contribute any amount hereunder that exceeds the
amount of the fees received by such Dealer Manager pursuant to this agreement.

 

(e)                                  The agreements contained in Section 4 and in this Section 7
and the representations and warranties of the Company set forth in
Section 5 hereof shall survive any termination or cancellation of this
agreement, any completion of the engagement provided by this agreement, any
investigation made by or on behalf of any Dealer Manager, any of their
respective officers or partners or any person controlling any Dealer Manager,
any termination or expiration of the Tender Offer and any acquisition of
Securities, whether pursuant to the Tender Offer or otherwise.

 

(f)                                    The reimbursement, indemnity and contribution obligations of the Company
under this Section 7 shall be in addition to any liability that the
Company may otherwise have, shall extend upon the same terms and conditions to
each Dealer Manager’s affiliates and the partners, directors, officers, agents,
employees and controlling persons (if any), as the case may be, of each Dealer
Manager and any such affiliate, and shall be binding upon and inure to the
benefit

 

 

of any successors, assigns, heirs and personal
representatives of the Company, each Dealer Manager, any such affiliate and any
such other person referred to above.

 

8.  Termination

 

(a)                                  Subject to Section 7 hereof, this agreement shall automatically
terminate upon the consummation, expiration, termination or withdrawal of the
Tender Offer.

 

(b)                                 In addition, the services of any Dealer Manager may be terminated by
such Dealer Manager, or the services of all (but not less than all) Dealer
Managers may be terminated by the Company, at any time upon prior written
notice by the terminating party to the other parties hereto without liability
or continuing obligation (except as otherwise set forth herein) of (i) the
Company or any Dealer Manager in the event the services of all Dealer Managers
are terminated or (ii) the terminating Dealer Manager and the other
parties hereto in respect of any such terminating Dealer Manager.
Notwithstanding any termination (other than a termination by a Dealer Manager
without cause), each Dealer Manager shall be entitled to any fees and expenses
payable to such Dealer Manager pursuant to this agreement. In addition, if at
any time prior to the expiration of 180 days following such termination by the
Company without cause, the Company consummates, or enter into a definitive
agreement with one or more other dealer managers that subsequently results in
the consummation of, a tender offer with respect to the Securities, the Company
will pay the Dealer Managers the fees specified herein with respect to any
Securities purchased in such transaction.

 

(c)                                  Notwithstanding anything herein to the contrary, the agreements
contained in Sections 4 and 7 hereof shall survive any termination or
cancellation of this agreement, any completion of the engagement provided by
this agreement, any investigation made by or on behalf of you, any of your
officers or partners or any person controlling you, any termination or
expiration of the Tender Offer and any acquisition of Securities, whether
pursuant to the Tender Offer or otherwise.

 

9.  Miscellaneous

 

(a)                                  This agreement is made solely for the benefit of you, the Company and
any partner, director, officer, agent, employee, controlling person or
affiliate referred to in Section 7 hereof, and their respective successors,
assigns, and legal representatives, and no

 

 

other person shall acquire or have any right
under or by virtue of this agreement.

 

(b)                                 In the event that any provision hereof shall be determined to be invalid
or unenforceable in any respect, such determination shall not affect such
provision in any other respect or any other provision hereof, which shall
remain in full force and effect.

 

(c)                                  Except as otherwise expressly provided in this agreement, whenever
notice is required by the provisions of this agreement to be given to
(i) the Company, such notice shall be in writing addressed c/o the Company
at 35 South Service Road, P.O. Box 6022, Plainview, New York 11803,
Attention: Chief Financial Officer, with a copy to Michael R. Littenberg at
Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022;
and (ii) you, such notice shall be in writing addressed to you, Credit
Suisse Securities (USA) LLC at Eleven Madison Avenue, New York, New York 10010,
facsimile number (212) 325-4296, Attention: IBD Legal; Goldman, Sachs &
Co. at 200 West Street, New York, New York 10282-2198, facsimile number (212)
902-3000, Attention: Registration Department; and with a copy to Senet Bischoff
at Latham & Watkins LLP, 885 Third Avenue, New York, New York 10022.

 

(d)                                 This agreement contains the entire understanding of the parties with
respect to your acting as Dealer Managers for the Tender Offer, superseding any
prior agreements with respect thereto and may not be modified or amended except
in writing executed by the parties hereto. 
This agreement may be executed in any number of separate counterparts,
each of which shall be an original, but all such counterparts shall together
constitute one and the same agreement. 
Facsimile signatures on counterparts of this agreement are authorized,
and will have the same effect as though the facsimile signatures were original
executions, and this agreement will be deemed executed by a party when a
signature page, or facsimile of a signature page, executed by that party is transmitted
to each of the other parties or as they have directed.

 

(e)                                  THIS AGREEMENT AND ANY MATTERS RELATED TO THIS
TRANSACTION SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS THAT
WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAWS OF THE STATE OF
NEW YORK.  Any right to trial by jury
with respect to any action or proceeding arising in connection with or as a
result of either

 

 

your engagement or any matter
referred to in this agreement is hereby waived by the parties hereto.   The Company
agrees that any suit or proceeding arising in respect of this agreement or our
engagement will be tried exclusively in the U.S. District Court for the
Southern District of New York or, if that court does not have subject matter
jurisdiction, in any state court located in The City and County of
New York and the Company agrees to submit to the jurisdiction of, and to
venue in, such courts.

 

(f)                                    The Company hereby acknowledges and agrees that (i) the
transactions contemplated by this agreement were negotiated at arm’s length
between sophisticated parties represented by counsel, (ii) no fiduciary or
agency relationship between the Company on the one hand, and any of the Dealer
Managers on the other hand has been created as a result of any of the
transactions contemplated by this agreement or the process leading to such
transactions, irrespective of whether any of the Dealer Managers have advised
or is advising the Company on other matters, (iii) the obligations of each
Dealer Manager to the Company in respect of the Tender Offer are set forth in
this agreement in their entirety and (iv) the Company has obtained such
legal, tax and accounting advice as it deems appropriate with respect to this
agreement and the transactions contemplated hereby and any other activities
undertaken in connection therewith, and the Company is not relying on any
Dealer Manager with respect to any such matters.  The Company hereby agrees that it will not
claim that any Dealer Manager owes a fiduciary or similar duty to it, in
connection with such transaction or the process leading thereto.

 

(g)                                 The Dealer Managers do not provide accounting, tax or legal advice.  The Company is authorized, subject to applicable
law, to disclose any and all aspects of this potential transaction that are
necessary to support any U.S. federal income tax benefits expected to be
claimed with respect to such transaction, without the Dealer Managers imposing
any limitation of any kind.

 

 

Please sign and return to us a duplicate of this
letter, whereupon it will become a binding agreement.

 

 

Very truly yours,

 

 

Aeroflex Incorporated

 

 

	
  By:

  	
  /s/
  Charles Badlato

  	
   

  
	
  Name: Charles Badlato

  	
   

  
	
  Title: VP—Treasurer

  	
   

  

 

 

The undersigned hereby confirms that the foregoing
letter, as of the date thereof, correctly sets forth the agreement between the
Company and the undersigned.

 

 

Credit Suisse Securities (USA) LLC

 

 

	
  By:

  	
  /s/
  Timothy Lu

  	
   

  
	
  Name: Timothy Lu

  	
   

  
	
  Title: Managing Director

  	
   

  
	
   

  	
   

  
	
  /s/ Goldman, Sachs & Co.

  	
   

  
	
  (Goldman, Sachs & Co.)

  	
   

  

 

 

Schedule 1

 

Dealer Manager Fees Allocation

 

	
  Dealer Manager

  	
   

  	
  Percentage of Tender Fee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Credit Suisse Securities (USA) LLC

  	
   

  	
  50

  	
  %

  
	
  Goldman, Sachs & Co.

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  100

  	
  %

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