Document:

EXHIBIT 10.35

 

FORM OF AMENDMENT NO. 3 TO
EMPLOYMENT AGREEMENT

 

AMENDMENT
NO. 3 TO THE EMPLOYMENT AGREEMENT (this “Amendment”) made as of the
    th day of November, 2010 by and between AEROFLEX
INCORPORATED, a Delaware corporation (hereinafter the “Company”) and CHARLES
BADLATO (hereinafter the “Executive” and together with the Company, the “Parties”).

 

WITNESSETH:

 

WHEREAS, the Parties entered into an Employment Agreement
dated November 6, 2003, as amended in July, 2008 and on December 31,
2008 (the “Agreement”) under which the Parties agreed upon the terms pursuant
to which the Executive would provide services to the Company as further
described therein, and

 

WHEREAS, the parties desire to amend the Agreement to
comply with Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), and the regulations and notices promulgated thereunder.

 

NOW,
THEREFORE, the parties hereto agree as follows, effective as of the date
hereof:

 

1.                                      The last
sentence of Section 6 of the Agreement is hereby amended and restated,
which shall read in its entirety as follows:

 

“In
addition, Employee shall be entitled to a car allowance in the amount of $600
per month, such amount to be paid monthly in accordance with the normal payroll
practices of the Company.”

 

2.                                      Section 8(e)(iii) is
hereby amended and restated, which shall read in its entirety as follows:

 

“(iii) 
In the event of Termination Without Cause, the Employee shall be entitled to
receive any Bonus awarded but not yet paid to him, and, for the greater of (x) remainder
of the Term of Employment at the time of termination or (y) one year:

 

(A) 
Base Salary at the rate in effect on the date of his termination paid in
accordance with the Company’s regular payroll practices, and

 

(B) benefits
under any employee benefit plans of the Company in which he participated or, as
to any plans in which his continued participation is precluded, a lump sum
payment of the after-tax cost to the Employee of equivalent benefits, such
payment to be 

 

1

 

made
as soon as practical following the Employee’s termination of employment.”

 

3.                                      The second
sentence of Section 8(f) of the Agreement is hereby amended and
restated, which shall read in its entirety as follows:

 

“Upon
such termination, the Employee shall receive immediately in a lump sum an
amount equal to three times the sum of (i) his annual Base Salary and (ii) the
amount of any Bonus payable to him for the last completed fiscal year less
$100.  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 Employee 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 Employee 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 Employee without incurring such
excise tax, as determined by the Company’s independent 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.”

 

4.                                      A new Section 8(k) of
the Agreement is hereby added, which shall read in its entirety as follows:

 

“(k) Payments;
Compliance with Section 409A of the Code. 
Notwithstanding anything herein to the contrary, if (i) the
Employee is to receive payments or benefits under Section 8 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 Employee 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 Employee to any tax, interest or penalty
imposed under Section 409A of the Code (or any regulation promulgated
thereunder) if the payment or benefit 

 

2

 

would
commence within six months of a termination of the Employee’s employment, then
such payment or benefit required under Section 8 shall not commence until
the first day which is at least six months after the termination of the
Employee’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 Employee in one lump sum payment or
otherwise provided to the Employee as soon as administratively feasible after
the first day which is at least six months after the termination of the
Employee’s employment.  Thereafter, the
payments and benefits shall continue, if applicable, for the relevant period
set forth in Section 8.  For
purposes of this Agreement, all references to “termination of employment” and
other similar language shall be deemed to refer to the Employee’s “separation
from service” as defined in Treasury Regulation Section 1.409A-1(h).”

 

5.             Except as specifically
provided in and modified by this Amendment, the Agreement is in all other
respects hereby ratified and confirmed and references to the Agreement shall be
deemed to refer to the Agreement as modified by this Amendment.

 

6.             This Amendment may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.

 

IN
WITNESS WHEREOF, the undersigned have executed this Amendment as of the day and
year first above written.

 

	
   

  	
  AEROFLEX INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Charles
  Badlato

  

 

3EXHIBIT 10.36

 

FORM OF AMENDMENT NO. 2 TO
EMPLOYMENT AGREEMENT

 

AMENDMENT
NO. 2 TO THE EMPLOYMENT AGREEMENT (this “Amendment”) made as of the
     day of November 2010 by and between AEROFLEX
INCORPORATED, a Delaware corporation (hereinafter “Aeroflex” or the “Company”)
and LEONARD BOROW (hereinafter “Borow” or the “Executive “and together with the
Company, the “Parties”).

 

WITNESSETH:

 

WHEREAS, the Parties entered into an Employment Agreement
dated August 15, 2007, as amended December 31, 2008 (the “Agreement”)
under which the Parties agreed upon the terms pursuant to which the Executive
would provide services to the Company as further described therein, and

 

WHEREAS, the Parties desire to amend the Agreement to
extend the term thereof and otherwise to comply with Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), and the regulations and
notices promulgated thereunder.

 

NOW,
THEREFORE, the parties hereto agree as follows, effective as of the date
hereof:

 

1.             Section 2(b) of
the Employment Agreement shall be deleted and replaced in its entirety with the
following:

 

“Employment Term. The Employment Term shall commence on the
Effective Date and shall terminate on August 15, 2015. In addition, the
Employment Term shall automatically terminate upon any termination of Borow’s
employment pursuant Section 8.”

 

2.             Section 4(a) of
the Employment Agreement shall be deleted and replaced in its entirety with the
following:

 

“For
each Fiscal Year ending during the Employment Term, Borow shall be eligible to
receive an annual bonus of between 50% and 150% of Salary based upon the
achievement of EBITDA targets for such Fiscal Year as established by the
Board.  More particularly, (i) 50%
of Salary will be awarded to Borow as a bonus if Aeroflex’s EBITDA is equal to
the minimum EBITDA target established by the Board (the “Threshold EBITDA”); (ii) 100%
of Salary will be awarded as a bonus if Aeroflex’s EBITDA is equal to the FY
EBITDA Target established by the Board (the “FY EBITDA Target”); and (iii) 150%
of Salary will be awarded 

 

 

as
a bonus if Aeroflex’s EBITDA is equal to or greater than the maximum EBITDA
Target established by the Board (the “Maximum EBITDA”). Borow’s bonus shall be
determined by linear interpolation if Aeroflex’s EBITDA is between the
Threshold EBITDA and the FY EBITDA Target or between the FY EBITDA Target and
the Maximum EBITDA, as the case may be. If the Board fails to establish the
Threshold EBITDA or the Maximum EBITDA for any fiscal year, such targets shall
be presumed to be, respectively, $10,000,000 less and $10,000,000 more than the
FY EBITDA Target. No annual bonus will be paid if Aeroflex’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.

 

3.             The first phrase of Section 8(g)(ii) of
the Agreement is hereby amended and restated, which shall read as follows:

 

“(ii) In
the event of termination by Aeroflex of Borow’s employment without Cause or of
termination by Borow of his employment for Good Reason, subject to Borow’s
execution and nonrevocation of a general release in favor of Aeroflex, its
affiliates and their current and former officers, directors and employees, in
substantially the form attached hereto as Exhibit A within 30 days
following the date of such termination, Borow shall be entitled, commencing, notwithstanding
any provision to the contrary in Sections 8(g)(ii)(A)-(D), on the 30th day following such termination of employment
(provided that, payments or benefits that would otherwise have been owed to
Borow prior to the 30th day after termination of employment shall be
made to or on behalf of Borow on the 30th day after his
termination of employment), in addition to the compensation and benefits
specified in Section 8(b), to the following payments and benefits:”

 

4.             Section 8(g)(ii)(D) of
the Agreement is hereby amended and restated, which shall read in its entirety
as follows

 

“(D) continued
participation in all employee benefit plans or programs available to Aeroflex
employees generally in which Borow was participating on the date of termination
of his employment until the end of the Employment Term (assuming Borow’s
employment had not terminated); provided; however, that 

 

2

 

(x) if
Borow is precluded from continuing his participation in any employee benefit
plan or program as provided in this clause (D), he shall be entitled to the
after-tax economic equivalent, paid in a lump sum on the 30th day following termination of Borow’s
employment, of the benefits under the plan or program in which he is unable to
participate until the end of the Employment Term, and (y) the economic
equivalent of any benefit foregone shall be deemed to be the lowest cost that
Borow would incur in obtaining such benefit on an individual basis; and”

 

5.             A new Section 8(h) of
the Agreement is hereby added, which shall read in its entirety as follows:

 

“(h) 
Payments; Compliance with Section 409A of the Code.  Notwithstanding anything herein to the
contrary, if (i) Borow is to receive payments or benefits under Section 8
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) 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 (iii) such payment
or benefit would otherwise subject Borow 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 Borow’s employment, then such payment or benefit required under Section 8
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, the payments and
benefits shall continue, if applicable, for the relevant period set forth in Section 8.  For purposes of this Agreement, all
references to “termination of employment” and other similar language shall be
deemed to refer to Borow’s “separation from service” as defined in Treasury
Regulation Section 1.409A-1(h).”

 

6.             The second sentence of Section 10(b) of
the Agreement is hereby amended and restated, which shall read in its entirety
as follows:

 

3

 

“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.”

 

7.             The third and fourth
sentences of Section 10(b) of the Agreement are hereby amended and
restated, which shall read in their entirety as follows:

 

“Notwithstanding
the foregoing, if immediately before such Change in Control or other
transaction, no stock of Aeroflex or any member of its affiliated group (as
defined in Q&A 46 of Treas. Reg. Section 1.280 G) is “readily tradable
on an established securities market or otherwise” (within the meaning of
Q&A 6(a)(2)(i) of Treas. Reg. Section 1.280G), Aeroflex shall use
reasonable efforts to obtain the approval of the Cutback Benefits by Aeroflex’s
shareholders in the manner contemplated by Q&A 7 of Treas. Reg. Section 1.280G,
it being understood and agreed that Aeroflex does not guarantee that such
approval will be obtained.  If, and only
if, Aeroflex determines that such approval is applicable and is actually
obtained, Borow shall be entitled to receive the Cutback Benefits without
regard to the first sentence of this paragraph.”

 

8.             Except as specifically
provided in and modified by this Amendment, the Agreement is in all other
respects hereby ratified and confirmed and references to the Agreement shall be
deemed to refer to the Agreement as modified by this Amendment.

 

9.             This Amendment may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.

 

IN
WITNESS WHEREOF, the undersigned have executed this Amendment as of the day and
year first above written.

 

	
   

  	
  AEROFLEX INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Leonard
  Borow

  

 

4

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