Exhibit 10.1
FIRST AMENDMENT TO THE AEROFLEX
INCORPORATED KEY EMPLOYEE DEFERRED
COMPENSATION PLAN
AMENDMENT NO. 1 TO THE AEROFLEX INCORPORATED KEY EMPLOYEE DEFERRED
COMPENSATION PLAN (the "Amendment") made as of the 21st day of November, 2006.
The Aeroflex Incorporated Key Employee Deferred Compensation Plan (the
"Plan") provides for employees to elect to defer compensation that would
otherwise be paid in a given year. The purpose of this Amendment is to make
certain changes to the Plan to conform with Code Section 409A. To effectuate
these changes, the Plan is hereby amended as follows, effective as of January 1,
2005:
1. All references to 20 percent with regard to an amount of voting
securities or outstanding shares of common stock in Section 1.2(i) and
1.2(iii) shall henceforth be read to mean 35 percent, effective as of
the date hereof.
2. Section 1.2(i) of the Plan shall be amended and restated in its
entirety to read as follows:
"`Deferral Election Form' means the form provided by the
Company pursuant to which a Participant elects to defer a
portion of his or her Compensation, as provided in Section
2.1."
3. Section 1.2(k) of the Plan shall be amended and restated in its
entirety to read as follows:
"`Early Distribution' means withdrawal by a Participant of
amounts from his or her Deferred Compensation Account (but only
with regard to such portion of his or her account deferred prior
to January 1, 2005, including the Earnings thereon) before he or
she would otherwise be entitled to such amounts, as provided in
Section 3.8 below."
4. Section 1.2(o) of the Plan shall be amended and restated in its
entirety to read as follows:
"`Hardship' means for amounts deferred prior to January 1, 2005
(and the Earnings thereon), a severe financial stringency to a
Participant resulting from a sudden and unexpected illness or
accident of the Participant or his or her dependent (as defined
in Code Section 154(a)), loss of his or her property due to
casualty, or other similar or extraordinary and unforeseeable
circumstance arising as a result of events beyond the control of
the Participant. For amounts deferred on and after January 1,
2005 (and the Earnings thereon) `Hardship' means a severe
financial hardship
to the Participant resulting from: (i) an illness or accident of
the Participant, a Participant's spouse or a dependant (within
the meaning of Code Section 152(a)); (ii) loss of the
Participant's property due to casualty; or (iii) other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant."
5. Section 1.2(s) of the Plan shall be amended and restated in its
entirety to read as follows:
"`Total Disability' means for amounts deferred prior to January
1, 2005 (and the Earnings thereon), bodily injury or sickness
that wholly and continuously disables a Participant. For amounts
deferred on and after January 1, 2005 (and the Earnings thereon)
`Total Disability' means (A) a Participant is unable to engage in
any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected
to result in death or can be expect to last for a continuous
period of not less than 12 months, or (B) a Participant is, by
reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not
less than 3 months under an accident and health plan covering
employees of the Company The Committee shall make any
determination of Total Disability, which shall be final, and
based on the finding of an independent physician selected by the
Board, to the extent applicable."
6. Section 2.1 shall be amended and restated in its entirety to read as
follows:
"2.1 Deferral Election Form
For deferrals made on and after January 1, 2005, in order to
participate in the Plan, a Participant shall execute and file
with the Company one or more Deferral Election Forms, designating
the portion of his or her Compensation and/or other amounts
earned from the Company, to be deferred hereunder. Any such
Deferral Election Form shall be filed in accordance with the
following deferral rules.
a. Salary. A Participant must elect to defer salary under
the Plan, under an applicable Deferral Election Form on or
prior to December 31 of the calendar year prior to the Year
in which such deferrals will occur. A Participant may not
defer more of his or her salary to be earned for any Year
than the percentage specified by the Company and in effect
at the time of execution and filing of the applicable
Deferral Election Form.
b. Bonus. A Participant may defer up to 100 percent of his or
her bonus to be earned for any Year, pursuant to execution and
filing of the applicable Deferral Election Form on or prior to
the last day of the fiscal Year prior to the Year in which the
services relevant to the payment of the bonus are to be
performed. Notwithstanding the foregoing, to the extent that
the bonus amount payable to a Participant would be
nondeductible by the Company in the tax year in which such
bonus payment would otherwise be deductible by the Company,
then, any nondeductible portion of such bonus will be
automatically deferred in accordance with the Plan.
c. Deferral Increments. Deferrals of salary or bonus shall be in
increments of 1 percent, but may be stated as the dollar amount
to which a specified percentage translates; provided, however,
that a Participant may elect to receive currently a specified
dollar amount of his or her bonus and defer the balance.
d. Deferral of Other Amounts or Items. Pursuant to a Deferral
Election Form executed by a Participant and filed with the
Company, a Participant may defer any other amount or item that
the Company authorizes to be deferred (as, for example,
settlement of rights to restricted shares of Common Stock),
provided that the deferral of such compensation is permitted
under Code Section 409A. Any such deferrals must be made
timely in accordance Code Section 409A(a)(3) and the
regulations thereunder.
e. Annual Deferral Election Required. A Deferral Election Form
executed by a Participant and filed with the Company for any
Year shall apply only to the elements of Compensation or other
amounts or items added to his or her Deferred Compensation
Account for such Year, and the Company shall require timely
execution and filing of a Deferral Election Form for new
deferrals for each subsequent Year. Once filed with the
Company for any Year, a Participant's Deferral Election Form
shall be irrevocable for such Year.
f. New Participants During Any Year. Notwithstanding the
forgoing, once an individual first becomes eligible to be a
Participant, he or she shall execute and file with the Company
within 30 days of the date such eligibility, one or more
Deferral Election Forms with respect to any amounts to be
deferred for such Year; provided however, that any such
Deferral Election shall only be valid with respect to
compensation earned after the election becomes valid, unless
otherwise permitted under Code Section 409A and the rules
thereunder."
7. Section 3.1(b) of the Plan shall be amended and restated in its
entirety to read as follows:
"b. Revision of Date. A Participant may extend the benefit
commencement date for payment of the portion of his or her
Deferred Compensation Account attributable to any Year's
deferral, provided such change occurs at least one year before
the scheduled benefit commencement date. In addition to the above
requirement, with respect to amounts deferred on or after January
1, 2005 (and the Earnings thereon), any extension of the benefit
commencement date shall not commence until at least 5 years from
the date any such payment would otherwise have been made (or with
respect to installment payments, 5 years from the date such
payments would otherwise have begun to be made) and any such
revised election will not be effective for 12 months from the
date on which the revised election is made."
8. Section 3.6 of the Plan shall be amended and restated in its entirety
to read as follows:
"3.6 Change in Control
Notwithstanding the provisions of Section 3.1, in the
event of a Change in Control each Participant's benefit
commencement date shall be the date of such event; provided
however, that if management losses a proxy contest, as
described in Section 2.3.c., prior to the date of a Change in
Control, then, with respect only to amounts deferred prior to
January 1, 2005 (and the Earnings thereon) the benefit
commencement date shall be the date of such event."
9. The second sentence of Section 3.7 of the Plan shall be amended and
restated in its entirety to read as follows:
"The Committee shall make a determination that the requested
distribution is due to Hardship and shall also determine
whether such Hardship is applicable to amounts deferred prior
to January 1, 2005 (and the Earnings thereon) and/or amounts
deferred on and after January 1, 2005 (and the Earnings
thereon)."
10. Section 3.8 of the Plan shall be amended and restated in its entirety
to read as follows:
"3.8 Early Distribution
A Participant may elect an Early Distribution from
his or her Deferred Compensation Account, but only with
respect to
amounts deferred by such Participant prior to January 1, 2005
(and the Earnings thereon) (the "Pre-2005 Account"), of an amount
up to 50 percent of the Pre-2005 Account balance, by filing an
election form with the Committee. Any such election shall be
subject to the approval of the Committee, and the Committee's
determination whether or not to allow such election shall be
final.
To the extent that the Committee allows any such
election, the amount of the Participant's Pre-2005 Account
balance to which the approved Early Distribution percentage
translates shall be determined as of the end of the calendar
quarter coincident with or next following the Committee's
approval, and such amount shall be paid to the Participant in
a lump sum as soon as practicable thereafter; provided,
however, that, any such Early Distribution shall be made pro
rata from the Participant's Pre-2005 Account and, to the
extent that shares of Common Stock are part thereof, the cash
payment shall be adjusted to reflect the value, as of the same
determination date, of the shares distributed.
When an Early Distribution is made, the Participant
shall forfeit 10 percent of (a) such Early Distribution or (b)
the remaining balance of his or her Pre-2005 Account,
whichever is less, and the Company shall have no obligation to
the Participant or his or her Beneficiary, as the case may be,
with respect to such forfeited amount.
A Participant who receives an Early Distribution while
employed by the Company will remain eligible to participate in
the Plan for the balance of the Year in which such Early
Distribution is made."
11. Section 3.9 of the Plan shall be amended and restated in its entirety
to read as follows:
"3.9 Certain Withdrawals with Committee Approval
Subject to approval of the Committee, in its sole and
complete discretion, a Participant may withdraw from his or
her Pre-2005 Account any amount (or portion thereof) deferred
for any Year (or portion thereof prior to 2005 (plus the
earnings thereon) that need not be deferred to preserve the
deductibility of Compensation paid to the Participant for any
Year under Section 162(m) of the Code."
12. A new Section 3.10 shall be added, which shall read in its entirety as
follows:
"3.10 Delay of Payment - Deferrals On and After January 1, 2005
Notwithstanding the foregoing, if the Participant is a
"specified employee" within the meaning of Code Section 409A,
then payments of the portion of such Participant's Deferred
Compensation Account (and Earnings thereon), which was
deferred on or after January 1, 2005, as required under
Section 3.2 or Section 3.5, as applicable, shall not commence
until the first day which is at least six months after the
date on which the Participant's employment terminates. All
such payments, which would have otherwise been required to be
made over such six month period, shall be paid to the
Participant in one lump sum payment, as soon as
administratively feasible after the first day which is at
least six months after the date on which the Participant's
employment terminates. Thereafter, such payments shall
continue as so provided in the applicable Section 3.2 or
Section 3.5. This Section 3.10 shall not effect payment of
such portion of a Participant's Pre-2005 Account."
13. Except as specifically provided in and modified by this Amendment, all
of the terms and conditions of the Plan are hereby ratified and
confirmed and references to the Plan shall be deemed to refer to the
Plan as modified by this Amendment.
14. This Amendment shall also be deemed an amendment to any provision of
(a) the employment agreement between the Company and Harvey R. Blau,
dated March 1, 1999 and (b) the employment agreement between the
Company and Leonard Borow, dated March 1, 1999 (collectively, with any
amendments thereto, the "Employment Agreements") which addresses the
deferral of compensation.
IN WITNESS WHEREOF, the Company has caused this First Amendment to the
Aeroflex Incorporated Key Employee Deferred Compensation Plan to be executed by
its duly authorized officers the date first above written.
Attest: AEROFLEX INCORPORATED
/s/Charles Badlato
- ------------------ By: /s/John Adamovich, Jr.
------------------------------
Name: John Adamovich, Jr.
Title: Senior Vice President and
Chief Financial Officer
/s/Harvey R. Blau
---------------------------------
Harvey R. Blau
/s/Leonard Borow
---------------------------------
Leonard Borow