Exhibit 4.2
STOCK OPTION AGREEMENT
AGREEMENT made the __ day of September, 2003 between AEROFLEX
INCORPORATED, a Delaware corporation, (hereinafter called the "Company") and
__________ (hereinafter called the "Optionee").
W I T N E S S E T H:
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WHEREAS, the Company and MCE Technologies, Inc. entered into a Merger
Agreement dated as of June 27, 2003, pursuant to which the Company has acquired
(the "Acquisition") all of the outstanding Common Stock of MCE Technologies,
Inc.("MCE"); and
WHEREAS, the Optionee is currently an employee of MCE, and the Company
is desirous of inducing or encouraging the Optionee to continue to remain in the
employ of MCE after the Acquisition by offering the Optionee certain incentives
or rewards to do so; and
WHEREAS, the Board of Directors of the Company has determined that
Optionee is eligible for, and should be granted an option as hereinbelow
provided, and Optionee desires to have such option;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. GRANT AND EXERCISE OF OPTION.
(a) The Company hereby grants to Optionee an option to
purchase a total of _________(_____)shares of the authorized and unissued Common
Stock of the Company, having a par value of $.10 per share, at the price of
$____ per share. The within option may be exercised in full on or before
September __, 2013 (the "Expiration Date").
(b) Each exercise of the within option shall be by delivery to
the Company, at its then principal office (attention of the Secretary) of
written notice stating the number of shares to be purchased, accompanied by
payment in full of the option price of such shares. The option price shall be
payable in United States dollars in cash or by certified check, bank draft,
postal or express money order; provided, however, that in lieu of payment in
full in cash, the Optionee may, with the approval of the Board of Directors,
exercise his option by tendering to the Company shares of the Company's Common
Stock owned by him and having a fair market value (as determined by the Board of
Directors in its absolute discretion) equal to the cash exercise price (or the
balance thereof) applicable to his option.
(c) In the event of each exercise of the within option, the
Company shall deliver to the Optionee, personally or at the Optionee's
designated address, as soon as practicable, a certificate made out to the
Optionee for the number of shares being purchased.
2. NON-TRANSFERABILITY OF OPTION. The option granted under this
Agreement shall not be transferred otherwise than by will or the laws of descent
and distribution and shall be exercisable during Optionee's lifetime only by the
Optionee. No option granted hereunder shall be subject to execution, attachment,
pledge, hypothecation, or other process.
3. DEATH, RETIREMENT AND TERMINATION OF EMPLOYMENT. Any
Option, the period of which has not expired, shall terminate at the time of
death of the Optionee, or at the time of retirement or termination
for any reason of such person's employment or service, including service as a
consultant, and no share of Common Stock may thereafter be delivered pursuant to
such Option, except that:
(a) Upon retirement or termination of employment or service
(other than by death, disability, or termination for cause), an Optionee may
within three (3) months after the date of such retirement or termination,
purchase all or part of the shares with respect to which the Option was
exercisable on the date of such termination, in accordance herewith, but in no
event after the Expiration Date;
(b) Upon the termination of employment or service for cause,
this Option shall immediately terminate. For purposes of this Section, "cause"
shall mean (i) willful disregard of duties and/or gross insubordination, (ii)
habitual absence from employment,(iii) the commission of fraud,
misrepresentation or embezzlement; or (iv) as defined in any employment
agreement between the Company or any affiliate of the Company and the Optionee;
(c) Upon the "disability" of any Optionee, the Optionee may
within one (1) year after the date of such termination of employment, but in no
event after the Expiration Date, purchase all or part of the shares with respect
to which the Option was exercisable on the date of such termination. For
purposes of this section, the term "disability" shall mean a physical or mental
disability as defined in Section 105 of the Internal Revenue Code of 1986, as
amended;
(d) Upon the death of the Optionee during his employment or
within one (1) year after termination due to "disability", the person or persons
to whom such Optionee's rights under the Option are transferred by will or the
laws of descent and distribution may, within three (3) years after the date of
such Optionee's death, but in no event after the Expiration Date, purchase all
or any part of the shares subject to this Option. Upon the death of the Optionee
within three (3) months after any termination of employment under clause 3(a) of
this Option, the person or persons to whom such Optionee's rights under the
Option are transferred by will or the laws of descent and distribution may,
within three (3) years after the date of such Optionee's death, but in no event
after the Expiration Date, purchase all or any part of the shares with respect
to which the Option was exercisable on the date of termination of employment or
service in accordance herewith.
4. DILUTION AND OTHER ADJUSTMENTS. In the event that there is any
change in the stock subject to the within option through merger, consolidation
or reorganization, or in the event of any dividend in stock of the same class to
holders of issued and outstanding stock of the same class, or the issuance to
the holders of such stock of rights to subscribe to stock of the same class, or
in the event of any split, combination or exchange of stock or other change in
the capital structure of the Company, the Board of Directors of the Company
shall make such adjustments in the within option as it may deem equitable to
prevent dilution or enlargement of the rights granted to the Optionee hereunder,
and such adjustments, when so made, shall be conclusive and binding on the
parties to this Agreement; and provided, further, that nothing herein shall be
construed as limiting or preventing the Company from exercising any right or
power to make or enter into adjustments, reclassifications, reorganizations, or
changes in its capital or business structure or to merge, consolidate or
dissolve or to sell or transfer all or any part of its business or assets.
5. REGISTRATION.
The Company shall cause a Registration Statement on Form S-8 covering
the Shares of the Common Stock of the Company issuable upon the exercise of the
Option granted hereunder to be filed with the Securities and Exchange Commission
and to become effective under the Securities Act of 1933, as amended, prior to
the first anniversary date of this Agreement; provided, however, that if the
Company is not permitted for any reason to register such Common Stock pursuant
to a Registration Statement on Form S-8, the Company shall use its best efforts
to cause a Registration Statement on Form S-3 covering the Common Stock to be
filed with the Securities and Exchange Commission and to become effective under
the Securities Act of 1933, as amended, prior to the first anniversary date of
this Agreement.
6. REQUIREMENTS OF LAW.
(a) If any law, regulation of the Securities and Exchange
Commission, or any regulation of any other commission or agency having
jurisdiction shall require the Company or the Optionee to take any action with
respect to the shares of stock to be acquired upon the exercise of the within
option, then the date upon which the Company shall deliver or cause to be
delivered the certificate or certificates for the shares of stock shall be
postponed until full compliance has been made with all such requirements of law
or regulation.
(b) Neither the Optionee nor any person or persons referred to
in Paragraph 3 above, as the case may be, shall be, or shall be deemed to be, a
holder of any shares subject to the within option unless and until certificates
for such shares are delivered to him or them in accordance with this Agreement,
and no certificates may be delivered until the shares represented thereby are
paid in full.
7. PURCHASE FOR INVESTMENT. The Optionee represents, on behalf of
himself and the person or persons referred to in Paragraph 3 above, that any
shares of the Company purchased pursuant to this Agreement will be acquired in
good faith for investment and not for resale or distribution, and Optionee on
behalf of himself and said person or persons, agrees that each notice of the
exercise of the within option shall contain or be accompanied by a
representation in writing signed by him or said person or persons, as the case
may be, in form satisfactory to the Company, that the shares of the Company to
be purchased pursuant to such notice are being so acquired and will not be sold
except in compliance with applicable securities laws. The requirements of this
Paragraph 7 may be waived by the Company if the Company shall have received an
opinion of its counsel that such representation is not required.
8. ACKNOWLEDGMENT. Optionee represents that he has read and understands
the terms and conditions of this Agreement and agrees to be bound thereby.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
AEROFLEX INCORPORATED
By:
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, Optionee
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