Exhibit 4.2
STOCK OPTION AGREEMENT
----------------------
AGREEMENT made the 25th day of February, 1999, between Aeroflex
Incorporated, a Delaware corporation, (hereinafter called the "Company") and
_______, residing at _____________________ (hereinafter called the "Optionee").
W I T N E S S E T H:
Whereas, the Company and United Technologies Corporation entered into a
Stock Purchase Agreement dated as of February 25, 1999, pursuant to which the
Company has acquired (the "Acquisition") all of the outstanding Common Stock of
UTMC Microelectronic Systems Inc.("UTMC"); and
Whereas, the Optionee is currently an employee of UTMC, and the Company is
desirous of inducing or encouraging the Optionee to continue to remain in the
employ of UTMC 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. 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 $13.625 per share, upon and subject to the following terms and
conditions:
(a) The within option may be exercised on or before February 24, 2009
(the "Expiration Date") and, within such period, only at the following times
and in the following amounts:
(i) After the expiration of six (6) months from the date
of this Agreement, the option may be exercised to the extent of not
more than THIRTY-THREE AND ONE-THIRD (33 1/3%) PERCENT of the shares
granted in Paragraph 1 hereof;
(ii) After the expiration of one (1) year from the date of
this Agreement, the option may be exercised to the extent of not more
than SIXTY-SIX AND TWO-THIRDS (66 2/3%) PERCENT of the shares granted
in Paragraph 1 hereof; and
(iii) After the expiration of two (2) years from the date
of this Agreement, the option may be exercised to the extent of not
more than ONE HUNDRED (100%) PERCENT of the shares granted in
Paragraph 1 hereof.
(b) The right to exercise set forth in Paragraph 1(a)(i), (ii) and
(iii) shall be accelerated providing for immediate exercise, in the event of a
change in control of the Company.
(1) For purposes of this Agreement, a change in control of the
Company, or in any person directly or indirectly controlling the Company, shall
mean:
(i) a change in control as such term is presently defined in
Regulation 240.12b-2 under the Securities and Exchange Act of 1934; or
(ii) if any "person" (as such term is used in Section 13(d) and
14(d) of the Exchange Act) other than the Company or any "person" who on
the date of this Agreement is a director or officer of the Company, becomes
the "beneficial owner" (as defined in Rule 13(d)-3 under the Exchange Act)
directly or indirectly, of securities of the Company representing ten (10%)
percent of the voting power of the Company's then outstanding securities;
or
(iii) if during any period of two (2) consecutive years during
the term of this Agreement, individuals who at the beginning of such period
constitute the Board of Directors, cease for any reason to constitute at
least a majority thereof, unless the election of each director who is not a
director at the beginning of such period has been approved in advance by
directors representing at least two-third (2/3) of the directors then in
office who were directors at the beginning of the period.
(2) Notwithstanding the foregoing, this paragraph shall have no
applicability to any change of control as defined hereunder in the event that:
(i) a majority of the Board of Directors in office immediately
prior to the event or events resulting in the change of control determine
that such change is in the best interests of the Company; or
(ii) a majority of the Board of Directors in office immediately
prior to the event or events resulting in the change of control determine
that such change is not in the best interests of the Company; and
thereafter Employee cooperates, assists or acts, directly or indirectly, on
behalf of or in connection with the party seeking to acquire control of the
Company; it being expressly understood and agreed that in the event the
within option is not exercised on or before the Expiration Date, as to any
part or all of the shares which may be purchased under the option, the
right to purchase such shares shall completely lapse;
(c) 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.
(d) 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 with UTMC, 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, voluntary termination or termination for cause), an
Optionee may within one (1) year after the date of such retirement or
termination, purchase all or part of the shares with respect to which such
Optionee is entitled to exercise such option, in accordance herewith, but in no
event after the Expiration Date. ;
(b) Upon voluntary termination or the termination of employment or
service for cause, this Option shall terminate. For purposes of this Section,
"cause" shall mean (i)conviction of a felony involving moral turpitude, (ii)
willful disregard of duties and/or gross insubordination or (iii) a breach
Optionee of the provisions of Section 10 or Section 11 of his employment
agreement of even date;
(c) Upon the "disability" of any Optionee, the Optionee may within
three (3) years 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 such Optionee is entitled to exercise such Option in
accordance herewith. 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; and
(d) Upon the death of the Optionee during his employment, 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 two (2) 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 by 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: ____________________________
--------------------------------
_________, Optionee
