Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
---------------------------
AEROFLEX INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 11-1974412
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
35 South Service Road, Plainview, New York 11803
(Address of principal executive offices) (Zip Code)
AEROFLEX INCORPORATED 1999 STOCK OPTION PLAN
(Full Title of the Plan)
Michael Gorin, President
Aeroflex Incorporated
35 South Service Road
Plainview, New York 11803
(Name and address of agent for service)
(516) 694-6700
(Telephone number, including area code, of agent for service)
---------------------------
copy to:
Nancy D. Lieberman, Esq.
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
(516) 822-4820
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================
Title of Each Proposed Minimum Proposed Maximum
Class of Securities Amount to be Offering Price Per Aggregate Offering Amount of
To be Registered Registered Security (1) Price (1) Registration Fee
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value $.10 900,000 shs.(2) $39.0625 $35,156,250 $9,774
per share
================================================================================================
<FN>
(1) Estimated solely for the purpose of calculating the registration fee, based
upon the last reported sales price of the Company's Common Stock on the New York
Stock Exchange on February 28, 2000.
(2) The Registration Statement also covers an indeterminate number of additional
shares of Common Stock which may become issuable pursuant to anti-dilution and
adjustment provisions of the Plan.
================================================================================================
</FN>
</TABLE>
<PAGE>
AEROFLEX INCORPORATED
SUMMARY OF AEROFLEX INCORPORATED
1999 STOCK OPTION PLAN, AS AMENDED
In August 1999, in order to attract and retain persons necessary for the
success of the Company, the Company adopted the Aeroflex Incorporated 1999 Stock
Option Plan (the "Plan"). The Plan was approved by the Company's stockholders on
January 6, 2000. The Plan, as amended, covers up to 900,000 shares of the
Company's Common Stock, pursuant to which directors, officers and employees of,
and consultants to, the Company and its subsidiaries and affiliates, are
eligible to receive non-qualified stock options. Shares of Common Stock issued
upon the exercise of options granted pursuant to the Plan will generally be from
the Company's authorized but unissued shares or treasury shares. The Plan, which
expires on August 10, 2009, will be administered by the Board of Directors or a
committee designated by the Board of Directors (the "Committee") consisting of
two or more members of the Board all of whom shall be non-employee directors.
Members of each class of the Board of Directors are elected every three years
for three year terms by the stockholders of the Company. Members of the
Committee which administers the Plan may be removed or replaced at any time by
the Board of Directors. The selection of participants, allotments of shares,
determination of price and other conditions relating to options will be
determined by the Board of Directors, or the Committee, in its sole discretion,
subject to the limitations of the Plan.
The Plan may be amended, suspended or terminated by the Board of Directors
or the Committee.
Stock options granted under the Plan are exercisable for a period of up to
ten years from the date of grant at an exercise price equal to the fair market
value of the Common Stock on the date of the grant.
Options granted pursuant to the Plan may not be sold, pledged,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent or distribution or, to the extent permitted by the Board or
the Committee, to (i) a member or members of the optionee's family, (ii) a
trust, (iii) a family limited partnership, or (iv) a similar estate planning
vehicle primarily for members of the optionee's family.
If any optionee ceases to serve as an employee of the Company, he may, but
only within two (2) years after the date he ceases to be an employee of the
Company, exercise his options to the extent that he was entitled to exercise it
as of the date of such termination. To the extent that he was not entitled to
exercise an option at the date of such termination, or he does not exercise such
option (which he was entitled to exercise) within the time specified herein,
such option shall terminate. Notwithstanding the foregoing, in the event of the
death of an optionee (i) while an employee of the Company, any parent
corporation of the Company or any subsidiary, or (ii) within two years after
termination of all employment with the Company, any parent corporation of the
Company and any subsidiary (other than for total disability) or (iii) within
five years after termination on account of total disability of all employment
with the Company, any parent corporation of the Company and any subsidiary, such
optionee's estate or any person who acquires the right to exercise such option
by bequest or inheritance or by reason of the death of the optionee may exercise
such optionee's Option at any time within the period of five years from the date
of death. In the case of clauses (i) and (iii) above, such Option shall be
exercisable in full for all the remaining shares covered thereby, but in the
case of clause (ii) such Option shall be exercisable only to the extent it was
exercisable on the date of such termination. In no case is an option exercisable
after its expiration date.
In the event of a Change in Control (as defined in the Plan) of the
Company, at the option of the Board or the Committee, (a) all options
outstanding on the date of such Change in Control shall become immediately and
fully exercisable, and (b) an optionee will be permitted to surrender for
cancellation within sixty (60) days after such Change in Control any option or
portion of an option which was granted more than six (6) months prior to the
date of such surrender, to the extent not yet exercised, and to receive a cash
payment in an amount equal to the excess, if any, of the Fair Market Value (on
the date of surrender) of the shares of Common Stock subject to the option or
portion thereof surrendered, over the aggregate purchase price for such Shares.
<PAGE>
The Company's reports and registration statements filed with the Securities
and Exchange Commission pursuant to the provisions of the Securities Exchange
Act of 1934, as amended ("Exchange Act") are incorporated by reference herein
and these documents, as well as the Company's annual report to shareholders, its
latest prospectus filed pursuant to Rule 424(b) under the Securities Act of
1933, as amended, and additional information about the Plan and its
administration, are available upon written or oral request from the Treasurer of
the Company, at the Company's offices at 35 South Service Road, Plainview, New
York 11803, (516)694-6700. The Company does not intend to furnish any reports to
participating employees as to the amount and status of their options under this
Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the Federal income tax consequences as
of the date hereof with respect to options exercised with cash or Common Stock
or a combination of cash and Common Stock. This description of the Federal
income tax consequences is based upon law and Treasury interpretations in effect
on the date of this Prospectus (including Proposed and Temporary regulations
which may be changed when finalized), and it should be understood that this
summary is not exhaustive, that the law may change, and further that special
rules may apply with respect to situations not specifically discussed herein.
Careful attention should also be given to state and local tax consequences. As
such you are urged to consult with your own qualified tax advisor.
Exercise of Non-Qualified Options with Cash
No taxable income will be realized by the optionee upon the grant of a
non-qualified option. On exercise, the excess of the fair market value of the
stock at the time of exercise over the option price of such stock will be
compensation and (i) will be taxable at ordinary income tax rates in the year of
exercise, (ii) will be subject to withholding for Federal income tax purposes,
and (iii) generally will be an allowable income tax deduction to the Company.
The optionee's tax basis for stock acquired upon exercise of a non-qualified
option will be equal to the option price paid for the stock plus any amounts
included in income as compensation. Upon the sale of shares acquired pursuant to
exercise of a non-qualified option, the optionee will have long-term or
short-term capital gain or loss depending on the holding period.
If the optionee is subject to restrictions under Section 16(b) of the
Exchange Act ("Section 16(b) restrictions") at exercise, (i) he will not be
taxed at the time of exercise, and will instead be taxed when the Section 16(b)
restrictions lapse (which is deemed under Treasury regulations to be six months
after the date of issuance of the shares), based on the excess (if any) at that
time or, if earlier, at the time of the sale of such shares, of the fair market
value of the shares received over the option price, and (ii) the holding period
for purposes of determining entitlement to long-term or short-term capital gain
or loss, as the case may be, will commence on the earlier of the date of sale of
such shares or the date that the Section 16(b) restrictions lapse. However, such
an optionee may elect under Section 83(b) of the Internal Revenue Code of 1986,
as amended ("Code") to be taxed at the time of exercise of the option, based on
the excess (if any) at the time of exercise of the fair market value of the
shares received over the option price, in which event the holding period will
commence on the date of transfer. Optionees who are subject to Section 16(b)
restrictions should consult a qualified tax advisor regarding the advisability
of a Section 83(b) election, which must be made within 30 days following the
exercise of the shares.
Exercise of Non-Qualified Options with Common Stock
Based on a 1980 Revenue Ruling, if shares previously acquired other than
upon exercise of an incentive stock option are surrendered in full or partial
payment of the exercise price of a non-qualified option, then no gain or loss
will be recognized by the optionee, on the date of exercise, for the shares
which have an aggregate fair market value equal to the aggregate fair market
value of the shares surrendered ("Replacement Shares"). The optionee will have a
basis in the Replacement Shares equal to the basis of the shares surrendered,
and the optionee's holding period (for purposes of determining entitlement to
long-term capital gain or loss treatment on a subsequent disposition of the
Replacement Shares) will generally include the period during which the
surrendered shares were held.
<PAGE>
To the extent that the optionee receives shares in addition to the
Replacement Shares on such exercise ("Additional Shares"), then (i) the excess
of the fair market value of all of the shares received over the sum of the fair
market value of the shares surrendered plus any cash payments made by the
optionee on the exercise of the option will be treated as compensation taxable
as ordinary income (and subject to withholding), (ii) the optionee's basis in
such Additional Shares will be equal to the sum of the amount taxed as ordinary
income on exercise plus the amount of any cash payments made on exercise, and
(iii) the holding period for such Additional Shares (for purposes of determining
entitlement to long-term or short-term capital gain or loss treatment on a
subsequent disposition of the Additional Shares) will begin when such Additional
Shares are issued to the optionee.
In the absence of new published rulings to the contrary, it would appear
that rules similar to those that apply under the 1980 Revenue Ruling would apply
to the exercise of a non-qualified option using shares previously acquired by
exercising an incentive stock option. Based on the 1980 Revenue Ruling, the
exercise of a non-qualified option using shares previously acquired by
exercising an incentive stock option would not result in a "disqualifying
disposition" of such shares.
Information Reporting
Pursuant to applicable tax regulations, the Company will provide to each
optionee and to the appropriate tax authorities information regarding the
exercises of non-qualified options on Form W-2.
RESTRICTION ON REOFFERS OR RESALES OF COMMON STOCK
ACQUIRED PURSUANT TO THE PLAN
Participants in the Plan who receive shares of the Company's Common Stock
pursuant to the exercise of options may from time to time sell all or a part of
such Common Stock. In some instances, there may be restrictions on the amount
and manner of such sales by reason of pertinent provisions of the securities
laws and the rules thereunder. Optionees should consult with legal counsel about
the securities law implications of the exercise of options and the acquisition
or disposition of shares of Common Stock under the Plan.
Pursuant to Section 16(b) of the Exchange Act, if an optionee, while an
officer, director or ten percent (10%) stockholder of the Company, (i) acquires
any equity security of the Company (other than Shares of Common Stock acquired
under the Plan or another stock option plan of the Company if the exercise price
of the option pursuant to which such shares of Common Stock were acquired does
not exceed the fair market value thereof at the time of exercise), and (ii)
within six months before or after such acquisition sells any equity security of
the Company, including Common Stock acquired under the Plan, then such optionee
will be required to repay to the Company any profit attributable to the two
transactions. Further, reoffers and resales of Common Stock received pursuant to
the Plan by participants who are "affiliates" of the Company must be made
pursuant to a separate prospectus or pursuant to the provisions of Rule 144
under the Securities Act or pursuant to another applicable exemption from the
registration requirements of the Securities Act. Such reoffers or resales may
not be made pursuant to this Prospectus.
In the event of any inconsistency between this summary and the Plan, the
terms of the Plan shall govern.
This document constitutes part of a prospectus covering securities that
have been registered under the Securities Act of 1933.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
---------------------------------------
The Registrant hereby incorporates by reference into this Registration
Statement the documents listed in (a) and (b) below:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended June 30, 1999;
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarters ended September 30, 1999 and December 31, 1999;
(c) The description of the class of securities to be offered which is
contained in a registration statement filed under Section 12 of
the Securities Exchange Act of 1934 (File No. 1-8037), including
any amendment or report filed for the purpose of updating such
description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all such securities then remaining unsold,
shall be deemed to be incorporated by reference in this Registration Statement
and to be a part hereof from the date of filing of such documents.
Item 4. Description of Securities.
-------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel.
--------------------------------------
Harvey R. Blau, a member of the law firm of Blau, Kramer, Wactlar &
Lieberman, P.C. ("BKW&L") is Chairman of the Board and Chief Executive Officer
of the Registrant. As of February 28, 2000, Mr. Blau owns 324,417 shares of
Common Stock, including 4,651 shares held by the Blau, Kramer, Wactlar &
Lieberman, P.C. Profit Sharing Plan and 204,058 shares owned by his wife, as to
which Mr. Blau has disclaimed beneficial ownership, as well as options to
purchase 1,000,000 shares of Common Stock granted to Mr. Blau pursuant to the
Registrant's various stock option plans.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
Under the provisions of the Certificate of Incorporation and By-Laws of
Registrant, each person who is or was a director or officer of Registrant shall
be indemnified by Registrant as of right to the full extent permitted or
authorized by the General Corporation Law of Delaware.
Under such law, to the extent that such person is successful on the merits
of defense of a suit or proceeding brought against him by reason of the fact
that he is a director or officer of Registrant, he shall be indemnified against
expenses (including attorneys' fees) reasonably incurred in connection with such
action.
If unsuccessful in defense of a third-party civil suit or a criminal suit
is settled, such a person shall be indemnified under such law against both (1)
expenses (including attorneys' fees) and (2) judgments, fines and amounts paid
in settlement if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of Registrant, and with respect
to any criminal action, had no reasonable cause to believe his conduct was
unlawful.
<PAGE>
If unsuccessful in defense of a suit brought by or in the right of
Registrant, or if such suit is settled, such a person shall be indemnified under
such law only against expenses (including attorneys' fees) incurred in the
defense or settlement of such suit if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of
Registrant except that if such a person is adjudicated to be liable in such suit
for negligence or misconduct in the performance of his duty to Registrant, he
cannot be made whole even for expenses unless the court determines that he is
fairly and reasonably entitled to be indemnified for such expenses.
The officers and directors of the Registrant are covered by officers'
and directors' liability insurance. The policy coverage is $25,000,000 which
includes reimbursement for costs and fees. There is a maximum aggregate
deductible for each loss under the policy of $250,000. The Registrant has
entered into Indemnification Agreements with certain of its officers and
directors. The Agreements provide for reimbursement for all direct and indirect
costs of any type or nature whatsoever (including attorneys' fees and related
disbursements) actually and reasonably incurred in connection with either the
investigation, defense or appeal of a Proceeding, as defined, including amounts
paid in settlement by or on behalf of an Indemnitee.
Item 7. Exemption from Registration Claimed.
-----------------------------------
Not applicable.
Item 8. Exhibits.
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4.1 1999 Stock Option Plan, as amended.
5 Opinion and consent of Blau, Kramer, Wactlar & Lieberman, P.C.
23.1 Consent of Blau, Kramer, Wactlar & Lieberman, P.C. - included in
their opinion filed as Exhibit 5.
23.2 Consent of KPMG LLP.
24 Powers of Attorney.
Item 9. Undertakings.
------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement; provided, however, that paragraphs
(a)(l)(i) and (a)(l)(ii) do not apply if the information required
to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant pursuant
to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration
Statement.
<PAGE>
(2) That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against policy as expressed in the Act and will be
governed by final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Plainview, New York on the 29th day of February, 2000.
AEROFLEX INCORPORATED
By: /s/ Michael Gorin
-----------------------------
Michael Gorin
President and Director (Chief Financial Officer and
Principal Accounting Officer)
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on February 29, 2000 by the
following persons in the capacities indicated. Each person whose signature
appears below constitutes and appoints Michael Gorin and Leonard Borow, and each
of them acting individually, with full power of substitution, our true and
lawful attorneys-in-fact and agents to do any and all acts and things in our
name and on our behalf in our capacities indicated below which they or either of
them may deem necessary or advisable to enable Aeroflex Incorporated to comply
with the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement including specifically, but not limited to, power and
authority to sign for us or any of us in our names in the capacities stated
below, any and all amendments (including post-effective amendments) thereto,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
such connection, as fully to all intents and purposes as we might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or his substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.
Signature Title
--------- -----
/s/ Harvey R. Blau Chairman of the Board
Harvey R. Blau (Chief Executive Officer)
/s/ Michael Gorin President and Director
Michael Gorin (Chief Financial Officer and Principal
Accounting Officer)
/s/ Leonard Borow Executive Vice President, Secretary and Director
Leonard Borow (Chief Operating Officer)
/s/ Paul Abecassis Director
Paul Abecassis
/s/ Milton Brenner Director
Milton Brenner
/s/ Ernest E. Courchene, Jr. Director
Ernest E. Courchene, Jr.
/s/ Donald S. Jones Director
Donald S. Jones
/s/ Eugene Novikoff Director
Eugene Novikoff
/s/ John S. Patton Director
John S. Patton
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AEROFLEX INCORPORATED
================================================================================
Form S-8 Registration Statement
- --------------------------------------------------------------------------------
E X H I B I T I N D E X
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Page No. in Sequential
Exhibit Numbering of all Pages,
Number Exhibit Description including Exhibit Pages
- ------- ------------------- -----------------------
4.1 1999 Stock Option Plan, as amended. . . . . . . 1
5 Opinion and Consent of Counsel. . . . . . . . . 6
23.1 Consent of Counsel. . . . . . . . . . . . . . . See Exhibit 5
23.2 Consent of KPMG LLP . . . . . . . . . . . . . . 7
24 Powers of Attorney. . . . . . . . . . . . . . . See signature page
AEROFLEX INCORPORATED
1999 STOCK OPTION PLAN, AS AMENDED
SECTION 1. GENERAL PROVISIONS
1.1. Name and General Purpose
The name of this plan is the Aeroflex Incorporated 1999 Stock Option Plan
(hereinafter called the "Plan"). The Plan is intended to be a broadly-based
incentive plan which enables Aeroflex Incorporated (the "Company") and its
subsidiaries and affiliates to foster and promote the interests of the Company
by attracting and retaining directors, officers and employees of, and
consultants to, the Company who contribute to the Company's success by their
ability, ingenuity and industry, to enable such directors, officers, employees
and consultants to participate in the long-term success and growth of the
Company by giving them a proprietary interest in the Company and to provide
incentive compensation opportunities competitive with those of competing
corporations.
1.2 Definitions
a. "Affiliate" means any person or entity controlled by or under common
control with the Company, by virtue of the ownership of voting
securities, by contract or otherwise.
b. "Board" means the Board of Directors of the Company.
c. "Change in Control" means a change of control of the Company, or in
any person directly or indirectly controlling the Company, which shall
mean:
(a) a change in control as such term is presently defined in
Regulation 240.12b-(2) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"); or
(b) 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 twenty percent (20%) or
more of the voting power of the Company's then outstanding
securities; or
(c) if during any period of two (2) consecutive years during the term
of this Plan, individuals who at the beginning of such period
constitute the Board of Directors, cease for any reason to
constitute at least a majority thereof.
d. "Committee" means the Committee referred to in Section 1.3 of the
Plan.
e. "Common Stock" means shares of the Common Stock, par value $.10 per
share, of the Company.
f. "Company" means Aeroflex Incorporated, a corporation organized under
the laws of the State of Delaware (or any successor corporation).
g. "Fair Market Value" means the closing market price of the Common Stock
on the New York Stock Exchange consolidated reporting system on the
trading day prior to the date of the grant or on any other date on
which the Common Stock is to be valued hereunder. If no sale shall
have been reported on the New York Stock Exchange consolidated
reporting system on such date, Fair Market Value shall be determined
by the Committee.
h. "Non-Employee Director" shall have the meaning set forth in Rule 16(b)
promulgated by the Securities and Exchange Commission ("Commission").
i. "Option" means any option to purchase Common Stock under Section 2 of
the Plan.
<PAGE>
j. "Option Agreement" means the option agreement described in Section 2.4
of the Plan.
k. "Participant" means any director, officer, employee or consultant of
the Company, a Subsidiary or an Affiliate who is selected by the
Committee to participate in the Plan.
l. "Subsidiary" means any corporation in which the Company possesses
directly or indirectly 50% or more of the combined voting power of all
classes of stock of such corporation.
m. "Total Disability" means accidental bodily injury or sickness which
wholly and continuously disabled an optionee. The Committee, whose
decisions shall be final, shall make a determination of Total
Disability.
1.3 Administration of the Plan
The Plan shall be administered by the Board or by the Committee appointed
by the Board consisting of two or more members of the Board all of whom shall be
Non-Employee Directors. The Committee shall serve at the pleasure of the Board
and shall have such powers as the Board may, from time to time, confer upon it.
Subject to this Section 1.3, the Committee shall have sole and complete
authority to adopt, alter, amend or revoke such administrative rules, guidelines
and practices governing the operation of the Plan as it shall, from time to
time, deem advisable, and to interpret the terms and provisions of the Plan.
The Committee shall keep minutes of its meetings and of action taken by it
without a meeting. A majority of the Committee shall constitute a quorum, and
the acts of a majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by all of the members of the Committee
without a meeting, shall constitute the acts of the Committee.
1.4 Eligibility
Stock Options may be granted only to directors, officers, employees of, or
consultants to, the Company or a Subsidiary or Affiliate. Subject to Section
1.5, any person who has been granted any Option may, if he is otherwise
eligible, be granted an additional Option or Options.
1.5 Shares
The aggregate number of shares reserved for issuance pursuant to the Plan
shall be 900,000 shares of Common Stock, or the number and kind of shares of
stock or other securities which shall be substituted for such shares or to which
such shares shall be adjusted as provided in Section 1.6. No individual may be
granted Options to purchase more than an aggregate 500,000 shares of Common
Stock pursuant to the Plan.
Such number of shares may be set aside out of the authorized but unissued
shares of Common Stock or out of issued shares of Common Stock acquired for and
held in the Treasury of the Company, not reserved for any other purpose. Shares
subject to, but not sold or issued under, any Option terminating or expiring for
any reason prior to its exercise in full will again be available for Options
thereafter granted during the balance of the term of the Plan.
1.6 Adjustments Due to Stock Splits, Mergers, Consolidation, Etc.
If, at any time, the Company shall take any action, whether by stock
dividend, stock split, combination of shares or otherwise, which results in a
proportionate increase or decrease in the number of shares of Common Stock
theretofore issued and outstanding, the number of shares which are reserved for
issuance under the Plan and the number of shares which, at such time, are
subject to Options shall, to the extent deemed appropriate by the Committee, be
increased or decreased in the same proportion, provided, however, that the
Company shall not be obligated to issue fractional shares.
Likewise, in the event of any change in the outstanding shares of Common
Stock by reason of any recapitalization, merger, consolidation, reorganization,
combination or exchange of shares or other corporate change, the Committee shall
make such substitution or adjustments, if any, as it deems to be appropriate, as
to the number or kind of shares of Common Stock or other securities which are
reserved for issuance under the Plan and the number of shares or other
securities which, at such time are subject to Options.
<PAGE>
In the event of a Change in Control, at the option of the Board or
Committee, (a) all Options outstanding on the date of such Change in Control
shall become immediately and fully exercisable, and (b) an optionee will be
permitted to surrender for cancellation within sixty (60) days after such Change
in Control any Option or portion of an Option which was granted more than six
(6) months prior to the date of such surrender, to the extent not yet exercised,
and to receive a cash payment in an amount equal to the excess, if any, of the
Fair Market Value (on the date of surrender) of the shares of Common Stock
subject to the Option or portion thereof surrendered, over the aggregate
purchase price for such Shares under the Option.
1.7 Non-Alienation of Benefits
Except as herein specifically provided, no right or unpaid benefit under
the Plan shall be subject to alienation, assignment, pledge or charge and any
attempt to alienate, assign, pledge or charge the same shall be void. If any
Participant or other person entitled to benefits hereunder should attempt to
alienate, assign, pledge or charge any benefit hereunder, then such benefit
shall, in the discretion of the Committee, cease.
1.8 Withholding or Deduction for Taxes
If, at any time, the Company or any Subsidiary or Affiliate is required,
under applicable laws and regulations, to withhold, or to make any deduction for
any taxes, or take any other action in connection with any Option exercise, the
Participant shall be required to pay to the Company or such Subsidiary or
Affiliate, the amount of any taxes required to be withheld, or, in lieu thereof,
at the option of the Company, the Company or such Subsidiary or Affiliate may
accept a sufficient number of shares of Common Stock to cover the amount
required to be withheld.
1.9 Administrative Expenses
The entire expense of administering the Plan shall be borne by the Company.
1.10 General Conditions
a. The Board or the Committee may, from time to time, amend, suspend or
terminate any or all of the provisions of the Plan, provided that,
without the Participant's approval, no change may be made which would
alter or impair any right theretofore granted to any Participant.
b. With the consent of the Participant affected thereby, the Committee
may amend or modify any outstanding Option in any manner not
inconsistent with the terms of the Plan, including, without
limitation, and irrespective of the provisions of Section 2.3(c)
below, to accelerate the date or dates as of which an installment of
an Option becomes exercisable; provided, that the Committee shall not
have the right to reprice any outstanding Options, either by lowering
the exercise price or by cancelling and regranting, without the
affirmative vote of a majority of the stockholders of the Company
voting on the repricing proposal.
c. Nothing contained in the Plan shall prohibit the Company or any
Subsidiary or Affiliate from establishing other additional incentive
compensation arrangements for employees of the Company or such
Subsidiary or Affiliate.
d. Nothing in the Plan shall be deemed to limit, in any way, the right of
the Company or any Subsidiary or Affiliate to terminate a
Participant's employment with the Company (or such Subsidiary or
Affiliate) at any time.
e. Any decision or action taken by the Board or the Committee arising out
of or in connection with the construction, administration,
interpretation and effect of the Plan shall be conclusive and binding
upon all Participants and any person claiming under or through any
Participant.
f. No member of the Board or of the Committee shall be liable for any act
or action, whether of commission or omission, (i) by such member
except in circumstances involving actual bad faith, nor (ii) by any
other member or by any officer, agent or employee.
<PAGE>
1.11 Compliance with Applicable Law
Notwithstanding any other provision of the Plan, the Company shall not be
obligated to issue any shares of Common Stock, or grant any Option with respect
thereto, unless it is advised by counsel of its selection that it may do so
without violation of the applicable Federal and State laws pertaining to the
issuance of securities and the Company may require any stock certificate so
issued to bear a legend, may give its transfer agent instructions limiting the
transfer thereof, and may take such other steps, as in its judgment are
reasonably required to prevent any such violation.
1.12 Effective Dates
The Plan was adopted by the Board on August 11, 1999, subject to approval
by the stockholders of the Company. The Plan was amended by the Board on
November 18, 1999. The Plan shall terminate on August 10, 2009.
SECTION 2. OPTION GRANTS
2.1 Authority of Committee
Subject to the provisions of the Plan, the Committee shall have the sole
and complete authority to determine (i) the Participants to whom Options shall
be granted; (ii) the number of shares to be covered by each Option; and (iii)
the conditions and limitations, if any, in addition to those set forth in
Section 2 hereof, applicable to the exercise of an Option, including without
limitation, the nature and duration of the restrictions, if any, to be imposed
upon the sale or other disposition of shares acquired upon exercise of an
Option.
Stock Options granted under the Plan shall be non-qualified stock options.
The Committee shall have the authority to grant Options.
2.2 Option Exercise Price
The price of stock purchased upon the exercise of Options granted pursuant
to the Plan shall be not less than the Fair Market Value thereof at the time
that the Option is granted.
The purchase price is to be paid in full in cash, certified or bank
cashier's check or, at the option of the Company, Common Stock valued at its
Fair Market Value on the date of exercise, or a combination thereof, when the
Option is exercised and stock certificates will be delivered only against such
payment.
2.3 Option Grants
Each Option will be subject to the following provisions:
a. Term of Option
An Option will be for a term of not more than ten years from the date of
grant.
b. Exercise
(i) By an Employee:
Unless otherwise provided by the Committee and except in the manner
described below upon the death of the optionee, an Option may be exercised
only in installments as follows: up to one-half of the subject shares on
and after the first anniversary of the date of grant, up to all of the
subject shares on and after the second such anniversary of the date of the
grant of such Option but in no event later than the expiration of the term
of the Option.
An Option shall be exercisable during the optionee's lifetime only by the
optionee and shall not be exercisable by the optionee unless, at all times
since the date of grant and at the time of exercise, such optionee is an
employee of or providing services to the Company, any parent corporation of
the Company or any Subsidiary or Affiliate, except that, upon termination
of all such employment or provision of services (other than by death, Total
Disability, or by Total Disability followed by death in the circumstances
<PAGE>
provided below), the optionee may exercise an Option at any time within two
years thereafter but only to the extent such Option is exercisable on the
date of such termination.
Upon termination of all such employment by Total Disability, the optionee
may exercise such Options at any time within five years thereafter, but
only to the extent such Option is exercisable on the date of such
termination.
In the event of the death of an optionee (i) while an employee of or
providing services to the Company, any parent corporation of the Company or
any Subsidiary or Affiliate, or (ii) within two years after termination of
all such employment or provision of services (other than for Total
Disability) or (iii) within five years after termination on account of
Total Disability of all such employment or provision of services, such
optionee's estate or any person who acquires the right to exercise such
option by bequest or inheritance or by reason of the death of the optionee
may exercise such optionee's Option at any time within the period of five
years from the date of death. In the case of clauses (i) and (iii) above,
such Option shall be exercisable in full for all the remaining shares
covered thereby, but in the case of clause (ii) such Option shall be
exercisable only to the extent it was exercisable on the date of such
termination of employment.
(ii) By Persons other than Employees:
If the optionee is not an employee of the Company or the parent corporation
of the Company or any Subsidiary or Affiliate, the vesting of such
optionee's right to exercise his Options shall be established and
determined by the Committee in the Option Agreement covering the Options
granted to such optionee.
Notwithstanding the foregoing provisions regarding the exercise of an
Option in the event of death, Total Disability, other termination of
employment or provision of services or otherwise, in no event shall an
Option be exercisable in whole or in part after the termination date
provided in the Option Agreement.
c. Transferability
An Option granted under the Plan shall not be transferable otherwise than
by will or by the laws of descent and distribution, or to the extent permitted
by the Board or the Committee to (i) a member or members of the optionee's
family, (ii) a trust, (iii) a family limited partnership or (iv) a similar
estate planning vehicle primarily for members of the optionee's family.
2.4 Agreements
In consideration of any Options granted to a Participant under the Plan,
each such Participant shall enter into an Option Agreement with the Company
providing, consistent with the Plan, such terms as the Committee may deem
advisable.
Exhibit 5
March 3, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Aeroflex Incorporated
Registration Statement on Form S-8
Gentlemen:
Reference is made to the filing by Aeroflex Incorporated (the
"Corporation") of a Registration Statement on Form S-8 with the Securities and
Exchange Commission pursuant to the provisions of the Securities Act of 1933, as
amended, covering the registration of 900,000 shares of the Corporation's Common
Stock, $.10 par value per share, in connection with the issuance of options
under Aeroflex Incorporated 1999 Stock Option Plan (the "Plan").
As counsel for the Corporation, we have examined its corporate records,
including its Certificate of Incorporation, as amended, By-Laws, its corporate
minutes, the form of its Common Stock certificate, the Plan and such other
documents as we have deemed necessary or relevant under the circumstances.
Based upon our examination, we are of the opinion that:
1. The Corporation is duly organized and validly existing under the laws of
the State of Delaware.
2. There have been reserved for issuance by the Board of Directors of the
Corporation 900,000 shares of its Common Stock, $.10 par value per share. The
shares of the Corporation's Common Stock, when issued pursuant to the exercise
of options granted under the Plan, will be validly authorized, legally issued,
fully paid and non-assessable.
We hereby consent to be named in the Registration Statement and in the
Prospectus which constitutes a part thereof as counsel of the Corporation, and
we hereby consent to the filing of this opinion as Exhibit 5 to the Registration
Statement.
Very truly yours,
/s/ Blau, Kramer, Wactlar &
Lieberman, P.C.
BLAU, KRAMER, WACTLAR &
LIEBERMAN, P.C.
Consent of Independent Auditors
The Board of Directors
Aeroflex Incorporated:
We consent to the incorporation by reference in the registration statement
on Form S-8 of Aeroflex Incorporated of our report dated August 10, 1999,
relating to the consolidated balance sheets of Aeroflex Incorporated and
subsidiaries as of June 30, 1999 and 1998 and the related consolidated
statements of earnings, stockholders' equity and cash flows for each of the
years in the three-year period ended June 30, 1999, which report is incorporated
by reference in the June 30, 1999 annual report on Form 10-K of Aeroflex
Incorporated and subsidiaries.
/s/ KPMG LLP
KPMG LLP
Melville, New York
February 29, 2000
