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EXHIBIT 10.7
NONQUALIFIED STOCK OPTION AGREEMENT
UNDER
ESCO TECHNOLOGIES INC.
1999 STOCK OPTION PLAN
THIS AGREEMENT, made this ___ day of ________________, 200__, by and
between ESCO TECHNOLOGIES INC., a Missouri corporation (hereinafter called the
"Company"), and _________________ (hereinafter called "Optionee"),
WITNESSETH THAT:
WHEREAS, the Board of Directors of the Company ("Board of Directors")
has adopted the ESCO Technologies Inc. 1999 Stock Option Plan (the "Plan")
pursuant to which options covering an aggregate of 610,000 shares of the Common
Stock of the Company may be granted to officers and other key management
employees of the Company and its subsidiaries; and
WHEREAS, Optionee is now an officer or other key management employee of
the Company or a subsidiary of the Company; and
WHEREAS, the Company desires to grant to Optionee the option to
purchase certain shares of its stock under the terms of the Plan;
NOW, THEREFORE, in consideration of the premises, and of the mutual
agreements hereinafter set forth, it is covenanted and agreed as follows:
1. Grant Subject to Plan. This option is granted under and is
expressly subject to, all the terms and provisions
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of the Plan, which terms are incorporated herein by reference. The Committee
referred to in Paragraph 4 of the Plan ("Committee") has been appointed by the
Board of Directors, and designated by it, as the Committee to make grants of
options.
2. Grant and Terms of Option. Pursuant to action of the Committee,
which action was taken on __________________ ("Date of Grant"),the Company
grants to Optionee the option to purchase all or any part of
__________________________ (________) shares of the Common Stock of the Company,
of the par value of $0.01 per share ("Common Stock"), for a period of ten (10)
years from the Date of Grant, at the purchase price of $___________ per share;
provided, however, that the right to exercise such option shall be, and is
hereby, restricted so that no shares may be purchased during the first year of
the term hereof; that at any time during the term of this option after the end
of the first year from the Date of Grant, Optionee may purchase up to 33-1/3% of
the total number of shares to which this option relates; that at any time during
the term of this option after the end of the second year from the Date of Grant,
Optionee may purchase up to an additional 33-1/3% of the total number of shares
to which this option relates; and that at any time after the end of the third
year from the Date of Grant, Optionee may purchase up to an additional 33-1/3%
of the total number of shares to which this option relates; so that upon the
expiration of the third year from the Date of Grant and thereafter during the
term hereof, Optionee will have become entitled to purchase the entire number
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of shares to which this option relates. Notwithstanding the foregoing, in the
event of a Change of Control (as hereinafter defined) Optionee may purchase 100%
of the total number of shares to which this option relates. In no event may this
option or any part thereof be exercised after the expiration of ten (10) years
from the Date of Grant. Without further action or approval by the Committee, the
purchase price of the shares subject to the option may be paid for (i) in cash,
(ii) by tender of shares of Common Stock already owned by Optionee, or (iii) by
a combination of methods of payment specified in clauses (i) and (ii), but only
if Optionee has owned any shares to be tendered for at least six (6) months, all
in accordance with Paragraph 6 of the Plan. For the purposes of this Agreement,
a Change of Control means:
a. The purchase or other acquisition (other than from the
Company) by any person, entity or group of persons, within the meaning
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (excluding, for this purpose, the Company
or its subsidiaries or any employee benefit plan of the Company or its
subsidiaries), of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either the
then-outstanding shares of common stock of the Company or the combined
voting power of the Company's then-outstanding voting securities
entitled to vote generally in the election of directors; or
b. Individuals who, as of the date hereof,
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constitute the Board of Directors of the Company (the "Board" and, as
of the date hereof, the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any person
who becomes a director subsequent to the date hereof whose election,
or nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an individual whose initial assumption of
office is in connection with an actual or threatened election contest
relating to the election of directors of the Company, as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) shall be, for purposes of this section, considered as
though such person were a member of the Incumbent Board; or
c. Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case with respect to
which persons who were the stockholders of the Company immediately
prior to such reorganization, merger or consolidation do not,
immediately thereafter, own more than 50% of, respectively, the common
stock and the combined voting power entitled to vote generally in the
election of directors of the reorganized, merged or consolidated
corporation's then-outstanding voting securities, or of a liquidation
or dissolution of the Company or of the sale of all or substantially
all of the assets of the Company.
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3. Anti-Dilution Provisions. In the event that, during the term of
this Agreement, there is any change in the number of shares of outstanding
Common Stock of the Company by reason of stock dividends, recapitalizations,
mergers, consolidations, split-ups, combinations or exchanges of shares and the
like, the number of shares covered by this option agreement and the price
thereof shall be adjusted, to the same proportionate number of shares and price
as in this original agreement.
4. Investment Purpose. Optionee represents that, in the event of the
exercise by him of the option hereby granted, or any part thereof, he intends to
purchase the shares acquired on such exercise for investment and not with a view
to resale or other distribution; except that the Company, at its election, may
waive or release this condition in the event the shares acquired on exercise of
the option are registered under the Securities Act of 1933, or upon the
happening of any other contingency which the Company shall determine warrants
the waiver or release of this condition. Optionee agrees that the certificates
evidencing the shares acquired by him on exercise of all or any part of this
option, may bear a restrictive legend, if appropriate, indicating that the
shares have not been registered under said Act and are subject to restrictions
on the transfer thereof, which legend may be in the following form (or such
other form as the Company shall determine to be proper), to-wit:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, but
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have been issued or transferred to the registered owner pursuant
to the exemption afforded by Section 4(2) of said Act. No
transfer or assignment of these shares by the registered owner
shall be valid or effective, and the issuer of these shares shall
not be required to give any effect to any transfer or attempted
transfer of these shares, including without limitation, a
transfer by operation of law, unless (a) the issuer shall have
received an opinion of its counsel that the shares may be
transferred without requirement of registration under said Act,
or (b) there shall have been delivered to the issuer a
'no-action' letter from the staff of the Securities and Exchange
Commission, or (c) the shares are registered under said Act."
5. Non-Transferability. Neither the option hereby granted nor any
rights thereunder or under this Agreement may be assigned, transferred or in
any manner encumbered except by will or the laws of descent and distribution,
and any attempted assignment, transfer, mortgage, pledge or encumbrance except
as herein authorized, shall be void and of no effect. The option may be
exercised during Optionee's lifetime only by him.
6. Termination of Employment. In the event of the termination of
employment of Optionee other than by death, the option granted may be exercised
at the times and to the extent provided in paragraph 9 of the Plan.
7. Death of Optionee. In the event of the death of Optionee during
the term of this Agreement and while he is employed by the Company (or a
subsidiary), or within three (3) months after the termination of his employment
(or one (l) year in the case of the termination of employment of an Optionee who
is disabled as provided in the Plan), this option may be exercised, to the
extent that he was entitled to exercise it at the date of his death, by a
legatee or legatees of Optionee under
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his last will, or by his personal representatives or distributees, at any
time within a period of one (1) year after his death, but not after ten (10)
years from the date hereof, and only if and to the extent that he was entitled
to exercise the option at the date of his death.
8. Shares Issued on Exercise of Option. It is the intention of the
Company that on any exercise of this option it will transfer to Optionee shares
of its authorized but unissued stock or transfer Treasury shares, or utilize any
combination of Treasury shares and authorized but unissued shares, to satisfy
its obligations to deliver shares on any exercise hereof.
9. Committee Administration. This option has been granted pursuant to
a determination made by the Committee, and such Committee or any successor or
substitute committee authorized by the Board of Directors or the Board of
Directors itself, subject to the express terms of this option, shall have
plenary authority to interpret any provision of this option and to make any
determinations necessary or advisable for the administration of this option and
the exercise of the rights herein granted, and may waive or amend any provisions
hereof in any manner not adversely affecting the rights granted to Optionee by
the express terms hereof.
10. Option Not an Incentive Stock Option. This option shall not be
treated as an incentive stock option under Section 422 of the Internal Revenue
Code of 1986, as amended.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its Vice President and to be attested by its Secretary
under the seal of the Company, pursuant to due authorization, and Optionee has
signed this Agreement to evidence his acceptance of the option herein granted
and of the terms hereof, all as of the date hereof.
ESCO TECHNOLOGIES INC.
By
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Vice President
ATTEST:
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Secretary
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Optionee