Exhibit 10(c)
NONQUALIFIED STOCK OPTION AGREEMENT
UNDER
ESCO ELECTRONICS CORPORATION
1994 STOCK OPTION PLAN
THIS AGREEMENT, made this 18th day of July, 2002, by and between ESCO
Technologies Inc. (formerly ESCO Electronics Corporation), a Missouri
corporation (hereinafter called the "Company"), and Xxxxxx X. Xxxxx
(hereinafter called "Optionee"),
WITNESSETH THAT:
WHEREAS, the Board of Directors of the Company ("Board of Directors")
has adopted the ESCO Electronics Corporation 1994 Stock Option Plan (the
"Plan") pursuant to which options to purchase shares of the Common Stock of
the Company may be granted to certain key management employees of the
Company and its subsidiaries; and
WHEREAS, Optionee is now a key management employee 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 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 July 18, 2002 ("Date of Grant"), the Company
grants to Optionee the option to purchase all or any part of sixty thousand
(60,000) 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 $31.3350 per share; provided,
however, that the right to exercise such option shall be, and is hereby,
restricted so that no shares may be purchased prior to February 1, 2003;
that at any time during the term of this option on or after February 1,
2003, Optionee may purchase 100% of the number 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 effective as of the later of
(i) the date of the Change of Control, or (ii) six (6) months after the
Date of Grant. In no event may this option or any part thereof be exercised
after the expiration of ten (10) years from the Date of Grant. 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), 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, 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.
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, as
the Committee, in its sole discretion, shall determine.
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 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. Provided, that if Optionee's employment is terminated on account of
retirement on or after age 60, Optionee may exercise this option, to the
extent that he was entitled to exercise it at the date of such retirement,
at any time within five (5) years after such retirement, but not after ten
(10) years from the Date of the Grant. Provided, further, that if
Optionee's employment is terminated for cause (as hereinafter defined) this
option shall terminate and be of no further force or effect. For purposes
of this Agreement, the term "cause" shall mean:
(i) Optionee's willful and continued failure to substantially perform
his duties with the Company or one of its subsidiaries (other than any such
failure resulting from incapacity due to physical or mental illness), after
a written demand for such performance is delivered to him by the Board of
Directors of the Company which specifically identifies the manner in which
such Board believes that he has not substantially performed his duties; or
(ii) Optionee's willful engaging in (A) illegal conduct (other than
minor traffic offenses), or (B) conduct which is in breach of his fiduciary
duty to the Company or one of its subsidiaries and which is demonstrably
injurious to the Company or one of its subsidiaries, any of their
reputations, or any of their business prospects. For purposes of this
subparagraph (ii) and subparagraph (i) above, no act or failure to act on
Optionee's part shall be considered "willful" unless it is done, or omitted
to be done, by him in bad faith or without reasonable belief that his
action or omission was in the best interests of the Company or one of its
subsidiaries. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board of Directors of the
Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by Optionee in
good faith and in the best interests of the Company or one of its
subsidiaries;
The cessation of Optionee's employment shall not be deemed to be for
"cause" unless and until there shall have been delivered to him a copy of a
resolution duly adopted by the affirmative vote of not less than
three-fourths of the entire membership of such Board of Directors of the
Company (but excluding Optionee so long as he is a member of such Board) at
a meeting of such Board called and held for such purpose (after reasonable
notice is provided to Optionee and he is given an opportunity, together
with counsel, to be heard before such Board), finding that, in the
good-faith opinion of such Board, Optionee is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.
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 his last will, or by
his personal representatives or distributes, 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.
11. Governing Law. This Agreement shall be construed and administered
in accordance wit the laws of the State of Missouri, without regard to the
principles of conflicts of law which might otherwise apply.
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
Vice President
ATTEST:
Secretary
Xxxxxx X. Xxxxx, Optionee
