EXHIBIT 10.4(a)

 

ESCO TECHNOLOGIES INC.

COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

 

Adopted May 10, 2001

Amended and Restated November 9, 2005

 

1.    Purpose. The purpose of the Plan is to enable ESCO Technologies Inc. (the
“Company”) to compensate each non-employee member of the board of directors of
the Company (such board of directors hereinafter referred to as the “Board” and
each such non-employee member of the Board hereinafter referred to as the
“Director”) who contributes to the Company’s success by his or her ability,
ingenuity and knowledge, and to better ensure that the interests of such
Director are more closely aligned with the interests of the Company’s
shareholders by paying a significant portion of his or her compensation in
shares of the Company’s common stock (“Common Stock”).

 

2.    Payment of Annual Retainer. Each Director shall receive an annual retainer
fee (the “Retainer Fee”) payable partially in cash ( the “Cash Portion of the
Retainer Fee”) and partially in shares of Common Stock (the “Stock Portion of
the Retainer Fee”) as determined from time to time by action of the Human
Resources and Compensation Committee of the Board (“HRCC”). The total amount of
the Retainer Fee shall also be determined from time to time by action of the
HRCC. The Cash Portion of the Retainer Fee shall be paid in January of each year
for that calendar year. The Stock Portion of the Retainer Fee shall be
distributed quarterly no later than the 15th business day of each quarter of the
calendar year and shall represent consideration for services to be performed for
the quarter then beginning. Provided, however, that the HRCC reserves the right
to change the frequency of payment/distribution of the Retainer Fee. To be
entitled to a quarterly Retainer Fee stock distribution, the Director must be a
member of the Board on the first day of the corresponding quarter.

 

3.    Other Compensation. In addition to payment of the Retainer Fee provided
for in Section 2, each Director shall be paid such additional cash fees for
attendance at Board and Board Committee meetings, service as chairman of a
committee, service as lead director or other fees as approved by the HRCC from
time to time.

 

4.    Deferral of Compensation. Directors may elect to defer the receipt of all
(but not less than all) of the annual Cash Portion of the Retainer Fee and other
cash compensation in stock equivalents and/or to defer the receipt of all (but
not less than all) of the quarterly installment of the Stock Portion of the
Retainer Fee in stock equivalents by executing and delivering an election form
to the Company no later than the end of the calendar year preceding the calendar
year in which such amounts will be earned and subject to such other conditions
as the Company shall determine. Any newly elected Director may elect to defer
Retainer Fees or other cash compensation prior to the effective date of his or
her election to the Board. Except as otherwise provided herein, the election to
defer Retainer Fees or other cash compensation shall be irrevocable as to
amounts earned in the following calendar year or following the effective date of
election to the Board as applicable and shall remain in effect until a new
election form is delivered to the Company or distributions commence, whichever
is earlier. Any such new election form shall apply only to future Retainer Fees
or other cash compensation earned after the calendar year in which such new
election form is filed. If a Director desires to defer fees earned after a
distribution commences, he or she must file a hew election form to defer such
fees prior to the commencement of the calendar year in which such fees will be
earned.

 

(a)  Deferred Compensation Account.

 

(i)    The Company shall establish a deferred compensation bookkeeping account
(the “Account”) for each Director electing to defer Retainer Fees or other cash
compensation. As of the date a Retainer Fee or other cash compensation would
otherwise be paid to the Director (absent the deferral election), the Company
shall credit to the Account the amount of Retainer Fees or other cash
compensation which the Director has elected to defer. The credit shall be in
stock equivalents (“Stock Equivalents”) only, determined as follows:

 

(a)    For each share of Common Stock otherwise payable as the quarterly
distribution of the Stock Portion of the Retainer Fee which the Director elects
to defer, the Company shall credit the Account with one Stock Equivalent.

 

(b)    For the annual payment of the Cash Portion of the Retainer Fee which the
Director elects to defer, the Company shall credit the Account with that number
of Stock Equivalents equal to the dollar amount of such portion, divided by the
Fair Market Value (as hereafter defined) per share of the Common Stock on the
first day of the corresponding quarter.

 

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(c)    For other cash compensation which the Director elects to defer, the
Company shall credit the Account with that number of Stock Equivalents equal to
the dollar amount of such compensation, divided by the Fair Market Value per
share of the Common Stock on the first day of the corresponding quarter.

 

“Fair Market Value” as of any date shall mean the average of the high and low
prices of the Common Stock on the New York Stock Exchange on such date (or on
the most recent date on which the Common Stock is traded).

 

(ii)    The Account shall be credited, as of the payment date of any cash
dividends paid on Common Stock, with additional Stock Equivalents equal to the
product of the per share dividend and the number of Stock Equivalents credited
to the Account and dividing such product by the Fair Market Value per share of
the Common Stock as of the dividend payment date. The Account shall be credited,
as of the payment date of any stock dividends paid on Common Stock with
additional Stock Equivalents equal to the product of the per share dividend and
the number of Stock Equivalents credited to the Account

 

(b)  Distribution.

 

(i)    Except as otherwise provided in the Plan, the balance in the Account
shall be distributed to the Director commencing on the date which the Director
has specified on the election form; provided, however, that such distribution
must begin no later than the Director’s 65th birthday or upon termination of the
Director’s service as a Director, whichever is later (“Commencement Date”).
Distribution shall be made in cash (the “Cash Distribution”) or in shares of
Common Stock (the “Common Stock Distribution”) as the Director shall elect in
the election form; provided, that the portion of the Account representing the
Stock Portion of the Retainer Fee which has been deferred may only be
distributed in the form of a Common Stock Distribution. The Cash Distribution
shall equal the number of Stock Equivalents then credited to the Account as of
the Commencement Date multiplied by the Fair Market Value per share of Common
Stock as of such date. If Cash Distribution is to be made in installments, the
amount of such distribution shall be based upon the number of Stock Equivalents
credited to the Account as of the date each installment is to be made,
multiplied by the Fair Market Value per share of Common Stock as of each such
date. The Common Stock Distribution shall equal the number of shares of Common
Stock equal to the number of Stock Equivalents credited to the Account as of the
Commencement Date; provided that Distribution of Common Stock shall be rounded
down to the nearest whole share of Common Stock and any fractional share shall
be paid in cash in an amount equal to the fractional share multiplied by the
Fair Market Value per share as of the Commencement Date.

 

(ii)   Distribution shall be made either in a lump sum or, as specified on the
Director’s election form, in quarterly, semi-annual or annual installments, over
a period not to exceed 5 years from the Commencement Date; provided, that Common
Stock Distributions may not be made more frequently than semi-annually. An
election to change the form (cash or stock) of distribution with respect to the
Account must be received by the Company prior to January 1 of the calendar year
in which distributions are to be made pursuant to such election and must be
approved in advance by the HRCC.

 

(iii)   Notwithstanding the provisions of paragraph 4(b)(i), in the event the
Director is removed from the Board or terminates service on the Board on account
of death, the balance in the Account shall be payable in a lump sum in a Cash
Distribution within 30 days after January 1 of the following calendar year (the
“Cash Distribution Date”). The Cash Distribution shall equal the number of Stock
Equivalents then credited to the Account as of the Cash Distribution Date
multiplied by the Fair Market Value per share of Common Stock as of the Cash
Distribution Date.

 

(iv)   In the event the Director becomes disabled (as hereafter defined), the
balance in the Account (determined in accordance with paragraph 4(b)(i) as of
the date of disability) shall be paid in a lump sum within 30 days following the
Director’s disability. For this purpose, a Director shall be considered disabled
only if such Director is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than q12 months.

 

(v)   The Company shall deduct from all distributions hereunder any taxes
required to be withheld by the federal or any state or local government.

 

5.    Change in Control.

 

(a)    Notwithstanding any other provision of the Plan, if a Change in Control
occurs and within one year subsequent to such Change in Control the Director
ceases to serve as a member of the Board for any reason, the balance in the
Account shall be paid in a lump sum to the Director, in the manner determined in
paragraph 5(b) below, on the 15th day of February following the end of the
calendar year in which such termination occurs.

 

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(b)  The payment determined under this paragraph 5(b) shall be a Cash
Distribution in an amount equal to the greater of the following:

 

(i)    the number of Stock Equivalents then credited to the Account multiplied
by the Fair Market Value per share of Common Stock as of either (i) the date of
termination of the Director’s service on the Board (if such Common Stock is
still in existence), or (ii) the date of the Change in Control, whichever is
greater; or

 

(ii)   the number of Stock Equivalents then credited to the Account multiplied
by the fair market value per share of the consideration received by holders of
Common Stock in the Change in Control as of either (i) the date of termination
of the Director’s service on the Board, or (ii) the date of the Change in
Control, whichever is greater.

 

(c)   Notwithstanding paragraph (b) above, if the consideration in the Change in
Control takes the form of stock of an acquiring corporation, payment may be in
the form of such stock of such corporation, in lieu of cash.

 

A “Change in Control” shall be defined to mean (i) a merger, consolidation or
reorganization of the Company in which, as a consequence of the transaction, the
incumbent Directors immediately prior to such transaction do not constitute a
majority of the directors of the continuing or surviving corporation; (ii) the
acquisition, directly or indirectly, of the power to vote 50% or more of the
outstanding Common Stock of the Company by any person, entity or “group” (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934); or (iii) any sale or other transfer, in one or a series of transactions,
of all or substantially all of the assets of the Company; unless, in any case, a
majority of then-current Directors determines prior to such transaction or event
that it shall not, for purposes of the Plan, be deemed a Change in Control.

 

(d)  The Company shall promptly reimburse the Director for all legal fees and
expenses reasonably incurred in successfully obtaining or enforcing any right or
benefit provided under this Section.

 

6.    Distribution of Common Stock. The maximum number of shares of Common Stock
available for distribution pursuant to the Plan shall be 200,000 shares, subject
to adjustment as set forth in Section 71. The shares of Common Stock issuable to
Directors under the Plan shall be issued from shares held in the Company’s
treasury.

 

7.    Adjustment to Shares of Stock Issuable Pursuant to Plan. In the event of
any change in the outstanding shares of Common Stock of the Company by reason of
any stock split, stock dividend or recapitalization of the Company, an equitable
adjustment shall be made to the number of shares of Common Stock issuable under
the Plan, the amount of the Stock Portion of the Retainer Fee set forth in
Section 2 and the number of Stock Equivalents credited to the Account for any
Director, as the HRCC determines is necessary or appropriate, in its discretion,
to give proper effect to such corporate action. Any such adjustment determined
in good faith by the HRCC shall be conclusive and binding for all purposes of
the Plan.

 

8.    Amendments. Section 5 of the Plan may not be amended or modified or
terminated after the occurrence of a Change in Control with respect to benefits
accrued as of such occurrence. The Plan may otherwise be amended, modified or
terminated by the HRCC at any time, provided that no such action shall reduce
the amounts credited to the Account of any Director immediately prior to such
action or change the time, method or manner of distribution of such Account.

 

9.    Miscellaneous.

 

(a)   The provisions of the Plan shall be binding upon and enforceable against
the Company and/or the continuing or surviving corporation in a Change of
Control.

 

(b)   Neither the Director nor any other person shall have any interest in any
fund or in any specific asset of the Company by reason of amounts credited to
the Account of a Director hereunder, or the right to exercise any of the rights
or privileges of a shareholder (including the right to vote) with respect to any
Stock Equivalents credited to the Account or to receive any distribution under
the Plan except as expressly provided for in the Plan. Distributions hereunder
shall be made from the general assets of the Company, and the rights of the
Director shall be those of an unsecured general creditor of the Company.

 

(c)   The Company may require that the Directors shall agree to acquire shares
of Common Stock under the Plan for investment and not for resale or distribution
except pursuant to a registration statement under the Securities Act of 1933 or
an exemption from such registration, and may require that certificates
representing such shares shall bear a customary restrictive legend to this
effect.

 

 

1 Adjusted to 400,000 shares pursuant to the Company’s 2005 stock split.

 

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(d)   The interest of the Director under the Plan shall not be assignable by the
Director or the Director’s beneficiary or legal representative, either by
voluntary assignment or by operation of law, and any such attempted assignment
shall be ineffective to transfer the Director’s interest; provided, however,
that (i) the Director may designate beneficiaries to receive any benefit payable
under the Plan upon death, and (ii) the legal representative of the Director’s
estate may assign his or her interest under the Plan to the persons entitled to
any such benefit.

 

(e)   Nothing contained herein shall impose any obligation on the Company to
continue the tenure of the Director beyond the term for which such Director has
been elected or prevent his or her removal.

 

(f)    The Plan shall be interpreted by and all questions arising in connection
therewith shall be determined by the HRCC, whose interpretation or determination
shall be conclusive and binding.

 

(g)   If any amounts deferred pursuant to the Plan are found in a final judgment
or other order to have been includible in gross income by a Director prior to
payment of such amounts from his or her Account, such amounts shall be
immediately paid to such Director, notwithstanding any election pursuant to
Section 4.

 

(h)   The provisions of the Plan shall be governed by and construed in
accordance with the laws of the State of Missouri, without regard to the
principles of conflicts of law which might otherwise apply.

 

10.   Effective Date. The Plan shall become effective July 1, 2001 and this
Restatement shall become effective as of January 1, 2005.

 

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ESCO TECHNOLOGIES INC.

COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

 

ELECTION FORM

 

Pursuant to the ESCO Technologies Inc. Compensation Plan For Non-Employee
Directors:

 

1.    COMPENSATION TO BE DEFERRED:

 

¨ I hereby elect to defer payment of my Cash Portion of the Retainer Fee and
other cash compensation fees.

 

¨ I hereby elect to defer distribution of my Stock Portion of the Retainer Fee.

 

I understand that all deferrals will be credited as Stock Equivalents to my
Deferred Compensation Account.

 

2.    TYPE OF DISTRIBUTION:

 

Stock Portion of the Retainer Fee:

 

¨ Lump Sum – in shares

 

¨ Installments over ____ years (may not exceed 5 years) in shares

 

¨ Semi-Annually in shares

 

¨ Annually in shares

 

Cash Portion of the Retainer Fee:

 

¨ Lump Sum – in cash

 

¨ Lump Sum – in shares

 

¨ Installments over ____ years (may not exceed 5 years)

 

¨ Semi-Annually ____% in cash; ____% in shares

 

¨ Annually ____% in cash; ____% in shares

 

¨ Quarterly in cash

 

3.    TIME OF DISTRIBUTION:

 

¨ Lump sum distribution to be made on __________________________.

 

¨ Installment distributions to commence on _______________________.

 

¨ Distribution to be made or commence on the effective date of my retirement as
a Director of the Company.

 

4.    DESIGNATION OF BENEFICIARY: In the absence of such designation, payment
will be paid to your estate. (Please include social security number and
address.)

 

Name   Address   Social Security Number

 

 

 

 

 

 

 

 

 

 

 

 

5.    This deferment will remain in effect with respect to each such subsequent
year until such time as I may revoke the deferment or distributions commence,
whichever is earlier. Such later filings shall apply only to Retainer Fees and
other cash compensation to be earned after the calendar year in which such later
filings are made.

 

Director: _________________________________________ Date:
__________________________

 

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