Exhibit 10.10

 

MTC TECHNOLOGIES, INC.

 

INCENTIVE STOCK OPTION AGREEMENT

 

This INCENTIVE STOCK OPTION AGREEMENT (this “Agreement”) is entered into by and
between MTC Technologies, Inc., a Delaware corporation (the “Company”), and
                         (the “Optionee”) on                                 ,
            .

 

1. Effectiveness/Operation of Agreement. This Agreement will be effective and
binding immediately upon its execution (the “Date of Grant”).

 

2. Grant of Stock Option.

 

  (a) Subject to and upon the terms, conditions, and restrictions set forth in
this Agreement and in the Company’s 2002 Equity and Performance Incentive Plan
(Amended and Restated February 25, 2004) (the “Plan”), the Company grants to the
Optionee as of the Date of Grant a stock option (the “Option”) to purchase
         Common Shares (the “Optioned Shares”), subject to adjustment as
hereinafter provided. The Option may be exercised from time to time in
accordance with the terms of this Agreement.

 

  (b) The price at which each of the Optioned Shares may be purchased pursuant
to the Option shall be $        .        , subject to further adjustment as
hereinafter provided (the “Option Price”).

 

3. Type of Option. Except to the extent of the $100,000 limitation set forth in
Section 422(d) of the Code, the Option is intended to be an “incentive stock
option” within the meaning of that term under Section 422 of the Code, or any
successor provision thereto and this Agreement shall be construed in a manner
that will enable this Option to be so qualified. To the extent, if any, that the
$100,000 limitation set forth in Section 422(d) of the Code is exceeded, the
Option shall constitute two separate options with the first option covering the
number of Common Shares up to the $100,000 limitation intended to be an
incentive stock option and the second option covering any excess Common Shares
intended to be a nonqualified stock option.

 

4. Term of Option. The term of the Option shall commence on the Date of Grant
and, unless earlier terminated in accordance with Section 8 hereof, shall expire
ten (10) years from the Date of Grant.

 

5.

Right to Exercise. Subject to Section 8, Section 9 and Section 12 hereof, the
Option will be exercisable from time to time prior to the tenth anniversary of
the Date of Grant to the extent of: (a)          percent (    %) of the Optioned
Shares on the Date of Grant; and (b)         percent (    %) of the Optioned
Shares on each of the next two anniversaries of the Date of Grant, if the
Optionee remains continuously employed until such time. To the extent the Option
is exercisable, it may be exercised in whole or in part. In no event shall the
Optionee be entitled to acquire a fraction of one Optioned Share pursuant to the

--------------------------------------------------------------------------------

 

Option. The Optionee shall be entitled to the privileges of ownership with
respect to Optioned Shares purchased and delivered to the Optionee upon the
exercise of all or part of the Option.

 

6. Option Nontransferable. The Option granted hereby shall be neither
transferable nor assignable by the Optionee other than by will or by the laws of
descent and distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee, or in the event of his or her legal incapacity,
by his or her guardian or legal representative acting on behalf of the Optionee
in a fiduciary capacity under state or foreign law and court supervision.

 

7. Notice of Exercise; Payment. To the extent then exercisable, this Option may
be exercised by written notice to the Company stating the number of Optioned
Shares for which the Option is being exercised and the intended manner of
payment. The date of the Optionee’s written notice shall be the exercise date.
Payment equal to the aggregate Option Price of the Optioned Shares for which the
Option is being exercised shall be tendered in full with the notice of exercise
to the Company in cash in the form of currency or check or other cash equivalent
acceptable to the Company. The Optionee may also tender the Option Price by (a)
the actual or constructive transfer to the Company of nonforfeitable,
nonrestricted Common Shares that have been owned by the Optionee for more than
six months prior to the date of exercise, or (b) by any combination of the
foregoing methods of payment, including a partial tender in cash and a partial
tender in nonforfeitable, nonrestricted Common Shares. Nonforfeitable,
nonrestricted Common Shares that are transferred by the Optionee in payment of
all or any part of the Option Price shall be valued on the basis of their Market
Value per Share. The requirement of payment in cash shall be deemed satisfied if
the Optionee makes arrangements that are satisfactory to the Company with a
broker that is a member of the National Association of Securities Dealers, Inc.
to sell on the exercise date a sufficient number of Optioned Shares that are
being purchased pursuant to the exercise, so that the net proceeds of the sale
transaction will at least equal the amount of the aggregate Option Price plus
payment of any applicable withholding taxes, and pursuant to which the broker
undertakes to deliver to the Company the amount of the aggregate Option Price
plus payment of any applicable withholding taxes on a date satisfactory to the
Company, but not later than the date on which the sale transaction will settle
in the ordinary course of business. As a further condition precedent to the
exercise of the Option, the Optionee shall comply with all regulations and
requirements of any regulatory authority having control of, or supervision over,
the issuance of Common Shares and in connection therewith shall execute any
documents that the Board shall in its sole discretion deem necessary or
advisable.

 

8. Termination of Agreement.

 

  (a) This Agreement and the Option granted hereby shall terminate automatically
and without further notice on the earliest of the following dates:

 

  (i) Six (6) months after the Optionee’s retirement at or after age 65;

 

2

--------------------------------------------------------------------------------

  (ii) Six (6) months after the Optionee’s death if such death occurs while the
Optionee is employed by the Company or any Subsidiary;

 

  (iii) Six (6) months after the Optionee’s permanent and total disability, if
the Optionee becomes permanently and totally disabled while an employee of the
Company or any Subsidiary and ceases to be an employee as a result of such
disability;

 

  (iv) Except as provided otherwise in Section 8(b) below or on a case-by-case
basis, thirty (30) calendar days after the Optionee ceases to be an employee of
the Company or any Subsidiary for any reason other than as described in Section
8(a)(i), 8(a)(ii) or 8(a)(iii) hereof; or

 

  (v) Ten (10) years from the Date of Grant.

 

  (b) In the event that the Optionee’s employment is terminated for just cause,
this Agreement shall terminate at the time of such termination notwithstanding
any other provision of this Agreement and the Optionee’s option will cease to be
exercisable to the extent exercisable as of such termination and will not become
exercisable after such termination. For purposes of this provision, “just cause”
shall mean, with respect to an Optionee, “just cause” (or any similar term) as
defined in any employment, severance or other agreement between the Company or
any Subsidiary and the Optionee, or if there is no such agreement in effect that
contains a definition of “just cause” (or any similar term), “just cause” shall
include the commission by the Optionee of any of the following acts prior to
termination of employment:

 

  (i) an intentional act of fraud, embezzlement, theft, or any other material
violation of law in connection with the Optionee’s duties or in the course of
the Optionee’s employment;

 

  (ii) intentional wrongful damage to material assets of the Company or any
Subsidiary;

 

  (iii) intentional wrongful disclosure of material confidential information of
the Company or any Subsidiary;

 

  (iv) intentional wrongful engagement in any competitive activity that would
constitute a material breach of the duty of loyalty to the Company or any
Subsidiary;

 

  (v) intentional breach of any stated material employment policy of the Company
or any Subsidiary; or

 

  (vi) any other conduct that constitutes “cause” at common law.

 

  (c) This Agreement shall not be exercisable for any number of Optioned Shares
in excess of the number of Optioned Shares for which this Agreement is then

 

3

--------------------------------------------------------------------------------

 

exercisable, pursuant to Sections 5 and 9 hereof, on the date of termination of
employment or other service with the Company. For the purposes of this
Agreement, the continuous employment of the Optionee with the Company shall not
be deemed to have been interrupted, and the Optionee shall not be deemed to have
ceased to be an employee of the Company, by reason of the transfer of his or her
employment among the Company and the Subsidiaries or a leave of absence approved
by the Board.

 

9. Acceleration of Option. Notwithstanding Section 5 hereof, after the Date of
Grant, the Option granted hereby shall become immediately exercisable in full in
the event of (i) a Change in Control, (ii) the Optionee’s retirement at or after
age 65, (iii) the death of the Optionee if such death occurs while the Optionee
is employed by the Company or any Subsidiary or (iv) the Optionee’s permanent
and total disability if the Optionee becomes permanently and totally disabled
while an employee of the Company or any Subsidiary.

 

10. No Employment Contract. Nothing contained in this Agreement shall confer
upon the Optionee any right with respect to continuance of employment by the
Company or any Subsidiary, nor limit or affect in any manner the right of the
Company or any Subsidiary to terminate the employment or adjust the compensation
of the Optionee.

 

11. Taxes and Withholding. To the extent that the Company or any Subsidiary
shall be required to withhold any federal, state, local or foreign taxes in
connection with the exercise of the Option, and the amounts available to the
Company or such Subsidiary for such withholding are insufficient, it shall be a
condition to the exercise of the Option that the Optionee shall pay such taxes
or make provisions that are satisfactory to the Company or the Subsidiary, as
the case may be for the payment thereof. The Optionee may elect to satisfy all
or any part of any such withholding obligation by (a) surrendering to the
Company or the Subsidiary a portion of the Optioned Shares that are issued or
transferred to the Optionee upon the exercise of the Option, and the Optioned
Shares so surrendered by the Optionee shall be credited against any such
withholding obligation at the Market Value per Share of such shares on the date
of such surrender or (b) utilizing the broker assistance arrangement provided in
Section 7.

 

12. Compliance with Law. The Company shall make reasonable efforts to comply
with all applicable federal, state and provincial securities laws; provided,
however, notwithstanding any other provision of this Agreement, the Option shall
not be exercisable if the exercise thereof would result in a violation of any
such law.

 

13. Adjustments. The Board may make or provide for such adjustments in the
number of Optioned Shares covered by the Option, in the Option Price applicable
to the Option, and in the kind of shares covered thereby, as the Board, in its
sole discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the Optionee’s rights that otherwise would
result from (a) any stock dividend, stock split, combination of shares,
recapitalization, or other change in the capital structure of the Company, (b)
any merger, consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation, or other distribution of assets
or issuance of rights or warrants to purchase securities, or (c) any other
corporate transaction or event

 

4

--------------------------------------------------------------------------------

 

having an effect similar to any of the foregoing. In the event of any such
transaction or event, the Board, in its discretion, may provide in substitution
for the Option such alternative consideration as it may determine to be
equitable in the circumstances and may require in connection therewith the
surrender of the Option.

 

14. Availability of Common Shares. The Company shall at all times until the
expiration of the Option, reserve and keep available, either in its treasury or
out of its authorized but unissued Common Shares, the full number of Optioned
Shares deliverable upon the exercise of the Option.

 

15. Mandatory Notice of Disqualifying Disposition. Without limiting any other
provision hereof, the Optionee hereby agrees that if the Optionee disposes
(whether by sale, exchange gift or otherwise) of any of the Optioned Shares
within two (2) years of the Date of Grant or within one (1) year after the
transfer of such share or shares to the Optionee, the Optionee shall notify the
Company of such disposition in writing within thirty (30) days from the date of
such disposition. Such written notice shall state the principal terms of such
disposition and the type and amount of the consideration received for such share
or shares by the Optionee in connection therewith.

 

16. Amendments. Any amendment to the Plan shall be deemed to be an amendment to
this Agreement to the extent that the amendment is applicable hereto; provided,
however, that no amendment shall adversely affect the rights of the Optionee
under this Agreement without the Optionee’s consent.

 

17. Severability. In the event that one or more of the provisions of this
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions hereof shall continue
to be valid and fully enforceable.

 

18. Relation to Plan. This Agreement is subject to the terms and conditions of
the Plan. In the event of any inconsistency between the provisions of this
Agreement and the Plan, the Plan shall govern. Capitalized terms used herein
without definition shall have the meanings assigned to them in the Plan. The
Board acting pursuant to the Plan, or any duly authorized committee thereof as
constituted from time to time, shall, except as expressly provided otherwise
herein, have the right to determine any questions which arise in connection with
the Option or its exercise.

 

19. Successors and Assigns. Without limiting Section 6 hereof, the provisions of
this Agreement shall inure to the benefit of, and be binding upon, the
successors, administrators, heirs, legal representatives and assigns of the
Optionee, and the successors and assigns of the Company.

 

20. Governing Law. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Delaware, without giving
effect to the principles of conflict of laws thereof. Each party to this
Agreement hereby consents and submits himself, herself or itself to the
jurisdiction of the courts of the State of Delaware for the purposes of any
legal action or proceeding arising out of this Agreement.

 

5

--------------------------------------------------------------------------------

21. Notices. Any notice to the Company provided for herein shall be in writing
to the Company and any notice to the Optionee shall be addressed to the Optionee
at his or her address on file with the Company. Except as otherwise provided
herein, any written notice shall be deemed to be duly given if and when
delivered personally or sent by registered mail or electronic means of
communication, and addressed as aforesaid. Any party may change the address to
which notices are to be given hereunder by notice to the other party as herein
specified (provided that for this purpose any mailed notice shall be deemed
given on the third business day following deposit of the same in the mail).

 

6

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its
behalf by its duly authorized officer and Optionee has also executed this
Agreement in duplicate, as of the day and year first above written.

 

MTC TECHNOLOGIES, INC.

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

The undersigned Optionee hereby acknowledges receipt of an executed original of
this Agreement and accepts the Option granted hereunder, subject to the terms
and conditions of the Plan and the terms and conditions set forth herein.

 

 

 

--------------------------------------------------------------------------------

                                , Optionee

--------------------------------------------------------------------------------

 

7