Exhibit10.3


 


AMERICAN
SCIENCE AND ENGINEERING, INC.


2005
Equity and Incentive Plan


 


Nonstatutory Stock
Option Grant Agreement


Performance Vested
Options


 


American Science
and Engineering, Inc. (the “Company”), a Massachusetts corporation,
hereby grants to the person named below an option to purchase shares of Common
Stock, $0.66 2/3 par value, of the Company (the “Option”) under and
subject to the Company’s 2005 Equity and Incentive Plan (the “Plan”)
exercisable on the terms and conditions set forth below and those attached
hereto and in the Plan:


 


	
   Grant Date

  	
   

  	
  [Date]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   Optionee

  	
   

  	
  [Name]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   Options Granted

  	
   

  	
  [# of Options]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   Exercise Price

  	
   

  	
  $[Strike Price]

  	
   

  	
  per share

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   Expiration Date

  	
   

  	
  [Expiration
  Date]

  	
   

  	
   

  



 


Exercise Schedule
and Vesting:  The options shall vest and
become exercisable upon the achievement of performance targets of the Company,
as more particularly described herein (“Performance-Vested Options”).  Specifically, Performance-Vested Options
shall become exercisable in accordance with the following terms: as soon as practicable following the delivery
to the Company of its audited financial statements for the fiscal year, the
Compensation Committee shall determine whether the Performance Goals (as
defined in the Plan) have been met. 
Restrictions on the Performance-Vested Options will lapse, pro-rata, as
each or any of the Performance Goals are met. 
If the Company has not met any portion of the Performance Goals prior to
the end of the fiscal year ending on or before [Fiscal Year Date], one half
(1/2) of the pro-rata portion of the Performance-Vested Options attributable to
such unattained goals shall immediately vest, and one half (1/2) shall be
automatically and immediately forfeited.


 


 The Performance Goals shall be established by
the Committee based on one or more of the following objective criteria prior to
the beginning of such Performance Period or within such period after the
beginning of the Performance Period (as defined in the Plan) as shall meet the
requirements to be considered “pre-established objective performance goals” for
purposes of the regulations issued under Section 162(m) of the Code: (i) increases
in the price of the Common Stock, (ii) market share, (iii) sales, (iv) revenue,
(v) return on equity, assets, or capital, (vi) economic profit
(economic value added), (vii) total shareholder return, (viii) costs,
(ix) expenses, (x) margins, (xi) earnings (including EBITDA) or
earnings per share, (xii) cash flow (including adjusted operating cash flow),
(xiii) customer satisfaction, (xiv) operating profit, (xv) net income, (xvi)
research and development, (xvii) product releases, (xviii) manufacturing, or
(xix) any combination of the foregoing, including without limitation, goals
based on any of such measures relative to appropriate peer groups or market
indices, as more particularly outlined on Exhibit A, attached to this
Agreement


 


This Option shall not be
treated as an Incentive Stock Option under section 422 of the Internal Revenue
Code of 1986, as amended.


 


By acceptance of this
Option, the Participant agrees to the terms and conditions set forth above and
those attached hereto and in the Plan.


 


	
  PARTICIPANT

  	
   

  	
  AMERICAN SCIENCE
  AND ENGINEERING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  



 

















 


 AMERICAN SCIENCE AND ENGINEERING, INC. 2005
EQUITY AND INCENTIVE PLAN


 


Nonstatutory Stock Option Terms
And Conditions


 


1.             Plan Incorporated by Reference.  This Option is issued pursuant to the terms
of the Plan.  This Grant Agreement does
not set forth all of the terms and conditions of the Plan, which are
incorporated herein by reference. 
Capitalized terms used and not otherwise defined in this Grant Agreement
have the meanings given to them in the Plan. 
The Committee administers the Plan and its determinations regarding the
operation of the Plan are final and binding. 
A copy of the Plan may be obtained upon written request without charge
from the Human Resources Department of the Company.


 


2.             Option
Price.  The price to be paid for each
share of Common Stock issued upon exercise of the whole or any part of this
Option is the Option Price set forth on the face of this Grant Agreement.


 


3.             Exercisability
and Vesting Schedule.  As long as the
Participant remains continuously employed by the Company or an Affiliate, this
Option will vest and may be exercised (in whole or in part) in accordance with
the Exercisability and Vesting Schedule set forth on the face of this Grant
Agreement, but only for the purchase of whole shares.  This Option may not be exercised as to any
shares after the Expiration Date.


 


4.             Effect
of Termination of Employment.  If the
Participant’s status as an employee of the Company or an Affiliate is
terminated for any reason (voluntary or involuntary), this Option shall not
thereafter become vested or exercisable as to any additional shares, and the
already vested portion of this Option shall remain exercisable (to the extent
not previously exercised) for ninety (90) days after the day on which the
Participant’s employment is terminated, whereupon this Option shall terminate; except
that


 


(a)                                  If
the Participant is on military leave, sick leave, or other leave of absence
approved by the Company or the Affiliate, his or her employment with the
Company or the Affiliate will be treated as continuing intact during the period
of such leave.  The Participant’s
employment will be deemed to have terminated on the first day after the
expiration of such leave.


 


(b)                                 If the Participant is terminated by reason of
retirement prior to the end of the fiscal year ending on or before [Fiscal Year
Date] and the Participant’s age is equal to or greater than 65 and the
Participant’s age plus length of service is equal to or greater than 70, one
half (1/2) of the pro-rata portion of the Performance-Vested Shares reflecting
the percentage of such Option that was accrued by the Company on its books at
the time of the Participant’s retirement date shall immediately vest, and one
half (1/2) shall be automatically and immediately forfeited.


 


(c)                                  If
the Participant’s employment is terminated by reason of his or her death, this
Option shall become exercisable and vested on a prorated basis reflecting the
percentage of such Option that was accrued by the Company on its books at the
time of the Participant’s death, without regard to the Exercisability and
Vesting Schedule.  In such event, such
prorated portion of this Option may be exercised at any time within twelve (12)
months after the date of the Participant’s death by the person(s) to whom
the Participant’s option rights pass by will or by the applicable laws of descent
and distribution.


 


(d)                                 If
the Participant’s employment is terminated by the Company or the Affiliate for “cause,”
this Option, to the extent vested and exercisable upon such termination of
employment, may be exercised by the Participant only through the close of
regular business hours on the date of termination.  Unless otherwise defined in any written
employment agreement between the Company or the Affiliate and the Participant,
cause shall be determined by the Committee in its discretion.


 


In no event,
however, may this Option be exercised after the Expiration Date set forth on
the face of this Grant Agreement.


 


5.             Method
of Exercise.  To exercise this
Option, the Participant shall deliver notice of exercise to the Company
specifying the number of shares with respect to which the Option is being
exercised accompanied by payment of the Option Price for such shares (i) by
cash, (ii) by actual delivery or attestation of ownership of shares of
Common Stock owned by the Participant, including vested Restricted Stock, (iii) by
retaining shares of Common Stock otherwise issuable pursuant to the Option, (iv) for
consideration received by the Company under a broker-assisted cashless exercise
program acceptable to the Company, or (v) for such other 


 

















 


lawful consideration
as the Committee may determine.  Such
exercise notice must be given at the time and in the manner as specified by the
Committee from time to time.  Upon
payment of the exercise price and applicable taxes, and assuming satisfaction
of all applicable securities laws and exchange listing requirements, the
Company shall delivery, or make available to the Participant through the Plan’s
designated broker, the net shares or cash proceeds (as the case may be)
resulting from the Option exercise.


 


6.             Change
of Control.  To preserve the
Participant’s rights under this Option in the event of a Change in Control of
the Company (as defined below) occurring while the Participant is employed by
the Company or an Affiliate, the Committee shall fully accelerate the vesting
of this Option and may in its discretion take one or more of the following
actions: (i) provide for payment to the Participant of cash or other
property with a Fair Market Value equal to the amount that would have been
received upon the exercise or payment of the Option had the Option been
exercised or paid upon the Change in Control of the Company, (ii) adjust
the terms of the Option in a manner determined by the Committee to reflect the
Change in Control of the Company, (iii) cause the Option to be assumed, or
new rights substituted therefore, by another entity, or (iv) make such
other provision as the Committee may consider equitable to the Participant and
in the best interests of the Company. 
For purposes of this Section, a “Change in Control of the Company” shall
mean:  (i) the consummation of (a) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving entity or pursuant to which the Company’s Common Stock
is converted into cash, securities, or other property, other than a merger of
the Company in which the ownership by the Company’s stockholders of the
securities in the surviving entity is at least two-thirds of the combined
voting power; or (b) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company; (ii) the stockholders of the Company have
approved any plan or proposal for the liquidation or dissolution of the
Company; (iii) any person (as that term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) has become the beneficial owner (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more
of the Company’s outstanding Common Stock; or (iv) that during any period
of two consecutive years, individuals who, at the beginning of such period,
constitute the entire Board of Directors of the Company shall cease, for any
reason, to constitute a majority thereof, unless the election, or the
nomination for election by the Company’s stockholders, of each new director was
approved by a vote of at least three-quarters of the directors then still in
office who were directors at the beginning of the period.


 


7.             Option Not Transferable.  This Option is not transferable by the Participant
other than by will or the laws of descent and distribution, and is exercisable,
during the Participant’s lifetime, only by the Participant.  The naming of a Designated Beneficiary does
not constitute a transfer. The Committee may, in its sole discretion, allow the
Participant to transfer this Option under a domestic relations order in
settlement of marital or domestic property rights.


 


8.             Payment of Taxes. The
Participant shall pay to the Company, or make provision satisfactory to the
Committee for payment of, any taxes required by law to be withheld with respect
to the exercise of the Option no later than the date of the event creating the
tax liability.  The Company and its
Affiliates may, to the extent permitted by law, deduct any such tax obligations
from any payment of any kind due to the Participant.  In the Committee’s discretion, the minimum
tax obligations required by law to be withheld with respect to the exercise of
the Option may be paid in whole or in part in shares of Common Stock, including
shares retained from the exercise of the Option, valued at their Fair Market
Value on the date of retention.


 


9.             No Right To Employment.  No person shall have any claim or right to be
granted an Option.  Neither the Plan nor
this Option shall be deemed to give any Participant the right to continued
employment or to limit the right of the Company or an Affiliate to discharge
any Participant at any time.


 


10.           Amendment of Option.  The Committee may amend, modify, or terminate
this Option, including substituting therefore another option of the same or a
different type, changing the date of exercise or realization and converting an
incentive stock option to a nonstatutory stock option, provided that the
Participant’s consent to such action shall be required unless (i) the
Committee determines that the action, taking into account any related action,
would not materially and adversely affect the Participant, or (ii) the
action is permitted by the terms of the Plan.


 


11.           Data Privacy and Electronic
Delivery.  By executing this Grant
Agreement, the Participant: (i) authorizes the Company, its Affiliates,
and any agent of the Company or its Affiliates administering the Plan or
providing Plan recordkeeping services, to disclose to the Company, its
Affiliates or third-party service providers such information and data as may be
deemed necessary or appropriate to facilitate the grant of Options and the
administration of the Plan; (ii) waives any data privacy rights he or she
may have with respect to such information; and (iii) authorizes the
Company, its Affiliates, and third-party service providers to store and
transmit such information in electronic form. 
The Participant agrees that the Company, its Affiliates, and their
agents may 


 

















 


deliver
electronically all documents relating to the Plan or this Option (including,
without limitation, prospectuses required by the Securities and Exchange
Commission) and all other documents that the Company is required to deliver to
its stockholders.


 


12.           Cancellation and Rescission of
Option.  In consideration of this
Option the Participant agrees that if Participant breaches Participant’s
obligations under the terms of the American Science & Engineering
Employee Representation, Rights in Data, and Non-Compete Agreement, then the
Company may cancel, suspend, withhold, or otherwise limit or restrict (in whole
or in part) the exercise of this Option. 
If this Option has been exercised prior to the occurrence or discovery
by the Company of any such breach, then the Committee may rescind the exercise
of this Option at any time within the two (2) year period after such
exercise.  In the event of any
rescission, the Participant shall pay to the Company the amount of income
recognized upon exercise of the Option and any additional gain realized upon
any sale of Option shares in such manner and on such terms and conditions as
may be required by the Committee, and the Company shall be entitled to set-off
the amount of any such income or gain against any amount that may be owed to
the Participant.


 


13.           Impact of Restatement of Financial
Statements Upon Option.  If any of
the Company’s financial statements are required to be restated as a result of
errors, omissions, or fraud, the Committee may (in its sole discretion, but
acting in good faith) direct that the Company recover all or a portion of the
amount of income recognized upon the exercise of this Option and any additional
gain realized upon any sale of the Option shares with respect to any fiscal
year of the Company the financial results of which are negatively affected by
such restatement. The amount to be recovered from the Participant shall be the
amount by which the Option income at exercise, and any gain upon sale of the
Option shares of the affected award, exceed the amount that would have been
payable to the Participant had the financial statements been initially filed as
restated, or any greater or lesser amount that the Committee shall determine.
The Committee may determine to recover different amounts from different
participants or different classes of participants on such bases as it shall
deem appropriate.  In no event shall the
amount to be recovered by the Company be less than the amount required to be
repaid or recovered as a matter of law. The Committee shall determine whether
the Company shall effect any such recovery (i) by seeking repayment from
the Participant, (ii) by reducing (subject to applicable law and the terms
and conditions of the applicable plan, program, or arrangement) the amount that
would otherwise be payable to the Participant under any compensatory plan,
program, or arrangement maintained by the Company or any of its Affiliates, (iii) by
withholding payment of future increases in compensation (including the payment
of any discretionary bonus amount) or grants of compensatory awards that would
otherwise have been made in accordance with the Company’s otherwise applicable
compensation practices, or (iv) by any combination of the forgoing.