Exhibit 10.42


 


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                                 ,
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:

  	
   

  



 


1

















 


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                                           
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 


 


2

















 


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.  “The term ‘Change in Control’ or ‘Change in
Control of the Company’ shall mean the occurrence hereafter of any of the
following:


 


(a)                                  Any
Person, other than the Company or an Affiliate, becomes a beneficial owner
(within the meaning of Rule 13d-3, as amended, as promulgated under the
Securities Exchange Act of 1934, as amended), directly or indirectly, in one or
a series of transactions, of securities representing more than fifty percent
(50%) of the combined voting power of the Company’s then outstanding
securities;


 


(b)                                 The
consummation of a merger or consolidation of the Company with any other Person,
other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation;


 


(c)                                  The
closing of a sale or other disposition by the Company of all or substantially
all of the assets of the Company;


 


(d)                                 Individuals
who constitute the Board of Directors on the date hereof (“Incumbent Directors”)
cease for any reason to constitute at least a majority of the board; provided,
that any individual who becomes a member of the Board subsequent to the date
hereof, whose election or nomination for election was approved by a vote of at
least two-thirds of the Incumbent Directors shall be treated as an Incumbent
Director unless he or she assumed office as a result of an actual or threatened
election contest with respect to the election or removal of directors; or


 


(e)                                  A
complete liquidation or dissolution of the Company;


 


provided, in each case,
that such event also constitutes a “change in control event” within the meaning
of Treasury Regulation Section 1.409A-3(i)(5).


 


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.


 


3

















 


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.


 


4