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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 31, 2007
ESCO TECHNOLOGIES INC.
(Exact Name of Registrant as Specified in Charter)
Missouri 1-10596 43-1554045
(State or Other (Commission (I.R.S. Employer
Jurisdiction of Incorporation) File Number) Identification No.)
9900A Clayton Road, St. Louis, Missouri 63124-1186
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 314-213-7200
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2 (b) under the
Exchange Act (17 CFR 240.14d-2 (b))
[ ] Pre-commencement communications pursuant to Rule 13e-4 (c) under the
Exchange Act (17 CFR 240.113d-4 (c))
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF
CERTAIN OFFICERS
The Registrant entered into employment agreements effective on or about
November 1, 1999 with executive officers V.L. Richey, Jr., G.E. Muenster and
A.S. Barclay. These employment agreements were amended to extend until November
2, 2004, and were further amended on May 5, 2004 to provide for automatic
renewal after November 2, 2004 for subsequent one year periods unless a six
month notice of non-renewal is given by the Registrant or the executive.
The employment agreements provide for a base salary of not less than their
fiscal year 1999 base salary, as increased in accordance with the Registrant's
compensation policy, and an annual bonus. These executives are also entitled to
participate in any stock options, restricted stock or performance shares awards
and other compensation as the Registrant's Human Resources and Compensation
Committee shall determine. They are also entitled to participate in all employee
benefit programs of the Registrant applicable to senior executives, and the
Registrant will continue to provide certain perquisites, including financial
planning, an automobile allowance and club memberships.
The Registrant has the right to terminate the employment of the executive
officers at any time upon thirty days notice for cause or without cause, and
these executives have the right to resign at any time upon thirty days notice.
Cause is defined in the agreements as an executive's willful failure to perform
his duties, disability or incapacity extending for nine consecutive months,
willful misconduct, conviction of a felony, breach of any material provision of
the employment agreement, or a determination by the Board that the executive
committed fraud, embezzlement, theft or misappropriation against the Registrant.
If an executive's employment is terminated by the Registrant other than for
cause, or if an executive terminates his employment following certain actions by
the Registrant, such as failing to comply with the agreement, materially
reducing the executive's responsibilities or requiring the executive to
relocate, the executive will be entitled to receive certain compensation
benefits. In the case of such a termination, Mr. Richey will receive for two
years, and Mr. Muenster and Ms. Barclay will receive for one year: (i) the
continuation of their then-current base salary and bonus (bonus calculated using
the annual percentage of base salary for the last fiscal year prior to
termination), (ii) immediate vesting of outstanding stock options and immediate
vesting and payout of earned performance-accelerated restricted shares, and
(iii) continuation of employee benefits and perquisites for the period of base
salary continuation. If an executive's employment is terminated in connection
with a Change of Control (as defined), the executive will not receive the
foregoing benefits, and will receive instead the benefits payable under the
Registrant's Severance Plan.
The employment agreements prohibit the executives from disclosing
confidential information or trade secrets concerning the Registrant, and for a
specific period from soliciting employees of the Registrant and from soliciting
customers or distributors of the Registrant.
Effective December 31, 2007, the employment agreements were amended so that
the amounts payable upon termination of employment (other than in connection
with a change of control of the Registrant) would not be subject to Section 409A
of the Internal Revenue Code of 1986, as amended. These amendments included the
following provisions:
(a) The executive may elect to receive his/her base salary and bonus
termination amounts (i) in lump sums payable March 15 of the calendar
year following the calendar year in which termination occurs, or (ii)
in equal biweekly installments commencing after termination, provided
that any remaining installments shall be paid in a lump sum 2 1/2
months following the end of the calendar year or fiscal year of the
Registrant in which termination occurs (whichever is later);
(b) Executive outplacement assistance shall not extend past the last day
of the executive's second taxable year following the taxable year in
which termination occurs; and
(c) The "Good Reason" definition relative to the executive's termination
on that basis was modified to require that the executive give notice,
allow for a cure period for the Registrant, and that the termination
occur within two years of the triggering event.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
Exhibit No. Description of Exhibit
10.1 Third Amendment to Employment Agreement dated as of
December 31, 2007 between the Registrant and
Victor L. Richey, Jr.*
*Identical Amendments To Employment Agreements between the Registrant and
executive officers A.S. Barclay and G.E. Muenster, except that (i) the
termination amounts payable under Paragraph 9.a(1) are equal to base salary for
12 months, and (ii) under Paragraph 9.a(1)(B), such termination amounts may be
paid in biweekly installments equal to 1/26th of such amounts.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ESCO TECHNOLOGIES INC.
Dated: January 7, 2008 By: /s/T.B. Martin
T.B. Martin
Assistant Secretary
EXHIBIT INDEX
Exhibit No. Description of Exhibit
10.1 Third Amendment to Employment Agreement dated as of
December 31, 2007 between the Registrant and
Victor L. Richey, Jr.
EX-10.1
THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into as of the 31st day of December, 2007,
between ESCO Technologies Inc. ("Company") and Victor L. Richey, Jr.
("Executive").
WITNESSETH:
WHEREAS, the Company and the Executive entered into an Employment
Agreement as of the 3rd day of November, 1999 ("Agreement"), which
Agreement was amended as of the 9th day of August, 2001; and
WHEREAS, the parties retained the right to amend the Agreement
pursuant to Article 15 thereof; and
WHEREAS, the parties desire to again amend the Agreement effective as
of December 31, 2007.
NOW, THEREFORE, effective as of December 31, 2007, the Agreement is
amended as follows:
1. Paragraph 9.a and subparagraphs (1) and (2) thereof are
deleted and replaced with the following:
a. Termination by the Company other than for Cause.
If, during the term of this Agreement, but under circumstances not
described in paragraph 8, above, the Executive's employment is terminated
by the Company for reasons other than "Cause" (as hereinafter defined),
including purported termination (i.e., the Executive is placed on a
terminal leave of absence by the Company), then, provided the Executive
executes the Standard Severance Agreement and Release then in general use
by ESCO for this purpose, the Executive shall receive the following:
(1) The Company shall pay the Executive an amount equal to his base salary
for 24 months at the rate in effect at the date of such termination of
employment. Such amount shall be paid in either of the following forms, as
elected by the Executive:
(A) in a lump sum on the regularly scheduled payroll date of the
Company coinciding with or immediately preceding March 15 of the
calendar year following the calendar year in which such termination
occurs; or
(B) in biweekly installments equal to 1/52nd of such amount,
commencing on the regularly scheduled payroll date of the Company
immediately following such termination and continuing on each
succeeding regularly scheduled biweekly payroll date; provided,
however, that the installments, if any, remaining to be paid on the
regularly scheduled payroll date coinciding with or immediately
preceding the fifteenth day of the third month following the end of
the calendar year or fiscal year of the Company in which such
termination occurs, whichever is later, shall be paid in a lump sum on
such date.
(2) As a supplement to the payment of the Executive's base salary rate
under subparagraph (1), above, the Company shall also pay the Executive an
amount equal to his PCP Percentage and ICP Percentage (as hereinafter
defined), as applicable, for 24 months following such termination in the
same manner as determined under subparagraph (1). For this purpose, his PCP
Percentage and ICP Percentage shall be no less than his annual percentage
(of base salary) under the Company's Performance Compensation Plan and
Incentive Compensation Plan, respectively, in which the Executive
participates, for the last fiscal year prior to the termination.
2. Subparagraph (8) of paragraph 9.a is revised to read as follows:
(8) The Company shall make available, for such period which it determines
(but in no event ending later than the last day of the second taxable year
of the Executive following the taxable year in which termination of
employment occurs), executive outplacement assistance which it determines
to be appropriate for Executive.
3. The second sentence of paragraph 9.c is revised to read as follows:
"Good Reason" shall mean the occurrence of any one or more of the following
events:
(1) any material failure by the Company to comply with any of the
provisions of this Agreement, other than a failure to comply with
paragraphs 3 through 7 hereof inclusive solely by reason of a reduction in
compensation or benefits that applies to all Senior Management employees;
(2) the Company's requiring the Executive to move his residence from the
Greater St. Louis, Missouri area due to a material change in the geographic
location at which the Executive must perform his duties; or
(3) the Company's assigning duties to Executive which are, expressly or in
practical effect, a material and substantial demotion from or substantial
reduction of Executive's present executive or material responsibilities,
whether or not accompanied by a reduction in remuneration;
provided, however, that termination of employment shall be for "Good
Reason" only if (i) the Executive provides notice to the Company of the
existence of the applicable event described in this paragraph 9.c no later
than 90 days following the initial occurrence of such event, (ii) the
Company fails to remedy such event with 30 days after receiving such
notice, and (iii) such termination occurs within two years following the
initial occurrence of such event.
IN WITNESS WHEREOF, the foregoing Agreement was executed effective as
of December 31, 2007.
ESCO TECHNOLOGIES INC.
By: /s/ V.L. Richey, Jr. /s/ Deborah J. Hanlon
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Executive