ESCO TECHNOLOGIES INC
FORM OF INCENTIVE STOCK OPTION AGREEMENT
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<TYPE>EX-10.4
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<FILENAME>c59985ex10-4.txt
<DESCRIPTION>FORM OF INCENTIVE STOCK OPTION AGREEMENT
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                                                                    EXHIBIT 10.4

                        INCENTIVE STOCK OPTION AGREEMENT
                                      UNDER
                             ESCO TECHNOLOGIES INC.
                             1999 STOCK OPTION PLAN


                  THIS AGREEMENT, made this      day of           , 200  , by
and between ESCO TECHNOLOGIES INC., a Missouri corporation (hereinafter called
the "Company"), and                       (hereinafter called "Optionee"),

                  WITNESSETH THAT:

                  WHEREAS, the Board of Directors of the Company ("Board of
Directors") has adopted the ESCO Technologies Inc. 1999 Stock Option Plan (the
"Plan") pursuant to which options covering an aggregate of 610,000 shares of the
Common Stock of the Company may be granted to officers and other key management
employees of the Company and its subsidiaries; and

                  WHEREAS, Optionee is now an officer or other key management
employee of the Company or a subsidiary of the Company; and

                  WHEREAS, the Company desires to grant to Optionee the option
to purchase certain shares of its stock under the terms of the Plan;
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                  NOW, THEREFORE, in consideration of the premises, and of the
mutual agreements hereinafter set forth, it is covenanted and agreed as follows:

                  1. Grant Subject to Plan. This option is granted under and is
expressly subject to, all the terms and provisions of the Plan, which terms are
incorporated herein by reference. The Committee referred to in Paragraph 4 of
the Plan ("Committee") has been appointed by the Board of Directors, and
designated by it, as the Committee to make grants of options.

                  2. Grant and Terms of Option. Pursuant to action of the
Committee, which action was taken on                          ("Date of
Grant"), the Company grants to Optionee the option to purchase all or any part
of                         (        ) shares of the Common Stock of the Company,
of the par value of $0.01 per share ("Common Stock"), for a period of ten (10)
years from the Date of Grant, at the purchase price of $            per share;
provided, however, that the right to exercise such option shall be, and is
hereby, restricted so that no shares may be purchased during the first year of
the term hereof; that at any time during the term of this option after the end
of the first year from the Date of Grant, Optionee may purchase up to 33-1/3% of
the total number of shares to which

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this option relates; that at any time during the term of this option after the
end of the second year from the Date of Grant, Optionee may purchase up to an
additional 33-1/3% of the total number of shares to which this option relates;
and that at any time after the end of the third year from the Date of Grant,
Optionee may purchase up to an additional 33-1/3% of the total number of shares
to which this option relates; so that upon the expiration of the third year from
the Date of Grant and thereafter during the term hereof, Optionee will have
become entitled to purchase the entire number of shares to which this option
relates. Notwithstanding the foregoing, in the event of a Change of Control (as
hereinafter defined) Optionee may purchase 100% of the total number of shares to
which this option relates. In no event may this option or any part thereof be
exercised after the expiration of ten (10) years from the Date of Grant. Without
further action or approval by the Committee, the purchase price of the shares
subject to the option may be paid for (i) in cash, (ii) in the discretion of the
General Counsel of the Company, by tender of shares of Common Stock already
owned by Optionee, or (iii) in the discretion of the General Counsel of the
Company, by a combination of methods of payment specified in clauses (i) and
(ii), but only if Optionee has owned any shares to be tendered for at least six
(6) months,

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all in accordance with Paragraph 6 of the Plan. No shares of Common Stock may be
tendered in exercise of this option if such shares were acquired by Optionee
through the exercise of an Incentive Stock Option, unless (i) such shares have
been held by Optionee for at least one year, and (ii) at least two years have
elapsed since such Incentive Stock Option was granted. For the purposes of this
Agreement, a Change of Control means:

                           a. The purchase or other acquisition (other than from
         the Company) by any person, entity or group of persons, within the
         meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
         1934, as amended (the "Exchange Act") (excluding, for this purpose, the
         Company or its subsidiaries or any employee benefit plan of the Company
         or its subsidiaries), of beneficial ownership (within the meaning of
         Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either
         the then-outstanding shares of common stock of the Company or the
         combined voting power of the Company's then-outstanding voting
         securities entitled to vote generally in the election of directors; or

                           b. Individuals who, as of the date hereof, constitute
         the Board of Directors of the Company (the "Board" and, as of the date
         hereof, the "Incumbent Board")

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         cease for any reason to constitute at least a majority of the Board,
         provided that any person who becomes a director subsequent to the date
         hereof whose election, or nomination for election by the Company's
         shareholders, was approved by a vote of at least a majority of the
         directors then comprising the Incumbent Board (other than an individual
         whose initial assumption of office is in connection with an actual or
         threatened election contest relating to the election of directors of
         the Company, as such terms are used in Rule 14a-11 of Regulation 14A
         promulgated under the Exchange Act) shall be, for purposes of this
         section, considered as though such person were a member of the
         Incumbent Board; or

                           c. Approval by the stockholders of the Company of a
         reorganization, merger or consolidation, in each case with respect to
         which persons who were the stockholders of the Company immediately
         prior to such reorganization, merger or consolidation do not,
         immediately thereafter, own more than 50% of, respectively, the common
         stock and the combined voting power entitled to vote generally in the
         election of directors of the reorganized, merged or consolidated
         corporation's then-outstanding voting securities, or of a liquidation
         or dissolution of the

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         Company or of the sale of all or substantially all of the assets of the
         Company.

                  3. Anti-Dilution Provisions. In the event that, during the
term of this Agreement, there is any change in the number of shares of
outstanding Common Stock of the Company by reason of stock dividends,
recapitalizations, mergers, consolidations, split-ups, combinations or exchanges
of shares and the like, the number of shares covered by this option agreement
and the price thereof shall be adjusted, to the same proportionate number of
shares and price as in this original agreement.

                  4. Investment Purpose. Optionee represents that, in the event
of the exercise by him of the option hereby granted, or any part thereof, he
intends to purchase the shares acquired on such exercise for investment and not
with a view to resale or other distribution; except that the Company, at its
election, may waive or release this condition in the event the shares acquired
on exercise of the option are registered under the Securities Act of 1933, or
upon the happening of any other contingency which the Company shall determine
warrants the waiver or release of this condition. Optionee agrees that the
certificates evidencing the shares acquired by him on exercise of all or any
part of this option, may bear a restrictive


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legend, if appropriate, indicating that the shares have not been registered
under said Act and are subject to restrictions on the transfer thereof, which
legend may be in the following form (or such other form as the Company shall
determine to be proper), to-wit:

                  "The shares represented by this certificate have not been
                  registered under the Securities Act of 1933, but have been
                  issued or transferred to the registered owner pursuant to the
                  exemption afforded by Section 4(2) of said Act. No transfer or
                  assignment of these shares by the registered owner shall be
                  valid or effective, and the issuer of these shares shall not
                  be required to give any effect to any transfer or attempted
                  transfer of these shares, including without limitation, a
                  transfer by operation of law, unless (a) the issuer shall have
                  received an opinion of its counsel that the shares may be
                  transferred without requirement of registration under said
                  Act, or (b) there shall have been delivered to the issuer a
                  'no-action' letter from the staff of the Securities and
                  Exchange Commission, or (c) the shares are registered under
                  said Act."

                  5. Non-Transferability. Neither the option hereby granted nor
any rights thereunder or under this Agreement may be assigned, transferred or in
any manner encumbered except by will or the laws of descent and distribution,
and any attempted assignment, transfer, mortgage, pledge or encumbrance except
as herein authorized, shall be void and of no effect. The option may be
exercised during Optionee's lifetime only by him.

                  6. Termination of Employment. In the event of the termination
of employment of Optionee other than by death, the

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option granted may be exercised at the times and to the extent provided in
paragraph 9 of the Plan.

                  7. Death of Optionee. In the event of the death of Optionee
during the term of this Agreement and while he is employed by the Company (or a
subsidiary), or within three (3) months after the termination of his employment
(or one (l) year in the case of the termination of employment of an Optionee who
is disabled as provided in the Plan), this option may be exercised, to the
extent that he was entitled to exercise it at the date of his death, by a
legatee or legatees of Optionee under his last will, or by his personal
representatives or distributees, at any time within a period of one (1) year
after his death, but not after ten (10) years from the date hereof, and only if
and to the extent that he was entitled to exercise the option at the date of his
death.

                  8. Shares Issued on Exercise of Option. It is the intention of
the Company that on any exercise of this option it will transfer to Optionee
shares of its authorized but unissued stock or transfer Treasury shares, or
utilize any combination of Treasury shares and authorized but unissued shares,
to satisfy its obligations to deliver shares on any exercise hereof.

                  9. Committee Administration. This option has been granted
pursuant to a determination made by the Committee, and

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such Committee or any successor or substitute committee authorized by the Board
of Directors or the Board of Directors itself, subject to the express terms of
this option, shall have plenary authority to interpret any provision of this
option and to make any determinations necessary or advisable for the
administration of this option and the exercise of the rights herein granted, and
may waive or amend any provisions hereof in any manner not adversely affecting
the rights granted to Optionee by the express terms hereof.

                  10. Option an Incentive Stock Option. It is intended that this
option shall be treated as an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended.

                  IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed on its behalf by its Vice President and to be attested by its
Secretary under the seal of the Company, pursuant to due authorization, and
Optionee has signed this Agreement to evidence his acceptance of the option
herein granted and of the terms hereof, all as of the date hereof.


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                                              ESCO TECHNOLOGIES INC.


                                              By
                                                 ------------------------------
                                                       Vice President

ATTEST:

-------------------------------
    Secretary



                                                 ------------------------------
                                                          Optionee


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