(As Amended Through
December 20, 2007)
1.1 The objectives
of this Stock Option Plan (the “ Plan ”) are to
enable The O’Gara Group, Inc. (the “ Company
”) to compete successfully in retaining and attracting
employees, non-employee members of its Board of Advisors,
non-employee members of its Board of Directors and consultants of
outstanding ability and to stimulate the efforts of these persons
toward the Company’s objectives.
2.1 For purposes
of the Plan each of the following terms shall have the definition
which is attributed to it, unless another definition is clearly
indicated by a particular usage and context.
A. “
Board ” means the Board of Directors of the
Company.
B. “
Board of Advisors ” means the Board of Advisors of the
Company.
C. “
Cause ” means the occurrence of any one or more of the
following events with respect to an Option Holder: conviction of
any felony criminal offense or criminal offense involving moral
turpitude or controlled substances; violation of any policy or
procedure of the Company applicable to the Option Holder which is
deemed in good faith by the Board to be harmful to the Company;
violation of any provision of any written agreement between the
Company and the Option Holder which permits termination of such
Agreement; or failure to perform satisfactorily in the judgment of
the Board a substantial portion of his or her duties to the Company
after having been advised by the Company that his or her
performance has been deemed to be unsatisfactory.
D. “
Code ” means the Internal Revenue Code of 1986, as
amended. Reference to any Section of the Code includes the
provisions of that Section as it may be amended or replaced by any
other section(s) of like intent and purpose and also includes any
regulations or rulings promulgated thereunder.
E. “
Company ” means the Company and any subsidiary of the
Company, as the term “subsidiary” is defined in Section
424(f) of the Code.
F. “
Consultant ” means any natural person who provides
bona fide services to the Company or its majority-owned
subsidiaries, who is not on the regular payroll of the Company and
whose services neither are in connection with the offer or sale of
securities of the Company in a capital-raising transaction nor
directly or indirectly promote or maintain a market for the
Company’s securities.
G. “ Date
of Grant ” means the date on which, or such later date as
of which, the Board makes an award of an Option.
H. “
Disability ” means permanent and total disability as
defined in Section 22(e)(3) of the Code.
I. “
Eligible Employee ” means any individual (other than
one who receives retirement benefits, stipends, consulting fees,
honorariums and the like) who performs services for the Company and
is included on the regular payroll of the Company.
J. “ Fair
Market Value ” means, as of any date other than the date
of an initial public offering, (i) if the Shares are readily
tradable on an established securities market, such value as the
Board shall determine in accordance with Section 409A of the
Code, or (ii) if the Shares are not readily tradable on an
established securities market, such value as the Board shall
determine by either (a) the reasonable application of a
reasonable valuation method that complies with the requirements of
Treas. Reg. § 1.409A-1(b)(5)(iv)(B)(1) or (b) by using one of
the presumptive reasonable valuation methods described in Treas.
Reg. § 1.409A-1(b)(5)(iv)(B)(2), provided that, in either
case, once a single valuation method is used to determine the Fair
Market Value of a Share, such value may not be changed through the
retroactive use of another valuation method. Solely as of the date
of an initial public offering, “Fair Market Value” of a
Share shall mean the price to the public pursuant to the form of
final prospectus used in connection with the initial public
offering, as indicated on the cover page of such prospectus or
otherwise.
K. “
Incentive Stock Option ” shall have the same meaning
as is given to that term by Section 422 of the
Code.
L. “
Mature Shares ” means Shares which have been fully
paid and held, of record or beneficially, by the holder of an
Option for at least six months.
M. “
Nonemployee Member of the Board of Advisors ” means
any member of the Board of Advisors who is not on the regular
payroll of the Company.
N. “
Nonemployee Director ” means any member of the Board
of Directors who is not on the regular payroll of the
Company.
O. “
Nonqualified Stock Option ” means any Option other
than an Incentive Stock Option.
P. “
Option ” means the right, subject to the terms of this
Plan and to such other terms and conditions as the Board may
establish, to purchase from the Company a stated number of Shares
at a specified price.
Q. “
Option Holder ” means any Eligible Employee,
Nonemployee Member of the Board of Advisors, Nonemployee Director
or Consultant to whom an Option has been granted under the
Plan.
R. “
Option Price ” means the consideration in cash or
property that, pursuant to the terms of the Option, is the price at
which a Share subject to the Option is purchasable. The term
“Option Price” does not include any amounts paid as
interest under a deferred payment plan or treated as interest. The
Option Price for a Share shall not be less than the Fair Market
Value of a Share on the Date of Grant.
S. “
Share ” means one share of the Common Stock, no par
value, of the Company.
3.1
Administration . The Plan shall be administered by the
Board. Subject to and consistent with the provisions of the Plan,
the Board shall establish such rules and regulations as it deems
necessary or appropriate for the proper administration of the Plan,
shall interpret the provisions of the Plan, shall decide all
questions of fact arising in the application of Plan provisions and
shall make such other determinations and take such actions in
connection with the Plan and the Options granted hereunder as it
deems necessary or advisable.
3.2 Except as
specifically limited by the provisions of the Plan, the Board shall
have authority to:
A. Determine which
Eligible Employees, Nonemployee Members of the Board of Advisors,
Nonemployee Director or Consultants shall be granted
Options;
B. Determine the
number of Shares which may be subject to each Option;
C. Determine the
term and the Option Price of each Option;
D. Determine
whether an Option is an Incentive Stock Option or a Nonqualified
Stock Option (except that only Nonqualified Stock Options may be
granted to Nonemployee Members of the Board of Advisors,
Nonemployee Director or Consultants);
E. Determine the
time or times when Options will be granted; and
F. Determine all
other terms and conditions of each Option, including (but not
limited to) the terms of any Option agreement. The Board may, in
its discretion, determine as a condition of any Option that a
stated percentage of Shares covered by such Option shall vest in
any one year or other stated period of time and may
specify
the conditions
under which a vested Option is exercisable. The Board may also
waive or amend the terms and conditions of, or accelerate either or
both the vesting or exercisability of, an Option under
circumstances selected by the Board, except to the extent such
waiver, amendment or acceleration would cause the Option to be
treated as either (i) the grant of a new Option or an extension of
the Option under Treas. Reg. § 1.409A-1(b)(5)(v) that is not
exempt from the requirements of Section 409A of the Code or
(ii) as having had an additional deferral feature from the
original Date of Grant that is not permitted under Treas. Reg.
§ 1.409A-1(b)(5)(i)(A)(3), as long as such waivers, amendments
or accelerations are not inconsistent with the terms of the Plan,
but no such changes shall materially impair the rights of any
Option Holder without his or her consent unless required by law or
integrally related to a requirement of law.
3.3 Any action,
decision, interpretation or determination by the Board with respect
to the application or administration of this Plan shall be final
and binding upon all persons, and need not be uniform with respect
to its determination of recipients, amount, timing, form, terms or
provisions of Options.
3.4 No member of
the Board shall be liable for any action or determination taken or
made in good faith with respect to the Plan or any Option granted
hereunder and, to the extent not prohibited by applicable law, all
members shall be indemnified by the Company for any liability and
expenses which they may incur as a result of any claim or cause of
action, or threatened claim or cause of action, arising in
connection with the administration of this Plan or the grant of any
Option hereunder.
3.5 The Board may,
at its discretion, delegate any or all of the functions to be
performed by it to a committee of the Board.
4.1 Except as
provided in Article XI, the number of Shares which may be
issued under the Plan shall not exceed 570 (after giving effect to
the 100 for 1 stock split contemplated in connection with the
Investment Agreement dated as of May 17, 2004) in the
aggregate. If any Option expires or terminates for any reason
without being completely exercised, the Shares with respect to
which such Option was not exercised may again be subject to other
Options. Shares tendered as payment for the Option Price pursuant
to Section 7.1 shall be available for issuance under the Plan.
The Board may make such other determinations regarding the counting
of Shares issued pursuant to the Plan as it deems necessary or
advisable, provided that such determinations shall be permitted by
law.
5.1 Subject to the
terms and conditions of the Plan, the Board may, from time to time,
grant Options to Eligible Employees, Nonemployee Members of the
Board of Advisors, Nonemployee Directors or Consultants on such
terms and conditions as it shall determine.
More than one
Option and more than one form of Option may be granted to the same
individual.
6.1 Any person
entitled to exercise an Option may do so in whole or in part, to
the extent the Option is vested, by delivering to the Company,
attention: Secretary, at its principal office, a written notice of
exercise. The written notice shall specify the number of Shares for
which an Option is being exercised and shall be accompanied by full
payment of the Option Price for the Shares being
purchased.
7.1 Subject to
such administrative requirements as the Board may impose, payment
of the Option Price may be made, at the election of the Option
Holder, in cash or by the tender of Mature Shares or by a
combination of the foregoing. If payment by the tender of Mature
Shares is selected, the value of each Mature Share shall be deemed
to be the Fair Market Value of a Share on the day the Mature Shares
are tendered for payment, which shall be the date on which the
Mature Shares, duly endorsed or accompanied by a stock power duly
endorsed for transfer to the Company, are received by the
Company.
INCENTIVE STOCK OPTIONS AND
NONQUALIFIED STOCK OPTIONS
8.1 Any Option
designated as an Incentive Stock Option will be subject to the
general provisions applicable to all Options granted under the
Plan. In addition, an Incentive Stock Option shall be subject to
the following specific provisions:
A. No incentive
Stock Option may be exercised after the expiration of ten years
from the Date of Grant.
B. At the time the
Incentive Stock Option is granted, if the Eligible Employee owns,
directly or indirectly, stock representing more than 10% of the
total combined voting power of all classes of stock of the Company
then:
(i) The Option
Price must equal at least 110% of the Fair Market Value on the Date
of Grant; and
(ii) The term of
the Option shall not be greater than five years from the Date of
Grant.
C. The aggregate
Fair Market Value (determined as of the Date of Grant) of the
Shares with respect to which Incentive Stock Options are
exercisable for the first
time by any
holder during any calendar year (under all plans of the Company)
shall not exceed $100,000.
8.2 If any Option
is not granted, exercised or held pursuant to the provisions of
Code Section 422, it will be considered to be a Nonqualified Stock
Option to the extent that any or all of the grant is in conflict
with those provisions.
TRANSFERABILITY OF
OPTIONS
9.1 During the
lifetime of an Option Holder, an Option granted under this Plan to
him or her will be non-assignable and non-transferable and may be
exercised only by such individual or that individual’s legal
representative or guardian. In the event of the death of an Option
Holder, an exercisable Option shall be transferable, to the extent
the Option is vested on the date of death, pursuant to the
holder’s Will or by the laws of descent and distribution and
may thereafter be exercised by the transferee(s) as provided in
Article X. Shares issued upon Option exercise shall, in all
cases, be subject to the provisions of Article XV.
10.1 Unless
earlier terminated pursuant to Article XIII, an Option granted
to an Eligible Employee will terminate as follows:
A. During the
period of the Eligible Employee’s continuous employment with
the Company, the Option will terminate upon the earlier of the date
on which it has been fully exercised, it expires by its terms or it
is terminated by the mutual agreement of the Company and the
Eligible Employee.
B. Upon
termination of the Eligible Employee’s employment with the
Company for any reason any unexercisable Option, whether or not
vested, shall immediately terminate. Except as provided in
Section 10.1(C) or Section 10.1(D), any Option which is
vested (in whole or part) and exercisable on the date of
termination of employment will terminate upon the earlier of its
full exercise (to the extent vested on the date of termination of
employment), the expiration of the Option by its terms or the end
of the three-month period following the date of termination. For
purposes of the Plan, a leave of absence approved by the Company
shall not be deemed to be termination of employment.
C. If an Eligible
Employee to whom an Option was granted dies or becomes subject to a
Disability while employed by the Company, an Option which is vested
(in whole or part) and exercisable on the date of death or the
commencement of Disability may be exercised at any time within one
year after the date of death or the commencement of Disability, to
the extent that the Eligible Employee was entitled to exercise it
at the time of death or the commencement of Disability, by the
Eligible Employee or the Eligible Employee’s legal
representative or guardian or by the
representative(s) of the Eligible
Employee’s estate or the person(s) to whom the Option may
have been transferred by Will or by the laws of descent and
distribution.
D. Upon
termination by the Company of the Eligible Employee’s
employment for Cause, all unexercised Options, whether vested or
not, held by the Eligible Employee at the time of termination shall
immediately terminate. In addition, if an Eligible Employee
terminates his or her employment and the Board, in good faith,
determines that grounds existed at that time for the Company to
terminate the Eligible Employee for Cause, all unexercised Options
held by the Eligible Employee at the time of termination, whether
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