(As Amended and Restated Effective
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, unless otherwise defined in an Option
agreement, 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 or its Subsidiaries applicable to the Option Holder which
is deemed in good faith by the Board to be harmful to the Company
or its Subsidiaries; violation of any provision of any written
agreement between the Company (or one of its Subsidiaries) 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
or
its
Subsidiaries after having been advised by the Company or the
Subsidiary, if applicable, that his or her performance has been
deemed to be unsatisfactory.
D. “
Code ” means the Internal Revenue Code of 1986, as
amended, and any regulations or rulings promulgated thereunder.
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) or statute of like intent and purpose.
E. “
Company ” means the Company.
F. “
Consultant ” means any natural person who provides
bona fide services to the Company or its Subsidiaries, who is not
on the regular payroll of the Company or its Subsidiaries 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 date when the Board completes the
corporate action necessary to create the legally binding right
constituting the Option. For this purpose, Board action creating
the legally binding right constituting the Option is not considered
complete until the date on which the maximum number of Shares that
can be purchased under the Option and the minimum exercise price
are fixed or determinable, and the class of underlying Common Stock
and the identity of the Option Holder is designated. If the Board
action provides for an immediate offer of Common Stock for sale to
an Option Holder, or provides for a particular date on which such
offer is to be made, the Date of Grant of the Option is the date of
such Board action if the offer is to be made immediately, or the
date provided as the date of the offer, as the case may
be.
H. “
Disability ” means a permanent and total disability,
as defined in Section 22(e)(3) of the Code, as determined by
the Board in good faith, upon receipt of medical advice from one or
more individuals, selected by the Board, who are qualified to give
professional medical advise.
I. “
Eligible Employee ” means any employee (including any
officer) of the Company or a Subsidiary, including any such
employee who is on an approved leave of absence, layoff, or has
been subject to a disability which does not qualify as a
Disability.
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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 free and
clear of all liens and encumbrances, and which such holder has held
for at least six months.
M. “
Nonemployee Member of the Board of Advisors ” means
any member of the Board of Advisors who is not an Eligible
Employee.
N. “
Nonemployee Director ” means any member of the Board
of Directors who is not an Eligible Employee.
O. “
Nonqualified Stock Option ” means any Option other
than an Incentive Stock Option.
P. “
Option ” means the right or privilege of an
individual, subject to the terms of this Plan and to such other
terms and conditions as the Board may establish, to purchase a
maximum number of Shares from the Company by virtue of an offer of
the Company continuing for a stated period of time, whether or not
irrevocable, to sell such Shares at a specified price per Share,
such individual being under no obligation to purchase.
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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.
T. “
Subsidiary ” means, with respect to grants of
Nonqualified Stock Options, any corporation in a chain of
corporations or other entities in which each corporation or other
entity has a controlling interest in another corporation or other
entity in the chain, ending with the Company (or any successor
thereto) that has a controlling interest in the corporation or
other entity for which the Eligible Employee or Consultant provides
direct services on the Date of Grant of the Option. For this
purpose, the term “controlling interest” has the same
meaning as provided in Treas. Reg. § 1.414(c)-2(b)(2)(i),
provided that the language “at least 50 percent” is
used instead of “at least 80 percent” each place
it appears in Treas. Reg. §1.414(c)-2(b)(2)(i).
In addition, with
respect to the grant of a Nonqualified Stock Option to an Eligible
Employee or Consultant that is based upon legitimate business
criteria, the term “controlling interest” has the same
meaning as provided in Treas. Reg. § 1.414(c)-2(b)(2)(i),
provided that the language “at least 20 percent”
is used instead of “at least 80 percent” each
place it appears in Treas. Reg. § 1.414(c)-2(b)(2)(i).
For purposes of determining ownership of an interest in an
organization, the rules of Treas. Reg. §§ 1.414(c)-3 and
1.414(c)-4 apply. The determination of whether a grant of a
Nonqualified Stock Option is based on legitimate business criteria
is based on the facts and circumstances, focusing primarily on
whether there is a sufficient nexus between the Eligible Employee
or Consultant and the Company so that the grant serves a legitimate
non-tax business purpose other than simply providing compensation
to the Eligible Employee or Consultant that is excluded from the
requirements of Section 409A of the Code.
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With respect to
grants of Incentive Stock Options, the term “
Subsidiary ” means any corporation and any other
entity considered a subsidiary as defined in Section 424(f) of the
Code.
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 Directors 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 Directors and 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
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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 Section 8.1(C) of this Plan,
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 81,500 Shares in the
aggregate, all of which may be granted as Incentive Stock Options.
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. Mature
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
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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, except that Incentive
Stock Options may only be granted to Eligible Employees. Each
Option granted shall be designated as either a Nonqualified Stock
Option or an Incentive Stock Option. 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.
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INCENTIVE STOCK OPTIONS AND
NONQUALIFIED STOCK OPTIONS
8.1 Any Option
designated as a Nonqualified Stock Option will be subject to the
following specific provisions:
A. The Option
Price per Share shall never be less than the Fair Market Value of a
Share on the Date of Grant, subject to adjustment pursuant to
Article XI.
B. The transfer or
exercise of the Nonqualified Stock Option is subject to taxation
under Section 83 and Treas. Reg.
§ 1.83-7.
C. In no event
shall a Nonqualified Stock Option awarded under this Plan include
any feature for the deferral of compensation other than the
deferral of recognition of income until the later of exercise or
disposition of the Option under Treas. Reg. § 1.83-7, or the
time the Share acquired pursuant to the exercise of the Option
first becomes substantially vested (as defined in Treas. Reg.
§ 1.83-3(b)).
D. The number of
Shares subject to the Nonqualified Stock Option shall be fixed on
the Date of Grant, subject to adjustment pursuant to
Article XI.
8.2 Any Option
designated as an Incentive Stock Option will be subject to the
general provisions applicable to all Options granted under the
Plan, including those set forth in Section 8.1 above. 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. If, at the time
the Incentive Stock Option is granted, 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
and its Subsidiaries, then:
(i) The Option
Price per Share must not be less than 110% of the Fair Market Value
of a Share on the Date of Grant; and
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(ii) The term of
the Incentive Stock 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 become
exercisable for the first time by any Option Holder during any
calendar year (under all plans of the Company and its Subsidiaries)
shall not exceed $100,000.
D. The provisions
of the Option agreement shall require the Option Holder to notify
the Company of any disposition of any Shares issued as a result of
the exercise of an Incentive Stock Option under the circumstances
described in Section 421(b) of the Code (relating to certain
disqualifying dispositions), within 10 days of such
disposition.
8.3 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 Option
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&
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