ARMOR HOLDINGS, INC.
2002 EXECUTIVE STOCK PLAN
1. PURPOSE. The purpose of the Armor Holdings, Inc. 2002 Executive Stock
Plan (the "Plan") is to afford certain key employees of the Company and its
Subsidiaries and Affiliates who are responsible for the continued growth of the
Company an opportunity to acquire a proprietary interest in the Company, and
thus to create in such key employees an increased interest in and a greater
concern for the welfare of the Company and its subsidiaries, thereby
strengthening their commitment to the welfare of the Company and its
Subsidiaries and Affiliates and promoting an identity of interest between
stockholders and these key employees.
The Company, by means of this Plan, seeks to retain the services of key
employees and to enable the Company to attract and retain persons of competence.
The stock options ("Options") offered pursuant to the Plan are a matter of
separate inducement and are not in lieu of any salary or other compensation for
the services of any key employee.
The Options granted under the Plan are not intended to be options that meet
the requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code") ("Non-Qualified Options"). Capitalized terms not defined in the
text are defined in Section 24.
2. SHARES SUBJECT TO THE PLAN. Subject to Section 18, the total number of
Shares reserved and available for grant and issuance pursuant to this Plan will
be 470,000 Shares. Shares that have been (a) reserved for issuance under Options
which have expired or otherwise terminated without issuance of the underlying
Shares, (b) reserved for issuance or issued under an Award granted hereunder but
are forfeited or are repurchased by the Company at the original issue price, or
(c) reserved for issuance or issued under an Award that otherwise terminates
without Shares being issued, shall be available for issuance. At all times the
Company shall reserve and keep available a sufficient number of Shares as shall
be required to satisfy the requirements of all outstanding Options granted under
this Plan and all other outstanding but unvested Awards granted under this Plan.
3. ELIGIBILITY. All Awards may be granted to employees, officers,
directors, consultants, independent contractors and advisors of the Company or
any Parent, Affiliate or Subsidiary of the Company. No single officer, director
or employee of the Company may acquire under this Plan more than one percent of
the shares of Common Stock outstanding as of the Effective Date.
4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be administered by the
Committee or by the Board. Any power, authority or discretion granted to the
Committee may also be taken by the Board. Subject to the general purposes, terms
and conditions of this Plan, and to the direction of the Board, the Committee
will have full power to implement and carry out this Plan. Without limitation,
the Committee will have the authority to:
(a) select persons to receive Awards;
(b) determine the nature, extent, form and terms of Awards and the
number of Shares or other consideration subject to Awards;
(c) determine the vesting, exerciseability and payment of Awards;
(d) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;
(e) determine whether Awards will be granted singly, in combination
with, in tandem with, in replacement of, or as alternatives to,
other Awards under this Plan or any other incentive or
compensation plan of the Company or any Parent or Subsidiary of
the Company;
(f) prescribe, amend and rescind rules and regulations relating to
this Plan or any Award;
(g) construe and interpret this Plan, any Award Agreement and any
other agreement or document executed pursuant to this Plan;
(h) grant waivers of Plan or Award conditions;
(i) determine whether an Award has been earned;
(j) accelerate the vesting of any Award; and
(k) make all other determinations necessary or advisable for the
administration of this Plan.
The Committee shall have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations and to make all
such determinations relating to the Plan as it may deem necessary or advisable
for the administration of the Plan. The Committee's interpretation of the Plan
or any documents evidencing Awards granted pursuant
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thereto and all decisions and determinations by the Committee with respect to
the Plan shall be final, binding, and conclusive on all parties unless otherwise
determined by the Board.
4.2 Committee Discretion. Any determination made by the Committee with
respect to any Award will be made in its sole discretion at the time of grant of
the Award or, unless in contravention of any express term of this Plan or Award,
at any later time, and such determination will be final and binding on the
Company and on all persons having an interest in any Award under this Plan.
5. STOCK OPTIONS. The Committee may grant Options to eligible persons which
are not intended to be "Incentive Stock Options" within the meaning of Section
422 of the Code or any successor section thereof ("NQSO's"). The Committee may
determine the number of Shares subject to the Option, the Exercise Price of the
Option, the period during which the Option may be exercised, and all other terms
and conditions of the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan will be
evidenced by an Award Agreement ("Stock Option Agreement"), which will expressly
identify the Option as a NQSO, and will be in such form and contain such
provisions (which need not be the same for each Participant) as the Committee
may from time to time approve, and which will comply with and be subject to the
terms and conditions of this Plan.
5.2 Exercise Period. Options may be exercisable to the extent vested
within the times or upon the events determined by the Committee as set forth in
the Stock Option Agreement governing such Option; provided, however, that no
Option will be exercisable after the expiration of ten (10) years from the date
the Option is granted. The Committee also may provide for Options to become
exercisable at one time or from time to time, periodically or otherwise, in such
number of Shares or percentage of Shares as the Committee determines.
5.3 Exercise Price. The Exercise Price of an Option will be determined
by the Committee when the Option is granted and may be greater, less than, or
equal to the Fair Market Value of the Shares on the date of grant.
5.4 Date of Grant. The date of grant of an Option will be the date on
which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
5.5 Method of Exercise. Options may be exercised only by delivery to
the Company of a written stock option exercise agreement (the "Exercise
Agreement") in a form approved from time to time by the Committee (which need
not be the same for each Participant), stating the number of Shares being
purchased, the restrictions imposed on the Shares purchased under such Exercise
Agreement, if any, and such representations and agreements regarding
Participant's investment intent and access to information and other matters, if
any, as may be
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required or desirable by the Company to comply with applicable securities laws,
together with payment in full of the Exercise Price for the number of Shares
being purchased. Payment for the Shares purchased may be made in accordance with
Section 8 of this Plan.
5.6 Termination. Unless otherwise expressly provided in an Award
Agreement or otherwise determined by the Committee, exercise of an Option will
always be subject to the following:
a. If the Participant is Terminated for any reason (including
voluntary Termination) other than death or Disability, then the
Participant may exercise such Participant's Options only to the
extent that such Options would have been exercisable upon the
Termination Date no later than three (3) months after the
Termination Date (or such shorter or longer time period not
exceeding five (5) years as may be determined by the Committee),
but in any event, no later than the expiration date of the
Options.
b. If the Participant is Terminated because of Participant's death
or Disability (or the Participant dies within three (3) months
after a Termination other than for Cause or because of
Participant's Disability), then Participant's Options may be
exercised only to the extent that such Options would have been
exercisable by Participant on the Termination Date and must be
exercised by Participant (or Participant's legal representative
or authorized assignee) no later than twelve (12) months after
the Termination Date (or such shorter or longer time period not
exceeding five (5) years as may be determined by the Committee),
but in any event no later than the expiration date of the
Options.
c. Notwithstanding the provisions in paragraph 5.6(a) above, if a
Participant is terminated for Cause, neither the Participant, the
Participant's estate nor such other person who may then hold the
Option shall be entitled to exercise any Option with respect to
any Shares whatsoever, after termination of service, whether or
not after termination of service the Participant may receive
payment from the Company or Subsidiary for vacation pay, for
services rendered prior to termination, for services rendered for
the day on which termination occurs, for salary in lieu of
notice, or for any other benefits. In making such determination,
the Committee shall give the Participant an opportunity to
present to the Committee evidence on his behalf. For the purpose
of this paragraph, termination of service shall be deemed to
occur on the date when the Company dispatches notice or advice to
the Participant that his or her service is terminated.
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d. If the Participant is not an employee or a director, the Award
Agreement shall specify treatment of the Award upon Termination.
5.7 Modification, Extension or Renewal. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that, except as expressly provided for in the
Plan or an Award Agreement, any such action may not, without the written consent
of a Participant, impair any of such Participant's rights under any Option
previously granted.
5.8 Limitations on Exercise. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from exercising
the Option for the full number of Shares for which it is then exercisable.
5.9 Lapsed Grants. Notwithstanding anything in the Plan to the
contrary, the Company may, in its sole discretion, allow the exercise of a
lapsed grant if the Company determines that: (i) the lapse was the result of the
Company's inability to timely execute the exercise of an option award and (ii)
the Participant made valid and reasonable efforts to exercise the Award. In the
event the Company makes such a determination, the Company shall allow the
exercise to occur as promptly as possible following its receipt of exercise
instructions subsequent to such determination.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company to
sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the price to be paid (the "Purchase Price"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a Restricted
Stock Award made pursuant to this Plan will be evidenced by an Award Agreement
("Restricted Stock Purchase Agreement") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to time
approve, and shall comply with and be subject to the terms and conditions of
this Plan. The offer of Restricted Stock shall will be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company not later than thirty (30) days
after the date the Restricted Stock Purchase Agreement is delivered to the
person. If such person does not execute and deliver the Restricted Stock
Purchase Agreement along with full payment for the Shares to the Company within
thirty (30) days, then the offer shall terminate, unless otherwise determined by
the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Committee on the date the
Restricted Stock
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Award is granted. Payment of the Purchase Price shall be made in accordance with
Section 8 of this Plan.
6.3 Terms of Restricted Stock Awards. Restricted Stock Awards shall be
subject to such restrictions as the Committee may impose. These restrictions may
be based upon completion of a specified number of years of service with the
Company or upon completion of the performance goals as set out in advance in the
Participant's individual Restricted Stock Purchase Agreement. Restricted Stock
Awards may vary from Participant to Participant and between groups of
Participants. Prior to the grant of a Restricted Stock Award, the Committee
shall: (a) determine the nature, length and starting date of any Performance
Period for the Restricted Stock Award; (b) select from among the Performance
Factors to be used to measure performance goals, if any; and (c) determine the
number of Shares that may be awarded to the Participant. Prior to the payment of
any Restricted Stock Award, the Committee shall determine the extent to which
such Restricted Stock Award has been earned and such determination shall be
conclusive. Performance Periods may overlap and Participants may participate
simultaneously with respect to Restricted Stock Awards that are subject to
different Performance Periods and having different performance goals and other
criteria.
6.4 Stock Restrictions. Each certificate representing Restricted Stock
awarded under the Plan shall bear the following legend until the lapse of all
restrictions with respect to such Stock:
"TRANSFER OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY
IS RESTRICTED PURSUANT TO THE TERMS OF A RESTRICTED STOCK
AGREEMENT, DATED AS OF _______, BETWEEN ARMOR HOLDINGS, INC., AND
____________. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF ARMOR HOLDINGS, INC."
Stop transfer orders shall be entered with the Company's transfer agent and
registrar against the transfer of legended securities.
6.5 Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Restricted Stock Award only to the extent earned as of the date of
Termination in accordance with the Restricted Stock Purchase Agreement, unless
the Committee will determine otherwise.
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7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of Shares (which
may consist of Restricted Stock) for services rendered to the Company or any
Parent or Subsidiary of the Company. A Stock Bonus may be awarded for past
services already rendered to the Company, or any Parent or Subsidiary of the
Company pursuant to an Award Agreement (the "Stock Bonus Agreement") that will
be in such form (which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply with and be subject to
the terms and conditions of this Plan. A Stock Bonus may be awarded upon
satisfaction of such performance goals as are set out in advance in the
Participant's individual Award Agreement (the "Performance Stock Bonus
Agreement") that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. Stock Bonuses may
vary from Participant to Participant and between groups of Participants, and may
be based upon the achievement of the Company, Parent or Subsidiary and/or
individual Performance Factors or upon such other criteria as the Committee may
determine.
7.2 Terms of Stock Bonuses. The Committee will determine the number of
Shares to be awarded to the Participant. If the Stock Bonus is being earned upon
the satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee will: (a) determine the nature, length and
starting date of any Performance Period for each Stock Bonus; (b) select from
among the Performance Factors to be used to measure the performance, if any; and
(c) determine the number of Shares that may be awarded to the Participant. Prior
to the payment of any Stock Bonus, the Committee shall determine the extent to
which such Stock Bonuses have been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock Bonuses that
are subject to different Performance Periods and different performance goals and
other criteria. The number of Shares may be fixed or may vary in accordance with
such performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the Stock Bonuses to
take into account changes in law and accounting or tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus may be paid
currently or on a deferred basis with such interest or dividend equivalent, if
any, as the Committee may determine. Payment may be made in the form of cash or
whole Shares or a combination thereof, either in a lump sum payment or in
installments, all as the Committee will determine.
8. PAYMENT FOR SHARE PURCHASES.
8.1 Payment. Payment for Shares purchased pursuant to this Plan may be
made in cash (by check) or, where expressly approved for the Participant by the
Committee or where expressly indicated in the Participants Award Agreement and
where permitted by law:
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a. by cancellation of indebtedness of the Company to the
Participant;
b. by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for
within the meaning of SEC Rule 144 (and, if such shares were
purchased from the Company by use of a promissory note, such note
has been fully paid with respect to such shares); or (2) were
obtained by Participant in the public market;
c. by tender of a promissory note having such terms as may be
approved by the Committee and bearing interest at a rate
sufficient to avoid imputation of income under Sections 483 and
1274 of the Code;
d. by waiver of compensation due or accrued to the Participant for
services rendered;
e. with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the Participant
and a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD Dealer") whereby
the Participant irrevocably elects to exercise the Option
and to sell a portion of the Shares so purchased to pay for
the Exercise Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the Exercise
Price directly to the Company; or
(2) through a "margin" commitment from the Participant and a
NASD Dealer whereby the Participant irrevocably elects to
exercise the Option and to pledge the Shares so purchased to
the NASD Dealer in a margin account as security for a loan
from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the Exercise Price directly to the
Company; or
f. by any combination of the foregoing or other method authorized by
the Committee.
At its discretion, the Committee may modify or suspend any method for the
exercise of stock options, including any of the methods specified in the
previous sentence.
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Delivery of shares for exercising an Option shall be made either through the
physical delivery of shares or through an appropriate certification or
attestation of valid ownership.
8.2 Loan Guarantees. The Committee may help the Participant pay for
Shares purchased under this Plan by authorizing a guarantee by the Company of a
third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
9.2 Stock Withholding. When, under applicable tax laws, a Participant
incurs tax liability in connection with the exercise or vesting of any Award
that is subject to tax withholding and the Participant is obligated to pay the
Company the amount required to be withheld, the Committee may in its sole
discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the
Committee.
10. PRIVILEGES OF STOCK OWNERSHIP. No Participant will have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's Purchase Price or Exercise Price pursuant
to Section 12.
11. TRANSFERABILITY.
11.1 Non-transferability of Options. Notwithstanding the foregoing, the
Committee may set forth in an Award Agreement at the time of grant or
thereafter, that the Options may be transferred to members of the Participant's
immediate family, to trusts solely for
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the benefit of such immediate family members and to partnerships or limited
liability companies in which such family members and/or trusts are the only
partners or members, as the case may be. For this purpose, immediate family
means the Participant's spouse, parents, children, stepchildren, grandchildren
and legal dependants. Any transfer of Options made under this provision will not
be effective until notice of such transfer is delivered to the Company.
11.2 Rights of Transferee. Notwithstanding anything to the contrary
herein, if an Option has been transferred in accordance with Section 11.1 above,
the Option shall be exercisable solely by the transferee. The Option shall
remain subject to the provisions of the Plan, including that it will be
exercisable only to the extent that the Participant or Participant's estate
would have been entitled to exercise it if the Participant had not transferred
the Option. In the event of the death of the Participant prior to the expiration
of the right to exercise the transferred Option, the period during which the
Option shall be exercisable will terminate on the date 12 months following the
date of the Participant's death. In no event will the Option be exercisable
after the expiration of the exercise period set forth in the Award Agreement.
The Option shall be subject to such other rules relating to transferees as the
Committee shall determine.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the Company
may reserve to itself and/or its assignee(s) in the Award Agreement a right to
repurchase a portion of or all Unvested Shares held by a Participant following
such Participant's Termination at any time within three (3) months after the
later of Participant's Termination Date and the date Participant purchases
Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at the Participant's Exercise Price or Purchase Price, as the case
may be.
13. CERTIFICATES. All certificates for Shares or other securities delivered
under this Plan will be subject to such stock transfer orders, legends and other
restrictions, consistent with the terms of the Awards, as the Committee may deem
necessary or advisable, including restrictions under any applicable federal,
state or foreign securities law, or any rules, regulations and other
requirements of the SEC or any stock exchange or automated quotation system upon
which the Shares may be listed or quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any
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event, the Company will have full recourse against the Participant under the
promissory note notwithstanding any pledge of the Participant's Shares or other
collateral. In connection with any pledge of the Shares, Participant will be
required to execute and deliver a written pledge agreement in such form as the
Committee will from time to time approve. In the discretion of the Committee,
the pledge agreement may provide that the Shares purchased with the promissory
note may be released from the pledge on a pro rata basis as the promissory note
is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from
time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. However, in the
event that an Award is not effective as discussed in the preceding sentence, the
Company will use reasonable efforts to modify, revise or renew such Award in a
manner so as to make the Award effective. Notwithstanding any other provision in
this Plan, the Company will have no obligation to issue or deliver certificates
for Shares under this Plan prior to: (a) obtaining any approvals from
governmental agencies that the Company determines are necessary or advisable;
and/or (b) completion of any registration or other qualification of such Shares
under any state or federal law or ruling of any governmental body that the
Company determines to be necessary or advisable. The Company will be under no
obligation to register the Shares with the SEC or to effect compliance with the
registration, qualification or listing requirements of any state securities
laws, stock exchange or automated quotation system, and the Company will have no
liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
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18. CORPORATE TRANSACTIONS.
18.1 Assumption or Replacement of Awards by Successor. If a
Change-of-Control Event occurs:
(i) the successor company in any Change-of-Control Event may, if
approved in writing by the Committee prior to any
Change-of-Control Event:
(1) substitute equivalent Options or Awards or provide
substantially similar consideration to Participants as was
provided to stockholders (after taking into account the
existing provisions of the Awards), or
(2) issue, in place of outstanding Shares of the Company
held by the Participant, substantially similar shares or
substantially similar other securities or substantially
similar other property subject to repurchase restrictions no
less favorable to the Participant.
(ii) Notwithstanding anything in this Plan to the contrary, the
Committee may, in its sole discretion, provide that the
vesting of any or all Options and Awards granted pursuant to
this Plan will accelerate immediately prior to the
consummation of a Change-of-Control Event. If the Committee
exercises such discretion with respect to Options, such
Options will become exercisable in full prior to the
consummation of such event at such time and on such
conditions as the Committee determines, and if such Options
are not exercised prior to the consummation of such event,
they shall terminate at such time as determined by the
Committee.
18.2 Other Treatment of Awards. Subject to any rights and limitations
set forth in Section 18.1, if a Change-of-Control Event occurs or has occurred,
any outstanding Awards will be treated as provided in the applicable agreement
or plan of merger, consolidation, dissolution, liquidation, or sale of assets
constituting the Change-of-Control Event.
18.3 Assumption of Awards by the Company. The Company, from time to
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either (a) granting an Award under this Plan in substitution of
such other company's award, or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption
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will be permissible if the holder of the substituted or assumed award would have
been eligible to be granted an Award under this Plan if the other company had
applied the rules of this Plan to such grant. If the Company assumes an award
granted by another company, the terms and conditions of such award will remain
unchanged (except that the exercise price and the number and nature of Shares
issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code). If the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
18.4 Adjustment of Shares. In the event that the number of outstanding
shares is changed by a stock dividend, recapitalization, stock split, reverse
stock split, subdivision, combination, reclassification or similar change in the
capital structure of the Company without consideration, then (a) the number of
Shares reserved for issuance under this Plan, (b) the Exercise Prices of and
number of Shares subject to outstanding Options, and (c) the number of Shares
subject to other outstanding Awards will be proportionately adjusted, subject to
any required action by the Board or the stockholders of the Company and
compliance with applicable securities laws; provided, however, that fractions of
a Share will not be issued but will either be replaced by a cash payment equal
to the Fair Market Value of such fraction of a Share or will be rounded up to
the nearest whole Share, as determined by the Committee.
19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective on
the date that this Plan is approved by the Board of Directors of the Company
(the "Effective Date").
20. TERM OF PLAN. Unless earlier terminated as provided herein, this Plan
will terminate ten (10) years from the date this Plan is adopted by the Board.
The expiration of the Plan, however, shall not affect the rights of Participants
under Options theretofore granted to them, and all unexpired Options and Awards
shall continue in force and operation after termination of the Plan, except as
they may lapse or be terminated by their own terms and conditions.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate
or amend this Plan in any respect, including without limitation amendment of any
form of Award Agreement or instrument to be executed pursuant to this Plan;
provided, however, that the Board will not (i) without the approval of the
stockholders of the Company, amend this Plan in any manner that applicable law
or regulation requires such stockholder approval, or (ii) without the written
consent of the Participant substantially alter or impair any Option or Award
previously granted under the Plan. Notwithstanding the foregoing, if an Option
has been transferred in accordance with the terms of this Plan, written consent
of the transferee (and not the Participant) shall be necessary to substantially
alter or impair any Option or Award previously granted under the Plan.
22. EFFECT OF SECTION 162(M) OF THE CODE. The Plan, and all Awards issued
thereunder, are intended to be exempt from the application of Section 162(m) of
the Code, which
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restricts under certain circumstances the Federal income tax deduction for
compensation paid by a public company to named executives in excess of $1
million per year. The exemption is based on Treasury Regulation Section
1.162-27(f) as in effect on the effective date of the Plan, with the
understanding that such regulation generally exempts from the application of
Section 162(m) of the Code compensation paid pursuant to a plan that existed
before a company becomes publicly held. The Committee may, without stockholder
approval (unless otherwise required to comply with Rule 16b-3 under the Exchange
Act), amend the Plan retroactively and/or prospectively to the extent it
determines necessary in order to comply with any subsequent clarification of
Section 162(m) of the Code required to preserve the Company's Federal income tax
deduction for compensation paid pursuant to the Plan. To the extent that the
Committee determines as of the Date of Grant of an Award that (i) the Award is
intended to comply with Section 162(m) of the Code and (ii) the exemption
described above is no longer available with respect to such Award, such Award
shall not be effective until any stockholder approval required under Section
162(m) of the Code has been obtained.
23. GENERAL.
23.1 Additional Provisions of an Award. Awards under the Plan also may
be subject to such other provisions (whether or not applicable to the benefit
awarded to any other Participant) as the Committee determines appropriate
including, without limitation, provisions to assist the Participant in financing
the purchase of Stock upon the exercise of Options, provisions for the
forfeiture of or restrictions on resale or other disposition of shares of Stock
acquired under any Award, provisions giving the Company the right to repurchase
shares of Stock acquired under any Award in the event the Participant elects to
dispose of such shares, provisions which restrict a Participant's ability to
sell Shares for a period of time under certain circumstances, and provisions to
comply with Federal and state securities laws and Federal and state tax
withholding requirements. Any such provisions shall be reflected in the
applicable Award Agreement. In addition, the Committee may, in its discretion,
provide in an Award Agreement that, in the event that the Participant engages,
within a specified period after termination of employment, in certain activity
specified by the Committee that is deemed detrimental to the interests of the
Company (including, but not limited to, the breach of any non-solicitation
and/or non-compete agreements with the Company), the Participant will forfeit
all rights under any Options that remain outstanding as of the time of such act
and will return to the Company an amount of shares with a Fair Market Value
(determined as of the date such shares are returned) equal to the amount of any
gain realized upon the exercise of any Option that occurred within a specified
time period.
23.2. Claim to Awards and Employment Rights. Unless otherwise expressly
agreed in writing by the Company, no employee or other person shall have any
claim or right to be granted an Award under the Plan or, having been selected
for the grant of an Award, to be selected for a grant of any other Award.
Neither the Plan nor any action taken hereunder shall be construed as giving any
Participant any right to be retained in the employ or service of the Company, a
Subsidiary or an Affiliate.
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23.3. Designation and Change of Beneficiary. Each Participant shall
file with the Committee a written designation of one or more persons as the
beneficiary who shall be entitled to receive the amounts payable with respect to
an Award of Restricted Stock, if any, due under the Plan upon his death. A
Participant may, from time to time, revoke or change his beneficiary designation
without the consent of any prior beneficiary by filing a new designation with
the Committee. The last such designation received by the Committee shall be
controlling; provided, however, that no designation, or change or revocation
thereof, shall be effective unless received by the Committee prior to the
Participant's death, and in no event shall it be effective as of a date prior to
such receipt. If no beneficiary designation is filed by the Participant, the
beneficiary shall be deemed to be his or her spouse or, if the Participant is
unmarried at the time of death, his or her estate.
23.4. Payments to Persons Other Than Participants. If the Committee
shall find that any person to whom any amount is payable under the Plan is
unable to care for his or her affairs because of illness or accident, or is a
minor, or is otherwise legally incompetent or incapacitated or has died, then
any payment due to such person or such person's estate (unless a prior claim
therefor has been made by a duly appointed legal representative) may, if the
Committee so directs the Company, be paid to such person's spouse, child,
relative, an institution maintaining or having custody of such person, or any
other person deemed by the Committee, in its absolute discretion, to be a proper
recipient on behalf of such person otherwise entitled to payment. Any such
payment shall be a complete discharge of the liability of the Committee and the
Company therefor.
23.5. No Liability of Committee Members. No member of the Committee
shall be personally liable by reason of any contract or other instrument
executed by such Committee member or on his or her behalf in his or her capacity
as a member of the Committee nor for any mistake of judgment made in good faith,
and the Company shall indemnify and hold harmless each member of the Committee
and each other employee, officer or director of the Company to whom any duty or
power relating to the administration or interpretation of the Plan may be
allocated or delegated, against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim) arising out of any
act or omission to act in connection with the Plan unless arising out of such
person's own fraud or willful bad faith; provided, however, that approval of the
Board shall be required for the payment of any amount in settlement of a claim
against any such person. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or By-Laws, as a matter
of law, or otherwise, or any power that the Company may have to indemnify them
or hold them harmless.
23.6. Governing law. The Plan and all agreements hereunder shall be
governed by and construed in accordance with the internal laws of the State of
Delaware without regard to the principles of conflicts of law thereof.
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23.7. Funding. No provision of the Plan shall require the Company, for
the purpose of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other entity to which contributions are made or
otherwise to segregate any assets, nor shall the Company maintain separate bank
accounts, books, records or other evidence of the existence of a segregated or
separately maintained or administered fund for such purposes. Participants shall
have no rights under the Plan other than as general unsecured creditors of the
Company, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have the same
rights as other employees under general law.
23.8. Reliance on Reports. Each member of the Committee and each member
of the Board shall be fully justified in relying, acting or failing or refusing
to act, and shall not be liable for having so relied, acted or failed or refused
to act in good faith, upon any report made by the independent public accountant
of the Company and its Subsidiaries and Affiliates and upon any other
information furnished in connection with the Plan by any person or persons other
than himself.
23.9. Relationship to Other Benefits. No payment under the Plan shall
be taken into account in determining any benefits under any pension, retirement,
profit sharing, group insurance or other benefit plan of the Company or any
Subsidiary except as otherwise specifically provided in such other plan.
23.10. Expenses. The expenses of administering the Plan shall be borne
by the Company and its Subsidiaries and Affiliates.
23.11. Pronouns. Masculine pronouns and other words of masculine gender
shall refer to both men and women.
23.12. Titles and Headings. The titles and headings of the sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings shall
control.
23.13. Termination of Employment. For all purposes herein, a person who
transfers from employment or service with the Company to employment or service
with a Subsidiary or Affiliate or vice versa shall not be deemed to have
terminated employment or service with the Company, a Subsidiary or Affiliate.
23.14 Nonexclusivity of the Plan. Neither the adoption of this Plan by
the Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such incentive arrangements as it
may deem desirable, including, without limitation, the granting of stock options
and bonuses otherwise than under this Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.
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23.15 Employees Based Outside of the United States. Notwithstanding any
provision of the Plan to the contrary, in order to foster and promote
achievement of the purposes of the Plan or to comply with provisions of laws in
other countries in which the Company, its Affiliates, and its Subsidiaries
operate or have employees, the Committee, in its sole discretion, shall have the
power and authority to (i) determine which employees employed outside the United
States are eligible to participate in the Plan, (ii) modify the terms and
conditions of Awards granted to employees who are employed outside the United
States, and (iii) establish subplans (through the addition of schedules to the
Plan or otherwise), modify option exercise procedures and other terms and
procedures to the extent such actions may be necessary or advisable.
24. DEFINITIONS. As used in this Plan, the following terms will have the
following meanings:
"Affiliate" means any entity in which the Company has an ownership interest
of at least 20%.
"Award" means any award under this Plan, including any Option, Restricted
Stock or Stock Bonus.
"Award Agreement" means, with respect to each Award, the signed written
agreement between the Company and the Participant setting forth the terms
and conditions of the Award.
"Board" means the Board of Directors of the Company.
"Cause" means the Company, a Subsidiary or Affiliate having cause to
terminate a Participant's employment or service under any existing
employment, consulting or any other agreement between the Participant and
the Company or a Subsidiary or Affiliate or, in the absence of such an
employment, consulting or other agreement, upon (i) the determination by
the Committee that the Participant has ceased to perform his duties to the
Company, a Subsidiary or Affiliate (other than as a result of his
incapacity due to physical or mental illness or injury), which failure
amounts to an intentional and extended neglect of his duties to such party,
(ii) the Committee's determination that the Participant has engaged or is
about to engage in conduct materially injurious to the Company, a
Subsidiary or Affiliate or (iii) the Participant having been convicted of a
felony or a misdemeanor carrying a jail sentence of six months or more.
"Change-of-Control Event" means the occurrence of any one or more of the
following events: (i) there shall have been a change in a majority of the
Board of Directors of the Company within a two (2) year period, unless the
appointment of a director or the nomination for election by the Company's
stockholders of each new director was approved by the vote of a majority of
the directors then still in
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office who were in office at the beginning of such two (2) year period, or
(ii) the Company shall have been sold by either (A) a sale of all or
substantially all its assets, or (B) a merger or consolidation, other than
any merger or consolidation pursuant to which the Company acquires another
entity, or (C) a tender offer, whether solicited or unsolicited.
"Code" means the Internal Revenue Code of 1986, as amended. Reference in
the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations
under such section.
"Common Stock" means the outstanding common stock, par value $0.01 per
share, of the Company, or any other class of securities into which
substantially all the Common Stock is converted or for which substantially
all the Common Stock is exchanged.
"Committee" means the Compensation Committee, the Stock Option Committee or
such other committee appointed by the Board consisting solely of two or
more Outside Directors or the Board.
"Company" means Armor Holdings, Inc., a Delaware corporation, or any
successor corporation.
"Disability" or "Disabled" means a disability, whether temporary or
permanent, partial or total, as determined in good faith by the Committee.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.
"Fair Market Value" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:
a. if such Common Stock is publicly traded and is then listed on a
national securities exchange, (i.e. the New York Stock Exchange)
its closing price on the date of determination on the principal
national securities exchange on which the Common Stock is listed
or admitted to trading, and if there were no trades on such date,
on the day on which a trade occurred next preceding such date;
b. if such Common Stock is publicly traded and is then quoted on the
NASDAQ National Market, its closing price on the NASDAQ National
Market on the date of determination as reported in The
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Wall Street Journal, and if there were no trades on such date, on
the day on which a trade occurred next preceding such date;
c. if such Common Stock is publicly traded but is not quoted on the
NASDAQ National Market nor listed or admitted to trading on a
national securities exchange, the average of the closing bid and
asked prices on the date of determination as reported in The Wall
Street Journal or, if not reported in The Wall Street Journal, as
reported by any reputable publisher or quotation service, as
determined by the Committee in good faith, and if there were no
trades on such date, on the day on which a trade occurred next
preceding such date;
d. if none of the foregoing is applicable, by the Committee in good
faith based upon factors available at the time of the
determination, including, but not limited to, capital raising
activities of the Company.
"Insider" means an officer or director of the Company or any other person
whose transactions in the Company's Common Stock are subject to Section 16
of the Exchange Act.
"NASD Dealer" has the meaning set forth in Section 8(e).
"NQSO's" has the meaning set forth in Section 5.
"Option" means an award of an option to purchase Shares pursuant to
Section 5.
"Outside Director" means a person who is both (i) a "nonemployee director"
within the meaning of Rule 16b-3 under the Exchange Act, or any successor
rule or regulation and (ii) an "outside director" within the meaning of
Section 162(m) of the Code.
"Parent" means any corporation or other legal entity (other than the
Company) in an unbroken chain of corporations and/or other legal entities
ending with the Company if each of such corporations and other legal
entities other than the Company owns stock, other equity securities or
other equity interests possessing 50% or more of the total combined voting
power of all classes of stock, equity securities or other equity interests
in one of the other corporations or other entities in such chain.
"Participant" means a person who receives an Award under this Plan.
19
"Performance Factors" means the factors selected by the Committee from time
to time, including, but not limited to, the following measures to determine
whether the performance goals established by the Committee and applicable
to Awards have been satisfied:
a. Net revenue and/or net revenue growth;
b. Earnings before income taxes and amortization and/or earnings
before income taxes and amortization growth;
c. Operating income and/or operating income growth;
d. Net income and/or net income growth;
e. Earnings per share and/or earnings per share growth;
f. Total stockholder return and/or total stockholder return growth;
g. Return on equity;
h. Operating cash flow;
i. Adjusted operating cash flow return on income;
j. Economic value added;
k. Successful capital raises;
l. Individual confidential business objectives
m. Other factors deemed reasonable and appropriate by the Committee.
"Performance Period" means the period of service determined by the
Committee, not to exceed five years, during which years of service or
performance is to be measured for Restricted Stock Awards or Stock Bonuses.
"Plan" means Armor Holdings, Inc. 2002 Executive Stock Plan, as amended
from time to time.
"Restricted Stock Award" means an award of Shares pursuant to Section 6.
"SEC" means the Securities and Exchange Commission.
20
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of the Company's Common Stock reserved for issuance
under this Plan, as adjusted pursuant to Section 18, and any successor
security.
"Stock Bonus" means an award of Shares, or cash in lieu of Shares, pursuant
to Section 7.
"Subsidiary" means any corporation or other legal entity (other than the
Company) in an unbroken chain of corporations and/or other legal entities
beginning with the Company if each of the corporations and entities other
than the last corporation or entity in the unbroken chain owns stock, other
equity securities or other equity interests possessing 50% or more of the
total combined voting power of all classes of stock, other equity
securities or other equity interests in one of the other corporations or
entities in such chain.
"Termination" or "Terminated" means, for purposes of this Plan with respect
to a Participant, that the Participant has for any reason ceased to provide
services as an employee, officer, director, consultant, independent
contractor, or advisor to the Company or a Parent or Subsidiary of the
Company. An employee will not be deemed to have ceased to provide services
in the case of (i) sick leave, (ii) military leave, or (iii) any other
leave of absence approved by the Committee, provided, that such leave is
for a period of not more than 90 days, unless re-employment upon the
expiration of such leave is guaranteed by contract or statute or unless
provided otherwise pursuant to formal policy adopted from time to time by
the Company and issued and promulgated to employees in writing. In the case
of any employee on an approved leave of absence, the Committee may make
such provisions respecting suspension of vesting of the Award while on
leave from the employ of the Company or a Subsidiary as it may deem
appropriate, except that in no event may an Option be exercised after the
expiration of the term set forth in the Option agreement. The Committee
will have sole discretion to determine whether a Participant has ceased to
provide services and the effective date on which the Participant ceased to
provide services (the "Termination Date").
"Unvested Shares" means "Unvested Shares" as defined in the Award
Agreement.
"Vested Shares" means "Vested Shares" as defined in the Award Agreement.
21