Exhibit 10.1

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into on August
31, 2016 by and among STG Group, Inc., a Delaware corporation (together with its
successors and assigns, the “Company”), and Phillip E. Lacombe (“Executive”).

 

WHEREAS, the Company wishes to engage Executive as its President and Chief
Operating Officer, effective as of September 12, 2016 (the “Effective Date”);

 

WHEREAS, Executive wishes to join the Company as its President and Chief
Operating Officer; and,

 

WHEREAS, this Agreement sets forth the terms of Executive’s employment
relationship with the Company.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

1.            Employment. The Company shall employ Executive, and Executive
hereby accepts employment with the Company, upon the terms and conditions set
forth in this Agreement for the period beginning as of the Effective Date and
ending as provided in Section 4 hereof (the “Employment Period”).

 

2.Position and Duties.

 

(a)          During the Employment Period, Executive shall serve as President
and Chief Operating Officer of the Company. During the Employment Period,
Executive shall have the duties, responsibilities and authority customarily
associated with the position of President and Chief Operating Officer and will
have such other duties and authority consistent with such office as will be
determined from time to time by the Board of Directors of the Company (the
“Board”), or any Chief Executive Officer of the Company.

 

(b)          During the Employment Period, Executive shall devote substantially
all of his efforts and business time and attention (except for permitted
vacation periods and reasonable periods of illness or other incapacity) to the
business and affairs of the Company and its Subsidiaries; provided, however,
that the foregoing shall not preclude Executive from devoting a reasonable
amount of time to (i) civic, charitable, religious or other not-for-profit
activities, (ii) serving as a director of Red Five and Bennett Advanced
Research, and with the approval of the Board, serving as a director of other for
profit entities, and (iii) subject to Section 7, managing passive private
investments, so long as such activities do not conflict with or materially
interfere with Executive’s responsibilities to the Company or the terms of this
Agreement.

 

3.Compensation and Benefits.

 

(a)          Base Salary. During the Employment Period, Executive’s base salary
shall be at the rate of $450,000 per annum. Commencing in January 2017 and
annually thereafter, the Board shall review and may increase such base salary
(as it may be changed from time to time, the “Base Salary”). The Base Salary
shall be payable by the Company in regular installments in accordance with the
Company’s general payroll practices as in effect from time to time.

 

 

 

 

(b)          Bonus. Executive shall be eligible for an annual bonus (a “Bonus”)
based on achievement of organizational and individual performance targets
established by the compensation committee of the Board in consultation with
Executive (provided that Executive acknowledges that the organizational targets
for the fiscal year in which this Agreement is entered into already have been
established). The Bonus at target level of achievement for a fiscal year shall
be 100% of Base Salary (the “Target Bonus”) (but, for the avoidance of doubt,
the actual Bonus may be higher or lower); provided that the Bonus for the fiscal
year in which the Effective Date occurs shall be prorated based on the portion
of such fiscal year Executive is employed hereunder, but shall be no less than
the Target Bonus multiplied by a fraction, the numerator of which is the number
of days Executive is employed hereunder during such fiscal year and the
denominator of which is 365. The Bonus targets for fiscal year 2016 are attached
as Exhibit A to the Summary of Terms between the parties dated [August ___,
2016]. Any earned Bonus shall be paid in the form of a cash lump sum. Except as
provided in Section 4(b)(iv), payment of the earned Bonus shall be subject to
Executive’s continued employment with the Company through the date the Bonus is
paid, which shall be no later than the 15th day of the third month following the
end of the fiscal year in which the fiscal year to which the Bonus relates ends.
Executive acknowledges that the Company intends to structure the Bonus
opportunity after the fiscal year in which the Effective Date occurs to qualify
as “performance-based compensation” for purposes of Section 162(m) of the Code.

 

(c)          New Equity Grants. Executive shall be granted five hundred thousand
(500,000) Non-qualified Stock Options to purchase shares of the Company’s common
stock as equity awards (the “Equity Grants”), of which 250,000 of such Equity
Grants shall be made promptly following the Effective Date (the “First Tranche”)
with an exercise price of the greater of (1) Fair Market Value on the date of
grant or (2) $3.00 and 250,000 of such Equity Grants shall be made on or about
the first anniversary of the Effective Date (the “Second Tranche”) with an
exercise price of Fair Market Value on the date of grant, it being understood
that the Second Tranche shall not be issued under the Plan, although such award
shall incorporate and be subject to the terms of the Plan. The Equity Grants
shall consist of Non-qualified Stock Options to purchase shares of the Company’s
common stock. The award agreements for the Equity Grants are attached as Exhibit
A and Exhibit B and are further subject to the applicable terms of this
Agreement, which shall be deemed incorporated into such grants as if fully set
forth therein.

 

(d)          Benefits. During the Employment Period, Executive shall be eligible
to participate in all of the Company’s employee benefit programs for which
executive officers of the Company are generally eligible on a basis no less
favorable to him than provided any other similarly-situated executive officer.

 

(e)          Expenses. During the Employment Period, the Company shall reimburse
Executive for all reasonable business expenses incurred by him in the course of
performing his duties and responsibilities under this Agreement which are
consistent with the Company’s policies in effect from time to time with respect
to travel, entertainment and other business expenses, subject to the Company’s
requirements with respect to reporting and documentation of such expenses.

 

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4.Termination.

 

(a)          The Employment Period (and Executive’s employment hereunder) shall
continue until terminated (i) by Executive’s resignation without Good Reason,
(ii) due to Executive’s death or upon written notice from the Company because of
Executive’s Disability given while the Executive is Disabled, (iii) by
Executive’s resignation for Good Reason, (iv) by the Company by terminating
Executive’s employment hereunder without Cause or (v) by the Company by
terminating Executive’s employment with Cause. Except as otherwise provided
herein, any termination of the Employment Period by the Company or the Executive
shall be effective as specified in a written notice from the terminating party
(“Notice of Termination”).

 

(b)          If Executive’s employment is terminated for any reason, he (or, as
applicable, his estate) shall be entitled to payment of the following: (i) any
accrued but unpaid Base Salary, payable in accordance with the Company’s
standard payroll procedures; (ii) accrued but unused vacation in accordance with
Company policy: (iii) business expenses that have been incurred but have not yet
been reimbursed pursuant to Section 3(f); (iv) unless Executive’s employment was
terminated by the Company for Cause, any earned but unpaid Annual Bonus for the
fiscal year preceding the year in which the Date of Termination occurs, payable
when annual bonuses for such fiscal year are paid to the Company’s executive
officers; and (v) any vested benefits under the terms of the Company’s employee
benefit plans, payable as specified in such plans (collectively, the “Accrued
Obligations”).

 

(c)          If Executive’s employment is terminated without Cause by the
Company or Executive terminates his employment for Good Reason, Executive shall
be entitled to the following (without duplication); provided that any amounts
due hereunder (other than pursuant to subclause (i)) shall cease if the
Executive violates the provisions of Section 5 or 7 below:

 

(i)          The Accrued Obligations;

 

(ii)         Payment of an amount equal to the Executive’s Base Salary, payable
over the twelve (12) month period in equal installments in accordance with the
Company’s normal payroll schedule, beginning on the first payroll date following
the Release becoming irrevocable (the period with respect to which payment is
made hereunder is the “Severance Period”); provided that if such termination
occurs after the first anniversary of the Effective Date and is upon or within
12 months following a Change in Control that also constitutes a change in
control event under Treas. Reg. Section 409A-3(i)(5) (a “Change in Control
Termination”), the Executive shall receive the amounts set forth above in a cash
lump sum within five (5) Business Days following the date that the Release
becomes irrevocable.

 

(iii)        Payment at the same time the payments in subclause (ii) are made,
of 12 monthly “COBRA” premiums in effect as of the Date of Termination for the
health, dental and vision coverage in effect for Executive and his dependents at
such time; provided, that if payment is made in connection with a Change in
Control Termination, this benefit shall be a lump sum payment equal to 12 times
the monthly “COBRA” premiums, payable at the same time the Change in Control
Termination payment under subclause (ii) is paid;

 

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(iv)        A Pro Rata Bonus, payable when annual bonuses for such fiscal year
are paid to the Company’s executive officers; and

 

(v)          In the event such termination is not a Change in Control Trigger
(as defined below), (A) with respect to the portion of the Equity Grants that
have been granted to Executive (and, for the avoidance of doubt, this
subparagraph (v)(A) shall apply notwithstanding any contrary provision of any
grant agreement or plan document), (1) if such termination occurs within six (6)
months of the Effective Date, there shall be no accelerated vesting of any
portion of the Equity Grants, (2) if such termination occurs between the six (6)
month and twelve (12) month anniversary of the Effective Date, 50% of the
unvested portion of the First Tranche shall accelerate and vest immediately upon
such termination, and (3) if such termination occurs on or after the first
anniversary of the Effective Date but prior to the second anniversary of the
Effective Date, 100% of the unvested portion of the First Tranche and 50% of the
unvested portion of the Second Tranche shall accelerate and vest immediately
upon such termination, and (B) with respect to any other equity award, such
treatment as provided in the applicable grant agreement.

 

Executive shall not be entitled to any other salary, compensation or employee
benefits after termination of the Employment Period, except as otherwise
expressly required by applicable law. Notwithstanding anything herein to the
contrary, the payments and benefits to be provided pursuant to Subsections
4(c)(ii) through (vi) are subject to Executive executing a release of claims
substantially in the form attached hereto as Exhibit C (a “Release”) and such
Release becoming irrevocable within 55 days following the Date of Termination.
Notwithstanding anything in this Section 4(b) to the contrary, in the event that
that the period following the Date of Termination during which the Release must
be executed and not revoked begins in one calendar year and ends in the
subsequent calendar year, then any amount payable pursuant to this Section 4(b)
that could otherwise be payable in either the calendar year in which the Date of
Termination occurs or the immediately subsequent calendar year, will in all
events be paid in such immediately subsequent calendar year, subject to
Executive’s timely execution (without revocation) of such Release.

 

(d)          If the Employment Period is terminated by the Company for Cause or
by Executive without Good Reason, or due to Executive’s death or Disability,
Executive (or, as applicable, his estate) shall only be entitled to the Accrued
Obligations, and any equity awards shall be treated as specified in the
applicable grant agreement. Except as otherwise set forth herein, Executive
shall not be entitled to any other salary, compensation or benefits from the
Company or its Subsidiaries thereafter, except as specifically provided for in
the Company’s employee benefit plans or as otherwise expressly required by
applicable law.

 

(e)          Notwithstanding anything above to the contrary, the foregoing shall
not affect Executive’s right to indemnification by the Company or his right to
directors’ and officers’ liability insurance in accordance with Section 25 of
this Agreement.

 

(f)          Executive shall have no obligations to mitigate the amounts due
hereunder upon a termination and no amounts due hereunder shall be offset by any
other amounts earned by the Executive.

 

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5.          Confidential Information. Executive acknowledges that the
Confidential Information (as defined herein) obtained by him while employed by
the Company and its Subsidiaries concerning the business or affairs of the
Company or its Subsidiaries are the exclusive property of the Company or such
Subsidiary. Executive shall treat and hold as confidential any proprietary or
confidential information concerning the business and affairs of the Company and
its Subsidiaries that is not already generally available to the public or known
within the relevant trade or industry (the “Confidential Information”, which
shall include, without limitation, information concerning the Company’s
marketing and business methods, procedures and strategies, fees, rates, clients,
mailing lists, trade secrets, plans for the development of new services, and
plans for the expansion into new areas or markets, financial records, data,
results of operations and billings) and shall refrain, other than in the
ordinary course of the Company’s or its Subsidiaries’ business, from using or
disclosing any of the Confidential Information to third parties unrelated to the
Company or its Subsidiaries. Executive shall deliver to the Company at the
termination of the Employment Period, or at any other time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
embodying or relating to the Confidential Information, Work Product (as defined
in Section 6 hereof) or other Confidential Information relating to the business
of the Company or its Subsidiaries which he may then possess or have under his
control. Nothing herein, however, shall prohibit Executive from retaining
(i) papers and other materials of a personal nature, including, without
limitation, photographs, correspondence, personal diaries, calendars, models and
Rolodexes and address books (including those that comingle personal and business
contact information), personal files and phone books, or (ii) information
showing his compensation or relating to reimbursement of expenses and
(iii) information that he reasonably believes may be needed for tax purposes or
(iv) copies of plans, programs or agreements relating to his employment or
termination thereof. In addition, during the Employment Period, Executive
acknowledges that the Company may receive from third parties their confidential
or proprietary information and if Employee knows or reasonably should have known
that the Company was required to keep such information confidential by such
third party, Executive agrees to treat such information as “Confidential
Information” hereunder. During the Employment Period and thereafter, and without
in any way limiting the provisions of this Section 5, Executive agrees to hold
all Confidential Information in the strictest confidence and not to disclose it
to any unauthorized person or to use it except in both cases in the ordinary
course of business in carrying out in good faith Executive’s duties for and
responsibilities to the Company or its Subsidiaries and Affiliates, unless
expressly authorized by the Company in writing. Notwithstanding anything
elsewhere to the contrary, Confidential Information (or any other confidential
or proprietary information) shall not include information which becomes
generally known to and available for use by the public or known within the
relevant trade or industry other than as a result of Executive’s violation of
this Section 5. Notwithstanding anything elsewhere to the contrary, any
non-disclosure provision in this Agreement does not prohibit or restrict
Executive from responding to any inquiry by the Securities and Exchange
Commission or any other self-regulatory organization or governmental entity
(“Regulatory Entities”) and the provisions of this Section 5 shall not apply
(i) when disclosure is required by law or by any court, arbitrator, mediator or
administrative or legislative body (including any committee thereof) with actual
or apparent jurisdiction to order Executive to disclose or make accessible any
information, (ii) with respect to any other litigation, arbitration or mediation
involving any agreement between or among Executive, the Company and/or its
Subsidiaries, or (iii) in connection with any assistance Executive provides
pursuant to Section 14. Except in connection with any request by a Regulatory
Entity, Executive agrees that in the event he is requested by subpoena, court
order, search order or other legal process to disclose Confidential Information,
unless otherwise prohibited by law or regulation, Executive shall promptly as
reasonably practicable notify the Company of such request and agrees not to
disclose any Confidential Information unless and until the Company has expressly
authorized him to do so in writing or the Company has had a reasonable
opportunity under the circumstances to object to such request or to litigate the
matter (of which the Company agrees to keep Executive informed) and has failed
to do so, provided that Executive may disclose such Confidential Information if
advised by his legal counsel that he would be in contempt of court not to do so.

 

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6.          Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable)
(“Works”) which relate to the Company’s or its Subsidiaries’ actual or
anticipated business, research and development or existing or future products or
services (provided such anticipated business, research or development or such
future products or services are under active development at the time Executive
is creating any Work covered herein) and which are conceived, developed or made
by Executive while employed by the Company or its Subsidiaries or their
respective predecessors (“Work Product”) belong to the Company or such
Subsidiary. Any copyrightable work prepared in whole or in part by Executive in
the course of his work for any of the foregoing entities shall be deemed a “work
made for hire” under the copyright laws, and the Company or such Subsidiary
shall own all rights therein. To the extent that any such copyrightable work is
not a “work made for hire,” Executive hereby assigns and agrees to assign to the
Company or such Subsidiary all right, title, and interest, including without
limitation, copyright in and to such copyrightable work. Executive shall
promptly disclose such Work Product and copyrightable work to the Board and
perform all actions reasonably requested by the Board (whether during or after
the Employment Period), at the Company’s sole expense (including reimbursing
Executive for any legal fees incurred by him to the extent he reasonably
determines that legal assistance is necessary in connection with his obligations
or rights under this Section 6), to establish and confirm the Company’s or such
Subsidiary’s ownership (including, without limitation, assignments, consents,
powers of authority, and other instruments).

 

7.Executive Covenants.

 

(a)          Covenant not to Compete. For the duration of the Employment Period
and, if Executive’s employment is terminated either by the Company for Cause or
by Executive without Good Reason, for twelve (12) months thereafter, Executive
shall not, directly or indirectly, provide services to any Designated Company.

 

(b)          Non-Solicitation. For the duration of the Employment Period and for
twelve (12) months thereafter, other than in the course of performing his
duties, Executive shall not directly or indirectly through another person
(i) induce or attempt to induce any employee of the Company or any of its
Subsidiaries to leave the employ of the Company or such Subsidiary, or in any
way interfere with the relationship between the Company or any of its
Subsidiaries and any employee thereof, (ii) hire, within ninety days of such
person’s termination of employment with the Company or any of its Affiliates,
any person who was an employee of the Company or any Subsidiary at any time
while Executive is employed by the Company or (iii) personally induce or attempt
to induce any customer, supplier, licensee, licensor, franchisee or other
business relation of the Company or any Subsidiary to cease doing business with
the Company or such Subsidiary, or in any way personally interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any Subsidiary. This Section 7(b) shall not apply to
(i) general advertisements to hire employees not directed at individuals
described herein or (ii) Executive serving as a reference for any such
individual.

 

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(c)          Blue-Penciling/Remedies. Notwithstanding anything in this Section 7
to the contrary, if at any time a court holds that the restrictions stated in
this Section 7 are unreasonable or otherwise unenforceable under circumstances
then existing, the parties hereto agree that the maximum period, scope or
geographical area determined to be reasonable under such circumstances by such
court shall be substituted for the stated period, scope or area, and the court
making the determination of unreasonableness or unenforceability shall have the
power to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed. The parties
acknowledge and agree that money damages would not be an adequate remedy for any
breach or threatened breach of the provisions of this Section 7 and that, in
such event, the Company and its Successors or assigns may, in addition to any
other rights and remedies existing in its favor, apply to any court of competent
jurisdiction for specific performance, injunctive and/or other relief in order
to enforce or prevent any violations of the provisions of this Section 7
(including, if the court so determines, the extension of the covenants described
herein by a period equal to the length of court proceedings necessary to stop
such violation). Any injunction shall be available without the posting of any
bond or other security or proving actual damages. The parties agree that the
restrictions contained in this Section 7 are reasonable in all respects.

 

8.          Mutual Nondisparagement. Each party (which, in the case of the
Company, shall mean the Company by authorized statement or its executive
officers and the members of the Board) agrees, during the Employment Period and
following the Date of Termination, to refrain from Disparaging (as defined
below) the other party and its Affiliates, including, in the case of the
Company, any of its services, technologies or practices, or any of its
directors, officers, agents, representatives or stockholders, either orally or
in writing. Nothing in this paragraph shall preclude any party from making
truthful statements that are reasonably necessary to comply with applicable law,
regulation or legal process, or to defend or enforce a party’s rights under this
Agreement or any other agreement between the Parties. The foregoing shall not be
violated by truthful statements rebutting statements about a party made by
others. For purposes of this Agreement, “Disparaging” means making remarks,
comments or statements, whether written or oral, that impugn the character,
integrity, reputation or abilities of the person being disparaged.

 

9.          Executive’s Representations. As of the Effective Date and the date
hereof, Executive hereby represents and warrants to the Company that, to the
best of his knowledge, (i) the execution, delivery and performance of this
Agreement by Executive do not conflict with, breach, violate or cause a default
under any contract, written agreement, written instrument or court order,
judgment or decree to which Executive is a party or by which he is bound,
(ii) except as otherwise disclosed to the Company, Executive is not a party to
or bound by any employment agreement, noncompete agreement or confidentiality
agreement with any other person or entity and (iii) upon the execution and
delivery of this Agreement by the Company and Executive, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms, except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally. Executive hereby acknowledges and represents that he has
consulted with any independent advisors he deems necessary regarding his rights
and obligations under this Agreement and that he fully understands the terms and
conditions contained herein.

 

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10.         Company and Company Representations. The Company represents and
warrants that, to the best of its knowledge, (i) the execution, delivery and
performance of this Agreement by it has been fully and validly authorized by all
necessary corporate action, (ii) the officer signing this Agreement on its
behalf is duly authorized to do so, (iii) the execution, delivery and
performance of this Agreement does not violate any applicable law, regulation,
order, judgment or decree or any agreement, plan or corporate governance
document to which it is a party or by which it is bound and (iv) upon execution
and delivery of this Agreement by the parties, it shall be a valid and binding
obligation of the Company, enforceable against it in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally.

 

11.         Definitions. When used in this Agreement, the following terms have
the meanings set forth below:

 

“Affiliate” of any particular Person means any other Person controlling,
controlled by, or under common control with such particular Person, where
“control” means the possession, directly or indirectly, of the power to direct
the management and policies of a Person whether through the ownership of voting
securities, by contract or otherwise.

 

“Board” means the board of managers of the Company.

 

“Cause” for the termination of Executive’s employment with the Company will be
deemed to exist if (a) Executive has been convicted for committing an act of
fraud, embezzlement, theft or other act constituting a felony (other than
traffic related offenses or as a result of vicarious liability), (b) Executive
willfully engages in illegal conduct or gross misconduct that is significantly
injurious to the Company; however, no act or failure to act, on Executive’s part
shall be considered “willful” unless done or omitted to be done, by Executive
not in good faith and without reasonable belief that his action or omission was
in the best interest of the Company or (c) failure to attempt in good faith to
perform his duties (other than as a result of physical or mental incapacity)
after the receipt of a notice from the Company detailing such failure and the
failure to cure such failure within 30 days of such notice. For the avoidance of
doubt, termination of Executive’s employment due to Disability is not a
termination without Cause.

 

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“Change in Control” means a “Change in Control” or a “Corporate Transaction” as
defined in the Company’s 2015 Omnibus Incentive Plan, as amended (the “Plan”);
provided, however, that (1) a merger or consolidation described in subsection
(i) of the definition of Corporate Transaction shall not constitute a Corporate
Transaction for purposes of this Agreement if the holders of the Company’s
voting securities immediately prior to the merger continue to beneficially own,
directly or indirectly, at least a majority of the voting securities in the
Successor or its parent immediately after the merger, and (2) a sale, transfer
or other disposition described in subsection (ii) of the definition of Corporate
Transaction shall not constitute a Corporate Transaction for purposes of this
sentence if the holders of the Company’s voting securities immediately prior to
such transaction beneficially own, directly or indirectly, at least a majority
of the voting securities of the purchaser or transferees of such assets
immediately after such transaction.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

 “Date of Termination” means (i) if Executive’s employment is terminated by the
Company for Cause, the date of receipt of the Notice of Termination or any later
date specified therein within thirty (30) days of such notice, as the case may
be, (ii) if Executive’s employment is terminated by the Company without Cause,
the date of receipt of the Notice of Termination or any later date specified
therein within thirty (30) days of such notice, as the case may be, (iii) if
Executive’s employment is terminated by Executive for Good Reason, at the time
period specified in the Notice of Termination consistent with the procedural
provisions in the definition of Good Reason, (iv) if Executive’s employment is
terminated by Executive other than for Good Reason, the date specified in such
notice, provided that such date is at least 30 days after the giving of such
notice, and (v) if Executive’s employment is terminated by reason of death or
Disability, the date of Executive’s death or the date specified in the notice of
termination for Disability, as applicable; provided that in each case
termination of employment constitutes a “separation from service” for purposes
of Section 409A of the Code and the regulations promulgated thereunder.

 

“Designated Company” means one of the twelve (12) companies (or segments
thereof) on Exhibit D hereto (and any Subsidiaries and successors thereof). The
Company may at any time change the companies that are Designated Companies so
long as there are no more than twelve (12), the Companies are competitors of the
Company and Executive is notified of the change in writing at least ninety
(90) days prior to termination of his employment with the Company.

 

“Disability” means that as a result of physical or mental illness or incapacity
the Executive has been unable to perform his material duties for 180 days in any
365 day period.

 

 “Good Reason” means the occurrence of any of the events or conditions described
in clauses (a) through (d) hereof, without Executive’s prior written consent:
(a)(i) any material adverse change in Executive’s authority, duties or
responsibilities (including reporting responsibilities and lines); (b) a
material reduction in Executive’s Base Salary; (c) the imposition of a
requirement that Executive be based (i) at any place outside a 50-mile radius
from Executive’s principal place of employment immediately prior to the Change
in Control or (ii) at any location other than the Company’s corporate
headquarters, except, in each case, for reasonably required travel on Company
business which is not materially greater in frequency or duration than prior to
the Change in Control; or (d) any material breach by the Company of any
provision of this Agreement, including the failure of the Company to obtain an
agreement, reasonably satisfactory to Executive from any Successor to assume and
agree to perform this Agreement pursuant to Section 22. Notwithstanding anything
to the contrary in this Agreement, no termination will be deemed to be for Good
Reason hereunder unless (i) Executive provides written notice to the Company
identifying the applicable event or condition within 90 days of the occurrence
of the event or the initial existence of the condition, (ii) the Company fails
to remedy the event or condition within a period of 30 days following such
notice, and (iii) Executive terminates his employment as a result of such
failure to cure within 30 days after the end of the cure period.

 

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“Person” means and includes an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof and any other entity.

 

“Pro Rata Bonus” means the product of (a) the actual Bonus for fiscal year in
which the Date of Termination occurs, as determined by the compensation
committee of the Board based on actual performance for the year relative to the
preestablished targets (but with any personal factor being at no less than one
hundred percent (100%), (b) multiplied by a fraction, the numerator of which is
the number of days in such fiscal year up to and including the Date of
Termination and the denominator of which is 365.

 

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association, or business entity of which (i) if
a corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers, or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association, or other business entity (other than a corporation), a
majority of partnership or other similar ownership interest thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association, or other business entity
(other than a corporation) if such Person or Persons shall be allocated a
majority of limited liability company, partnership, association, or other
business entity gains or losses or shall be or control any managing director or
general partner of such limited liability company, partnership, association, or
other business entity. For purposes hereof, references to a “Subsidiary” of any
Person shall be given effect only at such times that such Person has one or more
Subsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a
Subsidiary of the Company.

 

“Successor” means a corporation or other entity acquiring all or substantially
all the assets and business of the Company, whether by operation of law, by
assignment or otherwise.

 

 - 10 - 

 

 

12.         Tax Issues. Notwithstanding anything contained in this Agreement (or
any other agreement between Executive and the Company or its Subsidiaries) to
the contrary, the Company and its Subsidiaries shall be entitled to deduct and
withhold from any amounts distributable or due to Executive from the Company or
any of its Subsidiaries, including from Executive’s wages, compensation, or
benefits, as may be required by the Code, or under any state or local law
relating to compensation. In addition, the parties intend that any compensation,
benefits and other amounts payable or provided to Executive under this Agreement
be exempt from or shall be paid or provided in compliance with Section 409A of
the Code and all regulations, guidance, and other interpretative authority
issued thereunder (collectively, “Section 409A”) such that there will be no
adverse tax consequences, interest, or penalties for Executive under
Section 409A as a result of the payments and benefits so paid or provided to
him, and this Agreement shall be interpreted accordingly; provided, however,
that the Company, its Affiliates and Successors, and their respective employees,
officers, directors, agents and representatives (including, without limitation,
legal counsel) will not have any liability to Executive with respect to any
taxes, penalties, interest or other costs or expenses Executive or any related
party may incur with respect to or as a result of Section 409A or for damages
for failing to comply with Section 409A. The parties agree to modify this
Agreement, or the timing (but not the amount) of the payments hereunder of
severance or other compensation, or both, to the extent necessary to comply with
and to the extent permissible under Section 409A. In addition, notwithstanding
anything to the contrary contained in any other provision of this Agreement, the
payments and benefits to be provided Executive under this Agreement shall be
subject to the provisions set forth below.

 

(a)          The date of Executive’s “separation from service,” as defined in
the regulations issued under Section 409A, shall be treated as Executive’s Date
of Termination for purposes of determining the time of payment of any amount
that becomes payable to Executive pursuant to Section 4 hereof upon the
termination of his employment and that is treated as an amount of deferred
compensation for purposes of Section 409A.

 

(b)          In the case of any amounts that are payable to Executive under this
Agreement in the form of installment payments, Executive’s right to receive such
payments shall be treated as a right to receive a series of separate payments
under Treas. Reg. §1.409A-2(b)(2)(iii).

 

(c)          If Executive is a “specified employee” within the meaning of
Section 409A at the time of his “separation from service” within the meaning of
Section 409A, then any payment otherwise required to be made to his under this
Agreement on account of his separation from service, to the extent such payment
(after taking in to account all exclusions applicable to such payment under
Section 409A) is properly treated as deferred compensation subject to
Section 409A, shall not be made until the first business day after (i) the
expiration of six months from the date of Executive’s separation from service,
or (ii) if earlier, the date of Executive’s death (the “Delayed Payment Date”).
On the Delayed Payment Date, there shall be paid to Executive or, if Executive
has died, to Executive’s estate, in a single cash lump sum, an amount equal to
aggregate amount of the payments delayed pursuant to the preceding sentence.

 

(d)          To the extent that the reimbursement of any expenses or the
provision of any in-kind benefits pursuant to this Agreement is subject to
Section 409A, (i) the amount of such expenses eligible for reimbursement, or
in-kind benefits to be provided hereunder during any one calendar year shall not
affect the amount of such expenses eligible for reimbursement or in-kind
benefits to be provided hereunder in any other calendar year; provided, however,
that the foregoing shall not apply to any limit on the amount of any expenses
incurred by Executive that may be reimbursed or paid under the terms of the
Company’s medical plan, if such limit is imposed on all similarly situated
participants in such plan; (ii) all such expenses eligible for reimbursement
hereunder shall be paid to Executive as soon as administratively practicable
after any documentation required for reimbursement for such expenses has been
submitted, but in any event by no later than December 31 of the calendar year
following the calendar year in which such expenses were incurred; and
(iii) Executive’s right to receive any such reimbursements or in-kind benefits
shall not be subject to liquidation or exchange for any other benefit.

 

 - 11 - 

 

 

13.Golden Parachute Provisions.

 

(a)          In the event Executive becomes entitled to receive payments and
benefits hereunder or otherwise and such payments and benefits (the “Total
Payments”) will be subject to the tax (the “Excise Tax”) imposed by Section 4999
of the Code, or any similar tax that may hereafter be imposed, the Tax Counsel
(defined below) shall compute the “Net After-Tax Amount,” and the “Reduced
Amount,” and shall adjust the Total Payments as described below. The Net
After-Tax Amount shall mean the present value of the Total Payments, net of all
federal income, excise and employment taxes that would be imposed on Executive
by reason of such payments. The Reduced Amount shall mean the largest aggregate
amount of the Total Payments that can be paid without any amount being subject
to the Excise Tax. If the Company determines that the Reduced Amount is greater
than the Net After-Tax Amount, the Total Payments will be reduced to the Reduced
Amount. Such reduction to the Total Payments shall, to the extent permitted by
Section 280G and Section 409A, be in the order specified by the Executive or, if
not specified or can’t be specified, be made by first reducing or eliminating
any cash severance benefits, then by reducing or eliminating any accelerated
vesting of equity awards in the manner that results in the largest amount being
paid to Executive and then by reducing or eliminating any other remaining Total
Payments, in each case in reverse order beginning with the payments which are to
be paid the farthest in time from the date of the transaction triggering the
Excise Tax.

 

(b)          All determinations under this Section 13 shall be made by a tax
advisor selected by the Company before the change in control event and
reasonably acceptable to Executive (“Tax Counsel”), the fees and expenses of
which shall be borne solely by the Company For purposes of determining the Net
After-Tax Amount, the Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Change in Control of the Company occurs, and state and local income
taxes at the highest marginal rate of taxation in the state and locality of
Executive’s residence on the effective date of the Change in Control of the
Company, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes, taking into account the
reduction in itemized deduction under Section 68 of the Code.

 

14.         Executive’s Cooperation. As reasonably requested by the Company and
at times and on schedules and at locations that are reasonably consistent with
Executive’s other business and personal activities and commitments and provided
such cooperation is not adverse to Executive’s legal or economic interests,
Executive agrees to reasonably cooperate with the Company and its Subsidiaries
in any (dispute during the Employment Period or thereafter with one or more
third parties, internal investigation or administrative, regulatory or judicial
investigation or proceeding which relates to a matter that Executive has
knowledge of as a result of his employment with the Company. In the event the
Company requires Executive’s cooperation in accordance with this Section 14
after the Employment Period and during Executive’s lifetime, the Company shall
reimburse Executive for reasonable travel expenses (including lodging and
meals), upon submission of receipts. In addition, if Executive provides such
assistance at a time with respect to which the Company is not making payments to
Executive under Section 4 herein, Executive shall receive reasonable
compensation for assisting the Company but not for Executive’s time providing
sworn testimony.

 

 - 12 - 

 

 

15.         Notices. Any notice, request or other communication given in
connection with this Agreement shall be in writing and shall be deemed to have
been given (i) when personally delivered to the recipient (provided written
acknowledgement of receipt is obtained), (ii) two days after being sent by
reputable overnight courier service or (iii) three days after being mailed by
first class mail, return receipt requested, to the recipient at the address
below indicated:

 

Notices to Executive:

[At the last address on file with the Company]

 

Notices to the Company:

 

STG Group, Inc.
11091 Sunset Hills Road
Suite 200
Reston, Virginia 20190

Attention: Chairman of the Board

 

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party in
accordance with this paragraph.

 

16.         Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the state
in which the Company’s chief executive office is located, the time period shall
be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.

 

17.         Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any action in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein and
in all events in a manner to give maximum effect to the intent of the parties
hereunder.

 

18.         Complete Agreement. This Agreement and those documents expressly
referred to herein as in effect as of the date hereof and as executed by all the
parties hereto embody the complete agreement and understanding among the parties
and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof. For the avoidance of doubt, the provisions of
Sections 3(c), 4(c)(v), 4(c)(vi) and 23 relating to equity awards and the
definitions of “Cause”, “Good Reason” and “Disability” herein, shall apply in
lieu of any contrary provision of any applicable plan document or grant
agreement (notwithstanding any other provision in such plan document or grant
agreement, including without limitation the grant agreements attached hereto as
Exhibit A and Exhibit B).

 

 - 13 - 

 

 

19.         No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.

 

20.         Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

 

21.         Successors and Assigns. This Agreement will be binding upon and will
inure to the benefit of the Company and its Successors, and the Company will
require any Successors to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place. Neither this
Agreement nor any right or interest hereunder will be assignable or transferable
by Executive or by Executive’s beneficiaries or legal representatives, except by
will or by the laws of descent and distribution. This Agreement will inure to
the benefit of and be enforceable by Executive’s legal representatives.

 

22.         Choice of Law. This Agreement will be governed by and construed and
enforced in accordance with the laws of the State of Delaware without giving
effect to the conflict of laws principles thereof.

 

23.         Amendment and Waiver. The provisions of this Agreement may be
amended or terminated only with the prior written consent of the Company (as
approved by the Board) and Executive and as memorialized in a writing
specifically referencing the provisions being so amended or terminated. Any
waiver of any provision of this Agreement shall be effective only if in writing,
specifically referencing the provision being waived and signed by the person
against whom enforcement of the waiver is being sought (which in the case of the
Company shall require approval of the Board), and no course of conduct or course
of dealing or failure or delay by any party hereto in enforcing or exercising
any of the provisions of this Agreement (including, without limitation, the
Company’s right to terminate the Employment Period for Cause or Executive’s
right to terminate it for Good Reason) shall affect the validity, binding effect
or enforceability of this Agreement or be deemed to be an implied waiver of any
provision of this Agreement.

 

24.         Dispute Resolution. All disputes relating to this Agreement,
including its enforceability, other than with respect to Sections 5 through 7
hereof, shall be resolved by final and binding arbitration before an arbitrator
appointed by the Judicial Arbitration and Mediation Service (JAMS), with the
arbitration to be held in Fairfax County, Virginia. Judgment upon the award may
be entered in any court having jurisdiction thereof. The foregoing procedures
shall also determine any reference to any term used herein that is utilized in
any plan, program or grant.

 

 - 14 - 

 

 

25.         Indemnification and Liability Insurance. The Company hereby agree to
indemnify Executive and hold Executive harmless, to the maximum extent permitted
by law, against and in respect of any and all actions, suits, proceedings,
claims, demands, judgments, costs, expenses (including reasonable attorney’s
fees), losses, and damages (collectively, “Claims and Expenses”) resulting from
Executive’s good faith performance of Executive’s duties and obligations as an
officer or director of the Company, any Subsidiary or as a fiduciary of any
benefit plan of any of the foregoing or in any other role any of them request
Executive to serve; provided, that Executive shall not be entitled to
indemnification hereunder against Claims and Expenses that are finally
determined by a court of competent jurisdiction to have resulted from
Executive’s fraud or willful misconduct. The Company shall cover Executive under
directors’ and officers’ liability insurance both during and, while potential
liability exists, after the term of this Agreement in the same amount and to the
same extent as the Company covers its other officers and directors. The
obligations under this Section 25 shall survive the termination of Executive’s
employment with the Company.

 

[Signature Page Follows]

 

 - 15 - 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Executive Employment
Agreement as of the date first written above.

  

      STG GROUP, INC.       By: /s/ Cheryl D. Garrison   Name: Cheryl D.
Garrison   Title: Chief People Officer       EXECUTIVE       /s/ Phillip E.
Lacombe   Phillip E. Lacombe

 

 - 16 - 

 

 

EXHIBIT A

STG GROUP, INC.

 

NOTICE OF STOCK OPTION AWARD

 

Grantee’s Name and Address: Phillip E. Lacombe       8700 Cathedral Forest Dr.  
    Fairfax Station, VA 22039

 

You (the “Grantee”) have been granted an option to purchase shares of Common
Stock, subject to the terms and conditions of this Notice of Stock Option Award
(the “Notice”) and the Stock Option Award Agreement (the “Option Agreement”)
attached hereto, as follows. The award will not be issued under the Global
Defense & National Security Systems, Inc. 2015 Omnibus Incentive Plan, as
amended from time to time (the “Plan”), but will be subject to the Plan’s terms
and conditions, which are incorporated herein and will be incorporated into such
award by reference, as if such award were granted under the Plan. Unless
otherwise defined herein, the terms defined in the Plan or the Option Agreement
shall have the same defined meanings in this Notice.

 

Date of Award: [September ___, 2016]     Exercise Price per Share: $[Greater of
(1) Fair Market Value on Date of  Award and (2) $3.00]     Total Number of
Shares Subject to the Option (the “Shares”): 250,000     Type of Option:
Non-Qualified Stock Option     Expiration Date: [September ___, 2026]    
Post-Termination Exercise Period: Three (3) Months

 

Vesting Schedule:

 

Subject to the limitations set forth in this Notice, the Plan and the Option
Agreement, and except as otherwise provided in the Executive Employment
Agreement by and between the Grantee and the Company, effective as of [September
___, 2016] (the “Executive Employment Agreement”), the Option shall vest and
become exercisable, in whole or in part, in accordance with the following
schedule:

 

Date of Vesting:1 Percentage of Award Vested:         Date of Award 25 %      
[March ___, 2017] 50 %       [September ___, 2017] 75 %       [March ___, 2018]
100 %

 

 

1 Based off employment start date.

 

 

 

 

provided, that if the Grantee’s Continuous Service is terminated without Cause
by the Company or for Good Reason by the Grantee, (1) if such termination occurs
within six (6) months of the Effective Date (as defined in the Executive
Employment Agreement), there shall be no accelerated vesting of any portion of
the Option, (2) if such termination occurs between the six (6) month and twelve
(12) month anniversary of the Effective Date, 50% of the unvested portion of the
Option shall accelerate and vest immediately upon such termination, and (3) if
such termination occurs on or after the first anniversary of the Effective Date,
the Option shall accelerate and vest in full.

 

In all other cases, vesting shall cease and any unvested portion of the Option
shall be immediately forfeited upon termination of the Grantee’s Continuous
Service.

 

IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and
agree that the Option is to be governed by the terms and conditions of this
Notice, the Plan, the Option Agreement and the Executive Employment Agreement.

 

  STG Group, Inc.         By:           Title:  

 

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST AND BECOME EXERCISABLE, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE’S
CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING GRANTED THE OPTION OR ACQUIRING
SHARES HEREUNDER).

 

The Grantee acknowledges receipt of a copy of the Plan and the Option Agreement,
and represents that he or she is familiar with the terms and provisions thereof,
and hereby accepts the Option subject to all of the terms and provisions hereof
and thereof. The Grantee has reviewed this Notice, the Plan, and the Option
Agreement in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Notice, and fully understands all provisions of
this Notice, the Plan and the Option Agreement. The Grantee hereby agrees that
all questions of interpretation and administration relating to this Notice, the
Plan and the Option Agreement shall be resolved by the Administrator in
accordance with Section 13 of the Option Agreement. The Grantee further agrees
to the venue selection and waiver of a jury trial in accordance with Section 14
of the Option Agreement. The Grantee further agrees to notify the Company upon
any change in the residence address indicated in this Notice.

 

Dated:     Signed:           Grantee

 

 2 

 

 

STG GROUP, INC.

 

STOCK OPTION AWARD AGREEMENT

 

1.          Grant of Option. STG Group, Inc., a Delaware corporation (the
“Company”), hereby grants to the Grantee (the “Grantee”) named in the Notice of
Stock Option Award (the “Notice”), an option (the “Option”) to purchase the
Total Number of Shares of Common Stock subject to the Option (the “Shares”) set
forth in the Notice, at the Exercise Price per Share set forth in the Notice
(the “Exercise Price”) subject to the terms and provisions of the Notice, this
Stock Option Award Agreement (the “Option Agreement”), and the provisions of the
Executive Employment Agreement by and between the Grantee and the Company,
effective as of [September ___, 2016] (the “Executive Employment Agreement”)
that pertain to this Option, which are incorporated herein by reference. This
Option is not issued under the Global Defense & National Security Systems, Inc.
2015 Omnibus Incentive Plan, as amended from time to time (the “Plan”), but is
subject to the Plan’s terms and conditions, which are incorporated herein by
reference, as if this Option were granted under the Plan. Unless otherwise
defined herein, the terms defined in the Plan shall have the same defined
meanings in this Option Agreement.

 

2.          Exercise of Option.

 

(a)          Right to Exercise. The Option shall be exercisable during its term
in accordance with the Vesting Schedule set out in the Notice and with the
applicable provisions of the Plan and this Option Agreement. The Option shall be
subject to the provisions of Section 11 of the Plan relating to the
exercisability or termination of the Option in the event of a Corporate
Transaction or Change in Control. The Grantee shall be subject to reasonable
limitations on the number of requested exercises during any monthly or weekly
period as determined by the Administrator. In no event shall the Company issue
fractional Shares.

 

(b)          Method of Exercise. The Option shall be exercisable by delivery of
an exercise notice (a form of which is attached as Exhibit A) or by such other
procedure as specified from time to time by the Administrator which shall state
the election to exercise the Option, the whole number of Shares in respect of
which the Option is being exercised, and such other provisions as may be
required by the Administrator. The exercise notice shall be delivered in person,
by certified mail, or by such other method (including electronic transmission)
as determined from time to time by the Administrator to the Company accompanied
by payment of the Exercise Price. The Option shall be deemed to be exercised
upon the date set forth in paragraph 1 of the Exercise Notice.

 

(c)          Taxes. The Grantee shall be responsible for payment of all taxes
relating to the exercise of the Option and the receipt and disposition of
related Shares. The Grantee shall be responsible for making arrangements
acceptable to the Administrator for the satisfaction of such tax withholding
obligations; provided, however, that the Company may require that any tax
withholding obligation arising as a result of the exercise of the Option be
satisfied through the withholding by the Company of a number of Shares having a
Fair Market Value equal to the minimum statutory withholding obligation (based
on minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes) that could be imposed on the transaction and, in any
case, which would not result in additional accounting expense to the Company.

 

 1 

 

 

3.          Notice of Exercise and Method of Payment. Notwithstanding anything
herein or elsewhere to the contrary, the Grantee’s right to exercise the Option
shall be conditioned upon the Grantee’s provision of advance written notice to
the Company of the Grantee’s desire to exercise the Option and the Company’s and
the Grantee’s agreement as to the method of payment of the exercise price and
satisfaction of any tax withholding obligations resulting from the exercise. The
advance written notice of exercise shall be provided by delivery to the Company
of the Exercise Notice set forth in Exhibit A at least ten (10) business days
before the date the Grantee intends to exercise all or any portion of the
Option. Payment of the Exercise Price shall be made by any of the following, or
a combination thereof, at the election of the Grantee and subject to the last
paragraph of this Section 3 and, with respect to subsection (d), subject to the
prior consent of the Company; provided, however, that such exercise method does
not then violate any Applicable Law:

 

(a)          cash;

 

(b)          check;

 

(c)          surrender of Shares held for the requisite period, if any,
necessary to avoid a charge to the Company’s earnings for financial reporting
purposes, or delivery of a properly executed form of attestation of ownership of
Shares as the Administrator may require which have a Fair Market Value on the
date of surrender or attestation equal to the aggregate Exercise Price of the
Shares as to which the Option is being exercised;

 

(d)          with the prior consent of the Company, payment through a “net
exercise” such that, without the payment of any funds, the Grantee may exercise
the Option and receive the net number of Shares equal to (i) the number of
Shares as to which the Option is being exercised, multiplied by (ii) a fraction,
the numerator of which is the Fair Market Value per Share (on such date as is
determined by the Administrator) less the Exercise Price per Share, and the
denominator of which is such Fair Market Value per Share (the number of net
Shares to be received shall be rounded down to the nearest whole number of
Shares); or

 

(e)          with the prior consent of the Company, payment through a
broker-dealer sale and remittance procedure pursuant to which the Grantee (i)
shall provide written instructions to a Company-designated brokerage firm to
effect the immediate sale of some or all of the purchased Shares and remit to
the Company sufficient funds to cover the aggregate exercise price payable for
the purchased Shares and (ii) shall provide written directives to the Company to
deliver the certificates for the purchased Shares directly to such brokerage
firm in order to complete the sale transaction.

 

Notwithstanding any other provision of this Section 3, the Company may require
that payment of the Exercise Price be made only pursuant to Section 3(d) above.

 

 2 

 

 

4.          Restrictions on Exercise. The Option may not be exercised (i) if the
issuance of the Shares subject to the Option upon such exercise would constitute
a violation of any Applicable Laws or (ii) prior to the date a Form S-8
registration statement covering the Shares underlying the Option shall have been
filed and become effective. If the exercise of the Option within the applicable
time periods set forth in Section 5, 6 and 7 of this Option Agreement is
prevented by the provisions of this Section 4, the Option shall remain
exercisable until one (1) month after the date the Grantee is notified by the
Company that the Option is exercisable, but in any event no later than the
Expiration Date set forth in the Notice.

 

5.          Termination or Change of Continuous Service. In the event the
Grantee’s Continuous Service terminates, other than for Cause, the Grantee may,
but only during the Post-Termination Exercise Period, exercise the portion of
the Option that was vested at the date of such termination (the “Termination
Date”). The Post-Termination Exercise Period shall commence on the Termination
Date. In the event of termination of the Grantee’s Continuous Service for Cause,
the Grantee’s right to exercise any vested portion of the Option shall, except
as otherwise determined by the Administrator, terminate concurrently with the
termination of the Grantee’s Continuous Service (also the “Termination Date”).
In no event, however, shall the Option be exercised later than the Expiration
Date set forth in the Notice. In the event of the Grantee’s change in status
from Employee, Director or Consultant to any other status of Employee, Director
or Consultant, the Option shall remain in effect and the Option shall continue
to vest in accordance with the Vesting Schedule set forth in the Notice;
provided, however, that with respect to any Incentive Stock Option that shall
remain in effect after a change in status from Employee to Director or
Consultant, such Incentive Stock Option shall cease to be treated as an
Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on
the day three (3) months and one (1) day following such change in status. Except
as provided in Sections 6 and 7 below, to the extent that the Option was
unvested on the Termination Date, or if the Grantee does not exercise the vested
portion of the Option within the Post-Termination Exercise Period, the Option
shall terminate.

 

      For purposes of this Award, the term “Cause” has the meaning set forth in
the Executive Employment Agreement.

 

      For purposes of this Award, “Good Reason” has the meaning set forth in the
Executive Employment Agreement.

 

6.          Disability of Grantee. In the event the Grantee’s Continuous Service
terminates as a result of his or her Disability, the Grantee may, but only
within twelve (12) months commencing on the Termination Date (but in no event
later than the Expiration Date), exercise the portion of the Option that was
vested on the Termination Date. To the extent that the Option was unvested on
the Termination Date, or if the Grantee does not exercise the vested portion of
the Option within the time specified herein, the Option shall terminate.

 

7.          Death of Grantee. In the event of the termination of the Grantee’s
Continuous Service as a result of his or her death, or in the event of the
Grantee’s death during the Post-Termination Exercise Period or during the
twelve (12) month period following the Grantee’s termination of Continuous
Service as a result of his or her Disability, the person who acquired the right
to exercise the Option pursuant to Section 8 may exercise the portion of the
Option that was vested at the date of termination within twelve (12) months
commencing on the date of death (but in no event later than the Expiration
Date). To the extent that the Option was unvested on the date of death, or if
the vested portion of the Option is not exercised within the time specified
herein, the Option shall terminate.

 

 3 

 

 

8.          Transferability of Option. The Option may not be transferred in any
manner other than by will or by the laws of descent and distribution, provided,
however, that the Option may be transferred during the lifetime of the Grantee
to the extent and in the manner authorized by the Administrator. Notwithstanding
the foregoing, the Grantee may designate one or more beneficiaries of the
Grantee’s Option in the event of the Grantee’s death on a beneficiary
designation form provided by the Administrator. Following the death of the
Grantee, the Option, to the extent provided in Section 7, may be exercised
(a) by the person or persons designated under the deceased Grantee’s beneficiary
designation or (b) in the absence of an effectively designated beneficiary, by
the Grantee’s legal representative or by any person empowered to do so under the
deceased Grantee’s will or under the then applicable laws of descent and
distribution. The terms of the Option shall be binding upon the executors,
administrators, heirs, successors and transferees of the Grantee.

 

9.          Term of Option. The Option must be exercised no later than the
Expiration Date set forth in the Notice or such earlier date as otherwise
provided herein. After the Expiration Date or such earlier date, the Option
shall be of no further force or effect and may not be exercised.

 

10.         Tax Consequences. The Grantee may incur tax liability as a result of
the Grantee’s purchase or disposition of the Shares. THE GRANTEE SHOULD CONSULT
A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

 

11.         Entire Agreement: Governing Law. The Notice, the Plan, this Option
Agreement, and the provisions in the Executive Employment Agreement that pertain
to this Option constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee’s interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan and this Option Agreement (except as expressly provided therein) is
intended to confer any rights or remedies on any persons other than the parties.
The Notice, the Plan and this Option Agreement are to be construed in accordance
with and governed by the internal laws of the State of Delaware without giving
effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the internal laws of the State of Delaware to the
rights and duties of the parties. Should any provision of the Notice, the Plan
or this Option Agreement be determined to be illegal or unenforceable, such
provision shall be enforced to the fullest extent allowed by law and the other
provisions shall nevertheless remain effective and shall remain enforceable.

 

12.         Construction. The captions used in the Notice and this Option
Agreement are inserted for convenience and shall not be deemed a part of the
Option for construction or interpretation. Except when otherwise indicated by
the context, the singular shall include the plural and the plural shall include
the singular. Use of the term “or” is not intended to be exclusive, unless the
context clearly requires otherwise.

 

 4 

 

 

13.         Administration and Interpretation. Any question or dispute regarding
the administration or interpretation of the Notice, the Plan or this Option
Agreement shall be submitted by the Grantee or by the Company to the
Administrator. The resolution of such question or dispute by the Administrator
shall be final and binding on all persons.

 

14.         Venue and Waiver of Jury Trial. The Company, the Grantee, and the
Grantee’s assignees pursuant to Section 8 (the “parties”) agree that any suit,
action, or proceeding arising out of or relating to the Notice, the Plan or this
Option Agreement shall be brought in the United States District Court for
Delaware (or should such court lack jurisdiction to hear such action, suit or
proceeding, in a Delaware state court) and that the parties shall submit to the
jurisdiction of such court. The parties irrevocably waive, to the fullest extent
permitted by law, any objection the party may have to the laying of venue for
any such suit, action or proceeding brought in such court. THE PARTIES ALSO
EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH
SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 14
shall for any reason be held invalid or unenforceable, it is the specific intent
of the parties that such provisions shall be modified to the minimum extent
necessary to make it or its application valid and enforceable.

 

15.         Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery, upon
deposit for delivery by an internationally recognized express mail courier
service or upon deposit in the United States mail by certified mail (if the
parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown in these instruments, or to such
other address as such party may designate in writing from time to time to the
other party.

 

END OF AGREEMENT

 

 5 

 

 

EXHIBIT A

 

EXERCISE NOTICE

 

[COMPANY

ADDRESS]

Attention: Secretary

 

1.          Exercise of Option. Effective as of ______________, ___2 the
undersigned (the “Grantee”) hereby elects to exercise the Grantee’s option to
purchase ___________ shares of the Common Stock (the “Shares”) of STG Group,
Inc. (the “Company”) under and pursuant to the Stock Option Award Agreement (the
“Option Agreement”) and Notice of Stock Option Award (the “Notice”) dated
______________, ________. This award is not issued under the Global Defense &
National Security Systems, Inc. 2015 Omnibus Incentive Plan, as amended from
time to time (the “Plan”), but is subject to the Plan’s terms and conditions,
which are incorporated herein by reference, as if such award were granted under
the Plan. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Exercise Notice.

 

2.          Representations of the Grantee. The Grantee acknowledges that the
Grantee has received, read and understood the Notice, the Plan and the Option
Agreement and agrees to abide by and be bound by their terms and conditions.

 

3.          Rights as Stockholder. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 10 of the Plan.

 

4.          Payment. The Grantee hereby agrees to deliver to the Company the
full Exercise Price for the Shares in accordance with Section 3 of the Option
Agreement or to make arrangements acceptable to the Company to satisfy such
obligations prior to the date of exercise.

 

5.          Tax Consultation. The Grantee understands that the Grantee may
suffer adverse tax consequences as a result of the Grantee’s purchase or
disposition of the Shares. The Grantee represents that the Grantee has consulted
with any tax consultants the Grantee deems advisable in connection with the
purchase or disposition of the Shares and that the Grantee is not relying on the
Company for any tax advice.

 

 

2 Must be at least ten (10) business days after date this Exercise Notice is
delivered to the Company.

 

 1 

 

 

6.          Taxes. The Grantee agrees to satisfy all applicable foreign,
federal, state and local income and employment tax withholding obligations and
herewith delivers to the Company the full amount of such obligations or has made
arrangements acceptable to the Company to satisfy such obligations. In the case
of an Incentive Stock Option, the Grantee also agrees, as partial consideration
for the designation of the Option as an Incentive Stock Option, to notify the
Company in writing within thirty (30) days of any disposition of any shares
acquired by exercise of the Option if such disposition occurs within two (2)
years from the Date of Award or within one (1) year from the date the Shares
were transferred to the Grantee.

 

7.          Successors and Assigns. The Company may assign any of its rights
under this Exercise Notice to single or multiple assignees, and this agreement
shall inure to the benefit of the successors and assigns of the Company. This
Exercise Notice shall be binding upon the Grantee and his or her heirs,
executors, administrators, successors and assigns.

 

8.          Construction. The captions used in this Exercise Notice are inserted
for convenience and shall not be deemed a part of this agreement for
construction or interpretation. Except when otherwise indicated by the context,
the singular shall include the plural and the plural shall include the singular.
Use of the term “or” is not intended to be exclusive, unless the context clearly
requires otherwise.

 

9.          Administration and Interpretation. The Grantee hereby agrees that
any question or dispute regarding the administration or interpretation of this
Exercise Notice shall be submitted by the Grantee or by the Company to the
Administrator. The resolution of such question or dispute by the Administrator
shall be final and binding on all persons.

 

10.         Governing Law; Severability. This Exercise Notice is to be construed
in accordance with and governed by the internal laws of the State of Delaware
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
Delaware to the rights and duties of the parties. Should any provision of this
Exercise Notice be determined by a court of law to be illegal or unenforceable,
such provision shall be enforced to the fullest extent allowed by law and the
other provisions shall nevertheless remain effective and shall remain
enforceable.

 

11.         Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery, upon
deposit for delivery by an internationally recognized express mail courier
service or upon deposit in the United States mail by certified mail (if the
parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown below beneath its signature, or to
such other address as such party may designate in writing from time to time to
the other party.

 

12.         Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this agreement.

 

 2 

 

 

13.         Entire Agreement. The Notice, the Plan and the Option Agreement are
incorporated herein by reference and together with this Exercise Notice
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee’s interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan, the Option Agreement and this Exercise Notice (except as expressly
provided therein) is intended to confer any rights or remedies on any persons
other than the parties.

 

Submitted by:     Accepted by:         GRANTEE:     STG Group, Inc.:            
By:  
                                                                                           
            Title:
                                                                                          
(Signature)               Address:     Address:         8700 Cathedral Forest
Dr.     11091 Sunset Hills Road, Suite 200 Fairfax Station, VA 22039     Reston,
Virginia 20190

 

 3 

 

 

EXHIBIT B

 

STG GROUP, INC.
(FORMERLY GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.)

 

2015 Omnibus INCENTIVE PLAN

 

Grantee’s Name and Address: Phillip E. Lacombe       8700 Cathedral Forest Dr.  
    Fairfax Station, VA 22039

 

The Compensation Committee of STG Group, Inc. (the “Company”) has authorized the
granting of an option to purchase shares of Common Stock on a [date to be on or
about September ___, 2017 to be determined by the Compensation Committee]. The
option described in this letter will be awarded to you subject only to your
continued employment by the Company on the date of grant. The award will be
subject to the Global Defense & National Security Systems, Inc. 2015 Omnibus
Incentive Plan, as amended from time to time (the “Plan”), the terms and
conditions of this letter (the “Letter”), and the Stock Option Award Agreement
(“Option Agreement”) attached hereto. Other than the terms set forth below, the
terms of the Option will be the same as the terms in the Stock Option Award you
were provided today by the Company (your “Initial Option Agreement”). Unless
otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Letter.

 

Date of Grant: On or about [September ___], 2017, on a date to be determined by
the Compensation Committee     Exercise Price per Share: [Fair Market Value on
Date of Grant]     Total Number of Shares Subject   to the Option (the
“Shares”): 250,000     Type of Option: Non-Qualified Stock Option     Expiration
Date: 10 years after date of award     Post-Termination Exercise Period: Three
(3) Months

 

Vesting Schedule:

 

Subject to the limitations set forth in this Letter, the Plan and the Initial
Option Agreement, the Option shall vest and become exercisable, in whole or in
part, in accordance with the following schedule:

 

Date of Vesting:  Percentage of Award Vested:        Date of Award   25%       
6 Months after Award   50%        1st Anniversary of Award   75%        18
Months after Award   100%

 

 

 

 

provided, that if your Continuous Service is terminated without Cause by the
Company or for Good Reason by you, if such termination occurs after the first
anniversary of the Effective Date (as defined in the Employment Agreement) but
prior to the second anniversary thereof, 50% of the unvested portion of the
Option shall accelerate and vest immediately upon such termination.

 

  STG Group, Inc.         By:           Title:  

 

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST AND BECOME EXERCISABLE, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE’S
CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING GRANTED THE OPTION OR ACQUIRING
SHARES HEREUNDER).

 

The Grantee acknowledges receipt of a copy of the Plan and the Option Agreement,
and represents that he or she is familiar with the terms and provisions thereof,
and hereby accepts the Option subject to all of the terms and provisions hereof
and thereof. The Grantee has reviewed this Notice, the Plan, and the Option
Agreement in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Notice, and fully understands all provisions of
this Notice, the Plan and the Option Agreement. The Grantee hereby agrees that
all questions of interpretation and administration relating to this Notice, the
Plan and the Option Agreement shall be resolved by the Administrator in
accordance with Section 13 of the Option Agreement. The Grantee further agrees
to the venue selection and waiver of a jury trial in accordance with Section 14
of the Option Agreement. The Grantee further agrees to notify the Company upon
any change in the residence address indicated in this Notice.

 

Dated:   Signed:           Grantee

 

 2 

 

 

STG GROUP, INC.
(FORMERLY GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.)

 

2015 Omnibus INCENTIVE PLAN

 

STOCK OPTION AWARD AGREEMENT

 

1.          Grant of Option. STG Group, Inc., a Delaware corporation (the
“Company”), hereby grants to the Grantee (the “Grantee”) named in the Notice of
Stock Option Award (the “Notice”), an option (the “Option”) to purchase the
Total Number of Shares of Common Stock subject to the Option (the “Shares”) set
forth in the Notice, at the Exercise Price per Share set forth in the Notice
(the “Exercise Price”) subject to the terms and provisions of the Notice, this
Stock Option Award Agreement (the “Option Agreement”), the Global Defense &
National Security Systems, Inc. 2015 Omnibus Incentive Plan, as amended from
time to time (the “Plan”) and the provisions of the Executive Employment
Agreement by and between the Grantee and the Company, effective as of [September
___, 2016] (the “Executive Employment Agreement”) that pertain to this Option,
which are incorporated herein by reference. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings in this Option
Agreement.

 

2.           Exercise of Option.

 

(a)          Right to Exercise. The Option shall be exercisable during its term
in accordance with the Vesting Schedule set out in the Notice and with the
applicable provisions of the Plan and this Option Agreement. The Option shall be
subject to the provisions of Section 11 of the Plan relating to the
exercisability or termination of the Option in the event of a Corporate
Transaction or Change in Control. The Grantee shall be subject to reasonable
limitations on the number of requested exercises during any monthly or weekly
period as determined by the Administrator. In no event shall the Company issue
fractional Shares.

 

(b)          Method of Exercise. The Option shall be exercisable by delivery of
an exercise notice (a form of which is attached as Exhibit A) or by such other
procedure as specified from time to time by the Administrator which shall state
the election to exercise the Option, the whole number of Shares in respect of
which the Option is being exercised, and such other provisions as may be
required by the Administrator. The exercise notice shall be delivered in person,
by certified mail, or by such other method (including electronic transmission)
as determined from time to time by the Administrator to the Company accompanied
by payment of the Exercise Price. The Option shall be deemed to be exercised
upon the date set forth in paragraph 1 of the Exercise Notice.

 

(c)          Taxes. The Grantee shall be responsible for payment of all taxes
relating to the exercise of the Option and the receipt and disposition of
related Shares. The Grantee shall be responsible for making arrangements
acceptable to the Administrator for the satisfaction of such tax withholding
obligations; provided, however, that the Company may require that any tax
withholding obligation arising as a result of the exercise of the Option be
satisfied through the withholding by the Company of a number of Shares having a
Fair Market Value equal to the minimum statutory withholding obligation (based
on minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes) that could be imposed on the transaction and, in any
case, which would not result in additional accounting expense to the Company.

 

 1 

 

 

3.          Notice of Exercise and Method of Payment. Notwithstanding anything
herein or elsewhere to the contrary, the Grantee’s right to exercise the Option
shall be conditioned upon the Grantee’s provision of advance written notice to
the Company of the Grantee’s desire to exercise the Option and the Company’s and
the Grantee’s agreement as to the method of payment of the exercise price and
satisfaction of any tax withholding obligations resulting from the exercise. The
advance written notice of exercise shall be provided by delivery to the Company
of the Exercise Notice set forth in Exhibit A at least ten (10) business days
before the date the Grantee intends to exercise all or any portion of the
Option. Payment of the Exercise Price shall be made by any of the following, or
a combination thereof, at the election of the Grantee and subject to the last
paragraph of this Section 3 and, with respect to subsection (d), subject to the
prior consent of the Company; provided, however, that such exercise method does
not then violate any Applicable Law:

 

(a)          cash;

 

(b)          check;

 

(c)          surrender of Shares held for the requisite period, if any,
necessary to avoid a charge to the Company’s earnings for financial reporting
purposes, or delivery of a properly executed form of attestation of ownership of
Shares as the Administrator may require which have a Fair Market Value on the
date of surrender or attestation equal to the aggregate Exercise Price of the
Shares as to which the Option is being exercised;

 

(d)          with the prior consent of the Company, payment through a “net
exercise” such that, without the payment of any funds, the Grantee may exercise
the Option and receive the net number of Shares equal to (i) the number of
Shares as to which the Option is being exercised, multiplied by (ii) a fraction,
the numerator of which is the Fair Market Value per Share (on such date as is
determined by the Administrator) less the Exercise Price per Share, and the
denominator of which is such Fair Market Value per Share (the number of net
Shares to be received shall be rounded down to the nearest whole number of
Shares); or

 

(e)          with the prior consent of the Company, payment through a
broker-dealer sale and remittance procedure pursuant to which the Grantee (i)
shall provide written instructions to a Company-designated brokerage firm to
effect the immediate sale of some or all of the purchased Shares and remit to
the Company sufficient funds to cover the aggregate exercise price payable for
the purchased Shares and (ii) shall provide written directives to the Company to
deliver the certificates for the purchased Shares directly to such brokerage
firm in order to complete the sale transaction.

 

Notwithstanding any other provision of this Section 3, the Company may require
that payment of the Exercise Price be made only pursuant to Section 3(d) above.

 

 2 

 

 

4.          Restrictions on Exercise. The Option may not be exercised (i) if the
issuance of the Shares subject to the Option upon such exercise would constitute
a violation of any Applicable Laws or (ii) prior to the date a Form S-8
registration statement covering the Shares underlying the Option shall have been
filed and become effective. If the exercise of the Option within the applicable
time periods set forth in Section 5, 6 and 7 of this Option Agreement is
prevented by the provisions of this Section 4, the Option shall remain
exercisable until one (1) month after the date the Grantee is notified by the
Company that the Option is exercisable, but in any event no later than the
Expiration Date set forth in the Notice.

 

5.          Termination or Change of Continuous Service. In the event the
Grantee’s Continuous Service terminates, other than for Cause, the Grantee may,
but only during the Post-Termination Exercise Period, exercise the portion of
the Option that was vested at the date of such termination (the “Termination
Date”). The Post-Termination Exercise Period shall commence on the Termination
Date. In the event of termination of the Grantee’s Continuous Service for Cause,
the Grantee’s right to exercise any vested portion of the Option shall, except
as otherwise determined by the Administrator, terminate concurrently with the
termination of the Grantee’s Continuous Service (also the “Termination Date”).
In no event, however, shall the Option be exercised later than the Expiration
Date set forth in the Notice. In the event of the Grantee’s change in status
from Employee, Director or Consultant to any other status of Employee, Director
or Consultant, the Option shall remain in effect and the Option shall continue
to vest in accordance with the Vesting Schedule set forth in the Notice;
provided, however, that with respect to any Incentive Stock Option that shall
remain in effect after a change in status from Employee to Director or
Consultant, such Incentive Stock Option shall cease to be treated as an
Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on
the day three (3) months and one (1) day following such change in status. Except
as provided in Sections 6 and 7 below, to the extent that the Option was
unvested on the Termination Date, or if the Grantee does not exercise the vested
portion of the Option within the Post-Termination Exercise Period, the Option
shall terminate.

 

      For purposes of this Award, the term “Cause” has the meaning set forth in
the Executive Employment Agreement.

 

      For purposes of this Award, “Good Reason” has the meaning set forth in the
Executive Employment Agreement.

 

6.          Disability of Grantee. In the event the Grantee’s Continuous Service
terminates as a result of his or her Disability, the Grantee may, but only
within twelve (12) months commencing on the Termination Date (but in no event
later than the Expiration Date), exercise the portion of the Option that was
vested on the Termination Date. To the extent that the Option was unvested on
the Termination Date, or if the Grantee does not exercise the vested portion of
the Option within the time specified herein, the Option shall terminate.

 

7.          Death of Grantee. In the event of the termination of the Grantee’s
Continuous Service as a result of his or her death, or in the event of the
Grantee’s death during the Post-Termination Exercise Period or during the
twelve (12) month period following the Grantee’s termination of Continuous
Service as a result of his or her Disability, the person who acquired the right
to exercise the Option pursuant to Section 8 may exercise the portion of the
Option that was vested at the date of termination within twelve (12) months
commencing on the date of death (but in no event later than the Expiration
Date). To the extent that the Option was unvested on the date of death, or if
the vested portion of the Option is not exercised within the time specified
herein, the Option shall terminate.

 

 3 

 

 

8.          Transferability of Option. The Option may not be transferred in any
manner other than by will or by the laws of descent and distribution, provided,
however, that the Option may be transferred during the lifetime of the Grantee
to the extent and in the manner authorized by the Administrator. Notwithstanding
the foregoing, the Grantee may designate one or more beneficiaries of the
Grantee’s Option in the event of the Grantee’s death on a beneficiary
designation form provided by the Administrator. Following the death of the
Grantee, the Option, to the extent provided in Section 7, may be exercised
(a) by the person or persons designated under the deceased Grantee’s beneficiary
designation or (b) in the absence of an effectively designated beneficiary, by
the Grantee’s legal representative or by any person empowered to do so under the
deceased Grantee’s will or under the then applicable laws of descent and
distribution. The terms of the Option shall be binding upon the executors,
administrators, heirs, successors and transferees of the Grantee.

 

9.          Term of Option. The Option must be exercised no later than the
Expiration Date set forth in the Notice or such earlier date as otherwise
provided herein. After the Expiration Date or such earlier date, the Option
shall be of no further force or effect and may not be exercised.

 

10.         Tax Consequences. The Grantee may incur tax liability as a result of
the Grantee’s purchase or disposition of the Shares. THE GRANTEE SHOULD CONSULT
A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

 

11.         Entire Agreement: Governing Law. The Notice, the Plan, this Option
Agreement, and the provisions in the Executive Employment Agreement that pertain
to this Option constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee’s interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan and this Option Agreement (except as expressly provided therein) is
intended to confer any rights or remedies on any persons other than the parties.
The Notice, the Plan and this Option Agreement are to be construed in accordance
with and governed by the internal laws of the State of Delaware without giving
effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the internal laws of the State of Delaware to the
rights and duties of the parties. Should any provision of the Notice, the Plan
or this Option Agreement be determined to be illegal or unenforceable, such
provision shall be enforced to the fullest extent allowed by law and the other
provisions shall nevertheless remain effective and shall remain enforceable.

 

12.         Construction. The captions used in the Notice and this Option
Agreement are inserted for convenience and shall not be deemed a part of the
Option for construction or interpretation. Except when otherwise indicated by
the context, the singular shall include the plural and the plural shall include
the singular. Use of the term “or” is not intended to be exclusive, unless the
context clearly requires otherwise.

 

 4 

 

 

13.         Administration and Interpretation. Any question or dispute regarding
the administration or interpretation of the Notice, the Plan or this Option
Agreement shall be submitted by the Grantee or by the Company to the
Administrator. The resolution of such question or dispute by the Administrator
shall be final and binding on all persons.

 

14.         Venue and Waiver of Jury Trial. The Company, the Grantee, and the
Grantee’s assignees pursuant to Section 8 (the “parties”) agree that any suit,
action, or proceeding arising out of or relating to the Notice, the Plan or this
Option Agreement shall be brought in the United States District Court for
Delaware (or should such court lack jurisdiction to hear such action, suit or
proceeding, in a Delaware state court) and that the parties shall submit to the
jurisdiction of such court. The parties irrevocably waive, to the fullest extent
permitted by law, any objection the party may have to the laying of venue for
any such suit, action or proceeding brought in such court. THE PARTIES ALSO
EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH
SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 14
shall for any reason be held invalid or unenforceable, it is the specific intent
of the parties that such provisions shall be modified to the minimum extent
necessary to make it or its application valid and enforceable.

 

15.         Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery, upon
deposit for delivery by an internationally recognized express mail courier
service or upon deposit in the United States mail by certified mail (if the
parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown in these instruments, or to such
other address as such party may designate in writing from time to time to the
other party.

 

END OF AGREEMENT

 

 5 

 

 

EXHIBIT A

 

GLOBAL DEFENSE & NATIONAL SECURITY SYSTEMS, INC.

 

2015 Omnibus INCENTIVE PLAN

 

EXERCISE NOTICE

 

[COMPANY

ADDRESS]

Attention: Secretary

 

1.          Exercise of Option. Effective as of ______________, ___1 the
undersigned (the “Grantee”) hereby elects to exercise the Grantee’s option to
purchase ___________ shares of the Common Stock (the “Shares”) of STG Group,
Inc. (the “Company”) under and pursuant to the Global Defense & National
Security Systems, Inc. 2015 Omnibus Incentive Plan, as amended from time to time
(the “Plan”) and the Stock Option Award Agreement (the “Option Agreement”) and
Notice of Stock Option Award (the “Notice”) dated ______________, ________.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Exercise Notice.

 

2.          Representations of the Grantee. The Grantee acknowledges that the
Grantee has received, read and understood the Notice, the Plan and the Option
Agreement and agrees to abide by and be bound by their terms and conditions.

 

3.          Rights as Stockholder. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 10 of the Plan.

 

4.          Payment. The Grantee hereby agrees to deliver to the Company the
full Exercise Price for the Shares in accordance with Section 3 of the Option
Agreement or to make arrangements acceptable to the Company to satisfy such
obligations prior to the date of exercise.

 

5.          Tax Consultation. The Grantee understands that the Grantee may
suffer adverse tax consequences as a result of the Grantee’s purchase or
disposition of the Shares. The Grantee represents that the Grantee has consulted
with any tax consultants the Grantee deems advisable in connection with the
purchase or disposition of the Shares and that the Grantee is not relying on the
Company for any tax advice.

 

 

1 Must be at least ten (10) business days after date this Exercise Notice is
delivered to the Company.

 

 1 

 

 

6.          Taxes. The Grantee agrees to satisfy all applicable foreign,
federal, state and local income and employment tax withholding obligations and
herewith delivers to the Company the full amount of such obligations or has made
arrangements acceptable to the Company to satisfy such obligations. In the case
of an Incentive Stock Option, the Grantee also agrees, as partial consideration
for the designation of the Option as an Incentive Stock Option, to notify the
Company in writing within thirty (30) days of any disposition of any shares
acquired by exercise of the Option if such disposition occurs within two (2)
years from the Date of Award or within one (1) year from the date the Shares
were transferred to the Grantee.

 

7.          Successors and Assigns. The Company may assign any of its rights
under this Exercise Notice to single or multiple assignees, and this agreement
shall inure to the benefit of the successors and assigns of the Company. This
Exercise Notice shall be binding upon the Grantee and his or her heirs,
executors, administrators, successors and assigns.

 

8.          Construction. The captions used in this Exercise Notice are inserted
for convenience and shall not be deemed a part of this agreement for
construction or interpretation. Except when otherwise indicated by the context,
the singular shall include the plural and the plural shall include the singular.
Use of the term “or” is not intended to be exclusive, unless the context clearly
requires otherwise.

 

9.          Administration and Interpretation. The Grantee hereby agrees that
any question or dispute regarding the administration or interpretation of this
Exercise Notice shall be submitted by the Grantee or by the Company to the
Administrator. The resolution of such question or dispute by the Administrator
shall be final and binding on all persons.

 

10.         Governing Law; Severability. This Exercise Notice is to be construed
in accordance with and governed by the internal laws of the State of Delaware
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
Delaware to the rights and duties of the parties. Should any provision of this
Exercise Notice be determined by a court of law to be illegal or unenforceable,
such provision shall be enforced to the fullest extent allowed by law and the
other provisions shall nevertheless remain effective and shall remain
enforceable.

 

11.         Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery, upon
deposit for delivery by an internationally recognized express mail courier
service or upon deposit in the United States mail by certified mail (if the
parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown below beneath its signature, or to
such other address as such party may designate in writing from time to time to
the other party.

 

12.         Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this agreement.

 

13.         Entire Agreement. The Notice, the Plan and the Option Agreement are
incorporated herein by reference and together with this Exercise Notice
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee’s interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan, the Option Agreement and this Exercise Notice (except as expressly
provided therein) is intended to confer any rights or remedies on any persons
other than the parties.

 

 2 

 

 

Submitted by:   Accepted by:       GRANTEE:   STG Group, Inc.:           By:    
        Title:   (Signature)           Address:   Address:      

8700 Cathedral Forest Dr.

Fairfax Station, VA 22039

  11091 Sunset Hills Road, Suite 200
Reston, Virginia 20190

 

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