Document:

exv4w15

 

Exhibit 4.15

SMITH & WESSON HOLDING CORPORATION

NON-QUALIFIED STOCK OPTION AGREEMENT

FOR

MICHAEL F. GOLDEN

     1. Grant of Option. Smith & Wesson Holding Corporation, a Nevada corporation (the “Company”)
hereby grants, as of December 6, 2004 (“Date of Grant”), to Michael F. Golden (the “Optionee”) an
option (the “Option”) to purchase up to 500,000 shares of the Company’s Common Stock, $.001 par
value per share (the “Shares”), at an exercise price per share equal to $1.47. The Option shall be
subject to the terms and conditions set forth herein. The Option is a new employee inducement
option and is not being granted pursuant to the Company’s 2004 Incentive Compensation Plan (the
“Plan”). To the extent not provided for herein, the Option, however, shall be construed in
accordance with the Plan. The Option is a nonqualified stock option, and not an Incentive Stock
Option. The Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by
all of the terms and conditions hereof and thereof and all applicable laws and regulations.

     2. Definitions. Unless otherwise provided herein, terms used herein that are defined in the
Plan and not defined herein shall have the meanings attributed to them under the Plan.

     3. Vesting Schedule. Except as otherwise provided in Sections 6 or 12 of this Agreement, or
in the Plan, the Option shall vest in the installments as provided below, which shall be
cumulative. To the extent that the Option has become vested with respect to a percentage of Shares
as provided below, the Option may thereafter be exercised by the Optionee, in whole or in part, at
any time or from time to time prior to the expiration of the Option as provided herein for such
vested Shares. The following table indicates each date (the “Vesting Date”) upon which the Optionee
shall be vested and thereby entitled to exercise the Option with respect to the percentage of
Shares granted as indicated beside the date, provided that the Continuous Service of the Optionee
continues through and on the applicable Vesting Date:

	 	 	 
	Percentage of Shares	 	Vesting Date
	20% of the total number of options
granted.

	 	Each of the first five annual
anniversaries of the Date of Grant,
commencing on December 6, 2005,
such that the Option shall be fully
vested, with respect to all Shares
subject to this grant, on December 6, 2009.

 

 

     Except as otherwise specifically provided herein, there shall be no proportionate or partial
vesting in the periods prior to each Vesting Date, and all vesting shall occur only on the
appropriate Vesting Date. Upon the termination of the Optionee’s Continuous Service with the
Company and its Related Entities, any unvested portion of the Option shall terminate and be null
and void.

     4. Method of Exercise. The vested portion of this Option shall be exercisable in whole or in
part in accordance with the vesting schedule set forth in Section 3 hereof by written notice which
shall state the election to exercise the Option, the number of vested Shares in respect of which
the Option is being exercised, and such other representations and agreements as to the holder’s
investment intent with respect to such Shares as may be required by the Company pursuant to the
provisions of the Plan. Such written notice shall be signed by the Optionee and shall be delivered
in person or by certified mail to the Secretary of the Company. The written notice shall be
accompanied by payment of the exercise price. This Option shall be deemed to be exercised after
both (a) receipt by the Company of such written notice accompanied by the exercise price and (b)
arrangements that are satisfactory to the Committee or the Board in its sole discretion have been
made for Optionee’s payment to the Company of the amount that is necessary to be withheld in
accordance with applicable Federal or state withholding requirements. No Shares will be issued
pursuant to the Option unless and until such issuance and such exercise shall comply with all
relevant provisions of applicable law, including the requirements of any stock exchange upon which
the Shares then may be traded.

     5. Method of Payment. Payment of the exercise price is due in full upon exercise of all or
any part of the Option. The Optionee may elect to make payment of the exercise price in one or
more of the following ways:

               (i) Cash or by check.

               (ii) In the Company’s sole discretion at the time the Option is exercised and provided that at
the time of exercise the Common Stock is publicly traded, pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common
Stock, results in either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company from the sales
proceeds.

               (iii) In the Company’s sole discretion at the time the Option is exercised, delivery by
Optionee of a promissory note in a form satisfactory to the Company, in the amount of the aggregate
exercise price of the exercised Shares together with the execution and delivery by the Optionee of
a security agreement in a form satisfactory to the Company. The promissory note shall bear
interest at a rate at least equal to the “applicable federal rate” prescribed under the Code and
its regulations at time of purchase, and shall be secured by a pledge of the Shares purchased by
the promissory note pursuant to the security agreement. At any time that the Company is
incorporated in Delaware, payment of the Common Stock’s “par value,” as defined in the Delaware
General Corporation Law, shall be made in cash and not by deferred payment. Notwithstanding the
foregoing, payment by promissory note shall not be permitted to the extent such payment would
violate the Sarbanes-Oxley Act of 2002.

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               (iv) Provided that at the time of exercise the Common Stock is publicly traded, by delivery of
already-owned shares of Common Stock either that Optionee has held for the period required to avoid
a charge to the Company’s reported earnings (generally six (6) months) or that Optionee did not
acquire, directly or indirectly from the Company, that are owned free and clear of any liens,
claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of
exercise. “Delivery” for these purposes, in the sole discretion of the Company at the time the
Optionee exercises the Option, shall include delivery to the Company of Optionee’s attestation of
ownership of such shares of Common Stock in a form approved by the Company. Notwithstanding the
foregoing, Optionee may not exercise the Option by tender to the Company of Common Stock to the
extent such tender would violate the provisions of any law, regulation or agreement restricting the
redemption of the Company’s stock.

     6. Termination of Option.

          (a) Any unexercised portion of the Option shall automatically and without notice terminate and
become null and void at the time of the earliest to occur of:

               (i) three months after the date on which the Optionee’s Continuous Service is terminated other
than by reason of (A) Cause, which, solely for purposes of this Agreement, shall mean the
termination of the Optionee’s Continuous Service by reason of the Optionee’s willful misconduct or
gross negligence, (B) a mental or physical disability (within the meaning of Internal Revenue Code
Section 22(e)) of the Optionee as determined by a medical doctor satisfactory to the Committee or
the Board, or (C) the death of the Optionee;

               (ii) immediately upon the termination of the Optionee’s Continuous Service for Cause;

               (iii) twelve months after the date on which the Optionee’s Continuous Service is terminated by
reason of a mental or physical disability (within the meaning of Section 22(e) of the Code) as
determined by a medical doctor satisfactory to the Committee or the Board;

               (iv) twelve months after the date of termination of the Optionee’s Continuous Service by
reason of the death of the Optionee; or

               (v) the tenth anniversary of the Date of Grant.

          (b) To the extent not previously exercised, (i) the Option shall terminate immediately in the
event of (1) the liquidation or dissolution of the Company, or (2) any reorganization, merger,
consolidation or other form of corporate transaction in which the Company does not survive or the
Shares are converted into or exchanged for securities issued by another entity, unless the
successor or acquiring entity, or an affiliate of such successor or acquiring entity, assumes the
Option or substitutes an equivalent option or right pursuant to Section 9(c) of the Plan, and (ii)
the Committee or the Board in its sole discretion may by written notice (“cancellation notice”)
cancel, effective upon the consummation of any corporate transaction described in Subsection
7(b)(i) of the Plan in which the Company does survive, the Option (or portion thereof) that remains
unexercised on such date. The Committee or the Board shall give written notice of any proposed
transaction referred to in this Section 6(b) a reasonable

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period of time prior to the closing date for such transaction (which notice may be given
either before or after approval of such transaction), in order that the Optionee may have a
reasonable period of time prior to the closing date of such transaction within which to exercise
the Option if and to the extent that it then is exercisable (including any portion of the Option
that may become exercisable upon the closing date of such transaction). The Optionee may condition
his exercise of the Option upon the consummation of a transaction referred to in this Section 6(b).

     7. Transferability. The Option granted hereby is not transferable otherwise than by will or
under the applicable laws of descent and distribution, and during the lifetime of the Optionee the
Option shall be exercisable only by the Optionee, or the Optionee’s guardian or legal
representative. In addition, the Option shall not be assigned, negotiated, pledged or hypothecated
in any way (whether by operation of law or otherwise), and the Option shall not be subject to
execution, attachment or similar process. Upon any attempt to transfer, assign, negotiate, pledge
or hypothecate the Option, or in the event of any levy upon the Option by reason of any execution,
attachment or similar process contrary to the provisions hereof, the Option shall immediately
become null and void.

     8. No Rights of Stockholders. Neither the Optionee nor any personal representative (or
beneficiary) shall be, or shall have any of the rights and privileges of, a stockholder of the
Company with respect to any shares of Stock purchasable or issuable upon the exercise of the
Option, in whole or in part, prior to the date of exercise of the Option.

     9. Acceleration of Exercisability of Option. This Option shall become immediately fully
exercisable in the event that, prior to the termination of the Option pursuant to Section 6 hereof,
there is a “Change in Control”, as defined in Section 7(b) of the Plan, that occurs during the
Optionee’s Continuous Service and such “Change in Control” was not approved by the Board of
Directors of the Company.

     10. No Right to Continuous Service. Neither the Option nor this Agreement shall confer upon
the Optionee any right to Continuous Service with the Company.

     11. Law Governing. This Agreement shall be governed in accordance with and governed by the
internal laws of the State of Nevada.

     12. Interpretation / Provisions of Plan Control. This Agreement is subject to all the terms,
conditions and provisions of the Plan, including, without limitation, the amendment provisions
thereof, and to such rules, regulations and interpretations relating to the Plan adopted by the
Committee or the Board as may be in effect from time to time. If and to the extent that this
Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the
Plan shall control, and this Agreement shall be deemed to be modified accordingly. The Optionee
accepts the Option subject to all the terms and provisions of the Plan and this Agreement. The
undersigned Optionee hereby accepts as binding, conclusive and final all decisions or
interpretations of the Committee or the Board upon any questions arising under the Plan and this
Agreement.

     13. Notices. Any notice under this Agreement shall be in writing and shall be deemed to have
been duly given when delivered personally or when deposited in the United

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States mail, registered, postage prepaid, and addressed, in the case of the Company, to the
Company’s President at Smith & Wesson Holding Corporation, 2100 Roosevelt Avenue, Springfield,
Massachusetts 01104, or if the Company should move its principal office, to such principal office,
and, in the case of the Optionee, to the Optionee’s last permanent address as shown on the
Company’s records, subject to the right of either party to designate some other address at any time
hereafter in a notice satisfying the requirements of this Section.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the 6th day
of December, 2004.

	 	 	 	 	 
	 	 	COMPANY:
	 
	 	 	 	 
	 	 	SMITH & WESSON HOLDING CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John A. Kelly
	 

	 	 	 	 
	 

	 	Name:
	 	John A. Kelly
	 

	 	 	 	 
	 

	 	Title:
	 	Chief Financial Officer
	 

	 	 	 	 

     Optionee has received a copy of the Company’s most recent prospectus describing the Plan and a
complete copy of the Plan document. Optionee has reviewed the Plan and this Option in their
entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option,
and fully understands all provisions of the Option.

	 	 	 	 	 	 	 
	Dated:	 	6/02/2005	 	OPTIONEE:
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Michael F. Golden
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Michael F. Golden

5exv10w23

 

Exhibit 10.23

SAF-T-HAMMER CORPORATION

Stock Option Plan

1. Purpose Of Plan.

     (a) General Purpose. The purpose of the SAF-T-HAMMER CORPORATION Stock Option Plan (“Plan”) is
to further the interests of SAF-T-HAMMER CORPORATION, a Nevada corporation (the “Corporation”), and
its subsidiaries (i) by providing an incentive based form of compensation to the directors,
officers, key employees and service providers of the Corporation and of its subsidiaries, (ii) by
alleviating cash payments which would have been made to former employees of the Corporation’s
subsidiary as severance payments and providing shares of the Corporation’s Common Stock issued upon
the exercise of options in lieu of cash, and (iii) by encouraging such persons to invest in shares
of the Corporation’s Common Stock, thereby acquiring a proprietary interest in its business and the
business of its subsidiaries and an increased personal interest in its continued success and
progress.

     (b) Incentive Stock Options. Some one or more of the options granted under the Plan may be
intended to qualify as an “incentive stock option” as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”), and any grant of such an option shall clearly
specify that such option is intended to so qualify. If no such specification is made, an option
granted hereunder shall not be intended to qualify as an “incentive stock option.” The employees
eligible to be considered for the grant of incentive stock options hereunder are any persons
regularly employed by the Corporation in a managerial capacity on a full-time, salaried basis.

2. Stock And Maximum Number Of Shares Subject To Plan.

     (a) Description of Stock and Maximum Shares Allocated. The stock subject to the provisions of
the Plan and issuable upon exercise of options granted under the Plan are shares of the
Corporation’s Common Stock, $.001 par value, which may be either unissued or treasury shares, as
the Corporation’s Board of Directors (the “Board”) may from time to time determine. Subject to
adjustment as provided in Section 7, the aggregate number of shares of Common Stock covered by the
Plan and issuable upon exercise of all options granted hereunder shall be 10,000,000 shares, which
shares shall be reserved for use upon the exercise of options to be granted from time to time.

     (b) Restoration of Unpurchased Shares. If an option expires or terminates for any reason prior
to its exercise in full and before the term of the Plan expires, the shares subject to, but not
issued under such option shall again be available for other options thereafter granted.

3. Administration; Amendments.

     (a) Administration by Committee. The Plan shall be administered by the Board or whenever the
Board has at least two members who are not either employees or officers of the Corporation or of
any parent or subsidiary of the Corporation (“Independent Directors”) by a committee of not less
than two persons who are

 

 

Independent Directors (the “Compensation Committee”), with full power to
administer the Plan, to interpret the Plan and to establish and amend rules and regulations for its
administration.

(The term “Compensation Committee” as used throughout this Plan shall refer to the Board or a
committee of two Independent Directors, whichever is administering the Plan at the time).

     (b) Exercise Price. Upon the grant of any option, the Compensation Committee shall specify the
exercise price for the shares issuable upon exercise of options granted. Upon approval of the
Board, which shall specify which options, if any, may be issued at less than Fair Market Value (as
defined below), an option exercise price per share may be less than 100% of the Fair Market Value
per share of the Corporation’s Common Stock on the date such option is granted. Options issued at
less than Fair Market Value may not be treated as incentive stock options.

     (c) Fair Market Value. The Fair Market Value of a share on any particular day shall be
determined as follows:

(1) If the shares are listed or admitted to trading on any securities exchange, the
fair market value shall be the average sales price on such day on the New York
Stock Exchange, or if the shares have not been listed or admitted to trading on the
New York Stock Exchange, on such other securities exchange on which such stock is
then listed or admitted to trading, or if no sale takes place on such day on any
such exchange, the average of the closing bid and asked price on such day as
officially quoted on any such exchange;

(2) If the shares are not then listed or admitted to trading on any securities
exchange, the fair market value shall be the average sales price on such day or, if
no sale takes place on such day, the average of the reported closing bid and asked
price on such date, in the over-the-counter market as furnished by the National
Association of Securities Dealers Automated Quotation (“NASDAQ”), or if NASDAQ at
the time is not engaged in the business of reporting such prices, as furnished by
any similar firm then engaged in such business and selected by the Board; or

(3) If the shares are not then listed or admitted to trading in the
over-the-counter market, the fair market value shall be the amount determined by
the Board in a manner consistent with Treasury Regulation Section 20-2031-2
promulgated under the Code or in such other manner prescribed by the Secretary of
the Treasury or the Internal Revenue Service.

     (d) Interpretation. The interpretation and construction by the Compensation Committee of the
terms and provisions of this Plan and of the agreements governing options and rights granted under
the Plan shall be final and conclusive. No member of the

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Compensation Committee shall be liable for
any action taken or determination made in good faith.

     (e) Amendments to Plan. The Compensation Committee may, without action on the part of the
stockholders of the Corporation, make such amendments to, changes in and additions to the Plan as
it may, from time to time, deem proper and in the best interests of the Corporation; provided that
the Compensation Committee may not, without consent of the holder, take any action which
disqualifies any option granted under the Plan as an incentive stock option for treatment as such
or which adversely affects or impairs the rights of the holder of any option outstanding under the
Plan.

4. Participants; Duration Of Plan.

     (a) Eligibility and Participation. Options may be granted in the total amount for the period
as allocated by the Board as provided in Section 4(b) below only to persons who at the time of
grant are directors, key employees of, or service providers to the Corporation or others who
qualify under the general purpose of the Plan stated above in Section 1, whether or not such
persons are also members of the Board; provided, however, that no incentive stock option may be
granted to a director of the Corporation unless such person is also an executive employee of the
Corporation.

     (b) Allotment. The Board shall determine the aggregate number of shares of Common Stock which
may be optioned from time to time but the Compensation Committee shall have sole authority to
determine the number of shares and the recipient thereof to be optioned at any time. The
Compensation Committee shall not be required to grant all options allocated by the Board for any
given period if it determines, in its sole and exclusive judgment, that such grant is not in the
best interests of the Corporation. The grant of an option to any person shall neither entitle such
individual to, nor disqualify such individual from, participation in any other grant of options
under the Plan.

     (c) Duration of Plan. The term of the Plan, unless previously terminated by the Board, is ten years or May 14,
2011. No option shall be granted under the Plan unless granted within ten years after the adoption
of the Plan by the Board, but options outstanding on that date shall not be terminated or otherwise
affected by virtue of the Plan’s expiration.

     (d) Approval of Stockholders. If the Board issues any incentive stock options, solely for the
purposes of compliance with the Code provisions pertaining to incentive stock options, the Plan
shall be submitted to the stockholders of the Corporation for their approval at a regular meeting
to be held within twelve months after adoption of the Plan by the Board. Stockholder approval shall
be evidenced by the affirmative vote of the holders of a majority of the shares of Common Stock
present in person or by proxy and voting at the meeting. If the stockholders decline to approve the
Plan at such meeting or if the Plan is not approved by the stockholders within twelve months after
its adoption by the Board, no incentive stock options may be issued under the Plan but all options
granted under the Plan shall remain in full force and effect regardless of Shareholder approval and
the Plan may be used for future nonincentive stock option issuances. If

3

 

shareholders fail to
approve the Plan, all previously issued incentive stock options shall be automatically converted to
nonincentive stock options.

5. Terms And Conditions Of Options And Rights.

     (a) Individual Agreements. Options granted under the Plan shall be evidenced by agreements in
such form as the Board from time to time approves, which agreements shall substantially comply with
and be subject to the terms of the Plan, including the terms and conditions of this Section 5.

     (b) Required Provisions. Each agreement shall state (i) the total number of shares to which it
pertains, (ii) the exercise price for the shares covered by the option, (iii) the time at which the
option becomes exercisable, (iv) the scheduled expiration date of the option, (v) the vesting
period(s) for such options, and (vi) the timing and conditions of issuance of any stock option
exercise.

     (c) Period. No option granted under the Plan shall be exercisable for a period in excess of
ten years from the date of its grant. All options granted shall be subject to earlier termination
in the event of termination of employment, retirement or death of the holder as provided in Section
6 or as otherwise set forth in the agreement granting the option. Unless otherwise provided in the
agreement granting the Stock Option itself, an option may be exercised in full or in part at any
time or from time to time during the term thereof, or provide for its exercise in stated
installments at stated times during such term.

     (d) No Fractional Shares. Options shall be granted and exercisable only for whole shares; no
fractional shares will be issuable upon exercise of any option granted under the Plan.

     (e) Method of Exercising Option. The method for exercising options granted to former employees
of the Corporation or of its subsidiaries shall be set forth in the agreement granting the option
itself. All other options shall be exercised by written notice to the Corporation, addressed to the
Corporation at its principal place of business. Such notice shall state the election to exercise
the option and the number of shares with respect to which it is being exercised, and shall be
signed by the person exercising the option. Such notice shall be accompanied (i) by the certificate
described in Section 8(b) and (ii) by payment in full of the exercise price for the number of
shares being purchased. Payment may be made in cash or by bank cashier’s check, or if required by
the terms of the option itself, by allocating compensation due to the Grantee by the Corporation or
by any of its subsidiaries to the Corporation as payment for the exercise price. In lieu of cash,
if permitted by the option itself, such payment may be made in whole or in part with shares of the
same class of stock as are then subject to the option, delivered in lieu of cash concurrently with
such exercise, the shares so delivered to be valued on the basis of the fair market value of the
stock (determined in a manner specified in the instrument evidencing the option) on the day
preceding the date of exercise. Alternatively, if permitted by the option itself, the Grantee may,
in lieu of using previously outstanding shares therefore, use some of the shares as to which the
option is then being exercised. The Corporation shall deliver a certificate or certificates
representing the option shares to

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the purchaser as soon as practicable after payment for those
shares has been received. If an option is exercised by any person other than the optionholder, such
notice shall be accompanied by appropriate proof of the right of such person to exercise the
option. All shares that are purchased and paid for in full upon the exercise of an option shall be
fully paid and non-assessable.

     (f) No Rights of a Stockholder. An optionholder shall have no rights as a stockholder with
respect to shares covered by an option. No adjustment will be made for dividends with respect to an
option for which the record date is prior to the date a stock certificate is issued upon exercise
of an option. Upon exercise of an option, the holder of the shares of Common Stock so received
shall have all rights of a stockholder of the Corporation as of the date of issuance.

     (g) Compliance with Law. No shares of Corporation Common Stock shall be issued or transferred
upon the exercise of any option unless and until all legal requirements applicable to the issuance
or transfer of such shares have been completed.

     (h) Other Provisions. The option agreements may contain such other provisions as the Board deems necessary to
effectuate the sense and purpose of the Plan, including covenants on the holder’s part not to
compete and remedies to the Corporation in the event of the breach of any such covenant.

6. Termination Of Employment; Assignability; Death.

     (a) Termination of Employment. Except as otherwise set forth in this Section 10(a), if any
optionholder ceases to be a director or employee of the Corporation or of any subsidiary of the
Corporation, or ceases to render services pursuant to a consulting, management or other agreement,
other than for death, disability or discharge for cause, such holder (or successors or transferees)
may, within three months after the date of termination, but in no event after the stated expiration
date, purchase some or all of the shares with respect to which such optionholder was entitled to
exercise such option, on the date such employment, directorship, or consulting relationship
terminated and the option shall thereafter be void for all purposes. Any termination of an
agreement pursuant to which services are rendered to the Corporation or of any subsidiary of the
Corporation by any party who is an optionholder, without a renewal of that agreement or entry into
a similar successor agreement, may be treated as a termination of the employment of the third
party. Notwithstanding the foregoing, the termination of an option issued pursuant to Section
1(a)(ii) shall be governed as expressly set forth in such option.

     (b) Assignability. Options granted under the Plan and the privileges conferred thereby shall
not be assignable or transferable, unless the Compensation Committee provides otherwise. Options
shall be exercisable by such transferee as set forth in this Section 6.

     (c) Disability. If the employment or directorship of the optionholder is terminated due to
disability, the optionholder (or transferee of the optionholder) may exercise the options, in whole
or in part, to the extent they were exercisable on the date

5

 

when the optionholder’s employment or
directorship terminated, at any time prior to the expiration date of the options or within one year
of the date of termination of employment or directorship, whichever is earlier.

     (d) Discharge for Cause. If the employment or directorship of the optionholder with the
Corporation or any of its subsidiaries is terminated due to discharge for cause, the options shall
terminate upon receipt by the optionholder of notice of such termination or the effective date of
the termination, whichever is earlier. Discharge for cause shall include discharge for personal
dishonesty, willful misconduct in performance of duties, failure, impairment or inability to
perform required duties, breach of fiduciary duty or conviction of any felony or crime of moral
turpitude. The Compensation Committee shall have the sole and exclusive right
to determine whether the optionholder has been discharged for cause for purposes of the Plan
and the date of such discharge.

     (e) Death of Holder. If optionholder dies while in the Corporation’s or any of its
subsidiaries’ employ or while rendering consulting services to the Corporation or to any of its
subsidiaries, an option shall be exercisable until the stated expiration date thereof by the person
or persons (“successors”) to whom the holder’s rights pass under will or by the laws of descent and
distribution or by transferees of the optionholders, as the case may be, but only to the extent
that the holder was entitled to exercise the option at the date of death. An option may be
exercised (and payment of the option price made in full) by the successors or transferees only
after written notice to the Corporation, specifying the number of shares to be purchased or rights
to be exercised. Such notice shall comply with the provisions of Section 5(e), and shall be
accompanied by the certificate required by Section 8(b).

7. Certain Adjustments.

     (a) Capital Adjustments. Except as limited by Section 422 of the Code, the aggregate number of
shares of Common Stock subject to the Plan, the number of shares covered by outstanding options,
and the price per share stated in such options shall be proportionately adjusted for any increase
or decrease in the number of outstanding shares of Common Stock of the Corporation resulting from a
subdivision or consolidation of shares or any other capital adjustment or the payment of a stock
dividend or any other increase or decrease in the number of such shares effected without receipt by
the Corporation of consideration therefor in money, services or property.

     (b) Corporate Reorganizations. Upon the dissolution or liquidation of the Corporation, or upon
a reorganization, merger or consolidation of the Corporation as a result of which the outstanding
securities of the class then subject to options hereunder are changed into or exchanged for cash or
property or securities not of the Corporation’s issue, or any combination thereof, or upon a sale
of substantially all of the property of the Corporation to, or the acquisition of stock
representing more than eighty percent (80%) of the voting power of the stock of the Corporation
then outstanding by another corporation or by a group of persons who are required to file a Form
13D under the Securities Exchange Act of 1934 (“34 Act”), the Plan shall terminate, and all options
theretofore granted hereunder shall terminate, unless provision be made in writing in connection
with

6

 

such transaction for the continuance of the Plan or for the assumption of options covering the
stock of a successor employer corporation, or a parent or a subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices, in which event the Plan and options
theretofore granted shall continue in the manner and under the terms so provided. If the Plan and
unexercised options shall terminate pursuant to the foregoing sentence, all persons
entitled to exercise any unexercised portions of options then outstanding shall have the
right, at such time prior to the consummation of the transaction causing such termination as the
Corporation shall designate, to exercise the unexercised portions of their options, including the
portions thereof which would, but for this paragraph entitled “Corporate Reorganizations,” not yet
be exercisable.

8. Delivery Of Stock; Legends, Representations.

     (a) Legend on Certificates. All certificates representing shares of Common Stock issued upon
exercise of options granted under the Plan shall be endorsed with a legend reading as follows:

     The shares of Common Stock evidenced by this certificate have been issued to the
registered owner in reliance upon written representations that these shares have been
purchased solely for investment. These shares may not be sold, transferred or assigned
unless in the opinion of the Corporation and its legal counsel such sale, transfer or
assignment will not be in violation of the Securities Act of 1933, as amended, and the
Rules and Regulations thereunder.

     (b) Private Offering for Investment Only. The options are and shall be made available only to
a limited number of present and future key executives, directors, services providers and key
employees of the Corporation and its subsidiaries who have knowledge of the Corporation’s financial
condition, management and its affairs. The Plan is not intended to provide additional capital for
the Corporation, but to encourage stock ownership among the Corporation’s and its subsidiaries’ key
personnel. By the act of accepting an option, each optionholder agrees (i) that, if he, his
successors, or his transferees exercise his option, he his successors, or his transferees will
purchase the subject shares solely for investment and not with any intention at such time to resell
or redistribute those shares, and (ii) that he, his successors, or his transferees will confirm
such intention by an appropriate certificate at the time the option is exercised. However, the
neglect or failure to execute such a certificate shall not limit or negate the foregoing agreement.

9. Compliance With Legal Requirements.

     (a) For Investment Only. If, at the time of exercise of this option, there is not in effect as
to the Option Shares being purchased a registration statement under the Securities Act of 1933, as
amended (or any successor statute) (collectively, the “1933 Act”), then the exercise of this option
shall be effective only upon receipt by the Corporation from the key employee or service provider
(or his legal representatives or heirs) of a written representation that the option shares are
being purchased for investment and not for distribution.

7

 

     (b) Registration Statement Preparation. The key employee or service provider hereby agrees to supply the Corporation with such
information and to cooperate with the Corporation, as the Corporation may reasonably request, in
connection with the preparation and filing of the registration statements and amendments thereto
under the Securities Act of 1933 and applicable state statutes and regulations applicable to the
option shares. The Corporation shall not be liable for failure to issue any such option shares
where such opinion of counsel cannot be obtained within the period specified for the exercise of
the option, or where such registration is required in the opinion of counsel. If shares of Common
Stock of the Corporation are, at the time of the exercise of this option, listed upon a securities
exchange, the exercise of this option shall be contingent upon completion of the necessary steps to
list the option shares being purchased upon such securities exchange.

     (c) Additional Restrictions on Option Exercise. Officers or any other employee or service
providers who are privy to material confidential information of the Corporation as determined by
the Committee may only exercise options during the period commencing three days following the
release for publication of quarterly or annual financial information regarding the Corporation and
ending two weeks prior to the end of the then current fiscal quarter of the Corporation (the
“Release Period”).

     A “release for publication” shall be deemed to be satisfied if the specified financial data
appears:

     (1) On a wire service;

     (2) A financial news service;

     (3) In a newspaper of general circulation; or

     (4) Is otherwise made publicly available.

     Notwithstanding any provision to the contrary contained herein, a key employee or service
provider may exercise options only so long as such exercise does not violate the law or any rule or
regulation adopted by the appropriate governmental authority.

10. Application Of Funds.

     The proceeds received by the Corporation from the sale of Common Stock pursuant to the
exercise of options will be used for general corporate purposes.

11. Withholding Of Taxes.

     The Corporation shall have the right to deduct from any other compensation of the option
holder any federal, state or locate income taxes (including FICA) required by law to be withheld
with respect to the granting or exercise of any options.

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     Dated as of the 31st day of May, 2001.

	 	 	 	 	 
	 	 	SAF-T-HAMMER CORPORATION,
a Nevada corporation
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 

	 	 	 	Mitchell Saltz
	 

	 	 	 	Chief Executive Officer

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