Document:

Exhibit 10.1

            AMERICAN HERITAGE ARMS, INC.

            2008 STOCK INCENTIVE PLAN

            1. Purpose

                  The purpose of the American Heritage Arms, Inc. Stock Incentive Plan is to provide a means by which eligible employees, officers, non-employee directors and other individual service providers may be given an opportunity to benefit from increases in the value of the Common Stock through the grant of Awards. The Company, by means of the Plan,
            seeks to retain the services of such eligible persons and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Subsidiaries.

            2. Definitions

                  Wherever the following capitalized terms are used in the Plan, they shall have the meanings specified below:

            
                	
                             

                        	
                            2.1

                        	
                            “Award” means an award of a Stock Option, Stock Appreciation Right, Restricted Stock Award or Stock Unit Award granted under the Plan.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.2

                        	
                            “Award Agreement” means a written agreement entered into between the Company and a Participant setting forth the terms and conditions of an Award. Each Award Agreement shall be subject to the terms and conditions of the Plan and need not be identical.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.3

                        	
                            “Board” means the Board of Directors of the Company.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.4

                        	
                            “Change in Control” shall have the meaning set forth in Section 10.2 hereof.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.5

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

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.6

                        	
                            “Committee” means the committee of the Board delegated with the authority to administer the Plan, or the full Board, as provided in Section 3 of the Plan.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.7

                        	
                            “Common Stock” means the Company’s Common Stock, par value $.01 per share.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        

            

             

             

            
                

            

            
                

            

             

            
                	
                             

                        	
                            2.8

                        	
                            “Company” means American Heritage Arms, Inc., a Delaware corporation.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.9

                        	
                            “Date of Grant” means the date on which an Award under the Plan is granted by the Committee, or such later date as the Committee may specify to be the effective date of an Award.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.10

                        	
                            “Disability” means a Participant being considered “disabled” within the meaning of Section 409A of the Code and Treasury Regulation 1.409A-3(i)(4), as well as any successor regulation or interpretation.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.11

                        	
                            “Effective Date” means the date set forth in Section 13.1 hereof.

                        
	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.12

                        	
                            “Eligible Person” means any person who is an employee, officer, director, consultant, advisor or other individual service provider of the Company or any Subsidiary, as determined by the Committee, or any person who is determined by the Committee to be a prospective employee, officer,
                            director, consultant, advisor or other individual service provider of the Company or any Subsidiary.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.13

                        	
                            “Exchange Act” means the Securities Exchange Act of 1934, as amended.

                        

            

             

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.14

                        	
                            “Fair Market Value” of a share of Common Stock shall be determined by the Board in its discretion in a manner consistent with Section 409A of the Code and Treasury Regulation 1.409A-1(b)(5)(iv), as well as any successor regulation or interpretation.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.15

                        	
                            “Incentive Stock Option” means a Stock Option granted under Section 6 hereof that is intended to meet the requirements of section 422 of the Code and the regulations promulgated thereunder.

                        
	
                             

                        	
                             

                        	
                             

                        

            

            
                	
                             

                        	
                            2.16

                        	
                            “Nonqualified Stock Option” means a Stock Option granted under Section 6 hereof that is not an Incentive Stock Option.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.17

                        	
                            “Participant” means any Eligible Person who holds an outstanding Award under the Plan.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        

            

             

             

            
                

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                            2.18

                        	
                            “Person” shall mean any individual, partnership, firm, trust, corporation, limited liability company or other similar entity. When two or more Persons act as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding or disposing of Common Stock, such
                            partnership, limited partnership, syndicate or group shall be deemed a “Person”.

                        
	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.19

                        	
                            “Plan” means this American Heritage Arms, Inc. 2008 Stock Incentive Plan, as may be amended from time to time.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.20

                        	
                            “Restricted Stock Award” means a grant of shares of Common Stock to an Eligible Person under Section 8 hereof that are issued subject to such vesting and transfer restrictions and such other conditions as are set forth in the Plan and the applicable Award Agreement.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.21

                        	
                            “Securities Act” means the Securities Act of 1933, as amended.

                        
	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.22

                        	
                            “Service” means a Participant’s employment or other service relationship with the Company or any Subsidiary.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.23

                        	
                            “Stock Appreciation Right” means a contractual right granted to an Eligible Person under Section 7 hereof entitling such Eligible Person to receive a payment, representing the difference between the base price per share of the right and the Fair Market Value of a share of Common Stock at
                            such time, and subject to such conditions, as are set forth in the Plan and the applicable Award Agreement.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.24

                        	
                            “Stock Option” means a contractual right granted to an Eligible Person under Section 6 hereof to purchase shares of Common Stock at such time and price, and subject to such conditions, as are set forth in the Plan and the applicable Award Agreement.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.25

                        	
                            “Stock Unit Award” means a contractual right granted to an Eligible Person under Section 9 hereof representing notional unit interests equal in value to a share of Common Stock to be paid and distributed at such times, and subject to such conditions, as are set forth in the Plan and the
                            applicable Award Agreement.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            2.26

                        	
                            “Stockholders Agreement” means the Stockholders' Agreement, dated December 11, 2007, among the Company and the stockholders of the Company named therein, as amended from time to time.

                        

            

             

             

            
                

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                            2.27     

                        	
                            “Subsidiary” means an entity (whether or not a corporation) that is wholly or majority owned or controlled, directly or indirectly, by the Company, or any other affiliate of the Company that is so designated, from time to time, by the Committee; provided, however, that with respect to
                            Incentive Stock Options, the term “Subsidiary” shall include only an entity that qualifies under section 424(f) of the Code as a “subsidiary corporation” with respect to the Company.

                        

            

            3. Administration

            Section 3.1      Committee Members. The Plan shall be administered by the Committee. The entire Board may comprise the Committee or the Board may delegate administration of the Plan to a Committee or Committees of one (1) or more members of the Board, and the term
            “Committee” shall apply to any person or persons to whom such authority has been delegated. Furthermore, unless one or more Committees has been appointed by the Board, any reference to the Committee in the Plan shall mean the Board. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the
            administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan.

             

            
                

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            Section 3.2      Committee Authority. The Committee shall have such powers and authority as may be necessary or appropriate for the Committee to carry out its functions as described in the Plan. Subject to the express limitations of the Plan, the Committee shall have authority in its
            discretion to determine the Eligible Persons to whom, and the time or times at which, Awards may be granted, the number of shares, units or other rights subject to each Award, the exercise, base or purchase price of an Award (if any), the time or times at which an Award will become vested, exercisable or payable, the performance criteria, performance goals and other conditions of an Award, the duration of the Award, and all other terms of the Award. Subject to the terms of the Plan,
            the Committee shall have the authority to amend the terms of an Award in any manner that is not inconsistent with the Plan, provided that no such action shall adversely affect the rights of a Participant with respect to an outstanding Award without the Participant’s consent. The Committee shall also have discretionary authority to interpret the Plan, to make all factual determinations under the Plan, and to make all other determinations necessary or advisable for Plan
            administration, including, without limitation, to correct any defect, to supply any omission or to reconcile any inconsistency in the Plan or any Award Agreement hereunder. The Committee may prescribe, amend, and rescind rules and regulations relating to the Plan. The Committee’s determinations under the Plan need not be uniform and may be made by the Committee selectively among Participants and Eligible Persons, whether or not such persons are similarly situated. The
            Committee shall, in its discretion, consider such factors as it deems relevant in making its interpretations, determinations and actions under the Plan including, without limitation, the recommendations or advice of any officer or employee of the Company or such attorneys, consultants, accountants or other advisors as it may select. All interpretations, determinations, and actions by the Committee shall be final, conclusive, and binding upon all
            parties.

            4. Shares Subject to the Plans

            Section 4.1 Share Limitation. Subject to adjustment pursuant to Section 4.2 hereof, the maximum aggregate number of shares of Common Stock which may be issued under all Awards granted to Participants under the Plan shall be 2,424,703 shares. Shares of Common Stock issued under the Plan may be either
            authorized but unissued shares or shares held in the Company’s treasury. Any shares of Common Stock subject to Awards that are settled in Common Stock shall be counted against the maximum share limitations of this Section 4.1 as one share of Common Stock for every share of Common Stock subject thereto, regardless of the number of shares of Common Stock actually issued to settle the Stock Option or Stock Appreciation Right upon exercise. To the extent that any Award under the
            Plan payable in shares of Common Stock is forfeited, cancelled, returned to the Company for failure to satisfy vesting requirements or upon the occurrence of other forfeiture events, or otherwise terminates without payment being made thereunder, the shares of Common Stock covered thereby will no longer be counted against the foregoing maximum share limitations and may again be made subject to Awards under the Plan pursuant to such limitations. No member of the Committee shall
            participate in any Committee actions with respect to the grant of any Award to such Committee member.

             

            
                

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            Section 4.2 Adjustments. If there shall occur any change with respect to the outstanding shares of Common Stock by reason of any recapitalization, reclassification, stock dividend, extraordinary dividend, stock split, reverse stock split, or other distribution with respect to the shares of Common Stock, or any merger,
            reorganization, consolidation, combination, spin-off or other similar corporate change, or any other change affecting the Common Stock, the Committee shall, in the manner and to the extent that it deems appropriate and equitable to the Participants and consistent with the terms of the Plan, cause an adjustment to be made in (i) the maximum numbers and kind of shares provided in Section 4.1 hereof, (ii) the numbers and kind of shares of Common Stock, units, or other rights subject to
            then outstanding Awards, (iii) the price for each share or unit or other right subject to then outstanding Awards, (iv) the performance measures or goals relating to the vesting of an Award and (v) any other terms of an Award that are affected by the event to prevent dilution or enlargement of a Participant’s rights under an Award. Notwithstanding the foregoing, in the case of Incentive Stock Options, any such adjustments shall, to the extent practicable, be made in a manner
            consistent with the requirements of section 424(a) of the Code.

            5. Participation and Awards

            Section 5.1 Designation of Participants. All Eligible Persons are eligible to be designated by the Committee to receive Awards and become Participants under the Plan. The Committee has the authority, in its discretion, to determine and designate from time to time those Eligible Persons who are to be granted Awards, the types of
            Awards to be granted and the number of shares of Common Stock or units subject to Awards granted under the Plan. In selecting Eligible Persons to be Participants and in determining the type and amount of Awards to be granted under the Plan, the Committee shall consider any and all factors that it deems relevant or appropriate.

            Section 5.2     Determination of Awards. The Committee shall determine the terms and conditions of all Awards granted to Participants in accordance with its authority under Section 3.2 hereof. An Award may consist of one type of right or benefit hereunder or of two or more such rights or benefits granted in
            tandem or in the alternative. To the extent deemed necessary by the Committee, an Award shall be evidenced by an Award Agreement as described in Section 11.1 hereof.

            6. Stock Options

            Section 6.1 Grant of Stock Option. A Stock Option may be granted to any Eligible Person selected by the Committee. Subject to the provisions of Section 6.6 hereof and section 422 of the Code, each Stock Option shall be designated, in the discretion of the Committee, as an Incentive Stock Option or as a Nonqualified Stock
            Option.

            Section 6.2     Exercise Price. The exercise price per share of a Stock Option shall not be less than 100 percent of the Fair Market Value of the shares of Common Stock on the Date of Grant, provided that the Committee may in its discretion specify for any Stock Option an exercise price per share that is
            higher than the Fair Market Value on the Date of Grant.

            Section 6.3     Vesting of Stock Options. The Committee shall in its discretion prescribe the time or times at which, or the conditions upon which, a Stock Option or portion thereof shall become vested and/or exercisable. The requirements for vesting and exercisability of a Stock Option may be based on the
            continued Service of the Participant with the Company or a Subsidiary for a specified time period (or periods) or on the attainment of a specified performance goal (or goals) established by the Committee in its discretion. The Committee may, in its discretion, accelerate the vesting or exercisability of any Stock Option at any time.

             

            
                

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            Section 6.4     Term of Stock Options. The Committee shall in its discretion prescribe in an Award Agreement the period during which a vested Stock Option may be exercised, provided that the maximum term of a Stock Option shall be ten (10) years from the Date of Grant. A Stock Option may be
            earlier terminated as specified by the Committee and set forth in an Award Agreement upon or following the termination of a Participant’s Service with the Company or any Subsidiary, including by reason of voluntary resignation, death, Disability, termination for cause or any other reason. Except as otherwise provided in this Section 6 or in an Award Agreement, no Stock Option may be exercised at any time during the term thereof unless the
            Participant is then in the Service of the Company or one of its Subsidiaries.

            Section 6.5     Stock Option Exercise; Tax Withholding. Subject to such terms and conditions as shall be specified in an Award Agreement, a Stock Option may be exercised in whole or in part at any time during the term thereof by notice in the form required by the Company, together with payment of the
            aggregate exercise price therefor and applicable withholding tax. Payment of the exercise price shall be made in the manner set forth in an Award Agreement, unless otherwise provided by the Committee: (i) in cash or by cash equivalent acceptable to the Committee; (ii) by payment in shares of Common Stock that have been held by the Participant for such period as the Committee may deem appropriate for accounting purposes or otherwise, valued at the Fair Market Value of such shares on
            the date of exercise; (iii) by a combination of the foregoing methods; or (iv) by such other method as may be approved by the Committee and set forth in an Award Agreement. In addition to and at the time of payment of the exercise price, the Participant shall pay to the Company the full amount of any and all applicable income tax, employment tax and other amounts required to be withheld in connection with such exercise, payable under such of the methods described above for the
            payment of the exercise price as may be approved by the Committee and set forth in an Award Agreement.

            
                	
                             

                        	
                            Section 6.6  

                        	
                            Additional Rules for Incentive Stock Options.

                        

            

            
                	
                             

                        	
                            (i)

                        	
                            Eligibility.     An Incentive Stock Option may only be granted to an Eligible Person who is considered an employee under Treasury Regulation §1.421-7(h) of the Company or any Subsidiary.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            (ii)

                        	
                            Annual Limits.     No Incentive Stock Option shall be granted to an Eligible Person as a result of which the aggregate Fair Market Value (determined as of the Date of Grant) of the stock with respect to which Incentive Stock Options are exercisable for the first time in any calendar year under the
                            Plan and any other stock option plans of the Company or any Subsidiary would exceed $100,000, determined in accordance with section 422(d) of the Code. This limitation shall be applied by taking Incentive Stock Options into account in the order in which granted.

                        

            

             

            
                	
                             

                        	
                             

                        	
                             

                        

            

             

             

            
                

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                            (iii)

                        	
                            Ten Percent Stockholders.     If a Stock Option granted under the Plan is intended to be an Incentive Stock Option, and if the Participant, at the time of grant, owns stock possessing ten percent or more of the total combined voting power of all classes of Common Stock of the Company or any
                            Subsidiary, then (A) the Stock Option exercise price per share shall in no event be less than 110 percent of the Fair Market Value of the Common Stock on the date of such grant and (B) such Stock Option shall not be exercisable after the expiration of five (5) years following the date such Stock Option is granted.

                        
	
                             

                        	
                             

                        	
                             

                        

            

            
                	
                             

                        	
                            (iv)

                        	
                            Termination of Employment.     An Award of an Incentive Stock Option may provide that such Stock Option may be exercised not later than three (3) months following termination of employment of the Participant with the Company and all Subsidiaries, or not later than one (1) year following death or a
                            permanent and total disability within the meaning of section 22(e)(3) of the Code, as and to the extent determined by the Committee to comply with the requirements of Section 422 of the Code.

                        

            

            
                	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                            (v)

                        	
                            Disqualifying Dispositions.     If shares of Common Stock acquired by exercise of an Incentive Stock Option are disposed of within two (2) years following the Date of Grant or one (1) year following the transfer of such shares to the Participant upon exercise, the Participant shall, promptly
                            following such disposition, notify the Company in writing of the date and terms of such disposition and provide such other information regarding the disposition as the Company may reasonably require.

                        

                

                7. Stock Appreciation Rights
            

            Section 7.1     Grant of Stock Appreciation Rights. A Stock Appreciation Right may be granted to any Eligible Person selected by the Committee. Stock Appreciation Rights may be granted on a basis that allows for the exercise of the right by the Participant or that provides for the automatic payment of the
            right upon a specified date or event.

            Section 7.2     Freestanding Stock Appreciation Rights.     A Stock Appreciation Right may be granted without any related Stock Option. The Committee shall in its discretion prescribe the time or times at which, or the conditions upon which, a Stock Appreciation Right or portion
            thereof shall become vested and/or exercisable. The requirements for vesting and exercisability of a Stock Appreciation Right may be based on the continued Service of a Participant with the Company or a Subsidiary for a specified time period (or periods) or on the attainment of a specified performance goal (or goals) established by the Committee in its discretion. A Stock Appreciation Right will be exercisable or payable at such time or times as determined by the Committee, provided
            that the maximum term of a Stock Appreciation Right shall be ten (10) years from the Date of Grant. The Committee may, in its discretion, accelerate the vesting or exercisability of any Stock Appreciation Right at any time. The base price of a Stock Appreciation Right granted without any related Stock Option shall be determined by the Committee in its sole discretion; provided, however, that the base price per share of any such freestanding Stock Appreciation Right shall not be less
            than 100 percent of the Fair Market Value of the shares of Common Stock on the Date of Grant.

             

            
                

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            Section 7.3     Tandem Stock Option/Stock Appreciation Rights.     A Stock Appreciation Right may be granted in tandem with a Stock Option, either at the time of grant or at any time thereafter during the term of the Stock Option. A tandem Stock Option/Stock Appreciation Right will
            entitle the holder to elect, as to all or any portion of the number of shares subject to the Award, to exercise either the Stock Option or the Stock Appreciation Right, resulting in the reduction of the corresponding number of shares subject to the right so exercised as well as the tandem right not so exercised. A Stock Appreciation Right granted in tandem with a Stock Option hereunder shall have a base price per share equal to the per share exercise price of the Stock Option, will
            be vested and exercisable at the same time or times that a related Stock Option is vested and exercisable, and will expire no later than the time at which the related Stock Option expires.

            Section 7.4     Payment of Stock Appreciation Rights.     A Stock Appreciation Right will entitle the holder, upon exercise or other payment of the Stock Appreciation Right, as applicable, to receive an amount determined by multiplying: (i) the excess of the Fair Market Value of a
            share of Common Stock on the date of exercise or payment of the Stock Appreciation Right over the base price of such Stock Appreciation Right, by (ii) the number of shares as to which such Stock Appreciation Right is exercised or paid. Payment of the amount determined under the foregoing may be made, as approved by the Committee and set forth in the Award Agreement, in shares of Common Stock valued at their Fair Market Value on the date of exercise or payment, in cash, or in a
            combination of shares of Common Stock and cash, subject to applicable tax withholding requirements.

            8. Restricted Stock Awards

            Section 8.1     Grant of Restricted Stock Awards.     A Restricted Stock Award may be granted to any Eligible Person selected by the Committee. The Committee may require the payment by the Participant of a specified purchase price in connection with any Restricted Stock Award. The
            Committee may provide in an Award Agreement for the payment of dividends and distributions to the Participant at such times as paid to stockholders generally or at the times of vesting or other payment of the Restricted Stock Award.

            Section 8.2     Vesting Requirements.     The restrictions imposed on shares of Common Stock granted under a Restricted Stock Award shall lapse in accordance with the vesting requirements specified by the Committee in the Award Agreement. The requirements for vesting of a Restricted
            Stock Award may be based on the continued Service of the Participant with the Company or its Subsidiaries for a specified time period (or periods) or on the attainment of a specified performance goal (or goals) established by the Committee in its discretion. The Committee may, in its discretion, accelerate the vesting of a Restricted Stock Award at any time. If the vesting requirements of a Restricted Stock Award shall not be satisfied, the Award shall be forfeited and the shares of
            Common Stock subject to the Award shall be returned to the Company. In the event that the Participant paid any purchase price with respect to such forfeited shares, unless otherwise provided by the Committee in an Award Agreement, the Company will refund to the Participant the lesser of (i) such purchase price and (ii) the Fair Market Value of such shares on the date of forfeiture.

             

            
                

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            Section 8.3     Restrictions.     Shares granted under any Restricted Stock Award may not be transferred, assigned or subject to any encumbrance, pledge, or charge until all applicable restrictions are removed or have expired, unless otherwise allowed by the Committee. The Committee
            may require in an Award Agreement that certificates representing the shares granted under a Restricted Stock Award bear a legend making appropriate reference to the restrictions imposed, and that certificates representing the shares granted or sold under a Restricted Stock Award will remain in the physical custody of an escrow holder until all restrictions are removed or have expired.

            Section 8.4     Rights as Stockholder.     Subject to the foregoing provisions of this Section 8 and the applicable Award Agreement, the Participant shall have all rights of a stockholder with respect to the shares granted to the Participant under a Restricted Stock Award, including
            the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto, unless the Committee determines otherwise at the time the Restricted Stock Award is granted.

            Section 8.5     Section 83(b) Election.     If a Participant makes an election pursuant to section 83(b) of the Code with respect to a Restricted Stock Award, the Participant shall file, within 30 days following the Date of Grant, a copy of such election with the Company (directed to
            the Secretary thereof) and with the Internal Revenue Service, in accordance with the regulations under section 83 of the Code. The Committee may provide in an Award Agreement that the Restricted Stock Award is conditioned upon the Participant’s making or refraining from making an election with respect to the Award under section 83(b) of the Code.

            
                	
                            9. Stock Unit Awards

                        

            

            Section 9.1     Grant of Stock Unit Awards.     A Stock Unit Award may be granted to any Eligible Person selected by the Committee. The value of each stock unit under a Stock Unit Award is equal to the Fair Market Value of the Common Stock on the applicable date or time period of
            determination, as specified by the Committee. A Stock Unit Award shall be subject to such restrictions and conditions as the Committee shall determine. A Stock Unit Award may be granted together with a dividend equivalent right with respect to the shares of Common Stock subject to the Award, which may be accumulated and may be deemed reinvested in additional stock units, as determined by the Committee in its discretion.

             

            
                

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            Section 9.2     Vesting of Stock Unit Awards.     On the Date of Grant, the Committee shall, in its discretion, determine any vesting requirements with respect to a Stock Unit Award, which shall be set forth in the Award Agreement. The requirements for vesting
            of a Stock Unit Award may be based on the continued Service of the Participant with the Company or its Subsidiaries for a specified time period (or periods) or on the attainment of a specified performance goal (or goals) established by the Committee in its discretion. The Committee may, in its discretion, accelerate the vesting of a Stock Unit Award at any time. A Stock Unit Award may also be granted on a fully vested basis, with a deferred payment date
            as may be determined by the Committee or elected by the Participant in accordance with the rules established by the Committee.

            Section 9.3     Payment of Stock Unit Awards.     A Stock Unit Award shall become payable to a Participant at the time or times determined by the Committee and set forth in the Award Agreement, which may be upon or following the vesting of the Award. Payment of a Stock Unit Award may
            be made, at the discretion of the Committee, in cash or in shares of Common Stock, or in a combination thereof, subject to applicable tax withholding requirements. Any cash payment of a Stock Unit Award shall be made based upon the Fair Market Value of the Common Stock, determined on such date or over such time period as determined by the Committee.

            Section 9.4     No Rights as Stockholder.     The Participant shall not have any rights as a stockholder with respect to the shares subject to a Stock Unit Award until such time as shares of Common Stock are delivered to the Participant pursuant to the terms of the Award
            Agreement.

            10. Change in Control

            Section 10.1     Effect of Change in Control.     The Committee may, at the time of the grant of an Award and as set forth in an Award Agreement, provide for the effect of a “Change in Control” on an Award. Such provisions may include any one or more of the following: (i)
            the acceleration or extension of time periods for purposes of exercising, vesting in, or realizing gain from any Award, (ii) the elimination or modification of performance or other conditions related to the payment or other rights under an Award, (iii) provision for the cash settlement of an Award for an equivalent cash value, as determined by the Committee, or (iv) such other modification or adjustment to an Award as the Committee deems appropriate to maintain and protect the
            rights and interests of Participants upon or following a Change in Control. To the extent necessary for compliance with Section 409A of the Code, an Award Agreement shall provide that an Award subject to the requirements of Section 409A that would otherwise become payable upon a Change in Control shall only become payable to the extent that the requirements for a “change in control” for purposes of Section 409A have been satisfied.

            Section 10.2     Definition of Change in Control.   For purposes of the Plan, unless otherwise defined in an Award Agreement, “Change in Control” shall mean (1) any Person who is not Cerberus Capital Management, L.P. or any of its
            affiliates or affiliate funds (“Cerberus”) becomes the beneficial owner, directly or indirectly, of seventy-five percent (75%) or more of the combined voting power of the then issued and outstanding shares of Common Stock and Preferred Stock or other voting securities of the Company or (2) the sale, transfer or other disposition of all or substantially all of the business and assets of the Company and its subsidiaries,
            whether by sale of assets, merger or otherwise (determined on a consolidated basis) to another Person other than a transaction in which the survivor or transferee is a Person controlled, directly or indirectly, by Cerberus.

             

            
                

                11

                 

                

            

             

            
                

            

             

            11. General Provisions

            Section 11.1     Award Agreement.     To the extent deemed necessary by the Committee, an Award under the Plan shall be evidenced by an Award Agreement in a written or electronic form approved by the Committee setting forth the number of shares of Common Stock or units subject to the
            Award, the exercise price, base price, or purchase price of the Award, the time or times at which an Award will become vested, exercisable or payable and the term of the Award. The Award Agreement may also set forth the effect on an Award of termination of Service under certain circumstances. The Award Agreement shall be subject to and incorporate, by reference or otherwise, all of the applicable terms and conditions of the Plan, and may also set forth other terms and conditions
            applicable to the Award as determined by the Committee consistent with the limitations of the Plan. Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of section 422 of the Code. The grant of an Award under the Plan shall not confer any rights upon the Participant holding such Award other than such terms, and subject to such conditions, as are specified in the Plan as being applicable to
            such type of Award (or to all Awards) or as are expressly set forth in the Award Agreement.

            Section 11.2     Forfeiture Events/Representations.     The Committee may specify in an Award Agreement at the time of the Award that the Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment
            upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events shall include, but shall not be limited to, termination of Service for cause, violation of material Company policies, breach of noncompetition, confidentiality or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company. The
            Committee may also specify in an Award Agreement that the Participant’s rights, payments and benefits with respect to an Award shall be conditioned upon the Participant making a representation regarding compliance with noncompetition, confidentiality or other restrictive covenants that may apply to the Participant and providing that the Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or
            recoupment on account of a breach of such representation.

            Section 11.3     No Assignment or Transfer; Beneficiaries.     Awards under the Plan shall not be assignable or transferable by the Participant, except by will or by the laws of descent and distribution, and shall not be subject in any manner to assignment, alienation, pledge,
            encumbrance or charge. Notwithstanding the foregoing, the Committee may provide in an Award Agreement that the Participant shall have the right to designate a beneficiary or beneficiaries who shall be entitled to any rights, payments or other benefits specified under an Award following the Participant’s death. During the lifetime of a Participant, an Award shall be exercised only by such Participant or such Participant’s guardian or legal representative. In the event of
            a Participant’s death, an Award may, to the extent permitted by the Award Agreement, be exercised by the Participant’s beneficiary as designated by the Participant in the manner prescribed by the Committee or, in the absence of an authorized beneficiary designation, by the legatee of such Award under the Participant’s will or by the Participant’s estate in accordance with the Participant’s will or the laws of descent and distribution, in each case in
            the same manner and to the same extent that such Award was exercisable by the Participant on the date of the Participant’s death.

             

            
                

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            Section 11.4     Rights as Stockholder.     A Participant shall have no rights as a holder of shares of Common Stock with respect to any unissued securities covered by an Award until the date the Participant becomes the holder of record of such securities. Except as provided in
            Section 4.2 hereof, no adjustment or other provision shall be made for dividends or other stockholder rights, except to the extent that the Award Agreement provides for dividend payments or dividend equivalent rights.

            Section 11.5     Employment or Service.     Nothing in the Plan, in the grant of any Award or in any Award Agreement shall confer upon any Eligible Person or Participant any right to continue in the Service of the Company or any of its Subsidiaries, or interfere in any way with the
            right of the Company or any of its Subsidiaries to terminate the employment or other service relationship of an Eligible Person or Participant for any reason at any time.

            Section 11.6 Fractional Shares. In the case of any fractional share or unit resulting from the grant, vesting, payment or crediting of dividends or dividend equivalents under an Award, the Committee shall have the discretionary authority to (i) disregard such fractional share or unit, (ii) round such fractional share or unit to the
            nearest lower or higher whole share or unit, or (iii) convert such fractional share or unit into a right to receive a cash payment.

            Section 11.7     Other Compensation and Benefit Plans.     The amount of any compensation deemed to be received by a Participant pursuant to an Award shall not constitute includable compensation for purposes of determining the amount of benefits to which a Participant is entitled
            under any other compensation or benefit plan or program of the Company or any Subsidiary, including, without limitation, under any bonus, pension, profit-sharing, life insurance, salary continuation or severance benefits plan, except to the extent specifically provided by the terms of any such plan.

            Section 11.8     Plan Binding on Transferees.     The Plan shall be binding upon the Company, its transferees and assigns, and the Participant, the Participant’s executor, administrator and permitted transferees and beneficiaries.

             

            
                

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            Section 11.9     Foreign Jurisdictions.     The Committee may adopt, amend and terminate such arrangements and grant such Awards, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to comply with any tax, securities,
            regulatory or other laws of other jurisdictions with respect to Awards that may be subject to such laws. The terms and conditions of such Awards may vary from the terms and conditions that would otherwise be required by the Plan solely to the extent the Committee deems necessary for such purpose. Moreover, the Board may approve such supplements to or amendments, restatements or alternative versions of the Plan, not inconsistent with the intent of the Plan, as it may
            consider necessary or appropriate for such purposes, without thereby affecting the terms of the Plan as in effect for any other purpose.

            Section 11.10 Substitute Awards in Corporate Transactions.     Nothing contained in the Plan shall be construed to limit the right of the Committee to grant Awards under the Plan in connection with the acquisition, whether by purchase, merger, consolidation or other corporate transaction, of the business or
            assets of any corporation or other entity. Without limiting the foregoing, the Committee may grant Awards under the Plan to an employee or director of another corporation who becomes an Eligible Person by reason of any such corporate transaction in substitution for awards previously granted by such corporation or entity to such person. The terms and conditions of the substitute Awards may vary from the terms and conditions that would otherwise be required by the Plan solely to the
            extent the Committee deems necessary for such purpose. Any shares of Common Stock subject to these substitute Awards shall not be counted against any of the maximum share limitations set forth in the Plan.

            Section 11.11 Stockholder Agreements; Restrictions. Upon the grant of any Award or the distribution of Common Stock pursuant to any Award (as applicable), the Participant (or legal representative) shall be required to become a party to a Stockholders Agreement and/or related agreement(s), which shall include such terms and conditions
            (including without limitation, call rights, drag-along rights and refusal rights), as may be determined by the Committee in its sole discretion.

            
                	
                             

                        	
                            Section 11.12

                        	
                            Company Call Right Upon Termination, Involuntary Transfer.

                        

            

            
                	
                             

                        	
                            (a)

                        	
                            Vested Common Stock.

                        

            

            (i)              Company Call Right. If a Participant's Service terminates for any reason, or an Involuntary Transfer occurs, the Company shall have the right (a "Call Right") to purchase and, upon the exercise of
            the Call Right by the Company, the Participant and the Participant's Permitted Transferees (as defined in the Stockholders' Agreement) shall be required to sell, all of the vested shares of Common Stock beneficially owned by any of them that were granted pursuant to an Award. Upon such termination or Involuntary Transfer, as the case may be, the Call Right may be exercised by the Company for a period of one year after the occurrence of such event (or, if later, the date on which the
            Company is notified or becomes aware of the occurrence of such event). The Company may exercise such Call Right by giving written notice thereof to the Participant.

             

            
                

                14

                 

                

            

             

            
                

            

            (ii)  Purchase Price. With respect to any exercise of a Call Right under this Section, the purchase price per vested share of Common Stock to be paid by the Company at the closing provided for in Section 7(b) shall be: (A) if the Participant's Service is terminated by the Company or any of its
            subsidiaries or affiliates for Cause (as defined in the applicable Award Agreement), the lesser of $0.24 or the Fair Market Value or (B) in case of an Involuntary Transfer or if the Participant's Service is terminated by the Participant for any reason other than for Cause, the Fair Market Value, in each case, determined as of the date of termination of the Participant's Service or the Involuntary Transfer.

            
                	
                             

                        	
                            (b)

                        	
                            Election and Delivery Procedures.

                        

            

            (i)              The closing of any exercise of the Call Right pursuant to this Section shall take place at the offices of the Company, or such other place as may be mutually agreed upon, not less than 10 nor more than 30 days after the date such Call Right is exercised. The exact date and time of closing
            shall be specified by the Company.

            (ii)  At such closing, the Participant shall deliver certificates for the vested shares of Common Stock to be sold to the Company duly endorsed, or accompanied by written instruments of transfer in a form reasonably satisfactory to the Company duly executed, by such transferor, free and clear of any lien, security interest, pledge, claim, option, right of first refusal,
            marital right or other encumbrance. The Company shall pay the applicable purchase price for the vested shares of Common Stock; provided, however, that such payment may be deferred under the circumstances, and to the extent, provided for in Section 7(c) below.

            (c)          Legal Limitations. Anything in this Plan to the contrary notwithstanding, to the extent that the limitations or restrictions applicable to the Company under the laws of its jurisdiction of incorporation, the restrictions or limitations contained in the Certificate of
            Incorporation or By-Laws of the Company or any other applicable law, rule or regulation or under the terms of any indebtedness for borrowed money of the Company prohibit the Company from, or would cause the Company to be in default thereunder after, making any payment required under this Plan with respect to any vested share of Common Stock, then the Company shall not be obligated to make such payment at such time, and shall have the right to defer such payment until the Board
            reasonably determines that such limitations and restrictions no longer restrict the Company from making such deferred payment. Any amounts the payment of which is so deferred shall bear interest, compounded annually and calculated at a rate equal to the Prime Rate and shall be paid (with interest) promptly after, and to the extent that, the Board determines that the limitations and restrictions referred to in the first sentence of this Section 7(c) no longer restrict such payment.
            Notwithstanding a deferral of payment in accordance with this Section 7(c) for vested shares of Common Stock in respect of which a Call Right shall have been exercised, the closing of any exercise of such Call Right shall take place as provided in Section 7(b), and the rights of the Participant in respect of the vested shares of Common Stock subject to such Call Right (other than the right to receive payment of amounts deferred in accordance with this Section) shall
            terminate as of such closing.

             

            
                

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            (d)          Definitions. For purposes of this Section, the following terms shall have the following meanings:

            (i)              "Fair Market Value" means the value of a share of Common Stock as determined in good faith by the Board, the Committee or the Compensation Committee of the Board.

            (ii)  "Involuntary Transfer" means a transfer of a Participant's vested shares of Common Stock by operation of law including, without limitation, as a result of (A) a sale or other disposition by a trustee or debtor in possession appointed or retained in a bankruptcy case, (B) a sale at any creditors' or judicial sale, or
            (C) a transfer arising out of a divorce or separation proceeding.

            (iii)  "Prime Rate" means the rate which Citibank, N.A. announces from time to time at its principal office as its prime lending rate for domestic commercial loans, the Prime Rate to change when and as such prime lending rate changes.

            12. Legal Compliance

            Section 12.1     Securities Laws.     No shares of Common Stock will be issued or transferred pursuant to an Award unless and until all then applicable requirements imposed by Federal and state securities and other laws, rules and regulations and by any regulatory agencies having
            jurisdiction, and by any exchanges upon which the shares of Common Stock may be listed, have been fully met. As a condition precedent to the issuance of shares pursuant to the grant or exercise of an Award, the Company may require the Participant to take any reasonable action to meet such requirements. The Committee may impose such conditions on any shares of Common Stock issuable under the Plan as it may deem advisable, including, without limitation, restrictions under the
            Securities Act, as amended, under the requirements of any exchange upon which such shares of the same class are then listed, and under any blue sky or other securities laws applicable to such shares. The Committee may also require the Participant to represent and warrant at the time of issuance or transfer that the shares of Common Stock are being acquired only for investment purposes and without any current intention to sell or distribute such shares. All Common Stock issued
            pursuant to the terms of this Plan shall constitute “restricted securities,” as that term is defined in Rule 144 promulgated pursuant to the Securities Act, and may not be transferred except in compliance herewith and with the registration requirements of the Securities Act or an exemption therefrom. Certificates representing Common Stock acquired pursuant to an Award may bear such legend as the Company may consider appropriate under the circumstances.

            Section 12.2 Incentive Arrangement. The Plan is designed to provide an on-going, pecuniary incentive for Participants to produce their best efforts to increase the value of the Company. The Plan is not intended to provide retirement income or to defer the receipt of payments hereunder to the termination of a Participant’s
            employment or beyond. The Plan is thus intended not to be a pension or welfare benefit plan that is subject to Employee Retirement Income Security Act of 1974 (“ERISA”), and shall be construed accordingly. All interpretations and determinations hereunder shall be made on a basis consistent with the Plan’s status as not an employee benefit plan subject to ERISA.

             

            
                

                16

                 

                

            

             

            
                

            

             

            Section 12.3     Unfunded Plan.     The adoption of the Plan and any reservation of shares of Common Stock or cash amounts by the Company to discharge its obligations hereunder shall not be deemed to create a trust or other funded arrangement. Except upon the issuance of Common Stock
            pursuant to an Award, any rights of a Participant under the Plan shall be those of a general unsecured creditor of the Company, and neither a Participant nor the Participant’s permitted transferees or estate shall have any other interest in any assets of the Company by virtue of the Plan. Notwithstanding the foregoing, the Company shall have the right to implement or set aside funds in a grantor trust, subject to the claims of the Company’s creditors or otherwise, to
            discharge its obligations under the Plan.

            Section 12.4 Section 409A Compliance. To the extent applicable, it is intended that the Plan and all Awards hereunder comply with the requirements of Section 409A of the Code, and the Plan and all Award Agreements shall be interpreted and applied by the Committee in a manner consistent with this intent in order to avoid the
            imposition of any additional tax under Section 409A of the Code. In the event that any provision of the Plan or an Award Agreement is determined by the Committee to not comply with the applicable requirements of Section 409A of the Code, the Committee shall have the authority to take such actions and to make such interpretations or changes to the Plan or an Award Agreement as the Committee deems necessary to comply with such requirements, provided that the Committee shall act in a
            manner that is intended to preserve the economic value of the Award to the Participant. In no event whatsoever shall the Company be liable for any additional tax, interest or penalties that may be imposed on the Executive by Section 409A of the Code or any damages for failing to comply with Section 409A of the Code.

            Section 12.5     Tax Withholding.     The Participant shall be responsible for payment of any taxes or similar charges required by law to be withheld from an Award or an amount paid in satisfaction of an Award, which shall be paid by the Participant on or prior to the payment or other
            event that results in taxable income in respect of an Award. The Award Agreement may specify the manner in which the withholding obligation shall be satisfied with respect to the particular type of Award.

            Section 12.6     No Guarantee of Tax Consequences. Neither the Company, the Board, the Committee nor any other person make any commitment or guarantee that any federal, state, local or foreign tax treatment will apply or be available to any Participant or any other person hereunder.

            Section 12.7     Severability.     If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their
            terms, and all provisions shall remain enforceable in any other jurisdiction.

            Section 12.8 Governing Law.     The Plan and all rights hereunder shall be subject to and interpreted in accordance with the laws of the State of Delaware, without reference to the principles of conflicts of laws, and to applicable Federal securities laws.

            13. Effective Date, Amendment and Termination

            Section 13.1     Effective Date.     The Plan shall become effective as of May 14, 2008.

            Section 13.2     Amendment; Termination.     The Board may suspend or terminate the Plan (or any portion thereof) at any time and may amend the Plan at any time and from time to time in such respects as the Board may deem advisable or in the best interests of the Company or any
            Subsidiary. No such amendment, suspension or termination shall materially and adversely affect the rights of any Participant under any outstanding Awards, without the consent of such Participant.

             

            
                

                17Exhibit 10.2

            NONQUALIFIED STOCK OPTION AWARD AGREEMENT

             

            American Heritage Arms, Inc.

            2008 Stock Incentive Plan

             

            This Award Agreement (the “Agreement”) made as of this _____ day of _______________, 2008, between American Heritage Arms, Inc., a Delaware corporation (the “Company”), and ____________________ (the “Optionee”), is made pursuant to the terms of the American Heritage Arms, Inc. 2008 Stock Incentive Plan (the “Plan”). Capitalized terms
            used herein but not defined shall have the meanings set forth in the Plan.

             

            Section 1.         Grant of Option. The Company has granted to the Optionee a non-qualified stock option for the purchase of the number of shares of common stock of the Company, par value $.01 per share (the “Common Stock”), specified in
            Appendix A hereto (the “Option Shares”). Each option identified in Appendix A shall be subject to the conditions hereinafter provided and subject to the terms and conditions set forth in the Plan, a copy of which the Optionee acknowledges having received. (Each option identified in Appendix A is hereinafter referred to as
            an “Option.”)

             

            Section 2.         Exercise Price. The exercise price per share of each Option shall be the Fair Market Value of a share of the Common Stock on the Date of Grant (as defined in the Plan) (the “Option Price”) as set forth on
            Appendix A hereto.

             

            
                	
                             

                        	
                            Section 3.

                        	
                            Vesting of Options.

                        

            

             

            (a)       Vesting Schedule. A portion of each Option shall vest and become exercisable on [the applicable anniversary of the Date of Grant thereof] as set forth in
            Appendix A, subject to the Optionee’s continued employment with the Company or any Subsidiary on each such vesting date.

             

            
                	
                             

                        	
                            (b)

                        	
                            Acceleration Events.

                        

            

             

            (i)         Notwithstanding the foregoing, each Option shall become fully and immediately vested and exercisable upon the occurrence of a Change in Control of the Company provided that the respective Option remains outstanding immediately prior to the effective date of the Change in Control.

             

            (ii)        Notwithstanding the foregoing, a certain number of Option Shares as determined below shall become fully and immediately vested and exercisable: (A) if the Optionee's employment with the Company or any Subsidiary is terminated by the Company Without Cause or (B) if the Optionee terminates his employment with the
            Company or any Subsidiary for Good Reason, in each case provided that the respective Option to which such Option Shares relate remains outstanding immediately prior to the effective date of each such occurrence.

             

            
                

                

            

             

            
                

            

            (iii)      For the purposes of Section 3(b)(ii), the number of Option Shares subject to partial acceleration and vesting shall be the number (rounded to the nearest whole number) equal to the number of Option Shares that are scheduled to vest at the end of the twelve (12) month
            period in which such termination occurs multiplied by a fraction, the numerator of which is the number of days elapsed before such termination date in the applicable twelve (12) month vesting period in which termination occurs and the denominator of which is 365.

            
                	
                             

                        	
                            (iv)

                        	
                            For the purposes of this Section 3(b) the following definitions apply:

                        

            

            (A)      "Cause" shall mean (1) the failure of the Optionee substantially to perform the Optionee's duties [under the employment agreement, dated [____], by and between the Optionee and the Company (the
            "Employment Agreement") (other than any such failure due to physical or mental illness) or other material breach by the Optionee of any of his obligations thereunder] [as directed by the Company and/or the Optionee's supervising employee], after a demand for substantial performance or demand for cure of
            such breach is delivered, and a reasonable opportunity to cure is given, to the Optionee by the Company, which demand identifies the manner in which the Company believes that the Optionee has not substantially performed his duties or breached his obligations, (2) the Optionee’s gross negligence or serious misconduct that has caused or would reasonably be expected to result in material injury to the Company or any of its affiliates, (3) the Optionee’s conviction
            of, or entering a plea of nolo contendere to, a crime that constitutes a felony, or (4) the Optionee’s violation of any provision of the Company’s business ethics policy that has resulted or would reasonably be expected to result in material injury to the Company or any of its affiliates, but only after a demand for cure of such violation is delivered, and a reasonable opportunity to
            cure is given, to the Optionee by the Company, which demand identifies the manner in which the Company believes that the Optionee has violated a material provision of the Company’s business ethics policy.

            (B)      "Disability" shall mean a physical or mental disability that prevents the performance by the Optionee of his duties [under the Employment Agreement] [as directed by the
            Company and/or the Optionee's supervising employee] lasting for a period of one hundred eighty (180) days or longer, whether or not consecutive, in any twelve (12) month period. The determination of the Optionee’s Disability shall be made by the Board after receiving an evaluation from an independent physician selected by the Company and reasonably acceptable to the Optionee and shall be final and binding on the parties
            hereto.

            (C)      "Good Reason" shall mean a termination of employment with the Company or any Subsidiary by the Optionee within thirty (30) days following the occurrence of: [(i) a material breach by the Company of any of its obligations under
            the Employment Agreement;] [(ii)] a reassignment of the Optionee the effect of which is a material diminution of the Optionee's duties;

             

            
                

                 

                2

                

                

            

            
                

            

            [(iii)] a material reduction of the Optionee’s base salary or other compensation; or [(iv)] the assignment of the Optionee to a principal office located beyond a 50-mile radius of the
            Optionee’s then current work place, in each case without the Optionee’s consent.

            (D)      "Without Cause" shall mean a termination of the Optionee's employment with the Company or any Subsidiary by the Company for reasons other than the Optionee's death or Disability or for Cause.

             

            Section 4.         Option Term. Option Shares that become vested pursuant to Section 3 hereof may be purchased at any time on or after the date of such vesting and prior to the expiration of the term of
            the Option to which they relate (each, an “Option Term”). An Option Term shall expire on the day prior to the tenth anniversary of the applicable Date of Grant, unless earlier terminated in accordance with the terms of the Plan or upon termination of the Optionee’s employment with the Company or any Subsidiary (“Termination of Employment”) in accordance with Section 5 hereof. Upon the expiration of an
            Option Term, any unexercised Option Shares underlying such expiring Option shall be cancelled and shall be of no further force or effect.

             

            
                	
                             

                        	
                            Section 5.

                        	
                            Termination of Employment.

                        

            

             

            (a)       General. Except as provided in Section 3(b) hereof, in the event of a Termination of Employment prior to the date that all Option Shares become vested in accordance with Section 3
            hereof, the Optionee (and the Optionee's estate, designated beneficiary or other legal representative) shall forfeit the Optionee’s interest in any Option Shares that have not yet become vested, which shall be cancelled and be of no further force or effect. In the event of a Termination of Employment for any reason, the Optionee shall retain the right to purchase any Option Shares that have previously become vested until the expiration of 90 days following the
            effective date of such Termination of Employment (or the expiration of the applicable Option Term, if earlier); provided, however, that such 90 day period may be extended (but not beyond the applicable Option Term) upon determination of the Committee or the Board.

             

            (b)       Death or Disability. Notwithstanding the provisions of Section 5(a) hereof, in the event of a Termination of Employment as a result of death or Disability, certain unvested Options hereunder shall become fully and immediately vested and
            exercisable in accordance with Section 3(b)(ii) hereof, and the Optionee, or the Optionee's legal representative, shall retain the right to purchase the Option Shares in accordance with the terms hereof until the expiration of 12 months following the date of such Termination of Employment (or the expiration of the applicable Option Term, if earlier); provided,
            however, that such 12 month period may be extended (but not beyond the applicable Option Term) upon determination of the Committee.

             

            
                	
                             

                        	
                            Section 6.

                        	
                            Procedure for Exercise.

                        

            

            (a)         Notice of Exercise. An Option may be exercised, in whole or in part, and whole Option Shares may be purchased, at any time during the term thereof by notice to the Company in the form attached hereto as Exhibit A, together with
            (i) payment of the aggregate

             

            
                

                 

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            Option Price therefor and any applicable withholding taxes and (ii) execution of an Instrument of Accession to the Stockholders Agreement, dated December 11, 2007, among the Company and the stockholders of the Company named therein, as amended from time to time in a form acceptable to the Board or the Committee (the "Instrument of Accession").

             

            (b)        Payment of Option Price. Payment of the Option Price shall be made: (i) in cash or by cash equivalent acceptable to the Committee, (ii) by payment in shares of Common Stock that have been held by the Optionee for at least six months (or such other period as the Committee may deem
            appropriate for purposes of applicable accounting rules), valued at the Fair Market Value of such shares on the date of exercise, (iii) through an open-market, broker-assisted transaction, or (iv) by a combination of the foregoing methods. In addition and at the time of exercise, if and to the extent required by applicable law, the Optionee shall remit to the Company under procedures specified by the Company all required Federal, state and local withholding tax amounts in any manner
            as permitted above for payment of the Option Price.

             

            (c)       Delivery of Stock Certificates Upon Exercise. Upon each exercise of an Option, the Company shall mail or deliver to the Optionee (or beneficiary in the case of exercise by a beneficiary), as promptly as practicable, a stock certificate or certificates representing the shares of Common
            Stock then purchased, and will pay all stamp taxes payable in connection therewith. Notwithstanding the foregoing, the Company shall not be obligated to deliver any such certificate or certificates upon exercise of an Option until the Company shall have received such assurances from its counsel as the Company may reasonably request that the exercise of the Option and the issuance of shares of Common Stock pursuant to such exercise will not violate the Securities Act of 1933 (the
            “Act”), as amended (as then in effect or any similar statute then in effect), or the securities laws of any state applicable to such exercise, issuance or transfer. Such assurances may include (but need not be limited to) opinions of counsel to the Company, covenants by the holder or transferee to observe such Act and laws and the placement of a legend on such certificate or certificates restricting subsequent transfers or sales except in compliance with such Act and
            laws.

             

            
                	
                             

                        	
                            Section 7.

                        	
                            Investment Representation.

                        

            

             

            (a)         Upon the exercise of an Option at a time when there is not in effect a registration statement under the Act relating to the shares of Common Stock, by virtue of such exercise, the Optionee shall be deemed to represent and warrant to the Company that the shares of Common Stock shall be acquired for investment and not with a view
            to the distribution thereof, and not with any present intention of distributing the same, and the Optionee shall provide the Company with such further representations and warranties as the Company may require in order to ensure compliance with applicable Federal and state securities, blue sky and other laws. No shares of Common Stock shall be acquired unless and until the Company and/or the Optionee shall have complied with all applicable Federal or state registration, listing
            and/or qualification requirements and all other requirements of law or of any regulatory agencies having jurisdiction, unless the Committee has received evidence satisfactory to it that the Optionee may acquire such shares pursuant to an exemption from registration under the applicable securities laws. Any determination in this connection by the Committee shall be final, binding and conclusive.

             

            
                

                 

                4

                

                 

                

            

             

            
                

            

            (b)        The Optionee hereby acknowledges that the Common Stock will be subject to the Stockholders' Agreement and hereby represents and warrants that this Agreement and the Instrument of Accession shall have been duly executed and delivered by the Optionee.

             

            (c)         The Company reserves the right to legend any certificate for shares of Common Stock, conditioning sales of such shares upon compliance with applicable federal and state securities laws and regulations, and the Stockholders' Agreement.

             

            Section 8.         Limitation of Rights. The Optionee shall not have any privileges of a stockholder of the Company with respect to any Option Shares, including without limitation any right to vote such Option Shares or to receive dividends or other
            distributions in respect thereof, until the date of the issuance to the Optionee of a stock certificate evidencing the Common Stock. Nothing in this Agreement or an Option shall confer upon the Optionee any right to continued employment with the Company or to interfere in any way with the right of the Company to terminate the Optionee’s employment at any time.

             

            Section 9.         Adjustments. All Options granted hereunder shall be subject to the provisions of Section 4.2 of the Plan relating to adjustments for recapitalizations, reclassifications and other changes in the Company’s corporate
            structure.

             

            Section 10.       Transfer Restrictions. No Option may be transferred, pledged, assigned, hypothecated or otherwise disposed of in any way by the Optionee, except by will or by the laws of descent and distribution;
            provided, however, that the Optionee may, during the Optionee’s lifetime and subject to the prior approval of the Committee at the time of proposed transfer, transfer all or part of an Option to or for the benefit of the Optionee’s “family members” (as defined in a manner consistent with the rules applicable to registration statements on Form S-8 promulgated under
            the Securities Act of 1933), which include certain trusts and other entities established for the benefit of the Optionee and/or the Optionee’s family members. Subsequent transfers of an Option shall be prohibited other than by will or the laws of descent and distribution upon the death of the transferee. In the event that an Optionee becomes legally incapacitated, an Option shall be exercisable by the Optionee’s legal guardian, committee or legal representative. If the
            Optionee dies, an Option shall thereafter be exercisable by the legatee of such Option under the Optionee’s will or by the Optionee’s estate in accordance with the Optionee’s will or the laws of descent and distribution, in each case in the same manner and to the same extent that such Option was exercisable by the Optionee on the date of the Optionee’s death. An Option shall not be subject to execution, attachment or similar process. Any attempted assignment,
            transfer, pledge, hypothecation or other disposition of an Option contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon an Option, shall be null and void and without effect.

             

            Section 11.       Notices. Any notice hereunder by the Optionee shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the Secretary of the Company. Any notice hereunder by the Company shall be given to the
            Optionee in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Optionee may have on file with the Company.

             

            
                

                 

                5

                

                 

                

            

             

            
                

            

            Section 12.       Construction. All Options hereunder are granted pursuant to the Plan and are in all respects subject to the terms and conditions of the Plan. The Optionee hereby acknowledges that a copy of the Plan has been delivered to the Optionee and accepts the
            Options hereunder subject to all terms and provisions of the Plan, which is incorporated herein by reference. In the event of a conflict or ambiguity between any term or provision contained herein and a term or provision of the Plan, the Plan will govern and prevail. The construction of and decisions under the Plan are vested in the Committee, whose determinations shall be final, conclusive and binding upon the Optionee.

             

            Section 13.       Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the choice of law principles thereof.

             

            Section 14.      Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 

             

            Section 15.       Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.

             

            Section 16.       Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties with respect to the subject matter hereof and thereof, merging any and all prior agreements.

             

             

            [SIGNATURES ON FOLLOWING PAGE]

             

            
                

                 

                6

                

                 

                

            

             

            
                

            

            

            IN WITNESS WHEREOF, the Company and the Optionee have executed this Agreement effective as of the date first above written.

             

            ____________________________________

             

            By: _________________________________

            Name:

            Title:

             

            OPTIONEE

             

             

                            

            
                	 	________________________________
	
                             

                        	
                            Signature of Optionee

                        

            

             

            ____________________________________

            Print Name

             

            
                

                 

                7

                

                 

                

            

             

            
                

            

            Appendix A

             

             

            
                	
                            DATE OF GRANT

                        	
                            NUMBER OF SHARES SUBJECT TO OPTION

                        	
                            OPTION PRICE

                        	
                            ANNIVERSARY

                        	
                            NUMBER OF SHARES TO VEST

                        
	
                             

                        	
                             

                        	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                             

                        
	
                             

                        	
                             

                        
	
                             

                        	
                             

                        
	
                             

                        	
                             

                        	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                             

                        
	
                             

                        	
                             

                        
	
                             

                        	
                             

                        
	
                             

                        	
                             

                        	
                             

                        	
                             

                        	
                             

                        
	
                             

                        	
                             

                        
	
                             

                        	
                             

                        
	
                             

                        	
                             

                        

            

             

             

            
                

                

            

             

            
                

            

            Exhibit A

             

            AMERICAN HERITAGE ARMS, INC.

            2008 STOCK INCENTIVE PLAN

             

            Notice of Exercise of Nonqualified Stock Option

             

            1.         Exercise of Option. Pursuant to the American Heritage Arms, Inc. 2008 Stock Incentive Plan (the "Plan") and my Award Agreement thereunder dated _____________ (the "Agreement"), I
            hereby elect to exercise my option ("Option") to the extent of ____________ shares of common stock ("Shares") of American Heritage Arms, Inc. (the "Company").

             

            2.         Delivery of Payment. I hereby deliver to the Company a cashier's check in the amount of US Dollars $ ____________ in full payment of the purchase price of the Shares determined by multiplying (a) the exercise price per Share as set forth in my Agreement, by (b) the number of
            Shares as to which I am exercising the Option and in satisfaction of my obligation to remit to the Company an amount sufficient to satisfy any withholding tax obligations of the Company that arise in connection with this exercise, or through such other payment method agreed to by the Company and permitted under the terms of the Plan.

             

            3.         Representations. In connection with my exercise of the Option, I hereby represent to the Company as follows:

             

            (a)       I am acquiring the Shares solely for investment purposes, with no present intention of distributing or reselling any of the Shares or any interest therein. I acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended.

             

            (b)       I am aware of the Company's and its Subsidiaries' business affairs and financial condition and have acquired sufficient information about the Company and its Subsidiaries to reach an informed and knowledgeable decision to acquire the Shares.

             

            (c)       I understand that the Shares are "restricted securities" under applicable U.S. federal and state securities laws and that, pursuant to these laws, I must hold the Shares indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or unless an exemption from such registration and
            qualification requirements is available. I acknowledge that the Company has no obligation to register or qualify the Shares for resale. I further acknowledge that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Shares, and requirements relating to the Company which are outside of my control, and which the Company is under no obligation
            to and may not be

             

            
                

                

            

             

            
                

            

            able to satisfy.

             

            (d)       I understand that there is no public market for the Shares, that no market may ever develop for them, and that the Shares have not been approved or disapproved by the Securities and Exchange Commission or any other federal, state or other governmental agency.

             

            (e)       I understand that the Shares are subject to certain restrictions on transfer set forth in the Plan. Both the Plan and the Agreement are incorporated herein by reference.

             

            (f)        I have consulted my own tax advisors in connection with my exercise of this Option and I am not relying upon the Company for any tax advice.

            

             

            

Submitted by the
            Optionholder:

             

            
                	 	Date:___________	By:_________________________________
	
                             

                        	 	 

            

             

            
                	
                             

                        	
                            Print Name:___________________________

                        

            

             

            
                	
                             

                        	
                            Address:_____________________________

                        

            

             

             

            
                	
                             

                        	
                            Social Security No.______________________

                        

            

             

            
                	
                             

                        	
                            Received and Accepted by the Company:

                        

            

             

            
                	
                             

                        	
                            AMERICAN HERITAGE ARMS, INC.

                        

            

             

            
                	
                             

                        	
                            By:__________________________________

                        

            

             

            
                	
                             

                        	
                            Print Name:___________________________

                        

            

             

            
                	
                             

                        	
                            Title:________________________________

                        

            

             

             

            Note: If options are being exercised on behalf of a deceased Plan Participant, then this Notice must be signed by such Participant's personal representative and must be accompanied by a certificate issued by an appropriate authority evidencing that the individual signing this Notice has been duly appointed and is currently serving as the Participant's personal representative
            under applicable local law governing decedents' estates.

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