Document:

EX-10.2

Exhibit 10.2

THE O’GARA GROUP, INC.

2005 Stock Option Plan

(As Amended and Restated Effective December 20, 2007)

ARTICLE I

OBJECTIVES

     1.1 The objectives of this Stock Option Plan (the “Plan”) are to enable The O’Gara
Group, Inc. (the “Company”) to compete successfully in retaining and attracting employees,
non-employee members of its Board of Advisors, non-employee members of its Board of Directors and
consultants of outstanding ability and to stimulate the efforts of these persons toward the
Company’s objectives.

ARTICLE II

DEFINITIONS

     2.1 For purposes of the Plan each of the following terms shall have the definition which is
attributed to it, unless another definition is clearly indicated by a particular usage and context.

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

     B. “Board of Advisors” means the Board of Advisors of the
Company.

     C. “Cause” means, unless otherwise defined in an Option agreement, the
occurrence of any one or more of the following events with respect to an Option Holder:
conviction of any felony criminal offense or criminal offense involving moral turpitude or
controlled substances; violation of any policy or procedure of the Company or its
Subsidiaries applicable to the Option Holder which is deemed in good faith by the Board to
be harmful to the Company or its Subsidiaries; violation of any provision of any written
agreement between the Company (or one of its Subsidiaries) and the Option Holder which
permits termination of such Agreement; or failure to perform satisfactorily in the judgment
of the Board a substantial portion of his or her duties to the Company or

 

 

its Subsidiaries after having been advised by the Company or the Subsidiary, if applicable,
that his or her performance has been deemed to be unsatisfactory.

     D. “Code” means the Internal Revenue Code of 1986, as amended, and any
regulations or rulings promulgated thereunder. Reference to any Section of the Code
includes the provisions of that Section as it may be amended or replaced by any
other section(s) or statute of like intent and purpose.

     E. “Company” means the Company.

     F. “Consultant” means any natural person who provides bona fide
services to the Company or its Subsidiaries, who is not on the regular payroll of
the Company or its Subsidiaries and whose services neither are in connection with
the offer or sale of securities of the Company in a capital-raising transaction nor
directly or indirectly promote or maintain a market for the Company’s securities.

     G. “Date of Grant” means date when the Board completes the corporate
action necessary to create the legally binding right constituting the Option. For
this purpose, Board action creating the legally binding right constituting the
Option is not considered complete until the date on which the maximum number of
Shares that can be purchased under the Option and the minimum exercise price are
fixed or determinable, and the class of underlying Common Stock and the identity of
the Option Holder is designated. If the Board action provides for an immediate
offer of Common Stock for sale to an Option Holder, or provides for a particular
date on which such offer is to be made, the Date of Grant of the Option is the date
of such Board action if the offer is to be made immediately, or the date provided as
the date of the offer, as the case may be.

     H. “Disability” means a permanent and total disability, as defined in
Section 22(e)(3) of the Code, as determined by the Board in good faith, upon receipt
of medical advice from one or more individuals, selected by the Board, who are
qualified to give professional medical advise.

     I. “Eligible Employee” means any employee (including any officer) of
the Company or a Subsidiary, including any such employee who is on an approved leave
of absence, layoff, or has been subject to a disability which does not qualify as a
Disability.

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     J. “Fair Market Value” means, as of any date other than the date of an
initial public offering, (i) if the Shares are readily tradable on an established
securities market, such value as the Board shall determine in accordance with
Section 409A of the Code, or (ii) if the Shares are not readily tradable on an
established securities market, such value as the Board shall determine by either
(a) the reasonable application of a reasonable valuation method that complies with
the requirements of Treas. Reg. § 1.409A-1(b)(5)(iv)(B)(1) or (b) by using one of
the presumptive reasonable valuation methods described in Treas. Reg.
§ 1.409A-1(b)(5)(iv)(B)(2), provided that, in either case, once a
single valuation method is used to determine the Fair Market Value of a Share, such
value may not be changed through the retroactive use of another valuation method.
Solely as of the date of an initial public offering, “Fair Market Value” of
a Share shall mean the price to the public pursuant to the form of final prospectus
used in connection with the initial public offering, as indicated on the cover page
of such prospectus or otherwise.

     K. “Incentive Stock Option” shall have the same meaning as is given to
that term by Section 422 of the Code.

     L. “Mature Shares” means Shares which have been fully paid and held, of
record or beneficially, by the holder free and clear of all liens and encumbrances,
and which such holder has held for at least six months.

     M. “Nonemployee Member of the Board of Advisors” means any member of
the Board of Advisors who is not an Eligible Employee.

     N. “Nonemployee Director” means any member of the Board of Directors
who is not an Eligible Employee.

     O. “Nonqualified Stock Option” means any Option other than an Incentive
Stock Option.

     P. “Option” means the right or privilege of an individual, subject to
the terms of this Plan and to such other terms and conditions as the Board may
establish, to purchase a maximum number of Shares from the Company by virtue of an
offer of the Company continuing for a stated period of time, whether or not
irrevocable, to sell such Shares at a specified price per Share, such individual
being under no obligation to purchase.

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     Q. “Option Holder” means any Eligible Employee, Nonemployee Member of
the Board of Advisors, Nonemployee Director or Consultant to whom an Option has been
granted under the Plan.

     R. “Option Price” means the consideration in cash or property that,
pursuant to the terms of the Option, is the price at which a Share subject to the
Option is purchasable. The term “Option Price” does not include any amounts
paid as interest under a deferred payment plan or treated as interest. The Option
Price for a Share shall not be less than the Fair Market Value of a Share on the
Date of Grant.

     S. “Share” means one share of the Common Stock, no par value, of the
Company.

     T. “Subsidiary” means, with respect to grants of Nonqualified Stock
Options, any corporation in a chain of corporations or other entities in which each
corporation or other entity has a controlling interest in another corporation or
other entity in the chain, ending with the Company (or any successor thereto) that
has a controlling interest in the corporation or other entity for which the Eligible
Employee or Consultant provides direct services on the Date of Grant of the Option.
For this purpose, the term “controlling interest” has the same meaning as provided
in Treas. Reg. § 1.414(c)-2(b)(2)(i), provided that the language “at least 50
percent” is used instead of “at least 80 percent” each place it appears in Treas.
Reg. §1.414(c)-2(b)(2)(i).

     In addition, with respect to the grant of a Nonqualified Stock Option to an
Eligible Employee or Consultant that is based upon legitimate business criteria, the
term “controlling interest” has the same meaning as provided in Treas. Reg. §
1.414(c)-2(b)(2)(i), provided that the language “at least 20 percent” is used
instead of “at least 80 percent” each place it appears in Treas. Reg.
§ 1.414(c)-2(b)(2)(i). For purposes of determining ownership of an interest in an
organization, the rules of Treas. Reg. §§ 1.414(c)-3 and 1.414(c)-4 apply. The
determination of whether a grant of a Nonqualified Stock Option is based on
legitimate business criteria is based on the facts and circumstances, focusing
primarily on whether there is a sufficient nexus between the Eligible Employee or
Consultant and the Company so that the grant serves a legitimate non-tax business
purpose other than simply providing compensation to the Eligible Employee or
Consultant that is excluded from the requirements of Section 409A of the Code.

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     With respect to grants of Incentive Stock Options, the term
“Subsidiary” means any corporation and any other entity considered a
subsidiary as defined in Section 424(f) of the Code.

ARTICLE III

ADMINISTRATION

     3.1 Administration. The Plan shall be administered by the Board. Subject to and
consistent with the provisions of the Plan, the Board shall establish such rules and regulations as
it deems necessary or appropriate for the proper administration of the Plan, shall interpret the
provisions of the Plan, shall decide all questions of fact arising in the application of Plan
provisions and shall make such other determinations and take such actions in connection with the
Plan and the Options granted hereunder as it deems necessary or advisable.

     3.2 Except as specifically limited by the provisions of the Plan, the Board shall have
authority to:

     A. Determine which Eligible Employees, Nonemployee Members of the Board of
Advisors, Nonemployee Directors or Consultants shall be granted Options;

     B. Determine the number of Shares which may be subject to each Option;

     C. Determine the term and the Option Price of each Option;

     D. Determine whether an Option is an Incentive Stock Option or a Nonqualified
Stock Option (except that only Nonqualified Stock Options may be granted to
Nonemployee Members of the Board of Advisors, Nonemployee Directors and
Consultants);

     E. Determine the time or times when Options will be granted; and

     F. Determine all other terms and conditions of each Option, including (but not
limited to) the terms of any Option agreement. The Board may, in its discretion,
determine as a condition of any Option that a stated percentage of Shares covered by
such Option shall vest in any one year or other stated period of

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time and may specify the conditions under which a vested Option is exercisable. The
Board may also waive or amend the terms and conditions of, or accelerate either or
both the vesting or exercisability of, an Option under circumstances selected by the
Board, except to the extent such waiver, amendment or acceleration would cause the
Option to be treated as either (i) the grant of a new Option or an extension of the
Option under Treas. Reg. § 1.409A-1(b)(5)(v) that is not exempt from the
requirements of Section 409A of the Code or (ii) as having had an additional
deferral feature from the original Date of Grant that is not permitted under
Section 8.1(C) of this Plan, as long as such waivers, amendments or accelerations
are not inconsistent with the terms of the Plan, but no such changes shall
materially impair the rights of any Option Holder without his or her consent unless
required by law or integrally related to a requirement of law.

     3.3 Any action, decision, interpretation or determination by the Board with respect to the
application or administration of this Plan shall be final and binding upon all persons, and need
not be uniform with respect to its determination of recipients, amount, timing, form, terms or
provisions of Options.

     3.4 No member of the Board shall be liable for any action or determination taken or made in
good faith with respect to the Plan or any Option granted hereunder and, to the extent not
prohibited by applicable law, all members shall be indemnified by the Company for any liability and
expenses which they may incur as a result of any claim or cause of action, or threatened claim or
cause of action, arising in connection with the administration of this Plan or the grant of any
Option hereunder.

     3.5 The Board may, at its discretion, delegate any or all of the functions to be performed by
it to a committee of the Board.

ARTICLE IV

SHARES ISSUABLE

     4.1 Except as provided in Article XI, the number of Shares which may be issued under the Plan
shall not exceed 81,500 Shares in the aggregate, all of which may be granted as Incentive Stock
Options. If any Option expires or terminates for any reason without being completely exercised,
the Shares with respect to which such Option was not exercised may again be subject to other
Options. Mature Shares tendered as payment for the Option Price pursuant to Section 7.1 shall be
available for issuance under the Plan. The Board may make such other

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determinations regarding the counting of Shares issued pursuant to the Plan as it deems necessary
or advisable, provided that such determinations shall be permitted by law.

ARTICLE V

GRANTING OF OPTIONS

     5.1 Subject to the terms and conditions of the Plan, the Board may, from time to time, grant
Options to Eligible Employees, Nonemployee Members of the Board of Advisors, Nonemployee Directors
or Consultants on such terms and conditions as it shall determine, except that Incentive Stock
Options may only be granted to Eligible Employees. Each Option granted shall be designated as
either a Nonqualified Stock Option or an Incentive Stock Option. More than one Option and more
than one form of Option may be granted to the same individual.

ARTICLE VI

EXERCISE OF OPTIONS

     6.1 Any person entitled to exercise an Option may do so in whole or in part, to the extent the
Option is vested, by delivering to the Company, attention: Secretary, at its principal office, a
written notice of exercise. The written notice shall specify the number of Shares for which an
Option is being exercised and shall be accompanied by full payment of the Option Price for the
Shares being purchased.

ARTICLE VII

PAYMENT OF OPTION PRICE

     7.1 Subject to such administrative requirements as the Board may impose, payment of the Option
Price may be made, at the election of the Option Holder, in cash or by the tender of Mature Shares
or by a combination of the foregoing. If payment by the tender of Mature Shares is selected, the
value of each Mature Share shall be deemed to be the Fair Market Value of a Share on the day the
Mature Shares are tendered for payment, which shall be the date on which the Mature Shares, duly
endorsed or accompanied by a stock power duly endorsed for transfer to the Company, are received by
the Company.

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ARTICLE VIII

INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS

     8.1 Any Option designated as a Nonqualified Stock Option will be subject to the following
specific provisions:

     A. The Option Price per Share shall never be less than the Fair Market Value of a
Share on the Date of Grant, subject to adjustment pursuant to Article XI.

     B. The transfer or exercise of the Nonqualified Stock Option is subject to taxation
under Section 83 and Treas. Reg. § 1.83-7.

     C. In no event shall a Nonqualified Stock Option awarded under this Plan include any
feature for the deferral of compensation other than the deferral of recognition of income
until the later of exercise or disposition of the Option under Treas. Reg. § 1.83-7, or the
time the Share acquired pursuant to the exercise of the Option first becomes substantially
vested (as defined in Treas. Reg. § 1.83-3(b)).

     D. The number of Shares subject to the Nonqualified Stock Option shall be fixed on the
Date of Grant, subject to adjustment pursuant to Article XI.

     8.2 Any Option designated as an Incentive Stock Option will be subject to the general
provisions applicable to all Options granted under the Plan, including those set forth in Section
8.1 above. In addition, an Incentive Stock Option shall be subject to the following specific
provisions:

     A. No Incentive Stock Option may be exercised after the expiration of ten
years from the Date of Grant.

     B. If, at the time the Incentive Stock Option is granted, the Eligible
Employee owns, directly or indirectly, stock representing more than 10% of the
total combined voting power of all classes of stock of the Company and its
Subsidiaries, then:

     (i) The Option Price per Share must not be less than 110% of
the Fair Market Value of a Share on the Date of Grant; and

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     (ii) The term of the Incentive Stock Option shall not be
greater than five years from the Date of Grant.

     C. The aggregate Fair Market Value (determined as of the Date of Grant) of the
Shares with respect to which Incentive Stock Options become exercisable for the
first time by any Option Holder during any calendar year (under all plans of the
Company and its Subsidiaries) shall not exceed $100,000.

     D. The provisions of the Option agreement shall require the Option Holder to
notify the Company of any disposition of any Shares issued as a result of the
exercise of an Incentive Stock Option under the circumstances described in Section
421(b) of the Code (relating to certain disqualifying dispositions), within 10 days
of such disposition.

     8.3 If any Option is not granted, exercised or held pursuant to the provisions of Code Section
422, it will be considered to be a Nonqualified Stock Option to the extent that any or all of the
grant is in conflict with those provisions.

ARTICLE IX

TRANSFERABILITY OF OPTIONS

     9.1 During the lifetime of an Option Holder, an Option granted under this Plan to him or her
will be non-assignable and non-transferable and may be exercised only by such individual or that
individual’s legal representative or guardian. In the event of the death of an Option Holder, an
exercisable Option shall be transferable, to the extent the Option is vested on the date of death,
pursuant to the Option Holder’s will or by the laws of descent and distribution and may thereafter
be exercised by the transferee(s) as provided in Article X. Shares issued upon Option exercise
shall, in all cases, be subject to the provisions of Article XV.

ARTICLE X

TERMINATION OF OPTIONS

     10.1 Unless earlier terminated pursuant to Article XIII, an Option granted to an Eligible
Employee will terminate as follows:

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     A. During the period of the Eligible Employee’s continuous employment with the
Company or its Subsidiaries, the Option will terminate upon the earlier of the date
on which it has been fully exercised, it expires by its terms or it is terminated by
the mutual agreement of the Company and the Eligible Employee.

     B. Upon termination of the Eligible Employee’s employment with the Company or
its Subsidiaries for any reason any unexercisable Option, whether or not vested,
shall immediately terminate. Except as provided in Section 10.1(C) or Section
10.1(D), any Option which is vested (in whole or part) and exercisable on the date
of termination of employment will terminate upon the earlier of its full exercise
(to the extent vested on the date of termination of employment), the expiration of
the Option by its terms or the end of the three-month period following the date of
termination. For purposes of the Plan, military leave, sick leave, or other bona
fide leave of absence shall not be deemed to be termination of employment.

     C. If an Eligible Employee to whom an Option was granted dies or becomes
subject to a Disability while employed by the Company or a Subsidiary, an Option
which is vested (in whole or part) and exercisable on the date of death or the
commencement of Disability may be exercised at any time within one year after the
date of death or the commencement of Disability, to the extent that the Eligible
Employee was entitled to exercise it at the time of death or the commencement of
Disability, by the Eligible Employee or the Eligible Employee’s legal representative
or guardian or by the representative(s) of the Eligible Employee’s estate or the
person(s) to whom the Option may have been transferred by will or by the laws of
descent and distribution.

     D. Upon termination by the Company or its Subsidiaries of the Eligible
Employee’s employment for Cause, all unexercised Options, whether vested or not,
held by the Eligible Employee at the time of termination shall immediately
terminate. In addition, if an Eligible Employee terminates his or her employment
and the Board, in good faith, determines that grounds existed at that time for the
Company or Subsidiary to terminate the Eligible Employee for Cause, all unexercised
Options held by the Eligible Employee at the time of termination, whether then
exercisable or not, shall be deemed to have been terminated at the time of
termination of employment.

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     10.2 Unless earlier terminated pursuant to Article XIII, an Option granted to a Nonemployee
Member of the Board of Advisors will terminate as follows:

     A. During the period of the Nonemployee Member of the Board of Advisors’
continuous service as a member of the Board of Advisors, the Option will terminate
upon the earlier of the date on which it has been fully exercised, it expires by its
terms or it is terminated by the mutual agreement of the Company and the Nonemployee
Member of the Board of Advisors.

     B. Upon termination of the Nonemployee Member of the Board of Advisors’ service
as a member of the Board of Advisors for any reason any unexercisable Option,
whether or not vested, shall immediately terminate. Except as provided in Section
10.2(C) or Section 10.2(D), any Option which is vested (in whole or part) and
exercisable on the date of termination of service as a member of the Board of
Advisors will terminate upon the earlier of its full exercise (to the extent vested
on the date of termination of service), the expiration of the Option by its terms or
the end of the three-month period following the date of termination.

     C. If a Nonemployee Member of the Board of Advisors to whom an Option was
granted dies or becomes subject to a Disability while serving on the Board of
Advisors, an Option which is vested (in whole or part) and exercisable on the date
of death or the commencement of Disability may be exercised at any time within one
year after the date of death or the commencement of Disability, to the extent that
the Nonemployee Member of the Board of Advisors was entitled to exercise it at the
time of death or the commencement of Disability, by the Nonemployee Member of the
Board of Advisors or the Nonemployee Member of the Board of Advisors’ legal
representative or guardian or by the representative(s) of the Nonemployee Member of
the Board of Advisors’ estate or the person(s) to whom the Option may have been
transferred by will or by the laws of descent and distribution.

     D. If the Board should determine that a Nonemployee Member of the Board of
Advisors has engaged in conduct that, if the Nonemployee Member of the Board of
Advisors were an Eligible Employee, would be grounds for termination of employment
for Cause, all unexercised Options, whether vested or not, held by the Nonemployee
Member of the Board of Advisors at the time of such determination shall immediately
terminate. In addition, if a Nonemployee Member of the Board of Advisors resigns as
a member of the Board of Advisors,

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and the Board, in good faith, determines that grounds existed at that time for the
Board to have made such a determination, all unexercised Options held by the
Nonemployee Member of the Board of Advisors at the time of resignation, whether then
exercisable or not, shall be deemed to have been terminated at the time of
resignation.

     10.3 Unless earlier terminated pursuant to Article XIII, an Option granted to a Nonemployee
Director will terminate as follows:

     A. During the period of the Nonemployee Director’s continuous service as a
member of the Board, the Option will terminate upon the earlier of the date on which
it has been fully exercised, it expires by its terms or it is terminated by the
mutual agreement of the Company and the Nonemployee Director.

     B. Upon termination of the Nonemployee Director’s service as a member of the
Board for any reason any unexercisable Option, whether or not vested, shall
immediately terminate. Except as provided in Section 10.3(C) or Section 10.3(D),
any Option which is vested (in whole or part) and exercisable on the date of
termination of service as a member of the Board will terminate upon the earlier of
its full exercise (to the extent vested on the date of termination of service), the
expiration of the Option by its terms or the end of the three-month period following
the date of termination.

     C. If a Nonemployee Director to whom an Option was granted dies or becomes
subject to a Disability while serving on the Board, an Option which is vested (in
whole or part) and exercisable on the date of death or the commencement of
Disability may be exercised at any time within one year after the date of death or
the commencement of Disability, to the extent that the Nonemployee Director was
entitled to exercise it at the time of death or the commencement of Disability, by
the Nonemployee Director or the Nonemployee Director’s legal representative or
guardian or by the representative(s) of the Nonemployee Director’s estate or the
person(s) to whom the Option may have been transferred by will or by the laws of
descent and distribution.

     D. If the Board should determine that a Nonemployee Director has engaged in
conduct that, if the Nonemployee Director were an Eligible Employee, would be
grounds for termination of employment for Cause, all unexercised Options, whether
vested or not, held by the Nonemployee Director at the time of

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such determination shall immediately terminate. In addition, if a Nonemployee
Director resigns as a member of the Board, and the Board, in good faith, determines
that grounds existed at that time for the Board to have made such a determination,
all unexercised Options held by the Nonemployee Director at the time of resignation,
whether then exercisable or not, shall be deemed to have been terminated at the time
of resignation.

     10.4 Unless earlier terminated pursuant to Article XIII, an Option granted to a Consultant
will terminate as follows:

     A. During the period of the Consultant’s continuous service to the Company or
its Subsidiaries, the Option will terminate upon the earlier of the date on which it
has been fully exercised, it expires by its terms or it is terminated by the mutual
agreement of the Company and the Consultant.

     B. On the date the Consultant is no longer providing services to the Company or
its Subsidiaries (as determined by the Board), for any reason any unexercisable
Option, whether or not vested, shall immediately terminate. Except as provided in
Section 10.4(C) or Section 10.4(D), any Option which is vested (in whole or part)
and exercisable on the date the Consultant is no longer providing services will
terminate upon the earlier of its full exercise (to the extent vested on the date of
termination of services), the expiration of the Option by its terms or the end of
the three-month period following the date the Consultant is no longer providing
services.

     C. If a Consultant to whom an Option was granted dies or becomes subject to a
Disability while providing services to the Company, an Option which is vested (in
whole or part) and exercisable on the date of death or the commencement of
Disability may be exercised at any time within one year after the date of death or
the commencement of Disability, to the extent that the Consultant was entitled to
exercise it at the time of death or the commencement of Disability, by the
Consultant or the Consultant’s legal representative or guardian or by the
representative(s) of the Consultant’s estate or the person(s) to whom the Option may
have been transferred by will or by the laws of descent and distribution.

     D. Upon termination by the Company of the Consultant’s services for Cause, all
unexercised Options, whether vested or not, held by the Consultant at the time of
termination shall immediately terminate. In addition, if a Consultant

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terminates providing his or her services and the Board, in good faith, determines
that grounds existed at that time for the Company to terminate the Consultant’s
services for Cause, all unexercised Options held by the Consultant at the time of
termination, whether then exercisable or not, shall be deemed to have been
terminated at the time of termination of services.

     10.5 Notwithstanding the foregoing provisions of this Article X, the Board may, in its
discretion, upon granting an Option provide in the Option agreement for such other periods by which
an Option may be exercised. In addition, the Board, at its discretion may extend the periods for
Option exercise as set forth in this Article X or in the Option agreement, provided that such
extension would not cause the Option to be treated as having had an additional deferral feature not
permitted under Section 8.1(C) of this Plan.

ARTICLE XI

ADJUSTMENTS TO SHARES AND OPTION PRICE

     11.1 If the Company shall at any time after the effective date of the Plan change the number
of issued Shares without new consideration to the Company (such as by stock dividend, stock split,
reverse stock split, recapitalization, reorganization, exchange of shares, liquidation, combination
or other change in corporate structure affecting the Shares) or make a distribution to shareholders
of cash or property (such as a large nonrecurring cash dividend or in a spin-off or split-up) which
has a substantial impact on the value of outstanding Shares (collectively, an “Equity
Restructuring”), then the numbers of Shares specified in Section 4.1, the specified or fixed
numbers of Shares covered by each outstanding Option, and, if applicable, the Option Price (the
“Adjusted Items”) shall be proportionately and equitably adjusted; provided that (i) any
adjustments made in the number of Shares with respect to which Incentive Stock Options may be or
have been granted shall be made in accordance with Code Section 424, (ii) the numbers of Shares
covered by each outstanding Option shall be made in accordance with Section 409A of the Code, and
(iii) fractions of a Share will not be issued but either will be replaced by a cash payment equal
to the Fair Market Value of such fraction of a Share or will be rounded down to the nearest whole
Share, as determined by the Board. The determination of whether an Equity Restructuring has
occurred, and what adjustments are to be made to Adjusted Items, shall be made by the Board in good
faith in such manner as it deems necessary or appropriate in order to prevent enlargement or
dilution of the rights and benefits (or potential benefits) intended to be made available under the
Plan.

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     In the event the type of Shares to be issued hereunder are affected on account of a merger,
consolidation, recapitalization, reclassification, combination, stock dividend, stock split, or
other similar event, the type of Shares issuable under this Plan in substitution of, or in exchange
for, the Shares shall be a class of stock that is common stock for purposes of Section 305 of the
Code of a corporation that is an eligible issuer of service recipient stock (within the meaning of
the Treas. Reg. § 1.409-1(b)(5)(iii)(E)). However, under no circumstances shall the Shares be
substituted or exchanged for a class of stock that (x) has any preference as to distributions other
than distributions of such stock and distributions in liquidation of the issuer or (y) is subject
to a mandatory repurchase obligation (other than a right of first refusal), or a put or call right
that is not a lapse restriction (as defined in Treas. Reg. § 1.83-3(i)) if the stock price under
such right or obligation is based on a measure other than the fair market value (disregarding lapse
restrictions as defined in §1.83-3(i)) of the equity interest in the corporation represented by the
stock.

ARTICLE XII

AMENDMENT OR TERMINATION OF PLAN

     12.1 The Board may at any time amend, suspend or terminate the Plan; provided, however, that
shareholder approval shall be required for any amendment if such approval is required pursuant to
the Code, or any rule or regulation thereunder, as such may be in effect and be interpreted from
time to time. Notwithstanding anything in this Plan to the contrary, the Board, in its discretion,
may amend the Plan or any Option agreement to cause the Plan and such Option to remain beyond the
scope of the types of compensatory arrangements that are subject to the requirements of Section
409A of the Code. In no event may an amendment to the Plan or any Option agreement (for example,
certain modifications, extensions or a renewals) be made if it would cause an Option to be
considered a deferral of compensation under Section 409A of the Code.

     12.2 Except as otherwise provided in Section 12.1, no amendment to the Plan shall alter or
impair any Option granted under the Plan without the consent of the holder thereof.

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ARTICLE XIII

CERTAIN EVENTS

     13.1 Subject to Section 13.4, in the event the Company shall consolidate with, merge into, or
transfer all or substantially all of its assets to another corporation or other entity (a
“successor corporation”), such successor corporation may obligate itself to continue this
Plan and to assume all obligations under the Plan. In the event such successor corporation assumes
the obligations under this Plan, the numbers of Shares or Option Price of Option shall be adjusted
in accordance with Section 11.1. In the event that such successor corporation does not obligate
itself to continue this Plan as above provided, the Plan shall terminate effective upon such
consolidation, merger or transfer and any Option previously granted hereunder shall terminate. If
practical, the Company shall give each Option Holder twenty (20) days prior notice of any possible
transaction which might terminate this Plan and the Options previously granted hereunder.

     13.2 Subject to Section 13.4, in the event any person (other than Thomas M. O’Gara or any of
his affiliates), by any means of purchase or acquisition, becomes the “beneficial owner” (as
defined in Exchange Act Rule 13d-3 as in effect on February 28, 2002) of more than 50% of the
outstanding Shares of the Company, or commences a tender offer pursuant to Exchange Act Regulation
14C (as in effect on February 28, 2002) which, if successful, would result in such person becoming
the beneficial owner of more than 50% of such Shares, then all Options which are outstanding at the
time of such event shall immediately become fully vested and exercisable in full.

     13.3 Subject to Section 13.4, in the event of the execution of an agreement of reorganization,
merger or consolidation of the Company with one or more corporations or other entities as a result
of which the Company is not to be the surviving corporation (whether or not the Company shall be
dissolved or liquidated) or the execution of an agreement of sale or transfer of all or
substantially all of the assets of the Company, then all Options which are outstanding at the time
of such event shall immediately become fully vested and exercisable in full.

     13.4 The grant of Options under the Plan shall in no way affect the right of the Company to
adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

16

 

     13.5 Notwithstanding the foregoing, in the event the amounts deemed payable under this Article
XIII when added to all other payments to the Option Holder by the Company, would, if made,
constitute excess parachute payments within the meaning of Sections 280G and 4999 of the Code, the
amounts deemed payable by the Company under this Article shall be reduced by the amount deemed
necessary to cause the holder to receive $1,000.00 less than three times the holder’s base amount
(as that term is defined in Code Section 280G) from all such payments to the holder from the
Company. In the event the amount of the payments exceeds the amount subsequently determined to
have been due, the excess benefits over three times the base amount shall be returned immediately
to the Company by the holder.

ARTICLE XIV

EFFECTIVE DATE

     14.1 This Plan became effective on June 28, 2005. No Option shall be granted pursuant to this
Plan subsequent to June 27, 2015 or subsequent to any earlier date as of which this Plan is
terminated.

ARTICLE XV

REPURCHASE OF OPTION SHARES

     15.1 In the event an Eligible Employee exercises an Option and thereafter, while still an
employee of the Company, wishes to sell the Shares received upon exercise, he or she shall first
offer to sell such Shares to the Company. The Eligible Employee shall give notice to the Company
at least 15 days prior to the proposed sale. The notice shall include the identity of the proposed
purchaser and the details of the terms of the proposed purchase. The Company shall have ten days
after receipt of this notice to advise the Eligible Employee that the Company has decided to
purchase the Shares on the same terms. If the terms of the proposed purchase involve consideration
other than cash, the Company may pay with consideration of comparable value. The purchase will be
closed within five days after notice is given by the Company. If the Company does not purchase the
Shares, the Eligible Employee may proceed with the proposed sale, but only on the terms described
in the original notice. The proposed sale must be completed within 30 days after the end of the
Company’s ten-day reply period.

     15.2 In the event a Nonemployee Member of the Board of Advisors exercises an Option and
thereafter, while still serving as a member of the Board of Advisors, wishes to sell

17

 

the Shares received upon exercise, he or she shall first offer to sell such Shares to the Company.
The Nonemployee Member of the Board of Advisors shall give notice to the Company at least 15 days
prior to the proposed sale. The notice shall include the identity of the proposed purchaser and
the details of the terms of the proposed purchase. The Company shall have ten days after receipt
of this notice to advise the Nonemployee Member of the Board of Advisors that the Company has
decided to purchase the Shares on the same terms. If the terms of the proposed purchase involve
consideration other than cash, the Company may pay with consideration of comparable value. The
purchase will be closed within five days after notice is given by the Company. If the Company does
not purchase the Shares, the Nonemployee Member of the Board of Advisors may proceed with the
proposed sale, but only on the terms described in the original notice. The proposed sale must be
completed within 30 days after the end of the Company’s ten-day reply period.

     15.3 In the event a Nonemployee Director exercises an Option and thereafter, while still
serving as a member of the Board, wishes to sell the Shares received upon exercise, he or she shall
first offer to sell such Shares to the Company. The Nonemployee Director shall give notice to the
Company at least 15 days prior to the proposed sale. The notice shall include the identity of the
proposed purchaser and the details of the terms of the proposed purchase. The Company shall have
ten days after receipt of this notice to advise the Nonemployee Director that the Company has
decided to purchase the Shares on the same terms. If the terms of the proposed purchase involve
consideration other than cash, the Company may pay with consideration of comparable value. The
purchase will be closed within five days after notice is given by the Company. If the Company does
not purchase the Shares, the Nonemployee Director may proceed with the proposed sale, but only on
the terms described in the original notice. The proposed sale must be completed within 30 days
after the end of the Company’s ten-day reply period.

     15.4 In the event a Consultant exercises an Option and thereafter, while still providing
services to the Company, wishes to sell the Shares received upon exercise, he or she shall first
offer to sell such Shares to the Company. The Consultant shall give notice to the Company at least
15 days prior to the proposed sale. The notice shall include the identity of the proposed
purchaser and the details of the terms of the proposed purchase. The Company shall have ten days
after receipt of this notice to advise the Consultant that the Company has decided to purchase the
Shares on the same terms. If the terms of the proposed purchase involve consideration other than
cash, the Company may pay with consideration of comparable value. The purchase will be closed
within five days after notice is given by the Company. If the Company does not purchase the
Shares, the Consultant may proceed with the proposed sale, but only on the terms described in the
original notice. The proposed sale must be completed within 30 days after the end of the Company’s
ten-day reply period.

18

 

     15.5 A. The provisions of this Article XV shall not apply to any Option Holder who is also a
party to the Company’s Second Amended and Restated Shareholder’s Agreement, dated July 14, 2006, as
amended and supplemented from time to time (“Buy-Sell Agreement”), so long as the Shares
acquired as a result of Options granted under this Plan are subject to the terms of the Buy-Sell
Agreement; provided that under no circumstances shall the Shares acquired under this Plan include
or be subject to a mandatory repurchase obligation (other than a right of first refusal), or a put
or call right that is not a lapse restriction (as defined in Treas. Reg. § 1.83-3(i)) if the per
Share price under such right or obligation is based on a measure other than the Fair Market Value
(disregarding lapse restrictions as defined in §1.83-3(i)) of a Share.

             B. The provisions of this Article XV shall terminate upon the earlier to occur of: (i) the
successful completion of a public offering of the Common Stock, no par value, of the Company that
is registered under the Securities Act of 1933 and which results, upon completion, in the Common
Stock being listed on a national stock exchange or a national trading or quotation system; or (ii)
the completion of a transaction which results in the Options granted under this Plan becoming
rights to purchase securities of another entity which are listed on a national stock exchange or a
national trading or quotation system.

ARTICLE XVI

MISCELLANEOUS

     16.1 Nothing contained in this Plan shall constitute the granting of an Option. Each Option
shall be represented by a written Option agreement executed by both the Option Holder and the
Company.

     16.2 Certificates for Shares purchased through exercise of Options will be issued in regular
course after exercise of the Option and payment therefor as called for by the provisions of the
Option agreement. No person holding an Option or entitled to exercise an Option granted under this
Plan shall have any rights or privileges of a shareholder of the Company with respect to any Shares
issuable upon exercise of such Option until certificates representing such Shares shall have been
issued and delivered. Notwithstanding any provision of this Plan or any Option agreement, no
Option may be transferred, and no Option shall be exercisable or Shares issued and delivered upon
exercise of an Option, unless and until the Company has complied with any and all applicable
federal and state securities laws, listing requirements of any market or national securities
exchange on which the Company’s Shares may then be traded and other requirements of law. Any
certificate representing Shares acquired upon exercise of an Option may bear such

19

 

legends as the Company deems advisable to assure compliance with all applicable laws and
regulations.

     16.3 All Shares acquired upon exercise of Options granted under this Plan shall be subject to
such “lock-up” arrangements as the underwriters reasonably may impose in the event of an initial
public offering by the Company.

     16.4 Nothing contained in this Plan or in any Option granted pursuant to it shall confer upon
any person any right to continue in the employ of or perform services for the Company or a
Subsidiary or to interfere in any way with the right of the Company or a Subsidiary to terminate a
person’s employment or service with the Company or Subsidiary at any time. So long as a holder of
an Option shall continue to be an employee of the Company or a Subsidiary, the Option shall not be
affected by any change of the employee’s duties or position.

     16.5 This Plan shall be construed and administered in accordance with and governed by the laws
of the State of Ohio.

     16.6 For federal income tax purposes, the Plan and the Options granted hereunder are intended
to be exempt from Section 409A of the Code as a result of compliance with the exemptions set forth
Treas. Reg. §§ 1.409A-1(b)(5)(i)(A) (relating to the exemption for Nonqualified Stock Options) and
1.409A-1(b)(5)(ii) (relating to the exemption for Incentive Stock Options). This Plan and all
Options granted hereunder shall be interpreted, operated and administered in a manner consistent
with this intention.

     16.7 When Shares are to be delivered upon exercise of an Option, the Company shall be entitled
to require (i) that the Option Holder remit an amount in cash, or if determined by the Board,
Mature Shares, sufficient to satisfy all federal, state, local and foreign tax withholding
requirements related thereto (“Required Withholding”), (ii) the withholding of such
Required Withholding from compensation otherwise due to the Option Holder or from any Shares to be
delivered to the Option Holder under the Plan, or (iii) any combination of the foregoing.

20EX-10.3

Exhibit 10.3

FORM

[2004/2005] STOCK OPTION PLAN

STOCK OPTION AWARD AND AGREEMENT

NON-QUALIFIED STOCK OPTION

You have been awarded a stock option under The O’Gara Group, Inc.’s [2004/2005] Stock Option Plan
(“[2004/2005] Plan”). This award gives you an opportunity to share in the Company’s long-term
growth through an option to buy shares of the Company’s common stock at a fixed price at some
future date. Over time, assuming the Company’s stock price increases, this stock option can
provide you with additional compensation. Please read and return this Agreement as requested
below.

GRANT: The O’Gara Group, Inc. (“Company”) grants to you, the Optionee named below, a
Non-Qualified Stock Option (the “Option”) to purchase [   ] shares of the Company’s common stock
(the “Shares”) as follows:

	 	 	 	 	 	 	 	 	 
	Optionee:

	 	Shares:
	 	Vest Date:
	 	Exercise Price:
	 	Grant Date:
	[          ]

	 	[          ]
	 	[          ]
	 	[          ]
	 	[          ]

VESTING: The Shares granted pursuant to the Option will become fully vested on the date
shown.

TERM: Except as otherwise provided in the [2004/2005] Plan, and except that unvested
options terminate immediately upon termination of employment or the provision of consulting
services (including a non-employee’s service on the Company’s Board of Directors or Board of
Advisors) with or to the Company, the Option terminates on the earlier of (i) ten years less one
day from the Grant Date; or (ii) three months from the date of termination of your employment or
the provision of consulting services (including a non-employee’s service on the Company’s Board of
Directors or Board of Advisors) with or to the Company for any reason other than Cause (as defined
in the [2004/2005] Plan) disability or death; or (iii) immediately upon termination for Cause; or
(iv) twelve months from the date of termination of your employment or the provision of consulting
services (including a non-employee’s service on the Company’s Board of Directors or Board of
Advisors) with or to the Company by reason of disability or death.

EXERCISE: The Option may be exercised in whole or in part for the number of Shares
specified in a written notice that is delivered to the Company and is accompanied by full payment
in cash or other shares of the Company’s common stock owned by you. You will have no rights in the
Shares purchased until certificates for those Shares have been issued in your name and delivered.

TAXES: You must pay all applicable taxes, including federal, state and local, including
withholding taxes, if any, resulting from the exercise of the option and the subsequent sale of the
Shares.

 

 

CONDITIONS: The Option is governed by the terms of this Agreement and the [2004/2005] Plan.
The rights and obligations of each of the Company and you under this Agreement also are governed
by and subject to applicable federal, state and locals laws and rules. Neither the Company nor you
shall violate any such laws or rules.

TRANSFER: This Option is not transferable by you other than by will or the laws of
descendent and distribution and is exercisable, during your lifetime, only by you or your legal
representative or guardian.

ACKNOWLEDGEMENT: Your signature on this Agreement also constitutes your acknowledgement
that you have received a copy of the [2004/2005] Plan.

ACCEPTANCE: To accept this award, please sign and return one copy immediately. Without
your signature, this Agreement is not valid.

	 	 	 	 	 	 	 
	 	 	THE O’GARA GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	OPTIONEE
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

Optionee Signature

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

Printed Name

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

Home Address

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

Social Security Number

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

Date Accepted

	 	 	 	 	 	 

2

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