EX-10.24 4 file004.htm STOCK INCENTIVE PLAN

 
 
 
                              ARMOR HOLDINGS, INC.
                 AMENDED AND RESTATED 2002 STOCK INCENTIVE PLAN
 
         1. PURPOSE. The purpose of Armor Holdings, Inc. 2002 Stock Incentive
Plan (the "Plan") is to provide a means through which the Company and its
Subsidiaries and Affiliates may attract able persons to enter and remain in the
employ of the Company and its Subsidiaries and Affiliates and to provide a means
whereby eligible persons can acquire and maintain Common Stock ownership, or be
paid incentive compensation measured by reference to the value of Common Stock,
thereby strengthening their commitment to the welfare of the Company and its
Subsidiaries and Affiliates and promoting an identity of interest between
stockholders and these eligible persons.
 
         So that the appropriate incentive can be provided, the Plan provides
for granting Incentive Stock Options, Nonqualified Stock Options, Restricted
Stock Awards and Stock Bonuses, or any combination of the foregoing. Capitalized
terms not defined in the text are defined in Section 24.
 
         2. SHARES SUBJECT TO THE PLAN. Subject to Section 18, the total number
of Shares reserved and available for grant and issuance pursuant to this Plan
will be 6,700,000 Shares. Shares that have been (a) reserved for issuance under
Options which have expired or otherwise terminated without issuance of the
underlying Shares, (b) reserved for issuance or issued under an Award granted
hereunder but are forfeited or are repurchased by the Company at the original
issue price, or (c) reserved for issuance or issued under an Award that
otherwise terminates without Shares being issued, shall be available for
issuance. At all times the Company shall reserve and keep available a sufficient
number of Shares as shall be required to satisfy the requirements of all
outstanding Options granted under this Plan and all other outstanding but
unvested Awards granted under this Plan.
 
         3. ELIGIBILITY. ISO's (as defined in Section 5 below) may be granted
only to employees (including officers and directors who are also employees) of
the Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants, independent contractors
and advisors of the Company or any Parent, Affiliate or Subsidiary of the
Company.
 
 
         4. ADMINISTRATION.
 
              4.1 Committee Authority. This Plan will be administered by the
Committee or by the Board. Any power, authority or discretion granted to the
Committee may also be taken by the Board. Subject to the general purposes, terms
and conditions of this Plan, and to the direction of the Board, the Committee
will have full power to implement and carry out this Plan. Without limitation,
the Committee will have the authority to:
 
              (a) select persons to receive Awards;
 
 
              (b) determine the nature, extent, form and terms of Awards and the
                  number of Shares or other consideration subject to
 
 
 
 
              (c) Awards;determine the vesting, exerciseability and payment of
                  Awards;
 
              (d) correct any defect, supply any omission or reconcile any
                  inconsistency in this Plan, any Award or any Award Agreement;
 
              (e) determine whether Awards will be granted singly, in
                  combination with, in tandem with, in replacement of, or as
                  alternatives to, other Awards under this Plan or any other
                  incentive or compensation plan of the Company or any Parent or
                  Subsidiary of the Company;
 
              (f) prescribe, amend and rescind rules and regulations relating to
                  this Plan or any Award;
 
              (g) construe and interpret this Plan, any Award Agreement and any
                  other agreement or document executed pursuant to this Plan;
 
              (h) grant waivers of Plan or Award conditions;
 
              (i) determine whether an Award has been earned;
 
              (j) accelerate the vesting of any Award; and
 
              (k) make all other determinations necessary or advisable for the
                  administration of this Plan.
 
         The Committee shall have the authority, subject to the provisions of
the Plan, to establish, adopt, or revise such rules and regulations and to make
all such determinations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan. The Committee's interpretation of
the Plan or any documents evidencing Awards granted pursuant thereto and all
decisions and determinations by the Committee with respect to the Plan shall be
final, binding, and conclusive on all parties unless otherwise determined by the
Board.
 
              4.2 Committee Discretion. Any determination made by the Committee
with respect to any Award will be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of this Plan
or Award, at any later time, and such determination will be final and binding on
the Company and on all persons having an interest in any Award under this Plan.
 
         5. STOCK OPTIONS. The Committee may grant Options to eligible persons
and will determine whether such Options will be intended to be "Incentive Stock
Options" within the meaning of Section 422 of the Code or any successor section
thereof ("ISO's") or nonqualified stock options (options not intended to qualify
as incentive stock options)("NQSO's"), the number of Shares subject to the
Option, the Exercise Price of the Option, the period during which the Option may
be exercised, and all other terms and conditions of the Option, subject to the
following:
 
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              5.1 Form of Option Grant. Each Option granted under this Plan will
be evidenced by an Award Agreement ("Stock Option Agreement"), which will
expressly identify the Option as an ISO or NQSO, and will be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.
 
              5.2 Exercise Period. Options may be exercisable to the extent
vested within the times or upon the events determined by the Committee as set
forth in the Stock Option Agreement governing such Option; provided, however,
that no Option will be exercisable after the expiration of ten (10) years from
the date the Option is granted; and provided further that no ISO granted to a
person who directly or by attribution owns more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any
Parent or Subsidiary of the Company ("Ten Percent Stockholder") will be
exercisable after the expiration of five (5) years from the date the ISO is
granted. The Committee also may provide for Options to become exercisable at one
time or from time to time, periodically or otherwise, in such number of Shares
or percentage of Shares as the Committee determines.
 
              5.3 Exercise Price. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may be greater, less
than, or equal to the Fair Market Value of the Shares on the date of grant;
provided that: (i) the Exercise Price of an ISO will be not less than 100% of
the Fair Market Value of the Shares on the date of grant; and (ii) the Exercise
Price of any ISO granted to a Ten Percent Stockholder will not be less than 110%
of the Fair Market Value of the Shares on the date of grant.
 
              5.4 Date of Grant. The date of grant of an Option will be the date
on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
 
              5.5 Method of Exercise. Options may be exercised only by delivery
to the Company of a written stock option exercise agreement (the "Exercise
Agreement") in a form approved from time to time by the Committee (which need
not be the same for each Participant), stating the number of Shares being
purchased, the restrictions imposed on the Shares purchased under such Exercise
Agreement, if any, and such representations and agreements regarding
Participant's investment intent and access to information and other matters, if
any, as may be required or desirable by the Company to comply with applicable
securities laws, together with payment in full of the Exercise Price for the
number of Shares being purchased. Payment for the Shares purchased may be made
in accordance with Section 8 of this Plan.
 
              5.6 Termination. Unless otherwise expressly provided in an Award
Agreement or otherwise determined by the Committee, exercise of an Option will
always be subject to the following:
 
              a. If the Participant is Terminated for any reason (including
                 voluntary Termination) other than death or Disability, then the
                 Participant may exercise such Participant's Options only to the
                 extent that such Options would have been exercisable upon the
                 Termination Date no later than three (3) months after the
                 Termination Date (or such
 
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                 shorter or longer time period not exceeding five (5) years as
                 may be determined by the Committee, with any exercise beyond
                 three (3) months after the Termination Date deemed to be a
                 NQSO), but in any event, no later than the expiration date of
                 the Options.
 
              b. If the Participant is Terminated because of Participant's death
                 or Disability (or the Participant dies within three (3) months
                 after a Termination other than for Cause or because of
                 Participant's Disability), then Participant's Options may be
                 exercised only to the extent that such Options would have been
                 exercisable by Participant on the Termination Date and must be
                 exercised by Participant (or Participant's legal representative
                 or authorized assignee) no later than twelve (12) months after
                 the Termination Date (or such shorter or longer time period not
                 exceeding five (5) years as may be determined by the Committee,
                 with any such exercise beyond twelve (12) months after the
                 Termination Date when the Termination is for Participant's
                 death or Disability, deemed to be a NQSO), but in any event no
                 later than the expiration date of the Options.
 
              c. Notwithstanding the provisions in paragraph 5.6(a) above, if a
                 Participant is terminated for Cause, neither the Participant,
                 the Participant's estate nor such other person who may then
                 hold the Option shall be entitled to exercise any Option with
                 respect to any Shares whatsoever, after termination of service,
                 whether or not after termination of service the Participant may
                 receive payment from the Company or Subsidiary for vacation
                 pay, for services rendered prior to termination, for services
                 rendered for the day on which termination occurs, for salary in
                 lieu of notice, or for any other benefits. In making such
                 determination, the Committee shall give the Participant an
                 opportunity to present to the Committee evidence on his behalf.
                 For the purpose of this paragraph, termination of service shall
                 be deemed to occur on the date when the Company dispatches
                 notice or advice to the Participant that his or her service is
                 terminated.
 
              d. If the Participant is not an employee or a director, the Award
                 Agreement shall specify treatment of the Award upon
                 Termination.
 
         5.7 Limitations on ISO. The aggregate Fair Market Value (determined as
of the date of grant) of Shares with respect to which ISO's are exercisable for
the first time by a Participant during any calendar year (under this Plan or
under any other incentive stock option plan of the Company, Parent or Subsidiary
of the Company) will not exceed $100,000 or such other amount as may be required
by the Code. If the Fair Market Value of Shares on the date of grant with
respect to which ISO's are exercisable for the first time by a Participant
during any calendar year exceeds $100,000, then the Options for the first
$100,000 worth of Shares to become exercisable in such calendar year will be
ISO's and the Options for the amount in excess of $100,000 that become
exercisable in that calendar year will be NQSO's. In the event that the
 
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Code or the regulations promulgated thereunder are amended after the Effective
Date of this Plan to provide for a different limit on the Fair Market Value of
Shares permitted to be subject to ISO's, such different limit will be
automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.
 
              5.8 Modification, Extension or Renewal. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that, except as expressly provided for in the
Plan or an Award Agreement, any such action may not, without the written consent
of a Participant, impair any of such Participant's rights under any Option
previously granted and (ii) except as provided for in Section 18 of the Plan,
Options issued hereunder will not be repriced, replaced or regranted through
cancellation or by lowering the Exercise Price of a previously granted Award
without prior approval of the Company's Stockholders. Any outstanding ISO that
is modified, extended, renewed or otherwise altered will be treated in
accordance with Section 424(h) of the Code.
 
              5.9 Limitations on Exercise. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
 
              5.10 No Disqualification. Notwithstanding any other provision in
this Plan, no term of this Plan relating to ISO's will be interpreted, amended
or altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
 
              5.11 Lapsed Grants. Notwithstanding anything in the Plan to the
contrary, the Company may, in its sole discretion, allow the exercise of a
lapsed grant if the Company determines that: (i) the lapse was the result of the
Company's inability to timely execute the exercise of an option award and (ii)
the Participant made valid and reasonable efforts to exercise the Award. In the
event the Company makes such a determination, the Company shall allow the
exercise to occur as promptly as possible following its receipt of exercise
instructions subsequent to such determination.
 
        6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to restrictions.
The Committee will determine to whom an offer will be made, the number of Shares
the person may purchase, the price to be paid (the "Purchase Price"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
 
              6.1 Form of Restricted Stock Award. All purchases under a
Restricted Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("Restricted Stock Purchase Agreement") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and shall comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock shall will be accepted by
the Participant's execution and delivery of the Restricted Stock Purchase
Agreement and full payment for the Shares to the Company not later than thirty
(30) days after the date the Restricted Stock Purchase Agreement is delivered to
the person. If such person does not execute
 
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and deliver the Restricted Stock Purchase Agreement along with full payment for
the Shares to the Company within thirty (30) days, then the offer shall
terminate, unless otherwise determined by the Committee.
 
              6.2 Purchase Price. The Purchase Price of Shares sold pursuant to
a Restricted Stock Award will be determined by the Committee on the date the
Restricted Stock Award is granted. Payment of the Purchase Price shall be made
in accordance with Section 8 of this Plan.
 
              6.3 Terms of Restricted Stock Awards. Restricted Stock Awards
shall be subject to such restrictions as the Committee may impose. These
restrictions may be based upon completion of a specified number of years of
service with the Company or upon completion of the performance goals as set out
in advance in the Participant's individual Restricted Stock Purchase Agreement.
Restricted Stock Awards may vary from Participant to Participant and between
groups of Participants. Prior to the grant of a Restricted Stock Award, the
Committee shall: (a) determine the nature, length and starting date of any
Performance Period for the Restricted Stock Award; (b) select from among the
Performance Factors to be used to measure performance goals, if any; and (c)
determine the number of Shares that may be awarded to the Participant. Prior to
the payment of any Restricted Stock Award, the Committee shall determine the
extent to which such Restricted Stock Award has been earned and such
determination shall be conclusive. Performance Periods may overlap and
Participants may participate simultaneously with respect to Restricted Stock
Awards that are subject to different Performance Periods and having different
performance goals and other criteria.
 
              6.4 Stock Restrictions. Each certificate representing Restricted
Stock awarded under the Plan shall bear the following legend until the lapse of
all restrictions with respect to such Stock:
 
              "TRANSFER OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY IS
              RESTRICTED PURSUANT TO THE TERMS OF A RESTRICTED STOCK AGREEMENT,
              DATED AS OF _______, BETWEEN ARMOR HOLDINGS, INC., AND
              ____________. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL
              EXECUTIVE OFFICES OF ARMOR HOLDINGS, INC."
 
         Stop transfer orders shall be entered with the Company's transfer agent
and registrar against the transfer of legended securities.
 
              6.5 Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Restricted Stock Award only to the extent earned as of the date of
Termination in accordance with the Restricted Stock Purchase Agreement, unless
the Committee will determine otherwise.
 
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         7. STOCK BONUSES.
 
              7.1 Awards of Stock Bonuses. A Stock Bonus is an award of Shares
(which may consist of Restricted Stock) for services rendered to the Company or
any Parent or Subsidiary of the Company. A Stock Bonus may be awarded for past
services already rendered to the Company, or any Parent or Subsidiary of the
Company pursuant to an Award Agreement (the "Stock Bonus Agreement") that will
be in such form (which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply with and be subject to
the terms and conditions of this Plan. A Stock Bonus may be awarded upon
satisfaction of such performance goals as are set out in advance in the
Participant's individual Award Agreement (the "Performance Stock Bonus
Agreement") that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. Stock Bonuses may
vary from Participant to Participant and between groups of Participants, and may
be based upon the achievement of the Company, Parent or Subsidiary and/or
individual Performance Factors or upon such other criteria as the Committee may
determine.
 
              7.2 Terms of Stock Bonuses. The Committee will determine the
number of Shares to be awarded to the Participant. If the Stock Bonus is being
earned upon the satisfaction of performance goals pursuant to a Performance
Stock Bonus Agreement, then the Committee will: (a) determine the nature, length
and starting date of any Performance Period for each Stock Bonus; (b) select
from among the Performance Factors to be used to measure the performance, if
any; and (c) determine the number of Shares that may be awarded to the
Participant. Prior to the payment of any Stock Bonus, the Committee shall
determine the extent to which such Stock Bonuses have been earned. Performance
Periods may overlap and Participants may participate simultaneously with respect
to Stock Bonuses that are subject to different Performance Periods and different
performance goals and other criteria. The number of Shares may be fixed or may
vary in accordance with such performance goals and criteria as may be determined
by the Committee. The Committee may adjust the performance goals applicable to
the Stock Bonuses to take into account changes in law and accounting or tax
rules and to make such adjustments as the Committee deems necessary or
appropriate to reflect the impact of extraordinary or unusual items, events or
circumstances to avoid windfalls or hardships.
 
              7.3 Form of Payment. The earned portion of a Stock Bonus may be
paid currently or on a deferred basis with such interest or dividend equivalent,
if any, as the Committee may determine. Payment may be made in the form of cash
or whole Shares or a combination thereof, either in a lump sum payment or in
installments, all as the Committee will determine.
 
         8. PAYMENT FOR SHARE PURCHASES.
 
              8.1 Payment. Payment for Shares purchased pursuant to this Plan
may be made in cash (by check) or, where expressly approved for the Participant
by the Committee or where expressly indicated in the Participants Award
Agreement and where permitted by law:
 
              a. by cancellation of indebtedness of the Company to the
Participant;
 
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              b. by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for within the
meaning of SEC Rule 144 (and, if such shares were purchased from the Company by
use of a promissory note, such note has been fully paid with respect to such
shares); or (2) were obtained by Participant in the public market;
 
              c. by tender of a promissory note having such terms as may be
approved by the Committee and bearing interest at a rate sufficient to avoid
imputation of income under Sections 483 and 1274 of the Code;
 
              d. by waiver of compensation due or accrued to the Participant for
services rendered;
 
              e. with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
 
              (1)  through a "same day sale" commitment from the Participant and
                   a broker-dealer that is a member of the National Association
                   of Securities Dealers (an "NASD Dealer") whereby the
                   Participant irrevocably elects to exercise the Option and to
                   sell a portion of the Shares so purchased to pay for the
                   Exercise Price, and whereby the NASD Dealer irrevocably
                   commits upon receipt of such Shares to forward the Exercise
                   Price directly to the Company; or
 
              (2)  through a "margin" commitment from the Participant and a NASD
                   Dealer whereby the Participant irrevocably elects to exercise
                   the Option and to pledge the Shares so purchased to the NASD
                   Dealer in a margin account as security for a loan from the
                   NASD Dealer in the amount of the Exercise Price, and whereby
                   the NASD Dealer irrevocably commits upon receipt of such
                   Shares to forward the Exercise Price directly to the Company;
                   or
 
              f. by any combination of the foregoing or other method authorized
by the Committee.
 
         At its discretion, the Committee may modify or suspend any method for
the exercise of stock options, including any of the methods specified in the
previous sentence. Delivery of shares for exercising an Option shall be made
either through the physical delivery of shares or through an appropriate
certification or attestation of valid ownership.
 
              8.2 Loan Guarantees. The Committee may help the Participant pay
for Shares purchased under this Plan by authorizing a guarantee by the Company
of a third-party loan to the Participant.
 
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         9.   WITHHOLDING TAXES.
 
              9.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
 
              9.2 Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the
Committee.
 
         10. PRIVILEGES OF STOCK OWNERSHIP. No Participant will have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's Purchase Price or Exercise Price pursuant
to Section 12.
 
         11. TRANSFERABILITY.
 
              11.1 Non-Transferability of Options. No Option granted under the
Plan shall be transferable by the Participant otherwise than by will or by the
laws of descent and distribution, and such Option right shall be exercisable,
during the Participant's lifetime, only by the Participant. Notwithstanding the
foregoing, the Committee may set forth in an Award Agreement at the time of
grant or thereafter, that the Options (other than Incentive Stock Options) may
be transferred to members of the Participant's immediate family, to trusts
solely for the benefit of such immediate family members and to partnerships or
limited liability companies in which such family members and/or trusts are the
only partners or members, as the case may be. For this purpose, immediate family
means the Participant's spouse, parents, children, stepchildren, grandchildren
and legal dependants. Any transfer of Options made under this provision will not
be effective until notice of such transfer is delivered to the Company.
 
              11.2 Rights of Transferee. Notwithstanding anything to the
contrary herein, if an Option has been transferred in accordance with Section
11.1 above, the Option shall
 
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be exercisable solely by the transferee. The Option shall remain subject to the
provisions of the Plan, including that it will be exercisable only to the extent
that the Participant or Participant's estate would have been entitled to
exercise it if the Participant had not transferred the Option. In the event of
the death of the Participant prior to the expiration of the right to exercise
the transferred Option, the period during which the Option shall be exercisable
will terminate on the date 12 months following the date of the Participant's
death. In no event will the Option be exercisable after the expiration of the
exercise period set forth in the Award Agreement. The Option shall be subject to
such other rules relating to transferees as the Committee shall determine.
 
         12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right to repurchase a portion of or all Unvested Shares held by a Participant
following such Participant's Termination at any time within three (3) months
after the later of Participant's Termination Date and the date Participant
purchases Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at the Participant's Exercise Price or Purchase Price, as the case
may be.
 
         13. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions, consistent with the terms of the Awards, as the
Committee may deem necessary or advisable, including restrictions under any
applicable federal, state or foreign securities law, or any rules, regulations
and other requirements of the SEC or any stock exchange or automated quotation
system upon which the Shares may be listed or quoted.
 
         14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. In the
discretion of the Committee, the pledge agreement may provide that the Shares
purchased with the promissory note may be released from the pledge on a pro rata
basis as the promissory note is paid.
 
         15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted
 
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with payment in cash, Shares (including Restricted Stock) or other
consideration, based on such terms and conditions as the Committee and the
Participant may agree.
 
         16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not
be effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. However, in the
event that an Award is not effective as discussed in the preceding sentence, the
Company will use reasonable efforts to modify, revise or renew such Award in a
manner so as to make the Award effective. Notwithstanding any other provision in
this Plan, the Company will have no obligation to issue or deliver certificates
for Shares under this Plan prior to: (a) obtaining any approvals from
governmental agencies that the Company determines are necessary or advisable;
and/or (b) completion of any registration or other qualification of such Shares
under any state or federal law or ruling of any governmental body that the
Company determines to be necessary or advisable. The Company will be under no
obligation to register the Shares with the SEC or to effect compliance with the
registration, qualification or listing requirements of any state securities
laws, stock exchange or automated quotation system, and the Company will have no
liability for any inability or failure to do so.
 
         17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.
 
         18. CORPORATE TRANSACTIONS.
 
              18.1 Assumption or Replacement of Awards by Successor. If a
Change-of-Control Event occurs:
 
              (i)   the successor company in any Change-of-Control Event may, if
                    approved in writing by the Committee prior to any
                    Change-of-Control Event:
 
                    (1)  substitute equivalent Options or Awards or provide
                         substantially similar consideration to Participants
                         as was provided to stockholders (after taking into
                         account the existing provisions of the Awards), or
 
                    (2)  issue, in place of outstanding Shares of the Company
                         held by the Participant, substantially similar
                         shares or substantially similar other securities or
                         substantially similar other property subject to
                         repurchase restrictions no less favorable to the
                         Participant.
 
                                       11
 
 
              (ii)  Notwithstanding anything in this Plan to the contrary, the
                    Committee may, in its sole discretion, provide that the
                    vesting of any or all Options and Awards granted pursuant to
                    this Plan will accelerate immediately prior to the
                    consummation of a Change-of-Control Event. If the Committee
                    exercises such discretion with respect to Options, such
                    Options will become exercisable in full prior to the
                    consummation of such event at such time and on such
                    conditions as the Committee determines, and if such Options
                    are not exercised prior to the consummation of such event,
                    they shall terminate at such time as determined by the
                    Committee.
 
              18.2 Other Treatment of Awards. Subject to any rights and
limitations set forth in Section 18.1, if a Change-of-Control Event occurs or
has occurred, any outstanding Awards will be treated as provided in the
applicable agreement or plan of merger, consolidation, dissolution, liquidation,
or sale of assets constituting the Change-of-Control Event.
 
              18.3 Assumption of Awards by the Company. The Company, from time
to time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either (a) granting an Award under this Plan in substitution of
such other company's award, or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. If the Company assumes an award granted by another
company, the terms and conditions of such award will remain unchanged (except
that the exercise price and the number and nature of Shares issuable upon
exercise of any such option will be adjusted appropriately pursuant to Section
424(a) of the Code). If the Company elects to grant a new Option rather than
assuming an existing option, such new Option may be granted with a similarly
adjusted Exercise Price.
 
              18.4 Adjustment of Shares. In the event that the number of
outstanding shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the stockholders of the
Company and compliance with applicable securities laws; provided, however, that
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Committee.
 
         19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective
on the date that this Plan is approved by the stockholders of the Company,
consistent with applicable laws (the "Effective Date").
 
                                       12
 
 
         20. TERM OF PLAN. Unless earlier terminated as provided herein, this
Plan will terminate ten (10) years from the date this Plan is adopted by the
Board. The expiration of the Plan, however, shall not affect the rights of
Participants under Options theretofore granted to them, and all unexpired
Options and Awards shall continue in force and operation after termination of
the Plan, except as they may lapse or be terminated by their own terms and
conditions.
 
         21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan; provided, however, that the Board will not, (i) without the
approval of the stockholders of the Company, amend this Plan in any manner that
applicable law or regulation requires such stockholder approval, or (ii) without
the written consent of the Participant substantially alter or impair any Option
or Award previously granted under the Plan. Notwithstanding the foregoing, if an
Option has been transferred in accordance with the terms of this Plan, written
consent of the transferee (and not the Participant) shall be necessary to
substantially alter or impair any Option or Award previously granted under the
Plan.
 
         22. EFFECT OF SECTION 162(m) OF THE CODE. The Plan, and all Awards
issued thereunder, are intended to be exempt from the application of Section
162(m) of the Code, which restricts under certain circumstances the Federal
income tax deduction for compensation paid by a public company to named
executives in excess of $1 million per year. The exemption is based on Treasury
Regulation Section 1.162-27(f) as in effect on the effective date of the Plan,
with the understanding that such regulation generally exempts from the
application of Section 162(m) of the Code compensation paid pursuant to a plan
that existed before a company becomes publicly held. The Committee may, without
stockholder approval (unless otherwise required to comply with Rule 16b-3 under
the Exchange Act), amend the Plan retroactively and/or prospectively to the
extent it determines necessary in order to comply with any subsequent
clarification of Section 162(m) of the Code required to preserve the Company's
Federal income tax deduction for compensation paid pursuant to the Plan. To the
extent that the Committee determines as of the Date of Grant of an Award that
(i) the Award is intended to comply with Section 162(m) of the Code and (ii) the
exemption described above is no longer available with respect to such Award,
such Award shall not be effective until any stockholder approval required under
Section 162(m) of the Code has been obtained.
 
         23. GENERAL.
 
              23.1 Additional Provisions of an Award. Awards under the Plan also
may be subject to such other provisions (whether or not applicable to the
benefit awarded to any other Participant) as the Committee determines
appropriate including, without limitation, provisions to assist the Participant
in financing the purchase of Stock upon the exercise of Options, provisions for
the forfeiture of or restrictions on resale or other disposition of shares of
Stock acquired under any Award, provisions giving the Company the right to
repurchase shares of Stock acquired under any Award in the event the Participant
elects to dispose of such shares, provisions which restrict a Participant's
ability to sell Shares for a period of time under certain circumstances, and
provisions to comply with Federal and state securities laws and Federal and
state tax withholding requirements. Any such provisions shall be reflected in
the applicable Award Agreement. In addition, the Committee may, in its
discretion, provide in an Award
 
                                       13
 
 
Agreement that, in the event that the Participant engages, within a specified
period after termination of employment, in certain activity specified by the
Committee that is deemed detrimental to the interests of the Company (including,
but not limited to, the breach of any non-solicitation and/or non-compete
agreements with the Company), the Participant will forfeit all rights under any
Options that remain outstanding as of the time of such act and will return to
the Company an amount of shares with a Fair Market Value (determined as of the
date such shares are returned) equal to the amount of any gain realized upon the
exercise of any Option that occurred within a specified time period.
 
              23.2. Claim to Awards and Employment Rights. Unless otherwise
expressly agreed in writing by the Company, no employee or other person shall
have any claim or right to be granted an Award under the Plan or, having been
selected for the grant of an Award, to be selected for a grant of any other
Award. Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ or service of the
Company, a Subsidiary or an Affiliate.
 
              23.3. Designation and Change of Beneficiary. Each Participant
shall file with the Committee a written designation of one or more persons as
the beneficiary who shall be entitled to receive the amounts payable with
respect to an Award of Restricted Stock, if any, due under the Plan upon his
death. A Participant may, from time to time, revoke or change his beneficiary
designation without the consent of any prior beneficiary by filing a new
designation with the Committee. The last such designation received by the
Committee shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Committee prior to the Participant's death, and in no event shall it be
effective as of a date prior to such receipt. If no beneficiary designation is
filed by the Participant, the beneficiary shall be deemed to be his or her
spouse or, if the Participant is unmarried at the time of death, his or her
estate.
 
              23.4. Payments to Persons Other Than Participants. If the
Committee shall find that any person to whom any amount is payable under the
Plan is unable to care for his or her affairs because of illness or accident, or
is a minor, or is otherwise legally incompetent or incapacitated or has died,
then any payment due to such person or such person's estate (unless a prior
claim therefor has been made by a duly appointed legal representative) may, if
the Committee so directs the Company, be paid to such person's spouse, child,
relative, an institution maintaining or having custody of such person, or any
other person deemed by the Committee, in its absolute discretion, to be a proper
recipient on behalf of such person otherwise entitled to payment. Any such
payment shall be a complete discharge of the liability of the Committee and the
Company therefor.
 
              23.5. No Liability of Committee Members. No member of the
Committee shall be personally liable by reason of any contract or other
instrument executed by such Committee member or on his or her behalf in his or
her capacity as a member of the Committee nor for any mistake of judgment made
in good faith, and the Company shall indemnify and hold harmless each member of
the Committee and each other employee, officer or director of the Company to
whom any duty or power relating to the administration or interpretation of the
Plan may be allocated or delegated, against any cost or expense (including
counsel fees) or liability (including any sum paid in settlement of a claim)
arising out of any act or omission to act in connection with the Plan unless
arising out of such person's own fraud or
 
                                       14
 
 
willful bad faith; provided, however, that approval of the Board shall be
required for the payment of any amount in settlement of a claim against any such
person. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
 
              23.6. Governing law. The Plan and all agreements hereunder shall
be governed by and construed in accordance with the internal laws of the State
of Delaware without regard to the principles of conflicts of law thereof.
 
              23.7. Funding. No provision of the Plan shall require the Company,
for the purpose of satisfying any obligations under the Plan, to purchase assets
or place any assets in a trust or other entity to which contributions are made
or otherwise to segregate any assets, nor shall the Company maintain separate
bank accounts, books, records or other evidence of the existence of a segregated
or separately maintained or administered fund for such purposes. Participants
shall have no rights under the Plan other than as general unsecured creditors of
the Company, except that insofar as they may have become entitled to payment of
additional compensation by performance of services, they shall have the same
rights as other employees under general law.
 
              23.8. Reliance on Reports. Each member of the Committee and each
member of the Board shall be fully justified in relying, acting or failing or
refusing to act, and shall not be liable for having so relied, acted or failed
or refused to act in good faith, upon any report made by the independent public
accountant of the Company and its Subsidiaries and Affiliates and upon any other
information furnished in connection with the Plan by any person or persons other
than himself.
 
              23.9. Relationship to Other Benefits. No payment under the Plan
shall be taken into account in determining any benefits under any pension,
retirement, profit sharing, group insurance or other benefit plan of the Company
or any Subsidiary except as otherwise specifically provided in such other plan.
 
              23.10. Expenses. The expenses of administering the Plan shall be
borne by the Company and its Subsidiaries and Affiliates.
 
              23.11. Pronouns. Masculine pronouns and other words of masculine
gender shall refer to both men and women.
 
              23.12. Titles and Headings. The titles and headings of the
sections in the Plan are for convenience of reference only, and in the event of
any conflict, the text of the Plan, rather than such titles or headings shall
control.
 
              23.13. Termination of Employment. For all purposes herein, a
person who transfers from employment or service with the Company to employment
or service with a Subsidiary or Affiliate or vice versa shall not be deemed to
have terminated employment or service with the Company, a Subsidiary or
Affiliate.
 
                                       15
 
 
              23.14 Nonexclusivity of the Plan. Neither the adoption of this
Plan by the Board, the submission of this Plan to the stockholders of the
Company for approval, nor any provision of this Plan will be construed as
creating any limitations on the power of the Board to adopt such incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
 
              23.15 Employees Based Outside of the United States.
Notwithstanding any provision of the Plan to the contrary, in order to foster
and promote achievement of the purposes of the Plan or to comply with provisions
of laws in other countries in which the Company, its Affiliates, and its
Subsidiaries operate or have employees, the Committee, in its sole discretion,
shall have the power and authority to (i) determine which employees employed
outside the United States are eligible to participate in the Plan, (ii) modify
the terms and conditions of Awards granted to employees who are employed outside
the United States, and (iii) establish subplans (through the addition of
schedules to the Plan or otherwise), modify option exercise procedures and other
terms and procedures to the extent such actions may be necessary or advisable.
 
         24. DEFINITIONS. As used in this Plan, the following terms will have
the following meanings:
 
         "Affiliate" means any entity in which the Company has an ownership
         interest of at least 20%.
 
         "Award" means any award under this Plan, including any Option,
         Restricted Stock or Stock Bonus.
 
         "Award Agreement" means, with respect to each Award, the signed written
         agreement between the Company and the Participant setting forth the
         terms and conditions of the Award.
 
         "Board" means the Board of Directors of the Company.
 
         "Cause" means the Company, a Subsidiary or Affiliate having cause to
         terminate a Participant's employment or service under any existing
         employment, consulting or any other agreement between the Participant
         and the Company or a Subsidiary or Affiliate or, in the absence of such
         an employment, consulting or other agreement, upon (i) the
         determination by the Committee that the Participant has ceased to
         perform his duties to the Company, a Subsidiary or Affiliate (other
         than as a result of his incapacity due to physical or mental illness or
         injury), which failure amounts to an intentional and extended neglect
         of his duties to such party, (ii) the Committee's determination that
         the Participant has engaged or is about to engage in conduct materially
         injurious to the Company, a Subsidiary or Affiliate or (iii) the
         Participant having been convicted of a felony or a misdemeanor carrying
         a jail sentence of six months or more.
 
         "Change-of-Control Event" means the occurrence of any one or more of
         the following events: (i) there shall have been a change in a majority
         of the Board of Directors of the
 
                                       16
 
 
         Company within a two (2) year period, unless the appointment of a
         director or the nomination for election by the Company's stockholders
         of each new director was approved by the vote of a majority of the
         directors then still in office who were in office at the beginning of
         such two (2) year period, or (ii) the Company shall have been sold by
         either (A) a sale of all or substantially all its assets, or (B) a
         merger or consolidation, other than any merger or consolidation
         pursuant to which the Company acquires another entity, or (C) a tender
         offer, whether solicited or unsolicited.
 
         "Code" means the Internal Revenue Code of 1986, as amended. Reference
         in the Plan to any section of the Code shall be deemed to include any
         amendments or successor provisions to such section and any regulations
         under such section.
 
         "Common Stock" means the outstanding common stock, par value $0.01 per
         share, of the Company, or any other class of securities into which
         substantially all the Common Stock is converted or for which
         substantially all the Common Stock is exchanged.
 
         "Committee" means the Compensation Committee, the Stock Option
         Committee or such other committee appointed by the Board consisting
         solely of two or more Outside Directors or the Board.
 
         "Company" means Armor Holdings, Inc., a Delaware corporation, or any
         successor corporation.
 
         "Disability" or "Disabled" means a disability, whether temporary or
         permanent, partial or total, as determined in good faith by the
         Committee.
 
         "Exchange Act" means the Securities Exchange Act of 1934, as amended.
 
         "Exercise Price" means the price at which a holder of an Option may
         purchase the Shares issuable upon exercise of the Option.
 
         "Fair Market Value" means, as of any date, the value of a share of the
         Company's Common Stock determined as follows:
 
              a. if such Common Stock is publicly traded and is then listed on a
                 national securities exchange (i.e. The New York Stock
                 Exchange), its closing price on the date of determination on
                 the principal national securities exchange on which the Common
                 Stock is listed or admitted to trading, and if there were no
                 trades on such date, on the day on which a trade occurred next
                 preceding such date;
 
              b. if such Common Stock is publicly traded and is then quoted on
                 the NASDAQ National Market, its closing price on the NASDAQ
                 National Market on the date of determination as reported in The
                 Wall Street Journal, and if there were no trades on such date,
                 on the day on which a trade occurred next preceding such date;
 
                                       17
 
 
              c. if such Common Stock is publicly traded but is not quoted on
                 the NASDAQ National Market nor listed or admitted to trading on
                 a national securities exchange, the average of the closing bid
                 and asked prices on the date of determination as reported in
                 The Wall Street Journal or, if not reported in The Wall Street
                 Journal, as reported by any reputable publisher or quotation
                 service, as determined by the Committee in good faith, and if
                 there were no trades on such date, on the day on which a trade
                 occurred next preceding such date;
 
              d. if none of the foregoing is applicable, by the Committee in
                 good faith based upon factors available at the time of the
                 determination, including, but not limited to, capital raising
                 activities of the Company.
 
         "Insider" means an officer or director of the Company or any other
         person whose transactions in the Company's Common Stock are subject to
         Section 16 of the Exchange Act.
 
         "NASD Dealer" has the meaning set forth in Section 8(e).
 
         "NQSO's" has the meaning set forth in Section 5.
 
         "Option" means an award of an option to purchase Shares pursuant to
         Section 5.
 
         "Outside Director" means a person who is both (i) a "nonemployee
         director" within the meaning of Rule 16b-3 under the Exchange Act, or
         any successor rule or regulation and (ii) an "outside director" within
         the meaning of Section 162(m) of the Code.
 
         "Parent" means any corporation or other legal entity (other than the
         Company) in an unbroken chain of corporations and/or other legal
         entities ending with the Company if each of such corporations and other
         legal entities other than the Company owns stock, other equity
         securities or other equity interests possessing 50% or more of the
         total combined voting power of all classes of stock, equity securities
         or other equity interests in one of the other corporations or other
         entities in such chain.
 
         "Participant" means a person who receives an Award under this Plan.
 
         "Performance Factors" means the factors selected by the Committee from
         time to time, including, but not limited to, the following measures to
         determine whether the performance goals established by the Committee
         and applicable to Awards have been satisfied:
 
              a. Net revenue and/or net revenue growth;
 
                                       18
 
 
              b. Earnings before income taxes and amortization and/or earnings
                 before income taxes and amortization growth;
 
              c. Operating income and/or operating income growth;
 
              d. Net income and/or net income growth;
 
              e. Earnings per share and/or earnings per share growth;
 
              f. Total stockholder return and/or total stockholder return
                 growth;
 
              g. Return on equity;
 
              h. Operating cash flow;
 
              i. Adjusted operating cash flow return on income;
 
              j. Economic value added;
 
              k. Successful capital raises;
 
              l. Individual confidential business objectives
 
              m. Other factors deemed reasonable and appropriate by the
                 Committee.
 
         "Performance Period" means the period of service determined by the
         Committee, not to exceed five years, during which years of service or
         performance is to be measured for Restricted Stock Awards or Stock
         Bonuses.
 
         "Plan" means Armor Holdings, Inc. 2002 Stock Incentive Plan, as amended
         from time to time.
 
         "Restricted Stock Award" means an award of Shares pursuant to Section
         6.
 
         "SEC" means the Securities and Exchange Commission.
 
         "Securities Act" means the Securities Act of 1933, as amended.
 
         "Shares" means shares of the Company's Common Stock reserved for
         issuance under this Plan, as adjusted pursuant to Section 18, and any
         successor security.
 
         "Stock Bonus" means an award of Shares, or cash in lieu of Shares,
         pursuant to Section 7.
 
         "Subsidiary" means any corporation or other legal entity (other than
         the Company) in an unbroken chain of corporations and/or other legal
         entities beginning with the Company if each of the corporations and
         entities other than the
 
                                       19
 
 
         last corporation or entity in the unbroken chain owns stock, other
         equity securities or other equity interests possessing 50% or more of
         the total combined voting power of all classes of stock, other equity
         securities or other equity interests in one of the other corporations
         or entities in such chain.
 
         "Ten Percent Stockholder" has the meaning set forth in Section 5.2.
 
         "Termination" or "Terminated" means, for purposes of this Plan with
         respect to a Participant, that the Participant has for any reason
         ceased to provide services as an employee, officer, director,
         consultant, independent contractor, or advisor to the Company or a
         Parent or Subsidiary of the Company. An employee will not be deemed to
         have ceased to provide services in the case of (i) sick leave, (ii)
         military leave, or (iii) any other leave of absence approved by the
         Committee, provided, that such leave is for a period of not more than
         90 days, unless re-employment upon the expiration of such leave is
         guaranteed by contract or statute or unless provided otherwise pursuant
         to formal policy adopted from time to time by the Company and issued
         and promulgated to employees in writing. In the case of any employee on
         an approved leave of absence, the Committee may make such provisions
         respecting suspension of vesting of the Award while on leave from the
         employ of the Company or a Subsidiary as it may deem appropriate,
         except that in no event may an Option be exercised after the expiration
         of the term set forth in the Option agreement. The Committee will have
         sole discretion to determine whether a Participant has ceased to
         provide services and the effective date on which the Participant ceased
         to provide services (the "Termination Date").
 
         "Unvested Shares" means "Unvested Shares" as defined in the Award
         Agreement.
 
         "Vested Shares" means "Vested Shares" as defined in the Award
         Agreement.
 
 
                                       20