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Exhibit 10.32 KNOWLES ELECTRONICS HOLDINGS, INC.
2004 STOCK OPTION PLAN  1.
    Purpose The purpose of this Knowles Electronics Holdings, Inc. 2004 Stock Option Plan (the Plan)
established by Knowles Electronics Holdings, Inc., a Delaware corporation (the Corporation), is
to advance the interests of the Corporations shareholders by enhancing the Corporations ability
to attract, retain and motivate persons who are expected to make important contributions to the
Corporation and its Affiliates by providing such persons with equity ownership opportunities and
performance-based incentives through the grant of options (Options) to purchase the Corporations
Stock and thereby better aligning the interests of such persons with those of the Corporations
shareholders.  2.
    Eligibility and Options Eligibility for participation in the Plan from among the employees of the Corporation and its
Affiliates, the granting of Options under the Plan, and the establishment of the aggregate number
of shares of Stock which may be issued under Options granted under the Plan will be recommended by
the Chief Executive Officer of the Corporations Affiliate, Knowles Electronics, LLC (Company)
for approval by the Board of Directors (Board) of the Corporation. The Board, in its discretion,
will determine the employees eligible to participate in the Plan, the number of shares of stock
granted to each Participant in each Option and the aggregate number of shares of stock which may be
issued under Options granted under the Plan. Each person who has been granted an Option under the
Plan shall be deemed a Participant.  3.
    Administration Administration.Except as provided in Section 2 above, the Plan will be
administered by the CEO of the Company. The CEO may adopt, amend and repeal such
administrative rules, guidelines and practices relating to the Plan, as he shall deem
advisable. The CEO may correct any defect or omission or reconcile any inconsistency in the
Plan or any Option in the manner and to the extent he shall deem necessary or advisable to
carry out the terms and purposes of the Plan. However, no such amendment shall in any
manner adversely affect any Participants rights with respect to Options previously granted
under the Plan without the written consent of the Participant. Any decisions under the Plan
with respect to just the CEO as a Participant shall be made by the Board. The CEO may
delegate to one or more other executive officers of the Company, the power to exercise such
of his duties under the Plan as the CEO may determine, except as provided in Section 2
above.  4.
    Stock to be Issued Under the Plan. (a) Stock.The stock to be issued upon the exercise of Options granted under
the Plan shall be shares of the $.01 par value per share Common Stock of the Corporation




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(Stock) which may either be authorized and unissued shares or issued shares held in
or hereafter acquired for the Corporations treasury. In the event that any outstanding
Option under the Plan expires or is terminated, the shares of Stock allocable to the
unexercised portion of such Option may again be subject to an Option under the Plan. (b) Certificates.The Corporation shall not be required to issue or deliver
any certificate for shares of Stock purchased upon the exercise of all or any part of an
Option before completion of any registration or other qualification of such shares under any
state or federal law or ruling or regulation of any governmental regulatory body that the
Board shall, in its sole discretion, determine is necessary or advisable.  5.
    Terms and Conditions of Options. Each Option granted under the Plan is intended to be a non-qualified stock option and shall
be subject to the following terms and conditions: (a) Term and Exercise of Options.The Option shall only be exercisable on the
date prior to the date of the occurrence of a Liquidity Event; provided, however, that
anything contained herein to the contrary notwithstanding, no Option granted hereunder shall
be exercisable after the expiration of ten (10) years from the date of grant of such Option
(the Final Exercise Date). Subject to the terms of the Plan, any Option may be exercised,
in whole or in part, as to one or more whole shares of Stock covered by the Option. In the
case of any fractional share resulting from any calculation under the Plan, the shares
available for exercise shall be determined to the nearest lower number of whole shares.
Each election to exercise an Option shall be made in writing on such form and at such time
and in such manner as shall be provided in the agreement governing such Option. The
exercise of any Option and the issuance of shares of Stock pursuant thereto, shall be
subject to any rules and restrictions imposed thereon by any applicable Federal or state
security laws or by any restrictions or contractual obligations established by or in
connection with the Liquidity Event. (b) Exercise Price.The price per share at which Stock may be acquired
pursuant to exercise of an Option, will be $1.00 per share. (c) Execution of Executive Stock Purchase Agreement.An Option may only be
exercised by a Participant, if the Participant has entered into the Executive Stock Purchase
Agreement attached to the Plan as Exhibit A prior to the exercise of the Option. (d) Medium and Time of Payment.The Option price shall be payable to the
Corporation in United States dollars upon the exercise of the Option, and the exercise of
any Option and the delivery of the optioned shares shall be contingent upon receipt by the
Corporation of the full purchase price paid in cash or by check. (e) Vesting.Each Option shall become and remain exercisable for 100% of the
shares covered thereby as of the date of grant of the Option, except as otherwise
specifically provided in the Plan. - 2 -




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(f) Termination of Employment.  (i)
    Continuous Relationship with the Company
Required. Except as otherwise provided in this paragraph (f), no Option may be exercised
unless the Participant, at the time he or she exercised the Option, is, and has been
at all times since the date of the grant of the Option, an employee of the
Corporation or an Affiliate (an Eligible Participant).  (ii)
    Termination of Relationship with the Company. If a Participant ceases to be an Eligible Participant for any reason, then,
except as provided in subparagraph (iii) below, the right of such Participant to
exercise any Option shall terminate immediately upon such cessation.  (iii)
    Exercise Period Upon Death, Disability or
Retirement. If the Participant dies, becomes disabled (within the meaning of Section
22(e)(3) of the Internal Revenue Code of 1986, as amended (Code), or retires
(voluntarily terminates employment with the Company while eligible for an early or
normal retirement benefit under a defined benefit pension plan sponsored by the
Corporation or any of its Affiliates) prior to the Final Exercise Date while he or
she is an Eligible Participant, such Participants Option shall remain exercisable
by the Participant (the Participants estate in the event of his death) until the
date preceding the date of the Liquidity Event, provided, however, that an Option
shall be exercisable only to the extent that such Option was exercisable by the
Participant on the date of his or her death, disability or retirement and provided
further that no Option shall be exercisable after the Final Exercise Date. All
determinations with respect to a Participants disability or retirement shall be
made in good faith by the CEO. (g) Transfer of Option.Neither the whole nor any part of any Option shall be
transferable by a Participant or by operation of law during said Participants lifetime and
at said Participants death an Option or any part thereof shall only be transferable by said
Participants Will or by the laws of descent and distribution. An Option may be exercised
during the lifetime of the Participant only by the Participant. Any Option, and any and all
rights granted to a Participant thereunder, to the extent not theretofore effectively
exercised shall automatically terminate and expire upon any sale, transfer or hypothecation
or any attempted sale, transfer or hypothecation of such Option or rights, or upon the
bankruptcy or insolvency of the Participant.  6.
    Adjustments for Changes in Stock or Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization,
combination of shares, reclassification of shares, spin-off or other similar change in
capitalization or event, or any distribution to holders of Stock other than a normal cash dividend,
(i) the number and class of securities available under this Plan, (ii) the number and class of
securities and exercise price per share subject to each outstanding Option, and (iii) the terms of - 3 -




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each other outstanding Option shall be appropriately adjusted by the Corporation (or
substituted Options may be awarded, if applicable) to the extent the Board shall determine, in good
faith, that such an adjustment (or substitution) is necessary and appropriate. The grant of an
Option pursuant to the Plan shall not affect in any way the right or power of the Corporation to
make adjustments, reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any
part of its business or assets.  7.
    General Provisions Applicable to Options (a) Documentation.Each Option shall be evidenced by a written agreement in
such form as the CEO shall determine which shall be signed by the Corporation and the
Participant. Each Option may contain terms and conditions in addition to those set forth in
the Plan. Upon the grant of an option hereunder to a Participant, there shall be delivered
to the Participant such other information or documents as the CEO shall deem necessary or
advisable. (b) Discretion.Except as otherwise provided by the Plan, each Option may be
made alone or in addition or in relation to any other Option. The terms of each Option need
not be identical, and all Participants need not be treated uniformly. (c) Withholding.Each Participant shall pay to the Corporation, or make
provision satisfactory to the Corporation for payment of, any taxes required to be withheld
in connection with Options granted to or exercised by such Participant. The Corporation or
the Company may, to the extent permitted by law, deduct any such tax obligations from any
payment of any kind otherwise due to a Participant. (d) Conditions on Delivery of Stock.The Corporation shall not be obligated to
deliver any shares of Stock pursuant to the Plan or to remove restrictions from shares
previously delivered under the Plan until (i) all conditions of the Option have been met or
removed to the satisfaction of the Corporation, (ii) in the opinion of the Corporations
counsel, all other legal matters in connection with the issuance and delivery of such shares
have been satisfied, including any applicable securities laws and any applicable stock
exchange or stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Corporation such representations or agreements as the Corporation may
consider appropriate to satisfy the requirements of any applicable laws, rules or
regulations. (e) Notice of Intent to Exercise Options.An Optionee desiring to exercise an
Option granted hereunder as to one or more of the shares covered thereby must, in order to
so exercise the Option, notify the Corporation in writing to that effect, specifying the
number of shares to be purchased in a form satisfactory to the CEO.  8.
    Special Definitions The following words and phrases as used herein shall have the following meanings, unless a
different meaning is plainly required by the context. Pronouns shall be interpreted so that the
masculine pronoun shall include the feminine and the singular shall include the plural: - 4 -




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(a) Affiliate means any corporation, organization, or entity which is under
common control with the Corporation or which is otherwise required to be aggregated with the
Corporation pursuant to paragraphs (b), (c), (m), or (o) of Code Section 414. (b) Initial Public Offering means an initial public offering and sale of the
Corporations equity securities pursuant to an effective registration statement under the
Securities Act of 1933, as amended. (c) Liquidity Event means the occurrence of:  (i)
    an Initial Public Offering; or(ii)
    the Sale of the Corporation. (d) Sale of the Corporation means the sale of the Corporation, other than an
Initial Public Offering, in a single transaction or a series of transactions, to a purchaser
who is not affiliated with the Corporation pursuant to which such purchaser acquires all or
a material portion of the outstanding capital stock (whether by merger, consolidation,
recapitalization, reorganization, purchase of the outstanding capital stock or otherwise) or
all or a material portion of the consolidated assets of the Corporation.  9.
    Miscellaneous (a) No Right to Employment or Other Status.No person shall have any claim or
right to be granted an Option, and the grant of an Option shall not be construed as giving a
Participant the right to continued employment or any other relationship with the Corporation
or the Company. The Corporation and the Company expressly reserves the right at any time to
dismiss or otherwise terminate its relationship with a Participant free from any liability
or claim under the Plan. (b) No Rights as Shareholder.No Participant shall have any rights as a
shareholder with respect to any Option until becoming the record holder of such shares. (c) Amendment of Plan. (1) The Board hereby reserves the right to amend, modify, and/or terminate the
Plan at any time. However, no such amendment or termination shall in any manner
adversely affect any Participants rights with respect to Options previously granted
under the Plan without the written consent of the Participant. (2) In addition, the CEO, by written instrument may (i) make any amendment
which may be necessary or desirable to ensure any compliance of the Plan may be
necessary to comply with the requirements of any applicable law or regulation, and
(ii) may make any another amendment to the Plan which in the CEOs discretion is
necessary or desirable to carry out the purposes of the Plan, as long as the cost of
such amendment to he Corporation is not material in the judgment of the CEO.
However, no such amendment shall in any manner - 5 -




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adversely affect any Participants rights with respect to Options previously granted
under the Plan without the written consent of the Participant. (d) Compliance with Securities Exchange Act.Notwithstanding anything herein
to the contrary, options shall always be granted and exercised in such a manner as to
conform to the provisions of Rule 16b-3, or any replacement rule, adopted pursuant to the
provisions of the Securities Exchange Act of 1934 as the same now exists or may, from time
to time, be amended. (e) Government Regulations.This Plan and the granting and exercise of any
Option hereunder and the obligations of the Corporation to sell and deliver shares under any
such Option shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies as may be required. (f) Proceeds form Sale of Stock.Proceeds of the purchase of optioned shares
by any Participant shall be for the general business purposes of the Corporation. (g) Reporting Requirements.The Board shall furnish each Participant hereunder
with such information relating to the exercise of any Option granted hereunder to said
Participant as is required under applicable State and Federal Tax and Security laws. (h) Governing Law.The provisions of the Plan and all Options made hereunder
shall be governed by and interpreted in accordance with the laws of the State of Illinois,
without regard to any applicable conflicts of law. (i) Effective Date.The Plan shall become effective as of November 1, 2004. IN WITNESS WHEREOF,the Corporation has caused the Plan to be signed by its duly authorized
officer as of the aforesaid Effective Date. KNOWLES ELECTRONICS HOLDINGS, INC.By:
    
    /s/ John J. ZeiJohn J. ZeiTitle:
    
    President and CEO
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