Exhibit
10.15


 


TRANSDIGM
GROUP INCORPORATED


 


FOURTH
AMENDED AND RESTATED


 


2003
STOCK OPTION PLAN


 


Section 1.             
PURPOSE.


 


The Plan is intended as an incentive to improve the
performance, encourage the continued employment and increase the proprietary
interest of certain employees of the Company selected for participation in the
Plan.  The Plan is designed to grant such employees the opportunity to
share in the Company’s long-term success through stock ownership and to afford
them the opportunity for additional compensation related to the value of Stock
of the Company.  It is intended that certain options granted under this
Plan may qualify as “incentive stock options” under Section 422 of the
Code.


 


Section 2.             
DEFINITIONS.


 


                                (a)          
“Affiliate”
means any parent corporation or subsidiary corporation of the Company, whether
now or hereafter existing, as those terms are defined in Sections
424(e) and (f), respectively, of the Code.


 


                                (b)          
“Annual EBITDA”
means, for any fiscal year, an amount equal to the Consolidated EBITDA (as such
term is defined in the Company’s (or its subsidiaries’) primary credit facility
in effect from time to time) for such fiscal year.


 


                                (c)          
“Annual EBITDA
Target” means:


 


                                                (i)           
for fiscal year 2004
(ending September 30, 2004), $134.7 million;


 


                                                (ii)          
for fiscal year 2005,
$163 million;


 


                                                (iii)         
for fiscal year 2006,
$190.1 million;


 


                                                (iv)         
for fiscal year 2007,
$215.6 million; and


 


                                                (v)          
for fiscal year 2008,
$238.8 million;


 


provided, however, the Annual EBITDA Target shall be appropriately
adjusted in good faith by the Board for any acquisitions, dispositions or other
similar events that effect the determination of Annual EBITDA.


 


                                (d)          
“Board” means
the Board of Directors of the Company.


 


                                (e)          
“Change in Control”
means a change in ownership or control of the Company effected through a
transaction or series of transactions (other than an offering of Stock to the
general public through a registration statement filed with the Securities and
Exchange Commission) whereby any “person” or related “group” of “persons” (as
such terms are used in Sections 13(d) and 14(d)(2) of the Exchange
Act) (other than the Company, any of its subsidiaries, an employee benefit plan
maintained by the Company or any of its subsidiaries, a Principal Stockholder
or a “person” that, prior to such transaction, directly or indirectly controls,
is controlled by, or is under common control with, the Company or a Principal
Stockholder) directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of securities of the Company
possessing more than fifty percent (50%) of the total combined voting power of
the Company’s securities outstanding immediately after such acquisition.


 


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


 

















                                (g)          
“Committee”
means the Compensation Committee of the Board.


 


                                (h)          
“Company”
means TransDigm Group Incorporated, a Delaware corporation, formerly known as
TD Holding Corporation.


 


                                (i)           
“Cumulative EBITDA”
means, for any fiscal year, the sum of the Annual EBITDA for each fiscal year
prior to and including such fiscal year, commencing with fiscal year 2004.


 


                                (j)           
“Cumulative EBITDA
Target” means


 


                                                (i)           
for fiscal year 2004,
$134.7 million;


 


                                                (ii)          
for fiscal year 2005,
$297.7 million;


 


                                                (iii)         
for fiscal year 2006,
$487.8 million;


 


                                                (iv)         
for fiscal year 2007,
$703.3 million; and


 


                                                (v)          
for fiscal year 2008,
$942.1 million;


 


provided, however, the Cumulative EBITDA Target shall be appropriately
adjusted in good faith by the Board for any acquisitions, dispositions or other
similar events that effect the determination of Cumulative EBITDA.


 


                                (k)          
“Disability”
means the permanent and total disability of a person within the meaning of
Section 22(e)(3) of the Code.


 


                                (l)           
“Disqualifying
Disposition” means any disposition (including any sale) of Stock acquired
by exercise of an Incentive Stock Option made within the period which is
(a) two years after the date the Participant was granted the Incentive
Stock Option or (b) one year after the date the Participant acquired Stock
by exercising the Incentive Stock Option.


 


                                (m)         
“Effective Time”
shall have the meaning ascribed to such term in the Merger Agreement.


 


                                (n)          
“Eligible Person”
means any Employee, or in the discretion of the Committee, in the case of
Rollover Options that are Nonqualified Stock Options, any entity that held
Prior Options.


 


                                (o)          
“Employee”
means any person employed by the Company or an Affiliate.


 


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


 


                                (q)          
“Existing
Participant” means any Participant of the Plan as of January 1, 2004.


 


                                (r)           
“Expiration Date”
means the date that an Option expires, after which the Option may no longer be
exercised.


 


                                (s)          
“Fair Market Value”
means (i) prior to an IPO, the fair market value per share of Stock,
determined in accordance with Section 6.2 of the Management Stockholders’
Agreement, (ii) at the time of an IPO, the per share price to the public
in such IPO, and (iii) after an IPO, on any date (A) if the Stock is
listed on a national securities exchange, the closing price as reported on the
primary exchange with which the Stock is listed and traded on the date of
grant, or, if there is no such sale on that date, then on the last preceding
date on which such a sale was reported, or (B) if the Stock is not listed
on any national securities exchange but is quoted in the National Market System
of the National Association of Securities Dealers Automated Quotation System (“NASDAQ-NMS”),
the last sale as reported by NASDAQ-NMS on the date of grant, or, if there is
no such sale on that date then on the last preceding date on which such a sale
was reported.  If, after an IPO, the Stock is not quoted on NASDAQ-NMS or
listed on an exchange, or representative quotes are not otherwise available,
the Fair Market Value shall mean the amount determined by the Board in good
faith to be the fair market value per share of Stock, on a fully diluted basis.


 


 


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                                (t)           
“Fund” means
Warburg Pincus Private Equity VIII, L.P.


 


                                (u)          
“IPO” means an
initial public offering of the Stock registered under the Securities Act
pursuant to an effective registration statement.


 


                                (v)          
“IPO Date”
means the effective date of the registration statement for the IPO.


 


                                (w)         
“Incentive Stock
Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.


 


                                (x)           
“Management
Stockholders’ Agreement” means that certain Management Stockholders’
Agreement, dated as of July 22, 2003, by and among the Company, the Fund
and the other parties named therein.


 


                                (y)          
“Merger Agreement”
means the Agreement and Plan of Merger, dated as of June 6, 2003, between
TD Acquisition Corporation, a Delaware corporation, and TransDigm Holding
Company, a Delaware corporation.


 


                                (z)           
“New Management
Options” means Options that are not Rollover Options or Repurchase Options.


 


                                (aa)        
“Nonqualified
Stock Option” means an Option not intended to qualify as an Incentive Stock
Option.


 


                                (bb)        
“Option” means
any Rollover Option, New Management Option or Repurchase Option granted
pursuant to the Plan.


 


                                (cc)        
“Option Agreement”
means a written agreement between the Company and a Participant evidencing the
terms and conditions of an individual Option grant.


 


                                (dd)        
“Participant”
means a person or entity to whom an Option is granted pursuant to the Plan or,
if applicable, such other person or entity who holds an outstanding Option.


 


                                (ee)        
“Performance
Vested Options” shall mean New Management Options to which the vesting
schedule set forth in Section 8(b)(ii) hereof applies.


 


                                (ff)          
“Plan” means
the TD Holding Corporation Second Amended and Restated 2003 Stock Option Plan,
as the same may be amended from time to time.


 


                                (gg)        
“Principal
Stockholder” means the Fund and any of its permitted assignees under that
certain Stockholders’ Agreement, dated as of July 22, 2003, among the
Company, the Fund and the other parties named therein.


 


                                (hh)        
“Prior Options”
means those options held by Participants prior to the closing of the
transactions contemplated by the Merger Agreement that were replaced by the
Rollover Options.


 


                                (ii)          
“Repurchase
Options” means Options the underlying shares of Stock of which are
allocated out of the Repurchase Pool.


 


                                (jj)          
“Repurchase Price”
means, with respect to any Repurchase Option, the purchase price per share paid
by the Company in connection with its repurchase of the shares of Stock or the
vested Option to which the Repurchase Option relates in accordance with the
terms of the Management Stockholders’ Agreement.


 


                                (kk)        
“Repurchase Pool”
means a pool of shares of Stock allocated under the Plan pursuant to
Section 4(d) hereof.


 


 


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                                (ll)          
“Rollover Options”
means Options granted to a Participant to replace Prior Options.


 


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


 


                                (nn)        
“Stock” means
the common stock of the Company, par value $.001 per share.


 


                                (oo)        
“Time Vested
Options” shall mean New Management Options to which the vesting
schedule set forth in Section 8(b)(i) hereof applies.


 


                                (pp)        
“Warburg Pincus”
means Warburg Pincus & Co.


 


Section 3.             
ADMINISTRATION.


 


                                (a)          
General.  The Plan shall be administered by
the Committee.


 


                                (b)          
Powers of the
Committee. 
Subject to the provisions of the Plan, the Committee shall have sole authority,
in its absolute discretion:


 


                                                (i)           
Subject to
subsection (d) below, to determine from time to time which of the
Eligible Persons shall be granted Options, when and how each Option shall be
granted, what type or combination of types of Option shall be granted, the
provisions of each Option granted (which need not be identical), including the
time or times when a person shall be permitted to receive Stock pursuant to an
Option, the number of shares of Stock with respect to which an Option shall be
granted to each such person, and the Option exercise price;


 


                                                (ii)          
To construe and
interpret the Plan and Options granted under it, and to establish, amend and
revoke rules and regulations for its administration;


 


                                                (iii)         
To amend the Plan or
an Option as provided in Section 17; and


 


                                                (iv)         
To exercise such
powers and to perform such acts as the Committee deems necessary or expedient
to promote the best interests of the Company which are not in conflict with the
provisions of the Plan.


 


                                (c)          
Committee
Determinations. 
All determinations, interpretations and constructions made by the Committee in
good faith shall not be subject to review by any person or entity and shall be
final, binding and conclusive on all persons and entities.


 


                                (d)          
Chief Executive
Officer Recommendation.  The number of Options granted under the Plan to any individual
shall be based upon the recommendations of the Company’s Chief Executive
Officer, and the Committee shall not unreasonably object to such
recommendations.


 


Section 4.             
STOCK SUBJECT TO THE PLAN.


 


                                (a)          
Share Reserve.


 


                                                (i)           
Rollover
Options. 
Subject to Section 11 hereof relating to adjustments, the total number of
shares of Stock which may be issued pursuant to the exercise of Rollover
Options hereunder shall not exceed, in the aggregate, 3,870,152 shares of
Stock.


 


                                                (ii)          
New
Management Options. 
Subject to Section 11 hereof relating to adjustments, the total number of
shares of Stock which may be issued pursuant to the exercise of New Management
Options shall not exceed, in the aggregate, 5,469,301 shares of Stock.  Of
the shares reserved for New Management Options, twenty percent (20%) shall be
available for grant of Time Vested Options, and eighty percent (80%) shall be
available for grant of Performance Vested Options.


 


 


4

















                                (b)          
Source.  The Stock to be optioned under
the Plan shall be shares of authorized but unissued Stock or previously issued
shares of Stock reacquired by the Company on the open market, by private
purchase or otherwise.


 


                                (c)          
Reversion of
Shares. 
Except as otherwise provided in subsection (d) below, if any New
Management Option shall for any reason expire, be forfeited or otherwise
terminate, in whole or in part, the shares of Stock not acquired under such New
Management Option shall revert to and again become available for issuance under
the Plan as a New Management Option, which New Management Option shall be
allocated as to Time Vested Options and Performance Vested Options as the New
Management Option expired, forfeited of terminated.


 


                                (d)          
Repurchase Pool.  Following the Effective Time, if,
pursuant the Management Stockholders’ Agreement, the Company repurchases
(i) any shares of Stock acquired upon exercise of any Option, or
(ii) any vested Option, such shares of Stock repurchased, or the shares of
Stock underlying the Option repurchased, as applicable, shall be allocated to
the Repurchase Pool, and again become available for issuance under the Plan as
a Repurchase Option.


 


Section 5.             
ELIGIBILITY.


 


Participation shall be limited to Eligible Persons who
have received written notification from the Committee, or from a person
designated by the Committee, that they have been selected to participate in the
Plan.  Except in the case of Incentive Stock Options, Options may be
granted to Eligible Persons; Incentive Stock Options may be granted only to
Employees.


 


Section 6.             
OPTIONS.


 


                                (a)          
General.  Options granted hereunder shall
be in such form and shall contain such terms and conditions as the Committee
shall deem appropriate.  All Options shall be separately designated
Incentive Stock Options or Nonqualified Stock Options at the time of grant,
and, if certificates are issued, a separate certificate or certificates will be
issued for shares of Stock purchased on exercise of each type of Option; provided,
however, that, New Management Options and Repurchase Options shall be
Nonqualified Stock Options.  The provisions of separate Options shall be
set forth in an Option Agreement, which agreements need not be identical.


 


                                (b)          
Payment for Stock.  Payment for shares of Stock
acquired pursuant to Options granted hereunder shall be made in full, upon
exercise of the Options (i) in immediately available funds in United
States dollars, by certified or bank cashier’s check, (ii) by surrender to
the Company of shares of Stock which either (A) have been held by the
Participant for at least six-months, or (B) were acquired from a person
other than the Company, (iii) by a combination of (i) and (ii),
(iv) prior to an IPO, by delivery of a notice of “net exercise” to the
Company, pursuant to which the Participant shall receive the number of shares
of Stock underlying the Options so exercised reduced by the number of shares of
Stock equal to the aggregate exercise price of the Options divided by the Fair
Market Value on the date of exercise, or (v) following an IPO, by any
other means approved by the Committee.  Anything herein to the contrary
notwithstanding, the Company shall not directly or indirectly extend or
maintain credit, or arrange for the extension of credit, in the form of a
personal loan to or for any director or executive officer of the Company
through the Plan in violation of Section 402 of the Sarbanes-Oxley Act of
2002 (“Section 402 of SOX”), and to the extent that any form of
payment would, in the opinion of the Company’s counsel, result in a violation
of Section 402 of SOX, such form of payment shall not be available.


 


                                (c)          
Transferability of
Options.  An
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Participant
only by the Participant; provided, however, that subject to the
consent of the Committee (such consent not to be unreasonably withheld), a
Nonqualified Stock Option may be transferred for legitimate estate planning
purposes to immediate family members and/or trusts or partnerships of which
such family members are the sole beneficiaries.  The Committee may impose
reasonable and customary conditions on any such transfers.


 


                                (d)          
Disqualifying
Dispositions. 
Each Participant who receives an Incentive Stock Option must agree to notify
the Company in writing immediately after the Participant makes a Disqualifying
Disposition of any Stock acquired pursuant to the exercise of an Incentive
Stock Option.


 


 


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                                (e)          
Termination of
Employment or Service.


 


                                                (i)           
If prior to the
Expiration Date, the Participant’s employment or service with the Company and
its Affiliates terminates for any reason other than by reason of the
Participant’s death or Disability, then (1) all vesting with respect to
the Options shall cease except as set forth in Section 8(b)(ii)(A) and (B),
(2) any unvested Options shall expire as of the date of such termination,
and (3) any vested Options shall remain exercisable until the earlier of
the Expiration Date or the date that is one-hundred-eighty (180) days after the
date of such termination of employment or service.


 


                                                (ii)          
If prior to the
Expiration Date, the Participant’s employment or service with the Company and
its Affiliates terminates by reason of death or Disability, (1) all
vesting with respect to the Options shall cease except as set forth in Section
8(b)(ii)(A) and (B), (2) any unvested Options shall expire as of the date
of such termination, and (3) any vested Options shall expire on the
earlier of the Expiration Date or the date that is twelve (12) months after the
date of such termination due to death or Disability of the Participant. 
In the event of a Participant’s death, the Options shall remain exercisable by
the person or persons to whom the Participant’s rights under the Options pass
by will or the applicable laws of descent and distribution until its
expiration, but only to the extent the Options were vested by the Participant
at the time of such termination due to death or Disability.


 


Section 7.             
ROLLOVER OPTIONS


 


Rollover Options shall be fully vested as of the date
of grant and shall be Nonqualified Stock Options, irrespective of whether the
Prior Options which they replace were Incentive Stock Options or Nonqualified
Stock Options, except that a Rollover Option which replaces a Prior Option
designated as an Incentive Stock Option and is designated as an Incentive Stock
Option in a Participant’s Option Agreement shall retain such designation as an
Incentive Stock Option and shall not be entitled to any benefit under the Plan
not included in the Prior Option such option replaces.  Subject to
Section 6(e) hereof and unless provided otherwise in a Participant’s
Option Agreement, Rollover Options shall have an Expiration Date of the later
to occur of (x) the expiration date of the related Prior Options, or (y)
January 1, 2010.


 


Section 8.             
NEW MANAGEMENT OPTIONS


 


                                (a)          
General.  Each New Management Option shall
include (through incorporation of provisions hereof by reference in the Option
Agreement or otherwise) the substance of each of the following provisions:


 


                                                (i)           
Expiration Date.  No New Management Option granted
hereunder shall have an Expiration Date beyond the tenth (10th)
anniversary of the date it was granted.


 


                                                (ii)          
Exercise Price.  The exercise price per share of
Stock for each New Management Option shall be the Fair Market Value of a share
of Stock as of the date of grant.


 


                                (b)          
Vesting.  New Management Options shall vest
and become exercisable in such manner and on such date or dates set forth in
subsections (i) and (ii) below; provided, however, that
notwithstanding such vesting dates, the Committee may in its sole discretion
accelerate the vesting of any New Management Option, which acceleration shall
not affect the terms and conditions of any such New Management Option other
than with respect to vesting.  Unless otherwise specifically determined by
the Committee, the vesting of a New Management Option shall occur only while
the Participant is employed or rendering services to the Company or its
Affiliates and all vesting shall cease upon a Participant’s termination of
employment or services for any reason.  If a New Management Option is
exercisable in installments, such installments or portions thereof which become
exercisable shall remain exercisable until the New Management Option expires.


 


                                                (i)           
Time
Vested Options. 
Except as otherwise provided in a Participant’s Option Agreement, twenty
percent (20%) of the Time Vested Options granted to a Participant shall vest
and become exercisable on the date of grant, and an additional twenty percent
(20%) shall vest and become exercisable on each 


 


 


6

















of the first, second,
third and fourth anniversaries of the date of grant.  All Time Vested
Options shall become fully vested and exercisable upon a Change in Control.


 


                (ii)           Performance Vested Options.


 


                (A)         
Vesting
Based on Annual Performance.  For each fiscal year of the Company beginning
with fiscal year 2004 and ending with fiscal year 2008, ten percent (10%) of
the Performance Vested Options granted to a Participant shall be eligible to
become vested and exercisable, provided that the Company has achieved an Annual
EBITDA equal to, or in excess of, the Annual EBITDA Target for such fiscal
year.  Such Performance Vested Options shall become vested and exercisable
as of the date that the Committee verifies that such Annual EBITDA Target has
been achieved; provided, however, that notwithstanding anything set forth in
any Option Agreement dated prior to the effective date of the Fourth Amended
and Restated Stock Option Plan (the “Fourth Amendment Effective Date”), the
vesting hereunder will be effective as to any Participant holding Performance
Vested Options employed by the Company or any subsidiary of the Company as of
the end of the fiscal year to which such Annual EBITDA Target relates. 
For each such fiscal year, the Committee shall verify whether the Annual EBITDA
Target has been achieved, and shall notify the Company’s Chief Executive
Officer of its determination with respect thereto, within ten
(10) business days after the Committee receives the Company’s audited
financial statements for that fiscal year.  If the Company does not
achieve the required Annual EBITDA Target for a fiscal year, but in the
immediately following fiscal year, the Company has achieved a Cumulative EBITDA
equal to, or in excess of, the Cumulative EBITDA Target for such immediately
following fiscal year, in addition to any Performance Vested Options that vest
and become exercisable in such immediately following fiscal year in accordance
with the preceding sentence, the Performance Vested Options that were eligible
for vesting in the immediately prior fiscal year shall also vest and become
exercisable as of the date that the Committee verifies (in the manner specified
above) that such Cumulative EBITDA Target has been achieved.


 


                (B)          
Cumulative
Target.
Provided that the Cumulative EBITDA for fiscal year 2008 is equal to, or in
excess of, the Cumulative EBITDA Target for fiscal year 2008, fifty percent
(50%) of the Performance Vested Options shall become vested and exercisable as
of the date that the Committee verifies that the Cumulative EBITDA Target for
fiscal year 2008 has been achieved; provided, however, that notwithstanding
anything set forth in any Option Agreement dated prior to the Fourth Amendment
Effective Date, the vesting hereunder will be effective as to any Participant
holding Performance Vested Options employed by the Company or any subsidiary of
the Company as of September 30, 2008.  If the Cumulative EBITDA for fiscal
year 2008 is in excess of ninety (90%) of the Cumulative EBITDA Target for fiscal
year 2008 but less than one hundred percent (100%) of the Cumulative EBITDA
Target for fiscal year 2008, for each whole percentage point between ninety
percent (90%) and one hundred percent (100%), five (5%) of the Performance
Vested Options shall become vested and exercisable as of the date that the
Committee verifies that such percentage of the Cumulative EBITDA Target for
fiscal year 2008 has been achieved.  If the Cumulative EBITDA for fiscal
year 2008 is less than ninety (90%) of the Cumulative EBITDA Target for such
fiscal year, no Performance Vested Options shall vest and become exercisable
based upon achievement of Cumulative EBITDA Target for fiscal year 2008. 
The Committee shall verify whether the Cumulative EBITDA Target for fiscal year
2008 has been achieved, and shall notify the Company’s Chief Executive Officer
of its determination with respect thereto, within ten (10) business days
after the Committee receives the Company’s audited financial statements for
fiscal year 2008.


 


 


7

















                (C)          
Change
in Control. 
In the event of a Change in Control, (1) if the annualized net rate of
return to the Company’s shareholders (excluding any Participants) immediately
following the Effective Time from the Effective Time until the date of
consummation of such Change in Control (the “NRR”), equals, or is in
excess of, twenty five percent (25%), all Performance Vested Options shall vest
and become exercisable on the Change in Control; (2) if the NRR is twenty
percent (20%), an additional number of Performance Vested Options shall vest
and become exercisable such that, in the aggregate, seventy five percent (75%)
of the Performance Vested Options shall be vested and exercisable on the Change
in Control, and (3) in addition to the number of Performance Vested
Options that shall vest in accordance with clause (2) above, for each
additional one percent (1%) of NRR in excess of twenty percent (20%) to and
including 24.9%, an additional number of Performance Vested Options shall vest
and become exercisable such that, in the aggregate, an additional five percent
(5%) of the Performance Vested Options shall be vested and exercisable on the
Change in Control.  Any Performance Vested Options which have not vested
prior to, or upon, a Change in Control, shall terminate.  For purposes of
determining NRR, securities of the Company purchased by the Company’s
shareholders at the Effective Time shall be valued at the face amount of such
securities at such time.  In addition, and for the avoidance of doubt, NRR
shall be determined before the dilutive effect of any management fees or
carried interest paid to Warburg Pincus by the Fund.


 


                (D)         
Expiration
of Unvested Options.  Performance Vested Options which do not vest in accordance with
the provisions of this Section 8(b)(ii) shall terminate.


 


                (E)          
Non-Existing
Participants. 
Notwithstanding the vesting provisions described above, with respect to any
Performance Vested Options granted to any Participant who is not an Existing
Participant, the Committee shall have the discretion to alter the performance
criteria to which the Performance Vested Options so granted will vest.  If
the Committee elects to alter the performance criteria applicable to any
Performance Vested Options granted to any Participant who is not an Existing
Participant as contemplated by this Section 8(b)(ii)(E), the Option
Agreement evidencing the Performance Vested Options so granted shall
specifically set forth such altered performance vesting criteria.


 


Section 9.             
REPURCHASE OPTIONS


 


                                (a)          
General.  Each Repurchase Option shall
include (through incorporation of provisions hereof by reference in the Option
Agreement or otherwise) the substance of each of the following provisions:


 


                                                (i)           
Expiration Date.  No Repurchase Option granted
hereunder shall have an Expiration Date beyond the tenth (10th)
anniversary of the date it was granted.


 


                                                (ii)          
Exercise Price.  The exercise price per share of
Stock for each Repurchase Option shall be the greater of (x) the Repurchase
Price, and (y) the Fair Market Value of a share of Stock on the date of grant.


 


                                (b)          
Vesting.  Repurchase Options shall vest and
become exercisable in such manner and on such date or dates set forth in the
Option Agreement, as may be determined by the Committee; provided, however,
that notwithstanding such vesting dates, the Committee may in its sole
discretion accelerate the vesting of any Repurchase Option, which acceleration
shall not affect the terms and conditions of any such Repurchase Option other
than with respect to vesting.  Unless otherwise specifically determined by
the Committee, the vesting of a Repurchase Option shall occur only while the
Participant is employed or rendering services to the Company or its Affiliates
and all vesting shall cease upon a Participant’s termination of employment or
services for any reason.  If a Repurchase Option is exercisable in
installments, such installments or portions thereof which become exercisable
shall remain exercisable until the Repurchase Option expires.


 


 


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Section 10.           
MANAGEMENT STOCKHOLDERS’ AGREEMENT.


 


As a condition of the grant of an Option, if a
Participant has not previously executed a copy of the Management Stockholders’
Agreement, the Company may require a Participant to execute a copy of the
Management Stockholders’ Agreement and to be bound by the terms and conditions
contained therein.


 


Section 11.           
ADJUSTMENT FOR RECAPITALIZATION, MERGER, ETC.


 


                                (a)          
Capitalization
Adjustments. 
The aggregate number of shares of Stock which may be granted or purchased
pursuant to Options granted hereunder, the number of shares of Stock covered by
each outstanding Option, and the price per share thereof in each such Option
may be subject to adjustment or substitution, as determined by the Committee in
its sole discretion, as to the number, price or kind of a share of Stock or
other consideration subject to such Options or as otherwise determined by the
Committee to be equitable (i) in the event of changes in the outstanding
Stock or in the capital structure of the Company by reason of stock dividends,
stock splits, reverse stock splits, recapitalizations, reorganizations,
mergers, consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the date of grant of any such Option,
(ii) in the event of any change in applicable laws or any change in
circumstances which results in or would result in any substantial dilution or
enlargement of the rights granted to, or available for, Participants in the
Plan, or (iii) for any other reason which the Committee, in its sole
discretion, determines otherwise warrants equitable adjustment because it
interferes with the intended operation of the Plan.  Any adjustment shall
be conclusively determined by the Committee; provided, in each case, the fair
value of the Option immediately following any such adjustment shall be equal to
the fair value of the Option immediately prior to such adjustment.


 


                                (b)          
Corporate Events.  Notwithstanding
subsection (a) above, in the event of (i) a merger or
consolidation such that after such merger or consolidation the Company is not
the surviving entity or the ultimate parent of the surviving entity,
(ii) the sale of all or substantially all of the assets of the Company, or
(iii) the reorganization or liquidation of the Company (a “Corporate
Event”), the Company shall require the successor entity or parent thereof
to assume all outstanding Options; provided, however, the
Committee may, in its discretion and in lieu of requiring such assumption,
provide that all outstanding Options shall terminate as of the consummation of
such Corporate Event, and (x) accelerate the exercisability of, or cause all
vesting restrictions to lapse on, all outstanding Time Vested Options to a date
at least ten days prior to the date of such Corporate Event and/or (y) provide
that holders of vested Options will receive a cash payment in respect of
cancellation of their Options based on the amount (if any) by which the per
share consideration being paid for the Stock in connection with such Corporate
Event exceeds the applicable exercise price.  If a Corporate Event occurs which
does not constitute a Change in Control, the Committee shall take such actions
with respect to unvested Performance Vested Options and Repurchase Options as
it considers reasonable and equitable under the circumstances, and to the
extent practicable will require the successor entity or parent thereof to
assume such options and adjust the vesting schedule thereon in a manner
that is designed to ensure treatment thereof that is consistent with
Section 8(b)(ii)(A) and (B) and Section 9.


 


                                (c)          
Assumption.  For purposes of
Section 11(b) above, an Option shall be considered assumed, without
limitation, if, at the time of issuance of the stock or other consideration
upon a Corporate Event, each holder of an Option would be entitled to receive
upon exercise of the award the same number and kind of shares of stock or the
same amount of property, cash or securities as such holder would have been
entitled to receive upon the occurrence of the transaction if the holder had
been, immediately prior to such transaction, the holder of the number of shares
of Stock covered by the Option at such time; provided, that if such
consideration received in the transaction is not solely equity securities of
the successor entity and the successor entity’s equity securities are listed on
a national securities exchange or quoted in the NASDAQ-NSM, the Committee may,
with the consent of the successor entity, provide for the consideration to be
received upon exercise of the Option to be solely such equity securities of the
successor entity equal to the Fair Market Value of the per share consideration
received by holders of Stock in the Corporate Event.


 


                                (d)          
Fractional Shares.  Any such adjustment may provide
for the elimination of any fractional share which might otherwise become
subject to an Option.


 


 


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Section 12.           
USE OF PROCEEDS.


 


                                The proceeds received from the sale of
Stock pursuant to the Plan shall be used for general corporate purposes.


 


Section 13.           
RIGHTS AND PRIVILEGES AS A STOCKHOLDER.


 


Except as otherwise specifically provided in the Plan,
no person shall be entitled to the rights and privileges of stock ownership in
respect of shares of Stock which are subject to Options hereunder until the
related Options have been exercised.


 


 


Section 14.           
EMPLOYMENT OR SERVICE RIGHTS.


 


No individual shall have any claim or right to be
granted an Option under the Plan or, having been selected for the grant of an
Option, to be selected for a grant of any other Option.  Neither the Plan
nor any action taken hereunder shall be construed as giving any individual any
right to be retained in the employ or service of the Company or an Affiliate.


 


Section 15.           
COMPLIANCE WITH LAWS.


 


The obligation of the Company to make payment of
Options in Stock or otherwise shall be subject to all applicable laws, rules,
and regulations, and to such approvals by governmental agencies as may be
required.  Notwithstanding any terms or conditions of any Option to the
contrary, the Company shall be under no obligation to offer to sell or to sell
and shall be prohibited from offering to sell or selling any shares of Stock
pursuant to an Option unless such shares have been properly registered for sale
pursuant to the Securities Act with the Securities and Exchange Commission or
unless the Company has received an opinion of counsel, satisfactory to the
Company, that such shares may be offered or sold without such registration
pursuant to an available exemption therefrom and the terms and conditions of
such exemption have been fully complied with.  The Company shall be under
no obligation to register for sale or resale under the Securities Act any of
the shares of Stock to be offered or sold under the Plan or any shares of Stock
issued upon exercise of Options unless the Stock is registered under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934
and such registration is necessary in order to permit issuance of the Stock
upon exercise in accordance with the Plan.  If the shares of Stock offered
for sale or sold under the Plan are offered or sold pursuant to an exemption
from registration under the Securities Act, the Company may restrict the
transfer of such shares and may legend the Stock certificates representing such
shares in such manner as it deems advisable to ensure the availability of any
such exemption.


 


Section 16.           
WITHHOLDING OBLIGATIONS.


 


The Company is authorized to withhold from any Option
granted, any payment relating to an Option under the Plan, including from a
distribution of shares of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes required to be withheld by
applicable law in connection with any transaction involving an Option, and to take
such other action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Option. This authority shall include
authority to withhold or receive shares of Stock or other property and to make
cash payments in respect thereof in satisfaction of a Participant’s tax
obligations.  In addition to the Company’s right to withhold from any
compensation paid to the Participant by the Company, a Participant may satisfy
any federal, state or local tax withholding obligation relating to the exercise
or acquisition of Stock under an Option by tendering a cash payment or, in the
sole discretion of the Committee, by any of the following means or by a combination
of such means:  (i) authorizing the Company to withhold shares of
Stock from the shares of Stock otherwise issuable to the Participant as a
result of the exercise or acquisition of Stock under the Option, provided,
however, that no shares of Stock are withheld with a value exceeding the
minimum amount of tax required to be withheld by law; or (ii) delivering
to the Company owned and unencumbered shares of Stock that either (A) have
been held by the Participant for at least six-months, or (B) were acquired
from a person other than the Company.  For purposes of this
Section 16, the term “Company” shall be deemed to mean any Affiliate that
may have a tax withholding obligation due to its relationship with a
Participant.


 


 


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Section 17.           
AMENDMENT OF THE PLAN OR OPTIONS.


 


                                (a)          
Amendment of Plan.  The Board at any time, and from
time to time, may amend the Plan; provided, however, that without further
stockholder approval the Board shall not make any amendment to the Plan which
would increase the maximum number of shares of Stock which may be issued
pursuant to Options under the Plan, except as contemplated by Section 11
hereof.


 


                                (b)          
No Impairment of
Rights. 
Rights under any Option granted before amendment of the Plan shall not be
impaired by any amendment of the Plan unless (i) the Company requests the
consent of the Participant and (ii) the Participant consents in writing.


 


                                (c)          
Amendment of Stock
Options. 
The Committee, at any time, and from time to time, may amend the terms of any
one or more Options; provided, however, that the rights under any
Option shall not be impaired by any such amendment unless (i) the Company
requests the consent of the Participant and (ii) the Participant consents
in writing.


 


Section 18.           
TERMINATION OR SUSPENSION OF THE PLAN.


 


The Board may suspend or terminate the Plan at any
time.  Unless sooner terminated, the Plan shall terminate on the day
before the tenth (10th) anniversary of the date the Plan was
originally adopted by the Board or approved by the stockholders of the Company,
whichever is earlier, where for purposes of this sentence, the term “Plan”
shall mean the Company’s 2003 Stock Option Plan, as in effect prior to any
amendment and restatement thereof.  No Options may be granted under the
Plan while the Plan is suspended or after it is terminated.  Rights under
any Option granted before suspension or termination of the Plan shall not be
impaired by such suspension or termination of the Plan unless (i) the
Company requests the consent of the Participant and (ii) the Participant
consents in writing.


 


Section 19.           
EFFECTIVE DATE OF THE PLAN.


 


The Plan shall be effective immediately following the
Effective Time.


 


Section 20.           
MISCELLANEOUS.


 


                                (a)          
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 member or on his behalf in his 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 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 Certificate 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.


 


                                (b)          
Payments Following
Accidents or Illness. 
If the Committee shall find that any person to whom any amount is payable under
the Plan is unable to care for his affairs because of illness or accident, or
is a minor, or has died, then any payment due to such person or his 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 his
spouse, child, relative, an institution maintaining or having custody of such
person, or any other person deemed by the Committee 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.


 


                                (c)          
Governing Law.  The Plan shall be governed by and
construed in accordance with the internal laws of the State of Delaware without
reference to the principles of conflicts of laws thereof.


 


 


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                                (d)          
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 unsecured general 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.


 


                                (e)          
Reliance on
Reports. 
Each member of the Committee and each member of the Board shall be fully
justified in relying, acting or failing to act, and shall not be liable for
having so relied, acted or failed to act in good faith, upon any report made by
the independent public accountant of the Company and its Affiliates and upon
any other information furnished in connection with the Plan by any person or
persons other than himself.


 


                                (f)           
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.


 


*    
*     *


 


 


 


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