Document:

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                                                                    Exhibit 10.9

                                COLT DEFENSE LLC

                      2003 MANAGEMENT OPTION INCENTIVE PLAN
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                                TABLE OF CONTENTS

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                                                                          PAGE
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1.       Definitions...................................................    1

2.       Effective Date and Termination of Plan........................    2

3.       Administration of Plan........................................    3

4.       Eligibility and Grant of Options; Committee Authority.........    3

5.       Number of Units Subject to Options............................    3

6.       Option Price..................................................    4

7.       Period of Option and Vesting..................................    4

8.       Exercise of Options...........................................    4

9.       Payment.......................................................    5

10.      Tax Withholding...............................................    5

11.      Restrictions on Transfer of Units.............................    6

12.      Exercise by Successors and Payment in Full....................    6

13.      Nontransferability of Option..................................    6

14.      Regulations and Approvals.....................................    6

15.      Interpretation and Amendments; Other Rules....................    7

16.      Changes in Capital Structure..................................    7

17.      Notices.......................................................    8

18.      Rights as Member..............................................    8

19.      Rights to Employment..........................................    8

20.      Exculpation and Indemnification...............................    8

21.      Captions......................................................    9

22.      Governing Law.................................................    9
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                                      -i-
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                                COLT DEFENSE LLC

                        MANAGEMENT OPTION INCENTIVE PLAN

            Colt Defense LLC, a Delaware limited liability company (the
"Company"), wishes to reward certain members of the management and other
employees of the Company (the "Participants"), to induce the Participants to
remain with the Company and to encourage them to increase their efforts to make
the Company's business more successful. In furtherance thereof, the Colt Defense
LLC Management Option Incentive Plan (the "Plan"), is designed to provide
equity-based incentives to the Participants.

1. Definitions.

            Whenever used herein, the following terms shall have the meanings
set forth below:

            "Award Agreement" means a written agreement, in a form approved by
the Committee, to be entered into by the Company and the Optionee of an Option,
as provided in Section 4.

            "Board" means the Governing Board of the Company.

            "Cause" means, unless otherwise provided in the Optionee's Award
Agreement, (i) the Participant shall have committed any material breach of any
of the provisions set forth (A) herein, (B) in any agreement between the Company
and such Participant, or (C) of the Company's Policy and Procedures; or (ii) the
Participant shall have committed any act of fraud, gross negligence or gross
misconduct in the performance of his duties or obligations hereunder or shall
have committed any criminal act or any crime involving moral turpitude; or (iii)
the Participant shall have committed any material act of misfeasance,
malfeasance, nonfeasance, disloyalty, dishonesty or breach of trust against the
Company or any affiliate of the Company; or (iv) the Participant shall have
failed to follow the direction of the Governing Board; provided, that such
direction did not require that the Participant violate any stature, rule or
regulation applicable to the Participant.

            "Code" means the Internal Revenue Code of 1986, as amended.

            "Committee" means the committee appointed by the Board under Section
3, or if the Board has not established such a committee, the Board.

            "Common Units" means the Company's Common Units, either currently
existing or authorized hereafter.

            "Company" means Colt Defense LLC, a Delaware limited liability
company.

            "Disability" means the incapacitation or disability of a Participant
by accident, sickness or otherwise so as to render such Participant mentally or
physically incapable of
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performing the services required to be performed by such Participant for the
Company immediately prior to such condition of such Participant for a period of
ninety (90) consecutive days, or for an aggregate of one hundred twenty (120)
days during any twelve (12) month period.

            "Effective Date" means June 12, 2003.

            "Fair Market Value" means the fair market value as determined by the
Committee.

            "Grant Date" means with respect to any Options: the date such
Options were initially granted by the Committee, which may be reflected in an
Optionee's Award Agreement.

            "Liquidation Event" means the first to occur of (i) a sale of all or
substantially all of the assets of the Company resulting in net proceeds
available for distribution to members of the Company upon liquidation of the
Company of not less than $21,000,000, (ii) any dissolution or complete
liquidation of the Company, (iii) any merger of the Company into another entity
in which the Company is not the surviving entity; or (iv) an underwritten public
offering of securities of the Company; provided, however, that in the case of
clauses (iii) and (iv) above, a Liquidation Event shall not be deemed to have
occurred until such time as Colt Defense Holding LLC, shall have received in
connection with such merger or underwritten public offering, as the case may be,
cash and/or securities in the surviving entity or the Company, as the case may
be, which are not subject to any contractual or other restriction on the
transfer of such securities.

            "Option" means the right to purchase, at a price and for the term
fixed by the Committee in accordance with the Plan, and subject to such other
limitations and restrictions in the Plan and the applicable Award Agreement, a
number of Units determined by the Committee.

            "Optionee" means a Participant to whom an Option is granted, or the
Successors of an Optionee, as the context so requires.

            "Option Price" means the exercise price per Unit, which shall be
reflected in an Optionee's Award Agreement.

            "Plan" means the Company's Management Option Incentive Plan, as set
forth herein and as the same may from time to time be amended.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Successor of an Optionee" means the legal representative of the
estate of a deceased Optionee or the person or persons who shall acquire the
right to exercise an Option by bequest or inheritance or by reason of the death
of the Optionee.

            "Units" means units of limited liability interest of the Company.

2. Effective Date and Termination of Plan.

            The effective date of the Plan is the Effective Date; provided that
the Plan shall have been approved by the Board effective as of such date. No
Option shall be granted

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hereunder on or after the fifth (5th) anniversary of the Effective Date, and the
Plan shall terminate on the fifth (5th) anniversary of the latest Grant Date of
any Option granted hereunder.

3. Administration of Plan.

            The Plan shall be administered by the Committee appointee by the
Board. The Committee shall consist of at least two (2) individuals. The acts of
a majority of the members present at any meeting of the Committee at which a
quorum is present, or acts approved in writing by a majority of the entire
Committee, shall be the acts of the Committee for purposes of the Plan. If and
to the extent applicable, no member of the Committee may act as to matters under
the Plan specifically relating to such member.

4. Eligibility and Grant of Options; Committee Authority.

            Subject to the provisions of the Plan, the Committee may, in its
sole discretion as reflected by the terms of Award Agreements: (i) authorize the
granting of Options to Participants and other employees of the Company; (ii)
determine and designate from time to time those Participants and other employees
of the Company to whom Options are to be granted and the number of Units to be
optioned to each employee; (iii) determine the number of Units subject to each
option; (iv) determine the time or times when and the manner and condition in
which each Option shall vest and thereby become exercisable and the duration of
the exercise period (to the extent not inconsistent with the provisions of the
Plan); and (v) determine or impose conditions to the grant or exercise of
Options under the Plan as it may deem appropriate. Options shall vest and
thereby become exercisable as set forth in Section 7 of the Plan, unless
otherwise determined by the Committee. In determining the eligibility of an
employee to receive an Option, as well as in determining the number of Units to
be optioned to any employee, the Committee may consider the position and
responsibilities of the employee, the nature and value to the Company of the
employee's services and accomplishments, the employee's present and potential
contribution to the success of the Company and such other factors as the
Committee may deem relevant. The Award Agreement, if any, shall contain such
other terms, provisions and conditions not inconsistent herewith as shall be
determined by the Committee. The Optionee shall take whatever additional actions
and execute whatever additional documents the Committee may in its reasonable
judgment deem necessary or advisable in order to carry out or effect one or more
of the obligations or restrictions imposed on the Optionee pursuant to the
express provisions of the Plan and the Award Agreement. Each Option granted
under the Plan shall not be qualified under Section 422 of the Code.

5. Number of Units Subject to Options.

            Subject to adjustments pursuant to Section 16, Options with respect
to an aggregate of no more than 23,073.727 Units may be granted under the Plan.
Notwithstanding the foregoing provisions of this Section 5, Units as to which an
Option is granted under the Plan that remain unexercised at the expiration,
forfeiture or other termination of such Option may be the subject of the grant
of further Options; provided, however, that the Option Price of such newly
granted Options shall be the Fair Market Value of the Units underlying such
Options at the time of such grant. Common Units issued hereunder may consist, in
whole or in part, of authorized and unissued units or treasury units. The
certificates for Units issued hereunder may include any

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legend which the Committee deems appropriate to reflect any restrictions on
transfer hereunder or under the Award Agreement, or as the Committee may
otherwise deem appropriate.

6. Option Price.

            The Option Price with respect to any Option shall be the Fair Market
Value of the Units underlying such Options as of the Grant Date hereof. Such
Option Price shall be reflected in the Award Agreement.

7. Period of Option and Vesting.

      (a) Options may be exercised at the time they vest and thereby become
exercisable pursuant to the Plan, and at any time thereafter until the
expiration of such Option as provided herein. Unless earlier expired, forfeited
or otherwise terminated, each Option shall expire in its entirety upon the fifth
(5th) anniversary of the Grant Date of such Option. Options shall also expire,
be forfeited and terminate at such times and in such circumstances as otherwise
provided hereunder and/or under the Award Agreement.

      (b) The Percentage of the Options granted to each Participant which remain
outstanding shall vest and thereby become exercisable on each anniversary of the
Grant Date in respect of such Options as set forth in the Award Agreement (if
any) or the resolutions of the Committee granting Options; provided, however,
that the vesting and exercisability of all Options shall accelerate as set forth
in Section 7(d) below. Each Option granted hereunder shall be exercisable until
the expiration of such Option.

      (c) Notwithstanding any provision of the Plan to the contrary, no Option
(or portion thereof) shall vest and thereby become exercisable if the Optionee's
employment with the Company has terminated before the time at which such Option
would otherwise have vested and thereby would have become exercisable, and any
Option that would otherwise vest and thereby become exercisable after such
termination shall not vest or become exercisable and shall be forfeited upon
such termination. Upon and after the death of an Optionee, such Optionee's
Options, if and to the extent otherwise exercisable hereunder, or under the
applicable Award Agreement after the Optionee's death, may be exercised by the
Successors of the Optionee.

      (d) Upon a Liquidation Event, all issued and outstanding Options will
fully accelerate, vest and thereby become immediately exercisable, effective
concurrently with the closing of the transactions constituting such Liquidation
Event; it being understood and agreed that if a Participant exercises its
Options concurrently with such closing, such Participant may participate in such
Liquidation Event as a member of the Company but only to the extent such
Participant exercises its Options.

8. Exercise of Options.

      (a) Subject to vesting and other restrictions provided for hereunder or
otherwise imposed in accordance herewith, an Option may be exercised, and
payment in full of the aggregate Option Price made, by an Optionee only by
written notice (in the form prescribed by the Committee) to the Company
specifying the number of Units to be purchased.

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      (b) If a Participant's employment with the Company is terminated,
regardless of whether by the Company or by the Participant, all Options that
have not previously vested and thereby become exercisable shall thereupon be
forfeited.

      (c) If a Participant's employment with the Company is terminated by the
Company for Cause or voluntarily by the Participant, all Options issued to such
Participant that previously vested and thereby became exercisable but were not
exercised on or before the earlier of such date of termination and the date the
Company gave notice to such Participant of his or her termination for Cause or
the date of voluntary termination shall thereupon be forfeited.

      (d) If a Participant's employment with the Company is terminated by the
Company other than for Cause, all Options issued to such Participant that remain
unexercised as of the date of such termination shall immediately terminate and
be forfeited; provided that any portion of such Options that previously vested
and were otherwise exercisable on the date of such termination shall remain
exercisable for a period of sixty (60) days following the date of such
termination, but in no event after the date which the Options would otherwise
expire pursuant to the terms of the Plan. Notwithstanding the provisions of the
previous sentence, upon the termination of the Participant's employment with the
Company (other than by the Company for Cause or by the Participant), the Company
shall have the option (the "Repurchase Option") to purchase from such
Participant his or her outstanding Options at the Fair Market Value of the Units
issuable upon exercise of such Options (as of the date of the exercise of the
Repurchase Option) less the Option Price of such Options (the "Repurchase
Price"). The Company may purchase Options pursuant to the Repurchase Option, by
(i) paying not less than one-third (1/3) of the Repurchase Price in cash by wire
transfer at the time of exercise of the Repurchase Option, and (ii) by issuing
to the Participant, a note with a principal amount equal to the remainder of the
Repurchase Price, payable two (2) years from the date of exercise of the
Repurchase Option, with amortization over two (2) years from the date of
exercise of the Repurchase Option, and bearing interest at the minimum rate of
interest (as of date of exercise of the Repurchase Option) to avoid the
imputation of interest thereon.

9.       Payment.

      (a) The aggregate Option Price shall be paid in full upon the exercise of
the Option. Payment must be made by one of the following methods:

            (i) a certified or bank cashier's check; or

            (ii) by any other method acceptable to the Committee in its
      discretion.

      (b) Any fractional Units resulting from an Optionee's election that are
accepted by the Company shall in the discretion of the Committee be paid in
cash.

10. Tax Withholding.

            The Committee may, in its discretion, require the Optionee to pay to
the Company at the time of exercise of any Option the amount that the Committee
deems necessary to satisfy the Company's obligation to withhold federal, state
or local income or other taxes incurred by reason of the exercise. Where the
exercise of an Option does not give rise to an obligation by the

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Company to withhold federal, state or local income or other taxes on the date of
exercise, but may give rise to such an obligation in the future, the Committee
may, in its discretion, make such arrangements and impose such requirements as
it deems necessary or appropriate. Notwithstanding anything contained in the
Plan to the contrary, the Optionee's satisfaction of any tax-withholding
requirements imposed by the Committee shall be a condition precedent to the
Company's obligation as may otherwise be provided hereunder to provide Units to
the Optionee, and the failure of the Optionee to satisfy such requirements with
respect to the exercise of an Option shall cause such Option to be forfeited.

11. Restrictions on Transfer of Units.

            To the extent required by the Board or, in the Board's sole
judgment, by existing agreements among the Company's members, Units issued upon
the exercise of Options shall be subject to the Optionee's agreement that the
Units will be subject to transfer restrictions, voting requirements and other
obligations to protect the Company's interests. Without limitation of the
foregoing, Units issued upon the exercise of Options shall be subject to the
Optionee's agreement that the Units will be subject to the terms and provisions
of the Amended and Restated Limited Liability Company Agreement of Colt Defense
LLC, dated as of June 12, 2003 (as amended, restated or otherwise modified from
time to time, the "LLC Agreement"), by and among the Company and certain members
of the Company with respect to the treatment of Equity Securities (as defined in
the LLC Agreement).

12. Exercise by Successors and Payment in Full.

            An Option may be exercised, and payment in full of the aggregate
Option Price made, by the Successors of an Optionee only by written notice (in
the form prescribed by the Committee) to the Company specifying the number of
Units to be purchased. Such notice shall state that the aggregate Option Price
will be paid in full, or that the Option will be exercised as otherwise provided
hereunder, in the discretion of the Company or the Committee, if and as
applicable.

13. Nontransferability of Option.

            Each Option granted under the Plan shall by its term be
nontransferable by the Optionee, except by will or the laws of descent and
distribution of the state wherein such Optionee is domiciled at the time of his
death; provided, however, that the Committee may (but need not) permit other
transfers where the Committee concludes that such transferability (i) does not
result in accelerated taxation and (ii) is otherwise appropriate and desirable.

14. Regulations and Approvals.

      (a) The obligation of the Company to issue Units with respect to Options
granted under the Plan shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state securities laws, and any
agreements regarding the issuance and sale of Units to which the Company is a
party and the obtaining of all such approvals by governmental agencies and
consents from members and third parties as may be deemed necessary or
appropriate by the Committee.

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      (b) The Committee may make such changes to the Plan as may be necessary or
appropriate to comply with the rules and regulations of any government authority
or to obtain tax benefits comparable to the benefits applicable to stock
options.

      (c) Each Option is subject to the requirement that, if at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of Units issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or the issuance of
Units, no Options shall be granted or payment made or Units issued, in whole or
in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions in a manner acceptable to the
Committee.

      (d) In the event that the disposition of Units acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act, and is not otherwise exempt from such registration, such Units
shall be restricted against transfer to the extent required under the Securities
Act.

15. Interpretation and Amendments; Other Rules.

            The Committee may make such rules and regulations and establish such
procedures for the administration of the Plan as it deems appropriate. Without
limiting the generality of the foregoing, the Committee may (i) determine the
extent, if any, to which Options or Units shall be forfeited (whether or not
such forfeiture is expressly contemplated hereunder); (ii) interpret the Plan
and the Award Agreements hereunder, with such interpretations to be conclusive
and binding on all persons and otherwise accorded the maximum deference
permitted by law; and (iii) take any other actions and make any other
determinations or decisions that it deems necessary or appropriate in connection
with the Plan or the administration or interpretation thereof. Unless otherwise
expressly provided hereunder, the Committee, with respect to any Option, may
exercise its discretion hereunder at the time of the award or thereafter. In the
event of any dispute or disagreement as to the interpretation of the Plan or of
any rule, regulation or procedure, or as to any question, right or obligation
arising from or related to the Plan, the decision of the Committee shall be
final and binding upon all persons. The Board may amend the Plan as it shall
deem advisable, except that no amendment may adversely affect an Optionee with
respect to Options previously granted unless such amendments are in connection
with compliance with applicable laws; provided, that the Board may not make any
amendment in the Plan that would, if such amendment were not approved by the
holders of the Common Units, cause the plan to fail to comply with or any
requirement of applicable law or regulation, unless and until the approval of
the holders of such Common Units is obtained.

16. Changes in Capital Structure.

            If (i) the Company shall at any time be involved in a merger,
consolidation, dissolution, liquidation, reorganization, exchange of units, sale
of all or substantially all of the assets or units of the Company or a
transaction similar thereto, (ii) any units distribution, units split, reverse
units split, units combination, reclassification, recapitalization or other
similar change in the capital structure of the Company or (iii) any other event
shall occur which in the

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judgment of the Committee necessitates action by way of adjusting the terms of
the outstanding Options, then the Committee may forthwith take any such action
as in its judgment shall be necessary to preserve to the Optionee's rights
substantially proportionate to the rights existing prior to such event, and to
maintain the continuing availability of Units under Section 4 (if Units are
otherwise then available) in a manner consistent with the intent hereof,
including, without limitation, adjustments in (x) the number and kind of units
subject to Options, (y) the Option Price, and (z) the number and kind of units
available under Section 4. To the extent that such action shall include an
increase or decrease in the number of units subject to outstanding Options, the
number of units available under Section 4 above shall be increased or decreased,
as the case may be, proportionately.

            The judgment of the Committee with respect to any matter referred to
in this Section 16 shall be conclusive and binding upon each Optionee without
the need for any amendment to the Plan.

17. Notices.

            All notices under the Plan shall be in writing, and if to the
Company, shall be delivered to the Board or mailed to its principal office,
addressed to the attention of the Board; and if to the Optionee, shall be
delivered personally or mailed to the Optionee at the address appearing in the
records of the Company. Such addresses may be changed at any time by written
notice to the other party given in accordance with this Section 17.

18. Rights as Member.

            Neither the Optionee nor any person entitled to exercise the
Optionee's rights in the event of death shall have any rights of a member with
respect to the Units subject to an Option, except to the extent that a
certificate for such Units shall have been issued upon the exercise of the
Option as provided for herein.

19. Rights to Employment.

            Nothing in the Plan or in any Option granted pursuant to the Plan
shall confer on any individual any right to continue in the employ of the
Company or interfere in any way with the right of the Company to terminate the
individual's employment at any time.

20. Exculpation and Indemnification.

            To the maximum extent permitted by law, the Company shall indemnify
and hold harmless the members of the Board and the members of the Committee from
and against any and all liabilities, costs and expenses incurred by such persons
as a result of any act or omission to act in connection with the performance of
such person's duties, responsibilities and obligations under the Plan, other
than such liabilities, costs and expenses as may result from the gross
negligence, bad faith, willful misconduct or criminal acts of such persons.

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21. Captions.

            The use of captions in this Plan is for convenience. The captions
are not intended to provide substantive rights.

22. Governing Law.

            THE PLAN SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.

            [Next page is signature page]

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            IN WITNESS WHEREOF, the Company's adoption of the foregoing
Management Option Incentive Plan is hereby confirmed.

COLT DEFENSE LLC

/s/ WILLIAM M. KEYS
--------------------------------------------
Name: William M. Keys
Its: PresidentEX-10.1

 

EXHIBIT 10.1

PIKE HOLDINGS, INC.

2005 EMPLOYEE STOCK PURCHASE PLAN

ARTICLE I

Adoption, Effectiveness and Purpose of the Plan

          SECTION 1.01. Adoption. Pike Holdings, Inc., a North Carolina corporation (the
“Company”), hereby adopts this 2005 Employee Stock Purchase Plan (the “Plan”)
providing for the issue and sale of shares of common stock, no par value, of the Company
(“Common Stock”) to eligible employees of the Company and its affiliates. 65,000 shares of
Common Stock will be reserved for issuance and sale under the Plan, subject to adjustment upon
change in the capitalization of the Company as the Board of Directors of the Company (the
“Board”) shall from time to time determine. Such shares may be authorized and made
available from unissued shares or issued shares which shall have been reacquired by the Company, in
whole or in part, as the Board shall from time to time determine.

          SECTION 1.02. Effectiveness. The Plan shall become effective upon its approval and
adoption by the Board.

          SECTION 1.03. Purpose. The general purpose of the Plan is to advance the interests
of the Company and its affiliates by providing eligible employees with an opportunity to subscribe
for and purchase Common Stock in order to further align their interests with those of other
stockholders of the Company. The offer and sale of Common Stock pursuant to the Plan are intended
to qualify as being made “under a written compensatory benefit plan” exempt from the registration
requirements of the Securities Act of 1933 pursuant to Rule 701 promulgated thereunder (“Rule
701”). The Plan is not intended to satisfy the requirements of Section 423 of the Internal
Revenue Code of 1986, as amended.

ARTICLE II

Certain Definitions

          The following terms shall have the meanings ascribed to them below:

          “Affiliate” shall mean, with respect to the Company, its majority stockholder,
majority-owned subsidiaries or majority-owned subsidiaries of the Company’s majority stockholder.
The term “Affiliate” shall be interpreted in a manner consistent with paragraph (c) of Rule 701.

          “Eligible Employee” shall mean any employee of the Company or any of its Affiliates
having the position of area supervisor or higher. The term “Eligible Employee” shall be
interpreted in a manner consistent with paragraph (c) of Rule 701.

 

 

ARTICLE III

Administration and Eligibility

          SECTION 3.01. Administration. (a) The Plan shall be administered by the Board. No
member of the Board shall be liable for any action or determination made by him or her in good
faith.

          (b) The Board shall have full power to implement and carry out the provisions of the Plan.
The Board may delegate to an officer of the Company the authority to execute Agreements (as defined
below) and any other documents in connection with the Plan in the form determined by the Board.

          (c) The Board shall have absolute discretion to interpret the Plan, prescribe, amend and
rescind rules and regulations relating to it, determine the terms and conditions of individual
purchases of Common Stock, and make all other determinations it deems necessary or advisable for
the administration of the Plan.

          (d) The determinations of the Board on all matters regarding the Plan shall be binding and
conclusive and no determination shall be subject to de novo review if challenged in
court.

          (e) Determinations under the Plan made by the Board, including, without limitation,
determinations as to the persons eligible to purchase Common Stock under the Plan, the terms and
conditions of such purchases and the agreements evidencing the same, need not be uniform and may be
made by it selectively among persons who are eligible to purchase Common Stock under the Plan,
whether or not such persons are similarly situated, to the extent consistent with the terms herein.

          (f) The Board shall be entitled to delegate, in its discretion, any or all of its rights and
responsibilities under the Plan to any committee thereof.

          SECTION 3.02. Eligibility. The Board shall determine in its discretion from time to
time the individuals entitled to subscribe for and purchase Common Stock under the Plan (each, a
“Participant”), provided, however, that no person shall be permitted to
subscribe for or purchase Common Stock under the Plan unless such person is an Eligible Employee.

ARTICLE IV

Purchase of Common Stock

          SECTION 4.01. Terms and Conditions of Purchase. The Board shall determine any and
all terms and conditions applicable to the subscription for and purchase of Common Stock under the
Plan, including the number of shares of Common Stock each Participant is eligible to subscribe for
and purchase and the form and amount of consideration to be paid for such Common Stock.

2

 

          SECTION 4.02. Stock Subscription Agreement. Notwithstanding anything herein to the
contrary, as a condition to the subscription for and purchase of Common Stock under the Plan, each
Participant shall be required to enter into a Stock Subscription Agreement (“Agreement”),
which shall be substantially in the form attached hereto as Exhibit 1, unless and until such form
is amended or modified by the Board in its discretion.

          SECTION 4.03. Limit on Common Stock Sold. Notwithstanding anything herein or in any
Agreement to the contrary, the amount of Common Stock issued and sold under the Plan during any
consecutive twelve-month period shall not exceed (a) $5,000,000 in the aggregate and (b) $500,000
in the case of any individual Participant. The provisions of this Section 4.03 shall be
interpreted in a manner consistent with paragraph (d) of Rule 701.

ARTICLE V

Withholding; Legal Restrictions; No Employment Guarantee

          SECTION 5.01. Tax Withholding. In connection with the transfer of shares of Common
Stock under the Plan in any circumstance that would subject a Participant to taxation, the Company
shall have the right to require the Participant to pay an amount in cash or to retain or sell
without notice, or to demand surrender of, shares of Common Stock in value sufficient to cover any
tax, including any Federal, state or local income tax, required by any governmental entity or
authority to be withheld or otherwise deducted and paid with respect to such transfer, and to make
payment (or to reimburse itself for payment made) to the appropriate taxing authority of an amount
in cash equal to the amount of such tax, remitting any balance to such Participant.

          SECTION 5.02. Legal Restrictions. (a) No subscription for or purchase of Common
Stock shall be made, and no shares of Common Stock shall be issued or delivered, under the Plan,
unless and until any applicable Federal or state registration, listing and qualification
requirements and any other requirements of law or of any regulatory agencies having jurisdiction
shall have been fully complied with (or exceptions from the foregoing are available), and each
offer and sale of Common Stock under the Plan shall specifically be conditioned upon compliance
with this Section 5.02.

          (b) The Board may impose such other terms, conditions and restrictions upon any subscription
for or purchase of Common Stock that the Board concludes, in its discretion, are necessary or
desirable to ensure compliance with any applicable law. Certificates for shares of Common Stock
issued under the Plan shall bear a legend substantially similar to the following:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF, AND IN
PARTICULAR MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION

3

 

COMPLIES WITH THE PROVISIONS OF, A STOCKHOLDERS AGREEMENT (THE “AGREEMENT”) (A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF PIKE HOLDINGS, INC. (TOGETHER WITH ITS SUCCESSORS,
THE “COMPANY”) AND WHICH WILL BE MAILED TO A STOCKHOLDER WITHOUT CHARGE WITHIN FIVE DAYS
AFTER RECEIPT BY THE COMPANY OF A WRITTEN REQUEST THEREFOR FROM SUCH STOCKHOLDER). THE
HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF
THE PROVISIONS OF THE AFORESAID AGREEMENT.”

          SECTION 5.03. No Guarantee of Employment. The Plan shall not be deemed to constitute
a contract between the Company or any Affiliate and any Participant or to be consideration or an
inducement for the employment, directorship or consultancy of any Participant by the Company or any
Affiliate. Nothing contained in the Plan shall be deemed to give any Participant the right to be
retained in the service of the Company or any Affiliate or to interfere with the right of the
Company or any Affiliate to discharge or to terminate the service of any Participant at any time
without regard to the effect such discharge or termination may have on any rights under the Plan.

ARTICLE VI

Amendment and Termination

          SECTION 6.01. Amendment and Termination. The Board may at any time amend, modify or
terminate the Plan in such respects as it shall determine in its sole discretion. Unless the Plan
shall previously have been terminated, the Plan shall terminate on, and no Common Stock may be
subscribed for or purchased after, the tenth anniversary of the date this Plan is adopted by the
Board.

ARTICLE VII

Miscellaneous

          SECTION 7.01. Applicable Law. The laws of the State of New York shall govern the
interpretation, validity and performance of the terms of the Plan, regardless of the law that might
be applied under principles of conflicts of law.

          SECTION 7.02. Exclusive Jurisdiction; Waiver of Jury Trial. (a) Each Participant
shall irrevocably submit to the exclusive jurisdiction of (i) the Supreme Court of the State of New
York, New York County, and (ii) the United States District Court for the Southern District of New
York, for the purposes of any suit, action or other proceeding arising out of the Plan, any
Agreement or any other agreement entered into in connection with the Plan or any transaction
contemplated hereby or thereby. Each Participant shall commence any action, suit or proceeding
relating hereto either in the United States District Court for the Southern District of New York or
if such suit, action or other proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New York County. Each Participant shall

4

 

 further agree that service of any process, summons, notice or document by U.S. registered mail
to such person’s last known address shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to jurisdiction in
this clause. Each Participant shall irrevocably and unconditionally waive any objection to the
laying of venue of any action, suit or proceeding arising out of the Plan, any Agreement or any
other agreement entered into in connection with the Plan or the transactions contemplated hereby or
thereby in (x) the Supreme Court of New York, New York County, or (y) the United States District
Court for the Southern District of New York, and hereby and thereby shall further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any such action, suit
or proceeding brought in any such court has been brought in an inconvenient forum.

          (b) Each Participant shall waive, to the fullest extent permitted by applicable law, any
right it may have to a trial by jury in respect of any litigation arising out of or relating to the
Plan.

          SECTION 7.03. Severability. If any provision of the Plan (or any portion thereof) or
the application of any such provision (or any portion thereof) to any person or circumstance shall
be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision hereof (or the
remaining portion thereof) or the application of such provision to any other persons or
circumstances.

          SECTION 7.04. Successors and Assigns. The Plan shall inure to the benefit of and be
binding upon each successor and assign of the Company. All obligations imposed upon a Participant,
and all rights granted to the Company hereunder, shall be binding upon the Participant’s heirs,
legal representatives and successors. The Plan and the rights and obligations hereunder shall not
be assignable or transferable by any Participant. Any attempted assignment or transfer in
violation of this Section 7.04 shall be void.

5

 

EXHIBIT 1

STOCK SUBSCRIPTION AGREEMENT

     PIKE HOLDINGS, INC. STOCK SUBSCRIPTION AGREEMENT (this
“Agreement”) dated as of the date set forth below, between PIKE
HOLDINGS, INC., a North Carolina corporation (the “Company”), and
the party whose name appears on the signature page hereto (the
“Purchaser”).

          WHEREAS the Company has adopted the 2005 Employee Stock Purchase Plan (the “Plan”),
pursuant to which Eligible Employees (as defined in the Plan) who are designated as Participants
(as defined in the Plan) may subscribe for and purchase from the Company shares of Common Stock, no
par value, of the Company (“Common Stock”);

          WHEREAS the Purchaser is an Eligible Employee and has been designated a Participant in the
Plan;

          WHEREAS the Purchaser desires to subscribe for and purchase from the Company, and the Company
desires to issue and sell to the Purchaser, shares of Common Stock pursuant to the Plan; and

          WHEREAS, as a condition to the Purchaser’s subscription for and purchase of such Common Stock,
the Plan requires that the Purchaser enter into this Agreement;

          NOW, THEREFORE, in order to implement the foregoing and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, the parties hereto agree as
follows:

ARTICLE I

Certain Definitions

          As used in this Agreement, the following terms shall have the meanings ascribed to them below:

          “Compensation” shall mean all regular salary or wages, including overtime,
commissions, holiday pay, permitted leave and absence pay and vacation pay, determined after all
deductions for taxes and other amounts required to be deducted or withheld under applicable law.

          “person” shall mean any individual, corporation, partnership, trust, unincorporated
organization or government or political department or agency thereof or other entity.

          “Securities Act” shall mean the Securities Act of 1933, and all rules and regulations
promulgated thereunder.

6

 

ARTICLE II

Purchase of Common Stock

          SECTION 2.01. Purchase of Common Stock. (a) On the terms and subject to the
conditions set forth in this Agreement, the Purchaser hereby subscribes for and agrees to purchase,
and the Company hereby agrees to issue and sell to the Purchaser at the Closing (as defined in
Section 2.03), the number of shares of Common Stock (the “Purchased Shares”) for the
aggregate purchase price (such aggregate amount, the “Purchase Price”), in each case set
forth on the Employee Stock Purchase Election Form executed by the Purchaser and delivered to the
Company in connection herewith.

          (b) At the Closing, the Purchaser shall deliver to the Company the Purchase Price by check or
wire transfer of immediately available funds to an account or accounts designated by the Company.

          (c) The Company shall reflect the Purchaser’s ownership of the Purchased Shares in its stock
ledger or other appropriate record of Common Stock ownership. Upon the Purchaser’s request, the
Company shall deliver to the Purchaser a certificate or certificates representing such Purchased
Shares registered in the name of the Purchaser and legended as the Company shall deem appropriate.

          SECTION 2.02. The Closing. The closing of the purchase and sale of the Purchased
Shares under Section 2.01 (the “Closing”) shall occur on January 31, 2005 (the “Closing
Date”), at a location designated in advance by the Company.

ARTICLE III

Representations and Warranties of the Company

          The Company represents and warrants to the Purchaser on the date hereof and on and as of the
Closing Date:

          SECTION
3.01. Authorization; Validity. The Company has the full right, power and
authority to enter into and perform this Agreement and this Agreement has been duly authorized,
executed and delivered by the Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.

          SECTION
3.02. Capitalization. The Common Stock to be issued to the Purchaser
pursuant to this Agreement, when issued and delivered in accordance with the terms hereof, will be
duly and validly issued and, upon receipt by the Company of the consideration to be received
hereunder, will be fully paid and nonassessable.

          SECTION
3.03. No Conflicts; No Violations. None of the execution, delivery or
performance of this Agreement by the Company will conflict with the

7

 

 Company’s Certificate of Incorporation or Bylaws or result in any material breach of any terms
or provisions of, or constitute a material default under, any material contract, agreement or
instrument to which the Company is a party or by which the Company or its property is bound.

ARTICLE IV

Representations and Warranties of the Purchaser

          The Purchaser hereby represents and warrants to the Company on the date hereof and on and as
of the Closing Date as follows:

          SECTION
4.01. Authority; No Other Action. (a) The Purchaser has the full right,
power and authority to enter into and perform this Agreement and this Agreement has been duly
authorized, executed and delivered by the Purchaser and is a valid and binding agreement of the
Purchaser, enforceable against the Purchaser in accordance with its terms.

          (b) No action by or in respect of, or filing with any governmental authority, agency or
official is required for the execution, delivery and performance of this Agreement by the
Purchaser.

          (c) None of the execution, delivery or performance of this Agreement by the Purchaser will
conflict with, or result in any material breach of any terms or provisions of, or constitute a
material breach of any terms or provisions of, or constitute a material default under, any material
contract, agreement or instrument to which the Purchaser is a party or by which the Purchaser or
its property is bound.

          SECTION
4.02. Investment Intention; No Resales. The Purchaser is acquiring the
Purchased Shares hereunder for investment, solely for its own account and not with a view to, or
for resale in connection with, the distribution thereof.

          SECTION
4.03. Stock Unregistered. The Purchaser has been advised by the Company
that: (a) the offer and sale of the Purchased Shares have not been registered under the Securities
Act or the securities laws of any other jurisdiction; (b) the offering and sale of the Purchased
Shares are intended to be exempt from registration under the Securities Act pursuant to Rule 701
promulgated under the Securities Act; (c) the offer or sale of the Purchased Shares by the
Purchaser to any other person is not exempt from registration under the Securities Act pursuant to
Rule 701 or otherwise; and (d) there is no established market for the Purchased Shares, and it is
not anticipated that there will be any public market for the Purchased Shares in the foreseeable
future.

8

 

ARTICLE V

Relationship with Existing Stockholders

          SECTION
5.01. Stockholders Agreement. Effective upon the Closing and subject to
Section 5.02, (a) the Purchaser agrees to and does hereby become a party to the Stockholders
Agreement dated as of April 18, 2002, among the Company, Reginald L. Banner, as Trustee under
irrevocable T/A with Joe B. Pike F/B/O Joseph Eric Pike, each of the Rollover Holders (as defined
therein), each of the Management Stockholders (as defined therein), LGB Pike LLC, a Delaware
limited liability company, and the other parties thereto (as amended from time to time, the
“Stockholders Agreement”) and (b) the Purchaser agrees to be bound by the terms of the
Stockholders Agreement as a “Management Stockholder” thereunder in accordance with Section 7.07
thereof. In connection with the foregoing and pursuant to Section 4.01 of the Stockholders
Agreement, the Purchaser shall execute and deliver to the Company, on behalf of LGB Pike LLC, on or
prior to the Closing the irrevocable proxy attached hereto as Annex A.

          SECTION
5.02. Waiver of Certain Rights. Notwithstanding anything to the contrary in
Section 5.01 or in the Stockholders Agreement, the Purchaser shall have no rights or entitlements
under, and shall be deemed to not be a “Management Stockholder” or “Holder” for purposes of,
Section 3.01, 5.03 or 7.11 of the Stockholders Agreement, and the Purchaser hereby expressly and
irrevocably waives all such rights and entitlements and releases the Company and the other Holders
(as defined in the Stockholders Agreement) from any obligation under such Sections of the
Stockholders Agreement.

          SECTION
5.03. Waiver of Notice. The Purchaser hereby waives all obligations of the
Company to deliver in the future any notice or other communication to the Purchaser in its capacity
as a holder of Common Stock, whether under the Stockholders Agreement, the North Carolina Business
Corporation Law or otherwise, and agrees that all such notices and communications shall instead be
delivered to LGB LLC (as defined in the Stockholders Agreement).

ARTICLE VI

Miscellaneous

          SECTION
6.01. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon each successor and assign of the Company. All obligations imposed upon the
Purchaser, and all rights granted to the Company hereunder, shall be binding upon the Purchaser’s
heirs, legal representatives and successors. This Agreement and the rights and obligations
hereunder shall not be assignable or transferable by the Purchaser. Any attempted assignment or
transfer in violation of this Section 6.01 shall be void.

9

 

          SECTION
6.02. Amendment. This Agreement may be amended only by a written instrument
signed by the Company and the Purchaser.

          SECTION
6.03. Notices. All notices and other communications provided for herein
shall be dated and in writing and shall be deemed to have been duly given when sent by registered
or certified mail, return receipt requested, postage prepaid and when received, if delivered
personally or otherwise, to the party to whom it is directed:

          (a) If to the Company, to it at the following address:

Pike Holdings, Inc.

P.O. Box 868

100 Pike Way

Mt. Airy, NC 27030

Attn: Mark Castaneda

with a copy to:

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, New York 10019

Telephone: (212) 474-1000

Facsimile: (212) 474-3700

Attention: Richard Hall, Esq.

          (b) If to the Purchaser, to it at the address listed on the signature page hereof or at such
other address as the Purchaser shall have specified by notice in writing to the Company,
provided that such notice of change of address shall be deemed to have been duly given only
when actually received.

          SECTION
6.04. Applicable Law. The laws of the State of New York shall govern the
interpretation, validity and performance of the terms of this Agreement, regardless of the law that
might be applied under principles of conflicts of law.

          SECTION
6.05. Exclusive Jurisdiction; Waiver of Jury Trial. (a) Each of the parties
hereto irrevocably submits to the exclusive jurisdiction of (i) the Supreme Court of the State of
New York, New York County, and (ii) the United States District Court for the Southern District of
New York, for the purposes of any suit, action or other proceeding arising out of this Agreement,
any agreement entered into in connection with this Agreement or any transaction contemplated hereby
or thereby. Each of the parties hereto agrees to commence any action, suit or proceeding relating
hereto either in the United States District Court for the Southern District of New York or if such
suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in
the Supreme Court of the State of New York, New York County. Each of the parties hereto further
agrees that service of any process, summons, notice or document by U.S.

10

 

registered mail to such party’s respective address set forth above shall be effective service
of process for any action, suit or proceeding in New York with respect to any matters to which it
has submitted to jurisdiction in this clause. Each of the parties hereto irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement, any agreement entered into in connection with this Agreement or the
transactions contemplated hereby or thereby in (x) the Supreme Court of New York, New York County,
or (y) the United States District Court for the Southern District of New York, and hereby and
thereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such
court that any such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.

          (b) Each party waives, to the fullest extent permitted by applicable law, any right it may
have to a trial by jury in respect of any litigation arising out of or relating to this Agreement
or the Plan.

          SECTION
6.06. Integration. The Plan, this Agreement and the documents referred to
herein or delivered pursuant hereto which form a part hereof contain the entire understanding of
the parties with respect to the subject matter hereof. There are no restrictions, agreements,
promises, representations, warranties, covenants or undertakings with respect to the subject matter
hereof other than those expressly set forth herein and in the Plan. This Agreement supersedes all
prior agreements and understandings between the parties with respect to the subject matter hereof,
provided that in the event of any inconsistency between the Plan and this Agreement (or any
document delivered pursuant hereto), the terms and conditions of the Plan shall control.

          SECTION
6.07. Descriptive Headings. The headings in this Agreement are for
convenience or reference only and shall not limit or otherwise affect the meaning of terms
contained herein.

          SECTION
6.08. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall constitute one and
the same instrument, and it shall not be necessary in making proof of this Agreement to produce or
account for more than one such counterpart.

          SECTION
6.09. Rights Cumulative; Waiver. The rights and remedies of the Purchaser
and the Company under this Agreement shall be cumulative and not exclusive of any rights or
remedies which it would otherwise have hereunder or at law or in equity or by statute, and no
failure or delay by such party in exercising any right or remedy shall impair such right or remedy
or operate as a waiver of such right or remedy, nor shall any single or partial exercise of any
power or right preclude its other or further exercise or the exercise of any other power or right.
The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any preceding or succeeding breach and no failure by either party to
exercise any right or privilege hereunder shall be deemed a waiver of such party’s rights or
privileges

11

 

 hereunder or shall be deemed a waiver of such party’s rights to exercise the same at any
subsequent time or times hereunder.

          SECTION
6.10. Severability. If any provision of this Agreement (or any portion
thereof) or the application of any such provision (or any portion thereof) to any person or
circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision to any other persons
or circumstances.

12

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of January 14, 2005.

PIKE HOLDINGS, INC.

	 	 	 	 	 
	

	 	by	 	 
	

	 	 	 	

	

	 	 	 	Name:
	

	 	 	 	Title:
	 
	 	 	 	 
	[PARTICIPANT]
	 
	 	 	 	 
	

	 	 	 	

Name:
	

	 	 	 	Address:

13

 

ANNEX A

IRREVOCABLE PROXY

     I, the undersigned, pursuant to Section 55-07-22 of the North Carolina Business Corporation
Act (the “NCBCA”), hereby irrevocably appoint LGB PIKE LLC (“LGB LLC”), a Delaware limited
liability company, as attorney and proxy for the undersigned, to vote, and to express written
consent to any corporate action with respect to, the total number of shares of Common Stock of Pike
Holdings, Inc., a North Carolina corporation (the “Company”), owned by the undersigned as
of the date hereof, and any shares of common stock of the Company acquired by the undersigned from
time to time subsequent to the date hereof (collectively, the “Shares”); to take action by
written consent and to attend any and all meetings, and adjournments thereof, of the stockholders
of the Company called for any purpose; and to represent and otherwise to act for the undersigned in
the same manner and with the same effect as if such action were taken by the undersigned, in each
case, for so long as I own the Shares.

     The undersigned hereby revokes any previous proxies with respect to the Shares which are the
subject of this irrevocable proxy. This proxy is irrevocable, coupled with an interest and has
been granted pursuant to the Stockholders Agreement dated as of April 18, 2002, among the Company,
LGB LLC and the Management Stockholders (as defined therein) (which includes a voting agreement
under Section 55-07-30 of the NCBCA). Notwithstanding anything to the contrary in the foregoing,
this proxy shall not be applicable to (and shall be deemed revoked as to) Shares otherwise covered
by this proxy which are sold by the undersigned (other than Shares sold subsequent to any record
date for any meeting of stockholders of the Company or any action by stockholders in lieu of a
meeting as to which the undersigned retains voting rights).

     The undersigned authorizes the attorney and proxy appointed herein to substitute any other
Person to act hereunder, to revoke any such substitution and to file this proxy or any substitution
or revocation with the Secretary of the Company.

     IN WITNESS WHEREOF, the undersigned has executed this proxy this                      day of                     , 2005.

	 	 	 
	

	 	

	

	 	Name:
	

	 	Address:

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