Document:

EX-10.4

 

As adopted by the Board

POLYPORE INTERNATIONAL, INC.

2006 STOCK OPTION PLAN

     1. Purpose And Intent.

          (a) The purpose of the Plan is to assist the Company in attracting, retaining, motivating and
rewarding Eligible Persons, and promoting the creation of long-term value for stockholders of the
Company by closely aligning the interests of Participants with those of such stockholders. The
Plan authorizes the award of stock-based incentives to Participants to encourage such persons to
expend their maximum efforts in the creation of stockholder value.

          (b) The Options issued under this Plan are not intended to be considered “nonqualified
deferred compensation” within the meaning of Section 409A of the Code. It also is intended that
(i) the exercise price per share of Stock to be purchased pursuant to any Option will never be less
than the “fair market value” (determined in a manner consistent with Section 409A of the Code and
the guidance and regulations promulgated under Section 409A of the Code) per share of the Stock
covered by such Option at the time of the grant of such Option, (ii) the transfer or exercise of
the Options will be subject to taxation pursuant to Section 83 of the Code and Treas. Reg. §1.83-7;
and (iii) no Option will include any feature for the deferral of compensation, other than the
deferral of recognition of income until the later of exercise or disposition of the Option under
Treas. Reg. §1.83-7, or the time the Stock is acquired pursuant to the exercise of the Option first
becomes substantially vested (as defined in Treas. Reg. § 1.83-3(b)).

     2. Definitions.

     For purposes of the Plan, the following terms shall be defined as set forth below:

          (a) “Affiliate” means, with respect to any entity, any other entity that, directly or
indirectly through one or more intermediaries, controls, is controlled by or is under common
control with, such entity.

          (b) “Annual EBITDA” means, for any fiscal year, an amount equal to, the Consolidated
EBITDA (as such term is defined in that certain Credit Agreement, dated as of May 13, 2004, as
amended on each of June 30, 2004 and December 13, 2005, but determined after adding back all
management, sponsor, arranger and other fees, if any, paid by the Company to the Warburg Investors)
for such fiscal year, and as appropriately adjusted by the Committee, in its reasonable discretion,
for any acquisitions and divestitures occurring after the Effective Date.

          (c) “Annual EBITDA Target” means:

	 	(i)	 	for fiscal year 2006, $130.2 million;
	 
	 	(ii)	 	for fiscal year 2007, $142.1 million;
	 
	 	(iii)	 	for fiscal year 2008, $150.1 million; and

 

 

	 	(iv)	 	for fiscal year 2009, $158.6 million.

provided, however, the Annual EBITDA Target shall be appropriately adjusted by the Committee, in
its reasonable discretion, for any acquisitions and divestitures included in the calculation of
Annual EBITDA pursuant to Section 2(b) above.

          (d) “Annual Performance Vested Option” means an Option subject to the vesting schedule
provided in Section 5(f)(ii)(1) below.

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

          (f) “Cause” means, in the absence of any employment agreement between a Participant
and the Employer otherwise defining Cause, (i) fraud or embezzlement on the part of Participant in
the course of his or her employment or services, (ii) personal dishonesty or acts of gross
negligence or gross misconduct, which, in each case, is demonstrably and materially injurious to
the Company or any of its Affiliates (iii) a Participant’s intentional engagement in conduct that
is materially injurious to the Company or any of its Affiliates, (iv) a Participant’s conviction by
a court of competent jurisdiction of, or pleading “guilty” or “no contest” to, (x) a felony or (y)
any other criminal charge (other than minor traffic violations) which could reasonably be expected
to have a material adverse impact on the reputation or business of the Company or any of its
Affiliates; (v) public or consistent drunkenness by a Participant or his or her illegal use of
narcotics which is, or could reasonably be expected to become, materially injurious to the
reputation or business of the Company or any of its Affiliates or which impairs, or could
reasonably be expected to impair, the performance of a Participant’s duties to the Company or any
of its Affiliates; or (vi) willful failure by a Participant to follow the lawful directions of a
superior officer or the Board, unless such failure did not occur in bad faith and is cured promptly
after written notice of such failure is given to the Participant by such superior officer or the
Board, or such direction otherwise constitutes Good Reason. In the event there is an employment
agreement between a Participant and the Employer defining Cause, “Cause” shall have the meaning
provided in such agreement.

          (g) “Change in Control” means (i) the sale or disposition, in one or a series of
related transactions, of all or substantially all of the assets of the Company to any “person” or
“group” (as such terms are defined in Sections l3(d)(3) and 14(d)(2) of the Exchange Act) other
than the Warburg Investors or their Affiliates; (ii) any person or group, other than the Warburg
Investors or their Affiliates, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and
13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power
of the voting stock of the Company, including by way of merger, consolidation or otherwise (other
than an offering of Stock to the general public through a registration statement filed with the
Securities and Exchange Commission); or (iii) the sale or disposition, in one or a series of
related transactions, of the voting stock of the Company, as a result of which the Warburg
Investors (either directly or indirectly) beneficially own less than 10% of the total voting power
of the voting stock of the Company.

          (h) “Code” means the Internal Revenue Code of 1986, as amended from time to time,
including regulations thereunder and successor provisions and regulations thereto.

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          (i) “Committee” means the Compensation Committee of the Board or such other committee
appointed by the Board consisting of two or more individuals.

          (j) “Committee Verification Date” means the date that the Committee verifies
achievement of the Annual EBITDA Target and Cumulative EBITDA Target, as applicable. The Committee
Verification Date shall occur within ten (10) business days after the Committee receives the
Company’s audited financial statements for the applicable fiscal year.

          (k) “Company” means Polypore International, Inc., a Delaware corporation.

          (l) “Company Repurchase Right” shall have the meaning set forth in Section 7 below.

          (m) “Company Securities” means equity securities of the Company acquired by the
Warburg Investors from time to time (determined on an as-converted basis).

          (n) “Corporate Event” shall have the meaning set forth in Section 8 below.

          (o) “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 2006.

          (p) “Cumulative EBITDA Target” means:

	 	(i)	 	for fiscal year 2006, $130.2 million;
	 
	 	(ii)	 	for fiscal year 2007, $272.3 million;
	 
	 	(iii)	 	for fiscal year 2008, $422.4 million; and
	 
	 	(iv)	 	for fiscal year 2009, $581.0 million;

provided, however, the Cumulative EBITDA Target shall be appropriately adjusted by the Committee,
in its reasonable discretion, for any acquisitions and divestitures included in the calculation of
Annual EBITDA pursuant to Section 2(b) above.

          (q) “Cumulative Performance Vested Option” means an Option subject to the vesting
schedule provided in Section 5(f)(ii)(2) below.

          (r) “Disability” means, in the absence of any employment agreement between a
Participant and the Employer otherwise defining Disability, the permanent and total disability of a
person within the meaning of Section 22(e)(3) of the Code. In the event there is an employment
agreement between a Participant and the Employer defining Disability, “Disability” shall have the
meaning provided in such agreement.

          (s) “Effective Date” shall mean June 15, 2006, the date that the Board adopted the
Plan.

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          (t) “Eligible Person” means (i) each employee of the Company or of any of its
Affiliates, including each such person who may also be a director of the Company and/or its
Affiliates; (ii) each non-employee director of the Company and/or its Affiliates; (iii) each other
person who provides substantial services to the Company and/or its Affiliates and who is designated
as eligible by the Committee; and (iv) any person who has been offered employment by the Company or
its Affiliates; provided that such prospective employee may not receive any payment or exercise any
right relating to an Option until such person has commenced employment with the Company or its
Affiliates. An employee on an approved leave of absence may be considered as still in the employ
of the Company or its Affiliates for purposes of eligibility for participation in the Plan.

          (u) “Employer” means the Company and any Affiliate or successor thereto, which employs
the Participant (determined without regard to any transfer of an Option) or for whom the
Participant performs services. For purposes of the Plan, with respect to any provision relating to
the termination of a Participant’s employment or service, as applicable, the transfer of such
Participant’s employment or service, as applicable, from one Employer to another Employer shall not
constitute a “termination” of employment or service, as applicable, with the first Employer, and
following such transfer, the subsequent Employer shall be deemed the Employer for purposes of the
Plan.

          (v) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, including rules thereunder and successor provisions and rules thereto.

          (w) “Expiration Date” means the date upon which the term of an Option expires, as
determined under Section 5(b) or 5(c) hereof, as applicable; provided, however, that for all Annual
Performance Vested Options and Cumulative Performance Vested Options, the Expiration Date shall be
subject to Section 5(f)(ii)(4) below.

          (x) “Fair Market Value” means (i) prior to an IPO, the fair market value per share of
Stock, as reasonably determined by the Board in good faith, (ii) at the time of an IPO, the per
share price offered 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 mean between the highest and lowest sale prices
reported as having occurred on the primary exchange with which the Stock is listed and traded on
the date prior to such date, 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 listed on the Nasdaq National Market System, the average between the
high bid price and low ask price reported on the date prior to such date, 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 listed on a national securities exchange or the Nasdaq National Market
System, 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.

          (y) “Good Reason” means, in the absence of any employment agreement between a
Participant and the Employer otherwise defining Good Reason, (i) the reduction of a Participant’s
base salary or bonus opportunity, other than an across the board reduction in base salary or bonus
opportunity applicable to all middle and senior management of the Company, (ii) the material breach
by the Company of the provisions of this Plan or of any employment or similar agreement with the
Participant, (iii) a relocation of Participant’s principal place of

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employment to a location which is more than 50 miles from the Participant’s principal place of
employment as of the Effective Date, but only if such new principal place of employment is further
from his permanent residence than the prior place of employment, or (iv) the material diminution of
a Participant’s title, duties or responsibilities, without the Participant’s consent. In the event
there is an employment agreement between a Participant and the Employer defining Good Reason, “Good
Reason” shall have the meaning provided in such agreement. For purposes of this Plan, no
termination of a Participant’s employment shall be considered for Good Reason unless the
Participant has provided the Company thirty (30) days’ written notice setting forth in reasonable
specificity the event that constitutes Good Reason, within sixty (60) days of the occurrence of
such event, and during such thirty (30) day notice period, the Company shall have failed to cure
the event or events in question.

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

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

          (bb) “Lock-Up Period” shall have the meaning set forth in Section 6(a) below.

          (cc) “Missed Year” shall have the meaning set forth in Section 5(f)(ii)(1) below.

          (dd) “NRR” means the annualized net rate of return to the Warburg Investors from May
13, 2004 until the date of consummation of a Change in Control. For purposes hereof, NRR shall be
calculated solely by reference to payments received or to be received by the Warburg Investors in
respect of any Company Securities, taking into account all management, sponsor, arranger and other
fees, if any, paid by the Company or its Affiliates to the Warburg Investors; provided, however,
that in the event of a Change in Control pursuant to Section 2(g)(iii), the value of any Company
Securities held by the Warburg Investors following such Change in Control shall be included in the
calculation of NRR hereunder as if the Warburg Investors had received payments equal to the Fair
Market Value of such Company Securities in connection with such Change in Control.

          (ee) “Option” means a conditional right, granted to a Participant under Section 5
hereof, to purchase Stock at a specified price during specified time periods (including any Prior
Vested Options). Options under the Plan are not intended to qualify as “incentive stock options”
meeting the requirements of Section 422 of the Code.

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

          (gg) “Participant” means an Eligible Person who has been granted an Option under the
Plan, or if applicable, such other person or entity who holds an Option.

          (hh) “Participant Repurchase Right” shall have the meaning set forth in Section 7
below.

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          (ii) “Permitted Transfer” shall mean any transfer by a Participant of all or any
portion of his or her shares of Stock (i) to or for the benefit of any spouse, child or grandchild
of the Participant, or (ii) to a trust or partnership for the benefit of any of the foregoing,
including transfers by will or the laws of descent and distribution.

          (jj) “Plan” means this Polypore International, Inc. 2006 Stock Option Plan.

          (kk) “Prime Rate” shall mean the rate from time to time published in the “Money Rates”
section of The Wall Street Journal as being the “Prime Rate” (or, if more than one rate is
published as the Prime Rate, then the highest of such rates).

          (ll) “Prior Options” means, collectively, Prior Vested Options and Prior Unvested
Options.

          (mm) “Prior Vested Options” means options to purchase Stock granted under the
Company’s 2004 Stock Option Plan which were vested as of the Effective Date.

          (nn) “Prior Unvested Options” means options to purchase Stock granted under the
Company’s 2004 Stock Option Plan prior to the Effective Date which were unvested as of the
Effective Date.

          (oo) “Pro Rata Fraction” means, with respect to any Qualifying Terminated Participant,
a fraction, the numerator of which equals the number of whole years elapsed from the later to occur
of (x) the Effective Date or (y) the date such Qualifying Terminated Participant received a grant
of Options hereunder, through the date of such Qualifying Terminated Participant’s termination of
employment with the Employer, and the denominator equals 4.

          (pp) “Qualifying Terminated Participant” shall mean a Participant (i) whose employment
with an Employer has been terminated by reason of such Participant’s death, Disability, by the
Employer without Cause or by the Participant with Good Reason, and (ii) who has been
employed with the Employer, the Company or any other Affiliate of the Company for more than twenty
four (24) months prior to the date of such termination of employment, and (iii) who became
a Participant more than twelve (12) months prior to the date of such termination of employment (it
being understood that no Participant shall be deemed to have been a Participant prior the Effective
Date as a result of holding Prior Options or otherwise).

          (qq) “Repurchase Price” means:

               (i) on or following a Participant’s termination of employment or service, as
applicable, with the Employer other than by the Employer for Cause, an amount equal to the
Fair Market Value of the Stock on the date of repurchase; or

               (ii) on or following a Participant’s termination of employment or service, as
applicable, with the Employer by the Employer for Cause, the lesser of (A) the original
purchase price paid for such shares of Stock, and (B) the Fair Market Value of the Stock on
the date of repurchase.

          (rr) “Repurchase Right” means, as applicable, the Company Repurchase Right or the
Participant Repurchase Right.

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          (ss) “Repurchase Right Exercise Period” means, with respect to shares of Stock
received upon the exercise of any Option:

               (i) in the case of shares acquired upon exercise of any Option prior to the date of a
Participant’s termination, the period commencing on the date of such termination and ending
on the seven (7) month anniversary of such termination; and

               (ii) in the case of shares acquired upon exercise of any Option on or following the
date of a Participant’s termination, the period commencing on the date of such exercise and
ending on the seven (7) month anniversary of the date of such exercise;

provided, however, that the Repurchase Right Exercise Period shall expire on the Repurchase Right
Lapse Date.

          (tt) “Repurchase Right Lapse Date” shall mean the earliest to occur of (i) the IPO
Date, (ii) a Change in Control, or (iii) the seven (7) year anniversary of the Effective Date.

          (uu) “Securities Act” means the Securities Act of 1933, as amended from time to time,
including rules thereunder and successor provisions and rules thereto.

          (vv) “Stock” means the Company’s Class B Common Stock, par value $0.01 per share, and
such other securities as may be substituted for such stock pursuant to Section 8 hereof.

          (ww) “Warburg Investors” means, collectively, Warburg Pincus Private Equity VIII, L.P.
and any other fund affiliated with Warburg Pincus & Co., a New York general partnership, and their
respective Affiliates.

3. Administration.

          (a) Authority of the Committee. Except as otherwise provided below, the Plan shall be
administered by the Committee. The Committee shall have full and final authority, in each case
subject to and consistent with the provisions of the Plan, to (i) select Eligible Persons to become
Participants; (ii) grant Options; (iii) determine the type, number, and other terms and conditions
of, and all other matters relating to, Options; (iv) prescribe Option Agreements (which need not be
identical for each Participant) and rules and regulations for the administration of the Plan; (v)
construe and interpret the Plan and Option Agreements and correct defects, supply omissions, or
reconcile inconsistencies therein; and (vi) make all other decisions and determinations as the
Committee may deem necessary or advisable for the administration of the Plan. The foregoing
notwithstanding, the Board shall perform the functions of the Committee for purposes of granting
Options under the Plan to non-employee directors. In any case in which the Board is performing a
function of the Committee under the Plan, each reference to the Committee herein shall be deemed to
refer to the Board, except where the context otherwise requires. Any action of the Committee shall
be final, conclusive and binding on all persons, including, without limitation, the Company, its
Affiliates, Eligible Persons, Participants and beneficiaries of Participants.

          (b) Delegation. The Committee may delegate to officers or employees of the Company or
any of its Affiliates, or committees thereof, the authority, subject to such terms as

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the Committee shall determine, to perform such functions, including but not limited to
administrative functions, as the Committee may determine appropriate. The Committee may appoint
agents to assist it in administering the Plan. Notwithstanding the foregoing or any other
provision of the Plan to the contrary, any Option granted under the Plan to any person or entity
who is not an employee of the Company or any of its Affiliates shall be expressly approved by the
Committee.

     (c) Section 409A.

               (i) The Committee shall take into account compliance with, and use commercially
reasonable efforts to comply with, Section 409A of the Code in connection with any grant of
an Option under the Plan, to the extent applicable, and all other acts or omissions taken or
not taken in connection with this Plan. In the event that the intent set forth above in
Section 1(b) above is frustrated for whatever reason, the Committee shall act in good faith
to achieve such intent to the extent reasonably practicable, and to take reasonable actions
to alleviate the application, or any financial adverse effect on the Participants, of
Section 409A of the Code to the Options granted under or subject to this Plan and the
exercise of those Options.

               (ii) Notwithstanding anything contained herein to the contrary, if at the time of a
Participant’s termination of employment or service, as applicable, with the Employer, (1)
the Participant is a “specified employee” as defined in Section 409A of the Company, and the
regulations and guidance thereunder in effect at the time of such termination and (2) any of
the payments or benefits provided hereunder may constitute “deferred compensation” under
Section 409A of the Code, then, and only to the extent required by such provisions, the date
of payment of such payments or benefits otherwise provided shall be delayed for a period of
up to six (6) months following the date of termination of employment or service, as
applicable, with the Employer.

4. Shares Available Under the Plan.

          (a) Number of Shares Available for Delivery. Subject to adjustment as provided in
Section 8 hereof, the total number of shares of Stock reserved and available for delivery in
connection with Options under the Plan (including any Prior Vested Options) shall be 17,614.
Shares of Stock delivered under the Plan shall consist of authorized and unissued shares or
previously issued shares of Stock reacquired by the Company on the open market or by private
purchase.

          (b) Share Counting Rules. The Committee may adopt reasonable counting procedures to
ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or
substitute awards) and make adjustments if the number of shares of Stock actually delivered differs
from the number of shares previously counted in connection with an Option. To the extent that an
Option expires or is canceled, forfeited, settled in cash or otherwise terminated or concluded
without a delivery to the Participant of the full number of shares to which the Option related, the
undelivered shares will again be available for Options. Shares withheld in payment of the exercise
price or taxes relating to an Option and shares equal to the number surrendered in payment of any
exercise price or taxes relating to an Option shall be deemed to constitute shares not delivered to
the Participant and shall be deemed to again be

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available for Options under the Plan; provided, however, that, where shares are withheld or
surrendered more than ten years after the date of the most recent stockholder approval of the Plan
or any other transaction occurs that would result in shares becoming available under this Section
4(b), such shares shall not become available if and to the extent that it would constitute a
material revision of the Plan subject to stockholder approval under then applicable rules of the
national securities exchange on which the Stock is listed or the Nasdaq National Market System, as
applicable.

     5. Options.

          (a) General. Options may be granted to Eligible Persons in such form and having such
terms and conditions as the Committee shall deem appropriate. The provisions of separate Options
shall be set forth in an Option Agreement, which agreements need not be identical. The Option
Agreement shall designate whether an Option is an Annual Performance Vested Option, a Cumulative
Performance Vested Option, or subject to other vesting conditions.

          (b) Conditions to Grant. As a condition of the grant of any Option to any Participant
hereunder, if such Participant holds Prior Options, he or she shall acknowledge and agree that (i)
as of the Effective Date, all Prior Unvested Options shall be deemed cancelled, and of no further
force or effect, and (ii) all Prior Vested Options shall no longer be subject to the terms and
conditions of the Company’s 2004 Stock Option Plan or, except as provided in the next sentence, the
option agreement entered into in connection therewith, and shall instead be deemed Options granted
hereunder, and be subject to the terms and conditions of the Plan as in effect on and after the
Effective Date. This subsection (b) shall have no effect as to the number of shares of Stock
subject to, and the exercise price and Expiration Date applicable to, any Prior Vested Option
granted to Holder, subject to any subsequent adjustment applicable to all Options as permitted
under the Plan.

          (c) Term. The term of each Option shall be set by the Committee at the time of grant;
provided, however, that no Option granted hereunder shall be exercisable after the expiration of
ten (10) years from the date it was granted.

          (d) Exercise Price. The exercise price per share of Stock for each Option shall be
set by the Committee at the time of grant but shall not be less than the Fair Market Value of a
share of Stock on the date of grant; provided, however, that for purposes of determining Fair
Market Value under this subsection (d), Fair Market Value shall, notwithstanding anything contained
in Section 2(x) to the contrary, be determined in a manner consistent with Section 409A of the Code
and the guidance and regulations promulgated under Section 409A of the Code.

          (e) 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, or by certified or bank cashier’s check; (ii) 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 (iii) by any other means approved by the Committee. Anything herein to the
contrary notwithstanding, the Company shall not directly or

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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.

          (f) Vesting.

               (i) Options shall vest and become exercisable on such date or dates, or upon the
achievement of performance or other conditions as may otherwise be determined by the
Committee and set forth in the Option Agreement; provided, however, that Options designated
as Annual Performance Vested Options or Cumulative Performance Vested Options in an Option
Agreement shall vest in accordance with subsection (ii) below. Notwithstanding any vesting
dates otherwise applicable to Options, the Committee may in its sole discretion accelerate
the vesting of any Option, which acceleration shall not affect the terms and conditions of
any such Option other than with respect to vesting. Unless otherwise specifically
determined by the Committee, the vesting of an Option shall occur only while the Participant
is employed or rendering services to the Employer, and all vesting shall cease upon a
Participant’s termination of employment or services with the Employer for any reason.

               (ii) The following vesting provisions shall apply to all Options designated as Annual
Performance Vested Options or Cumulative Performance Vested Options in a Participant’s
Option Agreement:

               (1) Annual Performance Vested Options. For each fiscal year of the Company
beginning with fiscal year 2006 and ending with fiscal year 2009, provided that the
Company has achieved an Annual EBITDA equal to, or in excess of, the Annual EBITDA
Target for such fiscal year, twenty five percent (25%) of the Annual Performance
Vested Options granted to a Participant shall vest and become exercisable as of the
Committee Verification Date. If Annual EBITDA for a fiscal year is less than the
Annual EBITDA Target for such fiscal year (a “Missed Year”), but in any
subsequent fiscal year, the Cumulative EBITDA for such subsequent fiscal year is
equal to, or in excess of, the Cumulative EBITDA Target for such subsequent fiscal
year, all Annual Performance Vested Options in respect of each prior Missed Year
shall vest and become exercisable as of the Committee Verification Date.

               (2) Cumulative Performance Vested Options. A Participant’s Cumulative
Performance Vested Options shall vest and become exercisable on the Committee
Verification Date for fiscal year 2009 based upon the level of achievement of
Cumulative EBITDA Target such that for each whole percentage that the Cumulative
EBITDA for fiscal year 2009 is in excess of ninety (90%) of the Cumulative EBITDA
Target for fiscal year 2009, ten percent (10%) of such Cumulative Performance Vested
Options shall vest and become exercisable (e.g., at 95% target achievement,
50% of the Cumulative Performance Vested Options will vest).

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               (3) Change in Control. In the event of a Change in Control that results in NRR
of twenty percent (20%) or more, seventy percent (70%) of both a Participant’s
Annual Performance Vested Options and Cumulative Performance Vested Options shall
vest and become exercisable on such Change in Control. In addition, for each whole
percentage that NRR is in excess of twenty percent (20%), an additional six percent
(6%) of both a Participant’s Annual Performance Vested Options and Cumulative
Performance Vested Options shall vest and become exercisable on such Change in
Control (e.g., at a 25% NRR, 100% of both a Participant’s Annual Performance
Vested Options and Cumulative Performance Vested Options will vest). For purposes
of this clause (3), all applicable percentages shall be based off of the aggregate
number of Annual Performance Vested Options and Cumulative Performance Vested
Options granted to a Participant, regardless of whether such Options are vested at
the time such percentage is determined (e.g., if a Participant has vested in
50% of the Annual Performance Vested Options and no Cumulative Performance Vested
Options at the time of a Change in Control, and a 20% NRR is achieved, the
Participant shall vest in an additional 20% of the Annual Performance Vested Options
and 70% of the Cumulative Performance Vested Options).

               (4) Expiration of Unvested Options. Annual Performance Vested Options and
Cumulative Performance Vested Options which have not vested on or prior to the
earlier of (x) a Change in Control, or (y) the Committee Verification Date for
fiscal year 2009, shall expire as of such applicable date, and be of no further
force or effect.

          (g) 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. Notwithstanding the foregoing, Options shall be transferable
to the extent provided in the Option Agreement or otherwise determined by the Committee.

          (h) Termination of Employment or Service. Except as may otherwise be provided by the
Committee in the Option Agreement:

               (i) If prior to the Expiration Date, a Participant’s employment or service, as
applicable, with the Employer terminates for any reason other than (A) by the Employer for
Cause, or (B) by reason of the Participant’s death or Disability, (1) all vesting with
respect to the Options shall cease, (2) subject to subsection (iv) below in the case of a
Qualifying Terminated Participant, any unvested Options shall expire as of the date of such
termination, and (3) subject to subsection (iv) below in the case of a Qualifying Terminated
Participant, any vested Options shall remain exercisable until the earlier of the Expiration
Date or the date that is ninety (90) days after the date of such termination.

               (ii) If prior to the Expiration Date, a Participant’s employment or service, as
applicable, with the Employer terminates by reason of such Participant’s death or
Disability, (A) all vesting with respect to the Options shall cease, (B) subject to
subsection (iv) below in the case of a Qualifying Terminated Participant, any unvested
Options shall expire as of the date of such termination, and (C) subject to subsection (iv)

11

 

below in the case of a Qualifying Terminated Participant, 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
a 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 such
Participant at the time of such termination due to death.

               (iii) If prior to the Expiration Date, a Participant’s employment or service, as
applicable, with the Employer is terminated by the Employer for Cause, all Options (whether
or not vested) shall immediately expire as of the date of such termination.

               (iv) If a Participant is a Qualifying Terminated Participant, notwithstanding
subsections (i) or (ii) above, such Participant’s unvested Cumulative Performance Vested
Options shall remain outstanding until the earlier of the Expiration Date or the date that
is twelve (12) months after the date of such termination. To the extent that the Cumulative
Performance Vested Options would have vested pursuant to Section 5(f)(ii)(2) or Section
5(f)(ii)(3) above within such twelve (12) month period (had no such termination occurred),
such Qualifying Terminated Participant shall vest in a number of Cumulative Performance
vested Options equal to the number of Cumulative Performance Options that would have vested
pursuant to Section 5(f)(ii)(2) or Section 5(f)(ii)(3) above (had no such termination
occurred) multiplied by the Pro Rata Fraction. Cumulative Performance Vested Options that
vest in accordance with the prior sentence shall remain exercisable until the earlier of the
Expiration Date or the date that is ninety (90) days after (x) Committee Verification Date
for fiscal year 2009, in the case of vesting as a result of Section 5(f)(ii)(2) above, or
(y) the date of the Change in Control, in the case of vesting as a result of Section
5(f)(ii)(3) above. All unvested Cumulative Vested Performance Options that do not otherwise
vest in accordance with this subsection (iv) shall expire on the twelve (12) month
anniversary of the date of the termination of such Qualifying Terminated Participant’s
employment with the Employer.

     6. Restrictions on Stock.

          (a) Prohibition on Transfers. Except as otherwise approved by the Committee, pursuant
to Section 7 below, or pursuant to subsections (b), (c) or (d) below, shares of Stock acquired by a
Participant upon the exercise of any Option granted hereunder may not be sold, transferred or
otherwise disposed of prior to the one hundred eightieth (180th) day following the IPO Date (the
“Lock-Up Period”). If requested by the underwriters managing any IPO, each Participant
shall execute a separate agreement to the foregoing effect. The Company may impose stop-transfer
instructions with respect to the Stock (or securities) subject to the foregoing restriction until
the end of such period.

          (b) Drag-Along Rights.

               (i) If the Warburg Investors are proposing to sell to one or more third parties fifty
percent (50%) or more of the number of the Company Securities beneficially owned by them on
any date of determination, the Warburg Investors shall have the right

12

 

to require each Participant to sell, in accordance with the immediately following
sentence hereof, all or a portion of such Participant’s shares of Stock received in
connection with an Award granted hereunder in such sale. In the event that the Warburg
Investors require the Participants to sell all or a portion of their shares of Stock
pursuant to this Section 6(b) such Participants shall be required to include in such sale an
amount of shares of Stock equal to the aggregate number of shares of Stock owned by such
Participant as of the date of the proposed sale multiplied by a fraction, the numerator of
which shall be the number of Company Securities that the Warburg Investors are proposing to
sell in such sale, and the denominator of which is the aggregate Company Securities owned by
the Warburg Investors, in each case, as of the date of the proposed sale. A Participant
required to sell any shares of Stock pursuant to this Section 6(b), shall be entitled to
receive in exchange therefor the purchase price per share of Stock received by the Warburg
Investors with respect to their shares of Stock in such transaction (less, in the case of
options, warrants or other convertible securities, the exercise or purchase price thereof);
provided, however, that if the Company Securities include preferred stock of the Company,
such per share price shall be calculated assuming conversion of all preferred stock and
after giving effect to any applicable liquidation preference to all holders of such
preferred stock. The purchase price paid for any shares of stock sold pursuant to this
Section 6(b) shall be payable in the same form of consideration as received by the Warburg
Investors, or in the discretion of the Committee, such other consideration as the Committee
deems equitably appropriate.

               (ii) To exercise the rights granted under this Section 6(b), the Warburg Investors
shall give each Participant a written notice, not less than fifteen (15) days prior to the
proposed sale, containing (i) the name and address of the proposed transferee(s) and (ii)
the proposed purchase price with respect to the shares of Stock, terms of payment and other
material terms and conditions of the offer of the proposed transferee(s), including the
expected closing date of the sale. Each Participant shall thereafter be obligated to sell
his or her shares of Stock to the proposed transferee(s) or vote his or her shares of Stock
in favor of the proposed transaction, as the case may be, in accordance with Section 6(b)(i)
above.

               (iii) Notwithstanding anything contained in this Section 6(b), in the event that all or
a portion of the purchase price for the shares of Stock being purchased consists of
securities and the sale of such securities to any Participant would, by virtue of the fact
that such Participant is not an “accredited investor” (within the meaning of Rule 501(a)
under the Securities Act), require either a registration under the Securities Act or the
preparation of a disclosure document pursuant to Regulation D under the Securities Act (or
any successor regulation) or a similar provision of any state securities law, then, at the
option of the Warburg Investors, any one or more of such Participants may receive, in lieu
of such securities, the Fair Market Value of such securities in cash, as determined in good
faith by the Board.

               (iv) For these purposes of this Section 6(b), the term “Stock” shall be deemed to only
include shares of Stock acquired upon exercise of any Option.

               (v) The drag-along rights described in this Section 6(b) shall terminate upon the IPO
Date.

13

 

     (c) Tag-Along Rights.

               (i) Subject to Section 6(c)(iii) below, for so long as the Warburg Investors directly
owns at least ten percent (10%) of the outstanding shares of Stock held by the Warburg
Investors on May 13, 2004 (as adjusted to reflect any stock dividend, split, reverse split,
combination, recapitalization, reclassification of shares, capital contributions or like
event), and if any of the Warburg Investors desire to sell any of the shares of Stock in a
single transaction or a series of transactions (the “Selling Stockholder”), the
Committee shall ensure that the Selling Stockholder contractually agrees, in writing, that
it shall be prohibited from selling any Stock directly owned by it to one or more third
parties, unless Warburg Investors notifies all Participants holding Stock received upon the
exercise of Options (the “Tag-Along Investors”), in writing, of such proposed sale
and its terms and conditions and complies with the other provisions of this Section 6(c).
Within ten (10) days of the date of such notice, each Tag-Along Investor shall notify the
Selling Stockholder if it elects to participate in such sale. Any Tag-Along Investor that
fails to notify the Selling Stockholder within such ten (10) day period shall be deemed to
have waived its rights under this Section 6(c)(i) with respect to the proposed sale. Each
Tag-Along Investor that so notifies the Selling Stockholder shall have the right to sell, at
the same price and on the same terms and conditions as the Selling Stockholder, an amount of
Stock equal to the Stock the third party actually proposes to purchase multiplied by a
fraction, the numerator of which shall be the number of shares of Stock owned by such
Tag-Along Investor and the denominator of which shall be the sum of aggregate number of
shares of Stock owned (1) by the Selling Stockholder, (2) each Tag-Along Investor exercising
its rights under this Section 6(e)(i), and (3) any other stockholders of the Company
exercising tag-along rights existing pursuant to other contractual agreements with the
Company.

               (ii) In the event that all or a portion of the purchase price consists of securities
and the sale of such securities to the Tag-Along Investors would require either a
registration under the Securities Act or the preparation of a disclosure document pursuant
to Regulation D under the Securities Act or a similar provision of any state securities law,
then, at the option of the Selling Stockholder, any one or more of the Tag-Along Investors
may receive, in lieu of such securities, the Fair Market Value of such securities in cash.

               (iii) The provisions of Section 6(c)(i) above shall not apply to Transfers, whether by
sale or otherwise, amongst the Warburg Investors themselves, provided such transferee
Affiliate(s) agree in writing to be bound by the terms of this Section 6(c). The tag-along
rights described in this Section 6(c) shall terminate upon the IPO Date.

          (d) Permitted Transfers. Stock acquired upon exercise of an Option may be transferred
in connection with a Permitted Transfer; provided, however, that it shall be a condition of each
such Permitted Transfer, that (x) the transferee agrees to be bound by the terms of the Plan and
the applicable Option Agreement as though no such transfer had taken place, and that (y) the
Participant has complied with all applicable law in connection with such transfer.

14

 

     7. Repurchase Rights Upon Termination of Employment.

          (a) Company Repurchase Right. If, prior to the Repurchase Right Lapse Date, a
Participant’s employment or service with the Employer terminates for any reason then, at any time
prior to the expiration of the Repurchase Right Exercise Period, the Company shall have the right
to repurchase the shares of Stock received pursuant to Options granted hereunder at a per share
price equal to the Repurchase Price (the “Company Repurchase Right”).

          (b) Participant Repurchase Right. If, prior to the Repurchase Right Lapse Date, a
Participant’s employment or service with the Employer terminates by reason of such Participant’s
death or Disability, then, at any time prior to the expiration of the Repurchase Right Exercise
Period, the Participant, or his or her beneficiaries or estate, shall have the right to require the
Company to repurchase the shares of Stock received pursuant to Options granted hereunder at a per
share price equal to the Repurchase Price (the “Participant Repurchase Right”); provided,
however, that the Participant Repurchase Right shall not apply to any shares of Stock held by a
Participant for less than six (6) months and one day.

          (c) Exercise of Repurchase Rights. Repurchase Rights shall be exercisable upon
written notice to the Company or a Participant, as applicable, indicating the number of shares of
Stock to be repurchased and the date on which the repurchase is to be effected, such date to be not
more than thirty (30) days after the date of such notice. The certificates representing the shares
of Stock to be repurchased shall be delivered to the Company prior to the close of business on the
date specified for the repurchase.

          (d) Payment of Repurchase Price. Except in the case of the exercise of a Repurchase
Right by the Company following a Participant’s termination of employment or service, as applicable,
(A) by the Employer for Cause or (B) by such Participant without Good Reason, the aggregate
Repurchase Price shall he paid in a lump-sum at the time of repurchase. If the Company exercises
the Repurchase Right following a Participant’s termination of employment or service, as applicable,
(A) by the Employer for Cause or (B) by such Participant without Good Reason, the Company shall be
permitted to issue a promissory note equal to the aggregate Repurchase Price in lieu of a cash
payment; provided, however, that such promissory note shall have a maturity date that does not
exceed three years from the date of such repurchase, shall bear simple interest of not less than
the Prime Rate in effect on the date of such repurchase, and shall be payable as to interest in
equal monthly installments during the term of the note and as to principal on the maturity date.

          (e) Assignment of Company Repurchase Right. The Company shall be permitted to assign
its Repurchase Right to the Warburg Investors.

     8. 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 shall be equitably
and proportionally adjusted or substituted, as determined by the Committee, as to the number, price
or kind of a share of Stock or other consideration subject to such Options (i) in the event of
changes in the outstanding Stock or in the capital structure of the Company by

15

 

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 (including any Corporate Event
(as defined below)); or (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.

          (b) Corporate Events. Notwithstanding the foregoing, except as may otherwise be
provided in an Option Agreement, in the event of (i) a merger or consolidation involving the
Company in which the Company is not the surviving corporation; (ii) a merger or consolidation
involving the Company in which the Company is the surviving corporation but the holders of shares
of Stock receive securities of another corporation and/or other property, including cash; (iii) a
Change in Control; or (iv) the reorganization or liquidation of the Company (each, a “Corporate
Event”), in lieu of providing the adjustment set forth in subsection (a) above, the Committee
may, in its discretion, cancel any or all vested and/or unvested Options as of the consummation of
such Corporate Event, and provide that holders of Options so cancelled will receive a payment in
respect of cancellation of their Options based on the amount of the per share consideration being
paid for the Stock in connection with such Corporate Event, less the applicable exercise price;
provided, however, that holders of (1) Options shall only be entitled to consideration in respect
of cancellation of an Option if the per share consideration less the applicable exercise price is
greater than zero, and (2) “performance vested” Options, including Annual Performance Vested
Options and Cumulative Performance Vested Options, shall only be entitled to consideration in
respect of cancellation of such Options to the extent that the applicable performance criteria is
achieved prior to or as a result of such Corporate Event, and shall not otherwise be entitled to
payment in consideration of cancelled unvested Options. Payments to holders pursuant to the
preceding sentence shall be made in cash, or, in the sole discretion of the Committee, in such
other consideration necessary for a holder of an Option to receive 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.

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

     9. Use of Proceeds.

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

     10. 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 such shares have been issued to that person.

16

 

     11. 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 of the Company.

     12. 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. 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.

     13. Withholding Obligations.

     As a condition to the exercise of any Option, the Committee may require that a Participant
satisfy, through a cash payment by the Participant, or, in the discretion of the Committee, through
deduction or withholding from any payment of any kind otherwise due to the Participant, or through
such other arrangements as are satisfactory to the Committee, the minimum amount of all Federal,
state and local income and other taxes of any kind required or permitted to be withheld in
connection with such exercise. The Committee, in its discretion, may permit shares of Stock to be
used to satisfy tax withholding requirements and such shares shall be valued at their Fair Market
Value as of the settlement date of the Option; provided, however, that the
aggregate Fair Market Value of the number of shares of Stock that may be used to satisfy tax
withholding requirements may not exceed the minimum statutory required withholding amount with
respect to such Option.

     14. 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, following the IPO Date, without stockholder approval, the Board
shall not make any amendment to the Plan which would violate the stockholder approval requirements
of the national securities exchange on which the Stock is listed or the Nasdaq National Market
System, as applicable.

17

 

          (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 the Participant consents in writing.

          (c) Amendment of 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 the Participant consents in writing.

     15. 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 is
adopted by the Board. 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 the Participant
consents in writing.

     16. Effective Date of the Plan.

     The Plan is effective as of the Effective Date.

     17. Miscellaneous.

          (a) Options to Participants Outside of the United States. The Committee may modify
the terms of any Option under the Plan made to or held by a Participant who is then a resident or
primarily employed outside of the United States in any manner deemed by the Committee to be
necessary or appropriate in order that such Option shall conform to laws, regulations and customs
of the country in which the Participant is then a resident or primarily employed, or so that the
value and other benefits of the Option to the Participant, as affected by foreign tax laws and
other restrictions applicable as a result of the Participant’s residence or employment abroad,
shall be comparable to the value of such Option to a Participant who is a resident or primarily
employed in the United States. An Option may be modified under this Section 17(a) in a manner that
is inconsistent with the express terms of the Plan, so long as such modifications will not
contravene any applicable law or regulation.

          (b) 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 or her
behalf in his or her capacity as a member of the Committee nor for any mistake of judgment made in
good faith, and the Company shall indemnify and hold harmless each member of the Committee and each
other employee, officer or director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or delegated, against any cost or
expense (including counsel fees) or liability (including any sum paid in settlement of a claim)
arising out of any act or omission to act in connection with the Plan unless arising out of such
person’s own fraud or 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

18

 

certificate or articles of incorporation or by-laws, each as may be amended from time to time,
as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold
them harmless.

          (c) 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 or her affairs
because of illness or accident, or is a minor, or has died, then any payment due to such person or
his or her 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 or her 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.

          (d) 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.

          (e) 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.

          (f) 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 such member.

          (g) 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.

19EX-10.5

 

OPTION AGREEMENT

          Polypore International, Inc., a Delaware corporation (the “Company”), pursuant to its
2006 Stock Option Plan (the “Plan”), hereby grants to the Holder Annual Performance Vested
Options and Cumulative Performance Vested Options to purchase the number of shares of Stock set
forth below. The Annual Performance Vested Options and Cumulative Performance Vested Options
(collectively, the “Performance Vested Options”), as well as any Prior Options (the Prior
Options and the Performance Vested Options are sometimes collectively referred to hereafter as the
“Options”) are subject to all of the terms and conditions set forth in this option
agreement (this “Option Agreement”) as well as all of the terms and conditions of the Plan,
all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined
herein shall have the same meaning as set forth in the Plan.

	 	 	 	 	 	 	 
	Holder:
	 	 	 	 	 	 
	 

	 	 

	 	 	 	 
	 
	 	 	 	 	 	 
	Date of Grant:

	 	June 15, 2006	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Number of Shares Subject to
Annual Performance Vested
Options:
	 	 
	 	1	 	 
	 
	 	 	 	 	 	 
	Number of Shares Subject to
Cumulative Performance Vested
Options:
	 	 
	 	2	 	 
	 
	 	 	 	 	 	 
	Exercise Price of
Performance Vested Options:

	 	$772.46	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Expiration Date of
Performance Vested Options:

	 	June 15, 2016	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Vesting Schedule:
	 	 	 	 	 	 

	 	 	 	 	 
	 

	 	Annual Performance

Vested Options:
	 	Annual Performance Vested Options shall vest in accordance
with Section 5(f)(ii)(1) and (3) of the Plan.
	 
	 	 	 	 
	 

	 	Cumulative Performance

Vested Options:
	 	Cumulative Performance Vested Options shall vest in
accordance with Section 5(f)(ii)(2) and (3) of the Plan.

 

			
	1	 	Insert number of shares representing 50% of the
total grant size.
	 
	2	 	Insert number of shares representing 50% of the
total grant size.

 

 

	 	 	 
	Prior Options:

	 	As a condition of the grant of Annual Performance Vested
Options and Cumulative Performance Vested Options under
this Option Agreement, Holder and Company hereby
acknowledge and agree that, as of the Effective Date, (i)
all Prior Unvested Options granted to Holder, if any,
shall be deemed cancelled, and of no further force or
effect; and (ii) all Prior Vested Options previously
granted to Holder, if any, shall no longer be subject to
the terms and conditions of the Company’s 2004 Stock
Option Plan or, except as provided in the next sentence,
the option agreement entered into in connection therewith,
and shall instead be deemed “Options” for all purposes
under the Plan and under this Option Agreement and be
subject to the terms and conditions contained in each.
This paragraph shall have no effect as to the number of
shares of Stock subject to, and the exercise price and
Expiration Date applicable to, any Prior Vested Option
granted to Holder, subject to any subsequent adjustment
applicable to all Options as permitted under the Plan.
	 
	 	 
	Exercise of Options:

	 	To exercise a vested Option in whole or in part, the
Holder (or his or her authorized representative) must give
written notice to the Committee, stating the number of
shares of Stock with respect to which he or she intends to
exercise the Options. The Company will issue the shares
of Stock with respect to which the Options are exercised
upon payment of the shares of Stock acquired in accordance
with Section 5(e) of the Plan, which Section 5(e) is
incorporated herein by reference and made a part hereof.

Upon exercise of Options, the Holder will be required to
satisfy applicable withholding tax obligations as provided
in Section 13 of the Plan.

	 
	 	 
	Termination of
Employment or Service:

	 	Section 5(h) of the Plan regarding treatment of Options
upon termination of the Holder’s employment or service is
incorporated herein by reference and made a part hereof.
	 
	 	 
	Restrictions on Stock:

	 	Section 6 of the Plan regarding restrictions on Stock
acquired upon exercise of an Option is incorporated herein
by reference and made a part hereof.
	 
	 	 
	Repurchase Rights:

	 	Section 7 of the Plan regarding the Repurchase Rights is
incorporated herein by reference and made a part hereof.

2

 

	 	 	 
	Additional Terms:

	 	Options shall be subject to the following additional terms:

	 	•	 	Options shall be exercisable in whole shares of
Stock only.
	 
	 	•	 	Each Option shall cease to be exercisable as to
any share of Stock when the Holder purchases the share of
Stock or when the Option otherwise expires.
	 
	 	•	 	This Option Agreement does not confer upon the
Holder any right to continue as an employee or service
provider of the Company, the Employer or any of their
respective Affiliates.
	 
	 	•	 	This Option Agreement shall be construed and
interpreted in accordance with the laws of the State of
Delaware, without regard to the principles of conflicts of
law thereof.
	 
	 	•	 	This Option Agreement shall constitute written
notice to the Holder that the Committee has consented, and
the Holder is permitted, to transfer the Options, or the
Stock acquired upon the exercise of the Options, for
legitimate estate planning -purposes, including any
transfer by the Holder of all or any portion of his or her
shares of Stock or Options (i) to or for the benefit of
any spouse, child or grandchild of the Holder, or (ii) to
a trust or partnership for the benefit of any of the
foregoing, including transfers by will or the laws of
descent and distribution.

	 	 	 
	Representations and
Warranties of

	 	Holder hereby represents and warrants to the Company
that:
	Holder:
	 	 

	 	•	 	Holder understands that the Stock has not been
registered under the Securities Act, nor qualified under
any state securities laws, and that it is being offered
and sold pursuant to an exemption from such registration
and qualification based in part upon such Holder’s
representations contained herein;
	 
	 	•	 	Holder has been informed that the shares of Stock
are restricted securities under the Securities Act and may
not be resold or transferred unless the shares of Stock
are first registered under the Federal -securities laws or
unless an exemption from such registration is available;
and
	 
	 	•	 	Holder is prepared to hold the shares of Stock for
an indefinite period and that Holder is aware that

3

 

	 	 	 	Rule
144 as promulgated under the Securities Act, which exempts
certain resales of restricted securities, is not presently
available to exempt the resale of the shares of Stock from
the registration requirements of the Securities Act.

THE UNDERSIGNED HOLDER ACKNOWLEDGES RECEIPT OF THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT
OF OPTIONS UNDER THIS OPTION AGREEMENT, AGREES TO BE BOUND BY THE TERMS OF BOTH THE OPTION
AGREEMENT AND THE PLAN. UPON EXECUTION BY THE HOLDER, THE COMPANY, ON BEHALF OF ITSELF AND ITS
AFFILIATES AND THE COMMITTEE, AGREES TO BE BOUND BY THE TERMS OF BOTH THIS OPTION AGREEMENT AND THE
PLAN.

	 	 	 	 	 	 	 	 	 
	POLYPORE INTERNATIONAL, INC.	 	 	 	HOLDER	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 

Signature
	 	 
	 	 

Signature
	 	 

	 	 	 	 	 	 	 	 	 	 	 
	Title

	 	:
	 	 	 	Date:	 	 	 	 
	Date:

	 	 

	 	 
	 	 	 	 

	 	 
	 

	 	 

	 	 	 	 	 	 	 	 

4

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