Exhibit 10.3
EXECUTION COPY
AMENDED AND
RESTATED
STOCK OPTION
AGREEMENT
This AMENDED AND RESTATED STOCK
OPTION AGREEMENT (this “ Agreement ”) is dated
as of June
, 2004, between TD Holding Corporation, a Delaware corporation (the
“ Company ”), and Michael Graff (the “
Holder ”).
W
I T N
E S S E T
H
WHEREAS, the Holder serves on the
Board of Directors of the Company (the “ Board
”); and
WHEREAS, in connection with such
service, the Company has previously granted the Holder an option to
purchase 883 shares of Stock (as hereinafter defined), subject to
the terms and conditions contained in that certain Stock Option
Agreement, dated as of July 22, 2003 (the “ Date of
Grant ”), between the Company and the Holder (the “
Prior Agreement ”); and
WHEREAS, prior to the date hereof,
the Company has amended and restated its 2003 Stock Option Plan in
its entirety to clarify certain provisions relating to the vesting
of certain performance based options (as so amended and restated,
the “ Option Plan ”); and
WHEREAS, the parties hereto desire
to amend and restate the Prior Agreement in its entirety for
purposes of aligning certain provisions relating to the vesting of
certain performance based options with the terms contained in the
Option Plan and otherwise to change certain provisions set forth in
the Prior Agreement.
NOW, THEREFORE, in consideration of
the foregoing and of the mutual promises contained herein, the
parties hereto hereby agree that the terms and conditions of the
Options (as hereinafter defined) are as follows:
1. Definitions . Capitalized
terms not otherwise defined herein shall have the same meaning as
ascribed to such terms in the Option Plan, a copy of which is
attached hereto.
2. Grant of Option . Subject
to the terms and conditions set forth herein, effective as of the
Date of Grant, the Company hereby grants to the Holder
(i) options to purchase 177 shares of Stock, at an exercise
price equal to $1,000 per share, and subject to the vesting
requirements set forth in Section 3(a) below (the “
Time Vested Options ”) and (ii) options to
purchase 706 shares of Stock, at an exercise price equal to $1,000
per share, and subject to the vesting requirements set forth in
Section 3(b) below (the “ Performance Vested
Options ” and, together with the Time Vested Options, the
“ Options ”). Subject to Section 4 below,
the Options shall expire on the tenth (10 th ) anniversary of the Date of Grant (the
“ Expiration Date ”).
3. Vesting . Options shall
vest and become exercisable in such manner and on such date or
dates set forth in subsections (a) and (b) below;
provided , however , 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.
(a) Time Vested Options .
Twenty percent (20%) of the Time Vested Options shall be fully
vested and exercisable on the Date of Grant, and an additional
twenty percent (20%) shall vest and become exercisable on each
of the first, second, third and fourth anniversaries of the Date of
Grant. All Time Vested Options shall become fully vested and
exercisable upon a Change in Control.
(b) Performance Vested
Options .
(i) Vesting Based on Annual
Performance . For each fiscal year of the Company beginning
with fiscal year 2004 and ending with fiscal year 2008, ten percent
(10%) of the Performance Vested Options shall be eligible to
become vested and exercisable, provided that the Company has
achieved an Annual EBITDA equal to, or in excess of, the Annual
EBITDA Target for such fiscal year. Such Performance Vested Options
shall become vested and exercisable as of the date that the
Committee verifies that such Annual EBITDA Target has been
achieved. For each such fiscal year, the Committee shall verify
whether the Annual EBITDA Target has been achieved, and shall
notify the Company’s Chief Executive Officer of its
determination with respect thereto, within ten (10) business
days after the Committee receives the Company’s audited
financial statements for that fiscal year. If the Company does not
achieve the required Annual EBITDA Target for a fiscal year, but in
the immediately following fiscal year, the Company has achieved a
Cumulative EBITDA equal to, or in excess of, the Cumulative EBITDA
Target for such immediately following fiscal year, in addition to
any Performance Vested Options that vest and become exercisable in
such immediately following fiscal year in accordance with the
preceding sentence, the Performance Vested Options that were
eligible for vesting in the immediately prior fiscal year shall
also vest and become exercisable as of the date that the Committee
verifies (in the manner specified above) that such Cumulative
EBITDA Target has been achieved.
(ii) Cumulative Target
. Provided that the Cumulative EBITDA for fiscal year 2008 is equal
to, or in excess of, the Cumulative EBITDA Target for fiscal year
2008, fifty percent (50%) of the Performance Vested Options
shall become vested and exercisable as of the date that the
Committee verifies that the Cumulative EBITDA Target for fiscal
year 2008 has been achieved. If the Cumulative EBITDA for fiscal
year 2008 is in excess of ninety (90%) of the Cumulative
EBITDA Target for fiscal year 2008 but less than one hundred
percent (100%) of the Cumulative EBITDA Target for fiscal year
2008, for each whole percentage point between ninety percent
(90%) and one hundred percent (100%), five (5%) of the
Performance Vested Options shall become vested and exercisable as
of the date that the Committee verifies that such percentage of the
Cumulative EBITDA Target for fiscal year 2008 has been achieved. If
the Cumulative EBITDA for fiscal year 2008 is less than ninety
(90%) of the Cumulative EBITDA Target for such fiscal year, no
Performance Vested Options shall vest and become exercisable based
upon achievement of the Cumulative EBITDA Target for
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fiscal year 2008. The Committee
shall verify whether the Cumulative EBITDA Target for fiscal year
2008 has been achieved, and shall notify the Company’s Chief
Executive Officer of its determination with respect thereto, within
ten (10) business days after the Committee receives the
Company’s audited financial statements for fiscal year
2008.
(iii) Change in
Control . In the event of a Change in Control, (1) if
the annualized net rate of return to the Company’s
shareholders (excluding any Participants) immediately following the
Effective Time from the Effective Time until the date of
consummation of such Change in Control (the “ NRR
”), equals, or is in excess of, twenty five percent (25%),
all Performance Vested Options shall vest and become exercisable on
the Change in Control; (2) if the NRR is twenty percent (20%),
an additional number of Performance Vested Options shall vest and
become exercisable such that, in the aggregate, seventy five
percent (75%) of the Performance Vested Options shall be
vested and exercisable on the Change in Control, and (3) in
addition to the number of Performance Vested Options that shall
vest in accordance with clause (2) above, for each additional
one percent (1%) of NRR in excess of twenty percent
(20%) to and including 24.9%, an additional number of
Performance Vested Options shall vest and become exercisable such
that, in the aggregate, an additional five percent (5%) of the
Performance Vested Options shall be vested and exercisable on the
Change in Control. Any Performance Vested Options which have not
vested prior to, or upon, a Change in Control, shall terminate. For
purposes of determining NRR, securities of the Company purchased by
the Company’s shareholders at the Effective Time shall be
valued at the face amount of such securities at such time. In
addition, and for the avoidance of doubt, NRR shall be determined
before the dilutive effect of any management fees or carried
interest paid to Warburg Pincus by the Fund.
(iv) Expiration of Unvested
Options . Performance Vested Options which do not vest in
accordance with the provisions of this Section 3(b) shall
terminate.
4. Termination of Service
.
(a) If prior to the Expiration Date,
and except as provided in Section 4(b) below, the Holder shall
cease to be a member of the Board for any reason, including in the
event the Holder ceases to be a member of the Board due to his
death or Disability, (i) all unvested Options held by the
Holder as of the date he ceases to be a member of the Board shall
continue to vest (or be eligible for vesting, in the case of
Performance Vested Options) in accordance with the terms hereof and
(ii) notwithstanding the fact that the Holder has ceased to be
a member of the Board, and except as provided in Section 4(b)
below, any vested Options held by the Holder as of the date he
ceased to be a member of the Board or any other Options that
thereafter become vested in accordance with the terms hereof, shall
remain exercisable in accordance with the terms hereof.
(b) If prior to the Expiration Date,
the Holder shall cease to be a member of the Board by reason of the
Holder’s voluntary resignation from the Board or by reason of
the Holder’s removal from the Board for Cause (as hereinafter
defined), (i) all vesting with respect to the Options shall
cease, (ii) any unvested Options shall expire as of the date
the Holder ceases to be a member of the Board and (iii) any
vested Options shall expire on the earlier of the
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Expiration Date or the date that is thirty
(30) calendar days after the date that the Holder ceases to be
a member of the Board. For purposes hereof, the term
“Cause” shall mean (x) the repeated failure by the
Holder, after written notice from the Board, substantially to
perform his material duties and responsibilities as a member of the
Board or as a member of the board of directors of any of the
Company’s subsidiaries (other than any such failure resulting
from incapacity due to reasonably documented physical or mental
illness), or (y) any willful misconduct by the Holder that has
the effect of materially injuring the business of the Company or
any of its subsidiaries, including, without limitation, the
disclosure of material secret or confidential information of the
Company or any of its subsidiaries.
5. Method of Exercising
Options . The Options may be exercised by the delivery to the
Company at its principal office or at such other address as may be
established by the Committee of written notice of the number of
shares of Stock with respect to which the Options are being
exercised accompanied by payment in full of the purchase price of
such shares. Payment for shares of Stock acquired pursuant to
Options granted hereunder shall be made in full, upon exercise of
the Options (i) in immediately available funds in United
States dollars, by certified or bank cashier’s check,
(ii) by surrender to the Company of shares of Stock which
either (A) have been held by the Holder for at least
six-months, or (B) were acquired from a person other than the
Company, (iii) by a combination of (i) and (ii),
(iv) prior to an IPO, by delivery of a notice of “net
exercise” to the Company, pursuant to which the Holder shall
receive the number of shares of Stock underlying the Options so
exercised reduced by the number of shares of Stock equal to the
aggregate exercise price of the Options divided by the Fair Market
Value on the date of exercise, or (v) following an IPO, by any
other means approved by the Committee.
6. Company; Holder
.
(a) The term “Company”
as used in this Agreement with reference to employment shall
include the Company and its Affiliates.
(b) Whenever the word
“Holder” is used in any provis
