ID: Office: UILC: CCA - 122224-08 ----------------------- 409A.00-00 Number: 200944045 Release Date: 10/30/2009 From: -------------------- Sent: Monday, December 22, 2008 2:48 PM To: -------------- Cc: ------------------------ Subject: RE: Option rollove r / 409A issue -------- Rollover treatment is possible here. Arguably there is no disparate treatment where the executives with outstanding options receive substitute options that are the same economically. The regs at § 1.409A - 1(b)(5)(v)(D) provide the standard for making this determination. The purpose of the substitution rules under this provision is to ensure that the substitute option has the same economic value (or less) as what they gave up. In addition, the spread isn't locked in because the subst ituted option's spread may fall in the future. ------------------------------------------------------------------------------------------------------ ------------------------------------------------ In the letter dated ---------------- , Newco stated the fol lowing regarding the ----------- shares: 3. Rollover Share Certificates; Assumption and Adjustment of the Rollover Options. With respect to the Rollover Shares, you hereby authorize -------- to take such action as may be necessary to cause the Rollover Shar es to be rolled over. You agree that you w ill not exercise the Rollover Options prior to the Closing. New co agrees to assume the Rollover Options on their current terms and conditions, except that: (a) the New co Options w ill be fully vested at all times, except as provided in Section 7(b) below ; (b) the New co Options w ill be exercisable for Shares; (c) the exercise price per Share of each New co Option w ill equal the lesser of (i) 25% of the fair market value of a Share, or (ii) the percentage of the fair m arket value of a Share that equals the ratio of the exercise price per -------- share of such option to the Merger Consideration; (d) the number of Shares underlying each New co Option shall be as set forth in Schedule I; and (e) at least 10 days prior to t he termination or expiration of any New co Option for any reason, if there is not a Public Market (as defined in the Stockholders’ Agreement) for the Shares, New co w ill permit you to exercise any such vested New co Options through net-physical settlement (i. e., by delivery of Shares net of the number of Shares having a Fair Market Value (as defined in the Stockholders’ Agreement, defined below ) equal to the applicable exercise price and applicable w ithholding taxes at the minimum statutory rate), unless (i) N ew co’s independent auditors determine that net-physical settlement of any such New co Options w ould produce less-favorable accounting consequences for New co or its affiliates than if you paid the exercise price for any such vested New co Options in cash (oth er than those that w ould have an immaterial effect) or (ii) New co receives advice from counsel, in accordance w ith Section 10 below , that such net-physical exercise w ould result in a penalty under Section 409A of the Internal Revenue Code of 1986, as amend ed (the "Code"). If, in accordance w ith this paragraph, you are entitled to exercise New co Options through net-physical exercise, Fair Market Value w ill be determined as set forth in the Stockholders’ Agreement, including any right to an Outside Appraisal (as defined therein). In particular, we question how paragraph ------- meets the spread requirement under § 1.409A - 1(b)(5)(v)(D). ---------------------------------------------------------------------------------------- -------------------------- If this requi rement is not met, then the substitute options in Newco

2 would be treated as new grants, which presumably would be discounted and therefore NQDC for purposes of § 409A. Please let us know if we can provide further assistance. ---------------------------- ---------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- ---- ---------------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------ -------------------- -----------------