FORM OF HAWKER BEECHCRAFT, INC. NONQUALIFIED STOCK OPTION AGREEMENT
Exhibit 10.9
TYPE A
FORM OF
HAWKER BEECHCRAFT, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
(Performance-Vesting)
THIS AGREEMENT (the Agreement), is made effective as of ________, 2007 (the Date of Grant), between Hawker Beechcraft, Inc., a Delaware corporation (the Company), and (the Participant).
R E C I T A L S:
WHEREAS, the Company has adopted the Hawker Beechcraft, Inc. 2007 Stock Option Plan (the Plan), which Plan is incorporated herein by reference and made a part of this Agreement. Capitalized terms not otherwise defined herein shall have the meanings given thereto in the Plan;
WHEREAS, the Participant, the Company and Hawker Beechcraft Corporation (HBC) have entered into that certain Employment Agreement dated as of March 26, 2007 (the Employment Agreement); and
WHEREAS, the Committee has determined that it would be in the best interests of the Company and its shareholders to grant an Option to the Participant pursuant to the Plan and the terms set forth herein.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:
1. Grant of the Option. The Company hereby grants to the Participant the right and option to purchase, pursuant to Section 6 of the Plan and the terms and conditions hereinafter set forth, all or any part of an aggregate of Shares, subject to adjustment as set forth in the Plan. The Option Price shall be $10.00 per share, which the Company and the Participant agree is not less than the Fair Market Value of the Shares as of the date hereof. The Option is granted pursuant to and is governed in all respects by the Plan. This Option is not intended to constitute an incentive stock option under Section 422 of the Code.
2. Vesting; Termination of Employment.
(a) Subject to the earlier termination or cancellation of the Option as set forth herein or in the Plan, the Option is eligible to vest and become exercisable with respect to Shares for each of the Companys 2007, 2008, 2009 and 2010 calendar years and for the Companys 2011 calendar year if the EBITDA target attached hereto as Exhibit A (the Target) for such year is achieved, such vesting to occur, if at all, on the date that the Companys audited financial statements for the applicable calendar year are presented to the Committee, and only if the Participants Employment did not terminate prior to December thirty-one (31) of the applicable calendar year, and as set forth below:
(i) if performance is below the Target for a calendar year, no portion of the Option eligible to vest for that calendar year shall become vested and exercisable; or
(ii) if performance for a calendar year meets or exceeds the Target for that calendar year, the full 20% of the Option eligible to vest for that calendar year shall become vested and exercisable.
The Target will be subject to adjustment in the event of unforeseen events, including but not limited to changes in capitalization, and acquisitions and dispositions. The Committee shall determine in good faith whether the Target for a calendar year has been attained. The portion of the Option which has become vested and exercisable as described herein is hereinafter referred to as the Vested Portion.
(b) If the Participants Employment is terminated for Cause, the Option shall, whether or not then vested, be automatically canceled without payment of consideration therefor.
(c) If the Participants Employment is terminated without Cause or by the Participant for Good Reason (as defined in the Employment Agreement), the Participant shall become vested in an additional 20% of the Shares originally subject to the Option but only if the Target is met or exceeded for the year of termination. The Option shall, to the extent not previously vested or eligible to become vested as described in this Section 2(c), be automatically canceled without payment of consideration therefor, and the Vested Portion of the Option shall remain exercisable for the applicable period set forth in Section 3(a).
(d) If the Participants Employment is terminated due to the Participants death or Disability, or by reason of the Company or HBC providing notice to the Participant that it is not renewing the term of the Employment Agreement, the Participant shall become vested in a number of Shares equal to 20% of the Shares originally subject to the Option multiplied by a fraction, the numerator of which is the number of days elapsed in the applicable calendar year of termination prior to such termination of Employment and the denominator of which is 365, but only if the Target is met or exceeded for the year of termination. The Option shall, to the extent not previously vested or eligible to become vested as described in this Section 2(d), be automatically canceled without payment of consideration therefor, and the Vested Portion of the Option shall remain exercisable for the applicable period set forth in Section 3(a).
(e) Upon termination of the Participants Employment for any reason other than those set forth in Paragraph (b), (c) or (d) of this Section 2, the Option shall, to the extent not previously vested, be automatically canceled without payment of consideration therefor, and the Vested Portion of the Option shall remain exercisable for the period set forth in Section 3(a).
(f) If the Participant is employed by a member of the Company Group on the date of consummation of a Liquidity Event, all Shares originally subject to the Option (including those previously eligible for vesting under Section 2(a) which did not vest) shall vest and become exercisable if the Existing Owner Group achieves a 30% Internal Rate of Return in connection with the Liquidity Event.
(g) In the event of a Transaction the Committee may either (i) cancel the Option and make payment in connection with such cancellation equal to the excess, if any, of the Fair Market Value of the Shares subject to such Option over the aggregate Option Price of such Option or (ii) provide for the issuance of substitute options or other awards that will preserve, as
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nearly as practicable, the economic terms of the Option, in each case as determined by the Committee in good faith and, in each case, in compliance, to the extent applicable, with Section 409A of the Code as determined by the Board.
3. Exercise of Option.
(a) Period of Exercise.
(i) In the case of termination of the Participants Employment due to the Participants death or Disability, subject to any provisions of the Plan and this Agreement to the contrary, the Participant (or his heir or legatee, if applicable) may exercise all or any part of the Vested Portion of the Option at any time prior to earliest to occur of (x) the tenth (10th) anniversary of the date of grant and (y) the first (1st) anniversary of the date of termination of Employment.
(ii) In the case of termination of the Participants Employment by the Company or HBC without Cause or by the Participant for Good Reason, or by reason of the Company or HBC providing notice to the Participant that it is not renewing the term of the Employment Agreement, subject to any provisions of the Plan and this Agreement to the contrary, the Participant may exercise all or any part of the Vested Portion of the Option at any time prior to the earliest to occur of (x) the tenth (10th) anniversary of the Date of Grant and (y) 5:00 pm (Eastern time) on the ninetieth (90th) day following the date the Participant is notified in writing by the Company whether the Target for the year of termination has been attained.
(iii) In the case of termination of the Participants Employment for any reason other than those set forth in Sections 3(a)(i) or 3(a)(ii), subject to any provisions of the Plan and this Agreement to the contrary, the Participant may exercise all or any part of the Vested Portion of the Option at any time prior to the earliest to occur of (x) the tenth (10th) anniversary of the Date of Grant and (y) 5:00 pm (Eastern time) on the ninetieth (90th) day following the date of the Participants termination of Employment.
(b) Method of Exercise.
(i) Subject to Section 3(a), the Vested Portion of the Option may be exercised by delivering to the Company at its principal office written notice of intent to so exercise; provided that the Option may be exercised with respect to whole Shares only. Such notice shall specify the number of Shares for which the Option is being exercised (the Purchased Shares) and shall be accompanied by payment in full of the Option Price in cash or by check or wire transfer; provided, however, that payment of such aggregate exercise price may instead be made, in whole or in part, by (i) the delivery to the Company of a certificate or certificates representing Shares, duly endorsed or accompanied by a duly executed stock power, which delivery effectively transfers to the Company good and valid title to such Shares, free and clear of any pledge, commitment, lien, claim or other encumbrance (such shares to be valued on the basis of the aggregate Fair Market Value thereof on the date of such exercise), provided that the Company is not then prohibited from purchasing or acquiring such Shares or (ii) by a reduction in the number of Purchased Shares to be issued upon such exercise having a Fair Market Value on the date of exercise equal to the aggregate Option Price in respect of the
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Purchased Shares, provided that the Company is not then prohibited from purchasing or acquiring such Shares. The Participant shall not have any rights to dividends or other rights of a stockholder with respect to Shares subject to the Option until the Participant has given written notice of exercise of the Option, paid in full for such Shares, satisfied any applicable withholding requirements and, if applicable, satisfied any other conditions imposed by the Committee or pursuant to the Plan or this Agreement.
(ii) Notwithstanding any other provision of the Plan or this Agreement to the contrary, the Option may not be exercised prior to the completion of any registration or qualification of the Option or the Shares under applicable state and federal securities or other laws, or under any ruling or regulation of any governmental body or national securities exchange (collectively, the Legal Requirements) that the Committee shall in its sole discretion determine to be necessary or advisable, unless an exemption to such registration or qualification is available and satisfied. The Committee may establish additional procedures as it deems necessary or desirable in connection with the exercise of the Option or the issuance of any Shares upon such exercise to comply with any Legal Requirements. Such procedures may include but are not limited to the establishment of limited periods during which the Option may be exercised or that following receipt of the notice of exercise, and prior to the completion of the exercise, the Participant will be required to affirm the exercise of the Option following receipt of any disclosure deemed necessary or desirable by the Committee.
(iii) Upon the Committees determination that the Option has been validly exercised as to any of the Shares, and that the Participant has paid in full for such Shares and satisfied any applicable withholding requirements, the Company shall issue certificates in the Participants name for such Shares.
(iv) In the event of the Participants death, the Vested Portion of the Option shall remain exercisable by the Participants executor or administrator, or the person or persons to whom the Participants rights under this Agreement shall pass by will or by the laws of descent and distribution as the case may be, to the extent set forth in Section 3(a)(i) (and the term Participant shall be deemed to include such heir or legatee). Any such heir or legatee of the Participant shall take rights herein granted subject to the terms and conditions hereof.
(v) In consideration of the grant of this Option, the Participant agrees that, as a condition to the exercise of any option to purchase Shares (whether this Option or any other option), the Participant shall, with respect to such Shares, have become a party to the Shareholders Agreement.
4. No Right to Continued Employment. The granting of the Option evidenced hereby and this Agreement shall impose no obligation on the Company or any other member of the Company Group to continue the Employment of the Participant and shall not lessen or affect the Companys or such other members right to terminate the Employment of such Participant.
5. Legend on Certificates. The certificates representing the Shares purchased upon the exercise of the Option shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission and any stock exchange upon which
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such Shares are listed, and any applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
6. Transferability. The Option and the Participants other rights and obligations under the Plan and this Agreement may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant without the prior written consent of the Company otherwise than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any of its Affiliates; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. No such permitted transfer of the Option to heirs or legatees of the Participant shall be effective to bind the Company unless the Committee shall have been furnished with written notice thereof and a copy of such evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions hereof. During the Participants lifetime, the Option is exercisable only by the Participant.
7. Withholding. Whenever Shares are to be issued upon exercise of the Option, the Company shall have the right to require the Participant to remit to the Company cash sufficient to satisfy all federal, state and local withholding tax requirements prior to issuance of the Shares and the delivery of any certificate or certificates for such Shares. The Participant may satisfy such tax withholding obligation by surrendering to the Company at the time of exercise Purchased Shares (valued in the manner provided in Section 3(b)(i) above), provided that the Company is not then prohibited from purchasing or acquiring such Shares.
8. Securities Laws. Upon the acquisition of any Shares pursuant to the exercise of the Option, the Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with this Agreement.
9. Notices. Any notice necessary under this Agreement shall be addressed to the Company in care of its Secretary at the principal executive office of the Company and to the Participant at the address appearing in the personnel records of the Company for the Participant or to either party hereto at such other address as either party may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.
10. Choice of Law. This agreement shall be governed by and construed in accordance with the laws of the state of New York without regard to principles of conflicts of laws.
11. Option Subject to Plan. By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The Option is subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.
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12. Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, effective as of the Date of Grant.
HAWKER BEECHCRAFT, INC. | ||
By: | ||
Name: | ||
Title: |
Agreed and acknowledged as of the Date of Grant: |
Exhibit A
Annual Target:
Calendar Year | EBITDA Target | Shares Eligible to Vest | |||
2007 | $ | | | ||
2008 | $ | | | ||
2009 | $ | | | ||
2010 | $ | | | ||
2011 | $ | | |