Exhibit 10.6
EXECUTION COPY
TYPE A
HAWKER BEECHCRAFT, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
(Performance-Vesting)
THIS AGREEMENT (the
“Agreement”), is made effective as of March 23,
2009 (the “Date of Grant”), between Hawker Beechcraft,
Inc., a Delaware corporation (the “Company”), and Worth
W. Boisture, Jr. (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 23, 2009 (the “Employment
Agreement”);
WHEREAS, the Company is an indirect
parent of HBC; 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. General .
(a) 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 310,938 Shares, subject to adjustment as set forth in the Plan.
The Option Price shall be $8.00 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.
(b) Term . The term of the
Option shall be ten (10) years from and after the Date of
Grant. Unless the Option is earlier terminated or canceled as
provided elsewhere herein, the Option shall expire at the close of
regular business hours at the Company’s headquarters on the
last day of the term of the Option. Upon such expiration, this
Agreement and all rights of the Optionee to exercise the Option
shall automatically terminate.
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 shall become vested (but not exercisable) as
follows, in each case so long as the Participant’s Employment
has not theretofore terminated:
(i) Prior to the first
(1st) anniversary of the Date of Grant, no portion of the
Option shall be considered vested;
(ii) On and after the first
(1st) anniversary of the Date of Grant, the Option shall be
vested with respect to an aggregate of 20% of the
Shares;
(iii) On and after the second
(2nd) anniversary of the Date of Grant, the Option shall be
vested with respect to an aggregate of 40% of the
Shares;
(iv) On and after the third
(3rd) anniversary of the Date of Grant, the Option shall be
vested with respect to an aggregate of 60% of the
Shares;
(v) On and after the fourth
(4th) anniversary of the Date of Grant, the Option shall be
vested with respect to an aggregate of 80% of the Shares;
and
(v) On and after the fifth
(5th) anniversary of the Date of Grant, the Option shall be
vested with respect to an aggregate of 100% of the
Shares.
The portion of the Option which has
become vested pursuant to this section 2(a) is hereinafter referred
to as the “Vested Portion.” No portion of the Option
will be exercisable until it has become exercisable pursuant to
Section 3(a)(i) or (ii) below.
(b) If the Participant’s
Employment is terminated by the Company for Cause, the Option
shall, whether or not then vested or exercisable, be automatically
canceled without payment of consideration therefor.
(c) If the Participant’s
Employment is terminated by the Company without Cause, by the
Participant for Good Reason (as defined in the Employment
Agreement), or due to the Participant’s death or Disability,
the Participant shall be vested in an additional 20% of the Shares
originally subject to the Option. The Option shall, to the extent
not previously vested or vesting as described in this
Section 2(c), be automatically canceled without payment of
consideration therefor, and the Vested Portion of the Option shall
remain outstanding for the applicable period set forth in
Section 3(b); provided that it shall not be exercisable unless
and until it has become exercisable pursuant to
Section 3(a)(i) or (ii) below.
(d) If the Participant’s
Employment terminates for any reason other than a termination for
Cause or a termination described in Section 2(c), 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 outstanding for the applicable
period set forth in Section 3(b); provided that it shall not
be exercisable unless and until it has become exercisable pursuant
to Section 3(a)(i) or (ii) below.
2
(e) 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 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) Exercisability
.
(i) 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 had not yet become vested) shall vest and
become exercisable if the Existing Owner Group achieves upon
consummation of the Liquidity Event an 8% Internal Rate of Return
and a Cash on Cash Return of at least two hundred percent (200%).
For purposes of this Agreement, “Cash on Cash Return”
shall mean the aggregate gross cash return realized by the Existing
Owner Group on all of the capital invested by them in the Company
or any of its subsidiaries in debt instruments, Shares or other
equity securities of any of them (collectively “Company Group
Securities”), including by means of direct purchases from any
member of the Company Group or through the contribution of debt
instruments purchased on the secondary market. In the case of any
contributed debt instrument, the amount of capital invested
attributable to such debt instrument shall be deemed to be the fair
market value of the debt instrument on the date it is contributed,
as determined by the Board in good faith. For purposes of this
Section 3(a)(i), return shall include all amounts included in
the determination of Internal Rate of Return, except that the term
Company Group Securities shall be substituted for the term
“equity” as used in the definition of Internal Rate of
Return.
(ii) If a Participant is no longer
employed by a member of the Company Group on the date of
consummation of a Liquidity Event, the Vested Portion of the Option
that remains outstanding on the date of the Liquidity Event, if
any, shall become exercisable if the Existing
