Exhibit 10.5
EXECUTION COPY
HAWKER BEECHCRAFT, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
(Time-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 and Hawker
Beechcraft Corporation, a Delaware 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 621,875 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 Section 2(b)
hereof and the earlier termination or cancellation of the Option as
set forth herein or in the Plan, the Option shall vest and become
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 vest or be exercisable;
(ii) On and after the first
(1st) anniversary of the Date of Grant, the Option shall vest
and be exercisable 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 vest
and be exercisable 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 vest
and be exercisable 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 vest
and be exercisable with respect to an aggregate of 80% of the
Shares; and
(vi) On and after the fifth
(5th) anniversary of the Date of Grant, the Option shall vest
and be exercisable with respect to an aggregate of 100% of the
Shares.
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 Participant’s
Employment is terminated for Cause, the Option shall, whether or
not then vested, 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 exercisable for the applicable period set forth in
Section 3(a).
(d) Upon termination of the
Participant’s Employment for any reason other than those set
forth in Paragraph (b) or (c) 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).
(e) Upon the occurrence of a
Transaction, the Option shall, to the extent not then vested,
automatically become fully vested and exercisable.
(f) 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
2
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) Post-Termination Period of
Exercise .
(i) In the case of termination of
the Participant’s Employment due to the Participant’s
death or Disability, the termination of the Participant’s
employment by the Company without Cause or by the Participant for
Good Reason, 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 second (2nd) anniversary of the date of
termination of Employment.
(ii) In the case of termination of
the Participant’s Employment for any reason other than a
termination described in Section 3(a)(i) or the Participant
retiring following the expiration of 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 Po
