VOUGHT AIRCRAFT INDUSTRIES, INC. SAR AGREEMENT GRANT NOTICE
Exhibit 10.2
XXXXXX AIRCRAFT INDUSTRIES, INC.
2006 INCENTIVE AWARD PLAN
SAR AGREEMENT
GRANT NOTICE
Pursuant to this Stock Appreciation Right Agreement dated [DATE] (together with Appendix
A hereto, the “Agreement”), Xxxxxx Aircraft Industries, Inc., a Delaware corporation (the
“Company”) hereby grants [NAME] (the “Participant”), the following award of Stock Appreciation
Rights (“SARs”) pursuant and subject to the terms and conditions of this Agreement and the
Company’s 2006 Incentive Award Plan (the “Plan”), the terms and conditions of which are hereby
incorporated into this Agreement by reference. Except as otherwise expressly provided herein, all
capitalized terms used in this Agreement, but not defined, shall have the meanings provided in the
Plan. Subject to the terms and conditions of this Agreement, including those provided in
Appendix A, the principal features of this award are as follows:
Number of SARs: [___]
Grant Date: [DATE]
Exercise Price: [$_]/share
Vesting of SARs: Except as otherwise provided herein, the SARs shall vest and become
exercisable as to 100% of the shares of Stock subject thereto as of December 31, 2012, subject to
the Participant’s continued employment with the Company through such date, provided, that if, as of
December 31 of each of 2006, 2007, 2008 and 2009 (each one-year period terminating on each such
December 31, a “Performance Period” within the meaning of the Plan), the Company attains the
Performance Goals applicable to such Performance Period (as described below), then the SARs shall
vest and become exercisable with respect to 25% of the shares of Stock subject thereto on such
December 31. Each date on which any SARs vest and become exercisable shall be referred to herein
as a “Vesting Date.”
Performance Goals:
| • | [Year 1 Performance Goal (For the Period ending December 31, 2006):] | ||
| • | [Year 2 Performance Goal (For the Period ending December 31, 2007):] | ||
| • | [Year 3 Performance Goal (For the Period ending December 31, 2008):] | ||
| • | [Year 4 Performance Goal (For the Period ending December 31, 2009):] |
Termination Period: Except as provided below, the SARs shall be canceled and forfeited without
payment of consideration therefor with respect to all shares of Stock subject thereto (whether
vested or unvested) as of the start of business on the date that the Participant’s employment with
the Company terminates. Notwithstanding the foregoing, (i) if the Participant’s employment is
terminated by the Company without Cause (as defined below) then, to the extent that the SARs are
vested and exercisable as of such date of termination, the SARs shall remain outstanding and
exercisable for thirty (30) days after such date of termination, and (ii) if the Participant’s
employment terminates due to the Participant’s death or Disability then, to the extent that the
SARs are vested and exercisable as of such date of termination and the Fair Market Value exceeds
the applicable Exercise Price, the SARs shall be deemed to be exercised as of such date of
termination. In no event shall any SARs be exercisable after the Expiration Date stated below.
For purposes of this Agreement, “Cause” means Cause as defined in a Participant’s
employment agreement with the Company if such an agreement exists and contains a definition of
Cause, or, if no such agreement exists or such agreement does not contain a definition of Cause,
then Cause means (i) a Participant’s failure substantially to perform his or her duties, other than
any such failure resulting from the Participant’s disability, after notice and reasonable
opportunity for cure, all as determined by the Committee; (ii) a Participant’s willful misconduct,
gross negligence or a breach of fiduciary duty that, in each case or in the aggregate, results in
material harm to the Company; (iii) a Participant’s having been the subject of any order, judicial
or administrative, obtained or issued by the Securities Exchange Commission, for any securities
violation involving fraud, including any such order consented to by the individual in which
findings of facts or any legal conclusions establishing liability are neither admitted nor denied;
(iv) a Participant’s conviction, plea of no contest, plea of nolo contendere, or imposition of
unadjudicated probation for any felony or crime involving moral turpitude; (v) a Participant’s
unlawful use (including being under the influence) or possession of illegal drugs on the Company’s
premises or while performing his or her duties and responsibilities; or (vi) a Participant’s act of
fraud, dishonesty, embezzlement, or misappropriation, in each case, against the Company or
involving Company assets.
Expiration Date: [DATE]
The Participant’s signature below indicates the Participant’s agreement with and understanding
that this award is subject to all of the terms and conditions contained in the Plan and in this
Agreement (including Appendix A), and that, in the event that there are any inconsistencies
between the terms of the Plan and the terms of this Agreement, the terms of the Plan shall control.
The Participant further acknowledges that the Participant has read and understands the Plan and
this Agreement, including Appendix A hereto, which contains the specific terms and conditions of
this grant of SARs. The Participant hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under the Plan or this
Agreement.
| XXXXXX AIRCRAFT INDUSTRIES, INC. | PARTICIPANT | |||||
| [Name] | ||||||
Name:
|
Address: | |||||
Title: |
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APPENDIX A
TERMS AND CONDITIONS OF SARS
1. Grant. The Company hereby grants to the Participant the SARs set forth in the
Grant Notice at the Exercise Price per SAR set forth in the Grant Notice, which Exercise Price
shall not be less than 100% of the Fair Market Value of a share of Stock on the Grant Date, subject
to all of the terms and conditions contained in this Agreement and the Plan. All capitalized terms
used but not defined herein shall have the meanings provided in the Grant Notice and the Plan.
2. SARs. As of the applicable Vesting Date, subject to the satisfaction of applicable
vesting requirements (as described in the Grant Notice), each vested SAR shall represent the right,
upon exercise, to receive payment in accordance with Section 6 below of an amount equal to the
excess of (x) the Fair Market Value of a share of Stock on the date the SAR is exercised over (y)
the per share Exercise Price indicated in the Grant Notice (the “Per Share SAR Value”). Unless and
until a SAR vests and is exercised by the Participant, the Participant shall have no right to
payment in respect of any such SAR. Prior to actual payment in respect of any vested and exercised
SAR, such SAR will represent an unsecured obligation of the Company, payable (if at all) only from
the general assets of the Company.
3. Exercisability.
| a. | General. Subject to the limitations contained in this Agreement, the SARs shall become vested and exercisable in such amounts and at such times as are set forth in the Grant Notice. No portion of the SARs which has not become vested and exercisable at the date of the Participant’s termination of employment with the Company shall thereafter become vested and exercisable. The installments provided for in the vesting schedule set forth in the Grant Notice are cumulative. Each such installment which becomes vested and exercisable pursuant to the vesting schedule set forth in the Grant Notice shall remain vested and exercisable until it terminates as provided in the Grant Notice. | ||
| b. | Other Limitations. Except as provided in the Grant Notice, only the Participant may exercise the SARs or any portion thereof. If the exercise of the SARs or the payment with respect thereto would constitute a violation of any applicable federal or state securities or other law or regulation, then the SARs may not be exercised. |
4. Method of Exercise. The SARs shall be exercisable by written notice (substantially
in the form attached hereto as Exhibit A). Such notice shall state the number of shares of
Stock for which the SARs are being exercised and contain such other representations and agreements
with respect to such shares as may be required by the Committee pursuant to the provisions of the
Plan (whether or not currently included in Exhibit A, including without limitation, those
representations included in the Investment Representation Statement annexed as Exhibit B
hereto). The notice shall be signed by the Participant and delivered in person or by
1
certified mail to the Secretary of the Company. The SARs shall be deemed to be exercised upon
receipt by the Company of such written notice. Notwithstanding any of the foregoing, the Committee
shall have the right to specify all conditions of the manner of exercise, which conditions may vary
and which may be subject to change from time to time.
5. Termination of Employment. If the Participant’s employment with the Company is
terminated for any reason, all SARs that have not vested prior to such termination shall be
immediately forfeited by the Participant as of such date of termination without consideration
therefor.
6. Payment after Exercise. Upon exercise, the exercised SARs shall entitle the
Participant to receive an aggregate amount equal to the product of (x) the Per Share SAR Value
times (y) the number of shares of Stock with respect to which the SAR is exercised. Such amount
shall be payable in whole shares of Stock (based on its Fair Market Value as of the date on which
the SAR is exercised), with fractional amounts paid in cash; provided, however, that in the
Committee’s sole discretion, any or all SARs may instead be paid in cash (in lieu of shares).
Payments in respect of any SARs that vest and are exercised in accordance herewith shall be made to
the Participant (or in the event of the Participant’s death, to the Participant’s estate), on as
soon as practicable after the applicable Payment Date, but in any event within sixty (60) days
after such Payment Date.
7. Tax Withholding. The Company shall have the authority and the right to deduct or
withhold, or to require the Participant to remit to the Company, an amount sufficient to satisfy
all applicable federal, state and local taxes (including the Participant’s employment tax
obligations) required by law to be withheld with respect to any taxable event arising in connection
with the SARs. Unless otherwise determined by the Committee, the Company shall, in satisfaction of
the foregoing requirement, withhold shares of Stock otherwise issuable in respect of any SARs
having a Fair Market Value equal to the sums required to be withheld, and the Participant hereby
agrees to such withholding of shares.
8. Rights as Shareholder. Neither the Participant nor any person claiming under or
through the Participant will have any of the rights or privileges of a shareholder of the Company
in respect of any shares of Stock that may become deliverable hereunder unless and until
certificates representing such shares of Stock shall have been issued, recorded on the records of
the Company or its transfer agents or registrars, and delivered to the Participant or any person
claiming under or through the Participant.
9. Non-Transferability. Unless transferred to a permitted transferee in accordance
with Section 10.3 of the Plan, SARs may not be sold, pledged, assigned or transferred in any manner
other than by will or the laws of descent and distribution, unless and until the shares of Stock
underlying the SARs have been issued (or cash distributed in lieu of Stock), and all restrictions
applicable to any such shares of Stock have lapsed. Neither the SARs nor any interest or right
therein shall be liable for the debts, contracts or engagements of the Participant or his
successors in interest or shall be subject to disposition by transfer, alienation, anticipation,
pledge, encumbrance, assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or any other
legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof
shall be null and void and of no effect, except to the extent that such disposition is permitted by
the preceding sentence.
10. Distribution of Stock. Notwithstanding anything herein to the contrary, (a) no
payment shall be made under this Agreement in the form of shares of Stock unless the shares of
Stock issuable upon such payment are then registered under the Securities Act or, if such shares of
Stock are not then so registered, the Committee has determined that such payment and issuance would
be exempt from the registration requirements of the Securities Act, and (b) the Company shall not
be required to issue or deliver any certificates evidencing shares of Stock pursuant to this
Agreement unless and until the Committee (i) has determined that the issuance and delivery of such
certificates are in compliance with all applicable laws and regulations and, if applicable, the
requirements of any exchange on which the shares of Stock are listed or traded, and (ii) has
obtained the consent or approval of any governmental or regulatory authority that the Committee
deems to be necessary or desirable as a condition to the issuance of any such certificates to the
Participant (or his or her estate). All certificates delivered pursuant to this Agreement shall be
subject to any stop-transfer orders and other restrictions as the Committee deems necessary or
advisable to comply with federal, state, or local securities or other laws, rules and regulations
and the rules of any national securities exchange or automated quotation system on which the shares
of Stock are listed, quoted, or traded. The Committee may place legends on any certificate to
reference restrictions applicable to the shares of Stock. In addition to the terms and conditions
provided herein, the Committee may require that the Participant make such reasonable covenants,
agreements, and representations as the Committee, in its sole discretion, deems advisable in order
to comply with any such laws, regulations, or requirements, including those representations
included in the Investment Representation Statement annexed as Exhibit B hereto. The
Committee shall have the right to require the Participant to comply with any timing or other
restrictions with respect to the settlement of any SARs pursuant to this Agreement, including a
window-period limitation, as may be imposed in the discretion of the Committee. Any shares of
Stock that may be distributed pursuant to this Agreement may consist, in whole or in part, of
authorized and unissued shares, treasury shares or shares purchased on the open market. No
fractional shares shall be issued and the Committee shall determine, in its sole discretion,
whether cash shall be given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up or down as appropriate.
11. Restrictions on Shares. Shares of Stock issued pursuant to the exercise of any
SARs shall be subject to such terms and conditions as the Committee shall determine in its sole
discretion, including, without limitation, transferability restrictions, repurchase rights,
requirements that such shares be transferred in the event of certain transactions, rights of first
refusal with respect to permitted transfers of shares, voting agreements, tag-along rights and
bring-along rights. Such terms and conditions may, in the Committee’s sole discretion, be
contained in a stockholders’ agreement or such other agreement as the Committee shall determine, in
each case in a form determined by the Committee. The issuance of such shares shall be conditioned
on the Participant’s consent to such terms and conditions and/or the Participant’s entering into
such agreement or agreements. Without limiting the generality of the foregoing, the Participant
hereby agrees that as a condition to the issuance of any shares of Stock payable with respect to
the SARs, at the Company’s request, Participant shall execute a
stockholders’ agreement (or joinder or counterpart signature page thereto) in a form
prescribed by the Company (a “Stockholders’ Agreement”) and that Participant and any and
all shares issued with respect to the SARs shall be subject to the terms and conditions of the
Stockholders’ Agreement.
12. Lock-Up Period. The Participant hereby agrees that, if so requested by the
Company or any representative of the underwriters (the “Managing Underwriter”) in
connection with any registration of the offering of any securities of the Company under the
Securities Act or any applicable state laws, the Participant shall not sell or otherwise transfer
any shares of Stock or other securities of the Company during (a) the 180-day period (or such
longer period as may be requested in writing by the Managing Underwriter and agreed to in writing
by the Company) following the effective date of a registration statement of the Company filed under
the Securities Act in connection with the Company’s initial public offering of Common Stock, or (b)
the 90-day period following the effective date of a registration statement filed by the Company
under the Securities Act in connection with any other public offering of Common Stock (in either
case, the “Market Standoff Period”). The Company may impose stop-transfer instructions
with respect to securities subject to the foregoing restrictions until the end of such Market
Standoff Period and these restrictions shall be binding on any transferee of such shares.
13. No Effect on Employment. Nothing in this Agreement or in the Plan shall confer
upon the Participant any right to continue to serve as an employee or other service provider of the
Company or any of its Subsidiaries.
14. Severablility. In the event that any provision in this Agreement is held invalid
or unenforceable, such provision will be severable from, and such invalidity or unenforceability
will not be construed to have any effect on, the remaining provisions of this Agreement, which
shall remain in full force and effect.
15. Tax Consultation. The Participant understands that the Participant may suffer
adverse tax consequences in connection with the SARs granted pursuant to this Agreement. The
Participant represents that the Participant has consulted with any tax consultants that the
Participant deems advisable in connection with the SARs and that the Participant is not relying on
the Company for tax advice.
16. Amendments, Suspension and Termination. To the extent permitted by the Plan, this
Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any
time or from time to time by the Committee.
17. Relationship to other Benefits. Neither the SARs nor payment in respect thereof
shall be taken into account in determining any benefits pursuant to any pension, retirement,
savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any
Subsidiary.
18. Conformity to Securities Laws. The Participant acknowledges that the Plan and
this Agreement are intended to conform to the extent necessary with all provisions of the
Securities Act and the Exchange Act and any and all regulations and rules promulgated by the
Securities and Exchange Commission thereunder, and all applicable state securities laws and
regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered,
and the SARs are granted, only in such a manner as to conform to such laws, rules and regulations.
To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to
the extent necessary to conform to such laws, rules and regulations.
19. Limitations Applicable to Section 16 Persons. Notwithstanding any other provision
of the Plan or this Agreement, if the Participant becomes subject to Section 16 of the Exchange
Act, the Plan, the SARs and this Agreement shall be subject to any additional limitations set forth
in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule.
To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent
necessary to conform to such applicable exemptive rule.
20. Code Section 409A. Neither the SARs nor any amounts payable in respect of the
SARs (together, “Payments”) are intended to provide for any deferral of compensation
subject to Code Section 409A. Notwithstanding the foregoing, if the Committee determines that any
Payments may be subject to Section 409A of the Code and related Department of Treasury guidance
(including such Department of Treasury guidance as may be issued after the Grant Date), the
Committee may adopt such amendments to this Agreement or adopt such other policies and procedures
(including amendments, policies and procedures with retroactive effect), or take any other actions
that the Committee reasonably determines are necessary to (a) exempt such Payments from Section
409A of the Code and/or preserve the intended tax treatment of such Payments, or (b) comply with
the requirements of Section 409A of the Code and related Department of Treasury guidance, provided,
that no such amendment, policy or procedure shall reduce the value of any Payments. Without
limiting the generality of the incorporation of the Plan by reference that is contained in the
Grant Notice, Section 16.14 of the Plan pertaining to Code Section 409A is hereby expressly
incorporated by reference into this Agreement.
21. Adjustments. The Participant acknowledges that the SARs are subject to
modification and termination in certain events as provided in this Agreement and Article 11 of the
Plan.
22. Successors and Assigns. The Company may assign any of its rights under this
Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer contained herein,
this Agreement shall be binding upon the Participant and his or her heirs, executors,
administrators, successors and assigns.
23. Governing Law. The laws of the State of Delaware shall govern the interpretation,
validity, administration, enforcement and performance of the terms of this Agreement regardless of
the law that might be applied under principles of conflicts of laws.
24. Captions. Captions provided herein are for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
