EXHIBIT (10.7)
FIRST AMENDMENT TO KEITH HOWE EMPLOYMENT AGREEMENT
          THIS FIRST AMENDMENT, dated as of December 31, 2008 (the “Amendment
Effective Date”), is entered into by and between Vought Aircraft Industries,
Inc., a Delaware corporation (the “Company”) and Keith Howe (the “Executive”).
RECITALS
          WHEREAS, the Company and the Executive previously entered into an
employment agreement, dated as of January 4, 2007, (the “Employment Agreement”),
that sets forth the terms and conditions of the Executive’s employment with the
Company;
          WHEREAS, the Company and Executive mutually desire to amend the
Employment Agreement to take into consideration certain requirements imposed by
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”); and
          WHEREAS, Section 15 of the Employment Agreement provides that the
Employment Agreement may be amended pursuant to a written agreement between the
Company and the Executive.
          NOW, THEREFORE, the Company and the Executive hereby agree that,
effective as of the Amendment Effective Date, for good and valuable
consideration, the receipt of which is hereby acknowledged, the Employment
Agreement is hereby amended as follows:
          1. The following sentence is hereby added to the end of Section 2(b)
of the Employment Agreement:
“Any annual bonus that becomes payable pursuant to this Section 2(b) shall be
paid no later than March 15th of the year following the year in which such
annual bonus is earned. Provided, however, that if the Board shall determine
that it is administratively impracticable, which may include inability of the
Company to gain certification of its financial statements, to make such annual
bonus payment by March 15th, any such payment shall be made as soon as
reasonably practicable after such period and in no event later than
December 31st of the year following the year the year for which such annual
bonus was earned.”
          2. Section 2(i) of the Employment Agreement is hereby deleted and
replaced in its entirety with the following:

  “(i)     Expenses. During the Term, the Company shall reimburse the Executive
for all reasonable travel and other business expenses incurred by him in the
performance of his duties to the Company in accordance with the Company’s
expense reimbursement policy. To the extent that any reimbursements, including
without limitation any reimbursements pursuant to Section 2(c) above, Section
2(g) above and/or pursuant to this Section 2(i), are determined to constitute
taxable compensation to the Executive, then reimbursement requests with respect
to such expenses must be timely submitted by the Executive and, if timely
submitted, such expenses shall be reimbursed no later than December 31st of the
year following the year in which the expense was incurred. In no event shall the
Executive be entitled to any such reimbursement payments after December 31st of
the year following the year in which the expense was incurred. The amount of any
such expenses reimbursed in one year shall not affect the amount eligible for
reimbursement in any subsequent year, except for the reimbursement of medical
expenses referred to in Section 105(b) of the Internal Revenue Code of 1986, as
amended (the “Code”) and the Executive’s right to reimbursement of any such
expenses shall not be subject to liquidation or exchange for any other benefit.”

 

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     3. Section 2(k) of the Employment Agreement is hereby deleted and replaced
in its entirety with the following:

  “(k)     Indemnification. The Executive shall be indemnified and held harmless
by the Company to the fullest extent authorized by the Company’s certificate of
incorporation or bylaws against all costs, expenses, liabilities and losses
reasonably incurred or suffered by the Executive with respect to any bona fide
claim against the Executive or the Company, where such claim is based on actions
taken by the Executive in good faith and in his capacity as an officer of the
Company. Notwithstanding the foregoing, no amounts shall be paid or advanced in
accordance with this Section 2(k) to the extent that any such amounts would fail
to be exempt from the application of Section 409A (as defined below) in
accordance with Treasury Regulation 1.409A-1(b)(10).”

     4. Section 4(b) of the Employment Agreement is hereby amended and restated
in its entirety to read as follows:

  “(b)    Termination without Cause or resignation for Good Reason. If, during
the Term, the Executive incurs a “separation from service” from the Company
(within the meaning of Section 409A(a)(2)(A)(i) of the Code and Treasury
Regulation Section 1.409A-1(h)) (a “Separation from Service”) by reason of a
termination of the Executive’s employment without Cause pursuant to
Section 3(a)(iv) or for Good Reason pursuant to Section 3(a)(v), the Company
shall, subject to the Executive signing and not revoking, within thirty
(30) days following the Separation from Service, a release of claims in
substantially the form attached hereto as Exhibit A:

  (i)   pay to the Executive, in equal installments over the twelve (12) month
period following the Date of Termination in accordance with the Company’s
regular payroll practice, an amount equal to the Annual Base Salary that the
Executive would have been entitled to receive if the Executive had continued his
employment hereunder for a period of twelve (12) months following the Date of
Termination, which amounts shall be payable commencing on the Company’s first
payroll date occurring on or after the 30th day following the Separation from
Service (the “First Payroll Date”), and any amounts that would otherwise have
been paid pursuant to this Section 4(b)(i) prior to such payroll date shall be
paid in a lump-sum on the First Payroll Date; and     (ii)   pay to the
Executive a lump-sum amount equal, as determined by the Company, to the total
aggregate annual premium costs for group medical, dental and vision benefit
coverage for the Executive and the Executive’s spouse and dependents, in each
case, as in effect with respect to each such individual immediately prior to
such Separation from Service, which payment shall be made on the First Payroll
Date and which payment may be applied by the Executive, in his discretion, to
the purchase of comparable coverage. For the avoidance of doubt, the payment
described in this Section 4(b)(ii) shall be subject to withholding of any
federal, state, local or foreign withholding or other taxes or charges which the
Company is required to withhold.”

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     5. Section 4(d) of the Employment Agreement is hereby deleted and replaced
in its entirety with the following:

  “(d)    409A. Notwithstanding anything to the contrary in this Section 4, no
payments in this Section 4 will be paid during the six-month period following
the Executive’s Separation from Service unless the Company determines, in its
good faith judgment, that paying such amounts at the time or times indicated in
this Section would not cause the Executive to incur an additional tax under
Section 409A (in which case such amounts shall be paid at the time or times
indicated in this Section). If the payment of any amounts are delayed as a
result of the previous sentence, on the first day following the end of the
six-month period (or such earlier date upon which such amount can be paid under
Section 409A without being subject to such additional taxes, including upon the
Executive’s death), the Company will pay the Executive a lump-sum amount equal
to the cumulative amount that would have otherwise been previously paid to the
Executive under this Agreement.”

     6. Clause (D) of Section 9(e) of the Employment Agreement is hereby deleted
and replaced in its entirety, and clauses “(E)” and “(F)” in the last paragraph
of Section 9(e) are hereby renumbered as clauses “(D)” and “(E)”, respectively.
     7. Section 21 of the Employment Agreement is hereby deleted and replaced in
its entirety with the following:
     “21. Section 409A. To the extent that the Company reasonably determines
that any compensation or benefits payable under this Agreement are subject to
Section 409A, this Agreement shall incorporate the terms and conditions required
by Section 409A reasonably determined by the Company and the Executive. To the
extent applicable, this Agreement shall be interpreted in accordance with
Section 409A of the Code and Department of Treasury regulations and other
interpretative guidance issued thereunder, including without limitation any such
regulations or other such guidance that may be issued after the Effective Date
(“Section 409A”). Notwithstanding any provision of this Agreement to the
contrary, in the event that following the Effective Date the Company reasonably
determines that any compensation or benefits payable under this Agreement may be
subject to Section 409A, the Company and the Executive shall work together to
adopt such amendments to this Agreement or adopt other policies or procedures
(including amendments, policies and procedures with retroactive effective), or
take any other commercially reasonable actions necessary or appropriate to
(a) preserve the intended tax treatment of the compensation and benefits payable
hereunder, to preserve the economic benefits of such compensation and benefits,
and/or to avoid less favorable accounting or tax consequences for the Company
and/or (ii) to exempt the compensation and benefits payable hereunder from
Section 409A or to comply with the requirements of Section 409A and thereby
avoid the application of penalty taxes thereunder; provided, however, that this
Section 21 does not, and shall not be construed so as to, create any obligation
on the part of the Company to adopt any such amendments, policies or procedures
or to take any other such actions or to indemnify the Executive for any failure
to do so.”
     9. Except as expressly modified by the terms of this First Amendment to the
Employment Agreement, the terms and conditions of the Employment Agreement shall
remain in full force and effect.
[Signature page follows]

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          IN WITNESS WHEREOF, the Company and the Executive agree to the terms
of this [First] Amendment to the Employment Agreement, effective as of the
Effective Date.

            VOUGHT AIRCRAFT INDUSTRIES, INC.
      By:   /s/ THOMAS F. STUBBINS         Name:   Thomas F. Stubbins       
Title:   Vice President, Human Resources        EXECUTIVE
      /s/ KEITH B. HOWE       Keith B. Howe           

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