exv10w1



 





Exhibit 10.1




VOUGHT AIRCRAFT INDUSTRIES, INC.

2006 INCENTIVE AWARD PLAN




ARTICLE 1.




PURPOSE




     The purpose of this Vought Aircraft Industries, Inc. 2006 Incentive Award Plan (the
“Plan”) is to promote the success and enhance the value of Vought Aircraft Industries, Inc.
(the “Company”) by linking the personal interests of the members of the Board, Employees,
and Consultants to those of Company stockholders and by providing such individuals with an
incentive for outstanding performance to generate superior returns to Company stockholders. The
Plan is further intended to provide flexibility to the Company in its ability to motivate, attract,
and retain the services of members of the Board, Employees, and Consultants upon whose judgment,
interest, and special effort the successful conduct of the Company’s operation is largely
dependent.



ARTICLE 2.




DEFINITIONS AND CONSTRUCTION




Wherever the following terms are used in the Plan they shall have the meanings specified

below, unless the context clearly indicates otherwise. The singular pronoun shall include the

plural where the context so indicates.




     2.1 “Award” means an Option, a Restricted Stock award, a Stock Appreciation Right
award, a Performance Share award, a Performance Stock Unit award, a Dividend Equivalents award, a
Stock Payment award, a Deferred Stock award, a Restricted Stock Unit award, a Performance Bonus
Award, or a Performance-Based Award granted to a Participant pursuant to the Plan.



     2.2 “Award Agreement” means any written agreement, contract, or other instrument or
document evidencing an Award, including through electronic medium.



     2.3 “Board” means the Board of Directors of the Company.



     2.4 “Change in Control” means either (a) the consummation of the sale, transfer,
conveyance or other disposition in one or a series of related transactions, of the equity
securities of the Company or its successor held, directly or indirectly, by TC Group, LLC
(“Carlyle”) in exchange for cash, or in the case of any transaction resulting in the
exchange for consideration other than cash (“non-cash consideration”) the receipt of cash
upon the disposition of such non-cash consideration, such that immediately following such
transaction or disposition (or series of related transactions or dispositions), the total number of
all equity securities held, directly or indirectly, by Carlyle and any Affiliate of Carlyle is, in
the aggregate, less than 50% of the total number of equity securities (as such securities may be
adjusted for the occurrence of a corporate



 









 




event) held, directly or indirectly, by Carlyle and any Affiliate of Carlyle immediately prior
to the transaction; or (b) the consummation of the sale, lease, transfer, conveyance or other
disposition (other than any transaction otherwise covered under the preceding sub-clause(a)), in
one or a series of related transactions, of all or substantially all of the assets of the Company,
or the Company and its Subsidiaries taken as a whole, to any “person ” (as such term is defined in
Section 13(d)(3) of the Exchange Act) other than to Carlyle or an Affiliate of Carlyle.




     2.5 “Code” means the Internal Revenue Code of 1986, as amended.



     2.6 “Committee” means the committee of the Board described in Article 12 hereof.



     2.7 “Consultant” means any consultant or adviser if: (a) the consultant or adviser
renders bona fide services to the Company or any Subsidiary; (b) the services rendered by the
consultant or adviser are not in connection with the offer or sale of securities in a
capital-raising transaction and do not directly or indirectly promote or maintain a market for the
Company’s securities; and (c) the consultant or adviser is a natural person who has contracted
directly with the Company or any Subsidiary to render such services.



     2.8 “Covered Employee” means an Employee who is, or could be, a “covered employee”
within the meaning of Section 162(m) of the Code.



     2.9 “Deferred Stock” means a right to receive a specified number of shares of Stock
during specified time periods pursuant to Section 8.5 hereof.



     2.10 “Disability” means that the Participant qualifies to receive long-term disability
payments under the Company’s long-term disability insurance program, as it may be amended from time
to time.



     2.11 “Dividend Equivalents” means a right granted to a Participant pursuant to Section
8.3 hereof to receive the equivalent value (in cash or Stock) of dividends paid on Stock.



     2.12 “Effective Date” shall have the meaning set forth in Section 13.1 hereof.



     2.13 “Eligible Individual” means any person who is an Employee, a Consultant or an
Independent Director, as determined by the Committee.



     2.14 “Employee” means any officer or other employee (as defined in accordance with
Section 3401(c) of the Code) of the Company or any Subsidiary.



     2.15 “Exchange Act” means the Securities Exchange Act of 1934, as amended.



     2.16 “Fair Market Value” means, as of any given date, (a) if Stock is traded on an
exchange (including NASDAQ), the closing price of a share of Stock as reported in the Wall Street
Journal (or such other source as the Company may deem reliable for such purposes) for such date, or
if no sale occurred on such date, the first trading date immediately prior to such date during
which a sale occurred; or (b) if Stock is not traded on an exchange but is quoted on a quotation
system, the mean between the closing representative bid and asked prices for the Stock on such
date, or if no sale occurred on such date, the first date immediately prior to such date on



2









 




which sales prices or bid and asked prices, as applicable, are reported by such quotation
system; or (c) if Stock is not publicly traded, the fair market value established by the Committee
acting in good faith.




     2.17 “Incentive Stock Option” means an Option that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.



     2.18 “Independent Director” means a member of the Board who is not an Employee of the
Company.



     2.19 “Non-Employee Director” means a member of the Board who qualifies as a
“Non-Employee Director” as defined in Rule 16b-3(b)(3) under the Exchange Act, or any successor
rule.



     2.20 “Non-Qualified Stock Option” means an Option that is not intended to be an
Incentive Stock Option.



     2.21 “Option” means a right granted to a Participant pursuant to Article 5 hereof to
purchase a specified number of shares of Stock at a specified price during specified time periods.
An Option may be either an Incentive Stock Option or a Non-Qualified Stock Option.



     2.22 “Participant” means any Eligible Individual who, as a member of the Board,
Consultant or Employee, has been granted an Award pursuant to the Plan.



     2.23 “Performance-Based Award” means an Award granted to selected Covered Employees
pursuant to Section 8.7 hereof, but which is subject to the terms and conditions set forth in
Article 9 hereof. All Performance-Based Awards are intended to qualify as Qualified
Performance-Based Compensation.



     2.24 “Performance Bonus Award” has the meaning set forth in Section 8.7 hereof.



     2.25 “Performance Criteria” means the criteria that the Committee selects for purposes
of establishing the Performance Goal or Performance Goals for a Participant for a Performance
Period. The Performance Criteria that will be used to establish Performance Goals are limited to
the following: net earnings (either before or after interest, taxes, depreciation and
amortization), economic value-added, sales or revenue, net income (either before or after taxes),
operating earnings, cash flow (including, but not limited to, operating cash flow and free cash
flow), cash flow return on capital, return on net assets, return on stockholders’ equity, return on
assets, return on capital, stockholder returns, return on sales, gross or net profit margin,
productivity, expense, margins, operating efficiency, customer satisfaction, working capital,
earnings per share, price per share of Stock, and market share, any of which may be measured either
in absolute terms or as compared to any incremental increase or as compared to results of a peer
group. The Committee shall define in an objective fashion the manner of calculating the
Performance Criteria it selects to use for such Performance Period for such Participant.



     2.26 “Performance Goals” means, for a Performance Period, the goals established in
writing by the Committee for the Performance Period based upon the Performance Criteria. Depending
on the Performance Criteria used to establish such Performance Goals, the



3









 




Performance Goals may be expressed in terms of overall Company performance or the performance
of a division, business unit, or an individual. The Committee, in its discretion, may, within the
time prescribed by Section 162(m) of the Code, adjust or modify the calculation of Performance
Goals for such Performance Period in order to prevent the dilution or enlargement of the rights of
Participants (a) in the event of, or in anticipation of, any unusual or extraordinary corporate
item, transaction, event, or development, or (b) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company, or the financial statements of the
Company, or in response to, or in anticipation of, changes in applicable laws, regulations,
accounting principles, or business conditions.




     2.27 “Performance Period” means the one or more periods of time, which may be of
varying and overlapping durations, as the Committee may select, over which the attainment of one or
more Performance Goals will be measured for the purpose of determining a Participant’s right to,
and the payment of, a Performance-Based Award.



     2.28 “Performance Share” means a right granted to a Participant pursuant to Section
8.1 hereof, to receive Stock, the payment of which is contingent upon achieving certain Performance
Goals or other performance-based targets established by the Committee.



     2.29 “Performance Stock Unit” means a right granted to a Participant pursuant to
Section 8.2 hereof, to receive Stock, the payment of which is contingent upon achieving certain
Performance Goals or other performance-based targets established by the Committee.



     2.30 “Plan” means this Vought Aircraft Industries, Inc. 2006 Incentive Award Plan, as
it may be amended from time to time.



     2.31 “Public Trading Date” means the first date upon which Stock is listed (or
approved for listing) upon notice of issuance on any securities exchange or designated (or approved
for designation) upon notice of issuance as a national market security on an interdealer quotation
system.



     2.32 “Qualified Performance-Based Compensation” means any compensation that is
intended to qualify as “qualified performance-based compensation” as described in Section
162(m)(4)(C) of the Code.



     2.33 “Restricted Stock” means Stock awarded to a Participant pursuant to Article 6
hereof that is subject to certain restrictions and may be subject to risk of forfeiture.



     2.34 “Restricted Stock Unit” means an Award granted pursuant to Section 8.6 hereof.



     2.35 “Securities Act” shall mean the Securities Act of 1933, as amended.



     2.36 “Stock” means the common stock of the Company, par value $.01 per share, and such
other securities of the Company that may be substituted for Stock pursuant to Article 11 hereof.



     2.37 “Stock Appreciation Right” or “SAR” means a right granted pursuant to
Article 7 hereof to receive a payment equal to the excess of the Fair Market Value of a specified
number



4









 




of shares of Stock on the date the SAR is exercised over the exercise price of the SAR
indicated in the applicable Award Agreement, which per share exercise price shall not be less than
the Fair Market Value of a share of Stock on the date the SAR is granted.




     2.38 “Stock Payment” means (a) a payment in the form of shares of Stock, or (b) an
option or other right to purchase shares of Stock, as part of any bonus, deferred compensation or
other arrangement, made in lieu of all or any portion of the compensation, granted pursuant to
Section 8.4 hereof.



     2.39 “Subsidiary” means any “subsidiary corporation” as defined in Section 424(f) of
the Code and any applicable regulations promulgated thereunder or any other entity of which a
majority of the outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.



ARTICLE 3.




SHARES SUBJECT TO THE PLAN




     3.1 Number of Shares.



          (a) Subject to Article 11 hereof and Section 3.1(b) hereof, the aggregate number of shares of
Stock which may be issued or transferred pursuant to Awards under the Plan is 1,500,000.




          (b) To the extent that an Award terminates, expires, or lapses for any reason, any shares of
Stock subject to the Award shall again be available for the grant of an Award pursuant to the Plan.
To the extent permitted by applicable law or any exchange rule, shares of Stock issued in
assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of
combination by the Company or any Subsidiary shall not be counted against shares of Stock available
for grant pursuant to this Plan. The payment of Dividend Equivalents in cash in conjunction with
any outstanding Awards shall not be counted against the shares available for issuance under the
Plan. Notwithstanding the provisions of this Section 3.1(b), no shares of Stock may again be
optioned, granted or awarded if such action would cause an Incentive Stock Option to fail to
qualify as an incentive stock option under Section 422 of the Code.




     3.2 Stock Distributed. Any Stock distributed pursuant to an Award may consist, in
whole or in part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open
market.



     3.3 Limitation on Number of Shares Subject to Awards. Notwithstanding any provision
in the Plan to the contrary, and subject to Article 11 hereof, the maximum number of shares of
Stock with respect to one or more Awards that may be granted to any one Participant during any
calendar year shall be 750,000 and the maximum amount that may be paid in cash during any calendar
year with respect to any Performance-Based Award (including, without limitation, any Performance
Bonus Award) shall be $1,000,000; provided, however, that the foregoing limitations shall not apply
prior to the Public Trading Date and, following the Public Trading Date, the foregoing limitations
shall not apply until the earliest of: (a) the first material



5









 




modification of the Plan (including any increase in the number of shares reserved for issuance
under the Plan in accordance with Section 3.1 hereof); (b) the issuance of all of the shares of
Stock reserved for issuance under the Plan; (c) the expiration of the Plan; (d) the first meeting
of stockholders at which members of the Board are to be elected that occurs after the close of the
third calendar year following the calendar year in which occurred the first registration of an
equity security of the Company under Section 12 of the Exchange Act; or (e) such other date
required by Section 162(m) of the Code and the rules and regulations promulgated thereunder.




ARTICLE 4.




ELIGIBILITY AND PARTICIPATION




     4.1 Eligibility. Each Eligible Individual shall be eligible to be granted one or more
Awards pursuant to the Plan.



     4.2 Participation. Subject to the provisions of the Plan, the Committee may, from
time to time, select from among all Eligible Individuals, those to whom Awards shall be granted and
shall determine the nature and amount of each Award. No Eligible Individual shall have any right
to be granted an Award pursuant to this Plan.



     4.3 Foreign Participants. Notwithstanding any provision of the Plan to the contrary,
in order to comply with the laws in other countries in which the Company and its Subsidiaries
operate or have Eligible Individuals, the Committee, in its sole discretion, shall have the power
and authority to: (i) determine which Subsidiaries shall be covered by the Plan; (ii) determine
which Eligible Individuals outside the United States are eligible to participate in the Plan; (iii)
modify the terms and conditions of any Award granted to Eligible Individuals outside the United
States to comply with applicable foreign laws; (iv) establish subplans and modify exercise
procedures and other terms and procedures, to the extent such actions may be necessary or advisable
(any such subplans and/or modifications shall be attached to this Plan as appendices); provided,
however, that no such subplans and/or modifications shall increase the share limitations contained
in Sections 3.1 and 3.3 hereof; and (v) take any action, before or after an Award is made, that it
deems advisable to obtain approval or comply with any necessary local governmental regulatory
exemptions or approvals. Notwithstanding the foregoing, the Committee may not take any actions
hereunder, and no Awards shall be granted, that would violate the Exchange Act, the Code, any
securities law or governing statute or any other applicable law.



ARTICLE 5.




STOCK OPTIONS




     5.1 General. The Committee is authorized to grant Options to Participants on the
following terms and conditions:



          (a) Exercise Price. The exercise price per share of Stock subject to an Option shall
be determined by the Committee and set forth in the Award Agreement; provided, that,

6









 








subject to Section 5.2(b) hereof, the per share exercise price for any Option shall not be
less than 100% of the Fair Market Value of a share of Stock on the date of grant.




          (b) Time and Conditions of Exercise. The Committee shall determine the time or times
at which an Option may be exercised in whole or in part; provided that the term of any Option
granted under the Plan shall not exceed ten years. The Committee shall also determine the
performance or other conditions, if any, that must be satisfied before all or part of an Option may
be exercised.




          (c) Payment. The Committee shall determine the methods by which the exercise price of
an Option may be paid, the form of payment, including, without limitation: (i) cash, (ii) shares of
Stock held for such period of time as may be required by the Committee in order to avoid adverse
accounting consequences and having a fair market value on the date of delivery equal to the
aggregate exercise price of the Option or exercised portion thereof, or (iii) other property
acceptable to the Committee (including through the delivery of a notice that the Participant has
placed a market sell order with a broker with respect to shares of Stock then issuable upon
exercise of the Option, and that the broker has been directed to pay a sufficient portion of the
net proceeds of the sale to the Company in satisfaction of the Option exercise price; provided that
payment of such proceeds is then made to the Company upon settlement of such sale), and the methods
by which shares of Stock shall be delivered or deemed to be delivered to Participants.
Notwithstanding any other provision of the Plan to the contrary, after the Public Trading Date, no
Participant who is a member of the Board or an “executive officer” of the Company within the
meaning of Section 13(k) of the Exchange Act shall be permitted to pay the exercise price of an
Option, or continue any extension of credit with respect to the exercise price of an Option with a
loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the
Exchange Act.




          (d) Evidence of Grant. All Options shall be evidenced by an Award Agreement between
the Company and the Participant. The Award Agreement shall include such additional provisions as
may be specified by the Committee.




     5.2 Incentive Stock Options. Incentive Stock Options shall be granted only to
Employees and the terms of any Incentive Stock Options granted pursuant to the Plan, in addition to
the requirements of Section 5.1 hereof, must comply with the provisions of this Section 5.2.



          (a) Dollar Limitation. The aggregate Fair Market Value (determined as of the time the
Option is granted) of all shares of Stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed $100,000 or such other limitation
as imposed by Section 422(d) of the Code, or any successor provision. To the extent that Incentive
Stock Options are first exercisable by a Participant in excess of such limitation, the excess shall
be considered Non-Qualified Stock Options.




          (b) Ten Percent Owners. No Incentive Stock Option may be granted to any individual
who, at the date of grant, owns stock possessing more than ten percent of the total combined voting
power of all classes of Stock of the Company unless such Option is granted at a






7









 







price that is not
less than 110% of Fair Market Value on the date of grant and the Option is exercisable for no more
than five years from the date of grant.



         (c) Notice of Disposition. The Participant shall give the Company prompt notice of
any disposition of shares of Stock acquired by exercise of an Incentive Stock Option within (i) two
years from the date of grant of such Incentive Stock Option or (ii) one year after the transfer of
such shares of Stock to the Participant.



         (d) Right to Exercise. During a Participant’s lifetime, an Incentive Stock Option may
be exercised only by the Participant.



         (e) Failure to Meet Requirements. Any Option (or portion thereof) purported to be an
Incentive Stock Option, which, for any reason, fails to meet the requirements of Section 422 of the
Code shall be considered a Non-Qualified Stock Option.




ARTICLE 6.




RESTRICTED STOCK AWARDS




     6.1 Grant of Restricted Stock. The Committee is authorized to make Awards of
Restricted Stock to any Participant selected by the Committee in such amounts and subject to such
terms and conditions as determined by the Committee. All Awards of Restricted Stock shall be
evidenced by an Award Agreement.



     6.2 Issuance and Restrictions. Restricted Stock shall be subject to such restrictions
on transferability and other restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on
the Restricted Stock). These restrictions may lapse separately or in combination at such times,
pursuant to such circumstances, in such installments, or otherwise, as the Committee determines at
the time of the grant of the Award or thereafter.



     6.3 Forfeiture. Except as otherwise determined by the Committee at the time of the
grant of the Award or thereafter, upon termination of employment or service during the applicable
restriction period, Restricted Stock that is at that time subject to restrictions shall be
forfeited; provided, however, that, the Committee may (a) provide in any Restricted Stock Award
Agreement that restrictions or forfeiture conditions relating to Restricted Stock will lapse in
whole or in part in the event of terminations resulting from specified causes, and (b) provide in
other cases for the lapse in whole or in part of restrictions or forfeiture conditions relating to
Restricted Stock.



     6.4 Certificates for Restricted Stock. Restricted Stock granted pursuant to the Plan
may be evidenced in such manner as the Committee shall determine. If certificates representing
shares of Restricted Stock are registered in the name of the Participant, certificates must bear an
appropriate legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.



8









 





ARTICLE 7.




STOCK APPRECIATION RIGHTS




     7.1 Grant of Stock Appreciation Rights.



          (a) A Stock Appreciation Right may be granted to any Participant selected by the Committee. A
Stock Appreciation Right shall be subject to such terms and conditions not inconsistent with the
Plan as the Committee shall impose and shall be evidenced by an Award Agreement.




          (b) A Stock Appreciation Right shall entitle the Participant (or other person entitled to
exercise the Stock Appreciation Right pursuant to the Plan) to exercise all or a specified portion
of the Stock Appreciation Right (to the extent then exercisable pursuant to its terms) and to
receive from the Company an amount equal to the product of (i) the excess of (A) the Fair Market
Value of a share of Stock on the date the Stock Appreciation Right is exercised over (B) the per
share exercise price of the SAR, which exercise price shall not be less than the Fair Market Value
of a share of Stock on the date the Stock Appreciation Right is granted and (ii) the number of
shares of Stock with respect to which the Stock Appreciation Right is exercised, subject to any
limitations the Committee may impose.




     7.2 Payment and Limitations on Exercise.



          (a) Subject to Section 7.2(b) below, payment of the amounts determined under Sections 7.1(b)
above shall be in cash, in Stock (based on its Fair Market Value as of the date the Stock
Appreciation Right is exercised) or a combination of both, as determined by the Committee in the
Award Agreement.




          (b) To the extent any payment under Section 7.1(b) hereof is effected in Stock, it shall be
made subject to satisfaction of all provisions of Article 5 above pertaining to Options.




ARTICLE 8.




OTHER TYPES OF AWARDS




     8.1 Performance Share Awards. Any Participant selected by the Committee may be
granted one or more Performance Share awards which shall be denominated in a number of shares of
Stock and which may be linked to any one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, in each case on a specified date or
dates or over any period or periods determined by the Committee. In making such determinations,
the Committee shall consider (among such other factors as it deems relevant in light of the
specific type of award) the contributions, responsibilities and other compensation of the
particular Participant.



     8.2 Performance Stock Units. Any Participant selected by the Committee may be granted
one or more Performance Stock Unit awards which shall be denominated in unit equivalent of shares
of Stock and/or units of value including dollar value of shares of Stock and



9









 




which may be linked to
any one or more of the Performance Criteria or other specific performance criteria determined
appropriate by the Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee. In making such determinations, the Committee shall consider
(among such other factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the particular Participant.




     8.3 Dividend Equivalents.



          (a) Any Participant selected by the Committee may be granted Dividend Equivalents based on the
dividends declared on the shares of Stock that are subject to any Award, to be credited as of
dividend payment dates, during the period between the date the Award is granted and the date the
Award is exercised, vests or expires, as determined by the Committee. Such Dividend Equivalents
shall be converted to cash or additional shares of Stock by such formula and at such time and
subject to such limitations as may be determined by the Committee.




          (b) Dividend Equivalents granted with respect to Options or SARs that are intended to be
Qualified Performance-Based Compensation shall be payable, with respect to pre-exercise periods,
regardless of whether such Option or SAR is subsequently exercised.




     8.4 Stock Payments. Any Participant selected by the Committee may receive Stock
Payments in the manner determined from time to time by the Committee; provided, that unless
otherwise determined by the Committee such Stock Payments shall be made in lieu of base salary,
bonus, or other cash compensation otherwise payable to such Participant. The number of shares
shall be determined by the Committee and may be based upon the Performance Criteria or other
specific performance criteria determined appropriate by the Committee, determined on the date such
Stock Payment is made or on any date thereafter.



     8.5 Deferred Stock. Any Participant selected by the Committee may be granted an award
of Deferred Stock in the manner determined from time to time by the Committee. The number of
shares of Deferred Stock shall be determined by the Committee and may be linked to the Performance
Criteria or other specific performance criteria determined to be appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined by the Committee.
Stock underlying a Deferred Stock award will not be issued until the Deferred Stock award has
vested, pursuant to a vesting schedule or performance criteria set by the Committee. Unless
otherwise provided by the Committee, a Participant awarded Deferred Stock shall have no rights as a
Company stockholder with respect to such Deferred Stock until such time as the Deferred Stock Award
has vested and the Stock underlying the Deferred Stock Award has been issued.



     8.6 Restricted Stock Units. The Committee is authorized to make Awards of Restricted
Stock Units to any Participant selected by the Committee in such amounts and subject to such terms
and conditions as determined by the Committee. At the time of grant, the
Committee shall specify the date or dates on which the Restricted Stock Units shall become
fully vested and nonforfeitable, and may specify such conditions to vesting as it deems
appropriate. At the time of grant, the Committee shall specify the maturity date applicable to
each grant of



10









 




Restricted Stock Units which shall be no earlier than the vesting date or dates of
the Award and may be determined at the election of the grantee. On the maturity date, the Company
shall, subject to Section 10.7(b) hereof, transfer to the Participant one unrestricted, fully
transferable share of Stock for each Restricted Stock Unit scheduled to be paid out on such date
and not previously forfeited.




     8.7 Performance Bonus Awards. Any Participant selected by the Committee may be
granted a cash bonus (a “Performance Bonus Award”) payable upon the attainment of
Performance Goals that are established by the Committee and relate to one or more of the
Performance Criteria or other specific performance criteria determined to be appropriate by the
Committee, in each case on a specified date or dates or over any period or periods determined by
the Committee. Any such Performance Bonus Award paid to a Covered Employee may be a
Performance-Based Award and shall be based upon objectively determinable bonus formulas established
in accordance with Article 9 hereof.



     8.8 Term. Except as otherwise provided herein, the term of any Award of Performance
Shares, Performance Stock Units, Dividend Equivalents, Stock Payments, Deferred Stock or Restricted
Stock Units shall be set by the Committee in its discretion.



     8.9 Exercise or Purchase Price. The Committee may establish the exercise or purchase
price, if any, of any Award of Performance Shares, Performance Stock Units, Deferred Stock, Stock
Payments or Restricted Stock Units; provided, however, that such price shall not be less than the
par value of a share of Stock on the date of grant, unless otherwise permitted by applicable state
law.



     8.10 Exercise upon Termination of Employment or Service. An Award of Performance
Shares, Performance Stock Units, Dividend Equivalents, Deferred Stock, Stock Payments and
Restricted Stock Units shall only be exercisable or payable while the Participant is an Employee,
Consultant or a member of the Board, as applicable; provided, however, that the Committee in its
sole and absolute discretion may provide that an Award of Performance Shares, Performance Stock
Units, Dividend Equivalents, Stock Payments, Deferred Stock or Restricted Stock Units may be
exercised or paid subsequent to a termination of employment or service, as applicable, or following
a Change in Control of the Company, or because of the Participant’s retirement, death or
Disability, or otherwise; provided, however, that any such provision with respect to Performance
Shares or Performance Stock Units shall be subject to the requirements of Section 162(m) of the
Code that apply to Qualified Performance-Based Compensation.



     8.11 Form of Payment. Payments with respect to any Awards granted under this Article
8 shall be made in cash, in Stock or a combination of both, as determined by the Committee.



     8.12 Award Agreement. All Awards under this Article 8 shall be subject to such
additional terms and conditions as determined by the Committee and shall be evidenced by an Award
Agreement.



11









 





ARTICLE 9.




PERFORMANCE-BASED AWARDS




     9.1 Purpose. The purpose of this Article 9 is to provide the Committee the ability to
qualify Awards other than Options and SARs and that are granted pursuant to Articles 6 and 8 hereof
as Qualified Performance-Based Compensation. If the Committee, in its discretion, decides to grant
a Performance-Based Award to a Covered Employee, the provisions of this Article 9 shall control
over any contrary provision contained in Articles 6 or 8 hereof; provided, however, that the
Committee may in its discretion grant Awards to Covered Employees that are based on Performance
Criteria or Performance Goals but that do not satisfy the requirements of this Article 9.



     9.2 Applicability. This Article 9 shall apply only to those Covered Employees
selected by the Committee to receive Performance-Based Awards. The designation of a Covered
Employee as a Participant for a Performance Period shall not in any manner entitle the Participant
to receive an Award for the period. Moreover, designation of a Covered Employee as a Participant
for a particular Performance Period shall not require designation of such Covered Employee as a
Participant in any subsequent Performance Period and designation of one Covered Employee as a
Participant shall not require designation of any other Covered Employees as a Participant in such
period or in any other period.



     9.3 Procedures with Respect to Performance-Based Awards. To the extent necessary to
comply with the Qualified Performance-Based Compensation requirements of Section 162(m)(4)(C) of
the Code, with respect to any Award granted under Articles 6 or 8 hereof which may be granted to
one or more Covered Employees, no later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period or period of service (or such other
time as may be required or permitted by Section 162(m) of the Code), the Committee shall, in
writing, (a) designate one or more Covered Employees, (b) select the Performance Criteria
applicable to the Performance Period, (c) establish the Performance Goals, and amounts of such
Awards, as applicable, which may be earned for such Performance Period, and (d) specify the
relationship between Performance Criteria and the Performance Goals and the amounts of such Awards,
as applicable, to be earned by each Covered Employee for such Performance Period. Following the
completion of each Performance Period, the Committee shall certify in writing whether the
applicable Performance Goals have been achieved for such Performance Period. In determining the
amount earned by a Covered Employee, the Committee shall have the right to reduce or eliminate (but
not to increase) the amount payable at a given level of performance to take into account additional
factors that the Committee may deem relevant to the assessment of individual or corporate
performance for the Performance Period.



     9.4 Payment of Performance-Based Awards. Unless otherwise provided in the applicable
Award Agreement, a Participant must be employed by the Company or a Subsidiary on the day a
Performance-Based Award for such Performance Period is paid to the Participant. Furthermore, a
Participant shall be eligible to receive payment pursuant to a Performance-Based Award for a
Performance Period only if the Performance Goals for such period are achieved. In determining the
amount earned under a Performance-Based Award, the Committee may reduce



12









 




or eliminate the amount of the Performance-Based Award earned for the Performance Period, if
in its sole and absolute discretion, such reduction or elimination is appropriate.




     9.5 Additional Limitations. Notwithstanding any other provision of the Plan, any
Award which is granted to a Covered Employee and is intended to constitute Qualified
Performance-Based Compensation shall be subject to any additional limitations set forth in Section
162(m) of the Code (including any amendment to Section 162(m) of the Code) or any regulations or
rulings issued thereunder that are requirements for qualification as qualified performance-based
compensation as described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended
to the extent necessary to conform to such requirements.



ARTICLE 10.




PROVISIONS APPLICABLE TO AWARDS




     10.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in the
discretion of the Committee, be granted either alone, in addition to, or in tandem with, any other
Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards
may be granted either at the same time as or at a different time from the grant of such other
Awards.



     10.2 Award Agreement. Awards under the Plan shall be evidenced by Award Agreements
that set forth the terms, conditions and limitations for each Award which may include the term of
an Award, the provisions applicable in the event the Participant’s employment or service
terminates, and the Company’s authority to unilaterally or bilaterally amend, modify, suspend,
cancel or rescind an Award.



     10.3 Limits on Transfer. No right or interest of a Participant in any Award may be
pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a
Subsidiary, or shall be subject to any lien, obligation, or liability of such Participant to any
other party other than the Company or a Subsidiary. Except as otherwise provided by the Committee,
no Award shall be assigned, transferred, or otherwise disposed of by a Participant other than by
will or the laws of descent and distribution. The Committee by express provision in the Award or
an amendment thereto may permit an Award (other than an Incentive Stock Option) to be transferred
to, exercised by and paid to certain persons or entities related to the Participant, including but
not limited to members of the Participant’s family, charitable institutions, or trusts or other
entities whose beneficiaries or beneficial owners are members of the Participant’s family and/or
charitable institutions, or to such other persons or entities as may be expressly approved by the
Committee, pursuant to such conditions and procedures as the Committee may establish. Any
permitted transfer shall be subject to the condition that the Committee receive evidence
satisfactory to it that the transfer is being made for estate and/or tax planning purposes (or to a
“blind trust” in connection with the Participant’s termination of employment or service with the
Company or a Subsidiary to assume a position with a governmental, charitable, educational or
similar non-profit institution) and on a basis consistent with the Company’s lawful issue of
securities.



13









 





     10.4 Restrictions on Shares. Shares purchased upon the exercise of an Option or
otherwise issued pursuant to Awards under the Plan 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 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 an Award Agreement, 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 Committee in its sole discretion may provide that the
Company may repurchase shares acquired upon exercise of an Option or otherwise issued pursuant to
an Award upon the occurrence of certain specified events, including, without limitation, a
Participant’s termination of employment or service, divorce, bankruptcy or insolvency.



     10.5 Investment Intent. The Company may require a Participant, as a condition to the
grant or exercise of, or acquisition of Stock under, any Award, (i) to give written representations
satisfactory to the Company as to the Participant’s knowledge and experience in financial and
business matters, and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business matters, and to give written
representations satisfactory to the Company that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of exercising the Award or
purchasing the shares; (ii) to give written representations satisfactory to the Company stating
that the Participant is acquiring the Stock for the Participant’s own account and not with any
present intention of selling or otherwise distributing the Stock; and (iii) to give such other
written representations as are deemed necessary or appropriate by the Company and its counsel. The
foregoing requirements, and any representations given pursuant to such requirements, shall be
inoperative if (A) the issuance of the shares upon the exercise of an Award or the acquisition of
Stock has been registered under a then currently effective registration statement under the
Securities Act or (B) as to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the then-applicable
securities laws. The Company may, upon advice of counsel to the Company, place legends on Stock
certificates issued under the Plan as such counsel deems necessary or appropriate in order to
comply with applicable securities laws, including, but not limited to, legends restricting the
transfer of the Stock.



     10.6 Beneficiaries. Notwithstanding Section 10.3 hereof, a Participant may, in the
manner determined by the Committee, designate a beneficiary to exercise the rights of the
Participant and to receive any distribution with respect to any Award upon the Participant’s death.
A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant
to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable
to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any
additional restrictions deemed necessary or appropriate by the Committee. If the Participant is
married and resides in a community property state, a designation of a person other than the
Participant’s spouse as his or her beneficiary with respect to more than 50% of the Participant’s
interest in the Award shall not be effective without the prior written consent of the



14









 




Participant’s spouse. If no beneficiary has been designated or survives the Participant,
payment shall be made to the person entitled thereto pursuant to the Participant’s will or the laws
of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or
revoked by a Participant at any time provided the change or revocation is filed with the Committee.




     10.7 Stock Certificates; Book Entry Procedures.



          (a) Notwithstanding anything herein to the contrary, the Company shall not be required to
issue or deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award,
unless and until the Board has determined, with advice of counsel, that the issuance and delivery
of such certificates is in compliance with all applicable laws, regulations of governmental
authorities and, if applicable, the requirements of any exchange on which the shares of Stock are
listed or traded. All Stock certificates delivered pursuant to the Plan are subject to any
stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply
with federal, state, or foreign jurisdiction, securities or other laws, rules and regulations and
the rules of any national securities exchange or automated quotation system on which the Stock is
listed, quoted, or traded. The Committee may place legends on any Stock certificate to reference
restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the
Board may require that a Participant make such reasonable covenants, agreements, and
representations as the Board, in its discretion, deems advisable in order to comply with any such
laws, regulations, or requirements. The Committee shall have the right to require any Participant
to comply with any timing or other restrictions with respect to the settlement or exercise of any
Award, including a window-period limitation, as may be imposed in the discretion of the Committee.




          (b) Notwithstanding any other provision of the Plan, unless otherwise determined by the
Committee or required by any applicable law, rule or regulation, the Company shall not deliver to
any Participant certificates evidencing shares of Stock issued in connection with any Award and
instead such shares of Stock shall be recorded in the books of the Company (or, as applicable, its
transfer agent or stock plan administrator).




     10.8 Paperless Exercise. In the event that the Company establishes, for itself or
using the services of a third party, an automated system for the exercise of Awards, such as a
system using an internet website or interactive voice response, then the paperless exercise of
Awards by a Participant may be permitted through the use of such an automated system.



ARTICLE 11.




CHANGES IN CAPITAL STRUCTURE




     11.1 Adjustments.



          (a) In the event of any stock dividend, stock split, combination or exchange of shares,
merger, consolidation, spin-off, recapitalization or other distribution (other than normal cash
dividends) of Company assets to stockholders, or any other change affecting the shares of Stock or
the share price of the Stock, the Committee shall make proportionate adjustments to

15









 








reflect such change with respect to (a) the aggregate number and kind of shares that may be
issued under the Plan (including, but not limited to, adjustments of the limitations in Sections
3.1 and 3.3 hereof); (b) the terms and conditions of any outstanding Awards (including, without
limitation, any applicable performance targets or criteria with respect thereto); and (c) the grant
or exercise price per share for any outstanding Awards under the Plan. Any adjustment affecting an
Award intended as Qualified Performance-Based Compensation shall be made consistent with the
requirements of Section 162(m) of the Code.




          (b) In the event of any transaction or event described in Section 11.1(a) hereof or any
unusual or nonrecurring transactions or events affecting the Company, any affiliate of the Company,
or the financial statements of the Company or any affiliate, or of changes in applicable laws,
regulations or accounting principles, the Committee, on such terms and conditions as it deems
appropriate, either by the terms of the Award or by action taken prior to the occurrence of such
transaction or event and either automatically or upon the Participant’s request, shall take any one
or more of the following actions whenever the Committee determines that such action is appropriate
in order to prevent dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Award under the Plan, to facilitate such
transactions or events or to give effect to such changes in laws, regulations or principles:





     (i) To provide for either (A) termination of any such Award in exchange for an amount of cash,
if any, equal to the amount that would have been attained upon the exercise of such Award or
realization of the Participant’s rights (and, for the avoidance of doubt, if as of the date of the
occurrence of the transaction or event described in this Section 11.1 the Committee determines in
good faith that no amount would have been attained upon the exercise of such Award or realization
of the Participant’s rights, then such Award may be terminated by the Company without payment) or
(B) the replacement of such Award with other rights or property;




     (ii) To provide that such Award be assumed by the successor or survivor corporation, or a
parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards
covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices;




     (iii) To make adjustments in the number and type of shares of Stock (or other securities or
property) subject to outstanding Awards, and in the number and kind of outstanding Restricted Stock
or Deferred Stock and/or in the terms and conditions of (including the grant or exercise price),
and the criteria included in, outstanding options, rights and awards and options, rights and awards
which may be granted in the future;




     (iv) To provide that such Award shall be exercisable or payable or fully vested with respect
to all shares covered thereby, notwithstanding anything to the contrary in the Plan or the
applicable Award Agreement; and




     (v) To provide that the Award cannot vest, be exercised or become payable after such event.



16









 





     11.2 Acceleration Upon a Change in Control. Notwithstanding Section 11.1 hereof, and
except as may otherwise be provided in any applicable Award Agreement or other written agreement
entered into between the Company and a Participant, if a Change in Control occurs and a
Participant’s Awards are not converted, assumed, or replaced by a successor entity, then
immediately prior to the Change in Control such Awards shall become fully exercisable and all
forfeiture restrictions on such Awards shall lapse. Upon, or in anticipation of, a Change in
Control, the Committee may cause any and all Awards outstanding hereunder to terminate at a
specific time in the future, including but not limited to the date of such Change in Control, and
shall give each Participant the right to exercise such Awards during a period of time as the
Committee, in its sole and absolute discretion, shall determine.



     11.3 No Other Rights. Except as expressly provided in the Plan, no Participant shall
have any rights by reason of any subdivision or consolidation of shares of stock of any class, the
payment of any dividend, any increase or decrease in the number of shares of stock of any class or
any dissolution, liquidation, merger, or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan or pursuant to action of the Committee under the Plan, no
issuance by the Company of shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect
to, the number of shares of Stock subject to an Award or the grant or exercise price of any Award.



ARTICLE 12.




ADMINISTRATION




     12.1 Committee. Unless and until the Board delegates administration of the Plan to a
Committee as set forth below, the Plan shall be administered by the full Board, and for such
purposes the term “Committee” as used in this Plan shall be deemed to refer to the Board. The
Board, at its discretion or as otherwise necessary to comply with the requirements of Section
162(m) of the Code, Rule 16b-3 promulgated under the Exchange Act or to the extent required by any
other applicable rule or regulation, shall delegate administration of the Plan to a Committee.
From and after the Public Trading Date, the Committee shall consist solely of two or more members
of the Board each of whom is an “outside director,” within the meaning of Section 162(m) of the
Code, a Non-Employee Director and an “independent director” under the rules of the New York Stock
Exchange (or other principal securities market on which shares of Stock are traded).
Notwithstanding the foregoing: (a) the full Board, acting by a majority of its members in office,
shall conduct the general administration of the Plan with respect to all Awards granted to
Independent Directors and for purposes of such Awards the term “Committee” as used in this Plan
shall be deemed to refer to the Board and (b) the Committee may delegate its authority hereunder to
the extent permitted by Section 12.5 hereof. In its sole discretion, the Board may at any time and
from time to time exercise any and all rights and duties of the Committee under the Plan except
with respect to matters which under Rule 16b-3 under the Exchange Act or Section 162(m) of the
Code, or any regulations or rules issued thereunder, are required to be determined in the sole
discretion of the Committee. Committee members may resign at any time by delivering written notice
to the Board.



17









 





     12.2 Governance of the Committee. The governance of the Committee shall be subject to
the charter of the Committee as approved by the Board. Notwithstanding the foregoing, any action
taken by the Committee shall be valid and effective, whether or not members of the Committee at the
time of such action are later determined not to have satisfied the requirements for membership set
forth in Section 12.1 or otherwise provided in the charter of the Committee. Each member of the
Committee is entitled to, in good faith, rely or act upon any report or other information furnished
to that member by any officer or other employee of the Company or any Subsidiary, the Company’s
independent certified public accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the Plan.



     12.3 Authority of Committee. Subject to any specific designation in the Plan, the
Committee has the exclusive power, authority and discretion to:



          (a) Designate Participants to receive Awards;




          (b) Determine the type or types of Awards to be granted to each Participant;




          (c) Determine the number of Awards to be granted and the number of shares of Stock to which an
Award will relate;




          (d) Determine the terms and conditions of any Award granted pursuant to the Plan, including,
but not limited to, the exercise price, grant price, or purchase price, any reload provision, any
restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or
restrictions on the exercisability of an Award, and accelerations or waivers thereof, any
provisions related to non-competition and recapture of gain on an Award, based in each case on such
considerations as the Committee in its sole discretion determines; provided, however, that the
Committee shall not have the authority to accelerate the vesting or waive the forfeiture of any
Performance-Based Awards;




          (e) Determine whether, to what extent, and pursuant to what circumstances an Award may be
settled in, or the exercise price of an Award may be paid in, cash, Stock, other Awards, or other
property, or an Award may be canceled, forfeited, or surrendered;




          (f) Prescribe the form of each Award Agreement, which need not be identical for each
Participant;




          (g) Decide all other matters that must be determined in connection with an Award;




          (h) Establish, adopt, or revise any rules and regulations as it may deem necessary or
advisable to administer the Plan;




          (i) Interpret the terms of, and any matter arising pursuant to, the Plan or any Award
Agreement; and




          (j) Make all other decisions and determinations that may be required pursuant to the Plan or
as the Committee deems necessary or advisable to administer the Plan.




18









 








     12.4 Decisions Binding. The Committee’s interpretation of the Plan, any Awards
granted pursuant to the Plan, any Award Agreement and all decisions and determinations by the
Committee with respect to the Plan are final, binding, and conclusive on all parties.



     12.5 Delegation of Authority. To the extent permitted by applicable law, the
Committee may from time to time delegate to a committee of one or more members of the Board or one
or more officers of the Company the authority to grant or amend Awards to Participants other than
(a) senior executives of the Company who are subject to Section 16 of the Exchange Act, (b) Covered
Employees, or (c) officers of the Company (or members of the Board) to whom authority to grant or
amend Awards has been delegated hereunder. Any delegation hereunder shall be subject to the
restrictions and limits that the Committee specifies at the time of such delegation, and the
Committee may at any time rescind the authority so delegated or appoint a new delegate. At all
times, the delegate appointed under this Section 12.5 shall serve in such capacity at the pleasure
of the Committee.



ARTICLE 13.




EFFECTIVE AND EXPIRATION DATE




     13.1 Effective Date. The Plan is effective as of the date the Plan is approved by the
Company’s stockholders (the “Effective Date”). The Plan will be deemed to be approved by
the stockholders if it receives the affirmative vote of the holders of a majority of the shares of
stock of the Company present or represented and entitled to vote at a meeting duly held in
accordance with the applicable provisions of the Company’s bylaws.



     13.2 Expiration Date. The Plan will expire on, and no Award may be granted pursuant
to the Plan after, the tenth anniversary of the Effective Date, except that no Incentive Stock
Options may be granted under the Plan after the earlier of the tenth anniversary of (i) the date
the Plan is approved by the Board or (ii) the Effective Date. Any Awards that are outstanding on
the tenth anniversary of the Effective Date shall remain in force according to the terms of the
Plan and the applicable Award Agreement.



ARTICLE 14.




AMENDMENT, MODIFICATION, AND TERMINATION




     14.1 Amendment, Modification, and Termination. Subject to Section 16.14 hereof, with
the approval of the Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan; provided, however, that (a) to the extent necessary and desirable to comply with
any applicable law, regulation, or stock exchange rule, the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as required, and (b)
stockholder approval shall be required for any amendment to the Plan that (i) increases the number
of shares available under the Plan (other than any adjustment as provided by Article 11 hereof),
(ii) permits the Committee to grant Options with an exercise price that is below Fair Market Value
on the date of grant, or (iii) permits the Committee to extend the exercise period for an Option
beyond ten years from the date of grant. Notwithstanding any provision in this Plan to the
contrary, absent approval of the stockholders of the Company, no Option may be



19









 




amended to reduce the per share exercise price of the shares subject to such Option below the
per share exercise price as of the date the Option is granted and, except as permitted by Article
11 hereof, no Option may be granted in exchange for, or in connection with, the cancellation or
surrender of an Option having a higher per share exercise price.




     14.2 Awards Previously Granted. Except with respect to amendments made pursuant to
Section 16.14 hereof, no termination, amendment, or modification of the Plan shall adversely affect
in any material way any Award previously granted pursuant to the Plan without the prior written
consent of the Participant.



ARTICLE 15.




     15.1 Restrictions on Shares. Shares of Stock issued to a Participant in respect of
any Award shall be subject to such terms and conditions as the Committee shall determine in its
sole discretion, including, without limitation, restrictions on the transferability of such shares,
the right of the Company to repurchase such shares, the right of the Company to require that such
shares be transferred in the event of certain transactions, a right of first refusal in favor of
the Company with respect to permitted transfers of such shares, tag-along rights, bring-along
rights, redemption and co-sale rights and voting requirements. Such terms and conditions may, in
the Committee’s sole discretion, be contained in an applicable Award Agreement, exercise notice,
stockholders agreement, voting agreement or in such other agreement as the Committee shall
determine, in each case in a form prescribed by the Committee in its sole discretion. The issuance
of such shares shall be conditioned on the Participant’s agreement to such terms and conditions
and, at the Company’s request, the Participant’s entering into such agreement or agreements.



ARTICLE 16.




GENERAL PROVISIONS




     16.1 No Rights to Awards. No Eligible Individual or other person shall have any claim
to be granted any Award pursuant to the Plan, and neither the Company nor the Committee is
obligated to treat Eligible Individuals, Participants or any other persons uniformly.



     16.2 No Stockholders Rights. Except as otherwise provided herein, a Participant shall
have none of the rights of a stockholder with respect to shares of Stock covered by any Award until
the Participant becomes the record owner of such shares of Stock.



     16.3 Withholding. The Company or any Subsidiary shall have the authority and the
right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient
to satisfy federal, state, local and foreign taxes (including the Participant’s employment tax
obligations) required by law to be withheld with respect to any taxable event concerning a
Participant arising as a result of this Plan. Unless otherwise determined by the Committee, the
Company shall, in satisfaction of the foregoing requirement, withhold shares of Stock otherwise
issuable under an Award having a Fair Market Value equal to the sums required to be withheld, and
the Participant’s acceptance of an Award hereunder shall be deemed to constitute the Participant’s
agreement to such withholding of shares. Notwithstanding the foregoing, the



20









 




Committee, in its sole discretion may allow the Participant to satisfy such withholding
requirement through any other means permitted by applicable law, including, without limitation,
payment in cash, payroll deduction, or the return of other shares of Stock owned by the
Participant. Notwithstanding any other provision of the Plan, the number of shares of Stock which
may be withheld with respect to the issuance, vesting, exercise or payment of any Award (or which
may be repurchased from the Participant of such Award within six months (or such other period as
may be determined by the Committee) after such shares of Stock were acquired by the Participant
from the Company) in order to satisfy the Participant’s federal, state, local and foreign income
and payroll tax liabilities with respect to the issuance, vesting, exercise or payment of the Award
shall be limited to the number of shares which have a Fair Market Value on the date of withholding
or repurchase equal to the aggregate amount of such liabilities based on the minimum legally
required withholding rates for federal, state, local and foreign income tax and payroll tax
purposes that are applicable to such supplemental taxable income.




     16.4 No Right to Employment or Services. Nothing in the Plan or any Award Agreement
shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate
any Participant’s employment or services at any time, nor confer upon any Participant any right to
continue in the employ or service of the Company or any Subsidiary.



     16.5 Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan for
incentive compensation. With respect to any payments not yet made to a Participant pursuant to an
Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights
that are greater than those of a general creditor of the Company or any Subsidiary.



     16.6 Indemnification. To the extent allowable pursuant to applicable law, each member
of the Committee or of the Board shall be indemnified and held harmless by the Company from any
loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in
connection with or resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure to act pursuant to
the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in
such action, suit, or proceeding against him or her; provided he or she gives the Company an
opportunity, at its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be entitled pursuant to
the Company’s Certificate of Incorporation or bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.



     16.7 Relationship to Other Benefits. No payment pursuant to the Plan 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 except to
the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.



     16.8 Expenses. The expenses of administering the Plan shall be borne by the Company
and its Subsidiaries.



21









 





     16.9 Titles and Headings. The titles and headings of the Sections in the Plan are for
convenience of reference only and, in the event of any conflict, the text of the Plan, rather than
such titles or headings, shall control.



     16.10 Fractional Shares. No fractional shares of Stock shall be issued and the
Committee shall determine, in its 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.



     16.11 Limitations Applicable to Section 16 Persons. Notwithstanding any other
provision of the Plan, the Plan, and any Award granted or awarded to any Participant who is then
subject to Section 16 of the Exchange Act, 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 under the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.



     16.12 Government and Other Regulations. The obligation of the Company to make payment
of awards in Stock or otherwise shall be subject to all applicable laws, rules, and regulations,
and to such approvals by government agencies as may be required. The Company shall be under no
obligation to register pursuant to the Securities Act, as amended, any of the shares of Stock paid
pursuant to the Plan. If the shares paid pursuant to the Plan may in certain circumstances be
exempt from registration pursuant to the Securities Act, as amended, the Company may restrict the
transfer of such shares in such manner as it deems advisable to ensure the availability of any such
exemption.



     16.13 Governing Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of Delaware.



     16.14 Section 409A. To the extent that the Committee determines that any Award
granted under the Plan is subject to Section 409A of the Code, the Award Agreement evidencing such
Award shall incorporate the terms and conditions required by Section 409A of the Code. To the
extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Section
409A of the Code and Department of Treasury regulations and other interpretive guidance issued
thereunder, including without limitation any such regulations or other guidance that may be issued
after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event
that following the Effective Date the Committee determines that any Award 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 Effective Date), the Committee may adopt such amendments to the
Plan and the applicable Award Agreement or adopt other policies and procedures (including
amendments, policies and procedures with retroactive effect), or take any other actions, that the
Committee determines are necessary or appropriate to (a) exempt the Award from Section 409A of the
Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award,
or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury
guidance.



22









 





* * * * *




     I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of Vought
Aircraft Industries, Inc. on November 2, 2006.



* * * * *




     I hereby certify that the foregoing Plan was approved by the stockholders of Vought Aircraft
Industries, Inc. on November 2, 2006.



     Executed on this 3rd day of November, 2006.



	 	 	 
	 	 	/s/ Kevin P. McGlinchey
	 	 	/s/ Kevin P. McGlinchey
	 

	 	Kevin P. McGlinchey
	 

	 	Corporate Secretary







23