Document:

Exhibit 10.5

THE PEOPLES NATIONAL BANK
Salary Continuation Agreement
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                            THE PEOPLES NATIONAL BANK
                          SALARY CONTINUATION AGREEMENT

         THIS SALARY  CONTINUATION  AGREEMENT (the  "Agreement") is adopted this
24th day of October,  2006, by and between THE PEOPLES NATIONAL BANK, a national
commercial bank located in Easley,  South Carolina (the "Bank") and Lewis Andrew
Westbrook III (the "Executive").

         The purpose of this Agreement is to provide  specified  benefits to the
Executive,  a member  of a select  group of  management  or  highly  compensated
employees who contribute  materially to the continued growth,  development,  and
future  business  success of the Bank.  This Agreement shall be unfunded for tax
purposes and for purposes of Title I of the Employee  Retirement Income Security
Act of 1974 ("ERISA"), as amended from time to time.

                                    Article 1
                                   Definitions

         Whenever used in this Agreement,  the following words and phrases shall
have the meanings specified:  1.1 "Beneficiary" means each designated person, or
the estate of the deceased  Executive,  entitled to benefits,  if any,  upon the
death of the Executive determined pursuant to Article 4.

1.2      "Beneficiary  Designation Form" means the form established from time to
         time by the Plan Administrator that the Executive completes, signs, and
         returns  to  the  Plan   Administrator   to   designate   one  or  more
         Beneficiaries.

1.3      "Board"  means the Board of  Directors of the Bank as from time to time
         constituted.

1.4      "Change in Control" means,  with respect to an Executive,  a "change in
         ownership"  or a  "change  in  effective  control"  of the  Bank  or an
         affiliated  corporation,  as described in Treasury  Regulations Section
         1.409A-3(g)(5)  (which  events are  collectively  referred to herein as
         "Change in Control  events").  Notwithstanding  any provision herein to
         the contrary,  to qualify as a Change in Control, the occurrence of the
         Change  in  Control  event  must be  objectively  determinable  and any
         requirement  that any  person,  such as the  Board or the  Compensation
         Committee,  certify the occurrence of a Change in Control event must be
         strictly  ministerial and not involve any discretionary  authority.  To
         constitute a Change in Control with respect to an Executive, the Change
         in  Control  event  must  relate to (i) the  corporation  for which the
         Executive is performing  services at the time of the Change in Control;
         (ii) the  corporation  that is liable for the  payment of the  deferred
         compensation;  or (iii) a corporation that is a majority shareholder of
         a corporation  identified  in  subparagraph  (i) or (ii) above,  or any
         corporation in a chain of corporations  in which each  corporation is a

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         majority  shareholder of another  corporation in the chain, ending in a
         corporation identified in subparagraph (i) or (ii) above.

         (a)      A "change in ownership"  of a  corporation  occurs on the date
                  that any one  person,  or more  than one  person  acting  as a
                  group,  acquires  ownership of stock of the corporation  that,
                  together with stock held by such person or group,  constitutes
                  more than 50 percent of the total fair  market  value or total
                  voting power of the stock of such corporation. However, if any
                  one  person,  or more than one  person  acting as a group,  is
                  considered  to own more  than 50  percent  of the  total  fair
                  market  value  or  total  voting  power  of  the  stock  of  a
                  corporation,  the acquisition of additional  stock by the same
                  person  or  persons  is not  considered  to cause a change  in
                  ownership  of the  corporation  (or to cause a  change  in the
                  effective  control of the  corporation  (within the meaning of
                  paragraph (b) below)).

         (b)      Notwithstanding  that a corporation has not undergone a change
                  in ownership under paragraph (a) above, a "change in effective
                  control" of a corporation occurs on the date that either:

                  (i)      Any one person,  or more than one person  acting as a
                           group,  acquires (or has acquired during the 12-month
                           period   ending  on  the  date  of  the  most  recent
                           acquisition  by such person or persons)  ownership of
                           stock of the  corporation  possessing  35  percent or
                           more of the total  voting  power of the stock of such
                           corporation; or

                  (ii)     A majority of members of the  corporation's  board of
                           directors is replaced  during any 12-month  period by
                           directors  whose   appointment  or  election  is  not
                           endorsed   by  a  majority  of  the  members  of  the
                           corporation's board of directors prior to the date of
                           the appointment or election.

         For purposes of this paragraph (b), the term corporation  refers solely
         to the relevant corporation identified in the opening paragraph of this
         Section 1.4, for which no other corporation is a majority shareholder.

1.5      "Code" means the Internal Revenue Code of 1986, as amended.

1.6      "Disability" means the Executive's inability as a result of physical or
         mental incapacity to substantially perform his duties for the Bank on a
         full-time  basis for a period of six (6)  months  as  determined  by an
         independent  physician selected with the approval of both the Executive
         and the Bank.

1.7      "Early   Termination"  means  Separation  from  Service  before  Normal
         Retirement  Age  except  when  such   Separation  from  Service  occurs
         following  a  Change  in  Control  or  due  to  death,  Disability,  or
         Termination for Cause.

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1.8      "Effective Date" means October 1, 2006.

1.9      "Final  Pay"  means the  Executive's  highest  annualized  base  salary
         (before reduction for compensation  deferred pursuant to all qualified,
         non-qualified,  and Code  Section  125 plans)  from the three (3) years
         prior to Separation  from Service,  including the year such  Separation
         from Service occurs.

1.10     "Normal  Retirement  Age" means the Executive  attaining age sixty-five
         (65).

1.11     "Normal  Retirement  Date" means the later of Normal  Retirement Age or
         Separation from Service.

1.12     "Plan Administrator" means the plan administrator  described in Article
         6.

1.13     "Plan Year" means each  twelve-month  period  commencing on October 1st
         and ending on September  30th of each year. The initial Plan Year shall
         commence  on the  Effective  Date  of  this  Agreement  and  end on the
         following September 30th.

1.14     "Projected Benefit" means fifteen percent (15%) of Projected Final Pay.

1.15     "Projected  Final Pay" means Final Pay  increased  by four percent (4%)
         annually, until Normal Retirement Age.

1.16     "Separation  from Service"  means the  termination  of the  Executive's
         employment with the Bank and all affiliated entities within the meaning
         of  Sections  414(b) and  414(c) of the Code,  for  reasons  other than
         death.  Whether a  Separation  from Service  takes place is  determined
         based on the facts and circumstances surrounding the termination of the
         Executive's  employment and whether the Bank and the Executive intended
         for  the  Executive  to  provide  significant  services  for  the  Bank
         following such  termination.  A termination  of employment  will not be
         considered a Separation from Service if:

         (a)      the Executive  continues to provide services as an employee of
                  the Bank at an annual  rate that is  twenty  percent  (20%) or
                  more  of  the  services  rendered,  on  average,   during  the
                  immediately  preceding three full calendar years of employment
                  (or, if employed  less than three years,  such lesser  period)
                  and the  annual  remuneration  for  such  services  is  twenty
                  percent  (20%)  or more  of the  average  annual  remuneration
                  earned  during  the  final  three  full   calendar   years  of
                  employment (or, illness, such lesser period), or

         (b)      the Executive  continues to provide  services to the Bank in a
                  capacity  other than as an  employee  of the Bank at an annual
                  rate  that is  fifty  percent  (50%)  or more of the  services
                  rendered,  on average,  during the immediately preceding three
                  full calendar  years of  employment  (or if employed less than
                  three years,  such lesser period) and the annual  remuneration
                  for  such  services  is  fifty  percent  (50%)  or more of the

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                  average annual remuneration earned during the final three full
                  calendar years of employment (or if less, such lesser period).

1.17     "Specified Employee" means a key employee (as defined in Section 416(i)
         of the Code  without  regard to paragraph 5 thereof) of the Bank or any
         affiliated  entity within the meaning of Sections  414(b) and 414(c) of
         the  Code,  if any  stock  of such  entity  is  publicly  traded  on an
         established securities market or otherwise.

1.18     "Termination for Cause" means Separation from Service for:

         (a)      any  act  that  constitutes,  on the  part  of the  Executive,
                  continued  failure  to  implement  or follow  the  directives,
                  policies or procedures of the Board,  willful violation of any
                  state or federal  law or  regulation  applicable  to the Bank,
                  mis-, mal- or non-feasance of duty,  conduct  inappropriate to
                  the  Executive's  office,  or  a  willful  violation  of  this
                  Agreement  which is  demonstrably  likely to lead to injury to
                  the business or reputation of the Bank; or

         (b)      any act that  resulted or was  intended to result in direct or
                  indirect  gain to or personal  enrichment  of the Executive at
                  the expense, direct or indirect, of the Bank; or

         (c)      any act that constitutes, on the part of the Executive, fraud,
                  dishonesty,  moral turpitude, gross negligence, or intentional
                  damage to the property or business of the Bank; or

         (d)      the  conviction  (from  which no  appeal  may be or is  timely
                  taken) of the Executive of a felony; or

         (e)      the suspension or removal of the Executive by federal or state
                  banking  regulatory  authorities acting under lawful authority
                  pursuant to  provisions  of federal or state law or regulation
                  which may be in effect from time to time;

         provided,  however, that in the case of clauses (a) and (b) above, such
         conduct shall not constitute Cause:

                  (x)      unless  (i) there  shall have been  delivered  to the
                           Executive  a  written   notice   setting  forth  with
                           specificity  the reasons that the Board  believes the
                           Executive's  conduct  meets the criteria set forth in
                           clause (a) or clause (b),  (ii) the  Executive  shall
                           have been  provided  the  opportunity  to be heard in
                           person  by  the  Board   (with   assistance   of  the
                           Executive's counsel if the Executive so desires), and
                           (iii)  after  such  hearing,   the   termination   is
                           evidenced  by a  resolution  adopted in good faith by
                           two-thirds  of the  members of the Board  (other than

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                           the Executive);  provided further,  however, that, if
                           the Executive's employment is terminated by operation
                           of  the  Bylaws  of  the  Bank  as  the  result  of a
                           Disqualification  Notice (as defined in the  Bylaws),
                           as used in this paragraph (x), "Board of the Company"
                           shall  mean  the  board  of   directors   of  Peoples
                           Bancorporation, Inc.

                                    Article 2
                          Distributions During Lifetime

2.1      Normal  Retirement  Benefit.  Upon the Normal Retirement Date, the Bank
         shall distribute to the Executive the benefit described in this Section
         2.1 in lieu of any other benefit under this Article.

         2.1.1    Amount of Benefit.  The annual  benefit under this Section 2.1
                  is fifteen percent (15%) of Final Pay.

         2.1.2    Distribution of Benefit.  The Bank shall distribute the annual
                  benefit  to  the   Executive  in  twelve  (12)  equal  monthly
                  installments   commencing  on  the  first  day  of  the  month
                  following Normal  Retirement Date. The annual benefit shall be
                  distributed to the Executive for fifteen (15) years.

2.2      Early  Termination  Benefit.  Upon  Early  Termination,  the Bank shall
         distribute to the  Executive the benefit  described in this Section 2.2
         in lieu of any other benefit under this Article.

         2.2.1    Amount of Benefit.  The benefit  under this Section 2.2 is the
                  vested  percentage,  determined as of the end of the Plan Year
                  preceding Separation from Service, of the benefit described in
                  Section 2.1.1 subject to the following vesting schedule:

                                Date               Percent Vested
                                ----               --------------
                      10/31/2006 - 10/30/2007           0.35%
                      10/31/2007 - 10/30/2008           2.29%
                      10/31/2008 - 10/30/2009           5.58%
                      10/31/2009 - 10/30/2010          10.04%
                      10/31/2010 - 10/30/2011          15.51%
                      10/31/2011 - 10/30/2012          21.83%
                      10/31/2012 - 10/30/2013          28.90%
                      10/31/2013 - 10/30/2014          36.62%
                      10/31/2014 - 10/30/2015          44.93%
                      10/31/2015 - 10/30/2016          53.76%
                      10/31/2016 - 10/30/2017          57.34%
                      10/31/2017 - 10/30/2018          60.71%
                      10/31/2018 - 10/30/2019          63.94%
                      10/31/2019 - 10/30/2020          67.06%
                      10/31/2020 - 10/30/2021          70.13%

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                      10/31/2021 - 10/30/2022          73.22%
                      10/31/2022 - 10/30/2023          76.41%
                      10/31/2023 - 10/30/2024          79.82%
                      10/31/2024 - 10/30/2025          83.63%
                      10/31/2025 - 10/30/2026          88.14%
                      10/31/2026 - 5/26/2027           94.09%
                        5/27/2027 or Later            100.00%

         2.2.2    Distribution of Benefit.  The Bank shall distribute the annual
                  benefit  to  the   Executive  in  twelve  (12)  equal  monthly
                  installments   commencing  on  the  first  day  of  the  month
                  following  Normal  Retirement Age. The annual benefit shall be
                  distributed to the Executive for fifteen (15) years.

2.3      Disability Benefit. If Executive experiences a Disability which results
         in a Separation  from Service prior to Normal  Retirement Age, the Bank
         shall distribute to the Executive the benefit described in this Section
         2.3 in lieu of any other benefit under this Article.

         2.3.1    Amount of Benefit.  The benefit  under this Section 2.3 is the
                  vested  percentage,  determined as of the end of the Plan Year
                  preceding Separation from Service, of the benefit described in
                  Section 2.1.1 subject to the following vesting schedule:

                                Date               Percent Vested
                                ----               --------------
                      10/31/2006 - 10/30/2007           3.50%
                      10/31/2007 - 10/30/2008          11.43%
                      10/31/2008 - 10/30/2009          18.60%
                      10/31/2009 - 10/30/2010          25.11%
                      10/31/2010 - 10/30/2011          31.01%
                      10/31/2011 - 10/30/2012          36.38%
                      10/31/2012 - 10/30/2013          41.28%
                      10/31/2013 - 10/30/2014          45.78%
                      10/31/2014 - 10/30/2015          49.92%
                      10/31/2015 - 10/30/2016          53.76%
                      10/31/2016 - 10/30/2017          57.34%
                      10/31/2017 - 10/30/2018          60.71%
                      10/31/2018 - 10/30/2019          63.94%
                      10/31/2019 - 10/30/2020          67.06%
                      10/31/2020 - 10/30/2021          70.13%
                      10/31/2021 - 10/30/2022          73.22%
                      10/31/2022 - 10/30/2023          76.41%
                      10/31/2023 - 10/30/2024          79.82%
                      10/31/2024 - 10/30/2025          83.63%
                      10/31/2025 - 10/30/2026          88.14%
                      10/31/2026 - 5/26/2027           94.09%
                       5/27/2027 or Later             100.00%

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         2.3.2    Distribution of Benefit. The Bank shall distribute the benefit
                  to the  Executive  in twelve (12) equal  monthly  installments
                  commencing  on the  first day of the  month  following  Normal
                  Retirement Age. The annual benefit shall be distributed to the
                  Executive for fifteen (15) years.

2.4      Change in  Control  Benefit.  Upon a Change in  Control  followed  by a
         Separation from Service, the Bank shall distribute to the Executive the
         benefit  described  in this  Section  2.4 in lieu of any other  benefit
         under this Article.

         2.4.1    Amount of Benefit.  The benefit  under this Section 2.4 is one
                  hundred percent (100%) of the Projected Benefit.

         2.4.2    Distribution of Benefit.  The Bank shall distribute the annual
                  benefit  to  the   Executive  in  twelve  (12)  equal  monthly
                  installments   commencing  on  the  first  day  of  the  month
                  following  Normal  Retirement Age. The annual benefit shall be
                  distributed to the Executive for fifteen (15) years.

2.5      Restriction on Timing of Distribution. Notwithstanding any provision of
         this  Agreement  to the  contrary,  if the  Executive  is  considered a
         Specified  Employee at Separation from Service under such procedures as
         established  by the Bank in  accordance  with Section 409A of the Code,
         benefit  distributions  that are made upon  Separation from Service may
         not  commence  earlier  than  six (6)  months  after  the  date of such
         Separation  from Service.  Therefore,  in the event this Section 2.5 is
         applicable to the Executive,  any distribution which would otherwise be
         paid to the  Executive  within  the  first  six  months  following  the
         Separation  from Service shall be accumulated and paid to the Executive
         in a lump sum on the  first  day of the  seventh  month  following  the
         Separation from Service. All subsequent  distributions shall be paid in
         the manner specified.

2.6      Distributions  Upon Income  Inclusion  Under  Section 409A of the Code.
         Upon the inclusion of any portion of the benefits into the  Executive's
         income  as a  result  of the  failure  of this  non-qualified  deferred
         compensation  plan to comply with the  requirements  of Section 409A of
         the Code,  to the  extent  such tax  liability  can be  covered  by the
         liability  accrued  to  satisfy  the Bank's  obligations  to  Executive
         pursuant to this Agreement,  a distribution shall be made as soon as is
         administratively  practicable  following  the  discovery  of  the  plan
         failure.

2.7      Change in Form or Timing of Distributions. For distribution of benefits
         under this Article 2, the  Executive  and the Bank may,  subject to the
         terms of Section 8.1, amend the Agreement to delay the timing or change
         the form of distributions. Any such amendment:

         (a)      may not accelerate  the time or schedule of any  distribution,
                  except  as  provided  in  Section  409A  of the  Code  and the
                  regulations thereunder;

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         (b)      must, for benefits  distributable under Sections 2.1, 2.2, 2.3
                  and 2.4,  be made at least  twelve  (12)  months  prior to the
                  first scheduled distribution;

         (c)      must, for benefits  distributable under Sections 2.1, 2.2, 2.3
                  and 2.4, delay the commencement of distributions for a minimum
                  of five (5)  years  from the date the first  distribution  was
                  originally scheduled to be made; and

         (d)      must take effect not less than  twelve  (12) months  after the
                  amendment is made.

                                    Article 3
                              Distribution at Death

3.1      Death During Active Service.  If the Executive dies while in the active
         service of the Bank, the Bank shall  distribute to the  Beneficiary the
         benefit   described  in  this  Section  3.1.   This  benefit  shall  be
         distributed in lieu of the benefits under Article 2.

         3.1.1    Amount of Benefit.  The benefit  under this Section 3.1 is the
                  Projected Benefit.

         3.1.2    Distribution of Benefit. The Bank shall distribute the benefit
                  to the  Beneficiary  in a lump  sum  within  sixty  (60)  days
                  following  receipt  by  the  Bank  of  the  Executive's  death
                  certificate.

3.2      Death During Distribution of a Benefit. If the Executive dies after any
         benefit  distributions  have commenced  under this Agreement but before
         receiving  all such  distributions,  the Bank shall  distribute  to the
         Beneficiary  the  remaining  benefits  at the same time and in the same
         amounts  that  would have been  distributed  to the  Executive  had the
         Executive survived.

3.3      Death After  Separation  from Service But Before Benefit  Distributions
         Commence.  If the Executive is entitled to benefit  distributions under
         this  Agreement,  but dies prior to the  commencement  of said  benefit
         distributions,  the Bank shall  distribute to the  Beneficiary the same
         benefits  that the Executive was entitled to prior to death except that
         the  benefit  distributions  shall  commence  within  thirty  (30) days
         following receipt by the Bank of the Executive's death certificate.

                                    Article 4
                                  Beneficiaries

4.1      Beneficiary.  The  Executive  shall  have the  right,  at any time,  to
         designate a Beneficiary(ies) to receive any benefit distributions under
         this  Agreement  upon  the  death  of the  Executive.  The  Beneficiary
         designated  under this  Agreement may be the same as or different  from
         the beneficiary  designation  under any other plan of the Bank in which
         the Executive participates.

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4.2      Beneficiary  Designation:  Change.  The  Executive  shall  designate  a
         Beneficiary by completing and signing the Beneficiary Designation Form,
         and delivering it to the Plan  Administrator  or its designated  agent.
         The Executive's  beneficiary  designation shall be deemed automatically
         revoked  if  the  Beneficiary  predeceases  the  Executive  or  if  the
         Executive   names  a  spouse  as   Beneficiary   and  the  marriage  is
         subsequently dissolved.  The Executive shall have the right to change a
         Beneficiary  by  completing,  signing and otherwise  complying with the
         terms of the Beneficiary  Designation Form and the Plan Administrator's
         rules  and  procedures,  as in  effect  from  time to  time.  Upon  the
         acceptance by the Plan  Administrator of a new Beneficiary  Designation
         Form, all Beneficiary designations previously filed shall be cancelled.
         The  Plan  Administrator   shall  be  entitled  to  rely  on  the  last
         Beneficiary Designation Form filed by the Executive and accepted by the
         Plan Administrator prior to the Executive's death.

4.3      Acknowledgment.   No   designation   or  change  in  designation  of  a
         Beneficiary   shall  be   effective   until   received,   accepted  and
         acknowledged  in writing by the Plan  Administrator  or its  designated
         agent.

4.4      No  Beneficiary  Designation.  If the  Executive  dies  without a valid
         beneficiary designation,  or if all designated Beneficiaries predecease
         the  Executive,  then the  Executive's  spouse shall be the  designated
         Beneficiary.  If the  Executive has no surviving  spouse,  the benefits
         shall be made to the Executive's estate.

4.5      Facility of Distribution.  If the Plan Administrator  determines in its
         discretion  that a benefit is to be distributed to a minor, to a person
         declared  incompetent,  or  to  a  person  incapable  of  handling  the
         disposition  of that  person's  property,  the Plan  Administrator  may
         direct   distribution   of  such   benefit  to  the   guardian,   legal
         representative  or person  having the care or  custody  of such  minor,
         incompetent  person or incapable  person.  The Plan  Administrator  may
         require proof of incompetence,  minority or guardianship as it may deem
         appropriate prior to distribution of the benefit. Any distribution of a
         benefit  shall be a  distribution  for the account of the Executive and
         the  Executive's  Beneficiary,  as the  case  may be,  and  shall  be a
         complete  discharge  of any  liability  under  the  Agreement  for such
         distribution amount.

                                    Article 5
                               General Limitations

5.1      Termination for Cause.  Notwithstanding any provision of this Agreement
         to the contrary,  the Bank shall not  distribute any benefit under this
         Agreement if the Executive's employment with the Bank is terminated due
         to a Termination for Cause.

5.2      Suicide  or  Misstatement.  No  benefits  shall be  distributed  if the
         Executive commits suicide within two (2) years after the Effective Date
         of this  Agreement,  or if an  insurance  company  which  issued a life
         insurance  policy  covering the  Executive and owned by the Bank denies

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         coverage (i) for material  misstatements  of fact made by the Executive
         on an  application  for such  life  insurance,  or (ii)  for any  other
         reason.

5.3      Removal.  Notwithstanding  any  provision  of  this  Agreement  to  the
         contrary,  the  Bank  shall  not  distribute  any  benefit  under  this
         Agreement if the Executive is subject to a final removal or prohibition
         order  issued by an  appropriate  federal  banking  agency  pursuant to
         Section 8(e) of the Federal Deposit Insurance Act.

5.4      Forfeiture  Provision.  While  Executive  is  employed  by the Bank and
         during  the  period of time the  Executive  is  receiving  any  benefit
         payments  pursuant  to this  Agreement,  the  Executive  will not,  for
         himself or on behalf  of, or in  conjunction  with any other  person or
         persons,    company,    partnership,    limited   liability    company,
         proprietorship,  trust, company,  bank, financial services institution,
         or other entity, directly or indirectly, own, manage, operate, control,
         be employed by,  consult with,  participate  in, or be connected in any
         manner  with  the   ownership,   employment,   management,   operation,
         consulting  or  control  of any  financial  services  institution  that
         competes  with Bank. In the event of any actual breach by the Executive
         of the provisions of this forfeiture provision, all payments under this
         Agreement payable to the Executive shall  irrevocably  terminate and no
         further  amount  shall be due or payable to the  Executive  pursuant to
         this   Agreement.   Executive   specifically   acknowledges   that  the
         restrictions  as set  forth  above  are  reasonable  and  bear a  valid
         connection  with the  business  operations  of Bank,  and  specifically
         admits that Executive is capable of obtaining  suitable  employment not
         in  competition  with  Bank.  If anyone of the  restrictions  contained
         herein  shall  for any  reason  be held to be  excessively  broad as to
         duration or  geographical  area, it shall be deemed amended by limiting
         and  reducing  it so as to be  valid  and  enforceable  to  the  extent
         compatible with applicable state law as it shall then appear. Executive
         acknowledges  that the Bank would not have entered into this  Agreement
         without the forfeiture  provision  contained  herein.  This  forfeiture
         provision  shall not  prohibit the  Executive  from owning stock in any
         publicly traded company provided Executive's  ownership is five percent
         (5%) or less of the  issued  and  outstanding  stock  of such  publicly
         traded company and the Executive has no corporate  responsibility other
         than the Executive's rights as a stockholder.

                                    Article 6
                           Administration of Agreement

6.1      Plan  Administrator  Duties.  This Agreement shall be administered by a
         Plan Administrator which shall consist of the Compensation Committee of
         the Board,  or such  committee or person(s) as the Board shall appoint.
         The Plan Administrator shall administer this Agreement according to its
         express terms and shall also have the  discretion  and authority to (i)
         make,   amend,   interpret  and  enforce  all  appropriate   rules  and
         regulations for the administration of this Agreement and (ii) decide or
         resolve  any  and  all  questions  including  interpretations  of  this
         Agreement,  as may arise in connection with the Agreement to the extent
         the exercise of such  discretion  and authority  does not conflict with
         Section 409A of the Code and regulations thereunder.

                                       10
<PAGE>

6.2      Agents. In the administration of this Agreement, the Plan Administrator
         may employ agents and delegate to them such administrative duties as it
         sees fit,  (including acting through a duly appointed  representative),
         and may from time to time  consult  with  counsel who may be counsel to
         the Bank.

6.3      Binding  Effect  of  Decisions.  The  decision  or  action  of the Plan
         Administrator  with  respect  to  any  question  arising  out  of or in
         connection with the  administration,  interpretation and application of
         the Agreement and the rules and regulations promulgated hereunder shall
         be final  and  conclusive  and  binding  upon all  persons  having  any
         interest in the Agreement.

6.4      Indemnity  of Plan  Administrator.  The Bank shall  indemnify  and hold
         harmless  the  members of the Plan  Administrator  against  any and all
         claims,  losses,  damages,  expenses or  liabilities  arising  from any
         action or failure to act with respect to this Agreement,  except in the
         case of  willful  misconduct  by the Plan  Administrator  or any of its
         members.

6.5      Bank  Information.  To enable the Plan  Administrator  to  perform  its
         functions,  the Bank shall  supply full and timely  information  to the
         Plan   Administrator   on  all   matters   relating  to  the  date  and
         circumstances of the retirement,  Disability, death, or Separation from
         Service of the Executive and such other  pertinent  information  as the
         Plan Administrator may reasonably require.

6.6      Annual  Statement.   The  Plan  Administrator   shall  provide  to  the
         Executive,  within one hundred  twenty (120) days after the end of each
         Plan Year, a statement  setting  forth the  benefits to be  distributed
         under this Agreement.

                                    Article 7
                            Claims Review Procedures

7.1      Claims Procedure. An Executive or Beneficiary  ("claimant") who has not
         received benefits under the Agreement that he or she believes should be
         distributed shall make a claim for such benefits as follows:

         7.1.1    Initiation - Written Claim. The claimant  initiates a claim by
                  submitting to the Plan  Administrator  a written claim for the
                  benefits.  If such a claim relates to the contents of a notice
                  received by the claimant,  the claim must be made within sixty
                  (60) days after such notice was received by the claimant.  All
                  other claims must be made within one hundred eighty (180) days
                  of the date on which the event that  caused the claim to arise
                  occurred.   The  claim  must  state  with   particularity  the
                  determination desired by the claimant.

         7.1.2    Timing of Plan Administrator  Response. The Plan Administrator
                  shall respond to such claimant  within 90 days after receiving
                  the claim. If the Plan  Administrator  determines that special

                                       11
<PAGE>

                  circumstances  require  additional  time  for  processing  the
                  claim, the Plan  Administrator  can extend the response period
                  by an additional 90 days by notifying the claimant in writing,
                  prior  to  the  end of  the  initial  90-day  period  that  an
                  additional  period is required.  The notice of extension  must
                  set forth the special  circumstances and the date by which the
                  Plan Administrator expects to render its decision.

         7.1.3    Notice of Decision.  If the Plan Administrator  denies part or
                  all of the  claim,  the Plan  Administrator  shall  notify the
                  claimant  in writing of such  denial.  The Plan  Administrator
                  shall  write the  notification  in a manner  calculated  to be
                  understood by the claimant. The notification shall set forth:

                  (a)      The specific reasons for the denial;

                  (b)      A  reference  to  the  specific   provisions  of  the
                           Agreement on which the denial is based;

                  (c)      A  description  of  any  additional   information  or
                           material  necessary  for the  claimant to perfect the
                           claim and an explanation of why it is needed;

                  (d)      An explanation of the Agreement's  review  procedures
                           and the time limits  applicable  to such  procedures;
                           and

                  (e)      A statement of the claimant's  right to bring a civil
                           action  under  ERISA  Section  502(a)   following  an
                           adverse benefit determination on review.

7.2      Review Procedure.  If the Plan Administrator  denies part or all of the
         claim,  the  claimant  shall have the  opportunity  for a full and fair
         review by the Plan Administrator of the denial, as follows:

         7.2.1    Initiation  - Written  Request.  To initiate  the review,  the
                  claimant,   within   60  days   after   receiving   the   Plan
                  Administrator's  notice  of  denial,  must  file with the Plan
                  Administrator a written request for review.

         7.2.2    Additional  Submissions  -  Information  Access.  The claimant
                  shall then have the  opportunity to submit  written  comments,
                  documents,  records  and  other  information  relating  to the
                  claim. The Plan Administrator shall also provide the claimant,
                  upon  request  and free of charge,  reasonable  access to, and
                  copies  of,  all  documents,  records  and  other  information
                  relevant (as defined in applicable  ERISA  regulations) to the
                  claimant's claim for benefits.

         7.2.3    Considerations on Review. In considering the review,  the Plan
                  Administrator  shall  take  into  account  all  materials  and
                  information  the  claimant  submits  relating  to  the  claim,
                  without  regard to whether such  information  was submitted or
                  considered in the initial benefit determination.

                                       12
<PAGE>

         7.2.4    Timing of Plan Administrator  Response. The Plan Administrator
                  shall respond in writing to such claimant within 60 days after
                  receiving  the request for review.  If the Plan  Administrator
                  determines that special  circumstances require additional time
                  for processing the claim,  the Plan  Administrator  can extend
                  the response  period by an additional 60 days by notifying the
                  claimant  in writing,  prior to the end of the initial  60-day
                  period that an  additional  period is required.  The notice of
                  extension  must set forth the  special  circumstances  and the
                  date by which the Plan  Administrator  expects  to render  its
                  decision.

         7.2.5    Notice of Decision.  The Plan  Administrator  shall notify the
                  claimant  in  writing  of its  decision  on  review.  The Plan
                  Administrator   shall  write  the  notification  in  a  manner
                  calculated to be understood by the claimant.  The notification
                  shall set forth:

                  (a)      The specific reasons for the denial;

                  (b)      A  reference  to  the  specific   provisions  of  the
                           Agreement on which the denial is based;

                  (c)      A statement that the claimant is entitled to receive,
                           upon  request and free of charge,  reasonable  access
                           to, and copies of, all  documents,  records and other
                           information  relevant (as defined in applicable ERISA
                           regulations)  to the  claimant's  claim for benefits;
                           and

                  (d)      A statement of the claimant's  right to bring a civil
                           action under ERISA Section 502(a).

7.3      Special  Procedures  Applicable  to Disability  Claims.  If a claim for
         benefits  under the Agreement is contingent on a  determination  by the
         Plan  Administrator  that the Executive suffers from a Disability,  the
         claimant shall receive a written response to the initial claim from the
         Plan  Administrator  within 45 days,  rather  than 90 days.  If special
         circumstances require an extension, the Plan Administrator shall notify
         the claimant within the 45-day  processing  period that additional time
         is needed. If the Plan Administrator requests additional information so
         it can process the claim,  the  claimant  will have at least 45 days in
         which to provide the  information.  Otherwise,  the  initial  extension
         cannot exceed 30 days. If circumstances require further extension,  the
         Plan Administrator will again notify the claimant, this time before the
         end of the initial 30-day  extension.  The notice will state the date a
         decision  can be  expected.  In no event will a decision  be  postponed
         beyond  an  additional  30  days  after  the  end of the  first  30-day
         extension.   The   claimant   may   request   a  review   of  the  Plan
         Administrator's  decision  regarding  the  Disability  claim within 180
         days,  rather than 60 days. The review must be conducted by a fiduciary
         different from the fiduciary who originally  denied the claim,  and the
         fiduciary  also cannot be  subordinate  to the fiduciary who originally
         denied the claim.  If the  original  denial of the claim was based on a
         medical  judgment,   the  reviewing  fiduciary  must  consult  with  an

                                       13
<PAGE>

         appropriate  health  care  professional  who was not  consulted  on the
         original claim and who is not subordinate to someone who was The review
         must  identify  the  medical or  vocational  experts  consulted  on the
         original claim. The claimant may request,  in writing,  a list of those
         medical or vocational experts.  The claimant will receive notice of the
         reviewing  fiduciary's  final decision  regarding the Disability  claim
         within 45 days, rather than 60 days, of the request for review.

7.4      Legal Action. A claimant's  compliance with the foregoing provisions of
         this Article 7 is a mandatory  prerequisite  to a  claimant's  right to
         commence any legal action with respect to any claim for benefits  under
         this Agreement.

                                    Article 8
                           Amendments and Termination

8.1      Amendments.  This Agreement may be amended only by a written  agreement
         signed  by  the  Bank  and  the  Executive.   However,   the  Bank  may
         unilaterally amend this Agreement to conform with written directives to
         the Bank from its  auditors  or banking  regulators  or to comply  with
         legislative or tax law,  including without  limitation  Section 409A of
         the  Code  and  any  and  all  regulations  and  guidance   promulgated
         thereunder.

8.2      Plan Termination Generally.  This Agreement may be terminated only by a
         written  agreement  signed by the Bank and the  Executive.  The benefit
         shall be the Early Termination  benefit as of the date the Agreement is
         terminated.  Except as provided in Section 8.3, the termination of this
         Agreement  shall  not  cause a  distribution  of  benefits  under  this
         Agreement.  Rather, upon such termination benefit distributions will be
         made at the earliest  distribution  event  permitted under Article 2 or
         Article 3.

8.3      Plan Terminations Under Section 409A.  Notwithstanding  anything to the
         contrary in Section 8.2, if the Bank  terminates  this Agreement in the
         following circumstances:

         (a)      Within thirty (30) days before,  or twelve (12) months after a
                  Change in Control, provided that all distributions are made no
                  later than twelve (12) months  following  such  termination of
                  the  Agreement  and  further  provided  that  all  the  Bank's
                  arrangements which are substantially  similar to the Agreement
                  are  terminated so the Executive and all  participants  in the
                  similar  arrangements  are  required to receive all amounts of
                  compensation deferred under the terminated arrangements within
                  twelve (12) months of the termination of the arrangements;

         (b)      Upon  the  Bank's  dissolution  or  with  the  approval  of  a
                  bankruptcy  court provided that the amounts deferred under the
                  Agreement are included in the Executive's  gross income in the
                  latest  of (i)  the  calendar  year  in  which  the  Agreement
                  terminates;  (ii) the calendar  year in which the amount is no
                  longer subject to a substantial  risk of forfeiture;  or (iii)
                  the  first  calendar  year  in  which  the   distribution   is
                  administratively practical; or

                                       14
<PAGE>

         (c)      Upon the Bank's  termination of this and all other non-account
                  balance  plans (as  referenced  in Section 409A of the Code or
                  the regulations  thereunder),  provided that all distributions
                  are made no earlier  than twelve (12) months and no later than
                  twenty-four  (24) months following such  termination,  and the
                  Bank does not adopt any new  non-account  balance  plans for a
                  minimum  of  five  (5)  years   following  the  date  of  such
                  termination;

         the Bank may distribute the Early Termination benefit, determined as of
         the date of the  termination  of the  Agreement,  to the Executive in a
         lump sum subject to the above terms.

                                    Article 9
                                  Miscellaneous

9.1      Binding  Effect.  This Agreement shall bind the Executive and the Bank,
         and  their  beneficiaries,  survivors,  executors,  administrators  and
         transferees.

9.2      No  Guarantee  of  Employment.  This  Agreement  is not a contract  for
         employment.  It does not give the  Executive  the right to remain as an
         employee of the Bank,  nor does it  interfere  with the Bank's right to
         discharge  the  Executive.  It also does not require the  Executive  to
         remain  an  employee  nor  interfere  with  the  Executive's  right  to
         terminate employment at any time.

9.3      Non-Transferability.  Benefits  under  this  Agreement  cannot be sold,
         transferred, assigned, pledged, attached or encumbered in any manner.

9.4      Tax Withholding  and Reporting.  The Bank shall withhold any taxes that
         are  required to be withheld,  including  but not limited to taxes owed
         under  Section 409A of the Code and  regulations  thereunder,  from the
         benefits provided under this Agreement. The Executive acknowledges that
         the Bank's  sole  liability  regarding  taxes is to forward any amounts
         withheld to the appropriate taxing  authority(ies).  Further,  the Bank
         shall satisfy all applicable  reporting  requirements,  including those
         under Section 409A of the Code and regulations thereunder.

9.5      Applicable  Law.  The  Agreement  and all  rights  hereunder  shall  be
         governed  by the laws of the  State of South  Carolina,  except  to the
         extent preempted by the laws of the United States of America.

9.6      Unfunded  Arrangement.  The Executive and the  Beneficiary  are general
         unsecured  creditors of the Bank for the distribution of benefits under
         this Agreement.  The benefits represent the mere promise by the Bank to
         distribute such benefits. The rights to benefits are not subject in any
         manner to anticipation, alienation, sale, transfer, assignment, pledge,
         encumbrance,  attachment, or garnishment by creditors. Any insurance on
         the Executive's life or other informal funding asset is a general asset
         of the Bank to which the Executive and Beneficiary have no preferred or
         secured claim.

                                       15
<PAGE>

9.7      Reorganization.  The Bank shall not merge or  consolidate  into or with
         another bank, or reorganize, or sell substantially all of its assets to
         another  bank,  firm,  or person  unless such  succeeding or continuing
         bank, firm, or person agrees to assume and discharge the obligations of
         the Bank under this Agreement.  Upon the occurrence of such event,  the
         term "Bank" as used in this  Agreement  shall be deemed to refer to the
         successor or survivor bank.

9.8      Entire  Agreement.  This  Agreement  constitutes  the entire  agreement
         between the Bank and the Executive as to the subject matter hereof.  No
         rights are granted to the Executive by virtue of this  Agreement  other
         than those specifically set forth herein.

9.10     Interpretation.  Wherever the  fulfillment of the intent and purpose of
         this Agreement  requires,  and the context will permit,  the use of the
         masculine gender includes the feminine and use of the singular includes
         the plural.

9.11     Alternative  Action.  In the event it shall become  impossible  for the
         Bank or the Plan  Administrator  to perform  any act  required  by this
         Agreement, the Bank or Plan Administrator may in its discretion perform
         such  alternative act as most nearly carries out the intent and purpose
         of this  Agreement and is in the best  interests of the Bank,  provided
         that such alternative acts do not violate Section 409A of the Code.

9.12     Headings.  Article and section  headings are for  convenient  reference
         only and shall not control or affect the meaning or construction of any
         of its provisions.

9.13     Validity.  In case any provision of this Agreement  shall be illegal or
         invalid for any reason,  said illegality or invalidity shall not affect
         the remaining  parts hereof,  but this Agreement shall be construed and
         enforced  as if such  illegal  and  invalid  provision  has never  been
         inserted herein.

9.14     Notice.  Any notice or filing  required or permitted to be given to the
         Bank or Plan Administrator  under this Agreement shall be sufficient if
         in writing and hand-delivered, or sent by registered or certified mail,
         to the address below:

                       The Peoples National Bank
                       1800 East Main Street
                       Easley, SC  29640

         Such notice  shall be deemed  given as of the date of  delivery  or, if
         delivery is made by mail,  as of the date shown on the  postmark on the
         receipt  for  registration  or  certification.

         Any notice or filing required or permitted to be given to the Executive
         under  this   Agreement   shall  be   sufficient   if  in  writing  and
         hand-delivered,  or sent by mail,  to the  last  known  address  of the
         Executive.

                                       16
<PAGE>

9.15     Compliance  with Section  409A.  This  Agreement  shall at all times be
         administered  and the provisions of this Agreement shall be interpreted
         consistent  with the  requirements  of Section 409A of the Code and any
         and all regulations  and similar  guidance  thereunder,  including such
         regulations  as may be  promulgated  after the  Effective  Date of this
         Agreement.

         IN WITNESS WHEREOF, the Executive and a duly authorized  representative
of the Bank have signed this Agreement.

Executive:                             BANK:

                                       THE PEOPLES NATIONAL BANK

                                       By:
                                           -------------------------------------
-----------------------------
Lewis Andrew Westbrook III
                                       Title:
                                              ----------------------------------

                                       17
<PAGE>

{  }     New Designation
{  }     Change in Designation

I, Lewis Andrew Westbrook, III, designate the following as Beneficiary under the
Agreement:

Primary:

-----------------------------------------        -----%

-----------------------------------------        -----%

Contingent:

-----------------------------------------        -----%

-----------------------------------------        -----%

Notes:
  o  Please PRINT CLEARLY or TYPE the names of the beneficiaries.
  o  To name a trust as Beneficiary, please provide the name of the
     trustee(s) and the exact name and date of the trust agreement.
  o  To name your estate as  Beneficiary,  please write  "Estate of
     [your name]".
  o  Be  aware  that  none  of the  contingent  beneficiaries  will
     receive  anything  unless  ALL  of the  primary  beneficiaries
     predecease you.

I understand  that I may change these  beneficiary  designations by delivering a
new written designation to the Plan Administrator, which shall be effective only
upon receipt and acknowledgment by the Plan  Administrator  prior to my death. I
further  understand that the designations  will be automatically  revoked if the
Beneficiary predeceases me, or, if I have named my spouse as Beneficiary and our
marriage is subsequently dissolved.

Name:          Lewis Andrew Westbrook, III

Signature:    _______________________________        Date:    _______

Received by the Plan Administrator this ________ day of __________________, 2___

By:       _________________________________

Title:    _________________________________

                                       18exv10w12

 

Exhibit 10.12

      

SPIRIT AEROSYSTEMS

HOLDINGS, INC.

UNION EQUITY

PARTICIPATION PLAN

(INITIAL PUBLIC OFFERING)

      

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I — PURPOSE
	 	 	1	 
	 
	 	 	 	 
	Section 1.01. Purpose
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II — DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	Section 2.01. Affiliate
	 	 	2	 
	Section 2.02. Beneficiary
	 	 	2	 
	Section 2.03. Board of Directors or Board
	 	 	2	 
	Section 2.04. Closing Date
	 	 	2	 
	Section 2.05. Committee
	 	 	2	 
	Section 2.06. Common Stock
	 	 	2	 
	Section 2.07. Companies
	 	 	2	 
	Section 2.08. Effective Date
	 	 	2	 
	Section 2.09. Eligible Employees
	 	 	2	 
	Section 2.10. Initial Public Offering
	 	 	2	 
	Section 2.11. Measurement Date
	 	 	2	 
	Section 2.12. Onex Investors
	 	 	2	 
	Section 2.13. Net Proceeds
	 	 	3	 
	Section 2.14. Participant
	 	 	3	 
	Section 2.15. Plan Administration Expenses
	 	 	3	 
	Section 2.16. Proceeds
	 	 	3	 
	Section 2.17. Threshold Price
	 	 	3	 
	 
	 	 	 	 
	ARTICLE III — ELIGIBLE EMPLOYEES
	 	 	3	 
	 
	 	 	 	 
	Section 3.01. Eligible Employees
	 	 	3	 
	 
	 	 	 	 
	ARTICLE IV — APPRECIATION RIGHTS
	 	 	3	 
	 
	 	 	 	 
	Section 4.01. Issuance of Appreciation Rights
	 	 	3	 
	Section 4.02. Vesting; Calculation of Net Proceeds
	 	 	4	 
	Section 4.03. Allocation of Net Proceeds
	 	 	4	 
	Section 4.04. Payment of Net Proceeds
	 	 	5	 
	Section 4.05. Condition to Receipt of Common Stock
	 	 	6	 
	Section 4.06. Securities Laws
	 	 	6	 
	Section 4.07. No Rights of Stockholder; Non-Transferability
	 	 	6	 
	Section 4.08. Adjustments upon Changes in Capitalization
	 	 	6	 
	 
	 	 	 	 
	ARTICLE V — CERTAIN RIGHTS AND OBLIGATIONS OF THE PARTICIPANTS
	 	 	7	 
	 
	 	 	 	 
	Section 5.01 Legends
	 	 	7	 
	Section 5.02. Plan Administration Expenses
	 	 	7	 
	 
	 	 	 	 
	ARTICLE VI — ADMINISTRATION
	 	 	8	 
	 
	 	 	 	 
	Section 6.01. Committee
	 	 	8	 
	Section 6.02. Union Observers
	 	 	8	 
	 
	 	 	 	 
	ARTICLE VII — AMENDMENT AND TERMINATION
	 	 	8	 

 - i -

 

 

	 	 	 	 	 
	 	 	Page	 
	Section 7.01. Amendment and Termination
	 	 	8	 
	Section 7.02. Termination of Appreciation Rights
	 	 	9	 
	 
	 	 	 	 
	ARTICLE VIII — MISCELLANEOUS
	 	 	9	 
	 
	 	 	 	 
	Section 8.01. Effective Date
	 	 	9	 
	Section 8.02. Distributions Net of Withholding
	 	 	9	 
	Section 8.03. Governing Law
	 	 	9	 
	Section 8.04. Headings
	 	 	10	 
	Section 8.05. Notices
	 	 	10	 
	Section 8.06. Severability
	 	 	10	 
	Section 8.07. Gender and Number
	 	 	10	 

 - ii -

 

 

SPIRIT AEROSYSTEMS HOLDINGS, INC.

UNION EQUITY PARTICIPATION PLAN

(Initial Public Offering)

     WHEREAS, Spirit AeroSystems Holdings, Inc. (the “Company”) owns all of the outstanding capital
stock of Spirit AeroSystems, Inc., a Delaware corporation (“Spirit”), which acquired the
Wichita/Tulsa Division of Boeing Commercial Airplanes (the “Wichita/Tulsa Operations”) on the
Closing Date (as defined below); and

     WHEREAS, certain of the employees who worked in the Wichita/Tulsa Operations are represented
by one of three unions: The International Association of Machinists and Aerospace Workers (the
“IAM”), the United Automobile, Aerospace & Agricultural Workers of America (the “UAW”) or the
International Brotherhood of Electrical Workers (the “IBEW”, and together with the IAM and UAW, the
“Unions”); and

     WHEREAS, as part of its initial collective bargaining agreements with the Unions, Spirit
agreed to establish an equity participation program for certain of the former employees of The
Boeing Company who became employed by Spirit as of June 17, 2005 (or thereafter and immediately
following approved leaves of absence) and met other specified criteria (the “Eligible Employees,”
as defined herein); and

     WHEREAS, the Company agreed to issue, pursuant to such equity program, certain rights tied to
the value of the Company’s Common Stock (the “Appreciation Rights” or “Rights”) for the benefit of
the Eligible Employees, which Rights would vest upon the first to occur of certain defined
triggering events (each an “Exercise Event”), including certain significant sales of Common Stock
by the Onex Investors, certain mergers of the Company, a sale of all or substantially all of the
assets of the Company or Spirit, a dividend recapitalization of the Company, or an Initial Public
Offering (as defined herein); and

     WHEREAS, the Company is planning such an Initial Public Offering, and wishes to establish an
equity participation program related thereto; and

     WHEREAS, the Board of Directors of the Company has reviewed the terms and provisions hereof
and found them satisfactory;

     NOW, THEREFORE, the Company hereby adopts the Plan on the terms and conditions set forth
herein, which Plan shall be known as the “Spirit AeroSystems Holdings, Inc. Union Equity
Participation Plan (Initial Public Offering).”

ARTICLE I — PURPOSE

     Section 1.01. Purpose. The purposes of the Plan are to strengthen the ability of the Company and Spirit to retain and
motivate the Eligible Employees, and to increase the identity of interests of such employees with
those of the Company’s stockholders. Upon approval of the Plan by the Board of Directors of the Company, the Company will issue the Appreciation Rights, which will vest on the Measurement
Date, and the Net Proceeds (as defined herein) will be

 

 

allocated among the Eligible Employees and
become payable, in each case as more fully described, and subject to the terms and conditions set
forth, herein.

ARTICLE II — DEFINITIONS

     For purposes of the Plan, the following terms shall have the following meanings, unless the
context clearly indicates otherwise:

     Section 2.01. Affiliate
means with respect to any person or entity, any other person or entity, which directly or
indirectly controls, is controlled by or is under common control with such person or entity.

     Section 2.02. Beneficiary
means that individual, trust or estate designated by a Participant, in the manner and at the
time(s) determined by the Committee, to receive any Net Proceeds otherwise payable to such
Participant in the event that the Participant dies before receiving the entire amount of such Net
Proceeds. If a Participant dies without having made a valid Beneficiary designation, his or her
estate shall be deemed his Beneficiary.

     Section 2.03. Board of Directors or Board means the board of directors of the Company.

     Section 2.04. Closing Date means June 16, 2005.

     Section 2.05. Committee means a committee appointed by, and serving at the pleasure of, the Board of Directors for
purposes of administering the Plan, which committee shall operate under rules and procedures
established by the Board of Directors from time to time for such purpose. If no such committee is
appointed by the Board, all references to the Committee herein shall be deemed to be references to
the Board.

     Section 2.06. Common Stock means the Company’s Class A common stock, par value $0.01 per share, and Class B common stock,
par value $0.01 per share.

     Section 2.07. Companies means the Company and Spirit.

     Section 2.08. Effective Date means the date the Board of Directors approves the Plan, which date is reflected on the
signature page hereof.

     Section 2.09. Eligible Employees shall have the meaning set forth in Article III hereof.

     Section 2.10. Initial Public Offering means an initial underwritten public offering of any class of Common Stock in which such
Common Stock is registered under the Securities Act of 1933, and which involves a listing of such
stock on a national securities exchange in the United States or the NASDAQ National Market.

     Section 2.11. Measurement Date means the closing date of the Initial Public Offering.

     Section 2.12. Onex Investors means Onex Partners LP, Onex Corporation and any Affiliate of Onex Partners LP or Onex
Corporation.

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     Section 2.13. Net Proceeds shall be determined as provided in Section 4.01.

     Section 2.14. Participant means an Eligible Employee who has been allocated a portion of Net Proceeds.

     Section 2.15. Plan Administration Expenses shall have the meaning set forth in Section 5.02 hereof.

     Section 2.16. Proceeds means the product of (i) the number of shares of Common Stock covered by Appreciation Rights
which have been issued, and (ii)(a) the price to the public in the Initial Public Offering, less
(b) the per share amount of all underwriting discounts and commissions paid by the Companies or any
selling stockholders, less (c) the per share amount of any offering expenses incurred by the
Companies.

     Section 2.17. Threshold Price means a price equal to $10.00 per share, increased by 15% per year, compounded annually and
accruing daily from and including the Closing Date to but not including the Measurement Date.

ARTICLE III — ELIGIBLE EMPLOYEES

     Section 3.01. Eligible Employees. The employees who are eligible to participate in the Plan are those hourly employees of Spirit
who (a) are represented by one of the Unions or were represented by one of the Unions while
employed by Spirit, (b) are former employees of The Boeing Company who either (i) became employed
by Spirit on the day after the Closing Date, or (ii) were on an approved leave of absence on the
Closing Date and became employed by Spirit immediately upon conclusion of such leave, and (c) were
employed by Spirit for at least ninety (90) consecutive days during the period commencing on the
day after the Closing Date, and ending on December 31, 2005. Notwithstanding anything herein, no
individual Eligible Employee shall have any rights with respect to or interest in the Appreciation
Rights, or any right to be allocated any portion of any Net Proceeds and no Eligible Employee is
assured that he or she will receive an allocation of any Net Proceeds.

ARTICLE IV — APPRECIATION RIGHTS

     Section 4.01. Issuance of Appreciation Rights. Effective as of the Effective Date, the Company shall issue Appreciation Rights
covering 4,851,000 shares in the aggregate, for the benefit of the Eligible Employees. When
vested, each Appreciation Right shall be converted into the right to receive a distribution from
the Company of an amount equal to the “Net Proceeds,” if any, attributable to such Right, as
determined on the Measurement Date, as follows: (i) the excess, if any, of the Proceeds determined
with respect to such Appreciation Right over the Aggregate Threshold Price for such Appreciation
Right, minus (ii) a pro rata portion of the Plan Administration Expenses; provided, however, that,
Plan Administration Expenses shall not reduce the Net Proceeds otherwise payable by more than five
percent (5%). The “Aggregate Threshold Price” for any given Appreciation Right shall be the
Threshold Price times the number of shares covered by such Appreciation Right. The Appreciation
Rights shall not confer upon any Eligible Employee (or his or her Beneficiary) any legal or
beneficial ownership of any actual

3

 

shares of Common Stock, or any voting, governing or approval
rights of any nature with respect to the Companies.

     Section 4.02. Vesting; Calculation of Net Proceeds. All of the Appreciation Rights shall vest automatically on the Measurement Date. As soon as
practicable thereafter, the Company shall determine whether any Net Proceeds are payable, and
calculate the amount thereof. The Company’s calculation of the Net Proceeds shall be final and
binding on all parties, including but not limited to the Companies, the Unions and the
Participants. The Company shall promptly provide written notice to each of Spirit and the
Committee of the aggregate amount of Net Proceeds payable to Eligible Employees represented by each
Union or that no such Net Proceeds are payable, together with a copy of the supporting
calculations. The Company shall promptly provide a written notice to each Union of the aggregate
amount of Net Proceeds payable to Eligible Employees represented by such Union, or that no such Net
Proceeds are payable, together with a copy of the supporting calculations.

     Section 4.03. Allocation of Net Proceeds. As soon as practicable after the Measurement Date, the aggregate Net Proceeds shall be allocated
among the Eligible Employees, as follows:

     (a) Eligible Employees represented by the IAM or the IBEW. Spirit shall prepare a written
report setting forth a list of Eligible Employees who have been allocated a portion of the
aggregate Net Proceeds, together with the amounts of cash and/or Common Stock to be paid to such
Eligible Employees. Spirit shall deliver a copy of such report to the Company and the Committee,
and shall notify each Eligible Employee who has been allocated Net Proceeds. The allocation shall
be made in the sole discretion of Spirit, and shall be final and binding on all persons.

     (b) Eligible Employees represented by the UAW. Spirit and the Union shall prepare a written
report setting forth a list of Eligible Employees who have been allocated a portion of the
aggregate Net Proceeds, together with the amounts of cash and/or Common Stock to be paid to such
Eligible Employees. Spirit shall deliver a copy of such report to the Company and the Committee,
and shall notify each Eligible Employee who has been allocated Net Proceeds. The allocation,
established through a collectively bargained agreement, shall be made by Spirit and the Union, in
their sole discretion, and shall be final and binding on all persons. No Eligible Employee shall
be permitted to participate in the process of determining the allocation of Net Proceeds. If
Spirit and the Union reach an impasse in bargaining over the allocation, such impasse shall be
resolved by submitting the dispute to final and binding interest arbitration by an arbitrator
selected by Spirit and the Union from a panel of seven arbitrators provided by the Federal
Mediation and Conciliation Service.

     (c) For purposes of allocating Net Proceeds pursuant to subparagraph (a) or (b) above, (i) Net
Proceeds attributable to Appreciation Rights covering 4,002,000 shares shall be allocated to
Eligible Employees represented or formerly represented by the IAM, (ii) Net Proceeds attributable
to Appreciation Rights covering 688,000 shares shall be allocated to Eligible Employees represented
or formerly represented by the UAW, and (iii) Net Proceeds attributable to Appreciation Rights
covering 161,000 shares shall be allocated to Eligible Employees represented or formerly
represented by the IBEW.

4

 

     (d) The determination of the allocation of the Net Proceeds pursuant to this Section shall be
final and binding on all persons, including without limitation the Companies, the Unions, and all
Eligible Employees, and no Eligible Employee shall have the right to challenge such allocation
other than on grounds that such allocation violates an applicable Federal, state or local
discrimination law.

     Section 4.04. Payment of Net Proceeds.

     (a) The Company may, in its sole discretion, distribute the Net Proceeds to the Participants
in (i) cash or (ii) shares of Common Stock, or any combination thereof. In the event that any
portion of the Net Proceeds is to be distributed by delivery of Common Stock, the fair market value
per share of such Common Stock, to be used for determining the amount of Net
Proceeds constituted thereby, shall be the per share price to the public in the Initial Public
Offering, before deducting underwriting discounts and commissions.

     (b) The Company shall distribute any Net Proceeds payable to a Participant (or, if he or she
dies, to his or her Beneficiary), as follows:

     (i) The portion of such Net Proceeds that is to be paid in cash shall be paid to the
Participant as soon as practicable after the Measurement Date.

     (ii) The portion of such Net Proceeds that is to be paid in shares of Common Stock shall be
distributed on the earlier of (A) the date that is 225 days following the closing of the Initial
Public Offering and (B) March 15 of the calendar year following the year in which the Measurement
Date occurs (or if such date is a Saturday, Sunday or holiday, then on the last
business day preceding such date (the “Stock Payment Date”). On the date that the cash portion of
Net Proceeds is distributed to Participants, the Company shall deliver an instruction letter (the
“Transfer Agent Instruction”) to its transfer agent (the “Transfer Agent”) setting forth the
Participants entitled to receive shares of Common Stock pursuant to this subparagraph (ii) and the
number of shares each such Participant is entitled to receive, and directing the Transfer Agent to
deliver such shares to the relevant Participants, in book entry form, on the Stock Payment Date,
subject to subparagraph (iii) and (iv) and Section 4.05 below.

     (iii) In the event a Participant is no longer an employee of the Company or any of its
Subsidiaries at the time shares of Common Stock are distributed pursuant to subparagraph (ii) above
(whether by reason of such Participant’s death or otherwise), such Participant (or if he or she has
died, his or her Beneficiary) shall receive, in lieu of shares of Common Stock, cash in an amount
equal to the number of shares of Common Stock which such Participant would otherwise be entitled to
receive, multiplied by the closing price of a share of the Common Stock on the last trading day
prior to the date on which the Common Stock is distributed, as reported by the New York Stock
Exchange, or such other exchange or inter-dealer quotation system on which the Common Stock is then
listed.

5

 

     (iv) At the time that any amount is included in the income of a Participant, as a result of
the allocation or payment of Net Proceeds (in cash or Common Stock) with respect thereto, the
Companies shall have the right to withhold from any cash or Common Stock to be distributed to such
Participant (or any other compensation or other amounts owing to such Participant in cash, Common
Stock or other property) the amount of any required tax withholding of any kind, and to take such
other action as may be necessary in their opinion to satisfy all obligations for the payment of
such taxes including, without limitation, directing the broker holding a Participant’s securities
account to sell the number of shares necessary to generate sufficient proceeds to satisfy the
required withholding amount, and to pay such proceeds to the Company. The Company, in its sole
discretion, may permit a Participant to satisfy any such tax withholding requirement by remitting a
certified check therefor to the Company or in any other form it deems acceptable, in its sole discretion. No distribution of any Net Proceeds shall be made to any Participant
until all tax withholding requirements have been satisfied.

     Section 4.05. Condition to Receipt of Common Stock. As a condition to the Company’s obligation to deliver shares of Common Stock to a Participant
pursuant to Section 4.04(b)(ii), such Participant shall have (i) opened a brokerage account with a
broker identified by the Company (such Participant’s “Brokerage Account”), (ii) provided the
Company with all account information requested by the Company in order for the Company to properly
identify the account to the Transfer Agent for deposit of the shares of Common Stock which such
Participant is entitled to receive and (iii) directed the broker to sell, upon receipt of shares of
Common Stock in the Brokerage Account, the number of shares necessary to generate sufficient
proceeds to satisfy the required tax withholding amount on such shares as more fully described in
Section 4.04(b)(iv) and to pay such proceeds to the Company. Shares of Common Stock deliverable to
a Participant pursuant to Section 4.04(b)(ii) shall be deposited in such Participant’s Brokerage
Account.

     Section 4.06. Securities Laws. Any shares of Common Stock to be distributed as Net Proceeds, and the resale thereof, shall be
subject to all applicable laws and regulations regarding the registration, marketing or sale of
securities. The Company will use commercially reasonable efforts to register on Form S-8 the
issuance of shares of Common Stock to the Participants to whom issuances of securities may be
registered on such form.

     Section 4.07. No Rights of Stockholder; Non-Transferability. Appreciation Rights shall not be subject to transfer or assignment, and the Participants shall
not have any rights of a stockholder in the Company or Spirit with respect thereto, including
without limitation, any rights with respect to voting, governance approvals or dividends.

     Section 4.08. Adjustments upon Changes in Capitalization.

     (a) In the event that, prior to the consummation of the Initial Public Offering, the
outstanding shares of Common Stock are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another company by reason of any corporate event
that is not an Exercise Event covered by another union equity participation program established by
the Companies for the benefit of the Eligible Employees, including a reorganization, merger,
consolidation, recapitalization, reclassification, stock split, combination

6

 

of shares or dividend
payable in capital stock, appropriate adjustment shall be made in the number and kind of shares of
Common Stock covered by the Appreciation Rights, and the Threshold Price. Such determination shall
be made by the Board of Directors, in its sole discretion, and shall be final and binding on all
persons, including without limitation the Companies, the Unions and the Eligible Employees.

     (b) In the event that, following the delivery by the Company of the Transfer Agent Instruction
but prior to the Stock Payment Date, the outstanding shares of Common Stock are changed into or
exchanged for a different number or kind of shares or other securities of the Company or of another
company by reason of any corporate event, including a reorganization, merger, consolidation,
recapitalization, reclassification, stock split, combination of shares or dividend payable in
capital stock, appropriate adjustment shall be made in the consideration to paid on the Stock
Payment Date, either by adjusting the number and kind of shares to be delivered or by substituting
more appropriate consideration for the shares of Common Stock to be delivered, in order for the
Participants to receive the effect of such corporate event, and appropriate instructions shall be
delivered to the Transfer Agent amending the Transfer Agent Instruction. Such determination shall
be made by the Board of Directors, in its sole discretion, and shall be final and binding on all
persons, including without limitation the Companies, the Unions and the Eligible Employees.

ARTICLE V — CERTAIN RIGHTS AND OBLIGATIONS OF THE PARTICIPANTS

     Section 5.01. Legends. In the event that shares of Common Stock are distributed to
Participants in full or partial satisfaction of the Net Proceeds amount, then the Company shall
place such legends on each certificate representing such shares that it shall determine, in its
sole discretion, are necessary, appropriate or desirable, including, if applicable, the following
legends endorsed conspicuously thereupon:

“THE SALE, ENCUMBRANCE OR OTHER DISPOSITION OF THE SHARES OF STOCK REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF THE ISSUER’S UNION EQUITY
PARTICIPATION PLAN (INITIAL PUBLIC OFFERING) A COPY OF WHICH MAY BE INSPECTED AT THE
PRINCIPAL OFFICE OF THE ISSUER OR OBTAINED FROM THE ISSUER WITHOUT CHARGE.”

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD (WITHIN THE MEANING OF SUCH ACT) IN THE
ABSENCE OF REGISTRATION UNDER SUCH ACT OR AN EXEMPTION THEREFROM.”

     Section 5.02. Plan Administration Expenses. The Companies will incur certain costs and expenses in connection with the administration of the
Plan or any other union equity participation program established for the benefit of Eligible
Employees in connection with an Exercise Event other than an Initial Public Offering, and the
distribution of Net Proceeds to Participants, including without limitation, costs of establishing a
program with a brokerage firm to set up accounts to receive shares of Common Stock in accordance
with Section 4.05 (such

7

 

costs and expenses, “Plan Administration Expenses”). These expenses shall
be repaid to the Company by way of an offset against Net Proceeds, if any, as described and subject
to the limits set forth in Section 4.01; provided, however, that (i) if an Initial Public Offering
occurs while this Plan is in effect and there are no Net Proceeds, the Eligible Employees shall not
be obligated to repay such Plan Administration Expenses, (ii) if the
Plan Administration Expenses exceed the limitation set forth in Section 4.01, the Eligible
Employees shall not be required to repay such excess, and (iii) if the Appreciation Rights
terminate prior to the occurrence of an Initial Public Offering, the Eligible Employees shall not
be obligated to repay such Plan Administration Expenses; provided, however, that in such event, if
proceeds are paid to Eligible Employees pursuant to another union equity participation program
established for the benefit of Eligible Employees, the Plan Administration Expenses may be offset
against Net Proceeds (as defined under such other union equity participation program) pursuant to
the terms of such other program.

ARTICLE VI — ADMINISTRATION

     Section 6.01. Committee. The Committee shall have full power to administer the Plan in all of its details, which powers
shall include, but are not limited to, the authority, in addition to all other powers provided by
the Plan, to:

     (i) Make discretionary interpretations regarding the terms of the Plan and make factual
findings with respect to any issue arising under the Plan;

     (ii) Make and enforce such rules and regulations as it deems necessary or proper for the
efficient administration of the Plan;

     (iii) Appoint such agents, specialists, legal counsel, accountants, consultants, or other
persons as the Committee deems advisable to assist in administering the Plan; and

     (iv) Maintain all records of the Plan.

     Section 6.02. Union Observers. Each Union shall be entitled to notice of all meetings of the Committee and each Union shall be
permitted, at its own expense, to send one representative to attend any such meeting to observe the
proceedings of the Committee; provided, however, that no Eligible Employee may
serve as a Union’s representative at any meeting of the Committee; provided,
further, however, that in the event the Board is serving as the Committee, then the
Unions shall only be permitted to receive notice of and to send a representative to attend meetings
of the Board at which the Plan will be discussed and the representatives shall only be permitted to
attend the portion of the meeting during which the Plan is discussed.

ARTICLE VII — AMENDMENT AND TERMINATION

     Section 7.01. Amendment and Termination. The Board of Directors may, at any time, suspend or terminate the Plan and shall have the right
to alter or amend the Plan or any part thereof at any time and from time to time as it may, in its
sole discretion, deem proper and in the best interests of the Company; provided,
however, that no such termination, suspension, alteration, or amendment shall, without the
consent of the appropriate Union, (i) deprive a

8

 

Participant of any interest in, or otherwise amend,
any right to receive Net Proceeds previously allocated to such Participant pursuant to the Plan or (ii) change
the terms of any Appreciation Right previously issued hereunder. Any termination, suspension,
alteration, or amendment of the Plan may be made by the Board of Directors without action on the
part of the stockholders of the Company.

     Section 7.02. Termination of Appreciation Rights.

     (a) Notwithstanding the provisions of Section 7.01 or anything herein to the contrary, all of
the Appreciation Rights automatically shall terminate and expire upon the earliest to occur of:

     (i) June 30, 2007.

     (ii) (A) the suspension, dissolution or winding-up of the Company’s or Spirit’s
business, (B) the Company’s or Spirit’s inability to pay debts, or its nonpayment of debts,
generally as they become due, (C) the institution of reorganization, liquidation or other
such proceedings by or against the Company or Spirit or the appointment of a custodian,
trustee, receiver or similar person for the Company’s or Spirit’s properties or business,
(D) an assignment by the Company or Spirit for the benefit of its creditors, or (E) any
action of the Company or Spirit for the purpose of effecting or facilitating any of the
foregoing; or

     (iii) An Exercise Event, other than an Initial Public Offering occurs, and pursuant to
a different union equity participation program established for the benefit of Eligible
Employees in connection with such Exercise Event, either Net Proceeds (as defined under such
other union equity participation program) are payable to the Participants, or Net Proceeds
(as defined under such other union equity participation program) are zero.

     (b) In the event the Initial Public Offering shall not have been consummated on or prior to
June 30, 2007 and the Appreciation Rights terminate on such date, the Companies shall negotiate
with the Unions in good faith to establish a union equity participation program for the benefit of
Eligible Employees pursuant to which the Company will issue stock appreciation rights on terms
similar to the Appreciation Rights, which will vest on the first Exercise Event to occur.

ARTICLE VIII — MISCELLANEOUS

     Section 8.01. Effective Date. The Plan shall be effective from and after the Effective Date.

     Section 8.02. Distributions Net of Withholding. Notwithstanding any other provision of the Plan, all distributions or payments required to be
made hereunder, shall be net of any amount sufficient to satisfy all federal, state, and local
withholding tax requirements, as set forth in Section 4.04.

     Section 8.03. Governing Law. The Plan and the Appreciation Rights shall be governed, construed, administered, and regulated
in all respects under the laws of the State of Delaware,

9

 

without regard to the principles of
conflicts of law, to the extent such laws are not preempted by the laws of the United States of
America. Any action concerning the Plan or the Rights shall be maintained exclusively in the state
or federal courts in Delaware.

     Section 8.04. Headings. The headings used in the Plan are inserted for reference purposes only and shall not be deemed
to limit or affect in any way the meaning or interpretation of any of the terms or provisions
herein.

     Section 8.05. Notices. Any notices or communications permitted or required to be given herein by any person shall be
deemed given either (i) when delivered, or (ii) three days after being placed in the United States
mail in an envelope addressed to the last communicated address of the person to whom the notice is
being given, with adequate postage thereon prepaid.

     Section 8.06. Severability. If any provision of the Plan shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions thereof, and the Plan shall be construed and
enforced as if such provisions had not been included.

     Section 8.07. Gender and Number. Whenever the masculine, feminine, or neuter gender is used inappropriately in the Plan, the Plan
shall be read as if the appropriate gender was used, and, unless the context otherwise requires,
the singular shall include the plural, and vice versa.

     Section 8.08. Dispute Resolution. Notwithstanding the Companies’ various (i) reservations of discretion, (ii) reservations of the
right to make final and binding calculations, and (iii) statements that Eligible Employees shall
have no rights, interests, or assurances, the Unions (but not any individual Eligible Employee or
group of Eligible Employees acting without Union representation) shall have the right, jointly or
severally, to submit to arbitration disputes over the performance of the Companies under this
agreement, in accordance with the following two sentences. Before submitting a dispute to
arbitration, the Union(s) will attempt to resolve the dispute with the Companies through good faith
negotiations. If the Companies and the Union(s) are unable to resolve the dispute within a
reasonable period of time, it shall be resolved by submitting the dispute to final and binding
interest arbitration by an arbitrator selected by Spirit and the Union(s) from a panel of seven
arbitrators provided by the Federal Mediation and Conciliation Service.

10

 

     IN WITNESS WHEREOF, the Company has caused the Plan to be executed by a duly authorized
officer, to be effective October 27, 2006, the date upon which the Board of Directors approved the
Plan.

	 	 	 	 	 	 	 
	 	 	SPIRIT AEROSYSTEMS HOLDINGS, INC.  
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Ulrich Schmidt	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	Executive Vice President and Chief
Financial Officer	 	 
	 

	 	 	 	 	 	 

11

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