Document:

Form of Hawker Beechcraft, Inc. Nonqualified Stock Option Agreement

 Exhibit 10.16 
 FORM OF 
 HAWKER BEECHCRAFT, INC. 
 NONQUALIFIED STOCK OPTION AGREEMENT 
 THIS AGREEMENT (the “Agreement”), is made effective as of
________, 2007 (the “Date of Grant”), between Hawker Beechcraft, Inc., a Delaware corporation (the “Company”), and                 , (the
“Participant”). 
 R E C I T A L S: 
 WHEREAS, the Company has adopted the Hawker Beechcraft, Inc. 2007 Stock Option Plan (the “Plan”), which Plan is incorporated herein by
reference and made a part of this Agreement. Capitalized terms not otherwise defined herein shall have the meanings given thereto in the Plan; and 
 WHEREAS, the Committee has determined that it would be in the best interests of the Company and its shareholders to grant an Option to the Participant pursuant to the Plan and the terms set forth herein. 
 NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows: 
 1. Grant of the Option. The Company hereby grants to the Participant the right and option to purchase, pursuant to Section 6 of the Plan and
the terms and conditions hereinafter set forth, all or any part of an aggregate of 10,000 Shares, subject to adjustment as set forth in the Plan. The Option Price shall be $10.00 per share which the Company and the Participant agree is not less than
the Fair Market Value of the Shares as of the date hereof. The Option is granted pursuant to and is governed in all respects by the Plan. This Option is not intended to constitute an incentive stock option under Section 422 of the Code.

 2. Vesting; Termination of Employment.  
 (a) Subject to the termination or cancellation of the Option as set forth herein or in the Plan, the entire Option shall vest and become
exercisable on the one year anniversary of the date of Participant’s appointment to the Company Board of Directors. The portion of the Option which has become vested and exercisable as described herein is hereinafter referred to as the
“Vested Portion.” 
 (b) Upon termination of the Participant’s Employment for any reason, the Option shall, to
the extent not previously vested, be automatically canceled without payment of consideration therefor, and the Vested Portion of the Option shall remain exercisable for the period set forth in Section 3(a)(ii). 
 (c) Upon the occurrence of a Transaction, the Option shall, to the extent not then vested, automatically become fully vested and
exercisable. 
 (d) In the event of a Transaction the Committee may either (i) cancel the Option and make payment in
connection with such cancellation equal to the excess, if any, of the 
  

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Fair Market Value of the Shares subject to such Option over the aggregate Option Price of such Option or (ii) provide for the issuance of substitute
options or other awards that will preserve , as nearly as practicable, the economic terms of the Option, in each case as determined by the Committee in good faith and, in each case, in compliance, to the extent applicable, with Section 409A of
the Code as determined by the Board. 
 3. Exercise of Option. 
 (a) Period of Exercise. 
 (i) In the case of termination of the Participant’s Employment due to the
Participant’s death or Disability, subject to any provisions of the Plan and this Agreement to the contrary, the Participant (or his heir or legatee, if applicable) may exercise all or any part of the Vested Portion of the Option at any time
prior to earliest to occur of (x) the tenth (10th) anniversary of the Date of Grant and (y) the first (1st) anniversary of the date of termination of Employment. 
 (ii) In the case of termination of the Participant’s Employment for any reason
other than the Participant’s death or Disability, subject to any provisions of the Plan and this Agreement to the contrary, the Participant may exercise all or any part of the Vested Portion of the Option at any time prior to the earliest to
occur of (x) the tenth (10th) anniversary of the Date of Grant and (y) 5:00 pm (Eastern time) on the ninetieth (90th) day following the date of the Participant’s termination of Employment. 
 (b) Method of Exercise. 
 (i) Subject to Section 3(a), the Vested Portion of the Option may be exercised by delivering to the Company at its principal office written notice of intent to so exercise; provided that the Option may be
exercised with respect to whole Shares only. Such notice shall specify the number of Shares for which the Option is being exercised (the “Purchased Shares”) and shall be accompanied by payment in full of the Option Price in cash or by
check or wire transfer; provided, however, that payment of such aggregate exercise price may instead be made, in whole or in part, by (i) the delivery to the Company of a certificate or certificates representing Shares, duly endorsed or
accompanied by a duly executed stock power, which delivery effectively transfers to the Company good and valid title to such Shares, free and clear of any pledge, commitment, lien, claim or other encumbrance (such shares to be valued on the basis of
the aggregate Fair Market Value thereof on the date of such exercise), or (ii) by a reduction in the number of Purchased Shares to be issued upon such exercise having a Fair Market Value on the date of exercise equal to the aggregate Option
Price in respect of the Purchased Shares, provided that the Company is not then prohibited from purchasing or acquiring such Shares. The Participant shall not have any rights to dividends or other rights of a stockholder with respect to Shares
subject to the Option until the Participant has given written notice of exercise of the Option, paid in full for such Shares, satisfied any applicable withholding requirements and, if applicable, satisfied any other conditions imposed by the
Committee or pursuant to the Plan or this Agreement. 
  

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 (ii) Notwithstanding any other provision of the Plan or this Agreement to the contrary,
the Option may not be exercised prior to the completion of any registration or qualification of the Option or the Shares under applicable state and federal securities or other laws, or under any ruling or regulation of any governmental body or
national securities exchange (collectively, the “Legal Requirements”) that the Committee shall in its sole discretion determine to be necessary or advisable, unless an exemption to such registration or qualification is available and
satisfied. The Committee may establish additional procedures as it deems necessary or desirable in connection with the exercise of the Option or the issuance of any Shares upon such exercise to comply with any Legal Requirements. Such procedures may
include but are not limited to the establishment of limited periods during which the Option may be exercised or that following receipt of the notice of exercise, and prior to the completion of the exercise, the Participant will be required to affirm
the exercise of the Option following receipt of any disclosure deemed necessary or desirable by the Committee. 
 (iii) Upon
the Committee’s determination that the Option has been validly exercised as to any of the Shares, and that the Participant has paid in full for such Shares and satisfied any applicable withholding requirements, the Company shall issue
certificates in the Participant’s name for such Shares. 
 (iv) In the event of the Participant’s death, the Vested
Portion of the Option shall remain exercisable by the Participant’s executor or administrator, or the person or persons to whom the Participant’s rights under this Agreement shall pass by will or by the laws of descent and distribution as
the case may be, to the extent set forth in Section 3(a)(i) (and the term “Participant” shall be deemed to include such heir or legatee). Any such heir or legatee of the Participant shall take rights herein granted subject to the
terms and conditions hereof. 
 (v) In consideration of the grant of this Option, the Participant agrees that, as a condition
to the exercise of any option to purchase Shares (whether this Option or any other option), the Participant shall, with respect to such Shares, have become a party to the Shareholders Agreement. 
 4. Participant Covenants. In consideration of and as a condition to the grant of the Option, the Participant agrees to the following covenants.

 (a) Unauthorized Disclosure. The Participant agrees and understands that in the Participant’s position with the
Company Group, the Participant has been and will be exposed to and has and will receive information relating to the confidential affairs of the Company and its Affiliates, including, without limitation, technical information, intellectual property,
business and marketing plans, strategies, customer information, software, other information concerning the products, promotions, development, financing, expansion plans, business policies and practices of the Company and its Affiliates and other
forms of information considered by the Company and its Affiliates to be confidential or in the nature of trade secrets (including, without limitation, ideas, research and development, know-how, formulas, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and business and marketing plans and proposals) (collectively, the “Confidential Information”). The Participant agrees that at all times during the
Participant’s Employment with the Company and thereafter, the Participant shall not disclose such Confidential Information, either directly or indirectly, to 

  

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any Person without the prior written consent of the Company and shall not use or attempt to use any such information in any manner other than in connection
with his Employment with the Company Group, unless required by law to disclose such information, in which case the Participant shall provide the Company with written notice of such requirement as far in advance of such anticipated disclosure as
possible. This confidentiality covenant has no temporal, geographical or territorial restriction. Upon termination of the Participant’s Employment with the Company Group, the Participant shall promptly supply to the Company all property, keys,
notes, memoranda, writings, lists, files, reports, customer lists, correspondence, tapes, disks, cards, surveys, maps, logs, machines, technical data and any other tangible product or document which has been produced by, received by or otherwise
submitted to the Participant during or prior to the Participant’s Employment with the Company Group, and any copies thereof in his (or capable of being reduced to his) possession. 
 (b) Non-Competition. By and in consideration of the Company’s entering into this Agreement and granting the Option hereunder,
and in further consideration of the Participant’s exposure to the Confidential Information of the Company and its Affiliates, the Participant agrees that the Participant shall not, during the Participant’s Employment with the Company Group
(the “Restriction Period”), directly or indirectly, own, manage, operate, join, control, be employed by, or participate in the ownership, management, operation or control of, or be connected in any manner with, including, without
limitation, holding any position as a stockholder, director, officer, consultant, independent contractor, employee, partner, or investor in, any Restricted Enterprise (as defined below); provided, that in no event shall ownership of one
percent (1%) or less of the outstanding securities of any class of any issuer whose securities are registered under the Securities Exchange Act of 1934, as amended, standing alone, be prohibited by this Section 4(b), so long as the
Participant does not have, or exercise, any rights to manage or operate the business of such issuer other than rights as a stockholder thereof. For purposes of this paragraph, “Restricted Enterprise” shall mean any Person that is actively
engaged in any geographic area in (i) the ownership of a type certificate of, or the design, manufacture, sale, or marketing of, general aviation aircraft of whatever description, including, without limitation, of whatever size, range, engine
type, or intended use, or of military trainer aircraft, or the design, manufacture, distribution, sale, or marketing of airframe components for general aviation aircraft or military trainer aircraft, or the provision of line fixed base operations or
maintenance, repair, and/or overhaul services for general aviation aircraft or military trainer aircraft or (ii) any other business proposed to be conducted by the Company or any of its subsidiaries in the Company’s business plan as in
effect at that time. During the Restriction Period, upon request of the Company, the Participant shall notify the Company of the Participant’s then-current employment status. 
 (c) Non-Solicitation of Employees. During the Restriction Period, the Participant shall not directly or indirectly contact, induce
or solicit (or assist any Person to contact, induce or solicit) for employment any person who is, or within twelve (12) months prior to the date of such solicitation was, an employee of the Company or any of its Affiliates. 
 (d) Interference with Business Relationships. During the Restriction Period , the Participant shall not directly or indirectly
contact, induce or solicit (or assist any Person to contact, induce or solicit.) any customer or client of the Company or its subsidiaries to terminate its relationship or otherwise cease doing business in whole or in part with the Company or its

  

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subsidiaries, or directly or indirectly interfere with (or assist any Person to interfere with) any material relationship between the Company or its
subsidiaries and any of its or their customers or clients so as to cause harm to the Company or its Affiliates. 
 (e)
Proprietary Rights. The Participant shall disclose promptly to the Company any and all inventions, discoveries, and improvements (whether or not patentable or registrable under copyright or similar statutes), and all patentable or
copyrightable works, initiated, conceived, discovered, reduced to practice, or made by him, either alone or in conjunction with others, during the Participant’s Employment with the Company and related to the business or activities of the
Company and its Affiliates (the “Developments”). Except to the extent any rights in any Developments constitute a work made for hire under the U.S. Copyright Act, 17 U.S.C. § 101 et seq. that are owned ab initio by the Company and/or
its applicable affiliate, the Participant assigns all of his right, title and interest in all Developments (including all intellectual property rights therein) to the Company or its nominee without further compensation, including all rights or
benefits therefor, including without limitation the right to sue and recover for past and future infringement. The Participant acknowledges that any lights in any Developments constituting a work made for hire under the U.S. Copyright Act, 17 U.S.C
§ 101 et seq. are owned upon creation by the Company and/or its applicable Affiliate as the Participant’s employer. Whenever requested to do so by the Company, the Participant shall execute any and all applications, assignments or other
instruments which the Company shall deem necessary to apply for and obtain trademarks, patents or copyrights of the United States or any foreign country or otherwise protect the interests of the Company and its Affiliates therein. These obligations
shall continue beyond the end of the Participant’s Employment with the Company with respect to inventions, discoveries, improvements or copyrightable works initiated, conceived or made by the Participant while employed by the Company, and shall
be binding upon the Participant’s employers, assigns, executors, administrators and other legal representatives. In connection with his execution of this Agreement, the Participant has informed the Company in writing of any interest in any
inventions or intellectual property rights that he holds as of the date hereof. If the Company is unable for any reason, after reasonable effort, to obtain the Participant’s signature on any document needed in connection with the actions
described in this Section 4(e), the Participant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as the Participant’s agent and attorney in fact to act for and on the Participant’s
behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of this Section 4(e) with the same legal force and effect as if executed by the Participant. 
 5. No Right to Continued Employment. The granting of the Option evidenced hereby and this Agreement shall impose no obligation on the Company or
any other member of the Company Group to continue the Employment of the Participant and shall not lessen or affect the Company’s or such other member’s right to terminate the Employment of such Participant. 
 6. Legend on Certificates. The certificates representing the Shares purchased upon the exercise of the Option shall be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission and any stock exchange upon which such Shares are listed, and any
applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 
  

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 7. Transferability. The Option and the Participant’s other rights and obligations under the
Plan and this Agreement may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant without the prior written consent of the Company otherwise than by will or by the laws of descent and
distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any of its Affiliates; provided that the designation of a beneficiary shall not
constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. No such permitted transfer of the Option to heirs or legatees of the Participant shall be effective to bind the Company unless the Committee shall have been
furnished with written notice thereof and a copy of such evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions hereof. During the
Participant’s lifetime, the Option is exercisable only by the Participant. 
 8. Withholding. Whenever Shares are to be issued
upon exercise of the Option, the Company shall have the right to require the Participant to remit to the Company cash sufficient to satisfy all federal, state and local withholding tax requirements prior to issuance of the Shares and the delivery of
any certificate or certificates for such Shares. The Participant may satisfy such tax withholding obligation by surrendering to the Company at the time of exercise Purchased Shares (valued in the manner provided in Section 3(b)(i) above),
provided that the Company is not then prohibited from purchasing or acquiring such Shares. 
 9. Securities Laws. Upon the acquisition
of any Shares pursuant to the exercise of the Option, the Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with
this Agreement. 
 10. Notices. Any notice necessary under this Agreement shall be addressed to the Company in care of its Secretary
at the principal executive office of the Company and to the Participant at the address appearing in the personnel records of the Company for the Participant or to either party hereto at such other address as either party may hereafter designate in
writing to the other, Any such notice shall be deemed effective upon receipt thereof by the addressee. 
 11. Choice of Law. This
agreement shall be governed by and construed in accordance with the laws of the state of New York without regard to principles of conflicts of laws. 
 12. Option Subject to Plan. By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The Option is subject to the Plan. The terms and provisions of the
Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan
will govern and prevail. 
  

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 13. Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 
  

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 IN WITNESS WHEREOF, the parties hereto have executed this Agreement, effective as of the Date of Grant.

  

			
	HAWKER BEECHCRAFT, INC.
		
	By:	 	 
	Name:	 	James K. Sanders
	Title:	 	V.P. & CFO

  

	
	Agreed and acknowledged as
	of the Date of Grant:Hawker Beechcraft Excess Savings and Deferred Compensation Plan

 Exhibit 10.17 
  

 HAWKER 
 BEECHCRAFT 
 EXCESS SAVINGS 

 AND DEFERRED 
 COMPENSATION 
 PLAN 
  

 HAWKER BEECHCRAFT EXCESS SAVINGS AND 
 DEFERRED COMPENSATION PLAN 
 Table of Contents 
  

					
	 ARTICLE I – PURPOSE
	  	1
			
	 Section 1.01.
	  	Purpose	  	1
		
	 ARTICLE II – DEFINITIONS
	  	1
			
	 Section 2.01.
	  	Beneficiary or Beneficiaries	  	1
			
	 Section 2.02.
	  	Board of Directors	  	1
			
	 Section 2.03.
	  	Closing Date	  	1
			
	 Section 2.04.
	  	Code	  	1
			
	 Section 2.05.
	  	Committee	  	2
			
	 Section 2.06.
	  	Company	  	2
			
	 Section 2.07.
	  	Deferred Compensation Account	  	2
			
	 Section 2.08.
	  	Employee	  	2
			
	 Section 2.09.
	  	Employer	  	.2
			
	 Section 2.10.
	  	Participant	  	2
			
	 Section 2.11.
	  	Plan	  	2
			
	 Section 2.12.
	  	Plan Year	  	2
			
	 Section 2.13.
	  	Separation from Service	  	3
			
	 Section 2.14.
	  	Sole Discretion	  	3
		
	 ARTICLE III – PARTICIPATION
	  	3
			
	 Section 3.01.
	  	Eligibility	  	3
			
	 Section 3.02.
	  	Salary Reduction Agreements	  	3
		
	 ARTICLE IV – DEFERRED COMPENSATION ACCOUNT
	  	4
			
	 Section 4.01.
	  	Deferred Compensation Account	  	4
			
	 Section 4.02.
	  	Increases and Decreases in Account	  	4
			
	 Section 4.03.
	  	Statement of Account	  	5
		
	 ARTICLE V – BENEFITS
	  	5
			
	 Section 5.01.
	  	General	  	5
			
	 Section 5.02.
	  	Beneficiary Designations	  	5
			
	 Section 5.03.
	  	Payment	  	6

  

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	 ARTICLE VI – SOURCE OF BENEFITS
	  	6
			
	 Section 6.01.
	  	Source of Benefits	  	6
			
	 Section 6.02.
	  	Multiple Employers	  	7
		
	 ARTICLE VII – ADMINISTRATION
	  	7
			
	 Section 7.01.
	  	Committee	  	7
			
	 Section 7.02.
	  	Reliance on Certificates, etc	  	7
		
	 ARTICLE VIII – AMENDMENT AND TERMINATION
	  	8
			
	 Section 8.01.
	  	Amendment	  	8
			
	 Section 8.02.
	  	Termination	  	8
		
	 ARTICLE IX – RESTRICTIONS ON ALIENATION
	  	8
			
	 Section 9.01.
	  	Restrictions on Alienation	  	8
		
	 ARTICLE X – CLAIMS PROCEDURES
	  	9
			
	 Section 10.01.
	  	Claims	  	9
			
	 Section 10.02.
	  	Claims Review	  	9
			
	 Section 10.03.
	  	Appeal of Claim Denial	  	9
			
	 Section 10.04.
	  	Review on Appeal	  	10
			
	 Section 10.05.
	  	Litigation of Claim	  	10
		
	 ARTICLE XI – MISCELLANEOUS
	  	11
			
	 Section 11.01.
	  	Effective Date	  	11
			
	 Section 11.02.
	  	No Guarantee of Interests	  	11
			
	 Section 11.03.
	  	Payments Net of Withholding and Other Amounts	  	11
			
	 Section 11.04.
	  	Binding on Successors	  	11
			
	 Section 11.05.
	  	Adoption by Other Employers	  	11
			
	 Section 11.06.
	  	Minors and Incompetents	  	11
			
	 Section 11.07.
	  	Erroneous Payments	  	11
			
	 Section 11.08.
	  	Headings	  	12
			
	 Section 11.09.
	  	Notices	  	12
			
	 Section 11.10.
	  	Severability	  	12
			
	 Section 11.11.
	  	No Contract of Employment	  	12
			
	 Section 11.12.
	  	Certain Limitations	  	12
			
	 Section 11.13.
	  	Governing Law	  	12
			
	 Section 11.14.
	  	Nonexclusivity of the Plan	  	12
			
	 Section 11.15.
	  	Changes in Time or Form of Distribution	  	12
			
	 Section 11.16.
	  	No Acceleration	  	13

  

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 HAWKER BEECHCRAFT EXCESS SAVINGS AND 
 DEFERRED COMPENSATION PLAN 
 WITNESSETH: That; 
 WHEREAS, the Company desires to provide specified unfunded and deferred compensation benefits for a select group of management or highly
compensated employees on the terms and conditions set forth herein; 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 “Hawker Beechcraft Excess Savings and Deferred Compensation Plan.” 
 ARTICLE I – PURPOSE 
 Section 1.01. Purpose. The purpose of the Plan is to provide specified unfunded
deferred compensation benefits for a select group of management or highly compensated employees who are eligible to participate in the Plan. It is the intention of the Company that this program shall be administered as an unfunded plan of deferred
compensation for income tax purposes and as an unfunded employee benefit plan established and maintained primarily for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3), and 40l(a)(l) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). 
 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. Beneficiary or Beneficiaries means the person, persons, entity, or entities entitled to receive any benefits under this Plan
pursuant to the designation of the Participant (or in default of such designation) as provided in Section 5.02 hereof. 
 Section 2.02. Board of Directors means the Board of Directors of the Company. 
 Section 2.03. Closing Date
means the closing date of the sale of Raytheon Aircraft Acquisition Company to Hawker Beechcraft, Inc. 
 Section 2.04. Code
means the Internal Revenue Code of 1986, as amended. 
  

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 Section 2.05. Committee means the Board of Directors or 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. 
 Section 2.06. Company means Hawker Beechcraft Corporation, or its successor. 
 Section 2.07. Deferred Compensation Account means the ledger entry established for each Participant under the Plan, which entry shall
represent the Employer’s unsecured and unfunded promise to pay the amount of benefits set forth by such entry. The Committee may establish one or more sub-accounts for each Participant, including, but not limited to, the following: 

 

	 	A.	A “Salary Reduction Account” created to hold Employee salary reduction contributions; 

  

	 	B.	An “Employer Match Account” created to hold Employer matching contributions; and 

 Separate accounting among a Participant’s sub-accounts shall be utilized. 
 Section 2.08.
Employee means any individual who is employed and compensated (by a payroll check issued directly from the Employer or Employer agent to the Employee or direct payroll deposit made to the Employee’s account) by the Employer or Employer
agent. In no event shall the term “Employee” include any individual classified or treated or otherwise characterized by the Employer as an independent contractor, consultant, leased employee, or temporary agency employee or otherwise not
treated by the Employer as an “Employee” for purposes of this Plan. The foregoing determination shall apply for all purposes of this Plan and regardless of whether such individual is later classified by any governmental agency, court,
tribunal, governing body or any other person as a common law employee of the Employer. 
 Section 2.09. Employer means the
Company (or its successor), and any other entity that adopts this Plan with the consent and approval of the Committee. 
 Section 2.10.
Participant means an Employee who has been designated by the Committee as eligible to participate in this Plan pursuant to Section 3.01. Where the context requires, the term “Participant” also shall include a former
Participant. 
 Section 2.11. Plan means this Hawker Beechcraft Excess Savings and Deferred Compensation Plan, as amended.

 Section 2.12. Plan Year means the 12-month period commencing January 1 each year; provided, however, that
the initial Plan Year shall be a short year commencing on the Closing Date and ending on December 31, 2007. 
  

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 Section 2.13. Separation from Service means the termination of employment with the Employer.
The term includes, but is not limited to, terminations of employment that arise from a Participant’s death, disability, retirement, discharge (with or without cause), or voluntary termination. The term shall not include any temporary absences
due to vacation, sickness, or other leaves of absence granted to a Participant by the Employer. A Separation from Service shall not be deemed to occur, however, upon a transfer involving any combination of any entity comprising the Employer or any
entity affiliated with the Employer within the meaning of Sections 414(b) and (c) of the Internal Revenue Code, as amended. 
 Section 2.14. Sole Discretion means the right and power to decide a matter, which right may be exercised arbitrarily at any time and from time to time. 
 ARTICLE III – PARTICIPATION 
 Section 3.01. Eligibility. The
Committee shall have the unrestricted right and power, which may be exercised in its Sole Discretion at any time and from time to time, to designate Employees who are eligible to participate in this Plan. The Committee also shall have the right, in
its Sole Discretion, to terminate an individual’s future participation in this Plan. If an individual’s participation in this Plan is terminated, the Participant (or Beneficiary, in the event of death) shall be entitled to receive the
Participant’s Deferred Compensation Account balance at the time and in the manner determined under Article V. 
 Section 3.02.
Salary Reduction Agreements. For each Plan Year (or portion of the Plan Year after entry into the Plan), each Participant designated by the Committee as eligible to participate in the salary reduction feature of the Plan may elect to execute
a salary reduction agreement in the form, time, and manner established by the Committee; provided, however, that the Committee shall not prescribe a time later than 30 days after the date a Participant is first designated as eligible
to participate. 
 An election by a Participant to reduce the Participant’s compensation shall only apply to compensation attributable
to services to be performed by the Participant after the date of such election; provided, however, that in the case of an election to defer any performance-based compensation payable with respect to services performed over a period of
at least 12 months, such election must be made no later than 6 months before the end of such period. 
 The terms of any such salary
reduction agreement shall provide that the Participant agrees to accept a reduction in compensation from the Employer. Except as otherwise provided herein, the agreement shall be irrevocable by the Participant during the Plan Year and each
subsequent Plan Year, unless the Participant enters into a new agreement prior to the beginning of the Plan Year for which the change is to be effective. All elections, including modifications and revocation, shall be made upon such terms and
conditions and at such time and in such manner as the Committee may from time to time determine in its Sole Discretion. The agreement shall automatically terminate upon the termination of this Plan, upon a Participant’s Separation from Service,
on a date determined by the Committee, or at such time as the Committee determines the Participant is no longer eligible to participate in the Plan. 
  

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 Notwithstanding anything to the contrary, Employees who were participants in the Raytheon Deferred
Compensation Plan and/or Raytheon Excess Savings Plan as of the Closing Date, shall be deemed to have made the same salary reduction election under this Plan as such Participant had in effect under Raytheon Deferred Compensation Plan and/or Raytheon
Excess Savings Plan on the day before the Closing Date. 
 ARTICLE IV – DEFERRED COMPENSATION ACCOUNT 
 Section 4.01. Deferred Compensation Account. Contributions shall be credited to a Participant’s Deferred Compensation Account in
accordance with the following provisions: 
  

	 	A.	Employee Contributions. The amount of compensation that a Participant elects to defer under the Plan pursuant to a salary reduction agreement entered into in accordance with
Section 3.02 hereof shall be credited to the Participant’s Salary Reduction Account. 

  

	 	B.	Employer Matching Contributions. For each Participant who enters into a salary reduction agreement, the Employer may contribute a matching contribution to the
Participant’s Employer Match Account in such amount and at such time as the Employer may determine, in its Sole Discretion. 

 To the extent the Employer is required to withhold any taxes or other amounts pursuant to any federal, state, or local law, such amounts shall be taken out of the portion of the Participant’s compensation which is not deferred under
this Plan. 
 Section 4.02. Increases and Decreases in Account. A Participant’s Deferred Compensation Account shall be
(i) increased or decreased (as appropriate) by an earnings factor, (ii) decreased by any distribution from the Participant’s Deferred Compensation Account, (iii) decreased by any costs, fees, or other expenses of the Plan
(including, but not limited to, taxes) allocable to the Participant’s Deferred Compensation Account, as determined by the Committee in its Sole Discretion, and (iv) decreased by any amount that the Participant is not entitled to receive
pursuant to Sections 5.01. The earnings factor will equal an amount that the Committee determines proper for each Participant in its Sole Discretion. The Committee may elect, in its Sole Discretion, that the earnings factor for each Participant will
equal the amount that the Participant’s Deferred Compensation Account would have earned had it been invested in one or more investment options designated by the Committee from time to time for such purpose. If the Committee elects to establish
investment options, Participants who are granted the option to direct the investment of their Deferred Compensation Accounts shall elect, at such time and in such manner as the Committee may from time to time prescribe, the investment options used
to determine the earnings factor applicable to such Participant’s Deferred Compensation Account. Changes in such elections may be made at such time and in such manner as the Committee may 

  

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determine in its Sole Discretion. Subject to the Committee’s right, in its Sole Discretion, to change, eliminate, modify, or alter investment options
under the Plan, any investment election shall be deemed to continue until revoked or modified by the Participant. In the event a Participant fails or refuses to make an election among the investment options established by the Committee, the
Committee may designate a default investment option and the Participant will be deemed to have elected to have earnings (if any) credited to the Participant’s Deferred Compensation Account by reference to such investment option. If the
Committee determines that an investment option is no longer suitable, it may freeze additional elections to have earnings credited by reference to such option and may select another investment option. Alternatively, the Committee may delete the
unsuitable investment option for all existing and future elections and may direct that elections with respect to the unsuitable option be transferred to a new option. 
 Notwithstanding anything to the contrary, Employees who were employed by the Employer as of the Closing Date shall be deemed, in the absence of a contrary election prior to the Closing Date, to have elected to invest
such Participant’s Deferred Compensation Account in the same manner as the Participant’s election under the Raytheon Excess Savings Plan on the day before the Closing Date, provided that the Committee may designate one or more funds which
shall automatically be substituted for any election to invest in Raytheon Common Stock. 
 Section 4.03. Statement of Account.
The Committee shall make available to each Participant, at least annually, a statement setting forth the balance to the credit of each Participant in his or her Deferred Compensation Account. 
 ARTICLE V – BENEFITS 
 Section 5.01. General. Each Participant
(or if the Participant is deceased, the Participant’s Beneficiary) shall be entitled to receive, at the time and in the manner set forth in Section 5.03, the sum of: (i) the amount credited to the Participant’s Salary Reduction
Account, and (ii) the amount credited to the Participant’s Employer Match Account, less all of the following: (i) all amounts sufficient to satisfy all federal, state, and local withholding requirements, (ii) any amounts owed by
Participant or the Participant’s Beneficiary to the Employer, and (iii) any reduction required pursuant to Section 11.12. 
 Section 5.02. Beneficiary Designations. In the event a Participant dies before receiving payment of all amounts payable to Participant under the Plan, payment of the remaining amounts shall be made to the Participant’s
Beneficiary. The Beneficiary of a Participant shall be the person, persons, entity, or entities designated by the Participant on a beneficiary designation form provided by the Committee. A Participant shall have the right to change the
Participant’s Beneficiary designation at any time; provided, however, that no change of a Beneficiary shall be effective until received and accepted by the Committee. In the event a Participant dies without having a Beneficiary
designation in force, or in the event no Beneficiary is alive or in being at the time of the Participant’s death, all payments due hereunder shall be made to Participant’s surviving spouse or, if the Participant leaves no surviving spouse,
to the Participant’s estate. 
  

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 If the Committee has any doubt as to the proper Beneficiary to receive payments hereunder, it shall have
the right to withhold payment until the matter is finally adjudicated. Any payment made in good faith and in accordance with the provisions of the Plan and a Participant’s Beneficiary designation form shall fully discharge the Company (and all
Affiliated Companies), the Committee, and all other persons from all further obligations with respect to such payment. 
 Section 5.03.
Payment. Payment of the portion of the Participant’s Deferred Compensation Account that the Participant is entitled to receive hereunder shall be made in a lump sum payment or in annual installment payments of five, ten or fifteen years,
as elected by the Participant, with payment commencing in January following the calendar year in which the Participant incurs a Separation from Service; provided, however, that no election to receive installment payments shall be valid
unless such election is made on or before the Closing Date or if later, within 30 days after the Employee is first designated as a Participant by the Committee. The failure to make a timely election by a Participant shall require payment to be made
in one lump sum payment. Subject to the provisions of Section 11.15 hereof, a Participant may make a written request to the Committee to change an election previously made (or deemed made) and elect to receive payment of the Participant’s
benefits (as specified above) and the Committee may, in its Sole Discretion, grant such request. 
 In the case of payment of all or a
portion of the Participant’s Deferred Compensation Account in installment payments, the earnings factor (as determined by the Committee in its Sole Discretion pursuant to Section 4.02) will be applied to the portion of Participant’s
Deferred Compensation Account remaining to be paid to the Participant. 
 All elections under this Section 5.03 shall be made upon such
form or forms and in such manner as the Committee may from time to time establish. 
 ARTICLE VI – SOURCE OF BENEFITS 

Section 6.01. Source of Benefits. Amounts payable hereunder shall be paid exclusively from the general assets of the Employer. The
Employer’s obligation under this Plan shall constitute a mere promise to pay benefits in the future, and no person entitled to payment hereunder shall have any claim, right, security interest, or other interest in any fund, trust, account,
insurance contract, or other asset of Employer. The Employer is not obligated to invest in any specific assets or fund, but it may invest in any asset or assets it deems advisable in order to provide a means for the payment of any liabilities under
this Plan and may contribute amounts to a trust conforming to the requirements of Revenue Procedure 92-64, as amended. Each Participant shall be an unsecured general creditor of the Employer and shall have no interest whatsoever in any such assets
or fund. The Employer’s liability for the payment of benefits hereunder shall be evidenced only by this Plan. 
  

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 Section 6.02. Multiple Employers. In the event a Participant is or has been employed by two
or more Employers and is entitled to a benefit from more than one Employer under this Plan, the liability for the payment of such Participant’s benefits under this Plan shall be apportioned among the Employers based upon a determination made by
the Committee in its Sole Discretion. A Participant may only secure payment of benefits from the Employer to whom the Committee has apportioned liability for the benefits. 
 ARTICLE VII – ADMINISTRATION 
 Section 7.01. Committee. The Committee shall have
full power to administer this 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 this Plan, to: 
  

	 	A.	Determine in its Sole Discretion the eligibility of any individual to participate in the Plan; 

  

	 	B.	Make discretionary interpretations regarding the terms of the Plan and make factual findings with respect to any issue arising under the Plan, including, but not limited to, the
power to determine whether an individual is eligible to participate in the Plan or receive benefits under the Plan and whether an individual has incurred a Separation from Service, with its interpretation to be final and conclusive;

  

	 	C.	Compute the amounts payable for any Participant or other person in accordance with the provisions of the Plan, determine the manner and time for making such payments in accordance
with the provisions of the Plan, and determine and authorize the person or persons to whom such payments will be paid; 

  

	 	D.	Receive and review claims for benefits and render decisions respecting such claims under the Plan; 

  

	 	E.	Make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of this Plan; 

  

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

  

	 	G.	Maintain all records of the Plan. 

 Section 7.02.
Reliance on Certificates, etc. The members of the Committee, the Board of Directors, and the officers and employees of the Company shall be entitled to rely on all certificates and reports made by any duly appointed accountants and on all
opinions given by any duly appointed legal counsel. Such legal counsel may be counsel for the Employer. 
  

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 ARTICLE VIII – AMENDMENT AND TERMINATION 
 Section 8.01. Amendment. The Board of Directors reserves the right, at will, at any time and from time to time, to modify, alter, or amend
this Plan (including without limitation a retroactive modification, alteration, or amendment), in whole or in part, and any such modification, alteration, or amendment shall be binding upon the Company, the Committee, each Participant, any adopting
Employer, and all other persons; provided, however, that no amendment will reduce the amount of the benefit that a Participant is then entitled to receive (the same as if the Participant had incurred a Separation from Service as of
such date) without the Participant’s (or present interest Beneficiary’s) written consent. Notwithstanding the foregoing, no consent shall be required and the Board of Directors shall have the right to modify, alter, or amend this Plan
(including a retroactive modification, alteration or amendment), at will and at any time, if it determines, in its Sole Discretion, that such amendment is necessary to comply with applicable law, which shall include, but shall not be limited to, the
right to retroactively apply any amendments necessary to keep this Plan an unfunded employee benefit plan described in Sections 201(2), 301(a)(3) and 401(a)(l) of ERISA or to comply with any applicable provision of the Code or ERISA or any judicial
or administrative guidance. 
 Section 8.02. Termination. The Company has established this Plan with the bona fide intention and
expectation that it will be continued indefinitely, but the Company will have no obligation whatsoever to maintain this Plan for any given length of time and may, at will and at any time, discontinue or terminate this Plan in whole or in part. In
addition, an adopting Employer shall have the right to discontinue or terminate its participation in this Plan as to its Employees. Upon a complete or partial termination of the Plan, each affected Participant (and present interest Beneficiary)
shall be given notice of the termination and shall be entitled to receive benefits in accordance with Article V. 
 ARTICLE IX –
RESTRICTIONS ON ALIENATION 
 Section 9.01. Restrictions on Alienation. Until the actual receipt of any benefit under this
Plan by a Participant or Beneficiary, no right or benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, assignment, transfer, pledge, encumbrance, garnishment, execution, levy, or charge of any kind, whether
voluntary or involuntary, including assignment or transfer to satisfy any liability for alimony or other payments for property settlement or support of a spouse or former spouse or other relative of a Participant or Beneficiary, whether upon
divorce, legal separation, or otherwise. Any attempt to anticipate, alienate, sell, assign, transfer, pledge, encumber, garnish, execute upon, levy upon, or charge any right or benefit under the Plan shall be void. No right or benefit hereunder
shall in any manner be liable for or subject to the debts, contracts, liabilities, engagements, or torts of the person entitled to such benefit, and no right or benefit hereunder 

  

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shall be considered an asset of such person in the event of his or her divorce, insolvency, or bankruptcy. The rights of a Participant or a Beneficiary
hereunder shall not be subject in any manner to attachment or other legal process for the debts of the Participant or such Beneficiary. 
 ARTICLE X – CLAIMS PROCEDURES 
 Section 10.01. Claims. Benefit claim determinations arising under this Plan
shall be made in accordance with the provisions of this Article and procedures established by the Committee. These claim procedures are designed to establish reasonable processes and safeguards to ensure that benefit claim determinations are made in
accordance with the provisions thereof. All claims for or relating to benefits, whether made by a Participant or other person, shall be made in a writing addressed and delivered to the Committee at the Committee’s main office, and such claim
shall contain the claimant’s name, mailing address, and telephone number, if any, and shall identify the claim in a manner reasonably calculated to make the claim understandable to the Committee. 
 Section 10.02. Claims Review. If a claim is wholly or partially denied, the Committee shall, within a reasonable period of time not to exceed
90 days, notify the claimant in writing of any adverse benefit determination, unless the Committee determines that special circumstances require an extension of time for processing the claim. If the Committee determines that an extension of time for
processing the claim is necessary, written notice of the same shall be provided to the claimant prior to the expiration of the 90-day period and shall indicate the special circumstances which require the extension of time and the date by which the
Committee expects to render the determination. The extension of time shall not exceed a 90-day period of time, beginning at the end of the initial 90-day period. The Committee’s notice shall be written in a manner calculated to be understood by
the claimant and shall set forth: 
  

	 	A.	The specific reason or reasons for the denial; 

  

	 	B.	Specific reference to pertinent Plan provisions on which the denial is based; 

  

	 	C.	A description of any additional material or information necessary for the claimant to perfect the claim, together with an explanation of why such material or information is
necessary; and 

  

	 	D.	An explanation of the claim review procedure set forth in Sections 10.03 and 10.04 below (including a statement of the claimant’s right to bring a civil action under ER1SA
Section 502(a) following an adverse benefit determination). 

 Section 10.03. Appeal of Claim Denial. A claimant or
the claimant’s duly authorized representative shall have 60 days within which to appeal an adverse benefit determination to the Committee. During the pendency of the review, the following provisions shall apply: 
  

	 	A.	The claimant shall have the opportunity to submit written comments, documents, records, and other information relating to the claim to the Committee; and 

 

 - 9 - 

	 	B.	The claimant shall be provided, upon request and free of charge, reasonable access to and copies of, all documents, records, and other relevant information relating to the claim for
benefits. 

 Section 10.04. Review on Appeal. A decision on review shall be rendered within a reasonable period of
time, not to exceed 60 days after the claimant’s request for review, unless the Committee determines that special circumstances require an extension of time for processing the appeal. If the Committee determines that an extension of time for
processing the appeal is necessary, written notice of the extension shall be furnished to the claimant prior to the expiration of the 60-day period and shall indicate the special circumstances requiring the extension and the date by which the
Committee expects to render the determination. The extension of time shall not exceed a 60-day period of time beginning at the end of the initial 60-day period. The Committee’s decision on review shall be communicated in writing to the claimant
and, if adverse, shall take into account all comments, documents, records, and other information submitted by the claimant (without regard to whether such information was submitted or considered in the initial benefit determination). The decision on
review shall be written in a manner calculated to be understood by the claimant and shall set forth the following: 
  

	 	A.	The specific reason or reasons for the adverse determination; 

  

	 	B.	Specific reference to pertinent plan provisions on which the benefit determination is based; and 

  

	 	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 to
the claimant’s claim for benefits; and 

  

	 	D.	A statement of the claimant’s right to bring an action under ERISA Section 502(a). 

 Section 10.05. Litigation of Claim. Prior to initiating legal action concerning a claim in any court, state or federal, against the Plan, any
trust used in conjunction with the Plan, the Employer, the Company, or the Committee, a claimant must first exhaust the administrative remedies provided in this Article X. Failure to exhaust the administrative remedies provided for in this Article X
shall be a bar to any civil action concerning a claim for benefits under the Plan. 
  

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 ARTICLE XI – MISCELLANEOUS 
 Section 11.01. Effective Date. The Plan shall be effective from and after the date of its adoption by the Board of Directors. 
 Section 11.02. No Guarantee of Interests. Neither the Employer, Committee, nor Board of Directors (nor any of their members) may guarantee
the payment of any amounts which may be or becomes due to any person or entity under this Plan. The liability to make any payment under this Plan is limited to the then available assets of the Employer. 
 Section 11.03. Payments Net of Withholding and Other Amounts. Notwithstanding any other provision of the Plan, all transfers or payments
shall be net of any amount sufficient to satisfy all federal, state, and local withholding tax requirements, and shall also be net of all amounts owed by Participant or by Participant’s Beneficiary, to the Employer. 
 Section 11.04. Binding on Successors. This Plan shall be binding upon all Participants, their respective heirs, and personal representatives
and upon the Employer, its successors, and assigns. 
 Section 11.05. Adoption by Other Employers. Any employer, corporation or
other entity with employees now in existence or hereafter formed or acquired, which is not already an Employer under this Plan, and which is otherwise legally eligible, may in the future, with the consent and approval of the Company, adopt this
Plan, and thereby, from and after the specified effective date, become an Employer under this Plan. However, the sole and absolute right to amend the Plan is reserved to the Company. It shall not be necessary for the adopting corporation or entity
to sign or execute the original or the amended Plan documents. The administrative powers and control of the Company as provided in the Plan, including the sole right of amendment and of appointment and removal of the Committee, shall not be
diminished by reason of the participation of any such adopting entity in this Plan. 
 Section 11.06. Minors and Incompetents. If
any person to whom a benefit is payable under this Plan is legally incompetent, either by reason of age or by reason of mental or physical disability, the Committee is authorized to cause the payments becoming due to such person to be made to
another for his or her benefit without responsibility of the Company, the Employer, the Committee or the Board of Directors to see to the application of such payments. Payments made pursuant to this authority shall constitute a complete discharge of
all obligations hereunder. 
 Section 11.07. Erroneous Payments. If any person receives any amount of benefits that the Committee
in its Sole Discretion later determines that such person was not entitled to receive under the terms of the Plan, such person shall be required to immediately make reimbursement to the Employer. In addition, the Committee shall have the right to
offset any future claims for benefits under the Plan against amounts that person was not otherwise entitled to receive. 
  

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 Section 11.08. Headings. The headings used in this 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 11.09. Notices. Any notices or communications permitted or required to be given herein by any Participant, the Company, the Committee, the Employer, or any other person shall be deemed given when delivered or when 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 11.10. Severability. If any provision of this 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 11.11. No Contract of Employment. Nothing contained herein shall be construed to constitute a contract of employment between any employee and any employer. Nothing herein contained shall be deemed to give any employee
the right to be retained in the employ of an employer or to interfere with the right of the employer to discharge any employee at any time without regard to the effect such discharge might have on the employee as a Participant under this Plan.

 Section 11.12. Certain Limitations. In the event the Employer is subject to legal limitations on the payment of benefits, then
benefit payments hereunder shall be reduced or eliminated, as the case may be, to comply with such legal limitations. 
 Section 11.13.
Governing Law. It is the Company’s intention that the Plan comply with and satisfy the applicable provisions of the Code and ERISA, including, but not limited to, Section 409A of the Code, and, consistent with such provisions of the
laws of the United States of America and in all other respects, the Plan and all agreements entered into under the Plan shall be governed, construed, administered, and regulated in accordance with the laws of the State of Kansas, 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 any agreement entered into under the Plan shall be maintained exclusively in the state or
federal courts in Kansas. 
 Section 11.14. Nonexclusivity of the Plan. The adoption of the Plan by the Board of Directors shall
not be construed as creating any limitations on the power of the Board of Directors to adopt such other incentive arrangements as it may deem desirable. 
 Section 11.15. Changes in Time or Form of Distribution. Notwithstanding any other provision of the Plan, any subsequent election by a Participant under the Plan that has the effect of delaying the time or
changing the form of any distribution or payment under the Plan shall satisfy the following requirements: 
  

	 	A.	Such election shall not take effect until at least 12 months after the date on which the election is made; 

  

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	 	B.	In the case of an election related to distribution or payment on account of Separation from Service or reaching a specified time, the first payment with respect to which the
election is made must be deferred for a period of not less than 5 years from the date such payment otherwise would have been made; and 

  

	 	C.	In the case of an election related to a distribution or payment on account of reaching a specified time, the election shall not be made less than 12 months before the date of the
first scheduled payment with respect to such distribution. 

 Section 11.16. No Acceleration. Except as otherwise
permitted by law, no interpretation, modification, alteration, amendment, or complete or partial termination of the Plan or any provision of the Plan shall cause or permit acceleration of the time or schedule of any payment under the Plan.

 IN WITNESS WHEREOF, the Company has caused this Plan to be executed as of the date first set forth above. 
  

			
	 HAWKER BEECHCRAFT CORPORATION

		
	 By:
	 	 

	 Its:
	 	 VICE PRESIDENT & CFO

  

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