SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
Form 10-K
_________________
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
X SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended March 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______________ to _____________
Commission file number 0-11720
AIR TRANSPORTATION HOLDING
COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1206400
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
3524 Airport Road
Maiden, North Carolina 28650
(Address of principal executive offices) (Zip Code)
(704) 377-2109
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $.25 per share
(Title of Class)
__________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
registrant as of May 31, 1996, computed by reference to the average of the
closing bid and asked prices for such stock on such date, was $3,837,960. As
of the same date, 2,613,433 shares of Common Stock, no par value, were
outstanding.
<PAGE>
PART I
Item 1. Business.
Air Transportation Holding Company, Inc., incorporated under the laws of
the State of Delaware in 1980 (the "Company"), operates through three wholly
owned subsidiaries, Mountain Air Cargo, Inc., a North Carolina corporation
("MAC"), CSA Air, Inc., a North Carolina corporation ("CSA"), and Mountain
Aircraft Services, LLC, a North Carolina limited liability company ("MAS").
The principal place of business of the Company, MAC and MAS is Maiden, North
Carolina, and the principal place of business of CSA is Iron Mountain,
Michigan. The Company through its subsidiaries employs approximately 360
persons, of which approximately 300 are employed by MAC, 50 are employed by
CSA and 10 are employed by MAS.
Effective July 1, 1992, the Company reorganized its subsidiaries. Prior
to such reorganization, the Company directly held the shares of capital stock
of MAC and a corporation then known as CSA Air, Inc. ("Old CSA"), and MAC held
the shares of capital stock of CSA, then known as MS Aircraft Maintenance
Corporation, Inc. In the reorganization, MAC transferred the shares of stock
of CSA to the Company, Old CSA transferred its assets to CSA and Old CSA
merged with and into MAC. Immediately following the reorganization CSA
changed its name to "CSA Air, Inc." In the following discussion of the
Company's business operations, all references to "CSA" include Old CSA.
MAC and CSA operate exclusively as contract carriers for overnight
delivery of small package air freight throughout the eastern half of the
United States and Canada, and in Puerto Rico and the U.S. Virgin Islands.
Over the past six fiscal years, as a consequence of changes in customer
preference, MAC and CSA have shifted their focus away from operating company-
owned aircraft to operating customer-owned aircraft under dry-lease service
contracts. In prior years, MAC's predominant business practice involved
carrying small package air freight in company-owned aircraft under contracts
that provided for a fixed fee per flight regardless of the amount of cargo
carried under so-called "wet lease" arrangements. For the most recent fiscal
year, these operations accounted for 6.0% of the Company's consolidated
revenue, compared to 7.1% for the prior fiscal year. Under the dry-lease
service contracts, the customer leases its aircraft to MAC (or CSA) for a
nominal amount and pays an administrative fee to MAC (or CSA). Under these
arrangements, all direct costs related to the operation of the aircraft
(including fuel, maintenance, landing fees and pilot costs) are passed through
to the customer. For the most recent fiscal year, operations under dry lease
service contracts accounted for 83.1% of the Company's consolidated revenue,
compared to 88.2% for the prior fiscal year.
For the fiscal year ended March 31, 1996, MAC and CSA provided air
delivery service exclusively to Federal Express Corporation ("Federal
Express"). As of March 31, 1996, MAC and CSA operated an aggregate of 93
aircraft under agreements with Federal Express. Separate agreements cover
2<PAGE>
the three types of aircraft operated by MAC and CSA for Federal Express --
Cessna Caravan, Fokker F-27 and Short Brothers SD3-30. Cessna Caravan and
Fokker F-27 aircraft are dry-leased from Federal Express, and Short Brothers
SD3-30 aircraft are owned by the Company and operated under "wet-lease"
arrangements with Federal Express. For the fiscal year ended March 31, 1996,
89.1% of the Company's consolidated revenues was attributable to the Company's
operations under these agreements.
Pursuant to such agreements, Federal Express determines the schedule of
routes to be flown by MAC and CSA. As of March 31, 1996, MAC and CSA were
flying approximately 85 routes pursuant to their agreements with Federal
Express.
Agreements with Federal Express are renewable annually and may be
terminated by Federal Express any time upon 15 to 30 days' notice. The
Company believes that the short term and other provisions of its agreements
with Federal Express are standard within the air freight contract delivery
service industry. Loss of Federal Express as a customer would have a material
adverse affect on MAC, CSA and the Company.
In October 1993, the Company organized MAS to sell aircraft parts and
offer engine overhaul management and engine component repair services for
commercial and military aircraft. For the fiscal year ended March 31, 1996,
MAS contributed 10.1% of the Company's consolidated revenues.
On April 15, 1994, the Company announced that it will relocate and expand
the MAC aircraft maintenance facility and MAS engine overhaul management and
repair station facility to North Carolina's new Global TransPark located in
Kinston, North Carolina. This new 66,000 square foot facility is projected to
be completed in August 1996 and will consolidate the Company's aircraft
maintenance and aircraft component repair stations operations currently
located in Anderson, South Carolina and Miami, Florida. On November 16, 1995,
MAC entered into a 21 1/2-year facilities lease with Global TransPark
Foundation, Inc. After an 18-month grace period, rent under the lease will
escalate from $2.25 per square foot to $5.90 per square foot over the life of
the lease.
MAC and CSA operate under separate aviation certifications. MAC is
certified to operate under Part 121 and Part 135 of the regulations of the
Federal Aviation Administration (the "FAA"). This certification permits MAC
to operate aircraft that can carry up to 18,000 pounds of cargo. CSA is
certified to operate under Part 135 of the FAA regulations. This
certification permits CSA to operate aircraft with a maximum cargo capacity of
7,500 pounds.
As a result of the shift from Company-owned aircraft to customer-owned
aircraft, the Company sold the bulk of its owned aircraft in 1989, 1990 and
1991. At the end of the most recent fiscal year, the Company owned three
cargo aircraft.
3<PAGE>
MAC and CSA, together, operated or held for sale the following aircraft
as of March 31, 1996:
[CAPTION] Form of Number of
Type of Aircraft Model Year Ownership Aircraft
Cessna Caravan, 208A and 208B
(single turbo prop) 1985-1996 dry lease 71
Fokker F-27 (twin turbo prop) 1968-1981 dry lease 22
Short Brothers SD3-30
(twin turbo prop) 1981 owned 3
__________
Total 96
Of the 96 aircraft fleet, 93 aircraft--that is, the Cessna Caravan and Fokker
F-27 aircraft--are owned by Federal Express. Under the dry-lease service
contracts, certain maintenance expense, including cost of parts inventory, and
maintenance performed by personnel not employed by the Company, is passed
directly to the customer, and the expense of daily, routine maintenance and
aircraft service checks is charged to the customer on an hourly
basis. Accordingly, the Company does not anticipate maintenance expense, such
as engine overhauls, to be material to the Company's operating results.
All FAA Part 135 aircraft, including Cessna Caravan models 208A and 208B,
and Short Brothers SD3-30 aircraft are maintained on FAA approved inspection
programs. The inspection intervals range from 100 to 200 hours. The engines
are produced by Pratt & Whitney, and overhaul periods are based on FAA-
approved schedules. The current overhaul period on the Cessna aircraft is
4,500 hours. The Short Brothers manufactured aircraft are maintained on an
"on condition" maintenance program (i.e., maintenance is performed when
performance deviates from certain specifications) with engine inspections at
each phase inspection and in-shop maintenance at predetermined intervals.
The Fokker F-27 aircraft are maintained under a FAA Part 121 maintenance
program. The program consists of A, B, C, D and I service checks. The engine
overhaul period is 5,700 hours.
The Company operates in highly competitive markets and competes with
approximately 50 other contract cargo carriers in the United States. MAC and
CSA's contracts are renewed on an annual basis. Accurate industry data is not
available to indicate the Company's position within its marketplace (in large
measure because most of the Company's competitors are privately held), but
management believes that MAC and CSA, combined, constitute one of the largest
contract carriers of the type described immediately above.
The Company's operations are not materially seasonal.
4<PAGE>
Governmental Regulation.
Under the Federal Aviation Act of 1958, as amended, the FAA has safety
jurisdiction over flight operations generally, including flight equipment,
flight and ground personnel training, examination and certification, certain
ground facilities, flight equipment maintenance programs and procedures,
examination and certification of mechanics, flight routes, air traffic control
and communications and other matters. The FAA also has power to suspend or
revoke for cause the certificates it issues and to institute proceedings for
imposition and collection of fines for violation of federal aviation
regulations. The Company has secured appropriate operating certificates and
airworthiness certificates for all aircraft operated by it.
During the most recent fiscal year, the Company underwent periodic
routine FAA reviews of MAC and CSA's operating procedures and flight and
maintenance records; no violations of procedures or recordkeeping were
reported.
The Airline Deregulation Act of 1978 created a new class of domestic
certificated all-cargo carriers. Pursuant to such certificate, aircraft of
specified size may be operated within the United States, without restriction
on routes.
The Company has been subject to FAA regulation since the commencement of
its business activities. The FAA is concerned with safety and the regulation
of flight operations generally, including equipment used, ground facilities,
maintenance, communications and other matters. The FAA can suspend or revoke
the authority of air carriers or their licensed personnel for failure to
comply with its regulations and can ground aircraft if questions arise
concerning airworthiness. The Company, through its subsidiaries, holds all
operating airworthiness and other FAA certificates that are currently required
for the conduct of its business, although these certificates may be suspended
or revoked for cause.
The FAA has authority under the Noise Control Act of 1972, as amended, to
monitor and regulate aircraft engine noise. The aircraft operated by the
Company are in compliance with all such regulations promulgated by the FAA.
Moreover, because the Company does not operate jet aircraft noncompliance is
not likely. Such aircraft also comply with standards for aircraft exhaust
emissions promulgated by the Environmental Protection Agency pursuant to the
Clean Air Act of 1970, as amended.
Because of the extensive use of radio and other communication facilities
in its aircraft operations, the Company is subject to the Federal
Communications Act of 1934, as amended.
Maintenance and Insurance.
The Company, through its subsidiaries, maintains its aircraft under the
appropriate FAA standards and regulations.
5<PAGE>
The Company has secured public liability and property damage insurance in
excess of minimum amounts required by the United States Department of
Transportation. The Company has also obtained all-risk hull insurance on
Company-owned aircraft.
The Company maintains cargo liability insurance, workers' compensation
insurance and fire and extended coverage insurance, for leased as well as
owned facilities and equipment.
Item 2. Properties.
The Company leases the Little Mountain Airport in Maiden, North Carolina
from a corporation whose stock is owned by David Clark, J. Hugh Bingham,
William H. Simpson and John J. Gioffre, officers and directors of the Company,
and three unaffiliated third parties. The facility consists of approximately
65 acres with one 3000 foot landing strip, approximately 20,000 square feet of
hangar space and approximately 9,700 square feet of office space. The
operations of the Company and MAC are headquartered at this facility. The
lease for this facility was renewed in May 1996, and is currently scheduled to
expire on May 31, 2001, and may be renewed for an additional five-year period.
In connection with the renewal, the monthly rental payment for this facility
increased to $8,073.
The Company also leases approximately 800 square feet of office space and
approximately 6,000 square feet of hangar space at the Ford Airport in Iron
Mountain, Michigan. CSA's operations are headquartered at these facilities.
These facilities are leased under an annually renewable agreement with a
monthly rental payment, as of March 31, 1996, of approximately $1,000.
On November 16, 1995, the Company entered into a twenty-one and a half
year premises and facilities lease with Global TransPark Foundation, Inc. to
lease approximately 53,000 square feet of a new 66,000 square foot aircraft
hangar, shop and office facility to be built at the North Carolina Global
TransPark in Kinston, North Carolina. Rent under this lease increases over
time as follows: the first 18 months, no rent; the next 5-year period, $2.25
per square foot; the next 5-year period, $3.50 per square foot; the next 5-
year period, $4.50 per square foot; and the final 5-year period, $5.90 per
square foot. The Company anticipates occupying this facility commencing in
August 1996.
The Company operates a maintenance facility in Anderson, South Carolina,
leasing approximately 2,200 square feet of office space and approximately
22,000 square feet of hangar space. Such facilities are leased on a month-to-
month basis. As of March 31, 1996, the monthly rental payment for this
facility was $3,000.
The Company operates a maintenance facility in Miami, Florida, leasing
approximately 4,700 square feet of hangar space. The lease expires in April
1998, and the monthly rental payment is $2,500.
As of March 31, 1995, the Company leased hangar space at 15 other
6<PAGE>
locations for aircraft storage. Such hangar space is leased at prevailing
market terms.
The table of aircraft presented in Item 1 lists the aircraft operated by
the Company's subsidiaries and the form of ownership.
Item 3. Legal Proceedings.
The Company is not aware of any pending or threatened lawsuits that if
adversely decided would have a material adverse effect on the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders.
PART II
Item 5. Registrant's Common Equity and Related Stockholder Matters.
The Company's common stock is publicly traded in the over-the-counter
market under the NASDAQ symbol "AIRT."
As of May 31, 1996, the number of holders of record of the Company's
Common Stock was approximately 720. Over-the-counter market quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commissions
and may not necessarily represent actual transactions. The range of high and
low bid quotations per share for the Company's common stock from April 1994
through March 1996 (which quotations have been adjusted to reflect the one-
for-five reverse split effected on May 16, 1994) is as follows:
[CAPTION] Common Stock
Quarter Ended High Low
June 30, 1994 . . . . . . . . . . . 7 3/16 4 1/4
September 30, 1994 . . . . . . . . 4 3/4 4
December 31, 1994 . . . . . . . . . 4 1/2 3 3/4
March 31, 1995 . . . . . . . . . . 3 7/8 3 3/4
June 30, 1995 . . . . . . . . . . . 4 1/8 3 7/8
September 30, 1995. . . . . . . . . 4 1/2 3 3/4
December 31, 1995 . . . . . . . . . 4 3/4 3 3/4
March 31, 1996. . . . . . . . . . . 4 1/2 3 3/4
In January 1992 and May 1993, the Company paid a cash dividend on its
Common Stock of $.01 per share (pre-reverse stock split, or $.05 per share
post-reverse stock split). On June 15, 1994, following the Company's one-for-
five reverse split of shares of its Common
Stock, the Company paid a cash dividend of $.06 per share ($.012 per pre-split
share). On May 31, 1995, the Company paid a cash dividend of $.07
7<PAGE>
per share. On April 22, 1996, the Company paid a cash dividend of $.08 per
share. Prior to January 1992, the Company had not paid a dividend. The
Company's Board of Directors intends to review the Company's operating
results, financial condition, capital requirements and other factors in
determining whether to pay cash dividends in the future.
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
Selected Financial Data. SELECTED FINANCIAL DATA
(in thousands except per share
data)
<CAPTION> Year Ended March 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Operating revenues $36,101 $32,951 $30,674 $26,776 $20,097
Earnings before extraordinary
credit and change in accounting
principle 1,612 1,598 1,579 1,504 823
Extraordinary credit - - - 309 392
Change in accounting principle - - 715 - -
Net earnings 1,612 1,598 2,294 1,813 1,215
Net earnings per share (1):
Earnings before extraordinary
credit and change in
accounting principle $ .53 $ .48 $ .47 $ .47 $ .26
Extraordinary credit - - - .09 .12
Change in accounting principle - - .22 - -
Net earnings $ .53 $ .48 $ .69 $ .56 $ .38
Total assets $10,220 $10,161 $ 8,550 $ 7,147 $ 4,770
Long-term debt, including
current portion $ 10 $ 14 $ 20 $ 241 $ 524
Stockholders' equity $ 7,414 $ 7,130 $ 6,642 $ 4,493 $ 2,756
Average common shares
outstanding (1) 3,020 3,312 3,348 3,210 3,190
Dividends declared per
common share (1)(2) $ .15 $ .06 $ .05 $ - $ .05
Dividends paid per
common share (1)(2) $ .07 $ .06 $ .05 $ - $ .05
(1) - All common share and dividend data reflect the one-for-five reverse
stock split effective May 16, 1994.
8<PAGE>
(2) - On April 25, 1995 the Company declared a $.07 per common share special
cash dividend, which was paid on May 31, 1995. On February 1, 1996 the
Company declared an $.08 per common share special cash dividend, paid April
22, 1996.
</TABLE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations. The Company's revenue is primarily generated
through its air cargo subsidiaries, Mountain Air Cargo, Inc. (MAC) and CSA
Air, Inc. (CSA), which are short-haul express air freight carriers flying
nightly contracts for a major express delivery company out of 78 cities,
principally located in 30 states in the eastern half of the United States and
in Canada, Puerto Rico, and the Virgin Islands. In 1993, the Company
organized Mountain Aircraft Services, LLC. (MAS) to engage in the sale of
commercial aircraft parts and provide aircraft engine overhaul management and
component repair services. Revenues from this operation contributed
approximately $3,629,000 and $1,236,000 to the Company's revenues in fiscal
1996 and 1995, respectively.
Under the terms of MAC and CSA's dry-lease service contracts (which
currently cover approximately 96% of the revenue aircraft operated), the
Company passes through to its customer certain cost components of its
operations without markup. The cost of fuel, landing fees, outside
maintenance, aircraft certification and conversion, parts and certain other
direct operating costs are included in operating expenses and billed to the
customer as cargo and maintenance revenue at no additional mark-up to the
customer.
The following table summarizes the changes and trends in the Company's
expenses as a percentage of revenue:
<TABLE>
<CAPTION> Fiscal Year Ended March 31
1996 1995 1994
<S> <C> <C> <C>
Operating revenue (in thousands) $36,101 $32,951 $30,674
Expense as a percentage
of revenue: % % %
Flight operations 35.05 36.81 37.81
Maintenance 46.73 43.50 42.42
General and administrative 10.63 10.90 10.90
Depreciation and amortization 1.34 1.40 1.08
Interest, net - - 0.03
Total costs and expenses 93.75% 92.61% 92.24%
</TABLE>
9<PAGE>
Fiscal 1996 vs 1995. Consolidated revenue increased $3,150,000 (9.6%) to
$36,101,000 for the fiscal year ended March 31, 1996 compared to the prior
fiscal year. Fiscal 1996's revenue increase resulted primarily from a
$2,393,000 (193.6%) increase in parts brokering and quick engine change
revenue related to the expansion of MAS, and an increase in the number of
customer-owned aircraft operated by the Company, partially offset by a
decrease in maintenance billing.
Operating expenses increased $3,338,000 (10.9%) to $33,843,000 for fiscal
1996 compared to fiscal 1995. The increase in operating expenses consisted of
the following changes: cost of flight operations increased $522,000 (4.3%)
primarily due to an increase in pilot staffing and airport fees; maintenance
expense increased $2,556,000 (17.8%), primarily as a result of increases in
cost of sales related to aircraft parts sold by MAS and increased use of
outside contract services; depreciation increased $26,000 (5.4%); general and
administrative expense increased $234,000 (6.5%) as a result of increased
staffing at MAS, cost associated with the Company's future relocation of
maintenance operations and increased employee benefits, salary and wage rates.
The $263,000 increase, in fiscal 1996, in non-operating income reflects a
gain on disposal of Company-owned aircraft.
Pretax earnings increased $75,000 (3.1%) to $2,520,000 for fiscal 1996
compared to 1995. The increases were due to the gain on disposal of Company-
owned aircraft, income on Company investments and increased earnings generated
by MAS, partially offset by increased operating and administration cost, and
decreased cargo aircraft maintenance revenue.
The provision for income taxes increased $60,000 (7.1%) to $908,000 for
fiscal 1996 compared to fiscal 1995. Fiscal 1996 experienced an increased
effective Federal tax rate due to the full utilization of certain net
operating loss carryforwards during the third quarter of fiscal 1995.
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes" as of the beginning of fiscal 1994, and
the cumulative effect of this change was reported in the Consolidated
Statements of Earnings for Fiscal 1994. The cumulative effect on fiscal 1994
net earnings of adoption of $715,000 ($.22 per share) reflects the impact of
"temporary differences" between amounts of assets and liabilities for
financial reporting purposes and such amounts as measured by tax laws, and the
future utilization of net operating loss and alternative minimum tax credit
carryforwards. In addition, the cumulative effect of adoption reduced
goodwill by $320,000, which reflects the effect of future utilization of pre-
acquisition loss carryforwards.
Because of the Company's dependence upon a single customer and
uncertainty as to the future allocation of taxable income among subsidiaries
to which the separate-return limitation applies, the Company has provided a
valuation allowance against gross deferred tax assets as of March 31, 1996.
Of the $170,000 valuation allowance approximately $152,000 is related to
potential benefits from pre-acquisition carryforwards, while approximately
$18,000 is related to other deferred benefits. Reductions in the valuation
allowance derived from utilization of pre-acquisition net operating loss
10<PAGE>
carryforwards of $401,000 have been credited directly to goodwill during the
1996 fiscal year. Changes in the valuation allowance, related to future
utilization of post-acquisition net operating losses, reduced the provision
for income taxes by $115,000 during the 1996 fiscal year.
As of March 31, 1996, the Company had federal net operating loss
carryforwards available for tax return purposes of approximately $500,000.
These carryforwards expire in 1997. The potential utilization of these
carryforwards is subject to the separate return limitation rules pursuant to
Treasury regulations.
Fiscal 1995 vs 1994. Consolidated revenue increased $2,277,000 (7.4%)
to $32,951,000 for the fiscal year ended March 31, 1995 compared to the prior
fiscal year. The increase in 1995 revenue primarily resulted from a
$1,152,000 increase in cargo revenue generated by Company-owned aircraft and a
$903,000 increase in revenue related to the expansion of MAS.
Operating expenses increased $2,220,000 (7.8%) to $30,505,000 for fiscal
1995 compared to fiscal 1994. The increase in operating expenses consisted of
the following changes: cost of flight operations increased $535,000 (4.6%) as
a result of increases in pilot and flight personnel and costs associated with
fuel, travel, and landing fees (primarily related to Company-owned aircraft)
which were partially offset by decreased aircraft lease costs; maintenance
expense increased $1,320,000 (10.1%) primarily as a result of increased
outside maintenance, inside personnel and cost of parts purchased for MAS,
offsetting decreases in
parts purchases and contract service costs; depreciation and amortization
increased $128,000 (38.8%) due to additional depreciation related to the
acquisition of aircraft, computer
system hardware, and maintenance and office equipment; the general and
administrative expense increase of $238,000 (7.1%) resulted from increases in
operational and clerical staffing related to expansion of MAS and increased
levels of administrative service required by the
Company's principal customer, increases in professional fees and stockholder
expense (including expense of special stockholder meeting held in May 1994)
and general increases in salary and wage rates.
Interest expense decreased $8,000 (92.0%) for fiscal 1995 compared to
fiscal 1994 due to the repayment of debt.
Pretax earnings increased $59,000 to $2,445,000 for fiscal 1995. The
pretax earnings increase was primarily related to the increased level of cargo
revenue generated by Company-owned aircraft and earnings generated by the
Company's brokerage and engine overhaul management services.
Provision for income taxes increased $41,000 (5.0%) to $848,000 in 1995.
The increase was due to the full utilization of post-acquisition net operating
loss carryforwards, resulting in higher Federal income tax rates, on certain
Company income starting in the second quarter of fiscal 1995. The provision
for income taxes for the fiscal years ended March 31, 1995 and 1994 were
different from the Federal statutory rates due to state tax provisions and
changes to the deferred tax valuation allowance.
11<PAGE>
Changes in the valuation allowance, related to future utilization of
post-acquisition net operating losses, reduced the provision for income taxes
by $112,000 during the 1995 fiscal year.
Liquidity and Capital Resources. As of March 31, 1996 the Company's
working capital amounted to $5,662,000, an increase of $1,185,000 compared to
March 31, 1995. The net increase, primarily resulted from profitable
operations, disposal of aircraft and earnings on investments, as reflected by
a $723,000 increase in cash and investments, a $790,000 decrease in accounts
payable and a $456,000 increase in inventory, partially offset by a
$233,000 decrease in accounts receivable and a $351,000 increase in accrued
expenses and
taxes. The March 31, 1996 cash and short-term investments included $3,266,000
invested primarily in bonds, commercial paper and mutual funds.
The Company's accounts receivable and inventory financing line provides
credit in the aggregate of up to $2,250,000 to September 1996. The Company
anticipates renewing the line of credit in 1996. Loans under the line of
credit bear interest at the lender's prime rate.
Substantially all of the Company's assets, excluding aircraft, have been
pledged as collateral under this financing arrangement. As of March 31, 1996,
the Company was in a net investment position against its credit line.
Management believes that funds anticipated from operations and existing credit
facilities will provide adequate cash flow to meet the Company's future
financial needs.
The respective years ended March 31, 1996, 1995 and 1994 resulted in the
following changes in cash flow: Operating activities provided $1,778,000,
$3,047,000, and $1,693,000; investing activities used $1,830,000, $299,000,
and $1,008,000; and financing activities used $1,114,000, $1,115,000 and
$367,000 respectively. Net cash and cash equivalents decreased $1,167,000 for
the year ended March 31, 1996, and increased $1,633,000 and $318,000 for the
years ended March 31, 1995 and 1994 respectively.
Cash provided by operating activities was $1,268,000 less for the year
ended March 31, 1996 compared to 1995, primarily due to reductions in accounts
payable. Cash used in investing activities for the year ended March 31, 1996
was approximately $1,532,000 more than 1995, principally due to the Company's
purchase of short-term investments in 1996. The primary use of cash in
investing activities in 1995 related to the acquisition of two aircraft. Cash
used in financing activities was $1,000 less in 1996 compared to 1995. The
primary use of cash in investing activities for 1995 related to the Company's
purchases of short-term investments in 1996.
During the fiscal year ended March 31, 1996 the Company repurchased
238,500 shares of its common stock at a total cost of $1,011,043. Pursuant to
its previously announced stock repurchase program, $821,000 remains available
for repurchase of common stock.
The Company's planned relocation of aircraft maintenance and repair
operations to Kinston, North Carolina is scheduled for August 1996. Costs asso-
ciated with the relocation are projected to reduce the Company's cash flow by
approximately $500,000 in fiscal 1997. Other than the above relocation there
12<PAGE>
are, currently, no commitments for significant capital expenditures and none
are anticipated during the fiscal year ending March 31, 1997.
Company stockholders approved, at a special stockholders' meeting held
May 4, 1994, a consolidation of common shares via a one-for-five reverse stock
split, which became effective May 16, 1994. The following cash dividend data
gives effect to the reverse stock split. The Company paid, on June 15, 1994,
a special cash dividend of $.06 per common share to shareholders of record May
20, 1994, and paid a $.07 per common share special cash dividend on May 31,
1995 to shareholders of record May 8, 1995. The Company also paid a $.08 per
common share special cash dividend on April 22, 1996 to shareholders of record
April 2, 1996.
Impact of Inflation. The Company believes the impact of inflation and
changing prices on its revenues and net earnings will not have a material
effect since the major cost
components of its operations, consisting principally of fuel, crew and certain
maintenance costs, are reimbursed, without markup, under current contract
terms.
Item 8. Financial Statements and Supplementary Data.
The following pages present the consolidated financial statements of the
Company and the independent auditors' report thereon.
13<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Air Transportation Holding Company, Inc.
Denver, North Carolina
We have audited the accompanying consolidated balance sheets of Air
Transportation Holding Company, Inc. and subsidiaries as of March 31, 1996 and
1995, and the related consolidated statements of earnings, stockholders'
equity, and cash flows for each of the three years in the period ended March
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Air Transportation Holding
Company, Inc. and subsidiaries as of March 31, 1996 and 1995, and the results
of their operations and their cash flows for each of the three years in the
period ended March 31, 1996 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
June 10, 1996
Charlotte, North Carolina
14<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION> March 31,
1996 1995
<S> <C> <C>
ASSETS (Note 3)
CURRENT ASSETS:
Cash and cash equivalents $ 2,213,841 $ 3,380,885
Short-term investments 1,889,819 -
Accounts receivable, less allowance for
doubtful accounts of $44,000 in 1996
and $38,000 in 1995 3,133,670 3,366,286
Parts and supplies inventory 725,503 269,653
Assets held for sale 20,646 40,646
Prepaid expenses 40,679 450
Deferred tax asset (Note 7) 440,000 440,000
Total Current Assets 8,464,158 7,497,920
PROPERTY AND EQUIPMENT (Notes 3 and 4):
Furniture, fixtures and improvements 2,084,027 1,893,924
Flight equipment and rotables inventory 1,164,807 1,419,740
3,248,834 3,313,664
Accumulated depreciation and amortization (1,678,980) (1,271,750)
Property and equipment, net 1,569,854 2,041,914
EXCESS OF COST OVER NET ASSETS OF SUBSIDIARY
ACQUIRED, net of amortization of $807,000
(1996) and $1,202,000 (1995) (Notes 1 and 7) 33,834 429,167
OTHER ASSETS 124,387 56,435
DEFERRED TAX ASSET (Note 7) 27,838 135,620
TOTAL $10,220,071 $10,161,056
<FN>
See notes to consolidated financial statements.
</TABLE>
15<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION> March 31,
1996 1995
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,003,081 $ 1,574,438
Accrued expenses (Note 2, 5, and 8) 1,555,284 1,401,275
Income taxes payable (Note 7) 238,113 41,054
Current maturities of long-term debt 5,976 4,437
Total Current Liabilities 2,802,454 3,021,204
LONG-TERM DEBT, less current maturities
(Notes 3 and 4) 3,649 9,838
COMMITMENTS (Note 4)
STOCKHOLDERS' EQUITY (Note 5):
Preferred stock, $1 par value; authorized
10,000,000 shares; none issued
Common stock, par value $.25; authorized
4,000,000 shares; issued 2,725,433 shares
in 1996 and 2,865,933 shares in 1995 681,358 716,483
Additional paid-in capital 7,299,045 7,891,108
Deficit (566,435) (1,477,577)
Total Stockholders' Equity 7,413,968 7,130,014
TOTAL $10,220,071 $10,161,056
<FN>
See notes to consolidated financial statements
</TABLE>
16<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<CAPTION> For Year Ended March 31
1996 1995 1994
<S> <C> <C> <C>
OPERATING REVENUE (Note 6):
Cargo $19,129,860 $18,283,842 $17,050,465
Maintenance 13,104,829 13,149,946 12,919,773
Aircraft services and other 3,865,859 1,517,184 703,670
36,100,548 32,950,972 30,673,908
OPERATING EXPENSES:
Flight operations 12,653,601 12,131,978 11,597,475
Maintenance and brokerage 16,888,729 14,332,419 13,012,291
General and administrative
(Note 8) 3,815,987 3,582,055 3,344,489
Depreciation and amortization 484,711 458,619 330,515
33,843,028 30,505,071 28,284,770
OPERATING INCOME 2,257,520 2,445,901 2,389,138
NON-OPERATING EXPENSE (INCOME):
Interest 981 661 8,227
Other (263,508) (313) (5,352)
(262,527) 348 2,875
EARNINGS BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 2,520,047 2,445,553 2,386,263
INCOME TAXES (Note 7) 908,000 848,000 807,000
EARNINGS BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE 1,612,047 1,597,553 1,579,263
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE (Note 7) - - 715,000
NET EARNINGS $ 1,612,047 $ 1,597,553 $ 2,294,263
NET EARNINGS PER COMMON SHARE (Note 5):
Earnings before cumulative effect of
change in accounting
principle $ 0.53 $ 0.48 $ 0.47
Cumulative effect of change in
accounting principle - - 0.22
Net earnings $ .53 $ 0.48 $ 0.69
WEIGHTED AVERAGE SHARES
OUTSTANDING 3,019,831 3,312,387 3,347,689
<FN>
See notes to consolidated financial statements.
</TABLE> 17<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION> Common Stock (Note 6) Additional
Paid-In
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance, March 31, 1993 2,912,433 $728,108 $8,279,308 $(4,514,500)
Cash dividend
($.05 per share) - - - (145,622)
Net earnings - - - 2,294,263
Balance, March 31, 1994 2,912,433 728,108 8,279,308 (2,365,859)
Repurchase and retirement
of common stock (278,500) (69,625) (563,450) (534,525)
Exercise of stock options 232,000 58,000 175,250 -
Cash dividend
($.06 per share) - - - (174,746)
Net earnings - - - 1,597,553
Balance, March 31, 1995 2,865,933 716,483 7,891,108 (1,477,577)
Repurchase and retirement
of common stock (238,500) (59,625) (669,563) (281,855)
Exercise of stock options 98,000 24,500 77,500 -
Cash dividend paid
($.07 per share) - - - (200,615)
Cash dividend declared
($.08 per share) (218,435)
Net earnings - - - 1,612,047
Balance, March 31, 1996 2,725,433 $ 681,358 $7,299,045 $ (566,435)
<FN>
See notes to consolidated financial statements.
</TABLE>
18<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION> For Year Ended March 31
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 1,612,047 $ 1,597,553 $ 2,294,263
Adjustments to reconcile net earnings
to net cash provided by operating activities
Cumulative effect of change in
accounting principle - - (715,000)
Depreciation and amortization 484,711 458,619 330,515
Other - - (5,352)
Change in deferred tax asset 107,782 104,180 355,000
Charge in lieu of income taxes
credited to goodwill 323,346 275,468 214,000
Changes in assets and liabilities
which provided (used) cash:
Accounts receivable 232,616 (344,082) (236,631)
Parts and supplies inventory (455,850) (168,833) (13,280)
Other assets (88,180) (4,709) (6,122)
Accounts payable (789,792) 834,037 (485,581)
Accrued expenses 154,009 264,334 (20,686)
Income taxes payable 197,059 29,941 (18,254)
Total adjustments 165,701 1,448,955 (601,391)
Net cash provided by operating
activities 1,777,748 3,046,508 1,692,872
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (204,172) (1,048,851) (758,932)
Proceeds from sale of equipment 263,508 - 30,552
Loans (to) from officers - 750,000 (280,000)
Short-term investments (1,889,819) - -
Net cash used in investing activities(1,830,483) (298,851) (1,008,380)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt (4,651) (5,935) (221,098)
Payment of cash dividend (200,615) (174,746) (145,622)
Repurchase of common stock (1,011,043) (1,167,600) -
Exercise of stock options 102,000 233,250 -
Net cash used in financing activities(1,114,309) (1,115,031) (366,720)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (1,167,044) 1,632,626 317,772
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 3,380,885 1,748,259 1,430,487
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 2,213,841 $ 3,380,885 $ 1,748,259
19<PAGE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 981 $ 1,233 $ 9,347
Income taxes 346,873 338,562 275,703
Non-Cash financing activity -
dividend accrual 218,435 - -
<FN>
See notes to consolidated financial statements
</TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1996, 1995, AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principal Business Activity - The Company, through its operating
subsidiaries, is an air cargo carrier specializing in the overnight delivery
of small package air freight, for a major express delivery company out of 78
cities principally located in 30 states in the eastern half of the U.S. and in
Canada, Puerto Rico, and the Virgin Islands. The Company also provides
aircraft parts, engine overhaul management and component repair services.
Principles of Consolidation - The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries,
Mountain Air Cargo, Inc., CSA Air, Inc., and Mountain Aircraft Services, LLC.
All significant intercompany transactions and balances have been
eliminated.
Use of Estimates - The preparation of the Company's financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and reportedamounts of revenues and
expenses during the reporting period. Actual results Investments could differ
from those estimates.
Parts and Supplies Inventory - Parts and supplies inventory are carried
at the lower of average cost or market. In accordance with industry
practice, the Company includes in current assets parts and supplies, although
a certain portion of these inventories are not expected to be used within one
year.
Property and Equipment - Property and equipment is stated at cost or, in
the case of equipment under capital leases, the present value of future lease
payments. Rotables inventory represents aircraft parts which are repairable
and are, therefore, capitalized and depreciated over their estimated useful
lives. Depreciation and amortization are provided on a straight-line basis
over estimated useful lives of 3-9 years for property and equipment. Assets
held for sale are carried at the lower of cost or estimated realizable
value.
20<PAGE>
Excess of Cost Over Net Assets of Subsidiary Acquired - Excess of cost
over net assets of subsidiary acquired represents the difference between the
fair value of the Company's stock issued and the carrying value of the net
asset deficiency of an acquired business as of the acquisition date. The
excess is being amortized on a straight-line basis over a 40 year period.
The Company periodically evaluates the value of the carrying amount of
goodwill using estimates of future cash flows and operating earnings of the
business acquired. Adjustments to the carrying amount, or amortization period
of goodwill, will be made if the earnings and cash flow outlook do not support
the current carrying value.
Investments - The Company has a cash management program which provides
for the investment of excess cash balances. Investments at March 31, 1996
represent available-for-sale securities carried at fair value (which
approximates cost).
Investments consist primarily of commercial paper, bonds, and mutual
funds.
Cargo and Maintenance Revenue - Cargo revenue is recognized at the time
the route is completed, and maintenance revenue is recognized when the service
has been performed.
Operating Expenses Reimbursed by Customer - The Company, under the terms
of its dry lease service contracts, passes through to its major customer
certain cost components of its operations without markup. The cost of fuel,
landing fees, outside maintenance
and certain other direct operating costs are included in operating
expenses and billed to the customer, as cargo and maintenance revenue, at
cost.
Net Earnings Per Common Share - Earnings per share have been compiled by
dividing net earnings by the weighted average number of common shares
outstanding, including common shares issuable under employee stock options
which are considered common share equiva-lents. There were no material
differences between primary and fully diluted earnings per share. (see Reverse
Stock Split below)
Reverse Stock Split - Company stockholders, at a special stockholders
meeting held May 4, 1994, approved, effective May 16, 1994, a one-for-five
reverse stock split of the Company's common shares. All 1996, 1995 and 1994
common stock par values, share balances, earnings per share and dividends have
been restated to reflect the reverse stock split.
Cash Equivalents - Cash equivalents consist of liquid investments with
maturities of three months or less when purchased.
21<PAGE>
Income Taxes - The Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes" as of the beginning of
fiscal 1994, and the cumulative effect of this change in accounting principle
is reported in the Consolidated Statements of Earnings for Fiscal 1994. The
cumulative effect on net earnings of adoption of $715,000 ($.22 per share)
reflects the impact of "temporary differences" between amounts of assets and
liabilities for financial reporting purposes and such amounts as measured by
tax laws, and the future utilization of net operating loss and alternative
minimum tax credit carryforwards. In addition, the cumulative effect of
adoption reduced goodwill by $320,000, which reflects the effect of future
utilization of pre-acquisition loss carryforwards.
Effect of New Accounting Standards - In October 1995, the Financial
Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based
Compensation". Under SFAS No. 123, companies are permitted to either adopt
this new standard and record expenses of stock options and other stock-based
employee compensation plans based on their fair value at date of grant or
continue to apply Accounting Principles Board ("APB") Opinion No. 25 and
increase footnote disclosure. The Company has decided to continue to apply
APB Opinion No. 25, and in fiscal 1997, to increase footnote disclosure to
include the pro forma impact on net earnings and earnings per share based on
the application of the fair value based method of accounting.
Reclassification - Certain amounts have been reclassified for 1995 and
1994 to conform to the 1996 presentation.
2. ACCRUED EXPENSES
Accrued expenses consist of the following:
MARCH 31,
1996 1995
Salaries, Wages and Related Items $ 684,440 $ 648,685
Profit Sharing 409,000 402,079
Other 461,844 350,511
$1,555,284 $1,401,275
3. FINANCING ARRANGEMENTS
The Company's accounts receivable and inventory financing line provides
for credit up to the lesser of $2,250,000 or the sum of 85% of eligible
accounts receivable and 35% of inventory (up to $400,000 maximum inventory
borrowing). Amounts advanced bear interest at the prime rate payable upon
demand. The prime rate at March 31, 1996 was 8 1/4%. Any advances are
collateralized by a first lien on accounts receivable, inventories (including
inventory classified as assets held for sale) and certain equipment. There
were no advances outstanding as of March 31, 1996 or 1995.
22<PAGE>
4. LEASE COMMITMENTS
The Company has capital lease obligations for office equipment and also
has operating lease commitments for office equipment and its office and
maintenance facilities. The Company leased its central office and maintenance
facilities from a company controlled by Company officers for $7,000 per month
under a five year lease which expires in May 1996. Effective June 1996, the
lease was renewed for an additional five-year period at $8,073 per month. The
Company is scheduled to relocate and expand its maintenance and repair
facilities to North Carolina's new Global TransPark (GTP) located in Kinston,
N.C. in August 1996. The lease for this facility is to be twenty one and one
half years, but may be cancellable by the Company upon the occurance of
certain events. Under the terms of the lease, the Company will pay rent,
after an 18 month grace period, per square foot escalating from $2.25 to $5.90
over the remaining life of the lease.
At March 31, 1996, future minimum annual rental payments under capital
leases and operating leases, including the GTP lease, with initial or
remaining terms of more than one year are as follows:
Capital Operating
Leases Leases
1997 $ 6,372 $ 132,525
1998 3,717 146,399
1999 216,805
2000 216,805
2001 216,805
Thereafter 3,943,428
Total minimum lease payments 10,089 $4,872,767
Less amount representing interest, at 5.7% 464
Present value of lease payments 9,625
Less current maturities 5,976
Long-term maturities $ 3,649
Rent expense for operating leases amounted to $177,000 (1996), $179,000
(1995), and $149,000 (1994). Rent expense to related parties was $84,000
(1996, 1995, and 1994).
5. STOCKHOLDERS' EQUITY
In 1984, the Company created a class of preferred stock, $1 par value.
The Company may issue up to 10,000,000 shares of preferred stock, in one or
more series, on such terms and with such rights, preferences and limitations
as determined by the Board of Directors. No preferred shares have been issued
as of March 31, 1996.
23<PAGE>
The Company has granted options to purchase 447,000 and 130,000 shares of
common stock to certain Company employees at a price of $1.00 and $1.25 per
share, respectively. As of March 31, 1996, options totaling 330,000 shares
have been exercised and 247,000 shares remain available and exercisable
through outstanding options. The Company has reserved an aggregate of 247,000
common shares for issuance upon exercise of these stock options.
The Company has announced its intention to repurchase the Company's
common stock under a share repurchase program. At March 31, 1996, the Company
may expend up to $821,000 under this program.
6. REVENUES FROM MAJOR CUSTOMER
Approximately 90% of the Company's revenues are derived from services
performed for a major air express company.
7. INCOME TAXES
The provision for income taxes was based upon the liability method in
1996, 1995 and 1994 and consists of:
YEAR ENDED MARCH 31,
1996 1995 1994
Current:
Federal $ 296,000 $ 273,000 $ 44,000
State 182,000 195,000 194,000
Total current 478,000 468,000 238,000
Charge in lieu of Federal taxes 430,000 380,000 569,000
Total $ 908,000 $ 848,000 $ 807,000
Pre-acquisition net operating loss carryforwards have been utilized for
federal income tax purposes for fiscal years 1996, 1995 and 1994. The income
tax benefit ($323,000) in 1996, $275,000 in 1995 and $214,000 in 1994) derived
from these pre-acquisition net operating loss carryforwards has been accounted
for as a reduction of goodwill. The consolidated income tax provision was
different from the amount computed using the statutory Federal income tax rate
for the following reasons:
1996 1995 1994
Income tax provision at U.S.
statutory rate $841,000 $765,000 $745,000
State income taxes 182,000 195,000 194,000
Reduction in valuation allowance (115,000) (112,000) (132,000)
Income tax provision $908,000 $848,000 $807,000
The tax effect of temporary differences and net operating loss carryfor-
wards that gave rise to the Company's deferred tax asset at March 31, 1996 and
1995 are as follows:
24<PAGE>
1996 1995
Net operating loss carryforwards $ 163,849 $ 715,166
Alternative minimum tax credit carryforwards - 91,565
Fixed assets 420,392 115,409
Other 53,850 261,820
638,091 1,183,960
Less: Valuation allowance (170,253) (608,340)
Deferred tax asset $ 467,838 $ 575,620
The deferred tax asset is broken down between current and noncurrent
amounts in the accompanying 1996 and 1995 consolidated balance sheets
according to the classification of the related asset and liability or, in the
case of tax loss carryforwards, based on their expected utilization date.
The Company has recorded a valuation allowance in order to reduce its
deferred tax asset to an amount which is more likely than not to be realized.
Of the $170,000 valuation allowance at March 31, 1996, approximately $152,000
relates to pre-acquisition carryforwards while approximately $18,000 is
related to other deferred
benefits. Reductions in the valuation allowance derived from utilization of
pre-acquisition carryforwards of $323,000 and $275,000 have been credited
directly to goodwill during the 1996 and 1995 fiscal years, respectively.
Changes in the valuation allowance, related to future utilization of post-
acquisition net operating losses, reduced the provision for income taxes by
$115,000 and $112,000, respectively, during the 1996 and 1995 fiscal years.
At March 31, 1996, the Company has federal net operating loss carryforw-
ards available for tax purposes of approximately $500,000. These
carryforwards expire in 1997. The potential utilization of these pre-
acquisition carryforwards is subject to the separate return limitation rules
pursuant to Treasury regulations. These carryforwards, to the extent
realized, will result in a reduction of goodwill, until goodwill is reduced to
zero.
8. EMPLOYEE BENEFITS
The Company has a 401K defined contribution plan (AirT 401(K) Retirement
Plan). All employees of the Company are eligible to participate in the plan.
The Company's contribution to the 401(K) plan for the years ended March 31,
1996, 1995 and 1994 was $210,052, $171,298, and $142,593, respectively.
The Company, in each of the past three years, has paid a discretionary
profit sharing bonus in which all employees have participated. The Company's
March 31, 1996, 1995, and 1994 expense was $409,000, $397,000 and $388,000,
respectively.
25<PAGE>
Effective January 1, 1996 the Company entered into supplemental
retirement agreements with certain key executives of the Company, to provide
for a monthly benefit upon retirement. The following table sets forth the
funded status of the plan at March 31, 1996.
Vested Benefit Obligation $ 913,847
Accumulated Benefit Obligation $ 913,847
Projected Benefit Obligation $ 913,847
Plan Assets at Fair Value $ -
Projected Benefit Obligation greater
than plan assets (913,847)
Prior service cost not yet recognized 871,737
Accrued pension cost recognized in the
consolidated balance sheet $ (42,110)
The projected benefit obligation was determined using an assumed
discount rate of 7%. The liability relating to these benefits has been
included in accrued expenses in the accompanying financial statements.
Net periodic pension expense for 1996 included the following:
Service Cost $ 6,838
Interest Cost 15,212
Amortization 20,060
Net periodic pension cost $ 42,110
9. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(in thousands except per share data)
FIRST SECOND THIRD FOURTH
1996 QUARTER QUARTER QUARTER QUARTER
Operating Revenues $8,364 $8,694 $8,762 $10,281
Gross Profit 812 504 663 541
Net Earnings 520 301 353 438
Net Earnings Per Share $ .17 $ .10 $ .12 $ .15
FIRST SECOND THIRD FOURTH
1995 QUARTER QUARTER QUARTER QUARTER
Operating Revenues $8,051 $8,081 $8,121 $8,698
Gross Profit 652 693 613 487
Net Earnings 431 433 384 350
Net Earnings Per Share $ .13 $ .13 $ .11 $ .11
26<PAGE>
Item 9. Disagreements on Accounting and Financial Disclosure.
The Company had no disagreements on accounting or financial
disclosure matters with its independent certified public accountants to report
under this Item 9.
PART III
Item 10. Directors and Executive Officers of the Registrant.
J. Hugh Bingham, age 50, has served as Senior Vice President of the
Company since June 1990, as Executive Vice President from June 1983 to June
1990, and as a director since March 1987. Mr. Bingham also serves as an
Executive Vice President and a director of MAC and of CSA and as President of
MAS.
David Clark, age 73, has served as Chairman of the Board of Directors of
the Company and as Chairman of the Board of all the Company's subsidiaries
since June 23, 1983. From June 23, 1983, Mr. Clark also served as the
Company's, and each of its subsidiaries', Chief Executive Officer and from the
spring of 1984 until June 1990, he served as the Company's President.
Mr. Clark is also Chairman of the Board of MAC and of CSA. He has served for
the past five years as President of a real estate development concern with
interests in North Carolina.
John J. Gioffre, age 52, has served as Vice President-Finance and Chief
Financial Officer of the Company since April 1984 and as Secretary/Treasurer
of the Company since June 1983. He has served as a director of the Company
since March 1987. Mr. Gioffre also serves as Vice-President, Secre-
tary/Treasurer and a director of MAC and CSA and as Vice President-Finance,
Treasurer and Secretary of MAS.
H. Wayne Ross, age 51, has served as President of CSA since October 1988.
William H. Simpson, age 48, has served as Executive Vice President of
the Company since June 1990, as Vice President from June 1983 to June 1990,
and as a director of the Company since June 20, 1985. Mr. Simpson is also the
President and a director of MAC, a director of CSA and Executive Vice
President of MAS.
Menda J. Street, age 44, has served as Vice President of MAC since 1984,
and in various other capacities at MAC since 1979.
Claude S. Abernethy, Jr., age 69, was elected as director of the Company
in June 1990. For the past five years, Mr. Abernethy has served as a Senior
Vice President of Interstate/Johnson Lane Corporation, a securities brokerage
and investment banking firm. Mr. Abernethy is also a director of Inter-
state/Johnson Lane Corporation and Carolina Mills, Inc.
Sam Chesnutt, age 62, was elected a director of the Company in August
1994. Mr. Chesnutt serves as President of Sam Chesnutt and Associates, an
agribusiness consulting firm. From November 1988 to December 1994, Mr.
Chesnutt served as Executive Vice President of AgriGeneral Company, L.P., an
agribusiness firm.
27<PAGE>
Walter Clark, age 39, was elected a director of the Company in April
1996. Mr. Clark has been self-employed in the real estate development
business since 1985.
J. Leonard Martin, age 59, was elected a director in August 1994. Mr.
Martin is currently an independent aviation consultant. From April 1994 to
June 1995, Mr. Martin has served as Chief Operating Officer of Musgrave
Machine & Tool, Inc., a machining company. From January 1989 to April 1994,
Mr. Martin served as a consultant to the North Carolina Air Cargo Authority in
connection with the establishment of the Global TransPark air cargo facility
in Kinston, North Carolina.
From 1955 through 1988 Mr. Martin was employed by Piedmont Airlines, a
commercial passenger airline, in various capacities, ultimately serving as
Senior Vice President-Passenger Services.
George C. Prill, age 73, has served as a director of the Company since
June 1982, as Chief Executive Officer and Chairman of the Board of Directors
from August 1982 until June 1983, and as President from August 1982 until
spring 1984. Mr. Prill has served as an Editorial Director for General
Publications, Inc., a publisher of magazines devoted to the air transportation
industry, since November 1992 and was retired from 1990 until that time. From
1979 to 1990, Mr. Prill served as President of George C. Prill & Associates,
Inc., of Charlottesville, Virginia, which performed consulting services for
the aerospace and airline industry. Mr. Prill has served as President of
Lockheed International Company, as Assistant Administrator of the FAA, as a
Senior Vice President of the National Aeronautic Association and Chairman of
the Aerospace Industry Trade Advisory Committee.
Terry Sanford, age 78, was elected a director in August 1994. Mr.
Sanford is President Emeritus of Duke University, a position held since 1985,
and has been a Professor of Public Policy at the Terry Sanford Institute of
Public Policy at Duke University since 1992. In addition, since 1993,
Mr. Sanford has been a partner of The Sanford Law Firm in Raleigh, North
Carolina. From 1986 to 1993, Mr. Sanford served as a United States Senator
representing the State of North Carolina. Mr. Sanford serves on the board of
directors of IMC, Inc., the parent of Golden Corral Corporation.
Walter Clark is David Clark's son.
The officers of the Company and its subsidiaries each serve at the
pleasure of the Board of Directors.
Each director receives a director's fee of $500 per month and an
attendance fee of $500 is paid to outside directors for each meeting of the
board of directors or a committee thereof.
28<PAGE>
To the Company's knowledge, based solely on review of the copies of
reports under Section 16(a) of the Securities Exchange Act of 1934 that have
been furnished to the Company and written representations that no other
reports were required, during the fiscal year ended March 31, 1996 all
executive officers, directors and greater than ten-percent beneficial owners
have complied with all applicable Section 16(a) filing requirements, except
that Mr. Chesnutt was a few days late in filing one report with respect to an
acquisition transaction.
Item 11. Executive Compensation.
The following table sets forth a summary of the compensation paid during
each of the three most recent fiscal years to Mr. Clark, as Chief Executive
Officer, and to each of the other individuals who were executive officers on
March 31, 1996 with total compensation of $100,000 or more.
SUMMARY COMPENSATION TABLE
All Other
Annual Compensation Compensation
Name and Principal Position Year Salary ($) Bonus ($) ($)
David Clark 1996 155,749 59,583 -
Chief Executive Officer 1995 144,738 59,345 -
1994 136,381 55,494 (1)
J. Hugh Bingham 1996 124,953 67,583 -
Senior Vice President 1995 107,177 67,845 -
1994 102,153 37,747 -
John J. Gioffre 1996 97,426 49,937 -
Vice President 1995 99,898 52,134 -
1994 90,443 28,747 -
William H. Simpson 1996 160,204 73,583 -
Executive Vice President 1995 149,221 79,845 -
1994 140,537 77,494 -
Menda J. Street 1996 93,316 38,291 -
Vice President of MAC 1995 89,283 39,422 -
1994 84,113 36,747 -
____________________________
(1) During the fiscal year ended March 31, 1994, the Company made certain
loans to Mr. Clark. See "Item 13 - Certain Relationships and Related
Transactions."
29<PAGE>
The following table sets forth the number of shares of Common Stock
underlying unexercised options at March 31, 1996 held by each of the executive
officers listed in the Summary Compensation Table. The table also includes
the value of such options at March 31, 1996 based upon the closing bid price
of the Company's Common Stock in the over-the-counter market on that date
($4.00 per share) and the exercise price of the options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number of Securities Value of
Shares Underlying Unexercised
Acquired Value Unexercised In-the-Money Options
On Realized Options at FYE(#) at FY-End ($)
Exer- Exer- Unexer- Exer- Unexer-
Name cise # ($) cisable cisable cisable cisable
David Clark - - - - - -
J. Hugh Bingham 14,000 42,000 78,000 - 312,000 -
John J. Gioffre 8,000 24,000 42,000 - 168,000 -
William H. Simpson 20,000 60,000 108,000 - 432,000 -
Menda J. Street - - 15,000 - 60,000 -
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information regarding the beneficial
ownership of shares of Common Stock (determined in accordance with Rule 13d-3
of the Securities and Exchange Commission) of the Company as of May 15, 1996
by each person that beneficially owns five percent or more of the shares of
Common Stock. Each person named in the table has sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned,
except as otherwise set forth in the notes to the table.
30<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Amount and Nature of
Title of Name and Address of Beneficial Ownership Percent
Class Beneficial Owner as of May 31, 1996 of Class
Common Stock, David Clark, Trustee 1,294,826(1) 49.5%
par value $.25 P.O. Box 488
per share Denver, N.C.
Thomas B. Henson, Trustee 1,294,826(1) 49.5%
1900 Independence Center
101 North Tryon Street
Charlotte, N.C. 28246
William H. Simpson 261,580(2) 9.9%
P.O. Box 488
Denver, N.C.
32<PAGE>
Kennedy Capital Mgmt, Inc.(3) 229,438 8.8%
425 North Ballas Road
St. Louis, Missouri 63141
____________________________
(1) Shares held pursuant to a revocable trust established by David Clark
under an Agreement dated August 21, 1995.
(2) Includes 1,200 shares held jointly with J. Hugh Bingham, and 108,000
shares under options granted by the Company.
(3) Information regarding Kennedy Capital Management, Inc. is based upon
information provided by Kennedy Capital Management Inc. to the
Company on June 17, 1996.
The following table sets forth information regarding the beneficial
ownership of shares of Common Stock of the Company by each director of the
Company and by all directors and officers of the Company as a group as of
May 15, 1996. Each person named in the table has sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned,
except as otherwise set forth in the notes to the table.
31<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Shares and Percent
of Common Stock
Beneficially Owned
Name Position with Company as of May 15, 1996
No. of Shares Percent
J. Hugh Bingham Senior Vice President, 116,080 (1)(2) 4.3%
Director
David Clark Chairman of the Board of 1,294,826 (3) 49.5%
Directors and Chief
Executive Officer
John J. Gioffre Vice President-Finance, 57,580 (4) 2.2%
Secretary and Treasurer,
Director
William H. Simpson Executive Vice President, 261,580 (1)(5) 9.6%
Director
Claude S. Abernethy, Jr. Director 22,611 *
Sam Chesnutt Director 3,600 *
Walter Clark Director 0 0%
J. Leonard Martin Director 100 (6) *
George C. Prill Director 45,966 1.8%
Terry Sanford Director 0 0%
All directors and N/A 1,823,343 (7) 63.9%
executive officers as a group
(12 persons)
__________________________________________
* Less than one percent.
(1) Includes 1,200 shares jointly held by Messrs. Simpson and Bingham.
(2) Includes 78,000 shares under options granted by the Company to Mr.
Bingham.
(3) Shares held pursuant to a revocable trust established by David Clark
under an Agreement dated August 21, 1995.
(4) Includes 42,000 shares under options granted by the Company to
Mr. Gioffre.
(5) Includes 108,000 shares under options granted by the Company to
Mr.Simpson.
(6) Such 100 shares are held by Mr. Martin's spouse of which shares
Mr.Martin disclaims beneficial ownership.
(7) Includes an aggregate of 243,000 shares of Common Stock members of
such group have the right to acquire within 60 days.
32<PAGE>
Item 13. Certain Relationships and Related Transactions.
The Company leases its corporate and operating facilities at the Little
Mountain, North Carolina airport from Little Mountain Airport Associates, Inc.
("Airport Associates"), a corporation whose stock is owned by David Clark,
J. Hugh Bingham, William H. Simpson, John J. Gioffre and three unaffiliated
third parties. On May 30, 1996, the Company renewed its lease for this
facility, scheduled to expire on that date, for an additional five-year term,
and adjusted the rent to account for increases in the consumer price index.
The lease may be extended for an additional five-year term, with rental
payments to be adjusted to reflect changes in the consumer price index. Upon
the renewal, the monthly rental payment was increased from $7,000 to $8,073.
The Company paid aggregate rental payments of $84,000 to Airport Associates
pursuant to such lease during the fiscal year ended March 31, 1996.
As part of the Company's stock repurchase program, the Company repurchased
certain shares of Common Stock from Messrs. Bingham, Gioffre and Simpson
during fiscal year ended March 31, 1996. On October 16, 1995, the Company
purchased for cash 25,000 shares of Common Stock from Mr. Simpson in a
negotiated transaction at a price of $4.35 per share. On March 15, 1996,
the Company purchased for cash 40,000 shares and 17,500 shares of Common
Stock from Messrs. Bingham and Gioffre, respectively, in negotiated trans-
actions at a price of $4.20 per share. The per share purchase price in
each of the foregoing transactions was equal to the average closing price
per share of the Common Stock as reported by NASDAQ for the 30-day period
prior to the date of repurchase.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
The following documents are filed as part of this report:
1. Financial Statements
The following financial statements are incorporated herein by reference
in Item 8 of Part II of this report:
(i) Independent Auditors' Report.
(ii) Consolidated Balance Sheets as of March 31, 1996 and 1995.
(iii) Consolidated Statements of Earnings for each of the three
years in the period ended March 31, 1996.
(iv) Consolidated Statements of Stockholders' Equity for each of
the three years in the period ended March 31, 1996.
(v) Consolidated Statements of Cash Flows for each of the three
years in the period ended March 31, 1996.
(vi) Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
No schedules are required to be submitted.
33<PAGE>
3. Exhibits
No. Description
3.1 Certificate of Incorporation, as amended, incorporated by
reference to Exhibit 3.1 of the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1994
3.2 By-laws of the Company
4.1 Specimen Common Stock Certificate, incorporated by reference to
Exhibit 4.1 of the Company's Annual Report on Form 10-K for the fiscal year
ended March 31,1994
10.1 Aircraft Dry Lease and Service Agreement dated February 2, 1994
between Mountain Air Cargo, Inc. and Federal Express Corporation, incorporated
by reference to Exhibit 10.13 to Amendment No. 1 on Form 10-Q/A to the
Company's Quarterly Report on Form 10-Q for the quarterly period ended
December 31, 1993
10.2 Loan Agreement among NationsBank of North Carolina, N.A., the
Company and its subsidiaries, dated January 17, 1995, incorporated by
reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for
the period ended December 31, 1994
10.3 Aircraft Wet Lease Agreement dated April 1, 1994 between Mountain
Air Cargo, Inc. and Federal Express Corporation, incorporated by reference to
Exhibit 10.4 of Amendment No. 1 on Form 10-Q/Q to the Company's Quarterly
Report on Form 10-Q for the period ended September 30, 1994
10.4 Adoption Agreement regarding the Company's Master 401(k) Plan and
Trust, incorporated by reference to Exhibit 10.7 to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1993*
10.5 Form of options to purchase the following amounts of Common Stock
issued by the Company to the following executive officers during the following
fiscal years ended March 31: *
Number of Shares
Executive Officer 1993 1992 1991
J. Hugh Bingham 150,000 150,000 200,000
John J. Gioffre 100,000 100,000 125,000
William H. Simpson 200,000 200,000 300,000
incorporated by reference to Exhibit 10.8 to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1993
10.6 Premises and Facilities Lease dated November 16, 1995 between
Global TransPark Foundation, Inc. and Mountain Air Cargo, Inc., incorporated
by reference to Exhibit 10.5 to Amendment No. 1 on Form 10-Q/Ato the Company's
Quarterly Report on Form 10-Q for the period ended December 31, 1995
34<PAGE>
10.7 Employment Agreement dated January 1, 1996 between the
Company,Mountain Air Cargo Inc., CSA Air Inc. and Mountain Aircraft Services,
LLC and David Clark.
10.8 Employment Agreement dated January 1, 1996 between the
Company,Mountain Air Cargo Inc. and Mountain Aircraft Services, LLC and
William H. Simpson.
10.9 Employment Agreement dated January 1, 1996 between the
Company,Mountain Air Cargo Inc., CSA Air Inc. and Mountain Aircraft Services,
LLC and John J. Gioffre.
10.10 Employment Agreement dated January 1, 1996 between the
Company,Mountain Air Cargo Inc. and Mountain Aircraft Services, LLC and J.
Hugh Bingham.
11.1 Computation of Primary and Fully Diluted Earnings per Common Share
21.1 List of subsidiaries of the Company, incorporated by reference to
Exhibit 21.1 of the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1994
27.1 Financial Data Schedule
__________________
* Management compensatory plan or arrangement required to be filed as
an exhibit to this report.
b. Reports on Form 8-K.
No Current Reports on Form 8-K were filed in the last quarter of the
fiscal year ended March 31, 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
AIR TRANSPORTATION HOLDING COMPANY, INC.
By: /s/ David Clark
David Clark, Chief Executive Officer
(Principal Executive Officer)
Date: June 20, 1996
35<PAGE>
By: /s/ John J. Gioffre
John J. Gioffre, Vice President - Finance
(Principal Financial and Accounting Officer)
Date: June 20, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Claude S. Abernathy
Claude S. Abernethy, Jr., Director
Date: June 20, 1996
By: /s/ J. Hugh Bingham
J. Hugh Bingham, Director
Date: June 20, 1996
By: /s/ David Clark
David Clark, Director
Date: June 20, 1996
By: /s/ Sam Chesnutt
Sam Chesnutt, Director
Date: June 20, 1996
By: /s/ Walter Clark
Walter Clark, Director
Date: June 20, 1996
By: /s/ John J. Gioffre
John J. Gioffre, Director
Date: June 20, 1996
By: /s/ J. Leonard Martin
J. Leonard Martin, Director
Date: June 20, 1996
36<PAGE>
By: /s/ George C. Prill
George C. Prill, Director
Date: June 20, 1996
By: /s/ William Simpson
William Simpson, Director
Date: June 20, 1996
By: /s/ Terry Sanford
Terry Sanford, Director
Date: June 20, 1996
EXHIBIT INDEX
Sequentially
Exhibit Number Document Numbered Page
3.2 By-laws of the Company 38-49
10.7 Executive employment agreement with David Clark 50-58
10.8 Executive employment agreement with William Simpson 59-70
10.9 Executive employment agreement with John Gioffre 71-81
10.10 Executive employment agreement with Hugh Bingham 82-92
11.1 Computation of Primary and Fully Diluted Earnings
per Common Stock 93
27.1 Financial Data Schedule 94
37<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
Exhibit 11.1
Computation for Primary and Fully Diluted Earnings Per Common Share
<CAPTION>
For Year Ended March 31
1996 1995 1994
<S> <C> <C> <C>
EARNINGS BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPAL $1,612,047 $1,597,553 $1,579,263
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE - - 715,000
NET EARNINGS $1,612,047 $1,597,553 $2,294,263
WEIGHTED AVERAGE COMMON SHARES:
Primary:
Weighted average shares outstanding 2,771,025 2,867,766 2,912,433
Dilutive stock options 248,806 444,621 435,256
3,019,831 3,312,387 3,347,689
Fully Diluted:
Weighted average shares outstanding 2,771,025 2,867,766 2,912,433
Dilutive stock options 250,054 426,988 451,330
3,021,079 3,294,754 3,363,763
NET EARNINGS PER COMMON SHARE:
Primary:
Earnings before cumulative effect of
change in accounting principle $ 0.53 $ 0.48 $ 0.47
Change in accounting principle - - 0.22
Net earnings $ 0.53 $ 0.48 $ 0.69
Fully Diluted:
Earnings before cumulative effect of
change in accounting principle $ 0.53 $ 0.48 $ 0.47
Change in accounting principle - - 0.21
Net earnings $ 0.53 $ 0.48 $ 0.68
Note: All common share data reflect the one-for-five reverse stock split
effective May 15, 1995.
<FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
"This schedule contains summary financial information extracted from Air
Transportation Holding Company, Inc.'s SEC Form 10-K for fiscal year ended
March 31, 1996 (identify specific fianancial statements) and is qualified in its
entirety by reference to such financial statements."
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2213841
<SECURITIES> 0
<RECEIVABLES> 3133670
<ALLOWANCES> 0
<INVENTORY> 725503
<CURRENT-ASSETS> 8464158
<PP&E> 3248834
<DEPRECIATION> 1678980
<TOTAL-ASSETS> 10220071
<CURRENT-LIABILITIES> 2802454
<BONDS> 0
0
0
<COMMON> 681358
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 10220071
<SALES> 36100548
<TOTAL-REVENUES> 36100548
<CGS> 0
<TOTAL-COSTS> 33843028
<OTHER-EXPENSES> (263508)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 981
<INCOME-PRETAX> 2520047
<INCOME-TAX> 908000
<INCOME-CONTINUING> 1612047
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1612047
<EPS-PRIMARY> 0.530
<EPS-DILUTED> 0.530
</TABLE>
Exhibit 3.2
ATLANTA EXPRESS AIRLINE CORPORATION
---ooOoo---
BY - L A W S
---ooOoo---
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Auburn, State of Alabama, at such place
as may be fixed from time to time by the board of directors, or at such other
place either within or without the State of Delaware as shall be designated
from time to time by the board of directors and stated in the notice of the
meeting. Meetings of stockholders for any other purpose may be held at such
time and place, within or without the State of Delaware, as shall be stated in
the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year
1981, shall be held on the twentieth day of May if not a legal holiday, and if
a legal holiday, then on the next secular day following, at 10:00 A.M., or at
such other date and time as shall be designated from time to time by the board
of directors and stated in the notice of the meeting, at which they shall
elect by a plurality vote a board of directors, and transact such other
business as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the
38<PAGE>
president and shall be called by the president or secretary at the request in
writing of a majority of the board of directors, or at the request in writing
of stockholders owning a majority in amount of the entire capital stock of the
corporation issued and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten nor more than sixty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present
or represented at any meeting of the stockholders, the stockholders entitled
to vote thereat, present in person or represented by proxy, shall have power
to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented.
At such adjourned meeting at which a quorum shall be present or represented
any business may be transacted which might have been transacted at the meeting
as originally notified. If the adjournment is for more than thirty days, or
if after the adjournment a new record date is fixed for the adjourned meeting,
a notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or
of the certificate of incorporation, a different vote is required in which
case such express provision shall govern and control the decision of such
question.
Section 10. Unless otherwise provided in the certificate of incorpora-
tion each stockholder shall at every meeting of the stockholders be entitled
to one vote in person or by proxy for each share of the capital stock having
voting power held by such stockholder, but no proxy shall be voted on after
three years from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of incorpora-
tion, any action required to be taken at any annual or special meeting of
stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking
of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in
writing.
39<PAGE>
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be not less than one nor more than nine. The first board shall
consist of one director. Thereafter, within the limits above specified, the
number of directors shall be determined by resolution of the board of
directors or by the stockholders at the annual meeting. The directors shall
be elected at the annual meeting of the stockholders, except as provided in
Section 2 of this Article, and each director elected shall hold office until
his successor is elected and qualified. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the
next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in office, then
an election of directors may be held in the manner provided by statute. If,
at the time of filling any vacancy or any newly created directorship, the
directors then in office shall constitute less than a majority of the whole
board (as constituted immediately prior to any such increase), the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten percent of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorship or to replace
the directors chosen by the directors then in office.
Section 3. The business of the corporation shall be managed by or under
the direction of its board of directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute
or by the certificate of incorporation or by these by-laws directed or re-
quired to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of
the stockholders to fix the time or place of such first meeting of the newly
elected board of directors, or in the event such meeting is not held at the
time and place so fixed by the stockholders, the meeting may be held at such
time and place as shall be specified in a notice given as hereinafter provided
for special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 7. Special meetings of the board may be called by the president
on two days' notice to each director, either personally or by mail or by
telegram; special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of two directors unless
the board consists of only one director; in which case
40<PAGE>
special meetings shall be called by the president or secretary in like manner
and on like notice on the written request of the sole director.
Section 8. At all meetings of the board a majority of the directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be
present.
Section 9. Unless otherwise restricted by the certificate of incorpora-
tion or these by-laws, any action required or permitted to be taken at any
meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting
of the board of directors, or any committee, by means of conference telephone
or similar communications equipment by means of which all persons participat-
ing in the meeting can hear each other, and such participation in a meeting
shall constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority
of the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to
all papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting
an agreement of merge or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the corporation's
property and assets, recommending to the stockholders a dissolution of the
corporation or a revocation of a dissolution, or amending the by-laws of the
corporation; and, unless the resolution or the certificate of incorporation
expressly so provide, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock. Such committee or
committees shall have such name or names as may be determined from time to
time by resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these
41<PAGE>
by-laws, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any,
of attendance at each meeting of the board of directors and may be paid a
fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving
the corporation in any other capacity and receiving compensation therefor.
Members of special or standing committees may be allowed like compensation for
attending committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or by law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares
entitled to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be
given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed
to such director or stockholder, at his address as it appears on the records
of the corporation, with postage thereon prepaid, and such notice shall be
deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given by telegram
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of
incorporation or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice-presidents,
a secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be
42<PAGE>
removed at any time by the affirmative vote of a majority of the board of
directors. Any vacancy occurring in any office of the corporation shall be
filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board
of directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of di-
rectors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings
of the meetings of the corporation and of the board of directors in a book to
be kept for that purpose and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board of directors,
and shall perform such other duties as may be prescribed by the board of
directors or president, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring
it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give
general authority to any other officer to affix the seal of the corporation
and to attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all
moneys and other valuable effects in the name and
43<PAGE>
to the credit of the corporation in such depositories as may be designated by
the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such disburse-
ments, and shall render to the president and the board of directors, at its
regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and
with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control belonging to
the corporation.
Section 14. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other powers as
the board of directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
chairman or vice-chairman of the board of directors, or the president or a
vice-president and the treasurer or an assistant treasurer, or the secretary
or an assistant secretary of the corporation, certifying the number of shares
owned by him in the corporation.
Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing
such issue of a new certificate or certificates, the board of directors may,
in, its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or to give the corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen
or destroyed.
44<PAGE>
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitle
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of
any other lawful action, the board of directors may fix, in advance, a record
date, which shall not be more than sixty nor less than ten days before the
date of such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting:
provided, however, that the board of directors may fix a new record date for
the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE (VII)
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the certificate of incorporation, if any, may be declared
by the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting,
and at any
45<PAGE>
special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall
be fixed by resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 7. The corporation shall indemnify its officers, directors,
employees and agents to the extent permitted by the General Corporation Law of
Delaware.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new by-
laws may be adopted by the stockholders or by the board of directors, when
such power is conferred upon the board of directors by the certificate of
incorporation at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal by-laws is conferred upon the board of directors by the
certificate of incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal by-laws.
46<PAGE>
ATLANTA EXPRESS AIRLINE CORPORATION
AMENDMENT #1 TO BY-LAWS
By resolution of the sole director of Atlanta Express Airline Corporation
dated as of February 27, 1981, Article II, Sections 1 and 2 of the By-laws
were amended to read in their entirety as follows:
Article II.
Meetings of Stockholders.
Section 1. Meetings of stockholders for any purpose shall be held
at such time and place, within or without the State of
Delaware, as shall be fixed by the board of directors
and stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the
year 1982, shall be held on the twentieth day of June
if not a legal holiday, and if a legal holiday, then
on the next secular day following, at 10:00 A.M., or
at such other date and time as shall be designated from time
to time by the board of directors and stated in the notice of the
meeting, at which they shall elect by a plurality vote a
board of directors, and transact such other business
as may properly be brought before the meeting.
The By-laws were otherwise ratified and confirmed.
/s/ Michael L. Lehrman
Michael L. Lehrman,
Secretary
47<PAGE>
ATLANTA EXPRESS AIRLINE CORPORATION
AMENDMENT #2 TO BY-LAWS
By resolution of the Board of Directors of Atlanta Express Airline
Corporation adopted at the February 12, 1982 Special Meeting of the Board of
Directors, Article II, Section 2 of the By-laws was amended to read in its
entirety as follows:
Article II.
Meetings of Stockholders.
Section 2. Annual meetings of stockholders, commencing with the
year 1983, shall be held on the twentieth day of June
if not a legal holiday, and if a legal holiday, then
on the next secular day following, at 10:00 A.M., or
at such other date and time as shall be designated from time
to time by the board of directors and stated in the notice of the
meeting, at which they shall elect by a plurality vote a
board of directors, and transact such other business
as may properly be brought before the meeting.
The By-laws were otherwise ratified and confirmed.
/s/ Michael L. Lehrman
Michael L. Lehrman,
President
48<PAGE>
AIR TRANSPORTATION HOLDING COMPANY, INC.
(formerly, Atlanta Express Airline Corporation)
AMENDMENT # 3 TO BY-LAWS
By resolution of the board of directors of Air Transportation Holding
Company, Inc. adopted at the May 7, 1996 meeting of the board of directors,
Article III, Section 1 of the By-laws was amended to read in its entirety as
follows:
Article III
Directors.
Section 1. The number of directors which shall constitute the
whole board shall be not less than one nor more than
ten. The first board shall consist of one director.
Thereafter, within the limits above specified, the
number of directors shall be determined by resolution of the board of
directors or by the stockholders at the annual meeting. The
directors shall be elected at the annual meeting of
the stockholders, except as provided in Section 2 of
this Article, and each director elected shall hold
office until his successor is elected and qualified. Directors
need not be stockholders.
The By-laws were otherwise ratified and confirmed.
/s/ John J. Gioffre
John J. Gioffre,
Secretary
49<PAGE>
EXECUTION COPY
EMPLOYMENT AGREEMENT
DAVID CLARK
THIS EMPLOYMENT AGREEMENT is made and entered into as of the
1st day of January, 1996, by and among AIR TRANSPORTATION HOLDING
COMPANY, INC., ("AirT"); a Delaware corporation; MOUNTAIN AIR
CARGO, INC., a North Carolina corporation; CSA, INC., a North
Carolina corporation; MOUNTAIN AIRCRAFT SERVICES, LLC, a North
Carolina limited liability company (all collectively referred to
herein as "Employer"); and DAVID CLARK, an individual having an
address at 214 South Ingleside Farm Road, Iron Station, North
Carolina 28080 ("Employee").
Background Statement
Employee currently is employed by Employer and holds the
positions for the different companies listed on Exhibit A attached
hereto and made a part hereof. Employee has worked for the
companies which comprise Employer in positions of responsibility
and authority for several years and has been instrumental in
successfully developing, expanding and increasing the business and
earnings of Employer. Employer desires to ensure that the services
of Employee will continue to be available to it on a mutually
satisfactory basis. In the course of his employment with Employer,
Employee has had access to trade secrets and proprietary
information of Employer and will, as an employee of Employer,
continue to have access to trade secrets and proprietary
information of Employer. Accordingly, Employee has and will
continue to acquire the knowledge and ability to compete with
Employer. Employer as offered Employee an employment agreement on
the terms and pursuant to the conditions hereof, including the
stability and security provided to Employee by the arrangement
provided for herein. The parties agree that the execution and
delivery of this Employment Agreement is a condition precedent to
the benefits extended to Employee hereunder. Employee agrees that
the benefits provided for herein are adequate and sufficient
consideration for the covenants made by Employee hereunder,
including, without limitation, the covenant not to compete.
NOW, THEREFORE, for valuable consideration, the receipt of
which is hereby acknowledged, the mutual duties and obligations set
forth herein, and intending to be legally bound, the parties hereto
agree as follows:
1. Employment. Employer hereby agrees to employ Employee
and Employee hereby agrees to serve Employer upon the terms and
conditions set forth in this Employment Agreement in the capacities
set forth on Exhibit A attached hereto, with the duties and
responsibilities of such positions to be determined from time to
time by the Board of Directors of AirT.
2. Term. (a) Statement of Term. The term of this
Employment Agreement shall begin on January 1, 1996, and end on
December 31, 1998, or on such later date to which the term of this
Employment Agreement may be extended pursuant to the provisions of
this Section 2. (b) Automatic Extension. Subject to
subsection (c) of this Section 2, the term of this Employment
Agreement shall be extended automatically for one year effective on
the 1st day of September, 1996 (so that effective on such date the
term of employment shall be extended from December 31, 1998, to
December 31, 1999), and on the 1st day of each succeeding September
(so that effective on each such day, the remaining term of
employment shall be for a full three-year, four month period).
(c) Termination of Automatic Extensions. Employee or the
Board of Directors of AirT, by written notice delivered to the
other, may at any time elect to terminate the automatic extension
provisions of subsection (b) of this section. Such election shall
apply only to extensions that would otherwise become effective
after delivery of such notice and shall not apply to extensions
that have theretofore become effective.
3. Compensation, Incentives and Employee Benefits.
(a.) Base Salary. Employer shall pay to the Employee for his
performance of services hereunder a base salary ("Base Salary") at
the rate of not less than One Hundred Fifty Thousand No/100
($150,000.00) per year for the period of this Employment Agreement.
The Employee's Base Salary rate shall be reviewed by Employer
annually and may be increased from time to time only with the
approval of the Compensation Committee of the Board of Directors of
Employer. From and after the effective date of any such change the
increased rate shall become the Base Salary rate applicable
thereafter. Base Salary shall be paid in accordance with
Employer's normal payroll practices and shall be prorated for any
partial months of employment.
(b) Incentive Compensation. Employer shall pay to the
Employee incentive compensation equal to two percent (2%) of the
earnings before income taxes or extraordinary items reported each
year by AirT on its Annual Report on Form 10-K (the "10-K").
Amounts payable under this subsection, if any, shall be paid within
fifteen (15) days after AirT files its 10-K with the Securities and
Exchange Commission. Amounts otherwise payable hereunder shall be
prorated for a partial year's employment in the event Employee's
employment is terminated or ceases during the course of AirT's
fiscal year.
(c) Employee Benefit Plans. In addition to the Base Salary
and Incentive Compensation provided for above, Employer shall
provide to the Employee the opportunity to continue to participate
in all life insurance, medical, dental, optical, disability, and
other employee benefit plans (collectively, "Employee Benefit
Plans") sponsored from time to time by Employer and covering its
employees generally or a particular group of its employees of which
the Employee is a member (including participation by the Employee's
dependents to the extent they are eligible under the terms of such
plans), subject to the terms and conditions of such benefit plans.
(d) Reimbursement of Expenses. Employer shall pay or
reimburse Employee for all reasonable travel and other expenses
incurred by him in performing his obligations under this Employment
Agreement. Such expenses shall be appropriately submitted and
approved in accordance with the policies approved by the Board of
Directors of AirT.
(e) Vacation. Employee shall be entitled to paid annual
vacation of up to 4 weeks per year.
(f) Automobile Expense. Employee shall be reimbursed for the
use of his automobile for Employer's business at the rate of
$4,800.00 per year, payable in monthly installments.
4. Retirement Benefits.
(a) Benefits Defined. The Employer hereby agrees to
pay a retirement benefit to the Employee of $75,000 per year. The
retirement benefit will be paid monthly installments in the form of
a 10-year term certain annuity (with no payments thereafter). In
the event of the Employee's death prior to the close of the 10-year
term certain, the remaining retirement benefit payments shall be
paid annually to the Employee's estate.
(a) Nonforfeitable Interest. Notwithstanding the foregoing,
the Employer shall have no obligation to pay any retirement benefit
until and unless the Employee remains employed until attaining a
full, nonforfeitable interest in such retirement benefit. The
Employee shall have a full, nonforfeitable interest in such
retirement benefit as of the earlier of April 1, 2001, his death,
his disability (as defined in Section 6(c)), or his termination
without cause.
(b) Commencement of Benefit. Payment of the annual benefit
shall commence a soon as practicable after the Employee's
termination of employment, except that, if the Employee's
employment is terminated without cause or due to disability,
payment of the retirement benefit shall not commence until the
earlier of April 1, 2001 or the Employee's death.
(c) Payment From General Assets. The retirement benefits
payable under this Agreement shall be paid by the Employer from its
general assets. The Employee shall have no right, interest, or
claim whatsoever to the payment of a benefit from any person other
than the Employer, and shall have no right, interest, or claim
whatsoever that is superior in any manner to the right of any other
general and unsecured creditor of the Employer. The employee shall
have no right to assign, alienate, pledge or otherwise encumber the
retirement benefits payable under this agreement and any attempt to
do so shall be void.
5. Duties. During the term hereof, Employee shall devote
all of his business time, attention, skills and efforts to the
business of Employer and the faithful performance of his duties
hereunder; provided, however, that (i) nothing contained herein
shall prevent Employee from making outside investments consistent
with the provisions contained herein and (ii) with the approval of
the Board of Directors of AirT, from time to time Employee may
serve, or continue to serve, on the boards of directors of, and
hold any other offices or positions in, companies or organizations
which, in the AirT Board's judgment, will not present any conflict
of interest with Employer, or materially affect the performance of
Employee's duties pursuant to this Agreement. Except for such
incidental matters as may be assigned by Employer from time to
time, the Employee's duties shall be confined to those geographic
areas in which Employer operates its business and (ii) Employee may
not be transferred from the principal office of Employer in Denver,
North Carolina.
6. Termination by Employer.
(a) Without Cause. The parties recognize (i) that the Board
of Directors of AirT has the duty to use its judgment in the best
interests of Employer in determining whether to remove or to elect
or reelect Employee as an executive officer of Employer even though
there may be no legal cause therefor under this Agreement, and (ii)
that any action or inaction of the Board of Directors of AirT
pursuant to clause (i) shall not prejudice the rights of Employee
under this Agreement. Accordingly, the parties agree that, subject
to all other provisions of this Paragraph 6, Employer shall have
the right at any time during the term of this Agreement to
terminate this Agreement without cause. Such right of termination
may be exercised by removal of Employee by the Board of Directors
of AirT or the failure of the Board of Directors of AirT to elect
or reelect Employee as an executive officer of Employer or
otherwise. Termination of this Agreement shall be deemed to occur
on the date Employee is notified thereof or, if he is not so
notified, on the date of the act or failure to act by the Board of
Directors of AirT referred to in the preceding sentence.
(b) Termination Payments. If Employer terminates Employee's
employment hereunder pursuant to paragraph 6(a) hereof for any
reason other than for "Cause", as defined herein, then the
following provisions shall govern:
(i) immediately upon the effectiveness of such event
Employer shall make a lump sum cash payment to Employee in an
amount equal to the sum of (A) the aggregate Base Salary that would
have been paid to Employee under the terms hereof after the date of
such event through the date of the then term of this Employment
Agreement (based upon the assumption that the Base Salary as in
effect immediately prior to the date of such event(s) continued to
be the Base Salary through the term of this Employment Agreement;
and (B) one-half of the maximum additional compensation that could
have been paid to Employee after the date of termination of
employment pursuant to Paragraph 3(b) had his employment hereunder
continued through the then date of the expiration of this
Agreement.
(c) Disability. If the Employee is unable to perform his
duties hereunder for a period of thirty-six (36) consecutive months
due to disability (as defined by the primary disability insurance
carrier then providing such insurance coverage for the Employer's
executive officers), this Agreement may be terminated at Employer's
discretion by giving to the Employee written notice specifying a
termination date subsequent thereto and also subsequent to the end
of said thirty-six (36) month period.
7. No Mitigation. Employee shall have no obligation to seek
other employment in the event of termination of his employment or
termination of the automatic renewal provisions of this Employment
Agreement and no compensation or other benefits received by
Employee from any other employment shall reduce or limit Employer's
obligation to make payment under this entire Paragraph 6.
(a) Definitions. "Cause" shall exist if, and only if, a
court of competent jurisdiction enters a final order finding that
(a) the Employee has committed wrongful acts (but excluding matters
of business judgment) which have had or will have a material
adverse effect on the business, operations or financial condition
of Employer, or (b) the Employee has willfully and materially
failed to perform the duties reasonably required of him under this
Agreement.
8. Confidential Information. Employee shall not, at any time
during or following his employment by Employer regardless of the
reason for such termination of employment, furnish, divulge,
communicate, use to the detriment of Employer or for the benefit of
any business, firm, person, partnership, trust or corporation, or
otherwise, any of Employer's confidential information, data, trade
secrets, sales methods, names of customers, advertising methods,
financial affairs or methods of procurement, or take with him any
document or paper relating to the foregoing, it being acknowledged
that Employee received or obtained all of the above in confidence
and as a fiduciary of Employer.
9. Non-Competition. Employee agrees that, during Employee's
employment with Employer and for a period of three (3) years
thereafter, whether Employee leaves voluntarily or involuntarily:
(a) Employee will not directly or indirectly,
individually or as a partner, employee, stockholder, consultant,
agent, officer, director, advisor or in any other capacity, solicit
any of the customers of Employer for the purpose of selling any
service or product similar to those provided by Employer, or in any
manner attempt to induce any of Employer's customers or suppliers
to withdraw, reduce or divert any of their business from Employer
or otherwise interfere or attempt to interfere with any business
relationship between Employer and its customers or suppliers. For
the purposes of this Paragraph 8(a), customers shall mean (i) any
client, account or customer of the Employer that has transacted any
business with or been contacted by Employer within the twelve
months preceding the date hereof, and (ii) any other client,
account or customer of Employer that has done business with
Employer within two years of the date of such separation or
termination;
(b) Employee will not in any manner induce or attempt to
induce any of Employer's employees to leave the employment of
Employer to become associated with any business operation engaged
in the air cargo or air freight business; or
(c) Employee will not directly or indirectly, either as
principal, agent, manager, employee, owner (if the percentage of
ownership exceeds one percent (1%) of the net worth of the
business), partner (general or limited), director, officer,
consultant or in any other capacity, participate in any business
operation engaged in the air cargo or air freight business.
10. Limitations on Scope. Because of the present and
contemplated future operations of Employer in the geographic areas
hereinafter set forth, it is further understood and agreed by the
parties hereto that the restriction set forth in Paragraph 8(c)
shall apply to a business operation engaged in the air cargo or air
freight business in the following geographic areas:
(i) The State of North Carolina;
(ii) The State of Michigan;
(iii) The State of South Carolina;
(iv) The State of Florida;
(v) Any State contiguous with the State of North Carolina;
(vi) Any State contiguous with the State of Michigan;
(vii) Any State contiguous with the State of South Carolina;
(viii)Any State contiguous with the State of Florida;
(ix) Any State east of the Mississippi River;
(x) Any State of the United States of America.
The parties intend the above geographical areas to be
completely severable and independent, and any invalidity or
unenforceability of this Employment Agreement with respect to any
one area shall not render this Employment Agreement unenforceable
as applied to any one or more of the other areas.
12. Severability. If any provision contained in this
Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Agreement but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
The parties agree that in the event a court should determine that
this Agreement or any of the covenants contained herein is
unreasonable, void or invalid, for any reason whatsoever, then in
such event,the parties hereto agree that the duration, geographical
or other limitation imposed herein should be as the court, or jury,
if applicable, should determine to be fair and reasonable, it being
the intent of each of the parties hereto to be subject to an
agreement that protects the legitimate competitive interests of
Employer and does not unreasonably curtail the rights of the
Employee.
13. Employee's Representation. Employee represents that his
experience and capabilities are such that the provisions of
Paragraph 8 will not prevent him from earning a livelihood.
14. Employer's Right to Obtain an Injunction. Employee
acknowledges that Employer will have no adequate means of
protecting their rights under Paragraphs 7 and 8 of this Agreement
other than securing an injunction. Accordingly, Employee agrees
that Employer is entitled to enforce this Employment Agreement by
obtaining a preliminary and permanent injunction and any other
appropriate equitable relief in a court of competent jurisdiction.
Employee acknowledges that the recovery of damages by Employer will
not be an adequate means to redress a breach of this Agreement.
Nothing contained in this Paragraph, however, shall prohibit
Employer from pursuing any remedies in addition to injunctive
relief, including recovery of damages.
15. General Provisions.
(a) Entire Agreement. This Employment Agreement contains the
entire understanding between the parties hereto relating to the
employment of Employee by Employer and supersedes any and all prior
employment or compensation agreements between Employer or any
predecessors of Employer or any of its subsidiaries and Employee.
(b) Nonassignability. Neither this Agreement nor any right
or interest hereunder shall be assignable by Employee, his
beneficiaries or legal representatives, without the prior written
consent of Employer; provided, however, that nothing shall preclude
(i) Employee from designating a beneficiary to receive any benefit
payable hereunder upon his death, or (ii) the executors,
administrators or other legal representatives of Employee or his
estate from assigning any rights hereunder to the person or persons
entitled thereunto.
(c) Binding Agreement. This Employment Agreement shall be
binding upon, and inure to the benefit of, Employee and Employer
and their respective permitted successors and assigns.
(d) Amendment or Modification of Employment Agreement. This
Employment Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(e) Insurance. Employer, at its discretion, may apply for
and procure in their own name and for its own benefit, life
insurance on Employee in any amount or amounts considered
advisable; and Employee shall have no right, title or interest
therein, and further, Employee agrees to submit to any medical or
other examination and to execute and deliver any applications or
other instruments in writing as may be reasonably necessary to
obtain such insurance.
(f) Notices. All notices under this Employment Agreement
shall be in writing and shall be deemed effective when delivered in
person (in the case of Employer, to its Secretary) or when mailed,
if mailed by certified mail, return receipt requested. Notices
mailed shall be addressed, in the case of Employee, to him at his
residential address currently on file with Employer, and in the
case of Employer, to its corporate headquarters, attention of the
Secretary, or to such other address as Employer or Employee may
designate in writing at any time or from time to time to the other
party. In lieu of notice by deposit in the U.S. mail, a party may
give notice by telegram or telex.
(g) Waiver. No delay or omission by either party hereto in
exercising any right, power or privilege hereunder shall impair
such right, power or privilege, nor shall any single or partial
exercise of any right, power or privilege preclude any further
exercise thereof or the exercise of any other right, power or
privilege. The provisions of this Paragraph 14(g) cannot be waived
except in writing signed by both parties.
(h) Governing Law. This agreement shall be governed and
construed in accordance with the laws of the State of North
Carolina, exclusive of its choice of law provisions.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
AIR TRANSPORTATION HOLDING COMPANY, INC.
By: ____________________________
Its: ___________
MOUNTAIN AIR CARGO, INC.
By: ____________________________
Its: ___________
CSA, INC.
By: ____________________________
Its: ___________
MOUNTAIN AIRCRAFT SERVICES, LLC
By: ____________________________
Its: ______________
______________________________ (SEAL)
David Clark
EXHIBIT A
COMPANY POSITION HELD
AirT Chairman of the Board
Chief Executive Officer
Chief Operating Officer
President
Mountain Air Cargo, Inc. Chairman of the Board
Chief Executive Officer
CSA Air, Inc. Chairman of the Board
Chief Executive Officer
Mountain Aircraft Services LLC Chairman of the Board
Chief Executive Officer
EXECUTION COPY
EMPLOYMENT AGREEMENT
WILLIAM H. SIMPSON
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of the 1st day of January, 1996, by and among AIR
TRANSPORTATION HOLDING COMPANY, INC., ("AirT"); a Delaware
corporation; MOUNTAIN AIR CARGO, INC., a North Carolina
corporation; MOUNTAIN AIRCRAFT SERVICES, LLC, a North Carolina
limited liability company (all collectively referred to herein as
"Employer"); and WILLIAM H. SIMPSON, an individual having an
address at P.O. Box 543, Denver, North Carolina 28037 ("Employee").
Background Statement
Employee currently is employed by Employer and holds the
positions for the different companies listed on Exhibit A attached
hereto and made a part hereof. Employee has worked for the
companies which comprise Employer in positions of responsibility
and authority for several years and has been instrumental in
successfully developing, expanding and increasing the business and
earnings of Employer. Employer desires to ensure that the services
of Employee will continue to be available to it on a mutually
satisfactory basis. In the course of his employment with Employer,
Employee has had access to trade secrets and proprietary
information of Employer and will, as an employee of Employer,
continue to have access to trade secrets and proprietary
information of Employer. Accordingly, Employee has and will
continue to acquire the knowledge and ability to compete with
Employer. Employer has offered Employee an employment agreement on
the terms and pursuant to the conditions hereof, including the
stability and security provided to Employee by the arrangement
provided for herein. The parties agree that the execution and
delivery of this Agreement is a condition precedent to the benefits
extended to Employee hereunder. Employee agrees that the benefits
provided for herein are adequate and sufficient consideration for
the covenants made by Employee hereunder, including, without
limitation, the covenant not to compete.
NOW, THEREFORE, for valuable consideration, the receipt of
which is hereby acknowledged, the mutual duties and obligations set
forth herein, and intending to be legally bound, the parties hereto
agree as follows:
Employment. Employer hereby agrees to employ Employee
and Employee hereby agrees to serve Employer upon the terms and
conditions set forth in this Agreement in the capacities set forth
on Exhibit A attached hereto, with the duties and responsibilities
of such positions to be determined from time to time by the
President and/or Chief Executive Officer of each of the companies
which comprise Employer and the Board of Directors of AirT.
Term.
Statement of Term. The term of this Agreement shall
begin on January 1, 1996, and end on March 31, 1999, or on such
later date to which the term of this Agreement may be extended
pursuant to the provisions of this Paragraph 2.
Automatic Extension. Subject to subparagraph (c) of this
Paragraph 2, the term of this Agreement shall be extended
automatically for one year effective on the 1st day of December,
1996 (so that effective on such date the term of employment shall
be extended from March 31, 1999, to March 31, 2000), and on the 1st
day of each succeeding December (so that effective on each such
day, the remaining term of employment shall be for a full three-
year, four month period).
Termination of Automatic Extensions. Employee or the
Board of Directors of AirT, by written notice delivered to the
other, may at any time elect to terminate the automatic extension
provisions of subparagraph (b) of this section. Such election
shall apply only to extensions that would otherwise become
effective after delivery of such notice and shall not apply to
extensions that have theretofore become effective.
Compensation, Incentives and Employee Benefits.
Base Salary. Employer shall pay to the Employee for his
performance of services hereunder a base salary ("Base Salary") at
the rate of not less than One Hundred Sixty-Five Thousand Five
Hundred Thirty-Seven and No/100 ($165,537.00) per year for the
period of this Agreement. The Employee's Base Salary rate shall be
reviewed by Employer annually and may be increased from time to
time only with the approval of the Compensation Committee of the
Board of Directors of AirT. From and after the effective date of
any such change the increased rate shall become the Base Salary
rate applicable thereafter. Base Salary shall be paid in
accordance with Employer's normal payroll practices and shall be
prorated for any partial months of employment.
Incentive Compensation. Employer shall pay to the
Employee incentive compensation ("Incentive Compensation") equal to
two percent (2%) of the earnings before income taxes or
extraordinary items reported each year by AirT on its Annual Report
on Form 10-K (the "10-K"). Amounts payable under this
subparagraph, if any, shall be paid within fifteen (15) days after
AirT files its 10-K with the Securities and Exchange Commission.
Amounts otherwise payable hereunder shall be prorated for a partial
year's employment in the event Employee's employment is terminated
or ceases during the course of AirT's fiscal year.
Employee Benefit Plans. In addition to the Base Salary
and Incentive Compensation provided for above, Employer shall
provide to the Employee the opportunity to continue to participate
in all life insurance, medical, dental, optical, disability, and
other employee benefit plans (collectively, "Employee Benefit
Plans") sponsored from time to time by Employer and covering its
employees generally or a particular group of its employees of which
the Employee is a member (including participation by the Employee's
spouse and dependents to the extent they are eligible under the
terms of such plans), subject to the terms and conditions of such
benefit plans.
Reimbursement of Expenses. Employer shall pay or
reimburse Employee for all reasonable travel and other expenses
incurred by him in performing his obligations under this Agreement.
Such expenses shall be appropriately submitted and approved in
accordance with the policies approved by the Board of Directors of
AirT.
Vacation. Employee shall be entitled to paid annual
vacation of up to 4 weeks per year.
Automobile Expense. Employee shall be reimbursed for the
use of his automobile for Employer's business at the rate of
$4,800.00 per year, payable in monthly installments.
Retirement Benefits.
Amount. The Employer shall pay Employee an annual
retirement benefit of Seventy-Five Thousand and No/100 Dollars
($75,000.00) per year in the event Employee continues work until he
reaches age 65. If Employee voluntarily terminates his employment
before he reaches age 65, such amount shall be reduced by three (3)
percentage points for each full year that his termination of
employment precedes the date he reaches age 65, but in no event
prior to his reaching age 62. If such termination of employment
occurs on a date other than his birthday, the three (3) percentage
point reduction shall be prorated on a monthly basis.
Form. Such retirement benefit shall commence as of the
date elected pursuant to Paragraph 4(c) hereof and shall be paid
monthly in the form of a single life annuity or, at Employee's
option, an actuarially equivalent joint and survivor annuity or
life annuity with a ten-year period certain; provided, however,
that Employee shall have the right to receive the present value of
his retirement benefit in a single lump sum payment if he files an
election in writing with the Employer at least one year before the
date as of which his benefit is scheduled to commence. For
purposes of this Agreement, (a) the present value shall be
determined by using the insurance industry's standard 1983 Group
Annuity Mortality Table (the "Table") and an interest rate (the
"Rate") equal to the average (for the 90 days prior to payment)
yield of ten year U.S. Treasury Notes (as reported over such period
in The Wall Street Journal or any successor to such publication),
(b) the term "joint and survivor annuity" shall mean an annuity
payable for Employee's life and, if he dies before his survivor
annuitant, a 50%, 75% or 100% survivor annuity payable to such
survivor for such person's life, (c) the term "life annuity with a
ten-year period certain" shall mean an annuity payable for the life
of Employee and, if Employee dies before payments have been made
for ten years, with continued payments to his designated
beneficiary for the balance of such ten-year period, and (d) an
actuarially equivalent benefit shall be determined using the Table
and the Rate.
Timing. Such retirement benefit shall be paid, or
benefit payments shall commence, in the form elected pursuant to
Paragraph 4(b) hereof, as of the first day of the month immediately
following Employee's 65th birthday; provided, however, that
Employee shall have the right at any age to elect that the payment
of his benefit commence after the later of the date he reaches age
62 or his employment terminates provided such election is filed in
writing with the Employer at least one year before his employment
terminates. If the payment of Employee's retirement benefit begins
before age 65 pursuant to such an election, such benefit shall be
reduced by three percentage points (3%) for each full year that the
benefit commencement date precedes Employee's 65th birthday. In
the event that benefits commence as of a date other than Employee's
birthday, the three percentage point reduction factor shall be
prorated on a monthly basis.
Offset for Other Retirement Benefits. In the event that
the retirement benefits payable under any retirement benefits
program applicable to all employees (the " AirT Plan") are paid in
the same form and at the same time as the retirement benefits under
this Paragraph 4, then the annual benefit payable under Paragraph
4 hereof each year shall be offset by the dollar amount paid to
Employee under the AirT Plan in such year. In the event that the
retirement benefits payable under the AirT Plan are not paid in the
same form or are not paid at the same time, then the retirement
benefits under this Paragraph 4 shall be offset by the actuarial
equivalent of the benefit expected to be paid to Employee under the
AirT Plan. The actuarial equivalent benefit shall be determined by
using the Table and the Rate.
Death Benefit. In the event of Employee's death prior to
the commencement of the retirement benefit described in Paragraph
4(a), Employer hereby agrees to pay an annual death benefit to
Employee's estate that is equal to the single life annuity benefit
Employee would have received if he had terminated employment on the
later of his 65th birthday or his date of death; provided, however,
that the amount payable under this subparagraph shall be reduced by
five percent (5%) per year for each year Employee's death occurs
prior to age 65, but in no event by more than fifty percent (50%).
Such annual benefit shall commence as soon as practicable after
Employee's death and shall be paid in substantially equal monthly
payments for a period of ten years.
Disability Benefit. In the event of Employee's
termination of employment as a result of total disability, his
retirement benefit under Paragraph 4 hereof shall be calculated
under Paragraph 4(a) and 4(c), shall be paid in the form elected
pursuant to Paragraph 4(b), and shall be paid at the time elected
pursuant to Paragraph 4(c), except that Employee shall have the
right to make an election under Paragraph 4(c) no later than six
months before his employment terminates, instead of one year before
his employment terminates.
Source of Benefits. The retirement benefits payable
under this Agreement shall be paid by the Employer from its general
assets. Employee shall have no right, interest, or claim
whatsoever to the payment of a benefit from any person other than
the Employer, and shall have no right or interest whatsoever that
is superior in any manner to the right of any other general and
unsecured creditor of the Employer. Employee shall have no right
to assign, alienate, pledge or otherwise encumber the retirement
benefits payable under this Agreement, and any attempt to do so
shall be void.
Participation in Other Plans. Employee shall participate
in all retirement plans (qualified or non-qualified) and all
deferred compensation arrangements maintained by the Employer in
which other senior executives participate as a group, subject to
the terms and conditions of such retirement plans.
Vesting. Notwithstanding anything herein to the
contrary, Employee's right to the retirement and death benefits
provided for hereunder shall vest upon the execution hereof even
though Employee shall have no right to the payment of any
retirement benefits until he reaches age 62 or to the death benefit
until death.
Duties. During the term hereof, Employee shall devote
all of his business time, attention, skills and efforts to the
business of Employer and the faithful performance of his duties
hereunder; provided, however, that (i) nothing contained herein
shall prevent Employee from making outside investments consistent
with the provisions contained herein and (ii) with the approval of
the Board of Directors of AirT, from time to time Employee may
serve, or continue to serve, on the boards of directors of, and
hold any other offices or positions in, companies or organizations
which, in the AirT Board of Directors' judgment, will not present
any conflict of interest with Employer, or materially affect the
performance of Employee's duties pursuant to this Agreement.
Except for such incidental matters as may be assigned by Employer
from time to time, Employee's duties shall be confined to those
geographic areas in which Employer operates its business and
Employee may not be transferred so that Employee's principal office
is located anywhere outside the state of North Carolina.
Termination.
Termination By Employer Without Cause. The parties
recognize (i) that the Board of Directors of AirT has the duty to
use its judgment in the best interests of Employer in determining
whether to remove or to elect or reelect Employee as an executive
officer of Employer even though there may be no legal cause
therefor under this Agreement, and (ii) that any action or inaction
of the Board of Directors of AirT pursuant to clause (i) shall not
prejudice the rights of Employee under this Agreement.
Accordingly, the parties agree that, subject to all other
provisions of this Paragraph 6, Employer shall have the right at
any time during the term of this Agreement to terminate this
Agreement without cause. Such right of termination may be
exercised by removal of Employee by the Board of Directors of AirT
or the failure of the Board of Directors of AirT to elect or re-
elect Employee as an executive officer of Employer or otherwise.
Termination of this Agreement shall be deemed to occur on the date
Employee is notified thereof or, if he is not so notified, on the
date of the act or failure to act by the Board of Directors of AirT
referred to in the preceding sentence.
Termination by Employee. Employee may terminate his
employment with Employer, for any reason or without reason, during
the term hereof. Such termination must be accompanied by the
delivery of at least 10 days' written notice delivered to Employer.
Termination Payments. If Employer terminates Employee's
employment hereunder pursuant to Paragraph 6(a) hereof for any
reason other than for "Cause", as defined herein, then the
following provisions shall govern:
Immediately upon the effectiveness of the termination set
forth in Paragraph 6(a) above, Employer shall make a lump
sum cash payment to Employee in an amount equal to the
sum of (A) the aggregate Base Salary that would have been
paid to Employee under the terms hereof after the date of
such event through the date of the then term of this
Agreement (based upon the agreement that the Base Salary
as in effect immediately prior to the date of such
event(s) continued to be the Base Salary through the term
of this Agreement; and (B) one-half of the maximum
additional compensation that would have been paid to
Employee after the date of termination of employment
pursuant to Paragraph 3(b) had his employment hereunder
continued through the then date of the expiration of this
Agreement (based upon the agreement that the amount of
incentive compensation paid to Employee pursuant to
Paragraph 3(b) for the calendar year immediately
preceding the date of termination continued to be the
amount payable through the term of this Agreement).
Notwithstanding anything contained in this Paragraph to the
contrary, in the event that the payments under this Paragraph to
Employee, either alone or together with other payments Employee has
a right to receive from Employer, would not be deductible (in whole
or in part) by Employer as a result of such payments constituting
a "parachute payment" (as defined in Section 280G of the Internal
Revenue Code, as amended (the "Code")), such payments shall be
reduced to the largest amount as will result in no portion of the
payments not being fully deductible by Employer as the result of
Section 280G of the Code. The determination of any reduction in
the payments pursuant to the foregoing sentence shall be made
exclusively by AirT's independent public accountants (whose fees
and expenses shall be borne by Employer), and such determination
shall be conclusive and binding on Employer and Employee.
Disability. If the Employee is unable to perform his
duties hereunder for a period of twelve (12) consecutive months due
to disability (as defined by the primary disability insurance car-
rier then providing such insurance coverage for the Employer's
executive officers), this Agreement may be terminated at Employer's
discretion by giving to the Employee written notice specifying a
termination date subsequent thereto and also subsequent to the end
of said twelve (12) month period.
(e) No Mitigation. Employee shall have no obligation to seek
other employment in the event of termination of his employment and
no compensation or other benefits received by Employee from any
other employment shall reduce or limit Employer's obligation to
make payment under this entire Paragraph 6.
(f) Definitions. "Cause" shall exist if, and only if, a
court of competent jurisdiction enters a final order finding that
(a) the Employee has committed wrongful acts (but excluding matters
of business judgment) which have had or will have a material
adverse effect on the business, operations or financial condition
of Employer, or (b) the Employee has willfully and materially
failed to perform the duties reasonably required of him under this
Agreement.
Confidential Information. Employee shall not, at any
time during or following his employment by Employer regardless of
the reason for such termination of employment, furnish, divulge,
communicate, use to the detriment of Employer or for the benefit of
any business, firm, person, partnership, trust or corporation, or
otherwise, any of Employer's confidential information, data, trade
secrets, sales methods, names of customers, advertising methods,
financial affairs or methods of procurement, or take with him any
document or paper relating to the foregoing, it being acknowledged
that Employee received or obtained all of the above in confidence
and as a fiduciary of Employer.
Non-Competition. Employee agrees that, during Employee's
employment with Employer and for a period of three (3) years
thereafter, whether Employee leaves voluntarily or involuntarily:
(a) Employee will not directly or indirectly,
individually or as a partner, employee, stockholder,
consultant, agent, officer, director, advisor or in any other
capacity, solicit any of the customers of Employer for the
purpose of selling any service or product similar to those
provided by Employer, or in any manner attempt to induce any
of Employer's customers or suppliers to withdraw, reduce or
divert any of their business from Employer or otherwise
interfere or attempt to interfere with any business
relationship between Employer and its customers or suppliers.
For the purposes of this Paragraph 8(a), customers shall mean
(i) any client, account or customer of the Employer that has
transacted any business with or been contacted by Employer
within the twelve months preceding the date hereof, and
(ii) any other client, account or customer of Employer that
has done business with Employer within two years of the date
of such separation or termination;
(b) Employee will not in any manner induce or attempt to
induce any of Employer's employees to leave the employment of
Employer to become associated with any business operation
engaged in the air cargo or air freight business;
(c) Employee will not directly or indirectly, either as
principal, agent, manager, employee, owner (if the percentage
of ownership exceeds one percent (1%) of the net worth of the
business), partner (general or limited), director, officer,
consultant or in any other capacity, participate in any
business operation engaged in the air cargo or air freight
business;
Limitations on Scope. Because of the present and
contemplated future operations of Employer in the geographic areas
hereinafter set forth, it is further understood and agreed by the
parties hereto that the restriction set forth in Paragraph 8(c)
shall apply to a business engaged in the air cargo, air freight,
aircraft maintenance or aircraft parts brokering business or
businesses in the following geographic areas:
(i) The State of North Carolina;
(ii) The State of Michigan;
(iii) The State of South Carolina;
(iv) The State of Florida;
(v) Any State contiguous with the State of North Carolina;
(vi) Any State contiguous with the State of Michigan;
(vii) Any State contiguous with the State of South Carolina;
(viii) Any State contiguous with the State of Florida;
(ix) Any State east of the Mississippi River;
(x) Any State of the United States of America.
The parties intend the above geographical areas to be
completely severable and independent, and any invalidity or
unenforceability of this Agreement with respect to any one area
shall not render this Agreement unenforceable as applied to any one
or more of the other areas.
Severability. If any provision contained in this
Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Agreement but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
The parties agree that in the event a court should determine that
this Agreement or any of the covenants contained herein is
unreasonable, void or invalid, for any reason whatsoever, then in
such event,the parties hereto agree that the duration, geographical
or other limitation imposed herein should be as the court, or jury,
if applicable, should determine to be fair and reasonable, it being
the intent of each of the parties hereto to be subject to an
agreement that protects the legitimate competitive interests of
Employer and does not unreasonably curtail the rights of the
Employee.
Employee's Representation. Employee represents that his
experience and capabilities are such that the provisions of
Paragraphs 8 and 9 will not prevent him from earning a livelihood.
Employer's Right to Obtain an Injunction. Employee
acknowledges that Employer will have no adequate means of
protecting its rights under Paragraphs 8 and 9 of this Agreement
other than securing an injunction. Accordingly, Employee agrees
that Employer is entitled to enforce this Agreement by obtaining a
preliminary and permanent injunction and any other appropriate
equitable relief in a court of competent jurisdiction. Employee
acknowledges that the recovery of damages by Employer will not be
an adequate means to redress a breach of this Agreement. Nothing
contained in this Paragraph, however, shall prohibit Employer from
pursuing any remedies in addition to injunctive relief, including
recovery of damages.<PAGE>
General Provisions.
Entire Agreement. This Agreement contains the entire
understanding between the parties hereto relating to the employment
of Employee by Employer and supersedes any and all prior
employment, compensation or retirement agreements between Employer
or any predecessors of Employer or any of its subsidiaries and
Employee.
Nonassignability. Neither this Agreement nor any right
or interest hereunder shall be assignable by Employee, his
beneficiaries or legal representatives, without the prior written
consent of Employer; provided, however, that nothing shall preclude
(i) Employee from designating a beneficiary to receive any benefit
payable hereunder upon his death, or (ii) the executors,
administrators or other legal representatives of Employee or his
estate from assigning any rights hereunder to the person or persons
entitled thereunto.
Binding Agreement. This Agreement shall be binding upon,
and inure to the benefit of, Employee and Employer and their
respective permitted successors and assigns.
Amendment or Modification of Agreement. This Agreement
may not be modified or amended except by an instrument in writing
signed by the parties hereto.
Insurance. Employer, at its discretion, may apply for
and procure in their own name and for its own benefit, life
insurance on Employee in any amount or amounts considered
advisable; and Employee shall have no right, title or interest
therein, and further, Employee agrees to submit to any medical or
other examination and to execute and deliver any applications or
other instruments in writing as may be reasonably necessary to
obtain such insurance.
Notices. All notices under this Agreement shall be in
writing and shall be deemed effective when delivered in person (in
the case of Employer, to its Secretary) or when mailed, if mailed
by certified mail, return receipt requested. Notices mailed shall
be addressed, in the case of Employee, to him at his residential
address currently on file with Employer, and in the case of
Employer, to its corporate headquarters, attention of the
Secretary, or to such other address as Employer or Employee may
designate in writing at any time or from time to time to the other
party. In lieu of notice by deposit in the U.S. mail, a party may
give notice by telegram or telex.
Waiver. No delay or omission by either party hereto in
exercising any right, power or privilege hereunder shall impair
such right, power or privilege, nor shall any single or partial
exercise of any right, power or privilege preclude any further
exercise thereof or the exercise of any other right, power or
privilege. The provisions of this Paragraph 14(g) cannot be waived
except in writing signed by both parties.
Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of North
Carolina, exclusive of its choice of law provisions.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
AIR TRANSPORTATION HOLDING COMPANY, INC.
By: ____________________________
Its: ___________
MOUNTAIN AIR CARGO, INC.
By: ____________________________
Its: ___________
MOUNTAIN AIRCRAFT SERVICES, LLC
By: ____________________________
Its: ______________
______________________________ (SEAL)
William H. Simpson
<PAGE>
EXHIBIT A
COMPANY POSITION HELD
AirT Executive Vice President
Mountain Air Cargo, Inc. President
Mountain Aircraft Services, LLC Executive Vice President
EXECUTION COPY
EMPLOYMENT AGREEMENT
JOHN J. GIOFFRE
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of the 1st day of January, 1996, by and among AIR
TRANSPORTATION HOLDING COMPANY, INC., ("AirT"); a Delaware
corporation; MOUNTAIN AIR CARGO, INC., a North Carolina
corporation; CSA, INC., a North Carolina corporation; MOUNTAIN
AIRCRAFT SERVICES, LLC, a North Carolina limited liability company
(all collectively referred to herein as "Employer"); and JOHN J.
GIOFFRE, an individual having an address at 17940 Mollypop Lane,
Huntersville, North Carolina 28078 ("Employee").
Background Statement
Employee currently is employed by Employer and holds the
positions for the different companies listed on Exhibit A attached
hereto and made a part hereof. Employee has worked for the
companies which comprise Employer in positions of responsibility
and authority for several years and has been instrumental in
successfully developing, expanding and increasing the business and
earnings of Employer. Employer desires to ensure that the services
of Employee will continue to be available to it on a mutually
satisfactory basis. In the course of his employment with Employer,
Employee has had access to trade secrets and proprietary
information of Employer and will, as an employee of Employer,
continue to have access to trade secrets and proprietary
information of Employer. Accordingly, Employee has and will
continue to acquire the knowledge and ability to compete with
Employer. Employer has offered Employee an employment agreement on
the terms and pursuant to the conditions hereof, including the
stability and security provided to Employee by the arrangement
provided for herein. The parties agree that the execution and
delivery of this Agreement is a condition precedent to the benefits
extended to Employee hereunder. Employee agrees that the benefits
provided for herein are adequate and sufficient consideration for
the covenants made by Employee hereunder, including, without
limitation, the covenant not to compete.
NOW, THEREFORE, for valuable consideration, the receipt of
which is hereby acknowledged, the mutual duties and obligations set
forth herein, and intending to be legally bound, the parties hereto
agree as follows:
Employment. Employer hereby agrees to employ Employee
and Employee hereby agrees to serve Employer upon the terms and
conditions set forth in this Agreement in the capacities set forth
on Exhibit A attached hereto, with the duties and responsibilities
of such positions to be determined from time to time by the
President and/or Chief Executive Officer of each of the companies
which comprise Employer and the Board of Directors of AirT.
Term.
Statement of Term. The term of this Agreement shall
begin on January 1, 1996, and end on March 31, 1999, or on such
later date to which the term of this Agreement may be extended
pursuant to the provisions of this Paragraph 2.
Automatic Extension. Subject to subparagraph (c) of this
Paragraph 2, the term of this Agreement shall be extended
automatically for one year effective on the 1st day of December,
1996 (so that effective on such date the term of employment shall
be extended from March 31, 1999, to March 31, 2000), and on the 1st
day of each succeeding December (so that effective on each such
day, the remaining term of employment shall be for a full three-
year, four month period).
Termination of Automatic Extensions. Employee or the
Board of Directors of AirT, by written notice delivered to the
other, may at any time elect to terminate the automatic extension
provisions of subparagraph (b) of this Paragraph. Such election
shall apply only to extensions that would otherwise become
effective after delivery of such notice and shall not apply to
extensions that have theretofore become effective.
Compensation, Incentives and Employee Benefits.
Base Salary. Employer shall pay to the Employee for his
performance of services hereunder a base salary ("Base Salary") at
the rate of not less than One Hundred Three Thousand Four Hundred
Forty Three and No/100 ($103,443.00) per year for the period of
this Agreement. The Employee's Base Salary rate shall be reviewed
by Employer annually and may be increased from time to time only
with the approval of the Compensation Committee of the Board of
Directors of AirT. From and after the effective date of any such
change the increased rate shall become the Base Salary rate
applicable thereafter. Base Salary shall be paid in accordance
with Employer's normal payroll practices and shall be prorated for
any partial months of employment.
Incentive Compensation. Employer shall pay to the
Employee incentive compensation ("Incentive Compensation") equal to
one and one-half percent (1.5%) of the earnings before income taxes
or extraordinary items reported each year by AirT on its Annual
Report on Form 10-K (the "10-K"). Amounts payable under this
subparagraph, if any, shall be paid within fifteen (15) days after
AirT files its 10-K with the Securities and Exchange Commission.
Amounts otherwise payable hereunder shall be prorated for a partial
year's employment in the event Employee's employment is terminated
or ceases during the course of AirT's fiscal year.
Employee Benefit Plans. In addition to the Base Salary
and Incentive Compensation provided for above, Employer shall
provide to the Employee the opportunity to continue to participate
in all life insurance, medical, dental, optical, disability, and
other employee benefit plans (collectively, "Employee Benefit
Plans") sponsored from time to time by Employer and covering its
employees generally or a particular group of its employees of which
the Employee is a member (including participation by the Employee's
dependents to the extent they are eligible under the terms of such
plans), subject to the terms and conditions of such benefit plans.
Reimbursement of Expenses. Employer shall pay or
reimburse Employee for all reasonable travel and other expenses
incurred by him in performing his obligations under this Agreement.
Such expenses shall be appropriately submitted and approved in
accordance with the policies approved by the Board of Directors of
AirT.
Vacation. Employee shall be entitled to paid annual
vacation of up to 4 weeks per year.
Automobile Expense. Employee shall be reimbursed for the
use of his automobile for Employer's business at the rate of
$4,800.00 per year, payable in monthly installments.
Retirement Benefits.
Amount. The Employer shall pay Employee an annual
retirement benefit of Sixty Thousand and No/100 Dollars
($60,000.00) per year in the event Employee continues work until he
reaches age 65. If Employee voluntarily terminates his employment
before he reaches age 65, such amount shall be reduced by three (3)
percentage points for each full year that his termination of
employment precedes the date he reaches age 65, but in no event
prior to his reaching age 62. If such termination of employment
occurs on a date other than his birthday, the three (3) percentage
point reduction shall be prorated on a monthly basis.
Form. Such retirement benefit shall commence as of the
date elected pursuant to Paragraph 4(c) hereof and shall be paid
monthly in the form of a single life annuity or, at Employee's
option, an actuarially equivalent joint and survivor annuity or
life annuity with a ten-year period certain; provided, however,
that Employee shall have the right to receive the present value of
his retirement benefit in a single lump sum payment if he files an
election in writing with the Employer at least one year before the
date as of which his benefit is scheduled to commence. For
purposes of this Agreement, (a) the present value shall be
determined by using the insurance industry's standard 1983 Group
Annuity Mortality Table (the "Table") and an interest rate (the
"Rate") equal to the average (for the 90 days prior to payment)
yield of ten year U.S. Treasury Notes (as reported over such period
in The Wall Street Journal or any successor to such publication),
(b) the term "joint and survivor annuity" shall mean an annuity
payable for Employee's life and, if he dies before his survivor
annuitant, a 50%, 75% or 100% survivor annuity payable to such
survivor for such person's life, (c) the term "life annuity with a
ten-year period certain" shall mean an annuity payable for the life
of Employee and, if Employee dies before payments have been made
for ten years, with continued payments to his designated
beneficiary for the balance of such ten-year period, and (d) an
actuarially equivalent benefit shall be determined using the Table
and the Rate.
Timing. Such retirement benefit shall be paid, or
benefit payments shall commence, in the form elected pursuant to
Paragraph 4(b) hereof, as of the first day of the month immediately
following Employee's 65th birthday; provided, however, that
Employee shall have the right at any age to elect that the payment
of his benefit commence after the later of the date he reaches age
62 or his employment terminates provided such election is filed in
writing with the Employer at least one year before his employment
terminates. If the payment of Employee's retirement benefit begins
before age 65 pursuant to such an election, such benefit shall be
reduced by three percentage points (3%) for each full year that the
benefit commencement date precedes Employee's 65th birthday. In
the event that benefits commence as of a date other than Employee's
birthday, the three percentage point reduction factor shall be
prorated on a monthly basis.
Offset for Other Retirement Benefits. In the event that
the retirement benefits payable under any retirement benefits
program applicable to all employees (the " AirT Plan") are paid in
the same form and at the same time as the retirement benefits under
this Paragraph 4, then the annual benefit payable under Paragraph
4 hereof each year shall be offset by the dollar amount paid to
Employee under the AirT Plan in such year. In the event that the
retirement benefits payable under the AirT Plan are not paid in the
same form or are not paid at the same time, then the retirement
benefits under this Paragraph 4 shall be offset by the actuarial
equivalent of the benefit expected to be paid to Employee under the
AirT Plan. The actuarial equivalent benefit shall be determined by
using the Table and the Rate.
Death Benefit. In the event of Employee's death prior to
the commencement of the retirement benefit described in Paragraph
4(a), the Employer hereby agrees to pay an annual death benefit to
Employee's estate that is equal to the single life annuity benefit
Employee would have received if he had terminated employment on the
later of his 65th birthday or his date of death; provided, however,
that the amount payable under this subparagraph shall be reduced by
five percent (5%) per year for each year Employee's death occurs
prior to age 65, but in no event by more than fifty percent (50%).
Such annual benefit shall commence as soon as practicable after
Employee's death and shall be paid in substantially equal monthly
payments for a period of ten years.
Disability Benefit. In the event of Employee's
termination of employment as a result of total disability, his
retirement benefit under Paragraph 4 hereof shall be calculated
under Paragraph 4(a) and 4(c), shall be paid in the form elected
pursuant to Paragraph 4(b), and shall be paid at the time elected
pursuant to Paragraph 4(c), except that Employee shall have the
right to make an election under Paragraph 4(c) no later than six
months before his employment terminates, instead of one year before
his employment terminates.
Source of Benefits. The retirement benefits payable
under this Agreement shall be paid by the Employer from its general
assets. Employee shall have no right, interest, or claim
whatsoever to the payment of a benefit from any person other than
the Employer, and shall have no right or interest whatsoever that
is superior in any manner to the right of any other general and
unsecured creditor of the Employer. Employee shall have no right
to assign, alienate, pledge or otherwise encumber the retirement
benefits payable under this Agreement, and any attempt to do so
shall be void.
Participation in Other Plans. Employee shall participate
in all retirement plans (qualified or non-qualified) and all
deferred compensation arrangements maintained by the Employer in
which other senior executives participate as a group, subject to
the terms and conditions of such retirement plans.
Vesting. Notwithstanding anything herein to the
contrary, Employee's right to the retirement and death benefits
provided for hereunder shall vest upon the execution hereof even
though Employee shall have no right to the payment of any
retirement benefits until he reaches age 62 or to the death benefit
until death.
Duties. During the term hereof, Employee shall devote
all of his business time, attention, skills and efforts to the
business of Employer and the faithful performance of his duties
hereunder; provided, however, that (i) nothing contained herein
shall prevent Employee from making outside investments consistent
with the provisions contained herein and (ii) with the approval of
the Board of Directors of AirT, from time to time Employee may
serve, or continue to serve, on the boards of directors of, and
hold any other offices or positions in, companies or organizations
which, in the AirT Board of Directors' judgment, will not present
any conflict of interest with Employer, or materially affect the
performance of Employee's duties pursuant to this Agreement.
Except for such incidental matters as may be assigned by Employer
from time to time, Employee's duties shall be confined to those
geographic areas in which Employer operates its business and
Employee may not be transferred so that Employee's principal office
is located anywhere outside the state of North Carolina.
Termination.
Termination By Employer Without Cause. The parties
recognize (i) that the Board of Directors of AirT has the duty to
use its judgment in the best interests of Employer in determining
whether to remove or to elect or reelect Employee as an executive
officer of Employer even though there may be no legal cause
therefor under this Agreement, and (ii) that any action or inaction
of the Board of Directors of AirT pursuant to clause (i) shall not
prejudice the rights of Employee under this Agreement.
Accordingly, the parties agree that, subject to all other
provisions of this Paragraph 6, Employer shall have the right at
any time during the term of this Agreement to terminate this
Agreement without cause. Such right of termination may be
exercised by removal of Employee by the Board of Directors of AirT
or the failure of the Board of Directors of AirT to elect or re-
elect Employee as an executive officer of Employer or otherwise.
Termination of this Agreement shall be deemed to occur on the date
Employee is notified thereof or, if he is not so notified, on the
date of the act or failure to act by the Board of Directors of AirT
referred to in the preceding sentence.
Termination by Employee. Employee may terminate his
employment with Employer, for any reason or without reason, during
the term hereof. Such termination must be accompanied by the
delivery of at least 10 days' written notice delivered to Employer.
Termination Payments. If Employer terminates Employee's
employment hereunder pursuant to Paragraph 6(a) hereof for any
reason other than for "Cause", as defined herein, then the
following provisions shall govern:
Immediately upon the effectiveness of the termination set
forth in Paragraph 6(a) above, Employer shall make a lump
sum cash payment to Employee in an amount equal to the
sum of (A) the aggregate Base Salary that would have been
paid to Employee under the terms hereof after the date of
such event through the date of the then term of this
Agreement (based upon the agreement that the Base Salary
as in effect immediately prior to the date of such
event(s) continued to be the Base Salary through the term
of this Agreement; and (B) one-half of the maximum
additional compensation that would have been paid to
Employee after the date of termination of employment
pursuant to Paragraph 3(b) had his employment hereunder
continued through the then date of the expiration of this
Agreement (based upon the agreement that the amount of
incentive compensation paid to Employee pursuant to
Paragraph 3(b) for the calendar year immediately
preceding the date of termination continued to be the
amount payable through the term of this Agreement).
Notwithstanding anything contained in this Paragraph to the
contrary, in the event that the payments under this Paragraph to
Employee, either alone or together with other payments Employee has
a right to receive from Employer, would not be deductible (in whole
or in part) by Employer as a result of such payments constituting
a "parachute payment" (as defined in Section 280G of the Internal
Revenue Code, as amended (the "Code")), such payments shall be
reduced to the largest amount as will result in no portion of the
payments not being fully deductible by Employer as the result of
Section 280G of the Code. The determination of any reduction in
the payments pursuant to the foregoing sentence shall be made
exclusively by AirT's independent public accountants (whose fees
and expenses shall be borne by Employer), and such determination
shall be conclusive and binding on Employer and Employee.
Disability. If the Employee is unable to perform his
duties hereunder for a period of twelve (12) consecutive months due
to disability (as defined by the primary disability insurance car-
rier then providing such insurance coverage for the Employer's
executive officers), this Agreement may be terminated at Employer's
discretion by giving to the Employee written notice specifying a
termination date subsequent thereto and also subsequent to the end
of said twelve (12) month period.
(e) No Mitigation. Employee shall have no obligation to seek
other employment in the event of termination of his employment and
no compensation or other benefits received by Employee from any
other employment shall reduce or limit Employer's obligation to
make payment under this entire Paragraph 6.
(f) Definitions. "Cause" shall exist if, and only if, a
court of competent jurisdiction enters a final order finding that
(a) the Employee has committed wrongful acts (but excluding matters
of business judgment) which have had or will have a material
adverse effect on the business, operations or financial condition
of Employer, or (b) the Employee has willfully and materially
failed to perform the duties reasonably required of him under this
Agreement.
Confidential Information. Employee shall not, at any
time during or following his employment by Employer regardless of
the reason for such termination of employment, furnish, divulge,
communicate, use to the detriment of Employer or for the benefit of
any business, firm, person, partnership, trust or corporation, or
otherwise, any of Employer's confidential information, data, trade
secrets, sales methods, names of customers, advertising methods,
financial affairs or methods of procurement, or take with him any
document or paper relating to the foregoing, it being acknowledged
that Employee received or obtained all of the above in confidence
and as a fiduciary of Employer.
Non-Competition. Employee agrees that, during Employee's
employment with Employer and for a period of three (3) years
thereafter, whether Employee leaves voluntarily or involuntarily:
(a) Employee will not directly or indirectly,
individually or as a partner, employee, stockholder,
consultant, agent, officer, director, advisor or in any other
capacity, solicit any of the customers of Employer for the
purpose of selling any service or product similar to those
provided by Employer, or in any manner attempt to induce any
of Employer's customers or suppliers to withdraw, reduce or
divert any of their business from Employer or otherwise
interfere or attempt to interfere with any business
relationship between Employer and its customers or suppliers.
For the purposes of this Paragraph 8(a), customers shall mean
(i) any client, account or customer of the Employer that has
transacted any business with or been contacted by Employer
within the twelve months preceding the date hereof, and
(ii) any other client, account or customer of Employer that
has done business with Employer within two years of the date
of such separation or termination;
(b) Employee will not in any manner induce or attempt to
induce any of Employer's employees to leave the employment of
Employer to become associated with any business operation
engaged in the air cargo or air freight business;
(c) Employee will not directly or indirectly, either as
principal, agent, manager, employee, owner (if the percentage
of ownership exceeds one percent (1%) of the net worth of the
business), partner (general or limited), director, officer,
consultant or in any other capacity, participate in any
business operation engaged in the air cargo or air freight
business;
Limitations on Scope. Because of the present and
contemplated future operations of Employer in the geographic areas
hereinafter set forth, it is further understood and agreed by the
parties hereto that the restriction set forth in Paragraph 8(c)
shall apply to a business engaged in the air cargo, air freight,
aircraft maintenance or aircraft parts brokering business or
businesses in the following geographic areas:
(i) The State of North Carolina;
(ii) The State of Michigan;
(iii) The State of South Carolina;
(iv) The State of Florida;
(v) Any State contiguous with the State of North Carolina;
(vi) Any State contiguous with the State of Michigan;
(vii) Any State contiguous with the State of South Carolina;
(viii) Any State contiguous with the State of Florida;
(ix) Any State east of the Mississippi River;
(x) Any State of the United States of America.
The parties intend the above geographical areas to be
completely severable and independent, and any invalidity or
unenforceability of this Agreement with respect to any one area
shall not render this Agreement unenforceable as applied to any one
or more of the other areas.
Severability. If any provision contained in this
Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Agreement but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
The parties agree that in the event a court should determine that
this Agreement or any of the covenants contained herein is
unreasonable, void or invalid, for any reason whatsoever, then in
such event,the parties hereto agree that the duration, geographical
or other limitation imposed herein should be as the court, or jury,
if applicable, should determine to be fair and reasonable, it being
the intent of each of the parties hereto to be subject to an
agreement that protects the legitimate competitive interests of
Employer and does not unreasonably curtail the rights of the
Employee.
Employee's Representation. Employee represents that his
experience and capabilities are such that the provisions of
Paragraphs 8 and 9 will not prevent him from earning a livelihood.
Employer's Right to Obtain an Injunction. Employee
acknowledges that Employer will have no adequate means of
protecting its rights under Paragraphs 8 and 9 of this Agreement
other than securing an injunction. Accordingly, Employee agrees
that Employer is entitled to enforce this Agreement by obtaining a
preliminary and permanent injunction and any other appropriate
equitable relief in a court of competent jurisdiction. Employee
acknowledges that the recovery of damages by Employer will not be
an adequate means to redress a breach of this Agreement. Nothing
contained in this Paragraph, however, shall prohibit Employer from
pursuing any remedies in addition to injunctive relief, including
recovery of damages.
General Provisions.
Entire Agreement. This Agreement contains the entire
understanding between the parties hereto relating to the employment
of Employee by Employer and supersedes any and all prior
employment, compensation or retirement agreements between Employer
or any predecessors of Employer or any of its subsidiaries and
Employee.
Nonassignability. Neither this Agreement nor any right
or interest hereunder shall be assignable by Employee, his
beneficiaries or legal representatives, without the prior written
consent of Employer; provided, however, that nothing shall preclude
(i) Employee from designating a beneficiary to receive any benefit
payable hereunder upon his death, or (ii) the executors,
administrators or other legal representatives of Employee or his
estate from assigning any rights hereunder to the person or persons
entitled thereunto.
Binding Agreement. This Agreement shall be binding upon,
and inure to the benefit of, Employee and Employer and their
respective permitted successors and assigns.
Amendment or Modification of Agreement. This Agreement
may not be modified or amended except by an instrument in writing
signed by the parties hereto.
Insurance. Employer, at its discretion, may apply for
and procure in their own name and for its own benefit, life
insurance on Employee in any amount or amounts considered
advisable; and Employee shall have no right, title or interest
therein, and further, Employee agrees to submit to any medical or
other examination and to execute and deliver any applications or
other instruments in writing as may be reasonably necessary to
obtain such insurance.
Notices. All notices under this Agreement shall be in
writing and shall be deemed effective when delivered in person (in
the case of Employer, to its Secretary) or when mailed, if mailed
by certified mail, return receipt requested. Notices mailed shall
be addressed, in the case of Employee, to him at his residential
address currently on file with Employer, and in the case of
Employer, to its corporate headquarters, attention of the
Secretary, or to such other address as Employer or Employee may
designate in writing at any time or from time to time to the other
party. In lieu of notice by deposit in the U.S. mail, a party may
give notice by telegram or telex.
Waiver. No delay or omission by either party hereto in
exercising any right, power or privilege hereunder shall impair
such right, power or privilege, nor shall any single or partial
exercise of any right, power or privilege preclude any further
exercise thereof or the exercise of any other right, power or
privilege. The provisions of this Paragraph 14(g) cannot be waived
except in writing signed by both parties.
Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of North
Carolina, exclusive of its choice of law provisions
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
AIR TRANSPORTATION HOLDING COMPANY, INC.
By: ____________________________
Its: ___________
MOUNTAIN AIR CARGO, INC.
By: ____________________________
Its: ___________
CSA, INC.
By: ____________________________
Its: ___________
MOUNTAIN AIRCRAFT SERVICES, LLC
By: ____________________________
Its: ______________
______________________________ (SEAL)
John J. Gioffre
<PAGE>
EXHIBIT A
COMPANY POSITION HELD
AirT Vice President
Secretary
Treasurer
Chief Financial Officer
Mountain Air Cargo, Inc. Vice President Finance
Secretary
Treasurer
Chief Financial Officer
CSA Air, Inc. Vice President Finance
Secretary
Treasurer
Mountain Aircraft Services LLC Vice President Finance
Secretary
Treasurer
EXECUTION COPY
EMPLOYMENT AGREEMENT
J. HUGH BINGHAM
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of the 1st day of January, 1996, by and among AIR
TRANSPORTATION HOLDING COMPANY, INC., ("AirT"); a Delaware
corporation; MOUNTAIN AIR CARGO, INC., a North Carolina
corporation; MOUNTAIN AIRCRAFT SERVICES, LLC, a North Carolina
limited liability company (all collectively referred to herein as
"Employer"); and J. HUGH BINGHAM, an individual having an address
at 107 Labans Lane, Lincolnton, North Carolina 28092 ("Employee").
Background Statement
Employee currently is employed by Employer and holds the
positions for the different companies listed on Exhibit A attached
hereto and made a part hereof. Employee has worked for the
companies which comprise Employer in positions of responsibility
and authority for several years and has been instrumental in
successfully developing, expanding and increasing the business and
earnings of Employer. Employer desires to ensure that the services
of Employee will continue to be available to it on a mutually
satisfactory basis. In the course of his employment with Employer,
Employee has had access to trade secrets and proprietary
information of Employer and will, as an employee of Employer,
continue to have access to trade secrets and proprietary
information of Employer. Accordingly, Employee has and will
continue to acquire the knowledge and ability to compete with
Employer. Employer has offered Employee an employment agreement on
the terms and pursuant to the conditions hereof, including the
stability and security provided to Employee by the arrangement
provided for herein. The parties agree that the execution and
delivery of this Agreement is a condition precedent to the benefits
extended to Employee hereunder. Employee agrees that the benefits
provided for herein are adequate and sufficient consideration for
the covenants made by Employee hereunder, including, without
limitation, the covenant not to compete.
NOW, THEREFORE, for valuable consideration, the receipt of
which is hereby acknowledged, the mutual duties and obligations set
forth herein, and intending to be legally bound, the parties hereto
agree as follows:
Employment. Employer hereby agrees to employ Employee
and Employee hereby agrees to serve Employer upon the terms and
conditions set forth in this Agreement in the capacities set forth
on Exhibit A attached hereto, with the duties and responsibilities
of such positions to be determined from time to time by the
President and/or Chief Executive Officer of each of the companies
which comprise Employer and the Board of Directors of AirT.
Term.
Statement of Term. The term of this Agreement shall
begin on January 1, 1996, and end on March 31, 1999, or on such
later date to which the term of this Agreement may be extended
pursuant to the provisions of this Paragraph 2.
Automatic Extension. Subject to subparagraph (c) of this
Paragraph 2, the term of this Agreement shall be extended
automatically for one year effective on the 1st day of December,
1996 (so that effective on such date the term of employment shall
be extended from March 31, 1999, to March 31, 2000), and on the 1st
day of each succeeding December (so that effective on each such
day, the remaining term of employment shall be for a full three-
year, four month period).
Termination of Automatic Extensions. Employee or the
Board of Directors of AirT, by written notice delivered to the
other, may at any time elect to terminate the automatic extension
provisions of subparagraph (b) of this Paragraph 2. Such election
shall apply only to extensions that would otherwise become
effective after delivery of such notice and shall not apply to
extensions that have theretofore become effective.
Compensation, Incentives and Employee Benefits.
Base Salary. Employer shall pay to the Employee for his
performance of services hereunder a base salary ("Base Salary") at
the rate of not less than One Hundred Thirty Thousand and No/100
($130,000) per year for the period of this Agreement. The
Employee's Base Salary rate shall be reviewed by Employer annually
and may be increased from time to time only with the approval of
the Compensation Committee of the Board of Directors of AirT. From
and after the effective date of any such change the increased rate
shall become the Base Salary rate applicable thereafter. Base
Salary shall be paid in bi-weekly installments and shall be pro-
rated for any partial months of employment.
Incentive Compensation. Employer shall pay to the
Employee incentive compensation ("Incentive Compensation") equal to
two percent (2%) of the earnings before income taxes or
extraordinary items reported each year by AirT on its Annual Report
on Form 10-K (the "10-K"). Amounts payable under this
subparagraph, if any, shall be paid within fifteen (15) days after
AirT files its 10-K with the Securities and Exchange Commission.
Amounts otherwise payable hereunder shall be prorated for a partial
year's employment in the event Employee's employment is terminated
or ceases during the course of AirT's fiscal year.
Employee Benefit Plans. In addition to the Base Salary
and Incentive Compensation provided for above, Employer shall
provide to the Employee the opportunity to continue to participate
in all life insurance, medical, dental, optical, disability, and
other employee benefit plans (collectively, "Employee Benefit
Plans") sponsored from time to time by Employer and covering its
employees generally or a particular group of its employees of which
the Employee is a member (including participation by the Employee's
dependents to the extent they are eligible under the terms of such
plans), subject to the terms and conditions of such benefit plans.
Reimbursement of Expenses. Employer shall pay or
reimburse Employee for all reasonable travel and other expenses
incurred by him in performing his obligations under this Agreement.
Such expenses shall be appropriately submitted and approved in
accordance with the policies approved by the Board of Directors of
AirT.
Vacation. Employee shall be entitled to paid annual
vacation of up to 4 weeks per year.
Automobile Expense. Employee shall be reimbursed for the
use of his automobile for Employer's business at the rate of
$4,800.00 per year, payable in monthly installments.
Retirement Benefits.
Amount. The Employer shall pay Employee an annual
retirement benefit of Seventy-Five Thousand and No/100 Dollars
($75,000.00) per year in the event Employee continues work until he
reaches age 65. If Employee voluntarily terminates his employment
before he reaches age 65, such amount shall be reduced by three (3)
percentage points for each full year that his termination of
employment precedes the date he reaches age 65, but in no event
prior to his reaching age 62. If such termination of employment
occurs on a date other than his birthday, the three (3) percentage
point reduction shall be prorated on a monthly basis.
Form. Such retirement benefit shall commence as of the
date elected pursuant to Paragraph 4(c) hereof and shall be paid
monthly in the form of a single life annuity or, at Employee's
option, an actuarially equivalent joint and survivor annuity or
life annuity with a ten-year period certain; provided, however,
that Employee shall have the right to receive the present value of
his retirement benefit in a single lump sum payment if he files an
election in writing with the Employer at least one year before the
date as of which his benefit is scheduled to commence. For
purposes of this Agreement, (a) the present value shall be
determined by using the insurance industry's standard 1983 Group
Annuity Mortality Table (the "Table") and an interest rate (the
"Rate") equal to the average (for the 90 days prior to payment)
yield of ten year U.S. Treasury Notes (as reported over such period
in The Wall Street Journal or any successor to such publication),
(b) the term "joint and survivor annuity" shall mean an annuity
payable for Employee's life and, if he dies before his survivor
annuitant, a 50%, 75% or 100% survivor annuity payable to such
survivor for such person's life, (c) the term "life annuity with a
ten-year period certain" shall mean an annuity payable for the life
of Employee and, if Employee dies before payments have been made
for ten years, with continued payments to his designated
beneficiary for the balance of such ten-year period, and (d) an
actuarially equivalent benefit shall be determined using the Table
and the Rate.
Timing. Such retirement benefit shall be paid, or
benefit payments shall commence, in the form elected pursuant to
Paragraph 4(b) hereof, as of the first day of the month immediately
following Employee's 65th birthday; provided, however, that
Employee shall have the right at any age to elect that the payment
of his benefit commence after the later of the date he reaches age
62 or his employment terminates provided such election is filed in
writing with the Employer at least one year before his employment
terminates. If the payment of Employee's retirement benefit begins
before age 65 pursuant to such an election, such benefit shall be
reduced by three percentage points (3%) for each full year that the
benefit commencement date precedes Employee's 65th birthday. In
the event that benefits commence as of a date other than Employee's
birthday, the three percentage point reduction factor shall be
prorated on a monthly basis.
Offset for Other Retirement Benefits. In the event that
the retirement benefits payable under any retirement benefits
program applicable to all employees (the " AirT Plan") are paid in
the same form and at the same time as the retirement benefits under
this Paragraph 4, then the annual benefit payable under Paragraph
4 hereof each year shall be offset by the dollar amount paid to
Employee under the AirT Plan in such year. In the event that the
retirement benefits payable under the AirT Plan are not paid in the
same form or are not paid at the same time, then the retirement
benefits under this Paragraph 4 shall be offset by the actuarial
equivalent of the benefit expected to be paid to Employee under the
AirT Plan. The actuarial equivalent benefit shall be determined by
using the Table and the Rate.
Death Benefit. In the event of Employee's death prior to
the commencement of the retirement benefit described in Paragraph
4(a), Employer hereby agrees to pay an annual death benefit to
Employee's estate that is equal to the single life annuity benefit
Employee would have received if he had terminated employment on the
later of his 65th birthday or his date of death; provided, however,
that the amount payable under this subparagraph shall be reduced by
five percent (5%) per year for each year Employee's death occurs
prior to age 65, but in no by event more than fifty percent (50%).
Such annual benefit shall commence as soon as practicable after
Employee's death and shall be paid in substantially equal monthly
payments for a period of ten years.
Disability Benefit. In the event of Employee's
termination of employment as a result of total disability, his
retirement benefit under Paragraph 4 hereof shall be calculated
under Paragraph 4(a) and 4(c), shall be paid in the form elected
pursuant to Paragraph 4(b), and shall be paid at the time elected
pursuant to Paragraph 4(c), except that Employee shall have the
right to make an election under Paragraph 4(c) no later than six
months before his employment terminates, instead of one year before
his employment terminates.
Source of Benefits. The retirement benefits payable
under this Agreement shall be paid by the Employer from its general
assets. Employee shall have no right, interest, or claim
whatsoever to the payment of a benefit from any person other than
the Employer, and shall have no right or interest whatsoever that
is superior in any manner to the right of any other general and
unsecured creditor of the Employer. Employee shall have no right
to assign, alienate, pledge or otherwise encumber the retirement
benefits payable under this Agreement, and any attempt to do so
shall be void.
Participation in Other Plans. Employee shall participate
in all retirement plans (qualified or non-qualified) and all
deferred compensation arrangements maintained by the Employer in
which other senior executives participate as a group, subject to
the terms and conditions of such retirement plans.
Vesting. Notwithstanding anything herein to the
contrary, Employee's right to the retirement and death benefits
provided for hereunder shall vest upon the execution hereof even
though Employee shall have no right to the payment of any
retirement benefits until he reaches age 62 or to the death benefit
until death.
Duties. During the term hereof, Employee shall devote
all of his business time, attention, skills and efforts to the
business of Employer and the faithful performance of his duties
hereunder; provided, however, that (i) nothing contained herein
shall prevent Employee from making outside investments consistent
with the provisions contained herein and (ii) with the approval of
the Board of Directors of AirT, from time to time Employee may
serve, or continue to serve, on the boards of directors of, and
hold any other offices or positions in, companies or organizations
which, in the AirT Board of Directors' judgment, will not present
any conflict of interest with Employer, or materially affect the
performance of Employee's duties pursuant to this Agreement.
Except for such incidental matters as may be assigned by Employer
from time to time, Employee's duties shall be confined to those
geographic areas in which Employer operates its business and
Employee may not be transferred so that Employee's principal office
is located anywhere outside the state of North Carolina.
Termination.
Termination By Employer Without Cause. The parties
recognize (i) that the Board of Directors of AirT has the duty to
use its judgment in the best interests of Employer in determining
whether to remove or to elect or reelect Employee as an executive
officer of Employer even though there may be no legal cause
therefor under this Agreement, and (ii) that any action or inaction
of the Board of Directors of AirT pursuant to clause (i) shall not
prejudice the rights of Employee under this Agreement.
Accordingly, the parties agree that, subject to all other
provisions of this Paragraph 6, Employer shall have the right at
any time during the term of this Agreement to terminate this
Agreement without cause. Such right of termination may be
exercised by removal of Employee by the Board of Directors of AirT
or the failure of the Board of Directors of AirT to elect or re-
elect Employee as an executive officer of Employer or otherwise.
Termination of this Agreement shall be deemed to occur on the date
Employee is notified thereof or, if he is not so notified, on the
date of the act or failure to act by the Board of Directors of AirT
referred to in the preceding sentence.
Termination by Employee. Employee may terminate his
employment with Employer, for any reason or without reason, during
the term hereof. Such termination must be accompanied by the
delivery of at least 10 days' written notice delivered to Employer.
Termination Payments. If Employer terminates Employee's
employment hereunder pursuant to Paragraph 6(a) hereof for any
reason other than for "Cause", as defined herein, then the
following provisions shall govern:
Immediately upon the effectiveness of the termination set
forth in Paragraph 6(a) above, Employer shall make a lump
sum cash payment to Employee in an amount equal to the
sum of (A) the aggregate Base Salary that would have been
paid to Employee under the terms hereof after the date of
such event through the date of the then term of this
Agreement (based upon the agreement that the Base Salary
as in effect immediately prior to the date of such
event(s) continued to be the Base Salary through the term
of this Agreement; and (B) one-half of the maximum
additional compensation that would have been paid to
Employee after the date of termination of employment
pursuant to Paragraph 3(b) had his employment hereunder
continued through the then date of the expiration of this
Agreement (based upon the agreement that the amount of
incentive compensation paid to Employee pursuant to
Paragraph 3(b) for the calendar year immediately
preceding the date of termination continued to be the
amount payable through the term of this Agreement).
Notwithstanding anything contained in this Paragraph to the
contrary, in the event that the payments under this Paragraph to
Employee, either alone or together with other payments Employee has
a right to receive from Employer, would not be deductible (in whole
or in part) by Employer as a result of such payments constituting
a "parachute payment" (as defined in Section 280G of the Internal
Revenue Code, as amended (the "Code")), such payments shall be
reduced to the largest amount as will result in no portion of the
payments not being fully deductible by Employer as the result of
Section 280G of the Code. The determination of any reduction in
the payments pursuant to the foregoing sentence shall be made
exclusively by AirT's independent public accountants (whose fees
and expenses shall be borne by Employer), and such determination
shall be conclusive and binding on Employer and Employee.
Disability. If the Employee is unable to perform his
duties hereunder for a period of twelve (12) consecutive months due
to disability (as defined by the primary disability insurance car-
rier then providing such insurance coverage for the Employer's
executive officers), this Agreement may be terminated at Employer's
discretion by giving to the Employee written notice specifying a
termination date subsequent thereto and also subsequent to the end
of said twelve (12) month period.
(e) No Mitigation. Employee shall have no obligation to seek
other employment in the event of termination of his employment and
no compensation or other benefits received by Employee from any
other employment shall reduce or limit Employer's obligation to
make payment under this entire Paragraph 6.
(f) Definitions. "Cause" shall exist if, and only if, a
court of competent jurisdiction enters a final order finding that
(a) the Employee has committed wrongful acts (but excluding matters
of business judgment) which have had or will have a material
adverse effect on the business, operations or financial condition
of Employer, or (b) the Employee has willfully and materially
failed to perform the duties reasonably required of him under this
Agreement.
Confidential Information. Employee shall not, at any
time during or following his employment by Employer regardless of
the reason for such termination of employment, furnish, divulge,
communicate, use to the detriment of Employer or for the benefit of
any business, firm, person, partnership, trust or corporation, or
otherwise, any of Employer's confidential information, data, trade
secrets, sales methods, names of customers, advertising methods,
financial affairs or methods of procurement, or take with him any
document or paper relating to the foregoing, it being acknowledged
that Employee received or obtained all of the above in confidence
and as a fiduciary of Employer.
Non-Competition. Employee agrees that, during Employee's
employment with Employer and for a period of three (3) years
thereafter, whether Employee leaves voluntarily or involuntarily:
(a) Employee will not directly or indirectly,
individually or as a partner, employee, stockholder,
consultant, agent, officer, director, advisor or in any other
capacity, solicit any of the customers of Employer for the
purpose of selling any service or product similar to those
provided by Employer, or in any manner attempt to induce any
of Employer's customers or suppliers to withdraw, reduce or
divert any of their business from Employer or otherwise
interfere or attempt to interfere with any business
relationship between Employer and its customers or suppliers.
For the purposes of this Paragraph 8(a), customers shall mean
(i) any client, account or customer of the Employer that has
transacted any business with or been contacted by Employer
within the twelve months preceding the date hereof, and
(ii) any other client, account or customer of Employer that
has done business with Employer within two years of the date
of such separation or termination;
(b) Employee will not in any manner induce or attempt to
induce any of Employer's employees to leave the employment of
Employer to become associated with any business operation
engaged in the air cargo or air freight business;
(c) Employee will not directly or indirectly, either as
principal, agent, manager, employee, owner (if the percentage
of ownership exceeds one percent (1%) of the net worth of the
business), partner (general or limited), director, officer,
consultant or in any other capacity, participate in any
business operation engaged in the air cargo or air freight
business;
Limitations on Scope. Because of the present and
contemplated future operations of Employer in the geographic areas
hereinafter set forth, it is further understood and agreed by the
parties hereto that the restriction set forth in Paragraph 8(c)
shall apply to a business engaged in the air cargo, air freight,
aircraft maintenance or aircraft parts brokering business or
businesses in the following geographic areas:
(i) The State of North Carolina;
(ii) The State of Michigan;
(iii) The State of South Carolina;
(iv) The State of Florida;
(v) Any State contiguous with the State of North Carolina;
(vi) Any State contiguous with the State of Michigan;
(vii) Any State contiguous with the State of South Carolina;
(viii) Any State contiguous with the State of Florida;
(ix) Any State east of the Mississippi River;
(x) Any State of the United States of America.
The parties intend the above geographical areas to be
completely severable and independent, and any invalidity or
unenforceability of this Agreement with respect to any one area
shall not render this Agreement unenforceable as applied to any one
or more of the other areas.
Severability. If any provision contained in this
Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Agreement but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
The parties agree that in the event a court should determine that
this Agreement or any of the covenants contained herein is
unreasonable, void or invalid, for any reason whatsoever, then in
such event,the parties hereto agree that the duration, geographical
or other limitation imposed herein should be as the court, or jury,
if applicable, should determine to be fair and reasonable, it being
the intent of each of the parties hereto to be subject to an
agreement that protects the legitimate competitive interests of
Employer and does not unreasonably curtail the rights of the
Employee.
Employee's Representation. Employee represents that his
experience and capabilities are such that the provisions of
Paragraphs 8 and 9 will not prevent him from earning a livelihood.
Employer's Right to Obtain an Injunction. Employee
acknowledges that Employer will have no adequate means of
protecting its rights under Paragraphs 8 and 9 of this Agreement
other than securing an injunction. Accordingly, Employee agrees
that Employer is entitled to enforce this Agreement by obtaining a
preliminary and permanent injunction and any other appropriate
equitable relief in a court of competent jurisdiction. Employee
acknowledges that the recovery of damages by Employer will not be
an adequate means to redress a breach of this Agreement. Nothing
contained in this Paragraph, however, shall prohibit Employer from
pursuing any remedies in addition to injunctive relief, including
recovery of damages.
General Provisions.
Entire Agreement. This Agreement contains the entire
understanding between the parties hereto relating to the employment
of Employee by Employer and supersedes any and all prior
employment, compensation or retirement agreements between Employer
or any predecessors of Employer or any of its subsidiaries and
Employee.
Nonassignability. Neither this Agreement nor any right
or interest hereunder shall be assignable by Employee, his
beneficiaries or legal representatives, without the prior written
consent of Employer; provided, however, that nothing shall preclude
(i) Employee from designating a beneficiary to receive any benefit
payable hereunder upon his death, or (ii) the executors,
administrators or other legal representatives of Employee or his
estate from assigning any rights hereunder to the person or persons
entitled thereunto.
Binding Agreement. This Agreement shall be binding upon,
and inure to the benefit of, Employee and Employer and their
respective permitted successors and assigns.
Amendment or Modification of Agreement. This Agreement
may not be modified or amended except by an instrument in writing
signed by the parties hereto.
Insurance. Employer, at its discretion, may apply for
and procure in their own name and for its own benefit, life
insurance on Employee in any amount or amounts considered
advisable; and Employee shall have no right, title or interest
therein, and further, Employee agrees to submit to any medical or
other examination and to execute and deliver any applications or
other instruments in writing as may be reasonably necessary to
obtain such insurance.
Notices. All notices under this Agreement shall be in
writing and shall be deemed effective when delivered in person (in
the case of Employer, to its Secretary) or when mailed, if mailed
by certified mail, return receipt requested. Notices mailed shall
be addressed, in the case of Employee, to him at his residential
address currently on file with Employer, and in the case of
Employer, to its corporate headquarters, attention of the
Secretary, or to such other address as Employer or Employee may
designate in writing at any time or from time to time to the other
party. In lieu of notice by deposit in the U.S. mail, a party may
give notice by telegram or telex.
Waiver. No delay or omission by either party hereto in
exercising any right, power or privilege hereunder shall impair
such right, power or privilege, nor shall any single or partial
exercise of any right, power or privilege preclude any further
exercise thereof or the exercise of any other right, power or
privilege. The provisions of this Paragraph 14(g) cannot be waived
except in writing signed by both parties.
Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of North
Carolina, exclusive of its choice of law provisions.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
AIR TRANSPORTATION HOLDING COMPANY, INC.
By: ____________________________
Its: ___________
MOUNTAIN AIR CARGO, INC.
By: ____________________________
Its: ___________
MOUNTAIN AIRCRAFT SERVICES, LLC
By: ____________________________
Its: ______________
______________________________ (SEAL)
J. Hugh Bingham
EXHIBIT A
COMPANY POSITION HELD
AirT Senior Vice President
Mountain Air Cargo, Inc. Executive Vice President
Mountain Aircraft Services LLC President
