FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1998
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 (I.R.S. Employer
incorporation or organization) Identification No.)
Post Office Box 488, Denver, North Carolina 28037
(Address of principal executive offices)
(704) 377-2109
(Registrant's telephone number, including area code)
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 for 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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
2,711,653 Common Shares, par value of $.25 per share were outstanding as of
August 7, 1998.
This filing contains 60 pages.
The exhibit index is on page 15.
<PAGE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Earnings
for the three-month periods ended
June 30, 1998 and 1997 (Unaudited) 3
Consolidated Balance Sheets at
June 30, 1998 (Unaudited)
and March 31, 1998 4
Consolidated Statements of Cash
Flows for the three-month periods
ended June 30, 1998 and 1997 (Unaudited) 5
Notes to Consolidated Financial
Statements (Unaudited) 6-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8-11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12-14
Exhibit Index 15
Exhibits 16-60
2<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
<CAPTION>
Three Months Ended
June 30,
1998 1997
<S> <C> <C>
Operating Revenues:
Cargo $ 4,676,739 $ 4,374,209
Maintenance 3,348,669 3,139,421
Ground equipment 3,360,023 -
Aircraft services and other 1,124,710 645,450
12,510,141 8,159,080
Operating Expenses:
Flight operations 3,231,848 3,015,056
Maintenance and brokering 3,857,126 3,429,576
Ground equipment 2,870,123 -
General and administrative 1,855,104 1,016,867
Depreciation and amortization 171,377 107,013
Facility start-up and merger expense - 125,764
11,985,578 7,694,276
Operating Income 524,563 464,804
Non-operating Expense (Income):
Interest 50,696 -
Deferred retirement expense 6,249 420,083
Investment income (43,545) (79,507)
13,400 340,576
Earnings Before Income Taxes 511,163 124,228
Income Taxes 204,465 29,731
Net Earnings $ 306,698 $ 94,497
Net Earnings Per Share:
Basic $ 0.11 $ 0.04
Diluted $ 0.11 $ 0.03
Average Shares Outstanding:
Basic 2,711,653 2,651,432
Diluted 2,810,875 2,790,935
<FN>
See notes to consolidated financial statements.
</TABLE>
3 <PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, 1998 March 31,1998
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 135,968 $ 193,918
Marketable securities 2,566,542 2,556,257
Accounts receivable, net 6,543,028 6,673,101
Inventories 5,860,069 5,325,613
Deferred tax asset, net 272,980 272,980
Prepaid expenses and other 35,020 33,922
Total Current Assets 15,413,607 15,055,791
Property and Equipment 4,858,959 4,693,268
Less accumulated depreciation (2,577,075) (2,429,031)
2,281,884 2,264,237
Deferred Tax Asset 152,000 152,000
Intangible Pension Asset 389,495 389,495
Other Assets 426,228 427,880
Total Assets 18,663,214 18,289,403
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to bank 3,683,135 916,079
Accounts payable 2,904,280 3,975,633
Accrued expenses 1,177,970 1,778,664
Income taxes payable 126,174 762,961
Current portion of long-term obligations 55,045 56,241
Total Current Liabilities 7,946,604 7,489,578
Capital Lease Obligation (less current
portion) 30,904 30,904
Deferred Retirement Obligations (less
current portion) 1,044,570 1,056,795
Stockholders' Equity:
Preferred stock, $1 par value, authorized
10,000,000 shares, none issued - -
Common stock, par value $.25; authorized
4,000,000 shares; 2,711,653 and
2,651,433 shares issued 677,241 677,241
Additional paid in capital 7,128,907 7,128,907
Retained Earnings 1,834,988 1,905,978
9,641,136 9,712,126
Total Liabilities & Stockholders' Equity $ 18,663,214 $ 18,289,403
<FN>
See notes to consolidated financial statements.
</TABLE>
4<PAGE>
<TABLE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Three Months Ended
June 30,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 306,698 $ 94,497
Adjustments to reconcile net earnings to net
cash (used in) provided by operations:
Depreciation and amortization 171,377 107,013
Change in retirement obligation (12,225) 445,779
Change in assets and liabilities which
provided (used) cash:
Accounts receivable 130,073 924,887
Inventories (534,456) (37,277)
Prepaid expenses and other 554 39,594
Accounts payable (1,071,353) (453,135)
Accrued expenses (601,890) (541,651)
Income taxes payable (636,787) (121,249)
Total adjustments (2,554,707) 363,961
Net cash (used in) provided by
operating activities (2,248,009) 458,458
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (189,024) (119,500)
Purchase of marketable securities (10,285) (19,783)
Sale of marketable securities - 116,446
Net cash used in investing activities (199,309) (22,837)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit 2,767,056 -
Payment of cash dividend (377 688) (265,143)
Repurchase of common stock - (48)
Net cash provided by (used in)
financing activities 2,389,368 (265,191)
NET (DECREASE) INCREASE IN CASH
& CASH EQUIVALENTS (57,950) 170,430
CASH & CASH EQUIVALENTS AT BEGINNING
OF PERIOD 193,918 2,377,898
CASH & CASH EQUIVALENTS AT END OF PERIOD $ 135,968 $ 2,548,328
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 47,856 $ 45
Income/Franchise taxes 845,885 160,425
<FN>
See notes to consolidated financial statements.
</TABLE>
5<PAGE>
AIR TRANSPORTATION HOLDING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. Financial Statements
The Consolidated Balance Sheet as of June 30, 1998, the
Consolidated Statements of Earnings for the three-month periods ended
June 30, 1998 and 1997 and the Consolidated Statements of Cash Flows
for the three-month periods ended June 30, 1998 and 1997 have been
prepared by Air Transportation Holding Company, Inc. (the Company)
without audit. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash
flows as of June 30, 1998, and for prior periods presented, have been
made.
It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended March
31, 1998. The results of operations for the period ended June 30 are
not necessarily indicative of the operating results for the full
year.
B. Income Taxes
The tax effect of temporary differences gave rise to the
Company's deferred tax asset in the accompanying June 30, 1998 and
March 31, 1998 consolidated balance sheets.
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. Changes in the valuation allowance, related to
future utilization of net operating losses, reduced the provision for
income taxes by $44,000 during the three-months ended June 30, 1997.
At June 30, 1998, the Company had no valuation allowance.
The income tax provisions for the three-months ended June 30,
1998 and 1997 differ from the federal statutory rate primarily as a
result of state income taxes, non-deductible meals and entertainment
expenses and a reduction in the above mentioned valuation allowance.
C. Net Earnings Per Share
Basic earnings per share has been calculated by dividing net
earnings by the weighted average number of common shares outstanding
during each period. For purposes of calculating diluted earnings per
share, shares issuable under employee stock options were considered
common share equivalents and were included in the weighted average
common shares.
6<PAGE>
The computation of basic and diluted earnings per common share is as
follows:
Three months ended June 30,
1998 1997
Net earnings $ 306,698 $ 94,497
Weighted average common shares:
Shares outstanding - basic 2,711,653 2,651,432
Dilutive stock options 99,222 139,503
Shares outstanding - diluted 2,810,875 2,790,935
Net earnings per common share:
Basic $ 0.11 $ 0.04
Diluted $ 0.11 $ 0.03
D. Acquisition
On August 29, 1997, the Company acquired the Simon Deicer
Division of Terex, Inc. for $715,000 cash. The acquisition, renamed
Global Ground Support, LLC (Global), manufactures, sells and services
aircraft deice equipment on a worldwide basis. The acquisition was
accounted for using the purchase method; accordingly, the assets and
liabilities (which included $1,522,000 inventory, $287,000 fixed
assets and $3,000 accounts receivable, net of $1,048,000 in customer
deposits and $49,000 warranty obligation) of the acquired entity have
been recorded at their estimated fair value at the date of
acquisition. Global's results of operations have been included in
the Consolidated Statement of Income since the date of acquisition.
7<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Overview
Statements in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" or made by management
of the Company which contain more than historical information may be
considered forward-looking statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995) which are subject
to risks and uncertainties. Actual results may differ materially
from those expressed in the forward-looking statements because of
important risks and uncertainties, including but not limited to the
effects of economic, competitive and market conditions in the
aviation industry.
The Company's most significant component of revenue is 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 80 cities, principally located in 30 states in the
eastern half of the United States and in Puerto Rico, Canada and the
Virgin Islands. Under the terms of its dry-lease service contracts
(which currently cover approximately 98% of the revenue aircraft
operated), the Company passes through to its customer certain cost
components of its operations without markup. The cost of fuel,
flight crews, 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.
In May 1997, to expand its revenue base, the Company's Mountain
Aircraft Services, LLC (MAS) subsidiary expanded its aircraft
component repair services. MAS's revenue contributed $1,029,000 and
$620,000 to the Company's revenues for the three-month periods ended
June 30, 1998 and 1997, respectively.
In August 1997, the Company acquired certain assets and order
backlog and assumed certain liabilities of Simon Deicer Company, a
division of Terex Aviation Ground Equipment, Inc. located in Olathe,
Kansas. The acquisition, renamed Global Ground Support, LLC
(Global), manufactures, services and supports aircraft deicers on a
worldwide basis. Global is operated as a subsidiary of MAS.
Global's revenue contributed $3,360,000 for the three-month period
ended June 30, 1998.
8<PAGE>
Seasonality
Global's business has historically been highly seasonal. In
general, the bulk of Global's revenues and earnings have occurred
during the second and third fiscal quarters, and comparatively little
has occurred during the first and fourth fiscal quarters due to the
nature of its product line. The Company plans to reduce Global's
seasonal fluctuation in revenues and earnings by broadening its
product line to increase revenues and earnings in the first and
fourth fiscal quarters. The remainder of the Company's business is
not materially seasonal.
Results of Operations
Consolidated revenue increased $4,351,000 (53.3%) to $12,510,000
for the three-month period ended June 30, 1998 compared to its
equivalent 1997 period. The increase in revenue primarily resulted
from the operations of Global and increases in air cargo and
component repair services.
Operating expenses increased $4,291,000 (55.8%) to $11,986,000
for the three-month period ended June 30, 1998 compared to its
equivalent 1997 period. The increase in operating expenses consisted
of the following changes: cost of flight operations increased
$217,000 (7.2%) primarily as a result of increases in pilot and
flight personnel and costs associated with pilot travel; maintenance
expense increased $428,000 (12.5%) primarily as a result of increases
associated with contract services, and cost of parts and labor
related to the expansion of MAS's repair shop; ground equipment
increased $2,870,000, as a result of the August 1997 acquisition of
Global; depreciation increased $64,000 (60.2%) as a result of
increased depreciation related to the above Global acquisition;
general and administrative expense increased $838,000 (82.4%)
primarily as a result of increases associated with the start-up of
Global and expansion of MAS's repair shop operations.
The $327,000 decrease in non-operating expense was principally
due to a $420,000 provision, booked in the first quarter of 1997, to
fulfill contractual benefits related to the death of the Company's
Chairman and CEO.
Pretax earnings increased $387,000 for the three-month period
ended June 30, 1998 compared to 1997, principally due to the above
1997 death benefit provision and an increase in air cargo service
earnings for the three-month period ended June 30, 1998, partially
offset by a seasonal first quarter 1999 loss at Global.
The provision for income taxes for the three-month period ended
June 30, 1998 increased $175,000 compared to the 1997 period,
primarily due to increased taxable income.
9<PAGE>
Liquidity and Capital Resources
As of June 30, 1998 the Company's working capital amounted to
$7,467,000, a decrease of $99,000 compared to March 31, 1998. The net
decrease primarily resulted from cash required in the operation of
Global, partially offset by profitable air cargo service operations.
The Company, on July 17, 1998, increased its unsecured line of
credit to $7,000,000. The line, which matures August 31, 1998, is
expected to be renewed before its expiration date. Amounts advanced
under the line of credit bear interest at the 30-day "LIBOR" rate
plus 137 basis points. The Company anticipates that it will renew
the line of credit before its scheduled expiration.
Under the terms of the line of credit the Company may not
encumber certain real or personal property. As of June 30, 1998, the
Company was in a net borrowing position against its credit line of
$3,683,000, a $2,767,000 increase over the March 31, 1998 loan
balance. 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 three-month periods ended June 30, 1998 and 1997
resulted in the following changes in cash flow: operating activities
used $2,248,000 in 1998 and provided $458,000 in 1997, investing
activities used $199,000 in 1998 and $23,000 in 1997 and financing
activities provided $2,389,000 in 1998 and used $265,000 in 1997. Net
cash decreased $58,000 during the three months ended June 30, 1998
and increased $170,000 during the three months ended June 30, 1997.
Cash used in operating activities was $2,706,000 more for the
three-months ended June 30, 1998 compared to the similar 1997 period
principally due to increases in inventory and decreases in accounts
payable, accrued expenses and taxes payable and a $420,000 provision
to fulfill contractual benefits related to the death of the Company's
former Chairman and CEO in the first quarter of 1997, partially
offset by profitable operations.
Cash used in investing activities for the three-months ended
June 30, 1998 was approximately $176,000 more than the comparable
period in 1997, principally due to the sale of marketable securities
in 1997 and to increased capital expenditures related to operations
of Global in 1998.
Cash provided by financing activities was $2,655,000 more in the
1998 three-month period than in the corresponding 1997 period due to
an increase in borrowings under the line of credit in 1998, partially
offset by an increase in cash dividend.
10<PAGE>
Liquidity and Capital Resources (continued)
There are currently no commitments for significant capital
expenditures. The Company's Board of Directors on August 7, 1997
adopted the policy to pay an annual cash dividend in the first
quarter of each fiscal year, in an amount to be determined by the
Board. The Company paid a $.14 per share cash dividend in June 1998.
Deferred Retirement Obligation
The Company's former Chairman and Chief Executive Officer passed
away on April 18, 1997. In addition to amounts previously expensed,
under the terms of his supplemental retirement agreement, death
benefits with a present value of approximately $420,000 were expensed
in the first quarter 1998. The death benefits are payable in the
amount of $75,000 per year for 10 years.
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 on
its manufacturing operations because increased costs due to inflation
could be passed on the its customers, or on its air cargo business
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.
Year 2000 Issue
The Company has initiated a comprehensive review of its computer
systems to identify the systems that could be affected by the "year
2000 issue", which is the result of computer programs written using
two digits rather than four to define the applicable year. As a
result of such review, the Company has revised certain customized
software systems to enable such systems to work properly following
the year 2000 and has verified that recently acquired software
systems from third-party vendors have been certified as being "year
2000 compliant". Management believes only one significant software
system used by the Company has not been confirmed as being "year 2000
compliant". Management has not yet determined whether to replace
such system (management believes that replacement products for such
system that are "year 2000 compliant" are commercially available) or
to revise the software system to confirm that it will function
properly after the year 2000. Management believes that such system
can be replaced or revised by the end of the current
fiscal year. Management does not believe the conversion of its
software systems will have a significant impact on the Company's
financial position or results of operations.
11<PAGE>
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) 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, incorporated by reference to
Exhibit 3.2 of the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1996
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 July 17, 1998
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 of the Company's
Annual Report on Form 10-K for the fiscal year ended March 31,
1993
12<PAGE>
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/A to the Company's Quarterly
Report on Form 10-Q for the period ended December 31, 1995
10.7 Employment Agreement dated January 1, 1996 between the
Company, Mountain Air Cargo Inc. and Mountain Aircraft
Services, LLC and William H. Simpson, incorporated by reference
to Exhibit 10.8 to the Company's Annual Report Form 10-K for
the fiscal year ended March 31, 1996*
10.8 Employment Agreement dated January 1, 1996 between the
Company, Mountain Air Cargo Inc. and Mountain Aircraft
Services, LLC and John J. Gioffre, incorporated by reference to
Exhibit 10.9 to the Company's Annual Report Form 10-K for the
fiscal year ended March 31, 1996*
10.9 Employment Agreement dated January 1, 1996 between Company, Mountain
Air Cargo Inc. and Mountain Aircraft Services, LLC and J. Hugh
Bingham, incorporated by reference to Exhibit 10.10 to the Company's
Annual Report Form 10K for the fiscal year end March 31, 1996.*
10.10 Employment Agreement dated September 30, 1997 between Mountain
Aircraft Services, LLC and J. Leonard Martin, incorporated by refer-
ence to Exhibit 10.10 to the Company's Quarterly Report
Form 10-Q for the quarter ended December 31, 1997.*
10.11 Omibus Securities Award Plan.*
21.1 List of subsidiaries of the Company, incorporated by reference to
Exhibit 21.1 of the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1997
27.1 Financial Data Schedule (For SEC use only)
_______________________
* 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 first quarter of fiscal
1999.
13<PAGE>
SIGNATURES
Pursuant to the requirements 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.
(Registrant)
Date: August 10, 1998 /s/ Walter Clark
Walter Clark, Chief Executive Officer
Date: August 10, 1998 /s/ John Gioffre
John J. Gioffre, Vice President-Finance
14<PAGE>
AIR TRANSPORTATION HOLDING COMPANY, INC.
EXHIBIT INDEX
Exhibit PAGE
10.2 Loan Agreement among NationsBank of North
Carolina, N.A., the Company and its
Subsidiaries, dated July 17, 1998 16-28
10.11 Omnibus Securities Award Plan 29-60
15<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
"This schedule contains summary financial information extracted from Air
Transportation Holding Company, Inc. SEC Form 10-K for year ended March
31, 1998 (identify specific financial statements) and is qualified in its
entirety by reference to such financial statements."
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 193918
<SECURITIES> 2556257
<RECEIVABLES> 6673101
<ALLOWANCES> 0
<INVENTORY> 5325613
<CURRENT-ASSETS> 15055791
<PP&E> 4693268
<DEPRECIATION> 2429031
<TOTAL-ASSETS> 18289403
<CURRENT-LIABILITIES> 7489578
<BONDS> 0
0
0
<COMMON> 677241
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 18289403
<SALES> 51025640
<TOTAL-REVENUES> 51025640
<CGS> 0
<TOTAL-COSTS> 47954638
<OTHER-EXPENSES> 179358
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2891644
<INCOME-TAX> 1185574
<INCOME-CONTINUING> 1706070
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1706070
<EPS-PRIMARY> 0.64
<EPS-DILUTED> 0.61
</TABLE>
32
C-352414v02!.04848.00010
AIR TRANSPORTATION HOLDING COMPANY, INC.
1998 OMNIBUS LONG-TERM COMPENSATION PLAN
ARTICLE 1 - PURPOSE AND TERM OF PLAN
1.1 Purpose. The purposes of the Plan are to aid Air
Transportation Holding Company, Inc. ("AirT") and its
Subsidiaries (AirT and its Subsidiaries collectively being
referred to herein as the "Company") in attracting and retaining
Key Employees through a competitive compensation package, to
stimulate the efforts of such Key Employees and to strengthen
their desire to remain with the Company, to aid the Company in
attracting superior individuals to serve as Nonemployee Directors
and to provide appropriate compensation to such Nonemployee
Directors for their Service. Toward these objectives, the
Committee may grant Employee Stock Options, stock appreciation
rights, Performance Restricted Stock Awards, Performance Awards
payable in Common Stock or cash, performance units, and other
incentive Awards to Key Employees on the terms and subject to the
conditions set forth in the Plan. In addition, the Plan provides
for the grant of options to Nonemployee Directors upon their
initial election or appointment as a Director and that each
Nonemployee Director may elect to take all or part of his or her
compensation as Director in the form of options.
1.2 Term. The Plan shall become effective as of August 13,
1998, subject to its approval by the shareholders of AirT at the
1998 Annual Meeting of the shareholders. No Awards shall be
exercisable or payable before approval of the Plan has been
obtained from Air T's shareholders. Awards shall not be granted
pursuant to Articles 7, 8, 9, 10 or 11 of the Plan after August
13, 2001; except that the Committee may grant Awards after such
date in recognition of performance for Performance Cycles and
Performance Periods commencing prior to such date.
ARTICLE 2 - DEFINITIONS
2.1 Approved Reason. "Approved Reason" means a reason for
terminating employment with the Company that, in the opinion of
the Committee, is in the best interests of the Company, as
determined by the Committee on a case-by-case basis in its sole
discretion.
2.2 Award. "Award" means any form of stock option, stock
appreciation right, performance unit, Performance Award payable
in cash or shares of Common Stock, shares of Performance
Restricted Stock under the Performance Restricted Stock Program,
or other incentive Award granted under the Plan, whether singly,
in combination, or in tandem, to a Participant by the Committee
pursuant to such terms, conditions, restrictions, and
limitations, if any, as the Committee may establish by the Award
Notice or otherwise, and any Formula Option or Deferral Option.
2.3 Award Notice. "Award Notice" means a written notice from
the Company to a Participant that establishes the terms,
conditions, restrictions, and limitations applicable to an Award
in addition to those established by this Plan and by the
Committee's exercise of its administrative powers.
2.4 Award Payment Date. "Award Payment Date" means, for a
Performance Cycle or Performance Period, the date the Awards for
such Performance Cycle or Performance Period shall be paid to
Participants. The Award Payment Date for a Performance Cycle or
Performance Period shall occur as soon as administratively
possible following the completion of the certifications required
pursuant to Subsection 9.5.3, in the case of a Performance
Cycle, and Subsection 10.5.3, in the case of a Performance
Period.
2.5 Board. "Board" means the Board of Directors of AirT.
2.6 Cause. "Cause," in the case of a Key Employee, means (a)
the willful and continued failure by an Employee to substantially
perform his or her duties with his or her employer after written
warnings identifying the lack of substantial performance are
delivered to the Employee by his or her employer to specifically
identify the manner in which the employer believes that the
Employee has not substantially performed his or her duties, or
(b) the willful engaging by an Employee in illegal conduct that
is materially and demonstrably injurious to AirT or a Subsidiary.
"Cause" means, in the case of a Nonemployee Director, termination
of such Nonemployee Director's Service by AirT's shareholders for
cause pursuant to the Bylaws of AirT.
2.7 CEO. "CEO" means the Chief Executive Officer of AirT.
2.8 Change In Control. "Change In Control" means, (i) as the
result of a tender offer, merger, consolidation, sale of assets,
or any combination of such transactions, the persons who were
members of the Board immediately before the transaction cease to
constitute at least a majority thereof, and (ii) such occurrence
would be a change of control of the Company of a nature that such
event would be required to be reported in response to Item 1(a)
of the Current Report on Form 8-K, as in effect on the date
hereof, promulgated pursuant to Section 13 of the Exchange Act
(whether or not the Company is required to file such a report).
2.9 Change In Control Price. "Change In Control Price" means
the merger or tender price paid for a share of Common Stock upon
a Change of Control.
2.10 Change In Ownership. "Change In Ownership" means a Change
In Control that results directly or indirectly in the Common
Stock ceasing to be actively traded on the primary securities
exchange or quotation system on which the Common Stock is traded
immediately prior to such Change in Control.
2.11 Code. "Code" means the Internal Revenue Code of 1986, as
amended from time to time, including regulations thereunder and
successor provisions and regulations thereto.
2.12 Committee. "Committee" means the Compensation Committee of
the Board, unless and until its members are not qualified to
serve on the Committee pursuant to the provisions of the Plan, in
which case the Board will designate the members of the Committee;
provided that the Committee shall at all times consist of two or
more Directors, each of whom is both a "Non-Employee Director"
within the meaning of Rule 16b-3 under the Exchange Act and an
"outside director" within the meaning of the definition of such
term as contained in Treasury Regulation Section 1.162-27(e)(3),
or any successor definition; provided further that no Director
shall be appointed a member of the Committee who has received any
Award other than an Award under Article 12 in the year prior to
such appointment; provided further that no Committee member may
receive an Award other than pursuant to Article 12.
2.13 Common Stock. "Common Stock" means Common Stock, $.20 par
value per share, of AirT, which may be newly issued, treasury
stock, shares issued and outstanding or shares owned by a
Subsidiary.
2.14 Company. "Company" means AirT and its Subsidiaries.
2.15 Covered Employee. "Covered Employee" means an Employee who
is a "Covered Employee" within the meaning of Section 162(m) of
the Code.
2.16 Deferral Stock Option. "Deferral Stock Option " means an
award of stock options to a Nonemployee Director pursuant to the
election of such Nonemployee Director to receive such stock
option in lieu of cash compensation in accordance with Subsection
12.3 of this Plan.
2.17 Director. "Director" means a director of AirT.
2.18 Disability. "Disability," in the case of a Key Employee,
means a disability under the terms of the AirT long-term
disability plan maintained by the Company or any successor plan
thereto.
2.19 Disability. "Disability," in the case of a Nonemployee
Director, means the permanent and lasting inability, by reason of
physical or mental infirmity, or both, of an employee to perform
his or her duties as Director. Such Disability shall be
determined exclusively by the Board, with or without reference to
the certificate of a qualified physician.
2.20 Effective Date. "Effective Date" means the date an Award is
determined to be effective by the Committee upon its grant of
such Award.
2.21 Employee. "Employee" means either (a) a salaried employee
of AirT or (b) a salaried employee of a Subsidiary.
2.22 Employee Stock Option. "Employee Stock Option" means an
Award granted to a Key Employee in the form of a stock option
pursuant to Article 7.
2.23 Exchange Act. "Exchange Act" means the Securities Exchange
Act of 1934, as amended from time to time, including rules
thereunder and successor provisions and rules thereto.
2.24 Formula Option. "Formula Option " means an Option granted
to a Nonemployee Director of the Company pursuant to Section 12.2
of the Plan.
2.25 Good Reason. "Good Reason" means any of the following
(without the Participant's written consent):
(i) the assignment to the Participant by the Company
of duties inconsistent with the Participant's position, duties,
responsibilities and status with the Company immediately prior to
a Change in Control, or a change in the Participant's titles or
offices as in effect immediately prior to Change in Control of
the Company, or any removal of the Participant from or any
failure to reelect the Participant to any of such positions,
except in connection with the termination of his employment
because of Disability, Retirement or Cause or as a result of the
Participant's death or by the Participant other than for Good
Reason;
(ii) a reduction by the Company in the Participant's
base salary as in effect immediately prior to the Change in
Control;
(iii) any failure by the Company to continue in
effect any benefit plan or arrangement (including, without
limitation, the Company's profit sharing plan, Group Annuity
Contract, group life insurance plan, senior participant survivor
life insurance supplement, and medical, dental, accident and
disability plans) in which the Participant is participating at
the time of a Change in Control (or any other plans providing the
Participant with substantially similar benefits) (hereinafter
referred to as "Benefit Plans"), or the taking of any action by
the Company which would adversely affect the Participant's
participation in or materially reduce the Participant's benefits
under any such Benefit Plan or deprive the Participant of any
material fringe benefit enjoyed by the Participant at the time of
a Change in Control;
(iv) any failure by the Company to continue in effect
any incentive plan or arrangement (including, without limitation,
any annual incentive compensation plan, long-term performance
incentive plan, long-term incentive bonus plan, as amended, bonus
and contingent bonus arrangements and credits and the right to
receive performance awards and similar incentive compensation
benefits) in which the Participant is participating at the time
of a Change in Control (or any other plans or arrangements
providing him with substantially similar benefits) hereinafter
referred to as "Incentive Plans") or the taking of any action by
the Company which would adversely affect the Participant's
participation in any such Incentive Plan or reduce the
Participant's benefits under any such Incentive Plan, expressed
as a percentage of his base salary, by more than 10 percentage
points in any fiscal year as compared to the immediately
preceding fiscal year.
(v) any failure by the Company to continue in effect
any plan or arrangement to receive securities of the Company
(including, without limitation, this Plan, and any other plan or
arrangement to receive and exercise stock options, stock
appreciation rights, restricted stock or grants thereof) in which
the Participant is participating at the time of a Change in
Control of the Company (or plans or arrangements providing him
with substantially similar benefits) (hereinafter referred to as
"Securities Plans") or the taking of any action by the Company
which would adversely affect the Participant's participation in
or materially reduce the Participant's benefits under any such
Securities Plan;
(vi) the Participant's relocation to any place more
than thirty (30) miles from the location at which the Participant
performed the Participant's duties prior to a Change in Control,
except for required travel by the Participant on the Company's
business to an extent substantially consistent with the
Participant's business travel obligations at the time of a Change
in Control; or
(vii) any failure by the Company to provide the
Participant with the number of paid vacation days to which the
Participant is entitled at the time of a Change in Control.
2.26 Initial Election Date. "Initial Election Date" means, for
each Director, the later to occur of (i) the date of such
Director's election at the 1998 annual meeting of the
shareholders of AirT or (ii) the date of the Director's initial
election or appointment to the Board.
2.27 Key Employee. "Key Employee" means a senior level Employee
who holds a position of responsibility in a managerial,
administrative, or professional capacity.
2.28 Negative Discretion. "Negative Discretion" means the
discretion authorized by the Plan to be applied by the Committee
in determining the size of an Award for a Performance Period or
Performance Cycle if, in the Committee's sole judgment, such
application is appropriate. Negative Discretion may only be used
by the Committee to eliminate or reduce the size of an Award. By
way of example and not by way of limitation, in no event shall
any discretionary authority granted to the Committee by the Plan,
including but not limited to Negative Discretion, be used to:
(a) grant Awards for a Performance Period or Performance Cycle if
the Performance Goals for such Performance Period or Performance
Cycle have not been attained; or (b) increase an Award above the
maximum amount payable under Section 7.7, 8.7, 9.10 or 10.7 of
the Plan.
2.29 Nonemployee Director. "Nonemployee Director" means a member
of the Board who is not an Employee.
2.30 Nonemployee Director Option. "Nonemployee Director Option "
means a Formula Option or a Deferral Option.
2.31 Nonemployee Director Option Agreement. "Nonemployee
Director Option Agreement" means an Option Agreement between the
Company and the Nonemployee Director pursuant to which the
Nonemployee Director Option is awarded stock options as set forth
in the Plan.
2.32 AirT. "AirT" means Air Transportation Holding Company, Inc.
2.33 Participant. "Participant" means any Key Employee who has
been selected for a grant of stock options pursuant to Article 7,
any Key Employee who has been selected for a grant of stock
appreciation rights pursuant to Article 8, any Key Employee who
for a Performance Cycle has been selected to participate in the
Performance Restricted Stock Program pursuant to Article 9, any
Key Employee who for a Performance Period has been selected to
participate in the Performance Award Program pursuant to
Article 10, any Key Employee who has been selected for a grant of
performance units pursuant to Article 11, and any Nonemployee
Director who is eligible to receive a grant of Formula Options
pursuant to Section 12.2, or who elects to receive Deferral
Options pursuant to Article 12.
2.34 Performance Awards. "Performance Awards" means the
Performance Awards granted to Key Employees pursuant to Article
10. All Performance Awards are intended to qualify as
"performance-based compensation" under Section 162(m) of the
Code.
2.35 Performance Criteria. "Performance Criteria" means the one
or more criteria that the Committee shall select for purposes of
establishing the Performance Goal(s) for a Performance Period or
Performance Cycle. The Performance Criteria that will be used to
establish such Performance Goal(s) shall be limited to the
following: Return On Net Assets ("RONA"), return on shareholders'
equity, return on assets, return on capital, shareholder returns,
profit margin, earnings per share, net earnings, operating
earnings, Common Stock price per share, and sales or market
share. To the extent required by Section 162(m) of the Code, the
Committee shall, within the first 90 days of a Performance Period
or Performance Cycle (or, if longer, within the maximum period
allowed under Section 162(m) of the Code), define in an objective
fashion the manner of calculating the Performance Criteria it
selects to use for such Performance Period or Performance Cycle.
2.36 Performance Cycle. "Performance Cycle" means the one or
more periods of time, which may be of varying and overlapping
durations, but which shall be at least one year in length, as the
Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining
a Participant's right to and the payment of an Award under the
Performance Restricted Stock Program.
2.37 Performance Formula. "Performance Formula" means, for a
Performance Period or Performance Cycle, the one or more
objective formulas applied against the relevant Performance Goals
to determine, with regard to the Award of a particular
Participant, whether all, some portion but less than all, or none
of the Award has been earned for the Performance Period or
Performance Cycle. In the case of an Award under the Performance
Restricted Stock Program, in the event the Performance Goals for
a Performance Cycle are achieved, the Performance Formula shall
determine what percentage of the Participant's Target Award for
the Performance Cycle will be earned.
2.38 Performance Goal. "Performance Goal" means, for a
Performance Period or Performance Cycle, the one or more goals
established by the Committee for the Performance Period or
Performance Cycle based upon the Performance Criteria. The
Committee is authorized at any time during the first 90 days of a
Performance Period or Performance Cycle, or at any time
thereafter (but only to the extent the exercise of such authority
after the first 90 days of a Performance Period or Performance
Cycle would not cause the Awards granted to the Covered Employees
for the Performance Period or Performance Cycle to fail to
qualify as "performance-based compensation" under Section 162(m)
of the Code), in its sole and absolute discretion, to adjust or
modify the calculation of a Performance Goal for such Performance
Period or Performance Cycle in order to prevent the dilution or
enlargement of the rights of Participants, (a) in the event of,
or in anticipation of, any unusual or extraordinary corporate
item, transaction, event or development; (b) in recognition of,
or in anticipation of, any other unusual or nonrecurring events
affecting the Company, or the financial statements of the
Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business
conditions; and (c) in view of the Committee's assessment of the
business strategy of the Company, performance of comparable
organizations, economic and business conditions and any other
circumstances deemed relevant.
2.39 Performance Period. "Performance Period" means the one or
more periods of time, which may be varying and overlapping
durations, but which shall be at least one year in length, as the
Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining
a Participant's right to and the payment of a Performance Award.
2.40 Performance Restricted Stock. "Performance Restricted
Stock" means an Award of Common Stock subject to the restrictions
set forth in Section 9.6 awarded to a Key Employee pursuant to
Article 9.
2.41 Performance Restricted Stock Award. "Performance Restricted
Stock Award" means an Award granted pursuant to Article 9 in the
form of shares of Performance Restricted Stock. All Restricted
Stock Awards are intended to qualify as "performance-based
compensation" under Section 162(m) of the Code.
2.42 Performance Restricted Stock Program. "Performance
Restricted Stock Program" means the program established under
Article 9 of the Plan pursuant to which selected Key Employees
receive Awards for a Performance Cycle in the form of shares of
Performance Restricted Stock based upon attainment of Performance
Goals for such Performance Cycle. All Awards granted to Covered
Employees under the Performance Restricted Stock Program are
intended to qualify as "performance-based compensation" under
Section 162(m) of the Code.
2.43 Plan. "Plan" means this Air Transportation Holding Company,
Inc. 1998 Omnibus Long-Term Compensation Plan, as amended or
modified from time to time.
2.44 Retirement. "Retirement" means, in the case of a Key
Employee, for all Plan purposes other than Section 18.12, a
termination of employment from the Company on or after attainment
of Normal Retirement Age as defined under the AirT 401(k) Plan.
"Retirement" means, in the case of a Nonemployee Director, for
all Plan purposes other than Section 18.12, the termination of
such Nonemployee Director's Service on or after age 70, or at any
earlier age with the consent of the Board.
2.45 Restriction Period. "Restriction Period" means the period
of time beginning on the Effective Date of the grant of
Performance Restricted Stock and ending three (3) year(s) after
such date, or such longer period as the Committee shall determine
in its sole discretion.
2.46 Service. "Service" means service as a Director.
2.47 Subsidiary. "Subsidiary" means a corporation or other
business entity in which AirT directly or indirectly has an
ownership interest of 80 percent or more.
2.48 Target Award. "Target Award" means, for a Performance
Cycle, the target Award amount, expressed as a number of shares
of Performance Restricted Stock, established for each Participant
selected by the Committee for the Performance Cycle. The fact,
however, that a Target Award is established for a Participant
shall not in any manner entitle such Participant to receive an
Award for such Performance Cycle.
2.49 Unit. "Unit" means a bookkeeping entry used by the Company
to record and account for the grant of performance units until
the performance unit is paid, cancelled, forfeited or terminated,
as the case may be.
ARTICLE 3 - ELIGIBILITY
Only Key Employees are eligible to participate in Awards under
Articles 7, 8, 9, 10 and 11 of the Plan. Only Nonemployee
Directors shall participate in Awards under Article 12 of the
Plan. For purposes of Articles 7, 8, 9, 10, and 11 of the Plan,
the Committee shall select, from time to time, Participants from
those Key Employees who, in the opinion of the Committee, can
further the Plan's purposes. Once a Participant is so selected,
the Committee shall determine the type or types of Awards to be
made to the Participant and shall establish in the related Award
Notices the terms, conditions, restrictions, and limitations, if
any, applicable to the Awards in addition to those set forth in
this Plan and the administrative rules and regulations issued by
the Committee.
ARTICLE 4 - PLAN ADMINISTRATION
4.1 Responsibility. The Committee shall have total and
exclusive responsibility to control, operate, manage, and
administer the Plan in accordance with its terms.
4.2 Authority of the Committee. The Committee shall have all
the authority that may be necessary or helpful to enable it to
discharge its responsibilities with respect to the Plan. Without
limiting the generality of the preceding sentence, the Committee
shall have the exclusive right to: (a) interpret the Plan; (b)
determine eligibility for the participation in the Plan; (c)
decide all questions concerning eligibility for and the amount of
Awards payable under the Plan; (d) construe any ambiguous
provision of the Plan; (e) correct any default; (f) supply any
omission; (g) reconcile any inconsistency; (h) issue
administrative guidelines as an aid to administer the Plan and
make changes in such guidelines as it from time to time deems
proper; (i) make regulations for carrying out the Plan and make
changes in such regulations as it from time to time deems proper;
(j) determine whether Awards should be granted singly, in
combination, or in tandem; (k) to the extent permitted under the
Plan, grant waivers of Plan terms, conditions, restrictions, and
limitations; (l) accelerate the vesting, exercise, or payment of
an Award or the Performance Period of an Award when such action
or actions would be in the best interest of the Company; (m)
establish such other types of Awards, besides those specifically
enumerated in Article 5 hereof, that the Committee determines are
consistent with the Plan's purpose; (n) subject to Section 7.2,
grant Awards in replacement of Awards previously granted under
this Plan or any other executive compensation plan of the
Company; (o) establish and administer the Performance Goals and
certify whether, and to what extent, they have been attained; and
(p) take any and all other action it deems necessary or advisable
for the proper operation or administration of the Plan; provided
that in no event shall the Committee have the power to determine
eligibility for participation under Article 12 or to determine
the number, price, vesting period, or timing of Formula Options
granted under Article 12 (all of which determinations are
automatic under the provisions of the Plan).
4.3 Discretionary Authority. The Committee shall have full
discretionary authority in all matters related to the discharge
of its responsibilities and the exercise of its authority under
the Plan, including without limitation its construction of the
terms of the Plan and its determination of eligibility for
participation and Awards under the Plan. It is the intent of the
Plan that the decisions of the Committee and its action with
respect to the Plan shall be final, binding and conclusive upon
all persons having or claiming to have any right or interest in
or under the Plan.
4.4 Section 162(m) of the Code. With regard to all Covered
Employees, the Plan shall, for all purposes, be interpreted and
construed in accordance with Section 162(m) of the Code.
4.5 Action by the Committee. The Committee may act only by a
majority of its members. Any determination of the Committee may
be made, without a meeting, by a writing or writings signed by
all of the members of the Committee. In addition, the Committee
may authorize any one or more of its number to execute and
deliver documents on behalf of the Committee.
4.6 Delegation of Authority. The Committee may delegate some or
all of its authority under the Plan to any person or persons
provided that any such delegation be in writing; provided,
however, that only the Committee may select and grant Awards to
Participants who are subject to Section 16 of the Exchange Act or
are Covered Employees.
ARTICLE 5 - FORMS OF AWARDS
5.1 In General. Awards may, at the Committee's sole discretion,
be paid in the form of stock options pursuant to Article 7, stock
appreciation rights pursuant to Article 8, Performance Restricted
Stock Awards pursuant to Article 9, Performance Awards pursuant
to Article 10, performance units pursuant to Article 11, and any
form established by the Committee pursuant to Section 4.2(m), or
a combination thereof. Awards may also be paid in the form of
Formula Options and Deferral Options pursuant to Article 12. All
Awards shall be subject to the terms, conditions, restrictions
and limitations of the Plan. The Committee may, in its sole
judgment, subject an Award, except Formula Options and Deferral
Options granted pursuant to Article 12, to such other terms,
conditions, restrictions, and limitations (including, but not
limited to, the time and conditions of exercise and restrictions
on transferability and vesting), provided they are not
inconsistent with the terms of the Plan. Awards under a
particular Article of the Plan need not be uniform and Awards
under two or more Articles may be combined into a single Award
Notice. Any combination of Awards may be granted at one time and
on more than one occasion to the same Participant. For purposes
of the Plan, the value of any Award granted in the form of Common
Stock shall be the closing price at which a share of Common Stock
trades on the date of the grant's Effective Date, or the next
preceding trading day if such date was not a trading date, on the
primary securities exchange or quotation system on which the
Common Stock is then traded.
ARTICLE 6 - SHARES SUBJECT TO PLAN
6.1 Available Shares. The maximum number of shares of Common
Stock that shall be available for grant of Awards under the Plan
(including incentive stock options) during its term, shall not
exceed 165,000. (Such amount shall be subject to adjustment as
provided in Section 6.2.) Any shares of Common Stock related to
Awards that terminate by expiration, forfeiture, cancellation, or
otherwise without the issuance of such shares shall be available
again for grant under the Plan. Moreover, shares of Common Stock
with respect to which a stock appreciation right has been
exercised and paid in cash shall again become eligible for grant
under the Plan; provided that if such shares of Common Stock
subject to Awards are settled in cash in lieu of Common Stock or
are exchanged with the Committee's permission for Awards not
involving Common Stock, such shares shall not be available again
for grant under the Plan. The maximum number of shares available
for issuance under the Plan shall not be reduced to reflect any
dividends or dividend equivalents that are reinvested into
additional shares of Common Stock or credited as additional
performance shares. The shares of Common Stock available for
issuance under the Plan may be authorized and unissued shares,
treasury shares, shares issued and outstanding or shares owned by
a Subsidiary.
6.2 Adjustment to Shares.
6.2.1 In General. The provisions of this Subsection 6.2.1
are subject to the limitation contained in Subsection 6.2.2. If
there is any change in the number of outstanding shares of Common
Stock through the declaration of stock dividends, stock splits or
the like, the number of shares available for Awards, the shares
subject to any Award and the option prices or exercise prices of
Awards shall be automatically adjusted. If there is any change
in the number of outstanding shares of Common Stock through any
change in the capital account of AirT, or through a merger,
consolidation, separation (including a spin-off or other
distribution of stock or property), reorganization (whether or
not such reorganization comes within the meaning of such term in
Section 368(a) of the Code) or partial or complete liquidation,
the Committee shall make appropriate adjustments in the maximum
number of shares of Common Stock that may be issued under the
Plan and any adjustments and/or modifications to outstanding
Awards as it, in its sole discretion, deems appropriate. In
event of any other change in the capital structure or in the
Common Stock of AirT, the Committee shall also be authorized to
make such appropriate adjustments in the maximum number of shares
of Common Stock available for issuance under the Plan and any
adjustments and/or modifications to outstanding Awards as it, in
its sole discretion, deems appropriate. The maximum number of
shares available for issuance under the Plan shall be
automatically adjusted to the extent necessary to reflect any
dividend equivalents paid in the form of Common Stock.
6.2.2 Covered Employees. In no event shall the Award of
any Participant who is a Covered Employee be adjusted pursuant to
Subsection 6.2(a) to the extent it would cause such Award to fail
to qualify as "performance-based compensation" under Section
162(m) of the Code.
ARTICLE 7 - EMPLOYEE STOCK OPTION PROGRAM
7.1 In General. Awards may be granted to Key Employees in the
form of Employee Stock Options. These Employee Stock Options may
be incentive stock options within the meaning of Section 422 of
the Code or non-qualified stock options (i.e., stock options that
are not incentive stock options), or a combination of both. All
Awards under the Plan issued to Covered Employees in the form of
Employee Stock Options shall qualify as "performance-based
compensation" under Section 162(m) of the Code.
7.2 Terms and Conditions of Stock Options. An Employee Stock
Option shall be exercisable in whole or in such installments and
at such times as may be determined by the Committee. The price
at which Common Stock may be purchased upon exercise of an
Employee Stock Option shall be not less than 100% of the closing
price at which a share of Common Stock trades on the date of the
grant's Effective Date, or the next preceding trading day if such
date was not a trading date, on the primary securities exchange
or quotation system on which the Common Stock is then traded.
Moreover, all Options shall expire not later than 10 years from
the Effective Date of the grant. Employee Stock Options shall
not be repriced, i.e., there shall be no grant of an Employee
Stock Option(s) to a Participant in exchange for a Participant's
agreement to cancellation of a higher-priced Employee Stock
Option(s) that was previously granted to such Participant.
7.3 Restrictions Relating to Incentive Stock Options. Employee
Stock Options issued in the form of incentive stock options
shall, in addition to being subject to the terms and conditions
of Section 7.2, comply with Section 422 of the Code.
Accordingly, the aggregate fair-market value (determined at the
time the option was granted) of the Common Stock with respect to
which incentive stock options are exercisable for the first time
by a Participant during any calendar year (under this Plan or any
other plan of the Company) shall not exceed $100,000 (or such
other limit as may be required by the Code). The price at which
Common Stock may be purchased upon exercise of an incentive stock
option shall not be less than 100% of the closing price at which
a share of Common Stock trades on the date of the grant's
Effective Date, or the next preceding trading day if such date
was not a trading date, on the primary securities exchange or
quotation system on which the Common Stock is then traded,
provided that in the case of an incentive stock option granted to
a Key Employee who at the time of grant owns (as is defined in
Section 424(d) of the Code) stock of the Company or the
Subsidiaries possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any of the
Subsidiaries, the price at which Common Stock may be purchased
upon exercise of such incentive stock option shall be not less
than 110% of such price, on the Effective Date of the incentive
stock option's grant. In no event may the price at which Common
Stock may be purchased upon exercise of such incentive stock
option be less than the par value of the Common Stock subject to
such incentive stock option. From the maximum number of shares
available for issuance under the Plan under Section 6.1, the
number of shares of Common Stock that shall be available for
incentive stock options granted under the Plan is 165,000.
7.4 Additional Terms and Conditions. The Committee may, by way
of the Award Notice or otherwise, establish such other terms,
conditions, restrictions, and limitations, if any, of any
Employee Stock Option Award, provided they are not inconsistent
with the Plan.
7.5 Exercise. Upon exercise, the option price of an Employee
Stock Option may be paid in cash, shares of Common Stock, a
combination of the foregoing, or such other consideration as the
Committee may deem appropriate. The Committee shall establish
appropriate methods for accepting Common Stock, whether
restricted or unrestricted, and may impose such conditions as it
deems appropriate on the use of such Common Stock to exercise an
Employee Stock Option. Subject to Section 18.9, Employee Stock
Options awarded under the Plan may be exercised by way of any
broker-assisted exercise program, provided such program is
available at the time of the Employee Stock Option's exercise.
The Committee may permit a Participant to satisfy any amounts
required to be withheld under the applicable Federal, state and
local tax laws, in effect from time to time, by electing to have
the Company withhold a portion of the shares of Common Stock to
be delivered for the payment of such taxes.
7.6 Nontransferability of Employee Stock Options. No Employee
Stock Option granted pursuant to the Plan shall be transferable
otherwise than by will or by the laws of descent and distribution
or pursuant to a qualified domestic relations order as defined by
the Code. During the lifetime of an optionee, the Employee Stock
Option shall be exercisable only by the optionee personally or by
the optionee's legal representative.
7.7 Maximum Award Payable. Notwithstanding any provision
contained in the Plan to the contrary, the maximum number of
shares for which Employee Stock Options may be granted under the
Plan to any one Participant for a calendar year is 50,000 shares
of Common Stock.
ARTICLE 8 - STOCK APPRECIATION RIGHTS
8.1 In General. Awards may be granted to employees in the form
of stock appreciation rights ("SARs"). An SAR may be granted in
tandem with all or a portion of a related Employee Stock Option
under the Plan ("Tandem SARs"), or may be granted separately
("Freestanding SARs"). A Tandem SAR may be granted either at the
time of the grant of the related Employee Stock Option or at any
time thereafter during the term of the Employee Stock Option.
SARs shall entitle the recipient to receive a payment equal to
the appreciation in market value of a stated number of shares of
Common Stock from the exercise price to the market value on the
date of exercise. All Awards under the Plan issued to Covered
Employees in the form of an SAR shall qualify as "performance-
based compensation" under Section 162(m) of the Code.
8.2 Terms and Conditions of Tandem SARs. A Tandem SAR shall be
exercisable to the extent, and only to the extent, that the
related Employee Stock Option is exercisable, and the "exercise
price" of such an SAR (the base from which the value of the SAR
is measured at its exercise) shall be the option price under the
related Employee Stock Option. However, at no time shall a
Tandem SAR be issued if the option price of its related Employee
Stock Option is less than the fair-market value of the Common
Stock, as determined by the Committee, on the Effective Date of
the Tandem SAR's grant. If a related Employee Stock Option is
exercised as to some or all of the shares covered by the Award,
the related Tandem SAR, if any, shall be cancelled automatically
to the extent of the number of shares covered by the Employee
Stock Option exercise. Upon exercise of a Tandem SAR as to some
or all of the shares covered by the Award, the related Employee
Stock Option shall be cancelled automatically to the extent of
the number of shares covered by such exercise, and such shares
shall not again be eligible for grant in accordance with Section
6.1. Moreover, all Tandem SARs shall not expire later than 10
years from the Effective Date of the SAR's grant.
8.3 Terms and Conditions of Freestanding SARs. Freestanding
SARs shall be exercisable in whole or in such installments and at
such times as may be determined by the Committee. The exercise
price of a Freestanding SAR shall be not less than 100% of the
closing price at which a share of Common Stock trades on the date
of the grant's Effective Date, or the next preceding trading day
if such date was not a trading date, on the primary securities
exchange or quotation system on which the Common Stock is then
traded. Moreover, all Freestanding SARs shall not expire later
than 10 years from the Effective Date of the Freestanding SAR's
grant.
8.4 Deemed Exercise. The Committee may provide that an SAR
shall be deemed to be exercised at the close of business on the
scheduled expiration date of such SAR if at such time the SAR by
its terms remains exercisable and, if so exercised, would result
in a payment to the holder of such SAR.
8.5 Additional Terms and Conditions. The Committee may, by way
of the Award Notice or otherwise, determine such other terms,
conditions, restrictions, and limitations, if any, of any SAR
Award, provided they are not inconsistent with the Plan.
8.6 Nontransferability of SARs. No SAR granted pursuant to the
Plan shall be transferable otherwise than by will or by the laws
of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code. During the lifetime of
the Participant to whom the SAR was granted, the SAR shall be
exercisable only by such Participant personally or by the
holder's legal representative.
8.7 Maximum Award Payable. Notwithstanding any provision
contained in the Plan to the contrary, the maximum number of
shares for which SARs may be granted under the Plan to any one
Participant for a calendar year is 10,000 shares of Common Stock.
ARTICLE 9 - PERFORMANCE RESTRICTED STOCK PROGRAM
9.1 Purpose. The purposes of the Performance Restricted Stock
Program are: (a) to promote the interests of the Company and its
shareholders by providing a means to acquire a proprietary
interest in the Company to selected Key Employees who are in a
position to make a substantial contribution to the continued
progress and success of the Company; (b) to attract and retain
qualified individuals to serve as Employees in those positions;
(c) to enhance long-term performance of the Company by linking a
meaningful portion of the compensation of selected Key Employees
to the achievement of specific long-term financial objectives of
the Company; and (d) to motivate and reward selected Key
Employees to undertake actions to increase the price of the
Common Stock.
9.2 Eligibility. Any Key Employee is eligible to participate in
the Performance Restricted Stock Program. Within the first 90
days of a Performance Cycle (or, if longer, within the maximum
period allowed under Section 162(m) of the Code), the Committee
will select those Key Employees who will be Participants for such
Performance Cycle. However, designation of a Key Employee as a
Participant for a Performance Cycle shall not in any manner
entitle the Participant to receive payment of an Award for the
cycle. The determination as to whether or not such Participant
becomes entitled to payment of an Award for such Performance
Cycle shall be decided solely in accordance with the provisions
of this Article 9. Moreover, designation of a Key Employee as a
Participant for a particular Performance Cycle shall not require
designation of such Key Employee as a Participant in any
subsequent Performance Cycle and designation of one Key Employee
as a Participant shall not require designation of any other Key
Employee as a Participant in such Performance Cycle or in any
other Performance Cycle.
9.3 Description of Awards. Awards granted under the Performance
Restricted Stock Program provide Participants with the
opportunity to earn shares of Performance Restricted Stock,
subject to the terms and conditions of Section 9.6 below. Each
Award granted under the Plan for a Performance Cycle shall
consist of a Target Award expressed as fixed number of shares of
Performance Restricted Stock. In the event the Performance Goals
for the Performance Cycle are achieved, the Performance Formula
shall determine, with regard to a particular Participant, what
percentage of the Participant's Target Award for the Performance
Cycle will be earned. All of the Awards issued under the
Performance Restricted Stock Program to Covered Employees are
intended to qualify as "performance-based compensation" under
Section 162(m) of the Code.
9.4 Procedure for Determining Awards. Within the first 90 days
of a Performance Cycle (or, if longer, within the maximum period
allowed under Section 162(m) of the Code), the Committee shall
establish in writing for such Performance Cycle the following:
the specific Performance Criteria that will be used to establish
the Performance Goal(s), the kind(s) and level(s) of the
Performance Goal(s), whether the Performance Goal(s) is(are) to
apply to the Company, AirT, a Subsidiary, or any one or more
subunits of the foregoing, the amount of the Target Award and the
Performance Formula.
9.5 Payment of Awards.
9.5.1 Condition to Receipt of Awards. Except as
provided in Section 9.8, a Participant must be employed by the
Company on the Performance Cycle's Award Payment Date to be
eligible for an Award for such Performance Cycle.
9.5.2 Limitation. A Participant shall be eligible to
receive an Award for a Performance Cycle only if:
9.5.2.1 the Performance Goals for such cycle are
achieved; and
9.5.2.2 the Performance Formula as applied
against such Performance Goals determines that all or some
portion of the Participant's Target Award has been earned for the
Performance Period.
9.5.3 Certification. Following the completion of a
Performance Cycle, the Committee shall meet to review and certify
in writing whether, and to what extent, the Performance Goals for
the Performance Cycle have been achieved. If the Committee
certifies that the Performance Goals have been achieved, it
shall, based upon application of the Performance Formula to the
Performance Goals for such cycle, also calculate and certify in
writing for each Participant what percentage of the Participant's
Target Award has been earned for the cycle. The Committee shall
then determine the actual size of each Participant's Award for
the Performance Cycle and, in so doing, shall apply Negative
Discretion, if and when it deems appropriate.
9.5.4 Negative Discretion. In determining the actual
size of an individual Award to be paid for a Performance Cycle,
the Committee may, through the use of Negative Discretion, reduce
or eliminate the amount of the Award earned under the Performance
Formula for the Performance Cycle if, in its sole judgment, such
reduction or elimination is appropriate.
9.5.5 Timing of Award Payments. The Awards granted by
the Committee for a Performance Cycle shall be paid to
Participants on the Award Payment Date for such Performance
Cycle.
9.5.6 New Participants. Participants who are employed
by the Company after the Committee's selection of Participants
for the Performance Cycle, as well as Key Employees who are
selected by the Committee to be Participants after such date,
shall, in the event Awards are paid for the Performance Cycle,
only be entitled to a pro rata Award. The amount of the pro rata
Award shall be determined by multiplying the Award the
Participant would have otherwise been paid if he or she had been
a Participant for the entire Performance Cycle by a fraction, the
numerator of which is the number of full months he or she was
eligible to participate in the Performance Restricted Stock
Program during the Performance Cycle and the denominator of which
is the total number of full months in the Performance Cycle. For
purposes of this calculation, a partial month of participation
shall be treated as a full month of participation to the extent a
Participant participates in the Performance Restricted Stock
Program for 15 or more days of such month; and shall not be taken
into consideration to the extent the Participant participates in
the Performance Restricted Stock Program for less than 15 days of
such month.
9.5.7 Noncompetition. No Participant shall receive
payment of an Award if, subsequent to the commencement of the
Performance Cycle and prior to the Award Payment Date for such
cycle, the Participant engages in the conduct prohibited under
Section 13.3.
9.6 Performance Restricted Stock: Terms and Conditions. Shares
of Performance Restricted Stock shall be subject to the following
terms and conditions:
9.6.1 Subject to the provisions of the Plan and the
Performance Restricted Stock Agreement referred to in paragraph
9.6.4, until the expiration of the Restriction Period, the
Participant shall not be permitted to sell, assign, transfer,
pledge, or otherwise encumber shares of Performance Restricted
Stock.
9.6.2 Except as provided in this Section 9.6 and the
Performance Restricted Stock Agreement, the Participant shall
have, with respect to the shares of Performance Restricted Stock,
all of the rights of a shareholder of the Company holding shares
of the Common Stock, including, if applicable, the right to vote
the shares and the right to receive any cash dividends. If so
determined by the Committee in the applicable Performance
Restricted Stock Agreement, dividends payable in Common Stock
shall be paid in the form of Performance Restricted Stock on
which such dividend was paid, held subject to the same conditions
and restrictions of the underlying Performance Restricted Stock.
9.6.3 Except to the extent otherwise provided in the
applicable Performance Restricted Stock Agreement, this Section
9.6.3, and Articles 16 and 17, upon a Participant's termination
of employment during an unexpired Restriction Period, all shares
still subject to such unexpired Restriction Period held by that
Participant shall be forfeited by that Participant. In the event
of the termination of employment of a Participant because of
death, Disability, Retirement, or for an Approved Reason, the
unexpired Restriction Period(s) shall lapse as to a pro-rata
portion of such Performance Restricted Stock, which pro-rata
portion shall be equal to the portion of the applicable
Restriction Period(s) that has elapsed as of the date of such
termination of employment, and such pro-rata portion shall become
free of all restrictions and become fully vested and
transferable. The remaining portion of the Performance
Restricted Stock for which the Restriction Period has not expired
shall be forfeited by the Participant.
Notwithstanding anything contained in this Section 9.6.3 to
the contrary, as to any Participant who, on the date of his or
her termination of employment because of death, Disability,
Retirement or for an Approved Reason, holds any Performance
Restricted Stock that has not been outstanding for a period of at
least six months from the Effective Date of such Performance
Restricted Stock and who on the date of such termination is
required to report under Section 16 of the Exchange Act, such
Performance Restricted Stock shall not become free of
restrictions, vested, and transferable pursuant to this Section
9.6.3 until the first business day next following the end of such
six-month period.
9.6.4 Each Performance Restricted Stock award shall be
confirmed by, and be subject to the terms of, a Performance
Restricted Stock Agreement.
9.7 Performance Restricted Stock Certificates. Shares of
Performance Restricted Stock shall be evidenced in such manner as
the Committee may deem appropriate, including book-entry
registration or issuance of one or more stock certificates. Any
certificate issued in respect of shares of Performance Restricted
Stock shall be registered in the name of such Participant and
shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Performance
Restricted Stock, substantially in the following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and conditions
(including forfeiture) of the Air Transportation Holding Company,
Inc. Omnibus Long-Term Compensation Plan and a Performance
Restricted Stock Agreement. Copies of such Plan and Agreement
are on file at the offices of the Company.
The Committee may require that the certificates evidencing
such shares be held in custody by the Company until the
restrictions thereon shall have lapsed and that, as a condition
of any Award of Performance Restricted Stock, the Participant
shall have delivered a stock power, endorsed in blank, relating
to the Common Stock covered by such Award.
If and when the applicable Restriction Period expires
without a prior forfeiture of the Performance Restricted Stock,
unlegended certificates for such shares shall be delivered to the
Participant promptly upon surrender of the legended certificates.
9.8 Termination of Employment During Performance Cycle. In the
event a Participant's employment is terminated prior to an Award
Payment Date for a Performance Cycle for any reason other than
death, Disability, Retirement or for an Approved Reason, all of
such Participant's Awards for such Performance Cycle shall be
forfeited. In the event a Participant terminates employment due
to death, Disability, or Retirement, or for an Approved Reason,
prior to the Award Payment Date for a Performance Cycle, the
Participant shall receive, if Awards are paid for such
Performance Cycle and if he or she complies with the requirements
of Subsection 9.5.7 through the Award Payment Date, a pro rata
Award. The amount of the pro rata Award shall be determined by
multiplying the Award the Participant would have otherwise been
paid if he or she had been a Participant through the Award
Payment Date for the Performance Cycle by a fraction, the
numerator of which is the number of full months he or she was a
Participant during such Performance Cycle and the denominator of
which is the total number of full months in the Performance
Cycle. For purposes of this calculation, a partial month of
participation shall: (1) be treated as a full month of
participation to the extent a Participant participates in the
Performance Restricted Stock Program for 15 or more days of such
month; and (2) not be taken into consideration to the extent the
Participant participates in the Performance Restricted Stock
Program for less than 15 days of such month. Such pro rata Award
shall be paid in the form of shares of Common Stock, not subject
to any restrictions, limitations or escrow requirements. In the
event of Disability, or Retirement or termination for an Approved
Reason, the pro rata Award shall be paid directly to the
Participant and, in the event of death, to the Participant's
estate.
9.9 Awards. On or promptly after the Award Payment Date for a
Performance Cycle, the Committee shall issue to each Participant
the Award, in the form of shares of Performance Restricted Stock,
he or she has earned for such Performance Cycle. Such shares of
Performance Restricted Stock shall be subject to such terms,
conditions, limitations, and restrictions of Section 9.6 and such
other as the Committee, in its sole judgment, determines.
9.10 Maximum Award Payable. Notwithstanding any provision
contained in the Plan to the contrary, the Maximum Award Payable
to any one Participant under the Plan for a Performance Cycle is
5,000 shares of Performance Restricted Stock.
ARTICLE 10 - PERFORMANCE AWARD PROGRAM
10.1 Eligibility. Only Key Employees shall be eligible to
receive Performance Awards. Within the first 90 days of a
Performance Period (or, if longer, within the maximum period
allowed under Section 162(m) of the Code), the Committee shall
select those Key Employees who will be Participants for such
Performance Period. However, designation of a Key Employee as a
Participant for a Performance Period shall not in any manner
entitle the Participant to receive a Performance Award for the
Performance Period. The entitlement of any Participant to
payment of a Performance Award for such Performance Period shall
be decided solely in accordance with the provisions of this
Article 10. Moreover, designation of a Key Employee as a
Participant for a particular Performance Period shall not require
designation of such Key Employee as a Participant in any
subsequent Performance Period, and designation of one Key
Employee as a Participant shall not require designation of any
other Key Employee as a Participant in such Performance Period or
in any other Performance Period. All of the Performance Awards
issued under the Performance Award Program to Covered Employees
are intended to qualify as "performance-based compensation" under
Section 162(m) of the Code.
10.2 Calculation of Performance Incentive Base Salary. Within
the first 90 days of a Performance Period (or, if longer, within
the maximum period allowed under Section 162(m) of the Code), the
Committee shall calculate the Participant's Performance Incentive
Base Salary for the Performance Period then beginning. The
Performance Incentive Base Salary for any Performance Period
shall be the Participant's base salary as of the date the
Performance Goal(s) for such Performance Period is set by the
Committee. Once the Performance Incentive Base Salary is
determined, the Performance Incentive Base Salary will not change
for that Performance Period.
10.3 Procedure for Determining Awards. With regard to a
particular Performance Period, the Committee shall, using its
full discretion, select the length of such Performance Period.
Within the first 90 days of a Performance Period (or, if longer,
within the maximum period allowed under Section 162(m) of the
Code), the Committee shall establish in writing for such
Performance Period (i) the specific Performance Criteria that
will be used to establish the Performance Goal(s) for such
Performance Period and the kind(s) and level(s) of such
Performance Goal(s) and (ii) an award matrix detailing the
Performance Award for each Participant if such Performance Goals
are attained. The amount of a Participant's Performance Award
will be calculated from the Performance Formula for the
Performance Period, which Performance Formula shall be equal to
the product of the Participant's Incentive Base Salary and the
percentage derived from the award matrix.
10.4 Performance Awards. On the Award Payment Date for a
Performance Period, the Committee shall issue to each Participant
the Award, in the form of cash or Common Stock, as the Committee
may determine in its sole discretion. Shares of Common Stock
shall be subject to such terms, conditions, limitations, and
restrictions as the Committee, in its sole judgment, determines.
10.5 Payment of Awards.
10.5.1 Condition to Receipt of Awards. Except as provided
in Sections 10.6 and Articles 16 and 17, a Participant must be
employed by the Company on the Performance Period's Award Payment
Date to be eligible for an Award for such Performance Period.
10.5.2 Limitation. A Participant shall be eligible to
receive an Award for a Performance Period only if: (i) the
Performance Goals for such Performance Period are achieved; and
(ii) the Performance Formula as applied against such Performance
Goals determines that all or some portion of the Performance
Award has been earned by that Participant for the Performance
Period.
10.5.3 Certification. Following the completion of a
Performance Period, the Committee shall meet to review and
certify in writing whether, and to what extent, the Performance
Goals for the Performance Period have been achieved. If the
Committee certifies that the Performance Goals have been
achieved, it shall, based upon application of the Performance
Formula to the Performance Goals for such Performance Period,
also calculate and certify in writing for each Participant what
percentage of the Performance Award has been earned for the
Performance Period. The Committee shall then determine the size
of each Participant's Award for the Performance Period and, in so
doing, shall apply Negative Discretion if and when it deems
appropriate.
10.5.4 Negative Discretion. In determining the size of
an individual Award to be paid for a Performance Period, the
Committee may, through the use of Negative Discretion, reduce or
eliminate the amount of the Award earned under the Performance
Formula for the Performance Period if, in its sole discretion,
such reduction or elimination is appropriate.
10.5.5 Timing of Award Payments. The Performance Awards
granted by the Committee for a Performance Period shall be paid
to Participants on or promptly after the Award Payment Date for
such Performance Period.
10.5.6 New Participants. Participants who commence
employment by the Company after the Committee's selection of
Participants for the Performance Period, as well as Key Employees
who are selected by the Committee to be Participants after such
date, shall, in the event Awards are paid for the Performance
Period, be entitled to a pro rata Award. The amount of the pro
rata Award shall be determined by multiplying the Award the
Participant would have otherwise been paid if he or she had been
a Participant for the entire Performance Period by a fraction,
the numerator of which is the number of full months he or she was
eligible as a Participant to participate in the Performance Award
Program during the Performance Period and the denominator of
which is the total number of full months in the Performance
Period. For purposes of this calculation, a partial month of
participation shall: (i) be treated as a full month of
participation to the extent a Participant participates in the
Performance Award Program for 15 or more days of such month; and
(ii) not be taken into consideration to the extent the
Participant participates in the Performance Award Program for
less than 15 days of such month.
10.6 Termination of Employment During Performance Period. In the
event a Participant's employment terminates because of death,
Disability, Retirement or for an Approved Reason prior to the
Award Payment Date for a Performance Period, the Participant
shall receive, if Awards are paid for such Performance Period,
through the Award Payment Date, a pro rata Performance Award.
The amount of the pro rata Performance Award shall be determined
by multiplying the Performance Award the Participant would have
otherwise been paid if he or she had been a Participant through
the Award Payment Date for the Performance Period by a fraction,
the numerator of which is the number of full months he or she was
a Participant during such Performance Period and the denominator
of which is the total number of full months in the Performance
Period. For purposes of this calculation, a partial month of
participation shall: (1) be treated as a full month of
participation to the extent a Participant participates in the
Performance Award Program for 15 or more days of such month; and
(2) not be taken into consideration to the extent the Participant
participates in the Performance Award Program for less than 15
days of such month. Such pro rata Performance Award shall be
paid in the form of cash. In the event of death, Disability,
Retirement or for an Approved Reason, the pro rata Performance
Award shall be paid directly to the Participant and, in the event
of death, to the Participant's estate, no more than 120 days
after the Award Payment Date for such Performance Period. In the
event a Participant's employment terminates for any reason other
than death, Disability, Retirement or an Approved Reason, such
Participant shall have no right to any Performance Award for the
Performance Period in which such Participant's employment is
terminated.
10.7 Maximum Award Payable. Notwithstanding any provision
contained in the Plan to the contrary, the maximum Performance
Award payable to any one Participant under the Plan for a
calendar year is $100,000, or, in the event the Performance Award
is paid in shares of Common Stock, the equivalent Common Stock
award thereof, based on the closing price at which a share of
Common Stock trades on the date of the grant's Effective Date, or
the next preceding trading day if such date was not a trading
date, on the primary securities exchange or quotation system on
which the Common Stock is then traded.
ARTICLE 11 - PERFORMANCE UNITS
11.1 Grants. Awards may be granted in the form of performance
units. Performance units, as that term is used in this Plan,
shall refer to Units valued by reference to designated criteria
established by the Committee, but performance units shall not be
payable in Common Stock.
11.2 Performance Criteria. Performance units shall be contingent
on the attainment during a Performance Period of certain
performance objectives. The length of the Performance Period,
the performance objectives to be achieved during the Performance
Period, and the measure of whether and to what degree such
objectives have been attained shall be conclusively determined by
the Committee in the exercise of its absolute discretion.
Performance objectives may be revised by the Committee, at such
times as it deems appropriate during the Performance Period, in
order to take into consideration any unforeseen events or changes
in circumstances.
11.3 Additional Terms and Conditions. The Committee may, by way
of the Award Notice or otherwise, determine such other terms,
conditions, restrictions, and limitations, if any, of any Award
of performance units, provided they are not inconsistent with the
Plan.
ARTICLE 12 - NONEMPLOYEE DIRECTOR OPTIONS
12.1 Eligible Awards. Only Nonemployee Directors are eligible to
receive Formula Options and Deferral Options, which shall be
nonqualified stock options (i.e. options that are not incentive
stock options within the meaning of Section 422 of the Code).
12.2 Formula Options.
12.2.1 Each Nonemployee Director shall automatically
receive, upon his or her respective Initial Election Date an
option to purchase 1,000 shares of Common Stock ("Formula
Options").
12.2.2 Terms and Conditions of Formula Options
12.2.2.1 Exercise Price. The price at which Common
Stock may be purchased upon exercise of a Formula Option shall be
not less than 100% of the closing price at which a share of
Common Stock traded on the date of the grant of the Formula
Option, or the next preceding date if such date is not a trading
date, on the primary securities exchange or quotation system on
which the Common stock is then traded on the date of grant of
such Formula Options.
12.2.2.2 Vesting. Subject to the provisions of
Sections 10.3.4.3 and 10.3.4.4, after one (1) year from the
Effective date of such Formula Option, such Formula Option shall
become exercisable for all shares of Common Stock covered
thereby; provided that in the event the Service of the Non-
employee Director holding such option terminates prior to the end
of such vesting period for reason other than death, Disability or
Retirement, such option shall be forfeited and shall lapse
immediately.
12.2.2.3 Term of Exercisability. Upon the termination
of the Service of a Nonemployee Director because of death,
Disability or Retirement, the nonexercised Formula Options held
by such Nonemployee Director shall become immediately exercisable
as to 100% of the Shares of Common Stock covered thereby;
provided that in the event the Service of the Non-employee
Director holding such option terminates prior to the end of such
vesting period for reason other than death, Disability or
Retirement, such option shall be forfeited and shall lapse
immediately. Once any portion of a Formula Option becomes
exercisable, it shall remain exercisable for the lesser of (10)
ten years after the date of grant, (1) one year from the date
the Participant shall cease, by reason of the Participant's
death, Disability or Retirement, to be a Nonemployee Director, or
(3) three months from the date the Participant shall cease, for
any reason other than such Participant's death or Disability, to
be a Nonemployee Director; provided, however, that if the
Participant shall cease to be a Nonemployee Director and then die
or become Disabled within three months thereafter, the Formula
Option shall remain exercisable for one year after the date of
the Participant's death. Notwithstanding any contrary provision
in the Plan, upon a Change in Control, no additional terms,
conditions, restrictions, or limitations shall be placed upon any
Formula Option granted under this Article 12 and each Formula
Option outstanding shall become immediately exercisable as to all
of the shares of Common Stock covered thereby and shall be valued
and cashed out on the basis of the Change in Control Price within
90 days of the Change in Control; provided that any such options
having an exercise price equal to or greater than the Change in
Control Price shall have a value of zero, shall be cancelled, and
the owner thereof shall not be entitled to any payment.
12.2.2.4 Exercise and Payment. Upon exercise, the
option price of a Formula Option may be paid in cash, shares of
Common Stock, a combination of the foregoing, or such other
consideration as the Committee may deem appropriate. The
Committee shall establish appropriate methods for accepting
Common Stock, whether restricted or unrestricted, and may impose
such conditions as it deems appropriate on the use of such Common
Stock to exercise a stock option. Subject to Section 18.9, stock
options awarded under the Plan may be exercised by way of a
broker-assisted exercise program, provided such program is
available at the time of the option's exercise. The Committee
may permit a Participant to satisfy any amounts required to be
withheld under the applicable federal, state and local tax laws
in effect from time to time, by electing to have the Company
withhold a portion of the shares of Common Stock to be delivered
for the payment of such taxes.
12.2.2.5 Option Agreements. Each Award of a Formula
Option under this Plan shall be evidenced by a written agreement
signed by the Participant.
12.2.3 The provisions of the formula contained in
Subsections 12.2.1 and 12.2.2 of this Plan shall not be altered
or amended more often than every six (6) months except as
necessary to comply with the Code and the rules and regulations
thereunder.
12.2.4 Rule 16b-3 Compliance. The grant of Formula
Options is intended to comply in all respects with Rule 16b-3 of
the Exchange Act such that the grant of all Formula Options
issued under the Plan shall be exempt from Section 16(b) of the
Exchange Act.
12.3 Deferral Options.
12.3.1 Election. Each year, each Nonemployee Director
may, on or before the date of the scheduled annual shareholders'
meeting of AirT for such year, make an irrevocable election to
receive Deferral Options in lieu of all or any part of the cash
compensation to which such member would otherwise be entitled as
a member of the Board and any committee thereof (other than
reimbursement of expenses) for the period from such scheduled
annual shareholders' meeting to the day prior to the following
annual meeting. The Effective Date of any such Deferral Option
shall be the date of AirT's annual shareholders' meeting
beginning the compensation period to which such Deferral Option
relates, provided that the effectiveness of any Deferral Option
granted hereunder is conditioned on the prior approval of such
Deferral Option by the Committee or the Board. An election made
hereunder shall be effective for the grant of such number of
Deferral Options as is determined by the Committee to constitute
an amount of Deferral Options equivalent on the Effective Date to
the cash compensation elected to be foregone. In making such
determination of equivalency, the Committee shall rely upon the
Black-Scholes option pricing model or other generally accepted
method of pricing options.
12.3.2 Terms and Conditions of Deferral Options.
12.3.2.1 Exercise Price. The price at which Common
Stock may be purchased upon exercise of a Deferral Option shall
be not less than 100% of the closing price at which a share of
Common Stock trades on the date of the grant of the Deferral
Option, or the next preceding date if such date is not a trading
date, on the primary securities exchange or quotation system on
which the Common Stock is then traded.
12.3.2.2 Vesting. Subject to the provisions of
Sections 12.3.2.3 and 10.3.4.4, after one (1) year, or such
longer time as the Committee shall determine, from the Effective
date of such Deferral Option, such Deferral Option shall become
exercisable for all shares of Common Stock covered thereby.
12.3.2.3 Acceleration due to Termination of Service,
Change in Control. If the Service of any Participant ends during
the 1-year period for which cash compensation has been waived,
such Participant's rights in such Deferral Option shall be as
follows:
12.3.2.3.1 Upon the termination of such
Nonemployee Director's Service because of death, Disability or
Retirement during such 1-year period, each unexercised Deferral
Option held by that Nonemployee Director shall become immediately
exercisable as to 100% of the shares of Common Stock covered
thereby;
12.3.2.3.2 Upon the termination of such
Nonemployee Director's Service during such 1-year period for any
reason other than death, Disability or Retirement, a portion of
the shares of Common Stock covered by the Deferral Option thereby
shall become immediately exercisable as follows:
12.3.2.3.2.1 The shares of Common Stock
covered by a Deferral Option attributable to the election to
forgo cash compensation for the 1-year period in which such
Participant's Service terminates shall be prorated and such
Option shall become immediately exercisable to the extent of that
portion of the shares of Common Stock attributable to the time of
Service during that 1-year period; and
12.3.2.3.2.2 As to the balance of the
shares of Common Stock covered by such Deferral Option for such 1-
year period, such Deferral Option shall lapse immediately.
Notwithstanding any contrary provision in the
Plan, upon a Change in Control, no additional terms, conditions,
restrictions, or limitations shall be placed upon any Deferral
Option granted under this Article 12, and each Deferral Option
outstanding shall become immediately exercisable as to all of the
shares of Common Stock covered thereby and shall be valued and
cashed out on the basis of the Change in Control Price within 90
days of the Change in Control; provided that any such options
having an exercise price equal to or greater than the Change in
Control Price shall have a value of zero, shall be cancelled, and
the owner thereof shall not be entitled to any payment.
12.3.2.4 Term of Exercisability. Once any portion of
a Deferral Option becomes exercisable, it shall remain
exercisable only for the lesser of
12.3.2.4.0.1 10 years after the date of
grant (or such lesser number of years as the Committee shall
determine) or
12.3.2.4.0.2 1-year (or such greater number
of years as the Committee shall determine) after the Service of a
Participant terminates for any reason. Subject to the provisions
of Section 12.3.2.3.1, if applicable, each such Deferral Director
Option may be exercised in whole or in part not earlier than 6
months (or such longer time as the Committee shall provide in the
written agreement referred to in Section 12.3.2.6) after the date
of grant and shall expire on the date ten years after the date of
grant, or such earlier date as determined by the Committee.
12.3.2.5 Exercise and Payment. Upon exercise, the
option price of a Deferral Option may be paid in cash, shares of
Common Stock, a combination of the foregoing, or such other
consideration as the Committee may deem appropriate. The
Committee shall establish appropriate methods for accepting
Common Stock, whether restricted or unrestricted, and may impose
such conditions as it deems appropriate on the use of such Common
Stock to exercise a stock option. Subject to Section 18.9, stock
options awarded under the Plan may be exercised by way of a
broker-assisted exercise program, provided such program is
available at the time of the option's exercise. The Committee
may permit a Participant to satisfy any amounts required to be
withheld under the applicable federal, state and local tax laws
in effect from time to time, by electing to have the Company
withhold a portion of the shares of Common Stock to be delivered
for the payment of such taxes.
12.3.2.6 Option Agreements. Each Award of a Deferral
Option under this Plan shall be evidenced by a written agreement
signed by the Nonemployee Director.
12.3.3 Rule 16b-3 Compliance. The grant of Deferral
Options is intended to comply in all respects with Rule 16b-3 of
the Exchange Act such that the grant of all Deferral Options
issued under the Plan shall be exempt from Section 16(b) of the
Exchange Act.
12.4 Nontransferability of Formula and Deferral Options. No
Formula or Deferral Option granted pursuant to the Plan shall be
transferable otherwise than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order
as defined by the Code. During the lifetime of an optionee, the
Formula Option and Deferral Option shall be exercisable only by
the optionee personally or by the optionee's legal
representative.
ARTICLE 13 - PAYMENT OF AWARDS
13.1 In General. In the absence of a Plan provision to the
contrary, payment of Awards may, at the discretion of the
Committee, be made in cash, Common Stock, a combination of cash
and Common Stock, or any other form of property as the Committee
shall determine. In addition, payment of Awards may include such
terms, conditions, restrictions, and limitations, if any, as the
Committee deems appropriate, including, in the case of Awards
paid in the form of Common Stock, restrictions on transfer and
forfeiture provisions; provided, however, such terms, conditions,
restrictions, and limitations are not inconsistent with the Plan.
Further, payment of Awards may be made in the form of a lump sum
or installments, as determined by the Committee.
13.2 Termination of Employment. If employment with the Company
of a Key Employee who is a Participant terminates for a reason
other than death, Disability, Retirement, or any Approved Reason,
unpaid Awards granted under Articles 7, 8, 9, 10 and 11,
including, but not by way of limitation, Awards earned or
exercised but not yet paid, all unpaid dividends and dividend
equivalents, and all interest accrued on the foregoing shall be
cancelled or forfeited, as the case may be, unless the
Participant's Award Notice provides otherwise. The Committee
shall, notwithstanding Sections 4.4 and 18.11 to the contrary,
have the authority to promulgate rules and regulations to
determine the treatment of an Award under the Plan in the event
of the Key Employee Participant's death, Disability, Retirement
or termination for an Approved Reason; provided, however, in the
case of Awards issued under the Performance Restricted Stock
Program, such rules and regulations are consistent with Section
9.8, and in the case of Awards under the Performance Award
Program, such rules and regulations are consistent with Section
10.6.
13.3 Noncompetition. As to all Awards made pursuant to Articles
7, 8, 9, 10 and 11, unless the Award Notice specifies otherwise,
a Participant shall forfeit all unpaid Awards, including, but not
by way of limitation, Awards earned or exercised but not yet
paid, all unpaid dividends and dividend equivalents and all
interest, if any, accrued on the foregoing if, (i) in the opinion
of the Committee, the Participant, without the prior written
consent of the Company, engages directly or indirectly in any
manner or capacity as principal, agent, partner, officer,
director, stockholder, employee, or otherwise, in any business or
activity competitive with the business conducted by AirT or any
Subsidiary; (ii) at any time divulges to any person or any entity
other than the Company any trade secrets, methods, processes or
the proprietary or confidential information of the Company; or
(iii) the Participant performs any act or engages in any activity
that the Committee determines is inimical to the best interests
of the Company. For purposes of this Section 13.3, a Participant
shall not be deemed a stockholder if the Participant's record and
beneficial ownership amount to not more than 5% of the
outstanding capital stock of any company subject to the periodic
and other reporting requirements of the Exchange Act.
ARTICLE 14 - DIVIDEND AND DIVIDEND EQUIVALENT
If an Award is granted in the form of a Restricted Stock
Award, stock option, or Common Stock share, or in the form of any
other stock-based grant, the Committee may choose, at the time of
the grant of the Award or any time thereafter up to the time of
the Award's payment, to include as part of such Award an
entitlement to receive dividends or dividend equivalents, subject
to such terms, conditions, restrictions, and limitations, if any,
as the Committee may establish. Dividends and dividend
equivalents shall be paid in such form and manner (i.e., lump sum
or installments) and at such time(s) as the Committee shall
determine. All dividends or dividend equivalents that are not
paid currently may, at the Committee's discretion, accrue
interest, be reinvested into additional shares of Common Stock
or, in the case of dividends or dividend equivalents credited in
connection with performance shares, be credited as additional
performance shares and paid to the Participant if and when, and
to the extent that, payment is made pursuant to such Award. The
total number of shares available for grant under Section 6.1
shall not be reduced to reflect any dividends or dividend
equivalents that are reinvested into additional shares of Common
Stock or credited as additional performance shares.
ARTICLE 15 - DEFERRAL OF AWARDS
At the discretion of the Committee, payment of any Award,
dividend, or dividend equivalent, or any portion thereof, may be
deferred by a Participant until such time as the Committee may
establish. All such deferrals shall be accomplished by the
delivery of a written, irrevocable election by the Participant
prior to the time established by the Committee for such purpose,
on a form provided by the Company. Further, all deferrals shall
be made in accordance with administrative guidelines established
by the Committee to ensure that such deferrals comply with all
applicable requirements of the Code. Deferred payments shall be
paid in a lump sum or installments, as determined by the
Committee. Deferred Awards may also be credited with interest,
at such rates to be determined by the Committee and, with respect
to those deferred Awards denominated in the form of Common Stock,
with dividends or dividend equivalents.
ARTICLE 16 - CHANGE IN OWNERSHIP
16.1 Background. The provisions of this Article 16 shall apply
only to Awards made pursuant to Articles 7, 8, 9, 10 and 11 and
shall not apply to Awards made pursuant to Article 12.
Notwithstanding any provision contained in the Plan, including,
but not limited to, Sections 4.4 and 18.11, the provisions of
this Article 16 shall control over any contrary provision. Upon
a Change In Ownership: (i) the terms of this Article 16 shall
immediately become operative, without further action or consent
by any person or entity; (ii) all terms, conditions, restrictions
and limitations in effect on any unexercised, unearned, unpaid
and/or deferred Award, or any other outstanding Award, shall
immediately lapse as of the date of such event; (iii) no other
terms, conditions, restrictions and/or limitations shall be
imposed upon any Awards on or after such date, and in no
circumstance shall an Award be forfeited on or after such date;
and (iv) except in those instances where a prorated Award is
required to be paid under this Article 16, all unexercised,
unvested, unearned and/or unpaid Awards or any other outstanding
Awards shall automatically become one hundred percent (100%)
vested immediately.
16.2 Dividends and Dividend Equivalents. Upon a Change In
Ownership, all unpaid dividends and dividend equivalents and all
interest accrued thereon, if any, shall be treated and paid under
this Article 16 in the identical manner and time as the Award
under which such dividends or dividend equivalents have been
credited. For example, if upon a Change In Ownership, an Award
under this Article 16 is to be paid in a prorated fashion, all
unpaid dividends and dividend equivalents with respect to such
Award shall be paid according to the same formula used to
determine the amount of such prorated Award.
16.3 Treatment of Performance Units and Performance Awards. Upon
a Change In Ownership, any Participant in the Performance Award
Program or Performance Unit Program, whether or not he or she is
still employed by the Company, shall be paid, as soon as
practicable but in no event later than 90 days after the Change
In Ownership, a pro rata Award for each Performance Period in
which the Participant was selected to participate and during
which the Change In Ownership occurs ("Current Performance
Period"). The amount of such pro rata Award shall be determined
by annualizing (over the current Performance Period) the level of
the applicable Performance Criteria for the Performance Goal for
such Current Performance Period up to the end of the month
preceding the Change In Ownership, determining the Performance
Award that would have been payable for such Performance Period
had such annualized level been the actual level of the applicable
Performance Criteria for the Performance Goal for such Current
Performance Period, and multiplying such Performance Award so
determined by a fraction, the numerator of which shall be the
number of full months in the Current Performance Period prior to
the date of the Change In Ownership and the denominator of which
shall be the total number of full months in the Performance
Period. For purposes of this calculation, a partial month shall
be treated as a full month to the extent 15 or more days in such
month have elapsed.
16.4 Treatment of Awards under Performance Restricted Stock
Program. Upon a Change In Ownership, any Participant of the
Performance Restricted Stock Program, whether or not he or she is
still employed by the Company, shall be paid, as soon as
practicable but in no event later than 90 days after the Change
In Ownership, a pro rata Award for each Performance Cycle in
which the Participant was selected to participate and during
which the Change In Ownership occurs. The amount of the pro rata
Award shall be determined by multiplying the Target Award for
such Performance Cycle for Participants by a fraction, the
numerator of which shall be the number of full months in the
Performance Cycle prior to the date of the Change In Ownership
and the denominator of which shall be the total number of full
months in the Performance Cycle. For purposes of this
calculation, a partial month shall be treated as a full month to
the extent 15 or more days in such month have elapsed.
16.5 Valuation of Awards. Upon a Change In Ownership, all
outstanding shares of Common Stock, Freestanding SARs, stock
options (including incentive stock options), Restricted Stock
Awards, performance units and all other outstanding stock-based
Awards (including those earned as a result of the application of
Section 16.4 above and those granted by the Committee pursuant to
its authority under Subsection 4.2(m) hereof), shall be valued
and cashed out on the basis of the Change In Control Price and
shall be cancelled; provided that any Options granted under this
Plan having an exercise price equal to or greater than the Change
in Control Price shall have a value of zero, shall be cancelled,
and the owner thereof shall not be entitled to any payment.
16.6 Payment of Awards. Upon a Change In Ownership, any
Participant, whether or not he or she is still employed by the
Company, shall be paid, in a single lump sum cash payment, as
soon as practicable but in no event later than 90 days after the
Change In Ownership, all of his or her shares of Common Stock,
Freestanding SARs, stock options (including incentive stock
options), Restricted Stock Awards, Performance Awards and
(including those earned as a result of the application of
Section 16.3 above) performance units, and all other outstanding
stock-based Awards (including those earned as a result of the
application of Section 16.4 above and those granted by the
Committee pursuant to its authority under Subsection 4.2(m)
hereof) and all other outstanding Awards.
16.7 Deferred Awards. Upon a Change In Ownership, all Awards
deferred by a Participant under Article 15 hereof, but for which
he or she has not received payment as of such date, shall be paid
in a single lump sum cash payment as soon as practicable, but in
no event later than 90 days after the Change In Ownership. For
purposes of making such payment, the value of all Awards which
are stock based shall be determined by the Change In Control
Price.
16.8 Section 16 of the Exchange Act. Notwithstanding anything
contained in this Article 16 to the contrary, any Participant
who, on the date of the Change In Ownership, holds any stock
options or Freestanding SARs that have not been outstanding for a
period of at least six months from their date of grant and who on
such date is required to report under Section 16 of the Exchange
Act shall not be paid such an Award until the first day next
following the end of such six-month period.
16.9 Miscellaneous. Upon a Change In Ownership, (i) the
provisions of Sections 13.2, 13.3 and 18.3 hereof shall become
null and void and of no further force and effect; and (ii) no
action, including, but not by way of limitation, the amendment,
suspension, or termination of the Plan, shall be taken which
would affect the rights of any Participant or the operation of
the Plan with respect to any Award to which the Participant may
have become entitled hereunder on or prior to the date of such
action or as a result of such Change In Ownership.
ARTICLE 17 - CHANGE IN CONTROL
17.1 Background. Notwithstanding any provision contained in the
Plan, including, but not limited to, Sections 4.4 and 18.11, the
provisions of this Article 17 shall control over any contrary
provision except with respect to Awards made pursuant to Article
12 (as to which Article 12 this Article 17 shall not apply). All
Participants shall be eligible for the treatment afforded by this
Article 17 if their employment terminates within two years
following a Change in Control, unless the termination is due to
(i) death, (ii) Disability, (iii) Cause, (iv) termination by the
Participant other than for Good Reason, or (v) Retirement.
17.2 Vesting and Lapse of Restrictions. If a Participant is
eligible for treatment under this Article 17, (i) all of the
terms, conditions, restrictions and limitations in effect on any
of his or her unexercised, unearned, unpaid and/or deferred
Awards shall immediately lapse as of the date of his or her
termination of employment, (ii) no other terms, conditions,
restrictions and/or limitations shall be imposed upon any of his
or her Awards on or after such date, and in no event shall any of
his or her Awards be forfeited on or after such date; and (iii)
except in those instances where a prorated Award is required to
be paid under this Article 17, all of his or her unexercised,
unvested, unearned and/or unpaid Awards shall automatically
become one hundred percent (100%) vested immediately upon his or
her termination of employment.
17.3 Dividends and Dividend Equivalents. If a Participant is
eligible for treatment under this Article 17, all of his or her
unpaid dividends and dividend equivalents and all interest
accrued thereon, if any, shall be treated and paid under this
Article 17 in the identical manner and time as the Award under
which such dividends or dividend equivalents have been credited.
17.4 Treatment of Awards under the Performance Award Program and
Performance Unit Program. If a Participant is eligible for
treatment under this Article 17, for each Performance Period in
which the Participant was selected to participate and during
which his or her termination of employment occurs ("Termination
Current Performance Period"), he or she shall be considered to
have earned and, therefore, be entitled to receive that prorated
portion of the Award for such Termination Current Performance
Period. The amount of such pro rata Award shall be determined by
assuming that the Performance Goal for such Termination Current
Performance Period was attained at a level of 100% or the
equivalent thereof, determining the Performance Award that would
have been payable for such Performance Period had the Performance
Goal been attained at a level of 100% or the equivalent thereof,
and multiplying such Performance Award so determined by a
fraction, the numerator of which shall be the number of full
months in the Termination Current Performance Period prior to the
date of the Change In Ownership and the denominator of which
shall be the total number of full months in the Performance
Period.
The Participant shall be paid, as soon as practicable but in
no event later than 90 days after the date of his or her
termination of employment, a pro rata Award so determined, in
cash.
17.5 Treatment of Awards under Performance Restricted Stock
Program. If a Participant of the Performance Restricted Stock
Program is eligible for treatment under this Article 17, he or
she shall be paid, as soon as practicable but in no event later
than 90 days after the date of his or her termination of
employment, a pro rata Award for each Performance Cycle in which
the Participant was selected to participate and during which the
Change In Ownership occurs. The amount of the pro rata Award
shall be determined by multiplying the Target Award for such
Performance Cycle for such Participants by a fraction, the
numerator of which shall be the number of full months in the
Performance Cycle prior to the date of his or her termination of
employment and the denominator of which shall be the total number
of full months in the Performance Cycle. For purposes of this
calculation, a partial month shall be treated as a full month to
the extent 15 or more days in such month have elapsed. To the
extent Target Awards have not yet been established for the
Performance Cycle, the Target Award for the immediately preceding
Performance Cycle shall be used.
17.6 Valuation of Awards. If a Participant is eligible for
treatment under this Article 17, his or her Award shall be valued
and cashed out in accordance with the provisions of Section 16.5.
17.7 Payment of Awards. If a Participant is eligible for
treatment under this Article 17, he or she shall be paid, in a
single lump sum cash payment, as soon as practicable but in no
event later than 90 days after the date of his or her termination
of employment, all of his or her shares of Common Stock,
Freestanding SARs, stock options (including incentive stock
options), Restricted Stock Awards, Performance Awards and
performance units and shares (including those earned as a result
of the application of Section 17.4 above), all other outstanding
stock-based Awards (including those earned as a result of the
application of Section 17.5 above and those granted by the
Committee pursuant to its authority under Subsection 4.2(m)
hereof) and all other outstanding Awards.
17.8 Deferred Awards. If a Participant is eligible for treatment
under this Article 17, all of his or her deferred Awards for
which payment has not been received as of the date of his or her
termination of employment shall be paid to the Participant in a
single lump sum cash payment as soon as practicable, but in no
event later than 90 days after the date of the Participant's
termination. For purposes of making such payment, the value of
all Awards which are stock based shall be determined by the
Change In Control Price.
17.9 Section 16 of the Exchange Act. Notwithstanding anything
contained in this Article 17 to the contrary, any Participant
who, on the date of his or her termination of employment under
the conditions described in Section 17.1, holds any stock options
or Freestanding SARs that have not been outstanding for a period
of at least six months from their date of grant and who on the
date of such termination is required to report under Section 16
of the Exchange Act shall not be paid such Award until the first
business day next following the end of such six-month period.
17.10 Miscellaneous. Upon a Change In Control, (i) the
provisions of Sections 13.2, 13.3 and 18.3 hereof shall become
null and void and of no force and effect insofar as they apply to
a Participant who has been terminated under the conditions
described in Section 17.1 above, and (ii) no action, including,
but not by way of limitation, the amendment, suspension or
termination of the Plan, shall be taken which would affect the
rights of any Participant or the operation of the Plan with
respect to any Award to which the Participant may have become
entitled hereunder on or prior to the date of the Change In
Control or to which he or she may become entitled as a result of
such Change In Control.
17.11 Legal Fees. AirT shall pay all legal fees and related
expenses incurred by a Participant in seeking to obtain or
enforce any payment, benefit or right he or she may be entitled
to under the Plan after a Change In Control; provided, however,
the Participant shall be required to repay any such amounts to
AirT to the extent a court of competent jurisdiction issues a
final and non-appealable order setting forth the determination
that the position taken by the Participant was frivolous or
advanced in bad faith.
ARTICLE 18 - MISCELLANEOUS
18.1 Nonassignability. No Awards rights shall be subject in any
manner to alienation, anticipation, sale, transfer (except by
will or the laws of descent and distribution), assignment,
pledge, or encumbrance prior to payment pursuant to the Plan.
18.2 Withholding Taxes. The Company shall be entitled to deduct
from any payment under the Plan, regardless of the form of such
payment, the amount of all applicable income and employment taxes
required by law to be withheld with respect to such payment or
may require the Participant to pay to it such tax prior to and as
a condition of the making of such payment. In accordance with
any applicable administrative guidelines it establishes, the
Committee may allow a Participant to pay the amount of taxes
required by law to be withheld from an Award by withholding from
any payment of Common Stock due as a result of such Award, or by
permitting the Participant to deliver to the Company, shares of
Common Stock having a fair-market value, as determined by the
Committee, equal to the amount of such required withholding
taxes.
18.3 Amendments to Awards. The Committee may at any time
unilaterally amend any unexercised, unearned, or unpaid Award,
including, but not by way of limitation, Awards earned but not
yet paid, to the extent it deems appropriate; provided, however,
that any such amendment which, in the opinion of the Committee,
is adverse to the Participant shall require the Participant's
consent.
18.4 Regulatory Approvals and Listings. Notwithstanding anything
contained in this Plan to the contrary, the Company shall have no
obligation to issue or deliver certificates of Common Stock
evidencing Stock Awards or any other Award resulting in the
payment of Common Stock prior to (i) the obtaining of any
approval from any governmental agent which the Company shall, in
its sole discretion, determine to be necessary or advisable, (ii)
the admission of such shares to listing on the stock exchange on
which the Common Stock may be listed and (iii) the completion of
any registration or other qualification of said shares under any
state or Federal law or ruling of any governmental body that the
Company shall, in its sole discretion, determine to be necessary
or advisable.
18.5 No Right to Continued Employment or Grants. Participation
in the Plan shall not give any Employee any right to remain in
the employ of AirT or any Subsidiary. AirT, or, in the case of
employment with a Subsidiary, the Subsidiary, reserves the right
to terminate any Employee at any time. Further, the adoption of
this Plan shall not be deemed to give any Employee or any other
individual any right to be selected as a Participant or to be
granted an Award.
18.6 Amendment/Termination. The Committee may suspend or
terminate the Plan at any time with or without prior notice. In
addition, the Committee may, from time to time and with or
without prior notice, amend the Plan in any manner, but may not
without shareholder approval adopt any amendment that would
require the vote of the shareholders of AirT pursuant to Section
16 of the Exchange Act or Section 162(m) of the Code, but only
insofar as such amendment affects Covered Employees.
18.7 Governing Law. The Plan shall be governed by and construed
in accordance with the laws of the State of North Carolina,
except as superseded by applicable Federal Law.
18.8 No Right, Title, or Interest in Company Assets. No
Participant shall have any rights as a shareholder as a result of
participation in the Plan until the date of issuance of a stock
certificate in his or her name and, in the case of restricted
shares of Common Stock, such rights are granted to the
Participant under the Plan. To the extent any person acquires a
right to receive payments from the Company under the Plan, such
rights shall be no greater than the rights of an unsecured
creditor of the Company and the Participant shall not have any
rights in or against any specific assets of the Company. All of
the Awards granted under the Plan shall be unfunded.
18.9 Section 16 of the Exchange Act. In order to avoid any
Exchange Act violations, the Committee may, from time to time,
impose additional restrictions upon an Award, including but not
limited to, restrictions regarding tax withholdings and
restrictions regarding the Participant's ability to exercise
Awards under any broker-assisted exercise program.
18.10 No Guarantee of Tax Consequences. No person connected
with the Plan in any capacity, including, but not limited to,
AirT and its Subsidiaries and their directors, officers, agents
and employees makes any representation, commitment, or guarantee
that any tax treatment, including, but not limited to, Federal,
state and local income, estate and gift tax treatment, will be
applicable with respect to amounts deferred under the Plan, or
paid to or for the benefit of a Participant under the Plan, or
that such tax treatment will apply to or be available to a
Participant on account of participation in the Plan.
18.11 Compliance with Section 162(m). If any provision of
the Plan, other than the application of those contained in
Articles 17 or 18 hereof, would cause the Awards granted to a
Covered Person not to qualify as "performance-based compensation"
under Section 162(m) of the Code, that provision, insofar as it
pertains to the Covered Person, shall be severed from, and shall
be deemed not to be a part of this Plan, but the other provisions
hereof shall remain in full force and effect.
18.12 Other Benefits. No Award granted under the Plan shall
be considered compensation for purposes of computing benefits
under any retirement plan of the Company nor affect any benefits
or compensation under any other benefit or compensation plan of
the Company now or subsequently in effect.
13
NationsBank, N.A.
LOAN AGREEMENT
This Loan Agreement (the "Agreement") dated as of July 17, 1998,
by and between NationsBank, N.A. a national banking association
("Bank") and the Borrower described below.
[This Agreement contains some provisions preceded by boxes. A
box which is not marked means that the provision beside it is not
applicable to this transaction.]
In consideration of the Loan or Loans described below and the
mutual covenants and agreements contained herein, and intending to be
legally bound hereby, Bank and Borrower agree as follows:
1. DEFINITIONS AND REFERENCE TERMS. In addition to any other
terms defined herein, the following terms shall have the meaning set
forth with respect thereto:
A. Borrower: Air Transportation Holding Company, Inc.
CSA Air, Inc
Mountain Air Cargo, Inc.
Mountain Aircraft Services, LLC
Global Ground Support, LLC
B. Borrower's Address:
3524 Airport Road, Maiden, North Carolina 28650
C. Current Assets. Current Assets means the aggregate
amount of all of Borrower's assets which would, in accordance with
GAAP, properly be defined as
current assets.
D. Current Liabilities. Current Liabilities means the
aggregate amount of all current liabilities as determined in
accordance with GAAP, but in any event shall include all
liabilities except those having a maturity date which is more than
one year from the date as of which such computation is being made.
E. Hazardous Materials. Hazardous Materials include all
materials defined as hazardous materials or substances under any
local, state or federal environmental laws, rules or regulations,
and petroleum, petroleum products, oil and asbestos.
F. Loan. Any loan described in Section 2 hereof and any
subsequent loan which states that it is subject to this Loan
Agreement.
G. Loan Documents. Loan Documents means this Loan
Agreement and any and all promissory notes executed by Borrower in
favor of Bank and all other documents, instruments, guarantees,
certificates and agreements executed and/or delivered by Borrower,
any guarantor or third party in connection with any Loan.
H. Tangible Net Worth. Tangible Net Worth means the
amount by which total assets exceed total liabilities in accordance
with GAAP.
I. Accounting Terms. All accounting terms not
specifically defined or specified herein shall have the meanings
generally attributed to such terms under generally accepted
accounting principles ("GAAP"), as in effect from time to time,
consistently applied, with respect to the financial statements
referenced in Section 3.H. hereof.
2. LOANS.
A. Loan. Bank hereby agrees to make (or has made) one
or more loans to Borrower in the aggregate principal face amount of
$7,000,000.00. The obligation to repay the loans is evidenced by a
promissory note or notes dated July 17, 1998, (the promissory note or
notes together with any and all renewals, extensions or
rearrangements thereof being hereafter collectively referred to as
the "Note") having a maturity date, repayment terms and interest rate
as set forth in the Note.
i . [X] Revolving Credit Feature. The Loan provides
for a revolving line of credit (the "Line") under which Borrower may
from time to time, borrow, repay and re-borrow funds.
ii. [] Clean-Up Period. Borrower shall maintain a
zero balance on the Line for a period of at least ____ consecutive
days during [] each fiscal year [] any consecutive twelve month
period.
iii. [] Borrowing Base. The Line is subject to the
Borrowing Base Agreement attached hereto as Exhibit "A" and by
reference made a part hereof.
iv. [] Usage Fee. Borrower will pay hereafter on
________________, 19_____ and on the ______ day of each
_________________ for the period from and including the date the
Line was established to and including the maturity date of the Line,
a usage fee at a rate per annum of _______% of the [] average daily
unused portion of the Line during such period [] average daily used
portion of the Line during such period [] committed amount of the
Line. The Borrower may at any time upon written notice to the Bank
permanently reduce the amount of the Line at which time the
obligation of the Borrower to pay a usage fee shall thereupon
correspondingly be reduced.
v. [X] Letter of Credit Subfeature. As a
subfeature under the Line, Bank may from time to time up to and
including August 31, 1998, issue letters of credit for the account of
Borrower (each, a "Letter of Credit" and collectively, "Letters of
Credit"); provided, however, that the form and substance of each
Letter of Credit shall be subject to approval by Bank in its sole
discretion; and provided further that the aggregate undrawn amount of
all outstanding Letters of Credit shall not at any time exceed
$4,000,000. Each Letter of Credit shall be issued for a term
designated by Borrower, provided, however, that no Letter of Credit
shall have an expiration date subsequent to August 31, 1998. The
undrawn amount of all Letters of Credit plus any and all amounts paid
by Bank in connection with drawings under any Letter of Credit for
which the Bank has not been reimbursed shall be reserved under the
Line and shall not be available for advances thereunder. Each draft
paid by Bank under a Letter of Credit shall be deemed an advance
under the Line and shall be repaid in accordance with the terms of
the Line; provided however, that if the Line is not available for any
reason whatsoever, at the time any draft is paid by Bank, or if
advances are not available under the Line in such amount due to any
limitation of borrowing set forth herein, then the full amount of
such drafts shall be immediately due and payable, together with
interest thereon, from the date such amount is paid by Bank to the
date such amount is fully repaid by Borrower, at that rate of
interest applicable to advances under the Line. In such event,
Borrower agrees that Bank, at Bank's sole discretion may debit
Borrower's deposit account with Bank for the amount of such draft.
3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents
and warrants to Bank as follows:
A. Good Standing. Borrower is a corporation duly
organized, validly existing and in good standing under the laws of
Deleware and has the power and authority to own its property and to
carry on its business in each jurisdiction in which Borrower does
business.
B. Authority and Compliance. Borrower has full power and
authority to execute and deliver the Loan Documents and to incur and
perform the obligations provided for therein, all of which have been
duly authorized by all proper and necessary action of the appropriate
governing body of Borrower. No consent or approval of any public
authority or other third party is required as a condition to the
validity of any Loan Document, and Borrower is in compliance with all
laws and regulatory requirements to which it is subject.
C. Binding Agreement. This Agreement and the other Loan
Documents executed by Borrower constitute valid and legally binding
obligations of Borrower, enforceable in accordance with their terms.
D. Litigation. There is no proceeding involving Borrower
pending or, to the knowledge of Borrower, threatened before any court
or governmental authority, agency or arbitration authority, except as
disclosed to Bank in writing and acknowledged by Bank prior to the
date of this Agreement.
E. No Conflicting Agreements. There is no charter,
bylaw, stock provision, partnership agreement or other document
pertaining to the organization, power or authority of Borrower and no
provision of any existing agreement, mortgage, indenture or contract
binding on Borrower or affecting its property, which would conflict
with or in any way prevent the execution, delivery or carrying out of
the terms of this Agreement and the other Loan Documents.
F. Ownership of Assets. Borrower has good title to its
assets, and its assets are free and clear of liens, except those
granted to Bank and as disclosed to Bank in writing prior to the date
of this Agreement.
G. Taxes. All taxes and assessments due and payable by
Borrower have been paid or are being contested in good faith by
appropriate proceedings and the Borrower has filed all tax returns
which it is required to file.
H. Financial Statements. The financial statements of
Borrower heretofore delivered to Bank have been prepared in
accordance with GAAP applied on a consistent basis throughout the
period involved and fairly present Borrower's financial condition as
of the date or dates thereof, and there has been no material adverse
change in Borrower's financial condition or operations since June 30,
1997. All factual information furnished by Borrower to Bank in
connection with this Agreement and the other Loan Documents is and
will be accurate and complete on the date as of which such
information is delivered to Bank and is not and will not be
incomplete by the omission of any material fact necessary to make
such information not misleading.
I. Place of Business. Borrower's chief executive office
is located at
3524 Airport Road
Maiden, NC 28650
J. Environmental. The conduct of Borrower's business
operations and the condition of Borrower's property does not and will
not violate any federal laws, rules or ordinances for environmental
protection, regulations of the Environmental Protection Agency, any
applicable local or state law, rule, regulation or rule of common law
or any judicial interpretation thereof relating primarily to the
environment or Hazardous Materials.
K. Continuation of Representations and Warranties. All
representations and warranties made under this Agreement shall be
deemed to be made at and as of the date hereof and at and as of the
date of any advance under any Loan.
4. AFFIRMATIVE COVENANTS. Until full payment and performance
of all obligations of Borrower under the Loan Documents, Borrower
will, unless Bank consents otherwise in writing (and without limiting
any requirement of any other Loan Document):
A. Financial Condition. Maintain Borrower's
financial condition as follows, determined in accordance with
GAAP applied on a consistent basis throughout the period
involved except to the extent modified by the following
definitions:
I. Maintain at all times a ratio of debt to tangible
net worth of not greater than 1.0 to 1.0.
II. Maintain on a quarterly basis a ratio of Funded
Debt to EBITDA of not greater than 3.0 to 1.0.
B. Financial Statements and Other Information. Maintain
a system of accounting satisfactory to Bank and in accordance with
GAAP applied on a consistent basis throughout the period involved,
permit Bank's officers or authorized representatives to visit and
inspect Borrower's books of account and other records at such
reasonable times and as often as Bank may desire, and pay the
reasonable fees and disbursements of any accountants or other agents
of Bank selected by Bank for the foregoing purposes. Unless written
notice of another location is given to Bank, Borrower's books and
records will be located at Borrower's chief executive office set
forth above. All financial statements called for below shall be
prepared in form and content acceptable to Bank and by independent
certified public accountants acceptable to Bank.
In addition, Borrower will:
i. Furnish to Bank annual audited financial statements and 10K
filings of Borrower for each fiscal year of Borrower, within 90
days after the close of each such fiscal year.
ii.Furnish to Bank certified copies of 10Q filings and related
financial statements including a balance sheet and income
statement for each quarter of each fiscal year within 60 days
after the close of each such period.
iii. Furnish to Bank a compliance certificate for (and executed
by an authorized representative of) Borrower concurrently with
and dated as of the date of delivery of each of the financial
statements as required in paragraphs i and ii above, containing
(a) a certification that the financial statements of even date
are true and correct and that the Borrower is not in default
under the terms of this Agreement, and (b) computations and
conclusions, in such detail as Bank may request, with respect to
compliance with this Agreement, and the other Loan Documents,
including computations of all quantitative covenants.
vii. Furnish to Bank promptly such additional information,
reports and statements respecting the business operations and
financial condition of Borrower from time to time, as Bank may
reasonably request.
C. Insurance. Maintain insurance with responsible
insurance companies on such of its properties, in such amounts and
against such risks as is customarily maintained by similar businesses
operating in the same vicinity, specifically to include fire and
extended coverage insurance covering all assets, business
interruption insurance, workers compensation insurance and liability
insurance, all to be with such companies and in such amounts as are
satisfactory to Bank and providing for at least 30 days prior notice
to Bank of any cancellation thereof. Satisfactory evidence of such
insurance will be supplied to Bank prior to funding under the Loan(s)
and 30 days prior to each policy renewal.
D. Existence and Compliance. Maintain its existence,
good standing and qualification to do business, where required and
comply with all laws, regulations and governmental requirements
including, without limitation, environmental laws applicable to it or
to any of its property, business operations and transactions.
E. Adverse Conditions or Events. Promptly advise Bank in
writing of (i) any condition, event or act which comes to its
attention that would or might materially adversely affect Borrower's
financial condition or operations or Bank's rights under the Loan
Documents, (ii) any litigation filed by or against Borrower, (iii)
any event that has occurred that would constitute an event of default
under any Loan Documents and (iv) any uninsured or partially
uninsured loss through fire, theft, liability or property damage in
excess of an aggregate of $500,000.
F. Taxes and Other Obligations. Pay all of its taxes,
assessments and other obligations, including, but not limited to
taxes, costs or other expenses arising out of this transaction, as
the same become due and payable, except to the extent the same are
being contested in good faith by appropriate proceedings in a
diligent manner.
G. Maintenance. Maintain all of its tangible property in
good condition and repair and make all necessary replacements
thereof, and preserve and maintain all licenses, trademarks,
privileges, permits, franchises, certificates and the like necessary
for the operation of its business.
H. Environmental. Immediately advise Bank in writing
of (i) any and all enforcement, cleanup, remedial, removal, or other
governmental or regulatory actions instituted, completed or
threatened pursuant to any applicable federal, state, or local laws,
ordinances or regulations relating to any Hazardous Materials
affecting Borrower's business operations; and (ii) all claims made or
threatened by any third party against Borrower relating to damages,
contribution, cost recovery, compensation, loss or injury resulting
from any Hazardous Materials. Borrower shall immediately notify Bank
of any remedial action taken by Borrower with respect to Borrower's
business operations. Borrower will not use or permit any other party
to use any Hazardous Materials at any of Borrower's places of
business or at any other property owned by Borrower except such
materials as are incidental to Borrower's normal course of business,
maintenance and repairs and which are handled in compliance with all
applicable environmental laws. Borrower agrees to permit Bank, its
agents, contractors and employees to enter and inspect any of
Borrower's places of business or any other property of Borrower at
any reasonable times upon three (3) days prior notice for the
purposes of conducting an environmental investigation and audit
(including taking physical samples) to insure that Borrower is
complying with this covenant and Borrower shall reimburse Bank on
demand for the costs of any such environmental investigation and
audit. Borrower shall provide Bank, its agents, contractors,
employees and representatives with access to and copies of any and
all data and documents relating to or dealing with any Hazardous
Materials used, generated, manufactured, stored or disposed of by
Borrower's business operations within five (5) days of the request
therefore.
5. NEGATIVE COVENANTS. Until full payment and performance of
all obligations of Borrower under the Loan Documents, Borrower will
not, without the prior written consent of Bank (and without limiting
any requirement of any other Loan Documents):
[] A. Capital Expenditures. Make capital expenditures
during each fiscal year (including capitalized leases) exceeding in
the aggregate the lesser of $__________.
[] B. Lease Expenditures. Incur new obligations for the
lease or hire of real or personal property requiring payments in any
fiscal year in excess of an aggregate of $__________.
[] C. Compensation. Pay by way of salary, bonus,
distribution, dividend, lease payment or otherwise, aggregate annual
compensation to ______________________, and
__________________________ in excess of:
$________________ during fiscal year 19_____
$________________ during fiscal year 19_____
$________________ during fiscal year 19_____
$________________ during fiscal year 19_____
D. Transfer of Assets or Control. Sell, lease, assign or
otherwise dispose of or transfer any assets, except in the normal
course of its business, or enter into any merger or consolidation, or
transfer control or ownership of the Borrower or form or acquire any
subsidiary.
E. Liens. Grant, suffer or permit any contractual or
noncontractual lien on or security interest in its assets, except in
favor of Bank, or fail to promptly pay when due all lawful claims,
whether for labor, materials or otherwise.
F. Extensions of Credit. Make or permit any subsidiary
to make, any loan or advance to any person or entity, or purchase or
otherwise acquire, or permit any subsidiary to purchase or otherwise
acquire, any capital stock, assets, obligations, or other securities
of, make any capital contribution to, or otherwise invest in or
acquire any interest in any entity, or participate as a partner or
joint venturer with any person or entity, except for the purchase of
direct obligations of the United States or any agency thereof with
maturities of less than one year.
G. Borrowings. Create, incur, assume or become liable in
any manner for any indebtedness (for borrowed money, deferred payment
for the purchase of assets, lease payments, as surety or guarantor
for the debt for another, or otherwise) other than to Bank, except
for normal trade debts incurred in the ordinary course of Borrower's
business, and except for existing indebtedness disclosed to Bank in
writing and acknowledged by Bank prior to the date of this Agreement.
[] H. Dividends and Distributions. Make any distribution
(other than dividends payable in capital stock of Borrower) on any
shares of any class of its capital stock or, if Borrower is a
partnership, make any distribution to any partner, or apply any of
its property or assets to the purchase, redemption or other
retirement of any shares of any class of capital stock of or any
partnership interest in Borrower exceeding in the aggregate []
$_______________ per fiscal year, [] _____% of net profit per fiscal
year, or in any way amend its capital structure.
I. Character of Business. Change the general character
of business as conducted at the date hereof, or engage in any type of
business not reasonably related to its business as presently
conducted.
[] J. Management Change. Make any substantial change in its
present executive or management personnel.
6. DEFAULT. Borrower shall be in default under this Agreement
and under each of the other Loan Documents if it shall default in the
payment of any amounts due and owing under the Loan or should it fail
to timely and properly observe, keep or perform any term, covenant,
agreement or condition in any Loan Document or in any other loan
agreement, promissory note, security agreement, deed of trust, deed
to secure debt, mortgage, assignment or other contract securing or
evidencing payment of any indebtedness of Borrower to Bank or any
affiliate or subsidiary of NationsBank Corporation.
7. REMEDIES UPON DEFAULT. If an event of default shall occur,
Bank shall have all rights, powers and remedies available under each
of the Loan Documents as well as all rights and remedies available at
law or in equity.
8. NOTICES. All notices, requests or demands which any party
is required or may desire to give to any other party under any
provision of this Agreement must be in writing delivered to the other
party at the following address:
Borrower:
Air Transportation Holding Company, Inc.
3524 Airport Road
Maiden, NC 28650
Bank:
NationsBank, NA
PO Box 100
Denver, NC 28037
or to such other address as any party may designate by written notice
to the other party. Each such notice, request and demand shall be
deemed given or made as follows:
A. If sent by mail, upon the earlier of the date of
receipt or five (5) days after deposit in the U.S. Mail, first class
postage prepaid;
B. If sent by any other means , upon delivery.
9. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to
Bank immediately upon demand the full amount of all costs and
expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel if
permitted by applicable law), incurred by Bank in connection with (a)
negotiation and preparation of this Agreement and each of the Loan
Documents, and (b) all other costs and attorneys' fees incurred by
Bank for which Borrower is obligated to reimburse Bank in accordance
with the Terms of the Loan Documents.
10. MISCELLANEOUS. Borrower and Bank further covenant and
agree as follows, without limiting any requirement of any other Loan
Document:
A. Cumulative Rights and No Waiver. Each and every right
granted to Bank under any Loan Document, or allowed it by law or
equity shall be cumulative of each other and may be exercised in
addition to any and all other rights of Bank, and no delay in
exercising any right shall operate as a waiver thereof, nor shall any
single or partial exercise by Bank of any right preclude any other or
future exercise thereof or the exercise of any other right. Borrower
expressly waives any presentment, demand, protest or other notice of
any kind, including but not limited to notice of intent to accelerate
and notice of acceleration. No notice to or demand on Borrower in
any case shall, of itself, entitle Borrower to any other or future
notice or demand in similar or other circumstances.
B. Applicable Law. This Loan Agreement and the rights
and obligations of the parties hereunder shall be governed by and
interpreted in accordance with the laws of D.C. and applicable United
States federal law.
C. Amendment. No modification, consent, amendment or
waiver of any provision of this Loan Agreement, nor consent to any
departure by Borrower therefrom, shall be effective unless the same
shall be in writing and signed by an officer of Bank, and then shall
be effective only in the specified instance and for the purpose for
which given. This Loan Agreement is binding upon Borrower, its
successors and assigns, and inures to the benefit of Bank, its
successors and assigns; however, no assignment or other transfer of
Borrower's rights or obligations hereunder shall be made or be
effective without Bank's prior written consent, nor shall it relieve
Borrower of any obligations hereunder. There is no third party
beneficiary of this Loan Agreement.
D. Documents. All documents, certificates and other
items required under this Loan Agreement to be executed and/or
delivered to Bank shall be in form and content satisfactory to Bank
and its counsel.
E. Partial Invalidity. The unenforceability or
invalidity of any provision of this Loan Agreement shall not affect
the enforceability or validity of any other provision herein and the
invalidity or unenforceability of any provision of any Loan Document
to any person or circumstance shall not affect the enforceability or
validity of such provision as it may apply to other persons or
circumstances.
F. Indemnification. Notwithstanding anything to the
contrary contained in Section 10(G), Borrower shall indemnify, defend
and hold Bank and its successors and assigns harmless from and
against any and all claims, demands, suits, losses, damages,
assessments, fines, penalties, costs or other expenses (including
reasonable attorneys' fees and court costs) arising from or in any
way related to any of the transactions contemplated hereby, including
but not limited to actual or threatened damage to the environment,
agency costs of investigation, personal injury or death, or property
damage, due to a release or alleged release of Hazardous Materials,
arising from Borrower's business operations, any other property owned
by Borrower or in the surface or ground water arising from Borrower's
business operations, or gaseous emissions arising from Borrower's
business operations or any other condition existing or arising from
Borrower's business operations resulting from the use or existence of
Hazardous Materials, whether such claim proves to be true or false.
Borrower further agrees that its indemnity obligations shall include,
but are not limited to, liability for damages resulting from the
personal injury or death of an employee of the Borrower, regardless
of whether the Borrower has paid the employee under the workmen' s
compensation laws of any state or other similar federal or state
legislation for the protection of employees. The term "property
damage" as used in this paragraph includes, but is not limited to,
damage to any real or personal property of the Borrower, the Bank,
and of any third parties. The Borrower's obligations under this
paragraph shall survive the repayment of the Loan and any deed in
lieu of foreclosure or foreclosure of any Deed to Secure Debt, Deed
of Trust, Security Agreement or Mortgage securing the Loan.
G. Survivability. All covenants, agreements,
representations and warranties made herein or in the other Loan
Documents shall survive the making of the Loan and shall continue in
full force and effect so long as the Loan is outstanding or the
obligation of the Bank to make any advances under the Line shall not
have expired.
[] H. Updated Appraisals and Maintenance of Collateral
Value. Bank may at its option obtain at Borrower's expense, once
every _____________ (or as otherwise requested by Bank) an appraisal
of any real property securing payment of the Loan (the "Real
Property") prepared in accordance with applicable bank regulatory
agency regulations and the written instructions from Bank by a third
party appraiser engaged directly by Bank. The costs of each such
appraisal shall be payable by Borrower to Bank on demand. If such
appraisal shows the market value of the Real Property has declined,
Borrower agrees that upon demand of Bank it will immediately either
pledge additional collateral in form and substance satisfactory to
Bank or make such payments as shall be necessary to reduce the
principal balance outstanding under the Loan, so that in either case
the principal amount outstanding under the Loan shall not exceed
______% of the market value of the Real Property and any additional
collateral.
11. ADDITIONAL PROVISIONS: [] The Borrower shall comply with
those additional provisions set forth on Exhibit "__" attached hereto
and by reference made a part hereof.
12. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR
RELATING TO THIS, INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED
INSTRUMENTS, AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED ON
OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING
ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT
APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE
"SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY,
THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD
MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS
AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED
PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO
WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER
SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN
THE CITY OF THE BORROWER'S DOMICILE AT TIME OF THE EXECUTION OF THIS
INSTRUMENT, AGREEMENT OR DOCUMENT AND ADMINISTERED BY J.A.M.S. WHO
WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY
PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN
ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE
COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE
ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO
EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION
PROVISION SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY
OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS
CONTAINED IN THIS ARBITRATION PROVISION; OR (II) BE A WAIVER BY THE
BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE
BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT
LIMITED TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL
PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR
ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF,
WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY
EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR
OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER
THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF
HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR
FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A
WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH
ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
OCCASIONING RESORT TO SUCH REMEDIES.
13. NO ORAL AGREEMENT. THIS WRITTEN LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed under seal by their duly authorized
representatives as of the date first above written.
BORROWER: BANK:
Air Transportation Holding Company, Inc. NationsBank, NA
By: ________________________ (Seal) By:
______________________________ (Seal)
Name:______________________ Name: C. Gerome Chambers, Jr.
Title: _______________________ Title: Vice President
[Corporate Seal]
Attest:________________________ (Seal)
Name:____________________________
Title:_____________________________
BORROWER: BORROWER:
CSA Air, Inc. Mountain Air Cargo, Inc.
By: ________________________ (Seal) By:
______________________________ (Seal)
Name:______________________ Name: ____________________________
Title: _______________________ Title:
_____________________________
[Corporate Seal] [Corporate Seal]
Attest:________________________ (Seal)
Attest:________________________ (Seal)
Name:____________________________
Name:____________________________
Title:_____________________________
Title:_____________________________
BORROWER: BORROWER:
Mountain Aircraft Services, LLC Global Ground Support, LLC
By: ________________________ (Seal) By:
______________________________ (Seal)
Name:______________________ Name: ____________________________
Title: _______________________ Title:
_____________________________
[Corporate Seal] [Corporate Seal]
Attest:________________________ (Seal)
Attest:________________________ (Seal)
Name:____________________________
Name:____________________________
Title:_____________________________
Title:_____________________________
INDEX
Accounting Terms, 1
Adverse Conditions or Events, 6
AFFIRMATIVE COVENANTS, 4
Amendment, 8
Applicable Law, 8
ARBITRATION, 9
Authority and Compliance., 2
Bank, 1
Binding Agreement, 3
Borrower, 1
Borrower's Address, 1
Borrowing Base, 2
Borrowings, 7
Capital Expenditures, 6
Cash flow coverage ratio, 4
Character of Business, 7
Clean-Up Period, 2
Compensation, 6
Compliance certificate, 5
Continuation of Representation and Warranties, 4
COSTS, EXPENSES AND ATTORNEY'S FEES, 8
Cumulative Rights and No Waiver, 8
Current Assets, 1
Current Liabilities, 1
DEFAULT, 7
Dividends and Distributions, 7
Documents, 8
Environmental Matters, 3
Existence and Compliance, 6
Extensions of Credit, 7
Financial Condition, 4
Financial Statements, 3
Financial Statements and Other Information, 5
GAAP, 1
Good Standing, 2
Hazardous Materials, 1
Indemnification, 8
Insurance, 5
Lease Expenditures., 6
Letter of Credit Subfeature, 2
Liens, 7
Litigation, 3
Loan, 1
Loan Documents., 1
Maintenance of property in good condition, 6
Maintenance of Collateral Value, 9
MISCELLANEOUS, 8
NEGATIVE COVENANTS, 6
Net working capital, 4
No Conflicting Agreements, 3
NOTICES, 7
Notification of Environmental Claims, 6
Ownership of Assets, 3
Partial Invalidity, 8
Place of Business, 3
Ratio of Current Assets to Current Liabilities, 4
Ratio of total liabilities to Tangible Net Worth, 4
REMEDIES UPON DEFAULT, 7
Revolving Credit Feature, 2
Survivability, 9
Tangible Net Worth, 1, 4
Taxes, 3
Taxes and Other Obligations, 6
Transfer of Assets or Control, 7
Updated Appraisals, 9
Usage Fee, 2
