September 11, 1998
Dear Shareholder:
You are cordially invited to attend the Company's Annual Meeting of
Shareholders to be held on Wednesday, October 7, 1998, at 11:00 A.M., local
time, at the Company's offices at Newport News/Williamsburg International
Airport, Newport News, Virginia.
As set forth in the formal Notice of Meeting and in the accompanying
Proxy Statement, we are asking you to elect directors, approve a stock option
plan to incentivize and benefit our employees, consultants and directors and to
ratify the appointment of BDO Seidman as the independent auditors of the
Company.
The Board of Directors has approved the proposals and believes they are
in the best interests of all of the Company's shareholders. We urge you to read
the accompanying Proxy Statement carefully. At the Meeting, the Board of
Directors will also report on the affairs of the Company. After the formal part
of the meeting we will have a discussion period for questions and comments of
general interest to shareholders.
We look forward to greeting personally those shareholders who are able
to attend the meeting; however, whether or not you plan to attend the meeting,
it is important that your shares be represented. Accordingly, you are requested
to sign, date and mail the enclosed proxy, at your earliest convenience, in the
envelope provided.
Thank you for your cooperation.
Very truly yours,
David E. Sandlin
Chairman of the Board
<PAGE>
THE FLIGHT INTERNATIONAL GROUP, INC.
Newport News/Williamsburg International Airport
Newport News, Virginia 23602
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of The Flight International Group,
Inc. (the "Company") will be held at the Company's offices at Newport
News/Williamsburg International Airport, Newport News, Virginia, on Wednesday,
October 7, 1998 at 11:00 a.m., or at any adjournment of the meeting, to consider
and vote upon the following matters, as explained more fully in the accompanying
Proxy Statement:
1. To elect the Board of Directors.
2. To ratify a proposal to approve the Company's 1998 Stock Option Plan.
3. To ratify the selection of BDO Seidman, independent certified public
accountants, as the Company's independent auditors for the year ending
April 30, 1999.
4. To transact any other business that properly comes before the meeting
or any adjournments or postponements of the meeting.
Only shareholders of record at the close of business on August 25, 1998
are entitled to notice of and to vote at the Annual Meeting. Shareholders who
are unable to attend the Annual Meeting are requested to complete, date and
return the enclosed form of proxy promptly in the envelope provided.
Shareholders who attend the annual meeting may revoke their proxy and
vote their shares in person.
Ann P. Campbell
Secretary
Newport News, Virginia, U.S.A.
September 11, 1998
<PAGE>
THE FLIGHT INTERNATIONAL GROUP, INC.
Newport News/Williamsburg International Airport
Newport News, Virginia 23602
PROXY STATEMENT
GENERAL INFORMATION
Proxy Solicitation
This Proxy Statement is mailed to holders ("Shareholders") of shares of
the New Common Stock, par value $.01 per share ("Common Stock") of The Flight
International Group, Inc., a Georgia corporation (the "Company"), in connection
with the solicitation of proxies by the Board of Directors of the Company for
use at the Annual Meeting of Shareholders to be held on October 7, 1998, at
11:00 A.M. local time, at Newport News/Williamsburg International Airport,
Newport News, Virginia, and at any adjournments of the meeting (the "Annual
Meeting").
At the Annual Meeting the Shareholders will vote upon: (1) the election
of five directors; (2) the ratification of the Company's 1998 Stock Option Plan;
and (3) the ratification of the selection of BDO Seidman, independent certified
public accountants, as the Company's independent auditors for the year ending
April 30, 1999. Management currently is not aware of any other matters which
will come before the Annual Meeting. If any other matters properly come before
the Annual Meeting, the persons designated as proxies intend to vote in
accordance with their judgment on such matters.
Proxies for use at the Annual Meeting are being solicited by the Board
of Directors of the Company. These proxy materials are first being mailed to
Shareholders on or about September 11, 1998. Proxies will be solicited primarily
by mail. Certain officers, directors, employees and agents of the Company, none
of whom will receive additional compensation for such efforts, may solicit
proxies by telephone, facsimile, electronic mail or other personal contact. The
Company will bear the cost of soliciting proxies, including postage, printing
and handling, and will reimburse the reasonable expenses of brokerage firms and
others for forwarding material to beneficial owners of shares of Common Stock.
Proposals of Shareholders intended to be presented at the Company's
1999 Annual Meeting must be received at the Company's offices at Newport
News/Williamsburg International Airport, Newport News, VA 23602, Attention: Ann
P. Campbell, Corporate Secretary, no later than July 1, 1999, to be considered
for inclusion in the proxy statement and form of proxy for that meeting.
Revocability and Voting of Proxy
A form of proxy for use at the Annual Meeting and a return envelope
for the proxy are enclosed. Shares represented by duly executed proxies will be
voted in accordance with Shareholders' instructions. If you sign the proxy, but
do not fill in a vote, your shares will be voted in accordance with the
Directors' recommendations. Any proxy may be revoked by a shareholder
prior to its exercise upon written notice to the Secretary of the
Company, or by a Shareholder voting
<PAGE>
in person at the Annual Meeting.
Record Date and Voting Rights
Shareholders of record at the close of business on August 25, 1998 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting and
any adjournment(s) thereof. On the Record Date, the Company had outstanding and
entitled to vote at the Annual Meeting 1,013,976 shares of Common Stock.
Shareholders as of the Record Date will be entitled to one vote for each share
held, with no shares having cumulative voting rights. The holders of a majority
of the outstanding shares of Common Stock, present in person or by proxy and
entitled to vote, will constitute a quorum at the Annual Meeting. Shares of
Common Stock are counted for quorum purposes if they are represented for any
purpose at the Annual Meeting other than solely to object to holding the Annual
Meeting or transacting business at the Annual Meeting. Assuming a quorum is
present, for the election of directors a plurality of the shares voting must
vote in the affirmative. The approval of any other matter coming before the
Annual Meeting (including Proposals 2 and 3) requires that a majority of the
shares voting must vote in the affirmative. Abstentions and broker non-votes are
neither counted for purposes of determining the number of affirmative votes
required for approval of proposals nor voted for or against matters presented
for Shareholder consideration. Consequently, so long as a quorum is present,
abstentions and broker non-votes have no effect on the outcome of any vote.
BENEFICIAL OWNERSHIP OF COMMON STOCK BY
CERTAIN STOCKHOLDERS AND MANAGEMENT
The following table sets forth information as of August 15, 1998,
regarding the beneficial ownership of the Company's Common Stock of (i) each
person known by the Company to own beneficially more than 5% of the Company's
outstanding Common Stock, (ii) each director of the Company, and (iii) all
directors and executive officers of the Company as a group. Except as otherwise
specified, the named beneficial owner has sole voting and investment power.
2
<PAGE>
<TABLE>
<CAPTION>
Name and Amount and
Address of Nature of
Beneficial Beneficial
Owner Ownership Percent of Class
- ---------- ---------- ----------------
<S> <C> <C>
David E. Sandlin 243,000 (1) 23.10%
c/o The Flight International Group, Inc.
Newport News/Williamsburg
International Airport
Newport News, Virginia 23602
Wayne M. Richmon 55,000 5.42%
c/o The Flight International Group, Inc.
Newport News/Williamsburg
International Airport
Newport News, Virginia 23602
David Sharp 1 *
c/o The Flight International Group, Inc.
Newport News/Williamsburg
International Airport
Newport News, Virginia 23602
Gary D. Reinhart - 0 - ---
c/o The Flight International Group, Inc.
Newport News/Williamsburg
International Airport
Newport News, Virginia 23602
Ann P. Campbell - 0 - ---
c/o The Flight International Group, Inc.
Newport News/Williamsburg
International Airport
Newport News, Virginia 23602
C. Lofton Fouts, Jr. - 0 - ---
6690 Knollwood Circle
Douglasville, GA 30135
John R. Bone 145,000 14.30%
P.O. Box 217, 3 East Broad St.
Newman, GA 30263
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
Vice Admiral Richard M. Dunleavy (Ret.) - 0 - ---
2220 Sandpiper Road
Virginia Beach, VA 23456
Flight Partners Limited., L.P. ("FPP") 60,000 5.92%
c/o Lincolnshire Management, Inc.
780 Third Avenue
New York, NY 10017
Attention: Mr. William F. Wolffer, Jr.
Michigan National Bank 103,985 10.26%(2)
2777 Inkster Road
Mail Code 10-60
Farmington Hills, MI 48334-5326
Attention: Otto Wilhelm, Vice President
SouthTrust Bank of Alabama, N.A. 105,435 10.40%(2)
112 N. 20th Street, 3rd Floor
Birmingham, AL 35203
Attention: Mr. Lee Brown, Senior V.P.
First Tennessee National Bank Assn. 54,073 5.33%(2)
Box 84
Memphis, TN 38101
Attention: Gary Rick, Vice President
LeasePlan USA, Inc. 61,341 6.05%(2)
180 Interstate North Parkway, Suite 400
Atlanta, GA 30339
Attention: John Stasiowski, Vice President
ALL DIRECTORS AND
EXECUTIVE OFFICERS
AS A GROUP (8 individuals) 443,001 42.11%
------- ------
</TABLE>
* Represents less than a one percent interest.
(1) Includes shares underlying 38,000 currently exercisable options to purchase
shares of common stock.
(2) Pursuant to the Company's Amended Plan of Reorganization approved with
the U.S. Bankruptcy Court (the "Plan"), 510,000 shares of New Common Stock
were issued to unsecured creditors and certain other claimants of the
Chapter 11 Entities, including these shareholders. The Company disputed,
however, claims to approximately 200,000 of such shares to certain
creditors. As of the date of filing of this Annual Report, as indicated
above, the Company has resolved all such disputed claims, subject to final
paperwork in one case.
4
<PAGE>
PROPOSAL NUMBER 1
ELECTION OF FIVE DIRECTORS
Five directors are to be elected at the Annual Meeting. James Lingan,
previously a member of the Board of Directors, died in March 1998. The Board of
Directors intends to fill this vacancy in accordance with the By-laws of the
Company, and in the interim will operate with five directors. Unless otherwise
specified, the enclosed proxy will be voted in favor of the persons named below
to serve until the next annual meeting of shareholders and until their
successors have been duly elected and qualified. If any of these nominees
becomes unavailable for any reason, or if a vacancy should occur before the
election, the shares represented by the proxy will be voted for the person, if
any, who is designated by the Board of Directors to replace the nominee or to
fill the vacancy on the Board. All nominees have consented to be named and have
indicated their intent to serve if elected. The Board of Directors has no reason
to believe that any of the nominees will be unable to serve or that any vacancy
on the Board of Directors will occur.
The nominees, their ages, the year in which each became a director and
their positions with the Company are as follows:
<TABLE>
<CAPTION>
Name Age Date of Election Position
- ---- --- ---------------- --------
<S> <C> <C> <C>
David E. Sandlin 54 March 30, 1994 Chairman, President,
Director
Wayne M. Richmon 41 February 13, 1995 Executive Vice President,
Treasurer, Chief Financial
Officer, Director
C. Lofton Fouts, Jr. 66 February 13, 1995 Director
John R. Bone 47 February 13, 1995 Director
Vice Admiral Richard M. Dunleavy (Ret.) 65 May 24, 1995 Director
</TABLE>
Each nominee's business experience during the past five years is
described below:
David E. Sandlin. Mr. Sandlin has been Chairman, President and a
Director of the Company and its subsidiaries since March 30, 1994, and was
formerly President of Flight International's Sales and Leasing Division.
Mr. Sandlin has been involved in aircraft marketing and management since 1978.
He has worked in various capacities for Cessna and Dassault and has extensive
experience with Learjets. In 1990 he founded DESCO Aviation Consultants
International ("DESCO") and is an officer, director and 50% shareholder of
Maritime Sales & Leasing, Inc. ("Maritime"), a major lessor of turbine
aircraft. Maritime has leased a total of 16 aircraft to FII, a subsidiary of
the Company. Mr. Sandlin also is a one-third owner of The Aviation Company
("TAC"), which has leased one aircraft to the Company. See "Certain
Relationships and Related Transactions."
5
<PAGE>
Wayne M. Richmon. Mr. Richmon, Executive Vice President, Treasurer,
Chief Financial Officer and Director, joined the Company in 1992, and is
responsible for finance, corporate administration, human resources, management
information services and contract administration. Prior to joining the Company,
he served previously as Chief Financial Officer for American Systems Engineering
Company and held management positions at two national "big six" accounting
firms, specializing in government contract and consulting services. Mr. Richmon
is a CPA registered in the State of Virginia.
C. Lofton Fouts, Jr. Mr. Fouts, Director, has been involved in the
aviation industry for 29 years. He wrote the original Piper Flite Center
training syllabus, the first standardized flight program used nationwide in the
general aviation industry. In 1988, Mr. Fouts formed Lofton Fouts & Associates,
Inc., a general aviation consulting business specializing in sales, acquisitions
and mergers of fixed base operations and related aviation businesses.
John R. Bone. Mr. Bone, Director, is President of Global Jet, a
corporate aircraft sales and brokerage firm, and is an officer, director and 50%
shareholder of Maritime. Mr. Bone studied aeronautical engineering at Northrup
University. He is an A&P mechanic, has worked as Chief Pilot for major U.S.
companies and currently is a pilot with a major United States airline. Global
Jet, with Mr. Bone, has been instrumental in developing the fleet of Learjets
for Phoenix Air Group, a competitor of FII. See "Certain Relationships and
Related Transactions."
Vice Admiral Richard M. Dunleavy (Ret.). Admiral Dunleavy, Director,
was formerly Assistant Chief of Naval Operations (Air Warfare). Admiral Dunleavy
joined the Staff of the Chief of Naval Operations in 1976. From 1978 to 1979 he
was Commanding Officer of the USS Ponchatoula and assumed command of the USS
Coral Sea in 1979. In 1981 he was selected as Commander of U.S. Naval Forces in
the Philippines and later became Commander, Carrier Group FOUR/Commander
Striking Force Atlantic. From 1986 to 1989 he was Commander, Naval Air Force,
U.S. Atlantic Fleet. Admiral Dunleavy's military awards include a Distinguished
Service Medal, three Legions of Merit, eight Air Medals and four Navy
Commendation Medals.
Compliance With Section 16(a) of the Exchange Act
The Company believes that all required Forms 3 and 4 were furnished to
the registrant during the fiscal year ended April 30, 1998.
Board of Directors Meetings
During the fiscal year ended April 30, 1998, there was one meeting of
the Company's Board of Directors. Mr. Bone did not attend this meeting.
The Board of Directors does not have standing audit, nominating or
compensation committees. Approval of the annual audit is completed by management
and the Board of Directors. Nominations are made by the Board of Directors
as a whole. Any Shareholder interested in nominating a director should see
"Submission of Shareholder Proposals" below. The Board of Directors as a whole
determines the compensation of the Company's executive officers.
6
<PAGE>
Executive Compensation
The following table reflects the aggregate cash compensation, including bonuses
and deferred compensation, for services in all capacities to the Company during
the fiscal years ended April 30, 1998, 1997 and 1996 for the Chief Executive
Officer of the Company. No other executive officer of the Company had aggregate
remuneration exceeding $100,000.
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
Other
Annual Other
Name, Principal Position Year Salary Comp. Compensation
- ------------------------ ---- ------ ------ ------------
<S> <C> <C> <C> <C>
David E. Sandlin(4) 1998 $110,728(1) (2) $31,920(3)
Chairman, President 1997 $110,000(1) (2) $13,700(3)
1996 $100,000(1) (2) $ 962
</TABLE>
(1) Pursuant to an Employment Agreement, dated as of January 3, 1995, by
and between the Company and David E. Sandlin, as amended to date (the
"Sandlin Agreement"), Mr. Sandlin received a salary at an annual rate
of $100,000 from the effective date of such agreement through the end
of the fiscal year ended April 30, 1996, $110,000 during the fiscal
year ended April 30, 1997 and $110,000 during the fiscal year ended
April 30, 1998. See "Employment Agreements," below.
(2) The Sandlin Agreement and Mr. Sandlin's employment arrangement prior to
entering into the Sandlin Agreement provides for certain perquisites,
including an apartment in Newport News, Virginia, travel costs to and
from his home in Atlanta, Georgia and an automobile in Newport News.
The aggregate cost of these items for the fiscal year ended April 30,
1998 was $30,079; for the fiscal year ended April 30, 1997, $25,280;
and for the fiscal year ended April 30, 1996, $25,081.
(3) Mr. Sandlin was issued 10,000 shares of Common Stock in January 1997
as compensation. The valuation of such shares is an estimate by the
Company. There is no current active trading market in the Company's
securities. Mr. Sandlin also was granted 38,000 options to purchase
shares of Common Stock, at an exercise price of $2.00 or an aggregate
of $76,000 for all such shares, on March 9, 1998, which options were
valued at $.84 per option. See "Employment Agreements," below.
(4) Mr. Sandlin is an officer, director and 50% shareholder of Maritime.
Maritime has leased a total of 16 aircraft to FII, a subsidiary of the
Company. Mr. Sandlin is also a one-third owner of TAC, which has
leased one aircraft to the Company). The Company does not believe that
any of the foregoing constituted compensation to Mr. Sandlin, but
makes this disclosure for the sake of completeness. See, "Certain
Relationships and Related Transactions."
7
<PAGE>
The Flight International Group, Inc. 401(k) Plan
The Flight International Group, Inc. 401(k) Plan (the "401(k) Plan") is
a defined contribution plan sponsored by the Company. The 401(k) Plan covers all
eligible employees of the Company. Employees become eligible to participate upon
completing one year of service in a job classification not subject to a
collective bargaining agreement. One year of service is defined as any
consecutive 12 month period in which the employee works 1,000 hours.
Participants may elect to have 1% to 15% of their compensation
contributed to the 401(k) Plan, up to the maximum allowed by law. Contributions
to the 401(k) Plan are matched by the Company at the rate of 40% of the first 5%
of employees' contributions. On August 12, 1998, the Board of Directors approved
an increase permitting the Company to match contributions at the rate of up to
50% of the first 6% of employees' contributions. All employee contributions,
rollover contributions and earnings thereon are 100% vested. Company
contributions vest at a rate of 20% per year. The participant may designate his
contribution and employer matching contributions to be invested in any
combination of eight funds maintained by the Trustee. After a participant dies
or retires, the participant or his beneficiary is entitled to receive the entire
vested balance of his account. The Company reserves the right to amend or
terminate the 401(k) Plan at any time. If the 401(k) Plan is terminated, each
participant is then vested with the amount in his account. The Company
contributed $45,785 and $31,921 to the 401(k) Plan in fiscal years 1998 and
1997, respectively.
The 401(k) Plan has received a determination letter from the Internal
Revenue Service exempting it from Federal income taxes.
Directors' Compensation
Directors who are not members of management or affiliates thereof
receive $1,000 for each Board meeting attended, plus out-of-pocket expenses
incurred in connection with such attendance. Members of management and
affiliates thereof who are directors do not receive separate compensation
therefor.
Employment Agreements
The Sandlin Agreement
The Sandlin Agreement continues for a term which expires December 31,
2001, provided that the Sandlin Agreement is renewed automatically from year to
year thereafter unless either party gives notice of termination. Mr. Sandlin's
base salary was previously $100,000 per year (subject to increases by the Board
of Directors taking into consideration certain factors specified therein). On
September 17, 1996, the Board of Directors approved the extension of the Sandlin
Agreement through December 31, 2001, as well as a raise in Mr. Sandlin's base
salary to $110,000, with 10% annual base salary increases. Separate from the
Sandlin Agreement, the Board also approved (i) issuing to Mr. Sandlin, as
compensation, 10,000 shares of Common Stock, which were issued in January 1997
and (ii) granting to Mr. Sandlin, as compensation, options to purchase 38,000
shares of Common Stock, exercisable at $2.00 per share or an aggregate of
$76,000 for all such shares.
8
<PAGE>
Mr. Sandlin is reimbursed for all necessary and reasonable expenses
incurred in performing under the Sandlin Agreement and certain other expenses
specified therein (including without limitation for the cost of an apartment and
automobile for his use in Newport News, Virginia and his travel expenses to and
from his home in Atlanta, Georgia and Newport News). He is also entitled to
participate in any benefit programs which the Company may establish.
The Company may terminate the Sandlin Agreement for "cause" (as defined
therein), in the event of the death or disability of Mr. Sandlin or at any time
after delivery to Mr. Sandlin of a written notice of termination. Mr. Sandlin
may terminate the Sandlin Agreement on sixty (60) days written notice for, among
other things, a reduction in his base salary below that in existence upon
signing (or other material breach by the Company), the relocation of the
Company's offices and the assignment of duties inconsistent with his position or
material adverse alteration in the nature or status of his responsibilities or
conditions of employment (including without limitation material reductions in
vacation or material increase in overnight travel obligations not reasonably
required).
In the event that the Sandlin Agreement is terminated by the Company
for cause or in the event of death or disability, or in the event Mr. Sandlin
terminates the Sandlin Agreement other than in connection with a change in
control, Mr. Sandlin receives his salary, expense reimbursements and other
benefits through the date of termination, in addition to any applicable
insurance benefits.
In the event of a termination by the Company not for cause, death or
disability, or in the event Mr. Sandlin terminates the Sandlin Agreement in
connection with a change in control, Mr. Sandlin receives the amounts described
above plus a lump sum severance payment equal to the sum total of all base
salary due to him for the remainder of his agreement, at the rate in effect at
the time notice of termination is given. In this circumstance, the Company, for
one year after termination, also will provide Mr. Sandlin with life and health
insurance benefits substantially similar to those he was receiving immediately
prior to the notice of termination. A change in control is deemed to have
occurred in the event of a sale of the Company or merger of the Company with
another business pursuant to which any person or entity other than certain
specified entities (these are Maritime, Global Jet, Phoenix Air Group and DESCO,
Aviation Consultants) become beneficial owners of capital stock of the Company.
The Sandlin Agreement prohibits Mr. Sandlin, during the term of the
Sandlin Agreement and for one year thereafter, from serving as an employee,
owner, partner, agent, director, officer, consultant or shareholder (except
ownership of 5% or less of most public companies) of a business which is
materially in competition with the business of the Company, but this provision
can be modified by formal resolution of at least 75% of the Board of Directors
(excluding Mr. Sandlin). The Company agrees to indemnify Mr. Sandlin against
reasonable expenses, liabilities and losses incurred or suffered by him in
connection with his service to the Company.
9
<PAGE>
Employment Agreement with Wayne M. Richmon
The Company also has entered into an Employment Agreement with Wayne M.
Richmon, its Executive Vice President, Treasurer and Chief Financial Officer,
dated as of January 3, 1995 (the "Richmon Agreement"). The Richmon Agreement
continues for a term which expires December 31, 1998, provided that the Richmon
Agreement is renewed automatically from year to year thereafter unless either
party gives notice of termination. Mr. Richmon's base salary was previously
$80,000 per year (subject to increases by the Board of Directors taking into
consideration certain factors specified therein). On September 17, 1996, the
Board of Directors approved a raise in Mr. Richmon's base salary to $88,000.
Upon each automatic renewal, Mr. Richmon's base salary increases 10% per annum.
The Board also approved issuing to Mr. Richmon, as compensation, 5,000 shares
of Common Stock, which were issued in January 1997.
Mr. Richmon is reimbursed for all necessary and reasonable expenses
incurred in performing under the Richmon Agreement and certain other expenses
specified therein. He is also entitled to participate in any benefit programs
which the Company may establish.
The Company may terminate the Richmon Agreement for "cause" (as defined
therein), in the event of the death or disability of Mr. Richmon or at any time
after delivery to Mr. Richmon of a written notice of termination. Mr. Richmon
may terminate the Richmon Agreement on sixty (60) days written notice for, among
other things, a reduction in his base salary below (or other material breach by
the Company), the relocation of the Company's offices and the assignment of
duties inconsistent with his position or material adverse alteration in the
nature or status of his responsibilities or conditions of employment.
In the event that the Richmon Agreement is terminated by the Company
for cause or in the event of death or disability, or in the event Mr. Richmon
terminates the Richmon Agreement other than in connection with a change in
control, Mr. Richmon receives his salary, expense reimbursements and other
benefits through the date of termination, in addition to any applicable
insurance benefits.
In the event of a termination by the Company not for cause, death or
disability, or in the event Mr. Richmon terminates the Richmon Agreement in
connection with a change in control, Mr. Richmon receives the amounts described
above plus a lump sum severance payment equal to 100% of his annual base salary
at the rate in effect at the time notice of termination is given. In this
circumstance, the Company, for one year after termination, also will provide Mr.
Richmon with life and health insurance benefits substantially similar to those
he was receiving immediately prior to the notice of termination. A change in
control is deemed to have occurred in the event of a sale of the Company or
merger of the Company with another business pursuant to which any person or
entity becomes beneficial owner of capital stock of the Company.
The Richmon Agreement prohibits Mr. Richmon, during the term of the
Richmon Agreement and for one year thereafter, from serving as an employee,
owner, partner, agent, director, officer, consultant or shareholder
(except ownership of 5% or less of most public companies) of a business
which is materially in competition with the business of the Company.
The Company agrees to
10
<PAGE>
indemnify Mr. Richmon against reasonable expenses, liabilities and losses
incurred or suffered by him in connection with his service to the Company.
Certain Relationships and Related Transactions
Mr. Sandlin is an officer, director and 50% shareholder of Maritime, a
major lessor of turbine aircraft. Maritime has leased a total of 16 aircraft to
FII at a total cost to FII of $2,696,000 for the fiscal year ended April 30,
1998. The Company believes the financial and other arrangements between FII and
Maritime are reasonable and fair and similar to arrangements which would have
been made in an arm's length transaction between FII and an unaffiliated third
party. The Company does not believe that Mr. Sandlin's relationship with
Maritime materially interferes with his ability to fully perform his obligations
to the Company as a director, officer and employee.
Mr. Sandlin is also a one-third owner of TAC, which has leased one Casa
235 aircraft to the Company. In anticipation of a project to send Casa 235
aircraft to Bahrain, the Company sought to lease a plane from TAC. In
expectation of this lease, TAC purchased the aircraft intended for the lease.
Thereafter, this project was eliminated due to DOD budget cutting. However, the
aircraft was leased to the Company in January, 1996. As of April 30, 1998, the
Company had not found a full time use for the aircraft. Prior to April 30, 1996,
this situation had been causing harm to its cash flow. On April 30, 1998 the
lease was modified from $60,000 per month to $500 per hour flown. This has
substantially reduced the cost of carrying this aircraft, although certain other
significant expenses, such as insurance and other maintenance, continue.
However, for the six months during the fiscal year ended April 30, 1998, TAC
arranged for the use of this aircraft by a third party which third party, bore
all of the expenses related to this aircraft during such period. There are no
assurances that any such arrangement will continue. The Company believes that
the financial and other arrangements between FII and TAC are reasonable and
fair and similar to arrangements which would have been made in an arm's length
transaction between FII and an unaffiliated third party.
Mr. Bone is an officer, director and 50% shareholder of Maritime. In
addition, Mr. Bone is the sole shareholder, director and officer of Global Jet
("Global Jet"), which, with Mr. Bone, has been instrumental in developing the
fleet of Learjets for Phoenix Air Group, a competitor of FII. The Company does
not believe that Mr. Bone's relationships with Maritime and Global Jet
materially interfere with Mr. Bone's ability to fully perform his obligations
to the Company as a director.
On August 12, 1998, the Company entered into a Joint Venture Agreement
with Maritime, pursuant to which the Company will undertake major repairs to a
certain aircraft owned by Maritime, with the intention of selling such aircraft.
The Company will be paid for its repairs if the aircraft is sold or leased. If
the aircraft is sold, the net proceeds of sale (after reimbursement to Maritime
and the Company of their respective costs) shall be split equally between
Maritime and the Company. In the alternative, the Company may lease the aircraft
from Maritime, in which case the Company will be paid for its costs, plus a
markup which it customarily obtains in repairs to Maritime, and the Company
will not participate in the proceeds of any future sale. Finally, if Maritime
leases the aircraft to a third party, the Company will be paid for its costs,
plus its customary retail markup, and the Company will not participate in the
proceeds of any future sale.
11
<PAGE>
The Board of Directors of the Company currently requires approval or
ratification by the Board of all related party transactions.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE "FOR"
THE ELECTION OF ALL FIVE NOMINEES FOR DIRECTOR.
PROPOSAL 2: APPROVAL OF 1998 STOCK OPTION PLAN
On August 12, 1998, the Company adopted the The Flight International
Group 1998 Stock Option Plan (the "Option Plan") by the Board of Directors,
subject to approval by the Shareholders. The full text of the Plan is provided
in Exhibit A to this Proxy Statement. The discussion which follows summarizes
features of the Option Plan, provides full information concerning the options
heretofore granted, and also provides information concerning other matters
relevant to the proposal to approve the Option Plan (and therefore, effectively
those options). The summary information below should be read in conjunction
with Exhibit A, which Shareholders are advised to review in its entirety in
connection with their deliberations upon this proposal.
The Option Plan will be administered by the Board of Directors (or by
a committee of the Board of Directors, if one is appointed for this purpose),
provided that members of the Board of Directors who are either eligible for
Awards (as defined below) or have been granted Awards may not vote on any
matters affecting the administration of the Plan or the grant of any Award
pursuant to the Plan if required pursuant to Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Option Plan provides for the granting of incentive stock options
(within the meaning of Section 422 of the Code) and nonqualified stock options
(individually, an "Award" or collectively, "Awards"), to those officers or other
key employees, directors or consultants, with potential to contribute to the
future success of the Company or its subsidiaries, provided, that only employees
may be granted incentive stock options. The Board of Directors has discretion to
select the persons to whom Awards will be granted (from among those eligible),
to determine the type, size and terms and conditions applicable to each Award
and the authority to interpret, construe and implement the provisions of the
Option Plan. Notwithstanding the foregoing, with respect to incentive stock
options, the aggregate fair market value (determined at the time such Award is
granted) of the shares of Common Stock with respect to which incentive stock
options are exercisable for the first time by such employee during any calendar
year shall not exceed $100,000 under all plans of the employer corporation or
its parent or subsidiaries. The Board of Directors' decisions are binding on the
Company and persons eligible to participate in the Option Plan and all other
persons having any interest in the Option Plan. It is presently anticipated that
approximately six individuals initially will participate in the Option Plan.
The total number of shares of Common Stock that may be subject to
Awards under the
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Option Plan is 500,000, subject to adjustment in accordance with the terms of
the Option Plan. Common Stock issued under the Option Plan may be either
authorized but unissued shares, treasury shares or any combination thereof.
To the fullest extent permitted under Rule 16b-3 under the Exchange Act and
Sections 162(m) and 422 of the Code, any shares of Common Stock subject to an
Award which lapses, expires or is otherwise terminated prior to the issuance of
such shares may become available for new Awards.
The Company has not yet granted any Awards under the Option Plan.
Options to purchase Common Stock granted as Awards ("Options"), which
may be nonqualified or incentive stock options, may be granted under the Option
Plan at an exercise price (the "Option Price") determined by the Board of
Directors in its discretion, provided, that the Option Price of incentive stock
options may be no less than the fair market value of the underlying Common Stock
on the date of grant (or 110% of fair market value in the case of an incentive
stock option granted to a ten percent shareholder).
Options will expire not later than ten years after the date on which
they are granted. Options become exercisable at such times and in such
installments as determined by the Board of Directors. Notwithstanding the
foregoing, however, each Option shall, except as otherwise provided in the stock
option agreement between the Company and an optionee, become exercisable in full
for the aggregate number of shares covered thereby unconditionally on the first
day following the occurrence of any of the following: (a) the approval by the
shareholders of the Company of an Approved Transaction; (b) a Control Purchase;
or (c) a Board Change (each as defined below).
For purposes of the Option Plan, (i) an "Approved Transaction" shall
mean (A) any consolidation or merger of the Company in which the Company is not
the continuing or surviving corporation or pursuant to which shares of Common
Stock would be converted into cash, securities or other property, other than a
merger of the Company in which the holders of Common Stock immediately prior to
the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or (B) any sale, lease,
exchange, or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company, or (C)
the adoption of any plan or proposal for the liquidation or dissolution of the
Company; (ii) a "Control Purchase" shall mean circumstances in which any person
(as such term is defined in Sections l3(d)(3) and l4(d)(2) of the Exchange Act),
corporation or other entity (other than the Company or any employee benefit plan
sponsored by the Company or any subsidiary of the Company) (x) shall purchase
any Common Stock of the Company (or securities convertible into the Company's
Common Stock) for cash, securities or any other consideration pursuant to a
tender offer or exchange offer, without the prior consent of the Board of
Directors, or (y) shall become the "beneficial owner" (as such term is defined
in Rule l3d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing twenty-five percent (25%) or more of the combined
voting power of the then outstanding securities of the Company ordinarily (and
apart from rights accruing under special circumstances) having the right to vote
in the election of directors (calculated as provided in paragraph (d) of such
Rule l3d-3 in the case of rights to acquire the Company's securities), and (iii)
A "Board Change" shall mean circumstances in which, during any period of two
consecutive years or less, individuals who at the beginning of such period
constitute
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the entire Board shall cease for any reason to constitute a majority thereof
unless the election, or the nomination for election by the Company's
shareholders, of each new director was approved by a vote of at least a
majority of the directors then still in office.
In the event that dividends are payable in Common Stock or in the event
there are splits, subdivisions or combinations of shares of Common Stock, the
number of shares available under the Option Plan shall be increased or decreased
proportionately, as the case may be, and the number of shares delivered upon the
exercise thereafter of any Option theretofore granted or issued shall be
increased or decreased proportionately, as the case may be, without change in
the aggregate purchase price.
In the event that an Option holder ceases to be an employee for any
reason other than permanent disability, retirement under certain circumstances
(as determined by the Board of Directors) or death, any Option, including any
unexercised portion thereof, which was otherwise exercisable on the date of
termination, shall automatically terminate upon the date on which the Option
holder ceased to be so employed. In the event of the termination of an Option
holder's employment resulting from retirement or permanent disability of the
Option holder while an employee, any Option granted to such employee shall be
exercisable for one (l) year after the date of termination of employment due to
permanent disability, but in no event after the expiration of the exercise
period. In the event of the death of an Option holder while an employee, or
during the one (l) year period after the date of termination of employment due
to retirement or permanent disability of the Option holder, that portion of the
Option which had become exercisable on the date of death shall be exercisable by
his or her personal representatives, heirs or legatees at any time prior to the
expiration of one (l) year from the date of the death of the Option holder, but
in no event after the expiration of the exercise period.
The Board of Directors may at any time alter, amend, suspend or
discontinue the Option Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any recipient of
an Option under any agreement theretofore entered into under the Option Plan,
without his consent, or which, without the requisite vote of the shareholders
of the Company approving such action, would:
(a) except as is provided in the Option Plan, increase the total
number of shares of stock reserved for the purposes of the Option Plan; or
(b) extend the duration of the Option Plan; or
(c) materially increase the benefits accruing to participants under
the Option Plan; or
(d) change the category of persons who can be eligible participants
under the Option Plan. Without limiting the foregoing, the Board of Directors
may, any time or from time to time, authorize the Company, without the consent
of the respective recipients, to issue new Options in exchange for the surrender
and cancellation of any or all outstanding Options.
Shareholder approval of the Option Plan is not required by Georgia
corporate law. However,
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shareholder approval is required in order for incentive stock options to be
granted under the Option Plan. Accordingly, the Option Plan has been adopted by
the Board subject to Shareholder approval at the Annual Meeting, and all Options
previously granted under the Option Plan also have been granted subject to such
approval. If the proposal to approve the Option Plan is not carried at the
Annual Meeting, all Options under the Option Plan then outstanding automatically
will be canceled, and no further grants will be made under the Option Plan.
The proposal to approve the Option Plan will be carried if a majority
of the shares of Common Stock entitled to vote and actually voted upon the
proposal at the Annual Meeting are voted "for" the proposal, provided that the
total number of shares voted against the proposal equals a majority of all
common shares entitled to vote. For this purpose, any shares for which an
abstention or broker non-vote is registered will not be considered to have been
voted upon the proposal.
THE BOARD OF DIRECTORS OF THE COMPANY DEEMS PROPOSAL NUMBER
2 TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS
AND RECOMMENDS A VOTE "FOR" ITS APPROVAL.
PROPOSAL NUMBER 3
ELECTION OF AUDITORS
The Shareholders will be asked to ratify the appointment of the firm
of BDO Seidman, independent certified public accountants, as auditors of the
Company for the fiscal year ended April 30, 1999. A representative of BDO
Seidman will be present at the Annual Meeting, have an opportunity to make a
statement if he so desires, and be available to respond to appropriate questions
from Shareholders.
THE BOARD OF DIRECTORS OF THE COMPANY DEEMS PROPOSAL NUMBER
3 TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND
RECOMMENDS A VOTE "FOR" ITS APPROVAL.
The Board of Directors is not aware that any matters other than those
set forth herein will come before the Annual Meeting. Should any matters
requiring the vote of the Shareholders arise, it is intended that shares
represented by proxies will be voted in respect thereof in accordance with the
direction of the person or persons holding the proxy.
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Submission of Proposals of Shareholders
Proposals of Shareholders intended to be presented at the Company's
1999 Annual Meeting of Shareholders must be received at the Company's offices at
Newport News/Williamsburg Airport, Newport News, Virginia 23602, Attention: Ann
P. Campbell, Corporate Secretary, no later than July 1, 1999, to be considered
for inclusion in the proxy statement and form of proxy for that meeting.
Annual Report
The Annual Report of the Company for the fiscal year ended April 30,
1998, including audited financial statements, is enclosed with this proxy
statement, but is not a part of the proxy solicitation material. The exhibits
to the Form 10-KSB of the Company for the fiscal year ended April 30, 1998, as
amended to date, which the Annual Report includes, are not included with this
proxy statement; however, the Company is willing to supply copies of such
exhibits (to the extent not accepted for confidential treatment) upon written
request to the Company.
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EXHIBIT A
1998 STOCK OPTION PLAN OF
THE FLIGHT INTERNATIONAL GROUP, INC.
AUGUST 12, 1998
l. PURPOSE OF THE PLAN
The purpose of the 1998 Stock Option Plan (the "Plan") of THE FLIGHT
INTERNATIONAL GROUP, INC. (the "Company") is to provide an incentive to
employees, directors and consultants whose present and potential contributions
to the Company and its Subsidiaries (as such term is defined in Section 2 below)
are or will be important to the success of the Company by affording them an
opportunity to acquire a proprietary interest in the Company. It is intended
that this purpose will be effected through the issuance of stock options to
purchase shares of New Common Stock, $.01 par value per share, of the Company
("Common Stock") (such options are sometimes referred to herein as "Awards").
Stock options may be granted under the Plan which qualify as "Incentive Stock
Options" ( "ISO" or collectively as "ISOs") under Section 422 of the Internal
Revenue Code of l986, as it may be hereafter amended (the "Code") as well as
"Nonqualified Stock Options" ("NQSO" or collectively as "NQSOs") which are any
options that are not Incentive Stock Options.
2. ELIGIBILITY
Awards may be made or granted to employees, directors and consultants
of the Company or its Subsidiaries, who are deemed to have the potential to have
a significant effect on the future success of the Company (such eligible persons
being referred to herein as "Eligible Participants"). The term "employees" shall
include officers of the Company or of a Subsidiary. Directors of the Company or
any Subsidiary or consultants who are not employees of the Company or a
Subsidiary are not eligible to receive options which qualify as ISO's. No ISO
shall be granted to an employee who, at the time the option is granted, owns
stock possessing more than l0% of the total combined voting power of all classes
of capital stock of the employer corporation (as such term is used in the Code)
or any Parent or Subsidiary of the employer corporation, provided, however, that
an ISO may be granted to such an employee if at the time such ISO is granted the
option price is at least one hundred ten percent (ll0%) of the fair market value
of stock subject to the ISO on the date of grant (as determined pursuant to
Subsection 8(a) hereof) and such ISO is by its terms not exercisable after the
expiration of five (5) years from the date such option is granted. The terms
"Subsidiary" and "Parent" as used herein shall have the meanings given them in
Section 425 of the Code. Awards may be made to personnel who hold or have held
options or shares under the Plan or any other plans of the Company.
3. STOCK SUBJECT TO THE PLAN
The shares that may be issued upon exercise of options under the Plan
shall not exceed in the aggregate 500,000 shares of the Common Stock, as
adjusted to give effect to the anti-dilution provisions contained in Section 7
hereof. Such shares may be authorized and unissued shares, or shares purchased
by the Company and reserved for issuance under the Plan. If a stock option for
any reason expires or is
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terminated without having been exercised in full, those shares relating to an
unexercised stock option shall again become available for grant and/or sale
under the Plan.
4. ADMINISTRATION
(a) Procedure. The Plan shall be administered by the Board of Directors
or by a Committee of the Board of Directors, if one is appointed for this
purpose (the "Committee"). Committee members shall serve for such term as the
Board of Directors may in each case determine, and shall be subject to removal
at any time by the Board of Directors.
(b) Powers of the Board or Committee. As used herein, except as the
Committee's powers are specifically limited in Sections 4, 5, 15 and 16 hereof,
reference to the Board of Directors shall mean such Board or the Committee,
whichever is then acting with respect to the Plan. Subject to the provisions of
the Plan, the Board of Directors shall have the authority in its discretion: (i)
to determine, upon review of relevant information, the fair market value of the
Common Stock; (ii) to determine the exercise price per share of stock options to
be granted; (iii) to determine the Eligible Participants to whom, and time or
times at which, Awards shall be granted and the number of shares to be issuable
upon exercise of each stock option; (iv) to construe and interpret the Plan; (v)
to prescribe, amend and rescind rules and regulations relating to the Plan; (vi)
to determine the terms and provisions of each Award (which need not be
identical); and (vii) to make all other determinations necessary to or advisable
for the administration of the Plan.
5. DURATION OF THE PLAN
The Plan shall become effective upon the approval of the requisite vote
of the shareholders of the Company, and upon the approvals, if required, of any
other public authorities. The Plan shall remain in effect for a term of ten (10)
years from the date of adoption by the Board unless sooner terminated under
Section 15 hereof. Notwithstanding any of the foregoing to the contrary, the
Board of Directors (but not the Committee) shall have the authority to amend the
Plan pursuant to Section 15 hereof; provided, however, that Awards already made
shall remain in full force and effect as if the Plan had not been amended or
terminated.
6. OPTIONS
Options shall be evidenced by stock option agreements in such form, and
not inconsistent with the Plan, as the Board of Directors shall approve from
time to time, which agreements shall contain in substance the following terms
and conditions:
(a) Types of Options. Both ISOs and NQSOs may be granted. In connection
with the grant of an Option, the Committee shall specify whether the Option is
intended to be an ISO or a Committee shall specify whether the Option is
intended to be an ISO or a NQSO, and the agreement evidencing the Option shall
designate it accordingly. In connection with the grant of any Option intended to
be an ISO, the Committee may prescribe such terms and conditions other than
those specified in the Plan as the Committee deems desirable to qualify the
Option as an incentive stock option under the Code. If for any reason an Option
(or any portion thereof) intended by the Committee to be an ISO nevertheless
does not so qualify shall not invalidate the Option (or such portion), and
instead the disqualified portion (or, if necessary, the whole Option) shall be
deemed to have been granted as a Nonqualified Stock Option irrespective of the
manner in which it is designated in the Option agreement.
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(b) Option Price; Number of Shares. The option price, which shall be
approved by the Board of Directors, shall in no event be less than one hundred
percent (l00%) in the case of ISOs, and eighty-five percent (85%) in the case of
other options, of the fair market value of the Company's Common Stock at the
time the Option is granted. The fair market value of the Common Stock, for the
purposes of the Plan, shall mean: (i) if the Common Stock is traded on a
national securities exchange or on the NASDAQ National Market System ("NMS"),
the per share closing price of the Common Stock on the principal securities
exchange on which they are listed or on NMS, as the case may be, on the date of
grant (or if there is no closing price for such date of grant, then the last
preceding business day on which there was a closing price); or (ii) if the
Common Stock is traded in the over-the-counter market and quotations are
published on the NASDAQ quotation system (but not on NMS), the closing bid price
of the Common Stock on the date of grant as reported by NASDAQ (or if there are
no closing bid prices for such date of grant, then the last preceding business
day on which there was a closing bid price); or (iii) if the Common Stock is
traded in the over-the-counter market but bid quotations are not published on
NASDAQ, the closing bid price per share for the Common Stock as furnished by a
broker-dealer which regularly furnishes price quotations for the Common Stock;
or (iv) if no such quotations are available, as determined in good faith by the
Board of Directors.
The option agreement shall specify the total number of shares to which
it pertains and whether such Options are ISOs or are not ISOs. With respect to
ISOs granted under the Plan, the aggregate fair market value (determined at the
time an ISO is granted) of the shares of Common Stock with respect to which ISOs
are exercisable for the first time by such employee during any calendar year
shall not exceed $l00,000 under all plans of the employer corporation or its
Parent or Subsidiaries.
(c) Waiting Period and Exercise Dates. At the time an Option is
granted, the Board of Directors will determine the terms and conditions to be
satisfied before shares may be purchased, including the dates on which shares
subject to the Option may first be purchased. (The period from the date of grant
of an Option until the date on which such Option may first be exercised, if not
immediately exercisable, is referred to herein as the "waiting period. ") At the
time an Option is granted, the Board of Directors shall fix the period within
which it may be exercised which shall not be less than one (l) year nor more
than ten (l0) years from the date of grant. (Any of such periods is referred to
herein as the "exercise period.")
(d) Form and Time of Payment. Stock purchased pursuant to an option
agreement shall be paid for at the time of purchase either in cash or by
certified check or, in the discretion of the Board of Directors, as set forth in
the stock option agreement (i) in a combination of cash and a promissory note,
(ii) through the delivery of shares of Common Stock, or (iii) in a combination
of the methods described above. Upon receipt of payment, the Company shall,
without transfer or issue tax to the Option holder or other person entitled to
exercise the Option, deliver to the Option holder (or such other person) a
certificate or certificates for the shares so purchased.
(e) Effect of Death or Retirement under Certain Circumstances. If the
grantee of a then - outstanding Option should cease to be an employee of the
Company and its Subsidiaries due to (i) retirement at or after 65, (ii)
retirement at an age not younger than age 55 and with the Company's consent or
pursuant to the disability retirement provisions of a Company-sponsored pension
or profit-sharing plan applicable to the grantee, or (iii) the grantee's death,
the Option thereupon shall become exercisable for the full amount of Shares for
which it has not previously been exercised, regardless of whether all
installments of the Option otherwise would have been exercisable at the time.
Thereafter, the Option shall continue to be exercisable by the grantee (or his
or her administrator or executor or another person who has acquired the right
to exercise the Option by bequest or inheritance or by intervivos gift from the
grantee) until the first anniversary of the
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grantee's employment termination or, if earlier, the expiration date of
the Option.
(f) Effect of Other Employment Termination. If the grantee of a then -
outstanding Option should cease to be an employee of the Company and its
Subsidiaries under any circumstances other than those specified in Section 6(e),
the Option thereupon automatically shall terminate.
(g) Other Provisions. Each Option granted under the Plan may contain
such other terms, provisions, and conditions not inconsistent with the Plan as
may be determined by the Board of Directors.
7. RECAPITALIZATION
In the event that dividends are payable in Common Stock or in the event
there are splits, subdivisions or combinations of shares of Common Stock, the
number of shares available under the Plan shall be increased or decreased
proportionately, as the case may be, and the number of shares delivered upon the
exercise thereafter of any stock option theretofore granted or issued shall be
increased or decreased proportionately, as the case may be, without change in
the aggregate purchase price.
8. ACCELERATION
(a) Notwithstanding any contrary waiting period in any stock option
agreement issued pursuant to the Plan, but subject to any determination by the
Board of Directors to provide otherwise at the time such Award is granted or
subsequent thereto, each outstanding Option granted under the Plan shall, except
as otherwise provided in the stock option agreement, become exercisable in full
for the aggregate number of shares covered thereby unconditionally on the first
day following the occurrence of any of the following: (a) the approval by the
shareholders of the Company of an Approved Transaction; (b) a Control Purchase;
or (c) a Board Change.
(b) For purposes of this Section 8:
(i) An "Approved Transaction" shall mean (A) any consolidation
or merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of Common Stock would be converted into
cash, securities or other property, other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger, or (B) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, or (C) the adoption of any plan or proposal for
the liquidation or dissolution of the Company.
(ii) A "Control Purchase" shall mean circumstances in which
any person (as such term is defined in Sections l3(d)(3) and l4(d)(2) of the
Exchange Act), corporation or other entity (other than the Company or any
employee benefit plan sponsored by the Company or any Subsidiary) (A) shall
purchase any Common Stock of the Company (or securities convertible into the
Company's Common Stock) for cash, securities or any other consideration pursuant
to a tender offer or exchange offer, without the prior consent of the Board of
Directors, or (B) shall become the "beneficial owner" (as such term is defined
in Rule l3d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing twenty-five percent (25%) or more of the combined
voting power of the then outstanding securities of the Company ordinarily (and
apart from rights accruing under special circumstances) having the right to vote
in the election of directors (calculated as provided in paragraph (d) of such
Rule l3d-3 in the case of rights to
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acquire the Company's securities).
(iii) A "Board Change" shall mean circumstances in which,
during any period of two consecutive years or less, individuals who at the
beginning of such period constitute the entire Board shall cease for any reason
to constitute a majority thereof unless the election, or the nomination for
election by the Company's shareholders, of each new director was approved by a
vote of at least a majority of the directors then still in office.
9. CONTINUATION OF RELATIONSHIP; LEAVE OF ABSENCE
(a) Nothing in the Plan or any Award made hereunder shall interfere
with or limit in any way, the right of the Company or of any Subsidiary to
terminate any Eligible Participant's employment at any time, nor confer upon
any Eligible Participant any right to continue any such relationship with the
Company or Subsidiary.
(b) For purposes of the Plan, a transfer of a recipient of Options
hereunder from the Company to a Subsidiary or vice versa, or from one Subsidiary
to another, or a leave of absence duly authorized by the Company shall not be
deemed a termination of employment or a break in the incentive, waiting or
exercise period, as the case may be. In the case of any employee on an approved
leave of absence, the Board of Directors may make such provisions with respect
to continuance of stock rights, Options or restricted shares previously granted
while on leave from the employ of the Company or a Subsidiary as it may deem
equitable.
l0. GENERAL RESTRICTION
Each Award made under the Plan shall be subject to the requirement
that, if at any time the Board of Directors shall determine, in its sole and
subjective discretion, that the registration, qualification or listing of the
shares subject to such Award upon a securities exchange or under any state or
federal law, or the consent or approval of any government regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting or
exercise of such Award, the Company shall not be required to issue such shares
unless such registration, qualification, listing, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Board of
Directors. Nothing in the Plan or any agreement or grant hereunder shall
obligate the Company to effect any such registration, qualification or listing.
11. RIGHTS AS A SHAREHOLDER
The holder of a stock option shall have no rights as a shareholder with
respect to any shares covered by the stock option, until the date of issuance of
a stock certificate to him for such shares related to the exercise thereof. No
adjustment shall be made for the dividends or other rights for which the record
date is prior to the date such stock certificate is issued.
l2. TRANSFER RESTRICTIONS
During the lifetime of the grantee, an option granted under the Plan
may not be sold, assigned, pledged, hypothecated, or otherwise transferred in
any manner, except that the Committee, in its discretion and subject to such
conditions as it may determine to impose, may permit an inter vivos transfer by
gift to an immediate family member of the grantee or to a charitable
organization.
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l3. WITHHOLDING TAXES
Whenever under the Plan shares are to be issued upon exercise of stock
options granted hereunder, the Company shall have the right to require the
Eligible Participant to remit to the Company an amount sufficient to satisfy
applicable federal, state and local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares or at such later
time as when the Company may determine that such taxes are due. Whenever under
the Plan payments are to be made in cash, such payment shall be net of an amount
sufficient to satisfy applicable federal, state and local withholding tax
requirements.
l4. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board of Directors nor any
provision of the Plan shall be construed as creating any limitations on the
power of the Board (but not the Committee) to adopt such additional compensation
agreements as it may deem desirable, including, without limitation, the granting
of stock options otherwise than under the Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.
15. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Board of Directors (but not the Committee) may at any time amend,
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made which would impair the rights of any recipient
of a stock option under any agreement theretofore entered into hereunder,
without his consent, or which, without the requisite vote of the shareholders of
the Company approving such action, would:
(a) except as is provided in Section 7 of the Plan, increase the total
number of shares of stock reserved for the purposes of the Plan; or
(b) extend the duration of the Plan; or
(c) materially increase the benefits accruing to participants
under the Plan; or
(d) change the category of persons who can be Eligible Participants
under the Plan. Without limiting the foregoing, the Board of Directors may, any
time or from time to time, authorize the Company, without the consent of the
respective recipients, to issue new Options in exchange for the surrender and
cancellation of any or all outstanding Options.
16. LIMITATIONS ON EXERCISE
Notwithstanding anything to the contrary contained in the Plan, any
agreement evidencing any Award hereunder may contain such provisions as the
Board deems appropriate to ensure that the penalty provisions of Section 4999 of
the Code, or any successor thereto, will not apply to any stock received by the
holder from the Company.
17. GOVERNING LAW
The Plan shall be governed by, and construed in accordance with, the
laws of the State of Georgia.
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18. REGULATORY COMPLIANCE AND LISTING
Notwithstanding anything in the Plan to the contrary, the issuance or
delivery of any Shares pursuant to the exercise of an Option may be postponed by
the Company for such period as may be required to enable the Company to comply
with any applicable securities laws or regulations, any applicable listing
requirements of any national securities exchange, or any requirements under any
other law or regulation applicable to the issuance or delivery of such Shares,
and the Company shall not be obligated to issue or deliver any such Shares if
the issuance or delivery thereof shall constitute a violation of any applicable
provision of law or regulation of any governmental authority or national
securities exchange.
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