SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (Section Mark)240.14a-11(c) or
(Section Mark)240.14a.12
CCAIR, INC.
(Name of Registrant as Specified In its Chapter)
CCAIR, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(4), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i) (3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11.
1) Title of each class of securities to which transaction
applies: Common Stock
2) Aggregate number of securities to which transaction applies:
Not Applicable
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:(1) Not Applicable
4) Proposed maximum aggregate value of transaction: Not
Applicable
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of the filing.
1) Amount Previously Paid: $0
2) Form, Schedule or Registration Statement No.: Not Applicable
3) Filing Party: Not Applicable
4) Date Filed: Not Applicable
1 Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE>
CCAIR, Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held November 16, 1995
Notice is hereby given that the Annual Meeting of Stockholders
of CCAIR, Inc. will be held at the Sheraton Airport Plaza Hotel,
3315 South I-85 at Billy Graham Parkway, Charlotte, North Carolina
on November 16, 1995 at 10:00 a.m., for the following purposes:
1. To elect five Directors;
2. To approve an amendment to the Company's Stock Option
Plan to increase the number of shares by 200,000 for
which options can be granted;
3. To consider ratification of the selection of Arthur
Andersen LLP as independent auditors for the fiscal year
ending June 30, 1996; and
4. To transact such other business as may properly come
before the Meeting or any adjournment or adjournments
thereof.
The Board of Directors has fixed the close of business on
September 22, 1995 as the record date for the determination of
stockholders entitled to notice of and to vote at the Meeting. A
complete list of the stockholders entitled to vote at the Meeting
will be available at the office of CCAIR, Inc., 4700 Yorkmont Road,
Second Floor, Charlotte, North Carolina, at least ten days prior to
the Meeting.
Your attention is directed to the accompanying Proxy
Statement.
By Order of the Board of Directors,
(Signature of Eric W. Montgomery)
Eric W. Montgomery
Secretary
Charlotte, North Carolina
October 16, 1995
<PAGE>
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 16, 1995
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of CCAIR, Inc. (the
"Company") for the Annual Meeting of Stockholders to be held on November
16, 1995, and at any adjournment thereof. The address of the Company's
principal executive office is 4700 Yorkmont Road, Second Floor,
Charlotte, North Carolina 28208. This Proxy Statement and accompanying
form of proxy are expected to be mailed to stockholders on or about
October 16, 1995.
The enclosed proxy is being solicited by the Board of Directors of
the Company. A stockholder who executes the accompanying form of proxy
may revoke his proxy at any time before it is voted by filing with Eric
W. Montgomery, Secretary of the Company, at 4700 Yorkmont Road, Second
Floor, Charlotte, North Carolina 28208, a written revocation or a
properly executed proxy bearing a later date, or by attending and voting
in person at the Annual Meeting. All shares represented by valid
proxies received pursuant to the solicitation and prior to the Meeting
and not revoked before they are exercised will be voted, and, if a
choice is specified with respect to any matter to be acted upon, the
shares will be voted in accordance with such specifications. If no
specification is indicated, the shares will be voted in accordance with
the recommendations of the Board of Directors.
If a properly executed proxy is returned and the stockholder has
abstained from voting on any matter, the shares represented by the proxy
will be considered present at the Meeting for purposes of determining a
quorum and for calculating the vote, but will not be considered to have
been voted in favor of such matter. If an executed proxy is returned by
a broker holding shares in street name which indicates that the broker
does not have discretionary authority as to certain shares to vote on
one or more matters, such shares will be considered present at the
Meeting for purposes of determining a quorum, but not for purposes of
calculating a vote with respect to such matter. With respect to the
election of Directors, the amendment of the Stock Option Plan and the
ratification of the selection of independent auditors, the vote required
is a majority of the shares actually voted. As a result, abstentions
and broker nonvotes will not affect the outcome of these matters.
The expense of the solicitation of proxies, including the costs of
preparing and distributing the proxy materials, the handling and
tabulation of proxies received and charges of brokerage houses and other
institutions, nominees or fiduciaries in forwarding such documents to
beneficial owners, will be paid by the Company. In addition to the
mailing of proxy materials, solicitation may be made in person or by
telephone or telegraph by Directors, Officers or regular employees of
the Company. Such Directors, Officers and employees will not receive
additional compensation for such services.
VOTING SECURITIES OUTSTANDING
Only stockholders of record at the close of business as of
September 22, 1995, will be entitled to notice of and to vote at the
Annual Meeting of Stockholders. As of the close of business on
September 22, 1995, the Company had 7,400,695 outstanding shares of
common stock par value $0.01 per share; there are no other voting
securities.
As of September 22, 1995, no stockholder was known to the Company
to be the beneficial owner of more than five percent of the common stock
of the Company.
The presence, in person or by proxy, of the holders of a majority
of the shares of common stock entitled to vote at the Annual Meeting
constitutes a quorum for the transaction of business.
1
<PAGE>
ELECTION OF DIRECTORS
Five Directors will be elected at the Annual Meeting to serve for a
one-year term and until their successors have been duly elected and
qualified. Stockholders do not have cumulative voting rights in the
election of Directors. Each shareholder is entitled to one vote for
each share held for each Director.
Unless authority is withheld, it is the intention of the persons
named in the enclosed form of proxy to vote FOR the election as
Directors of the persons identified as nominees for Directors in the
table below. If the candidacy of any one or more of such nominees
should, for any reason, be withdrawn, the proxies will be voted FOR such
other person or persons, if any, as may be nominated by the Board of
Directors. All nominees have consented to be named herein as standing
for election to the Board of Directors and have consented to serve if
elected.
The following information is furnished with respect to the nominees
for election to the Board of Directors of the Company:
<TABLE>
<CAPTION>
Name Age Principal Occupation for Past Five Years Director Since
<S> <C> <C> <C>
John A. Adams 46 President, Talon Resources, Inc., aviation and financial 1992
consulting firm (1982 to present); Chief Executive Officer,
GEO Environmental, Inc. (1992 to present); Chief Financial
Officer and Partner, Lifeco Services Corporation, travel
services company (1984 to 1989); President, Travel Center,
Inc., subsidiary of Lifeco Services Corporation, travel
company servicing governmental clients (1984 to 1989).
K. Ray Allen 48 Chief Executive Officer and President, Computer 1994
Intelligence, Incorporated, a computer software engineering
firm (1981 to present); Chief Executive Officer and
President, Burl Software Laboratories, Incorporated, a
computer software development and marketing firm (1992
to June 1994).
Kenneth W. Gann 56 Chief Executive Officer and President of the Company 1990
(November 1990 to present); Vice President, Customer
Service, MGM Grand Air, Inc., commercial airline, Los
Angeles, CA (December 1989 to October 1990); Executive
Vice President and Chief Operating Officer, MGM Grand
Air, Inc. (November 1987 to December 1988).
Gordon Linkon 66 Retired (September 1993); Chief Executive Officer 1994
and President, USAir Shuttle,commercial airline, New York,
NY (April 1992 to September 1993); Vice President USAir
Express Division, USAir Group, Inc., commercial airline,
Arlington, VA (1988 to April 1992); Chairman and Chief
Executive Officer, Florida Express, Inc., commercial airline,
Orlando, FL (1983 to 1988)
Dean E. Painter, Jr. 51 Co-owner and President, CLG, Inc., computer leasing 1985
and sales company, Raleigh, NC (1980 to present).
</TABLE>
During the fiscal year ended June 30, 1995, the Board of Directors
held a total of five (5) regular and special meetings. Each Director
then serving attended 75% or more of the total number of meetings of the
Board and of the committees of the Board on which he served.
2
<PAGE>
The Board of Directors of the Company has the following standing
Committees: Audit Committee, Nominating Committee, Stock Option
Committee and Compensation Committee. The Stock Option Committee met
twice during the fiscal year ended June 30, 1995. The Nominating
Committee, Audit Committee and Compensation Committee did not meet
during that period.
The Audit Committee confers with the Company's independent auditors
and reviews the scope of auditing of the Company's books and accounts
and the reports submitted by the auditors. The Committee also reviews,
with the independent auditors and appropriate Company personnel,
procedures and methods employed in connection with the Company's
management policies relating to internal controls. Reports are made by
the Committee to the Board from time to time. The members of the Audit
Committee are Messrs. John A. Adams and Gordon Linkon.
The Nominating Committee recommends to the Board the appropriate
size of the Board of Directors and the names of candidates for
nomination to the Board. The Committee will consider qualified
candidates recommended by stockholders. In order for a candidate
recommended by a stockholder to be considered as a nominee at the next
Annual Meeting, the name of such candidate, together with a written
description of the candidate's qualifications, must be received at the
Company's principal executive offices on or before June 14, 1996. The
members of the Nominating Committee are Messrs. Kenneth W. Gann and Dean
E. Painter, Jr.
The Stock Option Committee administers the Company's Amended and
Restated Stock Option Plan. This Committee is composed of Directors who
are not eligible for discretionary grants under the Plan. The Committee
has full authority, in accordance with the requirements of the Plan, to
determine whether to grant stock options to eligible recipients and to
determine the size, terms and restrictions on stock options granted.
The members of the Stock Option Committee are Messrs. K. Ray Allen and
Gordon Linkon.
The Compensation Committee recommends to the Board appropriate
levels and types of compensation for each Executive Officer or position
and Director of the Company. The Committee will also make
recommendations on various employee benefits or benefit plans considered
by the Board of Directors. The members of the Compensation Committee
are Messrs. Dean E. Painter, Jr. and John A. Adams.
The members of the Board of Directors do not receive fees in
exchange for their service to the Company. From time to time, the
Directors receive grants of options to purchase common stock in
compensation for their service as Directors. See disclosure under
heading "Report of Compensation Committee" for additional information.
In addition, certain of the Directors have consulting arrangements with
the Company. See disclosure under headings "Compensation Committee
Interlocks and Insider Participation" and "Certain Relationships and
Related Transactions" for additional information.
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth as of September 22, 1995, certain
information with respect to the beneficial ownership for each of the
Directors and the nominee Directors of the Company and of all Directors,
nominee Directors and Officers as a group, of the outstanding shares of
the Company's common stock, which is the only class of voting securities
of the Company. Each of the individuals listed below possesses sole
voting and investment power with respect to the shares listed opposite
his name, unless noted otherwise.
Amount and Nature
Name of Beneficial Ownership Percent of Class(6)
Kenneth W. Gann 289,668(1) 3.9%
Dean E. Painter, Jr. 102,000(2) 1.4%
John A. Adams 157,000(3) 2.1%
K. Ray Allen 25,000(4) Less than 1%
Gordon Linkon 30,000 Less than 1%
All Directors, and Officers
as a Group (8 persons) 641,668(5) 8.7%
3
<PAGE>
1 Mr. Gann has the right to acquire 289,668 shares pursuant to presently
exercisable options.
2 Mr. Painter has the right to acquire 82,000 shares pursuant to presently
exercisable options.
3 Mr. Adams has the right to acquire 152,000 shares pursuant to presently
exercisable options.
4 Mr. Allen has the right to acquire 15,000 shares pursuant to presently
exercisable options.
5 Includes 576,668 shares which Officers and Directors have the right to
acquire pursuant to presently exercisable options.
6 All percentage calculations assume all presently exercisable stock options
held by Officers and Directors have been exercised.
MANAGEMENT
Executive Officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position and Background
<S> <C> <C>
Kenneth W. Gann 56 Chief Executive Officer, President and Director of the Company (November 1990 to
present); Vice-President Customer Service, MGM Grand Air, Inc., a commercial
airline with approximately 300 employees and $30,000,000 in annual revenues, Los
Angeles, CA (December 1989 to October 1990).
Kathryn L. Chisholm 32 Vice President Sales and Service of the Company (December 1993 to present);
Director of Customer Service (June 1991 to December 1993). Ms. Chisholm joined
the Company in September 1988 as Training Coordinator and has served as
Manager of Training and Manager of Customer Service before assuming the
position of Director of Customer Service of the Company.
Eric W. Montgomery 36 Vice President of Finance, Secretary and Acting Treasurer of the Company
(February, 1995 to present); Controller, Hunter Farms, Inc., a division of a regional
grocery chain, High Point, NC (March 1993 to February 1995); Assistant Controller,
Denny's, Inc., a restaurant chain, Spartanburg, SC (April 1990 to February 1993).
Peter J. Sistare 32 Vice President of Operations of the Company (March 1994 to present); Vice
President of Maintenance (December 1993 to March 1994); Director of Maintenance
of the Company (December 1990 to December 1993). Mr. Sistare joined the
Company in April 1986 as a mechanic and has served as Manager of Avionics,
Aircraft Instructor, Manager of Maintenance and Acting Director of Maintenance
before assuming his position of Director of Maintenance of the Company. Mr.
Sistare keeps current as a pilot on the Shorts 360 by flying the line periodically.
</TABLE>
EXECUTIVE COMPENSATION
The rules of the Securities and Exchange Commission ("SEC") with
respect to executive compensation were revised in late 1992. These
rules modified significantly the manner in which executive compensation
is presented to shareholders in a proxy statement and added new
disclosure requirements. At the same time, the SEC rules increased the
threshold income level for reporting on compensation for a particular
officer.
4
<PAGE>
Compensation of Executive Officers
The following table sets forth certain summary information
concerning the compensation paid or accrued by the Company on behalf of
the Company's Chief Executive Officer. None of the Company's other
executive officers had annual income in excess of $100,000, the
threshold level for reporting under the SEC rules. Thus, only the Chief
Executive Officer is a Named Executive Officer for purposes of
disclosure under the SEC rules.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual
Compensation Awards
Name and Other Annual All Other
Principal Salary Bonus Compensation(2) Options(3) Compensation
Position Year(1) ($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
Kenneth W. Gann 1995 125,040 6,000 248,000(4) 7,625(5,6)
Chief Executive
Officer and
President
1994 125,040 6,000 125,000(7) 6,745(5,6)
1993 125,040 6,000 100,000(8) 3,772(5,6)
</TABLE>
1 The Company's fiscal year runs from July 1 to June 30 in the succeeding
calendar year and the year stated in the table and in the notes to the
table refers to the year in which the fiscal year ends.
2 The amounts paid as other annual compensation represent a car allowance
of $500 per month.
3 The Company does not issue Stock Appreciation Rights (SARs). This column
reflects the stock options issued under its Amended and Restated Stock
Option Plan.
4 The options to purchase 248,000 shares of common stock granted in 1995
were, in part, a transaction in which Mr. Gann surrendered options to
purchase 236,000 shares that were granted in 1992-1994. However, the rules
of the Securities and Exchange Commission require that these grants be
shown without the effect of the surrender. The additional 12,000 options
were granted in 1995.
5 The Company purchased a key man life insurance policy on Mr. Gann in the
face amount of $1 million; 60% of proceeds to Company and 40% to Mr.
Gann's spouse. The amounts included in All Other Compensation represent
that portion of the premium paid by the Company that funds the death
benefit for Mr. Gann's spouse.
6 Amounts included under All Other Compensation are for premiums for
supplemental life insurance and medical insurance paid by Company.
7 This grant is part of a transaction in which Mr. Gann surrendered stock
options to purchase 55,000 shares of common stock in exchange for stock
options to purchase the same number of shares.
8 The options to purchase 100,000 shares of common stock granted in 1993
were a part of a transaction in which Mr. Gann surrendered options to
purchase 100,000 shares that were granted in 1992. However, the rules of
the Securities and Exchange Commission require that the grant in 1993 be
shown without the effect of the surrender.
5
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth the individual grants of stock
options made to the Named Executive Officer during the fiscal year ended
June 30, 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realized Value
at Assumed Annual
Individual Rates of Stock Price
Grants Appreciation for
Option Term(2)
% of Total Exercise
Options Options Granted or Base Expir-
Granted(1) to Employees in Price ation 5% 10%
Name (#) Fiscal Year ($/sh) Date
<S> <C> <C> <C> <C> <C> <C>
Kenneth W. Gann 236,000(3) 73.0% $1.1875 11/15/04 $176,248 $446,646
12,000 3.7% $1.1875 11/15/04 $ 8,962 $ 22,711
</TABLE>
1 All options granted are Non-qualified Stock Options granted under the
Company's Amended and Restated Stock Option Plan.
2 These amounts are based on the assumed rates of appreciation as suggested
by the rules of the Securities and Exchange Commission over the remaining
term of the options and do not represent a prediction by the Company of
future stock prices. Actual gains, if any, on stock option exercises are
dependent upon the future performance of the Company's common stock.
3 This grant is a part of a transaction in which Mr. Gann surrendered
options to acquire 55,000 shares and 181,000 shares of common stock in
exchange for new options to acquire 55,000 and 181,000 shares of common
stock. See discussion under Ten-Year Option Repricing on page 8.
Aggregated Option Exercises in Last Fiscal Year and Year-End Option Values
The following table sets forth the aggregate value of unexercised
options to acquire shares of common stock held by the Named Executive
Officer on June 30, 1995 and the value realized upon the exercise of
options during the fiscal year ended June 30, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of
Unexercised Unexercised
Options In-The-Money
Shares at Options
Acquired June 30, 1995 at June 30, 1995(2)
on Value
Exercise(1) Realized(1)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Kenneth W. Gann -0- -0- 289,668 -0- $ 607,983 -0-
</TABLE>
6
<PAGE>
1 Mr. Gann did not exercise any stock options held by him during the fiscal
year ended June 30, 1995.
2 The value is calculated as the excess of market value of the common stock
as of June 30, 1995 over the exercise price. On June 30, 1995, the
closing bid price for the Company's common stock on the NASDAQ Small
Cap Market was $3.1875.
Ten-Year Option Repricings
Under the rules of the Securities and Exchange Commission, certain
information is required if a company adjusts or amends the exercise
price of stock option ("repricing") for a Named Executive Officer. The
information is required on the repricing for the Named Executive Officer
and for any executive officer with respect to repricings that occurred
in the last ten fiscal years or since a company became a reporting
company. The following table sets forth information on the repricing
for the Named Executive Officer in the last two fiscal years. Also
listed are repricings for other executive officers since the Company
became a reporting company in 1989.
TEN-YEAR OPTIONS REPRICINGS
<TABLE>
<CAPTION>
Market Length of
Number Price of Exercise Original
of Stock at Price at New Option Term
Options Time of Time of Exercise Remaining at
Repriced Repricing Repricing Price Date of
Name Date (#) ($) ($) ($) Repricing
<S> <C> <C> <C> <C> <C> <C>
Kenneth W. Gann 02/08/93 100,000 $4.50 $5.5625 $4.50 9 years,11 months
Chief Executive 05/18/94 55,000 $1.8125 $3.75 $1.8125 9 years, 9 months
Officer and 11/15/94 55,000 $1.1875 $1.8125 $1.1875 9 years, 6 months
President 11/15/94 70,000 $1.1875 $3.75 $1.1875 9 years, 3 months
11/15/94 100,000 $1.1875 $4.50 $1.1875 8 years, 3 months
11/15/94 11,000 $1.1875 $4.125 $1.1875 7 years, 1 month
Kathryn L. Chisholm 05/18/94 17,000 $1.8125 $3.75 $1.8125 9 years, 9 months
Vice President of 11/15/94 2,500 $1.1875 $4.50 $1.1875 9 years, 3 months
Sales and Service 11/15/94 17,000 $1.1875 $1.8125 $1.1875 9 years, 6 months
Peter J. Sistare 05/18/94 17,000 $1.8125 $3.75 $1.8125 9 years, 9 months
Vice President of 05/18/94 5,000 $1.8125 $4.125 $1.8125 9 years,10 months
Operations 11/15/94 5,000 $1.1875 $4.50 $1.1875 8 years, 3 months
11/15/94 17,000 $1.1875 $1.8125 $1.1875 9 years, 6 months
11/15/94 5,000 $1.1875 $1.8125 $1.1875 9 years, 6 months
Virginia V. Bennett 11/15/94 4,000 $1.1875 $2.50 $1.1875 4 years, 6 months
Vice President of 11/15/95 10,000 $1.1875 2.375 $1.1875 6 years,10 months
Finance and 11/15/94 5,000 $1.1875 $4.50 $1.1875 8 years, 3 months
Controller
</TABLE>
7
<PAGE>
REPORT ON OPTION REPRICINGS
In November of 1994, the Stock Option Committee of the Board of
Directors reviewed the outstanding stock option grants that had been
made to employees. The Committee observed that the market price of the
Company's common stock had declined since the options were granted. The
Committee noted that the efforts of the employees who received options
were critical to the Company's operations and future prospects. The
Committee determined to reissue all outstanding options to eleven (11)
employees and Directors totaling options to acquire 533, 000 shares of
common stock, upon the surrender by each employee or Director of the
options previously granted. The exercise price for the options was set
at the market value on the date of reissuance.
Stock Option Committee
K. Ray Allen Gordon Linkon
Compensation Agreements
Officers of the Company, except for Mr. Gann, Chief Executive
Officer, serve at the pleasure of the Board of Directors. Mr. Gann has
an Employment Agreement with the Company that is described below in the
Report of the Compensation Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. John A. Adams and Mr. Dean E. Painter, Jr. served as members of
the Compensation Committee of the Board of Directors of the Company for
the fiscal year ended June 30, 1995, but were not and have not been
officers or employees of the Company or any subsidiaries.
The Company has engaged Talon Resources, Inc. over the last five
fiscal years as a consultant on aviation and financial matters,
including assistance in the preparation of the Chapter 11 plan of
reorganization for the Company. Talon Resources performs airline and
financial planning services for the Company. It bills at an hourly
rate, plus travel expenses, that has not increased since last approved
in Bankruptcy Court. Records of hours for work performed are submitted
to the Company's President for approval. John A. Adams, a Director of
the Company, is the President and fifty-percent shareholder of Talon
Resources, Inc. At the inception of the Company's relationship with
Talon Resources, Inc., John A. Adams was not a Director of the Company.
Since the hourly billing rate of Talon Resources, Inc. has not changed
since John A. Adams became a Director of the Company in 1993, the
Company believes this rate reflects the rate which might have been
obtained from a nonaffiliated party. In the fiscal year ended June 30,
1995, Talon Resources, Inc. received payments in the aggregate amount of
$54,676 for services rendered in that fiscal year and the prior fiscal
year.
Mr. Adams and Mr. Painter have each extended short-term secured
lines of credit to the Company as follows:
Related
Date Date Rights
Name Loaned Amount Expired Granted
John A. Adams 06/21/95 $150,000 06/29/95 3,750
04/13/95 200,000 05/31/95 10,000
03/13/95 200,000 03/31/95 5,000
09/19/94 100,000 09/29/94 2,500
Dean E. Painter, Jr. 05/15/95 $300,000 05/31/95 7,500
04/13/95 300,000 04/30/95 7,500
10/14/94 400,000 11/28/94 20,000
8
<PAGE>
The lines of credit were extended to assist the Company with
short-term cash flow. The interest rate was at ten percent (10%) on the
lines of credit. The lines of credit were secured by liens on certain
personal property owned by the Company. As additional consideration,
the Company issued warrants to purchase 2,500 shares of common stock at
the then current market price for each $100,000 loaned. If the loan was
not repaid at the end of the month in which it was made, the loan was
considered a new loan for purposes of the issuance of warrants. The
terms of the loans were proposed by Dean Painter and approved by the
remaining members of the Board of Directors. These warrants were not
issued pursuant to a plan under Rule 16b-3. Given the size of the loans
and the time and expense of obtaining outside credit, the Company did
not solicit these funds from unaffiliated parties.
On June 30, 1995 the Company entered into a sale and leaseback
transaction with Adallipa Partners. John Adams, K. Ray Allen, Gordon
Linkon and Dean Painter are the general partners of Adallipa Partners.
As additional consideration for entering into this transaction, CCAIR,
Inc. issued warrants to purchase 250,000 shares of common stock at the
then current market price to the partnership which were immediately
distributed pro rata to the partners. The sale and leaseback
transaction involved certain aircraft engines owned by the Company.
These engines were sold for $1,000,000 which represented the valuation
of the engines at the higher of current value or book value. This
transaction resulted in a gain of $70,000. The monthly lease term was
determined by taking into consideration that both types of engines were
mature and a substantial factor for probable obsolescence was included.
The President of the Company, Kenneth Gann, made the decision on behalf
of the Company to enter into the sale and leaseback transaction. The
Company was unable to compare the terms of this transaction with similar
unaffiliated transactions because the Company was unable to attract any
other proposal from any other lender to obtain the sale and leaseback
financing. The sale and leaseback financing was critically important to
the Company's cash flow.
REPORT OF THE COMPENSATION COMMITTEE
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended, that incorporate by
reference, in whole or in part, subsequent filings including this Proxy
Statement, the following Report of the Board of Directors as well as the
Performance Graph set forth on page 11 hereof shall not be deemed to be
incorporated into any such filings.
The SEC rules addressing disclosure of executive compensation in
proxy statements require a report by a Compensation Committee or similar
entity or by the Board of Directors as a whole concerning compensation
policies applicable to executive officers including the specific
relationship of corporate performance to executive compensation. The
focus of this Report is to be the compensation paid or accrued for the
last fiscal year.
The compensation policies of the Company for the fiscal year ended
June 30, 1995 were established by the Compensation Committee and the
Stock Option Committee of the Board of Directors. The Compensation
Committee is composed of two nonemployee Directors and has oversight
responsibility for executive compensation and executive benefit program
of the Company, except for the Amended and Restated Stock Option Plan
(the "Stock Option Plan") which is administered by the Stock Option
Committee. This bifurcation of responsibilities resulted from the
necessity of administration by disinterested Directors under Rule 16b-3
of the Securities Exchange Act of 1934, as amended.
Compensation Committee Report on Executive Compensation
The Company's executive compensation policies during the last
fiscal year has focused on cash compensation in the form of annual
salary and incentive compensation in the form of stock options. Given
the financial circumstances during that period, the objective was to pay
salaries at a level sufficient to hire and retain executive officers but
consistent with the cash flow needs of the Company. Executive officers
were provided opportunity for far greater compensation by the award of
stock options. Directors of the Company were also compensated through
the award of stock options in lieu of Directors' fees or other benefits.
9
<PAGE>
Mr. Gann's compensation has been composed of two elements: (1) a
base salary, effective in 1991, of $125,000 adjusted for inflation; and
(2) the awards of stock options. Mr. Gann received stock options to
purchase 200,000 shares of common stock as an inducement to join the
Company as its President and Chief Executive Officer when it was in the
first phase of its Chapter 11 Reorganization proceeding. The stock
options became exercisable in three roughly equal annual installments.
Since Mr. Gann joined the Company, there has been only one adjustment in
the base salary.
In February of 1994, upon the recommendation of the Compensation
Committee, the Company entered into a new employment agreement with Mr.
Gann. This employment agreement provided for a base salary of $125,000
and contained a three-year term. The Compensation Committee recommended
the new employment agreement in light of the uncertainties related to
the Company's financial circumstances, as a means to retain the services
of Mr. Gann. Other than the change in term from one year to three
years, the only material difference to the employment relationship
concerned a potential change in Mr. Gann's responsibilities. If the
Board of Directors determined to elect a new Chief Executive Officer,
then Mr. Gann had the choice to remain as Chief Operating Officer and
President or to resign and receive compensation for twelve (12) months
after resignation. If the Board of Directors shall reduce the job
responsibilities of Mr. Gann below those normally attributable to the
Chief Executive Officer of a Delaware corporation, then Mr. Gann has the
right to terminate the agreement and receive the compensation due for
the remaining term of the agreement.
In November of l994, Mr. Gann received grants of options to
purchase 12,000 shares of common stock at market prices under the
Company's Stock Option Plan and 236,000 of his existing options were
surrendered to the Company and replaced with 236,000 options exercisable
at $1.1875.
During the last fiscal year, even though the results of operations
showed substantial improvement as compared to the prior fiscal year, Mr.
Gann's level of cash compensation was not directly related to measures
of the Company's performance. The cash compensation was provided in
accordance with the employment agreement stated above. The Compensation
Committee does not currently have policies concerning the payment of
cash bonuses, preferring to tie incentive compensation to the
performance of the Company's common stock through the issuance of stock
options. The Compensation Committee does not currently have specific
policies concerning the relationship between the Company's performance
and the issuance of stock options, preferring to assess each issuance of
stock options in light of the surrounding facts and circumstances. The
issuance to Mr. Gann of options to purchase 12,000 shares of the common
stock of the Company during the last fiscal year was in lieu of
directors' fees.
Compensation Committee
John A. Adams Dean E. Painter, Jr.
Stock Option Committee
K. Ray Allen Gordon Linkon
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative return on the
Company's common stock since June 30, 1990 with the cumulative total
return in the CRSP Index for the Nasdaq Stock Market (U.S. companies)
and the CRSP Index for NASDAQ stocks having an SIC Code of 4500 to 4599
over the same period. The companies comprising those SIC Codes are
engaged in commercial aviation. The graph assumes an initial $100.00
investment on June 30, 1990.
10
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS
Performance Graph for
CCAIR, INC.
Prepared by the Center for Research in Security Prices (CRSP)
The University of Chicago Graduate School of Business
Produced on 07/28/95 including data to 06/30/95
CRSP Total Returns Index
<TABLE>
<CAPTION>
6/29/90 6/28/91 6/30/92 6/30/93 6/30/94 6/30/95
<S> <C> <C> <C> <C> <C> <C>
CCAIR, Inc. 100.0 125.0 237.5 393.8 100.0 159.4
NASDAQ Stock
Market (U.S.
Companies) 100.0 105.9 127.3 160.0 161.1 215.3
NASDAQ Trucking
& Transportation
Stocks 100.0 106.1 129.0 158.8 162.6 178.9
</TABLE>
Notes:
A. The index level for all series was set to $100.00 on 06/29/90.
B. The NASDAQ Trucking & Transportation Stocks include SIC Codes
3700-3799, 4200-4299, 4400-4599 & 4700-4799, both U.S. and
foreign companies included.
11
<PAGE>
AMENDMENT TO STOCK OPTION PLAN
On October 12, 1995 the Board of Directors amended, subject to
shareholder approval, the Fourth Amended and Restated Stock Option Plan
(the "Plan") to increase the number of shares of common stock for which
options can be granted by 200,000 shares from 1,175,000 to 1,375,000
shares. A proposal to approve the amendment will be presented to
shareholders at the Annual Meeting of Shareholders. Approval of the
amendment requires the affirmative vote of the holders of a majority of
the shares of common stock represented at the Annual Meeting. The
purpose of the Plan is to strengthen the Company's ability to attract
and retain key employees and to furnish additional incentives to such
persons by encouraging them to become owners of common stock. The
Company has traditionally granted stock options to its Directors in lieu
of paying Directors' fees and will continue this policy. Directors,
Officers and employees of the Company will benefit from ratification of
the amendment to the extent that they are eligible to receive options
under the Plan. The Company has four nonemployee Directors and ten key
employees eligible to receive options under the Plan.
Except for 29,500 shares, all of the 1,175,000 shares previously
reserved by the Company for grant pursuant to the Plan are subject to
outstanding options or had been issued upon the exercise of stock
options as of the date of this Proxy Statement. Consequently,
additional options to purchase shares could not be granted under the
Plan unless additional shares became available as a result of
cancellation or forfeiture of previously granted by unexercised options,
or unless the amendment to increase the number of shares available for
option grants under the Plan is approved by shareholders. The Board of
Directors believes that the increase will be sufficient for needs that
will occur through the fiscal year ending June 30, 1997. As of the date
of this Proxy Statement, options to purchase 623,668 shares remain
outstanding and unexercised and options to purchase 521,832 shares have
been exercised.
The Plan is administered by the Stock Option Committee of the Board
of Directors, that consists of two nonemployee Directors. The Stock
Option Committee has the authority to grant options, to define the terms
of option grants, to select the persons eligible to receive option
grants, to promulgate rules relating to the Plan and to take other
action necessary or advisable for the administration of the Plan. Under
the Plan, the members of the Stock Option Committee receive options to
purchase 15,000 shares of common stock on the date of the Annual Meeting
of Stockholders.
Under the Plan, options may be granted at not less than 100% (110%
in the case of incentive stock options granted to 10% shareholders) of
the fair value of the Company's common stock on the date of grant.
Options may be granted under the Plan no later than February 12, 1999,
the Plan's termination date. Options granted under the Plan may not
exceed ten years in duration (five years for 10% shareholders). Options
may not be transferred except by will or the laws of descent and
distribution. Unless otherwise provided in the governing option
agreement, options must be exercised, if at all, prior to termination of
employment except for termination due to death or disability, and within
twelve months after termination for death and disability.
The closing price per share of the Company's common stock on
October 11, 1995, as reported on the NASDAQ Small-Cap Stock Market, was
$1 15/16.
Under the Plan, stock options may be issued (1) as incentive stock
options within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), (2) as nonstatutory stock options that
do not qualify as incentive stock options, or (3) a combination of both.
There is no taxable income to a participant as a result of the grant of
an incentive stock option or the exercise of an incentive stock option
if the participant does not dispose of the acquired stock for certain
time periods. However, the difference between the fair market value of
the shares under the option at the time of exercise and the option price
will generate a tax preference item that could result in an alternative
minimum tax liability for the employee. Upon sale of the shares, the
difference between the sale price and the option price will generally be
taxable income. The Company is not entitled to a federal income tax
deduction upon the grant or exercise of incentive stock options.
Generally, there is no taxable income to a participant as a result of
the grant of a nonstatutory stock option. However, upon exercise, the
participant will realize taxable income equal to the difference between
the fair market value of the stock at the time of exercise and the
option price. The Company is not entitled to a tax deduction upon the
grant of a nonstatutory stock option, but is entitled to a tax deduction
equal to the participant's taxable income realized upon the exercise of
the stock option. The foregoing statements are based on current federal
income tax laws and regulations and are subject to changes in such tax
laws and regulations, or interpretations thereof.
12
<PAGE>
The options outstanding under the Plan to Kenneth W. Gann, the
Named Executive Officer, total 289,668, to the current executive
officers as a group total 332,668, and to the current Directors as a
group total 536,168. Of the options under the Plan unexercised as of
the date of this Proxy Statement, 617,168 were exercisable and 5,000
were unexercisable. If the amendment to the Plan is adopted the
following options will be issued:
Fifth Amended and Restated Stock Option Plan
Name/Position Exercise Price Number of Options
Kenneth W. Gann/Chief 3.25 2,500
Executive Officer 2.9375 2,500
1.875 5,000
1.9375 2,500
1.5625 2,250
1.250 2,250
1.50 1,500
1.8125 800
1.75 1,375
20,675
Gordon Linkon/Director FMV @ November 16, 1995(1) 15,000
K. Ray Allen/Director FMV @ November 16, 1995(1) 15,000
1 The members of the Stock Option Committee receive 15,000 options on
the date of the Annual Shareholder's Meeting.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Painter, Mr. Adams and Mr. Gann have extended short-term
secured lines of credit to the Company since July 1, 1994. Their lines
of credit were extended to assist the Company with short-term cash flow.
Please refer to the disclosure under the heading "Compensation Committee
Interlocks and Insider Participation" for a description of certain
transactions between the Company and Mr. Painter and Mr. Adams. Mr.
Gann extended short-term lines of credit under terms similar to those
set forth above. Mr. Gann was issued options to acquire shares of the
Company's common stock under the Company's Stock Option Plan, subject to
shareholder approval of an increase in the number of shares of common
stock available under the stock option plan. See page 12 for a more
complete description. Mr. Gann made loans as follows:
Date Loaned Amount Date Expired Related Rights Granted
06/16/95 $100,000 07/31/95 5,000
03/20/95 100,000 05/31/95 7,500
01/18/95 80,000 01/31/95 2,250
11/14/94 55,000 11/29/94 1,375
11/14/94 35,000 11/29/94 875
10/18/94 60,000 10/31/94 1,500
09/26/94 32,000 09/29/94 800
09/15/94 55,000 09/29/94 1,375
13
<PAGE>
The Company believes that the foregoing transactions were
contracted on terms at least as favorable to the Company as could be
obtained from unrelated third parties.
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Officers and Directors and persons who own more than ten
percent of the Company's common stock to file reports of ownership or
change in ownership in the Company's common stock with the Securities
and Exchange Commission. Based solely on a review of those reports and
on information supplied to the Company, without independent inquiry, all
Section 16(a) filing requirements applicable to its executive Officers,
Directors and greater than ten-percent shareholders were complied with,
except as set forth below.
Mr. Adams and Mr. Painter did not report the issuance of warrants
to purchase shares of common stock until the Form 5 was filed with
respect to the 1995 fiscal year.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP as
independent certified public accountants to examine the Company's
financial statements for the next fiscal year ending June 30, 1996.
This selection is being presented to the stockholders for their
ratification at the Annual Meeting. The Board of Directors recommends a
vote FOR ratification of the selection of Arthur Andersen as independent
public accountants.
PROPOSALS OF SECURITY HOLDERS
It is expected that the Company's Annual Meeting in 1996 will be
held on or about November 14, 1996. Stockholders desiring to submit
proposals for action at that meeting will be required to submit them to
the Company on or about June 14, 1996. Any shareholder proposal must
also be proper in form and substance as determined in accordance with
the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder.
OTHER MATTERS
The Board of Directors does not know of any other matter to be
presented at the Annual Meeting that is not listed in the Notice of
Annual Meeting and discussed above. If other matters are properly
brought before the Annual Meeting,however, the persons named in the
accompanying form of proxy will vote the proxy on such matters in
accordance with their best judgment.
By Order of the Board of Directors
October 16, 1995
14
<PAGE>
CCAIR, INC.
FIFTH AMENDED AND RESTATED STOCK OPTION PLAN
ARTICLE I
GENERAL PROVISIONS
1. Purpose. The Fifth Amended and Restated Stock Option
Plan (the "Plan") of CCAIR, Inc., (the "Company") amends and
restates the Company's Fourth Amended and Restated Plan (the
"Fourth Amended Plan") adopted by the Board of Directors on
November 15, 1994. The Fourth Amended Plan amended and restated
the Company's Third Amended and Restated Stock Option (the "Third
Amended Plan") adopted by the Board of Directors on February 25,
1994. The Third Amended Plan amended and restated the Company's
Second Amended and Restated Stock Option Plan (the "Second Amended
Plan") adopted by the Company's Board of Directors on February 8,
1993. The Second Amended Plan amended and restated the Company's
Amended and Restated Stock Option Plan, (the "First Amended Plan")
adopted by the Company's Board of Directors on May 18, 1989. The
First Amended Plan amended and restated the Company's Nonqualified
Stock Option Plan (the "Original Plan") adopted by the Company's
Board of Directors on February 13, 1989. The Plan is intended as
an incentive to encourage certain persons in a position to
contribute materially to the Company's success to remain with the
Company and to encourage them to continue to promote the best
interests of the Company.
2. Elements of the Plan. Options granted under the Plan
shall be granted pursuant to either Article II or Article III of
the Plan. Options granted pursuant to Article II are intended to
qualify as incentive stock options ("Incentive Stock Options")
under Section 422A of the Internal Revenue Code of 1986, as amended
(the "Code"). Options granted pursuant to Article III of the Plan
shall not qualify as Incentive Stock Options ("Nonqualified
Options").
3. Administration. The Plan shall be administered by a
committee of two or more members of the Board of Directors of the
Company. The Board of Directors shall appoint the members of the
committee to administer the Plan and the committee shall be known
as the Stock Option Committee. To be eligible to serve as a member
of the Stock Option Committee, the individual must be a
"disinterested person" as defined in Rule 16(b)-3(c)(2)(i) under
the Securities Exchange Act of 1934, as amended, and as such Rule
is amended or interpreted by the Securities and Exchange Commission
from time to time. No member of the Board of Directors of the
Company or of the Stock Option Committee shall be liable for any
action or determination made in good faith with respect to the Plan
or to any option granted thereunder. In addition, directors shall
be eligible for indemnification from the Company, pursuant to the
Company's Bylaws, for any expenses, judgments or other costs
<PAGE>
incurred as a result of a lawsuit filed against them or any of them
claiming any rights or remedies due to their participation in the
administration of the Plan.
4. Authority of Board of Directors.
(a) Subject to the other provisions of this Plan,
including paragraph (b) of this Section, the Stock Option
Committee of the Company shall have sole authority in its
absolute discretion: to grant options to officers or employees
of the Company under the Plan; to determine the number of
shares subject to any option under the Plan; to fix the option
price and the duration of each option; to establish any other
terms and conditions of options; and to accelerate the time at
which any outstanding option may be exercised. The Board of
Directors shall have sole authority in its absolute
discretion, subject to the other provisions of this Plan, to
terminate the Plan. In addition, subject to the other
provisions of this Plan, and with a view to effecting its
purpose, the Stock Option Committee shall have sole authority
in its absolute discretion: to construe and interpret the
Plan; to define the terms used herein; to prescribe, amend and
rescind rules and regulations relating to the Plan; to make
any other determinations necessary or advisable for the
administration of the Plan and to do everything necessary or
appropriate to administer the Plan. All decisions,
determinations, and interpretations made by the Stock Option
Committee shall be binding and conclusive on all optionees and
on their legal representatives, heirs and beneficiaries.
(b) Each member of the Stock Option Committee, upon the
first to occur of (i) the effective date of this Plan, or (ii)
upon appointment as a member of the Stock Option Committee,
shall be entitled to receive options to purchase 15,000 shares
of Common Stock. Upon the date of the annual meeting of
shareholders of the Company, each member of the Stock Option
Committee shall be entitled to receive options to purchase
15,000 shares of Common Stock. This paragraph shall not be
amended more than once every six months, other than to comport
with changes to the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder.
5. Shares Subject to the Plan. By shareholder approval at
the annual meeting of shareholders held on November 16, 1995, the
maximum aggregate number of shares of Common Stock available
pursuant to the Plan, subject to adjustment as provided in Section
10 of this Article I, shall be 1,375,000 shares of the Company's
Common Stock, par value $.01 per share ("Common Stock"). Shares
subject to options may be authorized and unissued shares or
previously issued shares which have been acquired by the Company
and are held in its treasury. Shares subject to options that
-2-
<PAGE>
terminate or expire prior to exercise shall be available for
further option grant hereunder.
6. Eligibility.
(a) Incentive Stock Options. Incentive Stock options
may be granted only to key employees of the Company or any of its
subsidiaries (including directors and officers who are key
employees).
(b) Nonqualified Options. Nonqualified Options may be
granted only to persons who are officers or directors of the
Company or any subsidiary (whether or not employees) and key
employees of the Company or any subsidiary.
(c) Number of Options. More than one option may be
granted to the same person, if otherwise eligible to receive
options pursuant to this Plan.
(d) Maximum Number of Shares That May be Acquired By
Directors. Notwithstanding any other term or provision of the
Plan, the aggregate number of shares of Common Stock that may be
acquired by any director of the Company under the Plan (including
shares purchased pursuant to options granted under the Plan or the
Original Plan) shall not exceed 5% of the issued and outstanding
shares of Common Stock in the case of a director who is also an
employee of the Company or 1% of the issued and outstanding shares
of Common Stock in the case of a director who is not an employee of
the Company. This limitation shall be applied at the time an
option is granted and shall be based on the number of shares of
Common Stock issued and outstanding immediately prior to such
grant.
7. Terms and Conditions of Options. Stock options granted
under the Plan shall be evidenced by agreements in such form as the
Board of Directors may from time to time approve, which agreements
shall comply with and be subject to the following terms and
conditions, in addition to the provisions of Article II or Article
III, as applicable:
(a) Number of Shares; Designation. Each option shall
state the number of shares to which it pertains and whether it
is an Incentive Stock Option granted under Article II of the
Plan or a Nonqualified Option granted under Article III of the
Plan.
(b) Option Price. Each option shall state the option
price, which shall not be less than the fair market value (as
hereinafter defined) per share of the Common Stock at the time
the option is granted (except that for any Incentive Stock
Option granted to an employee who owns more than 10% of the
combined voting power of all classes of stock of the Company,
-3-
<PAGE>
or of its parent or subsidiary, the option price shall not be
less than 110% of fair market value). However, each
Nonqualified Option issued upon surrender of a stock option
granted under the Original Plan and outstanding immediately
prior to adoption of this Plan by the Board of Directors may
have an option price equal to the option price of the
surrendered option (even if less than the then fair market
value), subject to adjustment in a manner consistent with
Article I, Section 10, if such option (i) is to purchase the
same number of shares of Common Stock as the surrendered
option and (ii) has a final expiration date no later than the
expiration date of the surrendered option (other than for
expiration upon the optionee's disability or death). Fair
market value shall be determined by the Board of Directors on
the basis of such factors as it deems appropriate; provided,
however, that fair market value shall be determined without
regard to any restriction other than a restriction which, by
its terms, will never lapse, and further provided, however,
that if at the time the determination of fair market value is
made, the Common Stock is admitted to trading on a national
securities exchange for which sales prices are regularly
reported, fair market value shall not be less than the mean of
the high and low asked or closing sales prices reported for
the Common Stock on that exchange on the day (or most recent
trading day preceding the day on which the option is granted).
For purposes of this Plan, the term "national securities
exchange" shall include the National Association of Securities
Dealers Automated Quotation System and the over-the-counter
market.
(c) Exercise of Options. Each option shall be
exercisable in one or more installments during its term, and
the right to exercise may be cumulative. At least one hundred
shares may be purchased at any one time unless the number
purchased is the total number that may be purchased under the
option at that time. No option may be exercised for any
fraction of a share of Common Stock.
(d) Written Notice and Payment Required. An option
granted pursuant to the terms of this Plan shall be exercised
when written notice of that exercise has been received by the
Company at its principal office from the person entitled to
exercise the option and full payment for the shares with
respect to which the option is exercised has been received by
the Company. The purchase price of any shares purchased shall
be paid in full in cash or by certified or cashier's check
payable to the order of the Company or, unless prohibited by
the applicable option agreement, by shares of Common Stock or
by a combination of cash, check, and (unless prohibited by the
applicable option agreement) shares of Common Stock. If any
portion of the purchase price is paid in shares of Common
Stock, those shares shall be tendered at their then fair
-4-
<PAGE>
market value as determined in accordance with Section 7(b) of
this Article I.
(e) Compliance With Securities Laws. The options
granted under the Plan and the shares issuable pursuant to the
Plan may, at the option of the Company, be registered under
applicable federal and state securities laws, but the Company
shall have no obligation to undertake any such registrations.
Shares of Common Stock shall not be issued with respect to any
option granted under the Plan unless the exercise of that
option and the issuance and delivery of those shares pursuant
to that exercise shall comply with all relevant provisions of
state and federal law including, without limitation, the
Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, and the requirements of any stock
exchange upon which the shares may then be listed, and shall
be further subject to the approval of counsel for the Company
with respect to such compliance. The Board of Directors may
also require an optionee to furnish evidence satisfactory to
the Company, including a written and signed representation
letter and consent to be bound by any transfer restriction
imposed by law, legend, condition, or otherwise, that the
shares are being purchased only for investment and without any
present intention to sell or distribute the shares in
violation of any state or federal law, rule, or regulation.
Further, each optionee shall consent to the imposition of a
legend on the shares of Common Stock subject to his or her
option restricting their transferability as required by law or
by this Plan.
(f) Options Not Transferable. Options granted pursuant
to this Plan may not be sold, pledged, assigned, or
transferred in any manner otherwise than by will or the laws
of descent or distribution and may be exercised during the
lifetime of an optionee only by that optionee.
(g) Duration of Options. Each option and all rights
thereunder granted pursuant to the terms of this Plan shall
expire on the date specified in the applicable option
agreement, but in no event shall any option expire later than
10 years from the date on which the option is granted.
Moreover, any Incentive Stock Option granted to an employee
who owns more than 10% of the combined voting power of all
classes of stock of the Company, or of its parent or
subsidiary, must expire within five years from the date of
grant. In addition, each option shall be subject to early
termination as provided in the Plan or applicable option
agreement.
-5-
<PAGE>
(h) Termination of Employment, Disability or Death.
(i) Except as otherwise provided in the applicable
option agreement, if an optionee ceases to be employed by
the Company, its parent, or any of its subsidiaries (or
a corporation or a parent or subsidiary of such
corporation issuing or assuming a stock option in a
transaction to which Section 425(a) of the Code applies),
for any reason other than disability or death, his or her
option shall terminate immediately on the date of such
termination.
(ii) Except as otherwise provided in the applicable
option agreement, if an optionee becomes disabled within
the meaning of Section 22(e)(3) of the Code while
employed by the Company, or its parent or any of its
subsidiaries (or a corporation or a parent or subsidiary
of such corporation issuing or assuming a stock option in
a transaction to which Section 425(a) of the Code
applies), his or her option may be exercised (to the
extent it is exercisable immediately prior to such
termination) at any time within 12 months after the date
of termination of employment due to disability.
(iii) Except as otherwise provided in the
applicable option agreement, if an optionee dies while
employed by the Company, its parent or any of its
subsidiaries, (or a corporation or a parent or subsidiary
of such corporation issuing or assuming a stock option in
a transaction to which Section 425(a) of the Code
applies), his or her option may be exercised (to the
extent it is exercisable immediately prior to such
termination) at any time within 12 months after the date
of death. During this period, the option may be
exercised, except as otherwise provided in the applicable
option agreement, by the person or persons to whom the
optionees rights under the option shall pass by will or
by the laws of descent and distribution.
(i) Rights as a Stockholder. An optionee or a permitted
transferee of an option shall have no rights as a stockholder
with respect to any shares issuable or deliverable pursuant to
this Plan until the date of the issuance of a stock
certificate to him for such shares. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other
rights for which the record date is prior to the date such
stock certificate is issued, except as provided in Section 10
of Article I.
-6-
<PAGE>
(j) Option Agreements. The option agreements
authorized under the Plan may differ from one another and
shall contain such other provisions not inconsistent with the
Plan as applicable as the Stock Option Committee may in its
discretion deem advisable from time to time, including,
without limitation, conditions precedent to the exercise of
the option covered by any agreement, which conditions may
include the satisfaction of specified performance criteria by
the Company or the optionee.
8. Tax Withholding. The exercise of any option granted under
the Plan is subject to the condition that if at any time the
Company shall determine, in its discretion, that the satisfaction
of withholding tax or other withholding liabilities under any state
or federal law is necessary or desirable as a condition of, or in
any connection with, such exercise or the delivery or purchase of
shares pursuant thereto, then in such event, the exercise of the
option shall not be effective unless such withholding tax or other
withholding liabilities shall have been satisfied in a manner
acceptable to the Company.
9. Employment. Nothing in the Plan or in any option shall
confer upon any eligible employee any right to continued employment
by the Company, or by its parent or subsidiary corporations, or
limit in any way the right of the Company or its parent or
subsidiary corporation at any time to terminate or alter the terms
of that employment.
10. Changes in Stock. In the event of a stock dividend,
split-up or combination of shares, recapitalization or merger in
which the Company is the surviving corporation or other similar
capital change, an appropriate and proportionate adjustment shall
be made in the maximum number and kind of shares as to which
options may be granted under the Plan. A corresponding adjustment
changing the number or kind of shares allocated to unexercised
options granted prior to such change shall likewise be made. Any
adjustment in outstanding options shall be made without change in
the aggregate purchase price applicable to the unexercised portion
of the option, but with a corresponding adjustment in the price for
each share covered by the option. In making any adjustment
pursuant to this section, any fractional shares shall be
disregarded. In the event of a consolidation or a merger in which
the Company is not the surviving corporation, or any other merger
in which the stockholders of the Company exchange their shares of
stock in the Company for stock of another corporation, or in the
event of complete liquidation of the Company, or in the case of a
tender offer accepted by the Board of Directors, all outstanding
options shall thereupon terminate, provided that the Board may,
prior to the effective date of any such consolidation or merger,
either (i) make all outstanding options immediately exercisable, or
(ii) authorize a payment to each optionee that approximates the
economic benefit he or she would have realized if his option were
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exercised immediately before such effective date, or (iii) arrange
to have the surviving corporation grant to the optionees
replacement options on terms which the Board shall determine to be
fair and reasonable.
11. Effective Date of Plan. The Original Plan became
effective on February 13, 1989, when it was adopted by the
Company's Board of Directors. The First Amended Plan became
effective on May 18, 1989, the date it was approved by the
Company's Board of Directors, subject to the First Amended Plan's
approval by a majority of the total votes eligible to be cast at a
meeting of the Company's stockholders. The Second Amended Plan
became effective on February 8, 1993, the date it was approved by
the Board of Directors. The Third Amended Plan became effective on
February 25, 1994, the date it was approved by the Board of
Directors. The Fourth Amended Plan became effective on November
15, 1994 the date it was approved by the Company's Board of
Directors. The Plan shall be effective November 16, 1995, the date
it has been approved by the Company's Board of Directors and a
majority of the total votes eligible to be cast at a meeting of the
Company's stockholders. However, the Original Plan, the First
Amended Plan, the Second Amended Plan, the Third Amended Plan and
the Fourth Amended Plan shall continue to be effective only so long
as there remain outstanding, and only with respect to, unexercised,
nonqualified options issued under the Original Plan, which are not
surrendered for issuance of replacement nonqualified options under
the Plan.
12. Termination and Amendment of Plan. The Plan may be
terminated at any time by the Board of Directors. Unless sooner
terminated the Plan shall terminate no later than February 12,
1999. No options shall be granted under the Plan after that date.
Subject to the limitation contained in Section 4(b) and Section 13
of this Article I, the Board of Directors may at any time amend or
revise the terms of the Plan, including the form and substance of
the option agreements to be used hereunder; provided that no
amendment or revision shall (a) increase the maximum aggregate
number of shares available under this Plan, except as permitted
under Section 10 of this Article I; (b) change the minimum purchase
price for shares subject to options granted under the Plan except
as permitted under Section 10 of this Article I; (c) extend the
time within which options may be exercised; (d) change the
designation of the persons eligible to receive options under the
Plan; or (e) change the designation of persons eligible to serve as
members of the Stock Option Committee.
13. Prior Rights and Obligations. No amendment, suspension,
or termination of the Plan shall, without the consent of the
optionee, alter or impair any of that optionee's rights or
obligations under any option granted under the Plan prior to such
amendment, suspension, or termination.
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14. Construction. The provisions set forth in Article II
shall not apply to Nonqualified Options granted pursuant to Article
III of this Plan. Likewise, the provisions set forth in Article
III shall not apply to Incentive Stock Options granted pursuant to
Article II of this Plan.
ARTICLE II
INCENTIVE STOCK OPTIONS
Options granted pursuant to this Article II of the Plan shall
constitute Incentive Stock Options under Section 422A of the Code
and shall be designated as such at the time of grant. Incentive
Stock Options granted pursuant to this Article II shall be subject
to the terms, conditions and limitations set forth in Article I
above and to the following:
1. Maximum Amount of Incentive Stock Options. The maximum
aggregate fair market value of Common Stock, determined as of the
time the Incentive Stock Option is granted, for which any employee
may be granted Incentive Stock Options (as defined in Section
422A(b) of Code) exercisable for the first time during any calendar
year under all incentive stock option plans of the Company and any
parent, subsidiary, and predecessor corporations, shall not exceed
$100,000. Any option in excess of the foregoing limitation shall
be granted pursuant to Article III of this Plan and shall be
clearly and specifically designated as not being an Incentive Stock
Option.
2. Compliance with Section 422A of the Code. This Plan is
intended to comply in every respect with Section 422A of the Code
and the regulations promulgated thereunder with regard to the grant
of Incentive Stock Options and the purchase and delivery of shares
of Common Stock upon the exercise thereof. In the event any future
statute or regulation shall modify Section 422A, this Plan shall be
deemed to incorporate by reference such modification for purposes
of granting Incentive Stock Options or the purchase and delivery of
any shares of Common Stock upon the exercise thereof. Any option
agreement relating to an Incentive Stock Option granted pursuant to
this Plan that is outstanding and unexercised at the time any
modifying statute or regulation becomes effective shall also be
deemed to incorporate by reference such modification, and no notice
of such modification need be given to the optionee. If any
provision of this Plan is determined to disqualify the shares
purchasable pursuant to Incentive Stock Options granted under this
Plan from the special tax treatment provided by Section 422A, such
provision shall be deemed to incorporate by reference for purposes
of the Incentive Stock Options the modification required to qualify
the shares for said tax treatment.
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ARTICLE III
NONQUALIFIED-STOCK OPTIONS
Options granted pursuant to this Article III shall constitute
Nonqualified Options and shall not be treated as Incentive Stock
Options under Section 422A of the Code. Nonqualified Options shall
be subject to the terms, conditions and limitations set forth in
Article I above, as applicable, and to the following:
1. Termination of Nonemployee Relationships with the Company.
If a nonemployee optionee ceases to serve the Company in the
capacity which made the optionee eligible to receive Nonqualified
Options pursuant to Article III of this Plan, then the optionee's
rights upon such termination shall be governed in the manner of an
optionee's rights upon termination of employment as set forth in
Article I of this Plan.
IN WITNESS WHEREOF, this Fifth Amended and Restated Stock
Option Plan is executed on behalf of the Company as of November 16,
1995.
CCAIR, Inc.
By:
President
ATTEST:
Assistant Secretary
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