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
[ ] Confidential, For use of Commission only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.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] No fee required.
[ ] 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 (Set forth the amount on which the filing fee
is calculated and state how it was determined): Not Applicable
4) Proposed maximum aggregate value of transaction: Not Applicable
5) Total fee paid: Not Applicable
[ ] Fee paid previously with preliminary materials.
[ ] 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
<PAGE>
CCAIR, INC.
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 13, 1997
- --------------------------------------------------------------------------------
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 13, 1997 at 10:00
a.m., for the following purposes:
1. To elect six Directors;
2. To ratify the adoption of the Directors' Compensation
Stock Option Plan;
3. To consider ratification of the selection of Arthur Andersen
LLP as independent auditors for the fiscal year ending June
30, 1998; 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 19,
1997 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,
/s/ Eric W. Montgomery
Eric W. Montgomery
Secretary
Charlotte, North Carolina
October 1, 1997
<PAGE>
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 13, 1997
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 13, 1997, 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 6, 1997.
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 P. O. Box 19929, Charlotte, North Carolina
28219-0929, 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 vote required is a majority of the shares
actually voted. As a result, abstentions and broker nonvotes will not affect the
outcome of this matter.
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
19, 1997, will be entitled to notice of and to vote at the Annual Meeting of
Stockholders. As of the close of business on September 19, 1997, the Company had
7,740,695 outstanding shares of common stock par value $0.01 per share; there
are no other voting securities.
1
<PAGE>
As of September 19, 1997, only one stockholder was known to the Company
to be the beneficial owner of more than five percent of the common stock of the
Company. On December 20, 1996, Barlow Partners, L.P., a Texas Limited
partnership with a principal business address of 65 East 96th Street, Apt. 14A,
New York, NY 10128, reported in a filing on Schedule 13D that it owned
beneficially 510,200 shares of common stock representing 6.6% of the outstanding
shares of common stock. George Murnane III, a director and nominee for election
as a director of the Company, is the sole general partner of Barlow Partners,
L.P., and the Schedule 13D reports that Mr. Murnane has the beneficial ownership
of all of the shares because he has the shared power to vote and to dispose of
the shares.
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.
ELECTION OF DIRECTORS
Six 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>
K. Ray Allen 50 Chief Executive Officer and President, Computer 11/15/94
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 58 Chief Executive Officer and President of the Company 11/01/90
(November 1990 to present).
Gordon Linkon 68 Retired (September 1993); Chief Executive Officer 11/15/94
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).
Eric W. Montgomery 38 Vice President of Finance, Secretary and Treasurer Nominee
of the Company (February 1995 to present); Controller,
Hunter Farms, Inc. a division of a regional grocery chain,
(March 1993 to February 1995); Assistant Controller,
Denny's, Inc., a restaurant chain (April 1990 to
February 1993.
2
<PAGE>
George Murnane, III (1) 39 Executive Vice President and Chief Financial Officer, 01/24/97
International Airline Support Group, Inc. (June 1996 to
present); aviation consultant (March-June 1996);
Executive Vice President and Chief Operating Officer,
Atlas Air, Inc. (October 1995 to February 1996);
investment banker, Merrill Lynch & Co., investment
banking firm (1986-1995).
Dean E. Painter, Jr.(2) 53 Chairman of the Board and Chief Executive Officer, 08/01/84
CLG, Inc., computer leasing and sales company,
company, Raleigh, NC (1980 to present).
</TABLE>
1 Mr. Murnane serves as a director of International Airline Support
Group, Inc., a publicly held company listed on the American Stock
Exchange.
2 Mr. Painter serves as a director of Centura Banks, Inc., a publicly
held company listed on the New York Stock Exchange.
During the fiscal year ended June 30, 1997, the Board of Directors held
a total of two (2) 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.
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 and the Audit Committee each
met once during the fiscal year ended June 30, 1997. The Nominating 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. K. Ray Allen 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 12,
1998. 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. Gordon Linkon and George Murnane, III.
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 K. Ray Allen.
The members of the Board of Directors do not receive fees in exchange
for their service to the Company. On November 14, 1996, the Board of Directors
adopted a Directors' Compensation Stock Option Plan to compensate directors for
their service as members of the Board of Directors. Each director receives a
grant of options to purchase 20,000 shares of the Company's common stock
annually. See disclosure under heading "Directors' Stock Option Plan" for
additional information. See disclosure under headings "Compensation Committee
Interlocks and Insider Participation" and "Certain Relationships and Related
Transactions" for additional information.
3
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth as of September 19, 1997, certain
information with respect to the beneficial ownership for each of the Directors
of the Company and of all 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 CLASS9
Kenneth W. Gann 374,193(1) 4.2%
Dean E. Painter, Jr. 262,000(2) 2.9%
John A. Adams 327,000(3) 3.6%
K. Ray Allen 108,750(4) 1.2%
Gordon Linkon 85,000(5) 0.9%
George Murnane, III 528,950(6) 6.9%
Eric W. Montgomery 35,000(7) 0.4%
All Directors and Officers
as a Group (8 persons) 1,777,893(8) 19.8%
1 Mr. Gann has the right to acquire 374,193 shares pursuant to presently
exercisable options.
2 Mr. Painter has the right to acquire 262,000 shares pursuant to presently
exercisable options and warrants.
3 Mr. Adams has the right to acquire 327,000 shares pursuant to presently
exercisable options and warrants.
4 Mr. Allen has the right to acquire 108,750 shares pursuant to presently
exercisable options and warrants.
5 Mr. Linkon has the right to acquire 85,000 shares pursuant to presently
exercisable options and warrants.
6 Mr. Murnane has the right to acquire 18,750 shares pursuant to presently
exercisable options and warrants. Mr. Murnane shares the voting and
dispositive power with respect to the 510,200 shares of the Company's
common stock owned by Barlow Partners, L.P.. See discussion under "Voting
Securities Outstanding" for additional information.
7 Mr. Montgomery has the right to acquire 35,000 shares pursuant to
presently exercisable options.
8 Includes 1,267,693 shares which Officers and Directors have the right to
acquire pursuant to presently exercisable options.
9 All percentage calculations assume all presently exercisable stock
options and warrants held by Executive Officers and Directors have been
exercised.
4
<PAGE>
MANAGEMENT
Executive Officers of the Company are as follows:
NAME AGE POSITION AND BACKGROUND
Kenneth W. Gann 58 Chief Executive Officer, President and Director
of the Company (November 1990 to present).
Eric W. Montgomery 38 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 34 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.
EXECUTIVE COMPENSATION
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 $100,000, the threshold level for reporting under the SEC
rules. Thus, only the Chief Executive Officer is a Named Executive Officer for
purposes of disclosure under the SEC rules.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
===============
LONG-TERM
COMPENSATION
===============================================================================================
Annual
Compensation Awards
=============================================================================================================
Other Annual All Other
Name and Salary Bonus Compensation(2) Options(3) Compensation
Principal Position Year(1) ($) ($) ($) (#) ($)
=============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Kenneth W. Gann 1997 139,181 --- ----- 32,7255 11,7776,7
Chief Executive --------------------------------------------------------------------------------------
Officer and 1996 131,0404 --- ----- 33,6255 8,6556,7
President --------------------------------------------------------------------------------------
1995 125,040 --- 6,000 248,0008 7,6256,7
=============================================================================================================
</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.
5
<PAGE>
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 For the fiscal year 1996 the salary for Mr. Gann was increased by
$6,000 and the separate car allowance of $500 per month was terminated.
5 Mr. Gann received options to purchase 12,725 and 19,625 shares of
common stock in 1997 and 1996, respectively, as additional
consideration for loans to the Company.
6 The Company purchased a key man life insurance policy on Mr. Gann in
the face amount of $1 million; 60% of proceeds to Company and 40% to
Mr. Gann's spouse. The amounts included in All Other Compensation
represent that portion of the premium paid by the Company that funds
the death benefit for Mr. Gann's spouse.
7 Amounts included under All Other Compensation are for premiums for
supplemental life insurance and medical insurance paid by Company.
8 The options to purchase 248,000 shares of common stock granted in 1995
were, in part, a transaction in which Mr. Gann surrendered options to
purchase 236,000 shares that were granted in 1992-1994. However, the
rules of the Securities and Exchange Commission require that these
grants be shown without the effect of the surrender. The additional
12,000 options were granted in 1995.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the individual grants of stock options
made to the Named Executive Officer during the fiscal year ended June 30, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
====================================================================================================================================
Potential Realized Value
at Assumed Annual
Individual Rates of Stock Price
Grants Appreciation for
Option Term(2)
- --------------------------------------------------------------------------------------------------
% of Total Exercise
Options Options Granted or Base Expir-
Granted1 to Employees in Price ation 5% 10%
Name (#) Fiscal Year ($/sh) Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth W. Gann 1,750 3.3% $1.75 07/16/06 $ 1,926 $ 4,880
1,625 3.1% $1.6875 08/15/06 $ 1,725 $ 4,370
1,500 2.8% $1.5938 10/24/06 $ 1,503 $ 3,810
20,000 37.9% $1.4375 11/14/06 $18,081 $45,819
1,500 2.8% $1.4375 11/20/06 $ 1,356 $ 3,436
1,500 2.8% $1.875 12/24/06 $ 1,769 $ 4,482
1,250 2.4% $1.75 01/15/07 $ 1,376 $ 3,486
1,100 2.1% $1.875 03/20/07 $ 1,297 $ 3,287
1,250 2.4% $1.8175 05/14/07 $ 1,429 $ 3,621
1,250 2.4% $1.9375 06/17/07 $ 1,523 $ 3,860
====================================================================================================================================
</TABLE>
6
<PAGE>
1 All options granted are Non-qualified Stock Options granted under the
Company's Amended and Restated Stock Option Plan or under the Company's
Directors' Compensation 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.
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, 1997 and the value realized upon the exercise of options during the
fiscal year ended June 30, 1997.
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, 1997 AT JUNE 30, 19972
ON VALUE _________________________ _________________________
EXERCISE1 REALIZED1
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth W. Gann -0- -0- 374,193 3,750 $219,833 $ 0.00
===============================================================================================================================
</TABLE>
1 Mr. Gann did not exercise any stock options held by him during the
fiscal year ended June 30, 1997.
2 The value is calculated as the excess of market value of the common
stock as of June 30, 1997 over the exercise price, the last trading day
for the 1997 fiscal year. On June 30, 1997, the last sales price for
the Company's common stock on the NASDAQ Small Cap Market was $1.8125.
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. Dean E. Painter, Jr. and Mr. K. Ray Allen were serving as members
of the Compensation Committee of the Board of Directors of the Company as the
fiscal year ended on June 30, 1997, but were not and have not been officers or
employees of the Company or any subsidiaries. Mr. John A. Adams, a director
whose term will expire at the annual meeting, also served as a member of the
Compensation Committee during the fiscal year. Mr. Adams was not and has not
been an officer or employee of the Company or any subsidiaries.
The Company has engaged Talon Resources, Inc. over the last six 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, 1997, Talon Resources, Inc. received payments in the aggregate amount
of $85,243 for services rendered in that fiscal year and the prior fiscal year.
7
<PAGE>
During the fiscal year ended June 30, 1997, Mr. Adams, Mr. Painter and
Mr. Allen each extended short- term secured lines of credit to the Company as
follows:
================================================================================
DATE DATE WARRANTS
NAME LOANED AMOUNT EXPIRED GRANTED
================================================================================
John A. Adams 07/01/96 $300,000 07/30/96 7,500
08/01/96 100,000 09/06/96 2,500
11/25/96 100,000 12/03/96 2,500
12/26/96 150,000 01/02/97 3,750
01/15/97 150,000 01/31/97 3,750
03/20/97 150,000 04/02/97 3,750
05/15/97 150,000 05/30/97 3,750
06/16/97 150,000 07/08/97 3,750
================================================================================
Dean E. Painter, Jr. 07/16/96 $200,000 07/30/96 5,000
================================================================================
K. Ray Allen 07/16/96 $100,000 07/30/96 2,500
08/15/96 150,000 08/31/96 3,750
================================================================================
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.
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 10 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, 1997 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.
8
<PAGE>
Mr. Gann's compensation has been composed of two elements: (1) a base
salary, effective in 1996, of $145,000 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 have been
only two adjustments in the base salary.
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 $145,000 and contained a three-year term,
commencing in February of 1997. 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 of the start date for the term of three years, there was no
material difference to the employment agreement then in effect.
In November of l996, Mr. Gann received grants of options to purchase
20,000 shares of common stock at market prices under the Company's Directors'
Compensation Stock Option Plan. Mr. Gann also received grants of options in
connection with loans made to the Company. See discussion under "Certain
Relationships and related transactions.
Upon recommendation of the Compensation Committee, the Board of
Directors adopted on November 14, 1996, a Bonus Compensation Plan in order to
provide incentives for the officers to remain with the Company. The Bonus
Compensation Plan provides that two percent (2%) of the net profits of the
Company above a profit target level will be set aside as a bonus pool for the
officers of the Company. The Board of Directors would allocate the bonus pool
among the officers after the completion of the annual audit. No officer would
receive a payment under the Bonus Compensation Plan unless that officer was in
the employ of the Company at the end of the fiscal year in which the allocation
was made. The profit target level for the fiscal year ended June 30, 1997 was
$2.5 million. Since that target level was not met, there is no bonus pool to be
allocated.
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. Incentive compensation will be paid in the
form of cash bonuses under the Bonus Compensation Plan and through the issuance
of stock options. The Compensation Committee intended to set the profit target
level at high levels compared to the Company's prior operating results, in order
that bonus payments will be made when the Company's operating results show
significant improvement. 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 20,000 shares of the common stock of the Company
during the previous fiscal year was in lieu of directors' fees.
COMPENSATION COMMITTEE
Dean E. Painter, Jr. K. Ray Allen
STOCK OPTION COMMITTEE
Gordon Linkon George Murnane, III
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative return on the
Company's common stock since June 30, 1992 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's of 3700-3799, 4200-4299, 4400-4599 and
4700-4799 U.S and Foreign over the same period. The companies comprising those
SIC Codes are engaged in trucking and transportation. The graph assumes an
initial $100.00 investment on June 30, 1992.
9
<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 09/22/97
including data to 06/30/97
CRSP Total Returns Index
6/30/92 6/30/93 6/30/94 6/30/95 6/28/96 6/30/97
CCAIR, Inc. 100.0 165.8 42.1 67.1 44.7 38.2
NASDAQ Stock
Market (U.S.
Companies) 100.0 125.8 127.0 169.5 217.6 264.6
NASDAQ Trucking
& Transportation
Stocks 100.0 123.0 126.0 140.9 156.2 179.0
Notes:
A. The lines represent monthly index levels derived from
compounded daily returns that include all dividends.
B. The indexes are reweighted daily, using the market
capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 06/30/92.
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Painter, Mr. Adams, Mr. Allen and Mr. Gann have extended short-term
secured lines of credit to the Company since July 1, 1995. 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. Adams, Mr. Painter and Mr. Allen. Mr. Gann extended short-term lines of
credit under terms similar to those set forth above. At his election, Mr. Gann
was issued options to acquire shares of the Company's common stock under the
Company's Stock Option Plan. See page 8 for a more complete description. Mr.
Gann made loans as follows:
====================================================================
DATE LOANED AMOUNT DATE EXPIRED RELATED RIGHTS GRANTED
====================================================================
06/17/97 $ 50,000 06/30/97 1,250
05/14/97 50,000 05/31/97 1,250
03/20/97 44,000 03/31/97 1,100
01/15/97 50,000 01/31/97 1,250
12/24/96 60,000 12/31/96 1,500
11/20/96 60,000 11/30/96 1,500
10/24/96 60,000 10/31/96 1,500
08/14/96 65,000 08/29/96 1,625
07/16/96 70,000 07/31/96 1,750
====================================================================
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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 did not report the issuance of warrants to purchase shares of
common stock until the Form 5 was filed with respect to the 1997 fiscal year.
Warrants having the right to acquire a total of 15,000 shares of the Company's
common stock were issued to Mr. Adams in four transactions in January, March,
May and June of 1997, that were required to be reported on a Form 4 for those
months.
11
<PAGE>
DIRECTORS' COMPENSATION STOCK OPTION PLAN
On November 14, 1996 the Board of Directors adopted a Directors'
Compensation Stock Option Plan (the "Directors' Plan"), which provides for the
annual grant to each director of options to acquire 20,000 shares of the
Company's common stock. A copy of the Directors' Plan is attached as Exhibit A.
The exercise price will be the fair market value of a share of the Company's
common stock on the date of grant, which is the date a director is first elected
to the Board of Directors and thereafter on the date of the Annual Meeting of
Shareholders. If a director is first elected to the Board on a date other than
the Annual Meeting of Shareholders, then the number of shares subject to option
is adjusted to reflect the period of service on the Board until the next Annual
Meeting of Shareholders. The Board of Directors authorized the issuance of
options to acquire 300,000 shares of common stock under the Directors' Plan.
Options are not exercisable for a period of six months after the date of grant.
The Board of Directors may amend or terminate the Directors' Plan at any time,
provided that such amendment or termination will not affect any option
previously granted without the consent of the holder of an option.
A proposal to ratify the Directors' Plan 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 formalize the Company's traditional
practice of granting stock options to its directors in lieu of fees for service
on the Board or on committees. The Board of Directors believes that this
Directors' Plan will assist the Company in retaining current members and
attracting new members at such time as necessary. The Company has six members of
the Board of Directors.
The Company has another Stock Option Plan, the Fifth Amended and
Restated Stock Option Plan, (the "Stock Option Plan") which had ben used to
compensate directors and provide incentive compensation to the officers of the
Company. Of the 1,375,000 shares previously reserved by the Company for grant
pursuant to the Plan, 1,332,775 are subject to outstanding options or had been
issued upon the exercise of stock options as of the date of this Proxy
Statement. Consequently, compensation to directors in the form of stock options
could not be made unless additional shares became available as a result of
cancellation or forfeiture of previously granted unexercised options. As of the
date of this Proxy Statement, options to purchase 795,943 shares remain
outstanding and unexercised and options to purchase 536,832 shares have been
exercised.
Under the Directors' Plan, options may be granted at not less than 100%
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 November 14, 1999, the Plan's
termination date. Options granted under the Plan may not exceed ten years in
duration. Options may not be transferred except by will or the laws of descent
and distribution, or in accordance with gifts to charitable organizations. The
options generally do not expire when a director's service on the Board of
Directors terminates, except that any options granted within six months of
termination will expire upon termination.
The closing price per share of the Company's common stock on September
19, 1997, as reported on the NASDAQ Small-Cap Stock Market was $3.00.
Under the Directors' Plan, stock options are issued as nonstatutory
stock options that do not qualify as 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 Directors' Plan are set forth as
follows:
================================================================================
DIRECTORS' COMPENSATION STOCK OPTION PLAN
================================================================================
NAME/POSITION EXERCISE PRICE NUMBER OF OPTIONS
================================================================================
Kenneth W. Gann
Chief Executive Officer $1.4375 20,000
John A. Adams, Director 1.4375 20,000
Dean E. Painter, Jr., Director 1.4375 20,000
K. Ray Allen, Director 1.4375 20,000
Gordon Linkon, Director 1.4375 20,000
George Murnane, III, Director1 1.75 15,000
------
115,000
================================================================================
1 Mr. Murnane was elected to the Board of Directors in January and
received 15,000 options on the date of his election.
================================================================================
The Board of Directors recommends a vote FOR ratification of the
adoption of the Directors' Plan.
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, 1998. 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 1998 will be held
on or about November 12, 1998. Stockholders desiring to submit proposals for
action at that meeting will be required to submit them to the Company on or
about June 12, 1998. 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 1, 1997
13
<PAGE>
EXHIBIT "A"
CCAIR, INC.
DIRECTORS' COMPENSATION STOCK OPTION PLAN
1. Purpose. The Directors' Compensation Stock Option Plan (the "Plan") of
CCAIR, Inc. (the "Company") is adopted by the Company's Board of Directors on
November 14, 1996. The Plan is designed to compensate the Directors of the
Company for their service as members of the Board of Directors and of committees
in lieu of cash compensation.
2. Nonqualified Stock Options. Options granted under the Plan shall be
granted an nonqualified stock options under the Internal Revenue Code of 1986,
as amended (the "Code").
3. Administration. The Plan shall be administered by the Board of Directors
of the Company. No member of the Board of Directors of the Company 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 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. Formula Grant. Each member of the Board of Directors of the Company upon
the adoption of this Plan shall receive options to purchase 20,000 shares of
Common Stock. Any person becoming a director after the effective date of this
Plan shall receive, on the date of such person's election, options to purchase
shares of Common Stock in accordance with the following formula:
number of whole months
prior to the next November x 20,000 = number of shares
-------------------------- (rounded to the
twelve nearest 100)
As an example, a director is elected to serve on February 10, 1997, the
formula would be calculated as follows:
8 (March - October) x 20,000 = 13,333.33 (13,300).
-----
12
Upon the date of the annual meeting of stockholders of the Company as
established by the bylaws of the Company, each member of the Board of Directors
then serving shall receive options to purchase 20, 000 shares of common stock.
5. Shares Subject to the Plan. The maximum aggregate number of shares of
Common Stock available pursuant to the Plan, subject to adjustment as provided
in Section 8 shall be 300,000 shares of the Company's Common Stock, par value
$.01 per share ("Common
<PAGE>
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 terminate or expire prior to
exercise shall be available for further option grant hereunder.
6. 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 as applicable:
(a) Number of Shares. Each option shall state the number of
shares to which it pertains.
(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. 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
-2-
<PAGE>
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 market value as determined in accordance
with Section 6(b).
(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 Are Transferable. Options granted pursuant to this
Plan may not be sold, pledged, assigned, or transferred in any manner
otherwise than in accordance with this paragraph. Options may be
transferred by gift, by will or the laws of descent or distribution to
family members or to charitable organizations qualifying under Section
501(c)(3) of the Code.
(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. In addition, each option shall be subject to early termination
as provided in the Plan or applicable option agreement.
(h) Termination of Services as a Director. Except as
otherwise provided in the applicable option agreement, if an
-3-
<PAGE>
optionee ceases to serve as a Director of the Company for any reason
other than retirement, disability or death, any options granted within
six months preceding the date that service as a Director ceases shall
terminate on such date. All other options shall be unaffected and shall
remain in full force and effect.
(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 8.
(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 Board of
Directors may in its discretion deem advisable from time to time.
7. 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.
8. 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
-4-
<PAGE>
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 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.
9. Effective Date of Plan. This Plan became effective on November 14,
1996, when it was adopted by the Company's Board of Directors and shall continue
to be effective only so long as there remain outstanding, and only with respect
to, unexercised, nonqualified options issued under the Plan, which are not
surrendered for issuance of replacement nonqualified options under the Plan.
10. 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 November 14, 1999. No options shall be granted under the
Plan after that date. Subject to the limitation contained in Section 11, 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.
11. 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.
IN WITNESS WHEREOF, this Directors' Compensation Stock Option Plan is
executed on behalf of the Company as of November 14, 1996.
CCAIR, Inc.
By: /s/ Kenneth W. Gann
President
ATTEST:
/s/ Patricia H. Bergman
Assistant Secretary
-5-
<PAGE>
CCAIR, INC. PROXY
4700 YORKMONT ROAD, SECOND FLOOR
CHARLOTTE, NORTH CAROLINA 28208
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of CCAIR, Inc. (the "Company") hereby
constitutes and appoints Kenneth W. Gann and Peter J. Sistare, and each of them,
with full power of substitution, attorneys and proxies to appear and vote, as
indicated below, all the shares of Common Stock of the Company held of record by
the undersigned on September 19, 1997 at the Annual Meeting of the Stockholders
of the Company to be held on November 13, 1997 and at any and all adjournments
thereof.
1. PROPOSAL TO ELECT THE SIX NOMINEES LISTED BELOW AS DIRECTORS TO
SERVE FOR A TERM EXPIRING AT THE ANNUAL MEETING FOR THE FISCAL YEAR ENDING JUNE
30, 1998 AND UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote for all nominees
(except as marked to the listed below
contrary below)
(Instruction: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below)
NOMINEES: Kenneth W. Gann, Dean E. Painter Jr., K. Ray Allen, Gordon Linkon,
George Murnane III and Eric W. Montgomery.
2. PROPOSAL TO RATIFY THE ADOPTION OF THE DIRECTORS' COMPENSATION STOCK OPTION
PLAN.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
3. PROPOSAL TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT
AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING JUNE 30, 1998.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" PROPOSALS 1, 2, AND 3. THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH
OTHER BUSINESS AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF, IN
THEIR SOLE DISCRETION.
Dated:__________________________, 1997.
__________________________
__________________________
Signature of Stockholder(s)
Please sign exactly as name appears on
this proxy. When shares are held by
joint tenants, both should sign. When
signing on behalf of a corporation or
partnership, or as attorney, agent or
fiduciary, please indicate the capacity
in which you are signing.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY, USING THE ENCLOSED ENVELOPE.
