SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934(Amendment No.____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss240.14a-11(c) or ss240.14a-12
...............................................................................
AIRWAYS CORPORATION
...............................................................................
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) or Schedule 14A.
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6i)(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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[X] 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 its filing.
1) Amount Previously Paid: $125
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2) Form, Schedule or Registration Statement No.: DEF 14A
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3) Filing Party: AIRWAYS CORPORATION
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4) Date Filed: 29-Jul-96
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AIRWAYS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 11, 1996
TO THE SHAREHOLDERS OF AIRWAYS CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of Airways
Corporation, a Delaware corporation (the "Company"), will be held at the AirTran
Airways, Inc. Maintenance Hangar located at 4170 Wiley Drive, Orlando, Florida,
on September 11, 1996 at 10:00 A.M. local time, for the following purposes, all
of which are more completely set forth in the accompanying Proxy Statement:
1. To elect Directors of the Company.
2. To consider and vote upon a proposal to increase to 1,150,000 shares the
number of shares of Common Stock reserved pursuant to the Company's 1995
Stock Option Plan.
3. To ratify the selection of KPMG Peat Marwick LLP, independent certified
public accountants, as auditors for the Company for the year ending March
31, 1997.
4. To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on July 25, 1996, are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By order of the Board of Directors,
Mark B. Rinder, Secretary
Orlando, Florida
Date: July 27, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. SHAREHOLDERS
WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY
AND VOTE THEIR SHARES IN PERSON.
AIRWAYS CORPORATION
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 11, 1996
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Airways Corporation, a Delaware corporation (the
"Company"), of proxies from the holders of the Company's Common Stock, par value
$.01 per share (the "Common Stock"), for use at the 1996 Annual Meeting of
Shareholders of the Company to be held at 10:00 A.M. local time, on Wednesday,
September 11, 1996, or at any adjournment(s) or postponement(s) thereof (the
"Annual Meeting"), pursuant to the foregoing Notice of Annual Meeting of
Shareholders.
The approximate date that this Proxy Statement and the enclosed form of proxy
are first being sent to Shareholders is August 9, 1996. Shareholders should
review the information provided herein in conjunction with the Company's 1996
Annual Report, which accompanies this Proxy Statement. The Company's principal
executive offices are located at 6280 Hazeltine National Drive, Orlando, Florida
32822, and its telephone number is (407) 859-1579.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's Shareholders will consider and vote upon
the following matters:
(1) The election of five members, divided into three separate classes, to the
Company's Board of Directors to serve until their successors are duly
elected and qualified;
(2) A proposal to increase to 1,150,000 shares the number of shares of Common
Stock reserved for issuance pursuant to the Company's 1995 Stock Option
Plan;
(3) The ratification of KPMG Peat Marwick LLP, as the Company's independent
auditors for the year ending March 31, 1997; and
(4) Such other business as may properly come before the Annual Meeting,
including any adjournments or postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all shares
represented by valid proxies received pursuant to this solicitation (and which
have not been revoked in accordance with the procedures set forth above) will be
voted (a) FOR the election of the five nominees for directors named below; (b)
FOR the proposal to increase to 1,150,000 shares the number of shares of Common
Stock reserved for issuance pursuant to the Company's 1995 Stock Option Plan,
and (c) FOR the ratification of the appointment of KPMG Peat Marwick LLP, as the
Company's independent auditors. In the event a shareholder specifies a different
choice by means of the enclosed proxy, his or her shares will be voted in
accordance with the specification so made. The Board does not know of any other
matters that may be brought before the Annual Meeting nor does it foresee or
have reason to believe that proxy holders will have to vote for substitute or
alternate nominees. In the event that any other matter should come before the
Annual Meeting or any nominee is not available for election, the persons named
in the enclosed proxy will have discretionary authority to vote all proxies not
marked to the contrary with respect to such matters in accordance with their
best judgment.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on July 25, 1996 as the
record date (the "Record Date") for determining shareholders of the Company
entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
there were 8,997,937 shares of Common Stock issued and outstanding, all of which
are entitled to be voted at the Annual Meeting. Each share of Common Stock is
entitled to one vote on each matter submitted to shareholders for approval at
the Annual Meeting. Shareholders do not have the right to cumulate their votes
for directors.
The attendance, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors will be elected by a plurality of
the votes cast by the shares of Common Stock represented in person or by proxy
at the Annual Meeting. The affirmative vote of a majority of the shares of
Common Stock present and voting at the Annual Meeting is required to approve the
proposal to increase to 1,150,000 shares the number of shares of Common Stock
reserved for issuance pursuant to the Company's 1995 Stock Option Plan and to
ratify the appointment of KPMG Peat Marwick LLP as the Company's independent
auditors. If less than a majority of outstanding shares entitled to vote are
represented at the Annual Meeting, a majority of the shares so represented may
adjourn the Annual Meeting to another date, time or place, and notice need not
be given of the new date, time or place if the new date, time or place is
announced at the meeting before an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more inspectors of
election for the meeting. Such inspector(s) shall determine the number of shares
of Common Stock represented at the meeting, the existence of a quorum and the
validity and effect of proxies, and shall receive, count and tabulate ballots
and votes and determine the results thereof.
Pursuant to Delaware law, abstentions and broker non-votes are counted as
present for purposes of determining the presence of a quorum. However,
abstentions are treated as present and entitled to vote and thus have the effect
of a vote against a matter. A broker non-vote on a matter is considered not
entitled to vote on that matter and thus is not counted in determining whether a
matter requiring approval of a majority of the shares present and entitled to
vote has been approved or whether a plurality of the shares present and entitled
to vote has been voted.
A list of shareholders entitled to vote at the Annual Meeting will be available
at the Company's offices, 6280 Hazeltine National Drive, Orlando, Florida 32822,
for a period of ten days prior to the Annual Meeting and at the Annual Meeting
and itself for examination by any shareholder.
SECURITY OWNERSHIP
The following table sets forth, as of July 1, 1996, the number of shares of
Common Stock of the Company which were owned beneficially by (i) each person who
is known by the Company to own beneficially more than 5% of its Common Stock,
(ii) each director and nominee for director, (iii) the Named Executive Officers
(as defined in "Executive Compensation") and (iv) all directors and executive
officers of the Company as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(2)(3)(4) OUTSTANDING SHARES(2)
<S> <C> <C>
Carl R. Pohlad 1,379,310 15.33%
Pohlad Companies
3800 Dean Bosworth Plaza
60 South Street
Minneapolis, MN 55402
Lowell T. Swenson 461,748(6) 5.13%
1020 Centennial Dr.
Three River Falls, MN 56701
Robert D. Swenson 542,895(7) 5.87%
Alan Stephen 34,000 (5)
John S. Olbrych 1,000 (5)
John K. Ellingboe 25,620 (5)
Roger T. Munt 8,000 (5)
John F. Horn 100,000 1.10%
All directors and executive 737,115 7.85%
officers as a group (11 persons)
</TABLE>
__________________
(1) Unless otherwise indicated, the address of each beneficial owner is Airways
Corporation, 6280 Hazeltine National Drive, Orlando, Florida 32822.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date hereof upon exercise
of options and warrants. Each beneficial owner's percentage ownership is
determined by assuming that options and warrants that are held by such
person (but not those held by any other person) and that are exercisable
within 60 days from the date hereof have been exercised.
(3) Includes shares which may be acquired within the next 60 days in the
following amounts by exercise of stock options: R. D. Swenson -- 250,000;
A. Stephen -- 4,000; J. Ellingboe -- 4,000; R. Munt -- 4,000; J. Horn --
100,000; and all directors and executive officers as a group -- 387,000.
(4) The shares shown do not include the following shares of common stock which
are subject to stock options that are not exercisable within the next 60
days: A. Stephen -- 4,000; J. Olbrych -- 24,000; J. Ellingboe -- 4,000; R.
Munt -- 4,000; and all directors and executive officers as a group --
136,000.
(5) Ownership is less than one percent (1%) of total shares outstanding.
(6) Includes 100,000 shares of Common Stock for which Mr. Swenson shares voting
power with his wife.
(7) Includes (i) 38,220 shares of Common Stock held by Mr. Swenson's wife, and
(ii) 29,720 shares of Common Stock Mr. Swenson holds as custodian for his
children.
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation and Bylaws provide that the number of
directors shall be a minimum of three and a maximum of twelve, which number is
fixed from time-to-time by the Board of Directors. The number of directors is
currently fixed at six. The Company's Certificate of Incorporation provides that
the Board of Directors shall consist of three classes of directors, as nearly
equal in number as possible. Initially, pursuant to the Company's Certificate of
Incorporation, all directors comprising the three classes shall be elected at
the 1996 Annual Meeting for terms expiring for Class I, Class II and Class III
in 1997, 1998 and 1999, respectively. Thereafter, commencing in 1997, one class
of directors is to be elected each year for a term extending to the third
succeeding annual meeting after such election. On July 10, 1996, John F. Horn
retired as an officer and director of the Company, leaving a vacancy on the
Board. Prior to the 1997 Annual Meeting, the Board of Directors, in accordance
with the Company's Bylaws, may by majority vote appoint a sixth member of the
Board to serve as a Class I director until the expiration of his or her term at
the 1997 Annual Meeting. The members of the Board also comprise the board of
directors of AirTran Airways, Inc., the Company's subsidiary ("AirTran").
The Company has nominated the following five individuals to be elected as
directors in their respective classifications and each such director elected at
the Annual Meeting shall serve for a term expiring as indicated below or when
his successor has been duly elected and qualified:
TERM
NAME CLASSIFICATION EXPIRATION
John K. Ellingboe I 1997
Roger T. Munt II 1998
John S. Olbrych II 1998
Robert D. Swenson III 1999
Alan R. Stephen III 1999
The Board of Directors has no reason to believe that any nominee will refuse or
be unable to accept election; however, in the event that one or more nominees
are unable to accept election or if any other unforeseen contingencies should
arise, each proxy that does not direct otherwise will be voted for the remaining
nominees, if any, and for such other persons as may be designated by the Board
of Directors.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Robert D. Swenson 42 Chairman of the Board, President and Chief Executive Officer
of the Company and AirTran
John K. Ellingboe 45 Director of the Company and AirTran
Roger T. Munt 47 Director of the Company and AirTran
John S. Olbrych 40 Director of the Company and AirTran
Alan R. Stephen 49 Director of the Company and AirTran
Mark B. Rinder 39 Vice President, Finance, Chief Financial Officer, Treasurer
and Secretary of the Company and Vice President, Finance and
Chief Financial Officer of AirTran
Gustavo A. Carbonell 31 Vice President, Planning and Scheduling, of AirTran
Stuart L. Henning 55 Vice President, Operations, of AirTran
Cathy Hoag 39 Vice President, Sales and Marketing, of AirTran
Arlie D. Johnson 47 Vice President, Customer Service, of AirTran
</TABLE>
ROBERT D. SWENSON, a Class III Director, has served as Chairman of the Board
and Chief Executive Officer of the Company since April 1995 and as Chairman
of the Board of AirTran since June 1994. From June 1994 to January 1995, Mr.
Swenson was President of AirTran. On July 11, 1996, the Board of Directors of
the Company and AirTran appointed him to the office of President of the
Company and President and Chief Executive Officer of AirTran. Mr. Swenson
served as a director, President and Chief Executive Officer of the Mesaba
Holdings, Inc. and its subsidiary, Mesaba Aviation, Inc. from 1981 to 1995
and was Chairman of the Board of Mesaba Holdings, Inc. and Mesaba Aviation,
Inc. from 1986 to September 1995. Mr. Swenson also served as President of
Mesaba's predecessor from 1978 until March 1981. Mr. Swenson holds an Airline
Transport Pilot certificate with flight instructor privileges and is type
rated in the Fokker F-27 aircraft. Mr. Swenson was a member of the Board of
Directors of the Regional Airline Association from 1985 through 1988 and
served as Treasurer of the Association during 1987 and 1988. He was elected
to serve as Vice Chairman of the Board of Directors of the Association for
1992 and was elected Chairman for 1993.
JOHN S. OLBRYCH, a Class II Director, has served as a director of the Company
from April 1995 and a director of AirTran since June 1994. He served as
Secretary and Treasurer of the Company from April 1995 to May 1996. Since
April 22, 1996, Mr. Olbrych has been Chief Financial Officer of Mac-Gray
Company, Cambridge, Massachusetts and since June 20, 1995, he has been
President of D.C.-III Aviation, Inc., Newbury, Massachusetts. Mr. Olbrych
served as Senior Vice President, Finance and Treasurer of Mesaba Holdings,
Inc. and Mesaba Aviation, Inc. from August 1994 until September 1995, and
served as a director of Mesaba Holdings, Inc. from January 1988 to September,
1995. Mr. Olbrych has been a business and financial consultant since March
1992. He was Managing General Partner of Cooper & Olbrych from March 1991 to
February 1992, and was a Vice President of State Street Bank and Trust
Company, Boston, Massachusetts, from June 1986 to February 1991. From October
1984 to June 1986, Mr. Olbrych was Vice President of Britmar Corporation.
From August 1981 to October 1984, Mr. Olbrych was an Assistant Vice President
of State Bank and Trust Company
JOHN K. ELLINGBOE, a Class I Director, has served as a director of the
Company since April 1995 and a director of AirTran since June 1994. Mr.
Ellingboe served as a director of Mesaba Holdings, Inc. from September 1990
to September 1995. Since June 1996, Mr. Ellingboe has been Chief Executive
Officer of PMSA Management Group, LLC, a management consulting firm. From
October 1993 to May 1996, he was Senior Vice President, Business Development,
General Counsel and Secretary of Fingerhut Companies, Inc. From May 1990 to
October 1993, he was Vice President, General Counsel and Secretary of
Fingerhut Companies, Inc. Prior to 1990, he was an attorney in private
practice.
ROGER T. MUNT, a Class II Director, has served as a director of the Company
since 1995 and a director of AirTran since June 1994. Mr. Munt served as a
director of Mesaba Holdings, Inc. from June 1984 to September 1995. Mr. Munt
has been Executive Vice President and Chief Operating Officer of IGM Inc.
since April 1994 and was President of Munt & Associates from March 1992 to
April 1994. He served as General Manager of Helijet U.S. Inc. from March 1990
to March 1992. He was Vice President of Marketing and Strategic Planning of
Dee Howard Co. from December 1988 to March 1990, and served as the Senior
Vice President of Marketing for Fairchild Aircraft Corporation, Texas, a
manufacturer of aircraft, from 1984 until December 1988.
ALAN R. STEPHEN, a Class III Director, has served as a director of the
Company since April 1995 and a director of AirTran since June 1994. Mr.
Stephen served as a director of Mesaba Holdings, Inc. from November 1987 to
September 1995. Mr. Stephen has been President of Twin Otter International,
Ltd. since May 1987. From September 1978 to May 1987, Mr. Stephen was
Executive Vice President of the Regional Airline Association in Washington,
D.C.
MARK B. RINDER has been the Vice President, Finance, Chief Financial Officer,
Secretary and Treasurer of the Company since May, 1996, and the Vice President,
Finance, and Chief Financial Officer of AirTran since February 1996. From 1993
through 1995, Mr. Rinder was Vice President, Finance of Caterair International
Corporation, and from 1991 to 1993 was Vice President, Business Development for
Europe and North America for that company. From 1989 to 1991, Mr. Rinder served
Marriott Corporation and Caterair International Corp. as their Controller for
European operations.
STUART L. HENNING has been Vice President of Operations of AirTran since
February 1996. From 1993 to 1996 he served as Director of Flight Support
Services for the University of North Dakota Aerospace Foundation. From 1988 to
1993 he was Vice President of Flight Operations for Northwest Airlines, Inc. and
prior thereto Mr. Henning served in a variety of senior management positions in
Pilot Training at Northwest Airlines and, earlier as a pilot commencing in 1969.
CATHY HOAG has been Vice President of Sales and Marketing of AirTran since
February 1996. From 1984 to 1996 Ms. Hoag served in several marketing-related
positions with The Hertz Corporation, ultimately serving as its Director of
Advertising from 1990 to 1996.
ARLIE D. JOHNSON has been Vice President of Customer Service of AirTran since
November 1995. Prior thereto, he was Director of Operations at Sun Country
Airlines, Inc. from September to November 1995. In 1993, he co-founded and
was a principal of Strategic Opportunities, Inc., a consulting firm, until
September 1995. From 1989 to 1993, he served as Director of Customer Service
for Northwest Airlines, Inc. in charge of its Minneapolis hub operations.
GUSTAVO A. CARBONELL has served as Vice President of Planning and Scheduling
of AirTran since March 1995. From October 1992 to March 1994, he served as
Director of Planning and Scheduling for Mesa Air Group. Prior thereto, he was
a Manager of Market Planning and Analysis for Southwest Airlines Co. from
April 1985 to October 1992.
ELECTION OF OFFICERS AND DIRECTORS
The Company's officers are elected annually by the Board of Directors and serve
at the discretion of the Board of Directors. The Company's directors hold office
until the annual meeting of shareholders for the years in which their respective
terms expire as indicated above or until their successors are duly elected. At
each subsequent annual meeting of shareholders, successors to the class of
directors whose term expires at such meeting will be elected to serve for
three-year terms and until their successors are elected and qualified.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has established an Audit Committee and a Compensation
Committee. The Company does not have a nominating committee.
The members of the Audit Committee are Roger T. Munt and John K. Ellingboe. The
Audit Committee's functions include reviewing with the Company's independent
public accountants their reports and audits, and reporting their findings to the
full Board.
The members of the Compensation Committee are Alan R. Stephen, John K. Ellingboe
and Roger T. Munt. The Compensation Committee's functions consist of
establishing general levels of compensation for all employees of the Company,
setting the annual salary of each of the executive officers of the Company,
granting options to employees under the Company's option plans, and reviewing
and approving compensation and benefit plans of the Company. During the fiscal
year-ended March 31, 1996, the Board of Directors held 14 meetings and took
action 5 additional times by unanimous written consent. The Audit Committee held
no meetings, and the Compensation Committee held six meetings during the last
fiscal year. Each of the incumbent directors attended at least 75% of the
meetings of the Board and each committee of which he was a member held during
the last fiscal year.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive a fee of $1,500 per
quarter and are reimbursed for out-of-pocket expenses incurred in performing
their duties as directors. Under the 1995 Director Stock Option Plan, an option
to purchase 4,000 shares of common stock is automatically granted to each
non-employee director on April 25 of each year, exercisable at 100% of the fair
market value of the Company's common stock on the date of grant. The options
have a term of six years and become exercisable on the first anniversary of the
date of grant.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the Company's outstanding Common Stock, to file with the Securities and Exchange
Commission (the "SEC") initial reports of ownership and reports of changes in
ownership of Common Stock. Such persons are required by SEC regulation to
furnish the Company with copies of all such reports they file. To the Company's
knowledge, based solely on a review of the copies of such reports furnished to
the Company, initial reports of ownership were filed late for Mr. Carl Pohlad, a
greater than ten percent beneficial owner; for Messrs. Ellingboe, Munt, Olbrych,
Stephen and Swenson, directors of the Company; for Messrs. Carbonell, Johnson,
Rinder, and Henning, and Ms. Hoag, executive officers of the Company; and for
Mr. Horn, a former director and executive officer of the Company.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following compensation table sets forth, for the fiscal year ended March 31,
1996, the cash and certain other compensation paid by the Company to its Chief
Executive Officer, and the Company's other executive officers whose compensation
for the fiscal year ended 1996 exceeded $100,000 (collectively, the "Named
Executive Officers"). No other executive officer earned an annual salary and
bonus in excess of $100,000 during such year.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
OTHER ANNUAL SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITIONS YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS/SARS (#)
<S> <C> <C> <C> <C> <C>
Robert D. Swenson 1996 $ 30,771 -- -- 250,000(1)
Chairman and Chief Executive
Officer of the Company, Chairman
of AirTran
John F. Horn(2) 1996 $140,005 $1,855 $81 100,000(1)
President of the Company and
President and Chief Executive
Officer of AirTran
</TABLE>
_________________________
(1) Represents options granted on April 25, 1995 under the Company's 1995 Stock
Option Plan at an exercise price of $2.70 per share.
(2) Mr. Horn retired on July 10, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all grants of options to the Named Executive Officers
of the Company in the fiscal year ended March 31, 1996. The options were granted
under the Company's 1995 Stock Option Plan. Pursuant to SEC rules, the table
also shows the value of the options granted at the end of the option terms (six
years) if the stock price were to appreciate annually by 5% and 10%,
respectively. There is no assurance that the stock price will appreciate at the
rates shown in the table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------------- VALUE
PERCENT AT ASSUMED ANNUAL RATES
OF TOTAL OF
NUMBER OF OPTIONS STOCK PRICE APPRECIATION
SECURITIES GRANTED TO EXERCISE OR FOR OPTION TERM(1)
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION -------------------------
NAME OPTIONS GRANTED FISCAL YEAR ($/SH) DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Robert D. Swenson 250,000 37.5% $2.70 4/25/2001 $905,000 $1,196,000
John F. Horn 100,000 15.0% $2.70 4/25/2001 $362,000 $ 478,000
</TABLE>
____________________
(1) If the price of the Company' Common Stock appreciates, the value of the
Company's Common Stock held by the shareholders will also increase. For
example, the market value of the Company's Common Stock on September 8,
1995 (the Company's first day of trading on NASDAQ) was approximately $72.5
million, based upon the market price of $8-1/8 on that date. If the
Company's Common Stock increases by 5% per year, the market value on April
25, 2001 of the same number of shares would be approximately $97.2 million.
If the price of the Company's Common Stock increases by 10% per year, the
market value on April 25, 2001 would be approximately $128.5 million.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table provides information as to options exercised by each of the
Named Executive Officers of the Company during fiscal year ended March 31, 1996
and the value of options held by such officers at year end.
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ON REALIZED OPTIONS AT 3/31/96 AT 3/31/96($)(1)
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Robert D Swenson 0 0 250,000 0 $1,637,500 0
John F. Horn 0 0 100,000 0 $ 655,000 0
</TABLE>
____________________
(1) The closing sale price of the Common Stock on March 29, 1996 (the last
trading day of the Company's fiscal year) as reported by NASDAQ was $9.25
per share. Value is calculated by multiplying (a) the difference between
$9.25 and the option exercise price by (b) the number of shares of Common
Stock underlying the option.
THE COMPANY'S STOCK OPTION PLANS
STOCK OPTION PLAN
On April 25, 1995, the Board of Directors adopted the Company's 1995 Stock
Option Plan (the "Stock Option Plan") pursuant to which options may be granted
for up to 1,000,000 shares of the Company's Common Stock. 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 Board is submitting to shareholders a
resolution to increase, to 1,150,000 shares, the number of shares subject to
issuance under the 1995 Stock Option Plan. For a discussion of the Stock Option
Plan, see "Proposal to Increase the Number of Shares Reserved for Issuance
Pursuant to the Company's Stock Option Plan."
DIRECTOR STOCK OPTION PLAN
The 1995 Director Stock Option Plan (the "DSOP") was adopted by the Board of
Directors on April 25, 1995. The purpose of the DSOP is to attract the best
available individuals to serve as non-employee directors of the Company
("Outside Directors") and to encourage their continued service on the Board of
Directors. The maximum aggregate number of shares of the Company's Common Stock
which may be issued pursuant to the DSOP is 150,000. The DSOP is intended to
comply with Rule 16b-3 under the Securities Exchange Act of 1934.
The DSOP provides for the automatic grant of options to purchase the Company's
Common Stock to Outside Directors according to fixed terms. On April 25, 1995,
each Outside Director then serving on the Board of Directors was automatically
granted an option to purchase 4,000 shares at an exercise price of $2.70 per
share and will automatically receive an option to purchase 4,000 shares on each
subsequent April 25. A new Outside Director automatically receives options to
purchase 4,000 shares upon first becoming an Outside Director and on each April
25 after the year of the original grant. Each Outside Director will continue to
receive automatic annual grants until the Outside Director ceases to serve as
such, until the DSOP terminates, or until the shares authorized for issuance
under the DSOP are exhausted. An option may have a term of up to ten years and
will be exercisable not earlier than the first anniversary of the date of the
grant of the option. The exercise price for each share of the Company's Common
Stock purchased pursuant to an option will be 100% of the fair market value of
such share on the date of the grant of the option.
No option granted under the DSOP may be transferred other than by will or by the
laws of descent and distribution, and all options are exercisable, during the
lifetime of the Outside Director, only by the Outside Director. If an Outside
Director ceases to serve as a director for any reason other than death or total
disability (as defined in the DSOP), all rights to exercise his or her options
granted under the Plan will terminate, unless such termination is waived by the
Board of Directors. In the event an Outside Director dies while serving as a
director or within three months after termination of his or her service as a
director because of his or her total disability, his or her options may be
exercised prior to the earlier to occur of the expiration of the option or three
years from the date of death. In the event an Outside Director's service as a
director terminates because of a total disability and the Outside Director has
not died within three months of such termination, his or her options may be
exercised prior to the earlier to occur of the expiration of the option or one
year from the date of such termination.
The options granted under the DSOP will not constitute incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended. There is no taxable income to a participant as a result of the grant of
an option under the DSOP. However, upon exercise, the participant will generally
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 will
ordinarily be entitled to a corresponding tax deduction at the time that the
participant realizes compensation income. Upon a subsequent sale of the shares
so acquired, the participant will recognize a capital gain or loss equal to the
difference between the amount realized in the sale and the fair market value of
the shares on the date of exercise. 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.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee consists of three independent, non-employee directors
appointed by the Board of Directors. The Committee has been authorized by the
Board of Directors to set the annual salary and incentive compensation of each
of the executive officers of the Company, to grant stock options to officers and
key employees under the Company's Stock Option Plan and to review and approve
overall compensation levels and benefits plans of the Company. The full Board of
Directors generally does not review the Compensation Committee's decisions
relating to executive compensation except for the compensation of the Chief
Executive Officer and in the event that such decisions require the adoption of
certain documents or specific plans.
COMPENSATION PHILOSOPHY
The Company's executive compensation policies, as endorsed by the Compensation
Committee, are designed to:
(a) Attract, motivate and retain executives who the Committee believes
contribute to the long-term success of the Company;
(b) Reward individual contributions to the Company's accomplishment of certain
profit, operational and other goals;
(c) Promote a pay-for-performance philosophy by making a significant portion of
total compensation subject to performance-based goals while providing
compensation opportunity that is generally competitive for positions with
similar responsibilities in similarly situated companies; and
(d) Provide opportunities to own the Company's common stock to promote
alignment of the executives' interests with those of the Company's
shareholders.
The Compensation Committee believes that each of these factors is important to
the financial performance of the Company. In implementing its executive
compensation program, the Company and the Committee seek to create compensation
plans incorporating these factors. The Compensation Committee also believes,
however, that enhancement of shareholder value will best be served by
compensation plans that encourage meeting operational, safety and reliability
standards and the Committee seeks to recognize these factors as well as
financial measures in setting total compensation of the Company's officers.
The components of the Company's current executive compensation program are
comprised of base salary, cash incentive compensation and long-term incentive
awards in the form of stock option grants.
BASE SALARY AND CASH INCENTIVE COMPENSATION
The Compensation Committee establishes the base salary and incentive
compensation of the Chief Executive Officer and approves the salaries and
incentive compensation of the other executive officers as recommended by the
Chief Executive Officer. Base salary levels, including that of the Chief
Executive Officer, are reviewed annually by the Compensation Committee.
Incentive compensation, in the form of profit sharing participation, is
generally paid quarterly and is designed to provide a direct financial incentive
to achieve the Company's profit goals. The senior executive officers ordinarily
receive a significant portion of their total compensation through incentive
compensation.
LONG-TERM INCENTIVE COMPENSATION
The Company's stock option program is intended to provide a long-term incentive
for executive officers and other employees. The Committee believes that stock
option grants allow executives and other employees to participate in the success
of the Company and link their interests directly with those of the shareholders.
If there is no price appreciation in the Company's common stock, option holders
receive no benefit, because stock options are granted with an exercise price
equal to the fair market value of the common stock on the day of grant. The
number of stock options granted to executives, including the Chief Executive
Officer, is based primarily on base salary level, the number of options
previously granted, individual performance and the Company's financial and
operational performance. The executive officers named in the Summary
Compensation Table, were granted options to purchase a total of 350,000 shares
during fiscal 1996. However, Robert D. Swenson's option to purchase 250,000
shares was granted in connection with the anticipated spin-off of the Company
from its former parent and Mr. Swenson's agreement to cancel an option for
250,000 shares of the former parent company's stock.
Respectfully submitted,
THE COMPENSATION COMMITTEE
Roger T. Munt John K. Ellingboe Alan R. Stephen
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Roger T. Munt, John K. Ellingboe and Alan R. Stephen served on the Compensation
Committee during the fiscal year ended March 31, 1996. No member of the
Compensation Committee of the Board of Directors was an officer, former officer
or employee of the Company or its subsidiary during the fiscal year ended March
31, 1996. John F. Horn, the President and a Director of the Company until July
10, 1996, was also Chairman of the Board of MarketLink, Inc. ("MarketLink") and
served on the compensation committee of that company during the fiscal year
ended March 31, 1996. No other executive officer of the Company served as a
member of the compensation committee or board of directors of another entity
which had an executive officer who served on the Company's Compensation
Committee or Board of Directors during the fiscal year ended March 31, 1996.
During the fiscal year ended March 31, 1996, AirTran and MarketLink, Inc.
entered into an agreement pursuant to which MarketLink provided AirTran with an
automated telephone system. The agreement provides for monthly payments to
MarketLink of $4,400 for services rendered under the agreement for a term of 36
months, and $95.00 per hour for services requested by AirTran outside the scope
of the agreement. During the fiscal year ended March 31, 1996, the Company paid
MarketLink $5,700. See "Certain Transactions with Management."
COMPANY STOCK PERFORMANCE
The following graph provides a quarterly comparison of the total cumulative
returns for the Company's Common Stock, the CRSP Index for the NASDAQ Stock
Market (U.S. companies), and the CRSP Index for air carriers traded on the
NASDAQ System. The CRSP Indexes are prepared by the Center for Research in
Security Prices of the University of Chicago. The total cumulative return for
each period is based on the investment of $100 on September 8, 1995, assuming
compounded daily returns and the reinvestment of all dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
6/30/95 9/8/95 12/29/95 3/29/96
Company 0.000 100.000 115.385 113.846
Market Index 87.851 100.000 99.587 104.207
Peer Index 90.653 100.000 111.571 118.784
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 $100.00 on 9/08/95, the day the
Company's Common Stock was listed for trading on the NASDAQ-NMS. On
9/08/95, the closing sales price of the Common Stock was $8-1/8.
CERTAIN TRANSACTIONS WITH MANAGEMENT
In January 1996, AirTran, entered into an agreement with MarketLink, Inc., a
Minnesota corporation, pursuant to which MarketLink was retained to provide an
automated telephone system for AirTran, inclusive of hardware, software and
associated accessories. The agreement calls for monthly payments to MarketLink
of $4,400 for services provided under the agreement for a term of 36 months, and
$95.00 per hour, plus out-of-pocket costs, for all development, programming,
testing and installation provided by MarketLink for applications requested by
AirTran for purposes other than specified in the agreement. During the fiscal
year ended March 31, 1996, the Company paid MarketLink $5,700. John F. Horn, an
executive officer and director of the Company and AirTran during the year-ended
March 31, 1996, was the Chairman of the Board of MarketLink from January 1993
until May 1996. MarketLink is a publicly traded company of which Mr. Horn is a
5.7% beneficial owner. The transaction with MarketLink was reviewed and approved
by all members of the Board, except Mr. Horn, who abstained from voting.
PROPOSAL TO INCREASE THE NUMBER OF SHARES RESERVED FOR
ISSUANCE PURSUANT TO THE COMPANY'S STOCK OPTION PLAN
The Company's Board of Directors has unanimously adopted, subject to the
approval by the Company's shareholders, a resolution to increase to 1,150,000
shares the number of shares of Common Stock in the Company's 1995 Stock Option
Plan (the "Stock Option Plan") that are reserved for issuance to the Company's
employees. The Stock Option Plan presently authorizes 1,000,000 shares for
issuance upon exercise of stock options. The text of the Stock Option Plan, as
modified pursuant to this amendment, is attached hereto as Exhibit A. The
material features of the Stock Option Plan are discussed below, but the
description is subject to, and is qualified in its entirety by, the full text of
the Stock Option Plan, as amended.
The purpose of the Stock Option Plan is to provide additional incentives to
attract and retain qualified employees through the encouragement of stock
ownership in the Company by such persons. In furtherance of this purpose, the
Stock Option Plan authorizes (a) the granting of incentive or non-statutory
stock options (or combinations of both) to purchase Common Stock to employees of
the Company, (b) the provision of loans for the purpose of financing the
exercise of options, and (c) the use of already owned Common Stock as payment of
the exercise price for options granted under the Stock Option Plan (such
provisions being at times referred to herein as the "Stock Swap").
Approval of the increase in the number of shares reserved for issuance under the
Stock Option Plan by the Company's shareholders pursuant to the Stock Option
Plan is one of the conditions of Rule 16b-3, a rule promulgated by the
Securities and Exchange Commission (the "SEC") that provides an exemption from
the operation of the "short-swing profit" recovery provisions of Section 16(b)
of the Securities Exchange Act of 1934 (the "Exchange Act"), with respect to the
acquisition of options, the use of the Stock Swap and certain other transactions
by officers and directors of the Company.
Options are intended to be granted primarily to those persons who possess a
capacity to contribute significantly to the successful performance of the
Company. Because persons to whom grants of options are to be made are to be
determined from time-to-time by the Compensation Committee, in its discretion,
it is impossible at this time to indicate the precise number, name or positions
of persons who will receive options or the number of shares for which options
will be granted to any such employee, except to the extent already granted or
conditionally granted.
Assuming approval of the proposed amendment, an aggregate of 1,150,000 shares of
Common Stock (subject to adjustment as discussed below) will be reserved for
sale upon exercise of options granted under the Stock Option Plan. As of July 1,
1996, options to purchase 667,000 shares of Common Stock are issued and
outstanding under the Stock Option Plan. The shares acquired upon exercise of
options granted under the Stock Option Plan will be authorized and unissued
shares of Common Stock. The Company's shareholders will not have any preemptive
rights to purchase or subscribe for the shares reserved for issuance under the
Stock Option Plan. If any option granted under the Stock Option Plan expires or
terminates for any reason other than having been exercised in full, the
unpurchased shares subject to that option will again be available for purposes
of the Stock Option Plan.
The following table sets forth, as of July 1, 1996, certain information
regarding options granted under the Stock Option Plan to the persons and groups
indicated. Of such options, 518,000 are currently, or within the next 60 days
will become exercisable.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SHARES EXERCISE PRICE OPTIONS AT
NAME AND POSITION SUBJECT TO OPTIONS PER SHARE JULY 1, 1996(1)
<S> <C> <C> <C>
Robert D. Swenson 250,000 $2.70 $1,043,750
Chairman of the Board,
Chief Executive Officer and
President of the Company and AirTran
John F. Horn 100,000 $2.70 $ 417,500
President of the Company;
President and Chief Executive Officer
of AirTran(2)
All current directors who are not executive 20,000(3) $7.75 $ 0
officers as a group (1 person)
All current executive officers 375,000 $4.51(5) $ 886,875
as a group (6 persons)(4)
All employees as a group, other than 172,000 $5.28(6) $ 274,340
executive officers (131 persons)
</TABLE>
___________________________
(1) The closing sale price of the Common Stock on July 1, 1996 was $6-7/8 per
share. Value is calculated by multiplying (a) the difference between $6-7/8
and the option exercise price by (b) the number of shares of Common Stock
underlying the option.
(2) Mr. Horn retired on July 10, 1996.
(3) Represents shares issuable upon exercise of options granted to John S.
Olbrych while he was an officer of the Company.
(4) Does not include Mr. Horn's option for 100,000 shares.
(5) Represents an average of option exercise prices ranging from $2.70 to
$10.75 per share.
(6) Represents an average of option exercise prices ranging from $2.70 to
$10.00 per share.
TERMS AND CONDITIONS
The Stock Option Plan is administered by the Compensation Committee of the Board
of Directors, which consists exclusively of non-employee directors. The
Compensation Committee has the authority to grant options, determine the terms
of options, select the employees to whom options are granted, promulgate rules
relating to the Plan, interpret the Plan, and to take other actions necessary or
advisable for the administration of the Stock Option Plan.
Under the Stock Option Plan, the option excercise price per share may not be
less than the fair market value of the underlying shares on the date of grant
or, in the case of an incentive stock option granted to a 10% shareholder, 110%
of the fair market value on the date of grant. For purposes of the Stock Option
Plan, the term "fair market value" means the closing sale price of the Common
Stock, as reported by the National Association of Securities Dealers Automated
Quotation System (the "NASDAQ") on the date of grant. (The Stock Option Plan
also provides that if the Company's Common Stock were not listed on NASDAQ (or
any national securities exchange), fair market value would be determined by the
average of the closing bid and asked prices for the Common Stock as reported by
the National Quotation Bureau, Inc. or similar compilation service; or if there
existed no public trading market for the Common Stock, fair market value would
then be the amount as reasonably determined by the Board of Directors or
Compensation Committee.) The exercise price of an option may be paid in cash, or
at the sole discretion of the Committee, by delivery of already owned shares of
Common Stock having a fair market value equal to the exercise price, or by a
combination of the foregoing. The Stock Option Plan also authorizes the Company
to make loans to optionees to enable them to exercise their options. Such loans
must (i) provide for an initial term not exceeding five years, but which term is
renewable at the Committee's discretion, (ii) bear interest at a rate as
determined by the Committee, and (iii) be secured by the shares of Common Stock
purchased or other collateral as determined by the Committee. Cash payments will
be used by the Company for general corporate purposes.
The use of already owned shares of Common Stock applies to payment for the
exercise of an option in a single transaction and to the "pyramiding" of already
owned shares in successive, simultaneous option exercises. In general,
pyramiding permits an option holder to start with as little as one share of
Common Stock and exercise an entire option to the extent then exercisable (no
matter what the number of shares subject thereto). By using already owned shares
of Common Stock, no cash (except for fractional share adjustments) is needed to
exercise an option. Consequently, the optionee would receive Common Stock equal
in value to the spread between the fair market of the shares subject to the
option and the exercise price of the option.
No option granted under the Stock Option Plan is assignable or transferable,
other than by will or by the laws of descent and distribution. During the
lifetime of an optionee, an option is exercisable only by such optionee. The
expiration date of an option will be determined by the Committee at the time of
the grant, but may not be longer than ten years from the date of grant. An
option may be exercised at any time or from time-to-time or only after a period
of time or in installments, as the Committee determines. Under circumstances of
dissolution, liquidation, or merger of the Company, the Board may, in its sole
discretion, accelerate the date on which options may be exercised. No option may
be granted under the Stock Option Plan after April 24, 2005.
The unexercised portion of any option granted to an employee under the Stock
Option Plan shall automatically be terminated (a) three months after the date on
which the optionee's employment is terminated for any reason other than (i)
cause (as defined in the Stock Option Plan); (ii) total disability; or (iii)
death; (b) immediately upon the termination of the optionee's employment for
cause; (c) on the date that is the earlier of the expiration date of the option
or one year after the date on which the optionee's employment is terminated by
reason of total disability; or (d) on the date that is the earlier of the
expiration date of the option or three years after the date on which the
optionee's employment is terminated by reason of the death of the employee.
To prevent dilution of the rights of a holder of an option, the Stock Option
Plan provides for adjustment of the number of shares for which options may be
granted, the number of shares subject to outstanding options and the exercise
price of outstanding options in the event of any increase or decrease in the
number of issued and outstanding shares through the declaration of a stock
dividend or through any recapitalization resulting in a stock split-up,
combination or exchange of shares. Provisions governing the effect upon options
of a merger, consolidation or other reorganization of the Company are also
included in the Stock Option Plan.
AMENDMENTS
The Board of Directors may amend, suspend or terminate the Stock Option Plan at
any time, provided that such amendment may not adversely affect the rights of an
optionee under an outstanding option without the affected optionee's written
consent. However, the Board of Directors may not amend the Stock Option Plan
without shareholder approval to, among other things, (a) increase the number of
shares of Common Stock reserved for issuance or change the class of persons
eligible to receive options, (b) permit the granting of options that expire
beyond the maximum 10-year period, (c) provide for a lesser time than six months
within which an option may be exercised, or (d) permit the granting of an option
having an exercise price less than the fair market value (as defined in the
Stock Option Plan) of the Company's common stock on the date of grant.
FEDERAL INCOME TAX CONSEQUENCES OF THE STOCK OPTION PLAN
The Stock Option Plan is not qualified under the provisions of Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), nor is it subject to
any of the provisions of the Employee Retirement Income Security Act of 1974 (as
amended.).
NON-STATUTORY STOCK OPTIONS.
An optionee granted a non-statutory stock option under the Stock Option Plan
will generally recognize, at the date of exercise of such non-statutory stock
option, ordinary income equal to the difference between the exercise price and
the fair market value of the shares of Common Stock subject to the non-statutory
stock option. This taxable ordinary income will be subject to Federal income tax
withholding. A Federal income tax deduction will be allowed to the Company in an
amount equal to the ordinary income to be recognized by the optionee, provided
that such amount constitutes an ordinary and necessary business expense to the
Company and is reasonable, and either the optionee includes the amount in income
or the Company timely satisfies its reporting requirements with respect to that
amount.
The Federal income tax treatment is somewhat different for officers and
directors of the Company ("Reporting Persons") as a result of the short-swing
profit recovery provisions of Section 16(b) of the Exchange Act. If a Reporting
Person exercises an option prior to the expiration of the holding period
required by Rule 16b-3 (which holding period lasts for six months following the
acquisition of the option), unless the Reporting Person makes an 83(b) Election,
as described below, the Reporting Person will recognize ordinary income upon the
expiration of the holding period or such earlier date on which the person ceases
to be a Reporting Person. The amount of ordinary income will be equal to the
difference between the exercise price of the option and the fair market value of
the shares at the time that the income is recognized. A Reporting Person,
however, is entitled to elect under Section 83(b) of the Code (the "83(b)
Election") within 30 days after exercising an option, to treat as ordinary
income the excess of the fair market value of the shares covered by the option
on the date of exercise over the exercise price and no further ordinary income
will be recognized, irrespective of whether the fair market value of the shares
has increased or decreased at the expiration of the applicable period under
Section 16(b).
If an optionee exercises a non-statutory stock option by delivering other shares
of the Company's Common Stock, the optionee will not recognize gain or loss with
respect to the exchange of such shares, even if the then fair market value of
the shares is different from the optionee's tax basis. The optionee, however,
will be taxed as described above with respect to the exercise of the
non-statutory stock option as if he had paid the exercise price in cash, and the
Company likewise generally will be entitled to an equivalent tax deduction.
Provided a separate identifiable stock certificate is issued therefor, the
optionee's tax basis in that number of shares received on such exercise which is
equal to the number of shares surrendered on such exercise will be equal to his
tax basis in the shares surrendered, and his holding period for such number of
shares received will include his holding period for the shares surrendered. The
optionee's tax basis and holding period for the additional shares received on
exercise of a non-statutory stock option paid for, in whole or in part, with
shares will be the same as if the optionee had exercised the non-statutory stock
option solely for cash.
INCENTIVE STOCK OPTIONS.
Incentive stock options are "incentive stock options" as defined in Section 422
of the Code. Under the Code, an optionee generally is not subject to ordinary
income tax upon the grant or exercise of an incentive stock option. However, an
employee who exercises an incentive stock option by delivering shares of Common
Stock previously acquired pursuant to the exercise of an incentive stock option
is treated as making a Disqualifying Disposition (defined below) of such shares
if the employee delivers such shares before the expiration of the holding period
applicable to such shares. The applicable holding period is the longer of two
years from the date of grant or one year from the date of exercise. The effect
of this provision is to prevent "pyramiding" the exercise of an incentive stock
option (i.e., the exercise of the incentive stock option for one share and the
use of that share to make successive exercises of the incentive stock option
until it is completely exercised) without the imposition of current income tax.
If, subsequent to the exercise of an incentive stock option (whether paid
for in cash or in shares), the optionee holds the shares received upon exercise
for a period that exceeds (a) two years from the date such incentive stock
option was granted or, if later (b) one year from the date of exercise (the
"Required Holding Period"), the difference (if any) between the amount realized
from the sale of such shares and the tax basis to the holder will be taxed as
long-term capital gain or loss.
In general if, after exercising an incentive stock option, an employee disposes
of the shares so acquired before the end of the Required Holding Period (a
"Disqualifying Disposition"), such optionee would be deemed in receipt of
ordinary income in the year of the Disqualifying Disposition in an amount equal
to the excess of the fair market value of the shares at the date the incentive
stock option was exercised over the exercise price. If the Disqualifying
Disposition is a sale or exchange which would permit a loss to be recognized
under the Code (were a loss in fact to be sustained), and the sales proceeds are
less than the fair market value of the shares on the date of exercise, the
optionee's ordinary income would be limited to the gain (if any), from the sale.
If the amount realized upon the disposition exceeds the fair market value of the
shares on the date of exercise, the excess would be treated as a short-term or
long-term capital gain, depending on whether the holding period for such shares
exceeded one year.
For taxable years beginning after December 31, 1992, the alternative minimum tax
on individuals is imposed at a rate of 26% of the first $175,000 of taxable
excess, and 28% of so much of the taxable excess as exceeds $175,000. Taxable
excess is defined as the excess of (i) an individual's taxable income plus
certain specified tax preference items and subject to certain items of
adjustment, over (ii) an exemption amount of ($33,750 in the case of non-married
individuals; $45,000 in the case of married individuals filing jointly; and
$22,500 in the case of married individuals filing separately). The exemption
amount is reduced or eliminated in certain cases. An individual will be liable
for the alternative minimum tax only to the extent of the amount by which such
tax exceeds the liability for regular Federal income tax (reduced by certain
credits). A foreign tax credit may be applied against the alternative minimum
tax. Further, the amount of minimum tax liability generally is allowed as a
credit offsetting regular tax liability in subsequent years.
The amount by which the fair market value of the shares acquired at the time of
exercise of an incentive stock option exceeds the exercise price of such shares
under such option generally will be treated as an item of adjustment included in
the optionee's alternative minimum taxable income for purposes of the
alternative minimum tax for the year in which the option is exercised. If
however, there is a Disqualifying Disposition of the shares in the year in which
the option is exercised, there will be no item of adjustment for purposes of the
alternative minimum tax as a result of the exercise of the option with respect
to those shares. If there is a Disqualifying Disposition in a year after the
year of exercise, the income on the Disqualifying Disposition will not be
considered income for purposes of the alternative minimum tax in that subsequent
year. The optionee's tax basis for shares acquired pursuant to the exercise of
an incentive stock option will be increased for purposes of determining the
alternative minimum tax by the amount of the item of adjustment recognized with
respect to such shares in the year the option was exercised.
An income tax deduction is not allowed to the Company with respect to the grant
or exercise of an incentive stock option or the disposition, after the Required
Holding Period, of shares acquired upon exercise. In the event of a
Disqualifying Disposition, a Federal income tax deduction will be allowed to the
Company in an amount equal to the ordinary income to be recognized by the
optionee, provided that such amount constitutes an ordinary and necessary
business expense to the Company and is reasonable, and either the optionee
includes the amount in income or the Company timely satisfies its reporting
requirements with respect to that amount.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
PROPOSAL TO INCREASE TO 1,150,000 SHARES THE NUMBER OF SHARES OF COMMON STOCK
RESERVED FOR ISSUANCE UNDER THE STOCK OPTION PLAN.
3. SELECTION OF AUDITORS
On September 28, 1995, the Company terminated its relationship with the
independent accounting firm of Arthur Anderson LLP ("AA"). The Company's Board
of Directors approved the decision to change independent accountants. AA's
report on the Company's financial statements for the fiscal year ended March 31,
1995 did not contain an adverse opinion or a disclaimer of opinion, nor was it
qualified or modified as to uncertainty, audit scope, or accounting principles.
From the time AA was engaged by the Company through the date of AA's dismissal,
there were no disagreements with AA on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of AA, would have caused it
to make reference to the subject matter of the disagreements in connection with
its report. The Company engaged KPMG Peat Marwick LLP as its new independent
accountants. Representatives of KPMG Peat Marwick LLP are expected to be present
at the meeting and will be available to respond to appropriate questions. They
will be given the opportunity to make a statement if they desire to do so.
While ratification by shareholders of this appointment is not required by law or
the Company's Certificate of Incorporation or Bylaws, management of the Company
believes that such ratification is desirable. In the event this appointment is
not ratified by an affirmative vote of shareholders holding a majority of the
Company's issued and outstanding Common Stock, in attendance at the meeting,
either in person or by proxy, the Board of Directors of the Company will
consider that fact when it appoints independent public accountants for the next
fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION AND APPROVAL OF
ITS SELECTION OF KPMG PEAT MARWICK LLP AT THE 1996 ANNUAL MEETING.
4. OTHER BUSINESS
The Board of Directors knows of no business which will be presented for action
at the Annual Meeting other than as set forth in this Proxy Statement, but if
any other matters properly come before the meeting, it is the intention of the
persons named in the accompanying proxy to vote on such matters in accordance
with their best judgment.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of Directors.
The giving of a proxy does not preclude the right to vote in person should any
shareholder giving the proxy so desire. Shareholders have an unconditional right
to revoke their proxy at any time prior to the exercise thereof, either in
person at the Annual Meeting or by filing with the Company's Secretary at the
Company's headquarters a written revocation or duly executed proxy bearing a
later date; however, no such revocation will be effective until written notice
of the revocation is received by the Company at or prior to the Annual Meeting.
COST OF SOLICITATION
The entire cost of solicitation of proxies by the Board of Directors will be
borne by the Company. In addition to the use of the mails, proxies may be
solicited by personal interview, facsimile, telephone and telegram by directors,
officers and employees of the Company. The Company expects to reimburse brokers
or other persons for their reasonable out-of-pocket expenses in forwarding proxy
material to beneficial owners.
SHAREHOLDER PROPOSALS FOR 1997
Shareholder proposals intended to be presented at the Company's 1997 Annual
Meeting of Shareholders must be received by the President of the Company at the
Company's executive offices for possible inclusion in the Company's Proxy
Statement and notice of meeting relating to that meeting by April 3, 1997.
Shareholder proposals must be made in compliance with applicable legal
requirements promulgated by the Securities and Exchange Commission and be
furnished to the President by certified mail, return receipt requested.
YOU ARE URGED TO SIGN AND RETURN YOUR PROXY PROMPTLY TO MAKE CERTAIN YOUR
SHARES WILL BE VOTED AT THE 1996 ANNUAL MEETING. FOR YOUR CONVENIENCE, A
RETURN ENVELOPE IS ENCLOSED.
BY ORDER OF THE BOARD OF DIRECTORS
Mark B. Rinder, Secretary
Orlando, Florida
July 27, 1996
EXHIBIT A
AIRWAYS CORPORATION
1995 STOCK OPTION PLAN
(AS AMENDED)
1. PURPOSE AND DEFINITIONS. The Purpose of this Plan is to strengthen the
ability of Airways Corporation (the "Company") to attract and retain key
Employees and Consultants and to furnish additional incentives to such persons
by encouraging them to acquire an equity interest in the Company.
The following definitions are used herein:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(c) "Committee" means the committee appointed by the Board of Directors
of the Company in accordance with Section 3.
(d) "Consultant" means any person other than a director who is engaged by
the Company or any Parent or Subsidiary to render consulting services for
compensation.
(e) "Eligible Participants" means Employees and Consultants.
(f) "Employee" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The
payment of a director's fee by the Company is not sufficient to constitute
"employment."
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(h) "Incentive stock options" means options to purchase Stock which at
the time such options are granted under this Plan qualify as incentive stock
options within the meaning of Section 422 of the Code.
(i) "Nonqualified stock options" means options to purchase Stock which at
the time such options are granted under this Plan do not qualify as
incentive stock options.
(j) "Parent" means any corporation which at the time an option is granted
under this Plan is a "parent corporation" as defined in Section 425(e) of
the Code.
(k) "Plan" means this Airways Corporation 1995 Stock Option Plan.
(l) "Stock" means the Company's Common Stock, $.01 par value per
share.
(m) "Subsidiary" means any corporation which at the time an option is
granted under this Plan is a "subsidiary corporation" as defined in Section
424(f) of the Code except that such term shall not include any corporation
which is classified as a foreign corporation pursuant to Section 7701 of the
Code.
2. SHARES SUBJECT TO THE PLAN. Options may be granted by the Company from time
to time to Eligible Participants to purchase an aggregate of 1,150,000 shares of
Stock, and such number of shares shall be reserved for options granted under the
Plan (subject to adjustment as provided in Section 5(h)). The shares issued upon
exercise of options granted under the Plan may be authorized and unissued shares
or shares held by the Company (whether acquired specifically for issuance under
the Plan or otherwise) which are available under applicable law to be issued
under the Plan. If any option granted under the Plan shall terminate, expire or,
with the consent of the optionee, be canceled as to any shares, new options may
thereafter be granted under the Plan covering the number of shares subject to
the option which was thus terminated, expired or canceled.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Compensation Committee of the Board appointed by the Board and serving at the
Board's pleasure, or such other committee as the Board may from time to time
appoint to serve as such pursuant to this Section 3. Such Committee shall
consist of not less than two members of the Board. Any grants of options to
officers who are subject to Section 16 of the Exchange Act shall be made only by
a Committee of two or more directors, each of whom is a "disinterested person"
as defined in Rule 16(b)-3(c)(2) of the Exchange Act.
The Committee shall have plenary authority in its discretion, subject to and not
inconsistent with the express provisions of the Plan, to grant options; to
determine the purchase price of the Stock covered by each option, the term of
each option, the Eligible Participants to whom, and the time or times when
options shall be granted and the number of shares covered by each option; to
designate options as incentive stock options or nonqualified stock options; with
the consent of an optionee, to modify or amend an option; to authorize any
person to execute on behalf of the Company any instrument required to effectuate
the grant of an option previously granted by the Board; to interpret the Plan;
to prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the option agreements (which need not be
identical); to correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or in any option granted hereunder in the manner and
to the extent it shall deem necessary to carry out the terms of the Plan; and to
make all other determinations deemed necessary or advisable, for the
administration of the Plan. The Committee may delegate to one or more of its
members or to one or more agents such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated its duties
as aforesaid may employ one or more persons to render advice with respect to the
responsibility the Committee or such person may have under the Plan.
The Committee may employ attorneys, consultants, accountants or other persons
and the Committee, the Company and its officers and directors shall be entitled
to rely upon the advice, opinions or valuations of any such persons. All actions
taken and all interpretations and determinations made by the Committee in good
faith shall be final and binding upon all persons to whom options have been
granted under the Plan, the Company and all other interested persons. No member
of the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the grant of any
options made hereunder, and all members of the Committee shall be
fully-protected by the Company in respect of any such action, determination or
interpretation.
4. GRANT OF OPTIONS. Subject to the provisions of the Plan, the Committee shall
(a) determine and designate from time to time those Eligible Participants to
whom options are to be granted; (b) authorize the granting of incentive stock
options, nonqualified stock options, or a combination of incentive stock options
and nonqualified stock options; (c) determine the number of shares subject to
each option; and (d) determine the time or times when and the manner in which
each option shall be exercisable and the duration of the exercise period;
provided, however, that (i) incentive stock options may be granted only to
Employees, (ii) no option shall be granted after the expiration of 10 years from
the Effective Date of the Plan specified in Section 9 below, (iii) the aggregate
fair market value (determined as of the date the option is granted) of stock for
which all of an Employee's incentive stock options first become exercisable
during any calendar year shall not exceed $100,000, and (iv) no director of the
Company who is not also an Employee shall be entitled to receive any option
under the Plan.
5. TERMS AND CONDITIONS OF OPTIONS. Each option granted under the Plan shall be
evidenced by an agreement in a form approved by the Committee. Such agreement
shall be subject to the following express terms and conditions and to such other
terms and conditions as the Committee may deem appropriate:
(a) Option Period. Each option agreement shall specify the period for
which the option thereunder is granted and shall provide that the option
shall expire at the end of such period. The Committee may extend such period
provided that, in the case of an incentive stock option, such extension may
have the effect of causing the option to be treated as a nonqualified stock
option. In no case shall such period, including any such extensions, exceed
10 years from the date of grant; provided, however, that in the case of an
incentive stock option granted to a person who, at the time of grant, owns
stock possessing more than 10% of the total combined voting power of all
classes of capital stock of the Company (a "Ten Percent Stockholder"), such
period, including extensions, shall not exceed five years from the date of
grant.
(b) Exercise Price. The exercise price per share of Stock shall be
determined by the Committee at the time each option is granted and shall be
not less than (i) the fair market value or (ii) in the case of an incentive
stock option granted to a Ten Percent Stockholder, 110% of the fair market
value of one share of the Stock on the date the option is granted, as
determined by the Committee.
For purposes of this Section 5, the "fair market value" of the Stock
shall be determined as follows:
(A) if the Stock is listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange, the fair market
value on any given day shall be the closing sale price for the Stock on
such day, as reported in the Wall Street Journal or other newspaper of
general circulation;
(B) if the Stock is not listed on a national securities exchange, the
fair market value on any given day shall be the closing sale price for
the Stock as reported on the NASDAQ National Market or Small Cap Market
on such day, as reported in the Wall Street Journal or other newspaper of
general circulation;
(C) if the Stock is not listed on a national securities exchange, is
not admitted to unlisted trading privileges on any such exchange, and is
not listed on the NASDAQ National Market or Small Cap Market, the fair
market value on any given day shall be the average of the closing
representative bid and asked prices as reported by the National Quotation
Bureau, Inc. or such other publicly available compilation of the bid and
asked prices of the Stock in any over-the-counter market on which the
Stock is traded; or
(D) if there exists no public trading market for the Stock, the fair
market value on any given day shall be an amount determined by the Board
or Committee in such manner as it may reasonably determine in its
discretion, provided that such amount shall not be less than the book
value per share as reasonably determined by the Committee as of the date
of determination nor less than the par value of the Stock.
In the event that the Stock did not trade on the day an option is
granted, the fair market value shall be determined by reference to the
earliest preceding day on which the Stock was traded.
(c) Exercise of Option. No part of any option may be exercised for such
period after the date on which the option is granted as the Committee may
specify in the option agreement, and the option agreement may provide for
exercisability in installments; provided, however, that no option may be
exercised for a period of six months after the date of grant. Option granted
under the Plan may be exercised without regard to the status of previously
granted options.
An option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
option by 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. Until the issuance (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such shares, no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Stock subject to the option, notwithstanding the exercise of
the option. A share certificate for the number of shares so acquired shall
be issued to the optionee as soon as practicable after the exercise of the
option. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except
as provided in Section 5(h) hereof.
(d) Payment of Purchase Price upon Exercise. Each option shall provide
that the purchase price of the shares as to which an option shall be
exercised shall be paid to the Company at the time of exercise in cash;
provided, however, that the Committee may determine, in its sole discretion,
other forms of consideration to be appropriate for payment of the purchase
price of the shares as to which an option shall be exercised, including, but
not limited to, shares of Stock already owned by the optionee having a total
fair market value, as determined by the Committee, equal to the purchase
price, or a combination of cash and Stock having a total fair market value,
as so determined, equal to the purchase price.
The Company may make loans to such option holders as the Committee, in
its discretion, may determine (including a holder who is a director or
officer of the Company) in connection with the exercise of options granted
under the Plan; provided, however, that the Committee shall have no
discretion to authorize the making of any loan where the possession of such
discretion or the making of such loan would result in a "modification" (as
defined in Section 424(h) of the Code) of any incentive stock option. Such
loans shall be subject to the following terms and conditions and such other
terms and conditions not inconsistent with the Plan as the Committee shall
determine:
(i) Such loans shall bear interest at such rates as the Committee
shall determine from time to time, which rates may be below then current
market rates (except in the case of incentive stock options).
(ii) In no event may any such loan exceed the fair market value, at
the date of exercise, of the shares covered by the option or portion
thereof exercised by the holder.
(iii) No loan shall have an initial term exceeding five years, but,
any such loan may be renewable at the discretion of the Committee.
(iv) When a loan shall have been made, shares of Common Stock having
a fair market value at least equal to the principal amount of the loan,
or such other collateral as may be deemed appropriate by the Committee,
shall be pledged to the Company as security for payment of the unpaid
balance of the loan.
(v) Every loan shall comply with all applicable laws, regulations and
rules of the Federal Reserve Board and any other governmental agency
having jurisdiction.
(e) Exercise in the Event of Death or Termination of Status as an
Employee or Consultant.
(i) If an optionee dies while an Employee or Consultant of the
Company or a Subsidiary or Parent or within three months after
termination of his or her status as an Employee or Consultant because of
his or her total disability, his or her option may be exercised, to the
extent that the optionee shall have been entitled to do so on the date of
his or her death, by the person or persons to whom the optionee's right
under the option passes by will or applicable law, or if no such person
has such right, by his or her executors or administrators, at any time or
from time to time, but not later than the expiration date specified in
paragraph (a) of this Section 5 or three years after the optionee's
death, whichever date is earlier.
(ii) If an optionee's status as an Employee or Consultant of the
Company or a Subsidiary or Parent shall terminate because of his or her
total disability, he or she may exercise his or her option to the extent
that he or she shall have been entitled to do so at the date of such
termination, at any time or from time to time, but not later than the
expiration date specified in paragraph (a) of this Section 5 or one year
after such termination, whichever date is earlier.
(iii) If an optionee's status as an Employee or Consultant of the
Company or a Subsidiary or Parent shall terminate by reason of his or her
retirement in accordance with the terms of the Company's retirement plans
or with the consent of the Committee; voluntarily; or involuntarily other
than for cause, death, or total disability, all rights to exercise his or
her option shall terminate at the expiration date specified in paragraph
(a) of this Section 5 or three months after termination of employment,
whichever date is earlier.
(iv) If an optionee's status as an Employee or Consultant of the
Company or a Subsidiary or Parent shall terminate for cause, all rights
to exercise his or her option shall terminate at the date of such
termination.
"Termination for cause" shall include termination for malfeasance or
misfeasance in the performance of duties of the optionee as an Employee or
Consultant or conviction of illegal activity in connection therewith or any
conduct detrimental to the interests of the Company or any Subsidiary or
Parent, violation of the terms of the optionee's employment or consulting
agreement, if any, and in any event, the determination of the Committee
with respect to the matter of whether an optionee's status as an Employee
or Consultant of the Company or a Subsidiary or Parent has been terminated
for cause shall be final and conclusive. "Total disability" shall mean the
total and permanent inability of a person, as a result of accident or
sickness, to perform his or her duties as an Employee or Consultant.
Notwithstanding subsections (ii), (iii) and (iv) above, the Committee
shall have the authority to extend the period in which an option may be
exercised, provided that no such extension may be for a term beyond the date
specified in paragraph (a) of this Section 5. Such extension of the option
exercise period may have the effect of causing the option to be treated as a
nonqualified stock option.
(f) Nontransferability. No option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution.
During the lifetime of the optionee, an option shall be exercisable only by
the optionee or by the optionee's guardian or legal representative (unless
such exercise would disqualify an option as an incentive stock option.)
(g) Investment Representation. Each option agreement may provide that,
upon demand by the Committee for such a representation, the optionee (or any
person acting under paragraph 5(e)) shall deliver to the Committee at the
time of any exercise of an option or portion thereof a written
representation that the shares to be acquired upon such exercise are to be
acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation
prior to the delivery of any shares issued upon exercise of an option and
prior to the expiration of the option period shall be a condition precedent
to the right of the optionee or such other person to purchase any shares.
(h) Adjustments in Event of Change in Common Stock. The number and kind
of shares covered by each outstanding option, and the number and kind of
shares of Stock which have been authorized for issuance under the Plan but
as to which options have not yet been granted or which have been returned to
the Plan upon cancellation or expiration of an option, as well as the price
per share of Stock covered by each such outstanding option, shall be
proportionately adjusted for any increase or decrease in the number of
issued and outstanding shares of Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Stock,
or any other increase or decrease in the number of issued shares of Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be
deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, or options or rights to
purchase shares of stock of any class shall affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of shares
of Stock subject to an option.
In the event of the proposed dissolution or liquidation of the Company,
each option will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instances, declare that any
option shall terminate as of a date fixed by the Board and give each
optionee the right to exercise his or her option as to all or any part of
the optioned Stock, including shares as to which the option would not
otherwise be exercisable. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the option shall be assumed or an
equivalent option shall be substituted by such successor corporation or a
parent or subsidiary of such successor corporation, unless the Board
determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, that the optionee shall have the right to
exercise the option as to all of the optioned Stock, including shares as to
which the option would not otherwise be exercisable. If the Board makes an
option fully exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Board shall notify the optionee that the
option shall be fully exercisable for a stated period of time from the date
of such notice, and the option will terminate upon the expiration of such
period.
(i) Incentive Stock Options. Each option agreement which provides for
the grant of an incentive stock option to a participant shall contain
such terms and provisions as the Committee may determine to be necessary
or desirable in order to qualify such option as an incentive stock option
within the meaning of Section 422 of the Code, or any amendment thereof
or substitute therefor.
(j) No Rights as Stockholder. No optionee shall have any rights as a
stockholder with respect to any shares subject to his or her option prior
to the date of issuance to him or her of a certificate or certificates
for such shares.
(k) No Rights to Continued Employment. The Plan and any option
granted under the Plan shall not confer upon any optionee any right with
respect to continuance of his or her status as an Employee or Consultant
of the Company or any Subsidiary or Parent, nor shall the Plan or any
option granted under the Plan interfere in any way with the right of the
Company or any Subsidiary or Parent, as the case may be to terminate an
optionee's status as an Employee or Consultant at any time.
6. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant and exercise
of options hereunder, and the obligation of the Company to sell and deliver
shares of Stock under such options, shall be subject to all applicable federal
and state laws, rules, and regulations and to such approvals by any government
or regulatory agency as may be required. The Company shall not be required to
issue or deliver any certificates for shares of Stock prior to (a) the listing
of such shares on any stock exchange on which the Stock may then be listed and
(b) the completion of any registration or qualification of such shares under any
federal or state law, or any ruling or regulation of any government body which
the Company shall, in its sole discretion, determine to be necessary or
advisable.
Inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Stock hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Stock
as to which such requisite authority shall not have been obtained.
7. DISPOSITION OF SHARES. Without the consent of the Committee, no share of
Stock acquired by an exercise of an incentive stock option granted under the
Plan shall be transferable other than by will or by the laws of descent and
distribution within two years of the date such option was granted or within one
year after the transfer of such share pursuant to such exercise; provided,
however, that an optionee may sell, transfer, hypothecate, or otherwise dispose
of the shares acquired upon exercise of an incentive stock option at any time
following exercise so long as adequate provision is made for the payment to the
Company of funds sufficient for payment of any withholding and other taxes
required by any governmental authority in respect of the sale of such shares
prior to one year following the date of exercise.
8. AMENDMENT AND DISCONTINUANCE. The Board of Directors of the Company may from
time to time amend, suspend or discontinue the Plan; provided, however, that,
subject to the provisions of paragraph (h) of Section 5, no action of the Board
of Directors or of the Committee may (i) increase the number of shares reserved
for options pursuant to Section 2, (ii) permit the granting of any option having
an exercise price less than that determined in accordance with paragraph (b) of
Section 5, (iii) shorten the period provided for in paragraph (c) of Section 5
which must elapse between the date of granting an option and the date on which
any part of an option may be exercised, (iv) permit the granting of options
which expire beyond the period provided for in paragraph (a) of Section 5, or
(v) make any change that would require stockholder approval pursuant to Rule
16b-3 under the Exchange Act, unless such approval is obtained. Without the
written consent of an optionee, no amendment or suspension of the Plan shall
alter or impair any option previously granted to him or her under the Plan.
Notwithstanding the foregoing, the Board of Directors may also amend or modify
the Plan to give effect to changes hereafter adopted in any law, rule or
regulation affecting incentive stock options. The Plan may be amended, modified
or terminated in any other manner as may be approved by the stockholders of the
Company.
9. EFFECTIVE DATE OF THE PLAN. The Effective Date of the Plan shall be April
25, 1995, the date of its adoption by the Board of Directors of the Company.
The Plan was approved by the Company's sole stockholder on April 25, 1995.
10. NAME. The Plan shall be known as the "Airways Corporation 1995 Stock
Option Plan."
11. EFFECT ON OTHER STOCK PLANS. The adoption of the Plan shall have no
effect on options granted or to be granted pursuant to any other stock option
plans covering the Employees or Consultants of the Company, any Subsidiary or
Parent, or any predecessors or successors thereto.
AIRWAYS CORPORATION
SHAREHOLDER PROXY
THIS SHAREHOLDER PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS SEPTEMBER 11, 1996
The undersigned hereby appoints Robert D. Swenson, Mark B. Rinder, or either of
them, as proxies, each with the power to appoint his substitute, to represent,
and vote all shares of Common Stock of and on behalf of the undersigned as
designated on the reverse side at the Annual Meeting of Shareholders of Airways
Corporation, to be held September 11, 1996, and any adjournments thereof, with
all powers the undersigned would possess if personally present and voting at
such meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
PLEASE MARK YOUR
VOTES AS INDICATED
IN THIS EXAMPLE [X]
1. ELECTION OF DIRECTORS Robert D. Swenson, John S. Olbrych, John K.
Ellingboe, Roger T. Munt, Alan R. Stephen
[ ] FOR nominees listed at right
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
2. PROPOSAL TO INCREASE NUMBER OF SHARES RESERVED FOR ISSUANCE UNDER 1995
STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE SELECTION OF KPMG PEAT MARWICK LLP AS AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. OTHER BUSINESS: The proxies are authorized to vote in their discretion on
such other business as may properly come before the meeting. This Proxy, when
properly executed, will be voted in the manner directed herein by the
undersigned shareholder. If no direction is indicated, the Proxy will be voted
FOR Proposals 1, 2 and 3.
PLEASE MARK ON THIS SIDE; THEN SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
(Continued from other side)
This Proxy, when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is indicated, the Proxy will be
voted FOR Proposals 1, 2 and 3.
THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
Date:____________________ , 1996
_________________________________
Signature
_________________________________
Signature if held jointly
PLEASE SIGN EXACTLY AS NAME(S) APPEAR(S) HEREON. If shares are held in the name
of two or more persons, all must sign. When signing as Attorney, Executor,
Administrator, Personal Representative, Trustee, or Guardian, give full title as
such. If signer is a corporation, sign full corporate name by duly authorized
officer.
AIRWAYS CORPORATION ANNUAL MEETING
AirTran Airways, Inc. Maintenance Hangar
4170 Wiley Drive
Orlando, Florida
SEPTEMBER 11, 1996
10:00 A.M., Local Time
