FIRST AVIATION SERVICES INC.
EMPLOYEE STOCK PURCHASE PLAN
1. DEFINITIONS.
(a) "Base Pay" means a Qualified Employee's gross pay for a
40-hour week, including overtime payments, bonuses and sales
commission, but excluding relocation or attributed types of
compensation, and other special payments, fees or allowances.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended and as it may be amended from time to time.
(d) "Committee" has the meaning set forth in Section 13
hereof.
(e) "Common Stock" means the Common Stock of the Company,
$0.01 par value per share.
(f) "Company" means First Aviation Services Inc., a
Delaware corporation, and its successors.
(g) "Exchange Act" means the Securities Exchange Act of
1934, as amended, and as it may be amended from time to time.
(h) "Exercise Date" has the meaning set forth in Section
4(a) hereof.
(i) "Fair Market Value" means the average of the high and
low price of the Common Stock on the NASDAQ National Market
System as reported and published in the Eastern Edition of The
Wall Street Journal, or if there is no trading of the Common
Stock on the date in question, then the average of the high and
low price of the Common Stock, as so reported and published, on
the next preceding date on which there was trading in the Common
Stock; provided, however, that the Committee, in determining such
Fair Market Value, may utilize such other exchange, market or
other factors affecting value of the Common Stock as it may deem
appropriate.
(j) "Grant Date" has the meaning set forth in Section 4(a)
hereof.
(k) "Offering Period" means the six month term of options
under this Plan, commencing on January 1 and July 1 of each year;
provided, however that the first Offering Period shall be an
eight month term commencing on May 1, 1997 and ending on December
31, 1997.
(l) "Option Price" has the meaning set forth in Section
5(b) hereof.
(m) "Participant" means a Qualified Employee who elects to
participate in this Plan during an Offering Period.
(n) "Personal Representative" means the person or persons
who, upon the death or Total Disability of a Participant, shall
have acquired, on behalf of the Participant by legal proceeding
or under the laws of descent and distribution or otherwise, the
right to exercise the Participant's rights under, or to receive
the benefits specified in, this Plan.
(o) "Plan" means this First Aviation Services Inc. Employee
Stock Purchase Plan, as it may be amended from time to time.
(p) "Qualified Employee" means any employee of the Company
or any Subsidiary who has completed 12 months of continuous
service with the Company or a Subsidiary as of the Grant Date and
who is customarily employed for more than 20 hours per week and
more than five months in a calendar year. Notwithstanding the
foregoing, the term "Qualified Employee" does not include any
employee who, immediately after the option is granted, owns
(within the meaning of Sections 423(b)(3) and 424(d) of the Code)
stock representing 5% or more of the total combined voting power
or value of all classes of stock of the Company or a Subsidiary.
With respect to employees of Aircraft Parts
International ("API") who became employees of the Company upon
the Company's acquisition of API from AMR Combs, Inc., continuous
service with the Company or a Subsidiary shall include, for
purposes of determining an individual's status as a Qualified
Employee only, such individual's continuous employment with API
prior to becoming employed by the Company.
(q) "Subsidiary" means any corporation or other entity, at
least a majority of whose outstanding voting stock or voting
power is beneficially owned directly or indirectly by the
Company.
All references herein to the masculine shall also be
references to the feminine or neuter as appropriate.
2. PURPOSE, SUMMARY. The purpose of this Plan is to
assist Qualified Employees in acquiring a stock ownership
interest in the Company pursuant to a plan which is intended to
qualify as an "employee stock purchase plan" under Section 423 of
the Code. Under this Plan, Participants are deemed to have been
granted options to purchase shares of Common Stock. Participants
designate a certain amount of their Base Pay to be set aside
during the Offering Period for the purpose of purchasing Common
Stock. At the end of the Offering Period, the Participants are
deemed to have exercised their options using the funds set aside
for them and the Company issues share certificates to them. The
Plan is intended, among other things, to provide an additional
incentive to Participants, through the ownership of Common Stock,
to achieve business goals that would increase stock values and to
remain in the employ of the Company or a Subsidiary.
3. STOCK SUBJECT TO THIS PLAN. Subject to the provisions
of Section 10 hereof (relating to adjustments upon changes in
capitalization), the total number of shares available under this
Plan is 250,000 shares of Common Stock. Such shares may be
authorized but unissued shares.
4. GRANT OF OPTIONS.
(a) IN GENERAL. Commencing May 1, 1997 and continuing
while this Plan remains in force, the Company will offer options
to purchase shares of Common Stock under this Plan to all
Participants. The options will be deemed to have been granted as
of January 1 and July 1 (or, with respect to the 1997 calendar
year, as of May 1 only) of each year (each, a "Grant Date"). The
term of each option shall be six months (eight months for the
1997 calendar year), the last day of which shall be either June
30 or December 31, as applicable, (the "Exercise Date"). The
number of shares subject to each option and deemed to be
purchased by each Participant shall be the quotient, rounded down
to the nearest whole number, of (i) the aggregate payroll
deductions authorized by each Participant in accordance with
Section 4(b) below made during the Offering Period, divided by
(ii) the Option Price. The grant of options hereunder is subject
to the approval of the Plan by the stockholders of the Company.
If stockholder approval is not received by or before December 15,
1997, this Plan shall be deemed to be terminated and the options
granted hereunder shall have no effect but instead shall be null
and void.
(b) ELECTION TO PARTICIPATE; PAYROLL DEDUCTION
AUTHORIZATION. Except as provided in Section 4(d) below, a
Qualified Employee may participate in this Plan only by means of
payroll deductions. Each Qualified Employee who elects to
participate in this Plan shall deliver to the Company, no later
than 15 days next preceding a Grant Date (or April 10 for the
1997 calendar year), or the next business day following the 15th
day preceding a grant date if such day is not a business day, a
written payroll deduction authorization in a form approved by the
Company pursuant to which he gives notice of his election to
participate in this Plan as of the next following Grant Date, and
whereby he designates a stated amount to be deducted from his
Base Pay on each payday during the next Offering Period and
credited to his bookkeeping account under this Plan ("Account").
The stated amount to be deducted from a Participant's Base Pay
may not be less than $10.00 per pay period. The aggregate stated
amount for any Offering Period may not exceed either of the
following: (i) ten percent of the Participant's Base Pay during
the Offering Period; or (ii) an amount which will result in
noncompliance with the $25,000 limitation stated in Section 4(c)
below. Payroll deduction authorizations may not be changed
during the Offering Period. In the event the number of shares of
Common Stock subject to options during an Offering Period exceeds
the number of shares then available under this Plan, the
available shares shall be allocated among the Participants in
proportion to the balance of their Accounts at the end of the
Offering Period, and any amounts credited to their Accounts after
giving effect to shares during purchased that Offering Period
shall be refunded to the Participants.
(c) $25,000 LIMITATION. No Participant shall be
deemed to have been granted an option under this Plan which would
permit his rights to purchase Common Stock under this Plan or any
other employee stock purchase plan of the Company or any
Subsidiary to accrue at a rate which exceeds $25,000 of Fair
Market Value of Common Stock (determined as of the Grant Date of
such option) for each calendar year such option is outstanding.
For purposes of this subsection (c), the right to purchase Common
Stock under an option accrues when the option (or any portion
thereof) becomes exercisable, and the right to purchase Common
Stock which has accrued during one Offering Period may not be
carried over to any subsequent Offering Period.
(d) LEAVES OF ABSENCE. During leaves of absence
approved by the Company and meeting the requirements of Treasury
Regulation Section 1.421-7(h)(2), a Participant may continue
participation in this Plan by making cash payments to the Company
on the Company's normal paydays equal to the reduction in his
payroll deduction attributable to his leave.
5. EXERCISE OF OPTIONS.
(a) IN GENERAL. On June 30 or December 31 of each
Offering Period, as applicable, each Participant automatically
and without any act on his part will be deemed to have exercised
his option to the extent that the balance then credited to his
Account is sufficient to purchase whole shares of Common Stock at
the Option Price. The Company shall promptly refund to the
Participant any balance remaining in his Account, without
interest thereon, after giving effect to the purchase of such
whole shares.
(b) "OPTION PRICE" DEFINED. The Option Price per
share to be paid by each Participant upon exercise of his option
shall be an amount equal to 85% of the Fair Market Value of
Common Stock on the Grant Date or on the Exercise Date, whichever
amount is less.
(c) DELIVERY OF SHARE CERTIFICATES. Subject to
Section 5(d) below, the Company will deliver to each Participant
a certificate issued in the Participant's name for the number of
shares with respect to which his option was exercised. The
Company will deliver the certificate as soon as practicable
following the Exercise Date.
(d) GOVERNMENT REGULATIONS. This Plan, the granting
of options under this Plan and the issuance of Common Stock
pursuant hereto are subject to all applicable federal and state
laws, rules and regulations and to such approvals by any
regulatory or governmental agency which may, in the opinion of
counsel for the Company, be necessary or advisable in connection
therewith. Without limiting the generality of the foregoing, no
options may be granted under this Plan, and no shares may be
issued by the Company, unless and until, in each such case, all
legal requirements applicable to the grant or issuance have, in
the opinion of counsel to the Company, been complied with. In
connection with the issuance of Common Stock hereunder, the
Participant shall, if requested by the Company, give assurances
satisfactory to counsel to the Company in respect of such matters
as the Company may deem desirable to assure compliance with all
applicable legal requirements.
6. WITHDRAWAL FROM THIS PLAN.
(a) IN GENERAL. Any Participant may completely
withdraw from this Plan at any time. A Participant who desires
to withdraw from this Plan must deliver to the Company a notice
of withdrawal in a form approved by the Company. Promptly
following the time when the notice of withdrawal is delivered,
the Company will refund to the Participant the amount of the
balance of his Account, without interest thereon, and the
Participant's payroll deduction authorization, interest in this
Plan and option under this Plan shall thereupon terminate.
(b) ELIGIBILITY FOLLOWING WITHDRAWAL. A Participant
who has withdrawn from this Plan shall again be eligible to
participate in this Plan upon expiration of the Offering Period
during which the Participant withdrew.
7. TERMINATION OF EMPLOYMENT FOR ANY REASON. If the
employment of a Participant by the Company or a Subsidiary
terminates during an Offering Period for any reason, his
participation in this Plan automatically and without any act on
his part shall terminate as of the date of the termination of the
Participant's employment. The Company promptly will refund to
the Participant the amount of the balance of his Account, without
interest thereon, and thereupon his interest in and option under
this Plan shall terminate. Nothing in this Plan shall prevent
the Company or any Subsidiary from terminating any Participant's
employment.
8. RESTRICTION UPON ASSIGNMENT. An option granted under
this Plan shall not be transferable and is exercisable during the
Participant's lifetime only by the Participant. The Company will
not recognize any assignment or purported assignment by a
Participant of his option or of any rights under his option or
under this Plan.
9. NO RIGHTS AS STOCKHOLDER. With respect to shares of
Common Stock subject to an option, a Participant shall not be
deemed to be a stockholder and shall not have any of the rights
or privileges of a stockholder until a certificate for shares of
Common Stock has been issued to the Participant following the
exercise of his option.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. If the
outstanding shares of Common Stock are increased, decreased or
changed into, or exchange for, a different number or kind of
shares or securities of the Company through a reorganization or
merger in which the Company is the surviving entity, or through a
combination, recapitalization, reclassification, stock split,
stock dividend, stock consolidation or otherwise, an appropriate
adjustment shall be made in the number and kind of shares that
may be issued under this Plan.
Upon the dissolution or liquidation of the Company, or
upon a reorganization, merger, or consolidation of the Company
with one or more corporations as a result of which the Company is
not the surviving corporation, or upon a sale of all or
substantially all of the property of the Company to another
corporation, this Plan shall terminate, and any outstanding
options shall terminate and the Company thereupon will promptly
refund the balance of the Participants' Accounts to the
Participants, without interest thereon, unless (i) the Committee
shall determine, in its sole and absolute discretion, that any or
all options under this Plan shall accelerate and become
immediately exercisable or (ii) provision shall be made in
connection with such transaction for the assumption of options
theretofore granted hereunder, or the substitution for such
options or new options covering the stock of a successor employer
corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to number and kind of shares and prices. If the
Committee determines to accelerate any or all of the options, the
acceleration date designated by the Committee shall be deemed to
be the Exercise Date for the purpose of computing the option
price of the accelerated option.
In so adjusting Common Stock to reflect such changes,
or in determining that no such adjustment is necessary, the
Committee may rely upon the advice of independent counsel and
accountants of the Company, and the determination of the
Committee shall be conclusive. No fractional shares of stock
shall be issued under this Plan on account of any such
adjustment.
11. USE OF FUNDS; NO INTEREST PAID. All amounts withheld
from Participants' paychecks hereunder and credited to their
Accounts will be included in the general funds of the Company
free of any trust or other restriction and may be used by the
Company for any corporate purpose. Under no circumstances shall
interest on such amounts be paid to any Participant or credited
to his Account.
12. AMENDMENT OF THIS PLAN. The Board may amend, suspend
or terminate this Plan at any time and from time to time;
provided, however, that, if any amendment would (i) materially
increase the benefits accruing to Participants under this Plan,
(ii) materially increase the aggregate number of shares of Common
Stock that may be issued under this Plan, or (iii) materially
modify the requirements as to eligibility for participation in
this Plan, then to the extent required under Section 423 of the
Code or any other applicable law, or deemed necessary or
advisable by the Board, such amendment shall be subject to
stockholder approval. Notwithstanding anything else contained
herein, the Board shall have the right to designate from time to
time the Subsidiaries whose employees may be eligible to
participate in the Plan and such designations shall not
constitute an amendment to the Plan requiring stockholder
approval in accordance with Treasury Regulation Section 1.423-
2(c)(4).
13. ADMINISTRATION BY COMMITTEE; RULES AND REGULATIONS.
This Plan shall be administered by a committee composed of not
less than two directors of the Company (the "Committee"), each of
whom shall be a "non-employee" as such term is defined in Rule
16b-3(b)(3) under the Exchange Act or any successor provision of
the Exchange Act so that the Committee members are qualified to
administer this Plan under such provision. Each member shall
serve for a term commencing on a date specified by the Board and
continuing until he dies or resigns or is removed from office by
the Board. The Committee shall have the power to make, amend and
repeal rules and regulations for the interpretation and
administration of this Plan consistent with the qualification of
this Plan under Section 423 of the Code and consistent with Rule
16b-3 under the Exchange Act.
14. TERM; APPROVAL BY STOCKHOLDERS. No option may be
granted during any period of suspension nor after termination of
this Plan, and in no event may any option be granted under this
Plan after the date on which all of the Common Stock available
under this Plan has been purchased.
This plan shall be submitted for the approval of the
Company's stockholders within 12 months after the date of the
Board's initial adoption of this Plan and shall be effective upon
its approval by the stockholders; provided, however,
effectiveness of this Plan shall be conditioned upon consummation
of a public offering of the Company's Common Stock on or before
March 15, 1997.
15. EFFECT UPON OTHER PLANS. The adoption of this Plan
shall not affect any other compensation or incentive plans in
effect for the Company or any Subsidiary. Nothing in this Plan
shall be construed to limit the right of the Company or any
Subsidiary (a) to establish any other forms of incentives or
compensation for employees of the Company or any Subsidiary or
(b) to grant or assume options otherwise than under this Plan in
connection with any proper corporate purpose.
16. HEADINGS. Headings are provided herein for convenience
only and shall not serve as a basis for interpretation or
construction of this Plan.
17. GOVERNING LAW. This Plan shall be governed by, and
construed and enforced in accordance with, the laws of the State
of Connecticut. If any provisions shall be held by a court of
competent jurisdiction to be invalid and unenforceable, the
remaining provisions of this Plan shall continue to be fully
effective.