Exhibit 10.1

AGREEMENT

THIS AGREEMENT, dated this 12th day of June, 2013 (this “Agreement”), is by and
among AO Partners I, L.P. (“AO Partners”), AO Partners, LLC, Nicholas J. Swenson
(“Swenson”), Seth G. Barkett, William R. Foudray, Andrew L. Osborne, John M.
LaFontsee, Scott A. Ronan, Nicholas P. Zaccagnini, Ryan P. Buckley, Thomas D.
Gallagher and Christopher J. Richard (the foregoing individuals and entities
being collectively referred to herein as the “AO Partners Group”), and Air T,
Inc., a Delaware corporation (the “Company”).

RECITALS
 
WHEREAS, AO Partners has submitted to the Secretary of the Company a Notice of
Intent to Nominate Directors and Submit Nominees for Election dated May 2, 2013,
along with a Supplemented Notice of Intent to Nominate Directors and Submit
Nominees for Election dated May 28, 2013 (collectively, the “Notice of Intent”),
to nominate ten persons for election as directors of the Company at the 2013
annual meeting of stockholders of the Company (the “2013 Annual Meeting”), and
to submit its nominees, who are Nicholas J. Swenson, Seth G. Barkett, William R.
Foudray, Andrew L. Osborne, John M. LaFontsee, Scott A. Ronan, Nicholas P.
Zaccagnini, Ryan P. Buckley, Thomas D. Gallagher and Christopher J. Richard, for
election at the 2013 Annual Meeting.  In the Notice of Intent, AO Partners
indicated that in connection with its nomination of such nominees, it intended
to deliver a proxy statement and form of proxy to stockholders of at least the
percentage of the Company’s outstanding common stock required to elect such
nominees (the “Contested Election”);

WHEREAS, the Company and the members of the AO Partners Group have determined
that the interests of the Company and its stockholders would be best served at
this time by, among other things, avoiding the Contested Election and the
substantial expense and disruption that may result therefrom;

WHEREAS, AO Partners has requested reimbursement from the Company for its
out-of-pocket expenses incurred in connection with its efforts to nominate and
elect its nominees to the Company’s Board of Directors at the 2013 Annual
Meeting; and

WHEREAS, the Company’s Board of Directors has determined to reimburse AO
Partners for its reasonable out-of-pocket expenses incurred in connection with
the 2013 Annual Meeting.

AGREEMENT
 
NOW, THEREFORE, in consideration of the foregoing premises and the respective
representations, warranties and agreements hereinafter set forth, and, intending
to be legally bound hereby, the parties hereby agree as follows:

 
Section 1.
Amendment to Stockholder Rights Plan and Submission to Stockholders for
Approval.

(a)           The Company will promptly amend and restate the Rights Agreement
dated as of March 26, 2012 by and between the Company and American Stock
Transfer & Trust Company, LLC, as rights agent, as amended, by entering into the
Amended and Restated Rights Agreement in the form attached hereto as Exhibit A
(as so amended and restated, the “Rights Agreement”) and taking all action
necessary to cause American Stock Transfer & Trust Company, LLC, as rights
agent, to enter into such Amended and Restated Rights Agreement.
 
 
 
 
 
 
 
 
 

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(b)           At the 2013 Annual Meeting, the Company will submit a proposal for
the stockholders to approve the Rights Agreement.  The Company’s proxy statement
used to solicit proxies to be voted at the 2013 Annual Meeting will include a
description of the Rights Agreement consistent with the description included in
the Form 8-K filed by the Company with the Securities and Exchange Commission
(the “SEC”) on March 26, 2012, as revised to reflect the amendments to the
Rights Agreement effected since that date, including the amendments to be
effected by the Amended and Restated Rights Agreement in the form attached
hereto as Exhibit A.  The AO Partners Group will be allowed to include in the
proxy statement a brief statement on why it plans to vote against approval of
the Rights Agreement, which will be in close proximity to the Board’s statement
in favor of approving the Rights Agreement and will be as prominent as the
Board’s statement.  The Rights Agreement will be deemed to be approved if, at
the 2013 Annual Meeting, more votes are cast in favor of approval of the Rights
Agreement than are cast against the approval of the Rights Agreement.   Shares
represented by proxies which are marked to indicate abstentions and broker
non-votes will not affect the outcome.  Proxies submitted without voting
direction on this proposal will be voted “Abstain.”

(c)           The 2013 Annual Meeting will be held no later than August 30,
2013.  The ratification of the selection of independent auditors will be
included on the agenda for the 2013 Annual Meeting, and the Board of Directors
of the Company (the “Board”) will solicit proxies to be voted on this matter.

Section 2.                      Board Size; Nominees for Election as Directors.

(a)           The Board will promptly adopt a resolution to reduce the size of
the Board from ten to seven effective at the commencement the 2013 Annual
Meeting and shall not rescind or modify such resolution, or adopt a resolution
establishing a different size of the Board, at any time prior to the conclusion
of the 2013 Annual Meeting, without the consent of Mr. Swenson.

(b)           The Board will nominate for election as directors at the 2013
Annual Meeting, and will solicit proxies for their election, the seven
individuals determined in the following manner:

(1)           The following three nominees proposed by AO Partners, Nicholas J.
Swenson, Seth G. Barkett and Andrew L. Osborne (the “Stockholder Nominees”);

(2)           The following three nominees proposed by the Company, John J.
Gioffre, Walter Clark and an individual to be selected by the Nominating
Committee of the Board from a list of individuals provided to AO Partners, which
selection shall occur and be communicated to AO Partners no later than the date
of selection of the Seventh Nominee (as defined below) (the “Committee
Nominees”); and

(3)           one individual who would be an independent director under the
rules of the NASDAQ Stock Market eligible to serve on the Audit Committee and
who is mutually agreeable to 2/3s of the Stockholder Nominees and 2/3s of the
Committee Nominees (the “Seventh Nominee”), to be selected as follows: the
Stockholder Nominees and the Committee Nominees will have two weeks after
execution of this Agreement to agree to the Seventh Nominee from any individuals
they may suggest; if the Seventh Nomineee is not so selected in that period, the
Company will engage a director candidate search firm of national reputation to
suggest potential candidates; then the Stockholder Nominees and the Committee
Nominees will select the Seventh Director from the candidates suggested by the
search firm using the 2/3 principal.

If subsequent to their election, a director ceases to serve, only AO Partners
may fill a vacancy of a Stockholder Nominee, only the remaining Committee
Nominees may fill a vacancy of any Committee Nominee, and only the Stockholder
Nominees and Committee Nominees acting together, as provided in 2(b)(3) above,
may fill the vacancy of the Seventh Nominee.
 
 
 
 
 
 
 

 
 
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Section 3.                      Board Committees.

(a)           Promptly following the 2013 Annual Meeting, the Company will
reconstitute the Nominating Committee of the Board with three members who shall
be one Stockholder Nominee, one Committee Nominee and the Seventh Nominee.

(b)           Promptly following the 2013 Annual Meeting, the Company will
reconstitute the Compensation Committee with three members who shall be two
Stockholder Nominees and the Seventh Nominee.

(c)           Promptly following the 2013 Annual Meeting, the Board will
establish a committee of three directors to be designated the Capital Allocation
Committee, the form of the charter of which is attached as Exhibit B
hereto.  The Capital Allocation Committee will be charged with reviewing and
recommending “for” or “against” all internal and external capital investments,
acquisitions, securities purchases or sales, mergers and general investments in
excess of $100,000 (defined hereafter as an“Investment”). The Capital Allocation
Committee will act as a clearinghouse for the evaluation of possible uses of
excess capital, measuring and reporting on the capital required by each business
unit, measuring return on capital for each business unit and seeking to inform
the Board about the Company’s use of its capital resources. The Committee will
seek Investments that have the highest risk-adjusted return on capital. Such
Investments will be made for the benefit of the Company and its
stockholders.  Procedurally, all proposals for Investments in excess of
$100,000, will be presented to the Capital Allocation Committee for a
recommendation “for” or “against” the proposal (for the avoidance of doubt, the
Capital Allocation Committee may itself originate Investment proposals for
consideration by the Board). Although the Investment may have been recommended
by the Capital Allocation Committee, the Board may disapprove of the Investment.
For the avoidance of doubt, the Board may not undertake an Investment without
submitting the Investment to the Capital Allocation Committee for its
recommendation and receiving a recommendation from the Committee “for” the
Investment.  The Capital Allocation Committee shall be comprised of two
Stockholder Nominees and one Committee Nominee.

(d)           Promptly following the execution of this Agreement, the Board will
disband the following committees of the Board: the Executive Committee, the
Special Committee established by resolution of the Board on May 1, 2013 and the
Independent Subcommittee established by resolution of the Special Committee on
May 6, 2013. The Board will not constitute any additional committees without the
approval of the majority of the board and at least 2/3 of the Stockholder
Nominees.

(e)           The charters of the Nominating Committee, the Compensation
Committee and the Audit Committee of the Board are attached as Exhibits C, D and
E, respectively.

Section 4.                      Emeritus Directors.  Each of George Prill and
Sam Chesnutt will be offered the position of Director Emeritus and will be paid
a stipend set by the Board for their participation in major Board meetings as
non-voting observers.

Section 5.                      Corporate Aircraft.  The current Board will
consider and pass, if a majority of the Board so approves, a motion to proceed
with the prompt sale of the Company’s corporate aircraft with the proceeds from
such sale to be applied either (a) to invest in an internal project or
investment with a projected 15%+ projected rate of return on capital investment,
(b) to repurchase Company stock or (c) to pay a special dividend.  If such
aircraft is sold, the Board may determine to charter equivalent aircraft as
needed to keep customer service at the same level.
 
 
 
 
 
 
 
 

 
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Section 6.
Contested Election; Voting.

(a)           AO Partners hereby irrevocably withdraws the nominations of
Nicholas J. Swenson, Seth G. Barkett, William R. Foudray, Andrew L. Osborne,
John M. LaFontsee, Scott A. Ronan, Nicholas P. Zaccagnini, Ryan P. Buckley,
Thomas D. Gallagher and Christopher J. Richard for election as directors at the
2013 Annual Meeting and its related Notice of Intent and will not submit a
notice of intent to nominate directors at the 2013 Annual Meeting or notice of
any other matter to be acted upon by the stockholders at the 2013 Annual
Meeting.

(b)           At the 2013 Annual Meeting or any adjournment thereof, AO Partners
and its Affiliates and Associates shall vote all shares of Common Stock that
they are entitled to vote at the 2013 Annual Meeting (a) in favor of the
election as directors of each of the nominees as determined in accordance with
Section 2(b) hereof and (b) with respect to the advisory vote to approve
executive compensation, ratification of independent auditors and any proposal
made by a stockholder (but not with respect to the approval of the Rights
Agreement or the advisory vote on the selection of the frequency of future
advisory vote to approve executive compensation) in accordance with the Board’s
recommendation.  For the avoidance of doubt, AO Partners and its Affiliates may
publicly state their intent to vote against the Rights Agreement, in compliance
with Rule 14a-1(l)(2)(iv) promulgated under the Securities Exchange Act of 1934.

(c)           AO Partners and its Affiliates and Associates will not submit, and
will not encourage any other stockholder to submit, a notice of intent to
nominate directors at the Company’s 2014 annual meeting of stockholders (the
“2014 Annual Meeting”) or notice of any other matter to be acted upon by the
stockholders at the 2014 Annual Meeting; provided that this provision will lapse
if (1) the stockholders approve the Rights Agreement at the 2013 Annual Meeting,
(2) the Company enters into a new stockholder rights agreement  or a similar
agreement, (3) the Board fails to nominate the Stockholder Nominees or the
Seventh Director for election as directors at the 2014 Annual Meeting prior to
May 1, 2014, (4) the Board elects to take an action contrary to the
recommendation of the Capital Allocation Committee that relates to an Investment
in excess of $100,000, (5) the daily volume weighted average price of the common
stock of the Company for any 15 days in any 30-day period commencing after the
date of the 2013 Annual Meeting is less than 80% of the daily volume weighted
average price of the common stock of the Company on the date of the 2013 Annual
Meeting, (6) after the date hereof, the Company has a consolidated loss for two
or more consecutive fiscal quarters, (7) subsequent to a meeting of the Board to
be held immediately following the 2013 Annual Meeting, Mr. Swenson is not
serving as the Chairman of the Board at any time during the term of this
Agreement, (8) the size of the Board is increased or decreased at any time
during the term of this Agreement without the approval of a majority of the
Board, including a majority of the Stockholder Nominees, or (9) the Nominating
Committee charter, the Compensation Committee charter or the Audit Committee
charter is materially amended, without the approval of a majority of the Board,
including a majority of the Stockholder Nominees.

Section 7.                      Reimbursement of Expenses.  The Company agrees
to reimburse AO Partners for its out-of-pocket expenses incurred in connection
with its efforts to nominate and elect its nominees to the Company’s Board of
Directors at the 2013 Annual Meeting in an amount equal to $30,000.  Such amount
shall be payable by the Company within ten (10) business days following the date
of this Agreement.

Section 8.                      Representations and Warranties.

(a)           The members of the AO Partners Group jointly and severally
represent and warrant as follows:
 
 
 
 
 
 
 
 
 
 
 
 

 
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(i)           Each member of the AO Partners Group has the power and authority
to execute, deliver and carry out the terms and provisions of this Agreement and
to consummate the transactions contemplated hereby.

(ii)           This Agreement has been duly and validly authorized, executed and
delivered by each member of the AO Partners Group, constitutes a valid and
binding obligation and agreement of each such member and is enforceable against
each such member in accordance with its terms.

(iii)           The members of the AO Partners Group, together with their
Affiliates and Associates, beneficially own, directly or indirectly, an
aggregate of 366,200 shares of Common Stock as set forth in the Schedule 13D
amendment filed by the members of the AO Partners Group with the SEC on May 29,
2013.

(b)           The Company hereby represents and warrants as follows:

(i)           The Company has the power and authority to execute, deliver and
carry out the terms and provisions of this Agreement and to consummate the
transactions contemplated hereby.

(ii)           This Agreement has been duly and validly authorized, executed and
delivered by the Company, constitutes a valid and binding obligation and
agreement of the Company and is enforceable against the Company in accordance
with its terms.

Section 9.                      Specific Performance.  Each of the members of
the AO Partners Group, on the one hand, and the Company, on the other hand,
acknowledges and agrees that irreparable injury to the other party hereto would
occur in the event any of the provisions of this Agreement were not performed in
accordance with its specific terms or was otherwise breached and that such
injury would not be adequately compensable in damages.  It is accordingly agreed
that the members of the AO Partners Group, on the one hand, and the Company, on
the other hand, shall each be entitled to specific enforcement of, and
injunctive relief to prevent any violation of, the terms hereof and the other
party hereto will not take any action, directly or indirectly, in opposition to
the party seeking relief on the grounds that any other remedy or relief is
available at law or in equity.

Section 10.                      Press Release and Other Public
Disclosures.  Immediately following the execution and delivery of this
Agreement, the Company and AO Partners shall issue the joint press release
attached hereto as Exhibit F (the “Press Release”).  None of the parties hereto
will make any public statements (including in any filing with the SEC or any
other regulatory or governmental agency, including any stock exchange) that are
inconsistent with, or otherwise contrary to, the statements in the Press Release
issued pursuant to this Section 10.

Section 11.                      Non-Disparagement.  During the term of this
Agreement, neither the Company and its respective officers, directors or
Affiliates, on the one hand, nor any of members of the AO Partners Group and
their respective officers, directors or Affiliates, on the other hand, shall
directly or indirectly make or issue or cause to be made or issued any
disclosure, announcement, or statement (including without limitation the filing
of any document or report with the SEC or any other governmental agency unless
required by law or any disclosure to any journalist, member of the media, or
securities analyst) concerning the other party or, with respect to the Company,
any of its respective past, present or future directors, director nominees,
officers, members, employees, advisors or other affiliates, which disparages
such other party or any of such other party’s respective past, present, or
future directors, director nominees, officers, members, employees, advisors or
other affiliates.
 
 
 
 
 
 
 
 
 
 
 

 
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Section 12.                      Certain Definitions.  As used in this
Agreement, (a) the terms “Affiliates” and “Associates” shall have the meanings
of such terms as set forth in Rule 12b-2 promulgated by the SEC under the
Securities Exchange Act of 1934 and (b) the term “Common Stock” shall mean the
common stock of the Company, par value $0.25 per share.

Section 13.                      No Waiver.  Any waiver by any party of a breach
of any provision of this Agreement shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Agreement.  The failure of a party to insist upon strict
adherence to any term of this Agreement on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.

Section 14.                      Successors and Assigns.  All the terms and
provisions of this Agreement shall inure to the benefit of and shall be
enforceable by the successors and assigns of the parties hereto.

Section 15.                      Entire Agreement; Amendments.  This Agreement
contains the entire understanding of the parties with respect to its subject
matter.  There are no restrictions, agreements, promises, representations,
warranties, covenants or other undertakings other than those expressly set forth
in this Agreement.  This Agreement may be amended only by a written instrument
duly executed by the parties or their respective successors or assigns.

Section 16.                      Headings.  The section headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.

Section 17.                      Notices.  All notices, demands and other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given (a)
when delivered by hand (with written confirmation of receipt), (b) upon sending
if sent by electronic mail or facsimile, with electronic confirmation of
sending, provided, however, that a copy is sent on the same day by registered
mail, return receipt requested, in each case to the appropriate mailing and
electronic mail or facsimile addresses set forth below, (c) one (1) day after
being sent by nationally recognized overnight carrier to the addresses set forth
below or (d) when actually delivered if sent by any other method that results in
delivery (with written confirmation of receipt):

If to the Company:

Air T, Inc.
3524 Airport Road
Maiden, North Carolina 28650
Attn:           John Parry, Secretary
Facsimile: (828) 464-8741
Email: jparry@airt.net

with a copy to:

Robinson Bradshaw & Hinson, P.A.
101 North Tryon Street, Suite 1900
Charlotte, North Carolina 28246
Attn:           Stephen M. Lynch
Facsimile: (704) 373-3955
Email: slynch@rbh.com
 
 
 
 
 
 
 
 

 
6
 

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If to the AO Partners Group:

AO Partners I, L.P.
3033 Excelsior Blvd., Suite 560
Minneapolis, Minnesota 55416
Attn:           Nicholas J. Swenson
Email: nickswenson@grovelandcapital.com

with a copy to:

Foley & Lardner LLP
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-5306
Attn:           Peter D. Fetzer
Facsimile: (414) 297-4900
Email: pfetzer@foley.com

in each case, or to such other address as the person to whom notice is given may
have previously furnished to the others in writing in the manner set forth
above.

Section 18.                      Governing Law.  This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware without reference to the conflict of laws principles thereof.

Section 19.                      Counterparts.  This Agreement may be executed
in counterparts, each of which shall be an original, but all of which together
shall constitute one and the same Agreement.

Section 20.                      Severability.  If any provision of this
Agreement or the application thereof to any person or circumstance is determined
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, will remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.  Upon such determination, the parties shall
negotiate in an effort to agree upon a suitable and equitable substitute
provision to effect the original intent of the parties.

Section 21.                      Term.  This Agreement shall expire on the 30th
day prior to commencement of the period, based on the date of the 2014 annual
meeting of stockholders and as provided in the Company’s bylaws, during which a
stockholder must deliver written notice of an intention to nominate a person for
election at the 2015 annual meeting of stockholders in order to permit such
stockholder to make such nomination at such annual meeting.

[Remainder of page intentionally left blank.]
 
 
 
 
 
 
 
 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
 
 
 
AIR T, INC.

 
 
By:
/s/ Walter Clark
 

 
Name:  Walter Clark

 
Title:  Chief Executive Officer

 
 
AO PARTNERS I, L.P.

 
 
By:
AO PARTNERS, LLC

 
General Partner

 
By:
  /s/ Nicholas J. Swenson
 

 
Name:  Nicholas J. Swenson

 
Title:  Managing Member

 
 
AO PARTNERS LLC

 
 
By:
  /s/ Nicholas J. Swenson
 

 
Name:  Nicholas J. Swenson

 
Title:  Managing Member

     /s/ Nicholas J. Swenson                                     
      Nicholas J. Swenson
 
         
/s/ Seth G.
Barkett                                                                                                        
  Seth G. Barkett
 
 
  /s/ William R.
Foudray                                                                                             
 William R. Foudray
 
 
  /s/ Andrew L.
Osborne                                                                                                
  Andrew L. Osborne
 
 
  /s/ John M.
LaFontsee                                                                                            
 John M. LaFontsee
 
 
  /s/ Scott A.
Ronan                                                                                                       
  Scott A. Ronan
 
 
  /s/ Nicholas P.
Zaccagnini                                                                                     
 Nicholas P. Zaccagnini
 
 
  /s/ Ryan
P.Buckley                                                                                                      
  Ryan P. Buckley
 
 
  /s/ Thomas D.
Gallagher                                                                                        
 Thomas D. Gallagher
 
  /s/ Christopher J.
Richard                                                                                          
  Christopher J. Richard
 

 
[Agreement Signature Page]

 
 

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EXHIBIT A

Form of Amended and Restated Rights Agreement

(attached)

 
 

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AMENDED AND RESTATED RIGHTS AGREEMENT
 
Dated as of June __, 2013
 
By and Between
 
AIR T, INC.
 
and
 
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
 
as Rights Agent
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 

 
 

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TABLE OF CONTENTS

Page
 

1.
Certain Definitions 
1

 
2.
Appointment of Rights Agent 
8

 
3.
Issue of Right Certificates 
8

 
4.
Form of Right Certificates 
10

 
5.
Countersignature and Registration 
11

 
6.
Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates 
11

 
7.
Exercise of Rights; Purchase Price; Expiration Date of Rights 
12

 
8.
Cancellation of Right Certificates 
13

 
9.
Company Covenants Concerning Securities and Rights 
13

 
10.
Record Date 
15

 
11.
Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights 
15

 
12.
Certificate of Adjusted Purchase Price or Number of Securities 
23

 
13.
Consolidation, Merger or Sale or Transfer of Assets or Earning Power 
24

 
14.
Fractional Rights and Fractional Securities 
26

 
15.
Rights of Action 
28

 
16.
Agreement of Rights Holders 
28

 
17.
Right Certificate Holder Not Deemed a Shareholder 
29

 
18.
Concerning the Rights Agent 
29

 
19.
Merger or Consolidation or Change of Name of Rights Agent 
29

 
20.
Duties of Rights Agent 
30

 
21.
Change of Rights Agent 
32

 
22.
Issuance of New Right Certificates 
33

 
23.
Redemption and Exemption 
34

 
24.
Exchange 
36

 
25.
Notice of Certain Events 
37

 
26.
Notices 
37

 
27.
Supplements and Amendments 
38

 
28.
Successors; Certain Covenants 
39

 
29.
Benefits of This Agreement 
39

 
30.
Governing Law 
39

 
31.
Severability 
39

 
32.
Descriptive Headings, Etc 
39

 
33.
Determinations and Actions by the Directors 
39

 
34.
Counterparts 
40

 
 
 
EXHIBIT A—Certificate of Designation                               
 A-1

 
 
EXHIBIT B—Form of Rights
Certificate                                                                                                                                                                                                                                                     
 B-1

 
 
EXHIBIT C—Form of Summary of Rights to Purchase Preferred
Stock                                                                                                                                                                                                
 C-1

 

 

     

 

 
 

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AMENDED AND RESTATED RIGHTS AGREEMENT
 
This AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of June __, 2013 (this
“Agreement”), is made and entered into by and between Air T, Inc., a Delaware
corporation (the “Company”), and American Stock Transfer & Trust Company, LLC, a
New York limited liability trust company (the “Rights Agent”).
 
RECITALS
 
WHEREAS, on March 26, 2012, the Board of Directors of the Company (the “Board”)
adopted the Rights Agreement, dated as of March 26, 2012, between the Company
and the Rights Agent (such agreement, as amended prior to the date hereof, the
“Original Agreement”), authorized and declared a dividend distribution of one
right (a “Right”) for each share of common stock, par value $0.25 per share, of
the Company (each, a “Common Share”) outstanding as of the Close of Business (as
defined in Section 1(g)) on April 5, 2012 (the “Record Date”), each Right
initially representing the right to purchase one one-thousandth of a Preferred
Share (as defined in Section 1(w)) on the terms and subject to the conditions
herein set forth, and further authorized and directed the issuance of one Right
(subject to adjustment as provided therein) with respect to each Common Share
issued or delivered by the Company (whether originally issued or delivered from
the Company’s treasury) after the Record Date but prior to the earlier of the
Distribution Date (as defined in Section 1(k)) and the Expiration Date (as
defined in Section 1(o)) or as provided in Section 22;
 
WHEREAS, under Section 27 of the Original Agreement, the Company and the Rights
Agent may from time to time supplement or amend any provision of the Original
Agreement;
 
WHEREAS, the Board, through actions of a subcommittee (the “Independent
Subcommittee”) of a special committee of the Board duly established and
delegated authority to, among other things, exercise the rights of the Board
under the Original Agreement, authorized and approved certain technical
amendments to the Original Agreement in a First Amendment to Rights Agreement,
dated as of May 20, 2012, between the Company and the Rights Agent; and
 
WHEREAS, the Independent Subcommittee has authorized certain additional
amendments to the Original Agreement, which include, among other things, the
addition of (i) a qualifying offer provision, which provides, as set forth
herein, that the shareholders of the Company may cause the Board to call a
special meeting if the Board has not redeemed the Rights or exempted a
Qualifying Offer within a certain timeframe (ii) a modification to the
definition of Expiration Date in the Original Agreement to provide that this
Agreement shall expire if, at the Company’s 2013 annual meeting of shareholders,
a proposal to approve this Agreement is not approved by a vote in which more
votes are cast in favor of the proposal than are cast against it; and
 
WHEREAS, the Company and the Rights Agent desire to amend and restate the
Original Agreement to give effect to such amendments.
 
 
 
 

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NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the
parties hereto hereby agree as follows to amend, restate and supersede the
Original Agreement in its entirety:
 
1.           Certain Definitions.  For purposes of this Agreement, the following
terms have the meanings indicated:
 
(a)           “Acquiring Person” means any Person (other than the Company, an
Exempt Person or any Related Person) that, together with all Affiliates and
Associates of such Person, is the Beneficial Owner of 20% or more of the
then-outstanding Common Shares; provided, however, that a Person will not be
deemed to have become an Acquiring Person solely as a result of a reduction in
the number of Common Shares outstanding unless and until such time as (i) such
Person or any Affiliate or Associate of such Person thereafter becomes the
Beneficial Owner of additional Common Shares representing 1% or more of the
then-outstanding Common Shares, other than as a result of a stock dividend,
stock split or similar transaction effected by the Company in which all holders
of Common Shares are treated equally, or (ii) any other Person that is the
Beneficial Owner of Common Shares representing 1% or more of the
then-outstanding Common Shares thereafter becomes an Affiliate or Associate of
such Person.  Notwithstanding anything to the contrary in this Section 1(a), if
the Board of Directors of the Company determines in good faith that a Person who
would otherwise be an “Acquiring Person”, as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently (including
because such Person was (i) unaware that it Beneficially Owned a percentage of
the then-outstanding Common Shares that would otherwise cause such Person to be
an “Acquiring Person” or (ii) aware of the extent of its Beneficial Ownership of
Common Shares, but had no actual knowledge of the consequences of such
Beneficial Ownership under this Agreement), and such Person divests itself of
Beneficial Ownership as promptly as practicable (as determined by the Board) of
a sufficient number of Common Shares so that such Person would no longer be an
“Acquiring Person”, as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an “Acquiring Person”
for any purposes of this Agreement.
 
(b)           “Affiliate” and “Associate” will have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Agreement, provided however,
that a Person will not be deemed to be the Affiliate or Associate of another
Person solely because either or both Persons are or were Directors of the
Company.
 
(c)           A Person will be deemed the “Beneficial Owner” of, and to
“Beneficially Own,” any securities:
 
(i)           the beneficial ownership of which such Person or any of such
Person’s Affiliates or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or understanding (whether or not
in writing), or upon the exercise of conversion rights, exchange rights,
warrants, options or other rights (in each case, other than upon exercise or
exchange of the Rights); provided, however, that a Person will not be deemed the
Beneficial Owner of, or to Beneficially Own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of such
Person’s Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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(ii)           which such Person or any of such Person’s Affiliates or
Associates, directly or indirectly, has or shares the right to vote or dispose
of, including pursuant to any agreement, arrangement or understanding (whether
or not in writing); or
 
(iii)           of which any other Person is the Beneficial Owner, if such
Person or any of such Person’s Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) with such other Person
(or any of such other Person’s Affiliates or Associates) with respect to
acquiring, holding, voting or disposing of any securities of the Company;
provided, however, that a Person party to any agreement, arrangement or
understanding (whether or not in writing) with the Company with respect to
acquiring, holding, voting or disposing of any securities of the Company shall
not, by virtue of such agreement, arrangement or understanding, be deemed to
Beneficially Own securities of the Company Beneficially Owned by the Company or
any of the Company’s Affiliates or Associates;
 
(iv)           of which such Person would otherwise be deemed to be the
Beneficial Owner pursuant to Rule 13d-3 under the Exchange Act;
 
provided, however, that a Person will not be deemed the Beneficial Owner of, or
to Beneficially Own, any security (A) if such Person has the right to vote such
security pursuant to an agreement, arrangement or understanding (whether or not
in writing) which (1) arises solely from a revocable proxy given to such Person
in response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report), or (B) if such beneficial ownership arises
solely as a result of such Person’s status as a “clearing agency,” as defined in
Section 3(a)(23) of the Exchange Act; provided further, however, that nothing in
this paragraph (c) will cause a Person engaged in business as an underwriter of
securities to be the Beneficial Owner of, or to Beneficially Own, any securities
acquired through such Person’s participation in good faith in an underwriting
syndicate until the expiration of 40 calendar days after the date of such
acquisition, or such later date as the Board may determine in any specific case.
 
(d)           “Board” has the meaning set forth in the Recitals to this
Agreement.
 
(e)           “Board Evaluation Period” has the meaning set forth in Section
23(c).
 
(f)           “Business Day” means any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New York (or such other state
in which the principal office of the Rights Agent is located) are authorized or
obligated by law or executive order to close.
 
(g)           “Close of Business” on any given date means 5:00 P.M., Eastern
time, on that date; provided, however, that if such date is not a Business Day
it means 5:00 P.M., Eastern time, on the next succeeding Business Day.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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(h)           “Common Shares” when used with reference to the Company means the
shares of common stock, par value $0.25 per share, of the Company; provided,
however, that, if the Company is the continuing or surviving corporation in a
transaction described in Section 13(a)(ii), “Common Shares” when used with
reference to the Company means shares of the capital stock or units of the
equity interests with the greatest aggregate voting power of the
Company.  “Common Shares” when used with reference to any corporation or other
legal entity other than the Company, including an Issuer, means shares of the
capital stock or units of the equity interests with the greatest aggregate
voting power of such corporation or other legal entity.
 
(i)           “Company” means Air T, Inc., a Delaware corporation.
 
(j)           “Definitive Acquisition Agreement” shall mean any definitive
written agreement entered into by the Company that is conditioned on the
approval by the holders of not less than a majority of the outstanding Common
Shares at a meeting of the shareholders of the Company with respect to (i) a
merger, consolidation, recapitalization, reorganization, share exchange,
business combination or similar transaction involving the Company or (ii) the
acquisition in any manner, directly or indirectly, of more than 50% of the
consolidated total assets (including, without limitation, equity securities of
its subsidiaries) of the Company and its Subsidiaries.
 
(k)           “Distribution Date” means the earlier of:  (i) the Close of
Business on the tenth calendar day following the Share Acquisition Date, or (ii)
the Close of Business on such date as may be specified by the Board after the
commencement of, or first public disclosure of an intent to commence, a tender
or exchange offer by any Person (other than the Company or any Related Person),
whether such commencement or first public disclosure occurs before or after the
date of this Agreement, if upon the consummation thereof such Person would be
the Beneficial Owner of 20% or more of the then-outstanding Common Shares.
 
(l)           “Exchange Act” means the Securities Exchange Act of 1934, as
amended.
 
(m)           “Exempt Person” shall mean each Person that Beneficially Owns, as
of the date of this Agreement, 20% or more of the Common Shares outstanding;
provided, however, that any such Person shall cease to be an Exempt Person and
will be deemed an Acquiring Person, subject to the exception for inadvertent
acquisition in Section 1(a), if such Person acquires Beneficial Ownership of
such number of additional Common Shares (other than as a result of a stock
dividend, stock split or similar transaction effected by the Company in which
all holders of Common Shares are treated equally) which represents 1% or more of
the Common Shares outstanding at the time of such acquisition; provided,
further, that (1) such Person shall cease to be an Exempt Person immediately at
such time as such Person ceases to be the Beneficial Owner of 20% or more of the
Common Shares then outstanding; and (2) no Exempt Person will cease to be an
Exempt Person solely as a result of a reduction in the number of Common Shares
outstanding unless and until such Exempt Person acquires Beneficial Ownership of
such number of additional Common Shares (other than as a result of a stock
dividend, stock split or similar transaction effected by the Company in which
all holders of Common Shares are treated equally) which represents 1% or more of
the Common Shares outstanding at the time of such acquisition.
 
(n)           “Exemption Date” has the meaning set forth in Section 23(e).
 
 
 
 
 
 
 
 
 
 
 
 
 
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(o)           “Expiration Date” means the earliest of (i) the Close of Business
on the Final Expiration Date, (ii) the final adjournment of the Company’s 2013
annual meeting of shareholders if a proposal to approve this Agreement has not
been approved by a vote in which  more votes are cast in favor of such proposal
than are cast against such proposal, (iii) the time at which the Rights are
redeemed as provided in Section 23, and (iv) the time at which all exercisable
Rights are exchanged as provided in Section 24.
 
(p)           “Final Expiration Date” means the third anniversary of the Record
Date.
 
(q)           “Flip-in Event” means any event described in Section 11(a)(ii).
 
(r)           “Flip-over Event” means any event described in clauses (i), (ii)
or (iii) of Section 13(a).
 
(s)           “Issuer” has the meaning set forth in Section 13(b).
 
(t)           “Nasdaq” means The NASDAQ Stock Market.
 
(u)           “Outside Meeting Date” has the meaning set forth in Section 23(e).
 
(v)           “Person” means any individual, firm, corporation or other legal
entity, and includes any successor (by merger or otherwise) of such entity.
 
(w)           “Preferred Shares” means shares of Series A Junior Participating
Preferred Stock, par value $1.00 per share, of the Company having the rights and
preferences set forth in the form of Certificate of Designation attached as
Exhibit A.
 
(x)           “Purchase Price” means initially $25.00 per one one-thousandth of
a Preferred Share, subject to adjustment from time to time as provided in this
Agreement.
 
(y)           “Qualifying Offer” shall mean an offer determined by the Board to
have, to the extent required for the type of offer specified, each of the
following characteristics:
 
(i)           a fully financed all-cash tender offer or an exchange offer
offering shares of common stock of the offeror, or a combination thereof, for
any and all of the then outstanding Common Shares at the same per-share
consideration;
 
(ii)           an offer that has commenced within the meaning of Rule 14d-2(a)
under the Exchange Act;
 
(iii)           an offer that is subject only to the minimum tender condition
described below in item (vi) of this definition and other customary terms and
conditions, which conditions shall not include any financing, funding or similar
conditions or any requirements with respect to the offeror or its agents being
permitted any due diligence with respect to the books, records, management,
accountants or any other outside advisers of the Company;
 
 
 
 
 
 
 
 
 
 
 
 
 
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(iv)           an offer pursuant to which the Company and its shareholders have
received an irrevocable written commitment of the offeror that the offer will
remain open for not less than ninety (90) Business Days and, if a Special
Meeting Demand is duly delivered to the Board of Directors in accordance with
Section 23(c), for at least ten (10) Business Days after the date of the Special
Meeting or, if no Special Meeting is held within the Special Meeting Period (as
defined in Section 23(d)), for at least ten (10) Business Days following the
last day of such Special Meeting Period;
 
(v)           an offer pursuant to which the Company has received an irrevocable
written commitment by the offeror that, in addition to the minimum time periods
specified in item (iv) of this definition, the offer, if it is otherwise to
expire prior thereto, will be extended for at least fifteen (15) Business Days
after (i) any increase in the price offered, or (ii) any bona fide alternative
offer is commenced by another Person within the meaning of Rule 14d-2(a) of the
Exchange Act; provided, however, that such offer need not remain open, as a
result of clauses (iv) and (v) of this definition, beyond (1) the time which any
other offer satisfying the criteria for a Qualifying Offer is then required to
be kept open under such clauses (iv) and (v), or (2) the expiration date, as
such date may be extended by public announcement (with prompt written notice to
the Rights Agent) in compliance with Rule 14e-1 of the Exchange Act, of any
other tender offer for the Common Shares with respect to which the Board has
agreed to redeem the Rights immediately prior to acceptance for payment of
Common Shares thereunder (unless such other offer is terminated prior to its
expiration without any Common Shares having been purchased thereunder) or (3)
one (1) Business Day after the shareholder vote with respect to approval of any
Definitive Acquisition Agreement has been officially determined and certified by
the inspectors of elections;
 
(vi)           an offer that is conditioned on a minimum of at least a majority
of (i) the outstanding Common Shares on a fully-diluted basis and (ii) the
outstanding Common Shares not Beneficially Owned by the Person making such offer
(or any such Affiliates or Associates of such Person) being tendered and not
withdrawn as of the offer’s expiration date, which condition shall not be
waivable;
 
(vii)           an offer pursuant to which the Company and its shareholders have
received an irrevocable written commitment by the offeror to consummate as
promptly as practicable upon successful completion of the offer a second step
transaction whereby all of the Common Shares not tendered into the offer will be
acquired at the same consideration per share actually paid pursuant to the
offer, subject to shareholders’ statutory appraisal rights, if any;
 
(viii)           an offer pursuant to which the Company and its shareholders
have received an irrevocable written commitment of the offeror that no
amendments will be made to the offer to reduce the offer consideration, or
otherwise change the terms of the offer in a way that is materially adverse to a
tendering shareholder (other than extensions of the offer consistent with the
terms thereof).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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(ix)           if the offer includes shares of common stock of the offeror, (i)
the offeror is a publicly owned United States corporation and its common stock
is freely tradable and is listed or admitted to trading on either the NASDAQ
Global Select Market, the NASDAQ Global Market or the New York Stock Exchange,
(ii) no shareholder approval of the offeror is required to issue such common
stock, or, if required, such approval has already been obtained, (iii) no Person
(including any Affiliates or Associates of such Person) beneficially owns more
than 20% of the voting stock of the offeror at the time of commencement of the
offer or at any time during the term of the offer, (iv) no other class of voting
stock of the offeror is outstanding (v) the offeror meets the registrant
eligibility requirements for use of Form S-3 for registering securities under
the Securities Act, including, without limitation, the filing of all required
Exchange Act reports in a timely manner during the twelve calendar months prior
to the date of commencement of such offer; and (vi) the per-share offer price of
the offer will be determined by valuing such common stock of the offeror at the
lowest reported market price for such common stock of the offeror during the
five Trading Days immediately preceding and the five Trading Days immediately
following the commencement of the offer (within the meaning of Rule 14d-2(a)
under the Exchange Act).
 
For the purposes of the definition of Qualifying Offer, “fully financed” shall
mean that the offeror has sufficient funds for the offer and related expenses
which shall be evidenced by (i) firm, unqualified, written commitments from
responsible financial institutions having the necessary financial capacity,
accepted by the offeror, to provide funds for such offer subject only to
customary terms and conditions, (ii) cash or cash equivalents then available to
the offeror, set apart and maintained solely for the purpose of funding the
offer with an irrevocable, legally binding written commitment being provided by
the offeror to the Board to maintain such availability until the offer is
consummated or withdrawn or (iii) a combination of the foregoing; which evidence
has been provided to the Company prior to, or upon, commencement of the offer.
If an offer becomes a Qualifying Offer in accordance with this definition, but
subsequently ceases to be a Qualifying Offer as a result of the failure at a
later date to continue to satisfy any of the requirements of this definition,
such offer shall cease to be a Qualifying Offer and the provisions of Section
23(c) shall no longer be applicable to such offer.
 
(z)           “Qualifying Offer Resolution” has the meaning set forth in Section
23(c).
 
(aa)           “Record Date” has the meaning set forth in the Recitals to this
Agreement.
 
(bb)           “Redemption Price” means $0.01 per Right, subject to adjustment
by resolution of the Board to reflect any stock split, stock dividend or similar
transaction occurring after the Record Date.
 
(cc)           “Related Person” means (i) any Subsidiary of the Company or (ii)
any employee benefit or stock ownership plan of the Company or of any Subsidiary
of the Company or any entity holding Common Shares for or pursuant to the terms
of any such plan.
 
(dd)           “Requisite Percentage” has the meaning set forth in Section
23(c).
 
(ee)           “Right” has the meaning set forth in the Recitals to this
Agreement.
 
(ff)           “Right Certificates” means certificates evidencing the Rights, in
substantially the form attached as Exhibit B.
 
 
 
 
 
 
 
 
 
 
 
 
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(gg)           “Rights Agent” means American Stock Transfer & Trust Company,
LLC, unless and until a successor Rights Agent has become such pursuant to the
terms of this Agreement, and thereafter, “Rights Agent” means such successor
Rights Agent.
 
(hh)           “Securities Act” means the Securities Act of 1933, as amended.
 
(ii)           “Share Acquisition Date” means the first date of public
announcement (by press release, filing made with the Securities and Exchange
Commission or otherwise, including a report filed or amended pursuant to Section
13(d) under the Exchange Act) (i) by the Company stating that an Acquiring
Person has become such or (ii) by an Acquiring Person indicating that such
Acquiring Person has become such.
 
(jj)           “Special Meeting” has the meaning set forth in Section 23(c).
 
(kk)           “Special Meeting Demand” has the meaning set forth in Section
23(c).
 
(ll)           “Special Meeting Period” has the meaning set forth in Section
23(d).
 
(mm)           “Subsidiary” when used with reference to any Person means any
corporation or other legal entity of which a majority of the voting power of the
voting equity securities or equity interests is owned, directly or indirectly,
by such Person; provided, however, that for purposes of Section 13(b),
“Subsidiary” when used with reference to any Person means any corporation or
other legal entity of which at least 20% of the voting power of the voting
equity securities or equity interests is owned, directly or indirectly, by such
Person.
 
(nn)           “Trading Day” means any day on which the principal national
securities exchange on which the Common Shares are listed or admitted to trading
is open for the transaction of business or, if the Common Shares are not listed
or admitted to trading on any national securities exchange, a Business Day.
 
(oo)           “Triggering Event” means any Flip-in Event or Flip-over Event.
 
2.           Appointment of Rights Agent.  The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment and
hereby certifies that it complies with the requirements of Nasdaq governing
transfer agents and registrars.  The Company may from time to time act as
Co-Rights Agent or appoint such Co-Rights Agents as it may deem necessary or
desirable upon ten (10) days’ prior written notice to the Rights Agent.  The
Rights Agent shall have no duty to supervise, and shall in no event be liable
for, the acts or omissions of any such Co-Rights Agent.  Any actions which may
be taken by the Rights Agent pursuant to the terms of this Agreement may be
taken by any such Co-Rights Agent.  To the extent that any Co-Rights Agent takes
any action pursuant to this Agreement, such Co-Rights Agent will be entitled to
all of the rights and protections of, and subject to all of the applicable
duties and obligations imposed upon, the Rights Agent pursuant to the terms of
this Agreement.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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3.           Issue of Right Certificates.  (a)  Until the Distribution Date, (i)
the Rights will be evidenced by the certificates representing Common Shares
registered in the names of the record holders thereof (which certificates
representing Common Shares will also be deemed to be Right Certificates) and
Rights associated with any uncertificated Common Shares will be evidenced
(subject to the provisions of Section 3(b) hereof) by the registration of such
Common Shares in the share register of the Company in the names of the holders
thereof (which registration shall also be deemed to be the registration of
ownership of the associated Rights) and not by separate registrations or Right
Certificates, (ii) the Rights will be transferable only in connection with the
transfer of the underlying Common Shares, and (iii) the surrender for transfer
of any certificates evidencing Common Shares in respect of which Rights have
been issued will also constitute the transfer of the Rights associated with the
Common Shares evidenced by such certificates.  The Company will make available,
as promptly as practicable following the Record Date, a copy of a Summary of
Rights, in substantially the form attached hereto as Exhibit C to any holder of
Rights who may so request from time to time prior to the Expiration Date.
 
(b)           Rights will be issued by the Company in respect of all Common
Shares (other than Common Shares issued upon the exercise or exchange of any
Right) issued or delivered by the Company (whether originally issued or
delivered from the Company’s treasury) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date.  Certificates
evidencing such Common Shares will have stamped on, impressed on, printed on,
written on, or otherwise affixed to them the following legend or such similar
legend as the Company may deem appropriate and as is not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or transaction reporting system on
which the Common Shares may from time to time be listed or quoted, or to conform
to usage:
 
This certificate also evidences and entitles the holder hereof to certain rights
(the “Rights”) as set forth in the Rights Agreement, dated as of March 26, 2012,
between Air T, Inc. (the “Company”) and American Stock Transfer & Trust Company,
LLC, as Rights Agent, as it may from time to time be supplemented or amended
pursuant to its terms (the “Rights Agreement”), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the principal
offices of the Company  The Rights are not exercisable prior to the occurrence
of certain events specified in the Rights Agreement.  Under certain
circumstances, as set forth in the Rights Agreement, such Rights may be
redeemed, may expire, may be amended, or may be evidenced by separate
certificates and no longer be evidenced by this Certificate.  The Company will
mail to the holder of this Certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after receipt of a
written request therefor.  Under certain circumstances as set forth in the
Rights Agreement, Rights that are or were Beneficially Owned by an Acquiring
Person or any Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement), may become null and void.
 
In the case of the initial transaction statement or subsequent periodic
statements with respect to uncertificated Common Shares, if any, such statement
or statements shall bear the following legend:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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The registration in the share register of Air T, Inc. (the “Company”) of the
shares of common stock to which this initial transaction or subsequent periodic
statement relates also evidences and entitles the registered holder of such
shares to certain rights (the “Rights”) as set forth in the Rights Agreement,
dated as of March 26, 2012, between the Company and American Stock Transfer &
Trust Company, LLC, as Rights Agent, as it may from time to time be supplemented
or amended pursuant to its terms (the “Rights Agreement”), the terms of which
are hereby incorporated herein by reference and a copy of which is on file at
the principal executive offices of the Company.  The Rights are not exercisable
prior to the occurrence of certain events specified in the Rights
Agreement.  Under certain circumstances, as set forth in the Rights Agreement,
such Rights may be redeemed, may expire, may be amended, or may be evidenced by
separate certificates and no longer be evidenced by such registration.  The
Company will mail to the registered holder of such shares a copy of the Rights
Agreement as in effect on the date of mailing, without charge promptly after
receipt of a written request therefor.  Under certain circumstances as set forth
in the Rights Agreement, Rights that are or were Beneficially Owned by an
Acquiring Person or any Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement), may become null and void.
 
(c)           Any Right Certificate issued pursuant to this Section 3 that
represents Rights Beneficially Owned by an Acquiring Person or any Associate or
Affiliate thereof and any Right Certificate issued at any time upon the transfer
of any Rights to an Acquiring Person or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate and any Right
Certificate issued pursuant to Section 6 or 11 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall be subject to and contain the following legend or such similar
legend as the Company may deem appropriate and as is not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage:
 
The Rights represented by this Right Certificate are or were beneficially owned
by a Person who was an Acquiring Person or an Affiliate or an Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement). This Right
Certificate and the Rights represented hereby may become null and void in the
circumstances specified in Section 11(a)(ii) or Section 13 of the Rights
Agreement.
 
The Company shall instruct the Rights Agent in writing of the Right Certificates
which should be so legended and shall supply the Rights Agent with such legended
Right Certificates.
 
(d)           The Company shall give the Rights Agent prompt written notice of
the Distribution Date.  As promptly as practicable after the Distribution Date,
the Company will prepare and execute, the Rights Agent will countersign and the
Company will send or cause to be sent (and the Rights Agent will, if requested
and at the expense of the Company, send), by first class, insured, postage
prepaid mail, to each record holder of Common Shares as of the Close of Business
on the Distribution Date, at the address of such holder shown on the records of
the Company, a Right Certificate evidencing one Right for each Common Share so
held, subject to adjustment as provided herein.  As of and after the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
 
(e)           In the event that the Company purchases or otherwise acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares will be deemed canceled and retired so
that the Company will not be entitled to exercise any Rights associated with the
Common Shares so purchased or acquired.
 
 
 
 
 
 
 
 
 
 
 
 
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4.           Form of Right Certificates.  The Right Certificates (and the form
of election to purchase and the form of assignment to be printed on the reverse
thereof) will be substantially in the form attached as Exhibit B with such
changes and marks of identification or designation, and such legends, summaries
or endorsements printed thereon, as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or transaction
reporting system on which the Rights may from time to time be listed or quoted,
or to conform to usage.  The Right Certificates shall be in a machine printable
format and in a form reasonably satisfactory to the Rights Agent.  Subject to
the provisions of Section 22, the Right Certificates, whenever issued, shall
show the date of countersignature, and on their face will entitle the holders
thereof to purchase such number of one one-thousandths of a Preferred Share as
are set forth therein at the Purchase Price set forth therein, but the Purchase
Price, the number and kind of securities issuable upon exercise of each Right
and the number of Rights outstanding will be subject to adjustment as provided
herein.
 
5.           Countersignature and Registration.  (a)  The Right Certificates
will be executed on behalf of the Company by its Chairman, its Chief Executive
Officer, President or any Vice President, either manually or by facsimile
signature, and will have affixed thereto the Company’s seal or a facsimile
thereof which will be attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature.  The Right Certificates will
be manually countersigned by the Rights Agent and will not be valid for any
purpose unless so countersigned.  In case any officer of the Company who signed
any of the Right Certificates ceases to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, is a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement any such person
was not such officer.
 
(b)           Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at the principal office of the Rights Agent designated for
such purpose and at such other offices as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or any transaction reporting system on
which the Rights may from time to time be listed or quoted, books for
registration and transfer of the Right Certificates issued hereunder.  Such
books will show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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6.           Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates.  (a)  Subject to the
provisions of Sections 7(d), 14 and 24, at any time after the Close of Business
on the Distribution Date and prior to the Expiration Date, any Right Certificate
or Right Certificates representing exercisable Rights may be transferred, split
up, combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-thousandths
of a Preferred Share (or other securities, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase.  Any registered holder
desiring to transfer, split up, combine or exchange any such Right Certificate
or Right Certificates must make such request in a writing delivered to the
Rights Agent and must surrender the Right Certificate or Right Certificates to
be transferred, split up, combined or exchanged at the principal office of the
Rights Agent designated for such purpose.  Thereupon or as promptly as
practicable thereafter, subject to the provisions of Sections 7(d), 14 and 24,
the Company will prepare, execute and deliver to the Rights Agent, and the
Rights Agent will countersign and deliver, a Right Certificate or Right
Certificates, as the case may be, as so requested.  The Company may require
payment by the holders of Rights of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.
 
(b)           Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will prepare, execute and
deliver a new Right Certificate of like tenor to the Rights Agent and the Rights
Agent will countersign and deliver such new Right Certificate to the registered
holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
 
7.           Exercise of Rights; Purchase Price; Expiration Date of
Rights.  (a)  The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date and prior to the Expiration Date,
upon surrender of the Right Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the office or
offices of the Rights Agent designated for such purpose, together with payment
in cash, in lawful money of the United States of America by certified check or
bank draft payable to the order of the Company, equal to the sum of (i) the
aggregate Purchase Price for the total number of one one-thousandths of a
Preferred Share as to which such surrendered Rights are exercised and (ii) an
amount equal to any applicable transfer tax required to be paid by the holder of
such Right Certificate in accordance with the provisions of Section 9(d).
 
(b)           Upon receipt of a Right Certificate representing exercisable
Rights with the form of election to purchase duly executed, accompanied by
payment as described above, the Rights Agent will promptly (i) requisition from
any transfer agent of the Preferred Shares (or make available, if the Rights
Agent is the transfer agent) certificates representing the number of one
one-thousandths of a Preferred Share to be purchased (and the Company hereby
irrevocably authorizes and directs its transfer agent to comply with all such
requests), or, if the Company elects to deposit Preferred Shares issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one
one-thousandths of a Preferred Share as are to be purchased (and the Company
hereby irrevocably authorizes and directs such depositary agent to comply with
all such requests), (ii) after receipt of such certificates (or depositary
receipts, as the case may be), cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, (iii) when appropriate,
 
 
 
 
 
 
 
 
 
 
 
 
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requisition from the Company or any transfer agent therefor (or make available,
if the Rights Agent is the transfer agent) certificates representing the number
of equivalent common shares to be issued in lieu of the issuance of Common
Shares in accordance with the provisions of Section 11(a)(iii), (iv) when
appropriate, after receipt of such certificates, cause the same to be delivered
to or upon the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder, (v) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of the issuance of fractional shares in accordance with the provisions of
Section 14 or in lieu of the issuance of Common Shares in accordance with the
provisions of Section 11(a)(iii), (vi) when appropriate, after receipt, deliver
such cash to or upon the order of the registered holder of such Right
Certificate, and (vii) when appropriate, deliver any due bill or other
instrument provided to the Rights Agent by the Company for delivery to the
registered holder of such Right Certificate as provided by Section 11(l).
 
(c)           In case the registered holder of any Right Certificate exercises
less than all the Rights evidenced thereby, the Company will prepare, execute
and deliver a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised and the Rights Agent will countersign and deliver such new
Right Certificate to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14.
 
(d)           Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company will be obligated to undertake any
action with respect to any purported transfer, split up, combination or exchange
of any Right Certificate pursuant to Section 6 or exercise of a Right
Certificate as set forth in this Section 7 unless the registered holder of such
Right Certificate has (i) completed and signed the certificate following the
form of assignment or the form of election to purchase, as applicable, set forth
on the reverse side of the Right Certificate surrendered for such transfer,
split up, combination, exchange or exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company may reasonably request.  The
Rights Agent will endeavor to comply with the provisions hereof to the extent it
has received instructions from the Company concerning such matters.
 
8.           Cancellation of Right Certificates.  All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or
exchange will, if surrendered to the Company or to any of its stock transfer
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, will be canceled by it, and no Right
Certificates will be issued in lieu thereof except as expressly permitted by the
provisions of this Agreement.  The Company will deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent will so cancel and retire, any
other Right Certificate purchased or acquired by the Company otherwise than upon
the exercise thereof.  The Rights Agent will deliver all canceled Right
Certificates to the Company.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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9.           Company Covenants Concerning Securities and Rights.  The Company
covenants and agrees that:
 
(a)           It will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, a number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7.
 
(b)           So long as the Preferred Shares (and, following the occurrence of
a Triggering Event, Common Shares and/or other securities) issuable upon the
exercise of the Rights may be listed on a national securities exchange, it will
endeavor to cause, from and after such time as the Rights become exercisable,
all securities reserved for issuance upon the exercise of Rights to be listed on
such exchange upon official notice of issuance upon such exercise.
 
(c)           It will take all such action as may be necessary to ensure that
all Preferred Shares (and, following the occurrence of a Triggering Event,
Common Shares and/or other securities) delivered upon exercise of Rights, at the
time of delivery of the certificates for such securities, will be (subject to
payment of the Purchase Price) duly authorized, validly issued, fully paid and
nonassessable securities.
 
(d)           It will pay when due and payable any and all federal and state
transfer taxes and charges that may be payable in respect of the issuance or
delivery of the Right Certificates and of any certificates representing
securities issued upon the exercise of Rights; provided, however, that the
Company will not be required to pay any transfer tax or charge which may be
payable in respect of any transfer or delivery of Right Certificates to a person
other than, or the issuance or delivery of certificates or depositary receipts
representing securities issued upon the exercise of Rights in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or deliver any certificates or depositary
receipts representing securities issued upon the exercise of any Rights until
any such tax or charge has been paid (any such tax or charge being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company’s reasonable satisfaction that no such tax is
due.
 
(e)           It will use its best efforts (i) to file on an appropriate form,
as soon as practicable following the later of the Share Acquisition Date and the
Distribution Date, a registration statement under the Securities Act with
respect to the securities issuable upon exercise of the Rights, (ii) to cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date.  The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or “blue sky” laws of the various states in connection with the
exercisability of the Rights.  The Company may temporarily suspend, for a period
of time after the date set forth in clause (i) of the first sentence of this
Section 9(e), the exercisability of the Rights in order to prepare and file such
registration statement and to permit it to become effective.  Upon any such
suspension, the Company will issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect, in each case
with simultaneous written notice to the Rights Agent.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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In addition, if the Company determines that a registration statement should be
filed under the Securities Act or any state securities laws following the
Distribution Date, the Company may temporarily suspend the exercisability of the
Rights in each relevant jurisdiction until such time as a registration statement
has been declared effective and, upon any such suspension, the Company will
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect.  Notwithstanding anything in this Agreement
to the contrary, the Rights will not be exercisable in any jurisdiction if the
requisite registration or qualification in such jurisdiction has not been
effected or the exercise of the Rights is not permitted under applicable
law.  The Rights Agent may assume, unless notified in writing to the contrary by
the Company, that any Right exercised is permitted to be exercised under
applicable law and shall have no liability for acting in reliance upon such
assumption.
 
(f)           Notwithstanding anything in this Agreement to the contrary, after
the later of the Share Acquisition Date and the Distribution Date it will not
take (or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will eliminate or otherwise
diminish the benefits intended to be afforded by the Rights.
 
(g)           In the event that the Company is obligated to issue other
securities of the Company and/or pay cash pursuant to Section 11, 13, 14 or 24
it will make all arrangements necessary so that such other securities and/or
cash are available for distribution by the Rights Agent, if and when
appropriate.
 
10.           Record Date.  Each Person in whose name any certificate
representing Preferred Shares (or Common Shares and/or other securities, as the
case may be) is issued upon the exercise of Rights will for all purposes be
deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate will be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the transfer books of
the Company for the Preferred Shares (or Common Shares and/or other securities,
as the case may be) are closed, such Person will be deemed to have become the
record holder of such securities on, and such certificate will be dated, the
next succeeding Business Day on which the transfer books of the Company for the
Preferred Shares (or Common Shares and/or other securities, as the case may be)
are open.  Prior to the exercise of the Rights evidenced thereby, the holder of
a Right Certificate will not be entitled to any rights of a holder of any
security for which the Rights are or may become exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions, or
to exercise any preemptive rights, and will not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
 
11.           Adjustment of Purchase Price, Number and Kind of Securities or
Number of Rights.  The Purchase Price, the number and kind of securities
issuable upon exercise of each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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(a)           (i)           In the event that the Company at any time after the
Record Date (A) declares a dividend on the Preferred Shares payable in Preferred
Shares, (B) subdivides the outstanding Preferred Shares, (C) combines the
outstanding Preferred Shares into a smaller number of Preferred Shares, or (D)
issues any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification and/or the number and/or kind
of shares of capital stock issuable on such date upon exercise of a Right, will
be proportionately adjusted so that the holder of any Right exercised after such
time is entitled to receive upon payment of the Purchase Price then in effect
the aggregate number and kind of shares of capital stock which, if such Right
had been exercised immediately prior to such date and at a time when the
transfer books of the Company for the Preferred Shares were open, the holder of
such Right would have owned upon such exercise (and, in the case of a
reclassification, would have retained after giving effect to such
reclassification) and would have been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock issuable upon
exercise of one Right.  If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) or Section 13, the
adjustment provided for in this Section 11(a)(i) will be in addition to, and
will be made prior to, any adjustment required pursuant to Section 11(a)(ii) or
Section 13.
 
(ii)           Subject to the provisions of Section 24, if
 
(A)           any Person becomes an Acquiring Person; or
 
(B)           any Acquiring Person or any Affiliate or Associate of any
Acquiring Person (including any Person who becomes an Acquiring Person as a
result of a transaction described in this Section 11(a)(ii)(B)), directly or
indirectly, (1) merges into the Company or otherwise combines with the Company
and the Company is the continuing or surviving corporation of such merger or
combination (other than in a transaction subject to Section 13), (2) merges or
otherwise combines with any Subsidiary of the Company, (3) in one or more
transactions (otherwise than in connection with the exercise, exchange or
conversion of securities exercisable or exchangeable for or convertible into
shares of any class of capital stock of the Company or any of its Subsidiaries)
transfers cash, securities or any other property to the Company or any of its
Subsidiaries in exchange (in whole or in part) for shares of any class of
capital stock of the Company or any of its Subsidiaries or for securities
exercisable or exchangeable for or convertible into shares of any class of
capital stock of the Company or any of its Subsidiaries, or otherwise obtains
from the Company or any of its Subsidiaries, with or without consideration, any
additional shares of any class of capital stock of the Company or any of its
Subsidiaries or securities exercisable or exchangeable for or convertible into
shares of any class of capital stock of the Company or any of its Subsidiaries
(otherwise than as part of a pro rata distribution to
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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                                                                                        all
all holders of shares of any class of capital stock of the Company, or any of
its Subsidiaries), (4) sells, purchases, leases, exchanges, mortgages, pledges,
transfers or otherwise disposes (in one or more transactions) to, from, with or
of, as the case may be, the Company or any of its Subsidiaries (otherwise than
in a transaction subject to Section 13), any property, including securities, on
terms and conditions less favorable to the Company than the Company would be
able to obtain in an arm’s-length transaction with an unaffiliated third party,
(5) receives any compensation from the Company or any of its Subsidiaries other
than compensation as a director or a regular full-time employee, in either case
at rates consistent with the Company’s (or its Subsidiaries’) past practices, or
(6) receives the benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided by the Company or
any of its Subsidiaries; or
 
(C)           during such time as there is an Acquiring Person, there is any
reclassification of securities of the Company (including any reverse stock
split), or any recapitalization of the Company, or any merger or consolidation
of the Company with any of its Subsidiaries, or any other transaction or series
of transactions involving the Company or any of its Subsidiaries (whether or not
with or into or otherwise involving an Acquiring Person), other than a
transaction subject to Section 13, which has the effect, directly or indirectly,
of increasing by more than 1% the proportionate share of the outstanding shares
of any class of equity securities of the Company or any of its Subsidiaries, or
of securities exercisable or exchangeable for or convertible into equity
securities of the Company or any of its Subsidiaries, of which an Acquiring
Person, or any Affiliate or Associate of any Acquiring Person, is the Beneficial
Owner,
 
then, from and after the latest of the Distribution Date, the Share Acquisition
Date and the date of the occurrence of such Flip-in Event, proper provision will
be made so that each holder of a Right, except as provided below, will
thereafter have the right to receive, upon exercise thereof in accordance with
the terms of this Agreement at an exercise price per Right equal to the product
of the then-current Purchase Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to the date of the occurrence of such Flip-in Event (or, if
any other Flip-in Event shall have previously occurred, the product of the
then-current Purchase Price multiplied by the number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to the date
of the first occurrence of a Flip-in Event), in lieu of Preferred Shares, such
number of Common Shares as equals the result obtained by (x) multiplying the
then-current Purchase Price by the number of one one-thousandths of a Preferred
Share for which a Right was exercisable immediately prior to the date of the
occurrence of such Flip-in Event (or, if any other Flip-in Event shall have
previously occurred, multiplying the then-current Purchase Price by the number
of one one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to the date of the first occurrence of a Flip-in Event), and
dividing that product by (y) 50% of the current per share market price of the
Common Shares (determined pursuant to Section 11(d)) on the date of the
occurrence of such Flip- in Event.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Notwithstanding anything in this Agreement to the contrary, from and after the
first occurrence of a Flip-in Event, any Rights that are Beneficially Owned by
(A) any Acquiring Person (or any Affiliate or Associate of any Acquiring
Person), (B) a transferee of any Acquiring Person (or any such Affiliate or
Associate) who becomes a transferee after the occurrence of a Flip-in Event, or
(C) a transferee of any Acquiring Person (or any such Affiliate or Associate)
who became a transferee prior to or concurrently with the occurrence of a
Flip-in Event pursuant to either (1) a transfer from an Acquiring Person to
holders of its equity securities or to any Person with whom it has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (2) a transfer which the Board has determined is part of a plan,
arrangement or understanding which has the purpose or effect of avoiding the
provisions of this Section 11(a)(ii), and subsequent transferees of any of such
Persons, will be void without any further action and any holder of such Rights
will thereafter have no rights whatsoever with respect to such Rights under any
provision of this Agreement.  The Company will use all reasonable efforts to
ensure that the provisions of this Section 11(a)(ii) are complied with, but will
have no liability to any holder of Right Certificates or any other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.  Upon the
occurrence of a Flip-in Event, no Right Certificate that represents Rights that
are or have become void pursuant to the provisions of this Section 11(a)(ii)
will thereafter be issued pursuant to Section 3 or Section 6, and any Right
Certificate delivered to the Rights Agent that represents Rights that are or
have become void pursuant to the provisions of this Section 11(a)(ii) will be
canceled.  Upon the occurrence of a Flip-over Event, any Rights that shall not
have been previously exercised pursuant to this Section 11(a)(ii) shall
thereafter be exercisable only pursuant to Section 13 and not pursuant to this
Section 11(a)(ii).
 
(iii)           Upon the occurrence of a Flip-in Event, if there are not
sufficient Common Shares authorized but unissued or issued but not outstanding
to permit the issuance of all the Common Shares issuable in accordance with
Section 11(a)(ii) upon the exercise of a Right, the Directors of the Company
will use their best efforts promptly to authorize and, subject to the provisions
of Section 9(e), make available for issuance additional Common Shares or other
equity securities of the Company having equivalent voting rights and an
equivalent value (as determined in good faith by the Board) to the Common Shares
(for purposes of this Section 11(a)(iii), “equivalent common shares”).  In the
event that equivalent common shares are so authorized, upon the exercise of a
Right in accordance with the provisions of Section 7, the registered holder will
be entitled to receive (A) Common Shares, to the extent any are available, and
(B) a number of equivalent common shares, which the Board have determined in
good faith to have a value equivalent to the excess of (x) the aggregate current
per share market value on the date of the occurrence of the most recent Flip-in
Event of all the Common Shares issuable in accordance with Section 11(a)(ii)
upon the exercise of a Right (the “Exercise Value”) over (y) the aggregate
current per share market value on the date of the occurrence of the most recent
Flip-in Event of any Common Shares available for issuance upon the exercise of
such Right; provided, however, that if at any time after 90 calendar days after
the latest
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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of the Share Acquisition Date, the Distribution Date and the date of the
occurrence of the most recent Flip-in Event, there are not sufficient Common
Shares and/or equivalent common shares available for issuance upon the exercise
of a Right, then the Company will be obligated to deliver, upon the surrender of
such Right and without requiring payment of the Purchase Price, Common Shares
(to the extent available), equivalent common shares (to the extent available)
and then cash (to the extent permitted by applicable law and any agreements or
instruments to which the Company is a party in effect immediately prior to the
Share Acquisition Date), which securities and cash have an aggregate value equal
to the excess of (1) the Exercise Value over (2) the product of the then-current
Purchase Price multiplied by the number of one one-thousandths of a Preferred
Share for which a Right was exercisable immediately prior to the date of the
occurrence of the most recent Flip-in Event (or, if any other Flip-in Event
shall have previously occurred, the product of the then-current Purchase Price
multiplied by the number of one one-thousandths of a Preferred Share for which a
Right would have been exercisable immediately prior to the date of the
occurrence of such Flip-in Event if no other Flip-in Event had previously
occurred).  To the extent that any legal or contractual restrictions prevent the
Company from paying the full amount of cash payable in accordance with the
foregoing sentence, the Company will pay to holders of the Rights as to which
such payments are being made all amounts which are not then restricted on a pro
rata basis and will continue to make payments on a pro rata basis as promptly as
funds become available until the full amount due to each such Rights holder has
been paid.
 
(b)           In the event that the Company fixes a record date for the issuance
of rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or securities having equivalent
rights, privileges and preferences as the Preferred Shares (for purposes of this
Section 11(b), “equivalent preferred shares”)) or securities convertible into
Preferred Shares or equivalent preferred shares at a price per Preferred Share
or equivalent preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent preferred shares) less
than the current per share market price of the Preferred Shares (determined
pursuant to Section 11(d)) on such record date, the Purchase Price to be in
effect after such record date will be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which is the number of Preferred Shares outstanding on such record
date plus the number of Preferred Shares which the aggregate offering price of
the total number of Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current per share market
price and the denominator of which is the number of Preferred Shares outstanding
on such record date plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock issuable upon exercise of one Right.  In case such subscription
price may be paid in a consideration part or all of which is in a form other
than cash, the value of such consideration will be as determined in good faith
by the Board, whose determination will be described in a statement filed with
the Rights Agent.  Preferred Shares owned by or held for the account of the
Company will not be deemed outstanding for the purpose of any such
computation.  Such adjustment will be made successively whenever such a record
date is fixed, and in the event that such rights, options or warrants are not so
issued, the Purchase Price will be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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(c)           In the event that the Company fixes a record date for the making
of a distribution to all holders of Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend), assets, stock
(other than a dividend payable in Preferred Shares) or subscription rights,
options or warrants (excluding those referred to in Section 11(b)), the Purchase
Price to be in effect after such record date will be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which is the current per share market price of the
Preferred Shares (as determined pursuant to Section 11(d)) on such record date
or, if earlier, the date on which Preferred Shares begin to trade on an
ex-dividend or when issued basis for such distribution, less the fair market
value (as determined in good faith by the Board, whose determination will be
described in a statement filed with the Rights Agent) of the portion of the
evidences of indebtedness, cash, assets or stock so to be distributed or of such
subscription rights, options or warrants applicable to one Preferred Share, and
the denominator of which is such current per share market price of the Preferred
Shares; provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock issuable upon exercise of one Right.  Such adjustments
will be made successively whenever such a record date is fixed; and in the event
that such distribution is not so made, the Purchase Price will again be adjusted
to be the Purchase Price which would then be in effect if such record date had
not been fixed.
 
(d)           (i)           For the purpose of any computation hereunder, the
“current per share market price” of Common Shares on any date will be deemed to
be the average of the daily closing prices per share of such Common Shares for
the 30 consecutive Trading Days immediately prior to such date; provided,
however, that in the event that the current per share market price of the Common
Shares is determined during a period following the announcement by the issuer of
such Common Shares of (A) a dividend or distribution on such Common Shares
payable in such Common Shares or securities convertible into such Common Shares
(other than the Rights) or (B) any subdivision, combination or reclassification
of such Common Shares, and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
current per share market price will be appropriately adjusted to take into
account ex-dividend trading or to reflect the current per share market price per
Common Share equivalent.  The closing price for each day will be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on Nasdaq or, if the Common Shares
are not listed or admitted to trading on Nasdaq, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Common Shares are listed
or admitted to trading or, if the Common Shares are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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reported by Nasdaq or such other system then in use, or, if on any such date the
Common Shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Shares selected by the Board.  If the Common Shares are
not publicly held or not so listed or traded, or are not the subject of
available bid and asked quotes, “current per share market price” will mean the
fair value per share as determined in good faith by the Board, whose
determination will be described in a statement filed with the Rights Agent.
 
(ii)           For the purpose of any computation hereunder, the “current per
share market price” of the Preferred Shares will be determined in the same
manner as set forth above for Common Shares in Section 11(d)(i), other than the
last sentence thereof.  If the current per share market price of the Preferred
Shares cannot be determined in the manner provided above, the “current per share
market price” of the Preferred Shares will be conclusively deemed to be an
amount equal to the current per share market price of the Common Shares
multiplied by one thousand (as such number may be appropriately adjusted to
reflect events such as stock splits, stock dividends, recapitalizations or
similar transactions relating to the Common Shares occurring after the date of
this Agreement).  If neither the Common Shares nor the Preferred Shares are
publicly held or so listed or traded, or the subject of available bid and asked
quotes, “current per share market price” of the Preferred Shares will mean the
fair value per share as determined in good faith by the Board, whose
determination will be described in a statement filed with the Rights Agent.  For
all purposes of this Agreement, the current per share market price of one
one-thousandth of a Preferred Share will be equal to the current per share
market price of one Preferred Share divided by one thousand.
 
(e)           Except as set forth below, no adjustment in the Purchase Price
will be required unless such adjustment would require an increase or decrease of
at least 1% in such price; provided, however, that any adjustments which by
reason of this Section 11(e) are not required to be made will be carried forward
and taken into account in any subsequent adjustment.  All calculations under
this Section 11 will be made to the nearest cent or to the nearest one
one-millionth of a Preferred Share or one ten-thousandth of a Common Share or
other security, as the case may be.  Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 will be made no later
than the earlier of (i) three years from the date of the transaction which
requires such adjustment and (ii) the Expiration Date.
 
(f)           If as a result of an adjustment made pursuant to Section 11(a),
the holder of any Right thereafter exercised becomes entitled to receive any
securities of the Company other than Preferred Shares, thereafter the number
and/or kind of such other securities so receivable upon exercise of any Right
(and/or the Purchase Price in respect thereof) will be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Shares (and the Purchase Price
in respect thereof) contained in this Section 11, and the provisions of Sections
7, 9, 10, 13 and 14 with respect to the Preferred Shares (and the Purchase Price
in respect thereof) will apply on like terms to any such other securities (and
the Purchase Price in respect thereof).
 
(g)           All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder will evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
Preferred Share issuable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
 
 
 
 
 
 
 
 
 
 
 
 
 
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(h)           Unless the Company has exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price pursuant to Section
11(b) or Section 11(c), each Right outstanding immediately prior to the making
of such adjustment will thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-thousandths of a Preferred Share
(calculated to the nearest one one-millionth of a Preferred Share) obtained by
(i) multiplying (x) the number of one one-thousandths of a Preferred Share
issuable upon exercise of a Right immediately prior to such adjustment of the
Purchase Price by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
 
(i)           The Company may elect, on or after the date of any adjustment of
the Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of one one-thousandths of a Preferred Share issuable
upon the exercise of a Right.  Each of the Rights outstanding after such
adjustment of the number of Rights will be exercisable for the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment.  Each Right held of record prior to such
adjustment of the number of Rights will become that number of Rights (calculated
to the nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price.  The Company
will make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made.  Such record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, will be at least 10 calendar days later than the
date of the public announcement.  If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company will, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to the provisions of Section 14, the additional Rights to which such
holders are entitled as a result of such adjustment, or, at the option of the
Company, will cause to be distributed to such holders of record in substitution
and replacement for the Right Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof if required by the Company, new
Right Certificates evidencing all the Rights to which such holders are entitled
after such adjustment.  Right Certificates so to be distributed will be issued,
executed, and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and will be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
 
(j)           Without respect to any adjustment or change in the Purchase Price
and/or the number and/or kind of securities issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number and kind of securities which were
expressed in the initial Right Certificate issued hereunder.
 
(k)           Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-thousandth of the then par value, if any, of
the Preferred Shares or below the then par value, if any, of any other
securities of the Company issuable upon exercise of the Rights, the Company will
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares or such other securities, as the case may be, at
such adjusted Purchase Price.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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(l)           In any case in which this Section 11 otherwise requires that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of Preferred Shares or other securities of the Company, if any,
issuable upon such exercise over and above the number of Preferred Shares or
other securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company delivers to such holder a due bill or other
appropriate instrument evidencing such holder’s right to receive such additional
Preferred Shares or other securities upon the occurrence of the event requiring
such adjustment.
 
(m)           Notwithstanding anything in this Agreement to the contrary, the
Company will be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment the Board determine to be advisable
in order that any (i) consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of Preferred Shares at less than the current per share
market price therefor, (iii) issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable for
Preferred Shares, (iv) stock dividends, or (v) issuance of rights, options or
warrants  referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Shares is not taxable to such shareholders.
 
(n)           The Company covenants and agrees that it will not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)),
(ii) merge with or into any other Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o)), or (iii) sell or transfer
(or permit any Subsidiary to sell or transfer), in one transaction, or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o)), if at the time of or immediately after such consolidation, merger or
sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect that would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
 
(o)           The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 27, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
 
(p)           Notwithstanding anything in this Agreement to the contrary, in the
event that the Company at any time after the Record Date prior to the
Distribution Date (i) pays a dividend on the outstanding Common Shares payable
in Common Shares, (ii) subdivides the outstanding Common Shares, (iii) combines
the outstanding Common Shares into a smaller number of shares, or (iv) issues
any shares of its capital stock in a reclassification of the outstanding Common
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each Common Share then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, will be
proportionately adjusted so that
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 the number of Rights thereafter associated with each Common Share following any
such event equals the result obtained by multiplying the number of Rights
associated with each Common Share immediately prior to such event by a fraction
the numerator of which is the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the denominator of which is
the total number of Common Shares outstanding immediately following the
occurrence of such event.  The adjustments provided for in this Section 11(p)
will be made successively whenever such a dividend is paid or such a
subdivision, combination or reclassification is effected.
 
12.           Certificate of Adjusted Purchase Price or Number of
Securities.  Whenever an adjustment is made as provided in Section 11 or Section
13, the Company will promptly (a) prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Preferred
Shares and the Common Shares a copy of such certificate, and (c) if such
adjustment is made after the Distribution Date, mail a brief summary of such
adjustment to each holder of a Right Certificate in accordance with Section
26.  The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be deemed to
have knowledge of such adjustment unless and until it shall have received such
certificate.
 
13.           Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.  (a)  In the event that:
 
(i)           at any time after a Person has become an Acquiring Person, the
Company consolidates with, or merges with or into, any other Person (other than
a Subsidiary of the Company in a transaction that complies with Section 11(o))
and the Company is not the continuing or surviving corporation of such
consolidation or merger; or
 
(ii)           at any time after a Person has become an Acquiring Person, any
Person consolidates with the Company, or merges with or into the Company, and
the Company is the continuing or surviving corporation of such merger or
consolidation and, in connection with such merger or consolidation, all or part
of the Common Shares is changed into or exchanged for stock or other securities
of any other Person or cash or any other property; or
 
(iii)           at any time after a Person has become an Acquiring Person, the
Company, directly or indirectly, sells or otherwise transfers (or one or more of
its Subsidiaries sells or otherwise transfers), in one or more transactions,
assets or earning power (including without limitation securities creating any
obligation on the part of the Company and/or any of its Subsidiaries)
representing in the aggregate more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any Person or Persons
other than the Company or one or more of its wholly owned Subsidiaries;
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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then, and in each such case, proper provision will be made so that from and
after the latest of the Share Acquisition Date, the Distribution Date and the
date of the occurrence of such Flip-over Event (A) each holder of a Right
(except as otherwise provided herein) thereafter has the right to receive, upon
the exercise thereof in accordance with the terms of this Agreement at an
exercise price per Right equal to the product of the then-current Purchase Price
multiplied by the number of one one-thousandths of a Preferred Share for which a
Right was exercisable immediately prior to the Share Acquisition Date, such
number of duly authorized, validly issued, fully paid, nonassessable and freely
tradeable Common Shares of the Issuer, free and clear of any liens, encumbrances
and other adverse claims and not subject to any rights of call or first refusal,
as equals the result obtained by (x) multiplying the then-current Purchase Price
by the number of one one-thousandths of a Preferred Share for which a Right is
exercisable immediately prior to the Share Acquisition Date and dividing that
product by (y) 50% of the current per share market price of the Common Shares of
the Issuer (determined pursuant to Section 11(d)), on the date of the occurrence
of such Flip-over Event; (B) the Issuer will thereafter be liable for, and will
assume, by virtue of the occurrence of such Flip-over Event, all the obligations
and duties of the Company pursuant to this Agreement; (C) the term “Company”
will thereafter be deemed to refer to the Issuer; and (D) the Issuer will take
such steps (including without limitation the reservation of a sufficient number
of its Common Shares to permit the exercise of all outstanding Rights) in
connection with such consummation as may be necessary to assure that the
provisions hereof are thereafter applicable, as nearly as reasonably may be
possible, in relation to its Common Shares thereafter deliverable upon the
exercise of the Rights.
 
(b)           For purposes of this Section 13, “Issuer” means (i) in the case of
any Flip-over Event described in Sections 13(a)(i) or (ii) above, the Person
that is the continuing, surviving, resulting or acquiring Person (including the
Company as the continuing or surviving corporation of a transaction described in
Section 13(a)(ii) above), and (ii) in the case of any Flip-over Event described
in Section 13(a)(iii) above, the Person that is the party receiving the greatest
portion of the assets or earning power (including without limitation securities
creating any obligation on the part of the Company and/or any of its
Subsidiaries) transferred pursuant to such transaction or transactions;
provided, however, that, in any such case, (A) if (1) no class of equity
security of such Person is, at the time of such merger, consolidation or
transaction and has been continuously over the preceding 12-month period,
registered pursuant to Section 12 of the Exchange Act, and (2) such Person is a
Subsidiary, directly or indirectly, of another Person, a class of equity
security of which is and has been so registered, the term “Issuer” means such
other Person; and (B) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, a class of equity security of two or more
of which are and have been so registered, the term “Issuer” means whichever of
such Persons is the issuer of the equity security having the greatest aggregate
market value.  Notwithstanding the foregoing, if the Issuer in any of the
Flip-over Events listed above is not a corporation or other legal entity having
outstanding equity securities, then, and in each such case, (x) if the Issuer is
directly or indirectly wholly owned by a corporation or other legal entity
having outstanding equity securities, then all references to Common Shares of
the Issuer will be deemed to
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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be references to the Common Shares of the corporation or other legal entity
having outstanding equity securities which ultimately controls the Issuer, and
(y) if there is no such corporation or other legal entity having outstanding
equity securities, (I) proper provision will be made so that the Issuer creates
or otherwise makes available for purposes of the exercise of the Rights in
accordance with the terms of this Agreement, a kind or kinds of security or
securities having a fair market value at least equal to the economic value of
the Common Shares which each holder of a Right would have been entitled to
receive if the Issuer had been a corporation or other legal entity having
outstanding equity securities; and (II) all other provisions of this Agreement
will apply to the issuer of such securities as if such securities were Common
Shares.
 
(c)           The Company will not consummate any Flip-over Event if, (i) at the
time of or immediately after such Flip-over Event, there are or would be any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements in effect which would eliminate or substantially diminish the
benefits intended to be afforded by the Rights, (ii) prior to, simultaneously
with or immediately after such Flip-over Event, the shareholders of the Person
who constitutes, or would constitute, the Issuer for purposes of Section 13(a)
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates, or (iii) the form or nature of the
organization of the Issuer would preclude or limit the exercisability of the
Rights.  In addition, the Company will not consummate any Flip-over Event unless
the Issuer has a sufficient number of authorized Common Shares (or other
securities as contemplated in Section 13(b) above) which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior to such consummation the Company and the
Issuer have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in subsections (a) and (b) of this Section 13
and further providing that as promptly as practicable after the consummation of
any Flip-over Event, the Issuer will:
 
(A)           prepare and file a registration statement under the Securities Act
with respect to the Rights and the securities issuable upon exercise of the
Rights on an appropriate form, and use its best efforts to cause such
registration statement to (1) become effective as soon as practicable after such
filing and (2) remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
 
(B)           take all such action as may be appropriate under, or to ensure
compliance with, the securities or “blue sky” laws of the various states in
connection with the exercisability of the Rights; and
 
(C)           deliver to holders of the Rights historical financial statements
for the Issuer and each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
 
(d)           The provisions of this Section 13 will similarly apply to
successive mergers or consolidations or sales or other transfers.  In the event
that a Flip-over Event occurs at any time after the occurrence of a Flip-in
Event, except for Rights that have become void pursuant to Section 11(a)(ii),
Rights that shall not have been previously exercised will cease to be
exercisable in the manner provided in Section 11(a)(ii) and will thereafter be
exercisable in the manner provided in Section 13(a).
 
14.           Fractional Rights and Fractional Securities.  (a)  The Company
will not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights.  In lieu of such fractional
Rights, the Company will pay as promptly as practicable to the registered
holders of the Right Certificates with regard to which such fractional Rights
otherwise would be issuable, an amount in cash equal to the same fraction of the
current market value of one Right.  For the purposes of this Section 14(a), the
current market value of one Right is the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights
otherwise would have been issuable.  The closing price for any day is the last
sale price, regular way, or, in case no such sale takes place on such
 
 
 
 
 
 
 
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day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on Nasdaq or, if the Rights
are not listed or admitted to trading on Nasdaq, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by Nasdaq or such other system then in use, or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board.  If the Rights are not publicly held or are
not so listed or traded, or are not the subject of available bid and asked
quotes, the current market value of one Right will mean the fair value thereof
as determined in good faith by the Board, whose determination will be described
in a statement filed with the Rights Agent.
 
(b)           The Company will not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-thousandth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share).  Fractions of
Preferred Shares in integral multiples of one one-thousandth of a Preferred
Share may, at the election of the Company, be evidenced by depositary receipts
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement provides that the holders of such
depositary receipts have all the rights, privileges and preferences to which
they are entitled as beneficial owners of the Preferred Shares represented by
such depositary receipts.  In lieu of fractional Preferred Shares that are not
integral multiples of one one-thousandth of a Preferred Share, the Company may
pay to any Person to whom or which such fractional Preferred Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of one Preferred Share.  For purposes of this
Section 14(b), the current market value of one Preferred Share is the closing
price of the Preferred Shares (as determined in the same manner as set forth for
Common Shares in the second sentence of Section 11(d)(i)) for the Trading Day
immediately prior to the date of such exercise; provided, however, that if the
closing price of the Preferred Shares cannot be so determined, the closing price
of the Preferred Shares for such Trading Day will be conclusively deemed to be
an amount equal to the closing price of the Common Shares (determined pursuant
to the second sentence of Section 11(d)(i)) for such Trading Day multiplied by
one thousand (as such number may be appropriately adjusted to reflect events
such as stock splits, stock dividends, recapitalizations or similar transactions
relating to the Common Shares occurring after the date of this Agreement);
provided further, however, that if neither the Common Shares nor the Preferred
Shares are publicly held or listed or admitted to trading on any national
securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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exchange, or the subject of available bid and asked quotes, the current market
value of one Preferred Share will mean the fair value thereof as determined in
good faith by the Board, whose determination will be described in a statement
filed with the Rights Agent.
 
(c)           Following the occurrence of a Triggering Event, the Company will
not be required to issue fractions of Common Shares or other securities issuable
upon exercise or exchange of the Rights or to distribute certificates which
evidence any such fractional securities.  In lieu of issuing any such fractional
securities, the Company may pay to any Person to whom or which such fractional
securities would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of one such security.  For purposes of this
Section 14(c), the current market value of one Common Share or other security
issuable upon the exercise or exchange of Rights is the closing price thereof
(as determined in the same manner as set forth for Common Shares in the second
sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date
of such exercise or exchange; provided, however, that if neither the Common
Shares nor any such other securities are publicly held or listed or admitted to
trading on any national securities exchange, or the subject of available bid and
asked quotes, the current market value of one Common Share or such other
security will mean the fair value thereof as determined in good faith by the
Board, whose determination will mean the fair value thereof as will be described
in a statement filed with the Rights Agent.
 
15.           Rights of Action.  All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the holder of any Common Shares), may in his own behalf
and for his own benefit enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his right to exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Agreement.  Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under this Agreement, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to this Agreement.
 
16.           Agreement of Rights Holders.  Every holder of a Right by accepting
the same consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
 
(a)           Prior to the Distribution Date, the Rights are transferable only
in connection with the transfer of the Common Shares;
 
(b)           After the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
 
(c)           The Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Share certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificate or the associated Common Share certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent will be affected by any
notice to the contrary;
 
 
 
 
 
 
 
 
 
 
 
 
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(d)           Such holder expressly waives any right to receive any fractional
Rights and any fractional securities upon exercise or exchange of a Right,
except as otherwise provided in Section 14; and
 
(e)           Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent will have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company will use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
 
17.           Right Certificate Holder Not Deemed a Shareholder.  No holder, as
such, of any Right Certificate will be entitled to vote, receive dividends, or
be deemed for any purpose the holder of Preferred Shares or any other securities
of the Company which may at any time be issuable upon the exercise of the Rights
represented thereby, nor will anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of Directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in Section 25), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions of this Agreement or
exchanged pursuant to the provisions of Section 24.
 
18.           Concerning the Rights Agent.  (a)  The Company will pay to the
Rights Agent such compensation as shall be agreed to in writing between the
Company and the Rights Agent for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties hereunder.  The
Company will also indemnify the Rights Agent for, and hold it harmless against,
any loss, liability, suit, action, proceeding or expense, incurred without gross
negligence, bad faith, or willful misconduct on the part of the Rights Agent,
for anything done or omitted to be done by the Rights Agent in connection with
the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim (whether asserted by the Company, a
holder of Rights, or any other Person) of liability arising therefrom, directly
or indirectly.  The provisions of this Section 18(a) shall survive the
expiration of the Rights and the termination of this Agreement.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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(b)           The Rights Agent will be protected and will incur no liability for
or in respect of any action taken, suffered, or omitted by it in connection with
its administration of this Agreement in reliance upon any Right Certificate or
certificate evidencing Preferred Shares or Common Shares or other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, instruction, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed and executed by the proper Person or Persons.
 
(c)           Notwithstanding anything in this Agreement to the contrary, in no
event shall the Rights Agent be liable for special, indirect, punitive or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the likelihood of
the loss or damage and regardless of the form of the action.
 
19.           Merger or Consolidation or Change of Name of Rights
Agent.  (a)  Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent is a party, or any corporation succeeding to all or
substantially all the corporate trust or agency business of the Rights Agent or
any successor Rights Agent, will be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21.  If at the time such successor Rights Agent succeeds to the agency
created by this Agreement any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and if at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates will have the full force provided in the Right Certificates and in
this Agreement.
 
(b)           If at any time the name of the Rights Agent changes and at such
time any of the Right Certificates have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and if at that time any of the Right
Certificates have not been countersigned, the Rights Agent may countersign such
Right Certificates either in its prior name or in its changed name; and in all
such cases such Right Certificates will have the full force provided in the
Right Certificates and in this Agreement.
 
20.           Duties of Rights Agent.  The Rights Agent undertakes the duties
and obligations expressly imposed by this Agreement, and no implied duties or
obligations shall be read into this Agreement against the Rights Agent, upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, will be bound:
 
(a)           The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel will be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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(b)           Whenever in the performance of its duties under this Agreement the
Rights Agent deems it necessary or desirable that any fact or matter be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by any one of the Chairman, the Chief Executive Officer,
the President, any Vice President, the Secretary or the Treasurer of the Company
and delivered to the Rights Agent, and such certificate will be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
 
(c)           The Rights Agent will be liable hereunder only for its own gross
negligence, bad faith or willful misconduct; provided, however, that the Rights
Agent shall not be liable for any indirect, special, consequential or punitive
damages.
 
(d)           The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and will be deemed to have been
made by the Company only.
 
(e)           The Rights Agent will not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution and delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor will it be responsible for any breach by the Company of any
covenant contained in this Agreement or in any Right Certificate; nor will it be
responsible for any adjustment required under the provisions of Sections 11 or
13 (including any adjustment which results in Rights becoming void) or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice of any such adjustment); nor will it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of stock or other securities to be issued pursuant to
this Agreement or any Right Certificate or as to whether any shares of stock or
other securities will, when issued, be duly authorized, validly issued, fully
paid and nonassessable, nor shall the Rights Agent be responsible for the
legality of the terms hereof in its capacity as an administrative agent.
 
(f)           The Company will perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
 
(g)           The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman, the Chief Executive Officer, the President, any Vice
President, the Secretary or the Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it will
not be liable for any action
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions.  Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken or omitted by the Rights Agent under
this Agreement and the date on and/or after which such action shall be taken or
such omission shall be effective.  The Rights Agent shall not be liable for any
action taken by, or omission of, the Rights Agent in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than three Business Days after the date any
officer of the Company actually receives such application, unless any such
officer shall have consented in writing to any earlier date) unless prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
 
(h)           The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement.  Nothing herein will preclude the Rights Agent from acting
in any other capacity for the Company or for any other Person.
 
(i)           The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.  The Rights Agent will not be under any duty
or responsibility to ensure compliance with any applicable federal or state
securities laws in connection with the issuance, transfer or exchange of Right
Certificates.
 
(j)           If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise, transfer, split up, combination or exchange, either
(i) the certificate attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 or 2 thereof, or (ii) any other actual or
suspected irregularity exists, the Rights Agent will not take any further action
with respect to such requested exercise, transfer, split up, combination or
exchange without first consulting with the Company, and will thereafter take
further action with respect thereto only in accordance with the Company’s
written instructions.
 
(k)           No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
 
(l)           In addition to the foregoing, the Rights Agent shall be protected
and shall incur no liability for, or in respect of, any action taken or omitted
by it in connection with its administration of this Agreement if such acts or
omissions are in reliance upon (i) the proper execution of the certification
concerning beneficial ownership appended to the form of assignment and the form
of election to purchase attached hereto unless the Rights Agent shall have
actual knowledge that, as executed, such certification is untrue, or (ii) the
non-execution of such certification including, without limitation, any refusal
to honor any otherwise permissible assignment or election by reason of such
non-execution.
 
 
 
 
 
 
 
 
 
 
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(m)           The Company agrees to give the Rights Agent prompt written notice
of any event or ownership which would prohibit the exercise or transfer of the
Right Certificates.
 
21.           Change of Rights Agent.  The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
calendar days’ notice in writing mailed to the Company and to each transfer
agent of the Preferred Shares or the Common Shares by registered or certified
mail.  The Company may remove the Rights Agent or any successor Rights Agent
upon 30 calendar days’ notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Preferred Shares and the Common Shares by registered or certified mail, and to
the holders of the Right Certificates by first class mail.  If the Rights Agent
resigns or is removed or otherwise becomes incapable of acting, the Company will
appoint a successor to the Rights Agent.  If the Company fails to make such
appointment within a period of 30 calendar days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who will, with such notice, submit his Right Certificate for
inspection by the Company), then the Rights Agent, at the expense of the
Company, or the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent.  Any
successor Rights Agent, whether appointed by the Company or by such a court,
will be a corporation or other legal entity organized and doing business under
the laws of the United States or of the State of New York (or of any other state
of the United States), in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million.  After appointment, the successor Rights Agent will be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent will deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose.  Not later than the effective
date of any such appointment, the Company will file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Preferred
Shares or the Common Shares, and mail a notice thereof in writing to the
registered holders of the Right Certificates.  Failure to give any notice
provided for in this Section 21, however, or any defect therein, will not affect
the legality or validity of the resignation or removal of the Rights Agent or
the appointment of the successor Rights Agent, as the case may be.
 
22.           Issuance of New Right Certificates.  Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board to reflect any adjustment or change in the Purchase
Price per share and the number or kind of securities issuable upon exercise of
the Rights made in accordance with the provisions of this Agreement.  In
addition, in connection with the issuance or sale by the Company of Common
Shares following the Distribution Date and prior to the Expiration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Date, the Company (a) will, with respect to Common Shares so issued or sold
pursuant to the exercise, exchange or conversion of securities (other than
Rights) issued prior to the Distribution Date which are exercisable or
exchangeable for, or convertible into Common Shares, and (b) may, in any other
case, if deemed necessary, appropriate or desirable by the Board, issue Right
Certificates representing an equivalent number of Rights as would have been
issued in respect of such Common Shares if they had been issued or sold prior to
the Distribution Date, as appropriately adjusted as provided herein as if they
had been so issued or sold; provided, however, that (i) no such Right
Certificate will be issued if, and to the extent that, in its good faith
judgment the Board determine that the issuance of such Right Certificate could
have a material adverse tax consequence to the Company or to the Person to whom
or which such Right Certificate otherwise would be issued and (ii) no such Right
Certificate will be issued if, and to the extent that, appropriate adjustment
otherwise has been made in lieu of the issuance thereof.
 
23.           Redemption and Exemption.  (a)  The Board may, at their option,
redeem all but not less than all of the then-outstanding Rights at the
Redemption Price at any time prior to the Close of Business on the earlier of
(i) the Share Acquisition Date and (ii) the Expiration Date.  Any such
redemption will be effective immediately upon the action of the Board ordering
the same, unless such action of the Board expressly provides that such
redemption will be effective at a subsequent time or upon the occurrence or
nonoccurrence of one or more specified events (in which case such redemption
will be effective in accordance with the provisions of such action of the
Board).
 
(b)           Immediately upon the effectiveness of the redemption of the Rights
as provided in Section 23(a), and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights will be to receive the Redemption Price,
without interest thereon.  Promptly after the effectiveness of the redemption of
the Rights as provided in Section 23(a), the Company will publicly announce such
redemption and, within 10 calendar days thereafter, will give notice of such
redemption to the Rights Agent and the holders of the then-outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Company; provided, however, that the failure to
give, or any defect in, any such notice will not affect the validity of the
redemption of the Rights.  Any notice that is mailed in the manner herein
provided will be deemed given, whether or not the holder receives the
notice.  The notice of redemption mailed to the holders of Rights will state the
method by which the payment of the Redemption Price will be made.  The Company
may, at its option, pay the Redemption Price in cash, Common Shares (based upon
the current per share market price of the Common Shares (determined pursuant to
Section 11(d)) at the time of redemption), or any other form of consideration
deemed appropriate by the Board (based upon the fair market value of such other
consideration, determined by the Board in good faith) or any combination
thereof.  The Company may, at its option, combine the payment of the Redemption
Price with any other payment being made concurrently to holders of Common Shares
and, to the extent that any such other payment is discretionary, may reduce the
amount thereof on account of the concurrent payment of the Redemption Price.  If
legal or contractual restrictions prevent the Company from paying the Redemption
Price (in the form of consideration deemed appropriate by the Board) at the time
of redemption, the Company will pay the Redemption Price, without interest,
promptly after such time as the Company ceases to be so prevented from paying
the Redemption Price.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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(c)           In the event the Company receives a Qualifying Offer and the Board
has not redeemed the outstanding Rights or exempted such Qualifying Offer from
the terms of this Agreement or called a special meeting of shareholders for the
purpose of voting on whether or not to exempt such Qualifying Offer from the
terms of this Agreement, in each case, by the end of ninety (90) Business Days
following the commencement of such Qualifying Offer within the meaning of Rule
14d-2(a) under the Exchange Act (the “Board Evaluation Period”), the holders of
record (or their duly authorized proxy) of at least ten percent (10%) or more of
the Common Shares then outstanding (excluding Common Shares that are
Beneficially Owned by the Person(s) and their Affiliates and Associates making
the Qualifying Offer) (the “Requisite Percentage”) may submit to the Board, not
earlier than seventy (70) Business Days nor later than ninety (90) Business Days
following the commencement of such Qualifying Offer within the meaning of Rule
14d-2(a) under the Exchange Act, a written demand complying with the terms of
this Section 23(c) (the “Special Meeting Demand”) directing the Board to submit
to a vote of shareholders at a special meeting of the shareholders of the
Company (a “Special Meeting”) a resolution exempting such Qualifying Offer from
the provisions of this Agreement (the “Qualifying Offer Resolution”).  For
purposes of a Special Meeting Demand, the record date for determining eligible
holders of record eligible to make a Special Meeting Demand shall be the
seventieth (70th) Business Day following the commencement of such Qualifying
Offer within the meaning of Rule 14d-2(a) under the Exchange Act. Any Special
Meeting Demand must be delivered to the Secretary of the Company at the
principal executive offices of the Company and must set forth as to the
shareholders of record executing the request (i) the name and address of such
shareholders, as they appear on the Company’s books and records, (ii) the class
and number of Common Shares which are owned of record by each of such
shareholders and (iii) in the case of Common Shares that are Beneficially Owned
by another Person, an executed certification by the holder of record that such
holder has executed such Special Meeting Notice only after obtaining
instructions to do so from such Beneficial Owner.
 
(d)           After receipt of Special Meeting Demands in proper form and in
accordance with this Section 23 from a shareholder or shareholders holding the
Requisite Percentage, the Board shall take such actions as are necessary or
desirable to cause the Qualifying Offer Resolution to be so submitted to a vote
of shareholders at a Special Meeting to be convened within sixty (60) Business
Days following the last day of the Board Evaluation Period (the “Special Meeting
Period”) by including a proposal relating to adoption of the Qualifying Offer
Resolution in the proxy materials of the Company for the Special Meeting;
provided, however, that if the Company at any time during the Special Meeting
Period and prior to a vote on the Qualifying Offer Resolution enters into a
Definitive Acquisition Agreement, the Special Meeting Period may be extended
(and any Special Meeting called in connection therewith may be cancelled) if the
Qualifying Offer Resolution will be separately submitted to a vote at the same
meeting as the Definitive Acquisition Agreement.  Subject to the requirements of
applicable law, the Board may take a position in favor of or opposed to the
adoption of the Qualifying Offer Resolution, or no position with respect to the
Qualifying Offer Resolution, as it determines to be appropriate in the exercise
of its fiduciary duties.
 
(e)           In the event that no Person has become an Acquiring Person prior
to the Exemption Date and the Qualifying Offer continues to be a Qualifying
Offer and either (i) the Special Meeting is not convened on or prior to the last
day of the Special Meeting Period (the “Outside Meeting Date”), or (ii) if, at
the Special Meeting at which a quorum is present, a majority of the Common
Shares outstanding as
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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of the record date for the Special Meeting selected by the Board (excluding
Common Shares Beneficially Owned by the Person making the Qualified Offer and
such Affiliates and Associates of such Person) shall vote in favor of the
Qualifying Offer Resolution, then the Qualifying Offer shall be deemed exempt
from the application of this Agreement in all respects to such Qualifying Offer
so long as it remains a Qualifying Offer, such exemption to be effective on the
Close of Business on (i) the Outside Meeting Date or (ii) the date on which the
results of the vote on the Qualifying Offer Resolution at the Special Meeting
are certified as official by the appointed inspectors of election for the
Special Meeting, as the case may be (the “Exemption Date”). Notwithstanding
anything herein to the contrary, no action or vote by shareholders not in
compliance with the provisions of this Section 23 shall serve to exempt any
offer from the terms of this Agreement.  Immediately upon the Close of Business
on the Exemption Date, and without any further action and without any notice,
the right to exercise the Rights with respect to the Qualifying Offer will
terminate and, notwithstanding anything in this Agreement to the contrary, the
consummation of the Qualifying Offer shall not cause the offeror (or its
Affiliates or Associates) to become an Acquiring Person; and the Rights shall
immediately expire and have no further force and effect upon such consummation.
 
24.           Exchange.  (a)  The Company may, at its option and upon
authorization of its Board of Directors, at any time after the Share Acquisition
Date, exchange all or part of the then-outstanding and exercisable Rights (which
will not include Rights that have become void pursuant to the provisions of
Section 11(a)(ii)) for Common Shares at an exchange ratio of one Common Share
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the Record Date (such exchange ratio being
hereinafter referred to as the “Exchange Ratio”).  Any such exchange will be
effective immediately upon the action of the Board ordering the same, unless
such action of the Board expressly provides that such exchange will be effective
at a subsequent time or upon the occurrence or nonoccurrence of one or more
specified events (in which case such exchange will be effective in accordance
with the provisions of such action of the Board).  Notwithstanding the
foregoing, the Board will not be empowered to effect such exchange at any time
after any Person (other than the Company or any Related Person), who or which,
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the then-outstanding Common Shares.
 
(b)           Immediately upon the effectiveness of the exchange of any Rights
as provided in Section 24(a), and without any further action and without any
notice, the right to exercise such Rights will terminate and the only right with
respect to such Rights thereafter of the holder of such Rights will be to
receive that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio.  Promptly after the effectiveness
of the exchange of any Rights as provided in Section 24(a), the Company will
publicly announce such exchange and, within 10 calendar days thereafter, will
give notice of such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent; provided,
however, that the failure to give, or any defect in, such notice will not affect
the validity of such exchange.  Any notice that is mailed in the manner herein
provided will be deemed given, whether or not the holder receives the
notice.  Each such notice of exchange will state the method by which the
exchange of the Common Shares for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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exchanged.  Any partial exchange will be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 11(a)(ii)) held by each holder of Rights.
 
(c)           In any exchange pursuant to this Section 24, the Company, at its
option, may substitute for any Common Share exchangeable for a Right (i)
equivalent common shares (as such term is used in Section 11(a)(iii)), (ii)
cash, (iii) debt securities of the Company, (iv) other assets, or (v) any
combination of the foregoing, in any event having an aggregate value, as
determined in good faith by the Board (whose determination will be described in
a statement filed with the Rights Agent), equal to the current market value of
one Common Share (determined pursuant to Section 11(d)) on the Trading Day
immediately preceding the date of the effectiveness of the exchange pursuant to
this Section 24.
 
25.           Notice of Certain Events.  (a)  If, after the Distribution Date,
the Company proposes (i) to pay any dividend payable in stock of any class to
the holders of Preferred Shares or to make any other distribution to the holders
of Preferred Shares (other than a regular periodic cash dividend), (ii) to offer
to the holders of Preferred Shares rights, options or warrants to subscribe for
or to purchase any additional Preferred Shares or shares of stock of any class
or any other securities, rights or options, (iii) to effect any reclassification
of its Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any consolidation
or merger into or with, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or any of its
Subsidiaries) representing more than 50% of the assets and earning power of the
Company and its Subsidiaries, taken as a whole, in either case to any other
Person or Persons (other than the Company or one or more of its Subsidiaries in
one or more transactions each of which complies with Section 11(o) above),
(v) to effect the liquidation, dissolution or winding up of the Company, or (vi)
to declare or pay any dividend on the Common Shares payable in Common Shares or
to effect a subdivision, combination or reclassification of the Common Shares
then, in each such case, the Company will give to each holder of a Right
Certificate and the Rights Agent, to the extent feasible and in accordance with
Section 26, a notice of such proposed action, which specifies the record date
for the purposes of such stock dividend, distribution or offering of rights,
options or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution or winding up is to take place
and the date of participation therein by the holders of the Common Shares and/or
Preferred Shares, if any such date is to be fixed, and such notice will be so
given, in the case of any action covered by clause (i) or (ii) above, at least
10 calendar days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and, in the case of any such other
action, at least 10 calendar days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, whichever is the earlier.
 
(b)           In case any Triggering Event occurs, then, in any such case, the
Company will as soon as practicable thereafter give to the Rights Agent and each
holder of a Right Certificate, in accordance with Section 26, a notice of the
occurrence of such event, which specifies the event and the consequences of the
event to holders of Rights.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37
 

--------------------------------------------------------------------------------

 
26.           Notices.  (a)  Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company will be sufficiently given or made if sent by first class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
 
Air T, Inc.
Post Office Box 488
Denver, North Carolina  28037
Attention:  Chief Executive Officer
 
(b)           Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent will be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed
(until  another address is filed in writing with the Company) as follows:
 
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, New York  11219
Attention:  Relationship Manager
 
with a copy (which shall not constitute notice) to:
 
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, New York  11219
Attention:  General Counsel
 
(c)           Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right Certificate
(or, if prior the Distribution Date, to the holder of any certificate evidencing
Common Shares) will be sufficiently given or made if sent by first class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
 
27.           Supplements and Amendments.  Prior to the time at which the Rights
cease to be redeemable pursuant to Section 23, and subject to the last sentence
of this Section 27, the Company may in its sole and absolute discretion, and the
Rights Agent will if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any holders of Rights
or Common Shares.  From and after the time at which the Rights cease to be
redeemable pursuant to Section 23, and subject to the last sentence of this
Section 27, the Company may, and the Rights Agent will if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights or Common Shares in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to supplement or amend the provisions hereunder
in any manner which the Company may deem desirable; provided that no such
supplement or amendment shall adversely affect the Rights Agent or the interests
of the holders of Rights as such (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person), and no such supplement or amendment shall
cause the Rights again to become redeemable or cause this Agreement again to
become
 
 
 
 
 
 
 
38
 

--------------------------------------------------------------------------------

 
supplementable or amendable otherwise than in accordance with the provisions of
this sentence.  Without limiting the generality or effect of the foregoing, this
Agreement may be supplemented or amended to provide for such voting powers for
the Rights and such procedures for the exercise thereof, if any, as the Board
may determine to be appropriate.  Upon the delivery of a certificate from an
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 27, the Rights Agent will execute
such supplement or amendment; provided, however, that the failure or refusal of
the Rights Agent to execute such supplement or amendment will not affect the
validity of any supplement or amendment adopted by the Board, any of which will
be effective in accordance with the terms thereof.  Notwithstanding anything in
this Agreement to the contrary, no supplement or amendment may be made which
decreases the stated Redemption Price to an amount less than $.01 per Right.
 
28.           Successors; Certain Covenants.  All the covenants and provisions
of this Agreement by or for the benefit of the Company or the Rights Agent will
be binding on and inure to the benefit of their respective successors and
assigns hereunder.
 
29.           Benefits of This Agreement.  Nothing in this Agreement will be
construed to give to any Person other than the Company, the Rights Agent, and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement.  This Agreement will be for the sole and exclusive benefit of
the Company, the Rights Agent, and the registered holders of the Right
Certificates (or prior to the Distribution Date, the Common Shares).
 
30.           Governing Law.  This Agreement, each Right and each Right
Certificate issued hereunder will be deemed to be a contract made under the
internal substantive laws of the State of Delaware and for all purposes will be
governed by and construed in accordance with the internal substantive laws of
such State applicable to contracts to be made and performed entirely within such
State, provided, however, that the rights and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of
New York.  The parties hereby submit to the nonexclusive jurisdiction of the
courts of the borough of Manhattan, New York City, New York, and acknowledge
that such courts are a convenient forum.
 
31.           Severability.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement will remain in full force and
effect and will in no way be affected, impaired or invalidated; provided,
however, that nothing contained in this Section 31 will affect the ability of
the Company under the provisions of Section 27 to supplement or amend this
Agreement to replace such invalid, void or unenforceable term, provision,
covenant or restriction with a legal, valid and enforceable term, provision,
covenant or restriction.
 
32.           Descriptive Headings, Etc.  Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and will not
control or affect the meaning or construction of any of the provisions
hereof.  Unless otherwise expressly provided, references herein to Articles,
Sections and Exhibits are to Articles, Sections and Exhibits of or to this
Agreement.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
39
 

--------------------------------------------------------------------------------

 
33.           Determinations and Actions by the Directors.  For all purposes of
this Agreement, any calculation of the number of Common Shares outstanding at
any particular time, including for purposes of determining the particular
percentage of such outstanding Common Shares of which any Person is the
Beneficial Owner, will be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The
Board, or, in the event of a delegation by the Board to a committee thereof or
such committee’s delegation to a subcommittee thereof, such duly authorized
committee (or subcommittee thereof) of the Board, will have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including without limitation
the right and power to (i) interpret the provisions of this Agreement, (ii) make
all determinations deemed necessary or advisable for the administration of this
Agreement (including any determination as to whether particular Rights shall
have become void) and (iii) take any and all actions and exercise any and all
rights of the Company specified in Section 27 of this Agreement. All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, any omission with respect to any of the foregoing)
which are done or made by the Directors of the Company (including without
limitation, any such committee or subcommittee as described above) in good faith
will (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties and (y) not subject the Directors of
the Company (including, without limitation, the members of any such committee or
subcommittee as described above) to any liability to any Person, including
without limitation the Rights Agent and the holders of the Rights.
 
34.           Counterparts.  This Agreement may be executed in any number of
counterparts and each of such counterparts will for all purposes be deemed to be
an original, and all such counterparts will together constitute but one and the
same instrument.
 
 
[Signatures appear on following page]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40
 

--------------------------------------------------------------------------------

 
 
 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
 
AIR T, INC.
 
 
By:
                                                                                                                                                                                   
 

 
Name:
Walter Clark

 
Title:
Chief Executive Officer

 
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, as Rights Agent
 
 
By:
                                                                                                                                                                            
 

 
Name:

 
Title:

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 

--------------------------------------------------------------------------------

 
EXHIBIT A
 
CERTIFICATE OF DESIGNATION
 
of
 
SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
 
of
 
AIR T, INC.
 
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
 
Air T, Inc., a corporation organized and existing under the General Corporation
Law of the State of Delaware (hereinafter called the “Corporation”), DOES HEREBY
CERTIFY:
 
That, pursuant to authority vested in the Board of Directors of the Company by
its Restated Certificate of Incorporation, and pursuant to the provisions of
Section 151 of the General Corporation Law, the Board of Directors of the
Company has adopted the following resolution providing for the issuance of a
series of Preferred Stock:
 
RESOLVED, that pursuant to the authority vested in the Board of Directors of the
Corporation by the Restated Certificate of Incorporation, the Board of Directors
hereby creates a series of Preferred Stock designated as Series A Junior
Participating Preferred Stock, $1.00 par value per share, of the Corporation and
hereby states the designation and number of shares, and fixes the preferences,
limitations and relative rights thereof, as follows:
 
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
 
Designation and Amount
 
The shares of such series will be designated as Series A Junior Participating
Preferred Stock (the “Series A Preferred”) and the number of shares constituting
the Series A Preferred is 5,000.  Such number of shares may be increased or
decreased by resolution of the Board of Directors of the Corporation; provided,
however, that no decrease will reduce the number of shares of Series A Preferred
to a number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred.  Series A Preferred may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder’s fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred.
 
 
 
 
 
 
 
 
 
 
A-1
 

--------------------------------------------------------------------------------

 
Dividends and Distributions
 
Subject to the rights of the holders of any shares of any series of Preferred
Stock ranking prior to the Series A Preferred with respect to dividends, the
holders of shares of Series A Preferred, in preference to the holders of Common
Stock, par value $0.25 per share (the “Common Stock”), of the Corporation, and
of any other junior stock, will be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
dividends payable in cash (except as otherwise provided below) on such dates as
are from time to time established for the payment of dividends on the Common
Stock (each such date being referred to herein as a “Dividend Payment Date”),
commencing on the first Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Preferred (the “First Dividend Payment
Date”), in an amount per share (rounded to the nearest cent) equal to the
greater of (i) $1.00 or (ii) subject to the provision for adjustment hereinafter
set forth, one thousand times the aggregate per share amount of all cash
dividends, and one thousand times the aggregate per share amount (payable in
kind) of all non-cash dividends, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Dividend Payment Date or, with respect to the First
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Preferred.  In the event that the Corporation at any time (i)
declares a dividend on the outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivides the outstanding shares of Common Stock,
(iii) combines the outstanding shares of Common Stock into a smaller number of
shares, or (iv) issues any shares of its capital stock in a reclassification of
the outstanding shares of Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Corporation is the
continuing or surviving corporation), then, in each such case and regardless of
whether any shares of Series A Preferred are then issued or outstanding, the
amount to which holders of shares of Series A Preferred would otherwise be
entitled immediately prior to such event under clause (ii) of the preceding
sentence will be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
 
The Corporation will declare a dividend on the Series A Preferred as provided in
the immediately preceding paragraph immediately after it declares a dividend on
the Common Stock (other than a dividend payable in shares of Common
Stock).  Each such dividend on the Series A Preferred will be payable
immediately prior to the time at which the related dividend on the Common Stock
is payable.
 
Dividends will accrue on outstanding shares of Series A Preferred from the
Dividend Payment Date next preceding the date of issue of such shares, unless
(i) the date of issue of such shares is prior to the record date for the First
Dividend Payment Date, in which case dividends on such shares will accrue from
the date of the first issuance of a share of Series A Preferred or (ii) the date
of issue is a Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred entitled to receive a
dividend and before such Dividend Payment Date, in either of which events such
dividends will accrue from such Dividend Payment Date.  Accrued but unpaid
dividends will cumulate from the applicable Dividend Payment Date but will not
bear interest.  Dividends paid on the
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A-2
 

--------------------------------------------------------------------------------

 
shares of Series A Preferred in an amount less than the total amount of such
dividends at the time accrued and payable on such shares will be allocated pro
rata on a share-by-share basis among all such shares at the time
outstanding.  The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred entitled to receive payment of a
dividend or distribution declared thereon, which record date will be not more
than 60 calendar days prior to the date fixed for the payment thereof.
 
Voting Rights
 
The holders of shares of Series A Preferred will have the following voting
rights:
 
Subject to the provision for adjustment hereinafter set forth, each share of
Series A Preferred will entitle the holder thereof to one thousand votes on all
matters submitted to a vote of the stockholders of the Corporation.  In the
event the Corporation at any time (i) declares a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivides the
outstanding shares of Common Stock, (iii) combines the outstanding shares of
Common Stock into a smaller number of shares, or (iv) issues any shares of its
capital stock in a reclassification of the outstanding shares of Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing or surviving corporation),
then, in each such case and regardless of whether any shares of Series A
Preferred are then issued or outstanding, the number of votes per share to which
holders of shares of Series A Preferred would otherwise be entitled immediately
prior to such event will be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
 
Except as otherwise provided herein, in the Restated Certificate of
Incorporation, in any other Preferred Stock Designation creating a series of
Preferred Stock or any similar stock, or by law, the holders of shares of Series
A Preferred and the holders of shares of Common Stock and any other capital
stock of the Corporation having general voting rights will vote together as one
class on all matters submitted to a vote of stockholders of the Corporation.
 
Except as set forth in the Restated Certificate of Incorporation or herein, or
as otherwise provided by law, holders of shares of Series A Preferred will have
no voting rights.
 
Certain Restrictions
 
Whenever regular dividends or other dividends or distributions payable on the
Series A Preferred are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Preferred outstanding have been paid in full, the Corporation will not:
 
Declare or pay dividends, or make any other distributions, on any shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the shares of Series A Preferred;
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A-3
 

--------------------------------------------------------------------------------

 
Declare or pay dividends, or make any other distributions, on any shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the shares of Series A Preferred, except
dividends paid ratably on the shares of Series A Preferred and all such parity
stock on which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
 
Redeem, purchase or otherwise acquire for consideration shares of any stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the shares of Series A Preferred; provided, however, that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the shares of Series A Preferred; or
 
Redeem, purchase or otherwise acquire for consideration any shares of Series A
Preferred, or any shares of stock ranking on a parity with the shares of
Series A Preferred, except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration of
the respective annual dividend rates and other relative rights and preferences
of the respective series and classes, may determine in good faith will result in
fair and equitable treatment among the respective series or classes.
 
The Corporation will not permit any majority-owned subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Article
IV, purchase or otherwise acquire such shares at such time and in such manner.
 
Reacquired Shares
 
Any shares of Series A Preferred purchased or otherwise acquired by the
Corporation in any manner whatsoever will be retired and canceled promptly after
the acquisition thereof.  All such shares will upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock subject to the conditions and restrictions on
issuance set forth herein, in the Restated Certificate of Incorporation of the
Corporation, or in any other Preferred Stock Designation creating a series of
Preferred Stock or any similar stock or as otherwise required by law.
 
Liquidation, Dissolution or Winding Up
 
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution will be made (a) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
shares of Series A Preferred unless, prior thereto, the holders of shares of
Series A Preferred have received $100 per share, plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment; provided, however, that the holders of shares of Series A
Preferred will be entitled to receive an aggregate amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A-4
 

--------------------------------------------------------------------------------

 
per share, subject to the provision for adjustment hereinafter set forth, equal
to one thousand times the aggregate amount to be distributed per share to
holders of shares of Common Stock or (b) to the holders of shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the shares of Series A Preferred, except distributions made
ratably on the shares of Series A Preferred and all such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up.  In the event the
Corporation at any time (i) declares a dividend on the outstanding shares of
Common Stock payable in shares of Common Stock, (ii) subdivides the outstanding
shares of Common Stock, (iii) combines the outstanding shares of Common Stock
into a smaller number of shares, or (iv) issues any shares of its capital stock
in a reclassification of the outstanding shares of Common Stock (including any
such reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), then, in each such case
and regardless of whether any shares of Series A Preferred are then issued or
outstanding, the aggregate amount to which each holder of shares of Series A
Preferred would otherwise be entitled immediately prior to such event under the
proviso in clause (a) of the preceding sentence will be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
 
Consolidation, Merger, Etc.
 
In the event that the Corporation enters into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then, in each such case, each share of Series A Preferred will at the
same time be similarly exchanged for or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to one
thousand times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged.  In the event the Corporation at
any time (a) declares a dividend on the outstanding shares of Common Stock
payable in shares of Common Stock, (b) subdivides the outstanding shares of
Common Stock, (c) combines the outstanding shares of Common Stock in a smaller
number of shares, or (d) issues any shares of its capital stock in a
reclassification of the outstanding shares of Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), then, in each such case
and regardless of whether any shares of Series A Preferred are then issued or
outstanding, the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred will be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
 
Redemption
 
The shares of Series A Preferred are not redeemable.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A-5
 
 

--------------------------------------------------------------------------------

 
Rank
 
The Series A Preferred rank, with respect to the payment of dividends and the
distribution of assets, junior to all other series of the Corporation’s
Preferred Stock, unless the terms of any such series shall provide otherwise.
 
Amendment
 
Notwithstanding anything contained in the Restated Certificate of Incorporation
of the Corporation to the contrary and in addition to any other vote required by
applicable law, the Restated Certificate of Incorporation of the Corporation may
not be amended in any manner that would materially alter or change the powers,
preferences or special rights of the Series A Preferred so as to affect them
adversely without the affirmative vote of the holders of at least 80% of the
outstanding shares of Series A Preferred, voting together as a single series.
 
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of the
Corporation by its Chairman and President and attested by its Secretary this
26th day of March, 2012.
 
AIR T, INC.
 
 
By:
                                                                                                                                
       

Walter Clark, Chairman and Chief Executive Officer
 
Attest:

                                                                                              
John Parry, Secretary
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A-6
 

--------------------------------------------------------------------------------

 
EXHIBIT B
 
FORM OF RIGHT CERTIFICATE
 
Certificate No. R- ___________ Rights
 
Not exercisable after April 5, 2015 or earlier if redeemed, exchanged or
amended.  The Rights are subject to redemption, exchange and amendment at the
option of the Company, on the terms set forth in the Rights Agreement.  Under
certain circumstances specified in the Rights Agreement, rights that are or were
beneficially owned by an Acquiring Person or an Affiliate or an Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement) or a
transferee thereof may become null and void.
 
Right Certificate
 
AIR T, INC.
 
This certifies that _______________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions, and conditions of the Amended and
Restated Rights Agreement, dated as of __________ __, 2013, as the same may be
amended from time to time (the “Rights Agreement”), between Air T, Inc., a
Delaware corporation (the “Company”), and American Stock Transfer & Trust
Company, LLC, a New York limited liability trust company (the “Rights Agent”),
to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00 P.M. (Eastern time)
on the Expiration Date (as such term is defined in the Rights Agreement) at the
principal office or offices of the Rights Agent designated for such purpose, one
one-thousandth of a fully paid nonassessable share of Series A Junior
Participating Preferred Stock, par value $1.00 per share (the “Preferred
Shares”), of the Company, at a purchase price of $25.00 per one one-thousandth
of a Preferred Share (the “Purchase Price”), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase and related
Certificate duly executed.  If this Right Certificate is exercised in part, the
holder will be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not
exercised.  The number of Rights evidenced by this Right Certificate (and the
number of one one-thousandths of a Preferred Share which may be purchased upon
exercise thereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of the date of the Rights Agreement, based on
the Preferred Shares as constituted at such date.
 
As provided in the Rights Agreement, the Purchase Price and/or the number and/or
kind of securities issuable upon the exercise of the Rights evidenced by this
Right Certificate are subject to adjustment upon the occurrence of certain
events.
 
This Right Certificate is subject to all of the terms, provisions and conditions
of the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a
 
 
 
 
 
 
 
 
 
 
 
 
B-1
 

--------------------------------------------------------------------------------

 
part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities of the Rights Agent, the Company and the holders of the Right
Certificates, which limitations of rights include the temporary suspension of
the exercisability of the Rights under the circumstances specified in the Rights
Agreement.  Copies of the Rights Agreement are on file at the above- mentioned
office of the Rights Agent and can be obtained from the Company without charge
upon written request therefor.  Terms used herein with initial capital letters
and not defined herein are used herein with the meanings ascribed thereto in the
Rights Agreement.
 
Pursuant to the Rights Agreement, from and after the occurrence of a Flip-in
Event, any Rights that are Beneficially Owned by (i) any Acquiring Person (or
any Affiliate or Associate of any Acquiring Person), (ii) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who becomes a transferee
after the occurrence of a Flip-in Event, or (iii) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who became a transferee prior to or
concurrently with the Flip-in Event pursuant to either (a) a transfer from an
Acquiring Person to holders of its equity securities or to any Person with whom
it has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (b) a transfer which the Board of Directors of the Company
have determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding certain provisions of the Rights Agreement, and
subsequent transferees of any of such Persons, will be void without any further
action and any holder of such Rights will thereafter have no rights whatsoever
with respect to such Rights under any provision of the Rights Agreement.  From
and after the occurrence of a Flip-in Event, no Right Certificate will be issued
that represents Rights that are or have become void pursuant to the provisions
of the Rights Agreement, and any Right Certificate delivered to the Rights Agent
that represents Rights that are or have become void pursuant to the provisions
of the Rights Agreement will be canceled.
 
This Right Certificate, with or without other Right Certificates, may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates entitling the holder to purchase a like number of one
one-thousandths of a Preferred Share (or other securities, as the case may be)
as the Right Certificate or Right Certificates surrendered entitled such holder
(or former holder in the case of a transfer) to purchase, upon presentation and
surrender hereof at the principal office of the Rights Agent designated for such
purpose, with the Form of Assignment (if appropriate) and the related
Certificate duly executed.
 
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Company at its option at a redemption price
of $.01 per Right or may be exchanged in whole or in part.  The Rights Agreement
may be supplemented and amended by the Company, as provided therein.
 
The Company is not required to issue fractions of Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the option of the Company, be evidenced by depositary
receipts) or other securities issuable upon the exercise of any Right or Rights
evidenced hereby.  In lieu of issuing such fractional Preferred Shares or other
securities, the Company may make a cash payment, as provided in the Rights
Agreement.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
B-2
 

--------------------------------------------------------------------------------

 
No holder of this Right Certificate, as such, will be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable upon the exercise of the Right or Rights represented hereby, nor will
anything contained herein or in the Rights Agreement be construed to confer upon
the holder hereof, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate have been exercised in accordance with the
provisions of the Rights Agreement.
 
This Right Certificate will not be valid or obligatory for any purpose until it
has been countersigned by an authorized signatory of the Rights Agent.
 
WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal.  Dated as of _____________, ____.
 
[SEAL]
 
ATTEST:
AIR T, INC.

 
 
By:
  
                                                                                                                                             
 

 
Name:

 
Title:

 
Countersigned:

[                                             ]
as Rights Agent
 
By:
                                                                        

Authorized Signatory

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
B-3
 

--------------------------------------------------------------------------------

 
 
Form of Reverse Side of Right Certificate
 
FORM OF ASSIGNMENT
 
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
 
FOR VALUE RECEIVED, _______________ hereby sells, assigns and transfers unto
 

(Please print name and address of transferee)
 

this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
 
Dated:  __________, ____
 

                                                                                                                         
                Signature
 
Signature Guaranteed:
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
B-4
 

--------------------------------------------------------------------------------

 
CERTIFICATE
 
The undersigned hereby certifies by checking the appropriate boxes that:
 
1.           the Rights evidenced by this Right Certificate [  ] are [  ] are
not being sold, assigned, transferred, split up, combined or exchanged by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement);
 
2.           after due inquiry and to the best knowledge of the undersigned, it
[  ] did [  ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
 
Dated:  __________, ___
 
 

                                                    
 Signature
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
B-5
 

--------------------------------------------------------------------------------

 

FORM OF ELECTION TO PURCHASE
 
(To be executed if holder desires to
exercise the Right Certificate)
 
To Air T, Inc.:
 
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the one one-thousandths of a
Preferred Share or other securities issuable upon the exercise of such Rights
and requests that certificates for such securities be issued in the name of and
delivered to:
 
Please insert social security
or other identifying
number:                                                                                                                                                                                                                                                                                                                                           
 
                                                                                                                                                                                                                                                                                                                                                          
 
(Please print name and address)
 
If such number of Rights is not all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
will be registered in the name of and delivered to:
 
Please insert social security
or other identifying
number:                                                                                                                                                                                                                                                                                                                                          
 
                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                         
(Please print name and address)
 
Dated:  __________, ___
 
                                                                      

                Signature
 
Signature Guaranteed:
 
 
 
 
 
 
 
 
 
 

 
B-6
 

--------------------------------------------------------------------------------

 
CERTIFICATE
 
The undersigned hereby certifies by checking the appropriate boxes that:
 
1.           the Rights evidenced by this Right Certificate [  ] are [  ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined pursuant to the Rights Agreement);
 
2.           after due inquiry and to the best knowledge of the undersigned, it
[  ] did [  ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was, or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
 
Dated:  __________, ____
 
                                                                                                                                                                                     
                                Signature
 
 
              NOTICE
 
Signatures on the foregoing Form of Assignment and Form of Election to Purchase
and in the related Certificates must correspond to the name as written upon the
face of this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
 
Signatures must be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved medallion signature program) pursuant to Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
B-7
 

--------------------------------------------------------------------------------

 
EXHIBIT C
 
FORM OF
 
SUMMARY OF RIGHTS TO PURCHASE
 
PREFERRED STOCK
 
The Board of Directors (the “Board”) of Air T, Inc. (the “Company”) has declared
a dividend distribution of one right (a “Right”) for each outstanding share of
Common Stock, par value $.25 per share (the “Common Shares”), of the
Company.  The distribution is payable on April 5, 2012 (the “Record Date”) to
the stockholders of record as of the close of business on the Record Date.  Each
Right entitles the registered holder thereof to purchase from the Company one
one-thousandth of a share of Series A Junior Participating Preferred Stock, par
value $1.00 per share (the “Preferred Shares”), of the Company at a price (the
“Purchase Price”) of $25.00 per one one-thousandth of a Preferred Share, subject
to adjustment.  The description and terms of the Rights are set forth in a
Rights Agreement, originally dated as of March 26, 2012, as amended and restated
in the Amended and Restated Rights Agreement, dated as of ____________, 2013
(the “Rights Agreement”), between the Company and American Stock Transfer &
Trust Company, LLC, as Rights Agent (the “Rights Agent”).
 
Under the Rights Agreement, the Rights will initially be evidenced by the
certificates evidencing Common Shares or book-entries representing
uncertificated shares until the earlier (the “Distribution Date”) of: (i) the
close of business on the date that is ten business days after the first date
(the “Share Acquisition Date”) of public announcement that a person (other than
the Company, a subsidiary or employee benefit or stock ownership plan of the
Company or any of its affiliates or associates or an exempt person (as defined
below)), together with its affiliates and associates, has acquired beneficial
ownership of 20% or more of the outstanding Common Shares (any such person being
hereinafter called an “Acquiring Person”) or (ii) the close of business on the
date specified by the Board following the commencement or first public
disclosure of a tender offer or exchange offer by any person (other than the
Company, a subsidiary or employee benefit or stock ownership plan of the Company
or any of its affiliates or associates), whether such commencement or first
public disclosure occurs before or after the date of the Rights Agreement, the
consummation of which would result in beneficial ownership by such person of 20%
or more of the outstanding Common Shares.  An exempt person means each person
that beneficially owns as of the date of the Rights Agreement 20% or more of the
outstanding Common Shares, except that each such person will be considered an
exempt person only if and so long as the Common Shares that are beneficially
owned by such person do not exceed the number of shares which are beneficially
owned by such person on the date of the Rights Agreement, plus any additional
Common Shares representing not more than 1% of the Common Shares then
outstanding, and except that a person will cease to be an exempt person
immediately at such time as such person ceases to be the beneficial owner of
more than 20% of the Common Shares then outstanding.
 
The Rights Agreement provides that, until the Distribution Date, the Rights may
be transferred with and only with the Common Shares.  Until the Distribution
Date (or earlier redemption or expiration of the Rights), any certificate or, in
the case of uncertificated shares, any initial transaction statement or
subsequent period statement evidencing Common Shares of the Company issued upon
transfer or new
 
 
 
 
 
 
 
 
 
B-8
 

--------------------------------------------------------------------------------

 
issuance of the Common Shares will contain a notation incorporating the Rights
Agreement by reference.  Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates
evidencing Common Shares or the registration of transfer of ownership of Common
Shares in the share register of the Company will also constitute the transfer of
the Rights associated with such certificates.
 
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights (“Right Certificates”) will be mailed to holders of record
of Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.  No Right is
exercisable at any time prior to the Distribution Date.  The Rights will expire
on the earliest of (i) the third anniversary of the Record Date or (ii) the
final adjournment of the Company’s 2013 annual meeting of shareholders if a
proposal to approve this Agreement has not been approved by a vote in which more
votes are cast in favor of such proposal than are cast against such proposal,
unless earlier redeemed, exchanged or amended by the Company as described
below.  Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including the right to vote or to
receive dividends.
 
The Purchase Price payable, and the number of Preferred Shares or other
securities issuable, upon exercise of the Rights will be subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the Preferred Shares, (ii)
upon the grant to holders of Preferred Shares of certain rights, options or
warrants to subscribe for or purchase the Preferred Shares at a price, or
securities convertible into the Preferred Shares with a conversion price, less
than the then-current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness,
cash (excluding regular periodic cash dividends), assets, stock (excluding
dividends payable in the Preferred Shares) or subscription rights or warrants
(other than those referred to above).  The number of outstanding Rights and the
number of one one-thousandths of the Preferred Shares issuable upon exercise of
each Right will be subject to adjustment in the event of a stock dividend on the
Common Shares payable in Common Shares or a subdivision, combination or
reclassification of Common Shares occurring, in any such case, prior to the
Distribution Date.
 
The Preferred Shares issuable upon exercise of the Rights will not be
redeemable.  If issued, each outstanding Preferred Share will be entitled, in
connection with the declaration of a dividend on the Common Shares, to a
preferential dividend payment equal to the greater of (i) $1.00 per share and
(ii) an amount equal to 1,000 times the related dividend declared per Common
Share.  Subject to customary anti-dilution provisions, in the event of
liquidation, the holders of Preferred Shares will be entitled to a preferential
liquidation payment equal to the greater of (a) $100 per share and (b) an amount
equal to 1,000 times the liquidation payment made per Common Share.  Because of
the nature of the Preferred Shares’ dividend, voting and liquidation rights, the
value of the one one-thousandth interest in a Preferred Share purchasable upon
exercise of a Right should approximate the value of one Common Share.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
B-9
 

--------------------------------------------------------------------------------

 
Rights will be exercisable to purchase Preferred Shares only after the
Distribution Date occurs and prior to the occurrence of a Flip-in Event as
described below.  A Distribution Date resulting from the commencement of a
tender offer or exchange offer described in clause (ii) of the second paragraph
of this summary could precede the occurrence of a Flip-in Event and thus result
in the Rights being exercisable to purchase Preferred Shares.  A Distribution
Date resulting from any occurrence described in clause (i) of the second
paragraph of this summary would necessarily follow the occurrence of a Flip-in
Event and thus result in the Rights being exercisable to purchase Common Shares
or other securities as described below.
 
Under the Rights Agreement, in the event (a “Flip-in Event”) that (i) any person
becomes an Acquiring Person, (ii) any Acquiring Person or any affiliate or
associate of such person merges into or combines with the Company and the
Company is the surviving corporation, (iii) any Acquiring Person or any
affiliate or associate of such person effects certain other transactions with
the Company, or (iv) during such time as there is an Acquiring Person the
Company effects certain transactions, in each case as described in the Rights
Agreement, then, in each such case, proper provision will be made so that from
and after the occurrence of such event, each holder of a Right, other than
Rights that are or were owned beneficially by an Acquiring Person or any
affiliate or associate of such person (which, from and after the date of a
Flip-in Event, will be null and void), will have the right to receive, upon
exercise thereof at the then-current exercise price of a Right, that number of
Common Shares (or, under certain circumstances, an economically equivalent
security of the Company or other assets) that at the time of such Flip-in Event
have a market value of two times the exercise price of the Right.
 
In the event (a “Flip-over Event”) that, at any time after a person has become
an Acquiring Person, (i) the Company merges with or into any person and the
Company is not the surviving corporation, (ii) any person merges with or into
the Company and the Company is the surviving corporation, but all or part of the
Common Shares are changed or exchanged for stock or other securities of any
other person or cash or any other property, or (iii) 50% or more of the
Company’s assets or earning power, including securities creating obligations of
the Company, are sold, in each case as described in the Rights Agreement, then,
and in each such case, proper provision will be made so that each holder of a
Right, other than Rights which have become void, will thereafter have the right
to receive, upon the exercise thereof at the then-current exercise price of the
Right, that number of Common Shares (or, under certain circumstances, an
economically equivalent security or securities) of such other person that at the
time of such Flip-over Event have a market value of two times the exercise price
of the Right.
 
From and after the Distribution Date, Rights (other than any Rights that have
become null and void) will be exercisable as described above, upon payment of
the aggregate exercise price in cash.  In addition, at any time after the
earlier of the Share Acquisition Date and the Distribution Date and prior to the
acquisition by any person or group of affiliated or associated persons of 50% or
more of the outstanding Common Shares, the Company may exchange the Rights
(other than any Rights that have become null and void), in whole or in part, at
an exchange ratio of one Common Share per Right (subject to adjustment).
 
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments require an adjustment in the Purchase Price of at
least 1%.  The Company will not be required to issue fractional Preferred Shares
(other than fractions that are integral multiples of one one-thousandth of a
Preferred Share, which may, at the option of the Company, be evidenced by
depositary receipts) or fractional Common Shares or other securities issuable
upon the exercise of Rights.  In lieu of issuing such securities, the Company
may make a cash payment, as provided in the Rights Agreement.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
B-10
 

--------------------------------------------------------------------------------

 
The Company may, at its option, redeem the Rights in whole, but not in part, at
a price of $0.01 per Right, subject to adjustment (the “Redemption Price”), at
any time prior to the earlier of (i) the close of business on the Share
Acquisition Date and (ii) the close of business on the Expiration
Date.  Immediately upon any redemption of the Rights, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
 
The Rights Agreement would not prohibit the consummation of a fully financed,
all-cash tender offer or exchange offer that meets conditions specified in the
Rights Agreement and provides for payment of the same consideration for all
shares of the Company.  In the event the Company receives such a “Qualifying
Offer,” as defined in the Rights Agreement, and within 90 business days of the
commencement of such offer (the “Board Evaluation Period”), the Board has not
redeemed the outstanding Rights, exempted the Qualifying Offer from the terms of
the Rights Agreement or called a special meeting of shareholders to vote on
whether to exempt the Qualifying Offer from the terms of the Rights Agreement,
holders of at least 10% of the Common Shares (excluding Common Shares
beneficially owned by the offeror and its affiliates and associates) may request
that the Board call a special meeting for this purpose.  If, subject to the
conditions specified in the Rights Agreement, (i) the special meeting is not
convened by the 60th business day following the last day of the Board Evaluation
Period or (ii) the special meeting is convened and a majority of the Common
Shares outstanding as of the record date for the special meeting (excluding
Common Shares beneficially owned by the offeror and its affiliates and
associates) vote in favor of exempting the Qualifying Offer, the Qualifying
Offer will be deemed exempt from the Rights Agreement.
 
Prior to the time at which the Rights cease to be redeemable, the Rights
Agreement may be amended by the Company without the approval of any holders of
Rights, including amendments that increase or decrease the Purchase Price, that
add other events requiring adjustment to the Purchase Price payable and the
number of the Preferred Shares or other securities issuable upon the exercise of
the Rights or that modify procedures relating to the redemption of the Rights,
except that no amendment may be made that decreases the stated Redemption Price
to an amount less than $0.01 per Right.
 
The Board will have the exclusive power and authority to administer the Rights
Agreement and to exercise all rights and powers specifically granted to the
Board or to the Company therein, or as may be necessary or advisable in the
administration of the Rights Agreement, including without limitation the right
and power to interpret the provisions of the Rights Agreement and to make all
determinations deemed necessary or advisable for the administration of the
Rights Agreement (including any determination to redeem or not redeem the Rights
or to amend or not amend the Rights Agreement).  All such actions, calculations,
interpretations and determinations (including any omission with respect to any
of the foregoing) which are done or made by the Board in good faith will be
final, conclusive and binding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
B-11
 

--------------------------------------------------------------------------------

 
on the Company, the Rights Agent, the holders of the Rights and all other
parties and will not subject the Board to any liability to any person, including
without limitation the Rights Agent and the holders of the Rights.
 
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an exhibit to a Current Report on Form 8-K.  A copy of the Rights
Agreement is available free of charge from the Company.
 
This summary description of the Rights is as of the Record Date, does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by this reference.
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
B-12
 

--------------------------------------------------------------------------------

 
EXHIBIT B

Form of Charter of the
Capital Allocation Committee
Air T, Inc. LOGO [airtlogo2013.jpg]
AIR T, INC.
 
CHARTER
OF THE
CAPITAL ALLOCATION COMMITTEE
OF THE BOARD OF DIRECTORS

I.  
PURPOSE

 
The primary function of the Capital Allocation Committee (the “Committee”) is to
review and recommend to the Board “for” or “against” all internal and external
capital investments, acquisitions, securities purchases or sales, mergers and
general investments in excess of $100,000 (each defined hereafter as an
“Investment”).
 
II.  
COMPOSITION

 
The Committee shall be comprised of three directors, appointed by the Board, who
meet such criteria as the Board may establish.
 
Unless the Board appoints a Chair of the Committee, the members of the Committee
may designate a Chair by majority vote of the full Committee membership.
 
III.  
MEETINGS

 
The Committee shall meet as frequently as circumstances dictate.  The Committee
may ask members of management or others to attend any meeting and provide
information or advice as needed.
 
IV.  
ACTIVITIES

 
To fulfill its responsibilities, the Committee shall:
 
(1)           review and recommend to the Board “for” or “against” all
Investments.
 
(2)           act as a clearinghouse for the evaluation of possible uses of
excess capital, measuring and reporting on the capital required by each business
unit, measuring return on capital for each business unit and seeking to inform
the Board about the Company’s use of its capital resources.
 
 
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
(3)           seek Investments that have the highest risk-adjusted return on
capital to be made for the benefit of the Company and its stockholders.
 
All proposals for Investments, will be presented to the Capital Allocation
Committee for a recommendation “for” or “against” the proposal (for the
avoidance of doubt, the Capital Allocation Committee may itself originate
Investment proposals for consideration by the Board). Although the Investment
may have been recommended by the Capital Allocation Committee, the Board may
disapprove of the Investment.  For the avoidance of doubt, the Board may not
undertake an Investment without submitting the Investment to the Capital
Allocation Committee for its recommendation and receiving a recommendation from
the Committee “for” the Investment.
 
V.           PROCESSES
 
After each Committee meeting, the Committee shall report its actions and
recommendations to the Board.
 
The Committee shall review this Charter periodically and recommend any proposed
revisions to the Board for its approval.
 
The Committee shall have the authority to delegate any of its responsibilities
to subcommittees.
 
The Committee shall have the sole authority to engage advisors, as it deems
appropriate, to advise the Committee and to set the terms (including approval of
fees and expenses) of all such engagements, and to terminate any such
engagements.  The Corporation shall provide for appropriate funding, as
determined by the Committee, for paying fees to such advisors engaged by the
Committee.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 

--------------------------------------------------------------------------------

 

EXHIBIT C
 
Air T, Inc. LOGO [airtlogo2013.jpg]
AIR T, INC.
 
CHARTER
OF THE
NOMINATING COMMITTEE
OF THE BOARD OF DIRECTORS
(Restated)
 
I.  
PURPOSE

 
The primary function of the Nominating Committee (the “Committee”) is to assist
the Corporation’s Board of Directors in identifying qualified individuals to
become Board members, in determining the composition of the Board and its
committees, and in monitoring a process to assess Board and Board committee
effectiveness.
 
II.  
COMPOSITION

 
The Committee shall be comprised of three or more directors, appointed by the
Board, who meet the independence requirements of applicable regulations, Nasdaq
Stock Market rules and such other criteria as the Board may establish.
 
Unless the Board appoints a Chair of the Committee, the members of the Committee
may designate a Chair by majority vote of the full Committee membership.
 
III.  
MEETINGS

 
The Committee shall meet as frequently as circumstances dictate.  The Committee
may ask members of management or others to attend any meeting and provide
information or advice as needed.
 
IV.  
ACTIVITIES

 
To fulfill its responsibilities, the Committee shall:
 
(1) Make recommendations to the Board regarding the size and composition of the
Board and the criteria for the selection of candidates for membership on the
Board.
 
(2) Oversee the search for individuals qualified to become members of the Board,
including by evaluating persons suggested by directors, stockholders or others,
and supervise appropriate inquiries into the backgrounds and qualifications of
possible candidates.
 
(3) Recommend to the Board director nominees to be presented for stockholder
approval at each annual meeting of stockholders and to fill any vacancies
between annual meetings.
 
 
 
 

--------------------------------------------------------------------------------

 
(4) Monitor and make recommendations to the Board with respect to the functions
of the various committees of the Board.
 
(5) Recommend to the Board the membership of the various Board committees.
 
(6) Periodically review the frequency, structure and content of Board meetings
and recommend changes to the Board as appropriate.
 
V.           PROCESSES
 
After each Committee meeting, the Committee shall report its actions and
recommendations to the Board.
 
The Committee shall review this Charter periodically and recommend any proposed
revisions to the Board for its approval.
 
The Committee shall have the authority to delegate any of its responsibilities
to subcommittees.  The Committee shall also have the authority to engage a
search firm to assist in identifying director candidates and to engage outside
counsel and other advisors, in each case as it deems appropriate, and to set the
terms (including fees) of all such engagements.  The Corporation shall provide
for appropriate funding, as determined by the Committee, for paying fees to
outside advisors engaged by the Committee.
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

--------------------------------------------------------------------------------

 

EXHIBIT D
 
Air T, Inc. LOGO [airtlogo2013.jpg]
AIR T, INC.
 
CHARTER
OF THE
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS

 
I.  
PURPOSE

 
The Compensation Committee (the “Committee”) has the primary function of
assisting the Board of Directors (the “Board”) of Air T, Inc. (the
“Corporation”) in discharging its responsibilities related to compensation of
the Corporation’s directors and executive officers.
 
II.  
COMPOSITION

 
The Committee shall be comprised of three or more directors, appointed by the
Board, who meet the independence requirements of applicable SEC regulations,
Nasdaq Stock Market listing standards applicable to members of a compensation
committee and such other criteria as the Board may establish, subject only to
limited exceptions provided by applicable regulations.  In addition, each member
of the Committee shall be a “Non-Employee Director” under Rule 16b-3 of the
Exchange Act and an “outside director” for purposes of Section 162(m) of the
Internal Revenue Code.  Notwithstanding the foregoing, no action of the
Committee will be void or invalid because of the participation of a director who
does not meet these requirements.
 
Unless the Board appoints a Chair of the Committee, the members of the Committee
may designate a Chair by majority vote of the full Committee membership.
 
III.  
MEETINGS

 
The Committee shall meet as frequently as circumstances dictate.  The Committee
may ask members of management or others to attend any meeting and provide
information or advice as needed.
 
IV.  
ACTIVITIES

 
To fulfill its responsibilities, the Committee shall:
 
(7)  
Evaluate, develop, approve and report to the Board regarding the Corporation’s
overall compensation philosophy and strategy, including the balance among
various components of compensation, such as base salaries, cash-based and
equity-based incentive compensation, and other benefits.

 
 
 
 

--------------------------------------------------------------------------------

 
(8)  
Determine, or recommend to the Board for its determination, the compensation,
including salary, bonus, incentive and equity compensation to be paid to the
Chief Executive Officer (provided that the Chief Executive Officer may not be
present during voting or deliberations on his or her compensation).

 
(9)  
Determine, or recommend to the Board for its determination, the compensation,
including salary, bonus, incentive and equity compensation to be paid to the
other executive officers of the Corporation.

 
(10)  
Review director fees and other compensation paid to non-employee members of the
Board on a periodic basic and effect, or recommend to the Board, any changes the
Committee deems appropriate.

 
(11)  
Periodically review the Corporation’s equity-based and other incentive plans and
revise such plans, or recommend revisions or new plans to the Board, as the
Committee deems appropriate.

 
(12)  
Determine and recommend to the Board for approval any performance targets and
participation levels for the Corporation’s management in any incentive plan for
which such targets and levels are to be set.

 
(13)  
When delegated such authority by the Board, exercise the full authority of the
Board to administer the Corporation’s equity-based and other incentive,
compensation or benefit plans.

 
(14)  
Review and approve all formal employment agreements with the Corporation’s
executive officers.

 
(15)  
Review the Corporation’s overall compensation policies and practices for all
employees as they relate to the Corporation’s risk.

 
V.           PROCESSES
 
After each Committee meeting, the Committee shall report its actions and
recommendations to the Board.
 
The Committee shall review this Charter periodically and recommend any proposed
revisions to the Board for its approval.
 
The Committee shall have the authority to delegate any of its responsibilities
to subcommittees.
 
The Committee shall have the sole authority to engage compensation consultants
and other advisors, as it deems appropriate, to advise the Committee and to set
the terms (including approval of fees and expenses) of all such engagements, and
to terminate any such engagements.  The Corporation shall provide for
appropriate funding, as determined by the Committee, for paying fees to such
advisors engaged by the Committee.
 

 
 

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EXHIBIT E
 
Air T, Inc. LOGO [airtlogo2013.jpg]
Air T, Inc.
 
Audit Committee Charter
(Restated)
 

There shall be a committee of the Board of Directors to be known as the audit
committee.
 
Role and independence
 
The audit committee of the board of directors assists the board in fulfilling
its responsibility for oversight of:
 
(1)
the quality and integrity of the accounting, auditing and reporting practices of
the corporation;

 
(2)
the audits of the corporation’s financial statements and the independent
auditor’s qualifications, independence and performance;

 
(3)
the corporation’s systems of internal control over financial reporting;

 
(4)
the corporation’s compliance with legal and regulatory requirements;

 
(5)
the performance of the corporation’s internal audit function;

 
and such other duties as directed by the board.  The membership of the committee
shall consist of at least three directors who are generally knowledgeable in
financial and auditing matters, and including at least one member who is an
“audit committee financial expert” under Securities Exchange Commission
regulations if one or more members of the board would qualify as an “audit
committee financial expert” and would be eligible to serve on the audit
committee.  Each member shall be free of any relationship that, in the opinion
of the board, would interfere with his or her individual exercise of independent
judgment and shall meet the independence requirements of the NASDAQ Stock Market
applicable to membership on the audit committee.
 
The committee is expected to maintain free and open communication (including
regular private executive sessions) with the independent auditor, the internal
auditors and the management of the corporation and to provide each group with
full access to the committee (and the board) to report on any and all
appropriate matters.  In discharging its oversight role, the committee is
empowered to investigate any matter brought to its attention, with full power to
retain outside counsel or other experts for this purpose and to have the
corporation pay all reasonable fees of such advisors.
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
Responsibilities
 
The audit committee’s primary responsibilities include:
 
·  
Selecting and retaining the independent accounting firm that audits the
financial statements of the corporation and approving the scope of the proposed
audit for each fiscal year and the fees and other compensation to be paid
therefor.  In so doing, the committee will discuss and consider the auditor’s
written affirmation that the auditor is in fact independent and the nature and
rigor of the audit process and receive and review all reports from management
and the current auditor relevant to these determinations.

 
·  
Reviewing and periodically discussing with the independent auditor all
significant relationships the firm and members of the engagement team have with
the corporation and others that may affect the auditor’s independence.

 
·  
Preapproving all auditing services and permitted non-audit services (including
the fees and terms thereof) to be performed for the corporation by its
independent auditor, subject to such exceptions for non-audit services as
permitted by applicable laws and regulations.  The committee may form and
delegate authority to subcommittees consisting of one or more members when
appropriate, including the authority to grant preapprovals of audit and
permitted non-audit services, provided that decisions of such subcommittee to
grant preapprovals shall be presented to the full committee at its next
scheduled meeting.

 
·  
Reviewing financial statements (including quarterly reports) with management and
the independent auditor.  It is anticipated that these discussions will include
quality of earnings, review of reserves and accruals, consideration of the
suitability of accounting principles, review of highly judgmental areas, audit
adjustments (whether or not recorded) and such other inquiries as may be
appropriate.  Annually, after satisfactory review by the committee, the
company’s audited financial statements will be approved by the board of
directors for inclusion in the annual report of Form 10-K to be filed with the
Securities and Exchange Commission.

 
·  
Reviewing with management Management’s Discussion and Analysis of Financial
Condition and Results of Operations to be included in the corporation’s annual
report on Form 10-K or quarterly report on Form 10-Q, as applicable.

 
·  
Discussing with management and the auditors the quality and adequacy of the
company’s internal controls over financial reporting and reporting processes.

 
·  
Discussing with the independent auditor its judgments about the quality and
appropriateness of the Corporation’s accounting principles as applied in its
financial reporting.

 
·  
Reviewing and discussing with management and the independent auditor, as
appropriate, earnings press releases, and financial information and earnings
guidance provided by the Corporation to analysts and rating agencies.

 
 
 
 
 
 
 
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
·  
Discussing with management, the internal auditors and the independent auditor
policies with respect to risk assessment and risk management, significant risks
or exposures of the corporation and the steps that have been taken to minimize
such risks.  It is anticipated that such discussions will include the status of
pending litigation, taxation matters and other areas of oversight of the legal
and compliance area as may be appropriate.

 
·  
Establishing procedures for the receipt, retention and treatment of complaints
received by the corporation regarding accounting, internal control over
financial reporting or auditing matters, and the confidential, anonymous
submission by employees of concerns regarding questionable accounting or
auditing matters.

 
·  
Approving any letter to be included in the Corporation’s annual report or proxy
statement that describes the Committee’s composition and responsibilities and
how they were discharged.

 
·  
Reporting on audit committee activities to the full board and issuance annually
of a summary report (including appropriate oversight conclusion) suitable for
submission to the shareholders.

 
·  
Reviewing any “related party transactions,” as defined by applicable NASDAQ
rules, and determining whether to ratify or approve such transactions.

 
·  
Performing any other activities consistent with this charter, the corporation’s
bylaws and governing law that the committee or the board may deem necessary or
appropriate.

 
·  
Conducting an annual review of this charter and updating it as appropriate.

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
 

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EXHIBIT F
PRESS RELEASE

Contact:
Walter Clark
Chief Executive Officer
Air T, Inc.
3524 Airport Road
Maiden, NC 28650
(828) 464-8741

FOR IMMEDIATE RELEASE

Air T and AO Partners Agree to Settle Pending Election Contest

MAIDEN, N.C., June 13, 2013 -- Air T, Inc. (Nasdaq Capital Market:AIRT) and AO
Partners, I, L.P., announced today that they have entered into an agreement to
settle a pending contest related to the election of directors at Air T’s 2013
annual meeting of stockholders.  Under the settlement, AO Partners, which
currently owns approximately 14.9% of Air T’s common stock, has agreed to
withdraw its proposed slate of 10 director nominees in favor of an agreed slate
of seven nominees to constitute the new board.  The agreed slate includes three
nominees —Nicholas J. Swenson, Seth G. Barkett and Andrew L. Osborne—who have
been named by AO Partners; three nominees—John G. Gioffre and Walter Clark (who
have been named by a committee of independent directors of Air T) and a third
individual to be selected by that committee of independent directors from a list
of individuals provided by the committee to AO Partners; and one additional
nominee who will be agreed upon by a majority of each of the AO Partners
nominees and the committee’s nominees.

Walter Clark, Chief Executive Officer of Air T, stated, “We are pleased to have
reached this settlement with AO Partners and look forward to working together
productively toward the continued goal of improving company performance,
enhancing stockholder value and maintaining and expanding the strong
partnerships with our customer base.”

Nicholas J. Swenson, managing member of the general partner of AO Partners and a
current director of Air T, stated, “I am delighted that Seth and Andrew will be
joining me on the Board, and we look forward to working collaboratively with our
fellow directors.  We are confident the Board will benefit from increased
stockholder representation.”

The agreement also provides, among other things, that Air T will promptly make
certain amendments to its stockholder rights agreement, including increasing the
triggering percentage from 15% to 20%, adding a “chewable” feature, and
providing that the rights agreement will expire if not approved by stockholders
at the 2013 annual meeting.  AO Partners has stated its intention to vote
against approval of the rights agreement and will be permitted to include a
statement in Air T’s proxy statement stating the reasons for its
opposition.  Other settlement terms provide for the reconstitution of various
board committees with representatives from the AO Partners nominees and the
formation of a new Capital Allocation Committee, to consist of a majority of AO
Partners nominees, that would review and make
 
 
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
recommendations regarding all internal and external capital investments,
acquisitions, securities purchases or sales, mergers or general investments in
excess of $100,000.  Subject to the fulfillment of certain standstill conditions
specified in the agreement, AO Partners has agreed not to submit additional
director nominations or other matters for consideration at Air T’s 2014 annual
meeting of stockholders.  The settlement agreement is described more fully in,
and attached as an exhibit to, Air T’s Form 8-K filed today with the SEC.

About Air T

Air T, through its subsidiaries, provides overnight air freight service to the
express delivery industry, manufactures and sells aircraft deicers and other
special purpose industrial equipment, and provides ground support equipment and
facilities maintenance to airlines.  Air T is one of the largest, small-aircraft
air cargo operators in the United States.  Air T's Mountain Air Cargo (MAC) and
CSA, Air subsidiaries currently operate a fleet of single and twin-engine
turbo-prop aircraft nightly in the eastern half of the United States, Puerto
Rico and the Caribbean Islands.  Air T's Global Ground Support subsidiary
manufactures deicing and other specialized military and industrial equipment and
is one of the largest providers of deicers in the world.  The Global Aviation
Services subsidiary provides ground support equipment and facilities maintenance
to domestic airline customers.

CERTAIN INFORMATION CONCERNING PARTICIPANTS

Air T, Inc. (“Air T”) will file a proxy statement in connection with its 2013
annual meeting of stockholders.  Air T stockholders are strongly advised to read
the proxy statement and the accompanying proxy card when they become available,
as they will contain important information.  Stockholders will be able to obtain
this proxy statement, any amendments or supplements to the proxy statement and
other documents filed by Air T with the Securities and Exchange Commission for
free at the Internet website maintained by the Securities and Exchange
Commission at http://www.sec.gov.  Copies of the proxy statement and any
amendments and supplements to the proxy statement will also be available for
free at Air T’s website, http://www.airt.net, or by writing to Air T, Inc., Post
Office Box 488, Denver, North Carolina 28037, Attention: Corporate Secretary.

Air T, its current directors and executive officers and nominees for election as
director at Air T’s 2013 annual meeting of stockholders (which directors,
executive officers and nominees are Seth G. Barkett, Sam Chesnutt, Allison T.
Clark, Walter Clark, John J. Gioffre,  Andrew L. Osborne, John Parry, George C.
Prill, William H. Simpson, Nicholas J. Swenson, Dennis A. Wicker and J. Bradley
Wilson) may be deemed to be participants in the solicitation of proxies for Air
T’s 2013 annual meeting of stockholders.  Detailed information regarding the
affiliations and interests of Air T’s current directors and executive officers
is available in the proxy statement for Air T’s 2012 annual meeting of
stockholders filed with the Securities and Exchange Commission on July 20, 2012
(which information is supplemented by the subsequent election of Mr. Wilson as
Chairman of the Board of Directors, succeeding Mr. Walter Clark in that
position, and subsequent amendments on Schedule 13D/A filed by AO Partners et
al. with respect to Mr. Swenson).  Detailed information regarding the
affiliations and interests of Mr. Barkett and Mr. Osborne are included in the
Schedule 13D/A of AO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
Partners et al. (Amendment No. 11) filed on May 8, 2013 with the Securities and
Exchange Commission and AO Partners’ Notice of Intent to Nominate Directors
attached as Exhibit 5.6 thereto.  In addition, the following table sets forth
information regarding the beneficial ownership of shares of common stock of Air
T by each of these directors, executive officer and director nominees of Air T
and by all directors, executive officers and director nominees of Air T as a
group as of June 5, 2013.  Each person named in the table has sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned.

     
Shares and Percent of
Common Stock Beneficially
 Owned as of June 5, 2013
 
Name
Position with Company
 
No. of Shares
   
Percent
                 
Seth G. Barkett
Nominee
    0       *  
Sam Chesnutt                                       
Director
    2,500 (1)     *  
Allison T. Clark                                       
Director
    23,000 (1)     *  
Walter Clark                                       
Chief Executive Officer,  Director and Nominee
    143,627 (1)     5.8 %
John J. Gioffre                                       
Director and Nominee
    5,027 (1)     *  
Andrew L. Osborne
Nominee
    0       *  
John Parry                                       
Vice President-Finance, Chief Financial Officer, Secretary, Treasurer and
Director
    16,502 (1)     *  
William H. Simpson                                       
Executive Vice President and Director
    31,604 (1)     1.3 %
Nicholas J. Swenson
Director and Nominee
    366,200 (1)(2)     14.9 %
George C. Prill                                       
Director
    3,500 (1)     *  
Dennis A. Wicker                                       
Director
    3,500 (1)     *  
J. Bradley Wilson                                       
Chairman of the Board
    2,500 (1)     *  
All such directors, executive officers and director nominees as a group (12
persons)
      597,960 (1)     24.4 %

______________________
*           Less than one percent.
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
(1)           Includes shares which the following executive officers and
directors have the right to acquire within 60 days through the exercise of stock
options issued by Air T: Mr. Walter Clark, 50,000 shares; Mr. Parry, 15,000
shares; Mr. Simpson, 30,000 shares; Mr. Swenson, 2,500 shares; Mr. Chesnutt,
2,500 shares; Mr. Allison Clark, 2,500 shares; Mr. Gioffre, 2,500 shares; Mr.
Prill, 2,500 shares; Mr. Wicker, 3,500 shares; Mr. Wilson, 2,500 shares; all
such directors and executive officers as a group, 113,500 shares.

(2) Includes 363,700 shares over which Mr. Swenson reports shared voting and
investment power as managing member of AO Partners, LLC, the general partner of
AO Partners I, L.P.