Exhibit 10.5

THIS FORM OF AWARD AGREEMENT IS PART OF A PROSPECTUS

COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933

AIR TRANSPORT SERVICES GROUP, INC.

AMENDED AND RESTATED

2005 LONG-TERM INCENTIVE PLAN

PERFORMANCE-BASED STOCK UNITS

GRANTED TO [NAME] ON [DATE]

Air Transport Services Group, Inc. (“Company”) and its shareholders believe that
their business interests are best served by extending to you an opportunity to
earn additional compensation based on the growth of the Company’s business. To
this end, the Company and its shareholders adopted the Air Transport Services
Group, Inc. 2005 Long-Term Incentive Plan (“Plan”) as a means through which you
may share in the Company’s success. This is done by granting Awards to key
employees like you. If you satisfy the conditions described in this Agreement
(and the Plan), your Award will mature into common shares of the Company.

This Award Agreement describes many features of your Award and the conditions
you must meet before you may receive the value associated with your Award. To
ensure you fully understand these terms and conditions, you should:

 

  •  

Read the Plan and the Plan’s Prospectus carefully to ensure you understand how
the Plan works;

 

  •  

Read this Award Agreement carefully to ensure you understand the nature of your
Award and what must happen if you are to earn it; and

 

  •  

Contact W. Joseph Payne at (937) 382-5591 ext. 62686 if you have any questions
about your Award.

Also, no later than [Date], you must return a signed copy of the Award Agreement
to:

W. Joseph Payne

Air Transport Services Group, Inc.

145 Hunter Drive

Wilmington, Ohio 45177

If you do not do this, your Award will be revoked automatically as of the date
it was granted and you will not be entitled to receive anything on account of
the retroactively revoked Award.

Section 409A of the Internal Revenue Code (“Section 409A”) imposes substantial
penalties on persons who receive some forms of deferred compensation (see the
Plan’s Prospectus for more information about these penalties). Your Award has
been designed to avoid these penalties. As a condition of accepting this Award,
you must agree to accept any revisions that the Company subsequently determines
to be necessary in order for you to avoid these penalties, without any further
consideration, even if those revisions change the terms of your Award and reduce
its value or potential value.

 

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1. Nature of Your Award

You have been granted an Award consisting of stock units, which will be
converted to common shares of the Company if the conditions described in this
Award Agreement are met. Federal income tax rules apply to the payment of your
Award. These and other conditions affecting your Award are described in this
Award Agreement, the Plan and the Plan’s Prospectus, all of which you should
read carefully.

No later than [Date], you must return a signed copy of this Award Agreement to:

W. Joseph Payne

Air Transport Services Group, Inc.

145 Hunter Drive

Wilmington, Ohio 45177

If you do not do this, your Award will be revoked automatically as of the Grant
Date and you will not be entitled to receive anything on account of the
retroactively revoked Award.

 

  a. Grant Date: Your Performance Units were issued on [Date].

This is the date you begin to earn your Award.

 

  b. Amount of Award: The amount of your Award and the conditions that must be
met before it will be earned are discussed below in the section below titled
“When Your Award Will Be Settled.”

 

  c. Performance Period: The period that begins on January 1, 2010, and ends on
December 31, 2012.

This is the period over which the Plan committee will determine if you have met
the conditions imposed on your Award.

2. When Your Award Will Be Settled

 

  a. In General: At the end of the Performance Period, your stock units will be
converted to an equal number of common shares of the Company or forfeited
depending on:

 

  •  

The extent to which the appreciation of the Company stock during the Performance
Period equals or exceeds the Total Shareholder Return (“TSR”) performance of the
NASDAQ Transportation Index during the same period (these stock units are
referred to as “Stock Performance Units”); and

 

  •  

How the Company’s Average Return on Invested Capital for the Performance Period
compares to the levels specified in the table below (these stock units are
referred to as “ROIC Units”).

The tables below demonstrate how these criteria will affect your Award. However,
before analyzing those tables, it is important that you understand that:

 

  •  

Separate criteria are applied to each of the parts of your Award. This means
that you might earn Stock Performance Units at the threshold level but earn your
ROIC Units at the maximum level.

 

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  •  

The NASDAQ Transportation Index is a group comprised of transportation
corporations whose stock is traded on the NASDAQ.

 

  •  

“Average ROIC” is equal to the sum of the Company’s ROIC for each fiscal year
that began during the Performance Period and ending on December 31, 2012,
divided by three.

 

  •  

The Company shall determine its “ROIC” for each fiscal year beginning January 1
and ending each December 31 during the Performance Period, by dividing the NOPAT
for such period by Invested Capital for such period, as such terms are defined
below.

 

  •  

The Company’s “NOPAT” for any fiscal year will be equal to the Company’s net
operating profit after taxes based on the Company’s financial statements for
such year. The Company’s Board of Directors may exclude any extraordinary,
non-recurring items from the determination of NOPAT for any period, in its
discretion.

 

  •  

The Company’s “Invested Capital” for any fiscal year is the result obtained by
adding the Company’s operating assets and net fixed assets and subtracting its
operating current liabilities, all determined as of December 31 of such year.

 

  b. Your Stock Performance Units: You will earn or forfeit all or part of your
Stock Performance Units depending on the extent to which the criteria described
in the following table are met.

 

If, on December 31, 2007, the

Company’s stock performance is

 

You will receive the following number of

shares of Company stock

Below the 40th percentile of the NASDAQ Transportation Index   0 At the 40th
percentile of the NASDAQ Transportation Index (“threshold Stock Performance Unit
level”)   [Number]* At the 50th percentile of the NASDAQ Transportation Index
(“target Stock Performance Unit level”)   [Number]* At the 75th or higher
percentile of the NASDAQ Transportation Index (“maximum Stock Performance Unit
Level”)   [Number]*

 

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*

Note: For performance outcomes between the 40th percentile and the 75th
percentile levels, actual awards will be interpolated.

 

  c. Your ROIC Units: You will earn or forfeit all or part of your ROIC Units
depending on the extent to which the criteria described in the following table
are met.

 

If, over the Performance Period, the

Company’s Average Return on

Invested Capital is

 

You will receive the following number of

shares of Company stock

Less than 8%   0 8% (“threshold ROIC Unit level”)   [Number]* 10% (“target ROIC
Unit level”)   [Number]* 12% or higher (“maximum ROIC Unit level”)   [Number]*

 

* Note: For performance outcomes between the 8% ROIC and 12% ROIC levels, actual
awards will be interpolated.

As noted above, between the threshold and maximum performance levels, actual
awards will be calculated by interpolating between the ranges shown in the
preceding tables. This interpolation will be done only in whole increments (full
percentiles for the Stock Performance Units and percentages to the nearest 10th
for the ROIC Units) and will not be applied below the threshold level or above
the maximum level.

Example 1: Assume that the Company’s Average Return on Invested Capital for the
Performance Period is 11 percent (one full percentage point above the lowest
range of the “target ROIC Unit level”). In this case, you will receive [Number]
shares of Company stock (because whole percentages between the threshold and
maximum levels are interpolated).

Example 2: Assume that the Company’s Average Return on Invested Capital for the
Performance Period is 13 percent (one full percentage point above the “maximum
ROIC Unit level”). In this case, you still will receive [Number] shares of
Company stock (because no interpolation is applied above the maximum level).

Example 3: Assume that the Company’s Average Return on Invested Capital for the
Performance Period is 7 percent (one full percentage point below the lowest
range of the “threshold ROIC Unit level”). In this case, all of the ROIC Units
will be forfeited (because no interpolation is applied below the threshold
level).

Example 4: Assume that the Company’s Average Return on Invested Capital for the
Performance Period is 8.7 percent (seven-tenths of a percentage point above the
lowest range of the “target ROIC Unit level”). In this case, you still will
receive [Number] shares of Company stock (based on interpolation between the
threshold and target level).

 

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  d. How Your Performance Units Might Be Settled Before the End of the
Performance Period: If there is a Business Combination (as defined in the Plan)
while you are employed, all performance criteria will be deemed to have been met
at the threshold level or at any higher level actually achieved as of the date
of the Business Combination (“Accelerated Units”) and you will receive cash or
stock (depending on the nature of the Business Combination) as if the
Performance Period ended on the date of the Business Combination. The amount you
will receive will be determined under the following formula:

Your Accelerated Units multiplied by the number of whole months between the
beginning of the Performance Period and the date of the Business Combination

Divided by the number of whole months in the Performance Period

 

  e. How Your Performance Units Are Settled if You Die, Retire or Become
Disabled Before the End of the Performance Period: If your employment terminates
before the end of the Performance Period (and before a Business Combination)
because of death, disability (as defined in the Plan) or after qualifying for
retirement under the company retirement plan to which you are subject, you may
receive a portion of your Award. The amount (if any) you will receive will
depend on whether (and the extent to which) the performance criteria are met at
the end of the Performance Period, not when you terminate employment. If the
performance criteria are met at the end of the Performance Period during which
you terminate because of death, disability or retirement, you (or your
beneficiary) will receive the number of shares you would have received if you
had remained actively employed until the end of that Performance Period
multiplied by the number of whole years (i.e., elapsed 12-consecutive-month
periods) between the first day of the Performance Period and the date you
terminate employment because of death, retirement or disability and divided by
the number of whole years (i.e., elapsed 12-consecutive-month periods included
in the Performance Period).

 

  f. How Your Performance Units May Be Forfeited: You will forfeit your
Performance Units if, before your Performance Units are settled:

 

  •  

You terminate employment voluntarily (and before you are eligible for
retirement) or if you are involuntarily terminated by the Company for any reason
(or for no reason) before the Normal Settlement Date (and you are not then
eligible for retirement);

 

  •  

You commit any act of fraud, intentional misrepresentation, embezzlement,
misappropriation or conversion of any of the Company’s or any Subsidiary’s (as
defined in the Plan) assets or business opportunities;

 

  •  

You are convicted of, or enter into a plea of nolo contendere to, a felony;

 

  •  

You intentionally, repeatedly or continually violate any of the Company’s
policies or procedures after notice that you have violated a Company policy or
procedure;

 

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  •  

You breach any written covenant or agreement with the Company or any Subsidiary,
including the terms of the Plan;

 

  •  

Without the Company’s advance written consent, you agree to or actually serve in
any capacity for a business or entity that competes with any portion of the
Company’s or any Subsidiary’s (as defined in the Plan) business or provide
services (including business consulting) to an entity that competes with any
portion of the Company’s or any Subsidiary’s business;

 

  •  

You refuse or fail to consult with, supply information to or otherwise cooperate
with the Company after having been requested to do so; or

 

  •  

You deliberately engage in any action that the Company decides harms the Company
or any Subsidiary.

3. Settling Your Award

If all applicable conditions have been met, your Performance Units will be
settled within 60 days following the end of the Performance Period.

4. Other Rules Affecting Your Award

 

  a. Rights During the Performance Period: During the Performance Period, you
will not actually own the shares that you might receive at the end of the
Performance Period. This means that you may not exercise any voting rights or
receive any dividends associated with those shares until your Award is settled.

 

  b. Beneficiary Designation: You may name a Beneficiary or Beneficiaries to
receive any shares associated with your Performance Units that are settled after
you die. This may be done only on the attached Beneficiary Designation Form and
by following the rules described in that form and in the Plan. If you have not
made an effective Beneficiary designation, your Beneficiary will be your
surviving spouse or, if you do not have a surviving spouse, your estate.

 

  c. Tax Withholding: Income taxes must be withheld when your Award is settled
(see the Plan’s Prospectus for a discussion of the tax treatment of your Award).
These taxes may be paid in one of several ways. They are:

 

  •  

The Company may withhold this amount from other amounts owed to you (e.g., from
your salary).

 

  •  

You may pay these taxes by giving the Company a check (payable to “Air Transport
Services Group, Inc.”) in an amount equal to the taxes that must be withheld.

 

  •  

By having the Company withhold a portion of the shares that otherwise would be
distributed. The number of shares withheld will have a fair market value equal
to the taxes that must be withheld.

 

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  •  

You may give the Company other shares of Company stock (that you have owned for
at least six months) with a value equal to the taxes that must be withheld.

You may choose the approach you prefer, although the Company may reject your
preferred method for any reason (or for no reason). If this happens, the Company
will specify (from among the alternatives just listed) how these taxes are to be
paid.

If you do not choose a method within 30 days of the Settlement Date, the Company
will withhold a portion of the shares that otherwise would be distributed. The
number of shares withheld will have a fair market value equal to the taxes that
must be withheld and the balance of the shares will be distributed to you.

 

  d. Transferring Your Performance Units: Normally your Performance Units may
not be transferred to another person. However, you may complete a Beneficiary
Designation Form to name the person to receive any stock that is distributed
after you die. Also, the Committee may allow you to place your Performance Units
into a trust established for your benefit or the benefit of your family. Contact
W. Joseph Payne at (937) 382-5591 ext. 62686 or at the address given below if
you are interested in doing this.

 

  e. Governing Law: This Award Agreement will be construed in accordance with
and governed by the laws (other than laws governing conflicts of laws) of the
United States and of the State of Ohio, except to the extent that the Delaware
General Corporation Law is mandatorily applicable.

 

  f. Other Agreements: Also, your Performance Units will be subject to the terms
of any other written agreements between you and the Company.

 

  g. Adjustments to Your Performance Units: Your Award will be adjusted, if
appropriate, to reflect any change to the Company’s capital structure (e.g., the
number of your Performance Units will be adjusted to reflect a stock split).

 

  h. Other Rules: Your Stock Performance Units are also subject to more rules
described in the Plan and in the Plan’s Prospectus. You should read both these
documents carefully to ensure you fully understand all the conditions of this
Award.

5. Tax Treatment of Your Award

The federal income tax treatment of your Performance Units is discussed in the
Plan’s Prospectus.

*****

You may contact W. Joseph Payne at (937) 382-5591 ext. 62686 or at the address
given below if you have any questions about your Award or this Award Agreement.

****

 

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6. Your Acknowledgment of Award Conditions

Note: You must sign and return a copy of this Award Agreement to W. Joseph Payne
at the address given below no later than [Date].

By signing below, I acknowledge and agree that:

• A copy of the Plan has been made available to me;

 

  •  

I have received a copy of the Plan’s Prospectus;

 

  •  

I understand and accept the conditions placed on my Award and understand what I
must do to earn my Award;

 

  •  

I will consent (on my own behalf and on behalf of my beneficiaries and without
any further consideration) to any change to my Award or this Award Agreement to
avoid paying penalties under Section 409A of the Internal Revenue Code, even if
those changes affect the terms of my Award and reduce its value or potential
value; and

 

  •  

If I do not return a signed copy of this Award Agreement to the address shown
below not later than [Date], my Award will be revoked automatically as of the
date it was granted and I will not be entitled to receive anything on account of
the retroactively revoked Award.

 

[Name]  

 

(signature)   Date signed:  

 

A signed copy of this form must be sent to the following address no later than
[Date]:

W. Joseph Payne

Air Transport Services Group, Inc.

145 Hunter Drive

Wilmington, Ohio 45177

After it is received, the Air Transport Services Group, Inc. 2005 Long-Term
Incentive Plan Committee will acknowledge receipt of your signed agreement.

 

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*****

Committee’s Acknowledgment of Receipt

A signed copy of this Award Agreement was received on
                                .

 

By:  

 

[Name]:  

             Has complied with the conditions imposed on the grant and the Award
and the Award Agreement remains in effect; or

             Has not complied with the conditions imposed on the grant and the
Award and the Award Agreement are revoked as of the Grant Date because

 

 

describe deficiency

Air Transport Services Group, Inc. 2005 Long-Term Incentive Plan Committee

 

By:  

 

Date:  

 

Note: Send a copy of this completed form to W. Joseph Payne and keep a copy as
part of the Plan’s permanent records.

 

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AIR TRANSPORT SERVICES GROUP, INC.

AMENDED AND RESTATED

2005 LONG-TERM INCENTIVE PLAN

BENEFICIARY DESIGNATION FORM

RELATING TO PERFORMANCE STOCK UNITS ISSUED TO [NAME] ON [DATE]

Instructions for Completing This Form

You may use this form to [1] name the person you want to receive any amount due
under the Air Transport Services Group, Inc. 2005 Long-Term Incentive Plan after
your death or [2] change the person who will receive these benefits.

There are several things you should know before you complete this form.

First, if you do not elect another Beneficiary, any amount due to you under the
Plan when you die will be paid to your surviving spouse or, if you have no
surviving spouse, to your estate.

Second, your election will not be effective (and will not be implemented) unless
you complete all applicable portions of this form.

Third, your election will be effective only if this form is completed properly
and returned to W. Joseph Payne at the address given below.

Fourth, all elections will remain in effect until they are changed (or until all
death benefits are paid).

Fifth, if you designate your spouse as your Beneficiary but are subsequently
divorced from that person (or your marriage is annulled), your Beneficiary
designation will be revoked automatically.

Sixth, if you have any questions about this form or if you need additional
copies of this form, please contact W. Joseph Payne at (937) 382-5591 ext. 62686
or at the address given below.

 

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Designation of Beneficiary

1.01 Primary Beneficiary:

I designate the following persons as my Primary Beneficiary or Beneficiaries to
receive any amount due under the Award Agreement described at the top of this
form after my death. This benefit will be paid, in the proportion specified, to:

 

                 % to   

 

   (Name)    (Relationship)

 

Address:

  

 

 

                 % to   

 

   (Name)    (Relationship)

 

Address:

  

 

 

                 % to   

 

   (Name)    (Relationship)

 

Address:

  

 

 

                 % to   

 

   (Name)    (Relationship)

 

Address:

  

 

1.02 Contingent Beneficiary

If one or more of my Primary Beneficiaries dies before I die, I direct that any
amount due under the Award Agreement described at the top of this form after my
death:

             Be paid to my other named Primary Beneficiaries in proportion to
the allocation given above (ignoring the interest allocated to the deceased
Primary Beneficiary); or

             Be distributed among the following Contingent Beneficiaries.

 

                 % to   

 

   (Name)    (Relationship)

 

Address:

  

 

 

                 % to   

 

   (Name)    (Relationship)

 

Address:

  

 

 

                 % to   

 

   (Name)    (Relationship)

 

Address:

  

 

 

                 % to   

 

   (Name)    (Relationship)

 

Address:

  

 

 

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****

Elections made on this form will be effective only after this form is received
by W. Joseph Payne and only if it is fully and properly completed and signed.

Name: [Name]

 

Soc. Sec. No.:

  

 

 

Date of Birth:   

 

 

Address:   

 

 

 

Sign and return this form to W. Joseph Payne at the address given below

 

 

    

 

Date      Signature

Return this signed form to W. Joseph Payne at the following address:

W. Joseph Payne

Air Transport Services Group, Inc.

145 Hunter Drive

Wilmington, Ohio 45177

 

Received on:  

 

By:  

 

 

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