EXHIBIT 10.1
 
EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT (“Agreement”), made and entered into as of the 8th day
of July 2005, by and between WALTER CLARK, an individual resident of North
Carolina (“Employee”), and AIR T, INC., a Delaware corporation (the “Company”).
 
Background Statement
 
The Company, through its subsidiaries, is one of the largest contract
carriers providing overnight air cargo services to the air express delivery
industry and is a leading manufacturer and service provider with respect to
military, airline and airport ground support equipment, including mobile
deicing/decontamination equipment, catering/cabin service trucks and fixed
pedestal-mounted deicing systems. Employee has served as Chief Executive Officer
of the Company and has agreed to continue employment with the Company pursuant
to the terms of this Agreement. Employee has or will be exposed to various
information, data, methods, processes, software and systems of the Company, many
of which are proprietary to the Company. The Company’s fiscal year end is March
31.

Statement of Agreement

In consideration of the mutual covenants herein, Employee and the Company agree
as follows:

1.    Employment. The Company agrees to employ Employee, and Employee agrees to
serve the Company, upon the terms and conditions set forth in this Agreement.

2.    Position and Responsibilities. The Company shall employ the Employee as
its Chief Executive Officer and the Employee’s duties shall include all legal
duties of a character in keeping with and incidental to such executive position.
The Employee shall perform all legal duties, services and acts necessary to
assist in the management, conduct and operation of the Company and its
subsidiaries and shall perform such other legal duties as may be reasonably
assigned to him from time to time by the Board of Directors of the Company (the
“Board”).

3.    Term of Employment. Subject to Section 6 of this Agreement, the term of
Employee’s employment hereunder shall commence immediately and shall continue
for two years; provided that on each anniversary of the date of this Agreement
the term of Employee’s employment hereunder shall be extended for an additional
year beyond the scheduled date of expiration unless notice of termination of
continued extensions of the period of Employee’s employment hereunder is
provided by Employee to the Company, or by the Company to Employee, within 90
days prior to such anniversary of the date of this Agreement (the term of
Employee’s employment pursuant to this Agreement being referred to herein as the
“Period of Employment”). For purposes of clarification, the foregoing sentence
has the effect of establishing a rolling two-year scheduled Period of Employment
term under this Agreement on each
 

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anniversary of the date of this Agreement absent timely notice from one party to
the other of termination of continued extension of the scheduled Period of
Employment term prior to the anniversary date, and, if such notice is timely
provided in advance of an anniversary date, the remaining scheduled Period of
Employment term on that anniversary date would be one year.

4.    Duties. During the Period of Employment, Employee shall devote all of his
business time, attention, skills and efforts to the business of the Company and
the faithful performance of his duties hereunder; provided, however, that with
the approval of the Board, Employee may engage in such other activities that, in
the Board’s judgment, will not present any conflict of interest with the Company
or any affiliate of the Company (a “Company Affiliate”) or adversely affect the
performance of Employee’s duties pursuant to this Agreement. In the performance
of his duties, Employee shall at all times be subject to the control,
supervision and review of the Board.

5.    Compensation and Benefits. For all services rendered by the Employee to
the Company in any capacity under this Agreement, the Company shall compensate
Employee during the Period of Employment as follows:

(a)    Base Salary. The Company shall pay Employee an annual salary that is no
less than a base salary (the “Base Salary”) of $200,000 per year, subject to
applicable federal and state income and social security tax withholding
requirements. During the Period of Employment, the Base Salary may be increased
as determined by the Board or its Compensation Committee. Employee’s salary
shall be payable in accordance with the Company’s customary payroll practices.

(b)    Incentive Compensation. The Company shall pay to the Employee incentive
compensation equal to two percent (2%) of the annual consolidated net income
before income taxes or extraordinary items of the Company and its subsidiaries
as reported by the Company in its Annual Report on Form 10-K (the “Form10-K”)
for the applicable year. Such incentive compensation payment shall be subject to
applicable withholding for taxes. Amounts payable under this subparagraph, if
any, shall be paid within fifteen (15) days after the Company files its 10-K
with the Securities and Exchange Commission. Amounts otherwise payable hereunder
shall be prorated for a partial year's employment in the event Employee's
employment is terminated or ceases during the course of the Company’s fiscal
year. Employee shall also be eligible to participate in such other incentive
compensation plans, including cash profit-sharing and bonus plans and stock
option plans, as the Board or its Compensation Committee may from time to time
determine.

(c)    Employee Benefit Plans or Arrangements. Employee shall be eligible to
participate in such other employee benefit plans of the Company, as presently in
effect or as they may be modified or added to from time to time, including,
without limitation, plans providing retirement benefits, medical insurance, life
insurance, disability insurance, and accidental death or dismemberment
insurance, subject to satisfaction of minimum term of service or other
requirements set forth in such plans.
 

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(d)    Vacation and Sick Leave. Employee shall be entitled to four weeks paid
vacation per year and sick leave in accordance with the Company’s policies as
adopted from time to time.

(e)    Reimbursement of Expenses. The Company shall pay or reimburse Employee
for all reasonable travel and other business expenses incurred by him in
performing his duties under this Agreement. Such expenses shall be appropriately
documented and submitted to the Company in accordance with the Company’s
policies in effect from time to time.

(f)    Perquisites. During the Period of Employment, Employee shall be entitled
to personal use of corporate passenger aircraft. Employee shall not be required
to reimburse the Company for the cost of his personal use of such aircraft to
the extent the Company’s cost of Employee’s personal use of such aircraft does
not exceed $50,000 in any fiscal year. Employee shall reimburse the Company for
the cost of his personal use of such aircraft to the extent the Company’s cost
of Employee’s personal use of such aircraft exceeds $50,000 in any fiscal year.

6.    Termination of Employment.

(a)    Termination by Company. The Company shall have the right to terminate
Employee’s employment under this Agreement upon the death or Disability (as
defined below) of Employee or for Cause (as defined below) without any further
obligation to Employee under this Agreement. Termination for Disability or for
Cause will be effective upon delivery of written notice of such termination to
Employee.

(i)    “Disability” means any impairment of mind or body that renders Employee
unable to perform his normal duties and functions hereunder for a continuous
period of at least three months or is likely to prevent Employee from performing
such duties and functions for more than six months during any 18-month period,
as determined in good faith by a physician selected by the Board. Any refusal by
Employee to submit to a medical examination for the purpose of certifying
Disability under this Section shall be deemed conclusively to constitute
evidence of Employee’s Disability.

(ii)    “Cause” means (A) the repeated failure of Employee to perform his duties
hereunder or the lawful directives of the Board; (B) the commission of an act by
Employee constituting financial dishonesty against the Company or any Company
Affiliate; (C) any knowing falsification of information to be submitted by or on
behalf of the Company or any Company Affiliate to Federal Express Corporation or
the Federal Aviation Administration, United States Department of Defense or
other governmental authority; (D) the failure to cooperate in any investigation
by Federal Express Corporation or the Federal Aviation Administration, United
States Department of Defense or other governmental authority of the Company or
any Company Affiliate or any internal investigation by the Company, including by
the Board or any committee of the Board; (E) the commission of an act by
Employee involving a felony; (F) the commission of an act by Employee involving
moral turpitude that brings the Company or any Company Affiliate into public
disrepute or disgrace or causes material harm to the customer relations,
operations or business prospects of the Company or any Company Affiliate.

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(b)    Termination Without Cause. The Company shall have the right to terminate
Employee’s employment hereunder at any time for any reason subject to the
provisions of this Section 6(b). In the event the Company shall terminate the
Employee for any reason other than as provided in Section 6(a) (which the
Company may do at anytime in its sole discretion), the Company shall pay to
Employee his Base Salary, less applicable withholding for taxes, for a period of
two years and six months commencing on the date of termination of employment
hereunder (the “Severance Period”). The Company, at its option, may pay such
amounts either (i) in installments in the amounts and on the payment dates on
which such Base Salary would have been paid if Employee had continued as an
employee of the Company or (ii) as a single payment not later than 60 days after
the date of termination, in which event the single payment shall be in an amount
equal to the net present value (at an 8% discount rate) of the total amount of
such payments. In addition, during the Severance Period, the Company shall, to
the extent permitted by the terms of its insurance policies, continue to provide
all health and welfare benefits provided on the date of termination of
employment, and in the event that continuation of health benefits are not
permitted under the terms of the Company’s health insurance policies, if the
Employee elects to purchase group health insurance coverage under federal law
(COBRA), then the Company shall pay the premiums for such COBRA coverage for the
Severance Period. Thereafter, the Employee may elect to purchase COBRA coverage
at his own expense. Such payments pursuant to this Section 6(b) shall be
Employee’s only remedy with respect to such termination.

(c)    Termination by Employee. Employee shall have the right to terminate his
employment under this Agreement at any time for any reason upon delivery of
written notice to the Company. In the event that, at any time within twelve
months following a Change in Control (as defined below), Employee terminates his
employment under this agreement for Good Reason (as defined below), as specified
in the written notice of termination given by Employee to the Company, the
Company shall pay to Employee his Base Salary, less applicable withholding for
taxes, for the Severance Period. The Company, at its option, may pay such
amounts either (i) in installments in the amounts and on the payment dates on
which such Base Salary would have been paid if Employee had continued as an
employee of the Company or (ii) as a single payment not later than 60 days after
the date of termination, in which event the single payment shall be in an amount
equal to the net present value (at an 8% discount rate) of the total amount of
such payments. In addition, during the Severance Period, the Company shall, to
the extent permitted by the terms of its insurance policies, continue to provide
all health and welfare benefits provided on the date of termination of
employment, and in the event that continuation of health benefits are not
permitted under the terms of the Company’s health insurance policies, if the
Employee elects to purchase COBRA coverage, then the Company shall pay the
premiums for such COBRA coverage for the Severance Period. Thereafter, the
Employee may elect to purchase COBRA coverage at his own expense. Such payments
pursuant to this Section 6(c) shall be Employee’s only rights with respect to
such termination. A termination by Employee for Good Reason in accordance with
the second sentence of this Section 6(c) shall not be deemed a voluntary
termination of employment by Employee for the purpose of this Agreement or any
plan or practice of the Company or its affiliates.

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(d)    Definition of “Change in Control”. “Change in Control” shall mean:

(i)    An acquisition of any common stock, par value $0.25 per share, of the
Company (“Common Stock”) or other Voting Securities (as defined below) by any
“Person” (as the term person is used for purposes of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)),
immediately after which such Person has “Beneficial Ownership” (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty percent
(30%) or more of either (A) the then-outstanding Common Stock or (B) the
combined voting power of the Company’s then-outstanding voting securities
entitled to vote for the election of directors (the “Voting Securities”);
provided, however, in determining whether a Change in Control has occurred,
Common Stock or Voting Securities which are acquired in a “Non-Control
Acquisition” (as defined below) shall not constitute an acquisition which would
cause a Change in Control. A “Non-Control Acquisition” shall mean an acquisition
of Common Stock (A) directly from the Company, (B) by an employee benefit plan
(or a trust forming a part thereof) maintained by (x) the Company or (y) any
corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or indirectly, by
the Company (for purposes of this definition, a “Related Entity”), (C) by the
Company or any Related Entity, or (D) by any Person in connection with a
“Non-Control Transaction” (as defined below);

(ii)    The individuals who, as of the date hereof, are members of the Board
(the “Incumbent Board”), cease for any reason to constitute at least a majority
of the members of the Board, or following a Merger (as defined below), the board
of directors of the ultimate Parent Corporation (as defined below); provided,
however, that if the election, or nomination for election by the Company’s
common stockholders, of any new director was approved by a vote of a majority of
the Incumbent Board, such new director shall, for purposes of this Agreement, be
considered as a member of the Incumbent Board; provided, further, however, that
no individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of an actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board (a “Proxy Contest”), including by reason of any agreement intended to
avoid or settle any Proxy Contest; or

(iii)    The consummation of:

(A)    A merger, consolidation or reorganization with or into the Company, or in
which securities of the Company are issued (a “Merger”), unless the Merger is a
“Non-Control Transaction.” A “Non-Control Transaction” shall mean a Merger in
which:
 

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(1)    the stockholders of the Company immediately before such Merger own
directly or indirectly immediately following the Merger at least fifty percent
(50%) of the outstanding common stock and the combined voting power of the
outstanding voting securities of (x) the corporation resulting from such Merger
(the “Surviving Corporation”), if fifty percent (50%) or more of the combined
voting power of the then outstanding voting securities of the Surviving
Corporation is not Beneficially Owned, directly or indirectly by another
corporation (a “Parent Corporation”), or (y) if there is one or more Parent
Corporations, the ultimate Parent Corporation;

(2)    the individuals who were members of the Incumbent Board immediately prior
to the execution of the agreement providing for the Merger, constitute at least
a majority of the members of the board of directors of, (x) the Surviving
Corporation, if fifty percent (50%) or more of the combined voting power of the
then outstanding voting securities of the Surviving Corporation is not
Beneficially Owned, directly or indirectly by a Parent Corporation, or (y) if
there is one or more Parent Corporations, the ultimate Parent Corporation; and

(3)    no Person other than the Company, any Related Entity, or any employee
benefit plan (or any trust forming a part thereof) that, immediately prior to
the Merger, was maintained by the Company or any Related Entity, or any Person
who, immediately prior to the Merger had Beneficial Ownership of thirty percent
(30%) or more of the then outstanding Common Stock or Voting Securities, has
Beneficial Ownership, directly or indirectly, of thirty percent (30%) or more of
the combined voting power of the outstanding voting securities or common stock
of (x) the Surviving Corporation, if fifty percent (50%) or more of the combined
voting power of the then outstanding voting securities of the Surviving
Corporation is not Beneficially Owned, directly or indirectly by a Parent
Corporation, or (y) if there is one or more Parent Corporations, the ultimate
Parent Corporation; or

(B)    A complete liquidation or dissolution of the Company; or

(C)    The direct or indirect sale or other disposition of all or substantially
all of the assets of the Company to any Person (other than a transfer to a
Related Entity or under conditions that would constitute a Non-Control
Transaction (with the disposition of assets being regarded as a Merger for this
purpose) or the distribution to the Company’s stockholders of the stock of a
Related Entity or any other assets).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the “Subject Person”) acquired Beneficial Ownership
of more than the permitted amount of the then outstanding Common Stock or Voting
Securities as a result of the acquisition of Common Stock or Voting Securities
by the Company which, by reducing the number of Common Stock or Voting
Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
 

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acquisition of Common Stock or Voting Securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Common Stock or Voting Securities which increases the
percentage of the then outstanding Common Stock or Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control shall occur.

(e)    Definition of “Good Reason”. “Good Reason” shall mean:

(i)    without Employee’s consent, (A) the assignment to Employee of any new
duties or responsibilities substantially inconsistent in character with
Employee’s duties and responsibilities within the Company immediately prior to a
Change in Control, (B) any substantial adverse change in Employee’s duties and
responsibilities as in effect immediately prior to a Change in Control,
including, but not limited to, a reduction in duties or responsibilities that
occurs because the Company is no longer an independent publicly-held entity, (C)
a change in any annual or long term incentive plan in which Employee
participated immediately prior to the Change in Control such that Employee’s
opportunity, in the aggregate, to earn incentive compensation is materially
impaired, or (D) any substantial increase in Employee’s obligation to travel on
the Company’s business over Employee’s business travel obligations during the
year prior to the Change in Control;

(ii)    the failure of the Company to comply with any of its obligations under
Section 5 of this Agreement;

(iii)    without Employee’s consent, the relocation of Employee’s work site to a
location that is more than fifty (50) miles from the offices of the Company at
which Employee was employed immediately prior to the Change in Control, or the
failure of the Company to pay or reimburse Employee, in accordance with the
Company’s relocation policy for its employees in existence immediately prior to
a Change in Control, for all reasonable costs and expenses, plus “gross ups,” if
any, referred to in such policy incurred by Employee relating to a change of
Employee’s principal residence in connection with any such relocation to which
Employee consents.

7.    Confidential Information. Employee acknowledges that, during Employee’s
employment with the Company, Employee will acquire, be exposed to and have
access to, material, data and information of the Company and Company Affiliates
and/or customers or clients of the Company and Company Affiliates that is
confidential, proprietary, and/or a trade secret. At all times, both during and
after the termination of employment, Employee shall keep and retain in
confidence and shall not disclose, except as required in the course of
Employee’s employment with the Company, to any person, firm or corporation, or
use for his own purposes, any of this proprietary, confidential or trade secret
information. For purposes of this Section 7, such information shall include, but
 

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shall not be limited to: (i) the Company’s and any Company Affiliate’s standard
operating procedures, processes, formulae, know-how, scientific, technical and
product information, whether patentable or not, which is of value to the Company
or any Company Affiliate and not generally known by the Company’s or any Company
Affiliate’s competitors; (ii) pharmaceutical procedures, test results, product
development, marketing plans and strategies; (iii) all confidential information
obtained from third parties and customers concerning their products or business;
and (iv) confidential business information of the Company or any Company
Affiliate, including proprietary product development plans, marketing and
business plans, strategies, projections, business opportunities, client lists,
sales and cost information and financial results and performance. All writings,
records and other documents and things containing any such proprietary,
confidential or trade secret information in Employee’s custody or possession
shall be the exclusive property of the Company shall not be copied or removed
from the premises of the Company except in pursuit of the business of the
Company and shall be delivered to the Company without retaining any copies upon
the termination of Employee’s employment or at any time as requested by the
Company. Upon termination of Employee’s employment with the Company, Employee
shall, if requested by the Company, re-affirm in writing Employee’s recognition
of the importance of maintaining the confidentiality of all such proprietary,
confidential or trade secret information and re-affirm all of the obligations
set forth in Section 7 of this Agreement. Employee acknowledges that the
obligations pertaining to the confidentiality and non-disclosure of information
shall remain in effect for a period of ten (10) years following termination of
Employee’s employment with the Company, or until the Company or any Company
Affiliate has released any such information into the public domain, in which
case Employee’s obligation hereunder shall cease with respect only to such
information so released.

8.    Restrictions on Activities.

(a)    Noncompetition. So long as Employee is employed by the Company and for a
period of one (1) year following termination of Employee’s employment, whether
such termination is voluntary or involuntary on the part of Employee and whether
such termination is with or without Cause, Employee shall not become employed by
(as an officer, director, employee, consultant or otherwise), or otherwise
become commercially interested in or affiliated with (whether through direct,
indirect, actual or beneficial ownership or through a financial interest
amounting to more than 1% of the ownership of any Competitor), a Competitor,
unless Employee accepts employment with a Competitor in an area of the
Competitor’s business that does not compete in any way with the Company or any
Company Affiliate. For purposes of this Agreement, a “Competitor” shall be
defined as any business entity (i) that provides air cargo services to the
express delivery industry or (ii) that manufactures or markets airport ground
support equipment, including mobile deicing/decontamination equipment,
catering/cabin service trucks or fixed pedestal-mounted deicing systems.

(b)    Nonsolicitation. So long as Employee is employed by the Company and for a
period of one (1) year following termination of Employee’s employment, whether
such termination is voluntary or involuntary on the part of Employee and whether
such termination is with or without Cause, Employee shall not:

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(i)    Solicit or attempt to solicit, for competitive purposes, the business of
any of the clients or customers of the Company or any Company Affiliate for
which Employee has rendered any significant services on behalf of the Company or
any Company Affiliate at any time, or solicit or attempt to solicit, for
competitive purposes, the business of any of the prospective customers or
clients of the Company or any Company Affiliate with whom Employee has had
significant contact on behalf of the Company or any Company Affiliate, or
otherwise induce such customers or clients or prospective customers or clients
to reduce, terminate, or restrict or alter their business relationships with the
Company or any Company Affiliate in any fashion.

(ii)    Induce or attempt to induce any employee of the Company or any Company
Affiliate to leave the Company or any Company Affiliate for the purpose of
engaging in a business operation that is competitive with the Company or any
Company Affiliate.

(c)    Geographic Scope. In recognition of the broad geographic scope of the
foregoing restrictions, the fact that the Company’s customers and clients are
located throughout the United States and of the ease of competing with the
Company in any part of the United States, Employee acknowledges that a broad
restriction is necessary. The restrictions on competition and solicitation set
forth in this Section 8 are intended to cover the employee’s service in the
following geographic areas: (i) North Carolina; (ii) Michigan; (iii) Kansas;
(ii) all states in which the Company or any Company Affiliate is currently
engaged in business at the time the Employee’s employment ends; and (iii) each
and every state in the United States; provided, however, that the Company shall
have the right to limit, unilaterally, the scope of any provision of this
Agreement to ensure the enforceability of Employee’s agreement not to compete
with the Company and any Company Affiliate.

(d)    Providing Copy of Agreement. Employee agrees to show a copy of this
Agreement to any Competitor with whom Employee interviews during Employee’s
employment with the Company or with whom Employee interviews within one (1) year
following the effective date of the termination of Employee’s employment with
the Company.

9.    Assignment of Inventions. Employee understands and agrees that Employee is
performing work for hire for the Company and that any Inventions developed or
conceived by Employee during Employee’s employment with the Company are the sole
property of the Company. The term “Inventions” shall include any inventions,
discoveries, programs, programming techniques, underlying program designs and/or
concepts, machinery, products, processes, computer hardware, information
systems, software (including without limitation source code, object code,
documentation, diagrams and flow charts), as well as any other discoveries,
concepts and ideas, whether patentable or not, relating to any present or
prospective activities or business of the Company or any Company Affiliate.
Employee agrees to promptly disclose to the Company all Inventions he makes
during employment with the Company. Employee agrees to
 

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 assign, and does hereby assign, to the Company or its nominees, all right,
title and interest in and to Inventions made by Employee. Employee will, with
reasonable reimbursement for expenses, but at no other expense to the Company,
at any time during or after Employee’s employment with the Company, sign and
deliver all lawful papers and cooperate in such other lawful acts which may be
reasonably necessary or desirable to protect or vest title in Inventions in the
Company or its nominees, including applying for, obtaining, maintaining, and
enforcing copyrights and/or patents on Inventions in all countries of the world.
Nothing herein shall require the Company to accept or perfect any such
assignment or other conveyance of any interest in any patent or Inventions or
require the Company to prosecute such patent or other application. This
provision does not apply to any Inventions for which Employee affirmatively
proves that no equipment, supplies, facility, or trade secret information of the
Company or any Company Affiliate was used and which was developed entirely on
Employee’s own time unless (a) the Inventions relate (i) directly to the
business of the Company or any Company Affiliate, or (ii) to the Company’s or
any Company Affiliate’s actual or demonstrably anticipated research or
development; or (b) the Inventions result, either directly or indirectly, from
any work performed by Employee for the Company or any Company Affiliate.

10.    Severability. If any provision contained in this Agreement shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. If a court
determines that this Agreement or any covenant contained herein is unreasonable,
void or unenforceable, for any reason whatsoever, then in such event the parties
hereto agree that the duration, geographical or other limitation imposed herein
should be such as the court, or jury, as the case may be, determines to be fair
and reasonable, it being the intent of each of the parties hereto to be subject
to an agreement that is necessary for the protection of the legitimate interest
of the Company and its successors or assigns and that is not unduly harsh in
curtailing the legitimate rights of the Employee.

11.    Employee’s Representation. Employee represents that his experience and
capabilities are such that the provisions of Section 8 will not unreasonably
limit him in earning a livelihood.

12.    Company’s Right to Obtain an Injunction. Employee acknowledges that the
Company will have no adequate means of protecting its rights under Sections 7
and 8 of this Agreement other than by securing an injunction. Accordingly,
Employee agrees that the Company is entitled to enforce this Agreement by
obtaining a preliminary and permanent injunction and any other appropriate
equitable relief in any court of competent jurisdiction. Employee acknowledges
that the Company’s recovery of damages will not be an adequate means to redress
a breach of this Agreement. Nothing contained in this Section, however, shall
prohibit the Company from obtaining any appropriate remedies in addition to
injunctive relief, including recovery of damages.

13.    General Provisions.

(a)    Entire Agreement. This Agreement contains the entire understanding
between the parties hereto relating to the employment of Employee by the Company
and supersedes any and all prior employment, compensation or retirement
agreements between the Company and Employee.

(b)    Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Company and its affiliates and their successors and assigns,
and shall be binding upon and inure to the benefit of Employee and his estate,
legal representatives and assigns, provided, however, that in no event shall
Employee’s obligations to perform services for the Company be delegated or
transferred by Employee.

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(c)    Amendment of Agreement. No amendment, modification, waiver, termination
or cancellation of this Agreement shall be binding or effective for any purpose
unless it is made in writing signed by the party against whom enforcement of
such amendment, modification, waiver, termination or cancellation is sought. No
course of dealing between the parties to this Agreement shall be deemed to
affect, modify, amend or discharge any provision or term of this Agreement. No
delay on the part of the Company or Employee in the exercise of any of their
respective rights or remedies shall operate as a waiver thereof, and no single
or partial exercise by the Company or Employee of any such right or remedy shall
preclude other or further exercise thereof. A waiver of right or remedy on any
one occasion shall not be construed as a bar to or waiver of any such right or
remedy on any other occasion.

(d)    Insurance. The Company, at its discretion, may apply for and procure in
its own name and for its own benefit, life insurance on Employee in any amount
or amounts considered advisable; and Employee shall have no right, title or
interest therein. Employee agrees to submit to any medical or other examination
and to execute and deliver any applications or other instruments in writing as
may be reasonably necessary to obtain such insurance.

(e)    Notices. All notices under this Agreement shall be in writing and shall
be deemed effective when delivered in person (in the Company’s case, to its
Secretary) or when mailed, if mailed by certified mail, return receipt
requested. Notices mailed shall be addressed, in the case of Employee, to him at
his residential address, and in the case of Company, to its corporate
headquarters, attention of the Secretary, or to such other address as Employee
or the Company may designate in writing at any time or from time to time to the
other party in accordance with this Section.

(f)    Governing Law. This agreement shall be governed and construed in
accordance with the laws of the State of North Carolina.

(g)    Counterparts. This Agreement may be executed on separate counterparts
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.

(h)    Headings. The headings in the sections of this Agreement are for
convenience only and shall not be deemed to constitute a part thereof and shall
not affect the constructions or interpretation of this Agreement.

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
Secretary, upon the direction and authorization duly given by the Compensation
Committee of the Board of Directors of the Company, and Employee has signed this
Agreement, all as of the day and year first above written.

AIR T, INC.

By:    /s/ John J. Gioffre                        
Name:  John J. Gioffre
Title:  Secretary
 

EMPLOYEE

  /s Walter Clark                            
Walter Clark
 
 

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