EXHIBIT 10.1
 
EMPLOYMENT AND NONCOMPETE AGREEMENT

THIS EMPLOYMENT AND NONCOMPETE AGREEMENT (“Agreement”), made and entered into as
of the 6th day of October, 2006, by and between JOHN PARRY, an individual
resident of Idaho (“Employee”), and AIR T, INC., a Delaware corporation (the
“Company”).
 
 
Background Statement
 
The Company, through its subsidiaries, provides overnight air freight service to
the express delivery industry, and manufactures, sells and services aircraft
ground support and special purpose industrial equipment. Employee has agreed to
join the Company initially as a Vice President and after a brief period as Chief
Financial Officer and Vice President--Finance 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 or which will represent a substantial investment in
the training and/or development of Employee.
 
IN CONSIDERATION of the promises and the mutual covenants contained herein, the
parties hereto agree as follows:
 
1.  Employment. Subject to the terms and conditions stated herein, and in
consideration of Employee’s obligations and covenants, including without
limitation, those obligations and covenants set forth in Paragraphs 7, 8 and 9
hereof, the Company agrees to employ Employee on an active and full-time basis,
and Employee accepts such employment, initially as a Vice President and after a
brief period as Chief Financial Officer and Vice President--Finance of the
Company, subject to the order, supervision and direction of the Company’s Board
of Directors and its Chief Executive Officer.
 
2.  Duties. Employee shall initially serve the Company as Vice President and
after a brief transition period shall thereafter serve the Company as Chief
Financial Officer and Vice President—Finance and in those capacities shall
devote Employee’s full business time, skill and best efforts to the business of
the Company and faithfully perform such executive and supervisory duties as may
be prescribed by the Company’s Board of Directors and its Chief Executive
Officer. Employee shall act at all times in compliance, in all material
respects, with all policies, rules and decisions adopted from time to time by
the Board of Directors of the Company, including the Company’s Code of Business
Conduct and Ethics.
 
3.  Term of Employment. The term of Employee’s employment by the Company
hereunder shall commence as of the date hereof and shall continue for a period
of three (3) years after such commencement date (the “Term of Employment”),
unless sooner terminated as provided in paragraph 5 below.
 
4.  Compensation.
 
(a)  The base annual compensation rate to be paid to Employee for the services
to be rendered hereunder (“Base Rate”) throughout the Term of Employment, except
to the extent adjusted as provided below, shall be $125,000, payable in
accordance with the Company’s normal payroll practices, subject to applicable
federal and state income and social security tax withholding requirements.
Employee’s Base Rate may be reviewed from time to time and may be adjusted
upward as Employee’s performance, the performance of the Company and other
pertinent factors warrant.
 
(b)  Incentive Compensation. During the term of this Agreement, Employee will be
entitled to receive, as incentive compensation, compensation equal to 1.5 % of
the Company’s pre-tax net income included in the audited, consolidated net
income statement of the Company. This incentive compensation will be paid on or
about June 15 of each year, with respect to results achieved during the previous
fiscal year. In the event Employee’s employment is terminated during the fiscal
year, he shall be eligible to receive a pro-rata portion of the incentive
compensation for that fiscal year, to be paid on or about June 15 following his
termination of employment.
 
(c)  Employee Benefit Plans. In addition to the Base Salary provided for above,
the Company shall provide to Employee the opportunity to participate in all life
insurance, medical, disability, and other employee benefit plans (collectively,
“Employee Benefit Plans”) sponsored from time to time by the Company and
covering its employees generally or a particular group of its employees of which
Employee is a member (including participation by Employee’s spouse and
dependents to the extent they are eligible under the terms of such plans),
subject to the terms and conditions of such benefit plans.
 
(d)  Reimbursement of Expenses. The Company shall pay or reimburse Employee for
all reasonable travel and other expenses incurred by Employee in performing
Employee’s obligations under this Employment Agreement in accordance with the
Company’s expense reimbursement policies as established and changed from time to
time. In addition, the Company will reimburse Employee for up to$10,000 in
moving expenses in connection with the relocation of his residence from Idaho to
Maiden, North Carolina or any nearby area.
 
(e)  Vacation. Employee shall be entitled to paid annual vacation of up to four
weeks per year.
 
(f)  Car Allowance. Employee shall be entitled to receive a car allowance of
four hundred dollars ($400) per month plus reimbursement for fuel, repair
expense and insurance for his primary automobile upon presentation of
documentation in accordance with the Company’s expense reimbursement policies as
established and changed from time to time.
 
(g)  Stock Options. Employee shall be eligible to be considered for
participation in any stock option plan approved by the stockholders of Air T,
Inc., with the amount of options and vesting schedule to be determined by the
Compensation Committee of the member company’s Board of Directors.
 
5.  Termination.
 
(a)  Termination Events. Employee’s employment hereunder will terminate upon the
earlier of (i) the death of Employee or Employee’s becoming Permanently Disabled
(as defined below), (ii) termination by the Company for Cause (as defined
below), (iii) termination by the Company without Cause or (iv) the expiration of
the Term of Employment.
 
(b)  Termination Payments. From and after the termination of Employee’s
employment for any reason set forth in Sections 5(a)(i), 5(a)(ii) or 5(a)(iv)
the Company shall not be liable to Employee, Employee’s spouse or Employee’s
personal representative for the payment of salary, benefits, or payments of any
kind, except for amounts payable under this Employment Agreement that are
attributable to services performed by Employee prior to the termination of
Employee’s employment, or except as provided by the terms of any Company
benefit, disability or retirement plan in which Employee may be a participant.
 
(c)  Termination Without Cause. In the event Employee is terminated by Employer
without cause, Employee shall be entitled solely to receive the payments set
forth in paragraph 6 herein, subject to the conditions thereof.
 
(d)  Definition of “Cause.” “Cause” means (i) the failure of Employee to carry
out and perform Employee’s duties hereunder; (ii) the refusal by or inability of
Employee to follow the lawful directions of the member company’s Board of
Directors; (iii) the commission of an act by Employee constituting financial
dishonesty against the Company; (iv) the commission of an act by Employee
involving a felony; (v) the commission of an act by Employee that brings the
Company or any of its affiliates into public disrepute or disgrace or causes
material harm to the customer relations, operations or business prospects of the
Company or its subsidiaries; or (vi) violation by Employee of any provision of
this Agreement.
 
(e)  Definition of “Permanent Disability”. “Permanent Disability” means any
physical or mental impairment that renders Employee unable to perform the
essential functions of Employee’s job under the terms of this Employment
Agreement, either with or without reasonable accommodation, for a period of six
(6) months or more.
 
6.  Severance Payment. In the event of the termination of Employee’s employment
without Cause, the Company shall continue to pay the base salary of Employee for
a period of twelve (12) months from the date of termination, conditional upon
Employee’s execution of a release of claims against the Company. This release
shall be in a form satisfactory to the Company, and shall be a general release
of all claims. These separation payments shall be payable at a time and in
accord with the regular payroll practices of the Company, but shall not commence
until the execution of such release by Employee and the satisfaction of all
waiting and revocation periods required by law. All such amounts shall be
subject to and reduced by any applicable federal and state withholding taxes.
 
7.  Confidentiality. 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/or its customers or clients
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 paragraph, such information shall include, but
shall not be limited to: sales methods, information concerning customers,
advertising methods, financial affairs or methods of procurement, marketing and
business plans, strategies, projections, business opportunities, client lists,
sales and cost information and financial results and performance. Employee
acknowledges that the obligations pertaining to the confidentiality and
non-disclosure of information shall remain in effect for a period of five (5)
years, or until the Company 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.  Non-Competition Agreement. So long as Employee is employed by the Company
and for a period of one (1) year following termination of Employee’s employment
(such period not to include any period(s) of violation or period(s) of time
required for litigation to enforce the covenants herein), whether such
termination is voluntary or involuntary on the part of Employee and whether such
termination is with or without Cause, Employee shall not:
 
(f)  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), a COMPETITOR, unless Employee accepts employment with a
COMPETITOR in an area of the COMPETITOR’S business which does not compete with
the Company. For purposes of this Agreement, a COMPETITOR shall be defined as
any person, firm, business or entity (including any sole proprietorship of
Employee) that provides overnight air freight service to any of the Company’s
customers or manufactures, leases, sells or provides third-party maintenance
services with respect to mobile deicing/decontamination equipment,
catering/cabin service trucks, pedestal-mounted deicing systems or ground
support equipment.
 
(g)  Solicit or attempt to solicit, for competitive purposes, the business of
any of the Company’s clients or customers or otherwise induce such customers or
clients to reduce, terminate, or restrict or alter their business relationships
with the Company in any fashion.
 
(h)  Induce or attempt to induce any employee of the Company to leave the
Company for the purpose of engaging in a business operation that is competitive
with the Company’s business operations.
 
(i)  In recognition of the broad geographic scope of the Company’s business,
including that its customer base extends throughout the United States, and of
the ease of competing with that business in any part of the United States, the
restrictions on competition set forth herein are intended to cover 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.
 
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. 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. Employee agrees to 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. Provided, however, that 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 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 (ii) to the Company’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.
 
10.  Company’s Right to Obtain an Injunction. Employee acknowledges that the
Company will have no adequate means of protecting its rights under paragraphs 7,
8 and 9 of this Agreement other than by securing an injunction (a court order
prohibiting Employee from violating the Agreement). 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.
Nothing contained in this paragraph, however, shall prohibit the Company from
pursuing any remedies in addition to injunctive relief, including recovery of
damages.
 
11.  Condition to Seeking Subsequent Employment. 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) years following the effective date of the termination of Employee’s
employment with the Company.
 
12.  General Provisions.
 
(j)  Entire Agreement. This Employment 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 or compensation
agreements between the Company and Employee.
 
(k)  Severability. If any provision contained in this Employment 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 Employment Agreement but this Employment Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein.
 
(l)  Assignment. Neither this Employment Agreement nor any right or interest
hereunder shall be assignable by Employee, Employee’s beneficiaries or legal
representatives, without the prior written consent of the Company; provided,
however, that nothing shall preclude (i) Employee from designating a beneficiary
to receive any benefit payable upon Employee’s death, or (ii) the executors,
administrators or other legal representatives of Employee or Employee estate
from assigning any rights hereunder to the person or persons entitled thereunto.
The Company may transfer or assign its rights and interest in this Employment
Agreement to any person, proprietorship, partnership, limited liability company
or corporation that acquires or succeeds to at least a majority of the equity,
assets, accounts or other business of the Company.
 
(m)  Binding Agreement. This Employment Agreement shall be binding upon, and
inure to the benefit of, Employee and the Company and their respective permitted
successors and assigns.
 
(n)  Amendment or Modification of Employment Agreement. This Employment
Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto.
 
(o)  Waiver. No delay or omission by either party hereto in exercising any
right, power or privilege hereunder shall impair such right, power or privilege,
nor shall any single or partial exercise of any right, power or privilege
preclude any further exercise thereof or the exercise of any other right, power
or privilege. The provisions of this paragraph 12(f) cannot be waived except in
writing signed by both parties.
 
(p)  Governing Law and Forum Selection. This Agreement shall be construed in
accordance with and governed by the substantive laws of the State of North
Carolina, without regard to conflict of laws principles. Furthermore, in
exchange for the consideration set forth herein, Employee agrees that any claim
against the Company (i) for the breach or invalidity of any provision of this
Agreement; (ii) arising out of or relating to the employment of Employee with
the Company or (iii) encompassed within or related to any claim to be released
as provided in paragraph 6 herein, shall be brought exclusively in the Superior
Court of Lincoln County, North Carolina, or the United States District Court for
the Western District of North Carolina, and in no other forum. Employee hereby
consents to the personal and subject matter jurisdiction of these courts for the
purpose of adjudicating any claims subject to this forum selection clause.
Employee also agrees that any dispute of any kind arising out of or relating to
this Agreement or to Employee’s employment with the Company shall at the
Company’s sole election be submitted to arbitration before the American
Arbitration Association in Mecklenburg County, North Carolina, which election
may be made by the Company at any time prior to the last day to answer and/or
respond to a summons and/or complaint or counterclaim, crossclaim or third-party
claim made by Employee. The provisions of the North Carolina Uniform Arbitration
Act, N.C. Gen. Stat. § 1-567.1 et seq. shall apply to the arbitration of
disputes hereunder unless such provisions are preempted by the Federal
Arbitration Act.
 
(q)  Notices. Any notice, offer, acceptance or other document required or
permitted to be given pursuant to any provisions of this Agreement shall be in
writing, signed by or on behalf of the person giving the same, and (as elected
by the person giving such notice) delivered by hand or mailed to the parties at
the following addresses by registered or certified mail, postage prepaid, return
receipt requested, or by a third party company or governmental entity providing
delivery services in the ordinary course of business, which guarantees delivery
on a specified date:
 
If to Employee: John Parry

 
If to the Company: Air T, Inc.
PO Box 488
Denver, N.C., 28037

 
Attention: Walter Clark
 
or to such other address as any party hereto may designate by complying with the
provisions of this Section 12(h).
 
Such notice shall be deemed given (i) as of the date of written acknowledgment
by Employee or an officer of the Company if delivered by hand, (ii) seventy-two
(72) hours after deposit in United States mail if sent by registered or
certified mail or (iii) on the delivery date guaranteed by the third party
delivery service if sent by such service.
 
Rejection or other refusal to accept or inability to deliver because of changed
address of which no notice has been received shall not affect the date upon
which the notice is deemed to have been given pursuant hereto. Notwithstanding
the foregoing, no notice of change of address shall be effective until the date
of receipt hereof.
 
13.  Consideration for Election to Board Of Directors. Employee shall be
considered by the Nominating Committee of the Board of Directors for nomination
for election as a director at the Company’s 2007 annual meeting of stockholders
and at subsequent annual meetings of stockholders for so long as he continues to
serve as the Company’s Chief Financial Officer.
 

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

IN WITNESS WHEREOF, Employee has executed this Agreement and the Company has
caused this Agreement to be executed in its name by its duly authorized
officials as of the day and year first above written.

EMPLOYEE:

/s/ John Parry     
John Parry

COMPANY:

AIR T, INC.

By: /s/ Walter Clark   

Title: Chief Executive Officer