**Exhibit 10.1**

 

MESABA HOLDINGS, INC.

 

1994 STOCK OPTION PLAN

 

(As amended by the Board of Directorson August 29, 1995 & July 1, 1997)

 

(Formerly known as the AirTran Corporation

1994 Stock Option Plan)

 

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MESABA HOLDINGS, INC.

1994 STOCK OPTION PLAN

 

TABLE OF CONTENTS

 
| Purpose                                                         |   |
|-----------------------------------------------------------------|--------|
| Shares Subject to the Plan                                      |   |
| Administration of the Plan                                      |   |
| Grant of  Options                                               |   |
| Terms and Conditions of  Options                                |   |
| (a)Option  Period                                               |   |
| (b)Exercise  Price                                              |   |
| (c)Exercise  of Option                                          |   |
| (d)Payment of  Purchase Price upon Exercise                     |   |
| (e)Exercise  in the Event of Death or Termination of Employment |   |
| (f)Nontransferability                                           |   |
| (g)Investment Representation                                    |   |
| (h)Adjustments  in Event of Change in Common Stock              |   |
| (i)Incentive Stock Options                                      |   |
| (j)No Rights as Shareholder                                     |   |
| (k)No Rights to  Continued Employment                           |   |
| Compliance  with Other Laws and Regulations                     |   |
| Disposition  of Shares                                          |   |
| Amendment and  Discontinuance                                   |   |
| Effective Date of the Plan                                      |   |
| Name                                                            |   |
| Effect on Other Stock Plans                                     |   |

 

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MESABA HOLDINGS, INC.

1994 STOCK OPTION PLAN

 

(As amended by the Board of Directorson August 29, 1995 and July 1, 1997)(Formerly known as the AirTran Corporation1994 Stock Option Plan)

 

1.                                       Purpose. The purpose of this Plan is to provide a means whereby Mesaba Holdings, Inc.(the “Company”) may, through the grant of incentive stock options andnonqualified stock options to Key Employees, as defined below, attract andretain persons of ability as employees and motivate such employees to exerttheir best efforts on behalf of the Company, its shareholders and any Subsidiary.  By affording Key Employees the opportunity toacquire proprietary interests in the Company and any Subsidiary and byproviding them incentives to put forth maximum efforts for the success of theCompany’s business, the Plan seeks to contribute to the attainment of thoseobjectives.

 

As used herein, the term “Committee”shall mean the committee appointed by the Board of Directors of the Company inaccordance with Section 3.  The term“Subsidiary” shall mean any corporation which at the time an option isgranted under this Plan qualifies as a subsidiary of the Company under thedefinition of “subsidiary corporation” contained in Section 424(f) ofthe Internal Revenue Code of 1986, as amended from time to time (the “Code”),or any similar provision hereafter enacted, except that such term shall notinclude any corporation which is classified as a foreign corporation pursuantto Section 7701 of the Code.  Theterm “Key Employees” means those employees (including officers anddirectors who are also employees) of the Company or of any Subsidiary, who, inthe judgment of the Committee referred to in Section 3 below, areconsidered especially important to the future of the Company.  The term “incentive stock options”means options to purchase Common Stock ($.01 par value) of the Company (the “Stock”)which at the time such options are granted under this Plan qualify as incentivestock options within the meaning of Section 422 of the Code.  The term “nonqualified stock options”means options to purchase stock which at the time such options are grantedunder this Plan do not qualify as incentive stock options.

 

2.                                       Shares Subject to the Plan.  Options may be granted by the Company fromtime to time to Key Employees to purchase an aggregate of 800,000 shares of theStock, and such number of shares shall be reserved for options granted underthe Plan (subject to adjustment as provided in Section 5(h)).  The shares issued upon exercise of optionsgranted under the Plan may be authorized and unissued shares or shares held bythe Company (whether acquired specifically for issuance under the Plan orotherwise) which are available under applicable law to be issued under thePlan.  If any option granted under thePlan shall terminate, expire or, with the consent of the optionee, be canceledas to any shares, new options may thereafter be granted under the Plan coveringthe number of shares subject to the option which was thus terminated, expiredor canceled.

 

3.                                       Administration of the Plan.  The Plan shall be administered by theCompensation Committee of the Board of Directors of the Company (the “Board”)appointed by the Board and serving at the Board’s pleasure, or such othercommittee as the Board may from time to time

 

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appoint to serveas such pursuant to this Section 3. Such Committee shall consist of not less than two members of theBoard.  Any grants of options to officerswho are subject to Section 16 of the Securities Exchange Act of 1934, asamended (the “Exchange Act”), shall be made only by a Committee of two or moredirectors, each of whom is a “disinterested person” as defined in Rule 16b-3(c)(2) ofthe Exchange Act.

 

The Committee shall haveplenary authority in its discretion, subject to and not inconsistent with theexpress provisions of the Plan, to grant options;  to determine the purchase price of the Stockcovered by each option, the term of each option, the employees to whom, and thetime or times which, options shall be granted and the number of shares covered byeach option; to designate options as incentive stock options or nonqualifiedoptions; with the consent of an optionee, to modify or amend an Option; toauthorize any person to execute on behalf of the Company any instrumentrequired to effectuate the grant of an Option previously granted by the Board;to interpret the Plan; to prescribe, amend and rescind rules andregulations relating to the Plan; to determine the terms and provisions of theoption agreements (which need not be identical); with the consent of anoptionee, to modify or amend an option; to authorize any person to execute onbehalf of the Company any instrument required to effectuate the grant of anoption previously granted by the Board; and to make all other determinationsdeemed necessary or advisable for the administration of the Plan.  The Committee may delegate to one or more ofits members or to one or more agents such administrative duties as it may deemadvisable, and the Committee or any person to whom it has delegated its dutiesas aforesaid may employ one or more persons to render advice with respect tothe responsibility the Committee or such person may have under the Plan.

 

The Committee may employattorneys, consultants, accountants or other persons and the Committee, theCompany and its officers and directors shall be entitled to rely upon theadvice, opinions or valuations of any such persons.  All actions taken and all interpretations anddeterminations made by the Committee in good faith shall be final and bindingupon all persons to whom options have been granted under the Plan, the Companyand all other interested persons.  Nomember of the Committee shall be personally liable for any action,determination or interpretation made in good faith with respect to that Plan orthe grant of any options made hereunder, and all members of the Committee shallbe fully protected by the Company in respect of any such action, determinationor interpretation.

 

4.                                       Grant of Options.  Subject to the provisions of the Plan, theCommittee shall (a) determine and designate from time to time those KeyEmployees to whom options are to be granted; (b) authorize the granting ofincentive stock options, nonqualified stock options, or a combination ofincentive stock options and nonqualified stock options; (c) determine thenumber of shares subject to each option; and (d) determine the time ortimes when and the manner in which each option shall be exercisable and theduration of the exercise period; provided, however, that (i) nooption shall be granted after the expiration of 10 years from the EffectiveDate of the Plan specified in Section 9 below and (ii) the aggregatefair market value (determined as of the date the option is granted) of stockfor which all of an employee’s incentive stock options first become exercisableduring any calendar year shall not exceed $100,000.  No director of the Company who is not also anemployee of the Company or any Subsidiary shall be entitled to receive anyoption under the Plan.

 

5.                                       Terms and Conditions of Options.  Each option granted under the Plan shall beevidenced by an agreement in a form approved by the Committee.  Such agreement shall be

 

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subject to thefollowing express terms and conditions and to such other terms and conditionsas the Committee may deem appropriate:

 

(a)                                  Option Period.  Each option agreement shall specify theperiod for which the option thereunder is granted and shall provide that theoption shall expire at the end of such period. The Committee may extend such period provided that, in the case of inincentive stock option, such extension shall not disqualify the option as anincentive stock option.  In no case shallsuch period, including any such extensions, exceed 10 years from the date ofgrant; provided, however, that in the case of an incentive stock optiongranted to an individual who, at the time of grant, owns stock possessing morethan 10% of the total combined voting power of all classes of capital stock ofthe Company (a “Ten Percent Shareholder”), such period, including extensions,shall not exceed five years from the date of grant.

 

(b)                                 Exercise Price.  The exercise price per share of Stock shallbe determined by the Committee at the time each option is granted and shall benot less than (i) the fair market value or (ii) in the case of anincentive stock option granted to a Ten Percent Shareholder, 110% of the fairmarket value of one share of the Stock on the date the option is granted, asdetermined by the Committee.

 

For purposes of this Section 5,the “fair market value” of the Stock shall be determined as follows:

 

(A) if the Stock is listed on a nationalsecurities exchange or admitted to unlisted trading privileges on suchexchange, the fair market value on any given day shall be the closing saleprice for the Stock, or if no sale is made on such day, the closing bid pricefor such day on such exchange;

 

(B) if the Stock is not listed on a nationalsecurities exchange, the fair market value on any given day shall be theclosing sale price for the Stock as reported on the NASDAQ National MarketSystem on such day, or if no sale is made on such day, the closing bid pricefor such day as entered by a market maker for the Stock;

 

(C) if the Stock is not listed on a nationalsecurities exchange, is not admitted to unlisted trading privileges on any suchexchange, and is not eligible for inclusion in the NASDAQ National MarketSystem, the fair market value on any given day shall be the average of theclosing representative bid and asked prices as reported by the NationalQuotation Bureau, Inc. or, if the Stock is not quoted on the NationalAssociation of Securities Dealers Automated Quotations System, then as reportedin any publicly available compilation of the bid and asked prices of the Stockin any over-the-counter market on which the Stock is traded; or

 

(D) if there exists no public trading market forthe Stock of the Company, the fair market value on any given day shall be anamount determined by the Committee in such manner as it may reasonablydetermine in its discretion, provided that such amount shall not be less thanthe book value per share as reasonably determined by the Committee as of thedate of determination nor less than the par value of the Stock.

 

(c)                                  Exercise of Option.  No part of any option may be exercised untilthe optionee shall have remained in the employ of the Company or of aSubsidiary for such period after the date on which the option is granted as theCommittee may specify in the option

 

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agreement, and the optionagreement may provide for exercisability in installments; provided, however,that no option may be exercised for a period of six months after the date ofgrant.  Options granted under this Planmay be exercised without regard to the status of previously granted options.

 

(d)                                 Payment of Purchase Priceupon Exercise.  Each option shallprovide that the purchase price of the shares as to which an option shall beexercised shall be paid to the Company at the time of exercise in cash; provided,however, that the Committee may determine, in its sole discretion, otherforms of consideration to be appropriate for payment of the purchase price ofthe shares as to which an option shall be exercised, including, but not limitedto, shares of Stock already owned by the optionee having a total fair marketvalue, as determined by the Committee, equal to the purchase price, or acombination of cash and Stock having a total fair market value, as sodetermined, equal to the purchase price.

 

The Company may makeloans to such option holders as the Committee, in its discretion, may determine(including a holder who is a director or officer of the Company) in connectionwith the exercise of options granted under the Plan; provided, however,that the Committee shall have no discretion to authorize the making of any loanwhere the possession of such discretion or the making of such loan would resultin a “modification” (as defined in Section 424(h) of the Code) of anyincentive stock option.  Such loans shallbe subject to the following terms and conditions and such other terms andconditions not inconsistent with the Plan as the Committee shall determine:

 

(i)                                     Suchloans shall bear interest at such rates as the Committee shall determine fromtime to time, which rates may be below then current market rates (except in thecase of incentive stock options).

 

(ii)                                  Inno event may any such loan exceed the fair market value, at the date ofexercise, of the shares covered by the option or portion thereof exercised bythe holder.

 

(iii)  No loan shall have an initial termexceeding five years, but, any such loan may be renewable at the discretion ofthe Committee.

 

(iv)                              Whena loan shall have been made, shares of Common Stock having a fair market valueat least equal to the principal amount of the loan, or such other collateral asmay be deemed appropriate by the Committee, shall be pledged by the holder tothe Company as security for payment of the unpaid balance of the loan.

 

(v)                                 Everyloan shall comply with all applicable laws, regulations and rules of theFederal Reserve Board and any other governmental agency having jurisdiction.

 

(e)                                  Exercise in the Event ofDeath or Termination of Employment.

 

(i)                                     Ifan optionee shall die while an employee of the Company or a Subsidiary, his orher option may be exercised, to the extent that the optionee shall have beenentitled to do so on the date of his or her death, by the person or persons towhom the optionee’s right under the option passes by will or applicable law, orif no such person has such right, by his or her executors or administrators, atany time or from time to time, but not later than the expiration date specifiedin

 

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paragraph(a) of this Section 5 or two years after the optionee’s death,whichever date is earlier.

 

(ii)                                  Ifan optionee’s employment by the Company or a Subsidiary shall terminate becauseof his or her total disability, he or she may exercise his or her option to theextent that he or she shall have been entitled to do so at the date of thetermination of his or her employment, at any time or from time to time, but notlater than the expiration date specified in paragraph (a) of this Section 5or one year after termination of employment, whichever date is earlier.

 

(iii)  If an optionee’s employment shallterminate by reason of his or her retirement in accordance with the terms ofthe Company’s retirement plans or with the consent of the Committee orinvoluntarily other than for cause, all rights to exercise his or her optionshall terminate at the expiration date specified in paragraph (a) of this Section 5or three months after termination of employment, whichever date is earlier.

 

(iv)                              Ifan optionee’s employment shall terminate for cause or voluntarily orinvoluntarily for any reason other than death, total disability or retirement,all rights to exercise his or her option shall terminate at the date of suchtermination of employment, unless such termination is waived by the Committeein its sole discretion.

 

“Terminationfor cause” shall include termination for malfeasance or misfeasance in theperformance of duties of the optionee as an employee of the Company orconviction of illegal activity in connection therewith or any conductdetrimental to the interests of the Company or any Subsidiary, violation of theterms of the optionee’s employment agreement, if any, and in any event, thedetermination of the Committee with respect to the matter of whether anoptionee’s employment has been terminated for cause shall be final andconclusive.  “Total disability”shall mean a physical or mental condition of an employee resulting from bodilyinjury, disease, or mental disorder which renders the employee incapable ofcontinuing his or her usual and customary employment with the Company.

 

(f)                                    Nontransferability.  No option granted under the Plan shall betransferable other than by will or by the laws of descent anddistribution.  During the lifetime of theoptionee, an option shall be exercisable only by the optionee or by theoptionee’s guardian or legal representative (unless such exercise woulddisqualify an option as an incentive stock option).

 

(g)                                 Investment Representation.  Each option agreement may provide that, upondemand by the Committee for such a representation, the optionee (or any personacting under paragraph 5(e)) shall deliver to the Committee at the time of anyexercise of an option or portion thereof a written representation that theshares to be acquired upon such exercise are to be acquired for investment andnot for resale or with a view to the distribution thereof.  Upon such demand, delivery of suchrepresentation prior to the delivery of any shares issued upon exercise of anoption and prior to the expiration of the option period shall be a conditionprecedent to the right of the optionee or such other person to purchase anyshares.

 

(h)                                 Adjustments in Event ofChange in Common Stock.    In theevent of any change in the Common Stock of the Company by reason of any stockdividend, recapitalization,

 

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reorganization, merger,consolidation, split-up, combination, or exchange of shares, or rights offeringto purchase Common Stock at a price substantially below fair market value, orof any similar change affecting the Common Stock, the number and kind of shareswhich thereafter may be optioned and sold under the Plan and the number andkind of shares subject to option in outstanding option agreements and thepurchase price per share thereof shall be appropriately adjusted consistentwith such change in such manner as the Committee may deem equitable to preventsubstantial dilution or enlargement of the rights granted to, or available for,participants in the Plan.

 

(i)                                     Incentive Stock Options.  Each option agreement which provides for thegrant of an incentive stock option to a participant shall contain such termsand provisions as the Committee may determine to be necessary or desirable inorder to qualify such option as an incentive stock option within the meaning ofSection 422 of the Code, or any amendment thereof or substitute therefor.

 

(j)                                     No Rights as Shareholder.  No optionee shall have any rights as ashareholder with respect to any shares subject to his or her option prior tothe date of issuance to him or her of a certificate or certificates for suchshares.

 

(k)                                  No Rights to ContinuedEmployment.  The Plan and anyoption granted under the Plan shall not confer upon any optionee any right withrespect to continuance of employment by the Company or any Subsidiary, norshall the Plan and any option granted under the Plan interfere in any way withthe right of the Company or any Subsidiary by which an optionee is employed toterminate his or her employment at any time.

 

6.                                       Compliance with Other Lawsand Regulations.  The Plan, thegrant and exercise of options hereunder, and the obligation of the Company tosell and deliver shares of Stock under such options, shall be subject to all applicablefederal and state laws, rules, and regulations and to such approvals by anygovernment or regulatory agency as may be required.  The Company shall not be required to issue ordeliver any certificates for shares of Stock prior to (a) the listing ofsuch shares on any stock exchange on which the Stock may then be listed and (b) thecompletion of any registration or qualification of such shares under anyfederal or state law, or any ruling or regulation of any government body whichthe Company shall, in its sole discretion, determine to be necessary oradvisable.

 

7.                                       Disposition of Shares.  Without the consent of the Committee, noshare of Stock acquired by an exercise of an incentive stock option grantedunder the Plan shall be transferable other than by will or by the laws ofdescent and distribution within two years of the date such option was grantedor within one year after the transfer of such share pursuant to such exercise; provided,however, that an optionee may sell, transfer, hypothecate, or otherwisedispose of the shares acquired upon exercise of an incentive stock option atany time following exercise so long as adequate provision is made for thepayment to the Company of funds sufficient for payment of any withholding andother taxes required by any governmental authority in respect of the sale ofsuch shares prior to one year following the date of exercise.

 

8.                                       Amendment and Discontinuance.  The Board of Directors of the Company mayfrom time to time amend, suspend or discontinue the Plan; provided, however,that, subject to the provisions of paragraph (h) of Section 5, noaction of the Board of Directors or of the Committee may (i) increase thenumber of shares reserved for options pursuant to Section 2, (ii) permitthe granting of any option having an exercise price less than that determinedin accordance with

 

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paragraph (b) ofSection 5, (iii) shorten the period provided for in paragraph (c) ofSection 5 which must elapse between the date of granting an option and thedate on which any part of an option may be exercised, (iv) permit thegranting of options which expire beyond the period provided for in paragraph (a) ofSection 5, or (v) make any change that would require shareholderapproval pursuant to Rule 16b-3 under the Exchange Act, unless suchapproval is obtained.  Without thewritten consent of an optionee, no amendment or suspension of the Plan shallalter or impair any option previously granted to him or her under the Plan.  Notwithstanding the foregoing, the Board ofDirectors may also amend or modify the Plan to give effect to changes hereafteradopted in any law, rule or regulation affecting incentive stockoptions.  The Plan may be amended,modified or terminated in any other manner as may be approved by theshareholders of the Company.

 

9.                                       Effective Date of the Plan.  The Effective Date of the Plan shall be May 19,1994, the date of its adoption by the Board of Directors of the Company,subject to approval by shareholders of the Company holding not less than amajority of the shares present and voting at its next annual or specialshareholders’ meeting.

 

10.                                 Name.  The Plan shall be known as the “MesabaHoldings, Inc. 1994 Stock Option Plan.”

 

11.                                 Effect on Other Stock Plans.  The adoption of the Plan shall have no effecton options granted or to be granted pursuant to any other stock option planscovering the employees of the Company, any Subsidiary, or any predecessors orsuccessors thereto.

 

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