Document:

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EXHIBIT 10.37

CIT EMPLOYEE SEVERANCE PLAN

Effective Date:  November 6, 2013

TABLE OF CONTENTS

	ARTICLE I – INTRODUCTION	1
	 	 
	ARTICLE II – DEFINITIONS AND INTERPRETATIONS	1
	 	 
	ARTICLE III - ELIGIBILITY TO PARTICIPATE	6
	 	 
	ARTICLE IV – BENEFITS PAYABLE FROM THE PLAN	7
	 	 
	ARTICLE V – NOTICE OF TERMINATION	11
	 	 
	ARTICLE VI – HOW AND WHEN SEVERANCE BENEFITS WILL BE PAID	12
	 	 
	ARTICLE VII – MISCELLANEOUS PROVISIONS	13
	 	 
	ARTICLE VIII – WHAT ELSE A PARTICIPANT NEEDS TO KNOW ABOUT THE PLAN	14

CIT EMPLOYEE SEVERANCE PLAN

ARTICLE I – INTRODUCTION

CIT Group Inc. (“CIT”) hereby establishes the CIT Employee Severance Plan (the “Plan”), effective November 6, 2013 (defined herein as the “Effective Date”), to provide severance and other benefits to certain employees of CIT and its designated affiliated companies (together, the “Company”) who suffer a loss of employment under the terms and conditions set forth in the Plan.  The Plan replaces, terminates and supersedes any and all severance plans, policies and/or practices of the Company and its Affiliates in effect for covered employees prior to the Effective Date; provided, however, that any employee of CIT or its Affiliates who has been given written notice of termination prior to the Effective Date shall not be eligible for benefits under the Plan, but shall remain subject to the terms and conditions of the Employee Severance Plan in effect prior to the Effective Date.

The Plan is intended to fall within the definition of an “employee welfare benefit plan” under Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  No employee or representative of the Company or any of its Affiliates is authorized to modify, add to or subtract from these terms and conditions, except in accordance with the amendment and termination procedures described herein.

ARTICLE II – DEFINITIONS AND INTERPRETATIONS

The following definitions and interpretations of important terms apply to the Plan.

1.

Affiliate.   Any corporation that is included in a controlled group of corporations (within the meaning of Section 414(b) of the Code) that includes CIT and any trade or business (whether or not incorporated) that is under common control with CIT (within the meaning of Section 414(c) of the Code); provided, however, that in applying Section 1563(a)(1), (2), and (3) of the Code for purposes of determining a controlled group of corporations under Section 414(b) of the Code, the language “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Section 1563(a)(1), (2) and (3) of the Code, and in applying Section 1.414(c)-2 of the Treasury Regulations, for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c) of the Code, “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Section 1.414(c)-2 of the Treasury Regulations.  Notwithstanding the foregoing, (i) no trade or business that CIT or an Affiliate acquires (or acquires an interest in) as a result of a business loan or lease default or related or similar events, and (ii) no entity in which CIT or an Affiliate has an equity investment, but which is not consolidated on CIT’s financial statements, shall be considered an Affiliate for purposes of the Plan.

2.

Agreement and General Release.  The confidential separation agreement and general release provided by the Company to an Employee in connection with his or her termination of employment with the Company, which if executed by the Employee (and not timely revoked), will acknowledge his or her termination of employment with the Company and release the Company, Affiliates and all other affiliated parties and individuals from liability for any and all claims.  The Agreement and General Release will also, in the complete and sole discretion of the Company, include additional provisions relating to, by way of example and not limitation: non-solicitation of customers, employees and other parties; confidentiality of the Agreement and General Release; confidentiality of Company and Affiliate information; non-disparagement of the Company, Affiliates and all other affiliated parties and individuals; return of Company and Affiliate property; cooperation with litigation; and such other provisions as the Company deems necessary from time to time to protect its interests and those of its Affiliates, including, without limitation, non-competition provisions.  By signing the Agreement and General Release, an Employee waives, among other things, all rights he or she may have under federal, state and local statutes and all common law causes of action related to his or her employment and the termination of his or her employment and agrees to comply with the terms of the Agreement and General Release.

3.

Base Pay.  The Participant’s annualized base salary from the Company at the time of his or her Termination Date (or, if the Participant is paid on an hourly basis, the Participant’s base wages for the 52-week period preceding his or her Termination Date).  Base Pay shall exclude all forms of bonuses or awards, commissions or sales-related compensation, non-cash compensation, incentive or deferred compensation (including STI), overtime pay, employer contributions to employee benefit plans and any other additional or special compensation.  However, a Participant’s Base Pay will include salary reduction contributions made on a Participant’s behalf to any plan of the Company under Section 125, 132(f) or 401(k) of the Code.  For purposes of the Plan, a Week of Base Pay shall be a Participant’s annual Base Pay divided by 52.

4.

Cause.   Any reason for an employment termination that does not constitute a basis for an Eligible Termination of Employment, including, without limitation, misconduct, performance or performance related reasons, and any act or omission that would preclude the Employee from employment with the Company by virtue of Section 19 of the Federal Deposit Insurance Act. 

The determination as to whether an Employee has been terminated for Cause will be made by the Company, in its sole and absolute discretion, and such determination shall be final and binding on all affected Employees and may be relied upon by the Plan Administrator.

If an Employee is terminated from employment and it is subsequently determined that, by virtue of conduct or circumstances, arising either before or after the termination, the Employee or former Employee engaged in conduct that constitutes Cause or that would have constituted Cause, he or she shall be treated as having been terminated for Cause, and the individual will be ineligible for benefits under the Plan.  In such 

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circumstances, in the event that Plan benefits have already been paid by the Company, the Company shall be entitled to recover any such benefits.

5.

CEO.  The chief executive officer of CIT.

6.

Change of Control.  A Change of Control shall be defined as set forth in the Amended and Restated CIT Group Inc. Long-Term Incentive Plan, as amended from time to time. 

7.

Change of Control Termination.  A Level 1 Employee’s employment with the Company ends for any reason that constitutes an Eligible Termination of Employment within two years after a Change of Control.

8.

CIT.  CIT Group Inc. and it successors in interest.

9.

Code.  The Internal Revenue Code of 1986, as amended.

10.

Committee.  The Compensation Committee of the Board of Directors of CIT, as it is constituted from time to time, or any successor committee.

11.

Company.  CIT and any Affiliate, except an Affiliate that is excluded from the Plan by the CEO and that is listed on Appendix A.  An Affiliate shall cease to be part of the Company at the time such company ceases to be an Affiliate.

12.

Continuous Service.  As of the Participant’s Termination Date and as reflected in the Company’s records, the sum total of the Participant’s period of employment in a capacity that qualifies such person as an Employee.  Notwithstanding the foregoing, employment prior to a break in service will not be counted towards a Participant’s Continuous Service if (i) it preceded a break in service longer than one year, or (ii) the Participant was paid or provided (and did not repay) severance or termination-related benefits in connection with such employment prior to a break in service.   A Year of Continuous Service is a 12-month period of Continuous Service (with partial years rounded up).

13.

Effective Date.  The Effective Date of the Plan is November 6, 2013.

14.

Eligible Termination of Employment.   Eligible Termination of Employment shall mean (a) the involuntary termination by the Company of an Employee’s employment relationship as the result of a job elimination, downsizing or restructuring, or (b) a Good Reason Termination.

15.

EMC Member.  A member of CIT’s Executive Management Committee, or a successor committee.

16.

Employee.  Any employee of the Company who (i) is employed within the United States as of his or her Termination Date (or is a United States citizen temporarily on an employment assignment outside of the United States with the reasonable 

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expectation to return to the United States as a continuing employee of the Company), (ii) is regularly scheduled to work at least twenty hours per week, and (iii) is not eligible to either participate in any other severance plan of the Company or any of its Affiliates or receive severance or termination-related benefits pursuant to a written agreement between such individual and the Company or any of its Affiliates.   Notwithstanding the preceding sentence, “Employee” also does not include any individual (i) designated or classified by the Company as an independent contractor, or any other form of contingent worker and not as an employee at the time of any determination, (ii) being paid by or through a third party agency, or (iii) designated or classified by the Company as an intern, or a seasonal, temporary, project-based or leased employee, during the period the individual is so paid or designated; any such individual shall not be an Employee even if he or she is later retroactively reclassified as a common-law or other type of employee of the Company during all or any part of such period pursuant to applicable law or otherwise.

17.

Good Reason.  Good Reason occurs when, without the Employee’s consent:

(i)

An Employee incurs a material diminution of his or her Base Pay (except in the event of a compensation reduction applicable to the Employee and other employees of comparable rank and/or status); or

(ii)

Either of the following occurs, which shall be applicable to a Level 1 Employee only: (A) for purposes of determining whether the Employee experiences a Change of Control Termination, such Employee  incurs a material diminution of his or her duties and responsibilities following a Change of Control, or (B) for purposes of determining whether the Employee experiences an Eligible Termination of Employment, other than a Change of Control Termination, such Employee  incurs a material diminution of his or her duties and responsibilities as a result of actions taken pursuant to the provisions of the agreement under which the Change of Control is effected, but before the Change of Control actually occurs (except the foregoing shall in no event apply to a temporary reduction while the Employee is physically or mentally incapacitated or a modification in the duties and/or responsibilities of the Employee and other employees of comparable rank and/or status); or

(iii)

An Employee is reassigned to a work location that is more than fifty miles from his or her immediately preceding work location and which increases the distance the Employee has to commute to work by more than fifty miles.

18.

Good Reason Termination.  The termination by an Employee of his or her employment relationship with the Company for Good Reason; provided, however, that a Good Reason Termination shall not occur unless (a) the Employee has provided the Company written notice specifying in detail the alleged condition of Good Reason within thirty days of the existence of such condition; (b) the Company has failed to cure such 

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alleged condition within ninety days following the Company’s receipt of such written notice; and (c) if the Committee has determined that the Company has failed to cure such alleged condition, the Employee initiates a separation from service within five days following the end of such ninety-day cure period.

19.

Ineligible Termination.  A discharge or other separation of employment of an Employee for any of the following reasons:

(i)

the Employee is involuntarily terminated by the Company, with or without prior warning or notice, for Cause;

(ii)

an Employee’s voluntary resignation (other than a Good Reason Termination), retirement, job abandonment or other voluntary failure to remain continuously employed through his or her designated Termination Date;

(iii)

an Employee’s death (except as specifically provided herein) or disability (as defined in the Company’s applicable long-term disability plan or policy last in effect prior to the first date the Employee suffered from such disability);

(iv)

the business or a portion of the business of the Company is (i) sold in whole or in part to an unaffiliated corporation, company or individual, (ii) merged or consolidated with an unaffiliated corporation, company or individual or is part of a similar corporate transaction or (iii) outsourced to another corporation, company or individual, and the Employee is offered employment with the purchaser or surviving business or the corporation, company or individual to which the business is outsourced (whether or not he or she accepts any such position with the purchaser, surviving business or other company or individual) in a position (a) with an annualized base pay in an amount at least equal to the annualized Base Pay that the Employee last received from the Company; and (b) that does not result in a reassignment of the Employee’s work location that is more than fifty miles from the Employee’s immediately preceding work location and which increases the distance the Employee has to commute to work by more than fifty miles.

20.

Level 1 Employee.  An EMC Member and an Employee with a grade of 420 or higher (or such other comparable classification as determined by the Company in writing from time to time) and other key Employees as designated by the CEO and approved by the Committee.

21.

Level 2 Employee.  An Employee with a grade less than 420 (or such other comparable classification as determined by the Company in writing from time to time).

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22.

Notice Date.  The date on which an Employee is notified by the Company of his or her involuntary Eligible Termination of Employment or an Employee notifies the Company of a Good Reason Termination.

23.

Notice Period.  The time between when an Employee is notified in writing that he or she will be incurring an involuntary Eligible Termination of Employment and his or her Termination Date, as determined under Article V, below.

24.

Participant.  An Employee who meets the requirements for eligibility under the Plan, as set forth in Article III, below.  An individual shall cease being a Participant once all severance and other benefits due to such individual under the Plan have been paid with respect to such Participant and no person shall have any further rights under this Plan with respect to such former Participant.

25.

Plan Administrator.  The Employee Benefit Plans Committee of CIT (or successor committee), or such other person or committee appointed from time to time by the Employee Benefit Plans Committee of CIT to administer the Plan. 

26.

Severance Pay.  The amount payable to a Participant under Article IV, below.

27.

Severance Period.  The number of weeks for which Base Severance is paid to a Participant under Article IV, below.

28.

STI.  The discretionary annual incentive, including cash and applicable equity or equity-based or other non-cash awards, whether or not deferred, that may be payable to a Participant, but excluding all other forms of incentive awards, such as any long term incentive awards or payments, special awards or bonuses, sign-on or retention awards or bonuses, earn out awards or payments, awards or payments pursuant to any sales plans and/or commission plans, or any similar awards or payments, as determined in the sole discretion of the Company. 

29.

Termination Date.  The date (as designated by the Company with respect to an involuntary termination) on which an Employee experiences an Eligible Termination of Employment with the Company.  Notwithstanding the foregoing, with respect to any Employee, the Company reserves the right, in its sole and absolute discretion, to change a previously designated Termination Date.

ARTICLE III - ELIGIBILITY TO PARTICIPATE

An Employee becomes a Participant in the Plan and shall be entitled to Severance Pay and other benefits provided in Article IV and, if applicable, notice of termination provided in Article V, below, only if he or she:

(i)

Either (A) is notified by the Company in writing on or after the Effective Date of his or her involuntary Eligible Termination of Employment, to be 

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effective as of his or her Termination Date, or (B) meets the requirements for a Good Reason Termination after the Effective Date;

(ii)

Does not incur an Ineligible Termination or does not continue as or become an employee of the Company or an Affiliate;

(iii)

Experiences an Eligible Termination of Employment; and

(iv)

Timely returns (and does not timely revoke) a signed, dated and notarized original Agreement and General Release.

An Employee shall become a Participant and payment of benefits under the Plan will be made only after the Agreement and General Release has been signed and the time for the Employee to revoke the Agreement and General Release (as set forth in the Agreement and General Release), if any, has expired without the Employee having revoked that document.

Notwithstanding the foregoing, if an Employee is notified in writing on or after the Effective Date of his or her involuntary Eligible Termination of Employment and dies prior to his or her designated Termination Date, any amounts that would have been paid to the Employee under the Plan will be paid to the appointed administrator, executor or personal representative of the Participant’s estate (based on the Company’s receipt of a death certificate and letters testamentary, as applicable) as soon as practicable following the effective date of an Agreement and General Release timely executed by the appropriate person.

In addition, with respect to an Employee who is on disability or medical leave of absence and would have incurred an Eligible Termination of Employment but for such leave, such person shall become a Participant on (and the Employee’s Termination Date shall be deemed to be) the date on which the Employee is medically cleared to return to employment (based on such evidence that the Plan Administrator requests, in its discretion), provided that the Employee actually presents himself or herself to the Company for work within 10 calendar days of such clearance date (and satisfies all of the other requirements in this Article III).  

ARTICLE IV – BENEFITS PAYABLE FROM THE PLAN

Participants shall be entitled to the following Severance Pay and other benefits under either Section A or B below (without duplication), depending on the category of their Eligible Termination of Employment:

A.

Eligible Termination of Employment (other than a Change of Control Termination)

A Participant who incurs an Eligible Termination of Employment (other than a Change of Control Termination) shall be entitled to receive the following:

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1.

Base Severance.

Base Severance in an amount determined under the following chart, provided, however, that the maximum Base Severance under the Plan will be 52 Weeks of Base Pay:

			
	Grade

	Minimum Base Severance

(Weeks of Base Pay)

	Additional Weeks of Base Pay per Year of Continuous Service

	EMC

	52 Weeks

	N/A

	420

	39 Weeks

	2 Weeks

	418

	20 Weeks

	2 Weeks

	416

	16 Weeks

	2 Weeks

	414

	12 Weeks

	2 Weeks

	412

	10 Weeks

	2 Weeks

	410

	8  Weeks

	2 Weeks

	Below 410

	4  Weeks

	2 Weeks

2.

Severance Bonus.

Severance Bonus in an amount determined as follows:

(a)

Level 1 Employees.

For Level 1 Employees, the Company will pay the Participant an amount equal to his or her Level 1 Applicable Amount (as defined below), multiplied by a fraction, the numerator of which is the number of months employed (with a partial month deemed to be a full month for this purpose) during the period beginning on the later of (i) January 1st of the year in which the Participant’s Notice Date occurs and (ii) the Participant’s most recent date of hire with the Company, and ending on his or her Termination Date, and the denominator of which is 12.  For purposes of the prior sentence, the Level 1 Applicable Amount shall be equal to, (i) if the Participant was eligible for an STI for the year immediately preceding his or her Notice Date, the STI granted to such Participant for such preceding year, if any, (or the most recent STI guarantee, if applicable), and (ii) if the Participant was not eligible for an STI for the year immediately preceding his or her Notice Date, the most recent STI guarantee or estimate/target, if applicable.

(b)

Level 2 Employees

For Level 2 Employees, the Company will pay the Participant an amount equal to his or her Level 2 Applicable Amount (as defined below), multiplied by a fraction, the numerator of which is the number of months employed (with a partial month deemed to be a full month for this purpose) during the period 

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beginning on the later of (i) January 1st of the year in which the Participant’s Notice Date occurs and (ii) the Participant’s most recent date of hire with the Company, and ending on his or her Termination Date, and the denominator of which is 12.  For purposes of the prior sentence, the Level 2 Applicable Amount shall be equal to: (i) if the Participant was eligible for an STI during the year immediately preceding his or her Notice Date, (A) for Employees grade 412 and above, the STI granted to such Participant for such preceding year, if any, (or the most recent STI guarantee, if applicable), or (B) for Employees below grade 412, his or her Severance Bonus Percentage of Base Pay as determined in accordance with Schedule A attached, which Schedule may be amended from time to time, in the sole discretion of the CEO, and (ii) if the Participant was not eligible for the STI for the year immediately preceding his or her Notice Date, (A) for Employees grade 412 and above, the most recent STI guarantee or STI estimate/target, or (B) for Employees below grade 412, his or her current year Severance Bonus Percentage of Base Pay as determined in accordance with Schedule A attached.

Notwithstanding the foregoing, if a Participant’s Notice Date is on or after January 1 of a year, but prior to the time that the STI, if any, is paid for the year preceding such Notice Date, the Participant will no longer be eligible for an STI for such preceding year.  Instead, the numerator described under either subparagraph (a) or (b) above, as applicable, shall be increased by the number of months the Participant was employed in the year preceding such Notice Date. 

3.

Benefits Payment.

Following his or her Termination Date, a Participant (and his or her eligible dependents) may be entitled to elect to continue medical, vision, prescription drug and dental coverage under the Company-sponsored health coverage plans on a self-pay basis in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).  If a Participant is so eligible for COBRA coverage for himself or herself and/or his or her eligible dependents, the Company will pay the Participant an amount equal to the applicable premium (at 102% of the applicable rate) for such coverage (but for no more than the coverage in effect immediately prior to the Participant’s Termination Date) for the Participant’s Severance Period.  For example, if the Participant is entitled to 12 Weeks of Base Pay as Base Severance, he or she will be eligible for a payment equal to 12 weeks of COBRA premiums.  Any such premium payment will include an additional gross up payment meant to reasonably cover applicable federal and state income taxes, as determined in the sole discretion of the Company.

All provisions of the Participant’s (and his or her covered eligible dependents’) COBRA coverage will be in accordance with the applicable plan in effect for similarly situated active employees of the Company (including any applicable co-payments, co-insurance, deductibles and other out-of-pocket expenses).

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4.

Outplacement Benefits.

Participants may be entitled to certain outplacement services as determined by the Company, in its sole and absolute discretion.  If a Participant is offered outplacement services, the Company will make arrangements for the provision of such services at an outplacement provider of the Company’s choice, provided, however, that such outplacement services will cease if a Participant obtains subsequent employment.

B.

Change of Control Termination

A Level 1 Employee who incurs a Change of Control Termination shall be entitled to receive the following, in lieu of the benefits provided under Section A above:

1.

EMC Members.

An EMC Member who incurs a Change of Control Termination shall be entitled to receive Base Severance in an amount equal to two times the sum of (i) his or her annual Base Pay, plus (ii) the average of the highest two out of the last three years’ STI awards, or the simple average if the period is less than three years (or, if the Participant was not eligible for an STI during such period, the current year STI guarantee or estimate/target, if applicable).  In addition, the EMC Member shall receive (i) a Severance Bonus, as determined above, but, in the case of a Participant who was eligible for an STI award for at least the last two performance years, based on the average of the highest two out of the last three years’ STI awards, (ii) a Benefits Payment, as determined above, but for a maximum of 24 months (notwithstanding any statutory limitations on the length of COBRA coverage), and (iii) outplacement benefits, as determined above.

2.  Grade 420

A grade 420 Employee (and any other key Employee designated by the CEO of CIT and approved by the Committee) who incurs a Change of Control Termination shall be entitled to receive Base Severance in an amount equal to the sum of (i) his or her annual Base Pay, plus (ii) the average of the highest two out of the last three years’ STI awards, or the simple average if the period is less than three years (or, if the Participant was not eligible for an STI during such period, the current year STI guarantee or estimate/target, if applicable).  In addition, the Participant shall receive (i) a Severance Bonus, as determined above, but, in the case of a Participant who was eligible for an STI award for at least the last two performance years, based on the average of the highest two out of the last three years’ STI awards, and (ii) a Benefits Payment as determined above, but for a maximum of 12 months, and (iii) outplacement benefits, as determined above.

Notwithstanding the foregoing, if a Participant receives benefits provided under Section A after an Eligible Termination of Employment that (i) occurs within two years prior to a Change of Control, and (ii) such Eligible Termination of Employment results from actions taken pursuant to the provisions of the agreement under which the Change of Control is effected, then such Participant will receive, on the Change of Control date, 

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the difference between the Severance Pay paid to the Participant under Section A above and the Severance Pay that would be payable under this Section B as if such Eligible Termination of Employment were a Change of Control Termination.

*                              *                              *

If an Employee is eligible to participate in the Plan (whether or not the Employee elects to become a Participant), such Employee shall not be entitled to receive any other severance, separation, notice (other than notice required under the Plan) or termination payments or other remuneration on account of his or her employment or termination of employment with the Company (or any Affiliate) under any other plan, policy, program or agreement.  If, for any reason, a Participant becomes entitled to or receives any other severance, separation, notice or termination payments on account of his or her employment or termination of employment with the Company (or any Affiliate), including, for example, any payments required to be paid to the Participant under any Federal, State or local law (including, without limitation, the Worker Adjustment and Retraining Notification Act or “WARN”) or pursuant to any agreement (except unemployment benefits payable in accordance with state law and payment for accrued but unused vacation), his or her benefits under the Plan will be reduced by the amount of such other payments paid or payable.  An Employee must notify the Plan Administrator if he or she receives or is claiming to be entitled to receive any such payment(s).

ARTICLE V – NOTICE OF TERMINATION

Each Employee who may become entitled to Severance Pay and other benefits under the Plan in connection with an involuntary Eligible Termination of Employment shall receive written notice of termination from the Company for a minimum period of time equal to such Participant’s Notice Period, as determined under the following chart:

		
	Grade

	Notice Period

	EMC

	12 Weeks

	420

	12 Weeks

	418

	12 Weeks

	416

	8 Weeks

	414

	6 Weeks

	412

	4 Weeks

	Below 412

	3 Weeks

Notwithstanding the foregoing, the Company, in its sole discretion, may remove the Employee from the Company’s payroll (and the date of such removal shall be the Participant’s Termination Date) and pay the Employee for the remaining applicable Notice Period in lieu of providing notice hereunder, which amount will be equal to one Week (or partial Week) of Base Pay in effect on his or her Termination Date for each week (or partial week) of advance notice that the Employee would otherwise have received.  This payment in lieu of notice is in addition to any other payments for which the Employee is eligible under the Plan and shall be paid at the same time as Severance 

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Pay is paid to such Participant.  Any notice (or pay in lieu of notice) to which an Employee is entitled to receive is inclusive of, and not in addition to, any advance notice of an involuntary termination of employment that the Company is obligated to give the Employee under applicable federal, state or local law, including, without limitation, WARN.

ARTICLE VI – HOW AND WHEN SEVERANCE BENEFITS WILL BE PAID

Except as provided in the following paragraph or otherwise specifically provided in the Plan, any amounts due to a Participant will be paid in a single lump sum 60 days following the Participant’s Termination Date.

Notwithstanding anything in this Plan to the contrary, if the aggregate of all amounts payable to a Participant under the Plan (when combined with similar amounts payable to the Participant under any other agreements, methods, programs, or other arrangements with respect to which deferrals of compensation are treated with the Plan as having been deferred under a single nonqualified deferred compensation plan under Treasury Regulation Section 1.409A-1(c)(2)) exceeds the lesser of two times (i) the Participant’s annual rate of pay for the year prior to the year of his or her Termination Date or (ii) the maximum amount that may be taken into account under a qualified pension plan pursuant to Section 401(a)(17) of the Code for the year of his or her Termination Date, (A) such amount that exceeds the above limit shall be paid to the Participant within 30 days following the six month anniversary of the Participant’s Termination Date or, if earlier, the Participant’s death, and (B) an Eligible Termination of Employment shall not be deemed to have occurred for purposes of any provision of this Plan providing for payment of such amounts until such Eligible Termination of Employment is also a separation from service from the Company within the meaning of Code Section 409A.

If a Participant receives Severance Pay and is re-hired by the Company or any Affiliate before his or her Severance Period expires, then the Participant must repay to the Company an amount equal to the sum of a Week of Base Pay for such Participant and the applicable COBRA premium used to determine his or her Benefits Payment (determined on a weekly basis), multiplied by the difference between the number of weeks (or partial weeks) of Base Severance paid to the Participant and the actual number of weeks (or partial weeks) between the Participant’s Termination Date and the date on which the Participant is rehired. 

All amounts payable under the Plan are subject to Federal, state and local income and Social Security tax withholdings and any other withholdings mandated by law.

In the event that a Participant dies before receiving the payments due to the Participant under the Plan, any remaining amounts will be paid to the appointed administrator, executor or personal representative of the Participant’s estate as soon as administratively possible following the Participant’s death.

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ARTICLE VII – MISCELLANEOUS PROVISIONS

1.

Amendment and Termination.  The Company reserves the right, in its sole and absolute discretion, to terminate, modify and amend the Plan in whole or in part, at any time, for any reason, with or without advance notice; provided, however, that, unless otherwise required by applicable law or regulation, no termination, modification or amendment: (i) may adversely affect the rights of a Participant whose Agreement and General Release has become effective, or (ii) shall be made within two years after a Change of Control or prior to a Change of Control while an agreement is in effect under which the Change of Control is to be effected, if such termination, modification or amendment would adversely affect the rights of Employees under the Plan.  No individual may become entitled to additional benefits or other rights under the Plan after the Plan is terminated.   

2.

No Additional Rights Created.  Neither the establishment of this Plan, nor any modification thereof, nor the payment of any benefits hereunder, shall be construed as giving to any Participant, Employee or other person any legal or equitable right against the Company or any officer, director or employee thereof; and in no event shall the terms and conditions of employment by the Company of any Employee be modified or in any way affected by this Plan.

3.

Records.  The records of the Company with respect to Continuous Service; employment history; STI awards, estimates or guarantees; Base Pay; absences; employee benefits; and all other relevant matters shall be conclusive for all purposes of this Plan.

4.

Construction.  The respective terms and provisions of the Plan shall be construed, whenever possible, to be in conformity with the requirements of ERISA, or any subsequent laws or amendments thereto.  To the extent not in conflict with the preceding sentence or another provision in the Plan, the construction and administration of the Plan shall be in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York (without reference to its conflicts of law provisions).

5.

Severability.  Should any provisions of the Plan be deemed or held to be unlawful or invalid for any reason, such fact shall not adversely affect the other provisions of the Plan unless such determination shall render impossible or impracticable the functioning of the Plan, and in such case, an appropriate provision or provisions shall be adopted so that the Plan may continue to function properly.

6.

Incompetency.  In the event that the Plan Administrator finds that a Participant is unable to care for his or her affairs because of illness or accident, then benefits payable hereunder, unless claim has been made therefor by a duly appointed guardian, committee, or other legal representative, may be paid in such manner as the Plan Administrator shall determine, and the application thereof shall be a complete discharge of all liability for any payments or benefits to which such Participant was or would have been otherwise entitled under this Plan.

13

7.

Plan Not a Contract of Employment.  Nothing contained in this Plan shall be held or construed to create any liability upon the Company to retain any Employee in its service.  All Employees shall remain subject to discharge or discipline to the same extent as if the Plan had not been put into effect.

8.

Financing.  The benefits payable under this Plan shall be paid out of the general assets of the Company.  No Participant or any other person shall have any interest whatsoever in any specific asset of the Company.  To the extent that any person acquires a right to receive payments under this Plan, such right shall not be secured by any assets of the Company.

9.

Successors; Binding Obligation. 

(a)

This Plan shall not be terminated by any merger or consolidation of CIT whereby CIT is or is not the surviving or resulting corporation or as a result of any transfer of all or substantially all of the assets of CIT or a purchase of the securities of CIT.  In the event of any such merger, consolidation, transfer of assets or purchase, the provisions of this Plan shall be binding upon the surviving or resulting corporation or the person or entity to which such assets are transferred.

(b)

The Company agrees that concurrently with any merger, consolidation, transfer of assets or purchase of the securities of CIT referred to in paragraph (a) of this Section 9, it will cause any successor or transferee unconditionally to assume all of the obligations of the Company hereunder.

10.

Nontransferability.  In no event shall the Company make any payment under this Plan to any assignee or creditor of a Participant, except as otherwise required by law.  Prior to the time of a payment hereunder, a Participant shall have no rights by way of anticipation or otherwise to assign or otherwise dispose of any interest under this Plan, nor shall rights be assigned or transferred by operation of law.

ARTICLE VIII – WHAT ELSE A PARTICIPANT NEEDS TO KNOW ABOUT THE PLAN

1.

Claims Procedure.  Participants will receive the benefits to which they are entitled under the Plan.  If an Employee or former Employee (“claimant”) feels he or she has not been provided with all benefits to which he or she is entitled under the Plan, the claimant may file a written claim with the Senior Vice President of Compensation and Benefits, Human Resources of CIT (the “Claims Reviewer”) with respect to his or her rights to receive benefits from the Plan.  This claim must be filed within one year after the claimant’s termination of employment.

A claimant will be notified of the acceptance or denial of his or her claim for benefits within ninety (90) days from the date the Claims Reviewer receives the application.  In some cases, a claimant’s request may take more time to review and an additional processing period of up to ninety (90) days may be required.  If that happens, 

14

the claimant will receive a written notice of that fact, which will also indicate the special circumstances requiring the extension of time and the date by which the Claims Reviewer expects that a determination will be made with respect to the claim.  If the extension is required due to the claimant’s failure to submit information necessary to decide the claim, the period for making the determination will be tolled from the date on which the extension notice is sent to the claimant until the date on which the claimant responds to the Plan’s request for information.

If a claimant’s claim is denied in whole or in part, or any adverse benefit determination is made with respect to a claimant’s claim, he or she will be provided with a written notice setting forth the reason for the determination, along with specific references to Plan provisions on which the determination is based.  This notice also will explain what additional information is needed to evaluate the claim (and why such information is necessary), together with an explanation of the Plan’s claims review procedure and the time limits applicable to such procedure, as well as a statement of the claimant’s right to request arbitration as set forth below (in lieu of bringing a civil action under Section 502(a) of ERISA) following an adverse benefit determination on review.  If a claimant is not notified (of the denial or an extension) within ninety (90) days from the date the claimant notifies the Claims Reviewer, the claimant may request a review of his or her application as if the claimant’s claim had been denied.

If a claimant’s claim has been denied, the claimant may request that the Plan Administrator review the denial.  The request must be in writing and must be made within sixty (60) days after written notification of denial.  In connection with this request, the claimant (or his or her duly authorized representative) may (i) be provided, upon written request and free of charge, with reasonable access to (and copies of) all documents, records, and other information relevant to the claim; and (ii) submit to the Plan Administrator written comments, documents, records, and other information related to the claim.

The review by the Plan Administrator will take into account all comments, documents, records, and other information the claimant submits relating to the claim.  The Plan Administrator will make a final written decision on a claim review, in most cases within sixty (60) days after receipt of a request for a review.  In some cases, the claim may take more time to review, and an additional processing period of up to sixty (60) days may be required.  If that happens, the claimant will receive a written notice of that fact, which will also indicate the special circumstances requiring the extension of time and the date by which the Plan Administrator expects to make a determination with respect to the claim.  If the extension is required due to the claimant’s failure to submit information necessary to decide the claim, the period for making the determination will be tolled from the date on which the extension notice is sent to the claimant until the date on which the claimant responds to the Plan’s request for information.

The Plan Administrator’s decision on a claimant’s claim for review will be communicated to the claimant in writing.  If an adverse benefit determination is made with respect to a claimant’s claim, the notice will include (i) the specific reason(s) for any 

15

adverse benefit determination, with references to the specific Plan provisions on which the determination is based; (ii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to (and copies of) all documents, records and other information relevant to the claim; and (iii) a statement of the claimant’s right to request arbitration as set forth below, in lieu of bringing a civil action under Section 502(a) of ERISA. 

The decision of the Plan Administrator (or its designee) is final and binding on all parties.

These procedures must be exhausted before a claimant may request arbitration as set forth below regarding payment of benefits under the Plan.  A claimant may not request arbitration regarding payment of benefits more than one year after the claimant receives written notice of the decision on the claimant’s claim for review.

2.

Mandatory Arbitration

In lieu of a claimant’s right to bring a civil action under Section 502(a) of ERISA, any and all disputes, claims, or controversies arising out of or relating to this Plan or the breach, termination, enforcement, interpretation or validity thereof, including any and all claims arising under ERISA, and including the determination of the scope or applicability of this requirement to arbitrate, shall be determined by final and binding arbitration in the State of New York before one arbitrator.

Any claim must be brought in the respective party’s individual capacity, and not as a plaintiff or class member in any purported class, collective, representative, multiple plaintiff, or similar proceeding (“Class Action”).  The claimant expressly waives any ability to maintain any Class Action in any forum.  The arbitrator shall not have authority to combine or aggregate similar claims or conduct any Class Action nor make an award to any person or entity not a party to the arbitration.

The arbitrator must possess a juris doctorate degree and have significant experience in employment law.

The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules (as they exist on the Effective Date).  The claimant and the Company adopt and agree to implement the JAMS Optional Arbitration Appeal Procedure (as it exists on the Effective Date) with respect to any final award in an arbitration arising out of or related to the Plan.

The arbitration will be governed by the Federal Arbitration Act (9 U.S.C. Secs. 1-16), ERISA, and, to the extent ERISA does not apply, the laws of the State of New York exclusive of conflict or choice of law rules.

The parties shall maintain the confidential nature of the arbitration proceeding, hearing and award, except as may be necessary to prepare for or conduct the hearing on 

16

the merits, or except as may be necessary in connection with a court application for a preliminary remedy, a judicial challenge to an award or its enforcement, or unless otherwise required by applicable law, regulation, subpoena, court order, administrative ruling, or judicial decision, or to enforce the terms of the award.  The parties may disclose the existence, terms, and conditions of the arbitration proceeding, hearing and award, but only as necessary, to their legal advisors, accountants, auditors, regulators, experts, or other advisors, provided that the claimant or the Company makes the person to whom disclosure is made aware of the confidential nature of the arbitration proceeding, hearing and award, and such person agrees to maintain such confidentiality.

In any arbitration arising out of or related to this Plan, the arbitrator is not empowered to award punitive, compensatory, consequential, extracontractual or exemplary damages.

The arbitration award shall be accompanied by a statement of reasons.

The determination of the arbitrator shall be conclusive and binding on the parties, and judgment on the award may be entered in any court having jurisdiction.  This clause shall not preclude the claimant or the Company from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction.

3.

Plan Interpretation and Benefit Determination.

A.

The Plan Administrator (along with the Claims Reviewer, with respect to initial benefit determinations) shall have the exclusive right, power, and authority, in its sole and absolute discretion, to administer, apply and interpret the Plan and any other documents and to decide all factual and legal matters arising in connection with the operation or administration of the Plan.

B.

Without limiting the generality of the foregoing paragraph, the Plan Administrator (or, where applicable, any duly authorized delegee of the Plan Administrator) shall have the sole and absolute discretionary authority to:

1.

take all actions and make all decisions (including factual decisions) with respect to the eligibility for, and the amount of, benefits payable under the Plan;

2.

formulate, interpret and apply rules, regulations and policies necessary to administer the Plan;

3.

decide questions, including legal or factual questions, relating to the calculation and payment of benefits, and all other determinations made, under the Plan;

4.

resolve and/or clarify any factual or other ambiguities, inconsistencies and omissions arising under the Plan or other Plan documents; and

17

5.

process, and approve or deny, benefit claims and rule on any benefit exclusions.

All determinations made by the Plan Administrator (or, where applicable, any duly authorized delegee of the Plan Administrator) with respect to any matter arising under the Plan shall be final and binding on the Employee, Participant, beneficiary, and all other parties affected thereby.

4.

Miscellaneous.

The Plan Administrator keeps records of the Plan and is responsible for the administration of the Plan.  The Plan Administrator will also answer any questions a Participant may have about the Plan.

Service of legal process may be made upon the Plan Administrator.

To the fullest extent applicable, severance and other benefits payable under the Plan are intended to be exempt from the definition of “nonqualified deferred compensation” under Code Section 409A in accordance with one or more of the exemptions available under the final Treasury regulations promulgated under Code Section 409A and, to the extent that any such amount or benefit is or becomes subject to Code Section 409A due to a failure to qualify for an exemption from the definition of nonqualified deferred compensation in accordance with such final Treasury regulations, the Plan is intended to comply with the applicable requirements of Code Section 409A with respect to such amounts or benefits.  The Plan shall be interpreted and administered to the extent possible in a manner consistent with the foregoing statement of intent. Whenever a payment under this Plan may be paid within a specified period, the actual date of payment within the specified period shall be within the Company’s sole discretion. 

18

Appendix A

List of Affiliates Excluded from Company

None

Schedule A

		
	Grade

	Severance Bonus % of Base Pay

	410

	10%

	408

	8%

	406

	5%

	404

	3%Ex102NonqualifiedDeferredCompensationPlan10-QExhibit

EXHIBIT 10.2

AIR TRANSPORT SERVICES GROUP, INC. 
NONQUALIFIED DEFERRED COMPENSATION PLAN

1.00Purpose
As of the Effective Date, the Company adopts this Plan for the purpose of providing deferred compensation to a select group of management and highly compensated employees in an amount equal to the Retirement Contributions that could not be made to the Qualified Plan in which the Eligible Employee participates due to the compensation limit under Code §401(a)(17).  This Plan is an unfunded arrangement and is intended to be exempt from the participation, vesting, funding and fiduciary requirements set forth in Title I of ERISA.
2.00    Definitions
Whenever used in this Plan, the following terms have the meanings given to them in this Article 2.00, unless another meaning is expressly provided elsewhere in this Plan.  Also, the form of any term will include all of its other forms.
		
	2.01
	Account:  The bookkeeping account established for each Participant under Section 6.01 of this Plan.

		
	2.02
	Affiliate:  Any entity that, along with the Company, would be considered a single employer under Code §§414(b) and 414(c).

		
	2.03
	Beneficiary:  The person or persons designated by a Participant on a form prescribed by the Committee to receive any portion of such Participant’s benefit that is unpaid at the Participant’s death.  If a Participant has not made an effective designation of a Beneficiary or Beneficiaries, the Participant’s Beneficiary will be his or her surviving spouse or, if there is no surviving spouse, the Participant’s estate.  

		
	2.04
	Board:  The Board of Directors of the Company.

		
	2.05
	Cause:  With respect to any Participant, “cause” as defined in any employment (or similar) agreement then in effect between the Participant and the Company or an Affiliate or, if not defined therein, the occurrence of any of the following: (a) the Participant’s continued failure substantially to perform the Participant’s assigned duties (other than as a result of total or partial incapacity due to physical or mental illness) for a period of ten (10) days following written notice by the Company or any of its Affiliates to the Participant of such failure; (b) the Participant’s engagement in conduct detrimental to the interests of the Company or any of its Affiliates; (c) the Participant’s charged with, indictment for, conviction of, or plea of guilty or nolo contendere to, (i) a felony or (ii) a crime other than a felony, which involves moral turpitude or a breach of trust or fiduciary duty owed to the Company or any of its Affiliates; (d) the Participant's disclosure of trade secrets or confidential information of the Company or any of its Affiliates; or (e) the Participant's breach of any policy of the Company or any of its Affiliates that applies to the Participant or any agreement with the Company 

1

or any of its Affiliates in respect of confidentiality, nondisclosure, non-competition or otherwise. 
		
	2.06
	Change in Control:  Provided that such definition shall be interpreted in a manner that is consistent with the definition of “change in control event” under Code §409A and Treasury Regulation §1.409A-3(i)(5), a “Change in Control” of the Company shall mean the first to occur of any of the following:

		
	(a)
	the date that any person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company;

		
	(b)
	the date that any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing thirty percent (30%) or more of the total voting power of the stock of the Company;

		
	(c)
	the date that a majority of members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or 

		
	(d)
	the date that any one person, or more than one person acting as a group, acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions.

2.07    Code:  The Internal Revenue Code of 1986, as amended.
		
	2.08
	Committee:  The Compensation Committee of the Board.

2.09    Company:  Air Transport Services Group, Inc., and its successors.
		
	2.10
	Compensation:  A Participant’s “Compensation” as defined in the Qualified Plan calculated without regard to the compensation limit under Code §401(a)(17).

2.11    Disability:  A Participant shall be considered disabled if:
		
	(a)
	the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or

2

		
	(b)
	the Participant is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Participant’s employer; or

		
	(c)
	the Participant is determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board. 

3

		
	2.12
	Distribution Election Form:  The form each Eligible Employee and Participant, as the case may be, must complete to designate the form of distribution of his or her Plan Benefit or may complete to change a prior designation as to the form of distribution of his or her Plan Benefit.

		
	2.13
	Effective Date:  October 31, 2013.

		
	2.14
	Eligible Employee:  Each Employee who meets the eligibility criteria listed in Section 3.01.

		
	2.15
	Employee:  Each person employed by the Company or any of its Affiliates, except for any person so employed under the terms of a collective bargaining agreement.

		
	2.16
	Employer Contribution:  A contribution made by the Company or any of its Affiliates that is credited to a Participant’s Account in accordance with the terms of Section 4.01 of this Plan.  

		
	2.17
	ERISA:  The Employee Retirement Income Security Act of 1974, as amended.

		
	2.18
	Participant:  An Eligible Employee who becomes a participant in this Plan as described in Article 3.00.

		
	2.19
	Plan:  The Air Transport Services Group, Inc. Nonqualified Deferred Compensation Plan, as amended from time to time.

		
	2.20
	Plan Benefit:  The vested portion of a Participant’s Account as of any Valuation Date.

		
	2.21
	Plan Year:  Each calendar year or portion thereof during which this Plan is in effect.

		
	2.22
	Qualified Plan:  The qualified defined contribution retirement plan in which the Eligible Employee participates through his or her employer.  As of the Effective Date, such qualified defined contribution retirement plans include (a) the Amended and Restated ABX Air Capital Accumulation Plan, as may be amended from time to time; and (b) the Air Transport International LLC 401(k) Plan, as may be amended from time to time. 

		
	2.23
	Retirement Contribution:  The applicable employer contribution to be made on behalf of a Participant during a Plan Year pursuant to the terms of the Qualified Plan. 

		
	2.24
	Termination:  A “separation from service” within the meaning of Code §409A and Treasury Regulation §1.409A-1(h). 

		
	2.25
	Unforeseeable Emergency:  A severe financial hardship to a Participant within the meaning of Code §409A resulting from: (a) an illness or accident of the Participant or the Participant’s spouse, Beneficiary or dependent (as defined in Code §152, without regard to Code §§152(b)(1), (b)(2) and (d)(1)(B)); (b) loss of the Participant’s property due to casualty; or (c) other similar or extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

4

		
	2.26
	Valuation Date:  The last day of each calendar month or any other date or dates fixed by the Committee for the valuation and adjustment of an Account.

3.00    Participation
		
	3.01
	Eligibility.  Subject to Section 3.02 of this Plan, an Employee shall be an Eligible Employee upon designation by the Committee following satisfaction of the following requirements:

		
	(a) 
	is a highly compensated employee or a member of a select group of management (both within the meaning of Title I of ERISA) of the Company or any of its Affiliates, as determined by the Committee in its sole discretion;  

		
	(b)
	is eligible for a Retirement Contribution pursuant to the terms of the Qualified Plan; 

		
	(c)
	is credited with at least 1,000 “Hours of Service” as defined by the Qualified Plan during the Plan Year; and

		
	(d)
	receives Compensation in excess of the compensation limit under Code §401(a)(17).

		
	3.02
	Loss of Eligible Employee Status.  A Participant who is no longer an Eligible Employee shall no longer be eligible to participate in the Plan.  Amounts credited to the Account of a Participant who is no longer an Eligible Employee shall continue to be administered in accordance with the terms and conditions of this Plan and shall be distributed as provided in Article 7.00.

4.00    Employer Contributions
		
	4.01
	Employer Contributions.  Each Plan Year, the Company or one of its Affiliates, as applicable, shall make an Employer Contribution to the Account of a Participant in such amount that would have been made as a Retirement Contribution pursuant to the Qualified Plan if the compensation limit under Code §401(a)(17) did not exist, minus the amount of the Retirement Contribution actually made on behalf of the Participant under the Qualified Plan for the applicable Plan Year.  Such Employer Contributions shall be credited to the Accounts of Participants during the first calendar quarter following the last day of the Plan Year.

5.00    Vesting

5

		
	5.01
	Employer Contributions.  Except as otherwise provided in Section 5.02 of this Plan, a Participant shall have a vested right to the portion of his or her Account attributable to any Employer Contribution and any deemed earnings and losses on the investment of such Employer Contribution upon three “Years of Service” as defined by the Qualified Plan. 

		
	5.02
	Accelerated Vesting Upon Occurrence of Certain Events.  Notwithstanding the foregoing, a Participant shall become fully vested in all amounts credited to his or her Account upon the earliest to occur of: (a) the Participant’s Disability; (b) the Participant’s death; or (c) a Change in Control.

		
	5.03
	Amounts Not Vested.  Any amounts credited to a Participant’s Account that are not vested upon his or her Termination shall be forfeited.

6.00    Accounts
		
	6.01
	Establishment of Accounts.  The Committee shall establish and maintain an Account for each Participant.  Each Participant’s Account shall be credited with, to the extent applicable, any Employer Contributions, and the Participant’s allocable share of any deemed earnings or losses on the foregoing.  Each Participant’s Account shall be reduced by any distributions made from such Account plus, subject to Article 8.00 of this Plan and to the extent permitted by applicable law, any federal, state and local tax withholding as may be required by law.

		
	6.02
	Establishment of Subaccounts.  Within each Participant’s Account, separate subaccounts shall be maintained to the extent necessary for the administration of the Plan.    

6.03    Earnings or Losses on Accounts.  
		
	(a)
	The Company shall invest the Account on behalf of the Participant or credit the Account with earnings or interest as though such Account were invested in such investments and under such criteria as the Committee may determine in its sole discretion.  The Company may also permit the Participant to direct the investment or deemed investment of the Account  in such investments as the Company may make available for this purpose from time to time or as the Participant may select.  The Company assumes no responsibility or liability with respect to any loss or expense that may arise, result or be incurred from any investment or deemed investment of the Account.  Any costs or expenses incurred by the Company in the investment of the Account shall be debited against the Account.   The Account shall be credited with earnings or debited for losses, as the case may be, based on its investment or deemed investment pursuant to Section 6.03(b).

		
	(b)
	As of each Valuation Date, each Participant’s Account will be credited with earnings and charged with losses equal to the amount by which the Account would have been credited or charged since the prior Valuation Date had the Participant’s Account been invested as described in Section 6.03(a) of this Plan. 

6

		
	(c)
	Notwithstanding the foregoing, neither the Company nor any of its Affiliates shall have any obligation to invest any funds in accordance with the investment described in this Section 6.03.  Participants’ Accounts shall merely be bookkeeping entries on the books of the Company and its Affiliates, as applicable, and no Participant or Beneficiary shall obtain any property right or interest in any investment or any other particular assets of the Company or any of its Affiliates.

7.00    Distribution of Plan Benefits
		
	7.01
	Distributions Upon Termination (Other than Death).

		
	(a)
	Except as provided in Sections 7.02 and 7.03, upon a Participant’s Termination, the Participant’s Plan Benefit shall be distributed to the Participant in a lump sum cash payment within ninety (90) days after the Participant’s Termination

A Participant may elect to receive distribution of his or her Plan Benefit  paid in up to ten (10) substantially equal annual installments beginning on the January 1 following the Participant’s Termination and on each January 1 thereafter by submitting a valid Distribution Election Form in accordance with Section 7.01(b).

		
	(b)
	An election to receive annual installments under this Section 7.01 must be made on a signed Distribution Election Form that is submitted to the Committee no later than thirty (30) days after the date on which the Participant first becomes eligible to participate in this Plan, with respect to any Employer Contribution made or credited for services performed after such election is made.  For purposes of the preceding sentence, an Eligible Employee shall be first eligible to participate in this Plan only if the Eligible Employee is not eligible to participate in any other arrangement that, along with this Plan, is treated as a single nonqualified deferred compensation plan under Code §409A and the Treasury Regulations promulgated thereunder.

		
	(i)
	The election described in this Section 7.01(b) shall be subject to the terms and conditions specified in this Plan and in the Distribution Election Form and, except as provided in Section 7.01(b)(ii) of this Plan, shall be irrevocable once made.

		
	(ii)
	A Participant may elect to change the form of distribution (based on the alternatives described in Section 7.01(a) of this Plan) by submitting a new Distribution Election Form to the Committee; provided, however, that: (A) such change may not take effect until at least twelve (12) months after the date on which such election is made; (B) the payment with respect to which such change is made must be deferred (other than a distribution upon death) for a period of not less than five (5) years from the date such payment would otherwise have been paid (or, in the case of installment payments treated as a single payment, from the date the first amount was scheduled to be paid); and (C) such change must be made not less than twelve (12) months before 

7

the date the payment is scheduled to be paid (or in the case of installment payments treated as a single payment, from the date the first amount was scheduled to be paid).  

		
	(iii)
	Once a Participant’s Plan Benefit is or begins to be distributed, no further changes to the distribution of such Plan Benefit shall be permitted.  For purposes of this Section 7.01, if the right to any payments would constitute the right to a “series of installment payments” within the meaning of Code §409A, then such payments shall be treated as a single payment within the meaning of Code §409A.

		
	(c)
	If a Participant elects to receive annual installments under this Section 7.01, the amount of each installment shall be determined by multiplying the Participant’s Plan Benefit by a fraction, the denominator of which in the first year of distribution equals the number of years over which the Participant has elected benefits to be paid and the numerator is one (1).  The amount of the installments for each succeeding year shall be determined by multiplying the Participant’s Plan Benefit as of the applicable date of distribution by a fraction, the denominator of which equals the number of remaining years over which benefits are to be distributed, and the numerator of which is one (1).  

		
	(d)
	Notwithstanding any provision in the Plan to the contrary, the Committee, in its sole discretion, may require a lump sum distribution of a Participant’s Plan Benefit if:  (i) the distribution results in the termination and liquidation of the entirety of the Participant’s interest under this Plan and all agreements, methods, programs or other arrangements with respect to which deferrals of compensation are treated as having been deferred under a single nonqualified deferred compensation plan under Code §409A; and (ii) the aggregate distribution under the arrangements is not greater than the limitation on elective deferrals under Code §402(g).

		
	(e)
	Notwithstanding any provision in this Plan to the contrary, any Plan Benefit payable to a Participant who is a “specified employee” (as defined in Code §409A) of the Company or any of its Affiliates upon the Participant’s Termination shall not be (or begin to be) distributed until six months after the date on which the Participant Terminates (or, if earlier, the date on which the Participant dies).  The first payment to be made shall include the cumulative amount, if any, of any amounts that would otherwise have been paid in accordance with the Participant’s Distribution Election Form but for the fact that such amounts could not be paid during such postponement period.

7.02    Distributions Upon Death.
		
	(a)
	Notwithstanding anything in this Plan to the contrary, if a Participant dies before his or her Plan Benefit has begun to be distributed or has been fully distributed, the Plan 

8

Benefit will be distributed to the Participant’s Beneficiary in a lump sum within ninety (90) days after the date of the Participant’s death.

		
	(b)
	If a Participant dies after the Participant’s Termination and after his or her Plan Benefit has been fully distributed, no additional benefit will be due to such Participant or his or her Beneficiary under this Plan.

		
	7.03
	Termination for Cause.  Notwithstanding anything in this Plan to the contrary, if a Participant is Terminated by the Company for Cause or, if following a Participant’s Termination, the Company determines that Cause existed to Terminate the Participant, all Employer Contributions and any deemed earnings on the foregoing in the Participant’s Account (whether or not vested) shall be forfeited as of the date of such Termination. 

		
	7.04
	Distributions Upon Disability.  Notwithstanding anything in this Plan to the contrary, if a Participant incurs a Disability before his or her Termination and before his or her Plan Benefit has begun to be distributed, the Plan Benefit will be distributed to the Participant in a lump sum within ninety (90) days after the date on which the Participant incurs the Disability.  

		
	7.05
	Unforeseeable Emergency.  A Participant may request a distribution of his or her Plan Benefit upon the occurrence of an Unforeseeable Emergency.  As a condition of receiving a distribution under this Section 7.05, the Participant must file a written application with the Committee specifying the nature of the Unforeseeable Emergency, the amount needed to address the Unforeseeable Emergency and supplying any other information that the Committee, in its discretion, may need to ensure the conditions specified in this Section 7.05 are satisfied.  The Committee shall, in its sole discretion, determine whether an Unforeseeable Emergency exists.  If the Committee determines that an Unforeseeable Emergency exists, the Company or one of its Affiliates, as applicable, shall distribute an amount to the Participant that shall not be greater than the amount reasonably necessary, in the Committee’s determination, to satisfy the emergency need (which may include the amount necessary to pay any federal, state, local or foreign income taxes or penalties reasonably anticipated to result from the distribution) or, if less, the value of the Participant’s Plan Benefit as of the Valuation Date immediately preceding the distribution date.  A distribution on account of an Unforeseeable Emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, or by liquidation of the Participant’s assets, to the extent that the liquidation of such assets would not cause a severe financial hardship.

		
	7.06
	Full Discharge.  Once the Participant’s Plan Benefit has been fully distributed, none of the Company, its Affiliates, the Board, the Committee, their delegates or this Plan will have any further liability under this Plan to the Participant or the Participant’s Beneficiary.

8.00    Tax Withholding
The Company or any of its Affiliates, as applicable, shall withhold from other amounts owed to a Participant or require the Participant to remit to the Company or the Affiliate, as applicable, an 

9

amount sufficient to satisfy federal, state and local tax withholding requirements with respect to any Plan Benefit or the vesting, payment or cancellation of any Plan Benefit.
9.00    Claims Procedure

		
	9.01
	Filing Claims.  Any Participant or Beneficiary (a “claimant”) who believes that he or she is entitled to an unpaid Plan Benefit may file a written notification of his or her claim with the Committee.  

		
	9.02
	Notification to Claimant.  If the claim is wholly or partially denied, the Committee will, within a reasonable period of time, and within ninety (90) days of the receipt of such claim, or if the claim is a claim on account of Disability, within forty-five (45) days of the receipt of such claim, provide the claimant with written notice of the denial setting forth in a manner calculated to be understood by the claimant:

(a)    The specific reason or reasons for which the claim was denied;
		
	(b)
	Specific reference to pertinent Plan provisions, rules, procedures or protocols upon which the Committee relied to deny the claim;

		
	(c)
	A description of any additional material or information that the claimant may file to perfect the claim and an explanation of why this material or information is necessary; 

		
	(d)
	An explanation of this Plan’s claims review procedure and the time limits applicable to such procedure and a statement of the claimant’s right to bring a civil action under ERISA §502(a) following an adverse determination upon review; and

		
	(e)
	In the case of an adverse determination of a claim on account of Disability, the information to the claimant shall include, to the extent necessary, the information set forth in Department of Labor Regulation §2560.503-1(g)(1)(v).

If special circumstances require the extension of the forty-five (45) day or ninety (90) day period described above, the claimant will be notified before the end of the initial period of the circumstances requiring the extension and the date by which the Committee expects to reach a decision.  Any extension for deciding a claim will not be for more than an additional ninety (90) day period, or if the claim is on account of Disability, for not more than two (2) additional thirty (30) day periods.  
		
	9.03
	Review Procedure.  If a claim has been wholly or partially denied, the affected claimant, or his or her authorized representative may:

		
	(a)
	Request that the Committee reconsider its initial denial by filing a written appeal within sixty (60) days after receiving written notice that all or part of the initial claim was denied (one hundred eighty (180) days in the case of a denial of a claim on account of Disability);

10

		
	(b)
	Review pertinent documents and other material upon which the Committee relied when denying the initial claim; and

		
	(c)
	Submit a written description of the reasons for which the claimant disagrees with the Committee’s initial adverse decision.

An appeal of an initial denial of benefits and all supporting material must be made in writing within the time periods described above and directed to the Committee.  The Committee is solely responsible for reviewing all benefit claims and appeals and taking all appropriate steps to implement its decision.
The Committee’s decision on review will be sent to the claimant in writing and will include:
		
	(i)
	Specific reason or reasons for the decision;

		
	(ii)
	Specific references to pertinent Plan provisions upon which the decision was based;

		
	(iii)
	The claimant’s ability to review and receive copies of all documents relating to the claimant’s claim for benefits, free of charge;

		
	(iv)
	An explanation of any voluntary review procedures describing the steps to be taken by a claimant who wishes to submit the claimant’s claims for review and the time limits applicable to such procedures; and

		
	(v)
	A statement of the claimant’s right to bring a civil action under ERISA §502(a).

The Committee will consider all information submitted by the claimant, regardless of whether the information was part of the original claim.  The Committee’s decision on review will be made not later than sixty (60) days (forty-five (45) days in the case of a claim on account of Disability) after the Committee’s receipt of the request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered as soon as possible, but not later than one hundred twenty (120) days (ninety (90) days in the case of a claim on account of Disability) after receipt of the request for review.  This notice to the claimant will indicate the special circumstances requiring the extension and the date by which the Committee expects to render a decision and will be provided to the claimant prior to the expiration of the initial forty-five (45) day or sixty (60) day period. 
Notwithstanding the foregoing, in the case of a claim on account of Disability: (A) the review of the denied claim shall be conducted by the Committee’s designee or a named fiduciary who is neither the individual who made the benefit determination nor a subordinate of such person; and (B) no deference shall be given to the initial benefit determination.  For issues involving medical judgment, the Committee’s designee or the named fiduciary, as applicable, must consult with an independent health care professional who may not be the health care professional who decided the initial claim.

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To the extent permitted by law, the decision of the Committee (if no review is properly requested) or the decision of the review official on review, as the case may be, will be final and binding on all parties.  No legal action for benefits under this Plan may be brought unless and until the claimant has exhausted his or her remedies under this Article 9.00.
10.00    Administration
10.01    Administration.
		
	(a)
	The Committee is expressly empowered to interpret this Plan, determine all questions arising in the administration, interpretation and application of this Plan; employ actuaries, accountants, counsel and other persons it deems necessary in connection with the administration of this Plan, request any information from the Company or any of its Affiliates it deems necessary to determine whether the Company or any Affiliate would be considered insolvent or subject to a proceeding in bankruptcy, and take all other necessary and proper actions to fulfill its duties under this Plan.

		
	(b)
	The Committee shall not be liable for any actions by it hereunder, unless due to its own negligence, willful misconduct or lack of good faith.

		
	(c)
	The Committee (and any delegate under Section 10.01(d) of this Plan) shall be indemnified and saved harmless by the Company from and against all personal liability to which the Committee (and such delegate) may be subject by reason of any act done or omitted to be done in its official capacity as administrator in good faith in the administration of this Plan, including all expenses reasonably incurred in its defense in the event the Company fails to provide such defense upon the request of the Committee (or such delegate).

		
	(d)
	In exercising its authority under this Plan, the Committee may allocate all or any part of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by the Committee.  Any such allocation or delegation may be revoked at any time.

10.02    Compensation and Expenses.
		
	(a)
	The Committee and any delegate under Section 10.01(d) of this Plan will serve without compensation for services provided to this Plan.  The Company and, if applicable, its Affiliates, will furnish the Committee and any delegate under Section 10.01(d) of this Plan with all clerical or other assistance necessary to perform their respective duties.

		
	(b)
	The Company and its Affiliates will pay all expenses of administering this Plan. 

10.03    Effect of Committee Action.

12

		
	(a)
	All actions taken and all determinations made by the Committee in good faith will be final and binding upon all Participants, Beneficiaries, the Company and its Affiliates and any other person interested in this Plan.  To the extent the Committee has been granted discretionary authority under this Plan, its prior exercise of this authority will not obligate the Committee to exercise its authority in a like fashion thereafter.

		
	(b)
	This Plan will be interpreted by the Committee in accordance with its terms and their intended meaning.  The construction and interpretation of the Plan provisions are vested with the Committee, in its absolute discretion, including, without limitation, the determination of benefits and eligibility.  All decisions, determinations and interpretations will be final, conclusive and binding upon all persons having an interest in this Plan.

11.00    Amendments and Termination
The Committee may, at any time, in its sole discretion, amend, modify, or suspend this Plan in whole or in part, except that no such amendment, modification, or suspension shall have any retroactive effect to reduce any amounts allocated to a Participant’s Account without the Participant’s consent.  The Board may, at any time, in its sole discretion terminate this Plan, in whole or in part, except that no such termination shall have any retroactive effect to reduce any amounts allocated to a Participant’s Account without the Participant’s consent.  In the event that this Plan is terminated, the distribution of the amounts credited to a Participant’s Account shall not be accelerated but shall be paid at such time and in such manner as determined under the terms of this Plan immediately prior to termination as if this Plan had not been terminated; provided, however, that the Company, in its sole discretion, may distribute a Participant’s Plan Benefit in accordance with Treasury Regulation §1.409A-3(j)(4)(ix).

12.00    Prohibition Against Funding
This Plan is an unfunded, unsecured promise by the Company and its Affiliates to pay only those Plan Benefits that are accrued by Participants under the terms of this Plan.  Neither the Company nor any of its Affiliates shall be required to segregate any assets into a fund established exclusively to pay Plan Benefits.  This Plan shall be an unfunded for tax purposes and for purposes of Title I of ERISA.  The Participants and their Beneficiaries have only the rights of general unsecured creditors and do not have any interest in or right to any specific asset of the Company or any of its Affiliates.  The Company or one of its Affiliates, as applicable, shall be designated the owner and beneficiary of any investment acquired in connection with obligations under this Plan.
		
	13.00
	Miscellaneous

13

		
	13.01
	No Contract.  The adoption and maintenance of this Plan shall not be deemed to constitute a contract of employment or otherwise between the Company or any of its Affiliates and any Employee or Participant or other person, or to be consideration for, or an inducement or condition of, any employment.  Nothing contained herein shall be deemed to give any Employee or Participant or other person the right to be retained in the service of the Company or any of its Affiliates or to interfere with the right of the Company or any of its Affiliates (which right is expressly reserved) to discharge, with or without Cause, any Employee or Participant or other person at any time without any liability for any claim either against this Plan (except to the extent provided herein) or against the Company or any of its Affiliates.

		
	13.02
	No Alienation.  The right of a Participant or any other person to receive Plan Benefits may not be assigned, transferred, pledged or encumbered except as provided in the Participant’s designation of a Beneficiary, by will or by applicable laws of descent and distribution.  Any attempt to assign, transfer, pledge or encumber a Plan Benefit will be null and void and of no legal effect.  Any action taken (or attempted to be taken) contrary to the provisions of this Section 13.02 will be null and void and of no effect whatsoever; the Company, its Affiliates and the Committee may disregard such action (or attempted action) and will not in any manner be bound by it; and they, and each of them, will suffer no liability by doing so.  If any Participant or other person acts (or attempts to take any action) contrary to this Section 13.02, the Company, its Affiliates and the Committee will be reimbursed and indemnified on demand out of the interest of such Participant in this Plan for any loss, cost or expense incurred as a result of disregarding or acting in disregard of that action (or attempted action).  

		
	13.03
	Governing Law.  This Plan, and applicable forms associated with this Plan, will be governed by and construed in accordance with the laws of the United States and, to the extent applicable, the laws of the State of Ohio, excluding any conflicts of laws principles.

		
	13.04
	Headings.  Headings and subheadings in this Plan document are inserted for convenience of reference only.  They constitute no part of this Plan.

		
	13.05
	Illegal or Invalid Provision.  If any provision of this Plan is held to be illegal or invalid for any reason, this Plan will be construed and enforced as if the offending provision had not been included in this Plan.  However, that determination will not affect the legality or validity of the remaining parts of this Plan.

		
	13.06
	Coordination with Other Plans.  A Participant’s or his or her Beneficiary’s rights to any Plan Benefits will be determined solely by reference to the terms of this Plan document and will be unaffected by any other document or agreement between the Participant or the Beneficiary and the Company or any of its Affiliates.

		
	13.07
	Code §409A.  Although the Company makes no guarantee with respect to the treatment of payment or benefits under this Plan, this Plan is intended to comply with the requirements of Code §409A and the Treasury Regulations promulgated thereunder, and the Company will interpret, apply and administer this Plan in accordance with this intent.  The Company may accelerate the time or schedule of a distribution to a Participant or the Participant’s 

14

Beneficiary at any time this Plan fails to meet the requirements of Code §409A.  Such payment may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Code §409A.  Notwithstanding the foregoing, none of the Company, its Affiliates, the Board, the Committee or their delegates shall have any liability to a Participant for failure to comply with the requirements of Code §409A.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly authorized officer, effective as of the Effective Date.

AIR TRANSPORT SERVICES GROUP, INC. 

By:      /s/ Joseph C. Hete 
Title:  President & Chief Executive Officer 

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