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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: DECEMBER 31, 1998
Commission File No. 1-11775
AVIATION SALES COMPANY
(Exact name of issuer in its charter)
DELAWARE 65-0665658
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6905 N.W. 25TH STREET
MIAMI, FLORIDA 33122
(Address of principal executive offices) (Zip Code)
(305) 592-4055
(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Exchange Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
Common Stock, New York Stock Exchange
par value $0.001 per share
Securities registered pursuant to section 12(g) of the Exchange Act:
None
Indicate by check whether the registrant (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter periods that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. YES X NO
Indicate by check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (ss.229.405) is contained hereon, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of March 15, 1999, 12,553,775 Shares of Common Stock were outstanding and the
aggregate market value (based on the closing price on the New York Stock
Exchange on March 15, 1999, which was $44.69 per share) of the Common Stock held
by non-affiliates was approximately $378,755,000.
DOCUMENTS INCORPORATED BY REFERENCE
Certain exhibits listed in Part IV of this Annual Report on Form 10-K,
as amended, are incorporated by reference from prior filings made by the
registrant under the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended.
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<PAGE>
The purpose of this Amendment No. 1 on Form 10-K/A of Aviation Sales
Company (the "Company") is to amend the Company's previously filed Form 10-K for
the year ended December 31, 1998 to add the information required by Items 10,
11, 12 and 13 of Part III of Form 10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
BOARD OF DIRECTORS
The certificate of incorporation and bylaws of the Company presently
provide for a board of directors divided into three classes, as nearly equal in
size as possible, with staggered terms of three years. At the date of this
report, the members of the Company's board of directors and the expiration of
their terms as directors are as follows:
<TABLE>
<CAPTION>
TERM
NAME AGE POSITIONS EXPIRES
- ---- --- --------- -------
<S> <C> <C> <C>
Dale S. Baker.......................... 41 Chairman of the Board, President and 1999
Chief Executive Officer
Harold M. Woody........................ 53 Director and Executive Vice President 1999
and President of the Company's leasing
operations
Robert Alpert.......................... 49 Director 2001
Sam Humphreys.......................... 38 Director 2000
Philip B. Schwartz..................... 45 Director 1999
George F. Baker, III................... 50 Director 2001
Jeffrey N. Greenblatt.................. 40 Director 2000
</TABLE>
BUSINESS EXPERIENCE
DALE S. BAKER has been President and Chief Executive Officer of the
Company since February 1992. Prior to joining the Company, Mr. Baker was Senior
Vice President and Manager of GE Capital's Corporate Investment Finance Group.
HAROLD M. WOODY has been Executive Vice President of the Company since
February 1992 and the President of the Company's leasing operations since early
1997.
ROBERT ALPERT is a private investor. In addition to his investment in
the Company, Mr. Alpert has invested significantly in business ventures in the
steel, environmental, waste and oil service industries.
SAM HUMPHREYS is a Managing Director of Main Street Merchant Partners,
a merchant banking firm, and has been a partner in that firm and its predecessor
since January 1996. Since March 1997, Mr. Humphreys has also been the Chairman
of PalEx, Inc., the largest manufacturer of pallets in the United States. From
April 1993 until March 1997, Mr. Humphreys held various executive positions with
U.S. Delivery Systems, Inc., a provider of same-day local delivery services, and
Envirofil, Inc., an environmental services company.
PHILIP B. SCHWARTZ is a shareholder in the Florida law firm of Akerman,
Senterfitt & Eidson, P.A., practicing in the firm's Miami office. Prior to
joining Akerman Senterfitt in September 1995, Mr. Schwartz was a partner with
Broad and
1
<PAGE>
Cassel, Miami, Florida, for five years. Mr. Schwartz is a member of The Florida
Bar and the American Bar Association and a former Chair of the Business Law
Section of The Florida Bar. Akerman Senterfitt performs legal services for the
Company.
GEORGE F. BAKER, III has been a director of the Company since July.
1998. Mr. Baker served as a director of Whitehall Corporation ("Whitehall") from
March 1991 until July 1998, as Chairman of the Board of Directors and Chief
Executive Officer of Whitehall from April 1991 until July 1998 and as President
of Whitehall from October 1991 until April 1995. Mr. Baker is a managing partner
of Cambridge Capital Fund, L.P., an investment partnership, and Baker Nye, L.P.,
an investment partnership.
JEFFREY N. GREENBLATT has been a director of the Company since July
1998. Presently, Mr. Greenblatt serves as managing director and a management
committee member of Cambridge Capital Management, L.L.C., an investment manager.
Mr. Greenblatt also serves as a shareholder/ officer of Monarch Management
Group, Ltd., a portfolio manager. Further, Mr. Greenblatt serves as a managing
member of Monarch GP, LLC, a general partner of an investment partnership. Since
January 1989, Mr. Greenblatt has been a general partner of Cambridge Capital
Fund, L.P., an investment partnership, and since January 1988, Mr. Greenblatt
has been a general partner of Baker Nye, L.P., an investment partnership.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's board of directors is responsible for establishing broad
corporate policies and for the Company's overall performance. The Company's
board has several committees. Standing committees of the board are the executive
committee, the audit committee and the compensation committee.
The executive committee is authorized to act between meetings of the
Company's board and to exercise in full the powers of the board, subject to such
limitations imposed by law. The members of the executive committee are Dale S.
Baker, Harold M. Woody, Robert Alpert, Sam Humphreys and George F. Baker, III.
The audit committee maintains communications between the Company's
board and the Company's independent auditors, monitors performance of the
independent auditors, reviews audit scope and results, reviews the organization
and performance of the Company's internal systems of audit and financial
controls, and recommends the retention or, where appropriate, the replacement of
independent auditors. The members of the audit committee are Philip B. Schwartz
and Jeffrey N. Greenblatt.
The compensation committee reviews and approves compensation policies
and practices for all elected corporate executive officers and fixes the total
compensation of the Chief Executive Officer. The compensation committee also
administers the Company's 1996 Stock Option Plan and the 1996 Director Stock
Option Plan. The members of the compensation committee are Robert Alpert, Sam
Humphreys and George F Baker, III.
2
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EXECUTIVE OFFICERS
The following list reflects the executive officers of the Company, as
of the date of this report, the capacity in which they serve the Company, and
when they assumed office:
<TABLE>
<CAPTION>
EXECUTIVE
NAME AGE POSITIONS OFFICER SINCE
- ---- --- --------- -------------
<S> <C> <C> <C>
Dale S. Baker................... 41 President and Chief Executive Officer February 1992
Harold M. Woody................. 53 Executive Vice President of the Company and February 1992
President of the Company's leasing operations
William H. Alderman............. 37 Senior Vice President, Corporate Development September 1996
James D. Innella................ 40 Senior Vice President of the Company and December 1994
President of the Company's redistribution
operations
Benito Quevedo.................. 45 Senior Vice President of the Company and July 1998
President of the Company's maintenance and repair
operations
Garlan Braithwaite.............. 64 Vice President, Finance and Treasurer February 1999
Gary Eakins..................... 45 Vice President and Chief Legal Officer July 1998
Richard Hutchinson.............. 40 Chief Information Officer July 1998
Michael A. Saso................. 42 Senior Vice President, Purchasing of the Company's December 1994
redistribution operations
Laura DeCespedes................ 42 Vice President, Human Resources January 1999
Philip B. Schwartz.............. 45 Corporate Secretary March 1999
</TABLE>
BUSINESS EXPERIENCE
DALE S. BAKER. See the biographical information contained in "Board of
Directors" above.
HAROLD M. WOODY. See the biographical information contained in "Board
of Directors" above.
WILLIAM H. ALDERMAN has been Senior Vice President of Corporate
Development of the Company since September 1996. Prior to joining the Company,
from May 1995 to September 1996, Mr. Alderman was a Managing Director and
principal of the financial advisory firm of International Aviation Management
Group. Prior to joining International Aviation Management Group, Mr. Alderman
was Vice President of Structured Finance of GE Capital Aviation Services.
JAMES D. INNELLA was Vice President and Chief Operating Officer of the
Company from December 1994 until July 1998, when he became Senior Vice President
of the Company and President of the Company's redistribution operations. Prior
thereto, for more than five years, Mr. Innella served in various capacities with
the Aviation Sales business unit of Aviall, Inc. and with Ryder Airlines
Services.
BENITO QUEVEDO has been Senior Vice President of the Company and
President of the Company's maintenance and repair operations since July 1998.
Prior to joining the Company, Mr. Quevedo was the principal shareholder and
President of Caribe Aviation, Inc. and Aircraft Interior Designs, Inc.
3
<PAGE>
GARLAN BRAITHWAITE has been Vice President, Finance of the Company
since February 1999. From July 1998 to February 1999, Mr. Braithwaite was a
consultant to the Company, and from August 1997 to July 1998, Mr. Braithwaite
was the Senior Vice President and Chief Financial Officer of Whitehall. From
1990 through 1997, Mr. Braithwaite was the President of Dragon Investment Corp.,
which made investments in small service businesses.
GARY EAKINS has been Vice President and Chief Legal Officer of the
Company since July 1998. Prior thereto, for more than five years, Mr. Eakins
served as Vice President, Secretary and General Counsel of Southern Air
Transport. Southern Air Transport filed for bankruptcy on October 1, 1998.
RICHARD HUTCHINSON has been with the Company since January 1997 and has
been Chief Information Officer of the Company since July 1998. From March 1995
to December 1996, Mr. Hutchinson was Senior Business Analyst, IT Manager,
Project Leader and Technical Consultant for Racal Data Group, an international
source of computer networking systems and services. From September 1994 to March
1995, Mr. Hutchinson served as a consultant on various projects. From January
1991 to September 1994, Mr. Hutchinson served as Director of Information
Services for Burt Hill Kosar Rittelmann Associates.
MICHAEL A. SASO has been Senior Vice President, Purchasing of the
Company's redistribution operations since December 1994. From 1986 until
December 1994, Mr. Saso served as Vice President, Purchasing for the Aviation
Sales business unit of Aviall, Inc.
LAURA DECESPEDES has been Vice President, Human Resources of the
Company since January 1999. Prior to joining the Company, from September 1997 to
December 1998, Ms. DeCespedes was the Vice President of Human Resources for
Productivity Point International. From June 1995 to September 1997, Ms.
DeCespedes was Director of Field Human Resources for Sensormatic Electronics
Corp.
PHILIP B. SCHWARTZ. See the biographical information contained in
"Board of Directors" above.
FAMILY RELATIONSHIPS
There are no family relationships between or among any of the Company's
directors and executive officers, and there is no family relationship between
Dale S. Baker and George E Baker, III.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(d) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), during the Company's fiscal year
ended December 31, 1998 and any Forms 5 and amendments thereto furnished to the
Company with respect to its most recent fiscal year, and any written
representations referred to in subparagraph (b)(2)(i) of Item 405 of Regulation
S-K, except as set forth below, no person who at any time during the fiscal year
ended December 31, 1998 was a director, officer or, to the knowledge of the
Company, a beneficial owner of more than 10% of any class of equity securities
of the Company registered pursuant to Section 12 of the Exchange Act failed to
file on a timely basis, as disclosed in Forms 3, 4 and 5, reports required by
Section 16(a) of the Exchange Act during the fiscal year ended December 31,
1998. The Company has been advised that (i) Benito Quevedo was late in filing a
Form 3 and four Form 4s., (ii) each of George F. Baker,III, Jeffrey N.
Greenblatt, Gary Eakins, Richard Hutchinson, Garlan Braithwaite and Philip B.
Schwartz was late in filing a Form 3, and (iii) William Alderman was late in
filing a Form 5.
4
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth information about the compensation paid
or accrued during 1998, 1997 and 1996 to the Company's Chief Executive Officer
and to each of the four other most highly compensated executive officers of the
Company whose aggregate direct compensation exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
------------------------------------------
SALARY BONUS OTHER ANNUAL ALL OTHER
NAME YEAR ($) ($) COMPENSATION COMPENSATION
- ---- --------- ------------- ------------ ------------------- ------------
<S> <C> <C> <C> <C> <C>
Dale S. Baker............... 1998 263,797 197,848 (1) --
1997 258,670 212,627 (1) --
1996 248,416 124,208 (1) --
Harold M. Woody............. 1998 236,029 177,021 -- --
1997 231,442 116,385 -- --
1996 222,267 111,134 -- --
Michael A. Saso............. 1998 186,888 140,166 -- --
1997 186,889 153,613 -- --
1996 135,975 67,988 -- --
Joseph E. Civiletto......... 1998 175,000 131,250 -- --
1997 141,588 116,385 -- --
1996 135,975 67,988 -- --
James D. Innella............ 1998 225,000 168,750 -- --
1997 153,735 126,370 -- --
1995 141,977 70,959 -- --
</TABLE>
(1) Mr, Baker also receives $5,000 per year for life insurance premiums.
See "Employment Agreements" below.
No long-term compensation awards were made to management during the
three years ended December 31, 1998.
OPTION GRANTS DURING LAST FISCAL YEAR
The following table sets forth information concerning options to
purchase shares of common stock granted during the fiscal year ended December
31, 1998 to those persons named in the Summary Compensation Table.
5
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<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SHARES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- ---- -------------- -------------- -------------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Dale S. Baker............ 25,000 5.6 24.50 09/15/08 385,250 976,167
5,000 1.1 37.00 07/01/08 116,346 294,842
Harold M. Woody.......... 15,000 3.4 24.50 09/15/08 231,150 585,700
5,000 1.1 37.00 07/01/08 116,346 294,842
Michael A. Saso.......... 15,000 3.4 24.50 09/15/08 231,150 585,700
Joseph E. Civiletto...... 15,000 3.4 31.05 05/06/99 35,513 72,191
15,000 3.4 24.50 09/15/99 28,022 56,963
James D. Innella......... 25,000 5.6 35.25 06/12/08 554,213 1,404,485
15,000 3.4 24.50 09/15/08 231,150 585,700
</TABLE>
- -----------------------
(1) These amounts represent assumed rates of appreciation in the price of
common stock during the term of the options in accordance with rates
specified in applicable federal securities regulations. Actual gains,
if any, on stock option exercises will depend on the future price of
common stock and overall stock market conditions. There is no
representation that the rates of appreciation reflected in the table
will be achieved.
AGGREGATED OPTIONS EXERCISED DURING LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth information concerning the exercise of
stock options to purchase common stock during the 1998 fiscal year and the value
of unexercised stock options to purchase common stock at the end of the 1998
fiscal year for the persons named in the Summary Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
NUMBER OF AT FISCAL YEAR END AT FISCAL YEAR-END($)
SHARES VALUE --------------------- ---------------------
ACQUIRED ON REALIZED EXERCISABLE/UNEXERCIS- EXERCISABLE/UNEXERCIS-
NAME EXERCISE ($) ABLE ABLE*
- ---- ------------ -------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Dale S. Baker............. -- -- 38,250/16,750 602,381/270,094
Harold M. Woody........... -- -- 34,950/10,050 549,169/162,056
Michael A. Saso........... -- -- 14,999/10,001 234,359/161,266
Joseph E. Civiletto....... -- -- 31,666/18,334 495,115/260,385
James D. Innella.......... -- -- 38,322/26,668 541,024/250,851
</TABLE>
* Computed based upon the difference between the closing price of common
stock at December 31, 1998 and the exercise price. No value has been
assigned to options which are not in-the-money.
6
<PAGE>
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company receives an annual
retainer fee of $12,000 per year for serving as a director. In addition, each
director who is not an employee of the Company receives $1,000 for each meeting
of the board attended and $1,000 for each committee meeting attended.
All directors receive on an annual basis a mandatory stock option grant
under the 1996 Director Stock Option Plan for serving on the Company's board.
Five-year options to purchase 5,000 shares of common stock are automatically
granted to each director on July 1 of each year, at an option exercise price
equal to the closing price of common stock on July 1. All such options are
immediately exercisable on the date of grant. Existing directors, upon the
organization of the Company were granted five-year options to purchase 10,000
shares of common stock, all of which were immediately exercisable, at an option
exercise price equal to the initial public offering price. Additionally,
directors appointed to the Company's board are and will in the future be granted
options to purchase 10,000 shares of common stock at the time they are appointed
to the board, at an option exercise price equal to the closing price of common
stock on the date of their appointment to the board.
EMPLOYMENT AGREEMENTS
On January 1, 1999, the Company entered into an employment agreement
with Dale S. Baker. The employment agreement provides for an annual base salary
of $550,000 (to be increased annually by a cost of living adjustment). In
addition, the Company agreed to provide Mr. Baker with all employee benefits
available under benefit plans established by the Company, and to pay Mr. Baker
an additional sum of $5,000 per year for insurance premiums to maintain a whole
life insurance policy. The employment agreement requires Mr. Baker to use his
best efforts to perform the duties of President and Chief Executive Officer. The
agreement provides for a term expiring on January 1, 2002.
The employment agreement further provides for an option grant to
purchase 350,000 shares of common stock (granted outside of any plan) at $40.625
per share, with one-third of the options granted vesting on January 1, 2000,
one-third of the options granted vesting on January 1, 2001, and one-third of
the options granted vesting on January 1, 2002. The employment agreement also
provides for Mr. Baker's participation in the Aviation Sales Company 1999 EBITDA
Plan which allows him to earn an incentive bonus of between 50% and 125% of his
base salary.
Mr. Woody has an employment agreement with the Company under which he
is entitled to an annual base salary of $212,500 (to be increased annually by a
cost of living adjustment), and all employee benefits available under benefit
plans the Company establishes. This employment agreement provides for an initial
term expiring on December 31, 1999. Thereafter, the respective agreement shall
run for successive one-year periods unless the Company terminates the agreement
upon six months' prior written notice, or Mr. Woody terminates the agreement
upon three months' prior written notice.
On January 1, 1999, the Company entered into employment agreements with
James D. Innella and Benito Quevedo to serve as Senior Vice Presidents and as
President of the Company's redistribution operations and the Company's
maintenance and repair operations, respectively, under which they are each
entitled to an annual base salary of $350,000 (to be increased annually by a
cost of living adjustment), and all employee benefits available under benefit
plans established by the Company. Mr. Innella's and Mr. Quevedo's agreements
provide for a term expiring on January 1, 2003 and January 1, 2002,
respectively.
The employment agreements with Messrs. Innella and Quevedo further
provide for option grants to each to purchase 175,000 shares of common stock
(granted outside of any plan) at $40.625 per share, with one-third of the
options granted vesting on January 1, 2000, one-third of the options granted
vesting on January 1, 2001, and one-third of the options granted vesting on
January 1, 2002. The employment agreements also provide for Messrs. Innella's
and Quevedo's participation in the Aviation Sales Company 1999 EBITDA Plan,
which provides each with the opportunity to earn an incentive bonus of between
50% and 125% of his base salary.
Mr. Saso has an employment agreement with the Company's redistribution
operation under which he serves as Senior Vice President, Purchasing of that
operation and is entitled to an annual base salary of $185,000 (to be increased
annually by a cost of living adjustment), and all employee benefits available
under Company benefit plans. The agreement provides
7
<PAGE>
for an initial term expiring on May 31, 2001, running for successive one-year
terms thereafter, unless the Company terminates the agreement upon six months'
prior written notice, or Mr. Saso terminates the agreement upon three months'
prior written notice.
The employment agreements with Messrs. Woody and Saso also provide for
their participation in the Company's 1997 EBITDA Incentive Compensation Plan,
which provides that each of them has the opportunity to earn an incentive bonus
of between 20% and 250% of their base salary.
Further, each of the Company's employment agreements provides for
certain benefits in the event of a change of control.
Section 162(m) of the Internal Revenue Code generally disallows an
income tax deduction to public companies for compensation over $1.0 million paid
in a year to any one of the chief executive officer or the four most highly
compensated other executive officers, to the extent that this compensation is
not "performance based" within the meaning of Section 162(m). As a result of
this limitation, no assurance can be given that all of the compensation paid to
the Company's executive officers in the future will be deductible.
STOCK OPTION PLANS
The board of directors of the Company and stockholders have adopted two
stock option plans (the "Plans"). Pursuant to the 1996 Director Stock Option
Plan (the "Director Plan"), options to acquire a maximum of the greater of
150,000 shares or 2% of the number of shares of common stock then outstanding
may be granted to directors of the Company. Pursuant to the 1996 Stock Option
Plan (the "1996 Plan"), options to acquire a maximum of the greater of 650,000
shares common stock or 8% of the number of shares of common stock then
outstanding may be granted to the executive officers, employees (including
employees who are directors), independent contractors and consultants of the
Company. As of the date of this Form 10-K/A, options to purchase 702,391 shares
at exercise prices ranging from $11.31 per share to $37.44 per share are
currently outstanding under both plans, 572,569 of which are immediately
exercisable.
The compensation committee administers the Plans. Prior to the
formation of the compensation committee, the board administered both plans. The
compensation committee determines which persons will receive options and the
number of options to be granted to such persons. The Director Plan also provides
for annual mandatory grants of options to directors. The compensation committee
also interprets the provisions of the Plans and makes all other determinations
that it deems necessary or advisable for the administration of the Plans.
Pursuant to both of the Plans, the Company may grant incentive stock
options as defined in Section 422(b) of the Internal Revenue Code and
non-qualified stock options, not intended to qualify under Section 422(b). The
price at which the Company's common stock may be purchased upon the exercise of
options granted under the Plans will be required to be at least equal to the per
share fair market value of common stock on the date the particular options are
granted. Options granted under either of the Plans may have maximum terms of not
more than ten years and are not transferable, except by will or the laws of
descent and distribution. None of the incentive stock options under the Plans
may be granted to an individual owning more than 10% of the total combined
voting power of all classes of stock issued by the Company unless the purchase
price of common stock under such option is at least 110% of the fair market
value of the shares issuable on exercise of the option determined as of the date
the option is granted, and such option is not exercisable more than five years
after the grant date.
Generally, options granted under the Plans may remain outstanding and
may be exercised at any time up to three months after the person to whom such
options were granted is no longer employed or retained by the Company or serving
on the Company's board.
Pursuant to the Plans, unless otherwise determined by the compensation
committee, one-third of the options granted to an individual are exercisable
upon grant, one-third are exercisable on the first anniversary of such grant and
the final one-third are exercisable on the second anniversary of such grant.
However, options granted under the Plans become immediately exercisable if the
Company terminates the holder of such options or if the holder is no longer a
director of the
8
<PAGE>
Company, as the case may be, subsequent to certain events which are deemed to be
a "change in control" of the Company. A "change in control" of the Company
generally is deemed to occur when:
(i) any person becomes the beneficial owner of or acquires voting
control with respect to more than 20% of common stock (or 35%
if such person was a holder of common stock on July 2, 1996,
the date of the Company's initial public offering);
(ii) a change occurs in the composition of a majority of the
Company's board of directors during a two-year period,
provided that a change with respect to a member of the
Company's board shall be deemed not to have occurred if the
appointment of a member of the Company's board is approved by
a vote of at least 75% of the individuals who constitute the
then existing board; or
(iii) the Company's stockholders approve the sale of all or
substantially all of the assets of the Company.
Incentive stock options granted under the Plans are subject to the
restriction that the aggregate fair market value (determined as of the date of
grant) of options which first become exercisable in any calendar year cannot
exceed $100,000.
The Plans provide for appropriate adjustments in the number and type of
shares covered by the Plans and options granted under the Plans in the event of
any reorganization, merger, recapitalization or certain other transactions
involving the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the past fiscal year, none of the Company's directors or
executive officers served as a member of the compensation committee or similar
committee of another entity, one of whose executive officers served on the
Company's board or served as a director of another entity, one of whose
executive officers served on the Company's board, or served as a member of the
compensation committee or similar committee of any other entity, one of whose
executive officers served as the Company's director.
9
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the date of this Form 10-K/A,
certain information regarding the Company's common stock owned of record or
beneficially by: (1) each person who owns more than 5% of the outstanding common
stock, (2) each named executive officer of the Company, (3) each director of the
Company , and (4) all directors and executive officers as a group.
Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes generally voting power and/or
investment power with respect to securities. Shares of common stock subject to
options currently exercisable or exercisable within 60 days of the date of this
report are deemed outstanding for purposes of computing the percentage
beneficially owned by the person holding the options but are not deemed
outstanding for purposes of computing the percentage beneficially owned by any
other person. Unless otherwise specified, the address for each beneficial owner
is c/o Aviation Sales Company, 6905 N.W. 25th Street, Miami, Florida 33122.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED (1)
-------------------------------------
APPROXIMATE
NAME NUMBER PERCENT OF CLASS
- ---- -------------------------------------
<S> <C> <C>
Robert Alpert(2)(3)............................................. 2,372,000 18.9%
George F. Baker, III(4)......................................... 1,055,776 8.4%
Richard B Nye (5)............................................... 973,774 7.8%
Cambridge Capital Fund, L.P.(6)................................. 675,995 5.4%
Dale S. Baker (7)............................................... 338,250 2.7%
Baker Nye, L.P.(8).............................................. 297,779 2.4%
Harold M. Woody(9).............................................. 234,950 1.9%
Sam Humphreys(10)............................................... 20,000 *
Philip B. Schwartz(11).......................................... 16,400 *
Jeffrey N. Greenblatt(12)....................................... 30,572 *
Michael A. Saso(13)............................................. 49,999 *
James D. Innella(14)............................................ 110,332 *
All directors and executive officers as a group (15 persons)(15) 4,400,611 34.0%
</TABLE>
- -------------------------------
* Less than one percent.
(1) Unless otherwise indicated, each person named in the table has the sole
voting and investment power with respect to the shares beneficially
owned.
(2) Shares are primarily owned of record by two corporate entities
controlled by Mr. Alpert.
(3) Includes vested options to purchase 20,000 shares at prices ranging
from $19.00 to $37.00 per share.
(4) George F. Baker, III may be deemed to beneficially own 675,995 shares
of common stock directly owned by Cambridge Capital Fund, L.P.
("Cambridge Capital"), of which Mr. Baker is a managing general partner
and 297,995 shares of common stock directly owned by Baker Nye, L.P.
("Baker Nye"), of which Mr. Baker is a managing general partner.
Includes vested options to purchase 82,002 shares at prices ranging
from $12.52 to $37.97 per share.
(5) Richard B. Nye may be deemed to beneficially own 675,995 shares of
common stock directly owned by Cambridge Capital of which Mr. Nye is a
managing general partner and 297,995 shares of common stock directly
owned by Baker Nye of which Mr. Nye is a managing general partner.
(6) Cambridge Capital is an investment limited partnership. George F.
Baker, III, one of its managing general partners, and Jeffrey N.
Greenblatt, a non-managing general partner of Cambridge Capital, are
also directors of the Company.
(7) Includes vested options to purchase 38,250 shares at prices ranging
from $19.00 to $37.00 per share.
(8) Baker Nye is an investment limited partnership. George F Baker, III,
one of its managing general partners, and Jeffrey N. Greenblatt, a
non-managing general partner of Baker Nye, are directors of the
Company.
(9) Includes vested options to purchase 34,950 shares at prices ranging
from $19.00 to $37.00 per share.
(10) Vested options to purchase 20,000 shares at prices ranging from $19.00
to $37.00 per share.
(11) Includes vested options to purchase 15,000 shares at prices ranging
from $37.00 to $37.06 per share.
10
<PAGE>
(12) Vested options to purchase 30,572 shares at prices ranging from $11.31
to $34.63 per share.
(13) Includes vested options to purchase 14,999 shares at prices ranging
from $24.50 to $25.25 per share.
(14) Includes vested options to purchase 38,332 shares at prices ranging
from $19.00 to $35.25 per share.
(15) Includes vested options to purchase 374,498 shares at prices ranging
from $11.31 to $37.00 per share.
11
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 2, 1994, the Company entered into a 20-year lease with
Aviation Properties, a Delaware general partnership ("Aviation Properties"),
pursuant to which the Company leases its corporate headquarters and warehouse in
Miami, Florida (the "Miami Property"). The Company makes annual payments under
such lease in the amount of approximately $892,990. The sole partners of
Aviation Properties are (a) AVAC Corporation ("AVAC") and (b) J/T Aviation
Partners ("J/T"). The sole stockholder and president of AVAC is Robert Alpert, a
principal stockholder and director of the Company, and J/T was previously a
principal stockholder of the Company.
In connection with Aviation Properties' purchase of the Miami Property,
the Company and Aviation Properties entered into a loan agreement (the "Loan
Agreement") whereby the Company made a $2,465,519 loan to Aviation Properties,
which loan bears interest at 8% per annum, with principal and interest due in a
single payment on December 2, 2004.
As of December 2, 1994, the Company entered into a six-year lease with
Aviation Properties of Texas, a Delaware general partnership ("AVTEX"), pursuant
to which the Company leases a warehouse in Pearland, Texas. The Company make
annual payments under such lease in the amount of $114,468. The sole partners of
AVTEX are AVAC and J/T.
In March 1998, Aviation Sales Distribution Services Company ("ASDS"), a
wholly-owned subsidiary of AVS, acquired the Pearland Property from AVTEX in
exchange for (i) ASDS 's cancellation of all outstanding principal balance and
unpaid accrued interest on a promissory note of AVTEX held by ASDS in the
principal amount of $434,244 and (ii) ASDS's assumption of indebtedness in the
principal amount of $1,128,855 which was secured by a deed of trust in favor of
a third party.
In July 1998, the Company entered into an approximately 19 month lease
for the 30,000 square foot office and manufacturing facility in Miami, Florida
used by its subsidiary Caribe Aviation, Inc. (the "Caribe Facility Lease"). The
lessor under the Caribe Facility Lease is Ben Quevedo, No. 1, Ltd., a limited
partnership controlled by Benito Quevedo (the "Quevedo Partnership"), an
executive officer of the Company. The Company makes monthly payments to the
lessor under the Caribe Facility Lease of approximately $21,515 in rent and
$2,500 in pass through operating costs.
The Company believes the terms of the Loan Agreement, the terms of the
leases with Aviation Properties, AVTEX and the Quevedo Partnership and the terms
of the purchase of the Pearland Property are no less favorable than could be
obtained from an unaffiliated third party.
Mr. Schwartz is a shareholder in Akerman, Senterfitt & Eidson, P.A.,
which has in the past and continues to perform legal services for the Company.
The fees paid by the Company to Akerman, Senterfitt & Eidson, P.A. for legal
services rendered are no greater than those that would be charged to the Company
by an unrelated third party law firm.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AVIATION SALES COMPANY
(Registrant)
BY: /S/ DALE S. BAKER April 30, 1999
- ---------------------
Dale S. Baker, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE AND TITLE DATE:
------------------- ----
<S> <C>
/S/ DALE S. BAKER April 30, 1999
- ------------------
Dale S. Baker
President, Chief Executive Officer, Chief Financial Officer and
Chairman of the Board (Principal Executive and Financial Officer)
/S/ HAROLD M. WOODY April 30, 1999
- --------------------
Harold M. Woody
Executive Vice President and Director
/S/ GARLAN BRAITHWAITE April 30, 1999
- ----------------------
Garlan Braithwaite
Vice President, Finance
(Principal Accounting Officer)
/S/ ROBERT ALPERT April 30, 1999
- -----------------
Robert Alpert
Director
/S/ SAM HUMPHREYS April 30, 1999
- -----------------
Sam Humphreys
Director
/S/ PHILIP B. SCHWARTZ April 30, 1999
- ----------------------
Philip B. Schwartz
Director
/S/ GEORGE F. BAKER April 30, 1999
- -------------------
George F. Baker, III
Director
/S/ JEFFREY N. GREENBLATT April 30, 1999
- -------------------------
Jeffrey N. Greenblatt
Director
</TABLE>
[SIGNATURE PAGE TO FORM 10-K/A]
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