<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Aviation Distributors, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
AVIATION DISTRIBUTORS, INC.
One Capital Drive
Lake Forest, California 92630
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 4, 2000
(APPROXIMATE MAILING DATE: JUNE 30, 2000)
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of AVIATION DISTRIBUTORS, INC., a Delaware corporation (the
"Company"), will be held at the Sutton Place Hotel, 4500 MacArthur Boulevard,
Newport Beach, California 92660, on Friday, August 4, 2000 at 2:00 P.M. local
time, for the following purposes:
1. To elect five members of the Board of Directors to serve until the next
Annual Meeting of Stockholders;
2. To consider and act upon the ratification of the appointment of Grant
Thornton, LLP as the independent public accountants of the Company for the
fiscal year ending December 31, 2000;
3. To amend the Aviation Distributors, Inc. 1996 Omnibus Stock Option and
Incentive Plan and to approve the grant of stock options to certain individuals;
and
4. To transact such other business as may properly come before the Meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on June 15, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Meeting. Only holders of the Company's Common Stock at the close
of business on the record date are entitled to vote at the Meeting.
You are cordially invited to attend the Meeting in person. However, whether
you plan to attend or not, we urge you to complete, date, sign, and return the
enclosed proxy promptly in the envelope provided, to which no postage need be
affixed if mailed in the United States, in order that as many shares as possible
may be represented at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
---------------------------
Bruce H. Haglund, Secretary
Lake Forest, California
June 30, 2000
<PAGE>
AVIATION DISTRIBUTORS, INC.
One Capital Drive
Lake Forest, California 92630
PRELIMINARY PROXY STATEMENT
April 30, 2000
SOLICITATION OF PROXIES
DATE, TIME, AND PLACE
This Proxy Statement and the accompanying proxy/voting instruction card
("Proxy Card") are being mailed beginning on or about the date shown above, to
holders of common shares (the "Stockholders") in connection with the
solicitation of proxies by the Board of Directors (the "Board of Directors" or
"Board") of AVIATION DISTRIBUTORS, INC., a Delaware corporation (the "Company"),
to be used at the Annual Meeting of Stockholders (the "Meeting"), to be held at
the Sutton Place Hotel, 4500 MacArthur Boulevard, Newport Beach, California
92660, on Friday, August 4, 2000 at 2:00 P.M. local time, or any adjournment
thereof.
QUORUM AND VOTING
Proxies are solicited to give all Stockholders of record at the close of
business on June 15, 2000 (the "Record Date"), an opportunity to vote on matters
that come before the Meeting. Shares of Common Stock (the "Shares") can be voted
only if the Stockholder is present in person or is represented by proxy. The
presence in person or by proxy of the holders of a majority of the total
outstanding voting Shares is necessary to constitute a quorum at the Meeting.
When your Proxy Card is returned properly signed, the Shares represented
will be voted in accordance with your directions. You can specify your choices
by marking the appropriate boxes on the enclosed Proxy Card. If your Proxy Card
is signed and returned without specifying choices, the Shares will be voted as
recommended by the Board of Directors. Abstentions marked on the Proxy Card and
broker non-votes are voted neither "for" nor "against" items being voted upon,
but are counted in the determination of a quorum.
As of the record date, there were 3,344,500 Shares outstanding. Each
outstanding Share is entitled to one vote on each matter properly brought before
the Meeting other than the election of Directors which is by cumulative voting.
SOLICITATION AND COST
The Company will bear all costs and expenses related to this solicitation
of proxies by the Board of Directors, including the costs of preparing,
printing, and mailing to the Stockholders this Proxy Statement and accompanying
materials. In addition to the solicitation of proxies by use of the mails, the
Directors, officers, and employees of the Company, without receiving additional
compensation, may solicit proxies personally, by telephone, or by any other
means of communication.
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REVOCABILITY OF PROXY
If you wish to give your proxy to someone other than the persons designated
by the Board of Directors, all names appearing on the enclosed Proxy Card must
be crossed out and the name of another person or persons inserted. The signed
card must be presented at the Meeting by the person or persons representing you.
You may revoke your proxy at any time before it is voted at the Meeting by
executing a later-dated proxy, by voting by ballot at the Meeting, or by filing
a written revocation of your proxy with the Company before the Meeting.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO SIGN AND RETURN THE
ACCOMPANYING PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. If you do
attend, you may vote by ballot at the Meeting, thereby canceling any proxy
previously given.
As a matter of policy, proxies, ballots, and voting tabulations that
identify individual Stockholders are kept private by the Company. Such documents
are available for examination only by the inspectors of election and certain
personnel associated with processing Proxy Cards and tabulating the vote. The
vote of any Stockholder is not disclosed except as may be necessary to meet
legal requirements.
DOCUMENTS INCORPORATED BY REFERENCE
The Company specifically incorporates the Financial Statements for the year
ended December 31, 1999, filed as part of the 1999 Annual Report on Form 10-KSB
in response to Item 13 of the 10-KSB. The Annual Report and attached Financial
Statements should have been enclosed in the mailing containing this Proxy
Statement. If you did not receive a copy of the Annual Report and attached
Financial Statement, please contact the Company and request that the information
be sent to you. A copy of the 1999 Annual Report may be obtained from the
Company without cost to the requesting Stockholder by contacting the Company.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
VOTING SECURITIES
As of the Record Date for the Annual Meeting of Stockholders, the number of
issued and outstanding shares of Common Stock totaled 3,344,500.
PRINCIPAL STOCKHOLDERS
The following table sets forth information concerning the beneficial
ownership of the Company's Shares as of June 30, 2000 for (i) each current
Director and each nominee for Director (ii) each named executive officer of the
Company as defined in 402(a)(2) of Regulation S-B of the Securities Act of 1933,
(iii) all persons known by the Company to beneficially own more than 5% of the
Company's voting Shares, and (iv) all executive officers and Directors of the
Company as a group.
<TABLE>
<CAPTION>
NAME/ADDRESS OF BENEFICIAL OWNERS (1) NUMBER OF SHARES (2) PERCENT OF TOTAL (3)
- ------------------------------------- -------------------- --------------------
<S> <C> <C>
Osamah S. Bakhit 1,866,050 (4) 55.8%
Bruce H. Haglund 132,500 (5) 3.9%
William D. King 410,000 (6) 1.2%
Saleem S. Naber 28,333 (7) *
Jeffrey G. Ward 30,000 (8) *
John B. Jacobs 33,000 (9) *
William T. Walker 15,000 (10) *
Gary L. Joslin 44,998 (11) 1.3%
All officers and directors as a group 2,559,881 76.5%
(8 persons)
</TABLE>
2
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*Less than 1%.
- --------------------
(1) Unless otherwise noted, the Company believes that all Shares are
beneficially owned and that all persons named in the table or family
members have sole voting and investment power with respect to all Shares
owned by them. Unless otherwise indicated, the address of each Stockholder
is One Capital Drive, Lake Forest, California 92630.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date hereof upon the
exercise of warrants or options.
(3) Assumes 3,344,500 Shares outstanding plus the number of Shares issuable to
each person named upon the exercise of presently exercisable stock options
held by such person. Each beneficial owner's percentage ownership is
determined by assuming that options that are held by such person (but not
those held by any other person) and which are exercisable within 60 days
from the date hereof have been exercised.
(4) Includes 160,000 stock options presently exercisable at $1.00 per share and
51,050 stock options presently exercisable at $5.00 per share.
(5) Includes 15,000 stock options presently exercisable at $1.00 per share and
12,500 stock options presently exercisable at $5.00 per share.
(6) Includes 350,000 stock options presently exercisable at $0.25 per share.
(7) Includes 15,000 stock options presently exercisable at $1.00 per share and
8,333 stock options presently exercisable at $5.00 per share.
(8) Includes 15,000 stock options presently exercisable at $1.00 per share and
15,000 stock options presently exercisable at $5.00 per share.
(9) Represents 33,000 stock options presently exercisable at $1.00 per share.
(10) Includes 10,000 stock options presently exercisable at $1.00 per share and
5,000 stock options presently exercisable at $5.00 per share.
(11) Includes 28,333 stock options presently exercisable at $1.00 per share and
16,665 stock options presently exercisable at $5.00 per share.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1995 and December 1996, the Company loaned Osamah S. Bakhit,
the founder, majority shareholder, and former Chairman of the Board and Chief
Executive Officer of the Company, $328,718 and $80,000, respectively. The loans
bear interest at the rate of 6% per annum. Interest on the loans has been
satisfied through December 31, 1999 through a reduction in liability due Mr.
Bakhit pursuant to his consulting agreement with the Company. The Board of
Directors of the Company extended the due date of the balance of principal and
interest until December 31, 2000 in consideration of Mr. Bakhit's personal
guaranty of the Company's current credit facility and his pledge of 1,000,000 of
his shares of Common Stock to secure the indebtedness of the Company through
December 15, 2002. Mr. Bakhit received $298,000 in consulting fees for the year
ended December 31, 1999. The Company anticipates that Mr. Bakhit's compensation
for the year ending December 31, 2000 will be approximately $300,000.
Gibson, Haglund & Paulsen, the law firm in which Bruce H. Haglund, a member
of the Board of Directors, is a principal, billed the Company $25,400 for legal
services in 1999; however, the Company made no payments to Gibson, Haglund &
Paulsen in 1999. Mr. Haglund was also granted stock options in 1996 to purchase
10,000 shares of Common Stock of the Company at $5.00 per share, of which 2,500
options are currently exercisable, and additional stock options in 1997 to
purchase 10,000 shares of Common Stock of the Company at $5.00 per share, all of
which are currently exercisable. In September 1999, Gibson, Haglund & Paulsen
forgave $110,000 in accrued legal fees and expenses and Mr. Haglund was granted
an option to purchase 100,000 shares of Common Stock at $.25 per share, the
market price of the Company's Common Stock on the date the option was granted.
In October 1999, Mr. Haglund exercised the option to purchase the 100,000 shares
by forgiving an additional $25,000 in legal fees and
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expenses. In September 1999, Mr. Haglund was granted an additional option to
purchase 15,000 shares of Common Stock at an exercise price of $1.00 per share,
all of which options are currently exercisable.
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT
Section 16 (a) of the Securities Exchange Act requires the Company's
officers, Directors, and persons who own more than 10% of a registered class of
the Company's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Officers,
Directors, and greater than 10% beneficial owners are required by SEC regulation
to furnish the Company with copies of all Section 16 (a) forms they file. The
Company believes that all filing requirements applicable to its Officers,
Directors, and greater than 10% beneficial owners were complied with in 1999.
BOARD OF DIRECTORS
The Board of Directors has the responsibility for establishing broad
corporate policies and for overseeing the overall performance of the Company.
However, in accordance with corporate governance principles, the Board is not
involved in day-to-day operating details. Members of the Board of Directors are
kept informed of the Company's business through discussions with the officers of
the Company, by reviewing analyses and reports sent to them, and by
participating in Board and committee meetings.
The Board held six formal meetings during 1999. All Directors attended more
than 75% of the Meetings held. In addition to formal meetings, the Board met
numerous times informally.
COMMITTEES
The Company's Audit Committee is responsible for recommending to the Board
of Directors the engagement of the independent auditors of the Company and
reviewing with the independent auditors the scope and results of the audits, the
internal accounting controls of the Company, audit practices, and the
professional services furnished by independent auditors. The Audit Committee
held two formal Audit Committee meetings in 1999. All members of the Audit
Committee attended more than 75% of the Audit Committee meetings. In addition to
formal meetings, the Audit Committee met numerous times informally. The current
members of the Audit Committee are Bruce H. Haglund, Chairman, Saleem S. Naber,
and William T. Walker, Jr.
In September 1997, the Company formed an Executive Committee. The current
members of the Executive Committee are William D. King, the Chief Executive
Officer, Bruce H. Haglund, Chairman of the Audit Committee, Jeffrey G. Ward, the
Executive Vice President, and Gary L. Joslin, the Vice President-Finance and
Chief Financial Officer. Mr. King is the current chairman of the Executive
Committee. The Committee meets periodically to oversee the Company's operations.
COMPENSATION OF DIRECTORS
The Company's policy is to pay $2,500 quarterly to Directors who are not
employees or consultants of the Company for their services as directors. The
Company reimburses reasonable out-of-pocket expenses of directors for attendance
at meetings. Members of the Board of Directors are also eligible to receive
stock option grants. In 1999, Messrs. Haglund, Naber, and Walker each received
options to purchase 15,000 Shares at $1.00 per share, all of which options are
vested. Mr. Joslin received options to purchase 45,000 Shares at $1.00 in 1999,
of which 28,333 are currently vested, 8,333 vest on April 15, 2001, and 8,334
vest on April 15, 2002. Options to purchase 935,000 shares of Common Stock were
granted to Mr. King, the Company's Chief Executive Officer, in connection with
his employment, of which (i) 350,000 options are exercisable at $.25 per share
and are fully vested, and (ii) 600,000 are exercisable at $1.22 per share and
vest 300,000 on December 31, 2000 and 300,000 on December 31, 2001 conditioned
upon Mr. King's employment on such dates.
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<PAGE>
LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS
The Company's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not be personally liable for monetary
damages for breach of their fiduciary duties as directors, except liability for
(i) any breach of their duty of loyalty to the corporation or its stockholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) unlawful payments of dividends or unlawful
stock repurchases or redemptions, or (iv) any transaction from which the
director derived an improper personal benefit. Such limitation of liability does
not apply to liabilities arising under the federal securities laws and does not
affect the availability of equitable remedies such as injunctive relief or
rescission.
The Company's Certificate of Incorporation provides that, except to the
extent prohibited by the Delaware General Corporation Law, its directors shall
not be personally liable to the Company or its stockholders for monetary damages
for any breach of fiduciary duty as directors of the Company. Under Delaware
law, the directors have a fiduciary duty to the Company which is not eliminated
by this provision of the Certificate of Incorporation and, in appropriate
circumstances, equitable remedies such as injunctive or other forms of
non-monetary relief will remain available. In addition, each Director will
continue to be subject to liability under Delaware law for breach of the
director's duty of loyalty to the Company for acts or omissions which are found
by a court of competent jurisdiction to be not in good faith or involving
improper personal benefit to the director, and for payment of dividends or
approval of stock repurchases or redemptions that are prohibited by Delaware
law. This provision also does not affect the director's responsibilities under
any other laws, such as the Federal securities laws or state or Federal
environmental laws. In addition, the Company has obtained liability insurance
for its officers and directors.
The Certificate of Incorporation also provides that the Company shall
indemnify, to the fullest extent permitted by Section 145 of the Delaware
General Corporation Law, all of its present and former officers and directors,
and any party agreeing to serve as an officer, director or trustee of any entity
at the Company's request, in connection with any civil or criminal proceeding
threatened or instituted against such party by reason of actions or omissions
while serving in such capacity. Indemnification by the Company includes payment
of expenses in defense of the indemnified party in advance of any proceeding or
final disposition thereof. The rights to indemnification provided in this
provision do not preclude the exercise of any other indemnification rights by
any party pursuant to any law, agreement or vote of the stockholders or
disinterested directors of the Company.
Section 145 of the Delaware General Corporation Law generally allows the
Company to indemnify the parties described in the preceding paragraph for all
expenses, judgments, fines, and amounts in settlement actually paid and
reasonably incurred in connection with any proceedings so long as such party
acted in good faith and in a manner reasonably believed to be in or not opposed
to the Company's best interests and, with respect to any criminal proceedings,
if such party had no reasonable cause to believe his or her conduct to be
unlawful. Indemnification may only be made by the Company if the applicable
standard of conduct set forth in Section 145 has been met by the indemnified
party upon a determination made (1) by the Board of Directors by a majority vote
of directors who are not parties to such proceedings, or (2) if there are no
such directors or at the order of such directors, by independent legal counsel
in a written opinion, or (3) by the stockholders.
ELECTION OF DIRECTORS
(ITEM #1 ON THE PROXY CARD)
The Certificate of Incorporation, as amended (the "Certificate"), of the
Company provides that the number of Directors shall consist of not less than
three and not more than 12 members. The Certificate also provides for a
"classified" Board of Directors, dividing the Directors into three classes,
designated
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Class I, Class II, and Class III, with each class consisting of one-third of the
total number of Directors, as nearly as possible. The term of the initial Class
I Directors was to terminate at the 1997 annual meeting of stockholders, the
term of the initial Class II Directors was to terminate at the 1998 meeting, and
the term of the initial Class III Directors was to terminate at the 1999
meeting. The Certificate provides that successors to the class of directors
whose term was to expire at each annual meeting of stockholders are to be
elected for a three-year term.
Although the Company is a Delaware corporation, under Section 2115 of the
California Corporations Code, certain provisions of the California Corporations
Code apply to the Company because of the residence of the Company's stockholders
and the extent of its business operations and assets in California. The
provisions include those pertaining to the requirement of cumulative voting and
those allowing classified boards of directors for "listed" corporations. Because
the Company does not qualify under California law for a classified Board, the
Directors to be elected at the Meeting will be elected until the next annual
meeting of the stockholders.
Five members of the Board of Directors are to be elected at the Meeting.
The five nominees selected by the Board of Directors are listed on the following
pages. Stockholders have cumulative voting rights when voting for Directors;
accordingly, any Stockholder may multiply the number of Shares he or she is
entitled to vote by the number of Directors to be elected and allocate votes
among the candidates in any manner. There are no conditions precedent to the
exercise of the right to cumulate votes in the election of Directors of the
Company: Stockholders may exercise such cumulative voting rights, either in
person or by proxy, with or without advance notice to the Company. The five
Director nominees receiving the highest number of votes will be elected. Any
Shares not voted, whether by abstention, broker non-vote, or otherwise, have no
impact on the vote.
The Board of Directors intends to vote proxies equally for the five
nominees unless otherwise instructed on the Proxy Card. If you do not wish your
Shares to be voted for particular nominees, please identify the exceptions in
the designated space provided on the Proxy Card.
If at the time of the Meeting one or more of the nominees have become
unavailable to serve, Shares represented by proxies will be voted for the
remaining nominees and for any substitute nominee or nominees designated by the
Board of Directors.
Directors elected at the Meeting will hold office until the next Annual
Meeting or until their successors have been elected and qualified. For each
nominee there follows a brief listing of principal occupation for at least the
past five years, other major affiliations, and age as of January 1, 1998.
NOMINEES FOR ELECTION AS DIRECTORS
The names, ages, and positions of the nominees for election as Directors
are as follows:
<TABLE>
<CAPTION>
EXECUTIVE AGE TITLE FIRST ELECTED
- --------- --- ----- -------------
<S> <C> <C> <C>
William D. King 58 Chief Executive Officer, Chairman and Director 2000
Gary L. Joslin 62 Chief Financial Officer and Director 1998
Bruce H. Haglund 48 Secretary, Director, Chairman of the Audit Committee 1996
William T. Walker, Jr. 68 Director and Member of the Audit Committee 1997
Saleem S. Naber 70 Director 1998
</TABLE>
WILLIAM D. KING, CHIEF EXECUTIVE OFFICER, CHAIRMAN AND DIRECTOR. Mr. King became
Chief Executive Officer, Chairman and a Director of the Company in January 2000.
Prior to his involvement with the Company, Mr. King held various executive
positions from 1969 to 1994 when he retired as President of Electrical and
Mechanical groups of JWP, Inc. Mr. King holds an MBA from Harvard University's
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<PAGE>
Graduate School of Business Administration and a Bachelor of Science degree from
the University of North Carolina. Mr. King is also a member of the Executive
Committee of the Company.
GARY L. JOSLIN, CHIEF FINANCIAL OFFICER AND DIRECTOR. Mr. Joslin, who became
Chief Financial Officer and Director in April 1998, served as a management and
financial consultant prior to joining ADI. Previously, he served as a senior
financial executive in the wholesale and retail segments of the building
materials and equipment industry for companies ranging in size from $70 million
to $450 million, including Prime Source, Inc. He also served in numerous
financial positions with Wickes Companies, a multi-billion-dollar conglomerate
involved in retailing, wholesaling, and manufacturing. Mr. Joslin holds a
Bachelor of Science degree in Accounting from California State University - Long
Beach and is a licensed CPA. Mr. Joslin is also a member of the Executive
Committee of the Company.
BRUCE H. HAGLUND, SECRETARY AND DIRECTOR. Mr. Haglund has served as General
Counsel of the Company since 1992 and has served as Secretary and a director of
the Company from June 1996 to present. He has served as a Director of the
Company since 1989. Mr. Haglund is a principal in the law firm of Gibson,
Haglund & Paulsen in Orange County, California where he has been engaged in the
private practice of law since 1980. He is also a member of the Boards of
Directors of Metalclad Corporation, HydroMaid International, Inc., Renaissance
Golf Products, Inc. and VitriSeal, Inc. Mr. Haglund has a J.D. from the
University of Utah College of Law. Mr. Haglund is also the Chairman of the Audit
Committee of the Board and a member of the Executive Committee of the Company.
WILLIAM T. WALKER, JR., DIRECTOR. Mr. Walker became a director of the Company in
March 1997. Mr. Walker founded Walker Associates, a corporate finance consulting
firm for investment banking, in 1985 and has participated in or been
instrumental in completing over $250 million in public and private offerings
since its inception. Prior to forming Walker Associates, Mr. Walker served as
executive Vice President, Manager of Investment Banking, Member of the Board and
Executive Committee and Chairman of the Underwriting Committee for Bateman
Eichler Hill Richards, a New York Stock Exchange Member firm. Mr. Walker is also
a member of the Board of Directors of Fortune Petroleum Corporation and
Go-Video, Inc., both public companies traded on the American Stock Exchange. Mr.
Walker attended Stanford University. Mr. Walker is also a member of the Audit
Committee of the Board.
SALEEM S. NABER, DIRECTOR. Mr. Naber, who became Chief Executive Officer,
President and a Director of the Company in April 1998. Mr. Naber resigned as an
officer of the Company in January 2000 and is now exclusively a Director of the
Company. Mr. Naber has over 40 years of experience in the aerospace industry,
primarily with Lucas Aerospace and Western Gear Corporation, acquired by Lucas
in 1988. His responsibilities with Lucas ranged from Design Engineer of
Precision Products to President of Lucas Western, Inc., the $400 million U.S.
division of Lucas. Mr. Naber's most recent post before joining the Company was
Managing Director of Lucas Aerospace, Aircraft Systems Division, the position he
held when he resigned in 1996. Mr. Naber received a Bachelor of Science degree
in Electrical Engineering from the University of California - Berkeley and
pursued post-graduate courses at the University of Southern California and the
University of California, Los Angeles. Mr. Naber is also a member of the Audit
Committee.
Management intends to vote for the directors as nominated.
EXECUTIVE OFFICERS
The names, ages, and positions of the Company's executive officers and key
consultants, who are not also nominees for Directors, as of the date of this
Proxy Statement are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY FIRST ELECTED
<S> <C> <C> <C>
Osamah S. Bakhit 50 Founder, Marketing and Sales Advisor 1988
Jeffrey G. Ward 40 Executive Vice President 1993
John B. Jacobs 35 Senior Vice President 1999
</TABLE>
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<PAGE>
OSAMAH S. BAKHIT, MARKETING AND SALES ADVISOR. Mr. Bakhit, the founder of the
Company, was Chief Executive Officer, President, Chairman and a Director of the
Company from its inception until his resignation as an officer and Director of
the Company in November 1997. He is no longer an executive officer of the
Company, but consults with the Company on a full-time basis as a marketing and
sales advisor. Mr. Bakhit has over 16 years of aircraft experience. Prior to
forming the Company in 1988, Mr. Bakhit was CEO of Bakhit Enterprises, a company
that purchased heavy construction vehicles and material for General Enterprise
Company. Mr. Bakhit worked for General Enterprise Company in Amman, Jordan,
where he managed overall construction operations. His duties included
supervising the construction of Queen Alia International Airport in Jordan. Mr.
Bakhit attended the University of California, Irvine.
JEFFREY G. WARD, EXECUTIVE VICE PRESIDENT. Mr. Ward has over 16 years of
aircraft experience and currently oversees and lends leadership to the extensive
sales team at ADI. Prior to joining the Company in 1993, Mr. Ward was a sales
representative for System Industries. He was a sales consultant to the aerospace
industry with key accounts including the U.S. military and major aerospace
manufacturers. Prior to System Industries, Mr. Ward was a sales representative
for Eastman Kodak Company. Mr. Ward also served in the United States Marine
Corps for seven years as a naval aviator. Mr. Ward has a B.A. in Economics and
German from the University of Virginia.
JOHN B. JACOBS, SENIOR VICE PRESIDENT. Mr. Jacobs has over 11 years of
management experience in aircraft material sales and leasing. Prior to joining
the Company in July 1999, he was vice president of Airmotive, Inc., an
international aircraft parts redistributor, where he held various sales
positions for over nine years. He has been active in the aircraft industry since
1988. Mr. Jacobs oversees sales, marketing and operations for the company. Mr.
Jacobs holds a Bachelor of Arts degree in International Marketing and Management
from California State University, Fullerton.
REPORT ON EXECUTIVE COMPENSATION
The Company's compensation programs are designed to link executives'
compensation to the performance of the Company. The annual salary paid to
executives over the past three years reflect fixed amounts that are deemed
competitive for executives with comparable ability and experience in the
industry.
COMPENSATION OF OFFICERS
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
- -------------------------------------------------------------------------------------------------
NAME AND OTHER AWARDS PAYOUTS
PRINCIPAL YEAR SALARY BONUS ANNUAL --------------------------------- ALL
POSITION ($) ($) COMPEN- RESTRICTED OPTIONS/ LTIP OTHER (1)
SATION STOCK ($) SARS (#) PAYOUTS ($)
($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William D. King 1998 - - - - - - -
------------------------------------------------------------------------------------------
CEO (2) 1999 14,086 - - - 950,000 - -
- ---------------------------------------------------------------------------------------------------------------
John B. Jacobs 1998 - - - - - - -
------------------------------------------------------------------------------------------
VP (3) 1999 89,544 - - - 100,000 - -
- ---------------------------------------------------------------------------------------------------------------
Jeffrey G. Ward 1997 172,024 -
------------------------------------------------------------------------------------------
Exec. VP 1998 196,185 - - - - -
------------------------------------------------------------------------------------------
1999 184,226 - - - 15,000 - -
- ---------------------------------------------------------------------------------------------------------------
Gary L. Joslin 1998 114,081 - - - - - -
------------------------------------------------------------------------------------------
CFO (4) 1999 153,002 - - 45,000 - -
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The remuneration described in the table does not include the cost to the
Company of benefits furnished to the named executive officers, including
premiums for health insurance and other personal benefits provided to such
individual that are extended to all employees of the Company in connection
with their employment. The value of such benefits cannot be precisely
determined; however, the executive officers named above did not receive
other compensation in excess of the lesser of $50,000 or 10% of such
officers' cash compensation. Other annual compensation consists of
automobile lease payments, automobile insurance, and certain other
perquisites paid by the Company.
(2) Mr. King was appointed as the Company's Chief Executive Officer in January
2000.
(3) Mr. Jacobs was appointed as the Company's Senior Vice President in July
1999.
(4) Mr. Joslin was appointed as the Company's Chief Financial Officer in June
1998.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR--INDIVIDUAL GRANTS
A total of 1,619,000 options were granted to employees, consultants, and
directors of the Company in 1999. Options to purchase 935,000 shares of Common
Stock were granted to Mr. King, the Company's Chief Executive Officer, in
connection with his employment, of which (i) 350,000 options are exercisable at
$.25 per share and are fully vested, and (ii) 600,000 are exercisable at $1.22
per share and vest 300,000 on December 31, 2000 and 300,000 on December 31, 2001
conditioned upon Mr. King's employment on such dates. In September 1999, Gibson,
Haglund & Paulsen forgave $110,000 in accrued legal fees and expenses and Mr.
Haglund was granted an option to purchase 100,000 shares of Common Stock at $.25
per share, the market price of the Company's Common Stock on the date the option
was granted. In October 1999, Mr. Haglund exercised the option to purchase the
100,000 shares by forgiving an additional $25,000 in legal fees and expenses. In
1999, Messrs. Haglund, Naber, and Walker each received options to purchase
15,000 Shares at $1.00 per share, all of which options are vested. Mr. Joslin
received options to purchase 45,000 Shares at $1.00 in 1999, of which 28,333 are
currently vested, 8,333 vest on April 15, 2001, and 8,334 vest on April 15,
2002. Mr. Jacobs was granted options for 100,000 shares exercisable at $1.00 per
share in 1999, of which 33,333 are currently vested, 33,333 vest on April 15,
2001, and 33,334 vest on April 15, 2002. Mr. Ward was granted options for 15,000
shares in 1999, all of which are vested. Mr. Bakhit was granted options for
160,000 shares in 1999, all of which are vested. The options granted to the
foregoing persons are summarized below:
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f)
Number of % of Total Potential Realizable
Securities Options Value at Assumed
Underlying Granted to Exercise or Annual Rates of
Options Employees in Base Price Expiration Stock Price Appreciation
Name Granted (#)Fiscal Year(1) ($/Sh) Date 5%($) 10% ($)
---- ------------------------- ------ ---- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
William D. King 350,000 21.6% $.25 12/31/2009 55,028 139,452
William D. King 600,000 37.1% $1.22 12/31/2009 460,351 1,166,619
Osamah S. Bakhit 160,000 9.9% $1.00 12/31/2009 100,623 254,999
Bruce H. Haglund 100,000 6.2% $.25 12/31/2004 15,722 39,844
Bruce H. Haglund 15,000 0.9% $1.00 12/31/2004 4,144 9,158
John B. Jacobs 100,000 6.2% $1.00 12/31/2004 27,628 61,051
Gary L. Joslin 45,000 2.8% $1.00 12/31/2004 12,433 27,473
Saleem S. Naber 15,000 0.9% $1.00 12/31/2004 4,144 9,158
William T. Walker, Jr. 15,000 0.9% $1.00 12/31/2004 4,144 9,158
Jeffrey G. Ward 15,000 0.9% $1.00 12/31/2004 4,144 9,158
</TABLE>
- ----------------
(1) An aggregate of 1,619,000 options were granted to Officers, Directors,
consultants, and employees during 1999.
9
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN THE YEAR ENDED DECEMBER 31, 1999 AND OPTION
VALUES AT DECEMBER 31, 1999
Bruce H. Haglund exercised options to purchase 100,000 shares in October
1999 at an exercise price of $.25 per share. There was no value realized on the
date the options were exercised because the market value of the Company's Shares
on the date of exercise was less than the exercise price. See "Option Grants in
Last Fiscal Year--Individual Grants" above. The following table sets forth (i)
the number of shares acquired on exercise of options and the valued realized,
and (ii) the number of options, both exercisable and unexercisable, held by each
of the named executive officers of the Company and the value of any in-the-money
options at December 31, 1999 (assuming a market value of $1.38 on December 31,
1999):
<TABLE>
<CAPTION>
Number of Value of
Unexercised in-the-Money
Options at Options at
Shares December 31, 1999 December 31, 1999 (1)
Acquired Value ----------------- ---------------------
on Exercise Realized Exercisable/ Exercisable/
(#) ($) Unexercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
William D. King -0- $-0- 350,000/600,000 $395,000/$96,000
Osamah S. Bakhit -0- $-0- 211,050/-0- $60,800/$-0-
Bruce H. Haglund 100,000 $-0- 27,500/7,500 $5,700/$31,875
John B. Jacobs -0- $-0- 33,333/66,667 $12,667/$25,333
Gary L. Joslin -0- $-0- 44,998/50,002 $10,767/$6,333
Saleem S. Naber -0- $-0- 23,333/16,667 $5,700/$-0-
William T. Walker -0- $-0- 15,000/5,000 $3,800/$-0-
Jeffery G. Ward -0- $-0- 30,000/-0- $5,700/$-0-
</TABLE>
(1) The value of "in-the-money" options represents the difference between the
exercise price of such options and the $1.38, the closing sale price of the
Common Stock on December 31, 1999.
RATIFICATION OF APPOINTMENT OF AUDITORS
(ITEM #2 ON PROXY CARD)
The Board of Directors has selected Grant Thornton LLP as independent
public accountants for the Company for the fiscal year ending December 31, 2000,
subject to the approval of the Stockholders. Ratification of the appointment of
auditors requires a majority of the votes cast thereon. Any Shares not voted,
whether by abstention, broker non-vote, or otherwise, have no impact on the
vote. If the Stockholders do not ratify this appointment, other independent
auditors will be considered by the Board or Directors upon recommendation of the
Audit Committee.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding Shares is required to
approve this proposal. Management intends to vote "FOR" the proposal to ratify
the auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE AUDITORS, AND YOUR PROXY WILL BE
SO VOTED UNLESS YOU SPECIFY OTHERWISE.
AMENDMENT OF 1996 STOCK OPTION AND INCENTIVE PLAN
(ITEM #3 ON PROXY CARD)
In July 1996 the Company adopted the Aviation Distributors, Inc. 1996 Stock
Option and Incentive Plan (the "Plan"). This plan provides for the granting of
incentive or non-qualified stock options to
10
<PAGE>
employees, non-employee directors and independent contractors at the sole
discretion of the board of directors. Stock appreciation rights, as defined, may
accompany options issued under the Plan. Additionally, the Plan provides for the
issuance of restricted stock, dividend equivalents and other stock and cash
based awards and loans to participants in connection with the options or other
plan provisions at the discretion of the board of directors. Options currently
outstanding become exercisable in zero to four years from the grant date and
expire 10 years after the grant date. The options are exercisable at not less
than the market value of the Company's stock on the date of the grant. The
initial number of shares available under the Plan for issuance was 264,500. A
total of 932,500 non-qualified options have been granted outside the Plan since
the Plan's inception. The board of directors has approved an amendment to the
Plan to increase the allowable shares under the Plan to 1,000,000 shares,
subject to shareholder approval.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholders proposals intended for inclusion in next years proxy statement
should be sent via certified mail-return receipt requested to Bruce H. Haglund,
Secretary, Aviation Distributors, Inc., One Capital Drive, Lake Forest,
California 92630, and must be received by December 31, 2000.
MISCELLANEOUS AND OTHER MATTERS
Management knows of no matters to come before the Meeting other than those
specified herein. If any other matter should come before the Meeting, then the
persons named in the enclosed form of proxy will have discretionary authority to
vote all proxies with respect thereto in accordance with their judgment.
DOCUMENTS INCORPORATED BY REFERENCE
The Company specifically incorporates the Financial Statements for the year
ended December 31, 1999, filed as part of the 1999 Annual Report on Form 10-KSB
in response to Item 13 of the 10-KSB. The Annual Report and attached Financial
Statements should have been enclosed in the mailing containing this Proxy
Statement. If you did not receive a copy of the Annual Report and attached
Financial Statement, please contact the Company and request that the information
be sent to you. A copy of the 1999 Annual Report may be obtained from the
Company without cost to the requesting stockholder by contacting the Company.
A COPY OF THE COMPANY'S CURRENT ANNUAL REPORT ON FORM 10-KSB AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, IS BEING MAILED TO EACH STOCKHOLDER TOGETHER WITH THIS PROXY
STATEMENT. ADDITIONAL COPIES MAY BE OBTAINED BY STOCKHOLDERS WITHOUT CHARGE BY
WRITING TO: AVIATIONS DISTRIBUTORS, INC., ONE CAPITAL DRIVE, LAKE FOREST,
CALIFORNIA 92630. COPIES OF ANY EXHIBITS TO THE ANNUAL REPORT, SPECIFICALLY
LISTED IN THE ANNUAL REPORT, MAY BE OBTAINED BY STOCKHOLDERS WITH A CHARGE EQUAL
TO THE COMPANY'S COST TO COPY AND SEND ANY REQUESTED EXHIBIT.
11
<PAGE>
[SIDE ONE OF CARD]
AVIATION DISTRIBUTORS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 4, 2000
The undersigned hereby constitutes and appoints Bruce H. Haglund and Gary
L. Joslin, and each of them, the true and lawful attorneys, agents, and proxies
of the undersigned, with full power of substitution, to vote with respect to all
the shares of Common Stock, par value $.001, of AVIATION DISTRIBUTORS, INC.,
standing in the name of the undersigned at the close of business on June 15,
2000, at the Annual Meeting of Stockholders to be held August 4, 2000, and at
any and all adjournments and postponements thereof, to vote:
1. Election of Directors: FOR all nominees listed below
(Except as marked to the contrary below)
WITHHOLD AUTHORITY
WILLIAM D. KING, GARY L. JOSLIN, BRUCE H. HAGLUND, WILLIAM T. WALKER, JR.,
SALEEM S. NABER.
2. To consider and ratify the appointment of GRANT THORNTON LLP as
independent auditor of the Company for the fiscal year ending December
31, 2000:
FOR AGAINST ABSTAIN
3. To amend the Aviation Distributors, Inc. 1996 Omnibus Stock Option and
Incentive Plan and to approve the grant of stock options to certain
indivdiuals:
FOR AGAINST ABSTAIN
4. In their discretion, the Board of Directors is authorized to vote this
Proxy upon such other matters as may properly come before the meeting
or any adjournment or postponement thereof.
[SIDE TWO OF CARD]
The shares represented by this Proxy will be voted in the manner directed
herein by the undersigned stockholder. If no directions to the contrary are
made, this Proxy will be voted FOR the election of all of the director nominees
named above and FOR approval of Proposals 2 and 3 if necessary.
DATED: , 2000
(Signature)
(Signature if held jointly)
IMPORTANT: Please sign exactly as your
name appears at the left. Each joint
owner should sign. Executors,
administrators, trustees, should give
full title. If a corporation, please
sign in full corporate name by an
authorized officer. If a partnership,
please sign in partnership name by an
authorized person.
Please mark, sign, date and return
promptly.
THIS PROXY IS BEING SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
OF AVIATION DISTRIBUTORS, INC.
