UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14 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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AEROCENTURY CORP.
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(Name of Registrant as Specified in Its Charter)
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Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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/X/ No fee required.
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and 0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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<PAGE>
AEROCENTURY CORP.
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 1999
TO OUR STOCKHOLDERS:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders of
AeroCentury Corp. (the "Company"), which will be held at the Hiller Aviation
Museum, 601 Skyway Road, San Carlos, California at 6:00 p.m. on April 23, 1999
for the following purposes:
1. To elect two directors to the Board of Directors;
2. To consider and vote upon a proposal to ratify the selection
of Arthur Andersen LLP as independent public accountants for
the Company for the fiscal year ending December 31, 1999; and
3. To act upon such other business as may properly come before the
meeting or any adjournment or postponement thereof.
These matters are more fully described in the Proxy Statement accompanying this
Notice.
The Board of Directors has fixed the close of business on March 1, 1999 as the
record date for determining those stockholders who will be entitled to vote at
the meeting. The stock transfer books will not be closed between the record date
and the date of the meeting.
A quorum comprising the holders of the majority of the outstanding shares of
Common Stock of the Company on the record date must be present or represented
for the transaction of business at the Annual Meeting. Accordingly, it is
important that your shares be represented at the meeting. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. Your proxy may be revoked at any
time prior to the time it is voted.
If you plan to attend the meeting, please call the Company's Investor Relations
Department at 650-340-1888, so that your name can be placed on the guest list at
the Hiller Aviation Museum entrance.
Please read the proxy material carefully. Your vote is important and the Company
appreciates your cooperation in considering and acting on the matters presented.
Sincerely yours,
/s/ Neal D. Crispin
Neal D. Crispin
CHAIRMAN OF THE BOARD
March 22, 1999
Burlingame, California
<PAGE>
PROXY STATEMENT
FOR
1999 ANNUAL MEETING OF STOCKHOLDERS
OF
AEROCENTURY CORP.
TO BE HELD ON APRIL 23, 1999
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of AEROCENTURY CORP. (the "Company") of proxies to be voted
at the 1999 Annual Meeting of Stockholders, which will be held at 6:00 p.m. on
April 23, 1999 at the Hiller Aviation Museum, 601 Skyway Road, San Carlos,
California, or at any adjournments or postponements thereof, for the purposes
set forth in the accompanying Notice of 1999 Annual Meeting of Stockholders.
This Proxy Statement and the proxy card were first mailed to stockholders on or
about March 22, 1999. The Company's 1999 Annual Report is being mailed to
stockholders concurrently with this Proxy Statement. The 1999 Annual Report is
not to be regarded as proxy soliciting material or as a communication by means
of which any solicitation of proxies is to be made.
VOTING RIGHTS AND SOLICITATION
The close of business on March 1, 1999 was the record date for stockholders
entitled to notice of and to vote at the 1999 Annual Meeting of Stockholders. As
of that date, the Company had 1,606,557 shares of Common Stock, $0.001 par value
(the "Common Stock"), issued and outstanding, of which 17,800 are held by the
Company as treasury stock. All of the shares of the Company's Common Stock
outstanding on the record date, except for treasury stock, are entitled to vote
at the 1999 Annual Meeting of Stockholders, and stockholders of record entitled
to vote at the meeting will have one vote for each share of Common Stock so held
with regard to each matter to be voted upon.
If your shares are registered directly in your name with the Company's transfer
agent, Continental Stock & Transfer Co., you are considered, with respect to
those shares, the "stockholder of record" and these proxy materials are being
sent directly to you by the Company. As the stockholder of record, you have the
right to grant your voting proxy directly to the Company or to vote in person at
the meeting. The Company has enclosed a proxy card for your use which should be
returned to the Company.
If your shares are held in a stock brokerage account or by a bank or other
nominee, you are considered the "beneficial owner" of shares held "in street
name" and these proxy materials were forwarded to you by your broker or nominee
who is considered, with respect to those shares, the stockholder of record. As
the beneficial owner, you have the right to direct your broker on how to vote
and are also invited to attend the meeting. However, since you are not the
stockholder of record, you may not vote those shares in person at the meeting.
Your broker or nominees has enclosed a voting instruction card for your use,
which must be returned to your broker or nominee.
Shares of the Company's Common Stock represented by proxies in the accompanying
form which are properly executed and returned to the Company will be voted at
the 1999 Annual Meeting of Stockholders in accordance with the instructions of
the stockholder of record contained therein. In the absence of contrary
instructions, shares represented by such proxies will be voted FOR the election
of each of the directors as described herein under "Proposal 1: Election of
Directors" and FOR ratification of the selection of accountants as described
herein under "Proposal 2: Ratification of Selection of Independent Public
Accountants." Management does not know of any matters to be presented at this
Annual Meeting other than those set forth in this Proxy Statement and in the
Notice accompanying this Proxy Statement. If other matters should properly come
before the meeting, the proxy holders will vote on such matters in accordance
with their best judgment. Any stockholder of record has the right to revoke his
or her proxy at any time before it is voted at the meeting. Election of
directors by stockholders shall be determined by a plurality of the votes cast
by the stockholders of record entitled to vote at the election present in person
or represented by proxy.
Abstentions and broker non-votes are each included in the determination of the
number of shares present for quorum purposes. Abstentions are counted in
tabulations of the votes cast on proposals presented to stockholders, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved.
The entire cost of soliciting proxies will be borne by the Company. Proxies will
be solicited principally through the use of the mails, but, if deemed desirable,
may be solicited personally or by telephone, telegraph or special letter by
officers and regular Company employees for no additional compensation.
Arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to send proxies and proxy material to the beneficial owners of
the Company's Common Stock, and such persons may be reimbursed for their
expenses.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Two of the Company's six directors will be elected at the 1999 Annual Meeting of
Stockholders. The nominees for the Board of Directors are set forth below. The
proxy holders intend to vote all proxies received by them in the accompanying
form for the nominees for director listed below, unless instructions to the
contrary are marked on the proxy. In the event that a nominee is unable or
declines to serve as a director at the time of the 1999 Annual Meeting of
Stockholders, the proxies will be voted for any nominee who shall be designated
by the present Board of Directors to fill the vacancy. In the event that
additional persons are nominated for election as directors, the proxy holders
intend to vote all proxies received by them for the nominees listed below. As of
the date of this Proxy Statement, the Board of Directors is not aware of any
nominee who is unable or will decline to serve as a director. The term of office
of each person elected as a director will continue until the 2002 Annual Meeting
of Stockholders or until the director's successor has been elected.
Nominees To Board Of Directors
Mr. Maurice J. Averay, age 68. Mr. Averay has served as director since
January 1998. Mr. Averay has been an aviation consultant since 1996. From 1995
to 1996 he was a full-time consultant to Saab Aircraft of America and its parent
with respect to marketing and new aircraft development. From 1990 - 1995, he was
Senior Vice President of the Sales and Marketing team of Saab Aircraft of
America responsible for North and South American turboprop airliner sales. Prior
to that Mr. Averay was Vice President of Sales Support for Saab Aircraft
International, Ltd.; Sales Engineering Manager for Fairchild Aircraft, Inc., San
Antonio, Texas; Vice President, Planning, for Chataqua Airlines, Jamestown, New
York, a U.S. Airways commuter associate; and Vice President of Shorts Aircraft
USA, Inc., Mr. Averay holds a Bachelor of Science in Aero Engineering from the
University of Bristol, United Kingdom.
Ms. Toni M. Perazzo, age 52. Ms. Perazzo has served as a director since
1997. She is a member of the Audit and Executive Committees of the Board of
Directors. Ms. Perazzo is the Company's Vice President-Finance and Secretary and
has held these same positions with JetFleet Management Corp. ("JMC"), the
management company for the Company since 1994, and CMA Consolidated, Inc.
("CMA") since 1990. Prior to joining CMA in 1990, she was Assistant Vice
President for a savings and loan, controller of an oil and gas syndicator and a
senior auditor with Arthur Young & Co., Certified Public Accountants. Ms.
Perazzo is the wife of Neal D. Crispin, a director and officer of JMC and the
Company. She received her Bachelor's Degree from the University of California at
Berkeley, and her Master's Degree in Business Administration from the University
of Southern California. Ms. Perazzo, a CPA, is a member of the California
Society of Certified Public Accountants and the American Institute of Certified
Public Accountants.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ELECTION OF
ALL OF THE ABOVE NOMINEES FOR ELECTION AS DIRECTORS.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP served as independent public accountants for the
Company for the fiscal year ended December 31, 1998. The Board of Directors
desires the firm to continue in this capacity for the current fiscal year.
Accordingly, a resolution will be presented to the meeting to ratify the
selection of Arthur Andersen LLP by the Board of Directors as independent public
accountants to audit the accounts and records of the Company for the fiscal year
ending December 31, 1999, and to perform other appropriate services. In the
event that stockholders fail to ratify the selection of Arthur Andersen LLP, the
Board of Directors would reconsider such selection.
Arthur Andersen LLP replaced Vocker Kristofferson & Co. as the Company's
auditors in May 1998. Vocker Kristofferson & Co had been auditors for the
predecessor partnerships of the Company, and their resignation as the Company's
auditors was not the result of any disagreement with the Company over accounting
principles or practices, financial disclosures, or auditing scope or procedures.
The replacement of Vocker Kristofferson & Co. with Arthur Andersen LLP was
unanimously approved by the Company's Board of Directors.
A representative of Arthur Andersen LLP will be present at the Annual Meeting to
respond to appropriate questions and to make a statement if such representative
desires to do so.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS.
<PAGE>
INFORMATION REGARDING THE COMPANY'S
DIRECTORS AND OFFICERS
Current Board Of Directors
The following directors have terms expiring at the Company's 1999 Annual
Stockholder Meeting: Maurice J. Averay and Toni M. Perazzo. They have been
nominated for election to the Board of Directors. For their biographical
information, see "PROPOSAL 1: ELECTION OF DIRECTORS," above.
The following directors have terms expiring at the Company's 2000 Annual
Stockholder Meeting:
Mr. Marc J. Anderson, age 62. Mr. Anderson is the Company's Chief
Operating Officer and Senior Vice President. He holds the same officer positions
with JMC. Prior to joining JMC in 1994, Mr. Anderson was an aviation consultant
(1992 to 1994) and prior to that spent seven years (1985 to 1992) as Senior Vice
President-Marketing for PLM International, a transportation equipment leasing
company. He was responsible for the acquisition, modification, leasing and
remarketing of all aircraft. Prior to PLM, Mr. Anderson served as
Director-Contracts for Fairchild Aircraft Corp.; Director of Aircraft Sales for
Fairchild SAAB Joint Venture; and Vice President, Contracts for SHORTS Aircraft
USA, Inc. Prior to that, Mr. Anderson was employed with several airlines in
various roles of increasing responsibility beginning in 1959.
Thomas W. Orr, age 64. Mr. Orr is currently a partner at the accounting
firm of Bregante + Company LLP, where he has been a partner since joining that
firm in 1992. Prior to that, beginning in 1986, Mr. Orr was Vice President,
Finance, at Scripps League Newspapers, Inc. Beginning in 1958, Mr. Orr was in
the audit department of Arthur Young & Company, where he retired as a partner in
1986. Mr. Orr received his Bachelor's degree in Business Administration, with
distinction, (Accounting major) from the University of Minnesota. He is a member
of the American Institute of Certified Public Accountants, the California
Society of Certified Public Accountants, and a former member of the California
State Board of Accountancy.
The following directors have terms expiring at the Company's 2001 Annual
Stockholder Meeting:
Mr. Neal D. Crispin, age 53. Mr. Crispin, is Chairman of the Board and
President of the Company. He is also President and a Chairman of CMA
Consolidated, Inc. ("CMA") and JetFleet Management Corp. Prior to forming CMA in
1983, Mr. Crispin spent 2 years as vice President-Finance of an oil and gas
company. Previously, Mr. Crispin was a manager with Arthur Young & Co.,
Certified Public Accountants. Prior to joining Arthur Young & Co., Mr. Crispin
served as a management consultant, specializing in financial consulting. Mr.
Crispin is the husband of Toni M. Perazzo, a Director and Officer of JMC and the
Company. He received a Bachelor's Degree in Economics from the University of
California at Santa Barbara and a Master's Degree in Business Administration
(specializing in Finance) from the University of California at Berkeley. Mr.
Crispin, a certified public accountant, is a member of the American Institute of
Certified Public Accountants and the California Society of Certified Public
Accountants.
Evan J. Wallach, age 44. Mr. Wallach is Vice President, Finance of C-S
Aviation. From 1996 to 1998, he was President and Chief Executive Officer of
Global Airfinance Corporation. He has specialized in aircraft and airline
financing over the past seventeen years, having held senior level positions with
The CIT Group (1994 to 1996), Bankers Trust Company (1992 to 1994), Kendall
Capital Partners (1990 to 1992), Drexel Burnham Lambert (1987 to 1990), American
Express Aircraft Leasing (1985 to 1987). Mr. Wallach received a Bachelor's
Degree in Political Science from State University of New York at Stony Brook and
a Master's Degree in Business Administration from the University of Michigan.
<PAGE>
Board Meetings And Committees
The Board of Directors of the Company held a total of seven meetings during the
fiscal year ended December 31, 1998 (the "1998 fiscal year"). Each director
attended every meeting of the Board and every meeting held by all committees of
the Board on which the director served.
The Company has an Audit Committee and an Executive Committee of the Board of
Directors. There is no compensation or nominating committee or committee
performing the functions of such committees.
The Audit Committee meets with the Company's financial management and its
independent public accountants to review internal financial information, audit
plans and results, and financial reporting procedures. This committee, which
currently consists of Thomas W. Orr, Chairman, Evan J. Wallach and Toni M.
Perazzo held one meeting during the 1998 fiscal year, and has held one meeting
in the 1999 fiscal year to date.
The Executive Committee has the authority to acquire, dispose of and finance
investments for the Company and execute contracts and agreements, including
those related to the borrowing of money by the Company, and generally exercise
all other powers of the Board of Directors except for those which require action
by all the directors or the independent directors under the Certificate of
Incorporation or the Bylaws of the Company, or under applicable law. The
Executive Committee currently consists of three directors, which will include
Neal D. Crispin, Chairman, Toni M. Perazzo, and Marc J. Anderson.
Director Compensation
Non-employee members of the Board are each paid an annual fee of $14,000 and are
reimbursed for all reasonable out-of-pocket costs incurred in connection with
their attendance at such meetings. They also receive $1,000 annually for each
committee membership. Board members who are officers of the Company do not
receive any compensation for Board or committee membership.
Officers And Key Employees
For biographies of Neal D. Crispin, President & Chairman of the Board, Marc J.
Anderson, Chief Operating Officer & Senior Vice President, and Toni M. Perazzo,
Vice President - Finance & Secretary, see " Board of Directors" above.
Listed below are officers and key employees of JetFleet Management Corp., the
Company's management company, who in their capacity as officers and/or employees
of JMC are responsible for the management of various aspects of the Company's
business:
<PAGE>
Mr. Andre Berenfeld, Vice President, Contracts, age 45. Mr. Berenfeld is
responsible for the administration of aircraft leases, marketing agreements and
vendor agreements for the Company and JMC. Mr. Berenfeld has 19 years of
aviation industry experience in a variety of assignments in the engineering,
technical management and finance fields. Prior to joining the Company, he held
various positions of increasing responsibility with Citicorp (1992-1995), and
before that with PLM International, United Airlines, and the General Electric
Company. Mr. Berenfeld has Bachelor of Science degrees in Electrical Engineering
and Mechanical Engineering and a Master's Degree in Business Administration from
the University of Pennsylvania, Wharton School of Business.
Mr. Frank Duckstein, Vice President, Remarketing, age 44. Mr. Duckstein has been
in charge of market development for JMC since joining JMC in 1995. From 1989 to
1995, Mr. Duckstein served as Director of Marketing for PLM International, a
transportation equipment leasing company. While at PLM, he was responsible for
sales and remarketing, market research and development, both domestically and
internationally, of PLM's corporate and commuter aircraft, as well as their
helicopter fleet. Previously, he was with the following international and
regional airlines operating within Europe and the U.S. with responsibility for
operation, market development and sales: Direct Air (Berlin, Germany); Air
Berlin (Berlin, Germany); and Aeroamerica (Berlin, Germany). Mr. Duckstein
attended the Technical University of Berlin, majoring in Economics.
Ms. Polly Prelinger, Vice President, Marketing, age 41. Ms. Prelinger is in
charge of research and market development for the Company and JMC. Prior to
joining JMC in 1998, Ms. Prelinger was Vice President-Sales and Marketing for 2
years with Fairchild Aircraft Incorporated, a major commuter aircraft
manufacturer. During the period 1987 - 1996, Ms. Prelinger was at PLM
International, a diversified equipment leasing company where she held positions
of Director, Research and Market Development and Vice President, Aircraft
Marketing. Ms. Prelinger holds a Bachelor of Arts degree in Russian Studies from
the University of Michigan.
Christopher B. Tigno, General Counsel, age 37. Mr. Tigno is responsible for all
legal matters of the Company and JMC and its related companies, including
supervision of outside counsel, documentation of aircraft asset acquisition
transactions, and corporate and securities matters. He is also General Counsel
for CMA. He joined JMC and CMA in 1996. He was most recently employed as Senior
Counsel with the firm of Wilson, Ryan & Campilongo (1992 to 1996), and prior to
that was associated with Fenwick & West and Morrison & Foerster. Mr. Tigno
received his Juris Doctor degree from the University of California, Boalt Hall
School of Law and was admitted to the California Bar in 1986. He also holds a
Bachelor's Degree in Chemical Engineering from Stanford University.
<PAGE>
Employment Contracts
No compensation was paid by the Company to its officers in 1998, as the Company
had engaged JetFleet Management Corp. as the management company under the
Management Agreement in effect since 1997. The officers of the Company are
officers of JMC, and received their compensation from JMC. The cash compensation
received by Neal Crispin from JMC including bonuses, for 1998 was $60,000 and is
expected to be $63,000 in 1999. The cash compensation received by Ms. Perazzo
from JMC including bonuses for 1998 was $30,000 and is expected to be $32,000 in
1999. The only executive officer of JMC whose compensation exceeds $100,000 is
Marc J. Anderson, Sr. Vice President & Chief Operating Officer, whose salary and
bonus was $120,000 in 1998 and is expected to be $155,000 in 1999.
On April 23, 1998, the Company entered into an Employment Agreement with Neal D.
Crispin which will become effective in the event that either (i) the Company
terminates the Management Agreement with JMC or (ii) there is a change in
control of the voting securities of the Company. In either of those events, the
Company would employ Mr. Crispin for a five year term as President of the
Company. Mr. Crispin would receive a signing bonus of $500,000 plus 5% of the
outstanding capitalization of the Company, and receive an annual salary of
$250,000. Mr. Crispin would be eligible for an annual minimum performance bonus
of twice his annual salary. The agreement also provides for severance payments
if the Company terminates his employment for reasons other than "for cause" or
disability, or the Company terminates employment for enumerated "good reasons."
Following a change in control of the Company, severance payments will be payable
by the Company in the event of termination of employment for any reason.
On April 28, 1998, the Company entered into an Employment Agreement with Marc J.
Anderson which will become effective in the event that either (i) the Company
terminates the Management Agreement with JMC or (ii) there is a change in
control of the voting securities of the Company. In either of those events, the
Company would employ Mr. Anderson for a five year term as Chief Operating
Officer and Senior Vice President of the Company at a base salary of $120,000,
and he would receive a signing bonus of $50,000. The agreement also provides for
severance payments if the Company terminates his employment for reasons other
than "for cause" or disability, or the Company terminates employment for
enumerated "good reasons." Following a change in control of the Company,
severance payments would be payable by the Company in the event of termination
of employment for any reason.
Compensation Committee Interlocks And Insider Participation
Neal Crispin and Toni M. Perazzo are both executive officers and directors of
the Company and JetFleet Management Corp. Marc Anderson is an executive officer
and director of the Company and an executive officer of JetFleet Management
Corp. As described above under "Employment Contracts," the Company has no
employees and does not pay any compensation to its executive officers. Other
than that, no executive officers of the Company currently serve on the
compensation committee (or any other committee of the board of directors
performing similar functions) of another entity.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information regarding the beneficial ownership of
the Company's Common Stock as of March 1, 1999 by: (i) each person who is known
to the Company to own beneficially more than five percent of the outstanding
shares of the Company's Common Stock; (ii) each director; and (iii) all
directors and executive officers as a group.
<TABLE>
<S>
<C> <C> <C>
Name, Position, & Address No of. Shares(1) Percentage of
Ownership of
Common Stock(8)
Neal D. Crispin 199,728 12.57%
Chairman of the Board,
President and Principal
Shareholder (1)(2)(3)(9)
Toni M. Perazzo 199,728 12.57%
Director, Vice President - Finance,
Secretary and Principal
Shareholder (1)(2)(4)(9)
Marc J. Anderson 4,330 *
Director, Senior Vice President
and Chief Operating Officer (1)(2)(5)
Maurice J. Averay, 200 *
Director (2)
Thomas W. Orr, 400 *
Director (2)
Evan J. Wallach, 75 *
Director (2)
JetFleet Holding Corp., 147,167 9.26%
Principal Shareholder (2)(6)
All directors and executive
officers as a group (6 persons)(7) 201,733 12.70%
------------------------------------------------
</TABLE>
* Less than 1%
[footnotes on following page]
<PAGE>
(1) Except as indicated in the footnotes to this table, the stockholders
named in the table are known to the Company to have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable. The number of shares beneficially owned includes Common
Stock of which such individual has the right to acquire beneficial
ownership either currently or within 60 days after March 1, 1999,
including, but not limited to, upon the exercise of an option.
(2) The mailing address is c/o AeroCentury Corp., 1440 Chapin Avenue Suite
310, Burlingame, California 94010.
(3) Includes 197,886 shares owned by corporations of which Mr. Crispin is
an officer, director and principal shareholder. To avoid double
counting the same shares, does not include 13,333 shares issuable upon
exercise of options granted to Mr. Crispin by JetFleet Holding Corp.
("JHC") to purchase AeroCentury Common Stock owned by JHC. (The shares
issuable upon exercise of these options would come from the 147,167
shares already counted as beneficially owned by Mr. Crispin and Ms.
Perazzo indirectly through JHC.)
(4) Includes 197,886 shares owned by corporations, of which Ms. Perazzo is
an officer, director and principal shareholder, plus all other shares
owned beneficially by Mr. Crispin, spouse of Ms. Perazzo.
(5) Includes shares issuable upon exercise of options to purchase 3,000
shares issuable upon exercise of options granted by JHC to purchase
AeroCentury Common Stock owned by JHC.
(6) In May 1998, the original holder of the shares of the Company, JetFleet
Management Corp., was renamed "JetFleet Holding Corp." The rights and
obligations under the Management Agreement were then assigned by
JetFleet Holding Corp. to a newly-created wholly-owned subsidiary named
"JetFleet Management Corp."
(7) Consists of shares beneficially owned by officers and directors, but
excludes option shares described in footnote (3) and (5), since the
shares issuable upon exercise of these options are already counted in
the 147,167 shares beneficially owned by Mr. Crispin and Ms. Perazzo
indirectly through JHC, and therefore included in the shares counted as
beneficially owned by officers and directors.
(8) For purposes of calculating percentages, total outstanding shares
consists of 1,588,757 shares of outstanding Common Stock, which
excludes shares held by the Company as treasury stock.
RELATED PARTY TRANSACTIONS
Management Agreement. JMC acts as the management company for the Company under
the Management Agreement, dated December 31, 1997, as amended on February 3,
1998, between JMC and the Company. The officers of the Company are also officers
of JMC and two members of the JMC's Board of Directors are on the Board of
Directors of the Company.
<PAGE>
Under the Management Agreement, the Company pays a monthly management fee to JMC
equal to 0.25% of the net book value of the Company's assets as of the end of
the month for which the fee is due. In addition, JMC may receive a brokerage fee
for locating assets for the Company, provided that the aggregate purchase price
including chargeable acquisition costs and any brokerage fee does not exceed the
fair market value of the asset based on appraisal, and a remarketing fee in
connection with the sale or re-lease of the Company's assets. The management
fees, brokerage fees and remarketing fees may not exceed the customary and usual
fees that would be paid to an unaffiliated party for such services. The Company
paid JMC $520,280 of management fees and $397,230 in brokerage fees during 1998.
No such fees were paid by the Company to JMC during 1997, since the Company's
business activities did not commence until its consolidation with JetFleet
Aircraft, L.P. and JetFleet Aircraft II, L.P. on January 1, 1998.
In the event of any breach by the Company which terminates the Management
Agreement, the Company will be liable for liquidated damages of $12 million
(adjusted for inflation) from 1997 until 2007, then declining $1 million per
year each year thereafter. A sale or disposition by the Company of over 25% of
the assets of the Company in a single transaction or series of transactions not
recommended by JMC is considered one event of termination by the Company in
breach of the Management Agreement.
The agreement also grants the Company an option to acquire all of the
outstanding stock of JMC at any time on or before December 31, 2003, subject to
such stockholder approval as required by applicable law, for a purchase price
based on the earnings of JMC, in the form of freely tradeable registered stock
of the Company. The purchase price would be set at 90% of the product of (i) the
earnings of JMC as of the most recent 12-month period prior to the acquisition,
multiplied by (ii) the average price to earnings ratio of the Company over the
same 12-month period, each as determined according to generally accepted
accounting principles; provided, however, that if the purchase price is less
than $12 million, JMC would have the right to decline the acquisition.
On February 3, 1998, the Company's Board of Directors, including its three
outside directors, ratified, approved and confirmed the terms of the Management
Agreement, as amended to its current form. The original Management Agreement had
been previously approved by the Board of Directors in its original form in 1997.
Loan Transaction. In connection with the Company's purchase of an aircraft in
March 1998 from an independent third party seller, the Company borrowed $866,670
from AeroCentury IV, Inc. ("ACIV"), a corporation owned by JetFleet Holding
Corp., the parent of JMC. Certain of the officers and directors of the Company
are officers and directors of ACIV. The note which carried a rate of interest at
12% per annum was repaid in August 1998. A total of $43,910 in interest was paid
to ACIV in connection with the loan.
Office Space. The Company maintains its principal office at the offices of JMC
at 1440 Chapin Avenue, Suite 310, Burlingame, California, without reimbursement
to JMC.
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten percent stockholders are
required by Securities and Exchange Commission regulation to furnish the Company
with copies of all Section 16(a) reports they file.
Based solely upon review of the copies of such reports furnished to the Company
and written representations that no other reports were required, the Company
believes that there was compliance for the fiscal year ended December 31, 1998
with all Section 16(a) filing requirements applicable to the Company's officers,
directors and greater than ten percent beneficial owners.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be considered at the 2000 Annual Meeting of
Stockholders must be received by the Company no later than February 4, 2000.
Proposals submitted after that date will be considered untimely, and will not be
considered at the 2000 Annual Meeting. The proposal must be mailed to the
Company's principal executive offices, 1440 Chapin Avenue, Suite 310,
Burlingame, California 94010. Such proposals may be included in next year's
proxy statement if they comply with certain rules and regulations promulgated by
the Securities and Exchange Commission.
OTHER MATTERS
Management does not know of any matters to be presented at this Annual Meeting
other than those set forth herein and in the Notice accompanying this Proxy
Statement.
It is important that your shares be represented at the meeting, regardless of
the number of shares which you hold. YOU ARE, THEREFORE, URGED TO EXECUTE
PROMPTLY AND RETURN THE ACCOMPANYING PROXY IN THE ENVELOPE WHICH HAS BEEN
ENCLOSED FOR YOUR CONVENIENCE. Stockholders who are present at the meeting may
revoke their proxies and vote in person or, if they prefer, may abstain from
voting in person and allow their proxies to be voted.
By Order of the Board of Directors,
/s/ Neal D. Crispin
Neal D. Crispin, President
March 22, 1999
Burlingame, California
