<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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
- --------------------------------------------------------------------------------
TriStar Aerospace Co.
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
Douglas Childress, Executive Vice President, Chief Financial Officer
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the table below per Exchange Act Rule 14a-6(i)(4) and 0-11
("Rule 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 Rule 0-11
(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
<PAGE>
TRISTAR AEROSPACE CO.
- -------------------------------------------------------------------------------
2527 Willowbrook Road, Dallas, Texas 75220, Phone (214) 366-5000
December 23, 1998
Dear Fellow Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of TriStar Aerospace Co., to be held on Friday, January 22, 1999, at 12:00 p.m.,
central standard time, at the King George Room located in the Radisson Hotel,
2330 W. Northwest Highway, Dallas, Texas 75220.
At the meeting, we will review TriStar's activities over the past year, as
well as the outlook for 1999. The Secretary's formal notice of the meeting and
the proxy statement appear on the following pages and describe the matters to be
acted upon at the meeting.
We hope that you will be able to attend the meeting in person. However,
whether or not you plan to be present, please sign and return your proxy as soon
as possible so that your vote will be counted.
Sincerely,
/s/ P. QUENTIN BOURJEAURD
P. QUENTIN BOURJEAURD
CHAIRMAN OF THE BOARD
<PAGE>
TRISTAR AEROSPACE CO.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
The 1999 Annual Meeting of Stockholders of TriStar Aerospace Co., a
Delaware corporation (the "Company"), will be held at the King George Room
located in the Radisson Hotel, 2330 W. Northwest Highway, Dallas, Texas 75220,
on Friday, January 22, 1999 at 12:00 p.m., central standard time, for the
following purposes:
1. To elect two Class I directors for terms ending at the 2002 Annual
Meeting of Stockholders; and
2. To transact such other business as may properly come before the
meeting.
Stockholders of record as of the close of business on December 10, 1998
will be entitled to vote at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN THE ACCOMPANYING
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. You may
revoke your proxy at any time before it is voted by delivery to the Company of a
subsequently executed proxy or a written notice of revocation or by voting in
person at the meeting.
By order of the Board of Directors,
/s/ DOUGLAS E. CHILDRESS
Douglas E. Childress
Secretary
December 23, 1998.
<PAGE>
TRISTAR AEROSPACE CO.
2527 WILLOWBROOK ROAD
DALLAS, TEXAS 75220
---------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 22, 1999
---------------------
This proxy statement is furnished to stockholders of TriStar Aerospace Co.,
a Delaware corporation ("TriStar" or the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board or
"Board of Directors") for use at the 1999 Annual Meeting of Stockholders to be
held at 12:00 p.m., central standard time, on Friday, January 22, 1999, at the
King George Room located in the Radisson Hotel, 2330 W. Northwest Highway,
Dallas, Texas 75220, and any adjournments thereof.
Stockholders of record as of the close of business on December 10, 1998
will be entitled to vote at the meeting or any adjournments thereof. As of
the record date, December 10, 1998, the Company had outstanding 17,044,742
shares of common stock, par value $.01 per share ("Common Stock"), each
entitled to one vote on all matters to be voted upon. This proxy statement,
the accompanying form of proxy and the Company's annual report to
stockholders for the fiscal year ended September 30, 1998 are being mailed on
or about December 23, 1998 to each stockholder entitled to vote at the
meeting.
<PAGE>
VOTING AND REVOCATION OF PROXIES
VOTING
If the enclosed proxy is executed and returned in time and not revoked, all
shares represented by the proxy will be voted. Each proxy will be voted in
accordance with the stockholder's instructions.
The holders of a majority of the shares of Common Stock entitled to vote at
the meeting, present in person or by proxy, constitutes a quorum. If a quorum
is present, the affirmative vote of the holders of a plurality of the votes cast
at the meeting will be required for the election of directors; and the
affirmative vote of holders of a majority of the shares present in person or by
proxy at the meeting and entitled to vote thereon will be required to act on all
other matters to come before the meeting. An automated system administered by
the Company's transfer agent tabulates the votes. For purposes of determining
the number of votes cast with respect to any voting matter, only those cast
"for" or "against" are included; abstentions and broker non-votes are excluded.
Accordingly, with respect to the election of directors, abstentions and broker
non-votes will have no effect on the outcome. For purposes of determining
whether the affirmative vote of a majority of the shares present at the meeting
and entitled to vote has been obtained, abstentions will be included in, and
broker non-votes will be excluded from, the number of shares present and
entitled to vote. Accordingly, with respect to any matter other than the
election of directors, abstentions will have the effect of a vote "against" the
matter and broker non-votes will have the effect of reducing the number of
affirmative votes required to achieve the majority vote.
REVOCATION
A stockholder giving a proxy may revoke it at any time before it is voted
by delivery to the Company's Secretary of a subsequently executed proxy or a
written notice of revocation. In addition, returning your completed proxy will
not prevent you from voting in person at the meeting should you be present and
wish to do so.
ELECTION OF DIRECTORS
The Board of Directors consists of six directors divided into three
classes: Two Class I Directors, Two Class II Directors and Two Class III
Directors. Directors hold office for staggered terms of three years and until
their successors have been duly elected and qualified. One of the three classes
will be elected each year at the Annual Meeting of Stockholders to succeed the
directors whose terms are ending.
Two directors in Class I are to be elected at the 1999 Annual Meeting, and
proxies cannot be voted for more than two nominees. The directors so elected
will hold office as directors until the 2002 Annual Meeting of Stockholders and
until their respective successors have been duly elected and qualified. The
directors in Class II and Class III are serving terms ending at the Annual
Meeting of Stockholders in 2000 and 2001, respectively.
The names of the nominees for election to terms ending at the 2002 Annual
Meeting of Stockholders is set forth below, followed by the names of the
directors in Class II and Class III. Information concerning all classes of
directors follows under the heading "Management". If any one or more of the
nominees in unable to serve for any reason or withdraws from nomination, proxies
will be voted for the substitute nominee or nominees, if any, proposed by the
Board of Directors. The Board has no knowledge that any nominee will or may be
unable to serve or will or may withdraw from nomination. All of the nominees
are presently serving as directors of the Company.
2
<PAGE>
NOMINEES FOR ELECTION TO TERMS ENDING AT THE 2002 ANNUAL MEETING OF STOCKHOLDERS
Douglas E. Childress, Brian E. Barents.
DIRECTORS WHOSE TERMS END AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS
Charles Balchunas, James L. Hersma.
DIRECTORS WHOSE TERMS END AT THE 2001 ANNUAL MEETING OF STOCKHOLDERS
Quentin Bourjeaurd, Cindy B. Brown.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information known by the Company
regarding the beneficial ownership of the Company's Common Stock, as of November
23, 1998, by each beneficial owner of more than five percent of the outstanding
Common Stock, by each of the Company's directors, by each current executive
officer named in the Summary Compensation Table and by all directors and
executives officers of the Company as a group. Except as otherwise indicated,
the person or entities listed below have sole voting and investing power with
respect to all shares of Common Stock beneficially owned by them, except to the
extent such power may be shared with a spouse.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME BENEFICIALLY OWNED(1) PERCENTAGE(2)
<S> <C> <C>
Seneca Capital Management, L.L.C.(3) 900,350 5.28
Quentin Bourjeaurd(4) 2,993,469 16.11
Charles Balchunas(5) 738,798 4.19
Douglas E. Childress(6) 63,835 *
Denny Barge(7) 132,730 *
John R. King, Jr.(8) 104,360 *
Brian E. Barents - -
James L. Hersma(9) 1,000 *
Cindy B. Brown - -
All directors and executive officers 4,041,192 20.84
of the Company as a group (9
persons) (10)
</TABLE>
- ------------------------
* Less than one percent
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of Common Stock which such person has
the right to acquire within 60 days following November 23, 1998. For
purposes of computing the percentage of outstanding shares of Common Stock
held by each person or group of persons named above, any shares which such
person or persons has or have the right to acquire within 60 days following
November 23, 1998 is deemed to be outstanding, but is not deemed to be
outstanding for the purpose of computing the percentage ownership of any
other person.
(2) The outstanding Common Stock of the Company as of November 23, 1998 was
17,044,742 shares.
(3) Based on information contained in Schedule 13G, dated October 26, 1998, and
filed with the Securities and Exchange Commission by Seneca Capital
Management L.L.C. ("Seneca"). The address of Seneca is 900 Montgomery
Street, #500, San Francisco, CA 94133. Seneca, in its
3
<PAGE>
capacity as investment advisor, may be deemed to beneficially own the
shares included in the table, which are held of record for clients of
Seneca. Seneca holds sole power to dispose of or direct disposition of
all shares included in the table and the sole power to vote or to direct
the vote of all shares included in the table.
(4) Includes (i) 1,459,447 shares owned of record by Mr. Bourjeaurd, and (ii)
1,534,022 shares subject to options which are currently exercisable. Mr.
Bourjeaurd's business address is 2527 Willowbrook Road, Dallas, Texas
75220.
(5) Includes (i) 136,522 shares owned of record by Mr. Balchunas, and
(ii) 602,276 shares subject to options which are currently exercisable.
(6) Includes (i) 3,010 shares owned of record by Mr. Childress, and (ii) 60,825
shares subject to options which are currently exercisable.
(7) Includes (i) 50,010 shares owned of record by Mr. Barge, and (ii) 82,720
shares subject to options which are currently exercisable.
(8) Includes (i) 34,138 shares owned of record by Mr. King, and (ii) 70,222
shares subject to options which are currently exercisable.
(9) Includes 1,000 shares owned of record by Mr. Hersma.
(10) Includes (i) 1,691,127 shares owned of record by the directors and
executive officers of the Company, and (ii) 2,350,065 shares subject to
options which are currently exercisable.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table and biographies set forth information concerning those
individuals who are currently serving as members of the Board of Directors or as
executive officers of the Company.
<TABLE>
<CAPTION>
NAME PRINCIPAL POSITIONS WITH THE COMPANY
---- ------------------------------------
<S> <C>
Quentin Bourjeaurd........ Chairman of the Board of Directors, President and Chief Executive Officer
Charles Balchunas......... Director, Executive Vice President and Chief Operating Officer
Douglas E. Childress...... Director, Executive Vice President, Chief Financial Officer, Treasurer and Secretary
Cindy B. Brown............ Director
James L. Hersma........... Director
Brian E. Barents.......... Director
Trevor Wright............. Executive Vice President, Sales and Marketing
Denny Barge............... Vice President of Operations and Strategic Planning
John R. King, Jr. ........ Vice President, Information Technology
</TABLE>
QUENTIN BOURJEAURD, age 41, has served on the Board of Directors of the
Company since September 19, 1996 and as Chairman of the Board of Directors since
May 12, 1998. Mr. Bourjeaurd has served as President of the Company since
September 19, 1996 and as the Chief Executive Officer of the Company since
December 2, 1996. From June 1993 to September 19, 1996, Mr. Bourjeaurd was the
Vice President and General Manager of Aviall Aerospace, then a business unit of
Aviall Services, Inc. Mr. Bourjeaurd formed Bourjeaurd Specialty Products, Inc.,
an aerospace hardware distribution company, in June 1983 and was the President
and sole stockholder of such company until its acquisition by Aviall
Services, Inc. in June 1993.
4
<PAGE>
DOUGLAS E. CHILDRESS, age 41, has served on the Board of Directors of the
Company since May 5, 1998. Mr. Childress joined the Company as the Vice
President-Finance and Treasurer on August 29, 1997 and became an Executive Vice
President, the Chief Financial Officer and the Secretary of the Company on
January 15, 1998. Prior to joining the Company, Mr. Childress served as the
Director of Accounting, Consulting and Evaluation Services of Interstate Battery
System of America, a Dallas based battery distribution company, from
October 1994 to August 1997 and as an Audit and Consulting Manager with the KL
Real Estate Group of Ernst & Young from July 1993 to October 1994. Mr. Childress
co-founded the consulting firm Worldwide Holdings Corporation, a local
investment banking firm, in 1990 prior to which time he had been employed as an
audit manager with Ernst & Young. Mr. Childress is a certified public
accountant and an accredited member of the American Society of Appraisers.
CHARLES BALCHUNAS, age 54, has served on the Board of Directors of the
Company and as Executive Vice President and Chief Operating Officer of the
Company since September 19, 1996. Mr. Balchunas joined Tri-Star Aerospace, Inc.
(the "Predecessor") in August 1990 as a customer service manager, subsequently
becoming the Executive Vice President and Chief Operating Officer of the
Predecessor. Prior to joining the Predecessor, Mr. Balchunas served as a
Lieutenant Colonel with the United States Marine Corps. During his 22 years of
service with the Marine Corps, Mr. Balchunas gained extensive experience in
aviation, aviation maintenance and logistics systems management as an aircraft
maintenance manager, an airfield operations manager and the Commanding Officer,
Headquarters of the Marine Corps Air Station in Iwakuni, Japan.
CINDY B. BROWN, age 41, has served on the Board of Directors of the Company
since May 5, 1998. Ms. Brown is currently a partner in the Chavoys Group, a
management consulting company specializing in mentoring and supplementing
executive management teams. Ms. Brown served as Senior Vice President-Finance
of Blockbuster Entertainment Group from 1997 to 1998. From 1980 to 1997, Ms.
Brown was employed by Dr. Pepper/Seven-Up North America where she served in
several capacities, including Director-Treasury and Strategic Planning and Vice
President-Information Services.
JAMES L. HERSMA, age 50, has served on the Board of Directors of the
Company since May 12, 1998. Mr. Hersma is President and Chief Executive Officer
of Novation, the pharmaceutical supply company of VHA and UHC. He also serves
on Novation's Board of Directors. From 1993 through 1996, Mr. Hersma served as
President and Chief Operating Officer of CIS Technologies Inc., a publicly held
health care software company in Tulsa, Okla.
BRIAN E. BARENTS, age 54, has served on the Board of Directors of the
Company since May 5, 1998. Mr. Barents is a founding member of Galaxy Aerospace
Company, a commercial aircraft manufacturer, and has served as President, Chief
Executive Officer and on the Board of Directors of Galaxy Aerospace Company
since 1996. From 1990 to 1996, Mr. Barents was the President and Chief
Executive Officer of Learjet Inc., also a commercial aircraft manufacturer. Mr.
Barents serves on the Board of Directors of Kaman Corporation, a publicly held
company which primarily specializes in aerospace manufacturing.
TREVOR WRIGHT, age 51, has served as the Executive Vice President, Sales
and Marketing of the Company since August 4, 1998. Prior to joining the
Company, Mr. Wright was the Vice President of Sales, Marketing and Interim
President for Aerospace Rivet Manufacturers Corporation, an aerospace hardware
manufacturing company, which he joined in 1997. From 1994 to 1997, Mr. Wright
was employed by Fairchild Fastners, a distribution division of Fairchild
Corporation, also an aerospace hardware manufacturing company, where he held
various positions including Senior Vice President of Sales and Marketing and
Vice President of Customer Support.
DENNY BARGE, age 35, has served as the Vice President of Strategic Planning
since he joined the Company on December 8, 1997, and has served as Vice
President of Operations since May 20, 1998. Prior to joining the Company, Mr.
Barge was a principal at Price Waterhouse, where he served in the consulting
5
<PAGE>
division from 1995 to 1997. From 1990 to 1995, Mr. Barge was employed by
Neutrogena Corporation, a division of Johnson & Johnson, where he held various
positions including Director of Operations.
JOHN R. KING, JR., age 50, has served as the Company's Vice President,
Information Technology since April 7, 1997. Prior to joining the Company, Mr.
King had served as the Vice President of Operations of FFSC Inc. (formerly
Fitz & Floyd), a designer and wholesale distributor of fine china and ceramic
giftware, since 1987. In such capacity Mr. King oversaw approximately 350
employees with the FFSC Inc.'s MIS, Inventory Control, Warehouse and
Distribution, Customer Service and Retail department reporting to him. From
1984 to 1987 Mr. King was the Vice President of Systems Applications with
Benton Schneider & Associates, a software and consulting firm. Mr. King is
certified in production and inventory management by the American Production
and Inventory Control Society.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange act of 1934, as amended,
requires the Company's directors and executive officers and holders of more
than 10% of the Company's outstanding Common Stock to file with the
Securities and Exchange commission reports of ownership and changes in
ownership of Common Stock and other equity securities of the Company on Form
3, 4 and 5. Based on written representations of reporting persons and a
review of those reports, the Company believes that during the fiscal year
ended September 30, 1998, all its officers and directors and holders of more
than 10% of the Company's Common Stock complied with all applicable Section
16(a) filing requirements, except as follows: in September 1998, Doug
Childress reported on Form 4 one transaction relating to the Company's
initial public offering of Common Stock which closed on May 5, 1998 (the
"Offering"). In November 1998, Quentin Bourjeaurd reported on Form 4 a
transaction relating to the Company's Offering. In December 1998, Doug
Childress, Charles Balchunas, Denny Barge, and John King reported on Form 5 a
transaction in which the Company purchased 10 shares on behalf of each
individual in connection with the Company's Offering. In December 1998,
Quentin Bourjeaurd reported on Form 4 the same transaction relating to the
Company's purchase of 10 shares on his behalf. Mr. Bourjeaurd, Mr.
Balchunas, Mr. Childress, Mr. Barge, and Mr. King were delinquent in filing
all such reports.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company directs the management of the
business and affairs of the Company, as provided by Delaware law, and conducts
its business through meetings of the Board and two standing committees: Audit
and Compensation. In addition, from time to time, special committees may be
established under the direction of the Board when necessary to address specific
issues. The Company has no nominating or similar committee.
COMMITTEES OF THE BOARD; BOARD MEETINGS
The Board of Directors of the Company held three meetings during fiscal
year 1998. Each director attended 75% or more of the aggregate of (i)
meetings of the Board held during the period for which he or she served as a
director and (ii) meetings of all committees held during the period for which
he or she served on those committees.
The AUDIT COMMITTEE'S principal functions are to review the scope of the
annual audit of the Company by its independent public accountants, review the
annual financial statements of the Company and the related audit report of the
Company as prepared by the independent public accountants, review management's
selection of an independent public accounting firm each year and review audit
and any non-audit fees paid to the Company's independent public accountants.
The Company's Chief Financial Officer generally attends Audit Committee meetings
and gives reports to and answers inquiries from the Audit Committee. The Audit
Committee reports its findings and recommendations to the Board. The Audit
6
<PAGE>
Committee is composed of two non-employee directors: Cindy B. Brown and James
L. Hersma. The Audit Committee held one meeting during fiscal year 1998.
The COMPENSATION COMMITTEE is responsible for developing and making
recommendations to the Board of Directors with respect to the Company's
compensation policies and also determines the cash portion of the Company's
compensation program, including the cash compensation to be paid to the
Company's executive officers. In addition, the Compensation Committee is
responsible for administering the Company's employee benefit plans, including
the 1998 Stock Option Plan. The Compensation Committee is composed of three
non-employee directors: Cindy B. Brown, Brian E. Barents and James L. Hersma.
The Compensation Committee held no meetings during fiscal year 1998.
DIRECTOR COMPENSATION
Directors who are not executive officers of the Company are granted options
to purchase Common Stock in connection with their election to the Board.
Although no options were granted to non-executive directors in fiscal 1998,
shortly after the end of the fiscal year, on October 13, 1998, options were
granted to newly elected non-executive directors as follows: Cindy B. Brown,
25,000 shares; Brian E. Barents, 25,000 shares; and James L. Hersma, 25,000
shares. The exercise price for all of these options is equal to the fair market
value at the date of grant. Non-executive directors also are paid a fee of
$3,500 for each meeting of the Board of Directors which they attend. In
addition, each non-executive director is paid $2,500 per year for service on a
committee. Directors are reimbursed for their out-of-pocket expenses arising
from attendance at meetings of the Board and Committees which occur outside of
Dallas, Texas.
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation for 1998 and 1997 for the
Company's Chief Executive Officer and the executive officers of the Company
whose total compensation exceeded $100,000 (collectively, the "Named Executive
Officers").
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------------------- -------------
SECURITIES
OTHER ANNUAL ALL OTHER UNDERLYING
SALARY BONUS COMPENSATION COMPENSATION OPTIONS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#)(4)
--------------------------- ---- ------ ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Quentin Bourjeaurd.................... 1998 225,000 70,900 - 6,304(1) -
President and Chief Executive Officer 1997 202,706 350 - 1,256(2) 1,853,340
Charles Balchunas..................... 1998 200,000 59,900 - 5,962(1) -
Executive Vice President
and Chief Operating Officer 1997 161,927 100,350 16,215(3) 3,569(2) 723,325
Douglas E. Childress (5).............. 1998 166,154 134,500 - 1,294(1)
Executive Vice President
and Chief Financial Officer 1997 4,654 3,050 - - 71,730
Denny Barge (6)....................... 1998 153,846 198,250 - 857(1) 158,000
Vice President of Operations
and Strategic Planning
John R. King, Jr. (7)................. 1998 120,000 59,700 - 3,190(1) -
Vice President of Information
Technology 1997 55,584 13,700 - 2,333(2) 85,320
G. Bruce McInnis (8).................. 1998 158,461 800 - 6,237(1) -
Assistant to the Chairman 1997 133,846 100,350 66,935(3) 525(2) 723,325
Louis F. Partenza(9).................. 1998 140,000 600 - 3,915(1) -
Senior Vice President, Sales and
Marketing 1997 70,000 50,250 46,650(3) 221(2) 158,000
</TABLE>
- ----------------
(1) Represents (i) amounts paid for term life insurance premiums during fiscal
year 1998 on behalf of Messrs. Bourjeaurd, Balchunas, Childress, Barge,
King, McInnis, and Partenza in the amounts of $1,327, $985, $812, $630,
$756, $1,260, and $882 respectively, (ii) contributions to the
Company's 401(k) plan during fiscal year 1998 on behalf of Messrs.
Bourjeaurd, Balchunas, Childress, King, McInnis, and Partenza in the
amounts of $4,750, $4,750, $255, $2,207, $4,750, and $2,806
respectively and (iii) an amount of $227 paid by the Company to
purchase 10 shares of Common Stock at $16 per share and to pay the
associated taxes on behalf of Messrs. Bourjeaurd, Balchunas, Childress,
King, McInnis, and Partenza, respectfully, in connection with the
Company's Offering.
(2) Represents (i) amounts paid for term life insurance premiums during fiscal
year 1997 on behalf of Messrs. Bourjeaurd, Balchunas, King, McInnis and
Partenza in the amounts of $526, $329, $ 126, $525 and $221,
respectively, (ii) amounts paid for whole life insurance premiums on
behalf of Mr. Balchunas in the amount of $677 and (iii) contributions to
the Company's 401(k) plan during fiscal year 1997 on behalf of Mr.
Bourjeaurd, Mr. Balchunas, and Mr. King in the amounts of $730, $2,563,
and $ 2,207, respectively.
(3) Represents reimbursement of expenses incurred by Messrs. Balchunas,
McInnis and Partenza in relocating to Dallas, Texas in connection with
their commencement of employment with the Company in fiscal 1997.
8
<PAGE>
(4) Under the terms of the grant letters relating to the options, options
which are not exercisable at the date of grant become "available" in the
Company's fiscal years 1997 through 2001 depending on satisfaction by
the Company of certain performance targets. Once "available," 25% of
such options may be exercised immediately with 25% of the remaining
options becoming exercisable at the end of each of the next three fiscal
years. The availability and exercisability of the options are subject
to acceleration in certain circumstances. As a result of the Company's
Offering, all of the options which were "available" prior to the
Offering became immediately exercisable. In addition, 80% of the
options eligible to become "available" in fiscal years ending subsequent
to the Offering became immediately exercisable as a result of the
Offering. The options which were not accelerated as described in the
foregoing sentence terminated upon consummation of the Offering.
Because the options reflected in the above table were granted prior to
the Offering, the number of "Securities Underlying the Options" is
calculated based upon the initial date such options were granted.
(5) On August 29, 1997, Mr. Childress joined the Company as Vice President of
Finance and Treasurer and was subsequently promoted on January 15, 1998
to replace Mr. McInnis and serve as the Company's Executive Vice
President, Chief Financial Officer, Treasurer and Secretary.
(6) Mr. Barge joined the Company on December 8, 1997 as Vice President of
Strategic Planning and was subsequently promoted to Vice President of
Operations on May 20, 1998. Mr. Barge was not considered a Named
Executive Officer during Fiscal 1997 because he was not an officer of
the Company during that fiscal year.
(7) Mr. King joined the Company on April 7, 1997 as Vice President of
Information Technology.
(8) During fiscal 1997, Mr. McInnis served as the Chief Financial Officer
and Executive Vice President-Administration of the Company. As of
January 15, 1998, Mr. McInnis resigned from such positions to become
Assistant to the Chairman of the Board of Directors of the Company. As
of the end of Fiscal Year 1998, Mr. McInnis no longer served as an
executive officer of the Company.
(9) As of the end of Fiscal Year 1998, Mr. Partenza no longer served as an
executive officer of the Company.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning stock option
grants made to each of the Named Executive Officers during fiscal 1998:
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1998
INDIVIDUAL GRANTS
-------------------------------
POTENTIAL REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL -----------------------------------
UNDERLYING OPTIONS GRANTED EXERCISE PRICE APPRECIATION FOR OPTION
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION TERM(1)
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 0%($) 5%($) 10%($)
---- ---------- ---------------- -------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Denny Barge 132,720(2) 100 3.80 9/18/06 1,486,464 2,586,178 4,120,401
</TABLE>
- ----------------
(1) The column labeled "0%" is provided to show the market price value of the
indicated options on the date of grant. The exercise price of such
options was below the market price of the underlying Common Stock at the
date of grant. The amounts under the columns labeled "5%" and "10%" are
based on calculations at hypothetical 5% and 10% compounded annual
appreciation rates
9
<PAGE>
prescribed by the Securities and Exchange Commission (the "Commission")
and, therefore, are not intended to forecast possible future
appreciation, if any, of the Common Stock. For purposes of calculating
the potential realizable value of the indicated options, the Company has
assumed the value of the underlying Common Stock on the date of grant to
be $15.00, the fair market value recommended by the Commission on such
date as set forth in the Commission's comment letter dated April 2, 1998,
comment No. 10, Amendment No. 1, to the Registration Statement Number
333-46335 on Form S-1 filed on March 24, 1998, effective April 29, 1998.
(2) Based upon the number of securities underlying the options granted as of
the end of fiscal year 1998, taking into consideration that 80% of the
options eligible to become "available" in fiscal years ending subsequent
to the Company's Offering became immediately exercisable as a result of
the Offering, and that the options, which were not accelerated, terminated
upon consummation of the Offering. See note (4) of the "Summary
Compensation Table" for details concerning the terms of such options.
AGGREGATED OPTION EXERCISES AND VALUES
The following table sets forth stock option values as of September 30,
1998 for each of the Named Executive Officers. Three of the Named Executive
Officers exercised options for shares of Common Stock during fiscal 1998.
FISCAL 1998 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
EXERCISE REALIZED OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END
----------- --------- -------------------------- ------------------------
NAME (#) ($)(4)(5) EXERCISABLE (#)(1)(2)(3) EXERCISABLE ($)(1)(2)
---- ----------- --------- -------------------------- ------------------------
<S> <C> <C> <C> <C>
Quentin Bourjeaurd - - 1,534,022 12,509,949
Charles Balchunas - - 602,276 3,322,688
Douglas E. Childress(4) 2,000 12,510 60,825 380,460
Denny Barge(4) 50,000 291,250 82,720 481,844
John R. King, Jr. - - 70,222 385,949
G. Bruce McInnis(5) 409,536 5,304,481 192,740 219,463
Louis F. Partenza - - 130,508 717,021
</TABLE>
- ----------------
(1) Based upon the closing price of the Common Stock of TriStar on September
30, 1998, which was $9.625 per share.
(2) As of September 30, 1998 all outstanding options issued pursuant to the
Company's Stock Option Plans were fully exercisable. For an explanation
of the terms of such options see note (4) of the "Summary Compensation
Table".
(3) Based upon the number of securities underlying the unexercised options as
of the end of the fiscal year on September 30, 1998. This table reflects
the cancellation of options which terminated as a result of the
Company's initial public offering. See note (4) of the "Summary
Compensation Table" for details concerning the terms of such options.
(4) Mr. Childress and Mr. Barge exercised options to purchase shares of
Common Stock of TriStar during fiscal 1998, but as of September 30, 1998
neither of them had sold such shares. The "Value Realized" is calculated
based upon an assumed selling price of $9.625 (the closing sales price of
the Common Stock of TriStar as of September 30, 1998).
(5) Mr. McInnis exercised 204,768 options to purchase shares of Common Stock
of TriStar and sold those shares in connection with the Company's
Offering. In addition, Mr. McInnis exercised
10
<PAGE>
204,768 options to purchase shares of Common Stock of TriStar and sold
those shares in connection with the Underwriters' over allotment option
which was exercised in connection with the Offering. Such shares were
sold at a price of $15.00 per share (net $1 per share paid as commission).
EMPLOYMENT AGREEMENTS
QUENTIN BOURJEAURD EXECUTIVE EMPLOYMENT AGREEMENT. Mr. Bourjeaurd
entered into an executive employment agreement with the Company on September
19, 1996. Pursuant to his employment agreement, Mr. Bourjeaurd will serve as
President of the Company through September 19, 2001, unless earlier
terminated as provided therein. Under his employment agreement, Mr.
Bourjeaurd receives an annual salary of $200,000 and is entitled to medical
and other benefits generally available to senior executives of the Company.
On July 1, 1997 the Compensation Committee increased Mr. Bourjeaurd's annual
compensation to $225,000.
Mr. Bourjeaurd's employment agreement also provides that if Mr.
Bourjeaurd's employment is terminated by the Company other than for Cause (as
defined therein), Mr. Bourjeaurd will continue to receive his salary and
benefits (as severance) until the earlier to occur of (i) the expiration of
the term of his employment agreement or (ii) the second anniversary of the
date of termination; provided that such continued salary and benefits will
cease upon commencement by Mr. Bourjeaurd of other full-time employment. In
the event Mr. Bourjeaurd's employment is terminated for Cause or by reason of
Death or Disability (as defined therein), no further compensation will be
payable by the Company. Additionally, Mr. Bourjeaurd's employment agreement
contains a non-competition provision pursuant to which Mr. Bourjeaurd has
agreed not to engage in any business activity, without the consent of the
Company, which would be in competition with any business engaged in by the
Company during his employment and thereafter for as long as he continues to
receive any of the severance payments described above.
CHARLES BALCHUNAS EXECUTIVE EMPLOYMENT AGREEMENT. Mr. Balchunas entered
into an executive employment agreement with the Company on February 1, 1997.
Pursuant to his employment agreement, Mr. Balchunas will serve as Chief
Operating Officer of the Company through December 31, 1999, unless earlier
terminated as provided therein. Under his employment agreement, Mr. Balchunas
receives an annual salary of $200,000, is eligible for such discretionary
bonuses as the Compensation Committee may determine and is entitled to
medical and other benefits generally available to senior executives of the
Company.
Mr. Balchunas' employment agreement also provides that if Mr. Balchunas'
employment is terminated other than for Cause (as defined therein), Mr.
Balchunas will continue to receive his salary and benefits (as severance) for
a period of two years following the Date of Termination (as defined therein)
of his employment; provided that such continued salary and benefits will
cease upon commencement by Mr. Balchunas of other full-time employment. In
the event Mr. Balchunas' employment is terminated for Cause or by reason of
Death or Disability (as defined therein), no further compensation will be
payable by the Company. Additionally, Mr. Balchunas' employment agreement
contains a non-competition provision pursuant to which Mr. Balchunas has
agreed not to engage in any business activity, without the consent of the
Company, which would be in competition with any business engaged in by the
Company during his employment and for two years thereafter.
DOUGLAS E. CHILDRESS EXECUTIVE EMPLOYMENT AGREEMENT. Mr. Childress
entered into an executive employment agreement with the Company on January
15, 1998. Pursuant to his employment agreement, Mr. Childress will serve as
Executive Vice President and Chief Financial Officer of the Company through
January 15, 2000, unless earlier terminated as provided therein. Under this
employment agreement, Mr. Childress receives an annual salary of at least
$150,000, is eligible for such discretionary bonuses as the Compensation
Committee may determine and is entitled to medical and other benefits
generally available to senior executives of the Company.
11
<PAGE>
Mr. Childress' employment agreement also provides that if Mr. Childress'
employment is terminated other than for Cause (as defined therein), Mr.
Childress will continue to receive his salary and benefits (as severance) for
a period of two (2) years following the Date of Termination (as defined
therein) of his employment; provided that such continued salary and benefits
will cease upon commencement by Mr. Childress of other full time employment.
In the event Mr. Childress' employment is terminated for Cause or by reason
of Death or Disability (as defined therein), no further compensation will be
payable by the Company. Additionally, Mr. Childress' employment agreement
contains a non-competition provision pursuant to which Mr. Childress has
agreed not to engage in any business activity, without the consent of the
Company, which will be in competition with any business engaged in by the
Company during his employment and for such period of time thereafter that
Mr. Childress continues to receive any of the severance payments described
above.
TREVOR WRIGHT EXECUTIVE EMPLOYMENT AGREEMENT. Mr. Wright entered into
an executive employment agreement with the Company on August 1, 1998.
Pursuant to his employment agreement, Mr. Wright will serve as Executive Vice
President of Sales and Marketing of the Company through July 31, 2000, unless
earlier terminated as provided therein. Under his employment agreement, Mr.
Wright receives an annual salary of $140,000, is eligible for such
discretionary bonuses as the Compensation Committee may determine and is
entitled to medical and other benefits generally available to senior
executives of the Company.
Mr. Wright's employment agreement also provides that if Mr. Wright
suffers a Permanent Disability and the Company terminates his employment as a
result thereof (as defined therein), or Mr. Wright is terminated due to Death
(as defined therein), Mr. Wright or his estate will receive the balance of
his base salary under his employment agreement (as severance). In the event
Mr. Wright's employment is terminated without Cause (as defined therein) or
Mr. Wright terminates his employment because of Constructive Termination (as
defined therein), Mr. Wright will continue to receive his salary (as
severance) for a period of two years following the Date of Termination (as
defined therein). In the event Mr. Wright's employment is terminated for
Cause (as defined therein), no further compensation will be payable by the
Company. Additionally, Mr. Wright's employment agreement contains a
non-competition provision pursuant to which Mr. Wright has agreed not to
engage in any business activity, without the consent of the Company, which
will be in competition with any business engaged in by the Company during his
employment and for such period of time thereafter that Mr. Wright continues
to receive any of the severance payments described above.
DENNY BARGE EXECUTIVE EMPLOYMENT AGREEMENT. Mr. Barge entered into an
executive employment agreement with the Company on December 8, 1997.
Pursuant to his employment agreement, Mr. Barge will serve as Vice President
of Strategic Planning of the Company through December 8, 1999, unless earlier
terminated as provided therein. Under his employment agreement, Mr. Barge
receives an annual salary of $200,000, is eligible for such discretionary
bonuses as the Compensation Committee may determine and is entitled to
medical and other benefits generally available to senior executives of the
Company.
Mr. Barges' employment agreement also provides that if Mr. Barges'
employment is terminated other than for Cause (as defined therein) or Mr.
Barge terminates his employment for Good Cause (as defined therein), Mr.
Barge will continue to receive his salary and benefits (as severance) for a
period of one year following the Date of Termination (as defined therein) of
his employment. In the event Mr. Barges' employment is terminated for Cause
or by reason of Death or Disability (as defined therein), no further
compensation will be payable by the Company. Additionally, Mr. Barges'
employment agreement contains a non-competition provision pursuant to which
Mr. Barge has agreed not to engage in any business activity, without the
consent of the Company, which will be in competition with any business
engaged in by the Company during his employment and for such period of time
thereafter that Mr. Barge continues to receive any of the severance payments
described above.
12
<PAGE>
JOHN KING LETTER AGREEMENT. Mr. King and the Company are parties to a
letter agreement dated as of May 15, 1997. Pursuant to such letter
agreement, Mr. King will serve as Vice President of Information Systems for
an unstated term or until terminated as provided therein. Under his letter
agreement, Mr. King receives an annual salary of $120,000, is eligible for
such discretionary bonuses as the Compensation Committee may determine and is
entitled to medical and other benefits generally available to senior
executives of the Company.
Mr. King's letter agreement also provides that if Mr. King's employment
is terminated other than for Cause (as defined therein), Mr. King will
continue to receive his salary and benefits (as severance) for a period of
one year following such termination of his employment; provided that such
continued salary and benefits will be reduced by any earned income received
by Mr. King during such one year period following termination. In the event
Mr. King's employment is terminated for Cause or by reason of Death or
Disability (as defined therein), no further compensation will be payable by
the Company. Additionally, Mr. King's letter agreement contains a
non-competition provision pursuant to which Mr. King has agreed not to engage
in any business activity, without the consent of the Company, which will be
in competition with any business engaged in by the Company during his
employment and for a period of one year thereafter.
EXECUTIVE AND KEY EMPLOYEE INCENTIVE PLAN
The Company's Executive and Key Employee Incentive Plan provides for a
maximum annual bonus amount payable to certain executives and key employees
equal to a percentage of such executive's annual compensation. For each
executive, the bonus amount is determined by the Compensation Committee based
upon the following factors: (1) the achievement by the Company of certain
financial objectives; (2) the achievement by the executive's department of
certain quantifiable objectives; and (3) individual performance criteria.
STOCK OPTION PLANS
1996 STOCK OPTION PLAN
The Company's Amended and Restated 1996 Stock Option Plan (the "1996
Plan") authorizes the issuance of up to 3,950,000 shares of Common Stock of
the Company pursuant to stock options granted to key employees, non-employee
directors and consultants of the Company. The 1996 Plan does not provide for
stock appreciation rights.
The 1996 Plan will expire on September 18, 2006, unless earlier
terminated by the Company's Board of Directors. The authorized number of
shares, the exercise price of outstanding options and the number of shares
under options are subject to appropriate adjustment in the event of any
change in the number of outstanding shares of the Company's Common Stock
through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, reverse split, split-up, split-off, spin-off,
combination of shares, exchange of shares or other like change in the capital
structure of the Company.
The 1996 Plan is administered by the Compensation Committee which
selects the optionees and determines the terms and provisions of each option
grant within the parameters set forth in the 1996 Plan.
In general, in the event of a "change of control" of the Company (as
defined in the 1996 Plan), each option will terminate within a specified
number of days after notice to the holder of such option, and each such
holder will receive an amount equal to the excess of the aggregate fair
market value of the shares of Common Stock subject to the option over the
exercise price, payable in the same consideration as received by the
stockholders of the Company upon the closing of such transaction. Although
the Company's initial public offering on May 5, 1998 did not constitute a
"change of control" under the 1996 Plan, the grant letters pursuant to which
the outstanding options were granted provide that all options not subject to
acceleration by virtue of the consummation of the Offering will terminate
following consummation of such an Offering.
13
<PAGE>
See "Compensation of Executive Officers - Summary Compensation Table" for a
description of the acceleration provisions relating to the Company's initial
public offering.
Options may not be transferred except by will or the laws of descent and
distribution and may be exercised only by the holder during the lifetime of
such holder.
The options granted under the 1996 Plan are evidenced by stock option
agreements and are intended to be options that do not meet the requirements
for "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended. The exercise price of options must
be at least the fair market value of the Company's Common Stock on the date
the option is granted, and each option must expire no later than September
18, 2006. To exercise an option, the optionee must deliver to the Company
full payment for the shares purchased, provided that the Compensation
Committee may in its discretion (i) accept as payment shares of the Company's
Common Stock having a fair market value equal to the purchase price of the
shares being purchased or (ii) accept such other payment as the Compensation
Committee shall permit in its sole discretion at the time of exercise. The
Compensation Committee is empowered to amend the 1996 Plan, subject to
stockholder approval in certain circumstances.
As of September 30, 1998, options to purchase 2,701,384 shares of Common
Stock were outstanding under the 1996 Plan, all of which were exercisable on
such date.
1998 STOCK OPTION PLAN
The Company's 1998 Stock Option (the "1998 Plan") authorizes the
issuance of up to 2,000,000 shares of Common Stock of the Company pursuant to
stock options granted to key employees, non-employee directors and
consultants of the Company. The 1998 Plan does not provide for stock
appreciation rights.
The 1998 Plan will expire on April 1, 2008 unless earlier terminated by
the Company's Board of Directors. The authorized number of shares, the
exercise price of outstanding options and the number of shares under options
are subject to appropriate adjustment in the event of any change in the
number of outstanding shares of the Company's Common Stock through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
reverse split, split-up, split-off, spin-off, combination of shares, exchange
of shares or other like change in the capital structure of the Company.
The 1998 Plan is administered by the Compensation Committee which
selects the optionees and determines the terms and provisions of each option
grant within the parameters set forth in the 1998 Plan.
In the event of a "change of control" of the Company (as defined in the
1998 Plan), the Compensation Committee has the discretion (i) to accelerate
the vesting of each option not then currently exercisable, (ii) to cause each
option to terminate within a period of time after delivery of notice and
(iii) to cause each option holder to receive, in respect of each share for
which such option is exercisable, an amount equal to the excess of the fair
market value of such share over the exercise price per share, payable in a
form of consideration as determined by the Compensation Committee.
Options may not be transferred (other than to a member of a holder's
immediate family or to a trust for the benefit of a holder or a member of a
holder's family), except by will or the laws of the descent and distribution.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended September 30, 1998, Quentin Bourjeaurd, the
Company's Chief Executive Officer, President and Chairman of the Board of
Directors served as a member of the Compensation Committee of the Company.
14
<PAGE>
Notwithstanding the foregoing, no executive officer of the Company
served as a member of the Compensation Committee (or other board committee
performing similar functions or, in its absence of any such committee, the
entire board of directors) of another corporation, one of whose executive
officers served on the Compensation Committee. No executive officer of the
Company served as a director of another corporation, one of whose executive
officers served on the Compensation Committee. No executive officer of the
Company served as a member of the Compensation Committee (or other board
committee performing equivalent functions or, in the absence of any such
committee, the entire board of directors) of another corporation, one of
whose executive officers served as a director of the Company.
See "Certain Related Party Transactions" for further information
regarding transactions involving Mr. Bourjeaurd.
REPORT OF THE COMPENSATION COMMITTEE
The Company is in a highly competitive industry. In order to succeed,
the Company believes that it must be able to attract and retain outstanding
executives, promote among them the economic benefits of stock ownership in
the Company and motivate and reward executives who make contributions of
special importance to the success of the business of the Company.
The Company has structured its executive compensation program to support
the strategic goals and objectives of the Company. As a matter of policy, the
Compensation Committee believes that the annual compensation of the executive
officers should consist of a base salary, contingent cash bonus, and stock
options. Base salary levels are based on generally subjective factors and
include the contribution the executive officer made and is anticipated to
make to the success of the Company, the level of experience and
responsibility of the executive officer, the competitive position of the
Company's executive compensation and the Company's historical levels of
compensation for executive officers.
Cash bonuses are awarded based upon a combination of the executive
officer's achievement of certain personal goals and the achievement of annual
financial goals set forth in the Company's Executive and Key Employee
Incentive Plan. These goals may include a target range of earnings, net
income, inventory turns, or other objective measurements consistent with
long-term stockholder goals. Actual bonuses are awarded following the
year-end based on the actual achievement of the personal goals and the actual
achievement level of the specified financial goals.
Grants of Company stock options are intended to align the interests of
executives and key employees with the long-term interest of the Company
stockholders and to encourage executives and key employees to remain in the
Company's employ. Grants are not made every year but are awarded
subjectively based upon a number of factors, including the individual's level
of responsibility, the amount and term of options already held by the
individual, the individual's contributions and anticipated contributions to
the achievement of the Company's financial and strategic objections, and the
Company's achievement of its financial and strategic objectives.
The Compensation Committee did not recommend an increase in the base
salary of Mr. Bourjeaurd, the Company's Chief Executive Officer during the
fiscal year ended September 30, 1998. At the conclusion of fiscal 1998, the
Compensation Committee granted a $70,000 bonus to Mr. Bourjeaurd based upon
the Company's achievement of financial goals established at the commencement
of the fiscal year. This bonus represents 44% of the maximum bonus to which
Mr. Bourjeaurd was entitled. As a result, Mr. Bourjeaurd's incentive
compensation represented approximately 24% of his total cash compensation for
fiscal 1998. During fiscal 1998, Mr. Bourjeaurd was not awarded any stock
options.
COMPENSATION COMMITTEE
Cindy B. Brown, Brian E. Barents, and James L. Hersma
15
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return of $100 vested
on April 30, 1998, in the Common Stock of the Company, Standard & Poor's 500
Index and Standard & Poor's Aerospace/Defense Index. The returns of the
Standard & Poor's indices are calculated assuming reinvestment of dividends.
The Company has not paid any dividends. The graph covers a period commencing
April 30, 1998, when the Company's Common Stock was first publicly traded,
through September 30, 1998. The stock price performance shown on the graph
below is not necessarily indicative of future price performance.
COMPARISON OF 5 MONTH CUMULATIVE TOTAL
RETURN*
AMONG TRISTAR AEROSPACE CO., THE S & P 500 INDEX
AND THE S & P AEROSPACE/DEFENSE INDEX
[GRAPH]
*$100 INVESTED ON 4/30/98 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
-------------------------------------------------
4/98 5/98 6/98 7/98 8/98 9/98
<S> <C> <C> <C> <C> <C> <C>
TRISTAR AEROSPACE CO. 100.00 101.17 96.88 77.34 52.34 60.16
S & P 500 100.00 98.28 102.27 101.18 86.55 92.10
S & P AEROSPACE/DEFENSE 100.00 98.04 92.90 83.02 69.66 77.99
</TABLE>
16
<PAGE>
CERTAIN RELATED PARTY TRANSACTIONS
MANAGEMENT STOCKHOLDERS' AND OPTIONHOLDERS' AGREEMENT
The Company and each management stockholder and optionholder are parties
to an Amended and Restated Management Stockholders' and Optionholders'
Agreement dated as of May 15, 1997 (the "Stockholders Agreement"). The
Stockholders Agreement provides, among other things, for certain limitations
on transfers of the Common Stock, for the grant of proxies and powers of
attorney in favor of Odyssey Partners L.P., and for certain "piggyback"
registration rights in favor of the management stockholders with respect to
registered offerings of the Common Stock by the Company. Upon the
consummation of the Company's Offering, however, the Stockholders Agreement
terminated, except with respect to the "piggyback" registration rights
granted to the management stockholders. The management stockholders party to
the agreement include Messrs. Bourjeaurd, Balchunas , Childress, Barge and
King, in addition to certain other employees of the Company.
LOANS TO MANAGEMENT
On September 19, 1996, the Company loaned Mr. Bourjeaurd $200,000 at an
interest rate of 5.93% per annum, the proceeds of which were used to purchase
Common Stock of the Company. The entire principal and interest under such
loan was repaid by Mr. Bourjeaurd on December 11, 1997. On April 15, 1997,
the Company loaned an additional $100,000 to Mr. Bourjeaurd at an interest
rate of 5.83% per annum, the proceeds of which were used to purchase
additional Common Stock. The entire principal and interest under such loan
was repaid by Mr. Bourjeaurd on December 11, 1997.
On May 30, 1997, the Company loaned Mr. Balchunas $75,000 at an interest
rate of 6.74% per annum, the proceeds of which were used, together with
personal funds, to purchase 136,512 shares of Common Stock of the Company at
a purchase price of $1.47 per share. Until all principal and interest is paid
in full, Mr. Balchunas is required to apply all proceeds from any sale or
transfer of any shares of Common Stock owned by him to the principal and
interest then owing under the loan. Interest is otherwise payable
semi-annually. Interest of $5,126 was accrued for the fiscal year ended
September 30, 1998. All of the 136,512 shares purchased by Mr. Balchunas are
pledged to the Company as security for such loan.
TRANSACTION RELATING TO THE ACQUISITIONS OF TRI-STAR AEROSPACE, INC. AND
AVIALL AEROSPACE
As compensation for his services in coordinating, structuring and
consummating the simultaneous acquisitions of the Predecessor and Aviall
Aerospace, the Company agreed to pay Mr. Bourjeaurd a fee in the amount of
$2,560,000. Such fee was paid by the Company in installments as follows:
$51,370 in May 1997, $500,000 in October 1997, $795,560 in December 1997 and
$1,213,070 in February 1998. As compensation for his services in securing the
equity to consummate such acquisitions, the Company issued 790,000 shares of
its Common Stock to Mr. Bourjeaurd as a finder's fee at the closing of such
acquisitions on September 19, 1996.
APPOINTMENT OF AUDITORS
Upon recommendation of the Audit Committee, the Board of Directors has
appointed Arthur Andersen LLP, independent public accountants, to audit and
report on the consolidated financial statements of the Company for the fiscal
year ending September 30, 1999 and to perform such other services as may be
required of them. Arthur Andersen LLP have served as auditors for the Company
since 1996.
17
<PAGE>
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In
addition to the solicitation of proxies by use of the mails, some of the
officers, directors, and regular employees of the Company and its
subsidiaries, none of whom will receive additional compensation therefor, may
solicit proxies in person or by telephone or other means. As is customary,
the Company will, upon request, reimburse brokerage firms, banks, trustees,
nominees and other persons for their out-of-pocket expenses in forwarding
proxy materials to their principals.
STOCKHOLDER PROPOSALS FOR THE 1998
ANNUAL MEETNG OF STOCKHOLDERS
Stockholders may present proposals which may be proper subjects for
inclusion in the proxy statement and for consideration at an Annual Meeting.
To be considered, proposals must be submitted on a timely basis. Proposals
for the 2000 Annual Meeting must be received by the Company no later than
September 1, 1999. Proposals, as well as any questions related thereto,
should be submitted in writing to the Secretary of the Company. Proposals
may be included in the proxy statement for the 2000 Annual Meeting if they
comply with certain rules and regulations promulgated by the Securities and
Exchange Commission.
OTHER MATTERS
The Company knows of no other matter to be brought before the 1999
Annual Meeting. If any other matter requiring a vote of the stockholders
should come before the meeting, it is the intention of the persons named in
the proxy to vote with respect to any such matter in accordance with their
best judgment.
The Company will furnish, without charge, to each person whose proxy is
being solicited, upon written request, a copy of its Annual Report on Form
10-K for the fiscal year ended September 30, 1998, as filed with the
Securities and Exchange Commission (excluding exhibits). Copies of any
exhibits thereto also will be furnished upon the payment of a reasonable
duplicating charge. Requests in writing for copies of any such materials
should be directed to TriStar Aerospace Co., 2527 Willowbrook Road, Dallas,
Texas 75220, Attention: Secretary.
By order of the Board of Directors
/s/ DOUGLAS E. CHILDRESS
Douglas E. Childress
Secretary
Dallas, Texas
December 23, 1998
18
<PAGE>
TRISTAR AEROSPACE CO.
2527 WILLOWBROOK ROAD
DALLAS, TEXAS 75220
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Douglas E. Childress as proxy, with the
power to substitute such other person as the Chief Executive Officer may
appoint as a substitute, and hereby authorizes Mr. Childress to represent and
vote, as designated on the reverse side all shares of Common Stock of TriStar
Aerospace Co. (the "Company") held of record by the undersigned on December
10, 1998, at the Annual Meeting of Stockholders to be held on January 22,
1999 or other adjournment thereof.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
TRISTAR AEROSPACE CO.
JANUARY 22, 1999
ARROW PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED ARROW
PLEASE MARK YOUR
A /X/ VOTES AS IN THIS
EXAMPLE.
FOR nominees WITHHOLD
listed at right AUTHORITY
(except as marked to vote for
to the contrary) nominees listed at right
1. ELECTION
OF / / / / NOMINEES: Douglas E. Childress
DIRECTORS Brian E. Barents
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
AN INDIVIDUAL NOMINEE, WRITE THE NOMINEE'S
NAME ON THE SPACE PROVIDED BELOW.
- -----------------------------------------------
Signature Signature Dated:
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NOTE: Please date and sign exactly as your name appears on the envelope in
which this material was mailed. If shares are held jointly, each stockholder
should sign. Executors, administrators, trustees, etc. should use full title
and, if more than one, all should sign. If the stockholder is a corporation,
please sign full corporate name by an authorized officer. If the stockholder
is a partnership, please sign full partnership name by an authorized person.
