<PAGE> 1
SCHEDULE 14a INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
AMERICAN AIRCARRIERS SUPPORT, INCORPORATED
--------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[AMERICAN AIRCARRIERS SUPPORT INCORPORATED LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
American Aircarriers Support, Incorporated will be held at the Park Hotel, 2200
Rexford Road, Charlotte, North Carolina 28211 on Tuesday, May 11, 1999, at 10:00
a.m., Eastern Daylight Time, and thereafter as it may from time to time be
adjourned, for the following purposes:
1. To elect seven directors to hold office for the term set forth
in the accompanying Proxy Statement and until their successors
shall have been duly elected and qualified;
2. To consider and act upon an amendment to increase the number
of shares of Common Stock authorized for issuance under the
Company's 1998 Omnibus Stock Option Plan by an additional
450,000 shares.
3. To ratify the appointment of Arthur Andersen, LLP as
independent auditors; and
4. To consider and transact such other business as may properly
come before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 15,
1999, as the record date for the determination of shareholders entitled to
notice of and to vote at this meeting or any adjournment thereof.
By Order of the Board of Directors,
April 19, 1999 /s/ David M. Furr
----------------------------------
David M. Furr, Corporate Secretary
IMPORTANT
PLEASE MARK, DATE, SIGN, NOTE ANY CHANGE OF ADDRESS AND RETURN THE ENCLOSED
PROXY CARD IMMEDIATELY IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING, WE WILL BE
GLAD TO RETURN YOUR PROXY SO THAT YOU MAY VOTE IN PERSON.
<PAGE> 3
AMERICAN AIRCARRIERS SUPPORT, INCORPORATED
587 GREENWAY INDUSTRIAL DRIVE
LAKEMONT BUSINESS PARK
FORT MILL, SOUTH CAROLINA 29715
PROXY STATEMENT
RELATING TO THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD MAY 11, 1999
GENERAL
The enclosed proxy is solicited by the Board of Directors of American
Aircarriers Support, Incorporated (hereinafter referred to as the "Company") for
use at the Annual Meeting of Shareholders to be held at the Park Hotel, 2200
Rexford Road, Charlotte, North Carolina 28211 on Tuesday, May 11, 1999, at 10:00
a.m., Eastern Daylight Time, for the purposes set forth in the foregoing Notice
of Annual Meeting of Shareholders. This Proxy Statement and the form of proxy
will be mailed to shareholders on or about April 19, 1999.
The record date with respect to this solicitation was March 15, 1999.
All holders of record of Common Stock of American Aircarriers Support,
Incorporated as of the close of business on that date are entitled to vote at
the meeting. As of the record date, the Company had 7,190,104 shares of Common
Stock outstanding, excluding treasury shares. Each share of Common Stock is
entitled to one vote. A majority of the votes entitled to be cast constitutes a
quorum. If a quorum exists, action on any matter other than the election of
directors will be approved by the affirmative vote of the majority of shares
present in person or by proxy at the meeting and entitled to vote. Directors
will be elected by a plurality of the votes of the shares present in person or
by proxy at the meeting and entitled to vote in the election. Abstentions and
broker non-votes are not counted in the calculation of the vote.
A proxy may be revoked by the shareholder at any time prior to its
being voted. If a proxy is properly signed and is not revoked by the
shareholder, the shares it represents will be voted at the meeting in accordance
with the instructions of the shareholder, unless it is received in such form as
to render it invalid. If the proxy is signed and returned without specifying
choices, the shares will be voted in accordance with the recommendations of the
Board of Directors.
As a matter of policy, proxies, ballots and voting tabulations that
identify individual shareholders are held confidential by the Company. Such
documents are available for examination only by the inspectors of election, none
of whom is an employee of the Company, and certain employees associated with
tabulation of the vote. The identity of the vote of any shareholder is not
disclosed except as may be necessary to meet legal requirements.
The cost of this solicitation will be borne by the Company. Employees
and directors of the Company may solicit proxies but will not receive any
additional compensation for such solicitation. Proxies may be solicited
personally or by mail, facsimile, telephone or telegraph.
<PAGE> 4
I. ELECTION OF DIRECTORS
Information concerning the seven nominees for election as directors is
shown below. All nominees are now members of the Board of Directors. The Board
of Directors knows of no reason why any nominee would be unable to serve as a
director. If any nominee should for any reason become unable to serve, the
shares represented by all valid proxies will be voted for the election of such
other person as the Board of Directors may designate or the Board of Directors
may reduce the number of directors to eliminate the vacancy.
<TABLE>
<CAPTION>
NAME AGE CAPACITIES IN WHICH SERVED
----------------- --- ----------------------------------------------------
<S> <C> <C>
Karl F. Brown(1) 35 Chairman of the Board and Chief Executive Officer
Joseph E. Civiletto 39 President and Director
Anton K. Khoury 39 President of AAS-Amjet, Inc. and Director
Michael F. Evans 48 President of AAS Engine Services, Inc. and Director
David M. Furr(2) 41 Director
Pamela K. Clement(1)(2) 44 Director
James T. Comer, III(1) 50 Director
</TABLE>
---------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Karl F. Brown served as President of the Company from 1989 until
February 1999. Mr. Brown has served as Chairman of the Board and Chief Executive
Officer of the Company since January 1, 1998. From 1986 to 1989, Mr. Brown
served as a salesman for U.S. Aviation, Inc., an aircraft components and spare
parts redistributor partially owned by Herman O. Brown, Jr., Mr. Brown's father.
Mr. Brown attended the University of North Carolina at Charlotte and received a
Bachelor of Arts degree in Business in 1986.
Joseph E. Civiletto has served as President and Director of the Company
since February 1999. From February 1992 until joining the Company in February
1999, he was a Vice President and Chief Financial Officer of Aviation Sales
Company. From 1982 through 1992, Mr. Civiletto held various financial, planning
and audit positions with Baker Hughes, Inc. and Arthur Andersen LLP. He
graduated from Texas A & M University in 1982 with a Bachelor of Business
Administration degree in Accounting.
Anton K. Khoury has been a member of the Board of Directors of the
Company and the President of AAS-Amjet, Inc. since November 1998. He was the
President and founder of American Jet Engines Services, Inc. (the predecessor of
AAS-Amjet, Inc.) from its inception in 1987 until its assets were acquired by
the Company in November 1998. Mr. Khoury has nineteen years experience in the
commercial aircraft overhaul and repair industry, having served as Senior
Propulsion Engineer for Eastern Airlines from 1984 to 1987 and Batch Air from
1980 to 1984. Mr. Khoury received a Bachelor of Science degree in Aerospace
Engineering from Northrop University in 1980. He has held a FAA Airframe and
Power Plant Certificate since 1983.
Michael F. Evans has been a member of the Board of Directors of the
Company since November 1998 and the President of AAS Engine Services, Inc. and
Vice President of Powerplant Operations of the Company since October 1998. He
was the President and founder of Global Turbine Services, Inc. (the predecessor
of AAS Engine Services, Inc.) from its inception in 1994 until its assets were
acquired by the
-2-
<PAGE> 5
Company in October 1998. Mr. Evans has twenty-five years experience in the
commercial turbine industry, including serving as President and founder of Evans
Aviation Services, Inc. from 1988 to 1994 and Director of Commercial Engine
Division of Aviall, Inc. from 1986 to 1988. Mr. Evans attended the University of
Akron in Akron, Ohio. He has held an Airframe and Powerplant License since 1997.
David M. Furr has served as a director of the Company since January
1998. Mr. Furr has been a partner in the law firm of Gray, Layton, Drum,
Solomon, Sigmon, Furr & Smith, P.A., Gastonia, North Carolina, and a partner of
a predecessor firm for in excess of six years. Mr. Furr has practiced corporate
and tax law since 1983 and has represented the Company with respect to corporate
and tax matters since 1985. Mr. Furr is also a partner of Pierian Partners,
L.L.P., a Charlotte, North Carolina-based investment banking/marketing firm and
a director and a member of is also a director and a member of StockCar Stocks
Advisors, LLC, an advisor to the StockCar Stocks Index Fund, a mutual fund that
invests in companies involved in the sponsorship of, or that derive income from,
NASCAR sanctioned racing events at the Winston Cup Racing level. Mr. Furr is
also a director of Piedmont Venture Partners, a partnership that provides equity
capital to emerging growth companies in the fields of information technologies
and life sciences in the South Atlantic Region. Mr. Furr received a Bachelor of
Arts degree and his Juris Doctor degree from Wake Forest University in 1980 and
1982, respectively, and a Master of Taxation degree from the University of
Florida in 1983. Mr. Furr is admitted to practice before the United States Tax
Court.
Pamela K. Clement has been a director of the Company since February
1998. She is currently a partner of Pierian Partners, L.L.P., a Charlotte, North
Carolina-based investment banking/marketing firm and is also a director and a
member of StockCar Stocks Advisors, LLC, an advisor to the StockCar Stocks Index
Fund, a mutual fund that invests in companies involved in the sponsorship of, or
that derive income from, NASCAR sanctioned racing events at the Winston Cup
Racing level. Ms. Clement has also been a director of Piedmont Venture Partners,
a partnership that provides equity capital to emerging growth companies in the
fields of information technologies and life sciences in the South Atlantic
Region, since May 1996. From April 1995 to May 1996, Ms. Clement was engaged in
investing for her own account. From September 1992 to March 1995, she served as
president, chief operating officer and a director of Sovereign Advisers, Inc., a
Charlotte, North Carolina-based investment advisory firm. Ms. Clement sold her
interest in Sovereign Advisers, Inc. to Interstate/Johnson Lane Corporation in
1995. From 1976 through 1992, Ms. Clement was employed in a variety of positions
with a number of investment banking and money management firms. Ms. Clement
received a Bachelor of Arts degree in Economics from Cornell University in 1976.
James T. Comer, III has been a director of the Company since March
1998. Since 1991, Mr. Comer has been the president of J.T. Comer Consulting,
Inc. and chairman of Southern Pension Services, Inc., both of which are
wholly-owned by Mr. Comer. J.T. Comer Consulting, Inc. provides employee benefit
consulting services and Southern Pension Services, Inc. provides pension
administration services. From 1979 to 1986, Mr. Comer served as president of
J.T. Comer & Associates, Inc., a pension administration and benefit consulting
firm that was sold to the D & B Plan Services Division of the Dunn & Bradstreet
Corporation in 1986. Mr. Comer was employed as the president of the D & B Plan
Services Division from 1986 to 1991. Mr. Comer received a Bachelor of Arts
degree in Economics from the University of North Carolina at Charlotte in 1971.
COMMITTEES OF THE BOARD
The Board of Directors has delegated certain of its authority to a
Compensation Committee and an Audit Committee. The Compensation Committee is
currently composed of Mr. Furr and Ms. Clement. The
-3-
<PAGE> 6
Audit Committee is composed of Messrs. Brown and Comer and Ms. Clement. No
member of either committee is a former or current officer or employee of the
Company with the exception of Mr. Brown.
The Compensation Committee held two meetings in 1998. The primary
function of the Compensation Committee is to review and make recommendations to
the Board with respect to the compensation, including bonuses, of the Company's
officers and to administer the Company's 1998 Omnibus Stock Option Plan.
The Audit Committee held one meeting in 1998. The function of the Audit
Committee is to review and approve the scope of audit procedures employed by the
Company's independent auditors, to review and approve the audit reports rendered
by both the Company's independent auditors and to approve the audit fee charged
by the independent auditors. The Audit Committee reports to the Board of
Directors with respect to such matters and recommends the selection of
independent auditors.
BOARD AND COMMITTEE ATTENDANCE
In 1998, the Board of Directors held two formal meetings and took a
number of actions by unanimous written consent in lieu of meetings. All
directors attended all board and committee meetings held during fiscal 1998.
EXECUTIVE OFFICERS AND KEY EMPLOYEES
Elaine T. Rudisill, age 43, has served as Chief Financial Officer of
the Company since December 1997. In 1996, Ms. Rudisill became chief financial
officer, vice president of finance and treasurer of Novavax, Inc., Columbus,
Maryland, which until late 1995 was a subsidiary of IGI, Inc. Novavax, Inc. is
engaged in the development of biopharmaceutical products and, since its spin-off
from IGI, Inc., has been publicly traded. From 1987 through 1996, Ms. Rudisill
served as assistant controller, then controller, of IGI, Inc., Buena, New
Jersey, a publicly-traded diversified animal healthcare and human cosmetics
manufacturer.
Ned N. Angene, age 55, has served as President of AAS Landing Gears,
Inc. since November 1998. He was the President and co-founder of Condor Flight
Spares, Inc. (the predecessor of AAS Landing Gears, Inc.) from its inception in
May 1998 until its assets were acquired by the Company in November 1998. Mr.
Angene has thirty-four years experience in the commercial aircraft overhaul and
repair industry, including founding or serving as an executive officer of
Menasco, Castle Precision Industries, Cleveland Pneumatic Co., Dixie Aircraft
Parts, Inc. and AAR Landing Gear Center. He has held a FAA Repairman Certificate
since 1968.
William E. Werts, age 65, has been employed by the Company since 1990
as Director of Sales. Mr. Werts has been employed in the aircraft components and
spare parts redistribution industry for over 35 years, including five years at
U.S. Aviation, Inc. and 22 years at Charlotte Aircraft Corporation.
James E. Cauble, age 54, has been the Company's Director of Quality
Control since 1990. Mr. Cauble has been employed in the aircraft components and
spare parts redistribution industry for over 35 years, including eight years at
U.S. Aviation, Inc. and 22 years at Charlotte Aircraft Corporation. Mr. Cauble
has held an Airframe and Powerplant License since 1970 and an FAA Inspection
Authorization since 1975.
David B. Abbott, age 43, has served as the Company's Director of
Marketing since 1990. Prior to joining the Company, Mr. Abbott was employed in
various sales and marketing positions for over 14 years in the aviation
industry.
-4-
<PAGE> 7
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the annual
and long-term compensation for services in all capacities to the Company of Karl
F. Brown, who served as Chief Executive Officer and President during 1998, and
Elaine T. Rudisill, who joined the Company in December 1997 and served as Chief
Financial Officer during 1998. These two individuals are the only executive
officers of the Company whose total annual salary and bonus exceeded $100,000
during the year ended December 31, 1998.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL AWARDS
COMPENSATION(1) -------
FISCAL --------------- SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS(#) COMPENSATION
- --------------------------- ------ ------ ----- --------------------- ------------
<S> <C> <C> <C> <C> <C>
Karl F. Brown, 1998 $ 200,000 $ 100,000 120,000 $ 33,921(2)
Chairman of the Board, Chief 1997 150,000 -0- -0- 17,972(2)
Executive Officer and President 1996 150,000 -0- -0- 17,972(2)
Elaine T. Rudisill, 1998 $ 65,000 $ 60,000 35,000 -0-
Chief Financial Officer 1997 (3) (3) -0- $ 8,458(3)
1996 (3) (3) -0- (3)
</TABLE>
- -------------------
(1) Excludes S Corporation distributions to Mr. Brown of $2,284,711, $1,500,000
and $900,300 in 1998, 1997 and 1996.
(2) Represents costs attributable to two Company automobiles provided for use
by Mr. Brown and his spouse, cash advances made in connection with a
split-dollar life insurance plan maintained by the Company on behalf of Mr.
Brown and contributions by the Company into Mr. Brown's 401(k) account.
(3) Ms. Rudisill was first employed by the Company as an executive officer in
January 1998. In 1997, she was compensated as a consultant during the month
of December.
Option Grants Table. The following table sets forth information on
grants of stock options pursuant to the Company's 1998 Omnibus Stock Option Plan
during 1998 to Mr. Brown and Ms. Rudisill.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES PERCENT OF TOTAL EXERCISE OR
UNDERLYING OPTIONS/ OPTIONS/SARS GRANTED TO BASE PRICE EXPIRATION
NAME SARS GRANTED EMPLOYEES IN FISCAL YEAR ($/SHARE)(1) DATE
- ----------------- -------------------- ------------------------ ------------ -----------
<S> <C> <C> <C> <C>
Karl F. Brown 60,000 18.8% $ 6.60 2/21/2003
Karl F. Brown 60,000 18.8 6.60 11/15/2003
Elaine T. Rudisill 20,000 6.3 6.00 2/21/2008
Elaine T. Rudisill 15,000 4.7 6.00 11/15/2008
</TABLE>
- ---------------
(1) The exercise price is equal to the market price of the underlying security
on the date of grant. One-fourth of such options vest annually, the initial
one-fourth vesting upon grant.
Fiscal Year-End Options/Option Values Table.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDER- VALUE OF UNEXERCISED IN-
LYING UNEXERCISED OPTIONS/ THE-MONEY OPTIONS/SARS
SHARES SARS AT FISCAL YEAR-END AT FISCAL YEAR-END($)(1)
ACQUIRED VALUE -------------------------- ------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------- ----------- -------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Karl F. Brown -0- -0- 30,000 90,000 $112,500 $337,500
Elaine T. Rudisill -0- -0- 8,750 26,250 32,813 98,438
</TABLE>
- ---------------
-5-
<PAGE> 8
(1) The dollar values are calculated based upon the difference between the
exercise price of the options and the closing price for the Common Stock of
$9.75 on December 31, 1998.
No employee of the Company receives any additional compensation for his
services as a director. Non-management directors receive no salary for their
services as such, but receive a fee of $250 per meeting attended. The Board of
Directors has also authorized payment of reasonable travel or other
out-of-pocket expenses incurred by non-management directors in attending
meetings of the Board of Directors. In 1998, Mr. Furr, Ms. Clement and Mr.
Comer, all of whom are non-management directors, received options to purchase
35,000, 12,500 and 6,000 shares of Common Stock at an exercise price of $6.00
per share, respectively. All of such options became exercisable upon grant.
Certain directors of the Company are consultants or advisors to the Company and
receive compensation for such services. Other directors were parties to various
asset purchases agreements in 1998, whereby the Company acquired their
respective companies for cash and shares of Common Stock, entered into
employment contracts with them, and, in some instances, leased facilities from
them. See "Certain Relationships and Related Transactions".
Employment and Other Agreements. In January 1998, the Company entered
into an employment agreement with Karl F. Brown. The employment agreement
requires that he devote his full business time to the Company, may be terminated
by the Company for "cause" (as defined in the employment agreement) and, as
currently in effect, calls for Mr. Brown to receive an annual salary of $200,000
and a discretionary bonus determined by the Compensation Committee. The
employment agreement extends for a three-year term. Mr. Brown is also entitled
to receive lump sum compensation equal to approximately three times his annual
salary and bonus in the event of a change in control of the Company and upon Mr.
Brown's services being terminated or his status, authority or responsibilities
being substantially diminished. The employment agreement was amended to provide
for an annual salary of $265,000 commencing January 1, 1999.
In February 1998, the Company also entered into an employment agreement
with Elaine T. Rudisill, the Chief Financial Officer of the Company. This
agreement extends for a one-year term, is subject to successive one-year
automatic renewals unless either party provides notice of non-renewal, and
provides for Ms. Rudisill to receive an annual salary of $65,000 and a
discretionary bonus. Upon renewal, Ms. Rudisill's compensation was increased to
$110,000.
The Company has also entered into confidentiality and non-compete
agreements with its officers and key employees.
The Company maintains a 401(k) profit sharing plan and a medical
reimbursement plan covering substantially all of its employees.
COMMON STOCK OWNERSHIP
The table on the following page sets forth certain information
regarding beneficial ownership of Common Stock as of March 31, 1999 by (i) each
person known by the Company to own beneficially more than 5% of the outstanding
Common Stock, (ii) each director or nominee, and (iii) all executive officers
and directors as a group. The information on the institutional investors'
statements filed with the Commission under Section 13(d) or 13(g) of the
Exchange Act. Each person has sole voting and sole investment or dispositive
power with respect to the shares shown except as noted.
-6-
<PAGE> 9
<TABLE>
<CAPTION>
SHAREHOLDINGS ON
MARCH 31, 1999
------------------------
NUMBER OF PERCENT OF
NAME AND ADDRESS(1) SHARES(2) CLASS(3)
- ------------------------------- --------- ----------
<S> <C> <C>
Karl F. Brown(4).............................................................. 3,105,000 42.6%
Joseph E. Civiletto(5)........................................................ 50,000 *
Anton K. Khoury(6)............................................................ 313,500 4.4
Michael F. Evans.............................................................. 90,104 1.3
Herman O. Brown, Jr.(7)....................................................... 1,025,000 14.3
David M. Furr(7)(8)........................................................... 1,118,985 15.5
516 South New Hope Road
Gastonia, North Carolina 28053
Pamela K. Clement(9).......................................................... 23,600 *
1 Morrocroft Centre, Suite 380
6805 Morrison Boulevard
Charlotte, North Carolina 28211
James T. Comer, III(10)....................................................... 17,000 *
4731 Hedgemore Drive
Charlotte, North Carolina 28209
All directors and executive officers as a group
(Nine persons)(11)............................................................ 4,737,439 64.6%
</TABLE>
- -------------------
* Less than 1%
(1) Except as noted above, the address for all persons listed is 587
Greenway Industrial Drive, Lakemont Business Park, Fort Mill, South
Carolina 29715.
(2) Ownership includes both outstanding Common Stock and shares issuable
upon exercise of options that are currently exercisable or will become
exercisable within 60 days after the date hereof.
(3) All percentages are calculated based on the number of outstanding
shares in addition to shares which a person or group has the right to
acquire within 60 days after the date hereof.
(4) Includes 30,000 shares subject to currently exercisable options.
(5) Includes 50,000 shares subject to currently exercisable options.
(6) Excludes 312,500 shares held by Mr. Khoury's brother as to which he
disclaims beneficial ownership.
(7) In February 1998, Herman O. Brown, Jr., David M. Furr and the Company
entered into a Voting Trust pursuant to which David M. Furr has been
vested with all voting rights relating to the Common Stock currently
owned or hereafter acquired by Herman O. Brown, Jr. See below for
further information concerning the Voting Trust.
(8) Includes 35,000 shares subject to currently exercisable options.
(9) Includes 12,500 shares subject to currently exercisable options.
(10) Includes 6,000 shares subject to currently exercisable options.
(11) Includes 142,250 shares of Common Stock subject to currently
exercisable options. Excludes shares of Common Stock as to which
executive officers and directors disclaim beneficial ownership.
-7-
<PAGE> 10
The Company and Messrs. David M. Furr and Herman O. Brown, Jr. entered
into the Voting Trust in February 1998. During the term of the Voting Trust, Mr.
Furr has the exclusive right to exercise all of the voting rights and powers
with respect to the Common Stock subject to the Voting Trust. The Voting Trust
will terminate on the earlier to occur of (i) sale of all of the Common Stock
subject to the Voting Trust, (ii) the death of Herman O. Brown, Jr., or (iii)
expiration of the ten-year term of the Voting Trust, subject to the automatic
renewal of the Voting Trust for an additional period of ten years in the event
Herman O. Brown, Jr. continues to own Common Stock of the Company upon
expiration of the initial ten-year term of the Voting Trust. Under the Voting
Trust, Herman O. Brown, Jr. retains the power to receive dividends and to
instruct the trustee to dispose of shares of Common Stock within the Voting
Trust, subject to compliance with applicable federal and state securities laws
and a one year lock-up agreement made with the representative of the
underwriters of the Company's initial public offering.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE DIRECTOR NOMINEES IDENTIFIED ABOVE.
II. PROPOSAL TO APPROVE AMENDMENT
TO THE 1998 OMNIBUS STOCK OPTION PLAN
The Company's 1998 Omnibus Stock Option Plan (the "Option Plan") was
adopted in 1998. The Board of Directors believes that the Option Plan has proven
to be of substantial value in stimulating the efforts of persons who are key to
the Company's growth, development and financial success by allowing the Company
the ability to offer a variety of equity based incentives and awards to those
persons.
Currently, the maximum number of shares of Common Stock reserved and
available for Awards under the Option Plan is 450,000. As of December 31, 1998,
a total of 393,250 non-qualified and Incentive Stock Options were outstanding,
with exercise prices ranging from $6.00 to $6.60 per share, leaving only 56,750
shares available for grant under the Option Plan. In light of the Company's
growth, the Board of Directors determined that number of shares remaining for
issuance under the Option Plan was insufficient to provide adequately for
participation by eligible and prospective employees, directors and consultants
to whom the Compensation Committee would consider granting options. The Board of
Directors adopted an amendment to the Option Plan to increase the number of
shares available for issuance under the Option Plan by an additional 450,000
shares of Common Stock, which would bring the total amount issuable under the
Option Plan to 900,000. That number of shares would constitute approximately 11%
of the total shares of Common Stock outstanding assuming all such shares were
issued and no other shares of Common Stock were issued.
The Board of Directors expects that this number of shares will be
sufficient for compensatory issuances for the next year. The potential future
issuance of shares under the Option Plan will be dilutive to present and future
shareholders. The Board of Directors believes that the issuance of Awards under
the Option Plan for compensatory purposes will have the effect of motivating
management and others to perform and allowing the Company to attract new
personnel, which, in turn, should result in an increase in value of the
Company's Common Stock. The Board of Directors believes that any such increase
will offset, to some degree, the dilution to be experienced by current and
future shareholders.
SUMMARY OF OPTION PLAN
The Option Plan permits the grant of awards to certain persons who are
affiliated with the Company and its subsidiaries. The Option Plan provides for
the grant of incentive stock options ("Incentive Stock Options") within the
meaning of the Code, non-qualified stock options, restricted shares, performance
units, performance shares, dividend equivalent, share appreciation rights
("SARs") and other forms of awards, including deferrals of earned awards,
(collectively, the "Awards"). Employees and non-employees to whom
-8-
<PAGE> 11
an offer of employment has been extended, directors and consultants of the
Company and its subsidiaries are all eligible participants for all Awards,
except that Incentive Stock Options may be granted only to employees.
The Option Plan is administered by the Compensation Committee of the
Board of Directors, or such other committee designated by the Board of Directors
(the "Committee"). The Committee has broad administrative powers, including the
authority to construe and interpret the Option Plan, promulgate rules to
implement the Options Plan, and make all determinations necessary for
administration of the plan, including determination of the terms and conditions
of the Awards granted under the Option Plan, the individuals to whom Awards are
to be granted, the exercise price, if any, the number of shares subject to an
Award and the vesting and duration of Awards, subject to any restrictions
contained in the Option Plan.
The exercise price of Incentive Stock Options granted under the Option
Plan must be at least equal to the fair market value of the Common Stock of the
Company on the date of grant, and must be 110% of fair market value when granted
to an employee who owns shares representing more than 10% of the voting power of
all classes of stock of the Company. The exercise price of non-qualified stock
options granted under the Option Plan can not be less than 85% of the fair
market value of the Common Stock on the date of grant. The term of all options
granted under the Option Plan may not exceed ten years, except the term of
Incentive Stock Options granted to a 10% or more stockholder may not exceed five
years. The Option Plan may be amended or terminated by the Board of Directors,
but no such action may impair the rights of a participant under a previously
granted option.
The Option Plan provides for the award of SARs and Performance Units and
Performance Shares. An SAR is an incentive Award that permits the holder to
receive (per share covered thereby) the amount by which the fair market value of
a share of Common Stock on the date of exercise exceeds the fair market value of
such share on the date the SAR was granted or at such date as the Compensation
Committee designates. The Compensation Committee may grant SARs independently,
in addition to, or in tandem (such that the exercise of the SAR or related stock
option will result in forfeiture of the right to exercise the related stock
option or SAR for an equivalent number of shares) with a stock option Award. A
Performance Unit or Performance Share is an incentive Award whereby the Company
commits to make a distribution depending on the attainment of a performance
objective and condition established by the Committee and the base value of the
Performance Unit or Performance Share.
Upon termination of services of a non-employee director or consultant,
all options issuable, but not yet granted, to such persons for services rendered
shall be granted and all options shall remain exercisable for the original
option term. Options granted to an employee are exercisable for specified
periods of time ranging from one month to one year following an employee's
termination depending on the circumstances of the termination, except that
options granted to an employee terminated for cause shall not be exercisable to
any extent after termination. An unexercised option is exercisable only to the
extent that it was exercisable on the date of termination.
The Option Plan provides that, in the event the Company enters into an
agreement providing for the merger of the Company into another corporation, an
exchange of shares with another corporation, the reorganization of the Company
or the sale of substantially all of the Company's assets, unvested stock options
become immediately vested and exercisable. Upon the consummation of the merger,
exchange, reorganization or sale of assets, the successor corporation must
assume all Awards or substitute another Award on substantially identical terms
to the outstanding Award.
The Board of Directors may amend the Plan at any time and from time to
time, subject to the receipt of stockholder approval where required by Rule
16b-3, by the Code, by the Nasdaq National Market or other exchange regulations
or by state corporation law. The Board of Directors has approved the amendment
and
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shareholder approval is not required to amend the Option Plan. However, if
shareholders did not approve the amendment to the Option Plan, Incentive Stock
Options granted pursuant to the amendment may be disqualified from favorable tax
treatment.
Moreover, the Company issued an Incentive Stock Option to purchase
200,000 shares of Common Stock to Mr. Civiletto when he signed his employment
agreement. Officers and directors who, in the aggregate hold 4,158,060 of the
outstanding shares of Common Stock, have agreed that they will vote for the
amendment. This number of shares is a majority of all shares outstanding and is
therefore sufficient to approve the amendment. Accordingly, approval by the
remaining shareholders is a mere formality. Had this agreement not been made,
the Company could have had a significant earnings charge if the market price of
the Company's Common Stock had increased between the date of grant and the
actual shareholder approval.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS THAT
SHAREHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT TO THE OPTION PLAN WHICH
INCREASES THE NUMBER OF SHARES AVAILABLE PURSUANT TO THE PLAN BY AN ADDITIONAL
450,000 SHARES.
III. RATIFICATION OF AUDITORS
The firm of Arthur Andersen LLP has been appointed by the Board of
Directors to serve as the Company's independent auditors for the 1999 fiscal
year. Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions from shareholders.
The firm of Cherry, Bekaert & Holland, L.L.P audited the financial
statements of the Company for the two prior fiscal years. During those two
years, there were no disagreements with Cherry, Bekaert & Holland, L.L.P. on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure and their reports on the Company's financial
statements for those two years contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles.
The Board of Directors recently determined that the Company should
consider retaining a larger accounting firm with a national presence in view of
the Company's growth and the geographic diversity of recent acquisitions. The
Company solicited proposals from various accounting firms meeting those
criteria. The decision to appoint Arthur Andersen LLP was recommended by the
Audit Committee of the Board of Directors and approved by the Board of Directors
on April 12, 1999.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF ARTHUR
ANDERSEN LLP AS INDEPENDENT AUDITORS FOR THE COMPANY.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Under the securities laws of the United States, the Company's directors,
its executive officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission and the Company. Specific due dates for these
reports have been established and the Company is required to disclose in this
proxy statement any failure to file, or late filing, of such reports with
respect to the period ended December 31, 1998. Based solely on the Company's
review of Forms 3, 4 and 5 and amendments thereto furnished to the Company and
all written representations with respect to filing of such Forms, the Company is
aware that neither Mr. Khoury or Mr. Evans filed their initial Form 3 on a
timely basis.
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<PAGE> 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has adopted a policy that future material transactions
between the Company and its executive officers, directors and principal
shareholders (i.e. shareholders owning beneficially 5% or more of the
outstanding voting securities of the Company) must be approved by a majority of
the disinterested directors. Any such transactions will be on terms believed to
be no less favorable to the Company than could be obtained from unaffiliated
parties. For this purpose, a transaction is deemed material if such transaction,
alone or together with a series of similar transactions during the same fiscal
year, involves an amount which exceeds $60,000.
Herman O. Brown, Jr., a principal stockholder of the Company and the
father of Karl F. Brown, is a co-founder, officer and director of U.S. Aviation,
Inc. In 1993, the Company borrowed $525,000 from the unaffiliated co-founder of
U.S. Aviation, Inc. The repayment of amounts due under the promissory note that
evidences this borrowing was personally guaranteed by Mr. Karl Brown and Mr.
Herman Brown. Neither of them received any compensation for providing the
guarantees. All amounts due under this promissory note were repaid in 1998 using
cash generated from operations. The Company was also indebted to U.S. Aviation,
Inc. in the principal amount of $46,000 at December 31, 1997, which amount was
repaid in February 1998.
U.S. Aviation, Inc. has in the past consigned aircraft components and
spare parts to the Company. Under the consignment arrangement, the Company
remits to U.S. Aviation, Inc. 60% of the sales price of the components and spare
parts, less any overhaul and repair costs incurred by the Company. Consignment
sales on behalf of U.S. Aviation, Inc. totaled $37,000 and $77,000 in 1998 and
1997, respectively. The Company anticipates that consignment sales on behalf of
U.S. Aviation, Inc. will be immaterial in future periods.
At various times from 1993 through December 31, 1997, Messrs. Karl F.
Brown and Herman O. Brown, Jr. made unsecured advances to the Company. The
proceeds of such advances were used for working capital purposes. The advances
outstanding at December 31, 1997 bore interest at rates between 6% and 8% per
annum and were to mature between April 15, 1998 and June 30, 1998. At December
31, 1997, the Company was indebted to Messrs. Karl F. Brown and Herman O. Brown,
Jr. in the amounts of $711,000 and $746,000, respectively. The Company repaid
all such advances in 1998.
The Company currently leases a 15,000 square foot facility, consisting
primarily of warehouse storage, from B & C Enterprises, a partnership in which
Herman O. Brown, Jr. is a 50% partner. The facility is leased to the Company
through December 2002 for an annual rental of $50,400. The former headquarters
facility is leased to the Company through July 30, 2002 by Brown Enterprises, a
partnership of Messrs. Karl F. Brown and Herman O. Brown, Jr., for an annual
rental of $87,000. The Company moved into its new headquarters facility in late
February 1999 and Messrs. Karl F. Brown and Herman O. Brown, Jr. are attempting
to sell, lease or sublease the facility to another entity. Until such time as it
is sold or subleased, the Company will remain obligated under the lease. Each of
the foregoing leases requires the Company to pay taxes, insurance and
maintenance expenses for the facility in question. Management believes that
these facilities were leased to it on terms at least as favorable as could have
been obtained from unaffiliated third parties.
The Company terminated its S Corporation election in May 1998 and
distributed an aggregate of approximately $3.0 million in cash and $100,000 in
securities owned by the Company to Messrs. Karl F. Brown and Herman O. Brown,
Jr., which was an amount anticipated to be sufficient to pay their personal tax
liabilities related to 1998 taxable income earned prior to the date of
termination of the Company's S Corporation election, together with an amount
equal to approximately 50% of the previously undistributed accumulated taxable
income.
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<PAGE> 14
Prior to the date of the initial public offering in May 1998, Messrs.
Karl F. Brown and Herman O. Brown were parties to agreements providing that, in
the event of the death of Karl F. Brown, the shares of Common Stock owned by him
would be placed in a family trust under which Herman O. Brown, Jr., as trustee,
would retain all voting rights with respect to such Common Stock. Additionally,
the agreements provided that in the event of the death of Herman O. Brown, Jr.,
Karl F. Brown would retain the right to purchase the Common Stock owned by
Herman O. Brown, Jr. at a price equal to the book value of such Common Stock at
the time of Herman O. Brown, Jr.'s death. Those agreements terminated upon the
close of the initial public offering.
In February 1998, Herman O. Brown, Jr. entered into a voting trust
agreement (the "Voting Trust") pursuant to which David M. Furr, a director of
the Company, has been vested with all voting rights relating to the Common Stock
currently owned or hereafter acquired by Herman O. Brown, Jr. See "Principal
Stockholders."
During 1998 and 1997, the Company paid legal fees of $316,000 (of which
$96,500 was paid to an unaffiliated firm which served as co-counsel) and $16,000
to a law firm in which David M. Furr, a director of the Company, is a partner. A
substantial portion of the 1998 fees were in connection with the initial public
offering and the acquisitions consummated in the fourth quarter of 1998.
In the last quarter of 1998, the Company expanded its operations by using
three newly formed subsidiaries to acquire substantially all of the assets of
six companies. Certain founders and owners of the entities acquired became
employees and officers of the new subsidiary or of the Company and two of them,
Messrs. Khoury and Evans, were appointed to the Board of Directors of the
Company in November 1998. The material terms of those transactions are as
follows:
The Company acquired substantially all of the assets of Global Turbine
Services, Inc. and its affiliate Turbine Inspections, Incorporated ("Global")
for a purchase price $1,105,032 and assumption of certain accounts payable not
to exceed $305,013. The purchase price was comprised of $586,932 cash and
issuance of 90,104 shares of common stock valued at $518,100. Mr. Evans was a
principal in both of these entities and now serves as President of the
subsidiary which continued the operations of Global and as Vice President of
Power Plant Operations of the Company and a director of the Company.
The Company acquired substantially all of the operating assets of Condor
Flight Spares, Inc. ("Condor") for a purchase price $1,750,000. The purchase
price was comprised of $1,000,000 cash and issuance of 125,000 shares of common
stock valued at $750,000. Messrs. Ned Angene and Martin Washofsky, who owned
substantially all of the outstanding share of Condor Flight Spares, Inc., serve
as President and Executive Vice President - Head of Sales, respectively, of the
subsidiary which continued the operations of Condor. Simultaneously with the
asset purchase, the Company entered into a lease with Condor Properties of
Miami, Inc. for real property and an approximately 40,000 square foot facility
where Condor's business was located. Mr. Angene and Mr. Washofsky are principal
shareholders of Condor Properties of Miami, Inc. The initial rental payments of
$21,650 per month automatically increase by one percent per year annually during
the initial ten year term and any renewal terms.
The Company acquired substantially all of the assets of American Jet
Engine Services, Inc. ("Amjet") for a purchase price of $12,350,000 and
assumption of certain accounts and trade payables, but excluding certain
warranty claims, employee bonuses, and claims and liability arising from
specified investigations. The purchase price was comprised of approximately
$8,600,000 cash, issuance of 625,000 shares of common stock valued at $3,750,000
and adjustments of approximately $100,000 credited to the Company. The Company
also acquired the inventories of Global Air Spares, Inc. and Atlantic Airmotive
Corporation, both of which were affiliates of Amjet for an aggregate purchase
price of $2,550,000 cash. Mr. Anton Khoury and Mr. Hanna Khoury were the two
principals in all of these entities and continue to serve as
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<PAGE> 15
President and Executive Vice President, respectively, of the subsidiary which
continued the operations of these entities. Simultaneously with the asset
purchase, the Company entered into a lease with Anthony Khoury for one of the
facilities in which Amjet's business has been operating and another lease with
Hanna Khoury for the other facility in which Amjet's business has been
operating. During the initial one year term, the rental payments are $5,218 and
$5,325 per month for the approximately 12,000 square foot and 15,000 square foot
facilities, respectively.
Simultaneously with the acquisition of the inventory of Global Turbine
Services, Inc and its affiliate Turbine Inspections, Incorporated, the Company
entered into an agreement with Mr. Mike Evans, the founder and president of
those entities and now a director of the Company, for the consignment sale of
inventory controlled by him. The Company and Mr. Evans will share equally in the
profits from the sale of the consigned inventory until such time as Mr. Evans
has received aggregate profits of $1.6 million. The Company will then receive
legal ownership and title to all remaining inventory covered by the consignment
agreement and the consignment agreement will terminate. The Company paid Mr.
Evans $175,000 in consideration for the consignment rights. No consignment sales
on behalf of Mr. Evans were made in 1998.
ANNUAL REPORT
The Annual Report to Shareholders for the fiscal year ended December 31,
1998 is being sent to all shareholders with this Proxy Statement. The Annual
Report to Shareholders does not form any part of the material for the
solicitation of any Proxy.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER
31, 1998 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT EXHIBITS,
IS AVAILABLE WITHOUT CHARGE TO ANY SHAREHOLDER OF THE COMPANY UPON WRITTEN
REQUEST TO THE SECRETARY, AMERICAN AIRCARRIERS SUPPORT, INCORPORATED, 587
GREENWAY INDUSTRIAL DRIVE, LAKEMONT BUSINESS PARK, FORT MILL, SOUTH CAROLINA
29715.
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for shareholder
actions at future annual meetings by following the rules of the Securities and
Exchange Commission. Proposals intended for inclusion in next year's proxy
statement and proxy card must be received by the Company not later than December
13, 1999. Such proposals and supporting statements, if any, should be sent to
the attention of the Corporate Secretary, American Aircarriers Support,
Incorporated, 587 Greenway Industrial Drive, Lakemont Business Park, Fort Mill,
South Carolina 29715. If the Company does not receive notice of any other matter
that a shareholder wishes to raise at the Annual Meeting in 2000 by February 26,
2000 and a matter is raised at that meeting, the proxies will have discretionary
authority to vote on the matter.
OTHER MATTERS
Except for the matters described herein, management does not intend to
present any matter for action at the Annual Meeting and knows of no matter to be
presented at such meeting that is a proper subject for action by the
shareholders. However, if any other matters should properly come before the
Annual Meeting, it is intended that votes will be cast pursuant to the authority
granted by the enclosed Proxy in accordance with the best judgment of the person
or person acting under the Proxy.
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<PAGE> 16
AMERICAN AIRCARRIERS SUPPORT, INCORPORATED
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 11, 1999
KNOW ALL MEN BY THESE PRESENTS: that the undersigned shareholder of
American Aircarriers Support, Incorporated (the "Company") hereby constitutes
and appoints Karl F. Brown, as attorney and proxy, with the power to appoint his
substitute, and hereby authorizes him to represent and vote, as designated
below, all of the shares of Common Stock of the Company which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of the Company to be held
May 11, 1999, and at any and all adjournments thereof with respect to the
matters set forth below and described in the Notice of Annual Meeting of
Shareholders and Proxy Statement dated April 19, 1999, receipt of which is
acknowledged.
1. TO CONSIDER AND ACT UPON A PROPOSAL TO ELECT KARL F. BROWN, JOSEPH E.
CIVILETTO, ANTON K. KHOURY, MICHAEL F. EVANS, DAVID M. FURR, PAMELA K.
CLEMENT AND JAMES T. COMER, III AS DIRECTORS TO HOLD OFFICE FOR
ONE-YEAR TERMS OR UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED.
[ ] FOR ELECTION OF ALL NOMINEES (Except as shown below)
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES
Instructions: To withhold authority to vote for any individual nominee,
strike through the nominee's name below
KARL F. BROWN
JOSEPH E. CIVILETTO
ANTON K. KHOURY
MICHAEL F. EVANS
DAVID M. FURR
PAMELA K. CLEMENT
JAMES T. COMER, III
2. TO CONSIDER AND ACT UPON AN AMENDMENT TO INCREASE THE NUMBER OF SHARES
OF COMMON STOCK AUTHORIZED FOR ISSUANCE UNDER THE COMPANY'S 1998
OMNIBUS STOCK OPTION PLAN BY AN ADDITIONAL 450,000 SHARES.
[ ] FOR PROPOSAL
[ ] AGAINST PROPOSAL
[ ] ABSTAIN
3. TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS AUDITORS OF THE
COMPANY.
[ ] FOR RATIFICATION
[ ] AGAINST RATIFICATION
[ ] ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY AND ALL
ADJOURNMENTS THEREOF.
[ ] AUTHORIZED TO VOTE
[ ] ABSTAIN
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder(s). IF NO INDICATION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES LISTED AND FOR PROPOSALS 2 AND 3 AND THE PROXY HOLDERS
WILL VOTE ON ANY PROPOSAL UNDER 4 IN THEIR DISCRETION AND IN THEIR BEST
JUDGMENT.
Please mark, date, and sign exactly as your name appears on your stock
certificate. When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person. If this Proxy is not dated, the Proxy
will be deemed to bear the date the form was mailed to the shareholder.
Dated:
------------------ ----------------------------------------
Signature
Dated:
------------------ ----------------------------------------
Signature if held jointly
