As filed with the Securities and Exchange Commission on June 11, 1998
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AVIATION GENERAL, INCORPORATED
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 3721 to be applied for
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
720 N.W. 63rd Street
Hanger 8, Wiley Post Airport
Bethany, Oklahoma 73008
(405) 495-8080
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
N. Gene Criss
President and Chief
Executive Officer
720 N.W. 63rd Street
Hanger 8, Wiley Post Airport
Bethany, Oklahoma 73008
(405) 495-8080
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of communications to:
John F. Kearney
Dyer Ellis & Joseph
600 New Hampshire Avenue, N.W.
Washington, D.C. 20037
(202) 944-3000
Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.|_|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.|_|
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.|_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price per aggregate registration
to be registered registered Share(1) offering price(1) fee
<S> <C> <C> <C> <C>
Common Stock, $0.50 par value 7,280,548 shares $2.1875 $15,926,198 $4,826.12(2)
================================== ====================== ===================== ======================== ====================
</TABLE>
(1) Calculated Pursuant to Rule 457(c).
(2) Of this amount, $2,912.22 was previously paid upon the filing of
preliminary proxy material relating to the same transaction as this
registration statement. Accordingly, the balance of $1,913.90 is being
paid herewith pursuant to Rule 0-11(a)(2).
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
<PAGE>
COMMANDER AIRCRAFT COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
August 5, 1998
The 1998 Annual Meeting of the Shareholders of Commander Aircraft
Company, a Virginia corporation (the "Company"), will be held on Wednesday,
August 5, 1998 at p.m. local time at The Watergate Hotel, 2650 Virginia Avenue,
N.W., Washington, D.C. for the following purposes:
1. To consider and act upon an Agreement and Plan of Merger
(the "Merger Agreement") providing for the merger (the "Merger") of the Company,
a Virginia corporation, with and into a wholly owned subsidiary of Aviation
General, Incorporated, a Delaware corporation to be organized prior to the
Merger ("Aviation General"), pursuant to which all of the Company's shareholders
will become shareholders of Aviation General on a share-for-share basis, thus
changing the Company from a Virginia operating company to a Delaware holding
company.
2. To elect a Board of three Directors.
3. To consider and act upon an amendment to the Company's 1993
Stock Option Plan to increase the number of shares of Common Stock that may be
issued pursuant to stock options granted thereunder by 500,000 shares.
4. To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
These items are more fully described in the Proxy Statement/Prospectus
accompanying this Notice.
Only shareholders of record at the close of business on June 29, 1998
are entitled to notice of and to vote at the meeting.
A majority of the Company's outstanding shares must be represented at
the meeting (in person or by proxy) to transact business. To assure proper
representation at the meeting, please mark, sign, and date the enclosed proxy
and mail it promptly in the enclosed self-addressed envelope. Your proxy will
not be used if you revoke such proxy either before or at the meeting.
Stephen R. Buren
Chief Financial Officer
Dated: , 1998
IF YOU ARE UNABLE TO BE PERSONALLY PRESENT, PLEASE SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE. YOUR VOTE IS IMPORTANT.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT/PROSPECTUS
COMMANDER AIRCRAFT COMPANY AVIATION GENERAL INCORPORATED
PROXY STATEMENT PROSPECTUS
This Proxy Statement/Prospectus is being furnished to the shareholders
of the Company in connection with the proposed merger of the Company with and
into a wholly owned subsidiary of Aviation General, pursuant to which all of the
Company's shareholders will become shareholders of Aviation General on a
share-for-share basis, thus changing the Company from a Virginia operating
company to a Delaware holding company. It is also being furnished to the
shareholders of the Company in connection with the Annual Meeting of
Shareholders of the Company
This Proxy Statement/Prospectus constitutes (i) the Proxy Statement of
the Company with respect to the solicitation of proxies by the Board of
Directors of the Company for use at the Company's Annual Meeting of Shareholders
at which the holders of the Company Common Stock will be asked to approve the
Merger, elect three directors, and approve an increase in the number of shares
of Common Stock that may be issued pursuant to stock options granted under the
Company's 1993 Stock Option Plan and (ii) the Prospectus of Aviation General
with respect to the shares of Aviation General Common Stock to be issued to the
Company shareholders upon consummation to the Merger.
---------------
THE SHARES OF AVIATION GENERAL COMMON STOCK TO BE ISSUED IN
CONNECTION WITH THE MERGER HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE
---------------
The date of this Proxy Statement/Prospectus, and the approximate date on which
it is first being mailed to shareholders, is , 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In accordance
with the Exchange Act, the Company files reports, proxy statements, and other
information with the Securities and Exchange Commission (the "Commission").
Aviation General has filed a Registration Statement on Form S-4 (the
"Registration Statement") with the Commission under the Securities Act of 1933,
as amended (the "Securities Act") with respect to the shares of Aviation General
Common Stock to be issued upon consummation of the Merger. This Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits thereto, certain portions of which have
been omitted as permitted by the rules and regulations of the Commission. Copies
of the Registration Statement (including such omitted portions) are available
from the Commission upon payment of prescribed rates. For further information,
reference is made to the Registration Statement and the exhibits filed
therewith. Statements contained in this Proxy Statement/Prospectus relating to
the contents of any contract or other document referred to herein or therein are
not necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement or such other document, each such statement being qualified in all
respects by such reference.
This filed material can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the Commission:
Chicago Regional Office (Suite 1400, Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661) and New York Regional Office (Seven World Trade Center,
New York, New York 10048). Copies of such material may be obtained by mail from
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,
such material can be inspected at the offices of the National Association of
Securities Dealers, Inc. (the "NASD"), 1735 K Street, N.W., Washington D.C.
20006. Such material may also be accessed through the Commission's home page on
the World Wide Web at http:/www.sec.gov.
DOCUMENTS INCORPORATED BY REFERENCE
This Proxy Statement/Prospectus incorporates by reference documents
relating to the Company that are not presented herein or delivered herewith.
Such documents (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference) are available to any person to whom this
Proxy Statement/Prospectus is delivered, on written or oral request, without
charge, from Commander Aircraft Company, 7200 Northwest 63rd Street, Bethany,
Oklahoma 73008, Attention: Stephen R. Buren, Chief Financial Officer, Telephone:
(405) 495-8080. In order to ensure timely delivery of the documents, any such
request should be made by , 1998. Copies of documents so requested will be
delivered by first class mail, postage paid. Copies of the Company's 1997 Annual
Report and its quarterly report on Form 10-Q are being delivered with this Proxy
Statement/Prospectus.
The following documents are incorporated by reference herein:
1. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998, as amended on June 8, 1998 (Commission File No.
0-21540).
2
<PAGE>
2. The Company's Annual Report on Form 10-K for the year ended
December 31, 1997. (Commission File No. 0-21540).
No person is authorized to give any information or make any representation not
contained in this Proxy Statement/Prospectus, and, if given or made, such
information or representation should not be relied upon as having been
authorized. This Proxy Statement/Prospectus does not constitute an offer to
sell, or a solicitation of an offer to purchase, the securities offered by this
Proxy Statement/Prospectus, or the solicitation of a proxy, in any jurisdiction,
to or from any person to whom it is unlawful to make such offer or solicitation
of an offer or proxy solicitation in such jurisdiction. Neither the delivery of
this Proxy Statement/Prospectus nor any distribution of securities made
hereunder shall, under any circumstances, create an implication that there has
been no change in the affairs of the Company since the date of this Proxy
Statement/Prospectus.
3
<PAGE>
INFORMATION CONCERNING SOLICITATION AND VOTING
The enclosed proxy is solicited on behalf of the Board of Directors of
Commander Aircraft Company (the "Company") for use at the Annual Meeting of
Shareholders to be held Wednesday, August 5, 1998 at p.m. local time, or any
adjournment or postponement thereof. The Annual Meeting will be held at The
Watergate Hotel, 2650 Virginia Avenue, N.W., Washington, D.C. The Company's
principal offices are located at 7200 Northwest 63rd Street, Hangar Eight, Wiley
Post Airport, Bethany, Oklahoma 73008, and its telephone number is (405)
495-8080. These proxy solicitation materials will be mailed to shareholders on
or about , 1998.
Shareholders of record at the close of business on June 29, 1998 are
entitled to notice of, and to vote at, the Annual Meeting. On June 29, 1998,
7,280,548 shares of the Company's common stock were issued and outstanding. Each
share of common stock outstanding on the record date is entitled to one vote.
Votes Required for Approval
The vote required for approval of the Merger Agreement and the Merger
is two thirds of the outstanding shares of Common Stock entitled to vote
thereon. The three nominees for director receiving a plurality of the votes cast
at the meeting in person or by proxy shall be elected. The amendment to the 1993
Stock Option Plan and all other matters will be approved if the votes cast at
the meeting in person or by proxy favoring the action exceed the votes cast
opposing the action. Abstentions and broker non-votes will not be treated as
votes cast and therefore will have no effect on the outcome of the matters to be
voted on at the Annual Meeting.
Any person may revoke a proxy at any time before its use by delivering
to the Company a written revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person.
The cost of this solicitation will be borne by the Company. The Company
may reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally, by telephone or otherwise.
Deadline for Receipt of Shareholder Proposals for 1999 Annual Meeting
Proposals of shareholders which are intended to be presented by such
shareholders at the Company's 1999 Annual Meeting must be received by the
Company no later than January 5, 1999.
4
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of April 13, 1998 certain information
with respect to the beneficial ownership of the Company's Common Stock by (i)
any person (including any "group" within the meaning of Rule 13d-5 of the
Exchange Act known by the Company to be the beneficial owner of more than 5% of
the Company's voting securities, (ii) each director and each nominee for
director to the Company, (iii) each of the executive officers named in the
Summary Compensation Table appearing herein, and (iv) all executive officers and
directors as a group.
<TABLE>
<CAPTION>
Number Percent
Name of Shares of Total
<S> <C> <C>
Special Situation Investment Holdings, Ltd.............................................. 4,968,868 68.2%
c/o KuwAm Corporation
2600 Virginia Avenue, N.W.
Washington, D.C. 20037 (1)
Special Situation Investment Holdings, L.P. II.......................................... 373,000 5.1%
c/o KuwAm Corporation
2600 Virginia Avenue, N.W.
Washington, D.C. 20037 (1)
KuwAm Corporation....................................................................... 5,515,868 75.8%
2600 Virginia Avenue, N.W.
Washington, D.C. 20037 (1)
Mishal Yousef Saud Al Sabah (2)(4)...................................................... 468,327 6.4%
Wirt D. Walker, III (3)(4).............................................................. 5,914,790 81.2%
N. Gene Criss (4)....................................................................... 113,441 1.4%
Stephen R. Buren (4).................................................................... 22,100 *
Dean N. Thomas (4)...................................................................... 20,000 *
All Officers and Directors as a Group (5 persons) (5)................................... 6,538,658 89.8%
</TABLE>
* Less than one percent
(1) Special Situation Investment Holdings, Ltd. ("SSIH"), Special Situation
Investment Holdings, L.P. II ("SSIH II") and KuwAm Corporation are members
of a "group" within the meaning of Rule 13d-5 under the Securities and
Exchange Act of 1934, as amended (the "KuwAm Group"). KuwAm Corporation, a
Washington, D.C. based private investment firm, is the general partner of
SSIH, the Company's majority shareholder, and SSIH II. The shareholders of
KuwAm include Wirt D. Walker, III, the Chairman and a director of the
Company, and Mishal Yousef Al Sabah, a director of the Company. Mr. Walker
is also the Managing Director of KuwAm. The KuwAm Group consists of the
following members having the following holdings: SSIH, 4,968,868 shares;
SSIH II, 373,000 shares; KuwAm, 174,000 shares; Mr. Walker, 330,590 shares;
Mr. Walker's son, 15,000 shares; Mr. Al Sabah, 246,828 shares; Fifth Floor
Company for General Trading & Contracting ("Fifth Floor Company"), 161,500
shares. Each member of the KuwAm Group disclaims beneficial ownership of
shares owned by the other group members, except that Mr. Walker has sole
voting and dispositive power with respect to the shares owned by him and by
SSIH, SSIH II, KuwAm and by his son, and Mr. Al Sabah has sole voting and
dispositive power with respect to the shares owned by him and Fifth Floor
Company.
5
<PAGE>
(2) Includes 161,500 shares owned by Fifth Floor Company of which Mr. Al Sabah
is a principal. Does not include shares that Mr. Al Sabah may be deemed to
own beneficially by virtue of his membership in the KuwAm Group.
(3) Includes 15,000 shares owned by Mr. Walker's son. Mr. Walker also has sole
voting and dispositive power with respect to shares owned by SSIH, SSIH II
and KuwAm. Also includes shares Mr. Walker may be deemed to own
beneficially by virtue of his membership in the KuwAm Group.
(4) Includes shares issuable upon exercise of options that are exercisable
within 60 days, as follows: Mr. Al Sabah, 59,999 shares; Mr. Walker, 53,332
shares; Mr. Criss, 113,331 shares; Mr. Buren, 15,000 shares; and Mr.
Thomas, 20,000 shares.
(5) At April 13, 1998, executive officers and directors of the Company as a
group (5 persons) held options to purchase an aggregate of 498,333 shares
of common stock, representing approximately 72% of outstanding options at
that date. The numbers set forth in this table include an aggregate of
261,662 shares underlying options exercisable within 60 days of such date.
6
<PAGE>
PROPOSAL 1 - THE MERGER
The following discussion summarizes certain aspects of the Merger. This
summary is not complete and is qualified by reference to the Merger Agreement, a
copy of which is attached to this Proxy Statement/Prospectus as Annex A.
General
Shareholders are being asked to approve the Merger Agreement and the
Merger pursuant to which the Company, a Virginia corporation, will merge with
and into a wholly owned subsidiary of Aviation General, a Delaware corporation
to be organized prior to the Merger. If the Merger is approved, the Company will
become a wholly owned subsidiary of Aviation General and the Company's
shareholders will receive one share of Aviation General Common Stock in exchange
for each share of the Company Common Stock owned by them, thus reorganizing the
Company into a Delaware holding company.
The Merger will not affect the relative voting rights or ownership
interests of shareholders. The members of Aviation General's Board of Directors
will be the same as the members of the Company's Board of Directors. Due to
certain differences between the Delaware General Corporation Law (the "DGCL")
and the Virginia Stock Corporation Act (the "VSCA"), however, not all of the
rights of shareholders will remain the same. See "-- Comparison of Shareholders'
Rights." In addition, the Certificate of Incorporation of Aviation General
("Aviation General's Charter") authorizes the issuance of 20,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock, while the Articles of
Incorporation of the Company (the "Company's Charter") authorizes the issuance
of only 10,000,000 shares of Common Stock and 20,000 shares of Series A
Preferred Stock. See "-- Increase in Authorized Common Stock."
The Company's Board of Directors has unanimously approved the Merger
Agreement and the Merger subject to shareholder approval. Shareholder approval
is the only condition precedent to the consummation of the Merger.
Information Concerning Aviation General
Aviation General will be organized prior to completion of the Merger.
Upon organization, it will have no assets, liabilities, or operations. Following
completion of the Merger, it will have no assets other than the stock of the
Company, no liabilities, and no operations independent of those of the Company.
Thus, financial statements of Aviation General following the Merger will be
virtually identical to those of the Company prior to the Merger. Accordingly,
historical financial statements of Aviation General and pro forma financial
statements reflecting completion of the Merger have not been included in this
Proxy Statement/Prospectus.
Reasons for the Merger
The Company currently manufactures, markets and provides support
services for its line of single engine, high performance, aircraft, which
includes the Commander 114B, the Commander 114TC turbo charged, and the
Commander 114AT all-purpose trainer. To a lesser extent, it also provides,
through its aviation services division, aircraft consulting, brokerage, and
refurbishment services for single engine, twin engine, turbine and jet general
aviation aircraft. The Company has announced that it intends to expand its
aviation services division and pursue acquisitions. See the Company's 1997
Annual Report,
7
<PAGE>
a copy of which accompanies this Proxy Statement/Prospectus. The Board of
Directors believes that the Merger will enhance the Company's ability to pursue
these plans because it will (i) result in an improved organizational and capital
structure and (ii) change its domicile from the Commonwealth of Virginia to the
State of Delaware, which the Company believes has a more flexible and
predictable body of corporate law. The Board of Directors also believes that the
Company's new name, Aviation General, Incorporated, reflects the Company's
anticipated expansion and diversification of its business. The Merger is not
being proposed in connection with any particular acquisition, and the Company
currently has no agreements, arrangements, or understandings with respect to any
acquisitions.
Improved Organizational and Capital Structure. The Board of Directors
believes that the reorganization from operating company into holding company
structure and the increase in authorized shares of Common Stock will improve its
ability to effectively pursue its expansion strategy. The holding company form
of organization will give Aviation General the ability to structure future
acquisitions in an optimal manner in light of operational and legal
considerations. In addition, there may be circumstances in which it will be
advisable to insulate an acquired business from potential liability of other
operating subsidiaries of the holding company.
The authorized capital stock of the Company currently consists of
10,000,000 shares of Common Stock and 20,000 shares of Class A Preferred Stock.
The authorized capital stock of Aviation General will consist of 20,000,000
shares of Common Stock and 5,000,000 shares of Preferred Stock. As of June 29,
1998, 7,280,548 shares of Common Stock and no shares of Class A Preferred Stock
were issued and outstanding, and an additional 800,000 shares of Common Stock
were reserved for issuance upon the exercise of options and warrants that were
outstanding or were available for issuance under Commander's stock option plan.
As of that date, therefore, 1,919,452 shares of authorized and unissued Common
Stock were unreserved and available for issuance.
The Board of Directors considers it advisable to increase the
authorized capital stock so that additional shares will be available for
issuance in connection with possible future actions, such as financings,
acquisitions, mergers, stock splits, stock dividends, use in employee benefit
plans, and other corporate purposes. Although the Company has no plans to issue
any additional shares of capital stock, having shares available for issuance
generally will allow shares to be issued in the future without the expense and
delay of a shareholders' meeting. The Nasdaq SmallCap Market, on which Aviation
General's Common Stock will trade following the Merger, currently requires
shareholder approval of certain corporate actions as a requirement of continued
listing, including certain acquisitions involving the issuance of Common Stock
in amount equal to or greater than 20% of the shares outstanding prior to the
issuance.
The Board of Directors of Aviation General will be authorized, without
further approval or action by the stockholders, to issue shares of Preferred
Stock in one or more series and to determine the rights, preferences,
privileges, and restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences, sinking
fund terms, and number of shares constituting any series of Preferred Stock or
the designation of such series. The rights of the holders of Common Stock will
generally be subject to the prior rights of the holders of any outstanding
shares of Preferred Stock with respect to dividends, liquidation preferences,
and other matters. Among other things, the Preferred Stock could be issued by
Aviation General to raise capital to finance acquisitions. The Preferred Stock
could have certain anti-takeover effects under certain circumstances. The
issuance of shares of Preferred Stock could enable the Board of Directors to
render more difficult or discourage an attempt to obtain control of Aviation
General by means of a merger, tender offer, or other business
8
<PAGE>
combination transaction directed at Aviation General by, among other things,
placing shares of Preferred Stock with investors who might align themselves with
the Board of Directors, issuing new shares to dilute stock ownership of a person
or entity seeking control of Aviation General, or creating a class or series of
Preferred Stock with class voting rights.
Delaware Corporate Law. For a number of years, the State of Delaware
has had a policy of encouraging incorporation in that state. In furtherance of
that policy, it has adopted comprehensive, modern, and flexible corporate laws,
which it periodically updates and revises to meet changing business needs. As a
result, many corporations have chosen Delaware as their state of domicile. In
addition, Delaware courts have developed a body of case law construing Delaware
law and establishing public policies with respect to corporations incorporated
in Delaware. Thus, organization of Aviation General as a Delaware corporation
should provide greater flexibility, certainty, and predictability with respect
to its corporate affairs.
Comparison of Shareholders' Rights
Aviation General will be incorporated under the laws of the State of
Delaware, while the Company is incorporated under the laws of the Commonwealth
of Virginia. Because the Company's shareholders will receive Aviation General
Common Stock in the Merger and thus will become shareholders of Aviation
General, their rights will be governed by the DGCL and Aviation General's
Charter and Bylaws. The following summary describes all material differences
between the DGCL and Aviation General's Charter and Bylaws, on one hand, and the
VSCE and the Company's Charter and Bylaws, on the other hand. Copies of Aviation
General's Charter and Bylaws have been filed as exhibits to the registration
statement of which this Proxy Statement/Prospectus is part.
Board of Directors. Aviation General's Bylaws provide that the Board of
Directors shall have a minimum of three and a maximum of seven members. The
Company's Bylaws provide for the same minimum and maximum numbers of directors.
The DGCL and the VSCA provide that directors may be removed by
shareholders with or without cause. The Company's and Aviation General's Bylaws
provide that any director or the entire Board of Directors may be removed, with
or without cause, by the holders of a majority of shares of Common Stock
entitled to vote at an election of directors.
In accordance with the DGCL, Aviation General's Bylaws provide that
vacancies and newly created directorships may be filled by a majority of the
directors then in office (even if less than a quorum). In accordance with the
VSCA, the Company's Bylaws provide that a vacancy may be filled by the
shareholders, the board of directors, or a majority of the remaining directors
though less than a quorum.
Under the DGCL, cumulative voting in the election of directors is not
mandatory. Aviation General's Charter does not provide for cumulative voting.
Similarly, under the VSCA, shareholders do not have a right to cumulative voting
unless the articles of incorporation so provide. The Company's Charter does not
provide for cumulative voting.
The DGCL allows a corporation to adopt a classified board of directors
consisting of as many as three classes, without specifying any minimum number
required in each class. Aviation General's Charter does not provide for a
classified Board of Directors. The VSCA similarly allows a corporation's
9
<PAGE>
articles of incorporation to provide for a classified board of directors. The
Company's Charter does not provide for a classified board of directors.
Possible Anti-takeover Effects. Aviation General will be subject to
Section 203 of the DGCL ("Section 203"). Pursuant to Section 203, with certain
exceptions, a Delaware corporation may not engage in any of a broad range of
business combinations, such as mergers, consolidations, and sales of assets,
with an "interested shareholder" for a period of three years from the date that
such person became an interested shareholder unless (i) the transaction that
results in the person's becoming an interested shareholder, or the business
combination, is approved by the board of directors of the corporation before the
person becomes an interested shareholder, (ii) upon consummation of the
transaction which results in the shareholder becoming an interested shareholder,
the interested shareholder owns 85% or more of the voting stock of the
corporation outstanding at the time the transaction commenced (other than
certain excluded shares), or (iii) on or after the date the person becomes an
interested shareholder, the business combination is approved by the
corporation's board of directors and by holders of at least two-thirds of the
corporation's outstanding voting stock, excluding shares owned by the interested
shareholder, at a meeting of shareholders. Under Section 203, an "interested
shareholder" is defined as any person, other than the corporation and any direct
or indirect majority-owned subsidiaries of the corporation, that is (i) the
owner of 15% or more of the outstanding voting stock of the corporation or (ii)
an affiliate or associate of the corporation and the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the three-year
period immediately prior to the date on which it is sought to be determined
whether such person is an interested shareholder. Aviation General has approved
the Company's current 15% shareholders as "interested shareholders."
Under certain circumstances, Section 203 makes it more difficult for a
person who would be an "interested shareholder" to effect various business
combinations with a corporation for a three-year period. The provisions of
Section 203 may encourage persons interested in acquiring Aviation General to
negotiate in advance with Aviation General's Board of Directors because the
shareholder approval requirement would be avoided if a majority of Aviation
General's directors then in office approve either the business combination or
the transaction which results in the person becoming an interested shareholder.
Such provisions also may have the effect of preventing changes in management of
Aviation General. It is possible that such provisions could make it more
difficult to accomplish transactions that shareholders may otherwise deem to be
in their best interests.
As a Virginia corporation, the Company is subject to Section 13.1-725
et seq. of the VSCA ("Section 725") which contains provisions restricting
"Affiliated Transactions." Section 725 requires approval of Affiliated
Transactions between a Virginia corporation and an Interested Shareholder
(defined in Section 725 to include any (i) beneficial owner of more than 10% of
any class of its outstanding voting shares or (ii) an affiliate or associate of
the corporation that at any time within the preceding three years has been an
Interested Shareholder of the corporation) by an affirmative vote of a majority
of the Disinterested Directors (as defined below) and holders of at least
two-thirds of the voting shares other than shares beneficially owned by the
Interested Shareholder as defined in the VSCA. Affiliated Transactions subject
to this approval requirement include, (i) mergers and share exchanges with an
Interested Shareholder, (ii) dispositions of material corporate assets to or
with an Interested Shareholder not in the ordinary course of business, (iii) any
guaranty by the corporation of indebtedness of any Interested Shareholder in an
amount in excess of five percent of the corporation's consolidated net worth,
(iv) dispositions to an Interested Shareholder of an amount of voting shares of
the corporation having an aggregate fair market value in excess of five percent
of the aggregate fair market value of all of the outstanding voting shares
except pursuant to a share dividend or the exercise of rights distributed on a
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<PAGE>
basis affording substantially proportionate treatment to all holders of the same
class or series of voting shares, (v) a dissolution of the corporation proposed
by or on behalf of an Interested Shareholder, or (vi) any reclassification,
including, reverse stock split, recapitalization or merger of the corporation
with its subsidiaries which increases the percentage of voting shares owned
beneficially by an Interested Shareholder by more than 5%. A Disinterested
Director means, with respect to a particular Interested Shareholder, a member of
the corporation's board of directors who was a member on the date on which an
Interested Shareholder became an Interested Shareholder and who was recommended
for election by, or was elected to fill a vacancy and received the affirmative
vote of, a majority of the Disinterested Directors then on the Board. The VSCA
requires that an Affiliated Transaction with an Interested Shareholder occurring
three years or more after the Interested Shareholder becomes an Interested
Shareholder must be approved by the affirmative vote of the holders of
two-thirds of the voting shares (other than those beneficially owned by the
Interested Shareholder) or by a majority of the Disinterested Directors.
Under the VSCA, the special voting requirements do not apply to
Affiliated Transactions proposed after the three year period has expired if the
transaction satisfies the fair-price requirements of the statute. In general,
the fair-price requirement provides that in a two-step acquisition transaction,
the Interested Shareholder must pay the shareholders in the second step either
the same amount of cash or the same amount and type of consideration paid to
acquire the Virginia corporation's shares in the first step.
None of the foregoing limitations and special voting requirements
applies to a transaction with an Interested Shareholder (i) whose acquisition of
shares making such person an Interested Shareholder was approved by a majority
of the Virginia corporation's Disinterested Directors, (ii) who was an
Interested Shareholder on the date the Virginia corporation became subject to
these provisions by virtue of its having 300 shareholders of record, (iii) who
became an Interested Shareholder as a result of acquiring shares by gift,
testamentary bequest or the laws of descent and distribution, or (iv) generally,
who became an Interested Shareholder inadvertently.
These provisions may have the effect of deterring certain takeovers of
Virginia corporations. In addition, the VSCA provides that, by affirmative vote
of a majority of the voting shares other than shares owned by an Interested
Shareholder, a corporation can "opt out" of the Affiliated Transactions
provisions by adopting an amendment to its Articles of Incorporation or Bylaws
providing that the Affiliated Transactions provisions shall not apply to the
corporation. The Company has not "opted out" of the Affiliated Transactions
provisions.
Special Meeting of Shareholders. The DGCL provides that a special
meeting of shareholders may be called by a corporation's board of directors or
by such person or persons as may be authorized by its certificate of
incorporation or bylaws. The VSCA provides that a corporation shall hold a
special meeting of shareholders on call of the chairman of the board of
directors, the president, the board of directors, or the person or persons
authorized to do so by the articles of incorporation or bylaws. Both the
Company's Bylaws and Aviation General's Bylaws provide that a special meeting of
shareholders may be called by the Chairman, the President, or the Board of
Directors.
Shareholder Action in Lieu of Meeting. The DGCL provides that, unless
otherwise provided in a corporation's certificate of incorporation, any action
required or permitted to be taken at an annual or special meeting of
shareholders may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action that would
be taken, is signed by holders of
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<PAGE>
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize such action at a meeting. Aviation General's Charter does
not eliminate the ability of shareholders to take action by consent in lieu of a
meeting.
The VSCA provides that any action required or permitted to be taken at
a meeting of the shareholders of a corporation may be taken without a meeting,
but only with the written consent of all shareholders entitled to vote with
respect to the subject matter thereof. The action shall be evidenced by one or
more written consents describing the action taken, signed by all the
shareholders entitled to vote on the action and included on the corporate
records. The Company's Charter and Bylaws do not provide for, or prohibit,
shareholder action in lieu of a meeting.
Bylaw Amendments by Directors. Under the DGCL, the power to adopt,
amend, or repeal bylaws is vested exclusively in the shareholders entitled to
vote, unless the certificate of incorporation confers such power upon the board
of directors as well. Aviation General's Charter and Bylaws provide that the
Board of Directors is expressly authorized to make, alter or repeal Aviation
General's Bylaws by an affirmative majority vote.
The VSCA provides that the power to alter, amend or repeal bylaws is
vested in the board of directors, subject to repeal or change by action of the
shareholders, provided such powers are reserved to the shareholders by the
articles of incorporation. The Company's Charter does not reserve such powers to
the shareholders.
Payment of Dividends; Share Repurchases. Under the DGCL, a corporation
may declare and pay dividends either out of its surplus or, if there is no
surplus, out of its net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. Aviation General's Charter provides
that, subject to the provisions of applicable law and the preferences of any
preferred stock, the holders of Aviation General Common Stock shall be entitled
to receive dividends at such times and in such amounts as determined by the
Board of Directors.
The DGCL permits a corporation to purchase or redeem shares of its own
stock when its capital is not impaired and such purchase or redemption would not
cause any impairment of the capital of the corporation, except that a
corporation may purchase or redeem out of capital any of its preferred shares if
such shares will be retired upon their acquisition and the capital of the
corporation will be reduced in accordance with the DGCL. Under the DGCL, a
corporation may not purchase any of its redeemable shares for more than the
price at which they may then be redeemed.
Under the VSCA, a board of directors may authorize and the corporation
may make distributions to its shareholders, subject to restrictions by the
articles of incorporation, except that no distribution may be made if, after
giving it effect, the corporation would not be able to pay its debts as they
become due in the usual course of business or if the corporation's total assets
would be less than the sum of its total liabilities plus (unless the articles of
incorporation permit otherwise) the amount that would be needed, if the
corporation were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of shareholders whose preferential rights
are superior to those receiving the distribution. The VSCA permits a corporation
to acquire its own shares. Such acquired shares constitute authorized but
unissued shares of the same class, but undesignated as to series.
Director Liability; Reliance. The DGCL and the VSCA are similar with regard
to limitations on director liability. The DGCL and the VSCA permit a corporation
to include in its certificate or articles
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<PAGE>
of incorporation, as the case may be, a provision eliminating or limiting a
director's liability to the corporation or its shareholders for monetary damages
for breaches of fiduciary duty, including conduct which could be characterized
as negligence or gross negligence. The DGCL and the VSCA expressly provide,
however, that liability for breaches of duty of loyalty, acts or omissions not
in good faith or involving intentional misconduct or knowing violations of the
law, the unlawful purchase or redemption of stock or payment of unlawful
dividends or the receipt of improper personal benefits cannot be eliminated or
limited in this manner. Both statutes further provide that no such provision
shall eliminate or limit the liability of a director for any act or omission
occurring prior to the date when such provision becomes effective. Aviation
General's Charter contains provisions that eliminate the personal liability of
the directors and officers to the extent permitted under the DGCL. The Company's
Charter contains similar provisions.
Under the DGCL, a member of the board of directors of a corporation or
a member of any committee designated by the board of directors will, in the
performance of his duties, be fully protected in relying in good faith upon the
records of the corporation and upon such information, opinions, reports, or
statements presented to the corporation by any of the corporation's officers or
employees, or committees of the board of directors, or by any other person as to
matters the member reasonably believes are within such other person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the corporation. The VSCA does not contain a similar
provision.
Both the DGCL and the VSCA provide that a corporation may purchase and
maintain insurance on behalf of any individual who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in such capacity, whether or
not the corporation would have the power to indemnify him against such
liability.
Indemnification. The DGCL permits, but does not require, a corporation
to indemnify its directors, officers, employees or agents and expressly provides
that the indemnification provided for under the DGCL shall not be deemed
exclusive of any indemnification right under any bylaw, vote of shareholders or
disinterested directors, or otherwise. The DGCL permits indemnification against
expenses and certain other liabilities arising out of legal actions brought or
threatened against such persons for their conduct on behalf of the corporation,
provided that each such person acted in good faith and in a manner that he
reasonably believed was in or not opposed to the corporation's best interests
and in the case of a criminal proceeding, had no reasonable cause to believe his
or her conduct was unlawful. The DGCL does not allow indemnification of
directors in the case of an action by or in the right of the corporation
(including shareholder derivative suits) unless the directors successfully
defend the action or indemnification is ordered by the court. Aviation General's
Charter and Bylaws provide for indemnification to the fullest extent authorized
by the DGCL and, therefore, these statutory indemnification rights are available
to the directors, officers, employees and agents of Aviation General.
The VSCA requires a corporation to indemnify its directors and officers
against reasonable expenses incurred by them in defense of any proceeding to
which they are made a party because of their position with the corporation and
in which they prevail, unless the corporation's articles of incorporation limit
this right. The VSCA also authorizes a corporation to more broadly indemnify its
directors and officers, and to extend such indemnification to its employees and
agents, and to make additional provisions for advances and reimbursement of
expenses to them, subject to certain limitations, including restrictions against
indemnification for willful misconduct or knowing violation of the criminal law.
The
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<PAGE>
VSCA does not permit a corporation to indemnify its directors, however, in
connection with a proceeding (i) by or in the right of the corporation in which
the director was adjudged liable to the corporation or (ii) in which a director
has been adjudged liable on the basis that a benefit was improperly received by
him. These statutory indemnification rights of directors and officers are not
limited by the Company's Charter and are, therefore, available to the Company's
directors and officers. In addition, the Company's Charter provides that the
Company's Board of Directors is empowered to cause the Company to indemnify any
person, other than a director or officer of the Company, to the same extent as
it would indemnify a director or officer.
Control Share Acquisitions. The VSCA provides that shares acquired in a
transaction that would cause the acquiring person's voting strength to cross any
of three thresholds (20%, 33% or 50%) have no voting rights unless granted by a
majority vote of shares not owned by the acquiring person or any officer or
employee-director of the corporation. The acquiring shareholder can request a
special meeting of the shareholders to consider granting voting rights to shares
that he owns or proposes to acquire. The request generally must be voted on at a
special meeting of shareholders to be called within 10 days thereafter. Any
special meeting to consider whether to grant voting rights must be held no
earlier than 30 days and no later than 50 days from the date of the request.
Delaware does not have a control share acquisition statute.
Dissenters' Rights. Pursuant to both the VSCA and the DGCL, a
shareholder of a corporation engaging in certain transactions may, under certain
circumstances, dissent from a merger, consolidation or other transaction and
demand payment in cash in the amount of the fair value of his or her shares (as
appraised pursuant to judicial proceedings) in lieu of the consideration such
shareholder would otherwise receive in such transaction.
Under the DGCL, shareholders of a corporation are entitled to appraisal
rights only with respect to certain statutory mergers or consolidations. Unless
otherwise provided in the certificate of incorporation, the DGCL does not grant
appraisal rights to (i) shareholders with respect to a merger or consolidation
of a corporation, the shares of which are either listed on a national securities
exchange or are held of record by more than 2,000 holders, if such shareholders
receive only shares of the surviving corporation or shares of any other
corporation which are either listed on a national securities exchange or held of
record by more than 2,000 holders or (ii) shareholders of a corporation
surviving a merger if no vote of the shareholders of such corporation is
required to approve the merger.
Under the VSCA, shareholders of a corporation are entitled to dissent
from certain mergers, consolidations or share exchanges by such corporation, or
upon the disposition of all or substantially all of its assets. However, unless
otherwise provided in the articles of incorporation, shareholders generally have
no appraisal rights with respect to their shares if the shares (i) are listed on
a national securities exchange or (ii) held by at least 2,000 record
shareholders.
Dissenters' Rights in Connection with the Merger
Under the VSCA, the Company's shareholders objecting to the Merger
Agreement and the Merger do not have any dissenters' rights of appraisal.
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Federal Income Tax Consequences of the Merger
The Merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended, and thus
neither the Company nor Aviation General will recognize any gain or loss as a
result of the Merger and no gain or loss will be recognized by shareholders upon
their receipt of shares of Aviation General Common Stock in exchange for their
shares of the Company Common Stock.
Effective Date; Termination and Abandonment
The Merger Agreement provides that, subject to approval and adoption by
the shareholders of the Company, the Effective Date shall be the date on which
articles of merger are filed with the Virginia State Corporation Commission and
a certificate of merger relating to the Merger is filed with the Secretary of
State of Delaware. The Company anticipates that the certificate will be filed
promptly after the 1998 Annual Meeting. No State or Federal regulatory
requirements or approvals must be complied with or obtained in order to
consummate the Merger.
The Merger Agreement may be terminated and abandoned by the Board of
Directors of the Company or the Board of Directors of Aviation General at any
time prior to the consummation of the Merger. In addition, the Merger Agreement
may be amended at any time prior to the Effective Date with the mutual consent
of the Boards of Directors of the Company and Aviation General, provided that
the Merger Agreement may not be amended following its adoption by the
shareholders of the Company in any manner that would be prohibited by applicable
law.
Conversion of Shares
At the Effective Date, each share of Company Common Stock will be
converted into one share of Aviation General Common Stock. The holder of each
certificate that immediately prior to the Effective Date evidenced shares of
Company Common Stock shall receive upon surrender for cancellation of such
certificate a new certificate evidencing the same number of shares of Aviation
General Common Stock.
IT WILL NOT BE NECESSARY FOR SHAREHOLDERS OF THE COMPANY TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES FOR STOCK CERTIFICATES OF AVIATION GENERAL. Until
surrendered for cancellation, such certificates will be deemed for all corporate
purposes to evidence ownership of Aviation General Common Stock into which
Company Common Stock was converted at the Effective Date.
It is expected that at the Effective Date Aviation General Common Stock
will be listed on the Nasdaq SmallCap Market.
Recommendation of Board of Directors
The Company's Board of Directors unanimously recommends that
shareholders vote "FOR" the Merger Agreement and the Merger.
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<PAGE>
PROPOSAL 2: ELECTION OF DIRECTORS
Nominees
A board of three directors is to be elected at the Annual Meeting.
Unless marked to the contrary, all properly signed and returned proxies will be
voted for the election of management's three nominees named below, all of whom
are presently directors of the Company. If any nominee is unable or, for good
cause, declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for any nominee designated by the present Board of
Directors to fill the vacancy. The Company is not aware of any nominee who will
be unable or will decline to serve as a director. The term of office of each
person elected as a director will continue until the next Annual Meeting of
Shareholders or until a successor has been elected and qualified. Upon
consummation of the Merger, each person elected as a director of the Company
will serve as a director of Aviation General.
The following sets forth certain information regarding each of the
nominees for election as director:
Wirt D. Walker, III, age 52, has served as a director of the
Company from September 1989 to February 1991, and as Chairman of the
Board of Directors since May 1991. Mr. Walker served as the Company's
Chief Executive Officer from May 1991 to August 1991 and from December
1992 to May 1995. Since 1982, Mr. Walker has served as a director and
the Managing Director of KuwAm Corporation, a private investment firm.
He is the Chairman of STRATESEC Incorporated, a publicly traded company
that provides technology-based security solutions for medium and large
commercial and government facilities, and Universal Communications,
Inc., a privately held advertising and marketing communications
company.
N. Gene Criss, age 55, has served as President and Chief
Executive Officer since May 1995. Mr. Criss served as President and
Chief Operating Officer from December 1994 to May 1995, as Executive
Vice President and Chief Operating Officer from November 1992 to
December 1994 and as a director since August 1993. He served as Vice
President, Manufacturing at American General Aircraft Company, a
manufacturer of light single engine general aviation aircraft from July
1992 to November 1992. Prior to July 1992, Mr. Criss held a variety of
positions of increasing responsibility during a twenty-two year career
at Piper Aircraft Corporation, including service as Director of
Materials and Manufacturing Support from 1982 to June 1992. During his
tenure with Piper Aircraft Corporation, Mr. Criss was responsible for
corporate scheduling, production and material control, inventory
control and engineering administration.
Mishal Yousef Saud Al Sabah, 37, is a private investor who has
been involved in a broad range of investment activities in the United
States and overseas for the past eighteen years. Mr. Al Sabah has been
a director of the Company since 1991. He has served as the Chairman of
the Board of Directors of KuwAm Corporation since 1982 and is a
director of STRATESEC Incorporated and Universal Communications, Inc.
Director Compensation
Directors are paid an annual fee of $20,000, payable in equal quarterly
installments, for services as a director. Such fees are prorated when a director
does not serve for a full year. Directors receive
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<PAGE>
no additional compensation for committee participation or attendance at
committee meetings, other than reimbursement of travel and lodging expenses.
The 1993 Stock Option Plan provides for the automatic annual grant of a
stock option to purchase 20,000 shares of common stock to each eligible
non-employee and employee director of the Company; non-employee directors will
automatically receive a nonstatutory stock option and employee directors will
automatically receive an incentive stock option. The 1997 annual automatic
options were granted to each of the three directors on December 20, 1997.
Board Meetings and Committees
The Board of Directors held a total of four meetings during the fiscal year
ended December 31, 1997. The Board has two committees: the Audit Committee and
the Compensation Committee.
The Audit Committee, comprised of Messrs. Walker and Al Sabah,
recommends the selection of the Company's independent accountants and approves
the scope of the audit to be conducted. The Committee is primarily responsible
for reviewing and evaluating the Company's accounting practices and its systems
of internal accounting controls. The Audit Committee held one meeting during
fiscal 1997.
The Compensation Committee recommends the amount and type of
compensation to be paid to the Company's executive officers, reviews the
performance of the Company's key employees, and administers and determines
distributions under the Company's Profit Sharing Plan. The Compensation
Committee will also determine the number of shares, if any, to be granted each
employee under such plan and the terms of such grants. The Compensation
Committee held one meeting during 1997.
No director attended fewer than 75% of all meetings of the Board of
Directors held during fiscal 1997 or of all meetings of any committee upon which
such director served during fiscal 1997.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is comprised of Mr. Walker and Mr. Al Sabah;
neither are employees of the Company. They are not eligible to participate in
the Company's Profit Sharing Plan. Both receive compensation for services as a
director (See "Director Compensation"). Mr. Walker served as Chief Executive
Officer of the Company from December 1992 to May 1995. Messrs. Walker and Al
Sabah are directors and shareholders of KuwAm Corporation, the corporate general
partner of SSIH, the majority shareholder of the Company.
Other Officers
Stephen R. Buren, age 54, has served as Chief Financial Officer of the
Company since May 1991 and as Vice President and Treasurer of the Company since
1990. He was Vice President, Finance and Treasurer of Mycro-Tek, Inc. from 1987
to 1990, and was Vice President, Finance of Health Technologies, Inc. from 1986
to 1987. From 1974 to 1986 he held division and corporate controllership
positions at Cessna Aircraft Company.
Dean N. Thomas, age 43, has served as Senior Vice President -- Sales
and Marketing since January 1995. He was President of Strategic Marketing
Resources, a marketing consulting firm, from
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1990 to 1994, and held various positions at Piper Aircraft Corporation from 1981
to 1990, including Director of Marketing and Director of Product Development.
18
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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows certain information concerning the
compensation of each of the Company's executive officers for services rendered
in all capacities to the Company for the fiscal years ended 1997, 1996, and
1995.
<TABLE>
<CAPTION>
Long-term Compensation
Securities
Underlying
Options All Other
Annual Compensation Awarded Compensation
Year Salary(1) Bonus(1) (in shares) (2)
<S> <C> <C> <C> <C> <C>
N. Gene Criss...................................... 1997 $125,000 -- 60,000 $ 20,000
President, Chief Executive 1996 $125,000 -- 60,000 $ 20,000
Officer and Director (3) 1995 $125,000 -- 60,000 $ 10,000
Stephen R. Buren................................... 1997 $ 81,923 -- 10,000 --
Vice President, Chief Financial 1996 $ 80,000 -- 25,000 --
Officer and Treasurer 1995 $ 79,039 -- 10,000 --
Dean N. Thomas..................................... 1997 $ 75,000 $ 18,500 10,000
Senior Vice President-- Sales and 1996 $ 55,692 $ 12,200 10,000 --
Marketing 1995 $ 51,603 $ 4,397 20,000 --
Wirt D. Walker, III................................ 1997 -- -- 20,000 $ 20,000
Chairman (4) 1996 -- -- 20,000 $ 20,000
1995 -- -- 20,000 $ 10,000
</TABLE>
(1) Salary and bonus payments include voluntary salary reduction contribution
to the Company's 401(k) Savings Plan.
(2) Amounts paid as director fees unless otherwise indicated.
(3) Mr. Criss joined the Company in November 1992 and became a director in
August 1993. His annual salary is $125,000.
(4) Mr. Walker served as Chief Executive Officer of the Company from December
1992 to May 1995, for which he received no compensation.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-end Option
Values
The following table shows the number of shares of common stock acquired
by the executive officers upon the exercise of stock options during fiscal 1997,
the new value realized at exercise, the number of shares of common stock
represented by outstanding stock options held by each executive officer as of
December 31, 1997 and the value of such options based on the closing price of
the Company's Common Stock on December 31, 1997, which was $1 13/16 per share.
19
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<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Number of Value Underlying Unexercised In-the-Money Options
Shares Acquired Realized Options at FY End (#)(1) at FY End ($)(2)
on Exercised (#) ($)(3) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Wirt D. Walker, III.............. -- -- 53,333/ 40,000 $0/0
N. Gene Criss.................... -- -- 100,000/ 120,000 $0/0
Stephen R. Buren................. -- -- 15,000/ 30,000 $0/0
Dean N. Thomas................... -- -- 16,667/ 23,333 $0/0
</TABLE>
(1) Represents the total number of shares subject to stock options held by
each executive officer. These options were granted at various dates
during fiscal years 1993 through 1997 and are exercisable on various
dates beginning in 1994 and expiring in 2002.
(2) Represents the difference between the exercise price and $1 13/16 which
was the December 31, 1997 closing price. Stock option exercise prices
range from $2.00 to $5.25, therefore no options were in-the-money at
December 31, 1997.
(3) Aggregate market value of the shares covered by the option at the date
of exercise, less the aggregate exercise price. No options were
exercised in 1997.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
is composed of Wirt D. Walker, III and Mishal Yousef Saud Al Sabah. Both are
independent outside directors. The Committee is charged with the responsibility
for reviewing the performance and approving the compensation of key executives
and for establishing general compensation policies and standards for reviewing
management performance. The Committee also reviews both corporate and key
executive performance in light of established criteria and goals and approves
individual key executive compensation.
Compensation Philosophy
The executive compensation policy of the Company is to provide
competitive levels of compensation that advance the Company's annual and
long-term performance objectives, reward corporate performance, and assist the
Company in attracting, retaining and motivating highly qualified executives. The
framework for the Committee's executive compensation programs is to establish
base salaries which are competitive with similar sized companies and to create
incentives for excellent performance by providing executives with the
opportunity to earn additional remuneration linked to the Company's
profitability. The incentive plan goals are designed to improve the
effectiveness and enhance the efficiency of Company operations and to create
value for the shareholders. It is also the Company's policy to encourage share
ownership by executive officers and non-employee directors through the grant of
stock options.
Components of Compensation
The compensation package of the Company's executive officers consists
of base annual salary, participation in the Company's Profit Sharing Plan and
stock option grants.
At executive levels, base salaries are reviewed but not necessarily
increased annually. Base salaries are fixed at levels slightly below competitive
amounts paid to individuals with comparable qualifications, experience and
responsibilities engaged in similar businesses as the Company, based on
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<PAGE>
the experience of the Committee members, directors and employees of the Company
within the aviation industry.
The Company has adopted a Profit Sharing Plan which is intended to
advance the interests of the Company by providing eligible employees with annual
incentive to increase the productivity of the Company. Unless the Board of
Directors determines otherwise prior to the end of a fiscal year, the Profit
Sharing Plan provides for payment to selected employees of an aggregate of 10%
of the consolidated pre-tax profits of the Company for the fiscal year. The
Compensation Committee administers the Profit Sharing Plan and selects the
employees who will receive profit sharing awards. Profit sharing awards are
based upon an employee's salary, level of responsibility and attainment of
performance goals and objectives. Profit sharing awards are paid as soon as
practicable following the end of the fiscal year.
The Company uses stock options both to reward past performance and to
motivate future performance, especially long-term performance. The Committee
believes that through the use of stock options, executive interests are directly
tied to enhancing shareholder value. Stock options are granted at fair market
value as of the date of grant and generally have a term of three to five years.
The options vest 33% per year, beginning on the first anniversary date of the
grant. The stock options provide value to the recipients only when the market
price of the Company's common stock increases above the option grant price and
only as the shares vest and become exercisable.
Section 162(m) of the Internal Revenue Code, which provides for a
$1,000,000 limit on the deductibility of compensation, presently is not
applicable to the Company. The Committee will review this policy with respect to
Section 162(m) when and if the section is applicable in the future.
Option Grants in Last Fiscal Year
The Committee approved the following stock option grants for the
executive officers during fiscal year 1997.
<TABLE>
<CAPTION>
Percent of Potential Realizable
Number of Total Value at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Price Appreciation for
Options Employees in Exercise Expiration Option Term
Granted(1) Fiscal Year Price Date 5% 10%
------------------------ ------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Wirt D. Walker, III................ 20,000 10% $ 2.00 12/20/02 $ 11,051 $ 24,420
N. Gene Criss...................... 40,000 19% $ 2.25 1/06/00 $ 14,186 $ 29,790
20,000 10% $ 2.00 12/20/02 $ 11,051 $ 24,420
--------- ------
60,000 29%
Stephen R. Buren................... 10,000 5% $ 2.50 10/11/00 $ 3,941 $ 8,275
Dean N. Thomas..................... 10,000 5% $ 2.50 10/11/00 $ 3,941 $ 8,275
</TABLE>
(1) Each option is non-transferable; vests as to 33% of the shares covered
by such option over three years, commencing on the first anniversary of
the date of issuance; is canceled prior to vesting in the event the
holder either resigns from the Company or is terminated for justifiable
cause; and is void after the date listed under the heading "Expiration
Date." The exercise price of the stock subject to options was equal to
the market value on the date of the grant. The number of shares
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issuable upon exercise of each option is subject to adjustment
subsequent to any stock dividend, split-up, recapitalization or certain
other transactions.
During 1997, Messrs. Walker, Al Sabah and Criss, directors of the Company,
were granted an option to purchase 20,000 shares of common stock pursuant
to the 1993 Stock Option Plan.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and holders of more than ten percent
of the Company's Common Stock to file reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company.
The Company believes that during the fiscal year ended December 31, 1997, its
officers, directors and holders of more than 10% of the Company's Common Stock
complied with all Section 16(a) filing requirements.
Compensation of Chief Executive Officer
The Committee makes decisions regarding the compensation of the Chief
Executive Officer using the same philosophy set forth above. The Committee's
approach in setting Mr. Criss' base compensation, as with that of the Company's
other executives, is to be competitive with other companies within the industry,
taking into consideration company size, operating conditions and compensation
philosophy and performance. Mr. Criss' base salary was not increased during
fiscal 1997. Mr. Criss' fiscal 1997 incentive compensation was earned under the
same performance criteria that were described previously in this report. He was
granted options to purchase a total of 60,000 shares of the Company's common
stock during fiscal 1997, of which 20,000 shares represent the automatic grant
to directors.
COMPENSATION COMMITTEE
Wirt D. Walker, III
Mishal Yousef Saud Al Sabah
22
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PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Corporation
includes in this Proxy Statement a line-graph presentation comparing cumulative,
five year shareholder returns on an indexed basis with (i) a broad equity market
index and (ii) either an industry index or peer group. An initial public
offering of the Company's stock occurred on April 19, 1993. The following graph
compares the percentage change in the cumulative total return of the Nasdaq
Stock Market -- US Index and the Standard & Poor's Aerospace/Defense Industry
Index for a period of 56 months. Total return for the purpose of this graph
assumes reinvestment of all dividends, if any. The stock price information shown
on the graph is not necessarily indicative of future price performance.
COMPARISON OF 56 MONTH CUMULATIVE TOTAL RETURN*
Among Commander Aircraft Company, the Nasdaq Stock Market -- US Index
And the S&P Aerospace/Defense Index
Commander NASDAQ S&P
Aircraft Stock Aerospace/
Company Market--US Defense
4/19/93 100 100 100
12/93 61 113 127
12/94 51 110 137
12/95 38 156 227
12/96 21 192 303
12/97 19 235 312
* $100 invested on 4/19/93 in stock or on 3/31/93 in index; includes
reinvestment of dividends.
CERTAIN TRANSACTIONS
During 1997, the Company sold, on open account, spare parts for an
aggregate of $57,000 to Commander International, a Commander Authorized Sales
and Service Representative located in Dubai that is owned by Mishal Yousef Al
Sabah, a director of the Company. All sales were at prices comparable to sales
to unrelated parties. The maximum amount outstanding under Commander
International's account during 1997 was $2,650,666, and the amount outstanding
as of December 31, 1997 was $1,496,971. The maturity date of the account was
extended until June 30, 1998 and amounts outstanding under the account bear
interest at 1% over the Morgan Guaranty of New York prime rate (9.5% at December
31, 1997), with interest paid quarterly in arrears. During 1997, the Company
received payments of $1,395,000 on the account, of which $186,745 represented
the payment of interest. In light of Commander International's payment history,
which has resulted in a reduction in the amount of the note from $4,224,000 at
December 31, 1995 to its present amount, and the Company's commercial
relationship with Commander International, the Company anticipates that it will
extend the maturity date of the note beyond June 30, 1998. Commander
International was responsible for establishing a market for the Company's
aircraft in the Middle East and in Europe, and to date has been responsible for
the sale of more than 20 of the Company's aircraft.
23
<PAGE>
In January 1997, the Board of Directors of the Company accepted an
offer by the majority shareholder and its affiliates to exchange $2,000,000 of
10% notes payable for 200,000 shares of newly issued common stock effective
February 1, 1997. The repayment of accrued interest outstanding at December 31,
1996 and February 1, 1997 was waived. The maturity date of the remaining
$900,000 notes payable was extended to December 31, 1997 with interest payable
June 30, 1997 and December 31, 1997. Interest paid under the notes to Special
Situation Investment Holdings, Ltd., Special Situation Investment Holdings, L.P.
II and KuwAm Corporation totaled $67,096 for 1997.
In October 1997, the Board of Directors accepted an offer by the
majority shareholder and its affiliates to purchase 360,000 shares of newly
issued common stock for $10.00 per share or an aggregate of $3,600,000. Of the
proceeds $900,000 was used to redeem 10% demand notes due 12/31/97 and
approximately $600,000 was used to repay bank debt.
In February 1998, the Company repurchased a 114B aircraft from
STRATESEC, Incorporated, for $240,000, the fair market value for such an
aircraft. The Company had sold the aircraft to STRATESEC in 1996 for $335,000,
the list price of the aircraft. The majority stockholder of the Company is the
majority stockholder of STRATESEC, and the chairman of the Company is the
chairman of STRATESEC. Since repurchasing the aircraft, the Company [refurbished
it and] sold it for a profit.
In May 1998, the Company purchased $600,000 of convertible subordinated
debentures of STRATESEC. The debentures have an interest rate of 10%, are due on
December 31, 1999 and are convertible into common stock of STRATESEC at $8.50
per share. In connection with its investment in the debentures, the Company was
also issued warrants to purchase 60,000 shares of STRATESEC common stock at an
exercise price of $2.50 per share and a term of three years.
24
<PAGE>
PROPOSAL 3 - AMENDMENT OF 1993 STOCK OPTION PLAN
Introduction
The Board of Directors of the Company has unanimously approved a
resolution, subject to shareholder approval, approving an amendment to the
Company's 1993 Stock Option Plan (the "Plan") to increase the number of shares
of Common Stock that may be issued pursuant to stock options granted thereunder
by 500,000 shares. Before giving effect to the proposed amendment, 104,650
shares of Common Stock remain available for issuance pursuant to the Plan.
The Board of Directors recommends that shareholders vote for the
amendment of the Plan. The Board believes the Plan provides a means for key
employees and directors upon whose judgment and interest the Company is and will
be largely dependent for the successful conduct of its business to increase
their personal ownership in the Company. It is believed that such incentive
awards will further the identification of directors' and key employees'
interests with those of the Company's. No determination has been made as to the
amount of options to be granted to any individual.
A summary of the Company's 1993 Stock Option Plan follows:
Eligibility
All employees of the Company or any parent or subsidiary of the Company
whom the Compensation Committee determines to be key employees are eligible to
receive stock options under the Plan. The Company estimates that it currently
has approximately fifteen such employees (two of whom are officers).
The Plan also provides that both employee directors and non-employee
directors are eligible for automatic grants of options. A non-employee director
is eligible to receive an option under the Plan if he or she is not otherwise an
employee of the Company or any subsidiary and was not an employee of the Company
or subsidiary for a period of at least one year before the date of grant of an
option under the Plan. Two members of the Board presently qualify for the
automatic grant of options under the Plan.
Administration
The Plan is administered by the Compensation Committee, which is
comprised of at least two directors of the Company who are not eligible for
discretionary grants of options under the Plan or any similar plan of the
Company. In addition to having general supervisory and interpretive authority
over the Plan, the Committee determines, upon the recommendation of management
and subject to the terms and limits of the Plan, the employees, if any, to whom
options will be granted, the time at which options are to be granted, the number
of shares to be subject to each option, and the terms and conditions of exercise
of options.
Award of Stock Options
Employees. Options to purchase shares of Common Stock granted to employees
under the Plan may be incentive stock options or nonstatutory stock options.
Incentive stock options qualify for favorable income tax treatment, while
nonstatutory stock options do not. The exercise price of shares
25
<PAGE>
of Common Stock covered by an incentive stock option may not be less than 100%
(or, in the case of an incentive stock option granted to a 10% shareholder,
110%) of the fair market value of the Common Stock on the date of the option
grant. The option price of Common Stock covered by a nonstatutory stock option
granted to an employee may not be less than 85% of the fair market value of the
Common Stock on the date of grant.
An incentive stock option shall be exercisable in any calendar year
only to the extent that the aggregate fair market value (determined at the date
of grant) of the Common Stock with respect to which incentive stock options are
exercisable for the first time during the calendar year does not exceed
$100,000.
Options may be exercised in whole or in part at such times as may be
specified by the Committee in the Participant's stock option agreement; provided
that the exercise provisions for incentive stock options shall in all events not
be more liberal than certain restrictions set forth in the Plan.
Directors. Each eligible non-employee director and employee director of
the Company on the effective date of the Plan, and subsequently on each
anniversary of the effective date of the Plan, automatically receives an option
to purchase 20,000 shares of Common Stock. Eligible directors may receive
multiple annual automatic grants of options pursuant to the terms of the Plan.
The terms and conditions that apply to each such automatic grant are as
follows: (a) the exercise price per share of Common Stock covered by each such
option shall be equal to the fair market value on the date of grant; (b) the
option by its term shall expire five years after the date of grant; (c) each
option shall be exercisable ratably over three years in increments of 331/3% per
year commencing on the first anniversary of the date of grant; (d) the option
may be exercised by one of the methods described under "Exercise of Options";
and (e) all other terms and conditions applicable to the holding and exercise of
the option shall conform to the Company's then current form of option agreement
to the extent not inconsistent with the terms of the Plan applicable to
incentive stock options.
General
If a stock option is canceled, terminates or lapses unexercised, any
unissued shares allocable to such option may be subjected again to an option.
The Committee is expressly authorized to make an award to a Plan participant
(other than a non-employee director) conditional upon the surrender for
cancellation of an existing stock option.
Adjustments will be made in the number of shares that may be issued
under the Plan in the event of a future stock dividend, stock split or similar
pro rata change in the number of outstanding shares of Common Stock or the
future creation or issuance to shareholders generally of rights, options or
options for the purchase of Company Common Stock or preferred stock.
Exercise of Options
Generally, an option may only be exercised by payment of the full
purchase price in cash. If the option so provides, the option may be exercised
by delivering an exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan proceeds
from the option shares to pay the exercise price. An option may be exercisable
on or after
26
<PAGE>
the date of grant provided, however, that no option may be exercised before the
Plan is approved by the shareholders of the Company.
Transferability of Stock Options
No option may be sold, transferred, pledged, or otherwise disposed of,
other than by will or by the laws of descent and distribution. All rights
granted to a participant under the Plan shall be exercisable during his or her
lifetime only by such participant, or the participant's guardians or legal
representatives. Upon death of a participant, his or her personal representative
or beneficiary may exercise the participant's rights under the Plan.
Amendment of the Plan and Stock Options
The Board of Directors may amend the Plan in such respects as it deems
advisable; provided that the shareholders of the Company must approve any
amendment that would (i) materially increase the benefits accruing to
participants under the plan, (ii) materially increase the number of shares of
Common Stock that may be issued under the plan, or (iii) materially modify the
requirements of eligibility for participation in the Plan. Stock options granted
under the Plan may be amended with the consent of the recipient so long as the
amended award is consistent with the terms of the Plan.
Federal Income Tax Consequences
An employee or director will not incur federal income tax when he or
she is granted a stock option.
Upon exercise of a nonstatutory stock option, an employee or director
generally will recognize ordinary income (which in the case of an employee is
subject to income tax withholding by the Company) equal to the difference
between the fair market value of the Common Stock on the date of the exercise
and the option price. When an employee exercises an incentive stock option, he
or she generally will not recognize income, unless he is subject to the
alternative minimum tax. Non-employee directors are not granted incentive stock
options under the Plan.
The Company usually will be entitled to a business expense deduction at
the time and in the amount that the recipient of an incentive award recognizes
ordinary compensation income in connection therewith. As stated above, this
usually occurs upon exercise of nonstatutory options or the sale or other
impermissible disposition of an incentive stock option before the applicable
holding period has expired.
Generally, the Company's deduction is contingent upon the Company's
meeting withholding tax requirements as to employees; however, tax legislation,
enacted August 10, 1993, generally imposes a $1,000,000 limitation on the amount
of the annual compensation deduction allowable to a publicly-held company in
respect to its chief executive officer and its four most highly paid officers.
An exception is provided for certain performance-based compensation if certain
shareholder approval and outside director requirements are satisfied. Because of
certain interpretations issued under the statutory provisions, and in the
absence of Internal Revenue Service regulations, there can be no assurance that
any of the options granted under the Plan will qualify for this exception. No
deduction is allowed in connection with an incentive stock option, unless the
employee disposes of Common Stock received upon exercise in violation of the
holding period requirements.
27
<PAGE>
Vote Required
Approval of the proposal to amend the plan requires the affirmative
vote of the majority of the shares present in person or by proxy at the annual
meeting.
The Board of Directors recommends that you vote "FOR" the proposal to
amend the 1993 Stock Option Plan.
INDEPENDENT AUDITORS
The Board of Directors has approved a resolution retaining Grant
Thornton LLP as its independent auditors for fiscal 1998.
A representative of Grant Thornton LLP will be present at the Annual
Meeting and will have an opportunity at the meeting to make a statement if he
desires to do so and will be available to respond to appropriate questions.
EXPERTS
The financial statements of the Company as of December 31, 1996 and
1997 and for each of the three years in the period ended December 31, 1997
incorporated by reference in this Proxy Statement/Prospectus and the
Registration Statement of which it is part have been audited by Grant Thornton
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting.
If any other matters properly come before the meeting, it is the intention of
the persons named in the enclosed form of Proxy to vote the shares they
represent as the Board of Directors may recommend.
Stephen R. Buren
Chief Financial Officer
Dated: , 1998
28
<PAGE>
ANNEX A
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
Among
AVIATION GENERAL, INCORPORATED
(A Delaware Corporation)
COMMANDER ACQUISITION CORPORATION
(A Delaware Corporation)
COMMANDER AIRCRAFT COMPANY
(A Virginia Corporation)
___________________, 1998
<PAGE>
TABLE OF CONTENTS
Section Page
RECITALS .................................................................A-1
Section 1. THE MERGER....................................................A-1
Section 2. OPTIONS.......................................................A-4
Section 3. COVENANTS.....................................................A-4
Section 4. CONDITIONS PRECEDENT TO OBLIGATIONS OF ALL PARTIES............A-5
Section 5. CLOSING.......................................................A-5
Section 6. REPRESENTATIONS AND WARRANTIES................................A-5
Section 7. TERMINATION OF THE MERGER.....................................A-6
Section 8. MISCELLANEOUS.................................................A-6
Exhibits
Exhibit A Merger Certificate
Exhibit B Articles of Merger and Plan of Merger
Exhibit C Certificate of Incorporation and Bylaws of Aviation General,
Incorporated
Exhibit D Certificate of Incorporation and Bylaws of Commander Acquisition
i
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is entered
into on this ___ day of _________, 1998, by and among AVIATION GENERAL,
INCORPORATED, a Delaware corporation ("Aviation General"), COMMANDER ACQUISITION
CORPORATION, a Delaware corporation ("Commander Acquisition"), and COMMANDER
AIRCRAFT COMPANY, a Virginia corporation ("Commander"), with reference to the
following facts:
RECITALS
A. Aviation General was organized for the purpose of entering into this
Agreement and has not yet issued any capital stock, and Commander Acquisition is
a wholly owned subsidiary of Aviation General.
B. The boards of directors of Commander and Commander Acquisition deem
it advisable to merge Commander with and into Commander Acquisition (the
"Merger"), as provided in this Agreement.
C. Pursuant to the Merger, the holders of shares of Common Stock, par
value $.50 per share, of Commander ("Commander Common Stock"), will receive
shares of Common Stock, par value $.50 per share, of Aviation General ("Aviation
General Common Stock") in the manner set forth in Section 1 of this Agreement
and upon the terms and conditions otherwise set forth in this Agreement.
D. To accomplish the foregoing, the parties desire to adopt a plan of
reorganization to effectuate the statutory merger of Commander into Commander
Acquisition in accordance with the provisions of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code").
E. Commander has outstanding options to purchase 688,683 shares of
Commander Common Stock at prices between $2.00 and $5.25 per share (the
"Commander Options").
F. In connection with the Merger, the parties hereto desire that the
obligation of Commander to issue Commander Common Stock under the Commander
Options, be converted into the obligation of Aviation General to issue Aviation
General Common Stock.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth, the parties hereto agree as follows:
AGREEMENT
Section 1. THE MERGER.
(a) Execution, Filing and Effective Time. On the date of closing of the
Merger referred to in Section 5 hereof, and subject to the terms and conditions
hereinafter set forth, the parties hereto agree to cause the Merger to be
consummated by filing (i) with the office of the
A-1
<PAGE>
Delaware Secretary of State a Certificate of Merger in the form of Exhibit A to
this Agreement (the "Merger Certificate"), executed and acknowledged by
Commander and Commander Acquisition and such other documents as may be required
by the provisions of the Delaware General Corporation Law and as are necessary
to cause the Merger to become effective, and (ii) with the Virginia State
Corporation Commission Articles of Merger in the form of Exhibit B to this
Agreement (the "Articles of Merger") executed and acknowledged by Commander and
Commander Acquisition, and such other documents as may be required by the
provisions of the Virginia Stock Corporation Act and as are necessary to cause
the Merger to become effective. The Merger shall become effective when the
Merger Certificate, the Articles of Merger and such other necessary documents
are so filed with the Secretary of State of the State of Delaware and the
Virginia State Corporation Commission. The time at which the Merger becomes
effective is referred to herein as the "Effective Time."
(b) Constituent and Surviving Corporations. Commander and Commander
Acquisition shall be the constituent corporations, and Commander Acquisition
shall be the surviving corporation (in such capacity, Commander Acquisition is
sometimes hereinafter referred to as the "Surviving Corporation"). At the
Effective Time, the identity and separate existence of Commander shall cease.
Upon the effectiveness of the Merger, the Surviving Corporation shall possess
all of the rights, privileges, immunities, powers, franchises and authority,
whether of a public or private nature, and be subject to all restrictions,
liabilities, obligations and duties, of the constituent corporation with which
it merged; all the rights, privileges, immunities, powers, franchises and
authority of Commander, and all assets and properties of every description,
real, personal and mixed, and every interest therein wherever located, and all
debts and other obligations belonging or due to Commander on whatever account,
as well as all other things in action belonging or due to Commander, shall be
vested in the Surviving Corporation; all rights of creditors and all liens upon
any property of each constituent corporation shall be preserved unimpaired; and
any claims existing or action or proceeding pending by or against Commander may
be prosecuted to judgment with right of appeal by the Surviving Corporation as
if the Merger had not taken place.
(c) Certificate of Incorporation and Bylaws. At the Effective Time: (i)
Article FIRST of the Commander Acquisition Certificate of Incorporation shall be
amended to read as follows: "FIRST: The name of the Corporation is 'Commander
Aircraft Company'," and (ii) the Bylaws of Commander Acquisition as in effect at
the Effective Time shall remain in effect without change.
(d) Officers and Boards of Directors. The members of the Boards of
Directors of Commander Acquisition at the Effective Time shall remain in office,
each to serve in accordance with the respective Bylaws of Commander Acquisition,
until his or her successor is duly elected and qualified. The Merger shall not
affect or change the officers of Commander Acquisition, who shall continue to
hold their respective offices, at the pleasure of the Board of Directors of
Commander Acquisition.
(e) Conversion of Stock and Other Securities. At the Effective Time,
subject to Section 1(f) hereof:
A-2
<PAGE>
(i) Each outstanding share of Commander Common Stock shall
become and be converted into one share of Aviation General Common Stock, without
any action on the part of the holder thereof.
(ii) Each outstanding share of Common Stock, par value $.50
per share, of Commander Acquisition shall continue to be owned by Aviation
General.
(iii) The Commander Options shall become and be converted into
options to purchase a number of shares of Aviation General Common Stock equal to
the number of shares of Commander Common Stock subject to such options
immediately prior to the Effective Time, and the exercise price per share shall
be an amount equal to the exercise price per share of the Commander Option being
converted with no change in the other terms and conditions.
(iv) All rights of third parties, other than under the
Commander Options converted pursuant to Section 1(e)(iii) hereof, to receive
Commander Common Stock, and all obligations to accept Commander Common Stock,
under any outstanding agreement, commitment or other obligation to which
Commander is a party shall become and be converted into the right to receive or
an obligation to accept shares of Aviation General Common Stock equal to the
number of shares of Commander Common Stock that would otherwise have been issued
under such agreement, commitment or obligation.
(f) Fractional Shares. No fractional shares of Aviation General Common
Stock will be issued in connection with the Merger, and the number of shares of
Aviation General Common Stock deliverable shall be rounded to the nearest full
number. If more than one certificate representing shares of Commander Common
Stock shall be surrendered at one time for the account of the same stockholder
of record, the number of full shares of Aviation General Common Stock for which
certificates shall be delivered shall be computed on the basis of the aggregate
number of shares of Commander Common Stock represented by the certificates so
surrendered.
(g) Treasury Shares. All shares of Commander Common Stock held by any
of the parties hereto at the Effective Time (the "Treasury Shares") shall cease
to exist and all certificates representing any Treasury Shares shall, as
promptly as practicable thereafter, be canceled and no cash or shares of capital
stock of Aviation General shall be issued in exchange therefor.
(h) Exchange. After the Effective Time, each certificate theretofore
representing issued and outstanding shares of Commander Common Stock shall
represent that same number of shares of Aviation General Common Stock. At and
after the Effective Time, all of the certificates which immediately prior to the
Effective Time represented outstanding shares of Commander Common Stock shall be
deemed for all purposes to evidence ownership of, and to represent shares of
Aviation General Common Stock, into which the shares of Commander Common Stock
formerly represented by such certificates have been converted as herein
provided. The registered owner on the books and records of Commander or its
transfer agent of the shares evidenced by any such certificate shall, until such
certificate shall have been surrendered for transfer or otherwise accounted for
to Aviation General or its transfer agent, have and be entitled to exercise any
voting and other rights with respect to and to receive any dividends and other
distributions upon the
A-3
<PAGE>
shares of Aviation General Common Stock evidenced by such outstanding
certificate as above provided.
Section 2. OPTIONS AND 1993 STOCK OPTION PLAN.
At the Effective Time, Aviation General shall assume all of the rights
and obligations of Commander pursuant to all outstanding Commander Options and
Commander's 1993 Stock Option Plan (the "Plan"), provided that Aviation General
shall not be obligated to issue Commander Common Stock upon exercise of such
options or options to be granted pursuant to the Plan but shall instead be
obligated to issue Aviation General Common Stock pursuant to the terms of such
options or options to be granted pursuant to the Plan as provided in Section
1(e) hereof. All terms and conditions of such options and the Plan, including
terms and conditions relating to the exerciseability and the maximum term of
such options, shall be identical to the terms and conditions of such options and
the Plan in effect immediately prior to the Effective Time. No fractional shares
of Aviation General Common Stock shall be issued upon exercise of all or any
portion of such options and the number of shares of Aviation General Common
Stock deliverable upon such exercise shall be rounded to the nearest full
number.
Section 3. COVENANTS.
(a) Stockholder Approval. Commander and Aviation General each will take
appropriate action to call a meeting of its stockholders, to be held at the
earliest practicable date, to consider and vote upon this Agreement and the
Merger, and the transactions contemplated hereby and thereby, will submit the
same to its stockholders with a recommendation for approval by its Boards of
Directors and will solicit the approval thereof by its stockholders.
(b) Issuance of Aviation General Common Stock. Aviation General agrees
that it will issue to the holders of Commander Common Stock at the Effective
Time shares of Aviation General Common Stock as provided for in Section 1(e) of
this Agreement.
(c) Third Party Consents. Commander will make all filings with, and use
its reasonable best efforts to obtain all consents of, all governmental agencies
and third parties which are required to be filed or obtained by any party hereto
in order for this Agreement, the Merger and the transactions contemplated hereby
and thereby to be effected (including without limitation all required filings
and consents with respect to applicable blue sky laws, certificate of need laws
and similar licenses and permits) and each of the parties hereto will otherwise
use its reasonable best efforts to cause the consummation of the Merger and the
other transactions contemplated herein, all in accordance with the terms of this
Agreement.
(d) Satisfaction of Conditions. Each party hereto agrees that it will
take all actions reasonably within its power and authority to duly and promptly
carry out all of its obligations under this Agreement and to comply with all of
the representations and warranties hereunder applicable to it. In addition,
Commander covenants and agrees to use its reasonable best efforts to cause all
of the conditions to the obligations of the other to effect the Merger to be
satisfied as promptly as possible.
A-4
<PAGE>
Section 4. CONDITIONS PRECEDENT TO OBLIGATIONS OF ALL PARTIES.
The obligations of each party to this Agreement to effect the Merger,
and of Aviation General to deliver the shares of Aviation General Common Stock
to be issued pursuant to the Merger, shall be subject, at each such party's
option (notwithstanding the waiver by any other party of any such condition), to
the following conditions:
(a) Approval of Commander. The holders of the percentage of Commander's
outstanding capital stock required by the Amended and Restated Articles of
Incorporation and Bylaws of Commander and the laws of the Commonwealth of
Virginia shall have voted to approve this Agreement, the Merger and the
transactions contemplated hereby and thereby.
(c) Action or Proceedings. There shall not be any action or proceeding
by or before any court or other governmental body which shall seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement, and
there shall not be any action or proceeding seeking a material amount of damages
by reason of consummation of the Merger, the defense of either of which, in the
reasonable judgment of the Board of Directors of Commander (after consultation
with outside counsel handling such matter), would involve expense or lapse of
time that would be materially adverse to Commander's interests.
(d) Outstanding Shares. Immediately prior to the Effective Time, there
shall be issued and outstanding ___________ shares of Commander Common Stock,
and there shall not be issued and outstanding any other shares of capital stock,
or securities convertible into capital stock, of Commander.
Section 5. CLOSING.
The closing of the Merger and other transactions contemplated by this
Agreement shall, unless another date or place is agreed to in writing by the
parties hereto, take place at the offices of Aviation General at 7200 Northwest
63rd Street, Hangar 8, Wiley Post Airport, Bethany, Oklahoma (except for the
filing of the Merger Certificate with the Delaware Secretary of State, which
shall take place in the office of such Secretary, and for filing of the Articles
of Merger with the Virginia State Corporation Commission, which shall take place
in the office of such Commission), on the day of the meeting of the Commander
stockholders to approve the Merger, if all conditions to the Merger have been
satisfied or waived on or before such date, or as soon as practicable following
the satisfaction or waiver of all conditions to the Merger if all such
conditions have not been satisfied or waived on or before the date of such
stockholders meeting.
Section 6. REPRESENTATIONS AND WARRANTIES.
(a) Aviation General. Aviation General represents and warrants to each
of the other parties hereto that the Certificates of Incorporation and Bylaws of
Aviation General and Commander Acquisition each are substantially set forth in
the forms of Exhibits C and D, respectively, to this Agreement.
A-5
<PAGE>
(b) Commander. Commander represents and warrants to each of the other
parties hereto that immediately prior to the Effective Time (i) the authorized
capital stock of Commander will consist of ___________ shares of Commander
Common Stock, of which ____________ shares will be outstanding, (ii) all of the
outstanding shares of Commander Common Stock have been validly issued, fully
paid and nonassessable, and (iii) except for the Commander Options, Commander
will not have any outstanding subscriptions, options, warrants, rights or other
agreements or commitments obligating Commander to issue or sell shares of its
capital stock or any securities or obligations convertible into or exchangeable
for any shares of its capital stock.
Section 7. TERMINATION OF THE MERGER.
(a) Termination. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time by the Boards of Directors of
Commander and Commander Acquisition.
Section 8. MISCELLANEOUS.
(a) Modification or Waiver. This Agreement and the Merger Certificate
may be amended, modified or superseded at any time by a written instrument
executed by the parties hereto, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived by the party
intended to be benefited hereby; provided, however, that the terms of the Merger
set forth in Section 1(e) may be amended, modified or superseded only with the
additional approval of Commander Acquisition and Commander. Except as expressly
otherwise required by the previous sentence, no stockholder approval shall be
required for any amendment, modification or waiver. No waiver of any nature, in
any one or more instances, shall be deemed to be or construed as a further or
continued waiver of any condition or any breach of any other term,
representation or warranty in this Agreement.
(b) Binding Effect and Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that prior to the Effective Time, no assignment
of any rights provided for herein may be made by any party without the express
written consent of the other parties.
(c) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
(d) Section Headings. The Section headings contained in this Agreement
are inserted for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.
(e) Entire Agreement. This Agreement and all other writings referred to
herein and all exhibits and schedules hereto, embodies the entire agreement and
understanding between the parties hereto relating to the subject matter hereof
and supersedes any prior letters of intent, agreements and understandings
relating to the subject matter hereof.
A-6
<PAGE>
(f) No Third Party Beneficiaries. Nothing expressed or referred to in
this Agreement is intended or shall be construed to give any person other than
the parties to this Agreement or their respective successors or permitted
assigns any legal or equitable right, remedy or claim under or in respect to
this Agreement or any provision contained herein, it being the intention of the
parties to this Agreement that this Agreement shall be for the sole and
exclusive benefit of such parties or such successors and assigns and not for the
benefit of any other person.
(g) Counterparts. Separate copies of this Agreement may be signed by
the parties hereto (including by facsimile signature) with the same effect as
though all of the parties had signed one copy of this Agreement.
(h) Severability. If any provision of this Agreement shall be held
invalid under any applicable law, such invalidity shall not affect any other
provision of this Agreement that can be given effect without the invalid
provision and, to this end, the provisions hereof are severable.
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the date first above written.
COMMANDER AIRCRAFT COMPANY
By: ____________________________________
Name:
Title:
AVIATION GENERAL, INCORPORATED
By: ____________________________________
Name:
Title:
COMMANDER ACQUISITION CORPORATION
By: ____________________________________
Name:
Title:
A-7
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Aviation General's Certificate of Incorporation and By-laws provide for
indemnification of directors, officers, agents, and employees to the fullest
extent permitted by law. Under Delaware law, a corporation may indemnify any
person who was or is a party or is threatened to be made a party to an action
(other than an action by or in the right of the corporation) by reason of his
service as a director or officer of the corporation, or his service, at the
corporation's request, as a director, officer, employee, or agent of another
corporation or other enterprise, against expenses (including attorneys' fees)
that are actually and reasonably incurred by him ("Expenses"), and judgments,
fines and amounts paid in settlement that are actually and reasonably incurred
by him, in connection with the defense or settlement of such action, provided
that he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful. Although Delaware law permits a corporation to indemnify
any person referred to above against Expenses in connection with the defense or
settlement of an action by or in the right of the corporation, provided that he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests, if such person has been judged
liable to the corporation, indemnification is only permitted to the extent that
the Court of Chancery (or the court in which the action was brought) determines
that, despite the adjudication of liability, such person is entitled to
indemnity for such Expenses as the court deems proper. The determination as to
whether a person seeking indemnification has met the required standard of
conduct is to be made (1) by a majority vote of a quorum of disinterested
members of the board of directors, or (2) by independent legal counsel in a
written opinion, if such a quorum does not exist or if the disinterested
directors so direct, or (3) by the stockholders. The General Corporation Law of
the State of Delaware also provides for mandatory indemnification of any
director, officer, employee or agent against Expenses to the extent such person
has been successful in any proceeding covered by the statute. In addition, the
General Corporation Law of the State of Delaware provides the general
authorization of advancement of a director's or officer's litigation expenses in
lieu of requiring the authorization of such advancement by the board of
directors in specific cases, and that indemnification and advancement of
expenses provided by the statute shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under any by-law, agreement or otherwise.
Item 21. Exhibits and Financial Statement Schedules.
(a) The following is a list of exhibits furnished:
2. Form of Agreement and Plan of Reorganization (included as
Annex A to the Proxy Statement/Prospectus).
3.1 Form of Articles of Incorporation of Aviation General, Incorporated.
3.2 Form of By-laws of Aviation General, Incorporated.
5 Opinion of Counsel.
23.1 Consent of Public Accountants.
24 Power of Attorney (included in signature page).
27 Financial Data Schedule (1)
(1) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1998.
II-1
<PAGE>
(b) The following is a list of Financial Statement Schedules furnished:
Item 22. Undertakings.
The undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (in the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8, or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration
II-2
<PAGE>
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Bethany and
State of Oklahoma on the 11th day of June 1998.
AVIATION GENERAL, INCORPORATED
/s/ N. GENE CRISS
By: N. Gene Criss
President and Chief Executive Officer
POWER OF ATTORNEY TO SIGN AMENDMENTS
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint MICHAEL JOSEPH and JOHN F.
KEARNEY, and each of them, with full power to act without the other, his true
and lawful attorney-in-fact and agent for him and in his name, place and stead,
in any and all capacities, to sign any or all amendments to this Registration
Statement, including without limitation any registration statement for the same
Offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same, as fully, for all intents and purposes, as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ N. GENE CRISS June 11, 1998
- -------------------------------------
N. Gene Criss President, Chief Executive Officer,
and Director
(Principal Executive Officer)
/s/ STEPHEN R. BUREN June 11, 1998
- -------------------------------------
Stephen R. Buren Vice President Chief Financial
Officer, and Treasurer
(Principal Financial and
Accounting Officer)
/s/ WIRT D. WALKER III June 11, 1998
- -------------------------------------
Wirt D. Walker III Chairman and Director
/s/ MISHAL YOUSEF SAUD AL SABAH June 11, 1998
- -------------------------------
Mishal Yousef Saud Al Sabah Director
</TABLE>
II-4
CERTIFICATE OF INCORPORATION
OF
AVIATION GENERAL, INCORPORATED
ARTICLE I
The name of the Corporation is Aviation General, Incorporated.
ARTICLE II
The period of its duration is perpetual.
ARTICLE III
The purpose for which the Corporation is organized is to engage in the
transaction of any or all lawful business for which corporations may be
incorporated under the Delaware General Corporation Law.
ARTICLE IV
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 25,000,000, of which (a) 5,000,000
shares, par value $0.01 per share, are to be designated "Preferred Stock" (the
"Preferred Stock") (b) 20,000,000 shares, par value $0.50 per share, are to be
of a class designated "Common Stock" (the "Common Stock").
The designations, powers, preferences and rights and qualifications,
limitations, or restrictions of the Preferred Stock and the Common Stock are as
follows:
A. PREFERRED STOCK
The Board of Directors is authorized and empowered to designate the
rights, preferences, and restrictions of shares of Preferred Stock from time to
time in accordance with the following:
1. The Board of Directors is hereby authorized to issue the Preferred
Stock from time to time in one or more series, which Preferred Stock shall be
preferred to the Common Stock as to dividends and distribution of assets of the
Corporation on dissolution, as hereinafter provided, and shall have such
distinctive designations as may be stated in the Certificate of Designation
providing for the issue of such stock adopted by the Board of Directors pursuant
to Section 151(g) of the Delaware General Corporation Law. In such Certificate
of Designation providing for the issue of shares of each particular series, the
Board of Directors is hereby expressly authorized and empowered to fix the
number of shares constituting such series and to fix the relative rights and
preferences of the shares of the series so established to the full extent
allowable by law except as otherwise provided herein and except insofar as such
rights and preferences are fixed herein. Such authorization in the Board of
Directors shall expressly include the authority to fix and determine the
relative rights and preferences of such shares in the following respects:
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<PAGE>
(a) The rate of dividend;
(b) Whether shares can be redeemed or called and, if so, the redemption or call
price and terms and conditions of redemption or call;
(c) The amount payable upon shares in the event of voluntary and involuntary
liquidation;
(d) The purchase, retirement, or sinking fund provisions, if any, for the call,
redemption, or purchase of shares;
(e) The terms and conditions, if any, on which shares may be converted into
Common Stock or any other securities;
(f) Whether or not shares have voting rights, and the extent of such voting
rights, if any, including the number of votes per share; and
(g) Whether or not shares shall be cumulative, non-cumulative, or
partially cumulative as to dividends and the dates from which any
cumulative dividends are to accumulate.
All shares of the Preferred Stock shall be of equal rank and shall be
identical, except in respect to the particulars that may be fixed by the Board
of Directors as hereinabove provided in this Article IV and which may vary among
the series.
2. The holders of Preferred Stock are entitled to receive, when, as,
and if declared by the Board of Directors, but only from funds legally available
for the payment of dividends, cash dividends at the annual rate for each
particular series as theretofore fixed and determined by the Board of Directors
as hereinabove authorized, and to more; such dividends to be payable before any
dividend on Common Stock shall be paid or set apart for payment.
3. In the event of any dissolution, liquidation, or winding up of the
affairs of the Corporation, after payment or provision for payment of the debts
and other liabilities of the Corporation, the holders of each series of
Preferred Stock shall be entitled to receive, out of the net assets of the
Corporation, an amount in cash for each share equal to the amount fixed and
determined by the Board of Directors in any Certificate of Designation providing
for the issue of any particular series of Preferred Stock, plus an amount equal
to any dividends payable to such holder which are then unpaid, either under the
provisions of the Certificate of Designation adopted by the Board of Directors
providing for the issue of such series of Preferred Stock or by declaration of
the Board of Directors, on each such share up to the date fixed for
distribution, and no more, before any distribution shall be made to the holders
of Common Stock. Neither the merger or consolidation of the Corporation, nor the
sale, lease, or conveyance of all or a part of its assets shall be deemed to be
a dissolution, liquidation, or winding up of the affairs of the Corporation
unless otherwise stated by the Board of Directors with respect to such series.
B. COMMON STOCK
2
<PAGE>
1. Whenever dividends upon the Preferred Stock at the time outstanding
shall have been paid in full for all past dividend periods or declared and set
apart for payment, the holders of the Common Stock shall be entitled to receive
dividends when, as, and if declared by the Board of Directors out of funds
legally available therefor.
2. In the event of any liquidation, dissolution, or winding up of the
affairs of the Corporation, either voluntary or involuntary, distributions to
the stockholders of the Corporation shall be made in the following manner: if
any Preferred Stock is then outstanding and if payment has been made to the
holders of the such Preferred Stock of the full amount to which they shall be
entitled then the holders of the Common Stock shall be entitled to share in all
remaining assets of the Corporation available for distribution to its
stockholders on a share for share basis.
3. Each holder of Common Stock shall be entitled to vote on all matters
and shall be entitled to one vote for each share of Common Stock standing in
such holder's name on the books of the Corporation.
ARTICLE V
Except as provided elsewhere in this Certificate of Incorporation, the
preemptive rights of any shareholder of the Corporation to acquire additional,
unissued, or treasury shares of the Corporation, or securities of the
Corporation convertible into or carrying a right to subscribe to or acquire
shares of the Corporation, is hereby denied; provided, however, that nothing
herein shall preclude the Corporation from granting preemptive rights by
contract or agreement to any person, corporation, or other entity.
ARTICLE VI
The registered agent of the Corporation in the State of Delaware is The
Corporation Trust Company. The address of the Corporation's registered agent is
1209 Orange Street, City of Wilmington, County of New Castle.
ARTICLE VII
1. Number. The number of directors of the Corporation may be fixed by the
Bylaws.
2. Powers. In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized:
(a) To make, alter, or repeal the Bylaws of the Corporation;
(b) To authorize and cause to be executed mortgages and liens upon
the real and personal property of the Corporation;
(c) To set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper
purpose and to abolish any such reserve in the manner in which
it was created; and
3
<PAGE>
(d) By a majority of the whole Board of Directors, to designate
one or more committees, each committee to office for a term
expiring at the annual meeting of stockholders held in the
year following the year of their election.
3. Created Directorships and Vacancies. Newly created directorships
resulting from any increase in the number of directors and any vacancies of the
Board of Directors resulting from death, resignation, disqualification, removal,
or other cause shall be filled by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum of the Board
of Directors. Any director elected in accordance with the preceding sentence
shall hold office for the remainder of the full term and until such director's
successor shall have been elected and qualified. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
4. Removal. Any director may be removed from office, with or without
cause, by the affirmative vote of the holders of a majority of the combined
voting power of the then outstanding shares of stock entitled to vote generally
in the election of directors, voting together as a single class.
ARTICLE VIII
1. Location of Meetings; Books and Records; Use of Ballots in the
Elections of Directors. Meetings of stockholders may be held within or without
the State of Delaware, as the Bylaws may provide. The books of the Corporation
may be kept (subject to applicable law) outside the State of Delaware at such
place or places as may be designated from time to time by the Board of Directors
or in the Bylaws of the Corporation. Elections of Directors need not be by
written ballot unless the Bylaws of the Corporation shall so provide.
2. Special Meetings. Special meetings of stockholders of the
Corporation may be called only by the Chairman of the Board of Directors, the
President, or the Board of Directors pursuant to a resolution approved by a
majority of the entire Board of Directors.
ARTICLE IX
To the fullest extent permitted by the Delaware General Corporation
Law, as the same exists or may hereafter be amended, a director of the
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for an act or omission in the director's capacity as a
director.
4
<PAGE>
ARTICLE X
1. Right to Indemnification. Each person who was or is made a party to
or is threatened to be made a party to or is otherwise involved in any action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director, officer, employee, or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee, or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee, or agent or in
any other capacity while serving as a director, officer, employee, or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than permitted prior thereto), against all expense, liability, and loss
(including attorney's fees, judgments, fines, ERISA excise taxes, or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith and such indemnification shall continue as to
an indemnitee who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the indemnitee's heirs, executors, and
administrators; provided, however, that, except as provided in section 3 hereof
with respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the board of directors of the Corporation.
2. Right to Advancement of Expenses. The right to indemnification
conferred in section 1 of this Article X shall include the right to be paid by
the Corporation the expenses incurred in defending any proceeding for which such
right to indemnification is applicable in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Article X or otherwise.
3. Right of Indemnitee to Bring Suit. The rights to indemnification and
to the advancement of expenses conferred in sections 1 and 2 of this Section
shall be contract rights. If a claim under sections 1 or 2 of this Article X is
not paid in full by the Corporation within sixty days after a written claim has
been received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be twenty
days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled also to be paid the expense of prosecuting or defending such
suit. In (i) any suit brought
5
<PAGE>
by the indemnitee to enforce a right to indemnification hereunder (but not in a
suit brought by the indemnitee to enforce a right to an advancement of expenses)
it shall be a defense that, and (ii) in any suit by the Corporation to recover
an advancement of expenses pursuant to the terms of an undertaking the
Corporation shall be entitled to recover such expenses upon a final adjudication
that, the indemnitee has not met any applicable standard for indemnification set
forth in the Delaware General Corporation Law. Neither the failure of the
Corporation (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its board of directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expense hereunder, or
by the Corporation to recover an advancement of expenses pursuant to the terms
of an undertaking, the burden of proving that the indemnitee is not entitled to
be indemnified, or to such advancement of expenses, under this Article X or
otherwise shall be on the Corporation.
4. Non-Exclusivity of Rights. The rights to indemnification and to the
advancement of expenses conferred in this Article X shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, this Corporation's certificate of incorporation, bylaw, agreement, vote
of stockholders or disinterested, directors, or otherwise.
5. Insurance. The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee, or agent of the
corporation or another corporation, partnership, joint venture, trust, or other
enterprise against any expense, liability, or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability, or loss under the Delaware General Law.
ARTICLE XI
The election of directors need not be by written ballot.
ARTICLE XII
The Board of Directors shall have power to adopt, amend, and repeal the
Bylaws of the Corporation by an affirmative majority vote. Any Bylaws adopted by
the directors under the powers conferred hereby may be amended or repealed by
the directors or by the stockholders.
ARTICLE XIII
This Certificate of Incorporation may be amended from time to time as
provided in the Delaware General Corporation Law, as amended from time to time.
6
<PAGE>
IN WITNESS WHEREOF, Aviation General, Incorporated has caused this
certificate to be signed by Elizabeth A. Schmitt, its Secretary, who hereby
acknowledges under penalty of perjury that the facts herein stated are true and
that this certificate is the act and deed of the Corporation, this day of ,
1998.
AVIATION GENERAL, INCORPORATED
By:
Elizabeth A. Schmitt
Secretary
7
AVIATION GENERAL, INCORPORATED
BYLAWS
ARTICLE I
MEETINGS OF SHAREHOLDERS
1.1 Place and Time of Meetings. Meetings of shareholders shall be held
at such place, either within or without the State of Delaware, and at such time,
as may be provided in the notice of the meeting and approved by the Chairman of
the Board of Directors (the "Chairman"), the President or the Board of
Directors.
1.2 Organization and Order of Business. The Chairman or, in his
absence, the President shall serve as chairman at all meetings of the
shareholders. In the absence of both of the foregoing officers or if both of
them decline to serve, a majority of the shares entitled to vote at a meeting
may appoint any person entitled to vote at the meeting to act as chairman. The
secretary of the Corporation or, in his absence, an assistant secretary, shall
act as secretary at all meetings of the shareholders. In the event that neither
the secretary nor any assistant secretary is present, the chairman of the
meeting may appoint any person to act as secretary of the meeting.
The Chairman shall have the authority to make such rules and
regulations, to establish such procedures and to take such steps as he may deem
necessary or desirable for the proper conduct of each meeting of the
shareholders, including, without limitation, the authority to make the agenda
and to establish procedures for (i) dismissing business not properly presented,
(ii) maintaining order and safety, (iii) placing limitations on the time
allotted to questions or comments on the affairs of the Corporation, (iv)
placing restrictions on attendance at a meeting by persons or classes of persons
who are not shareholders or their proxies, (v) restricting entry to a meeting
after the time prescribed for the commencement thereof and (vi) commencing,
conducting and closing voting on any matter.
1.3 Annual Meeting. The annual meeting of shareholders shall be held on
such day chosen by the Board of Directors.
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<PAGE>
1.4 Special Meetings. Special meetings of the shareholders may be
called only by the Chairman, the President or the Board of Directors. Only
business within the purpose or purposes described in the notice for a special
meeting of shareholders may be conducted at the meeting.
1.5 Record Dates. The Board of Directors shall fix, in advance, a
record date to make a determination of shareholders entitled to notice of, or to
vote at, any meeting of shareholders, to receive any dividend or for any
purpose, such date to be not more than 60 days before the meeting or action
requiring a determination of shareholders.
When a determination of shareholders entitled to notice of or to vote
at any meeting of shareholders has been made, such determination shall be
effective for any adjournment of the meeting unless the Board of Directors fixes
a new record date, which it shall do if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting.
1.6 Notice of Meetings. Written notice stating the place, day and hour
of each meeting of shareholders and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given not less
than ten nor more than 60 days before the date of the meeting (except when a
different time is required in these Bylaws or by law) either personally or by
mail, telephone, telegraph, teletype, telecopy or other form of wire or wireless
communication, or by private courier, to each shareholder of record entitled to
vote at such meeting. If mailed, such notice shall be deemed to be effective
when deposited in first class United States mail with postage thereon prepaid,
addressed to the shareholder at his address as it appears on the share transfer
books of the Corporation.
If a meeting is adjourned to a different date, time or place, notice
need not be given if the new date, time or place is announced at the meeting
before adjournment. However, if a new record date for an adjourned meeting is
fixed, notice of the adjourned meeting shall be given to shareholders as of the
new record date, unless a court provides otherwise.
Notwithstanding the foregoing, no notice of a meeting of shareholders
need be given to a shareholder if (i) an annual report and proxy statements for
two consecutive annual meetings of shareholders or (ii) all, and at least two,
checks in payment of dividends or interest on securities during a 12-month
period, have been sent by first-class United States mail, with postage thereon
prepaid, addressed to the shareholder at his address as it appears on the share
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transfer books of the Corporation, and returned undeliverable. The obligation of
the Corporation to give notice of meetings of shareholders to any such
shareholder shall be reinstated once the Corporation has received a new address
for such shareholder for entry on its share transfer books.
1.7 Waiver of Notice; Attendance at Meeting. A shareholder may waive
any notice required by law, the Certificate of Incorporation or these Bylaws
before or after the date and time of the meeting that is the subject of such
notice. The waiver shall be in writing, be signed by the shareholder entitled to
the notice, and be delivered to the Secretary of the Corporation for inclusion
in the minutes or filing with the corporate records.
A shareholder's attendance at a meeting (i) waives objection to lack of
notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting, and (ii) waives objection to consideration of a particular
matter at the meeting that is not within the purpose or purposes described in
the meeting notice, unless the shareholder objects to considering the matter
when it is presented.
1.8 Quorum and Voting Requirements. Unless otherwise required by law, a
majority of the votes entitled to be cast on a matter constitutes a quorum for
action on that matter. Once a share is represented for any purpose at a meeting,
it is deemed present for quorum purposes for the remainder of the meeting and
for any adjournment of that meeting unless a new record date is or shall be set
for that adjourned meeting. If a quorum exists, action on a matter, other than
the election of directors, is approved if the votes cast favoring the action
exceed the votes cast opposing the action, unless a greater number of
affirmative votes is required by law. Directors shall be elected by a plurality
of the votes cast by the shares entitled to vote in the election at a meeting at
which a quorum is present. Less than a quorum may adjourn a meeting.
1.9 Proxies. A shareholder may vote his shares in person or by proxy. A
shareholder may appoint a proxy to vote or otherwise act for him by signing an
appointment form, either personally or by his attorney-in-fact. An appointment
of a proxy is effective when received by the Secretary or other officer or agent
authorized to tabulate votes and is valid for eleven (11) months unless a longer
period is expressly provided in the appointment form. An appointment of a proxy
is revocable by the shareholder unless the appointment form conspicuously states
that it is irrevocable and the appointment is coupled with an interest.
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The death or incapacity of the shareholder appointing a proxy does not
affect the right of the Corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the Secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment. An irrevocable appointment is revoked when the interest
with which it is coupled is extinguished. A transferee for value of shares
subject to an irrevocable appointment may revoke the appointment if he did not
know of its existence when he acquired the shares and the existence of the
irrevocable appointment was not noted conspicuously on the certificate
representing the shares. Subject to any legal limitations on the right of the
Corporation to accept the vote or other action of a proxy and to any express
limitation on the proxy's authority appearing on the face of the appointment
form, the Corporation is entitled to accept the proxy's vote or other action as
that of the shareholder making the appointment. Any fiduciary who is entitled to
vote any shares may vote such shares by proxy.
1.10 Voting List. The officer or agent having charge of the share
transfer books of the Corporation shall make, at least ten days before each
meeting of shareholders, a complete list of the shareholders entitled to vote at
such meeting or any adjournment thereof, with the address of and the number of
shares held by each. For a period of ten days prior to the meeting such list
shall be kept on file at the registered office of the Corporation or at its
principal office or at the office of its transfer agent or registrar and shall
be subject to inspection by any shareholder at any time during usual business
hours. Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting for the purpose thereof. The original share transfer
books shall be prima facia evidence as to who are the shareholders entitled to
examine such list or transfer books or to vote at any meeting of the
shareholder. The right of a shareholder to inspect such list prior to the
meeting shall be subject to the conditions and limitations set forth by law. If
the requirements of this section have not been substantially complied with, the
meeting shall, on the demand of any shareholder in person or by proxy, be
adjourned until such requirements are met. Refusal or failure to prepare or make
available the shareholders' list does not affect the validity of action taken at
the meeting prior to the making
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of any such demand, but any action taken by the shareholders after the making of
any such demand shall be invalid and of no effect.
1.11 Action without Meeting. Except as may otherwise be limited by the
Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at a meeting of the shareholders may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding shares of stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted.
ARTICLE II
DIRECTORS
2.1 General Powers. The Corporation shall have a Board of Directors.
All corporate powers shall be exercised by or under the authority of, and the
business and affairs of the Corporation managed under the direction of, its
Board of Directors, subject to any limitation set forth in the Certificate of
Incorporation.
2.2 Number and Term. The number of directors of the Corporation may
vary between a minimum of three (3) and a maximum of seven (7). The number of
directors may be increased or decreased from time to time by the Board of
Directors. No decrease in number shall have the effect of shortening the term of
any incumbent director. Each director shall hold office until his death,
resignation or removal or until his successor is elected.
2.3 Nomination of Directors. No person shall be eligible for election
as a director at a meeting of shareholders unless nominated by the Board of
Directors upon recommendation of the Nominating Committee or otherwise.
2.4 Election. Except as provided in Section 2.5, the directors (other
than initial directors) shall be elected by the holders of the Common shares at
each annual meeting of shareholders and each director shall hold office until
the next annual meeting of the shareholders and until his or her successor is
duly elected and qualified. Those persons who receive the greatest number of
votes shall be deemed elected even though they do not receive a majority of the
votes cast. No individual shall be named or elected as a director without his
prior consent.
2.5 Removal; Vacancies. The shareholders may remove one or more directors
with or without cause. Unless the Certificate of Incorporation requires a
greater vote, a director may
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be removed if the number of votes cast to remove him constitutes a majority of
the votes entitled to be cast at an election of directors of the voting group or
voting groups by which such director was elected. A director may be removed by
the shareholders only at a meeting called for the purpose of removing him and
the meeting notice must state that the purpose, or one of the purposes of the
meeting, is removal of the director.
A vacancy on the Board of Directors, including a vacancy resulting from
the removal of a director or an increase in the number of directors, may be
filled by (i) the shareholders, (ii) the Board of Directors or (iii) the
affirmative vote of a majority of the remaining directors though less than a
quorum of the Board of Directors, and may, in the case of a resignation that
will become effective at a specified later date, be filled before the vacancy
occurs but the new director may not take office until the vacancy occurs.
2.6 Annual and Regular Meetings. An annual meeting of the Board of
Directors, which shall be considered a regular meeting, shall be held
immediately following each annual meeting of shareholders, for the purpose of
electing officers and carrying on such other business as may properly come
before the meeting. The Board of Directors may also adopt a schedule of
additional meetings which shall be considered regular meetings. Regular meetings
shall be held at such times and at such places, as the Chairman, the President
or the Board of Directors shall designate from time to time. If no place is
designated, regular meetings shall be held at the principal office of the
Corporation.
2.7 Special Meetings. Special meetings of the Board of Directors may be
called by the Chairman, the President or a majority of the Directors of the
Corporation, and shall be held at such times and at such places, as the person
or persons calling the meetings shall designate. If no such place is designated
in the notice of a meeting, it shall be held at the principal office of the
Corporation.
2.8 Notice of Meetings. No notice need be given of regular meetings of
the Board of Directors.
Notices of special meetings of the Board of Directors shall be given to
each director in person or delivered to his residence or business address (or
such other place as he may have directed in writing) not less than twenty-four
(24) hours before the meeting by mail, messenger, telecopy, telegraph, or other
means of written communication or by telephoning such notice to
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him. Any such notice shall set forth the time and place of the meeting and state
the purpose for which it is called.
2.9 Waiver of Notice; Attendance at Meeting. A director may waive any
notice required by law, the Certificate of Incorporation, or these Bylaws before
or after the date and time stated in the notice, and such waiver shall be
equivalent to the giving of such notice. Except as provided in the next
paragraph of this section, the waiver shall be in writing, signed by the
director entitled to the notice and filed with the minutes or corporate records.
A director's attendance at or participation in a meeting waives any required
notice to him of the meeting unless the director at the beginning of the meeting
or promptly upon his arrival objects to holding the meeting or transacting
business at the meeting and does not thereafter vote for or assent to action
taken at the meeting.
2.10 Quorum; Voting. A majority of the number of directors fixed in these
Bylaws shall constitute a quorum for the transaction of business at a meeting of
the Board of Directors. If a quorum is present when a vote is taken, the
affirmative vote of a majority of the directors present is the act of the Board
of Directors. A director who is present at a meeting of the Board of Directors
or a committee of the Board of Directors when corporate action is taken is
deemed to have assented to the action taken unless (i) he objects at the
beginning of the meeting, or promptly upon his arrival, to holding it or
transacting specified business at the meeting; or (ii) he votes against, or
abstains from, the action taken.
2.11 Telephonic Meetings. The Board of Directors may permit any or all
directors to participate in a regular or special meeting by, or conduct the
meeting through the use of, any means of communication by which all directors
participating may simultaneously hear each other during the meeting. A director
participating in a meeting by this means is deemed to be present in person at
the meeting.
2.12 Action Without Meeting. Action required or permitted to be taken at a
meeting of the Board of Directors may be taken without a meeting if the action
is taken by all members of the Board. The action shall be evidenced by one or
more written consents stating the action taken, signed by each director either
before or after the action taken, and included in the minutes or filed with the
corporate records reflecting the action taken. Action taken under this section
shall be effective when the last director signs the consent unless the consent
specifies a different
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effective date in which event the action taken is effective as of the date
specified therein provided the consent states the date of execution by each
director.
2.13 Compensation. The Board of Directors may fix the compensation of
directors and may provide for the payment of all expenses incurred by them in
attending meetings of the Board of Directors.
ARTICLE III
COMMITTEES OF DIRECTORS
3.1 Committees. The Board of Directors may create one or more
committees and appoint members of the Board of Directors to serve on them.
Unless otherwise provided in these Bylaws, each committee shall have two or more
members who serve at the pleasure of the Board of Directors. The creation of a
committee and appointment of members to it shall be approved by a majority of
all of the directors in office when the action is taken.
3.2 Authority of Committees. To the extent specified by the Board of
Directors, each committee may exercise the authority of the Board of Directors,
except that a committee may not (i) approve or recommend to shareholders action
that is required by law to be approved by shareholders; (ii) fill vacancies on
the Board of Directors or on any of its committees; (iii) amend the Certificate
of Incorporation; (iv) adopt, amend, or repeal these Bylaws; (v) approve a plan
of merger not requiring shareholder approval; (vi) authorize or approve a
distribution, except according to a general formula or method prescribed by the
Board of Directors; or (vii) authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and relative rights,
preferences, and limitations of a class or series of shares, except that the
Board of Directors may authorize a committee, or a senior executive officer of
the Corporation, to do so within limits specifically prescribed by the Board of
Directors.
3.3 Compensation Committee. The Board of Directors shall appoint a
Compensation Committee consisting of not less than two non-employee directors
which committee shall have all of the authority of the Board of Directors except
to the extent such authority is limited by the provisions of Section 3.2.
3.4 Audit Committee. The Board of Directors shall appoint an Audit
Committee consisting of not less than two directors, none of whom shall be
officers of the Corporation, which committee shall regularly review the adequacy
of the Corporation's internal financial
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controls, review with the Corporation's independent public accountants the
annual audit and other financial statements, and recommend the selection of the
Corporation's independent public accountants.
3.5 Committee Meetings; Miscellaneous. The provisions of these Bylaws
which govern meetings, action without meetings, notice and waiver of notice, and
quorum and voting requirements of the Board of Directors shall apply to
committees of directors and their members as well.
ARTICLE IV
OFFICERS
4.1 Officers. The officers of the Corporation shall be a Chairman of
the Board of Directors, a President, a Secretary, a Treasurer, and, in the
discretion of the Board of Directors or the Chairman and the President, one or
more Vice-Presidents and such other officers as may be deemed necessary or
advisable to carry on the business of the Corporation. Any two or more offices
may be held by the same person.
4.2 Election; Term. Officers shall be elected by the Board of
Directors. Officers shall hold office, unless sooner removed, until the next
annual meeting of the Board of Directors or until their successors are elected.
Any officer may resign at any time upon written notice to the Board of
Directors, and such resignation shall be effective when notice is delivered
unless the notice specifies a later effective date.
4.3 Removal of Officers. The Board of Directors may remove any officer
at any time, with or without cause.
4.4 Duties of the Chairman. The Chairman shall have general charge of,
and be charged with the duty of supervision of, the business of the Corporation
and shall perform such duties as may, from time to time, be assigned to him by
the Board of Directors.
4.5 Duties of the President. The President shall have such powers and
perform such duties as generally pertain to that position or as may from time to
time, be assigned to him by the Chairman or Board of Directors.
4.6 Duties of the Secretary. The Secretary shall have the duty to see
that a record of the proceedings of each meeting of the shareholders and the
Board of Directors, and any committee of the Board of Directors, is properly
recorded and that notices of all such meetings
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are duly given in accordance with the provisions of these Bylaws or as required
by law; he may affix the corporate seal to any document the execution of which
is duly authorized, and when so affixed may attest the same; and, in general, he
shall perform all duties incident to the office of secretary of a corporation,
and such other duties as, from time to time, may be assigned to him by the
Chairman, the President or the Board of Directors, or as may be required by law.
4.7 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all securities, funds, receipts and disbursements of the
Corporation, and shall deposit or cause to be deposited, in the name of the
Corporation, all monies or valuable effects in such banks, trust companies or
other depositories as shall, from time to time, be selected by or under
authority granted by the Board of Directors; he shall be custodian of the
financial records of the Corporation; he shall keep or cause to be kept full and
accurate records of all receipts and disbursements of the Corporation and shall
render to the Chairman, the President or the Board of Directors, whenever
requested, an account of the financial condition of the Corporation. In addition
he shall perform such duties as may be assigned to him by the Chairman, the
President, or the Board of Directors.
4.8 Duties of Other Officers. The other officers of the Corporation
shall have such authority and perform such duties as shall be prescribed by the
Board of Directors or by officers authorized by the Board of Directors to
appoint them to their respective offices. To the extent that such duties are not
so stated, such officers shall have such authority and perform the duties which
generally pertain to their respective offices, subject to the control of the
Chairman, the President or the Board of Directors.
4.9 Voting Securities of Other Corporations. Either of the Chairman, or
the President shall have the power to act for and vote on behalf of the
Corporation at all meetings of the shareholders of any corporation in which this
Corporation holds stock, or in connection with any consent of shareholders in
lieu of any such meeting.
4.10 Bonds. The Board of Directors may require that any or all
officers, employees and agents of the Corporation give bond to the Corporation,
with sufficient sureties, conditioned upon the faithful performance of the
duties of their respective offices or positions.
ARTICLE V
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SHARE CERTIFICATES
5.1 Form. Shares of the Corporation shall, when fully paid, be
evidenced by certificates containing such information as is required by law and
approved by the Board of Directors. Certificates shall be signed by the Chairman
and the Secretary and may (but need not) be sealed with the seal of the
Corporation. The seal of the Corporation and any or all of the signatures on a
share certificate may be facsimile. If any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar on the date of issue.
5.2 Transfer. The Board of Directors may make rules and regulations
concerning the issue, registration and transfer of certificates representing the
shares of the Corporation. Transfers of shares and of the certificates
representing such shares shall be made upon the books of the Corporation by
surrender of the certificates representing such shares accompanied by written
assignments given by the owners or their attorneys-in-fact.
5.3 Restrictions on Transfer. A lawful restriction on the transfer or
registration of transfer of shares is valid and enforceable against the holder
or a transferee of the holder if the restriction complies with the requirements
of law and its existence is noted conspicuously on the front or back of the
certificate representing the shares. Unless so noted a restriction is not
enforceable against a person without knowledge of the restriction.
5.4 Lost or Destroyed Share Certificates. The Corporation may issue a
new share certificate in the place of any certificate theretofore issued which
is alleged to have been lost or destroyed and may require the owner of such
certificate, or his legal representative, to give the Corporation a bond, with
or without surety, or such other agreement, undertaking or security as the Board
of Directors shall determine is appropriate, to indemnify the Corporation
against any claim that may be made against it on account of the alleged loss or
destruction or the issuance of any such new certificate.
ARTICLE VI
MISCELLANEOUS PROVISIONS
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6.1 Corporate Seal. The corporate seal of the Corporation shall be
circular and shall have inscribed thereon, within and around the circumference
"AVIATION GENERAL, INCORPORATED". In the center shall be the word "SEAL".
6.2 Fiscal Year. The fiscal year of the Corporation shall be determined
in the discretion of the Board of Directors, but in the absence of any such
determination it shall be the calendar year.
6.3 Amendments. These Bylaws may be amended or repealed, and new Bylaws
may be made, at any regular or special meeting of the Board of Directors. Bylaws
made by the Board of Directors may be repealed or changed and new Bylaws may be
made by the shareholders, and the shareholders may prescribe that any Bylaw made
by them shall not be altered, amended or repealed by the Board of Directors.
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June 11, 1998
Aviation General, Incorporated
720 N.W. 63rd Street
Hanger 8, Wiley Post Airport
Bethany, Oklahoma 73008
Ladies and Gentlemen:
We have acted as counsel for Aviation General, Incorporated, a Delaware
corporation (the"Company"), in connection with (i) the reorganization of the
Company pursuant to the Agreement and Plan of Reorganization and (ii) the
issuance, pursuant to the Company's registration statement on Form S-4, File No.
333-______ (the "Registration Statement"), of up to 7,280,548 shares of its
Common Stock, par value $0.50 per share (the "Shares"). Based upon our
examination of such corporate records and other documents and such questions of
law as we have deemed necessary and appropriate, we are of the opinion that the
Shares have been duly authorized and, when issued as provided for in the
Agreement and Plan of Reorganization, will be validly issued, fully paid, and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Dyer Ellis & Joseph PC
Exhibit 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 6, 1998, accompanying the
financial statements of Commander Aircraft Company included in the Annual Report
of the Company to its shareholders on Form 10-K for the year ended December 31,
1997 which is incorporated by reference in this Registration Statement. We
consent to the incorporation by reference in the Registration Statement on Form
S-4 of the aforementioned report and to the use of our name as it appears under
the caption "Experts".
GRANT THORNTON LLP
Oklahoma City, Oklahoma
June 12, 1998
