HEICO CORPORATION
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 17, 1998
----------
The Annual Meeting of Shareholders of HEICO Corporation, a Florida
corporation ("HEICO" or the "Company"), will be held on March 17, 1998, at 10:00
A.M. local time, at The Wyndham Hotel - Fort Lauderdale Airport, 1825 Griffin
Road, Dania, Florida, for the following purposes:
1. To elect a Board of Directors for the ensuing year;
2. To consider and act upon a proposal to approve an amendment to
the 1993 Stock Option Plan (the "1993 Stock Option Plan") to
increase the number of shares issuable pursuant to the 1993
Stock Option Plan;
3. To consider and vote upon a proposal to approve an amendment
(the "Share Increase Amendment") to Article III of HEICO's
Articles of Incorporation (the "Articles") to increase the
number of authorized shares of common stock, $0.01 par value
per share (the "Common Stock") from 20,000,000 shares to
30,000,000 shares;
4. To consider and vote upon a proposal to approve an amendment
(the "Dual Class Amendment") to Article III of HEICO's
Articles to add to HEICO's authorized capital stock to consist
of 30,000,000 shares of Class A Common Stock, $0.01 par value
per share (the "Class A Common Stock"), having 1/10th vote per
share; and
5. Transacting such other business as may properly come before
the meeting or any adjournments thereof.
Only holders of record of HEICO Common Stock at the close of business
on January 19, 1998 will be entitled to vote at the Meeting.
YOU ARE REQUESTED, REGARDLESS OF THE NUMBER OF SHARES OWNED, TO SIGN
AND DATE THE ENCLOSED PROXY AND TO MAIL IT PROMPTLY. YOU MAY REVOKE YOUR PROXY
EITHER BY WRITTEN NOTICE TO HEICO OR IN PERSON AT THE MEETING (WITHOUT AFFECTING
ANY VOTE PREVIOUSLY TAKEN).
BY ORDER OF THE BOARD OF DIRECTORS
LAURANS A. MENDELSON,
3000 Taft Street CHAIRMAN OF THE BOARD,
Hollywood, Florida PRESIDENT AND
February 16, 1998 CHIEF EXECUTIVE OFFICER
<PAGE>
HEICO CORPORATION
3000 TAFT STREET, HOLLYWOOD, FLORIDA 33021
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PROXY STATEMENT
----------
This Proxy Statement is furnished to the shareholders of HEICO
Corporation ("HEICO" or the "Company") in connection with the solicitation of
proxies by HEICO's Board of Directors (the "Board") for use at the annual
meeting of shareholders of HEICO to be held at The Wyndham Hotel - Fort
Lauderdale Airport, 1825 Griffin Road, Dania, Florida 33004 on Tuesday, March
17, 1998 at 10:00 A.M., local time. This Proxy Statement is first being mailed
to shareholders on or about February 17, 1998.
At the annual meeting, the shareholders will be asked to elect a Board,
to approve an amendment to the 1993 Stock Option Plan (the "1993 Stock Option
Plan"), to approve an amendment (the "Share Increase Amendment") to Article III
of HEICO's Articles of Incorporation (the "Articles") to increase the number of
authorized shares of common stock, $0.01 par value per share (the "Common
Stock") from 20,000,000 shares to 30,000,000 shares; to approve an amendment
(the "Dual Class Amendment") to Article III of HEICO's Articles to add to
HEICO's authorized common stock to consist of 30,000,000 shares of Class A
Common Stock, $0.01 par value per share (the "Class A Common Stock"), having
1/10th vote per share; and to vote on any other business which properly comes
before the meeting.
THE BOARD OF DIRECTORS OF HEICO URGES YOU PROMPTLY TO DATE, SIGN AND
MAIL YOUR PROXY, IN THE FORM ENCLOSED WITH THIS PROXY STATEMENT, TO MAKE CERTAIN
THAT YOUR SHARES ARE VOTED AT THE MEETING. PROXIES IN THE ENCLOSED OR OTHER
ACCEPTABLE FORM THAT ARE RECEIVED IN TIME FOR THE MEETING WILL BE VOTED.
HOWEVER, YOU MAY REVOKE YOUR PROXY AT ANY TIME BY A REVOCATION IN WRITING OR A
LATER DATED PROXY THAT IS RECEIVED BY HEICO, AND IF YOU ATTEND THE MEETING YOU
MAY VOTE YOUR SHARES IN PERSON.
If your proxy is received in time for the meeting, it will be voted in
the manner specified by you in the proxy. If you do not specify a choice, the
proxy will be voted as indicated in the form of proxy.
HEICO will bear the expense of soliciting proxies in the accompanying
form. Solicitations will be by mail, and directors, officers and regular
employees of HEICO may solicit proxies personally or by telephone, telegram or
special letter. HEICO will also employ Beacon Hill Partners, Inc., 90 Broad
Street, New York, New York 10004, to assist in soliciting proxies for a fee of
$5,000 plus related out-of-pocket expenses.
Only holders of record of HEICO Common Stock at the close of business
on January 19, 1998 will be entitled to vote at the meeting. On that date there
were 8,289,659 shares of HEICO Common Stock outstanding, each entitled to one
vote.
<PAGE>
VOTING SECURITIES OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth information with respect to the
beneficial ownership of the Company's outstanding Common Stock as of January 19,
1998, by (i) each person who is known to the Company to be the beneficial owner
of more than 5% of the outstanding Common Stock, (ii) the Chief Executive
Officer and the other four most highly compensated executive officers, (iii)
each of the directors of the Company, and (iv) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED (2)
-----------------------------
NUMBER PERCENT
------------ ------------
<S> <C> <C>
(a) Certain beneficial owners (1):
Mendelson Reporting Group(3)................................................... 2,264,269 23.71%
HEICO Savings and Investment Plan(4)........................................... 1,305,443 15.75
Dr. Herbert A. Wertheim(5)..................................................... 1,136,176 13.71
Dimensional Fund Advisors, Inc.(6)............................................. 503,577 6.07
Rene Plessner Reporting Group(7)............................................... 419,968 5.07
(b) Directors:
Jacob T. Carwile(8)............................................................ 134,813 1.60
Samuel L. Higginbottom......................................................... 3,549 *
Paul F. Manieri(9)............................................................. 135,305 1.61
Eric A. Mendelson(10).......................................................... 409,483 4.80
Laurans A. Mendelson(11)....................................................... 1,747,328 19.30
Victor H. Mendelson(12)........................................................ 404,038 4.73
Albert Morrison, Jr.(13)....................................................... 16,873 *
Dr. Alan Schriesheim(14)....................................................... 122,949 1.46
Guy C. Shafer.................................................................. 11,275 *
(c) Executive officers listed in Summary Compensation table who are not
directors:
Thomas S. Irwin(15)............................................................ 315,290 3.72
James L. Reum(16).............................................................. 123,308 1.47
(d) All directors and officers as a group (11 persons)(17).................... 3,127,631 30.65
All directors, officers, the HEICO Savings and Investment Plan and the
Mendelson Reporting Group as a group(18)....................................... 4,433,074 43.44
</TABLE>
- ----------
* Represents ownership of less than 1%.
(1) Unless otherwise indicated, the address of each Beneficial Owner
identified is c/o HEICO Corporation, 3000 Taft Street, Hollywood,
Florida 33021. Except as otherwise indicated, such Beneficial Owners
have sole voting and investment power with respect to all shares of
Common Stock owned by them, except to the extent such power may be
shared with a spouse.
(2) The number of shares of Common Stock deemed outstanding as of January
19, 1998 includes (i) 8,289,659 shares of Common Stock outstanding and
(ii) shares issued pursuant to options held by the respective person or
group which may be exercised within 60 days ("Presently Exercisable
Stock Options") as set forth below. Pursuant to the rules of the
Securities and Exchange Commission, presently
2
<PAGE>
exercisable stock options are deemed to be outstanding and to be
beneficially owned by the person or group for the purpose of computing
the percentage ownership of such person or group, but are not treated
as outstanding for the purpose of computing the percentage ownership of
any other person or group.
(3) The Mendelson Reporting Group consists of Laurans A. Mendelson; Eric A.
Mendelson; Victor H. Mendelson; Mendelson International Corporation
("MIC"), a corporation whose stock is owned solely by Eric and Victor
Mendelson and whose Chairman of the Board is Laurans A. Mendelson; LAM
Limited Partners, a partnership whose sole general partner is a
corporation controlled by Laurans A. Mendelson; and the Victor H.
Mendelson Revocable Investment Trust, whose Grantor, Trustee and sole
presently vested beneficiary is Victor H. Mendelson. Includes 1,261,817
shares covered by currently exercisable stock options. Also includes
232,360 shares held of record by employees and former shareholders of
the Company's Northwings Accessories Corp. subsidiary ("Northwings")
but subject to a voting proxy held by Laurans A. Mendelson. See Notes
(10), (11) and (12) below. The address of the Mendelson Reporting Group
is 825 Brickell Bay Drive, 16th Floor, Miami, Florida 33131.
(4) Reflects 424,418 shares allocated to participants' individual accounts
and 881,024 unallocated shares as of September 30, 1997. Under the
terms of the HEICO Savings and Investment Plan, all shares allocated to
the accounts of participating employees will be voted or not as
directed by written instructions from the participating employees, and
allocated shares for which no instructions are received and all
unallocated shares will be voted in the same proportion as the shares
for which instructions are received. The address of HEICO Savings and
Investment Plan is c/o Reliance Trust Company, 3384 Peachtree Road NE,
Suite 900, Atlanta, Georgia 30326.
(5) The address of Dr. Wertheim is 191 Leucadendra Drive, Coral Gables,
Florida 33156.
(6) Based on information in a Schedule 13G filed February 10, 1998, all of
which shares are held in portfolios of advisory clients of Dimensional,
DFA Investment Dimensions Group Inc., or DFA Investment Trust Company,
registered open-end investment companies. The address of Dimensional
Fund Advisors, Inc. is 1299 Ocean Avenue, Santa Monica, California
90401.
(7) Based on information in a Schedule 13D dated January 9, 1997 filed by
Mr. Plessner individually and as sole Trustee for the Rene Plessner
Associates, Inc. Profit Sharing Plan. Reflects 167,836 shares held by
Mr. Plessner and 252,132 shares held by the Rene Plessner Associates,
Inc. Profit Sharing Plan, an employee profit sharing plan of Rene
Plessner Associates, Inc., an executive search company. The address of
Rene Plessner Reporting Group is 375 Park Avenue, New York, New York
10152.
(8) Reflects 123,538 shares subject to presently exercisable stock options.
(9) Reflects 123,538 shares subject to presently exercisable stock options.
(10) Reflects 148,290 shares held by MIC, 248,730 shares covered by
currently exercisable stock options and 10,291 shares held by the HEICO
Savings and Investment Plan and allocated to Eric A. Mendelson's
account, and 150 shares owned by one of Eric Mendelson's children. See
Note (2) above.
(11) Laurans A. Mendelson disclaims beneficial ownership with respect to
148,290 of these shares, which are held in the name of MIC, 18,750
shares which were donated to Laurans A. and Arlene H. Mendelson
Charitable Foundation, Inc., of which Mr. Mendelson is president and
232,360 shares held of record by employees and former shareholders of
the Company's Northwings subsidiary but subject to a voting proxy held
by Mr. Mendelson. The remaining 1,347,928 shares are held solely by Mr.
Mendelson or LAM Limited Partners and include 765,105 shares covered by
currently exercisable stock options and 16,452 shares held by the HEICO
Savings and Investment Plan and allocated to Mr. Mendelson's account.
See Notes (3), (9) and (11).
3
<PAGE>
(12) Reflects 148,290 shares held by MIC, 247,982 shares covered by
currently exercisable stock options, of which 156,485 shares are held
by the Victor H. Mendelson Revocable Investment Trust and 7,271 shares
held by the HEICO Savings and Investment Plan and allocated to Victor
H. Mendelson's account. See Note (2) above.
(13) Albert Morrison Jr.'s voting and dispositive power with respect to
15,481 of these shares is held indirectly through Sheridan Ventures,
Inc., a corporation of which Mr. Morrison is the President, but not a
shareholder.
(14) Reflects 111,182 shares subject to presently exercisable stock options.
(15) Reflects 190,640 shares covered by currently exercisable stock options
and 24,170 shares held by the HEICO Savings and Investment Plan and
allocated to Thomas S. Irwin's account.
(16) Reflects 104,930 shares covered by currently exercisable stock options,
4,939 shares held for the benefit of Mr. Reum by a non-qualified
deferred compensation plan made available by the Company to selected
executive officers and 4,702 shares held by the HEICO Savings and
Investment Plan and allocated to James L. Reum's account.
(17) Reflects 1,915,645 shares covered by currently exercisable stock
options. The total for all directors and officers as a group (11
persons) also includes 63,516 shares held by the HEICO Savings and
Investment Plan and allocated to accounts of officers pursuant to the
Plan. See Note (3) above.
(18) Reflects all shares and options held by all directors and officers (11
persons), the HEICO Savings and Investment Plan and all members of the
Mendelson Reporting Group.
4
<PAGE>
PROPOSAL TO ELECT DIRECTORS
(PROPOSAL NO. 1)
Each of the nine individuals named in the table below has been
nominated by management for election to the Board at the annual meeting to serve
until the next annual meeting or until his successor is elected and qualified.
All of the nominees are currently serving as directors.
<TABLE>
<CAPTION>
DIRECTOR SINCE
--------------
NAME AGE CORPORATE OFFICE OR POSITION
- ---- --- ----------------------------
<S> <C> <C>
Jacob T. Carwile 75 Director(1)(3) 1975
Samuel L. Higginbottom 76 Director(1)(2)(5) 1989
Paul F. Manieri 80 Director(1)(2)(4) 1985
Eric A. Mendelson 32 Vice President of the Company; President of HEICO 1992
Aerospace Holdings Corp. and Director(6)
Laurans A. Mendelson 59 Chairman of the Board, President and Chief Executive 1989
Officer, Director(2)(6)
Victor H. Mendelson 30 Vice President and General Counsel of the Company; 1996
President of HEICO Aviation Products Corp. and
Director(4)(6)
Albert Morrison, Jr. 61 Director (3)(5) 1989
Dr. Alan Schriesheim 67 Director(2)(4) 1984
Guy C. Shafer 79 Director(1)(5) 1989
</TABLE>
- ----------
(1) Member of Nominating and Executive Compensation Committee.
(2) Member of Executive Committee.
(3) Member of Finance/Audit Committee.
(4) Member of Environmental, Safety and Health Committee.
(5) Member of Stock Option Plan Committee.
(6) Laurans A. Mendelson is the father of Eric A. Mendelson and Victor H.
Mendelson.
BUSINESS EXPERIENCE OF NOMINEES
Mr. Jacob T. Carwile retired as a Lt. Col. from the United States Air
Force ("USAF"), and presently serves as an aerospace consultant. During Mr.
Carwile's USAF career, Mr. Carwile served as a command pilot and procurement
officer, working extensively in the development, testing, and production of many
aircraft, helicopters, and engines. Mr. Carwile also served in special
management positions with numerous overhaul and modification facilities in the
United States and Spain. From 1972 to 1987 Mr. Carwile served as president of
Decar Associates, which provided aviation material to the U.S. government and
the aerospace industry.
Mr. Samuel L. Higginbottom is a retired executive officer of Rolls
Royce, Inc. (an aircraft engine manufacturer), where he served as Chairman,
President and Chief Executive Officer from 1974 to 1986. He was the Chairman of
the Columbia University Board of Trustees from 1982 until September 1989. Mr.
Higginbottom was President, Chief Operating Officer and a director of Eastern
Airlines, Inc., from 1970 to 1973 and served in various other executive
capacities with that company from 1964 to 1969. Mr. Higginbottom is a director
of British Aerospace Holdings, Inc., an aircraft manufacturer, and was a
director of AmeriFirst Bank from 1986 to 1991. He is also Vice Chairman of the
Board of Trustees of St. Thomas University, Miami, Florida.
Mr. Paul F. Manieri is a management consultant and retired executive of
IBM Corporation, for which he served in various positions for 44 years,
including Director of Manufacturing and Engineering for IBM World Trade
Corporation and Director of Personnel and Director of Communications for IBM
Corporation.
5
<PAGE>
Mr. Eric A. Mendelson has been President of HEICO Aerospace Holdings
Corp. ("HEICO Aerospace"), a subsidiary of HEICO, since its formation in 1997
and President of HEICO Aerospace Corporation since 1993 and a Vice President of
HEICO since 1992. He also served as President of HEICO's Jet Avion Corporation,
a wholly-owned subsidiary of HEICO Aerospace, from 1993 to 1996 and served as
Jet Avion's Executive Vice President and Chief Operating Officer from 1991 to
1993. From 1990 to 1991, Mr. Mendelson was Director of Planning and Operations
of HEICO. Mr. Mendelson is a co-founder and, since 1987, has been Managing
Director of Mendelson International Corporation, a private investment company
which is a shareholder of HEICO (see "Voting Securities of Principal
Shareholders and Management," above). Mr. Mendelson received his MBA from
Columbia University Graduate School of Business and his AB degree from Columbia
College.
Mr. Laurans A. Mendelson has served as Chairman of the Board and Chief
Executive Officer of HEICO since 1990 and President since 1991. Mr. Mendelson
served as Chairman of the Board of Directors of US Diagnostic Inc. from February
1997 until his resignation in December 1997. Mr. Mendelson has been Chairman of
the Board of Ambassador Square, Inc. (a real estate development and management
company) since 1980 and President of that company since 1988, as well a Chairman
of the Board of Columbia Ventures, Inc. (a private investment company) since
1985 and that company's President since 1988. He is a member of the Board of
Trustees of Columbia University. Mr. Mendelson was a member of the Board of
Governors of the Aerospace Industries Association in 1997, the Board of Trustees
of Mt. Sinai Medical Center, Miami Beach, Florida and Chairman of the Hollywood
Economic Growth Corporation, Hollywood, Florida, a not-for-profit community
advancement company. He is a member of the American Institute of Certified
Public Accountants, the Florida Institute of Certified Public Accountants, the
New York State Society of Certified Public Accountants and Society of University
Grand Founders of the University of Miami. Mr. Mendelson received his MBA from
Columbia University Graduate School of Business and his AB degree from Columbia
College.
Mr. Victor H. Mendelson has served as a Vice President of HEICO since
1996, as President of HEICO Aviation Products Corp. ("HEICO Aviation"), a
wholly-owned subsidiary of HEICO, since 1996 and General Counsel of the Company
since 1993. He served as Executive Vice President of MediTek Health Corporation
from 1994 until its sale by HEICO, and its Chief Operating Officer from 1995
until its sale. He was HEICO's Associate General Counsel from 1992 until 1993.
From 1990 until 1992, he worked on a consulting basis with HEICO developing and
analyzing various strategic opportunities. Mr. Mendelson is a co-founder and,
since 1987, has been President of Mendelson International Corporation (a private
investment company which is a shareholder of HEICO) (see "Voting Securities of
Principal Shareholders and Management," above). He is a Trustee of St. Thomas
University of Miami, Florida. He received his JD degree from the University of
Miami and his AB degree from Columbia College.
Mr. Albert Morrison, Jr. has served as President of Morrison, Brown,
Argiz & Company, a certified public accounting firm located in Miami, Florida,
since 1971. Mr. Morrison has served as the Vice Chairman of the Dade County
Industrial Development Authority since 1983. Mr. Morrison is the Treasurer of
the Florida International University Board of Trustees and has served as a
Trustee since 1980. Mr. Morrison also serves as a director of Logic Devices,
Inc., a computer electronics company and Walnut Financial Services, Inc., a
financial services company.
Dr. Alan Schriesheim is retired from the Argonne National Laboratory,
where he served as Director from 1984 to 1996. From 1983 to 1984, he served as
Senior Deputy Director and Chief Operating Officer of Argonne. From 1956 to
1983, Dr. Schriesheim served in a number of capacities with Exxon Corporation in
research and administration, including positions as General Manager of the
Engineering Technology Department for Exxon Research and Engineering Co. and
Director of Exxon's Corporate Research Laboratories. Dr. Schriesheim is also a
director of the Rohm and Haas Company, a chemical company, and a member of the
Board of the Children's Memorial Hospital of Chicago, Illinois.
Mr. Guy C. Shafer is retired from Coltec Industries, Inc., formerly
Colt Industries, Inc., (a manufacturer of aviation and automotive equipment),
where he served as Advisor to the Chief Executive Officer from 1987 to 1988,
Executive Vice President from 1985 to 1986 and Group Vice President from 1969 to
1985. Mr. Shafer has been in the aviation and automotive manufacturing industry
since 1946.
6
<PAGE>
Meetings of the Board are held periodically during the year. The Board
held six meetings in fiscal 1997. The Board currently has five standing
committees: the Executive Committee; the Nominating and Executive Compensation
Committee; the Finance/Audit Committee; the Environmental, Safety and Health
Committee and the Stock Option Plan Committee. The Executive Committee has such
powers as are delegated by the Board, which may be exercised while the Board is
not in session, provided such powers are not in conflict with specific powers
conferred to other committees or are otherwise contrary to law. The Nominating
and Executive Compensation Committee determines the Company's director and
officer requirements and recommends to the full Board nominees for election. The
Nominating and Executive Compensation Committee does not solicit nominations
from shareholders. That Committee also reviews and approves compensation of the
Company's officers, key employees and directors. The Finance/Audit Committee
meets with the Company's Chief Financial Officer and its auditors to review the
scope and results of their audits and consults with the auditors with respect to
the Company's internal controls. In addition, the Finance/Audit Committee
reviews financial matters which may arise from time to time. The Environmental,
Safety and Health Committee meets with the Company's senior management and
oversees compliance in all matters relating to federal and state environmental,
safety and health regulations. The Stock Option Plan Committee administers the
Company's stock option plans including authority to grant options, determines
the persons to whom and the times at which options are granted, and determines
the terms and provisions of each grant. During fiscal 1997, no separate meetings
of the Executive Committee were held, the Nominating and Executive Compensation
Committee met four times, the Finance/Audit Committee met twice, the Stock
Option Plan Committee met three times and the Environmental, Safety and Health
Committee met four times.
The persons named in the enclosed proxy card intend to vote such proxy
for the election of the listed nominees, or, in the event of death,
disqualification, refusal or inability of any nominee to serve, for the election
of such other person as management may recommend in the place of such nominee to
fill such vacancy. Management has no reason to believe that any of the nominees
will not be a candidate or will be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR ALL OF
MANAGEMENT'S NOMINEES.
COMPENSATION OF DIRECTORS
Directors receive director's fees of $1,000 for each regular Board
meeting attended and an annual retainer of $18,000. Directors of the Company are
required to purchase shares of HEICO Common Stock equivalent to 1/3 of their
annual retainers ($6,000). Members of committees of the Board of the Company are
paid a $2,000 annual retainer for each committee served and $500 for attendance
at each committee meeting. In addition, committee chairmen are paid an annual
retainer of $1,000 for each committee chaired. During fiscal 1997, an aggregate
of $150,452 was paid to directors under the compensation arrangements described
above (including $22,642 paid to Jacob Carwile, $26,142 paid to Samuel
Higginbottom, $27,642 paid to Paul Manieri, $26,242 paid to Albert Morrison,
$23,642 paid to Dr. Alan Schriesheim and $24,142 paid to Guy Shafer), excluding
amounts paid to Laurans A. Mendelson, Eric A. Mendelson and Victor H. Mendelson,
which are reported in the Summary Compensation Table. Per diem fees for other
consulting services are paid to individual directors, as assigned by the
Chairman of the Board, in the amount of $600 per day. During fiscal 1997, an
aggregate of $112,325 was paid to directors for consulting services (including
$25,200 paid to Jacob Carwile, $78,000 paid to Samuel Higginbottom, $5,950 paid
to Paul Manieri and $3,175 paid to Dr. Alan Schriesheim).
The Company's Directors' Retirement Plan, adopted in 1991 in order to
facilitate Director retirements, covers the then current directors of the
Company. Under the Directors' Retirement Plan, participants will, upon
retirement from the Board, receive annually the average retainer such director
was paid during his service as a member of the Board payable in quarterly
installments. Such quarterly payments are not to be less than $3,000. Subject to
the terms of the Directors' Retirement Plan, these quarterly payments will
continue for the same period of time that the participant served on the Board,
not to exceed ten years. During fiscal 1997, $76,000 was accrued, while no
amounts were paid pursuant to the Directors' Retirement Plan.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries, to or on
behalf of the Company's Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company or its subsidiaries
(determined as of the end of the last fiscal year) for the fiscal years ended
October 31, 1995, 1996 and 1997:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------
AWARDS PAYOUTS
----------------------- -----------
ANNUAL COMPENSATION (1) RESTRICTED ALL OTHER
NAME AND ----------------------------------------- STOCK OPTIONS/ LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OTHER ($) AWARD(S) ($) SARS(#)(2) PAYOUTS ($) ($)
- ------------------ ---- ---------- --------- --------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Laurans A. Mendelson 1997 350,000 200,000 169,642 (3) 0 45,000 0 28,299 (11)
Chairman of the Board, 1996 325,000 200,000 326,967 (4) 0 61,257 0 29,500 (11)
President and Chief 1995 312,000 200,000 18,000 (5) 0 98,828 0 27,870 (11)
Executive Officer
Thomas S. Irwin 1997 165,000 85,000 90,000 (6) 0 47,250 0 9,759 (12)
Executive Vice President 1996 155,481 85,000 100,000 (7) 0 13,613 0 10,630 (12)
and Chief Financial Officer 1995 150,000 65,000 0 0 32,943 0 9,000 (12)
Eric A. Mendelson 1997 150,000 190,000 16,642 (5) 0 79,500 0 9,000 (12)
Vice President; 1996 139,134 150,000 73,697 (8) 0 41,180 0 9,681 (12)
President of HEICO 1995 125,000 95,000 16,000 (5) 0 41,180 0 7,505 (12)
Aerospace Holdings Corp.
Victor H. Mendelson 1997 150,000 80,000 130,339 (9) 0 79,500 0 9,000 (12)
Vice President and 1996 137,404 50,000 157,500 (10) 0 64,254 0 9,549 (12)
General Counsel;
President of HEICO
Aviation Products Corp.
James L. Reum 1997 150,000 150,000 0 0 39,750 0 7,326 (12)
Executive Vice President and 1996 130,481 100,000 0 0 19,058 0 8,303 (12)
Chief Operating Officer of 1995 110,000 65,000 0 0 8,237 0 6,671 (12)
HEICO Aerospace Holdings Corp.
</TABLE>
FOOTNOTES ON NEXT PAGE
8
<PAGE>
(1) Salary and bonus amounts include amounts deferred by executive officers
pursuant to a non-qualified deferred compensation plan available to
selected executive officers. Under such deferred compensation plan,
selected employees may elect to defer a portion of their compensation.
Amounts deferred are immediately vested and invested in individually
directed investment accounts. Earnings on such investment accounts,
which are maintained by a Trustee, accrue to the benefit of the
individual.
(2) The Company has not granted and does not currently grant Stock
Appreciation Rights ("SARs"). The option share amounts presented have
been adjusted for stock dividends.
(3) Represents a special $150,000 cash incentive payment awarded from the
proceeds of the sale of a minority interest in HEICO Aerospace Holdings
Corp., a subsidiary of the Company, and the payment of directors' fees
totaling $19,642.
(4) Represents a special $300,000 cash incentive payment awarded from the
proceeds of the sale of MediTek Health Corporation and the payment of
directors' fees totaling $26,697.
(5) Represents payments of directors' fees.
(6) Represents a special $90,000 cash incentive payment awarded from the
proceeds of the sale of a minority interest in HEICO Aerospace Holdings
Corp., a subsidiary of the Company.
(7) Represents a special cash incentive payment awarded from the proceeds
of the sale of MediTek Health Corporation.
(8) Represents a special $50,000 cash incentive payment awarded from the
proceeds of sale of MediTek Health Corporation and the payment of
directors' fees totaling $23,697.
(9) Represents a special $110,000 cash incentive payment awarded from the
proceeds of the sale of a minority interest in HEICO Aerospace Holdings
Corp., a subsidiary of the Company, and the payment of directors' fees
totaling $20,339.
(10) Represents a special $150,000 cash incentive payment awarded from the
proceeds of the sale of MediTek Health Corporation and the payment of
directors' fees totaling $7,500.
(11) Includes annual life insurance premiums paid by the Company of $18,750
in fiscal years 1997, 1996 and 1995. Amount also includes Company
contributions to his HEICO Savings and Investment Plan account of
$9,549 in fiscal 1997, $10,750 in fiscal year 1996 and $9,120 in fiscal
year 1995. Prior to receiving a portion of the Company contributions
under such plan, Mr. Mendelson contributed, in cash, twice the amount
that he received in stock. Participation in the HEICO Savings and
Investment Plan is available to nearly all employees of the Company.
(12) Represents Company contributions to the HEICO Savings and Investment
Plan account of the named executive. Prior to receiving a portion of
the Company contributions under such plan, each named executive
contributed, in cash, twice the amount that he received in HEICO stock.
Participation in the HEICO Savings and Investment Plan is available to
nearly all employees of the Company.
9
<PAGE>
OPTION/SAR GRANTS TABLE
The following table sets forth information concerning individual grants
of stock options pursuant to the Company's Non-Qualified Stock Option Plan (the
"NQSO Plan") and 1993 Stock Option Plan during the fiscal year ended October 31,
1997 to the Company's Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company. The Company has not
granted and does not currently grant stock appreciation rights. The option share
and per option share price amounts have been adjusted for stock dividends and a
stock split.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS/SARS POTENTIAL REALIZABLE VALUE AT
OPTIONS/SARS GRANTED TO EXERCISE OR MARKET PRICE ASSUMED ANNUAL RATES OF STOCK
GRANTED EMPLOYEES IN BASE PRICE ON DATE OF EXPIRATION APPRECIATION FOR OPTION TERM (2)
NAME AND PRINCIPAL POSITION (#)(1) FISCAL YEAR ($/SH) GRANT DATE 0% ($) 5% ($) 10% ($)
- --------------------------- ------------ ------------ ----------- ------------ ---------- ------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Laurans A. Mendelson 45,000 8% $14.92 $14.92 06/06/07 0 $422,240 $1,070,038
Chairman of the Board,
President and Chief
Executive Officer
Thomas S. Irwin 12,375 2% $12.73 $12.73 12/13/06 0 $99,050 $251,014
Executive Vice President 22,500 4% $14.92 $14.92 06/06/07 0 $211,069 $534,907
and Chief Financial Officer 12,375 2% $12.65 $12.65 12/13/06 0 $98,459 $249,516
Eric A. Mendelson 24,750 5% $12.73 $12.73 12/13/06 0 $198,101 $502,029
Vice President; 30,000 6% $17.50 $17.50 09/12/07 0 $330,170 $836,715
President of HEICO 24,750 5% $12.65 $12.65 12/13/06 0 $196,919 $499,033
Aerospace Holdings Corp.
Victor H. Mendelson 24,750 5% $12,73 $12.73 12/13/06 0 $198,101 $502,029
Vice President and 30,000 6% 17.50 $17.50 09/12/07 0 $330,170 $836,715
General Counsel; 24,750 5% $12.65 $12.65 12/13/06 0 $196,919 $499,033
President of HEICO
Aviation Products Corp.
James L. Reum 24,750 5% $12,73 $12.73 12/13/06 0 $198,101 $502,029
Executive Vice President and 15,000 3% $17.50 $17.50 09/12/07 0 $165,084 $418,357
Chief Operating Officer of
HEICO Aerospace Holdings Corp.
</TABLE>
- ----------
(1) Options were 100% vested at grant; No stock appreciation rights have
been granted.
(2) Based upon arbitrary assumptions of 0%, 5%, and 10% annual appreciation
of the Company's Common Stock through the expiration date of the
executive's options granted during the last fiscal year.
10
<PAGE>
AGGREGATED OPTION/SAR EXERCISES AND
FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table sets forth information concerning unexercised
options to purchase the Company's Common Stock as of October 31, 1997 under the
Company's Combined Stock Option Plan, NQSO Plan and 1993 Stock Option Plan held
by the Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company. Also reported are the values for
"in-the-money" options which represent the positive spread between the exercise
price of any such existing stock options and the closing price of HEICO Common
Stock on the composite tape of the American Stock Exchange ("AMEX") on October
31, 1997:
<TABLE>
<CAPTION>
AGGREGATE OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
---------------------------------------------
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
AT FY-END(#) AT FY-END($)
SHARES ACQUIRES ON EXERCISABLE/ EXERCISABLE/
NAME AND PRINCIPAL POSITION EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE(1) UNEXERCISABLE
- --------------------------- ------------------ ------------------ ---------------- -------------
<S> <C> <C> <C> <C>
Laurans A. Mendelson 0 0 765,105E 15,088,865E
Chairman of the Board,
President and Chief
Executive Officer
Thomas S. Irwin 23,332 $214,426 190,640E 3,533,945E
Executive Vice President 9,282U 106,502U
and Chief Financial Officer
Eric A. Mendelson 0 0 248,730E 4,261,188E
Vice President; President 18,563U 212,992U
of HEICO Aerospace
Holdings Corp.
Victor H. Mendelson 0 0 247,982E 4,195,155E
Vice President and General 19,313U 226,546U
Counsel; President of
HEICO Aviation Products
Corp.
James L. Reum 0 0 104,930E 1,621,851E
Executive Vice President 3,295U 69,870U
and Chief Operating
Officer of HEICO Aerospace
Holdings Corp.
</TABLE>
- ------------------
E - Denotes exercisable options.
U - Denotes unexercisable options.
(1) Option share amounts have been adjusted for stock dividends and stock
splits.
11
<PAGE>
NOMINATING AND EXECUTIVE COMPENSATION COMMITTEE REPORT
THE COMMITTEE
The Nominating and Executive Compensation Committee (the "Committee")
of the Board is composed entirely of members of the Board who were not, during
the three year term prior to service on the Committee or during the period of
service on the Committee, granted options under any Company stock option plan.
No member of the Committee is a current or former employee or officer of the
Company or any of its' affiliates. Decisions concerning compensation of the
Company's executive officers generally are made by the Committee and all
decisions by the Committee relating to compensation of the Company's executive
officers are reviewed by the full Board, except that decisions relating to
awards under the Company's 1993 Stock Option Plan are made by the Stock Option
Plan Committee (the "SOC") and are further ratified by the Board.
COMPENSATION PHILOSOPHY
In general, the Company's primary objectives in establishing executive
compensation are: (i) incentivizing management to improve earnings and maximize
shareholder value; (ii) ensuring that the interests of shareholders and the
Company's management are properly aligned; (iii) long-term growth pursuit by
management; (iv) recruitment of top-quality management; (v) stimulation of both
entrepreneurial and team objectives by management; and (vi) obtaining and
retaining high-quality managers in an increasingly competitive compensation
market. Because a common stock security is usually priced at a multiple of a
company's earnings, the Committee believes that stock-based compensation
stimulates managers to maximize the Company's stock price by increasing
earnings. THE COMMITTEE BELIEVES THAT THIS PHILOSOPHY LED TO THE COMPANY'S 134%
SHARE PRICE INCREASE IN FISCAL 1997, 62% SHARE PRICE INCREASE IN FISCAL 1996,
ITS 112% SHARE PRICE INCREASE IN FISCAL 1995 AND THE 92%, 267%, 46% AND 88%
EARNINGS INCREASES IN FISCAL 1997, 1996, 1995 AND 1994, RESPECTIVELY.
Historically, the Company has refrained from paying large base cash
compensation and has paid cash bonuses only upon quantitative earnings
improvements. Stock options have allowed the Company to limit its cash
compensation risk by granting such options which are not charged to the
Company's income and which yield gains for officers only upon the Company's
success. Further, numerous publicly-held corporations issue stock options to
their employees and the Committee believes that the Company must do so in order
to remain competitive in the employment markets.
Stock option holders do not receive any income or other benefit from
their stock options unless all shareholders gain from an increase in the
Company's stock price. If management's efforts do not result in a share price
increase, management will forego potentially sizeable financial gains, which
gains often represent a substantial income expectation for certain officers. The
Committee believes that HEICO's management has worked diligently to improve the
Company's performance, which has provided management with gains on their stock
options.
RELATIONSHIP TO PERFORMANCE UNDER COMPENSATION PLANS
Compensation paid to the Company's executive officers in 1997, as
reflected in the foregoing tables, consisted essentially of base salary, cash
bonuses, stock options, and Company contributions to the HEICO Savings and
Investment Plan (the "Savings and Investment Plan"). All employees of the
Company and certain subsidiaries are eligible to participate in the Savings and
Investment Plan, but, under Federal regulations, certain employees of the
Company (such employees include all executive officers who received a matching
contribution to their Savings and Investment Plan accounts) are limited in their
participation. Further, all officers listed herein who are eligible to
participate in the Savings and Investment Plan contributed a portion of their
compensation to the Savings and Investment Plan in order to receive the maximum
of the Company's contribution.
Executive officers' base salaries are determined through the
utilization of comparative industry data and numerous other considerations of
individual performance and corporate goals. The following items are among the
12
<PAGE>
chief factors considered by the Committee in establishing base salaries for the
Company's executive officers: prevailing executive compensation trends;
compensation analysis reports from an independent consulting firm; consultation
with executives; known industry standards; local and geographic standards;
private negotiation with key executives; alternative employment opportunities
available to executives; industry knowledge and experience; complexity and
difficulty of responsibilities; and past and expected future contributions to
the Company's development.
The Committee seeks to reward management's success in meeting the goals
set forth for the Company. Specifically, management had embarked on an ambitious
product development program to expand HEICO Aerospace's product offering.
Management has repeatedly met or exceeded its new product sales goals during
each of the past three years and is currently expected to meet or exceed those
goals in 1998. The new product development program is critical to the Company's
earnings growth. Because, due in large measure to management's efforts, HEICO
Aerospace's income from operations increased significantly in 1997 following a
substantial increase in 1996, the Committee feels it is appropriate to reward
certain executive officers for such success. Much of the Company's earnings
growth resulted from HEICO Aerospace's income gains.
The Committee has observed the current management team for numerous
years and has concluded that its bonus policy has appropriately rewarded and
incentivized management for its successes and efforts. During the most recent
fiscal year, management successfully completed a critical and complicated
strategic alliance with a major airline, completed a significant acquisition and
commenced a restructuring and product development campaign at the Company's
recently acquired Ground Support Group. Meanwhile, the Company's continuing
operations witnessed substantial growth, as did the Company's share price.
Accordingly, the Committee again rewarded management with bonuses during 1997.
Although the Committee believes that its compensation policies
stimulate long-term growth and attention to short-term considerations, it
intends to regularly review compensation practices and may, depending upon
conditions in its businesses and other factors, revise its policies.
CHIEF EXECUTIVE OFFICER
The Committee evaluates the Chief Executive Officer's compensation
annually. The primary standards which the Committee considers with regard to the
Chief Executive Officer's compensation are substantially the same as those
described with regard to executive officers in general. Further, the Committee
assesses past performance, ability to deliver predicted results and expectation
of further contributions to the Company.
The Committee believes that the Company has prospered under Mr.
Mendelson's leadership. Specifically, the Company has expanded its aerospace
product line while restructuring its aerospace operations, and successfully
entered and sold a new, profitable line of business, which grew substantially
since its commencement. Under Mr. Mendelson's tenure, the Company has completed
the strategic alliance referenced above and two other significant strategic
acquisitions.
The Committee desires to continue to induce Mr. Mendelson to devote
substantially all of his time and effort to the Company and to forego other
potentially lucrative business transactions. In doing so, the Committee has
considered Mr. Mendelson's other successful business activities unrelated to the
Company.
Further, the Company's commercial bank has required that the Company
retain Mr. Mendelson's services in order to obtain and retain its credit
facility. The Company's lender has also required that Mr. Mendelson and his
family maintain their present ownership position in the Company in order to
retain the credit facility. These requirements were made at the lender's sole
request as part of the Company's loan agreement with the lender. Accordingly,
the Board believes that it is essential to ensure Mr. Mendelson's continued
management of the Company by providing him with sufficient incentive to remain
as the Company's Chief Executive Officer and to induce him to maintain his
significant investment in the Company.
13
<PAGE>
The Committee ascribes to the well established business philosophy that
equity ownership by management is essential. Accordingly, because Mr. Mendelson
has made a substantial equity commitment to the Company, the Committee finds it
necessary and appropriate to consider this factor in establishing Mr.
Mendelson's compensation level.
1997 STOCK OPTION GRANTS
As discussed previously in this report, the Committee believes that
stock options are a critical method of aligning shareholder and management
interests because such options are likely to cause managers to reap economic
reward only if other shareholders gain. Further, in order to compete with other,
larger corporations for top-quality acquisitions and management talent, the
Board recognizes that it must supply its managers with the opportunity to
realize large financial gains upon the successful implementation of their goals
and objectives.
Therefore, the Committee awarded stock options to certain executive
officers, as described in the foregoing tables.
SUBMITTED BY THE NOMINATING AND EXECUTIVE COMPENSATION COMMITTEE OF THE
COMPANY'S BOARD OF DIRECTORS: PAUL F. MANIERI, JACOB T. CARWILE, SAMUEL L.
HIGGINBOTTOM, AND GUY C. SHAFER. EMPLOYMENT AGREEMENTS
Thomas S. Irwin and the Company are parties to a key employee
termination agreement which provides a lump sum severance payment equal to two
years' compensation if his employment is terminated within three years after a
change in control of the Company (as defined in the key employee termination
agreement).
14
<PAGE>
PERFORMANCE GRAPH
The SEC requires that the Company include in this Proxy
Statement/Prospectus a line-graph presentation comparing cumulative, five-year
shareholder returns on an indexed basis with the American Stock Exchange Total
Value Index and either a nationally recognized industry standard or an index of
peer companies selected by the Company. For purposes of this performance
comparison, the Company has selected the Dow Jones Aerospace & Defense Group
Index, which is comprised of companies which make air transportation vehicles,
major weapons, defense equipment or defense radar systems.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
HEICO Common Stock......................... $100.00 $111.77 $77.92 $166.04 $271.06 $636.29
American Stock Exchange Value Index........ $100.00 $126.12 $120.13 $136.66 $148.99 $177.03
Dow Jones Aerospace Group.................. $100.00 $133.49 $160.12 $244.23 $346.98 $391.51
</TABLE>
15
<PAGE>
PROPOSAL TO APPROVE THE AMENDMENT OF HEICO'S 1993 STOCK OPTION PLAN
(PROPOSAL NO. 2)
The HEICO Corporation 1993 Stock Option Plan was established in 1993,
providing the availability of stock options for grant to officers and key
personnel of HEICO and its subsidiaries. The principal purpose of the 1993 Stock
Option Plan is to continue to attract and retain qualified and competent persons
who provide management and other services and upon whose efforts and judgment
the success of HEICO and its subsidiaries is largely dependent. Under the 1993
Stock Option Plan, 1,282,500 shares of Common Stock, after adjustment for stock
dividends and splits as set forth below, were reserved for issuance upon
exercise of options under the 1993 Stock Option Plan. As of January 31, 1998,
17,172 shares remain available for issuance under the 1993 Stock Option Plan. In
addition, 644,099 shares of Common Stock, after adjustment for stock dividends
and splits, were reserved for issuance upon exercise of options granted under
the Company's NQSO Plan. As of January 31, 1998, 28,009 shares remain available
for issuance under the NQSO Plan.
AMENDMENTS TO THE PLAN
On December 11, 1997, the Board unanimously approved, subject to the
approval of HEICO's shareholders, an amendment to the 1993 Stock Option Plan to
increase the number of shares issuable pursuant to the 1993 Stock Option Plan by
400,000 shares to 1,682,500 shares. As noted above, only 17,172 shares currently
remain eligible for grant under the 1993 Stock Option Plan. A copy of the entire
text of HEICO's 1993 Stock Option Plan is attached to this Proxy Statement as
Exhibit A. The summary, as set forth below, of the 1993 Stock Option Plan and
principal provisions of the proposed amendment is qualified in its entirety by
reference to the attached full text of the proposed revised 1993 Stock Option
Plan.
The purpose of increasing the number of shares available for issuance
under the 1993 Stock Option Plan is to ensure that HEICO will continue to be
able to grant options as incentives to those individuals upon whose efforts the
Company relies for the continued success, development and growth of its
business.
SUMMARY
The 1993 Stock Option Plan is designed to comply with the SEC Rule
16b-3 exemption from the short-swing profit recovery provisions of Section 16(b)
of the Exchange Act. For the full text of the 1993 Stock Option Plan, see
Exhibit A to this Proxy Statement/Prospectus.
The 1993 Stock Option Plan provides for the issuance of incentive stock
options within the meaning of Section 422 of the Internal Revenue Code (the
"Code") and for the issuance of non-qualified stock options (not intended to
qualify under Section 422 of the Code). If any option granted under the 1993
Stock Option Plan expires or becomes unexercisable for any reason without having
been exercised in full, the unissued shares of HEICO Common Stock which are
subject to such option generally become available for further grant under the
1993 Stock Option Plan.
The 1993 Stock Option Plan is administered by a committee (the "Stock
Option Committee") consisting of three members of the HEICO Board, each of whom
is a non-employee director as defined in Rule 16b-3.
Subject to the provisions of the 1993 Stock Option Plan, the Stock
Option Committee has the authority, in its discretion, to, among other things:
(i) grant options; (ii) determine the persons to whom, and the times at which
options are granted and the number of shares of HEICO Common Stock into which
each option is exercisable; (iii) determine the terms and provisions of each
option granted; and (iv) interpret the 1993 Stock Option Plan and make all other
determinations deemed necessary or advisable for its administration.
The exercise price of options granted pursuant to the 1993 Stock Option
Plan shall be determined by the Stock Option Committee; PROVIDED, HOWEVER, that
in no event shall the option price of any incentive stock option be less than
(i) 100% or (ii) in the case of an individual who owns stock possessing more
than 10% of the total
16
<PAGE>
combined voting power of all classes of stock of HEICO, 110% of the fair market
value of the shares underlying such option on the date such option is granted.
The 1993 Stock Option Plan provides that no incentive stock option may
be granted to an employee of HEICO or its subsidiaries if, as a result of such
grant, the aggregate fair market value (determined at the time the option was
granted) of the HEICO Common Stock into which such option is exercisable for the
first time by such employee during any calendar year (under all plans of HEICO
and its subsidiaries) exceeds $100,000. The 1993 Stock Option Plan also limits
the number of stock options which may be granted to any individual employee in
any fiscal year to options covering not more than 100,000 shares.
The term of each option is determined by the Stock Option Committee but
shall never exceed ten years. In the event of an incentive stock option granted
to an optionee owning more than 10% of the combined voting power of all classes
of stock of HEICO, such options shall have a term not to exceed five years.
Unless limited by the Stock Option Committee, the acceptable methods of
payment of the exercise price of options under the 1993 Stock Option Plan
include cash, check, promissory note, other shares of HEICO's Common Stock
(including shares acquired pursuant to a partial and simultaneous exercise of an
option) or any combination thereof. The Stock Option Committee, in its
discretion, may accept other forms of payment. The 1993 Stock Option Plan sets
forth additional provisions with respect to the exercise of options by optionees
upon the termination of their employment and upon their death.
Subject to certain limitations, the number of shares of HEICO Common
Stock covered by each outstanding option granted under the 1993 Stock Option
Plan, the number of shares of HEICO Common Stock which are authorized for
issuance but as to which no options have been granted (or which have been
returned to the 1993 Stock Option Plan upon cancellation or expiration of any
option) and the exercise price per share of outstanding options, are
proportionately adjusted for any increase or decrease in number of issued shares
of HEICO Common Stock resulting from a stock split or stock dividend. Subject to
certain limitations, in the event of a proposed dissolution, liquidation, merger
of sale of all or substantially all of the assets of HEICO in which HEICO does
not survive, outstanding options shall become immediately fully exercisable.
Additionally, outstanding options shall generally become immediately fully
exercisable upon a change of control of HEICO. The Stock Option Committee or
Board may accelerate the exercise of such options in such a case to a date which
is prior to such transaction.
Subject to certain limitations set forth in the 1993 Stock Option Plan,
the Stock Option Committee may amend the 1993 Stock Option Plan as it deems
advisable, PROVIDED, HOWEVER, that the approval of the holders of a majority of
the outstanding HEICO Common Stock is necessary to amend the 1993 Stock Option
Plan to increase the number of shares of HEICO Common Stock subject to the 1993
Stock Option Plan, to change the eligibility requirements to participate in the
1993 Stock Option Plan or to materially increase the benefits accruing to
participants under the 1993 Stock Option Plan.
FEDERAL INCOME TAX CONSEQUENCES: INCENTIVE STOCK OPTIONS. Certain
options granted under the 1993 Stock Option Plan are intended to qualify as
incentive stock options within the meaning of Section 422 of the Code. An
employee to whom an incentive stock option is granted pursuant to the 1993 Stock
Option Plan generally will not recognize any compensation income, and HEICO will
not realize any compensation deduction, at the time the incentive stock option
is granted or at the time the incentive stock option is exercised. In the year
of exercise, however, the amount by which the fair market value of the HEICO
Common Stock exceeds the option price will be included in the employee's
alternative minimum taxable income. Special alternative minimum tax rules apply
if the employee does not meet the "ISO holding period requirements" discussed
below.
In order to obtain incentive stock option treatment for federal income
tax purposes upon the subsequent sale (or other disposition) by the optionee of
the shares of HEICO Common Stock received upon exercise of the option, the sale
(or other disposition) must not occur within two years from the date of the
granting of the option nor within one year after the issuance of such shares
upon exercise of the option (the "ISO holding period requirements"). If the ISO
holding period requirements are satisfied, on the subsequent sale (or other
disposition) by the optionee
17
<PAGE>
of the shares of HEICO Common Stock received upon the exercise of such an
option, the optionee generally will realize income equal to the difference, if
any, between the proceeds realized from the sale (or other disposition) and the
amount paid as the exercise price of the option. On the other hand, if the ISO
holding period requirements are not satisfied on the subsequent sale (or other
disposition) by the optionee of the shares of HEICO Common Stock received upon
the exercise of such option, the optionee generally will realize income taxable
as compensation (and HEICO will realize a compensation deduction) in an amount
equal to the lesser of (a) the difference, if any, between the fair market value
of the shares on the date of exercise and the amount paid as the exercise price
of the option or (b) the difference, if any, between the proceeds realized from
the sale or other disposition and the amount paid as the exercise price of such
option. Any additional gain realized on such sale or disposition (in addition to
the compensation income referred to above) would give rise to taxable income.
The tax basis of the shares of HEICO Common Stock received by the
optionee upon exercise will be equal to the amount paid as the exercise price
(plus the amount, if any, includable in his or her gross income as compensation
income, as referred to in the immediately preceding paragraph). The holding
period for such shares will commence on the date of exercise.
FEDERAL INCOME TAX CONSEQUENCES: NON-QUALIFIED OPTIONS. Certain options
granted under the 1993 Stock Option Plan are not intended to qualify as
incentive stock options within the meaning of Section 422 of the Code. An
individual to whom a non-qualified option is granted pursuant to the 1993 Stock
Option Plan generally will not recognize any compensation income, and HEICO will
not realize any compensation deduction, at the time the non-qualified option is
granted. In the year of exercise, however, the optionee generally will realize
income taxable as compensation (and HEICO will realize a compensation deduction)
in an amount equal to the difference, if any, between the fair market value of
the shares on the date of exercise and the amount paid as the exercise price of
the non-qualified option.
The tax basis of the shares of HEICO Common Stock received by the
optionee upon exercise of a non-qualified option will be equal to the amount
paid as the exercise price plus the amount, if any, includable in his or her
gross income as compensation income. The holding period for such shares will
commence on the date of exercise. On the subsequent sale (or other disposition)
by the optionee of the shares of HEICO Common Stock received upon the exercise
of a non-qualified option, any gain realized on such sale or disposition would
give rise to taxable income.
OPTIONS GRANTED UNDER THE PLAN
As of January 31, 1998, options to purchase 2,604,043 shares of Common
Stock were outstanding at an average exercise price of $6.57 per share under all
stock option plans including options to purchase 1,206,314 shares of Common
Stock at an average exercise price of $9.19 per share under the 1993 Stock
Option Plan. Of the total options outstanding, options to purchase 449,680
shares were granted prior to 1990. As of January 31, 1998, 45,181 shares of
Common Stock remained eligible for grant under all stock option plans
represented by 17,172 shares reserved under the 1993 Stock Option Plan and
28,009 shares reserved under the Company's NQSO Plan. The last reported sales
price of the Common Stock on the AMEX composite tape as of January 31, 1998 was
$28.25.
18
<PAGE>
The table below indicates, as of January 31, 1998, the aggregate number
of options granted under all stock option plans since their inception to the
persons and groups indicated, and the number of outstanding options held by such
persons and groups as of such date.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL OR GROUP POSITION WITH HEICO OPTIONS GRANTED(1)(2) OPTIONS OUTSTANDING(1)
--------------------------- ------------------- --------------------- ----------------------
<S> <C> <C>
Laurans A. Mendelson Chairman of the Board, 765,105 765,105
President and Chief
Executive Officer
Thomas S. Irwin Executive Vice President 277,746 199,922
and Chief Financial
Officer
Eric A. Mendelson(3) Director and Vice 267,293 267,293
President of HEICO
Corporation; President
of HEICO Aerospace
Holdings Corp.
Victor H. Mendelson(3) Vice President and 267,295 267,295
General Counsel of
HEICO Corporation;
President of HEICO
Aviation Products Corp.
James L. Reum Executive Vice President 108,225 108,225
and Chief Operating
Officer of HEICO
Aerospace Holdings Corp.
Jacob T. Carwile Director 123,538(4) 123,538
Paul F. Manieri Director 123,538(4) 123,538
Alan Schriesheim Director 123,538(4) 111,182
All current executive officers 1,685,664 1,607,840
All current directors who are 370,614 358,258
not executive officers
All current employees, other 708,706 600,882
than executive officers
</TABLE>
- ----------------------
No other persons have received 5% or more of the total options granted.
(1) After adjustment for stock dividends and stock splits.
(2) Excludes options canceled subsequent to grant.
(3) Eric A. Mendelson and Victor H. Mendelson are sons of Laurans A.
Mendelson.
(4) Options were granted to named Director prior to 1990.
19
<PAGE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board believes that the 1993 Stock Option Plan has provided
significant value to HEICO by facilitating the attraction and retention of
outstanding personnel for management and other positions with the Company.
Industry surveys and the Company's experience within the aerospace industry show
stock options are widely used in attracting, retaining and motivating key
personnel. Further, the Board believes that stock options align the interest of
shareholders and the Company's management because such stock options are
typically granted at no less than the fair market value of the HEICO Common
Stock at the date of grant and therefore the holders do not receive any income
or other benefit from their options unless all shareholders gain from an
increase in the Company's stock price. The Board believes that it continues to
be in the best interest of the Company to be able to grant options as incentives
to those individuals upon whose efforts HEICO relies for the continued success
and development of its business. HEICO believes that shareholders have been
rewarded by the Company's stock option policies, as evidenced by HEICO's share
price increases of 134% in fiscal 1997; 62% in fiscal 1996; 112% in fiscal 1995;
and the 92%, 267%, 46% and 88% increases in the Company's earnings in fiscal
1997, 1996, 1995 and 1994, respectively.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ADOPTION OF THE PROPOSAL TO AMEND THE 1993 STOCK OPTION PLAN.
20
<PAGE>
PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
FROM 20,000,000 SHARES TO 30,000,000 SHARES
(PROPOSAL NO. 3)
GENERAL INFORMATION AND BACKGROUND OF THE SHARE INCREASE AMENDMENT
Effective December 11, 1997, the Company's Board unanimously approved
and adopted the Share Increase Amendment to the Company's Articles pursuant to
which the number of authorized shares of Common Stock would be increased from
20,000,000 shares to 30,000,000 shares and recommended that such Share Increase
Amendment be submitted to the Company's shareholders for approval. This summary
is qualified in its entirety by reference to the complete text of the Share
Increase Amendment, together with the Dual Class Amendment, which is attached to
the Proxy Statement as Exhibit B. Shareholders are urged to read the actual text
of the Share Increase Amendment in its entirety.
Of the 20,000,000 currently authorized shares of Common Stock, as of
January 19, 1998, 8,289,659 shares were issued and outstanding and an additional
2,649,224 were reserved for issuance in connection with outstanding options.
Although presently authorized shares are sufficient to meet all present
requirements, the Board believes that it is desirable that HEICO have the
flexibility to issue a substantial number of shares of Common Stock without
further shareholder action unless required by applicable law or regulation. The
availability of additional shares will enhance the Company's flexibility in
connection with possible future actions, such as corporate mergers, acquisitions
of property, stock dividends, stock splits, and employee benefit programs. The
Board will determine whether, when and on what terms the issuance of shares of
Common Stock may be warranted in connection with any of the foregoing purposes.
During the past three years, the Board has declared numerous stock
dividends and stock splits which have more than tripled the number of the
Company's outstanding shares of Common Stock. These stock splits and dividends
have utilized in excess of 5,000,000 shares of the Company's authorized Common
Stock.
The Board does not intend to seek further shareholder approval prior to
the issuance of any additional shares in future transactions unless required by
law, the Articles or AMEX. Further, the Board does not intend to issue any
Common Stock to be authorized under the proposed Share Increase Amendment except
upon the terms the Board deems to be in the best interests of HEICO and its
shareholders. The issuance of additional Common Stock without further
shareholder approval may, among other things, have a dilutive effect on earnings
per share and on the equity of the present holders of Common Stock and their
voting rights. Holders of Common Stock have no preemptive rights. The
availability for issuance of additional shares of Common Stock also could have
the effect of rendering more difficult or discouraging an attempt to obtain
control of HEICO. For example, the issuance of shares of Common Stock (within
the limits imposed by applicable law and AMEX) in a public or private sale,
merger or similar transaction would increase the number of outstanding shares,
thereby possibly diluting the interest of a party attempting to obtain control
of HEICO. The additional shares also could be used to render more difficult a
merger or similar transaction even if it appears to be desirable to a majority
of the shareholders. HEICO is not aware of any efforts to obtain control of the
Company.
VOTE REQUIRED. Approval of the Share Increase Amendment will require
the affirmative vote of the holders of a majority of the shares of Common Stock
of the Company outstanding and entitled to vote. Abstentions and broker
non-votes are considered shares of stock outstanding and entitled to vote and
are counted in determining the number of votes necessary for a majority. An
abstention or broker non-vote will therefore have the practical effect of voting
against approval of the Share Increase Amendment because it represents one fewer
vote for approval of the Share Increase Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE ADOPTION OF THE SHARE INCREASE AMENDMENT.
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PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION
TO CREATE CLASS A COMMON STOCK
(PROPOSAL NO. 4)
GENERAL INFORMATION AND BACKGROUND OF THE DUAL CLASS AMENDMENT
In recent years, a number of publicly held companies have adopted
capital structures utilizing two classes of common stock. As part of its
consideration of future potential growth strategies, management of the Company
became interested in effecting such a "dual class" structure in order to provide
flexibility in considering, proposing and structuring acquisition and financing
transactions to potentially augment the Company's growth. Although the Company
continually reviews and evaluates acquisition and financing alternatives, and
has previously announced a Convertible Note Offering (as defined below), the
Company does not presently have any agreements, understanding or arrangement
with respect to the issuance of any Class A Common Stock in connection with any
acquisitions or financings.
As indicated in "Voting Securities of Principal Shareholders and
Management.," Laurans A. Mendelson, members of his family and their affiliates
(collectively, the "Mendelson Family Group") beneficially own in the aggregate
approximately 23.71% of the issued and outstanding shares of Common Stock,
including 232,360 shares held of record by employees and former shareholders of
the Company's Northwings subsidiary but subject to a voting proxy held by
Laurans A. Mendelson. In light of the possible effects of a dual class stock
structure on the shareholders of the Company (including the Mendelson Family
Group), on December 11, 1997, the Board appointed a special committee (the
"Special Committee") of two independent directors -- Samuel L. Higginbottom
(chairman) and Albert Morrison, Jr. The Special Committee was asked to review
the proposed Dual Class Amendment and recommend to the Board whether or not to
proceed. The Special Committee met two times relating to the Dual Class
Amendment.
On February 13, 1998, the Special Committee held a conference call
meeting with legal counsel. The objectives sought to be achieved by, and the
various proposed terms of, the Dual Class Amendment were reviewed. The
anticipated benefits and possible disadvantages of the dual class stock
structure to be effected by the Dual Class Amendment were also discussed. See
"Reasons for the Dual Class Structure" and "Certain Potential Disadvantages of
the Dual Class Structure." At that meeting, they also discussed the potential
market price differential between voting and sub-voting shares, the potential
impact on market liquidity, the potential reaction of institutional investors to
sub-voting stock structures and the potential impact on the Company's ability to
raise capital.
At a meeting on February 13, 1998, at which all members were present,
the Special Committee formulated its recommendation to the Board that the
Company adopt the Dual Class Amendment. All of the members of the Special
Committee voted to recommend to the Board the adoption of the Dual Class
Amendment.
On February 14, 1997, each member of the Board considered the Special
Committee's recommendation and reviewed the market liquidity, shareholder
positions, growth objectives, capital structure and recommendations of the
Special Committee. Upon such review, each member of the Board concluded that the
advantages of the Dual Class Amendment far outweighed the potential
disadvantages, and unanimously voted to approve by written consent the
recommendation of the Special Committee to adopt the Dual Class Amendment and to
recommend their adoption to the Company's shareholders. The Company's Board then
directed that the proposed terms of the Dual Class Amendment be finalized and
that this Dual Class Amendment be incorporated as a proposal in HEICO's 1998
Proxy Statement.
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Management of the Company anticipates that the authorized but unissued
shares of Class A Common Stock would be utilized by the Company for general
corporate purposes, including the issuance of such shares in public offerings or
privately negotiated transactions. In that regard, in November 1997 the Company
filed a Registration Statement on Form S-3 with respect to a proposed offering
of $75,000,000 aggregate principal amount of Convertible Subordinated Notes
("Convertible Debt Offering"). The Company intends to continue to evaluate the
benefits of the proposed Convertible Debt Offering and expects that it will
pursue the Convertible Debt Offering only if the conversion price and other
terms are acceptable. If the Dual Class Amendment is approved and the Company
determines to proceed with an offering of convertible securities, such
securities could be convertible into Class A Common Stock. Future issuances of
Class A Common Stock may also be made for a variety of other valid corporate
purposes, including as stock dividend to existing shareholders, to reduce
indebtedness, to increase working capital or to fund additions to fixed assets.
The Company may also use such stock to effect acquisitions of or business
combinations with other corporations or business entities and to fund employee
benefit and incentive plans. Although the Company continually reviews and
evaluates acquisition and financing alternatives, and has previously announced a
Convertible Note Offering, the Company does not presently have any agreements,
understanding or arrangement with respect to the issuance of any Class A Common
Stock in connection with any acquisitions or financings. As an equity security,
the Class A Common Stock would participate fully from a financial point of view
in any future growth of the Company.
The following is a summary of the material terms of the Dual Class
Amendment. This summary is qualified in its entirety by reference to the
complete text of the Dual Class Amendment, together with the Share Increase
Amendment, which is attached to the Proxy Statement as Exhibit B. Shareholders
are urged to read the actual text of the Dual Class Amendment in its entirety.
SUMMARY OF NEWLY AUTHORIZED CLASS A COMMON STOCK
The Company's authorized capital stock currently consists of 30,000,000
shares, consisting of 20,000,000 shares of Common Stock, of which 8,289,659
shares were outstanding as of the Record Date; and 10,000,000 shares of
Preferred Stock, of which 200,000 shares are designated as Series A Junior
Preferred Stock, none of which are outstanding.
The Dual Class Amendment modifies the Company's capitalization such
that, upon filing the Dual Class Amendment with the Secretary of State of the
State of Florida, the Company's authorized capital stock will include 30,000,000
shares of Class A Common Stock.
The Dual Class Amendment will become effective upon filing with the
Secretary of State of the State of Florida (the "Effective Date") after approval
of holders of a majority of HEICO's Common Stock. Pursuant to the Dual Class
Amendment, the economic rights of each share of Common Stock and Class A Common
Stock will be identical, except that each share of Common Stock will entitle the
holder thereof to one vote in respect of matters submitted for the vote of
holders of Common Stock, whereas each share of Class A Common Stock will entitle
the holder thereof to one-tenth (1/10) vote on such matters. See "Description of
Common Stock."
REASONS FOR THE DUAL CLASS STRUCTURE
The Board believes that the adoption of the Dual Class Amendment,
including the dual class stock structure created thereby, is in the best
interests of the Company. The material advantages and disadvantages of the dual
class stock structure considered by the Special Committee and the Board are set
forth herein. The Board believes that the creation of a capital structure with
both full-voting Common Stock and sub-voting Class A Common Stock will offer a
number of potential benefits to the Company and its shareholders as set forth
below:
FINANCING FLEXIBILITY. By authorizing the Company to issue either
full-voting or sub-voting shares, the Dual Class Amendment will provide the
Company with increased flexibility to issue Class A Common Stock (i) in order to
raise equity capital (either through direct issuances of stock or through
issuances of convertible securities) to finance future capital expenditures and
to finance the future growth of the Company, (ii) as consideration for future
acquisitions, and (iii) in connection with employee stock benefit plans as a
means of attracting,
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compensating and retaining key employees, without materially diluting the voting
power of the Company's existing shareholders, even though their relative equity
interests would decrease. Although the Company continually reviews and evaluates
acquisition and financing alternatives, and has previously announced a
Convertible Note Offering, the Company does not presently have any agreements,
understanding or arrangement with respect to the issuance of any Class A Common
Stock in connection with any acquisitions or financings. Management believes
that by providing the Company with the ability to issue sub-voting equity
securities, the Dual Class Amendment also helps mitigate any reluctance that the
Mendelson Family Group (see "Voting Securities of Principal Shareholders and
Management" and "Interests of Certain Persons") might otherwise have to support
the issuance of significant amounts of additional common stock because of the
accompanying voting dilution. Avoiding such voting dilution also reduces the
risk of disruption in the continuity of the Company's management, current
policies and long-term strategy, as discussed below under "Continuity."
CONTINUITY. The Dual Class Amendment will provide the Company with the
flexibility to issue Class A Common Stock for financing, acquisition and
compensation purposes without materially diluting the voting power of the
Company's existing shareholders, including the Mendelson Family Group. As a
practical matter, the Dual Class Amendment will permit the Mendelson Family
Group to retain significant voting power even if the Company issues shares of
Class A Common Stock. Accordingly, the Dual Class Amendment is expected to
reduce the risk of disruption in the continuity of the Company's management and
its current operating policies and long-term strategy that might otherwise
result if the Company issued a substantial number of additional shares of Common
Stock.
KEY EMPLOYEES. The Dual Class Amendment is intended to permit all
employees of the Company to continue to concentrate on their employment
responsibilities by reducing concerns, if any, that the future of the Company
could be affected by real or perceived succession issues or by an unsolicited
takeover attempt. By reducing these uncertainties, the Dual Class Amendment may
enhance the ability of the Company to attract and retain highly qualified key
employees. In addition, the Company's ability to issue Class A Common Stock will
increase the Company's flexibility in structuring compensation plans and
arrangements so those employees may continue to participate in the growth of the
Company without materially diluting the voting power of existing shareholders.
KEY CUSTOMERS AND SUPPLIERS. The Dual Class Amendment is also intended
to provide reassurance to long-time customers, suppliers and other entities that
have significant business relationships with the Company, each of which may have
concerns about potential changes in control, thereby increasing their
willingness to enter into long-term commitments with the Company.
ANTITAKOVER EFFECTS OF DUAL CLASS STOCK STRUCTURE
The Dual Class Amendment may deter or frustrate a takeover attempt of
the Company that a holder of Common Stock might consider in its best interest,
including those attempts that might result in a premium over the market price
for the capital stock held by the shareholder. While the Dual Class Amendment
and the creation and issuance of shares of Class A Common Stock may act as an
effective deterrent or bar to future takeover attempts not sanctioned by
management or the holders of a majority of the Common Stock, the Dual Class
Amendment is not being proposed in reaction to any such takeover attempt or to
any accumulation of the Company's Common Stock known to management. The Dual
Class Amendment is being proposed at this time to give management the
flexibility to issue additional equity securities in future corporate
transactions without threatening the voting power in the present stockholders.
Set forth below is a brief summary of the principal anti-takeover effects of the
Dual Class Amendment.
DUAL CLASS STOCK STRUCTURE. Holders of Class A Common Stock will have
per share voting rights that are one-tenth of the voting rights of holders of
the Common Stock. One of the principal purposes of having two classes of common
stock with different voting rights is to maintain existing shareholders' voting
power in the Company. See "Certain Potential Disadvantages of the Dual Class
Stock Structure."
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AUTHORIZED BUT UNISSUED SHARES. The Dual Class Amendment provides for a
significant number of authorized but unissued shares of Class A Common Stock
that will be available for future issuance without shareholder approval. These
additional shares may be utilized for a variety of corporate purposes, including
future public offerings to raise additional capital, corporate acquisitions and
employee benefit plans. Although the Company continually reviews and evaluates
acquisition and financing alternatives, and has previously announced a
Convertible Note Offering, the Company does not presently have any agreements,
understanding or arrangement with respect to the issuance of any Class A Common
Stock in connection with any acquisitions or financings.
CERTAIN POTENTIAL DISADVANTAGES OF THE DUAL CLASS STOCK STRUCTURE
While the Board has determined that the implementation of the dual
class stock structure reflected in the Dual Class Amendment is in the best
interest of the Company, such structure may also be considered to have certain
disadvantages, including, but not limited to, those set forth below and those
set forth under "Certain Effects of the Dual Class Amendment."
INFLUENCE BY THE MENDELSON FAMILY GROUP. The Mendelson Family Group
beneficially own in the aggregate approximately 23.71% of the Company's
outstanding capital stock, including 232,360 shares held of record by employees
and former shareholders of the Company's Northwings subsidiary but subject to a
voting proxy held by Laurans A. Mendelson. The Mendelson Family Group is
therefore able to substantially influence the election of members of the
Company's Board and the control of the business, policies and affairs of the
Company. The voting power of the Mendelson Family Group may discourage certain
types of transactions involving an actual or potential change in control of the
Company, including transactions in which the holders of Common Stock might
receive a premium for such shares over prevailing market prices.
INVESTMENT BY INSTITUTIONS. The dual class stock structure effected by
the Dual Class Amendment may affect the decision of certain institutional
investors that would otherwise consider investing in or retaining the Common
Stock. The holding of sub-voting shares may not be permitted by the investment
policies of certain institutional investors. The Company is not aware of the
effect, if any, that the adoption of the Dual Class Amendment will have on the
continued holdings of those institutional investors who currently own Common
Stock.
ACQUISITION ACCOUNTING. In order for the Company to effect a business
combination to be accounted for using the "pooling of interests" method, the
Company would be required to issue Common Stock in order to effect any such
combination. Class A Common Stock may not be used, either alone or in
combination with Common Stock, to effect a business combination utilizing such
method of accounting.
STATE STATUTES. Some state securities law statutes contain provisions
which, following the issuance of Class A Common Stock, may restrict certain
offerings of equity securities by the Company or the secondary trading of such
equity securities in those states. However, due to exemptions or for other
reasons, the Company does not believe that such provisions will have a material
adverse effect on the amount of equity securities that the Company will be able
to offer, the price obtainable for such equity securities in such an offering,
or the secondary trading market for the Company's equity securities.
SECURITY FOR CREDIT. While there can be no assurance, the Company does
not expect that the implementation of the dual class stock structure reflected
in the Dual Class Amendment will affect the ability of shareholders to use
shares of either Common Stock or Class A Common Stock as security for the
extension of credit by financial institutions, securities brokers or dealers.
DESCRIPTION OF THE COMMON STOCK
The terms of the Common Stock and the Class A Common Stock are set
forth in full in Article III of the Company's Dual Class Amendment (attached
hereto as Exhibit B). The rights of the two classes will be identical except as
otherwise described below.
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VOTING. Under the Company's current Articles, each share of Common
Stock is entitled to one vote per share. Pursuant to the proposed Dual Class
Amendment, (i) each share of Common Stock will be entitled to one vote per
share, and (ii) each share of Class A Common Stock will be entitled to one-tenth
vote per share. Except as required by applicable law, holders of Common Stock
and Class A Common Stock will vote together, with each other, and not as
separate classes, on all matters submitted to a vote of the shareholders.
Neither the Common Stock nor the Class A Common Stock will have cumulative
voting rights. The Dual Class Amendment does not affect the relative voting
power of holders of Common Stock.
DIVIDENDS AND DISTRIBUTIONS. The Dual Class Amendment provides that,
subject to the rights of the holders of the Company's Preferred Stock, the
holders of Common Stock and Class A Common Stock will be entitled to receive
when, as and if declared by the Board, out of funds legally available therefor,
dividends and other distributions payable in cash, property, stock (including
shares of any class or series of the Company, whether or not shares of such
class or series are already outstanding) or otherwise. Each share of Common
Stock and each share of Class A Common Stock will have identical rights with
respect to dividends and distributions, subject to the following: (i) a common
stock dividend payable with respect to the Company's Common Stock may be paid in
Class A Common Stock or Common Stock or a combination of both; (ii) a common
stock dividend payable with respect to the Company's Class A Common Stock may be
paid in Class A Common Stock or Common Stock or a combination of both; (iii)
whenever a dividend or distribution is payable in shares of Common Stock and/or
Class A Common Stock, the number of shares payable per each share shall be equal
in number; and (iv) a stock dividend payable with respect to Common Stock that
is paid in shares of Common Stock will be considered to be identical to a stock
dividend payable with respect to Class A Common Stock that is paid in a
proportionate number of shares of Class A Common Stock. The dividend provisions
of the Dual Class Amendment provides the Board with the flexibility to determine
appropriate dividend levels, if any, under the circumstances from time to time.
CONVERTIBILITY. Neither the Common Stock nor the Class A Common Stock
will be convertible into another class of securities of the Company.
SPLITS OR COMBINATIONS. The Dual Class Amendment provide that, if the
Company shall in any manner split, subdivide or combine the shares of
outstanding Common Stock or Class A Common Stock, then the outstanding shares of
the other such class shall be proportionately split, subdivided or combined in
the same manner and on the same basis as the outstanding shares of the class
that has been split, subdivided or combined.
MERGERS AND CONSOLIDATIONS. In the event of a merger, consolidation or
combination of the Company with another entity (whether or not the Company is
the surviving entity), the holders of Common Stock and Class A Common Stock will
be entitled to receive the same per share consideration in that transaction,
except that any common stock that holders of Common Stock and Class A Common
Stock are entitled to receive in any such event may differ as to voting rights
and otherwise to the extent and only the extent that the Common Stock and the
Class A Common Stock differ as set forth in Article III of the Articles.
LIQUIDATION. In the event of liquidation, after payment of the debts
and other liabilities of the Company and after making provision for the holders
of Preferred Stock, if any, the remaining assets of the Company will be
distributable ratably among the holders of the Common Stock and Class A Common
Stock treated as a single class.
PREEMPTIVE RIGHTS. Neither the Common Stock nor the Class A Common
Stock will carry any preemptive rights enabling a holder to subscribe for or
receive shares of the Company of any class or any other securities convertible
into any class of the Company's stock.
CERTAIN EFFECTS OF THE DUAL CLASS AMENDMENT
EFFECTS ON RELATIVE OWNERSHIP INTEREST AND VOTING POWER. The Dual Class
Amendment will not itself affect the relative voting power or equity interests
of the holders of Common Stock. Such shareholders' relative voting power will
change only upon and to the extent impacted by future issuances of stock.
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EFFECT ON MARKET VALUE, PRICE AND TRADING MARKET. The market price of
shares of the Common Stock and Class A Common Stock, when issued, will depend on
many factors, including, among others, the future performance of the Company,
general market conditions and conditions relating to companies similar to the
Company and the industry in general. Accordingly, the Company cannot predict the
market prices at which the Common Stock and the Class A Common Stock, when
issued, will trade following the adoption of the Dual Class Amendment or whether
one class will trade at a premium over the other class. The Company believes
that the market value of the Common Stock immediately after the Dual Class
Amendment will not be materially less than the market value of the Common Stock
immediately prior to the announcement of the Dual Class Amendment, but there can
be no assurance as to the trading prices of either the Common Stock or the Class
A Common Stock, when issued. The Common Stock is currently traded on the AMEX.
On the Record Date, the last reported sales price per share of the Common Stock
was $26 7/8. If the market price of the Class A Common Stock, when issued, were
to drop significantly below the market price of the Common Stock, the potential
benefits of the Dual Class Amendment's dual class stock structure with respect
to flexibility for financings by the Company or resales by the shareholders may
be limited.
The Common Stock will continue to be listed on the AMEX, and in the
event the Class A Common Stock is issued, the Company would seek authorization
to list the Class A Common Stock on the AMEX. Any issuance of Class A Common
Stock by the Company may serve to increase market activity in the Class A Common
Stock relative to the Common Stock. Greater market activity may result in
increased volatility in pricing and could enlarge any price differential, either
higher or lower, between the Class A Common Stock and the Common Stock.
SUBSEQUENT AMENDMENTS. The Dual Class Amendment will not prevent the
Company from taking any action, or otherwise affect the Company's ability, with
the requisite approval of its shareholders, to adopt any future amendments to
the Company's Dual Class Amendment for the purpose of further changing the
Company's capital structure or for any other lawful purpose. The issuance of
Preferred Stock with voting rights or conversion rights may adversely affect the
voting power of the Common Stock and the Class A Common Stock.
AMEX CRITERIA. The Dual Class Amendment is intended to comply with the
rules of AMEX that prohibit the disparate reduction or restriction of the voting
rights of existing stockholders through any corporate action or issuance. The
purpose of the rule is to prohibit stock issuances and other corporate actions
that have a "disenfranchising effect" on existing stockholders. Although the
Company has no present plans or proposals to issue sub-voting Class A Common
Stock, the Company presently anticipates that both the Common Stock and the
Class A Common Stock will be traded on the AMEX. Future issuances of either
Common Stock or Class A Common Stock may be subject to further AMEX approval.
The dual class stock structure effected by the Dual Class Amendment is
intended to comply with the requirements of the AMEX. The effect of the
applicable AMEX rules is to prohibit an issuer from issuing any class of
security, or taking other corporate action, with the effect of nullifying,
restricting, or disparately reducing the per share voting rights of holders of
an outstanding class or classes of common stock of such issuer. The purpose of
the AMEX rules is to prohibit stock issuances and other corporate actions that
have a "disenfranchising effect" on existing shareholders. Future issuances of
Class A Common Stock may also require AMEX approval.
The Dual Class Amendment also requires that if any shares of Class A
Common Stock require registration with or approval of any governmental authority
under any federal or state law, the Company will cause such shares of Class A
Common Stock to be duly registered or approved, as the case may be. The Company
is also required to endeavor to use its best efforts to list the shares of Class
A Common Stock to be delivered prior to such delivery upon each national
securities exchange upon which the outstanding shares of Class A Common Stock
are listed at the time of such delivery.
POTENTIAL CHANGES IN LAWS OR REGULATIONS. In the past, bills have been
introduced in Congress that, if enacted, would have prohibited the registration
of common stock on a national securities exchange if such common stock were part
of a class of securities which has no voting rights or carried disproportionate
voting rights. While these bills have not been acted upon by Congress, there can
be no assurance that such a bill (or a modified version thereof) will not be
introduced in Congress in the future. Legislation or other regulatory
developments could make
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the Company's Common Stock and Class A Common Stock ineligible for trading on
national securities exchanges. The Company is unable to predict whether any such
regulatory proposals will be adopted or whether they will have such effect.
VOTE REQUIRED. Approval of the Dual Class Amendment will require the
affirmative vote of the holders of a majority of the shares of Common Stock of
the Company outstanding and entitled to vote. Abstentions and broker non-votes
are considered shares of stock outstanding and entitled to vote and are counted
in determining the number of votes necessary for a majority. An abstention or
broker non-vote will therefore have the practical effect of voting against
approval of the Dual Class Amendment because it represents one fewer vote for
approval of the Dual Class Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE ADOPTION OF THE DUAL CLASS AMENDMENT.
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SELECTION OF AUDITORS
The Board has not yet selected an independent public accounting firm to
serve as the Company's auditors for fiscal 1998. The Board is expected to decide
on this matter shortly after the 1997 annual meeting.
Representatives of Deloitte & Touche LLP, the Company's auditors since
fiscal 1990, are expected to be present at the annual meeting. Such
representatives will have an opportunity to make a statement, if they desire to
do so, and will be available to answer questions that may be asked by
shareholders.
PROPOSALS OF SHAREHOLDERS
If any shareholder of the Company wishes to present a proposal for
action at the Company's annual meeting of shareholders presently scheduled for
March 16, 1999, notice of such presentation must be received by the Company at
its principal executive office, 3000 Taft Street, Hollywood, Florida 33021, on
or before October 19, 1998.
GENERAL AND OTHER MATTERS
Neither HEICO nor the members of its Board intend to bring before the
meeting any matters other than those referred to in the accompanying Notice of
Meeting. They have no present knowledge that any other matters will be presented
to be acted on pursuant to your proxy. However, if any other matters properly
come before the meeting, the persons whose names appear in the enclosed form of
proxy intend to vote the proxy in accordance with their judgment.
BY ORDER OF THE BOARD OF DIRECTORS,
LAURANS A. MENDELSON
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
<PAGE>
EXHIBIT A
HEICO CORPORATION
1993 STOCK OPTION PLAN
1. PURPOSE. The purpose of this Plan is to advance the interests of
HEICO Corporation, a Florida corporation (the "Company"), and its Subsidiaries
by providing an additional incentive to attract and retain qualified and
competent persons who provide management and other services and upon whose
efforts and judgement the success of the Company and Subsidiaries is largely
dependent, through the encouragement of stock ownership in the Company by such
persons.
2. DEFINITIONS. As used herein, the following terms shall have the
meanings indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the stock option committee
appointed by the Board pursuant to Section 12 hereof, or if not
appointed, the Board.
(c) "Common Stock" shall mean the common stock, par value $.01
per share, of the Company.
(d) "Director" shall mean a member of the Board.
(e) "Disinterested Person" shall mean a Director who, during
one year prior to the time he serves on the Committee and during such
service, has not received Shares, options for Shares or any rights with
respect to Shares under this Plan or any other employee and/or Director
benefit plan of the Company or any of its affiliates except pursuant to
an election to receive annual director's fees in securities of the
Company.
(f) "Employee" and "employment" shall, except where the
context otherwise requires, mean or refer to a Director and his
Directorship as well as to a regular employee and his employment.
(g) "Fair Market Value" of a Share on any date of reference
shall mean the Closing Price of the Common Stock on such date, unless
the Committee in its sole discretion shall determine otherwise in a
fair and uniform manner. For this purpose, the Closing Price of the
Common Stock on any business day shall be (i) if the Common Stock is
listed or admitted for trading on any United States national securities
exchange, or if actual transactions are otherwise reported on a
consolidated transaction reporting system, the last reported sale price
of Common Stock on such exchange or reporting system, as reported in
any newspaper of general circulation, or (ii) if the Common Stock is
quoted on the National Association of Securities Dealers Automated
Quotations System ("NASDAQ"), or any similar system of automated
dissemination of quotations of securities prices in common use, the
mean between the closing bid and asked quotations for Common Stock as
reported by the National Quotation Bureau, Incorporated, if at least
two securities dealers have inserted both bid and asked quotations for
Common Stock on at least 5 of the 10 preceding business days.
(h) "Grantee" shall mean a person to whom a stock option is
granted under this Plan or any person who succeeds to the rights of
such person under this Plan by reason of death of such person or
transfer of such option as may be allowed under this Plan.
(i) "Incentive Stock Option" means an option to purchase
Shares of Common Stock which is intended to qualify as an incentive
stock option as defined in Section 422 of the Internal Revenue Code.
(j) "Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time.
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(k) "Key Employee" means any person, including officers and
Directors, in the regular full-time employment of the Company or any
Subsidiary who, in the opinion of the Committee, is or is expected to
be responsible for the management, growth or protection of some part or
all of the business of the Company or a Subsidiary.
(l) "Non-qualified Stock Option" means an option to purchase
Shares of Common Stock which is not intended to qualify as an Incentive
Stock Option.
(m) "Option" (when capitalized) shall mean any option granted
under this Plan.
(n) "Plan" shall mean this 1993 Stock Option Plan for HEICO
Corporation.
(o) "Share(s)" shall mean a share or shares of the Common
Stock.
(p) "Subsidiary" shall mean any corporation (other than the
Company) in any unbroken chain of corporations, beginning with the
Company if, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing ten (10) percent or more of any class of any equity
security in one of the other corporations in such chain and has the
right to direct the management of the other corporation.
3. SHARES AND OPTIONS. The Company may grant to Grantees from time to
time Options to purchase an aggregate of up to 1,682,500 Shares from Shares held
in the Company's treasury or from authorized and unissued Shares. Of this
amount, all or any may be optioned as Incentive Stock Options, as Non-qualified
Stock Options, or any combination thereof. If any Option granted under this Plan
shall terminate, expire, or be cancelled or surrendered as to any Shares, new
Options may thereafter be granted covering such Shares.
4. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an Option Agreement,
which Option Agreement may be altered consistent with this Plan and
with the approval of both the Committee and the Grantee, that may
contain terms deemed necessary or desirable by the Committee,
including, but not limited to, a requirement that the Grantee agree
that, for a specified period after termination of his employment, he
will not enter into any employment with, or participate directly or
indirectly in, any entity which is directly or indirectly competitive
with the Company or any of its Subsidiaries, provided such terms are
not inconsistent with this Plan or any applicable law. Grantees shall
be selected by the Committee in its discretion and shall be employees
and Directors who are not employees; provided, however, that Directors
who are not employees shall not be eligible to receive Incentive Stock
Options. Any person who files with the Committee, in a form
satisfactory to the Committee, a written waiver of eligibility to
receive any Option under this Plan shall not be eligible to receive any
Option under this Plan for the duration of such waiver.
(b) In granting Options, the Committee shall take into
consideration the contribution the person has made to the success of
the Company or its Subsidiaries and such other factors as the Committee
shall determine. The Committee shall also have the authority to consult
with and receive recommendations from officers and other personnel of
the Company and its Subsidiaries with regard to these matters. The
Committee may from time to time in granting Options under the Plan
prescribe such other terms and conditions concerning such Options as it
deems appropriate, including, without limitation, (i) prescribing the
date or dates on which the Option becomes exercisable, (ii) providing
that the Option rights accrue or become exercisable in installments
over a period of years, or upon the attainment of stated goals or both,
or (iii) relating an Option to the continued employment of the Grantee
for a specified period of time, provided that such terms and conditions
are not more favorable to the Grantee than those expressly permitted
herein.
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(c) The Options granted to Grantees under this Plan shall be
in addition to regular salaries, Director's fees, pension, life
insurance or other benefits related to their employment or
Directorships with the Company or its Subsidiaries. Neither the Plan
nor any Option granted under the Plan shall confer upon any person any
right to employment or Directorship or continuation of employment or
Directorship by the Company or any of its Subsidiaries.
(d) The Committee in its sole discretion shall determine in
each case whether periods of military or government service shall
constitute a continuation of employment for the purposes of this Plan
or any Option.
(e) During each fiscal year of the Company, no Employee may be
granted Option(s) to purchase more than 100,000 Shares.
(f) No employee may be granted any Incentive Stock Option
pursuant to this plan to the extent that the aggregate fair market
value (determined at the time the Option is granted) of the Shares with
respect to which Incentive Stock Options granted to the employee under
the terms of this Plan or its predecessor after December 31, 1986 are
exercisable for the first time by the employee during any calendar year
exceeds $100,000.
(g) Option agreements with respect to Incentive Stock
Options shall contain such terms and conditions as may be required
under Section 422 of the Internal Revenue Code, as such section may be
amended from time to time.
5. OPTION PRICE. The option price per share of any Option shall be
the price determined by the Committee; provided, however, that in no event shall
the option price per Share of any Incentive Stock Option be less than (i) 100%
or (ii) in the case of an individual who owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company, 110%, of
the Fair Market Value of the Shares underlying such Option on the date such
Option is granted.
6. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee in its sole discretion have been made for
the Grantee's payment to the Company of the amount, if any, that is necessary to
withhold in accordance with applicable Federal or State tax withholding
requirements. Unless further limited by the Committee in any Option Agreement,
the option price of any Shares shall be paid in cash, by certified check or
official bank check, by money order, by the Grantee's promissory note, with
Shares (including Shares acquired pursuant to a partial and simultaneous
exercise of the Option) or by a combination of the above; provided further,
however, that the Committee in its sole discretion may accept a personal check
in full or partial payment of any Shares. If the exercise price is paid in whole
or in part with Shares, the value of the Shares surrendered shall be their Fair
Market Value on the business day immediately preceding the date the Option is
exercised. The Company in its sole discretion may, on an individual basis or
pursuant to a general program established in connection with this Plan, lend
money to a Grantee to obtain the cash necessary to exercise all or a portion of
an Option granted hereunder or to pay any tax liability of the Grantee
attributable to such exercise. If the exercise price is paid in whole or in part
with the Grantee's promissory note, such note shall, unless specified by the
Committee at the time of grant or any time thereafter, (w) provide for full
recourse to the maker, (x) be collateralized by the pledge of the Shares that
the Grantee purchases upon exercise of the Option, (y) bear interest at the
prime rate of the Company's principal lender and (z) contain such other terms as
the Committee in its sole discretion shall reasonably require. No Grantee or
permitted transferee(s) thereof shall be deemed to be a holder of any Shares
subject to an Option unless and until exercise has been completed pursuant to
clauses (i-iii) above. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date of exercise,
except as expressly provided in Section 9 hereof.
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7. EXERCISABILITY OF OPTIONS. Any Option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee shall
provide in the corresponding Option agreement, except as otherwise provided in
this Section 7.
(a) The expiration date of an Option shall be determined by
the Committee at the time of grant, but in no event shall an Incentive
Stock Option be exercisable after the expiration of (i) ten (10) years
from the date of grant of the Option or (ii) in the case of an
individual who owns stock possessing more than 10% of the total
combined voting power of all classes of voting stock of the Company,
five years from the date of the grant of the Option.
(b) Except to the extent otherwise provided in any Option
agreement, each outstanding Option shall become immediately fully
exercisable
(i) if any "person" (as such term is used in
Sections 13(d) and 14(d) (2) of the Securities Exchange Act of
1934), except the Mendelson Reporting Group, as that group is
defined in an Amendment to a Schedule 13D filed on February
26, 1992 or any subsequent amendment to the aforementioned
13D, is or becomes a beneficial owner, directly or indirectly,
of securities of the Company representing 15% or more of the
combined voting power of the Corporation's then outstanding
securities;
(ii) if, during any period of two consecutive
years, individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at
least a majority thereof, unless the Board in existence
immediately preceding the two year period shall have nominated
the new Directors whose Directorships have create the altered
Board composition; or
(iii) if the stockholders of the Company shall
approve a plan of merger, consolidation, reorganization,
liquidation or dissolution in which the Company does not
survive (unless the merger, consolidation, reorganization,
liquidation or dissolution is subsequently abandoned)
provided, however, that a merger or reorganization pursuant to
which the Company merges with a Subsidiary which is owned
principally by the Company's pre-merger or reorganization
shareholders and which becomes publicly traded within five (5)
business days thereafter shall not trigger immediate
exercisability under this Section 7; or
(iv) if the stockholders of the Company shall
approve a plan for the sale, lease, exchange or other
disposition of all or substantially all of the property and
assets of the Company (unless such approved plan is
subsequently abandoned).
(c) The Committee may in its sole discretion accelerate the
date on which any Option may be exercised.
8. TERMINATION OF OPTION PERIOD.
(a) The unexercised portion of any Option shall
automatically and without notice terminate and become null and void at
the time of the earliest to occur of the following:
(i) one week after the date on which the Grantee's
employment is terminated for any reason other than by reason
of (A) cause (which, for purposes of this Plan, shall mean the
termination of the Grantee's employment by reason of the
Grantee's willful misconduct or gross negligence), (B) a
mental or physical disability as determined by a medical
doctor satisfactory to the Committee, or (C) death; provided,
however, that the one week period may be extended by the
Committee to up to three (3) months with respect to Incentive
Stock Options and up to thirty six (36) months in the case of
Non-qualified Stock Options;
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(ii) immediately upon termination of the Grantee's
employment for cause, provided, however, that the Committee
may extend the period to up to three (3) months with respect
to Incentive Stock Options and up to thirty six (36) months in
the case of Non-qualified Stock Options;
(iii) six months after the date on which the
Grantee's employment is terminated by reason of mental or
physical disability as determined by a medical doctor
satisfactory to the Committee, provided, however, that the
Committee may extend the period to up to thirty six (36)
months in respect to Non-qualified Stock Options;
(iv) (A) twelve months after the date of
termination of the Grantee's employment by reason of death of
the Grantee, or (B) three months after the date on which the
Grantee shall die if such death shall occur during the six (6)
month period specified in Subsection 8(a)(iii) hereof,
provided, however, that the Committee may extend the period to
up to thirty six (36) months in respect to Non-qualified Stock
Options.
(b) The Committee in its sole discretion may by giving
written notice ("cancellation notice") cancel, effective upon the date
of the consummation of any corporate transaction described in
Subsections 7(b)(iii) or (iv) hereof, any Option that remains
unexercised on such date. Such cancellation notice shall be given a
reasonable period of time prior to the proposed date of such
cancellation and may be given either before or after stockholder
approval of such corporate transaction.
9. ADJUSTMENT OF SHARES.
(a) If, at any time while the Plan is in effect or
unexercised Options are outstanding, there shall be any increase or
decrease in the number of issued and outstanding Shares through the
declaration of a stock dividend or through any recapitalization
resulting in a stock split-up, combination or exchange of Shares, then
and in such event:
(i) appropriate adjustment shall be made in the
maximum number of Shares available for grant under the Plan
(including, but not limited to, shares permitted to be granted
to any one individual employee), so that the same percentage
of the Company's issued and outstanding Shares shall continue
to be subject to being so optioned; and
(ii) appropriate adjustment shall be made in the
number of Shares and the option price per Share thereof then
subject to any outstanding Option, so that the same percentage
of the Company's issued and outstanding Shares shall remain
subject to purchase at the same aggregate option price.
(b) Subject to the specific terms of any Option agreement,
the Committee may change the terms of Options outstanding under this
Plan with respect to the option price or the number of Shares subject
to the Options, or both, when, in the Committee's sole discretion, such
adjustments become appropriate by reason of a corporate transaction
described in Subsections 7(b)(iii) or (iv) hereof.
(c) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class,
either in connection with direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to the number of or option price of Shares then
subject to outstanding Options granted under this Plan.
(d) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not
affect in any manner the right or power of the Company to make,
authorize or consummate (i) any or all adjustments, recapitalizations,
reorganizations or other changes in
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the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issuance by the Company of debt
securities or preferred or preference stock that would rank above the
Shares subject to outstanding Options; (iv) the dissolution or
liquidation of the Company; (v) any sale, transfer or assignment of all
or any part of the assets or business of the Company; or (vi) any other
corporate act or proceeding, whether of a similar character or
otherwise.
10. TRANSFERABILITY OF OPTIONS. Each Option agreement shall provide
that the Option shall not be transferable by the Grantee otherwise than by will
or the laws of descent and distribution or, in the case of Non-qualified Stock
Options, pursuant to a qualified domestic relations order as defined by the
Internal Revenue Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder; provided, however, that the Committee may waive the
foregoing transferability restriction with respect to Non-qualified Stock
Options on a case-by-case basis.
11. ISSUANCE OF SHARES. As a condition of any sale or issuance of
Shares upon exercise of any Option, the Committee may require such arrangement
or undertakings, if any, as the Committee may deem necessary or advisable to
ensure compliance with any applicable federal or state securities law or
regulation, including, but not limited to, the following:
(i) a representation and warranty by the Grantee to
the Company, at the time any Option is exercised, that he is
acquiring the Shares to be issued to him for investment and
not with a view to, or for sale in connection with, the
distribution of any such Shares; and
(ii) a representation, warranty and/or agreement
to be bound by any legends that are, in the opinion of the
Committee, necessary or appropriate to comply with the
provisions of any securities laws deemed by the Committee to
be applicable to the issuance of the Shares and are endorsed
upon the Share certificates.
12. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by a stock option
committee (herein called the "Committee") consisting of not less than
two (2) Directors, all of whom shall be Disinterested Persons;
provided, however, that if no Committee is appointed, the Board may
administer the Plan provided that all members of the Board at the time
are Disinterested Persons. The Committee shall have all of the powers
of the Board with respect to the Plan. Any member of the Committee may
be removed at any time, with or without cause, by resolution of the
Board, and any vacancy occurring in the membership of the Committee may
be filled by appointment of the Board.
(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes f the Plan. The
determinations and the interpretation and construction of any provision
of the Plan by the Committee shall be final and conclusive.
(c) Any and all decisions or determinations of the Committee
shall be made either (i) by a majority vote of the members of the
Committee at a meeting or (ii) without a meeting by the unanimous
written approval of the members of the Committee.
13. INTERPRETATION.
(a) If any provision of the Plan should be held invalid for
any reason, such holding shall not affect the remaining provisions
hereof, but instead the Plan shall be construed and enforced as if such
provision had never been included in the Plan.
(b) This Plan shall be governed by the laws of the State of
Florida.
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(c) Headings contained in this Plan are for convenience only
and shall in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
14. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Committee may
from time to time amend the Plan or any Option consistent with the Plan;
provided, however, that (except to the extent provided in Section 9) no such
amendment may, without approval by the stockholders of the Company, (a) increase
the number of Shares reserved for Options, (b) change the requirements for
eligibility to receive Options, or (c) materially increase the benefits accruing
to the participants under the Plan; and provided, further, that (except to the
extent provided in Section 8) no amendment or suspension of the Plan or any
Option issued hereunder shall substantially impair any Option previously granted
to any Grantee without the consent of such Grantee.
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15. EFFECTIVE DATE AND TERMINATION DATE. The effective date of this
Plan shall be March 17, 1993 provided that the Plan is approved by the Company's
Stockholder(s), and the Plan shall terminate on the tenth (10th) anniversary of
the effective date. After such termination date, no Options may be granted
hereunder; provided, however, that Options outstanding at such date may be
exercised pursuant to their terms.
Dated as of the 17TH HEICO CORPORATION
day of MARCH, 1998.
By: /S/ LAURANS A. MENDELSON
------------------------
Laurans A. Mendelson
Chairman, President and
Chief Executive Officer
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EXHIBIT B
ARTICLES OF INCORPORATION
OF
HEICO CORPORATION
----------------
ARTICLE III: CAPITAL STOCK
(a) The corporation is authorized to issue seventy million
(70,000,0000) shares of capital stock, $0.01 par value per share, of which
thirty million (30,000,000) are designated Common Stock; thirty million
(30,000,000) are designated Class A Common Stock; and ten million (10,000,000)
are designated Preferred Stock.
The Board of Directors may change the name and reference to the Common
Stock and the Class A Common Stock without altering and changing any of the
rights, priviledges and preferences of the holders of the Common Stock and the
Class A Common Stock, including but not limited to renaming the Class A Common
Stock Class B Common Stock and renaming the Common Stock Class A Common Stock.
(b) The Common Stock and the Class A Common Stock shall be subject to
the express terms of the Preferred Stock and any class or series thereof. The
powers, preferences and rights of the Common Stock and the Class A Common Stock
and the qualifications, limitations and restrictions thereof, shall in all
respects be identical, except as otherwise required by law or as expressly
provided in this Section (b).
(1) Except as otherwise required by law or as may be
provided by the resolutions of the Board authorizing the issuance of any class
or series of the Preferred Stock, as herein provided, all rights to vote and all
voting power shall be vested exclusively in the holders of the Common Stock and
Class A Common Stock. The holders of shares of Common Stock and Class A Common
Stock shall have the following voting rights:
(A) the holders of Common Stock shall be entitled to
one (1) vote for each share of Common Stock held on all matters voted upon by
the shareholders of the Company and shall vote together with the holders of
Class A Common Stock and together with the holders of any other classes or
series of stock who are entitled to vote in such manner and not as a separate
class; and
(B) the holders of Class A Common Stock shall be
entitled to one-tenth (1/10th) vote for each share of Class A Common Stock held
on all matters voted upon by the shareholders of the Company and shall vote
together with the holders of Common Stock and together with the holders of any
other classes or series of stock who are entitled to vote in such manner and not
as a separate class.
(2) Subject to the rights of the holders of the Preferred
Stock, the holders of the Common Stock and the Class A Common Stock shall be
entitled to receive when, as and if declared by the Board, out of funds legally
available therefor, dividends and other distributions payable in cash, property,
stock (including shares of any class or series of the Company, whether or not
shares of such class or series are already outstanding) or otherwise. Each share
Common Stock and each share of Class A Common Stock shall have identical rights
with respect to dividends and distributions, subject to the following:
(A) a dividend or distribution in common stock on
Common Stock may be paid or made in shares of Common Stock or shares of Class A
Common Stock or a combination of both;
(B) a dividend or distribution in common stock on
Class A Common Stock may be paid in shares of Class A Common Stock or shares of
Common Stock or a combination of both;
(C) whenever a dividend or distribution is payable in
shares of Common Stock and/or Class A Common Stock, the number of shares of
Common Stock payable as a dividend or distribution per each share of Common
Stock or Class A Common Stock shall be equal in number;
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(D) a dividend or distribution on Common Stock which
is paid or made in shares of Common Stock shall be considered identical to a
dividend or distribution on Class A Common Stock which is paid or made in a
proportionate number of shares of Class A Common Stock; and
(E) If any shares of Class A Common Stock require
registration with or approval of any governmental authority under any federal or
state law before such shares may be issued upon conversion, the Company shall
cause such shares to be duly registered or approved, as the case may be. The
Company shall endeavor to use its best efforts to list the shares of Class A
Common Stock to be delivered upon conversion prior to such delivery upon each
national securities exchange upon which the outstanding shares of Class A Common
Stock are listed at the time of such delivery.
(3) If the Company shall in any manner split, subdivide or
combine the outstanding shares of Common Stock or Class A Common Stock, then the
outstanding shares of the Common Stock and the Class A Common Stock shall be
proportionately split, subdivided or combined in the same manner and on the same
basis as the outstanding shares of the class that has been split, subdivided or
combined.
(4) In the event of a merger, consolidation or combination
of the Company with another entity (whether or not the Company is the surviving
entity), the holders of Common Stock and Class A Common Stock shall be entitled
to receive the same per share consideration in that transaction, except that any
common stock that holders of Class A Common Stock are entitled to receive in any
such event may differ as to voting rights and otherwise to the extent and only
the extent that the Common Stock and the Class A Common Stock differ as set
forth in this Section (b).
(5) Upon any liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary, and after the holders of the
Preferred Stock shall have been paid in full the amounts to which they shall be
entitled, if any, or a sum sufficient for such payment in full shall have been
set aside, the remaining net assets of the Company, if any, shall be divided
among and paid ratably to the holders of Common Stock and Class A Common Stock
treated as a single class.
(6) The Board shall have the power to cause the Company to
issue and sell shares of either class of Common Stock to such individuals,
partnerships, joint ventures, limited liability companies, associations,
corporations, trusts or other legal entities (collectively, "persons") and for
such consideration as the Board shall from time to time in its discretion
determine, whether or not greater consideration could be received upon the issue
or sale of the same number of shares of the Common Stock or the Class A Common
Stock, and as otherwise permitted by law. The Board shall have the power to
cause the Company to purchase, out of funds legally available therefor, shares
of either the Common Stock or the Class A Common Stock from such persons and for
such consideration as the Board shall from time to time in its discretion
determine, whether or not less consideration could be paid upon the purchase of
the same number of shares of the Common Stock or the Class A Common Stock, and
as otherwise permitted by law.
(c) The holders of record of any outstanding shares of Preferred
Stock shall be entitled to dividends when and as declared by the Board of
Directors of the corporation at such rate per share, if any, and at such time
and in such manner, as shall be determined by the Board of Directors of the
corporation in the resolution authorizing the series of Preferred Stock of which
such shares of Preferred Stock are a part.
(d) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the corporation, the holders of record of the
outstanding shares of Preferred Stock shall be entitled to such amount, if any,
for each share of Preferred Stock, as the Board of Directors of the corporation
shall determine in the resolution authorizing the series of Preferred Stock of
which such shares of Preferred Stock are a part, whether or not the corporation
shall have any surplus or earnings available for dividends, and no more. If the
assets of the corporation shall not be sufficient to pay to all holders of
Preferred Stock the amounts to which they would be entitled in the event of a
voluntary or involuntary liquidation, dissolution or winding up of the
corporation, the
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holders of record of each series of the Preferred Stock which is entitled to
share in the assets of the corporation in any such event shall be entitled to
share in the assets of the corporation to the extent, if any, and in the manner,
determined by the Board of Directors of the corporation in the resolution
authorizing the series of Preferred Stock of which such shares are a part and in
such cases holders of record of shares of Preferred Stock of the same series
shall be entitled to share ratably in accordance with the number of shares of
Preferred Stock of the series held of record by them to the extent, if any, that
the series is entitled to share in the assets of the corporation in such event.
(e) Preferred Stock may be issued from time to time in one or more
series. All Preferred Stock shall be of equal rank and identical, except in
respect to the particulars that may be fixed by the Board of Directors. The
Board of Directors is authorized to establish series of Preferred Stock and to
fix, in the manner and to the full extent provided and permitted by law, the
following rights, preferences and limitations of each series of the Preferred
Stock and the relative rights, preferences and limitations between or among such
series:
(1) the distinctive designation of each series and the number
of shares that shall constitute the series;
(2) the rate of dividends, if any, the preferences and
conditions under which, dividends shall be payable on the shares of each series
and the time and manner of payment, the status of such dividends as cumulative
or noncumulative, the date or dates from which dividends, if cumulative, shall
accumulate, and the status of such shares as participating or nonparticipating
after the payment of dividends as to which such shares are entitled to any
preference;
(3) whether shares of each series may be redeemed and, if so,
the redemption price and the terms and conditions of redemption;
(4) sinking fund provisions, if any, for the redemption or
purchase of shares of each series which is redeemable;
(5) the amount, if any, payable upon shares of each series in
the event of the voluntary or involuntary liquidation, dissolution or winding up
of the corporation, and the manner and preference of such payment;
(6) voting rights, if any, on the shares of each series and
any conditions upon the exercisability of such rights;
(7) the rights, if any, of the holders of shares of each
series to convert those shares into Common Stock or shares of any other series
of Preferred Stock and the terms and conditions of conversion;
(8) the limitations, if any, applicable while each series is
outstanding, on the payment of dividends or making of distributions on, or the
acquisition or redemption of, Common Stock or any other class of shares ranking
junior, either as to dividends or upon liquidation, to the shares of each
series.
(9) the conditions or restrictions, if any, upon the issue
of any additional shares (including additional shares of such series or any
other series or of any other class) ranking on a parity with or prior to the
shares of such series either as to dividends or upon liquidation; and
(10) any other relative powers, preferences and
participations, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of shares of such series.
When such series of Preferred Stock is established by the Board of
Directors, articles of amendment setting forth the amendment, certifying that
the amendment has been duly adopted by the Board of Directors in accordance with
the applicable provisions of the Florida Business Corporation Act, and
containing such other statements as may be necessary or advisable, shall be
assigned by its president or vice president and by its secretary or an assistant
secretary, and filed with the Department of State of the State of Florida.
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(f) Series A Junior Participating Preferred Stock.
(1) Dividends and Distributions. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting such series
shall be 50,000.
(2) Dividends and Distributions.
(A) Subject to the provisions for adjustment
hereinafter set forth, the holders of shares of Series A Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, (i) cash dividends in an amount per
share (rounded to the nearest cent) equal to 100 times the aggregate per share
amount of all cash dividends declared or paid on the Common Stock of the
corporation and (ii) a preferential cash dividend (the "Series A Preferential
Cash Dividends"), if any, on the first day of February, May, August and November
of each year (each a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a shares of Series A Preferred Stock, in an amount equal to $.75 per share of
Series A Preferred Stock less the per share amount of all cash dividends
declared on the Series A Preferred Stock pursuant to clause (i) of this sentence
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the
corporation shall, at any time after the issuance of any share or fraction of a
series of Series A Preferred Stock, make any distribution on the shares of
Common Stock of the corporation, whether by way of a dividend or a
reclassification of stock, a recapitalization, reorganization or partial
liquidation of the corporation or otherwise, which is payable in cash or any
debt security, debt instrument, real or personal property or any other property
(other than cash dividends subject to the immediately preceding sentence, a
distribution of shares of Common Stock or other capital stock of the corporation
or a distribution of rights or warrants to acquire any such share, including any
debt security convertible into or exchangeable for any such share, at a price
less than the Fair Market Value (as defined in Section (e)(7)(D) of this Article
III) of such share), then and in each such event the corporation shall
simultaneously pay on each then outstanding shares of Series A Preferred Stock
of the Corporation a distribution, in like kind, of 100 times such distribution
paid on a share of Common Stock (subject to the provisions for adjustment
hereinafter set forth). The dividends and distributions on the Series A
Preferred Stock to which holders thereof are entitled pursuant to clause (i) of
the first sentence of this paragraph and pursuant to the second sentence of this
paragraph are hereinafter referred to as "Participating Dividends" and the
multiple of such cash and non-cash dividends on the Common Stock applicable to
the determination of the Participating Dividends, which shall be 100 initially
but shall be adjusted from time to time as hereinafter provided, is hereinafter
referred to as the "Dividend Multiple." In the event the Corporation shall at
any time after November 2, 1993 declare or pay any dividend or make any
distribution on a combination, consolidation or reverse split of the outstanding
shares of Common Stock into a greater or lesser number of shares of Common
Stock, then in each such case the Dividend Multiple thereafter applicable to the
determination of the amount of Participating Dividends which holders of shares
of Series A Preferred Stock shall be entitled to receive shall be the Dividend
Multiple applicable immediately prior to such event multiplied by a fraction,
the numerator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare each
Participating Dividend at the same time it declares any cash or non-cash
dividend or distribution on the Common Stock in respect of which a Participating
Dividend is required to be paid. No cash or non-cash dividend or distribution on
the Common Stock in respect of which a Participating Dividend is required to be
paid shall be paid or set aside for payment on the Common Stock unless a
Participating Dividend in respect of such dividend or distribution on the Common
Stock shall be simultaneously paid, or set aside for payment, on the Series A
Preferred Stock.
(C) Series A Preferential Cash Dividends shall begin
to accrue on outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issuance of any shares of
Series A Preferred Stock. Accrued but unpaid Series A Preferential Cash
Dividends shall be cumulative but shall not bear interest. Series A Preferential
Cash Dividends paid on the share of Series A
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Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
(3) Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment
hereinafter set forth, each share of Series A Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Corporation. The number of votes which a holder of a share
of Series A Preferred Stock is entitled to cast, as the same may be adjusted
from time to time as hereinafter provided, is hereinafter referred to as the
"Vote Multiple." In the event the Corporation shall at any time after November
2, 1993 declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or split or a combination, consolidation or
reverse split of the outstanding shares of Common Stock into a greater or lesser
number of shares of Common Stock, then in each such case the Vote Multiple
thereafter applicable to the determination of the number of votes per share to
which holders of shares of Series A Preferred Stock shall be entitled after such
event shall be the Vote Multiple immediately prior to such event multiplied by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided in these Articles of
Incorporation or the Bylaws of the Corporation, the holders of shares of Series
A Preferred Stock and the holders of shares of Common Stock shall vote together
as a single voting group on all matters submitted to a vote of shareholders of
the Corporation.
(C) Unless otherwise provided in these Articles of
Incorporation, in the event that any preferential cash dividend to which the
holders of any currently existing or future series of the Preferred Stock are
entitled (collectively, the "Preferred Cash Dividends") has accrued for four or
more quarterly dividend periods, whether consecutive or not, and shall not have
been declared and paid (or a sum sufficient for the payment thereof has been set
aside) in full, the holders of record of such series of Preferred Stock, other
than any series in respect of which such right is expressly withheld by these
Articles of Incorporation (such holders existing from time to time being
hereinafter referred to as the "Unpaid Series Holders"), acting as a single
voting group, shall have the right, at the next meeting of shareholders called
for the election of Directors, to elect two members to the Board of Directors,
which Directors (hereinafter, the "Preferred Directors") shall be in addition to
the number of Directors required by the Bylaws of the Corporation prior to such
event, to serve until the next annual meeting of shareholders and until their
successors are elected and qualified or their earlier resignation, removal or
incapacity or until such earlier time as all accrued and unpaid Preferred Cash
Dividends shall have been paid (or a sum sufficient for the payment thereof has
been set aside) in full. If at any annual meeting of shareholders at which the
term of a Preferred Director is fixed to expire there are accrued Preferred Cash
Dividends which have not been paid (or a sum sufficient for payment thereof has
not been set aside) in full, the Unpaid Series Holders shall have the right to
elect a Preferred Director to the vacant Directorship resulting from the
expiration of the term of such Preferred Director in the manner provided in the
immediately preceding sentence until all accrued and unpaid Preferred Cash
Dividends shall have been paid (or a sum sufficient for payment thereof has been
set aside) in full; PROVIDED, HOWEVER, that at no time shall more than two
Preferred Directors be members of the Board of Directors. The Preferred
Directors may be removed, with or without cause, by the Unpaid Series Holders.
Vacancies in such Directorships (whether caused by death, resignation, removal
or otherwise) may be filled (if any accrued Preferred Cash Dividends remain
unpaid or a sum sufficient for payment thereof has not been set aside) only by
the Unpaid Series Holders (or by the remaining Director elected by the Unpaid
Series Holders, if there be one) in the manner permitted by law; PROVIDED,
HOWEVER, that any such action by the Unpaid Series Holders shall be taken at a
meeting of shareholders and shall not be taken by written consent; PROVIDED
FURTHER, HOWEVER, that by a vote of a majority of the Board of Directors in
office other than the Preferred Directors, the Preferred Directors may be
removed immediately after all accrued and unpaid Preferred Cash Dividends shall
have been paid (or a sum sufficient for the payment thereof has been set aside)
in full.
(D) Except as otherwise provided in these Articles of
Incorporation or the Bylaws of the Corporation, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall
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not be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for the taking of any corporate action.
(4) Certain Restrictions.
(A) Whenever Series A Preferential Cash Dividends or
Participating Dividends are in arrears or the Corporation shall be in default of
payment thereof, thereafter and until all accrued and unpaid Series A
Preferential Cash Dividends and Participating Dividends, whether or not
declared, on shares of Series A Preferred Stock outstanding shall have been paid
(or a sum sufficient for payment thereof has been set aside) in full, and in
addition to any and all other rights which any holder of shares of Series A
Preferred Stock may have in such circumstances, the Corporation shall not
(i) declare or pay dividends on, make any
other distributions on, or redeem or purchase or otherwise acquire for
consideration, any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any
other distributions on any shares of stock ranking on a parity as to dividends
with the Series A Preferred Stock, unless dividends are paid ratably on the
Series A Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled if the full dividends accrued thereon were to
be paid;
(iii) except as permitted by subparagraph
(iv) of this paragraph (4)(a), redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred Stock,
PROVIDED that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock of
the Corporation ranking junior (both as to dividends and upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock (either as to dividends or
upon liquidation, dissolution or winding up), except in accordance with a
purchase offer made to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any Subsidiary
(as hereinafter defined) of the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the Corporation
could, under paragraph (a) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner. A "Subsidiary" of the Corporation shall
mean any corporation or other entity of which securities or other ownership
interests having ordinary voting power sufficient to elect a majority of the
Board of Directors or other persons performing similar functions are
beneficially owned, directly or indirectly, by the Corporation or by any
corporation or other entity that is otherwise controlled by the Corporation.
(C) The Corporation shall not issue any shares of
Series A Preferred Stock except upon exercise of Rights (the "Rights") issued
pursuant to that certain Rights Agreement dated as of November 2, 1993 between
the Corporation and SunBank, National Association, as rights agent, a copy of
which is on file with the Secretary of the Corporation at its principal
executive office and shall be made available to shareholders of record without
charge upon written request therefor addressed to said Secretary.
Notwithstanding the foregoing sentence, nothing contained in the provisions
hereof shall prohibit or restrict the Corporation from issuing for any purpose
any series of Preferred Stock with rights and privileges similar to, different
from or greater than those of the Series A Preferred Stock.
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<PAGE>
(5) Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares upon their retirement and cancellation shall become authorized
but unissued shares of Preferred Stock, without designation as to series, and
such shares may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors.
(6) Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (A) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless the holders of shares of
Series A Preferred Stock shall have received, subject to adjustment as
hereinafter provided, (i) $45 per one-hundredth share plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, or (ii) if greater than the amount specified in
clause (A)(i) of this sentence, an amount equal to 100 times the aggregate
amount to be distributed per share to holders of Common Stock, as the same may
be adjusted as hereinafter provided, and (B) to the holders of stock ranking on
a parity upon liquidation, dissolution or winding up with the Series A Preferred
Stock, unless simultaneously therewith distributions are made ratably on the
Series A Preferred Stock and all other shares of such parity stock in proportion
to the total amounts to which the holders of shares of Series A Preferred Stock
are entitled under clause (A)(i) of this sentence and to which the holders of
such parity shares are entitled, in each case upon such liquidation, dissolution
or winding up. The amount to which holders of Series A Preferred Stock may be
entitled upon liquidation, dissolution or winding up of the Corporation pursuant
to clause (A) of the foregoing sentence is hereinafter referred to as the
"Participating Liquidation Amount" and the multiple of the amount to be
distributed to holders of shares of Common Stock upon the liquidation,
dissolution or winding up of the Corporation applicable pursuant to said clause
to the determination of the Participating Liquidation Amount, as said multiple
may be adjusted from time to time as hereinafter provided, is hereinafter
referred to a the "Liquidation Multiple." In the event the Corporation shall at
any time after November 2, 1993 declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision of split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, then in each
such case the Liquidation Multiple thereafter applicable to the determination of
the Participating Liquidation Amount to which holders of Series A Preferred
Stock shall be entitled after such event shall be the Liquidation Multiple
applicable immediately prior to such event multiplied by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(7) Certain Reclassifications and Other Events.
(A) In the event that holders of shares of Common
Stock of the Corporation receive after November 2, 1993 in respect of their
shares of Common Stock any share of capital stock of the Corporation (other than
any share of Common Stock of the Corporation), whether by way of
reclassification, recapitalization, reorganization, dividend or other
distribution or otherwise (a "Transaction"), then and in each such event the
dividend rights, voting rights and rights upon the liquidation, dissolution or
winding up of the Corporation of the shares of Series A Preferred Stock shall be
adjusted so that after such event the holders of Series A Preferred Stock shall
be entitled, in respect of each share of Series A Preferred Stock held, in
addition to such rights in respect thereof to which such holder was entitled
immediately prior to such adjustment, to (i) such additional dividends as equal
the Dividend Multiple in effect immediately prior to such Transaction multiplied
by the additional dividends which the holder of a share of Common Stock shall be
entitled to receive by virtue of the receipt in the Transaction of such capital
stock, (ii) such additional voting rights as equal the Vote Multiple in effect
immediately prior to such Transaction multiplied by the additional voting rights
which the holder of a share of Common Stock shall be entitled to receive by
virtue of the receipt in the Transaction of such capital stock and (iii) such
additional distributions upon liquidation, dissolution or winding up of the
Corporation as equal the Liquidation Multiple in effect immediately prior to
such Transaction multiplied by the additional amount which the holder of a share
of Common Stock shall be entitled to receive upon liquidation, dissolution or
winding up of the Corporation by virtue of the receipt in the Transaction of
such capital stock, as the case may be, all as provided by the terms of such
capital stock.
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<PAGE>
(B) In the event that holders of shares of Common
Stock of the Corporation receive after November 2, 1993 in respect of their
shares of Common Stock any right or warrant to purchase Common Stock (including
as such a right, for all purposes of this paragraph, any security convertible
into or exchangeable for Common Stock) at a purchase price per share less than
the Fair Market Value (as hereinafter defined) of a share of Common Stock on the
date of issuance of such right or warrant, then and in each such event the
dividend rights, voting rights and rights upon the liquidation, dissolution or
winding up of the Corporation of the shares of Series A Preferred Stock shall
each be adjusted so that after such event the Dividend Multiple, the Vote
Multiple and the Liquidation Multiple shall each be the product of the Dividend
Multiple, the Voting Multiple and the Liquidation Multiple, as the case may be,
in effect immediately prior to such event multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the maximum number
of shares of Common Stock which could be acquired upon exercise in full of all
such rights or warrants and the denominator of which shall be the number of
shares of Common Stock outstanding immediately before such issuance of rights or
warrants plus the number of shares of Common Stock which could be purchased, at
the Fair Market Value of the Common Stock at the time of such issuance, by the
maximum aggregate consideration payable upon exercise in full of all such rights
or warrants.
(C) In the event that holders of shares of Common
Stock of the Corporation receive after November 2, 1993 in respect of their
shares of Common Stock any right or warrant to purchase capital stock of the
Corporation (other than shares of Common Stock), including as such a right, for
all purposes of this paragraph, any security convertible into or exchangeable
for capital stock of the Corporation (other than Common Stock), at a purchase
price per share less than the Fair Market Value of such shares of capital stock
on the date of issuance of such right or warrant, then and in each such event
the dividend rights, voting rights and rights upon liquidation, dissolution or
winding up of the Corporation of the shares of Series A Preferred Stock shall
each be adjusted so that after such event each holder of a share of Series A
Preferred Stock shall be entitled, in respect of each share of Series A
Preferred Stock held, in addition to such rights in respect thereof to which
such holder was entitled immediately prior to such event, to receive (i) such
additional dividends as equal the Dividend Multiple in effect immediately prior
to such event multiplied, first, by the additional dividends to which the holder
of a share of Common Stock shall be entitled upon exercise of such right or
warrant by virtue of the capital stock which could be acquired upon such
exercise and multiplied again by the Discount Fraction (as hereinafter defined)
and (ii) such additional voting rights as equal the Vote Multiple in effect
immediately prior to such event multiplied, first, by the additional voting
rights to which the holder of a share of Common Stock shall be entitled upon
exercise of such right or warrant by virtue of the capital stock which could be
acquired upon such exercise and multiplied again by the Discount Fraction and
(iii) such additional distributions upon liquidation, dissolution or winding up
of the Corporation as equal the Liquidation Multiple in effect immediately prior
to such event multiplied, first, by the additional amount which the holder of a
share of Common Stock shall be entitled to receive upon liquidation, dissolution
or winding up of the Corporation upon exercise of such right or warrant by
virtue of the capital stock which could be acquired upon such exercise and
multiplied again by the Discount Fraction. For purposes of this paragraph, the
"Discount Fraction" shall be a fraction, the numerator of which shall be the
difference between the Fair Market Value of a share of the capital stock subject
to a right or warrant distributed to holders of shares of Common Stock of the
Corporation as contemplated by this paragraph immediately after the distribution
thereof and the purchase price per share for such share of capital stock
pursuant to such right or warrant and the denominator of which shall the Fair
Market Value of a share of such capital stock immediately after the distribution
of such right or warrant.
(D) For purposes of this Section (e) of Article III,
the "Fair Market Value" of a share of capital stock of the Corporation
(including a share of Common Stock) on any date shall be deemed to be the
average of the daily closing price per share thereof over the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; PROVIDED, HOWEVER, that, in the event that such Fair Market Value of any
such share of capital stock is determined during a period which includes any
date that is within 30 Trading Days after (i) the ex-dividend date for a
dividend or distribution on stock payable in shares of such stock or securities
convertible into shares of such stock, or (ii) the effective date of any
subdivision, split, combination, consolidation, reverse stock split or
reclassification of such stock, then, and in each such case, the Fair Market
Value shall be appropriately adjusted by the Board of Directors of the
Corporation to take into account ex-dividend or post-effective date trading. The
closing price for any day shall be the last sale price, regular way, or, in case
no
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<PAGE>
such sale takes place on such day, the average of the closing bid and asked
prices, regular way (in either case, as reported in the applicable transaction
reporting system with respect to securities listed or admitted to trading on the
New York Stock Exchange), or, if the shares are not listed or admitted to
trading on the New York Stock Exchange, as reported in the applicable
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the shares are listed or admitted to
trading or, if the shares are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation
System's National Market System ("NASDAQ/NMS") or such other system then in use,
or if on any such date the shares are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the shares selected by the Board of Directors of
the Corporation. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares are listed or admitted to
trading is open for the transaction of business or, if the shares are not listed
or admitted to trading on any national securities exchange, on which the
NASDAQ/NMS or such national securities exchange as may be selected by the Board
of Directors of the Corporation is open. If the shares are not publicly held or
not so listed or traded on any day within the period of 30 Trading Days
applicable to the determination of Fair Market Value thereof as aforesaid, "Fair
Market Value" shall mean the fair market value thereof per share as determined
in good faith by the Board of Directors of the Corporation. In either case
referred to in the foregoing sentence, the determination of Fair Market Value
shall be described in a statement filed with the Secretary of the Corporation.
(8) Consolidation, Merger, Etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each
outstanding share of Series A Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.
(9) Effective Time of Adjustments.
(A) Adjustments to the Series A Preferred Stock
required by the provisions hereof shall be effective as of the time at which the
event requiring such adjustments occur.
(B) The Corporation shall give prompt written notice
to each holder of a share of Series A Preferred Stock of the effect of any
adjustment to the voting rights, dividend rights or rights upon liquidation,
dissolution or winding up of the Corporation of such shares required by the
provisions hereof. Notwithstanding the foregoing sentence, the failure of the
Corporation to give such notice shall not affect the validity of or the force or
effect of or the requirement for such adjustment.
(10) No Redemption. The shares of Series A Preferred Stock
shall not be redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence of this Section 10, the Corporation may
acquire shares of Series A Preferred Stock in any other manner permitted by law
and the Articles of Incorporation.
(11) Ranking. Unless otherwise provided in these Articles
of Incorporation, the Series A Preferred Stock shall rank junior to all other
series of the Corporation's Preferred Stock as to the payment of dividends and
the distribution of assets on liquidation, dissolution or winding up and shall
rank senior to the Common Stock.
(12) Amendment. These Articles of Incorporation of the
Corporation shall not be amended in any manner which would adversely affect the
rights, preferences or limitations of the Series A Preferred Stock without, in
addition to any other vote of shareholders required by law, the approval of (1)
the holders of the then outstanding Rights (as defined in Section (e)(4)(C) of
this Article III) and (2) the holders of the then outstanding shares of the
Series A Preferred Stock, with the holders of the Rights and the holders of the
Series A Preferred
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Stock voting together as a single voting group; PROVIDED, HOWEVER, that the
holder of each share of Series A Preferred Stock shall have one vote and the
holder of each Right shall have one one-hundredth of a vote with respect to each
such amendment.
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HEICO CORPORATION
ANNUAL MEETING OF SHAREHOLDERS, MARCH 17, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of HEICO CORPORATION hereby appoints
Laurans A. Mendelson and Thomas S. Irwin, or either of them, the true and lawful
attorney or attorneys and proxy or proxies of the undersigned with full power of
substitution and revocation to each of them, to vote all the shares of stock
which the undersigned would be entitled to vote, if there personally present, at
the Annual Meeting of Shareholders of HEICO CORPORATION called to be held at The
Wyndham Hotel - Fort Lauderdale Airport, 1825 Griffin Road, Dania, Florida at
10:00 a.m. on March 17, 1998 (notice of such meeting has been received), and at
any adjournments thereof, with all powers which the undersigned would possess if
personally present. Without limiting the generality of the foregoing, said
attorneys and proxies are authorized to vote as indicated below.
1. ELECTION OF DIRECTORS
NOMINEES: Jacob T. Carwile, Samuel L. Higginbottom, Paul F.
Manieri, Laurans A. Mendelson, Eric A. Mendelson, Victor H.
Mendelson, Albert Morrison, Jr., Dr. Alan Schriesheim, Guy C.
Shafer
[ ] FOR all nominees listed WITHHOLD AUTHORITY
to vote for all nominees listed above [ ]
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW:
2. APPROVAL OF AMENDMENT TO THE 1993 STOCK OPTION PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM
20,000,000 SHARES TO 30,000,000 SHARES
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION TO CREATE
CLASS A COMMON STOCK
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. In their discretion, upon such other matters which may
properly come before the meeting or any adjournments.
(CONTINUED FROM OTHER SIDE)
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED BUT WHERE NO DIRECTION IS GIVEN IT WILL BE
VOTED FOR THE ELECTION OF ALL DIRECTORS, FOR THE PROPOSAL TO AMEND THE 1993
STOCK OPTION PLAN, FOR THE PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK, AND FOR THE PROPOSAL
TO AMEND THE ARTICLES OF INCORPORATION TO CREATE CLASS A COMMON STOCK AS
DESCRIBED IN THE NOTICE OF MEETING AND PROXY STATEMENT.
PLEASE SIGN, DATE AND MAIL THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED, SO THAT
YOUR SHARES CAN BE VOTED AT THE MEETING.
Dated :_________________________, 1998
-------------------------------------
Signature of Shareholder
-------------------------------------
Signature of Shareholder
(Please sign exactly as name appears hereon.
If Executor, Trustee, etc., give full title.
If stock is held in the name of more than
one person, each should sign.)
