SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e) (2))
HEICO CORPORATION
(Name of Registrant as Specified in Its Charter)
HEICO CORPORATION
(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
HEICO CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 16, 1999
----------------
The Annual Meeting of Shareholders of HEICO Corporation, a Florida
corporation ("HEICO" or the "Company"), will be held on March 16, 1999, at
10:00 A.M. local time, at The Sheraton Fort Lauderdale Airport Hotel, 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; and
3. Transacting such other business as may properly come before the meeting
or any adjournments thereof.
Only holders of record of HEICO Common Stock and Class A Common Stock at
the close of business on January 18, 1999 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
3000 Taft Street LAURANS A. MENDELSON,
Hollywood, Florida CHAIRMAN OF THE BOARD,
February 17, 1999 PRESIDENT AND
CHIEF EXECUTIVE OFFICER
<PAGE>
HEICO CORPORATION
3000 TAFT STREET, HOLLYWOOD, FLORIDA 33021
----------------
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 Sheraton Fort Lauderdale Airport Hotel,
1825 Griffin Road, Dania, Florida 33004 on Tuesday, March 16, 1999 at 10:00
A.M., local time. This Proxy Statement is first being mailed to shareholders on
or about February 19, 1999.
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") 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
$7,500 plus related out-of-pocket expenses.
Only holders of record of HEICO Common Stock, $0.01 par value per share
(the "Common Stock") and Class A Common Stock, $0.01 par value per share (the
"Class A Common Stock") at the close of business on January 18, 1999 will be
entitled to vote at the meeting. On that date there were 8,464,025 shares of
Common Stock, each entitled to one vote and 4,136,572 shares of Class A Common
Stock, each entitled to 1/10th vote per share outstanding.
<PAGE>
VOTING SECURITIES OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth some information regarding the beneficial
ownership of the Common Stock and Class A Common Stock as of January 18, 1999
by (i) each person who is known to the Company to be the beneficial owner of
more than 5% of the outstanding Common Stock or Class A 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. Except as set forth below,
the shareholders named below have sole voting and investment power with respect
to all shares of Common Stock and Class A Common Stock shown as being
beneficially owned by them.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(2)
-----------------------------------------------------
CLASS A
COMMON STOCK COMMON STOCK
------------------------- -------------------------
NAME AND ADDRESS
OF BENEFICIAL OWNER(1) NUMBER PERCENT NUMBER PERCENT
---------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(a) Certain beneficial owners:
Mendelson Reporting Group(3) ................................... 2,109,212 21.66% 1,141,233 23.78%
HEICO Savings and Investment Plan(4) ........................... 1,315,934 15.55 659,614 15.95
Dr. Herbert A. Wertheim(5) ..................................... 1,136,176 13.42 568,088 13.73
Dimensional Fund Advisors, Inc.(6) ............................. 441,722 5.22 230,710 5.58
Rene Plessner Reporting Group(7) ............................... 448,067 5.29 224,034 5.42
(b) Directors:
Jacob T. Carwile(8) ............................................ 135,013 1.57 67,782 1.61
Samuel L. Higginbottom ......................................... 3,749 * 2,149 *
Paul F. Manieri(9) ............................................. 11,967 * 67,753 1.61
Eric A. Mendelson(10) .......................................... 427,223 4.90 209,210 4.91
Laurans A. Mendelson(11) ....................................... 1,574,501 17.06 873,579 19.22
Victor H. Mendelson(12) ........................................ 422,052 4.84 206,724 4.85
Albert Morrison, Jr.(13) ....................................... 17,073 * 8,811 *
Dr. Alan Schriesheim(14) ....................................... 122,994 1.43 61,772 1.47
Guy C. Shafer .................................................. 11,475 * 6,012 *
(c) Executive officers listed in Summary Compensation
table who are not directors:
Thomas S. Irwin(15) ............................................ 320,705 3.72 160,353 3.80
James L. Reum(16) .............................................. 113,385 1.32 56,694 1.35
All directors and officers as a group (11 persons)(17) ......... 2,845,573 27.80 1,572,559 30.74
All directors, officers, the HEICO Savings and
Investment Plan and the Mendelson Reporting Group
as a group ..................................................... 4,161,507 40.66 2,232,173 43.63
</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 and
Class A 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 and Class A Common Stock deemed
outstanding includes (i) 8,464,025 shares of Common Stock outstanding as
of January 18, 1999, (ii) 4,136,572 shares of Class A Common Stock
outstanding as of January 18, 1999, and (iii) shares issued pursuant to
options held by the respective person or group which may be exercised
within 60 days after January 18, 1999 ("presently exercisable stock
options") as set forth below. Pursuant to the rules of the Securities and
Exchange Commission, presently 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 Arlene Mendelson, the wife of Laurans A.
Mendelson, LAM Alpha Partnership, a partnership
2
<PAGE>
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 1,274,568 shares of Common Stock and 662,285 shares of
Class A Common Stock covered by currently exercisable stock options. Also
includes 56,815 shares of Common Stock and 90,384 shares of Class A Common
Stock held of record by employees and former shareholders of the Company's
Northwings Accessories Corp. subsidiary 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 517,564 shares of Common Stock and 260,429 shares of Class A
Common Stock allocated to participants' individual accounts and 798,370
unallocated shares of Common Stock and 399,185 unallocated shares of Class
A Common Stock as of September 30, 1998. Under the terms of the 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 on February 11, 1999, 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, Suite 650, 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 279,979 shares of Common
Stock and 139,990 shares of Class A Common Stock held by Mr. Plessner and
168,088 shares of Common Stock and 84,044 shares of Class A Common Stock
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, NY 10052.
(8) Reflects 123,538 shares of Common Stock and 61,770 shares of Class A
Common Stock subject to presently exercisable stock options.
(9) Reflects 61,770 shares of Class A Common Stock subject to presently
exercisable stock options. Mr. Manieri is not standing for reelection.
(10) Reflects 157,282 shares of Common Stock and 74,140 shares of Class A
Common Stock held by MIC, 254,918 shares of Common Stock and 127,459
shares of Class A Common Stock covered by currently exercisable stock
options and 13,181 shares of Common Stock and 6,591 shares of Class A
Common Stock held by the HEICO Savings and Investment Plan and allocated
to Eric A. Mendelson's account and 250 shares of Common Stock and 225
shares of Class A Common Stock owned by Eric Mendelson's children. See
Note (3) above.
(11) Laurans A. Mendelson disclaims beneficial ownership with respect to
157,282 shares of Common Stock and 74,140 shares of Class A Common Stock,
respectively, of these shares, which are held in the name of MIC, 16,050
shares of Common Stock and 8,875 shares of Class A Common Stock which were
donated to Laurans A. and Arlene H. Mendelson Charitable Foundation, Inc.,
of which Mr. Mendelson is President, and 56,815 shares of Common Stock and
90,384 shares of Class A Common Stock held of record by employees and
former shareholders of the Company's Northwings subsidiary but subject to
a voting proxy held by Mr. Mendelson. Includes 560,419 shares of Common
Stock and 283,211 shares of Class A Common Stock held solely by Mr.
Mendelson or LAM Limited Partners. Also includes 765,105 shares of Common
Stock and 407,554 shares of Class A Common Stock covered by currently
exercisable stock options and 18,830 shares of Common Stock and 9,415
shares of Class A Common Stock held by the HEICO Savings and Investment
Plan and allocated to Mr. Mendelson's account. See Notes (3), (10) and
(12).
(12) Reflects 157,282 shares of Common Stock and 74,140 shares of Class A
Common Stock held by MIC, 254,545 shares of Common Stock and 127,272
shares of Class A Common Stock covered by currently exercisable stock
options, of which 156,485 shares of Common Stock and 78,243 shares of
Class A Common Stock are held by the Victor H. Mendelson Revocable
Investment Trust, and 9,530 shares of Common Stock and 4,765 shares of
Class A Common Stock held by the HEICO Savings and Investment Plan and
allocated to Victor H. Mendelson's account and 200 shares of Class A
Common Stock owned by Victor Mendelson's children. See Note (3) above.
(13) Albert Morrison Jr.'s voting and dispositive power with respect to 15,481
and 7,740 shares of Common Stock and Class A Common Stock, respectively,
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 of Common Stock and 55,592 shares of Class A
Common Stock subject to presently exercisable stock options.
(15) Reflects 154,309 shares of Common Stock and 84,516 shares of Class A
Common Stock covered by currently exercisable stock options and 26,491
shares of Common Stock and 13,245 shares of Class A Common Stock held by
the HEICO Savings and Investment Plan and allocated to Thomas S. Irwin's
account.
(16) Reflects 106,577 shares of Common Stock and 53,290 shares of Class A
Common Stock covered by currently exercisable stock options, and 6,808
shares of Common Stock and 3,404 shares of Class A Common Stock held by
the HEICO Savings and Investment Plan and allocated to James L. Reum's
account.
(17) Reflects 1,770,174 shares of Common Stock and 979,223 shares of Class A
Common Stock covered by currently exercisable stock options. The total for
all directors and officers as a group (11 persons) also includes 74,840
shares of Common Stock and 37,420 shares of Class A Common Stock held by
the HEICO Savings and Investment Plan and allocated to accounts of officers
pursuant to the Plan. See Note (3) above.
3
<PAGE>
PROPOSAL TO ELECT DIRECTORS
(PROPOSAL NO. 1)
Each of the eight 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
NAME AGE CORPORATE OFFICE OR POSITION SINCE
- ---- --- ---------------------------- --------
<S> <C> <C> <C>
Jacob T. Carwile 76 Director(1)(3) 1975
Samuel L. Higginbottom 77 Director(1)(2)(5) 1989
Eric A. Mendelson 33 Vice President of the Company; President of HEICO 1992
Aerospace Holdings Corp. and Director(6)
Laurans A. Mendelson 60 Chairman of the Board, President and Chief Executive 1989
Officer, Director(2)(6)
Victor H. Mendelson 31 Vice President and General Counsel of the Company; 1996
President of HEICO Aviation Products Corp. and
Director(4)(6)
Albert Morrison, Jr. 62 Director(3)(5) 1989
Dr. Alan Schriesheim 68 Director(2)(4) 1984
Guy C. Shafer 80 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
LAURANS A. MENDELSON has served as Chairman of the Board of the Company
since December 1990. Mr. Mendelson has also served as Chief Executive Officer
of the Company since February 1990, President of the Company since September
1991 and served as President of MediTek Health Corporation from May 1994 until
its sale in July 1996. In 1997, Mr. Mendelson served on the board of governors
of the AIA. Mr. Mendelson is a Certified Public Accountant. Mr. Mendelson is a
member of the Board of Trustees of Columbia University and the Board of
Trustees of Mount Sinai Medical Center in Miami Beach, Florida.
ERIC A. MENDELSON has served as Vice President of the Company since 1992,
and has been President of HEICO Aerospace Holdings Corp. ("HEICO Aerospace"), a
subsidiary of HEICO, since is formation in 1997 and President of HEICO
Aerospace Corporation since 1993. 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 the Company. Mr. Mendelson is a co-founder, and,
since 1987, has been Managing Director of Mendelson International Corporation
("MIC"), a private investment company which is a shareholder of HEICO. He
received his AB degree from Columbia College and his MBA from the Columbia
University Graduate School of Business. Eric Mendelson is the son of Laurans
Mendelson and the brother of Victor Mendelson.
VICTOR H. MENDELSON has served as Vice President of the Company since
1996, as President of HEICO Aviation Products Corp. since September 1996 and as
General Counsel of the Company since 1993. He served as Executive Vice
President of MediTek Health Corporation from 1994 and its Chief
4
<PAGE>
Operating Officer from 1995 until its sale in July 1996. He was the Company's
Associate General Counsel from 1992 until 1993. From 1990 until 1992, he worked
on a consulting basis with the Company developing and analyzing various
strategic opportunities. Mr. Mendelson is a co-founder and, since 1987, has
been President, of MIC (a private investment company which is a shareholder of
HEICO). Mr. Mendelson received his AB degree from Columbia College and his JD
from The University of Miami School of Law. He is a Trustee of St. Thomas
University, Miami, Florida. Victor Mendelson is the son of Laurans Mendelson
and the brother of Eric Mendelson.
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.
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. He 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 was a director of British Aerospace Holdings,
Inc., an aircraft manufacturer, from 1986 to 1999 and was a director of
AmeriFirst Bank from 1986 to 1991. He is Vice Chairman of St. Thomas
University, Miami, Florida.
ALBERT MORRISON, JR. has served as President of Morrison, Brown, Argiz &
Company, a certified public accounting firm located in Miami, Florida, since
1971. He 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 served 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 Rohm and Haas Company, a chemical company, and a member of the
Board of the Children's Memorial Hospital of Chicago, Illinois.
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.
Meetings of the Board are held periodically during the year. The Board
held nine meetings in fiscal 1998. 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
5
<PAGE>
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
1998, no separate meetings of the Executive Committee were held, the Nominating
and Executive Compensation Committee met four times, the Finance/Audit
Committee met two times, the Stock Option Plan Committee met four 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 1998, an
aggregate of $149,666 was paid to directors under the compensation arrangements
described above (including $24,000 paid to Jacob Carwile, $25,500 paid to
Samuel Higginbottom, $28,000 paid to Paul Manieri, $25,000 paid to Albert
Morrison, Jr., $23,666 paid to Dr. Alan Schriesheim and $23,500 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 1998, an aggregate of $115,700 was paid to directors for consulting
services (including $34,800 paid to Jacob Carwile, $78,000 paid to Samuel
Higginbottom, $1,200 paid to Paul Manieri and $1,700 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 1998, $80,000 was accrued, while no
amounts were paid pursuant to the Directors' Retirement Plan.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries, to or on
behalf of the Company's Chief Executive Officer and each of the four other most
highly compensated executive officers of the Company or its subsidiaries
(determined as of the end of the last fiscal year) for the fiscal years ended
October 31, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
--------------------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OTHER($)
- --------------------------- ---- --------- -------- --------
<S> <C> <C> <C> <C>
Laurans A. Mendelson 1998 385,000 350,000 33,215(3)
Chairman of the Board, 1997 350,000 200,000 169,642(4)
President and Chief 1996 325,000 200,000 326,967(5)
Executive Officer
Thomas S. Irwin 1998 180,000 190,000 --
Executive Vice President 1997 165,000 85,000 90,000(6)
and Chief Financial Officer 1996 155,481 85,000 100,000(7)
Eric A. Mendelson 1998 180,000 190,000 29,882(3)
Vice President; 1997 150,000 190,000 16,642(3)
President of HEICO 1996 139,134 150,000 73,697(8)
Aerospace Holdings Corp.
Victor H. Mendelson 1998 180,000 190,000 33,382(3)
Vice President and General 1997 150,000 80,000 130,339(9)
Counsel; President of HEICO 1996 137,404 50,000 157,500(10)
Aviation Products Corp.
James L. Reum 1998 180,000 150,000 0
Executive Vice President and 1997 150,000 150,000 0
Chief Operating Officer of 1996 130,481 100,000 0
HEICO Aerospace Holdings Corp.
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
AWARDS PAYOUTS
------------------------------ --------
RESTRICTED
STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL POSITION AWARD(S)($) SARS(#)(2) PAYOUTS COMPENSATION($)
- --------------------------- ----------- ---------- ------- ---------------
<S> <C> <C> <C> <C>
Laurans A. Mendelson 0 25,000(11) 0 25,330(12)
Chairman of the Board, 0 45,000 0 28,299(12)
President and Chief 0 61,257 0 29,500(12)
Executive Officer
Thomas S. Irwin 0 50,000(11) 0 7,159(13)
Executive Vice President 0 47,250 0 9,759(13)
and Chief Financial Officer 0 13,613 0 10,630(13)
Eric A. Mendelson 0 100,000 0 7,454(13)
Vice President; 0 79,500 0 9,000(13)
President of HEICO 0 31,310 0 9,681(13)
Aerospace Holdings Corp.
Victor H. Mendelson 0 100,000 0 7,238(13)
Vice President and General 0 79,500 0 9,000(13)
Counsel; President of HEICO 0 64,255 0 9,549(13)
Aviation Products Corp.
James L. Reum 0 25,000(11) 0 5,801(13)
Executive Vice President and 0 39,750 0 7,326(13)
Chief Operating Officer of 0 19,058 0 8,303(13)
HEICO Aerospace Holdings Corp.
</TABLE>
- ----------------
(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 splits and dividends, as applicable.
(3) Represents payments of directors' fees.
(4) 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.
(5) 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.
(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) Represents options granted for Class A Common Stock.
7
<PAGE>
(12) Includes annual life insurance premiums paid by the Company of $18,250 in
fiscal years 1998, 1997 and 1996. Amount also includes Company
contributions to his HEICO Savings and Investment Plan account of $7,080
in fiscal 1998, $9,549 in fiscal 1997 and $10,750 in fiscal year 1996.
Prior to receiving a portion of the Company contributions under such plan,
Mr. Mendelson contributed, in cash, twice the amount that he received in
stock. Participation in the HEICO Savings and Investment Plan is available
to nearly all employees of the Company.
(13) Represents Company contributions to the HEICO Savings and Investment Plan
account of the named executive. Prior to receiving a portion of the
Company contributions under such plan, each named executive contributed,
in cash, twice the amount that he received in HEICO stock. Participation
in the HEICO Savings and Investment Plan is available to nearly all
employees of the Company.
OPTIONS/SAR GRANTS TABLE
The following table sets forth information concerning individual grants of
stock options pursuant to the Company's Non-Qualified Stock Option Plan (the
"NQSO Plan") and 1993 Stock Option Plan during the fiscal year ended October
31, 1998 to the Company's Chief Executive Officer and each of the four other
most highly compensated executive officers of the Company. The Company has not
granted and does not currently grant stock appreciation rights.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS/SARS
OPTIONS/ GRANTED TO EXERCISE
SARS EMPLOYEES IN OR BASE
NAME AND PRINCIPAL POSITION GRANTED(#)(1) FISCAL YEAR PRICE($/SH)
- --------------------------- ------------- ------------ -----------
<S> <C> <C> <C>
Laurans A. Mendelson 25,000(3)(6) 6% $ 27.50
Chairman of the Board,
President and Chief
Executive Officer
Thomas S. Irwin 50,000(4)(6) 12% $ 27.50
Executive Vice President
and Chief Financial Officer
Eric A. Mendelson 100,000(4)(5) 24% $ 30.63
Vice President;
President of HEICO
Aerospace Holdings Corp.
Victor H. Mendelson 100,000(4)(5) 24% $ 30.63
Vice President and General
Counsel; President of HEICO
Aviation Products Corp.
James L. Reum 25,000(4)(6) 6% $ 27.50
Executive Vice President and
Chief Operating Officer of
HEICO Aerospace Holdings Corp.
<CAPTION>
POTENTIAL REALIZABLE
VALUE ASSUMING
ANNUAL RATES OF STOCK
MARKET APPRECIATION FOR
PRICE ON OPTION TERM(2)
DATE OF EXPIRATION ---------------------------------
NAME AND PRINCIPAL POSITION GRANT DATE 0%($) 5%($) 10%($)
- --------------------------- -------- ---------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Laurans A. Mendelson $ 27.50 06/12/08 0 $ 432,365 $1,095,698
Chairman of the Board,
President and Chief
Executive Officer
Thomas S. Irwin $ 27.50 06/12/08 0 $ 864,730 $2,191,396
Executive Vice President
and Chief Financial Officer
Eric A. Mendelson $ 30.63 06/12/08 0 $1,925,990 $4,880,836
Vice President;
President of HEICO
Aerospace Holdings Corp.
Victor H. Mendelson $ 30.63 06/12/08 0 $1,925,990 $4,880,836
Vice President and General
Counsel; President of HEICO
Aviation Products Corp.
James L. Reum $ 27.50 06/12/08 0 $ 432,365 $1,095,698
Executive Vice President and
Chief Operating Officer of
HEICO Aerospace Holdings Corp.
</TABLE>
- ----------------
(1) No stock appreciation rights have been granted.
(2) Based upon arbitrary assumptions of 0%, 5%, and 10% annual appreciation of
the Company's Common Stock through the expiration date of the executive's
options granted during the last fiscal year.
(3) Options were 100% vested at grant.
(4) Options vest 20% per annum.
(5) Represents options to purchase Common Stock.
(6) Represents options to purchase Class A Common Stock.
8
<PAGE>
AGGREGATED OPTION/SAR EXERCISES AND
FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table sets forth information concerning options exercised
during fiscal 1998 and unexercised options to purchase the Company's Common
Stock and Class A Common Stock as of October 31, 1998 under the Company's
Combined Stock Option Plan, NQSO Plan and 1993 Stock Option Plan held by the
Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company. Also reported are the values for
"in-the-money" options which represent the positive spread between the exercise
price of any such existing stock options and the closing prices of HEICO's
Common Stock and Class A Common Stock on the composite tape of the American
Stock Exchange ("AMEX") on October 31, 1998:
AGGREGATE OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
SHARES AT FY-END(#) AT FY-END($)
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME AND PRINCIPAL POSITION ON EXERCISE(#) REALIZED($) UNEXERCISABLE(1) UNEXERCISABLE
- --------------------------- -------------- ----------- ---------------- -------------
<S> <C> <C> <C> <C>
Laurans A. Mendelson 0 0 1,172,659E $23,098,497E
Chairman of the Board, President and
Chief Executive Officer
Thomas S. Irwin 37,060(2) $1,022,671 248,902E 4,768,726E
Executive Vice President and Chief 63,923U 203,673U
Financial Officer
Eric A. Mendelson 0 0 373,095E 6,864,962E
Vice President; President of HEICO 127,845U 407,329U
Aerospace Holdings Corp.
Victor H. Mendelson 0 0 371,973E 6,791,099E
Vice President and General Counsel; 128,970U 428,735U
President of HEICO Aviation
Products Corp.
James L. Reum 0 0 157,396E 2,720,318E
Executive Vice President and Chief 29,943U 104,372U
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.
(2) Represents 24,707 shares of Common Stock and 12,353 shares of Class A
Common Stock.
9
<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 increase income and enhance
shareholder value; (ii) aligning stockholder and management interests; (iii)
long-term growth pursuit by management; (iv) recruitment of the highest quality
management team; (v) stimulation of both entrepreneurial and team objectives by
management; and (vi) obtaining and retaining top managers in a very competitive
compensation market. The Committee believes that stock-based compensation
stimulates managers to maximize the Company's stock price by increasing
earnings because the Committee believes that a Company's stock price is
ultimately driven by earnings. THE COMMITTEE BELIEVES THAT THIS PHILOSOPHY LED
TO THE COMPANY'S 54% COMMON STOCK SHARE PRICE INCREASE IN 1998, 134% SHARE
PRICE INCREASE IN FISCAL 1997, 62% SHARE PRICE INCREASE IN FISCAL 1996, ITS
112% SHARE PRICE INCREASE IN FISCAL 1995 AND THE 50%, 92%, 267%, 46% AND 88%
EARNINGS INCREASES IN FISCAL 1998, 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 directly charged to
the Company's reported 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 of the Company's 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 1998, 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 (including Laurans A. Mendelson, Thomas S. Irwin, Eric A. Mendelson,
Victor H. Mendelson and James L. Reum) 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.
The Committee determines executive officers' base salaries by use of
comparative industry data and numerous other considerations of individual
performance and corporate goals. The following
10
<PAGE>
items are among the principal factors which the Committee considered in
establishing base salaries for the Company's executive officers in 1998:
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 believes it is crucial to reward management's success in
meeting the Company's goals. Specifically, management has repeatedly met or
exceeded its new product sales goals during each of the past four years and is
currently expected to meet or exceed those goals in 1999. The Flight Support
Group's new product development program is critical to the Company's earnings
growth. Because, due in large measure to management's efforts, the Flight
Support Group's income from operations increased significantly in 1998
following substantial increases in 1997, 1996 and 1995, the Committee feels it
is appropriate to reward certain executive officers for this success. Much of
the Company's earnings growth resulted from the Flight Support Group's income
gains.
The Committee has observed the current management team for numerous years
and has concluded that the Committee's bonus policy has appropriately rewarded
and incentivized management for its successes and efforts. During the most
recent year, management successfully completed three significant acquisitions
and successfully implemented a restructuring and product development campaign
at the Company's Ground Support Group. The Ground Support Group's revenue and
income grew substantially in fiscal 1998. The Company's continuing operations
witnessed strong growth, as did the Company's share price. Accordingly, the
Committee again rewarded management with bonuses during 1998.
Although the Committee believes that its compensation policies stimulate
long-term growth and attention to short-term considerations, it will regularly
review compensation practices and may, depending upon conditions in its
businesses and other factors, alter 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 anticipated
future contributions to the Company's growth.
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
a key strategic alliance with a major airline and five other significant
strategic acquisitions and in fiscal 1998, successfully negotiated a $120
million credit facility with a syndicate of banks.
The Committee believes it is important to continue to induce Mr. Mendelson
to devote substantially all of his professional 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 substantially all of 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
11
<PAGE>
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.
The Committee believes that equity ownership by management is essential.
Accordingly, because Mr. Mendelson has made a substantial equity commitment to
the Company, the Committee believes it should consider this factor in
establishing Mr. Mendelson's compensation level.
1998 STOCK OPTION GRANTS
As discussed previously in this report, the Committee believes that stock
options are a successful method of aligning shareholder and management
interests because such options will cause managers to reap economic reward only
if other shareholders gain. Further, in order to compete with other, larger
corporations for high-quality acquisitions and management talent, the Committee
understands that the Company 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).
12
<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.
[PERFORMANCE GRAF OMITTED]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
------------ ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
HEICO Common Stock* ........... $ 100.00 $ 69.69 $ 150.56 $ 242.66 $ 569.71 $ 818.58
American Stock Exchange Total
Value Index ................. $ 100.00 $ 95.25 $ 108.36 $ 118.13 $ 144.54 $ 139.77
Dow Jones Aerospace and Defense
Group Index ................. $ 100.00 $ 119.95 $ 182.95 $ 259.93 $ 291.64 $ 278.64
</TABLE>
- ----------------
* The share price used in determining the Company's shareholder returns on its
Common Stock has been retroactively adjusted to give effect to the April
1998 dividend of one share of Class A Common Stock for each two outstanding
shares of Common Stock.
13
<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, 1,549,500 shares of Common Stock and 938,582 shares
of Class A 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, 1999, 21,190 shares of Common Stock and
169,205 shares of Class A Common Stock remain available for issuance under the
1993 Stock Option Plan. In addition, 520,561 shares of Common Stock and 322,055
shares of Class A 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, 1999, 28,009 shares of Common Stock and
4,005 shares of Class A Common Stock remain available for issuance under the
NQSO Plan.
AMENDMENTS TO THE PLAN
On December 11, 1998, 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 Common and Class A Common shares issuable pursuant to
the 1993 Stock Option Plan by 400,000 shares and 200,000 shares to 1,949,500
and 1,138,582 shares, respectively. As noted above, only 21,190 Common shares
and 169,205 Class A Common 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 or
Class A 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
14
<PAGE>
Stock or Class A 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 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 or Class A 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 or
Class A 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
or Class A Common Stock covered by each outstanding option granted under the
1993 Stock Option Plan, the number of shares of HEICO Common Stock or Class A
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 or Class A Common Stock
resulting from a stock split or stock dividend. Subject to certain limitations,
in the event of a proposed dissolution, liquidation, merger or 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 and Class A Common Stock is necessary to
amend the 1993 Stock Option Plan to increase the number of shares of HEICO
Common Stock or Class A 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
15
<PAGE>
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 or Class A 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 or Class A 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 of the shares of HEICO
Common Stock or Class A 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 or Class A
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 or Class A 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 or Class A 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 or Class A
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, 1999, options to purchase 2,616,934 shares of Common
Stock and 1,415,170 shares of Class A Common Stock were outstanding at an
average exercise price of $7.19 and $7.13 per
16
<PAGE>
share, respectively, under all stock option plans including options to purchase
1,429,115 shares of Common Stock and 742,127 shares of Class A Common Stock at
an average exercise price of $10.74 and $10.74 per share, respectively, under
the 1993 Stock Option Plan. As of January 31, 1999, 49,199 shares of Common
Stock and 173,210 shares of Class A Common Stock remained eligible for grant
under all stock option plans represented by 21,190 shares of Common Stock and
169,205 shares of Class A Common Stock available under the 1993 Stock Option
Plan and 28,009 of Common Stock and 4,005 shares of Class A Common Stock
available under the Company's NQSO Plan. The last reported sales price of the
Common Stock and Class A Common Stock on the New York Stock Exchange composite
tape as of January 29, 1999, to which the Company's Common Stock and Class A
Common Stock were transferred effective on such date, was $27.125 and $22.75,
respectively.
The table below indicates, as of January 31, 1999, 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>
OPTIONS GRANTED(1)(2)
-------------------------------
CLASS A
NAME OF COMMON COMMON
INDIVIDUAL OR GROUP POSITION STOCK STOCK(5) TOTAL
- ------------------- -------- ------ -------- -----
<S> <C> <C> <C> <C>
Laurans A. Mendelson Chairman of the Board, 765,105 407,554 1,172,659
President and Chief
Executive Officer
Thomas S. Irwin Executive Vice President 277,749 149,963 427,712
and Chief Financial
Officer
Eric A. Mendelson(3) Director and Vice 367,293 133,647 500,940
President of HEICO
Corporation; President
of HEICO Aerospace
Holdings Corp.
Victor H. Mendelson(3) Vice President and 367,295 133,648 500,943
General Counsel of
HEICO Corporation;
President of HEICO
Aviation Products Corp.
James L. Reum Executive Vice President 108,225 79,114 187,339
and Chief Operating
Officer of HEICO
Aerospace Holdings Corp.
Jacob T. Carwile Director 123,538(4) 61,770 185,308
Paul F. Manieri(6) Director 123,538(4) 61,770 185,308
Alan Schriesheim Director 123,538(4) 61,770 185,308
All current executive officers 1,885,667 903,926 2,789,593
All current directors who are 370,614 185,310 555,924
not executive officers
All current employees, other 1,101,824 372,603 1,474,427
than executive officers
<CAPTION>
OPTIONS
OUTSTANDING(1)
------------------------------
CLASS A
NAME OF COMMON COMMON
INDIVIDUAL OR GROUP STOCK STOCK(5) TOTAL
- ------------------- ------ -------- -----
<S> <C> <C> <C>
Laurans A. Mendelson 765,105 407,554 1,172,659
Thomas S. Irwin 160,497 137,610 298,107
Eric A. Mendelson(3) 367,293 133,647 500,940
Victor H. Mendelson(3) 367,295 133,648 500,943
James L. Reum 108,225 79,114 187,339
Jacob T. Carwile 123,538 61,770 185,308
Paul F. Manieri(6) -- 61,770 61,770
Alan Schriesheim 111,182 55,592 166,774
All current executive officers 1,768,415 891,573 2,659,988
All current directors who are 234,720 179,132 413,852
not executive officers
All current employees, other 666,459 344,165 1,010,624
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.
(5) Includes "adjustment for shares" as defined in the respective Plan
agreements relating to the distribution of one share of Class A Common
Stock for each two shares of Common Stock made on April 23, 1998.
(6) Mr. Manieri is not standing for reelection.
17
<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 or Class A 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 Common Stock share price increases of 54% in
fiscal 1998; 134% in fiscal 1997; 62% in fiscal 1996; 112% in fiscal 1995; and
the 50%, 92%, 267%, 46% and 88% increases in the Company's earnings in fiscal
1998, 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.
SELECTION OF AUDITORS
The Board has not yet selected an independent public accounting firm to
serve as the Company's auditors for fiscal 1999. The Board is expected to
decide on this matter shortly after the 1998 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
21, 2000, 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 31, 1999.
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
18
<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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<PAGE>
(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 and Class
A 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 1,949,500 shares of Common Stock and
1,138,582 shares of Class A Common Stock 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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<PAGE>
(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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<PAGE>
7. EXERCISEABILITY 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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<PAGE>
(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 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 the
Company's capital structure or its business; (ii) any merger or consolidation
of the Company;
A-5
<PAGE>
(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. INTREPRETATION.
(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
(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.
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<PAGE>
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.
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 16th
day of March, 1999.
HEICO CORPORATION
By: /s/ Laurans A. Mendelson
-------------------------
Laurans A. Mendelson
Chairman, President and
Chief Executive Officer
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<PAGE>
HEICO CORPORATION
ANNUAL MEETING OF SHAREHOLDERS, MARCH 16, 1999
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
Sheraton Fort Lauderdale Airport Hotel, 1825 Griffin Road, Dania, Florida at
10:00 a.m. on March 16, 1999 (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,
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. In their discretion, upon such other matters which
may properly come before the meeting or any
adjournments.
<PAGE>
(CONTINUED FROM OTHER SIDE)
THIS PROXY WILL BE VOTED AS DIRECTED BUT WHERE NO DIRECTION IS GIVEN IT WILL BE
VOTED FOR THE ELECTION OF ALL DIRECTORS AND FOR THE PROPOSAL TO AMEND THE 1993
STOCK OPTION PLAN.
PLEASE SIGN, DATE AND MAIL THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED, SO THAT
YOUR SHARES CAN BE VOTED AT THE MEETING.
Dated :_________________________, 1999
_______________________________________
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.)
