King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
August 14, 1997
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: International Airline Support Group, Inc. (File No. 0-18352);
Definitive Proxy Materials for the Annual Meeting of Stockholders
TO BE HELD ON SEPTEMBER 22, 1997
Ladies and Gentlemen:
On behalf of International Airline Support Group, Inc. (the
"Company"), we have enclosed for filing pursuant to Rule 14a-6 of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), the Company's
Proxy Statement and form of proxy for use in connection with the Company's
Annual Meeting of Stockholders to be held on September 22, 1997.
Preliminary copies of the proxy materials were filed with the Commission on
July 24, 1997, at which time the required filing fee was paid. The enclosed
materials are marked to indicate the change to the versions filed on July
24. Definitive copies of the Proxy Statement will be first sent to
stockholders on August 19, 1997.
If you have any questions regarding the enclosed, please contact the
undersigned at 404/572-4676.
Very truly yours,
/s/ Philip A. Theodore
Philip A. Theodore
PAT:rm
Enclosures
cc: Mr. George Murnane III
<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
Filed by the Registrant <checked-box>
Filed by a Party other than the Registrant <square>
Check the appropriate box:
<square> Preliminary Proxy Statement
<square> Confidential, for Use of the Commission Only (as permitted by Rule
14a-12))
<checked-box> Definitive Proxy Statement
<square> Definitive Additional Materials
<square> Soliciting Material Pursuant to <section> 240.14a-11(c) or <section>
140.14a-12
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
(Name of Registrant as Specified in Its Charter)
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
<checked-box> $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
<square> $500 per each party to the controversy pursuant to Exchange Act Rule
14a-(6)(i)(3)
<square> Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
Title of each class of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Aggregate number of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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):
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proposed maximum aggregate value of transaction:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total fee paid:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<square>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: AUGUST 14, 1997
<PAGE>
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
1954 AIRPORT ROAD
SUITE 200
ATLANTA, GEORGIA 30341
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
International Airline Support Group, Inc.
The Annual Meeting of Stockholders of International Airline Support
Group, Inc. (the "Company") will be held at the offices of the Company at the
address listed above, on Monday, September 22, 1997, at 10:00 a.m., local time,
to consider and vote on:
1. The election of directors.
2. The approval of an amendment to the Company's 1996 Long Term Incentive
and Share Award Plan ("Plan") to increase from By 115,000 the number of
shares available for grant under the Plan.
3. The approval of an amendment to the Company's Amended and Restated
Certificate of Incorporation to make the provisions of Section 203 of the
Delaware General Corporation Law applicable to the Company.
4. The approval of an amendment to the Company's Amended and Restated
Certificate of Incorporation to provide for three classes of directors
with staggered terms of up to three years such that approximately one-
third of the Board stands for election each year.
5. The ratification of the appointment of Grant Thornton, LLP as independent
auditors for the fiscal year of the Company ending on May 31, 1998
("fiscal 1998").
6. Such other matters as may properly come before the meeting or any
adjournments thereof.
The close of business on August 12, 1997, has been fixed as the record
date for determination of stockholders entitled to notice of, and to vote at,
the Annual Meeting or any adjournments thereof. A list of stockholders
entitled to vote at the Annual Meeting will be maintained during the ten-day
period preceding the meeting at the offices of the Company in Atlanta, Georgia.
Your attention is directed to the proxy statement accompanying this notice.
By Order of the Board of Directors,
JAMES M. ISAACSON
SECRETARY
Atlanta, Georgia
August 19, 1997
<PAGE>
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
1954 AIRPORT ROAD
SUITE 200
ATLANTA, GEORGIA 30341
PROXY STATEMENT
______________________
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 22, 1997
This Proxy Statement is furnished to the holders of shares of the $.001 par
value per share Common Stock (the "Common Stock") of International Airline
Support Group, Inc. (the "Company") in connection with the solicitation by the
Company's Board of Directors of proxies for use at the Annual Meeting of
Stockholders to be held at the offices of the Company at the address listed
above, on Monday, September 22, 1997, at 10:00 a.m. local time, and at any
adjournments thereof (the "1997 Annual Meeting"). It is anticipated that this
Proxy Statement and accompanying form of proxy will be mailed to stockholders
on or about August 19, 1997.
The cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, certain officers and employees of the Company, who will
receive no compensation for their services other than their regular salaries,
may solicit proxies in person or by telephone or by written communication. The
Company may also make arrangements with brokerage houses, custodians, nominees
and other fiduciaries to send proxy material to their principals at the
Company's expense. The Company has retained Corporate Investors Communications,
Inc. to aid in solicitation of proxies at a fee of approximately
$4,000, plus certain expenses.
VOTING PROCEDURES
VOTING STOCK
Only holders of record of the Company's Common Stock, as of the close of
business on August 12, 1997 (the "Record Date") will be entitled to vote at the
1997 Annual Meeting. The Company had outstanding 2,395,095 shares of Common
Stock on the Record Date, each share being entitled to one vote on each matter
submitted to the stockholders.
Stockholders who do not expect to attend the 1997 Annual Meeting are urged
to execute and return the enclosed proxy card promptly. Any stockholder signing
and returning a proxy may revoke the same at any time prior to the voting of
the proxy by giving written notice to the Secretary of the Company or by voting
in person at the meeting. All properly executed proxy cards delivered by
stockholders and not revoked will be voted at the 1997 Annual Meeting in
accordance with the directions given. With respect to the proposal regarding
election of directors, stockholders may (a) vote in favor of all nominees, (b)
withhold their votes as to all nominees, or (c) withhold their votes as to
specific nominees by so indicating in the appropriate space on the enclosed
proxy card. With respect to each other proposal being submitted to the
stockholders for their consideration, stockholders may (i) vote "FOR" such
proposal, (ii) vote "AGAINST" such proposal, or (iii) abstain from voting on
such proposal. If no specific instructions are given with regard to the
matters to be voted upon, the shares represented by a signed proxy card will be
voted "FOR" the election of all nominees for director, "FOR" the proposal to
amend the 1996 Long Term Incentive and Share Award Plan (the "Plan") to
increase from by 115,000 the number of shares
available for grant under the Plan, "FOR" approval of an amendment to the
Company's Amended and Restated Certificate of Incorporation to make the
provisions of Section 203 of the Delaware General Corporation Law applicable to
the Company(the "Section 203 Amendment"), "FOR" approval of an amendment to
the Company's Amended and Restated Certificate of Incorporation to provide for
three classes of directors with staggered terms of up to three years such that
approximately one-third of the Board stands for election each year (the
"Classified Board Amendment") and "FOR" the appointment of Grant Thornton LLP
as independent accountants. Management knows of no other matters that may
come before the meeting for consideration by the stockholders. However, if any
other matter properly comes before the meeting, the persons named in the
enclosed proxy card as proxies will vote upon such matters in accordance
with their judgment.
QUORUM AND VOTING REQUIREMENTS
A quorum at the Annual Meeting will consist of a majority of the votes
entitled to be cast by the holders of all shares of Common Stock that are
outstanding and entitled to vote. A majority of the votes entitled to be cast
by the holders of all shares of Common Stock that are present at the meeting
and entitled to vote will be necessary to elect the director-nominees listed
herein, to amend the Plan to increase by 115,000 the number of shares issuable
under the Plan, to approve the Section 203 Amendment, to approve the Classified
Board Amendment and to ratify the appointment of Grant Thornton LLP as
independent auditors. Abstentions and proxies relating to "street name" shares
for which brokers have not received voting instruction from the beneficial
owner ("Broker Non-Votes") are counted in determining whether a quorum is
present. With respect to all matters submitted to the stockholders for their
consideration, other than the election of directors, abstention will be counted
as part of the total number of votes cast on such proposals in determining
whether the proposals have received the requisite number of favorable votes,
whereas Broker Non-Votes will not be counted as part of the total number of
votes cast on such proposals. Thus abstentions will have the same effect as
votes against any given proposal, whereas Broker Non-Votes will have no effect
in determining whether any given proposal has been approved by the
stockholders. In the election of directors, the nominees receiving the highest
number of votes will be elected. Therefore, withholding authority to vote for
a director nominee will have no effect.
ELECTION OF DIRECTORS (PROPOSAL NO. 1)
A board of four directors will be elected at the 1997 Annual Meeting. The
Board of Directors has nominated: Alexius A. Dyer III, Kyle R. Kirkland, E.
James Mueller and George Murnane III to serve as directors until the next
annual meeting of stockholders or until their successors are elected and
qualified, or if the Classified Board Amendment is approved, for the terms
specified therein. Messrs. Dyer, Kirkland, Mueller and Murnane are currently
members of the Board of Directors. Each nominee has consented to serve on the
Board for the applicable term or until his successor is duly elected and
qualified. If any of the nominees should be unable to serve for any reason
(which management has no reason to anticipate at this time), the Board of
Directors may designate a substitute nominee or nominees (in which case the
persons named as proxies in the enclosed proxy card will vote all valid proxy
cards for the election of such substitute nominee or nominees), allow the
vacancy or vacancies to remain open until a suitable candidate or candidates
are located, or eliminate the vacancy. The affirmative vote of holders of a
majority of the issued and outstanding shares ofCommon Stock present in person
or represented by proxy, at the 1997 Annual Meeting is required to elect the
persons nominated.
Mr. Dyer, the Chairman, President and Chief Executive Officer of the Company,
and Mr. Murnane, the Executive Vice President and Chief Financial Officer, have
each entered into employment agreements with the Company that provide, among
other things, that Messrs. Dyer and Murnane shall serve as members of the Board
during the terms of their respective Employment Agreements. See "Executive
Compensation -- Employment Agreements."
The Board of Directors recommends a vote FOR each nominee for director.
<PAGE>
INFORMATION AS TO DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth certain information, including ownership of
the Company's Common Stock, as of August 12, 1997, with respect to: (i) each
director; (ii) each executive officer and (iii) all directors and executive
officers as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
OFFICER OR OWNED
DIRECTOR SINCE
NAME AGE POSITION PERCENTAGE
<S> <C> <C> <C> <C> <C>
Alexius A. Dyer III (1) 41 Chairman of the Board, 1992 130,137 (4) 5.4%
President and Chief Executive
Officer
George Murnane III (1) 39 Executive Vice President, Chief 1996 57,733 (4) 2.4%
Financial Officer and Director
Kyle R. Kirkland (2)(3) 35 Director 1992 57,207 (4) 2.4%
E. James Mueller (2)(3) 51 Director 1991 99,072 (4) 4.1%
James M. Isaacson 36 Vice President of Finance, 1997 17,500 (4) *
Treasurer and Secretary
Officers and Directors as a Group
_______________________ 15.1%
361,649
</TABLE>
_____________________________
* Less than one percent.
(1) Member of Executive Committee.
(2) Member of Audit Committee.
(3) Member of the Compensation Committee.
(4) Includes the following shares of Common Stock subject to options
exercisable presently or within sixty days: Mr. Dyer, 123,500;
Mr. Murnane, 57,633; Mr. Kirkland, 57,207;
Mr. Mueller, 64,072; and Mr. Isaacson, 17,500.
ALEXIUS A. DYER III has been the Chief Executive Officer of the Company and
Chairman of the Company's Board of Directors since February 1995. Mr. Dyer has
been a director of the Company since 1992. Mr. Dyer served as President of the
Company from February 1994 to February 1995. From February 1991 to February
1994, Mr. Dyer served as Executive Vice President of Capital Markets of the
Company. Additionally, during 1991, he served as the President and director of
the Company's subsidiary, Barnstorm Leasing, Inc., which was merged into the
Company in July 1992.
GEORGE MURNANE III has been Executive Vice President and Chief Financial
Officer of the Company since June 1996 and has served as a Director since
October 3, 1996. From March 1996 through June 1996, Mr. Murnane served as a
consultant for the aviation industry. From October 1995 through February 1996
he served as Executive Vice President and Chief Operating Officer of Atlas Air,
Inc., an air cargo company. From 1986 to 1995 he was affiliated with the
New York investment banking firm of Merrill Lynch & Co., most recently as
Director in the firm's Transportation Group. Mr. Murnane was named to the
Board of Directors of CCAIR, Inc. in January 1997.
KYLE R. KIRKLAND has been a director of the Company since July 1992.
Mr. Kirkland has served as the President of Kirkland Messina,LLC, an
investment banking firm, since March 1994. Mr. Kirkland was employed as Senior
Vice President of Dabney/Resnick, Inc., an investment banking firm now known as
Dabney/Resnick/Imperial, LLC ("D/R"), from June 1991 until February 1994. D/R
acted as the placement agent for certain debt securities issued by the Company.
Mr. Kirkland was employed as an investment banker with Canyon Partners, Inc.
and with Drexel Burnham Lambert, Inc. from March 1990 through June 1991 and
from July 1988 through March 1990, respectively. Mr. Kirkland is the
Chairman and a director of Steinway Musical Instruments, Inc. He also
serves on the boards of several privately held businesses.
E. JAMES MUELLER has been a director of the Company since 1991. Mr. Mueller
has been a principal with J.M. Associates, Inc., a business development
consulting firm, since January 1992. From June 1978 through December 1991,
Mr. Mueller was the Vice President of Sales/Marketing of Air Cargo Associates,
Inc., a Connecticut airline charter brokerage/sales corporation.
JAMES M. ISAACSON has been the Company's Vice President of Finance and
Treasurer since December 1996 and has served as Secretary since July 1997.
From April 1995 to December 1996 he served as Director of Corporate Finance and
Assistant Secretary for ValuJet Airlines, Inc. From May 1984 through April
1995 he served in a number of capacities for Delta Air Lines, Inc., where he
most recently served as Manager - Capital Markets & Analysis.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee, Kyle R. Kirkland and E. James
Mueller, have never been employees of the Company. No interlocks existed and
no insiders participated in the Compensation Committee's deliberations or
decisions regarding salaries for the fiscal year ending May 31, 1997 ("fiscal
1997").
COMPENSATION OF DIRECTORS
The non-employee members of the Company's Board of Directors received a
$25,000 fee for their service on the Board during fiscal 1997 pursuant to a
Director's Compensation Plan that was adopted during fiscal 1995. Directors
are also reimbursed for expenses incurred in connection with the attendance
of Board meetings.
COMMITTEES AND MEETINGS
The Board of Directors of the Company held two meetings during the year ended
May 31, 1997 and acted by written consent on six occasions during
such year. The Audit Committee, which consists of Messrs. Kirkland and Mueller,
held one meeting during the year ended May 31,1997. The functions of the Audit
Committee are (i) to recommend the appointment of the Company's independent
accountants, (ii) to meet periodically with the Company's management and its
independent accountants on matters relating to the annual audit, internal
controls, and accounting principles of the Company, and the Company's financial
reporting, (iii) to review potential conflict of interest situations, where
appropriate, and (iv) to review proposals for major transactions. The
Compensation Committee, which consists of Messrs. Kirkland and Mueller, did not
meet formally during 1997 but acted from time to time by unanimous written
consent. The functions of the Compensation Committee are (i) to review and
approve all employment and termination of executive officers, (ii) to monitor
compensation of all management staff, (iii) to review and approve compensation
of the Chief Executive Officer and other senior management, and (iv) to
administer the Company's 1996 Long Term Incentive and Share Award Plan (the
"Plan"). During fiscal 1997, each director attended more than 75% of all
meetings of the Board of Directors and the committees on which he served.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership on Forms 3, 4
and 5 with the Securities and Exchange Commission. Officers, directors and
greater than ten percent stockholders are required by law to furnish the
Company copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and representations from certain reporting persons, the Company
believes that its officers, directors and greater than ten percent beneficial
owners complied with all filing requirements applicable to them with respect to
transactions during 1997.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock, as of August 8, 1997, by
each person who was known by the Company to own beneficially more than 5% of
the Company's Common Stock as of such date, based on information available to
the Company. Except as otherwise indicated, each person has sole voting and
dispositive power with respect to the shares beneficially owned by such person.
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES BENEFICIALLY OWNED % OF SHARES OUTSTANDING
<S> <C> <C>
Cardinal Capital Management, L.L.C. (1) 530,588 22.2%
Cardinal Recovery Partners, L.P.
One Fawcett Place
Greenwich, Connecticut 06830
Northeast Investors Trust (2) 224,540 9.4%
50 Congress Street, Room 1000
Boston, Massachusetts 02109
Kennedy Capital Management, Inc. (3) 400,000 16.7%
10829 Olive Blvd.
St. Louis, Missouri 63141
</TABLE>
(1) Based on the Schedule 13D filed by Cardinal Capital Management,
L.L.C. on October 4, 1996.
(2) Based on the records of the Company's transfer agent on August
12 8, 1997.
(3) Based on the Schedule 13D filed by Kennedy Capital Management,
Inc. on July 11, 1997.
EXECUTIVE COMPENSATION
The following sets forth certain information regarding the aggregate cash
compensation paid to or earned by the Company's Chief Executive Officer during
fiscal 1995, 1996 and 1997 and the Company's Chief Financial Officer during
fiscal year 1997 (the "Named Executives"). No other executive officer of the
Company earned in excess of $100,000 in fiscal 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL AWARDS
COMPENSATION
<S> <C> <C> <C> <C>
NAME AND PRINCIPAL PAID
POSITION YEAR SALARY($) BONUS ($) OPTIONS/SARS(#)
Alexius A. Dyer III 1997 161,154 125,911 (1) 224,543
Chairman of the Board, 1996 135,000 80,000 (1) ---
President and Chief 1995 133,108 --- 107,000 (2)
Executive Officer
George Murnane III 1997 139,615 --- (3) 104,787
Executive Vice President
and Chief Financial Officer
</TABLE>
_________________
(1) Mr. Dyer's fiscal 1997 bonus has not yet been determined. The
$125,911 listed for fiscal 1997 is bonus paid in fiscal 1997 but
earned with respect to fiscal 1996 under the terms of his
employment agreement. The $80,000 listed for fiscal 1996 was paid
to him upon execution of his employment agreement. See
"--Employment Agreements."
(2) These options were canceled pursuant to the restructuring of the
Company's indebtedness (the "Restructuring"), effective on
October 3, 1996. The "Restructuring" is described in the Company's
Proxy Statement/Prospectus dated August 30, 1996 and contained in
the Registration Statement on Form S-4 (Registration No. 333-08065)
and in the Company's Annual Report on Form 10-K for the year ending
May 31, 1997.
(3) Mr. Murnane became Executive Vice President and Chief Financial
Officer of the Company on June 17, 1996. His fiscal 1997 bonus
has not been determined but he is entitled to a minimum bonus of
$50,000 for that fiscal year. See "-- Employment Agreements."
STOCK OPTION GRANTS AND VALUES
The following table sets forth certain information regarding option
grants to the Named Executives during fiscal 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS Potential realizable value
at assumed annual rates
of stock price
appreciation for option
TERM
5% ($)10%($)
<S> <C> <C> <C> <C> <C> <C>
NAME Number of Percentage of Exercise or EXPIRATION DATE
securities total options base price
underlying granted to ($/SH)
options employees in
GRANTED (#) FISCAL YEAR (%)
Alexius A. Dyer III 224,543 47 3.00 10/03/06 423,642 1,073,591
George Murnane III 104,787 22 3.00 10/03/06 197,700 501,010
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES TABLE
The following table sets forth certain information with respect to option
exercises by the Named Executives during fiscal 1997 and the value of options
owned by the Named Executives at May 31, 1997.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at FY-End(#) in-the-Money Options at
FY-End ($){(1)}
EXERCISABLE/
UNEXERCISABLE EXERCISABLE/
UNEXERCISABLE
<S> <C> <C> <C> <C>
SHARES ACQUIRED ON
EXERCISE (#)
NAME VALUE REALIZED ($)
Alexius A. Dyer III 0 0 89,818 / 134,725 134,727 / 202,088
George Murnane III 0 0 33,333 / 71,454 50,000 / 107,181
</TABLE>
(1) Based on the closing price of the Company's Common Stock on the AMEX on
May 31, 1997 of $4.50 per share.
EMPLOYMENT AGREEMENTS
As of October 3, 1996, the Company extended for an additional five years
the employment agreement with Alexius A. Dyer III, President, Chief Executive
Officer and Chairman of the Company. The employment agreement provides for
payment of a base salary of $175,000 per annum for each year during the
remaining term and annual cost-of-living increases, which base salary may be
increased as the Board deems appropriate. During the term of the employment
agreement and any extension thereof, Mr. Dyer shall serve as a member of the
Board.
Mr. Dyer's employment agreement also provides that he is entitled to an
annual bonus during the stated term in an amount not less than 5% of the
Company's net income before extraordinary and non-recurring items and income
taxes, subject to two adjustments. First, in computing net income, the Company
is required to exclude any item of revenue (including COD income) or expense
attributable to the Restructuring or to any litigation commenced by or against
the Company. Second, items of revenue and expense attributable to the sale of
aircraft are not considered extraordinary or non-recurring items.
Pursuant to the employment agreement, if Mr. Dyer is terminated without
cause prior to the end of the term of the employment agreement, the Company is
required to pay to Mr. Dyer the base salary for the remaining term of the
agreement plus an amount equal to a pro rata portion (based on months employed
during the current fiscal year) of the bonus paid to him during the previous
fiscal year. If Mr. Dyer terminates the employment agreement following the
occurrence of a "Change of Control" (as defined), the Company is obligated to
pay to him an amount equal to the average annual compensation paid to him
during the two most recent fiscal years by the Company.
As of October 3, 1996, the Company entered into a five-year employment
agreement with George Murnane III, the Executive Vice President and Chief
Financial Officer. The employment agreement provides for payment of a base
salary of $150,000 per annum for each year during the remaining term and annual
cost-of-living increases, which base salary may be increased as the Board deems
appropriate. During the term of the employment agreement and any extension
thereof, Mr. Murnane shall serve as a member of the Board.
Mr. Murnane's employment agreement also provides that he is entitled to
an annual bonus during the stated term in an amount not less than 3% of the
Company's net income before extraordinary and non-recurring items and income
taxes, subject to two adjustments. First, in computing net income, the Company
is required to exclude any item of revenue (including COD income) or expense
attributable to the Restructuring or to any litigation commenced by or against
the Company. Second, items of revenue and expense attributable to the sale of
aircraft are not considered extraordinary or non-recurring items. Mr. Murnane
is entitled to a minimum bonus for fiscal 1997 of $50,000.
Pursuant to his employment agreement, if Mr. Murnane is terminated
without cause prior to the end of the term of the employment agreement, the
Company is required to pay to Mr. Murnane the base salary for the remaining
term of the agreement plus an amount equal to a pro rata portion (based on
months employed during the current fiscal year) of the bonus paid to him during
the previous fiscal year. If Mr. Murnane terminates the employment agreement
following the occurrence of a "Change of Control" (as defined), the Company is
obligated to pay to him an amount equal to the average annual compensation paid
to him during the two most recent fiscal years by the Company.
CERTAIN TRANSACTIONS
In connection with the Restructuring, Kirkland Messina, Inc., an
investment banking firm of which Mr. Kirkland is a principal, received a
placement agent's fee in connection with the origination of a credit agreement,
which did not exceed 5% of such firm's consolidated gross revenues during its
last fiscal year. A description of the Restructuring and the credit agreement
may be found in the Company's Proxy Statement/Prospectus dated August 30, 1996
and contained in the Registration Statement on Form S-4 (Registration
No. 333-08065) and in the Company's Annual Report on Form 10-K for the year
ending May 31, 1997.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") of the Board of Directors
consists of Messrs. Kirkland and Mueller, two non-employee members of the Board
of Directors. The Committee is responsible for administering the Plan.
EXECUTIVE COMPENSATION POLICIES
Generally, the Company's executive compensation program is designed to be
competitive with that offered by other companies against which the Company
competes for executive resources. At the same time, the Company links a
significant portion of executive compensation to the achievement of the
Company's short and long-term financial and strategic objectives and to the
performance of the Company's Common Stock. The Company's executive
compensation program consists of three primary elements: base salary, annual
incentive bonus and stock options or other stock benefits. Base salary is
intended to be competitive in the marketplace. However, although the Committee
considers competitive data, salaries are determined subjectively by the
Committee rather than by reference to any specific target group of companies.
Subject to the terms of any applicable employment agreement, base salary is
reviewed at least annually and adjusted based on changes in competitive pay
levels, the executive's performance as measured against individual and Company-
wide goals, as well as changes in the executive's role in the Company. The
Committee awards incentive bonuses to the Named Executives based on the
achievement of certain targets and objectives in a manner consistent with the
terms of their employment agreements. The Company does not make annual stock
option or other stock benefit grants to all executives. Rather, the Committee
determines each year which, if any, executives will receive benefits, based on
individual performance and each executive's existing stock option position.
EXECUTIVE OFFICER COMPENSATION
Alexius A. Dyer III, the Company's President, Chief Executive Officer and
Chairman, and George Murnane III, the Company's Executive Vice President and
Chief Financial Officer, each entered into employment agreements in connection
with the Restructuring on October 3, 1996. See "Management --
Employment Agreements." The base compensation, incentive bonus and stock option
agreements entered into by the Company with such individuals were determined by
arm's-length negotiations between the Compensation Committee and certain
holders of the Company's then-outstanding debt securities and such individuals.
The Company did not enter into an employment agreement with James Isaacson, the
Company's Vice President of Finance and Treasurer. The terms of Mr. Isaacson's
employment with the Company were determined by arm's length negotiations by the
Committee and officers of the Company and such individual. The Compensation
Committee believes that the specific base compensation, incentive bonus and
stock option arrangements were necessary to attract management of the caliber
sought by the Board. Future adjustments of such arrangements will be made in
accordance with the general principles outlined above.
The Company paid Mr. Dyer a bonus in fiscal 1997 with respect to
performance in fiscal 1996, calculated under the terms of his employment
agreement, but paid no other bonus to any of its executive officers during
fiscal 1997. The Company awarded stock options to its executive officers
during fiscal 1997, either pursuant to their employment agreement or at the
discretion of the Committee, in light of the past and prospective contributions
of, and the need to provide adequate incentive for, the recipients of such
options.
COMPENSATION OF THE PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN
On October 3, 1996, Mr. Dyer entered into a revised employment
agreement with the Company as described above. See "Management -- Employment
Agreements." The terms of the agreement were reviewed and approved by the
Committee. The employment agreement provides for the payment of an annual
bonus to Mr. Dyer in an amount to be determined by the Compensation Committee
based upon a formula in his employment agreement, which may, in the discretion
of the Committee, be increased based on the performance of the Company against
defined objectives. The bonus payable to Mr. Dyer in each such fiscal year
shall be not less than an amount equal to five percent (5%) of the Company's
net income before extraordinary and non-recurring items and income taxes, and
before giving effect to any bonuses paid to the Company's employees, including
the bonus to Mr. Dyer, as reported on the Company's periodic filings with the
Securities and Exchange Commission, subject to the following adjustments: (i)
there shall be excluded from the computation of net income any item of revenue
(including, without limitation, cancellation of indebtedness income) or expense
attributable to the Restructuring or to any litigation commenced by or against
the Company and (ii) items of revenue and expense attributable to the sale of
aircraft (whether now owned or acquired in the future) shall not be considered
extraordinary or non-recurring items regardless of the treatment accorded such
items under generally accepted accounting principles or the rules of the
Securities and Exchange Commission. The Committee believes that the bonus
provisions of Mr. Dyer's employment agreement create an appropriate
relationship between Mr. Dyer's level of compensation and the Company's
performance.
This report by the Committee shall not be deemed to be incorporated by
reference by a general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or the Exchange Act
and shall not otherwise be deemed filed under such Acts.
Respectfully submitted by
The Compensation Committee:
Kyle R. Kirkland
E. James Mueller
<PAGE>
PERFORMANCE GRAPH
[GRAPHIC]
The following graph sets forth the total return (stock price plus
dividends) on a $100 investment in each of (i) the Company's Common Stock, (ii)
the AMEX Market Value Index and (iii) a Peer Group, from May 31, 1992 through
May 31, 1997. The Peer Group consists of AAR Corp., Aviall, Inc., Banner
Aerospace, Inc. and UNC Incorporated (price data on Aviall, Inc. is not
available until 1994 and its year-to-year performance does not affect the
performance of the Peer Group until 1995). The total return set forth with
respect to the Company has been adjusted to give effect to the reverse stock
split consummated on October 3, 1996 as part of the Restructuring, which
caused 27 shares of the Company's then-outstanding common stock to be exchanged
for one share of the Company's Common Stock.
The first reported sale of the Company's Common Stock following the
restructuring occurred on October 18, 1996 at $4.50 per share. The Company's
common stock closed at $8.25 per share on August 12, 1997.
<TABLE>
<CAPTION>
Data Points as of
<S> <C> <C> <C> <C> <C> <C>
DATA POINTS AS OF May 31,
1992 1993 1994 1995 1996 1997
International Airline 100 98 20 8 5 3
Support Group, Inc.
AMEX Market Value 100 111 112 125 155 157
Index
Peer Group 100 101 110 83 119 170
</TABLE>
<PAGE>
APPROVAL OF AMENDMENT TO PLAN (PROPOSAL NO. 2)
By unanimous written consent effective as of June 4, 1997, the
Compensation Committee recommended to the Board of Directors, subject to
stockholder approval, the amendment of the Plan in order to increase by 115,000
the number shares of the Company's Common Stock for which options may be
granted. If the stockholders approve the amendment to the Plan, options to
purchase a total of 713,782 shares of the Company's Common Stock may be granted
under the Plan. The Compensation Committee has previously granted options to
purchase all but 173 of the 598,782 shares presently available for issuance
under the Plan. The Board recommends that the stockholders of the Company
approve the amendment to the Plan. The affirmative vote of the majority of the
issued and outstanding shares of the Company's Common Stock present in
person or represented by Proxy at the 1997 annual meeting is required for
approval of the amendment to the Plan.
The Board of Directors recommends a vote FOR this proposal.
PLAN DESCRIPTION. The Plan was approved by the Company's
stockholders at a special meeting of the stockholders held on September 30,
1996. The Plan is intended to provide a means to attract, retain and motivate
selected employees and directors of the Company. The Plan provides for the
grant to eligible employees of incentive stock options, non-qualified stock
options, stock appreciation rights, restricted shares and restricted share
units, performance shares and performance units, dividend equivalents and other
share-based awards (collectively "awards"). All employees (approximately
25 persons) and NON-EMPLOYEE directors (two persons) are eligible
to participate in the Plan. The Plan is administered by the Compensation
Committee. The Compensation Committee has the full and final authority to
select employees to whom awards may be granted, to determine the type of awards
to be granted to such employees and to make all administrative determinations
required by the Plan. The Compensation Committee also will have authority to
waive conditions relating to an award or accelerate vesting of awards. The
Plan provides for certain grants of nonqualified stock options to directors who
are not executive officers of the Company. Upon adoption of the Plan, an
aggregate of 598,782 shares of the Company's Common Stock were reserved for
issuance under the Plan, subject to anti-dilution adjustments in the event of
certain changes in the Company's capital structure.
STOCK OPTIONS. The Plan authorizes the granting of both incentive
stock options and non-qualified stock options. At the discretion of the
Compensation Committee, awards of options to employees under the Plan may be
granted in tandem with other types of awards, incentive stock options granted
to employees under the Plan, and any accompanying share appreciation rights,
must generally expire within 10 years after the date of grant. The exercise
prices of incentive stock options must be equal to at least 100% of the fair
market value of the Common Stock on the date of grant. The exercise prices of
non-qualified stock options may be more or less than the fair market value of
the Common Stock on the date of grant. Awards under the Stock Option Plan to
employees, except for vested shares, are not transferable by the holder other
than by will or applicable laws of descent or distribution, except pursuant to
a designation filed by an employee with the Company as to who shall receive the
benefits specified under the Plan upon the death of such employee.
RESTRICTED STOCK. The Plan authorizes the Compensation Committee
to grant shares of restricted stock to employees, subject to the terms and
conditions imposed by the Compensation Committee. These terms may include a
restriction period during which the shares of restricted stock may not be sold,
assigned, transferred, pledged or otherwise encumbered and during which such
shares may be subject to forfeiture. Except for such restrictions on transfer
and such other restrictions as the Compensation Committee may impose, the
recipient of restricted stock will have all the rights of a holder of Common
Stock as to such restricted stock including the right to vote the shares and
the right to receive dividends. Except as provided by the Compensation
Committee at the time of grant or otherwise, upon a termination of employment
for any reason during the restriction period, all shares still subject to
restriction will be forfeited by the employee. The Plan also authorizes the
Compensation Committee to grant restricted share units to an employee, under
which shares of Common Stock or cash will be delivered to the employee after
the expiration of the restriction period.
SHARE APPRECIATION RIGHTS. The Plan authorizes the Compensation
Committee to grant share appreciation rights to employees, subject to the terms
and conditions imposed by the Compensation Committee. Share appreciation
rights give an employee the right to receive the excess of the fair market
value of shares of Common Stock on the date of exercise over the exercise price
of the share appreciation rights, as set by the Compensation Committee. Terms
within the discretion of the Compensation Committee may include the time of
exercise, the form of consideration payable at exercise, and the method by
which shares of Common Stock will be delivered or deemed to be delivered to an
employee.
PERFORMANCE SHARES AND PERFORMANCE UNITS. The Plan also authorizes
the Compensation Committee to grant performance shares or performance units to
employees, subject to the terms and conditions imposed by the Compensation
Committee. These awards provide shares of Common Stock or cash to an employee
upon the satisfaction of certain performance objectives, as determined by the
Compensation Committee. Awards may be fixed or may vary in accordance with the
level of such performance. The Compensation Committee generally may revise the
performance objectives to reflect the occurrence of significant events which it
expects to have a substantial effect on the performance objectives. Except as
provided by the Compensation Committee at the time of grant or otherwise, upon
a termination of employment during the performance period, all shares and units
relating to such performance period will be forfeited by the employee.
DIVIDEND EQUIVALENTS. The Plan also authorizes the Compensation
Committee to grant dividend equivalents to employees. These awards may relate
to other awards of shares, rights or units and generally give an employee the
right to receive cash or other property equal to any dividends paid on the
shares of Common Stock underlying such other awards. Such dividend equivalents
may either be paid when accrued or deemed to have been reinvested in additional
shares of Common Stock. Dividend equivalents (other than freestanding dividend
equivalents) will be subject to all conditions and restrictions of the
underlying awards to which they relate.
In addition to the foregoing types of awards, the Plan also
authorizes the Compensation Committee, subject to limitations under applicable
law, to grant employees any other awards based on shares of Common Stock,
including the award of unrestricted shares purely as a bonus and not subject to
any conditions. Cash awards, as an element of or supplement to any other
award, are also authorized under the Plan. In all cases, the Compensation
Committee shall determine the terms and conditions of such awards.
The Plan generally may be amended, altered, suspended, discontinued
or terminated from time to time by the Board of Directors, except that
stockholder approval is required, in accordance with Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), for any amendment (a)
to increase the number of shares of Common Stock reserved for issuance under
the Plan or (b) to change the class of employees eligible to participate in the
Plan; provided, however, that no such amendment may impair the rights of any
participant without his consent.
The Plan provides that, if the Compensation Committee determines
that a stock dividend, recapitalization, stock split, reorganization, merger,
consolidation, spin-off, combination, or similar corporate transaction affects
the Common Stock such that an adjustment is appropriate to prevent dilution or
enlargement of rights of employees participating in the Plan, the Compensation
Committee has discretion to adjust the number and kind of shares to be issued
under the Plan, the number and kind of shares issuable in respect of
outstanding awards and the exercise price, grant price or purchase price of any
award. The Plan provides that such adjustments with respect to options of
directors who are not executive officers of the Company shall be made
automatically. In addition, the Compensation Committee is authorized to make
adjustments in the terms of awards in recognition of certain unusual or non-
recurring events affecting the Company and its financial statements.
FEDERAL INCOME TAX CONSEQUENCES OF OPTION GRANTS
The following discussion outlines generally the federal income tax
consequences of option awards under the Plan. Individual circumstances may
vary these results. The federal income tax law and regulations are frequently
amended, and each participant should rely on his own tax counsel for advice
regarding federal income tax treatment under the Plan.
NON-QUALIFIED STOCK OPTIONS. The recipient of a non-qualified
stock option under the Plan is not subject to any federal income tax upon the
grant of such option nor does the grant of the option result in an income tax
deduction for the Company. As a result of the exercise of an option, the
recipient will recognize ordinary income in an amount equal to the excess, if
any, of the fair market value of the shares transferred to the recipient upon
exercise over the exercise price. Such fair market value generally will be
determined on the date the shares of Common Stock are transferred pursuant to
the exercise. However, if the recipient is subject to Section 16(b) of the
Exchange Act, the date on which the fair market value of the shares transferred
will be determined is delayed until the earlier of the last day of the six-
month period beginning on the date the "property" is "purchased" or the first
day on which a sale of the "property purchased" will not subject the recipient
to suit under Section 16(b) of the Exchange Act. Alternatively, if the
recipient is subject to Section 16(b) of the Exchange Act and makes a timely
election under Section 83(b) of the Code, such fair market value will be
determined on the date the shares are transferred pursuant to the exercise
without regard to the effect of Section 16(b) of the Exchange Act. The
recipient will recognize ordinary income in the year in which the fair market
value of the shares transferred is determined. The Company generally will be
entitled to a federal income tax deduction equal to the amount of ordinary
income recognized by the recipient when such ordinary income is recognized by
the recipient, provided the Company satisfies applicable federal income tax
reporting requirements. The Company's deduction, however, is subject to a
$1,000,000 limitation on the deduction of certain employee remuneration under
Section 162(m) of the Code, unless an exception for performance-based
compensation under such section applies.
Depending on the period the shares of Common Stock are held after
exercise, the sale or other taxable disposition of shares acquired through the
exercise of a non-qualified stock option generally will result in a short- or a
long-term capital gain or loss equal to the difference between the amount
realized on such disposition and the fair market value of such shares when the
non-qualified stock option was exercised.
Special rules apply to a recipient who exercises a non-qualified
stock option by paying the exercise price, in whole or in part, by the transfer
of shares of Common Stock to the Company.
INCENTIVE STOCK OPTIONS. An employee is not subject to any federal
income tax upon the grant of an incentive stock option pursuant to the Plan,
nor does the grant of an incentive stock option result in an income tax
deduction for the Company. Further, an employee will not recognize income for
federal income tax purposes and the Company normally will not be entitled to
any federal income tax deduction as a result of the exercise of an incentive
stock option and the related transfer of shares of Common Stock to the
employee. However, the excess of the fair market value of the shares
transferred upon the exercise of the incentive stock option over the exercise
price for such shares generally will constitute an item of alternative minimum
tax adjustment to the employee for the year in which the option is exercised.
Thus, certain employees may increase their federal income tax liability as a
result of the exercise of an incentive stock option under the alternative
minimum tax rules of the Code.
If the shares of Common Stock transferred pursuant to the exercise
of an incentive stock option are disposed of within two years from the date the
option is granted or within one year from the date the option is exercised, the
employee generally will recognize ordinary income equal to the lesser of (1)
the gain recognized (i.e., the excess of the amount realized on the disposition
over the exercise price) or (2) the excess of the fair market value of the
shares transferred upon exercise over the exercise price for such shares. If
the employee is subject to Section 16(b) of the Exchange Act, special rules may
apply to determine the amount of ordinary income recognized upon the
disposition. The balance, if any, of the employee's gain over the amount
treated as ordinary income on disposition generally will be treated as long- or
short-term capital gain depending upon whether the holding period applicable to
long-term capital assets is satisfied. The Company generally would be entitled
to a federal income tax deduction equal to any ordinary income recognized by
the employee, provided the Company satisfies applicable federal income tax
reporting requirements and subject to the limitation on the deduction of
certain employee remuneration as mandated by Section 162(m) of the Code, absent
an exception for performance-based compensation under such section.
If the shares of Common Stock transferred upon the exercise of an
incentive stock option are disposed of after the holding periods have been
satisfied, such disposition generally will result in long-term capital gain or
loss treatment with respect to the difference between the amount realized on
the disposition and the exercise price. The Company will not be entitled to a
federal income tax deduction as a result of a disposition of such shares after
these holding periods have been satisfied.
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO MAKE
SECTION 203 APPLICABLE (PROPOSAL NO. 3)
The Board of Directors has approved a resolution amending the
Company's Amended and Restated Certificate of Incorporation, subject to
stockholder approval, to provide that Section 203 of Delaware General
Corporation Law ("DGCL") shall be applicable to the Company. Section 203 may
have the effect of delaying, deferring or preventing a change of control of the
Company. In general, Section 203 of the DGCL prohibits a publicly held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years following the time such
stockholder became an "interested stockholder," unless (a) prior to such time
the board of directors of the corporation approved either the "business
combination" or the transaction which resulted in the stockholder becoming an
"interested stockholder" or (b) upon consummation of the transaction which
resulted in the stockholder becoming an "interested stockholder," the
"interested stockholder" owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced, excluding for
purposes of determining the number of shares outstanding those shares owned by
(i) persons who are directors and also officers and (ii) by employee stock
plans, in which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer, or (c) at or subsequent to such time the "business
combination" is approved by the board of directors and authorized at the annual
or special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66-2/3 % of the outstanding voting stock which is
not owned by the "interested stockholder." A "business combination" includes
certain mergers, stock or asset sales and other transactions resulting in a
financial benefit to the "interested stockholder." An "interested stockholder"
is a person who, together with affiliates and associates, owns (or within three
years, did own) 15% or more of the corporation's voting stock.
The Company believes that the protections that Section 203 would
provide to the Company would be beneficial to the stockholders because they
would enhance the Board of Directors' capacity to defend against undesirable
takeover attempts and, in the event of the sale of the Company, enhance the
Board of Directors' ability to negotiate a transaction that is in the
stockholders' best interest and maximizes value for all stockholders. The
proposed amendment to the Company's amended and restated certificate of
incorporation to make the protections of section 203 available to the Company
is not being recommended in response to a pending or threatened attempt to
acquire control of the Company. The affirmative vote of the majority of the
issued and outstanding shares of the Company's Common Stock present in person
or represented by Proxy at the 1997 annual meeting is required for approval of
the amendment to the Company's amended and restated Certificate of
incorporation to provide that Section 203 of the DGCL shall be applicable to
the Company.
The Board of Directors recommends a vote FOR this proposal.
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO PROVIDE FOR
A CLASSIFIED BOARD OF DIRECTORS (PROPOSAL NO. 4)
The Board of Directors has adopted a resolution recommending an
amendment to its Amended and Restated Certificate of Incorporation, subject to
stockholder approval, that provides for three classes of directors with
staggered terms of up to three years such that approximately one-third of the
Board stands for election each year.
With respect to the classification of the members of the Company's
Board of Directors, the Classified Board Amendment provides that directors of
the first class, which shall initially consist of two members, shall be elected
to hold office for terms expiring at the next annual meeting of the Company
following the adoption of the Classified Board Amendment; directors of the
second class, which shall initially consist of two members, shall be elected to
hold office for terms expiring at the second succeeding annual meeting; and
directors of the third class, which shall initially consist of two members,
shall be elected to hold office for terms expiring at the third succeeding
annual meeting. Thereafter, the successors to each class of directors shall be
elected for three-year terms. The Classified Board Amendment also provides
that directors may not be removed except for cause. Such removal for cause may
be effected only by the resolution of all other Board members, stating such
cause, or by the affirmative vote of the holders of at least 75% of the voting
power of all of the then outstanding shares of Common Stock. No director so
removed may be reinstated so long as the cause for removal continues to exist.
"Cause," shall be limited to criminal acts and gross negligence. Currently,
the Company's Bylaws provide that members of the Board may be removed without
cause. The Board intends to amend the Bylaws to make them consistent with the
Classified Board Amendment upon approval of the Classified Board Amendment by
the stockholders. The Classified Board Amendment also provides that, once
approved by the stockholders, it may not be repealed except by the affirmative
vote of 75% of the voting power of all the then outstanding shares of Common
Stock. The affirmative vote of the majority of the issued and outstanding
shares of the Company's common stock present in person or
represented by proxy at the 1997 annual meeting is required for approval of the
Classified Board Amendment.
If the Classified Board Amendment is adopted, and if the Company's
stockholders elect to the Board of Directors those persons nominated by the
Board of Directors, Messrs. Kirkland and Mueller will serve as
directors of the second class; and Messrs. Dyer and Murnane
will serve as directors of the third class. There will be no directors of the
first class because there are presently three vacancies on the Company's Board
of Directors.
Staggered terms for members of the Board of Directors may have the
effect of delaying, deferring or preventing a change of control of the Company
since only one-third of the directors are up for election each year and may not
be removed except for cause. However, the Board of Directors believes that
staggered terms for directors will enhance Board continuity and increase the
Board's capacity to defend against undesirable takeover attempts and, in the
event of the sale of the Company, enhances the Board of Directors ability to
negotiate a transaction that is in the stockholders' best interest. The
proposed classification of the Board of Directors is not being recommended in
response to a pending or threatened attempt to acquire control of the Company.
The Board of Directors recommends a vote FOR this proposal.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS (PROPOSAL NO.
5)
The Board of Directors has appointed Grant Thornton LLP as
independent accountants of the Company for fiscal 1998. Although stockholder
ratification is not required, the Board of Directors has directed that such
appointment be submitted to the stockholders for ratification. The Board
considers Grant Thornton LLP to be well qualified and recommends
that the stockholders vote to ratify that appointment. A representative of
Grant Thornton LLP is not expected to attend the 1997 Annual
Meeting.
The affirmative vote of the holders of a majority of the issued and
outstanding shares of Common Stock present in person or represented by proxy
at the 1997 Annual Meeting is required to adopt the proposal.
If the proposal is not adopted, the Board of Directors may reconsider the
appointment.
The Board of Directors recommends a vote FOR this proposal.
ADDITIONAL INFORMATION
PROPOSALS FOR 1998 MEETING
Any proposal of stockholders that is intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received at the Company's
principal executive offices no later than April 21, 1998 and must comply with
all other applicable legal requirements in order to be included in the
Company's proxy statement and form of proxy for that meeting.
ANNUAL REPORT
The Company's 1997 Annual Report on Form 10-K is being mailed to
Stockholders with this Proxy Statement.
OTHER MATTERS
The Board of Directors knows of no matter to come before the Annual
Meeting other than as specified herein. If other business should, however, be
properly brought before such meeting, the persons voting the proxies will vote
them in accordance with their best judgment.
THE STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, AND RETURN PROMPTLY
THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ Alexius A. Dyer III
ALEXIUS A. DYER III
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant X
Filed by a Party other than the Registrant _
Check the appropriate box:
__ Preliminary Proxy Statement
__ Confidential, for Use of the Commission Only
(as permitted by Rule 14a-12))
_X Definitive Proxy Statement
__ Definitive Additional Materials
__ Soliciting Material Pursuant to 240.14a-11(c) or 140.14a-12
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
-------------------------------------------
(Name of Registrant as Specified in Its Charter)
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
-----------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
_X $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or Item 22(a)(2)
of Schedule 14A.
__ $500 per each party to the controversy pursuant to Exchange Act Rule
14a-(6)(i)(3)
__ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
Title of each class of securities to which transaction applies:
-------------------------------------------------------------
Aggregate number of securities to which transaction applies:
--------------------------------------------------------------
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):
_______________________________________________________________
Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
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: July 24, 1997
-------------
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 22, 1997
The undersigned hereby appoints Alexius A. Dyer III and George Murnane III,
and each of them, proxies with full power of substitution and resubstitution,
for and in the name of the undersigned, to vote all shares of International
Airline Support Group, Inc. which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Stockholders to be held at
the offices of the Company, 1954 Airport Road, Suite 200, Atlanta, Georgia
30341, at 10:00a.m., local time, on September 22, 1997, and at any
adjournment thereof, upon the matters described in the accompanying
Notice of Annual Meeting and Proxy Statement, receipt of which is hereby
acknowledged, and upon any other business that may properly come before the
meeting or any adjournment thereof. Said proxies are directed to vote on the
matters described in the Notice of Annual Meeting and Proxy Statement as
follows, and otherwise in their discretion upon such other business as may
properly come before the meeting or any adjournment thereof.
1. To elect four (4) directors:
Alexius A. Dyer III
Kyle R. Kirkland
E. James Mueller
George Murnane III
___ FOR all nominees ___ WITHHOLD AUTHORITY
(except as marked to vote for all nominees
the contrary above) listed
(Instructions: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list above.)
The Board of Directors recommends a vote FOR the election of the nominees
listed above to serve as directors of International Airline Support
Group, Inc.
2. To approve an amendment to the Company's 1996 Long Term Incentive
and Share Award Plan to increase from by 115,000 the number of
shares available for grants under said Plan:
__FOR __AGAINST __ABSTAIN
The Board of Directors recommends a vote FOR the approval of the amendment
of the Company's 1996 Long Term Incentive and Share Award Plan.
3. To approve an amendment to the Company's Amended and Restated Certificate
of Incorporation to make the provisions of Section 203 of the Delaware General
Corporation Law applicable to the Company:
__FOR __AGAINST __ABSTAIN
The Board of Directors recommends a vote FOR the approval of the amendment
to the Company's Amended and Restated Certificate of Incorporation related
to Section 203 of the Delaware General Corporation Law.
4. To approve an amendment to the Company's Amended and Restated Certificate
of Incorporation to provide for three classes of directors with staggered
terms of up to three years such that approximately one-third of the
Board stands for election each year.
__FOR __AGAINST __ABSTAIN
The Board of Directors recommends a vote FOR the approval of the
amendment of the Company's Amended and Restated Certificate of Incorporation
related to classification of the Board of Directors.
5. To ratify the appointment of Grant Thornton, LLP as independent
auditors for 1998.
__FOR __AGAINST __ABSTAIN
The Board of Directors recommends a vote FOR the ratification of the
appointment of Grant Thornton, LLP.
6. In the discretion of the proxies, on any other matter that may properly
come before the meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED, THE
PROXY WILL BE VOTED FOR THE PROPOSALS.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY.
Please sign exactly as your name or names appear hereon. Where more than
one owner is shown above, each should sign. When signing in a fiduciary or
representative capacity, please give full title. If this proxy is submitted
by a corporation, it should be executed in the full corporate name by a duly
authorized officer. If a partnership, please sign in partnership name by
authorized person.
_______________________________ DATE: ____________________, 1997
Signature of Shareholder
_______________________________
Print Name
_______________________________ DATE: ___________________, 1997
Signature of Shareholder
_______________________________
Print Name
