-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NV8VhKPRDZduC1vfcerVJMET2yTTRmjyo5GoRYz4hpWrTAT9vBUtE9Kfb0HCaY1J zMwLEE5fcXyi+faYVt4xKw== 0000950144-97-012034.txt : 19971113 0000950144-97-012034.hdr.sgml : 19971113 ACCESSION NUMBER: 0000950144-97-012034 CONFORMED SUBMISSION TYPE: SB-2 PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19971113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JET AVIATION TRADING INC CENTRAL INDEX KEY: 0001035119 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 522040613 FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SB-2 SEC ACT: SEC FILE NUMBER: 333-40107 FILM NUMBER: 97715556 BUSINESS ADDRESS: STREET 1: 15675 NW 15TH AVE CITY: MIAMI STATE: FL ZIP: 33169 BUSINESS PHONE: 33169 MAIL ADDRESS: STREET 1: 15675 NW 15TH AVENUE CITY: MIAMI STATE: FL ZIP: 33169 SB-2 1 JET AVIATION TRADING FORM SB-2 1 ================================================================================ U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- JET AVIATION TRADING, INC. (Name of small business issuer in its charter) FLORIDA 5008 52-2040613 (State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
15675 NORTHWEST 15TH AVENUE MIAMI, FLORIDA 33169 (305) 624-6700 (Address and telephone number of principal executive offices and principal place of business) JOSEPH J. NELSON, PRESIDENT JET AVIATION TRADING, INC. 15675 NORTHWEST 15TH AVENUE, MIAMI, FLORIDA 33169 (305) 624-6700 (Name, address and telephone number of agent for service) With a copy to: SHAPO, FREEDMAN & BLOOM, P.A. 200 SOUTH BISCAYNE BLVD., SUITE 4750 MIAMI, FLORIDA 33131 ATTN: LEONARD H. BLOOM, ESQ. (305) 358-4440 APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after registration statement becomes effective. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] -- [Added in Release No. 33-7168 (para.85,620), effective June 7, 1995, 60 F.R. 26604.] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] -- [Added in Release No. 33-7168 (para.85,620), effective June 7, 1995, 60 F.R. 26604.] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box [ ] [Added in Release No. 33-7168 (para.85,620), effective June 7, 1995, 60 F.R. 26604.] CALCULATION OF REGISTRATION FEE
====================================================================================================================== PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF TO BE REGISTERED REGISTERED PER SHARE PRICE REGISTRATION FEE - ---------------------------------------------------------------------------------------------------------------------- Common Stock(1)................... 1,000,000 4.50 $4,500,000 $1,364 - ---------------------------------------------------------------------------------------------------------------------- Common Stock...................... 1,969,000 4.50 $8,860,500 $2,685 ======================================================================================================================
(1) Shares of Common Stock issuable in connection with the exercise of the Warrants. --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a) MAY DETERMINE. ================================================================================ 2 JET AVIATION TRADING, INC. CROSS-REFERENCE SHEET SHOWING LOCATION OR CAPTION IN PROSPECTUS OF INFORMATION REQUIRED BY ITEMS OF FORM SB-2
ITEM REGISTRATION STATEMENT ITEM NUMBER AND HEADING LOCATION OR CAPTION IN PROSPECTUS - ---- ---------------------------------------------- --------------------------------- 1. Front of Registration Statement and Outside Front Cover Page of Prospectus.............. Outside front cover of Prospectus 2. Inside Front and Outside Back Cover Pages of Prospectus.................................. Inside front and outside back cover pages of Prospectus 3. Summary Information and Risk Factors.......... Prospectus Summary; the Company; Risk Factors 4. Use of Proceeds............................... Use of Proceeds 5. Determination of Offering Price............... The Offering 6. Dilution...................................... Dilution 7. Selling Security Holders...................... Selling Security Holders 8. Plan of Distribution.......................... Outside front cover page; Plan of Distribution 9. Legal Proceedings............................. Business 10. Directors, Executive Officers, Promoters and Control Persons............................. Management 11. Security Ownership of Certain Beneficial Owners and Management....................... Principal Stockholders 12. Description of Securities..................... Description of Securities 13. Interest of Named Experts and Counsel......... Legal Matters; Experts 14. Disclosure of Commission Position on Indemnification for Securities Act Liabilities................................. Not Applicable 15. Organization Within Last Five Years........... Certain Transactions 16. Description of Business....................... The Company; Business 17. Management's Discussion and Analysis or Plan of Operation................................ Management's Discussion and Analysis of Financial Conditions and Results of Operations 18. Description of Property....................... Business 19. Certain Relationships and Related Transactions................................ Certain Transactions 20. Market for Common Equity and Related Stockholder Matters......................... Market Price of the Common Stock 21. Executive Compensation........................ Management 22. Financial Statements.......................... Report of Independent Certified Public Accountants
i 3 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED NOVEMBER 12, 1997 PROSPECTUS JET AVIATION TRADING, INC. 1,000,000 SHARES OF COMMON STOCK OFFERED BY THE COMPANY PURSUANT TO OUTSTANDING WARRANTS --------------------- 1,000,000 SHARES OF COMMON STOCK OFFERED BY CERTAIN SELLING SECURITY HOLDERS UPON EXERCISE OF OUTSTANDING WARRANTS --------------------- 1,969,000 SHARES OF COMMON STOCK OFFERED BY CERTAIN SELLING SECURITY HOLDERS --------------------- This Prospectus relates to an offering by Jet Aviation Trading, Inc. (the "Company") of 1,000,000 shares of common stock, $.001 par value per share (the "Common Stock"), issuable upon the exercise of 1,000,000 outstanding Common Stock Purchase Warrants (the "Warrants"). This Prospectus also relates to the sale of 1,000,000 shares of Common Stock following the exercise of the Warrants and the sale of 1,969,000 additional shares of Common Stock previously issued by the Company in certain private placement transactions, all of which are offered by the holders thereof identified as "Selling Security Holders" in this Prospectus. See "SELLING SECURITY HOLDERS." Each Warrant entitles the holder to purchase at any time until June 30, 2002 one share of Common Stock upon payment of an exercise price of $4.50. See "DESCRIPTION OF SECURITIES." The Company will not receive any proceeds from the sale of shares of Common Stock by the Selling Security Holders, although it will receive proceeds from the exercise of the Warrants. Sales of shares of Common Stock may be made from time to time in transactions (which may include block transactions) by or for the account of the Selling Security Holders in the over-the-counter market or in negotiated transactions, or otherwise, at market prices prevailing at the time of sale or at negotiated prices. The Company has informed the Selling Security Holders that the anti-manipulative rules under the Securities Exchange Act of 1934, Regulation M, may apply to their sales in the market and has furnished each of the Selling Security Holders with a copy of these rules. The Company has also informed the Selling Security Holders of the need for delivery of copies of this Prospectus. See "SELLING SECURITY HOLDERS" and "PLAN OF DISTRIBUTION." --------------------- THE SECURITIES OFFERED INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" AND "DILUTION." --------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
============================================================================================================================ PRICE TO UNDERWRITING PROCEEDS TO THE PROCEEDS TO THE SELLING CLASS OF SECURITY SECURITY HOLDERS DISCOUNTS COMPANY(1) SECURITY HOLDERS - ---------------------------------------------------------------------------------------------------------------------------- Shares of Common Stock(2)....... $4.50 N/A $4,500,000 N/A - ------------------------------------------------------------------------------------------------------------------------ Shares of Common Stock(3)....... -- N/A N/A $ (4) - ------------------------------------------------------------------------------------------------------------------------ Shares of Common Stock(5)....... -- N/A N/A $ (4) ========================================================================================================================
(1) Does not take into account the costs of this offering, including among others, printing, blue sky and professional fees, estimated at $100,000, which will be borne entirely by the Company; assumes all warrants are exercised. (2) Represents shares of Common Stock which may be issued upon exercise of the Warrants. (3) Represents the anticipated sale by the Selling Security Holders of shares of Common Stock issuable upon exercise of the Warrants, at $ , the high bid price on . There can be no assurances, however, that the Selling Security Holders will be able to sell their shares of Common Stock at this price, or that a liquid market will exist for the Company's Common Stock. (4) Does not give effect to ordinary brokerage commissions or other costs of sale that will be borne solely by the Selling Security Holders. (5) Represents the anticipated sale by the Selling Security Holders at $ , the high bid price on . There can be no assurances, however, that the Selling Security Holders will be able to sell their shares of Common Stock at this price, or that a liquid market will exist for the Company's Common Stock. The Common Stock is traded in the over-the-counter market and is quoted on The OTC Bulletin Board under the symbol "JTAV". --------------------- The date of this Prospectus is , 1997 4 AVAILABLE INFORMATION The Company is not subject to the information requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company will provide a report to stockholders, at least annually, which will include audited financial statements of the Company. The Company will provide, without charge, to each person who receives a Prospectus, upon the written or oral request of such person, a copy of any of the information that was incorporated by reference in the Prospectus (not including exhibits to the information that was incorporated by reference unless the exhibits are themselves specifically incorporated by reference). Requests should be directed to the Secretary, Jet Aviation Trading, Inc., 15675 Northwest 15th Avenue, Miami, Florida 33169 (Telephone No. 305-624-6700). 2 5 PROSPECTUS SUMMARY The following Summary is qualified in its entirety by the more detailed information and financial statements, including the Notes thereto, appearing elsewhere in this Prospectus. THE COMPANY The Company (formerly known as Schuylkill Acquisition Corp.) was formed pursuant to the laws of the State of Florida in May, 1997. It conducted no business. On July 28, 1997, the Company merged with Jet Aviation Trading, Inc., a Florida corporation ("Old Jet"), remained the surviving entity and changed its name to Jet Aviation Trading, Inc. Old Jet had commenced business on October 3, 1996. Unless the context otherwise requires, references to the "Company" throughout this Prospectus, including the Financial Statements contained herein, refer to the operations of Old Jet prior to July 28, 1997 and the Company thereafter. The Company specializes in the sale, lease, exchange and purchase of technical spares for fixed-wing commercial jet transport aircraft manufactured by Boeing, McDonnell Douglas, Airbus and Lockheed. Complimenting this core business, the Company provides its customers with inventory management services including new product distribution, technical purchasing, maintenance repair management, consignment marketing and purchase/leaseback of technical spares inventory. The Company also pursues opportunities involving the purchase, sale and lease of jet turbine engines, jet turbine aircraft and related aviation industry equipment. Industry estimates are that the annual worldwide market for aircraft spare parts is approximately $10.2 billion, of which approximately $1.6 billion reflects annual sales of aircraft spare parts in the redistribution market. These sales figures are expected to grow considerably in the near future, as continued cost pressures affect airlines, manufacturers and maintenance service providers. The emphasis upon cost containment in recent years has led to a marked increase in the average age of the worldwide airline fleet, as commercial airlines seek to prolong the depreciable life of their aircraft. The Company seeks to exploit these key market trends by positioning itself as a low cost participant in the redistribution market. In addition, the Company offers its customers a wide range of inventory management services, allowing them to reduce operational expenses. This service complements the recent trend of commercial airlines seeking to outsource certain activities in order to focus upon their core business of passenger and cargo air transportation. Finally the Company believes that it can successfully exploit opportunities for bulk purchases of inventory and purchases of jet turbine engines and aircraft at favorable prices, thereby increasing profitability. (See "Business" and "Risk Factors"). From inception (October 3, 1996) though the fiscal year ended August 31, 1997, the Company generated net sales of $6,215,553 and net income of $15,959. Of such revenues, approximately 57.3% were derived from sales to domestic customers and approximately 42.7% were derived from sales to international customers. Transactions involving technical spares accounted for 100% of net sales. The Company's operations are conducted from leased facilities at 15675 Northwest 15th Avenue, Miami, Florida 33169 where it maintains its executive offices. Its telephone number is (305) 624-6700. THE OFFERING Securities Being Offered: This Prospectus relates to an offering by the Company of 1,000,000 shares of common stock, $.001 par value per share (the "Common Stock"), issuable upon the exercise of certain outstanding Common Stock Purchase Warrants (the "Warrants") previously issued by the Company. This Prospectus also relates to the sale of 1,000,000 shares of Common Stock following the exercise of the outstanding Warrants, by the holders 3 6 thereof, and to the sale of 1,969,000 additional shares of Common Stock previously issued by the Company in certain private placement transactions, all of which are being offered by the holders thereof identified as "Selling Security Holders" in this Prospectus. See "SELLING SECURITY HOLDERS." The shares of Common Stock offered by the Selling Security Holders may be offered for sale from time to time by the holders in regular brokerage transactions, either directly or through brokers or to dealers, in private sales or negotiated transactions, or otherwise, at prices related to then prevailing market prices. The Company will not receive any proceeds from the sale of shares of Common Stock by the Selling Security Holders. All expenses of the registration of such securities are, however, being borne by the Company. The Selling Security Holders, and not the Company, will pay or assume such brokerage commissions as may be incurred in the sale of their securities. The Common Stock is traded on The OTC Bulletin Board under the symbol "JTAV". On the high bid price was $ . Total number of shares of Common Stock outstanding.............. 2,996,500 Total number of shares of Common Stock offered by the Company pursuant to outstanding Warrants..... 1,000,000 Total number of shares of Common Stock outstanding upon exercise of the outstanding Warrants..... 3,996,500 Total number of shares of Common Stock being offered by Selling Security Holders (including shares issuable upon exercise of the Warrants)............ 2,969,000 Use of Proceeds: The net proceeds realized by the Company upon the exercise of the Warrants will be used to purchase jet turbine engines and additional inventory and to offset general working capital requirements of the Company. See "USE OF PROCEEDS." Inasmuch as the Company has received no firm commitments for the exercise of the Warrants, however, there can be no assurances as to the amount of the net proceeds to be realized by the Company. Except for any proceeds that may be realized upon exercise of the Warrants, the Company will not receive any of the proceeds from the sale of any of the shares of Common Stock by the Selling Security Holders. Risk Factors: The Common Stock offered hereby involves a high degree of risk and prospective investors should consider carefully the factors specified under "Risk Factors" before electing to invest. See "RISK FACTORS." Trading Symbol: Common Stock -- "JTAV" 4 7 SELECTED FINANCIAL INFORMATION Set forth below is the historical selected financial information with respect to the Company for the period from inception (October 3, 1996) until August 31, 1997 and the 11 months then ended.
ELEVEN MONTHS ENDED AUGUST 31, 1997 --------------- INCOME STATEMENT INFORMATION Revenue..................................................... $6,215,553 Net Income.................................................. $ 15,959 Net Income per Share........................................ $ .01 Weighted Average Shares Outstanding......................... 1,672,968 BALANCE SHEET INFORMATION (AT END OF PERIOD) Working Capital............................................. $3,246,086 Total Assets................................................ $4,561,330 Total Liabilities........................................... $1,181,057 Stockholders' Equity........................................ $3,380,273 Net Tangible Book Value Per Share........................... $ 1.13
5 8 RISK FACTORS Prospective investors should consider carefully the following Risk Factors, together with the other information contained in this Prospectus, in evaluating an investment in the shares of Common Stock offered hereby. LIMITED OPERATING HISTORY The Company has a limited operating history upon which an evaluation of its performance and prospects can be made. The Company's prospects must be considered in light of the numerous risks, expenses, delays, problems and difficulties frequently encountered in the establishment of a new enterprise in industries characterized by intense competition. Although through August 31, 1997, the Company has operated profitably, the Company intends to expand its operations, which will bring increased cash flow pressures. Accordingly, expansion of inventory and operations may have a negative impact on the profitability of the Company, at least in the near term. Further, there can be no assurance that the Company will be able to successfully expand its operations and continue profitability. See "FINANCIAL STATEMENTS" and "BUSINESS." NEED FOR ADDITIONAL FUNDING The exercise of all the Warrants will result in net proceeds to the Company of approximately $4,400,000. Although the Company believes that these funds, together with revenues from operations will be sufficient for the Company's immediate anticipated needs, additional funds will be required to expand the business over time. There can be no assurance however, that such funds will be sufficient in the near term or that the Company will be able to secure additional financing when required. See "BUSINESS" and "MANAGEMENT'S DISCUSSION." EFFECTS OF THE ECONOMY ON THE OPERATIONS OF THE COMPANY Since the Company's customers consist of airlines, maintenance and repair facilities that service airlines and other spare parts redistributors, the Company's business is impacted by the economic factors which affect the airline industry. When such factors adversely affect the airline industry, they tend to reduce the overall demand for aircraft spare parts and peripheral services, causing price reductions and increasing the credit risk associated with doing business with airlines and others. Additionally, factors such as the price of fuel affect the aircraft spare parts market, since older aircraft (into which aircraft spare parts are most often placed), which tend to be less fuel efficient, become less viable as the price of fuel increases. There can be no assurance that economic and other factors which might affect the airline industry will not have an adverse impact on the Company's results of operations. TRENDS IN THE MARKET Airline purchasing departments have been reducing the number of "approved" suppliers in order to reduce costs. During the last few years certain major airlines have reduced the number of "approved" suppliers from as many as fifty to as few as five. Although the Company presently is an approved supplier of fourteen airlines, no assurances can be given that the Company can maintain or expand this status. Further, the reduction in the supplier base for airlines contributed to a consolidation in the redistribution market which, the Company believes, will continue. Only redistributors with extensive inventories, experienced management, sufficient capital and the ability to adhere to the industry standards for traceability will, the Company believes, operate profitably. No assurances can be given that the Company can effectively compete in this changing marketplace. RISK REGARDING THE COMPANY'S INVENTORY The Company's inventory consists principally of new, overhauled, serviceable and repairable aircraft parts that are purchased from many sources. Before parts may be installed in an aircraft, they must meet certain standards of condition established by the Federal Aviation Administration ("FAA") and/or the 6 9 equivalent regulatory agencies in other countries. Specific regulations vary from country to country, although regulatory requirements in other countries generally coincide with FAA requirements. Parts owned or acquired by the Company may not meet applicable standards or standards may change in the future, causing parts which are already contained in the Company's inventory to be scrapped or modified. Aircraft manufacturers may also develop new parts to be used in lieu of parts already contained in the Company's inventory. In all such cases, to the extent that the Company has such parts in its inventory, their value may be reduced. See "BUSINESS -- Government Regulation and Traceability." RISKS REGARDING THE PURCHASE OF JET TURBINE ENGINES AND AIRCRAFT Although the Company has not, to date, purchased jet turbine engines or jet turbine aircraft for resale, it intends in the future, to engage in these activities. The purchase for resale of these items are subject to risks related to the volatility in the market place for engines and aircraft. These activities also involve a commitment of substantial capital, and if the engines or aircraft are purchased at too high a price for subsequent resale, substantial losses could be incurred. In addition, engines and aircraft may need repair work, which increases their cost and adversely affects profitability. GOVERNMENT REGULATION The aviation industry is highly regulated in the United States by the FAA and in other countries by similar agencies. While the Company's business is not regulated, the aircraft spare parts which it sells to its customers must be accompanied by documentation which enables the customer to comply with applicable regulatory requirements. There can be no assurance that new and more stringent government regulations will not be adopted in the future or that any such new regulations, if enacted, would not have an adverse impact on the Company. See "BUSINESS -- Government Regulation and Traceability." FLUCTUATIONS IN OPERATING RESULTS The Company's operating results are affected by many factors, including the timing of orders from customers, the timing of expenditures to purchase inventory in anticipation of future sales, the timing of bulk inventory purchases, the timing of purchases and financing requirements for jet engines or aircraft and the mix of available technical spare parts contained, at any time, in the Company's inventory. A large portion of the Company's operating expenses are relatively fixed. Since the Company typically does not obtain long-term purchase orders or commitments from its customers, it must anticipate the future volume of orders based upon the historic purchasing patterns of its customers and upon its discussions with its customers as to their future requirements. Cancellations, reductions or delays in orders by a customer or group of customers could have a material adverse effect on the Company's business, financial condition and results of operations. See "FINANCIAL STATEMENTS" and "MANAGEMENT'S DISCUSSION." RELIANCE ON CHIEF EXECUTIVE OFFICER The continued success of the Company is dependent to a significant degree upon the services of Joseph J. Nelson, its president and chief executive officer and upon the Company's ability to attract and retain qualified personnel experienced in the various phases of the Company's business. The Company has an employment agreement with Mr. Nelson which terminates on October 31, 1999. The Company anticipates obtaining term insurance for Mr. Nelson in an amount not to exceed $1,000,000. However, the ability of the Company to operate successfully could be jeopardized with the loss of Mr. Nelson's services. See "MANAGEMENT." COMPETITION There are numerous suppliers of aircraft spare parts in the aviation market worldwide and, through inventory listing services, customers have access to a broad array of suppliers. These include major aircraft manufacturers, airline and aircraft service companies, and aircraft spare parts redistributors. Many of the Company's competitors have substantially greater financial and other resources than the Company. There can 7 10 be no assurance that competitive pressures will not materially and adversely affect the Company's business, financial condition or results of operations. See "BUSINESS -- Competition." POSSIBLE VOLATILITY OF STOCK PRICES As of , 1997, the Company had outstanding 2,996,500 shares of Common Stock, of which approximately are eligible for public trading. Taking into account the sale of shares held by Selling Security Holders and the exercise of the Warrants, assuming all of the Warrants are exercised, the Company will have 3,996,500 shares of Common Stock outstanding, approximately of which will be eligible for public trading. Although it is impossible to predict market influences and prospective values for securities, it is possible that, in and of itself, the substantial increase in the number of shares available for sale could have a depressive effect upon the market value of the Company's Common Stock. Furthermore, although the Company's Common Stock trades in the over-the-counter market, there can be no assurances that a regular trading market will develop, or, if developed, will continue, or that the prices of the Common Stock will exceed the exercise price paid by the holders of the Warrants. There has been a history of significant volatility in the market prices for shares of companies in a similar stage of development. Hence, there can be no assurances that holders who elect to exercise their Warrants will ultimately be able to sell the underlying shares of Common Stock at a profit, if at all. Because of the factors described above and elsewhere in this Prospectus, the market price of the Company's Common Stock following the date of this Prospectus may be highly volatile. POSSIBLE LIMITATIONS UPON TRADING ACTIVITIES; RESTRICTIONS IMPOSED UPON BROKER-DEALERS EFFECTING TRANSACTIONS IN CERTAIN SECURITIES Trading of the Company's securities may be subject to material limitations as a consequence of certain provisions of the Securities Exchange Act of 1934 (the "Exchange Act") which limit the activities of broker-dealers effecting transactions in "penny stocks." Rules 15g-2 through 15g-6 promulgated under the Exchange Act provide a series of rules requiring broker-dealers engaging in transactions in low-priced over-the-counter securities defined as "penny stocks," to first provide to their customers a series of disclosures and documents, including: (i) a standardized risk disclosure document identifying the risks inherent in investing in "penny stocks;" (ii) all compensation received by the broker-dealer in connection with the transaction; (iii) current quotation prices and other relevant market data; and (iv) monthly account statements reflecting the fair market value of the securities. "Penny stocks" are defined as any equity securities other than a security that is registered on a national exchange; included for quotation in the NASDAQ system; or whose issuer has net tangible assets of more than $2,000,000 and has been in continuous operation for greater than three (3) years. Issuers who have been in operation less than three (3) years must have net tangible assets of at least $5,000,000. Accordingly, the Company's Common Stock presently constitutes a "penny stock." As such, trading activities for the Company's Common Stock will be made more difficult for broker-dealers than in the case of securities not defined as "penny stock." This may have the result of depressing the market for the Company's securities and an investor may find it difficult to dispose of such securities. In addition, under the Exchange Act, and the regulations thereunder, any person engaged in a distribution of the shares of Common Stock of the Company offered by this Prospectus may not simultaneously engage in market making activities with respect to the Common Stock of the Company during the applicable "cooling off" periods prior to the commencement of such distribution. In addition, and without limiting the foregoing, each Selling Security Holder will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder including, without limitation, Rule 15c2-6, and Regulation M, which provisions may limit the timing of purchases and sales of Common Stock by the Selling Security Holders. 8 11 ARBITRARY DETERMINATION OF EXERCISE PRICE The exercise prices of the Warrants do not bear any relationship to the assets, book value, operating results or net worth of the Company, and should not be considered to be an indication of the actual value of the Company. POSSIBLE STATE AND FEDERAL RESTRICTIONS ON EXERCISE OF WARRANTS Holders of Warrants will be able to sell the underlying Common Stock issuable upon exercise thereof only if a current registration statement relating to such underlying Common Stock is then in effect and on file with the Securities and Exchange Commission and only if such Common Stock is qualified for sale or exempt from qualification under the applicable state securities laws. The Warrants contain certain provisions requiring the Company to file for, and endeavor to secure, current and effective registration of the shares of Common Stock issuable upon exercise. Although the Company has undertaken to use its best efforts to maintain the effectiveness of this Prospectus covering the securities underlying the Warrants, there can be no assurances that the Company will be able to do so. The value of the Warrants may be greatly reduced if a current prospectus covering the securities issuable upon the exercise of Warrants is not kept effective or if such securities are not qualified or exempt from qualification in the states in which the holders of Warrants reside. See "DESCRIPTION OF SECURITIES." EFFECT OF OUTSTANDING WARRANTS As of October 31, 1997, the Company had outstanding Warrants to purchase 1,000,000 shares of Common Stock upon exercise. To the extent that the shares underlying the Warrants enter the market, the price of the Common Stock in the market may be substantially reduced. Moreover, for the term of the Warrants issued by the Company, the holders thereof are given an opportunity to profit from a rise in the market price of the Company's Common Stock, with resulting dilution in the interest of the other stockholders. Further, the terms on which the Company may obtain additional financing during that period may be adversely affected by the existence of such Warrants. The holders of such Warrants may exercise them at a time when the Company might be able to obtain additional capital through a new offering of securities on terms more favorable than those provided by therein. The Company has undertaken to file this Prospectus with the Securities and Exchange Commission pursuant to certain registration rights enjoyed by holders of Warrants. The expense of registration of this Prospectus shall be borne by the Company, which expense may be significant. DIVIDENDS NOT LIKELY The Company does not intend to declare or pay cash dividends in the foreseeable future. Earnings, if any, are expected to be retained to finance and develop its business. See "DESCRIPTION OF SECURITIES." DILUTION The exercise price of the Warrants is $4.50 per share. Officers, directors, promoters and affiliated persons of the Company purchased their shares for cash and other consideration ranging from $.001 to $2.50. USE OF PROCEEDS The Company will not realize any proceeds from the sale of shares of Common Stock by the Selling Security Holders. See "SELLING SECURITY HOLDERS." The net proceeds which may be realized by the Company upon the exercise of one-hundred (100%) percent of the Warrants will be approximately $4,400,000. Inasmuch as the Company has received no firm commitments for their exercise, there can be no assurance that any or a substantial portion of the Warrants will be exercised. 9 12 Management cannot predict with any certainty the amount of proceeds, if any, which may be generated from the exercise of Warrants. The net proceeds, if any, which may be realized by the Company upon the exercise of the Warrants, will be utilized to continue the operations of the Company in accordance with the business strategy identified by management. See "BUSINESS." Based upon this strategy, assuming that net proceeds of $4,400,000 are realized by the Company upon the exercise of Warrants, management would reasonably expect to utilize such proceeds within a period of twenty-four (24) months, in the following relative proportions:
APPLICATION OF FUNDS % OF FUNDS - -------------------- ---------- Purchase of jet turbine engines............................. 34% Purchase of additional spare parts inventory................ 25 General working capital..................................... 21 Employment of key personnel................................. 15 Improve facilities and purchase new equipment............... 5 --- 100% ===
The amounts actually expended for the purposes described above could vary significantly depending on, among other things, the Company's ability to obtain capital from other sources, the demand for the Company's services and the availability of inventory, jet engines and aircraft at attractive prices. MARKET PRICE OF THE COMMON STOCK As of the date of this Prospectus, the Company's Common Stock is traded in the over-the-counter market through The OTC Bulletin Board under the symbol "JTAV." From to the high and low bid prices of the Common Stock were and respectively. Records of the Company's stock transfer agent indicate that as of October 31, 1997, the Company had 304 record holders of its Common Stock. The Company has not paid any cash dividends to date, and does not anticipate or contemplate paying cash dividends in the foreseeable future. It is the present intention of management to utilize all available funds for working capital of the Company. 10 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion should be read in conjunction with the Company's Financial Statements, including the notes thereto. This Prospectus contains certain forward-looking information which involves risks and uncertainties. The actual results could differ from the results anticipated herein. OVERVIEW The Company was incorporated in Florida on May 28, 1997 for the purpose of acquiring by merger the business and operations of Old Jet upon the completion of a stock offering by the Company. On July 28, 1997, the Company acquired 100% of the outstanding common stock of Old Jet in exchange for 1,776,800 shares of common stock of the Company in a one for one stock exchange. The merger has been accounted for as a purchase. Old Jet was incorporated in the state of Florida on October 3, 1996 for the purpose of buying, selling, leasing and exchanging spare parts for fixed-wing commercial jet transport aircraft. Effective July 28, 1997 the Company's name was changed from Schuylkill Acquisition Corp. to Jet Aviation Trading, Inc. The effect of the transaction was a reverse merger; accordingly, the historical financial statements presented are those of the accounting survivor, Old Jet, and the stockholders' equity of the merged company was recapitalized to reflect the capital structure of the surviving legal entity (the Company) and the retained earnings of Old Jet. The Company derives its revenues from selling, leasing and exchanging spare parts for fixed-wing commercial jet transport aircraft. The Company has only a limited operating history upon which an evaluation of its operations and prospects can be based. Although the Company has since inception experienced increasing net sales, the Company may experience significant fluctuations in its gross margins and operating results in the future, both on an annual and a quarterly basis. These fluctuations may be caused by various factors, including general economic conditions, specific economic conditions in the commercial aviation industry, the availability and price of surplus aviation material, the size and timing of customer orders, returns by and allowances to customers and the cost of capital to the Company. RESULTS OF OPERATIONS Net sales of $6,215,553 have been generated since inception on October 3, 1996 through August 31, 1997. The Company has been able to sustain an increase in net sales since inception through August 31, 1997, primarily due to the increased availability of cash resources to acquire inventory for resale. The Company generated foreign sales of $2,655,968 since inception through August 31, 1997 due to its marketing efforts and expansion of its product lines to its foreign customers. Gross margins of 25% as a percentage of sales resulted in gross profits of $1,530,689 since inception through August 31, 1997. Total selling, general and administrative expenses of $1,482,060 were 24% of sales. In management's opinion this unusually high expense, as a percentage of sales, was a result of expanding the Company's office and warehouse facilities along with its sales, administrative and warehouse personnel levels to efficiently address its increasing inventory and revenues. Management does not anticipate that the unusually high expenses, (as a percentage of sales), experienced from inception through August 31, 1997, will continue on a regular basis. Interest expense (net of interest income) of $16,470 resulted from borrowings to expand the Company's inventory levels, its operations as well as the financing of the expansion of the Company's office and warehouse facilities. Further increases in interest expense can be anticipated in the future as the Company continues to expand its inventory levels and facilities to support future growth. 11 14 Net income was $15,959, and net income per share was $0.01 per share in the period from inception through August 31, 1997. Net income per share is based upon the weighted average of the common shares outstanding (1,672,968) from inception through August 31, 1997. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital was $3,246,086 as of August 31, 1997. The principal reasons for the increase in working capital since inception were the increase in inventories and increase in cash resulting from private placements of equity securities and the conversion of debt to equity. Net cash used in operating activities was $1,516,173. The decrease in cash flow from operating activities was due primarily to the increase in accounts receivable and inventory during the period ended August 31, 1997. Net cash used in investing activities was $121,730 for the period ended August 31, 1997. Net cash used in investing activities for the period ended August 31, 1997 represented the acquisition of property and equipment and deposit with an aircraft parts manufacturer. Net cash provided by financing activities was $1,979,563 for the period ended August 31, 1997. Since its inception the Company has received $932,313 from the issuance of Common Stock. The Company believes that the cash flows expected to be generated by operations will meet its anticipated short term cash needs for working capital and the proceeds from the exercise of the Warrants will enable the Company to make future capital expenditures, through the next 18 months. The Company does not have any commitments for material capital expenditures. PLAN OF OPERATION Following the exercise of the Warrants in this offering, the Company intends to use a portion of the proceeds, as well as trade credit, to acquire turbine jet engines and expand its inventory of engine spare parts. The Company also anticipates hiring additional employees, particularly in the marketing area. Finally the Company seeks to establish a $1.5 million revolving credit facility for working capital and equipment purchases. The Company currently is discussing the terms and conditions of such a facility with banks, although no bank has yet offered the Company a commitment. 12 15 BUSINESS GENERAL The Company was formed pursuant to the laws of the State of Florida in May, 1997. It conducted no business. On July 28, 1997, the Company, then known as Schuylkill Acquisition Corp., merged with Jet Aviation Trading, Inc., a Florida corporation ("Old Jet"), remained the surviving entity and changed its name to Jet Aviation Trading, Inc. Old Jet had commenced business on October 3, 1996. Unless the context otherwise requires, references to the "Company" throughout this Prospectus, including the Financial Statements contained herein, refer to the operations of Old Jet prior to July 28, 1997 and the Company thereafter. The Company specializes in the sale, lease, exchange and purchase of technical spares for fixed-wing commercial jet transport aircraft manufactured by Boeing, McDonnell Douglas, Airbus and Lockheed. Complimenting this core business, the Company provides its customers with inventory management services including new product distribution, technical purchasing, maintenance repair management, consignment marketing and purchase/leaseback of technical spares inventory. The Company also pursues opportunities involving the purchase, sale and lease of jet turbine engines, jet turbine aircraft, and related aviation industry equipment. INDUSTRY OVERVIEW Industry estimates are that the annual worldwide market for aircraft spare parts is approximately $10.2 billion, of which approximately $1.6 billion reflects annual sales of aircraft spare parts in the redistribution market. The redistribution market is highly fragmented, with a limited number of large, well-capitalized companies selling a broad range of aircraft spare parts, and many smaller competitors servicing particular segments of the industry. The Company believes that significant trends affecting the market will increase its overall size and at the same time eliminate some market participants. These trends are: Growth in Market for Aircraft Spare Parts According to Boeing's 1996 Market Outlook (the "Boeing Report"), the worldwide fleet of commercial passenger airplanes is expected to double from 11,066 airplanes at the end of 1995 to 23,081 airplanes by 2015. The Boeing Report also projects that cargo jet aircraft will increase from 1,219 airplanes in 1995 to 2,260 airplanes by 2015. Seventy percent of the airplanes delivered to cargo operators are expected to be used aircraft which were converted from commercial passenger service. Further, the number of planes in service for more than 10 years is continuing to increase, and these older planes are the primary market for redistributors. Finally, cost considerations are forcing many airlines and repair and maintenance facilities to utilize aircraft spare parts sold by redistributors, instead of purchasing new parts for inventory. The Company believes that all of these factors will increase the demand for aircraft spare parts from the redistribution market. Increased Outsourcing of Inventory Management Function Airlines incur substantial expenditures in connection with fuel, labor and aircraft ownership. Further, during the last decade, airlines have come under increasing pressure to reduce the costs associated with providing air transportation services. Although several of the expenditures required to operate an airline are beyond the direct control of airline operators (e.g., the price of fuel and labor costs), obtaining replacement parts from the redistribution market and outsourcing inventory management functions are, the Company believes, areas in which airlines can allow these functions to be handled more inexpensively and efficiently. Increasing Emphasis on Traceability Due to concerns regarding unapproved aircraft spare parts, regulatory authorities have increased the level of documentation which must be maintained on aircraft spare parts. This requirement has, in turn, been extended by end-users to the vendors of the parts. The sophistication required to track the history of an 13 16 inventory consisting of thousands of aircraft spare parts is considerable and has required companies to invest significantly in information systems technology. Increased Consignment Certain of the Company's customers adjust inventory levels on a periodic basis by disposing of excess aircraft spare parts. Traditionally, larger airlines have used internal personnel to manage such dispositions. The Company believes that major airlines and other owners of aircraft spare parts, in order to concentrate on their core businesses and to more effectively redistribute their excess parts inventories, are increasingly entering into long-term consignment agreements with redistributors. By consigning inventories to a redistributor such as the Company, customers are able to distribute their aircraft spare parts to a larger number of prospective inventory buyers, allowing the customer to maximize the value of its inventory. Consignment also enables the Company to offer for sale significant parts inventory at minimal capital cost to the Company. Increased Leasing The Company believes that cost considerations will result in airlines' increased use of leasing with respect to spare parts and engines. This practice can prove beneficial to the Company, for it can obtain a steady income stream over a period of time from lease payments and upon termination of the lease, regain the part or engine for subsequent sale. In addition, leasing arrangements may afford the Company the ability to obtain additional financing. COMPANY STRATEGY The Company believes that it can become a low cost leader in the redistribution market, as well as for its ancillary inventory management services, by combining its managerial experience with increased capital and building upon its present operations. The essential elements of its business strategy are: Internal Growth The Company's strategy is to increase operating revenues and operating income through continued customer penetration in its existing markets and expansion into new markets. The Company intends to achieve this by continuing to increase the size and scope of its inventory and by continuing to expand its marketing efforts worldwide. The Company will also expand its inventory management, leasing and on-site consignment services to allow its customers to reduce their costs of operations by outsourcing some or all of their inventory management and supply functions and to take advantage of opportunities to maximize the value of their spare parts inventory. The Company seeks to establish and maintain close working relationships with its customers and to become their vendor of choice. Capitalize on Large Bulk Purchase Opportunities Although opportunities to purchase large inventories in bulk in the aircraft spare parts industry cannot be predicted, historically they become available on a regular basis. "Bulk" purchase opportunities arise when airlines, in order to reduce capital requirements, sell large amounts of inventory in a single transaction or when inventories of aircraft spare parts are sold in conjunction with bankruptcy proceedings, or when operators upgrade their fleet. In these situations the Company can obtain large inventories of aircraft spare parts at a lower cost than can ordinarily be obtained by purchasing on an individual basis. This results generally in higher gross margins on sales of such parts. Since inception, the Company has successfully completed six bulk inventory purchases in excess of $100,000. The Company believes that due to the experience of management, and as a result of additional capital, an increased number of larger bulk purchases can be effectuated. Initiate Purchase and Sale of Jet Turbine Engines and Aircraft The Company believes that with proper financial resources, it would be in a position to enter the market for the purchase and sale of jet turbine engines and aircraft. This market is extremely competitive and capital 14 17 intensive. However, the Company believes that it has the management expertise and industry contacts to make prudent purchases, the key to profitability in this market. Pursue Acquisitions of Complementary Businesses Another element of the Company's strategy involves acquisitions of other companies, assets or product lines that would complement or expand the Company's existing aircraft spare parts redistribution and inventory management services business. The Company believes that acquisitions will enable it to achieve economies of scale and expand the product and service line available to its customers. The Company is currently evaluating a number of acquisition opportunities. No commitments or binding agreements have been entered into to date and accordingly, no assurance can be given that any of the acquisitions currently being considered will be consummated. AIRCRAFT SPARE PARTS Aircraft spare parts can be categorized by their ongoing ability to be repaired and returned to service. The general categories are as follows: (i) rotable; (ii) repairable; and (iii) expendable. A rotable is a part which is removed periodically as dictated by an operator's maintenance procedures or on an "as needed" basis and is typically repaired or overhauled and re-used an indefinite number of times. An important subset of rotables is life limited parts. A life limited part has a designated number of allowable flight hours and/or cycles (one take-off and landing generally constitutes one cycle) after which it is rendered unusable. A repairable is similar to a rotable except that it can only be repaired a limited number of times before it must be discarded. An expendable is generally a part which is used and not thereafter repaired for further use. Aircraft spare parts conditions are classified within the industry as (i) factory new, (ii) new surplus, (iii) overhauled, (iv) serviceable, and (v) as removed. A factory new or new surplus part is one that has never been installed or used. Factory new parts are purchased from manufacturers or their authorized distributors. New surplus parts are purchased from excess stock of airlines, repair facilities or other redistributors. An overhauled part has been completely disassembled, inspected, repaired, reassembled and tested by a licensed repair facility. An aircraft spare part is classified serviceable if it is removed by the operator from an aircraft or engine while operating under an approved maintenance program and is functional and meets any manufacturer or time and cycle restrictions applicable to the part. A factory new, new surplus, overhauled or serviceable part designation indicates that the part can be immediately utilized on an aircraft. A part in "as-removed" condition requires functional testing, repair or overhaul by a licensed facility prior to being returned to service in an aircraft. OPERATIONS The Company's main business is the buying and selling of aircraft spare parts. The Company has also pursued opportunities regarding the purchase and sale of related aviation industry equipment. In this regard, the Company acquired a DC-10-30 flight simulator and related support package and software. The Company also provides value-added inventory management services to its customers. The Company believes that inventory management services provide significant opportunities for expansion of the Company's business in the future. Finally, the Company intends to develop business as a redistributor of turbine jet engines and become involved in the purchase, sale and lease of jet turbine aircraft. Inventory Purchases and Sales The daily operations of the Company encompass inventory sales, brokering and exchanging aircraft spare parts. The Company advertises its available inventories held for sale or exchange on the Inventory Locator Service ("ILS"), the Airline Inventory Redistribution System ("AIRS") and BCOM electronic databases. Buyers of aircraft spare parts can access the ILS, AIRS and BCOM databases and determine the companies which have the desired inventory available. The Company estimates that twenty-five percent of its daily sales activity results from an ILS, AIRS or BCOM inquiry. All major airlines and repair agencies subscribe to one or more of these databases and accordingly, the Company maintains continual on-line direct access with them. 15 18 ILS, AIRS and BCOM do not, however, list price information relating to particular parts. The ability to properly evaluate and price spare parts derives from management experience in the industry. The Company currently has over 35,000 line items in stock. The Company monitors market availability, pricing and historical data on a continuous basis. The Company sells new, overhauled and serviceable replacement parts from its inventory and by buying them at the request of its customers against a specific order; usually purchasing the parts for its own account and selling them to its customers. For the period ended August 31, 1997, inventory sales accounted for 100% of revenues. Inventory Management Services The Company provides a number of inventory management services to its customers. These services assist airlines in downsizing their inventory management operations, thus enabling them to utilize their capital more efficiently and reduce costs. Through the offering of various services, the Company believes it can provide an inventory management program geared to any particular customer's requirements. Consignment By consigning inventories to a redistributor such as the Company, customers are able to distribute their aircraft spare parts to a larger number of prospective inventory buyers, allowing the customer to maximize the value of its inventory. Consignment also enables the Company to offer for sale significant parts inventory at minimal capital cost. The Company currently maintains or manages or has consignment agreements in place and its revenues from consignment arrangements have accounted for approximately 5% of net sales for the period ended August 31, 1997. The Company anticipates that revenues from consignments will increase as a percentage of total revenues in the future. Purchasing Services The Company provides services whereby it purchases spare parts for smaller and start-up airlines. These arrangements allow the Company's customers to take advantage of the Company's greater purchasing power and repair management services. SALES AND MARKETING; CUSTOMERS The Company utilizes six inside and outside salespersons and a network of independent representatives in its sales and marketing efforts. The Company's President directs the Company's sales force. The Company's sales force is responsible for obtaining new customers and maintaining relationships with existing customers. The majority of the Company's day-to-day sales are accomplished through the Company's inside sales force. The Company provides sales and delivery services seven days a week, 24 hours a day. This service is critical to provide support to airline customers which, at any time, may have an aircraft grounded in need of a particular part. The Company's South Florida location, with easy access to Miami International Airport and Fort Lauderdale International Airport, assists the Company in providing reliable and timely delivery of purchased products. The Company has over 140 customers, which include commercial passenger airlines, air cargo carriers, maintenance and repair facilities, original equipment manufacturers and other aircraft parts redistribution companies. During the eleven month period ended August 31, 1997, the Company's top 10 customers accounted for approximately 75% of net sales, and one customer has accounted for more than 20% of net sales. MANAGEMENT INFORMATION SYSTEM The Company has implemented the first phase of upgrading its management information systems by acquiring computer hardware and software. The Company's data system is being developed to incorporate state-of-the-art records imaging, archiving, inventory and asset management analysis, financial recordation and other support systems. The Company believes that upon full implementation of its data management 16 19 system, such system will be more than adequate to manage the requirements of the Company in accordance with its forecasted growth. COMPETITION The aircraft spare parts redistribution market is highly fragmented. Competition in the redistribution market is generally based on price, availability of product and quality, including traceability. The Company's major competitors include AAR Corp., Aero Controls Corp., Solair, Inc., The Memphis Group and Aviation Sales Company. There is also substantial competition, both domestically and overseas, from smaller, independent dealers who generally participate in niche markets. Several of the Company's competitors have greater financial and other resources than the Company. The jet turbine engine and jet turbine aircraft market is currently dominated by various financial institutions, such as GE Capital, CIT Group, and International Lease Finance Corp. as well as the major competitors from the spare parts redistribution market. The market also includes many smaller entities who engage in transactions on a sporadic basis. GOVERNMENT REGULATION AND TRACEABILITY The FAA regulates the manufacture, repair and operation of all aircraft and aircraft parts operated in the United States. Its regulations are designed to insure that all aircraft and aviation equipment are continuously maintained in proper condition to ensure safe operation of the aircraft. Similar rules apply in other countries. All aircraft must be maintained under a continuous condition monitoring program and must periodically undergo thorough inspection and maintenance. The inspection, maintenance and repair procedures for the various types of aircraft and equipment are prescribed by regulatory authorities and can be performed only by certified technicians at certified repair facilities. Certification and conformance is required before installation of a part on an aircraft. Presently, whenever necessary with respect to a particular part, the Company utilizes FAA and/or Joint Aviation Authority certified repair stations to repair and certify parts to ensure worldwide marketability. The operations of the Company may in the future be subject to new and more stringent regulatory requirements. In that regard, the Company closely monitors the FAA and industry trade groups in an attempt to understand how possible future regulations might impact the Company. See "Risk Factors -- Market Trend" and "Government Regulation." An important factor in the aircraft spare parts redistribution market relates to the documentation or traceability that is supplied with an aircraft spare part. The Company requires all of its suppliers to provide adequate documentation as required by the industry and the regulatory agencies. The Company is designing its data management system to image, capture, manage and communicate this documentation. EMPLOYEES As of August 31, 1997, the Company employed eighteen persons. None of the Company's employees are covered by collective bargaining agreements. The Company believes that its relations with its employees are good. PROPERTIES The Company's executive offices and warehouse facilities are located in Miami, Florida. These facilities comprise a total of approximately 17,600P square feet. The premises are subject to a lease dated January 1, 1997 and subsequently amended on November 1, 1997, which expires on December 31, 2000, at an annual rental of $79,614 plus pass-throughs of (i) utilities, (2) increases in real estate taxes, (3) assessments, (4) increases in insurance and (5) the Company's share of assessments imposed by the industrial park's association. Rent is subject to a cost of living increase adjustment. The Company has two additional one year options to renew. These facilities are adequate for the Company's present needs. 17 20 PRODUCT LIABILITY AND LEGAL PROCEEDINGS The Company's business exposes it to possible claims for personal injury or death which may result from a failure of aircraft spare parts sold by it. The Company takes what it believes are adequate precautions to ensure the quality and traceability of the aircraft parts which it sells. The Company does not carry product liability insurance. See "Risk Factors -- Product Liability." The Company is not involved in any litigation. 18 21 MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS The present members of the Board of Directors, all executive officers, their ages and positions with the Company are set forth below:
NAMES AGE POSITION - ----- ---- -------- Joseph J. Nelson...................... 48 President and Chief Executive Officer, Director Michael J. Cirillo.................... 49 Director Theodore H. Gregor.................... 46 Director Joseph F. Janusz...................... 46 Vice President -- Finance Chief Financial Officer
Joseph J. Nelson has been President and Chief Executive Officer of the Company since October, 1996. Prior thereto, he was Senior Vice-President of The AGES Group, L.P. ("AGES"), responsible for the operations of four divisions with revenues of approximately $100 million, and held other positions with AGES since October, 1990. Prior thereto, Mr. Nelson was with Ryder Corporation attaining the position of Vice President of Sales. Mr. Nelson holds a B.S degree from DePaul University and an M.B.A. in Finance from Farleigh Dickinson University. Michael J. Cirillo has been a director of the Company since June, 1997. He is President of The D.A.R. Group, Inc. an investment banking firm and President of CBM Consultants, Inc., a marketing and consulting firm. From 1987 through 1995 Mr. Cirillo was an officer and director of Flex Resources, Inc., a temporary and permanent employment firm. Mr. Cirillo holds a B.S. degree from Farleigh Dickinson University. Theodore H. Gregor has been a director of the Company since October, 1997. Since 1987, he has been the President of Aero Kool Corporation, a privately held company engaged in business as an FAA approved repair facility. Mr. Gregor holds a B.S. degree in Mechanical Engineering from the University of Miami. Joseph F. Janusz has been Vice President of Finance and Chief Financial Officer of the Company since June 1, 1997. Prior thereto he was a practicing certified public accountant. From September, 1993 through March, 1996, he was the Chief Financial and Operations Officer of Homeshield Industries, Inc. a privately held manufacturing company. From January, 1987 through June, 1990, Mr. Janusz was the Chief Financial Officer of RMJ Associates, Inc., a holding company involved in the office supply, furniture and printing businesses. Mr. Janusz holds a B.S. degree in Accounting from the University of Florida. He is a member of the American Institute of CPAs, the Florida Institute of CPAs and is a licensed real estate broker in Florida. The officers of the Company are elected by the Board of Directors to serve until their successors are elected and qualified. The directors of the Company are elected at the annual meeting of the stockholders. The Company's Certificate of Incorporation and Bylaws provide for the indemnification of, and advancement of expenses to, directors and officers of the Company. The Company has also entered into agreements to provide indemnification for its directors and executive officers. COMMITTEES The Board of Directors intends to establish an Audit Committee within the next fiscal year. The Audit Committee will recommend the independent accountants appointed by the Board of Directors to audit the financial statements of the Company, which includes an inspection of the books and accounts of the Company, and will review with such accountants the scope of their audit and their report thereon, including any questions and recommendations that may arise relating to such audit and report of the Company's internal accounting and auditing procedures. 19 22 DIRECTOR COMPENSATION The Company intends to pay directors of the Company who are not employed by the Company a fee at the rate of $500 for each meeting of the Board of Directors attended and $500 for each committee meeting attended. In addition, all directors will receive on an annual basis stock option grants under the Stock Option Plan for serving on the Board. Options to purchase 5,000 shares of Common Stock will be automatically granted to each director on December 31 of each year, starting December 31, 1997, at an option exercise price equal to the closing bid or sales price of the Common Stock on such date. Additionally, directors appointed to the Board in the future will be granted options to purchase 10,000 shares of Common Stock at an option exercise price equal to the closing bid or sales price of the Common Stock on the date of their appointment to the Board. EXECUTIVE COMPENSATION The following table reflects compensation paid or accrued by the Company during the year ended August 31, 1997 to the Company's Chief Executive Officer.
NAME YEAR SALARY - ---- ---- -------- Joseph J. Nelson............................................ 1997 $135,385(1)
- --------------- (1) Represents compensation from November 1, 1996 to August 31, 1997. EMPLOYMENT AGREEMENTS The Company and its President and Chief Executive Officer entered into an employment agreement effective November 1, 1996. This Agreement is for a period of three (3) years, terminating on October 31, 1999. The Agreement provides for an annual base salary of $160,000 and a year-end cash bonus of 3% of the pre-tax net income of the Company, as defined therein. STOCK OPTION PLAN On September 1, 1997, the Board of Directors adopted a Stock Option Plan (the "Plan"). This Plan provides for the grant of Incentive Stock Options, Non-qualified Stock Options and Stock Appreciation Rights to employees selected by the Board of Directors, or Compensation Committee. The Plan also sets forth applicable rules and regulations for stock options granted to non-employee directors. To date, 84,500 options have been granted under the Plan, including 30,000 to Mr. Nelson and 20,000 to Mr. Janusz. The Plan is subject to stockholder approval and will be submitted to the stockholders at the Company's annual meeting in 1998. PRINCIPAL STOCKHOLDERS The following table sets forth certain information regarding the beneficial ownership of the Common Stock of the Company as of October 31, 1997 (a) by each of the Company's directors, (b) all executive officers and directors as a group, and (c) all persons known by the Company to own beneficially more than 5% of the Company's Common Stock.
NAME SHARES PERCENT - ---- --------- ------- Joseph J. Nelson(1)(2)...................................... 222,000 7.4% Michael J. Cirillo(1)(3).................................... 1,150,000 29.1
20 23
NAME SHARES PERCENT - ---- --------- ------- Argaman, Inc................................................ 600,000 20.0 M.S.A. Trust Company Ltd., Co. #51-138681-5 of 3 Daniel Frisch Street 64731 Tel Aviv, Israel Silvertown International Corp............................... 279,800 9.3 Israel Galili No. 6 Tel Aviv, Israel 69377 Fersam International Ltd.................................... 280,000 9.3 PA Verkuyllaan 51-55 (Acht.) 11-71 EB Badhoevedorp, The Netherlands Joseph Laura................................................ 233,600 7.8 105 Mountainside View Morgantown, NJ 07751 All officers and directors as a group(4 persons)............ 1,382,000 34.8
- --------------- (1) The addresses for Mr. Nelson and Mr. Cirillo are c/o Jet Aviation Trading, Inc., 15675 N.W. 15 Avenue, Miami, FL 33169. (2) Includes 10,000 shares subject to stock options presently exercisable; does not include 20,000 shares subject to stock options which become exercisable in October, 1998. (3) Includes Warrants to purchase 950,000 shares of Common Stock owned by the D.A.R. Group, Inc. of which Mr. Cirillo is the President. (4) Includes 10,000 shares subject to stock options granted to Joseph F. Janusz; does not include 10,000 shares subject to stock options which become exercisable in October, 1998. CERTAIN TRANSACTIONS Effective October 1, 1996, the Company sold 600,000 shares of its Common Stock to Jet Avionics Systems, Inc. ("Jet Avionics") in consideration of a promissory note in the principal amount of $175,000, payable on demand, together with accrued interest at the applicable federal rate. The Company also entered into a Consignment Agreement with Jet Avionics, whereby the Company agreed to sell certain inventory of technical spares for the benefit of the Company and Jet Avionics. Pursuant to such Consignment Agreement, the Company sold to third parties certain of the consignment inventory for approximately $452,000 and owed Jet Avionics $303,000 after giving effect to a $36,000 payment. On August 29, 1997, the Company and Jet Avionics entered into a Consignment Cancellation and Purchase Agreement whereby (i) Jet Avionics cancelled the debt of $303,000 and (ii) the Company purchased the remaining consignment inventory with a value of approximately $336,000 from Jet Avionics all in exchange for 230,000 shares of the Company's Common Stock, $4,000 in cash, and the cancellation of $175,000 of indebtedness of Jet Avionics to the Company. The President and sole shareholder of Jet Avionics is Sharon Taoz, the daughter of Allen Beni. Ms. Taoz was employed by the Company, as an account executive, from October 3, 1996 through August 31, 1997 and was paid $37,000. From October 3, 1996 through October 2, 1997, Mr. Beni served in a non-executive capacity as Vice President of Special Projects pursuant to an employment agreement. During this period of time, Mr. Beni was paid $88,615 for services rendered. On October 2, 1997, Mr. Beni and the Company terminated the aforementioned employment agreement and entered into a one (1) year Consulting Agreement. This Consulting Agreement provides for a monthly retainer of $4,000 and a commission which may be earned based upon sales or purchases introduced by Mr. Beni to the Company. Mr. Beni also owns an equity interest in the lessor of the Company's facilities. Mr. Beni was the President of Florida West Airlines, Inc., which filed for bankruptcy in the United States Bankruptcy Court for the Southern District of Florida in September, 1994. Mr. Beni may be deemed to have been an organizer of the Company. 21 24 On October 3, 1996, the Company sold 80,000 shares of its Common Stock to IP Services, Inc. ("IP") for $24,510. IP is an affiliate of Howard M. Appel. During 1996 FAC Enterprises, Inc. ("FAC), an affiliate of Mr. Appel, loaned the Company an aggregate of $325,000. During the year, the Company repaid $125,000. The balance ($200,000) was repaid on August 29, 1997 through the issuance of 100,000 shares of Common Stock. FAC was also issued 7,500 shares for advisory services rendered. Mr. Appel may be deemed to have been an organizer of the Company. On November 1, 1996, the Company sold 192,000 shares of its Common Stock to Joseph J. Nelson in consideration of a promissory note in the principal amount of $80,000 payable on demand, together with accrued interest at the applicable federal rate. On November 14, 1996, the Company entered into a contract with Fersam International Ltd. ("Fersam") for the purchase of a one-half interest in a CAE Electronics Ltd. Sigma 3-six (6) axis DC-10 simulator (the "DC-10 simulator"). In consideration for the purchase of this interest, the Company paid $125,000 in cash and issued 40,000 shares of Common Stock valued at $100,000. On March 28, 1997, the Company entered into another contract with Fersam for the purchase of one (1) Novoview 2000 Visual Support System, Simulator Spares Parts Package and Maintenance Training Data Package to be used in connection with the DC-10 simulator. In consideration of and as payment for the purchase of these assets, the Company issued 200,000 shares of Common Stock valued at $500,000. On March 27, 1997, Silvertown International Corp. ("Silvertown") loaned the Company $120,000. This loan was evidenced by a promissory note payable to Silvertown, due on June 27, 1997, together with interest at 6% per annum. In consideration for this unsecured loan, the Company issued to Silvertown 4,800 shares of Common Stock. This note was extended for an additional three (3) months. On May 12, 1997, Silvertown loaned the Company $250,000. This loan was evidenced by a promissory note payable to Silvertown, due on or about July 27, 1997, together with interest at 6% per annum. In consideration for this unsecured loan, the Company issued to Silvertown 10,000 shares of Common Stock. On August 29, 1997, the Company satisfied the principal amounts of these promissory notes through the issuance of 185,000 shares of Common Stock to Silvertown. On May 23, 1997, Joseph Laura loaned $500,000 to the Company. This loan was evidenced by a promissory note payable to Mr. Laura, due on the earlier of May 31, 1998 or the Company obtaining equity financing in excess of $1,000,000, together with interest at 12% per annum. The Company satisfied the principal amount of this note through the issuance of 250,000 shares of Common Stock to Mr. Laura on August 29, 1997. On May 30, 1997, The D.A.R. Group, Inc., an affiliate of Michael J. Cirillo, a director of the Company, was issued 200,000 shares of Common Stock of the Company, for $200. On June 1, 1997, The D.A.R. Group, Inc., was issued warrants to purchase 950,000 shares of Common Stock for an advisory fee. See "DESCRIPTION OF SECURITIES." DESCRIPTION OF SECURITIES COMMON STOCK The Company is authorized to issue 30,000,000 shares of Common Stock, $.001 par value per share, of which 2,996,500 shares are outstanding. An additional 1,000,000 shares of Common Stock are reserved for issuance upon the exercise of the Warrants and an additional 750,000 shares are reserved for issuance pursuant to the Company's Stock Option Plan. Holders of Common Stock have equal rights to receive dividends when, as and if declared by the Board of Directors, out of funds legally available therefor. Holders of Common Stock have one vote for each share held of record and do not have cumulative voting rights. Holders of Common Stock are entitled upon liquidation of the Company to share ratably in the net assets available for distribution, subject to the rights, if any, of holders of any preferred stock then outstanding. 22 25 Shares of Common Stock are not redeemable and have no pre-emptive or similar rights. All outstanding shares of Common Stock are fully paid and non-assessable. PREFERRED STOCK Within the limits and restrictions contained in the Certificate of Incorporation, the Board of Directors has the authority, without further action by the stockholders, to issue up to 3,000,000 shares of Preferred Stock, $.10 par value per share (the "Preferred Stock"), in one or more series, and to fix, as to any such series, the dividend rate, redemption prices, preferences on liquidation or dissolution, sinking fund terms, if any, conversion rights, voting rights, and any other preferences or special rights and qualifications. Shares of Preferred Stock issued by the Board of Directors could be utilized, under certain circumstances, to make an attempt to gain control of the Company more difficult or time consuming. For example, shares of Preferred Stock could be issued with certain rights which might have the effect of diluting the percentage of Common Stock owned by a significant stockholder or issued to purchasers who might side with management in opposing a takeover bid which the Board of Directors determines is not in the best interests of the Company and its stockholders. This provision may be viewed as having possible anti-takeover effects. A takeover transaction frequently affords stockholders the opportunity to sell their shares at a premium over current market prices. The Board of Directors has not authorized any series of Preferred Stock, and there are no agreements, understandings or plans for the issuance of any Preferred Stock. OUTSTANDING WARRANTS The Warrants were issued in June 1, 1997 in connection with the organization of the Company. Each Warrant entitles the holder to purchase one share of Common Stock at an exercise price of $4.50 until June 30, 2002. The Warrants are redeemable by the Company at $.05 upon the occurrence of both of the following events: (a) the listing of the Company's shares of common stock on a securities exchange and (b) the Company's common stock trading in excess of $5.25 per share for a ten day period. The Warrants provide for adjustment of the exercise price and for a change in the number of shares issuable upon exercise to protect holders against dilution in the event of a stock dividend, stock split, combination or reclassification of the Common Stock. The Warrants may be exercised upon surrender of the Warrant Certificate on or prior to the expiration date (or earlier redemption date) of such Warrant at the offices of the Company's transfer agent, with the form of "Election to Purchase" completed and executed as indicated, accompanied by payment of the full exercise price (by certified or bank check, payable to the order of the Company) for the number of shares with respect to which the Warrant is being exercised. Shares issued upon exercise of Warrants and paid for in accordance with the terms of the Warrants will be fully paid and nonassessable. The Warrant holders have been granted registration rights by the Company and the registration statement, of which this Prospectus is part, has been filed with the Securities and Exchange Commission as a result thereof. The costs of filing the registration statement will be borne entirely by the Company. The Warrants do not confer upon the holder thereof any voting or other rights of a stockholder. TRANSFER AGENT StockTrans, Inc., 7 East Lancaster Avenue, Ardmore, Pennsylvania 19003, serves as transfer agent for the Common Stock. SELLING SECURITY HOLDERS The shares of Common Stock of the Company offered by this Prospectus are being sold for the account of the selling security holders identified in the following table (the "Selling Security Holders"). 23 26 The Selling Security Holders are offering for sale an aggregate of 1,000,000 shares of Common Stock issuable upon exercise of the Warrants, as well as 1,969,000 shares of Common Stock previously issued by the Company in certain private placement transactions. The following table sets forth the number of Shares being held of record or beneficially (to the extent known by the Company) by such Selling Security Holders and provides (by footnote reference) any material relationship between the Company and such Selling Security Holder, all of which is based upon information currently available to the Company.
NUMBER OF SHARES OF COMMON NUMBER OF NUMBER OF STOCK SHARES OF SHARES OF PERCENTAGE TO BE SOLD COMMON PERCENTAGE COMMON STOCK BEFORE IN STOCK AFTER NAME BEFORE OFFERING(1) OFFERING(1) OFFERING(1) AFTER OFFERING OFFERING(1) - ---- ------------------- ------------ ------------ --------------- ----------- The D.A.R. Group, Inc.(2)(3)..... 950,000 24.7 % 950,000 -- --% Argaman, Inc..................... 600,000 15.2 300,000 300,000 7.6 Leonard H. Bloom................. 10,000 * 10,000 -- -- Amaury Borges(4)................. 20,000 * 10,000 10,000 * Clifton Capital Corp............. 128,000 3.21 128,000 -- -- Michael J. Cirillo(2)............ 200,000 5.07 200,000 -- -- Dallas Investments, Ltd.(5)...... 125,000 3.17 125,000 -- -- Discretionary Investment Trust dtd 7/7/93..................... 70,000 1.77 70,000 -- -- Brian Due........................ 20,000 * 10,000 10,000 * Elanken Family Trust............. 41,400 1.05 41,400 -- -- Fersam International Ltd.(2)..... 280,000 7.0 260,000 20,000 * Godwin Finance Ltd............... 100,000 2.5 100,000 -- -- I.P. Services, Inc.(2)........... 70,000 1.77 70,000 -- -- Jet Avionics Systems, Inc.(2).... 80,400 2.01 40,000 40,400 1.01 KAB Investments, Inc............. 70,000 1.77 50,000 20,000 * Joseph Laura(2).................. 233,600 5.82 233,600 -- -- Joseph Nelson(6)................. 212,000 5.37 100,000 112,000 2.84 Zvi Moshe(2)(7).................. 20,000 * 10,000 10,000 * Yoram Moussaieff................. 40,000 1.0 20,000 20,000 * Mustang Electronics Affiliated Defined Benefits Pension Plan........................... 20,000 * 10,000 10,000 * Bill Seidel...................... 10,000 * 5,000 5,00 * Joseph Shalhon................... 20,000 * 10,000 10,000 * Bella Shrem...................... 12,000 * 6,000 6,000 * Silvertown International Corp.(2)....................... 279,800 7.1 140,000 139,800 3.5 SPH Equities, Inc................ 60,000 1.52 60,000 -- -- Janet & Robert Weinstein......... 20,000 * 10,000 10,000 *
- --------------- * Less than 1% (1) Including 1,000,000 shares issued upon exercise of all the Warrants. (2) See "Certain Transactions". (3) Shares to be issued upon exercise of Warrants. (4) Mr. Borges is employed as the Senior Account Executive of the Company. (5) Includes 50,000 shares to be issued upon exercise of Warrants. (6) Mr. Nelson is the President of the Company. (7) Mr. Moshe is the President of Silvertown International Corp. Certain of the Selling Security Holders have agreed not to sell their remaining shares of Common Stock for a period of one year from the effective date of the registration statement. 24 27 PLAN OF DISTRIBUTION EXERCISE OF WARRANTS The Company is offering shares of Common Stock issuable upon exercise of Warrants that were previously issued to the holders thereof. The Warrants are exercisable by tendering to the Company the appropriate exercise price along with the Warrant Certificate (with the "Election to Purchase" addendum properly filled out). Upon exercise, the Company will issue such fully paid and non-assessable shares of Common Stock as are specified on the Certificate so tendered and deliver to the holder thereof such additional securities as are required by the terms thereof. Payment of the exercise price shall be made in cash or by certified check or bank draft made payable to the order of the Company. The Warrants may be subject to redemption by the Company. See "DESCRIPTION OF SECURITIES." SELLING SECURITY HOLDERS The Selling Security Holders are offering shares of Common Stock for their own account and not for the account of the Company. The Company will not receive any proceeds from the sale of the shares of Common Stock by the Selling Security Holders. Each Selling Security Holder will, prior to any sales, agree (a) not to effect any offers or sales of the Common Stock in any manner other than as specified in this Prospectus, (b) to inform the Company of any sale of Common Stock at least one business day prior to such sale and (c) not to purchase or induce others to purchase Common Stock in violation of Regulation M under the Exchange Act. The shares of Common Stock may be sold from time to time to purchasers directly by any of the Selling Security Holders acting as principals for their own accounts in one or more transactions in the over-the-counter market or in negotiated transactions at market prices prevailing at the time of sale or at prices otherwise negotiated. Alternatively, the shares of Common Stock may be offered from time to time through agents, brokers, dealers or underwriters designated from time to time, and such agents, brokers, dealers or underwriters may receive compensation in the form of commissions or concessions from the Selling Security Holders or the purchasers of the Common Stock. Under the Exchange Act, and the regulations thereunder, any person engaged in a distribution of the shares of Common Stock of the Company offered by this Prospectus may not simultaneously engage in market making activities with respect to the Common Stock of the Company during the applicable "cooling off" periods prior to the commencement of such distribution. In addition, and without limiting the foregoing, each Selling Security Holder will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder including, without limitation, Rule 15c2-6, and Regulation M, which provisions may limit the timing of purchases and sales of Common Stock by the Selling Security Holder. There are possible limitations upon trading activities and restrictions upon broker-dealers effecting transactions in certain securities which may also materially affect the value of, and an investor's ability to dispose of, the Company's securities. See "RISK FACTORS." The Company will use its best efforts to file, during any period in which offers or sales are being made, one or more post-effective amendments to the Registration Statement, of which this Prospectus is a part, to describe any material information with respect to the plan of distribution not previously disclosed in this Prospectus or any material change to such information in this Prospectus. LEGAL MATTERS The validity of the Common Stock offered hereby will passed upon for the Company by Shapo, Freedman & Bloom, P.A., 200 South Biscayne Boulevard, Suite 4750, Miami, Florida 33131. Leonard H. Bloom, a shareholder of the firm, owns 10,000 shares of Common Stock of the Company. 25 28 EXPERTS The financial statements of the Company for the fiscal year ended August 31, 1997 included in this Prospectus have been audited by Sweeney, Gates & Co., certified public accountants, and are included herein in reliance upon the authority of said firm as experts on accounting and auditing. ADDITIONAL INFORMATION The Company has filed with the Securities and Exchange Commission, a Registration Statement on Form SB-2 with respect to the Common Stock being registered hereby. This Prospectus does not contain all the information contained in such Registration Statement, as permitted by the Rules and Regulations of the Securities and Exchange Commission. The Registration Statement, including exhibits thereto, may be inspected without charge and copies of all or any part thereof may be obtained from the Commission's principal office in Washington, D.C. at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices at 75 Park Place, 14th Floor, New York, New York 10007 and at Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials can be obtained upon written request addressed to the Commission, Public Reference Section 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. For further information with respect to the Company, the Common Stock being registered hereby and the contents of any contract or document referred to herein, reference is made to the Registration Statement and the exhibits filed as a part thereof. 26 29 INDEX TO FINANCIAL STATEMENTS
PAGE ---- Independent Auditors' Report................................ F-2 Balance Sheet, August 31, 1997.............................. F-3 Statement of Income, October 3, 1996 (Date of Inception) to August 31, 1997........................................... F-4 Statement of Changes in Stockholders' Equity................ F-5 Statement of Cash Flows..................................... F-6 Note to Financial Statements................................ F-7
F-1 30 INDEPENDENT AUDITORS' REPORT Stockholders and Board of Directors Jet Aviation Trading, Inc. We have audited the accompanying balance sheet of Jet Aviation Trading, Inc. as of August 31, 1997, and the related statements of income, stockholders' equity, and cash flows for the period from October 3, 1996 (Date of Inception) through August 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Jet Aviation Trading, Inc. as of August 31, 1997, and the results of its operations and cash flows for the period from October 3, 1996 (Date of Inception) through August 31, 1997, in conformity with generally accepted accounting principles. Sweeney, Gates & Co. Fort Lauderdale, Florida October 9, 1997, except as to Note 12 which is as of October 29, 1997 F-2 31 JET AVIATION TRADING, INC. BALANCE SHEET AUGUST 31, 1997 ASSETS Current assets: Cash...................................................... $ 341,660 Accounts receivable, less $93,000 allowance for doubtful accounts............................................... 1,764,119 Inventory................................................. 1,532,333 DC-10 flight simulator held for resale (Note 3)........... 734,421 Deferred tax asset........................................ 23,000 Prepaid expenses and other current assets................. 29,610 ---------- Total current assets.............................. 4,425,143 ---------- Property and equipment, less accumulated depreciation of $8,293.................................................... 88,437 Deferred offering costs..................................... 22,750 Deposit-Boeing.............................................. 25,000 ---------- $4,561,330 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $ 977,706 Accrued expenses.......................................... 144,540 Accrued interest.......................................... 19,611 Income taxes payable...................................... 37,200 ---------- Total current liabilities......................... 1,179,057 ---------- Deferred tax liability...................................... 2,000 ---------- Stockholders' equity: Preferred stock, par value $.10 per share, 3,000,000 shares authorized, and no shares issued and outstanding............................................ -- Common stock, par value $.001 per share; 30,000,000 shares authorized, and 2,996,500 shares issued and outstanding............................................ 2,997 Additional paid-in capital................................ 3,441,317 Retained earnings......................................... 15,959 ---------- 3,460,273 Less: Stockholders' notes receivable (Note 6)............... (80,000) ---------- Total stockholder's equity........................ 3,380,273 ---------- $4,561,330 ==========
The accompanying notes are an integral part of these financial statements. F-3 32 JET AVIATION TRADING, INC. STATEMENT OF INCOME OCTOBER 3, 1996 (DATE OF INCEPTION) TO AUGUST 31, 1997 Sales, net of returns and allowances........................ $6,215,553 Cost of sales............................................... 4,684,864 ---------- Gross profit.............................................. 1,530,689 ---------- Selling, general and administrative expenses................ 1,482,060 ---------- Operating income............................................ 48,629 ---------- Other income (expense): Interest income........................................... $ 21,867 Interest expense.......................................... (38,337) (16,470) -------- ---------- Income before income taxes.................................. 32,159 Income tax expense: Current................................................... 37,200 Deferred.................................................. (21,000) 16,200 -------- ---------- Net Income........................................ $ 15,959 ========== Net Income per share.............................. $ 0.01 ========== Weighted average number of common shares outstanding........ 1,672,968 ==========
The accompanying notes are an integral part of these financial statements. F-4 33 JET AVIATION TRADING, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY OCTOBER 3, 1996 (DATE OF INCEPTION) TO AUGUST 31, 1997
COMMON STOCK ADDITIONAL STOCKHOLDER'S ------------------ PAID-IN RETAINED NOTE SHARES AMOUNT CAPITAL EARNINGS RECEIVABLE TOTAL --------- ------ ---------- -------- ------------- ---------- Issuance of common stock to founding stockholders......... 1,200,000 $1,200 $ 378,800 $ -- $(255,000) $ 125,000 Issuance of common stock in connection with the purchase of equipment and aircraft parts......................... 10,000 10 24,990 -- -- 25,000 Issuance of common stock in connection with private placement..................... 312,000 312 745,997 -- -- 746,309 Issuance of common stock in connection with purchase of DC-10 Simulator held for resale..................... 240,000 240 599,760 -- -- 600,000 Issuance of common stock in connection with debt.......... 14,800 15 36,985 -- -- 37,000 Issuance of common stock to founders of Schuylkill Acquisition Corp. at par value......................... 400,000 400 -- -- -- 400 Issuance of common stock in a private offering by Schuylkill Acquisition Corp. ............ 47,200 47 95,856 -- -- 95,903 Issuance of 1,000,000 warrants...................... -- -- 50,000 -- -- 50,000 Accumulated deficit of Schuylkill Acquisition Corp. adjusted due to merger........ -- -- (35,298) -- -- (35,298) Conversion of $370,000 of notes payable to common stock....... 185,000 185 369,815 -- -- 370,000 Conversion of $200,000 stockholder loan to common stock and payment of $15,000 advisory fee in common stock......................... 107,500 108 214,892 -- -- 215,000 Conversion of $500,000 note payable to common stock....... 250,000 250 499,750 -- -- 500,000 Issuance of common stock for the payment of amounts due to a stockholder and for the purchase of remaining consigned inventory........... 230,000 230 459,770 -- 175,000 635,000 Net Income...................... -- -- -- 15,959 -- 15,959 --------- ------ ---------- ------- --------- ---------- Balance, August 31, 1997........ 2,996,500 $2,997 $3,441,317 $15,959 $ (80,000) $3,380,273 ========= ====== ========== ======= ========= ==========
The accompanying notes are an integral part of these financial statements. F-5 34 JET AVIATION TRADING, INC. STATEMENT OF CASH FLOWS OCTOBER 3, 1996 (DATE OF INCEPTION) TO AUGUST 31, 1997 Cash flows form operating activities: Net income................................................ $ 15,959 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization.......................... 8,293 Allowance for doubtful accounts........................ 93,000 Noncash compensation expense related to warrants....... 50,000 Noncash compensation relating to an advisory fee....... 15,000 Noncash compensation relating to loan origination fee................................................... 37,000 Deferred tax asset, net of deferred tax liability...... (21,000) Change in assets and liabilities: Decrease (increase) in: Accounts receivable.................................. (1,857,119) Inventory (Note 6)................................... (872,333) Cash paid in connection with purchase of DC-10 flight simulator........................................... (134,421) Prepaid expenses and other current assets............ (29,610) Increase (decrease) in: Accounts payable..................................... 977,706 Accrued expenses..................................... 144,541 Accured interest..................................... 19,611 Income tax payable................................... 37,200 ----------- Total adjustments................................. (1,532,132) ----------- Net cash used for operating activities...................... (1,516,173) ----------- Cash flows from investing activities: Deposit--Boeing........................................... (25,000) Purchase of property and equipment........................ (96,730) ----------- Net cash used for investing activities............ (121,730) ----------- Cash flows from financing activities: Deferred offering costs................................... (22,750) Proceeds from stockholder loans, subsequently converted to common stock........................................... 1,195,000 Payments on stockholder loans............................. (125,000) Proceeds from issuance of securities...................... 932,313 ----------- Net cash provided by financing activities......... 1,979,563 ----------- Cash, ending................................................ $ 341,660 =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW: Interest paid............................................. $ 24,103 ----------- Income taxes paid......................................... $ -- ===========
The accompanying notes are an integral part of these financial statements. F-6 35 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION Organization and History -- Schuylkill Acquisition Corp. ("the Company" or "SAC") was incorporated in Florida on May 28, 1997, for the purpose of acquiring by merger the business and operations of Jet Aviation Trading, Inc. ("Old Jet") upon the completion of a stock offering by the Company. On July 28, 1997, the Company acquired 100% of the outstanding common stock of Old Jet in exchange for 1,776,800 shares of common stock of the Company in a one for one stock exchange. Old Jet was incorporated in the state of Florida on October 3, 1996 for the purpose of buying, selling, leasing and exchanging spare parts for fixed-wing commercial jet transport aircraft. Effective July 28, 1997, the Company's name was changed from Schuylkill Acquisition Corp. to Jet Aviation Trading, Inc. Merger and Recapitalization -- The merger was completed on July 28, 1997, whereby SAC acquired 100% of the outstanding common stock of Old Jet in exchange for 1,776,800 shares of common stock of SAC in a one for one stock exchange. The merger has been accounted for as a purchase. The effect of the transaction was a reverse merger, whereas SAC changed its name to Jet Aviation Trading, Inc. and Old Jet became the acquiring entity and accounting survivor. Accordingly, the historical financial statements presented are those of the accounting survivor, Old Jet, and the stockholders' equity of the merged Company was recapitalized to reflect the capital structure of the surviving legal entity and the accumulated deficit of Old Jet at the time of merger. Nature of Business and Credit Policies -- The Company buys, sells, leases and exchanges spare parts for fixed-wing commercial jet transport aircraft. The Company's customers are primarily commercial passenger and cargo operators, original equipment manufacturers and Federal Aviation Administration and Joint Aviation Authority repair stations throughout the world. The Company performs ongoing credit evaluations of its customers' financial condition and extends credit to its customers based upon its evaluations. If creditworthiness is questionable, parts are shipped COD. The allowance for doubtful accounts is based upon the expected collection of accounts receivable. Cash Equivalents -- The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. Revenue and Cost Recognition -- The Company recognizes revenue when parts are shipped to the customer. Amounts paid in advance are recorded as deferred income and recognized in the period in which the parts are shipped. Inventories -- Inventory is stated at the lower of cost or market. Cost of aircraft parts is determined on a specific identification basis. When parts are purchased in lots, the individual parts are expensed at a predetermined percentage of the sales price until the cost of the lot is recovered. Costs to repair, inspect and/or modify the parts are charged to the specific part when incurred. Deferred Offering Costs -- Amounts paid or accrued for costs related to the anticipated public offering will be recorded as a reduction of the proceeds when the offering is completed. If the offering is not completed, the costs will be expensed. Income Taxes -- The Company accounts for income taxes on an asset and liability approach for financial accounting. Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. F-7 36 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) Net Income Per Share -- Net income per common share is computed by dividing net income by the weighted average number of shares outstanding during the period. Warrants issued during the period are not considered dilutive, and therefore, are not included in the computation of net income per share. In February 1997, the Financial Accounting Standards Board issued SFAS 128, "Earnings Per Share". The adoption of SFAS 128 did not have an effect on the computation of earnings per share because the effective date is December 15, 1997, and earlier application is not permitted. Recoverability of Long Lived Assets -- The Company has adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." The Statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The Company is not aware of any events or circumstances which indicate the existence of an impairment which would be material to the Company's financial statements. Financial Instruments -- The carrying amount of cash, accounts receivable, accounts payable and accrued expenses approximates fair value as of August 31, 1997. The carrying value of the stockholder's note receivable at August 31, 1997, approximates fair value. Estimates -- The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates based on management's knowledge and experience. Accordingly, actual results could differ from those estimates. 2. RELATED PARTY TRANSACTIONS CONSIGNMENT AGREEMENT WITH RELATED PARTY The Company entered into a Consignment Agreement (the "Agreement") with a related party, Jet Avionics Systems, Inc. ("Avionics"), effective October 3, 1996, wherein the Company agreed to sell certain consignment inventory of technical spare parts belonging to Avionics and pay Avionics 75% of the sales price collected for the inventory sold. The sales price is the gross sales price less any costs involved if any item of inventory is required to be overhauled, certified or modified in order to be sold. Total consideration to be paid for the inventory under the Agreement was $675,000. Pursuant to such Agreement, the Company sold approximately $452,000 of parts during the year to third parties and Avionics was due $339,000 of this amount. During the year, the Company paid Avionics $36,000 of the amount due. On August 29, 1997, the Company and Avionics entered into a Consignment Cancellation and Purchase Agreement whereby the Company purchased the remaining inventory not sold with a value of approximately $336,000 from Avionics and thereafter paid the balance of $639,000 in exchange for 230,000 shares of the Company's common stock valued at $2.00 per share, the cancellation of $175,000 of indebtedness of Avionics due the Company, and $4,000 in cash. The president and sole stockholder of Avionics was employed by the Company from October 3, 1996 through October 2, 1997. The president and sole stockholder is the daughter of an employee of the Company who served in a non-executive capacity as Vice President of Special Projects. F-8 37 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) OFFICE AND WAREHOUSE FACILITY The Company leases its office and warehouse facility from a company partially owned by a stockholder of the Company under a four year lease expiring December 31, 2000 with two one year options to renew. The monthly rental is $4,609 plus applicable sales tax and pass through of expenses. Rent expense was $29,435 for the period ended August 31, 1997. At August 31, 1997, the Company was obligated under this operating lease arrangement as follows:
YEARS ENDING AUGUST 31, AMOUNT - ----------------------- -------- 1998........................................................ $ 55,308 1999........................................................ 55,308 2000........................................................ 55,308 2001........................................................ 18,436 -------- $184,360 ========
3. PURCHASE OF DC-10 FLIGHT SIMULATOR AND SUPPORT PACKAGE On November 1, 1996, the Company entered into an agreement with a company domiciled in the Netherlands (the "seller" or the "Netherlands Company") to purchase one half (50%) ownership in a DC 10-30 six axis flight simulator and all associated equipment required to operate the flight simulator. The agreement calls for the seller and the Company to equally participate in all revenues generated from the sale, lease or disassembly of the hardware of the flight simulator. The Company paid the seller $125,000 in cash and issued 40,000 shares of the Company's common stock valued at $2.50 per share for the flight simulator The Company intends to sell the flight simulator as a complete package. On March 28, 1997, the Company entered into a second agreement with the seller to purchase one Novoview 2000 Visual System, one package of simulator parts, one maintenance training/procedure manual and one data support package used to support the DC 10-30 flight simulator. The price of the items purchased was $500,000 and the Company paid for the items by issuing 200,000 shares of its common stock at $2.50 per share. The Company will receive 100% of the revenues generated from the sale of these items. The interest in the simulator, related items and freight costs are reflected in the accompanying balance sheet as DC-10 flight simulator totaling $734,421. This Netherlands Company is also a purchaser and supplier of spare parts from and to the Company. During the year ended August 31, 1997, the Netherlands Company purchased spare parts totaling $82,775 from the Company, and sold $183,331 of spare parts to the Company in addition to the DC 10-30 flight simulator. At August 31, 1997, the Company was owed $1,375 by the Netherlands Company and the Company owed the Netherlands Company $47,750. Additionally, the Netherlands Company held $22,400 of the Company's inventory in their warehouse at August 31, 1997. F-9 38 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) 4. PROPERTY AND EQUIPMENT Property and equipment consisted of the following at August 31, 1997: Furniture and fixtures...................................... $28,715 Computer equipment.......................................... 27,068 Leasehold improvements...................................... 30,443 Software.................................................... 10,504 ------- 96,730 Less: Accumulated depreciation.............................. (8,293) ------- $88,437 =======
Property and equipment is depreciated on a straight-line basis with useful lives ranging from 5 to 7 years. Depreciation expense for the period was $8,293. 5. CAPITAL STOCK PREFERRED STOCK Within the limits and restrictions contained in the Certificate of Incorporation, the Board of Directors has the authority, without further action by the stockholders, to issue up to 3,000,000 shares of Preferred Stock, $.10 par value per share, in one or more series, and to fix, as to any such series, the dividend rate, redemption prices, preferences on liquidation or dissolution, sinking fund terms, if any, conversion rights, voting rights, and any other preferences or special rights and qualifications. COMMON STOCK Founders' shares totaling 400,000 common shares were issued on May 28, 1997, to four entities for par value of $.001. Net proceeds from the issuance of founders' shares was $400. During 1997, the Company sold 47,200 shares of common stock for $2.50 per share resulting in total proceeds of $118,000. Deferred offering costs of $22,098 have been reflected as a reduction of the proceeds of the private placement offering. On July 17, 1997, the Company issued 1,776,800 shares of common stock to acquire 100% of the outstanding common stock of Jet Aviation in a 1 for 1 stock exchange. WARRANTS On June 1, 1997, 1,000,000 warrants were issued in connection with the organization of Schuylkill Acquisition Corp. to related parties for an advisory fee. The Company has reserved 1,000,000 shares of its common stock for exercise of the warrants. Each warrant entitles the holder to purchase one share of common stock at an exercise price of $4.50 until June 30, 2002. The warrants are redeemable by the Company at $.05 upon the occurrence of both of the following events: (a) the listing of the Company's shares of common stock on a securities exchange, and (b) the Company's common stock is trading in excess of $5.25 per share for a ten day period. The Company has adopted SFAS No. 123, Accounting for Stock-Based Compensation, for non-employee stock compensation. Accordingly, the warrants referred to above have been valued at $.05 per warrant and expensed. F-10 39 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) CONVERSION OF DEBT During October and November, 1996, an affiliate of a stockholder loaned the Company $325,000. The loans were payable on demand and did not bear a stated interest rate. During the year $125,000 was repaid. On August 29, 1997, the Company converted $200,000 of the loan to 100,000 shares of common stock at $2.00 per share. On March 27 and May 12, 1997, the Company borrowed $370,000 from a stockholder and entered into two short term notes payable, bearing interest at 6% per annum. One of the notes was extended on June 19, 1997, and interest was increased to 10% per annum. On August 29, 1997, the Company and stockholder converted the notes payable to 185,000 shares of common stock at $2.00 per share and the Company paid the interest accrued on the short term notes payable through that date. On May 23, 1997, prior to the merger, Schuylkill Acquisition Corp. borrowed $500,000 from a stockholder, evidence by a promissory note bearing interest at 12%. On August 29, 1997, the promissory note was converted to 250,000 shares of common stock at $2.00 per share, and the Company paid the accrued interest through that date. COMMON STOCK TRANSACTIONS OF JET AVIATION TRADING, INC. (OLD JET) PRIOR TO MERGER On October 3, 1996, Old Jet sold 408,000 founders' shares of common stock for total proceeds of $125,000. Effective October 1, 1996, Old Jet issued 600,000 shares of the Old Jet's common stock for a $175,000 note bearing interest of 6% to Avionics. Further, effective November 1, 1996, Old Jet issued 192,000 shares of common stock to its President for a $80,000 note bearing interest of 6%. See Note 2 and Note 6. On October 22, 1996, Old Jet issued 10,000 shares valued at $2.50 per share in partial payment of the purchase of equipment and aircraft parts totaling $50,000. On January 22, 1997, Old Jet issued 40,000 shares of Old Jet's common stock in partial payment for the purchase of a DC-10 flight simulator. See Note 3. Also, on January 22, 1997, and June 2, 1997, Old Jet issued 312,000 shares of common stock in private placement transactions. Net proceeds from the private placement totaled $746,309, after giving effect to $33,691 in offering costs. On March 31, 1997, Old Jet issued 200,000 shares of common stock valued at $2.50 per share in connection with the purchase of a DC-10 flight simulator support package. See Note 3. On April 4, 1997, and May 12, 1997, Old Jet issued a total of 14,800 shares valued at $2.50 per share, for a total of $37,000, to a stockholder as additional incentive for providing stockholder loans. The expense has been recorded as debt issue costs. 6. STOCKHOLDERS' NOTES RECEIVABLE Stockholders' notes receivable relate to the issuance of Old Jet's common stock as follows: - Effective October 1, 1996, Old Jet issued 600,000 shares of common stock to Avionics for a $175,000 note bearing interest at 6%. The note was canceled in partial payment of the amounts due under the Consignment Cancellation and Purchase Agreement. See Note 2. - On November 1, 1996, Old Jet issued 192,000 shares of common stock to its president for an $80,000 note bearing interest at 6%. Should the president earn bonuses per his employment contract, one half of the bonuses in excess of $25,000 earned annually, may be applied to the outstanding note balance. The note is due on demand and is unsecured. F-11 40 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) 7. INCOME TAXES The income tax provision was comprised of the following at August 31, 1997: Current: Federal................................................... $ 30,500 State..................................................... 6,700 Deferred: Federal................................................... (16,700) State..................................................... (4,300) -------- Income tax provision........................................ $ 16,200 ========
A reconciliation between the statutory rate and the effective rate is as follows for the year ended August 31, 1997: Federal statutory tax rate.................................. 34.0% State statutory rate, net of federal benefit................ 3.6 Permanent difference and other.............................. 12.8 ---- Effective tax rate.......................................... 50.4% ====
Significant components of the Company's deferred tax assets and liabilities, computed using currently enacted tax rates, are as follows at August 31, 1997: Current items: Assets: Allowances for doubtful accounts which are currently nondeductible......................................... $23,000 ------- Net current deferred tax assets............................. $23,000 ======= Long-term items: Property and equipment principally due to the use of accelerated depreciation for tax purposes.............. $(2,000) ------- Net long-term deferred tax liabilities...................... $(2,000) =======
8. COMMITMENTS AND CONTINGENCIES EMPLOYMENT AGREEMENT Effective November 1, 1996, Old Jet entered into an employment contract with its president for a three year period and the agreement automatically extends on a month to month basis thereafter. Base compensation is $160,000 per year, plus 3% of the pretax net income of the Company. The agreement also calls for one half of the bonus in excess of $25,000 earned annually by the president to be applied to reduce the outstanding balance of the president's obligation under his promissory note given to Old Jet for his stock. See Note 6. Effective October 3, 1996, Old Jet entered into an employment contract with an individual who is an affiliate of Avionics as an employee for a three year period. Base compensation is $120,000 per year, plus a bonus determined by the Board of Directors. On October 2, 1997, the Company and the employee mutually agreed to the termination of said employment agreement dated October 3, 1996. The Company and individual have entered into a Consulting Agreement on October 3, 1997, for a twelve month period ending October 2, 1998. Base compensation is $4,000 per month, plus a commission of 15% of the collected purchase price of sales, and 15% of the purchase price of material for resale which the individual introduces to the Company. F-12 41 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) 9. SALES TO MAJOR CUSTOMERS The Company sells, leases and exchanges spare parts for fixed-wing commercial jet transport aircraft to foreign and domestic customers. The information with respect to revenue, by geographic area, is presented in the table below for the period from October 3, 1997 (inception) through August 31, 1997. United States............................................... $3,559,585 Africa and Middle East...................................... 36,119 Europe...................................................... 938,896 Latin America............................................... 25,140 Asia........................................................ 1,655,813 ---------- Total............................................. $6,215,553 ==========
One Asian customer accounted for 20% of the Company's sales in fiscal 1997. 10. SUPPLEMENTAL NON-CASH FLOW INFORMATION During the year the Company purchased equipment and aircraft parts with a value of $50,000 by issuing 10,000 shares of common stock at $2.50 per share and paying the remainder in cash. As part of the purchase of the DC-10 flight simulator and support package for $734,421, the Company issued 240,000 shares of common stock at $2.50 per share and paid the remainder in cash. As part of its cost of borrowing money during the year the Company issued 14,800 shares of common stock valued at $2.50 per share to a stockholder of the Company. On August 29, 1997, the Company issued 230,000 shares of common stock valued at $2.00 per share, canceled a $175,000 note due to the Company by Avionics and paid $4,000 in cash in satisfaction of a $303,000 debt due Avionics and the purchase of the remaining consigned inventory valued at $336,000. On August 29, 1997, the Company converted four notes payable totaling $1,070,000 by issuing 535,000 shares of common stock at a value of $2.00 per share. On August 29, 1997, the Company paid $15,000 as an advisory fee to a related party by issuing 7,500 shares of common stock at a value of $2.00 per share. 11. CONCENTRATION OF CREDIT RISK INVOLVING CASH During the year, the Company maintained cash balances in excess of the Federally insured limits. The Company maintained the balances in four banks, one of which is a major money center bank. Three of the banks are Federally insured. A fourth bank, Israel Discount Bank Limited is a major international bank and operates in the United States under the Edge Act, but is not Federally insured. At August 31, 1997, the Company had balances under $100,000 in the three Federally insured banks, but maintained a balance of $264,550 in Israel Discount Bank Limited. However, the Company does not believe a significant risk existed in having the balance with Israel Discount Bank Limited. F-13 42 JET AVIATION TRADING, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) 12. SUBSEQUENT EVENTS On October 29, 1997, the Board of Directors adopted a Stock Option Plan (the "Plan") effective September 1, 1997. This Plan provides for the grant to employees selected by the Board of Directors, or Compensation Committee, of incentive stock options, non-qualified stock options and stock appreciation rights in the aggregate not exceeding 750,000 shares. The Plan also sets forth applicable rules and regulations for stock options granted to non-employee directors. The Board of Directors authorized the issuance of 74,500 stock options. The Plan is subject to stockholder approval and will be submitted to the stockholders at the Company's annual meeting in 1998. F-14 43 ====================================================== NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE CIRCUMSTANCES OF THE COMPANY OR THE FACTS HEREIN SET FORTH SINCE THE DATE HEREOF. --------------------- TABLE OF CONTENTS
PAGE ---- Prospectus Summary.................... 3 The Company........................... 3 The Offering.......................... 3 Selected Financial Information........ 5 Risk Factors.......................... 6 Dilution.............................. 9 Use of Proceeds....................... 9 Market Price of the Common Stock...... 10 Management's Discussion and Analysis of Financial Condition and Results of Operation........................ 11 Business.............................. 13 Management............................ 19 Principal Stockholders................ 20 Certain Transactions.................. 21 Description of Securities............. 22 Selling Security Holders.............. 23 Plan of Distribution.................. 25 Legal Matters......................... 25 Experts............................... 26 Additional Information................ 26 Financial Statements.................. F-1
--------------------- UNTIL , 1998 (90 DAYS AFTER THE DATE OF THE PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. ====================================================== ====================================================== 1,000,000 SHARES OF COMMON STOCK OFFERED BY THE COMPANY PURSUANT TO OUTSTANDING WARRANTS --------------------- 1,000,000 SHARES OF COMMON STOCK OFFERED BY CERTAIN SELLING SECURITY HOLDERS UPON EXERCISE OF OUTSTANDING WARRANTS --------------------- 1,969,000 SHARES OF COMMON STOCK OFFERED BY CERTAIN SELLING SECURITY HOLDERS JET AVIATION TRADING, INC. ----------------- PROSPECTUS ----------------- , 1997 ====================================================== 44 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Pursuant to Section 607.0850 of the Florida Business Corporation Act, the Company has the power to indemnify directors, officers, employees or agents. The Company's Articles of Incorporation [and Bylaws provide for indemnification of directors and officers. In addition, the Company's executive officers and directors have entered into agreements with the Company which also indemnifies them for certain acts and omissions. ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses in connection with the issuance of the securities being registered are as follows: SEC Registration Fee........................................ $ 4,049 Printing Expenses........................................... 20,000 Accounting Fees and Expenses................................ 15,000 Legal Fees and Expenses..................................... 30,000 Blue Sky Fees and Expenses.................................. 10,000 Transfer Agent and Registrar Fees and Expenses.............. 5,000 Miscellaneous............................................... 16,000 -------- Total............................................. $100,049 ========
- --------------- All amounts, except the SEC registration fee, are estimated. ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES. The following table sets forth the Company's sales of unregistered securities.
NUMBER OF SHARES OF COMMON STOCK DATE SOLD PURCHASER CONSIDERATION - -------------------------------- --------- --------- -------------- 600,000 ......................... 10/1/96 Jet Avionics Systems, Inc.(1) $ 175,000(note) 128,000 ......................... 10/3/96 Clifton Capital Corp.(1) $ 39,216 80,000 ......................... 10/3/96 IP Services, Inc.(1) $ 24,510 70,000 ......................... 10/3/96 Discretionary Investment Trust(1) $ 21,446 70,000 ......................... 10/3/96 K.A.B. Investments(1) $ 21,446 60,000 ......................... 10/3/96 S.P.H. Equities(1) $ 18,382 192,000 ......................... 11/1/96 Joseph Nelson(1) $ 80,000(note) 10,000 ......................... 12/31/96 Bill Seidel(2) inventory 20,000 ......................... 1/22/97 Joseph J. Nelson(2) $ 50,000 20,000 ......................... 2/7/97 Brian Due(3) $ 50,000 20,000 ......................... 2/7/97 Amaury Borges(3) $ 50,000 80,000 ......................... 2/7/97 Silvertown International Corp.(3) $ 200,000 20,000 ......................... 2/7/97 Zvi Moshe(3) $ 50,000 20,000 ......................... 2/7/97 Fersam International Ltd.(3) $ 50,000 20,000 ......................... 2/7/97 Janet & Robert Weinstein(3) $ 50,000 12,000 ......................... 3/6/97 Bella Shrem(3) $ 30,000 20,000 ......................... 3/6/97 Joseph Shalhon(3) $ 50,000 20,000 ......................... 2/27/97 Mustang Electronics, Inc. Affiliated Defined Benefits Pension Plan(3) $ 50,000 40,000 ......................... 3/14/97 Fersam International Ltd.(2) inventory 40,000 ......................... 3/17/97 Yoram Moussaieff(3) $ 100,000 200,000 ......................... 3/28/97 Fersam International Ltd.(2) inventory 200,000 ......................... 5/30/97 The D.A.R. Group, Inc.(1) $ 200
II-1 45
NUMBER OF SHARES OF COMMON STOCK DATE SOLD PURCHASER CONSIDERATION - -------------------------------- --------- --------- -------------- 75,000 ......................... 5/30/97 Dallas Investments, Ltd.(1) $ 75 100,000 ......................... 5/30/97 Godwin Finance Ltd.(1) $ 100 25,000 ......................... 5/30/97 Joseph Laura(1) $ 25 20,000 ......................... 6/2/97 Fersam International Ltd.(2) $ 50,000 14,800 ......................... 6/2/97 Silvertown International Corp.(2) fee 400 ......................... 6/26/97 Adler, Bruce/Dorothy(4) $ 1,000 400 ......................... 6/28/97 Aiello, Alfonso(4) $ 1,000 400 ......................... 7/2/97 Aldorasi, Michael/Tina(4) $ 1,000 400 ......................... 6/28/97 Askin, Joseph(4) $ 1,000 200 ......................... 7/1/97 Baerga, Carol(4) $ 500 400 ......................... 7/2/97 Balletto, Robert(4) $ 1,000 400 ......................... 6/28/97 Blumer, Jeffrey I.(4) $ 1,000 400 ......................... 6/25/97 Brigante, Gennaro(4) $ 1,000 400 ......................... 7/2/97 Burke, Michael B.(4) $ 1,000 500 ......................... 6/26/97 Cappucci, Edward Vincent(4) $ 1,250 500 ......................... 6/26/97 Cappucci, Marianne Joy(4) $ 1,250 400 ......................... 7/1/97 Carlson, Robin(4) $ 1,000 400 ......................... 6/28/97 Casazza, James T.(4) $ 1,000 500 ......................... 7/1/97 Costa, Joanne(4) $ 1,250 400 ......................... 7/1/97 Coyle, Tom(4) $ 1,000 400 ......................... 7/1/97 Coyle, Robert(4) $ 1,000 1,000 ......................... 6/25/97 Cucchiari-Palmieri, Annette(4) $ 2,500 400 ......................... 7/2/97 Cuzzocrea, Joseph(4) $ 1,000 400 ......................... 6/27/97 Daly, Bill(4) $ 1,000 400 ......................... 6/26/97 Damiano, John A.(4) $ 1,000 400 ......................... 7/2/97 D'Amica, Palmina(4) $ 1,000 400 ......................... 6/28/97 Delicious Desserts, Inc.(4) $ 1,000 400 ......................... 7/1/97 DeMartino, Jerome(4) $ 1,000 400 ......................... 6/30/97 DeVito, Donato J.(4) $ 1,000 1,000 ......................... 6/25/97 DiCarlo, Rosemary(4) $ 2,500 400 ......................... 7/2/97 Dini, Constance(4) $ 1,000 400 ......................... 7/1/97 Fallon, Robert & Ann(4) $ 1,000 100 ......................... 7/1/97 Finn, Robert(4) $ 250 400 ......................... 7/2/97 Fogliano, Christine(4) $ 1,000 400 ......................... 6/27/97 Fogliano, Frank(4) $ 1,000 400 ......................... 6/27/97 Fogliano, Daniel F.(4) $ 1,000 400 ......................... 6/28/97 Fogliano, Jr., Nicholas(4) $ 1,000 400 ......................... 6/28/97 Furci, Joseph N.(4) $ 1,000 400 ......................... 6/28/97 Fusco, Joseph(4) $ 1,000 400 ......................... 6/28/97 Fusco, Joseph & Rose(4) $ 1,000 400 ......................... 6/28/97 Fusco, Rose A.(4) $ 1,000 400 ......................... 6/28/97 Genovese, Carmine(4) $ 1,000 400 ......................... 6/28/97 Genovese, Carmela(4) $ 1,000 400 ......................... 6/27/97 Giammarino, Thomas & June(4) $ 1,000 400 ......................... 6/28/97 I-Yell-O-Foods(4) $ 1,000 400 ......................... 7/1/97 Gil, Michele R.(4) $ 1,000 800 ......................... 6/25/97 Greco, Gary(4) $ 2,000 1,000 ......................... 6/25/97 Gullery, Judith(4) $ 2,500 400 ......................... 6/27/97 Hanlon, Theresa(4) $ 1,000 400 ......................... 7/2/97 Hinz, Brian(4) $ 1,000 400 ......................... 7/2/97 Honan, Brian(4) $ 1,000
II-2 46
NUMBER OF SHARES OF COMMON STOCK DATE SOLD PURCHASER CONSIDERATION - -------------------------------- --------- --------- -------------- 400 ......................... 7/2/97 Ianiello, Christopher(4) $ 1,000 400 ......................... 7/2/97 Ianiello, Michael J.(4) $ 1,000 400 ......................... 7/2/97 Johnsen, Bendik C.(4) $ 1,000 400 ......................... 7/2/97 Johnsen, Joan(4) $ 1,000 400 ......................... 7/2/97 Johnsen, Kelly(4) $ 1,000 400 ......................... 7/2/97 Johnsen, Maureen(4) $ 1,000 400 ......................... 7/2/97 Johnsen, Robert(4) $ 1,000 400 ......................... 7/2/97 Johnsen, Robert & Joan(4) $ 1,000 400 ......................... 7/2/97 Johnsen Jr., Robert E.(4) $ 1,000 400 ......................... 7/1/97 Kilgannon, Thomas(4) $ 1,000 400 ......................... 6/28/97 Marino, Paul(4) $ 1,000 400 ......................... 7/1/97 Mayr, Laura(4) $ 1,000 400 ......................... 7/1/97 McNee, Donald & Julie(4) $ 1,000 500 ......................... 7/1/97 Millington, Cheryl A.(4) $ 1,250 400 ......................... 7/2/97 Modafferi, James S.(4) $ 1,000 300 ......................... 7/1/97 Montalto, Dorothy M.(4) $ 750 300 ......................... 7/1/97 Morisano, Maria(4) $ 750 400 ......................... 6/25/97 Paolino, Frank(4) $ 1,000 800 ......................... 6/30/97 Paolino, Linda(4) $ 2,000 1,200 ......................... 6/25/97 Paolini, Stephen A.(4) $ 3,000 300 ......................... 7/1/97 Parisi, Dawn(4) $ 750 500 ......................... 7/1/97 Parisi, Lucille(4) $ 1,250 300 ......................... 7/1/97 Parisi, Neil(4) $ 750 200 ......................... 7/1/97 Parisi, Vincent(4) $ 500 300 ......................... 7/1/97 Parisi c/f, Vincent & Parisi, Vincent Anthony(4) $ 750 500 ......................... 7/1/97 Parisi, Vincent(4) $ 1,250 300 ......................... 7/1/97 Parisi c/f, Dawn & Danielle(4) $ 750 200 ......................... 7/1/97 Parisi c/f, Neil & Anniello(4) $ 500 300 ......................... 7/1/97 Parisi c/f, Dawn & Parisi Jr., Vincent(4) $ 750 500 ......................... 7/1/97 Petillo, Dolores(4) $ 1,250 500 ......................... 7/1/97 Petillo c/f, Dolores & Costa, Joseph A.(4) $ 1,250 400 ......................... 7/2/97 Picciano, Georgene(4) $ 1,000 400 ......................... 7/2/97 Puccio, Jr., David & Puccio, Kathleen(4) $ 1,000 4,000 ......................... 7/1/97 R.P. Capital Growth, L.P.(4) $ 10,000 400 ......................... 7/2/97 Raffelo, Carrie(4) $ 1,000 400 ......................... 7/1/97 Ramdharie, Tagewattie(4) $ 1,000 200 ......................... 7/1/97 Ravanos, Lisbeth(4) $ 500 400 ......................... 6/25/97 Ricciotti, James M.(4) $ 1,000 400 ......................... 6/28/97 Santo, William R.(4) $ 1,000 400 ......................... 6/26/97 Santo, Jr., Frank J.(4) $ 1,000 600 ......................... 6/26/97 Santore, Gina M.(4) $ 1,500 400 ......................... 6/28/97 Sblendorio, Dominick & Sblendorio, Sarah(4) $ 1,000 400 ......................... 6/28/97 Sblendorio, Dominick(4) $ 1,000 400 ......................... 7/2/97 Sole, Linda(4) $ 1,000 400 ......................... 7/2/97 Strommen, Cindy(4) $ 1,000
II-3 47 200 ............................... 7/1/97 Tomasino c/f, Domineck & Tomasino, Christie(4) $ 500 1,000 ............................... 6/25/97 Vaccaro, Christopher(4) $ 2,500 1,000 ............................... 6/25/97 Vaccaro, Catherine(4) $ 2,500 1,000 ............................... 6/25/97 Vaccaro, Elicia(4) $ 2,500 1,000 ............................... 6/25/97 Vaccaro, Thomas(4) $ 2,500 400 ............................... 6/26/97 Winkler, John(4) $ 1,000 100,000 ............................... 8/29/97 FAC Enterprises, Inc.(4) $ 200,000 7,500 ............................... 8/29/97 FAC Enterprises, Inc.(4) fee 150,000 ............................... 8/29/97 Jet Avionics Systems, Inc.(4) $ 300,000 80,000 ............................... 8/29/97 Jet Avionics Systems, Inc.(2) inventory 250,000 ............................... 8/29/97 Joseph Laura(2) $ 500,000 185,000 ............................... 8/29/97 Silvertown International Corp.(2) $ 370,000 NUMBER OF WARRANTS - ------------------------------------------- 950,000 ............................... 6/1/97 The D.A.R. Group services 50,000 ............................... 6/1/97 Dallas Investment Groupd services
- --------------- (1) Founder's shares (2) Sold in reliance upon Section 4(2) of the Act (3) Sold in reliance upon Rule 506/Regulation D and/or 4(2) (4) Sold in reliance upon Rule 504/Regulation D No Commissions or other remuneration was paid in connection with the above described sales of Common Stock. ITEM 27. EXHIBITS. 2.1 -- Agreement and Plan of Reorganization dated July 15, 1997 2.2 -- Articles of Merger 3.1 -- Articles of Incorporation 3.2 -- Amendment to Articles of Incorporation 3.3 -- Amended -- By-Laws 4.1 -- Form of Warrant 5.1 -- Opinion of Shapo, Freedman & Bloom, P.A. (to be provided by amendment) 10.1 -- Employment Agreement with Joseph J. Nelson 10.2 -- Business Lease 10.3 -- Consignment Agreement with Jet Avionics Systems, Inc. 10.4 -- Consignment, Cancellation and Purchase Agreement with Jet Avionics Systems, Inc. 10.5 -- Stock Option Plan 10.6 -- Form of Indemnity Agreement with directors and officers. 23.1 -- Consent of Shapo, Freedman & Bloom, P.A. (included in Exhibit 5.1) 23.2 -- Consent of Sweeney, Gates & Co., independent certified public accountants, contained in Part II of the registration statement.
II-4 48 ITEM 28. UNDERTAKING. The undersigned registrant hereby undertakes that it will: (1) File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to: (i) Include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b), if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) Include any additional or changed material information on the plan of distribution. (2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering. (3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling person of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the undersigned of expenses incurred or paid by a director, officer or controlling persons of the undersigned in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the undersigned will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-5 49 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement on Form SB-2 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Miami, State of Florida, on the 12th day of November, 1997. JET AVIATION TRADING, INC. By: JOSEPH J. NELSON ------------------------------------ Joseph J. Nelson President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacity and on the dates indicated:
SIGNATURE TITLE DATE --------- ----- ---- JOSEPH J. NELSON President and Chief November 12, 1997 - ----------------------------------------------------- Executive Officer, Joseph J. Nelson Director JOSEPH F. JANUSZ Vice President and Chief November 12, 1997 - ----------------------------------------------------- Financial Officer Joseph F. Janusz MICHAEL J. CIRILLO Director November 12, 1997 - ----------------------------------------------------- Michael J. Cirillo THEODORE H. GREGOR Director November 12, 1997 - ----------------------------------------------------- Theodore H. Gregor
II-6 EX-2.1 2 PLAN OF MERGER 7/15/97 1 Exhibit 2.1 AGREEMENT AND PLAN OF REORGANIZATION AGREEMENT AND PLAN OF REORGANIZATION, dated July 15 1997, by and between JET AVIATION TRADING, INC., a Florida corporation ("Jet") and SCHUYLKILL ACQUISITION CORPORATION, a Florida corporation ("SAC"). Jet and SAC are sometimes hereinafter referred to as the "Constituent Corporation." WHEREAS, the Board of Directors of SAC has determined that it is in the best interests of SAC and its stockholders to acquire Jet through a merger of Jet with and into SAC (the "Merger"), all in accordance with the terms and conditions of this Agreement; and WHEREAS, the Board of Directors of Jet believes that the Merger is in the best interests of its stockholders on the date hereof (the "Jet Stockholders"). NOW THEREFORE, in consideration of the foregoing premises and the mutual representations, warranties, covenants and agreements contained herein, the parties agree as follows: ARTICLE I PLAN OF MERGER 1.1 THE MERGER. Upon the terms and subject to the conditions of this Agreement and in accordance with the Business Corporation Act of the State of Florida, as amended (the "BCA"), as of the Effective Time (as defined in Section 1.2), (a) Jet shall be merged with and into SAC, (b) the separate existence of Jet shall thereupon cease and (c) SAC, as the surviving corporation in the Merger (the "Surviving Corporation"), shall continue its corporate existence under the laws of the State of Florida. 1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become effective immediately upon the filing of the Articles of Merger, in the form attached hereto as Exhibit "A" (the "Articles of Merger"), to be executed, acknowledged and filed with the Secretary of State of the State of Florida (the "Florida Secretary") as provided in the BCA. The date and time of such filing is herein sometimes referred to as the "Effective Time." 1.3 EFFECT OF THE MERGER. At the Effective Time, the Constituent Corporations shall become a single corporation, and the Surviving Corporation shall thereupon and thereafter posses all of the rights, privileges, immunities, powers, franchises and authority of a public and private nature, and be subject to all of the restrictions, disabilities and duties, of each of the Constituent Corporations. The Surviving Corporation shall be vested with all the rights, privileges, immunities, powers, franchises and authority of each of the Constituent Corporations, and all assets and property of every description, real, personal and mixed, and every interest therein, wherever located, and all debts or other obligations belonging or due to either of the Constituent Corporations on whatever account, as well as stock subscriptions and all other things in action or belonging to each of the Constituent Corporations. 2 1.4 ARTICLES OF INCORPORATION AND BY-LAWS. At the Effective Time, the Articles of Incorporation of SAC, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation until thereafter amended in accordance with applicable law and such Articles of Incorporation. The By-Laws of SAC shall be the By-Laws of the Surviving Corporation until thereafter amended in accordance with applicable law and such By-Laws. 1.5 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. At the Effective Time, the initial officers and directors of the Surviving Corporation will be as set forth on Exhibit "B". 1.6 JET STOCKHOLDER APPROVAL. Jet will take all action necessary in accordance with the BCA and any other applicable law or regulation, and with its Articles of Incorporation and By-Laws, to solicit the written consent of its stockholders or to convene a meeting of its stockholders, to be held as soon as practicable, to consider and vote upon this Agreement and the transactions contemplated hereby. Jet shall use its best efforts to obtain such stockholder approval. 1.7 FURTHER ACTION. If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement or to vest the Surviving Corporation with the full right, title and possession to all assets, property, rights, privileges, immunities, powers and franchises of either or both of the Constituent Corporations, the officers and directors of the Surviving Corporation are fully authorized in the name of either or both of the Constituent Corporation or otherwise to take all such action. 1.8 CLOSING. Consummation of the transactions contemplated by this Agreement (the "Closing") will take place at the offices of Bloom & Warfman, P.A., 1101 Brickell Avenue, Suite 1400, Miami, FL 33131, at such time and date which is as soon as practicable after the satisfaction of the conditions set forth in Article VI and in any event which is no later than two business days after satisfaction or waiver of such conditions (the "Closing Date"). At the Closing, SAC and Jet will each carry out the procedures specified under the applicable provisions of the BCA, including duly executing and filing the Articles of Merger with the Florida Secretary, to the end that the Merger shall become effective. 1.9 ACCOUNTING TREATMENT. The parties understand that the Merger will be accounted for as a purchase in accordance with generally accepted accounting principals. 1.10 NAME. The name of the Surviving Corporation shall be Jet Aviation Trading, Inc. 1.11 PRINCIPAL PLACE OF BUSINESS. The principal place of business of the Surviving Corporation shall be 15675 Northwest 15th Avenue, Miami, Florida 33169. 2 3 ARTICLE II CONVERSION OF SHARES; DISSENTING SHARES; EXCHANGE OF SHARES 2.1 CONVERSION OF JET SHARES. (a) At the Effective Time, each then outstanding share of common stock of Jet (the "Jet Common Stock") (other than Dissenting Shares as defined in Section 2.4) shall cease to be an existing and issued share by virtue of the Merger and without any action on the part of SAC, Jet or the holder thereof shall be canceled in exchange for one share of common stock of SAC (the "SAC Common Stock"). (b) All shares of Jet Common Stock (the "Jet Shares") or other securities held in the treasury of Jet immediately prior to the Effective Time, shall be canceled and cease to exist at and after the Effective Time, and no consideration shall be paid with respect thereto. 2.2 CLOSING OF JET TRANSFER BOOKS. At and after the Effective Time, holders of certificates representing Jet Shares shall cease to have any rights as stockholders of Jet, the stock transfer books of Jet shall be closed with respect to Jet Shares issued and outstanding immediately prior to the Effective Time, and no further transfer of such shares shall thereafter be made on such stock transfer books. If, after the Effective Time, valid certificates previously representing such shares are presented to the Surviving Corporation, they shall be exchanged as provided in Section 2.3. 2.3 EXCHANGE OF CERTIFICATES. Jet or SAC shall transmit to the holders of the Jet Shares (the "Recipient Holders") appropriate documents, including a form of transmittal letter substantially as attached hereto as Exhibit "C" (the "Transmittal Letter"), to be used by them to surrender their certificates representing Jet Shares in exchange for SAC Common Stock certificates (collectively, the "Merger Consideration"), in each case to the extent provided in Section 2.1 hereof. Until so surrendered and exchanged, each certificate for Jet Shares held by Recipient Holders, shall represent solely the right to receive the Merger Consideration into which the Jet Shares it theretofore represented shall have been converted pursuant to Section 2.1 (or to perfect the holder thereof's right to receive payment for such shares pursuant to Section 607.1301 et. seq. of the BCA and Section 2.4 hereof); provide however, that customary and appropriate certifications and indemnities allowing exchange against lost or destroyed certificates shall be provided; and provided further that nothing in this Section 2.3 shall require SAC to deliver its Common Stock to any Recipient Holder who shall fail to surrender a certificate representing such shares (or the certification and indemnities relating to a lost certificate) together with a Transmittal Letter duly completed and executed by such Recipient Holder. 2.4 DISSENTING SHARES. Notwithstanding anything in this Agreement to the contrary, Jet Shares that are issued and outstanding immediately prior to the Effective Time and that are held by stockholders who have not voted such shares in favor of the Merger and who have delivered a written demand for appraisal of such shares in the manner and at the time provided in Section 607.1301, et. seq. of the BCA ("Dissenting Shares") shall not be canceled without consideration or canceled and converted into shares of SAC Common Stock unless and until such holder shall have failed to perfect 3 4 or shall have effectively withdrawn or lost, such holder's appraisal rights under the BCA. If such holder shall have so failed to perfect, or shall have effectively withdrawn or lost such rights, such holder's Shares shall thereupon be deemed to have been canceled or converted as described in Section 2.1 at the Effective Time, and each such share held by a Recipient Holder shall represent solely the right to receive the shares of SAC Common Stock into which the Jet Shares it theretofore constituted shall have been converted pursuant to Section 2.1. From and after the Effective Time, no stockholder who has demanded the appraisal of shares as provided in Section 607.1301 et. seq., of the BCA shall be entitled to vote such holder's shares for any purpose or to receive payment of dividends or other distributions with respect to such holder's shares (except dividends and other distributions payable to stockholders of record at a date which is prior to the Effective Time). Such stockholders who have demanded the appraisal of shares shall only be entitled to receive consideration as provided in Section 607.1301 et. seq., of the BCA. 2.5 INVESTMENT INTENT. The SAC Shares have not been registered under the Securities Act of 1933, as amended (the "Act"), and may not be resold unless the Shares are registered under the Act or an exemption from such registration is available. Each certificate representing the SAC Shares will have a legend thereon incorporating language as follows: "The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"). The shares have been acquired for investment and may not be sold or transferred in the absence of an effective Registration Statement for the shares under the Act unless in the opinion of counsel satisfactory to the Company, registration is not required under the Act." 2.6 CAPITAL STOCK OF SAC. Each share of common stock, and all rights, options and warrants to purchase Common Stock ("Stock Purchase Rights") of SAC issued and outstanding immediately prior to the Effective Time shall become shares and Stock Purchase Rights of the Surviving Corporation after the Merger and together with all the shares of Common Stock issuable pursuant to Section 2.1(a) shall at the Effective Time constitute all of the issued and outstanding shares and Stock Purchase Rights of the Surviving Corporation. Each stock certificate or agreement of SAC evidencing ownership of any such shares and Stock Purchase Rights shall continue to evidence ownership of such shares and Stock Purchase Rights of the Surviving Corporation. ARTICLE III REPRESENTATIONS AND WARRANTIES OF JET 3.1 ORGANIZATION AND GOOD STANDING. Jet is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida and is entitled to own or lease its properties and to carry on its business as and in the places where such properties are now owned, leased or operated and such business is now conducted. Jet does not have any subsidiaries. The Articles of Incorporation and By-Laws of Jet, previously delivered to SAC, have not been amended and remain in effect. Jet is not in violation of its Articles of Incorporation or By-Laws. 4 5 3.2 OWNERSHIP OF JET SHARES. Schedule A hereof sets forth the owners of record and beneficially of all of the shares of capital stock of Jet, all of which shares were duly authorized, validly issued, fully paid, non assessable and free of preemptive rights. There are no outstanding subscriptions, rights, options, warrants or other agreements, obligating Jet to issue, sell or transfer any stock or other securities. 3.3 FINANCIAL STATEMENTS, BOOKS AND RECORDS. There has been previously delivered to SAC an audited balance sheet as of March 31, 1997 (the "Balance Sheet") and the related statements of operations from inception (October 3, 1996) through March 31, 1997 (collectively the "Financial Statements"). The Financial Statements fairly represent the financial position of Jet as at such date and the results of its operations for the period then ended. 3.4 AUTHORITY. Jet has full corporate power and authority to execute, deliver and perform this Agreement. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the Board of Directors of Jet, and no other corporate proceedings on the part of Jet are necessary for Jet to authorize this Agreement or, other than approval of such agreement by the Jet Stockholders, for Jet to consummate the transactions contemplated hereby and thereby. This Agreement, when executed and delivered by Jet, will be duly executed and delivered by duly authorized officers of Jet. This Agreement is valid, binding and enforceable against Jet in accordance with its terms except as enforceability hereof or thereof may be subject to or limited by applicable bankruptcy, insolvency, arrangement or similar laws affecting the rights of creditors generally and judicial limitations upon equitable remedies. 3.5 NO MATERIAL ADVERSE CHANGES. Since the date of the Balance Sheet there has not been: (i) any material adverse change in the assets, operations, condition (financial or otherwise) or prospective business of Jet; (ii) any damage, destruction or loss materially affecting the assets, prospective business, operations or condition (financial or otherwise) of Jet, whether or not covered by insurance; (iii) any declaration, setting aside or payment of any dividend or distribution with respect to any redemption or repurchase of Jet's capital stock; (iv) any sale of an asset (other than in the ordinary course of business) or any mortgage or pledge by Jet of any properties or assets; or (v) adoption of any pension, profit sharing, retirement, stock bonus, stock option or similar plan or arrangement. 5 6 3.6 COMPLIANCE WITH LAWS. Jet has complied with all federal, state, county and local laws, ordinances, regulations, inspections, orders, judgments, injunctions, awards or decrees applicable to it or its business which, if not complied with, would materially and adversely affect its business. 3.7 NO BREACH. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not: (i) violate any provision of the Articles of Incorporation or By-Laws of Jet; (ii) violate, conflict with or result in the breach of any of the terms of, result in a material modification of, otherwise give any other contracting party the right to terminate, or constitute (or with notice or lapse of time or both constitute) a default under, any contract or other agreement to which Jet is a party or by or to which it or any of its assets or properties may be bound or subject; (iii) violate any order, judgment, injunction, award or decree of any court, arbitrator or governmental or regulatory body against, or binding upon, Jet, or upon the properties or business of Jet; or (iv) violate any statute, law or regulation of any jurisdiction applicable to the transactions contemplated herein which could have a materially adverse effect on the business or operations of Jet. 3.8 ACTIONS AND PROCEEDINGS. There is no outstanding order, judgment, injunction, award or decree of any court, governmental or regulatory body or arbitration tribunal against or involving Jet. There is no action, suit or claim or legal, administrative or arbitral proceeding (whether or not the defense thereof or liabilities in respect thereof are covered by insurance) pending or threatened against or involving Jet or any of its properties or assets. 3.9 BROKERS OR FINDERS. No broker's or finder's fee will be payable by Jet in connection with the transaction contemplated by this Agreement, nor will any such fee be incurred as a result of any actions by Jet. 3.10 TANGIBLE ASSETS. Jet has full title and interest in all machinery, equipment, furniture, leasehold improvements, fixtures, vehicles, structures, owned or leased by Jet, any related capitalization items or other tangible property material to the business of Jet (the "Tangible Assets"). Jet holds all rights, title and interest in all the Tangible Assets owned by it on the Balance Sheet or acquired by it after the date of the Balance Sheet. 3.11 LIABILITIES. Jet does not have any material direct or indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated, secured or unsecured, accrued or absolute, contingent or otherwise, (all of the foregoing collectively defined as "Liabilities"), which were not fully, fairly and adequately 6 7 reflected on the Balance Sheet. As of the Closing Date, Jet will not have any Liabilities, other than Liabilities fully and adequately reflected on the Balance Sheet, except for Liabilities incurred in the ordinary course of business or otherwise disclosed in Schedule 3.11. 3.12 NO CONSENTS. Other than stockholder consent and filing of the Articles of Merger with the Secretary of State of the State of Florida, no other consents from any governmental agency or third party is necessary for the consummation of the transactions hereunder. 3.13 OPERATIONS OF JET. Except as set forth on Schedule 3.13, or otherwise disclosed herein, from the date of the Balance Sheet and through the Closing Date hereof Jet has not and will not have except in the ordinary course of its operations: (i) incurred any indebtedness for borrowed money; (ii) declared or paid any dividend or declared or made any distribution of any kind to any shareholder, or made any direct or indirect redemption, retirement, purchase or other acquisition of any shares in its capital stock; (iii) made any material loan or advance to any stockholder, officer, director, employee, consultant, agent or other representative or made any other material loan or advance; (iv) incurred or assumed any material indebtedness or liability (whether or not currently due and payable); (v) disposed of any assets; or (vi) issued any equity securities or rights to acquire such equity securities. 3.14 CAPITALIZATION. The authorized capital stock of Jet consists of 20,000,000 shares of common stock of which 1,776,800 shares are presently issued and outstanding. Jet has not granted, issued or agreed to grant, issue or make available any warrants, options, subscription rights or any other commitments of any character relating to its issued or unissued shares of capital stock. 3.15 TAXES. Jet has prepared and filed all appropriate tax returns for all periods to and through the date hereof for which any such returns have been required to be filed by it and has paid all taxes shown to be due by said returns or on any assessments received by it or has made adequate provision for the payment thereof. 3.16 FULL DISCLOSURE. No representation or warranty by Jet in this Agreement or in any document or schedule to be delivered by it pursuant thereto, and no written statement, certificate or instrument furnished or to be furnished to SAC pursuant hereto or in connection with the negotiation, execution or performance of this Agreement contains or will contain any untrue statement of material fact or omits or will omit to state any fact necessary to make any statement herein or therein not 7 8 materially misleading or necessary to a complete and correct presentation of all material aspects of the businesses of Jet. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SAC 4.1 ORGANIZATION GOOD STANDING AND OWNERSHIP. SAC is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida and is entitled to own or lease its properties and to carry on its business as and in the places where such properties are now owned, leased, or operated and such business is now conducted. The authorized capital stock of SAC consists of 30,000,000 shares of Common Stock ($.001 par value), of which ____ shares are presently issued and outstanding, and 3,000,000 shares of Preferred Stock ($.10 par value), no shares of which are issued and outstanding. Schedule B hereof sets forth the owners of record and beneficially of all of the Shares of capital stock of SAC, all of which shares were duly authorized, validly issued, fully paid, non-assessable and free of preemptive rights. Schedule B also sets forth the owners of record and beneficially of all warrants to purchase common stock, each such warrant entitling the holder thereof to purchase one share of common stock at $4.50 per share (a true copy of the warrant is annexed as Exhibit "E"). The SAC Articles of Incorporation and By-Laws, previously delivered to Jet, have not been amended and remain in effect. SAC is not in violation of its Articles of Incorporation or By-Laws. 4.2 THE SAC SHARES. The SAC Shares to be issued in the Merger have been or will have been duly authorized by all necessary corporate action and, when so issued in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable. 4.3 FINANCIAL STATEMENTS, BOOKS AND RECORDS. SAC has been recently organized and has as of the date hereof, assets and liabilities as set forth on Schedule B. 4.4 NO MATERIAL CHANGES. Since organization, there has not been: (i) any material adverse change in the assets or financial condition of SAC; (ii) any damage, destruction or loss materially affecting the assets or financial condition of SAC, whether or not covered by insurance; (iii) any declaration, setting aside or payment of any dividend or distribution with respect to any redemption or repurchase of the SAC capital stock; (iv) any sale of an asset or any mortgage or pledge by SAC of any properties or assets; or 8 9 (v) adoption of any pension, profit sharing, retirement, stock bonus, stock option or similar plan or arrangement. 4.5 COMPLIANCE WITH LAW. SAC has complied with all federal, state, county and local laws, ordinances, regulations, inspections, orders, judgments, injunctions, awards or decrees applicable to it or its businesses. 4.6 NO BREACH. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not: (i) violate any provision of the Articles of Incorporation or By-Laws of SAC; (ii) violate, conflict with or result in the breach of any of the terms of, result in a material modification of, otherwise give any other contracting party the right to terminate, or constitute (or with notice or lapse of time or both constitute) a default under, any contract or other agreement to which SAC is a party or by or to which it or any of its assets or properties may be bound or subject; (iii) violate any order, judgment, injunction, award or decree of any court, arbitrator or governmental or regulatory body against, or binding upon, SAC or upon the securities properties or business of SAC; or (iv) violate any statute, law or regulation of any jurisdiction applicable to the transactions contemplated herein. 4.7 ACTIONS AND PROCEEDINGS. There is no outstanding order, judgment, injunction, award or decree of any court, governmental or regulatory body or arbitration tribunal against or involving SAC. There is no action, suit or claim or legal, administrative or arbitral proceeding or (whether or not the defense thereof or liabilities in respect thereof are covered by insurance) pending or threatened against or involving SAC or any of its properties or assets. 4.8 BROKERS OR FINDERS. No broker's or finder's fee will be payable by SAC in connection with the transaction contemplated by this Agreement, nor will any such fee be incurred as a result of any actions by SAC. 4.9 LIABILITIES. SAC does not have any material direct or indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or responsibility, know or unknown, fixed or unfixed, liquidated or unliquidated, secured or unsecured, accrued or absolute, contingent or otherwise, including, without limitation, any liability on account of taxes, any other governmental charge or lawsuit other than a loan from Joseph Laura in the sum of $500,000, represented by a certain Promissory Note dated May 23, 1997 (the "Laura Loan") (all of the foregoing collectively defined as "Liabilities"). As of the Closing Date, SAC will not have any Liabilities, other than the Laura Loan. 9 10 4.10 NO CONSENTS. Other than filing the Articles of Merger with the Secretary of State of the State of Florida, no other consents from any governmental agency or third party is necessary for the consummation of the transaction hereunder. 4.11 OPERATIONS OF SAC. Through the Closing Date hereof SAC has not and will not have: (i) incurred any indebtedness for borrowed money other than ______________; (ii) declared or paid any dividend or declared or made any distribution of any kind to any shareholder, or made any direct or indirect redemption, retirement, purchase or other acquisition of any shares in its capital stock; (iii) made any loan or advance to any shareholder, officer, director, employee, consultant, agent or other representative or made any other loan or advance otherwise than in the ordinary course of business; (iv) except in the ordinary course of business, incurred or assumed any indebtedness or liability (whether or not currently due and payable); (v) disposed of any assets except in the ordinary course of business; or (vi) issued any equity securities or rights to acquire such equity securities except the 447,200 shares and 1,000,000 Warrants to purchase common stock at $4.50 per share. 4.12 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. SAC has the full legal right and power and all authority and approval required to enter into, execute and deliver this Agreement and to perform fully its obligations hereunder. This Agreement has been duly executed and delivered and is the valid and binding obligation of SAC enforceable in accordance with its terms, except as may be limited by bankruptcy, moratorium, insolvency or other similar laws generally affecting the enforcement of creditors' rights. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and the performance by SAC of this Agreement, in accordance with its respective terms and conditions will not: (i) require the approval or consent of any governmental or regulatory body, the shareholders of SAC, or the approval or consent of any other person; (ii) conflict with or result in any breach or violation of any of the terms and conditions of, or constitute (or with any notice or lapse of time or both would constitute) a default under, any order, judgment or decree applicable to SAC, or any instrument, contract or other agreement to which SAC is a party or by or to which SAC is bound or subject; or 10 11 (iii) result in the creation of any lien or other encumbrances on the assets or properties of SAC. 4.13 FULL DISCLOSURE. No representation or warranty by SAC in this Agreement or in any document or schedule to be delivered by it pursuant hereto, and no written statement, certificate or instrument furnished or to be furnished to Jet pursuant hereto or in connection with the performance of this Agreement contains or will contain any untrue statement of material fact or omits or will omit to state any fact necessary to make any statement herein or therein not materially misleading or necessary to a complete and correct presentation of all material aspects of the business of SAC. ARTICLE V COVENANTS 5.1 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the Closing Date, the parties shall be entitled, through their employees and representatives, to make such investigation and verification of the assets, properties, business and operations, books, records and financial condition of the other, including communications with suppliers, vendors and customers, as they each may reasonably require. No investigation by a party hereto shall, however, diminish or waive in any way any of the representations, warranties, covenants or agreements of the other party under this Agreement. Consummation of this Agreement shall be subject to the fulfillment of due diligence procedures to the reasonable satisfaction of each of the parties hereto and their respective counsel. 5.2 EXPENSES. Each party hereto agrees to pay its own costs and expenses incurred in negotiating this Agreement and consummating the transactions described herein. 5.3 FURTHER ASSURANCES. The parties shall execute such documents and other papers and take such further actions as may be reasonably required or desirable to carry out the provisions hereof and the transactions contemplated hereby. Each such party shall use its best efforts to fulfill or obtain the fulfillment of the conditions to the Closing, including, without limitation, the execution and delivery of any documents or other papers, the execution and delivery of which are necessary or appropriate to the Closing. 5.4 CONFIDENTIALITY. In the event the transactions contemplated by this Agreement are not consummated, each of the parties hereto agree to keep confidential any information disclosed to each other in connection therewith; provided, however, such obligation shall not apply to information which: (i) at the time of disclosure was public knowledge; (ii) after the time of disclosure become public knowledge (except due to the action of the receiving party); or (iii) the receiving party had within its possession at the time of disclosure. 11 12 ARTICLE VI CONDITIONS TO CLOSING The obligation of Jet and SAC to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: (i) this Agreement and the Merger shall have received the requisite approval of the stockholders of Jet; (ii) the representations and warranties set forth in Article III (with respect to SAC's obligations) and IV (with respect to Jet's obligations) above are true and correct in all material respects at and as of the Closing Date; (iii) each of SAC and Jet shall have performed and complied with all of such party's covenants hereunder in all material respects through the Closing Date; (iv) No action, suit, or proceeding shall be pending or threatened before any court or quasi-judicial or administrative agency of any federal, state or local jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or change would (a) prevent consummation of any of the transactions by this Agreement, (b) cause any of the transaction contemplated by this Agreement to be rescinded following consummation, (c) affect adversely the right of the Surviving Corporation to own the former assets and to operate the former business of Jet (and no such injunction, judgment, order, decree, ruling or change shall be in effect); (v) SAC shall have raised sufficient capital such that its net shareholder equity shall be at least $100,000 at the Closing Date, and it shall have no liabilities other than the $500,000 Laura loan, (copies of which loan documents are attached as Exhibit "D"); (vi) SAC shall have complied with SEC Regulation D and Rule 504 promulgated thereunder in connection with its raise of capital; shall have filed Form D, and the Offering memorandum used in said raise of capital shall contain no untrue statements of material fact, nor omissions thereof which would make material statements therein misleading, as of the date thereof, and as of the Closing Date; (vii) Jet shall have received a certificate from SAC to the effect that each of the conditions specified above in Article 6(i)-(vi) is satisfied in all respects; (viii) Jet shall have received from counsel to SAC an opinion in form and substance satisfactory to counsel for Jet to the effect that: (a) SAC has been duly formed and organized and upon Closing all of its stock will be validly issued and nonassessable, and 12 13 (b) SAC has the requisite corporate authority to engage in its business and own its properties and to execute and deliver this Agreement. (c) This Agreement constitutes the legal, valid and binding agreement of SAC, enforceable against it in accordance with all of its terms and conditions. (d) Such other matters as counsel for Jet shall reasonably request. (ix) Stockholders of Jet owning fewer than twenty percent of its issued and outstanding common stock have elected appraisal rights pursuant to Section 2.4 hereof. ARTICLE VII TERMINATION 7. TERMINATION OF AGREEMENT. (a) by mutual written consent of the SAC and Jet. (b) by Jet if the Merger shall not have been consummated by July 31, 1997, provided that Jet's right to terminate this Agreement pursuant to this Section 7.1(b) shall not be available in the event of Jet's failure to fulfill any obligation under this Agreement or any action or inaction on the part of Jet has been, in full or in part, the cause of or resulted in, in full or in part, the failure of the conditions to SAC's obligation to consummate the Merger to be satisfied or the failure of the Merger to occur on or before such date; (c) by SAC if the Merger shall not have been consummated by July 31, 1997, provided that the right of SAC to terminate this Agreement pursuant to this Section 7.1(c) shall not be available in the event SAC's or such failure to fulfill any obligation under this Agreement or any action or inaction on the part of SAC, has been, in full or in part, the cause of or resulted in, in full or in part, the failure of the conditions to Jet's obligation to consummate the Merger to be satisfied or the failure of the Merger to occur on or before such date; or (d) by Jet or SAC if a court of competent jurisdiction or governmental, regulatory or administrative agency or commission shall have issued a non-appealable final order, decree or ruling or taken any other action, in each case having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger. ARTICLE VIII MISCELLANEOUS 8.1 WAIVERS. The waiver of a breach of this Agreement or the failure of any party hereto to exercise any right under this Agreement shall in no event constitute waiver as to any future breach whether similar or dissimilar in nature or as to the exercise of any further right under this Agreement. 13 14 8.2 AMENDMENT. This Agreement may be amended or modified only by an instrument of equal formality signed by the parties or the duly authorized representatives of the respective parties. 8.3 ASSIGNMENT. This Agreement is not assignable except by operation of law. 8.4 NOTICES. Until otherwise specified in writing, the mailing addresses of the parties of this Agreement shall be as follows: To Jet: 15675 N.W. 15th Avenue 12 Miami, FL 33169 Att: Joseph Nelson, President To SAC: 30 Broad Street, 43rd Floor New York, NY 10004 Att: Michael J. Cirillo, President Any notice or statement given under this Agreement shall be deemed to have been given if sent by registered mail addressed to the other party at the address indicated above or at such other address which shall have been furnished in writing to the address or. 8.5 GOVERNING LAW. This Agreement shall be construed, and the legal relations between the parties determined, in accordance with the laws of the State of Florida, thereby precluding any choice of law rules which may direct the application of the laws of any other jurisdiction. 8.6 PUBLICITY. No publicity release or announcement concerning this Agreement or the transactions contemplated hereby shall be issued by either party hereto at any time from the signing hereof without advance approval in writing of the form and substance thereof by the other party. 8.7 ENTIRE AGREEMENT. This Agreement (including the Exhibits and Schedules hereto) and the collateral agreements executed in connection with the consummation of the transactions contemplated herein contain the entire agreement among the parties with respect to the Merger and related transactions, and supersede all prior agreements, written or oral, with respect thereto. 8.8 HEADINGS. The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. 8.9 SEVERABILITY OF PROVISIONS. The invalidity or unenforceability or any term, phrase, clause, paragraph, restrictions, covenant, agreement or other provision of this Agreement shall in no way affect the validity or enforcement of any other provision or any part thereof. 14 15 8.10 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed, shall constitute an original copy hereof, but all of which together shall be considered but one and the same document. IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written. JET AVIATION TRADING, INC. By: /s/ Joseph Nelson ------------------------------------- JOSEPH NELSON, President SCHUYLKILL ACQUISITION CORP. By: /s/ Michael J. Cirillo ------------------------------------- MICHAEL J. CIRILLO, President 15 EX-2.2 3 ARTICLES OF MERGER 1 Exhibit 2.2 ARTICLES OF MERGER BETWEEN JET AVIATION TRADING, INC. AND SCHUYLKILL ACQUISITION CORP. Pursuant to the requirements of Section 607.1105 of the Florida Corporation Act, the undersigned Joseph J. Nelson, President, of Jet Aviation Trading, Inc. and Michael J. Cirillo, President, of Schuylkill Acquisition Corp., hereby certify: FIRST: That the names of the constituent corporations are Jet Aviation Trading, Inc. and Schuylkill Acquisition Corp. and the name of surviving corporation will be Schuylkill Acquisition Corp., the name of which shall, on the effective date of the merger, be changed to Jet Aviation Trading, Inc. SECOND: The plan of merger is that on the effective date of the merger each then outstanding share of common stock of Jet Aviation Trading, Inc., shall cease to be an existing and issued share by virtue of the merger and without any action on the part of Schuylkill Acquisition Corp., Jet Aviation Trading, Inc. or the holder thereof shall be canceled in exchange for one share of common stock of Schuylkill Acquisition Corp. THIRD: That the merger shall be and become effective upon the filing of these Articles of Merger with the Secretary of State of Florida. FOURTH: That the merger was authorized by the Board of Directors of Jet Aviation Trading, Inc. by unanimous written consent on July 14, 1997, and that the merger was authorized 1 2 by the Board of Directors of Schuylkill Acquisition Corp. by unanimous written consent on July 14, 1977. FIFTH: That the merger was authorized by the shareholders of Jet Aviation Trading, Inc., by written consent of a majority of the shareholders of the issued and outstanding stock on July 17, 1997, and that approval by the stockholders of Schuylkill Acquisition Corp. was not required pursuant to Florida Statutes ss.607.1103. IN WITNESS WHEREOF, we hereunto sign our names and affix our seals this 17 day of July, 1997. JET AVIATION TRADING, INC. By: /s/ Joseph Nelson -------------------------------- Joseph Nelson, President SCHUYLKILL ACQUISITION CORP. By: /s/ Michael J. Cirillo -------------------------------- Michael J. Cirillo, President STATE OF FLORIDA ) :ss COUNTY OF DADE ) The foregoing instrument was acknowledged before me this day of July, 1997 by JOSEPH NELSON, President of Jet Aviation Trading, Inc., a Florida corporation, who is personally known to me or who produced N/A as identification, and who did/did not take an oath. Marion N. Koliniatis /s/ Marion N. Koliniatis - ------------------------------------- --------------------------------- Typed, Printed or Stamped Notary Public -- State of Name of Notary Public Florida at large My Commission expires: 6/7/99 [SEAL] [NOTARY CERTIFICATES CONTINUED ON FOLLOWING PAGE] 2 3 STATE OF NEW YORK ) :ss COUNTY OF NEW YORK ) The foregoing instrument was acknowledged before me this 15th day of July, 1997 by MICHAEL J. CIRILLO, President of Schuylkill Acquisition Corp., a Florida corporation, who is personally known to me or who produced a passport as identification, and who did/did not take an oath. MARIO PAGAN /s/ MARIO PAGAN - ------------------------------------- --------------------------------- Typed, Printed or Stamped Notary Public -- State of New York Name of Notary Public [SEAL] MARIO PAGAN Notary Public State of New York No. 01PA5058118 Qualified in New York County Commission Expires April 1, 1998 3 EX-3.1 4 ARTICLES OF INCORPORATION 1 Exhibit 3.1 ARTICLES OF INCORPORATION OF SCHUYLKILL ACQUISITION CORP. The undersigned, a natural person competent to contract, does hereby make, subscribe and file these Articles of Incorporation for the purpose of organizing a corporation under the laws of the State of Florida. ARTICLE I CORPORATE NAME The name of this Corporation shall be: SCHUYLKILL ACQUISITION CORP. ARTICLE II PRINCIPAL OFFICE AND MAILING ADDRESS The principal office and mailing address of the Corporation is c/o Atlas, Pearlman, Trop & Borkson, P.A., 200 East Las Olas Boulevard, Suite 1900, Fort Lauderdale, Florida 33301. ARTICLE III NATURE OF CORPORATE BUSINESS AND POWERS The general nature of the business to be transacted by this Corporation shall be to engage in any and all lawful business permitted under the laws of the United States and the State of Florida. James M. Schneider, Esq., FL Bar #214338 Atlas, Pearlman, Trop & Borkson, P.A. 200 East Las Olas Boulevard, Suite 1900 Fort Lauderdale, Florida 33301 Phone No: (954) 763-1200 2 ARTICLE IV CAPITAL STOCK The maximum number of shares that this Corporation shall be authorized to issue and have outstanding at any one time shall be 30,000,000 shares of common stock, par value $.001 per share and three million (3,000,000) shares of Preferred Stock having a par value of $.10 per share. Series of the Preferred Stock may be created and issued from time to time, with such designations, preferences, conversion rights, cumulative, relative, participating, optional or other rights, including voting rights, qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolution or resolutions providing for the creation and issuance of such series of Preferred Stock as adopted by the Board of Directors pursuant to the authority in this paragraph given. ARTICLE V TERM OF EXISTENCE This Corporation shall have perpetual existence. ARTICLE VI REGISTERED AGENT AND INITIAL REGISTERED OFFICE IN FLORIDA The Registered Agent and the street address of the initial Registered Office of this Corporation in the State of Florida shall be: James M. Schneider, Esq. Atlas, Pearlman, Trop & Borkson, P.A. 200 East Las Olas Boulevard, Suite 1900 Fort Lauderdale, Florida 33301 2 EX-3.2 5 AMENDMENT TO ARTICLES OF INCORPORATION 1 ARTICLE VII BOARD OF DIRECTORS This Corporation shall have one (1) Director initially. ARTICLE VIII INITIAL DIRECTORS The name and address of the initial Directors of this Corporation are: Michael Cirillo 30 Broad Street, 43rd Floor New York, NY 10004 The person named as initial Director shall hold office for the first year of existence of this Corporation, or until his successors are elected or appointed and have qualified, whichever occurs first. ARTICLE IX INCORPORATOR The person and address of the person signing these Articles of Incorporation as the Incorporator is James M. Schneider, Esq., c/o Atlas, Pearlman, Trop & Borkson, P.A., 200 East Las Olas Boulevard, Suite 1900, Fort Lauderdale, Florida 33301. ARTICLE X INDEMNIFICATION This Corporation may indemnify any director, officer, employee or agent of the Corporation to the fullest extent permitted by Florida law. 3 2 ARTICLE XI AFFILIATED TRANSACTIONS This Corporation expressly elects not to be governed by Section 607.0901 of the Florida Business Corporation Act, as amended from time to time, relating to affiliated transactions. IN WITNESS WHEREOF, the undersigned incorporator has executed the foregoing Articles of Incorporation on the 28th day of May, 1997. /s/ James M. Schneider -------------------------------- James M. Schneider, Incorporator 4 3 CERTIFICATE DESIGNATING REGISTERED AGENT AND OFFICE FOR SERVICE OF PROCESS SCHUYLKILL ACQUISITION CORP., a corporation existing under the laws of the State of Florida with its principal office and mailing address c/o Atlas, Pearlman, Trop & Borkson, P.A., 200 East Las Olas Boulevard, Suite 1900, Fort Lauderdale, Florida 33301 has named James M. Schneider whose address is c/o Atlas, Pearlman, Trop & Borkson, P.A., 200 East Las Olas Boulevard, Suite 1900, Fort Lauderdale, Florida 33301 as its agent to accept service of process within the State of Florida. ACCEPTANCE: Having been named to accept service of process for the above named Corporation, at the place designated in this Certificate, I hereby accept the appointment as Registered Agent, and agree to comply with all applicable provisions of law. In addition, I hereby am familiar with and accept the duties and responsibilities as Registered Agent for said Corporation. /s/ James M. Schneider ---------------------- James M. Schneider 5 4 Exhibit 3.2 ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF JET AVIATION TRADING, INC. 1. Article II of the Articles of Incorporation of Jet Aviation Trading, Inc., a Florida corporation ("Corporation") f/k/a Schuylkill Acquisition Corp. filed with the Secretary of State of Florida on May 28, 1997, is hereby replaced in its entirety to read as follows: "Article II The principal office and mailing address of the Corporation is 15675 Northwest 15th Avenue, Miami, Florida 33301." 2. Article VI of the Articles of Incorporation of the Corporation is hereby deleted. 3. The foregoing Amendment was adopted by the directors of the Corporation on August 14, 1997, without shareholder approval as permitted by Fla. Statutes, Section 607.1002. IN WITNESS WHEREOF, the undersigned President and Secretary of this Corporation have executed these Articles of Amendment this 14th day of August, 1997. Jet Aviation Trading, Inc. Attested: /s/ Marion N. Kolinatis /s/ Joseph J. Nelson - ---------------------------------- ----------------------------------- its Secretary its President and Director MARION N. KOLINATIS JOSEPH J. NELSON - ---------------------------------- ----------------------------------- ITS SECRETARY ITS PRESIDENT AND DIRECTOR EX-3.3 6 AMEND. TO BY LAWS 1 Exhibit 3.3 AMENDED BYLAWS OF JET AVIATION TRADING, INC. ARTICLE I MEETINGS OF SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of the shareholders of the corporation shall be held during the month of December of each year or at such other time designated by the Board of Directors of the corporation. Business trans acted at the annual meeting shall include the election of directors of the corporation. If the designated day shall fall on a Saturday, Sunday or legal holiday, then the meeting shall be held on the first business day thereafter. Section 2. Special Meetings. Special meetings of the shareholders shall be held when directed by the President or the Board of Directors, or when requested in writing by the holders of not less than ten (10%) percent of all the shares entitled to vote at the meeting. A meeting requested by shareholders shall be called for a date not less than ten (10) nor more than sixty (60) days after the request is made, unless the shareholders requesting the meeting designate a later date. The call for the meeting shall be issued by the Secretary, unless the President, Board of Directors, or Shareholders requesting the meeting shall designate another person to do so. 1 2 Section 3. Place. Meetings of shareholders shall be held at the principal place of business of the corporation or at such other place as may be designated by the Board of Directors. Section 4. Notice. Written notice stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than sixty (60) days before the meeting, either personally or by first class mail, by or at the direction of the President, the Secretary or the officer or persons calling the meeting to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his address as it appears on the stock transfer books of the corporation, with postage thereon prepaid. Section 5. Notice of Adjourned Meeting. When a meeting is adjourned to another time or place, it shall not be necessary to give any notice of the adjourned meeting if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken, and at the adjourned meeting any business may be transacted that might have been transacted on the original date of the meeting. If, however, after the adjournment the Board of Directors fixes a new record date for the adjourned meeting, a notice of the adjourned meeting shall be given as provided in this Article to each shareholder of record on the new record date entitled to vote at such meeting. 2 3 Section 6. Shareholder Quorum and Voting. A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If a quorum is present, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders unless otherwise provided by law. Section 7. Voting of Shares. Each outstanding share shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders. Section 8. Proxies. A shareholder may vote either in person or by proxy executed in writing by the shareholder or his duly authorized attorney-in-fact. No proxy shall be valid after eleven (11) months from the date thereof unless otherwise provided in the proxy. Section 9. Action by Shareholders Without a Meeting. Any action required by law, these Bylaws, or the Articles of Incorporation of the corporation to be taken at any annual or special meeting of shareholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, as is provided by law. 3 4 ARTICLE II DIRECTORS Section 1. Function. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be managed under the direction of, the Board of Directors. Section 2. Qualification. Directors need not be residents of Florida or shareholders of the corporation. Section 3. Compensation. The Board of Directors shall have authority to fix the compensation of directors. Section 4. Presumption of Assent. A director of the corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless he votes against such action or abstains from voting in respect thereto because of an asserted conflict of interest. Section 5. Number of Directors. The corporation shall have a Board of Directors of such number not less than two (2) nor more than seven (7), as shall be determined and fixed by either the shareholders or the Board of Directors at their annual meeting or at any special meeting of either the shareholders or the Board of Directors called for that purpose. Section 6. Election and Term. The persons named in the Articles of Incorporation as the members of the initial Board of Directors shall hold office until 4 5 the first annual meeting of shareholders, and until their successors shall have been elected and qualified or until their earlier resignation, removal from office or death. At the first annual meeting of shareholders and at each annual meeting thereafter the shareholders shall elect directors to hold office until the next succeeding annual meeting. Each director shall hold office for a term for which he is elected and until his earlier resignation, removal from office or death. Section 7. Vacancies. Any vacancy occurring in the Board of Directors, including any vacancies created by reason of an increase in the number of directors, the remaining directors in office, though less than a quorum, by a majority vote, may appoint any qualified person to fill such vacancy for the unexpired term and until his successor shall be duly chosen. Section 8. Removal of Directors. At an annual meeting or at a special meeting of shareholders called expressly for that purpose, any director or the entire Board of Directors may be removed, with or without cause, by a vote of the holders of a majority of the shares then entitled to vote at an election of directors. Section 9. Resignation. A director may resign at any time by giving written notice to the Board of Directors, the President or the Secretary of the Corporation. Unless otherwise specified in the notice, the resignation of such officer shall take effect upon receipt thereof by the Board of Directors, and the acceptance of the resignation shall not be necessary to make it effective. Section 10. Quorum and Voting. A majority of the number of directors fixed by these Bylaws shall constitute a quorum for the transaction of business. The 5 6 act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 11. Executive and Other Committees. The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members an executive committee and one or more other committees each of which, to the extent provided in such resolution, shall have and may exercise all the authority of the Board of Directors, except as is provided by law. Section 12. Place of meeting. Regular and special meetings of the Board of Directors shall be held at the principal place of business of the corporation or at such other place as may be designated by the President. Section 13. Time, Notice and Call of Meetings. Regular meetings of the Board of Directors shall be held immediately following the annual meeting of shareholders and at such other times as the Board of Directors may determine. Written notice of the time and place of meetings of the Board of Directors, other than the regular annual meeting, shall be given to each director by either personal delivery, telegram or cablegram at least three (3) days before the meeting or by notice mailed to the director at least ten (10) days before the meeting. Notice of a meeting of the Board of Directors need not be given to any director who signs a waiver of notice either before or after the meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting and waiver of any and all objections to the place of the meeting, the time of the meeting, or the manner in which it has been called or convened, except when a director states, 6 7 at the beginning of the meeting, any objection to the transaction of business because the meeting is not lawfully called or convened. Neither the business to be transacted at, or the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. A majority of the directors present, whether or not a quorum exists, may adjourn any meeting of the Board of Directors to another time and place. Notice of any such adjourned meeting shall be given to the directors who were not present at the time of the adjournment and, unless the time and place of the adjourned meeting are announced at the time of the adjournment, to the other directors. Meetings of the Board of Directors may be called by the President of the corporation or by any one director. Members of the Board of Directors may participate in a meeting of such board by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. Section 14. Action Without a Meeting. Any action required to be taken at a meeting of the Board of Directors, or any action which may be taken at a meeting of the Board of Directors or a committee thereof, may be taken without a meeting if a consent in writing, setting forth the action so to be taken, signed by all of the directors, or all the members of the committee, as the case may be, is filed in the 7 8 minutes of the proceedings of the board or of the committee. Such consent shall have the same effect as a unanimous vote. ARTICLE III OFFICERS Section 1. Officers. The officers of the corporation shall consist of a President, a Secretary and a Treasurer, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers and agents as may be deemed necessary may be elected or appointed by the Board of Directors from time to time. Any two or more offices may be held by the same person. The Board of Directors shall have authority to fix the compensation of officers. Section 2. Duties. The officers of this corporation shall have the following duties: The President shall be the chief executive officer of the corporation, shall have general and active management of the business and affairs of the corporation subject to the directions of the Board of Directors, and shall preside at all meetings of the shareholders and Board of Directors. The Secretary shall have custody of, and maintain, all of the corporate records except the financial records; shall record the minutes of all meetings of the shareholders and Board of Directors, send all notices of all meetings and perform such other duties as may be prescribed by the Board of Directors or the President. The Treasurer shall have custody of all corporate funds and financial records, shall keep full and accurate accounts of receipts and disbursements and render 8 9 accounts thereof at the annual meetings of shareholders and whenever else required by the Board of Directors or the President, and shall perform such other duties as may be prescribed by the Board of Directors or the President. Section 3. Removal, Resignation, Vacancy of Officers. An officer or agent elected or appointed by the Board of Directors may be removed by the board whenever in its judgment the best interests of the corporation will be served thereby. An officer may resign at any time by delivering a written notice to the Corporation. Any vacancy in any office may be filled by the Board of Directors. ARTICLE IV STOCK CERTIFICATES Section 1. Issuance. Every holder of shares in the corporation shall be entitled to have a certificate representing all shares to which he is entitled. No certificate shall be issued for any share until such share is fully paid. Section 2. Form. Certificates representing shares in the corporation shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary and may be sealed with the seal of the corporation or a facsimile thereof. Section 3. Transfer of Stock. The corporation shall register a stock certificate presented to it for transfer if the certificate is properly endorsed by the holder of record or by his duly authorized attorney. Section 4. Lost, Stolen, or Destroyed Certificates. If the shareholder shall claim to have lost or destroyed a certificate of shares issued by the corporation, a new certificate shall be issued upon the making of an affidavit of that fact by the 9 10 person claiming the certificate of stock to be lost, stolen or destroyed and, at the discretion of the Board of Directors, upon the deposit of a bond or other indemnity in such amount and with such sureties, if any, as the Board may reasonably require. ARTICLE V BOOKS AND RECORDS Section 1. Books and Records. The corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its shareholders, Board of Directors and committees of directors. The corporation shall keep at its registered office or principal place of business a record of its shareholders, giving the names and addresses of all shareholders and the numbers of the shares held by each. Any books, records and minutes may be in written form or in any other form capable of being converted into written form within a reasonable time. Section 2. Shareholders' Inspection Rights. Any person who shall have been a holder of record of shares or of voting trust certificates therefore at least six (6) months immediately preceding his demand or shall be the holder of record of, or the holder of record of voting trust certificates for, at lease five (5%) percent of the outstanding shares of the corporation, upon written demand stating the purpose thereof shall have the right to examine, in person or by agent or attorney, records of accounts, minutes and records of shareholders and to make extracts therefrom. Section 3. Financial Information. The Corporation shall furnish its shareholders with annual financial statements not later than four (4) months after the 10 11 close of each fiscal year. Such financial statements shall include a balance sheet showing in reasonable detail the financial condition of the corporation as of the close of its fiscal year, a profit and loss statement showing the results of the operations of the corporation during its fiscal year and a statement of cash flows for that year.. Upon the written request of any shareholder or holder of voting trust certificates for shares of the corporation, the corporation shall mail to each shareholder or holder of voting trust certificates a copy of the most recent such financial statements. The financial statements shall be filed in the registered office of the corporation in Florida, shall be kept for at least five (5) years, and shall be subject to inspection during business hours by any shareholders or holder of voting trust certificates, in person or by agent. ARTICLE VI DIVIDENDS The Board of Directors of the corporation may, from time to time, declare and the corporation may pay dividends on its shares in cash, property or its own shares, except when the corporation is insolvent or when the payment thereof would render the corporation insolvent, subject to the provisions of the Florida Statutes. ARTICLE VII CORPORATE SEAL The Board of Directors shall provide a corporate seal which shall be in circular form. 11 12 ARTICLE VIII FISCAL YEAR The fiscal year of the corporation shall end on such date as shall be determined by the Board of Directors. ARTICLE IX AMENDMENTS These Bylaws may be altered, amended, repealed or added to by the vote of the Board of Directors of this corporation at any regular meeting of the Board, or at a special meeting of directors called for that purpose. These Bylaws, and any amendments thereto, and new Bylaws added by the Board of Directors, may be amended, altered or replaced by the shareholders at any annual or special meeting of the shareholders. ARTICLE X INDEMNIFICATION Section 1. Actions in General. The Corporation shall indemnify any person who was or is party or is threatened to be made a party to any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a Director, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or is or was serving at the request of the Corporation as trustee or administrator or in 12 13 any other fiduciary capacity under any pension, profit sharing, deferred compensation or other plan, or any employee welfare benefit plan of the Corporation. The indemnification shall be against expenses (including attorneys' fees), judgment, fines, and amounts paid in settlement actually and reasonably incurred by such person in connection with the action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that such person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceedings, he had reasonable cause to believe that his conduct was unlawful. Section 2. Action By or In Right of Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a Director, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or is or was serving as a trustee or administrator or in any other fiduciary capacity under any person, 13 14 profit sharing, deferred compensation or other plan, or any employee welfare benefit plan of the Corporation. The indemnification shall be against expenses (including attorneys' fees) reasonably incurred by him in connection with the defense and settlement of the action or suit, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue, or matter as to which the person has been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless (and only to the extent that) the court in which the action or suit was brought, or a court of equity in the county in which the Corporation has its principal office, determines upon application that, despite the adjudication of liability but in view of all circumstances of the case, the person is fairly and reasonably entitled to indemnity for the expenses which the court shall deem proper. Section 3. Determination that Indemnification is Proper. Any indemnification under Sections 1 or 2 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the Director, Officer, employee, agent, trustee, administrator or other fiduciary is proper in the circumstances because he has met the applicable standard of conduct set forth in said Sections 1 or 2. The determination shall be made (1) by the Board of Directors by a unanimous vote of all of the Directors then in office who were not parties to the action, suit or proceeding, or, (2) if the disinterested Directors so direct, the determination of the propriety of any 14 15 indemnification under this Article shall be made, in a written opinion, by independent legal counsel, (i.e., a lawyer who is not a Director, Officer, employee or agent of the Corporation or such other corporation, partnership, joint venture, trust or other enterprise, or is not or was not serving at the request of the Corporation as a trustee or administrator or in any other fiduciary capacity under any pension, profit sharing, deferred compensation or other plan, or any employee welfare benefit plan of the Corporation, and who is not a partner or professional associate of any Director, Officer, employee or agent of the Corporation or such other corporation, partnership, joint venture, trust or other enterprise), or (3) by the unanimous vote of all disinterested Stockholders. Section 4. Indemnification Against Expenses Incurred in Successful Defense. Unless otherwise expressly provided by the Articles of Incorporation of the Corporation, to the extent that a Director, Officer, employee, agent, trustee, administrator or other fiduciary of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 or 2, or in defense of any claim, issue, or matter therein mentioned, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith, no determination pursuant to Section 1 shall be required in such instance. Section 5. Payment of Expenses in Advance of Final Disposition of Action. Expenses (including attorneys' fees) incurred in defending a civil or criminal action, suit or proceeding shall be paid by the Corporation in advance of the final 15 16 disposition thereof if authorized in the specific case by a preliminary determination, following the procedures set forth in Section 3, that there is a reasonable basis for a belief that the Director, Officer, employee, agent, trustee, administrator or other fiduciary met the applicable standard of conduct set forth in Sections 1 or 2, but only upon receipt of an undertaking by or on behalf of the Director, Officer, employee, agent, trustee, administrator or other fiduciary reasonably assuring that such amount will be repaid unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Article. Section 6. Non-Exclusive Right to Indemnity Inures to Benefit of Heirs and Personal Representatives. The foregoing rights of indemnification shall be in addition to all rights to which any such Director, Officer, employee, agent, trustee, administrator or other fiduciary may be entitled as a matter of law, and shall continue as to a person who has ceased to be such a Director, Officer, employee, agent, trustee, administrator or other fiduciary and inure to the benefit of the heirs and personal representatives of such person. Section 7. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or is or was serving at the request of the Corporation as a trustee or administrator or in any other fiduciary capacity under any pension, profit sharing, deferred compensation or other plan, or any employee welfare benefit plan of the Corporation, against any liability asserted against him and incurred by him in any such capacity, or arising out 16 17 of his status as such, whether or not the Corporation would have the power or would be required to indemnify him against the liability under the provisions of this Article or of the laws of this State. Section 8. Gender. Whenever used in this Article X, the masculine gender shall include the feminine and neuter genders. Section 9. Certain Persons not to be Indemnified. Notwithstanding the foregoing provisions of this Article X, the Corporation shall not indemnify any bank, trust company, investment adviser, or any actuary against any liability which they may have by reason of their acting as a "fiduciary" of any employee benefit plan (as that term is defined in the Employee Retirement Income Security Act, as amended from time to time) established for the benefit of this Corporation's employees. 17 EX-4.1 7 WARRANT 1 Exhibit 4.1 FORM OF WARRANT No. W____________ Number of Shares Subject to Warrant:_________ VOID AFTER 5:00 P.M. EASTERN DAYLIGHT TIME ON JUNE 30, 2002. WARRANT TO PURCHASE SHARES OF COMMON STOCK OF SCHUYLKILL ACQUISITION CORP. THIS IS TO CERTIFY. that for value received.___________________________________ ("Holder") is entitled to purchase, subject to the provisions of this Warrant from Schuylkill Acquisition Corp., a Florida corporation ("Company").__________ shares of Common Stock, $.001 per value, of the Company ("Common Stock"), at an exercise price per share equal to $4.50, at any time during the period beginning June 1, 1997 (the "Commencement Date") and ending at 5:00 p.m. Philadelphia, Pennsylvania time on June 30, 2002 (the "Termination Date"). The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for a share of Common Stock may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time, are hereinafter sometimes referred to as "Warrant Shares" and the exercise price of a share of Common Stock in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the "Exercise Price". (a) Exercise of Warrant. Subject to the provisions of Section (h) hereof, this Warrant may be exercised in whole or in part at any time or from time to time on or after the Commencement Date until the Termination Date or, if either such day is a day on which banking institutions in the State of Florida are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise price for the number of shares specified in such form in lawful money of the United States of America in cash or by official bank or certified check made payable to Schuylkill Acquisition Corp. If this Warrant shall be exercised in part only, the Company shall upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise and together with payment of the Exercise Price in the manner provided herein, the Holder shall be deemed to be the holder of record of the shares of Common Stock or other securities issuable upon such exercise provided, however, that if at the date of surrender of such Warrants and payment of such Exercise Price the transfer books for the Common Stock or such other securities shall be closed, the certificates for the shares or other securities in respect of which such Warrants are then exercised shall be issuable as of the date on which such books shall next be opened and until such date the Company shall be under 2 no duty to deliver any certificate for such shares or other securities and the Holder shall not be deemed to have become a holder or record of such shares or the owners of such other securities. (b) Reservation of Shares. The Company hereby agrees that at all times there shall be reserved for issuance and or delivery upon exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of this Warrant. (c) Fractional Shares. The Company shall not be required to issue fractions of shares on the exercise of Warrants. If any fraction of a share would, except for the provisions of this Section, be issuable on the exercise of any Warrant, the Company will (i) if the fraction of a share otherwise issuable is equal to less than one-half, round down and issue to the Holder only the largest whole number of shares of Common Stock to which the Holder is otherwise entitled, or (ii) if the fraction of a share otherwise issuable is greater than one-half, round-up and issue to the Holder one additional share of Common Stock in addition to the largest whole number of shares of Common Stock to which the holder is otherwise entitled. (d) Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Subject to the provisions of Section (h), upon surrender of this Warrant to the Company or the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any applicable transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation hereof at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder thereof. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of such indemnification as the Company may in its discretion impose, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. (e) Rights of the Holder. The Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or in equity and the rights of the Holder are limited to those expressed in the Warrant are not enforceable against the Company except to the extent set forth herein. (f) Anti-Dilution Provisions. The Exercise Price and the number and kind of securities purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time as hereafter provided. (i) In the case of the Company issuing Common Stock as a dividend upon Common Stock or in payment of a dividend thereon shall subdivide the number of outstanding shares of its Common Stock into a greater number of outstanding shares or shall contract the number 3 of outstanding shares of its Common Stock into a lesser number of shares, the Exercise Price then in effect shall be adjusted, effective at the close of business on the record date for the determination of stockholders entitled to receive such dividend or be subject to such subdivision or contraction, to the price (computed to the nearest cent) determined by dividing (A) the product obtained by multiplying the Exercise Price in effect immediately prior to close of business on such record date by the number of shares of Common Stock outstanding prior to such dividend, subdivision or contraction, by (B) the number of shares of Common Stock outstanding immediately after such dividend, subdivision or contraction. (ii) If any capital reorganization or reclassification of the capital stock of the Company (other than as set forth in subsection (i) of this section (f), or consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and adequate provisions shall be made whereby the holder of each Warrant shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions specified in the Warrant and in lieu of the shares of Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented by such Warrant, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of Common Stock immediately theretofore purchasable and receivable upon the exercise of the rights represented by such Warrant had such reorganization, reclassification, consolidation, merger or sale not taken place, and in any such case appropriate provision shall be made with respect to the rights and interest of the Holder to the end that the provisions of the Warrants (including, without limitation, provisions for adjustment of the Exercise Price and of the number of shares issuable upon the exercise of Warrants) shall thereafter be applicable as nearly as may be practicable in relation to any shares of stock, securities, or assets thereafter deliverable upon exercise of Warrants. The Company shall not effect any such consolidation, merger or sale unless prior to or simultaneously with the consummation thereof, the successor corporation purchasing such assets shall assume, by written instrument, the obligation to deliver to the Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Holder may be entitled to purchase. (iii) Upon such adjustment of the Exercise Price pursuant to subsection (i) of this Section (f), the number of shares of Common Stock specified in each Warrant shall thereupon evidence the right to purchase that number of shares of Common Stock (calculated to the nearest hundredth of a share of Common Stock) obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock purchasable immediately prior to such adjustment upon exercise of such Warrant and dividing the product so obtained by the Exercise Price in effect after such adjustment. (iv) Irrespective of any adjustments of the number or kind of securities issuable upon exercise of warrants or the Exercise Price. Warrants theretofore or thereafter issued may continue to express the same number of shares of Common Stock and Exercise Price as are stated in similar Warrants previously issued. (v) The Company may, at its sole option, retain the independent public accounting firm regularly retained by the Company, or another firm of independent public 4 accountants of recognized standing selected by the Company's Board of Directors, to make any computation required under this Section (f), and a certificate signed by such firm shall be conclusive evidence of any computation made under this Section (f). (vi) Whenever there is an adjustment in the Exercise Price or in the number of kind of securities issuable upon exercise of the Warrants, or both, as provided in this Section (f) the Company shall (i) promptly file in the custody of its Secretary or Assistant Secretary a certificate signed by the Chairman of the board of the President or Vice President of the Company and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company setting forth the facts requiring such adjustment and the number and kind of securities issuable upon exercise of each Warrant after such adjustment: and (ii) cause a notice stating that such adjustment has been effected and stating the Exercise Price then in effect and the number and kind of securities issuable upon exercise of each Warrant to be sent to each registered holder of a Warrant. (vii) The Exercise Price and the number of shares issuable upon exercise of a Warrant shall not be adjusted except in the manner and only upon the occurrence of the events heretofore specifically referred to in this Section (f). (viii) The Board of Directors of the company may without the prior consent of the Holder reduce the Exercise Price or increase the number of shares of Common Stock or other securities issuable upon exercise of the Warrant. (ix) No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which together with any adjustments so carried forward, shall amount to not less than 1% of such Exercise Price. (g) Redemption (i) The Company shall have the right, upon thirty (30) days written notice to call this Warrant for redemption, in whole or in part at a call price of $0.5 per Warrant Share upon the occurrence of both of the following events: (a) the listing of the Company's shares of Common Stock on a securities exchange and (b) the Company's Common Stock trading in excess of $5.25 per share for a ten day period. (ii) In the event the Company shall desire to exercise its right to so redeem the Warrants it shall mail a notice of redemption to each of the Registered Holders of the Warrants to be redeemed first class postage prepaid not later than the thirtieth (30th)day before the date fixed for redemption at their last address as shall appear on the records of the Warrants. Any notice mailed in the manner provided herein shall be conclusively presumed to have been duly given whether or not the Registered Holder receives such notice. (iii) The notice of redemption shall specify (a) the redemption price: (b) the date fixed for redemption: (c) the place where the Warrant Certificates shall be delivered and the redemption price paid: and (d) that the right to exercise the Warrant shall terminate at 5:00 p.m. 5 (Eastern Daylight Time) on the business day immediately preceding the date fixed for redemption. The date fixed for the redemption of the Warrants shall be the Redemption Date. No failure to mail such notice nor any defect therein or in the mailing thereof shall affect the validity of the proceedings for such redemption except as to a Holder (i) to whom notice was not mailed or (ii) whose notice was defective. An affidavit of any agent of the company that notice of redemption has been mailed shall, in the absence of fraud be prima facie evidence of the facts stated therein. Any document of the notice, or affidavit of the person making the hand delivery and any document evidencing delivery by U.S. Mail to Holder's address such as a certified mail receipt, shall be conclusive evidence of delivery of notice to Holder. (iv) Any right to exercise a Warrant shall terminate at 5:00 p.m. (Eastern Daylight Time) on the business day immediately preceding the Redemption Date. On or after the Redemption Date. Holders of the Warrants shall have no further rights except to receive, upon surrender of the Warrant, the Redemption Price. (v) From and after the date specified for redemption the Company shall at the place specified in the notice of redemption upon presentation and surrender to the Company by or on behalf of the Registered Holder thereof of one or more Warrants to be redeemed deliver or cause to be delivered to or upon the written order of such Holder a sum in cash equal to the redemption price of each such Warrant. From and after the date fixed for redemption and upon the deposit or setting aside by the Company of a sum sufficient to redeem all the Warrants called for redemption such Warrants shall expire and become void and all rights hereunder and under the Warrant certificates except the right to receive payment of the redemption price shall cease. (h) Transfer to Company with the Securities Act of 1933 and Other Applicable Securities Laws. This Warrant or the Warrant Shares or any other security issued or issuable upon exercise of this Warrant may not be sold or otherwise disposed of unless the Holder provides the Company with an opinion of counsel satisfactory to the Company in form satisfactory to the Company that this Warrant or the Warrant Shares may be legally transferred without violating the Act and any other applicable securities laws and then, if such opinion states that certificates representing the Warrants or 6 Warrants Shares being transferred shall be required to bear a legend restricting further transfer only against receipt of an agreement of the transferee to comply with the provisions of this Section (h) with respect to any resale or other disposition of such securities. SCHUYLKILL ACQUISITION CORP. BY: ------------------------------ THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF AND MAY NOT BE TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, OR THE RULES AND REGULATIONS THEREUNDER. PURSUANT TO SECTION 203(d) OF THE PENNSYLVANIA SECURITIES ACT OF 1972 AND TO THE EXTENT IF ANY REQUIRED THEREBY THE PURCHASER OF THIS SECURITY WHICH IS A RESIDENT OF THE COMMONWEALTH OF PENNSYLVANIA HEREBY AGREES NOT TO SELL THIS SECURITY WITHIN TWELVE MONTHS AFTER THE DATE OF PURCHASE. 7 PURCHASE FORM Dated: ----------------------------- The Undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing __________________ shares of Common Stock and hereby makes payment of $_____________ in payment of the Exercise Price thereof. INSTRUCTIONS FOR REGISTRATION OF STOCK Name: - -------------------------------------------------------------------------------- [Please typewrite or print] Address: ----------------------------------------------------------------------- - -------------------------------------------------------------------------------- Social Security or Tax I.D. Number: --------------------------------------------- Signature: ---------------------------------------------------------------------- ASSIGNMENT FORM FOR VALUE RECEIVED, _______________________________ hereby sells, assigns and transfers unto: Name: - -------------------------------------------------------------------------------- [Please typewrite or print] Address: ----------------------------------------------------------------------- - -------------------------------------------------------------------------------- Social Security or Tax I.D. Number: --------------------------------------------- the right to purchase Common Stock represented by this Warrant to the extent of - -------------- 8 shares as to which such right is exercisable and does hereby irrevocably constitute and appoint _______________________. Attorney to transfer the Shares on the books of the Company with full power of substitution in _________________ the premises. - ----------------------------------- - ----------------------------------- Signature Date EX-10.1 8 EMP. AGREEMENT W/NELSON 1 Exhibit 10.1 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made and entered into this 31st day of October, 1996, and effective as of November 1, 1996 by and between JOSEPH NELSON, whose address is 5565 Leitner Dr. East Coral Springs, Florida, ("Employee"), and JET AVIATION TRADING, INC., a Florida Corporation, whose address is 1170 N.W. 163rd Drive, Miami, FL 33169 (hereinafter called "JET, Employer or Company"). WITNESSETH: WHEREAS, JET is in the business of buying and selling aircraft, engines and parts and related products and materials (the "Business of Employer"); and WHEREAS, Employee will be employed as President, Chief Executive Officer and Director of JET and whose duties include responsibility for and oversight of all day to day activities of JET and other functions; and WHEREAS, JET does business, purchases inventory and has customers throughout the world; and WHEREAS, this Agreement sets forth in writing the understanding of the parties agreed to between themselves to provide for the employment of Employee upon the terms and conditions herein set forth; NOW, THEREFORE, in consideration of the above and foregoing premises and the employment of the Employee during the term hereof, the parties agree as follows: 1. Recitals. The above-mentioned recitals are true and correct and are incorporated herein and by reference made a part of this Agreement. 2. Revocation of Prior Agreements: The parties do hereby cancel and revoke all prior agreements and understandings whether oral or written, relating to the subject matter of this Agreement. 1 2 3. Term of Employment. Subject to the provisions hereof, the Employer hereby employs Employee for the period commencing as of November 1, 1996 and continuing until October 31, 1999, (the "Term") or unless sooner terminated as provided herein. Each 12 month period of employment hereunder, commencing November 1, 1996, shall be called an "Employment Year." In the event the Employee is still employed at the end of the Term, then this Agreement shall automatically extend from month-to-month thereafter on all of these terms and conditions except that paragraph 11(b) and 12(b)(ii) shall not apply. 4. Employment Duties. Employee shall serve the Employer as and in the specific capacity of President, Chief Executive Officer and as a Director of the Employer. Employee shall be in charge of and oversight of all operating activities of the Employer and shall be responsible for general oversight and management of the day to day operations of the Employer and such other duties as may reasonably be required by the elected Board of Directors of JET (the "Board"). Employee covenants and agrees to devote his full time and energies, and his best efforts and business judgments exclusively to the business of the Employer and to perform such duties to the best of his ability and to observe all reasonable policies, rules and regulations as determined and imposed by the Employer for operation of the Employer's business. The Employee shall report to the Board, who shall direct, control and supervise the duties to be performed. 5. Vacation. Employee shall be entitled to two (2) weeks of vacation time during each year of his employment, one week of which shall accrue every six (6) months. Such vacation shall be with full pay and other benefits provided hereunder. Vacation may be taken prior to accrual, but salary paid for any such vacation not accrued will be returned by Employee at termination. The time of vacation shall be selected in such manner as not to conflict with the Employer's operations, and Employee's employment duties; however, Employer shall not unreasonably constrain Employee's time of vacation. Employee shall give Employer reasonable notice of his intended vacations. Up to one week of vacation may be rolled-over to the following year if allotted vacation time was not used in the previous year. In no event may Employee take more than two weeks of vacation in a row. If allotted or rolled-over vacation is not fully used prior to termination, Employee shall be compensated for such unused vacation. 6. Sick Leave. As determined by the Employer, the Employee shall be entitled to a reasonable number of days of sick leave with full pay during each calendar year. 7. Confidential Information. All records of the Employer which include, but are not limited to, advertising, sales, other materials or articles of information, including without limitation, data processing reports, computer software and/or media containing Employer's confidential information, customer lists, supplier lists, purchasing information, customer sales analysis and patterns, invoices, price lists or information, samples, or any other materials or data of any kind furnished to Employee 2 3 by the Employer, acquired by Employee while employed by the Employer, or developed by Employee on behalf of the Employer or at the Employer's direction or for the Employer's use or otherwise in connection with Employee's employment hereunder, are and shall remain the sole and confidential property of the Employer. Employee acknowledges that such information is proprietary trade secrets of Employer. All or any such materials and records shall hereinafter be known as "Confidential Information." If the Employer requests the return of such Confidential Information at any time during, at, or after the termination of Employee's employment hereunder, Employee shall immediately deliver the same and all copies or excerpts thereof to Employer. 8. Covenants During Employment. While employed by the Employer, Employee agrees that he will not, without the written consent of the Board: (a) Unless authorized to do so by the Board, make, draw, accept or endorse any contract, lease, promissory note, or other instrument requiring the payment of money by the Employer nor shall he use any money belonging to the Employer or pledge its credit except in the usual and regular course of business and exclusively on account, or for the benefit of the Employer; (b) Release or discharge any debtor of the Employer without receiving the full amount thereof; (c) Make any statement or perform any act intended to advance an interest of any existing or prospective competitor of the Employer in any way that will or may reasonably be thought to injure an interest of the Employer in its relationships and dealings with existing or potential customers or solicit or encourage any other employee of the Employer to do any act that is intended to be disloyal to the Employer or inconsistent with the Employer's best interest or in violation of any provision of this Agreement; (d) Compete in any manner directly or indirectly with the business of the Company or in any field connected with aviation, aircraft, aircraft parts, avionics or the like. 9. Nondisclosure. The Employee shall not, at any time during the term of this Employment Agreement or at any time thereafter, except as may be authorized by JET in writing disclose or make use of, directly or indirectly, JET's customer list or supplier list or any other Confidential Information for his own benefit, for the benefit of others engaged in the same business as JET or for others who Employee believes or should reasonably believe might or could enter into JET's business. Employee acknowledges the material adverse impact to Employer due to any breach by Employee of these provisions, no matter how small, and that any such breach shall cause him to forfeit any unpaid amounts set forth in Paragraph 11(b)(ii) below. 3 4 10. Non-Compete. a) In the event of termination of Employee's employment with JET without cause or if Employee voluntarily leaves employment and Employer elects to pay Employee Severance Pay under paragraph (12)(b) iii, hereof , it is agreed that Employee will not, for a period of one year thereafter, (the "Non-Compete Period") directly or indirectly, either as an individual, employee, agent, partner, shareholder, owner or otherwise; (a) call on, solicit or accept the Customers of JET (as defined below) for the purpose of selling or the sale of those types of products which JET sold during the two year period preceding Employee's termination, either for himself or for any other person or competing business; or (b) call on, solicit or seek to purchase supplies, materials or inventory for resale or use of the type purchased by JET from the Vendors of JET (as defined below) or (c) be employed, consult for, or in any way render services to any business engaged in the sale and or distribution of the type of products which JET does or has sold or distributed within the previous twelve month period and in any geographic area where JET regularly does business at the time of Employee's termination from employment. "Customers of JET" shall mean those persons or entities, including their affiliates, parents, subsidiaries franchisers or franchisees, wherever located in the world who purchased any of JET's products within the twelve month period preceding Employee's termination, upon whom Employee called, with whom Employee became acquainted, or whose name Employee learned during his employment with JET. "Vendors of JET" shall mean those person or entities including their affiliates, parents, subsidiaries, franchisers or franchisees, who sold raw or finished goods or supplies to JET within the twelve month period preceding Employee's termination, upon whom Employee called, with whom Employee became acquainted, or whose name Employee learned during his employment with JET. 11. Compensation. (a) Basic Compensation In each year of Employee's Term of Employment: Employee shall receive as basic compensation ("Basic Compensation") for all services rendered by the Employee hereunder, an annual salary during each Employment Year, or prorated for a partial Employment Year of $160,000, payable in accordance with the customary payroll practices of Employer, but in no event less frequently than semi-monthly. At the end of each Employment Year, Employee and Employer shall negotiate in good faith any increase in Basic Compensation as may be appropriate for the next Employment Year. (b) Bonuses: In addition to the amounts paid to Employee pursuant to (a) above, if Employee is still employed by Employer on October 31, 1997, and at the end of each fiscal year thereafter, Employee shall be entitled to a cash bonus based upon the Employer's results of operations for the fiscal year ending October 31, 1997 and each fiscal year thereafter that Employee is still employed hereunder, on the following terms and conditions: 4 5 Employee shall be entitled to a bonus of 3% of the Pre Tax Net Income of Employer, for such fiscal year. "Pre-Tax Net Income of Employer" shall be defined as net income of Employer determined under generally accepted accounting principles, consistently applied, after deducting Employee's compensation, including this bonus. Employee agrees that one-half of the bonus amount in excess of $25,000 annually earned by Employee shall be applied to reduce the outstanding balance of Employee's obligation under his promissory note given pursuant to paragraph 11(c) below. (c) Upon execution hereof, the Company will honor Employee's subscription for 192,000 shares of the Company's Common Stock. The Company will issue such shares upon delivery to the Company of Employee's promissory note in the principal amount of $80,000 payable together with accrued interest at the Applicable Federal Rate for demand obligations in effect at the date this Employment Agreement is executed, as determined by the Internal Revenue Service, per annum, upon demand. (d) Health Insurance and Benefits: During the Term, Employer shall pay for Employee's health insurance coverage under the Employer's group health insurance plan in effect for the employees of the Company and such other benefits as are commensurate with executives in Employee's position. (e) Employee shall be granted options to purchase 30,000 shares of the Common Stock of the Company under the stock option plan of the Company duly adopted by the Board. Such options shall vest 10,000 shares per year commencing one year from the date hereof in accordance with said stock option plan. (d) Deductions from Compensation: Any amounts payable to Employee hereunder shall be subject to reduction and withholding for Social Security, withholding taxes, and any other such taxes or deductions as may from time to time be required to be withheld by Employer pursuant to applicable governmental authority. 5 6 12. Termination. (a) General: This Agreement shall terminate upon the Employee's termination of employment, but the terms of the paragraphs herein which contemplate acts, the restraint of acts, or payments after the termination or expiration hereof, and the representations and warranties made herein, shall survive the termination of this Employment Agreement for any reason. Employee's employment hereunder shall be terminated upon the happening of any of the following events: (1) the death of the Employee; (2) the permanent disability of the Employee, as more fully discussed in Article 13 hereof; (3) upon the expiration of the Term of this Employment Agreement according to its terms; (4) for cause; for these purposes, "cause" shall include: (i) the conviction of Employee of a crime involving moral turpitude; (ii) an act of dishonesty either involving Employee's employment or harmful to Employer or other employees, including fraud, misappropriation, embezzlement or the like; (iii) the misfeasance, malfeasance or non-feasance of Employee in carrying out the duties of Employee's employment with Employer, not cured within thirty (30) days prior notice. (b) Payments Upon Termination: i. Death or Disability. Upon termination of Employee's employment hereunder at the end of the Term or because of the death or permanent disability of Employee, Employee or in the event of his death or his mental incapacity his personal representative, shall be paid his Basic Compensation hereunder, prorated through the date of termination. In addition if termination of this Agreement is due to the death of the Employee, his estate shall be entitled to the payment of the Employee's Basic Compensation for sixty (60) days after the date of Employee's death. 6 7 ii. Termination For Cause or Voluntary Leaving. Upon termination of Employee's employment hereunder for cause or voluntary leaving, as compensation for services rendered during the term of this Agreement to the date of termination, Employee shall be paid his Basic Compensation hereunder prorated through the date of termination, and no other amounts hereunder. Any amounts which have been prepaid will be returned by Employee or his personal representative. iii. Dismissal. Upon termination of Employee's employment hereunder, for reasons not for cause, death, permanent disability, his voluntary leaving or the expiration of the Term hereof, such reasons to include, without limitation, the dismissal of the Employee by Employer for reasons not for cause, or the dissolution of the Employer, Employee shall be entitled to receive his Basic Compensation for twelve (12) months payable no less often than semi-monthly following Termination of Employee's employment under this Employment Agreement immediately above, ("Severance") and such amounts as he may be entitled to as are set forth in paragraph 11 prorated, annualized and calculated through the date of Termination. If Employee voluntarily leaves, at Employer's election it may pay Employee Severance Pay for so long as Employee does not compete with Employer under the terms of Paragraph 10 hereof. These payments shall cease however should Employee breach the provisions of paragraphs 7, 9 or 10 hereof, in addition to the other remedies therefor of Employer hereunder. 13. Disability. (a) In the event that Employee incurs a disability of either a physical or mental character which, in the opinion of a physician selected by the Employer, which physician shall be approved by Employee (which approval shall not be unreasonably withheld), renders him disabled from performing the usual and customary duties to be rendered hereunder or heretofore rendered by Employee, he shall receive his full Basic Compensation for the first ninety (90) days or any part thereof of continuous disability. (b) No disability shall be deemed to exist until after Employee shall be unable to perform his duties for thirty (30) consecutive days; but after such disability continues for thirty (30) consecutive days, then the same shall be deemed to have existed from the first day of such disability. (c) If the Employee does not recover and resume his duties within ninety days from the date he is deemed to have become disabled, Employee may, unless the physician selected in paragraph 11(a) above certifies that Employee is again capable of performing his usual and customary duties with or without reasonable accommodation, at the election of the Board of Directors, be deemed to have become permanently disabled at the beginning of such disability. 7 8 (d)(i) If Employee shall have been disabled and shall have returned to work after the end of such disability, any recurrence of the same disability commencing within one hundred eighty (180) days of the termination of the prior period of disability shall be deemed to be a continuation of the prior disability, and the periods of all such disabilities shall be added together to determine the rights of the parties hereunder. (ii) If Employee shall have been disabled and shall have returned to work after the end of such disability, any new and unrelated disability occurring thereafter shall be treated as if the previous and unrelated disability had not occurred. (e) Services During Disability: During the period that Employee shall be entitled to receive payments under this Article, and to the extent that he is physically and mentally able to do so, he shall furnish information and assistance to the Employer and comply with the provisions hereof; and, in addition, upon reasonable request in writing on behalf of the President he shall make himself available to the Employer to undertake reasonable assignments consistent with the dignity, importance and scope of his prior position and his physical and mental health. 14. Reformation. If elements of the agreements set forth in the above paragraphs would otherwise be determined to be invalid or unenforceable by a court of competent jurisdiction, the parties intend and agree that such court shall exercise its discretion in reforming the elements of this Agreement to the end that Employer and Employee shall be subject to an employment agreement, a nondisclosure covenant and related covenants as close as possible to the terms in the paragraphs above and which are enforceable by Employer or Employee. 15. Essence. Employee agrees that the covenants and agreements contained herein are the essence of this Agreement and that such covenants and agreements are reasonable and necessary to protect and preserve the interests and properties of Employer and Employee; that irreparable loss and damage will be suffered by Employer should Employee breach any of such covenants and agreements; that each of such covenants and agreements is separate, distinct and severable, not only from the other of such covenants and agreements but also from the other and remaining provisions of this agreement; that the enforceability of any such covenant or agreement shall not affect the validity or enforceability of any other such covenants or agreements or provisions of this Agreement and that the covenants and agreement shall be fully enforceable irrespective of how long Employee has been in the employment of Employer. 8 9 16. Remedies. (a) Employee agrees and understands that Employer has acted in reliance on the provisions of this Agreement in employing Employee and would not continue to employ Employee if Employee did not execute this Agreement. (b) In the event that Employee shall breach any or all of the covenants and agreements set forth in paragraph 9 or 10 subsequent to the termination of his employment, Employee agrees that the running of the period of restrictions set forth in paragraphs 9 or 10 shall be tolled during the continuation(s) of any such breach or breaches by the Employee and the running of the period of such restrictions shall commence or commence again only upon compliance by the Employee with the terms of the applicable paragraphs breached. (c) Employee agrees that in the event he shall breach any of the above covenants and agreements, damage to Employer shall be presumed in any legal action by Employer against Employee for damages. Employer shall be entitled to collect actual damages caused by Employee's breach of any of the covenants and agreements. In addition to the above remedy and other remedies available to it, Employer shall be entitled to both permanent and temporary injunctions, without the posting of a bond and without the need to prove irreparable harm, to prevent a breach or contemplated breach by Employee of any of the above covenants or agreements. 18. Miscellaneous. (a) Binding Agreement: All the terms, covenants, representations, warranties and conditions of this Agreement shall be binding upon and inure to the benefit of, and be enforceable by, the parties hereto and their respective successors, heirs at law, legatees, distributees, executors, administrators and other legal representatives. (b) Waiver: No term or condition of this Agreement shall be deemed to have been waived nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition for the future or as to any act other than that specifically waived. (d) Severability: If, for any reason, any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held to be invalid, and each such other provision shall to the full extent consistent with law continue in full force and effect. 9 10 (e) Notices: All notices, requests, demands and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, given by prepaid telegraph or mailed first class, postage prepaid, registered or certified mail, return receipt requested, to Employer or Employee at their respective addresses set forth in this Agreement or to any other address of which notice of the change is given to the parties hereto. (f) Governing Law. The construction, interpretation, validity and performance of this Employment Agreement shall be governed by the laws of the State of Florida. The parties agree that venue for any action shall be in Dade County, Florida. (g) Entire Agreement. This instrument contains the entire agreement between the parties hereto with respect to the subject matter hereof and no prior or collateral promises or conditions in connection with or with respect to the subject matter hereof not incorporated herein shall be binding upon the parties hereto. (h) Modification. No modification, extension, renewal, rescission, termination or waiver of any of the provisions contained herein or any future representation, promise or condition in connection with the subject matter hereof, shall be binding upon any of the parties unless made in writing and duly executed by the parties or their authorized representative. (i) Headings. The section and paragraph headings contained in this Employment Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this document. (j) Attorney's Fees and Expenses. Employer and Employee agree that, if either party has to employ an attorney to enforce this Agreement, the non-prevailing party shall pay reasonable costs, expenses, attorney's fees and paralegal fees through and including any appeals, settlement or negotiations required to enforce this Employment Agreement incurred by the prevailing party. (k) Material Inducement. Employer and Employee agree and understand that both parties hereto have acted in reliance on this Employment Agreement in executing this Agreement and the covenants contained herein are a material inducement for both parties hereto to do so. (l) Survival. The terms of the paragraphs herein which contemplate acts, the restraint of acts, or payments after the termination or expiration hereof and the representations and warranties made herein shall survive the termination of this Agreement or Employee's employment hereunder for any reason. 10 11 IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed and its seal to be affixed hereunto by its officers hereunto duly authorized, and Employee has signed this Agreement all as of the day and year first above written. EMPLOYER Attest: JET AVIATION TRADING, INC. By: /s/ Marion N. Kolinatis By: /s/ Allen Beni - --------------------------- -------------------------------- its Secretary Title: V.P. Allen Beni ----------------------------- (Corporate Seal) Witnesses: /s/ Allen Beni /s/ Joseph Nelson - --------------------------- ------------------------------------ Allen Beni JOSEPH NELSON 11 EX-10.2 9 LEASE 1 Exhibit 10.2 BUSINESS LEASE THIS AGREEMENT, entered into this 1st day of January, 1997 between West Tropical Investment Corp. hereinafter called the lessor or landlord, party of the first part, and Jet Aviation Trading Inc. of the County of Dade and State of Florida hereinafter called the lessee or tenant, party of the second part: WITNESSETH, that the said lessor or landlord does this day lease unto said lessee, and said lessee does hereby hire and take as tenant ____ under said lessor the following described premises: Describe type of property, address, etc.) WAREHOUSE and offices consisting of Approximately 13560 Sq. Feet. 15675 NW 15 Ave., Miami Fl. 33169 situate in Dade county State of Florida, to be used and occupied by the lessee as Warehouse and offices, and for no other purposes or uses whatsoever, for the term of four years, subject and conditioned on the provisions of clause ten of this lease beginning the 1st day of January 1997, and ending the 31st day of December 2000, at and for the agreed total rental of Fifty Eight Thousand Nine Hundred Seven and 88/100 Dollars. Payable annually as follows: Office : 2550 Square Feet at $5.50/sq.ft.--$168.75 Per month plus applicable sales tax. Warehouse : 11010 Square Feet at $3.75/sq.ft.--$3,440.63 Per month plus applicable sales tax. Total monthly payment is $4,908.99 (Including sales tax of 6.5%) all payments to be made to the lessor on the first day of each and every month in advance without demand at the office of West Tropical Investments Corp. in the City of Hollywood, Florida or at such other place and to such other person, as the lessor may from time to time designate in writing. The following express stipulations and conditions are made a part of this lease and are hereby assented to by the lessee: FIRST: The lessee shall not assign this lease, nor sub-let the premises, or any part thereof nor use the same, or any part thereof, not permit the same, or any part thereof, to be used for any other purpose than as above stipulated, nor make any alterations therein, and all additions thereto, without the written consent of the lessor, and all additions, fixtures or improvements which may be made by lessee, except movable office furniture, shall become the property of the lessor and remain upon the premises as a part thereof, and be surrendered with the premises at the termination of this lease. SECOND: All personal property placed or moved in the premises above described shall be at the risk of the lessee or owner thereof, and lessor shall not be liable for any damage to said personal property, or to the lessee arising from the bursting or leaking of water pipes, or from any net of negligence of any co-tenant or occupants of the building or of any other person whensoever. THIRD: That the tenant shall promptly execute and comply with all statutes, ordinances, rules, orders, regulations and requirements of the Federal, State and City Government and of any and all their Departments and Bureaus applicable to said premises, for the correction, prevention, and abatement of nuisances or other grievances, in, upon, or connected with said premises during said term; and shall also promptly comply with and execute all rules, orders and regulations of the applicable fire prevention codes for the prevention of fires, at Tenant's own cost and expense. Tenant's liability shall be limited from the commencement of this lease. 2 FOURTH: In the event the premises shall be destroyed or so damaged or injured by fire or other casualty during the Life of this agreement, whereby the same shall be rendered untenantable, then the lessor shall have the right to render said premises tenantable by repairs within ninety days therefrom. If said premises are not rendered tenantable within said time, it shall be optional with either party hereto to cancel this lease, and in the event of such cancellation the rent shall be paid only to the date of such fire or casualty. The cancellation herein mentioned shall be evidenced in writing. FIFTH: The prompt payment of the rent for said premises upon the dates named, and the faithful observance of the rules and regulations printed upon this lease, and which are hereby made a part of this covenant, and of such other and further rules or regulations as may be hereafter made by the lessor, are the conditions upon which the lease is made and accepted and any failure on the part of the leasee to comply with the terms of said lease, or any of said rules and regulations now in existence, or which may be hereafter prescribed by the lessor, shall at the option of the lessor, work a forfeiture of this contract, and all of the rights of the lessee hereunder. SIXTH: If the lessee shall abandon or vacate said premises before the end of the term of this lease, or shall suffer the rent to be in arrears, the lessor may, at his option, forthwith cancel this lease or he may enter said premises as the agent of the lessee, without being liable in any way therefor, and relet the premises with or without any furniture that may be, therein, as the agent of the lessor, at such price and upon such terms and for such duration of time as the lessor may determine, and receive the rent therefor, applying the same to the payment of the rent due by these presents, and if the full rental herein provided shall not be realized by lessor over and above the expenses to lessor in such re-letting, the said lessee shall pay any deficiency, and if more than the full rental is realized lessor will pay over to said lessee the excess of demand. SEVENTH: Lessee agrees to pay the cost of collection and ten per cent attorney's fees on any part of said rental that may be collected by suit or by attorney, after the same is past due. EIGHTH: The lessee agrees that he will pay all charges for rent, gas, electricity or other illumination, and for all water used on said premises, and should said charges for rent, light or water herein provided for at any time remain due and unpaid for the space of five days after the same shall have become due, the lessor may at his option consider the said lessee tenant at sufferance and the entire rent for the rental period then next ensuing shall at once be due and payable and may forthwith be collected by distress or otherwise. NINTH: The said lessee hereby pledges and assigns to the lessor all the furniture, fixtures, goods and chattels of said lessee, which shall or may be brought or put on said premises as security for the payment of the rent herein reserved, and the lessee agrees that the said lien may be enforced by distress foreclosure or otherwise at the election of the said lessor, and does hereby agree to pay attorney's fees of ten percent of the amount so collected or found to be due, together with all costs and charges therefore incurred or paid by the lessor. ELEVENTH: The lessor, or any of his agents, shall have the right to enter said premises during all reasonable hours, to examine the same to make such repairs, additions or alterations as may be deemed necessary for the safety, comfort, or preservation thereof, or of said building, or to exhibit said premises, and to put or keep upon the doors or windows thereof a notice "FOR RENT" at any time within thirty (30) days before the expiration of this lease. The right of entry shall likewise exist for the purpose of removing placards, signs, fixtures, alterations, or additions, which do not conform to this agreement, or to the rules and regulations of the building. TWELFTH: Lessee hereby accepts the premises in the condition they are in at the beginning of this lease and agrees to maintain said premises in the same condition, order and repair as they are at the commencement of said term, excepting only reasonable wear and tear arising from the use thereof under this agreement, and to make good to said lessor immediately upon demand, any damage to water apparatus, or electric lights or any fixture, appliances or appurtenances of said premises, or of the building, caused by any act or neglect of lessee, or of any person or persons in the employ or under the control of the lessee. THIRTEENTH: It is expressly agreed and understood by and between the parties to this agreement, that the landlord shall not be liable for any damage or injury by water, which may be sustained by the said tenant or other person or for any other damage or injury resulting from the carelessness, negligence, or improper conduct on the part of any other tenant or agents, or employees, or by reason of the breakage, leakage, or obstruction of the water, sewer or soil pipes, or other leakage in or about the said building. FOURTEENTH: If the lessee shall become insolvent or if bankruptcy proceedings shall be begun by or against the lessee, before the end of said term the lessor is hereby irrevocably authorized at its option, to forthwith cancel this lease, as for a default. Lessor may elect to accept rent from such receive, trustee, or other judicial officer during the term of their occupancy in their fiduciary capacity without affecting lessor's rights as contained in this contract, but no receiver, trustee, or other judicial officer shall ever have any right, title or interest in or to the above described property by virtue of this contract. FIFTEENTH; Lessee hereby waives and renounces for himself and family any and all homestead and exemption rights he may have now, or hereafter, under or by virtue of the constitution and laws of this State, or of any other State, or of the United States, as against the payment of said rental or any portion hereof, or any other 3 SIXTEENTH: This contract shall bind the lessor and its assigns or successors, and the heirs, assigns, personal representatives, or successors as the case may be, of the lessee. SEVENTEENTH: It is understood and agreed between the parties hereto that time is of the essence of this contract and this applies to all terms and conditions contained herein. EIGHTEENTH: It is understood and agreed between the parties hereto that written notice mailed or delivered to the premises leased hereunder shall constitute sufficient notice to the lessee and written notice mailed or delivered to the offices of the lessor shall constitute sufficient notice to the lessor, to comply with the terms of this contract. NINETEENTH: The rights of this lessor under the foregoing shall be cumulative, and failure on the part of the lessor to exercise promptly any rights given hereunder shall not operate to forfeit any of the said rights. TWENTIETH: It is further understood and agreed between the parties hereto that any charges against the lessee by the lessor for services or for work done on the premises by order of the lessor or otherwise .... under this contract shall be considered as rent due and shall be included in any lien for rent due and unpaid. TWENTY-FIRST: It is hereby understood and agreed that any signs of advertising to be used, including awnings, in connection with the premises leased hereunder shall be first submitted to the lessor for approval before installation of same. TWENTY-SECOND: RADON GAS NOTIFICATION (the following notification may be required in some ....: Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings. Additional information regarding radon and radon testing may be obtained from your county public health unit. See Attached Addendum: In Witness Whereof, the parties hereto have executed this instrument for the purposes herein expressed, the day and year above written. Signed, sealed and delivered in the presence of: By: /s/ - -------------------------------- ------------------------------- Witness Signature (as to Lessee) Witness Signature - -------------------------------- -------------------------------- Printed Name Printed Name By: /s/ - -------------------------------- -------------------------------- Witness Signature (as to Lessee) Witness Address 3100 N. 29th Court Hollywood, FL 33020 /s/ - -------------------------------- ------------------------------- Printed Name Witness Signature Jet Aviation Trading, Inc. - -------------------------------- ------------------------------- Witness Signature (as to Lessee) Printed Name By: /s/ Joseph Nelson - -------------------------------- -------------------------------- Printed Name Witness Address 15675 NW 15 Ave. Miami, FL 33169 - -------------------------------- Witness Signature (as to Lessee) - -------------------------------- Printed Name STATE OF FLORIDA ) COUNTY OF ) I hereby Certify that on this day before me, an officer duly authorized to administer oaths and take acknowledgement, personally appointed Joseph J. Nelson known to me to be the person ----- described in and whos ----- the foregoing ----- who ---- before me that he .... the same and on oath was not taken, said person(s) is/... personally known to me ... provided the following type of identification Drivers License Notary Public Stamp Witness my hand and official seal in the County and State said aforesaid this 4th day of November, 1997 /s/ Marion N. Koliniatis --------------------------------------- Notary Signature Marion N. Koliniatis --------------------------------------- Printed Name 4 ADDENDUM ARTICLE TWENTY THIRD: INSTALLATIONS Tenant shall not make any additions, alterations or improvements in or to the Demised Premises without Landlord's written consent. Landlord shall not unreasonably withhold consent. For any improvement, addition or alteration made by the Tenant the Landlord agrees not to charge Tenant for disassembly or removal of such alteration. ARTICLE TWENTY FOURTH: UTILITIES Landlord shall provide necessary mains, ducts and conduit in order to bring electric service to the demised Premises, however, Tenant shall pay for all electric usage directly to the utility company. Landlord shall not be liable for any failure or interruptions of such services and may interrupt same in order to repair or alter any portion of the warehouse building. Tenant shall pay the water usage bill for the entire building comprising of the Demised portion of the building not leased by Tenant. Nothing contained herein shall be construed as an obligation of Landlord to continue to supply water and sewer service. ARTICLE TWENTY SIXTH: LIABILITY INSURANCE Tenant shall, at its own expense, during the term hereof, maintain and deliver to Landlord public liability and property damage and insurance policies with respect to the Demised Premises, in which both Landlord and Tenant shall be named as parties covered thereby, within the limits of $500,000.00 for injury or death to any one person and $1,000,000.00 for any one accident and $300,000.00 with respect to damage to property. Such policy or policies shall be in such form and with such insurance companies as shall be to Landlord of cancellation; and, at least 15 days before the expiration of any such policy, Tenant shall supply Landlord with a substitute therefore, with evidence of payment of the premium thereof. 5 ARTICLE TWENTY SEVENTH: OPTION TO RENEW Tenant shall have the option, to be exercised by written notice to Landlord at least six months prior to the expiration of the original term of this lease, to renew this lease for two additional one year options upon all of the terms and conditions provided in the original lease. For the purposes of Cost of Living Adjustment Article, there shall be three (3) "adjustment months" during the renewal period, which shall be the month during each year of the renewal period which corresponds with the month in which the term of this lease first commenced, so that there shall be a cost of living adjustment as provided herein during each option year of the renewal period, including the first year thereof. For purposes of application of the cost of living increase during the option period the basic monthly rental shall be the original monthly rental under the lease and not the basic monthly rental payable during the initial option period. Tenant shall have the right to exercise two option periods as long as Tenant is not in default of this agreement. ARTICLE TWENTY EIGHTH: LANDLORD'S WORK Landlord reserves the right from time to time to make changes, additions and elimination in and to the buildings and common areas in and around the warehouse building, provided same do not unreasonably interfere with Tenant's use of the Demised Premises. ARTICLE TWENTY NINTH: TAX INCREASE If the real estate taxes payable on the land and building comprising the warehouse building properly shall be increased for any tax year over the amount of such taxes payable for the tax year immediately following the year in which this Lease is executed (such tax year being hereinafter called "base year" and the taxes payable in the base year being hereinafter called basic taxes"), Tenant shall pay to Landlord as additional rent, within 10 days after Landlord shall notify Tenant of such increase, an amount equal to Tenants' proportionate share of the tax increase in the ratio that Tenant's floor area bears to the floor area of all rented and rentable space in the warehouse building. Landlord shall take the benefit of the provisions of any statute or any ordinance permitting any such assessment to be paid over a period of time, and Tenant shall be obligated to pay only the said portion of the installments of any such assessments which shall become due and payable during the term of this Lease. Base year is 1997. 6 ARTICLE THIRTY: ASSESSMENTS Tenant shall also pay to Landlord as additional rent, within 10 days after Landlord shall give Tenant notice of the existence thereof, Tenant's proportionate share of any assessments of installments thereof for public betterments or improvements which may be levied on the land or buildings comprising the warehouse building and which are not deductible from any condemnation award. Tenant's proportionate share shall be in the ratio that Tenants' floor area bears to the floor area of all rented and rentable space in the warehouse building. Landlord shall take the benefit of the provisions of any statute or ordinance permitting any such assessment to be paid over a period of time, and Tenant shall be obligated to pay only the said portion of the installments of any such assessments which shall become due and payable during the term of this lease. Base year is 1997. ARTICLE THIRTY FIRST: INSURANCE INCREASES If the insurance premiums payable by Landlord on the fire, windstorm and extended coverage insurance policy carried by Landlord, covering the warehouse building in which the Demised Premises are located, shall be increased for any year over the amount of such insurance premiums for the year immediately following the year in which this Lease is executed (such year being hereinafter called "Base Year" and the insurance premium payable in the Base Year being hereinafter called the "Basic Premium"), Tenant shall pay to Landlord as additional rent within 10 days after Landlord shall notify Tenant of such increase, an amount equal to the proportion of the insurance premium increase in the ratio that Tenant's floor area bears to the floor area of all rented and rentable space in the warehouse building. Base year in 1997. ARTICLE THIRTY FIRST: SUNSHINE STATE INDUSTRIAL PARK Tenant agrees that, during the term hereof, it will pay as additional rent its proportionate share of any assessments imposed by Sunshine State Industrial Park Association, Inc. in furtherance of its purposes as set forth in said Declaration dated December 28, 1958. If Landlord shall so require, the Tenant shall pay the Association directly. ARTICLE THIRTY SECOND: COST OF LIVING ADJUSTMENT Commencing with each of the "adjustment months" described below Tenant shall pay as additional rent, an amount computed in accordance with the following provisions: 7 (A) Landlord shall compute the percentage increase, if any, of the cost of living for each year based upon the "Consumer Price Index Cities" (1967-100)(hereinafter called the "Index"), published by the Bureau of Labor Statistics of the United States Department of Labor. The index number indicated in the column for U.S. city Average entitled "All Items" for said month shall be the "current index number", and the corresponding index number for the month immediately preceding the month in which the term of this Lease commences shall be the "base index number". The excess of the current index number over the base index number, expressed in a percentage, shall be multiplied by the minimum rent payable hereunder, and the resulting amount shall be the increase required to be determined hereunder. The minimum rent as so adjusted shall be due and payable to Landlord in equal monthly installments commencing with the month after the month with respect to which such computation shall have been made. (B) If publication of the Index shall be discontinued, the parties shall accept comparable statistics on the cost of living as shall then be computed and published by an agency of the United States, or, if none, by a respected financial periodical selected by the parties, or, if they cannot agree, by arbitration. (C) There shall be four (4) adjustment months, each of which shall be the month which is the annual anniversary of the month when the term of this lease commenced, so that there shall be a cost of living adjustment for each year during the term of this lease as well as any option periods, if any, commencing with the first month of the second year of the lease term. (D) Provided, however, during the initial term and any exercised option period of this lease the annual rent shall never be increased in any single year by more than 5% of the minimum rental due in the preceding year. The minimum increase shall be 2%. Therefore, the annual base rent shall be increased annually by at least 2%, but not more than 5%. ARTICLE THIRTY THIRD: SECURITY The Tenant has this day deposited with the Landlord the first and last month's rent in the sum of $9,817.98, as security for the full, and faithful performance by Tenant of all of the terms, covenants and conditions of this lease upon Tenant's part to be performed, which said sum shall be returned to Tenant 10 days after the time fixed as the expiration of the term hereof, provided that Tenant has fully and faithfully carried out all of said terms, covenants and conditions on Tenant's part to be performed. Landlord shall have the right, but not obligation to apply any part of said deposit to cure any default of Tenant; 8 and, if Landlord does so, Tenant shall, upon demand, deposit with Landlord the amount so applied, so that Landlord shall have the full deposit on hand at all times during the term of this lease. In the event of a sale of the building or lease of the land on which it stands, subject to this lease, Landlord shall have the right to transfer the security to the vendee or lessee, and, Landlord shall be considered released by Tenant from all liability for the return of such security and Tenant shall look to the new Landlord solely for the return of said security, and it is agreed that this shall apply to every transfer or assignment made of the security to a new Landlord. The security deposited under this lease shall not be mortgaged, assigned or encumbered by Tenant without the written consent of Landlord, an any attempt to do so shall be void. One half of the security deposit will be considered last months rent. This will be used as the last months rent only if tenant is in good standing, and not in default of the lease agreement. The tenant will be responsible for the deficit of the rental amount due to cost of living adjustments. If Tenant shall lease from Landlord additional space in the building, Tenant shall pay additional security deposit to landlord in the amount of first and last month's rent for the additional space. ARTICLE THIRTY FOURTH: BROKERAGE Tenant represents and warrants that it has not had any dealings with any broker in connection with the bringing about of this lease or in connection with Tenant's having been introduced to Landlord. Without limiting the effect of the foregoing, Tenant agrees to indemnify and hold Landlord harmless against any claim or demand made by any real estate broker or agent claiming to have dealt with or consulted with Tenant or any of Tenant's representatives, employees or agents contrary to the foregoing representation and warranty. ARTICLE THIRTY FIFTH: ELECTRIC Tenant recognized Landlord will supply electric to all areas of tenants leased premises. Landlord will install an electric meter in the leased premises at Landlord's cost and expense. Tenant shall pay for the usage of all utilities directly to the utility companies. 9 ARTICLE THIRTY SIXTH: QUIET ENJOYMENT Landlord agrees that Tenant, upon paying the rent and performing all the covenants and conditions on Tenant's part to be observed and performed, shall and may peaceably and quietly have, hold and enjoy the Demised Premises for the term aforesaid, subject to the mortgages hereinbefore mentioned. ARTICLE THIRTY SEVENTH: SUBORDINATION This lease shall be subject and subordinate to all mortgages, ground or unerlying leases which may now or hereafter affect the premises of which the Demised Premises form a part, whether such mortgages cover only the Demised Premises or be a blanket mortgage covering other premises in addition to the Demised Premises, and to any renewals, modifications, consolidations, replacements or extensions thereof. Although this provision of this lease shall constitute the subordination itself, Tenant shall, if so requested by Landlord, execute promptly any certificate or subordination agreement that Landlord may request in confirmation of such subordination. DATED: JANUARY 1, 1997 WEST TROPICAL INVESTMENT CORP. LANDLORD /s/ STEVER ADELSTEIN ----------------------------- BY: STEVE ADELSTEIN, PRESIDENT JET AVIATION TRADING, INC. TENANT /s/ JOSEPH NELSON ----------------------------- BY: JOSEPH NELSON, PRESIDENT 10 SECOND ADDENDUM TO LEASE BETWEEN WEST TROPICAL INVESTMENTS CORP., AS LANDLORD, AND JET AVIATION TRADING, INC., AS TENANT, FOR THE PREMISES KNOWN AS 15675 N.W. 15TH AVENUE, MIAMI, FLORIDA 33169. 1. ADDITIONAL SPACE: Tenant has agreed to lease additional space in the building which it currently occupies. The following additional space will be added to the existing premises under lease dated January 1, 1997. a. Office - 2,440 square feet at $5.50/sq.ft. amounting to $1,118.33 per month plus applicable sales tax. b. Warehouse - 1,606 square feet at $3.75/sq.ft. amounting to $501.88 per month plus applicable sales tax. 2. SECURITY DEPOSIT: Tenant shall deposit additional security deposit for the additional space amounting to the first and last month's rent in the total amount of $3,240.42. 3. COMMENCEMENT: This amendment shall take effect and occupancy of the additional space shall commence November 1, 1997. DATED: ------------------------- WITNESSES WEST TROPICAL INVESTMENT CORP. LANDLORD /s/ Steve Adelstein, President - -------------------------------- ---------------------------------- By: Steve Adelstein, President /s/ Joseph Nelson - -------------------------------- ---------------------------------- By: Joseph Nelson, President EX-10.3 10 CONSIGN AGREEMENT W/JET AVIONICS 1 Exhibit 10.3 CONSIGNMENT AGREEMENT BY AND BETWEEN JET AVIATION TRADING, INC. ("CONSIGNEE") AND JET AVIONICS SYSTEMS, INC. ("OWNER") 2 INDEX
PREAMBLE ARTICLE 1 DEFINITIONS ARTICLE 2 SUBJECT MATTER ARTICLE 3 TERM OF AGREEMENT ARTICLE 4 DELIVERY ARTICLE 5 ACCEPTANCE AND STORAGE ARTICLE 6 TITLE AND RISK ARTICLE 7 INSURANCE/INDEMNIFICATION ARTICLE 8 SELLING PRICE ARTICLE 9 CONDITIONS OF SALE -Standard Conditions of Sale -CONSIGNEE to Comply with Laws ARTICLE 10 REMUNERATION ARTICLE 11 PARTS IMPROVED OPTION ARTICLE 12 TAXES ARTICLE 13 WARRANTY OF TITLE ARTICLE 14 MATERIAL CERTIFICATION ARTICLE 15 OWNER'S RIGHT OF ACCESS ARTICLE 16 TERMINATION FOR INSOLVENCY ARTICLE 17 INCOMPLETE SALES AT TERMINATION ARTICLE 18 REGISTRATION OF OWNER'S INTEREST ARTICLE 19 FORCE MAJEURE ARTICLE 20 CONFIDENTIALITY ARTICLE 21 APPLICABLE LAW ARTICLE 22 BROKERS AND FINDERS ARTICLE 23 ASSIGNMENT ARTICLE 24 NOTICES ARTICLE 25 ALTERATIONS ARTICLE 26 EXHIBITS ARTICLE 27 SEVERABILITY ARTICLE 28 HEADINGS ARTICLE 29 NON-EXCLUSIVITY ARTICLE 30 COUNTERPARTS EXHIBIT A INVENTORY
3 CONSIGNMENT AGREEMENT THIS AGREEMENT is made this 1st day of October, 1996, and effective as of October 3, 1996, between JET AVIATION TRADING, INC., having its principal place of business at 1170 N.W. 163rd Drive, Miami, FL 33169, (hereinafter referred to as the "CONSIGNEE") and JET AVIONICS SYSTEMS, INC., having its principal place of business at 1170 N.W. 163rd Drive, Miami, FL 33169 (hereinafter referred to as the "OWNER"). PREAMBLE WHEREAS: (a) The OWNER owns various spare commercial aircraft parts (hereinafter the "Inventory") which it desires to sell; and, (b) The CONSIGNEE is in the business of selling spare commercial aircraft parts and aircraft engine parts; and, (c) The OWNER is desirous of appointing the CONSIGNEE as the exclusive consignee of the Inventory for the purpose of the repair and sale thereof; and, (d) The CONSIGNEE has represented to the OWNER that it has the staff, facilities and financial security to carry out its proposed obligations as set out below. NOW, THEREFORE, in consideration of the premises and material covenants herein contained, the parties hereto agree as follows: OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 3 4 ARTICLE 1 - DEFINITIONS (a) AGREEMENT - shall mean this Agreement and any exhibits and/or amendments attached hereto. (b) CURRENT LIST PRICE - shall mean the manufacturers current list price as published from time to time by the manufacturer of the Inventory. (c) INVENTORY - shall mean the spare commercial aircraft parts consigned to CONSIGNEE for sales as listed in attached Exhibit "A" as amended from time to time. ARTICLE 2 - SUBJECT MATTER OWNER may, at its sole discretion from time to time, upon prior written notice, deliver to CONSIGNEE Inventory being the property of OWNER on consignment for sale by CONSIGNEE. Each item of Inventory delivered to CONSIGNEE hereunder shall be added to Exhibit "A" attached hereto, and such Exhibit "A" shall automatically be amended to constitute the Inventory for the purposes of this Agreement. The failure of the parties, as a result of mistake, neglect or inadvertence, to amend Exhibit "A" hereto shall not affect the validity of this Agreement which shall cover all Inventory delivered by OWNER to CONSIGNEE during the term of this Agreement even absent an appropriate amendment to Exhibit "A" to reflect such delivery. ARTICLE 3 - TERM OF AGREEMENT This Agreement shall remain in force for a period of one (1) year, commencing upon the execution of this Agreement, unless terminated prior to the expiration date of the Agreement by either party giving a minimum of thirty (30) days prior written notice to the other or by termination due to the breach of any of the terms and conditions of this Agreement by either party hereto OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 4 5 (hereinafter referred to as the "Term"). This Agreement may be extended for an additional year by CONSIGNEE if it is not then in default hereunder. Upon termination, the Inventory held by the CONSIGNEE shall be returned to OWNER or to a facility at OWNER's direction. The expenses of such return, shall be borne by, (a) the party providing the notice of termination, unless the termination results from breach of this Agreement by the other party (in which case, all return expenses shall be borne by the party in breach of this Agreement); or, (b) the party in breach of this Agreement; or, (c)the CONSIGNEE upon the expiration of this Agreement. ARTICLE 4 - DELIVERY OWNER shall deliver to CONSIGNEE at CONSIGNEE's facility at a mutually agreed upon schedule, the Inventory specified in Article 2 hereof and shall be responsible for payment of all costs incurred incident to such delivery. ARTICLE 5 - ACCEPTANCE AND STORAGE CONSIGNEE shall accept the Inventory and shall provide free of charge to OWNER secure and proper storage at CONSIGNEE's warehouse in Miami or at such other place as may be mutually agreed in writing between OWNER and CONSIGNEE. CONSIGNEE will segregate the Inventory from all other goods held in the custody of CONSIGNEE, and shall maintain a correct and up-to-date listing thereof. CONSIGNEE shall maintain a suitably clean and neat place of business for the storage and sale of the Inventory. OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 5 6 ARTICLE 6 - TITLE AND RISK (a) Title to any item of Inventory shall pass from OWNER to CONSIGNEE immediately upon the delivery of any such item of Inventory by CONSIGNEE to CONSIGNEE's customer, F.O.B. CONSIGNEE's premises, after an offer by such customer to purchase any such item of Inventory, has been accepted by CONSIGNEE. (b) Risk of loss or damage to any item of Inventory shall pass from OWNER to CONSIGNEE immediately upon delivery of such item to CONSIGNEE's facility. ARTICLE 7 - INSURANCE/INDEMNIFICATION CONSIGNEE shall be required to insure OWNER's interest in any Inventory held by CONSIGNEE and OWNER shall not be required to reimburse CONSIGNEE for the amount of any premium paid in respect of any insurance effected by CONSIGNEE. ARTICLE 8 - SELLING PRICE The prices at which the respective items of Inventory may be offered by CONSIGNEE for sale shall be their fair market value as determined by CONSIGNEE in good faith by comparison to Current List Price and according to prevailing market conditions at the time of sale(s). ARTICLE 9 - CONDITIONS OF SALE STANDARD CONDITIONS OF SALE Any loss sustained or any expenditure incurred by CONSIGNEE arising out of the operation or enforcement of the sale of an item or items of Inventory shall be for CONSIGNEE's account and shall not be recoverable from OWNER nor made deductible from any money payable to OWNER under the terms and conditions of this Agreement. OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 6 7 Notwithstanding the above, in the event that an item of Inventory sold by CONSIGNEE is rejected by CONSIGNEE's customer within a reasonable period of time, CONSIGNEE may, at its option, accept return of such item for customer credit. The returned item of Inventory shall be returned to stock and any remuneration previously paid to OWNER in accordance with Article 10 hereof shall be debited from OWNER's proceeds at the next reporting period following such return. CONSIGNEE TO COMPLY WITH LAWS In relation to each sale of an item of Inventory, CONSIGNEE's customer shall be responsible for obtaining any required authorization such as an Export License, Import License, or any other required Government authorization, including without limitation of the foregoing, any present or future rules, regulations, provisions or requirements of the United States Government, or any other government instrumentality or authority which prohibits or restricts the sale or export of goods, services, data or know-how to certain countries. CONSIGNEE's customer shall issue or make application for (as the case may be) any requisite license, authority or permit in its own name and shall not directly, or by implication, use the name of OWNER in any such issue or application, except as where required by law, without OWNER's prior written consent. ARTICLE 10 - REMUNERATION CONSIGNEE shall be entitled to retain by way of remuneration for the services rendered by it to OWNER, an amount equivalent to a percentage of the Net Sales Price of each item of Inventory sold by the CONSIGNEE pursuant to this Agreement as follows: OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 7 8 (a) Seventy-Five (75%) percent of the Net Sales Price to OWNER and Twenty-Five (25%) percent of the Net Sales Price to CONSIGNEE. The Net Sales Price is the Gross Sales Price less any costs involved if any item of Inventory is required to be overhauled, certified or modified in order to be sold, as outlined in Article 11 herein. All payments to OWNER by CONSIGNEE will be made as set forth in subparagraph 10(d) hereof via company check in good bank funds to the following: --------------------------------------- --------------------------------------- --------------------------------------- --------------------------------------- (b) CONSIGNEE shall be responsible for any bad debts, (except where OWNER has given prior written approval to terms of sale for promotional purposes) and all administration and selling expenses incurred by CONSIGNEE including, but not being limited to, warehousing, advertising, sales promotion, inspection, preparation for shipment, sales analysis, performance reports and accountancy. (c) "Gross Sales Price" shall mean the actual sales price less any rebates, discounts or allowances, including the cost of freight out, charged to the customer of CONSIGNEE. (d) CONSIGNEE shall prepare, at its cost and provide to OWNER a monthly report which shall be delivered to OWNER no later than the tenth day of the next succeeding month and which shall reflect each sale of the OWNER'S Inventory held OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 8 9 by CONSIGNEE, the gross amount of the sale, and the name of the purchaser which may be identified with a vendor number for the convenience of the parties. Payment for such sales shall be due five days after submittal of the report but, in any event, no later than the fifteenth (15th) day of the month next succeeding the month which the report covers. (e) No later than the first anniversary of the execution date hereof, CONSIGNEE shall pay to OWNER the amount of $225,000 less the amount of payments previously made to OWNER hereunder for sales of Inventory under this Article. (f) Upon the execution hereof, the CONSIGNEE shall honor OWNER's subscription for 600,000 shares of the CONSIGNEE's Common Stock. Such shares will be issued upon delivery of OWNER'S promissory note in the principal amount of $175,000 payable together with accrued interest at the Applicable Federal Rate for demand obligation in effect at the date this Consignment Agreement is executed, as determined by the Internal Revenue Service, per annum, upon demand. After the OWNER has received $500,000 in payments from CONSIGNEE hereunder, CONSIGNEE may apply the next monies due OWNER hereunder to the unpaid principal and interest due on said promissory note. (g) If CONSIGNEE shall have made an initial public offering of equity securities during the term hereof and shall have raised at such offering net proceeds to CONSIGNEE of $5,000,000 or more, then CONSIGNEE shall pay to OWNER in exchange for all OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 9 10 remaining Inventory the sum of $675,000 less all payments previously made to OWNER hereunder. ARTICLE 11 - PARTS IMPROVED OPTION CONSIGNEE agrees to repair and/or overhaul the Inventory as may be required in its opinion to put the Inventory in such a condition as to render it saleable. Costs incurred in repairing and/or overhauling the Inventory shall be deducted by CONSIGNEE in accordance with Article 10 hereof. ARTICLE 12 - TAXES Taxes imposed by any Federal, State or Local taxing authority within the United States and payable as a result of any sale, use, delivery, storage, or transfer of goods shall be borne by CONSIGNEE. All taxes imposed upon or measured by the net income or gross revenues of OWNER shall be the responsibility of OWNER. ARTICLE 13 - WARRANTY OF TITLE OWNER warrants that all Inventory consigned to CONSIGNEE under this Agreement shall have marketable title, free and clear of all liens, claims and encumbrances whatsoever. Further, OWNER warrants that it shall defend such title forever to CONSIGNEE and CONSIGNEE's third party customer(s). ARTICLE 14 - MATERIAL CERTIFICATION OWNER certifies the following to CONSIGNEE: (a) Each item of Inventory covered by this Agreement was produced by a manufacturer holding an FAA Approved Production Inspection System issued under FAR 21, Sub OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 10 11 Part F, or by a manufacturer holding an FAA Production Certificate issued under FAR 21, Sub. Part G. Each item of Inventory was manufactured by the prime manufacturer or its approved manufacturing/supplier source holding one of the following agreements/approvals; (i) a Fixed Quantity Licensee/Consignment Agreement, or; (ii) an FAA/PMA Licensee Agreement, or; (iii) written approval for Direct Ship Authority from the prime manufacturer. None of the items of Inventory have been subjected to severe stress or heat (as in major aircraft, engine failure, accident or fire); and, (b) The Inventory shall be sold by CONSIGNEE in an "as is" condition and OWNER makes no warranties, guarantees or representations of any kind, either express or implied, statutory or otherwise, except as set forth herein, with respect to the Inventory or any other equipment or parts delivered by OWNER to CONSIGNEE hereunder including any items of Inventory overhauled/repaired or recertified in accordance with Article 11 hereof; and (c) OWNER shall certify and supply all applicable records, data and certification identifying back-to-birth records for life limited and/or time controlled items of Inventory, where applicable; and, (d) All serialized and non-serialized items of Inventory (rotable, repairable and.or engine) will be accompanied with traceability to a commercial aviation regulated source, OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 11 12 (e) In accordance with ATA Specification 106 and Federal Aviation Regulation ss.21.321 Sub. Part L, all Airworthy items of Inventory which are Class II products will be accompanied by FAA or airworthiness releases. (f) Each rotable, repairable and/or engine items of Inventory that is certified airworthy will be accompanied by its teardown/work report; and, (g) Airworthiness release certificates, where applicable, will identify the FAA repair station number and the signature of the approving inspector, as well as all other pertinent information. ARTICLE 15 - OWNER'S RIGHTS OF ACCESS CONSIGNEE shall allow any duly authorized representative of OWNER the right of free and unrestricted access during normal business hours to all Inventory held by CONSIGNEE and shall provide all reasonable facilities for inspection and audit of the said Inventory and of CONSIGNEE's records relative to the receipt, storage and sale thereof. In the event that such audit discloses a deficiency in the quantity of the Inventory, then CONSIGNEE shall have the right of substitution of a part that is of equal or greater value or shall be liable to pay compensation to OWNER at the minimal sales price for such item(s) as previously agreed upon between the parties and in accordance with Article 8 herein. ARTICLE 16 - TERMINATION FOR INSOLVENCY CONSIGNEE hereby waives its right to assume or reject this Agreement in the event that it is adjudicated a bankrupt unless it assumes this Agreement within thirty (30) days of such adjudication which shall be determined by the entry of an order for relief in any bankruptcy, whether OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 12 13 voluntary or involuntary. CONSIGNEE further expressly consents to OWNER being granted relief from the automatic stay provision under the Bankruptcy Code, 11 U.S.C. ss.362, thirty (30) days after the aforesaid entry of an order for relief, unless within such time an order has been entered by the bankruptcy court permitting CONSIGNEE to assume this Agreement and, in connection with such assumption, curing any defaults of CONSIGNEE pursuant to the terms of this Agreement. ARTICLE 17 - INCOMPLETE SALES AT TERMINATION OWNER will allow CONSIGNEE ninety (90) days from the date of receipt of notice of termination to complete the deliveries of items(s) which were sold prior to the receipt of notice of termination pursuant to Article 16 hereof. ARTICLE 18 - REGISTRATION OF OWNER'S INTEREST CONSIGNEE shall do all acts and things necessary, give all consents and sign all documents required to be given or signed at OWNER's reasonable request so as to ensure that OWNER's right to and interest in the Inventory is protected as against the present or potential claims of any third party, including but not limited to those of CONSIGNEE's creditors, mortgagees, financiers, security holders and CONSIGNEE's related/associated companies, businesses or individuals, AND FURTHER the said acts and things shall include, but not be limited to any consents, statements or duly completed documents or forms required to register OWNER's interest in the Inventory in any State or Federal registry of interest in corporate, business or individual property, assets, stock in trade, shares or any other interest in property of any kind howsoever held. This obligation shall continue throughout the Term hereof and any holding over. OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 13 14 ARTICLE 19 - FORCE MAIEURE Neither OWNER nor CONSIGNEE shall be liable for damages for any delay or failure to perform their respective obligations under this Agreement which are due to causes beyond their control, including but not restricted to, acts of God, acts of public enemies, acts of the Government, whether legal or illegal, fires, floods, epidemics, quarantine restrictions, industrial disputes, lockouts, strikes, work slow-downs, freight embargoes, or unusually severe weather, provided however, that the party seeking to rely on such causes shall, within seven (7) days, notify the other party in writing of the cause of any such delay and such party shall make all reasonable efforts to reduce the effect of such delay on the operation of this Agreement. ARTICLE 20 - CONFIDENTIALITY Each party agrees (except with the prior written consent of the other party): (a) not to disclose details of this Agreement to any third parties other than its financial and legal advisers; and, (b) to maintain confidentiality of all information exchanged between the parties, including pricing information and other proprietary knowledge, held as confidential between OWNER and OWNER's suppliers and CONSIGNEE and CONSIGNEE's customers, and not to use such for the benefit of any third party. Such confidentiality shall survive the Term of this Agreement. ARTICLE 21 - APPLICABLE LAW The provisions of this Agreement and all rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Florida. OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 14 15 Both parties hereby agree that this Agreement shall be deemed to have been made in the County of Dade, Florida, and that any suit, action or proceeding arising out of or relating to this Agreement may be instituted in any State or Federal court having its situs within the County of Dade, Florida and each party hereby waives the personal service of any and all process and consent that all such service of process may be made by certified mail, return receipt requested, directed to the address set forth herein for each party. Any such notice shall be effective and shall be deemed to have been given when received at, or after refusal to receive, at the addresses set forth herein or at such other substitute addresses provided in accordance with this Article. ARTICLE 22 - BROKERS AND FINDERS CONSIGNEE and OWNER each agree that there are no third parties involved as brokers and finders in this transaction. OWNER indemnifies CONSIGNEE from liability for any fees, commissions or other claims made, including all legal costs, due to such claims caused by the indemnifying party. ARTICLE 23 - ASSIGNMENT This Agreement shall not be assigned in whole or in part by either party hereto without the prior written consent of the other party. ARTICLE 24 - NOTICES All notices or requests under this Agreement shall be in writing and shall be deemed to have been adequately given when received by the party to whom such notice or request is given. Notices may be delivered personally, by first class mail, postage prepaid, by reputable courier or by facsimile transmission and shall be addressed as follows: OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 15 16 If to CONSIGNEE: Jet Aviation Trading, Inc. 1170 N.W. 163rd Drive Miami, FL 33169 If to OWNER: Jet Avionics Systems, Inc. 1170 N.W. 163rd Drive Miami, FL 33169 or to such other address as either party may designate, from time to time, by written notice to the other party. ARTICLE 25 - ALTERATIONS This Agreement shall be effective only when duly signed by both parties hereto. It contains the entire understanding between the parties and may not be changed, modified or altered, nor any of its provisions waived, except by an agreement in writing signed by the parties hereto. All prior agreements or understandings between the parties in connection with the subject matter of this Agreement are superseded hereby and the waiver of any term of condition herein by either party shall not be deemed a waiver of any subsequent term or condition hereof. ARTICLE 26 - EXHIBITS Any Exhibits to this Agreement or side letters or referring to this Agreement and duly agreed to by both parties in writing shall automatically become a part of this Agreement and unless specifically stated otherwise, the provisions of this Agreement shall prevail in the event of any inconsistency. ARTICLE 27 - SEVERABILITY In the event that any provision of this Agreement is rendered void, invalid, or unenforceable in a certain jurisdiction, then such provision (or part thereof) may be severed from this Agreement OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 16 17 without affecting the remaining provisions hereof, as long as such severance does not have a material adverse affect on the performance of this Agreement. ARTICLE 28 - HEADINGS The headings to the clauses of this Agreement are for the purpose of reference only and in no way define, limit or describe the scope of intent of this Agreement. ARTICLE 29 - NON-EXCLUSIVITY The relationship of OWNER and CONSIGNEE under this Agreement is non-exclusive. Both parties reserve the right to enter into agreements with other parties for the provision of similar or identical services at any time during the Term of this Agreement. Further, nothing herein shall authorize either party to hold itself out as acting for or on behalf of the other party. ARTICLE 30 - COUNTERPARTS This Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original but all of which taken together shall constitute one and the same instrument. A facsimile signature on any counterpart hereto shall be deemed an original for all purposes. IN WITNESS WHEREOF, the parties hereto by their duly authorized officers have executed this Agreement as of the day and year first above written. FOR: JET AVIATION TRADING, INC. BY:/s/ Joseph J. Nelson ------------------------------------------ NAME: Joseph J. Nelson ---------------------------------------- TITLE: President & C.E.O. --------------------------------------- DATE: October 1, 1996 ---------------------------------------- OWNER: S.T. ------------------------ CONSIGNEE:/s/ -------------------- 17 18 FOR: JET AVIONICS SYSTEMS, INC. BY:/s/ Sharon Taoz ------------------------------------------ NAME: Sharon Taoz ---------------------------------------- TITLE: President --------------------------------------- DATE: October 1, 1996 ---------------------------------------- OWNER: S.T. ------------------------ CONSIGNEE:/s/ ST -------------------- 18 19 EXHIBIT "A" INVENTORY SEE DOCUMENTS ATTACHED HERETO AND MADE A PART HEREOF 19 EX-10.4 11 CONSIGN, CANCELLATION W/JET AVIONICS 1 Exhibit 10.4 CONSIGNMENT, CANCELLATION AND PURCHASE AGREEMENT This agreement is made this 29th day of August, 1997 between Jet Aviation Trading, Inc. having its principal place of business at 15675 N.W. 15th Avenue, Miami, FL 33167, (hereinafter referred to as "CONSIGNEE") and Jet Avionics Systems, Inc., having its principal place of business at 18181 N.E. 31st Court, Suite 1907, North Miami Beach, FL 33160 (hereinafter referred to as the "OWNER"). RECITALS: WHEREAS, OWNER and CONSIGNEE entered into a Consignment Agreement dated October 1, 1996, (the "Consignment Agreement") whereby OWNER consigned to CONSIGNEE that certain Inventory defined in the Consignment Agreement for sale by Consignee for the benefit of OWNER and CONSIGNEE; and WHEREAS, OWNER and CONSIGNEE have determined that CONSIGNEE shall purchase the remaining unsold Inventory from Owner, as set forth on Exhibit "A", attached hereto under the terms and conditions set forth herein; NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows: 1. Purchase: CONSIGNEE shall purchase all remaining unsold Inventory originally consigned to CONSIGNEE under the Consignment Agreement held by it on the 31st day of August, 1997 (the "Closing Date"). 2. Purchase Price: The purchase price ("Purchase Price") for the payment of such purchased Inventory shall be $675,000. 3. Payment: Payment of the Purchase Price shall be as follows: a. $340,000 of the Purchase Price has already been paid to OWNER in cash and equity in CONSIGNEE. b. CONSIGNEE shall apply the outstanding balance of principal and accumulated interest of OWNER's promissory note to CONSIGNEE in the original principal amount of $175,000 dated October 1,1 996, originally given for its subscription of shares of stock of CONSIGNEE to the Purchase Price; and -1- 2 c. The remainder of the Purchase Price shall be paid by issuing shares of CONSIGNEE's common stock at the rate of $2.00 of the Purchase Price for each share of common stock of Consignee. Owner acknowledges that such shares of common stock have not been registered for sale under the laws of the United States or any state. Owner agrees to execute a Subscription Agreement in the form attached hereto as Exhibit "B". 4. Title: At closing, OWNER will execute a Warranty Bill of Sale transferring marketable title to all of the remaining Inventory to CONSIGNEE free and clear of all liens, claims and encumbrances whatsoever. Further, OWNER warrants that it shall defend such title forever to CONSIGNEE and CONSIGNEE's third party customers. 5. Taxes: Taxes imposed by any federal, state or local taxing authority within the United States and payable as a result of the sale of the Inventory shall be borne by OWNER. 6. Material Certification: OWNER certifies the following to CONSIGNEE: (a) Each item of Inventory covered by this Agreement was produced by a manufacturer holding an FAA Approved Production Inspection System issued under FAR 21, Sub Part F, or by a manufacturer holding an FAA Production Certificate issued under FAR 21, Sub. Part G. Each item of Inventory was manufactured by the prime manufacturer or its approved manufacturing/supplier source holding one of the following agreements/approvals; (i) a Fixed Quantity Licensee/Consignment Agreement, or; (ii) an FAA/PMA Licensee Agreement, or; (iii) written approval for Direct Ship Authority from the prime manufacturer. None of the items of Inventory have been subjected to severe stress or heat (as in major aircraft, engine failure, accident or fire). Any part found not to comply with the standards of this paragraph 6 may, at Consignee's option, either be returned to Owner or disposed of in accordance with the appropriate regulatory standards; and, (b) The Inventory shall be sold by OWNER in an "as is" condition and OWNER makes no warranties, guarantees or representations of any kind, either express or implied, statutory or otherwise, except as set forth herein, with respect to the Inventory or any other equipment or parts delivered by OWNER to CONSIGNEE hereunder including any items of Inventory overhauled/repaired or recertified; and -2- 3 (c) All serialized and non-serialized items of Inventory (rotable, repairable and/or engine) will be accompanied with traceability to a commercial aviation regulated source. (d) Airworthiness release certificates, where applicable, will identify the FAA repair station number and the signature of the approving inspector, as well as all other pertinent information. 7. Confidentiality: Each party agrees (except with the prior written consent of the other party): (a) not to disclose details of this Agreement to any third parties other than its financial and legal advisers; and, (b) to maintain confidentiality of all information exchanged between the parties, including pricing information and other proprietary knowledge, held as confidential between OWNER and OWNER's suppliers and CONSIGNEE and CONSIGNEE's customers, and not to use such for the benefit of any third party. Such confidentiality shall survive the Term of this Agreement. 8. Applicable Law: The provisions of this Agreement and all rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Florida. Both parties hereby agree that this Agreement shall be deemed to have been made in the County of Dade, Florida, and that any suit, action or proceeding arising out of or relating to this Agreement may be instituted in any State or Federal court having its situs within the County of Dade, Florida and each party hereby waives the personal service of any and all process and consent that all such service of process may be made by certified mail, return receipt requested, directed to the address set forth herein for each party. Any such notice shall be effective and shall be deemed to have been given when received at, or after refusal to receive, at the addresses set forth herein or at such other substitute addresses provided in accordance with this Article. 9. Brokers and Finders: CONSIGNEE and OWNER each agree that there are no third parties involved as brokers and finders in this transaction. OWNER indemnifies CONSIGNEE from liability for any fees, commissions or other claims made, including all legal costs, due to such claims caused by the indemnifying party. 10. Assignment: This Agreement shall not be assigned in whole or in part by either party hereto without the prior written consent of the other party. -3- 4 11. Notices: All notices or requests under this Agreement shall be in writing and shall be deemed to have been adequately given when received by the party to whom such notice or request is given. Notices may be delivered personally, by first class mail, postage prepaid, by reputable courier or by facsimile transmission and shall be addressed as follows: If to CONSIGNEE: Jet Aviation Trading, Inc. 15675 N.W. 15th Avenue Miami, FL 33169 Fax (305) 624-2944 If to OWNER: Jet Avionics Systems, Inc. 18181 N.E. 31st Court, Suite 1907 North Miami, FL 33160 Fax (305) 933-1635 or to such other address as either party may designate, from time to time, by written notice to the other party. 12. Alterations: This Agreement shall be effective only when duly signed by both parties hereto. It contains the entire understanding between the parties and may not be changed, modified or altered, nor any of its provisions waived, except by an agreement in writing signed by the parties hereto. All prior agreements or understandings between the parties in connection with the subject matter of this Agreement are superseded hereby and the waiver of any term of condition herein by either party shall not be deemed a waiver of any subsequent term or condition hereof. 13. Exhibits: Any Exhibits to this Agreement or side letters or referring to this Agreement and duly agreed to by both parties in writing shall automatically become a part of this Agreement and unless specifically stated otherwise, the provisions of this Agreement shall prevail in the event of any inconsistency. 14. Severability: In the event that any provision of this Agreement is rendered void, invalid, or unenforceable in a certain jurisdiction, then such provision (or part thereof) may be severed from this Agreement without affecting the remaining provisions hereof, as long as such severance does not have a material adverse affect on the performance of this Agreement. 15. Headings: The headings to the clauses of this Agreement are for the purpose of reference only and in no way define, limit or describe the scope of intent of this Agreement. -4- 5 16. Non-Exclusivility: The relationship of OWNER and CONSIGNEE under this Agreement is non-exclusive. Both parties reserve the right to enter into agreements with other parties for the provision of similar or identical services at any time before or after the Closing Date. Further, nothing herein shall authorize either party to hold itself out as acting for or on behalf of the other party. 17. Counterparts: This Agreement may be executed simultaneously in two or more counterparts, each of which shall constitute an original but all of which taken together shall constitute one and the same instrument. A facsimile signature on any counterpart hereto shall be deemed an original for all purposes. IN WITNESS WHEREOF, the parties hereto by their duly authorized officers have executed this Agreement as of the day and year first above written. JET AVIATION TRADING, INC. BY:/s/ Joseph J. Nelson -------------------------------- JET AVIONICS SYSTEMS, INC. BY:/s/ Sharon Taoz -------------------------------- -5- 6 BILL OF SALE FOR VALUABLE CONSIDERATION, receipt of which is here acknowledged, Jet Avionics Systems, Inc. ("Seller") does hereby grant, bargain, sell, assign, transfer and deliver to Jet Aviation Trading, Inc. ("Purchaser") all of Seller's right, title, and interest in and to the goods and chattels which are listed on Exhibit "A" attached to this bill of sale. TO HAVE AND TO HOLD unto the Purchaser, its successors and assigns forever. And the Seller does, for itself, its successors, and assigns, covenant to and with the Purchaser, its successors and assigns that the Seller is the lawful owner of the said goods and chattels; that they are free from all encumbrances; that the Seller has good right to sell the same aforesaid, and that Seller will warrant and defend the transfer of the goods and chattels hereby made, unto the Purchaser, its successors and assigns against the lawful claims and demands of all persons whomsoever. IN WITNESS WHEREOF, the Seller has caused this document to be executed in its name and its corporate seal affixed by its proper officers thereto duly authorized this 29th day of August, 1997. Signed, sealed and delivered JET AVIONICS SYSTEMS, INC. in the presence of: Seller: /s/ Zvi Mosite /s/ Sharon Taoz - ------------------------------ ------------------------------------- Witness (Sign Name) Sharon Taoz, President Zvi Mosite - ------------------------------ (Print Name of Witness) EX-10.5 12 STOCK OPTION PLAN 1 Exhibit 10.5 STOCK OPTION PLAN Jet Aviation Trading, Inc., a Florida corporation (the "Company") sets forth herein the terms of this Stock Option Plan (the "Plan") as follows: 1. PURPOSE The Plan is intended to advance the interests of the Company by providing eligible individuals (as designated pursuant to Section 4 below) with an opportunity to acquire or increase a proprietary interest in the Company, which will thereby create a stronger incentive to expend maximum effort for the growth and success of the Company and its subsidiaries, and will encourage such eligible individuals to remain in the employ or service of the Company or that of one or more of its subsidiaries. Each stock option granted under the Plan (an "Option") is intended to be an "incentive stock option" ("Incentive Stock Option") within the meaning of Section 422 of the Internal Revenue Code of 1986, or the corresponding provision of any subsequently-enacted tax statute, as amended from time to time (the "Code"), except (i) to the extent that any such Option would exceed the limitations set forth in Section 7 below; (ii) for Options specifically designated at the time of grant as not being "incentive stock options"; and (iii) for Options granted to consultants or to members of the board of directors of the Company who are not officers or other employees of the Company or any "subsidiary corporation" (a "Subsidiary") thereof within the meaning of Section 424(f) of the Code or to directors of any Subsidiary who are not officers or other salaried employees of the Company (a "Subsidiary Director"). If any Options granted hereunder shall, for any reason, fail to qualify as an Incentive Stock Option, they shall nevertheless be deemed options issued by the Company pursuant to the Plan and for tax purposes shall be "non-qualified stock options." 2. ADMINISTRATION (a) Board. The Plan shall be administered by the Board of Directors of the Company (the "Board"), which shall have the full power and authority to take all actions, and to make all determinations required or provided for under the Plan or any Option or Option Agreement (as defined in Section 8 below) entered into hereunder and all such other actions and determinations not inconsistent with the specific terms and provisions of the Plan deemed by the Board to be necessary or appropriate to the administration of the Plan or any Option granted or Option Agreement entered into hereunder. All such actions and determinations shall be by the affirmative vote of a majority of the members of the Board present at a meeting at which any issue relating to the Plan is properly raised for consideration or without a meeting by written consent of the Board executed in accordance with the Company's Articles of Incorporation and By-Laws, and with applicable law. The interpretation and construction by the Board of any provision of the Plan or of any Option granted or Option Agreement entered into hereunder shall be final and conclusive. (b) Committee. The Board may appoint a Stock Option Committee (the "Committee"), which may be the compensation committee, consisting of not less than two members of the Board, none of whom shall be an officer or other salaried employee of the Company or any of its subsidiaries, and each of whom shall qualify in all respects as a "non-employee director" as 2 defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and as an "outside director" under Section 162(m)(4)(C)(i) of the Code. The Committee shall be solely responsible for those actions and responsibilities which are required to be taken by outside directors to qualify for the exceptions under Code ss.162(m) and the regulations thereunder for performance-based compensation. The Board, in its sole discretion, may provide that the role of the Committee shall be otherwise limited to making recommendations to the Board concerning any determinations to be made and actions to be taken by the Board pursuant to or with respect to the Plan, or the Board may delegate to the Committee such powers and authorities related to the administration of the Plan, as set forth in Section 2(a) above, as the Board shall determine, consistent with the Articles of Incorporation and By-Laws of the Company and applicable law. The Board may remove members, add members, and fill vacancies on the Committee from time to time, all in accordance with the Company's Articles of Incorporation and By-Laws, and with applicable law. The majority vote of the Committee, or acts reduced to or approved in writing by a majority of the members of the Committee, shall be the valid acts of the Committee. (c) No Liability. No member of the Board or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted or Option Agreement entered into hereunder, and the Company shall indemnify and hold harmless any member of the Board or Committee from any and all damages, losses or claims, including reasonable attorneys fees, arising from their actions (or inactions) in connection with this Plan or its administration. (d) Delegation to the Committee. In the event that the Plan or any Option granted or Option Agreement entered into hereunder provides for any action to be taken by or determination to be made by the Board, such action may be taken by or such determination may be made by the Committee if the power and authority to do so has been delegated to the Committee by the Board as provided for in Section 2(b) above. Unless otherwise expressly determined by the Board, any such action or determination by the Committee shall be final and conclusive. (e) Action by the Board. The Board may act under the Plan with respect to any Option granted to or Option Agreement entered into with an officer, director or stockholder of the Company who is subject to Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") other than by, or in accordance with the recommendations of, the Committee, constituted as set forth in Section 2(b) above, only if the Plan is otherwise administered in accordance with the provisions of Rule 16b-3 and if the provision of Code ss.162(m) are not applicable to such recommendations. 3. STOCK The stock that may be issued pursuant to Options granted under the Plan shall be shares of common stock, par value $.001 per share, of the Company (the "Stock"), which shares may be treasury shares or authorized but unissued shares. The number of shares of Stock that may be issued pursuant to Options and Stock Appreciation Rights granted under the Plan shall not exceed in the 2 3 aggregate 750,000 shares. The foregoing numbers of shares are subject to adjustment as provided in Section 18 below. If any Option expires, terminates, or is terminated or canceled for any reason prior to exercise in full, the shares of Stock that were subject to the unexercised portion of such Option shall be available for future Options granted under the Plan and such number of shares shall be restored to the number of shares available for issuance under Options granted. 4. ELIGIBILITY (a) Employees and Subsidiary Directors. Options may be granted under the Plan to any employee or consultant of the Company or any Subsidiary (including any such employee who is an officer or director of the Company or any Subsidiary) or to any Subsidiary Director as the Board or Committee shall determine and designate from time to time prior to the expiration or termination of the Plan. (b) Outside Directors. On the day of each annual meeting of the Stockholders of the Company, each director who is not then an employee of the Company or any of its subsidiaries (an "Outside Director"), shall be granted an Option to purchase 5000 shares of Stock, in each case at the price and upon the other terms and conditions specified in the Plan. In addition, subject to the availability of shares of Stock under the Plan, each person first elected to the Board as an Outside Director after the effective date of the Plan, shall be granted, as of the date such individual takes office, an Option to purchase 10000 shares of Stock at the price and upon the terms and conditions specified in the Plan. Each Option granted to an Outside Director shall be granted at an Option Price equal to 100 percent of the fair market value of a share of Stock on the date of grant (determined under Section 9 below) and upon the other terms and conditions specified in the Plan. Except as provided in this Section 4(b), no Outside Director shall be eligible to be granted Options under this Plan. (c) Multiple Grants. An individual may hold more than one Option subject to such restrictions as are provided herein. 5. EFFECTIVE DATE AND TERMS OF THE PLAN (a) Effective Date. The Plan shall be effective and considered adopted as of September 1, 1997, subject to approval of the Plan within one year of such effective date by a majority of the votes present and entitled to vote at a duly held meeting of the stockholders of the Company at which a quorum representing a majority of all outstanding voting stock is present, either in person or by proxy; provided, however, that upon approval of the Plan by stockholders of the Company as set forth above, all Options granted under the Plan on or after the effective date shall be fully effective as if the stockholders of the Company had approved the Plan on the effective date. If the stockholders fail to approve the Plan within one year of such effective date, any Options granted hereunder shall be null and void and of no effect. (b) Term. The Plan shall terminate on August 31, 2007. 3 4 6. GRANT OF OPTIONS Subject to the terms and conditions of the Plan, the Board or Committee may, at any time and from time to time, prior to the date of termination of the Plan, grant to such eligible individuals as the Board or Committee may determine ("Optionees"), Options to purchase such number of shares of the Stock on such terms and conditions as the Board or Committee may determine, including any terms or conditions which may be necessary to qualify such Option as "incentive stock options" under Section 422 of the Code. The date on which the Board or Committee approves the grant of an Option (or such later date as is specified by the Board or Committee) shall be considered the date on which such Option is granted. 7. LIMITATION ON INCENTIVE STOCK OPTIONS An Option (other than an Option described in exception (ii) or (iii) of Section 1) shall constitute an Incentive Stock Option to the extent that the aggregate fair market value of Stock (determined at the time the Option is granted) with respect to which Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year (under the Plan and all other plans of the Optionee's employer corporation and its parent and subsidiary corporations within the meaning of Section 422(d) of the Code) does not exceed $100,000. This limitation shall be applied by taking Options into account in the order in which they were granted. 8. OPTION AGREEMENTS All Options granted pursuant to the Plan shall be evidenced by written agreements ("Option Agreements"), to be executed by the Company and by the Optionee, in such form or forms and containing such provisions as the Board or Committee shall from time to time determine. Option Agreements covering Options granted from time to time or at the same time need not contain similar provisions; provided, however, that all such Option Agreements shall comply with all terms of the Plan. 9. OPTION PRICE The purchase price of each share of the Stock subject to an Option (the "Option Price") shall be fixed by the Board or Committee and stated in each Option Agreement, and shall be not less than 100 percent (or, in the case of an Option which does not or is not intended to qualify as an incentive stock option, not less than 50 percent) of the fair market value of a share of Stock on the date the Option is granted (as determined in good faith by the Board or Committee); provided, however, that in the event the Optionee would otherwise be ineligible to receive an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and 424(d) of the Code (relating to stock ownership of more than ten percent), the Option Price of an Option that is intended to be an Incentive Stock Option shall be not less than 110 percent of the fair market value of a share of Stock at the time such Option is granted. In the event that the Stock is listed on an established national or regional stock exchange, is admitted to quotation on the Nasdaq National Market System, or is publicly traded on 4 5 an established securities market, in determining the fair market value of the Stock, the Board or Committee shall use the closing price of the Stock on such exchange or System or in such market (the highest such closing price if there is more than one such exchange or market) on the trading date the Option is granted (or, if there is no such closing price, then the Board or Committee shall use the mean between the high and low prices on such date or if unavailable the mean between the high and low bid prices on such date), or, if no sale (or bid) of the Stock had been made on such day, on the next preceding day on which any such sale (or bid) shall have been made. 10. TERM AND EXERCISE OF OPTION (a) Term. Each Option granted under the Plan shall terminate and all rights to purchase shares thereunder shall cease upon the expiration of ten years from the date such Option is granted, or, with respect to Options granted to persons other than Outside Directors, on such date prior thereto as may be fixed by the Board or Committee and stated in the Option Agreement relating to such Option; provided, however, that in the event the Optionee would otherwise be ineligible to receive an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and 424(d) of the Code (relating to stock ownership of more than ten percent), an Option granted to such Optionee that is intended to be an Incentive Stock Option, shall in no event be exercisable after the expiration of five years from the date it is granted. (b) Option Period and Limitations on Exercise. Each Option granted to persons other than Outside Directors under the Plan shall be exercisable, in whole or in part, at any time and from time to time, over a period commencing on or after the date of grant and ending upon the expiration or termination of the Option, as the Board or Committee shall determine and as set forth in the Option Agreement relating to such Option. Without limiting the foregoing, the Board or Committee, subject to the terms and conditions of the Plan, may in its sole discretion provide that an Option may not be exercised in whole or in part for any period or periods of time during which such Option is outstanding; provided, however, that any such limitation on the exercise of an Option contained in any Option Agreement may be rescinded, modified or waived by the Board or Committee, in its sole discretion, at any time and from time to time after the date of such Option, so as to accelerate that time at which the Option may be exercised. Subject to Section 10(a), each Option granted to Outside Directors shall be exercisable, in whole or in part, at any time and from time to time, over a period commencing on the date of grant and ending upon the expiration of the Option as set forth in the Option Agreement. Notwithstanding any other provision of the Plan, no Option granted to an Optionee under the Plan shall be exercisable in whole or in part prior to the date the Plan is approved by the stockholders of the Company as provided in Section 5 above. (c) Method of Exercise. An Option that is exercisable hereunder may be exercised by delivery to the Company on any business day, at its principal office, addressed to the attention of the Committee (or Board if no Committee), of written notice of exercise, which notice shall specify the number of shares with respect to which the Option is being exercised. The minimum number of shares of Stock with respect to which an Option may be exercised, in whole or in part, at any time, shall be the lesser of 100 shares or the maximum number of shares available 5 6 for purchase under the Option at the time of exercise. Except as provided in the next following sentence, payment in full of the Option Price of the shares for which the Option is being exercised shall accompany the written notice of exercise of the Option and shall be made either (i) in cash or in cash equivalents; (ii) through the tender to the Company of shares of Stock, including the shares of Stock subject to the Option being exercised, which shares shall be valued, for purposes of determining the extent to which the Option Price has been paid thereby, at their fair market value (determined in the manner described in Section 9 above) on the date of exercise; or (iii) by a combination of the methods described in (i) and (ii); provided, however, that the Board or Committee may in its discretion impose and set forth in the Option Agreement pertaining to an Option granted to persons other than Outside Directors such limitations or prohibitions on the use of shares of Stock to exercise Options as it deems appropriate. Unless the Board or Committee shall provide otherwise, in the case of an Option Agreement relating to an Option granted to someone other than an Outside Director, payment in full of the Option Price need not accompany the written notice of exercise provided the notice of exercise directs that the Stock certificate or certificates for the shares for which the Option is exercised be delivered to a licensed broker acceptable to the Company as the agent for the individual exercising the Option and, at the time such Stock certificate or certificates are delivered, the broker tenders to the Company cash (or cash equivalents acceptable to the Company) equal to the Option Price for the shares of Stock purchased pursuant to the exercise of the Option plus the amount (if any) of federal and other taxes which the Company may, in its judgment, be required to withhold with respect to the exercise of the Option. An attempt to exercise any Option granted hereunder other than as set forth above shall be invalid and of no force and effect. Promptly after the exercise of an Option and the payment in full of the Option Price of the shares of Stock covered thereby, the individual exercising the Option shall be entitled to the issuance of a Stock certificate or certificates evidencing his ownership of such shares. A separate Stock certificate or certificates shall be issued for any shares purchased pursuant to the exercise of an Option which is an Incentive Stock Option which certificate or certificates shall not include any shares which were purchased pursuant to the exercise of an Option which is not an Incentive Stock Option. An individual holding or exercising an Option shall have none of the rights of a stockholder until the shares of Stock covered thereby are fully paid and issued to him and, except as provided in Section 18 below, no adjustments shall be made for dividends or other rights for which the record date is prior to the date of such issuance. 11. TRANSFERABILITY OF OPTIONS Unless set forth in the Option Agreement or Stock Appreciation Right Agreement at the time of grant, or at any time thereafter, no Option or Stock Appreciation Right shall be assignable or transferable by the Optionee to whom it is granted, other than by will or the laws of descent and distribution and during the lifetime of an Optionee to whom an Option is granted, only such Optionee (or, in the event of legal incompetency, the Optionee's guardian or legal representative) may exercise the Option. 6 7 12. STOCK APPRECIATION RIGHTS The Board may, upon recommendation of the Committee, grant Stock Appreciation Rights to Optionees at the same time as such Optionees are awarded Options under the Plan. Such Stock Appreciation Rights shall be evidenced by agreements in such form as the Board shall from time to time approve. Such agreements shall comply with, and be subject to, the following terms and conditions: (a) Employment Agreement. The Board may, in its discretion, include in any Stock Appreciation Rights granted under the Plan a condition that the Optionee shall agree to remain in the employ of, and to render services to, the Company or any of its Subsidiaries for a period of time (specified in the agreement) from the date the Stock Appreciation Rights are granted. No such agreement shall impose upon the Company or any of its Subsidiaries, however, any obligation to employ the Optionee for any period of time. (b) Grant. Each Stock Appreciation Right shall relate to a specific Option under the Plan, and shall be awarded to an Optionee concurrently with the grant of such Option. The number of Stock Appreciation Rights granted to an Optionee shall be equal to the number of shares that the Optionee is entitled to receive pursuant to the related Option. The number of Stock Appreciation Rights held by an Optionee shall be reduced by: (i) the number of Stock Appreciation Rights exercised for Stock or cash under the Stock Appreciation Rights agreement, and (ii) the number of shares of Stock purchased by such Optionee pursuant to the related Option. (c) Manner of Exercise. An Optionee shall exercise Stock Appreciation Rights by giving written notice of such exercise to the Company. The date upon which such written notice is received by the Company shall be the exercise date for the Stock Appreciation Rights. The Stock Appreciation Rights may only be exercised when the fair market value of the Stock subject to an Option exceeds the exercised price of the Option. (d) Appreciation Available. Each Stock Appreciation Right shall entitle an Optionee to the following amount of appreciation and no more - the excess of the fair market value of a share of Stock on the exercise date over the option price of the related Option. The total appreciation available to an Optionee from any exercise of Stock Appreciation Rights shall be equal to the number of Stock Appreciation Rights being exercised, multiplied by the amount of appreciation per Stock Appreciation Right determined under the preceding sentence. (e) Payment of Appreciation. In the discretion of the Optionee, the total appreciation available to an Optionee from an exercise of Stock Appreciation Rights may be paid to the Optionee 7 8 either in Stock or in cash. If paid in cash, the amount thereof shall be the amount of appreciation determined under Paragraph (d), above. If paid in Stock, the number of shares of Stock that shall be issued pursuant to the exercise of Stock Appreciation Rights shall be determined by dividing the amount of appreciation determined under Paragraph (d), above, by the fair market value of a share of Stock on the exercise date of the Stock Appreciation Rights. (f) Limitations Upon Exercise of Stock Appreciation Rights. An Optionee may exercise a Stock Appreciation Right for cash only in conjunction with the exercise of the Option to which the Stock Appreciation Right relates. Stock Appreciation Rights may be exercised only at such times and by such persons as may exercise Options under the Plan. Stock Appreciation Rights shall expire when the Option to which the Stock Appreciation Rights expires. Adjustment to the number of shares in the Plan and the price per share pursuant to Section 18 below shall also be made to any Stock Appreciation Rights held by each Optionee. Any termination, amendment, or revision of the Plan pursuant to Section 17 below shall be deemed a termination, amendment, or revision of Stock Appreciation Rights to the same extent. A Stock Appreciation Right is transferable only when the underlying Option is transferable, and under the same conditions. 13. TERMINATION OF SERVICE OR EMPLOYMENT (a) Employees and Subsidiary Directors. Upon the termination of the employment or service of an Optionee (other than an Outside Director) with the Company or a Subsidiary, other than by reason of the death or "permanent and total disability" (within the meaning of Section 22(e)(3) of the Code) of such Optionee, any Option and Stock Appreciation Rights granted to an Optionee pursuant to the Plan shall terminate three months after the date of such termination of employment, unless earlier terminated pursuant to Section 10(a); provided, however, that the Board or Committee may provide, by inclusion of appropriate language in any Option Agreement, (which is not an Incentive Stock Option) or Stock Appreciation Rights Agreement that the Optionee may (subject to the general limitations on exercise set forth in Section 10(b) above), in the event of termination of service or employment of the Optionee with the Company or a Subsidiary, exercise an Option or Stock Appreciation Right, in whole or in part, at any time subsequent to such termination of service or employment and prior to termination of the Option or Stock Appreciation Right pursuant to Section 10(a) above, either subject to or without regard to any installment limitation on exercise imposed pursuant to Section 10(b) above. Whether a leave of absence or leave on military or government service shall constitute a termination of service or employment for purposes of the Plan shall be determined by the Board or Committee, which determination shall be final and conclusive. For purposes of the Plan, a termination of employment with the Company or a Subsidiary shall not be deemed to occur if the Optionee is immediately thereafter employed with or in the service of the Company or any Subsidiary. (b) Outside Directors. Except as provided in Section 13(c), any Option and Stock Appreciation Right granted to an Outside Director shall terminate upon the expiration of three months after the termination of the Outside Director's service with the Company other than 8 9 because of death or "permanent and total disability" as defined above, or, if earlier, upon the expiration of ten years after grant of the Option. 14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY (a) Death of an Employee or Subsidiary Director. If an Optionee (other than an Outside Director) dies while in the employ or service of the Company or a Subsidiary or within the period following the termination of employment or service during which the Option and Stock Appreciation Right is exercisable under Section 13 above or 14(b) below, the executors or administrators or legatees or distributees of such Optionee's estate shall have the right (subject to the general limitations on exercise set forth in Section 10(b) above), at any time within one year after the date of such Optionee's death and prior to termination of the Option and Stock Appreciation Right pursuant to Section 10(a) above, to exercise any Option or Stock Appreciation Right held by such Optionee at the date of such Optionee's death, whether or not such Option or Stock Appreciation Right was exercisable immediately prior to such Optionee's death; provided, however, that the Board or Committee may provide by inclusion of appropriate language in any Option Agreement or Stock Appreciation Rights Agreement that, in the event of the death of the Optionee, the executors or administrators or legatees or distributees of such Optionee's estate may exercise an Option or Stock Appreciation Right (subject to the general limitations on exercise set forth in Section 10(b) above), in whole or in part, at any time subsequent to such Optionee's death and prior to termination of the Option or Stock Appreciation Right pursuant to Section 10(a) above, either subject to or without regard to any installment limitation on exercise imposed pursuant to Section 10(b) above. (b) Disability of an Employee or Subsidiary Director. If an Optionee (other than an Outside Director) terminates employment or service with the Company or a Subsidiary by reason of the "permanent and total disability" (within the meaning of Section 22(e)(3) of the Code) of such Optionee, then such Optionee shall have the right (subject to the general limitations on exercise set forth in Section 10(b) above), at any time within one year after such termination of service or employment and prior to termination of the Option and Stock Appreciation Right pursuant to Section 10(a) above, to exercise, in whole or in part, any Option and Stock Appreciation Rights held by such Optionee at the date of such termination of service or employment, whether or not such Option was exercisable immediately prior to such termination of service or employment; provided, however, that the Board or Committee may provide, by inclusion of appropriate language in any Option Agreement, and Stock Appreciation Rights Agreement that the Optionee may, in the event of the termination of service or employment of the Optionee with the Company or a Subsidiary by reason of the "permanent and total disability" (within the meaning of Section 22(e)(3) of the Code) of such Optionee, exercise an Option, and Stock Appreciation Right in whole or in part, at any time subsequent to such termination of service or employment and prior to termination of the Option and Stock Appreciation Right pursuant to Section 10(a) above, either subject to or without regard to any installment limitation on exercise imposed pursuant to Section 10(b) above. Whether a termination of service or employment is to be considered by reason of "permanent and total disability" for 9 10 purposes of this Plan shall be determined by the Board or Committee, which determination shall be final and conclusive. (c) Death or Disability of an Outside Director. Any Option and Stock Appreciation Right granted to an Outside Director shall remain exercisable for its remaining term in the event the Outside Director's termination of service is by reason of death or "permanent and total disability," as defined above, or, in the event of the Outside Director's death during the three-month period following the Outside Director's termination of service by reason other than death or permanent and total disability during which the Option was exercisable pursuant to Section 13(b) above. 15. USE OF PROCEEDS The proceeds received by the Company from the sale of Stock pursuant to Options and Stock Appreciation Rights granted under the Plan shall constitute general funds of the Company. 16. REQUIREMENTS OF LAW (a) Violations of Law. The Company shall not be required to sell or issue any shares of Stock under any Option or Stock Appreciation Right if the sale or issuance of such shares would constitute a violation by the individual exercising the Option or Stock Appreciation Right or the Company of any provisions of any law or regulation of any governmental authority, including without limitation any federal or state securities laws or regulations. Specifically in connection with the Securities Act of 1933 (as now in effect or as hereafter amended), upon exercise of any Option or Stock Appreciation Right unless a registration statement under such Act is in effect with respect to the shares of Stock covered by such Option or Stock Appreciation Right the Company shall not be required to sell or issue such shares unless the Board or Committee has received evidence satisfactory to it that the holder of such Option or Stock Appreciation Right may acquire such shares pursuant to an exemption from registration under such Act. Any determination in this connection by the Board or Committee shall be final, binding, and conclusive. The Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the Securities Act of 1933 (as now in effect or as hereafter amended). The Company shall not be obligated to take any affirmative action in order to cause the exercise of an Option or Stock Appreciation Right or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority. As to any jurisdiction that expressly imposes the requirement that an Option shall not be exercisable unless and until the shares of Stock covered by such Option or Stock Appreciation Right are registered or are subject to an available exemption from registration, the exercise of such Option or Stock Appreciation Right (under circumstances in which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption. (b) Compliance with Rule 16b-3. The intent of this Plan is to qualify for the exemption provided by Rule 16b-3 promulgated under the Exchange Act. To the extent any 10 11 provision of the Plan does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and deemed advisable by the Board or Committee and shall not affect the validity of the Plan. In the event Rule 16b-3 is revised or replaced, the Board, or the Committee acting on behalf of the Board, may exercise discretion to modify this Plan in any respect necessary to satisfy the requirements of the revised exemption or its replacement. 17. AMENDMENT AND TERMINATION OF THE PLAN The Board or Committee may, at any time and from time to time, amend, suspend or terminate the Plan as to any shares of Stock as to which Options or Stock Appreciation Rights have not been granted; provided, however, that no amendment by the Board or Committee shall, without approval by a majority of the votes present and entitled to vote at a duly held meeting of the stockholders of the Company at which a quorum representing a majority of all outstanding voting stock is, either in person or by proxy, present and voting on the amendment, or by written consent, in accordance with applicable state law and the Certificate of Incorporation and By-Laws of the Company, materially increase the benefits accruing to participants under the Plan, change the requirements as to eligibility to receive Options and Stock Appreciation Rights or increase the maximum number of shares of Stock in the aggregate that may be sold pursuant to Options or Stock Appreciation Rights granted under the Plan (except as permitted under Section 18 hereof). Except as permitted under this Section 16, no amendment, suspension or termination of the Plan shall, without the consent of the holder of the Option or Stock Appreciation Rights, alter or impair rights or obligations under any Option or Stock Appreciation Rights theretofore granted under the Plan. 18. EFFECT OF CHANGES IN CAPITALIZATION (a) Changes in Stock. If the outstanding shares of Stock are increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increases or decreases in such shares effected without receipt of consideration by the Company, occurring after the effective date of the Plan, the number and kinds of shares of Stock for the purchase of which Options and Stock Appreciation Rights may be granted under the Plan shall be adjusted proportionately and accordingly by the Company. In addition, the number and kind of shares of Stock for which Options and Stock Appreciation Rights are outstanding shall be adjusted proportionately and accordingly so that the proportionate interest of the holder of the Option and Stock Appreciation Rights immediately following such event shall, to the extent practicable, remain the same as immediately prior to such event. Any such adjustment in outstanding Options and Stock Appreciation Rights shall not change the aggregate Option Price payable with respect to shares of Stock subject to the unexercised portion of the Option outstanding but shall include a corresponding proportionate adjustment in the Option Price per share. (b) Reorganization in Which the Company Is the Surviving Corporation. Subject to Subsection (c) hereof, if the Company shall be the surviving corporation in any 11 12 reorganization, merger, or consolidation of the Company with one or more other corporations, any Option and Stock Appreciation Right theretofore granted pursuant to the Plan shall pertain to and apply to the securities to which a holder of the number of shares of Stock subject to such Option Stock Appreciation Right would have been entitled immediately following such reorganization, merger, or consolidation, with a corresponding proportionate adjustment of the Option Price per share so that the aggregate Option Price thereafter shall be the same as the aggregate Option Price of the shares remaining subject to the Option immediately prior to such reorganization, merger, or consolidation. (c) Reorganization in Which the Company Is Not the Surviving Corporation or Sale of Assets of Stock. Upon the dissolution or liquidation of the Company, or upon a merger, consolidation, reorganization or other business combination of the Company with one or more other entities in which the Company is not the surviving entity, or upon a sale of all or substantially all of the assets of the Company to another entity, or upon any transaction (including, without limitation, a merger or reorganization in which the Company is the surviving corporation) approved by the Board which results in any person or entity (or persons or entities acting as a group or otherwise in concert) owning 80 percent or more of the combined voting power of all classes of stock of the Company, the Plan and all Options and Stock Appreciation Rights outstanding hereunder shall terminate, except to the extent provision is made in writing in connection with such transaction for the continuation of the Plan and/or the assumption of the Options and Stock Appreciation Rights theretofore granted, or for the substitution for such Options and Stock Appreciation Rights of new options covering the stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kinds of shares and exercise prices, in which event the Plan and Options and Stock Appreciation Rights theretofore granted shall continue in the manner and under the terms so provided. In the event of any such termination of the Plan, each individual holding an Option and/or Stock Appreciation Right shall have the right immediately prior to the occurrence of such termination and during such period occurring prior to such termination as the Board or Committee in its sole discretion shall determine and designate, to exercise such Option or Stock Appreciation Right in whole or in part, whether or not such Option or Stock Appreciation Right was otherwise exercisable at the time such termination occurs and without regard to any installment limitation on exercise imposed pursuant to Section 10(b) above. The Board or Committee shall send written notice of an event that will result in such a termination to all individuals who hold Options or Stock Appreciation Rights not later than the time at which the Company gives notice thereof to its stockholders. (d) Adjustments. Adjustments under this Section 18 related to Stock or securities of the Company shall be made by the Board or Committee, whose determination in that respect shall be final, binding, and conclusive. No fractional shares of Stock or units of other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share or unit. 12 13 (e) No Limitations on Company. The grant of an Option or Stock Appreciation Rights pursuant to the Plan shall not affect or limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge, consolidate, dissolve or liquidate or to sell or transfer all or any part of its business or assets. 19. DISCLAIMER OF RIGHTS No provision in the Plan or in any Option or Stock Appreciation Rights granted or Option Agreement or Stock Appreciation Rights Agreement entered into pursuant to the Plan shall be construed to confer upon any individual the right to remain in the employ or service of the Company or any Subsidiary, or to interfere in any way with the right and authority of the Company or any Subsidiary either to increase or decrease the compensation of any individual at any time, or to terminate any employment or other relationship between any individual and the Company or any Subsidiary. 20. NONEXCLUSIVITY OF THE PLAN Neither the adoption of the Plan nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations upon the right and authority of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes or individuals or specifically to a particular individual or individuals) as the Board in its discretion determines desirable, including, without limitation, the granting of stock options otherwise than under the Plan. 13 EX-10.6 13 INDEMNITY AGREEMENT W/DIRECTORS AND OFFICERS 1 Exhibit 10.6 INDEMNITY AGREEMENT THIS AGREEMENT is made and entered into as of ________________, 1997, by and between JET AVIATION TRADING, INC., a Florida corporation (the "Company"), and _______________________ (the "Indemnitee"). PRELIMINARY STATEMENTS WHEREAS, the Company desires to retain the services of the Indemnitee as a director, officer, employee and/or agent of the Company; WHEREAS, Section 607.0850 of the Florida Business Corporation Act (the "Act") provides a non-exclusive statutory basis for the indemnification of directors, officers, employees and agents of a Florida corporation and authorizes agreements between the Company and its directors, officers, employees and agents with respect to indemnification of such individuals. WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify such persons so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified, and the Indemnitee is wiling to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be so indemnified; and WHEREAS, in order to induce the Indemnitee to serve or to continue to serve as a director, officer, employee and/or agent of the Company and/or a subsidiary of the Company, the Company has determined and agreed to enter into this agreement with the Indemnitee, and the Company and the Indemnitee agree as follows: 1. Indemnification of Indemnitee. The Company hereby agrees to hold harmless and indemnify the Indemnitee to the fullest extent authorized or permitted by the provisions of the Florida Statute, or by any amendment thereof or other statutory provision authorizing or permitting such indemnification adopted after the date hereof that has the effect of broadening (but not narrowing) the scope of indemnification provided under the Florida Statute as it exists as of the date hereof. 2. Additional Indemnification. In addition to any other indemnification to which the Indemnitee may be entitled pursuant to the Florida Statute, the Company's Articles of Incorporation (the "Articles") or Bylaws (the "Bylaws"), or otherwise, and subject only to the limitation set forth in Section 3 hereof, the Company hereby further agrees to hold harmless and indemnify the Indemnitee against any and all costs and expenses (including trial, appellate and other attorneys' fees), judgments, fines, penalties and amounts paid in settlement, actually and reasonably incurred by the Indemnitee in connection with any threatened, pending or completed claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of the 1 2 Company or a corporation, partnership, joint venture, trust, employee benefit plan or other enterprise or by or in the right of any other person) to which the Indemnitee is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that the Indemnitee is, was or at any time becomes a director, officer, employee or agent of the Company, or is or was serving or at any time serves at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. Notwithstanding any other provision of this Agreement, the Company shall pay and reimburse all expenses incurred by Indemnitee in connection with his appearance as a witness or other participation in a proceeding at a time when he is not a named defendant or respondent in the proceeding. 3. Limitations on Additional Indemnification. No indemnification pursuant to Section 2 hereof shall be paid by the Company if a judgment (after exhaustion of all appeals) or other final adjudication determines that the Indemnitee's actions, or omissions to act, were material to the cause of action so adjudicated and constitute: a. a violation of criminal law, unless the Indemnitee had reasonable cause to believe his conduct was lawful; or had no reasonable cause to believe his conduct was unlawful; b. a transaction from which the Indemnitee received an improper personal benefit within the meaning of Section 607.0850(7)(b) of the Florida Statute; c. in the case of a director, a circumstance under which the liability provisions of Section 607.0834 of the Florida Business Corporation Act are applicable; or d. willful misconduct or a conscious disregard for the best interests of the Company in a proceeding by or in the right of the Company to procure a judgment in its favor or in a proceeding by or in the right of a shareholder of the Company. 4. Disbursement/Repayment of Expenses. In addition to the prompt payment of any indemnification to which the Indemnitee may be entitled, upon the demand of the Indemnitee, the Company shall promptly (and in any event within five (5) business days after written demand therefor) advance to or reimburse the Indemnitee for all reasonable expenses (including, without limitation, trial, appellate and other attorneys' fees, court costs, judgments, fines, penalties, amounts paid in settlement and other payments) that the Indemnitee may incur in responding to, investigating, defending, settling or appealing any claim, action, suit or proceeding for which it reasonably appears that the indemnitee may be entitled to indemnification from the Company, either pursuant to this Agreement, the Florida Statute, the Articles, the Bylaws or otherwise. The Indemnitee agrees to reimburse the Company for all such expenses in the event, and only to the extent, that it shall be ultimately determined that the Indemnitee is not entitled to be indemnified by the Company for such expenses under the provisions of Section 3 of this Agreement. Such undertaking to reimburse the Company for amounts advanced if it is ultimately determined that the Indemnitee is not entitled to be indemnified by the Company is an unlimited general, unsecured and interest free obligation of the Indemnitee. 2 3 5. Indemnification Procedures. a. Payment/Determination of Indemnification. Upon any request from the Indemnitee for indemnification from the Company, whether pursuant to this Agreement, the Florida Statute, the Articles, the Bylaws or otherwise, the Company shall promptly pay the full amount of such requested indemnification. If the Company's Board of Directors (the "Board") reasonably believes that all or any portion of such indemnification pursuant to this Agreement is prohibited by Section 3 hereof, the Company shall in any event promptly pay the amount of such indemnification if any, that may reasonably then be paid and shall promptly make or cause to be made a determination (the "Determination") of whether the payment of the balance is limited by Section 3 hereof. Such Determination shall be made in the following order or preference: (i) by the Board of Directors by majority vote or consent of a quorum consisting of directors who are not, at the time of the Determination, named parties to such action, suit or proceeding ("Disinterested Directors"); or (ii) if such a quorum of Disinterested Directors cannot be obtained by majority vote or consent of a committee duly designated by the Board (in which designation all directors, whether or not Disinterested Directors, may participate) consisting solely of two or more Disinterested Directors; or (iii) if such a committee cannot be established, by the opinion of independent outside legal counsel employed by the Company; or (iv) if such legal opinion cannot be obtained, by a majority vote or consent of a quorum of shareholders who are not parties to such action, suit or proceedings or, if not such quorum is obtainable, by a majority vote of such shareholders. b. Presumptions and Effect of Certain Proceedings. In making a Determination with respect to entitlement to indemnification hereunder, the person or persons or entity making the Determination shall presume that Indemnitee is entitled to indemnification under this Agreement and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any Determination contrary to that presumption. The termination of any claim, action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, be determinative of or create a presumption that the Indemnitee is not entitled to indemnification or reimbursement of expenses hereunder or otherwise. c. Reliance as Safe Harbor. For purposes of any Determination hereunder, the Indemnitee shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company; or with respect to any criminal action or proceeding, to have had reasonable cause to believe his conduct was lawful, or no reasonable cause to believe his conduct was unlawful; if his action is based on information, opinions, reports, or 3 4 statements, including financial statements and other financial data, prepared or presented by one or more officers or employees of the Company whom the Director reasonably believes to be reliable and competent in such matters presented; legal counsel, public accountants, or other persons as to matters the Director reasonably believes are within the persons' professional or expert competence; or a committee of the Board of Directors of which he is not a member if the Director reasonably believes the committee merits confidence. The term "another enterprise" as used in this Section 5(c) shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which the Indemnitee is or was serving at the request of the Company as a director, officer, partner, trustee, employee or agent. The provisions of this Section 5(c) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth herein. d. Success on Merits or Otherwise. Notwithstanding any other provision for this Agreement, to the extent that the Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding described herein, or in defense of any claim, issue or matter therein, he shall be indemnified against all costs and expenses (including trial, appellate and other attorneys' fees) actually and reasonably incurred by him in connection with the investigation, defense, settlement or appeal thereof. For purposes of this Section 5(d), the term "successful on the merits or otherwise" shall include, but not be limited to, (i) any termination, withdrawal, or dismissal (with or without prejudice) of any claim, action, suit or proceeding against the Indemnitee without any express finding of liability or guilt against him, (ii) the expiration of 90 days after the making of any claim or threat of an action, suit or proceeding without the institution of the same and without any promise of payment made to induce a settlement, or (iii) the settlement of any action, suit or proceeding pursuant to which the Indemnitee pays less than $15,000 in settlement. e. Partial Indemnification or Reimbursement. If the Indemnitee is entitled under any provision of this Agreement to indemnification and/or reimbursement by the Company for some or a portion of the costs and expenses (including trial, appellate and other attorneys' fees) judgments, fines, penalties or amounts paid in settlement by the Indemnitee in connection with the investigation, defense, settlement or appeal of any action specified herein, but not, however, for the total amount thereof, the Company shall nevertheless indemnify and/or reimburse the Indemnitee for the portion thereof to which the Indemnitee is entitled. The party or parties making the Determination shall determine the portion (if less than all) of such claims, damages, expenses (including trial, appellate and other attorneys' fees), judgments, fines or amounts paid in settlement for which the Indemnitee is entitled to indemnification and/or reimbursement under this Agreement. f. Costs. All costs of making any Determination required by this Section 5 shall be borne solely by the Company, including, but not limited to, the costs of legal counsel, proxy solicitations and judicial determinations. The Company shall also be solely responsible for paying (i) all reasonable expenses incurred by the Indemnitee to enforce this Agreement including trial, appellate and other attorneys' fees and costs; and (ii) all costs of defending any suits or proceedings challenging payments to the Indemnitee under this Agreement including trial, appellate and other attorneys' fees and costs. 4 5 g. Timing of the Determination. The Company shall use its best efforts to make the Determination contemplated by this Section 5 promptly, but in all events within the following time periods: i. if the Determination is to be made by the Board or a committee thereof, such Determination shall be made not later than 30 days after a written request for a Deermination (a "Request") is delivered to the Company by the Indemnitee; ii. if the Determination is to be made by the Company's outside independent legal counsel, such Determination shall be made not later than 30 days after a Request is delivered to the Company by the Indemnitee; and iii. if the Determination is to be made by the Company's shareholders, such Determination shall be made not later than 90 days after a Request is delivered to the Company by the Indemnitee. The failure to make a Determination within the above-specified time period shall constitute a Determination that full indemnification is not limited or prohibited by Section 3 hereof. h. Shareholder Vote on Determination. In connection with each meeting at which a Shareholder Determination will be made, the Company shall solicit proxies that expressly include a proposal to indemnify or reimburse the Indemnitee. Subject to the fiduciary duties of its members under applicable law, the Board will not recommend against Indemnification or reimbursement in any proxy statement relating to the proposal to indemnify or reimburse the Indemnitee. i. Right of Indemnitee to Appeal on Adverse Determination by Board or Committee. If a Determination is made by the Board or a committee thereof that all or any portion of a request for indemnification pursuant to this Agreement is prohibited by Section 3 hereof, then upon the written request of the Indemnitee, the Company shall cause a new Determination to be made by the Company's shareholders at the next regular or special meeting of shareholders. Such Determination by the Company's shareholders shall be binding and conclusive for all purposes of this Agreement, but shall not preclude the Indemnitee from seeking court-ordered indemnification or reimbursement pursuant to any provision of the Florida Statutes or otherwise. j. Right of Indemnitee to Select Forum for Indemnification. If at any time subsequent to the date of this Agreement, "Continuing Directors" (as defined below) do not constitute a majority of the members of the Board, or there is otherwise a change in control of the Company (as contemplated by Item 403(c) of Securities and Exchange Commission Regulation S-K), then upon the request of the Indemnitee, the Company shall cause the Determination required by this Section 5 to be made by special legal counsel designated by the Indemnitee and approved by the Board (which approval shall not be unreasonably withheld), which counsel shall be deemed to satisfy the requirements of Section 5(a)(iii) hereof. If none of the legal counsel selected by the Indemnitee 5 6 are willing and/or able to make the Determination, then the Company shall cause the Determination to be made a majority vote or consent of a Board committee consisting solely of Continuing Directors. For purposes of this Agreement, a "Continuing Director" means either a member of the Board at the date of this Agreement or a person nominated to serve as a member of the Board by a majority of the then Continuing Directors. k. Access by the Indemnitee to Determination. The Company shall afford to the Indemnitee and his representative ample opportunity to present evidence of the facts upon which the Indemnitee relies for indemnification or reimbursement, together with other information relating to any requested Determination. The Company shall also afford the Indemnitee the reasonable opportunity to include such evidence and information in any Company proxy statement relating to a shareholder Determination. 6. Contribution. a. If the indemnification provided in Sections 1 and 2 hereof is unavailable and may not be paid to the Indemnitee for any reason other than those set forth in Section 3 hereof, then in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with the Indemnitee (or would be joined in such action, suit or proceeding), the Company shall contribute to the amount of expenses, judgments, fines and settlements paid or payable by the Indemnitee in such proportion as is appropriate to reflect (i) the relative benefits received by the Company on the one hand and the Indemnitee on the other hand from the transaction from which such action, suit or proceeding arose, and (ii) the relative fault of the Company on the one hand and of the Indemnitee on the other in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the Indemnitee on the other shall be determined by reference to, among other things, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such expenses, judgments, fines or settlement amounts. The Company agrees that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation or any other method of allocation that does not take in to account the foregoing equitable considerations. b. The determination as to the amount of the contribution, if any, shall be made by: i. a court of competent jurisdiction upon the application of both the Indemnitee and the Company (if an action or suit had been brought in, and final determination had been rendered by such court); ii. the Board by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding; or 6 7 iii. outside independent legal counsel of the Company, if a quorum is not obtainable for purpose of (ii) above, or, even if obtainable, a quorum of Disinterested Directors so directs. 7. Notification and Defense of Claim. Promptly after receipt of notice of the commencement of any action, suit or proceeding, the Indemnitee will, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof, but the omission to so notify the Company will not relieve the Company from any liability that it may have to the Indemnitee otherwise than under this Agreement. With respect to any such action, suit or proceeding as to which the Indemnitee so notifies the Company: a. The Company will be entitled to participate therein at its own expense. b. Except as otherwise provided below, the Company may assume the defense thereof, with counsel satisfactory to the Indemnitee. After notice from the Company to the Indemnitee of its election to assume the defense, the Company will not be liable to the Indemnitee under this Agreement for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof, other than reasonable costs of investigation or as otherwise provided below. The Indemnitee shall have the right to employ his counsel in such action, suit or proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of the Indemnitee unless: (i) the employment of counsel by the Indemnitee has been authorized by the Company; (ii) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of the defense of such action; or (iii) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of the Indemnitee's counsel shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of the Company or as to which the Indemnitee shall have come to the conclusion provided for in (ii) above; and c. The Company shall not be liable to indemnify the Indemnitee under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent. The Company shall not settle any action or claim in any manner that would impose any penalty or limitation on the Indemnitee without the Indemnitee's written consent. Neither the Company nor the Indemnitee will unreasonably withhold its or his consent to any proposed settlement. 8. Liability Insurance. So long as the Indemnitee shall continue to serve as a director or officer of the Company (or shall continue at the request of the Company to serve as a director or officer of another corporation, partnership, joint venture, trust or other enterprise), the Company will use its best efforts to purchase and maintain in effect for the benefit of the Indemnitee one or more valid, binding and enforceable policy or policies of D&O Insurance providing coverage within limits determined by the Board in its sole discretion. Notwithstanding the foregoing, the Company shall 7 8 not be required to purchase or maintain such insurance policy, if, in the sole discretion of the Board (i) such insurance is not reasonably available; (ii) the premium cost for such insurance is disproportionate to the amount of coverage; or (iii) the coverage provided by such insurance is so limited by exclusions that there is insufficient benefit from such insurance. 9. Disclosure of Payments. Except as expressly required by law, neither party shall disclose any payments under this Agreement unless prior approval of the other party is obtained. Any payments to the Indemnitee that must be disclosed shall, unless otherwise required by law, be described only in Company proxy or information statements relating to special and/or annual meetings of the Company's shareholders, and the Company shall afford the Indemnitee the reasonable opportunity to review all such disclosures and, if requested, to explain in such statement any mitigating circumstances regarding the events reported. 10. Covenant Not to Sue; Limitation of Actions and Release of Claims. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company (or any of its subsidiaries) against the Indemnitee, his spouse, heirs, personal representatives, successors or assigns after the expiration of 2 years from the date the Indemnitee ceases (for any reason) to serve as either a director, officer, or agent of the Company, and any claim or cause of action of the Company (or any of its subsidiaries) shall be extinguished and deemed released unless asserted by the filing of a legal action within such 2-year period. 11. Continuation of Obligations. All agreements and obligations of the Company contained herein shall continue during the period the Indemnitee is a director, officer, employee or agent of the Company (or is serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise), and shall continue thereafter for so long as the Indemnitee shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal or investigative, by reason of the fact that the Indemnitee has ceased to serve in any such capacity due to his resignation, removal by vote of directors or shareholders, termination, death, disability or otherwise. 12. Enforcement. a. The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce the Indemnitee to serve or to continue to serve as a director, officer, employee and/or agent of the Company and/or a subsidiary of the Company, and acknowledges that the Indemnitee is relying upon this Agreement in agreeing to serve or to continue to serve in such capacity. b. In the event the Indemnitee is required to bring any action to enforce his rights and to collect monies due under this Agreement and is successful in such action, the Company shall reimburse the Indemnitee for all of the Indemnitee's reasonable fees and expenses in bringing and pursuing such action, including reasonable attorney's fees (including trial, appellate and other attorney's fees), court costs and other related expenses. 8 9 13. Miscellaneous. a. Cooperation and Intent. The Company shall cooperate in good faith with the Indemnitee and use its best efforts to ensure that the Indemnitee is indemnified and/or reimbursed for expenses as described herein to the fullest extent permitted under the provisions of this Agreement. b. Nonexclusivity; Subrogation; Entire Agreement. The rights of indemnification and reimbursement provided in this Agreement shall be in addition to any rights by which the Indemnitee may otherwise be entitled by the Florida Statutes, the Articles, the Bylaws, a vote of the Company's shareholders, or otherwise. In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including the execution of such documents as are necessary to enable the Company to bring suit to enforce such rights. The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise. This Agreement constitutes the entire agreement between the Company and the Indemnitee with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, both written and oral, between the parties hereto with respect to such subject matter (the "Prior Agreements"); provided, however, that if this Agreement shall ever be held void or unenforceable for any reason whatsoever, and is not reformed pursuant to Section 13(d) hereof, then (i) this Agreement shall not be deemed to have superseded any Prior Agreements; (ii) all of such Prior Agreements shall be deemed to be in full force and effect notwithstanding the execution of this Agreement; and (iii) the Indemnitee shall be entitled to maximum indemnification benefits provided under the Florida Statute, the Articles, the Bylaws, a vote of Company's shareholders, or any Prior Agreements. c. Effective Date. The provisions of this Agreement shall cover claims, actions, suits, and proceedings whether now pending or hereafter commenced and shall be retroactive to cover acts or omissions or alleged acts or omissions that heretofore have taken place. d. Severability; Reformation. Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be invalid or unenforceable in whole or in part for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof. In the event that all or any portion of this Agreement is ever held void or unenforceable by a court of competent jurisdiction, then the parties hereto hereby expressly authorize such court to modify any provision(s) held void or unenforceable to the extent, and only to the extent, necessary to render it valid and enforceable. e. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication is directed, or (ii) mailed by certified or registered mail, postage prepaid, on the third business day after the date on which it is so mailed: 9 10 If to the Indemnitee: To the address set forth on the signature page hereof. If to the Company: Jet Aviation Trading, Inc. 15675 N.W. 15 Avenue Miami, FL 33169 or to such other address as may have been furnished by either party to the other. f. Amendments or Modification. This Agreement may not be amended or modified in any way except by a written instrument executed by all of the parties. g. Governing Law. This Agreement shall be governed by, interpreted and enforced in accordance with the laws of the State of Florida, without giving effect to the principles of conflicts of law thereof. h. Successor and Assigns. This Agreement shall be binding, upon the Indemnitee and the Company, its successors and assigns, and shall inure to the benefit of the Indemnitee, his heirs, personal representatives, successors and assigns and to the benefit of the Company, its successors and assigns. i. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement. j. Headings. The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written. JET AVIATION TRADING, INC. BY: ----------------------------------- Joseph Nelson, President THE INDEMNITEE: -------------------------------------- Address: ------------------------------ -------------------------------------- 10 EX-23.2 14 CONSENT OF SWEENEY, GATES 1 Exhibit 23.2 CONSENT OF INDEPENDENT AUDITORS We hereby consent to the use in this Registration Statement on Form SB-2 of our report dated October 9, 1997, related to the financial statements of Jet Aviation Trading, Inc. and to the reference to our firm under the caption "Experts" in the prospectus. Sweeney, Gates & Co. Fort Lauderdale, Florida November 12, 1997 -----END PRIVACY-ENHANCED MESSAGE-----