UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
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Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
WILLIS LEASE FINANCE CORPORATION
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(Name
☒ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☐ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material under §240.14a-12 |
Willis Lease Finance Corporation
(Name of Registrant as Specified Inin Its Charter)
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(Name
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION DATED
APRIL 4, 2024
In accordance with Rule 14a-6(d) under Regulation 14A, Willis Lease Finance Corporation intends to release definitive copies of this proxy statement to security holders on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
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PRELIMINARY COPY
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
WILLIS LEASE FINANCE CORPORATION
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NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 1998
------------------------
TO OUR SHAREHOLDERS:
about April 19, 2024.
NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS |
Wednesday, May 22, 2024 11:00 a.m., Eastern Time | Willis Lease Finance Corporation 4700 Lyons Technology Parkway Coconut Creek, Florida 33073 |
Dear Stockholder:
You are cordially invited to attend the 19982024 Annual Meeting of ShareholdersStockholders of WILLIS LEASE FINANCE CORPORATION (the "Company"“Annual Meeting”), which will be held virtually via live webcast at the
Park Hyatt Hotel, 333 Battery Street, San Francisco, California at 2:11:00 p.m.a.m., Eastern Time, on Wednesday, May 12, 1998,22, 2024.
The platform for the virtual Annual Meeting includes functionality that affords validated stockholders the same meeting participation rights and opportunities they would have at an in-person meeting. Instructions to access and log into the virtual Annual Meeting are provided below and, once admitted, stockholders may view reference materials, submit questions, and vote their shares by following purposes:
1. To the instructions that will be available on the Annual Meeting website.
In addition to any other business that may properly come before the Annual Meeting or any adjournment or postponement thereof, stockholders will be asked to:
The Board of Directors has fixed the close of business on March 23, 1998April 5, 2024, as the record date for determining those shareholdersstockholders who will be entitled to notice of and to vote at the meeting. The stock transfer books will not be closed between the record date and the date of the meeting. A quorum comprising the holders of the majority of the outstanding shares of Common Stock of the Companyour common stock on the record date must be present or represented for the transaction of business at the Annual Meeting. Accordingly, it is important that your shares be represented at the meeting. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE,
Access and Log-in Instructions for Virtual Annual Meeting
Register prior to ensurethe Annual Meeting at www.proxydocs.com/WLFC using your unique 12-digit or 16-digit control number included on your proxy card or on the instructions that accompany your proxy materials. You will be able to attend the Annual Meeting by following the instructions that will be emailed to you upon completion of such registration. Online access to the Annual Meeting will open at 10 a.m., Eastern Time, to allow time for you to log-in prior to the start of the live audio webcast of the Annual Meeting at 11 a.m., Eastern Time.
How Beneficial Owners May Participate in the Virtual Annual Meeting
If your shares are registered in the name of your bank, broker or other nominee, you are the “beneficial owner” of those shares and those shares are considered as held in “street name.” If you are a beneficial owner, to vote or ask questions at the virtual Annual Meeting, you must first obtain a valid legal proxy from your bank, broker or other nominee and then register in advance to attend the Annual Meeting. Follow the instructions from your bank, broker or other nominee included with the proxy materials that you are provided, or contact your bank, broker or other nominee to request a legal proxy form.
After obtaining a valid legal proxy from your bank, broker or other nominee, to register to vote or ask questions at the virtual Annual Meeting, you must submit proof of your legal proxy reflecting the number of your shares along with your name and email address to DMSsupport@BetaNXT.com.
Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on May 21, 2024. You will receive a confirmation of your registration by email after we receive your registration materials.
Voting Methods
BEFORE the Annual Meeting:
Vote by Internet: Go to www.proxydocs.com/WLFC until 11:59 p.m. Eastern Time on May 21, 2024.
Vote by Phone: Call toll-free 1-866-994-5580 until 11:59 p.m. Eastern Time on May 21, 2024.
Vote by Mail: Complete, sign and date the proxy card/voting instruction card and return it in the postage-paid envelope that is enclosed with your proxy materials.
DURING the Annual Meeting:
Vote by Internet: Go to www.proxydocs.com/WLFC and vote during the Annual Meeting by entering the 12-digit or 16-digit control number included in your proxy materials and following the instructions on the Annual Meeting website.
It remains very important that your shares will beare represented and voted at the Annual Meeting. YourWe therefore strongly encourage you to vote in advance of the Annual Meeting. You may revoke your proxy may be revoked at any time prior to the time it is voted.voted at the Annual Meeting. Returning the proxy card does not deprive you of your right to virtually attend the meeting and to vote your shares at the virtual Annual Meeting.
Proxy materials were mailed to you on or about April 19, 2024. Please read the proxy materialmaterials carefully. Your vote is important, and the
Company appreciateswe appreciate your cooperation in considering and acting on the matters presented.
Sincerely yours,
Charles F. Willis, IV
CHAIRMAN OF THE BOARD
By Order of the Board of Directors,
Dean M. Poulakidas
Senior Vice President,
General Counsel and
Corporate Secretary
April , 1998
Sausalito, California
WILLIS LEASE FINANCE CORPORATION
PROXY STATEMENT
[ ], 2024
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2024 WLFC Proxy Statement 1
SOLICITATION AND VOTING OF PROXIES |
General
This proxy statement is furnished in connection with the solicitation by the Board of Directors (also referred to as the “Board”, “Directors” or, individually, “Director”) of WILLIS LEASE FINANCE CORPORATION (the "Company"(“we,” “us,” “our,” “Willis Lease” or the “Company”) offor proxies to be voted at the 1998our 2024 Annual Meeting of Shareholders,Stockholders (the “Annual Meeting”), which will be held virtually via live webcast at 2:11:00 p.m.a.m., Eastern Time, on Wednesday, May 12, 1998 at22, 2024. Register prior to the Park Hyatt Hotel, 333 Battery Street,
San Francisco, California,Annual Meeting, or at any adjournments or postponements thereof, for the purposes set forth in the accompanying Notice of 1998 Annual Meeting, at www.proxydocs.com/WLFC using your unique 12- digit or 16-digit control number included on your proxy card or on the instructions that accompany your proxy materials. You will be able to attend the Annual Meeting by following the instructions that will be emailed to you upon completion of Shareholders.
The Company's principal executive offices are located at 180 Harbor Drive,
Suite 200, Sausalito, California 94965. such registration.
This Proxy Statementproxy statement is first being mailed to shareholdersstockholders on or about April 3, 1998. The Company's 199819, 2024. Our 2023 Annual Report is being mailed to shareholdersstockholders concurrently with this proxy statement.
Important Notice Regarding the Availability of Proxy Statement.
Materials for
the Annual Meeting to be held on May 22, 2024:
The 1998Proxy Statement, Proxy Card and the Annual Report is not to be regarded as proxy soliciting material or as
a communication by means
on Form 10-K for the fiscal year ended December 31, 2023
are also available free of which any solicitation of proxies is to be made.
VOTING
charge at
https://www.investorrelations.com/WLFC.
Voting
The close of business on March 23, 1998April 5, 2024 is the record date for shareholdersdetermining whether you, in your capacity as a stockholder, are entitled to notice of and to vote at the 1998 Annual Meeting of Shareholders.Meeting. As of that date, the Companywe had [6,859,179] shares of Common Stock, nocommon stock, $0.01 par value, (the
"Common Stock") issued and outstanding. All of the shares of the Company's
Common Stockour common stock outstanding on the record date are expected to be entitled to vote at the 1998
Annual Meeting of Shareholders, and shareholders of recordMeeting. If you are entitled to vote at the meeting, you will have one vote for each share of Common Stock so heldcommon stock you hold with regard to each matter to be voted upon.
The required quorum for the meeting is a majority of the outstanding shares of Common Stockcommon stock eligible to be voted on the matters to be considered at the meeting.
Shares of our common stock represented by proxies which are properly executed and returned to us on the accompanying proxy card will be voted at the Annual Meeting in accordance with the instructions marked on the proxy card. If you do not mark any instructions on the proxy card, your shares represented by the proxy card will be voted for the election of the Board’s nominees as Class II Directors, in favor of Proposal 2, and in favor of Proposal 3. In the election for directors,two Directors (Proposal 1), the five nominees for Class II Directors receiving the highest number of affirmative votes will be elected. The affirmative vote of a majority of the voting power of the outstanding voting shares of the Company present or represented andour common stock entitled to vote at the Annual Meeting (which affirmative votes constitute a
majority of the required quorum)thereon is required for the ratification of the
selection of KPMG Peat Marwick LLP as independent public accountants and the
approval of the proposed amendments to the Company's 1996 Stock Option/Stock
Issuance Plan (the "1996 Plan").Proposal 2. The affirmative vote of a majority of the outstanding shares eligible to be voted in person or by proxy at the meeting2024 Annual Meeting is required for approval
of the proposal to change the state of incorporation to Delaware.
Shares of the Company's Common Stock represented by proxies in the
accompanying form which are properly executed and returned to the Company will
be voted at the 1998 Annual Meeting of Shareholders in accordance with the
shareholders' instructions contained therein. If no instructions are marked on
the proxy card, the shares represented thereby will be voted (i) for the
election of the Board's nominees as directors (Proposal 1), (ii) for
ratification of the selection of KPMG Peat Marwick LLP as independent
1
public accountants for the Company for the fiscal year ending December 31, 1998
(Proposal 2), (iii) for the change of the Company's State of incorporation from
California to Delaware and the adoption of various other measures which will
affect certain shareholder rights as described herein (Proposal 3), and (iv) for the approval of 3.
2 2024 WLFC Proxy Statement
A summary of the amendmentsvoting provisions for the matters to be voted on at the 1996 PlanAnnual Meeting, provided a valid quorum is present or represented at the Annual Meeting, is as described herein (Proposal
4). follows:
Proposal | Vote | Board Recommendation | Routine or Non-Routine | Discretionary Voting by Broker Permitted? | Vote Required for Approval | Impact of Abstentions | Impact of Broker Non-Votes |
1 | Election of director nominees | FOR | Non-routine, thus if you hold your shares in street name, your broker may not vote your shares for you if you do not provide instructions to your broker | No | Plurality | No impact | No impact |
2 | Amendment to amended and restated certificate of incorporation to provide for officer exculpation | FOR | Non-routine, thus if you hold your shares in street name, your broker may not vote your shares for you if you do not provide instructions to your broker | No | Majority of the voting power of all outstanding shares of our common stock entitled to vote thereon | Same effect as a vote AGAINST the Proposal | Same effect as a vote AGAINST the Proposal |
3 | Ratification of independent registered public accounting firm | FOR | Routine, thus if you hold your shares in street name, your broker may vote your shares for you absent any other instructions from you | Yes | Majority of votes cast affirmatively or negatively | No impact | Broker has the discretion to vote |
2024 WLFC Proxy Statement 3
If a properly signed proxy or ballot indicates that a shareholder, broker or
other nominee abstainsyou abstain from voting or that theyour shares are not to be voted on a particular proposal the(or that you “withhold” your vote for a director nominee), your shares will not be counted as having been voted on that proposal, although suchyour shares will be counted as being in attendance at the meeting for purposes of determining the presence of a quorum. ForBroker non-votes (i.e., shares held by brokers or nominees, as to which instructions have not been received from beneficial owners or persons entitled to vote, that the purposebroker or nominee does not have discretionary power to vote on a particular matter) are counted towards a quorum, but are not counted for purposes of the proposals in determining whether the proposed change of the Company's State of incorporation
from California to Delaware (Proposal 3) isa matter has been approved abstentions and broker
non-votes will have the effect of a negative vote because that proposal requires
the approval ofby a majority of the outstanding shares represented in person or by proxy and entitled to vote. ManagementA broker or other nominee will not have discretion to vote your shares on any “non-routine” matters, absent instructions from you. “Non-routine” matters include all proposals, including the election of Directors, except for Proposal 3. Accordingly, we encourage you to provide voting instructions to your broker or other nominee whether or not you plan to participate in the meeting.
Our management does not know of any matters to be presented at the Annual Meeting other than those set forth in this Proxy Statementproxy statement and in the Notice accompanying this Proxy Statement.proxy statement. If other matters should properly come before the meeting, the proxy holders will vote on such matters in accordance with their best judgment.
REVOCABILITY OF PROXIES
Any shareholder giving
We encourage stockholders to vote in advance of the Annual Meeting, even if they plan to access the Annual Meeting virtually. In order to vote in advance, proxies submitted by internet or telephone must be received by 11:59 p.m., Eastern Time, on May 21, 2024. Stockholders can vote during the Annual Meeting, using the internet. Beneficial holders who wish to vote during the Annual Meeting must obtain a valid legal proxy from their broker, bank or other nominee prior to the date of the Annual Meeting and then register in advance no later 5:00 p.m., Eastern Time, on May 21, 2024. Voting by a stockholder during the form accompanying this Proxy Statement
has the right toAnnual Meeting will replace any previous votes.
Revocability of Proxies
Stockholders of record may revoke ittheir proxy at any time before it is votedthe polls close by submitting a later-dated proxy card, by voting using the internet at the meeting. It may
be revokedAnnual Meeting, by filing with the Secretary of the Companydelivering an instrument of revocation to our Corporate Secretary before the Annual Meeting, or by voting again using the presentation atinternet or by telephone before the meetingcut-off time. Your latest internet or telephone proxy is the one that will be counted. Please note, however, that if your shares are held of record by a duly executedbroker, bank or other nominee and you wish to revoke a proxy, bearing a later date. It may also be revokedyou must contact that firm to revoke any prior voting instructions.
Solicitation
This solicitation is made by attendance at the meeting and
election to vote in person.
SOLICITATIONour Board of Directors on our behalf. The entire cost of preparing, assembling and mailing the Notice of 1998
Annual Meeting, this Proxy Statementproxy statement and the enclosed proxy card, and of soliciting proxies, will be paid by the Company.us. Proxies will be solicited principally through the use of the mails,mail services, but if deemed desirable,we may be
solicitedsolicit proxies personally or by telephone, telegraphelectronic mail or special letter by our officers and our regular Company employees for no additional compensation. Arrangements may
be madeWe have retained Mediant Communications LLC to aid in the solicitation at an estimated cost to us of approximately $25,000 plus out-of-pocket expenses.
In addition, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must comply with brokerage housesthe additional requirements of Rule 14a-19(b).
4 2024 WLFC Proxy Statement
INFORMATION ABOUT THE BOARD OF DIRECTORS AND THE COMMITTEES OF THE BOARD |
Board of Directors
Our Bylaws authorize us to have seven Directors. At the present time, the Board consists of five Directors who are divided into three classes, one Director in Class I and other custodians, nomineestwo Directors in each of Class II and fiduciaries to
send proxiesClass III. One class is elected each year for a three year term. Colm Barrington, Brendan J. Curran and proxy material toRae Ann McKeating qualify as independent Directors, as defined in the beneficial ownersNasdaq listing standards.
Our business, property and affairs are managed under the direction of the Company's Common
Stock,Board. Directors are kept informed of our business through discussions with our Executive Chairman and such persons may be reimbursed for their expenses.
INFORMATION ABOUT THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
Non-employee membersour Chief Executive Officer (“CEO”) as well as our other officers, by reviewing materials provided to them and by participating in meetings of the Board are each paid an annual fee of $10,000 and are reimbursed for all reasonable out-of-pocket costs incurred to attend Board
of Directors or Committee meetings. They also receive $1,000 for each Board
meeting and $500 for each Committee meeting which they attend in person, and
$500 and $250, respectively, for each Board and Committee meeting held by
telephone. Pursuant to the Automatic Option Grant program under the 1996 Plan,
each individual who first becomes a non-employee Board member is eligible to
receive an option grant for 5,000 shares of Common Stock. In addition, on the
date of each annual shareholders meeting, beginning with the 1997 Annual
Meeting, each individual who is to continue to serve as a non-employee Board
member, whether or not such individual is standing for re-election at that
particular annual meeting, will be granted an option to purchase 1,000 shares of
Common Stock, provided such individual has served as a non-employee Board member
for at least six months. Each grant under the Automatic Option Grant Program
will have an exercise price per share equal to the fair market value per share
of the Company's Common Stock on the grant date, and will have a maximum term of
10 years, subject to earlier termination should the optionee cease to serve as a
member of the Company's Board of Directors.
2
The current non-employee Board members, Messrs. Anderson, LeRoy and Smith,
each received an automatic option grant on September 18, 1996 for 5,000 shares
of the Company's Common Stock at an exercise price per share of $8.00, the fair
market value per share of the Company's Common Stock on the date of grant. In
addition, each of these non-employee Board members received on automatic option
grant on May 14, 1997, for 1,000 shares of the Company's Common Stock at an
exercise price per share of $11.25, the fair market value per share of the
Company's Common stock on the date of grant. Each 5,000-share option grant will
vest in a series of four successive equal annual installments over the
optionee's period of continued service as a Board member measured from the
option grant date. Each 1,000-share option grant will vest in one installment
upon the optionee's completion of one year of Board service measured from the
grant date. Please see the description of the Automatic Option Grant Program
under Proposal Four for further information concerning the remaining terms and
conditions of these automatic option grants.its committees. The Board of Directors of the Company held a total of eight (8)nine meetings during the fiscal year ended December 31, 1997 (the "1997 fiscal year"). In the
1997 fiscal year, each director2023. Each incumbent Director attended at least 75% of the aggregate of (i) the total number of meetings of the Board, and (ii) the total number of meetings held by all committees of the Board on which hethat Director served.
Communications with the Board
You may communicate with the Board by sending a letter to: Board of Directors, Willis Lease Finance Corporation, c/o Office of the Corporate Secretary, 60 East Sir Francis Drake Boulevard, Suite 209, Larkspur, CA 94939. Our Office of the Corporate Secretary will receive your correspondence and forward it to the Board of Directors or to any individual Director or Directors to whom your communication is directed, unless the communication is unduly hostile, threatening, illegal, does not reasonably relate to us or our business, or is similarly inappropriate. The CompanyOffice of the Corporate Secretary has the authority to discard any inappropriate communications or to take other appropriate actions with respect to any such inappropriate communications.
Attendance at the Annual Meeting of Stockholders
Although we do not have a formal policy regarding attendance by members of our Board of Directors at our Annual Meeting of Stockholders, we encourage, but do not require, Directors to attend. Four of our Directors participated in our 2023 Annual Meeting of Stockholders.
Committees of the Board
The Board of Directors has an Audit Committee and a Compensation Committee, of the Board
of Directors, both currently comprised solely of non-employee directors. There is noindependent directors as defined by the Nasdaq listing standards (the “Audit Committee” and the “Compensation Committee”, respectively).
The Board does not have a nominating committee or Committeecommittee performing the functions of such a committee. The Board has determined that the function of a nominating committee is adequately fulfilled by the independent Directors. As there is no such established committee, the Company has no nominating committee charter. The full Board of Directors participates in the consideration of any Director nominee.
Although we have not formally set any specific minimum qualifications that Director nominees must possess, we look for candidates with appropriate experience in aviation and leasing, a strong professional background, and a general understanding of marketing, finance and other disciplines related to the success of a company in our industry. Also, although not part of any formal policy, our goal is a balanced and diverse Board, with members whose skills, background and experience are complementary and, together, cover the spectrum of areas that impact our business. Our Directors are generally nominated by our management or other Directors, and each nominee is evaluated based on the above qualifications and in the context of the Board as a whole. While we do not normally engage professional search firms or other third parties in connection with our Board nomination process, we may do so in the future.
As we do not have a history of stockholder nominations of Directors, we do not have a formal policy regarding stockholder nominees to the Board. Under our bylaws, stockholders wishing to nominate a candidate for Director must give notice to our Corporate Secretary no later than the close of business on the 90th day prior to the anniversary of our preceding year’s annual meeting. If the annual meeting is more than 30 days before or 60 days after such anniversary date, the notice must be delivered no later than the 90th day prior to such annual meeting or the 10th day following the day on which we publicly announce the annual meeting date. The notice should set forth: (i) the name, age, business address and residence address of the nominee; (ii) the principal occupation or employment of the nominee; (iii) the class and number of our shares
2024 WLFC Proxy Statement 5
beneficially owned by the nominee; (iv) a description of all arrangements or understandings between the stockholder and the nominee and any other person(s) pursuant to which the nomination is made by the stockholder; and (v) any other information relating to the nominee that is required to be disclosed in proxy statements for the election of Directors pursuant to Regulation 14A under the Securities Exchange Act of 1934. Nominees proposed by stockholders will be evaluated in the same manner as those proposed by management or existing Directors.
The Audit Committee oversees our accounting function, internal controls and financial reporting process on behalf of the Board. The Audit Committee meets with the Company'sour financial management and itsour independent registered public accountantsaccounting firm to review internalour financial information,statements and filings, the audit plans and results,matters arising from them, and financial reporting procedures. Thisprocedures, including any significant judgments made in preparation of the financial statements. The Nasdaq’s listing rules require that our Audit Committee whichbe composed of at least three independent Directors, who currently consistsare: Directors Brendan J. Curran (Chair), Rae Ann McKeating and Colm Barrington. All members of William M. LeRoy, Chairman, Ross K. Andersonthe Audit Committee are able to read and Willard
H. Smith,understand financial statements. Mr. Curran also qualifies as an audit committee financial expert, as defined by the SEC, and is financially sophisticated as required by the Nasdaq listing standards. The Audit Committee held two (2)four meetings during the 19972023 fiscal year. The Audit Committee’s charter is available on the Company’s website (www.wlfc.global).
The Compensation Committee reviews and approves the Company'sour compensation arrangements for senior managementexecutive officers and administers the 1996Company’s 2023 Incentive Stock Plan and the Company’s Employee Stock Purchase Plan. ThisThe Compensation Committee which currently consists of Ross K. Anderson, Chairman, William M.
LeRoythe Board’s independent Directors: Directors Rae Ann McKeating (Chair), Colm Barrington and Willard H. Smith, Jr.,Brendan J. Curran. The Compensation Committee held five (5)nine meetings during 2023. The Compensation Committee’s charter is available on the 1997 fiscal
year.
PROPOSAL 1
ELECTION OF DIRECTORS
Company’s website (www.wlfc.global).
The directorsBoard of Directors may also establish a committee of independent Directors, as defined by the Nasdaq listing standards, to address specific strategic issues from time to time, including as it did in 2023.
Board Leadership Structure
Our Company is led by Charles F. Willis, IV, the Company’s founder and Executive Chairman of the Board, and Austin Willis, the Company’s CEO. This approach of splitting the Executive Chairman and CEO roles is commonly utilized by public companies in the United States and we believe it is effective for our Company as well. Prior to serving as Executive Chairman of the Board, Mr. Charles Willis served as Chairman and Chief Executive Officer since the Company was founded, which has allowed Mr. Charles Willis to be seen by participants in the aviation industry and by our customers, business partners, investors and other stakeholders as providing strong leadership for our Company and in our industry. Prior to serving as the Company’s CEO, Mr. Austin Willis served as the Company’s Senior Vice President, Corporate Development which gave him extensive knowledge of the Company are elected annually to serve untiland its business lines and prepared him for the next
annual meetingrole of CEO. The Board believes that the separation of the shareholdersroles of Executive Chairman and until their respective successorsCEO are elected.the optimal structure for us and our stockholders because it enables decisive leadership, ensures clear accountability and enhances our ability to consistently communicate our message and strategy to all of our stakeholders. Moreover, Messrs. Charles Willis and Austin Willis possess detailed and in-depth knowledge of the issues, opportunities and challenges facing us and our business and, therefore, are best positioned to develop agendas that focus the Board’s time and attention on the most critical matters. We recognize that different board leadership structures may be appropriate for companies in different situations and at different times, and we believe that no one structure is suitable for all companies. While we believe that our current Board leadership structure is optimal for us, demonstrating to our employees, suppliers, customers and other stakeholders that Willis Lease is under strong leadership, this may change in the future.
We have not appointed an independent Board chairman or lead independent Director, as we believe that the members of our Board and the two standing Board committees consisting of entirely independent Directors provide an appropriate level of oversight. In this regard, the Audit Committee oversees the accounting and financial reporting processes, as well as risk, legal and compliance matters. The nominees forCompensation Committee oversees the compensation of our Executive Chairman and CEO and, upon the recommendation of the CEO, the compensation of the other executive officers of the Company. Each of these committees is led by a chairperson other than the Executive Chairman or CEO and, as discussed in more detail in this proxy statement, the entire Board of Directors are set forth below. Allis actively involved in overseeing our risk management. The entire Board monitors or, as appropriate, the independent Directors monitor matters such as the composition of the nomineesBoard and its committees, Board performance and “best practices” in corporate governance. Our independent Directors also conduct meetings in executive session. These meetings are typically held in conjunction with Board meetings. In 2023, five Board meetings included an independent Directors’ session. This allows Directors to speak candidly on any matters of interest without the Executive Chairman, CEO or other management members present. We believe this framework strikes a sound balance with appropriate oversight and that appointing an independent Board chairman would not improve the performance of the Board in a material way.
6 2024 WLFC Proxy Statement
The Board’s Role in Risk Oversight
It is management’s responsibility to manage risk and bring to the Board’s attention the most material risks to the Company. Our Board, including through the Audit Committee and Compensation Committee, each of which are comprised solely of independent Directors, regularly reviews various areas of significant risk to the Company, and advises and directs management on the scope and implementation of policies, strategic initiatives and other actions designed to mitigate various types of risks. Specific examples of risks primarily overseen by the full Board include competition risks, industry risks, economic risks, interest rate risks, liquidity risks, business operations risks and risks related to acquisitions and dispositions. Our Audit Committee regularly reviews with management and our independent auditors significant financial risk exposures and the processes management has implemented to monitor, control and report such exposures. Specific examples of risks primarily overseen by the Audit Committee include risks related to the preparation of Willis Lease’s financial statements, disclosure controls and procedures, internal controls and procedures required by the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act, accounting, financial and auditing risks, treasury risks (insurance, credit and debt), risks posed by significant litigation matters, data security risks and risks associated with proposed affiliate transactions. Our Audit Committee also oversees compliance with other applicable laws and regulations, as well as the Company’s Standards of Ethical Conduct Policy. Any reports received on the Company’s whistleblower hotline are submitted to the Chair of the Audit Committee. The Compensation Committee reviews and evaluates risks related to the attraction and retention of talent, risks associated with management succession planning, and risks related to the design of compensation programs established by the Compensation Committee for our executive officers. The Compensation Committee has determined in its reasonable business judgment that our compensation policies and practices for all employees, including executive officers, do not create risks that are reasonably likely to have serveda material adverse effect on the Company.
Director Compensation
For details regarding Director compensation, see “Compensation Tables — Director Compensation” elsewhere in this proxy statement.
Biographical Information
| Director |
| Age* | |
Class I Director Whose Term Expires at the 2026 Annual Meeting: |
|
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Rae Ann McKeating |
| 2020 |
| 71 |
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Class II Directors Whose Term Expires at the 2027 Annual Meeting (provided they are re-elected at the 2024 Annual Meeting): |
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|
|
|
|
|
Colm Barrington |
| 2024 |
| 78 |
Austin C. Willis |
| 2008 |
| 43 |
Class III Directors Whose Term Expires at the 2025 Annual Meeting: |
|
|
|
|
Brendan J. Curran |
| 2024 |
| 61 |
Charles F. Willis, IV |
| 1985 |
| 75 |
* Age as directors sinceof April 5, 2024.
2024 WLFC Proxy Statement 7
Board Diversity
The following Board Diversity Matrix provides information on the last annual meeting.
diversity of our Board as of April 5, 2024.
TOTAL NUMBER OF DIRECTORS: 5 |
| FEMALE |
|
| MALE |
|
| NON- |
|
| DID NOT |
| ||||
Part I: Gender Identity |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Directors |
|
| 1 |
|
|
| 4 |
|
|
| — |
|
|
| — |
|
Part II: Demographic Background |
|
|
|
|
|
|
|
|
|
|
|
| ||||
African American or Black |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Alaskan Native or Native American |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Asian |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Hispanic or Latinx |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Native Hawaiian or Pacific Islander |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
White |
|
| 1 |
|
|
| 4 |
|
|
| — |
|
|
| — |
|
Two or More Races or Ethnicities |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
LGBTQ+ |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Did Not Disclose Demographic Background |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
8 2024 WLFC Proxy Statement
Principal Occupations, Background and Qualifications of Director Nominees and Continuing Directors
Class I Director Whose Term Expires at the 2026 Annual Meeting:
Rae Ann McKeating
Director since: 2020 Independent | Rae Ann McKeating retired in 2016 as Senior Vice President, General Counsel and Chief Compliance Officer at Aviation Capital Group (ACG), a company that purchases new aircraft from Boeing and Airbus, and sells, leases and manages commercial aircraft to/for customers around the globe. Ms. McKeating served in the ACG legal department from 2007 to 2016. Since 2013, Ms. McKeating has been serving as a non-paid Board of Director for the non-profit St. Luke’s McCall Foundation, serving the health of the community of Valley and Adams counties in Idaho. Prior to joining ACG, Ms. McKeating provided legal business services to public and private businesses and individuals. From 1997 to 1999, Ms. McKeating was Senior Vice President, General Counsel and Corporate Secretary for Willis Lease Finance Corporation. From 1993 to 1997, Ms. McKeating served as Vice President, General Counsel and Corporate Secretary for Hawaiian Airlines, Inc. Prior to joining Hawaiian Airlines, Ms. McKeating worked several years with a major Hawaiian law firm, after having practiced two years with a Southern California law firm. Ms. McKeating earned her Bachelor of Arts degree in anthropology from the University of Texas and her Juris Doctor degree from the University of Utah. Ms. McKeating brings to the board vast experience in both the leasing and commercial aviation industry. |
Class II Directors Whose Term Expires at the 2027 Annual Meeting (provided they are re-elected at the 2024 Annual Meeting):
Colm Barrington
Director since: 2024 Independent | Colm Barrington has over 50 years of experience in the global aviation industry, having started his aviation career in 1968 at Aer Lingus. In 1980, he joined GPA Group plc where he held various senior management positions and helped establish and develop a global market for the sale of leased aircraft as financial assets. In 1993, Mr. Barrington oversaw the acquisition of GPA Group plc by GE Capital Aviation Services (GECAS) and was subsequently appointed President of GECAS Ireland. Mr. Barrington left his role at GECAS soon after to start his own aircraft lease management company, which subsequently merged into Babcock & Brown Limited. Following the merger, he remained at Babcock & Brown and was responsible for managing and developing aircraft operating lease and management activities globally for its aircraft operating lease division known as BBAM. When Babcock & Brown Air (subsequently renamed Fly Leasing Limited) was launched on the New York Stock Exchange in 2007, he served as Chief Executive Officer and Director until it was sold to Carlyle Aviation in 2021. Following that sale, Mr. Barrington stepped down from a full-time executive role and served as a Senior Ambassador to BBAM. In addition to his executive roles, Mr. Barrington has served in various non-executive director roles at five public companies in the aircraft leasing, airline, real estate and financial services sectors, including Non-Executive Chairman at Aer Lingus from 2008 to 2015 and Vice Chair of Finnair from 2016 to 2021. Mr. Barrington received a master’s degree in economics from University College Dublin and a diploma in public administration from The Institute for Public Administration, also in Dublin. Mr. Barrington’s extensive senior executive management experience in the aviation industry over the last five decades and his in-depth board knowledge from serving on various public company boards with listings in New York, Dublin, London and Helsinki would add significant value to the Board. |
Austin C. Willis
Director since: 2008 CEO | Austin C. Willis was elected to the Board in December 2008 and has served as the Company’s Chief Executive Officer since 2022. Prior to that, he was the Company’s Senior Vice President, Corporate Development, for over five years. Prior to joining the Board, Mr. Austin Willis established JT Power LLC, a company that sold commercial aircraft engine parts and leased commercial engines and aircraft. He later sold his business to enlist in the U.S. armed forces, |
2024 WLFC Proxy Statement 9
where he served as an Army Green Beret. He earned his Bachelor of Science degree from London School of Economics and Political Science and is the son of Charles F. Willis, IV. Mr. Austin Willis understands the inner workings of the Company and brings a familiarity with the aviation industry generally, as well as aftermarket parts and leasing. |
Class III Directors Whose Term Expires at the 2025 Annual Meeting:
Brendan J. Curran
Director since: 2024 Independent | Brendan J. Curran was appointed to the Board effective January 1, 2024.Mr. Curran is currently an operating resource and advisor to ATL Partners, a New York based private equity firm specializing in mergers & acquisitions. He also serves as Chairman of the Board of Aero Accessories, a leading independent component maintenance facility based in Miramar, FL. Mr. Curran’s leadership experience includes public company senior executive roles at Boeing Global Services, Crane Co., United Technologies Corporation, Pratt & Whitney Commercial Engines, and Hamilton Sundstrand. From 2020 to 2022, Mr. Curran served as Chairman of the Board of Boeing Asia-Pacific Aviation Services. Mr. Curran graduated from Columbia Business School with a Master of Business Administration degree and earned his Bachelor of Science degree in mechanical engineering from the University of Vermont. While at Columbia, he was awarded the Center for International Business Fellowship. With a distinguished career in the aerospace industry spanning nearly four decades, Mr. Curran brings to the Board a wealth of experience across the engine and airframe segments. |
Charles F. Willis, IV
Director since: 1985 Executive Chairman of the Board | Charles F. Willis, IV is the founder of Willis Lease, has served as a Director since our incorporation in 1985, served as President until July 2011 and CEO until April 1, 2022, has served as Chairman of the Board of Directors since 1996 and assumed the role of Executive Chairman on April 1, 2022. Mr. Charles Willis has over 45 years of experience in the aviation industry. From 1975 to 1985, Mr. Willis served as President of Willis Lease’s predecessor, Charles F. Willis Company, which purchased, financed and sold a variety of large commercial transport aircraft and provided consulting services to the aviation industry. During 1974, Mr. Charles Willis operated a small business not involved in the aviation industry. From 1972 through 1973, Mr. Charles Willis was Assistant Vice President of Sales at Seaboard World Airlines, a freight carrier. From 1965 through 1972, he held various positions at Alaska Airlines, including positions in the flight operations, sales and marketing departments. As our founder and Executive Chairman, Mr. Charles Willis brings to the Board significant senior leadership, sales and marketing, industry, technical and global experience, as well as a deep institutional knowledge of the Company, its operations and customer relations. |
10 2024 WLFC Proxy Statement
PROPOSAL 1: ELECTION OF TWO CLASS II DIRECTORS |
Our Board is divided into three classes, each class having a three-year term that expires in successive years. At the Annual Meeting, two Directors will be elected in Class II, to serve a three-year term expiring at the 2027 Annual Meeting of Stockholders or until succeeded by another qualified Director who has been duly elected.
The Board of Directors proposes that Colm Barrington and Austin C. Willis be re-elected as Directors in Class II for a three-year term expiring at the 2027 Annual Meeting or until their successor is duly elected and qualified or until such Director’s earlier death, resignation, disqualification or removal.
The proxy holders intend to vote all proxies received by them in the
accompanying form for the foregoing nominees, for director listed below, unless instructions to the contrary are marked on the proxy. In the event that aany nominee is unable or declines to serve as a directorDirector at the time of the 1998
Annual Meeting, of Shareholders, the proxies will be voted for any nominee who shall be designated by the present Board of Directors to fill the vacancy. In
the event that additional persons are nominated for election as directors, the
proxy holders intend to vote all proxies received by them for the nominees
listed below. As of the date of this Proxy Statement,proxy statement, the Board of Directors is not aware of any nominee who is unable or will decline to serve as a director.
3
NOMINEES TO BOARD OF DIRECTORS
DIRECTOR
NAME SINCE AGE*
- ----------------------------------------------------------------------------- ----------- -----
Charles F. Willis, IV........................................................ 1985 49
William L. McElfresh......................................................... 1996 51
Ross K. Anderson............................................................. 1996 56
William M. LeRoy............................................................. 1996 55
Willard H. Smith, Jr......................................................... 1996 61
- ------------------------
* Age listed as of March 23, 1998
CHARLES F. WILLIS, IV is the founder of the Company, has served as Chief
Executive Officer, President and a Director since its incorporation in 1985 and
has served as Chairman of the Board of Directors since 1996. Mr. Willis has 31
years of experience in the aviation industry. He has provided a wide range of
consulting services to the aviation industry, including fleet planning, cost of
recertification estimation, assistance with purchase and lease documentation,
appraisal of competing equipment and evaluation of financing proposals. From
1975 to 1985, Mr. Willis served as president of the Company's predecessor,
Charles F. Willis Company, which purchased, financed and/or sold a variety of
large commercial transport aircraft and provided consulting services to the
aviation industry. During 1974, Mr. Willis operated a small business not
involved in the aviation industry. From 1972 through 1973, Mr. Willis was
Assistant Vice President of Sales at Seaboard World Airlines, a freight carrier.
From 1965 through 1972, he held various positions at Alaska Airlines, including
positions in the departments of flight operations, sales and marketing.
WILLIAM L. MCELFRESH was named as the Company's Executive Vice President of
Strategic Development in February 1997. Prior to that, he served as the
Company's Executive Vice President-Marketing since 1989 and was named a Director
of the Company in 1996. For approximately 29 years, Mr. McElfresh has been
involved with commercial jet engine sales and support. From 1987 through 1989,
he was a partner with Turbine Engine Support Co., Inc. and provided sales,
brokerage, exchange and monitoring programs for aircraft engines and parts. As
Vice President, Sales and Marketing for International Aircraft Support, Inc.
from 1983 through 1987, Mr. McElfresh found and exploited new market
opportunities for commercial jet aircraft engines and spare parts. From 1977
through 1983, he developed and managed the worldwide spares support and overall
operations for the Power Accessories Division of TRW, Inc. From 1972 to 1983, he
established a marketing program in Asia and Pacific Island markets to support
the growth for the new Component Repair Group of TRW Inc., which manufactured
the major aircraft engine components for Pratt and Whitney, General Electric and
CFM. From 1968 to 1972, he was an Aircraft Maintenance Officer in the United
States Air Force assigned to VIP and NASA Operations Support. Mr. McElfresh
holds a B.A. from the University of Kansas and an M.B.A. from Pepperdine
University.
ROSS K. ANDERSON has served as a Director of the Company since 1996. Since
1993, Mr. Anderson has been President and Chief Executive Officer of ASTECH
Manufacturing, Inc. ("ASTECH"), an aerospace company manufacturing proprietary
metal honeycomb products using high temperature alloys. ASTECH's principal
customers include Boeing, Pratt & Whitney and General Electric for commercial
aircraft engines. From 1991 to 1993, Mr. Anderson was employed at Teledyne
Aircraft Group as Group Executive. From 1987 to 1991, Mr. Anderson served as
President of Teledyne Cast Products and PICCO. Mr. Anderson received his M.S. in
Aeronautical Engineering from California Institute of Technology, his M.B.A.
from Stanford Graduate School of Business and his B.S. from the United States
Naval Academy.
WILLIAM M. LEROY has served as a Director of the Company since 1996. In
1993, Mr. LeRoy established the LeRoy Accountancy Corporation, an audit firm
specializing in the audits of employee benefit plans. From 1965 to 1993, Mr.
LeRoy served in various positions at Ernst & Young LLP, an independent
accounting firm, in the Chicago, San Jose and San Francisco offices including as
audit partner
4
responsible for the financial institution and leasing company practice in
northern California. Mr. LeRoy received his M.B.A. from Golden Gate University
and his B.S. in Accounting from Northern Illinois University.
WILLARD H. SMITH, JR. has served as a Director of the Company since 1996.
From 1979 through 1995, Mr. Smith was employed at Merrill Lynch, Pierce Fenner &
Smith Incorporated ("Merrill Lynch") and served as Managing Director since 1983
in their Equity Capital Markets Division. From 1992 through 1995, Mr. Smith's
primary focus was the real estate investment trust industry. His duties as
Managing Director at Merrill Lynch included evaluating companies' structure and
equity requirements, coordinating the placement of equity offerings with Merrill
Lynch's retail and institutional client base, and assessing the market's demand
for potential offerings. Mr. Smith is also a Board Member of the Cohen & Steers
Realty Shares, Cohen & Steers Realty Income Fund, the Cohen & Steers Total
Return Realty Fund, the Cohen & Steers Special Equity Fund, Inc., the Cohen &
Steers Equity Income Fund, Essex Property Trust, Inc., Highwoods Properties,
Inc. and Realty Income Corporation. Prior to joining Merrill Lynch, Mr. Smith
worked at F. Eberstadt & Co. from 1971 to 1979. Mr. Smith received his B.S. in
Business Administration, and B.S. in Industrial Engineering from the University
of North Dakota in 1959 and 1960, respectively.
Director.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"“FOR” THE ELECTION OF ALL OF THE ABOVE-LISTED NOMINEES AS CLASS II DIRECTORS.
2024 WLFC Proxy Statement 11
EXECUTIVE OFFICERS OF THE COMPANY |
Our current executive officers and their respective ages as of April 5,
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
2024 were as listed below.
Name | Age | Positions and Offices | ||
Charles F. Willis, IV* | 75 | Executive Chairman | ||
Austin C. Willis* | 43 | Chief Executive Officer | ||
Brian R. Hole | 46 | President | ||
Scott B. Flaherty | 58 | Executive Vice President and Chief Financial Officer | ||
Dean M. Poulakidas | 55 | Executive Vice President, General Counsel and Corporate Secretary |
* See business experience background under “Principal Occupations, Background and Qualifications of Director Nominees and Continuing Directors.”
Brian R. Hole
President | Brian R. Hole joined Willis Lease in August 2014 and was promoted to President on April 1, 2016. Prior to his appointment as President, he served as Senior Vice President & Chief Investment Officer. Formerly, Mr. Hole was Owner and President of Aviation Opportunity Management LLC, where he advised bank, private equity and alternative investment funds regarding investment in large commercial aircraft and engines. Prior to starting his own business, from 2008 to 2012, Mr. Hole served as an attorney for United Technologies Corporation, Pratt & Whitney Division, where he worked with the Commercial Engines Group in assisting with the next generation product family of engines, and specifically, on the partnership for the PW1100G engine on the Airbus A320neo family of aircraft and at IAE International Aero Engines, where he structured and negotiated engine sales and aftermarket programs as well as spare engine and aircraft financings. Mr. Hole earned his undergraduate degree from Georgetown University and a law degree, with high honors, from the University of Connecticut School of Law. |
Scott B. Flaherty
Executive Vice President and Chief Financial Officer | Scott B. Flaherty joined Willis Lease in June 2016 and serves as our Executive Vice President and Chief Financial Officer. Prior to joining Willis Lease, Mr. Flaherty was Senior Vice President of Finance and Chief Financial Officer at Colt Defense LLC from 2009 until April of 2016. Prior to Colt Defense LLC, Mr. Flaherty was a Managing Director at Banc of America Securities LLC where he ran the origination effort, within the equity capital markets group, for various industries. Mr. Flaherty also was an investment banker at Credit Suisse First Boston. He worked as an engineer at the Pratt and Whitney division of the United Technologies Corporation for eight years. Mr. Flaherty earned his undergraduate degree from Worcester Polytechnic Institute and a Masters of Business Administration degree from the Leonard N. Stern School of Business at New York University. |
Dean M. Poulakidas
Executive Vice President, General Counsel and Corporate Secretary | Dean M. Poulakidas joined Willis Lease in September 2011 and serves as our Executive Vice President, General Counsel and Corporate Secretary. Formerly, Mr. Poulakidas was Vice President and Corporate Counsel with International Lease Finance Corporation (ILFC), where he managed a wide variety of aviation transactions working with airlines, manufacturers, purchasers, financiers, service providers and aviation authorities in many jurisdictions. Prior to ILFC, he was a corporate attorney at Pillsbury Madison & Sutro, where his transactional experience included international and domestic joint ventures, mergers and acquisitions. Mr. Poulakidas earned his undergraduate degree from the University of California at Los Angeles, his masters degree from Columbia University and his law degree from the University of California’s Hastings College of the Law. |
12 2024 WLFC Proxy Statement
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
The following table sets forth information regarding the beneficial ownership of the Company's Common Stockour common stock as of March 1, 1998 byApril 5, 2024 by: (i) each person who is known to the Companyus to own beneficially more than five percent of the outstanding shares of the Company's Common Stock;our common stock; (ii) each director;Director; (iii) each officer listed in the Summary Compensation Table,Executive Officer; and (iv) all directorsDirectors and executive officersExecutive Officers as a group.
COMMON STOCK(1)
---------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES PERCENTAGE OF CLASS
- --------------------------------------------------------------------------------- ---------- ---------------------
Charles F. Willis, IV(2)......................................................... 3,060,657(3) 42.5%
William L. McElfresh(2).......................................................... 78,159 1.1
Edwin F. Dibble(2)(4)............................................................ 38,726 *
Steven D. Oldenburg(2)........................................................... 16,370 *
Donald A. Nunemaker(2)........................................................... 7,676 *
Ross K. Anderson(2).............................................................. 7,000 *
Willard H. Smith, Jr.(2)......................................................... 7,000 *
William M. LeRoy(2).............................................................. 6,000 *
All directors and executive officers as a group (11 persons)..................... 3,239,773 44.9%
J.P. Morgan & Co. Incorporated................................................... 676,700(5) 9.4%
Wellington Management Company LLP................................................ 449,200(6) 6.2%
- ------------------------
Unless specified below, the mailing address for each individual, officer or Director is c/o Corporate Secretary, Willis Lease Finance Corporation, 60 East Sir Francis Drake Boulevard, Suite 209, Larkspur, CA 94939. As of April 5, 2024, we had [6,859,179] shares of common stock, $0.01 par value, issued and outstanding.
| Common stock(1) |
| |||||||
Name and Address of Beneficial Owner |
| Number of |
|
|
| Percentage |
| ||
Charles F. Willis, IV |
|
| 3,131,263 |
| (2) |
|
| 44.18 | % |
Austin C. Willis |
|
| 859,119 |
| (3) |
|
| 12.12 | % |
Brian R. Hole |
|
| 114,022 |
|
|
|
| 1.61 | % |
Dean M. Poulakidas |
|
| 146,346 |
|
|
|
| 2.06 | % |
Scott B. Flaherty |
|
| 113,553 |
|
|
|
| 1.60 | % |
Robert J. Keady |
|
| 34,779 |
|
|
| * |
| |
Hans Joerg Hunziker |
|
| 24,994 |
|
|
| * |
| |
Rae Ann McKeating |
|
| 16,250 |
|
|
| * |
| |
Brendan J. Curran |
|
| 5,000 |
|
|
| * |
| |
All Directors, nominees and Executive Officers as a group (9 persons) |
|
| 4,039,838 |
|
|
|
| 57.00 | % |
CFW Partners, L.P. |
| 2,134,148 |
| (2)(3) |
|
| 30.11 | % | |
M3 Partners, LP |
|
| 626,726 |
| (4) |
|
| 8.84 | % |
Dimensional Fund Advisors LP |
|
| 492,937 |
| (5) |
|
| 6.96 | % |
* Less than one percent of our outstanding common stock.
2024 WLFC Proxy Statement 13
14 2024 WLFC Proxy Statement
EXECUTIVE COMPENSATION |
The following table sets forth certain information with respect to the Namedcompensation of our Chief Executive Officers concerning sharesOfficer and the two most highly compensated executive officers other than our Chief Executive Officer (the “NEOs”), based on total compensation for their services with us in all capacities.
Summary Compensation Table for Fiscal Year 2023
Name and Principal |
| Year | Salary | Bonus |
| Stock | Option | Non-Equity | All Other | Total | ||||||||||||||||||||||||||||
Austin C. Willis |
| 2023 |
|
| 697,375 |
|
|
|
| 1,766,832 |
|
|
|
|
| 3,619,752 |
|
|
|
| — |
|
|
|
| — |
|
|
|
| 220,324 |
| (3) |
|
| 6,304,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Chief Executive Officer |
| 2022 |
|
| 580,688 |
|
|
|
| — |
|
|
|
|
| 1,278,220 |
|
|
|
| — |
|
|
|
| — |
|
|
|
| 93,436 |
|
|
|
| 1,952,344 |
|
|
Charles F. Willis, IV |
| 2023 |
|
| 1,103,857 |
|
|
|
| 2,733,571 |
|
|
|
|
| 6,486,000 |
|
|
|
| — |
|
|
|
| — |
|
|
|
| 160,145 |
| (4) |
|
| 10,483,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Executive Chairman |
| 2022 |
|
| 1,097,000 |
|
|
|
| 1,000,000 |
| (1) |
|
|
| 3,909,088 |
|
|
|
| — |
|
|
|
| — |
|
|
|
| 207,022 |
|
|
|
| 6,213,110 |
|
|
Brian R. Hole |
| 2023 |
|
| 702,693 |
|
|
|
| 1,172,568 |
|
|
|
|
| 2,397,000 |
|
|
|
| — |
|
|
|
| — |
|
|
|
| 76,611 |
| (5) |
|
| 4,348,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
President |
| 2022 |
|
| 499,244 |
|
|
|
| — |
|
|
|
|
| 1,066,586 |
|
|
|
| — |
|
|
|
| — |
|
|
|
| 23,566 |
|
|
|
| 1,589,396 |
|
|
With respect to time-based restricted stock awards, the amounts in this column represent the value of such awards as of the grant date. With respect to performance-based restricted stock awards, the amounts in this column represent the value for such awards based upon the probable outcome of the performance conditions as of the date of grant under FASB ASC Topic 718, which is equal to the value of each award as of such date assuming maximum achievement of the performance conditions.
For 2023, the reported grant date fair value represents the value of each of the following awards granted under the Company’s 2023 Incentive Stock Plan (“2023 Incentive Plan”): (i) restricted stock awards granted in 2023 subject to exercisabletime-based vesting conditions; and unexercisable(ii) performance-based restricted stock optionsawards granted in 2023 and issued in 2024, based on the achievement of performance goals during the 2023 performance cycle and reported at the probable outcome value, which will then be subject to further time-based vesting conditions, as described below:
For 2022, the reported grant date fair value represents the value of each of the following awards granted under the Company’s 2021 Incentive Stock Plan (“2021 Incentive Plan”): (i) restricted stock awards granted in 2022 subject to time-based vesting conditions; and (ii) performance-based restricted stock awards granted in 2022 and issued in 2023, based on the achievement of performance goals during the 2022 performance cycle and reported at the probable outcome value, which will then be subject to further time-based vesting conditions, as described below:
2024 WLFC Proxy Statement 15
2023 Equity Awards
The Compensation Committee established an equity award grant structure which awards a combination of time-based vesting restricted stock and target performance shares.
The time-based restricted stock was granted to each NEO on April 1, 2023 pursuant to the Company’s 2021 Incentive Plan, and vests ratably over a three-year period.
Each NEO was eligible to be granted performance shares based on achievement of a target goal, pursuant to the Company’s 2021 Incentive Plan. For the awards to be issued in early 2023, the Committee determined that the performance shares for the NEOs would be based on liquidity (defined as non-restricted cash plus revolver availability) as of December 31, 2022. If the Company’s liquidity for fiscal year 2022 achieved $50 million, each NEO would receive 100% of their target number of related performance shares. Our liquidity as of December 31, 2022 exceeded $50 million. The performance shares related to the achievement of liquidity targets are subject to additional time-based vesting over a one-year period following the end of the 1997 fiscal year. No options or SARs were exercised by
any Named Executive Officer duringperformance cycle. As a result of the 1997 fiscal year. ExceptCompany’s performance, the Compensation Committee determined the performance shares had been earned and formally issued them to each NEO, subject to vesting conditions, on April 1, 2023:
Executive |
| Restricted |
| Target |
| Earned |
| Total Restricted | ||||||||||||||||
Austin C. Willis |
|
|
| 20,680 |
|
|
|
|
| 31,020 |
|
|
|
|
| 31,020 |
|
|
|
|
| 51,700 |
|
|
Charles F. Willis, IV |
|
|
| 40,000 |
|
|
|
|
| 60,000 |
|
|
|
|
| 60,000 |
|
|
|
|
| 100,000 |
|
|
Brian R. Hole |
|
|
| 14,000 |
|
|
|
|
| 21,000 |
|
|
|
|
| 21,000 |
|
|
|
|
| 35,000 |
|
|
2024 Equity Awards
The Compensation Committee established an equity award grant structure which awards a combination of time-based vesting restricted stock and target performance shares.
The time-based restricted stock was granted to each NEO on April 1, 2024 pursuant to the extentCompany’s 2023 Incentive Plan, and vests ratably over a three-year period.
Each NEO was eligible to be granted two ranges of any limited stock appreciation rights awardedperformance shares based on achievement of minimum, target or maximum goals, pursuant to the Company’s 2023 Incentive Plan. For the awards to be issued in connection with outstanding
options, no Named Executive Officers held any stock appreciation rights atearly 2024, the endCommittee
16 2024 WLFC Proxy Statement
determined that the performance shares for the NEOs would be based on Return on Equity and Net Contribution Margin (defined as Lease Rent revenue, less Depreciation and Interest expenses) as of thatDecember 31, 2023. If the Company’s Return on Equity for fiscal year.
FISCAL YEAR-END OPTION VALUES
------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT FISCAL
FISCAL YEAR-END YEAR-END(1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ----------- -------------
Charles F. Willis, IV..................................... $ $
William L. McElfresh...................................... 75,000 75,000 712,500 712,500
Donald A. Nunemaker....................................... 7,500 22,500 20,625 61,875
Edwin F. Dibble........................................... 15,000 15,000 142,500 142,500
Steven D. Oldenburg....................................... 15,000 15,000 142,500 142,500
- ------------------------
(1) Basedyear 2023 achieved 10%, 8% or 6%, each NEO would receive 125%, 100% or 75% of their target number of related performance shares. Additionally, if the Company’s Net Contribution Margin for fiscal year 2023 achieved $30 million, $24 million or $18 million, each NEO would receive 125%, 100% or 75% of their target number of related performance shares. Our Return on Equity and Net Contribution Margin as of December 31, 2023 exceeded 10% and $30 million, respectively. The performance shares related to the fair market valueachievement of the shares atthese targets are subject to additional time-based vesting over a two-year period following the end of the 1997 fiscal
year ($17.50 per share) lessperformance cycle. As a result of the option exercise price payableCompany’s performance, the Compensation Committee determined the maximum number of performance shares had been earned and formally issued them to each NEO, subject to vesting conditions, on April 1, 2024:
Executive |
| Restricted |
| Target |
| Earned |
| Total Restricted | ||||||||||||||||
Austin C. Willis |
|
|
| 23,200 |
|
|
|
|
| 34,800 |
|
|
|
|
| 43,500 |
|
|
|
|
| 66,700 |
|
|
Charles F. Willis, IV |
|
|
| 40,000 |
|
|
|
|
| 60,000 |
|
|
|
|
| 75,000 |
|
|
|
|
| 115,000 |
|
|
Brian R. Hole |
|
|
| 15,200 |
|
|
|
|
| 22,800 |
|
|
|
|
| 28,500 |
|
|
|
|
| 43,700 |
|
|
Recoupment of Incentive Compensation
In June 2023, the SEC approved the Nasdaq’s proposed rules implementing the incentive-based compensation recovery provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which require listed companies to develop and implement a policy providing for those
shares.
8
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL AGREEMENTS
The Company presently has the following employment contractsrecovery of erroneously awarded incentive-based compensation received by current or former executive officers and to satisfy related disclosure obligations. In October 2023, the Compensation Committee adopted the Compensation Recovery Policy, which applies these new requirements to the Company’s executive officers, any vice-president or above in effect withcharge of a principal business unit, division, or function, or any other person (including an officer of the Named Executive Officers:
WILLIAM L. MCELFRESH. Effective July 1, 1996, Mr. McElfresh signed a
five-year employment agreement withCompany’s parent(s) or subsidiaries) who performs similar policy-making functions for the Company. The agreement automatically
renewsCompensation Recovery Policy applies to performance-based incentive compensation received on or after October 2, 2023, and provides for additionalthe mandatory recovery from covered persons of erroneously awarded incentive compensation in the event of an accounting restatement of the Company’s financial statements regardless of fault or misconduct.
2024 WLFC Proxy Statement 17
Outstanding Equity Awards at Fiscal 2023 Year-End
The following table provides information regarding each unvested stock award held by our NEOs as of December 31, 2023.
|
| Option Awards |
|
|
| Stock Awards |
|
| ||||||||||||||||||||||||||||||
Name |
| Number of | Option | Option |
|
| Award | Number | Market | Equity | Equity | |||||||||||||||||||||||||||
Austin C. Willis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 4/1/2021 |
|
|
| 2,826 |
| (1) |
| $ | 135,478 |
|
|
|
| — |
|
|
| $ | — |
|
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 4/1/2022 |
|
|
| 5,653 |
| (1) |
|
| 271,005 |
|
|
|
| — |
|
|
| $ | — |
|
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 4/1/2023 |
|
|
| 20,680 |
| (1) |
|
| 991,399 |
|
|
|
| — |
|
|
| $ | — |
|
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 4/1/2023 |
|
|
| 31,020 |
| (2) |
|
| 1,487,099 |
|
|
|
| — |
|
|
| $ | — |
|
| |
Charles F. Willis, IV |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4/1/2021 |
|
|
| 9,600 |
| (1) |
|
| 460,224 |
|
|
|
|
|
|
|
|
|
| |||||
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 4/1/2022 |
|
|
| 40,533 |
| (1) |
|
| 1,943,152 |
|
|
|
| — |
|
|
| $ | — |
|
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 4/1/2023 |
|
|
| 40,000 |
| (1) |
|
| 1,917,600 |
|
|
|
| — |
|
|
| $ | — |
|
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 4/1/2023 |
|
|
| 60,000 |
| (2) |
|
| 2,876,400 |
|
|
|
| — |
|
|
| $ | — |
|
| |
Brian R. Hole |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 4/1/2021 |
|
|
| 3,986 |
| (1) |
|
| 191,089 |
|
|
|
| — |
|
|
| $ | — |
|
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 4/1/2022 |
|
|
| 7,973 |
| (1) |
|
| 382,226 |
|
|
|
| — |
|
|
| $ | — |
|
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 4/1/2023 |
|
|
| 14,000 |
| (1) |
|
| 671,160 |
|
|
|
| — |
|
|
| $ | — |
|
| |
|
|
| — |
|
|
|
| — |
|
|
| — |
|
|
| 4/1/2023 |
|
|
| 21,000 |
| (2) |
|
| 1,006,740 |
|
|
|
| — |
|
|
| $ | — |
|
| |
Employment Agreements and Severance Payments
Employment agreements have been entered into with Messrs. Austin Willis, Charles Willis and Hole. These agreements provide for base salary (subject to increase but not decrease unless part of a salary reduction program affecting all senior executive officers), bonus compensation and certain benefits. As described in detail below, the employment contracts specify certain severance benefits to be paid in the event of an involuntary termination.
Employment contracts for Messrs. Austin Willis, Charles Willis, and Hole specify certain severance benefits to be paid in the event of an “Involuntary Termination” (i.e., termination of employment by the Company without cause or resignation by the employee for good reason) and, in the case of Mr. Hole, specified severance benefits in the event of an Involuntary Termination within 18 months following a change of control (a “Change of Control Termination”).
The maximum of these severance benefits payable to Mr. Austin Willis would represent (i) two times his base salary, plus (ii) any unpaid base salary and a prorated portion of his annual incentives accrued during the year of termination, and accrued vacation and sick pay, plus (iii) two times the average annual incentives he earned during the two years prior to his Involuntary Termination (or the greater of (A) one year terms unless either party givesor (B) the target bonus for such year), plus (iv) distribution of unpaid deferred compensation, accelerated vesting of restricted stock scheduled to vest during the two years following the termination date and continued coverage for two years under the Company’s employee group benefit plans. Additionally, in the event Mr. Austin Willis is terminated with less than the six months’ notice of
nonrenewal six months prior to expiration of the current term. Mr. McElfresh's
base salary is $150,000 per year, subject to adjustmentrequired by the Company's Board
of Directors. Mr. McElfreshhis contract, he is entitled to receive bonuses under the Company's
Incentive Compensation Plan.
STEVEN D. OLDENBURG. Effective July 1, 1996,a lump sum payment equal to his annual base salary. Upon a change of control, Mr. Oldenburg signed a
five-year employment agreement with the Company. The agreement automatically
renews for additional one year terms unless either party gives notice of
nonrenewal six months prior to expiration of the current term. Mr. Oldenburg's
base salary is $150,000 per year, subject to adjustment by the Company's Board
of Directors. Mr. OldenburgAustin Willis is entitled to receive bonusesimmediate vesting of all restricted stock bonus awards.
18 2024 WLFC Proxy Statement
The maximum of these severance benefits payable to Mr. Charles Willis would represent (i) three times his base salary, plus (ii) three times the average annual incentives he earned during the three years prior to his Involuntary Termination, plus (iii) a prorated portion of his annual incentives accrued during the year of termination, plus (iv) immediate vesting of all outstanding stock options and restricted stock, plus (v) continued coverage for three years under the Company's
Incentive Compensation Plan. The Company must provideCompany’s employee group benefit plans, plus (vi) continued payment for three years for club memberships (if any), plus (vii) the right to purchase company car or to assume the lease. Additionally, in the event Mr. OldenburgCharles Willis is terminated with at
least six months'less than the one year’s notice prior to termination ofrequired by his employment.
DONALD A. NUNEMAKER. Effective July 16, 1997, Donald A. Nunemaker signed a
two-year employment agreement with the Company. The agreement automatically
renews for additional one year terms unless either party gives notice of
nonrenewal six months prior to expiration of the current term. Mr. Nunemaker's
base salary is $150,000 per year, subject to adjustment by the Company's Board
of Directors. Mr. Nunemakercontract, he is entitled to a lump sum payment equal to his annual base salary prorated for the portion of the year for which he did not receive bonusesnotice. Upon a change of control, Mr. Charles Willis is entitled to immediate vesting of all stock options and restricted stock. In the event that Mr. Charles Willis voluntarily retires, he is entitled to purchase or assume the lease for his company car, to continued payment for his club memberships (if any) and to continued coverage under the Company's
Incentive Compensation Plan.
EDWARD F. DIBBLE. Effective January 1, 1997,Company’s employee group benefit plans for one year following his retirement.
The maximum of these severance benefits payable to Mr. Dibble signed a five-year
employment agreement with WASI. The agreement automatically renewsHole would represent (i) one times his base salary for an additional year unless WASI gives noticeInvoluntary Termination or one and one-half times his base salary for a Change of Control Termination, plus (ii) any unpaid base salary and any annual incentive compensation to which Mr. Hole is entitled as of his termination, sixty daysand accrued vacation and sick pay, plus (iii) only in the case of a Change of Control Termination, the average annual incentives he earned during the two years prior to the
expirationhis termination, plus (iv) distribution of unpaid deferred compensation, plus (v) payment of the employment period. Mr. Dibble's base salary is $100,000 per
year, subjectaverage of the largest and smallest (excluding from calculation any annual incentive equal to adjustmentzero) of his last five annual incentives earned prior to his termination, plus (vi) payment of an amount equal to his average annual total compensation for the immediately preceding five years, multiplied by the WASI's Boardnumber of Directors.
The Plan Administrator ofyears (full or partial) remaining in the 1996 Plan hasinitial employment term that ends on March 31, 2025, if the authorityInvoluntary Termination occurs on or before March 31, 2025. In addition, he is entitled to provide for accelerated vesting of unvested restricted stock and continued coverage under the sharesCompany’s employee group benefit plans for 18 months following an Involuntary Termination, or for two years following a Change of Common StockControl Termination. Additionally, in the event Mr. Hole is terminated with less than the six months’ notice required by his contract, he is entitled to a lump sum payment equal to six months of his annual base salary.
If any of these payments or benefits would constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code, as amended, and would be subject to any outstanding
optionsthe Excise Tax imposed by Section 4999 of the Internal Revenue Code, the employment contracts of each of Messrs. Austin Willis, Charles Willis, and Hole stipulate that payments to each of them will be reduced, to the extent necessary, so that no portion of the payments would be subject to the Excise Tax. This reduction shall only occur if the after-tax net present value of the payments, as so reduced, is greater than or equal to the after-tax present value of such payments without such reduction.
Other than as described above, if a NEO ceases to be employed by us because of his or her resignation or retirement (other than for reasons constituting a constructive termination under his or her employment agreement), no severance payments are owed by us.
Pay Versus Performance
Pursuant to Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, the Pay Versus Performance Table (set forth below) is required to include “Compensation Actually Paid,” as calculated per SEC disclosure rules, to the Company’s principal executive officer (“PEO”) and the Company’s non-PEO NEOs, as noted below. “Compensation Actually Paid” represents a new required calculation of compensation that differs significantly from the Summary Compensation Table calculation of compensation, the NEO’s realized or earned compensation. The amounts in the table below are calculated in accordance with SEC rules and do not represent amounts actually earned or realized by NEOs, including with respect to equity awards, which remain subject to forfeiture if the vesting conditions are not satisfied.
2024 WLFC Proxy Statement 19
Pay Versus Performance Table
Year |
|
| Summary |
| Summary |
| Compensation |
| Compensation |
| Average |
| Average |
| Value of Initial |
| Net | |||||||||||||||||||||||||||||||||
| 2023 |
|
|
|
| 6,304,283 |
|
|
|
|
| — |
|
|
|
|
| 5,029,397 |
|
|
|
|
| — |
|
|
|
|
| 7,416,223 |
|
|
|
|
| 5,444,083 |
|
|
|
|
| 160.47 |
|
|
|
|
| 43.8 |
|
|
| 2022 |
|
|
|
| 1,952,344 |
|
|
|
|
| 6,213,110 |
|
|
|
|
| 3,354,169 |
|
|
|
|
| 11,929,180 |
|
|
|
|
| 1,589,386 |
|
|
|
|
| 2,960,493 |
|
|
|
|
| 193.70 |
|
|
|
|
| 5.4 |
|
|
| 2021 |
|
|
|
| — |
|
|
|
|
| 7,917,156 |
|
|
|
|
| — |
|
|
|
|
| 10,821,552 |
|
|
|
|
| 1,519,734 |
|
|
|
|
| 1,984,797 |
|
|
|
|
| 123.60 |
|
|
|
|
| 3.4 |
|
|
| 2023 |
|
| 2022 |
| 2021 | ||||||||||||||||||||||||||||||
| Austin | Average Non- |
|
| Austin | Charles | Average Non- |
| Charles | Average Non- | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total Compensation from Summary Compensation |
| $ | 6,304,283 |
|
|
| $ | 7,416,223 |
|
|
| $ | 1,952,344 |
|
|
|
| 6,213,110 |
|
|
|
| 1,589,396 |
|
|
|
|
| 7,917,156 |
|
|
|
| 1,519,734 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Adjustments for Pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Adjustment Summary Compensation Table Pension |
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
|
| $ | — |
|
|
| $ | — |
|
|
Amount added for current year service cost |
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
|
| $ | — |
|
|
| $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Amount added for prior service cost impacting current year |
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
|
| $ | — |
|
|
| $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Total Adjustments for Pension |
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
|
| $ | — |
|
|
| $ | — |
|
|
Adjustments for Equity Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Adjustment for grant date values in the Summary Compensation Table (8) |
| $ | (3,619,752 | ) |
|
| $ | (4,441,500 | ) |
|
| $ | (1,278,220 | ) |
|
| $ | (3,909,088 | ) |
|
| $ | (1,066,586 | ) |
|
|
| $ | (6,403,600 | ) |
|
| $ | (1,031,239 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Year-end fair value of unvested awards granted in the current year |
| $ | 2,527,096 |
|
|
| $ | 3,299,400 |
|
|
| $ | 2,330,895 |
|
|
| $ | 7,128,408 |
|
|
| $ | 1,944,970 |
|
|
|
| $ | 5,722,800 |
|
|
| $ | 907,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Year-over-year difference of year-end fair values for unvested awards granted in prior years |
| $ | (85,892 | ) |
|
| $ | (314,496 | ) |
|
| $ | 486,410 |
|
|
| $ | 3,397,650 |
|
|
| $ | 686,639 |
|
|
|
| $ | 1,456,212 |
|
|
| $ | 225,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Fair values at vest date for awards granted and vested in current year |
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
| $ | — |
|
|
|
| $ | — |
|
|
| $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years |
| $ | (96,338 | ) |
|
| $ | (515,544 | ) |
|
| $ | (137,260 | ) |
|
| $ | (900,900 | ) |
|
| $ | (193,926 | ) |
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|
| $ | 2,128,984 |
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|
| $ | 363,787 |
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Forfeitures during current year equal to prior year-end fair value |
| $ | — |
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| $ | — |
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| $ | — |
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| $ | — |
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| $ | — |
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| $ | — |
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| $ | — |
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Dividends or dividend equivalents not otherwise included in total compensation |
| $ | — |
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Total Adjustments for Equity Awards |
| $ | (1,274,887 | ) |
|
| $ | (1,972,140 | ) |
|
| $ | 1,401,825 |
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| $ | 5,716,070 |
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| $ | 1,371,097 |
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|
| $ | 2,904,396 |
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|
| $ | 465,063 |
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Compensation Actually Paid (as calculated) |
| $ | 5,029,397 |
|
|
| $ | 5,444,083 |
|
|
| $ | 3,354,169 |
|
|
| $ | 11,929,180 |
|
|
| $ | 2,960,493 |
|
|
|
| $ | 10,821,552 |
|
|
| $ | 1,984,797 |
|
|
20 2024 WLFC Proxy Statement
Narrative Disclosure to Pay Versus Performance Table
We believe the “Compensation Actually Paid” in each of the years reported above and over the three-year cumulative period are reflective of the Compensation Committee’s emphasis on “pay-for-performance.” The total “Compensation Actually Paid for each of the PEO and NEOs fluctuated year-over-year, primarily due to fluctuations in our stock price over the period.
The illustrations below compare “Compensation Actually Paid” (as calculated in accordance with the SEC rules) and the following measures:
2024 WLFC Proxy Statement 21
Director Compensation
The following table summarizes compensation for 2023 by individual non-employee Directors. Messrs. Austin Willis and Charles Willis are also members of the Board but receive no additional compensation for such service. Please see the “Summary Compensation Table for Fiscal Year 2023” for the compensation paid to Messrs. Austin Willis and Charles Willis for their service to the Company.
Director Compensation for Fiscal Year Ended 2023
Name |
| Fees Earned |
| Stock |
| Option |
| All Other |
| Total | ||||||||||||||||||||
Hans Joerg Hunziker(4) |
|
| $ | 150,482 |
|
|
|
| $ | 122,700 |
|
|
|
|
| — |
|
|
|
|
| — |
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|
|
| $ | 273,182 |
|
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Robert J. Keady(5) |
|
| $ | 147,590 |
|
|
|
| $ | 122,700 |
|
|
|
|
| — |
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|
|
|
| — |
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|
|
| $ | 270,290 |
|
|
Rae Ann McKeating |
|
| $ | 147,590 |
|
|
|
| $ | 122,700 |
|
|
|
|
| — |
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|
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|
| — |
|
|
|
| $ | 270,290 |
|
|
22 2024 WLFC Proxy Statement
REPORT OF THE AUDIT COMMITTEE |
The CompensationAudit Committee of the Board of Directors (the “Audit Committee”) oversees our accounting function, internal controls and financial reporting process on behalf of the Board of Directors. The Audit Committee is currently composed of three non-employee directors, Ross K. Anderson, Chairman, William M. LeRoyDirectors, each of whom is independent as defined by the Nasdaq listing standards and Willard H. Smith, Jr., and was formed during fiscal year 1996 in
anticipationoperates pursuant to the Audit Committee Charter.
The Audit Committee reviews our financial reporting process on behalf of the Initial Public Offering of the Company's common stock.
For most of the 1997 fiscal year, all compensation decisions with respect to
the Company's executive officers were made by the Compensation Committee. The
Compensation Committee made its decisions primarily on the basis of its
understanding of the compensation practices of similarly-sized companies in
9
the industry and fixed the compensation package of each executive officer at a
level which was competitive with those practices. The Compensation Committee
commissioned KPMG Peat Marwick LLP to undertake a comprehensive review and
comparative analysis of the Company's overall compensation practices. While
preliminary results were presented to the Compensation Committee in late 1997,
the final report was not available until January of 1998.
The Compensation Committee administers the Company's compensation policies
and programs andBoard. Management has primary responsibility for executive compensation matters,
includingestablishing and maintaining adequate internal financial controls, for preparing the establishmentfinancial statements and for the public reporting process. Grant Thornton LLP (“Grant Thornton”), the Company’s independent registered public accounting firm for 2023, is responsible for expressing opinions on the conformity of the base salariesCompany’s audited financial statements with generally accepted accounting principles and on the Company’s internal control over financial reporting.
In this context, the Audit Committee has reviewed and discussed with management and Grant Thornton the audited financial statements for the year ended December 31, 2023 and Grant Thornton’s evaluation of the Company's executive
officers,Company’s internal control over financial reporting. The Audit Committee discussed with Grant Thornton the approvalmatters that are required to be discussed by the applicable requirements of individual bonuses and bonus programs for executive
officersthe Public Company Accounting Oversight Board and the administration of certain employee benefit programs. In
addition,Securities and Exchange Commission. Grant Thornton provided to the CompensationAudit Committee has exclusive responsibility for
administering the 1996 Plan, under which stock option grantswritten disclosures and direct stock
issuances may be made to executive officers and other employees. The following
is a summary of policies which the Compensation Committee applied in 1997 and
intends to apply in subsequent fiscal years in setting the compensation levels
for the Company's executive officers.
GENERAL COMPENSATION POLICY. The objectivesletter required by applicable requirements of the Company's executive
compensation program arePublic Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with Grant Thornton that firm’s independence. The Audit Committee concluded that Grant Thornton’s provision of audit and non-audit services to motivate and retain current executives and to
attract future ones. The Company's executive compensation program is designed
to: (1) provide a direct and substantial link between Company performance and
executive pay, (2) consider individual performance and accomplishments and
compensate accordingly, and (3) determine the Company's position in the aircraft
engine leasing labor market and be competitive in that labor market. The
Company's intent is to position its executive cash compensation levels around
the 60th-65th percentile of comparable U.S. companies. To this end, the Company tracks executive pay levels against companies of similar size. The Committee
also considers geographic location and companies that may competeis compatible with the
Company in recruiting executive talent.
FACTORS. The principal factors which the Compensation Committee considers
in establishing the components of each executive officer's compensation package
are summarized below. The Compensation Committee may, however, in its discretion
apply entirely different factors in setting executive compensation for future
fiscal years.
BASE SALARY. The base salary for each executive officer is setGrant Thornton’s independence.
Based on the basis
of personal performance, the Compensation Committee's assessment of salary
levels in effect for comparable positions with the Company's principal
competitors,review and internal comparability considerations. The weight given to each
of these factors may vary from individual to individual. The Compensation
Committee will generally rely upon specific compensation surveys, such as the
KPMG Peat Marwick surveydiscussions referred to above, for comparative compensation
purposes. Base salaries are reviewed on an annual basis, and adjustments are
made in accordance with the factors indicated above.
INCENTIVE COMPENSATION. The CompensationAudit Committee has established an
incentive compensation program pursuantrecommended to which each executive officer was
eligible to earn a bonus onour Board that the basis of the achievement of certain Company and
individual goals. The bonuses earned by each of the executive officers is set
forth in the Summary Compensation Table which appears earlier in this Proxy
Statement.
LONG-TERM INCENTIVE COMPENSATION. Long-term incentives are provided through
stock option grants. The grants are designed to align the interests of the
executive officers with those of the shareholders, and to provide each officer
with a significant incentive to manage the Company from the perspective of an
owner with an equity stake in the business. The stock option plan encourages
long term retention and provides rewards to executives and other eligible
employees commensurate with growth in shareholder value. It is the Committee's
practice to grant options to purchase shares at the market price on the date of
grant with a term of up to ten years. The options granted to the Company's
executive officers during fiscal 1997 will vest in four equal annual
installments. Accordingly, the options will provide a return to the executive
officer only if he remains in the Company's employ and the market price of the
underlying shares of common stock appreciates.
10
The number of shares subject to each option grant is set at a level intended
to create a meaningful opportunity for stock ownership based on the executive
officer's current position with the Company, the base salary associated with
that position, the size of comparable awards made to individuals in similar
positions within the industry, the individual's potential for increased
responsibility and promotion over the option term, and the individual's personal
performance in recent periods. The Committee also takes into account the number
of unvested options held by the executive officer in order to maintain an
appropriate level of equity incentive for that individual. However, the
Committee does not adhere to any specific guidelines as to the relative option
holdings of the Company's executive officers.
CEO COMPENSATION. The compensation payable to Mr. Willis, the Company's
Chief Executive Officer during fiscal year 1997, was determined by the
Compensation Committee. His base salary was set at a level which the Board felt
would be competitive with the base salary levels in effect for chief executive
officers at similarly-sized companies within the industry. Based upon the
Board's evaluation of the Company's performance and Mr. Willis' individual
performance, the Board awarded Mr. Willis a bonus of $350,000audited financial statements for the 1997
fiscal year. For the 1998 fiscal year Mr. Willis' compensation package was set
by the Compensation Committee on the basis of the compensation policy summarized
in this report.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m). Section 162(m) of the
Internal Revenue Code, enacted in 1993, generally disallows a tax deduction to
publicly-held companies for compensation paid to certain executive officers, to
the extent that compensation exceeds $1 million per officer in any year. The
compensation paid to the Company's executive officers for the 1997 fiscal year
did not exceed the $1 million limit per officer, and the compensation to be paid
to the Company's executive officers for the 1998 fiscal year is not expected to
exceed that limit. In addition, the 1996 Plan is structured so that any
compensation deemed paid to an executive officer in connection with the exercise
of his or her outstanding options under the 1996 Plan will qualify as
performance-based compensation which will not be subject to the $1 million
limitation.
Submitted by both the Board of Directors and the Compensation Committee of
the Company's Board of Directors:
Charles F. Willis, IV
Ross K. Anderson
William M. LeRoy
William L. McElfresh
Willard H. Smith, Jr.
11
PERFORMANCE GRAPH
The following performance graph shows the percentage change in cumulative
total return to a holder of the Company's common stock, assuming dividend
reinvestment, compared with the cumulative total return, assuming dividend
reinvestment, of the NASDAQ Stock Market-US Index and the NASDAQ Financial
Index, during the period from September 18, 1996 throughended December 31, 1997.
COMPARISON OF CUMULATIVE TOTAL RETURN*
AMONG WILLIS LEASE FINANCE CORPORATION, THE NASDAQ STOCK MARKET-US INDEX AND THE
NASDAQ FINANCIAL INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
WILLIS LEASE FINANCE CORPORATION NASDAQ STOCK MARKET-US NASDAQ FINANCIAL
9/18/96 $100 $100 $100
12/31/96 $161 $107 $113
12/31/97 $219 $131 $173
* $100 invested2023 be included in our Annual Report on 9/18/96 in stock or in index--including reinvestment of
dividends. Fiscal year ending December 31.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal year 1997, there were no transactions between the Company and
its directors, executive officers or known holders of greater than five percent
of the Company's Common Stock in which the amount involved exceeded $60,000 and
in which any of the foregoing persons had or will have a direct or indirect
material interest.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to fileForm 10-K for 2023 for filing with the Securities and Exchange Commission initial reportsCommission. This report is provided by the following independent Directors, who comprise the Audit Committee:
Brendan J. Curran, Committee Chair
Colm Barrington
Rae Ann McKeating
2024 WLFC Proxy Statement 23
PROPOSAL 2: APPROVAL OF Amendment to OUR Amended and Restated Certificate of Incorporation to provide for officer exculpation |
General
Our Board has unanimously adopted, and recommends that stockholders approve, an amendment to the Company’s Amended and Restated Certificate of ownership and
reportsIncorporation (the “Charter”) to limit the personal liability of changes in ownership of Common Stock and other equity securitiescertain senior officers of the Company. Officers,Company as permitted by recent amendments to Section 102(b)(7) of the Delaware General Corporation Law, as discussed further below (the “Amendment”).
Article VIII of our Charter currently includes a provision, authorized under the Delaware General Corporation Law (“the DGCL”), that eliminates the personal liability of Directors for monetary damages for breach of fiduciary duty as a Director to the fullest extent permitted by the DGCL. Prior to 2022, the DGCL did not allow for similar elimination or limitation of officers’ personal liability. As a result, shareholder plaintiffs employed tactics of bringing certain claims against individual officers when such claims would otherwise be exculpated and dismissed if brought against directors.
Effective August 1, 2022, the State of Delaware adopted an amendment to Section 102(b)(7) of the DGCL to allow Delaware corporations to exculpate certain of their officers from direct claims for a breach of the duty of care. The DGCL currently provides for exculpation of officers for direct claims, including class actions, and does not provide exculpation for breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, any transaction in which the officer derived an improper personal benefit, or any action brought by or in the right of the corporation.
In order to extend the protections of the recently amended Section 102(b)(7) of the DGCL to its officers, a Delaware corporation must affirmatively amend its certificate of incorporation to include such a provision, as the protections do not apply automatically. The Amendment proposed herein would provide both directors and holders of more than ten percentcertain officers with exculpation rights to the fullest extent permitted by the DGCL. Officers that may be entitled to exculpation under Section 102(b)(7) of the Company's Common Stock are requiredDGCL include: (i) the corporation’s president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer or chief accounting officer; (ii) an individual identified in the corporation’s public filings with the SEC as an NEO; and (iii) an individual who, by Securities and Exchange Commission
regulationwritten agreement with the corporation, has consented to furnishbe identified as an officer for purposes of accepting service of process (collectively, the Company with copies“covered officers”).
Rationale for Amendment
Officers often must make time-sensitive decisions on matters of all Section 16(a) reports they
file.
12
Based solely upon review of the copies of such reports furnishedsignificant importance to various stakeholders, which gives rise to the Companyrisk of legal action that may be based on hindsight. The Amendment would enhance the ability of our officers to make decisions that will maximize the Company’s value in furtherance of stockholder interests and written representationsempower our officers to exercise their business judgment without being concerned about personal risk of legal action. In addition, adopting an exculpation provision that aligns with Delaware law could prevent costly and protracted litigation that distracts our officers from its officersimportant operational and directors, the Companystrategic matters, which often result in higher insurance premiums.
The Board believes that during the fiscal year ended December 31, 1997, itsamending and restating our Charter to add liability protection for officers directors and holders of more than ten percent of the Company's Common Stock
complied with all Section 16(a) filing requirements applicable to the Company's
officers, directors and greater than ten percent beneficial owners, except the
following: a gift by a third party of the Company's Common Stock to Mr.
Oldenburg's two minor children was, inadvertently, not reported; the automatic
option grant for 5,000 shares of the Company's Common Stock received by Messrs.
Anderson, LeRoy and Smithis necessary in 1996 was, inadvertently, not reported; and the
automatic option grant for 1,000 shares of the Company's Common Stock received
by Messrs. Anderson, LeRoy and Smith in 1997 was, inadvertently, not reported.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick LLP served as independent public accountants
for the Company for the fiscal year ended December 31, 1997. The Board of
Directors desires the firmorder to continue to attract and retain experienced and qualified executives, especially since similar officer exculpation provisions have been adopted by public corporations. It would also reduce our officers’ personal legal exposure and help curb corporate litigation and associated insurance costs. We believe all of these are in this capacity for the fiscal year
ending December 31, 1998. Inbest interest of our stockholders. Furthermore, the event that shareholders failAmendment would more generally align the protections available to ratify the
selection of KPMG Peat Marwick LLP theour officers with those protections currently available to our Directors. Accordingly, our Board of Directors will reconsider such
selection.
A representative of KPMG Peat Marwick LLP will be present at the Annual
Meeting to respond to appropriate questions and make a statement if such
representative desires to do so.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS.
PROPOSAL 3
CHANGE IN THE COMPANY'S STATE OF INCORPORATION FROM CALIFORNIA TO DELAWARE
SUMMARY
The Board of Directors believes that itthe proposal to extend exculpation to our officers is fair and in the best interests of the Company and its shareholders to changestockholders.
Proposed Amendment
If the state of incorporation of the Company
from California to Delaware (the "Reincorporation Proposal" or the "Proposed
Reincorporation") and, in connection therewith, to adopt, as part of its new
Certificate of Incorporation and Bylaws, various features (the "Antitakeover
Provisions") intended (i) to promote stability of the Company's shareholder base
and (ii) to render more difficult certain unsolicited or hostile attempts to
take over the Company which could disrupt the Company and divert the attention
of the Company's directors, officers and employees. These features include,
among other things, the establishment of a classified Board of Directors with
staggered terms of office, provision for removal of directors only for cause and
only by the specified vote of shareholders, the requirement of a supermajority
vote of shareholders to approve certain business combinations and to amend the
bylaws, and the elimination of the right of shareholders to call special
shareholders' meetings, all as described more fully below and in Appendices A, B
and C hereto. Throughout the Proxy Statement, the term "Willis-California" or
the "Company" refers to Willis Lease Finance Corporation, the existing
California corporation, and the term "Willis-Delaware" refers to the new
Delaware corporation, a wholly owned subsidiary of Willis-California, which is
the proposed successor to Willis-California.
SHAREHOLDERS ARE URGED TO READ CAREFULLY THIS SECTION OF THE PROXY
STATEMENT, INCLUDING THE RELATED APPENDICES REFERENCED BELOW AND ATTACHED
HERETO, BEFORE VOTING ON THE REINCORPORATION PROPOSAL. THE PROPOSED
REINCORPORATION AND THE PROPOSED ANTITAKEOVER PROVISIONS CONSTITUTE ONE PROPOSAL
FOR SHAREHOLDER APPROVAL: A VOTE FOR THE REINCORPORATION WILL THEREFORE ALSO
CONSTITUTE A VOTE FOR THE MERGER
13
AGREEMENT, THE CERTIFICATE OF INCORPORATION AND THE BYLAWS OF WILLIS-DELAWARE
AND ALL PROVISIONS THEREOF (INCLUDING ALL OF THE ANTITAKEOVER PROVISIONS).
The Reincorporation Proposal will be effected by merging Willis-California
into Willis-Delaware (the "Merger") pursuant to the Agreement and Plan of Merger
substantiallyAmendment, in the form attached hereto as AppendixAnnex A, (the "Merger Agreement")
which will be entered into by Willis-California and Willis-Delaware following
approval of the Proposed Reincorporation by the Company's shareholders (if it is approved by the shareholders). Uponstockholders at the Annual Meeting, it will become effective upon the filing with the Secretary of State of the State of Delaware of a Certificate of Amendment to the Charter, which we would expect to file following the Annual Meeting. Other than the replacement of the existing Article VIII with the proposed Article VIII, the remainder of the Charter will remain unchanged after effectiveness of the Merger (the
"Effective Date"), (i) Willis-California will cease to exist, (ii)
Willis-Delaware will succeed toAmendment. Even if our stockholders approve the assets and assume the liabilities of
Willis-California and will continue to operate the business of the Company under
its current name, Willis Lease Finance Corporation, and (iii) each outstanding
share of Willis-California Common Stock, no par value per share, will
automatically be converted into one share of Willis-Delaware Common Stock, par
value $0.01 per share (a par value has been established for shares of stock
primarily for the purpose of reducing certain filing fees in the State of
Delaware). Each stock certificate representing issued and outstanding shares of
Willis-California Common Stock will continue to represent the same number of
shares of Common Stock of Willis-Delaware. THUS, IT WILL NOT BE NECESSARY FOR
SHAREHOLDERS TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR STOCK
CERTIFICATES OF WILLIS-DELAWARE. However, shareholders may exchange their
certificates if they so choose. It is anticipated that the Common Stock of
Willis-Delaware will continue to be listed on the Nasdaq National Market without
interruption under the same symbol ("WLFC"), and that such Market will consider
the delivery of Willis-California stock certificates to constitute "good
delivery" of shares of Willis-Delaware in transactions subsequent to the Merger.
The proposed Antitakeover Provisions are permittedAmendment, our Board retains discretion under Delaware law and are
consistent withnot to implement it. If the rules of the Nasdaq National Market.
As discussed below, the principal reasons for the proposed reincorporation
are the greater predictability and flexibility of Delaware corporate law, the
substantial body of case law interpreting that law, the increased ability of the
Company to attract and retain qualified directors and officers (especially in
light of possible continued initiatives in California to limit severely the
ability of companies to indemnify directors and officers), the reduction of the
Company's vulnerability to unsolicited or hostile attempts to obtain control of
the Company and an increased likelihood that shareholders will receive a fair
price for their shares in transactions relating to such attempts. The
Reincorporation ProposalAmendment is not being proposedapproved by our stockholders, the Charter will remain unchanged.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.
24 2024 WLFC Proxy Statement
PROPOSAL 3: ADVISORY VOTE ON THE APPOINTMENT OF GRANT THORNTON LLP |
The Audit Committee has appointed the firm of Grant Thornton to audit our 2024 financial statements, and Grant Thornton also served in order to prevent an
unsolicited takeover attempt,this capacity in 2023. Although not required by the Company’s bylaws or otherwise, the Audit Committee and the Board of Directors isbelieve it appropriate, as a matter of good corporate practice, to request that Willis Lease’s stockholders ratify, on an advisory basis, the appointment of Grant Thornton as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024. If the stockholders do not aware of any
present attempt by any personso ratify, the Audit Committee will reconsider the appointment and may retain Grant Thornton or another firm without re-submitting the matter to acquire control of the Company, obtain
representationCompany’s stockholders. Even if the stockholders vote on the Board of Directors or take any significant action that
would affect the governance of the Company.
It is possible that the Proposed Reincorporation and the adoption of the
Antitakeover Provisions will discourage hostile takeover attempts or tender
offers for control of Willis-Delaware which might be approved by many, or indeed
by a majority, of Willis-Delaware's shareholders. See "REASONS FOR
REINCORPORATION--Possible Disadvantages" below.
In accordance with California law, the affirmative vote of a majority of the
outstanding shares of Common Stock of Willis-California is required for approval
of the Merger Agreement and the other terms of the Proposed Reincorporation
(including the Antitakeover Provisions). The Proposed Reincorporation and the
adoption of the Antitakeover Provisions were considered by the Company's Board
of Directors and were unanimously approved by the Board of Directors on March
, 1998. Accordingly, the Board recommends a votean advisory basis in favor of the Proposed
Reincorporation andappointment, the adoption of the Antitakeover Provisions. Pursuant to the
Merger Agreement, however, the Merger (and thus the Proposed Reincorporation)Audit Committee may, be abandoned, even after shareholder approval has been obtained, if
circumstances arise which, in the opinion of the Willis-California Board of
Directors, make it inadvisable to proceed with the Merger. In that event, the
Company will continue as a California corporation, governed by its present
Amended and Restated Articles of Incorporation and Bylaws, WITHOUT the
Antitakeover Provisions. The Company has been informed that all shares of
Willis-California Common Stock held by CFW Partners, L.P, a California
14
Limited Partnership of which Charles F. Willis, IV holds a one percent (1%)
interest as the sole general partner and of which he holds an eighty percent
(80%) interest as a limited partner (as of March 1, 1998, 3,110,657 shares,
constituting approximately 42.5% of the outstanding common stock of
Willis-California) will be voted in favor of the Proposed Reincorporation (and
adoption of the Antitakeover Provisions). Shareholders of Willis-California will
have no dissenters' rights of appraisal with respect to the Merger.
The discussion set forth below is qualified in its entirety by, and should
be read in conjunction with,discretion, direct the Merger Agreement, the Certificate of
Incorporation of Willis-Delaware and the Bylaws of Willis-Delaware, which shall
be in substantially the form of Appendices A, B and C hereto, respectively.
NO CHANGE IN THE NAME, BUSINESS OR PHYSICAL LOCATION OF THE COMPANY
The Proposed Reincorporation will effect a change in the legal domicile of
the Company and certain other changesappointment of a legal nature,different independent registered public accounting firm at any time during the most significant of
which are described in this Proxy Statement. However, the Proposed
Reincorporation will not result in any change in the name, business, management,
location of the principal executive offices, fiscal year assets, liabilities or
net worth of the Company (other than due to the costs of the transaction).
Moreover, as noted above,if it is anticipated that after the Merger the shares of
Common Stock of Willis-Delaware will be traded, without interruption, on the
Nasdaq National Market under the same symbol as at present (WLFC). All employee
benefit, stock option and employee stock purchase plans of Willis-California
will be assumed and continued by Willis-Delaware, and each option or right
issued pursuant to such plans will automatically be converted into an option or
right to purchase the same number of shares of Willis-Delaware Common Stock, at
the same price per share, upon the same terms, and subject to the same
conditions. The Company believes that the Proposed Reincorporation will not
affect any of its material contracts with any third parties and that
Willis-California's rights and obligations under such material contractual
arrangements will continue and be assumed by Willis-Delaware.
REASONS FOR THE PROPOSED REINCORPORATION
DELAWARE CORPORATION LAW
For many years Delaware has followed a policy of encouraging incorporation
in that state and, in furtherance of that policy, has been a leader in adopting,
construing and implementing comprehensive, flexible corporate laws responsive to
the legal and business needs of corporations organized under its laws. Because
of Delaware's prominence as the state of incorporation for many major
corporations, both the legislature and courts in Delaware have demonstrated an
ability and a willingness to act quickly and effectively to meet changing
business needs. Delaware courts have developed considerable expertise in dealing
with corporate issues, and a substantial body of case law has developed
construing Delaware law and establishing public policies with respect to
corporate legal affairs. As a result, many corporations have chosen Delaware
initially as a state of incorporation or have subsequently changed corporate
domiciles to Delaware in a manner similar to that proposed by the Company.
As the Company plans for the future, the Board of Directors and management
believe that it is essential to be able to draw upon well established principles
of corporate governance in making legal and business decisions. The prominence
and predictability of Delaware corporate law provide a reliable foundation on
which the Company's governance decisions can be based and the Company believes
that shareholders will benefit from the responsiveness of Delaware corporate law
to their needs and to those of the corporation they own.
INCREASED ABILITY TO ATTRACT AND RETAIN QUALIFIED DIRECTORS AND OFFICERS
The increasing frequency of claims and litigation directed against directors
and officers has greatly expanded the risks facing directors and officers in
exercising their respective duties. In November 1996, Proposition 211 was
rejected by the California electorate. Proposition 211 would have severely
limited the
15
ability of California companies to indemnify their directors and officers. This
initiative was reputedly financed in large part by the California plaintiffs'
bar and other special interest groups. While Proposition 211 was defeated, the
Company believes it is likely that similar initiatives or legislation containing
similar provisions will be proposed in California again in the near future due
to continuing efforts by the supporters of Proposition 211. As a result, the
Company believes that the more favorable corporate environment afforded by
Delaware will enable it to compete more effectively with other public companies,
most of which are incorporated in Delaware, to attract new directors and
officers and to retain its current directors and officers.
Both California and Delaware law permit a corporation to include a provision
in its certificate of incorporation which reduces or limits the monetary
liability of directors for breaches of fiduciary duty in certain circumstances.
The amount of time and money required to respond to such claims and to defend
such litigation can be substantial. It is the Company's desire to reduce these
risks to its directors and to limit situations in which monetary damages can be
recovered against directors so that the Company may continue to attract and
retain qualified directors who otherwise might be unwilling to serve because of
the risks involved. The Company believes that, in general, Delaware law provides
greater protection to directors than California law and that Delaware case law
regarding a corporation's ability to limit director liability is more developed
and provides more guidance than California law.
REDUCED VULNERABILITY
The Proposed Reincorporation, including the Antitakeover Provisions, is
intended to reduce the Company's vulnerability to unsolicited or hostile
attempts to obtain control of the Company and to increase the likelihood that
shareholders will receive a fair price for their shares in transactions relating
to such attempts. As noted above, the Proposed Reincorporation, including the
adoption of the Antitakeover Provisions, is not being proposed in response to
any present attempt, known to the Board of Directors, to acquire control of the
Company, to obtain representation on the Company's Board of Directors, or to
take significant corporate action.
Third parties frequently accumulate stock positions in public corporations
in order to force a merger or other business combination or to commence a tender
or exchange offer or other hostile attempt to acquire control of the Company.
The Board of Directors believes that unsolicited takeover attempts may be unfair
or disadvantageous to the Company and its shareholders because, among other
reasons: (i) a non-negotiated takeover bid may be timed to take advantage of
temporarily depressed stock prices; (ii) a non-negotiated takeover bid may be
designed to foreclose or minimize the possibility of more favorable competing
bids or alternative transactions; (iii) a non-negotiated takeover bid may
involve the acquisition of only a controlling interest in the corporation's
stock, without affording all shareholders the opportunity to receive the same
economic benefits; and (iv) a non-negotiated takeover bid may often deprive the
shareholders of an adequate opportunity to evaluate the merits of the proposed
transaction.
By contrast, in a transaction in which a potential acquiror must negotiate
with an independent board of directors, the board can and should take account of
the underlying and long-term values of the Company's business, technology and
other assets, the possibilities for alternative transactions on more favorable
terms, possible advantages from a tax-free reorganization, anticipated favorable
developments in the Company's business not yet reflected in the stock price, and
equality of treatment of all shareholders.
The Antitakeover Provisions are designed to encourage any person who might
seek to acquire control of Willis-Delaware first to consult with
Willis-Delaware's Board of Directors and to negotiate the terms of any tender
offer or proposed business combination. The Board believes that, for the
protection of the Company's shareholders, any proposed acquisition of control of
the Company, and any proposed business combination in which the Company might be
involved, should be thoroughly studied by the Company's Board of Directors to
assuredetermines that such transactiona change would be in the best interests of the Company and its shareholders and that all of the Company's shareholders be treated fairly.
In sum, the Board of Directors
16
believes that the Reincorporation and the Antitakeover Provisions are prudent
and in the best interests of the Company and its shareholders and should be
adopted for their protection.
POSSIBLE DISADVANTAGES
Despite the belief of the Board of Directors as to the benefits to
shareholders of the Reincorporation Proposal (including the adoption of the
Antitakeover Provisions), it may be disadvantageous to the extent that it has
the effect of discouraging a future takeover attempt which is not approved by
the Board of Directors, but which a majority of the shareholders may deem to be
in their best interests or in which shareholders may receive a substantial
premium for their shares over the then current market value or over their cost
basis in such shares. As a result of such effects of the Reincorporation
Proposal, shareholders who might wish to participate in an unsolicited tender
offer may not have an opportunity to do so. In addition, to the extent that the
provisions of Delaware law enable the Board of Directors to resist a takeover or
a change in control of the Company, such provisions could make it more difficult
to change the existing Board of Directors and management. The proposed
Antitakeover Provisions could also delay or frustrate the assumption of control
by a holder of a large block of the Company's shares or a change in the
composition of the incumbent Board of Directors, even if many shareholders
considered such actions to be beneficial. Furthermore, adoption of the
Antitakeover Provisions will not necessarily ensure or guarantee that
shareholders will receive a price for their shares in connection with an
acquisition of control of the Company that reflects the value of such shares, or
that the price received will be fair or equitable, although in the opinion of
the Board of Directors the likelihood that the price will reflect such value and
be fair and equitable will be increased by the Proposed Reincorporation and the
adoption of the Antitakeover Provisions.
SIGNIFICANT DIFFERENCES BETWEEN stockholders.
THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION OF WILLIS-CALIFORNIA AND THE CERTIFICATE OF INCORPORATION OF
WILLIS-DELAWARE
The principal differences between the Amended and Restated Articles of
Incorporation of Willis-California and the Certificate of Incorporation of
Willis-Delaware are outlined below. The Amended and Restated Articles of
Incorporation and Bylaws of Willis-California already contain some provisions
intended by the Company to have "antitakeover" effects (such as the provision
enabling the Board of Directors to determine the powers, preferences and rights,
and the qualifications, limitations or restrictions, of the authorized and
unissued preferred stock of Willis-California; the provision that any action
taken by shareholders must be effected at an annual or special meeting of
shareholders and may not be taken by written consent; and the provision
establishing the procedures for shareholder nominations and proposals) and those
provisions will be retained in the Certificate of Incorporation and Bylaws of
Willis-Delaware. The Board of Directors does not have any current plans to
propose amendments to, or make other changes to, Willis-Delaware's charter
documents that may have "antitakeover" implications, other than as described in
this Proxy Statement.
CLASSIFIED BOARD OF DIRECTORS, REMOVAL OF DIRECTORS AND RELATED MATTERS
At present, all directors of Willis-California are elected annually to
one-year terms. In contrast, Article VII of the Certificate of Incorporation of
Willis-Delaware divides the Board of Directors into three classes, each class to
consist as nearly as possible of one-third of the directors. The term of office
of the Class I directors will expire at the first annual meeting of
shareholders; the term of the Class II directors will expire at the second
annual meeting and the term of the Class III directors will expire at the third
annual meeting. At each annual meeting, only one class of directors will be
elected, and they will serve a three-year term. Thus, the regular term of only
one class of directors will expire each year and each director will stand for
election only once in each three-year period. Article VII of the Certificate of
Incorporation also provides that directors of Willis-Delaware may be removed
only for cause and only by the affirmative vote of holders of a majority of the
outstanding Voting Stock of Willis-Delaware (for
17
purposes hereof, "Voting Stock" means all outstanding shares of capital stock of
the corporation entitled to vote in the election of directors of the
corporation, and each reference to a percentage or portion of shares of Voting
Stock shall refer to such percentage or portion of the votes entitled to be cast
by such shares).
A classified Board will serve as an obstacle to any attempts to obtain
control of Willis-Delaware through the acquisition of a significant minority
position and the election of a new slate of directors. At a minimum, two
successive annual meetings of shareholders will normally be required in order to
elect a majority of the Board, unless there is cause and sufficient voting
strength to remove a particular director or directors. As a result, instituting
a classified Board of Directors may deter certain mergers, tender offers, proxy
contests or other future attempts to acquire control of Willis-Delaware that
some or a majority of shareholders may deem to be in their best interests. See
"Reasons For Reincorporation--Possible Disadvantages".
The Board of Directors believes that once a person is elected to the Board
of Directors for a specific, fixed term, that director should not be subject to
arbitrary or capricious removal, especially at the whim of a third party who
acquires shares for the purpose and with the intent of ousting incumbent
directors who oppose the third party's policies and practices with respect to
the Company. It must be noted, of course, that Article VII would also prevent
the removal of a director in mid-term by other shareholders unless good cause
exists and the removal is approved by the holders of a majority of the
outstanding Voting Stock of Willis-Delaware. However, the Company believes that
Article VII is a reasonable provision which enables and encourages qualified
persons to serve as directors without concern for possible arbitrary or
capricious removal without cause. In addition, a classified Board of Directors
increases the likelihood of continuity and stability. When the Board of
Directors fills a vacancy resulting from the resignation, death,
disqualification or removal of a director, the director chosen by the Board to
fill that vacancy will be of the same class as the director he succeeds, to
serve for the full remaining term of that class (unless, by reason of any
previous changes in the authorized number of directors, the board of directors
shall designate the vacant directorship as a directorship of another class in
order more nearly to achieve equality in the number of directors among the
classes).
Willis-Delaware's Bylaws provide that the authorized number of directors is
five (5), the same as the number currently fixed under Willis-California's
Bylaws. Under Delaware law, a Board of Directors may fix or change the
authorized number of directors pursuant to an amendment of the Bylaws. The power
to do so is specifically recognized in Article VII of the Certificate of
Incorporation and Section 3.02 of the Bylaws of Willis-Delaware. In contrast,
under California law, a board of directors may only fix the exact number of
directors from time to time within a range provided in the Articles of
Incorporation or Bylaws, but any change in the range, or if the number of
directors is fixed, any change in the fixed number, must be approved by the
shareholders. The Bylaws of Willis-California contain a provision fixing the
authorized number of directors at five (5).
INCREASED SHAREHOLDER VOTE REQUIRED IN CERTAIN BUSINESS COMBINATIONS
Under California law, mergers, certain reorganizations, sales of all or
substantially all of the assets of the Company, the adoption of a plan of
voluntary liquidation of the Company and recapitalizations of the Company
involving amendments to its Articles of Incorporation must all be approved by
the affirmative vote of the holders of a majority of the corporation's
outstanding Voting Stock. Certain other transactions, including sales of less
than substantially all of the assets of the Company, do not require shareholder
approval under California law.
18
Article XIII of the Certificate of Incorporation of Willis-Delaware provides
that, in addition to any vote ordinarily required under Delaware law, the
affirmative vote of the holders of not less than 80% of Willis-Delaware's
outstanding Voting Stock (the "80% Vote Requirement") is required to approve
"business combinations"(1) with any "other entity"(2) if, as of the record date
for the determination of shareholders entitled to notice thereof and to vote
thereon, such other entity is, directly or indirectly, the beneficial owner of
more than 5% of the outstanding shares of the Common Stock of Willis-Delaware.
Article XIII contains exceptions to the 80% Vote Requirement, as follows:
1. APPROVAL OF CONTINUING DIRECTORS. The 80% Vote Requirement does not
apply to any proposed "business combination" that has been approved by a
majority of the "continuing directors"(3) of Willis-Delaware.
2. FAIR PRICE PROVISION. Article XIII of the Certificate of Incorporation
of Willis-Delaware contains a "fair price provision," which provides that the
80% Vote Requirement does not apply to any proposed "business combination" if
certain price requirements are satisfied. To satisfy the minimum price
requirements, the aggregate amount of cash and the fair market value of any
consideration other than cash to be received per share by holders of each class
of equity securities of Willis-Delaware in any "business combination" must be at
least equal to the highest of (i) the highest per share price paid or agreed to
be paid by the "other entity" for any of its shares of common stock of the
corporation during the eighteen month period immediately prior to and including
the date of the most recent public announcement of the proposed "business
combination" or (ii) the highest per share price paid in the transaction or
series of transactions in which the "other entity" acquired more than 5% of the
outstanding shares of Common Stock of the corporation. The issues of the
applicability and compliance with Article XIII of the Certificate of
Incorporation are to be determined in good faith by a majority of the
"continuing directors."
The 80% Vote Requirement and the exceptions thereto are designed to provide
an incentive for the "other entity" to negotiate a proposed "business
combination" with Willis-Delaware's Board of Directors instead of initiating
such a transaction on a non-negotiated, hostile basis. The 80% Vote Requirement
and the exceptions thereto effectively gives management more bargaining power in
negotiations with the "other entity" proposing a "business combination" and may
be able to be used by management to negotiate a favorable price for an
acquisition of Willis-Delaware.
- ------------------------
(1) Defined in the Certificate of Incorporation to mean (a) any merger or
consolidation of Willis- Delaware or an of its subsidiaries with or into any
"other entity", (b) the sale, exchange or lease of all or a substantial part
of the assets of Willis-Delaware to any "other entity", or (c) any sale or
lease to Willis-Delaware of any assets of any "other entity" or securities
issued by such "other entity" in exchange for securities of Willis-Delaware,
for which the approval of the shareholders of Willis- Delaware is required
by law or by agreement between Willis-Delaware and any national securities
exchange.
(2) Defined in the Certificate of Incorporation to include any person or entity
or any "affiliate" or "associate" of such person or entity (as each term is
defined in Article XIII of the Certificate of Incorporation); provided,
however, that there is excluded from that definition any person or entity
which beneficially owned on March 1, 1998, five percent (5%) or more of the
outstanding common stock of Willis-California. ACCORDINGLY, THE PERSONS WHO
BENEFICIALLY OWN MORE THAN FIVE PERCENT OF THE OUTSTANDING COMMON STOCK OF
WILLIS-CALIFORNIA LISTED IN THE TABLE SET FORTH UNDER "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" WILL NOT BE AN "OTHER ENTITY" AND
THE PROTECTIONS OF ARTICLE XIII OF THE CERTIFICATE OF INCORPORATION WILL NOT
BE AVAILABLE WITH RESPECT TO "BUSINESS COMBINATIONS" WITH ANY OF THE PERSONS
LISTED IN THAT TABLE.
(3) Defined in the Certificate of Incorporation to include a director who was a
member of the Board of Directors prior to the time that the "other entity"
involved in the proposed "business combination" acquired in excess of 5% of
the outstanding shares of Common Stock of Willis-Delaware.
19
To the extent that the 80% Vote Requirement discourages attempts to acquire
control of Willis-Delaware, shareholders who might wish to participate in a
tender offer may not be afforded the opportunity to do so. Similarly, the 80%
Vote Requirement could, under certain circumstances, permit the Board of
Directors or minority shareholders to frustrate consummation of a "business
combination" that the holders of a majority of the Voting Stock of
Willis-Delaware may believe to be in their best interests. See "Reasons For
Reincorporation--Possible Disadvantages".
CFW Partners, L.P., a California Limited Partnership of which Charles F
Willis, IV holds a one percent (1%) interest as the sole general partner and of
which he holds an eighty percent (80%) interest as a limited partner
beneficially owned approximately 42.5% of the Company's outstanding Common Stock
as of March 1, 1998. Assuming that CFW Partners, L.P. were to continue to hold
more than 20% of the shares of Willis-Delaware at the time a proposed "business
combination" subject to the 80% Vote Requirement is submitted to shareholders
and that all such shares were to be voted in the same way, CFW Partners, L.P.
could, by itself, thwart the approval of the proposed "business combination."
See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
ELIMINATION OF SHAREHOLDERS' POWER TO CALL SPECIAL SHAREHOLDERS MEETINGS
Under California law and the Bylaws of Willis-California, a special meeting
of shareholders may be called by the holders of 10% or more of the Voting Stock
of the Company and this right may not be removed by the Articles of
Incorporation or the Bylaws. Under Delaware law, a special meeting of
shareholders may be called only by the board of directors or by any other person
authorized to do so in the corporation's certificate of incorporation or bylaws.
Article XI of the Certificate of Incorporation of Willis-Delaware provides that
a special meeting of shareholders may be called only by the Board or Directors,
the Chairman of the Board or the President. Therefore, holders of 10% or more of
the outstanding Voting Stock of Willis-Delaware will not be able to call a
special meeting of shareholders.
Thus, by operation of Article XI of the Certificate of Incorporation,
proposals which currently could be brought before the Company's shareholders at
a special meeting called by the holders of 10% or more of the Willis-California
Common Stock can only be considered by the shareholders of Willis-Delaware at
the next annual shareholders meeting (or at a special meeting or shareholders
called by the Board of Directors) and then only if certain procedural
requirements mandated by law and by the Certificate of Incorporation (as
described below) are fulfilled.
It is possible that Article XI could delay shareholder action or acquisition
attempts favored by the holders of a majority of the outstanding shares. The
Company believes that Article XI is warranted as a prudent corporate governance
measure to prevent an inappropriately small number of shareholders from
prematurely forcing shareholder consideration of a proposal over the opposition
of the Board of Directors by calling a special shareholders' meeting before (i)
the time that the Board believes such consideration to be appropriate or (ii)
the next annual meeting (provided that the holders meet the notice requirements
for consideration of a proposal). Such special meetings would invoke substantial
expense and diversion of board and management time which the Company believes to
be inappropriate for an enterprise the size of the Company.
Both the Certificate of Incorporation of Willis-Delaware and the Amended and
Restated Articles of Incorporation of Willis-California provide that any action
taken by the shareholders must be effected at an annual or special meeting of
shareholders and may not be taken by written consent.
PROCEDURES FOR SHAREHOLDER NOMINATIONS AND PROPOSALS
The Bylaws of Willis-Delaware include an advance notice procedure similar to
that included in the Bylaws of Willis-California with regard to the nomination,
other than by or at the direction of the Board or Directors, of candidates for
election as directors (the "Nomination Procedure") and with regard to certain
20
matters to be brought before an annual meeting or special meeting of
shareholders (the "Business Procedure").
The Nomination Procedure provides that only persons nominated by or at the
direction of the Board of Directors or by a shareholder who has given timely
written notice to the Secretary of the Company prior to the meeting will be
eligible for election as directors. The Business Procedure provides that at an
annual or special meeting, and subject to any other applicable requirements,
only such business may be conducted as has been brought before the meeting by or
at the direction of the Board of Directors or by a shareholder who has given
timely written notice to the Secretary of the Company of such shareholder's
intention to bring such business before the meeting. In general, to be timely,
notice must be received by Willis-Delaware not fewer than 90 days prior to the
meeting or, in certain circumstances, not later than the close of business on
the 10th day following the day on which public announcement of the date of the
meeting is first made by the corporation (under Willis-California's Bylaws, a
notice is timely if received by the Company not earlier than 90 days nor later
than 60 days prior to the meeting or, in certain circumstances, not later than
the close of business on the 10th day following the day on which public
announcement of the date of the meeting is first made by the corporation).
Under the Nomination Procedure, a shareholder's notice to the Company must
contain certain information about the nominee, including name, address, the
consent to be nominated and such other information as would be required to be
included in a proxy statement soliciting proxies for the election of the
proposed nominee, and certain information about the shareholder proposing to
nominate that person, including name, address, a representation that the
shareholder is a holder of record of stock entitled to vote at the meeting and a
description of all arrangements or understandings between the shareholder and
each nominee. Under the Business Procedure, notice relating to the conduct of
business at a meeting other than the nomination of directors must contain
certain information about the business and about the shareholder who proposes to
bring the business before the meeting. If the Chairman or other officer
presiding at the meeting determines that a person was not nominated in
accordance with the Nomination Procedure, such person will not be eligible for
election as a director, or if he or she determines that other business was not
properly brought before such meeting in accordance with the Business Procedure,
such business will not be conducted at such meeting. Nothing in the Nomination
Procedure or the Business Procedure will preclude discussion by any shareholder
of any nomination or business properly made or brought before an annual or
special meeting in accordance with the above-described procedures.
By requiring advance notice of nominations by shareholders, the Nomination
Procedure affords the Board of Directors an opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed necessary or
desirable by the Board, to inform the shareholders about such qualifications. By
requiring advance notice of proposed business, the Business Procedure provides
the Board with an opportunity to inform shareholders of any business proposed to
be conducted at a meeting and the Board's position on any such proposal,
enabling shareholders to better determine whether they desire to attend the
meeting or grant a proxy to the Board of Directors as to the disposition of such
business. Although the Willis-Delaware Bylaws, like the California Bylaws, do
not give the Board any power to approve or disapprove shareholder nominations
for the election of directors or any other business desired by shareholders to
be conducted at a meeting, the Willis-Delaware Bylaws, like the
Willis-California Bylaws, may have the effect of precluding a nomination for the
election of directors or of precluding any other business at a particular
meeting if the proper procedures are not followed. In addition, the procedures
may discourage or deter a third party from conducting a solicitation of proxies
to elect its own slate of directors or otherwise attempting to obtain control of
the corporation, even if the conduct of such business or such attempt might be
beneficial to the corporation and its shareholders.
AMENDMENT OF CERTAIN CHARTER AND BYLAW PROVISIONS
The Amended and Restated Articles of Incorporation of Willis-California may
be amended or repealed in the manner prescribed by California law (which
requires, in most cases, approval by the board
21
of directors and approval by the affirmative vote of the holders of a majority
of the outstanding Voting Stock of the Corporation).
Article X of the Certificate of Incorporation of Willis-Delaware provides
that, with the exception of (i) Article IV (capitalization), (ii) Article VII
(classification of the Board of Directors and election or removal of directors),
(iii) Article IX (amendments to Bylaws), (iv) Article X (amendments to
Certificate of Incorporation) (v) Article XI (calling of special meetings of
shareholders only by the Board of Directors, the Chairman of the Board or the
President) (vi) Article XII (requirement that shareholder action be taken only
at annual or special meetings), and (vii) Article XIII (the 80% Vote Requirement
for certain "business combinations" and exceptions thereto), the Amended and
Restated Articles of Incorporation of Willis-Delaware may be amended or repealed
in the manner prescribed by Delaware law (which requires, in most cases,
approval by the board of directors and approval by the affirmative vote of the
holders of a majority of the outstanding Voting Stock of the Corporation). With
respect to Articles IV, VII, IX, X, XI, XII and XIII, the Certificate of
Incorporation provides that the proposed repeal or amendment also be approved by
the affirmative vote of the holders of not less than 80% of the outstanding
Voting Stock of Willis-Delaware.
The Bylaws of Willis-California may be amended or repealed either by its
Board of Directors or by the affirmative vote of the holders of a majority of
the outstanding Voting Stock of Willis-California. The Bylaws of Willis-Delaware
may be amended or repealed either by its Board of Directors or by the
affirmative vote of the holders of at least 80% of the outstanding Voting Stock
of Willis-Delaware.
AUTHORIZED SHARES OF STOCK
If the proposed Reincorporation is approved, the authorized capitalization
of Willis-Delaware would be identical to that of Willis-California. Article IV
of the Certificate of Incorporation authorizes Willis-Delaware to issue
20,000,000 shares of Common Stock, par value $0.01 per share, and 5,000,000
shares of Preferred Stock, par value $0.01 per share (a par value has been
established for shares of stock primarily for the purpose of reducing certain
filing fees in the State of Delaware).
Like Willis-California's Amended and Restated Articles of Incorporation,
Willis-Delaware's Certificate of Incorporation provides that the Board of
Directors is entitled to determine the powers, preferences and rights, and the
qualifications, limitations or restrictions, of the authorized and unissued
Preferred Stock. The issuance and sale of such Preferred Stock could occur in
connection with a hostile attempt to acquire control of Willis-Delaware and the
terms of such Preferred Stock may be designed, in part, to impede the
acquisition of control.
SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF CALIFORNIA AND DELAWARE
The corporation laws of California and Delaware differ in a number of
respects, some of which are discussed above. See "Significant Differences
Between The Amended And Restated Articles Of Incorporation Of Willis-California
And The Certificate Of Incorporation Of Willis-Delaware". It is impractical to
summarize all of the differences in this Proxy Statement, but significant
differences, not elsewhere discussed, between the corporation laws of California
and Delaware that could materially affect the rights of shareholders or the
Company are as follows:
CLASSIFICATION OF THE BOARD OF DIRECTORS
Under California law, a "listed" corporation generally may provide for a
classified board of directors by adopting amendments to its articles of
incorporation or bylaws, which amendments must be approved by the shareholders.
Willis-California qualifies as a "listed" corporation under California law but
its Amended and Restated Articles and Bylaws do not provide for a classified
board.
22
Delaware law permits, but does not require, a classified board of directors,
pursuant to which directors can be divided into as many as three classes with
staggered terms of office, with only one class of directors standing for
election each year. As discussed above, the Certificate of Incorporation of
Willis-Delaware provides for a classified board. See "Significant Differences
Between The Amended And Restated Articles Of Incorporation Of Willis-California
And The Certificate Of Incorporation Of Willis-Delaware--Classified Board of
Directors, Removal of Directors and Related Matters".
SHAREHOLDER APPROVAL OF CERTAIN BUSINESS COMBINATIONS
Under Section 203 of the Delaware General Corporation Law, a Delaware
corporation is prohibited from engaging in a "business combination" with an
interested shareholder for three years following the time that such person or
entity becomes an interested shareholder. With certain exceptions, an interested
shareholder is a person or entity who or which owns, individually or with other
persons or entities, fifteen percent (15%) or more of the corporation's
outstanding voting stock (including any rights to acquire stock pursuant to an
option, warrant, agreement, arrangement or understanding, or upon the exercise
of conversion or exchange rights, and stock with respect to which the person has
voting rights only). The three-year moratorium imposed on business combinations
by Section 203 does not apply if (i) prior to the time on which such shareholder
becomes an interested shareholder the Board of Directors of the subject
corporation approves either the business combination or the transaction that
resulted in the person or entity becoming an interested shareholder; (ii) upon
consummation of the transaction that made him or her an interested shareholder,
the interested shareholder owns at least eighty-five percent (85%) of the
corporation's voting stock outstanding at the time the transaction commenced
(excluding for purposes of determining the number of shares outstanding, shares
owned by directors who are also officers of the subject corporation and shares
held by employee stock plans in which employee participants do not have the
right to decide confidentially whether to accept a tender or exchange offer); or
(iii) on or after the time such person or entity becomes an interested
shareholder, the Board approves the business combination and it is also approved
at a shareholder meeting by sixty-six and two-thirds percent (66 2/3%) of the
outstanding Voting Stock not owned by the interested shareholder. Although a
Delaware corporation to which Section 203 applies may elect not to be governed
by Section 203, Willis-Delaware will not so elect and thus will be governed by
Section 203.
The Company believes that Section 203 will encourage any potential acquirer
to negotiate with the Company's Board of Directors. Section 203 also might have
the effect of limiting the ability of a potential acquirer to make a two-tiered
bid for Willis-Delaware in which all shareholders would not be treated equally.
Shareholders should note, however, that the application of Section 203 to
Willis-Delaware will confer upon the Board the power to reject a proposed
business combination in certain circumstances, even though a potential acquirer
may be offering a substantial premium for Willis-Delaware's shares over the
then-current market price. Section 203 would also discourage certain potential
acquirers unwilling to comply with its provisions.
California law requires that holders of common stock in a corporation (for
purposes hereof, the "Target") which is a party to a merger receive common stock
in the surviving corporation or its parent if the other corporation which is a
party to the merger transaction or its parent owns, directly or indirectly, more
than fifty percent (50%) but less than ninety percent (90%) of the Target's
common stock unless all of the Target's shareholders consent to the transaction.
This provision of California law may have the effect of making a merger by a
majority shareholder more difficult to accomplish. Although Delaware law does
not parallel California law in this respect, under some circumstances Section
203 does provide similar protection to shareholders against coercive two-tiered
bids for a corporation in which shareholders are not treated equally. (For a
discussion of provisions of the Certificate of Incorporation of Willis-Delaware
relating to the 80% Vote Requirement for major corporate transactions; see
"Significant Differences Between The Amended And Restated Articles Of
Incorporation Of Willis-California And The Certificate
23
Of Incorporation Of Willis-Delaware--Increased Shareholder Vote Required in
Certain Business Combinations").
CUMULATIVE VOTING FOR DIRECTORS
Cumulative voting rights in the election of directors entitle a shareholder
to give one nominee as many votes as is equal to the number or directors to be
elected multiplied by the number of shares owned by the shareholder, or to
distribute such votes on the same principle among two or more nominees, as the
shareholder sees fit. Neither the Amended and Restated Articles of Incorporation
or Bylaws of Willis-California nor the Certificate of Incorporation or Bylaws of
Willis-Delaware provide for cumulative voting. In the absence of cumulative
voting, the holders of the majority of the shares present or represented at a
meeting in which directors are to be elected have the power to elect all the
directors to be elected at such meeting, and no person could be elected without
the support of holders of the majority of shares present or represented at such
meeting. The absence of cumulative voting may make it difficult for a minority
shareholder adverse to a majority of the shareholders to obtain representation
on Willis-Delaware's Board of Directors.
California law requires cumulative voting in the election of directors upon
notice given by a shareholder at a shareholders meeting but permits a "listed"
corporation to eliminate cumulative voting. Willis-California qualifies as a
"listed" corporation under California law and its Bylaws eliminate cumulative
voting.
Under Delaware law, shares may not be cumulatively voted for the election of
directors unless the certificate of incorporation specifically provides for
cumulative voting. The Certificate of Incorporation of Willis-Delaware does not
provide for cumulative voting.
REMOVAL OF DIRECTORS
Under California law, any director or the entire board of directors may be
removed, with or without cause, with the approval of a majority of the
outstanding Voting Stock; however, no individual director may be removed (unless
the entire Board is removed) if the number of votes cast against such removal
would be sufficient to elect the director under cumulative voting. Delaware law
has a similar rule with respect to corporations that do not have classified
boards of directors.
In addition, Delaware law also provides that a director of a corporation
with a classified board of directors can be removed only for cause unless the
certificate of incorporation otherwise provides. Article VII of the Certificate
of Incorporation of Willis-Delaware provides that a director may be removed only
for cause and only with the affirmative vote of holders of a majority of the
Voting Stock. See "Significant Differences Between The Amended And Restated
Articles Of Incorporation Of Willis-California And The Certificate Of
Incorporation Of Willis-Delaware--Classified Board of Directors, Removal of
Directors and Related Matters".
SHAREHOLDER VOTING
Delaware law relating to mergers and other corporate reorganizations differs
from California law in a number of respects. Generally, California law requires
a shareholder vote in more situations than does Delaware law. Delaware law
provides for a shareholder vote (except as indicated below and for certain
mergers between a parent company and its 90% owned subsidiary) by both the
acquiring and the acquired corporation to approve mergers and by shareholders of
the acquired corporation for the sale by a corporation of substantially all of
its assets. California law, in addition to requiring a shareholder vote in the
foregoing circumstances, provides for a shareholder vote of an acquiring
corporation in either share-for-share exchanges or sale-of-assets
reorganizations and a shareholder vote of any parent corporation whose equity
securities are being issued or transferred in connection with a corporate
reorganization.
24
Delaware law does not require a shareholder vote of the surviving
corporation in a merger if (a) the merger agreement does not amend the existing
certificate of incorporation, (b) each share of stock of the surviving
corporation outstanding immediately before the effective date of the merger is
an identical outstanding share after the merger, and (c) the number of shares to
be issued by the surviving corporation in the merger does not exceed 20% of the
shares outstanding immediately prior to such issuance. California law contains a
similar exception to its voting requirements for reorganizations where
shareholders or the corporation itself, or both, immediately prior to the
reorganization will own immediately after the reorganization equity securities
constituting more than 83.3% (or five-sixths) of the voting power of the
surviving or acquiring corporation or its parent entity. (For a discussion of
provisions of the Certificate of Incorporation of Willis-Delaware relating to
the Supermajority Voting Requirements for major corporate transactions, see
"Significant Differences Between The Amended And Restated Articles Of
Incorporation Of Willis-California And The Certificate Of Incorporation Of
Willis-Delaware--Increased Shareholder Vote Required in Certain Business
Combinations").
LOANS TO OFFICERS
Under Delaware law, a corporation may make loans to, guarantee the
obligations of or otherwise assist, its officers or other employees and those of
its subsidiaries when such action, in the judgment of the corporation's board of
directors, may reasonably be expected to benefit the corporation. Under
California law, a corporation may only make such a loan to, or guarantee for the
benefit of, officers if such loan or guarantee is approved by a majority of the
corporation's shareholders or, for corporations with 100 or more shareholders of
record, by its board of directors pursuant to a shareholder-approved bylaw.
Willis-California currently does not have such a bylaw.
DISSENTERS' RIGHTS
Under both California and Delaware law, a shareholder of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to receive cash equal to the fair market value of the
shares held by such shareholder (as determined by a court of competent
jurisdiction or by agreement of the shareholder and the corporation), in lieu of
the consideration such shareholder would otherwise receive in the transaction.
The laws of California and Delaware differ with respect to the circumstances
under which dissenters' or appraisal rights are available. Delaware law does not
require dissenters' rights with respect to (a) a sale-of-assets reorganization,
(b) a merger by a corporation, the shares of which are either listed on a
national securities exchange or widely-held (by more than 2,000 shareholders of
record) if shareholders receive shares of the surviving corporation or of a
listed or widely-held corporation, or (c) a merger in which the corporation is
the surviving corporation, provided that no vote of its shareholders is required
to approve the merger. (For a discussion of mergers in which a vote of
shareholders is not required, see "Shareholder Voting").
California law does, in general, afford dissenters' rights in a
sale-of-assets reorganization, and the exclusions from dissenters' rights in
mergers are somewhat different from those in Delaware. For example, in the case
of a corporation whose shares are listed on a national securities exchange,
dissenters' rights would nevertheless be available in certain transactions for
any shares with respect to which there are certain restrictions on transfer and
for any class with respect to which 5% or more of such class claims dissenters'
rights. Also, under California law, shareholders of a corporation involved in a
reorganization are not entitled to dissenters' rights if the corporation, or its
shareholders immediately before the reorganization, or both, will own more than
five-sixths of the voting power of the surviving or acquiring corporation or its
parent entity.
25
LIMITATION OF LIABILITY
The laws of California and Delaware permit, with certain exceptions, a
corporation to adopt charter provisions eliminating the liability of a director
to the corporation or its shareholders for monetary damages for breach of the
director's fiduciary duty. The Amended and Restated Articles of Incorporation of
Willis-California and the Certificate of Incorporation of Willis-Delaware both
provide for the elimination of personal monetary liability of directors to the
fullest extent permissible under the law of the respective states. There are
nonetheless certain differences between the laws of the two states respecting
limitation of liability which are summarized below. In general, the Company
believes that Delaware law provides greater protection to directors than
California law and that Delaware case law regarding a corporation's ability to
limit director liability is more developed and provides more guidance than
California law.
Under California law, a provision eliminating the liability of directors for
monetary damages for breach of fiduciary duty does not eliminate or limit
director monetary liability for: (a) intentional misconduct or knowing and
culpable violation of law; (b) acts or omissions that a director believes to be
contrary to the best interests of the corporation or its shareholders, or that
involve the absence of good faith on the part of the director; (c) receipt of an
improper personal benefit; (d) acts or omissions that show reckless disregard
for the director's duty to the corporation or its shareholders, where the
director in the ordinary course of performing a director's duties should be
aware of a risk of serious injury to the corporation or its shareholders; (e)
acts or omissions that constitute an unexcused pattern of inattention that
amounts to an abdication of the director's duty to the corporation and its
shareholders; (f) transactions between the corporation and a director who has a
material financial interest in such transaction; and (g) liability for improper
distributions, loans or guarantees.
Under Delaware law, a provision eliminating the liability of directors for
monetary damages for breach of fiduciary duty does not eliminate or limit
director monetary liability for: (a) breaches of the director's duty of loyalty
to the corporation or its shareholders; (b) acts or omissions not in good faith
or involving intentional misconduct or knowing violations of law; (c) the
payment of unlawful dividends or unlawful stock repurchases or redemptions; or
(d) transactions in which the director received an improper personal benefit. In
addition, a limitation of liability provision also does not limit a director's
liability for violation of, or otherwise relieve the Company or its directors
from the necessity of complying with federal or state securities laws, or affect
the availability of nonmonetary remedies such as injunctive relief or
rescission.
INDEMNIFICATION
California and Delaware have similar laws respecting indemnification by a
corporation of its directors, officers, employees and other agents.
In general, California law requires indemnification where the individual has
defended successfully the action on the merits while Delaware law requires
indemnification where the individual has been successful on the merits or
otherwise in the defense of any action. In general, California and Delaware law
permit indemnification of expenses, including attorneys' fees, provided there is
a determination by the directors, by independent legal counsel or by the
shareholders that the person seeking indemnification acted in good faith and in
a manner reasonably believed to be in best interests of the corporation.
Expenses incurred by a director or an officer in defending an action may be
paid in advance, under Delaware law and California law, if such director or
officer undertakes to repay such amounts if it is ultimately determined that he
or she is not entitled to indemnification. In addition, the laws of both states
authorize a corporation's purchase of indemnity insurance for the benefit of its
directors, officers, employees and agents whether or not the corporation would
have the power to indemnify against the liability covered by the policy.
26
California law permits a California corporation to provide rights to
indemnification beyond those provided therein, subject to certain express
prohibitions and to the extent such additional indemnification is authorized in
the corporation's articles of incorporation. Willis-California's Amended and
Restated Articles of Incorporation permit Willis-California to provide
indemnification beyond that expressly mandated by the California Corporations
Code and Willis-California's Bylaws allow for indemnification to the maximum
extent permitted by the California Corporations Code.
Delaware law also permits a Delaware corporation to provide indemnification
in excess of that provided by statute. In contrast to California law, Delaware
law does not require authorizing provisions in the Certificate of Incorporation
and does not contain express prohibitions on indemnification in certain
circumstances. Limitations on indemnification may be imposed by a court,
however, based on principles of public policy. Willis-Delaware's Bylaws allow
for indemnification to the maximum extent permitted by the Delaware General
Corporation Law.
INSPECTION OF SHAREHOLDER LIST
Both California and Delaware law allow any shareholder to inspect and copy
the shareholder list during normal business hours and upon written demand for a
purpose reasonably related to such person's interest as a shareholder. In
addition, California law provides for an absolute right to inspect and copy the
corporation's shareholder list by persons holding five percent (5%) or more of
the corporation's voting shares or persons holding one percent (1%) or more of
such shares who have filed a Schedule 14A with the Securities and Exchange
Commission (generally, a Schedule 14A must be filed by any shareholder engaged
in the solicitation of proxies, as such terms are defined in the federal
securities laws, in connection with a contested election of directors). Delaware
law also permits any shareholder to inspect the shareholders' list during the
ten days preceding a shareholders' meeting, for any purpose germane to that
meeting. Delaware law contains no provision comparable to the absolute right of
inspection provided by California law to certain shareholders.
DIVIDENDS AND REPURCHASES OF SHARES
California law dispenses with the concepts of par value of shares as well as
statutory definitions of capital, surplus and the like. The concepts of par
value, capital and surplus exist under Delaware law.
Delaware law permits a corporation to declare and pay dividends out of
surplus or, if there is no surplus, out of net profits for current and preceding
fiscal years (as long as the amount of capital of the corporation following the
declaration and payment of the dividend is not less than the aggregate amount of
the capital represented by the issued and outstanding stock of all classes
having a preference upon the distribution of assets). In addition, Delaware law
generally provides that a corporation may redeem or repurchase its shares only
if the capital of the corporation is not impaired and such redemption or
repurchase would not impair the capital of the corporation. The ability of a
Delaware corporation to pay dividends on, or to make repurchases or redemptions
of, its shares is dependent on the financial status of the corporation standing
alone and not on a consolidated basis. In determining the amount of surplus of a
Delaware corporation, the assets of the corporation, including stock of
subsidiaries owned by the corporation, must be valued at their fair market value
as determined by the board of directors, without regard to their historical book
value.
Under California law, a corporation may not make any distributions to its
shareholders (including dividends and repurchase of shares) unless either: (i)
the corporation's retained earnings immediately prior to the proposed
distribution equal or exceed the amount of the proposed distribution; or (ii)
immediately after giving effect to such distribution, the corporation's assets
(exclusive of goodwill, capitalized research and development expenses and
deferred charges) are in an amount equal to at least 125% of its liabilities
(not including deferred taxes, deferred income and other deferred credits), and
the corporation's current assets are in an amount equal to at least its current
liabilities (or 125% of its current
27
liabilities if the average pre-tax and pre-interest expense earnings for the
preceding two fiscal years were
less than the average interest expense for such years). Such tests are applied
to California corporations on a consolidated basis.
APPLICATION OF THE GENERAL CORPORATION LAW OF CALIFORNIA TO DELAWARE
CORPORATIONS
Under Section 2115 of the California General Corporation Law, certain
foreign corporations (i.e., corporations not organized under California law)
which have significant contacts with California are subject to a number of key
provisions of the California General Corporation Law. However, an exemption from
Section 2115 is provided for corporations with outstanding securities designated
as qualified for trading as a national market security on the National
Association of Securities Dealers Automatic Quotation System if the corporation
has at least 800 holders of its equity securities as of the record date of its
most recent annual meeting of shareholders. Following the Proposed
Reincorporation, the Common Stock of the Company will continue to be designated
as qualified for trading as a national market security on the National
Association of Securities Dealers Automatic Quotation System and Willis-Delaware
will have at least 800 holders of its equity securities. Accordingly, it is
expected that Willis-Delaware will be exempt from Section 2115.
OTHER
RIGHTS OF DISSENTING SHAREHOLDERS. Dissenters' rights are not available to
shareholders of the Company with respect to the proposed Merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The Proposed Reincorporation is
intended to be a tax-free reorganization under the Internal Revenue Code of
1986, as amended. Assuming the Proposed Reincorporation qualifies as a
reorganization, no gain or loss will be recognized to the holders of Willis-
California Common Stock who receive Willis-Delaware Common Stock as a result of
consummation of the Merger, and no gain or loss will be recognized by
Willis-California or Willis-Delaware. Each former holder of Willis-California
Common Stock will have the same basis in the stock of Willis-Delaware received
by such holder pursuant to the Merger as such holder has in the
Willis-California Common Stock held by such holder at the time of consummation
of the Merger. Each shareholder's holding period with respect to the
Willis-Delaware Common Stock will include the period during which such holder
held the corresponding Willis-California Common Stock, provided the latter was
held by such holder as a capital asset at the time of consummation of the
Merger. The Company has not obtained a ruling from the Internal Revenue Service
or an opinion of legal or tax counsel with respect to the tax consequences of
the Merger.
THE FOREGOING IS ONLY A SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS REGARDING THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY OF THE LAWS OF
ANY STATE OR ANY LOCAL, FOREIGN OR OTHER JURISDICTION.
VOTE REQUIRED. The affirmative vote of a majority of the outstanding shares
of the Company's Common Stock. with each share entitled to one vote, is required
for approval of the Proposed Reincorporation. A vote for the Proposed
Reincorporation will constitute specific approval of the Merger Agreement and
all other transactions and proceedings related to the Reincorporation, including
adoption of the Antitakeover Provisions, described in this Proxy Statement.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"“FOR” THE CHANGE INRATIFICATION OF THE COMPANY'S STATEAPPOINTMENT OF INCORPORATION FROM CALIFORNIA TO DELAWARE ANDGRANT THORNTON LLP AS THE ADOPTION OF VARIOUS OTHER MEASURES WHICH WILL AFFECT CERTAIN SHAREHOLDER
RIGHTS AS DESCRIBED HEREIN.
28
PROPOSAL 4
AMENDMENTS TO THE 1996 STOCK OPTION/STOCK ISSUANCE PLANCOMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
Fees Billed to Willis Lease by Grant Thornton
For the 2023 and 2022 fiscal years, fees for services provided by Grant Thornton to us were as follows:
2023 |
| 2022 |
| ||||||
Audit Fees (1) |
| $ |
| 819,954 |
|
| $ | 921,927 |
|
Audit Related Fees(2) |
|
|
| 268,428 |
|
|
| 165,720 |
|
Tax Fees (3) |
|
|
| 13,840 |
|
|
| 14,095 |
|
|
| $ | 1,102,222 |
|
| $ | 1,101,742 |
| |
All fees described above were approved by the Audit Committee. The Audit Committee requires that any services to be provided by our auditors must be approved in advance by the Audit Committee. If approval is required before the Committee can act, a single member of the Committee can approve an engagement, subject to ratification by the Committee at its next meeting. All services were pre-approved by the Committee or its Chair.
Grant Thornton will attend the Annual Meeting. They will have the opportunity to make a statement, if they desire to do so. They will also be available to respond to appropriate questions from stockholders.
2024 WLFC Proxy Statement 25
From January 1, 2023 to the present, there have been no transactions, and there are currently no proposed transactions, in which the amount involved exceeds $120,000 to which we or any of our subsidiaries was (or is to be) a party and in which any Director, executive officer, holder of more than 5% of our capital stock, or any immediate family member of or person sharing the household with any of these individuals, had (or will have) a direct or indirect material interest, except as set forth below.
Between January 2023 and July 2023, Willis Asset Management Limited, one of the Company's shareholders are being askedwholly-owned and vertically-integrated subsidiaries, leased one of its hangars to Fur and Feather and Fin Limited, an entity which the Company's Executive Chairman retains an ownership interest, for quarterly rent payments of approximately $7,700. The lease was approved by the Board's Independent Directors.
During 2023, the Company paid approximately $44,000 of expenses payable to Mikchalk Lake, LLC, an entity in which our Executive Chairman retains an ownership interest. These expenses were for lodging and other business-related services were approved by the Board’s Independent Directors.
As required by Nasdaq rules, all material discretionary transactions between us and our Directors, executive officers or known principal stockholders (or their respective affiliates) must be approved by the Audit Committee. The Audit Committee does not intend to approve any such transactions unless it believes that they are on terms no less favorable to us than could be obtained from unaffiliated third parties.
Austin C. Willis, the son of our Executive Chairman, served as an executive officer of the Company during 2023 serving as the Company’s CEO. He received total compensation of $6,304,283 for 2023, calculated in the same manner as in the Summary Compensation Table of this proxy statement. His total compensation includes salary, cash incentive awards, stock awards and other compensation.
Policies and Procedures for Related-Party Transactions
The Board has adopted a formal policy governing the disclosure and approval of related party transactions. That policy is available on the Company’s website (www.wlfc.global). Under that policy, the Audit Committee reviews the material facts of all covered transactions that may require prior approval of or ratification by the Audit Committee. A “covered transaction” includes, but is not limited to, any financial transaction, arrangement or relationship or any series of amendmentssimilar transactions, arrangements or relationships including indebtedness and guarantees of indebtedness in which (a) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (b) the Company's 1996 Stock Option/Stock Issuance Plan (the "1996 Plan")Company is a participant, and (c) any related person has or will have a direct or indirect interest (other than solely as a result of being a Director or a less than 10 percent beneficial owner of another entity). This might include, but is not limited to, lease transactions, sale or purchase transactions, creditor/debtor transactions, guarantees or charitable contributions. The following includes types of transactions with related parties which have been pre-approved by the Audit Committee and therefore are not subject to Audit Committee review and approval, even if the amount exceeds $120,000:
26 2024 WLFC Proxy Statement
DELINQUENT SECTION 16(A) REPORTS |
Section 16(a) of the six (6)-month
holding period requirement as a conditionExchange Act of 1934 requires our directors, executive officers and any persons who own more than 10% of our common stock to file initial reports of ownership and reports of changes in ownership with the exercise of stock appreciation
rights) in order to take advantageSEC. Based solely on our review of the amendmentscopies of such forms filed with the SEC and written representations from the directors and executive officers, we believe that all Section 16(a) filing requirements were timely met in the year ended December 31, 2023.
STOCKHOLDER PROPOSALS |
Stockholder proposals intended to be considered at the 2025 Annual Meeting of Stockholders must, under Rule 16b-314a-8 of the Securities Exchange Act of 1934, as amended, which exempts certain officer and
director transactions under the 1996 Plan from the short-swing liability
provisions of the federal securities laws.
The proposed share increase will assure that a sufficient reserve of Common
Stock is available under the 1996 Plan to attract and retain the services of key
individuals essential to the Company's long-term growth and success. The
remaining amendments will provide the Company with more opportunities to make
equity incentives available to the non-employee Board members as an inducement
for their continued service and to facilitate plan administration by eliminating
a number of limitations and restrictions previously incorporated into the 1996
Plan to comply with the applicable requirements of SEC Rule 16b-3 prior to its
latest amendment.
The 1996 Plan became effective upon adoption by the Board on June 21, 1996
(the "Effective Date"), and was subsequently approved by the shareholders. On
February 24, 1998, the Board adopted the amendments to the 1996 Plan that are
the subject of this Proposal.
29
OPTION TRANSACTIONS
OPTIONS GRANTED WEIGHTED AVERAGE
NAME (NUMBER OF SHARES) EXERCISE PRICE
- ---------------------------------------------------------------------------- ------------------ -----------------
Charles F. Willis IV........................................................ -- --
William L. McElfresh........................................................ 150,000 $ 8.00
Donald A. Nunemaker......................................................... 30,000 $ 14.75
Edwin F. Dibble............................................................. 30,000 $ 8.00
Steven D. Oldenburg......................................................... 30,000 $ 8.00
All executive officers as a group (8 persons)............................... 333,000 $ 9.90
All current non-employee directors as a group (3 persons)................... 18,000 $ 8.50
All employees, including current officers who are not executive officers, as
a group (6 persons)....................................................... 90,500 $ 11.97
As of March 1, 1998, options covering 438,500 shares of Common Stock were
outstanding under the 1996 Plan, 571,500 shares remained available for future
option grants assuming shareholder approval of the 500,000 share increase which
forms part of this Proposal, and 15,000 shares have been issued under the 1996
Plan in connection with option exercises.
AMENDMENT AND TERMINATION
The Board may amend or modify the 1996 Plan in any or all respects
whatsoever, subject to any shareholder approval required under applicable law or
regulation. The Board may terminate the 1996 Plan at any time, and the 1996 Plan
will in all events terminate on June 19, 2006.
FEDERAL INCOME TAX CONSEQUENCES
OPTION GRANTS
Options granted under the 1996 Plan may be either incentive stock options
which satisfy the requirements of Section 422 of the Internal Revenue Code or
non-statutory options which are not intended to meet such requirements. The
Federal income tax treatment for the two types of options differs as follows:
INCENTIVE OPTIONS. No taxable income is recognized by the optionee at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise made the
subject of a taxable disposition. For Federal tax purposes, dispositions are
divided into two categories: (i) qualifying and (ii) disqualifying. A qualifying
disposition occurs if the sale or other disposition is made after the optionee
has held the shares for more than two (2) years after the option grant date and
more than one (1) year after the exercise date. If either of these two (2)
holding periods is not satisfied, then a disqualifying disposition will result.
Upon a qualifying disposition, the optionee will recognize long-term capital
gain in an amount equal to the excess of (i) the amount realized upon the sale
or other disposition of the purchased shares over (ii) the exercise price paid
for the shares. If there is a disqualifying disposition of the shares, then the
excess of (i) the fair market value of those shares on the exercise date over
(ii) the exercise price paid for the shares will be taxable as ordinary income
to the optionee. Any additional gain or loss recognized upon the disposition
will be recognized as a capital gain or loss by the optionee.
If the optionee makes a disqualifying disposition of the purchased shares,
then the Company will be entitled to an income tax deduction, for the taxable
year in which such disposition occurs, equal to the excess of (i) the fair
market value of such shares on the option exercise date over (ii) the exercise
price paid for the shares. In no other instance will the Company be allowed a
deduction with respect to the optionee's disposition of the purchased shares.
34
NON-STATUTORY OPTIONS. No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by the Company in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee will
not recognize any taxable income at the time of exercise but will have to report
as ordinary income, as and when the Company's repurchase right lapses, an amount
equal to the excess of (i) the fair market value of the shares on the date the
repurchase right lapses over (ii) the exercise price paid for the shares. The
optionee may, however, elect under Section 83(b) of the Internal Revenue Code to
include as ordinary income in the year of exercise of the option an amount equal
to the excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for such shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the repurchase right lapses.
The Company will be entitled to an income tax deduction equal to the amount
of ordinary income recognized by the optionee with respect to the exercised
non-statutory option. The deduction will in general be allowed for the taxable
year of the Company in which such ordinary income is recognized by the optionee.
STOCK APPRECIATION RIGHTS
An optionee who is granted a stock appreciation right will recognize
ordinary income in the year of exercise equal to the amount of the appreciation
distribution. The Company will be entitled to an income tax deduction equal to
such distribution for the taxable year in which the ordinary income is
recognized by the optionee.
DIRECT STOCK ISSUANCE
The tax principles applicable to direct stock issuances under the 1996 Plan
will be substantially the same as those summarized above for the exercise of
non-statutory option grants.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Company anticipates that any compensation deemed paid by it in
connection with disqualifying dispositions of incentive stock option shares or
exercises of non-statutory options will qualify as performance-based
compensation for purposes of Internal Revenue Code Section 162(m) and will not
have to be taken into account for purposes of the $1 million limitation per
covered individual on the deductibility of the compensation paid to certain
executive officers of the Company. Accordingly, all compensation deemed paid
with respect to those options will remain deductible by the Company without
limitation under Internal Revenue Code Section 162(m).
ACCOUNTING TREATMENT
Option grants or stock issuances with exercise or issue prices equal to the
fair market value of the shares at the time of issuance or grant will not result
in any charge to the Company's earnings, but the Company must disclose in the
notes to the Company's financial statements the fair value of options granted
under the 1996 Plan and the pro forma impact on the Company's annual net income
and earnings per share as though the computed fair value of such options had
been treated as compensation expense. In addition, the number of outstanding
options may be a factor in determining the Company's earnings per share on a
fully-diluted basis.
35
Should one or more optionees be granted stock appreciation rights which have
no conditions upon exercisability other than a service or employment
requirement, then such rights will result in a compensation expense to the
Company's earnings.
NEW PLAN BENEFITS
As of March 1, 1998, no options have been granted, and no direct stock
issuances have been made on the basis of the 500,000 share increase which forms
part of this Proposal.
SHAREHOLDER APPROVAL
The affirmative vote of a majority of the outstanding voting shares of the
Company present or represented and entitled to vote at the Annual Meeting is
required for approval of the amendments to the 1996 Plan. Should such
shareholder approval not be obtained, then any options granted on the basis of
the 500,000 share increase which forms part of this Proposal will terminate
without becoming exercisable for any of the shares of Common Stock subject to
those options, and no further options will be granted on the basis of such share
increase. In addition, the non-employee Board members will not become eligible
to participate in the Discretionary Option Grant or Stock Issuance Programs. The
1996 Plan will, however, continue to remain in effect, and option grants and
direct stock issuances may continue to be made pursuant to the provisions of the
1996 Plan in effect prior to the amendments summarized in this Proposal 4, until
the available reserve of Common Stock as last approved by the shareholders has
been issued pursuant to option grants made under the 1996 Plan.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
PROPOSED AMENDMENTS TO THE 1996 PLAN.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be considered at the 1999 Annual Meeting
of Shareholders must be received by the Companyus no later than January 4, 1999.
The proposalDecember 24, 2024. Your proposal(s) must be mailed to the Company's principal executiveour offices 180
Harbor Drive,at 60 East Sir Francis Drake Boulevard, Suite 200, Sausalito, California 94965. Such proposals209, Larkspur, CA 94939, Attention: Corporate Secretary. Your proposal(s) may be included in next year'syear’s proxy statement if they comply with certain rules and regulations promulgated by the Securities and Exchange Commission.
OTHER MATTERS
Management
Alternatively, under our bylaws, a proposal or nomination that you do not seek to include in our proxy statement pursuant to Rule 14a-8 may be submitted in writing to our Corporate Secretary for the 2025 Annual Meeting of Stockholders not less than 90 days prior to the anniversary of the preceding year’s annual meeting, unless the date of the 2025 Annual Meeting of Stockholders is advanced by more than 30 days or delayed (other than as a result of adjournment) by more than 60 days from the anniversary of the 2024 Annual Meeting. For our 2025 Annual Meeting of Stockholders, this means that your proposal(s) or nomination(s) must be submitted no later than February 21, 2025 (which is 90 calendar days before the anniversary of the 2024 Annual Meeting). If the date of our 2025 Annual Meeting of Stockholders is advanced by more than 30 days or delayed (other than as a result of adjournment) by more than 60 days from the anniversary of our 2024 Annual Meeting, you must submit any such proposal or nomination no later than the close of business on the later of the 90th day prior to the 2025 Annual Meeting of Stockholders or the 10th day following the day on which public announcement of the date of such meeting is first made. Your submission must include certain specified information concerning the proposal or nominee, as the case may be, as required by our bylaws, and information as to your ownership of our common stock.
STOCKHOLDERS SHARING THE SAME LAST NAME AND ADDRESS |
We are sending only one copy of our annual report and proxy statement to stockholders who share the same last name and address unless they have notified us that they want to continue receiving multiple copies. If you would like to have additional copies of our annual report and/or proxy statement mailed to you, or you would like to opt out of this
practice for future mailings, please either contact us at 415-408-4700 or submit your request to Willis Lease Finance Corporation, attention Corporate Secretary, 60 East Sir Francis Drake Boulevard, Suite 209, Larkspur, CA 94939. We will promptly send additional copies of the annual report and/or proxy statement upon receipt of such request. Also, if you received multiple copies of the annual meeting materials and would prefer to receive a single copy in the future, following receipt of such request, we will ensure that change for future mailings of annual meeting materials.
2024 WLFC Proxy Statement 27
OTHER MATTERS |
Our management does not know of any matters to be presented at the Annual Meeting other than those set forth herein and in the Notice accompanying this Proxy Statement.
INCORPORATION BY REFERENCE
The consolidated financial statements of the Company, Management's
Discussion and Analysis of Financial Condition and Results of Operations, and
the Report of Independent Accountants included in the Company's 1997 Annual
Report on Form 10-K are incorporated herein by this reference. Copies of the
Company's Annual Report on Form 10-K will be provided to shareholders without
charge, upon written request to James D. McBride, Chief Financial Officer,
Willis Lease Finance Corporation, 180 Harbor Drive, Suite 200, Sausalito,
California 94965.
proxy statement.
By Order of the Board of Directors,
Charles F. Willis, IV
CHAIRMAN OF THE BOARD
April , 1998
Sausalito, California
36
APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement") is dated as
Executive Chairman of , 1988, and is entered into by and between the Board
28 2024 WLFC Proxy Statement
ANNEX A: PROPOSED CERTIFICATE OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION |
WILLIS LEASE FINANCE CORPORATION
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
Willis Lease Finance Corporation (the “Corporation”), a California corporation ("Willis-California"), and WILLIS LEASE
FINANCE CORPORATION, a Delaware corporation ("Willis-Delaware").
Willis-California and Willis-Delaware are hereinafter sometimes collectively
referred to as the "Constituent Corporations".
RECITALS
A. Willis-California desires to merge with and into Willis-Delaware and
Willis-Delaware desires to merge with Willis-California, all upon the terms and
subject to the conditions of this Merger Agreement.
B. Willis-California was incorporated in 1985 and is a corporation duly organized and existing under and by virtue of the lawsGeneral Corporation Law of the State of California. Its authorized
capital stock consists of 5,000,000 shares of Preferred Stock, no par value per
share, and 20,000,000 shares of Common Stock, no par value per shareDelaware (the "Willis-California Common Stock"“DGCL”), of which no shares of Preferred Stock and
shares of Common Stock were issued and outstanding on , 1998.
C. Willis-Delaware was incorporated on , 1998. Its authorized
capital stock consists of 5,000,000 shares of Preferred Stock, par value $0.01
per share, and 20,000,000 shares of Common Stock, par value $0.01 per share (the
"Willis-Delaware Common Stock"), of which no shares of Preferred Stock and 100
shares of Common Stock were issued and outstanding on , 1998. All
outstanding shares of Willis-Delaware Common Stock shares are held by and in the
name of Willis-California.
D. The Board of Directors of Willis-California has determined that, for the
purpose of effecting the reincorporation of Willis-California in the State of
Delaware, it is advisable and in the bests interests of Willis-California and
its shareholders that Willis-California merge with and into Willis-Delaware upon
the terms and conditions herein provided.
E. The Board of Directors of Willis-California has adopted resolutions
approving this Merger Agreement and the transactions contemplateddoes hereby and
recommending that the existing shareholders of Willis-California (individually,
a "Shareholder", and collectively, the "Shareholders") approve this Merger
Agreement and the transactions contemplated hereby;
F. The Board of Directors of Willis-Delaware has adopted resolutions
approving this Merger Agreement and the transactions contemplated hereby. The
sole shareholder of Willis-Delaware has approved this Merger Agreement and the
transactions contemplated hereby.
NOW, THEREFORE, in considerationcertify as follows:
FIRST: That Article VIII of the premisesAmended and the mutual
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto agree as follows:
ARTICLE I
MERGER
Section 1.1. THE MERGER. In accordance with the provisions of this Merger
Agreement, the California General Corporation Law (the "CGCL") and the Delaware
General Corporation Law (the "DGCL"), Willis-California shall be merged with and
into Willis-Delaware (the "Merger"), the separate existence of Willis-California
shall cease and Willis-Delaware shall be the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") and shall continue its corporate
existence under the laws of the State of Delaware. The name of the Surviving
Corporation shall be "Willis Lease Finance Corporation".
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Section 1.2. FILING AND EFFECTIVENESS. The Merger shall become effective
when the following actions have been completed:
(a) This Agreement and the Merger shall have been adopted and approved
by the shareholders of Willis-California in accordance with the requirements
of the CGCL;
(b) An executed Certificate of Merger or an executed counterpart of this
Agreement meeting the requirements of the DGCL shall have been filed with
the Secretary of State of the State of Delaware;
(c) An executed Certificate of Merger or an executed counterpart of this
Agreement meeting the requirements of the CGCL shall have been filed with
the Secretary of State of the State of California.
The date and time when the Merger shall become effective is herein referred
to as the "Effective Date".
Section 1.3. EFFECT OF THE MERGER. Upon the Effective Date, the separate
existence of Willis-California shall cease and Willis-Delaware, as the Surviving
Corporation, (i) shall continue to possess all of its assets, rights, powers and
property as constituted immediately prior to the Effective Date; (ii) shall be
subject to all actions previously taken by its and Willis-California's Board of
Directors; (iii) shall succeed, without other transfer, to all of the assets,
rights, powers and property of Willis-California in the manner more fully set
forth in Section 259 of the DGCL; (iv) shall continue to be subject to all of
the debts, liabilities and obligations of Willis-Delaware as constituted
immediately prior to the Effective Date; and (v) shall succeed, without other
transfer, to all of the debts, liabilities and obligations of Willis-California
in the same manner as if Willis-Delaware had itself incurred them, all as more
fully provided under the applicable provisions of the DGCL and the CGCL.
ARTICLE II
CHARTER DOCUMENTS; DIRECTORS AND OFFICERS
Section 2.1. CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation and Bylaws of Willis-Delaware as in effect immediately prior to
the Effective Date shall continue in full force and effect as the Certificate of
Incorporation and Bylaws of the Surviving Corporation until duly amended in
accordance with the provisions thereof and applicable law.
Section 2.2. DIRECTORS AND OFFICERS. The directors and officers of
Willis-Delaware immediately prior to the Effective Date shall be the directors
and officers of the Surviving Corporation until their respective successors are
duly elected or appointed and qualified or until as otherwise provided by law,
or by the Certificate of Incorporation and Bylaws of the Surviving Corporation.
ARTICLE III
MANNER OF CONVERSION OF STOCK
Section 3.1. WILLIS-CALIFORNIA COMMON STOCK. Upon the Effective Date, each
share of Willis-California Common Stock issued and outstanding immediately prior
thereto shall, by virtue of the Merger and without any action by the Constituent
Corporations, the holder of such shares or any other person, be converted
automatically into one (1) fully paid and nonassessable, issued and outstanding
share of Common Stock, par value $0.01 per share, of the Surviving Corporation.
Section 3.2. WILLIS-CALIFORNIA OPTIONS AND STOCK PURCHASE RIGHTS.
(a) Upon the Effective Date, the Surviving Corporation shall assume and
continue the stock option plans and all other employee benefit plans of
Willis-California and all of such plans shall
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become the lawful obligations of the Surviving Corporation and shall be
implemented and administered in the same manner and without interruption
until the same are amended or otherwise lawfully altered or terminated. Each
outstanding and unexercised option or other right to purchase Willis-
California Common Stock shall become an option or right to purchase the
Surviving Corporation's Common Stock on the basis of one share of the
Surviving Corporation's Common Stock for each share of Willis-California
Common Stock issuable pursuant to any such option or stock purchase right,
on the same terms and conditions and at an exercise price per share equal to
the exercise price applicable to any such Willis-California option or stock
purchase right.
(b) A number of shares of the Surviving Corporation's Common Stock shall
be reserved for issuance upon the exercise of options and stock purchase
rights equal to the number of shares of Willis-California Common Stock so
reserved immediately prior to the Merger.
Section 3.3. WILLIS-DELAWARE COMMON STOCK. Upon the Effective Date, each
share of Willis-Delaware Common Stock, par value $0.01 per share, issued and
outstanding immediately prior thereto shall, by virtue of the Merger and without
any action by Willis-Delaware, the holder of such shares or any other person, be
canceled and returned to the status of authorized but unissued shares.
Section 3.4. EXCHANGE OF CERTIFICATES. After the Effective Date, each
holder of an outstanding certificate representing shares of Willis-California
Common Stock may, at such stockholder's option, surrender the same for
cancellation to Willis-Delaware or its transfer agent, and each such holder
shall be entitled to receive in exchange therefor a certificate or certificates
representing the number of shares of the Surviving Corporation's Common Stock
into which the surrendered shares were converted as herein provided. Unless and
until so surrendered, each outstanding certificate theretofore representing
shares of Willis-California Common Stock shall be deemed for all purposes to
represent the number of shares of the Surviving Corporation's Common Stock into
which such shares of Willis-California Common Stock were converted in the
Merger.
The registered owner on the books and records of Willis-California of any
shares of stock represented by such outstanding certificate shall, until such
certificate shall have been surrendered for transfer or otherwise accounted for
to Willis-Delaware its transfer agent, have and be entitled to exercise any
voting and other rights with respect to and to receive any dividend and other
distributions upon the shares of Common Stock of the Surviving Corporation
represented by such outstanding certificate as provided above.
Each certificate representing Common Stock of the Surviving Corporation so
issued in the Merger shall bear the same legends, if any, with respect to the
restrictions on transferability as the certificates of Willis-California so
converted and given in exchange therefor, unless otherwise determined by the
Board of Directors of the Surviving Corporation in compliance with applicable
laws, or other such additional legends as agreed upon by the holder and the
Surviving Corporation.
If any certificate for shares of Willis-Delaware stock is to be issued in a
name other than that in which the certificate surrendered in exchange therefor
is registered, it shall be a condition of issuance thereof that the certificate
so surrendered shall be properly endorsed and otherwise in proper form for
transfer, that such transfer otherwise be proper and comply with applicable
securities laws and that the person requesting such transfer pay to
Willis-Delaware or its transfer agent any transfer or other taxes payable by
reason of issuance of such new certificates in a name other than that of the
registered holder of the certificate surrendered or establish to the
satisfaction of Willis-Delaware that such tax has been paid or is not payable.
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ARTICLE IV
GENERAL
Section 4.1. COVENANTS OF WILLIS-DELAWARE. Willis-Delaware covenants and
agrees that it will, on or before the Effective Date:
(a) qualify to do business as a foreign corporation in the State of
California and in connection therewith irrevocably appoint an agent for the
service of process as required under the provisions of Section 2105 of the
CGCL;
(b) file any and all documents with the California Franchise Tax Board
necessary for the assumption by Willis-Delaware of all of the Franchise Tax
liabilities of Willis-California; and
(c) take such other actions as may be required by the CGCL.
Section 4.2. FURTHER ASSURANCES. From time to time, as and when required
by Willis-Delaware or by its successors and assigns, there shall be executed and
delivered on behalf of Willis-California such deeds and other instruments, and
there shall be taken or caused to be taken by Willis-California and Willis-
Delaware such further and other actions, as shall be appropriate or necessary in
order to vest or perfect in Willis-Delaware title to and possession of all
property, interests, assets, rights, privileges, immunities, powers, franchises
and authority of Willis-California, and otherwise to carry out the purposes and
intent of this Agreement, and the officers and directors of Willis-Delaware are
fully authorized in the name and on behalf of Willis-California or otherwise to
take any and all such action and to execute and deliver any and all such deeds
and other instruments.
Section 4.3. ABANDONMENT. At any time before the Effective Date, this
Agreement may be terminated and the Merger contemplated hereby may be abandoned
by the Board of Directors of either Willis-California or of Willis-Delaware, or
of both, notwithstanding approval of this Agreement by the shareholders of
Willis-California, by the sole shareholder of Willis-Delaware, or by both.
Section 4.4. AMENDMENT. The Board of Directors of the Constituent
Corporations may amend this Agreement at any time prior to the filing of this
Agreement (or certificate in lieu thereof) with the Secretaries of State of the
States of Delaware and California, provided that an amendment made subsequent to
the adoption of this Agreement by the stockholders of either Constituent
Corporation shall not: (a) alter or change the amount or kind of shares,
securities, cash, property and/or rights to be received in exchange for or on
conversion of all or any of the shares of any class or series thereof of such
Constituent Corporation; (b) alter or change any term of theRestated Certificate of Incorporation of the Surviving Corporation; (c) alter or change any of the terms
or conditions of this Agreement if such alteration or change would adversely
affect the holders of any class or series of capital stock of any Constituent
Corporation.
Section 4.5. GOVERNING LAW. ExceptCorporation, as required by California law, this
Merger Agreement shall be governed by the laws of the State of Delaware
regardless of the laws that might otherwise govern under applicable Delaware
principles of conflicts of law.
Section 4.6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement having first been approved by the
resolutions of the Board of Directors of Willis Lease Finance Corporation, a
Delaware corporation, and Willis Lease Finance Corporation, a California
corporation,amended, is hereby executed on behalf of each of such two corporations and
attested by their respective officers thereunto duly authorized.
WILLIS LEASE FINANCE CORPORATION,
a Delaware corporation
By
-----------------------------------------
Charles F. Willis, IV, President
ATTEST:
- -------------------------------------------
Lynn Mailliard, Corporate Secretary
WILLIS LEASE FINANCE CORPORATION,
a California corporation
By
-----------------------------------------
James D. McBride,
Executive Vice President
ATTEST:
- -------------------------------------------
Lynn Mailliard, Secretary
A-5
APPENDIX B
CERTIFICATE OF INCORPORATION
OF
WILLIS LEASE FINANCE CORPORATION
ARTICLE I
NAME OF CORPORATION
The name of this corporation is WILLIS LEASE FINANCE CORPORATION.
ARTICLE II
REGISTERED OFFICE
The address of the registered office of the corporationamended in the State of
Delaware is 9 East Loockerman Street, City of Dover, County of Kent, and the
name of its registered agent at that address is National Registered Agents, Inc.
ARTICLE III
PURPOSE
The purpose of the corporation isentirety to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
AUTHORIZED CAPITAL STOCK
(a) The corporation shall be authorized to issue two classes of shares of
stock to be designated, respectively, "Preferred Stock" and "Common Stock"; the
total number of shares which the corporation shall have authority to issue is
Twenty-Five Million (25,000,000); the total number of shares of Preferred Stock
shall be Five Million (5,000,000) and each such share shall have a par value of
one cent ($0.01); and the total number of shares of Common Stock shall be Twenty
Million (20,000,000) and each such share shall have a par value of one cent
($0.01).
(b) The shares of Preferred Stock may be issued from time to time in one or
more series. The board of directors is hereby vested with authority to fix by
resolution or resolutions the designations and the powers, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, including without limitation the dividend
rate, conversion or exchange rights, redemption price and liquidation
preference, of any series of shares of Preferred Stock, and to fix the number of
shares constituting any such series, and to increase or decrease the number of
shares of any such series (but not below the number of shares thereof then
outstanding). In case the number of shares of any such series shall be so
decreased, the shares constituting such decrease shall resume the status which
they had prior to the adoption of the resolution or resolutions originally
fixing the number of shares of such series.
ARTICLE V
INCORPORATOR
The name and mailing address of the incorporator of the corporation is:
Jeanne Carnahan, c/o National Corporate Research, LTD, 9 East Loockerman Street,
Dover, Delaware 19901.
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ARTICLE VI
ELECTION OF DIRECTORS
Elections of directors need not be by written ballot unless the bylaws of
the corporation shall so provide.
ARTICLE VII
STAGGERED BOARD
(a) The number of directors which shall constitute the whole board of
directors of the corporation shall be specified in the bylaws of the
corporation.
(b) Effective on the filing of the Certificate of Incorporation of the
corporation ("Incorporation Date"), the board shall be divided into three
classes: Class I, Class II and Class III. Such classes shall beread as nearly equal
in number of directors as possible. Directors in Class I shall serve for a term
ending at the first annual meeting held after the Incorporation Date, directors
in Class II shall serve for a term ending at the second annual meeting held
after the Incorporation Date, and directors in Class III shall serve for a term
ending at the third annual meeting held after the Incorporation Date.
Thereafter, each director shall serve for a term ending at the third annual
stockholders meeting following the annual meeting at which such director was
elected. The foregoing notwithstanding, each director shall serve until his
successor shall have been duly elected and qualified, unless he shall resign,
die, become disqualified or disabled, or shall otherwise be removed.
(c) At each annual election held after the Incorporation Date, the directors
chosen to succeed those whose terms then expire shall be identified as being of
the same class as the directors they succeed, unless, by reason of any
intervening changes in the authorized number of directors, the board of
directors shall designate one or more directorships whose term then expires as
directorships of another class in order more nearly to achieve equality in the
number of directors among the classes. When the board of directors fills a
vacancy resulting from the resignation, death, disqualification or removal of a
director, the director chosen to fill that vacancy shall be of the same class as
the director he succeeds, unless, by reason of any previous changes in the
authorized number of directors, the board of directors shall designate the
vacant directorship as a directorship of another class in order more nearly to
achieve equality in the number of directors among the classes.
(d) Notwithstanding the rule that the three classes shall be as nearly equal
in number of directors as possible, in the event of any change in the authorized
number of directors each director then continuing to serve as such will
nevertheless continue as a director of the class of which he is a member, until
the expiration of his current term or his earlier resignation, death,
disqualification or removal. If any newly created directorship or vacancy on the
board of directors, consistent with the rule that the three classes shall be as
nearly equal in number of directors as possible, may be allocated to one or two
or more classes, the board of directors shall allocate it to that of the
available class whose term of office is due to expire at the earliest date
following such allocation.
(e) During any period when the holders of Preferred Stock or any one or more
series thereof, voting as a class, shall be entitled to elect a specified number
of directors by reason of dividend arrearages or other contingencies giving them
the right to do so, then and during such time as such right continues (1) the
then otherwise authorized number of directors shall be increased by such
specified number of directors, and the holders of the Preferred Stock or such
series thereof, voting as a class, shall be entitled to elect the additional
directors as provided for pursuant to the provisions of such Preferred Stock or
series; (2) each such additional director shall not be a member of Class I,
Class II or Class III, but shall serve until the next annual meeting or until
his successor shall be elected and shall qualify, or until his right to hold
such office terminates pursuant to the provisions of such Preferred Stock or
series, whichever is earlier; and (3) whenever the holders of such Preferred
Stock or series thereof are divested of such rights to elect a
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specified number of directors, voting as a class, pursuant to the provisions of
such Preferred Stock or series, the terms of office of all directors elected by
the holders of such Preferred Stock or series, voting as a class pursuant to
such provisions, or elected to fill any vacancies resulting from the
resignation, death, disqualification or removal of directors so elected by the
holders of such Preferred Stock or series, shall forthwith terminate and the
authorized number of directors shall be reduced accordingly.
(f) Subject to the rights of the holders of any series of Preferred Stock
then outstanding, any director, or the entire board of directors, may be removed
from office at any time, but only (1) for cause, and (2) by the affirmative vote
of the holders of a majority of the Voting Stock. For purposes of this
Certificate of Incorporation, "Voting Stock" means all outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of
directors of the Corporation, and each reference to a percentage or portion of
shares of Voting Stock shall refer to such percentage or portion of the votes
entitled to be cast by such shares.
follows (the “Amendment”):
ARTICLE VIII
LIMITATION OF DIRECTOR AND OFFICER LIABILITY
To the fullest extent permitted by the Delaware General Corporation Law, as
the same existsno director or may hereafter be amended, a directorofficer of the corporationCorporation shall not be liablehave personal liability to the corporationCorporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Ifdirector or officer, provided that nothing in this article shall eliminate or limit the liability of a director or officer (i) for any breach of the director’s or officer’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under § 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director or officer derived an improper personal benefit. In the event the Delaware General Corporation Law is amended after the date of the filing of this Certificate of Incorporationhereof so as to authorize corporate action further eliminating or limiting the personal
liability of directors thenor officers of the Corporation, the liability of a director of the corporationdirectors or officers shall thereupon be eliminated or limited to the fullestmaximum extent permitted by the Delaware General Corporation Law, as so amended from time to time. No repeal or
modification of this Article VIII by
SECOND: That the stockholders shall adversely affect any
right or protection of a director of the corporation existing by virtue of this
Article VIII at the time of such repeal or modification.
ARTICLE IX
BYLAWS
In furtherance and not in limitation of the powers conferred by statute, the
board of directors is expressly authorized to make, repeal, alter, amend and
rescind any or all of the bylaws of the corporation.
Bylaws may not be made, repealed, altered, amended or rescinded by the
stockholders of the corporation except by the vote of the holders of not less
than eighty percent (80%) of the outstanding Voting Stock of the corporation,
considered for purposes of this Article IX as one class.
ARTICLE X
RESTRICTIONS ON CERTAIN AMENDMENTS TO CERTIFICATE OF INCORPORATION
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred on stockholders herein
are granted subject to this reservation. Notwithstanding the foregoing, the
provisions set forth in this Article X and in Articles IV, VII, IX, XI, XII and
XIII may not be repealed, amended or otherwise modified, directly or indirectly,
in any respect; provided, however, that any of the foregoing Articles may be
repealed or amended in any respect if such repeal or amendment is approved by
such vote as may be required under applicable law and in addition thereto by the
affirmative vote of the holders, voting together as a single class, of not less
than eighty percent (80%) of the outstanding Voting Stock of the corporation.
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ARTICLE XI
CALL OF SPECIAL MEETING OF STOCKHOLDERS
Special meetings of the stockholders of the corporation for any purpose or
purposes may be called at any time by the board of directors or by the Chairman
of the Board or by the President of the corporation, but such special meetings
may not be called by any other person or persons; provided, however, that if and
to the extent that any special meeting of the stockholders may be called by any
other person or persons specified in any provisions of any certificate filed
under Section 151(g) of the Delaware General Corporation Law (or its successor
statute as in effect from time to time hereunder), then such special meeting may
also be called by the person or persons, in the manner, at the times and for the
purposes so specified.
ARTICLE XII
NO ACTION BY WRITTEN CONSENT
Subject to the rights of holders of any series of Preferred Stock relating
to the ability of such holders of such Preferred Stock to take action by a
consent or consents in writing, no action shall be taken by the stockholders
except at an annual or special meeting of stockholders. No action shall be taken
by stockholders by written consent.
ARTICLE XIII
BUSINESS COMBINATIONS
(a) VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS. In addition to any
affirmative vote required by law or by any other provision of this Certificate
of Incorporation, and in addition to any voting rights granted or to be held by
holders of Preferred Stock, the affirmative vote of the holders of not less than
eighty percent (80%) of the outstanding Voting Stock of the Corporation,
considered for purposes of this Article XIII as one class, shall be required for
the approval or authorization of any "business combination" (as hereinafter
defined) with any "other entity" (as hereinafter defined) if, as of the record
date for the determination of stockholders entitled to notice thereof and to
vote thereon, such other entity is, directly or indirectly, the "beneficial
owner" of more than 5% of the outstanding shares of the Common Stock of the
Corporation.
(b) EXCEPTIONS.
(i) Section (a) of this Article XIII shall not be applicable to any
particular business combination, and such business combination shall require
only such affirmative vote as may be required by law, by any voting rights
granted to or held by holders of Preferred Stock and by any other provision
of this Certificate of Incorporation, if the proposed business combination
shall have been approved by a majority of the "continuing directors" (as
hereinafter defined).
(ii) Section (a) of this Article XIII shall not be applicable to any
particular business combination in which shareholders of the Corporation, in
one or more transactions, are to receive cash, property, securities or other
consideration in exchange for their shares of capital stock of the
Corporation, and such business combination shall require only such
affirmative vote as may be required by law, by any voting rights granted to
or held by holders of Preferred Stock and by any other provision of this
Certificate of Incorporation, if the following condition is met: the cash
plus the fair market value of the property, securities or other
consideration to be received per share by holders of the Common Stock of the
Corporation in the business combination is not less than the highest per
share price (including (i) brokerage commissions, (ii) soliciting dealers'
fees, (iii) dealer-manager compensation, and (iv) other expenses, including,
but not limited to, costs of newspaper advertisements, printing expenses and
attorneys' fees) paid by such other entity in acquiring any of its holdings
of the
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Corporation's Common Stock (1) within the period of eighteen (18) months
immediately prior to and including the date of the most recent public
announcement of the proposal of the business combination or (2) in the
transaction or series of transactions in which it acquired more than 5% of
the outstanding shares of the Common Stock of the Corporation.
(iii) Section (a) of this Article XIII shall not be applicable to any
particular business combination, and such business combination shall require
only such affirmative vote as may be required by law, by any voting rights
granted to or held by holders of Preferred Stock and by any other provision
of this Certificate of Incorporation, if the proposed business combination
is solely between the Corporation and another corporation, 30% or more of
the voting stock of which is owned by the Corporation.
(c) DEFINITIONS. For purposes of this Article XIII:
(1) The term "business combination" shall mean: (i) any merger or
consolidation of the Corporation or of any subsidiary of the Corporation
with or into any other entity; (ii) the sale, exchange or lease of all or
any substantial part of the assets of the Corporation to any other entity;
or (iii) any sale or lease to the Corporation or any subsidiary thereof in
exchange for securities of the Corporation of any assets of any other entity
or securities issued by such other entity, for which the approval of
stockholders of the Corporation is required by law or by any agreement
between the Corporation and any national securities exchange.
(2) The term "other entity" shall mean and include (i) any individual,
corporation, partnership or other person; (ii) any other party which is an
"affiliate" or "associate" (as those terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934) of
any entity described in clause (i); (iii) any other party with which any
entity described in clause (i) or any of its affiliates or associates have
any agreement, arrangement or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting or disposing of shares of the
Corporation; and (iv) the predecessors, successors or assigns of any
entities described in clauses (i), (ii) or (iii) in any transaction or
series of transactions not involving a public offering of the shares of the
Corporation within the meaning of the Securities Act of 1933; provided,
however, that the term "other entity" shall not include any individual,
corporation, partnership or other person, entity or group which
"beneficially owned" on March 1, 1998, five percent (5%) or more of the
outstanding common stock of Willis Lease Finance Corporation, a California
corporation.
(3) The term "continuing director" shall mean a director who (i) is
unaffiliated with and is not the other entity and (ii)Amendment was a member of the
Board of Directors prior to the time that the other entity involved in the
proposed business combination acquired in excess of 5% of the outstanding
shares of Common Stock of the Corporation.
(4) The term "beneficial ownership" shall include, without limitation,
any shares of stock of the Corporation which any other entity has the right
to acquire pursuant to any agreement, or upon exercise of conversion rights,
warrants or options, or otherwise.
(5) For the purposes of subparagraph (b)(ii) of this Article XIII, the
term "other consideration" shall include Common Stock of the Corporation
retained by its existing public stockholders in the event of a business
combination with such other entity in which the Corporation is the surviving
corporation.
(d) DETERMINATION OF COMPLIANCE. A majority of the continuing directors
shall have the power and duty to determine, for purposes of this Article XIII
and on the basis of information known to them:
(1) Whether the proposal business combination is within the scope of
this Article XIII;
(2) Whether the other entity owns beneficially more than 5% of the
outstanding shares of Common Stock of the Corporation;
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(3) The per share value proposed to be paid to the holders of Common
Stock of the Corporation in the business combination, within the meaning of
paragraph (b)(ii) of this Article XIII; and
(4) The highest price per share paid by the other entity, within the
meaning of subparagraph (b)(ii) of this Article XIII.
Such determination(s), if made in good faith, shall be binding upon all
parties.
(e) FIDUCIARY DUTY. Nothing contained in this Article XIII shall be
construed to relieve the other entity from any fiduciary obligation imposed by
statute or case law.
ARTICLE XIV
CREDITOR COMPROMISE OR ARRANGEMENT
Whenever a compromise or arrangement is proposed between this corporation
and its creditors or any class of them and/or between this corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three-
fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose
of forming a corporation to do business both within and without the State of
Delaware, andduly adopted in accordance with the General Corporation Lawapplicable provisions of Section 242 of the DGCL.
THIRD: That the Amendment shall become effective upon filing with the State of Delaware, has executed this Certificate as of March Delaware.
IN WITNESS WHEREOF, 1998.
--------------------------------------
Jeanne Carnahan, Incorporator
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APPENDIX C
BYLAWS
OF
WILLIS LEASE FINANCE CORPORATION
(A DELAWARE CORPORATION)
ARTICLE I.
OFFICES
SECTION 1.01 REGISTERED OFFICE. The registered office of Willis Lease
Finance Corporation (hereinafter called the Corporation) in the State of
Delaware shall be at 9 East Loockerman Street, City of Dover, County of Kent,
and the name of the registered agent in charge thereof shall be National
Registered Agents, Inc.
SECTION 1.02 OTHER OFFICES. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board of Directors (hereinafter called the Board) may from time
to time determine or as the business of the Corporation may require.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
SECTION 2.01 ANNUAL MEETINGS. Annual meetings of the stockholders of the
Corporation for the purpose of electing directors to succeed those whose terms
expire and for the transaction of such other proper business as may properly
come before such meetings may be held at such time, date and place as the Board
shall determine by resolution.
SECTION 2.02 SPECIAL MEETINGS. Special meetings of the stockholders for
the transaction of any proper business, unless otherwise prescribed by statute,
may be called only in accordance with Article XI of the Corporation's
Certificate of Incorporation as it may be amended from time to time (the
"Certificate of Incorporation").
SECTION 2.03 PLACE OF MEETINGS. All meetings of the stockholders shall be
held at such places, within or without the State of Delaware, as may from time
to time be designated by the person or persons calling the respective meeting
and specified in the respective notices or waivers of notice thereof. In the
absence of any such designation, stockholders' meetings shall be held at the
principal executive office of the Corporation.
SECTION 2.04 NOTICE OF MEETINGS. Except as otherwise required by law,
notice of each meeting of the stockholders, whether annual or special, shall be
given not less than ten (10) nor more than sixty (60) days before the date of
the meeting to each stockholder of record entitled to vote at such meeting by
delivering a typewritten or printed notice thereof to him personally, or by
depositing such notice in the United States mail, in a postage prepaid envelope,
directed to him at his post office address furnished by him to the Corporate
Secretary of the Corporation for such purpose or, if he shall not have furnished
to the Corporate Secretary his address for such purpose, then at his post office
address last known to the Corporate Secretary, or by transmitting a notice
thereof to him at such address by telegraph, cable, or wireless. Except as
otherwise expressly required by law, no publication of any notice of a meeting
of the stockholders shall be required. Every notice of a meeting of the
stockholders shall state the place, date and hour of the meeting, and, in the
case of a special meeting, shall also state the purpose or purposes for which
the meeting is called. Notice of any meeting of stockholders shall not be
required to be given to any
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stockholder who shall have waived such notice and such notice shall be deemed
waived by any stockholder who shall attend such meeting in person or by proxy,
except a stockholder who shall attend such meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Except as otherwise
expressly required by law, notice of any adjourned meeting of the stockholders
need not be given if the time and place thereof are announced at the meeting at
which the adjournment is taken.
SECTION 2.05 QUORUM. Except where otherwise provided by law, the holders
of record of a majority of the shares of stock of the Corporation entitled to be
voted thereat, present in person or by proxy, shall constitute a quorum for the
transaction of business at any meeting of the stockholders of the Corporation or
any adjournment thereof. For purposes of the foregoing, two or more classes or
series of stock shall be considered a single class if the holders thereof are
entitled to vote together as a single class at the meeting. In the absence of a
quorum at any meeting or any adjournment thereof, a majority of the shares of
stock of the Corporation present in person or by proxy and entitled to vote
thereat or, in the absence therefrom of all the stockholders, any officer
entitled to preside at, or to act as secretary of, such meeting may adjourn such
meeting from time to time. At any such adjourned meeting at which a quorum is
present any business may be transacted which might have been transacted at the
meeting as originally called.
SECTION 2.06 VOTING.
(a) Each stockholder shall, at each meeting of the stockholders, be
entitled to vote in person or by proxy for each share or fractional share of
the stock of the Corporation held by him which has voting power upon the
matter in question.
(b) Any such voting rights may be exercised by the stockholder entitled
thereto in person or by his proxy appointed by an instrument in writing,
subscribed by such stockholder or by his attorney thereunto authorized and
delivered to the secretary of the meeting; provided, however, that no proxy
shall be voted or acted upon after eleven months from its date unless said
proxy shall provide for a longer period. The attendance at any meeting of a
stockholder who may theretofore have given a proxy shall not have the effect
of revoking the same unless he shall in writing so notify the secretary of
the meeting prior to the voting of the proxy. At any meeting of the
stockholders, all matters, except as otherwise provided in the Certificate
of Incorporation or in these Bylaws, shall be decided by the vote of a
majority in voting interest of the stockholders present in person or by
proxy and entitled to vote thereat and thereon, a quorum being present. The
vote at any meeting of the stockholders on any question need not be by
ballot, unless the holders of a majority of the outstanding shares of all
classes of stock entitled to vote thereon present in person or by proxy
shall so determine. On a vote by ballot, each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy, and it shall
state the number of shares voted.
(c) Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors in such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity
shall be entitled to vote such stock. Persons whose stock is pledged shall
be entitled to vote, unless in the transfer by the pledgor on the books of
the Corporation he shall have expressly empowered the pledgee to vote
thereon, in which case only the pledgee, or his proxy, may represent such
stock and vote thereon. Stock having voting power standing of record in the
names of two or more persons, whether fiduciaries, members of a partnership,
joint tenants in common, tenants by entirety or otherwise, or with respect
to which two or more persons have the same fiduciary relationship, shall be
voted in accordance with the provisions of the General Corporation Law of
the State of Delaware.
SECTION 2.07 FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any
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adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any other change, conversion or exchange of stock or for the purpose
of any other lawful action, the Board may fix, in advance, a record date, which
shall not be more than 60 nor less than 10 days before the date of such meeting,
nor more than 60 days prior to any other action. If no record date is fixed: (1)
the record date for determining stockholders entitled to notice of or to vote at
a meeting of stockholders shall be at the close of business on the day before
the day on which notice is given, or, if notice is waived, at the close of
business on the day before the day on which the meeting is held; and (2) the
record date for determining stockholders for any other purpose shall be at the
close of business on the day on which the Board adopts the resolution relating
thereto. A determination of stockholders entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of such meeting;
provided, however, that the Board may fix a new record date for the adjourned
meeting. When a record date is so fixed, only shareholders of record at the
close of business on that date are entitled to notice of and to vote at the
meeting or to receive the dividend, distribution, or allotment of rights, or to
exercise the rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Corporation after the record date. The Board may
close the books of the Corporation against transfers of shares during the whole
or any part of a period of not more than sixty (60) days prior to the date of a
shareholders' meeting, the date when the right to any dividend, distribution, or
allotment of rights vests, or the effective date of any change, conversion or
exchange of shares.
SECTION 2.08 LIST OF STOCKHOLDERS ENTITLED TO VOTE. The Corporate
Secretary of the Corporation shall prepare and make, or cause to be prepared and
made, at least ten (10) days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 2.09 JUDGES. If at any meeting of the stockholders a vote by
written ballot shall be taken on any question, the chairman of such meeting may
appoint a judge or judges to act with respect to such vote. Each judge so
appointed shall first subscribe an oath faithfully to execute the duties of a
judge at such meeting with strict impartiality and according to the best of his
ability. Such judges shall decide upon the qualification of the voters and shall
report the number of shares represented at the meeting and entitled to vote on
such question, shall conduct and accept the votes, and, when the voting is
completed, shall ascertain and report the number of shares voted respectively
for and against the question. Reports of judges shall be in writing and
subscribed and delivered by them to the Corporate Secretary of the Corporation.
The judges need not be stockholders of the Corporation, and any officer of the
Corporation may be a judge on any question other than a vote for or against a
proposal in which he shall have a material interest.
SECTION 2.10 NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
(A) ANNUAL MEETINGS OF STOCKHOLDERS.
(1) Nominations of persons for election to the Board and the proposal
of business to be considered by the stockholders may be made at an annual
meeting of the stockholders (a) pursuant to the Corporation's notice of
meeting, (b) by or at the direction of the Board or (c) by any
stockholder of the Corporation who was a stockholder of record at the
time of giving of notice provided for in this Bylaw, who is entitled to
vote at the meeting and who complies with the notice procedures set forth
in this Bylaw.
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(2) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (c) of paragraph
(A)(1) of this Bylaw, the stockholder must have given timely notice
thereof in writing, in conformance with the requirements of this Bylaw,
to the Corporate Secretary of the Corporation and such other business
must otherwise be a proper matter for stockholder action. To be timely, a
stockholder's notice shall be delivered to the Corporate Secretary at the
principal executive offices of the Corporation not later than the close
of business on the 90th day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event
that the date of the annual meeting is more than 30 days before or more
than 60 days after such anniversary date, notice by the stockholder to be
timely must be so delivered not later than the close of business on the
90th day prior to such annual meeting or the 10th day following the day
on which public announcement of the date of such meeting is first made by
the Corporation. In no event shall the public announcement of an
adjournment of an annual meeting commence a new time period for the
giving of a stockholder's notice as described above. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or re-election as a director (i) the
name, age, business address and residence address of such person, (ii)
the principal occupation or employment of such person, (iii) the class
and number of shares of the Corporation which are beneficially owned by
such person, (iv) a description of all arrangements or understandings
between the stockholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the nominations are to
be made by the stockholder, and (v) any other information relating to
such person that is required to be disclosed in solicitations of proxies
for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934 (the
"1934 Act") (including without limitation such person's written consent
to being named in the proxy statement, if any, as a nominee and to
serving as a director if elected); and (b) as to any other business that
the stockholder proposes to bring before the meeting (i) a brief
description of the business desired to be brought before the meeting,
(ii) the reasons for conducting such business at the meeting, (iii) any
material interest in such business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made and (iv) any other
information which is required to be disclosed in solicitations of proxies
on behalf of any such business, and specifically, any such information
called for by Items 4 and 5 of Regulation 14A under the 1934 Act
regarding such other business, the proponent of such other business and
any associates or persons who would be deemed "participants" under
Regulation 14A were the proponent soliciting proxies on behalf of such
other business. All such notices shall include (i) a representation that
the person sending the notice is a shareholder of record and will remain
such through the record date for the meeting, (ii) the name and address,
as they appear on the Corporation's books, of such shareholder, (iii) the
class and number of the Corporation's shares which are owned beneficially
and of record by such shareholder, and (iv) a representation that such
shareholder intends to appear in person or by proxy at such meeting to
make the nomination or move the consideration of other business set forth
in the notice.
(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this Bylaw to the contrary, in the event that the number of
directors to the Board is increased and there is no public announcement
by the Corporation naming all of the nominees for director or specifying
the size of the increased Board at least 70 days prior to the first
anniversary of the preceding year's annual meeting, a stockholder's
notice required by this Bylaw shall also be considered timely, but only
with respect to nominees for any new positions created by such increase,
if it shall be delivered to the Corporate Secretary at the principal
executive offices of the Corporation not later than the close of business
on the 10th day following the day on which such public announcement is
first made by the Corporation.
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(B) SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting.
Nominations of persons for election to the Board may be made at a special
meeting of stockholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (a) by or at the direction of the Board or
(b) provided that the Board has determined that directors shall be elected
at such meeting, by any stockholder of the Corporation who is a stockholder
of record at the time of giving of notice provided for in this Bylaw, who
shall be entitled to vote at the meeting and who complies with the notice
procedures set forth in this Bylaw. In the event the Corporation calls a
special meeting of stockholders for the purpose of electing one or more
directors to the Board, any such stockholder may nominate a person or
persons (as the case may be), for election to such position(s) as specified
in the Corporation's notice of meeting, if the stockholder's notice required
by paragraph (A)(2) of this Bylaw shall be delivered to the Corporate
Secretary at the principal executive offices of the Corporation not later
than the close of business on the 90th day prior to such special meeting or
the 10th day following the day on which public announcement is first made of
the date of the special meeting and of the nominees proposed by the Board to
be elected at such meeting. In no event shall the public announcement of an
adjournment of a special meeting commence a new time period for the giving
of a stockholder's notice as described above.
(C) GENERAL.
(1) Only such persons who are nominated in accordance with the
procedures set forth in this Bylaw shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in accordance
with the procedures set forth in this Bylaw. Except as otherwise provided
by law, the Certificate of Incorporation or these Bylaws, the chairman of
the meeting shall, if the facts warrant, determine and declare at the
meeting that business or a nomination is not properly before the meeting
and, if he should so determine, the defective business shall not be
transacted and the defective nomination shall be disregarded.
(2) For purposes of this Bylaw, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Bylaw, a
stockholder shall also comply with all the applicable requirements of the
1934 Act and the rules and regulations thereunder with respect to the
matters set forth in this Bylaw. Nothing in this Bylaw shall be deemed to
affect any rights (i) of stockholders to request inclusion of proposals
in the Corporation's proxy statement pursuant to Rule 14a-8 under the
1934 Act of (ii) of the holders of any series of Preferred Stock to elect
directors under specified circumstances.
ARTICLE III.
BOARD OF DIRECTORS
SECTION 3.01 GENERAL POWERS. The property, business and affairs of the
Corporation shall be managed by the Board.
SECTION 3.02 NUMBER AND TERM OF OFFICE. The authorized number of directors
shall be five (5), and such number shall not be changed except by a Bylaw
amending this section duly adopted by the Board or duly adopted by the
stockholders pursuant to the terms of Article IX of the Certificate of
Incorporation. Directors need not be stockholders. Each of the directors of the
Corporation shall hold office until his successor shall have been duly elected
and shall qualify or until he shall resign, die, become disqualified or disabled
or shall otherwise be removed in the manner hereinafter provided.
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SECTION 3.03 ELECTION OF DIRECTORS. The directors shall be elected
annually by the stockholders of the Corporation and the persons receiving the
greatest number of votes, up to the number of directors to be elected, shall be
the directors. The election of directors is subject to any provisions contained
in the Certificate of Incorporation relating thereto, including any provisions
for a classified Board.
SECTION 3.04 RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice to the Board, the Chairman of the Board, the
President or the Corporate Secretary of the Corporation. Any such resignation
shall take effect at the time specified therein, or, if the time is not
specified, it shall take effect immediately upon its receipt; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 3.05 REMOVAL. Any director or the entire Board may be removed,
with cause, by the holders of a majority of the shares then entitled to vote at
an election of directors.
SECTION 3.06 VACANCIES. Except as otherwise provided in the Certificate of
Incorporation and except for a vacancy created by the removal of a director, any
vacancy in the Board, whether because of death, resignation, disqualification,
an increase in the number of directors, or otherwise, may be filled by vote of
the majority of the remaining directors, although less than a quorum. Vacancies
created by the removal of a director may be filled only by the affirmative vote
of the holders of a majority of the outstanding stock then entitled to vote at
an election of directors. Each director so chosen to fill a vacancy shall hold
office until his successor shall have been elected and shall qualify or until he
shall resign, die, become disqualified or disabled or shall otherwise be removed
in the manner herein provided.
SECTION 3.07 PLACE OF MEETING, ETC. The Board may hold any of its meetings
at such place or places within or without the State of Delaware as the Board may
from time to time by resolution designate or as shall be designated by the
person or persons calling the meeting or in the notice or a waiver of notice of
any such meeting. Directors may participate in any regular or special meeting of
the Board by means of conference telephone or similar communications equipment
pursuant to which all persons participating in the meeting of the Board can hear
each other, and such participation shall constitute presence in person at such
meeting.
SECTION 3.08 REGULAR MEETINGS. A regular annual meeting of the Board shall
be held without any further notice immediately after, and at the same place as,
the annual meeting of shareholders. The Board may provide for other regular
meetings from time to time by resolution. If any day fixed for a regular meeting
shall be a legal holiday at the place where the meeting is to be held, then the
meeting shall be held at the same hour and place on the next succeeding business
day that is not a legal holiday. Except as provided by law, notice of regular
meetings need not be given.
SECTION 3.09 SPECIAL MEETINGS. Special meetings of the Board shall be held
whenever called by the Chairman of the Board, the President, any Vice President,
the Corporate Secretary or any two (2) directors. Except as otherwise provided
by law or by these Bylaws, notice of the time and place of each such special
meeting shall be mailed to each director, addressed to him at his residence or
usual place of business, at least five (5) days before the day on which the
meeting is to be held, or shall be sent to him at such place by telegraph or
cable or be delivered personally not less than forty-eight (48) hours before the
time at which the meeting is to be held. Except where otherwise required by law
or by these Bylaws, notice of the purpose of a special meeting need not be
given. Notice of any meeting of the Board shall not be required to be given to
any director who signs a waiver of notice, whether before or after the meeting,
or who attends the meeting, without protesting prior thereto or at its
commencement, the lack of notice to such director.
SECTION 3.10 QUORUM AND MANNER OF ACTING. Except as otherwise provided in
these Bylaws, the presence of a majority of the authorized number of directors
shall be required to constitute a quorum for the transaction of business at any
meeting of the Board, and all matters shall be decided at any such meeting, a
quorum being present, by the affirmative votes of a majority of the directors
present. In the
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absence of a quorum, a majority of directors present at any meeting may adjourn
the same from time to time until a quorum shall be present. If a meeting is
adjourned for more than twenty-four (24) hours, notice of any adjournment to
another time or place shall be given prior to the time of the reconvened meeting
to the directors who were not present at the time of adjournment. The directors
shall act only as a Board, and the individual directors shall have no power as
such. A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for such meeting.
SECTION 3.11 ORGANIZATION. Meetings of the Board shall be presided over by
the Chairman of the Board, or in his absence by the President, or in his absence
by the Chief Administrative Officer, or in his absence by the Chief Financial
Officer, or in his absence by a Vice President, or in their absence by a
chairman chosen at the meeting. The Corporate Secretary shall act as secretary
of the meeting, but in his absence the chairman of the meeting may appoint any
person to act as secretary of the meeting.
SECTION 3.12 ACTION BY CONSENT. Any action required or permitted to be
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee. Such action by
written consent shall have the same force and effect as a unanimous vote of such
directors.
SECTION 3.13 COMPENSATION. The directors shall receive only such
compensation for their services as directors as may be allowed by resolution of
the Board. The Board may also provide that the Corporation shall reimburse each
such director for any expense incurred by him on account of his attendance at
any meetings of the Board or Committees of the Board. Neither the payment of
such compensation nor the reimbursement of such expenses shall be construed to
preclude any director from serving the Corporation or its subsidiaries in any
other capacity and receiving compensation therefor.
SECTION 3.14 COMMITTEES. The Board may, by resolution passed by a majority
of the whole Board, designate one or more committees, each committee to consist
of one (1) or more of the directors of the Corporation and to serve at the
pleasure of the Board. Any such committee, to the extent provided in the
resolution of the Board and except as otherwise limited by law, shall have and
may exercise all the powers and authority of the Board in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have power or authority in reference to amending the Certificate
of Incorporation, adopting an agreement of merger or consolidation, recommending
to the stockholders the sale, lease or exchange of all or substantially all of
the Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of dissolution, removing or
indemnifying directors or amending these Bylaws; and, unless the resolution
expressly so provides, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of the stock. Any such committee
shall keep written minutes of its meetings and report the same to the Board at
the next regular meeting of the Board. In the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in the
place of any such absent or disqualified member.
ARTICLE IV.
OFFICERS
SECTION 4.01 NUMBER. The officers of the Corporation shall be a Chairman
of the Board, a President, a Chief Financial Officer, one or more Vice
Presidents (the number thereof and their respective titles to be determined by
the Board), and a Corporate Secretary. In addition, the Board may appoint such
other officers as may be deemed expedient for the proper conduct of the business
of the Corporation, each of whom shall have such authority and perform such
duties as the Board may from time to time determine.
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SECTION 4.02 ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The officers of
the Corporation, except such officers as may be appointed in accordance with
Section 4.03, shall be chosen annually at the regular meeting of the Board held
after the annual meeting of shareholders and shall serve at the pleasure of the
Board. If officers are not chosen at such meeting of the Board, they shall be
chosen as soon thereafter as shall be convenient. Each officer shall hold office
until his successor shall have been duly chosen and shall qualify or until his
resignation, death, disqualification or removal in the manner hereinafter
provided.
SECTION 4.03 ASSISTANTS, AGENTS AND EMPLOYEES, ETC. In addition to the
officers specified in Section 4.01, the Board may appoint other assistants,
agents and employees as it may deem necessary or advisable, including one or
more Assistant Secretaries, and one or more Assistant Financial Officers, each
of whom shall hold office for such period, have such authority, and perform such
duties as the Board may from time to time determine. The Board may delegate to
any officer of the Corporation or any committee of the Board the power to
appoint, remove and prescribe the duties of any such assistants, agents or
employees.
SECTION 4.04 REMOVAL. Any officer, assistant, agent or employee of the
Corporation may be removed, with or without cause, at any time: (i) in the case
of an officer, assistant, agent or employee appointed by the Board, only by
resolution of the Board; and (ii) in the case of an officer, assistant, agent or
employee, by any officer of the Corporation or committee of the Board upon whom
or which such power of removal may be conferred by the Board.
SECTION 4.05 RESIGNATIONS. Any officer or assistant may resign at any time
by giving written notice of his resignation to the Board, the Chairman of the
Board, the President or the Corporate Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein, or, if the time be
not specified, upon receipt thereof by the Board, the Chairman of the Board, the
President or the Corporate Secretary, as the case may be; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 4.06 VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or other cause, may be filled by the
Board for the unexpired portion of the term thereof.
SECTION 4.07 INABILITY TO ACT. In the case of absence or inability to act
of any officer of the Corporation, the Board may from time to time delegate the
powers or duties of such officer to any other officer, or any director or other
person whom it may select.
SECTION 4.08 THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the Board.
SECTION 4.09 THE PRESIDENT. The President of the Corporation shall be the
chief executive officer of the Corporation and, subject to the control of the
Board, shall preside at all meetings of shareholders, shall have general and
active supervision and management over the business of the Corporation and over
its several officers, assistants, agents and employees, shall make reports to
the Board and shareholders, and shall perform all such other duties as are
incident to such office or are properly required by the Board.
SECTION 4.10 THE CHIEF FINANCIAL OFFICER. The Chief Financial Officer
shall have the general care and custody of the funds and securities of the
Corporation, and shall deposit all such funds in the name of the Corporation in
such banks, trust companies or other depositories as shall be selected by the
Board, and shall keep regular books of account. He shall receive, and give
receipts for, moneys due and payable to the Corporation from any source
whatsoever. He shall exercise general supervision over expenditures and
disbursements made by officers, agents and employees of the Corporation and the
preparation of such records and reports in connection therewith as may be
necessary or desirable. He shall, in general, perform all other duties incident
to the office of Chief Financial Officer and such other duties as from time to
time may be properly assigned to him by the Board or the President.
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SECTION 4.11 THE VICE PRESIDENTS. Each Vice President shall have such
powers and perform such duties as the Board or the President may from time to
time properly prescribe. At the request of the President, or in case of the
President's absence or inability to act upon the request of the Board, a Vice
President shall perform the duties of the President and when so acting, shall
have all the powers of, and be subject to all the restrictions upon, the
President.
SECTION 4.12 THE CORPORATE SECRETARY. The Corporate Secretary shall, if
present, record the proceedings of all meetings of the Board, of the
stockholders, and of all committees of which a secretary shall not have been
appointed, in one or more books provided for that purpose; he shall see that all
notices are duly given in accordance with these Bylaws and as required by law;
and, in general, he shall perform all the duties incident to the office of
Corporate Secretary and such other duties as may from time to time be properly
assigned to him by the Board or the President.
SECTION 4.13 COMPENSATION. The compensation of the officers of the
Corporation shall be fixed from time to time by the Board. None of such officers
shall be prevented from receiving such compensation by reason of the fact that
he is also a director of the Corporation. Nothing contained herein shall
preclude any officer from serving the Corporation, or any subsidiary
corporation, in any other capacity and receiving proper compensation therefor.
ARTICLE V.
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 5.01 EXECUTION OF CONTRACTS. The Board, except as in these Bylaws
otherwise provided, may authorize any officer or officers, agent or agents, to
enter into any contract or execute any instrument in the name of and on behalf
of the Corporation, and such authority may be general or confined to specific
instances; and unless so authorized by the Board or by these Bylaws, no officer,
agent or employee shall have any power or authority to bind the Corporation by
any contract or engagement or to pledge its credit or to render it liable for
any purpose or in any amount.
SECTION 5.02 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
payment of money, notes or other evidence of indebtedness, issued in the name of
or payable to the Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board.
SECTION 5.03 DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board may select, or as may
be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the purpose
of collection for the account of the Corporation, the Chairman of the Board, the
President, the Chief Financial Officer or any Vice President (or any other
officer or officers, assistant or assistants, agent or agents, or attorney or
attorneys of the Corporation who shall from time to time be determined by the
Board) may endorse, assign and deliver checks, drafts and other orders for the
payment of money which are payable to the order of the Corporation.
SECTION 5.04 GENERAL AND SPECIAL BANK ACCOUNTS. The Board may from time to
time authorize the opening and keeping of general and special bank accounts with
such banks, trust companies or other depositories as the Board may select or as
may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.
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ARTICLE VI.
SHARES AND THEIR TRANSFER
SECTION 6.01 CERTIFICATES FOR STOCK. Every owner of stock of the
Corporation shall be entitled to have a certificate or certificates, to be in
such form as the Board shall prescribe, certifying the number and class of
shares of the stock of the Corporation owned by him. The certificates
representing shares of such stock shall be numbered in the order in which they
shall be issued and shall be signed in the name of the Corporation by the
Chairman of the Board or the President or a Vice President, and by the Chief
Financial Officer or the Corporate Secretary or an Assistant Secretary. Any of
or all of the signatures on the certificates may be a facsimile. In case any
officer, transfer agent or registrar who has signed, or whose facsimile
signature has been placed upon, any such certificate, shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued,
such certificate may nevertheless be issued by the Corporation with the same
effect as though the person who signed such certificate, or whose facsimile
signature shall have been placed thereupon, were such officer, transfer agent or
registrar at the date of issue. A record shall be kept of the respective names
of the persons, firms or corporations owning the stock represented by such
certificates, the number and class of shares represented by such certificates,
respectively, and the respective dates thereof, and in case of cancellation, the
respective dates of cancellation. Every certificate surrendered to the
Corporation for exchange or transfer shall be canceled, and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so canceled, except in cases provided
for in Section 6.04.
SECTION 6.02 TRANSFERS OF STOCK. Transfers of shares of stock of the
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Corporate Secretary, or with a transfer clerk
or a transfer agent appointed as provided in Section 6.03, and upon surrender of
the certificate or certificates for such shares properly endorsed and the
payment of all taxes thereon. The person in whose name shares of stock stand on
the books of the Corporation shall be deemed the owner thereof for all purposes
as regards the Corporation. Whenever any transfer of shares shall be made for
collateral security, and not absolutely, such fact shall be so expressed in the
entry of transfer if, when the certificate or certificates shall be presented to
the Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
SECTION 6.03 REGULATIONS. The Board may make such rules and regulations as
it may deem expedient, not inconsistent with these Bylaws, concerning the issue,
transfer and registration of certificates for shares of the stock of the
Corporation. It may appoint, or authorize any officer or officers to appoint,
one or more transfer clerks or one or more transfer agents and one or more
registrars, and may require all certificates for stock to bear the signature or
signatures of any of them.
SECTION 6.04 LOST, STOLEN, DESTROYED, AND MUTILATED CERTIFICATES. In any
case of loss, theft, destruction, or mutilation of any certificate of stock,
another may be issued in its place upon proof of such loss, theft, destruction,
or mutilation and upon the giving of a bond of indemnity to the Corporation in
such form and in such sum as the Board may direct; provided, however, that a new
certificate may be issued without requiring any bond when, in the judgment of
the Board, it is proper so to do.
ARTICLE VII.
INDEMNIFICATION
SECTION 7.01 INDEMNIFICATION. Subject to any limitation which may be
contained in the Certificate of Incorporation, the Corporation shall to the full
extent permitted by law, including, without limitation, Delaware General
Corporation Law Section 145, as such Section now exists or shall hereafter be
amended, indemnify any person who was, is or is threatened to be made a party, a
named defendant or respondent to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal,
C-10
arbitral, administrative, or investigative, any appeal in such action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding, because such person 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, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, against judgments, penalties (including excise and similar taxes),
fines, settlements, and reasonable expenses (including attorneys' fees) actually
incurred by such person in connection with such action, suit, or proceeding. The
termination of any action, suit or proceeding by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that an individual 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, or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 7.02 EXPENSES. Subject to any limitation which may be contained in
the Certificate of Incorporation, the Corporation shall, to the full extent
permitted by law, including, without limitation, Section 145 of the Delaware
General Corporation Law, as such Section now exists or shall hereafter be
amended, pay or reimburse on a current basis the expenses incurred by any person
described in Section 7.01 in connection with any such action, suit, or
proceeding in advance of the final disposition thereof, if the Corporation has received (i) a written affirmation by the recipient of his good faith belief
that he has met the standard of conduct necessary for indemnification under the
Delaware General Corporation Law and (ii) a written undertaking by or on behalf
of such director or officer to repay the amount paid or reimbursed if it is
ultimately determined that he has not satisfied such standard of conduct or if
indemnification is prohibited by law.
SECTION 7.03 OTHER RIGHTS AND REMEDIES. The indemnification provided bycaused this Article shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any Bylaws, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceasedcertificate to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person. The rights provided insigned this Article VII shall be deemed to be provided by a contract between the Corporation
and the individuals who serve in the capacities described in Section 7.01 at any
time while these bylaws are in effect, and no repeal or modification of this
Article VII by the stockholders shall adversely affect any right of any person
otherwise entitled to indemnification by virtue of this Article VII at the time
of such repeal or modification.
SECTION 7.04 INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
such person and incurred by such person in any such capacity, or arising out of
such person's status as such, whether or not the Corporation would have the
power to indemnify such person against such liability under the provisions of
this Article.
SECTION 7.05 CONSTITUENT CORPORATIONS. For the purposes of this Article,
references to "the Corporation" include all constituent corporations absorbed in
a consolidation or merger as well as the resulting or surviving corporation, so
that any person who is or was a director, officer, employee or agent of such a
constituent corporation or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article with respect to the resulting or
surviving corporation as such person would if such person had served the
resulting or surviving corporation in the same capacity.
C-11
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.01 FISCAL YEAR. The fiscal year of the Corporation shall end on
the 31st[ ] day of December.
SECTION 8.02 WAIVER OF NOTICES. Whenever notice is required to be given by
these Bylaws or the Certificate of Incorporation or by law, the person entitled
to said notice may waive such notice in writing, either before or after the time
stated therein, and such waiver shall be deemed equivalent to notice.
SECTION 8.03 SEAL. The Corporation may have a corporate seal which shall
have the name of the Corporation and shall be in such form as may be approved
from time to time by the Board. The corporate seal may be used by causing it or
a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
SECTION 8.04 INTERESTED DIRECTORS; QUORUM. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have financial interest, shall be void or voidable solely for this
reason, or solely because the director or officer is present at or participates
in the meeting of the Board or committee thereof which authorizes the contract
or transaction, or solely because his or their votes are counted for such
purpose, if: (1) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the Board or the
committee, and the Board or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or (2)
the material facts as to his relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the stockholders; or (3) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or ratified, by the
Board, a committee thereof or the stockholders. Common or interested directors
may be counted in determining the presence of a quorum at a meeting of the Board
or of a committee which authorizes the contract or transaction.
SECTION 8.05 AMENDMENTS. These Bylaws may be amended only in accordance
with Article IX of the Corporation's Certificate of Incorporation.
SECTION 8.06 REPRESENTATION OF SHARES IN OTHER CORPORATIONS. Shares of
other corporations standing in the name of this Corporation may be voted or
represented and all incidents thereto may be exercised on behalf of the
Corporation by the Chairman of the Board, the President or any Vice President
and the Chief Financial Officer or the Corporate Secretary or an Assistant
Secretary.
SECTION 8.07 SEVERABILITY. Any determination that any provision of these
Bylaws is for any reason inapplicable, illegal or ineffective shall not affect
or invalidate any other provision of these Bylaws.
SECTION 8.08 PRONOUNS. All pronouns used in these Bylaws shall be deemed
to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
C-12
PROXY
WILLIS LEASE FINANCE CORPORATION
1998 Annual Meeting of Shareholders
May 12, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles F. Willis, IV, Donald A.
Nunemaker and Rae A. Capps, and each of them, as Proxies of the undersigned
with full power of substitution to act and to vote all of the shares of
Common Stock of WILLIS LEASE FINANCE CORPORATION held of record by the
undersigned on March 23, 1998 at the 1998 Annual Meeting of Shareholders of
the Company to be held on May 12, 1998, or at any adjournment thereof.
The Board of Directors recommends a vote for Proposals 1, 2, 3 and 4 on
the other side. This proxy will be voted in accordance with the choices
specified by the undersigned on the other side of this proxy. IF NO
INSTRUCTIONS TO THE CONTRARY ARE INDICATED HEREON, THIS PROXY WILL BE TREATED
AS A GRANT OF AUTHORITY TO VOTE FOR THE ELECTION OF THE NOMINEES FOR THE
BOARD OF DIRECTORS NAMED ON THE OTHER SIDE HEREOF AND AS A GRANT OF AUTHORITY
TO VOTE FOR PROPOSALS 2, 3 AND 4 STATED ON THE OTHER SIDE HEREOF AND ON ANY
OTHER MATTERS TO BE VOTED ON. PLEASE COMPLETE, SIGN AND DATE THIS PROXY AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
IMPORTANT: THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE
/X/ Please mark your votes as in this example.
1. ELECTION OF DIRECTORS
FOR all nominees listed below (except as marked to the contrary below) / /
WITHHOLD AUTHORITY to vote for all nominees listed below / /
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW)
Nominees: Charles F. Willis, IV, William L. McElfresh, Ross K. Anderson,
William M. LeRoy, Willard H. Smith, Jr.
2. To ratify the selection of KMPG Peat Marwick LLP as independent auditors
of the Company.
FOR / / AGAINST / / ABSTAIN / /
3. Proposal to change state of incorporation to Delaware and the adoption of
various other measures which will affect shareholders rights as described in
the Proxy Statement
FOR / / AGAINST / / ABSTAIN / /
4. Proposal to amend the 1996 Stock Option/ Stock Issuance Plan
FOR / / AGAINST / / ABSTAIN / /
5. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
FOR / / AGAINST / / ABSTAIN / /
PLEASE COMPLETE, SIGN AND DATE THIS PROXY AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Signature(s)__________________________________ Date:________________
Please sign exactly as your name(s) is (are) shown on the share certificate
to which the Proxy applies. When shares are held by joint tenants, both
should sign. When signing as an attorney, executor, administrator, trustee
or guardian, please give full title as such. If a corporation, please sign
in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
FOLD AND DETACH HERE