UNITED
STATE SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14F-1
Information Statement Required Pursuant to Section
14(f)
of the Securities Exchange Act of 1934
and Rule 14f-1 Thereunder
AeroCentury Corp.
(Exact
Name of Registrant as specified in its charter)
Delaware
(State
or other jurisdiction
of
incorporation)
|
001-13387
(Commission
File Number)
|
94-3263974
(IRS
Employer
Identification
No.)
|
1440 Chapin Avenue, Suite 310
Burlingame, California 94010
(Address,
including zip code, of principal executive offices)
(650)-340-1888
(Registrant’s
telephone number, including area code)
Information Statement
Pursuant to Section 14(f) of the Securities Exchange Act of
1934
and Rule 14f-1 thereunder
This
Information Statement is being furnished on or about September 17,
2021, to all of the stockholders of record at the close of business
on September 15, 2021, of the Common Stock of AeroCentury
Corp.
This
Information Statement is required by Section 14(f) of the
Securities Exchange Act of 1934, as amended, and Rule 14f-1
promulgated thereunder. You are urged to read this Information
Statement carefully.
NO VOTE
OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS
IS
REQUIRED IN CONNECTION WITH THIS INFORMATION
STATEMENT.
NO
PROXIES ARE BEING SOLICITED AND
YOU ARE
REQUESTED NOT TO SEND THE COMPANY A PROXY.
INTRODUCTION
This
Information Statement is being mailed on or about September 17,
2021 to holders of record on September 15, 2021 (the “Record
Date”), of shares of common stock (the “Common
Stock”) of AeroCentury Corp., a Delaware corporation (the
“Company” or “AeroCentury”), in accordance
with the requirements of Section 14(f) of the Securities Exchange
Act of 1934 (the “Exchange Act”), and Rule l4f-l
promulgated thereunder. This Information Statement is being filed
with the Securities and Exchange Commission (“SEC”) on
or about September 16, 2021.
CHANGE IN CONTROL
You are
receiving this Information Statement in connection with the
expected designation of new members to the Board of Directors of
the Company (the “Board”). AeroCentury and certain of
its subsidiaries (together with the Company, the
“Debtors”) commenced voluntary cases (collectively, the
“Chapter 11 Cases”) under chapter 11 of the United
States Bankruptcy Code in the United States Bankruptcy Court for
District of Delaware (the “Bankruptcy Court”) and filed
the Joint Chapter 11 Plan of
Reorganization of AeroCentury Corp. and Its Debtor
Affiliates (as amended or supplemented, the
“Plan”) with the Bankruptcy Court. On July 14, 2021,
the Debtors filed the Combined
Disclosure Statement and Joint Chapter 11 Plan of Reorganization of
AeroCentury Corp., and Its
Affiliated Debtors Docket No. 0282, with the Bankruptcy
Court (the “Combined Plan Statement”). On August 16,
2021, the Company filed the Notice
of Filing of Plan Supplement to the Combined Disclosure Statement
and Joint Chapter 11 Plan of AeroCentury Corp., and its Affiliated
Debtors, Docket No. 0266, with the Bankruptcy Court (as
may be later amended or supplemented, the “Plan
Supplement”). On August 30, 2021, the Company filed the
Second Plan Supplement to the
Combined Disclosure Statement and Joint Chapter 11 Plan of
AeroCentury Corp., and its Affiliated Debtors, Docket
No. 0288, with the
Bankruptcy Court. On August 31, 2021, the
Bankruptcy Court entered an order, Docket No. 0296 (the
“Confirmation Order”), confirming the Plan as set forth
in the Combined Plan Statement and Plan Supplement. The Company
expects that the effective date of the Plan (as defined in the
Plan, the “Effective Date”) will occur after all
conditions precedent to the Plan have been satisfied. Although the
Company is targeting occurrence of the Effective Date to occur on
or before September 30, 2021, the Company can make no assurances as
to when, or ultimately if, the Plan will become effective. It is
also possible that certain amendments could be made to the Plan
prior to the Effective Date.
Pursuant to the
Plan, the Company’s Common Stock outstanding
held by the existing shareholders
of AeroCentury on the Effective Date (the
“Legacy ACY
Shareholders”) will be
reinstated on the Effective Date. As of September 15, 2021, the
Company had 1,545,884 shares of Common Stock issued and outstanding
to Legacy ACY Shareholders. Under the Plan Sponsor Agreement
entered into between the Company and Yucheng Hu, TongTong
Ma, Qiang Zhang, Yanhua Li, Yiyi Huang, Hao Yang, Jing Li, Yeh
Ching and Ye Cheng (the “Plan Sponsor Agreement”), and
identifying such individuals, collectively, as “Plan
Sponsor” on the Effective Date, the Company will
issue,
pursuant to a Securities Purchase Agreement (“SPA”)
between the Plan Sponsor and the Company, 2,870,927 shares
(“New ACY Common Shares”) of Common Stock to the Plan
Sponsor at a purchase price equal to $3.85 per share, for an
aggregate purchase price of approximately US$11,053,069 in a
private placement exempt from registration requirement of the
Securities Act of 1933, as amended (the “Securities Act)
afforded by Section 4(a)(2), Rule 506 of Regulation D
(“Regulation D”), and/or Regulation S
(“Regulation S”) of the Securities Act. Prior to the
Effective Date, no single stockholder holds a majority of the
voting power of the outstanding Common Stock of AeroCentury.
Following the Effective Date, the New ACY Common Shares will
constitute a majority of the voting power of the outstanding shares
of Common Stock, and the Plan Sponsor shall, collectively,
beneficially own approximately 65% of the Common Stock of
AeroCentury.
Upon closing of the
SPA, the Plan Sponsor will hold an aggregate of 2,870,927 shares of
Common Stock, representing approximately 65% of the number of
shares of Common Stock outstanding on such date. The new
organizational documents of the reorganized Company will become
effective on the Effective Date and will authorize a sufficient
number of shares of Common Stock to accommodate the issuance of the
additional New ACY Common Shares pursuant to the Plan. Upon the
Effective Date and the closing of such stock purchase, as a
condition to the closing of the Plan Sponsor Agreement, all members
of the Board prior to the closing of such stock purchase will
resign as directors of the Company, and Yucheng Hu, Florence Ng,
Jianan Jiang, Siyuan Zhu and Qin Yao (the “Incoming
Directors”) will be appointed as directors of the Company to
take office not sooner than the later of (i) the Effective Date, or
(ii) ten (10) days after the mailing of this Information Statement
(the “Appointment Date”), resulting in a change in a
majority of the members of the Board. In addition, effective as of
the Effective Date, all current officers of the Company will
resign, and the Board has appointed Mr. Yucheng Hu as the Chairman,
president and chief executive officer, Ms. Florence Ng as the
general counsel and vice president of operations, and Ms. Qin Wang
as the chief financial officer, company secretary and
treasurer.
A copy
of the Combined Plan Statement was filed as part of Exhibit 99.1 to
a Current Report on Form 8-K filed by the Company on August 31,
2021. A copy of the Plan Sponsor Agreement was as Exhibit 99.1 to a
Current Report on Form 8-K filed by the Company on August 17,
2021.
Please
read this Information Statement carefully. It describes the terms
of various transactions that are expected to be consummated on the
Effective Date that will result in a change of control of the
Company and a change in a majority of the members of the Board. It
also contains certain biographical and other information concerning
the current and expected executive officers and directors of the
Company. Copies of this material also may be inspected without
charge at the public reference section of the SEC at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, DC 20549. The SEC also
maintains a website that contains reports, proxy and information
statements, and other information regarding public companies that
file reports with the SEC. Copies of the Company’s other
public filings may be obtained from the SEC’s website at
http://www.sec.gov.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The
Company currently has two classes of voting securities: (a) common
stock, par value $0.001 per share, of which 1,545,884 shares
are outstanding as of September 15, 2021, (b) preferred stock, par
value $0.001 per share, of which no shares are outstanding as of
September 15, 2021. Each share of common stock entitles the holder
thereof to one vote on each matter put to a vote of stockholders.
Following the Effective Date and the issuance of the New ACY Common
Shares, there will be 4,416,811 shares of common stock
outstanding.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Prior to the Effective Date
The
following table sets forth information as of September 15, 2021
regarding shares of our common stock beneficially owned by (a) each
person known by the Company to own beneficially more than 5% of the
outstanding voting stock of stock and by (b) each executive
officer, director of the Company prior to the change of officers
and directors expected to take place as a result of the closing of
the transaction contemplated by the Plan Sponsor Agreement, and (c)
the directors and executive officers of the Company referenced in
(b) as a group:
Name(1)
|
No. of Shares (2)
|
Percentage of Common Stock (3)
|
Michael G. Magnusson, Director, President
|
0
|
*
|
Harold M. Lyons, CFO, Treasurer, Sr. Vice President,
Finance and Secretary
|
0
|
*
|
Toni M. Perazzo, Director,
Principal
Stockholder (4)
|
327,374
|
21.2%
|
Evan M. Wallach, Director
|
0
|
*
|
Roy E. Hahn, Director
|
0
|
*
|
David P. Wilson, Director
|
0
|
*
|
All directors and executive officers as a group
|
327,374
|
21.2%
|
* Less than 1%
(1) Unless otherwise
indicated, the business address of each of the individuals is c/o
AeroCentury Corp., 1440 Chapin Avenue Suite 310, Burlingame,
California 94010.
(2) Except as
indicated in the footnotes to this table, the stockholders named in
the table are known to the Company to have sole voting and
investment power with respect to all shares of common stock shown
as beneficially owned by them, subject to community property laws
where applicable. Beneficial ownership of shares is determined in
accordance with the rules of the SEC and generally includes any
shares over which a person exercises sole or shared voting or
investment power, or of which a person has the right to acquire
ownership within 60 days after September 15,
2021.
(3) For purposes
of calculating percentages, 1,545,884 shares, consisting of all of
the outstanding shares of common stock (excluding Company treasury
stock) outstanding as of September 15, 2021, was
used.
(4) Includes (i) 16,007 shares of
common stock held directly by Ms. Perazzo or as beneficiary of a
401(k) custodial account, (ii) 152,433 shares held by an
irrevocable trust of which Ms. Perazzo is a beneficial owner; (iii)
152,434 shares held by an irrevocable trust of which a child of Ms.
Perazzo is the beneficiary; and (iv) 6,500 shares held in a joint
tenancy account with such child.
Following the Effective Date
The
following table sets forth information as of September 15, 2021,
adjusted to reflect the effect of the closing of the transactions
contemplated by the Plan Sponsor Agreement regarding shares of the
Company’s common stock beneficially owned by (a) each person
known by the Company to own beneficially more than 5% of the
outstanding voting stock of stock and by (b) each incoming
executive officer, director of the Company following the change of
officers and directors expected to take place as a result of the
closing of the transaction contemplated by the Plan Sponsor
Agreement, and (c) the directors and executive officers of the
Company referenced in (b) as a group (collectively, the
“Beneficial Owners and Management”).
Name(1)
|
No. of Shares (2)
|
Percentage of Common Stock (3)
|
Yucheng Hu, Director, Chairman, President and Chief
Executive Officer
|
1,598,201
|
36.2%
|
Florence Ng, Director, General Counsel and Vice President of
Operations
|
0
|
*
|
Qin (Carol) Wang, Chief Financial Officer, Company Secretary
and Treasurer
|
0
|
*
|
Jianan Jiang, Director
|
0
|
*
|
Siyuan Zhu, Director
|
0
|
*
|
Qin Yao, Director
|
0
|
*
|
All directors and executive officers as a group
|
1,598,201
|
36.2%
|
|
|
|
5% or greater owners
|
|
|
Toni M. Perazzo (4)
|
327,374
|
7.4%
|
* Less than 1%
(1) Unless otherwise
indicated, the business address of each of the individuals is c/o
AeroCentury Corp., 1440 Chapin Avenue Suite 310, Burlingame,
California 94010.
(2) Except as indicated in the footnotes to this table, the
stockholders named in the table are known to the Company to have
sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them, subject to
community property laws where applicable. Beneficial ownership of
shares is determined in accordance with the rules of the SEC and
generally includes any shares over which a person exercises sole or
shared voting or investment power, or of which a person has the
right to acquire ownership within 60 days after September 15,
2021.
(3) For purposes of
calculating percentages, percentages are based upon 4,403,027
shares of Common Stock outstanding, consisting of 1,545,884 shares
of Common Stock (excluding Company treasury stock) outstanding as
of September 15, 2021, plus 2,870,927 shares of Common Stock to be
issued pursuant to the Plan Sponsor Agreement.
(4) Ms. Perazzo is the former Board Chair and Chief Financial
Officer of the Company. Includes (i) 16,007 shares of Common Stock
held directly by Ms. Perazzo or as beneficiary of a 401(k)
custodial account, (ii) 152,433 shares held by an irrevocable trust
of which Ms. Perazzo is a beneficial owner; (iii) 152,434 shares
held by an irrevocable trust of which a child of Ms. Perazzo is the
beneficiary; and (iv) 6,500 shares held in a joint tenancy account
with such child.
DIRECTORS AND EXECUTIVE OFFICERS
Changes to the Board of Directors
As a
condition to the closing of the Plan Sponsor Agreement, all members
of the Board prior to the Effective Date will resign as directors
of the Company, and Yucheng Hu, Florence Ng, Jianan Jiang, Siyuan
Zhu and Qin Yao (the “Incoming Directors”) will be
appointed as members of the Board of the Company, to take office on
the Appointment Date, resulting in a change in all of the
directors. In addition, effective as of the Effective Date, all
current officers of the Company will resign, and the Board has
appointed Mr. Yucheng Hu as the Chairman, president and chief
executive officer, Ms. Florence Ng as the general counsel and vice
president of operations, and Ms. Qin Wang as the chief financial
officer, company secretary and treasurer.
The
following discussion sets forth the information regarding the
Company’s current executive officers and directors and
proposed executive officers and directors after completing the
transactions contemplated by the Plan Sponsor Agreement. If any
proposed director listed in the table should become unavailable for
any reason, which the Company does not anticipate, the Board will
appoint any substitute nominee or nominees as the Board in its sole
discretion deems necessary.
Legal Proceedings
There
are no material proceedings to which any of the Beneficial Owners
or Management or any of their associates or any affiliate of the
Company is a party adverse to the Company or any of its
subsidiaries or has a material interest adverse to the Company or
any of its subsidiaries.
Identification of Incumbent Directors and Executive
Officers
Incumbent Directors and Executive Officers
The
following table sets forth certain information regarding the
Company’s current executive officers and
directors:
Name
|
Age
|
Position
|
Toni M.
Perazzo
|
74
|
Chair
and Director
|
Michael
G. Magnusson
|
63
|
President,
Chief Executive Officer and Director
|
Harold
M. Lyons
|
62
|
Sr.
Vice President, Finance and Chief Financial Officer
|
Roy E.
Hahn
|
69
|
Director
|
Evan M.
Wallach
|
66
|
Director
|
David
P. Wilson
|
67
|
Director
|
All
directors hold office until the next annual meeting of stockholders
and until their successors have been duly elected and
qualified.
Ms. Toni M. Perazzo. Ms. Perazzo is a member of the
Executive Committee of the Board of Directors and has served on the
Board since the Company’s inception in 1997. In June 2020,
she was elected as Chair of the Board of Directors. Prior to her
retirement in December 2019, she was the Company’s Chief
Financial Officer, Treasurer, Senior Vice President-Finance, and
Secretary and also President and Chief Financial Officer of
JetFleet Management Corp. (“JMC”), a subsidiary of the
Company, where she had been an officer in various capacities since
1997. Her prior positions include Assistant Vice President for a
savings and loan company, controller of an oil and gas syndicator
and a senior auditor with Arthur Young & Co., Certified Public
Accountants. She received her Bachelor’s Degree from the
University of California at Berkeley, and her Master’s Degree
in Business Administration from the University of Southern
California. Ms. Perazzo is a certified public accountant and member
of the California Society of Certified Public Accountants and the
American Institute of Certified Public Accountants.
Mr. Michael G. Magnusson. Since 2016, Mr. Magnusson has been
the President and a director of the Company and the Managing
Director of JMC. Prior to joining the Company and JMC, he was a
principal of SAL Solutions, an aircraft leasing consulting firm
that he co-founded in 2015. Before that he was with Saab Aircraft,
which he joined in 1982 and where he held positions of increasing
responsibility culminating in tenure as Chief Executive Officer of
Saab Aircraft Leasing from 2001 until 2015. Mr. Magnusson received
a Master’s Degree in Aeronautical Engineering in 1982 from
KTH Royal Institute of Technology in Stockholm,
Sweden.
Mr. Harold M. Lyons, Sr. Vice President, Finance. Mr. Lyons
was promoted to the executive officer position of Sr. Vice
President, Finance on January 1, 2020. Prior to that, while serving
as Vice President, Finance since 2003, he was responsible for
overseeing tax accounting and tax analysis as well as
Sarbanes-Oxley internal controls compliance review for the Company.
Mr. Lyons has been employed by JMC and JMC affiliated companies
since 1992. Mr. Lyons was previously a Manager in the Tax
Department of Coopers & Lybrand, Certified Public Accountants
and, before that, Mr. Lyons was a Manager in the Tax Department of
Arthur Young & Co., Certified Public Accountants. He received a
Bachelor’s Degree in Business Administration (specializing in
Accounting and Applied Economics) and a Master’s Degree in
Business Administration (specializing in finance and management
science) from the University of California, Berkeley. Mr. Lyons is
a certified public accountant and is a member of the American
Institute of Certified Public Accountants (and a member of the Tax
Section) and of the California Society of Public
Accountants.
Mr. Roy E. Hahn. Mr. Hahn is the Chair of the Audit
Committee and a member of the Compensation Committee and has served
on the Board since 2007. Mr. Hahn is
currently Managing Director of Marbridge Group, LLC, an
alternative investment management firm he founded in 2004. Prior to
his founding of Marbridge Group, LLC, he was Managing Director of
Chenery Associates, an investment management firm. Mr. Hahn was a
Director at Coopers & Lybrand from 1987 to 1988, and a tax
partner with that firm from 1989 to 2003. Prior to Coopers &
Lybrand, he was a partner at Arthur Young & Co. His educational background includes a Bachelor's
Degree in Accounting from San Francisco State University. Mr. Hahn
is a certified public accountant and a member of the American
Institute of Certified Public Accountants and the California
Society of Certified Public Accountants.
Mr. Evan M. Wallach. Mr. Wallach is President and Chief
Executive Officer of Global Airfinance Services, Inc., an aviation
consulting business he founded in 1998 and returned to in June
2012. Mr. Wallach was the Chair of the Board of Directors of the
Company from 2016 until June 2020, and is a member of the Audit
Committee, the Compensation Committee, and the Executive Committee.
He has served on the Board since 1997. From December 2009 until
June 2012, Mr. Wallach was Managing Director,
Aviation/Transportation Markets at Jefferies & Company, Inc.
From 2005 to 2009, Mr. Wallach was a Managing Director,
Airline/Aircraft Securities Sales at Guggenheim Capital Markets,
LLC, a securities broker/dealer. From 2001 to 2005, he served as
Managing Director, Fixed Income Institutional Sales, at Piper
Jaffray LLC, and from 1998 to 2001 he served as Vice President,
Finance of C-S Aviation Inc., an aviation consulting firm. Mr.
Wallach has specialized in aircraft and airline financing for over
thirty years, having held senior level positions with The CIT
Group, Bankers Trust Company, Kendall Capital Partners, Drexel
Burnham Lambert, and American Express Aircraft Leasing. Mr. Wallach
received a Bachelor’s Degree in Political Science from State
University of New York at Stony Brook and a Master’s Degree
in Business Administration from the University of
Michigan.
Mr. David P. Wilson. Mr. Wilson has been a member of the
Company’s Board of Directors and the Audit Committee since
February 2015. He also serves as Chair of the Compensation
Committee. Mr. Wilson is currently a member of the Board of
Directors of Einn Volant Aircraft Leasing LLC. Mr. Wilson retired
in 2014 from General Electric Capital Aviation Services
(“GECAS”), where he was most recently a Senior Vice
President, concentrating on asset sales and aircraft
securitizations to a worldwide investor base. Prior to his 21-year
career at GECAS, Mr. Wilson spent 8 years at Citicorp's Equipment
Finance and Leasing Division as a product specialist in aircraft
finance marketing and working on several airline bankruptcies and
restructurings. Prior to joining Citicorp in 1985, he held various
financial positions at De Lage Landen (formerly Master Lease Corp.)
and Air Products and Chemicals at their headquarters. Mr. Wilson
started his career at Ernst & Ernst in 1977. He received his
Bachelor's Degree in Accounting and Finance from Boston College in
1977 and a MS/MBA in Finance from Drexel University in Philadelphia
in 1983.
There
are no agreements with respect to electing directors. The Board
appoints officers annually and each executive officer serves at the
discretion of the Board.
Incoming Executive Officers and Directors
As a
condition to the closing of the Plan Sponsor Agreement, the
following individuals are expected to serve as members of the
Company’s Board and/or the Company’s executive
officers:
Name
|
Age
|
Position
|
Yucheng
Hu*
|
36
|
Chairman,
President, Chief Executive Officer and Director
|
Florence
Ng*
|
57
|
General
Counsel, Vice President of Operations and Director
|
Qin
(Carol) Wang
|
31
|
Chief
Financial Officer, Secretary and Treasurer
|
Jianan
Jiang*
|
36
|
Independent
Director
|
Qin
Yao*
|
39
|
Independent
Director
|
Siyuan
Zhu*
|
35
|
Independent
Director
|
* The Incoming Directors will be
appointed to take office on the Appointment Date. All directors
will hold office until the next annual meeting of stockholders and
until their successors have been duly elected and
qualified.
Mr. Yucheng Hu. Mr. Hu is the founder of Chengdu Quleduo
Technology Co., Ltd., and has served as its Chief Executive Officer
since 2011. Mr. Hu is a successful entrepreneur with over 15 years
of experience in the internet industry. Mr. Hu established the
Xiyou online mobile game platform (wwwx52xiyou.com), which is a
popular online gaming platform in PRC. Mr. Hu has also formed
various software programming studios, such as the Mengqu studio,
and has developed various mini-programs for social media
applications such as the “click-and-play” application
for instance on-line games access.
Ms. Florence Ng. Ms. Ng is a lawyer qualified in Hong Kong
Special Administrative Region since 2011, specializing in
international cross border mergers and acquisitions transactions
and corporate commercial matters. Ms. Ng is currently an
independent non-executive director of China Internet Investment
Finance Holdings Limited (stock code: 810) since 2013, a company
listed on the Hong Kong Stock Exchange, and has served as a legal
consultant for ATIF Holdings Limited (stock code: ATIF) since 2019,
of which is a company listed in the Nasdaq Stock Exchange. Ms. Ng
holds a Bachelor’s degree in Art from San Francisco State
University, a Bachelor’s degree in Laws from University of
London, and a Master’s degree in Laws from the City
University of Hong Kong with distinction award.
Ms. Qin (Carol) Wang. Ms. Wang has been an independent
financial consultant since June 2020, specializing in M&A
transactions for companies listed in the Nasdaq Stock Exchange and
New York Stock Exchange. Prior to that, Ms. Wang has served as the
finance controller and financial advisor of TD Holdings, Inc.
(NASDAQ: GLG) from February 2018 to May 2020. Through July 2016 to
January 2018, Ms. Wang has served as a senior investment manager
for Yikuan Asset Management Company. Ms. Wang began her career at
Ernst & Young where she served as a senior auditor from
September 2012 to June 2015. She is skilled at M&A transaction,
US GAAP and IFRS financial reporting, implementing new accounting
standards, corporate financial management and planning. Ms. Wang
holds a Master’s degree in Finance from Renmin University of
China and a Bachelor’s degree in Economics from Donghua
University. Ms. Wang is a certified public accountant and is a
member of the Chinese Institute of Certified Public
Accountants.
Mr. Jianan Jiang.
Since February 2019, Mr. Jiang has been serving as the lead data
scientist for Stori Card in Washington, DC, which is a fast-growing
Fintech company using Artificial Intelligence technology to provide
better financial products for the underserved community in Latin
America. Prior to that, he worked as data analyst and data science
manager for Capital One from Oct 2014 to Jan 2019. Mr. Jiang served
as co-founder and CEO of Schema Fusion LLC from May 2013 to Sep
2014. Mr. Jiang received his Bachelor’s degree in Civil
Engineering from Qingdao Technological University in 2008, and
received his Master of Science in Management Science and
Engineering from Tongji University in 2011, and received his Master
of Science in Engineering and Technology Innovation Management from
Carnegie Mellon University in 2013.
Ms. Qin Yao. Ms. Yao is currently an information engineer at
Tencent Holdings Co., Ltd (stock code: 00700), a company listed on
the Hong Kong Stock Exchange, and responsible for the products and
market expansion of Tencent’s industrial Internet Sector
since 2017. From 2010 to 2017, Ms. Yao has served as an electronic
information engineer in China United Network Communications Co.,
Ltd. Ms. Yao has more than 10 years of investment experience in the
field of cloud computing, big data, AI and technology information
services. She also has profound knowledge of financial planning,
financial budgeting and financial risk management related to the
cloud business. Ms. Yao holds a Bachelor’s degree in
Electronic Information Engineering from the University of
Electronic Science and Technology in Chengdu in 2004.
Ms. Siyuan Zhu. Ms. Zhu is currently a senior finance
manager of Asia Region of IAC (Shanghai) Management Co., Ltd. since
2016. From 2013 to 2015, Ms. Zhu has served as a finance manager in
IAC (Shanghai) Automotive Component Technology Co., Ltd. Prior to
2013, Ms. Zhu held various positions at KPMG Huazhen for a total of
seven years and served as a program manager from 2011 to 2013. Ms.
Zhu has served as an independent director of TD Holdings, Inc.
(NASDAQ: GLG) from May 2019 to April 2021. Ms. Zhu holds a
Bachelor’s degree in Foreign Language and Literature from
Shanghai International Studies University. Ms. Zhu is a certified
public accountant in China.
Meetings and Committees of the Board of Directors
Board Meetings and Committees
The
incumbent Board of Directors of the Company held eighteen meetings
during the fiscal year ended December 31, 2020. During that year,
no incumbent director attended fewer than 75% of the meetings of
the Board of Directors and its committees on which he or she served
that were held during the period in which he or she was a director.
The Board of Directors has an Audit Committee, a Compensation
Committee and an Executive Committee of the Board of Directors,
each of which is discussed below.
Audit Committee. The Audit Committee operates under a
charter adopted and approved by the Board of Directors, which is
available on the Company’s website at http://www.aerocentury.com/audit.php.
The Audit Committee meets with the Company's management and its
independent registered public accounting firm to review internal
financial information, audit plans and results, and financial
reporting procedures. The Audit Committee currently consists of Roy
E. Hahn (Chair), Evan M. Wallach and David P. Wilson. Following the
Appointment Date, this committee shall consist of Siyuan Zhu
(Chair), Qin Yao, and Jianan Jiang. The Board has determined that
Ziyuan Zhu, Qin Yao and Jianan Jiang are independent within the
meaning of Sections 803A and 803B(2) of the NYSE American Company
Guide, and that Ms. Zhu is an “audit committee financial
expert” within the meaning of Item 407(d)(5) of Regulation
S-K promulgated by the SEC.
The
Board of Directors has determined that at least one member of the
current Audit Committee, Mr. Hahn, is an “audit committee
financial expert” within the meaning of Item 407(d)(5) of
Regulation S-K promulgated by the SEC. In the course of his career,
as described under “Directors and Officers” above, Mr.
Hahn acquired: (i) an understanding of generally accepted
accounting principles and financial statements, (ii) the ability to
assess the general application of such principles in connection
with the accounting for estimates, accruals and reserves, (iii)
experience preparing, auditing, analyzing or evaluating financial
statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and
complexity of issues that can reasonably be expected to be raised
by the Company’s financial statements, (iv) an understanding
of internal control over financial reporting, and (v) an
understanding of audit committee functions. The Audit Committee
held eight meetings during the fiscal year ended December 31,
2020.
Compensation Committee. The Compensation Committee assists
the Board in discharging its responsibilities relating to
compensation of the Company’s directors and officers and
complying with disclosure requirements regarding such compensation,
if and when required and in accordance with applicable SEC and
stock exchange rules and regulations. The Compensation Committee
operates under a charter adopted and approved by the Board of
Directors, which is available on the Company’s website at
http://www.aerocentury.com/compensation_committee.php.
The Compensation Committee currently consists of David P. Wilson
(Chair), Roy E. Hahn, and Evan M. Wallach. Following the
Appointment Date, the Compensation Committee shall consist of
Jianan Jiang (Chair), Siyuan Zhu, and Qin Yao. The Board has
determined that Siyuan Zhu, Jianan Jiang, and Qin Yao are
independent within the meaning of Section 803A and 805(c) of the
NYSE American Company Guide and Rule 10C-1(b)(1) under the
Securities Exchange Act of 1934, and a “non-employee
director” as defined in Rule 16b-3 promulgated under the
Exchange Act. The Compensation Committee held four meetings during
the fiscal year ended December 31, 2020.
Executive Committee. The Executive Committee has the
authority to acquire, dispose of and finance investments for the
Company and execute contracts and agreements, including those
related to the borrowing of money by the Company, and generally
exercises all other powers of the Board of Directors except for
those which require action by all of the directors or the
independent directors under the Certificate of Incorporation or the
Bylaws of the Company, or under applicable law or stock exchange
requirements. The Executive
Committee currently consists of only two directors, Toni M. Perazzo
and Evan M. Wallach. Following the Appointment Date, the
Executive Committee currently consists of only two directors
Yucheng Hu and Florence Ng. The Executive Committee did not hold
any meetings during fiscal year ended December 31,
2020.
Director Nominations. The Company does not have a formal
nominating committee. The independent directors separately consider
and make recommendations to the full Board of Directors regarding
any candidate being considered to serve on the Board of Directors,
and the full Board of Directors reviews and makes a determination
regarding such potential candidates. In light of this practice,
which is similar to the practices of many boards of directors that
have a standing nominating committee, the Board believes it is
unnecessary to formally establish such a committee.
The
Board has not adopted a formal procedure for considering nominees
recommended by stockholders, other than the procedures described
herein that are applicable to all director candidates and the
procedures set forth in the Bylaws of the Company for stockholder
nominations of directors. While the Board of Directors does not
have a specific policy for considering nominees recommended by
stockholders, this does not mean that a recommendation would not be
considered if received from a stockholder. The Board believes that
the current informal consideration process is adequate in light of
the historical absence of stockholder recommendations of director
nominees. In any event, the Board expects there would be no
difference between the manner in which the Board of Directors would
evaluate a director candidate recommended by a stockholder and a
director candidate recommended by any other source, such as an
existing member of the Board of Directors or one of the
Company’s executive officers.
Although the Board
of Directors does not have a formal policy with respect to Board
diversity, it strives to constitute the Board with directors who
bring to the Company a variety of perspectives, cultural
sensitivity, life experiences, skills, expertise, and sound
business understanding and judgment derived from a broad range of
business, professional, governmental, community involvement,
personal and aircraft leasing and finance experiences, as well as
directors who have skills and experience that are relevant and
helpful to the Company's industry and operations and who have the
desire and capacity to actively serve. In addition, the Board is
aware of the recently enacted California law requiring publicly
held corporations whose principal executive offices are located in
California to have at least (i) one to three female directors,
depending on the size of the board, and (ii) one director from an
underrepresented community, by the end of the 2021 calendar year.
Because the Company’s principal executive offices are located
in California, the Company is subject to these requirements. The
Company anticipates that the new Board of Directors will be in
compliance with this law.
In
reviewing a potential candidate for the Board, the Board of
Directors considers the individual's experience in the Company's
industry, the general business or other experience of the
candidate, the needs of the Company for an additional or
replacement director, the personality of the candidate, and the
candidate's interest in the business of the Company, as well as
numerous other subjective criteria. Of greatest importance is an
individual's integrity, willingness to actively participate and
ability to bring to the Company his or her experience and knowledge
in areas that are most beneficial to the Board. In addition, the
Board recognizes that at least a majority of the Company’s
directors must be independent under applicable NYSE American rules,
the members of certain Board committees must satisfy enhanced
independence and financial expertise standards under applicable
NYSE American and SEC rules, and one member of the Board should
meet the criteria for an “audit committee financial
expert” as defined by SEC rules.
Except
as described above, there are no specific minimum qualifications
that the Board believes must be met by a director nominee. The
incoming members of the Board of Directors were designated by the
Plan Sponsor pursuant to the Plan Sponsor Agreement, outside of the
process described above. The Board, however, intends to continue to
evaluate the incoming Board members and other candidates in the
manner described above in connection considering nominations for
all future Board elections.
Board Leadership Structure
The
Company’s Board of Directors recognizes that the leadership
structure and combination or separation of the President and
Chairman roles is driven by the needs of the Company at any point
in time. As a result, no policy exists requiring combination or
separation of leadership roles and governing documents do not
mandate a particular structure. This has allowed the Board of
Directors the flexibility to establish the most appropriate
structure for the Company at any given time.
Board of Directors’ Role in Risk Oversight
The
Company is exposed to a number of operational and financial risks,
and the Board plays an active role in overseeing management of
these risks. The Company’s Chief Executive Officer
(“CEO”) (who is a member of the Board of Directors) is
directly responsible for a number of operational risks, such as the
risks inherent in acquiring, owning, leasing and disposing of used
aircraft and engines. The Board regularly receives reports from the
CEO on these risks and works closely with the Company’s
management on strategies to manage these risks and to develop
contingency plans. The Company’s Chief Financial Officer is
directly responsible for a number of financial risks, such as the
risks associated with the Company’s credit and liquidity. The
Audit Committee and the full Board regularly receive reports from
the Chief Financial Officer on these risks and work closely with
the Company’s management on strategies to manage these risks
and to develop contingency plans. The Board also meets and confers
regularly with the Company’s management to identify other
risks faced by the Company, and outside counsel attend all board
meetings as non-voting guests of the Board. The Company believes
that this and other interactions with senior management of the
Company provide the Board with visibility into and access to the
details underlying the risks the Company faces, and thereby
enhances the quality of the Board’s risk oversight. Among the
risks over which the Board exercises oversight are economic,
financial, industrial, legal, and operational risks, including
cybersecurity risks.
In
addition, the Board performs its risk oversight function in part
through its committees, which, except for the Executive Committee,
are comprised solely of independent directors. The Audit Committee
oversees management of risks related to financial reporting and
disclosure processes and accounting policies, as well as certain
specific financial risks, such as variable interest rate risk, and
risks related to related party or conflict-of-interest
transactions. The Compensation Committee oversees management of
risks related to compensation policies and practices. The Company
believes the role of these Board committees in the Board’s
performance of its risk oversight function, as well as the
Board’s leadership structure discussed above, which separates
the roles of Chair of the Board and President, provide an
appropriate level of independent oversight, including risk
oversight, of the Company’s management team.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section
16(a) of the Securities Exchange Act requires the Companys
executive officers and directors, and persons who own more than 10%
of the Company’s common stock, to file reports regarding
ownership of, and transactions in, the Company’s securities
with the Securities and Exchange Commission and to provide us with
copies of those filings. Based solely upon a review of the copies
of such reports furnished to the Company and written
representations that no other reports were required, the Company
believes the Company's officers, directors and greater than ten
percent beneficial owners complied with all Section 16(a) filing
requirements applicable to them in the fiscal year ended December
31, 2020.
Communication between Stockholders and Directors
The
Company’s Board of Directors currently does not have a formal
process for stockholders to send communications to the Board of
Directors and does not believe such procedures are necessary at
this time because it believes that informal communications are
sufficient to communicate questions, comments and observations that
could be useful to the Board. Stockholders wishing to communicate
to the Board informally can address written correspondence to the
Company’s Board of Directors at the Company’s address
at 1440 Chapin Avenue, Suite 310, Burlingame, California 94010,
Attn: Board of Directors.
Director Attendance at Annual Meeting
It is
the policy of the Company and Board of Directors that directors
attend the Annual Meeting and be available for questions from
stockholders. All the then-seated directors, including the
directors nominated for election, attended the Company’s 2020
Annual Stockholders Meeting, either in person or if unable to
travel due to COVID issues, monitored the proceedings
electronically. Barring any adjustments to the format of the 2021
Annual Meeting due to social distancing or other restrictions
related to the COVID-19 pandemic, it is anticipated that the
directors nominated for election at the 2021 Annual Meeting will
attend the 2021 Annual Meeting.
Board Independence
Incumbent directors
Messrs. Hahn, Wallach, and Wilson are independent within the
meaning of Sections 803A of the NYSE American Company Guide. Mr.
Magnusson and Ms. Perazzo are not considered independent directors
due to their employment by the Company within the previous three
years.
A
majority of the incoming members of the Board of Directors of the
Company, consisting of Ms. Yao, Mr. Jiang and Ms. Zhu will be
independent directors, as defined in Section 803A of the NYSE
American Company Guide. Mr. Yu and Ms. Ng will not considered independent directors due to
their employment as executive officers of the
Company.
Family Relationships
There
are no family relationships among the Company’s existing
directors or executive officers, and based upon representations
made to the company by the Incoming Directors and incoming
executive officers, there are no family relationships among the
Incoming Directors and incoming executive officers.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation
The
table below provides the compensation of the Company’s
non-employee directors for the fiscal year ended December 31, 2020.
The compensation of the Company’s directors who also serve as
executive officers of the Company is set forth under
“Executive Compensation—Summary Compensation
Table” below.
2020 INCUMBENT DIRECTOR COMPENSATION TABLE
Name(1)
|
Fees
Earned or Paid in Cash($)
|
|
Roy E.
Hahn
|
$75,500
|
$75,500
|
Toni M.
Perazzo
|
81,500
|
81,500
|
Evan M.
Wallach
|
87,500
|
87,500
|
David P.
Wilson
|
75,500
|
75,500
|
(1) Michael G. Magnusson was an officer of the Company and its
subsidiary JetFleet Management Corp. during 2020 and therefore did
not receive compensation for service as a member of the
Company’s Board of Directors or committee thereof, in
accordance with the Company’s director compensation
policy.
|
|
Executive Officer Compensation
The
following table summarizes information concerning the compensation
awarded, paid to or earned by, the Company’s executive
officers for each of the last two completed fiscal
years.
Name
and Principal Position
|
|
|
|
|
|
Non-Equity
Incentive Plan Com-
pensation
($)
|
Non-qualified
Deferred
Compen-sation
Earnings
($)
|
All
Other Compen-
sation
($)(1)
|
|
Michael G.
Magnusson, President & CEO
|
20202019
|
375,000366,462
|
18,18875,000(3)
|
00
|
00
|
00
|
00
|
3,7323,720
|
396,920445,182
|
Harold M. Lyons,
CFO, Treasurer, Senior VP - Finance & Secretary of the Company;
SVP Finance and CFO of JMC(2)
|
2020
|
225,000
|
11,986
|
0
|
0
|
0
|
0
|
3,732
|
240,718
|
(1) Consists of a matching contribution under employees’
401(k) plan and life insurance premiums paid by the Company for
each employee.
(2) Mr. Lyons was appointed to this position on January 1,
2020
(3) Amount includes bonus stipulated in employment
agreement.
Narrative Disclosure to Summary Compensation Table
The compensation paid to the Company’s named executive
officers consists solely of base salary plus cash bonus payments,
if any. No named executive officer of the Company receives equity
compensation.
In April of 2019, the Board approved a Bonus Plan for which all
employees of the Company were eligible. A bonus pool of $294,500
was established as the maximum potential bonus pool available. The
amount to be actually awarded under the Plan was determined based
on the Company’s 2019 performance against four target metrics
for Company revenue, income, asset on-lease percentage and volume
of acquisitions, and a discretionary piece, each weighted at 20%.
The metric for revenue growth was fully met and the metric for
on-lease percentage of assets surpassed the minimum floor but did
not reach the target metric for 2019, and no discretionary amount
was added to the pool. Thus, the total bonus pool for 2019 was
approximately 24% of the maximum pool bonus amount, or $71,416. The
bonus pool allocated to each employee participated in the bonus
pool based on a predetermined percentage set by management and
approved by the Compensation Committee. Mr. Magnusson and Mr. Lyons
were paid bonuses under this plan in February of 2020, in the
amounts of $18,188 and $11,986, respectively.
Named Executive Officer Employment Agreements
Michael G. Magnusson. On
May 9, 2019, the Company entered into an Employment Agreement
(“Agreement”) with Michael G. Magnusson, the current
President and Chief Executive Officer of the Company. The Agreement
superseded and replaced Mr. Magnusson’s prior employment
agreement with JetFleet Management Corp. (“JMC”), the
management company for the Company. JMC became a wholly-owned
indirect subsidiary of the Company on October 1, 2018, when the
Company acquired JetFleet Holding Corp., the parent corporation of
JMC. The following is a summary of the terms of the Agreement with
Mr. Magnusson, which does not purport to be complete and is
qualified in its entirety by reference to the complete text of the
Employment Agreement, a copy of which is filed as Exhibit 10.1 to
the Company Form 8-K report filed with the SEC on May 13,
2019:
Term:
|
The
initial term of the Agreement expires on December 31, 2021, and is
automatically renewable for additional one-year renewal terms
unless one party gives the other at least 90 days’ notice
prior to scheduled expiration of the Agreement that it will not be
renewed.
|
Termination:
|
Termination. The Company may terminate the Agreement at any
time for “Cause,” defined as (1) a material breach by
Mr. Magnusson of his duties and responsibilities as set forth under
this Agreement, resulting from other than Mr. Magnusson's complete
or partial incapacity due to Disability (2) gross misconduct, (3) a
breach of the Agreement, the Company’s employment standards
of conduct or employee manual, (4) neglect of duties under the
Agreement, or (5) violation of a federal or state law or regulation
applicable to the business of the Company. The Company may
terminate Mr. Magnusson's employment for Disability, defined as
“any physical or mental incapacitation that results in Mr.
Magnusson's inability to perform his duties and responsibilities
for the Company for a period in excess of 90 consecutive days or
for more than 120 days during any consecutive 12 month period. Mr.
Magnusson may terminate his employment with the Company for Good
Reason, defined as one of the following events: (i) a material and
adverse change in Mr. Magnusson's position, duties,
responsibilities, or status; (ii) a material reduction in Mr.
Magnusson's salary or benefits then in effect, other than a
reduction comparable to reductions generally applicable to
similarly situated employees of the Company or (iii) the Company
materially breaches this Agreement.
|
Annual Compensation/Signing Bonus:
|
Mr.
Magnusson’s annual base salary for Fiscal Year 2019 is
$375,000, with subsequent year base salary rates to be determined
at the sole discretion of the Compensation Committee of the Board
of Directors, but in no event less than $375,000. Mr. Magnusson
received a $75,000 bonus upon signing of the
Agreement.
|
Bonus Compensation:
|
Mr.
Magnusson shall be entitled to participate in all executive cash
bonus/long term incentive compensation plan approved by the Board
of Directors for executive officers and key executives of the
Company, when and if established by the Compensation Committee, as
determined by good faith negotiation with the Compensation
Committee.
|
Severance:
|
In the
event the Company terminates the Agreement for any reason other
than Cause or Disability, or in the event that Mr. Magnusson
terminates the Agreement for Good Reason, Mr. Magnusson will be
entitled to severance payments equal to his then effective base
salary payable on a semi-monthly basis until the date that is the
earlier of (i) the scheduled expiration date of the Employment
Agreement or (ii) twenty-four months after such event of
termination. If Mr. Magnusson commences subsequent employment
during such payment period, the payment amounts during such period
shall be reduced by an amount equal to 75% of the base compensation
received by Mr. Magnusson from his successor employer during the
overlapping period of the severance payment period and Mr.
Magnusson’s new employment.
|
Directors and Executive Officers Compensation Post
Effective-Date
Following the closing of the Plan Sponsor Agreement, the
Company’s plans for compensation arrangements for the newly
appointed directors and officers will be set by the Board at a
future date.
SIGNATURE
Pursuant to the
requirements of the Securities Exchange Act of 1934, the Company
has duly caused this Information Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
AEROCENTURY
CORP.
Harold
M. Lyons
SVP
Finance and Chief Financial Officer
Aerocentury (AMEX:ACY)
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