In the Company’s Form 10-K, for the fiscal year ended December 31, 2002, under the settlement agreement, the Company paid $11.5 million in cash, all of which was paid by the Company’s directors’ and officers’ liability insurance carrier. The Company also issued (i) 1.25 million shares of authorized but unissued common stock, (ii) $4.0 million of new 8% Junior Subordinated Convertible PIK Notes due 2007, and (iii) five-year warrants to purchase 4.15 million shares of common stock at an exercise price of $5.16 per share, which are exercisable upon grant.
According to the latest docket, on August 24, 2001, the Court entered the Order granting in part and/or denying in part several, separate motions filed by Aviation Sales, Arthur Andersen LLP, and certain Individual Defendants. The plaintiffs then filed a Third Amended Complaint. On May 10, 2002, a Stipulation of settlement was filed, and on May 22, 2002, the Court entered the Order approving the settlement and certifying the Class. On August 21, 2002, U.S. District Judge Federico A. Moreno issued the Final Judgment and Order of Dismissal with Prejudice, approved the plan of allocation of the settlement, granted plaintiffs’ request for an award of attorneys’ fees and reimbursement for expenses and the case was closed.
The original action charges Aviation and others for violation of section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5 of the Securities Exchange Commission by reason of material misrepresentations and omissions during the Class Period concerning the Company.