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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement pursuant to Section 14(a) of
The Securities Exchange Act of 1934 (Amendment No. _____)
[X] Filed by the Registrant
[ ] Filed by a party other than the Registrant
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11C or Rule 14a-12
AIRPORT SYSTEMS INTERNATIONAL, INC.
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(Name of Registrant as Specified in Its Charter)
Steven F. Carman, Attorney for the Registrant
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:(1)
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(4) Proposed maximum aggregate value of transaction:
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(1)Set forth the amount on which the filing fee is calculated and state how
it was determined.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule, or registration statement number.
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(3) Filing party:
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(4) Date filed:
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AIRPORT SYSTEMS INTERNATIONAL, INC.
11300 WEST 89TH STREET
OVERLAND PARK, KANSAS 66214
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 15, 1998
Notice is hereby given that the Annual Meeting of the Stockholders of
Airport Systems International, Inc. (the "Company"), will be held at The
Doubletree Hotel at Corporate Woods, 10100 College Boulevard, Overland Park,
Kansas on Tuesday, September 15, 1998, commencing at 2:00 p.m. Kansas City time,
to consider and act upon the following matters and such other business as may
properly come before the meeting or any adjournment thereof:
1. The election of two (2) Class II Directors to serve for
a term of three years expiring in 2001; and
2. The ratification of the Board of Directors' appointment of
Ernst & Young as independent public accountants; and
3. Amendment of the Restated 1991 Stock Option Plan.
Holders of record of the outstanding Common Stock of the Company at the
close of business on July 24, 1998, are entitled to vote at the meeting or any
adjournment thereof.
By Order of the Board of Directors,
THOMAS C. CARGIN
Secretary
Overland Park, Kansas
August 5, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE TO WHICH NO
POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES. YOUR SHARES CANNOT BE
VOTED UNLESS YOU SIGN AND RETURN A PROXY OR VOTE BY BALLOT AT THE MEETING.
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AIRPORT SYSTEMS INTERNATIONAL, INC.
11300 WEST 89TH STREET
OVERLAND PARK, KANSAS 66214
PROXY STATEMENT
GENERAL INFORMATION
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy is being solicited on behalf of the Board of
Directors of Airport Systems International, Inc. (the "Company") for use at the
Annual Meeting of the Stockholders to be held on September 15, 1998 (the
"Meeting"), or at any adjournment thereof. Any proxy given does not affect the
right to vote in person at the Meeting and may be revoked at any time before it
is exercised by notifying Thomas C. Cargin, Secretary, by mail, telegram or
facsimile, or by appearing at the Meeting in person and casting a ballot. This
Proxy Statement and the proxy were first mailed to stockholders on or about
August 5, 1998.
All expenses of solicitation will be borne by the Company. In addition
to solicitations by mail, regular employees and Directors of the Company may
solicit proxies in person or by telephone. The Company does not expect to pay
any compensation for the solicitation of proxies.
VOTING PROCEDURES
Shares represented by a properly signed proxy received pursuant to this
solicitation will be voted in accordance with instructions thereon. If the proxy
is properly signed and returned and no instructions are given on the proxy with
respect to the matters to be acted upon, the shares represented by the proxy
will be voted at the Meeting for the election, as directors of the Company, of
the nominees hereinafter named and for the ratification of the appointment of
Ernst & Young as independent public accountants of the Company and for the
amendment of the Company's Restated 1991 Stock Option Plan. If any of the
nominees should unexpectedly become unavailable for election for any reason, the
shares represented by the proxy will be voted for such substituted nominee or
nominees as the Board of Directors may name. Each of the nominees hereinafter
named has indicated his willingness to serve if elected, and it is not
anticipated that either of them will become unavailable for election.
The proxy confers discretionary authority, with respect to the voting
of the shares represented thereby, on any other business that may properly come
before the Meeting. The Board of Directors is not aware that any such other
business, other than as set forth in this Proxy Statement and except for matters
incident to the conduct of the Meeting, is to be presented for action at the
Meeting and does not itself intend to present any such other business; however,
if any such other business does come before the Meeting, shares represented by
proxies properly signed and returned pursuant to this solicitation will be voted
as directed by the Board of Directors.
The two nominees for Director receiving the greatest number of votes at
the Meeting will be elected as Directors. Any shares not voted (whether by
abstention, broker non-vote, or otherwise) have no impact in the election of
directors except to the extent the failure to vote for an individual results in
another individual receiving a larger proportion of the total votes. The
ratification of the appointment of independent public accountants requires the
affirmative vote of a majority of shares present in person or represented by
proxy, and entitled to vote on the matter. For purposes of determining the
outcome of the vote on this matter, an instruction to "abstain" from voting on a
proposal will be treated as shares present and entitled to vote, and will have
the same effect as a vote against a proposal. "Broker non-votes," which occur
when brokers are prohibited from exercising discretionary voting authority for
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beneficial owners who have not provided voting instructions, are not counted for
the purpose of determining the number of shares present in person or represented
by proxy on a voting matter and will have no effect on the outcome of the vote
on the ratification of appointment of accountants. Amendment of the Restated
1991 Stock Option Plan requires the affirmative vote of a majority of the shares
of common stock represented at the meeting and entitled to vote. Thus,
abstentions and broker non-votes will have the effect of votes against the
proposal.
Only holders of Common Stock of the Company of record as of the close
of business on July 24, 1998, are entitled to vote at the Meeting. At the close
of business on that date, 2,230,500 shares of Common Stock were outstanding.
Holders of Common Stock are entitled to one (1) vote per share standing in their
names on the record date. Shares cannot be voted at the Meeting unless the owner
is present in person or represented by proxy.
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SECURITY OWNERSHIP
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth information with respect to the
beneficial ownership of shares of the Company's Common Stock at May 15, 1998, by
(i) the stockholders known by the Company to own beneficially more than 5% of
the Common Stock, (ii) each director of the Company who owns beneficially any
Common Stock, (iii) each executive officer named in the "Summary Compensation
Table," and (iv) all directors and executive officers of the Company as a group.
Unless otherwise indicated, the Company believes that each stockholder listed
below has sole voting and investment power with respect to the Common Stock
indicated as beneficially owned by them.
Number of Shares Percent of
Name and Address Beneficially Owned(1) Class
- ---------------- --------------------- -----
Gilder, Gagnon, Howe & Co. ............................240,475(2) 10.8
1775 Broadway
New York, NY 10019
FMR Corporation........................................199,000(3) 8.9
82 Devonshire Street
Boston, MA 02109-3614
Keith S. Cowan.........................................141,643(4) 6.0
Airport Systems International, Inc.
11300 West 89th Street
Overland Park, KS 66214
Thomas C. Blackburn....................................107,865(5) 4.8
Kansas Venture Capital, Inc.
6700 Antioch, Suite 460
Overland Park, KS 66204
Robert D. Taylor........................................39,300 1.8
Taylor Financial
1313 North Webb Rd., Suite 260
Wichita, KS 67206
Thomas C. Cargin........................................46,645(6) 2.1
Airport Systems International, Inc.
11300 West 89th Street
Overland Park, KS 66214
Michael M. Warner.......................................35,000(7) 1.5
Airport Systems International, Inc.
11300 West 89th Street
Overland Park, KS 66214
John C. Roos............................................43,393(8) 1.9
Airport Systems International, Inc.
11300 West 89th Street
Overland Park, KS 66214
Wayne S. Howard.........................................15,000(9) *
Airport Systems International, Inc.
11300 West 89th Street
Overland Park, KS 66214
All directors and executive officers as a..............476,841(10) 19.0
group (9 persons)
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* Less than one percent.
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(1) Pursuant to the rules of the Securities and Exchange Commission ("SEC"),
shares of Common Stock of the Company which an individual or a group has
a right to acquire within 60 days pursuant to the exercise of options or
warrants are deemed to be outstanding for the purpose of computing the
percentage of ownership of such individual or group, but are not deemed
to be outstanding for the purpose of computing the percentage ownership
of any other person shown in the table.
(2) According to a letter to the Company dated July 23, 1998, Gilder,
Gagnon, Howe & Co., a broker-dealer registered under Section 15 of the
Securities Exchange Act of 1934, reported beneficial ownership as to
240,475 shares of Common Stock of the Company held as of December 31,
1997. 226,900 of such shares were held in accounts owned by its partners
and by its partners' families in accounts controlled by partners, 5,650
of such shares were held in the account of its firm profit sharing plan
which is controlled by certain of its partners, and 7,925 of such shares
were held in the name of various employees of Gilder, Gagnon, Howe & Co.
(3) According to Schedule 13G sent to the Company, FMR Corporation, in its
capacity as an investment advisor, reported beneficial ownership as to
199,000 shares of Common Stock of the Company held as of December 31,
1997, and reported that it had shared voting power with respect to
199,000 of such shares and shared dispositive power over 199,000 of such
shares.
(4) Includes presently exercisable options to purchase 127,750 shares of
Common Stock of the Company.
(5) These shares of Common Stock of the Company are owned by Kansas Venture
Capital, Inc., of which Mr. Blackburn is the Vice President and as such
may be deemed to be a beneficial owner of these shares. Mr. Blackburn
disclaims such beneficial ownership.
(6) Includes presently exercisable options to purchase 31,500 shares of
Common Stock of the Company.
(7) Includes presently exercisable options to purchase 35,000 shares of
Common Stock of the Company.
(8) Includes presently exercisable options to purchase 31,500 shares of
Common Stock of the Company.
(9) Includes presently exercisable options to purchase 15,000 shares of
Common Stock of the Company.
(10) Includes presently exercisable options to purchase 277,250 shares of
Common Stock of the Company held by executive officers and directors as
a group.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, based solely on review of copies of reports
filed with the Securities and Exchange Commission and written representations
that no other reports were required during 1997, all Section 16(a) filing
requirements applicable to the officers, directors and beneficial owners of more
than 10 percent of the Company's equity securities were complied with on a
timely basis.
According to a letter to the Company dated July 23, 1998, Gilder,
Gagnon, Howe & Co., a broker-dealer registered under Section 15 of the
Securities and Exchange Act of 1934, held 741,195 shares of Common Stock of the
Company in client accounts as of December 31, 1997. Gilder, Gagnon, Howe & Co.
disclaims beneficial ownership as to all such shares and does not have the
exclusive authority to vote, buy, or sell any of the shares held by any of such
clients.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Stockholder proposals to be considered for inclusion in the Proxy
Statement and considered at the 1999 Annual Meeting of Stockholders must be
received by the Company no later than April 10, 1999. Any such proposals should
be directed to the Secretary of the Company at 11300 West 89th Street, Overland
Park, Kansas 66214.
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I. ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes,
with the term of office of each class ending in successive years. The terms of
the Directors of Class II expire with this Meeting. Each of the two nominees for
Class II, if elected, will serve three years until the 2001 Annual Meeting of
Stockholders and until a successor has been elected and qualified. The current
Directors of Classes III and I will continue in office until the 1999 and 2000
Annual Meetings, respectively.
NOMINEES FOR DIRECTORS
The following information is given with respect to the nominees for election.
Class II - Nominees to Serve Three Years until 2001 Annual Meeting
MICHAEL J. MEYER, age 42, has served as a Director of the Company since its
organization in May 1991, as its Chairman until March 7, 1995, and as its
President through September 1991. Mr. Meyer is President of Merit Capital
Management, Inc., a private equity merchant banking firm engaged in financing
growth-oriented private companies and acquisitions, which he formed in May,
1998. Prior to that he was Co-Manager of Holden Capital Advisors, LLC from
August, 1996 and prior to that was a Senior Vice President with George K. Baum &
Company, an investment banking firm from February, 1995. For more than five
years prior to that, Mr. Meyer was a Principal in the general partnership of
Allsop Venture Partners III L.P., a private equity fund. Mr. Meyer is also
Chairman of the Board and a member of the Executive Committee of Kansas Venture
Capital, Inc. and Vice-Chairman of Proxy Express Delivery Services, Inc. He has
over 16 years of experience in financing and managing growth companies and is a
Certified Public Accountant. Mr. Meyer is a member of the Company's Audit
Committee.
WALTER H. STOWELL, JR., age 61, has served as Chairman of the Board since March
7, 1995 and a Director of the Company since May 18, 1994. Mr. Stowell retired
from Raytheon Company on April 1, 1994, after being an employee of Raytheon
since 1960 in a variety of positions, last serving as a Senior Vice President
and General Manager of the Equipment Division. Raytheon Company is a
diversified, multi-industry, technology-based company, whose equipment division
develops and builds military and commercial radars, air traffic control systems,
satellite terminals, communications equipment, computers and missile fire
control systems. He is a member of the Company's Compensation and Stock Option
Committees.
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
The following information is given with respect to the Directors of Classes III
and I, who will continue to serve as Directors of the Company until the 1999 and
2000 Annual Meetings of Stockholders, respectively.
Class III - Serving Until 1999 Annual Meeting
KEITH S. COWAN, age 44, has served as President and a Director of the Company
since September 1991, and as Chief Executive Officer of the Company since August
1993. Prior to joining the Company, Mr. Cowan was an employee of the Teledyne
Controls Division of Teledyne, Inc. for more than five years, last serving as
Vice President, Airport and Instrumentation Products. Mr. Cowan has over
twenty-four years of system engineering, project management, and corporate
experience in the development, manufacturing, and sale of electronic systems. He
is also a licensed pilot holding an instrument rating.
ROBERT D. TAYLOR, age 51, has served as a Director of the Company since
September 1994. Mr. Taylor is President of Taylor Financial, a consulting and
investment firm and Chairman of Westchester Health Systems Group, an operator of
assisted living facilities. Mr. Taylor also serves as a Director on the Boards
of Commercial Federal Bank of Omaha,
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Nebraska, and Sirloin Stockade International, Inc. From 1991 to 1995, Mr. Taylor
was Chairman and Chief Executive Officer of Railroad Financial Corporation. Mr.
Taylor also serves as a Director of the Business School Advisory Board at the
University of Kansas and is a Trustee of the Sedgwick County Zoo in Wichita,
Kansas. Mr. Taylor serves on the Company's Compensation and Audit Committees.
Class I - Serving until 2000 Annual Meeting
THOMAS C. BLACKBURN, age 38, has served as a Director of the Company since its
organization in May 1991, and served as its Secretary until March 1993. Mr.
Blackburn has served as a Vice President of Kansas Venture Capital, Inc.
("KVCI"), a licensed small business investment company, since November 1988.
KVCI is a private SBIC organized to finance growth-oriented Kansas businesses.
Mr. Blackburn has over fourteen years experience in the investment industry in a
variety of capacities. He is a member of the Company's Stock Option Committee.
THOMAS C. CARGIN, age 43, has served as Vice President - Finance and
Administration of the Company since December 1991, as its Secretary since March
1993, and as a Director of the Company since October 1993. Prior to joining the
Company, Mr. Cargin was a partner in the accounting firm of Ifft & Barber since
1989 and prior to that was an employee of DYMON, Inc., a specialty chemical
manufacturer located in Kansas City, Kansas, since 1983, last serving as Vice
President of Finance and Chief Financial Officer. Mr. Cargin is a Certified
Public Accountant with over twenty one years of public accounting and private
industry accounting experience. He is also a licensed pilot holding an
instrument rating.
COMMITTEES AND DIRECTOR MEETINGS
The Board of Directors has established an Audit Committee, a
Compensation Committee, and a Stock Option Committee. The entire Board of
Directors acts as the nominating committee responsible for selecting candidates
for election as Directors. Stockholders wishing to submit the name of a
candidate for the Board of Directors should submit the recommendation, along
with biographical information, to the Secretary of the Company. The Audit
Committee's responsibilities include recommending to the Board of Directors the
public accounting firm to be engaged to audit the Company and reviewing with the
independent accountants the plan for, and results of, the auditing engagement
and the Company's internal accounting controls. The Audit Committee, which held
two formal meetings, is comprised of a majority of outside directors and its
current members consist of Messrs. Taylor and Meyer. The Compensation Committee,
which met once during the last fiscal year, is comprised of Messrs. Taylor and
Stowell, and has been given the responsibility of setting and administering the
policies which govern the annual compensation of the Company's executive
officers, as well as the Company's benefit plans other than the Stock Option
Plan. The Company's Stock Option Plan is administered by a committee of two
independent directors who may not receive options under the Stock Option Plan.
Messrs. Stowell and Blackburn currently comprise the Stock Option Committee,
which held one meeting during the last fiscal year.
The Board of Directors held eight special and regularly scheduled
meetings during the fiscal year ended April 30, 1998. During such fiscal year,
each director attended at least 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings held by all
Committees of the Board of Directors on which the Director served during the
last fiscal year.
DIRECTOR COMPENSATION
Each Director who is not a salaried employee of the Company is paid a
fee of $3,000 for each regularly scheduled Board meeting attended up to a
maximum of $12,000 per year, plus $1,000 for each specially scheduled Board
Meeting plus $500 for each meeting of a committee of the Board attended. No
Director who is an employee of the Company will receive compensation for
services rendered as a Director.
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EXECUTIVE COMPENSATION
The following table sets forth information concerning cash and non-cash
compensation paid to or accrued for the benefit of each of the Company's Chief
Executive Officer and certain other executive officers of the Company ("Named
Executive Officers") for all services rendered in all capacities to the Company
for the fiscal periods ended April 30, 1998, 1997 and 1996. No other current
executive officer of the Company received compensation in excess of $100,000 for
the last fiscal year.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
------------
Awards
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Shares
Annual Compensation Underlying
Name and ------------------------------------------- Options All Other
Principal Position Year Salary Bonus Other (#) Compensation(1)
- ------------------ ---- ------ ----- ----- --- ---------------
Keith S. Cowan 1998 $165,433 $42,888 $766(2) $-- $3,947
President and CEO 1997 155,000 57,000 744(2) -- 1,538
1996 139,000 -- 831(2) -- 1,390
Thomas C. Cargin 1998 $104,808 $15,137 $-- $-- $4,136
Vice President-Administration, 1997 100,000 27,000 -- -- 1,031
Secretary 1996 95,000 -- -- -- 520
Michael M. Warner 1998 $126,796 $15,137 $-- $-- $3,025
Vice President- 1997 118,800 -- 20,000(3) -- 1,181
Business Development 1996 110,000 -- -- -- 254
John C. Roos 1998 $113,165 $15,137 $-- $-- $3,164
Vice President-Engineering 1997 103,692 24,000 -- -- 1,035
1996 100,000 -- -- -- 532
Wayne S. Howard 1998 $103,483 $50,000 $-- $-- $2,604
Vice President-Indonesia 1997 92,494 12,000 -- -- 925
Programs 1996 90,000 -- -- -- 599
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(1) Consists of Company matching contributions made on behalf of Named
Executive Officers under the Company's 401(k) Savings Plan.
(2) Consists of monthly dues paid on a Company-owned membership at a golf
and country club of which Mr. Cowan presently is the Company's designated
member.
(3) Consists of consideration paid to Mr. Warner for his efforts in securing
orders for the Company in 1997 and execution of a Covenant Not To Compete
Agreement.
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AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth, for each of the Named Executive
Officers in the Summary Compensation Table above, the fiscal year-end number and
value of unexercised options. No options were exercised by the Named Executive
Officers during the fiscal year ended April 30, 1998.
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at April 30, 1998 at April 30, 1998(1)
-------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Keith S. Cowan............................127,750 -- $513,456 $--
Thomas C. Cargin...........................31,500 -- 105,951 --
Michael M. Warner..........................35,000 -- -- --
John C. Roos...............................31,500 -- 105,951 --
Wayne S. Howard............................15,000 -- -- --
(1) The value of unexercised in-the-money options is the difference between the
exercise price of the options and the fair market value of the Company's
Common Stock at April 30, 1998 ($5.00 per share).
EMPLOYMENT ARRANGEMENTS WITH NAMED EXECUTIVE OFFICERS
The Company entered into a written employment agreement effective June
22, 1993, with Keith S. Cowan. The agreement provides for Mr. Cowan to be
employed by the Company for a minimum period of three years following its
effective date. The Company recently extended the minimum employment period in
Mr. Cowan's employment agreement to November 30, 1999. All other terms and
conditions remained the same.
As compensation for services rendered to the Company, the agreement
provides for Mr. Cowan to receive (i) a base annual salary of $185,000 which may
be adjusted above such base amount from time to time by action of the Board of
Directors, and (ii) a performance-based bonus, the amount of which is determined
by reference to such criteria as may be established by the Board of Directors.
The Company also entered into a substantially similar written
employment agreement effective October 11, 1993, with Thomas C. Cargin. The
agreement provides for Mr. Cargin to be employed by the Company for a minimum
period of three years following its effective date. The Company recently
extended the minimum employment period in Mr. Cargin's employment agreement to
November 30, 1999. All other terms and conditions remained the same.
As compensation for services rendered to the Company, the agreement
provides for Mr. Cargin to receive (i) a base salary of $110,250 which may be
adjusted above such base amount from time to time by action of the Board of
Directors, and (ii) a performance-based bonus, the amount of which is determined
by reference to such criteria as may be established by the Board of Directors.
Each of Mr. Cowan's and Mr. Cargin's employment may be terminated by
the Company for cause (as defined in the agreements) or without cause. If Mr.
Cowan's or Mr. Cargin's employment is terminated for cause or if either resigns,
any unearned salary and bonus rights will cease on the date of such termination
or resignation. If the Company terminates Mr. Cowan or Mr. Cargin without cause,
all compensation payments will continue through the remainder of the agreement
term of the relevant agreement, or 12 months, whichever is greater. Pursuant to
the agreements, Mr. Cowan and Mr. Cargin have agreed to refrain from (i)
disclosing the Company's confidential information and (ii) for a one-year period
following termination of employment engaging, directly or indirectly, in any
ground-based navigation aids business which competes with the Company.
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On March 20, 1997, the Company entered into an agreement (the
"Agreement") with Michael W. Warner. In consideration of Mr. Warner's efforts to
procure a significant contract and Mr. Warner's covenant not to compete against
the Company for a period of two years after his resignation or termination, the
Company paid Mr. Warner a cash payment of $20,000 and extended a loan of $80,000
to Mr. Warner in the form of a promissory note (the "Promissory Note"). The
Promissory Note is to be paid in full on or before March 20, 2001 and carries
interest at an annual percentage rate of 6.375%. In exchange for Mr. Warner's
continued employment, the Company agreed to forgive the Promissory Note in
equivalent one-fourth amounts over each of the four years covered by the note
($20,000 per year). For the final year ended April 30, 1998, $20,000 was
forgiven under terms of the Agreement, leaving an unpaid balance of $60,000. As
set forth in the Promissory Note and the Agreement, the Company also agreed to
forgive the Promissory Note entirely in the event of Mr. Warner's death or if
Mr. Warner is terminated without cause following a change in control of the
Company.
II. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has appointed Ernst & Young as
independent public accountants to audit and certify the Company's financial
statements for the fiscal year ending April 30, 1999, subject to ratification
and approval by the stockholders at the Meeting.
Ernst & Young has examined the financial statements of the Company
since its organization in 1991. Representatives of Ernst & Young are expected to
be present at the Meeting, will be given the opportunity to make a statement if
they desire to do so, and are expected to be available to respond to appropriate
questions. The affirmative vote of a majority of the shares present and entitled
to vote at the Meeting is required for the approval of this proposal to ratify
the appointment. If the stockholders do not ratify the appointment of Ernst &
Young, the selection of independent public accountants will be reconsidered by
the Board of Directors.
The Board of Directors recommends that the stockholders vote FOR the
approval of the appointment.
III. AMENDMENT TO RESTATED 1991 STOCK OPTION PLAN
The Board recommends a vote for the amendment of the Company's Restated
1991 Stock Option Plan (the Plan"), increasing the number of shares of Common
Stock subject to option thereunder from 375,000 to 475,000. The stockholders are
being asked to ratify an amendment to the Plan. Capitalized terms used but not
defined herein shall have the meanings set forth in the Plan.
As of July 15, 1998, only 500 shares of Common Stock remain available
for option grants under the Plan. The amendment increases the number of shares
of Common Stock available for options under the Plan by 100,000 shares.
Information regarding the Stock Option Plan is set forth below.
RESTATED 1991 STOCK OPTION PLAN
General. The Plan provides for the grant of both non-qualified stock
options and options that qualify as incentive stock options under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"). The Plan is
administered by the Board. Officers, directors, employees, and consultants of
the Company and its affiliates generally are eligible to participate in the
Plan.
The purposes of the Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to the Company's employees, directors and consultants and to promote
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the success of the Company's business. To accomplish these objectives, the Plan
authorizes the grant of incentive stock options and non-qualified stock options.
The Plan is to continue in effect for a term of ten years, unless
sooner terminated by the Board, which may, from time to time, amend the Plan as
it deems advisable. However, approval by the Company's shareholders is required
for any revision or amendment to the Plan which provides for (i) any increase in
the number of Shares subject to the Plan (except for adjustments upon changes in
capitalization or merger), (ii) any change in the designation of the class of
persons eligible to be granted options, or (iii) any material increase in the
benefit accruing to participants under the Plan. The term of each incentive
stock option shall be ten years from the date of grant thereof, or such shorter
term as may be provided in the Incentive Stock Option Agreement. The term of
each option that is not an incentive stock option shall be as determined by the
Board and set forth in the Option Agreement. The term of any incentive stock
option that is granted to a holder of ten percent of the Common Stock of the
Company shall be five years from the date of grant or such shorter time as may
be provided in the Stock Option Agreement.
The maximum aggregate number of shares of Common Stock which may be
optioned and sold under the Plan is currently 375,000. Common Stock optioned and
sold under the Plan may be authorized, but unissued, or reacquired Common Stock.
The exercise price of an incentive stock option shall be at least 100%
of the fair market value of the Common Stock at the time the option is granted;
provided, however, that the exercise price will be 110% of the fair market value
of the Common Stock in the case of an Employee owning 10% or more of the
Company's Common Stock. The exercise price of any non-qualified stock options
will be as determined by the Board. The consideration to be paid for the Shares
to be issued upon exercise of an option, including the method of payment, shall
be determined by the Board and may consist entirely of cash, check, other shares
of Common Stock or other legally permissible methods of exercise, all as set
forth in the Plan.
Tax Treatment. Under the Plan, the Board may grant options that qualify
as "incentive stock options" ("ISOs") as defined in Section 422 of the Code. The
grantee of an ISO will not recognize taxable income by reason of the grant or
the exercise of an ISO. Under Code Section 422, if an Optionee exercises an ISO
and retains the acquired shares for at least one year after the date of transfer
and for at least two years after the date of grant, any gain or loss realized
upon disposition will be taxable to the grantee as a capital gain or loss at a
rate depending upon the period the grantee held the shares, and the Company will
not be entitled to any tax deduction. As a general rule, however, if the grantee
does not satisfy the applicable holding periods, the difference between the
option price and the lesser of the fair market value of the shares on the date
of exercise or the price received upon disposition of the shares generally will
be treated as compensation taxable to the grantee as ordinary income. Any
additional gain upon such disposition will be taxed as capital gain. As a
general rule, the Company will then be entitled to a deduction in the amount
constituting ordinary income to the grantee. At the time of exercise, the
difference between the price paid and the market value of the stock (the
"bargain element"), is treated as an "adjustment" in the calculation of
"alternative taxable income" and may result in the imposition of the
"alternative minimum tax."
The grantee of a non-qualified stock option ("NQSOs") will not
recognize taxable income when the NQSO is granted. At the time of exercise, the
grantee will recognize ordinary income, subject to withholding, and the Company
will be entitled to a corresponding deduction in the amount by which the market
value of the purchased shares at the time of exercise exceeds the exercise price
for such shares. If an Optionee thereafter sells such shares, the gain or loss,
if any, realized upon such disposition will constitute capital gain or loss to
the Optionee.
The closing market price of the Company's Common Stock on the NASDAQ
National Market System was $5.125 per share on July 15, 1998.
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The following table sets forth the number of stock options granted
under the Plan as of July 15, 1998 to the persons listed below:
Number of Shares
Name and Position Underlying Options Held(2)
- ----------------- --------------------------
Keith S. Cowan, Chief Executive Officer............................. 127,750
Michael M. Warner, Vice President .................................. 35,000
Wayne S. Howard, Vice President .................................... 15,000
Thomas C. Cargin, Vice President ................................... 31,500
John L. Roos, Vice President ....................................... 31,500
Executive Officers as a Group (7 persons)........................... 287,250
Non-Executive Directors as a Group (0 persons)...................... 0
Non-Executive Officer Employees as a Group (1 person)............... 5,000
The Board of Directors recommends a vote FOR the proposal to amend the Company's
Restated 1991 Stock Option Plan to increase the number of shares reserved for
issuance thereunder from 375,000 to 475,000 shares.
By Order of the Board of Directors,
THOMAS C. CARGIN
Secretary
- --------------------
(2)The weighted average exercise prices per share for Executive
Officers as a group and Non-Executive Officer Employees as a group are $2.51
and $5.625, respectively.
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APPENDIX A
RESTATED
AIRPORT SYSTEMS INTERNATIONAL, INC.
1991 STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" shall mean the Committee, if one has been appointed, or the
Board of Directors of the Company, if no Committee is appointed.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Airport Systems International, Inc., a Kansas
corporation.
(e) "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.
(f) "Consultant" shall mean any person who is engaged by the Company or
any subsidiary to render consulting services and is compensated for such
consulting services or any other person determined by the Board to have
performed services for or on behalf of the Company which merits the grant of an
Option, and any director of the Company whether compensated for such services or
not; provided that if and in the event the Company registers any class of any
equity security pursuant to Section 12 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), the term Consultant shall thereafter not
include directors who are not compensated for their services or are paid only a
director's fee by the Company.
(g) "Continuous Status as an Employee or Consultant" shall mean the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Board; provided that such leave is for a period
of not more than 90 days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.
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(h) "Employee" shall mean any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
(i) "Incentive Stock Option" shall mean an Option intended to qualify
as an incentive stock option within the meaning of Section 422A of the Code.
(j) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(k) "Option" shall mean a stock option granted pursuant to the Plan.
(l) "Optioned Stock" shall mean the Common Stock subject to an Option.
(m) "Optionee" shall mean an Employee or Consultant who receives an
Option.
(n) "Parent" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 425(e) of the Code.
(o) "Plan" shall mean this Restated 1991 Stock Option Plan.
(p) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(q) "Subsidiary" shall mean a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 425(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of shares which may be optioned and
sold under the Plan is 475,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. Notwithstanding any other provision of the Plan,
shares issued under the Plan and later repurchased by the Company shall become
available for future grant or sale under the Plan.
4. Administration of the Plan.
(a) Procedure. The Plan shall be administered by the Board of
Directors of the Company.
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(i) Subject to subparagraph (ii), the Board of Directors may
appoint a Committee consisting of not less than two members of the
Board of Directors to administer the Plan on behalf of the Board of
Directors, subject to such terms and conditions as the Board of
Directors may prescribe. Once appointed, the Committee shall continue
to serve until otherwise directed by the Board of Directors. Members of
the Board who are either eligible for Options or have been granted
Options may vote on any matters affecting the administration of the
Plan or the grant of any Options pursuant to the Plan, except that no
such member shall act upon the granting of an Option to himself, but
any such member may be counted in determining the existence of a quorum
at any meeting of the Board during which action is taken with respect
to the granting of Options to him.
(ii) Notwithstanding the foregoing subparagraph (i), if in any
event the Company registers any class of any equity security pursuant
to Section 12 of the Exchange Act, from the effective date of such
registration (the "Effective Date") until six months after the
termination of such registration (the "Termination Date"), any grants
of options to officers or directors shall only be made by the Board of
Directors; provided, however, that if any of the members of the Board
of Directors are eligible to participate in this Plan or any other
stock option or other stock plan of the Company or any of its
affiliates, or has been eligible at any time within the preceding year,
any grants of options to officers or directors of the Company must be
made by, or only in accordance with the recommendation of, a Committee
consisting of two or more directors, appointed by the Board of
Directors and having full authority to act in the matter, none of whom
is eligible to participate in this Plan or any other stock option or
other stock plan of the Company or any of its affiliates, or has been
eligible at any time within the preceding year. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board
of Directors.
(iii) Subject to the foregoing subparagraphs (i) and (ii),
from time to time the Board of Directors may increase the size of the
Committee and appoint additional members thereof, remove members (with
or without cause) and appoint new members in substitution therefor,
fill vacancies however caused, or remove all members of the Committee
and thereafter directly administer the Plan.
(b) Powers of the Board. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant Incentive Stock
Options or Nonstatutory Stock Options; (ii) to determine upon review of relevant
information and in accordance with Section 8(b) of the Plan, the fair market
value of the Common Stock; (iii) to determine the exercise price per share of
Options to be granted, which exercise price shall be determined in accordance
with Section 8(a) of the Plan; (iv) to determine the Employees or Consultants to
whom, and; the time or times at which, Options shall be granted and the number
of shares to be represented by each Option; (v) to interpret the Plan; (vi) to
prescribe, amend and rescind rules and regulations relating to the Plan; (vii)
to determine the terms and provisions of each Option granted (which need not be
identical) and, with the consent of the holder thereof, modify or amend each
Option; (viii) to accelerate or defer (with the consent of the Optionee) the
exercise date of any Option, consistent with the provisions of Section 5 of the
Plan;
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(ix) to authorize any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Option previously granted by the Board;
and (x) to make all other determinations deemed necessary or advisable for the
administration of the Plan.
(c) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
5. Eligibility.
(a) Options may be granted only to Employees and Consultants. Incentive
Stock Options may be granted only to Employees. An Employee or Consultant who
has been granted an Option may, if he is otherwise eligible, be granted an
additional Option or Options.
(b) To the extent that the aggregate fair market value of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionee during any calendar year (under all plans of the Company or any
Parent or Subsidiary) exceeds $100,000, such Incentive Stock Options shall be
treated as Nonstatutory Stock Options.
(c) Section 5(b) of the Plan shall apply only to an Incentive Stock
Option evidenced by an "Incentive Stock Option Agreement" which sets forth the
intention of the Company and the Optionee that such Option shall qualify as an
incentive stock option. Section 5(b) of the Plan shall not apply to any Option
evidenced by a "Nonstatutory Stock Option Agreement" which sets forth the
intention of the Company and the Optionee that such Option shall be a
Nonstatutory Stock Option.
(d) The Plan shall not confer upon any Optionee any right with respect
to continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his right or the Company's right to terminate
his employment or consulting relationship at any time.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 18 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 14 of the Plan.
7. Term of Options. The term of each Incentive Stock Option shall be
ten (10) years from the date of grant thereof or such shorter term as may be
provided in the Incentive Stock Option Agreement. The term of each Option that
is not an Incentive Stock Option shall be determined by the Board and set forth
in the Option Agreement. However, in the case of an Incentive Stock Option
granted to an Optionee who, at the time the Incentive Stock Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant thereof or
such shorter time may in the Incentive Stock Option Agreement.
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8. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of
the Company or, any Parent or Subsidiary, the per Share exercise
price shall be no less than 110% of the fair market value per
Share on the date of grant.
(B) granted to any other Employee, the per Share exercise
price shall be no less than 100% of the fair market value per
Share on the date of grant.
(ii) in the case of an Option granted on or after the effective
date of registration of any class of equity security of the Company
pursuant to Section 12 of the Exchange Act and prior to six months
after the termination of such registration, the per Share exercise
price shall be no less than 100% of the fair market value per Share on
the date of grant.
(iii) In the case of Non-Statutory Stock Options, at any price
per share determined by the Board.
(b) Fair Market Value. The fair market value shall be determined by the
Board in its discretion; provided, however, that where there is a public market
for the Common Stock, the fair market value per Share shall be the mean of the
bid and asked prices (or the closing price per share if the Common Stock listed
on that National Association of Securities Dealers Automated Quotation
("NASDAQ") National Market System) of the Common Stock for the date of grant, as
reported in The Wall Street Journal (or, if not so reported, as otherwise
reported by the NASDAQ System) or, in the event the Common Stock is listed on a
stock exchange, the fair market value per Share shall be the closing price on
such exchange on the date of grant of the Option, as reported in The Wall Street
Journal.
(c) Form of Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall
be determined by the Board and may consist entirely of cash, check, other Shares
of Common Stock having a fair market value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said option shall be
exercised, or any combination of such methods of payment, or such other
consideration and method of payment for the issuance of Shares to the extent
permitted under K.S.A. Sections 17-6402, 17-6403 and 17-6407 of the Kansas
General Corporation Code. In making its determination as to the
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type of consideration to accept, the Board shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.
9. Exercise of Option.
(a) Procedure for Exercise Rights as a Shareholder. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise in the form required by the Nonstatutory or Incentive Stock Option
Agreement has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(c) of the Plan.
Until. the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 12 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for purchase under the Option, by the number of Shares as to which the
Option is exercised.
10. Certain Events Affecting Exercisability of Incentive Stock Options.
(a) Termination of Status as an Employee or Consultant. With respect to
Incentive Stock Options, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant (as the case may be), such Optionee may, but
only within sixty (60) days (or such other period of time not exceeding three
(3) months as is determined by the Board, with such determination being made at
the time of grant of the Option) after such event of termination of an
Optionee's Continuous Status as an Employee or Consultant (as the case may be)
(but in no event later than the date of expiration of the term of such Incentive
Stock Option as set forth in the Incentive Stock Option Agreement), exercise his
Incentive Stock Option to the extent that he was entitled to exercise it at the
date of such termination. To the extent that he was not entitled to exercise the
Incentive Stock Option at the date of such termination, or if he does not
exercise such
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Incentive Stock Option (which he was entitled to exercise) within the time
specified herein, the Incentive Stock Option shall terminate.
(b) Disability of Optionee. With respect to Incentive Stock Options,
notwithstanding the provision of Section 10(a) above, in the event of
termination of an Optionee's Continuous Status as an Employee or Consultant (as
the case may be) as a result of his total and permanent disability (as defined
in Section 22(e)(3) of the Code), he may, but only within six (6) months (or
such other period of time not exceeding twelve (12) months as is determined by
the Board, with such determination being made at the time of grant of the
Incentive Stock Option) from the date of termination (but in no event later than
the date of expiration of the term of such Incentive Stock Option as set forth
in the Incentive Stock Option Agreement), exercise his Incentive Stock Option to
the extent he was entitled to exercise it at the date of such termination. To
the extent that he was not entitled to exercise the Incentive Stock Option at
the date of termination, or if he does not exercise such Incentive Stock Option
(which he was entitled to exercise) within the time specified herein, the
Incentive Stock Option shall terminate.
(c) Death of Optionee. With respect to Incentive Stock Options, in the
event of the death of an Optionee:
(i) who is at the time of his death an Employee or Consultant
of the Company and who shall have been in Continuous Status as an
Employee or Consultant since the date of grant of the Incentive Stock
Option, the Incentive Stock Option may be exercised, at any time within
nine (9) months following the date of death (but in no event later than
the date of expiration of the term of such Incentive Stock Option as
set forth in the Incentive Stock Option Agreement), by the Optionee's
estate or by a person who acquired the right to exercise the Incentive
Stock Option by bequest or inheritance, but only to the extent of the
right to exercise that would have accrued had the Optionee continued
living and remained in Continuous Status as an Employee or Consultant
six (6) months after the date of death, subject to the limitation set
forth in Section 5(b); or
(ii) which occurs within thirty (30) days (or such other
period of time not exceeding three (3) months as is determined by the
Board, with such determination being made at the time of grant of the
Incentive Stock Option) after the termination of Continuous Status as
an Employee or Consultant, the Incentive Stock Option may be exercised,
at any time within nine (9) months following the date of death (but in
no event later than the date of expiration of the term of such
Incentive Stock Option as set forth in the Incentive Stock Option
Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the Incentive Stock Option by bequest or inheritance,
but only to the extent of the right to exercise that had accrued at the
date of termination.
11. Non-Transferability of Options. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
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12. Adjustments Upon Changes in Capitalization or Merger. Subject to
any required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been effected
without receipt of consideration. Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company,
the Option will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Board. The Board may, in the exercise
of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise his Option as to all or any part of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable. In the event
of a proposed sale of all or substantially all of the assets of the Company, or
the merger of the Company with or into another corporation, the Option shall be
assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation. Unless the
option agreement granting an Option to an Optionee specifically provides
otherwise, in the event that such successor corporation refuses to assume the
Option or to substitute an equivalent option, the Board shall, in lieu of such
assumption or substitution, provide for the Optionee to have the right to
exercise the Option as to all of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable. The Board shall give
written notice to each holder of an Option of the pendency of the sale of
substantially all of the assets of the Company, a merger involving the Company
or the dissolution or liquidation of the Company not less than ten days prior to
such transaction. If the Board makes an Option fully exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the Board
shall notify the Optionee that the Option shall be fully exercisable for a
period of thirty (30) days from the date of such notice, and the Option will
terminate upon the expiration of such period.
13. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Board makes the determination granting
such Option. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.
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14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval of
the shareholders of the Company in the manner described in Section 18 of the
Plan:
(i) any increase in the number of Shares subject to the Plan,
other than in connection with an adjustment under Section 12 of the
Plan;
(ii) any change in the designation of the class of persons
eligible to be granted Options; or
(iii) if the Company has a class of equity securities registered
under Section 12 of the Exchange Act at the time of such revision or
amendment, any material increase in the benefit accruing to
participants under the Plan.
(b) Shareholder Approval. If any amendment requiring shareholder
approval under Section 14(a) of the Plan is made subsequent to the first
registration of any class of equity securities by the Company under Section 12
of the Exchange Act, such shareholder approval shall be solicited as described
in Section 18 of the Plan.
(c) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
15. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As, a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
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16. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
17. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
18. Shareholder Approval.
(a) Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date
the Plan is adopted. If such shareholder approval is obtained at a duly held
shareholders' meeting, it must be obtained by the affirmative vote of the
holders of a majority of the outstanding shares of the Company, or if such
shareholder approval is obtained by written consent, it must be obtained by the
unanimous written consent of all shareholders of the Company; provided, however,
that approval at a meeting or by written consent may be obtained by a lesser
degree of shareholder approval if the Board determines, in its discretion after
consultation with the Company's legal counsel, that such a lesser degree of
shareholder approval will comply with all applicable laws and will not adversely
affect the qualification of the Plan under Section 422A of the Code.
(b) If and in the event that the Company registers any class of equity
securities pursuant to Section 12 of the Exchange Act, any required approval of
the shareholders of the Company obtained after such registration shall be
solicited substantially in accordance with Section 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder.
(c) If any required approval by the shareholders of the Plan itself or
of any amendment thereto is solicited at any time otherwise than in the manner
described in Section 18(b) hereof, then the Company shall, at or prior to the
first annual meeting of shareholders held subsequent to the later of (1) the
first registration of any class of equity securities of the Company under
Section 12 of the Exchange Act or (2) the granting of an Option hereunder to an
officer or director after such registration, do the following:
(i) furnish in writing, to the holders entitled to vote for
the Plan substantially the same information which would be required (if
proxies to be voted with respect to approval
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or disapproval of the Plan or amendment were then being solicited) by
the rules and regulations in effect under Section 14(a) of the Exchange
Act at the time such information is furnished; and
(ii) file with, or mail for filing to, the Securities and
Exchange Commission four copies of the written information referred to
in subsection (i) hereof not later than the date on which such
information is first sent or given to shareholders.
19. Gender Reference. The words "he", "him" or "his" shall be deemed to
include the feminine and neuter gender of such words.
Adopted by the Board of Directors of Airport Systems International,
Inc. on May 15, 1998, and approved by the stockholders on September 15, 1998.
---------------------------------------
Thomas C. Cargin, Secretary
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APPENDIX B
PROXY AIRPORT SYSTEMS INTERNATIONAL, INC.
11300 West 89th Street, Overland Park, KS 66214
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS ON SEPTEMBER 15, 1998
The Board of Directors recommends a vote FOR items 1, 2 and 3.
The undersigned hereby appoints Keith S. Cowan and Thomas C. Cargin, and each of
them, or their designees, each with full power of substitution, as lawful
proxies to represent and vote all of the shares of Common Stock which the
undersigned is entitled to vote at the annual meeting of the stockholders of the
Company to be held on Tuesday, September 15, 1998, commencing at 2:00 p.m.
Kansas City time on that day, and at any adjournment or adjournments thereof, as
fully and with the same effect as the undersigned might or could do if
personally present, with respect to the following matters and, in their
discretion upon any other matters which may properly come before the meeting:
1. Election of two(2) Class II directors to serve for a term of three years
ending in 2001. The nominees are: Michael J. Meyer and Walter H. Stowell, Jr.
[ ] FOR all nominees listed. [ ] WITHHOLD AUTHORITY to vote for all nominees
listed. [ ] FOR all nominees EXCEPT nominee written in space below:
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2. Ratification of the appointment of Ernst & Young as independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Amendment of the Restated 1991 Stock Option Plan to increase the number of
shares of Common Stock subject to option thereunder by 100,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued, and to be signed on reverse side)
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THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
Either of said proxies present and acting at said meeting or any
adjournment or adjournments thereof shall have and may exercise all of the
powers of all of said proxies. The undersigned hereby ratifies and confirms all
that said proxies, or either of them or their substitutes, may lawfully do or
cause to be done by virtue hereof, and acknowledges receipt of the notice of
said meeting and the Proxy Statement accompanying it.
Dated ____________________________, 1998
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Please insert date of signing. Sign
exactly as name appears at left. If
signing as attorney, administrator,
executor, trustee, or guardian, give full
title as such.