SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SCHEDULE 14A INFORMATION
Proxy Statement pursuant to Section 14(a) of the Securities
Exchange Act Of 1934
Filed by registrant [X] Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Definitive additional materials
[x] Definitive proxy statement [ ] Soliciting material pursuant to
Rule 14a-11(c) or Rule 14a-12
AIRSENSORS. INC.
(Name of Registrant as Specified in Its Charter)
----------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] 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:
-------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid: $125.00
[X] Fee paid with previously with preliminary materials.
[ ] 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:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
AIRSENSORS, INC.
Notice of Annual Meeting of Stockholders
To the Stockholders of AirSensors, Inc.
Notice is hereby given that the Annual Meeting of Stockholders of AirSensors,
Inc. will be held at 1:30 p.m. local time on November 7, 1996 at the Sheraton
Cerritos Hotel Towne Center, 12725 Center Court Drive, Cerritos, California
90703 for the following purposes:
(1) To elect three directors for a term of three years;
(2) To consider and vote upon a proposal to approve the 1996 Incentive
Stock Option Plan;
(3) To ratify the appointment of Ernst & Young LLP as the Company's
independent public auditors; and
(4) To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on September 3, 1996, will be
entitled to notice of and to vote at the meeting and any adjournment thereof.
The vote of each stockholder is important. Whether or not you plan to attend
the meeting, you are requested to date and sign the enclosed proxy card and
return it promptly.
By Order of the Board of Directors,
Dale L. Rasmussen
Secretary
Cerritos, California
October 3, 1996
<PAGE>1
AIRSENSORS, INC.
16804 Gridley Place
Cerritos, California 90703
Proxy Statement
---------------
INFORMATION REGARDING PROXIES
This Proxy Statement and the enclosed proxy are furnished in connection
with the solicitation of proxies by the Board of Directors of AirSensors, Inc.
(the "Company") for use at the Annual Meeting of Stockholders to be held on
Thursday, November 7, 1996, at 1:30 p.m. local time, at the Sheraton Cerritos
Hotel Towne Center, 12725 Center Court Drive, Cerritos, California 90703, and
any adjournment thereof.
These proxy materials are being mailed to stockholders commencing on or
about October 3, 1996. Expenses of solicitation of proxies will be paid by
the Company. Solicitation will be by mail. There may be telephone or
personal solicitations by directors, officers, and employees of the Company
which will be made without paying them additional compensation. The Company
will request banks and brokers to solicit proxies from their customers and
will reimburse those banks and brokers for reasonable out-of-pocket costs for
this solicitation.
If the enclosed proxy is properly executed and returned, it will be voted
in accordance with the instructions specified thereon. In the absence of
instructions to the contrary, it will be voted (i) for all of the nominees for
the Company's Board of Directors listed in this Proxy Statement, (ii) for
approval of the 1996 Incentive Stock Option Plan and (iii) for ratification of
the appointment of Ernst & Young LLP as the Company's independent public
auditors. If other matters come before the meeting, it will be voted in
accordance with the best judgment of the persons named as proxies in the
enclosed proxy. Execution of the proxy will not in any way affect a
stockholder's right to attend the meeting or prevent voting in person. A
proxy may be revoked at any time by delivering written notice to the Secretary
of the Company before it is voted.
Only stockholders of record at the close of business on September 3, 1996
are entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. The holders of shares of Common Stock and 1993 Series 1 Preferred
Stock representing one-third of the outstanding voting rights of the
stockholders entitled to vote at the Annual Meeting will constitute a quorum
at the Annual Meeting. Abstentions and broker non-votes will be counted for
purposes of determining the presence or absence of a quorum.
<PAGE>2
I. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, each consisting of
three Directors, with the three classes serving staggered three-year terms.
The Directors elected at the Annual Meeting will be elected for three-year
terms. Each Director will hold office until the first meeting of stockholders
immediately following expiration of his term of office and until his successor
is qualified and elected.
Although the Board of Directors anticipates that all of the nominees will
be available to serve as Directors of the Company, if any of them do not
accept the nomination, or otherwise are unwilling or unable to serve, the
proxies will be voted for the election of a substitute nominee or nominees
designated by the Board of Directors.
Directors are elected by a plurality of the votes cast by the holders of
the Common Stock and the 1993 Series 1 Preferred Stock present in person or
represented by proxy and entitled to vote at the Annual Meeting. Any shares
not voted (whether by abstention, broker non-vote or votes withheld) are not
counted as votes cast for or against the nominees and will be excluded from
the vote.
INFORMATION ABOUT DIRECTORS
AND NOMINEES FOR ELECTION
The names and ages of the nominees and the other Directors, the year in
which each first became a director of the Company, their principal occupations
and certain other information are as follows:
NOMINEES FOR ELECTION TO TERMS EXPIRING IN 1999
NORMAN L. BRYAN, age 55, has been a Director since November 1993 and is
currently an independent consultant in Strategic Planning and Business
Development. He was employed by Pacific Gas and Electric Company until his
retirement in 1994. At PG&E, Mr. Bryan was Vice President, Marketing from
February 1993 until December 1994, and was Vice President, Clean Air Vehicles
from February 1991 to February 1993.
EDWIN J. SCHNEEBECK, age 84, has been a Director since March 1981 and is
the Vice Chairman of the Board. He was the owner and operator of a magazine
and newspaper distribution business which was sold in 1980 and, until its
dissolution, was President of ESS Corporation, a closely held real estate
company. Since then he has been active as an investor in real estate and
various closely held businesses.
DON J. SIMPLOT, age 61, has been a Director since May 1978. He is the
President of Simplot Industries, Inc., which is engaged in agricultural
enterprises, and a Vice President of J.R. Simplot Company, which is also
engaged in agricultural enterprises. Mr. Simplot is a Director of Micron
Technology, Inc., a designer and manufacturer of semiconductor memory
components primarily used in various computer applications.
<PAGE>3
DIRECTORS WHOSE TERMS CONTINUE UNTIL 1997
PETER B. BENSINGER, age 60, has been a Director since March, 1995. He
has been the President and CEO of Bensinger, DuPont & Associates, a consulting
firm providing consulting, training and employee assistance programs, since
1982. Mr. Bensinger served as Administrator of the U.S. Drug Enforcement
Administration from January 1976 to July 1981. Mr. Bensinger is the son-in-
law of Edwin J. Schneebeck.
RAWLEY F. TAPLETT, age 75, is the Chairman of the Board and has been a
Director of the Company since May 1978. He is the founder and owner of R.F.
Taplett Fruit and Storage Company, a grower, packer and marketer of fruit,
primarily apples. He is also the principal shareholder, and officer and
director, of Whitestone Orchards, Inc., which owns and operates apple
orchards.
DOUGLAS W. TOMS, age 66, is the Chairman of the Executive Committee and
has been a Director of the Company since October 1980. He served as President
and Chief Executive Officer of the Company from October 1980 to April 1989.
Since April 1989, Mr. Toms has been a consultant to American Honda Motor
Company, Inc.
DIRECTORS WHOSE TERMS CONTINUE UNTIL 1998
V. ROBERT COLTON, age 66, has been a Director since March 1989. Mr.
Colton is a retired dentist and has engaged in real estate investment and
development activities for a number of years.
ROBERT M. STEMMLER, age 60, has been a Director since May 1993, and
became the President and Chief Executive Officer of the Company on July 1,
1993. He was a full-time consultant to the Company from December 1992 until
becoming President and CEO. From 1988 until December 1992, Mr. Stemmler was
the Chief Operating Officer of Sargent Fletcher Company, a manufacturer of
fuel tanks, aerial refueling systems and specialty mission equipment for
military aircraft. He was the General Manager of IMPCO Technologies, Inc.
from 1982 to 1985.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended April 30, 1996, there were five meetings of
the Board of Directors. Each Director attended at least 75% of the total
number of meetings of the Board of Directors and committees on which the
Director served, with the exception of V. Robert Colton and Don J. Simplot.
Members of the Executive Committee are Douglas W. Toms, Chair, V. Robert
Colton, Edwin J. Schneebeck, Robert M. Stemmler and Rawley F. Taplett. The
Executive Committee has the authority to exercise all of the authority of the
Board of Directors, except that it may not recommend to the stockholders
proposals to be approved by the stockholders, amend the Bylaws, or amend the
Certificate of Incorporation. The Executive Committee did not meet during the
fiscal year ended April 30, 1996.
<PAGE>4
Members of the Audit Committee are Norman L. Bryan, Chair, Edwin J.
Schneebeck and Douglas W. Toms. The Audit Committee reviews with the
Company's independent auditors the scope, results and costs of the annual
audit and the Company's accounting policies and financial reporting. There
were two meetings of the Audit Committee during the fiscal year ended April
30, 1996.
Members of the Compensation Committee are Douglas W. Toms, Chair, Edwin
J. Schneebeck, Don J. Simplot and Rawley F. Taplett. The function of the
Compensation Committee is to consider and propose executive compensation
policies and submit to the Board of Directors reports recommending
compensation to be paid to the Company's executive officers. The Compensation
Committee met once during the fiscal year ended April 30, 1996.
The Board of Directors does not have a standing nominating committee.
COMPENSATION OF DIRECTORS
Each Director who is not an employee of the Company is paid an attendance
fee of $1,000 plus out-of-pocket expenses for each Board or Committee meeting
attended. In addition, the Chairman and Vice-Chairman of the Board of
Directors are each paid an annual retainer of $50,000 plus reimbursement of
out-of-pocket expenses, and provided a company vehicle. The Company provides
medical insurance for the Chairman of the Executive Committee.
A total of 270,000 options have been granted to Directors under the 1993
Stock Option Plan for nonemployee Directors. These options are held by
Messrs. Bensinger, Bryan, Colton, Schneebeck, Simplot, Taplett and Toms, all
of whom are nonemployee Directors, and one retired nonemployee Director.
80,000 options were available for future grants as of April 30, 1996. Option
exercise prices are the higher of (i) the average market value of the stock
for the 15 trading days following the date of grant and (ii) the market value
on the fifteenth trading day following the date of grant. Options are not
assignable and vest cumulatively at the rate of 25% annually, beginning on
the first anniversary date of grant. However, if a Director dies, becomes
disabled or retires at age 62 or later, then options vest at the rate of 25%
for each full calendar year in which optionee served as a Director of the
Company. Options must be exercised while a Director or within three months
following termination as Director, unless termination results from death or
disability, in which case options may be exercised during the one-year period
following termination. In no event may options be exercised more than ten
years after date of grant.
VOTING SECURITIES
Stockholders eligible to vote at the Annual Meeting are those of record
at the close of business on September 3, 1996. The voting securities of the
Company consist of Common Stock and 1993 Series 1 Preferred Stock. At
September 3, 1996, 5,686,848 shares of Common Stock and 5,950 shares of 1993
Series 1 Preferred Stock were outstanding.
Each outstanding share of Common Stock is entitled to one vote on all
matters to be presented at the meeting. Each share of 1993 Series 1 Preferred
Stock is also entitled to vote on all such matters and is entitled to the
number of votes equal to the number of full shares of Common Stock into which
it was convertible on the record date. On that date, each share of 1993
Series 1 Preferred Stock was convertible into the number of shares of Common
Stock that results from dividing $1,000 by a conversion price of $5.30 per
share, or 188 votes.
<PAGE>5
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
COMMON STOCK
The following table sets forth information as of September 3, 1996, with
respect to all stockholders known by the Company to be the beneficial owners
of more than 5% of the outstanding Common Stock. Except as otherwise
specified, each named beneficial owner has sole voting and investment power
with respect to the shares set forth opposite his or her name.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
----------------- --------------------- --------
Edwin J. Schneebeck 1,811,385 (1),(2) 28.52%
P.O. Box 5245
Tacoma, WA 98405
Rawley F. Taplett 601,642 (3) 10.19%
P.O. Box 2188
Wenatchee, WA 98801
Timothy J. Schneebeck 441,601 (4) 7.77%
P.O. Box 5245
Tacoma, WA 98405
Mary Chichester 356,644 (5) 6.09%
714 East 48th Street
Tacoma, WA 98404
-------------------------
(1) Includes 50,000 shares subject to options under the Directors
Stock Option Plan and 613,671 shares subject to conversion rights
under 3,250 shares of 1993 Series 1 Preferred Stock.
(2) Includes 441,601 shares owned by Timothy J. Schneebeck subject to
a power of attorney held by Edwin J. Schneebeck.
(3) Includes 50,000 shares subject to options under the Directors
Stock Option Plan and 169,940 shares subject to conversion rights
under 900 shares of 1993 Series 1 Preferred Stock.
(4) See footnote (2) above.
(5) Includes 166,666 shares subject to a presently exercisable
warrant.
<PAGE>6
PREFERRED STOCK
The following table sets forth information as of September 3, 1996, with
respect to all stockholders known by the Company to be the beneficial owners
of more than 5% of the outstanding 1993 Preferred Stock. Except as otherwise
specified, each named beneficial owner has sole voting and investment power
with respect to the shares set forth opposite his name.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- --------------------- --------
Edwin J. Schneebeck 3,250 54.62%
P.O. Box 5245
Tacoma, WA 98405
Don J. Simplot 900 15.13%
P.O. Box 27
Boise, ID 83707
Rawley F. Taplett 900 15.13%
P.O. Box 2188
Wenatchee, WA 98801
Douglas W. Toms 450 7.56%
2001 Lakewood
Olympia, WA 98501
Dale L. Rasmussen 450 7.56%
28833 228th Ave. S.E.
Kent, WA 98042
----- -------
5,950 100.00%
<PAGE>7
OWNERSHIP OF MANAGEMENT
The following table sets forth information as of September 3, 1996, as to
the number of shares of Common Stock and 1993 Series 1 Preferred Stock
beneficially owned by (i) each Director, (ii) the executive officers named in
the Summary Compensation Table and (iii) all Directors and executive officers
as a group. Except as otherwise specified, each named beneficial owner has
sole voting and investment power with respect to the shares set forth opposite
his name.
TITLE OF NAME OF BENEFICIAL AMOUNT AND NATURE OF PERCENT
CLASS OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------- ------------------ -------------------- --------
Common Peter B. Bensinger 46,333(1) 0.81%
Common Norman L. Bryan 6,000(1) 0.11%
Common V. Robert Colton 146,666(2) 2.57%
Common Thomas M. Costales 3,000(3) .05%
Common Edward E. Elsner -0- -0-
Common Dale L. Rasmussen 188,849(4) 3.23%
Common Edwin J. Schneebeck 1,811,385(5) 28.52%
Common Don J. Simplot 275,741(6) 4.70%
Common David H. Smith 3,419 .06%
Common Robert M. Stemmler 48,089(7) 0.84%
Common Rawley F. Taplett 601,642(8) 10.19%
Common Douglas W. Toms 240,635(9) 4.13%
Common All executive officers
and directors
as a group (12 persons) 3,371,759 47.22%
Preferred See "Ownership of Certain
Beneficial Owners -
Preferred Stock" for
ownership of 1993 Preferred
Stock
Preferred All executive officers
and directors
as a group (12 persons) 5,950 100.0%
<PAGE>8
- -------------------------
(1) Includes 5,000 shares subject to options under the Director Stock
Option Plan.
(2) Includes 30,000 shares subject to options under the Directors Stock
Option Plan.
(3) Includes 3,000 shares subject to options under the Incentive Stock
Option Plan.
(4) Includes 25,000 shares subject to options under the Incentive Stock
Option Plan, 52,714 shares subject to options under the 1991 Executive
Stock Option Plan and 84,970 shares subject to conversion rights under
450 shares of 1993 Series 1 Preferred Stock.
(5) Includes 50,000 shares subject to options under Directors Stock Option
Plan, 613,671 shares subject to conversion rights under 3,250 shares of
1993 Series 1 Preferred Stock and 441,601 shares owned by Timothy J.
Schneebeck subject to a power of attorney held by Edwin J. Schneebeck.
(6) Includes 10,000 shares subject to options under Directors Stock Option
Plan and 169,940 shares subject to conversion rights under 900 shares of
1993 Series 1 Preferred Stock.
(7) Includes 48,089 shares subject to options under the Incentive Stock
Option Plan.
(8) Includes 50,000 shares subject to options under Directors Stock Option
Plan and 169,940 shares subject to conversion rights under 900 shares of
1993 Series 1 Preferred Stock.
(9) Includes 50,000 shares subject to options under Directors Stock Option
Plan and 84,970 shares subject to conversion rights under 450 shares of
1993 Series 1 Preferred Stock.
EXECUTIVE OFFICERS
The following are the executive officers of the Company. Executive
officers are elected by the Board of Directors. For information concerning
Common Stock and 1993 Series 1 Preferred Stock beneficially owned by the
executive officers, see "Ownership of Management."
ROBERT M. STEMMLER. See description under "Election of Directors -
Information About Directors and Nominees for Election."
DALE L. RASMUSSEN, age 46, has been the Senior Vice President and
Secretary since June 1989. He joined the Company in 1984 as Vice President
of Finance and Administration.
THOMAS M. COSTALES, age 49, has been the Treasurer and Chief Financial
Officer of the Company since March 1995. From September 1993 until joining
the Company, he was Vice President and Controller of the Omnifax division of
Danka Industries, Inc. He held a similar position with Omnifax's
predecessor, Telautograph Corporation, from 1987 until it was acquired by
Danka Industries.
EDWARD E. ELSNER, age 48, has been Vice President of Operations of
AirSensors since June 1989, and Vice President of Operations of IMPCO since
October, 1985. He held similar manufacturing positions at Litton Industries,
Inc.
DAVID H. SMITH, age 56, has been Vice President, Research and Technology
since May 1993, and from 1988 until becoming a Vice President, was the
Company's Director of Research and Development.
<PAGE>9
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal years to the
Company's chief executive officer and each of the Company's other executive
officers who were serving at the end of fiscal year 1996.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------------
SECURITIES
UNDERLYING
NAME AND FISCAL SALARY BONUS OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR ($)(1) ($) (IN SHARES) COMPENSATION
- ------------------- ---- -------- ------- ------------ ------------
Robert M. Stemmler 1996 $198,000 $61,500 20,000(2) $25,878(3)
President and Chief 1995 170,083 53,625 50,000(2) 25,872
Executive Officer 1994 145,417 50,000 70,000(2) 20,786
Dale L. Rasmussen 1996 $ 93,416 $13,000 -0- $14,865(4)
Senior Vice President 1995 89,083 15,000 -0- 15,122
and Secretary 1994 85,000 17,000 -0- 16,341
Thomas M. Costales(5) 1996 $101,755 $17,300 -0- $15,249(6)
Treasurer and Chief 1995 16,667 3,000 12,000(2) 2,000
Financial Officer
David H. Smith 1996 $ 93,416 $13,000 -0- $14,953(7)
Vice President of 1995 92,000 15,000 -0- 14,324
Research 1994 92,000 16,000 -0- 11,924
Edward E. Elsner 1996 $ 96,045 $16,500 -0- $17,393(8)
Vice President of 1995 90,000 24,000 -0- 16,918
Operations 1994 85,000 18,000 -0- 16,656
- -------------------------
(1) Includes amounts deferred by executive officers pursuant to the IMPCO
Employee Tax Savings Plan.
(2) Options under the 1989 Incentive Stock Option Plan.
(3) Group term life insurance premium of $11,061, Christmas bonus of $1,000,
automobile allowance of $12,000 and Company's contribution of $1,817
pursuant to the IMPCO Employee Tax Savings Plan.
(4) Company's contribution of $1,865 pursuant to the IMPCO Employee Tax
Savings Plan, Christmas bonus of $1,000 and automobile allowance of
$12,000.
(5) Mr. Costales became the Company's Treasurer and Chief Financial Officer
in March 1995.
(6) Group term life insurance premium of $1,913, Company's contribution of
$336 pursuant to the IMPCO Employee Tax Savings Plan, Christmas bonus of
$1,000 and automobile allowance of $12,000.
<PAGE>10
(7) Group term life insurance premium of $38, Company's contribution of
$1,915 pursuant to the IMPCO Employee Tax Savings Plan, Christmas bonus
of $1,000 and automobile allowance of $12,000.
(8) Group life insurance premium of $2,475, Company' contribution of $1,918
to the IMPCO Employee Tax Savings Plan, Christmas bonus of $1,000 and
automobile allowance of $12,000.
OPTIONS GRANTED IN FISCAL YEAR 1996
The following table provides information with respect to options
granted during the last fiscal year.
INDIVIDUAL GRANTS
-------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE PER EXPIRATION
NAME GRANTED(1) IN FISCAL YEAR SHARE DATE
- ------------------- ---------- -------------- --------- ----------
Robert M. Stemmler 20,000 80% $8.38 1/11/06
Dale L. Rasmussen -0- -0- -0- -
Thomas M. Costales -0- -0- -0- -
Edward Elsner -0- -0- -0- -
David H. Smith -0- -0- -0- -
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION TERM (2)
---------------------------------
NAME 5% 10%
- ------------------- -------- --------
Robert M. Stemmler $105,406 $267,112
Dale L. Rasmussen -0- -0-
Thomas M. Costales -0- -0-
Edward Elsner -0- -0-
David H. Smith -0- -0-
- -------------------------
(1) Material terms of options granted under the 1989 Incentive Stock Option
Plan are as follows: Options are granted at the fair market value of the
Common Stock on the date of grant and vest cumulatively at the rate of
25% annually, beginning on the first anniversary of the date of grant.
However, if employment terminates due to death or disability, retirement
at or after age 62, or termination without cause, then options vest at
the rate of 25% for each full calendar year of employment. Options may
be exercised only while an optionee is employed by the Company, or within
30 days following termination of employment. However, if termination
results from death or disability, options may be exercised within one
year of the termination date. In no event may options be exercised more
than ten years after date of grant.
(2) Based on ten-year option term and annual compounding at rates shown.
The dollar amounts under these columns are the results of calculations
at the 5% and 10% rates set by the Securities and Exchange Commission
and, therefore, are not intended to forecast possible future
appreciation, if any, of the Common Stock. No gain to optionees is
possible without stock price appreciation, which will benefit all
stockholders on a commensurate basis.
<PAGE>11
AGGREGATED OPTION EXERCISES DURING FISCAL YEAR 1996
AND
FISCAL YEAR-END OPTION VALUES
The following table provides information with respect to exercise of
options during the last fiscal year and value of unexercised options at the
end of fiscal year 1996.
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS IN-THE-MONEY
SHARES (IN SHARES) AT OPTIONS AT
ACQUIRED FISCAL YEAR-END FISCAL YEAR-END(1)
ON VALUE ------------------ ------------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ------------------ -------- -------- ------------------ ------------------
Robert M. Stemmler -0- -0- 47,500/92,500(2) $ 62,600/62,600
Dale L. Rasmussen -0- -0- 77,714/ -0- (3) $370,412/ -0-
Thomas M. Costales -0- -0- 3,000/9,000 (2) -0- / -0-
Edward E. Elsner -0- -0- -0- / -0- -0- / -0-
David H. Smith -0- -0- -0- / -0- -0- / -0-
- -------------------------
(1) Calculated by determining the difference between the fair market value of
the Common Stock underlying the options on April 30, 1996 ($8.38) and the
exercise price of the options.
(2) Options under 1989 Incentive Stock Option Plan.
(3) Options under 1989 Incentive Stock Option Plan and 1991 Executive Stock
Option Plan.
EMPLOYMENT AGREEMENTS
The Company entered into an Employment Agreement with Robert M.
Stemmler which provides for three consecutive twelve month periods of
employment as the President and Chief Executive Officer, commencing
April 1, 1995. It is subject to certain termination events, which include
Mr. Stemmler's resignation and the Company's right to terminate him with or
without cause upon payment of a lump sum equal to 100% in the first term and
75% in the second and third terms, respectively, of base salary, plus certain
incentive compensation and payment of benefits for a period following
termination. The Employment Agreement requires payment of an annual base
salary of $195,000, payment of incentive compensation under the Company's
Bonus Incentive Plan and a special one-time bonus of $20,000 which was paid
at the commencement of the Employment Agreement.
<PAGE>12
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The following report on executive compensation is furnished by the
Board of Directors. In fiscal year 1996, as in prior years, the
nonmanagement members of the Board of Directors determined the compensation
to be paid to the executive officers. An Employment Agreement with Robert M.
Stemmler was in effect during the fiscal year. See "Employment Agreements."
FISCAL YEAR 1996 COMPENSATION
COMPENSATION PHILOSOPHY
Compensation of the executive officers is designed to link compensation
directly to the Company's growth and financial performance. Compensation
consists of base compensation, a Bonus Incentive Plan and options under an
Incentive Stock Option Plan. The objective of these three elements, taken
together, is to provide reasonable base compensation and to retain, recognize
and reward superior performance. The compensation philosophy also ensures
that the Company provides a comprehensive compensation package that is
competitive in the marketplace.
BONUS INCENTIVE PLAN
The Company has a Bonus Incentive Plan which includes a bonus incentive
plan for the chief executive officer and a bonus incentive pool for the
executive officers and staff. These bonus plans have two components: A
"revenue portion" which is based upon the percentage increase of the Company's
gross revenues to the extent gross revenues exceed 110% of the prior fiscal
year gross revenues, and an "earnings before interest and taxes (EBIT) portion"
which is based upon the incremental growth in EBIT over the prior fiscal
year. The minimum bonus payable to the chief executive officer is 1.5% of
the current fiscal year's EBIT and the maximum bonus is 75% of current
salary. The minimum bonus pool for the other executive officers and staff is
4% of the current fiscal year's EBIT and the maximum bonus pool is 50% of
their current aggregate salaries.
DEFERRED COMPENSATION PLAN
The Board of Directors has adopted a Deferred Compensation Plan to
provide a select group of management or highly compensated employees and
Directors with the opportunity to participate in a deferred compensation
program. Under the Plan, participants may defer up to 100% of their base
compensation and bonuses earned. The Company is required to make certain
matching contributions, a portion of which is to be in the form of options to
purchase the Company's common stock granted from the 1996 Incentive Stock
Option Plan and a portion in shares of the Company's common stock, subject to
vesting provisions. The options are to be granted on the first day of each
calendar year during which the Company's common stock is traded and the
exercise price for such options shall be equal to the closing price on the
Nasdaq National Market or such stock exchange on the first trading day of
such calendar year. The plan is not qualified under Section 401 of the
Internal Revenue Code. The Company will pay participants in the program,
upon retirement or termination of employment, an amount equal to the amount
of deferred compensation plus investment returns and vested shares of the
Company's common stock.
<PAGE>13
CEO COMPENSATION
Robert M. Stemmler served as chief executive officer pursuant to an
Employment Agreement which was effective April 1, 1995. Pursuant to the
Employment Agreement, he was paid a base salary at an annual rate of
$195,000. In addition to the base salary, Mr. Stemmler is eligible for an
annual cash bonus under the Bonus Incentive Plan.
Mr. Stemmler's bonus for fiscal year 1996 was the minimum bonus payable
under the Bonus Incentive Plan. As longer term compensation, options were
granted to purchase 20,000 shares of common stock under the Incentive Stock
Option Plan. The options were intended to induce Mr. Stemmler's continued
employment, allow him to participate in the ownership of the Company, and
provide further long-term incentive to advance the interest of the Company
and increase the value of the Company's stock.
OTHER EXECUTIVE OFFICERS
In reviewing and approving base salaries for the executive officers,
the Compensation Committee relies on independent industry surveys to assess
the Company's salary competitiveness and salary range for each position.
Base salary is based upon individual performance, experience, competitive
pay practices and level of responsibilities. Base salaries in fiscal year
1996 reflected the Committee's determination of compensation levels required
to remain competitive, given each executive officer's performance, the
Company's performance and the competitive environment for executive talent.
The purpose of Stock Options is to induce selected, key employees of the
Company and its subsidiaries to remain employed with the Company, to
participate in the ownership of the Company, to advance the interest of
the Company and to increase the value of the Company's Common Stock.
In fiscal year 1996, the executive officers' bonuses under the Bonus
Incentive Plan were at the minimum level payable under the Plan.
The foregoing report was made by the members of the Compensation
Committee.
Douglas W. Toms, Chair
Edwin J. Schneebeck
Don J. Simplot
Rawley F. Taplett
<PAGE>14
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return on the
Company's Common Stock for the last five fiscal years with the cumulative
total return of the CRSP Total Return Index for The Nasdaq Stock Market Index
and the Nasdaq Trucking and Transportation Stock Index over the same period
(assuming the investment of $100 and reinvestment of all dividends).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPH
VALUE AT TRUCKING &
APRIL 30, AIRSENSORS NASDAQ TRANSPORTATION
---------- ---------- -------- --------------
1991 100.0 100.0 100.0
1992 83.3 121.2 133.9
1993 113.9 139.4 150.1
1994 236.1 155.1 170.0
1995 188.9 180.4 170.0
1996 186.1 257.1 201.6
<PAGE>15
II. APPROVAL OF 1996 INCENTIVE STOCK OPTION PLAN
The Board of Directors adopted the 1996 Incentive Stock Option Plan (the
"Plan") subject to stockholder approval. It is similar to the 1989 Incentive
Stock Option Plan and was adopted because of the small number of options
remaining available for grant under the 1989 plan. The Board of Directors
believes that use of stock options is desirable as an effective means of
securing to the Company and its stockholders the advantages of the incentive
inherent in stock ownership by participating employees, whose judgment,
initiative and efforts are important to the Company for the successful
conduct of its business. Stockholder approval of the Plan will enable the
Company to continue incentive stock option programs for employees of the
Company and provide the flexibility to make stock-based incentive
compensation awards.
The Plan is set forth in full as Exhibit A to this Proxy Statement and
reference is made thereto for a complete statement of its terms and
provisions. The principal features of the Plan are discussed below.
DESCRIPTION OF THE PLAN
The Plan is administered by the Board of Directors, which has the
authority to appoint a Stock Option Committee consisting of three directors
and delegate administration to the Committee. It determines the employees to
be granted options and the amount of stock options to be awarded to
employees. Employees, including officers, of the Company and its
subsidiaries are eligible to receive options. The total number of shares of
Common Stock which may be issued pursuant to options under the Plan is
250,000. As of the date of this Proxy Statement, options for 66,500 shares
under the Plan have been granted, subject to approval of the Plan by the
stockholders.
The Plan provides for options which qualify as "incentive stock options"
as defined under the Internal Revenue Code. The option price must be at
least equal to the fair market value of the Company's Common Stock on the
date of grant. Options are not assignable except by will or the laws of
descent and distribution. Options vest and are exercisable cumulatively
(i) as to 40% of the total number of shares initially subject to the option,
24 months following the date of grant of such option, and (ii) as to 20% of
the total number of shares initially subject the option, once during each 12-
month period thereafter, so that 60 months following the date of grant such
options are fully vested and exercisable. An optionee may exercise an option
only while an employee of the Company or one of its subsidiaries, or within
three months following the termination of such employment. If an optionee
becomes disabled or dies while in the employ of the Company or a subsidiary,
the option may be exercised within one year of the optionee's death or
termination due to disability. In no event may an option be exercised more
than ten years after the date of grant. The option price may be paid in cash
or by the surrender of shares of the Company's Common Stock owned by the
employee exercising the option and having a fair market value on the date of
exercise equal to the option price, or in any combination of cash and shares
equal to the option price.
<PAGE>16
The Plan does not limit the aggregate number of shares which may be
optioned to any one employee or in any single year. However, the maximum
value of grants that vest in a calendar year is limited to $100,000 for each
employee. The Plan provides for appropriate adjustment of the number of
shares available for issuance under the Plan, including the number of shares
subject to outstanding options and the purchase price thereof, in the event
of reorganizations, stock splits, combinations of shares, stock dividends or
other recapitalizations of the Company.
When an option expires or terminates for any reason, the number of
unexercised or forfeited shares subject to the option may again become
available for grant under the Plan. The Plan will terminate on January 11,
2006. The Board of Directors may at any time amend, suspend or discontinue
the Plan, except that no amendment may be made without the approval of the
stockholders which would increase the number of shares subject to the Plan,
materially change the designation of the class of employees eligible to
receive options, remove the administration of the Plan from the Board of
Directors or the Stock Option Committee or materially increase the benefits
accruing to participants under the Plan.
FEDERAL INCOME TAX EFFECTS
An optionee realizes no taxable income upon either a grant or the
exercise of the option. If the optionee makes a disposition of the stock
acquired upon exercise of the option within two years from the date of grant
or within one year from the date of exercise (disqualifying disposition), the
difference between the option price and the fair market value on the date of
exercise (not to exceed the gain recognized on the sale) will be taxed at
ordinary income rates and any gain in excess of such amount will be a long-
term or short-term capital gain, depending on the length of time the stock
was held by the optionee. If the optionee sells the stock acquired upon
exercise of the option more than one year after the date of exercise and more
than two years after the date of grant, the difference between the option
price and the sales price will be taxed as long-term capital gain or loss.
The spread between the option price and the fair market value of the stock on
the date of exercise will be classified as an item of tax preference for
purposes of computing the alternative minimum tax.
The Company has no tax deduction with respect to the grant or exercise
of an option or the sale of stock acquired pursuant to an option under the
1996 Plan, except to the extent that an employee recognizes ordinary income
upon a disqualifying disposition of such stock.
APPROVAL OF THE PLAN
Approval of the Plan requires the affirmative vote of the holders of the
Common Stock and 1993 Series 1 Preferred Stock representing a majority of the
voting rights of the stockholders present in person or by proxy at the
Annual Meeting. Broker non-votes will not be counted for purposes of
determining whether the Plan has been approved or disapproved. Abstentions
will be counted in determining the number of votes required to approve or
disapprove the Plan. Accordingly, an abstention by a stockholder voting in
person or by proxy has the legal effect as voting against approval of the
Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" APPROVAL OF THE 1996 INCENTIVE STOCK OPTION PLAN
<PAGE>17
III. APPROVAL OF INDEPENDENT PUBLIC AUDITORS
Ernst & Young LLP has audited the Company's financial statements for the
fiscal years ended April 30, 1988 through 1996.
The Board of Directors has selected Ernst & Young LLP as independent
public auditors for the Company for the fiscal year ending April 30, 1997.
Although not required to be voted upon by the stockholders, the Board of
Directors deems it appropriate for the selection to be submitted for
ratification by the stockholders. The persons named in the accompanying
proxy will vote the Common Stock represented by the proxy for ratification of
the selection of Ernst & Young LLP, unless a contrary choice has been
specified in the proxy. If the stockholders do not ratify the selection of
Ernst & Young LLP by a majority vote, the selection of independent public
auditors will be considered by the Board of Directors, although the Board of
Directors would not be required to select different independent public
auditors for the Company. The Board of Directors retains the power to select
another firm as independent public auditors for the Company to replace a firm
whose selection was ratified by the stockholders in the event the Board of
Directors determines that the best interest of the Company warrants a change
of its independent public auditors. A representative of Ernst & Young LLP is
expected to be present at the Annual Meeting and will have the opportunity to
make a statement if he or she desires to do so. Such representative is
expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED
THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT PUBLIC
AUDITORS FOR THE COMPANY FOR FISCAL YEAR 1997 AND RECOMMENDS
A VOTE "FOR" APPROVAL OF THE APPOINTMENT.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of the
Company's Common Stock to file with the Securities and Exchange Commission
("SEC") initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors
and greater than 10% stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) reports they file. To the
Company's knowledge, based solely on review of the copies of such reports
furnished to the Company or advice that no filings were required, during
fiscal year 1996 all officers, directors and greater than 10% beneficial
owners were in compliance with the Section 16(a) filing requirements, except
that: Peter B. Bensinger, Norman L. Bryan, V. Robert Colton, Edwin J.
Schneebeck, Timothy J. Schneebeck, Robert M. Stemmler and Douglas W. Toms
each filed one Form 4 late; Don J. Simplot filed two Form 4's late; and
Rawley F. Taplett filed five Form 4's late.
PROPOSALS OF STOCKHOLDERS
In order for proposals of stockholders to be included in the proxy
materials for presentation at the 1997 Annual Meeting of Stockholders, such
proposals must be received by the Corporate Secretary no later than May 23,
1997.
<PAGE>18
OTHER INFORMATION
The Company's Annual Report on Form 10-K for the fiscal year ended April
30, 1996 was mailed to stockholders prior to or together with the mailing of
this Proxy Statement. Stockholders who did not receive a copy of the
Company's Annual Report on Form 10-K with their Proxy Statement may obtain a
copy by writing to or calling Dale L. Rasmussen, Secretary, AirSensors, Inc.,
708 Industry Drive, Seattle, Washington 98188; telephone number (206) 575-
1594.
OTHER BUSINESS
As of the date of this Proxy Statement management knows of no other
business which will be presented for action at the meeting. If any other
business requiring a vote of the stockholders should come before the meeting,
the persons named in the enclosed form of proxy will vote or refrain from
voting in accordance with their best judgment.
By Order of the Board of Directors,
/s/Dale L. Rasmussen
Dale L. Rasmussen
Secretary
Cerritos, California
October 3, 1996
<PAGE>19
AIRSENSORS, INC.
1996 INCENTIVE STOCK OPTION PLAN
PURPOSE OF THE PLAN. The purpose of this Incentive Stock Option Plan is
to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to the Employees
of the Company and to promote the success of the Company's business. It is
intended that options issued pursuant to this Incentive Stock Option Plan
constitute "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code.
DEFINITIONS. As used herein, the following definitions shall apply:
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means the Company's common stock, par value $.001
per share.
"COMPANY" means AirSensors, Inc., a Delaware corporation.
"COMMITTEE" means the Committee appointed by the Board in
accordance with SECTION 3(A) of the Plan.
"EMPLOYEE" means any person employed by the Company or any
Subsidiary of the Company which now exists or is hereafter organized or is
acquired by the Company.
"IMPCO" means IMPCO Technologies, Inc., a Delaware corporation.
"OPTION" means a stock option granted pursuant to the Plan.
"OPTIONED STOCK" means the Common Stock subject to an Option.
"OPTIONEE" means a person who holds an Option.
"PLAN" means this 1996 Incentive Stock Option Plan.
"SUBSIDIARY" means a corporation of which more than 50% of the
voting shares are held directly by the Company or directly and indirectly by
the Company and one or more Subsidiaries, whether or not such corporation
now exists or is hereafter organized or acquired by the Company or a
Subsidiary.
STOCK SUBJECT TO THE PLAN. Subject to SECTION 10, the maximum
number of shares which may be optioned and sold under the Plan is 250,000
shares of Common Stock.
A-1
<PAGE>20
If an Option should expire or become unexercisable in whole or in part
for any reason, the remaining shares of Common Stock which were subject to
the Option shall, unless the Plan shall have been terminated, become
available for other Options under the Plan.
ADMINISTRATION OF THE PLAN.
PROCEDURE. The Plan shall be administered by the Board or,
as determined by the Board, a Committee appointed by the Board. The
Committee shall consist of not less than three members of the Board and
shall administer the Plan subject to such terms and conditions as the Board
may prescribe. From time to time the Board may increase the size of the
Committee and appoint additional members, 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. The Committee shall select one of its members
as chairman and shall hold meetings at such times and places as it may
determine.
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 or the Committee during which action is taken with
respect to the granting of Options to him.
As used in the Plan and in any Option, the term "Board" shall refer to
the Board, or the Committee if a Committee has been appointed.
POWERS OF THE BOARD/COMMITTEE. Subject to the provisions of
the Plan, the Board shall have the authority, in its discretion: (i) to
determine, upon review of relevant information, the fair market value of the
Common Stock; (ii) to determine the exercise price per share of Options to
be granted, which price shall in no event be less than the fair market value
per share of Common Stock on the date of grant of the Option, or 110% of
such fair market value in the case of any Option granted to an Employee who,
immediately before the grant of such Option, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or of its parent or Subsidiaries; (iii) to determine the Employees
to whom, and the time or times at which, Options shall be granted and the
number of shares to be represented by each Option; (iv) to interpret the
Plan; (v) to prescribe, amend and rescind rules and regulations relating to
the Plan; (vi) except as otherwise provided in this Plan, to determine the
terms and provisions of each Option granted under the Plan (which need not
be identical) and, with the consent of the holder thereof, modify or amend
each Option; (vii) to accelerate the exercise date of any Option; (viii) to
authorize any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Option granted by the Board; and (ix)
to make all other determinations deemed necessary or advisable for the
administration of the Plan.
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. No member of the Board or the Committee shall be
liable for any action or determination made in good faith with respect to
the Plan or any Option. If the Board has appointed a Committee, the actions
of the Committee shall be reported to the Board.
A-2
<PAGE>21
ELIGIBILITY. Options may be granted only to Employees. An
Employee who has been granted an Option may, if he or she is otherwise
eligible, be granted an additional Option or Options.
No Option may be granted to an Optionee under the Plan if, as the
result of such grant, the aggregate fair market value (determined as of the
time each Option is granted) of the shares of Common Stock for which such
Optionee has been granted options which are exercisable for the first time
by such Optionee during any calendar year (under all incentive stock option
plans of the Company) would exceed $100,000.
The Plan shall not confer upon any Optionee any right with respect to
continuation of employment by the Company, nor shall it interfere in any way
with his or her right or the Company's right to terminate his or her
employment at any time.
TERM OF PLAN. Subject to SECTION 16, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a
term of ten (10) years from the effective date unless sooner terminated
under SECTION 12.
TERM OF OPTION. Except as otherwise provided in SECTIONS 8 AND
10, the term of each Option shall be for not more than ten (10) years from
the date of grant thereof, except that the term of each Option granted to an
employee who, immediately before such Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes
of stock of the Company or of its parent or Subsidiaries shall be for not
more than five (5) years from the date of grant thereof. Subject to the
foregoing, the term of each Option shall be determined by the Board.
OPTION PRICE AND CONSIDERATION.
The price for the shares of Common Stock to be issued
pursuant to an Option shall be such price as is determined by the Board, but
shall in no event be less than the fair market value per share of the Common
Stock on the date of grant of the Option. In the case of an Option granted
to an Employee who, immediately before the grant of such Option, owns stock
representing more than ten percent (10%) of the voting power of all classes
of stock of the Company or of its parent or Subsidiaries, the price shall be
not less than 110% of the fair market value per share of such Common Stock.
The fair market value shall be determined by the Board in its discretion;
PROVIDED, that if there is a public market for the Common Stock, the fair
market value shall be (i) the closing sale price as of the date of grant on
the Nasdaq National Market or a stock exchange if the Common Stock is traded
on the Nasdaq National Market or a stock exchange, and (ii) the mean of the
reported closing bid and ask prices for the Common Stock as of the date of
grant if the Common Stock is not traded as provided in clause (i).
The consideration to be paid for the Common Stock to be
issued upon exercise of an Option, and the method of payment, shall be
determined by the Board and may consist of cash or any other consideration
and method of payment for the issuance of common stock which is permitted
under the Delaware Corporation Law and complies with other applicable laws
and regulations (including but not limited to, applicable federal tax and
federal and state securities laws and regulations).
A-3
<PAGE>22
VESTING AND EXERCISE OF OPTIONS.
VESTING AND EXERCISE OF OPTIONS WHILE AN EMPLOYEE. Each
Option held by an Optionee shall vest and shall be exercisable at any time
so long as such Optionee continues to be an Employee, cumulatively, (i) as
to forty percent (40%) of the total number of shares subject to such Option,
twenty-four (24) months following the date of grant of such Option, and (ii)
as to twenty percent (20%) of the total number of shares subject to such
Option, once during each twelve (12) month period commencing on the third
and each subsequent anniversary date of the grant of such Option, so that
sixty (60) months following the date of the grant of each Option one hundred
percent (100%) of the shares subject to such Option may be purchased by
exercise of the Option.
VESTING OF OPTIONS UPON RETIREMENT. All Options held by an
Optionee who retires at age 62 or older and was continuously an Employee for
five (5) years immediately preceding retirement which are not vested as
provided in SECTION 8(a) shall immediately vest upon such Optionee's
retirement and be exercisable as provided in SECTION 8(c).
EXERCISE OF OPTIONS FOLLOWING TERMINATION OF STATUS AS AN
EMPLOYEE. Following termination of employment as an Employee, an Optionee
may exercise an Option to the extent that he or she was entitled to exercise
the Option at the date of such termination as provided in SECTION 8(a) and
(b) as follows:
Except in the case of death or disability (within the
meaning of Section 22(e)(3) of the Code), within thirty (30) days following
the date of termination of employment, except that the Board may extend the
period for such exercise up to a period not exceeding three (3) months
following the date of termination;
If an Optionee dies while an Employee, the period of time
within which the Board may permit exercise of Options after the date of
death may be up to one (1) year, and such Options may be exercised by the
Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance or by reason of the death of an Optionee;
and
If an Optionee becomes disabled while an Employee, the
period of time within which the Board may permit exercise of Options after
the date of termination as an Employee of the Company may be up to one (1)
year.
Options which are not vested as provided in SECTION 8(a) and (b) or
which are vested but not exercised as required by SECTION 8(c) shall
terminate.
SPECIAL LIMITATION ON EXERCISE. Notwithstanding SECTIONS
8(a) and (b), in no event shall an Option be exercisable (i) during the six
(6) month period immediately following the date of grant except as otherwise
provided in SECTION 10, or (ii) for the first time during any calendar year
for the purchase of Common Stock with an aggregate fair market value
(determined as of the date of grant) in excess of $100,000.
A-4
<PAGE>23
PROCEDURE FOR EXERCISE; RIGHTS AS STOCKHOLDER. An Option
shall be deemed to be exercised when written notice of such exercise 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 of
Common Stock with respect to which the Option is exercised has been received
by the Company. An Option may not be exercised for a fraction of a share of
Common Stock.
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 of Common Stock, no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to such Common Stock, notwithstanding the 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 10.
Exercise of an Option shall result in a decrease in the number of shares
of Common Stock which thereafter may be available, both for purposes of the
Plan and for purchase under the Option, by the number of shares of Common
Stock as to which the Option is exercised.
NON-TRANSFERABILITY OF OPTIONS. An 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.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to any
required action by the stockholders 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 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 or the payment of
a stock dividend (but only on the Common Stock) or any other increase or
decrease in the number of such shares of Common Stock affected without
receipt of consideration by the Company; PROVIDED, that conversion of any
convertible securities of the Company shall not be deemed to have been
"affected without receipt of consideration." Such adjustment shall be made
by the Board, whose determination shall be final, binding and conclusive.
Except as expressly provided herein, no issue 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 (i) the dissolution or liquidation of the Company, (ii)
the sale of substantially all of the assets of the Company or of IMPCO, or
(iii) the merger, consolidation or other reorganization of the Company with
or into another corporation, the Options will terminate 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 or may give all or certain Optionees the right to
exercise their Options as to all or any part of the shares of Common Stock
which are subject to such Options, including shares of Common Stock as to
which Options would not otherwise be exercisable.
A-5
<PAGE>24
In the event of a "change of control" of the Company, the Board may, in
the exercise of its sole discretion, give all or certain Optionees the right
to exercise their Options as to all or any part of the shares of Common
Stock which are subject to such Options, including shares of Common Stock as
to which Options would not otherwise be exercisable. For purposes of this
paragraph, "change of control" shall mean (i) within the meaning of Section
13(d) of the Securities Exchange Act of 1934, any person or group becomes a
beneficial owner, directly or indirectly, of the Company's securities
representing 50% or more of the total voting power of the Company's then
outstanding securities, (ii) the stockholders of the Company approve the
dissolution or liquidation of the Company, (iii) the stockholders of the
Company approve an agreement to merge or consolidate, or otherwise
reorganize, whether into one or more entities, as a result of which less
than 50% of the total voting power of securities of the surviving or
resulting entity are, or are to be, owned by former stockholders of the
Company, or (iv) the stockholders or directors of the Company or IMPCO
approve, respectively, the sale of seventy-five percent (75%) or more of the
Company's or IMPCO's business and/or assets.
No Option granted pursuant to this Plan shall be adjusted by the Board
pursuant to this SECTION 10 in a manner that causes the Option to fail to
continue to qualify as an incentive stock option within the meaning of
Section 422 of the Code.
The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge
or to consolidate or to dissolve, liquidate or sell, or transfer all or any
part of its business or assets.
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 to whom an Option is so granted within a reasonable time after the
date of such grant.
AMENDMENT AND TERMINATION OF THE PLAN.
AMENDMENT AND TERMINATION. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable,
except that, without approval of the holders of a majority of the
outstanding shares of the Common Stock, no such revision or amendment shall:
Increase the number of shares of Common Stock subject to
the Plan other than in connection with an adjustment under SECTION 10 of the
Plan;
materially change the designation of the class of employees
eligible to be granted Options;
remove the administration of the Plan from the Board; or
materially increase the benefits accruing to participants
under the Plan.
A-6
<PAGE>25
EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options granted prior to such
amendment or termination and such Options shall remain in full force and
effect as if this Plan had not been amended or terminated.
CONDITIONS UPON ISSUANCE OF SHARES. Shares of Common Stock shall not
be issued with respect to an Option granted under the Plan 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
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange or market
upon which the Common Stock may then be listed or quoted, 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 of Common Stock are being purchased only
for investment and without any present intention to sell or distribute such
Common Stock if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned relevant provisions
of law.
RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of shares of Common
Stock as shall be sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain from any regulatory body having
jurisdiction authority deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any shares of Common Stock hereunder shall
relieve the Company of any liability in respect of the non-issuance or sale
of such shares as to which such requisite authority shall not have been
obtained.
OPTION AGREEMENTS. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
STOCKHOLDER APPROVAL. Effectiveness of the Plan shall be subject
to approval within twelve (12) months following the Board of Directors'
adoption of this Plan by the holders of the Company's outstanding Common
Stock.
Adopted by the Board of Directors on January 11, 1996.
Approved by the stockholders on November 7, 1996.
A-7
<PAGE>26
AIRSENSORS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert M. Stemmler and Dale L. Rasmussen,
and each of them, as proxies, each with full power of substitution, to vote
for and on behalf of the undersigned all of the shares of Common Stock of
AirSensors, Inc. that the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders to be held on November 7, 1996,
and at any adjournment thereof, as follows:
This proxy when properly executed will be voted in the manner directed on
this proxy card. Management recommends a vote for all nominees and for the
matters designated on this proxy card; if no specification is made, a vote
for all of said nominees and for all such matters will be entered.
1. ELECTION OF DIRECTORS FOR A TERM OF THREE YEARS:
FOR WITHHOLD
All nominees listed AUTHORITY to vote
(except as indicated for all Nominees
to the contrary) as indicated
[ ] [ ]
INSTRUCTION - TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, PRINT
THAT NOMINEE'S NAME IN THE FOLLOWING SPACE:
------------------------------------------------------------------
Norman L. Bryan Edwin J. Schneebeck Don J. Simplot
2. FOR APPROVAL OF THE 1996 INCENTIVE STOCK OPTION PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. FOR RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP, AS THE
COMPANY'S INDEPENDENT AUDITOR
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. IN THEIR DIRECTION, THE HOLDERS OF THIS PROXY ARE AUTHORIZED TO
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
I Plan to attend the meeting [ ]
The undersigned hereby revokes any proxy or
proxies heretofore given for such shares and
ratifies all that said proxies or their
substitutes may lawfully do by virtue hereof.
Signature(s) Date: , 1996
------------------------------------ ---------------
Please sign exactly as name appears on this proxy. If stock is held jointly,
both persons should sign. Persons signing in a representative capacity should
give their title.
<PAGE>27
