<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(X)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1998
----------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-22760
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AIRPORT SYSTEMS INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Kansas 48-1099142
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11300 West 89th Street
Overland Park, Kansas 66214
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(address of principal executive offices)
(913)492-0861
- --------------------------------------------------------------------------------
(Issuer's telephone number)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the previous 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No ( )
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Common stock, $0.01 par value - 2,230,500 shares outstanding as of December 1,
1998
<PAGE> 2
AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
FORM 10-QSB
QUARTER ENDED OCTOBER 31, 1998
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I - FINANCIAL INFORMATION
ITEM I - CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 8
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 12
Item 4 - Submission of Matters to a Vote of Security Holders 12
Item 6 - Exhibits and Reports on Form 8-K 12
SIGNATURE PAGE 14
EXHIBIT INDEX 15
</TABLE>
<PAGE> 3
PART I. - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
OCTOBER 31, APRIL 30,
1998 1998
----------- ---------
(In thousands)
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash & cash equivalents $ 775 $ 2,449
Accounts receivable, net 4,157 6,156
Inventories, net 6,162 5,261
Other current assets 440 152
------- -------
Total current assets 11,534 14,018
Property and equipment, at cost 3,640 3,303
Accumulated depreciation and amortization 1,846 1,687
------- -------
1,794 1,616
Cost in excess of net assets acquired, net 1,154 1,190
Other assets 30 30
------- -------
Total assets $14,512 $16,854
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,130 $ 1,280
Accrued expenses 2,432 3,835
Current portion of long-term debt 20 19
Other current liabilities -- 80
------- -------
Total current liabilities 3,582 5,214
Long-term debt, less current portion 1,174 1,184
Deferred income taxes 15 15
Stockholders' equity:
Common stock 22 22
Additional paid-in capital 7,218 7,218
Retained earnings 2,501 3,201
------- -------
Total stockholders' equity 9,741 10,441
------- -------
Total liabilities and stockholders' equity $14,512 $16,854
======= =======
</TABLE>
NOTE: The balance sheet at April 30, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to condensed consolidated financial statements.
Page 3
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AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
OCTOBER 31 OCTOBER 31
--------------------- ----------------------
1998 1997 1998 1997
------- ------- ------- --------
<S> <C> <C> <C> <C>
Sales $ 3,241 $ 6,167 $ 7,968 $ 11,920
Cost of products sold 2,673 4,092 5,823 8,240
------- ------- ------- --------
Gross margin 568 2,075 2,145 3,680
Selling, general and administrative expenses 1,173 1,143 2,244 2,211
Research and development expenses 510 394 994 719
------- ------- ------- --------
Operating income (loss) (1,115) 538 (1,093) 750
Other income (expense):
Interest expense (24) (25) (47) (58)
Other, net 23 37 46 89
------- ------- ------- --------
Income (loss) before income taxes (1,116) 550 (1,094) 781
Provision (benefit) for income taxes (402) 169 (394) 240
------- ------- ------- --------
Net income (loss) $ (714) $ 381 $ (700) $ 541
======= ======= ======= ========
Income (loss) per share:
Basic $ (0.32) $ 0.17 $ (0.31) $ 0.24
======= ======= ======= ========
Diluted $ (0.32) $ 0.16 $ (0.31) $ 0.22
======= ======= ======= ========
</TABLE>
See notes to condensed consolidated financial statements.
Page 4
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AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
OCTOBER 31,
---------------------
1998 1997
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(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (700) $ 541
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 220 225
Changes in operating assets and liabilities:
Accounts receivable, net 1,999 1,077
Inventories, net (901) 2
Accounts payable (150) (1,039)
Accrued expenses and customer deposits (1,403) (1,318)
Other, net (368) (485)
------- -------
Net cash used in operating activities (1,303) (997)
INVESTING ACTIVITIES:
Purchase of short-term investments -- (2,567)
Liquidation of short-term investments -- 2,070
Purchases of property and equipment (362) (123)
------- -------
Net cash used in investing activities (362) (620)
FINANCING ACTIVITIES:
Net repayments on note payable to bank -- (600)
Principal payments on long-term debt (9) (12)
------- -------
Net cash used in financing activities (9) (612)
Net decrease in cash and cash equivalents (1,674) (2,229)
Cash and cash equivalents at beginning of period 2,449 3,122
------- -------
Cash and cash equivalents at end of period $ 775 $ 893
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 40 $ 58
======= =======
Income taxes $ 65 $ 573
======= =======
</TABLE>
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AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
OCTOBER 31, 1998
1. Basis of presentation
The accompanying unaudited condensed consolidated financial statements of
Airport Systems International, Inc. (the Company) include the accounts of the
Company and its wholly owned subsidiary, ASII International, Inc., a foreign
sales corporation incorporated in Barbados. All intercompany balances and
transactions have been eliminated. The condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the six months ended October 31, 1998 are not
necessarily indicative of the results that may be expected for the year ended
April 30, 1999. For further information, refer to the consolidated financial
statements and footnotes included in the Airport Systems International Inc. and
Subsidiary annual report on Form 10-KSB for the year ended April 30, 1998.
2. Notes Payable to Banks
The Company has a line of credit agreement with a bank which expires September
1, 2000. The agreement allows for borrowings up to a maximum of $6,000,000, at
an interest rate of either LIBOR plus 250 basis points (5.6% at October 31,
1998) or prime (8.0% at October 31, 1998), secured by accounts receivable,
inventory, and equipment. There were no borrowings at October 31, 1998.
4. Earnings Per Share
The Company adopted Financial Accounting Standards No. 128 (FAS 128), "Earnings
Per Share" in the third quarter of fiscal 1998. Share and per share amounts for
the quarter ended October 31, 1998, have been restated to comply with FAS 128.
Page 6
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The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
Three Months Six Months
Ended October 31, Ended October 31,
------------------------------ -------------------------------
1998 1997 1998 1997
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Numerator:
Net Income (loss) $ (714,000) $ 381,000 $ (700,000) $ 541,000
Denominator:
Denominator for basic
earnings per share - weighted
average shares 2,230,500 2,230,500 2,230,500 2,230,500
Effect of dilutive securities:
Employee stock options -- 197,749 -- 193,537
Denominator for diluted
earnings per share -
adjusted weighted average
shares with assumed
conversions 2,230,500 2,428,249 2,230,500 2,424,037
Earnings per share - Basic $ (0.32) $ 0.17 $ (0.31) $ 0.24
Earnings per share - Dilutive $ (0.32) $ 0.16 $ (0.31) $ 0.22
</TABLE>
Page 7
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The discussions set forth in this Form 10-QSB may contain forward-looking
comments based on current expectations that involve a number of risks and
uncertainties. Actual results could differ materially from those projected or
suggested in the forward-looking comments. The difference could be caused by a
number of factors, including, but not limited to the factors and conditions
which are described under the headings "Results of Operations," and "Backlog,"
as well as the competitive and pricing pressures related to all contracts,
either already in the Company's backlog, or which the Company is pursuing.
Further information on the factors that could affect the Company's financial
results are included in the Company's other SEC filings, including the Form
10-QSB for the quarter ended July 31, 1998 and the Form 10-KSB for the year
ended April 30, 1998. The reader is cautioned that the Company does not have a
policy of updating or revising forward-looking statements and thus he or she
should not assume that silence by management of the Company over time means that
actual events are bearing out as estimated in such forward-looking statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales for the second quarter of fiscal 1999 were $3.2 million compared to $6.2
million for the second quarter of fiscal 1997. Sales for the first six months of
fiscal 1999 were $8 million compared to $11.9 million for the first six months
of fiscal 1998. The decrease in sales for both the quarter and year to date is
due to a decrease in units shipped as a result of a lower beginning backlog
compared to the same period of fiscal 1998 as well as lower bookings than the
same period as last year, as discussed in the Backlog section.
Gross margin for the second quarter of fiscal 1999 was $568,000 (18% of sales)
compared to $2.1 million (34% of sales) for the second quarter of fiscal 1997.
Gross margin for the first six months of fiscal 1999 was $2.1 million (27% of
sales) compared to $3.6 million (31% of sales) for the first six months of
fiscal 1998. The lower gross margins reflect lower sales for both the quarter
and the six months ended October 31, 1998 as well as higher production costs
associated with the first new instrument landing system (ILS) design units
shipped during the second quarter, increases in installation costs incurred on
the various contracts, and lower prices as a result of increased price
competition. The higher production costs incurred on the initial ILS units
shipped are typical for an initial production run of a new product design and
the Company has seen and expects to see costs on subsequent units return to
expected levels. The increased installation costs relate to a contract the
Company has to deliver and install 21 DVOR/DME systems into the Republic of
Indonesia. Overall that program is proceeding according to schedule and under
budget. The Company does not expect the increased costs to materially impact
either the project completion or the overall budget of the program. The Company
expects gross margins to continue to fluctuate due to the timing and mix of
contract awards and delivery of product and services.
Page 8
<PAGE> 9
Selling, general, and administrative expenses remained unchanged during the
second quarter of fiscal 1999 at approximately $1.1 million compared to the
second quarter of fiscal 1998. As a percent of sales, selling, general, and
administrative expenses increased from 19% in the second quarter of fiscal 1998
to 36% in the second quarter of fiscal 1999. Selling, general, and
administrative expenses remained unchanged during the first six months of fiscal
1999 at approximately $2.2 million compared to the first six months of fiscal
1998. As a percent of sales, selling, general, and administrative expenses
increased from 19% in the first six months of fiscal 1998 to 28% in the first
six months of fiscal 1999. The increase as a percent of sales reflects the fact
that though sales declined in both periods over last year, selling, general and
administrative expenses remained the same. This was due primarily to increased
expenditures made to expand the Company's marketing capabilities.
Research and development expenses increased during the second quarter to
$510,000 from $394,000 in the second quarter of fiscal 1998. In the first six
months, research and development expenses increased to $994,000 from $719,000
for the first six months of fiscal 1998. The increase for both periods is a
result of increased labor and expenses related to programs designed to enhance
the current product line which includes the new Category II/III Instrument
Landing System as well as expenses incurred to obtain certification of the
airport lighting product line.
Interest expense remained unchanged for the second quarter compared to the
second quarter of fiscal 1998, and decreased to $47,000 from $58,000 for the
first six months due to a decrease in the average debt obligations outstanding
compared to the prior year period. Other income decreased to $23,000 from
$37,000 for the second quarter, and to $46,000 from $89,000 for the first six
months, due to a decrease in interest income resulting from lower average
outstanding cash and investment balances during the current year period compared
to the prior year period.
The Company recorded an estimated tax benefit for the quarter of $402,000 (36%
of the loss before income taxes), compared to a tax provision of $169,000 (31%
of income before taxes) for the second quarter of fiscal 1998. For the first six
months, the Company recorded a tax benefit of $394,000 (36% of the loss before
income taxes), compared to a tax provision of $240,000 (31% of income before
taxes). For both periods, the increase, as a percent of the income (loss) before
taxes reflects reduced benefits from the Company's Foreign Sales Corporation as
a result of lower international sales. The Company believes it is likely that
the tax benefits recorded will be realized due primarily to taxable income and
alternative minimum tax credits in prior carryback years and management's
expectation of future taxable income.
The net loss for the second quarter was $714,000, compared with a fiscal 1998
second quarter net income of $381,000. The net loss for the six months was
$700,000, compared with net income in the first six months of fiscal 1998 of
$541,000. The net losses for the three months and six months ended October 31,
1998 were due primarily to decreased sales and increased research and
development expenses as previously mentioned.
Page 9
<PAGE> 10
BACKLOG
The Company's backlog was $6.1 million at October 31, 1998, compared to $14.6
million at October 31, 1997, and $10.6 million at April 30, 1998. Approximately
79% of the backlog at October 31, 1998, was represented by three contracts. The
contracts call for providing navaid equipment and services to Indonesia (34% of
backlog), Taiwan (22% of backlog) and South America (23% of backlog). The
Company expects to ship approximately $4.7 million of the total backlog through
the end of fiscal 1999 with the remaining $1.4 million of backlog being
completed and shipped in fiscal 2000.
The decline in backlog, as compared to April 30, 1998, is the result of bookings
not keeping pace with shipments. In particular, the backlog at April 30, 1998,
included approximately $4.9 million related to a $17.7 million contract signed
with the Republic of Indonesia in the fourth quarter of 1997. At October 31,
1998, the backlog related to this contract had decreased to $2.1 million. The
decline in bookings is primarily the result of the economic difficulties
experienced in Southeast Asia which continues to delay the award of contracts,
but has also led many civil aviation authorities in that region of the world to
choose not to initiate any new procurements. The Company continues to expand its
marketing group through the addition of domestic and international marketing
personnel and the allocation of these resources to other regions of the world.
In addition, the Company is nearing completion and certification of enhancements
to its current products (in particular its CAT II/III ILS) which is expected to
increase geographic penetration in the Company's markets as well as improve its
competitive position on future tenders. The Company expects the delays and
cancellation of tenders, as discussed above, to negatively impact the Company's
revenue which when combined with the additional expenditures related to the
implementation of the airfield lighting product line program, is likely to
result in operating losses during the second half of fiscal 1999. The extent of
these losses is difficult to ascertain due to uncertainties in the timing of the
receipt of orders. The Company expects backlog and bidding activities as well as
contract awards to continue to fluctuate due to the size and timing of contract
programs.
LIQUIDITY AND CAPITAL RESOURCES
Net cash of $1.3 million was used by operations for the first six months of
fiscal 1999 compared to $997,000 used in the first six months of fiscal 1998.
The increase in cash used was primarily due to the net loss for the year, as
compared to the net income of the prior year. This was offset by a lower use of
cash resulting from changes in working capital as compared to the prior year
(($823,000) compared to ($1,763,000)).
Cash used in investing activities was $362,000 for the first six months of
fiscal 1999 compared to $620,000 used in the first six months of fiscal 1998.
The decrease in cash used is primarily the result of short-term investment
purchases in the prior year period.
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Cash used in financing activities was $9,000 in the first six months of fiscal
1999 compared to cash used of $612,000 in the first six months of fiscal 1998.
The decrease in cash used was the result of repayments made on the Company's
short-term note payable in the prior year period.
The Company expects that it will meet its ongoing requirements for working
capital and capital expenditures from a combination of cash expected to be
generated from operations, existing cash and cash equivalents and available
borrowings under its existing revolving credit facility.
YEAR 2000 DISCLOSURES
The Company has considered the impact of Year 2000 issues on its internal
computer systems and applications, and has developed a remediation plan. The
Company has completed an assessment and is replacing software and hardware so
that its internal computer systems will function properly with respect to dates
in the year 2000 and thereafter. This effort is expected to be completed by the
end of the third quarter of fiscal 1999, which is prior to any anticipated
impact on its operating systems. Cost of the project is expected to be
approximately $165,000, of which approximately $125,000 will be capitalized for
the purchase of new software and hardware, and $40,000 which will expensed as
incurred. To date the Company has spent approximately $110,000, of which
$105,000 has been capitalized.
The Company has considered the impact of Year 2000 issues on the navigation and
landing systems it has sold and installed. The Company did a formal evaluation
and testing of certain of its equipment for the FAA, and an informal evaluation
and testing on its other equipment and found no Year 2000 issues critical to
flight safety. Some of the Company's older navigation and landing systems have
computers with programs written using two digits rather than four to define the
applicable year. As a result, those computer programs have time-sensitive
software that recognize a date using "00" as the year 1900 rather than the year
2000. No system failures will occur as a result of Year 2000 issues as
navigational guidance is not dependent on this function. The Company responds to
requests from its customers regarding Year 2000 issues as described herein and
does not believe it will incur any costs with regard to this issue which will be
material to the Company's consolidated financial statements.
The Company has considered the impact of Year 2000 issues on vendor/supplier
software as well as software imbedded in facility systems and has developed a
remediation plan. The Company is requiring certification from all significant
vendors that they will be Year 2000 compliant. The Company is inventorying all
facility systems for Year 2000 issues. In both cases, the Company will determine
the extent of any exposure to Year 2000 issues based upon responses from vendors
and suppliers and its' inventory of facility systems and develop corrective
action plans. The Company does not believe it will incur any costs with regard
to this issue which will be material to the Company's consolidated financial
statements.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the Company was held on September
10, 1998. The following items were approved:
(a) Michael J. Meyer and Walter H. Stowell, Jr. were re-elected as
Class II directors of the Company for a period of three years
until the 2000 Annual Meeting of the Stockholders. For Mr.
Meyer, 1,009,930 shares were voted for election with 39,536
withheld. For Mr. Stowell, 1,039,380 shares were voted for
election with 10,086 withheld. Members of the Board continuing
in office include the Class III directors serving until the
1999 annual meeting, Keith S. Cowan and Robert D. Taylor, and
the Class I directors serving until the 2000 annual meeting,
Thomas C. Blackburn and Thomas C. Cargin.
(b) Appointment of Ernst & Young LLP as independent accountants
was approved with 1,047,965 shares voting for appointment and
1,501 against.
(c) Amendment of the Company's Restated 1991 Stock Option Plan,
increasing the number of shares of Common Stock subject to
option thereunder from 375,000 shares to 475,000 was approved
with 981,670 voting for amendment, 101,337 shares against and
2,725 shares withheld.
Item 5. On September 15, 1998, Thomas C. Blackburn resigned from the Company's
Board of Directors. On October 30, 1998, the Board of Directors
appointed David D. Gatchell to fill the vacancy created by Mr.
Blackburn's resignation.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 10.1 - Stock option agreement dated September 15, 1998
between the Company and Michael J. Meyer.
Exhibit 10.2 - Stock option agreement dated September 15, 1998
between the Company and Walter H. Stowell, Jr.
Exhibit 10.3 - Stock option agreement dated September 15, 1998
between the Company and Robert D. Taylor.
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Exhibit 27 - Financial Data Schedule (SEC Use Only)
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the
three months ended October 31, 1998.
Page 13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AIRPORT SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARY
December 15, 1998 /s/ Thomas C. Cargin
- ----------------- --------------------------------------------
Date Thomas C. Cargin, Vice President of Finance
and Administration, Secretary, and Principal
Accounting Officer
Page 14
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description Page
- ------ ----------- ----
<S> <C> <C>
10.1 Stock option agreement dated September 15, 1998 16-20
between the Company and Michael J. Meyer.
10.2 Stock option agreement dated September 15, 1998 21-25
between the Company and Walter H. Stowell, Jr.
10.3 Stock option agreement dated September 15, 1998 26-30
between the Company and Robert D. Taylor.
27 Financial Data Schedule (SEC Use Only)
</TABLE>
Page 15
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EXHIBIT 10.1
NONSTATUTORY STOCK OPTION AGREEMENT
This Non-Statutory Stock Option Agreement (this "Agreement") is made as
of the 15th day of September, 1998, by and between AIRPORT SYSTEMS
INTERNATIONAL, INC., a Kansas corporation (the "Company"), and MICHAEL J. MEYER,
a member of the Board of Directors (a "Director") of the Company ("Optionee").
1. BACKGROUND. In order to attract and retain qualified individuals to
serve on the Board of Directors of the Company (the "Board") and to promote the
success of the Company's business, the Company has decided to grant non-employee
directors of the Company options to purchase shares of common stock of the
Company ("Common Stock").
2. GRANT OF OPTION. The Company hereby grants to Optionee an option
(the "Option") to purchase up to an aggregate of 5,000 Shares of Common Stock of
the Company (the "Option Shares"), with the Option to be fully vested and
exercisable as to any or all of the Option Shares as of the date first set forth
above; provided, however, that the Option is subject to the terms of the Stock
Transfer Restriction Agreement for Exercise of Stock Option attached hereto as
Exhibit A ("Stock Restriction Agreement"), the provisions of which are
incorporated herein by reference and the terms of which shall control in the
event of any conflict with the terms hereof. The Option hereby granted is a
nonstatutory stock option not intended to qualify as an incentive stock option
within the meaning of Section 422A of the Code. For purposes of this Agreement,
"Share" shall mean a share of Common Stock, as adjusted in accordance with
Section 8.
3. VESTING OF SHARES. The Option is fully vested and shall be
exercisable immediately.
4. EXERCISE OF OPTION.
(a) NOTICE OF EXERCISE. An Option shall be deemed to be exercised when
Optionee or other authorized person gives to the Company written notice of such
exercise, and full payment for the Option Shares with respect to which the
Option is exercised has been received by the Company. As a condition to the
exercise of an Option, the Company will require the Optionee to execute a Stock
Restriction Agreement.
(b) ISSUANCE OF STOCK CERTIFICATE. 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 Option
Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Option Shares, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificates 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 8.
(c) Exercise of an Option in any manner shall result in a decrease in
the number of Option Shares that thereafter may be available for sale under the
Option, by the number of Option Shares as to which the Option is exercised.
16
<PAGE> 2
5. EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per Share exercise price for the Option Shares
to be issued pursuant to exercise of the Option shall be three and one quarter
dollars ($3.25), which is equal to the closing price per share of the Common
Stock on the date hereof as listed on the NASDAQ National Market System, as
reported in The Wall Street Journal.
(b) FORM OF CONSIDERATION. The consideration to be paid for the Option
Shares to be issued upon exercise of the Option, including the method of
payment, 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 Option Shares as to which the Option shall be exercised,
or any combination of such methods of payment, or such other consideration and
method of payment for the issuance of Option Shares to the extent permitted
under the laws of the state of Kansas.
(c) FAIR MARKET VALUE. The fair market value of any shares of Common
Stock delivered to the Company as payment of the purchase price upon exercise of
an Option 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 of Common Stock shall be the mean of the bid and asked prices (or the
closing price per share if the Common Stock is listed on the NASDAQ National
Market System) of the Common Stock on the date of exercise, as reported in The
Wall Street Journal (or, if not so reported, as otherwise reported by the NASDAQ
System); or, if 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
exercise of the Option, as reported in The Wall Street Journal.
6. TERM OF OPTION.
(a) GENERAL RULE. Except as provided in Section 6(b), Section 6(c) or
Section 6(d) hereof, the term of the Option granted pursuant to Section 2 hereof
shall be ten (10) years from the date hereof.
(b) TERMINATION OF STATUS AS A DIRECTOR. In the event of termination of
Optionee's continuous status as a Director, Optionee may, but only within ninety
(90) days after such event of termination of an Optionee's continuous status as
a Director (but in no event later than the date of expiration of the term of the
Option) exercise the 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 Option at the date of such termination, or if he does not exercise the
Option within the time specified herein, the Option shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding the provision of Section
6(b), in the event of termination of Optionee's continuous status as a Director
as a result of his total and permanent disability (as defined in Section
22(e)(3) of the Internal Revenue Code), he may, but only within twelve (12)
months from the date of termination (but in no event later than the date of
expiration of the term of the Option), exercise the 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
17
<PAGE> 3
Option at the date of termination, or if he does not exercise the Option within
the time specified herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of the death of Optionee:
(i) and at the time of his death he is a Director of the
Company and shall have been in continuous status as a Director since
the date of grant of the Option, the 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 the Option) by
the Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance; or
(ii) which occurs within (3) months after the termination of
Optionee's continuous status as a Director, the 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
the Option) by Optionee's estate or by a person who acquired the right
to exercise the Option by bequest or inheritance.
For purposes of this Section 6, "continuous status as a Director" means
the absence of any interruption or termination of service as a Director.
Continuous status as a Director shall not be considered interrupted in the case
of sick leave, military leave, or any other leave of absence, provided that such
leave is for a period of not more than 180 days.
7. 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 Optionee, only by Optionee.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by the
Option, as well as the price per share of Common Stock covered by the 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.
(b) DISSOLUTION, LIQUIDATION AND MERGER. In the event of the proposed
dissolution or liquidation of the Company, the Option will terminate immediately
prior to the
18
<PAGE> 4
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
Optionee the right to exercise his Option as to all or any part of the Common
Stock subject to the Option. The Board shall give written notice to Optionee 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.
9. CONDITIONS UPON ISSUANCE OF OPTION SHARES.
(a) COMPLIANCE WITH APPLICABLE LAW. Option 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 Option 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 upon which the Common Stock may then be listed, and shall be further
subject to the reasonable approval of counsel for the Company with respect to
such compliance.
(b) INVESTMENT REPRESENTATIONS. 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 Option Shares are being
purchased only for investment and without any present intention to sell or
distribute such Option Shares if, in the reasonable opinion of counsel for the
Company, such a representation is required by any of the aforementioned relevant
provisions of law.
(c) PAYMENT OR WITHHOLDING OF TAXES. As a condition to the issuance of
Option Shares, the Optionee shall (a) remit to the Company at the time of any
exercise of the Option any taxes required to be withheld by the Company under
federal, state or local laws as a result of the exercise of the Option, and/or
(b) instruct the Company to withhold in accordance with applicable law from any
compensation payable to the Optionee the taxes required to be held by the
Company under federal, state or local laws result of the exercise of the Option.
The determination of the amount of any such withholding shall be made by the
Company in its sole discretion.
(d) STOCK RESTRICTION AGREEMENT. All Option Shares issued pursuant to
the exercise of the Option shall be subject to the terms and provisions of the
Stock Restriction Agreement.
19
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
OPTIONEE
--------------------------------------
Name: Michael J. Meyer
AIRPORT SYSTEMS INTERNATIONAL, INC.
A KANSAS CORPORATION
By:
----------------------------------
Keith S. Cowan, President
20
<PAGE> 1
EXHIBIT 10.2
NONSTATUTORY STOCK OPTION AGREEMENT
This Non-Statutory Stock Option Agreement (this "Agreement") is made as
of the 15th day of September, 1998, by and between AIRPORT SYSTEMS
INTERNATIONAL, INC., a Kansas corporation (the "Company"), and WALTER H.
STOWELL, JR., a member of the Board of Directors (a "Director") of the Company
("Optionee").
17. BACKGROUND. In order to attract and retain qualified individuals to
serve on the Board of Directors of the Company (the "Board") and to promote the
success of the Company's business, the Company has decided to grant non-employee
directors of the Company options to purchase shares of common stock of the
Company ("Common Stock").
18. GRANT OF OPTION. The Company hereby grants to Optionee an option
(the "Option") to purchase up to an aggregate of 5,000 Shares of Common Stock of
the Company (the "Option Shares"), with the Option to be fully vested and
exercisable as to any or all of the Option Shares as of the date first set forth
above; provided, however, that the Option is subject to the terms of the Stock
Transfer Restriction Agreement for Exercise of Stock Option attached hereto as
Exhibit A ("Stock Restriction Agreement"), the provisions of which are
incorporated herein by reference and the terms of which shall control in the
event of any conflict with the terms hereof. The Option hereby granted is a
nonstatutory stock option not intended to qualify as an incentive stock option
within the meaning of Section 422A of the Code. For purposes of this Agreement,
"Share" shall mean a share of Common Stock, as adjusted in accordance with
Section 8.
19. VESTING OF SHARES. The Option is fully vested and shall be
exercisable immediately.
20. EXERCISE OF OPTION.
(a) NOTICE OF EXERCISE. An Option shall be deemed to be exercised when
Optionee or other authorized person gives to the Company written notice of such
exercise, and full payment for the Option Shares with respect to which the
Option is exercised has been received by the Company. As a condition to the
exercise of an Option, the Company will require the Optionee to execute a Stock
Restriction Agreement.
(b) ISSUANCE OF STOCK CERTIFICATE. 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 Option
Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Option Shares, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificates 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 8.
(c) Exercise of an Option in any manner shall result in a decrease in
the number of Option Shares that thereafter may be available for sale under the
Option, by the number of Option Shares as to which the Option is exercised.
21
<PAGE> 2
21. EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per Share exercise price for the Option Shares
to be issued pursuant to exercise of the Option shall be three and one quarter
dollars ($3.25), which is equal to the closing price per share of the Common
Stock on the date hereof as listed on the NASDAQ National Market System, as
reported in The Wall Street Journal.
(b) FORM OF CONSIDERATION. The consideration to be paid for the Option
Shares to be issued upon exercise of the Option, including the method of
payment, 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 Option Shares as to which the Option shall be exercised,
or any combination of such methods of payment, or such other consideration and
method of payment for the issuance of Option Shares to the extent permitted
under the laws of the state of Kansas.
(c) FAIR MARKET VALUE. The fair market value of any shares of Common
Stock delivered to the Company as payment of the purchase price upon exercise of
an Option 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 of Common Stock shall be the mean of the bid and asked prices (or the
closing price per share if the Common Stock is listed on the NASDAQ National
Market System) of the Common Stock on the date of exercise, as reported in The
Wall Street Journal (or, if not so reported, as otherwise reported by the NASDAQ
System); or, if 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
exercise of the Option, as reported in The Wall Street Journal.
22. TERM OF OPTION.
(a) GENERAL RULE. Except as provided in Section 6(b), Section 6(c) or
Section 6(d) hereof, the term of the Option granted pursuant to Section 2 hereof
shall be ten (10) years from the date hereof.
(b) TERMINATION OF STATUS AS A DIRECTOR. In the event of termination of
Optionee's continuous status as a Director, Optionee may, but only within ninety
(90) days after such event of termination of an Optionee's continuous status as
a Director (but in no event later than the date of expiration of the term of the
Option) exercise the 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 Option at the date of such termination, or if he does not exercise the
Option within the time specified herein, the Option shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding the provision of Section
6(b), in the event of termination of Optionee's continuous status as a Director
as a result of his total and permanent disability (as defined in Section
22(e)(3) of the Internal Revenue Code), he may, but only within twelve (12)
months from the date of termination (but in no event later than the date of
expiration of the term of the Option), exercise the 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
22
<PAGE> 3
Option at the date of termination, or if he does not exercise the Option within
the time specified herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of the death of Optionee:
(i) and at the time of his death he is a Director of the
Company and shall have been in continuous status as a Director since
the date of grant of the Option, the 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 the Option) by
the Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance; or
(ii) which occurs within (3) months after the termination of
Optionee's continuous status as a Director, the 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
the Option) by Optionee's estate or by a person who acquired the right
to exercise the Option by bequest or inheritance.
For purposes of this Section 6, "continuous status as a Director" means
the absence of any interruption or termination of service as a Director.
Continuous status as a Director shall not be considered interrupted in the case
of sick leave, military leave, or any other leave of absence, provided that such
leave is for a period of not more than 180 days.
23. 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 Optionee, only by Optionee.
24. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by the
Option, as well as the price per share of Common Stock covered by the 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.
(b) DISSOLUTION, LIQUIDATION AND MERGER. In the event of the proposed
dissolution or liquidation of the Company, the Option will terminate immediately
prior to the
23
<PAGE> 4
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
Optionee the right to exercise his Option as to all or any part of the Common
Stock subject to the Option. The Board shall give written notice to Optionee 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.
9. CONDITIONS UPON ISSUANCE OF OPTION SHARES.
(a) COMPLIANCE WITH APPLICABLE LAW. Option 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 Option 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 upon which the Common Stock may then be listed, and shall be further
subject to the reasonable approval of counsel for the Company with respect to
such compliance.
(b) INVESTMENT REPRESENTATIONS. 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 Option Shares are being
purchased only for investment and without any present intention to sell or
distribute such Option Shares if, in the reasonable opinion of counsel for the
Company, such a representation is required by any of the aforementioned relevant
provisions of law.
(c) PAYMENT OR WITHHOLDING OF TAXES. As a condition to the issuance of
Option Shares, the Optionee shall (a) remit to the Company at the time of any
exercise of the Option any taxes required to be withheld by the Company under
federal, state or local laws as a result of the exercise of the Option, and/or
(b) instruct the Company to withhold in accordance with applicable law from any
compensation payable to the Optionee the taxes required to be held by the
Company under federal, state or local laws result of the exercise of the Option.
The determination of the amount of any such withholding shall be made by the
Company in its sole discretion.
(d) STOCK RESTRICTION AGREEMENT. All Option Shares issued pursuant to
the exercise of the Option shall be subject to the terms and provisions of the
Stock Restriction Agreement.
24
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
OPTIONEE
----------------------------------------
Name: Walter H. Stowell, Jr.
AIRPORT SYSTEMS INTERNATIONAL, INC.
A KANSAS CORPORATION
By:
------------------------------------
Keith S. Cowan, President
25
<PAGE> 1
EXHIBIT 10.3
NONSTATUTORY STOCK OPTION AGREEMENT
This Non-Statutory Stock Option Agreement (this "Agreement") is made as
of the 15th day of September, 1998, by and between AIRPORT SYSTEMS
INTERNATIONAL, INC., a Kansas corporation (the "Company"), and ROBERT D. TAYLOR,
a member of the Board of Directors (a "Director") of the Company ("Optionee").
9. BACKGROUND. In order to attract and retain qualified individuals to
serve on the Board of Directors of the Company (the "Board") and to promote the
success of the Company's business, the Company has decided to grant non-employee
directors of the Company options to purchase shares of common stock of the
Company ("Common Stock").
10. GRANT OF OPTION. The Company hereby grants to Optionee an option
(the "Option") to purchase up to an aggregate of 5,000 Shares of Common Stock of
the Company (the "Option Shares"), with the Option to be fully vested and
exercisable as to any or all of the Option Shares as of the date first set forth
above; provided, however, that the Option is subject to the terms of the Stock
Transfer Restriction Agreement for Exercise of Stock Option attached hereto as
Exhibit A ("Stock Restriction Agreement"), the provisions of which are
incorporated herein by reference and the terms of which shall control in the
event of any conflict with the terms hereof. The Option hereby granted is a
nonstatutory stock option not intended to qualify as an incentive stock option
within the meaning of Section 422A of the Code. For purposes of this Agreement,
"Share" shall mean a share of Common Stock, as adjusted in accordance with
Section 8.
11. VESTING OF SHARES. The Option is fully vested and shall be
exercisable immediately.
12. EXERCISE OF OPTION.
(a) NOTICE OF EXERCISE. An Option shall be deemed to be exercised when
Optionee or other authorized person gives to the Company written notice of such
exercise, and full payment for the Option Shares with respect to which the
Option is exercised has been received by the Company. As a condition to the
exercise of an Option, the Company will require the Optionee to execute a Stock
Restriction Agreement.
(b) ISSUANCE OF STOCK CERTIFICATE. 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 Option
Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Option Shares, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificates 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 8.
(c) Exercise of an Option in any manner shall result in a decrease in
the number of Option Shares that thereafter may be available for sale under the
Option, by the number of Option Shares as to which the Option is exercised.
26
<PAGE> 2
13. EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per Share exercise price for the Option Shares
to be issued pursuant to exercise of the Option shall be three and one quarter
dollars ($3.25), which is equal to the closing price per share of the Common
Stock on the date hereof as listed on the NASDAQ National Market System, as
reported in The Wall Street Journal.
(b) FORM OF CONSIDERATION. The consideration to be paid for the Option
Shares to be issued upon exercise of the Option, including the method of
payment, 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 Option Shares as to which the Option shall be exercised,
or any combination of such methods of payment, or such other consideration and
method of payment for the issuance of Option Shares to the extent permitted
under the laws of the state of Kansas.
(c) FAIR MARKET VALUE. The fair market value of any shares of Common
Stock delivered to the Company as payment of the purchase price upon exercise of
an Option 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 of Common Stock shall be the mean of the bid and asked prices (or the
closing price per share if the Common Stock is listed on the NASDAQ National
Market System) of the Common Stock on the date of exercise, as reported in The
Wall Street Journal (or, if not so reported, as otherwise reported by the NASDAQ
System); or, if 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
exercise of the Option, as reported in The Wall Street Journal.
14. TERM OF OPTION.
(a) GENERAL RULE. Except as provided in Section 6(b), Section 6(c) or
Section 6(d) hereof, the term of the Option granted pursuant to Section 2 hereof
shall be ten (10) years from the date hereof.
(b) TERMINATION OF STATUS AS A DIRECTOR. In the event of termination of
Optionee's continuous status as a Director, Optionee may, but only within ninety
(90) days after such event of termination of an Optionee's continuous status as
a Director (but in no event later than the date of expiration of the term of the
Option) exercise the 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 Option at the date of such termination, or if he does not exercise the
Option within the time specified herein, the Option shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding the provision of Section
6(b), in the event of termination of Optionee's continuous status as a Director
as a result of his total and permanent disability (as defined in Section
22(e)(3) of the Internal Revenue Code), he may, but only within twelve (12)
months from the date of termination (but in no event later than the date of
expiration of the term of the Option), exercise the 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
27
<PAGE> 3
Option at the date of termination, or if he does not exercise the Option within
the time specified herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of the death of Optionee:
(i) and at the time of his death he is a Director of the
Company and shall have been in continuous status as a Director since
the date of grant of the Option, the 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 the Option) by
the Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance; or
(ii) which occurs within (3) months after the termination of
Optionee's continuous status as a Director, the 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
the Option) by Optionee's estate or by a person who acquired the right
to exercise the Option by bequest or inheritance.
For purposes of this Section 6, "continuous status as a Director" means
the absence of any interruption or termination of service as a Director.
Continuous status as a Director shall not be considered interrupted in the case
of sick leave, military leave, or any other leave of absence, provided that such
leave is for a period of not more than 180 days.
15. 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 Optionee, only by Optionee.
16. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by the
Option, as well as the price per share of Common Stock covered by the 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.
(b) DISSOLUTION, LIQUIDATION AND MERGER. In the event of the proposed
dissolution or liquidation of the Company, the Option will terminate immediately
prior to the
28
<PAGE> 4
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
Optionee the right to exercise his Option as to all or any part of the Common
Stock subject to the Option. The Board shall give written notice to Optionee 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.
9. CONDITIONS UPON ISSUANCE OF OPTION SHARES.
(a) COMPLIANCE WITH APPLICABLE LAW. Option 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 Option 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 upon which the Common Stock may then be listed, and shall be further
subject to the reasonable approval of counsel for the Company with respect to
such compliance.
(b) INVESTMENT REPRESENTATIONS. 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 Option Shares are being
purchased only for investment and without any present intention to sell or
distribute such Option Shares if, in the reasonable opinion of counsel for the
Company, such a representation is required by any of the aforementioned relevant
provisions of law.
(c) PAYMENT OR WITHHOLDING OF TAXES. As a condition to the issuance of
Option Shares, the Optionee shall (a) remit to the Company at the time of any
exercise of the Option any taxes required to be withheld by the Company under
federal, state or local laws as a result of the exercise of the Option, and/or
(b) instruct the Company to withhold in accordance with applicable law from any
compensation payable to the Optionee the taxes required to be held by the
Company under federal, state or local laws result of the exercise of the Option.
The determination of the amount of any such withholding shall be made by the
Company in its sole discretion.
(d) STOCK RESTRICTION AGREEMENT. All Option Shares issued pursuant to
the exercise of the Option shall be subject to the terms and provisions of the
Stock Restriction Agreement.
29
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
OPTIONEE
----------------------------------------
Name: Robert D. Taylor
AIRPORT SYSTEMS INTERNATIONAL, INC.
A KANSAS CORPORATION
By:
------------------------------------
Keith S. Cowan, President
30
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AIRPORT
SYSTEMS INTERNATIONAL, INC. FORM 10-QSB FOR THE QUARTER ENDED OCTOBER 31, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH AS EXHIBIT 27 OF THE
AIRPORT SYSTEMS INTERNATIONAL, INC. FORM 10-QSB.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> OCT-31-1998
<CASH> 775
<SECURITIES> 0
<RECEIVABLES> 4,196
<ALLOWANCES> 39
<INVENTORY> 6,162
<CURRENT-ASSETS> 11,534
<PP&E> 3,640
<DEPRECIATION> 1,846
<TOTAL-ASSETS> 14,512
<CURRENT-LIABILITIES> 3,582
<BONDS> 1,174
0
0
<COMMON> 22
<OTHER-SE> 9,719
<TOTAL-LIABILITY-AND-EQUITY> 14,512
<SALES> 7,968
<TOTAL-REVENUES> 7,968
<CGS> 5,823
<TOTAL-COSTS> 9,061
<OTHER-EXPENSES> (47)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46
<INCOME-PRETAX> (1,094)
<INCOME-TAX> (402)
<INCOME-CONTINUING> (700)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (700)
<EPS-PRIMARY> (.31)
<EPS-DILUTED> (.31)
</TABLE>
