SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A
(Rule 14a-101)
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement pursuant to Section 14(a) of
The Securities Exchange Act of 1934
|X| Filed by the Registrant
| | Filed by a party other than the Registrant
Check the appropriate box:
|X| Preliminary proxy statement
| | Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
| | Definitive proxy statement
| | Definitive additional materials
| | Soliciting material pursuant to Rule 14a-11C or Rule 14a-12
AIRPORT SYSTEMS INTERNATIONAL, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (check the appropriate box):
|X| No fee required.
| | Fee computed on table below per Exchange Act Rules 14a-6(i) (4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction:
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(4) Proposed maximum aggregate value of transaction:
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| | Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date of
its filing.
(1) Amount previously paid:
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(2) Form, schedule, or registration statement number.
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(3) Filing party:
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(4) Date filed:
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<PAGE>
AIRPORT SYSTEMS INTERNATIONAL, INC.
11300 WEST 89TH STREET
OVERLAND PARK, KANSAS 66214
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 12, 2000
Notice is hereby given that the Annual Meeting of the Stockholders
of Airport Systems International, Inc. (the "Company"), will be held at The
Doubletree Hotel at Corporate Woods, 10100 College Boulevard, Overland Park,
Kansas on Tuesday, September 12, 2000, commencing at 2:00 p.m. Kansas City time,
to consider and act upon the following matters and such other business as may
properly come before the meeting or any adjournment thereof:
1. The election of two (2) Class I Directors to serve
for a term of three years expiring in 2003; and
2. The approval of an amendment to the Articles of
Incorporation, contingent upon notification from the
United States Trademark and Patent Office that the
trademark "Elecsys" has been registered to the Company,
to change the name of the Company from "Airport Systems
International, Inc." to "Elecsys Corporation;" and
3. The ratification of the Board of Directors'
appointment of Ernst & Young as independent public
accountants.
Holders of record of the outstanding Common Stock of the Company at
the close of business on July 25, 2000, are entitled to vote at the meeting or
any adjournment thereof.
By Order of the Board of Directors,
THOMAS C. CARGIN
Secretary
Overland Park, Kansas
August 18, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE TO WHICH NO
POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES. YOUR SHARES CANNOT BE
VOTED UNLESS YOU SIGN AND RETURN A PROXY OR VOTE BY BALLOT AT THE MEETING.
<PAGE>
AIRPORT SYSTEMS INTERNATIONAL, INC.
11300 WEST 89TH STREET
OVERLAND PARK, KANSAS 66214
PROXY STATEMENT
GENERAL INFORMATION
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy is being solicited on behalf of the Board of Directors
of Airport Systems International, Inc. (the "Company") for use at the Annual
Meeting of the Stockholders to be held on September 12, 2000 (the "Meeting"), or
at any adjournment thereof. Any proxy given does not affect the right to vote in
person at the Meeting and may be revoked at any time before it is exercised by
notifying Thomas C. Cargin, Secretary, by mail, telegram or facsimile, or by
appearing at the Meeting in person and casting a ballot. This Proxy Statement
and the proxy were first mailed to stockholders on or about August 21, 2000.
All expenses of solicitation will be borne by the Company. In addition to
solicitations by mail, regular employees and Directors of the Company may
solicit proxies in person or by telephone. The Company does not expect to pay
any compensation for the solicitation of proxies.
VOTING PROCEDURES
Shares represented by a properly signed proxy received pursuant to this
solicitation will be voted in accordance with instructions thereon. If the proxy
is properly signed and returned and no instructions are given on the proxy with
respect to the matters to be acted upon, the shares represented by the proxy
will be voted at the Meeting: (i) for the election, as directors of the Company,
of the nominees hereinafter named, (ii) for the approval of the amendment to the
Company's Articles of Incorporation to change the name of the Company to
"Elecsys Corporation," contingent upon notification from the United States
Trademark and Patent Office ("Trademark Office") that the trademark "Elecsys"
has been registered to the Company, and (iii) for the ratification of the
appointment of Ernst & Young as independent public accountants of the Company.
If any of the nominees should unexpectedly become unavailable for election for
any reason, the shares represented by the proxy will be voted for such
substituted nominee or nominees as the Board of Directors may name. Each of the
nominees hereinafter named has indicated his willingness to serve if elected,
and it is not anticipated that either of them will become unavailable for
election.
The proxy confers discretionary authority, with respect to the voting of
the shares represented thereby, on any other business that may properly come
before the Meeting. The Board of Directors is not aware that any such other
business, other than as set forth in this Proxy Statement and except for matters
incident to the conduct of the Meeting, is to be presented for action at the
Meeting and does not itself intend to present any such other business; however,
if any such other business does come before the Meeting, shares represented by
proxies properly signed and returned pursuant to this solicitation will be voted
as directed by the Board of Directors.
The two nominees for Director receiving the greatest number of votes at
the Meeting will be elected as Directors. Any shares not voted (whether by
abstention, broker non-vote, or otherwise) have no impact in the election of
directors except to the extent the failure to vote for an individual results in
another individual receiving a larger proportion of the total votes. The
affirmative vote of a majority of shares present in person or represented by
proxy, and entitled to vote is required to approve the amendment to the
Company's Articles of Incorporation to change the name of the Company to
"Elecsys Corporation." Approval of the proposal to change the name will be
contingent on, and the Company will not file the amendment to change the
Company's Articles of Incorporation until it has received, notification from the
Trademark Office that the trademark "Elecsys" has been registered to the
Company. The ratification of the appointment of independent public accountants
requires the affirmative vote of a majority of shares present in person or
represented by proxy, and entitled to vote on the matter. For purposes of
determining the outcome of the vote on this matter, an instruction to "abstain"
from voting on a proposal will be treated as shares present and entitled to
vote, and will have the same effect as a vote against a proposal. "Broker
nonvotes," which occur when brokers are prohibited from exercising discretionary
voting authority for beneficial owners who have not provided voting
instructions, are not counted for the purpose of determining the number of
1
<PAGE>
shares present in person or represented by proxy on a voting matter and will
have no effect on the outcome of the vote on the ratification of appointment of
accountants.
Only holders of Common Stock of the Company of record as of the close of
business on July 25, 2000, are entitled to vote at the Meeting. At the close of
business on that date, 2,578,913 shares of Common Stock were outstanding.
Holders of Common Stock are entitled to one (1) vote per share standing in their
names on the record date. Shares cannot be voted at the Meeting unless the owner
is present in person or represented by proxy.
SECURITY OWNERSHIP
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of shares of the Company's Common Stock at July 31, 2000, by (i) the
stockholders known by the Company to own beneficially more than 5% of the Common
Stock, (ii) each director of the Company who owns beneficially any Common Stock,
(iii) each executive officer named in the "Summary Compensation Table," and (iv)
all directors and executive officers of the Company as a group. Unless otherwise
indicated, the Company believes that each stockholder listed below has sole
voting and investment power with respect to the Common Stock indicated as
beneficially owned by them.
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
--------------------------------------------------------------------------------
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS BENEFICIALLY OWNED (1) CLASS
--------------------------------------------------------------------------------
Gagnon Securities...........................433,257(2) 16.8
1370 Avenue of the Americas
Suite 2002
New York, NY 10019
KCEP Ventures II, L.P.......................410,715(3) 14.7
233 West 47th Street
Kansas City, MO 64112
Keith S. Cowan..............................148,743(4) 5.5
Airport Systems International, Inc.
11300 West 89th Street
Overland Park, KS 66214
Lois Gagnon.................................130,675(5) 5.1
1370 Avenue of the Americas
Suite 2002
New York, NY 10019
Robert D. Taylor.............................92,500(6) 3.6
1313 North Webb Rd., Suite 260
Wichita, KS 67206
Thomas C. Cargin.............................48,745(7) 1.9
Airport Systems International, Inc.
11300 West 89th Street
Overland Park, KS 66214
Wayne Howard.................................15,000(8) *
Airport Systems International, Inc.
11300 West 89th Street
Overland Park, KS 66214
Anthony Bommarito.............................7,667(9) *
Airport Systems International, Inc.
11300 West 89th Street
Overland Park, KS 66214
Michael J. Meyer.............................6,500(10) *
8700 Monrovia Suite 205
Lenexa, KS 66215
Walter H. Stowell............................5,000(11) *
27 Goodsell Point
Colchester, VT 05446
All directors and executive officers as a 13.8
group (9 persons)..........................388,950(12)
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</TABLE>
[FN]
* Less than one percent.
(1) Pursuant to the rules of the Securities and Exchange Commission ("SEC"),
shares of Common Stock of the Company which an individual or a group has a
right to acquire within 60 days pursuant to the exercise of options or
warrants are deemed to be outstanding for the purpose of computing the
percentage of ownership of such individual or group, but are not deemed to
be outstanding for the purpose of computing the percentage ownership of
any other person shown in the table.
(2) The information reflected above is primarily for securities in customer
accounts over which Gagnon Securities has discretionary trading authority
and is based on information provided to the Company.
3
<PAGE>
(3) According to a Schedule 13G filed as of February 16, 2000, KCEP Ventures
II, L.P. ("KCEP") reported beneficial ownership as to 410,715 shares of
Common Stock of the Company held as of February 16, 2000. 198,413 shares
of Common Stock are owned of record by KCEP, 166,667 shares of Common
Stock are issuable upon the conversion of a $500,000 principal amount
Convertible Subordinated Debenture issued to KCEP and 45,635 shares of
Common Stock are issuable upon the exercise of a warrant issued to KCEP.
(4) Includes presently exercisable options to purchase 127,750 shares of
Common Stock of the Company.
(5) According to a Schedule 13G filed as of May 16, 2000, Lois Gagnon reported
beneficial ownership as to 130,675 shares of Common Stock of the Company
held as of May 16, 2000. 110,000 of such shares are owned by Mrs. Gagnon;
6,725 shares are held by the Gagnon Foundation, of which Mrs. Gagnon is a
trustee; 12,400 shares are held by the Gagnon Family Partnership, of which
Mrs. Gagnon is a partner; and 1,550 shares are held by the Gagnon Trust,
of which Mrs. Gagnon is a trustee.
(6) Includes presently exercisable options to purchase 5,000 shares of Common
Stock of the Company.
(7) Includes presently exercisable options to purchase 31,500 shares of Common
Stock of the Company.
(8) Includes presently exercisable options to purchase 15,000 shares of Common
Stock of the Company.
(9) Includes presently exercisable options to purchase 6,667 shares of Common
Stock of the Company.
(10) Includes presently exercisable options to purchase 5,000 shares of Common
Stock of the Company.
(11) Includes presently exercisable options to purchase 5,000 shares of Common
Stock of the Company.
(12) Includes presently exercisable options to purchase 237,417 shares of
Common Stock of the Company held by executive officers and directors as a
group.
</FN>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, based solely on review of copies of reports
filed with the Securities and Exchange Commission and written representations
that no other reports were required during the fiscal year ending April 30,
2000, and except as described below, all Section 16(a) filing requirements
applicable to the officers, directors and beneficial owners of more than 10
percent of the Company's equity securities were complied with on a timely basis.
Gagnon Securities has not filed a Form 13G reflecting its beneficial ownership
of Common Stock of the Company. The Company has been advised that Gagnon
Securities will file a Form 13G.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Stockholder proposals to be considered for inclusion in the Proxy
Statement and considered at the 2001 Annual Meeting of the Stockholders must be
received by the Company no later than April 23, 2001. Any such proposals should
be directed to the Secretary of the Company at 11300 West 89th Street, Overland
Park, Kansas 66214.
I. ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes, with
the term of office of each class ending in successive years. The terms of the
Directors of Class I expire with this Meeting. Each of the two nominees for
Class I, if elected, will serve three years until the 2003 Annual Meeting of
Stockholders and until a successor has been elected and qualified. The current
Directors of Classes II and III will continue in office until the 2001 and 2002
Annual Meetings, respectively.
4
<PAGE>
NOMINEES FOR DIRECTORS
The following information is given with respect to the nominees for election.
CLASS I - NOMINEES TO SERVE THREE YEARS UNTIL 2003 ANNUAL MEETING
DAVID D. GATCHELL, age 46, has served as a Director of the Company since
November, 1998. Since 1997, Mr. Gatchell has served as Senior Vice President and
Chief Operating Officer of Wolfe Automotive Group, an automotive retailing
organization. From 1994 to 1997, Mr. Gatchell was a partner at the law firm of
Sonneschein, Nath, and Rosenthal.
THOMAS C. CARGIN, age 45, has served as Vice President - Finance and
Administration of the Company since December 1991, as its Secretary since March
1993, and as a Director of the Company since October 1993. From 1989 to 1993,
Mr. Cargin was a partner in the accounting firm of Ifft & Barber and prior to
that was an employee of DYMON, Inc., a specialty chemical manufacturer located
in Kansas City, Kansas, since 1983, last serving as Vice President of Finance
and Chief Financial Officer. Mr. Cargin is a Certified Public Accountant with
over twenty-two years of public accounting and private industry accounting
experience. He is also a licensed pilot holding an instrument rating.
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
The following information is given with respect to the Directors of Classes II
and III, who will continue to serve as Directors of the Company until the 2001
and 2002 Annual Meetings of Stockholders, respectively.
CLASS II - SERVING UNTIL 2001 ANNUAL MEETING
MICHAEL J. MEYER, age 44, has served as a Director of the Company since its
organization in May 1991, as its Chairman until March 7, 1995, and as its
President through September 1991. Mr. Meyer is President of Merit Capital
Management, Inc., a private equity merchant banking firm engaged in financing
growth-oriented private companies and acquisitions, which he formed in May 1998.
From August 1996 to May 1998, Mr. Meyer was Co-Manager of Holden Capital
Advisors, LLC, and prior to that was a Senior Vice President with George K. Baum
& Company, an investment banking firm from February, 1995. For more than five
years prior to that, Mr. Meyer was a Principal in the general partnership of
Allsop Venture Partners III L.P., a private equity fund. He has over 17 years of
experience in financing and managing growth companies and is a Certified Public
Accountant. Mr. Meyer is a member of the Company's Audit and Stock Option
Committees.
WALTER H. STOWELL, JR., age 63, has served as Chairman of the Board since March
7, 1995 and a Director of the Company since May 18, 1994. Mr. Stowell retired
from Raytheon Company on April 1, 1994, after being an employee of Raytheon
since 1960 in a variety of positions, last serving as a Senior Vice President
and General Manager of the Equipment Division. Raytheon Company is a
diversified, multi-industry, technology-based company, whose Equipment Division
develops and builds military and commercial radars, air traffic control systems,
satellite terminals, communications equipment, computers and missile fire
control systems. He is a member of the Company's Compensation and Stock Option
Committees.
CLASS III - SERVING UNTIL 2002 ANNUAL MEETING
KEITH S. COWAN, age 46, has served as President and a Director of the Company
since September 1991, and as Chief Executive Officer of the Company since August
1993. Prior to joining the Company, Mr. Cowan was an employee of the Teledyne
Controls Division of Teledyne, Inc. for more than five years, last serving as
Vice President, Airport and Instrumentation Products. Mr. Cowan has over
twenty-five years of system engineering, project management, and corporate
experience in the development, manufacturing and sale of electronic systems. He
is also a commercial pilot holding an instrument rating.
DAVID J. SCHULTE, age 39, has served as a Director of the Company since
February 2000. Since November 1994, Mr. Schulte has been a Partner and
Managing Director of Kansas City Equity Partners, a venture capital firm.
From April 1989 to November 1994, Mr. Schulte was Vice President, Corporate
Finance Department with Fahnestock & Co. Inc., and for three years prior to
that he was an Associate Attorney with Stinson, Mag & Fizzell. Mr. Schulte
is a Certified Public Accountant and a member of the Missouri Bar
Association. He has over 14 years of experience in acquisition financing and
investment. Mr. Schulte also serves on the Board of Directors of Hardware
Corporation of America and Taylor Products Company. Mr. Schulte serves on
the Audit Committee.
5
<PAGE>
ROBERT D. TAYLOR, age 53, has served as a Director of the Company since
September 1994. In July 1998, Mr. Taylor became President and Chief Executive
Officer of Executive Aircraft Corporation, an aircraft refurbishment and
maintenance company. Mr. Taylor is also President of Taylor Financial, a
consulting and investment firm. Mr. Taylor also serves as a Director on the
Boards of Commercial Federal Bank of Omaha, Nebraska, and Sirloin Stockade
International, Inc., Hutchinson, Kansas, a 68 unit restaurant chain. From 1991
to 1995, Mr. Taylor was Chairman and Chief Executive Officer of Railroad
Financial Corporation. Mr. Taylor also serves on the Advisory Board for the
University of Kansas Business School. Mr. Taylor serves on the Company's
Compensation and Audit Committees.
COMMITTEES AND DIRECTOR MEETINGS
The Board of Directors has established an Audit Committee, a Compensation
Committee, and a Stock Option Committee. The entire Board of Directors acts as
the nominating committee responsible for selecting candidates for election as
Directors. Stockholders wishing to submit the name of a candidate for the Board
of Directors should submit the recommendation, along with biographical
information, to the Secretary of the Company. The Audit Committee's
responsibilities include recommending to the Board of Directors the public
accounting firm to be engaged to audit the Company and reviewing with the
independent accountants the plan for, and results of, the auditing engagement
and the Company's internal accounting controls. The Board of Directors adopted a
written charter for the Audit Committee in May 2000. The Audit Committee, which
held one formal meeting, is comprised of a majority of outside directors and its
current members consist of Messrs. Taylor, Meyer and Schulte. The Compensation
Committee, which met once during the last fiscal year, is comprised of Messrs.
Taylor and Stowell, and has been given the responsibility of setting and
administering the policies which govern the annual compensation of the Company's
executive officers, as well as the Company's benefit plans other than the Stock
Option Plan. The Company's Stock Option Plan is administered by a committee of
two independent directors who may not receive options under the Stock Option
Plan. Messrs. Stowell and Meyer currently comprise the Stock Option Committee,
which held one meeting during the last fiscal year.
The Board of Directors held five special and regularly scheduled meetings
during the last fiscal year ended April 30, 2000. During such fiscal year and
for the period during which each director was on the Board, each director
attended at least 75% of the aggregate of the total number of meetings of the
Board of Directors and the total number of meetings held by all Committees of
the Board of Directors on which the Director served during the last fiscal year.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has reviewed and discussed the audited financial
statements with management and has discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61. The
Audit Committee has received the written disclosures and letter required by
Independence Standards Board No. 1 from the independent auditor and has
discussed with the auditor the auditor's independence. Pursuant to its review
and discussions, the Audit Committee recommends to the Board of Directors that
the audited financial statements be included in the Company's Annual Report on
Form 10-KSB for the last fiscal year for filing with the Commission.
DIRECTOR COMPENSATION
Each Director who is not a salaried employee of the Company is paid a fee
of $3,000 for each regularly scheduled Board meeting attended up to a maximum of
$12,000 per year, plus $1,000 for each specially scheduled Board Meeting, plus
$500 for each meeting of a committee of the Board attended. No Director who is
an employee of the Company will receive compensation for services rendered as a
Director.
On November 1, 1999 the Company entered into a Management Advisory
Agreement with Merit Capital Management, Inc. ("Merit"). The President of Merit
is Michael J. Meyer, a Director of the Company. Pursuant to the terms of this
agreement, the Company agreed to pay Merit an advisory fee relating to the
completion and integration of the DCI, Inc. acquisition and associated financial
transactions of $18,000 on January 3, 2000 and $6,000 per month beginning on
February 1, 2000 through November 1, 2001. The agreement further provided that
Merit's President, Mr. Meyer, will be enrolled in the Company's life and health
insurance at the Company's expense.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning cash and non-cash
compensation paid to or accrued for the benefit of each of the Company's Chief
Executive Officer and certain other executive officers of the Company ("Named
Executive Officers") for all services rendered in all capacities to the Company
for the fiscal periods ended April 30, 2000, 1999 and 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
LONG TERM
COMPENSATION
AWARDS
---------
SHARES
UNDERLYING
ANNUAL COMPENSATION OPTIONS ALL OTHER
----------------------------- (#) COMPENSATION(1)
--------- ---------------
NAME AND
PRINCIPAL POSITION YEAR SALARY BONUS OTHER
------------------ ---- ------ ----- -----
Keith S. Cowan 2000 $185,807 $ --- $1,133(2) $ --- $ 4,910
President and CEO 1999 184,156 --- 663(2) --- 4,012
1998 165,433 42,888 766(2) --- 3,947
Wayne Howard 2000 $103,483 $131,300 $ --- $ --- $ 1,869
Vice President - 1999 99,159 --- --- --- 2,212
Indonesia Programs 1998 103,483 59,000 --- --- 2,604
Thomas C. Cargin 2000 $110,569 $ --- $ --- $ --- $ ---
Vice President- 1999 110,040 --- --- --- 2,026
Administration 1998 104,808 15,137 --- --- 4,136
Anthony Bommarito(4) 2000 $110,502 --- --- --- $ 3,302
Vice President 1999 96,621 --- --- --- 888
Engineering and 1998 --- --- --- --- ---
Manufacturing
Michael M. Warner(5) 2000 $133,918 $ --- $20,000(3) $ --- $ 4,004
Vice President- 1999 133,234 --- 20,000(3) --- 2,127
Business Development 1998 126,796 15,137 20,000(3) --- 3,025
</TABLE>
[FN]
--------------------
(1) Consists of Company matching contributions made on behalf of Named
Executive Officers under the Company's 401(k) Savings Plan.
(2) Consists of monthly dues paid on a Company-owned membership at a golf and
country club of which Mr. Cowan presently is the Company's designated
member.
(3) Forgiveness of loan made to Mr. Warner for his efforts in securing orders
for the Company in 1997 and execution of a Covenant Not To Compete
Agreement.
(4) Mr. Bommarito was not employed by the Company during the fiscal year
1998.
(5) Mr. Warner resigned his position as Vice President - Business
Development on June 30, 2000.
</FN>
7
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth for each director and, for each of the
Named Executive Officers in the Summary Compensation Table above, the fiscal
year-end number and value of unexercised options. No options were exercised by
the Named Executive Officers during the fiscal year ended April 30, 2000.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT APRIL 30, 2000 At April 30, 2000(1)
------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Keith S. Cowan.............127,750 --- $237,831 $ ---
Thomas C. Cargin............31,500 --- 49,076 ---
Michael M. Warner...........35,000 --- --- ---
Wayne Howard................15,000 --- --- ---
Anthony Bommarito............6,667 13,333 --- ---
Walter H. Stowell............5,000 --- --- ---
Michael J. Meyer.............5,000 --- --- ---
Robert D. Taylor.............5,000 --- --- ---
</TABLE>
[FN]
(1) The value of unexercised in-the-money options is the difference between
the exercise price of the options and the fair market value of the
Company's Common Stock at April 30, 2000 ($2.50 per share).
</FN>
EMPLOYMENT ARRANGEMENTS WITH NAMED EXECUTIVE OFFICERS
The Company entered into a written employment agreement effective June 22,
1993, with Keith S. Cowan. The agreement provides for Mr. Cowan to be employed
by the Company for a minimum period of three years following its effective date.
The Company recently extended the minimum employment period in Mr. Cowan's
employment agreement to November 30, 2001. All other terms and conditions
remained the same.
As compensation for services rendered to the Company, the agreement
provides for Mr. Cowan to receive (i) a base annual salary of $192,400 which may
be adjusted above such base amount from time to time by action of the Board of
Directors, and (ii) a performance-based bonus, the amount of which is determined
by reference to such criteria as may be established by the Board of Directors.
The Company also entered into a substantially similar written employment
agreement effective October 11, 1993, with Thomas C. Cargin. The agreement
provides for Mr. Cargin to be employed by the Company for a minimum period of
three years following its effective date. The Company recently extended the
minimum employment period in Mr. Cargin's employment agreement to November 30,
2001. All other terms and conditions remained the same.
As compensation for services rendered to the Company, the agreement
provides for Mr. Cargin to receive (i) a base salary of $114,660 which may be
adjusted above such base amount from time to time by action of the Board of
Directors, and (ii) a performance-based bonus, the amount of which is determined
by reference to such criteria as may be established by the Board of Directors.
The Company also entered into a substantially similar written employment
agreement effective June 12, 1998, with Anthony G. Bommarito. The agreement
provides for Mr. Bommarito to be employed by the Company for a minimum period of
two years following its effective date. The agreement expired June 12, 2000.
As compensation for services rendered to the Company, the agreement
provides for Mr. Bommarito to receive (i) a base salary of $114,400 which may be
adjusted above such base amount from time to time by action of the Board of
Directors, and (ii) a performance-based bonus, the amount of which is determined
by reference to such criteria as may be established by the Board of Directors.
The Company also entered into a substantially similar written
employment agreement effective December 6, 1999 with Karl B. Gemperli. The
Agreement provides for Mr. Gemperli to be employed by the Company for a
minimum period of one year following its effective date.
8
<PAGE>
As Compensation for services rendered to the Company the agreement
provides for Mr. Gemperli to receive (i) a base salary of $140,000 which may be
adjusted above such base amount from time to time by action of the Board of
Directors, and (ii) a performance-based bonus, the amount of which is determined
by reference to such criteria as may be established by the Board of Directors.
Each of Mr. Cowan's, Mr. Cargin's, Mr. Bommarito's and Mr. Gemperli's
employment may be terminated by the Company for cause (as defined in the
agreements) or without cause. If Mr. Cowan's, Mr. Cargin's, Mr. Bommarito's or
Mr. Gemperli's employment is terminated for cause or if one resigns, any
unearned salary and bonus rights will cease on the date of such termination or
resignation. If the Company terminates Mr. Cowan or Mr. Cargin without cause,
all compensation payments will continue through the remainder of the agreement
term of the relevant agreement, or 12 months, whichever is greater. If the
Company terminates Mr. Bommarito without cause, all monthly compensation
payments will continue through the remainder of the agreement term of the
relevant agreement. If the Company enters into a significant corporate
transaction with a former employer of Mr. Bommarito, and Mr. Bommarito is
terminated or he is demoted within one year of the consummation of the
transaction, the Company will pay a severance amount to Mr. Bommarito equal to
two years' worth of salary payments. If the Company terminates Mr. Gemperli
without cause, the Company will pay Mr. Gemperli an amount equal to his monthly
salary multiplied by the number of months remaining in the employment agreement.
Pursuant to the agreements, Mr. Cowan, Mr. Cargin, Mr. Bommarito and Mr.
Gemperli have agreed to refrain from (i) disclosing the Company's confidential
information and (ii) for a one-year period following termination of employment
engaging, directly or indirectly, in any ground-based navigation aids business
which competes with the Company. Mr. Bommarito's employment agreement lapsed on
June 12, 2000.
On March 20, 1997, the Company entered into an agreement (the "Agreement")
with Michael W. Warner. In consideration of Mr. Warner's efforts to procure a
significant contract and Mr. Warner's covenant not to compete against the
Company for a period of two years after his resignation or termination, the
Company paid Mr. Warner a cash payment of $20,000 and extended a loan of $80,000
to Mr. Warner in the form of a promissory note (the "Promissory Note"). The
Promissory Note is to be paid in full on or before March 20, 2001 and carries
interest at an annual percentage rate of 6.375%. In exchange for Mr. Warner's
continued employment, the Company agreed to forgive the Promissory Note in
equivalent one-fourth amounts over each of the four years covered by the note
($20,000 per year). For the fiscal year ended April 30, 2000, $60,000 was
forgiven under terms of the Agreement, leaving an unpaid balance of $20,000. As
set forth in the Promissory Note and the Agreement, the Company also agreed to
forgive the Promissory Note entirely in the event of Mr. Warner's death or if
Mr. Warner is terminated without cause following a change in control of the
Company. Mr. Warner resigned from the Company on June 30, 2000. In connection
with his resignation, Mr. Warner repaid the Company $15,000, and the Company
forgave $5,000, representing a pro-rata portion of the balance due at April 30,
2000, but for which services had been rendered.
II. PROPOSAL TO CHANGE THE NAME OF THE COMPANY
At the Meeting, the Stockholders of the Company will consider and vote
upon an amendment to the Company's Articles of Incorporation to change the name
of the Company from "Airport Systems International, Inc." to "Elecsys
Corporation." Although the vote will be taken at the meeting, whether the name
is changed will depend upon the progress of the Company's pending application to
register the "Elecsys" trademark with the Trademark Office.
The purpose of the proposed name change is to reflect the changes in the
Company's business and its strategic direction. The proposed name "Elecsys
Corporation" reflects the Company's strategic focus and emphasis on the
electronic contract manufacturing industry.
If the name change is approved by the Stockholders, and prior to effecting
the name change by filing an amendment to the Company's Articles of
Incorporation, the Company must receive notice from the Trademark Office that
the "Elecsys" trademark has been registered to the Company. The Company
currently has a pending application to register the trademark "Elecsys" and
expects to hear from the Trademark Office within the next few months regarding
the status of its application. The change in the name of the Company will not
change the powers, preferences, or rights of the Company's Common Stock. All
Common Stock certificates outstanding on the date the amendment is filed will
continue to be valid and will represent the same number of shares of Common
Stock as they represented prior to the change in the Company name.
The Board of Directors recommend that the Stockholders vote FOR the
approval of the amendment.
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III. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has appointed Ernst & Young as
independent public accountants to audit and certify the Company's financial
statements for the fiscal year ending April 30, 2001, subject to ratification
and approval by the stockholders at the Meeting.
Ernst & Young has examined the financial statements of the Company since
its organization in 1991. Representatives of Ernst & Young are expected to be
present at the Meeting, will be given the opportunity to make a statement if
they desire to do so, and are expected to be available to respond to appropriate
questions. The affirmative vote of a majority of the shares present and entitled
to vote at the Meeting is required for the approval of this proposal to ratify
the appointment. If the stockholders do not ratify the appointment of Ernst &
Young, the selection of independent public accountants will be reconsidered by
the Board of Directors.
The Board of Directors recommends that the stockholders vote FOR the
approval of the appointment.
...... By Order of the Board of Directors,
--------------------------------------------
...... THOMAS C. CARGIN
...... Secretary
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