-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P/a2v02+Nxg/z/wI/HHuUbMv9MksyP9s3Dyzyevg/EFAvfTZtTeXLg0+YVJhrs0B t0mkooUL+96pffQPV2Z1Iw== 0000922907-01-000111.txt : 20010320 0000922907-01-000111.hdr.sgml : 20010320 ACCESSION NUMBER: 0000922907-01-000111 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 18 CONFORMED PERIOD OF REPORT: 20010131 FILED AS OF DATE: 20010319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELECSYS CORP CENTRAL INDEX KEY: 0000914398 STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812] IRS NUMBER: 481099142 STATE OF INCORPORATION: KS FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-15057 FILM NUMBER: 1571117 BUSINESS ADDRESS: STREET 1: 11300 WEST 89TH ST CITY: OVERLAND PARK STATE: KS ZIP: 66214 BUSINESS PHONE: 9134920861 MAIL ADDRESS: STREET 1: 11300 WEST 89TH ST CITY: OVERLAND PARK STATE: KS ZIP: 66214 FORMER COMPANY: FORMER CONFORMED NAME: AIRPORT SYSTEMS INTERNATIONAL INC DATE OF NAME CHANGE: 19931103 10QSB 1 0001.txt 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 January 31, 2001 ------------------------------------------ ( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------------ ----------------------- Commission file number 0-22760 ------------------------------------------------ ELECSYS CORPORATION (Exact name of small business issuer as specified in its charter) Kansas 48-1099142 ----------------------------------------------------------------------------- (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 11300 West 89th Street Overland Park, Kansas 66214 ---------------------------- (address of principal executive offices) (913)495-2614 ------------------------------ (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 - 2,635,581 shares outstanding as of February 13, 2001. ELECSYS CORPORATION AND SUBSIDIARIES FORM 10-QSB Quarter Ended January 31, 2001 INDEX Page PART I - FINANCIAL INFORMATION ITEM I - CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Operation 4 Condensed Consolidated Statements of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 6 Earnings Per Share Computation 7 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8 PART II - OTHER INFORMATION Item 1 - Legal Proceedings 14 Item 3 - Defaults on Senior Securities 14 Item 6 - Exhibits and Reports on Form 8-K 14 SIGNATURE PAGE 16 EXHIBIT INDEX 17 Elecsys Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (In thousands) January 31, 2001 April 30, 2000 ------------- ------------ Assets Current assets: Cash & cash equivalents $ 21 $ - Accounts receivable, net 5,445 5,812 Inventories, net 8,014 7,988 Other current assets 266 230 ------------- ------------ Total current assets 13,746 14,030 Property and equipment, at cost 6,672 6,403 Accumulated depreciation and amortization (2,472) (2,049) ------------- ------------ 4,200 4,354 Restricted cash 1,302 1,288 Cost in excess of net assets acquired, net 1,762 1,868 Other assets 177 268 ------------- ------------ Total assets $ 21,187 $ 21,808 ============= ============ Liabilities and stockholders' equity Current liabilities: Accounts payable $ 2,137 $ 1,968 Accrued expenses 1,913 2,939 Notes payable to bank 5,368 4,340 Current portion of long-term debt 679 679 Income taxes payable - 154 ------------- ------------ Total current liabilities 10,097 10,080 Long-term debt, less current portion 5,012 5,371 Stockholders' equity: Common stock 26 26 Additional paid-in capital 8,003 8,003 Accumulated deficit (1,951) (1,672) ------------- ------------ Total stockholders' equity 6,078 6,357 ------------- ------------ Total liabilities and stockholders' equity $ 21,187 $ 21,808 ============= ============ NOTE: The balance sheet at April 30, 2000 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. 3 Elecsys Corporation and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts) Three Months Ended Nine Months Ended --------------------- --------------------- January 31, January 31, 2001 2000 2001 2000 (restated) (restated) --------- -------- --------- --------- Sales $ 4,579 $ 4,366 $ 16,172 $ 11,702 Cost of products sold 3,024 3,049 11,052 8,366 --------- -------- --------- --------- Gross margin 1,555 1,317 5,120 3,336 Selling, general and administrative expenses 1,384 979 4,479 2,841 Research and development expenses - 188 50 776 --------- -------- --------- --------- Operating income (loss) 171 150 591 (281) Other income (expense): Interest expense (260) (62) (750) (148) --------- -------- --------- --------- Income (loss) before income taxes (89) 88 (159) (429) Provision for income taxes 120 - 120 - --------- -------- --------- --------- Net income (loss) $ (209) $ 88 $ (279) $ (429) ========= ======== ========= ========= Income (loss) per share: Basic $ (0.08) $ 0.04 $ (0.11) $ (0.19) ========= ======== ========= ========= Diluted $ (0.08) $ 0.04 $ (0.11) $ (0.19) ========= ======== ========= ========= See notes to condensed consolidated financial statements. 4 Elecsys Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)
Nine Months Ended January 31, -------------------------- 2001 2000 --------- --------- Operating activities: Net loss $ (279) $ (429) Adjustments to reconcile net loss to net cash used in operating activities: Restricted cash (14) - Depreciation and amortization 621 137 Changes in operating assets and liabilities: Accounts receivable, net 367 660 Inventories, net (26) (1,280) Accounts payable 169 236 Accrued expenses (1,026) (75) Other, net (190) 369 --------- --------- Net cash used in operating activities (378) (382) Investing activities: Purchases of property and equipment (269) (204) Additions to other assets (1) - --------- --------- Net cash used in investing activities (270) (204) Financing activities: Net borrowings on note payable to bank 1,028 675 Principal payments on long-term debt (359) (16) --------- --------- Net cash provided by financing activities 669 659 --------- --------- Net increase in cash and cash equivalents 21 73 Cash and cash equivalents at beginning of period - 2,449 --------- --------- Cash and cash equivalents at end of period $ 21 $ 2,522 ========= ========= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 456 $ 70 ========= ========= Income taxes $ 120 $ - ========= ========= See notes to condensed consolidated financial statements.
5 ELECSYS CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) January 31, 2001 1. Basis of presentation The accompanying unaudited condensed consolidated financial statements of Elecsys Corporation (the Company) include the accounts of the Company and its wholly owned subsidiaries, Airport Systems International, Inc., DCI Inc. and ASII International, Inc. 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 nine months ended January 31, 2001 are not necessarily indicative of the results that may be expected for the year ending April 30, 2001. 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, 2000. 2. Notes Payable to Banks The Company has a line of credit agreement with a bank which expires August 8, 2001. On January 31, 2001 the agreement was amended to increase maximum borrowings from $8,000,000 with an interest rate of prime plus 2% to $9,000,000 with interest rates ranging from prime plus 2% to prime plus 3%. The line of credit is secured by accounts receivable, inventory and equipment. Borrowings at January 31, 2001 were $5,368,000 with a weighted average interest rate of 11.4%. 3. Earnings Per Share Under SFAS No, 128, basic earnings per share is calculated by dividing net income or loss by weighted average common shares outstanding during the period. Fully diluted earnings per share includes the effect of all potentially dilutive securities, including stock options. 4. Income Taxes During the quarter ended January 31, 2001 the Company recognized the payment of a foreign tax obligation of $120,000 in the provision for income taxes. 5. Stockholders' Equity In February, 2001, the Company entered into an agreement with certain Company officers to issue 56,698 shares of Company common stock in lieu of cash compensation for the period February 1, 2001 through April 30, 2001. 6 Earnings Per Share Computation: The following table sets forth the computation of basic and diluted earnings (loss) per share:
Three Months Nine Months Ended January 31, Ended January 31, 2001 2000 2001 2000 ---------- ------------ ---------- ------------ Numerator: Net income (loss) $ (209,000) $ 88,000 $ (279,000) $ (429,000) Denominator for basic earnings (loss)per share - weighted average shares 2,579,000 2,230,500 2,579,000 2,230,500 Effect of dilutive securities: Stock options - 152,305 - - Denominator for diluted Earnings (loss) per share - adjusted weighted average shares with assumed conversions 2,579,000 2,382,805 2,579,000 2,230,500 Earnings (loss) per share - Basic $(0.08) $ 0.04 $(0.11) $(0.19) Earnings (loss) per share - Dilutive $(0.08) $ 0.04 $(0.11) $(0.19)
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 10QSB for the quarters ended October 31, 2000 and July 31, 2000 and the Form 10-KSB for the year ended April 30, 2000. 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. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Elecsys Corporation (the "Company" or "Elecsys") is a designer and manufacturer of electronic components, sub-assemblies and systems and a marketer of electronic contract assembly services. Elecsys, as the parent company, along with its wholly-owned subsidiaries, Airport Systems International, Inc. (ASII) and DCI, Inc. (DCI), operates two business segments, aerospace and electronic components manufacturing (ECM). The aerospace unit is operated through Airport Systems while the ECM unit is operated through DCI (purchased by Elecsys in February, 2000). The aerospace unit designs, manufactures and installs ground-based radio navigation and landing systems (navaids) and airfield lighting. Its customers consist of civil aviation authorities in the United States and throughout the world. The ECM unit manufactures custom liquid crystal display (LCD) devices as well as panel meter and heat-seal equipment. In addition, the unit also provides contract manufacturing services. Its products are used in aerospace, medical, industrial and home applications. Sales are made primarily to customers within the United States. On November 1, 2000, Airport Systems International, Inc. changed its name to Elecsys Corporation. Concurrent with the change, the Company transferred all of the assets, liabilities and operations of the aerospace unit to a wholly-owned subsidiary named Airport Systems International, Inc. The following summarized financial information is being presented to assist the reader in understanding the impact DCI had on operations in the three months and nine months ended January 31:
Three months ended January 31, 2001 2000 --------------------------------------------- --------- Inter- Aerospace ECM segment Total Total ------------- ---- --------- ------ ------ (restated) Sales $2,976 $1,753 $(150) $4,579 $4,366 Gross margin 966 591 (2) 1,555 1,317 % of sales 32% 34% 34% 30% Operating income (loss) 89 84 (2) 171 150
8
Nine months ended January 31, 2001 2000 ---------------------------- ----------- Inter- Aerospace ECM segment Total Total (restated) Sales $11,049 $5,557 $(434) $16,172 $11,702 Gross margin 3,029 2,096 (5) 5,120 3,336 % of sales 27% 38% 32% 29% Operating income (loss) 293 303 (5) 591 (280)
In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB 101), which, among other guidance, clarifies certain conditions to be met in order to recognize revenue. After reexamining the terms underlying certain transactions of the aerospace unit, the Company determined that revenue related to these transactions, which was recorded in the preceding quarters of fiscal 2000, should be reversed. In view of the cumulative effect of the unrecorded adjustment on the fiscal year 2000 results, as well as future periods, the Company restated its consolidated financial statements for the three months and nine months ended January 31, 2000. The restatements were required to reverse sales that the Company recorded as bill and hold sales when the manufacturing process was substantially complete, but before the rights of ownership of the equipment, factory acceptance tests and the physical delivery of the underlying equipment had occurred. The restated financial statements reflect sales when final delivery of the underlying equipment occurred. The aggregate effect of the adjustment on fiscal 2000 was to reduce revenue and net income by $1.5 million and $579,000 respectively. The effect of the adjustment for three months ended January 31, 2000 was to increase revenue and increase net income by $74,000 and $72,000 ($0.03 per share) respectively. For the nine months ended January 31, 2000 the effect was to decrease revenue and net income by $1.5 million and $579,000 ($0.26 per share) respectively. The financial statements and related notes set forth in this Form 10Q-SB reflect all such restatements. RESULTS OF OPERATIONS Consolidated sales for the third quarter of fiscal 2001 were $4.6 million, up from $4.4 million for the third quarter of fiscal 2000. Consolidated sales for the first nine months of fiscal 2001 increased 38 % to $16.2 million, as compared to $11.7 million for the first nine months of fiscal 2000. The increase in consolidated sales for the quarter and nine months ended January 31, 2001 is principally due to the acquisition of DCI in February 2001. DCI sales for the third quarter of 9 fiscal 2001 (after intercompany eliminations) totaled $1.6 million and $5.1 million for the first nine months of fiscal 2001. Airport Systems sales were $3.0 million, down 32% from $4.4 million for the third quarter 2001 and were $11.0 million, down 6% from $11.7 million for the first nine months of 2001. The decrease in sales of Airport Systems for the quarter and for the first nine months of 2001 was due to a decrease in the number of units shipped, resulting from a lower level of orders as compared to the same period last year. Consolidated gross margin for the third quarter was $1.6 million, or 34% of consolidated sales, up from $1.3 million, or 30% of consolidated sales in the third quarter of fiscal 2000. Consolidated gross margin for the quarter increased as a result of the acquisition of DCI, Inc. DCI generated a gross margin of $591,000, or 34% of sales. Airport Systems gross margin for the quarter was $966,000, or 32% of sales, down from $1.3 million, or 30% of sales for the third quarter of fiscal 2000. Gross margin was down due to lower sales. Gross margin as a percent of sales was higher due to the shipment of higher gross margin contracts. Consolidated gross margin for the first nine months of fiscal 2001 was $5.1 million, or 32% of consolidated sales, up from $3.3 million, or 29% of consolidated sales in the same period of fiscal 2000. Consolidated gross margin for the first nine months increased as a result of the acquisition of DCI, Inc. DCI generated gross margin of $2.1 million, or 38% of sales. Airport Systems gross margin for the first nine months was $3.0 million, or 27% of sales, down from $3.3 million, or 29% for the same period of fiscal 2000 due primarily to lower sales and higher manufacturing costs. Consolidated selling, general and administrative ("SG&A) expenses increased $405,000 during the third quarter of fiscal 2001 compared to the third quarter of fiscal 2000. SG&A expenses related to DCI totaled $507,000. Airport Systems' SG&A expenses were $877,000, down $102,000 or 10% from fiscal 2000, reflecting cost reductions initiated in the areas of administration and marketing personnel, travel and other related costs. As a percent of sales, Airport Systems SG&A expenses increased from 22% to 29% primarily as a result of lower Airport Systems sales. SG&A expenses increased $1.6 million during the first nine months of fiscal 2001 compared to the same period of fiscal 2000. SG&A expenses related to DCI totaled $1.8 million for this period. Airport Systems' SG&A expenses were $2.7 million for the first nine months of fiscal 2001 and $2.8 million for the first nine months of fiscal 2000. As a percent of sales, Airport Systems SG&A expenses were 24% in the first nine months of fiscal 2001 and 2000. Research and development expenses decreased during the third quarter of fiscal 2001 to $0 from $188,000 in the third quarter of fiscal 2000. In the first nine months of fiscal 2001 research and development expenses decreased to $50,000 from $776,000 for the first nine months of fiscal 2000. The decrease for both periods is a result of decreased labor and expenses related to development work on the new Category II\III Instrument Landing System, as well as increased contract related engineering efforts in fiscal 2001, which have been charged to production costs. Expenditures made during the first and second quarters of fiscal 2000 were primarily to obtain FAA approval of the new system, variants of the new system and approval for FAA maintenance takeover. Approval of the new system was obtained in the second quarter of fiscal 2000, while 10 approval of the variants and FAA maintenance take over was obtained in the third quarter of fiscal 2000. Interest expense increased from $62,000 to $260,000 for the third quarter of fiscal 2001 compared to the first quarter of fiscal 2000, and from $149,000 to $750,000 for the first nine months of fiscal 2001. This was due to an increase in the average debt obligations outstanding compared to the prior year period. An income tax provision of $120,000 was recorded in the third quarter reflecting the payment of foreign tax obligations. No other income tax provision was provided for in the third quarter and the first nine months of fiscal 2001 or fiscal 2000. Principally as a result of the above, the Company had consolidated operating income of $171,000 for the third quarter of fiscal 2001, compared to $150,000 for the same period last year. Consolidated operating income for the nine months ended January 31, 2001 was $591,000 compared to an operating loss of $280,000 for the same period last year. The improvement in operating income was due principally to the acquisition of DCI and reductions in research and development costs. The consolidated net loss for the third quarter of fiscal 2001 was $209,000, compared with fiscal 2000 third quarter consolidated net income of $88,000. The consolidated net loss for the first nine months of fiscal 2001 was $279,000, compared with a net loss in the first nine months of fiscal 2000 of $429,000. BACKLOG Airport Systems' backlog increased from $1.7 million to $2.9 million at January 31, 2001, compared to January 31, 2000. Approximately 73% of the backlog at January 31, 2001 consists of four contracts. Twenty three percent (23%) of the backlog represents a contract with a major U.S. air traffic control contractor for the delivery of multiple ILS systems into South America; 35% represents a contract with the Minister of National Defense of Korea to supply and install VOR/DVOR equipment; 10% represents a contract with the Airport Authority of Jamaica for navaid and communication equipment, as well as civil works, training, flight check and installation services; and 5% represents a contract to provide prototype localizer antennas to a contractor for supply to the United States Air Force. This contract includes options, valued at approximately $5.2 million, to provide an additional 130 antennas. Airport Systems expects these options to be exercised during fiscal 2001. Substantially all of the Airport Systems backlog at January 31, 2001 is expected to be completed and shipped in fiscal 2001. Airport Systems' backlog of $2.9 million experienced an increase compared to the prior year's backlog of $1.7 million. Bookings for the first nine months of fiscal 2001 totaled $8.4 million, down from bookings of $9.4 million in the same period last year. The decrease in bookings is due primarily to the timing of the receipt of orders. Airport Systems continues to see an increase in the demand for navaids, based upon the number and size of opportunities it is presently working on. Airport Systems presently has signed contracts to provide navaids and airport 11 lighting equipment totaling over $13.0 million. The contracts are awaiting finalization of the related financing (expected in the fourth quarter of fiscal 2001) before being entered into backlog. Delays in the closing of contracts for which Airport Systems is the low bidder has resulted in the lower bookings levels. Although the Company is optimistic about the prospects for both its aerospace and ECM units, any delays and or cancellation of procurement opportunities, particularly in its aerospace unit, will negatively impact the Company's revenue in fiscal 2001, and could result in operating losses or breakeven operating results. The amount of net income, net losses or the ability to achieve breakeven operating results 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. The Company is evaluating a number of strategic alternatives related to the Airport Systems subsidiary. DCI ACQUISITION The integration of the acquisition of DCI, Inc. is progressing satisfactorily. The impact on the Company's operating results has been notable. For the three and nine months ended January 31, 2001, DCI contributed 35% and 32% of consolidated sales respectively, and 50% of operating income for both periods. The Company believed at the time of the acquisition that several key areas in terms of quality, information systems and management needed to be addressed. During the third quarter of fiscal 2001, DCI achieved several significant milestones. First, DCI received ISO 9001 certification. This is a significant factor considered by many potential customers and will position DCI to compete for, and win, opportunities which heretofore had not been open to DCI. In addition, DCI completed installation in the third quarter of a new ERP (Enterprise Resource Planning) system. This system significantly enhanced management's visibility into it's manufacturing costs, inventory status and production planning. DCI has also initiated management changes in its marketing and engineering functions. DCI recently hired a new Vice-President of Business Development with significant experience in the electronics industry. Management believes that this, combined with a focus on recruiting additional sales resources and the implementation of a major account development strategy, will lead to increased sales in fiscal 2002. DCI recently hired a new Director of Engineering to enhance its design capabilities, particularly with regards to engineering schedule performance, customer engineering interface, configuration management and document control. Subsequent to the quarter end, DCI was approved as an EMS provider to General Electric Transportation Systems (GETS). This approval was universal throughout General Electric, thus allowing DCI to perform EMS services for all General Electric divisions. DCI's diverse design and support capabilities, as well as the ISO 9001 certification were significant factors that 12 led to that designation. LIQUIDITY AND CAPITAL RESOURCES Net cash of $378,000 was used by operations in the first nine months of fiscal 2001 compared to $382,000 used in the first nine months of fiscal 2000. The decrease in cash used was primarily due to a reduced net loss and higher non cash depreciation and amortization expense as compared to the prior year, offset by higher cash uses for operating assets and liabilities. Cash used in investing activities was $270,000 for the first nine months of fiscal 2001 compared to $204,000 used in the first nine months of fiscal 2000. Cash provided by financing activities was $669,000 in the first nine months of fiscal 2001 compared to cash provided of $659,000 in the first nine months of fiscal 2000, due primarily to increased short term borrowing ($1,028,000 compared to $675,000), net of increased principal payments on long-term debt ($359,000 compared to $16,000). 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, which was amended to increase maximum borrowings from $8 million to $9 million on January 31, 2001. 13 PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company is now, and may from time to time in the future be, involved in litigation in the ordinary course of its business that is not expected to have a material adverse impact on the Company or its financial affairs. Item 3. Defaults Upon Senior Securities Under terms of the First Amendment to the Loan and Security Agreement entered into by the Company and its senior lender, the Company is prohibited from making principal and interest payments to certain holders of subordinated debt. Accordingly, the second through the fourth quarterly payments of interest, first and second semi-annual payments of principle (totaling $74,000 and $312,000 respectively), due January 31, 2001, were not made to the former stockholders of DCI, Inc. on the $1,248,000 promissory note issued by the Company at the time of the acquisition, which is an event of default under terms of the promissory note. In addition, the second through fourth quarterly payments of interest ($38,000), due January 31, 2001, were not made to Kansas City Equity Partners (KCEP) on the $500,000 subordinated debenture issued by the Company at the time of acquisition of DCI, Inc., which is an event of default under terms of the subordinated debenture. The subordination agreements entered into between the Company's senior lender and former DCI, Inc. stockholders significantly limit the remedies now available to those junior debt holders. As soon as its operating results permit, the Company plans to negotiate with its senior lender the ability to make the debt payments that are due. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits: 10 (ff) Second Amendment to Loan and Security Agreement 10 (gg) Second Amendment to Letter of Credit and Loan and Security Agreement 10 (hh) Amended and Restated Revolving Credit Note B 10 (ii) Amended and Restated Promissory Note 10 (jj) Supplemental Agreement dated February 28, 2001 between the Company and Keith S. Cowan 10 (kk) Supplemental Agreement dated February 28, 2001 between the Company and Tom Cargin 10 (ll) Supplemental Agreement dated February 28, 2001 between the Company and Ken Pierson 14 10 (mm) Supplemental Agreement dated February 28, 2001 between the Company and Karl Gemperli 10 (nn) Stock option agreement dated May 25, 2000 by and between the Company and Thomas C. Cargin 10 (oo) Stock option agreement dated May 25, 2000 by and between the Company and Karl Gemperli 10 (pp) Stock option agreement dated May 25, 2000 by and between the Company and Anthony G. Bommarito 10 (qq) Stock option agreement dated May 25, 2000 by and between the Company and Gregory C. Brand 10 (rr) Stock option agreement dated May 25, 2000 by and between the Company and Ronald E. Peck 10 (ss) Stock option agreement dated May 25, 2000 by and between the Company and Michael Morgan 10 (tt) Stock option agreement dated May 25, 2000 by and between the Company and Keith S. Cowan 10 (uu) Stock option agreement dated October 2, 2000 by and between the Company and Kenneth M. Pierson 10 (vv) Stock option agreement dated February 21, 2001 by and between the Company and Kyle Reinoehl Exhibit 27 - Financial Data Schedule (SEC Use Only) (b) Reports on Form 8-K: Form 8-K filed on November 1, 2000 announcing the name change of the Company from Airport Systems International, Inc. to Elecsys Corporation. Form 8-K filed on November 22, 2000 announcing results for the second Quarter and first six months of the Company's 2001 fiscal year. 15 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. ELECSYS CORPORATION AND SUBSIDIARIES March 16, 2001 /s/ Thomas C. Cargin - --------------- ---------------------------------------------------- Date Thomas C. Cargin, Vice President of Finance and Administration, Secretary, and Principal Accounting Officer 16 EXHIBIT INDEX Number Description Page 10 (ff) Second Amendment to Loan and Security Agreement 10 (gg) Second Amendment to Letter of Credit and Loan and Security Agreement 10 (hh) Amended and Restated Revolving Credit Note B 10 (ii) Amended and Restated Promissory Note 10 (jj) Supplemental Agreement dated February 28, 2001 between the Company and Keith S. Cowan 10 (kk) Supplemental Agreement dated February 28, 2001 between the Company and Tom Cargin 10 (ll) Supplemental Agreement dated February 28, 2001 between the Company and Ken Pierson 10 (mm) Supplemental Agreement dated February 28, 2001 between the Company and Karl Gemperli 10 (nn) Stock option agreement dated May 25, 2000 by and between the Company and Thomas C. Cargin 10 (oo) Stock option agreement dated May 25, 2000 by and between the Company and Karl Gemperli 10 (pp) Stock option agreement dated May 25, 2000 by and between the Company and Anthony G. Bommarito 10 (qq) Stock option agreement dated May 25, 2000 by and between the Company and Gregory C. Brand 10 (rr) Stock option agreement dated May 25, 2000 by and between the Company and Ronald E. Peck 10 (ss) Stock option agreement dated May 25, 2000 by and between the Company and Michael Morgan 10 (tt) Stock option agreement dated May 25, 2000 by and between the Company and Keith S. Cowan 10 (uu) Stock option agreement dated October 2, 2000 by and between the Company and Kenneth M. Pierson 10 (vv) Stock option agreement dated February 21, 2001 by and between the Company and Kyle Reinoehl 27 Financial Data Schedule (SEC Use Only) 17 EX-10.FF 2 0002.txt SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Second Amendment") is made effective as of December _____, 2000, by and among Elecsys Corporation, f/k/a Airport Systems International, Inc. ("Elecsys"); Airport Systems International, Inc. ("New ASI") and DCI, Inc. ("DCI") (Elecsys, New ASI and DCI collectively, jointly and severally, the "Borrower"), and Bank of America, N.A. ("Lender"). PRELIMINARY STATEMENTS (A) Effective February 7, 2000, Elecsys, then known as Airport Systems International, Inc., DCI and Lender entered into a Loan and Security Agreement and other Loan Documents (as therein defined) ("collectively as amended, the Loan Agreement"); (B) The Loan Agreement provided, among other things, that Lender would lend Elecsys and DCI $8,000,000 on a revolving basis, $1,178,000 on a term loan basis, and $2,599,572.60 on direct pay letter of credit facility; (C) Effective November 1, 2000, Elecsys, then known as Airport Systems International, Inc., did the following (the "Restructuring"): (1) changed its name to "Elecsys Corporation" (2) formed a new company called Airport Systems International, Inc. as a wholly owned subsidiary of Elecsys (New ASI) and (3) transferred all of Elecsys' assets and liabilities to Airport Systems International, Inc.(except for the stock of DCI and the assets and liabilities related to the ownership of the DCI stock); (D) The Restructuring occurred without compliance with Sections 7.8 and 10.7 of the Loan Agreement. In addition, Elecsys is not in compliance with certain financial covenants set forth in the Loan Agreement. Therefore Borrower has requested that Lender modify the terms and conditions of the Loan Agreement as provided herein. NOW, THEREFORE, in consideration of the premises and upon application of Borrower, it is agreed by and among Lender and Borrower as follows: AGREEMENT 1. Acknowledgment of Preliminary Statements. The preliminary statements set forth above are accurate, represent the intent of the parties hereto and are incorporated herein by reference. Unless otherwise defined in this Second Amendment, capitalized terms used herein will have the same meaning in this Second Amendment as set forth in the Loan Agreement. 2. General Non-Waiver. Except as expressly provided herein, nothing in this Second Amendment shall be construed as a waiver on the part of Lender as to any rights, remedy or remedies it may enjoy under the Loan Agreement with respect to any existing circumstances, facts or events constituting an Event of Default under the Loan Agreement. 3. Acknowledgment of Existing Defaults. Borrower hereby acknowledges that the Restructuring occurred without compliance with Sections 7.8 and 10.7 of the Loan Agreement, and therefore constitutes Events of Default under Section 11.1(d) of the Loan Agreement. Borrower further acknowledges that for the period from October 31, 2000 through the effective date of this Second Amendment, it is not in compliance with the Minimum Tangible Net Worth, Maximum Liabilities Ratio and Minimum Debt Service Coverage Ratio called for under the Loan Agreement and that each such instance of non-compliance constitutes an Event of Default under the Loan Agreement. All Events of Default described in this paragraph shall be hereinafter referred to as the "Existing Defaults." 4. Limited Waiver of Defaults. Upon Lender's execution of this Second Amendment, Borrower's payment in full of all fees, costs and expenses hereunder required to be paid by Borrower including without limitation the Forbearance and Waiver Fee and Borrower's satisfaction of all conditions precedent described in section 9 of this Second Amendment to the satisfaction of Lender in its sole discretion, Lender hereby waives the Existing Defaults and its right to collect interest at the Default Rate, provided Borrower remains in compliance with the terms of the Loan Agreement as modified by this Second Amendment. Nothing contained in this Second Amendment shall constitute or be construed as a waiver of any other Default or Event of Default except as expressly provided in this Paragraph 4. 5. Forbearance and Waiver Fee. In addition to those amounts due Lender pursuant to Section 8 herein, Borrower shall pay to Lender the amount of Ten Thousand and No/100 Dollars ($10,000.00) as a Forbearance and Waiver Fee. The Forbearance and Waiver Fee shall be deemed earned as of the effective date hereof, and shall be due and payable in full not later than the effective date hereof. The payment of the Forbearance and Waiver Fee shall not reduce any of the Borrower's obligations under the Loan Agreement. 6. Modifications to Loan Agreement. Lender and Borrower hereby agree that the Loan Agreement is amended and modified as follows: 6.1 Section 1.1 is hereby amended by deleting in its entirety the paragraph on page 16 beginning with "Revolving Credit Facilit" and substituting the following: "Revolving Credit Facility" means the facility for the Revolving Credit Loans in the principal sum of up to $9,000,000.00. 6.2 Section 3.1(a) is deleted in its entirety and the following is substituted therefor: "(a) (i) Revolving Credit Loans. The Borrower will pay interest on the unpaid principal amount of each Revolving Credit Loan for each day from the day such Loan was made until such Loan is paid (whether at maturity, by reason of acceleration or otherwise), at a rate per annum equal to the Prime Rate plus Three percent (3%), payable monthly in arrears on each Interest Payment Date and on the Termination Date. (ii) Term Loans. The Borrower will pay interest on each Term Loan at a rate per annum equal to the Prime Rate plus Three percent (3%) payable in arrears on each Interest Payment Date and when such Term Loans are due (whether at maturity, by reason of acceleration or otherwise)." 6.3 Section 3.2(a) is deleted in its entirety and the following is substituted therefor: (a) Unused Line Fee. In connection with and as a consideration for the Lender's commitment hereunder, subject to the terms hereof, to lend to the Borrower under the Revolving Credit Facility, the Borrower shall pay a fee to the Lender, from the Effective Date until the Termination Date, in an amount equal to one-half of one percent (.5%) per annum of the average daily unused portion of the Revolving Credit Facility, payable quarterly in arrears on the first day of each quarter and on the date of any permanent reduction in the Revolving Credit Facility. 6.4 Section 10.1 is deleted in its entirety and the following is substituted therefor: "Section 10.1 Financial Ratios. (a) Minimum Tangible Net Worth. Permit the Tangible Net Worth of the Borrower to be less than: (1) $5,600,000 at the end of the fiscal quarter ending January 31, 2001, (2) $6,100,000 at the end of each fiscal quarter thereafter. (b) Minimum Current Ratio. Permit the Current Ratio at any time to be less than 1.45 to 1.0, measured on a quarterly basis beginning January 31, 2001. (c) [Intentionally omitted]. (d) Maximum Liabilities Ratio. Permit the Liabilities Ratio of the Borrower to exceed: (1) 2.75 to 1 at the end of the fiscal quarters ending January 31, 2001 and April 30, 2001, (5) 2.50 to 1 at the end of each fiscal quarter thereafter. (e) Minimum Debt Service Coverage Ratio. Permit the Debt Service Coverage Ratio of the Borrower to be less than: (1) .75 to 1 at the end of the fiscal quarter ending January 31, 2001 (2) 1.00 to 1 at the end of the fiscal quarter ending April 30, 2001 (3) 1.20 to 1 at the end of each fiscal quarter thereafter. 7. Further Security Documents. As a material part of the consideration for Lender entering into this Second Amendment and in order to induce Lender to modify the Loan Agreement and to extend credit to Borrower, the Elecsys and New ASI agree as follows: 7.1 New ASI hereby acknowledges, assumes and agrees to be bound by all of the terms and conditions of the Loan Agreement as if an original borrower thereunder, including without limitation, acknowledging Lender's security interests in and to all of Elecsys' assets, which security interests continue to be attached and perfected notwithstanding the transfer of such assets to New ASI. 7.2 To the extent not already granted, New ASI does hereby grant Lender a security interest in and to all of its assets, including, without limitation, all Receivables, Inventory, Equipment, Contract Rights, General Intangibles, Deposit Accounts, Real Estate and other Collateral as those terms are defined in the Loan Agreement to secure the payment and performance of all of Borrower's obligations under the Loan Agreement. New ASI additionally agrees to execute a security agreement in such form as is reasonably acceptable to Lender. 7.3 Elecsys shall and does hereby pledge as security for any or all of its Borrower's obligations to Lender under the Loan Agreement all its right title and interest in and to any and all shares of stock in New ASI. Elecsys shall execute a Stock Pledge Agreement further evidencing such pledge in such form as is reasonably acceptable to Lender. 8. Modification Expenses. Borrower will pay to Lender promptly as they come due, any and all costs and expenses incurred by Lender in connection with the negotiation, preparation and documentation of this Second Amendment, including without limitation, all recording fees, mortgage registration tax and all reasonable attorneys' fees and costs. 9. Conditions Precedent. Lender shall be under no obligation of any kind under this Second Amendment unless the following conditions precedent have been satisfied as determined in the sole discretion of Lender: 9.1 Completion of a U.C.C. search at the expense of Borrower demonstrating no intervening liens, claims or encumbrances that would adversely impact upon Lender's security interests as set forth in this Second Amendment and the Loan Agreement. 9.2 Full disclosure of all information and documents relating to the name change, subsidiary formation and transfer set forth in the preliminary statements above that may be reasonably requested by Lender. 9.3 Payment in full of the Forbearance and Waiver Fee in immediately available funds. 9.4 Execution of a security agreement and stock pledge agreement required by Section 7 of this Second Amendment. 9.5 Delivery of an reasoned opinion letter from Blackwell Sanders Peper Martin LLP to Lender in form and substance acceptable to Lender in its sole discretion opining that the Restructuring was duly authorized pursuant to the organizational documents of Elecsys and pursuant to Kansas and Federal law with full corporate authority. 9.6 Delivery of an unqualified opinion letter from Blackwell Sanders Peper Martin LLP in form and substance acceptable to Lender in its sole discretion opining as to the creation and perfection of security interests in favor of Lender with respect to all assets of Borrower. 9.7 Execution and Delivery of a new Promissory Note reflecting the change in the amount of Commitment set forth in paragraph 6.2 of this Second Amendment. 9.8 Execution of any other documents, including financing statements, amendments to existing financing statements, or other documents reasonably requested by Lender in connection herewith. 10. Cross Default and Cross Collateralization. A default in the payment or performance of Borrower's obligations under this Second Amendment will constitute an Event of Default under the Loan Agreement and in such event Lender will be entitled to exercise any and all remedies available thereunder. Lender and Borrower further agree that the Security Documents securing the Loan Agreement are hereby modified so that the Security Documents will continue to secure the Loan Agreement as amended by this Second Amendment. 11. Ratification. The parties hereto ratify and reaffirm that all terms, conditions and provisions of the Loan Agreement remain in full force and effect except to the extent expressly modified by the terms of this Second Amendment and the terms and conditions of this Second Amendment are hereby incorporated in, and will hereafter be deemed a part of, the Loan Documents for all purposes. 12. Releases. As a material part of the consideration for Lender entering into this Second Amendment and in order to induce Lender to modify the Loan Agreement and to extend credit to Borrower, Borrower hereby jointly and severally releases and forever discharges Lender's directors, officers, employees, agents, attorneys, affiliates, subsidiaries, successors and assigns from any and all liabilities, obligations, actions, contracts, claims, causes of action, damages, demands, costs and expenses whatsoever (collectively "Claims"), of every kind and nature, however evidenced or created, whether known or unknown, arising prior to or on the date of this Second Amendment including, but not limited to, any Claims involving the extension of credit under or administration of the Loan Agreement, the indebtedness incurred by the Borrower or any other transactions evidenced by the Loan Agreement and/or this Second Amendment. 13. Renewal. To the extent that any payment or payments made to Lender under this Second Amendment or the Loan Agreement are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, to either Borrower, whether directly or indirectly as a debtor-in-possession, or to a receiver or any other party under any bankruptcy law, or other state or federal law, then the portion of the indebtedness of the Borrower intended to have been satisfied by such payment or payments will be revived and will continue in full force and effect as if such payment or payments had never been received by Lender. 14. Representations and Warranties. Elecsys, New ASI and DCI jointly and severally represent and warrant to Lender as follows: (A) All of the representations and warranties of Borrower in the Loan Agreement are true and correct as of the date hereof, as modified by this Second Amendment. (B) Except as expressly described herein, no Event of Default is in existence with respect to the Loan Agreement or Security Documents. (C) No Event of Default has occurred or will occur as a result of the execution, delivery, and performance of this Second Amendment. (D) This Second Amendment has been duly authorized, executed and delivered and is a legally valid, binding, joint and several obligation of Elecsys, New ASI and DCI and is enforceable against each of them in accordance with its terms. (E) The transfer to New ASI by Elecsys of assets and related liabilities in the Restructuring did not create any tax liability to Elecsys or New ASI, and (ii) the conduct of the navigational aids business through New ASI will not have any material federal income tax consequences different than if such business had continued to be conducted through Elecsys. 15. Miscellaneous. (A) Borrower hereby agrees and acknowledges that Lender may endorse and deposit any check or other instrument tendered in connection with a partial payment without thereby giving effect to or being bound by any language purporting to make acceptance of such instrument an accord and satisfaction of the Secured Obligations evidenced by this Second Amendment or the Loan Agreement. (B) In the event of a conflict between or among the terms, covenants, conditions or provisions of this Second Amendment, Loan Agreement or any other Loan Documents, Lender may elect to enforce from time to time those provisions that would afford Lender the maximum financial benefits and security for the Secured Obligations and/or provide Lender the maximum assurance of payment of the Secured Obligations in full. (C) No inference in favor of, or against, any party will be drawn from the fact that such party has drafted any portion of the Loan Agreement. (D) This Second Amendment may be executed in any number of counterparts, each of which will be deemed to be an original but all of which taken together will constitute one and the same agreement. (E) This Second Amendment will be governed by and construed under the laws of the State of Missouri. (F) This Second Amendment will be binding upon and will inure to the benefit of the parties hereto and to their respective successors and assigns. 16. WAIVER OF JURY TRIAL. LENDER AND BORROWER WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS SECOND AMENDMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY BORROWER AND BORROWER ACKNOWLEDGES THAT NEITHER LENDER NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. BORROWER FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS FIRST AMENDMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. BORROWER FURTHER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER PROVISION. IN WITNESS WHEREOF, Borrower and Lender have caused this First Amendment to be executed by an officer duly authorized to so execute and bind Borrower and Lender, respectively, effective as of the day and year first written above. "BORROWER" ELECSYS CORPORATION, a Kansas corporation By: Printed Name: Its: DCI, INC., a Kansas corporation By: Printed Name: Its: AIRPORT SYSTEMS INTERNATIONAL, INC., a Kansas corporation By: Printed Name: Its: ACCEPTED effective the _____ day of December, 2000, at Lender's place of business in the City of Kansas City State of Missouri. "LENDER" BANK OF AMERICA, N.A., a national banking association By: Printed Name: Title: EX-10.GG 3 0003.txt SECOND AMENDMENT TO LETTER OF CREDIT, LOAN AND SECURITY AGREEMENT THIS SECOND AMENDMENT TO LETTER OF CREDIT, LOAN AND SECURITY AGREEMENT ("Second Amendment") is made effective as of December _____, 2000, by and among Elecsys Corporation, f/k/a Airport Systems International, Inc. ("Elecsys"); Airport Systems International, Inc. ("New ASI") and DCI, Inc. ("DCI") (Elecsys, ASI and DCI collectively, jointly and severally, the "Borrower"), and Bank of America, N.A. ("Lender"). PRELIMINARY STATEMENTS (A) Effective February 7, 2000, Elecsys, (then known as Airport Systems International, Inc.), DCI and Lender entered into a Letter of Credit, Loan and Security Agreement and other Financing Documents (as therein defined) (collectively as amended, the "Loan Agreement"); (B) The Loan Agreement provided, among other things, that Lender would lend Elecsys and DCI $8,000,000 on a revolving basis, $1,178,000 on a term loan basis, and $2,599,572.60 on direct pay letter of credit facility; (C) Effective November 1, 2000, Elecsys, then known as Airport Systems International, Inc., did the following (the "Restructuring"): (1) changed its name to "Elecsys Corporation" (2) formed a new company called Airport Systems International, Inc. as a wholly owned subsidiary of Elecsys (New ASI) and (3) transferred all of Elecsys' assets and liabilities to Airport Systems International, Inc.(except for the stock of DCI and the assets and liabilities related to the ownership of the DCI stock); (D) The Restructuring occurred without compliance with Sections 10.3 and 10.4 of the Loan Agreement. In addition, Elecsys is not in compliance with certain financial covenants set forth in the Loan Agreement. Therefore Borrower has requested that Lender modify the terms and conditions of the Loan Agreement as provided herein. (E) The Export-Import Bank of the United States ("EXIMBANK") guaranteed a portion of the Borrowers Obligations under the Financing Documents. NOW, THEREFORE, in consideration of the premises and upon application of Borrower, it is agreed by and among Lender and Borrower as follows: AGREEMENT 1. Acknowledgment of Preliminary Statements. The preliminary statements set forth above are accurate, represent the intent of the parties hereto and are incorporated herein by reference. Unless otherwise defined in this Second Amendment, capitalized terms used herein will have the same meaning in this Second Amendment as set forth in the Loan Agreement. 2. General Non-Waiver. Except as expressly provided herein, nothing in this Second Amendment shall be construed as a waiver on the part of Lender as to any rights, remedy or remedies it may enjoy under the Loan Agreement with respect to any existing circumstances, facts or events constituting an Event of Default under the Loan Agreement. 3. Acknowledgment of Existing Defaults. Borrower hereby acknowledges that the Restructuring occurred without compliance with Sections 10.3 and 10.4 of the Loan Agreement, and therefore constitutes Events of Default under Section 11.1(c) of the Loan Agreement. Borrower further acknowledges that for the period from October 31, 2000 through the effective date of this Second Amendment, it is not in compliance with the Minimum Tangible Net Worth, Maximum Liabilities Ratio and Minimum Debt Service Coverage Ratio called for under the Loan Agreement and that each such instance of non-compliance constitutes an Event of Default under the Loan Agreement. All Events of Default described in this paragraph shall be hereinafter referred to as the "Existing Defaults." 4. Limited Waiver of Defaults. Upon Lender's execution of this Second Amendment, Borrower's payment in full of all fees, costs and expenses hereunder required to be paid by Borrower including without limitation the Forbearance and Waiver Fee, and Borrower's satisfaction of all conditions precedent described in section 9 of this Second Amendment to the satisfaction of Lender in its sole discretion, Lender hereby waives the Existing Defaults and its right to collect interest at the Default Rate, provided Borrower remains in compliance with the terms of the Loan Agreement as modified by this Second Amendment. Nothing contained in this Second Amendment shall constitute or be construed as a waiver of any other Default or Event of Default except as expressly provided in this Paragraph 4. 5. [Intentionally omitted.] 6. Modifications to Loan Agreement. Lender and Borrower hereby agree that the Loan Agreement is amended and modified as follows: 6.1 Section 1.1 is hereby amended by deleting the figure "$8,000,000.00" following "(ii)" in the paragraph on page 3 which begins with "Available Commitment" and substituting the figure "$9,000,000.00." 6.2 Section 1.1 is hereby amended by deleting the phrase "United States Six Million Dollars (U.S. $6,000,000)" in the paragraph on page 5 which begins with "Commitment" and substituting the phrase "United States Seven Million Dollars (U.S.$7,000,000)." 6.3 Section 3.5 is hereby amended by deleting the phrase "one and one-quarter of one percent per annum (1.25%)" and substituting the phrase "one and three-quarters of one percent per annum (1.75%)." 6.4 The Promissory Note is hereby amended by deleting the phrase "plus one-half of one percent per annum (0.5%)" appearing in subparagraph (a) to the first full paragraph on the first page of the Promissory Note and substituting the phrase "plus two percent per annum (2%)." 6.5 Section 12.3(b) is deleted in its entirety and the following is substituted therefor: (b) EXIMBANK Facility Fee. The Borrower shall be obligated to pay directly to the Bank the EXIMBANK Facility Fee in the amount of U.S. $105,000.00 per annum, to be prorated for any portion of a 12-month period during which the Commitment will be outstanding, which is due and payable on the date of this Agreement and on each anniversary of the date of this Agreement. 6.6 Section 12.3(c) is deleted in its entirety and the following is substituted therefor: (c) Unused Line Fee. In connection with and as a consideration for the Bank's Commitment, the Borrowers shall pay a fee to the Bank in an amount equal to one-half of one percent (.5%) per annum of the average daily unused portion of the Commitment payable quarterly in arrears on the first day of each quarter and on the date of any permanent reduction in the Commitment. 6.7 Section 9.1 is deleted in its entirety and the following is substituted therefor: "Section 9.1 Financial Ratios. (a) Minimum Tangible Net Worth. Permit the Tangible Net Worth of the Borrower to be less than: (1) $5,600,000 at the end of the fiscal quarter ending January 31, 2001, (2) $6,100,000 at the end of each fiscal quarter thereafter. (b) Minimum Current Ratio. Permit the Current Ratio at any time to be less than 1.45 to 1.0, measured on a quarterly basis beginning January 31, 2001. (c) [Intentionally omitted]. (d) Maximum Liabilities Ratio. Permit the Liabilities Ratio of the Borrower to exceed: (1) 2.75 to 1 at the end of the fiscal quarters ending January 31, 2001 and April 30, 2001, (5) 2.50 to 1 at the end of each fiscal quarter thereafter. (e) Minimum Debt Service Coverage Ratio. Permit the Debt Service Coverage Ratio of the Borrower to be less than: (1) .75 to 1 at the end of the fiscal quarter ending January 31, 2001 (2) 1.00 to 1 at the end of the fiscal quarter ending April 30, 2001 (3) 1.20 to 1 at the end of each fiscal quarter thereafter. 7. Further Security Documents. As a material part of the consideration for Lender entering into this Second Amendment and in order to induce Lender to modify the Loan Agreement and to extend credit to Borrower, Elecsys and New ASI agree as follows: 7.1 New ASI hereby acknowledges, assumes and agrees to be bound by all of the terms and conditions of the Loan Agreement as if an original borrower thereunder, including without limitation, acknowledging Lender's security interests in and to all of Elecsys' assets, which security interests continue to be attached and perfected notwithstanding the transfer of such assets to New ASI. 7.2 To the extent not already granted, New ASI does hereby grant Lender a security interest in and to all of its assets, including, without limitation, all Receivables, Inventory, Equipment, Contract Rights, General Intangibles, Deposit Accounts, Real Estate and other Collateral as those terms are defined in the Loan Agreement to secure the payment and performance of all of Borrower's Obligations under the Loan Agreement. New ASI additionally agrees to execute a security agreement in such form as is reasonably acceptable to Lender. 7.3 Elecsys shall and does hereby pledge as security for any or all of Borrower's Obligations to Lender under the Loan Agreement all its right title and interest in and to any and all shares of stock in New ASI. Elecsys shall execute a Stock Pledge Agreement further evidencing such pledge in such form as is reasonably acceptable to Lender. 8. Modification Expenses. Borrower will pay to Lender promptly as they come due, any and all costs and expenses incurred by Lender in connection with the negotiation, preparation and documentation of this Second Amendment, including without limitation, all recording fees, mortgage registration tax and all reasonable attorneys' fees and costs. 9. Conditions Precedent. Lender shall be under no obligation of any kind under this Second Amendment unless the following conditions precedent have been satisfied as determined in the sole discretion of Lender: 9.1 Completion of a U.C.C. search at the expense of Borrower demonstrating no intervening liens, claims or encumbrances that would adversely impact upon Lender's security interests as set forth in this Second Amendment and the Loan Agreement. 9.2 Full disclosure of all information and documents relating to the name change, subsidiary formation and transfer set forth in the preliminary statements above that may be reasonably requested by Lender. 9.3 Payment in full of the Forbearance and Waiver Fee in immediately available funds. 9.4 Execution of a security agreement and stock pledge agreement required by Section 7 of this Second Amendment. 9.5 Delivery of an reasoned opinion letter from Blackwell Sanders Peper Martin LLP to Lender in form and substance acceptable to Lender in its sole discretion opining that the Restructuring was duly authorized pursuant to the organizational documents of Elecsys and pursuant to Kansas and Federal law with full corporate authority. 9.6 Delivery of an unqualified opinion letter from Blackwell Sanders Peper Martin LLP in form and substance acceptable to Lender in its sole discretion opining as to the creation and perfection of security interests in favor of Lender with respect to all assets of Borrower. 9.7 Execution and Delivery of a new Promissory Note reflecting the change in the amount of Commitment set forth in paragraph 6.2 of this Second Amendment. 9.8 Execution of any other documents, including financing statements, amendments to existing financing statements, or other documents reasonably requested by Lender in connection herewith. 10. Cross Default and Cross Collateralization. A default in the payment or performance of Borrower's obligations under this Second Amendment will constitute an Event of Default under the Loan Agreement and in such event Lender will be entitled to exercise any and all remedies available thereunder. Lender and Borrower further agree that the Security Documents securing the Loan Agreement are hereby modified so that the Security Documents will continue to secure the Loan Agreement as amended by this Second Amendment. 11. Ratification. The parties hereto ratify and reaffirm that all terms, conditions and provisions of the Loan Agreement remain in full force and effect except to the extent expressly modified by the terms of this Second Amendment and the terms and conditions of this Second Amendment are hereby incorporated in, and will hereafter be deemed a part of, the Loan Documents for all purposes. 12. Releases. As a material part of the consideration for Lender entering into this Second Amendment and in order to induce Lender to modify the Loan Agreement and to extend credit to Borrower, Borrower hereby jointly and severally releases and forever discharges Lender's directors, officers, employees, agents, attorneys, affiliates, subsidiaries, successors and assigns from any and all liabilities, obligations, actions, contracts, claims, causes of action, damages, demands, costs and expenses whatsoever (collectively "Claims"), of every kind and nature, however evidenced or created, whether known or unknown, arising prior to or on the date of this Second Amendment including, but not limited to, any Claims involving the extension of credit under or administration of the Loan Agreement, the indebtedness incurred by the Borrower or any other transactions evidenced by the Loan Agreement and/or this Second Amendment. 13. Renewal. To the extent that any payment or payments made to Lender under this Second Amendment or the Loan Agreement are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, to either Borrower, whether directly or indirectly as a debtor-in-possession, or to a receiver or any other party under any bankruptcy law, or other state or federal law, then the portion of the indebtedness of the Borrower intended to have been satisfied by such payment or payments will be revived and will continue in full force and effect as if such payment or payments had never been received by Lender. 14. Representations and Warranties. Elecsys, ASI and DCI -------------------------------- jointly and severally represent and warrant to Lender as follows: (A) All of the representations and warranties of Borrower in the Loan Agreement are true and correct as of the date hereof, as modified by this Second Amendment. (B) Except as expressly described herein, no Event of Default is in existence with respect to the Loan Agreement or Security Documents. (C) No Event of Default has occurred or will occur as a result of the execution, delivery, and performance of this Second Amendment. (D) This Second Amendment has been duly authorized, executed and delivered and is a legally valid, binding, joint and several obligation of Elecsys, ASI and DCI and is enforceable against each of them in accordance with its terms. (E) The transfer to New ASI by Elecsys of assets and related liabilities in the Restructuring did not create any tax liability to Elecsys or New ASI, and (ii) the conduct of the navigational aids business through New ASI will not have any material federal income tax consequences different than if such business had continued to be conducted through Elecsys. 15. Miscellaneous. (A) Borrower hereby agrees and acknowledges that Lender may endorse and deposit any check or other instrument tendered in connection with a partial payment without thereby giving effect to or being bound by any language purporting to make acceptance of such instrument an accord and satisfaction of the Secured Obligations evidenced by this Second Amendment or the Loan Agreement. (B) In the event of a conflict between or among the terms, covenants, conditions or provisions of this Second Amendment, Loan Agreement or any other Loan Documents, Lender may elect to enforce from time to time those provisions that would afford Lender the maximum financial benefits and security for the Secured Obligations and/or provide Lender the maximum assurance of payment of the Secured Obligations in full. (C) No inference in favor of, or against, any party will be drawn from the fact that such party has drafted any portion of the Loan Agreement. (D) This Second Amendment may be executed in any number of counterparts, each of which will be deemed to be an original but all of which taken together will constitute one and the same agreement. (E) This Second Amendment will be governed by and construed under the laws of the State of Missouri. (F) This Second Amendment will be binding upon and will inure to the benefit of the parties hereto and to their respective successors and assigns. 16. WAIVER OF JURY TRIAL. LENDER AND BORROWER WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS SECOND AMENDMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY BORROWER AND BORROWER ACKNOWLEDGES THAT NEITHER LENDER NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. BORROWER FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS FIRST AMENDMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. BORROWER FURTHER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER PROVISION. IN WITNESS WHEREOF, Borrower and Lender have caused this First Amendment to be executed by an officer duly authorized to so execute and bind Borrower and Lender, respectively, effective as of the day and year first written above. "BORROWER" ELECSYS CORPORATION, a Kansas corporation By: Printed Name: Its: DCI, INC., a Kansas corporation By: Printed Name: Its: AIRPORT SYSTEMS INTERNATIONAL, INC., a Kansas corporation By: Printed Name: Its: ACCEPTED effective the _____ day of December, 2000, at Lender's place of business in the City of Kansas City State of Missouri. "LENDER" BANK OF AMERICA, N.A., a national banking association By: Printed Name: Title: EX-10.HH 4 0004.txt REVOLVING CREDIT NOTE B $2,000,000 Date: February __, 2000 FOR VALUE RECEIVED, on February __, 2000 the undersigned promises to pay to the order of Bank of America, N.A., (hereinafter, together with any holder hereof, called "Holder") at Kansas City, Missouri (or at such other place as the Holder may designate in writing to the undersigned) the principal amount of Two Million and and No/100 Dollars ($2,000,000.00) or so much thereof as has been advanced hereunder. The undersigned shall pay interest as provided in that certain Loan and Security Agreement between the undersigned and Holder dated February 7, 2000 (the "Loan Agreement"). Unless otherwise defined herein, defined terms shall have the same meaning as in the Loan Agreement. It is contemplated that the principal sum evidenced by this Note may be reduced from time to time and that additional advances may be made from time to time, as provided in the Loan Agreement; provided, however, that the outstanding principal amount evidenced by this Note shall not exceed the maximum amount provided in the Loan Agreement. This Note is subject to the terms and conditions of, and entitled to the benefit of the Collateral described in, the Loan Agreement. Capitalized terms not defined herein shall have the meanings given in the Loan Agreement. No delay or failure on the part of the Holder in the exercise of any right or remedy hereunder, under the Loan Agreement, the Security Documents or at law or in equity, shall operate as a waiver thereof, and no single or partial exercise by the Holder of any right or remedy hereunder, under the Loan Agreement, the Security Documents, or at law or in equity shall preclude or estop another or further exercise thereof or the exercise of any other right or remedy. Principal and interest on this Note shall be payable and paid in lawful money of the United States of America. The undersigned and all endorsers waive presentment, notice of dishonor and protest. Time is of the essence of this Note and, in case this Note is collected by law or through an attorney at law, or under advice therefrom, the undersigned agrees to pay all costs of collection, including reasonable attorneys' fees if collected by or through an attorney. The provisions of this Note shall be construed and interpreted and all rights and obligations of the parties hereunder determined in accordance with the laws of the State of Missouri. THIS REVOLVING CREDIT NOTE "B" EVIDENCES, IN PART, THE SAME INDEBTEDNESS AS EVIDENCED BY DOCUMENTATION RELATING TO THE "EXISTING LOANS" (AS SUCH TERM IS DEFINED IN THE LOAN AGREEMENT). THIS REVOVING CREDIT NOTE "B" IS SECURED BY ALL OF THE SAME COLLATERAL AS THE EXISTING LOANS PURSUANT TO THE TERMS OF THE LOAN AGREEMENT AND RELATED LOAN DOCUMENTS. ALL FUTURE ADVANCES MADE TO THE MAKER WILL ALSO BE SECURED BY THE LOAN DOCUMENTS. THIS REVOLVING NOTE "B" IS, IN PART, A RESTATEMENT OF THE EXISTING LOANS AND THE DOCUMENTS RELATING THERETO, AND ITS EXECUTION AND DELIVERY DOES NOT EVIDENCE A CANCELLATION OF THE INDEBTEDNESS EVIDENCED BY THE PRIOR DOCUMENTS. IN WITNESS WHEREOF, the undersigned has caused this Note to be executed, sealed and delivered in Kansas City, Missouri, in its corporate name, by and through its respective duly authorized officers, as of the day and year first above written. BORROWER: ELECSYS CORPORATION, a Kansas corporation Attest: By: --------------------------------- Name: ---------------------------- By: Title: -------------------------- --------------------------- Name: --------------------- Title: -------------------- AIRPORT SYSTEMS INTERNATIONAL, INC., a Kansas corporation Attest: By: --------------------------------- Name: ---------------------------- By: Title: -------------------------- --------------------------- Name: -------------------- Title: ------------------- DCI, INC., a Kansas corporation Attest: By: ---------------------------------- Name: ---------------------------- By: Title: -------------------------- ---------------------------- Name: -------------------- Title: ------------------- EX-10.II 5 0005.txt PROMISSORY NOTE $7,000,000 February 7, 2000 (Date of Execution) FOR VALUE RECEIVED, ELECSYS CORPORATION, a Kansas corporation, AIRPORT SYSTEMS INTERNATIONAL, INC., a Kansas corporation, and DCI, INC., a Kansas corporation (collectively, the "Borrowers"), jointly and severally promise to pay to the order of BANK OF AMERICA, N.A. (the "Bank") at its office located at 10000 College Boulevard, Overland Park, Kansas 66210, or at such other place as the holder hereof may from time to time designate, the principal sum of UNITED STATES SEVEN MILLION DOLLARS (U.S.$7,000,000), or so much thereof as shall have been advanced by the Bank to the Borrowers under the Loan pursuant to the terms of the Letter of Credit, Loan and Security Agreement dated as of February 7, 2000, by and between the Bank and the Borrowers (the "Loan Agreement"), with interest thereon as provided below. Interest and principal shall be payable in lawful money of the United States, which shall be legal tender in payment of all debts and dues, public and private, at the time of payment, as follows: (a) interest on the unpaid principal balance at an annual rate, which is equal to the fluctuating prime rate of interest established and declared by the Bank from time to time (the "Prime Rate") plus one-half of one percent per annum (0.5%), shall be due and payable on the first calendar day of each and every month after the date hereof until the principal sum is paid in full; and (b) the entire balance of principal and accrued and unpaid interest shall be due and payable, on August 7, 2001. The Prime Rate does not necessarily represent the lowest rate of interest charged by the Bank to borrowers. The rate of interest charged under this Note shall change on the first day of the calendar month following the month in which any change in the Prime Rate is announced. Interest shall be charged based on a 360-day year factor applied to actual days elapsed. If any amount payable hereunder is not paid when due or payment is made in funds which are not immediately available or any other Event of Default (as defined in the Loan Agreement) has occurred and remains in existence, interest on the entire principal amount hereof and any accrued and unpaid interest shall be paid at the rate which is at all times equal to three percent (3%) per annum in excess of the rate otherwise payable hereunder from the date due until such amount shall be paid in full or until funds are immediately available or other Event of Default has been cured, as the case may be. Amounts which are advanced to the Borrowers under the Loan Agreement and then repaid by the Borrowers shall thereafter be available to be readvanced to the Borrowers in accordance with the terms of the Loan Agreement. The fact that the balance hereunder may be reduced to zero from time to time pursuant to the Loan Agreement will not affect the continuing validity of this Note or the Loan Agreement, and the balance may be increased to the stated principal amount after any such reduction to zero. The Borrowers may, at their option, prepay the principal balance hereof, in whole or in part, at any time, without premium or penalty; provided that any such prepayment is accompanied by a payment of all accrued and unpaid interest on the amount so prepaid. As provided in the Loan Agreement, the principal balance hereof must be immediately prepaid by the Borrowers, without premium or penalty, from all Proceeds of the Export Receivables and Export Inventory (as such terms are defined in the Loan Agreement) which are received by the Borrowers or the Bank. All payments received hereunder shall be applied first, to any unpaid costs, fees and expenses due under the Loan Agreement and the other Financing Documents defined therein, second, to the payment of accrued and unpaid interest, and finally, to the payment of outstanding principal, unless otherwise agreed to by the Bank. This Promissory Note is the Note referred to in the Loan Agreement and is secured by and subject to the provisions contained in the Loan Agreement. This Note is to be governed by, construed under and enforced in all respects according to the laws of the State of Missouri. The Borrowers hereby consent to the non-exclusive jurisdiction of the state and federal courts of the State of Missouri in any action to enforce the provisions of this Note. The rights and remedies of the holder of this Note, as provided herein, shall be cumulative and concurrent and may be pursued singularly, successively or together at the sole discretion of the holder, and may be exercised as often as occasion therefor shall occur, and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release of the same. In the event that any one or more of the provisions (or any part of any provision) of this Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, or in the event that any one or more of the provisions of this Note operates or would prospectively operate to invalidate this Note, then and in either of those events, such provision or provisions only shall be deemed null and void and shall not affect any other provisions (or remaining part of the affected provision) of this Note and the remaining provisions (or remaining part of the affected provision) of this Note shall remain operative and in full force and effect and shall in no way be affected, prejudiced or disturbed thereby. The Borrowers and any guarantors and endorsers hereof severally waive presentment, protest and demand, notice of protest, notice of demand and of dishonor and non-payment of this Note and expressly agree that this Note or any payment hereunder may be extended from time to time without in any way affecting the liability of the Borrowers and any guarantors and endorsers. WITNESS the signature and seal of the Borrowers by their duly authorized officers as of the day and year first above written. WITNESS (OR ATTEST): ELCSYS CORPORATION, as a borrower By: (SEAL) --------------------------- Name: -------------------- Title: -------------------- AIRPORT SYSTEMS INTERNATIONAL, INC. By: (SEAL) --------------------------- Name: --------------------- Title: -------------------- DCI, Inc. By: (SEAL) --------------------------- Name: --------------------- Title: -------------------- EX-10.JJ 6 0006.txt Supplemental Agreement This Agreement is entered into this 28th day of February, 2001, by and between Elecsys Corporation ("Corporation") and Keith Cowan ("Employee"). WHEREAS, Corporation and Employee have heretofore entered into a certain Employment Agreement pursuant to which Employee is entitled to a specified salary for services rendered on behalf of Corporation; and WHEREAS, in lieu of cash compensation payable to Employee pursuant to said Employment Agreement, the parties desire that Employee shall receive a specified number of shares of Corporation's common stock, $.01 par value ("Common Stock"), as hereinafter set forth. NOW, THEREFORE, in consideration of the mutual promises contained herein and other valuable consideration the receipt of which is hereby acknowledged, the parties agree as follows: 1. As soon as administratively practicable following the date hereof, Corporation shall issue for the benefit of Employee 16,667 shares of Common Stock. The parties agree that the issuance of such shares shall be a substitute for the first $25,000.00 of salary otherwise payable (after all applicable withholding and other payroll deductions) to Employee for services rendered on and after February 11, 2001. In the event Employee's employment with Corporation is terminated prior to the date Employee has completed the services giving rise to the payment hereunder, Employee agrees that he shall repay to Corporation an amount, in cash or shares of Common Stock, equal to the difference between $25,000.00 and Employee's net salary for the period commencing February 11, 2001 and ending on his date of termination. 2. Employee acknowledges that Corporation will withhold all applicable employment tax and other withholding obligations imposed in connection with the issuance of Common Stock hereunder, and Employee authorizes Corporation or its affiliates to make any withholding for taxes which Corporation or such affiliates deems necessary or proper in connection therewith. 3. Employee and Corporation agree that this Agreement supplements the Employment Agreement by and between such parties and, except as set forth herein, does not affect the rights, duties and obligations of the parties under said Employment Agreement. 4. The rights and obligations of Corporation under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Corporation. Employee may not assign any of her rights or delegate any of his duties or obligations under this Agreement without Corporation's express written consent. 5. In the event any term or provision hereof shall be determined by a court of competent jurisdiction or arbitrator to be unenforceable, the remainder hereof shall survive and the unenforceable provision shall be reformed to form an enforceable provision consistent with the intent of the parties as evidenced in this Agreement. 6. This Agreement and all disputes arising hereunder shall be subject to, governed by and construed in accordance with the laws of the State of Kansas. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. Elecsys Corporation ("Corporation") By:___________________________ "Employee" ------------------------------ EX-10.KK 7 0007.txt Supplemental Agreement This Agreement is entered into this 28th day of February, 2001, by and between Elecsys Corporation ("Corporation") and Tom Cargin ("Employee"). WHEREAS, Corporation and Employee have heretofore entered into a certain Employment Agreement pursuant to which Employee is entitled to a specified salary for services rendered on behalf of Corporation; and WHEREAS, in lieu of cash compensation payable to Employee pursuant to said Employment Agreement, the parties desire that Employee shall receive a specified number of shares of Corporation's common stock, $.01 par value ("Common Stock"), as hereinafter set forth. NOW, THEREFORE, in consideration of the mutual promises contained herein and other valuable consideration the receipt of which is hereby acknowledged, the parties agree as follows: 1. As soon as administratively practicable following the date hereof, Corporation shall issue for the benefit of Employee 6,667 shares of Common Stock. The parties agree that the issuance of such shares shall be a substitute for the first $10,000.00 of salary otherwise payable (after all applicable withholding and other payroll deductions) to Employee for services rendered on and after February 11, 2001. In the event Employee's employment with Corporation is terminated prior to the date Employee has completed the services giving rise to the payment hereunder, Employee agrees that he shall repay to Corporation an amount, in cash or shares of Common Stock, equal to the difference between $10,000.00 and Employee's net salary for the period commencing February 11, 2001 and ending on his date of termination. 2. Employee acknowledges that Corporation will withhold all applicable employment tax and other withholding obligations imposed in connection with the issuance of Common Stock hereunder, and Employee authorizes Corporation or its affiliates to make any withholding for taxes which Corporation or such affiliates deems necessary or proper in connection therewith. 3. Employee and Corporation agree that this Agreement supplements the Employment Agreement by and between such parties and, except as set forth herein, does not affect the rights, duties and obligations of the parties under said Employment Agreement. 4. The rights and obligations of Corporation under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Corporation. Employee may not assign any of her rights or delegate any of his duties or obligations under this Agreement without Corporation's express written consent. 5. In the event any term or provision hereof shall be determined by a court of competent jurisdiction or arbitrator to be unenforceable, the remainder hereof shall survive and the unenforceable provision shall be reformed to form an enforceable provision consistent with the intent of the parties as evidenced in this Agreement. 6. This Agreement and all disputes arising hereunder shall be subject to, governed by and construed in accordance with the laws of the State of Kansas. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. Elecsys Corporation ("Corporation") By:___________________________ "Employee" ------------------------------ EX-10.LL 8 0008.txt Agreement This Agreement is entered into this 28th day of February, 2001, by and between Airport Systems International, Inc. ("Corporation") and Ken Pierson ("Employee"). WHEREAS, Corporation and Employee have entered into an Employment Arrangement to which Employee is entitled to a specified salary for services rendered on behalf of Corporation; and WHEREAS, in lieu of cash compensation payable to Employee pursuant to said Employment Arrangement, the parties desire that Employee shall receive a specified number of shares of Corporation's common stock, $.01 par value ("Common Stock"), as hereinafter set forth. NOW, THEREFORE, in consideration of the mutual promises contained herein and other valuable consideration the receipt of which is hereby acknowledged, the parties agree as follows: 1. As soon as administratively practicable following the date hereof, Corporation shall issue for the benefit of Employee 16,667 shares of Common Stock. The parties agree that the issuance of such shares shall be a substitute for the first $25,000.00 of salary otherwise payable (after all applicable withholding and other payroll deductions) to Employee for services rendered on and after February 11, 2001. In the event Employee's employment with Corporation is terminated prior to the date Employee has completed the services giving rise to the payment hereunder, Employee agrees that he shall repay to Corporation an amount, in cash or shares of Common Stock, equal to the difference between $25,000.00 and Employee's net salary for the period commencing February 11, 2001 and ending on his date of termination. 2. Employee acknowledges that Corporation will withhold all applicable employment tax and other withholding obligations imposed in connection with the issuance of Common Stock hereunder, and Employee authorizes Corporation or its affiliates to make any withholding for taxes which Corporation or such affiliates deems necessary or proper in connection therewith. 4. The rights and obligations of Corporation under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Corporation. Employee may not assign any of her rights or delegate any of his duties or obligations under this Agreement without Corporation's express written consent. 5. In the event any term or provision hereof shall be determined by a court of competent jurisdiction or arbitrator to be unenforceable, the remainder hereof shall survive and the unenforceable provision shall be reformed to form an enforceable provision consistent with the intent of the parties as evidenced in this Agreement. 6. This Agreement and all disputes arising hereunder shall be subject to, governed by and construed in accordance with the laws of the State of Kansas. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. Airport Systems International, Inc. ("Corporation") By:___________________________ "Employee" ------------------------------ EX-10.MM 9 0009.txt Supplemental Agreement This Agreement is entered into this 28th day of February, 2001, by and between DCI, Inc. ("Corporation") and Karl Gemperli ("Employee"). WHEREAS, Corporation and Employee have heretofore entered into a certain Employment Agreement pursuant to which Employee is entitled to a specified salary for services rendered on behalf of Corporation; and WHEREAS, in lieu of cash compensation payable to Employee pursuant to said Employment Agreement, the parties desire that Employee shall receive a specified number of shares of Corporation's common stock, $.01 par value ("Common Stock"), as hereinafter set forth. NOW, THEREFORE, in consideration of the mutual promises contained herein and other valuable consideration the receipt of which is hereby acknowledged, the parties agree as follows: 1. As soon as administratively practicable following the date hereof, Corporation shall issue for the benefit of Employee 16,667 shares of Common Stock. The parties agree that the issuance of such shares shall be a substitute for the first $25,000.00 of salary otherwise payable (after all applicable withholding and other payroll deductions) to Employee for services rendered on and after February 11, 2001. In the event Employee's employment with Corporation is terminated prior to the date Employee has completed the services giving rise to the payment hereunder, Employee agrees that he shall repay to Corporation an amount, in cash or shares of Common Stock, equal to the difference between $25,000.00 and Employee's net salary for the period commencing February 11, 2001 and ending on his date of termination. 2. Employee acknowledges that Corporation will withhold all applicable employment tax and other withholding obligations imposed in connection with the issuance of Common Stock hereunder, and Employee authorizes Corporation or its affiliates to make any withholding for taxes which Corporation or such affiliates deems necessary or proper in connection therewith. 3. Employee and Corporation agree that this Agreement supplements the Employment Agreement by and between such parties and, except as set forth herein, does not affect the rights, duties and obligations of the parties under said Employment Agreement. 4. The rights and obligations of Corporation under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Corporation. Employee may not assign any of her rights or delegate any of his duties or obligations under this Agreement without Corporation's express written consent. 5. In the event any term or provision hereof shall be determined by a court of competent jurisdiction or arbitrator to be unenforceable, the remainder hereof shall survive and the unenforceable provision shall be reformed to form an enforceable provision consistent with the intent of the parties as evidenced in this Agreement. 6. This Agreement and all disputes arising hereunder shall be subject to, governed by and construed in accordance with the laws of the State of Kansas. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. DSI, Inc. ("Corporation") By:___________________________ "Employee" ------------------------------ EX-10.NN 10 0010.txt INCENTIVE STOCK OPTION AGREEMENT FOR OPTIONEE OF RESTATED 1991 STOCK OPTION PLAN This Agreement is made as of the 25th day of May, 2000, between AIRPORT SYSTEMS INTERNATIONAL, INC., a Kansas corporation (the "Company"), and THOMAS C. CARGIN, an employee to the Company or any Subsidiary ("Optionee"). 1. BACKGROUND. In order to attract and retain the best available personnel for positions of substantial responsibility in the Company or any Subsidiary and to promote the success of the Company's business, the Company has adopted the Restated 1991 Stock Option Plan (the "Plan"), a copy of which is attached hereto as Exhibit A. Pursuant to the Plan certain Employees and Consultants of the Company or any Subsidiary may be designated by the Board of Directors of the Company to receive an option to purchase shares of Common Stock of the Company ("Common Stock"). Capitalized terms used herein and otherwise not defined have the meaning ascribed to them in the Plan. 2. GRANT OF OPTION. The Company hereby grants to Optionee an option to purchase up to an aggregate of 4,000 Shares of Common Stock of the Company (the "Option Shares"), in accordance with the vesting schedule set forth in Section 3 hereof (the "Option"); provided however, that the Option is subject to the terms of the Plan and the Stock Transfer Restriction Agreement for Exercise of Stock Option attached hereto as Exhibit B ("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 an Incentive Stock Option. 3. VESTING OF SHARES. The option to purchase shares of Common Stock shall cumulatively vest and be exercisable for 1,334 shares of Common Stock on May 25, 2001, 1,333 shares of Common Stock on May 25, 2002 and 1,333 shares of Common Stock on May 25, 2003; provided, however, that the unvested portions of the Options shall vest and be exercisable immediately prior to any of the following transactions: (i) the closing of the Company's sale of all or substantially all of its assets or (ii) the acquisition of the Company by another entity by means of a merger or consolidation resulting in the exchange of the outstanding shares of Company's capital stock for securities or consideration issued or caused to be issued by the acquiring entity or its subsidiary or (iii) the acquisition from one or more of the shareholders of the Company of more than fifty percent (50%) of the Common Stock by a single person or group of persons acting together (collectively, a "Change in Control Transaction"); provided further, however, that if the Change in Control Transaction is with any person who is a holder of Common Stock on the date hereof, or an entity under the control of such person through stock ownership or otherwise, the unvested portion of the options shall not vest and the options shall remain in effect to vest in accordance with the vesting schedule set forth in this Section 3. 4. EXERCISE OF OPTION (a) An Option shall be deemed to be exercised when the 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) 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 shareholder 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 of the stock certificate is issued, except as provided in Section 12 of the Plan. (c) Exercise of an Option in any manner shall result in a decrease in the number of Option Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Option Shares as to which the Option is exercised. 5. EXERCISE PRICE AND CONSIDERATION. (a) EXERCISE PRICE. The per Share exercise price for the Option Shares to be issued pursuant to exercise of an Option shall be two and one-eighth dollars ($2.125), 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 an Option, including the method of payment, shall be determined by the Board of Directors and may consist entirely of cash, check, other shares of Common Stock having a fair market value on the date of surrender equal to the aggregate exercise price of the Option Shares as to which said option shall be exercised, or any combination of such methods of payment, or such other consideration and method of payment for the issuance of Option Shares to the extent permitted under the laws of the state of incorporation of the Company. In making its determination as to the type of consideration to accept, the Board of Directors shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. (c) FAIR MARKET VALUE. The fair market value of 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 National Association of Securities Dealers Automated Quotation ("NASDAQ") National Market System) of the Common Stock for the date of grant, as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by the NASDAQ System) or, 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 grant of the Option, as reported in The Wall Street Journal. 6. TERM OF OPTION. (a) GENERAL RULE. Except as provided in Section 6(b) and Section 6(c) hereof and in Section 10 and Section 12 of the Plan, the term of each Option granted pursuant to Section 2 hereof shall be ten (10) years from the date hereof. (b) EMPLOYMENT OF OPTIONEE TERMINATED. Notwithstanding anything provided to the contrary in the Plan, if Optionee's employment with the Company or any Subsidiary is terminated by the Company or any Subsidiary (i) for fraud or dishonesty of Optionee in connection with fulfillment of his duties and responsibilities as an employee of the Company or any Subsidiary, including without limitation, embezzlement of Company or Subsidiary funds; or (ii) because employee is charged with a felony under any applicable criminal code or statute, or (iii) if Optionee quits the employment of the Company or any Subsidiary, then all unexercised Options, whether vested or unvested, shall terminate immediately upon such termination of employment. If Optionee's employment with the Company or any subsidiary is terminated for a reason other than those described in the preceding sentence the unvested portion of the Option shall terminate immediately and the entire portion of the Option which was vested prior to termination of Employee's employment, to the extent that it was exercisable for sixty (60) days following Employee's termination date. To the extent that the Option was not exercisable on the Employee's termination date, or if the Option is not exercised (to the extent it was entitled to be exercised), within the 60 day period, the Option shall terminate. (c) BREACH OF NON-DISCLOSURE COVENANT NOT TO COMPETE. Notwithstanding anything provided to the contrary in the Plan, if Optionee breaches any applicable nondisclosure covenant or covenant not to compete set forth in any employment agreement between Optionee and the Company or a Subsidiary, or otherwise applicable to Optionee under the law of the jurisdiction where Optionee is employed, then all unexercised Options, whether vested or unvested, shall immediately terminate. 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 the Optionee, only by the Optionee. 8. CONDITIONS UPON ISSUANCE OF OPTION SHARES. (a) 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) 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) 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) All Option Shares issued pursuant to the exercise of the Option shall be subject to the terms and provisions of the Stock Restriction Agreement, an example of which is attached hereto as Exhibit B. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. OPTIONEE ------------------------------------------ Name: Thomas C. Cargin AIRPORT SYSTEMS INTERNATIONAL, INC. a Kansas corporation By: --------------------------------------- Keith S. Cowan, President Exhibits A. Restated 1991 Stock Option Plan B. Stock Transfer Restriction Agreement EX-10.OO 11 0011.txt INCENTIVE STOCK OPTION AGREEMENT FOR OPTIONEE OF RESTATED 1991 STOCK OPTION PLAN This Agreement is made as of the 6th day of December, 1999, between AIRPORT SYSTEMS INTERNATIONAL, INC., a Kansas corporation (the "Company"), and KARL GEMPERLI, an employee to the Company or any Subsidiary ("Optionee"). 1. BACKGROUND. In order to attract and retain the best available personnel for positions of substantial responsibility in the Company or any Subsidiary and to promote the success of the Company's business, the Company has adopted the Restated 1991 Stock Option Plan (the "Plan"), a copy of which is attached hereto as Exhibit A. Pursuant to the Plan certain Employees and Consultants of the Company or any Subsidiary may be designated by the Board of Directors of the Company to receive an option to purchase shares of Common Stock of the Company ("Common Stock"). Capitalized terms used herein and otherwise not defined have the meaning ascribed to them in the Plan. 2. GRANT OF OPTION. The Company hereby grants to Optionee an option to purchase up to an aggregate of 50,000 Shares of Common Stock of the Company (the "Option Shares"), in accordance with the vesting schedule set forth in Section 3 hereof (the "Option"); provided however, that the Option is subject to the terms of the Plan and the Stock Transfer Restriction Agreement for Exercise of Stock Option attached hereto as Exhibit B ("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 an Incentive Stock Option. 3. VESTING OF SHARES. The option to purchase shares of Common Stock shall cumulatively vest and be exercisable for 10,000 shares of Common Stock on December 6, 2000, 10,000 shares of Common Stock on December 6, 2001, 10,000 shares of Common Stock on December 6, 2003, 10,000 shares of Common Stock on December 6, 2004, and 10,000 shares of Common Stock on December 6, 2005; provided, however, that the unvested portions of the Options shall vest and be exercisable immediately prior to any of the following transactions: (i) the closing of the Company's sale of all or substantially all of its assets or (ii) the acquisition of the Company by another entity by means of a merger or consolidation resulting in the exchange of the outstanding shares of Company's capital stock for securities or consideration issued or caused to be issued by the acquiring entity or its subsidiary or (iii) the acquisition from one or more of the shareholders of the Company of more than fifty percent (50%) of the Common Stock by a single person or group of persons acting together (collectively, a "Change in Control Transaction"); provided further, however, that if the Change in Control Transaction is with any person who is a holder of Common Stock on the date hereof, or an entity under the control of such person through stock ownership or otherwise, the unvested portion of the options shall not vest and the options shall remain in effect to vest in accordance with the vesting schedule set forth in this Section 3. 4. EXERCISE OF OPTION (a) An Option shall be deemed to be exercised when the 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) 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 shareholder 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 of the stock certificate is issued, except as provided in Section 12 of the Plan. (c) Exercise of an Option in any manner shall result in a decrease in the number of Option Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Option Shares as to which the Option is exercised. 5. EXERCISE PRICE AND CONSIDERATION. (a) EXERCISE PRICE. The per Share exercise price for the Option Shares to be issued pursuant to exercise of an Option shall be two and one-quarter dollars ($2.25), 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 an Option, including the method of payment, shall be determined by the Board of Directors and may consist entirely of cash, check, other shares of Common Stock having a fair market value on the date of surrender equal to the aggregate exercise price of the Option Shares as to which said option shall be exercised, or any combination of such methods of payment, or such other consideration and method of payment for the issuance of Option Shares to the extent permitted under the laws of the state of incorporation of the Company. In making its determination as to the type of consideration to accept, the Board of Directors shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. (c) FAIR MARKET VALUE. The fair market value of 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 National Association of Securities Dealers Automated Quotation ("NASDAQ") National Market System) of the Common Stock for the date of grant, as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by the NASDAQ System) or, 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 grant of the Option, as reported in The Wall Street Journal. 6. TERM OF OPTION. (a) GENERAL RULE. Except as provided in Section 6(b) and Section 6(c) hereof and in Section 10 and Section 12 of the Plan, the term of each Option granted pursuant to Section 2 hereof shall be ten (10) years from the date hereof. (b) EMPLOYMENT OF OPTIONEE TERMINATED. Notwithstanding anything provided to the contrary in the Plan, if Optionee's employment with the Company or any Subsidiary is terminated by the Company or any Subsidiary (i) for fraud or dishonesty of Optionee in connection with fulfillment of his duties and responsibilities as an employee of the Company or any Subsidiary, including without limitation, embezzlement of Company or Subsidiary funds; or (ii) because employee is charged with a felony under any applicable criminal code or statute, or (iii) if Optionee quits the employment of the Company or any Subsidiary, then all unexercised Options, whether vested or unvested, shall terminate immediately upon such termination of employment. If Optionee's employment with the Company or any subsidiary is terminated for a reason other than those described in the preceding sentence the unvested portion of the Option shall terminate immediately and the entire portion of the Option which was vested prior to termination of Employee's employment, to the extent that it was exercisable for sixty (60) days following Employee's termination date. To the extent that the Option was not exercisable on the Employee's termination date, or if the Option is not exercised (to the extent it was entitled to be exercised), within the 60 day period, the Option shall terminate. (c) BREACH OF NON-DISCLOSURE COVENANT NOT TO COMPETE. Notwithstanding anything provided to the contrary in the Plan, if Optionee breaches any applicable nondisclosure covenant or covenant not to compete set forth in any employment agreement between Optionee and the Company or a Subsidiary, or otherwise applicable to Optionee under the law of the jurisdiction where Optionee is employed, then all unexercised Options, whether vested or unvested, shall immediately terminate. 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 the Optionee, only by the Optionee. 8. CONDITIONS UPON ISSUANCE OF OPTION SHARES. (a) 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) 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) 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) All Option Shares issued pursuant to the exercise of the Option shall be subject to the terms and provisions of the Stock Restriction Agreement, an example of which is attached hereto as Exhibit B. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. OPTIONEE --------------------------------------- Name: Karl Gemperli AIRPORT SYSTEMS INTERNATIONAL, INC. a Kansas corporation By: --------------------------------------- Keith S. Cowan, President Exhibits A. Restated 1991 Stock Option Plan B. Stock Transfer Restriction Agreement EX-10.PP 12 0012.txt INCENTIVE STOCK OPTION AGREEMENT FOR OPTIONEE OF RESTATED 1991 STOCK OPTION PLAN This Agreement is made as of the 25th day of May, 2000, between AIRPORT SYSTEMS INTERNATIONAL, INC., a Kansas corporation (the "Company"), and ANTHONY G. BOMMARITO, an employee to the Company or any Subsidiary ("Optionee"). 1. BACKGROUND. In order to attract and retain the best available personnel for positions of substantial responsibility in the Company or any Subsidiary and to promote the success of the Company's business, the Company has adopted the Restated 1991 Stock Option Plan (the "Plan"), a copy of which is attached hereto as Exhibit A. Pursuant to the Plan certain Employees and Consultants of the Company or any Subsidiary may be designated by the Board of Directors of the Company to receive an option to purchase shares of Common Stock of the Company ("Common Stock"). Capitalized terms used herein and otherwise not defined have the meaning ascribed to them in the Plan. 2. GRANT OF OPTION. The Company hereby grants to Optionee an option to purchase up to an aggregate of 4,000 Shares of Common Stock of the Company (the "Option Shares"), in accordance with the vesting schedule set forth in Section 3 hereof (the "Option"); provided however, that the Option is subject to the terms of the Plan and the Stock Transfer Restriction Agreement for Exercise of Stock Option attached hereto as Exhibit B ("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 an Incentive Stock Option. 3. VESTING OF SHARES. The option to purchase shares of Common Stock shall cumulatively vest and be exercisable for 1,334 shares of Common Stock on May 25, 2001, 1,333 shares of Common Stock on May 25, 2002 and 1,333 shares of Common Stock on May 25, 2003; provided, however, that the unvested portions of the Options shall vest and be exercisable immediately prior to any of the following transactions: (i) the closing of the Company's sale of all or substantially all of its assets or (ii) the acquisition of the Company by another entity by means of a merger or consolidation resulting in the exchange of the outstanding shares of Company's capital stock for securities or consideration issued or caused to be issued by the acquiring entity or its subsidiary or (iii) the acquisition from one or more of the shareholders of the Company of more than fifty percent (50%) of the Common Stock by a single person or group of persons acting together (collectively, a "Change in Control Transaction"); provided further, however, that if the Change in Control Transaction is with any person who is a holder of Common Stock on the date hereof, or an entity under the control of such person through stock ownership or otherwise, the unvested portion of the options shall not vest and the options shall remain in effect to vest in accordance with the vesting schedule set forth in this Section 3. 4. EXERCISE OF OPTION (a) An Option shall be deemed to be exercised when the 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) 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 shareholder 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 of the stock certificate is issued, except as provided in Section 12 of the Plan. (c) Exercise of an Option in any manner shall result in a decrease in the number of Option Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Option Shares as to which the Option is exercised. 5. EXERCISE PRICE AND CONSIDERATION. (a) EXERCISE PRICE. The per Share exercise price for the Option Shares to be issued pursuant to exercise of an Option shall be two and one-eighth dollars ($2.125), 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 an Option, including the method of payment, shall be determined by the Board of Directors and may consist entirely of cash, check, other shares of Common Stock having a fair market value on the date of surrender equal to the aggregate exercise price of the Option Shares as to which said option shall be exercised, or any combination of such methods of payment, or such other consideration and method of payment for the issuance of Option Shares to the extent permitted under the laws of the state of incorporation of the Company. In making its determination as to the type of consideration to accept, the Board of Directors shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. (c) FAIR MARKET VALUE. The fair market value of 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 National Association of Securities Dealers Automated Quotation ("NASDAQ") National Market System) of the Common Stock for the date of grant, as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by the NASDAQ System) or, 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 grant of the Option, as reported in The Wall Street Journal. 6. TERM OF OPTION. (a) GENERAL RULE. Except as provided in Section 6(b) and Section 6(c) hereof and in Section 10 and Section 12 of the Plan, the term of each Option granted pursuant to Section 2 hereof shall be ten (10) years from the date hereof. (b) EMPLOYMENT OF OPTIONEE TERMINATED. Notwithstanding anything provided to the contrary in the Plan, if Optionee's employment with the Company or any Subsidiary is terminated by the Company or any Subsidiary (i) for fraud or dishonesty of Optionee in connection with fulfillment of his duties and responsibilities as an employee of the Company or any Subsidiary, including without limitation, embezzlement of Company or Subsidiary funds; or (ii) because employee is charged with a felony under any applicable criminal code or statute, or (iii) if Optionee quits the employment of the Company or any Subsidiary, then all unexercised Options, whether vested or unvested, shall terminate immediately upon such termination of employment. If Optionee's employment with the Company or any subsidiary is terminated for a reason other than those described in the preceding sentence the unvested portion of the Option shall terminate immediately and the entire portion of the Option which was vested prior to termination of Employee's employment, to the extent that it was exercisable for sixty (60) days following Employee's termination date. To the extent that the Option was not exercisable on the Employee's termination date, or if the Option is not exercised (to the extent it was entitled to be exercised), within the 60 day period, the Option shall terminate. (c) BREACH OF NON-DISCLOSURE COVENANT NOT TO COMPETE. Notwithstanding anything provided to the contrary in the Plan, if Optionee breaches any applicable nondisclosure covenant or covenant not to compete set forth in any employment agreement between Optionee and the Company or a Subsidiary, or otherwise applicable to Optionee under the law of the jurisdiction where Optionee is employed, then all unexercised Options, whether vested or unvested, shall immediately terminate. 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 the Optionee, only by the Optionee. 8. CONDITIONS UPON ISSUANCE OF OPTION SHARES. (a) 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) 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) 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) All Option Shares issued pursuant to the exercise of the Option shall be subject to the terms and provisions of the Stock Restriction Agreement, an example of which is attached hereto as Exhibit B. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. OPTIONEE --------------------------------------- Name: Anthony G. Bommarito AIRPORT SYSTEMS INTERNATIONAL, INC. a Kansas corporation By: --------------------------------------- Keith S. Cowan, President Exhibits A. Restated 1991 Stock Option Plan B. Stock Transfer Restriction Agreement EX-10.QQ 13 0013.txt INCENTIVE STOCK OPTION AGREEMENT FOR OPTIONEE OF RESTATED 1991 STOCK OPTION PLAN This Agreement is made as of the 25th day of May, 2000, between AIRPORT SYSTEMS INTERNATIONAL, INC., a Kansas corporation (the "Company"), and GREGORY C. BRAND, an employee to the Company or any Subsidiary ("Optionee"). 1. BACKGROUND. In order to attract and retain the best available personnel for positions of substantial responsibility in the Company or any Subsidiary and to promote the success of the Company's business, the Company has adopted the Restated 1991 Stock Option Plan (the "Plan"), a copy of which is attached hereto as Exhibit A. Pursuant to the Plan certain Employees and Consultants of the Company or any Subsidiary may be designated by the Board of Directors of the Company to receive an option to purchase shares of Common Stock of the Company ("Common Stock"). Capitalized terms used herein and otherwise not defined have the meaning ascribed to them in the Plan. 2. GRANT OF OPTION. The Company hereby grants to Optionee an option to purchase up to an aggregate of 4,000 Shares of Common Stock of the Company (the "Option Shares"), in accordance with the vesting schedule set forth in Section 3 hereof (the "Option"); provided however, that the Option is subject to the terms of the Plan and the Stock Transfer Restriction Agreement for Exercise of Stock Option attached hereto as Exhibit B ("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 an Incentive Stock Option. 3. VESTING OF SHARES. The option to purchase shares of Common Stock shall cumulatively vest and be exercisable for 1,334 shares of Common Stock on May 25, 2001, 1,333 shares of Common Stock on May 25, 2002 and 1,333 shares of Common Stock on May 25, 2003; provided, however, that the unvested portions of the Options shall vest and be exercisable immediately prior to any of the following transactions: (i) the closing of the Company's sale of all or substantially all of its assets or (ii) the acquisition of the Company by another entity by means of a merger or consolidation resulting in the exchange of the outstanding shares of Company's capital stock for securities or consideration issued or caused to be issued by the acquiring entity or its subsidiary or (iii) the acquisition from one or more of the shareholders of the Company of more than fifty percent (50%) of the Common Stock by a single person or group of persons acting together (collectively, a "Change in Control Transaction"); provided further, however, that if the Change in Control Transaction is with any person who is a holder of Common Stock on the date hereof, or an entity under the control of such person through stock ownership or otherwise, the unvested portion of the options shall not vest and the options shall remain in effect to vest in accordance with the vesting schedule set forth in this Section 3. 4. EXERCISE OF OPTION (a) An Option shall be deemed to be exercised when the 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) 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 shareholder 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 of the stock certificate is issued, except as provided in Section 12 of the Plan. (c) Exercise of an Option in any manner shall result in a decrease in the number of Option Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Option Shares as to which the Option is exercised. 5. EXERCISE PRICE AND CONSIDERATION. (a) EXERCISE PRICE. The per Share exercise price for the Option Shares to be issued pursuant to exercise of an Option shall be two and one-eighth dollars ($2.125), 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 an Option, including the method of payment, shall be determined by the Board of Directors and may consist entirely of cash, check, other shares of Common Stock having a fair market value on the date of surrender equal to the aggregate exercise price of the Option Shares as to which said option shall be exercised, or any combination of such methods of payment, or such other consideration and method of payment for the issuance of Option Shares to the extent permitted under the laws of the state of incorporation of the Company. In making its determination as to the type of consideration to accept, the Board of Directors shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. (c) FAIR MARKET VALUE. The fair market value of 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 National Association of Securities Dealers Automated Quotation ("NASDAQ") National Market System) of the Common Stock for the date of grant, as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by the NASDAQ System) or, 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 grant of the Option, as reported in The Wall Street Journal. 6. TERM OF OPTION. (a) GENERAL RULE. Except as provided in Section 6(b) and Section 6(c) hereof and in Section 10 and Section 12 of the Plan, the term of each Option granted pursuant to Section 2 hereof shall be ten (10) years from the date hereof. (b) EMPLOYMENT OF OPTIONEE TERMINATED. Notwithstanding anything provided to the contrary in the Plan, if Optionee's employment with the Company or any Subsidiary is terminated by the Company or any Subsidiary (i) for fraud or dishonesty of Optionee in connection with fulfillment of his duties and responsibilities as an employee of the Company or any Subsidiary, including without limitation, embezzlement of Company or Subsidiary funds; or (ii) because employee is charged with a felony under any applicable criminal code or statute, or (iii) if Optionee quits the employment of the Company or any Subsidiary, then all unexercised Options, whether vested or unvested, shall terminate immediately upon such termination of employment. If Optionee's employment with the Company or any subsidiary is terminated for a reason other than those described in the preceding sentence the unvested portion of the Option shall terminate immediately and the entire portion of the Option which was vested prior to termination of Employee's employment, to the extent that it was exercisable for sixty (60) days following Employee's termination date. To the extent that the Option was not exercisable on the Employee's termination date, or if the Option is not exercised (to the extent it was entitled to be exercised), within the 60 day period, the Option shall terminate. (c) BREACH OF NON-DISCLOSURE COVENANT NOT TO COMPETE. Notwithstanding anything provided to the contrary in the Plan, if Optionee breaches any applicable nondisclosure covenant or covenant not to compete set forth in any employment agreement between Optionee and the Company or a Subsidiary, or otherwise applicable to Optionee under the law of the jurisdiction where Optionee is employed, then all unexercised Options, whether vested or unvested, shall immediately terminate. 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 the Optionee, only by the Optionee. 8. CONDITIONS UPON ISSUANCE OF OPTION SHARES. (a) 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) 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) 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) All Option Shares issued pursuant to the exercise of the Option shall be subject to the terms and provisions of the Stock Restriction Agreement, an example of which is attached hereto as Exhibit B. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. OPTIONEE ----------------------------------------- Name: Gregory C. Brand AIRPORT SYSTEMS INTERNATIONAL, INC. a Kansas corporation By: --------------------------------------- Keith S. Cowan, President Exhibits A. Restated 1991 Stock Option Plan B. Stock Transfer Restriction Agreement EX-10.RR 14 0014.txt INCENTIVE STOCK OPTION AGREEMENT FOR OPTIONEE OF RESTATED 1991 STOCK OPTION PLAN This Agreement is made as of the 25th day of May, 2000, between AIRPORT SYSTEMS INTERNATIONAL, INC., a Kansas corporation (the "Company"), and RONALD E. PECK, an employee to the Company or any Subsidiary ("Optionee"). 1. BACKGROUND. In order to attract and retain the best available personnel for positions of substantial responsibility in the Company or any Subsidiary and to promote the success of the Company's business, the Company has adopted the Restated 1991 Stock Option Plan (the "Plan"), a copy of which is attached hereto as Exhibit A. Pursuant to the Plan certain Employees and Consultants of the Company or any Subsidiary may be designated by the Board of Directors of the Company to receive an option to purchase shares of Common Stock of the Company ("Common Stock"). Capitalized terms used herein and otherwise not defined have the meaning ascribed to them in the Plan. 2. GRANT OF OPTION. The Company hereby grants to Optionee an option to purchase up to an aggregate of 4,000 Shares of Common Stock of the Company (the "Option Shares"), in accordance with the vesting schedule set forth in Section 3 hereof (the "Option"); provided however, that the Option is subject to the terms of the Plan and the Stock Transfer Restriction Agreement for Exercise of Stock Option attached hereto as Exhibit B ("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 an Incentive Stock Option. 3. VESTING OF SHARES. The option to purchase shares of Common Stock shall cumulatively vest and be exercisable for 1,334 shares of Common Stock on May 25, 2001, 1,333 shares of Common Stock on May 25, 2002 and 1,333 shares of Common Stock on May 25, 2003; provided, however, that the unvested portions of the Options shall vest and be exercisable immediately prior to any of the following transactions: (i) the closing of the Company's sale of all or substantially all of its assets or (ii) the acquisition of the Company by another entity by means of a merger or consolidation resulting in the exchange of the outstanding shares of Company's capital stock for securities or consideration issued or caused to be issued by the acquiring entity or its subsidiary or (iii) the acquisition from one or more of the shareholders of the Company of more than fifty percent (50%) of the Common Stock by a single person or group of persons acting together (collectively, a "Change in Control Transaction"); provided further, however, that if the Change in Control Transaction is with any person who is a holder of Common Stock on the date hereof, or an entity under the control of such person through stock ownership or otherwise, the unvested portion of the options shall not vest and the options shall remain in effect to vest in accordance with the vesting schedule set forth in this Section 3. 4. EXERCISE OF OPTION (a) An Option shall be deemed to be exercised when the 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) 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 shareholder 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 of the stock certificate is issued, except as provided in Section 12 of the Plan. (c) Exercise of an Option in any manner shall result in a decrease in the number of Option Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Option Shares as to which the Option is exercised. 5. EXERCISE PRICE AND CONSIDERATION. (a) EXERCISE PRICE. The per Share exercise price for the Option Shares to be issued pursuant to exercise of an Option shall be two and one-eighth dollars ($2.125), 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 an Option, including the method of payment, shall be determined by the Board of Directors and may consist entirely of cash, check, other shares of Common Stock having a fair market value on the date of surrender equal to the aggregate exercise price of the Option Shares as to which said option shall be exercised, or any combination of such methods of payment, or such other consideration and method of payment for the issuance of Option Shares to the extent permitted under the laws of the state of incorporation of the Company. In making its determination as to the type of consideration to accept, the Board of Directors shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. (c) FAIR MARKET VALUE. The fair market value of 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 National Association of Securities Dealers Automated Quotation ("NASDAQ") National Market System) of the Common Stock for the date of grant, as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by the NASDAQ System) or, 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 grant of the Option, as reported in The Wall Street Journal. 6. TERM OF OPTION. (a) GENERAL RULE. Except as provided in Section 6(b) and Section 6(c) hereof and in Section 10 and Section 12 of the Plan, the term of each Option granted pursuant to Section 2 hereof shall be ten (10) years from the date hereof. (b) EMPLOYMENT OF OPTIONEE TERMINATED. Notwithstanding anything provided to the contrary in the Plan, if Optionee's employment with the Company or any Subsidiary is terminated by the Company or any Subsidiary (i) for fraud or dishonesty of Optionee in connection with fulfillment of his duties and responsibilities as an employee of the Company or any Subsidiary, including without limitation, embezzlement of Company or Subsidiary funds; or (ii) because employee is charged with a felony under any applicable criminal code or statute, or (iii) if Optionee quits the employment of the Company or any Subsidiary, then all unexercised Options, whether vested or unvested, shall terminate immediately upon such termination of employment. If Optionee's employment with the Company or any subsidiary is terminated for a reason other than those described in the preceding sentence the unvested portion of the Option shall terminate immediately and the entire portion of the Option which was vested prior to termination of Employee's employment, to the extent that it was exercisable for sixty (60) days following Employee's termination date. To the extent that the Option was not exercisable on the Employee's termination date, or if the Option is not exercised (to the extent it was entitled to be exercised), within the 60 day period, the Option shall terminate. (c) BREACH OF NON-DISCLOSURE COVENANT NOT TO COMPETE. Notwithstanding anything provided to the contrary in the Plan, if Optionee breaches any applicable nondisclosure covenant or covenant not to compete set forth in any employment agreement between Optionee and the Company or a Subsidiary, or otherwise applicable to Optionee under the law of the jurisdiction where Optionee is employed, then all unexercised Options, whether vested or unvested, shall immediately terminate. 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 the Optionee, only by the Optionee. 8. CONDITIONS UPON ISSUANCE OF OPTION SHARES. (a) 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) 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) 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) All Option Shares issued pursuant to the exercise of the Option shall be subject to the terms and provisions of the Stock Restriction Agreement, an example of which is attached hereto as Exhibit B. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. OPTIONEE ---------------------------------------- Name: Ronald E. Peck AIRPORT SYSTEMS INTERNATIONAL, INC. a Kansas corporation By: --------------------------------------- Keith S. Cowan, President Exhibits A. Restated 1991 Stock Option Plan B. Stock Transfer Restriction Agreement EX-10.SS 15 0015.txt INCENTIVE STOCK OPTION AGREEMENT FOR OPTIONEE OF RESTATED 1991 STOCK OPTION PLAN This Agreement is made as of the 25th day of May, 2000, between AIRPORT SYSTEMS INTERNATIONAL, INC., a Kansas corporation (the "Company"), and MICHAEL MORGAN, an employee to the Company or any Subsidiary ("Optionee"). 1. BACKGROUND. In order to attract and retain the best available personnel for positions of substantial responsibility in the Company or any Subsidiary and to promote the success of the Company's business, the Company has adopted the Restated 1991 Stock Option Plan (the "Plan"), a copy of which is attached hereto as Exhibit A. Pursuant to the Plan certain Employees and Consultants of the Company or any Subsidiary may be designated by the Board of Directors of the Company to receive an option to purchase shares of Common Stock of the Company ("Common Stock"). Capitalized terms used herein and otherwise not defined have the meaning ascribed to them in the Plan. 2. GRANT OF OPTION. The Company hereby grants to Optionee an option to purchase up to an aggregate of 1,000 Shares of Common Stock of the Company (the "Option Shares"), in accordance with the vesting schedule set forth in Section 3 hereof (the "Option"); provided however, that the Option is subject to the terms of the Plan and the Stock Transfer Restriction Agreement for Exercise of Stock Option attached hereto as Exhibit B ("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 an Incentive Stock Option. 3. VESTING OF SHARES. The option to purchase shares of Common Stock shall cumulatively vest and be exercisable for 334 shares of Common Stock on May 25, 2001, 333 shares of Common Stock on May 25, 2002 and 333 shares of Common Stock on May 25, 2003; provided, however, that the unvested portions of the Options shall vest and be exercisable immediately prior to any of the following transactions: (i) the closing of the Company's sale of all or substantially all of its assets or (ii) the acquisition of the Company by another entity by means of a merger or consolidation resulting in the exchange of the outstanding shares of Company's capital stock for securities or consideration issued or caused to be issued by the acquiring entity or its subsidiary or (iii) the acquisition from one or more of the shareholders of the Company of more than fifty percent (50%) of the Common Stock by a single person or group of persons acting together (collectively, a "Change in Control Transaction"); provided further, however, that if the Change in Control Transaction is with any person who is a holder of Common Stock on the date hereof, or an entity under the control of such person through stock ownership or otherwise, the unvested portion of the options shall not vest and the options shall remain in effect to vest in accordance with the vesting schedule set forth in this Section 3. 4. EXERCISE OF OPTION (a) An Option shall be deemed to be exercised when the 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) 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 shareholder 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 of the stock certificate is issued, except as provided in Section 12 of the Plan. (c) Exercise of an Option in any manner shall result in a decrease in the number of Option Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Option Shares as to which the Option is exercised. 5. EXERCISE PRICE AND CONSIDERATION. (a) EXERCISE PRICE. The per Share exercise price for the Option Shares to be issued pursuant to exercise of an Option shall be two and one-eighth dollars ($2.125), 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 an Option, including the method of payment, shall be determined by the Board of Directors and may consist entirely of cash, check, other shares of Common Stock having a fair market value on the date of surrender equal to the aggregate exercise price of the Option Shares as to which said option shall be exercised, or any combination of such methods of payment, or such other consideration and method of payment for the issuance of Option Shares to the extent permitted under the laws of the state of incorporation of the Company. In making its determination as to the type of consideration to accept, the Board of Directors shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. (c) FAIR MARKET VALUE. The fair market value of 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 National Association of Securities Dealers Automated Quotation ("NASDAQ") National Market System) of the Common Stock for the date of grant, as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by the NASDAQ System) or, 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 grant of the Option, as reported in The Wall Street Journal. 6. TERM OF OPTION. (a) GENERAL RULE. Except as provided in Section 6(b) and Section 6(c) hereof and in Section 10 and Section 12 of the Plan, the term of each Option granted pursuant to Section 2 hereof shall be ten (10) years from the date hereof. (b) EMPLOYMENT OF OPTIONEE TERMINATED. Notwithstanding anything provided to the contrary in the Plan, if Optionee's employment with the Company or any Subsidiary is terminated by the Company or any Subsidiary (i) for fraud or dishonesty of Optionee in connection with fulfillment of his duties and responsibilities as an employee of the Company or any Subsidiary, including without limitation, embezzlement of Company or Subsidiary funds; or (ii) because employee is charged with a felony under any applicable criminal code or statute, or (iii) if Optionee quits the employment of the Company or any Subsidiary, then all unexercised Options, whether vested or unvested, shall terminate immediately upon such termination of employment. If Optionee's employment with the Company or any subsidiary is terminated for a reason other than those described in the preceding sentence the unvested portion of the Option shall terminate immediately and the entire portion of the Option which was vested prior to termination of Employee's employment, to the extent that it was exercisable for sixty (60) days following Employee's termination date. To the extent that the Option was not exercisable on the Employee's termination date, or if the Option is not exercised (to the extent it was entitled to be exercised), within the 60 day period, the Option shall terminate. (c) BREACH OF NON-DISCLOSURE COVENANT NOT TO COMPETE. Notwithstanding anything provided to the contrary in the Plan, if Optionee breaches any applicable nondisclosure covenant or covenant not to compete set forth in any employment agreement between Optionee and the Company or a Subsidiary, or otherwise applicable to Optionee under the law of the jurisdiction where Optionee is employed, then all unexercised Options, whether vested or unvested, shall immediately terminate. 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 the Optionee, only by the Optionee. 8. CONDITIONS UPON ISSUANCE OF OPTION SHARES. (a) 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) 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) 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) All Option Shares issued pursuant to the exercise of the Option shall be subject to the terms and provisions of the Stock Restriction Agreement, an example of which is attached hereto as Exhibit B. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. OPTIONEE --------------------------------------- Name: Michael Morgan AIRPORT SYSTEMS INTERNATIONAL, INC. a Kansas corporation By: --------------------------------------- Keith S. Cowan, President Exhibits A. Restated 1991 Stock Option Plan B. Stock Transfer Restriction Agreement EX-10.TT 16 0016.txt INCENTIVE STOCK OPTION AGREEMENT FOR OPTIONEE OF RESTATED 1991 STOCK OPTION PLAN This Agreement is made as of the 25th day of May, 2000, between AIRPORT SYSTEMS INTERNATIONAL, INC., a Kansas corporation (the "Company"), and KEITH S. COWAN, an employee to the Company or any Subsidiary ("Optionee"). 1. BACKGROUND. In order to attract and retain the best available personnel for positions of substantial responsibility in the Company or any Subsidiary and to promote the success of the Company's business, the Company has adopted the Restated 1991 Stock Option Plan (the "Plan"), a copy of which is attached hereto as Exhibit A. Pursuant to the Plan certain Employees and Consultants of the Company or any Subsidiary may be designated by the Board of Directors of the Company to receive an option to purchase shares of Common Stock of the Company ("Common Stock"). Capitalized terms used herein and otherwise not defined have the meaning ascribed to them in the Plan. 2. GRANT OF OPTION. The Company hereby grants to Optionee an option to purchase up to an aggregate of 4,000 Shares of Common Stock of the Company (the "Option Shares"), in accordance with the vesting schedule set forth in Section 3 hereof (the "Option"); provided however, that the Option is subject to the terms of the Plan and the Stock Transfer Restriction Agreement for Exercise of Stock Option attached hereto as Exhibit B ("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 an Incentive Stock Option. 3. VESTING OF SHARES. The option to purchase shares of Common Stock shall cumulatively vest and be exercisable for 1,334 shares of Common Stock on May 25, 2001, 1,333 shares of Common Stock on May 25, 2002 and 1,333 shares of Common Stock on May 25, 2003; provided, however, that the unvested portions of the Options shall vest and be exercisable immediately prior to any of the following transactions: (i) the closing of the Company's sale of all or substantially all of its assets or (ii) the acquisition of the Company by another entity by means of a merger or consolidation resulting in the exchange of the outstanding shares of Company's capital stock for securities or consideration issued or caused to be issued by the acquiring entity or its subsidiary or (iii) the acquisition from one or more of the shareholders of the Company of more than fifty percent (50%) of the Common Stock by a single person or group of persons acting together (collectively, a "Change in Control Transaction"); provided further, however, that if the Change in Control Transaction is with any person who is a holder of Common Stock on the date hereof, or an entity under the control of such person through stock ownership or otherwise, the unvested portion of the options shall not vest and the options shall remain in effect to vest in accordance with the vesting schedule set forth in this Section 3. 4. EXERCISE OF OPTION (a) An Option shall be deemed to be exercised when the 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) 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 shareholder 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 of the stock certificate is issued, except as provided in Section 12 of the Plan. (c) Exercise of an Option in any manner shall result in a decrease in the number of Option Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Option Shares as to which the Option is exercised. 5. EXERCISE PRICE AND CONSIDERATION. (a) EXERCISE PRICE. The per Share exercise price for the Option Shares to be issued pursuant to exercise of an Option shall be two and one-eighth dollars ($2.125), 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 an Option, including the method of payment, shall be determined by the Board of Directors and may consist entirely of cash, check, other shares of Common Stock having a fair market value on the date of surrender equal to the aggregate exercise price of the Option Shares as to which said option shall be exercised, or any combination of such methods of payment, or such other consideration and method of payment for the issuance of Option Shares to the extent permitted under the laws of the state of incorporation of the Company. In making its determination as to the type of consideration to accept, the Board of Directors shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. (c) FAIR MARKET VALUE. The fair market value of 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 National Association of Securities Dealers Automated Quotation ("NASDAQ") National Market System) of the Common Stock for the date of grant, as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by the NASDAQ System) or, 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 grant of the Option, as reported in The Wall Street Journal. 6. TERM OF OPTION. (a) GENERAL RULE. Except as provided in Section 6(b) and Section 6(c) hereof and in Section 10 and Section 12 of the Plan, the term of each Option granted pursuant to Section 2 hereof shall be ten (10) years from the date hereof. (b) EMPLOYMENT OF OPTIONEE TERMINATED. Notwithstanding anything provided to the contrary in the Plan, if Optionee's employment with the Company or any Subsidiary is terminated by the Company or any Subsidiary (i) for fraud or dishonesty of Optionee in connection with fulfillment of his duties and responsibilities as an employee of the Company or any Subsidiary, including without limitation, embezzlement of Company or Subsidiary funds; or (ii) because employee is charged with a felony under any applicable criminal code or statute, or (iii) if Optionee quits the employment of the Company or any Subsidiary, then all unexercised Options, whether vested or unvested, shall terminate immediately upon such termination of employment. If Optionee's employment with the Company or any subsidiary is terminated for a reason other than those described in the preceding sentence the unvested portion of the Option shall terminate immediately and the entire portion of the Option which was vested prior to termination of Employee's employment, to the extent that it was exercisable for sixty (60) days following Employee's termination date. To the extent that the Option was not exercisable on the Employee's termination date, or if the Option is not exercised (to the extent it was entitled to be exercised), within the 60 day period, the Option shall terminate. (c) BREACH OF NON-DISCLOSURE COVENANT NOT TO COMPETE. Notwithstanding anything provided to the contrary in the Plan, if Optionee breaches any applicable nondisclosure covenant or covenant not to compete set forth in any employment agreement between Optionee and the Company or a Subsidiary, or otherwise applicable to Optionee under the law of the jurisdiction where Optionee is employed, then all unexercised Options, whether vested or unvested, shall immediately terminate. 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 the Optionee, only by the Optionee. 8. CONDITIONS UPON ISSUANCE OF OPTION SHARES. (a) 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) 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) 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) All Option Shares issued pursuant to the exercise of the Option shall be subject to the terms and provisions of the Stock Restriction Agreement, an example of which is attached hereto as Exhibit B. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. OPTIONEE -------------------------------------- Name: Keith S. Cowan AIRPORT SYSTEMS INTERNATIONAL, INC. a Kansas corporation By: --------------------------------------- Thomas C. Cargin, Chief Financial Officer Exhibits A. Restated 1991 Stock Option Plan B. Stock Transfer Restriction Agreement EX-10.UU 17 0017.txt INCENTIVE STOCK OPTION AGREEMENT FOR OPTIONEE OF RESTATED 1991 STOCK OPTION PLAN This Agreement is made as of the 2nd day of October, 2000, between AIRPORT SYSTEMS INTERNATIONAL, INC., a Kansas corporation (the "Company"), and Kenneth M. Pierson and Joan B. Pierson, Trustees under the Kenneth M. Pierson and Joan B. Pierson Revocable Trust dated July 15, 1999; Kenneth M. Pierson an employee to the Company or any Subsidiary ("Optionee"). 1. BACKGROUND. In order to attract and retain the best available personnel for positions of substantial responsibility in the Company or any Subsidiary and to promote the success of the Company's business, the Company has adopted the Restated 1991 Stock Option Plan (the "Plan"), a copy of which is attached hereto as Exhibit A. Pursuant to the Plan certain Employees and Consultants of the Company or any Subsidiary may be designated by the Board of Directors of the Company to receive an option to purchase shares of Common Stock of the Company ("Common Stock"). Capitalized terms used herein and otherwise not defined have the meaning ascribed to them in the Plan. 2. GRANT OF OPTION. The Company hereby grants to Optionee an option to purchase up to an aggregate of 15,000 Shares of Common Stock of the Company (the "Option Shares"), in accordance with the vesting schedule set forth in Section 3 hereof (the "Option"); provided however, that the Option is subject to the terms of the Plan and the Stock Transfer Restriction Agreement for Exercise of Stock Option attached hereto as Exhibit B ("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 an Incentive Stock Option. 3. VESTING OF SHARES. The option to purchase shares of Common Stock shall cumulatively vest and be exercisable for 5,000 shares of Common Stock on October 2, 2001, 5,000 shares of Common Stock on October 2, 2002 and 5,000 shares of Common Stock on October 2, 2003; provided, however, that the unvested portions of the Options shall vest and be exercisable immediately prior to any of the following transactions: (i) the closing of the Company's sale of all or substantially all of its assets or (ii) the acquisition of the Company by another entity by means of a merger or consolidation resulting in the exchange of the outstanding shares of Company's capital stock for securities or consideration issued or caused to be issued by the acquiring entity or its subsidiary or (iii) the acquisition from one or more of the shareholders of the Company of more than fifty percent (50%) of the Common Stock by a single person or group of persons acting together (collectively, a "Change in Control Transaction"); provided further, however, that if the Change in Control Transaction is with any person who is a holder of Common Stock on the date hereof, or an entity under the control of such person through stock ownership or otherwise, the unvested portion of the options shall not vest and the options shall remain in effect to vest in accordance with the vesting schedule set forth in this Section 3. 4. EXERCISE OF OPTION (a) An Option shall be deemed to be exercised when the 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) 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 shareholder 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 of the stock certificate is issued, except as provided in Section 12 of the Plan. (c) Exercise of an Option in any manner shall result in a decrease in the number of Option Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Option Shares as to which the Option is exercised. 5. EXERCISE PRICE AND CONSIDERATION. (a) EXERCISE PRICE. The per Share exercise price for the Option Shares to be issued pursuant to exercise of an Option shall be $2.00, which is equal to the closing price per share of the Common Stock on the date hereof as listed on the American Stock Exchange 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 an Option, including the method of payment, shall be determined by the Board of Directors and may consist entirely of cash, check, other shares of Common Stock having a fair market value on the date of surrender equal to the aggregate exercise price of the Option Shares as to which said option shall be exercised, or any combination of such methods of payment, or such other consideration and method of payment for the issuance of Option Shares to the extent permitted under the laws of the state of incorporation of the Company. In making its determination as to the type of consideration to accept, the Board of Directors shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. (c) FAIR MARKET VALUE. The fair market value of 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 American Stock Exchange) of the Common Stock for the date of grant, as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by the American Stock Exchange) 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 grant of the Option, as reported in The Wall Street Journal. 6. TERM OF OPTION. (a) GENERAL RULE. Except as provided in Section 6(b) and Section 6(c) hereof and in Section 10 and Section 12 of the Plan, the term of each Option granted pursuant to Section 2 hereof shall be ten (10) years from the date hereof. (b) EMPLOYMENT OF OPTIONEE TERMINATED. Notwithstanding anything provided to the contrary in the Plan, if Optionee's employment with the Company or any Subsidiary is terminated by the Company or any Subsidiary (i) for fraud or dishonesty of Optionee in connection with fulfillment of his duties and responsibilities as an employee of the Company or any Subsidiary, including without limitation, embezzlement of Company or Subsidiary funds; or (ii) because employee is charged with a felony under any applicable criminal code or statute, or (iii) if Optionee quits the employment of the Company or any Subsidiary, then all unexercised Options, whether vested or unvested, shall terminate immediately upon such termination of employment. If Optionee's employment with the Company or any subsidiary is terminated for a reason other than those described in the preceding sentence the unvested portion of the Option shall terminate immediately and the entire portion of the Option which was vested prior to termination of Employee's employment, to the extent that it was exercisable for sixty (60) days following Employee's termination date. To the extent that the Option was not exercisable on the Employee's termination date, or if the Option is not exercised (to the extent it was entitled to be exercised), within the 60 day period, the Option shall terminate. (c) BREACH OF NON-DISCLOSURE COVENANT NOT TO COMPETE. Notwithstanding anything provided to the contrary in the Plan, if Optionee breaches any applicable nondisclosure covenant or covenant not to compete set forth in any employment agreement between Optionee and the Company or a Subsidiary, or otherwise applicable to Optionee under the law of the jurisdiction where Optionee is employed, then all unexercised Options, whether vested or unvested, shall immediately terminate. 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 the Optionee, only by the Optionee. 8. CONDITIONS UPON ISSUANCE OF OPTION SHARES. (a) 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) 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) 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) All Option Shares issued pursuant to the exercise of the Option shall be subject to the terms and provisions of the Stock Restriction Agreement, an example of which is attached hereto as Exhibit B. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. OPTIONEE -------------------------------------- Name: Kenneth M. Pierson AIRPORT SYSTEMS INTERNATIONAL, INC. a Kansas corporation By: --------------------------------------- Keith S. Cowan, President Exhibits A. Restated 1991 Stock Option Plan B. Stock Transfer Restriction Agreement EX-10.VV 18 0018.txt INCENTIVE STOCK OPTION AGREEMENT FOR OPTIONEE OF RESTATED 1991 STOCK OPTION PLAN This Agreement is made as of the 21st day of February, 2001, between ELECSYS CORPORATION., a Kansas corporation (the "Company"), and Kyle Reinoehl, an employee to the Company or any Subsidiary ("Optionee"). 1. BACKGROUND. In order to attract and retain the best available personnel for positions of substantial responsibility in the Company or any Subsidiary and to promote the success of the Company's business, the Company has adopted the Restated 1991 Stock Option Plan (the "Plan"), a copy of which is attached hereto as Exhibit A. Pursuant to the Plan certain Employees and Consultants of the Company or any Subsidiary may be designated by the Board of Directors of the Company to receive an option to purchase shares of Common Stock of the Company ("Common Stock"). Capitalized terms used herein and otherwise not defined have the meaning ascribed to them in the Plan. 2. GRANT OF OPTION. The Company hereby grants to Optionee an option to purchase up to an aggregate of 15,000 Shares of Common Stock of the Company (the "Option Shares"), in accordance with the vesting schedule set forth in Section 3 hereof (the "Option"); provided however, that the Option is subject to the terms of the Plan and the Stock Transfer Restriction Agreement for Exercise of Stock Option attached hereto as Exhibit B ("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 an Incentive Stock Option. 3. VESTING OF SHARES. The option to purchase shares of Common Stock shall cumulatively vest and be exercisable for 5,000 shares of Common Stock on February 21, 2002, 5,000 shares of Common Stock on February 21, 2003 and 5,000 shares of Common Stock on February 21, 2004; provided, however, that the unvested portions of the Options shall vest and be exercisable immediately prior to any of the following transactions: (i) the closing of the Company's sale of all or substantially all of its assets or (ii) the acquisition of the Company by another entity by means of a merger or consolidation resulting in the exchange of the outstanding shares of Company's capital stock for securities or consideration issued or caused to be issued by the acquiring entity or its subsidiary or (iii) the acquisition from one or more of the shareholders of the Company of more than fifty percent (50%) of the Common Stock by a single person or group of persons acting together (collectively, a "Change in Control Transaction"); provided further, however, that if the Change in Control Transaction is with any person who is a holder of Common Stock on the date hereof, or an entity under the control of such person through stock ownership or otherwise, the unvested portion of the options shall not vest and the options shall remain in effect to vest in accordance with the vesting schedule set forth in this Section 3. 4. EXERCISE OF OPTION (a) An Option shall be deemed to be exercised when the 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) 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 shareholder 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 of the stock certificate is issued, except as provided in Section 12 of the Plan. (c) Exercise of an Option in any manner shall result in a decrease in the number of Option Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Option Shares as to which the Option is exercised. 5. EXERCISE PRICE AND CONSIDERATION. (a) EXERCISE PRICE. The per Share exercise price for the Option Shares to be issued pursuant to exercise of an Option shall be $1.50, which is equal to the closing price per share of the Common Stock on the date hereof as listed on the American Stock Exchange 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 an Option, including the method of payment, shall be determined by the Board of Directors and may consist entirely of cash, check, other shares of Common Stock having a fair market value on the date of surrender equal to the aggregate exercise price of the Option Shares as to which said option shall be exercised, or any combination of such methods of payment, or such other consideration and method of payment for the issuance of Option Shares to the extent permitted under the laws of the state of incorporation of the Company. In making its determination as to the type of consideration to accept, the Board of Directors shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. (c) FAIR MARKET VALUE. The fair market value of 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 American Stock Exchange) of the Common Stock for the date of grant, as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by the American Stock Exchange) 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 grant of the Option, as reported in The Wall Street Journal. 6. TERM OF OPTION. (a) GENERAL RULE. Except as provided in Section 6(b) and Section 6(c) hereof and in Section 10 and Section 12 of the Plan, the term of each Option granted pursuant to Section 2 hereof shall be ten (10) years from the date hereof. (b) EMPLOYMENT OF OPTIONEE TERMINATED. Notwithstanding anything provided to the contrary in the Plan, if Optionee's employment with the Company or any Subsidiary is terminated by the Company or any Subsidiary (i) for fraud or dishonesty of Optionee in connection with fulfillment of his duties and responsibilities as an employee of the Company or any Subsidiary, including without limitation, embezzlement of Company or Subsidiary funds; or (ii) because employee is charged with a felony under any applicable criminal code or statute, or (iii) if Optionee quits the employment of the Company or any Subsidiary, then all unexercised Options, whether vested or unvested, shall terminate immediately upon such termination of employment. If Optionee's employment with the Company or any subsidiary is terminated for a reason other than those described in the preceding sentence the unvested portion of the Option shall terminate immediately and the entire portion of the Option which was vested prior to termination of Employee's employment, to the extent that it was exercisable for sixty (60) days following Employee's termination date. To the extent that the Option was not exercisable on the Employee's termination date, or if the Option is not exercised (to the extent it was entitled to be exercised), within the 60 day period, the Option shall terminate. (c) BREACH OF NON-DISCLOSURE COVENANT NOT TO COMPETE. Notwithstanding anything provided to the contrary in the Plan, if Optionee breaches any applicable nondisclosure covenant or covenant not to compete set forth in any employment agreement between Optionee and the Company or a Subsidiary, or otherwise applicable to Optionee under the law of the jurisdiction where Optionee is employed, then all unexercised Options, whether vested or unvested, shall immediately terminate. 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 the Optionee, only by the Optionee. 8. CONDITIONS UPON ISSUANCE OF OPTION SHARES. (a) 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) 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) 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) All Option Shares issued pursuant to the exercise of the Option shall be subject to the terms and provisions of the Stock Restriction Agreement, an example of which is attached hereto as Exhibit B. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. OPTIONEE -------------------------------------- Name: ELECSYS CORPORATION a Kansas corporation By: --------------------------------------- Keith S. Cowan, President Exhibits A. Restated 1991 Stock Option Plan B. Stock Transfer Restriction Agreement -----END PRIVACY-ENHANCED MESSAGE-----