-----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, WkKgt/Zl9QV4Pjro+gEP1+k6zodgWW2fzzkVZF2rrV15n5UQiCZI4ko4C9ciC6FL I5V3p1a2ivYG9ukH378nnQ== 0000898431-96-000106.txt : 19960814 0000898431-96-000106.hdr.sgml : 19960814 ACCESSION NUMBER: 0000898431-96-000106 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN LOCKER GROUP INC CENTRAL INDEX KEY: 0000008855 STANDARD INDUSTRIAL CLASSIFICATION: PARTITIONS, SHELVING, LOCKERS & OFFICE AND STORE FIXTURES [2540] IRS NUMBER: 160338330 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-00439 FILM NUMBER: 96609658 BUSINESS ADDRESS: STREET 1: 15 W SECOND ST CITY: JAMESTOWN STATE: NY ZIP: 14701 BUSINESS PHONE: 7166649600 MAIL ADDRESS: STREET 1: 15 WEST SECOND STREET CITY: JAMESTOWN STATE: NY ZIP: 14701 FORMER COMPANY: FORMER CONFORMED NAME: AVM CORP DATE OF NAME CHANGE: 19850520 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark one) (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996 OR ( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT FOR THE TRANSITION PERIOD FROM TO Commission file number: 0-439 --------------------------------------- American Locker Group Incorporated ---------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Delaware 16-0338330 ------------------------------- ------------------------- (State of other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 15 West Second Street, Jamestown, NY 14701 ----------------------------------------------------------------- (Address of principal executive offices) (716) 664-9600 ----------------------------------------------------------------- (Registrant's telephone number, including area code) ----------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 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. Yes X No ___ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ___ No ___ Not Applicable - 1 - APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares outstanding of each of the issuer's class of common stock equity as of the latest practicable date: August 6, 1996 Common Stock $1.00 par value - 804,067 Transitional Small Business Disclosure (check one) Yes ___ No X - 2 - PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES June 30, December 31, 1996 1995 -------- ------------ ASSETS CURRENT ASSETS Cash and cash equivalents $1,167,928 $1,080,487 Accounts receivable, less allowance for doubtful accounts (1996 $130,665; 1995 $79,020) 3,780,654 3,631,234 Inventories 2,925,086 2,775,615 Notes receivable 165,583 191,884 Prepaid expenses 214,668 143,978 Deferred income taxes 536,346 536,319 ---------- ---------- TOTAL CURRENT ASSETS 8,790,265 8,359,517 PROPERTY, PLANT AND EQUIPMENT Land 500 500 Buildings 495,289 496,196 Machinery and equipment 7,590,364 7,581,513 ---------- ---------- 8,086,153 8,078,209 Less allowances for depreciation and amortization 6,541,170 6,331,541 ---------- ---------- 1,544,983 1,746,668 ---------- ---------- TOTAL NON-CURRENT ASSETS 1,544,983 1,746,668 ---------- ---------- TOTAL ASSETS $10,335,248 $10,106,185 =========== =========== - 3 - STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES June 30, December 31, 1996 1995 -------- ------------ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Demand note payable $ 2,000,000 $ 1,400,000 Accounts payable and accrued expenses: Trade 576,240 965,432 Related party 209,074 377,214 ----------- ----------- 785,314 1,342,646 Commissions, salaries, wages and taxes thereon 174,553 348,549 Other accrued expenses 530,500 376,643 Federal and State income taxes payable 0 832,458 Current portion of long-term obligations 600,000 600,000 ----------- ----------- TOTAL CURRENT LIABILITIES 4,090,367 4,900,296 DEFERRED INCOME TAXES 83,635 83,609 LONG-TERM OBLIGATIONS Long term debt, less current portion 1,000,000 300,000 Deferred pension income 232,584 232,584 Postretirement benefits 125,630 125,630 ----------- ----------- 1,358,214 658,214 ----------- ----------- TOTAL NON-CURRENT LIABILITIES 1,441,849 741,823 ----------- ----------- TOTAL LIABILITIES 5,532,216 5,642,119 STOCKHOLDERS' EQUITY Common stock, par value $1 per share-- authorized 4,000,000 shares, issued 804,184 shares in 1996 and 818,625 in 1995 804,184 818,625 Other capital 1,080,102 1,258,805 Retained earnings 3,028,918 2,500,351 Foreign currency translation adjustment (110,172) (113,715) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 4,803,032 4,464,066 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,335,248 $10,106,185 =========== =========== See notes to consolidated financial statements. - 4 - STATEMENT OF CONSOLIDATED OPERATIONS AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES Three Months Ended June 30, 1996 1995 ------------ ------------ Net Sales $5,961,890 $5,273,245 Cost of products sold 4,039,302 3,574,124 ---------- ---------- 1,922,588 1,699,121 Selling, administrative and general expenses 1,357,325 1,329,169 ---------- ---------- 565,263 369,952 Interest and dividend income 11,191 9,619 Other income - net 41,230 64,274 Interest expense (64,724) (43,174) ---------- ---------- PROFIT BEFORE INCOME TAXES 552,960 400,671 Income taxes 217,005 157,905 ---------- ---------- NET PROFIT $335,955 $242,766 ========== ========== Per share of common stock: NET PROFIT $0.41 $0.28 ========== ========== See notes to consolidated financial statements. - 5 - STATEMENTS OF CONSOLIDATED OPERATIONS AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES Six Months Ended June 30, 1996 1995 ------------ ------------ Net sales $10,908,010 $12,353,329 Cost of products sold 7,538,010 8,276,444 ----------- ----------- 3,370,000 4,076,885 Selling, administrative and general expenses 2,507,368 2,526,867 ----------- ----------- 862,632 1,550,018 Interest and dividend income 18,551 26,752 Other income -- net 105,743 141,913 Interest expense (104,967) (102,846) ----------- ----------- PROFIT BEFORE INCOME TAXES 881,959 1,615,837 ----------- ----------- Income taxes 353,392 706,306 ----------- ----------- NET PROFIT $528,567 $909,531 =========== =========== NET PROFIT PER SHARE OF COMMON $0.65 $1.06 =========== =========== See notes to consolidated financial statements. - 6 - STATEMENTS OF CONSOLIDATED CASH FLOWS AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES Six Months Ended June 30, 1996 1995 ------------ ------------ Cash flows from operating activities: Net income from operations $ 528,567 $ 909,531 Adjustments to reconcile net income from operations to net cash (used in) provided by operating activities: Depreciation and amortization 315,363 173,154 Gain on disposition of property, plant and equipment (5,558) (23,767) Change in assets and liabilities: Notes receivable 26,301 (197,188) Account receivable (149,420) 1,058,354 Income taxes (832,458) 0 Inventories (149,471) (673,168) Prepaid expenses (70,690) (242,273) Accounts payable and accrued expenses (577,445) 505,104 ---------- ---------- NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (914,811) 1,509,747 Cash flows from investment activities: Purchase of property, plant and equipment (117,995) (98,377) Proceeds from sale of property, plant and equipment 9,848 24,397 ---------- ---------- NET CASH USED IN INVESTING ACTIVITIES (108,147) (73,980) Cash flows from financing activities: Net borrowing (repayment) under line of credit 600,000 (1,000,000) Additional long-term borrowings 1,000,000 0 Long-term debt repayments (300,000) (300,000) Treasury stock purchased/retired (193,144) (50,250) ---------- ---------- - 7 - NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,106,856 (1,350,250) ---------- ---------- Effect of exchange rate changes on cash 3,543 19,501 ---------- ---------- Net increase in cash 87,441 105,018 Cash and cash equivalents at beginning of year 1,080,487 315,684 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,167,928 $420,702 ========== ========== Supplemental cash flow information: Cash paid during the six-month period for interest $104,967 $102,846 ========== ========== Income Taxes $1,208,296 $ 50,000 ========== ========== See notes to consolidated financial statements. - 8 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES 1. The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with instructions to Form 10-QSB and, in the opinion of the Company, include all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of such condensed financial statements. The condensed financial statements do not include all information and footnotes normally associated with statements of financial condition, results of operations, and cash flows prepared in conformity with generally accepted accounting principles. 2. Provision for income taxes is based upon the estimated annual effective tax rate. 3. Net income per common share is computed by dividing net income by the weighted average number of shares outstanding, plus, when dilutive, the common stock equivalents which would arise from the exercise of stock options, during the periods; 812,043 shares for the six months ended June 30, 1996 and 805,461 shares for the quarter ended June 30, 1996, 858,411 for the six months ended June 30, 1995 and 857,962 for the quarter ended June 30, 1995. 4. Inventories are valued at the lower of cost or market. Cost is determined by using the last-in, first-out method for substantially all of the inventories. June 30, December 31, 1996 1995 ---- ---- Raw materials $1,502,928 $1,240,253 Work-in-process 1,424,813 1,414,994 Finished goods 1,272,035 1,395,058 ---------- ---------- $4,199,776 $4,050,305 Less allowance to reduce carrying value for LIFO basis 1,274,690 1,274,690 ---------- ---------- $2,925,086 $2,775,615 ---------- ---------- - 9 - ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES LIQUIDITY AND SOURCES OF CAPITAL The Company continues to have adequate resources and liquidity to maintain and expand its operations. Working capital at June 30, 1996 was $4,700,000, up $1,241,000 over working capital of $3,459,000 at December 31, 1995. The ratio of current assets to current liabilities was 2.2 to 1 at June 30, 1996, as compared to a ratio of 2.0 to 1 at December 1995. The increased working capital resulted primarily from profitable operations during the first six months of 1996 and increased long term debt borrowings used to build inventory and pay income tax liabilities. Cash used in operations was $915,000 during the first six months of 1996, compared to cash provided by operating activities of $1,510,000 for the same period in 1995. Cash used to reduce accounts payable and fund increased receivables was provided by additional borrowings under a line of credit. The Company's $3,000,000 line of credit is available to assist in satisfying future working capital needs, as required. The Company anticipates that its requirements for funds for operations and capital expenditures will be provided principally from cash generated from future operations. FIRST SIX MONTHS 1996 VS FIRST SIX MONTHS 1995 Sales for the first six months of 1996 of $10,908,000 were down $1,445,000 (12%) compared to sales of $12,353,000 during the same period in 1995. Plastic locker sales for the first half of 1996 were $5,542,000 compared to $7,184,000 during the first half of 1995. The decrease in plastic locker sales relates to the large initial release of CBUs to all USPS Ordering Districts which was completed in the first quarter of 1995. During the first half of 1996, the Company's delivery of CBU units totaled $3,693,000 compared to $5,030,000 in the first half of 1995. Sales of plastic locker products are expected to increase throughout 1996 as the Company begins to ship all three model CBU units under the USPS contract. All other sales, metal and electronic, were $5,366,000 for the first six months of 1996 compared to $5,169,000 for the first six months of 1995. This increase relates to a general increase in demand across all markets served by the Company. Consolidated costs of goods sold as a percentage of sales was 69% during the first six months of 1996 compared to 67% in the first - 10 - six months of 1995. The increased percentage is the result of reduced sales volume. Selling, administrative and general expense for the first half of 1996 decreased slightly, $20,000, over the same period in 1995. Selling, administrative and general expenses as a percent of sales was 23.0% during the first six months of 1996, up from 20.5% during the first six months of 1995. Other income--net of $106,000 in the first half of 1996 was down $36,000 from the same period in 1995. The decrease in 1996 is due principally to discounts earned from the purchase of materials for the CBU product and income earned on the sale of fixed assets in 1995. Interest expense in the first half of 1996 increased by $2,000 from the same period in 1995 due to an increase in the average balance outstanding under the Company's working capital line of credit. Increased borrowings are required to support the increased volume with USPS. SECOND QUARTER 1996 VS SECOND QUARTER 1995 Second quarter sales were $5,962,000 up $689,000 from the same period in 1995. Plastic sales of $2,982,000 were up 13% or $339,000 over 1995's second quarter. Sales of other products, metal and electronic lockers, were $2,980,000 during the second quarter of 1996 up 13% from 1995 second quarter sales of $2,630,000. Consolidated cost of products sold as a percentage of sales was 67.8% during the second quarter of 1996 and the second quarter of 1995. Selling, administrative and general expenses as a percent of net sales was 23% during the second quarter of 1996 compared to 25% in the second quarter of 1995. Other income--net of $41,000 in the second quarter of 1996 was down $23,000 from the second quarter of 1995, due principally to discounts earned from the purchase of materials for the CBU product and income earned from the sale of fixed assets in 1995. - 11 - PART II Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 10 Material Contracts Exhibit 27 Financial Data Schedule dated June 30, 1996. (b) The Company did not file any reports on Form 8-K during the three months ended June 30, 1996. - 12 - SIGNATURE In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERICAN LOCKER GROUP INCORPORATED (Registrant) /s/ Harold J. Ruttenberg --------------------------- Harold J. Ruttenberg Chairman, Chief Executive Officer, Treasurer and Principal Accounting Officer Date August 13, 1996 - 13 - EXHIBIT INDEX Prior Filing Or Sequential Page Exhibit No. No. Herein ----------- --------------- 10.1 Employment Agreement dated as of May 21, 1996 between American Locker Group Incorporated and Roy J. Glosser 10.2 Agreement dated as of May 21, 1996 between American Locker Group Incorporated and Edward F. Ruttenberg 10.3 Third Amendment to Manufacturing Agreement dated as of May 21, 1996 between American Locker Security Systems, Inc. and Signore, Inc. 27.1 Financial Data Schedule - 14 - EX-10.1 2 EMPLOYMENT AGREEMENT THIS AGREEMENT, made as of the 21st day of May, 1996, by and between AMERICAN LOCKER GROUP INCORPORATED, a Delaware corporation (the "Company"), and ROY J. GLOSSER, an individual residing in Jamestown, New York (the "Executive"), WITNESSETH: WHEREAS, the Company wishes to assure itself of the services of the Executive for the period provided in this Agreement, and the Executive is willing to serve in the employ of the Company on a full-time basis for such period upon the terms and conditions set forth below; WHEREAS, the Executive's association with the Company has given and will continue to give him access to and familiarity with confidential information concerning the Company, including, but not limited to, operating and business methods and developments and customer information and relationships; and WHEREAS, the Company would be irreparably injured if the Executive were to disclose any of the confidential information concerning the Company which the Executive has or may acquire. NOW, THEREFORE, in consideration of the premises and all the terms and conditions contained herein, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Employment and Duties. --------------------- (a) The Company hereby agrees to and hereby does employ the Executive for the term of this Agreement to render services to the Company and in connection therewith to perform such duties as the Executive may reasonably be directed to perform from time to time by the Board of Directors of the Company (the "Board"). During the period of his employment hereunder, the Executive shall devote all his business time, attention, skill, and efforts to the faithful performance of his duties hereunder and shall use his best endeavors diligently to promote the business and welfare of the Company. (b) The Executive hereby accepts such employment and agrees faithfully to perform to the best of his ability the duties described above. 2. Term. The Company hereby agrees to employ the Executive in the capacities and upon the terms and conditions set forth herein for a period commencing on May 21, 1996 at 12:00 noon Eastern Daylight Time and terminating on June 30, 1999 (the "Employment Period"), unless sooner terminated pursuant to Section 6 hereof. 3. Compensation. In consideration of the Executive's agreements contained herein and as compensation to the Executive for the performance of the services required hereunder, during the Employment Period the Company shall pay or grant to the Executive the following salary and other compensation and benefits: (a) a base salary, payable semi-monthly, of not less than $8,334 per month, as determined from time to time by the Board or an appropriate committee thereof; provided, however, that the Executive's base salary shall be periodically reviewed by the Board and may be increased if the Board determines that an increase is appropriate on the basis of the types of actions it generally takes into account in increasing the salaries of the executive officers of the Company; and (b) such other and additional benefits, including any long term incentive plans, as may from time to time be applicable to the Executive, which shall be relatively commensurate to benefits accorded other executives of the Company. The Executive shall also be entitled during the Employment Period to participate in any pension, life insurance, accidental death benefit, medical and hospital insurance plans and programs of the Company in existence for the benefit of its employees generally and for which he qualifies, and such other employee benefit plans and programs which the Company provides to its employees generally in accordance with the practices of the Company as such practices are in effect from time to time. 4. Renewal of Employment. --------------------- (a) Upon termination of the Employment Period, the Company may elect, with the approval of the Executive, to extend Executive's employment hereunder on a year-to-year basis, (each such one year extension being referred to as a "Renewal Term" and the time period of all Renewal Terms being referred to as the "Extended Employment Period"). If the Company elects not to extend Executive's employment hereunder at the end of the Employment Period or any Renewal Period, the Company agrees to continue to pay to the Executive the salary and benefits called for hereunder for a period ending on the sooner of (i) twelve months from the end of the Employment Period or Renewal Term, if applicable, or (ii) acceptance by the Executive of other employment, or (iii) acceptance by the Executive of paid consulting work. 2 (b) All of the terms and conditions of this Agreement shall continue in full force and effect during the Extended Employment Period, if any. 5. Disability. In the event of the permanent disability of Executive as determined for purposes of disability payment under Federal Social Security, the Company shall pay the Executive 100% of his base salary at the rate then in effect for a period of six months from the date of disability and at the rate of 60% thereafter for the balance of the term of this Agreement. Such payments shall be reduced by any payments to which the Executive is entitled under any disability plan then maintained by the Company and by any payments to which the Executive is entitled under the Federal Social Security disability program. 6. Confidentiality. The Executive agrees: --------------- (a) To keep secret all confidential matters of the Company and its affiliates, and not to disclose them to anyone outside the Company or its affiliates, either during or after his employment with the Company, except with the Company's prior written consent or as required by law; and (b) To deliver promptly to the Company on termination of the Employment Period all memoranda, notes, records, reports and other documents (and all copies thereof) with respect to any such confidential matters and other proprietary information which the Executive may then possess or have under his control and not to engage in competition with the Company during the term of this Agreement and for a period of one year thereafter. 7. Noncompetition. -------------- (a) Executive agrees that Executive will not, in the continental United States and during the term of this Agreement and for a period of one year thereafter, by himself or in partnership or as an equity owner or in conjunction with or as a consultant, unpaid adviser, manager or agent of any other person, firm, corporation or other entity, either directly or indirectly, undertake or carry on or be engaged or have any financial or other interest in, or in any other manner, advise or assist any person, firm, corporation or other entity engaged or interested in, selling products or services of the nature sold by the Company. (b) Executive agrees and warrants that the covenants contained herein are reasonable, that valid consideration has been and will be received therefor and that the 3 agreements set forth herein are the result of arms-length negotiations between the parties hereto. Executive acknowledges that in the event of a violation of the covenants contained in this paragraph, the Company's damages will be difficult to ascertain and the Company's remedy at law will be inadequate. Accordingly, Executive agrees that the Company shall be entitled to specific performance of such covenants and to an injunction to prevent any continuing violation thereof. (c) If any of the provisions of or covenants contained in this Section 7 is hereafter construed to be invalid or unenforceable in any jurisdiction, the same shall not affect the remainder of the provisions or the enforceability thereof in any other jurisdiction, which shall be given full effect, without regard to the invalidity or unenforceability in such other jurisdiction. If any of the provisions of or covenants contained in this Section 7 is held to be unenforceable in any jurisdiction because of the duration or geographical scope thereof, the parties agree that the court making such determination shall have the power to reduce the duration or geographical scope of such provision or covenant and, in its reduced form, said provision or covenant shall be enforceable; provided, however, that the determination of such court shall not affect the enforceability of this Section 7 in any other jurisdiction. 8. Termination. Notwithstanding any other provision of this Agreement, the Executive's employment hereunder and his compensation, bonuses and other benefits shall terminate and cease to accrue forthwith upon: (i) his death; or (ii) his disability (which shall be defined as his inability to perform his duties hereunder for an aggregate period of six months or more out of any consecutive twelve month period during the Employment Period); or (iii) by the Company for cause, as hereinafter defined. For purposes of this Agreement, "Cause" shall mean (a) intentional breach of this Agreement, or (b) intentional breach of a fiduciary duty owed to the Company involving personal profit, material, persistent and intentional dereliction, habitual drunkenness, habitual use of unprescribed narcotic drugs, or (c) failure to perform the duties set forth in this Agreement, which failure remains uncured thirty (30) days after written notice thereof from the Board of Directors of the Company, or (d) failure to perform stated duties owed to the Company which causes material harm or damage to the Company, or (e) conviction of Executive of a felony. For purposes of the foregoing, no act, or failure to act shall be considered "intentionally done" or "willfully done" unless done, or omitted to be done, in bad faith and without reasonable belief that such action or omission was in the best interest of the Company. 9. In the event of a Sale of the Company during the term of this Agreement, the Company shall pay to the Executive a special bonus, in addition to all other compensation hereunder, 4 equal to one year's base salary at the rate in effect on the closing of such Sale. Such bonus shall be payable promptly after the consummation of such Sale but shall be disregarded in the computation of benefits under the profit sharing or any other benefit or incentive plan of the Company. For the purposes of this paragraph, a Sale of the Company shall mean any merger or sale of substantially all assets of the Company or the sale or exchange to or with one entity or group acting in concert or more than a majority of the outstanding shares of the Company entitled to vote upon the election of directors. 10. Effect of Prior Agreements. This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement, arrangement or understanding between the Executive and the Company. 11. Consolidation, Merger, or Sale of Assets. Nothing in this Agreement shall preclude the Company from consolidating or merging into or with, or transferring all or substantially all of its assets to, another corporation which assumes this Agreement and all obligations and undertakings of the Company hereunder. Upon such a consolidation, merger, or transfer of assets and assumption, the term "Company" as used herein shall mean such corporation and this Agreement shall continue in full force and effect. 12. General Provisions. ------------------ (a) Nonassignability. Neither this Agreement nor any right or interest hereunder shall be assignable by the Executive, his beneficiaries, or legal representatives without the Company's prior written consent; provided, however, that nothing in this Section 12(a) shall preclude (i) the Executive from designating a beneficiary to receive any benefit payable hereunder upon his death, or (ii) the executors, administrators, or other legal representatives of the Executive or his estate from assigning any rights hereunder to the person or persons entitled thereto. (b) Binding Agreement. This Agreement shall be binding upon, and inure to the benefit of, the Executive and the Company and their respective permitted successors and assigns. (c) Amendment of Agreement. This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto. (d) Waiver. No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with 5 such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived. (e) Headings. The headings of sections herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. (f) Notices. Any and all notices required to be sent pursuant to the terms of this Agreement shall be sent registered or certified mail or personally delivered to the parties hereto at the following addresses or such other addresses as they may designate in writing: If to the Executive: Roy J. Glosser 16 Evelyn Drive Jamestown, New York 14701 If to the Company: American Locker Group Incorporated 15 West Second Street Jamestown, New York 14702 (g) Governing Law. This Agreement has been executed in the Commonwealth of Pennsylvania and its validity, interpretation, performance, and enforcement shall be governed by the laws of New York. (h) Enforceability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid and unenforceable provision were omitted. WITNESS the due execution hereof as of the day and year first above written. ATTEST: AMERICAN LOCKER GROUP INCORPORATED By: /s/ Charles E. Harris By: /s/ Harold J. Ruttenberg --------------------- ------------------------ Title: Secretary Title: Chairman, Chief Executive Officer and Treasurer WITNESS: EXECUTIVE /s/ Charles E. Harris /s/ Roy J. Glosser --------------------- ------------------- ROY J. GLOSSER EX-10.2 3 AGREEMENT ---------- This Agreement is made and entered into as of May 21, 1996 by and between AMERICAN LOCKER GROUP INCORPORATED, a Delaware corporation ("Company") with its office at 15 West Second Street, Jamestown, New York 14702-1000 and EDWARD F. RUTTENBERG, having an address at 5864 Aylesboro Avenue, Pittsburgh, Pennsylvania 15217 ("Mr. Ruttenberg"). ARTICLE 1. DEFINITIONS ------------------------ 1.1 "Confidential Information" shall mean any information of Company which is confidential or proprietary. Confidential Information shall not include information as to which Mr. Ruttenberg can show: (i) was in Mr. Ruttenberg's possession without restrictions of confidentiality prior to receipt from Company; (ii) is or becomes public knowledge because of events other than an act or failure to act by Mr. Ruttenberg or any person under Mr. Ruttenberg's direct or indirect control; or (iii) is independently developed by him, provided that Mr. Ruttenberg can show that such development was accomplished without use of the Confidential Information. 1.2 "Services" shall mean the services to be performed by Mr. Ruttenberg under this Agreement that are identified in Section 2. 1.3 "Effective Date" shall mean May 21, 1996. 1.4 "Technology" shall mean any technology or improvements developed by Mr. Ruttenberg while performing the Services. 1.5 "Term" shall mean the period from the date hereof through June 30, 1997. ARTICLE 2. SERVICES --------------------- During the Term, Mr. Ruttenberg shall provide to Company the Services consisting of such services as directed by the Chairman of the Company, all in accordance with the terms and conditions of this Agreement. ARTICLE 3. COMPENSATION ------------------------ - 1 - 3.1 In consideration of the Services to be provided by Mr. Ruttenberg, Company shall pay to him the sum of $4,170 per month, payable semi-monthly. 3.2 Company shall reimburse Mr. Ruttenberg for all reasonable travel costs and other out of pocket expenses incurred by him in carrying out the Services hereunder. 3.3 Unless otherwise provided herein, the fees and/or expenses invoiced in accordance with this Article 3 shall be due and payable within thirty (30) days after receipt of such invoice by Company. ARTICLE 4. CONFIDENTIAL INFORMATION ------------------------------------ 4.1 Mr. Ruttenberg acknowledges that Company does not wish to receive any confidential information from Mr. Ruttenberg except as necessary for him to perform the Services and that Company may reasonably presume that any unrelated information received from him is not proprietary. 4.2 Mr. Ruttenberg shall not transfer or otherwise disclose to any third party any Confidential Information. Mr. Ruttenberg shall give access to the Confidential Information solely to those employees with a need to have access thereto, shall take the same security precautions to protect against disclosure or unauthorized use of the Confidential Information that he takes with his own secret information, and in no event shall apply less than a reasonable standard of care to prevent such disclosure or unauthorized use. ARTICLE 5. OWNERSHIP ---------------------- 5.1 Company shall retain all intellectual property rights in any Technology developed under this Agreement. 5.2 Notwithstanding anything to the contrary in this Agreement, Company shall not prohibit or enjoin Mr. Ruttenberg from utilizing any skill or knowledge of a general nature acquired during the course of performing the Services. ARTICLE 6. NONCOMPETITION --------------------------- 6.1 Mr. Ruttenberg agrees that he will not, in the continental United States and during the term of this Agreement and for a period of one year thereafter, by himself or in partnership or as an equity owner or in conjunction with or as a consultant, unpaid adviser, manager or agent of any other person, firm, corporation or other entity, either directly or indirectly, - 2 - undertake or carry on or be engaged or have any financial or other interest in, or in any other manner, advise or assist any person, firm, corporation or other entity engaged or interested in, selling products or services of the nature sold by the Company. 6.2 Mr. Ruttenberg agrees and warrants that the covenants contained herein are reasonable, that valid consideration has been and will be received therefor and that the agreements set forth herein are the result of arms-length negotiations between the parties hereto. Mr. Ruttenberg acknowledges that in the event of a violation of the covenants contained in this paragraph, the Company's damages will be difficult to ascertain and the Company's remedy at law will be inadequate. Accordingly, Mr. Ruttenberg agrees that the Company shall be entitled to specific performance of such covenants and to an injunction to prevent any continuing violation thereof. 6.3 If any of the provisions of or covenants contained in this Article 6 is hereafter construed to be invalid or unenforceable in any jurisdiction, the same shall not affect the remainder of the provisions or the enforceability thereof in any other jurisdiction, which shall be given full effect, without regard to the invalidity or unenforceability in such other jurisdiction. If any of the provisions of or covenants contained in this Article 6 is held to be unenforceable in any jurisdiction because of the duration or geographical scope thereof, the parties agree that the court making such determination shall have the power to reduce the duration or geographical scope of such provision or covenant and, in its reduced form, said provision or covenant shall be enforceable; provided, however, that the determination of such court shall not affect the enforceability of this Article 6 in any other jurisdiction. ARTICLE 7. TERMINATION ------------------------ 7.1 This Agreement shall remain in effect for the term set forth in Section 1.5 unless terminated earlier under this Article 7. 7.2 This Agreement may be terminated by either party on thirty days written notice to the other party. 7.3 Company or Mr. Ruttenberg may terminate this Agreement immediately if the other party breaches its obligations hereunder. 7.4 Upon termination of this Agreement, Company shall pay Mr. Ruttenberg for services which Mr. Ruttenberg has performed up to and including the effective date of termination and Mr. Ruttenberg shall return to Company all materials furnished by Company. - 3 - 7.5 The rights and obligations of Articles 4, 5 and 6 shall survive any termination of this Agreement. ARTICLE 8. INDEPENDENT CONTRACTOR ----------------------------------- 8.1 Mr. Ruttenberg and his employees (if any) (i) are and shall remain independent contractors with respect to services performed pursuant to this Agreement; (ii) shall not be considered employees or agents of Company for any purpose; and (iii) shall have no authority to bind or make commitments on behalf of Company for any purpose and shall not hold themselves out as having such authority. 8.2 Mr. Ruttenberg assumes full responsibility for his actions and the actions of his employees while performing services pursuant to this Agreement, and shall be solely responsible for their supervision, daily direction and control, payment of salary (including withholding of income taxes and social security) and associated benefits. 8.3 Unless otherwise agreed by the parties, Mr. Ruttenberg and his employees shall observe the working rules and policies of Company while working in his facilities. ARTICLE 9. GENERAL ------------------- 9.1 Any written notices connected with this Agreement shall be sufficiently made on the mailing date if sent by registered or certified mail, postage prepaid, to Company or Mr. Ruttenberg, as applicable, at their addresses set forth on page 1. 9.2 This Agreement will be binding upon Company's and Mr. Ruttenberg's successors and assigns. However, neither party shall assign any of its rights (except rights to the payment of money) or delegate any of its obligations under this Agreement to any third party without the written consent of the other. 9.3 This Agreement shall be governed by and interpreted in accordance with the internal laws of New York. 9.4 If any provision of this Agreement is deemed invalid, illegal, or unenforceable in any jurisdiction, such provision shall be deemed amended to conform to applicable laws so as to be valid and enforceable, or, if it cannot be so amended without materially altering the intention of the parties, it shall be stricken, and the remainder of the Agreement shall remain in full force and effect. 9.5 This Agreement constitutes the entire agreement between the parties relating to the subject matter hereof, and supersedes all prior written and oral agreements and understandings between - 4 - Company and Mr. Ruttenberg respecting the subject matter hereof. This Agreement may not be released, discharged, amended or modified in any manner except by a written amendment signed by Company and Mr. Ruttenberg. 9.6 This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together shall be deemed to be one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized representatives as of the date written below. AMERICAN LOCKER GROUP INCORPORATED By: /s/ Harold J. Ruttenberg ------------------------ Title: Chairman, Chief Executive Officer and Treasurer /s/ Edward F. Ruttenberg ------------------------- EDWARD F. RUTTENBERG - 5 - EX-10.3 4 THIRD AMENDMENT TO MANUFACTURING AGREEMENT -------------------------------------------- This Third Amendment made as of May 21, 1996, to Manufacturing Agreement dated December 29, 1989 between SIGNORE, INC., a Delaware corporation ("Seller") and AMERICAN LOCKER SECURITY SYSTEMS, INC., a Delaware corporation ("Buyer"). WHEREAS, Seller and Buyer are parties to a Manufacturing Agreement dated December 29, 1989, as amended by the First Amendment to Manufacturing Agreement dated as of May 3, 1995, and as further amended by the Second Amendment to Manufacturing Agreement dated as of March 15, 1996 (such Manufacturing Agreement, as so amended, the "Amended Agreement"); and WHEREAS, Seller and Buyer wish to make certain amendments to the Amended Agreement. NOW, THEREFORE, for good and valuable consideration and intending to be legally bound hereby, Seller and Buyer agree as follows: 1. All defined terms used herein shall have the definitions set forth in the Amended Agreement. 2. Buyer and Seller acknowledge that as of December 31, 1995, the Remaining Inventory Value of Locker Inventory (as defined in Section 3(f) of the Amended Agreement) was $1,240,601.69 (after recognition of obsolete inventory described in Section 3(i) below). In accordance with the provisions of Section 3(f) of the Amended Agreement, Buyer has paid to Seller the sum of $78,069.37, receipt of which is acknowledged by Seller. Such $78,069.37 payment is calculated as follows: Actual Inventory 12/31/95 $1,240,601.69 Remaining Inventory Value 1/1/95 1,159,584.85 ------------- $ 81,016.84 Plus Obsolete Inventory 11,741.05 ------------- $ 92,757.89 Plus Credit Memo from Seller to Buyer 14,688.52 ------------- Payment Due from Buyer to Seller $ 78,069.37 ------------- ------------- 3. Buyer and Seller agree (i) that as of December 31, 1995, Locker Inventory contained $11,741.05 in obsolete inventory which was scrapped and deducted from the calculation of Remaining Inventory Value (as defined in Section 3(f) of the Amended Agreement); and (ii) that Locker Inventory determined on a proforma basis as of December 31, 1995 as if all payments required under Section 2 hereof had been made as of that date was $1,240,601.69 (i.e. Remaining Locker Inventory as of January 1, 1995 of $1,159,584.85 less $11,741.05 in obsolete inventory plus the $78,069.37 payments to be made by Buyer under Section 2 hereof plus $14,688.52 in credit memo from Seller to Buyer to reflect scrapped material caused by errors in manufacturing and engineering changes). 4. Except as expressly provided herein, the Amended Agreement shall remain unamended and in full force and effect. WITNESS the due execution hereof. SIGNORE, INC. By /s/ Alex N. Ditonto ------------------------ Title President AMERICAN LOCKER SECURITY SYSTEMS, INC. By /s/ Harold J. Ruttenberg ------------------------- Title: Chairman, Chief Executive Officer and Treasurer EX-27 5
5 6-MOS DEC-31-1996 JUN-30-1996 1,167,928 0 3,780,654 130,665 2,925,086 8,790,265 8,086,153 6,541,170 10,335,248 5,532,216 0 0 0 804,184 3,998,848 10,335,248 10,908,010 10,908,010 7,538,010 10,169,672 104,967 0 0 881,959 353,392 528,567 0 0 0 528,567 .65 .65
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