<PAGE>
As Filed with the Securities and Exchange Commission on September 4, 1996
Registration No. 333-10311
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
AMENDMENT NO. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
ALPHA TECHNOLOGIES GROUP, INC.
(Exact name of issuer as specified in its charter)
Delaware 76-0079338
- ------------------------------------ ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Joseph Greenberger, Esq.
10880 Wilshire Boulevard Greenberger & Forman
Suite 1400 1370 Avenue of the Americas
Los Angeles, California 90024 New York, NY 10019
(310) 441-7038 (212) 757-4001
- --------------------------------- ----------------------------------
(Address, including zip code, (Name, address, including zip code
and telephone number, including and telephone number, including
area code, of issuer's area code, of agent for service)
principal executive offices)
--------------
Approximate date of commencement of proposed sale to the public: As
soon as possible after the effective date of this Registration Statement becomes
effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 of the Securities
Act of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================================
Proposed Proposed
Title of Shares Amount Maximum Maximum
to be to Aggregate Price Aggregate Amount of
Registered be Registered Per Unit (1) Offering Price Registration Fee
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.03 par value....... 265,000 $5.625(1) $1,490,625(1) $514.01
=======================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) of the Securities act of 1933, based on the
last sale price of the common Stock as reported on the Nasdaq Stock
Market on August 14, 1996.
-----------------
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
===============================================================================
<PAGE>
PROSPECTUS
ALPHA TECHNOLOGIES GROUP, INC.
265,000 shares of Common Stock, $.03 par value
This Prospectus relates to 265,000 shares ("Shares") of Common Stock,
$.03 par value per share ("Common Stock"), of Alpha Technologies Group, Inc.
(the "Company" or "Alpha") offered for sale by the security holder (the "Selling
Stockholder") of the Company listed under "Selling Stockholder." The Company
will receive no proceeds from the sale of the Shares covered by this Prospectus.
The Common Stock is listed on the Nasdaq Stock Market ("Nasdaq") and
traded on the Nasdaq National Market System ("Nasdaq National Market") under the
symbol ATGI. The last reported sale price of the Common Stock on the Nasdaq
National Market on August 29, 1996 was $5.375 per share.
The Shares covered by this Prospectus may be offered for sale from time
to time on the Nasdaq National Market or otherwise at prices then obtainable.
The Company has agreed to indemnify the Selling Stockholder against certain
liabilities, including liabilities under the Securities Act of 1933 (the "Act").
See "Plan of Distribution."
It is anticipated that usual and customary brokerage fees will be paid
by the Selling Stockholder on the sale of the Shares offered hereby. The Company
will pay the other expenses of the offer of 265,000 Shares by the Selling
Stockholder, as described in this Prospectus (the "Offering"). See "Plan of
Distribution." The Offering, and the effectiveness of the Registration Statement
of which this Prospectus is part, will terminate one year from the date of this
Prospectus or on the earlier sale by the Selling Stockholder of all the Shares
offered by him hereby.
No dealer, salesman or other person has been authorized to give any
information or to make any representation other than those contained or
incorporated by reference in this Prospectus in connection with the offer
contained in this Prospectus, and, if given or made, such other information or
representations must not be relied upon as having been authorized by the Company
or the Selling Stockholder. This Prospectus does not constitute an offer to sell
or a solicitation of an offer to buy the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
hereof.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" AT PAGES 5-7.
The date of this Prospectus is September 4, 1996.
<PAGE>
CONTENTS
Page
Available Information................................................... 2
Documents Incorporated by Reference ................................... 3
Prospectus Summary ..................................................... 3
The Company ............................................................ 4
Risk Factors ........................................................... 5
No Proceeds from Offering to the Company................................ 9
Selling Stockholder.....................................................10
Plan of Distribution....................................................10
Expert..................................................................11
Legal Opinions..........................................................11
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities........................................12
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Exchange
Act of 1934 (the "Exchange Act"), and in accordance therewith files, reports,
proxy and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the Commission:
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of
such material may be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549, at
prescribed rates. The Common Stock is traded on the Nasdaq National Market.
Reports and other information concerning the Company may be inspected at the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933 (the "Act"), with respect to the
Common Stock offered hereby (including all amendments and supplements thereto,
the "Registration Statement"). The Registration Statement, including exhibits
and schedules thereto, may be obtained from the Commission's principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of
the fees prescribed by the Commission. This Prospectus, which forms part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement and the exhibits filed therewith, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. Statements contained in this Prospectus as to the contents of any
document referred to are not necessarily complete and in each instance reference
is made to the copy of the appropriate document filed as an exhibit to, or
incorporated by reference into, the Registration Statement, each statement being
qualified in all respects by such reference.
2
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, filed with the Commission (File No. 14365)
pursuant to the Exchange Act, are hereby incorporated by reference; Annual
Report on Form 10-KSB for the fiscal year ended October 29, 1995; and Quarterly
Reports on Form 10-Q for the fiscal quarters ended January 28, 1996 and April
28, 1996. In addition, all documents filed by the Company pursuant to sections
13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this Prospectus
and before the termination of the Offering shall be deemed incorporated by
reference herein and to be a part of this Prospectus from the date of filing of
such documents. Such incorporation shall not be deemed to incorporate by
reference the information referred to in Item 402(a)(8) of Regulation S-K. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purpose of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon request, a copy of any or all of the foregoing
documents described above which have been incorporated by reference in this
Prospectus, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents.) Such request should
be directed to: Investor Relations, Alpha Technologies Group, Inc., 10880
Wilshire Boulevard, Suite 1400, Los Angeles, California 90024; telephone number
310-441-7038; facsimile number 310-441- 7039.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus or incorporated herein by
reference and the financial statements which are incorporated herein by
reference.
<TABLE>
<CAPTION>
<S> <C>
THE COMPANY.......................................... The Company designs, manufacturers and
sells thermal management products and
connectors. The Company's thermal
management products serve the
microprocessor, computer, consumer
electronics, transportation and power supply
industries, and its connector products serve the
aerospace, telecommunications, medical electronics,
automotive and defense industries.
RISK FACTORS......................................... This Offering involves substantial risk. See
"Risk Factors."
3
<PAGE>
SECURITIES OFFERED................................... 265,000 shares of Company Common Stock,
par value $.03 per share.
OFFERING PRICE ...................................... All or part of the shares offered hereby may be
sold from time to time in amounts and on
terms to be determined by the Selling
Stockholder at the time of sale.
SELLING STOCKHOLDER.................................. The Shares being offered hereby are being
offered for the account of the Selling
Stockholder. See "Selling Stockholder."
USE OF PROCEEDS...................................... The Company will receive no part of the
proceeds from the sale of the shares registered
pursuant to this Prospectus.
TERMINATION OF OFFERING.............................. This Offering will terminate by the first
anniversary of the date hereof, or on
the earlier sale by the Selling
Stockholder of the Shares offered
hereby.
NASDAQ TRADING SYMBOL................................ ATGI.
</TABLE>
THE COMPANY
The Company designs, manufacturers and sells thermal management
products and connectors. Its thermal management products serve the
microprocessor, computer, consumer electronics, transportation and power supply
industries, and its connector products serve the aerospace, telecommunications,
medical electronics, automotive and defense industries.
The Company's thermal management products, principally heat sinks,
remove excess heat generated by electronic components within personal computers,
power supplies, stereo amplifiers and other electronic systems. Its Penguin
Cooler(TM) line of heat sinks is designed to solve the thermal management
problems of the microprocessor and personal computer markets. The Company also
designs, manufacturers and sells miniature, micro-miniature and nano-miniature
connectors to meet rigid industrial and military specifications. Most of the
Company's connectors are customized products sold to niche markets.
The Company entered the thermal management business in October 1993,
when it acquired Wakefield Engineering, Inc. In August 1994, the Company
acquired Aham Tor Inc., a manufacturer of heat sinks. In June 1995, the Company
acquired Specialty Extrusions, Ltd., a manufacturer of aluminum extrusions, the
primary raw material of heat sinks. The Company acquired Lockhart Industries,
Inc., a designer and manufacturer of sophisticated thermal management products,
located in Paramount, California in August 1996. In June 1994, the Company
entered the connector business when, through its Uni-Star Industries, Inc.
subsidiary, it acquired the Interconnect System Division of Microdot Inc.
4
<PAGE>
Alpha Technologies Group, Inc. was incorporated under its original
corporate name, Synercom Technology, Inc., as a Texas corporation in 1969, and
was reincorporated in Delaware in 1983. Originally a software company, the
Company sold the assets and business of the software operations, in September
1994. The Company's corporate headquarters are located at 10880 Wilshire
Boulevard, Suite 1400, Los Angeles, California 90024. Its telephone number is
310-441-7038, and its facsimile number is 310-441-7039. Unless the context
otherwise requires, "Company" refers to Alpha Technologies Group, Inc. and its
subsidiaries, and "Management" refers to the management of the Company.
RISK FACTORS
Prospective investors should carefully consider the following risk
factors in addition to the other information set forth in this Prospectus before
making any decision to invest in the Debentures.
Fluctuations in Operating Results and Recent Quarterly Loss
The Company's operating results are affected by a number of factors,
many of which are outside the Company's control. These factors have in the past
and could in the future materially and adversely affect net sales, gross margins
and profitability. They include: the volume and timing of orders received;
competitive pricing pressures; changes in the mix of products sold; potential
cancellation or rescheduling of orders; changes in the level of customer
inventories of the Company's products; the timing of new product and
manufacturing process technology introductions by the Company or its
competitors; availability of manufacturing capacity; and market acceptance of
new or enhanced products introduced by the Company. Additionally, the Company's
growth and results of operations are currently being, have in the past been, and
could in the future be, adversely affected by downturns in the personal
computer, microprocessor or electronics industries.
Both of the Company's principal operating subsidiaries were adversely
impacted during the third fiscal quarter and the first nine months of fiscal
1996 ending July 28, 1996 by a slow down in the markets they serve. Revenues for
the third quarter were $16.8 million, a decrease from the $17.4 million reported
in the same period last year. Net loss for the quarter was $740,000, or $.12 per
share, which included $625,000 in non-recurring charges, including for a
disputed purchase commitment, a write-down of inventory, costs related to the
termination of an acquisition effort and severance payments. Without the
charges, the Company's net loss would have been $.02 per share. For the
comparable 1995 quarter, the Company reported net income of $1.6 million, or
$.24 per share, inclusive of a benefit for income taxes of $.07 per share.
Operating results for the first nine months of the Company's 1996 fiscal year
were adversely affected by a decrease in gross profits resulting from the
inclusion of sales of its Specialty subsidiary, which have lower margins than
the Company's other products, higher manufacturing costs reflecting overhead
added in anticipation of a substantial increase in demand for Penguin(TM) Cooler
heat sinks which has yet to materialize, certain manufacturing inefficiencies,
and a change in the mix of products sold.
5
<PAGE>
The Company's ability to reduce costs quickly in response to revenue
shortfalls is limited. This limitation has been exacerbated during fiscal 1996
because the Company had anticipated a very strong sales year for its Penguin
Coolers(TM) line of heat sinks and created an overhead structure in line with
its forecasts, including investment in additional equipment and personnel to
increase production capacity. This increased demand has not yet fully
materialized and the Company has taken steps to reduce costs and improve
manufacturing inefficiencies. Although Management believes demand for its
thermal management products will increase during the remainder of calendar 1996,
there can be no assurance that such demand will materialize or that the Company
will be able to use its additional manufacturing capacity.
Generally, the profit margins on connectors are higher than for those
on thermal management products, and profit margins on customized connectors are
higher than those on standard connectors. Nevertheless, connector sales and
gross margins thereon can vary significantly from period to period, depending,
in large part, on the timing of orders for connectors used in military
applications. Revenues and operating results during the Company's nine months
ending July 28, 1996, were adversly affected, in part, by that variation. In
addition, the Company's backlog is not indicative of future operating results.
These and other factors can materially adversely affect the Company's operating
results for one or more quarters.
The Company expects its operating results to continue to fluctuate.
Results of operations in any one period should not be considered indicative of
results to be expected for any future period, and fluctuations in operating
results may also cause fluctuations in the market price for the Common Stock.
Management of Changes
The Company's revenues have grown significantly since October 1993, due
to several acquisitions. It entered the thermal management business in October
1993, when it acquired Wakefield Engineering, Inc., which operates the Company's
thermal management products business. In August 1994, the Company acquired Aham
Tor Inc., another manufacturer of heat sinks. In June 1995, the Company acquired
Specialty Extrusions, Ltd., a manufacturer of aluminum extrusions, the primary
raw material in heat sinks. In June 1994, the Company entered the niche-market
connector business when, through its Uni-Star Industries, Inc. subsidiary, it
acquired the Interconnect System Division of Microdot, Inc. In addition, the
Company has recently to acquired Lockhart Industries, Inc., a designer and
manufacturer of sophisticated thermal management products. In addition, during
fiscal 1996, the Company has invested in machinery to increase its capacity
especially related to the Penguin Cooler(TM) product line. Such expansion will
further increase the responsibilities of Management.
The Selling Stockholder was the President of Uni-Star Industries, Inc.,
the subsidiary of the Company in the connector business, until November 1995.
Harry Chase retired as President of Wakefield Engineering Inc., the subsidiary
of the Company in the thermal management products business, in June 1996. He
remains in a consulting capacity to the Company. The Company has recently
entered into an agreement to hire a new president of Wakefield who is expected
to start work in November, 1996. Although a new President was recently hired by
the Company's Uni-Star Industries, Inc. subsidiary, successful transition to new
operational management can not be assured. See "Risk Factors - Dependence on Key
Members of Management and other Executive Officers," below.
6
<PAGE>
The growth in revenues, the manufacturing capacity expansion, and the
changes in operational management have resulted in increased responsibilities
for Management.
Dependence Upon Key Members of Management and Other Executive Officers
The success of the Company is largely dependent on the efforts of
Marshall D. Butler, Chairman of the Board, and Lawrence Butler, President and
Chief Executive Officer. The loss of their services could have a material
adverse effect on the Company's business and prospects. The Company entered into
a three-year employment agreement with Lawrence Butler in August, 1995.
Future Potential Acquisitions
All the Company's current revenues are derived from businesses acquired
since October 1993. See "Risk Factors - Management of Changes." The Company
intends to continue to pursue acquisitions of businesses and product lines which
Management believes have significant growth possibilities. There can be no
assurance that future acquisitions will be profitable.
Dependence on Certain Industries
Sales of connectors to customers in the defense industry account for a
significant portion of connector sales. A decline in the defense budget for
programs which use the Company's connectors could adversely affect the Company's
operating results. In addition, sales of the Company's thermal management
products to customers in the microprocessor industry accounted for most of the
growth in sales of such products since the Company's entry into the business in
October 1993. A decline in the growth of demand for high-performance
microprocessors could cause a decline in the growth of sales of the Company's
thermal management products and adversely affect its operating results. During
the nine months ended July 28, 1996, both of the Company's product lines
suffered from the sluggishness of the electronics markets which they serve.
Quality Control Standards
The Company's products are incorporated into high technology products
manufactured by original equipment manufacturers ("OEMs") and, accordingly, must
meet exacting specifications. A substantial portion of the Company's OEM
customers require the Company to qualify as an approved supplier. In order to so
qualify, the Company must satisfy stringent quality control standards and
undergo extensive in-plant inspections of its manufacturing processes, equipment
and quality control systems. There can be no assurance that the Company will be
able to meet future customer quality requirements.
7
<PAGE>
Competition
Supplying components for use in electronic products is highly
competitive. Competition is based on many factors, including product quality and
reliability, timely delivery, price and ability to develop customer-specific
solutions to thermal management problems. Many companies offer products and
services similar to those offered by the Company, and several of these
competitors are divisions of larger companies with access to greater financial
and marketing resources. There can be no assurance that competitors will not
develop products that are superior to the Company's products. Further, there can
be no assurance that the Company will not experience additional price
competition, and that such competition may not adversely affect the Company's
position and results of operations.
Technological Changes
The markets for the Company's products are characterized by
technological advances, changes in customer requirements, product introductions
and evolving industry standards. The Company believes that its future success
will depend, in part, on its ability to continue to develop and market products
and product enhancements cost-effectively, which will require continued
expenditures for product engineering, sales and marketing. There can be no
assurance that the Company will be able to modify its products to meet its
customers' needs or that its markets will accept the Company's product
offerings.
Raw Materials Cost
The Company is dependent on aluminum for the production of its thermal
management products. Historically, the price for aluminum has experienced
substantial volatility. A significant cost increase for aluminum would have a
material adverse effect on the Company's results of operations.
Control by Management and Certain Directors
Members of Management and the Board of Directors, individually and
through partnerships controlled by certain members of Management and the Board,
beneficially own 2,071,687 shares of Common Stock in the aggregate, representing
31.3% of the currently outstanding shares of Common Stock (including options as
of July 31, 1996 for 410,327 shares of Common Stock exercisable within 60 days,
but not including options for 392,673 shares of Common Stock exercisable after
60 days). By virtue of such ownership and their positions with the Company,
Marshall D. Butler and Lawrence Butler may have the practical ability to
determine the election of all directors and control the outcome of substantially
all matters submitted to the Company's stockholders. Such concentration of
ownership could have the effect of making it more difficult for a third party to
acquire, or discourage a third party from seeking to acquire, control of the
Company.
8
<PAGE>
Environmental Considerations
The Company's manufacturing operations are subject to environmental
laws and regulations which govern waste water discharges, air emissions and the
handling and disposal of solid and hazardous wastes and the remediation of
contamination associated with the disposal of such wastes.
Potential Anti-Takeover Effects of Delaware Law; Possible Issuances of
Preferred Stock
Certain provisions of Delaware law could delay, impede or make more
difficult a merger, tender offer or proxy contest involving the Company, even if
such events could be beneficial to the interests of the stockholders. Such
provisions could limit the price that certain investors might be willing to pay
in the future for shares of Common Stock. In addition, shares of preferred stock
can be issued by the Board of Directors without stockholder approval on such
terms as the Board may determine. The rights of the holders of Common Stock will
be subject to, and may be adversely affected by, the rights of the holders of
any preferred stock that may be issued in the future. Moreover, although the
ability to issue preferred stock may provide flexibility in connection with
possible acquisitions and other corporate purposes, such issuance may make it
more difficult for a third party to acquire, or may discourage a third party
from acquiring, a majority of the voting stock of the Company.
NO PROCEEDS FROM OFFERING TO THE COMPANY
The Company will receive no part of the proceeds from the sale of any
of the shares by the Selling Stockholder.
9
<PAGE>
SELLING STOCKHOLDER
The 265,000 shares of Common Stock offered hereby were issued, on the
date of this Prospectus, by the Company to Mr. Castleman in exchange for the 20%
of the outstanding common stock of Uni-Star Industries, Inc., which, prior to
the exchange, was an 80%-owned subsidiary of the Company. Uni-Star Industries,
Inc. became a wholly-owned subsidiary of the Company as a result of the
exchange. The Selling Stockholder was President of Uni-Star Industries, Inc.
from June 1994 until November 1995. To the best of the Company's knowledge, the
Selling Stockholder has not held any office nor maintained any material
relationship with the Company or any of its predecessors or affiliates over the
past three years other than his office with Uni-Star Industries, Inc. The
following table sets forth information concerning the Selling Stockholder's
beneficial ownership of Shares as of the date of this Prospectus and the maximum
number of Shares that may be sold by the Selling Stockholder hereunder.
Shares
owned prior Shares to be Shares owned
Selling Stockholder to Offering sold in Offering After Offering
------------------- ------------ ---------------- --------------
Neal Castleman 265,000(1) 265,000 0(1)
PLAN OF DISTRIBUTION
The 265,000 Shares registered for sale in this Offering were issued by
the Company to the Selling Stockholder on the date of this Prospectus in
exchange for 20% of the outstanding common stock of Uni-Star which, prior to the
exchange, was an 80%-owned subsidiary of the Company. Uni-Star Industries, Inc.
became a wholly-owned subsidiary of the Company as a result of the exchange. The
Selling Stockholder was President of Uni-Star Industries, Inc. from June, 1994
until November, 1995.
The Selling Stockholder will be free to sell the Shares issued to him
on the date of this Prospectus in this Offering for a period of one year from
the date of the Prospectus or his earlier sale of all the Shares on the Nasdaq
market system or otherwise. The Company will pay no charges or commissions in
connection with the issuance of the Shares. It is anticipated that usual and
customary brokerage fees will be paid by the Selling Stockholder upon sale of
the Share offered hereby. The Company will pay the other expenses of this
Offering. The Shares may be sold from time to time by the Selling Stockholder.
Such sales may be made at prices and at terms then prevailing or at prices
related to the then current market price, or in negotiated transactions. The
Shares may be sold by one or more of the following: (a) a block trade in which
the broker so engaged will attempt to sell the Shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (c) an exchange distribution
- --------
1 Mr. Castleman is a limited partner in Steel Partners II, L.P., a private
investment partnership which owns 248,300 Shares. Mr. Castleman has no voting
or investment authority with respect to such Shares.
10
<PAGE>
in accordance with the rules of Nasdaq; and (d) ordinary brokerage transactions.
In effecting sales, brokers or dealers engaged by the Selling Stockholder may
arrange for other brokers or dealers to participate. Brokers or dealers will
receive commissions or discounts from Selling Stockholder in amounts to be
negotiated prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Act in connection with such sales.
EXPERT
The financial statements incorporated by reference in this Prospectus
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein upon the
authority of said Firm as experts in accounting and auditing in giving said
report.
LEGAL OPINIONS
The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Greenberger & Forman, 1370 Avenue of the
Americas, New York, New York 10019.
11
<PAGE>
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance And Distribution
The expenses in connection with the issuance and distribution of the
Common Stock to be registered are estimated (except for the Securities and
Exchange Commission filing fee) below. All such expenses will be paid by the
Registrant.
Securities and Exchange Commission Filing Fee $ 514
Accounting Fees and Expenses $ 750
Legal Fees and Expenses $25,000
Blue Sky Filing Fees and Expenses $ *
Printing Costs $ 3,500
Nasdaq Listing Fee $ 5,300
-------
Total Expenses $35,064
=======
- ------
*Although the Company is responsible for the filing fees and expenses in
connection with qualifying the shares of Common Stock to be registered under
such blue sky or other state securities laws as shall be necessary, the Selling
Security Holder has not yet identified to the Company in which states he
intends to reoffer and resell the shares of Common Stock registered hereby.
Accordingly, no estimate of such fees and expenses can be made at this time.
Item 15. Indemnification of Directors And Officers
Limitation of Liability. Section 145 of the Delaware General
Corporation Law (the "DGCL") and the Company's By-Laws provide for
indemnification of the Company's By-Laws, directors and officers and certain
other persons. Under Section 145 of the DGCL and the Company's By-Laws,
directors and officers of the Company may be indemnified by the Company against
all expenses incurred in connection with actions (including, under certain
circumstances, derivative actions) brought against such director or officer by
reason of his or her status as a representative of the Company, or because such
director or officer serves or served as a representative of another entity at
the Company's request, so long as the director or officer acted in good faith
and in a manner he or she reasonable believed to be in, or not opposed to, the
best interests of the Company.
Pursuant to the DGCL, the Company has adopted provisions in its
Certificate of Incorporation which eliminate the personal liability of its
directors and officers to the Company and its stockholders for monetary damages
for breach of the directors' fiduciary duties in certain circumstances and which
authorize the Company to indemnify its directors, officers and other agents, by
bylaw, agreement or otherwise, to the fullest extent permitted by law.
Generally, a director will be liable for monetary damages only for a breach of
the duty of loyalty, a failure to act in good faith, intentional misconduct, a
knowing violation of law, an improper personal benefit, or an illegal dividend
or stock repurchase, but not for negligence or gross negligence in satisfying
the duty of care. The Company's Bylaws require the Company to indemnify its
directors, officers, employees and other agents to the fullest extent permitted
by law. Generally, a director will be entitled to be indemnified against a claim
13
<PAGE>
if a majority of the directors who are not parties, independent legal counsel,
or the stockholders determines that the director acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the Company and, with respect to a criminal action, had no
reasonable cause to believe his or her conduct was unlawful; and his or her
expenses may be advanced by the Company if the director undertakes to reimburse
them if it is ultimately determined that he or she was not entitled to
indemnification.
Indemnification Agreements. The Company has entered into an
indemnification agreement with each of its officers and directors. The
agreements provide that in the event any such executive officer or director, is
or becomes a party or a witness or other participant in any threatened, pending
or completed action, suit or proceeding (an "Action") relating to the fact that
such person is or was a director, officer, employee or agent of the Company, or
is or was serving at the request of the Company as a director, officer,
employee, trustee, agent or fiduciary of another corporation, partnership, joint
venture, employee benefit plan, trust or other enterprise, the Company shall
indemnify such person to the fullest extent permitted by the DGCL. In addition,
the agreement provides that all reasonable expenses (including legal fees)
incurred by any such person shall be paid by the Company in advance of the final
disposition of any Action.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issuer.
Item 16. Exhibits
The following documents have been previously filed as Exhibits and are
incorporated herein by reference, except those exhibits indicated with an
asterisk which are filed herewith:
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
3.1 Certification of Incorporation of the Company,
as amended,(1)(2)(3)
3.2 By-laws of the Company.(4)
5 Opinion of Greenberger & Forman with respect to
the legality of the securities being registered.*
10.25 Agreement, dated August 15, 1996, between the
Company and Neal Castleman.*
10.26 Settlement Agreement dated August 15, 1996 between
the Company and Neal Castleman
23.1 Consent of Arthur Andersen LLP*
23.2 Consent of Greenberger & Forman (contained in
Exhibit 5)
- --------------------------
* Filed herewith.
14
<PAGE>
(1) Incorporated herein by reference to the Company's Registration Statement on
Form S-1 (Reg. No. 33-2979), which became effective March 7, 1986.
(2) Incorporated by reference to the Company's Registration Statement on Form
S-8, filed September 28, 1987 (Reg. No. 33-17359)
(3) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the year ended October 29, 1995.
(4) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended October 31, 1991.
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
provided, however, that paragraphs (i) and (ii) above do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
15
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona-fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for the purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona-fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to Item 15 above, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Los Angeles, California on September 3, 1996.
ALPHA TECHNOLOGIES GROUP INC.
By: /s/ Lawrence Butler
---------------------------------------
Lawrence Butler, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Lawrence Butler
- ------------------------------------ President, Chief Executive September 3, 1996
Lawrence Butler Officer, and Director
- ------------------------------------- Chairman of the Board August , 1996
Marshall Butler
/s/ Johnny J. Blanchard
- ------------------------------------- Chief Financial Officer September 3, 1996
Johnny J. Blanchard (Principal Financial and
Accounting Officer)
*
- ------------------------------------- Director September 3, 1996
Donald K. Grierson
- ------------------------------------- Director August , 1996
Frederic Heim
- ------------------------------------- Director August , 1996
Michael J. Konigsberg
*
- ------------------------------------- Director September 3, 1996
Warren Lichtenstein
*
- ------------------------------------- Director September 3, 1996
Kenneth Rind
*By: /s/ Johnny J. Blanchard
-------------------------------------
Johnny J. Blanchard, Attorney-in-fact
</TABLE>
16
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- ------------
3.1 Certification of Incorporation of the Company, as amended.
Incorporated herein by reference to the Company's Registration
Statement on Form S-1 (Reg. No. 33-2979), which became effective
March 7, 1986, and to the Company's Registration Statement on Form
S-8, filed September 28, 1987 (Reg. No. 33-l7359).
3.2 By-laws of the Company. Incorporated by reference to the Company's
Annual Report on Form 1O-K for the year ended October 31, 1991.
5 Opinion of Greenberger & Forman with respect to the legality of the
securities being registered.*
10.25 Agreement, dated August 15, 1996, between the Company and Neal
Castleman.*
10.26 Settlement Agreement, dated August 15, 1996, between the Company and
Neal Castleman*
23.1 Consent of Arthur Anderson LLP*
23.2 Consent of Greenberger & Forman (contained in Exhibit 5)
-------------
* Filed herewith.
<PAGE>
Exhibit 5
September 3, 1996
Alpha Technologies Group, Inc.
10880 Wilshire Boulevard
Suite 1400
Los Angeles, California 90034
Gentlemen and ladies:
We have acted as legal counsel for Alpha Technologies Group, Inc. (the
"Company") in connection with the preparation and filing of the Registration
Statement of the Company on Form S-3 for the registration under the Securities
Act of 1933 of 265,000 shares of common stock, par value $.0l per share, of the
Company (the "Common Stock"). As such counsel, we are familiar with the
Certificate of Incorporation, as amended, and the bylaws, as amended, of the
Company.
Based upon the foregoing, we are of the opinion that:
(1) The Company is a duly organized and validly existing corporation
under the laws of the State of Delaware; and
(2) The 265,000 shares of Common Stock to be registered pursuant to the
Registration Statement have been duly authorized and, when sold as described in
the Registration Statement, will be legally issued, fully paid and
non-assessable.
We are aware that we are referred to under the heading "Legal Opinions"
in the Prospectus forming part of the Registration Statement, and we hereby
consent to such use of our name in the Registration Statement and such
Prospectus, and to the filing of this opinion as an Exhibit to the Registration
Statement.
Very truly yours,
GREENBERGER & FORMAN
By: /s/ Joseph Greenberger
---------------------------
Joseph Greenberger
<PAGE>
EXHIBIT 10.25
Alpha Technologies Group, Inc. ("Alpha")
750 Lexington Avenue, 27th Floor
New York, New York 10022
Uni-Star Industries, Inc. ("Uni-Star")
306 Pasadena Avenue
South Pasadena, California 91030
August 15, 1996
Mr. Neal Castleman
19124 Pacific Coast Highway
Malibu, California 90265
Dear Mr. Castleman:
You are the record and beneficial owner of 20% (20 shares) of
Uni-Star's issued and outstanding Common Stock (the "Uni-Star Shares"). You have
discussed with Alpha and Uni-Star exchanging the Uni-Star Shares for 265,000
shares of Alpha's Common Stock (the "Alpha Shares")upon the terms and conditions
herein set forth. In that regard, you and we have agreed as follows:
1. Exchange of Uni-Star Shares for Alpha Shares. (a) On Closing
(hereinafter defined):
(i) you shall deliver to Alpha the stock certificate
representing the Uni-Star Shares, with a stock power executed by you
(with signature guaranteed) attached transferring the Uni-Star Shares
to Alpha; and
(ii) Alpha shall deliver to you a stock certificate
of Alpha issued in your name, representing the Alpha Shares, all of
which shall be registered for sale by you under the Securities Act of
1933, as amended (the "'33 Act"), under the Registration Statement
(hereinafter defined).
(b) Simultaneous with the execution hereof:
(i) Alpha is delivering to you a certificate of its
Secretary certifying to resolutions of its Board of Directors
authorizing its execution and delivery of this agreement and the
Release (hereinafter defined) and the issuance of the Alpha Shares to
you on the Closing pursuant to the terms of this agreement; and
(ii) Uni-Star is delivering to you a certificate of
its Secretary certifying to resolutions of its Board of Directors
authorizing the execution and delivery of this agreement and the
Release.
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 2
(c) Simultaneous with the execution hereof, you are executing
and delivering to Uni-Star and Alpha, and Alpha and Uni-Star are executing and
delivering to you, a Settlement Agreement and Mutual General Release of Claims,
dated the date hereof (the "Release").
(d) The exchange described in Sections 1(a)(i) and 1(a)(ii)
hereof is intended to be a tax free reorganization pursuant to Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, and Sections
1(a)(i) and 1(a)(ii) hereof are intended to be a plan of reorganization
thereunder; however, no party represents or warrants to any other that said
exchange qualifies as such a reorganization.
(e) The term "Closing" means the date on which the
Registration Statement is declared effective by the Securities and Exchange
Commission ("SEC").
(f) Alpha and Uni-Star represent and warrant that,
effective as of the date hereof and as of the Closing:
(i) Alpha is duly incorporated, validly existing and
in good standing under the laws of Delaware and has all requisite
corporate power and authority to own or lease and operate its
properties and to carry on its business as presently conducted;
(ii) this agreement and the Release have been duly
authorized, executed and delivered by and on behalf of Alpha and
Uni-Star and constitute their valid and binding agreements, enforceable
in accordance with their respective terms, the entry or consummation of
which do not and will not violate any obligation or restriction by
which either is bound;
(iii) as of the Closing, the Alpha Shares to be
issued pursuant to this agreement will have been duly authorized,
validly issued, fully paid and non-assessable, and free and clear of
any pledge, lien, encumbrance, security interest, preemptive right or
other claim;
(iv) none of (A) the Alpha Annual Report on Form
10-KSB on file with the SEC for its most recent fiscal year as to which
such a filing was required prior to the date of this agreement and
prior to and as of the Closing Date, (B) Alpha's Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K (if any) as filed with the
SEC since said Annual Report was filed and (C) the Proxy Statement for
Alpha's most recent
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 3
Annual Meeting of Stockholders required to be filed with the SEC prior
to the date of this agreement and prior to and as of the Closing Date,
contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements made therein not misleading in light of the circumstances
under which they were made, and all such filings were made within the
applicable statutory time periods (including extensions) required by
the Securities Exchange Act of 1934, as amended (the "'34 Act"); and
(v) during the 12 calendar months immediately
preceding the date hereof, Alpha has made all filings required under
the '34 Act within the applicable time periods (including extensions)
thereunder.
(g) Alpha covenants and agrees that between the date hereof
and two years from the Closing, it shall file with the SEC, within the
applicable time periods (including extensions), all reports required to be filed
by it under Section 13, 14 or 15(d) of the '34 Act and the regulations
thereunder.
(h) You represent and warrant that, as of the date
hereof and as of the Closing:
(i) the Uni-Star Shares are all the shares of capital
stock of Uni-Star in which you have a record or beneficial interest,
they are owned by you exclusively, of record and beneficially, and they
are being transferred to Alpha hereunder, free and clear of all claims,
liens or encumbrances of any kind or nature, except for the
restrictions referred to in the legends required by Section 3 hereof;
(ii) you have no record or (except as may arise from
your interest as a limited partner in Steel Partners II, L.P.)
beneficial interest in any securities of Alpha;
(iii) this agreement and the Release have been duly
executed and delivered by you and constitute your valid and binding
agreements, enforceable in accordance with their respective terms, the
entry or consummation of which do not and will not violate any
obligation or restriction by which you are bound.
(iv) the Alpha Shares which are being issued to you
in exchange for the Uni-Star Shares are being acquired by you solely
for investment purposes for your own account, not as a
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 4
nominee or agent for any other person. You do not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer
or grant participations to such person or to sell or any interest
therein to any third person any of the Alpha Shares;
(v) you have received all the information you
consider necessary or appropriate for deciding whether to exchange the
Uni-Star Shares for the Alpha Shares, you have had an opportunity to
ask questions and receive answers from representatives of Alpha
regarding the terms and conditions of the transaction, the
representations and warranties of Alpha and Uni-Star in this agreement
set forth all such information, and the terms and conditions in this
agreement and the Release set forth all such answers. The foregoing,
however, does not limit or modify Alpha's and Uni-Star's
representations and warranties in Section 1(f) hereof or your right to
rely thereon;
(vi) you have substantial experience in evaluating
and investing in private transactions so that you are capable of
evaluating the merits and risks of your investment in Alpha. By reason
of your business or financial experience or the business or financial
experience of your professional advisors who are unaffiliated with and
who are not compensated by Alpha or any affiliate or agent of Alpha,
directly or indirectly, you have the capacity to protect your own
interests in connection with your exchange of the Uni-Star Shares for
the Alpha Shares and the transactions contemplated hereby;
(vii) you are an accredited investor as defined in
Rule 501(a) of Regulation D promulgated under the '33 Act;
(viii) to your best knowledge and belief (based on,
and assuming, your due exercise of your responsibilities as President
of Uni-Star, but not assuming any investigation or inquiry), during the
period you were President of Uni-Star (June 1994 through November 1995)
(the "Service Period"), Uni-Star did not participate, directly or
indirectly, and no person acting on its behalf or for its benefit
participated, directly or indirectly, in any of the following:
a) receipt or giving, or commitment to
receive or give, any payment or other value for the
purpose of unlawful influence;
b) commercial bribe or kickback;
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 5
c) rebate or refund in contravention of law;
d) unlawful political contribution;
e) payment or commitment (including those
covered by the Foreign Corrupt Practices Act),
regardless of form, made with the understanding or
under circumstances that would indicate that all or
part thereof was to be paid or given as a kickback or
an unlawful influence payment or commitment;
f) any material violation of law, except in
unintentional respects; or
g) failure to accurately record, in any
material respect, any material transaction in Uni-
Star's books and records, or failure to record, in
any material respect, any material transaction in its
books and records in a consistent manner, which, if
such transaction had been accurately recorded in such
books and records, would reflect a breach of any
representation contained in section 1(h)(viii)
hereof; and
h) to your best knowledge and belief
(without any investigation or inquiry by you with
respect thereto), any event or state of affairs the
effect of which would be to cause any of the
following statements to contain an untrue statement
of material fact required to be stated therein or
necessary to make the statements made therein not
misleading in light of the circumstances under which
they were made: during the Service Period there were,
with respect to Uni-Star, no (x) material
irregularities concerning the internal control
structure involving management or employees who had
significant roles in the structure, or (y)
communications from regulatory agencies concerning
material non-compliance with, or material
deficiencies in, financial reporting practices that
could have material effect on the financial
statements; and
(ix) except for the operations of Ergo Mechanical
Systems, Inc., Lynx Systems Inc. and UniSource Automation, Inc., during
the Service Period neither you nor any affiliate or associate (within
the meaning of those terms under Rule 405 of the '33 Act) of yours has
or had any direct or indirect
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 6
interest (record or beneficial) in any operation (other than Uni-Star)
which used the equipment or premises of Uni-Star.
(i) Without in any way limiting your representations and
warranties set forth above, you agree not to make any disposition of all or any
portion of the Alpha Shares (a) unless and while there is in effect a
registration statement under the '33 Act covering such proposed disposition and
such disposition is made in accordance with such registration statement, or
(b)(i) you shall have notified Alpha of the proposed disposition and shall have
furnished Alpha with a detailed statement of the circumstances surrounding the
proposed disposition, and (ii) if reasonably requested by Alpha, you shall have
furnished Alpha with an opinion of counsel, reasonably satisfactory to Alpha,
that such disposition shall not require registration under the '33 Act. Alpha
shall not require opinions of your counsel for transactions made pursuant to
Rule 144 under the '33 Act, except in unusual circumstances.
2. Registration of Alpha Shares. (a) Alpha shall on the date hereof
file with the SEC a registration statement on Form S-3 under the '33 Act (as
such filing may be amended, and as declared effective, the "Registration
Statement") registering (upon effectiveness of the Registration Statement) the
Alpha Shares for sale by you. Alpha shall use its best efforts in order to
comply with the provisions of the '33 Act and (subject to the "provided,
however" clause in this Section 2(a), below) applicable securities laws of such
states in which publicly traded shares of Alpha common stock are presently
qualified or registered for sale as you may reasonably request so as to permit a
public offering and sale of the Alpha Shares by you in such states in such
manner as you may designate in the notice to Alpha, and to take all reasonable
steps necessary (including, without limitation, filing appropriate amendments
and supplements) to keep such Registration Statement effective and in compliance
with the '33 Act for one year after the effective date thereof. "Best efforts"
as used in the foregoing sentence includes, without limitation, responding
reasonably promptly to any SEC staff comments, and reasonably promptly
correcting any deficiencies identified by the SEC staff, with respect to said
Registration Statement. Alpha further warrants and represents that it will act
in good faith with respect to this Section 2(a). In connection with the offering
of any Alpha Shares registered pursuant to this Section 2(a), Alpha shall take
such action as shall be necessary to qualify the Alpha Shares covered by such
Registration Statement under such "blue sky" or other state securities laws for
offer and sale as shall be reasonably necessary to permit the public offering
and sale of all of the Alpha Shares; provided, however, that Alpha shall not be
required (i) to qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subparagraph, (ii) to
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 7
subject itself to taxation, or the obligation to collect or remit any tax, in
any such jurisdiction, or (iii) to consent to general service of process in any
such jurisdiction. Alpha shall not be obligated to effect more than said one
registration hereunder. Such Registration Statement may include securities
proposed to be offered by other than you. You agree to cooperate in a timely
manner in connection with such registration. Alpha shall pay all expenses in
complying with this Section 2(a) other than your underwriters' and brokers'
discounts and commissions and your attorneys' fees and expenses.
(b) Alpha shall indemnify and hold you harmless against any
losses, claims, damages or liabilities (or actions in respect thereof), joint or
several, to which you may become subject, under the '33 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof), including reasonable attorneys' fees, are caused by any untrue
statement or alleged untrue statement of any material fact contained, on the
effective date thereof, in the Registration Statement, any prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
and shall reimburse you for any legal or other expenses reasonably incurred by
you, in connection with investigating or defending any such loss, claim, damage,
liability or action, including reasonable attorneys' fees; provided, however,
that Alpha shall not be liable in any such case to the extent that any such
loss, damage, expense or liability arises out of or is based upon an untrue
statement, alleged untrue statement, omission or alleged omission so made in
conformity with written information furnished by you in this agreement or
specifically for inclusion in the Registration Statement.
(c) You shall indemnify and hold harmless Alpha, each of its
directors, each of its officers who have signed the Registration Statement, and
each person, if any, who controls Alpha, within the meaning of the '33 Act,
against any losses, claims, damages or liabilities to which Alpha, or any such
director, officer or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof), including reasonable attorneys' fees, are caused by any untrue
statement of any material fact contained in said Registration Statement, said
prospectus, or amendment or amendments or supplement thereto, which facts were
provided by you in writing or arise out of or are based upon the omission by you
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; and shall reimburse any legal or
other expenses,
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 8
reasonably incurred by Alpha or any such director, officer or controlling person
in connection with investigating or defending any such loss, claim, damage,
liability or action, including reasonable attorneys' fees; in each case only to
the extent, that such untrue statement or omission was so made in reliance upon
and in conformity with written information furnished by you in this agreement or
specifically for inclusion in the Registration Statement.
(d) If for any reason the indemnification provided for in
paragraphs (b) or (c) of this Section 2 is unavailable to an indemnified party
as contemplated by said paragraphs, then the indemnifying party in lieu of
indemnification shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities in
such proportions as is appropriate to reflect not only the relative benefits
received by the indemnified party and the indemnifying party but also the
relative fault of the indemnified party and the indemnifying party as well as
any other relevant equitable considerations, provided that you shall not be
required to contribute in an amount greater than the excess of the net proceeds
received by you from the sale of your registered Alpha Shares over all amounts
already contributed by you with respect to such claims, including amounts paid
for any legal or other fees or expenses incurred by you.
(e) Alpha shall notify you, during any period when a
prospectus included in the Registration Statement registering the Alpha Shares
is required to be delivered under the Act, when it becomes aware of the
happening of any event as a result of which such prospectus contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein, in the case of the prospectus, in light of the
circumstances under which they were made, not misleading and, as promptly as
practicable thereafter, prepare and file with the SEC and furnish a supplement
or amendment to such prospectus so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not contain any untrue
statement of a material fact or omit or state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Upon receipt of any such notice from Alpha of the
happening of any event of the kind described above, you agree to forthwith
discontinue disposition of the Alpha Shares until your receipt of the copies of
the supplemented or amended prospectus contemplated by the above or until you
are advised in writing (the "Advice") by Alpha that the use of the prospectus
may be resumed, and have received copies of any additional or supplemental
filings which are incorporated by reference in the prospectus, and, if so
directed by Alpha, you shall, or shall request the managing underwriter or
underwriters, if any, to,
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 9
deliver to Alpha (at the expense of Alpha) all copies, other than permanent file
copies then in your possession, of the prospectus covering such securities
current at the time of receipt of such notice.
(f) If the Board of Directors of Alpha determines in good
faith that the registration and distribution of Alpha Shares would substantially
and materially interfere with any actual pending financing, acquisition,
corporate reorganization or any other actual corporate development involving
Alpha or any of its subsidiaries and promptly gives you written notice of such
determination in accordance with the provisions of the following sentence, Alpha
shall be entitled to elect that the Registration Statement not be used for a
reasonable period of time, but not to exceed 90 days (a "Section 2(f) Period"),
subject to the provisions of Section 2(h) below. Any such written notice, to be
effective, shall contain a copy of the applicable board resolution certified by
the Secretary of the Corporation and a specific statement of the reasons for
such postponement or restriction on use and an estimate of the anticipated
delay. You shall treat such notice as confidential, and not permit it to become
disclosed in a manner which might affect the market for Alpha's securities.
Alpha shall promptly notify you of the expiration or earlier termination of a
Section 2(f) Period.
(g) If (i) during the period that the Registration Statement
referred to in Section 2(a) is effective, Alpha shall file a registration
statement (other than in connection with the registration of securities for the
account of any person or entity other than Alpha or the registration of
securities issuable pursuant to a continuous "at the market offering" pursuant
to Rule 415(a)(4) under the '33 Act, an employee stock option, stock purchase,
dividend reinvestment plan or similar plan) with respect to any of its
securities and (ii) with reasonable prior notice, (A) Alpha (in the case of a
non-underwritten offering pursuant to such registration statement) advises you
in writing that The Board of Directors of Alpha has determined in good faith
that a sale or distribution of all of the Alpha Shares would substantially and
materially adversely affect such offering (and provides to you along with such
writing, a certified copy of the applicable board resolution certified by the
Secretary of the Corporation) or (B) the managing underwriter or underwriters
(in the case of an underwritten offering) advise Alpha in writing (in which case
Alpha shall notify you), that a sale or distribution of all of the Alpha Shares
would substantially and materially adversely affect such offering, then you
shall, to the extent not inconsistent with applicable law, refrain from
effecting any sale or distribution of Alpha Shares, including sales pursuant to
Rule 144 under the '33 Act, during the 10-day period prior to and the (up to
90-day period
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 10
subsequent to) the effective date of such registration statement (a
"Section 2(g) Period").
(h) The effective period of the Registration Statement
referred to in Section 2(a) shall be extended by a number of days equal to the
number of days of any Section 2(f) and Section 2(g) Periods occurring during
such period as well as the number of days during which you cannot sell your
Alpha Shares under Section 2(e). Notwithstanding anything set forth herein to
the contrary, it is expressly understood and agreed that the aggregate of any
Section 2(f) and Section 2(g) Period, shall not exceed 90 days. Further, the
application of Section 2(e), 2(f) or 2(g) hereof shall not relieve Alpha from
any of its obligations under Section 2(a) above.
(i) Alpha agrees that in the event that the Registration
Statement relative to the Alpha Shares is not declared effective by the SEC on
or before 120 days after the date of this agreement by reason of Alpha's failure
to (i) reasonably promptly reply to any SEC staff comments (including but not
limited to Alpha's failure to have current financial data) with respect thereto,
(ii) comply with the provisions of Section 2(a) above, (iii) be able to register
the Alpha Shares on Form S-3 because it is no longer qualified to use such Form
S-3; Alpha shall automatically issue to you an additional 10,000 shares of
Common Stock of Alpha (the "Penalty Shares") within three (3) business days
after such 120 day period and in the event that the Registration Statement
relative to the Alpha Shares is not declared effective within sixty (60) days
after the aforementioned 120 day period Alpha shall automatically issue to you
an additional 10,000 Penalty Shares within 3 business days after the
aforementioned sixty (60) day period; provided, further that in the event that
the Registration Statement is declared effective after 120 days, but before 180
days from the date hereof Alpha shall automatically issue to you a pro-rata
portion of the second 10,000 Penalty Shares simultaneous with the effective date
of the Registration Statement. In no event shall the aggregate amount of Penalty
Shares exceed 20,000 shares of Common Stock of Alpha. Alpha's obligations with
respect to the Penalty Shares are identical to its obligations with respect to
the Alpha Shares, including, but not limited to, the registration requirements
set forth in Section 2(a) hereof. Consequently, any and all Penalty Shares
shall, by amendment, be included in the Registration Statement. Except as
expressly set forth herein to the contrary, all references to Alpha Shares shall
include Penalty Shares to the extent that any Penalty Shares shall have been
required to be issued hereunder. Alpha shall immediately provide copies of any
and all filings and correspondence to and from any and all regulatory
authorities, including but not limited to the SEC, Nasdaq, and any state
securities commissions, with respect to the registration of the Alpha Shares to
Clifford Brandeis, Esq., Zukerman Gore & Brandeis, 900 Third Avenue, New York,
New York 10022.
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 11
3. Legends. The certificate representing the Alpha Shares,
and the certificates for any securities issued in exchange therefor
or transfer thereof, shall bear the following legends:
(a) "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. IT MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITY UNDER SUCH
ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD
PURSUANT TO RULE 144 OF SUCH ACT."
(b) the Blue Sky legends borne by the certificate
representing the Uni-Star Shares.
The certificates issuable to any transferees on your sale of Alpha Shares
pursuant to the Registration Statement referred to in Section 2(a) during its
effective period shall not bear such legends.
4. Non-Competition; Etc.
4.1 Non-Competition. (a) In view of the facts that you served
as Uni-Star's chief executive officer and that you are selling your entire
interest in Uni-Star to Alpha, you agree with Alpha and Uni-Star that, until
February 28, 1998 you shall not (and represent and warrant to Alpha and Uni-Star
that, except as a shareholder, officer and employee of Uni-Star during the
Service Period, neither you nor a Castleman Affiliate (hereinafter defined) did
not) directly or indirectly, anywhere in Uni-Star's Market Area (hereinafter
defined), as an officer, director, stockholder, partner, member, associate,
employee, consultant, owner or lender, become or be interested in, or associated
with, any corporation, sole proprietorship, partnership, limited liability
company, firm or business (each, a "Castleman Affiliate") engaged in the design,
manufacture, offer for sale, sale, license of, a Uni-Star Connector (hereinafter
defined),
(b) A "Uni-Star Connector" is one or more of the
following:
(i) a Connector Product designed to comply with
military specification no. Mil-C-83513, Mil-C-55302/120-124,
Mil-C-28754, Mil-C-28859, Mil-A-28870, or Mil-STD-1130 (wire
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 12
wrapping), as any of such may be amended or superseded from
time to time (each, a "Uni-Star Mil-Spec Connector"), or
(ii) a Hermetic Connector (hereinafter defined), or
(iii) a Listed Product (hereinafter defined), or
(iv) a Proprietary Product (hereinafter defined), or
(v) a Derivative (hereinafter defined), or
(vi) a Replacement (hereinafter defined) of a
Connector Productor offered for sale on or prior to the date hereof by
Uni-Star, provided, however, that nothing in this clause (vi) shall
prohibit your design, manufacture, offer for sale or sale or the
design, manufacture, offer for sale or sale by a Castleman Affiliate,
of a Connector Product to a party who is not a Uni-Star Customer
(hereinafter defined), and further provided, however, that a Connector
Product offered for sale to for use by a Uni-Star Customer in a new
product of such Customer with respect to which product it first
requested information generally from designers or manufacturers of
connectors for placing an order therefor after November, 1995 shall not
be considered a Replacement for purposes of this clause (vi), or
(vii) a VME (versa (i.e., versatile) module,
European) backpanel/enclosure system, or
(viii) a HDSM (high density standard module) Micro-
connector (hereinafter defined), or
(ix) a rectangular Micro-connector, or
(x) a circular Micro-connector, or
(xi) a Nano-connector (hereinafter defined).
(c)(i) The "Market Area" is the territory encompassed by all
areas in which Uni-Star's products or services are marketed or sold,
which you acknowledge to be the United States and to also include
Canada, the United Kingdom, France, Germany, Japan, Italy, Switzerland,
Israel, the Republic of China (Taiwan), Hong Kong and Singapore;
provided, however, that no territory not named in this subparagraph
(c)(i) shall be deemed part of the Market Area.
(ii) A "Listed Product" is a Connector Product referred
to, on Exhibit A hereto.
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 13
(iii) A "Derivative" is (x) a product referred to on
Exhibit B, or (y) a Connector Product which is plug-to-plug compatible
(hereinafter defined) with a Uni-Star Mil Spec Connector, a Hermetic
Connector, a Listed Product, a Proprietary Product or Replacement.
(iv) A "Hermetic Connector" is a Connector Product which
has a glass to metal seal, including, without limitation, a Connector
Product with a glass to metal seal designed to comply with military
specification nos. Mil-C-5015, Mil-C-26482 (Series 1 and 2),
Mil-C-26500, Mil-C-38999 (Series 1, 2, 3 and 4), Mil-C-83723 (Series 3)
or Mil-C-81703 (Series 1), as any of such may be amended or superseded
from time to time, to the extent that such specification as so amended
or superseded includes a glass to metal seal design.
(v) A "Proprietary Product" is a Connector Product
referred to on Exhibit A, B or C hereto, provided, however, that any
Connector Product based on a design or on intellectual property
misappropriated from Uni-Star which comes into your possession or into
the possession of a Castleman Affiliate shall be deemed listed on
Exhibit C.
(vi) A "Replacement" is a Connector Product designed to be
used instead of a Uni-Star Mil-Spec Connector, a Listed Product, a
Derivative or a Proprietary Product, provided, however, that a product
shall not be considered a Replacement of another product if its
purchase and use by a customer for its application is less economical
to the customer than the product it replaces.
(vii) A "Micro-connector" is a Connector Product with
active pins (hereinafter defined) or a passive socket (hereinafter
defined) with contact points placed at a distance, center to center, of
.050 inches or less (but more than .025 inches). An "active pin" is a
twist pin or multi-leaf stamped pin, and a "passive socket" is a female
mate to an active pin.
(viii) A "Nano-connector" is a Connector Product with active
pins or a passive socket with contact points placed at a distance,
center to center, of .025 inches or less.
(ix) A "Connector Product" is a connector or a connector
component (hereinafter defined). Subject to Section 4.1(e)(iii) hereof,
a product which contains a Connector Product is also a Connector
Product. A "connector component" is a shell, insulator, hardware or a
contact for a connector.
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 14
(x) A Connector Product ("CP-I") is "plug-to-plug
compatible" with another Connector Product ("CP-II") if, ignoring
differences in pin count and/or pin configuration, the male component
of CP-I fits the female component of CP-II.
(xi) A "Uni-Star Customer" is a party who now is, or
prior to the date hereof was, a customer of Uni-Star for any Connector
Product.
(xii) For purposes of Sections 4.1(b) and 4.1(c) hereof,
the term "Uni-Star" means Uni-Star Industries, Inc., the Interconnect
Systems Division of Microdot, Inc. (its predecessor), Malco Microdot
SARL (its French subsidiary), and Malco Microdot UK, Ltd. (its United
Kingdom subsidiary).
(d) Nothing provided for in Section 4 hereof is
intended to limit anything provided for in Section 5 hereof or elsewhere in this
agreement, and nothing in Section 4 hereof shall be so construed. Nothing
provided for in Section 5 hereof is intended to limit anything provided for in
Section 4 hereof or elsewhere in this agreement, and nothing in Section 5 hereof
shall be so construed.
(e) Notwithstanding any other provision in Section
4.1(a) hereof to the contrary, for purposes thereof:
(i) you or a Castleman Affiliate may manufacture and sell
a Connector Product to a customer (including a Uni-Star Customer) if
Uni-Star has refused to sell such Connector to such customer, provided,
however, that, prior to any sale to such customer you notify Uni-Star
in writing of your intended sale and Uni-Star does not within 14 days
of receipt thereof advise you in writing that it has not refused to
make such sale;
(ii) you or a Castleman Affiliate may use processes which
do not include confidential matters or trade secrets of Uni-Star in the
manufacturing of Connector Products which are not Uni-Star Connectors;
(iii) you or a Castleman Affiliate may manufacture and sell
products which contain Connector Products if the primary purpose of the
sale is not to provide the Connector Products therein;
(iv) you or a Castleman Affiliate may own, directly or
indirectly, shares of stock of a corporation, which shares are
regularly traded on a national securities exchange or on the NASDAQ
National Market and which shares do not amount to
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 15
the lesser of (x) five per cent of the outstanding shares of
such corporation, or (y) an aggregate market value in excess
of $500,000; and
(v) without limiting what is not a Uni-Star Connector,
no Connector Product referred to on Exhibit D shall be
considered a Uni-Star Connector.
(f) In view of the facts referred to in Section
4.1(a) hereof, you agree that, until February 28, 1998, neither you nor a
Castleman Affiliate shall, directly or indirectly, anywhere in Uni-Star's Market
Area engage in the solicitation, hiring or retention of any employee of
Uni-Star, other than the employees named in Exhibit E hereto.
(g) Sections 4.1 and 5 hereof shall terminate in
the event Uni-Star and its successors cease to do business.
4.2 Severability. (a) If any of the provisions contained in
Section 4.1, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, you agree that the body
making such determination shall have the power to reduce the duration and/or
area of such provision and, in its reduced form, said provisions shall then be
enforceable.
(b) In the event that, under the laws of any
jurisdiction within the geographical scope of the covenants contained in Section
4.1, such covenants would be wholly unenforceable by reason of the breadth of
their scope or otherwise, it is the intention of the parties hereto that such
determination not bar nor in any way affect Uni-Star's right to the relief
provided above under the laws of any other jurisdiction within the geographical
scope of such covenants, and as to breaches of such covenants in such other
respective jurisdictions, the above covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants.
5. Protection of Confidential Information.
5.1 Confidential Information Restrictions. In view of the
facts that you are hereunder selling to Alpha your entire interest in Uni-Star
and that your work for Uni-Star as its President during the Service Period
brought you into close contact with confidential matters and trade secrets of
Uni-Star, you:
(a) agree to keep secret and retain in the
strictest confidence all, and not use any, confidential matter or
trade secret of Uni-Star (as defined in Section 4.1(c)(xii)),
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 16
including (to the extent it constitutes a confidential matter or trade secret),
without limitation, any of its trade "know-how", business, product or marketing
plans, the identity of its present or past customers, suppliers or contractors,
its procedures or policies in purchasing, marketing or sales (including, without
limitation, any of its pricing policies), operational methods, technical
processes, product designs, product or process developments, drawings or
specifications, formulae, patterns, compilations, programs, prototypes, devices,
methods, techniques and processes, except to the extent that any of the
foregoing first became or becomes known to you in an integrated form after the
Service Period without violation of Uni-Star's rights thereto (without limiting
your right to claim that what was known to you prior to and during the Service
Period does not constitute a confidential matter or a trade secret) or becomes
publicly known in an integrated form without violation, by you or any person
directly or indirectly related to you, of Uni-Star's rights thereto; provided,
however, that the foregoing shall not restrict you with respect to a product
concept constituting a confidential matter or trade secret if (1) the concept
was known to you prior to the Service Period, (2) it does not relate to a
Uni-Star Connector or a Uni-Star wire product or Uni-Star cable product, and (3)
it does not relate to a Uni-Star Value Added Product (hereinafter defined). A
Uni-Star Value Added Product is a wire harness, cable assembly, or
elctro-mechanical sub-assembly which contains one or more Uni-Star Connectors;
provided, however, that no connector-based electro-mechanical sub-assembly
heretofore designed, sold or manufactured by you or a Castleman Affiliate shall
consititue a Uni-Star Value Added Product; and
(b) represent and warrant that when you left Uni-
Star's employ in November 1995 you left at Uni-Star, in its usual and proper
location at Uni-Star's premises at 306 Pasadena Avenue, South Pasadena,
California, all memoranda, notes, records, plans, lists, reports, manuals,
drawings, specifications and other documents (and all copies thereof, in any
media, including, without limitation, in computer memory or readable form)
relating to such confidential matters or trade secrets which you possess or
possessed or have or had under your control (other than copies of material not
constituting a confidential matter or trade secret which was publicly available
in integrated form).
5.2 Recovery of Confidential Information. You agree to
promptly advise Uni-Star in writing if you have reason to believe that any
confidential matter or trade secret of Uni-Star (as defined in Section
4.1(c)(xii)) is or has come into your possession or into the possession of a
Castleman Affiliate, and to take such reasonable steps as Uni-Star may request,
at Uni-Star's expense (except if it is in your possession or in the possession
of a
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 17
Castleman Affiliate over whom you have control), to protect its rights with
respect thereto.
5.3 Cooperation. Until February 28, 1998, you agree to fully
cooperate in all reasonable respects, with Uni-Star (via telephone and review of
documents at your office) with respect to any action it may desire to take, or
any information it may seek, to perfect or protect any of its rights or
properties, insofar as such may pertain to the Service Period. Uni-Star shall
reimburse you for your reasonable expenses (including, subject to the next
sentence, a reasonable fee, not in excess of $350 per hour, for your time in
excess of two hours during any month) in providing such cooperation. Unless you
are called by Uni-Star as a non-expert with respect to a claim by Uni-Star
against a third party, you will not be reimbursed for your time spent in
connection with your compliance with legal process, including, without
limitation, subpoenas. Nothing contained in this Section 5.3 shall be construed
to require you to travel outside of Los Angeles County.
5.4 Misappropriated Confidential Information. Although
Uni-Star believes that certain of its confidential information may
have been wrongfully removed from its possession and misappropriated, it has no
actual knowledge that you have misappropriated any such confidential
information. However, nothing herein shall be construed to mean that Uni-Star
has or has not examined your business, products or services, or has or has not
conducted any investigation or inquiry, to determine whether such may provide
evidence of your possession or use of any such confidential information.
6. Injunctive Relief. You recognize that, because of the nature of the
subject matter of Sections 4 and 5 hereof, it would be impractical and extremely
difficult to determine Uni-Star's actual damages, and that Uni-Star would be
harmed irreparably, in the event of your breach of Section 4 or 5 hereof.
Accordingly, if you commit a breach, or threaten to commit a breach, of any of
the provisions of Section 4 or 5 hereof, Alpha and Uni-Star shall,
notwithstanding the provisions of Section 7 hereof, be entitled to have the
provisions of Section 4 and 5 specifically enforced by temporary, preliminary
and permanent injunctive relief, without the posting of a bond, surety or other
security, which you waive. Each of the parties submits to the jurisdiction of
the Los Angeles Superior Court, sitting in Los Angeles, California, and waives
any defense of inconvenient forum to the maintenance of such action. You appoint
Perry Silver, Esq. (and in the event of his unavailability, any member of said
firm), Silver & Freedman, 1925 Century Park East, Suite 2100, Los, Angeles,
California 90067-2722, and Uni-Star and Alpha appoint Joseph Greenberger, Esq.,
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 18
Greenberger & Forman, 1370 Avenue of the Americas, New York, New York 10019 (and
in the event of his unavailability, any member of said firm) as their respective
agents to receive on their respective behalfs service of the summon, complaint,
orders, and any other process that may be served in such action.
7. Arbitration. (a) Any claims by Uni-Star or Alpha against you, or by
you against Uni-Star or Alpha, arising out of or in connection with this
agreement shall be determined by arbitration in accordance with this agreement;
provided, however, that in the event of your alleged breach or default under
this agreement, Uni-Star and Alpha may also commence a court action for
injunctive relief pursuant to Section 6 hereof, but, upon the issuance and
during the continuance of injunction relief pursuant to Section 6 hereof, all
proceedings in such action shall be stayed and all issues therein shall be
determined by arbitration as provided herein and the decision of the arbitrator
on such issues shall be determinative in the action. The arbitration may be
commenced by a demand for arbitration with notice of claims served on a party's
agent for service of process as provided for in Section 6 hereof, with a
simultaneous copy thereof to the JAMS/Endispute office in Los Angeles,
California. There shall be one arbitrator agreed upon by the parties, or if the
parties cannot agree on the identity of the arbitrator within five days of the
arbitration demand, the arbitrator shall be selected by the administrator of the
JAMS/Endispute office in Los Angeles, California, and, except as provided
herein, the arbitrator shall be conducted in accordance with the JAMS/Endispute
Comprehensive Arbitration Rules and Procedures then in effect. The arbitrator
shall be an attorney with at least 10 years of judicial experience or an
attorney with at least 15 years of practice experience and whose practice
includes trade secret and intellectual property law (or an attorney with a
combination of at least 10 years of such judicial and practice experience). Any
issue about whether a claim is covered by this agreement to arbitrate shall be
determined by the arbitrator.
(b) The provisions of Section 1283.05 of the Code of Civil
Procedure, as amended or replaced as of the arbitration, are incorporated into
this agreement and shall be applicable to the arbitration. Depositions may be
taken and discovery may be obtained in any arbitration under this agreement in
accordance with said statute, as amended or replaced as of the arbitration. The
arbitrator shall not be bound by rules of evidence, but may consider such
writings and oral presentations as reasonable business people would use in the
conduct of their day-to-day affairs, and may require the parties to submit some
or all of their case by written declaration or such other manner of presentation
as the arbitrator may determine to be appropriate. Pre-trial
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 19
memoranda shall be exchanged no later than five days before the hearing. The
parties intend to limit live testimony and cross-examination to the extent
necessary to ensure a fair hearing on material issues without unnecessarily
prolonging the arbitration.
(c) The arbitrator shall take such steps as he or she may
consider necessary to start the hearing within 60 days of the appointment of the
arbitrator and to conclude the hearing within 20 days; and the arbitrator's
written decision shall be made not later than ten days after the conclusion of
the hearing. A stenographic record shall be kept of the hearing, except that the
arbitrator may employ telephonic conference calls with the parties' attorneys to
decide discovery and procedural issues, and no stenographic record shall be
required thereof. The parties have included these time limits in order to
expedite the proceeding, but they are not jurisdictional, and the arbitrator
shall for good cause (including the inability of a party to complete its
discovery despite diligent efforts in connection therewith) allow reasonable
extensions or delays, which shall not affect the validity of the award. The
written decision shall contain a brief statement of the claim(s) determined and
the award made on each claim. In making the decision and award, the arbitrator
shall apply applicable substantive law. Absent fraud, collusion or willful
misconduct by the arbitrator, the award shall be final, and judgment may be
entered in any court having jurisdiction thereof. The arbitrator may award
injunctive relief or any other substantive or procedural direction available
from a judge in an action, in law or equity, and shall award the predominantly
prevailing party its reasonable attorneys' fees and disbursements and expenses
(including stenographic, witnesses', experts' and investigational fees and
expenses) in connection with the arbitration. Until the arbitrator's award of
costs, the fees and disbursements of the arbitrator and stenographic recording
expenses shall be borne and paid 50% by you and 50% by Uni-Star or Alpha
(whichever may be a party to the arbitration).
(d) Notwithstanding any term in this agreement to the
contrary, each party hereto, on or prior to the commencement of arbitration
hereunder, shall first notify the other party in writing of its intention to
seek arbitration and the specific bases upon which its' claims are made. Within
ten (10) days, the party in receipt of such notification may request that
JAMS/Endispute provide mediation services with one mediator in accordance with
the Rules and as selected by the Administrator. The parties hereto agree to use
their best efforts to effect a resolution of a dispute prior to the commencement
of arbitration. Nothing herein shall limit the parties from seeking injunctive
relief as provided in Section (a).
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 20
8. Entire Agreement; Survival. The foregoing and the Release
set forth the entire agreement, and all representations and warranties, on the
subjects thereof, and supersede all previous and contemporaneous negotiations,
commitments, understandings, agreements, covenants, representations and
warranties relating to the subjects thereof (whether written or oral). All
representations and warranties and (except to the extent performed on or prior
to closing) all covenants and agreements herein shall survive the Closing.
Please sign and return this letter to us, at which time it and the
Release shall become binding agreements which may not be modified or terminated
except by a writing signed by the party to be charged therewith.
Sincerely,
ALPHA TECHNOLOGIES GROUP, INC.
By: /s/ Lawrence Butler
-----------------------------
Lawrence Butler, President
UNI-STAR INDUSTRIES, INC.
By: /s/ Ernest Hartland
-----------------------------
Ernest Hartland, President
AGREED AND ACCEPTED:
/s/ NEAL CASTLEMAN
- ------------------------------------
NEAL CASTLEMAN
Dated: August 15, 1996
<PAGE>
Mr. Neal Castleman
August 15, 1996
Page 21
Exhibits Attached
Exhibit A Section 4.1(c)(ii) Listed Products
Exhibit B Section 4.1(c)(iii) Certain Derivatives
Exhibit C Section 4.1(c) (v) Certain Proprietary Products
Exhibit D Section 4.1(e)(v) Certain Non-Connector Products
Exhibit E Section 4.1(f) Non-Restriction Employees
<PAGE>
EXHIBIT 10.26
SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE OF ALL CLAIMS
THIS SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
OF ALL CLAIMS ("Release") is made as of August 13, 1996, in the County of Los
Angeles, State of California, by and between Alpha Technologies Group, Inc., a
Delaware corporation ("Alpha"), Uni-Star Industries, Inc., a Delaware
corporation ("Uni-Star"), Malco Microdot SARL, Malco Microdot UK, Ltd., all
collectively "Corporation," and Neal Castleman, Ergo Mechanical Systems, Inc., a
California corporation ("EMSI"), Lynx Systems, Inc., a California corporation
and Unisource Automation, Inc., a California corporation (collectively
"Castleman"), whereby each of the parties, pursuant to Section 1541 of the
California Civil Code, extinguishes their rights and claims against the other as
herein enumerated.
In consideration of the mutual promises and covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is agreed as follows:
1. Release by Corporation. Corporation, on behalf of itself,
and on behalf of its directors, officers, agents, employees, attorneys, assigns,
subsidiaries, divisions, predecessors and successors, in their capacities as
such (collectively "Agents of Corporation"), hereby fully releases and
discharges Castleman, and his agents, employees, attorneys, heirs, executors,
administrators, and successors in their capacities as such (collectively "Agents
of Castleman") form each, any and all claims, demands, duties, debts,
liabilities, liens, obligations, acts, omissions and causes of action, of every
type, nature, kind or description, known or unknown, which Corporation and/or
the Agents of Corporation might or may hold or claim to exist against Castleman
and/or the Agents of Castleman, arising out of or in connection with any
contract, transaction act, cause, matter, thing or representation existing at
the time of execution hereof; including but not limited to his failure to
disclose to Corporation the existence or details of the legal proceedings
pending against Castleman in the United States Federal District Court for the
District of Arizona; provided, however, that this Release shall not release
Castleman or the Agents of Castleman from any obligations created in this
Release or in that certain Exchange Agreement, dated as of the date of this
Release ("Exchange Agreement"), to which this release is attached thereto as
Exhibit "A" and therewith incorporated therein by this reference.
2. Release by Castleman. Castleman, on behalf of himself, and
on behalf of the Agents of Castleman, hereby fully releases and discharges
Corporation and the Agents of Corporation, form each, any and all claims,
demands, duties, debts, liabilities, liens, obligations, acts, omissions and
causes of action, of every type, nature, kind or description, known or unknown,
which Castleman and/or the Agents of Castleman might or may hold or claim to
exist against Corporation and/or the Agents of Corporation, arising out of or in
connection with any contract, transaction, act, cause, matter, thing or
representation existing at the time of execution hereof, including but not
limited to all claims for wrongful termination, emotional distress or otherwise;
provided, however, that this Release shall not release Corporation or the Agents
of Corporation from any obligations created in this Release or in the Exchange
<PAGE>
Agreement or in that certain confidentiality agreement dated November 15, 1995
among Castleman, Corporation and certain others ("Confidentiality Agreement").
3. Release of Unknown Claims. Each party expressly
acknowledges that he/it may hereafter discover facts different from or in
addition to those now known or believed to be true with respect to such claims,
demands, duties, debts, liabilities, liens, obligations, acts, omissions or
causes of action and agrees that this Release shall be and remain effective in
all respects notwithstanding any such different or additional facts.
4. Civil Code Section 1542 Waiver. Each party expressly
acknowledges an awareness of the provisions of California Civil Code Section
1542, and understands the significance and consequences of waiving same, and
does hereby expressly waive any and all rights each may have under such Section
or any similar law of any State or territory of the United States, which, for
purposes of demonstrating each party's intent to so waive, is set forth in full
as follows:
"1542. General Release Extent:
A general release does not extend to claims
which the creditor does not know or suspect
to exist in his favor at the time of
executing the release, which if known by him
must have materially affected his settlement
with the debtor."
By virtue of each party's specific waiver of the above-quoted Section, each
party hereby assumes full responsibility for and does execute this Release.
5. Voluntary Execution. Each party expressly acknowledges that
he/it has carefully read this Release and the Exchange Agreement and is
completely familiar with and understands each and every provision thereof, that
this Release and the Exchange Agreement is fair and just in all of its
particulars, and that he/it enters into, executes and accepts this Release and
the Exchange Agreement freely and voluntarily, without reliance upon any
statements, representations, promises, covenants or inducements made by the
other, or any of the other's representatives, except as may be provided in this
Release or the Exchange Agreement.
6. No Assignment of Claims. Each party represents and warrants
that he/it has not heretofore assigned or transferred, or purported to assign or
transfer, to any person or entity whatsoever any claim, demand, duty, debt,
liability, lien, obligation, action or cause of action herein released. Each
party agrees to indemnify and hold the other harmless from and against any
claim, demand, duty, debt, liability, lien, obligation, action, cause of action,
cost and expense (including but not limited to reasonable attorneys' fees)
asserted against or imposed upon or incurred by the other party based on,
arising out of or in connection with any such assignment or transfer or
purported assignment or transfer.
7. Cancellation of Certain Agreements; Entire Agreement.
Except for purchase order no. 23C4 agreed upon between EMSI and Uni-Star
(Microdot) ("P.O."), the Exchange Agreement and the Confidentiality Agreement,
<PAGE>
all of which shall survive this Release, all prior agreements and understandings
between the parties, written and oral, are hereby acknowledged to be canceled,
voided and of no force or effect whatsoever. That certain sublease agreement
between Corporation and Hoffman/Vest Associates ("Lessor") is hereby terminated,
and Lessor's execution hereof shall constitute acceptance of such termination.
This Release, the P.O. and the Exchange Agreement constitute the entire
agreement and understanding between the parties concerning the subject matter
hereof and thereof, and supersedes and replaces all prior negotiations, proposed
agreements and agreements, written and oral, relating to the subject matter
hereof and thereof.
8. Unisource Automator Issues. On or before the ninetieth
(90th) day following Closing as contemplated in the Exchange Agreement,
Castleman will cause Unisource Automation to change its name so as not to
include the words "Uni" or "Star."
9. Confidentiality. Corporation and the Agents of Corporation
shall not divulge the existence of or disclose the terms of this Release or the
Exchange Agreement directly to DeCrane Aircraft Holdings, Inc., an Ohio
corporation, or to any person it knows to be its directors, officers, agents,
employees, attorneys, subsidiaries and successors of DeCrane Holdings, Inc.,
except as is otherwise required by law or generally released to the public. This
Section 9 shall survive this Release.
10. Liability Denied. Each party acknowledges and agrees that
this Release affects the claims of each party against the other party which were
denied and contested by each other and that nothing contained in this Release
shall be construed as an admission of liability by or on behalf of any of them,
by whom liability is expressly denied.
11. California Law. This Release shall be interpreted,
construed and governed by, in accordance with and consistent with the Laws of
the State of California, which shall apply in all respects, including statutes
of limitation, to any disputes or controversies arising out of or pertaining to
this Release.
12. Counterparts. This Release may be executed in any number
of counterparts, each of which shall be deemed an original but all of which,
when taken together, shall constitute one and the same document.
13. Grammar. Whenever required by the context hereof, the
singular shall be deemed to include the plural, the plural shall be deemed to
include the singular; the masculine, the feminine and neuter gender shall be
deemed to include the others.
14. Severability. In the event that any term, provision,
condition or other portion of this Release is determined to invalid, void or
unenforceable by a forum of competent jurisdiction, the same shall not affect
any other term, provision, condition or other portion hereof, and the remainder
of this Release shall remain in full force and effect, as if such invalid, void
or unenforceable term, provision, condition or other portion of this Release did
not appear herein.
<PAGE>
15. Attorneys' Fees. In the event that any suit in law or
equity, arbitration or other formal proceeding is instituted to recover damages
for breach of this Release, the prevailing party shall be entitled to recover
costs of suit incurred therein, and to also recover as an element of such costs
(but not as damages) reasonable attorneys' fees incurred by such prevailing
party. For purposes of this Release, the term "prevailing party" shall be the
party who is entitled to recover costs of suit, whether or not the proceeding is
brought to final judgment or award. A party not entitled to recover costs shall
not recover attorneys' fees.
IN WITNESS WHEREOF, this Release has been executed, delivered
and made effective as of the date and in the place first written above.
CASTLEMAN: CORPORATION:
Alpha Technologies Group, Inc.
/s/ Neal Castleman By: /s/ Lawrence Butler
- ------------------------------ ----------------------------------
Neal Castleman Lawrence Butler, President
Ergo Mechanical Systems, Inc. Uni-Star Industries
By: /s/ Neal Castleman By: /s/ Ernest Hartland
--------------------------- ----------------------------------
Neal Castleman, President
Lynx Systems, Inc. Malco Microdot SARL
By: /s/ Neal Castleman By: /s/ Ernest Hartland
--------------------------- ----------------------------------
Neal Castleman, President
Unisource Automation, Inc. Malco Microdot UK, Ltd.
By:/s/ Neal Castleman By: /s/ Ernest Hartland
--------------------------- ----------------------------------
Neal Castleman, President
<PAGE>
Uni-Star Industries, Inc.
By: /s/ Ernest Hartland
---------------------------------
Ernest Hartland, President
Agrees to as relates only to paragraph 7 hereof.
Lessor:
By: /s/ Ellen Hoffman
---------------------------------
Ellen Hoffman, President
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated November 16, 1995
included in Alpha Technologies Group Inc.'s Form 10-KSB for the year ended
October 29, 1995 and to all references to our Form included in this registration
statement.
/s/ Arthur Andersen, LLP
---------------------------
Arthur Andersen, LLP
Houston Texas
September 3, 1996
