<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for use of Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Materials Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Alpha Technologies Group, Inc.
--------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Registrant
--------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
____________________________________________________________
2) Aggregate number of securities to which transaction applies:
____________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
____________________________________________________________
4) Proposed maximum aggregate value of transaction:
____________________________________________________________
5) Total fee paid:
____________________________________________________________
[_] Fee paid previously by written preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ________________________________________________
2) Form, Schedule or Registration Statement No.: __________________________
3) Filing Party: __________________________________________________________
4) Date Filed: ____________________________________________________________
<PAGE>
ALPHA TECHNOLOGIES GROUP, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 21, 1998
TO THE STOCKHOLDERS OF ALPHA TECHNOLOGIES GROUP, INC.:
The 1998 Annual Meeting of the Stockholders (the "Annual Meeting") of ALPHA
TECHNOLOGIES GROUP, INC., a Delaware corporation (the "Company"), will be held
at 11:00 a.m. on Tuesday, April 21, 1998, at 306 Pasadena Avenue, South
Pasadena, California 91030 for the following purposes:
1. To elect six directors to the Board of Directors who will each serve
for a term of one year and until their successors have been elected and
qualified.
2. To approve certain amendments to the Company's 1994 Stock Option Plan.
3. To transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements thereof.
Only stockholders of record at the close of business on March 2, 1998, are
entitled to notice of and to vote at the Annual Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, STOCKHOLDERS ARE
REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE PROVIDED THEREFOR. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
IF YOU ARE ABLE TO ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES
PERSONALLY, YOU MAY DO SO AT ANY TIME BEFORE THE PROXY IS EXERCISED.
By Order of the Board of Directors,
/s/ Lawrence Butler
Lawrence Butler,
President and Chief Executive
Officer
February 23, 1998
<PAGE>
ALPHA TECHNOLOGIES GROUP, INC.
9465 WILSHIRE BOULEVARD SUITE 980
BEVERLY HILLS, CA 90212
----------------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
----------------
The 1998 Annual Meeting of Stockholders (the "Annual Meeting") of ALPHA
TECHNOLOGIES GROUP, INC., a Delaware corporation (the "Company" or "Alpha"),
will be held at 11:00 a.m. on Tuesday, April 21, 1998, at 306 Pasadena Avenue,
South Pasadena, California. The enclosed proxy is solicited on behalf of the
Board of Directors of the Company in connection with the Annual Meeting and
any adjournments or postponements thereof. This Proxy Statement and the
enclosed proxy (the "Proxy Materials") are first being mailed to stockholders
of the Company on or about March 6, 1998.
VOTING, PROXIES AND REVOCATION OF PROXIES
Shares represented at the Annual Meeting by an executed and unrevoked proxy
in the form enclosed will be voted in accordance with the instructions
contained therein. If no instructions are given on an executed and returned
proxy, the proxy holders intend to vote the shares represented thereby in
favor of each of the proposals to be presented to and voted upon by the
stockholders as set forth herein, and in accordance with their best judgment
on any other matter which may properly come before the meeting. The Annual
Meeting has been called to elect six directors and to approve certain
amendments to the Company's 1994 Stock Option Plan. Management knows of no
other business that is currently contemplated to be conducted at the Annual
Meeting. Any proxy given by a stockholder may be revoked by such stockholder
at any time prior to its exercise by filing a written instrument revoking the
proxy with the Secretary of the Company; filing a duly executed proxy bearing
a later date with the Secretary of the Company; or attending the Meeting and
voting in person. However, mere attendance at the Meeting will not, in and of
itself, revoke a proxy.
The cost for the solicitation of proxies is being borne by the Company. Such
solicitation is being made by mail and, in addition, may be made by directors,
officers and regular employees of the Company, either in person or by
telephone or telegram, without additional compensation for such services.
Mackenzie Partners, Inc. will assist the Company in the mailing of Proxy
Materials and the solicitation of proxies, for which it will be paid $2,500
plus expenses. The Proxy Materials will also be distributed to brokerage
houses, fiduciaries, custodians and other like parties for distribution to the
beneficial owners of capital stock of the Company and the Company will
reimburse such parties for their out-of-pocket expenses relating thereto.
SHARES ENTITLED TO VOTE
The Company's only outstanding class of voting securities is its common
stock, $.03 par value (the "Common Stock"). Each share of Common Stock
entitles the holder thereof to one vote on matters to be acted upon at the
Annual Meeting. No stockholder is entitled to cumulative voting rights.
Only stockholders of record at the close of business on March 2, 1998 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting
and any adjournments or postponements thereof. As of the Record Date, there
were 6,693,680 shares of Common Stock issued and outstanding.
The stock ledger of the Company (arranged alphabetically, showing the
address of each shareholder of record entitled to vote at the meeting and the
number of shares registered in the shareholder's name) will be available for
inspection at the Company's office at 9465 Wilshire Boulevard, Suite 980,
Beverly Hills, CA 90212 by any stockholder for any purpose germane to the
Annual Meeting during ordinary business hours from April 11, 1998 until the
Annual Meeting date.
<PAGE>
A stockholder who is a beneficial owner, but not a registered owner, as of
the Record Date, cannot vote his or her shares except by (i) the stockholder's
broker, bank or nominee in whose name the shares are registered executing and
delivering a proxy on his or her behalf or (ii) the stockholder attending the
Annual Meeting with a proxy or other authorization to vote from the registered
owner and voting.
ITEM 1. ELECTION OF DIRECTORS
It is intended that a proxy in the accompanying form, unless marked to the
contrary, will be voted in favor of the election of Marshall D. Butler,
Lawrence Butler, Donald K. Grierson, Frederic A. Heim, Kenneth W. Rind and
Michael J. Konigsberg as directors of the Company for a term of one year, and
until their successors are duly elected and qualified or until their earlier
death, resignation or removal.
In the event any of the nominees should become unable or refuse to accept
nomination or reelection to serve as a director, the persons named as proxies
in the enclosed form of proxy may vote for the election of such person or
persons as the Board of Directors of the Company may recommend in the place of
such nominee or nominees. All nominees have consented to be named and have
indicated their intent to serve if elected. Management knows of no reason why
any of these nominees might be unable or refuse to accept nomination or
election.
Each of the nominees is a current member of the Board of Directors who hold
office until their successors are duly elected and qualified. Set forth below
is certain information with respect to all current directors of the Company.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION FOR PAST FIVE YEARS
- - ---- --- ------------------------------------------------
<S> <C> <C>
Marshall D. Butler.......... 71 Chairman of the Board of Alpha since April 26,
1993, and Director of Alpha since April 2,
1993. From September 22, 1994 through April 19,
1995, Mr. Butler served as Chief Executive
Officer of Alpha. He has served as a director
of AVX Corporation, a manufacturer of ceramic
capacitors and a subsidiary of Kyocera
Corporation, since 1973. Mr. Butler served as
Chief Executive Officer of AVX Corporation from
December 1973 until his retirement on April 1,
1993. Mr. Butler was a director of Kyocera
Corporation from January 1990 through June
1995. Mr. Butler has been a director of Mass
Mutual Corporate Investors and Mass Mutual
Participation Investors since 1989. Mr. Butler
is the father of Lawrence Butler. Member of the
Executive and Compensation Committees.
Lawrence Butler............. 35 Mr. Butler has been President and Chief
Executive Officer of Alpha since April 19,
1995. He has served as a Director since, and
was an executive vice president of Alpha from,
September 1994. He has been director, president
and sole shareholder of Camelia Group, Inc.,
the general partner of Dot.Com Partners, L.P.,
f/k/a Steel Partners, L.P. (private investment
partnership), a Delaware limited partnership
("Dot.Com"), since 1990. Lawrence Butler is
Marshall Butler's son. Member of the Executive
Committee.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION FOR PAST FIVE YEARS
- - ---- --- ------------------------------------------------
<S> <C> <C>
Donald K. Grierson......... 63 Served as Vice-Chairman of the Board of Alpha
from April 1993 through April 1995. From
December 7, 1988 until April 26, 1993, Mr.
Grierson served as Chairman of the Board of
Alpha. He has been a director of Alpha since
February 1, 1988. Since 1991, Mr. Grierson has
also served as President and Chief Executive
Officer of ABB Vetco Gray Inc., which designs,
manufactures, sells and services highly
engineered exploration and production equipment
used by the worldwide oil and gas industry,
primarily for offshore applications. Mr.
Grierson currently serves as a director of
Parametric Technology Inc., a developer and
marketer of software products for the
automation of the mechanical design process.
Member of the Stock Option Committee.
Frederic A. Heim........... 71 Director of Alpha since April 2, 1993. Mr. Heim,
a private investor, served as a director of
Encino Savings and Loan, Van Nuys, California,
from 1991 through 1994. He was a co-founder
and, from 1981 to 1990, a director and
Executive Vice President of Computer Memories
Incorporated, which manufactured computer disk
drives. Member of Audit, Stock Option and
Compensation Committees.
Michael J. Konigsberg...... 35 Director of Alpha since April 1996. Since 1988,
Mr. Konigsberg has been employed by Lehman
Brothers Inc. in the following capacities:
August 1995 through present, Senior Vice
President, Leveraged Finance Group; August 1992
through July 1995, Vice President, Leveraged
Finance Group; August 1988 through July 1992,
Associate, Merchant Banking Group. Member of
the Compensation and Audit Committees.
Dr. Kenneth W. Rind........ 62 Director of the Company since April 1995. Since
1981, Dr. Rind has been Chairman of Oxford
Venture Corporation, an independent venture
capital management firm. Dr. Rind is currently
a director of Vasomedical, Inc., a medical
technology company; Computer Power, Inc., an
electronics equipment manufacturer; and ESC
Medical Systems, Ltd., a medical equipment
manufacturer. Member of Audit and Stock Option
Committees.
</TABLE>
3
<PAGE>
DIRECTOR NOT STANDING FOR RE-ELECTION
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION FOR PAST FIVE YEARS
- - ---- --- ------------------------------------------------
<S> <C> <C>
Warren G. Lichtenstein...... 32 Director of Alpha since April 2, 1993. From
September 1994 through September 1995, Mr.
Lichtenstein served as an executive vice
president of Alpha. Mr. Lichtenstein has been
the Chief Executive of the General Partner of
the General Partner of Steel Partners II, L.P.
since 1993. Mr. Lichtenstein has been Chairman
of Steel Partners Services, Ltd. since 1993.
From 1988 to 1990, he was an acquisition/risk
arbitrage analyst with Ballantrae Partners,
L.P., a private investment partnership. Since
1993, Mr. Lichtenstein has served as a director
of SL Industries, Inc., a New York stock
exchange company engaged in the manufacture and
sale of electrical-mechanical and specialty
products. Mr. Lichtenstein has also served,
since April 1994, as a director of Gateway
Industries, Inc. ("Gateway"), which, from
November 1995 to December 1996, was the owner
of Marsel Mirror & Glass Products, Inc.
("Marsel"), a manufacturer of mirror and
related glass products. Marsel filed for
protection under Chapter 11 of the Bankruptcy
Code shortly following Gateway's disposition of
Marsel. Since 1994, Mr. Lichtenstein has served
as a director of Saratoga Spring Water, Inc., a
bottler and distributor of spring water. Since
1996, Mr. Lichtenstein has served as a director
of Rose Stores, Inc., formerly a retail chain
principally in the Southeastern United States.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR THE ELECTION OF THE SIX NOMINEES FOR
DIRECTOR NAMED IN THIS PROXY STATEMENT.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of January 31, 1998, the number and
percentage of outstanding shares of Common Stock of the Company owned
beneficially, within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act"), by (i) each stockholder
known by the Company to own more than 5% of the outstanding shares of Common
Stock; (ii) each director and nominee of the Company; (iii) each named
executive officer; and (iv) all directors, nominees and executive officers, as
a group. Except as otherwise specified, the named beneficial owner has sole
voting and investment power.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERS(1) BENEFICIAL OWNERSHIP(2) OF CLASS(2)
---------------------------------------- ----------------------- -----------
<S> <C> <C>
Marshall D. Butler(3)(4).................. 582,967 8.6%
Lawrence Butler(5)........................ 1,144,727 16.5%
Donald K. Grierson........................ 200,000 3.0%
Frederic A. Heim(3)(6).................... 25,000 *
Michael J. Konigsberg(7).................. 9,834 *
Warren G. Lichtenstein(8)................. 218,300 3.2%
Dr. Kenneth W. Rind(9).................... 50,000 *
Dot.Com Partners, L.P.(10)................ 850,060 12.7%
Michael A. Hoffmann(11)................... 46,000 *
Dimensional Fund Advisors Inc............. 414,700 6.2%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401(12)
All Directors and Executive Officers as a
Group (9 Persons)(13).................... 2,313,935 31.5%
</TABLE>
- - --------
* Constitutes less than 1%
(1) Unless otherwise indicated, the address of each beneficial owner is c/o
Alpha Technologies Group, Inc., 9465 Wilshire Blvd. Suite 980, Beverly
Hills, CA 90212.
(2) Includes shares deemed to be beneficially owned by such persons or
entities pursuant to Rule 13d-3 promulgated under the Exchange Act
because they have the right to acquire such shares within 60 days upon
the exercise of options or similar rights or because such persons or
entities have or share investment or voting power.
(3) Does not include shares owned by Dot.Com of which Mr. M. Butler and Mr.
Heim are each limited partners. Messrs. Butler and Heim disclaim
beneficial ownership of such shares.
(4) Includes 86,667 shares which Mr. M. Butler has the right to acquire upon
the exercise of stock options within 60 days.
(5) Includes 850,060 shares owned by Dot.Com, 15,000 shares owned by a Trust
of which Mr. L. Butler is trustee and 261,667 shares which Mr. L. Butler
has the right to acquire upon the exercise of stock options within 60
days.
(6) Includes 20,000 shares which Mr. Heim has the right to acquire upon the
exercise of stock options within 60 days.
(7) Includes 8,334 shares that Mr. Konigsberg has the right to acquire upon
exercise of stock options within sixty days.
(8) Includes 190,000 shares which Mr. Lichtenstein has the right to acquire
upon the exercise of stock options within 60 days.
(9) Includes 40,000 shares which Mr. Rind has the right to acquire upon the
exercise of stock options within sixty days.
(10) Shares owned by Dot.Com are also included in the number of shares
reported as beneficially owned by Mr. L. Butler.
(11) Address is c/o Wakefield Engineering, Inc., 60 Audubon Road, Wakefield,
MA 01880. Includes 20,000 shares that Mr. Hoffmann has the right to
acquire upon exercise of stock options within sixty days.
(12) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
adviser, is deemed to have beneficial ownership of 414,700 shares of
Alpha stock as of December 31, 1997, all of which shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment Company, a
Delaware business trust, or the DFA Group Trust and DFA Participation
Group Trust, investment vehicles for qualified employee benefit plans,
all of which Dimensional serves as investment manager. Dimensional
disclaims beneficial ownership of all such shares.
(13) Includes 663,675 shares which individuals in the group have the right to
acquire upon the exercise of stock options which are exercisable within
60 days, 850,060 shares held by Dot.Com, 15,000 shares owned by a trust
of which Mr. L. Butler is trustee.
5
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The current executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- - ---- --- ------------------------------------------------
<S> <C> <C>
Marshall D. Butler......... 71 Chairman of the Board
Lawrence Butler............ 35 President and Chief Executive Officer
Johnny J. Blanchard........ 39 Secretary, Treasurer and Chief Financial Officer
Michael A. Hoffman......... 43 President, Wakefield Engineering Inc.
</TABLE>
Each officer of the Company holds office until his successor shall be duly
elected and qualified or until his earlier death, resignation or removal.
Mr. Blanchard has been Chief Financial Officer of the Company since
September 1994; from December 1989, he was Controller of the Company; and from
October 1988, he was General Accounting Manager of the Company. Mr. Blanchard
is a Certified Public Accountant.
Mr. Hoffmann joined Wakefield, as President on November 4, 1996. From 1989
through October 1996, Mr. Hoffman was employed in several managerial
capacities in the Rosemount division of Emerson Electric Company. His last
position was as Vice President, Pressure Operations, where his principal
responsibility was the management of operations.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued for services
rendered in all capacities on behalf of the Company during the last three
fiscal years to the Company's Chief Executive Officer and the Chairman of the
Board (the "Named Executive Officers"), the only executive officers who
received compensation in excess of $100,000 during the fiscal year ended
October 26, 1997.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------- ----------------
AWARDS
----------------
SECURITIES
NAME AND PRINCIPAL FISCAL UNDERLYING ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) OTHER OPTIONS/SARS (#) COMPENSATION
------------------ ------ ---------- --------- ------ ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence Butler......... 1997 185,833 -- -- 25,000(3) 11,400(4)
President and 1996 180,000 -- -- -- 4,050(4)
Chief Executive
Officer(1) 1995 152,039 57,600(2) -- 100,000(3)
Marshall D. Butler...... 1997 75,000 -- -- -- --
Chairman of the Board 1996 112,500 -- -- -- --
1995 150,000 -- -- 100,000 --
Michael A. Hoffmann..... 1997 150,000 27,541 -- 85,000 7,865(6)
President--Wakefield
Engineering, Inc.(5)
Ernest V. Hartland, Jr.. 1997 125,000 -- -- -- 2,019(9)
President--UniStar
Industries, Inc.(7) 1996 67,307 20,000 74,843(8) -- 2,596(9)
</TABLE>
- - --------
(1) On April 19, 1995, Lawrence Butler became President and Chief Executive
Officer of the Company at a salary of $180,000 per annum. In September
1995, Mr. Butler entered into a three-year employment agreement with the
Company. Effective September 1, 1997, Mr. L. Butler's salary increased to
$215,000 per annum. See "Employment Agreements".
(2) Represents amount paid in accordance with Mr. Butler's employment
agreement, based on the Company's earnings for its fiscal year ended
October 29, 1995, from continuing operations, less minority interest and
before provision for income taxes.
6
<PAGE>
(3) On April 19, 1995, in connection with his election as President of the
Company, Lawrence Butler was granted options to purchase 100,000 shares of
Common Stock, 50,100 of which are exercisable at $5.98 per share and
49,900 of which are exercisable at $5.44 per share and all of which vest
in three equal cumulative annual installments until April 19, 1998. The
fair market value of the shares on April 19, 1995 was $5.44. On August 19,
1997, Mr. L. Butler was granted 16,695 incentive stock options which are
exercisable at $3.9875 per share and 8,305 non-qualified stock options
which are exercisable at $3.625 per share. All options were granted under
the Company's stock option plan. On the date of the grant, the fair market
value of the shares was $3.625.
(4) Represents car allowance of $6,900; employer 401(k) matching contribution
of $4,500 for 1997, and a 401(k) matching contribution of $4,050 for 1996.
(5) Mr. Hoffmann joined Wakefield as President on November 4, 1996.
(6) Represents car allowance of $4,490 and employer 401(k) matching
contribution of $3,375.
(7) Mr. Hartland ceased serving as President of UniStar in August, 1997, but
his salary was continued through January 31, 1998 pursuant to his
severance agreement.
(8) Represents reimbursement of moving expenses.
(9) Represents 401(k) matching contributions.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding grants of stock options
to the Named Executive Officers during the last fiscal year. No SARs were
granted during the last fiscal year.
<TABLE>
<CAPTION>
% OF POTENTIAL REALIZABLE
OPTIONS/ VALUE AT ASSUMED ANNUAL
SARS RATES OF STOCK
GRANTED TO APPRECIATION FOR OPTION
EMPLOYEES TERM ($)
OPTIONS/SARS DURING EXERCISE EXPIRATION ------------------------
NAME GRANTED FISCAL YEAR PRICE/SHARE DATE 5% PER YEAR 10% PER YEAR
- - ---- ------------ ----------- ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence Butler (1)..... 16,695 6.5% 3.9875 8/18/2002 9,078 24,208
8,305 3.2% 3.6250 8/18/2002 7,526 15,052
Michael A. Hoffmann..... 60,000 23.2% 4.44 11/4/2001 66,562 133,125
25,000 9.7% 3.63 8/18/2002 22,656 45,312
</TABLE>
- - --------
(1) In January 1998, Mr. L. Butler was granted options to purchase 80,000
shares under the 1994 Plan.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR ENDED OCTOBER 26, 1997
AND FY-END OPTION VALUES
The following table sets forth information regarding each exercise of stock
options during the fiscal year ended October 26, 1997 by the Named Executive
Officers and the fiscal year-end value of unexercised options held by such
persons.
<TABLE>
<CAPTION>
NUMBER OF VALUE
UNEXERCISED UNEXERCISED IN-
SHARES OPTIONS AT THE-MONEY
ACQUIRED FY-END (#) OPTIONS AT FY-
ON VALUE EXERCISABLE/ END EXERCISABLE/
EXERCISE # REALIZED UNEXERCISABLE UNEXERCISABLE
---------- -------- -------------- ----------------
<S> <C> <C> <C> <C>
Lawrence Butler............. -0- -0- 261,667/58,333 $222,912/$20,510
Marshall Butler............. -0- -0- 86,667/38,333 $46,150/$11,537
Michael A. Hoffmann......... -0- -0- 0/85,000 $0/$41,562
</TABLE>
7
<PAGE>
EMPLOYMENT AGREEMENTS
On September 29, 1995, the Company and Mr. L. Butler entered into a three
year employment agreement (the "Agreement"). Under the Agreement, Mr. Butler
is entitled to a base annual salary of $180,000 for the first year of the term
with annual reviews of such base salary by the Board of Directors. In
addition, the Agreement provides for an annual bonus based on the Company's
earnings from continuing operations, less minority interest and before
provision for income taxes.
Effective November 4, 1996, the Company's Wakefield subsidiary entered into
a two year employment agreement with Michael A. Hoffmann, pursuant to which
Mr. Hoffmann is to serve as Wakefield's president and chief executive officer.
Under the agreement, Mr. Hoffmann is to receive an annual salary of $150,000,
a bonus of at least $15,000 for the first year of the term and options to
purchase 60,000 shares of the Company's common stock pursuant to the Company's
1994 Stock Option Plan.
RETIREMENT PLANS
The Company has adopted a 401-K Savings/Stock Purchase Plan (the "401-K
Plan") pursuant to which employees of the Company, including officers and
directors who are full-time employees, may elect to contribute up to 6% of
their salaries with the Company contributing an amount equal to one-half the
employee's contribution. The amounts contributed by the Company vest over the
first five (5) years of a person's employment with the Company. Employees may
also contribute certain additional amounts of their salaries to the 401-K Plan
without matching contributions by the Company. Income on the amounts held in
the 401-K Plan is not subject to Federal income tax until withdrawal. Amounts
held in the 401-K Plan are generally distributable to an employee upon normal
retirement at age 59 or upon the death or disability of the employee. The
Company does not maintain any pension plans.
STOCK OPTION PLANS AND AGREEMENTS
While the Company currently has stock options outstanding under four plans:
1981 and 1984 Incentive Stock Option Plans and the 1985 and 1994 Stock Option
Plans (collectively, the "Stock Option Plans"), options may only be granted
under the 1994 Plan.
In 1993, the Securities and Exchange Commission adopted new rules relating
to the filing of ownership reports by officers, directors and principal
security holders, and the exemption of certain transactions by those persons
from the short-swing profit recovery provisions of Section 16 of the Exchange
Act. As permitted by such new rules, the Company elected to delay phase-in of
new Rule 16b-3 relating to certain employee benefit plans such as the Stock
Option Plans. On August 25, 1993, the Board of Directors adopted resolutions
amending the 1984 and 1985 Stock Option Plans to ensure compliance with Rule
16b-3. The 1994 Plan is also intended to comply with such Rule.
As of October 26, 1997, the number of shares available for future grant
under the 1994 Plan was 167,668, and as of such date the Company had
outstanding options to acquire an aggregate of 1,223,500 shares of Common
Stock under all Stock Option Plans.
COMPENSATION OF DIRECTORS
On January 15, 1998, the Company's Board of Directors approved an amendment
to the Company's 1994 Stock Option Plan to provide for the annual grant (for
the next three years) of options to purchase 10,000 shares to each director
who is not an employee of the Company. See Item 2 -- Proposal to Amend 1994
Stock Option Plan. Previously, the compensation plan provided for payment to
directors who are not officers of or consultants to the Company of $1,000 for
each meeting of the Board of Directors or any of its committees attended in
person (plus reimbursement of travel expenses) and $250 for each telephonic
meeting in which a Director participates. Directors who are officers of or
consultants to the Company will not receive any additional compensation for
serving on the Board of Directors or its committees.
8
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board has a Compensation Committee, which currently consists of Marshall
D. Butler, Frederic A. Heim and Michael J. Konigsberg. For services as
Chairman of the Board of Directors, Marshall Butler received compensation of
$75,000 during the last fiscal year.
COMPENSATION COMMITTEE REPORT
The compensation paid to Lawrence Butler for the fiscal year ended October
26, 1997 was determined pursuant to his employment agreement which was entered
into on September 29, 1995. The agreement provides for a base annual salary,
subject to annual review, of $180,000, plus a bonus based on the Company
achieving certain approved targeted earnings. Prior to determining Mr.
Butler's salary, the Committee reviewed available surveys of compensation
packages for chief executives in the electronics components manufacturing
industry. The Committee recommended an increase to Mr. L. Butler's salary of
$35,000 for fiscal 1997. Mr. L. Butler was not entitled to, and did not
receive, a bonus for fiscal 1997. In addition, Mr. L. Butler was granted
options to purchase 25,000 shares of the Company's common stock during the
year ended October 26, 1997 and options to purchase an additional 80,000
subsequent to the year end.
It is the Committee's policy to provide its executive officers with a
moderately competitive salary and for incentives in the form of a stock
options and cash bonuses tied to targeted earnings. The Committee believes
that Mr. L. Butler's employment agreement reflects these policies.
Marshall D. Butler
Frederic A. Heim
Michael J. Konigsberg
9
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder's return of the
common stock of the Company for the last five years with the NASDAQ Composite
Index and the Standard & Poor's Electronic Components and Parts Manufacturers.
The graph assumes the value of the fixed investment was $100 on October 31,
1992, and that all dividends were reinvested.
LOGO
[Chart appears here]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD ALPHA NASDAQ COMPOSITE INDUSTRY GROUP
------------------ ----- ---------------- --------------
<S> <C> <C> <C>
October 31, 1992.................... 100 100 100
October 31, 1993.................... 200 128 114
October 31, 1994.................... 348 128 128
October 31, 1995.................... 704 171 178
October 31, 1996.................... 321 201 180
October 31, 1997.................... 313 263 246
</TABLE>
10
<PAGE>
MEETINGS OF BOARD AND COMMITTEES
During the fiscal year ended October 26, 1997, the Board of Directors of the
Company held five meetings and acted by unanimous written consent once. The
Board of Directors has a standing Audit Committee to assist the Board of
Directors in fulfilling its responsibilities relating to corporate accounting
and reporting practices. The current members of this committee are Michael
Konigsberg, Frederic Heim and Kenneth Rind. The Audit Committee held one
formal meeting in fiscal year 1997. The Board of Directors also has a standing
Compensation Committee to assist the Board of Directors in reviewing the
compensation levels of officers and directors of the Company. The current
members of this committee are Marshall Butler, Frederic Heim and Michael
Konigsberg. The Compensation Committee held two formal meetings in fiscal year
1997. The Board of Directors has an Executive Committee, which has all
authority of the Board of Directors to the extent permissible under Delaware
General Corporation law. The Executive Committee consists of Marshall Butler
and Lawrence Butler. During fiscal year 1997, the Executive Committee held two
formal meetings, and consulted with each other and management frequently. The
Company has a Stock Option Committee, which is charged with the function of
administering the Company's stock option plans. The members of the Stock
Option Committee are Donald K. Grierson and Kenneth Rind. The Stock Option
Committee met four times and acted by unanimous written consent five times
during fiscal year 1997.
Each director, other than Messrs. Heim and Lichtenstein, participated in
more than 75% of the total number of Board of Directors' meetings and Board of
Directors' committee meetings held during such director's tenure on the Board
of Directors or committee, as the case may be, during the fiscal year ended
October 26, 1997.
ITEM 2--APPROVAL OF AMENDMENTS TO THE 1994 STOCK OPTION PLAN
At the Meeting, stockholders will be asked to approve amendments to the
Company's 1994 Stock Option Plan (the "Plan") to increase the number of Shares
subject to the Plan from 1,000,000 to 1,325,000 and to provide for an
automatic grant of 10,000 options to each "outside director" at the annual
meetings held in 1998, 1999 and 2000. Such options will be exercisable at the
fair market value of the Shares on the date of grant, will vest in one year
and will be exercisable for five years from the date of grant. There are
currently 922,500 options outstanding under the Plan and, without the
Amendment, 69,168 available for grant. The Company's board of directors
approved the Amendments on January 15, 1998. The affirmative vote of a
majority of the shares present in person or by proxy at the Meeting is
necessary to approve the Amendment.
SUMMARY OF THE PLAN
The following summary of the Plan is not intended to be complete, and is
qualified in its entirety by reference to the Amended and Restated Plan
itself, a copy of which is attached hereto as Appendix A.
The primary purpose of the Plan is to provide a continuing, long-term
incentive to certain employees, directors and consultants of the Company and
its subsidiaries so that the Company will be able to attract and retain
qualified personnel and provide such individuals with a sense of
proprietorship and personal involvement in the development and financial
success of the Company. Options granted to employees under the Plan may be
either incentive stock options, within the meaning of Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), ("Incentive Stock
Options") or options which do not constitute Incentive Stock Options. Options
granted to outside directors and consultants under the Plan will be Options
which do not constitute Incentive Stock Options. The Plan is not subject to
any of the provisions of the Employee Retirement Income Security Act of 1974
("ERISA") nor is it a qualified plan under Section 401(a) of the Code. See
"FEDERAL INCOME TAX CONSEQUENCES."
ADMINISTRATION
The Plan is administered by a Committee (the "Committee") consisting of, and
appointed by the Board of Directors (the "Board"), not less than two outside
members of the Board within the meaning of Rule 16b-3 promulgated under the
Exchange Act and Section 162(m) of the Code. The interpretations and
constructions by
11
<PAGE>
the Committee of any provisions of the Plan and of Options granted thereunder,
and such determinations of the Committee as it deems appropriate for the
administration of the Plan and of Options granted thereunder, are final and
conclusive on all persons having any interest thereunder. The present members
of the Committee are Donald Grierson and Kenneth Rind.
The Committee has the authority, in its discretion and subject to the
express provisions of the Plan, to determine the individuals to receive
Options, the time when they will receive such Options, the purchase price and
the number of Shares which will be subject to each Option, and the other terms
and provisions of the respective Options (which need not be identical).
ELIGIBILITY AND EXTENT OF PARTICIPATION
Options may be granted only to employees, consultants and directors of the
Company and its subsidiaries. Incentive Stock Options may be granted only to
individuals who are employees (including officers and directors who are also
employees) of the Company or any parent or subsidiary corporation (as defined
in Section 424 of the Code) of the Company at the time the Option is granted;
provided, however, that Options which do not constitute Incentive Stock
Options may be granted to individuals who are consultants or directors of the
Company or any such parent or subsidiary corporation. As of January 31, 1998,
approximately 784 individuals were eligible to receive Options, and Options
were held by 60 individual(s) under the Plan. The maximum number of Options
that may be granted to any one individual under the Plan during any calendar
year may not exceed 100,000. Subject to the terms of the Plan, the Committee
has full and final authority to determine the persons who are to be granted
Options under the Plan and the number of Shares subject to each Option.
Under the Amended and Restated Plan, which is subject to Shareholder
approval at the Meeting, "Outside Directors", i.e., those not also serving as
officers or employees of the Company or any of its subsidiaries, will
automatically receive options to purchase 10,000 Shares at the Annual Meetings
held in 1998, 1999 and 2000. Such options will vest one year from the date of
grant, be exercisable at the fair market value on the date of grant and will
expire on the date that is the earlier of (x) five years from the date of
grant or (y) 90 days after the optionee ceases serving as a director of the
Company.
PURCHASE PRICE AND EXERCISE OF OPTIONS
The purchase price for each Share issuable upon exercise of an Option shall
not be less than 100% of the fair market value of such Share on the date the
Option is granted, except that no Incentive Stock Option shall be granted to
an individual if, at the time the Option is granted, such individual
beneficially owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of its parent or subsidiary
corporation, within the meaning of Section 422(b)(6) of the Code, unless (i)
at the time such Option is granted the option price is at least 110% of the
fair market value of the Stock subject to the Option and (ii) such Option by
its terms is not exercisable after the expiration of five years from the date
of the grant. To the extent that the aggregate fair market value (determined
at the time the respective Incentive Stock Option is granted) of stock with
respect to which Incentive Stock Options are exercisable for the first time by
an individual during any calendar year under all incentive stock options plans
of the Company and its parent and subsidiary corporations exceeds $100,000,
such excess Incentive Stock Options shall be treated as Options which do not
constitute Incentive Stock Options. The Committee may authorize the purchase
price to be paid in whole, or in part, by delivery of shares of the Company's
common stock having a fair market value equal to the option exercise price.
An Option may be exercised in such amounts and at such times as may be
determined by the Committee at the time of grant of such Option. To the extent
that an Option is not exercised within the period of exercisability fixed by
the Committee, it will expire as to the then unexercised part.
EXPIRATION AND TRANSFER OF OPTIONS
Options are non-transferable, except by will or by the laws of descent and
distribution. During the lifetime of each Option holder, only he may exercise
his Option.
12
<PAGE>
ADJUSTMENT OF SHARES
If any change is made in the Shares subject to the Plan, or subject to any
Option granted under the Plan, through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, combination of Shares, rights
offerings, change in the corporate structure of the Company, or otherwise,
such adjustment shall be made as to the maximum number of Shares subject to
the Plan, and the number of Shares and prices per share of stock subject to
outstanding Options as the Committee may deem appropriate.
The Amendments to the Plan are effective upon the date of their adoption by
the Board, provided they are approved by the stockholders of the Company at
the Annual Meeting. Except with respect to Options then outstanding, the Plan
terminates on September 12, 2004, after which no further Options shall be
granted.
AMENDMENTS TO AND TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with respect
to any shares for which Options have not theretofore been granted. The Board
shall have the right to alter or amend the Plan or any part thereof from time
to time; provided, that no change in any Option theretofore granted may be
made which would impair the rights of the Optionee without the consent of such
Optionee; and provided, further, that (i) the Board may not make any
alteration or amendment which would decrease any authority granted to the
Committee hereunder in contravention of Rule 16b-3 and (ii) the Board may not
make any alteration or amendment which would materially increase the benefits
accruing to participants under the Plan, increase the aggregate number of
shares which may be issued pursuant to the provisions of the Plan, change the
class of individuals eligible to receive Options under the Plan or extend the
term of the Plan, without the approval of the stockholders of the Company.
FEDERAL INCOME TAX CONSEQUENCES
The following summary of the Federal income tax consequences of the grant
and exercise of Options, and the disposition of Shares purchased pursuant to
the exercise of Options, is intended to reflect the current provisions of the
Code and the regulations thereunder. This summary is not intended to be a
complete statement of applicable law, nor does it deal with state and local
tax considerations.
INCENTIVE STOCK OPTIONS
The following is a discussion of the Federal income tax treatment accorded
to Incentive Stock Options.
No taxable income will be recognized by the Option holder at the time of a
grant or exercise of an Option. The excess of the fair market value of the
Common Stock over the option price at the date of exercise of an Option is an
adjustment for purposes of computing the alternative minimum tax under section
55 of the Code.
If the requirements of Section 422A of the Code are met by the Option holder
(including the requirement that no disposition of such Shares is made by the
Option holder for more than two years after the grant of the Option and for
more than one year after the exercise of such Option), then any gain or loss
realized by the Option holder upon disposition of such Shares will be treated
as long-term capital gain or loss (assuming such Shares are held as a capital
asset by the Option holder). If the requirements of section 422A of the Code
are met, the Company will not be entitled to any deduction for Federal income
tax purposes as a result of the issuance of such Shares pursuant to the
exercise of the Option. If Shares acquired on exercise of an Option are
disposed of prior to the expiration of either of the required holding periods
described above (a "disqualifying disposition"), the Option holder will
recognize ordinary income in the year in which the disposition of such Shares
occurs. The amount of such ordinary income will be the excess of (a) the lower
of the amount realized on disposition of such Shares or the fair market value
of such Shares on the date of exercise of such Option, over (b) the Option
price, so long as the disposition is by sale or exchange with respect to which
a loss, if sustained, would be recognized. In addition, long-term capital gain
may be recognized by the Option holder (assuming such Shares are held as a
capital asset for more than twelve months by the Option holder) in an amount
equal to the excess of the amount
13
<PAGE>
realized on the disqualifying disposition over the sum of the Option price and
the ordinary income recognized by the Option holder. The Company (or the
employer of the Option holder) will ordinarily be entitled to a deduction for
Federal income tax purposes at the time of the disqualifying disposition in an
amount equal to the ordinary income recognized by the Option holder.
If an Option is exercised by the estate of an Option holder, the holding
periods do not apply, and the estate will not recognize any ordinary income
when it disposes of the Shares acquired upon the exercise of such Option. The
estate, however, may recognize long-term capital gain, and the Company will
not be entitled to any deduction for Federal income tax purposes.
NON-INCENTIVE OPTIONS
No tax obligation will arise for the optionee or the Company upon the
granting of either incentive stock options or non-qualified stock options
under the Plan. Upon exercise of a non-qualified stock option, an optionee
will recognize ordinary income in an amount equal to the excess, if any, of
the fair market value, on the date of exercise, of the stock acquired over the
exercise price of the option. Thereupon, the Company will be entitled to a tax
deduction in an amount equal to the ordinary income recognized by the
optionee. Any additional gain or loss realized by an optionee on disposition
of the shares generally will be capital gain or loss to the optionee and will
not result in any additional tax deduction to the Company The taxable event
arising from exercise of non-qualified stock options by officers of the
Company subject to Section 16(b) of the Securities Act of 1934 occurs on the
later of the date on which the option is exercised or the date six months
after the date the option was granted unless the optionee elects, within 30
days of the date of exercise, to recognize ordinary income as of the date of
exercise. The income recognized at the end of any deferred period will include
any appreciation in the value of the stock during that period and the capital
gain holding period will not begin to run until the completion of such period.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL
TO AMEND THE PLAN.
The following gives information with respect to options that have been
granted under the Plan:
<TABLE>
<CAPTION>
WEIGHTED AVG.
EXERCISE PERCENTAGE
OPTIONS PRICE PER OF OPTIONS
NAME GRANTED (#) SHARE ($) EXP. DATE GRANTED
---- ----------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Lawrence Butler ............... 275,000 4.77 9/13/1999- 29.5%
President and Chief Executive 7/14/2004
Officer
Marshall Butler................ 100,000 5.74 4/19/2000 10.7%
Chairman of the Board
Michael A. Hoffmann............ 85,000 4.20 11/4/2001- 9.1%
President, Wakefield 8/18/2002
Engineering, Inc.
All Executive Officers as a
Group......................... 493,000 4.85 9/13/1999- 53.0%
(4 in number) 7/14/2004
All Current Non-Employee
Directors as a Group.......... 155,000 4.91 9/13/1999- 16.7%
(5 in number) 4/14/2001
All Non-Executive Officer
Employees..................... 254,832 4.34 9/21/1999- 27.4%
12/18/2002
</TABLE>
14
<PAGE>
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the 1999
Annual Meeting of Stockholders of the Company must be received by the Company
no later than October 25, 1998.
FILINGS UNDER SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership of such securities with the Securities and Exchange Commission.
Officers, directors and greater than ten percent beneficial owners are
required by applicable regulations to furnish the Company with copies of all
Section 16(a) forms they file. Other than Lawrence Butler, the Company is not
aware of any beneficial owner of more than ten Percent of its Common Stock.
Based on a review of the copies of the forms furnished to the Company, the
Company believes that all filing requirements applicable to its officers and
directors (other than one Form 4 inadvertently filed late by Lawrence Butler)
were complied with in a timely manner during fiscal year 1997.
THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP was appointed the Company's independent public
accountants for 1997. A representative of Arthur Andersen LLP is expected to
be present at the 1998 Annual Meeting of Stockholders, will be available to
answer appropriate questions, and will have an opportunity to make a statement
if such representative should desire.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
meeting. However, if any other business properly comes before the meeting, it
is the intention of the persons named in the enclosed form of proxy to vote on
such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in obtaining
the necessary vote. Therefore, whether or not you expect to attend the
meeting, please complete, sign and date the enclosed form of proxy and return
it in the enclosed envelope.
By Order of the Board of Directors,
/s/ Lawrence Butler
Lawrence Butler,
President and Chief Executive
Officer
Dated: February 23, 1998
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
OCTOBER 26, 1997, WILL BE SENT WITHOUT CHARGE TO ANY STOCKHOLDER REQUESTING IT
IN WRITING FROM: INVESTOR RELATIONS, ALPHA TECHNOLOGIES GROUP, INC., 330
BARKER CYPRESS ROAD, SUITE 270, HOUSTON, TX 77094.
15
<PAGE>
APPENDIX A
ALPHA TECHNOLOGIES GROUP, INC.
1994 STOCK OPTION PLAN
AS AMENDED AND RESTATED
AS OF JANUARY 15, 1998
I. PURPOSE OF THE PLAN
The ALPHA TECHNOLOGIES GROUP, INC. 1994 STOCK OPTION PLAN as amended and
restated, (the "Plan"), is intended to provide a means whereby certain
employees, consultants and directors of ALPHA TECHNOLOGIES GROUP, INC., a
Delaware corporation (the "Company"), and its subsidiaries may develop a sense
of proprietorship and personal involvement in the development and financial
success of the Company, and to encourage them to remain with and devote their
best efforts to the business of the Company, thereby advancing the interests
of the Company and its stockholders. Accordingly, the Company may grant to
certain employees, consultants and directors ("Optionees") the option
("Option") to purchase shares of the common stock of the Company ("Stock"), as
hereinafter set forth. Options granted to employees under the Plan may be
either incentive stock options ("Incentive Stock Options"), within the meaning
of Section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code"), or options which do not constitute Incentive Stock Options. Options
granted to consultants and directors under the Plan will be Options which do
not constitute Incentive Stock Options.
II. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") of, and
appointed by, the Board of Directors of the Company (the "Board"), and the
Committee shall be (a) comprised solely of two or more outside directors
(within the meaning of Section 162(m) of the Code and applicable interpretive
authority thereunder), and (b) constituted so as to permit the Plan to comply
with Rule 16b-3, as currently in effect or as hereinafter modified or amended
("Rule 16b-3"), promulgated under the Securities Exchange Act of 1934, as
amended (the "1934 Act"). The Committee shall have sole authority to select
the Optionees from among those individuals eligible hereunder and to establish
the number of shares which may be issued under each Option; provided, however,
that, notwithstanding any provision in the Plan to the contrary, the maximum
number of shares that may be subject to Options granted under the Plan to an
individual Optionee during any calendar year may not exceed 100,000 (subject
to adjustment in the same manner as provided in Paragraph VIII hereof with
respect to shares of Stock subject to Options then outstanding). The
limitation set forth in the preceding sentence shall be applied in a manner
which will permit compensation generated under the Plan to constitute
"performance-based" compensation for purposes of Section 162(m) of the Code,
including, without limitation, counting against such maximum number of shares,
to the extent required under Section 162(m) of the Code and applicable
interpretive authority thereunder, any shares subject to Options that are
canceled or repriced. In selecting the Optionees from among individuals
eligible hereunder and in establishing the number of shares that may be issued
under each Option, the Committee may take into account the nature of the
services rendered by such individuals, their present and potential
contributions to the Company's success and such other factors as the Committee
in its discretion shall deem relevant. The Committee is authorized to
interpret the Plan and may from time to time adopt such rules and regulations,
consistent with the provisions of the Plan, as it may deem advisable to carry
out the Plan. All decisions made by the Committee in selecting the Optionees,
in establishing the number of shares which may be issued under each Option and
in construing the provisions of the Plan shall be final.
III. OPTION AGREEMENTS
(a) Each Option shall be evidenced by a written agreement between the
Company and the Optionee ("Option Agreement") which shall contain such terms
and conditions as may be approved by the Committee.
A-1
<PAGE>
The terms and conditions of the respective Option Agreements need not be
identical. Specifically, an Option Agreement may provide for the surrender of
the right to purchase shares under the Option in return for a payment in cash
or shares of Stock or a combination of cash and shares of Stock equal in value
to the excess of the fair market value of the shares with respect to which the
right to purchase is surrendered over the option price therefor ("Stock
Appreciation Rights"), on such terms and conditions as the Committee in its
sole discretion may prescribe; provided, that, except as provided in
Subparagraph VIII(c) hereof, the Committee shall retain final authority (i) to
determine whether an Optionee shall be permitted, or (ii) to approve an
election by an Optionee, to receive cash in full or partial settlement of
Stock Appreciation Rights. Moreover, an Option Agreement may provide for the
payment of the option price, in whole or in part, by the delivery of a number
of shares of Stock (plus cash if necessary) having a fair market value equal
to such option price.
(b) For all purposes under the Plan, the fair market value of a share of
Stock on a particular date shall be equal to the last reported sales price of
the Stock (i) reported by the National Market System of NASDAQ on that date or
(ii) if the Stock is listed on a national stock exchange, reported on the
stock exchange composite tape on that date; or, in either case, if no prices
are reported on that date, on the last preceding date on which such price of
the Stock is so reported. If the Stock is traded over the counter at the time
a determination of its fair market value is required to be made hereunder, its
fair market value shall be deemed to be equal to the average between the
reported high and low or closing bid and asked prices of Stock on the most
recent date on which Stock was publicly traded. In the event Stock is not
publicly traded at the time a determination of its value is required to be
made hereunder, the determination of its fair market value shall be made by
the Committee in such manner as it deems appropriate.
(c) Each Option and all rights granted thereunder shall not be transferable
other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, and shall be exercisable during the Optionee's lifetime only by
the Optionee or the Optionee's guardian or legal representative.
IV. ELIGIBILITY OF OPTIONEE
(a) Incentive Stock Options may be granted only to individuals who are
employees (including officers and directors who are also employees) of the
Company or any parent or subsidiary corporation (as defined in Section 424 of
the Code) of the Company at the time the Option is granted; provided, however,
that Options which do not constitute Incentive Stock Options may be granted to
individuals who are consultants or directors (but not also employees) of the
Company or any such parent or subsidiary corporation. Options may be granted
to the same individual on more than one occasion. No Incentive Stock Option
shall be granted to an individual if, at the time the Option is granted, such
individual owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of its parent or subsidiary
corporation, within the meaning of Section 422(b)(6) of the Code, unless (i)
at the time such Option is granted the option price is at least 110% of the
fair market value of the Stock subject to the Option and (ii) such Option by
its terms is not exercisable after the expiration of five years from the date
of grant. To the extent that the aggregate fair market value (determined at
the time the respective Incentive Stock Option is granted) of stock with
respect to which Incentive Stock Options are exercisable for the first time by
an individual during any calendar year under all incentive stock option plans
of the Company and its parent and subsidiary corporations exceeds $100,000,
such excess Incentive Stock Options shall be treated as Options which do not
constitute Incentive Stock Options. The Committee shall determine, in
accordance with applicable provisions of the Code, Treasury Regulations and
other administrative pronouncements, which of an Optionee's Incentive Stock
Options will not constitute Incentive Stock Options because of such limitation
and shall notify the Optionee of such determination as soon as practicable
after such determination.
(b) On the day of the Annual Meeting of Shareholders held in 1998, 1999 and
2000, each person elected or re-elected as a director who is not also an
employee of the Company or any of its subsidiaries shall be granted
A-2
<PAGE>
Options to purchase 10,000 shares of Stock. Such Options, which will not be
Incentive Stock Options, shall be exercisable at the fair market value of
stock on the day of the Annual Meeting, shall vest one year from the date of
grant and shall be exercisable until the date that is the earlier of five
years from the date of grant or 90 days after the Optionee ceases to be a
director of the Company.
V. SHARES SUBJECT TO THE PLAN
The aggregate number of shares which may be issued under Options granted
under the Plan shall not exceed 1,325,000 shares of Stock. Such shares may
consist of authorized but unissued shares of Stock or previously issued shares
of Stock reacquired by the Company. Any of such shares which remain unissued
and which are not subject to outstanding Options at the termination of the
Plan shall cease to be subject to the Plan, but, until termination of the
Plan, the Company shall at all times make available a sufficient number of
shares to meet the requirements of the Plan. Should any Option hereunder
expire or terminate prior to its exercise in full, the shares theretofore
subject to such Option may again be subject to an Option granted under the
Plan to the extent permitted under Rule 16b-3. The aggregate number of shares
which may be issued under the Plan shall be subject to adjustment in the same
manner as provided in Paragraph VIII hereof with respect to shares of Stock
subject to Options then outstanding.
Exercise of an Option in any manner, including an exercise involving a Stock
Appreciation Right, shall result in a decrease in the number of shares of
Stock which may thereafter be available, both for purposes of the Plan and for
sale to any one individual, by the number of shares as to which the Option is
exercised.
Separate stock certificates shall be issued by the Company for those shares
acquired pursuant to the exercise of an Incentive Stock Option and for those
shares acquired pursuant to the exercise of any Option which does not
constitute an Incentive Stock Option.
VI. OPTION PRICE
The exercise price of Stock issued under each Option shall be determined by
the Committee, but in the case of an Incentive Stock Option, such exercise
price shall not be less than the fair market value of Stock subject to the
Option on the date the Option is granted.
VII. TERM OF PLAN
The Plan shall be effective upon the date of its adoption by the Board,
provided the Plan is approved by the stockholders of the Company within twelve
months thereafter. Notwithstanding any provision in this Plan or in any Option
Agreement, no Option shall be exercisable prior to such stockholder approval.
Except with respect to Options then outstanding, if not sooner terminated
under the provisions of Paragraph IX, the Plan shall terminate upon and no
further Options shall be granted after the expiration of ten years from the
date of its adoption by the Board, which such date is September 12, 2004.
VIII. RECAPITALIZATION OR REORGANIZATION
(a) The existence of the Plan and the Options granted hereunder shall not
affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization
or other change in the Company's capital structure or its business, any merger
or consolidation of the Company, any issue of debt or equity securities, the
dissolution or liquidation of the Company or any sale, lease, exchange or
other disposition of all or any part of its assets or business or any other
corporate act or proceeding.
(b) The shares with respect to which Options may be granted are shares of
Stock as presently constituted, but if, and whenever, prior to the expiration
of an Option theretofore granted, the Company shall effect a
A-3
<PAGE>
subdivision or consolidation of shares of Stock or the payment of a stock
dividend on Stock without receipt of consideration by the Company, the number
of shares of Stock with respect to which such Option may thereafter be
exercised (i) in the event of an increase in the number of outstanding shares
shall be proportionately increased, and the exercise price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the exercise price
per share shall be proportionately increased.
(c) If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure (a "recapitalization"), the number and
class of shares of Stock covered by an Option theretofore granted shall be
adjusted so that such Option shall thereafter cover the number and class of
shares of stock and securities to which the Optionee would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the Optionee had been the holder of record of the number of
shares of Stock then covered by such Option. If (i) the Company shall not be
the surviving entity in any merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity other than a previously wholly-
owned subsidiary of the Company), (ii) the Company sells, leases or exchanges
all or substantially all of its assets to any other person or entity (other
than a wholly-owned subsidiary of the Company), (iii) the Company is to be
dissolved and liquidated, (iv) any person or entity, including a "group" as
contemplated by Section 13(d)(3) of the 1934 Act, acquires or gains ownership
or control (including, without limitation, power to vote) of more than 50% of
the outstanding shares of the Company's voting stock (based upon voting
power), or (v) as a result of or in connection with a contested election of
directors, the persons who were directors of the Company before such election
shall cease to constitute a majority of the Board (each such event is referred
to herein as a "Corporate Change"), no later than (a) ten days after the
approval by the stockholders of the Company of such merger, consolidation,
reorganization, sale, lease or exchange of assets or dissolution or such
election of directors or (b) thirty days after a change of control of the type
described in Clause (iv), the Committee, acting in its sole discretion without
the consent or approval of any Optionee, shall act to effect one or more of
the following alternatives, which may vary among individual Optionees and
which may vary among Options held by any individual Optionee: (1) accelerate
the time at which Options then outstanding may be exercised so that such
Options may be exercised in full for a limited period of time on or before a
specified date (before or after such Corporate Change) fixed by the Committee,
after which specified date all unexercised Options and all rights of Optionees
thereunder shall terminate, (2) require the mandatory surrender to the Company
by selected Optionees of some or all of the outstanding Options held by such
Optionees (irrespective of whether such Options are then exercisable under the
provisions of the Plan) as of a date, before or after such Corporate Change,
specified by the Committee, in which event the Committee shall thereupon
cancel such Options and the Company shall pay to each Optionee an amount of
cash per share equal to the excess, if any, of the amount calculated in
Subparagraph (d) below (the "Change of Control Value") of the shares subject
to such Option over the exercise price(s) under such Options for such shares,
(3) make such adjustments to Options then outstanding as the Committee deems
appropriate to reflect such Corporate Change (provided, however, that the
Committee may determine in its sole discretion that no adjustment is necessary
to Options then outstanding) or (4) provide that the number and class of
shares of Stock covered by an Option theretofore granted shall be adjusted so
that such Option shall thereafter cover the number and class of shares of
stock or other securities or property (including, without limitation, cash) to
which the Optionee would have been entitled pursuant to the terms of the
agreement of merger, consolidation or sale of assets and dissolution if,
immediately prior to such merger, consolidation or sale of assets and
dissolution, the Optionee had been the holder of record of the number of
shares of Stock then covered by such Option.
(d) For the purposes of clause (2) in Subparagraph (c) above, the "Change of
Control Value" shall equal the amount determined in clause (i), (ii) or (iii),
whichever is applicable, as follows: (i) the per share price offered to
stockholders of the Company in any such merger, consolidation, reorganization,
sale of assets or dissolution transaction, (ii) the price per share offered to
stockholders of the Company in any tender offer or exchange offer whereby a
Corporate Change takes place, or (iii) if such Corporate Change occurs other
than pursuant to a tender or exchange offer, the fair market value per share
of the shares into which such Options being surrendered are exercisable, as
determined by the Committee as of the date determined by the Committee to be
the date of
A-4
<PAGE>
cancellation and surrender of such Options. In the event that the
consideration offered to stockholders of the Company in any transaction
described in this Subparagraph (d) or Subparagraph (c) above consists of
anything other than cash, the Committee shall determine the fair cash
equivalent of the portion of the consideration offered which is other than
cash.
(e) Any adjustment provided for in Subparagraphs (b) or (c) above shall be
subject to any required stockholder action.
(f) Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon
the exercise of rights or warrants to subscribe therefor, or upon conversion
of shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
of shares of Stock subject to Options theretofore granted or the exercise
price per share.
IX. AMENDMENT OR TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with respect
to any shares for which Options have not theretofore been granted. The Board
shall have the right to alter or amend the Plan or any part thereof from time
to time; provided, that no change in any Option theretofore granted may be
made which would impair the rights of the Optionee without the consent of such
Optionee; and provided, further, that (i) the Board may not make any
alteration or amendment which would decrease any authority granted to the
Committee hereunder in contravention of Rule 16b-3 and (ii) the Board may not
make any alteration or amendment which would materially increase the benefits
accruing to participants under the Plan, increase the aggregate number of
shares which may be issued pursuant to the provisions of the Plan, change the
class of individuals eligible to receive Options under the Plan or extend the
term of the Plan, without the approval of the stockholders of the Company.
X. SECURITIES LAWS
(a) The Company shall not be obligated to issue any Stock pursuant to any
Option granted under the Plan at any time when the offering of the shares
covered by such Option have not been registered under the Securities Act of
1933 and such other state and federal laws, rules or regulations as the
Company or the Committee deems applicable and, in the opinion of legal counsel
for the Company, there is no exemption from the registration requirements of
such laws, rules or regulations available for the offering and sale of such
shares.
(b) It is intended that the Plan and any grant of an Option made to a person
subject to Section 16 of the 1934 Act meet all of the requirements of Rule
16b-3. If any provision of the Plan or any such Option would disqualify the
Plan or such Option under, or would otherwise not comply with, Rule 16b-3,
such provision or Option shall be construed or deemed amended to conform to
Rule 16b-3.
XI. APPROVAL OF AMENDED AND RESTATED PLAN
The Amended and Restated Plan was approved by the Company's Board on January
15, 1998, subject to stockholder approval at the Company's Annual Meeting of
Stockholders held in 1998.
A-5
<PAGE>
ALPHA TECHNOLOGIES GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
APRIL 21, 1998
The Undersigned hereby appoints Marshall D. Butler and Lawrence Butler, and
each of them, as the true and lawful attorneys, agents and proxies of the
undersigned, with full power of substitution, to represent and to vote as
designated on the reverse side, all shares of Common Stock, $.03 par value, of
Alpha Technologies Group, Inc. (the "Company") held of record by the
undersigned as of the close of business on March 2, 1998, at the Annual Meeting
of Stockholders (the "Annual Meeting") to be held at 11:00 a.m. on April 21,
1998, at 306 Pasadena Avenue, South Pasadena, California, and at any
adjournments or postponements thereof. Any and all proxies heretofore given are
hereby revoked.
WHEN PROPERLY EXECUTED AND RETURNED, THIS PROXY WILL BE VOTED AS DESIGNATED
BY THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR EACH
OF THE NOMINEES FOR DIRECTOR, FOR THE PROPOSAL TO AMEND THE 1994 STOCK OPTION
PLAN, AND AS SET FORTH IN THE PROXY STATEMENT, WILL BE VOTED IN THE DISCRETION
OF THE PERSONS NAMED AS PROXIES HEREIN IN CONNECTION WITH ANY OTHER BUSINESS
THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING. THE BOARD OF DIRECTORS
RECOMMENDS VOTING FOR SUCH NOMINEES.
-------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-------------
- - --------------------------------------------------------------------------------
[X] Please mark votes as in this example.
1. ELECTION OF DIRECTORS TO A ONE-YEAR TERM.
NOMINEES: Marshall D. Butler, Lawrence Butler, Donald K. Grierson, Frederic A.
Heim, Kenneth W. Rind and Michael J. Konigsberg.
PROXIES NOT MARKED TO WITHHOLD AUTHORITY WILL BE VOTED FOR THE ELECTION OF ALL
NOMINEES WHOSE NAMES ARE NOT WRITTEN ON THE LINE BELOW.
[_] FOR ALL NOMINEES [_] WITHHELD FROM ALL NOMINEES
[_]
--------------------------------------
For all nominees except as noted above
[_] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW.
2. APPROVAL OF AMENDMENTS TO 1994 STOCK OPTION PLAN.
[_] FOR [_] AGAINST [_] ABSTAIN
PROXIES NOT MARKED WILL BE VOTED FOR THE PROPOSAL TO AMEND THE 1994 STOCK
OPTION PLAN.
3. FOR THE TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
IMPORTANT: Signatures should correspond exactly with the name(s) as they appear
on the stock record books of the Company. Each joint owner shall sign.
Executors, administrators, trustees, etc. should give full title.
Signature: _______________________________________________ Date: _____________
Signature: _______________________________________________ Date: _____________
