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