SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box: [ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only
(as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
ss. 240.14a-11(c) or ss. 240.14a-12
AMERICAN LOCKER GROUP INCORPORATED.
--------------------------------------------------
(Name of Registrant as Specified in its Charter)
.
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (check the appropriate box):
[x] No fee required
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with 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:
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2) Form, Schedule or Registration No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
AMERICAN LOCKER GROUP
INCORPORATED
608 ALLEN STREET
JAMESTOWN, NEW YORK 14701
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1999
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TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders will be held at the offices of
Kirkpatrick & Lockhart LLP, 1500 Oliver Building, Pittsburgh, PA 15222 on
Thursday, May 13, 1999, at 10:00 a.m., Eastern Daylight Time, for the following
purposes:
1. To elect a Board of Directors consisting of seven persons to serve
until the next Annual Meeting of Stockholders and until their
respective successors are duly elected and qualified;
2. To approve the Company's 1999 Stock Incentive Plan; and
3. To consider and act upon such other matters as may properly come
before the meeting.
The Board of Directors has fixed the close of business on March 18, 1999
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting.
Whether or not you expect to attend the meeting in person, you are urged
to sign, date and return the enclosed proxy promptly to the Company in the
enclosed postage paid envelope.
By Order of the Board of Directors
Charles E. Harris
Secretary
Jamestown, New York
April 5, 1999
<PAGE>
AMERICAN LOCKER GROUP
INCORPORATED
608 ALLEN STREET
JAMESTOWN, NEW YORK 14701
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1999
This Proxy Statement and the enclosed proxy, which are being mailed to
stockholders commencing on or about April 5, 1999, are furnished in connection
with the solicitation by the Board of Directors of American Locker Group
Incorporated (referred to in this Proxy Statement as the "Company") of proxies
for the Annual Meeting of Stockholders of the Company to be held on Thursday,
May 13, 1999, at 10:00 a.m., Eastern Daylight Time, at the offices of
Kirkpatrick & Lockhart LLP, 1500 Oliver Building, Pittsburgh, PA 15222.
Only holders of Common Stock of record at the close of business on March
18, 1999, will be entitled to notice of and to vote at the Annual Meeting. On
that date there were outstanding 2,498,772 shares of Common Stock. Each share of
the Company's outstanding Common Stock is entitled to one vote on all matters to
come before the Annual Meeting.
If the enclosed Proxy is properly executed and returned, it may
nevertheless be revoked at any time prior to its use by execution of a later
dated proxy, by voting in person at the Annual Meeting or by written or verbal
notice of such revocation to the Secretary of the Company at any time before
such proxy is voted.
A copy of the 1998 Annual Report of the Company is being mailed with this
Proxy Statement.
PROXY SOLICITATION AND EXPENSES OF SOLICITATION
Proxies are being solicited on behalf of the Board of Directors of the
Company and the expenses of soliciting proxies will be borne by the Company.
Solicitation will be made primarily by mail, but directors, officers and regular
employees of the Company may solicit proxies personally, by mail, or by
telephone or facsimile. The Company will not pay any compensation for the
solicitation of proxies, but will reimburse banks, brokers and other custodians,
nominees or fiduciaries for their reasonable expenses incurred in sending proxy
material to beneficial owners and obtaining their proxies.
<PAGE>
INTRODUCTION
PURPOSE OF THE ANNUAL MEETING
The Annual Meeting will be held for the following purposes: (i) to elect
seven directors to serve for a term of one year and until their successors are
duly elected and qualified; and (ii) to consider and vote upon the adoption of
the American Locker Group Incorporated 1999 Stock Incentive Plan (the "Stock
Incentive Plan Proposal").
VOTE REQUIRED
Approval of the Stock Incentive Plan Proposal will require the
affirmative vote of at least a majority in voting interest of the stockholders
present in person or by proxy and voting at the Annual Meeting and entitled to
vote thereon, assuming the presence of a quorum. Because abstentions with
respect to any matter are treated as shares present or represented and entitled
to vote for the purposes of determining whether that matter has been approved by
the stockholders, abstentions have the same effect as negative votes for the
Stock Incentive Plan Proposal. Broker non-votes and shares as to which proxy
authority has been withheld with respect to any matter are not deemed to be
present or represented for purposes of determining whether stockholder approval
of that matter has been obtained. If the stockholders do not approve the Stock
Incentive Plan, it will not be implemented, but the Company reserves the right
to adopt such other compensation plans and programs as it deems appropriate and
in the best interests of the Company and its stockholders.
ELECTION OF DIRECTORS
Seven persons, constituting the entire Board of Directors of the Company,
are to be elected at the 1999 Annual Meeting of Stockholders to serve until the
next Annual Meeting of Stockholders and until their successors are duly elected
and qualified. It is intended that the accompanying proxy will be voted for the
election of the seven nominees on the following pages. Six of the nominees, Alan
H. Finegold, Thomas Lynch IV, James E. Ruttenberg, Roy J. Glosser, Edward F.
Ruttenberg and Jeffrey C. Swoveland, were elected by the stockholders of the
Company at the 1998 Annual Meeting of Stockholders. The other nominee, Donald I.
Dussing, Jr., was elected as a Director by the Board in May 1998.
All nominees have indicated that they are willing and able to serve as
directors if elected. If any nominees should be unable or unwilling to serve,
the proxies will be voted for the election of such person as shall be designated
by the Board of Directors to replace such nominee.
The Company is organized under the laws of the State of Delaware. The
General Corporation Law of the State of Delaware requires that directors be
elected by a plurality of the votes of the shares present in person or
represented by proxy at a meeting and entitled to vote in the election of
directors. Accordingly, abstentions from voting and broker non-votes will have
no effect on the outcome of such proposal. The stockholders of the Company are
not entitled to vote cumulatively in the election of directors.
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<PAGE>
INFORMATION AS TO NOMINEES FOR DIRECTORS
The following sets forth certain information concerning the nominees for
election as directors, including the number of shares of Common Stock of the
Company beneficially owned directly or indirectly, by each on March 22, 1999.
Also included are the names of other companies filing reports pursuant to the
Securities Exchange Act of 1934, as amended, for which the nominees serve as
directors or trustees. There are no family relationships between any nominees or
principal officers of the Company except between Edward F. Ruttenberg, a nominee
for director, Chairman and Chief Executive Officer, and his brother, James E.
Ruttenberg, a nominee for director.
ALAN H. FINEGOLD
Mr. Alan H. Finegold, 56, a director since 1994, and a member of the
Executive Committee and the Audit Committee, has, since October 1, 1997, been
affiliated with Alan H. Finegold, P.C., a law firm, and the Alan H. Finegold
Company, which provides estate planning services. Prior to October 1, 1997, he
served as a partner of Kirkpatrick & Lockhart LLP, a Pittsburgh law firm, for
more than five years.
THOMAS LYNCH, IV
Mr. Thomas Lynch, 55, a director since 1994, and a member of the Executive
Compensation Committee, has served as a First Vice President of Janney,
Montgomery and Scott, a brokerage firm, for more than five years.
ROY J. GLOSSER
Mr. Roy J. Glosser, 38, a director since 1996, has been President and
Chief Operating Officer of the Company since May 1996. In September 1998, he was
appointed to the additional office of Treasurer of the Company. Between May 1995
and May 1996, he served as Vice President - Operations of the Company and
between December 1992 and May 1995, he served as Director of Operations of the
Company.
EDWARD F. RUTTENBERG
Mr. Edward F. Ruttenberg, 52, a director since 1996, has been Chairman and
Chief Executive Officer of the Company since September 1998. He served as Vice
Chairman of the Company from May, 1996, through August 1998. He has served as
President and a director of Rollform of Jamestown, Inc., a rollforming company,
for more than five years.
JAMES E. RUTTENBERG
Mr. James E. Ruttenberg, 57, a director since 1994 and a member of the
Executive Compensation Committee of the Board of Directors, has since 1996
served as President of
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<PAGE>
Claremont Billing Systems, Inc., a data processing/telephone billing firm. Prior
to 1996, he served as Executive Vice President of this company for more than
five years.
JEFFREY C. SWOVELAND
Mr. Jeffrey C. Swoveland, 43, a director since 1997, serves as Interim
Chief Financial Officer, Vice President-Finance and Treasurer of Equitable
Resources, Inc. He joined Equitable Resources, Inc. as Director of Alternative
Finance in September 1994. He was elected Treasurer in 1994, became Vice
President in 1995 and became Interim Chief Financial Officer in October 1997.
Prior to September 1994, he served as Vice President-Global Corporate Banking
for Mellon Bank N.A. He serves as a director of Petroleum Development
Corporation.
DONALD I. DUSSING, JR.
Mr. Donald I. Dussing, Jr., 57, a director since 1998, has served as
Senior Vice President and Manager of Western New York Commercial Banking
Department, Manufacturers and Traders Trust Company for more than five years.
STOCK OWNERSHIP OF NOMINEES AND EXECUTIVE OFFICERS
As of March 22, 1999, the nominees for director and the persons named in
the section of this Proxy Statement entitled "Compensation and Other
Transactions with Management and Others" owned the following shares of Common
Stock of the Company:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- --------------------------------------------------------------------------------
<S> <C> <C>
Alan H. Finegold 4,000 *
273 N.E. Edgewater Drive
Stuart, FL 34996
Roy J. Glosser 49,200(1) 1.9%
608 Allen Street
Jamestown, NY 14702-1000
Thomas Lynch, IV 0 *
201 Lexington Avenue
Pittsburgh, PA 15215
Edward F. Ruttenberg 22,332(2) .9%
5864 Aylesboro Avenue
Pittsburgh, PA 15217
James E. Ruttenberg 17,896 *
254 South Main St.
New City, NY 10956
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<PAGE>
Jeffrey C. Swoveland 0 *
5870 Aylesboro Avenue
Pittsburgh, PA 15217
Donald I. Dussing, Jr. 1,000 *
6201 Senate Circle
East Amherst, New York 14051
David L. Henderson 30,000(3) 1.2%
5770 Rothesay Drive
Dublin, Ohio 43017
(*) Less than 1%
(1) Includes 44,000 shares which Mr. Glosser has the right to acquire under
stock options. Also includes 800 shares owned by Mr. Glosser's wife with
respect to which Mr. Glosser disclaims beneficial ownership.
(2) Includes 11,000 shares held by Edward F. Ruttenberg, 2,000 shares held
jointly by Edward F. Ruttenberg and Sara Ruttenberg. Also included are
4,000 shares owned by their son, as to which shares Edward F. Ruttenberg
disclaims beneficial ownership, and 5,332 shares held by Rollform of
Jamestown, Inc. in which Mr. E. F. Ruttenberg and his immediate family own
a 97% interest.
(3) Includes 13,000 shares which Mr. Henderson has the right to acquire under
stock options.
</TABLE>
All directors and executive officers of the Company as a group (nine
persons) and persons who may be deemed to be part of the group with a director
owned beneficially 124,428 shares of Company Common Stock, or approximately 4.9%
of the shares outstanding, on March 22, 1999. For purposes of the foregoing
sentence, shares subject to stock options held by such persons (57,000 shares)
are included in the number of shares held and the total number of shares
outstanding.
INFORMATION WITH RESPECT TO COMMITTEES
AND COMPENSATION OF DIRECTORS
During 1998, the Board of Directors met three times and took one action by
unanimous consent, the Stock Option-Executive Compensation Committee took one
action by unanimous consent, and the Audit Committee met once. The functions of
the Audit Committee consist primarily of reviewing the scope and results of the
audit of the Company's financial statement and the findings and recommendations
of the Company's independent accountants with respect to the system of internal
controls and recommending to the Board of Directors the selection of the
independent accountants for the Company for the next year. The functions of the
Stock Option-Executive Compensation Committee consist of determining
compensation to be paid to executive officers of the Company and administering
all stock option plans of the Company, including making decisions relative to
the grant of options. The function of the Executive Committee is to exercise the
powers of the Board of Directors in the management of the affairs of the Company
- 5 -
<PAGE>
between the meetings of the Board of Directors. The Company does not have a
nominating committee.
Each director who is not a salaried employee of the Company is paid an
annual fee of $3,500 and a fee of $300 for each meeting of the Board of
Directors or of a Committee of the Board which he attends. Only one fee is
payable if the Board and a Committee meet on the same day.
All directors attended more than 75% of the aggregate total number of
meetings held in 1998 by the Board of Directors and the Committees of the Board
of Directors on which they serve.
COMPENSATION AND OTHER TRANSACTIONS
WITH MANAGEMENT AND OTHERS
The following information is given for 1998, 1997, and 1996 with respect
to the compensation which was paid or accrued for services in such years, or
which was paid in such years for services in prior years but not included in the
remuneration table in prior years' proxy statements, for each of the three
highest paid executive officers of the Company whose aggregate compensation from
the Company and its subsidiaries exceeded $100,000:
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<PAGE>
<TABLE>
<CAPTION>
===================================================================================
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------
LONG TERM ALL OTHER
NAME AND PRINCIPAL ANNUAL COMPENSATION COMPENSATION COMPENSATION
POSITION
--------------------------- -------------- --------------
AWARDS
--------------
Securities
Underlying
Year Salary Bonus Options/SARs(#)
- --------------------- ------- -------- -------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Harold J. Ruttenberg 1996 $150,000 $ 57,500 - $0
Chairman, Chief 1997 $150,000 $ 80,000 - $0
Executive Officer 1998 $116,667 $ 106,700 - $0
and Treasurer (through
August 15, 1998) (1)
- --------------------- ------- --------- ----------- -------------- --------------
Edward F. Ruttenberg 1996 $ 30,670 $ 0 - $0
Chairman and Chief 1997 $ 50,040 $ 15,000 - $0
Executive Officer 1998 $101,667 $ 73,700 - $0
(Effective September
3, 1998 (1)
- ---------------------- ------- --------- ----------- -------------- --------------
Roy J. Glosser 1996 $ 92,265 $ 42,500 - $0
President, Chief 1997 $125,000 $ 75,000 60,000 $0
Operating Officer shares (2)
and Treasurer 1998 $150,000 $150,000 - $0
- ---------------------- ------- --------- ----------- -------------- --------------
David L. Henderson 1996 $ 86,365 $ 18,000 - $0
Vice President/ 1997 $ 87,960 $ 27,000 - $0
General Manager 1998 $ 90,180 $ 54,600 - $0
American Locker
Security Systems, Inc.
====================== ======= ========= =========== ============== ==============
(1) Mr. Harold J. Ruttenberg died on August 15, 1998. On September 3, 1998,
Edward J. Ruttenberg was appointed as Chairman and Chief Executive Officer of
the Company.
(2) In May 1997, Mr. Roy J. Glosser was granted options with respect to 60,000
shares (as adjusted to reflect the four for one stock distribution effective
June 25, 1998) of common stock of the Company. In June 1998, stock appreciation
rights were granted with respect to options covering 12,000 of these shares.
</TABLE>
STOCK OPTIONS
In May 1988 the stockholders of the Company approved the American Locker
Group Incorporated 1988 Stock Incentive Plan (the "1988 Plan"). Grants under the
1988 Plan were to be granted to certain officers and directors of the Company by
the Executive Compensation Committee of the Board of Directors (the "Committee")
in its discretion. Under terms of the 1988 Plan, no new options can be granted
after February 29, 1998.
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<PAGE>
The 1988 Plan provides for the grant of rights to receive cash and/or
Company Common Stock, including options intended to qualify as incentive stock
options under Section 422A of the Internal Revenue Code of 1986, as amended, and
options not intended so to qualify.
The 1988 Plan provides that the exercise price of stock options must be no
less than the fair market value on the date of grant of the shares of Company
Common Stock subject thereto and no stock option granted under the 1988 Plan may
be exercisable more than ten years after its grant. In the case of a holder of
10% or more of the Company Common Stock, options intended to be incentive stock
options must have an exercise price of at least 110% of the fair market value of
the underlying shares of Company Common Stock on the date of grant and such
options must expire within five years of the date of grant. Upon exercise of a
stock option, the option price is required to be paid in cash, or at the
discretion of the Committee, in shares of Company Common Stock, valued at the
fair market value thereof on the date of payment, or in a combination of cash
and shares of Company Common Stock.
The 1988 Plan authorizes the Committee, in the event of any tender offer
or exchange offer (other than an offer by the Company) for shares of Company
Common Stock, to take such action as it may deem appropriate to enable the
recipients of outstanding awards to avail themselves of the benefits of such
offer, including acceleration of payment or exercise dates and purchase
outstanding stock options.
The Board of Directors is empowered to amend or terminate the 1988 Plan at
any time, provided, however, that no such action would be permitted to adversely
affect any rights or obligations with respect to any awards theretofore made
under the 1988 Plan, and provided further, that no such amendment, without
approval of the holders of a majority of the shares of Company Common Stock
voted thereon in person or by proxy, shall increase the number of shares of
Company Common Stock subject to the 1988 Plan, extend the period during which
awards may be granted, increase the maximum term for which stock options may be
issued under the 1988 Plan, decrease the minimum price at which stock options
may be issued under the 1988 Plan, or materially modify the requirements for
eligibility to participate in the 1988 Plan.
No options were granted under the 1988 Plan during 1998. During 1998,
stock appreciation rights were granted and exercised with respect to options
covering 12,000 shares held by Roy J. Glosser.
The following table sets forth information with respect to the persons
named in the Executive Compensation Table concerning the exercise of options
during the last fiscal year and unexercised options held as of December 31,
1998. Share data reflects the four for one stock distribution which was
distributed on June 25, 1998.
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<PAGE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<CAPTION>
=================================================================================
Shares Number of Value of Unexercised
Acquired Value Unexercised in-the-Money
on Exercise Realized Options/SARs at Options/SARs at
Name (#) ($) FY-End(#) FY-End($)(1)
- ---------------------------------------------------------------------------------
Exercis- Unexer- Exercisable Unexer-
able cisable cisable
- --------------- ---------- --------- -------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Harold J. -0- -0- 48,000 -0- $1,177,500(2) -0-
Ruttenberg
- --------------- ----------- --------- -------- --------- ----------- ---------
Roy J. Glosser 4,000 $108,750 44,000 -0- $987,250 -0-
12,000(3) $326,250 -0- -0- -0- -0-
- --------------- ----------- --------- -------- --------- ----------- ---------
David L. 13,000 $67,438 13,000 -0- $314,438 -0-
Henderson
=============== =========== ========= ======== ========= =========== =========
(1) Calculated on the basis of the closing price of the underlying securities
for the most recently reported trade prior to December 31, 1998 ($25.25
per share) minus the exercise price.
(2) On February 3, 1999, the Estate of Harold J. Ruttenberg exercised option
to purchase 48,000 shares of common stock.
(3) In 1998, Mr. Glosser exercised stock appreciation rights with respect to
12,000 shares of common stock.
</TABLE>
ESTIMATED RETIREMENT BENEFITS
The Company's pension plan for salaried employees provides for an annual
pension upon normal retirement computed under a career average formula,
presently equal to 2% of an employee's eligible lifetime earnings, which
includes salaries, commissions and bonuses. The following table sets forth the
approximate annual benefits payable on normal retirement pursuant to the
provisions of the pension plan for salaried employees to persons in specified
lifetime average annual earnings categories and years-of-service
classifications.
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<PAGE>
<TABLE>
<CAPTION>
Annual pension benefits for years of
Lifetime average credited service shown(1)
annual earnings 10 years 20 years 30 years
- ----------------- -------- -------- --------
<S> <C> <C> <C>
50,000 10,000 20,000 30,000
75,000 15,000 30,000 45,000
100,000 20,000 40,000 60,000
125,000 25,000 50,000 75,000
150,000 30,000 60,000 90,000
(1) Pension benefit amounts listed in the table are not subject to deduction
for Social Security benefits.
</TABLE>
Roy J. Glosser is credited with seven years service under such plan,
David L. Henderson is credited with nine years service and Edward F. Ruttenberg
is credited with one year of service.
Effective February 1, 1999, the Company has established a 401(K) Plan
under which it matches employee contributions at the rate of $.10 per $1.00 of
employee contributions up to 10% of employee's wages.
SUPPLEMENTAL RETIREMENT PLAN
In December 1997, the Board of Directors of the Company adopted the
American Locker Group Incorporated Supplemental Executive Retirement Plan (the
"Supplemental Plan"), effective January 1, 1998. The Supplemental Plan provides
for supplemental retirement benefits to certain executive level employees of the
Company as established by the Executive Compensation Committee of the Board of
Directors from time to time. No director of the Company may be the beneficiary
of the Supplemental Plan unless such director also serves as an employee of the
Company.
The Supplemental Plan provides for payment by the Company to the
participant of a specified monthly benefit and the provision by the Company of
supplemental medical benefits for the benefit of the participant and his
dependents (the "Health Benefit"). The obligations of the Company under the
Supplemental Plan are triggered by the actual retirement of the participant
(defined as the date on which the participant ceases, for reasons other than
death, all active employment with the Company) or upon a change of control. For
purposes of the Supplemental Plan, "Change of Control" is defined as a change in
ownership or control of the Company such that (i) any person, as defined in
Section 13(d) or 14(d) of the Securities and Exchange Act of 1934 becomes
beneficial owner of more than 50% of the Company; (ii) during any two year
period (including periods prior to the adoption of the Supplemental Plan) there
shall cease to be a majority of the Board of the Company comprised of
individuals who at the beginning of such period were on the Board and any new
members whose election was approved by a vote of the majority of the directors
who were then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so approved;
or (iii) the stockholders of the Company approve a merger or consolidation of
the Company (other than
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<PAGE>
merger or consolidation, which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent at least
80% of the combined voting power of the surviving entity after the merger or
consolidation), the approval by the stockholders of the Company of a complete
liquidation of the Company, or the Company enters into a plan to sell all or
substantially all of the Company's assets, in a single transaction or series of
related transactions.
The Supplemental Plan also provides that upon the death of a participant,
the Company shall continue to pay to the participant's spouse for the remainder
of such spouse's life an amount equal to one-half of the benefit paid to the
participant and to continue to provide the Health Benefit for the benefit of
such spouse.
In December 1997, the Board designated Harold J. Ruttenberg as a
participant in the Supplemental Plan and designated his monthly benefit, payable
upon actual retirement or change of control as defined above, as $12,500 per
month. As a result of Mr. Harold Ruttenberg's death, on August 15, 1998,
benefits of $6,250 per month became payable to Mr.
Harold Ruttenberg's spouse pursuant to the Supplemental Plan.
EMPLOYMENT AND OTHER CONTRACTS
In May 1996, the Company entered into an employment agreement with Roy J.
Glosser, effective May 21, 1996, and amended effective March 3, 1999 (as so
amended, the "Glosser Agreement"), pursuant to which Mr. Glosser became
President and Chief Operating Officer of the Company. The Glosser Agreement
provides, among other things (i) that the term of employment will expire on June
30, 2002, (ii) that the base compensation will be $13,125 per month, plus any
increase in base salary and any incentive compensation as determined by the
Board of Directors of the Company, and (iii) that in the event of the sale of
the Company, Mr. Glosser will be entitled to an incentive bonus equal to one
year's base salary in effect at the date of the sale.
The Glosser Agreement defines "sale of the Company" as 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 of more than a majority of the outstanding
shares of the Company entitled to vote upon the election of directors.
The Glosser Agreement also provides that in the event of permanent
disability, the Company shall pay the employee 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 the agreement. The
Glosser Agreement also provides that such payments shall be reduced by any
payments to which Mr. Glosser is entitled under any disability plan then
maintained by the Company and by any payments to which Mr. Glosser is entitled
under the Federal Social Security disability program.
OTHER TRANSACTIONS
Charles E. Harris, Secretary of the Company, is also a partner in
Kirkpatrick & Lockhart LLP which has provided legal services to the Company and
its subsidiaries since May 1973 and will continue to provide such services in
the future. Mr. Alan H. Finegold was until October 1997 a partner in Kirkpatrick
& Lockhart LLP.
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<PAGE>
Alan H. Finegold, a director of the Company, was paid $10,500 for
consulting services to the Company in 1998 pursuant to a consulting arrangement
under which Mr. Finegold is paid $1,500 per month. The arrangement may be
discontinued by the Company or Mr. Finegold at any time.
Donald I. Dussing, Jr., a director of the Company, is Senior Vice
President and Manager of Western New York Commercial Banking Department of
Manufacturers and Traders Trust Company, which has loaned money to the Company
under a term loan and revolving credit facility.
One of the Company's subsidiaries entered into a Manufacturing Agreement
with Signore, Inc., to furnish fabricating, assembly and shipping services. The
Agreement became effective on January 1, 1989, for a term which has been
extended through April 30, 2000. The Agreement provides that the cost to the
Company for these services be equal to Signore's cost divided by 80%. Pursuant
to the Manufacturing Agreement, the Company purchased $4,151,835 and $3,632,254
of material from Signore, Inc. during 1998 and 1997, respectively, at prices
that the Company believes are at arm's length. Alexander Ditonto serves as
Chairman of Signore, Inc. and is the father-in-law of Roy J. Glosser.
One of the Company's subsidiaries purchases fabricated parts from Rollform
of Jamestown, Inc., a rollforming company owned by Edward F. Ruttenberg, his
wife and family, and other relatives of Mr. Edward F. Ruttenberg. Pursuant to
this arrangement, the Company purchased $283,345, $114,004 and $90,084 of
materials from Rollform of Jamestown, Inc. in 1998, 1997 and 1996, respectively,
at prices that the Company believes are at arms length.
PROPOSAL TO APPROVE THE 1999 STOCK INCENTIVE PLAN
The Board of Directors of the Company adopted and approved effective as of
March 3, 1999 a new compensation plan to be sponsored and maintained by the
Company, to be known as the American Locker Group Incorporated 1998 Stock
Incentive Plan (the "Stock Incentive Plan"). A copy of the Stock Incentive Plan
is attached as Exhibit A to this Proxy Statement. The Stock Incentive Plan is
subject to approval by the Company's stockholders.
The Company believes that in order to attract, retain and motivate key
employees it is desirable to offer to such employees equity-based compensation.
The Stock Incentive Plan is intended to be a flexible vehicle under which a
variety of types of equity-based and cash-based compensation awards, including
stock options and stock appreciation rights, can be made. The closing price of
the Company's Common Stock on March 17, 1999, as reported by NASDAQ, was $14.00
per share.
ADMINISTRATION. The Stock Incentive Plan would be administered by the
Stock Option-Executive Compensation Committee of the Board of Directors of the
Company (the "Committee") comprised of at least two persons. The Committee shall
have the sole discretion to interpret the Stock Incentive Plan, establish and
modify administrative rules, impose conditions and restrictions on awards, and
take such other actions as it deems necessary or advisable. With respect to
participants who are not subject to Section l6 of the Exchange Act, the
Committee may delegate its authority under the Stock Incentive Plan to one or
more officers or employees of the Company. In addition, the full Board of
Directors of the Company can perform any of the functions of the Committee under
the Stock Incentive Plan.
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<PAGE>
AMOUNT OF STOCK. The Stock Incentive Plan provides for awards of up to
150,000 shares of Common Stock. The number and kind of shares subject to
outstanding awards, the purchase price for such shares and the number and kind
of shares available for issuance under the Stock Incentive Plan is subject to
adjustments, in the sole discretion of the Committee, in connection with the
occurrence of mergers, recapitalizations and other significant corporate events
involving the Company. The shares to be offered under the Stock Incentive Plan
will be either authorized and unissued shares or issued shares which have been
reacquired by the Company.
ELIGIBILITY AND PARTICIPATION. The participants under the Stock Incentive
Plan will be those employees and consultants of the Company or any subsidiary
who are selected by the Committee to receive awards, including officers who are
also directors of the Company or its subsidiaries. Approximately five persons
will initially be eligible to participate. No participant can receive awards
under the Stock Incentive Plan in any calendar year in respect of more than
15,000 shares of Common Stock.
AMENDMENT OR TERMINATION. The Stock Incentive Plan has no fixed expiration
date. The Committee will establish expiration and exercise dates on an
award-by-award basis. However, for the purpose of awarding incentive stock
options under Section 422 of the Code ("incentive stock options"), the Stock
Incentive Plan will expire ten years from its effective date.
STOCK OPTIONS. The Committee may grant to a participant incentive stock
options, options which do not qualify as incentive stock options ("non-qualified
stock options") or a combination thereof. The terms and conditions of stock
option grants including the quantity, price, vesting periods, and other
conditions on exercise will be determined by the Committee. Incentive stock
option grants shall be made in accordance with Section 422 of the Code.
The exercise price for stock options will be determined by the Committee
at its discretion, provided that the exercise price per share for each stock
option shall be at least equal to 100% of the fair market value of one share of
Common Stock on the date when the stock option is granted.
Upon a participant's termination of employment for any reason, any stock
options which were not exercisable on the participant's termination date will
expire, unless otherwise determined by the Committee.
Upon a participant's termination of employment for reasons other than
death, disability or retirement, the participant's stock options will expire on
the date of termination, unless the right to exercise the options is extended by
the Committee at its discretion. In general, upon a participant's termination by
reason of death or disability, stock options which were exercisable on the
participant's termination date (or which are otherwise determined to be
exercisable by the Committee) may continue to be exercised by the participant
(or the participant's beneficiary) for a period of twelve months from the date
of the participant's termination of employment, unless extended by the
Committee. Upon a participant's termination by reason of retirement, stock
options which were exercisable upon the participant's termination date (or which
are otherwise determined to be exercisable by the Committee) may continue to be
exercised by the participant for a period of three months from the date of the
participant's termination of employment, unless extended by the Committee. If
upon the disability or retirement of the participant, the participant's age plus
years of continuous service with the company and its affiliates and predecessors
(as combined and rounded to the nearest month) equals 65 or more, then all of
the participant's options will be exercisable on the date of such disability or
retirement for the
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<PAGE>
exercise period stated above. In no event, however, may the options be exercised
after the scheduled expiration date of the options.
Subject to the Committee's discretion, payment for shares of Common Stock
on the exercise of stock options may be made in cash, by the delivery (actually
or by attestation) of shares of Common Stock held by the participant for at
least six months prior to the date of exercise, a combination of cash and shares
of Common Stock, or in any other form of consideration acceptable to the
Committee (including one or more "cashless" exercise forms).
STOCK APPRECIATION RIGHTS. Stock appreciation rights ("SARs") may be
granted by the Committee to a participant either separate from or in tandem with
non-qualified stock options or incentive stock options. SARs may be granted at
the time of the stock option grant or, with respect to non-qualified stock
options, at any time prior to the exercise of the stock option. A SAR entitles
the participant to receive, upon its exercise, a payment equal to (i) the excess
of the fair market value of a share of Common Stock on the exercise date over
the SAR exercise price, times (ii) the number of shares of Common Stock with
respect to which the SAR is exercised.
The exercise price of a SAR is determined by the Committee, but in the
case of SARs granted in tandem with stock options, may not be less than the
exercise price of the related stock option. Upon exercise of a SAR, payment will
be made in cash or shares of Common Stock, or a combination thereof, as
determined at the discretion of the Committee.
CHANGE IN CONTROL. In the event of a change in control of the Company, all
stock options and SARs will immediately vest and become exercisable. In general,
events which constitute a change in control include: (i) acquisition by a person
of beneficial ownership of shares representing 30% or more of the voting power
of all classes of stock of the Company; (ii) during any year or period of two
consecutive years, the individuals who at the beginning of such period
constitute the Board no longer constitute at least a majority of the Board;
(iii) a reorganization, merger or consolidation; or (iv) approval by the
stockholders of the Company of a plan of complete liquidation of the Company.
FEDERAL INCOME TAX CONSEQUENCES. The following is a summary of the
principal U.S. federal income tax consequences of Stock Incentive Plan benefits
under present tax law. The summary is not intended to be exhaustive and, among
other things, does not describe state, local or non-U.S. tax consequences.
STOCK OPTIONS. No tax is incurred by the participant, and no amount is
deductible by the Company, upon the grant of a nonqualified stock option. At the
time of exercise of such an option, the difference between the exercise price
and the fair market value of the Common Stock will constitute ordinary income to
the participant. The Company will be allowed a deduction equal to the amount of
ordinary income recognized by the participant.
In the case of incentive stock options, although no income is recognized
upon exercise and the Company is not entitled to a deduction, the excess of the
fair market value of the Common Stock on the date of exercise over the exercise
price is counted in determining the participant's alternative minimum taxable
income. If the participant does not dispose of the shares acquired on the
exercise of an incentive stock option within one year after their receipt and
within two years after the grant of the incentive stock option, gain or loss
recognized on the disposition of the shares will be treated as long-term capital
gain or loss. In the event of an earlier disposition of
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<PAGE>
shares acquired upon the exercise of an incentive stock option, the participant
may recognize ordinary income, and if so, the Company will be entitled to a
deduction in a like amount.
SARS. The participant will not recognize any income at the time of grant
of a SAR. Upon the exercise of a SAR, the cash and the value of any Common Stock
received will constitute ordinary income to the participant. The Company will be
entitled to a deduction in the amount of such income at the time of exercise.
VOTE REQUIRED
Approval of the Stock Incentive Plan will require the affirmative vote of
at least a majority in voting interest of the stockholders present in person or
by proxy and voting at the Annual Meeting and entitled to vote thereon, assuming
the presence of a quorum. Because abstentions with respect to any matter are
treated as shares present or represented and entitled to vote for the purposes
of determining whether that matter has been approved by the stockholders,
abstentions have the same effect as negative votes for the Stock Incentive Plan
Proposal. Broker non-votes and shares as to which proxy authority has been
withheld with respect to any matter are not deemed to be present or represented
for purposes of determining whether stockholder approval of that matter has been
obtained. If the stockholders do not approve the Stock Incentive Plan, it will
not be implemented, but the Company reserves the right to adopt such other
compensation plans and programs as it deems appropriate and in the best
interests of the Company and its stockholders.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE STOCK INCENTIVE PLAN
AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS VOTE "FOR" ADOPTION OF THE STOCK
INCENTIVE PLAN.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
To the knowledge of the management of the Company, only the following
persons or groups owned of record or beneficially 5% or more of the outstanding
Common Stock of the Company as of March 23, 1998:
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Owner of Class
------------------- -------------------- ---------
<S> <C> <C>
Estate of Harold J. Ruttenberg 513,996 20.6%
The Atrium
307 S. Dithridge Street
Pittsburgh, PA 15213
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<PAGE>
Katherine M. Ruttenberg 216,000 8.6%
The Atrium
307 S. Dithridge Street
Pittsburgh, PA 15213
Barclays Global Investors, N.A 130,102 5.2%
45 Fremont Street
San Francisco, CA 94105
Avocet Capital Management, L.P. 297,400 11.9%
111 Congress Avenue, Suite 1600
Austin, TX 78701
- ----------
</TABLE>
INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed Ernst & Young LLP as
independent auditors to audit the financial statements of the Company and its
subsidiaries for the fiscal year ending December 31, 1999 and to report on such
audit to the stockholders of the Company. The firm of Ernst & Young LLP has
audited the Company's books annually since 1964. The Company has been advised
that the representatives of Ernst & Young LLP will be present at the Annual
Meeting of Stockholders and they will have an opportunity to make a statement,
if they desire to do so and they will be available to respond to appropriate
questions.
OTHER MATTERS
The management of the Company knows of no other matters which are to be
brought before the Annual Meeting other than those matters set forth in this
Proxy Statement. However, if any other matters come before the meeting, the
holders of the proxies will vote on such matters in accordance with their best
judgment.
STOCKHOLDER PROPOSALS
Any stockholder who intends to submit a proposal for action at the 2000
Annual Meeting of Stockholders must provide notice to the Company which must be
received by the Secretary of the Company before December 6, 1999 in order for
the proposal to be included in management's proxy statement and form of proxy
relating to the 2000 Annual Meeting of Stockholders.
By Order of the Board of Directors
Charles E. Harris
Secretary
April 5, 1999
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<PAGE>
EXHIBIT A
AMERICAN LOCKER GROUP INCORPORATED
1999 STOCK INCENTIVE PLAN
ARTICLE I
PURPOSE AND ADOPTION OF THE PLAN
1.01 PURPOSE. The purpose of the American Locker Group Incorporated 1999
Stock Incentive Plan (hereinafter referred to as the "Plan") is to assist in
attracting and retaining highly competent key employees and consultants and to
act as an incentive in motivating selected key employees and consultants of
American Locker Group Incorporated and its Subsidiaries (as defined below) to
achieve long-term corporate objectives.
1.02 ADOPTION AND TERM. The Plan was approved by the Board of Directors
(hereinafter referred to as the "Board") of American Locker Group Incorporated
(hereinafter referred to as the "Company") effective as of March 3, 1999 (the
"Effective Date"), subject to the approval of the stockholders of the Company.
The Plan shall remain in effect until terminated by action of the Board;
PROVIDED, HOWEVER, that no Incentive Stock Option (as defined below) may be
granted hereunder after the tenth anniversary of the Effective Date.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, capitalized terms shall have the following
meanings:
2.01 AWARD means any grant to a Participant of one or a combination of
Non-Qualified Stock Options, Incentive Stock Options and/or Stock Appreciation
Rights described in Article VI.
2.02 AWARD AGREEMENT means a written agreement between the Company and a
Participant or a written notice from the Company to a Participant specifically
setting forth the terms and conditions of an Award granted under the Plan.
2.03 BENEFICIARY means an individual, trust or estate who or which, by a
written designation of the Participant filed with the Company or by operation of
law, succeeds to the rights and obligations of the Participant under the Plan
and an Award Agreement upon the Participant's death.
2.04 BOARD means the Board of Directors of the Company.
2.05 CHANGE IN CONTROL means, and shall be deemed to have occurred upon
the occurrence of, any one of the following events:
(a) the acquisition by any person (including any syndicate or
group deemed to be a "person" under Section 13(d)(3) or 14(d)(2) of the
Exchange Act of "beneficial ownership" (as determined in accordance with
Rule 13d-3 promulgated under
<PAGE>
the Exchange Act, except that a person shall be deemed to be a "beneficial
owner" of all securities that such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of shares of capital stock of the Company
entitling such person to exercise 30% or more of the total voting power of
the Company Voting Securities;
(b) during any year or any period of two consecutive years
(not including any period prior to the Effective Date), individuals who at
the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(a), (c) or (d) of this definition) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason
to constitute at least a majority thereof;
(c) any consolidation or merger of the Company with or into
any other person, or any sale or transfer of all or substantially all of
the assets of the Company to another person, other than any such
transaction immediately following which more than 70% of, respectively,
the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Common Stock and the Company Voting
Securities immediately prior to such acquisition in substantially the same
proportion as their ownership, immediately prior to such acquisition, of
the Outstanding Common Stock and Company Voting Securities, as the case
may be; or
(d) the stockholders of the Company approve a plan of
complete liquidation of the Company.
Notwithstanding the foregoing, unless otherwise determined by the Board, no
change in control of the Company shall be deemed to have occurred for purposes
of determining a Participant's rights under this Plan if (x) the Participant is
a member of a group that first announces a proposal which, if successful, would
result in a Change of Control, which proposal (including any modifications
thereof) is ultimately successful, or (y) the Participant acquires a two percent
or more equity interest in the entity that ultimately acquires the Company
pursuant to the transaction described in (x) of this paragraph. For purposes of
this definition, transfers by the Estate of Harold J. Ruttenberg to members of
Mr. Harold J. Ruttenberg's family or trusts for the benefit of Mr. Harold J.
Ruttenberg's family shall not be considered in determining if a Change in
Control has occurred.
2.06 CODE means the Internal Revenue Code of 1986, as amended. References
to a section of the Code include that section and any comparable section or
sections of any future legislation that amends, supplements or supersedes said
section.
2.07 COMMITTEE means the committee established in accordance with Section
3.01.
2.08 COMPANY means American Locker Group Incorporated, a Delaware
corporation, and its successors and assigns.
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<PAGE>
2.09 COMPANY VOTING SECURITIES means the outstanding shares of any class
or classes (however designated) of capital stock of the Company entitled to vote
generally in the election of the Board.
2.10 COMMON STOCK means Common Stock of the Company, par value $ 1.00 per
share.
2.11 DATE OF GRANT means the date designated by the Committee as the date
as of which it grants an Award, which shall not be earlier than the date on
which the Committee approves the granting of such Award.
2.12 EFFECTIVE DATE shall have the meaning given to such term in Section
1.02.
2.13 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
2.14 EXERCISE PRICE means, with respect to a Stock Appreciation Right,
the amount established by the Committee in the related Award Agreement as the
amount to be subtracted from the Fair Market Value on the date of exercise in
order to determine the amount of the payment to be made to the Participant, as
further described in Section 6.02(b).
2.15 FAIR MARKET VALUE means, as of any applicable date: (i) if the
Common Stock is listed on a national securities exchange or is authorized for
quotation on The Nasdaq National Market System ("NMS"), the mean of the high and
low prices of the Common Stock on such exchange or NMS, as the case may be, on
such date or if no sale of the Common Stock shall have occurred on such date,
the highest asked price for the Common Stock on such date; or (ii) if the Common
Stock is not listed for trading on a national securities exchange or authorized
for quotation on NMS, the closing bid price as reported by The Nasdaq SmallCap
Market on such date, or if no such price shall have been reported for such date,
on the next preceding date for which such price was so reported; or (iii) if the
Common Stock is not listed for trading on a national securities exchange or
authorized for quotation on NMS or The Nasdaq SmallCap Market (if applicable),
the mean between the bid and ask prices published in the "pink sheets" or
displayed on the National Association of Securities Dealers, Inc. ("NASD")
Electronic Bulletin Board, as the case may be; or (iv) if the Common Stock is
not listed for trading on a national securities exchange, is not authorized for
quotation on NMS or The Nasdaq SmallCap Market and is not published in the "pink
sheets" or displayed on the NASD Electronic Bulletin Board, the fair market
value of the Common Stock as determined by the Committee based upon such
evidence as it may think necessary or desirable.
2.16 INCENTIVE STOCK OPTION means a stock option within the meaning of
Section 422 of the Code.
2.17 MERGER means any merger, reorganization, consolidation, share
exchange, transfer of assets or other transaction having similar effect
involving the Company.
2.18 NON-QUALIFIED STOCK OPTION means a stock option which is not an
Incentive Stock Option.
2.19 OPTIONS means all Non-Qualified Stock Options and Incentive Stock
Options granted at any time under Section 6.01(a) of the Plan.
2.20 OUTSTANDING COMMON STOCK means, at any time, the issued and
outstanding shares of Common Stock.
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<PAGE>
2.21 PARTICIPANT means a person designated to receive an Award under the
Plan in accordance with Section 5.01.
2.22 PLAN means the American Locker Group Incorporated 1999 Stock
Incentive Plan as described herein, as the same may be amended from time to
time.
2.23 PURCHASE PRICE, with respect to Options, shall have the meaning set
forth in Section 6.01(b).
2.24 RETIREMENT means early or normal retirement under a pension plan or
arrangement of the Company or one of its Subsidiaries in which the Participant
participates.
2.25 STOCK APPRECIATION RIGHTS means Awards granted in accordance with
Section 6.02(a).
2.26 SUBSIDIARY means a subsidiary of the Company within the meaning of
Section 424(f) of the Code.
2.27 TERMINATION OF EMPLOYMENT means the voluntary or involuntary
termination of a Participant's employment with the Company or a Subsidiary for
any reason, including death, disability, retirement or as the result of the
divestiture of the Participant's employer or any similar transaction in which
the Participant's employer ceases to be the Company or one of its Subsidiaries.
Whether entering military or other government service shall constitute
Termination of Employment, or whether a Termination of Employment shall occur as
a result of disability, shall be determined in each case by the Committee in its
sole discretion. In the case of a consultant who is not an employee of the
Company or a Subsidiary, Termination of Employment shall mean voluntary or
involuntary termination of the consulting relationship for any reason.
ARTICLE III
ADMINISTRATION
3.01 COMMITTEE. The Plan shall be administered by a committee of the
Board (the "Committee") comprised of at least two persons. The Committee shall
have exclusive and final authority in each determination, interpretation or
other action affecting the Plan and its Participants. The Committee shall have
the sole discretionary authority to interpret the Plan, to establish and modify
administrative rules for the Plan, to impose such conditions and restrictions on
Awards as it determines appropriate, and to take such steps in connection with
the Plan and Awards granted hereunder as it may deem necessary or advisable. The
Committee may, subject to compliance with applicable legal requirements, with
respect to Participants who are not subject to Section 16(b) of the Exchange
Act, delegate such of its powers and authority under the Plan as it deems
appropriate to designated officers or employees of the Company. In addition, the
Board may exercise any of the authority conferred upon the Committee hereunder.
In the event of any such delegation of authority or exercise of authority by the
Board, references in the Plan to the Committee shall be deemed to refer to the
delegate of the Committee or the Board, as the case may be.
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<PAGE>
ARTICLE IV
SHARES
4.01 NUMBER OF SHARES ISSUABLE. The total number of shares initially
authorized to be issued under the Plan shall be 150,000 shares of Common Stock.
The number of shares available for issuance under the Plan shall be subject to
adjustment in accordance with Section 7.07. The shares to be offered under the
Plan shall be authorized and unissued shares of Common Stock, or issued shares
of Common Stock which will have been reacquired by the Company.
4.02 SHARES SUBJECT TO TERMINATED AWARDS. Shares of Common Stock covered
by any unexercised portions of terminated Options (including canceled Options)
granted under Article VI and shares of Common Stock subject to any Award that
are otherwise surrendered by a Participant may be subject to new Awards under
the Plan. Shares of Common Stock subject to Options, or portions thereof, that
have been surrendered in connection with the exercise of Stock Appreciation
Rights shall not be available for subsequent Awards under the Plan, but shares
of Common Stock issued in payment of such Stock Appreciation Rights shall not be
charged against the number of shares of Common Stock available for the grant of
Awards hereunder.
ARTICLE V
PARTICIPATION
5.01 ELIGIBLE PARTICIPANTS. Participants in the Plan shall be such key
employees and consultants of the Company and its Subsidiaries, whether or not
members of the Board, as the Committee, in its sole discretion, may designate
from time to time. The Committee's designation of a Participant in any year
shall not require the Committee to designate such person to receive Awards in
any other year. The designation of a Participant to receive an Award under one
portion of the Plan does not require the Committee to include such Participant
under other portions of the Plan. The Committee shall consider such factors as
it deems pertinent in selecting Participants and in determining the types and
amounts of their respective Awards. Subject to adjustment in accordance with
Section 7.07, during any calendar year no Participant shall be granted Awards in
respect of more than 15,000 shares of Common Stock (whether through grants of
Options or Stock Appreciation Rights or other rights with respect thereto).
ARTICLE VI
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
6.01 OPTION AWARDS.
(A) GRANT OF OPTIONS. The Committee may grant, to such Participants as
the Committee may select, Options entitling the Participants to purchase shares
of Common Stock from the Company in such numbers, at such prices, and on such
terms and subject to such conditions, not inconsistent with the terms of the
Plan, as may be established by the Committee. The terms of any Option granted
under the Plan shall be set forth in an Award Agreement.
(B) PURCHASE PRICE OF OPTIONS. The Purchase Price of each share of
Common Stock which may be purchased upon exercise of any Option granted under
the Plan shall be determined by the Committee; PROVIDED, HOWEVER, that the
Purchase Price shall in all cases be equal to or greater than the Fair Market
Value on the Date of Grant.
(C) DESIGNATION OF OPTIONS. Except as otherwise expressly provided in
the Plan, the Committee may designate, at the time of the grant of an Option,
such Option as an Incentive
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<PAGE>
Stock Option or a Non-Qualified Stock Option; PROVIDED, HOWEVER, that an Option
may be designated as an Incentive Stock Option only if the applicable
Participant is an employee of the Company or a Subsidiary on the Date of Grant.
(D) INCENTIVE STOCK OPTION SHARE LIMITATION. No Participant may be
granted Incentive Stock Options under the Plan (or any other plans of the
Company and its Subsidiaries) that would result in Incentive Stock Options to
purchase shares of Common Stock with an aggregate Fair Market Value (measured on
the Date of Grant) of more than $100,000 first becoming exercisable by such
Participant in any one calendar year.
(E) RIGHTS AS A STOCKHOLDER. A Participant or a transferee of an Option
pursuant to Section 7.04 shall have no rights as a stockholder with respect to
the shares of Common Stock covered by an Option until that Participant or
transferee shall have become the holder of record of any such shares, and no
adjustment shall be made with respect to any such shares of Common Stock for
dividends in cash or other property or distributions of other rights on the
Common Stock for which the record date is prior to the date on which that
Participant or transferee shall have become the holder of record of any shares
covered by such Option; PROVIDED, HOWEVER, that Participants are entitled to
share adjustments to reflect capital changes under Section 7.07.
6.02 STOCK APPRECIATION RIGHTS.
(A) STOCK APPRECIATION RIGHT AWARDS. The Committee is authorized to grant
to any Participant one or more Stock Appreciation Rights. Such Stock
Appreciation Rights may be granted either independent of or in tandem with
Options granted to the same Participant. Stock Appreciation Rights granted in
tandem with Options may be granted simultaneously with, or, in the case of
Non-Qualified Stock Options, subsequent to, the grant to such Participant of the
related Options; PROVIDED, HOWEVER, that: (i) any Option covering any share of
Common Stock shall expire and not be exercisable upon the exercise of any Stock
Appreciation Right with respect to the same share, (ii) any Stock Appreciation
Right covering any share of Common Stock shall expire and not be exercisable
upon the exercise of any Option with respect to the same share, and (iii) an
Option and a Stock Appreciation Right covering the same share of Common Stock
may not be exercised simultaneously. Upon exercise of a Stock Appreciation Right
with respect to a share of Common Stock, the Participant shall be entitled to
receive an amount equal to the excess, if any, of (A) the Fair Market Value of a
share of Common Stock on the date of exercise over (B) the Exercise Price of
such Stock Appreciation Right established in the Award Agreement, which amount
shall be payable as provided in Section 6.02(c).
(B) EXERCISE PRICE. The Exercise Price established for any Stock
Appreciation Right granted under this Plan shall be determined by the Committee,
but in the case of Stock Appreciation Rights granted in tandem with Options
shall not be less than the Purchase Price of the related Options. Upon exercise
of Stock Appreciation Rights, the number of shares issuable upon exercise under
any related Options shall automatically be reduced by the number of shares of
Common Stock represented by such Options which are surrendered as a result of
the exercise of such Stock Appreciation Rights.
(C) PAYMENT OF INCREMENTAL VALUE. Any payment that may become due from
the Company by reason of a Participant's exercise of a Stock Appreciation Right
may be paid to the Participant as determined by the Committee (i) all in cash,
(ii) all in Common Stock, or (iii) in any combination of cash and Common Stock.
In the event that all or a portion of the payment is to be made in Common Stock,
the number of shares of Common Stock to be delivered in satisfaction of such
payment shall be determined by dividing the amount of such payment or portion
thereof by the Fair Market Value on the date of exercise . No fractional share
of Common Stock shall be issued to make any payment in respect of Stock
Appreciation Rights; if any fractional share would
- 6 -
<PAGE>
otherwise be issuable, the combination of cash and Common Stock payable to a
Participant shall be adjusted as directed by the Committee to avoid the issuance
of any fractional share.
6.03 TERMS OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.
(A) CONDITIONS ON EXERCISE. An Award Agreement with respect to Options
and/or Stock Appreciation Rights may contain such waiting periods, exercise
dates and restrictions on exercise (including, but not limited to, periodic
installments) as may be determined by the Committee at the time of grant.
(B) DURATION OF OPTIONS AND STOCK APPRECIATION RIGHTS. Options and Stock
Appreciation Rights shall terminate after the first to occur of the following
events:
(i) Expiration of the Option or Stock Appreciation Right as
provided in the related Award Agreement; or
(ii) Termination of the Award as provided in Section 6.03(e),
following the applicable Participant's Termination of Employment; or
(iii) In the case of an Incentive Stock Option, ten years from the
Date of Grant; or
(iv) Solely in the case of a Stock Appreciation Right granted in
tandem with an Option, upon the expiration of the related Option.
(C) ACCELERATION OF EXERCISE TIME. The Committee, in its sole discretion,
shall have the right (but shall not in any case be obligated), exercisable at
any time after the Date of Grant, to permit the exercise of any Option or Stock
Appreciation Right prior to the time such Option or Stock Appreciation Right
would otherwise become exercisable under the terms of the related Award
Agreement.
(D) EXTENSION OF EXERCISE TIME. In addition to the extensions permitted
under Section 6.03(e) in the event of Termination of Employment, the Committee,
in its sole discretion, shall have the right (but shall not in any case be
obligated), exercisable on or at any time after the Date of Grant, to permit the
exercise of any Option or Stock Appreciation Right after its expiration date
described in Section 6.03(e), subject, however, to the limitations described in
Sections 6.03(b)(i), (iii) and (iv).
(E) EXERCISE OF OPTIONS OR STOCK APPRECIATION RIGHTS UPON TERMINATION OF
EMPLOYMENT.
(i) TERMINATION OF VESTED OPTIONS AND STOCK APPRECIATION RIGHTS
UPON TERMINATION OF EMPLOYMENT. The following provisions shall apply to
all Options and Stock Appreciation Rights unless the applicable Award
Agreement shall provide otherwise:
(A) TERMINATION. In the event of Termination of Employment of
a Participant other than by reason of death, disability or
Retirement, the right of the Participant to exercise any Option or
Stock Appreciation Right shall terminate on the date of such
Termination of Employment, unless the exercise period is extended by
the Committee in accordance with Section 6.03(d).
(B) DISABILITY. In the event of a Participant's Termination of
Employment by reason of disability, the right of the Participant to
exercise any Option or Stock Appreciation Right which he or she was
entitled to exercise upon Termination of
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Employment (or which became exercisable at a later date pursuant to
Section 6.03(e)(ii)) shall terminate twelve months after the date of
such Termination of Employment, unless the exercise period is
extended by the Committee in accordance with Section 6.03(d).
Notwithstanding the foregoing, if, upon the disability of the
Participant, the Participant's age plus years of continuous service
with the Company and its affiliates and predecessors (as combined
and rounded to the nearest month) equal 65 or more, then all of his
Options and Stock Appreciation Rights shall be exercisable on the
date of such disability, for the exercise period stated above. In no
event, however, may any Option or Stock Appreciation Right be
exercised later than the date of expiration of the Option determined
pursuant to Section 6.03(b)(i), (iii) or (iv).
(C) RETIREMENT. In the event of a Participant's Termination of
Employment by reason of Retirement, the right of the Participant to
exercise any Option or Stock Appreciation Right which he or she was
entitled to exercise upon Termination of Employment (or which became
exercisable at a later date pursuant to Section 6.03(e)(ii)) shall
terminate three months after the date of such Termination of
Employment, unless the exercise period is extended by the Committee
in accordance with Section 6.03(d). Notwithstanding the foregoing,
if, upon the retirement of the Participant, the Participant's age
plus years of continuous service with the Company and its affiliates
and predecessors (as combined and rounded to the nearest month)
equal 65 or more, then all of his Options and Stock Appreciation
Rights shall be exercisable on the date of such retirement, for the
exercise period stated above. In no event, however, may any Option
or Stock Appreciation Right be exercised later than the date of
expiration of the Option determined pursuant to Section 6.03(b)(i),
(iii) or (iv).
(D) DEATH. In the event of the death of a Participant while
employed by the Company or a Subsidiary or within any additional
period of time from the date of the Participant's Termination of
Employment and prior to the expiration of any Option or Stock
Appreciation Right as provided pursuant to Section 6.03(e)(i)(B) or
(C) or Section 6.03(d) above, to the extent the right to exercise
the Option or Stock Appreciation Right was accrued as of the date of
such Termination of Employment and had not expired during such
additional period, the right of the Participant's Beneficiary to
exercise the Option or Stock Appreciation Right shall terminate
twelve months after the date of the Participant's death, unless the
exercise period is extended by the Committee in accordance with
Section 6.03(d). In no event, however, may any Option or Stock
Appreciation Right be exercised later than the date of expiration of
the Option determined pursuant to Section 6.03(b)(i), (iii) or (iv).
(ii) TERMINATION OF UNVESTED OPTIONS OR STOCK APPRECIATION RIGHTS
UPON TERMINATION OF EMPLOYMENT. Subject to Section 6.03(c), and except as
otherwise expressly provided pursuant to Section 6.03(e)(1)(B) or (C), to
the extent the right to exercise an Option or a Stock Appreciation Right,
or any portion thereof, has not accrued as of the date of Termination of
Employment, such right shall expire at the date of such Termination of
Employment.
6.04 EXERCISE PROCEDURES. Each Option and Stock Appreciation Right
granted under the Plan shall be exercised by written notice to the Company which
must be received by the officer or employee of the Company designated in the
Award Agreement at or before the close of business on the expiration date of the
Award. The Purchase Price of shares purchased upon exercise of an Option granted
under the Plan shall be paid in full in cash by the Participant
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pursuant to the Award Agreement; PROVIDED, HOWEVER, that the Committee may (but
shall not be required to) permit payment to be made by delivery to the Company
of either (a) shares of Common Stock (which may include Restricted Shares or
shares otherwise issuable in connection with the exercise of the Option, subject
to such rules as the Committee deems appropriate) or (b) any combination of cash
and Common Stock or (c) such other consideration as the Committee deems
appropriate and in compliance with applicable law (including payment in
accordance with a cashless exercise program under which, if so instructed by a
Participant, shares of Common Stock may be issued directly to the Participant's
broker or dealer upon receipt of an irrevocable written notice of exercise from
the Participant). In the event that any shares of Common Stock shall be
transferred to the Company to satisfy all or any part of the Purchase Price, the
part of the Purchase Price deemed to have been satisfied by such transfer of
shares of Common Stock shall be equal to the product derived by multiplying the
Fair Market Value as of the date of exercise times the number of shares of
Common Stock transferred to the Company. The Participant may not transfer to the
Company in satisfaction of the Purchase Price any fractional share of Common
Stock. Any part of the Purchase Price paid in cash upon the exercise of any
Option shall be added to the general funds of the Company and may be used for
any proper corporate purpose. Unless the Committee shall otherwise determine,
any shares of Common Stock transferred to the Company as payment of all or part
of the Purchase Price upon the exercise of any Option shall be held as treasury
shares.
6.05 CHANGE IN CONTROL. Unless otherwise provided by the Committee in
the applicable Award Agreement, in the event of a Change in Control, all Options
and Stock Appreciation Rights outstanding on the date of such Change in Control
shall become immediately and fully exercisable. The provisions of this Section
6.05 shall not be applicable to any Options or Stock Appreciation Rights granted
to a Participant if any Change in Control results from such Participant's
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of Common Stock or Company Voting Securities.
ARTICLE VII
TERMS APPLICABLE TO ALL AWARDS GRANTED UNDER THE PLAN
7.01 PLAN PROVISIONS CONTROL AWARD TERMS. The terms of the Plan shall
govern all Awards granted under the Plan, and in no event shall the Committee
have the power to grant any Award under the Plan the terms of which are contrary
to any of the provisions of the Plan. In the event any provision of any Award
granted under the Plan shall conflict with any term in the Plan as constituted
on the Date of Grant of such Award, the term in the Plan as constituted on the
Date of Grant of such Award shall control. Except as provided in Section 7.03
and Section 7.07, the terms of any Award granted under the Plan may not be
changed after the Date of Grant of such Award so as to materially decrease the
value of the Award without the express written approval of the holder.
7.02 AWARD AGREEMENT. No person shall have any rights under any Award
granted under the Plan unless and until the Company and the Participant to whom
such Award shall have been granted shall have executed and delivered an Award
Agreement or the Participant shall have received and acknowledged notice of the
Award authorized by the Committee expressly granting the Award to such person
and containing provisions setting forth the terms of the Award.
7.03 MODIFICATION OF AWARD AFTER GRANT. No Award granted under the Plan
to a Participant may be modified (unless such modification does not materially
decrease the value of that Award) after its Date of Grant except by express
written agreement between the Company
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and such Participant, provided that any such change (a) may not be inconsistent
with the terms of the Plan, and (b) shall be approved by the Committee.
7.04 LIMITATION ON TRANSFER. A Participant's rights and interest under
the Plan may not be assigned or transferred other than by will or the laws of
descent and distribution and, during the lifetime of a Participant, only the
Participant personally (or the Participant's personal representative) may
exercise rights under the Plan. The Participant's Beneficiary may exercise the
Participant's rights to the extent they are exercisable under the Plan following
the death of the Participant. Notwithstanding the foregoing, the Committee may
grant Non-Qualified Stock Options that are transferable, without payment of
consideration, to immediate family members of the Participant or to trusts or
partnerships for such family members or such other parties as the Committee may
approve (as evidenced by the applicable Award Agreement or an amendment
thereto), and the Committee may also amend outstanding Non-Qualified Stock
Options to provide for such transferability.
7.05 TAXES. The Company shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from the Participant in
lieu of withholding) the amount of any withholding or other tax required by law
to be withheld or paid by the Company with respect to any amount payable and/or
shares issuable under such Participant's Award or with respect to any income
recognized upon a disqualifying disposition of shares received pursuant to the
exercise of an Incentive Stock Option, and the Company may defer payment of cash
or issuance of shares upon exercise or vesting of an Award unless indemnified to
its satisfaction against any liability for any such tax. The amount of such
withholding or tax payment shall be determined by the Committee and shall be
payable by the Participant in cash at such time as the Committee determines;
PROVIDED, HOWEVER, that with the approval of the Committee, the Participant may
elect to meet his or her withholding requirement by delivering (actually or by
attestation) to the Company that number of previously acquired shares of Common
Stock, or by having withheld from such Award at the appropriate time that number
of shares of Common Stock, rounded up to the next whole share, the Fair Market
Value of which is equal to the amount of withholding taxes due.
7.06 SURRENDER OF AWARDS. Any Award granted under the Plan may be
surrendered to the Company for cancellation on such terms as the Committee and
the Participant approve.
7.07 ADJUSTMENTS TO REFLECT CAPITAL CHANGES.
(A) RECAPITALIZATION. The number and kind of shares subject to
outstanding Awards, the Purchase Price or Exercise Price for such shares,
the number and kind of shares available for Awards subsequently granted
under the Plan and the maximum number of shares in respect of which Awards
can be made to any Participant in any calendar year shall be appropriately
adjusted to reflect any stock dividend, stock split, combination or
exchange of shares, merger, consolidation or other change in
capitalization with a similar substantive effect upon the Plan or the
Awards granted under the Plan. The Committee shall have the power and sole
discretion to determine the amount of the adjustment to be made in each
case.
(B) MERGER. In the event of a Merger in which the Company is not
the surviving corporation or pursuant to which a majority of the shares
which are of the same class as the shares that are subject to outstanding
Awards are exchanged for, or converted into, or otherwise become shares of
another corporation or other consideration, the Committee shall have the
sole discretion to determine that (i) the surviving, continuing, successor
or purchasing corporation, as the case may be (the "Acquiring
Corporation"), will either assume the Company's rights and obligations
under outstanding Award Agreements or
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substitute awards in respect of the Acquiring Corporation's stock for
outstanding Awards or (ii) the outstanding Awards shall be cancelled in
exchange for such consideration as the Committee shall approve (based on
the value of the consideration received in the Merger by holders of the
same class of shares that are subject to outstanding Awards).
(C) OPTIONS TO PURCHASE SHARES OR STOCK OF ACQUIRED COMPANIES.
After any merger in which the Company or a Subsidiary shall be a surviving
corporation, the Committee may grant substituted options under the
provisions of the Plan, pursuant to Section 424 of the Code, replacing old
options granted under a plan of another party to the merger whose shares
of stock subject to the old options may no longer be issued following the
merger. The manner of application of the foregoing provisions to such
options and any appropriate adjustments shall be determined by the
Committee in its sole discretion. Any such adjustments may provide for the
elimination of any fractional shares which might otherwise become subject
to any Options.
7.08 LEGAL COMPLIANCE. Shares of Common Stock shall not be issued
hereunder unless the issuance and delivery of such shares shall comply with
applicable laws and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
7.09 NO RIGHT TO EMPLOYMENT. No employee or other person shall have any
claim of right to be granted an Award under the Plan. Neither the Plan nor any
action taken hereunder shall be construed as giving any employee any right to be
retained in the employ of the Company or any of its Subsidiaries.
7.10 AWARDS NOT INCLUDABLE FOR BENEFIT PURPOSES. Payments received by a
Participant pursuant to the provisions of the Plan shall not be included in the
determination of benefits under any pension, group insurance or other benefit
plan applicable to the Participant which is maintained by the Company or any of
its Subsidiaries, except as may be provided under the terms of such plans or
determined by the Board.
7.11 GOVERNING LAW. All determinations made and actions taken pursuant to
the Plan shall be governed by the laws of the State of Delaware and construed in
accordance therewith.
7.12 NO STRICT CONSTRUCTION. No rule of strict construction shall be
implied against the Company, the Committee or any other person in the
interpretation of any of the terms of the Plan, any Award granted under the Plan
or any rule or procedure established by the Committee.
7.13 CAPTIONS. The captions (i.e., all Section headings) used in the
Plan are for convenience only, do not constitute a part of the Plan, and shall
not be deemed to limit, characterize or affect in any way any provisions of the
Plan, and all provisions of the Plan shall be construed as if no captions had
been used in the Plan.
7.14 SEVERABILITY. Whenever possible, each provision in the Plan and
every Award at any time granted under the Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of the Plan or any Award at any time granted under the Plan shall be held to be
prohibited by or invalid under applicable law, then (a) such provision shall be
deemed amended to accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (b) all other provisions of
the Plan, such Award and every other Award at any time granted under the Plan
shall remain in full force and effect.
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7.15 AMENDMENT AND TERMINATION.
(A) AMENDMENT. The Board shall have complete power and authority
to amend the Plan at any time. No termination or amendment of the Plan
may, without the consent of the Participant to whom any Award shall
theretofore have been granted under the Plan, materially adversely affect
the right of such individual under such Award.
(B) TERMINATION. The Board shall have the right and the power to
terminate the Plan at any time. No Award shall be granted under the Plan
after the termination of the Plan, but the termination of the Plan shall
not have any other effect and any Award outstanding at the time of the
termination of the Plan may be exercised after termination of the Plan at
any time prior to the expiration date of such Award to the same extent
such Award would have been exercisable had the Plan not been terminated.
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