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))
- ---
Definitive Proxy Statement
- ---
X Definitive Additional Materials
- ---
Soliciting Material under ss. 240.14a-12
- ---
American Locker Group Incorporated
______________________________________________________________________________
(Name of Registrant as Specified in its Charter)
______________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the 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 the table below per Exchange Act Rules 14(a)6(i)(4) and
O-11.
- ---
1) Title of each class of securities to which transaction applies:
_______________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
_______________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________
5) Total fee paid:
_______________________________________________________________________
Fee paid previously by written preliminary materials.
- ---
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
- ---
1) Amount Previously Paid:________________________________________________
2) Form Schedule for Registration Statement No.___________________________
3) Filing Party:__________________________________________________________
4) Date Filed:____________________________________________________________
AMERICAN LOCKER GROUP
INCORPORATED
608 ALLEN STREET
JAMESTOWN, NEW YORK 14701
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 2002
----------
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders will be held at the offices of
Kirkpatrick & Lockhart LLP, Henry W. Oliver Building, 535 Smithfield Street,
(Second Floor), Pittsburgh, PA 15222 on Tuesday, May 14, 2002, 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 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 19,
2002 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 8, 2002
AMERICAN LOCKER GROUP
INCORPORATED
608 ALLEN STREET
JAMESTOWN, NEW YORK 14701
----------
PROXY STATEMENT
----------
ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 2002
This Proxy Statement and the enclosed proxy, which are being mailed to
stockholders commencing on or about April 8, 2002, 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 Tuesday, May
14, 2002, at 10:00 a.m., Eastern Daylight Time, at the offices of Kirkpatrick &
Lockhart LLP, Henry W. Oliver Building, (2nd Floor), 535 Smithfield Street,
Pittsburgh, PA 15222.
Only holders of Common Stock of record at the close of business on
March 19, 2002, will be entitled to notice of and to vote at the Annual Meeting.
On that date there were outstanding 2,043,046 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 2001 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.
INTRODUCTION
PURPOSE OF THE ANNUAL MEETING
The Annual Meeting will be held for the purpose of electing seven
directors to serve for a term of one year and until their successors are duly
elected and qualified.
ELECTION OF DIRECTORS
Seven persons, constituting the entire Board of Directors of the
Company, are to be elected at the 2001 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. All seven
of the nominees were elected by the stockholders of the Company at the 2001
Annual Meeting of Stockholders.
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.
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 20, 2002.
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.
- 2 -
ALAN H. FINEGOLD
Mr. Alan H. Finegold, 59, a director since 1994, and a member of the
Executive Committee and the Audit Committee, has, since October 1, 1997, been
affiliated with the Law Offices of Alan H. Finegold, LLC, 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. {revise per Alan's D&O}
THOMAS LYNCH, IV
Mr. Thomas Lynch, 58, a director since 1994, and a member of the
Executive Compensation Committee and the Audit 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, 41, 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.
EDWARD F. RUTTENBERG
Mr. Edward F. Ruttenberg, 55, 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, 60, a director since 1994, has served as
President of Claremont Billing Systems, Inc., a data processing/telephone
billing firm, for more than five years.
JEFFREY C. SWOVELAND
Mr. Jeffrey C. Swoveland, 46, a director since 1997, serves as Chief
Financial Officer of Body Media, a life-science company specializing in
non-invasive recording and translation of multi-parameter physiologic and
lifestyle data. Prior to September 2000, he served as Vice President-Finance and
Treasurer of Equitable Resources, Inc. He joined Equitable Resources, Inc. as
Director of Alternative Finance in September 1994. He served as Interim Chief
- 3 -
Financial Officer of Equitable Resources, Inc. from October 1997 to July 1999.
He serves as a director of Petroleum Development Corporation.
DONALD I. DUSSING, JR.
Mr. Donald I. Dussing, Jr., 60, a director since 1998, has served as
President - Buffalo Division of Manufacturers and Traders Trust Company since
April, 1999. Prior to that time, he served as Senior Vice President and Manager
of Western New York Commercial Banking Department, Manufacturers and Traders
Trust Company for more than five years. He serves as a director of Niacet
Corporation.
STOCK OWNERSHIP OF NOMINEES AND EXECUTIVE OFFICERS
As of March 20, 2002, 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:
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- --------------------------------------------------------------------------------
Alan H. Finegold 10,000(1) *
273 N.E. Edgewater Drive
Stuart, FL 34996
Roy J. Glosser 59,200(2) 2.8%
608 Allen Street
Jamestown, NY 14702-1000
Thomas Lynch, IV 0 *
201 Lexington Avenue
Pittsburgh, PA 15215
Edward F. Ruttenberg 47,732(3) 2.2%
5864 Aylesboro Avenue
Pittsburgh, PA 15217
James E. Ruttenberg 15,696 *
254 South Main St.
New City, NY 10956
Jeffrey C. Swoveland 0 *
5870 Aylesboro Avenue
Pittsburgh, PA 15217
- 4 -
Donald I. Dussing, Jr. 4,000 *
6201 Senate Circle
East Amherst, New York 14051
David L. Henderson 25,250(4) 1.7%
5770 Rothesay Drive
Dublin, Ohio 43017
(*) Less than 1%
(1) Includes 3,000 shares which Mr. Finegold has the right to acquire under
stock options.
(2) Includes 54,000 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.
(3) Includes 25,000 shares which Edward F. Ruttenberg has the right to
obtain under stock options. Also includes 15,400 shares held by Edward
F. Ruttenberg, 2,000 shares held jointly by Edward F. Ruttenberg and
Sara Ruttenberg and 5,332 shares held by Rollform of Jamestown, Inc. in
which Edward F. Ruttenberg and his immediate family own a 97% interest.
(4) Includes 5,000 shares which Mr. Henderson has the right to acquire
under stock options.
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 161,878 shares of Company Common Stock, or approximately 7.5%
of the shares outstanding, on March 20, 2002. For purposes of the foregoing
sentence, shares subject to stock options held by such persons (87,000 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 2001, the Board of Directors met two times, the Executive
Committee met one time, the Stock Option-Executive Compensation Committee met
one time, and the Audit Committee met two times. The functions of the Audit
Committee are described below under the caption "Audit Committee Charter -
Responsibilities and Processes". 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
report of the Stock Option-Executive Compensation Committee is set forth below
under the caption "Report on Executive Compensation". 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 between the meetings of the Board of
Directors. The Company does not have a nominating committee.
- 5 -
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 2001 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 2001, 2000 and 1999 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:
==========================================================================================================================
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------------------------------------------------
LONG TERM ALL OTHER
NAME AND PRINCIPAL POSITION ANNUAL COMPENSATION COMPENSATION COMPENSATION (1)
----------------------------------------------------------------------------------------
AWARDS
--------------
Securities
Underlying
Year Salary Bonus Options/SARs(#)
- --------------------------------------------------------------------------------------------------------------------------
Edward F. Ruttenberg 1999 $175,000 $118,800 15,000 $0
Chairman and Chief Executive 2000 $175,000 $125,000 10,000 $0
Officer 2001 $180,240 $150,000 - $0
- --------------------------------------------------------------------------------------------------------------------------
Roy J. Glosser 1999 $157,500 $108,000 10,000 $0
President, Chief Operating 2000 $157,500 $115,000 - $0
Officer and Treasurer 2001 $162,240 $125,000 - $0
- --------------------------------------------------------------------------------------------------------------------------
David Henderson 1999 $ 92,880 $ 36,000 5,000 $0
Vice President/General Manager 2000 $ 95,640 $ 40,500 - $0
American Locker Security 2001 $ 98,520 $ 45,000 - $0
Systems, Inc.
==========================================================================================================================
- 6 -
(1) In accordance with applicable regulations, the amounts do not include
perquisites and other personal benefits received by the named officers because
the aggregate value of such benefits did not exceed the lesser of $50,000 or 10
percent of the total salary and bonus for the named officers.
STOCK OPTIONS
1988 PLAN
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.
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.
During 2001, no options were exercised with respect to shares under the
1988 Plan.
1999 PLAN
In May 1999 the stockholders of the Company approved the American
Locker Group Incorporated 1999 Stock Incentive Plan (the "1999 Plan").
Administration. The 1999 Plan is 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 has the sole
discretion to interpret the 1999 Plan, establish and modify administrative
rules, impose conditions and restrictions on awards,
- 7 -
and take such other actions as it deems necessary or advisable. In addition, the
full Board of Directors of the Company can perform any of the functions of the
Committee under the 1999 Plan.
Amount of Stock. The 1999 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 1999 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 1999 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 1999 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 1999 Plan in any calendar year in respect of more than 15,000 shares of
Common Stock.
Amendment or Termination. The 1999 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 Internal Revenue Code of 1986, as amended (the "Code")
("incentive stock options"), the 1999 Plan will expire ten years from its
effective date of May 13, 1999.
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
- 8 -
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 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.
No options were granted in or exercised in 2001 under the 1999 Plan.
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,
2001. Share data reflects the four for one stock distribution which was
distributed on June 25, 1998.
- 9 -
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
===================================================================================================================
Shares Number of Unexercised Value of Unexercised
Acquired on Value Options/SARs at FY-End(#) in-the-Money Options/SARs at
Exercise (#) Realized ($) FY-End($)(1)
Name
- -------------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------------
Edward F. Ruttenberg -0- -0- 25,000 -0- [$231,250] -$0-
- -------------------------------------------------------------------------------------------------------------------
Roy J. Glosser -0- -0- 54,000 -0- [$729,140] -$0-
- -------------------------------------------------------------------------------------------------------------------
David L. Henderson -0- -0- 5,000 -0- [$52,500] -$0-
===================================================================================================================
(1) Calculated on the basis of the closing price of the underlying
securities at the closing of the market on December 31, 2001 ($17.00
per share) minus the exercise price.
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.
Annual pension benefits for years of
credited service shown(1)
Lifetime average
annual earnings 10 years 20 years 30 years
- ---------------- -------- -------- --------
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.
- 10 -
Roy J. Glosser is credited with nine years service under such plan,
David L. Henderson is credited with eleven years service and Edward F.
Ruttenberg is credited with three years 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 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.
- 11 -
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.
REPORT ON EXECUTIVE COMPENSATION
This Report on Executive Compensation is furnished by the Stock
Option-Executive Compensation Committee of the Board of Directors (referred to
as the "Committee").
In accordance with the rules of the Securities and Exchange Commission,
this report is not incorporated by reference into any of the Company's
registration statements under the Securities Act of 1933.
The Committee consists of three members, Thomas Lynch IV, Jeffrey C.
Swoveland and Donald I. Dussing, Jr., all of whom are disinterested non-employee
directors.
The Committee is responsible for all aspects of executive compensation
of the Company. It determines levels of executive compensation for each of the
two principal executive officers of the Company and administers the Company's
1999 Stock Incentive Plan, the Company's 1988 Stock Incentive Plan, and the
Supplemental Retirement Plan. Following its deliberations, the Executive
Committee makes periodic reports to the entire Board of Directors.
COMPENSATION PHILOSOPHY - The Company's overall executive compensation
objective is to attract and retain qualified executive officers by compensating
them at levels comparable to those at similar businesses. The Company's
compensation program for executive officers consists of five components:
(1) base salary;
(2) participation in bonus distributions;
(3) participation in other welfare and benefit plans available
to employees of the Company and its subsidiaries generally;
(4) participation in the 1999 Stock Incentive Plan;
(5) participation in the Supplemental Retirement Plan.
SALARY - The Committee reviews and, if appropriate, revises salary
levels for the two principal executive officers of the Company annually. Salary
adjustments made by the Committee generally become effective January 1 of each
fiscal year.
Executive officer salaries are determined in light of individual
performance and corporate performance. In fixing the Chief Executive Officer's
salary, the Committee also considers his effectiveness in achieving expansion
and growth objectives of the Company.
BONUS DISTRIBUTION - The Committee, on an annual basis at the end of
each fiscal year, allocates to key employees of the Company discretionary
bonuses. These bonuses are drawn
- 12 -
from a pool established at the time by the Committee based on factors including
the operating results of the Company for such fiscal year. The Chief Executive
Officer and the President make recommendations to the Committee for all eligible
employees but decisions as to the amount of any such bonus to the two principal
executive officers is determined by the Committee based on performance data
submitted to it. The bonuses are paid in cash.
1999 STOCK INCENTIVE PLAN - The Stockholders of the Company adopted the
1999 Stock Incentive Plan in May 1999 to recruit and retain highly qualified
managers, consultants and staff. The Committee administers the Plan which
includes directing the amount of stock options awarded, selecting the persons to
receive stock option awards, determining the terms, provisions and exercise
prices for the stock options. The actual amount earned by any individual who
receives stock options is determined by the performance of the Company's stock.
The Committee uses the level of responsibility of an individual as a guideline
to establish the size of stock option awards.
OTHER PLANS - The Company maintains other pension benefit and welfare
plans for employees of the Company and its subsidiaries, including a defined
benefit plan, a 401(k) plan, medical, disability and life insurance plans.
Executive officers participate in these plans on a non-preferential basis.
SUPPLEMENTAL RETIREMENT PLAN - Certain executive officers are eligible
to participate in the Company's Supplemental Retirement Plan which provides for
supplemental retirement benefits to certain executive level employees of
Company. The Supplemental Retirement Plan is administered by the Committee. As
of December 31, 2001, no present officer or employee of the Company had been
granted rights under the Supplemental Retirement Plan.
COMPENSATION OF EXECUTIVE OFFICERS IN 2002 - The Committee recommended
an increase of 4% in base compensation (excluding bonuses to executive officers)
with respect to Mr. Glosser and Mr. Ruttenberg for calendar year 2002 over
calendar year 2001.
The Committee believes that executive compensation fairly reflects the
benefits received by the Company stockholders.
COMPENSATION OF CHIEF EXECUTIVE OFFICER - Mr. Ruttenberg's compensation
is based on the same philosophy and policies for all executive officers and
includes the same components as the executive officers. In November 1999, to
assure Mr. Ruttenberg's continued service to the Company, he and the Company
entered into a three year employment agreement. In 2000 he was awarded options
to purchase 10,000 shares of common stock from the Company. The Committee
believes that Mr. Ruttenberg's compensation is reasonable, competitive and fair.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION - Section 162(a) of the
Internal Revenue Code imposes limits on tax deductions for annual compensation
paid to a chief executive officer and other highly compensated officers unless
the compensation qualifies as "performance-based" or is otherwise exempt under
the law. The current levels of compensation of the executive officers of the
Company are substantially below the levels at which the limitations of Section
162 are applicable. In the event that levels of compensation rise such that
Section 162 should become applicable, the Committee intends to comply with the
limitations of Section 162 unless
- 13 -
such compliance is determined by the Committee not to be in the best interest of
the Company at such time.
THE STOCK OPTION-EXECUTIVE
COMPENSATION COMMITTEE
Thomas Lynch IV, Chairman
Jeffrey C. Swoveland
Donald I. Dussing, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Executive Compensation-Stock Option Committee
is an officer or employee of the Company. No other member of the Committee has a
current or prior relationship, and no officer who is a statutory insider of the
company has a relationship to any other company, required to be described under
the Securities and Exchange Commission rules relating to disclosure of executive
compensation.
Report of the Audit Committee
The Audit Committee oversees the Company's financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the systems of internal
controls. In fulfilling its oversight responsibilities, the Committee reviewed
the audited financial statements in the Company's Annual Report for 2001 with
management including a discussion of the quality, not just the acceptability, of
the accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The Audit Committee reviewed with the Company's independent auditors, Ernst &
Young LLP, who are responsible for expressing an opinion on the conformity of
those audited financial statements with generally accepted accounting
principles, their judgments as to the quality, not just the acceptability, of
the Company's accounting principles and such other matters as are required to be
discussed with the Committee under generally accepted auditing standards. In
addition, the Audit Committee has discussed with the independent auditors the
auditors' independence from management and the Company including the matters in
the written disclosures required by the Independence Standards Board and
considered the compatibility of nonaudit services with the auditors'
independence.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for its audit. The Audit Committee meets with the
independent auditors, without management present, to discuss the results of its
examination, its evaluation of the Company's
- 14 -
internal controls, and the overall quality of the Company's financial reporting.
The Audit Committee held two such meetings during 2001 which was attended by all
members.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31, 2001 for filing with the Securities and
Exchange Commission. The Audit Committee and the Board have also recommended the
selection of Ernst & Young LLP as the Company's independent auditors for the
year ending December 31, 2002.
THE AUDIT COMMITTEE
Jeffrey C. Swoveland, Chairman
Thomas Lynch, IV
Donald I. Dussing, Jr.
- 15 -
AUDIT COMMITTEE CHARTER
Organization
This charter governs the operations of the Audit Committee. A copy of the Audit
Committee Charter is attached to this Proxy Statement as Appendix A. The Audit
Committee shall review and reassess the charter at least annually and obtain the
approval of the Board of Directors. The Audit Committee shall be appointed by
the Board of Directors of the Company and shall be comprised of at least three
directors, each of whom are independent of management and the Company. Members
of the committee shall be considered independent if they have no relationship
that may interfere with the exercise of their independence from management and
the Company. Each member must also satisfy the independence requirements
established by NASDAQ. All Audit Committee members shall be financially literate
and at least one member shall have accounting or related financial management
expertise.
Statement of Policy
The Audit Committee will provide assistance to the Board in fulfilling their
oversight responsibility to the Company's shareholders and potential
shareholders, the investing community, and others with respect to the Company's
(i) financial statements and the financial reporting processes, (ii) systems of
internal accounting and financial controls, and (iii) annual independent audit
of its financial statements and legal compliance and ethics programs, as each is
established by the Board and by the Company's management. In so doing, the Audit
Committee will maintain free and open communications with the Company's internal
and independent auditors and management. In discharging its oversight role, the
Audit Committee is empowered to investigate any matter brought to its attention
with full access to all books, records, facilities and personnel of the Company
and the power to retain outside counsel, or other experts, for this purpose.
The Committee, in carrying out its responsibilities, will adopt policies and
procedures that will remain flexible in order to best react to changing
conditions and circumstances. The Committee will endeavor to direct the overall
corporate goals of maintaining quality financial reporting, sound business risk
practices and ethical behavior.
Responsibilities and Processes
The primary responsibility of the Audit Committee is to oversee the Company's
financial reporting process on behalf of the Board and to report the results of
their activities to the Board. The Company's management is responsible for
preparing the Company's financial statements, and the Company's independent
auditors are responsible for auditing those financial statements.
The following describes the principal recurring processes of the Audit Committee
in carrying out its oversight responsibilities, which the Audit Committee will
implement to the full extent permitted by law:
- 16 -
o The Audit Committee will maintain a clear understanding with the
Company's management and its independent auditors regarding the
ultimate accountability of the independent auditors to the Audit
Committee and to the full Board;
o The Audit Committee will maintain the responsibility to select
the Company's independent auditors and ultimate authority with
respect to the evaluation of, and where appropriate, replacement
of the Company's independent auditors;
o The Audit Committee will discuss with the Company's independent
auditors (a) the independence of such auditors, (b) the matters
included in the written disclosures required by the Independence
Standards Board, a private-sector body created in 1997 which is
charged with creating, codifying, amending and preserving
independence standards for auditors of public companies, and (c)
issues of auditor independence related to the compatibility of
nonaudit services provided to the Company by such auditors;
o The Audit Committee will annually review the performance of the
independent auditors and will recommend to the Board its
selection of the Company's independent auditors for the upcoming
year;
o The Audit Committee will discuss with the Company's independent
auditors the overall scope and plans for their audits, including
the adequacy of staffing and compensation, and make such
recommendations to the Board in this regard as deemed necessary
or appropriate by the Audit Committee The Audit Committee will
also discuss with such auditors the adequacy and effectiveness of
the accounting and financial controls of the Company, including
the Company's system to monitor and manage business risk, and its
legal compliance and ethics programs;
o The Audit Committee will meet separately with the Company's
internal auditors and its independent auditors, both with and
without representatives of the Company's management present, to
discuss the results of their examinations;
o The Audit Committee will act to ensure that procedures are in
place to cause the Company's interim financial statements,
including footnotes, to be reviewed by the Company's independent
auditors in accordance with Statement on Auditing Standards No.
71, Interim Financial Statements, prior to the filing of the
Company's Quarterly Report on Form 10-Q for a given quarter. When
the independent auditors have identified matters to be
communicated to the Audit Committee in connection with such
review, the Audit Committee, or its Chairman on behalf of the
Audit Committee, will be available to the independent auditors to
discuss such matters and any other relevant matters with the
independent auditors and representatives of Company's management
prior to filing of quarterly statements under Form 10-Q;
o The Audit Committee will review with the Company's management and
its independent auditors the financial statements, including
footnotes, to be included in the Company's Annual Report on Form
10-K (or Annual Report to Shareholders)
- 17 -
with respect to (a) the quality, as opposed to only the
acceptability, of the Company's accounting principles, (b) the
reasonableness of significant judgments, and (c) the clarity of
the disclosures in the financial statements. Following such
review, the Audit Committee will recommend that the audited
financial statements be included in the Company's Annual Report
on Form 10-K. The Audit Committee will also discuss the results
of the annual audit and any other matters required to be
communicated to the Audit Committee by the Company's independent
auditors under generally accepted auditing standards;
o The Audit Committee will otherwise meet with and request and
obtain reports and information from such Company officers,
employees, suppliers and others as the Audit Committee shall
determine to be necessary or desirable in carrying out its duties
as set forth in this Charter.
These processes are set forth in this Charter as a guide, with the understanding
that the Audit Committee may supplement such processes as it deems appropriate.
Meetings
The Audit Committee may hold regular meetings on such days as it shall
determine. Other meetings of the Audit Committee shall be held at the request of
the Chairperson of the Audit Committee or any two other Audit Committee members.
Minutes of the meetings of the Audit Committee shall be regularly kept by a
person appointed by the Audit Committee to do so.
Attendance
Such officers and other employees of the Company as the Audit Committee may
regularly or from time-to-time designate shall attend meetings of the Audit
Committee.
Outside Assistance
The Audit Committee is authorized to engage or employ such outside professional
or other services as in its discretion may be required to fulfill its
responsibilities.
Procedure
The Audit Committee may adopt rules for its meetings and other activities. In
the absence of such rules, Audit Committee actions shall be governed by the
Company's Bylaws in force at the time of such actions and by applicable law. In
all cases, a quorum of the Audit Committee shall be a majority of the persons
then serving as members of the Audit Committee.
Audit Committee Independence
Each current member of the Audit Committee is independent as defined in the
National Association of Securities Dealers Listing Standards
- 18 -
EMPLOYMENT AND OTHER CONTRACTS
EDWARD F. RUTTENBERG
In November 1999, the Company entered into an employment agreement with
Edward F. Ruttenberg, effective November 18, 1999 (the "Ruttenberg Agreement").
The Ruttenberg Agreement provides, among other things, (i) that the term of
employment will expire on November 18, 2002, (ii) that base salary will be
$14,583 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 upon the occurrence of a "Trigger Event," Mr. Ruttenberg will be entitled
to receive as a special bonus an amount equal to two times his annual base
salary at the rate in effect on the closing of such Trigger Event plus the
annual bonus, if any, received with respect to the most recently completed
fiscal year of the Company. For purposes of the Ruttenberg Agreement, a Trigger
Event shall mean the occurrence of the event described in subsection (i) below
and one or more of the events described in subsection (ii) below; (i) any Rights
issued under the American Locker Group Incorporated Stock Rights Agreement dated
November 18, 1999 become exercisable under terms of such Rights Agreement, as
amended and in effect from time to time, and (ii) the occurrence of any of the
following: (a) a substantial reduction in the base salary, benefits or
perquisites provided Mr. Ruttenberg; (b) a relocation of the Company's principal
place of business to a location which is more than 50 miles from its current
location in Jamestown, New York; or (c) the assignment to Mr. Ruttenberg of any
duties inconsistent in any respect with Mr. Ruttenberg's current position with
the Company (including status, offices, titles and reporting requirements), or
any action by the Company which results in diminution in such position, or Mr.
Ruttenberg's current authority, duties or responsibilities, but excluding for
this purpose any isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company.
The Ruttenberg 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
Ruttenberg Agreement also provides that such payments shall be reduced by any
payments to which Mr. Ruttenberg is entitled under any disability plan then
maintained by the Company and by any payments to which Mr. Ruttenberg is
entitled under the Federal Social Security disability program.
ROY J. GLOSSER
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.
- 19 -
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.
CUMULATIVE TOTAL STOCKHOLDER RETURN
The graph set forth below shows the cumulative total stockholder return
(i.e., price change plus reinvestment of dividends) on the Common Stock from the
first day of trading in the Common Stock for the past five calendar years as
compared to the Russell 2000 Index and a peer group consisting of a group of
business equipment manufacturers, including Hon Industries, Inc., Miller Herman,
Inc., Xerox Corporation and Pitney Bowes, Inc. The graph assumes that $100 was
invested on January 1, 1996.
In accordance with the rules of the Securities and Exchange Commission,
this presentation is not incorporated by reference into any of the Company's
registration statements under the Securities Act of 1933.
{{Table}}
{{Caption}}
- ----------------------------------------------------------------------------------------------------------------------
FISCAL YEAR ENDING
- --------------------------------------------------- ------------------------------------------------------------------
COMPANY/INDEX/MARKET 1996 1997 1998 1999 2000 2001
- ----------------------------------------------------------------------------------------------------------------------
American Locker Group Incorporated 100.00 185.19 748.15 166.67 162.96 503.70
- ----------------------------------------------------------------------------------------------------------------------
Business Equipment 100.00 147.97 200.35 114.43 69.69 93.27
- ----------------------------------------------------------------------------------------------------------------------
Russell 2000 Index 100.00 122.34 118.91 142.21 136.07 137.46
- ----------------------------------------------------------------------------------------------------------------------
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.
- 20 -
Alan H. Finegold, a director of the Company, was paid $[18,000] for
consulting services to the Company in 2001 pursuant to a consulting arrangement
under which Mr. Finegold is paid $4,500 per calendar quarter. The arrangement
may be discontinued by the Company or Mr. Finegold at any time. Mr. Finegold is
also an equity holder in The Law Offices of Alan H. Finegold, LLC, a limited
liability company which provided legal services to the Company in 2001 and will
continue to provide such services in the future. The law offices of Alan H.
Finegold was paid $149,165 for such services in 2001.
Donald I. Dussing, Jr., a director of the Company, is President of the
Buffalo Division 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, and has been
amended and restated to provide for a term which expires August 31, 2003,
subject to automatic renewal for a three year period on each September 1 during
the term of the Agreement and subject to termination by either party on one
years notice to the other party. 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 $4,014,406 and $3,759,666
of material from Signore, Inc. during 2001 and 2000, 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 $215,337,
$152,131 and $217,685 of materials from Rollform of Jamestown, Inc. in 2001,
2000 and 1999, respectively, at prices that the Company believes are at arms
length.
- 21 -
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 20, 2002:
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Owner of Class
- ------------------- ------------------ --------
Estate of Harold J. Ruttenberg 458,996 22.2%
The Atrium
307 S. Dithridge Street
Pittsburgh, PA 15213
Katherine M. Ruttenberg 148,400 7.3%
The Atrium
307 S. Dithridge Street
Pittsburgh, PA 15213
Santa Monica Partners L.P. 155,700 7.6%
1865 Palmer Avenue
Larchmont, NY 10538
- ----------
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, 2002 and to report on such
audit to the stockholders of the Company.
AUDIT FEES
Fees billed by the Company to Ernst & Young LLP for audit services and
review of the Company's financial statements included in the Company's quarterly
and annual filings with the Securities and Exchange Commission were $92,550.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Fees paid by the Company to Ernst & Young LLP in the last fiscal year
for services with
- 22 -
respect to financial information design and implementation were $-0-.
OTHER FEES
Fees paid by the Company to Ernst & Young LLP in the last fiscal year
for all services other than those described above were $96,900. These fees
consist primarily of tax compliance services and fees in connection with the
Company's acquisition of Security Manufacturing Corporation during 2001.
The firm of Ernst & Young LLP has audited the Company's books annually since
1964. The Company has been advised that 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
Under Rule 14a-8 of the Securities and Exchange Commission, any
stockholder who intends to submit a proposal for action at the 2003 Annual
Meeting of Stockholders must provide notice to the Company which must be
received by the Secretary of the Company before December 6, 2002 in order for
the proposal to be included in management's proxy statement and form of proxy
relating to the 2003 Annual Meeting of Stockholders.
By Order of the Board of Directors
Charles E. Harris
Secretary
April 8, 2002
- 23 -
A-4
APPENDIX A
AMERICAN LOCKER GROUP INCORPORATED
AUDIT COMMITTEE CHARTER
================================================================================
Organization:
This Charter governs the operations of the audit committee (the "Committee") of
American Locker Group Incorporated (the "Company"). The Committee shall review
and reassess this Charter at least annually and shall obtain the approval of the
Board of Directors of the Company (the "Board") with respect to this Charter at
that time.
The Committee shall be appointed by the Board and shall be comprised of at least
three directors, all of whom will be independent of the Company and its
management. A director will be considered "independent" for this purpose if such
director has no relationship that may interfere with the exercise of the
director's independence from the Company and its management. NASDAQ Rule
4200(15) defines an "Independent Director" as follows:
(15) "Independent director" means a person other than an
officer or employee of the company or its
subsidiaries or any other individual having a
relationship which, in the opinion of the company's
board of directors, would interfere with the exercise
of independent judgment in carrying out the
responsibilities of a director. The following persons
shall not be considered independent:
(a) a director who is employed by the corporation or
any of its affiliates for the current year or any
of the past three years;
(b) a director who accepts any compensation from the
corporation or any of its affiliates in excess of
$60,000 during the previous fiscal year, other than
compensation for board service, benefits under a
tax-qualified retirement plan, or non-discretionary
compensation;
(c) a director who is a member of the immediate
family of an individual who is, or has been in any of
the past three years, employed by the corporation or
any of its affiliates as an executive officer.
Immediate family includes a person's spouse, parents,
children, siblings, mother-in-law, father-in-law,
brother-in-law, sister-in-law, son-in-law,
daughter-in-law, and anyone who resides in such
person's home;
A-1
(d) a director who is a partner in, or a controlling
shareholder or an executive officer of, any
for-profit business organization to which the
corporation made, or from which the corporation
received, payments (other than those arising solely
from investments in the corporation's securities)
that exceed 5% of the corporation's or business
organization's consolidated gross revenues for that
year, or $200,000, whichever is more, in any of the
past three years;
(e) a director who is employed as an executive of
another entity where any of the company's executives
serve on that entity's compensation committee.
All members of the Committee must be financially literate, and at least one
member of the Committee must have accounting or related financial management
expertise.
Statement of Policy:
The Committee will provide assistance to the Board in fulfilling their oversight
responsibility to the Company's shareholders and potential shareholders, the
investing community, and others with respect to the Company's (i) financial
statements and the financial reporting processes, (ii) systems of internal
accounting and financial controls, and (iii) annual independent audit of its
financial statements and legal compliance and ethics programs, as each is
established by the Board and by the Company's management. In so doing, the
Committee will maintain free and open communications with the Company's internal
and independent auditors and management. In discharging its oversight role, the
Committee is empowered to investigate any matter brought to its attention with
full access to all books, records, facilities and personnel of the Company and
the power to retain outside counsel, or other experts, for this purpose.
The Committee, in carrying out its responsibilities, will adopt policies and
procedures that will remain flexible in order to best react to changing
conditions and circumstances. The Committee will endeavor to direct the overall
corporate goals of maintaining quality financial reporting, sound business risk
practices and ethical behavior.
Responsibilities and Processes:
The primary responsibility of the Committee is to oversee the Company's
financial reporting process on behalf of the Board and to report the results of
their activities to the Board. The Company's management is responsible for
preparing the Company's financial statements, and the Company's independent
auditors are responsible for auditing those financial statements.
The following describes the principal recurring processes of the Committee in
carrying out its oversight responsibilities, which the Committee will implement
to the full extent permitted by law:
o The Committee will maintain a clear understanding with the
Company's management and its independent auditors regarding the
ultimate accountability of the independent auditors to the
Committee and to the full Board;
A-2
o The Committee will maintain the responsibility to select the
Company's independent auditors and ultimate authority with respect
to the evaluation of, and where appropriate, replacement of the
Company's independent auditors;
o The Committee will discuss with the Company's independent auditors
(a) the independence of such auditors, (b) the matters included in
the written disclosures required by the Independence Standards
Board, and (c) issues of auditor independence related to
compatibility of non audit services provided to the Company by
such auditors;
o The Committee will annually review the performance of the
independent auditors and will recommend to the Board its selection
of the Company's independent auditors for the upcoming year;
o The Committee will discuss with the Company's independent auditors
the overall scope and plans for their e audits, including the
adequacy of staffing and compensation, and make such
recommendations to the Board in this regard as deemed necessary or
appropriate by the Committee The Committee will also discuss with
such auditors the adequacy and effectiveness of the accounting and
financial controls of the Company, including the Company's system
to monitor and manage business risk, and its legal compliance and
ethics programs;
o The Committee will meet separately with the Company's internal
auditors and its independent auditors, both with and without
representatives of the Company's management present, to discuss
the results of their examinations;
o The Committee will act to ensure that procedures are in place to
cause the Company's interim financial statements, including
footnotes, to be reviewed by the Company's independent auditors
in accordance with Statement on Auditing Standards No. 71,
Interim Financial Statements, prior to the filing of the
Company's Quarterly Report on Form 10-Q for a given quarter. When
the independent auditors have identified matters to be
communicated to the Committee in connection with such review, the
Committee, or its Chairman on behalf of the Committee, will be
available to the independent auditors to discuss such matters and
any other relevant matters with the independent auditors and
representatives of Company's management prior to filing of
quarterly statements under Form 10-Q;
o The Committee will review with the Company's management and its
independent auditors the financial statements, including
footnotes, to be included in the Company's Annual Report on Form
10-K (or Annual Report to Shareholders) with respect to (a) the
quality, as opposed to only the acceptability, of the Company's
accounting principles, (b) the reasonableness of significant
judgments, and (c) the clarity of the disclosures in the
financial statements. Following such review, the Committee will
recommend that the audited financial statements be included in
the Company's Annual Report on Form 10-K. The Committee will also
discuss the results of the annual audit and any other matters
required to be communicated to the Committee by the Company's
independent auditors under generally accepted auditing standards;
A-3
o The Committee will otherwise meet with and request and obtain
reports and information from such Company officers, employees,
suppliers and others as the Committee shall determine to be
necessary or desirable in carrying out its duties as set forth in
this Charter.
These processes are set forth in this Charter as a guide, with the understanding
that the Committee may supplement such processes as it deems appropriate.
Meetings:
The Committee may hold regular meetings on such days as it shall determine.
Other meetings of the Committee shall be held at the request of the Chairperson
of the Committee or any two other Committee members. Minutes of the meetings of
the Committee shall be regularly kept by a person appointed by the Committee to
do so.
Attendance:
Such officers and other employees of the Company as the Committee may regularly
or from time-to-time designate shall attend meetings of the Committee.
Outside Assistance:
The Committee is authorized to engage or employ such outside professional or
other services as in its discretion may be required to fulfill its
responsibilities.
Procedure:
The Committee may adopt rules for its meetings and other activities. In the
absence of such rules, Committee actions shall be governed by the Company's
Bylaws in force at the time of such actions and by applicable law. In all cases,
a quorum of the Committee shall be a majority of the persons then serving as
members of the Committee.
A-4