SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
AEL INDUSTRIES, INC.
(Name of Registrant as Specified In Its Charter)
John R. Cox
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
4) Proposed maximum aggregate value of transaction:
1 Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
AEL INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
July 14, 1994
To Our Shareholders:
The annual meeting of shareholders of AEL Industries, Inc. will be
held at the offices of the Corporation, 305 Richardson Road, Lansdale,
Pennsylvania, on Thursday, July 14, 1994 at 11:00 A.M., for the following
purposes:
1. To elect a Board of Directors consisting of seven persons, to
serve until the next annual meeting of shareholders and until
their respective successors shall have been duly elected and
qualified.
2. To transact such other business as may properly come before the
meeting or any postponement or adjournment thereof.
The Board of Directors has fixed May 2, 1994 as the record date for
the determination of shareholders entitled to vote at the meeting. Only
shareholders of record at the close of business on that date will be
entitled to notice of, and to vote at, the meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY. A SELF-ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
By order of the Board of Directors.
John R. Cox
Secretary
May 18, 1994
AEL INDUSTRIES, INC.
PROXY STATEMENT
The enclosed proxy is solicited on behalf of AEL Industries, Inc. (the
"Company"), whose mailing address is 305 Richardson Road, Lansdale,
Pennsylvania 19446-1429, and is approved by its Board of Directors for use
at the Annual Meeting of Shareholders to be held on July 14, 1994 and at
any adjournment thereof. The approximate date on which this Proxy
Statement and the form of proxy will first be sent or given to shareholders
is May 18, 1994. Sending in a signed proxy will not affect the
shareholder's right to attend the meeting and vote in person since the
proxy is revocable.
Proxies in the form enclosed, if properly executed and received in
time for voting, and not revoked, will be voted in accordance with the
instructions thereon. The persons named in the enclosed proxy will vote
for the election of the seven nominees hereinafter named unless the
authority to vote for such directors is withheld. Any shareholder giving a
proxy may revoke it by giving written notice to the Secretary of the
Company at any time before the proxy is exercised.
Some of the officers and regular employees of the Company may, without
additional compensation, solicit proxies personally or by telephone,
telegraph or facsimile, if deemed necessary. The costs of solicitations
will be paid by the Company. The Company is required to pay the reasonable
expenses incurred by holders of record of the Company's common stock who
are brokers, dealers, banks, voting trustees, associations, or other
fiduciaries, or their nominees, for mailing proxy materials and annual
shareholders' reports to any beneficial owners of the common stock they
hold of record, upon request of such holders of record.
The enclosed proxy confers discretionary authority to vote with
respect to any and all of the following matters that may come before the
meeting: (i) matters of which the Company does not know a reasonable time
before the proxy solicitation; (ii) approval of the minutes of a prior
meeting of shareholders, if such approval does not amount to ratification
of the action taken at that meeting; (iii) the election of any person to
any office for which a bona fide nominee named herein is unable to serve or
for good cause will not serve; (iv) any proposal omitted from this Proxy
Statement and the form of proxy pursuant to Rules 14a-8 or 14a-9 under the
Securities Exchange Act of 1934, as amended; and (v) matters incident to
the conduct of the meeting. In connection with such matters, the persons
named in the enclosed proxy will vote in accordance with their best
judgment.
The Company had 3,336,292 shares of Class A common stock and 434,717
shares of Class B common stock outstanding at the close of business on May
2, 1994, the record date for determining the shareholders entitled to
notice of and to vote at the meeting. The presence, in person or by proxy,
of shareholders entitled to cast at least a majority of the votes which all
shareholders are entitled to cast on a particular matter constitutes a
quorum for the purpose of considering such matter. Abstentions are
included in determining the number of votes present or represented at the
meeting. Each share of Class B common stock entitles the holder to one
vote on all matters which may be brought before the meeting. The election
of each nominee for Director requires the affirmative vote of a plurality
of the shares of Class B common stock cast in the election of Directors.
Votes that are withheld and shares held of record by a broker or its
nominee that are not voted in the election will not be included in
determining the number of votes cast. Pursuant to the Company's Articles
of Incorporation, Class A shares have no voting rights except as to those
matters directly affecting the rights and privileges of the Class A shares
and except as otherwise required by law.
Holders of Class A common stock are not entitled to vote on any matter
which, to the knowledge of the Company, will be brought before the meeting.
Proxies are being solicited from the holders of Class A common stock on the
Company's behalf to obtain an expression of confidence in management, to
permit a quorum of Class A shareholders to appear and to record their votes
on the matters presented at the annual meeting of shareholders, and to
allow the persons named in the enclosed proxy to have discretionary
authority to vote on any matter which may come before the meeting on which
holders of Class A common stock are entitled to vote. If a quorum of Class
A shareholders is not obtained by the scheduled time of the annual
shareholders' meeting, the meeting will nevertheless proceed as an annual
meeting of Class B shareholders, at which holders of Class A shares are
welcome to be present but are not entitled to vote.
The Company is not aware of any matters (other than procedural
matters) which will be brought before the meeting which are not referred to
in the enclosed notice of the meeting.
INDEPENDENT AUDITORS
The accounting firm of Ernst & Young acted as the Company's
independent auditors for fiscal year 1994 and the Board of Directors
intends to continue that firm's services for fiscal year 1995. The
selection of the independent auditors is not being submitted to
shareholders for approval because there is no legal requirement to do so.
A representative of Ernst & Young is expected to be present at the
shareholders' meeting and to have the opportunity to make a statement, if
he desires to do so, and to be available to respond to appropriate
questions.
SHAREHOLDERS' PROPOSALS
Proposals of security holders must be received by the Company at its
principal executive offices not later than January 19, 1995 to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to the annual meeting of shareholders to be held in July 1995.
ELECTION OF DIRECTORS
A Board of seven Directors is to be elected at the meeting to
serve until the next annual meeting of shareholders or until
their respective successors shall have been duly elected and
qualified. All of the nominees listed below were previously
elected directors by the Class B shareholders. If any of the
nominees is unable or unwilling to serve, the persons named in
the enclosed proxy will vote in accordance with their best
judgment. The Company expects all nominees to be willing and
able to serve.
Present Principal
Occupation or Director
Name Employment Age Since
Francis J. Dunleavy(a) Private investor 79 April 1982
Frederick R. Einsidler(b)Private investor 68 July 1988
Conrad J. Fowler(c) Private investor 72 Dec. 1950
Leeam Lowin(d) Private investor 48 July 1992
Lloyd W. Moffit(e) Consultant-informa- 69 Nov. 1977
tion systems
Claire E. Riebman(f) Private investor 71 Jan. 1990
Dr. Leon Riebman(g) Chairman of the 74 Dec. 1950
Board and President
of the Company (Chief
Executive Officer)
(a) Prior to his retirement in 1980, Mr. Dunleavy was Vice
Chairman of the Board of International Telephone and
Telegraph Corporation, a telecommunications company. Mr.
Dunleavy is a director of the following companies whose
securities are publicly traded: Quaker Chemical Corp.;
Crown Cork and Seal Co. Inc.; Bird, Inc.; Scan Graphics; and
Selas Corporation of America.
(b) Prior to his retirement in 1987, Mr. Einsidler was Chairman
and Chief Executive Officer of Butler International, Inc.,
whose principal business was aviation services, engineering
services and telecommunications services.
(c) Mr. Fowler retired from the Company in 1986. He was
formerly Executive Vice President of the Company and was
Chairman of the Board of Directors from 1959 to 1987.
(d) Mr. Lowin has been a private investor and investment
manager, as well as a financial and business consultant, for
more than 25 years. He has been instrumental in founding,
financing and managing companies in the medical electronics
and data communications fields.
(e) Prior to his retirement in 1975, Lloyd W. Moffit was an
Admiral in the U.S. Navy and Deputy Director for Reconna-
issance and Electronic Warfare for the Chairman of the Joint
Chiefs of Staff.
(f) Mrs. Riebman is married to Dr. Riebman. She is a private
investor.
(g) Dr. Riebman is also a director of Ampal Corp. and Bank &
Trust Co. of Old York Road.
Except as noted above, each of the directors has had the
same principal occupation or employment for at least the past
five years.
As of the date of this Proxy Statement, the standing
committees of the Board of Directors include an Audit and Finance
Committee, an Executive Compensation Committee, and an Executive
Committee. The Board does not have a nominating committee.
During the fiscal year ended February 25, 1994, the Board of
Directors held five meetings, the Audit and Finance Committee
held three meetings and the Executive Compensation Committee held
two meetings. Each Board member attended at least 75% of the
meetings of the Board and the committees of which he or she is a
member.
During the fiscal year ended February 25, 1994, the Audit
and Finance Committee was comprised of Messrs. Dunleavy
(Chairman), Fowler and Lowin. The Committee is responsible for
review of financial reporting of the Company including activities
of both independent and internal auditors.
The Executive Compensation Committee is comprised of Messrs.
Moffit (Chairman) and Einsidler and is responsible for
recommending the compensation of all Executive Officers.
The Executive Committee was established to act when the full
Board of Directors is unavailable. It has all the authority of
the Board in the management of the business and affairs of the
Company, except those powers that cannot by law be delegated.
The members of the Executive Committee are Dr. Riebman and
Messrs. Dunleavy and Fowler.
As adjusted effective September 1992, Directors who are not
employees of the Company receive a retainer of $7,800 per year, a
fee of $950 for each directors' meeting attended, and a fee of
$650 ($750 for the committee chairman) for each committee meeting
attended, and are reimbursed for travel and other expenses of
attending meetings. For committee meetings that occur other than
on a day adjacent to the regular Board meeting, fees are $850 for
the Committee Chairman and $750 for the other members.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All voting rights are vested in the Company's Class B
common stock, except that the Class A common stock votes as a
class on any matter directly affecting the rights and privileges
of such class or as otherwise required by law. Dr. Leon Riebman,
Claire E. Riebman and Conrad J. Fowler each beneficially own more
than 5% of the Class B common stock. Dr. and Mrs. Riebman own
shares of Class B common stock jointly as beneficial owners, and
each owns Class B common stock individually. Dr. Riebman is an
executive officer and all are directors of the Company and their
mailing address is 305 Richardson Road, Lansdale, Pennsylvania
19446-1429. The following table shows all equity securities of
the Company beneficially owned (a), directly or indirectly, as of
April 21, 1994, by each director, nominee and by all directors,
nominees, and executive officers as a group:
Class A Percent Class B Percent
Common of Common of
Name Stock(b) Class(b) Stock Class
Francis J. Dunleavy... 1,900 * 0 0
Frederick R. Einsidler 627 * 0 0
Conrad J. Fowler...... 143(c) * 93,874(c) 22%
Leeam Lowin .......... 802,800(d) 24% 0 0
Lloyd W. Moffit....... 400 * 0 0
Claire E. Riebman..... 15,646(e) * 241,262(e) 55%
Dr. Leon Riebman...... 15,646(e) * 241,262(e) 55%
George King........... 13,941(f) * 297(f) *
All Directors and
Executive Officers as
a group 835,457(g) 25% 335,433(g) 77%
________________
*less than 1%
(a) The securities "beneficially owned" are determined in
accordance with the definitions of "beneficial
ownership" as set forth in the releases of the
Securities and Exchange Commission applicable as of the
date hereof, and, accordingly, may include securities
owned by or for, among others, spouses and/or minor
children of the individual and other relatives who have
the same home as such individual as well as other
securities as to which the individual has or shares
voting or investment power or has the right to acquire
under outstanding stock options within 60 days after
April 21, 1994. Beneficial ownership may be disclaimed
as to certain of the securities.
(b) Each share of Class B common stock is convertible, at the
option of the holder, into one share of Class A common
stock. The figures in these columns do not reflect the
additional shares of Class A common stock acquirable upon
conversion of Class B common stock.
(c) The sole voting and investment power of the Class A shares
belongs to Mr. Fowler's wife, who also has sole voting and
investment power with respect to 32,789 Class B shares. Mr.
Fowler has sole voting and investment power as to the
remaining Class B shares.
(d) Mr. Lowin has sole voting and investment power with respect
to 583,000 shares and shared investment power with respect
to 202,800 shares. The sole voting power with respect to
these 202,800 shares rests with other persons. The sole
voting and investment power of an additional 17,000 shares
belongs to Mr. Lowin's wife.
(e) Dr. and Mrs. Riebman share voting and investment power with
respect to 8,146 Class A shares. The remaining Class A
shares are in the form of options exercisable within 60 days
after April 21, 1994, and are held solely by Dr. Riebman.
Dr. Riebman has sole voting and investment power with
respect to 92,386 Class B shares. Mrs. Riebman has sole
power with respect to 8,154 Class B shares; power with
respect to the remaining Class B shares is shared by Dr. and
Mrs. Riebman.
(f) Mr. King and his wife share voting and investment power with
respect to 3,441 Class A shares and 297 Class B shares. The
remaining shares are in the form of options exercisable
within 60 days after April 21, 1994 and are held solely by
Mr. King.
(g) For purposes of computing the aggregate number of shares
owned by directors and officers as a group, shares for which
more than one beneficial owner is listed are counted only
once.
As of April 21, 1994, Raymond S. Markowitz, a Vice Presi-
dent of the Company owned less than 1% of the Company's Class A
common stock and 24,963 shares of Class B common stock (6% of the
class). His mailing address is 305 Richardson Road, Lansdale, PA
19446-1429. He is not an executive officer of the Company.
EXECUTIVE COMPENSATION
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Executive Compensation Committee is composed
of two outside directors. The primary function of the Committee
is to develop recommendations for the compensation of the
Company's Executive Officers, which are then presented to the
full Board of Directors for its review and approval. This report
describes bases for compensation decisions which are applicable
to all Executive Officers.
It is the Company's philosophy that executives should be
compensated commensurate with their level of responsibility, as
well as with their success in achieving both the short-term and
long-term goals of the Company. As a reflection of this
philosophy, salary comprises only one element of the Company's
executive compensation package. The inclusion of bonus payments
and stock option awards serves to more closely link the level of
total compensation to individual and company performance.
Salary levels are based on ranges established with the aid
of Hay Associates, an outside consulting firm, using individual
job elements as the foundation for determining the appropriate
scales. Defining the executive's role by such elements as the
knowledge necessary to perform and the level of accountability
attached to the position makes it possible to compare each
position with those of other companies within the Hay System.
The use of this resource affords the Company the opportunity to
compare the salaries of its Executive Officers with others in
similar positions as defined by these common elements. A
marketplace review of similar positions at companies of
comparable size is also conducted to ensure that the overall
level of compensation is adequate to attract and retain the
talented and highly motivated individuals essential to the
Company's success.
Bonus payments and stock option awards are used as a
supplement to base salary to provide increased motivation to
Executive Officers to meet performance objectives for themselves
and for the Company as a whole, as well as to increase
shareholder value. Bonus payments tend to reflect results of the
most recent fiscal year in categories such as sales, profits and
bookings, and thus emphasize achievement of short-term goals.
Stock option awards, on the other hand, cannot be exercised by
the Executive Officer until two years after award, after which
the option remains exercisable for at least three years.
Consequently, the stock option rewards long-term success and has
the additional benefit of being directly connected to shareholder
value. No specific formulas are used in determining the amount
of bonus payments or option awards. Together these two types of
compensation form an incentive structure which supports the
Company's goals by emphasizing the connection between financial
rewards and the successful achievement of those goals.
After an assessment of market trends and the Hay
Associates data, the Compensation Committee recommended, and the
Board of Directos concurred, that no salary increase be awarded
to Dr. Riebman for the period beginning July 1, 1993. The
Committee and the Board of Directors also agreed that, reflecting
the Company's performance for fiscal year 1993, Dr. Riebman not
receive a bonus payment in fiscal year 1994.
In the past, Compensation Committee recommendations based
on the performance of the most recently completed fiscal year
have been presented to the Board of Directors each July.
Beginning with fiscal year 1994, recommendations will be
presented to and acted upon by the Board of Directors in April,
to be effective in June. Based on the criteria discussed in this
report, in April 1994 the Compensation Committee recommended, and
the Board of Directors approved that Dr. Riebman receive a salary
increase of 3.8% along with a bonus payment equal to 15% of his
fiscal year 1994 salary. In addition, Dr. Riebman was granted a
stock option of 2500 shares.
Lloyd W. Moffit, Chairman
Frederick R. Einsidler
Executive Compensation Committee
COMPENSATION
The following table presents information detailing the
compensation paid to the Company's Executive Officers for the
last three (3) fiscal years.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
Name Securities All Other
and Underlying Compen-
Principal Fiscal Options/ sation(2)
Position Year(1) Salary($) Bonus($) SARs(#) ($)
LEON RIEBMAN 1994 349,002 0 0 6,112
Chief Executive 1993 344,618 86,000 2,500 5,805
Officer 1992 330,942 42,000 2,500 13,944
GEORGE KING 1994 178,258 0 1,500 4,629
Executive Vice 1993 178,092 41,746 1,500 4,279
President-Chief 1992 165,552 16,427 1,500 10,880
Financial Officer
<FN>
(1) The Company's fiscal year ends on the last Friday in February.
(2) Fiscal year 1994 amount includes Company contribution to 401(k)
Savings Plan for Dr. Riebman and Mr. King and patent bonus of
$500 paid to Dr. Riebman.
/TABLE
OPTION GRANTS
The table below illustrates the number and value of stock option grants
awarded to the Company's Executive Officers in fiscal year 1994.
Options are not exercisable until two years after the date of award and
expire at the end of five years from the award date.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for Option
Individual Grants Term
Number of
Securities
Underlying
Options/ % of Total Op- Exercise
SARS tions/SARS Granted or Base
Granted to Employees in Price Expiration
Name (#) Fiscal Year ($/Share) Date 5% 10%
George King 1,500 2.8% $8.00 2/05/99 $3,315 $7,320
OPTION EXERCISES
There were no shares acquired by the Executive Officers through the
exercise of options during fiscal year 1994. The following table shows
the number of securities underlying outstanding options and their realizable
value at the end of the fiscal year based on a market price on February 25,
1994 of $8.50 per share.
Aggregated Option/SAR Exercises In Last Fiscal Year and Fiscal
Year-End Option/SAR Table
Number of Securities Value of Unexercised In-
Underlying Unexercised The-Money Options/SARs at
Options/SARs at Fiscal Fiscal Year-End ($)
Year-End (#)
Shares
Acquired Value
On Exercise Realized Exercisable / Exercisable /
Name (#) ($) Unexercisable Unexercisable
__________________________________________________________________________________________
Leon Riebman 0 0 7,500/2,500 $21,475/$5,625
George King 0 0 10,500/12,000 $13,680/$4,125
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
shareholder return on the Company's Class A common stock against the
cumulative total return of the S&P 500 Stock Index and a peer group index
prepared by the University of Chicago's Center for Research in Security
Prices for the period of five fiscal years commencing February 24, 1989 and
ending February 25, 1994. In 1993 the Company used the Bridge Information
Systems, Inc. Electronic Defense Group Index for the industry comparison.
Bridge is no longer engaged in this service; however, the companies
included in the peer group index below are the same as those included in
the 1993 performance graph.
Comparison of Five-Year Cumulative Total Return*
AEL INDUSTRIES, INC., S & P 500 INDEX & PEER GROUP INDEX1
The points represented on the Performance Graph are as follows:
02/24/89 02/23/90 02/22/91 02/28/92 02/28/93 02/25/94
AEL Industries,
Inc. 100.0 68.8 59.4 100.0 81.2 106.2
S&P 500 Index 100.0 116.6 136.4 159.1 176.0 189.6
Peer Group
Index 100.0 90.4 107.2 121.5 144.3 181.7
* Assumes $100 invested in the Company and each index on February 24, 1989,
and that all dividends are reinvested.
1 Members of the Peer Group are Litton Industries, E-Systems,
Watkins-Johnson, General Motors (Class H), Raytheon, ESCO Electronics,
EG&G, Ketema, Cubic, JMAR Industries, Moog, Whitehall, Loral, Tech Sym,
Sparton, Canadian Marconi, Edo, and Diagnostic Retrieval Systems.
CERTAIN TRANSACTIONS
In 1982 the Company entered into an Employment and Retirement
Agreement with Dr. Riebman pursuant to which he will continue to work full
time so long as he desires to do so and is able to fully perform the duties
of his position. During this period his compensation and fringe benefits
will continue to be determined by the Board of Directors. If Dr. Riebman
elects to work on a part time basis he will receive a pro rata portion of
his most recent full time salary, which will be adjusted each year for
changes in the cost of living (subject to certain limitations). While
employed part time, Dr. Riebman will continue to receive his present fringe
benefits, and the Board of Directors may award him bonus payments in its
discretion. Upon termination of his employment Dr. Riebman may provide
consulting services to the Company for up to 130 days annually, for which
he will be paid a per diem consulting fee equal to his most recent average
daily salary. Alternatively, the Company may contract with Dr. Riebman for
consulting services on some other basis.
Dr. Riebman's Employment and Retirement Agreement also provides that
upon his retirement Dr. Riebman will receive, for ten years, annual
retirement payments which are generally equal to 50% of his average salary
and bonus during his last three years of full time employment (adjusted for
changes in the cost of living), reduced by the $41,032 annuity value of the
vested benefits paid to Dr. Riebman pursuant to the termination of the
Company's pension plan. As of February 25, 1994, Dr. Riebman's accrued
retirement benefits under the agreement totaled $1,251,723.
In the event of Dr. Riebman's death, his employment and retirement
payments will terminate and in lieu thereof his wife, if living, will
receive an annual death benefit for a period of six years after his death
(but not beyond the tenth anniversary of Dr. Riebman's retirement, or the
date of her death, whichever is sooner) in an amount equal to the salary or
retirement payments Dr. Riebman would have received in such years.
In 1986 the Company entered into a stock repurchase agreement with Dr.
Riebman whereby upon the death of Dr. Riebman, his Estate has the right,
exercisable by sending written purchase notice(s) to the Company at any
time within one year after the date of death, to require the Company to
purchase from the Estate the number and class of shares designated in the
purchase notice and owned by the Estate on the date of death. Shares of
stock owned jointly by Dr. Riebman and his wife would, for purposes of the
agreement, be deemed owned by the Estate. The purchase price per share is
determined by a formula designed to result in a price per share slightly
below the market price for the Class A shares on the date the Company
receives the purchase notice. The total amount required to be expended by
the Company pursuant to all purchase notices cannot exceed $250,000. The
initial term of the agreement was five years and the agreement will
continue to be renewed automatically for successive five year periods
unless the Company provides six months' prior notice of termination. The
Company has no obligation under the agreement to the Estate in the event of
Dr. Riebman's death after expiration of the agreement.
In 1980 the Company entered into an Employment and Retirement
Agreement with Conrad J. Fowler. Under the Agreement, Mr. Fowler is
receiving retirement payments of approximately $10,000 per year to continue
until December 1996. If Mr. Fowler dies prior to January 1, 1997, his
retirement payments will terminate and in lieu thereof his wife, if living,
will receive a death benefit in the approximate amount of $10,000 per year
through December 31, 1996, or the date of her death, whichever is sooner.
In 1988 the Company entered into several agreements with George King,
Executive Vice President. The Change of Control Agreement provides that
if, within 24 months after a change of control, Mr. King's employment is
terminated by the Company or he resigns following a reduction in his
salary, responsibilities or duties, then he or his surviving spouse will
become entitled to receive certain payments (the "change of control
benefit"). A change of control of the Company is deemed to have occurred
when Dr. Leon Riebman and/or his wife own, in the aggregate, less than 50%
of the outstanding Class B common stock of the Company (or, if no Class B
common stock is outstanding, less than 15% of the outstanding Class A
common stock, and another person owns more than 15%) and Dr. Riebman ceases
to be Chief Executive Officer of the Company. Mr. King or his surviving
spouse will also be entitled to receive such payments if his employment is
terminated without cause within twelve months prior to a change of control.
The value of the change of control benefit (paid over a 36-month period)
will be approximately three times Mr. King's average annual salary, bonus
and other taxable income from the Company for his last five years of
employment, reduced by amounts paid contemporaneously pursuant to the
Supplemental Benefits Agreement described below. The value of the change
of control benefit is also reduced by the present value of all other
amounts paid under any other agreement, including property transferred,
which are contingent upon a change of control. The change of control
benefit is expected to be a business expense deductible by the Company
under the Internal Revenue Code. The Change of Control Agreement
terminates automatically upon the death or total disability of Mr. King, or
upon his voluntary resignation (except as noted above) or termination for
cause, and may be terminated at any time by the Company or Mr. King on 18
months' notice.
The Supplemental Benefits Agreement provides that Mr. King will retire
from active employment with the Company at age 65, unless the Board of
Directors requests that he continue in his position. If Mr. King retires
at age 65 (or later if he continues his employment at the request of the
Board) he or his surviving spouse will receive for ten years after
retirement, as a supplemental retirement benefit, monthly payments equal to
25% of average monthly earnings (salary plus bonus) for his highest paid
three years of service with the Company. If he leaves the Company prior to
attaining age 65 he will be entitled to receive a reduced benefit (the
amount of which depends on his age at the time his employment terminates)
payable for ten years commencing when the Executive attains age 62.
However, if he becomes completely and permanently disabled while employed
by the Company he will receive the full 25% benefit. If Mr. King dies
while employed by the Company, or after terminating employment but before
payments commence, his surviving spouse will receive, in lieu of the
supplemental retirement benefit, a death benefit consisting of monthly
payments equal to 25% of his average monthly earnings for his highest paid
three years of service. Death benefit payments will commence when Mr. King
would have attained age 65 and will continue for ten years or until his
surviving spouse's death, whichever occurs sooner.
Pursuant to the agreements, Mr. King received an option to purchase
15,000 shares of Class A common stock of the Company. The exercise price
of each option is equal to the market price on the date of issuance. Mr.
King's option expires on December 31, 2002. The option was initially
exercisable for 10% of the total number of shares. Additional increments
will become exercisable approximately at five-year intervals, so that the
option will be fully exercisable when Mr. King attains age 65. The option
also becomes fully exercisable if, within 24 months after a change of
control, Mr. King's employment is terminated by the Company or he resigns
following a reduction in his salary, responsibilities or duties. To the
extent unexercised, the stock option terminates upon voluntary resignation
(except in the circumstances mentioned in the preceding sentence, in which
case the option terminates three months after resignation) and three months
after the termination of employment other than by voluntary resignation.
Mr. King's personal representative may exercise the option within three
months after his death to the extent that he could have exercised it on the
date of his death.
In 1988 the Company also entered into a Supplemental Benefits
Agreement with Mark H. Ronald, formerly President and Chief Operating
Officer. The terms of this Agreement were similar to those included in Mr.
King's Agreement. Mr. Ronald resigned from the Company in June 1993 at age
51. Pursuant to the terms of the Agreement, Mr. Ronald will be eligible to
begin receiving a reduced benefit in 2003.
No special or separate fund is provided for the payment of any of the
foregoing benefits but the Company is permitted to fund the same with
insurance on the individual's life if it so desires. All payments are
subject to the individual's compliance with certain confidentiality, non-
competition and other provisions. Mr. King has waived any age
discrimination claim related to his agreement to retire at age 65, to the
extent permissible under current law.
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED FEBRUARY 25, 1994 REQUIRED TO BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT CHARGE EXCEPT
FOR EXHIBITS TO THE REPORT, BY SENDING A WRITTEN REQUEST TO AEL INDUSTRIES,
INC, 305 RICHARDSON ROAD, LANSDALE, PENNSYLVANIA 19446-1429. ATTN: AEL
SHAREHOLDER RELATIONS.
By order of the Board of Directors.
John R. Cox
SECRETARY
AEL INDUSTRIES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, JULY 14, 1994
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints CONRAD J. FOWLER and
CLAIRE E. RIEBMAN, and each of them as attorneys and proxies of the
undersigned, with full power of substitution, for and in the name, place
and stead of the undersigned, to appear at the annual meeting of
shareholders of AEL Industries, Inc. (the "Company") to be held on July 14,
1994, and at any postponement and adjournment thereof, and to vote all of
the shares of Class A common stock and Class B common stock of the Company
which the undersigned is entitled to vote with all the powers and authority
the undersigned would possess if personally present. The undersigned
hereby directs that this proxy be voted as follows:
1. ELECTION OF DIRECTORS: Francis J. Dunleavy, Frederick R. Einsidler,
Conrad J. Fowler, Leeam Lowin, Lloyd W. Moffit, Claire E. Riebman, Dr. Leon
Riebman
/ / FOR all nominees listed above
/ / WITHHOLD AUTHORITY to vote for
all nominees listed above
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S),
PLACE AN "X" IN THIS BOX / / AND DRAW A LINE THROUGH EACH
APPLICABLE NOMINEE'S NAME LISTED ABOVE.
2. In their discretion, to vote upon such other business as may properly
come before the meeting or any postponement or adjournment thereof.
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED. IF NO
DIRECTIONS TO THE CONTRARY ARE INDICATED IN THE BOXES PROVIDED, THEN THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED ON THE REVERSE
SIDE. CLASS A SHARES DO NOT VOTE IN THE ELECTION OF DIRECTORS.
SOLICITATION OF CLASS A VOTES IS SOLELY FOR THE PURPOSE OF ALLOWING CLASS A
SHAREHOLDERS TO EXPRESS A PREFERENCE AND WILL NOT BE LEGALLY BINDING UPON
THE COMPANY.
A majority of said attorneys and proxies present at said meeting
(or if only one shall be present, then that one) may exercise all of the
power hereunder. Discretionary authority is hereby conferred as to certain
matters, described in the accompanying Proxy Statement, which may come
before the meeting. The undersigned hereby acknowledges receipt of the
Company's Proxy Statement dated May 18, 1994 and its 1994 Annual Report to
Shareholders.
Dated ......................1994
................................
Signature
................................
Signature If Held Jointly
It would be helpful if you signed exactly as your name or names appear
hereon.