AGREEMENT
This Agreement is made as of the 28th day of February, 1995 by and
among AEL Industries, Inc., a Pennsylvania corporation ("Company") and Dr.
Leon Riebman and Claire E. Riebman (collectively the "Riebmans").
BACKGROUND:
A. The Board of Directors ("Board") of the Company has appointed a
committee of the Board known as the Long Range Planning Committee ("LRPC")
for the purpose of considering strategic alternatives for the Company in
view of recent and significant developments and consolidations in the
defense industry. Among other possibilities, the LRPC considered whether
the Company should remain independent. That alternative may entail a
search for a new Chief Executive Officer. The LRPC also took into account
the right of the Riebmans either to transfer their Company stock to family
members or to sell only their Company stock to a person who may not wish to
purchase the Company stock held by other shareholders. The LRPC also
addressed the practical difficulties of consummating a sale of the Company
on terms which may not be acceptable to the Riebmans as controlling
shareholders.
B. After assessing the implications of maintaining the Company's
independence and these other factors, the LRPC decided, because of its
belief that it could thereby perform its duty to realize for the
shareholders of the Company ("Shareholders") the best value reasonably
available, to pursue the following course of action: (i) the negotiation of
an arrangement with the Riebmans concerning their voting control of the
Company in anticipation of a possible sale of the Company and (ii) the
negotiation of an arrangement with Dr. Riebman regarding his future
relationship with the Company.
C. A sale of the Company may be effected by a "Business Combination"
which shall mean (i) a sale of all or substantially all of the assets of
the Company in one transaction or a series of related transactions; (ii)
the acquisition by a person or group of persons acting in concert of the
beneficial ownership of more than eighty percent of the issued and
outstanding shares of "Class A Stock" and "Class B Stock" (each as herein
defined); (iii) a merger or consolidation of the Company with another
entity; or (iv) any transaction having like effect. An agreement providing
for a Business Combination is referred to as a "Business Combination
Agreement".
D. The LRPC has engaged an investment banking firm, an employee
benefits consultant and independent legal counsel to serve as its advisors
in connection with these matters.
E. The authorized capital stock of the Company consists of
20,000,000 shares of Class A Common Stock, par value $1.00 ("Class A
Stock") of which 3,358,211 shares are issued and outstanding; 440,000
shares of Class B Common Stock, par value $1.00 ("Class B Stock") of which
434,717 shares are issued and outstanding; and 200,000 shares of Preferred
Stock, par value $1.00, none of which are issued and outstanding.
F. The holders of Class B Stock have the exclusive voting power with
respect to matters submitted to the Shareholders except as to any matter
directly affecting the rights and privileges of Class A Stock or as
otherwise required by law.
G. Since the Riebmans collectively own (as tenants by the entireties
with right of survivorship) approximately 55% of the total voting power of
Class B Stock, they possess effective voting control of the Company. The
Shareholders other than the Riebmans are called the "Public Shareholders".
H. The LRPC believes that a Business Combination will be facilitated
and value maximized for the Shareholders if (i) voting control of the
Company is transferred to the "Voting Trustees" (as hereinafter defined)
for the term of this Agreement and (ii) a predetermined allocation between
the Riebmans and the Public Shareholders of the consideration paid in a
Business Combination is agreed to by the LRPC with the Riebmans at this
time by the issuance to the Riebmans of .75 shares of Class A Stock for
each share of Class B Stock owned by them.
I. The LRPC believes that, in order to accomplish this goal, it is
in the best interests of the Company and the Public Shareholders for the
Company to agree to issue to the Riebmans additional shares of Class A
Stock in exchange for the transfer by the Riebmans of their voting control
of the Company to the Voting Trustees for a period of time expected to be
sufficient to complete a "Qualifying Business Combination" (as herein
defined); provided, however, that such additional shares be held by the
Voting Trustees and be returned to the Company for cancellation if a
Qualifying Business Combination is not consummated as provided herein. It
is the intent of the LRPC that all holders of Class A Stock and Class B
Stock will be offered the same consideration and other terms for each share
in connection with a Qualifying Business Combination.
J. Dr. Leon Riebman and the Company have entered into an Employment
and Retirement Agreement dated January 8, 1982, as amended on November 14,
1991 (collectively the "1982 Agreement") pursuant to which, among other
things, Dr. Riebman may, but is not required to, provide consulting
services to the Company.
K. The LRPC believes that the Company's interests will be
substantially enhanced by Dr. Riebman and the Company entering into an
agreement which will (a) assure Dr. Leon Riebman's availability exclusively
to the Company in the future, and (b) substantially improve the Company's
rights with respect to the protection of proprietary information,
intellectual property and restrictions on competition.
L. The purpose of this Agreement is to set forth the terms and
conditions of the arrangements which the LRPC, acting for the Company, has
negotiated with (i) the Riebmans with respect to their voting control of
the Company to the extent set forth in the "VT Agreement" (as herein
defined) and a predetermined allocation between the Riebmans and the Public
Shareholders of the proceeds of a possible Qualifying Business Combination;
and (ii) Dr. Leon Riebman concerning his future relationship with the
Company.
NOW THEREFORE, in consideration of the premises set forth above and
the covenants of the parties included herein, and intending to be legally
bound hereby, the Company and the Riebmans agree as follows:
I. Term
(a) The initial term of this Agreement ("Initial Term") shall be
nine (9) months from the date hereof subject to extension, renewal, or
termination as follows:
(1) This Agreement shall be renewable for three additional
months beyond the Initial Term ("First Renewal Term") (i) if written notice
to this effect is given by the Company to the Riebmans not less than five
days prior to the expiration of the Initial Term and (ii) not later than
the last day of the Initial Term a payment is made by the Company to the
Riebmans of One Hundred Thousand Dollars ($100,000) which shall be credited
against, and reduce to that extent, the "Consulting Payments" (as herein
defined) as contemplated in Section V(b) hereof in the chronological order
thereof.
(2) This Agreement shall be renewable for an additional
three months beyond the First Renewal Term ("Second Renewal Term") (i) if
written notice to this effect is given by the Company to the Riebmans not
less than five days prior to the expiration of the First Renewal Term and
(ii) not later than the last day of the First Renewal Term a payment is
made by the Company to the Riebmans of Three Hundred Thousand Dollars
($300,000) which shall be credited against, and reduce to that extent, the
Consulting Payments as contemplated in Section V(b) hereof in the
chronological order thereof.
(3) If a Business Combination Agreement which contemplates a
Qualifying Business Combination recommended by the LRPC has been executed
by the Company at any time during the Initial Term, First Renewal Term or
Second Renewal Term but "Shareholder Approval" of the "Proposal" (as each
such term is herein defined) has not yet been obtained, the Initial Term,
First Renewal Term or Second Renewal Term, as the case may be, shall
automatically be extended, if it would have otherwise expired, until the
earlier of (i) the consummation of the Qualifying Business Combination
contemplated in such Business Combination Agreement ("Closing") or (ii) the
termination of such Business Combination Agreement pursuant to the terms
thereof unless such termination occurs in connection with a recommendation
by the LRPC, in the exercise of its fiduciary duty, of an alternative
Business Combination Agreement which contemplates a Qualifying Business
Combination, in which event such alternative Business Combination Agreement
shall be deemed to be a "Business Combination Agreement" for purposes of
this Section I(a)(3). Any such automatic extension shall be subject to the
provisions of Section I(a)(4) and I(a)(7) hereof.
(4) If (i) the Initial Term or First Renewal Term has been
automatically extended under Section I(a)(3) hereof and (ii) the Business
Combination Agreement referred to therein has been terminated pursuant to
the terms thereof, the Company shall have the right to renew this Agreement
for one or two successive three month periods, as the case may be,
commencing as of the expiration of the Initial Term or the First Renewal
Term, as the case may be, as contemplated in Section I(a) (l) or Section
I(a)(2), as appropriate, by giving the notice provided therein within
fifteen (15) business days after the termination of such Business
Combination Agreement and by making the requisite payment within three (3)
business days thereafter which payment shall be deemed timely for purposes
of Section I(a)(1) or Section I(a)(2), as appropriate. The exercise by the
Company of its rights under this Section I(a)(4) as it relates to the First
Renewal Term shall not abrogate the Company's rights under Section I(a)(2).
(5) This Agreement may be terminated at the option of the
Riebmans if (i) the "Voting Trustees" (as herein defined) materially breach
the "VT Agreement" (as herein defined) and such breach is not cured within
thirty days of their receipt of a written notice to this effect from the
Riebmans, except in the event of a material breach by the Voting Trustees
of Paragraph 5 6, 11 (first sentence) or 11(a) of the VT Agreement in which
case this Agreement may be terminated immediately by written notice to this
effect by the Riebmans or (ii) the Company materially breaches this
Agreement or the 1995 Agreement (as herein defined) and such breach is not
cured within thirty days of its receipt of a written notice to this effect
from the Riebmans, except in the event of a material breach by the Company
of Section IX(c) of this Agreement in which case this Agreement may be
terminated immediately by written notice to this effect by the Riebmans.
(6) This Agreement may be terminated at the option of the
Company if (i) the Riebmans materially breach the "VT Agreement" (as herein
defined) and such breach is not cured within thirty days of their receipt
of a written notice to this effect from the Company, except in the event of
a material breach by the Riebmans of Paragraph 6 or 10 of the VT Agreement
in which case this Agreement may be terminated immediately by written
notice to this effect by the Company or (ii) the Riebmans materially breach
this Agreement or Dr. Leon Riebman materially breaches the 1995 Agreement
and such breach is not cured within thirty days of their receipt of a
written notice to this effect from the Company.
(7) Unless this Agreement shall have previously expired or
terminated, this Agreement shall terminate upon the earliest to occur of
the following events: (i) immediately prior to the Closing under a
Business Combination Agreement not inconsistent in any material respect
with the terms of this Agreement which has been recommended by the LRPC and
pursuant to which an opinion acceptable to the LRPC is issued to the
Company by a nationally recognized investment banking firm with respect to
the fairness, from a financial point of view, to the Shareholders of the
consideration offered to them under such Business Combination Agreement
("Qualifying Business Combination") and which Qualifying Business
Combination has been included in the Proposal as to which Shareholder
Approval has been obtained; (ii) immediately following the conclusion of a
meeting of Shareholders at which Shareholder Approval has been sought but
not obtained of such Proposal; or (iii) November 28, 1996.
(b) "Proposal" shall mean a single proposition submitted to
the Shareholders consisting of: (1) ratification of this Agreement, the
"VT Agreement", the "Participation Rights Agreement" and the "1995
Agreement" (as each term is herein defined) and (2) approval of a
Qualifying Business Combination.
(c) "Shareholder Approval" shall mean the approval and
adoption of the Proposal by the affirmative vote of a majority of the votes
cast respectively by: (1) the holders of shares of Class A Stock and (2)
the holders of shares of Class B Stock, each voting as a class.
(d) The withdrawal by the LRPC, in the exercise of its
fiduciary duty, of its recommendation of a Business Combination Agreement,
shall not, in and of itself, result in the reduction of the time period
comprehended by the Initial Term, First Renewal Term, Second Renewal Term
or any extension thereof.
II. Voting Trust Agreement
(a) Concurrently with the execution of this Agreement, the
Company, the Riebmans, and Messrs. Francis J. Dunleavy, Frederick R.
Einsidler, Conrad J. Fowler and Leeam Lowin, as voting trustees ("Voting
Trustees"), have executed a Voting Trust Agreement in the form attached
hereto as Exhibit A ("VT Agreement") pursuant to which two separate trusts
("A" and "B") have been created. Certain provisions of the VT Agreement
are summarized as follows for convenience only. The provisions of the VT
Agreement shall exclusively govern the interpretation thereof.
(b) The Riebmans have transferred to the Voting Trustees for
allocation to the A and B Trusts all of the shares of Class A Stock and
Class B Stock (and stock powers duly endorsed in favor of the Voting
Trustees) owned by the Riebmans prior to the execution of this Agreement
(the "Riebman Shares") and the Contingent Shares (and stock powers duly
endorsed in favor of the Voting Trustees) so that the Voting Trustees
possess voting power with respect to the Riebman Shares and the Contingent
Shares, subject to the limitations stated in the VT Agreement.
(c) The Voting Trustees have agreed to perform their duties in
good faith, in a manner each reasonably believes to be in the best interest
of the Company and the Shareholders and with such care including reasonable
inquiry, skill and diligence as a person with ordinary prudence would use
under similar circumstances.
(d) The term of the VT Agreement shall be coextensive with the
term of this Agreement.
(e) In no event shall the Voting Trustees vote (which shall
include action by written consent) the Riebman Shares or the Contingent
Shares in a manner which is not consistent with the effectuation of the
purpose of the VT Agreement as described in Paragraph B of the Background
thereof.
(f) The Voting Trustees shall vote for the election of two (2)
persons nominated by Dr. Riebman or his personal representatives as
directors of the Company. The Voting Trustees shall vote for the
reelection as directors of the incumbent directors of the Company unless
one or more of them determines not to seek re-election, resigns or dies.
The Voting Trustees shall consult with the Riebmans prior to voting for the
election of any other person as a director of the Company. The Voting
Trustees shall assure that at all times a majority of the directors of the
Company shall be "Independent Directors" (which term shall for the purposes
of this Agreement and the VT Agreement mean a person who (i) is not an
employee of or consultant to the Company; (ii) is not related by blood or
marriage to either of the Riebmans; and (iii) in the reasonable
determination of the LRPC, does not have a financial or other material
relationship with either of the Riebmans which might influence the
objectivity of his or her judgment as it relates to the best interests of
the Company and the Shareholders). The Riebmans in their capacity as
directors of the Company shall take such action as is appropriate to give
effect to the foregoing sentence.
(g) Upon the termination of the VT Agreement, the Riebman shares
shall be delivered to the holder(s) of the Voting Trust Certificates issued
with respect to the Riebman Shares.
(h) The VT Agreement may not be amended or rescinded without the
written consent of the Company, the Riebmans and a majority of the Voting
Trustees unless there are at any time less than three Voting Trustees in
which case all actions at such time shall require the unanimous approval of
the Voting Trustees.
(i) "Voting Trustees" shall include their respective successors.
III. Contingent Issuance of Shares of Class A Stock
(a) The Company has issued .75 shares of Class A Stock
("Contingent Shares") to the Riebmans for each share of Class B Stock owned
by them and the Riebmans have concurrently transferred the Contingent
Shares (and stock powers duly endorsed in favor of the Voting Trustees) to
the Voting Trustees who shall hold them in the A Trust under the VT
Agreement as otherwise in accordance with the terms thereof.
(b) The VT Agreement provides, with respect to the Contingent
Shares, among other things, that:
(1) The Contingent Shares shall be held by the Voting
Trustees until the earlier of the following:
(i) Immediately prior to the Closing under a Qualifying
Business Combination included in the Proposal as to which Shareholder
Approval has been obtained, in which event the Contingent Shares shall be
delivered to the holder(s) of the voting trust certificate(s) issued with
respect to the Contingent Shares, or
(ii) The expiration or termination of this Agreement
for a reason other than as contemplated in Section III(b)(1)(i) hereof,
in which event the Contingent Shares shall be delivered to the Company which
shall thereupon cancel them without the payment of any consideration therefor.
(2) The Contingent Shares shall be voted by the Voting
Trustees in connection with the Proposal in the same proportion as the
votes cast with respect to the Proposal by the other holders of shares of
Class A Stock.
(c) On the date hereof, Dillon, Read & Co. Inc. has issued an
opinion to the LRPC and the Board with respect to the fairness, from a
financial point of view, to the Public Shareholders of the issuance of the
Contingent Shares pursuant to this Agreement.
IV. Undertakings by the Riebmans and Dr. Riebman
(a) During the Initial Term, First Renewal Term, Second Renewal
Term or any extension thereof, without the prior written consent of the
Company, the Riebmans agree that they will not transfer or agree to
transfer any interest in: (i) the Riebman Shares or (ii) their respective
beneficial interests evidenced by voting trust certificates under the VT
Agreement; provided that the executor(s) of the estates of either of the
Riebmans may succeed to such interests and shall be bound by this Agreement
and the VT Agreement; and provided further that the Riebmans may make
donative transfers of such interests to and among themselves or to their
issue so long as the donee(s) thereof agree(s) in writing to be bound by
this Agreement and the VT Agreement.
(b) During the Initial Term, First Renewal Term, Second Renewal
Term or any extension thereof, the Riebmans agree that neither of them will
acquire any additional shares of Class A Stock or Class B Stock except in
connection with: (i) the exercise of options existing on the date hereof
or (ii) the beneficial ownership of shares of Class A Stock or Class B
Stock issued in respect of stock dividends or stock distributions hereafter
declared.
(c) At such times as requested by the LRPC, Dr. Riebman shall
consult and cooperate with the LRPC in connection with its efforts to
arrange for a Qualifying Business Combination.
V. 1995 Agreement
(a) Concurrently with the execution of this Agreement, the
Company and Dr. Leon Riebman have executed a 1995 Agreement ("1995
Agreement") in the form attached hereto as Exhibit B. Certain provisions
of the 1995 Agreement are summarized as follows for convenience only. The
provisions of the 1995 Agreement shall exclusively govern the
interpretation thereof.
(b) The Company shall not be obligated to make the "Participation
Payment" or the "Consulting Payments" (as therein defined) contemplated
under Sections 8.F. and 4 of the 1995 Agreement unless the Contingent
Shares shall have been delivered by the Voting Trustees to the holder(s) of
the voting trust certificates issued with respect to the Contingent Shares
pursuant to Paragraph 11(a) of the VT Agreement.
(c) The Participation Payment contemplated in the 1995 Agreement
shall be in consideration of various noncompetition and other undertakings
made by Dr. Leon Riebman on the date hereof for the benefit of the Company
in Section V of the 1995 Agreement.
(d) Dr. Leon Riebman has on this date hereof agreed to hold
himself available to the Company, whenever requested by the Company, to
provide consulting services ("Consulting Services") for a three year period
commencing upon the date ("Consulting Commencement Date") on which Dr.
Riebman voluntarily retires from active employment with the Company, which
shall in no event occur prior to the date on which this Agreement expires,
as and to the extent requested by the Company in consideration of the
payment (collectively the "Consulting Payments" and individually a
"Consulting Payment") by the Company of Six Hundred Seventy-five Thousand
Dollars ($675,000) as follows:
1. Three Hundred Thousand Dollars ($300,000) payable on the
Consulting Commencement Date.
2. Two Hundred Twenty-Five Thousand Dollars ($225,000)
payable on the first anniversary of the Consulting Commencement Date.
3. One Hundred Fifty Thousand Dollars ($150,000) payable on
the second anniversary of the Consulting Commencement Date.
The Company shall not be obligated to make any of the Consulting
Payments unless certificates representing the Contingent Shares shall have
been delivered by the Voting Trustees to the holder(s) of the voting trust
certificates representing the Contingent Shares pursuant to Paragraph 11(a)
of the VT Agreement; provided that this provision shall not reduce or
otherwise affect the Company's obligations under Section I(a)(1), I(a)(2)
or I(a)(4).
If on the date such payment is otherwise due, Dr. Riebman will not be
available to provide Consulting Services for the forthcoming year, the
Company shall have no obligation to make any additional Consulting
Payments.
Any payment(s) made by the Company pursuant to Sections I(a)(l),
I(a)(2) or I(a)(4) hereof shall be credited against, and reduce to that
extent, Consulting Payments in chronological order thereof.
(e) The 1995 Agreement may not be amended or rescinded without
the written consent of Dr. Riebman and the Company.
VI. Change in Control Payment
The Corporation shall make a payment ("Change in Control
Payment") to Dr. Leon Riebman in the amount of Five Hundred Thousand
Dollars ($500,000) if (i) Closing occurs under a Qualifying Business
Combination included within the Proposal as to which Shareholder Approval
has been obtained; and (ii) Dr. Riebman's employment with the Company
terminates thereafter for any reason, voluntary or involuntary.
VII. Business Combination
The LRPC shall in good faith use all reasonable efforts to
arrange for a Qualifying Business Combination but it shall not have any
obligation to do so unless it deems the terms thereof to be in the best
interests of the Company and the Shareholders. The LRPC shall have the
right, in the exercise of its fiduciary duty, to withdraw its
recommendation of a Business Combination Agreement. The Closing of a
Qualifying Business Combination shall not occur within six months of the
date hereof unless the Riebmans are advised in writing by their counsel
that the sale by them of the Contingent Shares at such time will not expose
them to liability under Section 16(b) of the Securities and Exchange Act of
1934.
VIII. Advancing Counsel Fees
(a) Subject to the condition set forth in the following sentence,
the Company shall pay the reasonable counsel fees and disbursements
incurred by the Riebmans as parties to this Agreement, the members of the
LRPC, the Voting Trustees, any director or officer of the Company, or any
of them in the defense of any pending or threatened action, suit or
proceedings whether by or in the right of the Company or otherwise,
involving this Agreement or any Exhibit hereto (collectively "Proceeding")
in advance of the final disposition of the Proceeding. The foregoing
obligation of the Company is conditioned upon its prior receipt of an
undertaking by such person or persons to repay the amount so advanced if it
is ultimately determined by a court that such payment was not proper in the
circumstances.
(b) Except as provided in the following sentence, the Company
shall have the right to engage one law firm ("Primary Counsel") to
represent the Riebmans as parties to this Agreement, the members of the
LRPC, the Voting Trustees, any director or officer of the Company, or any
of them in connection with any Proceeding. The Company shall pay (and
advance subject to the provisions of Section VIII(a) hereof) the reasonable
fees and disbursements of separate counsel who may be selected by the
Riebmans (and reasonably acceptable to the Company) to represent them in
any Proceeding but only upon the following condition: the Primary Counsel
shall advise the Company in writing that it is such Primary Counsel's
opinion that the retention of separate counsel for the Riebmans is
appropriate because (i) the representation of the Riebmans and the other
persons described above by one law firm would involve a conflict of
interest or (ii) there are separate and additional defenses available to
the Riebmans which are not available to the other persons described above.
The Company shall have the right to determine the reasonableness of such
separate counsel's fees and disbursements. The Company shall have the
right to assume and control the defense of any Proceeding, including the
engagement of Primary Counsel subject, however, to the terms of the second
sentence of this Section VIII(b).
(c) The foregoing undertakings by the Company shall not inure to
the benefit of any party or parties other than the Riebmans, the members of
the LRPC, the Voting Trustees or any director or officer of the Company, or
any of them, and their heirs and personal representatives.
IX. Amendment or Recision; Company Actions Exclusively by LRPC;
Company Covenants; Bylaw Amendments
(a) This Agreement may not be amended or rescinded without the
written consent of the Riebmans and the Company.
(b) All actions by the Company contemplated by this Agreement,
the VT Agreement and the 1995 Agreement shall be taken on its behalf
exclusively by the LRPC which shall have the full authority of the Board
for the purposes hereof and thereof. All actions of the LRPC shall require
the approval of a majority of the members of the LRPC; provided, however,
if at any time there exist less than three (3) members of the LRPC, all
actions at such time shall require the unanimous approval of the members of
the LRPC. The foregoing shall not excuse the performance by the Company of
any obligations which it has undertaken to perform hereunder all of which
obligations having been approved by the LRPC, no further approval being
required.
(c) The Company agrees not to issue, or authorize the issuance
of, any additional shares of Class B Stock, any options for Class B Stock,
or securities exchangeable for or convertible into Class B Stock, during
the Initial Term, First Renewal Term, Second Renewal Term, or any
extension thereof. The Company further agrees not to change, or authorize
the change of, the voting rights relating to the Company's capital stock
during the Initial Term, the First Renewal Term, Second Renewal Term or
any extension thereof. It is the intention of this Section IX(c) that if
this Agreement expires or terminates for a reason other than the Closing of
a Qualifying Business Combination included within the Proposal as to which
Shareholder Approval has been obtained, the voting power of the Riebmans
with respect to the Company shall be restored to no less than what such
voting power would have been (i.e. voting control of the Company) had this
Agreement and the VT Agreement not been entered into.
(d) The Board shall: (i) maintain the LRPC in existence during
the Initial Term, First Renewal Term, Second Renewal Term or any extension
thereof; (ii) not change the present composition of the LRPC except upon
the request of the LRPC; and (iii) cause any successor member of the LRPC
to be a person who the LRPC considers to be an Independent Director.
(e) The Bylaws of the Company have been amended on the date
hereof so as to effectuate the purposes of this Agreement and the VT
Agreement.
X. Representations and Warranties
(a) The Company represents and warrants to the Riebmans as
follows:
(1) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania.
(2) The authorized and issued and outstanding capital stock
of the Company is as set forth in the recitals hereof. All of the issued
and outstanding shares of the capital stock are duly authorized, validly
issued, fully paid and nonassessable.
(3) All corporate actions on the part of the Company,
including, without limitation, the approval of this Agreement, the VT
Agreement, the Participation Rights Agreement and the 1995 Agreement by the
LRPC and the approval thereof by the requisite vote of the Board (the
Riebmans having abstained from voting thereon) necessary for the execution
and delivery by the Company of this Agreement, the VT Agreement, the
Participation Rights Agreement and the 1995 Agreement and the performance
by the Company of its obligations hereunder and thereunder, have been duly
taken.
(4) This Agreement, the VT Agreement, the Participation
Rights Agreement and the 1995 Agreement each constitutes a valid and
binding obligation of the Company enforceable against the Company in
accordance with the terms of each.
(5) The Contingent Shares have been duly authorized and
validly issued and are fully paid and nonassessable.
(b) The Riebmans severally represent and warrant to the Company
as follows:
(1) Each of them is sui juris and of full capacity to make
and perform his or her obligations under this Agreement. The execution,
delivery and performance by each of them of this Agreement will not violate
or constitute a breach of or default under any instrument to which either
of them is a party.
(2) This Agreement constitutes a valid and binding
obligation of each of them enforceable in accordance with its terms.
(3) The Riebmans beneficially own the Riebman Shares.
(4) The Riebmans have good, valid and indefeasible title to
the Riebman Shares, free and clear of all security interests, liens,
encumbrances, options, calls, pledges, trusts, voting trusts and other
agreements, covenants or restrictions.
(5) Each of them is acquiring the Contingent Shares solely
for their own account and in connection with a sale thereof pursuant to a
Qualifying Business Combination as contemplated herein and not with a view
to the distribution thereof within the meaning of the Securities Act of
1933. Each of them acknowledges that the Contingent Shares will not have
been registered under the Securities Act of 1933 or under any applicable
state securities law and may not be transferred (assuming the consent
required in Section IV(a) hereof has been given) unless they are
subsequently so registered or an exemption from such registration is
available.
(6) Each of them acknowledges that each voting trust
certificate evidencing a beneficial interest under the VT Agreement will
bear a legend as provided therein restricting transferability thereof.
XI. Notices
All communications provided for in this Agreement shall be in
writing and shall be sent to each party as follows:
To the Company:
AEL Industries, Inc.
305 Richardson Road
Lansdale, PA 19446
Attention: John R. Cox, Esquire
General Counsel
Fax 215-822-6056
With copies to:
Mr. Francis J. Dunleavy
560 Morris Road, Box 208
Blue Bell, PA 19422
Fax 215-643-9275
Frederick R. Einsidler
99 South Park Avenue, Apt. 109
Rockville Centre, NY 11570
Fax 516-536-6505
Conrad J. Fowler
826 North Fairway Road
Glenside, PA 19038
Fax 215-887-3293
Leeam Lowin
21 Fox Run Lane
Greenwich, CT 06831
Fax 203-661-6258
and
Vincent F. Garrity, Jr., Esquire
Duane, Morris & Heckscher
One Liberty Place
Philadelphia, PA 19103
Fax 215-979-1020
To the Riebmans
Dr. & Mrs. Leon Riebman
1380 Barrowdale Road
Rydal, PA 19046
Fax 215-885-2238 (telephone first)
With a copy to:
Abraham H. Frumkin, Esquire
Eckert Seamans Cherin & Mellott
1700 Market Street, Suite 3232
Philadelphia, PA 19103
Fax 215-575-6015
or to such other address as such party may hereafter specify in writing,
and shall be deemed given on the earlier of (a) physical delivery, (b) if
given by facsimile transmission, when such facsimile is transmitted to the
telephone number specified in this Agreement and telephone confirmation of
receipt thereof is received (c) three days after mailing by prepaid first
class mail and (d) one day after transmittal by prepaid overnight courier.
XII. Miscellaneous
(a) Equitable Relief. In the event of a breach or threatened
breach of any provision in this Agreement, in addition to any and all other
legal and equitable remedies which may be available, any party hereto may
specifically enforce the terms of this Agreement and may obtain temporary
or permanent injunctive relief without the necessity of proving actual
damage by reason of any such breach or threatened breach.
(b) Survival of Representations and Warranties; Section VIII
Obligations
All representations and warranties contained in this Agreement
and the obligations of the Company set forth in Section VIII hereof shall
survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby.
(c) Binding Effect
This Agreement shall be binding upon, and inure to the benefit
of, the Company and its successors and the Riebmans and their respective
heirs and personal representatives.
(d) Governing Law
This Agreement shall be governed by, and construed and enforced
in accordance with the internal law of the Commonwealth of Pennsylvania
without giving effect to conflicts of laws.
(e) Counsel Fees
The Company agrees to reimburse the Riebmans for the reasonable
fees and disbursements (but not in excess of Seventy-Five Thousand Dollars)
of their counsel incurred in connection with the negotiation of this
Agreement.
(f) Entire Agreement
This Agreement (including the VT Agreement, the 1995 Agreement,
and the Participation Rights Agreement) supersedes any prior negotiations
and understandings and constitutes the entire agreement between the parties
with regard to its subject matter. The recitals contained in the
Background of this Agreement are an integral part of this Agreement.
(g) Counterparts
This Agreement may be executed in several counterparts each of
which shall be deemed an original but all of which taken together shall
constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have executed, or caused to be
executed, this Agreement as of the date first mentioned above.
AEL INDUSTRIES, INC.
By:/s/ George King
/s/ Dr. Leon Riebman
Dr. Leon Riebman
/s/ Claire E. Riebman
Claire E. Riebman