1995 Agreement
This 1995 AGREEMENT ("1995 Agreement") is made as of the 28th day of
February, 1995 by and between AEL Industries, Inc., a Pennsylvania
corporation ("Corporation") and Dr. Leon Riebman ("Riebman").
Background
A. This is the 1995 Agreement referred to in Section V of an
agreement dated the date hereof by and among the Corporation and Dr. Leon
Riebman and Claire E. Riebman (the "Agreement").
B. The Corporation and Riebman have entered into an Employment and
Retirement Agreement, dated January 8, 1982, as amended on November 14,
1991 (collectively, "1982 Agreement").
C. The Corporation's rights will be substantially enhanced if
Riebman and the Corporation enter into this 1995 Agreement which will (a)
assure Riebman's availability exclusively to the Corporation in the future
and (b) substantially improve the Corporation's rights with respect to the
protection of proprietary information, intellectual property and
restrictions on competition, all as hereinafter more particularly set
forth. The purpose of this 1995 Agreement is to set forth the terms and
conditions thereof.
NOW THEREFORE, intending to be legally bound hereby, the Corporation
and Riebman agree as follows:
I. Definitions. All terms defined in the 1982 Agreement or the
Agreement shall have the same meaning when used herein and capitalized
unless the context clearly indicates otherwise.
II. Effective Date. This 1995 Agreement shall become effective on
the date hereof and shall supplement the 1982 Agreement to the extent
provided herein.
III. Limitation on Voluntary Retirement. Notwithstanding the
provisions of the 1982 Agreement, Riebman agrees that he shall not
voluntarily retire from active employment prior to the date of expiration
or termination of the Agreement.
IV. Consultancy. As contemplated in Section 4B of the 1982
Agreement, the Corporation and Riebman agree as follows:
4. Consultancy. For a period of three (3) years commencing
upon the date on which Riebman voluntarily retires from active employment
with the Corporation (which shall in no event occur prior to the date on
which the Agreement expires or terminates) ("Consulting Commencement Date")
Riebman shall provide to the Corporation, for up to 130 days per year, at
the Corporation's request, such consulting services ("Consulting Services")
which are not inconsistent with the position held by Riebman prior to the
date hereof as shall be required by the Corporation in its sole reasonable
discretion, which Consulting Services shall include, without limitation,
developing and continuing to cultivate relationships in the Corporation's
industry for the benefit of the Corporation. As consideration therefor,
the Corporation shall make payments (collectively the "Consulting Payments"
and individually a "Consulting Payment") to Riebman in the amount of Six
Hundred Seventy-five Thousand Dollars ($675,000) as follows:
(1) On the Consulting Commencement Date, a payment of Three
Hundred Thousand Dollars ($300,000);
(2) On the first anniversary of the Consulting Commencement
Date, a payment of Two Hundred Twenty-five Thousand
Dollars ($225,000); and
(3) On the second anniversary of the Consulting
Commencement Date, a payment of One Hundred Fifty
Thousand Dollars ($150,000).
The Corporation shall not be obligated to make any of the
Consulting Payments unless the 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.
The Corporation shall have no obligation to make any additional
Consulting Payments if on the date any such payment is otherwise due
Riebman will not be available to provide Consulting Services for the
forthcoming year. Any payment(s) made by the Company pursuant to Sections
I(a)(1), I(a)(2) or I(a)(4) of the Agreement shall be credited against, and
reduce to that extent, the Consulting Payments in chronological order
thereof.
For the period during which Riebman is performing the Consulting
Services, Riebman shall (i) be entitled to the Fringe Benefits provided in
Section 3C of the 1982 Agreement, provided Riebman shall not be entitled to
any vacation; and (ii) observe the covenants set forth in Section 8 of the
1982 Agreement, as supplemented and restated by Section V of this 1995
Agreement.
V. Proprietary Information and Non-Competition. Section 8 of the
1982 Agreement is hereby supplemented and restated in its entirety as
follows:
"8. Proprietary Information and Non-Competition.
A. Proprietary Information.
(1) Disclosure; Confidentiality Agreements. Riebman
covenants and agrees that he will not, during the Employment Period or at
any time thereafter, except with the express written consent of the
Corporation, directly or indirectly disclose, furnish, communicate or
divulge to any Person, or use for the benefit of any Person, other than the
Corporation, any confidential knowledge or information with respect to the
conduct or details of the Corporation's business, including, without
limitation, all manufacturing processes, technology, patents, copyrights,
inventions, proprietary information, computer software, computer hardware
designs, formulae, trade secrets, know-how, equipment, methods of
operation, financial condition, prices, fees, costs, designs, marketing
methods, forms, statistics, suppliers, customer lists, business methods,
financial and cost data and secret processes (collectively, the
"Proprietary Information"). Riebman further agrees to be bound by the
provisions of any confidentiality or similar agreement with any customer or
supplier of the Corporation to which Riebman is a party or to which the
Corporation is a party and as to which Riebman has knowledge of the terms
and conditions thereof on the date hereof, as employee, consultant,
officer, director or otherwise.
(2) Technical Data; Assignment of Rights Promptly
upon termination of his relationship with the Corporation, as employee,
consultant, officer, director or otherwise, for any reason whatsoever,
Riebman agrees to return to the Corporation any and all technical data,
drawings, memoranda, customer lists, notes, computer programs and listings
thereof, books of accounts, specifications, price lists and any other
papers and items embodying Proprietary Information which are in Riebman's
possession or control, all of which materials shall be the property of the
Corporation. Riebman further agrees to assign, transfer and convey to the
Corporation any patents, trademarks or other intellectual property rights
obtained by Riebman at any time in the future and which in any respect
relate to the business of the Corporation and are developed or derived by
him as a result of his relationship with the Corporation as employee,
consultant, officer, director or otherwise.
B. Non-Competition. Riebman covenants and agrees that for
so long as he shall have any relationship with the Corporation as employee,
consultant, officer, director or otherwise, and for a period of five (5)
years following the termination of such relationship for any reason
whatsoever ("Non-Competition Period"), Riebman shall not, without the
express written consent of the Corporation, directly or indirectly
(1) establish, engage, participate or invest in or
assist (whether as owner, part-owner, shareholder, partner, director,
officer, trustee, employee, agent, shareholder, partner or consultant or in
any other capacity) any business organization which
(a) is in competition with the Corporation in any
geographic area in which the Corporation conducts its business or sells its
products or in which the Corporation, to the knowledge of Riebman, plans to
conduct its business or sell its products;
(b) solicits or accepts, or intends to solicit or
accept, the business of any person or entity
(i) which was a customer or supplier of the
Corporation at any time within five (5) years prior to the termination of
Riebman's relationship with the Corporation, or
(ii) which was engaged in significant
discussions with the Corporation or had received a proposal from the
Corporation with a view toward establishing a customer or supplier
relationship at any time within two (2) years prior to the termination of
Riebman's relationship with the Corporation, or
(iii) with which Riebman shall have had
significant contact on behalf of the Corporation and which was, at the time
of such contact, a customer or supplier of the Corporation;
(2) divert or attempt to divert any business from the
Corporation by influencing or attempting to influence any customer or
prospective customer of the Corporation;
(3) hire, as employee, consultant, agent or otherwise,
or solicit the participation in any business activity (as owner, part-
owner, shareholder, partner, director, officer, trustee, employee, agent or
consultant or in any other capacity) of, any person who was an employee,
consultant or officer of the Corporation at any time within two (2) years
preceding the date of the termination of Riebman's relationship with the
Corporation.
Notwithstanding the foregoing provisions of this Section 8(B), Riebman may
make passive investments in a competitive enterprise the shares of
ownership of which are publicly traded if Riebman's investment constitutes
less than 5% of the equitable ownership of such enterprise.
C. Remedies.
(1) Equitable Relief. Riebman recognizes and
acknowledges that the Corporation's damages from any breach of the
provisions of this Section 8 may be difficult to measure and that the
Corporation's legal remedy for any such breach may accordingly be
inadequate. Riebman agrees that upon any actual or threatened violation
of the provisions of this Agreement, in addition to any other rights and
remedies which the Corporation may have at law or in equity, an order,
either temporary or permanent, may be entered by any court of competent
jurisdiction in an action brought by the Corporation for the purpose of
enjoining Riebman and his partners, agents, servants, employers and
employees from violating any of the provisions of this Section 8. The
existence of any claim or cause of action which Riebman may have against
the Corporation or any other Person (other than a claim for the
Corporation's breach of this Agreement for failure to make payments
hereunder) shall not constitute a defense or bar to the enforcement of such
covenants. If the Corporation is obliged to resort to the courts for the
enforcement of any of the covenants or agreements contained in this Section
8, or if such covenants or agreements are otherwise the subject of
litigation between the parties, then the term of such covenants and
agreements shall be extended for a period of time equal to the period of
such breach, such extension commencing on the later of (a) the date of a
final court order (without further right of appeal) enforcing such covenant
or agreement, and (b) the last date on which the covenants and agreements
would be enforceable without such an extension.
(2) Monetary Relief. In the event of any breach by
Riebman of any of the covenants or agreements contained in this Section 8,
the Corporation shall (in addition to its other rights and remedies) have
the right to suspend any or all of the payments otherwise due to Riebman
under this Agreement for the period of the breach (with no obligation to
pay such suspended payments after the period of the breach) and in the
event of a material breach, to permanently terminate any or all such
payments; any suspension or permanent termination of the payments shall not
relieve Riebman of his obligations under this Section 8 or other sections
of this Agreement.
The suspension or permanent termination of payments
otherwise due to Riebman under this Agreement shall not preclude an award
of equitable relief nor shall it be construed as liquidated damages.
Riebman recognizes and acknowledges that the damages which may be suffered
by the Corporation and recovered by it for a violation by Riebman of this
Section 8 may exceed the amount set forth in Subparagraph F.
D. Invalidity or Unenforceability. If any portion of the
covenants or agreements contained in this Section 8, or the application
thereof, is construed to be invalid or unenforceable, then the other
portions of such covenant(s) or agreement(s) or the application thereof
shall not be affected and shall be given full force and effect without
regard to the invalid or unenforceable portions to the fullest extent
possible. If any covenant or agreement in this Section 8 is held to be
unenforceable because of the area covered, the duration thereof, or the
scope thereof, then the court making such determination shall have the
power to reduce the area and/or duration and/or limit the scope thereof,
and the covenant or agreement shall then be enforceable in its reduced
form.
E. Definition of Corporation. For purposes of this
Section 8, the term "Corporation" shall include Corporation and all direct
and indirect subsidiaries and affiliates of Corporation.
F. Proprietary Information and Noncompetition Payment;
Participation Rights Agreement. The Corporation and Riebman have entered
into a "Participation Rights Agreement" on the date hereof in the form of
Exhibit C to the Agreement which provides that in consideration of
Riebman's agreement to comply with the provisions of this Section 8, the
Corporation shall, subject to the conditions set forth therein, make a
"Participation Payment" (as defined therein).
VI. Amendment; Rescission; Actions by the Corporation.
a. No amendment or rescission of this 1995 Agreement shall be
effective unless set forth in writing, signed by Riebman and the
Corporation and approved by the Long Range Planning Committee ("LRPC") o
the Board of Directors of the Corporation as provided in Section VI b.
hereof.
b. All actions by the Corporation contemplated by this 1995
Agreement shall be taken by and require the approval of a majority of the
members of the LRPC; provided, however, if at any time there exist less
than three members of the LRPC, all such actions shall require the
unanimous approval of the members of the LRPC. The foregoing shall not
excuse the performance by the Corporation 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.
VII. Representations and Warranties. Riebman hereby represents and
warrants to the Corporation as follows:
a. He is sui juris and of full capacity to make and perform his
obligations under this 1995 Agreement.
b. The execution, delivery and performance by Riebman of this
1995 Agreement will not violate or constitute a breach of or default under
any instrument to which he is party or pursuant to which he is bound.
c. This 1995 Agreement constitutes a valid and binding
obligation of Riebman enforceable in accordance with its terms.
d. To his knowledge, there are no breaches or violations of any
condition, covenant or provision of the 1982 Agreement, no event of
default has occurred under the 1982 Agreement, and no event has occurred
which, with the passage of time or the giving of notice or both, would
constitute an event of default under the 1982 Agreement.
e. To his knowledge, there exist no defenses or offsets to the
rights of the Corporation under the 1982 Agreement.
VIII. Termination
If the Agreement expires or terminates for a reason other than
the Closing of a Qualifying Business Combination included within a Proposal
as to which Shareholder Approval has been obtained, this 1995 Agreement
shall terminate and shall be of no further force and effect.
IX. Notices
All communications provided for in this 1995 Agreement shall be
in writing and shall be sent to each party as follows:
To The Corporation:
AEL Industries, Inc.
305 Richardson Road
Lansdale, PA 19446
Attention: John R. Cox, Esquire
General Counsel
Fax 215-822-6056
With copies to:
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 Riebman
Dr. 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.
X. Miscellaneous
a. Survival of Representations and Warranties. All
representations and warranties contained in this 1995 Agreement shall
survive the execution and delivery of this 1995 Agreement and the
consummation of the transactions contemplated hereby.
b. Binding Effect. This 1995 Agreement shall be binding upon,
and inure to the benefit of, the Corporation and its successors and the
Riebmans and their heirs and personal representatives.
c. Governing Law. This 1995 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.
d. Entire Agreement. This 1995 Agreement and the 1982 Agreement
taken together supersede any prior negotiations and understandings and
constitute the entire agreement between the parties with regard to its
subject matter.
e. The 1982 Agreement, with the enhancements in favor of the
Corporation provided by this 1995 Agreement, remains in full force and
effect.
f. Counterparts. This 1995 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
Name: George King
Title: Vice President
/s/ Dr. Leon Riebman
Dr. Leon Riebman