<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)
NAI TECHNOLOGIES, INC. (Name of Issuer)
- --------------------------------------------------------------------------------
Common Stock, $.10 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
62872H 10 7
- --------------------------------------------------------------------------------
(CUSIP Number)
Charles S. Holmes
P.O. Box 2850
Southampton, NY 11969
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 26, 1998
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
(Continued on following page(s))
Page 1 of 25 Pages
Exhibit Index Appears on Page 7
<PAGE>
<PAGE>
Page 2 of 25 Pages
CUSIP No. 62872H 10 7
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only)
Charles S. Holmes
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER (a) [ ]
OF A GROUP (b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS n/a
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS [ ]
IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A.
- --------------------------------------------------------------------------------
NUMBER 7 SOLE VOTING POWER 3,055,000(1) shares
OF ----------------------------------------------------------
SHARES
BENEFICIALLY 8 SHARED VOTING POWER 0
OWNED ----------------------------------------------------------
BY
EACH 9 SOLE DISPOSITIVE POWER 3,055,000(1) shares
REPORTING ----------------------------------------------------------
PERSON
WITH 10 SHARED DISPOSITIVE POWER 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 3,431,000(1) shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES [ ]
CERTAIN SHARES
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 30.2%(1)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON IN
- --------------------------------------------------------------------------------
(1)See Item 5 hereof.
<PAGE>
<PAGE>
Item 1. Security and Issuer.
This Statement on Schedule 13D relates to shares of Common Stock,
par value $.10 per share (the " NAI Common Stock"), of NAI Technologies, Inc.,
a New York corporation (the "Company" or "NAI"), whose principal executive
offices are located at 282 New York Avenue, Huntington, New York 11743.
Item 2. Identity and Background.
(a)-(c) This Statement is filed by Charles S. Holmes, the
President and sole stockholder of Asset Management Associates of New York, Inc.,
a New York-based firm specializing in acquisitions of manufacturing businesses,
whose executive office is located at P.O. Box 2850, Southampton, New York 11969.
(d)-(f) During the five years prior to the date hereof, Mr.
Holmes has not been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction, as a result of which
he was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws. Mr.
Holmes is a United States citizen.
Item 3. Source and Amount of Funds or Other Consideration.
Not Applicable
Item 4. Purpose of the Transaction.
A. In connection with an Agreement and Plan of Merger, dated as
of August 26, 1998 (the "Merger Agreement"), among the Company, DRS
Technologies, Inc. ("DRS") and DRS Merger Sub, Inc., whereby NAI shareholders
will receive 0.23 a share of DRS common stock ("DRS Common Stock") for each
outstanding share of NAI Common Stock held, subject to adjustment, Mr. Holmes
entered into a Shareholder's Agreement, dated as of August 26, 1998 (the "
Holmes Agreement"), with DRS in which Mr. Holmes agreed, among other things, to
vote the shares of NAI Common Stock owned by him in favor of the Merger
Agreement and the transactions contemplated thereby (the "Merger").
Under the Holmes Agreement, Mr. Holmes also agreed (i) to
exchange any (a) warrants of the Company (the "Warrants") to purchase shares of
NAI Common Stock, and (b) the 12% Convertible Subordinated Promissory Note due
2001 of the Company ("Company Notes"), owned by him upon the consummation of
the Merger in accordance with the terms of the Merger Agreement
-3-
<PAGE>
<PAGE>
(other than those Warrants to be used in the Wilcom Sale, as defined below), and
(ii) to refrain from selling (a) any of the NAI Common Stock owned by him for
the consecutive 62-day trading period ending on the effective date of the
Merger, and (b) the DRS Common Stock received by him pursuant to the Merger for
a period of 18 months following the consummation of the Merger.
B. It is a condition to the consummation of the Merger that the
Company and Mr. Holmes will enter into a stock purchase agreement (the "Wilcom
Agreement"), providing for the sale by the Company of its wholly-owned
subsidiary, Wilcom, Inc. ("Wilcom"), to Mr. Holmes (the "Wilcom Sale"). Pursuant
to the Wilcom Agreement, NAI will sell its shares of Wilcom to Mr. Holmes for a
purchase price of (i) $150,000, (ii) the surrendering of 300,000 warrants to
purchase shares of NAI Common Stock at a purchase price of $3.00 per share owned
by Mr. Holmes (the "$3.00 Warrants") and (iii) the surrendering of the 1,750,000
warrants to purchase shares of NAI Common Stock at a purchase price of $2.50
per share owned by Mr. Holmes (the "$2.50 Warrants"). The Wilcom Agreement will
provide that, among other things, it is a condition of the closing of the
Wilcom Sale that the Merger shall have received the necessary approval from the
stockholders of DRS and the Company.
C. Pursuant to and as a condition of the Merger Agreement, the
Charles S. Holmes 1997 Trust (the "Trust"), as the owner of record of 219,000
shares (the "Trust Shares") of NAI Common Stock and 157,000 warrants to
purchase shares of NAI Common Stock at a purchase price of $2.50 per share
(the "Trust Warrants" and together with the Trust Shares, the "Trust
Securities"), entered into a Shareholder's Agreement, dated as of August 26,
1998 (the "Trust Agreement"), with DRS in which the Trust agreed, among other
things, to vote the Trust Shares in favor of the Merger.
Under the Trust Agreement, the Trust also agreed (i) to exchange
the Trust Warrants owned by it upon the consummation of the Merger in accordance
with the terms of the Merger Agreement, and (ii) to refrain from selling (a) any
of the NAI Common Stock owned by it for the consecutive 62-day trading period
ending on the effective date of the Merger, and (b) the DRS Common Stock
received by it pursuant to the Merger for a period of 18 months following the
consummation of the Merger. The Trust Securities, the beneficiary of which is
Carrie Catherine Holmes, were contributed into the Trust by Ms. Diane Holmes.
Reference is hereby made to Item 6 hereof for a description of
certain contracts, arrangements, understandings and relationships relating to
the Company's securities.
Except as indicated in this Schedule 13D, Mr. Holmes currently
has no specific plans or proposals that relate to or would result in any of the
matters described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
-4-
<PAGE>
<PAGE>
Item 5. Interest in Securities of the Issuer.
(a) As of August 26, 1998, the Company had a total of 9,179,567
shares of NAI Common Stock issued and outstanding. Mr. Holmes is the
"beneficial owner", as such term is defined in the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or the rules and regulations
thereunder, of (i) 1,000,000 shares of NAI Common Stock (referred to
elsewhere herein as the "Shares") received upon conversion of the Holmes Note
(as defined herein), constituting 10.9% of the Company's total outstanding
shares of NAI Common Stock, and (ii) as hereinafter described, 2,431,000
additional shares of NAI Common Stock, which combined with the Shares
constitute 30.2% of the Company's total outstanding shares of NAI Common
Stock, as determined in accordance with Rule 13d-3 of the Exchange Act.
In connection with the Company's Private Placement discussed in
Item 6 of the Schedule 13D, Mr. Holmes purchased a Company Note in the aggregate
unpaid principal amount of $2,000,000 (the "Holmes Note") and 500,000 of the
$2.50 Warrants. In addition, the Company granted to Mr. Holmes 1,200,000 of the
$2.50 Warrants for past advisory services in connection with the Private
Placement and the engagement of Commonwealth Associates as the Company's
placement agent. Mr. Holmes exercised his right to convert the Holmes Note into
1,000,000 shares (the "Shares") of NAI Common Stock. The Company also granted
to Mr. Holmes the $3.00 Warrants, in connection with the conversion
of the Holmes Note into the Shares. On October 21, 1997, Mr. Holmes purchased
the remaining 50,000 of the $2.50 Warrants in the open market. The $2.50
Warrants and the $3.00 Warrants are sometimes collectively referred to as the
"Investment Warrants."
As discussed in Item 3 of Amendment No. 2, on August 7, 1996, Mr.
Holmes was reelected as a director of the Company and was granted options (the
"Stock Options") to purchase 5,000 shares of NAI Common Stock at a price of
$3.44 per share, exercisable at any time between August 7, 1997 and August 7,
2006, pursuant to the 1993 Stock Option Plan for Directors, as amended.
As a result of the ownership by Mr. Holmes of the Investment
Warrants and the Stock Options, and the ownership by the Trust of the Trust
Securities, Mr. Holmes currently may be deemed to own beneficially 2,431,000
additional shares of NAI Common Stock.
It should be noted that, as a result of certain provisions in the
$3.00 Warrants, the number of shares of NAI Common Stock which Mr. Holmes may be
entitled to receive upon exercise of the Investment Warrants is subject to
change.
Except as set forth in Item 5(a), Mr. Holmes does not own any
shares of NAI Common Stock and is not the "beneficial owner" of any such
shares, as such term is defined in the Exchange Act or the rules and
regulations thereunder.
-5-
<PAGE>
<PAGE>
(b) Mr. Holmes possesses the sole power to vote and dispose of,
and to direct the voting and disposition of, the Shares as a result of the
conversion of the Note into the Shares.
Except as set forth in the immediately preceding paragraph, Mr.
Holmes does not possess the power to vote or dispose of any shares of NAI Common
Stock unless the (i) Investment Warrants and (ii) Stock Options are exercised
for shares of NAI Common Stock, which Mr. Holmes has no current intention of
doing except as may be required pursuant to the Holmes Agreement. Only in
the event of such exercise may Mr. Holmes be deemed to have the sole power
to vote and dispose of, and to direct the voting and disposition of, the
shares of NAI Common Stock referenced above. Mr. Holmes does not possess the
power to vote or dispose of any of the Trust Securities.
(c) Except as set forth herein, Mr. Holmes does not beneficially
own any shares of NAI Common Stock and has not engaged in any transaction in
any such shares during the sixty day period immediately preceding the date
hereof.
(d) & (e) Inapplicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
Except as described herein and in previous amendments to this
Schedule 13D, Mr. Holmes has no other contracts, arrangements, understandings
or relationships with any persons with respect to any securities of the
Company. Mr. Holmes reserves the right to enter into any such contracts,
arrangements, understandings or relationships in the future.
The description of the transactions discussed in Item 4 is
further described in the Shareholder's Agreement, dated as of August 26, 1998,
between Charles S. Holmes and DRS Technologies, Inc., the Shareholder's
Agreement, dated as of August 26, 1998, between Charles S. Holmes 1997 Trust and
DRS Technologies, Inc. and the Press Release of the Company, issued on August
26, 1998. Reference is made to such documents which are attached hereto as
Exhibit 1, Exhibit 2 and Exhibit 3, respectively, and each such document is
incorporated herein by reference for all of its terms and conditions.
-6-
<PAGE>
<PAGE>
Item 7. Material to be Filed as Exhibits.
1. Shareholder's Agreement, dated as of August 26, 1998, between
Charles S. Holmes and DRS Technologies, Inc.
2. Shareholder's Agreement, dated as of August 26, 1998, between
Charles S. Holmes 1997 Trust and DRS Technologies, Inc.
3. Press Release of the Company, dated August 26, 1998.
-7-
<PAGE>
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: September 2, 1998
/s/ Charles S. Holmes
___________________________________________
Charles S. Holmes
-8-
<PAGE>
<PAGE>
SHAREHOLDER'S AGREEMENT
SHAREHOLDER'S AGREEMENT (the "Agreement"), dated as of August 25, 1998,
by and between Charles S. Holmes (the "Shareholder") and DRS Technologies, Inc.,
a Delaware corporation ("Acquiror").
W I T N E S S E T H :
WHEREAS, Acquiror, DRS Merger Sub, Inc., a New York corporation and a
direct wholly owned subsidiary of Acquiror ("Merger Sub"), and NAI Technologies,
Inc., a New York corporation (the "Company"), are parties to an Agreement and
Plan of Merger, dated as of August 25, 1998 (the "Merger Agreement"), which
provides, among other things, for the merger of Merger Sub with and into the
Company (the "Merger"), with the Company as the surviving corporation;
WHEREAS, the transactions contemplated by the Merger Agreement,
including without limitation the Merger, must be approved by holders of record
of a majority of the outstanding shares of common stock, par value $0.10 per
share, of the Company entitled to vote (such shares of common stock, the
"Company Common Stock") at a special meeting of the Company's shareholders (the
"Special Meeting") called for the purpose of approving the transactions
contemplated by the Merger Agreement, all in accordance with the requirements of
the New York Business Corporation Law, the Company's Certificate of
Incorporation and the Company's By-Laws;
WHEREAS, as of the date hereof, each of the Shareholder and any other
shareholders affiliated or associated with the Shareholder(1) has or may be
deemed as a beneficial owner (including without limitation as a custodian) to
have sole or shared voting power or dispositive power or both over the number
of shares (the "Shares") of Company Common Stock, the number of Warrants to
Purchase Common Stock of the Company (the "Company Warrants") and the principal
amount of 12% Convertible Subordinated Promissory Notes of the Company (the
"Company Convertible Notes") (collectively, the "Controlled Securities") set
forth under such Shareholder's name(s) on Schedule A hereto; and
WHEREAS, as a condition to Acquiror's entering into the Merger
Agreement, Acquiror has requested that the Shareholder execute and deliver to
Acquiror this Agreement;
- -------------------
(1) For purposes of this Agreement, the term "Shareholder" shall include such
shareholders affiliated or associated with the Shareholder.
<PAGE>
<PAGE>
NOW, THEREFORE, the parties agree as follows:
1. Agreement to Vote Shares. The Shareholder agrees to vote the Shares and
any other shares of Company Common Stock which he, she or it, directly or
indirectly, controls and is able to direct the voting thereof at the Special
Meeting or at any other meeting of the shareholders of the Company, however
called, and in any action by consent of the shareholders of the Company (a) in
favor of the Merger, (b) in favor of the Merger Agreement, and (c) against any
amendment of the Company's Certificate of Incorporation or By-Laws or any other
proposal or transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify, or result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under or with respect to, the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement.
2. Agreement to Exchange Warrants and Convertible Notes. The Shareholder
agrees to exchange, in accordance with the procedures contemplated in the Merger
Agreement, any Company Warrants or Company Convertible Notes over which such
Shareholder has dispositive control (with the exception of, in the case of
Charles S. Holmes, the Company Warrants that Mr. Holmes will surrender as part
of the purchase price for Wilcom, Inc. ("Wilcom") pursuant to the Stock Purchase
Agreement (the "Wilcom Agreement") to be entered into among Wilcom Acquisition
Corp., as Buyer, and the Company, as Seller), for comparable securities issued
by Acquiror.
3. Covenants. The Shareholder agrees with respect to himself, herself or
itself and the Controlled Securities that:
(a) Such Shareholder shall not, except consistent with the terms of this
Agreement, (i) transfer (which term shall include, without limitation, for the
purposes of this Agreement, any sale, gift, pledge or other disposition), or
consent to any transfer of, any or all of the Controlled Securities or any
interest therein (with the exception of, in the case of Charles S. Holmes, the
Company Warrants that Mr. Holmes will surrender as part of the purchase price
for Wilcom pursuant to the Wilcom Agreement), (ii) enter into any contract,
option or other agreement or understanding with respect to any transfer of any
or all of the Controlled Securities or any interest therein (with the exception
of, in the case of Charles S. Holmes, the Company Warrants that Mr. Holmes will
surrender as part of the purchase price for Wilcom pursuant to the Wilcom
Agreement), (iii) take any other action that would in any way restrict, limit or
interfere with the performance of his, her or its obligations hereunder or the
transactions contemplated hereby, or (iv) grant any proxies or powers of
attorney with respect to any of the Shares, deposit any of the Shares into a
voting trust or enter into a voting agreement with respect to such Shares.
(b) Such Shareholder will not enter into any transaction, take any
action, or directly or indirectly cause any event to occur that would result in
any of such Shareholder's representations or warranties herein contained not
being true and correct at and as of the time immediately after the occurrence of
such transaction, action or event.
(c) Such Shareholder has no present intention to sell the common stock,
par value $0.01 per share, of Acquiror (the "Acquiror Common Stock") acquired by
him, her or it
2
<PAGE>
<PAGE>
pursuant to the Merger. Such Shareholder agrees that he, she or it will not
sell, transfer or otherwise dispose of (i) any Company Common Stock for the
consecutive 62-day period ending on the effective date of the Merger and (ii)
any Acquiror Common Stock received by him, her or it pursuant to the Merger for
a period of 18 months following the effective date of the Merger.
4. Representations and Warranties. The Shareholder represents and warrants
with respect to himself, herself or itself and the Controlled Securities that:
(a) Such Shareholder is the record or beneficial owner of, or has voting
power or dispositive power or both over, the Controlled Securities set forth on
Schedule A under such Shareholder's name and, except for the Shares, such
Shareholder is not the record or beneficial owner of any other shares of Company
Common Stock.
(b) This Agreement has been duly executed and delivered by the
Shareholder and constitutes the legal, valid and binding obligation of the
Shareholder, enforceable against the Shareholder in accordance with its terms.
The Shareholder has all necessary power and authority to execute and deliver
this Agreement, to perform his, her or its obligations hereunder and to
consummate the transactions contemplated hereby. Neither the execution and
delivery of this Agreement nor the consummation by the Shareholder of the
transactions contemplated hereby will result in a violation of, or a default
under, or conflict with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to which the Shareholder
is a party or bound or to which the Controlled Securities are subject which
would materially impair the ability of the Shareholder to perform hereunder.
Consummation by the Shareholder of the transactions contemplated hereby will not
violate, or require any consent, approval, or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation applicable to the
Shareholder or the Controlled Securities, except for any filing under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the filing
of an amendment to the Schedules 13D or Forms 4, if any, filed by the
Shareholder with respect to the Company Common Stock.
(c) The Controlled Securities owned by the Shareholder and the
certificates representing such Controlled Securities are now and at all times
during the term hereof will be held by the Shareholder or by a nominee or
custodian for his, her or its benefit, free and clear of all liens, claims,
security interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder and except for any general fiduciary
obligations imposed by law.
(d) No broker, investment banker, financial adviser or other person is
entitled to any broker's fee, finder's fee, financial adviser's fee or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of such Shareholder.
5. Certain Events. The Shareholder agrees that this Agreement and the
obligations hereunder shall attach to the Controlled Securities and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Controlled Securities shall pass, whether by operation of law or otherwise,
including without limitation such person's heirs, guardians, administrators or
successors. In the event of any stock split, stock dividend, merger,
3
<PAGE>
<PAGE>
reorganization, recapitalization or other change in the capital structure of the
Company affecting the Company Common Stock, or the acquisition of additional
shares of Company Common Stock by the Shareholder, whether as a result of
exercising the Company Warrants or any stock options of the Company, converting
the Company Convertible Notes or otherwise, this Agreement and the obligations
hereunder shall attach to any additional shares of Company Common Stock or other
voting securities of the Company issued to or acquired by the Shareholder. In
the event of a stock dividend or distribution, or any change in Company Common
Stock by reason of any stock dividend, split-up, recapitalization, combination,
exchange of shares or the like, the term "Shares" shall be deemed to refer to
and include the Shares as well as all such stock dividends and distributions and
any shares into which or for which any or all of the Shares may be changed or
exchanged.
6. Specific Enforcement of this Agreement. The Shareholder expressly
acknowledges and agrees that irreparable damage would occur and that Acquiror
would not have an adequate remedy at law, including without limitation damages
alone, in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that Acquiror shall be entitled as a matter of right to
injunctive relief to prevent breaches by the Shareholder of this Agreement and
to enforce specifically the terms and provisions of this Agreement in any court
of competent jurisdiction with respect to any actual or threatened breach by the
Shareholder of the provisions of this Agreement, in addition to any other remedy
to which it may be entitled at law or in equity. In addition, each of the
parties hereto (i) consents to submit such party to the personal jurisdiction of
any Federal court located in the State of New York or any New York state court
located in New York County in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (iii) agrees that such party will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the State
of New York or a New York state court located in New York County.
7. Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the first to occur of (a) the
consummation of the Merger or (b) the date of termination of the Merger
Agreement in accordance with its terms by any of the parties thereto.
8. Miscellaneous.
(a) All communication under this Agreement shall be in writing and shall
be deemed given if delivered personally or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to Acquiror:
DRS Technologies, Inc.
5 Sylvan Way
Parsippany, NJ 07054
4
<PAGE>
<PAGE>
Attention: Mark S. Newman
Facsimile: (973) 898-4730
If to the Shareholder:
Charles S. Holmes
P. O. Box 2850
Southampton, NY 11969
Facsimile: (516) 287-4473
With a copy to:
c/o NAI Technologies, Inc.
282 New York Avenue
Huntington, NY 11743
Attention: Robert A. Carlson
Facsimile: (516) 367-1125
(b) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
(c) This Agreement constitutes the entire agreement relating to the
subject matter covered herein, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
(d) NEITHER THIS AGREEMENT NOR ANY OF THE RIGHTS, INTERESTS OR
OBLIGATIONS UNDER THIS AGREEMENT SHALL BE ASSIGNED, IN WHOLE OR IN PART, BY
OPERATION OF LAW OR OTHERWISE, BY THE SHAREHOLDER WITHOUT THE PRIOR WRITTEN
CONSENT OF ACQUIROR.
(e) The construction and performance of this Agreement will be governed
by the laws of the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
(f) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated and shall be
enforced to the fullest extent permitted by law.
(g) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and signed by
such party.
(h) This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
5
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SHAREHOLDER
/s/ Charles S. Holmes
____________________________
Name: Charles S. Holmes
DRS TECHNOLOGIES, INC.
By: /s/ Nina L. Dunn
_________________________
Name: Nina L. Dunn
Title: Exec. V.P. Secretary
6
<PAGE>
<PAGE>
SCHEDULE A
Shareholder: Charles S. Holmes
Shares: 1,000,000 shares of common stock
(5,000 options)
Warrants: 1,750,000 warrants with an exercise price of $2.50 per share
expiring February 15, 2002.
300,000 warrants with an exercise price of $3.00 per share
expiring February 15, 2002.
Convertible Notes: 0
7
<PAGE>
<PAGE>
SHAREHOLDER'S AGREEMENT
SHAREHOLDER'S AGREEMENT (the "Agreement"), dated as of August 26, 1998,
by and between Charles S. Holmes 1997 Trust (the "Shareholder") and DRS
Technologies, Inc., a Delaware corporation ("Acquiror").
W I T N E S S E T H :
WHEREAS, Acquiror, DRS Merger Sub, Inc., a New York corporation and a
direct wholly owned subsidiary of Acquiror ("Merger Sub"), and NAI Technologies,
Inc., a New York corporation (the "Company"), are parties to an Agreement and
Plan of Merger, dated as of August 26, 1998 (the "Merger Agreement"), which
provides, among other things, for the merger of Merger Sub with and into the
Company (the "Merger"), with the Company as the surviving corporation;
WHEREAS, the transactions contemplated by the Merger Agreement,
including without limitation the Merger, must be approved by holders of record
of a majority of the outstanding shares of common stock, par value $0.10 per
share, of the Company entitled to vote (such shares of common stock, the
"Company Common Stock") at a special meeting of the Company's shareholders (the
"Special Meeting") called for the purpose of approving the transactions
contemplated by the Merger Agreement, all in accordance with the requirements of
the New York Business Corporation Law, the Company's Certificate of
Incorporation and the Company's By-Laws;
WHEREAS, as of the date hereof, each of the Shareholder and any other
shareholders affiliated or associated with the Shareholder(1) has or may be
deemed as a beneficial owner (including without limitation as a custodian) to
have sole or shared voting power or dispositive power or both over the number
of shares (the "Shares") of Company Common Stock, the number of Warrants to
Purchase Common Stock of the Company (the "Company Warrants") and the principal
amount of 12% Convertible Subordinated Promissory Notes of the Company (the
"Company Convertible Notes") (collectively, the "Controlled Securities") set
forth under such Shareholder's name(s) on Schedule A hereto; and
WHEREAS, as a condition to Acquiror's entering into the Merger
Agreement, Acquiror has requested that the Shareholder execute and deliver to
Acquiror this Agreement;
- -------------------
(1) For purposes of this Agreement, the term "Shareholder" shall include such
shareholders affiliated or associated with the Shareholder.
<PAGE>
<PAGE>
NOW, THEREFORE, the parties agree as follows:
1. Agreement to Vote Shares. The Shareholder agrees to vote the Shares and
any other shares of Company Common Stock which he, she or it, directly or
indirectly, controls and is able to direct the voting thereof at the Special
Meeting or at any other meeting of the shareholders of the Company, however
called, and in any action by consent of the shareholders of the Company (a) in
favor of the Merger, (b) in favor of the Merger Agreement, and (c) against any
amendment of the Company's Certificate of Incorporation or By-Laws or any other
proposal or transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify, or result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under or with respect to, the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement.
2. Agreement to Exchange Warrants and Convertible Notes. The Shareholder
agrees to exchange, in accordance with the procedures contemplated in the Merger
Agreement, any Company Warrants or Company Convertible Notes over which such
Shareholder has dispositive control (with the exception of, in the case of
Charles S. Holmes and the Shareholder, the Company Warrants that Mr. Holmes and
the Shareholder will surrender as part of the purchase price for Wilcom, Inc.
("Wilcom") pursuant to the Stock Purchase Agreement (the "Wilcom Agreement") to
be entered into among Wilcom Acquisition Corp., as Buyer, and the Company, as
Seller), for comparable securities issued by Acquiror.
3. Covenants. The Shareholder agrees with respect to himself, herself or
itself and the Controlled Securities that:
(a) Such Shareholder shall not, except consistent with the terms of this
Agreement, (i) transfer (which term shall include, without limitation, for the
purposes of this Agreement, any sale, gift, pledge or other disposition), or
consent to any transfer of, any or all of the Controlled Securities or any
interest therein (with the exception of, in the case of Charles S. Holmes and
the Shareholder, the Company Warrants that Mr. Holmes and the Shareholder will
surrender as part of the purchase price for Wilcom pursuant to the Wilcom
Agreement), (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of the Controlled
Securities or any interest therein (with the exception of, in the case of
Charles S. Holmes and the Shareholder, the Company Warrants that Mr. Holmes and
the Shareholder will surrender as part of the purchase price for Wilcom pursuant
to the Wilcom Agreement), (iii) take any other action that would in any way
restrict, limit or interfere with the performance of his, her or its obligations
hereunder or the transactions contemplated hereby, or (iv) grant any proxies or
powers of attorney with respect to any of the Shares, deposit any of the Shares
into a voting trust or enter into a voting agreement with respect to such
Shares.
(b) Such Shareholder will not enter into any transaction, take any
action, or directly or indirectly cause any event to occur that would result in
any of such Shareholder's representations or warranties herein contained not
being true and correct at and as of the time immediately after the occurrence of
such transaction, action or event.
2
<PAGE>
<PAGE>
(c) Such Shareholder has no present intention to sell the common stock,
par value $0.01 per share, of Acquiror (the "Acquiror Common Stock") acquired by
him, her or it pursuant to the Merger. Such Shareholder agrees that he, she or
it will not sell, transfer or otherwise dispose of (i) any Company Common Stock
for the consecutive 62-day period ending on the effective date of the Merger and
(ii) any Acquiror Common Stock received by him, her or it pursuant to the Merger
for a period of 18 months following the effective date of the Merger.
4. Representations and Warranties. The Shareholder represents and warrants
with respect to himself, herself or itself and the Controlled Securities that:
(a) Such Shareholder is the record or beneficial owner of, or has voting
power or dispositive power or both over, the Controlled Securities set forth on
Schedule A under such Shareholder's name and, except for the Shares, such
Shareholder is not the record or beneficial owner of any other shares of Company
Common Stock.
(b) This Agreement has been duly executed and delivered by the
Shareholder and constitutes the legal, valid and binding obligation of the
Shareholder, enforceable against the Shareholder in accordance with its terms.
The Shareholder has all necessary power and authority to execute and deliver
this Agreement, to perform his, her or its obligations hereunder and to
consummate the transactions contemplated hereby. Neither the execution and
delivery of this Agreement nor the consummation by the Shareholder of the
transactions contemplated hereby will result in a violation of, or a default
under, or conflict with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to which the Shareholder
is a party or bound or to which the Controlled Securities are subject which
would materially impair the ability of the Shareholder to perform hereunder.
Consummation by the Shareholder of the transactions contemplated hereby will not
violate, or require any consent, approval, or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation applicable to the
Shareholder or the Controlled Securities, except for any filing under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the filing
of an amendment to the Schedules 13D or Forms 4, if any, filed by the
Shareholder with respect to the Company Common Stock.
(c) The Controlled Securities owned by the Shareholder and the
certificates representing such Controlled Securities are now and at all times
during the term hereof will be held by the Shareholder or by a nominee or
custodian for his, her or its benefit, free and clear of all liens, claims,
security interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder and except for any general fiduciary
obligations imposed by law.
(d) No broker, investment banker, financial adviser or other person is
entitled to any broker's fee, finder's fee, financial adviser's fee or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of such Shareholder.
5. Certain Events. The Shareholder agrees that this Agreement and the
obligations hereunder shall attach to the Controlled Securities and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Controlled Securities shall pass, whether by
3
<PAGE>
<PAGE>
operation of law or otherwise, including without limitation such person's heirs,
guardians, administrators or successors. In the event of any stock split, stock
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Company Common Stock, or the
acquisition of additional shares of Company Common Stock by the Shareholder,
whether as a result of exercising the Company Warrants, converting the Company
Convertible Notes or otherwise, this Agreement and the obligations hereunder
shall attach to any additional shares of Company Common Stock or other voting
securities of the Company issued to or acquired by the Shareholder. In the event
of a stock dividend or distribution, or any change in Company Common Stock by
reason of any stock dividend, split-up, recapitalization, combination, exchange
of shares or the like, the term "Shares" shall be deemed to refer to and include
the Shares as well as all such stock dividends and distributions and any shares
into which or for which any or all of the Shares may be changed or exchanged.
6. Specific Enforcement of this Agreement. The Shareholder expressly
acknowledges and agrees that irreparable damage would occur and that Acquiror
would not have an adequate remedy at law, including without limitation damages
alone, in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that Acquiror shall be entitled as a matter of right to
injunctive relief to prevent breaches by the Shareholder of this Agreement and
to enforce specifically the terms and provisions of this Agreement in any court
of competent jurisdiction with respect to any actual or threatened breach by the
Shareholder of the provisions of this Agreement, in addition to any other remedy
to which it may be entitled at law or in equity. In addition, each of the
parties hereto (i) consents to submit such party to the personal jurisdiction of
any Federal court located in the State of New York or any New York state court
located in New York County in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (iii) agrees that such party will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the State
of New York or a New York state court located in New York County.
7. Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the first to occur of (a) the
consummation of the Merger or (b) the date of termination of the Merger
Agreement in accordance with its terms by any of the parties thereto.
8. Miscellaneous.
(a) All communication under this Agreement shall be in writing and shall
be deemed given if delivered personally or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to Acquiror:
DRS Technologies, Inc.
5 Sylvan Way
4
<PAGE>
<PAGE>
Parsippany, NJ 07054
Attention: Mark S. Newman
Facsimile: (973) 898-4730
If to the Shareholder:
Charles S. Holmes 1997 Trust
117 Whites Lane
Southampton, NY 11968
Attention: Dennis McCarthy and Diane Guzik Holmes, Trustees
Facsimile: (516) 287-4473
With a copy to:
c/o NAI Technologies, Inc.
282 New York Avenue
Huntington, NY 11743
Attention: Robert A. Carlson
Facsimile: (516) 367-1125
(b) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
(c) This Agreement constitutes the entire agreement relating to the
subject matter covered herein, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
(d) NEITHER THIS AGREEMENT NOR ANY OF THE RIGHTS, INTERESTS OR
OBLIGATIONS UNDER THIS AGREEMENT SHALL BE ASSIGNED, IN WHOLE OR IN PART, BY
OPERATION OF LAW OR OTHERWISE, BY THE SHAREHOLDER WITHOUT THE PRIOR WRITTEN
CONSENT OF ACQUIROR.
(e) The construction and performance of this Agreement will be governed
by the laws of the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
(f) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated and shall be
enforced to the fullest extent permitted by law.
(g) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and signed by
such party.
(h) This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or
5
<PAGE>
<PAGE>
more counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
6
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SHAREHOLDER
Charles S. Holmes 1997 Trust
By: /s/ Dennis McCarthy
_________________________
Name: Dennis McCarthy
Title: Trustee
DRS TECHNOLOGIES, INC.
By: /s/ Nina L. Dunn
_________________________
Name: Nina L. Dunn
Title: Exec V.P. Secretary
7
<PAGE>
<PAGE>
SCHEDULE A
Shareholder: Charles S. Holmes 1997 Trust
Dennis McCarthy and Diane Guzik Holmes, as Trustees
Shares: 219,000 shares of common stock
Warrants: 157,000 warrants with an exercise price of $2.50 per share
expiring February 15, 2002
Convertible Notes: 0
8
<PAGE>
<PAGE>
Exhibit 3
FOR IMMEDIATE RELEASE
NAI TECHNOLOGIES, INC. ANNOUNCES SIGNING OF MERGER
AGREEMENT
WITH DRS TECHNOLOGIES, INC.
Huntington, NY, August 26, 1998 - NAI Technologies, Inc.
(NATL-NASDAQ), today announced that it has entered into a definitive merger
agreement with DRS Technologies, Inc. (ASE:DRS) for NAI to merger with a
subsidiary of DRS. Upon completion of the merger, NAI will become a wholly-owned
subsidiary of DRS. The Board of Directors for both NAI and DRS have unanimously
approved the merger.
Under the terms of the Merger Agreement, NAI shareholders will
receive 0.23 a share of DRS common stock for each outstanding share of NAI
common stock held, subject to adjustment if the average daily closing stock
price of DRS common stock is less than $12 over a 60-trading day period ending
two days prior to the closing date. In such event, NAI shareholders will receive
0.25 shares of DRS common stock for each share of NAI common stock. The Merger
is expected to be completed in the fourth quarter of 1998.
The closing is subject to certain conditions including,
regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, an effective registration statement filed with the Securities and Exchange
Commission, approval by the respective shareholders of NAI and DRS and certain
other conditions. The Merger Agreement provides for the payment of a termination
fee by NAI in the amount of $1.5 million in the event that NAI enters into a
definitive agreement with a third party to acquire NAI.
Robert Carlson, president and chief executive officer of NAI
Technologies, said "We look forward to joining an organization of the quality,
strength and longevity of DRS. This combination is expected to provide NAI with
increased financial stability and new global market opportunities. The core
business thrusts of the two companies are highly complementary."
Mark S. Newman, chairman, president and chief executive officer
of DRS Technologies stated: "A diversified international electronics Company,
NAI's business strongly complements DRS's defense electronics products and
systems integration technologies. The acquisition is consistent with our goal to
expand DRS's market share in ruggedized computers and peripheral equipment for
military applications.
<PAGE>
<PAGE>
DRS Technologies is a diversified, high-technology company
serving government and commercial niche markets worldwide. DRS develops and
manufacturers a variety of leading edge systems and components used for the
processing, display and storage of data. DRS provides its customers with a broad
range of products, including electronic sensor, electronic imaging and
electro-optical systems, and offers a full compliment of technical support
services. DRS's defense electronics products serve all branches of the armed
forces. Its commercial and industrial products are used by the airline, banking,
computer disk drive, security, transportation, retail sales and broadcast
industries.
NAI Technologies, Inc. is a diversified international electronics
company with strengths in both advanced computer system design and
telecommunications. It is a leading provider of rugged computers, peripherals
and integrated systems for military government and commercial applications.
This press release may contain forward-looking statements relating to future
revenues and operating information and their impact on future results. Actual
results could differ materially from those projected in the forward looking
statements as a result of risk factors such as market conditions, product life
cycles, customer delays in purchasing products, technology shifts, potential
difficulties, in introducing new products, competition, price sensitivity and
the uncertainty of continuing market acceptance of each company's products by
distributors, retailers and consumers and other risks or uncertainties detailed
in such company's Securities and Exchange Commission filings.
# # #
-2-
