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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 8, 1998
NAI Technologies, Inc.
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(Exact name of registrant as specified in its charter)
0-3704
(Commission File Number)
New York 11-1798773
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
282 New York Avenue
Huntington, New York 11743
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (516) 271-5685
(Former name or former address, if changed since last report)
Page 1 of 11 Pages
Exhibit Index on Page 4
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Item 5. Other Events
On April 8, 1998, NAI Technologies, Inc. announced that it has signed a
Letter of Intent with DRS Technologies, Inc. for NAI to merge with DRS. NAI
shareholders will receive one quarter of a share of DRS common stock for each
share of NAI common stock held. NAI's 12% Convertible Subordinated Promissory
Notes and Warrants to purchase NAI common stock will be convertible into or
exercisable for DRS common stock at the same one quarter to one exchange ratio.
The closing is subject to negotiation of a definitive merger agreement,
completion of due diligence, approval by the respective shareholders and certain
other conditions. The Letter of Intent provides for the payment of a termination
fee by NAI in the amount of $1.5 million in the event that NAI accepts an offer
from a third party to acquire NAI. Each company intends to send a joint proxy
statement to its shareholders and to hold a special meeting for approval of the
transaction. The transaction is anticipated to close during the third quarter of
1998.
The foregoing description of the proposed transaction is further
described in the Press Release of the Company, issued on April 8, 1998, and the
Letter of Intent, dated April 8, 1998, between the Company and DRS Technologies,
Inc., and reference is made to a copy of such documents which are attached
hereto as Exhibit 1 and Exhibit 2, respectively, and each such document is
incorporated herein by reference for all of its terms and conditions.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NAI TECHNOLOGIES, INC.
By: /s/ Richard A. Schneider
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Name: Richard A. Schneider
Title: Executive Vice President
and Chief Financial Officer
Date: April 15, 1998
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EXHIBIT INDEX
Exhibit No. Description
1. Press Release of the Company, dated April 8, 1998.
2. Letter of Intent, dated April 7, 1998, between DRS Technologies,
Inc. and NAI Technologies, Inc.
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Exhibit 1
FOR IMMEDIATE RELEASE
NAI TECHNOLOGIES, INC. ANNOUNCES LETTER OF INTENT TO MERGE
WITH DRS TECHNOLOGIES, INC.
Huntington, New York, - April 8, 1998 - NAI Technologies, Inc. (NASDAQ-
NATL) today announced that it has signed a Letter of Intent with DRS
Technologies, Inc. (AMEX: DRS) for NAI to merge with and into DRS.
NAI shareholders will receive one quarter of a share of DRS common stock
for each share of NAI common stock held. NAI's 12% Convertible Subordinated
Promissory Notes and Warrants to purchase NAI common stock will be convertible
into or exercisable for DRS common stock at the same one quarter to one exchange
ratio.
The closing is subject to negotiation of a definitive merger agreement,
completion of due diligence, approval by the respective shareholders and certain
other conditions. The Letter of Intent provides for the payment of a termination
fee by NAI in the amount of $1.5 million in the event that NAI accepts an offer
from a third party to acquire NAI.
Each company intends to send a joint proxy statement to its shareholders
and to hold a special meeting for approval of the transaction. The transaction
is anticipated to close during the third quarter of 1998.
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: "NAI's business complements DRS's core defense products
and systems integration technology. The acquisition is consistent with our
long-term growth strategy to expand DRS's market share in these areas. The
addition of this company will create a $250 million, broadly based enterprise."
DRS Technologies is a diversified, high-technology company serving
government and commercial niche markets worldwide. DRS develops and manufactures
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 complement of technical support services. DRS's
defense electronics products serve all branches of the armed forces. Its
commercial and
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industrial products are used by the airline, banking, computer disk drive,
security, transportation, retail sales and broadcast industries.
NAI Technologies 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. In addition, NAI supplies
transmission equipment for analog, digital and fiber optic communications and
data interchange networks. NAI's customer base includes commercial markets
requiring mobile computer and communications systems, U.S. and foreign armed
services, intelligence agencies, the regional Bell operating companies and major
worldwide independent telephone companies.
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.
# # #
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Exhibit 2
[DRS TECHNOLOGIES, INC. LETTERHEAD]
CONFIDENTIAL
NONBINDING LETTER OF INTENT
April 3, 1998
Board of Directors
NAI Technologies, Inc.
282 New York Avenue
Huntington, NY 11743
Attn: Robert A. Carlson, Chairman
Re: Merger of NAI with and into DRS
Gentlemen:
DRS Technologies, Inc. ("DRS") and NAI Technologies, Inc. ("NAI")
have been discussing a possible merger (the "Merger") of NAI with and into DRS
or a newly formed subsidiary of DRS. DRS and NAI believe that a Merger could be
mutually beneficial to both of our companies and to our respective stockholders.
The purpose of this nonbinding letter of intent is to articulate our intent to
merger, subject to the terms and conditions outlined in this letter and to be
more fully set forth in a definitive agreement between DRS and NAI (the
"Definitive Agreement").
1. Structure. We propose that NAI would be merged with and into
DRS or a newly formed subsidiary of DRS, with DRS as the surviving company in
the Merger. It is intended that the Merger qualify as a tax-free transaction
with stockholders of NAI receiving newly issued shares of common stock of DRS on
the basis, subject to due diligence, of .25 shares of DRS common stock for each
share of NAI's 9,155,427 shares of common stock (the "Exchange Ratio"). The
Exchange Ratio would also apply to the shares issuable upon exercise of NAI's
4,122,700 $2.50 Warrants, to those issuable upon exercise of NAI's 300,000 $3.00
Warrants and upon conversion, to NAI's 12% Convertible Subordinated Promissory
Notes; it is anticipated that these securities would retain their present terms
but for their conversion into DRS common stock equivalents. Similarly, vested
NAI employee stock options would convert into equivalent DRS options. It is the
intention of the parties that the issuance of DRS securities in the Merger will
be registered with the Securities and Exchange Commission, which registration
will include DRS common
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stock issuable upon conversion or exercise of the convertible notes, warrants
and options referred to herein.
2. Governance. It is the current intention of DRS and NAI that
the Board of Directors of DRS would include one person to be mutually selected
from the NAI Board of Directors who will serve as an independent director of the
surviving entity.
3. Definitive Agreement. DRS and NAI are each prepared to
commence negotiating in good faith a Definitive Agreement, and to enter into a
Definitive Agreement, provided that (i) each of DRS and NAI is satisfied with
the result of the due diligence examination and inspection to be conducted by it
and (ii) the board of directors of each of DRS and NAI approves the Definitive
Agreement. Prior to entering into the Definitive Agreement each of DRS and NAI
shall have received appropriate opinions from their respective financial
advisors as to the fairness of the transaction. The Definitive Agreement will
contain representations and warranties, covenants, indemnities, conditions and
other provisions which are normal and typical to merger transactions of the type
contemplated hereby and which shall be satisfactory to each of the parties and
its respective board of directors. Conditions to the obligations of the parties
to consummate the Merger shall include, among others, (a) receipt of all
necessary stockholder and other approvals and consents on terms and conditions
satisfactory to DRS and NAI, (b) there will have been no material adverse effect
on the financial condition, business, results of operations, prospects and/or
assets of NAI or any of its subsidiaries, nor would such a material adverse
effect be reasonably likely, and (c) the agreement of the director appointed
pursuant to paragraph 2 above and of Charles Holmes and of (except as otherwise
agreed by the parties) other stockholders affiliated or associated with Mr.
Holmes to refrain from selling or otherwise transferring any DRS common stock
owned by them for a period of 18 months following the effective date of the
Merger. It is the intention of the parties hereto that the Merger be consummated
before August 15, 1998.
4. Interim Operations. During the period from the execution of
this letter until earlier of (i) the Merger or (ii) the termination of this
letter or the Definitive Agreement, each of NAI and its subsidiaries (a) will
conduct their respective businesses only in the ordinary course, consistent with
prior practices, and in a manner that will expedite the consummation of the
transactions contemplated hereby and (b) will not materially change any of their
respective accounting methods or policies, without in each case the prior
written consent of DRS, which consent will not be unreasonably withheld. NAI
will advise DRS promptly of any actual or threatened claim, suit, action or
other court or regulatory proceeding regarding the transactions contemplated
hereby.
5. Exclusivity. During the period from the date hereof to the
earlier of (i) the consummation of the Merger or (ii) the termination of this
letter, neither NAI nor any of its affiliates will, directly or indirectly,
through any directors, officers, employees, agents, representatives or
otherwise, solicit, initiate, facilitate or encourage (including by way of
furnishing or disclosing non-public information) any inquiries or the making of
any proposal with respect to any merger, consolidation or
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other business combination involving NAI or its subsidiaries or the acquisition
of all or any significant assets or capital stock of NAI and its subsidiaries
taken as a whole (an "Acquisition Transaction") or negotiate, explore or
otherwise engage in discussions with any person (other than DRS and its
representatives) with respect to any Acquisition Transaction or enter into any
agreement, arrangement or understanding requiring it to abandon, terminate or
fail to consummate the Merger or any other transaction contemplated by this
letter; provided that NAI may, in response to an unsolicited written proposal
from a third party, furnish information to, and negotiate, explore or otherwise
engage in discussions with such third party, and enter into any such agreement,
arrangement or understanding, in each case only if the Board of Directors of NAI
determines in good faith, based upon the written opinion of outside counsel to
NAI, that failing to take such action would result in breach of the fiduciary
duties of the Board of Directors in connection with seeking an Acquisition
Transaction that is more favorable to the stockholders of NAI than the Merger
contemplated by this letter. NAI shall immediately advise DRS in writing of the
receipt of any inquiries or proposals related to an Acquisition Transaction.
6. Confidentiality. DRS and NAI have each entered into a
confidentiality agreement dated November 28, 1997 (the "Confidentiality
Agreement"), which agreement is incorporated herein by reference as if fully set
forth herein.
7. Publicity. Neither NAI nor DRS will issue or otherwise make
any announcements or other disclosures regarding the proposed transaction
without first consulting with each other.
8. Cooperation. Each of DRS and NAI agrees to cooperate fully
with the other and use reasonable efforts, in good faith, to carry out the
purpose and intent of this letter, including the making of all necessary filings
and obtaining all board, regulatory, shareholder and other approvals, consents
and authorizations which may be necessary or desirable in connection with the
transactions contemplated hereby, including (but not limited to) filings of
Notification and Report Forms under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended. NAI further agrees to cooperate with DRS in identifying
any conditions or limitations to which NAI is subject (including, without
limitation, non-compete provisions) that may result in restrictions on the
ability of DRS to conduct its businesses or own its assets after the Merger in
substantially the same manner as DRS currently conducts its businesses and owns
its assets.
9. Due Diligence. Upon DRS's receipt of NAI's confirmation and
acceptance of this letter, each party to this letter agreement (an "Inspecting
Party") will commence a due diligence examination and inspection of the other
party and its subsidiaries, including (but not limited to) an examination and
inspection of the books, records, documents, agreements, contracts, operations,
assets, liabilities, financial statements, accounting methods, projections and
any other materials or information reasonably requested by the Inspecting Party.
In this connection each party will afford the other party and its
representatives and agents, upon receipt of reasonable notice, full and complete
access to such materials and information and to
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all of its personnel. Each party will disclose to the other party all materials
and other information that may be material to the Inspecting Party in connection
with its due diligence examination and inspection, whether or not requested by
the Inspecting Party. Assuming prompt acceptance of this letter, DRS and NAI
intend to complete due diligence on or prior to April 30, 1998.
10. Termination and Termination Fee. It is the intention of DRS
and NAI to execute a Definitive Agreement on or prior to May 8, 1998 (or on such
other date as DRS and NAI may mutually agree), subject to the terms and
conditions set forth in this letter. This letter, and all efforts to bring about
a Merger between DRS and NAI, may be terminated (i) by either DRS or NAI if a
Definitive Agreement is not executed on or prior to May 22, 1998 (or such other
date as may be mutually acceptable to DRS and NAI), (ii) by written consent of
DRS and NAI or (iii) by DRS if NAI shall have taken any action to further an
Acquisition Transaction as defined in paragraph 5 hereof. In the event of the
termination of this letter, neither DRS nor NAI will have any further obligation
to the other party hereto, except for those obligations specified or referred to
in paragraphs 7 press release and 12 expenses of this letter, this paragraph 10
termination and the Confidentiality Agreement, each of which will survive the
termination of this letter.
DRS acknowledges that the Board of Directors of NAI has a
fiduciary obligation to its shareholders to consider and possibly accept an
unsolicited offer, if any, received by NAI from a third party for an Acquisition
Transaction. In consideration of DRS's willingness to incur the expenses and
devote the time and resources necessary to undertake its due diligence
investigation and to execute a Definitive Agreement, notwithstanding such
possibility, in the event that NAI shall have taken any action, directly or
indirectly, to further an Acquisition Transaction as contemplated by paragraph 5
hereof, regardless of whether any such Acquisition Transaction is more
favorable than the proposed Merger provided for herein the Definitive Agreement
will provide that (a) NAI will promptly pay to DRS cash in the amount of its
out-of-pocket expenses (including without limitation fees and expenses of
outside professionals) up to a maximum of $300,000. If, at any time prior to six
months after the termination of this Letter of Intent or a Definitive Agreement,
NAI enters into a definitive agreement relating to an Acquisition Transaction
(regardless of whether any such Acquisition Transaction is consummated) with any
third party which was in contact, directly or indirectly, with NAI during the
period that this letter of intent was in effect, regardless of whether any such
Acquisition Transaction is more favorable than the proposed Merger provided,
however, that if (i) DRS informs NAI that as a result of its due diligence
investigation DRS no longer desires to pursue the Merger, (ii) regulatory or
shareholder approval of the Acquisition Transaction is not obtained prior to
August 15, 1998, unless such failure to obtain such approval was due to the
failure by NAI to use best efforts in obtaining such approval, or (iii) if it is
established that the Definitive Agreement was terminated because of a breach by
DRS of its obligations thereunder, DRS shall not be entitled to the termination
fee and expense reimbursement provided for herein if NAI subsequently enters
into an Acquisition Transaction.
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11. Binding Effect. DRS and NAI agree that this letter merely
constitutes a statement of their present mutual intentions with respect to the
proposed Merger, does not contain all matters upon which agreement must be
reached in order for the consummation of the Merger to take place and is not
intended to create a legally binding and enforceable obligation to consummate
the Merger. A binding obligation will exist only upon the execution of a
Definitive Agreement, subject to the terms and conditions expressed therein. The
foregoing notwithstanding, paragraphs 5, 10, 11, 12 and 14 hereof and the
Confidentiality Agreement are intended to constitute binding agreements between
DRS and NAI, enforceable in accordance with and subject to the terms and
conditions thereof. No person is intended to be third party beneficiary of this
letter, and no person other than DRS and NAI is entitled to rely on this letter
for any purpose.
12. Expenses. Subject to the provisions of paragraph 10 above,
DRS and NAI will each be responsible for all expenses incurred by it in
connection with the transactions contemplated hereby.
13. Control of Business Operations. It is understood between DRS
and NAI that DRS and NAI each retains full control of and responsibility and
liability for its business operations prior to consummation of the Merger.
14. Governing Law. This letter shall be governed by and construed
and enforced in accordance with Delaware law.
15. Counterparts. This letter may be executed in counterparts,
each of which will be deemed an original, but all of which taken together will
constitute one and the same letter.
If you are in agreement with the provisions of this letter,
kindly confirm your agreement by signing the enclosed counterpart of this letter
and returning it to me on or prior to April 10, 1998, after which the proposal
expressed herein will no longer be effective.
Very truly yours, Accepted and Agreed to:
DRS TECHNOLOGIES, INC. NAI TECHNOLOGIES, INC.
By:/s/ Mark S. Newman By:/s/ Robert A. Carlson
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Mark S. Newman Robert A. Carlson
Chairman of the Board, President and Chairman of the Board and
Chief Executive Officer Chief Executive Officer
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