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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-1
Tender Offer Statement Pursuant to Section
14(d)(1) of the Securities Exchange Act of 1934
DECRANE AIRCRAFT HOLDINGS, INC.
(Name of Subject Company)
DECRANE ACQUISITION CO.
(Bidder)
COMMON STOCK
(Title of Class of Securities)
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243662103
(Cusip Number)
Thompson Dean
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, NY 10172
Telephone: (212) 892-3000
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications on Behalf of Bidder)
Copies to:
George R. Bason, Jr.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4000
CALCULATION OF FILING FEE
Transaction valuation* Amount of filing fee
---------------------- --------------------
$186,553,000 $37,310.60
* Value derived by multiplying 8,111,000 (number of shares of common stock of
the subject company outstanding on a fully diluted basis) by $23.00 (the
purchase price per share offered by the bidder).
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: Not applicable.
Form or Registration No.: Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
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CUSIP No. 243662103
1 NAMES OF REPORTING PERSONS DeCrane Acquisition Co.
S.S. or I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS BK; AF; WC; OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON None
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES [ ]
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A
10 TYPE OF REPORTING PERSON CO
Item l. Security and Subject Company
(a) The name of the subject company is DeCrane Aircraft Holdings,
Inc., a Delaware corporation (the "Company"), and the address of its principal
executive offices is 2361 Rosecrans Avenue, Suite 180, El Segundo, CA 90245.
(b) This Statement relates to the offer by DeCrane Acquisition
Co., a Delaware corporation ("Bidder"), to purchase all outstanding shares of
Common Stock, $0.01 par value (the "Shares"), of the Company at $23.00 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase (the "Offer to Purchase") and in the
related Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(l) and (a)(2) (which are herein collectively referred to as the "Offer").
The information set forth in the introduction to the Offer to Purchase (the
"Introduction") is incorporated herein by reference.
(c) The information set forth in Section 6 "Price Range of
Shares; Dividends" of the Offer to Purchase is incorporated herein by
reference.
Item 2. Identity and Background.
(a)-(d) This Statement is filed by Bidder. The information
set forth in the Introduction, Section 8 "Certain Information Concerning the
Purchaser, Finance, Parent, DLJMB and the DLJMB Funds" and Schedules A-O of the
Offer to Purchase is incorporated herein by reference.
(e)-(f) Neither Bidder, nor, to the best knowledge of Bidder,
any of the Reporting Entities (as defined in the Offer to Purchase) nor any of
the persons listed in Schedules A-O of the Offer to Purchase, has during the
last five years (i) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal
or state securities laws or finding any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the
Subject Company.
(a)-(b) The information set forth in the Introduction and
Section l0 "Background of the Offer; Past Contacts, Transactions or
Negotiations with the Company" of the Offer to Purchase is incorporated herein
by reference.
Item 4. Source and Amount of Funds or Other Consideration.
(a)-(b) The information set forth in Section 9 "Source and
Amount of Funds" of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
Item 5. Purpose of the Tender Offer and Plans or Proposals of
the Bidder.
(a)-(e) The information set forth in the Introduction and
Section 11 "Purpose of the Offer; Plans for the Company; Merger Agreement and
Other Agreements" of the Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in Section 12 "Effect of the
Offer on the Market for the Shares; Registration Under the Exchange Act" of
the Offer to Purchase is incorporated herein by reference.
Item 6. Interest in Securities of the Subject Company.
(a)-(b) The information set forth in the Introduction, Section
10 "Background of the Offer; Past Contacts, Transactions or Negotiations with
the Company" and Schedules A-O of the Offer to Purchase is incorporated herein
by reference.
Item 7. Contracts, Arrangements, Understandings or
Relationships with Respect to the Subject Company's Securities.
The information set forth in the Introduction, Section 8
"Certain Information Concerning the Purchaser, Finance, Parent, DLJMB and the
DLJMB Funds", Section 9 "Source and Amount of Funds", and Section 10
"Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company" of the Offer to Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in Section 17 "Fees and Expenses" of
the Offer to Purchase is incorporated herein by reference.
Item 9. Financial Statements of Certain Bidders.
Not applicable.
Item 10. Additional Information.
(a) None.
(b)-(c) The information set forth in Section 16 "Certain Legal
Matters; Regulatory Approvals" of the Offer to Purchase is incorporated herein
by reference.
(d) The information set forth in Section 9 "Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference.
(e) The information set forth in the Introduction and Section 16
"Certain Legal Matters; Regulatory Approvals" of the Offer to Purchase is
incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the
Letter of Transmittal is incorporated herein by reference in its entirety.
Item 11. Material to be Filed as Exhibits.
(a)(l) Offer to Purchase dated July 22, 1998.
(a)(2) Letter of Transmittal (including Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9).
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Text of press release issued by Bidder and the Company dated
July 17, 1998.
(a)(7) Form of summary advertisement dated July 22, 1998.
(b) Commitment letter from DLJ Bridge Finance, Inc. dated July
16, 1998 referred to in Section 9 "Source and Amount of Funds" of the
Offer to Purchase.
(c)(1) Commitment letter from DLJ Capital Funding, Inc. dated July
16, 1998 referred to in Section 9 "Source and Amount of Funds" of the
Offer to Purchase.
(c)(2) Agreement and Plan of Merger between DeCrane Aircraft
Holdings, Inc. and DeCrane Acquisition Co. dated as of July 16, 1998.
(c)(3) Confidentiality Agreement dated June 15, 1998 between
DeCrane Aircraft Holdings, Inc. and DLJ Merchant Banking II, Inc.
SIGNATURE
After due 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.
Dated: July 22, 1998
DECRANE ACQUISITION CO.
By: /s/ Timothy J. White
----------------------------
Name: Timothy J. White
Title: Vice President
<TABLE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C> <C>
(a)(l) Offer to Purchase dated July 22, 1998.
(a)(2) Letter of Transmittal (including Guidelines for
Certification of Taxpayer Identification Number on
Substitute Form W-9).
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Text of press release issued by Bidder and the Company dated
July 17, 1998.
(a)(7) Form of summary advertisement dated July 22, 1998.
(b) Commitment letter from DLJ Capital Funding, Inc. dated July
16, 1998 referred to in Section 9 "Source and Amount of
Funds" of the Offer to Purchase.
(c)(1) Commitment letter from DLJ Bridge Finance, Inc. dated July
16, 1998 referred to in Section 9 "Source and Amount of
Funds" of the Offer to Purchase.
(c)(2) Agreement and Plan of Merger between DeCrane Aircraft
Holdings, Inc. and DeCrane Acquisition Co. dated as of July
16, 1998.
(c)(3) Confidentiality Agreement dated June 15, 1998 between
DeCrane Aircraft Holdings, Inc. and DLJ Merchant Banking II,
Inc.
</TABLE>
Exhibit (a) (1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
DeCrane Aircraft Holdings, Inc.
at
$23.00 Net Per Share
by
DeCrane Acquisition Co.
a company formed by
DLJ MERCHANT BANKING
PARTNERS II, L.P.
and Affiliated Funds
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, AUGUST 25, 1998, UNLESS THE OFFER IS EXTENDED.
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THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD OF
DIRECTORS") HAS UNANIMOUSLY DETERMINED THAT EACH OF THE OFFER AND THE MERGER
DESCRIBED HEREIN IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS, HAS APPROVED THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE
COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO
THE OFFER.
--------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE
BEING VALIDLY TENDERED AND NOT WITHDRAWN BY THE EXPIRATION DATE A NUMBER OF
SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE "SHARES") OF DECRANE
AIRCRAFT HOLDINGS, INC. (THE "COMPANY") WHICH, TOGETHER WITH THE SHARES THEN
OWNED BY DECRANE ACQUISITION CO. (THE "PURCHASER"), WOULD REPRESENT AT LEAST A
MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED BASIS
AND (2) THERE BEING AVAILABLE TO THE PURCHASER SUFFICIENT FUNDS TO PURCHASE
THE SHARES PURSUANT TO THE OFFER AND TO PAY RELATED FEES AND EXPENSES.
--------------
Warburg Dillon Read LLC ("Warburg Dillon Read"), financial
advisor to the Company, has delivered to the Board of Directors its written
opinion to the effect that, as of the date of the Merger Agreement, the $23.00
in cash to be received by the holders of Shares in the Offer and the Merger
described below is fair to such holders from a financial point of view. The
full text of the written opinion of Warburg Dillon Read containing the
assumptions made, the matters considered and the scope of the review
undertaken in rendering such opinion as well as the limitations of such
opinion is included with the Company's solicitation/recommendation statement on
Schedule 14D-9, which is being mailed to stockholders concurrently herewith.
Stockholders are urged to read the full text of such opinion in conjunction
with this Offer.
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Any stockholder desiring to tender Shares should either (1)
complete and sign the Letter of Transmittal (or facsimile thereof) in
accordance with the instructions in the Letter of Transmittal and deliver it
with the certificate(s) representing tendered Shares and all other required
documents to the Depositary or tender such Shares pursuant to the procedures
for book-entry transfer set forth in Section 3 or (2) request his or her
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for him or her. A stockholder having Shares registered in the name
of a broker, dealer, commercial bank, trust company or other nominee must
contact such person if he or she desires to tender such Shares.
Any stockholder who desires to tender Shares and cannot deliver
such Shares and all other required documents to the Depositary by the
expiration of the Offer or who cannot comply with the procedures for
book-entry transfer on a timely basis must tender such Shares pursuant to the
guaranteed delivery procedure set forth in Section 3.
Questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover of this Offer to Purchase.
Additional copies of this Offer to Purchase, the Letter of Transmittal and the
Notice of Guaranteed Delivery may also be obtained from the Information Agent,
brokers, dealers, commercial banks or trust companies.
--------------
The Dealer Manager for the Offer is:
Donaldson, Lufkin & Jenrette
July 22, 1998
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TABLE OF CONTENTS
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Page
----
1. Terms of the Offer; Expiration Date......................................2
2. Acceptance for Payment and Payment.......................................2
3. Procedure for Tendering Shares...........................................3
4. Withdrawal Rights........................................................5
5. Certain Tax Considerations...............................................5
6. Price Range of Shares; Dividends.........................................6
7. Certain Information Concerning the Company...............................6
8. Certain Information Concerning the Purchaser,
Finance, Parent, DLJMB and the DLJMB Funds..............................10
9. Source and Amount of Funds..............................................13
10. Background of the Offer; Past Contacts,
Transactions or Negotiations with the Company...........................15
11. Purpose of the Offer, Plans for the
Company; Merger and Other Agreements....................................16
12. Effect of the Offer on the Market for the Shares;
Registration under the Exchange Act.23
13. Distributions...........................................................24
14. Extension of Tender Period; Termination;
Amendment...............................................................25
15. Certain Conditions of the Offer.........................................26
16. Certain Legal Matters; Regulatory Approvals.............................27
17. Fees and Expenses.......................................................28
18. Miscellaneous...........................................................29
Schedule A Directors and Executive Officers of the Purchaser, Finance
and Parent
Schedules B - O Directors and Executive Officers of the Reporting Entities
INTRODUCTION
To the Holders of Common Stock of
DECRANE AIRCRAFT HOLDINGS, INC.:
DeCrane Acquisition Co., a Delaware corporation (the
"Purchaser") and a wholly-owned, indirect subsidiary of DeCrane Holdings Co.,
a Delaware corporation ("Parent"), a company formed by DLJ Merchant Banking
Partners II, L.P. ("DLJMB") and certain affiliated funds (collectively with
DLJMB and as further described in Section 8 hereof, the "DLJMB Funds"), hereby
offers to purchase all outstanding shares of Common Stock, $0.01 par value (the
"Shares"), of DeCrane Aircraft Holdings, Inc., a Delaware corporation (the
"Company"), at $23.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which together constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
The Purchaser will pay all charges and expenses of Donaldson, Lufkin & Jenrette
Securities Corporation (the "Dealer Manager" or "DLJSC"), BankBoston, N.A.
(the "Depositary") and D.F. King & Co., Inc. (the "Information Agent")
incurred in connection with the Offer. See Section 17.
The Offer is conditioned upon, among other things, (1) there
being validly tendered and not withdrawn prior to the Expiration Date (as
hereinafter defined) a number of Shares which, together with the Shares then
owned by the Purchaser, would represent at least a majority of the total
number of outstanding Shares on a fully diluted basis (the "Minimum Tender
Condition") and (2) there being available to the Purchaser sufficient funds to
purchase the Shares pursuant to the Offer and to pay related fees and expenses
(the "Financing Condition").
The total amount of funds required by the Purchaser to purchase
all of the Shares pursuant to the Offer, to refinance existing debt of the
Company and to pay related fees and expenses is estimated to be approximately
$289.6 million. It is anticipated that the purchase of the Shares will be
financed with (i) borrowings of approximately $90.6 million by DeCrane Finance
Co. ("Finance"), a wholly-owned subsidiary of Parent, under certain bank
facilities; (ii) the issuance by Parent and Finance, for cash, of not more
than $134.0 million in equity and debt securities; and (iii) the issuance, for
cash proceeds of not less than $65.0 million, of common stock of Parent to be
purchased by the DLJMB Funds (the "Equity Purchase" and, collectively, the
"Financing"). See Section 9.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT EACH OF
THE OFFER AND THE MERGER DESCRIBED HEREIN IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE OFFER AND THE
MERGER, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of
Merger dated as of July 16, 1998 (the "Merger Agreement") between the Company
and the Purchaser. The Merger Agreement provides, among other things, that as
soon as practicable after the consummation of the Offer, the Purchaser will be
merged with and into the Company (the "Merger"), with the Company continuing
as the surviving corporation (the "Surviving Corporation"). Pursuant to the
Merger, each outstanding Share (other than Shares held by Parent, the
Purchaser or any other subsidiary of Parent (collectively, the "Purchaser
Companies") or Shares held by stockholders exercising appraisal rights) will
be converted into a right to receive $23.00 in cash, or any higher price that
may be paid per Share in the Offer, without interest. See Section 11.
According to the Company, as of July 20, 1998, there were
outstanding 7,524,740 Shares and not more than 586,260 Shares subject to
issuance pursuant to the Company's stock option and incentive plans. As such,
the Purchaser believes that the Minimum Tender Condition would be satisfied if
more than approximately 4,055,500 Shares are validly tendered pursuant to the
Offer and not withdrawn.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL
CONTAIN IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY
DECISION IS MADE WITH RESPECT TO THE OFFER.
1. Terms of the Offer; Expiration Date.
Upon the terms and subject to the conditions set forth in the
Offer, the Purchaser will accept for payment and pay for all Shares that are
validly tendered by the Expiration Date and not withdrawn as provided in
Section 4. The term "Expiration Date" shall mean 12:00 Midnight, New York City
time, on Tuesday, August 25, 1998, unless the Purchaser shall have extended
the period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by the Purchaser, shall expire.
The Offer is subject to certain conditions set forth in Section
15, including the satisfaction of the Minimum Tender Condition, the
satisfaction of the Financing Condition, and the expiration or termination of
the waiting period applicable to the Purchaser's acquisition of Shares
pursuant to the Offer and the Equity Purchase under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"). If any such
condition is not satisfied, the Purchaser may (i) terminate the Offer and
return all tendered Shares to tendering stockholders, (ii) extend the Offer,
subject to the Company's right to terminate the Merger Agreement if the Offer
has not been consummated within 60 days of the commencement of the Offer and
subject to withdrawal rights as set forth in Section 4, retain all such Shares
until the expiration of the Offer as so extended, (iii) waive such condition
and, subject to any requirement to extend the period of time during which the
Offer is open, purchase all Shares validly tendered by the Expiration Date and
not withdrawn or (iv) delay acceptance for payment or payment for Shares,
subject to applicable law, until satisfaction or waiver of the conditions to
the Offer. For a description of the Purchaser's right to extend the period of
time during which the Offer is open and to amend, delay or terminate the
Offer, see Sections 14 and 15.
The Company has provided the Purchaser with the Company's
stockholder list and security position listings for the purpose of
disseminating the Offer to holders of Shares. This Offer to Purchase and the
related Letter of Transmittal will be mailed to record holders of Shares and
will be furnished to brokers, banks and similar persons whose names, or the
names of whose nominees, appear on the stockholder list or, if applicable, who
are listed as participants in a clearing agency's security position listing
for subsequent transmittal to beneficial owners of Shares.
2. Acceptance for Payment and Payment.
Upon the terms and subject to the conditions of the Offer, the
Purchaser will accept for payment and pay for all Shares validly tendered by
the Expiration Date and not withdrawn as soon as practicable after the later
of the Expiration Date and the satisfaction or waiver of the conditions set
forth in Section 15. In addition, the Purchaser reserves the right, in its
sole discretion and subject to applicable law, to delay the acceptance for
payment or payment for Shares in order to comply in whole or in part with any
applicable law. For a description of the Purchaser's right to terminate the
Offer and not accept for payment or pay for Shares or to delay acceptance for
payment or payment for Shares, see Section 14.
For purposes of the Offer, the Purchaser shall be deemed to
have accepted for payment tendered Shares when, as and if the Purchaser gives
oral or written notice to the Depositary of its acceptance of the tenders of
such Shares. Payment for Shares accepted for payment pursuant to the Offer
will be made by deposit of the purchase price with the Depositary, which will
act as agent for the tendering stockholders for the purpose of receiving
payments from the Purchaser and transmitting such payments to tendering
stockholders. In all cases, payment for Shares accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of
certificates for such Shares (or of a confirmation of a book-entry transfer of
such Shares into the Depositary's account at the Book-Entry Transfer Facility
(as defined in Section 3)), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other required documents. For a
description of the procedure for tendering Shares pursuant to the Offer, see
Section 3. Accordingly, payment may be made to tendering stockholders at
different times if delivery of the Shares and other required documents occur
at different times. Under no circumstances will interest be paid by the
Purchaser on the consideration paid for Shares pursuant to the Offer,
regardless of any delay in making such payment.
If the Purchaser increases the consideration to be paid for
Shares pursuant to the Offer, the Purchaser will pay such increased
consideration for all Shares purchased pursuant to the Offer.
The Purchaser reserves the right to transfer or assign, in
whole or from time to time in part, to one or more of its affiliates the right
to purchase Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve the Purchaser of its obligations under the Offer
or prejudice the rights of tendering stockholders to receive payment for
Shares validly tendered and accepted for payment.
If any tendered Shares are not purchased pursuant to the Offer
for any reason, or if certificates are submitted for more Shares than are
tendered, certificates for such unpurchased or untendered Shares will be
returned (or, in the case of Shares tendered by book-entry transfer, such
Shares will be credited to an account maintained at the Book-Entry Transfer
Facility), without expense to the tendering stockholder, as promptly as
practicable following the expiration or termination of the Offer.
3. Procedure for Tendering Shares.
To tender Shares pursuant to the Offer, either a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other documents required by the Letter of Transmittal must be received by
the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase and either certificates for the Shares to be tendered must
be received by the Depositary at one of such addresses or such Shares must be
delivered pursuant to the procedures for book-entry transfer described below
(and a confirmation of such delivery received by the Depositary including an
Agent's Message (as defined below) if the tendering stockholder has not
delivered a Letter of Transmittal), in each case by the Expiration Date, or
the guaranteed delivery procedure described below must be complied with. The
term "Agent's Message" means a message, transmitted by the Book-Entry Transfer
Facility to and received by the Depositary and forming a part of a book-entry
confirmation which states that the Book-Entry Transfer Facility has received
an express acknowledgment from the participant in the Book-Entry Transfer
Facility tendering the Shares which are the subject of such book-entry
confirmation that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against such participant.
Book Entry Delivery. The Depositary will establish an account
with respect to the Shares at The Depository Trust Company (referred to as the
"Book-Entry Transfer Facility") for purposes of the Offer within two business
days after the date of this Offer to Purchase, and any financial institution
that is a participant in the system of the Book-Entry Transfer Facility may
make delivery of Shares by causing the Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account in accordance with the
procedures of the Book-Entry Transfer Facility. However, although delivery of
Shares may be effected through book-entry transfer, the Letter of Transmittal
(or facsimile thereof) properly completed and duly executed together with any
required signature guarantees or an Agent's Message and any other required
documents must, in any case, be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase by the
Expiration Date, or the guaranteed delivery procedure described below must be
complied with. Delivery of the Letter of Transmittal and any other required
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Depositary.
Signature Guarantees. Except as otherwise provided below, all
signatures on a Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) which is a member of a recognized Medallion Program approved by The
Securities Transfer Association Inc., including the Securities Transfer Agents
Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the
New York Stock Exchange, Inc. Medallion Signature Program (MSP) (an "Eligible
Institution"). Signatures on a Letter of Transmittal need not be guaranteed
(a) if the Letter of Transmittal is signed by the registered holder of the
Shares tendered therewith and such holder has not completed the box entitled
"Special Payment Instructions" on the Letter of Transmittal or (b) if such
Shares are tendered for the account of an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares
pursuant to the Offer and cannot deliver such Shares and all other required
documents to the Depositary by the Expiration Date, or such stockholder cannot
complete the procedure for delivery by book-entry transfer on a timely basis,
such Shares may nevertheless be tendered if all of the following conditions
are met:
(i) such tender is made by or through an Eligible
Institution;
(ii) a properly completed and duly executed Notice
of Guaranteed Delivery substantially in the form provided by the
Purchaser is received by the Depositary (as provided below) by
the Expiration Date; and
(iii) the certificates for such Shares (or a
confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility),
together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature
guarantee or an Agent's Message and any other documents required
by the Letter of Transmittal, are received by the Depositary
within three Nasdaq Stock Market trading days after the date of
execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by telegram, telex, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice.
The method of delivery of Shares and all other required
documents, including through the Book-Entry Transfer Facility, is at the
option and risk of the tendering stockholder and the delivery will be deemed
made only when actually received by the Depositary. If certificates for
Shares are sent by mail, registered mail with return receipt requested,
properly insured, is recommended. In all cases, sufficient time (in the case
of registered mail, up to ten days) should be allowed to ensure timely
delivery.
Under the federal income tax laws, the Depositary will be
required to withhold 31% of the amount of any payments made to certain
stockholders pursuant to the Offer. In order to avoid such backup
withholding, each tendering stockholder must provide the Depositary with such
stockholder's correct taxpayer identification number and certify that such
stockholder is not subject to such backup withholding by completing the
Substitute Form W-9 included in the Letter of Transmittal. If a stockholder
is a non-resident alien or foreign entity not subject to back-up withholding,
the stockholder must give the Depositary a completed Form W-8 Certificate of
Foreign Status prior to receipt of any payment.
By executing a Letter of Transmittal, a tendering stockholder
irrevocably appoints designees of the Purchaser as such stockholder's proxies
in the manner set forth in the Letter of Transmittal to the full extent of
such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser (and any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after July 22, 1998). All such proxies shall be irrevocable and coupled with
an interest in the tendered Shares. Such appointment is effective only upon
the acceptance for payment of such Shares by the Purchaser.( ) Upon such
acceptance for payment, all prior proxies and consents granted by such
stockholder with respect to such Shares and other securities will, without
further action, be revoked, and no subsequent proxies may be given nor
subsequent written consents executed by such stockholder (and, if given or
executed, will not be deemed to be effective). Such designees of the
Purchaser will be empowered to exercise all voting and other rights of such
stockholder as they, in their sole discretion, may deem proper at any annual,
special or adjourned meeting of the Company's stockholders, by written consent
or otherwise. The Purchaser reserves the right to require that, in order for
Shares to be validly tendered, immediately upon the Purchaser's acceptance for
payment of such Shares, the Purchaser is able to exercise full voting rights
with respect to such Shares and other securities (including voting at any
meeting of stockholders then scheduled or acting by written consent without a
meeting).
The tender of Shares pursuant to any one of the procedures
described above will constitute the tendering stockholder's acceptance of the
Offer, as well as the tendering stockholder's representation and warranty that
(a) such stockholder owns the Shares being tendered within the meaning of Rule
14e-4 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (b) the tender of such Shares complies with Rule 14e-4, and
(c) such stockholder has the full power and authority to tender and assign the
Shares tendered, as specified in the Letter of Transmittal. The Purchaser's
acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between the tendering stockholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
All questions as to the form of documents and the validity,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by the Purchaser, in its sole discretion,
which determination shall be final and binding. The Purchaser reserves the
absolute right to reject any or all tenders of Shares determined by it not to
be in proper form or the acceptance for payment of or payment for which may,
in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also
reserves the absolute right to waive any defect or irregularity in any tender
of Shares. None of the Purchaser, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defect or irregularity in tenders or incur any liability
for failure to give any such notification.
4. Withdrawal Rights.
Tenders of Shares made pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date. Thereafter, such tenders are
irrevocable, except that they may be withdrawn after September 19, 1998 unless
theretofore accepted for payment as provided in this Offer to Purchase. If
the Purchaser extends the period of time during which the Offer is open, is
delayed in accepting for payment or paying for Shares or is unable to accept
for payment or pay for Shares pursuant to the Offer for any reason, then,
without prejudice to the Purchaser's rights under the Offer, the Depositary
may, on behalf of the Purchaser, retain all Shares tendered, and such Shares
may not be withdrawn except as otherwise provided in this Section 4.
To be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person who tendered the Shares to be withdrawn
and the number of Shares to be withdrawn and the name of the registered holder
of Shares, if different from that of the person who tendered such Shares. If
the Shares to be withdrawn have been delivered to the Depositary, a signed
notice of withdrawal with (except in the case of Shares tendered by an
Eligible Institution) signatures guaranteed by an Eligible Institution must be
submitted prior to the release of such Shares. In addition, such notice must
specify, in the case of Shares tendered by delivery of certificates, the name
of the registered holder (if different from that of the tendering stockholder)
and the serial numbers shown on the particular certificates evidencing the
Shares to be withdrawn or, in the case of Shares tendered by book-entry
transfer, the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares. Withdrawals may not be
rescinded, and Shares withdrawn will thereafter be deemed not validly tendered
for purposes of the Offer. However, withdrawn Shares may be retendered by
again following one of the procedures described in Section 3 at any time prior
to the Expiration Date.
All questions as to the form and validity (including time of
receipt) of any notice of withdrawal will be determined by the Purchaser, in
its sole discretion, which determination shall be final and binding. None of
the Purchaser, the Dealer Manager, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defect or
irregularity in any notice of withdrawal or incur any liability for failure to
give any such notification.
5. Certain Tax Considerations.
Sales of Shares by stockholders of the Company pursuant to the
Offer will be taxable transactions for federal income tax purposes and may
also be taxable transactions under applicable state and local and other tax
laws.
In general, a stockholder will recognize gain or loss equal to
the difference between the tax basis of his or her Shares and the amount of
cash received in exchange therefor. Such gain or loss will be capital gain or
loss if the Shares are capital assets in the hands of the stockholder and will
be long-term gain or loss if the holding period for the Shares is more than
one year as of the date of the sale of such Shares.
The foregoing discussion may not apply to stockholders who
acquired their Shares pursuant to the exercise of stock options or other
compensation arrangements with the Company or who are not citizens or
residents of the United States or who are otherwise subject to special tax
treatment under the Internal Revenue Code of 1986, as amended.
The federal income tax discussion set forth above is included
for general information only and is based upon present law. Due to the
individual nature of tax consequences, stockholders are urged to consult their
tax advisors as to the specific tax consequences to them of the Offer,
including the effects of applicable state, local or other tax laws.
6. Price Range of Shares; Dividends.
The Shares trade under the symbol "DAHX" and are quoted on the
Nasdaq National Market System (the "Nasdaq National Market"). The following
table sets forth for the periods indicated the high and low sale prices per
Share as reported on the Nasdaq National Market, as reported in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 (the "Company
10-K") with respect to 1997 and thereafter as reported in published financial
sources. Bid prices represent quotations by dealers, do not reflect mark-ups,
mark-downs or commissions and may not represent actual transactions.
<TABLE>
High Low
---- ---
<S> <C> <C>
1997
Second Quarter *.................. $14 7/8 $ 9 3/4
Third Quarter..................... 19 1/4 14 5/8
Fourth Quarter.................... 21 15 1/4
1998
First Quarter..................... 19 15 9/16
Second Quarter.................... 18 7/8 15 7/8
Third Quarter (through July 21)... 22 43/64 17 1/2
</TABLE>
* from April 16, 1997
On July 16, 1998, the last full day of trading prior to the
announcement of the Offer and the execution of the Merger Agreement, the
reported closing sales price per Share on the Nasdaq National Market was
$17 5/8. On July 21, 1998, the last full day of trading prior to the
commencement of the Offer, the reported closing sales price per Share on
the Nasdaq National Market was $22 5/8.
According to the Company 10-K, the Company has never paid cash
dividends on the Shares.
Stockholders are urged to obtain current market quotations for
the Shares.
7. Certain Information Concerning the Company.
The Company is a Delaware corporation with its principal
executive offices located at 2361 Rosecrans Avenue, Suite 180, El Segundo, CA
90245.
According to the Company 10-K, the Company and its subsidiaries
manufacture avionics components and provide avionics systems integration
services in certain niche markets of the commercial and high-end corporate jet
aircraft industries. The products and services offered by the Company are
utilized primarily in commercial and corporate aircraft to connect, support
and/or integrate various avionics systems, including cabin avionics systems
and flight deck avionic systems. The Company's targeted markets consist of
commercial aircraft and avionics original equipment manufacturers, the
commercial aircraft retrofit market, the commercial aircraft aftermarket and
high-end corporate jet market. The Company also sells products and services
to the military aircraft market.
The Company was formed in 1989 to capitalize on emerging trends
in the aircraft market through acquisitions. Since its formation, the Company
has completed eleven acquisitions of businesses or assets. A summary of these
transactions follows:
Recent Mergers and Acquisitions
<TABLE>
<CAPTION>
Year of
Transaction Target Principal Products and Services(1)
----------- ------ ----------------------------------
<S> <C> <C>
1990 Hollingsead International, Inc. Avionics support structures
1991 Tri-Star Electronics International, Inc. Contacts & connectors
1991 Tri-Star Europe, S.A. Contact blanks
1991 Tri-Star Technologies, Inc. Wire marking equipment
1991 Cory Components, Inc. Connectors & harness assemblies
1996 Aerospace Display Systems, Inc. Dichroic LCD devices
1996 Elsinore Engineering services
1996 AMP Facility Contact blanks
1997 Audio International, Inc. Cabin management & entertainment products
1998 Avtech Corporation Cockpit audio, lighting, power & control
1998 Dettmers Corporation Corporate aircraft seats
</TABLE>
- ------------
(1) At the time of the transaction.
The following selected consolidated financial data relating to
the Company and its subsidiaries has been taken or derived from the audited
financial statements contained in the Company 10-K and the unaudited financial
statements contained in the Company's quarterly report on form 10-Q for its
fiscal quarter ended March 31, 1998 (the "Company 10-Q") and the Company's
quarterly report on form 10-Q for its fiscal quarter ended March 31, 1997,
respectively. More comprehensive financial information is included in such
10-K and 10-Qs and the other documents filed by the Company with the
Securities and Exchange Commission (the "Commission"), and the financial data
set forth below is qualified in its entirety by reference to such reports and
other documents including the financial statements contained therein. Such
reports and other documents may be examined and copies may be obtained from
the offices of the Commission in the manner set forth below.
DECRANE AIRCRAFT HOLDINGS, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Three months ended
March 31,
Year ended December 31, (unaudited)
------------------------------------- --------------------------
1995 1996(1) 1997(2) 1997 1998
-------- -------- -------- --------- -----------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Revenues....................................... $ 55,839 $ 65,099 $108,903 $26,118 $ 29,128
43,463 49,392 80,247 20,107 20,141
-------- -------- -------- ------- --------
Cost of sales..................................
Gross profit................................... 12,376 15,707 28,656 6,011 8,987
Selling, general and administrative expenses... 9,426 10,747 15,756 3,384 4,879
Amortization intangible assets................. 1,115 709 905 207 379
-------- -------- -------- ------- --------
Operating income............................... 1,835 4,251 11,995 2,420 3,729
Interest expense............................... 3,821 4,248 3,154 1,592 786
Other (income) expense, net.................... 297 (85) 131 (118) (29)
Minority interest.............................. 85 193 112 31 12
-------- -------- -------- ------- --------
Income (loss) before provision for income
taxes and extraordinary item.................. (2,368) (105) 8,598 915 2,960
Provision for income taxes(3).................. 1,078 712 3,344 286 1,272
-------- -------- -------- ------- --------
Income (loss) before extraordinary item........ (3,446) (817) 5,254 629 1,688
Extraordinary loss from debt refinancing(4).... -- -- (2,078) -- --
Net income (loss).............................. $ (3,446) $ (817) $ 3,176 $ 629 $ 1,688
======== ======== ======== ======= ========
Net income (loss) applicable to common
stockholders.................................. $ (3,307) $ (6,357) $531 $249 $ 1,688
======== ======== ======== ======= ========
Income (loss) per common share
Basic
Income (loss) before accounting change
and extraordinary item.................... $ (38.45) $ (73.92) $ 0.69 $ 2.90 $ 0.32
Extraordinary loss(4)....................... -- -- (0.55) -- --
-------- -------- -------- ------- --------
Net income (loss)........................... $ (38.45) $ (73.92) $ 0.14 $ 2.90 $ 0.32
======== ======== ======== ======= ========
Diluted
Income (loss) before accounting change
and extraordinary item.................... $ (38.45) $ (73.92) $ 0.62 $ 0.20 $ 0.30
Extraordinary loss(4)....................... --
-- -- (0.42) --
-------- -------- -------- ------- --------
Net income (loss)........................... $ (38.45) $ (73.92) $ 0.20 $ 0.20 $ 0.30
======== ======== ======== ======= ========
Pro forma before extraordinary item(5)
Basic....................................... $ 1.16 $ 0.27 $ 0.32
Diluted..................................... 1.10 0.25 0.30
Balance Sheet Data:
Working capital................................ $12,583 $10,486 $24,772 $11,275 $ 33,092
Total assets................................... 36,329 69,266 99,137 72,611 103,599
Total debt..................................... 24,672 42,250 38,838 42,537 44,485
Mandatorily redeemable preferred stock and
common stock warrants......................... 1,633 6,879 -- 6,879 --
Stockholders' equity (deficit)................. (1,697) 1,236 39,527 1,695 41,124
</TABLE>
- -----------
(1) Includes the effect of the acquisition of the remaining 25% minority
interest in Cory Components, Inc. ("Cory Components") beginning February
20, 1996, the date on which the transaction occurred, and the results of
Aerospace Display Systems and Elsinore beginning September 18, 1996 and
December 5, 1996, respectively, the dates on which they were acquired.
(2) Includes the effect of: (i) the initial public offering ("IPO") and the
application of the net proceeds therefrom on April 16, 1997; and (ii) the
acquisition of Audio International, Inc. beginning November 14, 1997, the
date on which it was acquired.
(3) Prior to the acquisition of the remaining 25% minority interest in Cory
Components in 1996, the Company did not consolidate the earnings of Cory
Components for tax purposes. As such, despite a consolidated pre-tax loss
in each of the years, the Company recorded a provision for income taxes from
1993 up to the date of the acquisition of the remaining 25% minority
interest in 1996 which primarily relates to Cory Components.
(4) Represents the write-off, net of an income tax benefit, of deferred
financing costs, unamortized original issue discounts, a prepayment penalty
and other related expenses incurred as a result of the repayment of debt by
the Company with the proceeds from its IPO in 1997.
(5) Pro forma for the recapitalization of the Company in April 1998, as
described in the Company 10-Q, and the IPO in 1997 and the application of
the net proceeds therefrom.
The information concerning the Company contained herein has
been taken from or is based upon reports and other documents on file with the
Commission or otherwise publicly available. Although the Purchaser does not
have any knowledge that would indicate that any statements contained herein
based upon such reports and documents are untrue, the Purchaser does not take
any responsibility for the accuracy or completeness of the information
contained in such reports and other documents or for any failure by the
Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information but are unknown to the
Purchaser.
The Company is subject to the informational requirements of the
Exchange Act and in accordance therewith files periodic reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. The Company is required to disclose in
such proxy statements certain information, as of particular dates, concerning
the Company's directors and officers, their remuneration, stock options
granted to them, the principal holders of the Company's securities and any
material interest of such persons in transactions with the Company. Such
reports, proxy statements and other information may be inspected at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and should also be available for
inspection and copying at the regional offices of the Commission in New York
(Seven World Trade Center, 13th Floor, New York, New York 10048), Los Angeles
(Suite 500 East, Tishman Building, 5757 Wilshire Boulevard, Los Angeles,
California 90036) and Chicago (Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661). Copies of such material can also be obtained
from the Public Reference Section of the Commission in Washington, D.C. 20549,
at prescribed rates. Such material also may be accessed electronically by
means of the Commission's home page on the Internet (http://www.sec.gov).
In the course of the discussions between representatives of
DLJMB and the Company (see Section 10), certain projections of future
operating performance were furnished to DLJMB's representatives. These
projections were not prepared with a view to public disclosure or compliance
with published guidelines of the Commission or the guidelines established by
the American Institute of Certified Public Accountants regarding projections,
and are included in this Offer to Purchase only because they were provided to
DLJMB. None of DLJMB, the Purchaser, the Company, any of their financial
advisors or the Dealer Manager assumes any responsibility for the accuracy of
these projections. In addition, these projections are based upon a variety of
assumptions relating to the businesses of the Company which may not be
realized and are subject to significant competitive uncertainties and
contingencies beyond the control of the Company. There can be no assurance
that the projections will be realized, and actual results may vary materially
from those shown.
Set forth below is a summary of the projections. The
projections should be read together with the financial statements of the
Company referred to herein.
DECRANE AIRCRAFT HOLDINGS, INC.
PROJECTED FINANCIAL INFORMATION
(In thousands)
<TABLE>
<CAPTION>
1998 1999 2000 2001 2002
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Sales... $178.4 $206.8 $235.5 $263.2 $285.7
EBITDA*..... 39.1 44.3 51.1 57.7 64.9
</TABLE>
- ------------
* Earnings before income tax, depreciation and amortization.
8. Certain Information Concerning the Purchaser, Finance,
Parent, DLJMB and the DLJMB Funds.
Parent is a Delaware corporation incorporated on July 14, 1998
and to date has engaged in no activities other than those incident to its
formation and the transactions contemplated by the Merger Agreement (including
the Financing). Parent is a wholly-owned subsidiary of DLJMB and, immediately
prior to the consummation of the Offer, will become a wholly-owned subsidiary
of the DLJMB Funds. The principal executive offices of Parent are located at
c/o DLJ Merchant Banking II, Inc., 277 Park Avenue, New York, NY 10172.
Finance, a wholly-owned subsidiary of Parent, is a Delaware
corporation incorporated on July 15, 1998 and to date has engaged in no
activities other than those incident to its formation and the transactions
contemplated by the Merger Agreement (including the Financing). The principal
executive offices of Finance are located at c/o DLJ Merchant Banking II, Inc.,
277 Park Avenue, New York, New York 10172
The Purchaser is a Delaware corporation incorporated on July
14, 1998 and to date has engaged in no activities other than those incident to
its formation, the execution and delivery of the Merger Agreement, the
commencement of the Offer, and the other transactions contemplated by the
Merger Agreement (including the Financing). The Purchaser is a wholly-owned
subsidiary of Finance. The principal executive offices of the Purchaser are
located at c/o DLJ Merchant Banking II, Inc., 277 Park Avenue, New York, NY
10172.
The name, business address, principal occupation or employment,
five year employment history and citizenship of each director and executive
officer of Parent, Finance and the Purchaser and certain other information are
set forth on Schedule A hereto.
The DLJMB Funds consist of, and are beneficially owned by, the
following entities: (1) DLJMB; (2) DLJ Merchant Banking Partners II-A, L.P. a
Delaware limited partnership ("Partners II-A"); (3) DLJ Millennium Partners,
L.P., a Delaware limited partnership ("Millennium"); (4) DLJ Millennium
Partners-A, L.P., a Delaware limited partnership ("Millennium-A"); (5) DLJ
Offshore Partners II, C.V., a Netherlands Antilles limited partnership
("Offshore II"); (6) DLJ EAB Partners, L.P., a Delaware limited partnership
("EAB"); (7) DLJ Merchant Banking II, LLC, a Delaware limited liability
company ("MBII LLC"); (8) DLJ Merchant Banking II, Inc., a Delaware
corporation ("MBII INC"); (9) DLJ Diversified Partners, L.P., a Delaware
limited partnership ("Diversified"); (10) DLJ Diversified Partners-A, L.P., a
Delaware limited partnership ("Diversified-A"); (11) DLJ Diversified
Associates, L.P., a Delaware limited partnership ("Diversified Associates");
(12) DLJ Diversified Partners, Inc., a Delaware corporation ("Diversified
Partners"); (13) DLJ First ESC L.P., a Delaware limited partnership ("ESC");
(14) DLJ ESC II L.P., a Delaware limited partnership ("ESC II"); (15) DLJ LBO
Plans Management Corporation, a Delaware corporation ("LBO"); (16) DLJ MB
Funding II, Inc., a Delaware corporation ("Funding II"); (17) DLJ Capital
Investors, Inc., a Delaware corporation ("DLJCI"); (18) UK Investment Plan
1997 Partners, a Delaware general partnership ("1997 Partners") (19) UK
Investment Plan 1997, Inc. ("Plan 1997" and together with the previously
listed entities, the "DLJ Entities"); (20) Donaldson, Lufkin & Jenrette, Inc.,
a Delaware corporation ("DLJ"); (21) The Equitable Companies Incorporated, a
Delaware corporation ("EQ"); (22) AXA-UAP, a societe anonyme organized under
the laws of France ("AXA"); (23) Finaxa, a societe anonyme organized under the
laws of France; (24) AXA Assurances I.A.R.D. Mutuelle, a mutual insurance
company organized under the laws of France; (25) AXA Assurances Vie Mutuelle,
a mutual insurance company organized under the laws of France; (26) AXA
Courtage Assurance Mutuelle, a mutual insurance company organized under the
laws of France; (27) Alpha Assurances Vie Mutuelle, a mutual insurance company
organized under the laws of France; and (28) Claude Bebear, Patrice Garnier
and Henri de Clermont-Tonnerre, trustees (the "AXA Voting Trustees") of a
voting trust (the "AXA Voting Trust") established pursuant to a Voting Trust
Agreement by and among AXA and the AXA Voting Trustees dated as of May 12,
1992, as amended January 22, 1997 (collectively, with the DLJ Entities, the
"Reporting Entities").
DLJMB, Partners II-A, Millennium, Millennium-A, Offshore II,
EAB, Diversified, Diversified-A, Funding II, 1997 Partners, ESC, and ESC II
are collectively referred to as the "DLJMB Funds".
DLJMB, Partners II-A, Millennium and Millennium-A are Delaware
limited partnerships which make investments for long term appreciation. MBII
LLC is the Associate General Partner of DLJMB and Partners II-A. MBII INC is
the Managing General Partner of DLJMB and Partners II-A. MBII LLC and MBII
INC make all of the investment decisions on behalf of DLJMB and Partners II-A.
EAB is Delaware limited partnership which makes investments for
long term appreciation. MBII LLC is the Associate General Partner of EAB and
LBO is the Managing General Partner of EAB. MBII LLC and LBO make all of the
investment decisions on behalf of EAB.
Offshore II is a Netherlands Antilles limited partnership which
makes investments for long term appreciation. MBII LLC is the Associate
General Partner of Offshore II. MBII INC is the Advisory General Partner of
Offshore II. MBII LLC and MBII INC make all of the investment decisions on
behalf of Offshore II.
MBII LLC is a Delaware limited liability company and is a
registered investment adviser. As the Associate General Partner of DLJMB,
Partners II-A, Millennium, Millennium-A, EAB and Offshore II, MBII LLC, in
conjunction with MBII INC, participates in investment decisions made on behalf
of these entities. MBII INC is the managing member of MBII LLC.
MBII INC is a Delaware corporation and is a registered
investment adviser. As the Managing General Partner of DLJMB, Partners II-A,
Millennium and Millennium-A, and the Advisory General Partner Offshore II,
MBII INC is responsible for the day to day management of these entities and,
in conjunction with MBII LLC, participates in investment decisions made on
behalf of these entities. MBII INC is a wholly owned subsidiary of DLJCI.
Diversified and Diversified-A are Delaware limited partnerships
which make investments for long term appreciation. A portion of Diversified and
Diversified-A's capital commitments are dedicated to making side-by-side
investments with DLJMB and Partners II-A, respectively. Diversified Associates
is the Associate General Partner of Diversified and Diversified-A and
Diversified Partners is the Managing General Partner of Diversified and
Diversified-A. Diversified Partners is responsible for the day to day
management of Diversified and Diversified-A.
Diversified Associates is a Delaware limited partnership and a
registered investment adviser. As the Associate General Partner of
Diversified and Diversified-A, Diversified Associates, in conjunction with
Diversified Partners and subject to the terms of the Diversified Agreement,
participates in the management of investments of Diversified. Diversified
Partners is the general partner of Diversified Associates.
Diversified Partners is a Delaware corporation and a registered
investment adviser. As the Managing General Partner of Diversified and
Diversified-A, Diversified Partners is responsible for the day to day
management of Diversified and Diversified-A. In conjunction with Diversified
Associates, Diversified Partners participates in the investment decisions made
on behalf of Diversified and Diversified-A. Diversified Partners is a wholly
owned subsidiary of DLJCI.
ESC and ESC II are Delaware limited partnerships and "employee
securities companies" as defined in the Investment Company Act of 1940, as
amended. LBO, as the Managing General Partner of ESC and ESC II, makes all
of the investment decisions on behalf of ESC and ESC II.
LBO is a Delaware corporation and a registered investment
adviser. LBO is a wholly owned subsidiary of DLJCI. As the Managing General
Partner of EAB, ESC and ESC II, LBO is responsible for the day-to-day
management of EAB, ESC and ESC II.
Funding II is a Delaware corporation which makes investments
for long term appreciation generally side-by-side with Partners II. Funding
II is a wholly owned subsidiary of DLJCI.
DLJCI is a Delaware corporation a holding company. DLJCI is a
wholly owned subsidiary of DLJ.
1997 Partners is a Delaware general partnership which makes
investments for long term appreciation generally side-by-side with Partners
II. Plan 1997 and DLJ are each general partners of 1997 Partners.
Plan 1997 is a Delaware corporation. Plan 1997 is a wholly
owned subsidiary of DLJ.
DLJ is a publicly held Delaware corporation. DLJ directly owns
all of the capital stock of DLJCI and Plan 1997. DLJ, acting on its own
behalf or through its subsidiaries, is a registered broker/dealer and
registered investment adviser engaged in investment banking, institutional
trading and research, investment management and financial and correspondent
brokerage services.
EQ is a Delaware corporation and is a holding company. As of
July 21, 1998, EQ owned, directly or indirectly, 72.8% of DLJ.
AXA is a societe anonyme organized under the laws of France and
a holding company for an international group of insurance and related
financial services companies. As of March 1, 1998 approximately 59% of the
outstanding common stock of EQ was beneficially owned by AXA. For insurance
regulatory purposes, to insure that certain indirect minority stockholders of
AXA will not be able to exercise control over EQ and certain of its insurance
subsidiaries, the voting shares of EQ capital stock beneficially owned by AXA
and its subsidiaries have been deposited into the AXA Voting Trust. For
additional information regarding the AXA Voting Trust, reference is made to
the Schedule 13D filed by AXA with respect to EQ. As of July 21, 1998, AXA
directly owned 0.15% of DLJ.
Finaxa is a societe anonyme organized under the laws of France
and is a holding company. As of March 1, 1998, Finaxa controlled directly and
indirectly approximately 21.4% of the issued ordinary shares (representing
approximately 30.2% of the voting power) of AXA.
Each of AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie
Mutuelle, AXA Courtage Assurance Mutuelle, and Alpha Assurances Vie Mutuelle
(collectively, the "Mutuelles AXA") is a mutual insurance company organized
under the laws of France. Each of the Mutuelles AXA is owned by its policy
holders. As of March 1, 1998, the Mutuelles AXA, as a group, control
approximately 62.0% of the issued shares (representing approximately 74.0% of
the voting power) of Finaxa. Including the ordinary shares owned by Finaxa,
on March 1, 1998, the Mutuelles AXA directly or indirectly controlled 24.7% of
the issued ordinary shares (representing 34.8% of the voting power) of AXA.
Acting as a group, the Mutuelles AXA control AXA and Finaxa.
Claude Bebear, Patrice Garnier and Henri de Clermont-Tonnerre,
the AXA Voting Trustees, exercise all voting rights with respect to the shares
of Equitable capital stock beneficially owned by AXA and its subsidiaries that
have been deposited in the AXA Voting Trust. The business address,
citizenship and present principal occupation of each of the AXA Voting
Trustees are set forth on Schedule K attached hereto.
The address of the principal business and office of each of the
DLJ Entities and DLJ is 277 Park Avenue, New York, New York 10172. The
address of the principal business and principal office of Equitable is 1290
Avenue of the Americas, New York, New York 10104. The name, business address,
citizenship, present principal occupation and name and business address of any
corporation or organization in which each such employment is conducted of each
executive officer and director of the DLJ Entities are set forth in Schedules
B-H, respectively, attached hereto.
The address of the principal business and principal office of
AXA and the AXA Voting Trustees is 9 Place Vendome, 75001 Paris, France. The
address of Finaxa is 23, avenue Matignon, 75008 Paris, France; of each of AXA
Assurances I.A.R.D. Mutuelle and AXA Assurances Vie Mutuelle is 21, rue de
Chateaudun, 75009 Paris, France; of AXA Courtage Assurance Mutuelle is 26, rue
Louis-le-Grand, 75006 Paris, France; and of Alpha Assurances Vie Mutuelle is
Tour Franklin, 100/101 Terrasse Boieldieu, Cedex 11, 92042 Paris La Defense,
France.
The name, business address, citizenship, present principal
occupation or employment and the name and business address of any corporation
or organization in which each such employment is conducted, of each executive
officer or member, as applicable, of the Board of Directors, Supervisory
Board, or the Conseil d'Administration (French analogue of a Board of
Directors) of Equitable, AXA, Finaxa and the Mutuelles AXA are set forth on
Schedules I through O, respectively, attached hereto.
Except as described in this Offer to Purchase, (i) none of the
Reporting Entities or, to the best knowledge of the Purchaser, any of the
persons listed in Schedules A through O to this Offer to Purchase or any
associate or majority-owned subsidiary of the Purchaser or any of the
persons so listed beneficially owns or has any right to acquire, directly
or indirectly, any Shares and (ii) none of the Reporting Entities or, to
the best knowledge of the Purchaser, any of the persons or entities
referred to above nor any director, executive officer or subsidiary of any
of the foregoing has effected any transaction in the Shares during the past
60 days.
Except as provided in the Merger Agreement and as otherwise
described in this Offer to Purchase, none of the Reporting Entities nor, to
the best knowledge of the Purchaser, any of the persons listed in Schedules A
through O to this Offer to Purchase, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting
of such securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees of profits,
division of profits or loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, since January 1,
1995, none of the Reporting Entities or, to the best knowledge of the
Purchaser, any of the persons listed in Schedules A through O hereto, have had
any business relationship or transaction with the Company or any of its
executive officers, directors, or affiliates that is required to be reported
under the rules and regulations of the Commission applicable to the Offer.
Except as set forth in this Offer to Purchase, since January 1, 1995, there
have been no contracts, negotiations or transactions between the Reporting
Entities, or any of its subsidiaries or, to the best knowledge of the
Purchaser, any of the persons listed in Schedules A through O to this Offer to
Purchase, on the one hand, and the Company or its affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other
transfer of a material amount of assets.
9. Source and Amount of Funds.
The total amount of funds required by the Purchaser to purchase
Shares pursuant to the Offer, refinance existing debt of the Company and pay
related fees and expenses is estimated to be approximately $289.6 million.
It is anticipated that the purchase of the Shares will be
financed with (i) borrowings by Finance under a senior term loan of $80.0
million (the "Term Loan Facility"); (ii) borrowings by Finance of
approximately $10.6 million under a $50.0 million revolving credit facility
(the "Revolving Credit Facility," and collectively with the Term Loan Facility,
the "Bank Facilities"); (iii) the issuance by Finance, for cash, of not more
than $100.0 million of senior subordinated increasing rate notes (the "Senior
Subordinated Notes"); (iv) the issuance by Parent, for cash, of not more than
$34.0 million of senior pay-in-kind increasing rate notes (the "Senior PIK
Notes" and together with the Subordinated Notes, the "Debt Securities"); and
(v) the issuance, for cash proceeds of not less than $65.0 million, of common
stock of Parent (the "Parent Common Stock") to be purchased by the DLJMB
Funds. DLJMB has received commitment letters pursuant to which (i) DLJ
Capital Funding, Inc. has indicated that it will fund, in part, and arrange a
syndicate of financial institutions to participate in the Bank Facilities, and
(ii) DLJ Bridge Finance, Inc. (the "DLJ Bridge Fund") has indicated that it or
an affiliate will purchase the Debt Securities (collectively, the "Commitment
Letters"). Each of the commitments set forth in the Commitment Letters is
subject to a number of conditions, including the execution of satisfactory
definitive documentation, the absence of material adverse changes and receipt
of material governmental and other approvals.
In lieu of issuing the Debt Securities to the DLJ Bridge Fund
or its affiliate, Parent and Finance may elect to issue to the public
pay-in-kind preferred stock of Parent ("Parent Preferred Stock") and senior
subordinated notes of Finance ("Finance Notes"). It is expected that the
Parent Preferred Stock would be mandatorily redeemable by Parent in 2008 and
that dividends thereon would be payable in kind for the first five years, and
thereafter in cash, at a rate to be determined. It is also expected that the
Finance Notes would be due in 2008 and that interest thereon would be paid
semi-annually at a rate to be determined.
It is anticipated that the Term Loan Facility will consist of
two tranches. Tranche A will consist of a term loan of $35 million,
amortizing over and maturing in five years. For the first six months of the
loan, the Tranche A term loan will bear interest, at the Surviving
Corporation's option, at either the base rate plus 1.00% or LIBOR plus 2.25%.
Tranche B will consist of a term loan of $45 million, amortizing over and
maturing in seven years. One percent of the principal amount of the Tranche B
term loan will be repayable in equal quarterly installments each year for six
years, and the remainder of the principal on the Tranche B loan will be
repayable in equal quarterly installments in the seventh year after the making
of the loan. For the first six months of the loan, the Tranche B loan will
bear interest, at the Surviving Corporation's option, at either the base rate
plus 1.25% or LIBOR plus 2.50%. After six months, the applicable margins
under the Tranche A and Tranche B loans will depend on the Surviving
Corporation's ratio of total debt to EBITDA.
The Revolving Credit Facility will mature on the fifth
anniversary after the date the loan is made. $25 million of the Revolving
Credit Facility is available for acquisitions by the Surviving Corporation and
the remaining $25 million, which may take the form of letters of credit, is
available for working capital purposes. For the first six months after the
Closing Date, amounts outstanding under the Revolving Credit Facility will
bear interest at the base rate plus 1.00% or LIBOR plus 2.25% and unused
portions of the Revolving Credit Facility will be subject to a commitment fee.
After six months, the applicable margins and commitment fee under the
Revolving Credit Facility will depend on the Surviving Corporation's ratio of
total debt to EBITDA.
Amounts borrowed under the Bank Facilities will be secured by a
first priority, perfected lien on all capital stock of Finance and the
Purchaser and, upon the consummation of the Merger, substantially all property
and assets of the Surviving Corporation and its domestic Subsidiaries,
including all capital stock of its domestic Subsidiaries and up to 65% of the
capital stock of its foreign Subsidiaries. All amounts outstanding under the
Bank Facilities will also be guaranteed by the Parent and the Purchaser and,
upon consummation of the Merger, by all direct and indirect domestic
Subsidiaries of the Surviving Corporation.
The Senior Subordinated Notes will bear interest at the prime
rate plus a spread, which initially will equal 150 basis points. If the
Senior Subordinated Notes are not retired in whole by the end of the first six
months following their issuance, the spread will increase significantly over
time. However, interest on the Senior Subordinated Notes will not exceed 17%
per year (with the cash portion thereof limited to 15% per year) or be less
than 10% per year. The Senior Subordinated Notes will mature on the first
anniversary of their issuance but must be redeemed by Finance under certain
circumstances, including, subject to certain exceptions, issuances of other
debt by Finance. The Senior Subordinated Notes will be subordinated to the
Bank Facilities. Finance's obligations under the Senior Subordinated Notes
will be guaranteed on a subordinated basis by the Purchaser and, after the
consummation of the Merger, all direct and indirect domestic Subsidiaries of
the Surviving Corporation.
The Senior PIK Notes will initially bear interest at the prime
rate plus 500 basis points. After six months, the interest rate will increase
significantly, and will depend upon prevailing interest rates. However,
interest on the Senior PIK Notes will not exceed 17% per year or be lower than
10% per year. The Senior PIK Notes will be subordinated to the Parent's
guarantees of the Bank Facilities and the Senior Subordinated Notes and
certain refinancings thereof. On the date the Senior PIK Notes are issued,
warrants representing 25% of the fully-diluted stock of the Company and
exercisable at a price equal to $0.01 per Share shall be placed in escrow. If
the refinancing of the Senior PIK Notes is not completed within 90 days from
the date of issuance of the Senior PIK Notes, then such warrants will begin to
be released to holders of the Senior PIK Notes in 90-day increments.
It is anticipated that the definitive documentation relating to
the Bank Facilities and Debt Securities will contain customary representations
and warranties and certain covenants, including limitations on indebtedness,
liens, restricted payments and similar matters, as well as certain mandatory
prepayment obligations customary for transactions of this nature.
It is anticipated that the debt incurred under the Bank
Facilities and by the issuance of the Debt Securities will be refinanced or
repaid from funds generated internally by the Purchaser (including, after
consummation of the Merger with the Company, funds generated by the Company)
or other sources, which may include the proceeds of the sale of debt or equity
securities or the sale of assets (including, possibly, Shares or, after
consummation of the Merger with the Company, securities or assets of the
Company).
Copies of the commitment letters of each of DLJ Capital
Funding, Inc. and DLJ Bridge Fund are filed as exhibits to the Purchaser's
Tender Offer Statement on Schedule 14D-1. Reference is made to such exhibits
for a more complete description of the proposed terms and conditions of each
of the Bank Facilities and the Debt Securities.
10. Background of the Offer; Past Contacts, Transactions or
Negotiations with the Company.
In the spring of 1998, the Company conducted a secondary
offering of shares of Common Stock on behalf of certain of its stockholders.
Representatives of DLJMB and DLJSC attended the management presentations
conducted by the Company in connection with that offering and spoke with one
of the Company's larger stockholders about the Company, its history, current
performance and potential. At that time, DLJMB concluded that it was not
interested in proposing to acquire the Company. In early June of 1998, DLJMB
learned that the Company had entered into an agreement to acquire Avtech
Corporation (see Section 7). At the suggestion of DLJSC, DLJMB began to
consider the possibility of acquiring the Company.
On or about June 15, 1998, the Company and DLJMB entered into a
confidentiality agreement (the "Confidentiality Agreement"). The
Confidentiality Agreement also provided that, for a two-year period, the
Purchaser would not, without consent of the Company, acquire, or offer to
acquire, Shares or any other interest in the Company or take certain other
actions.
During the period that followed, representatives of DLJMB
conducted their due diligence investigation regarding the business and
properties of the Company. In addition, DLJMB met with senior management of
the Company to discuss the Company. Following the expression of interest in
acquiring the Company expressed by DLJMB, the Board of Directors of the
Company formed a special committee (the "Special Committee") consisting of
three independent members of the Company's Board of Directors. The Special
Committee retained counsel and a financial advisor, Warburg Dillon Read.
During the period between June 29 and July 16, representatives of DLJMB and
the Special Committee discussed the terms of a possible acquisition and
negotiated the terms of the Merger Agreement. On July 16, 1998, the Purchaser
offered to acquire the Company for a price of $23.00 in cash per Share, and
following approval by the Special Committee and Board of Directors, the Merger
Agreement was executed.
11. Purpose of the Offer; Plans for the Company; Merger and
Other Agreements.
Purpose of the Offer. The purpose of the Offer is to acquire
control of, and an equity interest in, the Company. The purpose of the Merger
is to acquire all outstanding Shares not tendered and purchased pursuant to
the Offer. The Offer is being made pursuant to the Merger Agreement and the
purchase of the Shares pursuant to the Offer will increase the likelihood that
the Merger will be effected. If the Offer is successful, the Shares not
acquired by the Purchaser pursuant to the Offer will be converted, subject to
the terms of the Merger Agreement, into the right to receive cash in an amount
equal to the price per share paid pursuant to the Offer.
The Board of Directors of the Company has unanimously approved
the Merger and adopted the Merger Agreement. Depending upon the number of
Shares purchased by the Purchaser pursuant to the Offer, the Board may be
required to submit the Merger Agreement to the Company's stockholders for
approval at a stockholder's meeting convened for that purpose in accordance
with the law of the State of Delaware ("Delaware Law"). If stockholder
approval is required, the Merger Agreement must be approved by a majority of
all votes entitled to be cast at such meeting.
If the Minimum Tender Condition is satisfied, the Purchaser
will have sufficient voting power to approve the Merger Agreement at the
stockholders' meeting without the affirmative vote of any other stockholder.
If the Purchaser acquires 90% of the Shares, the Merger may be
consummated without a stockholders' meeting and without the approval of the
Company's stockholders. The Merger Agreement provides that the Purchaser (the
parent corporation) will be merged with and into the Company (the subsidiary
corporation) following the Offer, and that the certificate of incorporation of
the Company will be the certificate of incorporation of the Surviving
Corporation following the Merger.
Under Delaware Law, holders of Shares do not have appraisal
rights as a result of the Offer. In connection with the Merger, however,
stockholders of the Company may have the right to dissent and demand appraisal
of their Shares under Delaware Law. Under Delaware Law, dissenting
stockholders who comply with the applicable statutory procedures will be
entitled to receive a judicial determination of the fair value of their Shares
(exclusive of any element of value arising from the accomplishment or
expectation of such merger or similar business combination) and to receive
payment of such fair value in cash. Any such judicial determination of the
fair value of the Shares could be based upon considerations other than or in
addition to the price paid in the Merger and the market value of the Shares.
In Weinberger v. UOP, Inc., the Delaware Supreme Court stated, among other
things, that "proof of value by any techniques or methods which are generally
considered acceptable in the financial community and otherwise admissible in
court" should be considered in an appraisal proceeding. Stockholders should
recognize that the value so determined could be higher or lower than the price
per Share paid pursuant to the Offer or the consideration per Share paid in
such a merger or other similar business combination. Moreover, the Purchaser
may argue in an appraisal proceeding that, for purposes of such a proceeding,
the fair value of the Shares is less than the price paid in the Offer.
In addition, several decisions by Delaware courts have held
that, in certain circumstances a controlling stockholder of a company involved
in a merger has a fiduciary duty to other stockholders which requires that the
merger be fair to such other stockholders. In determining whether a merger is
fair to minority stockholders, Delaware courts have considered, among other
things, the type and amount of consideration to be received by the
stockholders and whether there was fair dealing among the parties. The
Delaware Supreme Court stated in Weinberger and Rabkin v. Philip A. Hunt
Chemical Corp. that the remedy ordinarily available to minority stockholders
in a cash-out merger is the right to appraisal described above. However, a
damages remedy or injunctive relief may be available if a merger is found to
be the product of procedural unfairness, including fraud, misrepresentation or
other misconduct.
If the Purchaser purchases Shares pursuant to the Offer and the
Merger is consummated more than one year after the completion of the Offer or
if an alternative merger transaction were to provide for the payment of
consideration less than that paid pursuant to the Offer, compliance by the
Purchaser with Rule 13e-3 under the Exchange Act would be required, unless the
Shares were to be deregistered under the Exchange Act prior to such
transaction. Rule 13e-3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed merger transaction and the consideration offered to
minority stockholders therein be filed with the Commission and disclosed to
minority stockholders prior to consummation of the merger transaction.
Plans for the Company. Upon the completion of the Offer, the
Purchaser understands that DLJMB, with the assistance of the Company's
management, intends to conduct a detailed review of the Company and its
assets, corporate structure, capitalization, operations, properties, policies,
management and personnel to determine what changes, if any, would be
desirable. Such changes may include extraordinary corporate transactions
involving the Company or its subsidiaries, acquisitions of stock or assets,
contributions of capital by DLJMB, issuances of debt or equity securities or
similar transactions. The Purchaser expects that following the Effective Time
(as defined below) (or at any earlier time permitted by the Merger Agreement)
it will cause its designees to constitute a majority of the members of the
Board of Directors. In the event the Offer is consummated, the Purchaser may
designate a number of members to the Company's Board of Directors (as
contemplated by the Merger Agreement), equal to the product of (i) the total
number of directors on the Board of Directors (giving effect to the election
of any additional directors designated by the Purchaser) and (ii) the
percentage that the number of shares then owned by the Purchaser bears to the
total number of Shares outstanding. The persons who may be designated by the
Purchaser are listed on Schedule A, which also includes the information
required to be disclosed by the Purchaser with respect to such designees under
Rule 14f-1 under the Exchange Act.
It is DLJMB's intention to afford certain key members of the
Company's management the opportunity to purchase an equity participation in
Parent. Such participation, however, is not a condition of the Offer or the
transactions contemplated in the Merger Agreement. No agreement has been
entered into between DLJMB, Parent or the Purchaser, on the one hand, and
management of the Company, on the other, regarding such equity participation,
and no discussions or negotiations regarding such equity participation are
currently anticipated to occur during the pendency of the Offer.
It is expected that, following the consummation of the Merger,
Finance will be merged with and into the Company, and thus will become a
direct, wholly-owned subsidiary of Parent.
Except as described above or elsewhere in this Offer to
Purchase, the Purchaser has no present plans or proposals that would relate to
or result in an extraordinary corporate transaction involving the Company or
any of its subsidiaries (such as a merger, reorganization, liquidation,
relocation of any operations or sale or other transfer of a material amount
of assets), any change in the Board of Directors or management, any material
change in the Company's capitalization or dividend policy or any other
material change in the Company's corporate structure or business.
The Merger Agreement. The following is a summary of the Merger
Agreement, a copy of which is filed as an Exhibit to the Schedule 14D-1. Such
summary is qualified in its entirety by reference to the Merger Agreement.
The Offer. The Merger Agreement provides for the making of the
Offer. The obligation of the Purchaser to accept for payment Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum Tender
Condition, the Financing Condition and certain other conditions that are
described in Section 15. The Purchaser has agreed that no change in the Offer
may be made which changes the form of consideration to be paid or decreases
the price per Share or the number of Shares sought in the Offer, which imposes
conditions to the Offer in addition to the Minimum Tender Condition, the
Financing Condition and those conditions described in Section 15 or which
otherwise materially and adversely affects the Company or the holders of the
Shares.
Recommendation. The Board of Directors, acting on the
recommendation of the Special Committee, has (i) unanimously determined that
the Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger, are fair to and in the best interest of the Company's
stockholders, (ii) unanimously approved the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger and
(iii) unanimously resolved to recommend acceptance of the Offer and approval
and adoption of the Merger Agreement and the Merger by the Company's
stockholders (subject to the Board of Directors' right to withdraw, modify or
amend the recommendation to the extent the Board of Directors of the Company
shall have concluded in good faith on the basis of written advice from outside
counsel that such action by the Board of Directors is required in order to
comply with the fiduciary duties of the Board of Directors to the stockholders
of the Company under applicable law).
The Merger. The Merger Agreement provides that, upon the terms
and subject to the conditions thereof, at the time at which the Company and
the Purchaser file a certificate of merger with the Secretary of State of the
State of Delaware and make all other filings or recordings required by
Delaware Law in connection with the Merger, the Purchaser shall be merged with
and into the Company in accordance with Delaware Law and the Merger Agreement.
The Merger shall become effective at such time as the Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware or at such
later time as is specified in the Certificate of Merger (the "Effective
Time"). As a result of the Merger, the separate corporate existence of the
Purchaser will cease and the Company will be the Surviving Corporation.
At the Effective Time, (i) each issued and outstanding Share
held in the treasury of the Company, or owned by the Purchaser Companies shall
be canceled, and no payment shall be made with respect thereto; (ii) each
share of common stock of the Purchaser then outstanding shall be converted
into and become one share of common stock of the Surviving Corporation; and
(iii) each Share outstanding immediately prior to the Effective Time shall,
except as otherwise provided in (i) above or with respect to Shares as to
which appraisal rights have been perfected, be converted into the right to
receive $23.00 in cash without interest.
The Merger Agreement provides that, at the Effective Time, the
certificate of incorporation of the Company will be the certificate of
incorporation of the Surviving Corporation and the bylaws of the Purchaser
will be the bylaws of the Surviving Corporation.
Employee Stock Options. At or immediately prior to the
Effective Time, each outstanding employee stock option to purchase Shares
granted under any employee stock option or compensation plan or arrangement of
the Company will be canceled, and each holder of any such option, whether or
not then vested or exercisable, shall be paid by the Company promptly after
the Effective Time for each such option an amount determined by multiplying
the excess, if any, of $23.00 per Share over the applicable exercise price of
such option by the number of Shares such holder could have purchased
(assuming full vesting of all options) had such holder exercised such option
in full immediately prior to the Effective Time.
Agreements of the Purchaser and the Company. The Merger
Agreement provides that effective upon purchase and payment for any Shares by
the Purchaser, the Purchaser shall be entitled to designate the number of
directors, rounded up to the next whole number, on the Company's Board of
Directors that equals the product of (i) the total number of directors on the
Board of Directors (giving effect to the election of any additional directors
pursuant to this paragraph) and (ii) the percentage that the number of Shares
owned by the Purchaser (including Shares accepted for payment) bears to the
total number of Shares outstanding, and the Company shall take all action
necessary to cause the Purchaser's designees to be elected or appointed to the
Board of Directors, including, without limitation, increasing the number of
directors, and seeking and accepting resignations of its incumbent directors.
Following the election or appointment of Purchaser's designees
pursuant to the Merger Agreement and until the Effective Time, the approval of
a majority of the directors of the Company then in office who were not
designated by Purchaser shall be required to authorize (and such authorization
shall constitute the authorization of the Board of Directors and no other
action on the part of the Company, including any action by any other director
or the Company, shall be required to authorize) any termination of the Merger
Agreement by the Company, any amendment of the Merger Agreement requiring
action by the Board of Directors, and any waiver of compliance with any of the
agreements or conditions contained in the Merger Agreement for the benefit of
the Company.
Pursuant to the Merger Agreement, the Company shall cause a
meeting of its stockholders (the "Company Stockholder Meeting") to be duly
called and held as soon as reasonably practicable for the purpose of voting on
the approval and adoption of the Merger Agreement and the Merger, unless a
vote of stockholders by the Company is not required by Delaware Law.
The Merger Agreement provides that the Company will promptly
prepare and file with the Commission under the Exchange Act a proxy statement
relating to the Company Stockholder Meeting (the "Proxy Statement") (unless
the vote of the stockholders is not required under Delaware Law). The Company
has agreed to use its reasonable best efforts to obtain the necessary
approvals by its stockholders of the Merger Agreement and the transactions
contemplated thereby. The Purchaser has agreed to vote and to cause each of
its subsidiaries (including, without limitation, the Purchaser) to vote all
Shares then owned by it in favor of adoption of the Merger Agreement.
The Company has agreed that, prior to the Effective Time, the
Company will not adopt or propose any change in its certificate of
incorporation or bylaws. In addition, the Company has agreed that, prior to
the Effective Time, the Company will not, and will not permit any of its
subsidiaries (each, a "Subsidiary") to, except as expressly required by the
Merger Agreement or with the prior consent of the Purchaser:
(a) acquire (by merger, consolidation or acquisition of stock or
assets) any material corporation, partnership or other business
organization or division thereof, or sell, lease or otherwise dispose of
a material subsidiary or a material amount of assets or securities;
(b) make any investment other than in readily marketable securities
in an amount in excess of $750,000 in the aggregate whether by purchase of
stock or securities, contributions to capital or any property transfer, or
purchase for an amount in excess of $750,000 in the aggregate, any
property or assets of any other individual or entity;
(c) waive, release, grant, or transfer any rights of value
material to the Company and the Subsidiaries taken as a whole;
(d) modify or change in any material respect any existing material
license, lease, contract, or other document material to the Company and
its subsidiaries taken as a whole;
(e) except to refund or refinance commercial paper, incur, assume or
prepay an amount of long-term or short-term debt in excess of $5,000,000
in the aggregate;
(f) assume, guarantee, endorse (other than endorsements of negotiable
instruments in the ordinary course of business) or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the
obligations of any other person (other than any Subsidiary) which, are in
excess of $500,000 in the aggregate;
(g) make any loans or advances to any other person (other than any
Subsidiary) which are in excess of $100,000 in the aggregate or
(h) authorize any new capital expenditures which, individually, is in
excess of $250,000 or, in the aggregate, are in excess of $1,000,000.
Furthermore, the Company has agreed that, prior to the
Effective Time, the Company will not, and will not permit any Subsidiary to do
any of the following:
(i) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, other than cash dividends and distributions by a wholly
owned subsidiary of the Company to the Company or to a subsidiary all of
the capital stock which is owned directly or indirectly by the Company,
or redeem, repurchase or otherwise acquire or offer to redeem,
repurchase, or otherwise acquire any of its securities or any securities
of its Subsidiaries;
(ii) adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement, deferred
compensation, employment or employee benefit plan, agreement, trust, plan,
fund or other arrangement for the benefit and welfare of any director,
officer or employee, or (except for normal increases in the ordinary
course of business that are consistent with past practices and that, in
the aggregate, do not result in a material increase in benefits or
compensation expense to the Company) increase in any manner the
compensation or fringe benefits of any director, officer or employee or
pay any benefit not required by any existing plan or arrangement
(including, without limitation, the granting of stock options or stock
appreciation rights or the removal of existing restrictions in any benefit
plans or agreements);
(iii) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory in any material
manner or write-off of notes or accounts receivable in any material
manner;
(iv) pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent
or otherwise) other than the payment, discharge or satisfaction in the
ordinary course of business, consistent with past practices, of
liabilities reflected or reserved against in the consolidated financial
statements of the Company or incurred since the most recent date thereof
pursuant to an agreement or transaction described in the Merger Agreement
or incurred in the ordinary course of business, consistent with past
practices;
(v) except as set forth in the Schedules to the Merger Agreement,
make any tax election or settle or compromise any material income tax
liability;
(vi) take any action other than in the ordinary course of business
and consistent with past practices with respect to accounting policies or
procedures other than any change in accounting policies (that is not
material to the Company and its Subsidiaries taken as a whole) that is
required by regulations of the SEC;
(vii) agree or commit to do any of the foregoing; or
(viii) take or agree or commit to take any action that would make
any representation and warranty of the Company hereunder inaccurate in any
respect at, or as of any time prior to, the Effective Time.
Non-Solicitation. Pursuant to the Merger Agreement the Company
has agreed that from the date of the Merger Agreement until the termination
thereof, the Company and its Subsidiaries will not, and will not authorize or
permit, their respective officers, directors, agents, representatives,
advisors or Subsidiaries to, directly or indirectly,
(i) solicit, initiate or take any action knowingly to facilitate
the submission of inquiries, proposals or offers which constitute or would
reasonably be expected to lead to an Acquisition Proposal (as defined
below) or
(ii) enter into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any Third Party (as defined
below) any information with respect to its business, properties or assets
or any of the foregoing, or otherwise cooperate in any way with, or
knowingly assist or participate in, facilitate or encourage, any effort or
attempt by any Third Party to do or seek any of the foregoing, or
(iii) grant any waiver or release under any standstill or similar
agreement with respect to any class of equity securities of the Company or
any of its Subsidiaries.
The Company is not prohibited, however (either directly or
indirectly through advisors, agents or other intermediaries) from (A)
furnishing information pursuant to an appropriate confidentiality letter
(which letter shall not be less favorable to the Company in any material
respect (with respect to duration and standstill provisions) than the
Confidentiality Agreement, and a copy of which shall be provided for
informational purposes only to the Purchaser) concerning the Company and its
businesses, properties or assets to a Third Party who has made or is seeking
to initiate discussions with respect to a bona fide Acquisition Proposal, (B)
engaging in discussions or negotiations with such a Third Party who has made a
bona fide Acquisition Proposal, (C) following receipt of a bona fide
Acquisition Proposal, taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) under the Exchange Act or otherwise making
disclosure to its stockholders, (D) following receipt of a bona fide
Acquisition Proposal, failing to make or withdrawing or modifying its
recommendation referred to above and/or (E) taking any non-appealable, final
action ordered to be taken by the Company by any court of competent
jurisdiction but in each case referred to in the foregoing clauses (A) through
(D) only to the extent that the Board of Directors of the Company shall have
concluded in good faith on the basis of written advice from outside counsel
that such action by the Board of Directors is required in order to comply with
the fiduciary duties of the Board of Directors to the stockholders of the
Company under applicable law. The Board of Directors of the Company shall not
take any of the foregoing actions referred to in clauses (A) through (D)
until after reasonable notice to the Purchaser with respect to such action,
and the Board of Directors shall continue to advise the Purchaser after taking
such action and, in addition, if the Board of Directors of the Company
receives an Acquisition Proposal, then the Company shall promptly inform the
Purchaser of the terms and conditions of such proposal and the identity of
the person making it.
"Acquisition Proposal" means any proposal or offer from any
Third Party (as defined below) which constitutes or would reasonably be
expected to lead to (A) any acquisition or purchase of 30% or more of the
consolidated assets of the Company and its Subsidiaries or of over 30% of any
class of equity securities of the Company or any of its Subsidiaries, (B) any
tender offer (including a self tender offer) or exchange offer that if
consummated would result in any Third Party beneficially owning 30% or more of
any class of equity securities of the Company or any of its Subsidiaries, (C)
any merger, consolidation, business combination, sale of substantially all
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries whose assets, individually or
in the aggregate, constitute more than 30% of the consolidated assets of the
Company (other than the transactions contemplated by the Merger Agreement) or
(D) any other transaction the consummation of which would be expected to
interfere with in a material way, prevent or materially delay the Merger or
which would reasonably be expected to materially dilute the benefits to the
Purchaser of the transactions contemplated by the Merger Agreement.
"Third Party" means any person, corporation, entity or "group,"
as defined in Section 13(d) of the Exchange Act, other than the Purchaser or
any of its affiliates.
Indemnification. The Purchaser and the Company have agreed
that for six years after the Effective Time, the Purchaser will cause the
Surviving Corporation to
(i) indemnify and hold harmless the present and former officers and
directors of the Company in respect of acts or omissions occurring prior to
the Effective Time (including without limitation matters related to the
transactions contemplated by this Agreement) and
(ii) retain limitations on personal liability of directors for
monetary damages,
in each case to the fullest extent provided under the Company's certificate of
incorporation and bylaws in effect on the date of the Merger Agreement,
subject to any limitation imposed from time to time under applicable law. Such
obligation shall apply to claims of which the Surviving Corporation shall have
been notified prior to the expiration of such six-year period, regardless of
when such claims shall have been disposed of. In addition, Parent has agreed
that for six years after the Effective Time, the Purchaser will cause the
Surviving Corporation to use its best efforts to provide officers' and
directors' liability insurance in respect of acts or omissions occurring prior
to and including the Effective Time covering each such Person currently
covered by the Company's officers' and directors' liability insurance policy
on terms with respect to coverage and amount no less favorable than those of
such policy in effect on the date of the Merger Agreement. The Purchaser will
not be obligated to cause the Surviving Corporation to pay premiums in excess
of 150% of the amount per annum the Company paid in its last full fiscal year.
Employees of the Company. The Purchaser has agreed that, for
at least one year from the Effective Time, subject to applicable law, the
Surviving Corporation and its Subsidiaries will provide benefits to their
employees which will, in the aggregate, be comparable to those currently
provided by the Company and its subsidiaries to their employees.
Representations and Warranties. The Merger Agreement contains
customary representations and warranties of the parties thereto including
representations by the Company as to the absence of certain changes or events
concerning its respective business, compliance with law, litigation, employee
benefit plans, taxes and other matters.
Conditions to Certain Obligations. The obligations of the
Company and the Purchaser to consummate the Merger are subject to the
satisfaction of the following conditions: (i) if required by Delaware Law, the
adoption by the stockholders of the Company in accordance with such law; (ii)
any applicable waiting period under the HSR Act relating to the Merger shall
have expired or been terminated; (iii) no provision of any applicable law or
regulation and no judgment, injunction, order or decree shall prohibit the
consummation of the Merger; (iv) the Purchaser shall have purchased Shares
pursuant to the Offer; and (v) all actions by or in respect of or filings with
any governmental body, agency, official, or authority required to permit the
consummation of the Merger shall have been obtained.
In addition, the obligations of the Purchaser to consummate the
Merger are subject to the satisfaction of the following conditions: (i) the
Company shall have performed in all material respects all of its obligations
under the Merger Agreement required to be performed by it at or prior to the
Effective Time; (ii) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit consummation of the
Merger; and (iii) the Purchaser shall have received all documents it may
reasonably request relating to the existence of the Company and the
Subsidiaries and the authority of the Company for this Agreement, all in form
and substance reasonably satisfactory to the Purchaser.
Termination. The Merger Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of the Merger Agreement by the stockholders of
the Company)
(i) by mutual written consent of the Company and the Purchaser
or
(ii) by either the Company or the Purchaser, if
(A) the Offer has not been consummated by the date that is
60 days after the commencement of the Offer; provided, however,
that such right to terminate is not available if Purchaser shall
have failed to purchase Shares in violation of the Offer;
(B) if there shall be any law or regulation that makes
consummation of the Merger illegal or otherwise prohibited or if
any judgment, injunction, order or decree enjoining the Purchaser
or the Company from consummating the Merger is entered and such
judgment, injunction, order or decree shall become final and
nonappealable; or
(C) if the Board of Directors of the Company shall have
withdrawn or materially modified its recommendation as permitted
under the Merger Agreement.
If the Merger Agreement is terminated, the Merger Agreement
will become void and of no effect with no liability on the part of the Company
or the Purchaser (other than any rights any party may have against the other
for wilful breach of the Merger Agreement) other than obligations of the
Purchaser under certain provisions of the Merger Agreement with respect to the
treatment of confidential non-public information concerning the Company and its
Subsidiaries, and obligations of the Company under certain provisions of the
Merger Agreement to pay certain fees to and expenses of the Purchaser (as
described below).
Fees and Expenses. The Company has agreed in the Merger
Agreement that if a Payment Event (as defined below) occurs, the Company will
pay to the Purchaser, within two business days following such Payment Event, a
fee equal to $6,900,000 in immediately available funds. This obligation shall
survive any termination of the Merger Agreement, however caused.
"Payment Event" means (x) the termination of the Merger
Agreement by the Company or Purchaser if the Board of Directors withdraws or
materially modifies its recommendation with respect to the Merger; or (y) the
occurrence of a Third Party Acquisition within 12 months of the termination of
the Merger Agreement where the Offer shall not have been consummated within 60
days after commencement of the Offer.
"Third Party Acquisition" means any of the following events,
whereby stockholders of the Company receive, pursuant to such event, cash,
securities or other consideration having an aggregate value, when taken
together with the value of any securities of the Company or its Subsidiaries
otherwise held by the stockholders of the Company after such event, in excess
of $23.00 per Share: (i) the Company is acquired by merger or otherwise by a
Third Party; (ii) a Third Party acquires more than 50% of the total assets of
the Company and its Subsidiaries, taken as a whole; (iii) a Third Party
acquires more than 50% of the outstanding Shares or (iv) the Company adopts
and implements a plan of liquidation, recapitalization or share repurchase
relating to more than 50% of the outstanding Shares or an extraordinary
dividend relating to more than 50% of the outstanding Shares or 50% of the
assets of the Company and its Subsidiaries, taken as a whole.
In addition, the Company has agreed in the Merger Agreement
that, upon termination of the Merger Agreement for any reason (subject to the
following sentence), the Company shall, within two business days after
submission of reasonable documentation of such expenses, reimburse the
Purchaser for all documented out-of-pocket fees and expenses incurred by the
Purchaser in connection with the Merger Agreement and transactions
contemplated thereby (including the Merger and the arrangement of, obtaining
the commitment to provide, or obtaining the financing for, the transactions
contemplated by the Merger Agreement), provided that such reimbursement
obligation shall not exceed $4,250,000. The Company is not required to make
any such payment if the termination of the Merger Agreement would not have
occurred but for the failure of the Purchaser to fulfill its obligations under
the Merger Agreement.
Except as described in the preceding paragraph, the Merger
Agreement provides that the Company and the Purchaser shall each bear all
expenses incurred by it in connection with the Merger Agreement and the
transactions contemplated thereby.
Amendment and Waivers. Any provision of the Merger Agreement
may be amended or waived prior to the Effective Time if, and only if, such
amendment or waiver is in writing and signed, and (i) in the case of an
amendment, by the Company and the Purchaser or (ii) in the case of a waiver,
by the party against whom the waiver is to be effective. After the adoption
of the Merger Agreement by the stockholders of the Company, no such amendment
or waiver shall alter or change, except with the further approval of such
stockholders (i) the amount or kind of consideration to be received in
exchange for any shares of capital stock of the Company, (ii) any term of the
certificate of incorporation of the Surviving Corporation or (iii) any other
terms and conditions of the Merger Agreement if such change would adversely
affect the holders of any shares of capital stock of the Company.
12. Effect of the Offer on the Market for the Shares;
Registration under the Exchange Act.
The purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and may reduce the number
of holders of Shares, which could adversely affect the liquidity and market
value of the remaining Shares held by stockholders other than the Purchaser.
The Purchaser cannot predict whether the reduction in the number of Shares
that might otherwise trade publicly would have an adverse or beneficial effect
on the market price for, or marketability of, the Shares or whether such
reduction would cause future market prices to be greater or less than the
Offer price.
Depending upon the number of Shares purchased pursuant to the
Offer, the Shares may no longer meet the standards for continued inclusion in
the Nasdaq National Market. If, as a result of the purchase of Shares
pursuant to the Offer, the Shares no longer meet the criteria for continuing
inclusion in the Nasdaq National Market, the market for the Shares could be
adversely affected. According to the Nasdaq National Market's published
guidelines, in order for the Shares to be eligible for continued inclusion in
the Nasdaq National Market, there must continue to be, among other things, at
least 1,100,000 publicly held Shares, held by at least 400 round lot
stockholders, with a market value of at least $8 million. If the Shares were
no longer eligible for inclusion in the Nasdaq National Market, they may
nevertheless continue to be included in the Nasdaq SmallCap Market unless,
among other things, the number of publicly held Shares (excluding Shares held
by officers, directors and beneficial owners of more than 10% of the Shares)
was less than 100,000, or there were fewer than 300 holders in total. If the
Shares are no longer eligible for inclusion in the Nasdaq National Market or
the Nasdaq SmallCap Market, the Shares might still be quoted on the OTC
Bulletin Board. According to the Company, there were approximately 29 holders
of record of Shares as of July 20, 1998. If, as a result of the purchase of
Shares pursuant to the Offer, the Shares no longer meet the requirements of
The Nasdaq Stock Market, Inc. for continued listing and the listing of Shares
is discontinued, the market for the Shares could be adversely affected.
If the Nasdaq National Market were to delist the Shares (which
the Purchaser intends to cause the Company to seek if it acquires control of
the Company and the Shares no longer meet the Nasdaq National Market listing
requirements), it is possible that the Shares would trade on another
securities exchange or in the over-the-counter market and that price
quotations for the Shares would be reported through the Nasdaq National Market
or other sources. The extent of the public market for the Shares and
availability of such quotations would, however, depend upon such factors as the
number of holders and/or the aggregate market value of the publicly-held
Shares at such time, the interest in maintaining a market in the Shares on the
part of securities firms, the possible termination of registration of the
Shares under the Exchange Act and other factors.
The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of such Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, the Shares might no longer constitute "margin securities" for the
purposes of the Federal Reserve Board's margin regulations and, therefore,
could no longer be used as collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act.
Such registration may be terminated upon application of the Company to the
Commission if the Shares are neither listed on a national securities exchange
nor held by 300 or more holders of record. Termination of the registration of
the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to holders of Shares and to the
Commission and would make certain of the provisions of the Exchange Act, such
as the short-swing profit recovery provisions of Section 16(b), the
requirement of furnishing a proxy statement pursuant to Section 14(a) in
connection with a stockholder's meeting and the related requirement of an
annual report to stockholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions, no longer
applicable to the Shares. Furthermore, "affiliates" of the Company and
persons holding "restricted securities" of the Company may be deprived of the
ability to dispose of such securities pursuant to Rule 144 promulgated under
the Securities Act of 1933 (the "Securities Act"). If registration of the
Shares under the Exchange Act were terminated, the Shares would no longer be
"margin securities" or eligible for reporting on the Nasdaq National Market.
The Purchaser intends to seek to cause the Company to terminate registration
of the Shares under the Exchange Act as soon after consummation of the Offer
as the requirements for termination of registration of the Shares are met.
13. Distributions.
If on or after July 16, 1998, the Company should split,
combine or otherwise change the Shares or its capitalization, acquire or
otherwise cause a reduction in the number of outstanding Shares or issue or
sell any additional Shares (other than Shares issued pursuant to and in
accordance with the terms in effect on July 16, 1998 of employee stock options
and convertible securities outstanding prior to such date), shares of any
other class or series of capital stock, other voting securities or any
securities convertible into, or options, rights, or warrants, conditional or
otherwise, to acquire, any of the foregoing, then, without prejudice to the
Purchaser's rights under Section 15, the Purchaser may, in its sole
discretion, make such adjustments in the purchase price and other terms of the
Offer as it deems appropriate including the number or type of securities to be
purchased.
14. Extension of Tender Period; Termination; Amendment.
The Purchaser reserves the right, at any time or from time to
time, in its sole discretion and regardless of whether or not any of the
conditions specified in Section 15 shall have been satisfied, to extend the
period of time during which the Offer is open by giving oral or written notice
of such extension to the Depositary and by making a public announcement of
such extension or to amend the Offer in any respect by making a public
announcement of such amendment; provided, however, that the Company has the
right pursuant to the Merger Agreement to terminate the Merger Agreement and
abandon the Merger if the Offer has not been consummated by the date that is
60 days after the commencement of the Offer. There can be no assurance that
the Purchaser will exercise its right to extend or amend the Offer.
If the Purchaser decreases the percentage of Shares being
sought or increases or decreases the consideration to be paid for Shares
pursuant to the Offer and the Offer is scheduled to expire at any time before
the expiration of a period of 10 business days from, and including, the date
that notice of such increase or decrease is first published, sent or given in
the manner specified below, the Offer will be extended until the expiration of
such period of 10 business days. If the Purchaser makes a material change in
the terms of the Offer (other than a change in price or percentage of
securities sought) or in the information concerning the Offer, or waives a
material condition of the Offer, the Purchaser will extend the Offer, if
required by applicable law, for a period sufficient to allow stockholders to
consider the amended terms of the Offer. In a published release, the
Commission has stated that in its view an offer must remain open for a minimum
period of time following a material change in the terms of such offer and that
the waiver of a condition such as the Minimum Tender Condition is a material
change in the terms of an offer. The release states that an offer should
remain open for a minimum of five business days from the date the material
change is first published, sent or given to securityholders, and that if
material changes are made with respect to information that approaches the
significance of price and share levels, a minimum of 10 business days may be
required to allow adequate dissemination and investor response. The term
"business day" shall mean any day other than Saturday, Sunday or a federal
holiday and shall consist of the time period from 12:01 A.M. through 12:00
Midnight, New York City time.
The Purchaser also reserves the right, in its sole discretion,
in the event any of the conditions specified in Section 15 shall not have been
satisfied and so long as Shares have not theretofore been accepted for
payment, to delay (except as otherwise required by applicable law) acceptance
for payment of or payment for Shares or to terminate the Offer and not accept
for payment or pay for Shares.
If the Purchaser extends the period of time during which the
Offer is open, is delayed in accepting for payment or paying for Shares or is
unable to accept for payment or pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may, on behalf of the Purchaser, retain all Shares tendered, and
such Shares may not be withdrawn except as otherwise provided in Section 4.
The reservation by the Purchaser of the right to delay acceptance for payment
of or payment for Shares is subject to applicable law, which requires that the
Purchaser pay the consideration offered or return the Shares deposited by or
on behalf of stockholders promptly after the termination or withdrawal of the
Offer.
Any extension, termination or amendment of the Offer will be
followed as promptly as practicable by a public announcement thereof. Without
limiting the manner in which the Purchaser may choose to make any public
announcement, the Purchaser will have no obligation (except as otherwise
required by applicable law) to publish, advertise or otherwise communicate any
such public announcement other than by making a release to the Dow Jones News
Service. In the case of an extension of the Offer, the Purchaser will make a
public announcement of such extension no later than 9:00 A.M., New York City
time, on the next business day after the previously scheduled Expiration Date.
15. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer, the Purchaser
shall not be required to accept for payment or pay for any Shares, and may
terminate the Offer as provided in Section 14, if prior to the acceptance for
payment of or payment for any Shares (i) the Minimum Tender Condition shall
not have been satisfied, (ii) the applicable waiting period under the HSR Act
in respect of any of the transactions contemplated by the Merger Agreement
shall not have expired or been terminated prior to the Expiration Date, (iii)
the Financing Condition shall not have been satisfied or (iv) at any time on
or after July 22, 1998, and prior to acceptance for payment or payment for the
Shares, any of the following conditions exist:
(a) there shall be instituted or pending any action or
proceeding by any government or governmental authority or agency, domestic or
foreign, or by any other person, domestic or foreign, before any court or
governmental authority or agency, domestic or foreign, (i) challenging or
seeking to make illegal, to delay materially or otherwise directly or
indirectly to restrain or prohibit the making of the Offer, the acceptance for
payment of or payment for some of or all the Shares by the Purchaser or the
consummation by the Purchaser of the Merger, or seeking to obtain material
damages, (ii) seeking to restrain or prohibit the Purchaser's ownership or
operation (or that of its respective subsidiaries or affiliates) of all or any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or of the Purchaser and its subsidiaries,
taken as a whole, or to compel the Purchaser or any of its subsidiaries or
affiliates to dispose of or hold separate all or any material portion of the
business or assets of the Company and its subsidiaries, taken as a whole, or
of the Purchaser and its subsidiaries, taken as a whole, (iii) seeking to
impose or confirm material limitations on the ability of the Purchaser or any
of its subsidiaries or affiliates effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote any
Shares acquired or owned by the Purchaser or any of its subsidiaries or
affiliates on all matters properly presented to the Company's stockholders,
or (iv) seeking to require divestiture by the Purchaser or any of its
subsidiaries or affiliates of any Shares, or (v) that otherwise, in the
reasonable judgment of the Purchaser, is likely to materially adversely affect
the Company and its subsidiaries, taken as a whole; or
(b) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Offer or the Merger, by any
court, government or governmental authority or agency, domestic or foreign
other than the application of the waiting period provisions of the HSR Act to
the Offer or the Merger, that, in the reasonable judgment of the Purchaser, is
likely, directly or indirectly, to result in any of the consequences referred
to in clauses (i) through (v) of paragraph (a) above; or
(c) any change or material worsening of any existing condition
shall have occurred or been threatened in the business, assets, liabilities,
condition (financial or otherwise), results of operations or, insofar as can
be reasonably foreseen, prospects of the Company and its subsidiaries taken as
a whole that, in the reasonable judgment of the Purchaser, is or is likely to
be materially adverse to the Company and its subsidiaries, taken as a whole; or
(d) a tender or exchange offer for more than 30% of the Shares
at a price per Share in excess of $23.00 shall have been publicly proposed to
be made or shall have been made by another person, or it shall have been
publicly disclosed or the Purchaser shall have otherwise learned that (i) any
person or "group" (as defined in Section 13(d)(3) of the Exchange Act) shall
have acquired or proposed to acquire beneficial ownership of more than 30% of
any class or series of capital stock of the Company (including the Shares),
through the acquisition of stock, the formation of a group or otherwise, or
shall have been granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of more than 30% of any class or
series of capital stock of the Company (including the Shares) other than
acquisitions for bona fide arbitrage purposes only and other than as disclosed
in a Schedule 13D or 13G on file with the Commission on July 16, 1998, or (ii)
any such person or group which, prior to July 16, 1998, had filed such a
Schedule with the Commission shall have acquired or proposed to acquire
beneficial ownership of additional shares of any class or series of capital
stock of the Company (including the Shares), through the acquisition of stock,
the formation of a group or otherwise, constituting 10% or more of any such
class or series, or shall have been granted any option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of additional shares
of any class or series of capital stock of the Company (including the Shares)
constituting 10% or more of any such class or series or (iii) any person or
group shall have entered into a definitive agreement or an agreement in
principle with respect to a merger, consolidation or other business
combination with the Company; or
(e) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger
Agreement, or any of the representations and warranties of the Company set
forth in the Merger Agreement shall not be true in any material respect when
made or at any time prior to consummation of the Offer as if made at and as of
such time; or
(f) The Fourth Amended and Restated Shareholders Agreement and
the Fifth Amended and Restated Registration Rights Agreement, in each case
among the Company and certain of its stockholders, shall not have been
terminated; or
(g) the Merger Agreement shall have been terminated in
accordance with its terms; or
(h) the Board of Directors of the Company shall have withdrawn
or materially modified its approval or recommendation of the Offer or the
Merger;
which, in the reasonable judgment of the Purchaser, in any such case, and
regardless of the circumstances giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
16. Certain Legal Matters; Regulatory Approvals.
General. Based on its examination of publicly available
information filed by the Company with the Commission and other publicly
available information concerning the Company, the Purchaser is not aware of
any governmental license or regulatory permit that appears to be material to
the Company's business that might be adversely affected by the Purchaser's
acquisition of Shares as contemplated herein or, except as set forth below, of
any approval or other action by any government or governmental administrative
or regulatory authority or agency, domestic or foreign, that would be required
for the acquisition or ownership of Shares by the Purchaser as contemplated
herein. Should any such approval or other action be required, the Purchaser
currently contemplates that such approval or other action will be sought.
There can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
if such approvals were not obtained or such other actions were not taken
adverse consequences might not result to the Company's business or certain
parts of the Company's business might not have to be disposed of, any of which
could cause the Purchaser to elect to terminate the Offer without the purchase
of Shares thereunder. The Purchaser's obligation under the Offer to accept
for payment and pay for Shares is subject to certain conditions. See Section
15.
On July 21, 1998, an action entitled Taam Associates, Inc. v.
DeCrane, et al., C.A. No. 16551, was commenced in Delaware Chancery Court on
behalf of a purported class of stockholders of the Company against the
Company, its directors and various officers, Donaldson, Lufkin & Jenrette,
Inc. and the Purchaser, alleging, among other things, that the directors had
breached their fiduciary duties by entering into the Merger Agreement without
engaging in an auction or "active market check" and therefore did not
adequately inform themselves in agreeing to terms that are unfair and
inadequate from the standpoint of the Company's stockholders. The complaint
seeks a preliminary and permanent injunction barring defendants from
proceeding with the transaction or, if the transaction is consummated, an order
rescinding it or awarding damages, together with interest, and an award of
attorneys' fees and litigation expenses. The Purchaser believes the action is
without merit.
Antitrust. Under the HSR Act and the rules that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The purchase of Shares pursuant to the Offer and the purchase
of Parent Common Stock by the DLJMB Funds are subject to such requirements.
Pursuant to the requirements of the HSR Act, the Purchaser
expects to file Notification and Report Forms with respect to the Offer and
the Equity Purchase with the Antitrust Division and the FTC on or about July
23, 1998. As a result, assuming such filings are made on July 23, 1998, the
waiting periods applicable to the purchase of Shares pursuant to the Offer and
the Equity Purchase are scheduled to expire at 11:59 P.M., New York City time,
on Thursday, August 6, 1998 and Saturday, August 21, 1998, respectively.
However, prior to such time, the Antitrust Division or the FTC may extend the
waiting period by requesting additional information or documentary material
relevant to the Offer from the Purchaser. If such a request is made, the
waiting period will be extended until 11:59 P.M., New York City time, on the
tenth day after substantial compliance by the Purchaser with such request.
Thereafter, such waiting period can be extended only by court order.
A request is being made pursuant to the HSR Act for early
termination of the waiting period applicable to the Offer and the Equity
Purchase. There can be no assurance, however, that the 15-day HSR Act waiting
periods will be terminated early. Shares will not be accepted for payment or
paid for pursuant to the Offer until the expiration or earlier termination of
the applicable waiting periods under the HSR Act. See Section 15. Subject to
Section 4, any extension of the waiting periods will not give rise to any
withdrawal rights not otherwise provided for by applicable law. If the
Purchaser's acquisition of Shares is delayed pursuant to a request by the
Antitrust Division or the FTC for additional information or documentary
material pursuant to the HSR Act, the Offer may, but need not, be extended.
The Antitrust Division and the FTC frequently scrutinize the
legality under the antitrust laws of transactions such as the acquisition of
Shares by the Purchaser pursuant to the Offer. At any time before or after
the consummation of any such transactions, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking divestiture of the Shares so acquired
or divestiture of substantial assets of the Purchaser or the Company. Private
parties (including individual states) may also bring legal actions under the
antitrust laws. The Purchaser does not believe that the consummation of the
Offer will result in a violation of any applicable antitrust laws. However,
there can be no assurance that a challenge to the Offer on antitrust grounds
will not be made, or if such a challenge is made, what the result will be.
See Section 15 for certain conditions to the Offer, including conditions with
respect to litigation and certain governmental actions.
Other Governmental Approvals. The Purchaser is currently
evaluating whether any regulatory approvals or filing of information with
governmental agencies will be required to be obtained or made in connection
with the Offer or the Merger in the United Kingdom or Switzerland, where the
Company maintains certain manufacturing facilities. If any such approvals are
required to be obtained, there can be no assurance that they will be obtained
or that, if obtained, they will be obtained prior to the scheduled expiration
of the Offer. See Section 15.
17. Fees and Expenses.
DLJSC is acting as financial advisor to the Purchaser and is
acting as Dealer Manager in connection with the Offer. The Purchaser has
agreed to pay DLJSC, as compensation for its services as financial advisor and
as Dealer Manager in connection with the Offer, fees aggregating $3.0 million.
The Purchaser has also agreed to reimburse DLJSC for certain reasonable
out-of-pocket expenses incurred in connection with the Offer (including the
fees and disbursements of outside counsel) and to indemnify DLJSC against
certain liabilities, including certain liabilities under the federal
securities laws. In addition, the Purchaser has agreed to pay DLJSC an annual
advisory fee of $300,000 beginning on the consummation of the Offer for a
period of five years.
The Purchaser has retained D.F. King & Co., Inc. to act as the
Information Agent and BankBoston, N.A. to act as the Depositary in connection
with the Offer. The Information Agent may contact holders of Shares by mail,
telephone, telex, telegraph and personal interviews and may request brokers,
dealers and other nominee stockholders to forward materials relating to the
Offer to beneficial owners. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their respective services,
will be reimbursed for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities in connection therewith, including
certain liabilities under the federal securities laws.
The Purchaser will not pay any fees or commissions to any
broker or dealer or any other person (other than the Dealer Manager, the
Information Agent and the Depositary) for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will, upon request, be reimbursed by the Purchaser for reasonable and
necessary costs and expenses incurred by them in forwarding materials to their
customers.
18. Miscellaneous.
The Offer is not being made to, nor will tenders be accepted
from or on behalf of, holders of Shares in any jurisdiction in which the
making of the Offer or acceptance thereof would not be in compliance with the
laws of such jurisdiction. However, the Purchaser may, in its discretion,
take such action as it may deem necessary to make the Offer in any such
jurisdiction and extend the Offer to holders of Shares in such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE
ANY REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
The Purchaser has filed with the Commission a Tender Offer
Statement on Schedule 14D-1, together with exhibits, pursuant to Rule 14d-3 of
the General Rules and Regulations under the Exchange Act, furnishing certain
additional information with respect to the Offer. The Schedule 14D-1 and any
amendments thereto, including exhibits, may be examined and copies may be
obtained from the offices of the Commission in the manner set forth in Section
7 of this Offer to Purchase (except that such information will not be
available at the regional offices of the Commission).
DeCrane Acquisition Co.
July 22, 1998
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS
1. Directors and Executive Officers of Each of Parent, Finance
and the Purchaser. The name, business address, present principal occupation
or employment of each director and executive officer of Parent, Finance and the
Purchaser and certain other information are set forth below. Unless otherwise
indicated below, the address of each director and officer is c/o Donaldson,
Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York, New York
10172. Unless otherwise indicated, each occupation set forth opposite an
individual's name refers to employment with each of Parent, Finance and the
Purchaser.
Name Present Principal Occupation or Employment
- ---- ------------------------------------------
*Thompson Dean President, Treasurer
*Timothy J. White Vice President and Secretary
- ------------
* Director
2. Persons Who May Be Designated by the Purchasers to Serve as
Directors on the Company's Board of Directors. The five-year employment
history of each person who may be appointed to the Company's Board of
Directors after the consummation of the Offer but prior to the Merger is as
follows:
<TABLE>
<CAPTION>
Present Principal Occupation and
Name Five-Year Employment History Age
- ---- ------------------------------- ---
<S> <C> <C>
Thompson Dean Thompson Dean joined DLJMB in 1988 as a Vice 40
President and was named a Managing Director in 1991.
Prior to joining DLJMB, he was a Vice President in the
Special Finance Group (Leveraged Transactions) at
Goldman, Sachs & Co. Mr. Dean currently serves as
Chairman of the Board of Von Hoffman Press, Inc., and
as a director of Arcade Holding Corp., CommVault
Systems, Inc., Formica Corp., Manufacturers' Services
Ltd. and Phase Metrics, Inc. He has previously served as
Chairman of the Board of Fiberite, Inc. and Katz Media
Group, Inc. and as a director of Evergreen Media Corp.,
Hampshire Chemical Corp., IVAC Corp., McGraw, Inc.
and Nimbus CD International, Inc.
Timothy J. White Timothy J. White has been a Vice President of DLJMB 36
since June 1998. From October 1994 to May 1998, Mr.
White was an Associate and Vice President of DLJSC.
From May 1994 to October 1994, Mr. White was an
Associate Counsel in the Office of the Independent
Counsel, United States Department of Justice. Prior to
that time, Mr. White was an attorney with Davis Polk &
Wardwell.
Susan C. Schnabel Susan Schnabel joined DLJSC in 1990 and became a 36
Managing Director in 1996. During this time, she
focused on mergers, acquisitions and financing of retail
and consumer products companies. In 1997, she served
as Chief Financial Officer of PETSMART, a high growth
specialty retailer of pet products and supplies. Ms.
Schnabel rejoined DLJ in her present capacity in 1998.
Ms. Schnabel serves on the Board of Dick's Clothing and
Sporting Goods.
Dr. Paul B. Kaminski Dr. Kaminski is a Managing Director of Global 51
Technology Partners. In 1994, he was sworn in as the
Under Secretary of Defense for Acquisition and
Technology and served in this capacity until 1997. Dr.
Kaminski has a continuing career involving advanced
technology in both the private and public sectors,
including positions as Founder, Chairman and CEO of
Technology Strategies and Alliances, CEO of
Technovation, Inc. and Chairman of the Defense Science
Board.
</TABLE>
SCHEDULE B
Executive Officers and Directors
of
DLJ Merchant Banking II, Inc.
The names of the Directors and the names and titles of the Executive
Officers of DLJ Merchant Banking II, Inc. ("MBII INC") and their business
addresses and principal occupations are set forth below. If no address is
given, the Director's or Executive Officer's business address is that of MBII
INC at 277 Park Avenue, New York, New York 10172. Unless otherwise indicated,
each occupation set forth opposite an individual's name refers to MBII INC and
each individual is a United States citizen.
Name, Business Address Present Principal Occupation
---------------------- ----------------------------
* Hamilton E. James Chairman; Managing Director, Donaldson, Lufkin
& Jenrette, Inc.
* Nicole S. Arnaboldi Managing Director
* Thompson Dean Managing Director
Carlos Garcia Managing Director
* Peter T. Grauer Managing Director
* David L. Jaffe Managing Director
* Lawrence M.v.D. Schloss Managing Director and Chief Operating Officer
* Karl R. Wyss Managing Director
- -----------
* Director
SCHEDULE C
Executive Officers and Directors
of
DLJ Diversified Partners, Inc.
The names of the Directors and the names and titles of the Executive
Officers of DLJ Diversified Partners, Inc. ("DP INC") and their business
addresses and principal occupations are set forth below. If no address is
given, the Director's or Executive Officer's business address is that of DP
INC at 277 Park Avenue, New York, New York 10172. Unless otherwise indicated,
each occupation set forth opposite an individual's name refers to DP INC and
each individual is a United States citizen.
Name, Business Address Present Principal Occupation
---------------------- ----------------------------
* Hamilton E. James Chairman; Managing Director, Donaldson, Lufkin
& Jenrette, Inc.
* Lawrence M.v.D. Schloss Managing Director and Chief Operating Officer;
Managing Director and Chief Operating Officer,
DLJ Merchant Banking II, Inc.
* Marjorie S. White Secretary and Treasurer; Vice President and
Secretary, Donaldson, Lufkin & Jenrette, Inc.
- ------------
* Director
SCHEDULE D
Executive Officers and Directors
of
DLJMB Funding, II, Inc.
The names of the Directors and the names and titles of the Executive
Officers of DLJ MB Funding, II, Inc. ("Funding II") and their business
addresses and principal occupations are set forth below. If no address is
given, the Director's or Executive Officer's business address is that of
Funding II at 277 Park Avenue, New York, New York 10172. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
Funding II and each individual is a United States citizen.
Name, Business Address Present Principal Occupation
---------------------- ----------------------------
* Anthony F. Daddino President; Executive Vice President and Chief
Financial Officer, Donaldson, Lufkin & Jenrette,
Inc.
* Charles J. Hendrickson Treasurer; Senior Vice President and Treasurer,
Donaldson, Lufkin & Jenrette, Inc.
Marjorie S. White Secretary; Vice President and Secretary,
Donaldson, Lufkin & Jenrette, Inc.
- ------------
* Director
SCHEDULE E
Executive Officers and Directors
of
DLJ LBO Plans Management Corporation
The names of the Directors and the names and titles of the Executive
Officers of DLJ LBO Plans Management Corporation ("LBO") and their business
addresses and principal occupations are set forth below. Each Director's or
Executive Officer's business address is that of LBO at 277 Park Avenue, New
York, New York 10172. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to LBO and each individual is a United
States citizen.
Name, Business Address Present Principal Occupation
---------------------- ----------------------------
* Anthony F. Daddino President; Executive Vice President and Chief
Financial Officer, Donaldson, Lufkin & Jenrette,
Inc.
* Vincent DeGiaimo Vice President; Senior Vice President and
Managing Director, Donaldson, Lufkin & Jenrette,
Inc.
* Marjorie S. White Vice President and Secretary; Vice President,
Donaldson, Lufkin & Jenrette, Inc.
- ------------
* Director
SCHEDULE F
Executive Officers and Directors
of
DLJ Capital Investors, Inc.
The names of the Directors and the names and titles of the Executive
Officers of DLJ Capital Investors, Inc. ("DLJCI") and their business addresses
and principal occupations are set forth below. If no address is given, the
Director's or Executive Officer's business address is that of DLJCI at 277
Park Avenue, New York, New York 10172. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to DLJCI and each
individual is a United States citizen.
Name, Business Address Present Principal Occupation
---------------------- ----------------------------
* John S. Chalsty Chairman; Chairman and Chief Executive Officer,
Donaldson, Lufkin & Jenrette, Inc.
* Hamilton E. James Chief Executive Officer; Managing Director,
Donaldson, Lufkin & Jenrette, Inc.
* Joe L. Roby Chief Operating Officer; President and Chief
Operating Officer, Donaldson, Lufkin & Jenrette,
Inc.
* Anthony F. Daddino Executive Vice President and Chief Financial
Officer; Executive Vice President and Chief
Financial Officer, Donaldson, Lufkin & Jenrette,
Inc.
* Marjorie S. White Secretary and Treasurer; Vice President and
Secretary, Donaldson, Lufkin & Jenrette, Inc.
- ------------
* Director
SCHEDULE G
Executive Officers and Directors
of
UK Investment Plan 1997, Inc.
The names of the Directors and the names and titles of the Executive
Officers of UK Investment Plan 1997, Inc. ("UKIP 1997 INC") and their business
addresses and principal occupations are set forth below. If no address is
given, the Director's or Executive Officer's business address is that of UKIP
1997 INC at 277 Park Avenue, New York, New York 10172. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
UKIP 1997 INC and each individual is a United States citizen.
Name, Business Address Present Principal Occupation
---------------------- ----------------------------
Anthony F. Daddino President; Executive Vice President and Chief
Financial Officer, Donaldson, Lufkin & Jenrette,
Inc.
* Marjorie S. White Vice President, Secretary and Treasurer; Vice
President and Secretary, Donaldson, Lufkin &
Jenrette, Inc.
* Stuart S. Flamberg Director of Taxes; Senior Vice President and
Director of Taxes, Donaldson, Lufkin & Jenrette,
Inc.
* Mark A. Competiello Tax Manager; Senior Vice President and Tax
Manager, Donaldson, Lufkin & Jenrette, Inc.
- ------------
* Director
SCHEDULE H
Executive Officers and Directors
of
Donaldson, Lufkin & Jenrette, Inc.
The names of the Directors and the names and titles of the Executive
Officers of Donaldson, Lufkin & Jenrette, Inc. ("DLJ") and their business
addresses and principal occupations are set forth below. If no address is
given, the Director's or Executive Officer's business address is that of DLJ
at 277 Park Avenue, New York, New York 10172. Unless otherwise indicated,
each occupation set forth opposite an individual's name refers to DLJ and each
individual is a United States citizen.
Name, Business Address Present Principal Occupation
---------------------- ----------------------------
* John S. Chalsty Chairman and Chief Executive Officer
* Joe L. Roby President and Chief Operating Officer
* Claude Bebear (1) Chairman of the Executive Committee of
AXA-UAP the Board, AXA- UAP
23, avenue Matignon
75008 Paris, France
* Henri de Castries (1) Senior Executive Vice President
AXA-UAP Financial Services and Life Insurance
23, avenue Matignon Activities (U.S. & U.K.), AXA-UAP
75008 Paris, France
* Denis Duverne (1) Senior Vice President - International
AXA-UAP Life, AXA- UAP
23, avenue Matignon
75008 Paris, France
* Louis Harris Chairman and Chief Executive Officer, LH
LH Research Research (research)
152 East 38th Street
New York, New York 10016-2605
* Henri G. Hottinguer (2) Chairman and Chief Executive Officer,
Banque Hottinguer Banque Hottinguer (banking)
38, rue de Provence
75009 Paris, France
* W. Edwin Jarmain President, Jarmain Group Inc. (private
Jarmain Group Inc. investment holding company)
Suite 2525, Box 36
121 King Street, West
Toronto, Ontario
M5H 3T9 Canada
* Francis Jungers Retired
19880 NW Estucca Drive
Portland, Oregon 97229
* Joseph J. Melone Chairman of the Executive Committee of
1290 Avenue of the Americas the Board, The Equitable Companies
New York, New York 10104 Incorporated
* Edward D. Miller President and Chief Executive Officer,
1290 Avenue of the Americas Micro Devices Advanced
New York, New York 10104
* Stanley B. Tulin Executive Vice President and Chief
Financial Officer, The Equitable
Companies Incorporated
* John C. West Retired
Bothea, Jordan & Griffin
23B Shelter Cove
Hilton Head Island, SC 29928
* Carl B. Menges Vice Chairman of the Board
* Hamilton E. James Managing Director
* Richard S. Pechter Managing Director
* Theodore P. Shen Managing Director
* Anthony F. Daddino Executive Vice President and Chief
Financial Officer
- ------------
* Director
(1) Citizen of the Republic of France
(2) Citizen of Canada
(3) Citizen of Switzerland
SCHEDULE I
Executive Officers and Directors
of
The Equitable Companies Incorporated
The names of the Directors and the names and titles of the Executive
Officers of The Equitable Companies Incorporated ("EQ") and their business
addresses and principal occupations are set forth below. If no address is
given, the Director's or Executive Officer's business address is that of EQ at
1290 Avenue of the Americas, New York, New York 10104. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
EQ and each individual is a United States citizen.
<TABLE>
<CAPTION>
Name, Business Address Present Principal Occupation
---------------------- ----------------------------
<S> <C> <C>
* Claude Bebear (1) Chairman of the Board; Chairman of the Executive
AXA-UAP Board, AXA-UAP
23, avenue Matignon
75008 Paris, France
* John S. Chalsty Chairman and Chief Executive Officer, Donaldson,
Donaldson, Lufkin & Jenrette, Inc. Lufkin & Jenrette, Inc.
277 Park Avenue
New York, NY 10172
* Francoise Colloc'h (1) Senior Executive Vice President, Group Human
AXA-UAP Resources and Communications, AXA-UAP
23, avenue Matignon
75008 Paris, France
* Henri de Castries (1) Vice Chairman of the Board; Senior Executive Vice
AXA-UAP President, Financial Services and Life Insurance
23, avenue Matignon Activities, U.S. & U.K.), AXA-UAP
75008 Paris, France
* Joseph L. Dionne Chairman and Chief Executive Officer, The
The McGraw-Hill Companies McGraw-Hill Companies (publishing)
1221 Avenue of the Americas
New York, NY 10020
* William T. Esrey Chairman and Chief Executive Officer, Sprint
Sprint Corporation Corporation (telecommunications)
P.O. Box 11315
Kansas City, MO 64112
* Jean-Rene Fourtou (1) Chairman and Chief Executive Officer, Rhone-
Rhone-Poulenc S.A. Poulenc S.A. (manufacturer of chemicals and
25 quai Paul Doumer agricultural products)
92408 Courbevoie Cedex
France
* Jacques Friedmann (1) Chairman of the Supervisory Board,
AXA-UAP AXA-UAP
9, Place Vendome
75001 Paris
France
Robert E. Garber Executive Vice President and General Counsel;
Executive Vice President and General Counsel, The
Equitable Life Assurance Society of the United
States
Jerome S. Golden Executive Vice President
* Donald J. Greene, Esq. Counselor-at-Law, Partner, LeBoeuf, Lamb, Greene
LeBoeuf, Lamb, Greene & & MacRae, L.L.P. (law firm)
MacRae, L.L.P.
125 West 55th Street
New York, NY 10019
* Anthony J. Hamilton (2) Group Chairman and Chief Executive Officer, Fox-
Fox-Pitt, Kelton Group Limited Pitt, Kelton Group Limited (finance)
35 Wilson Street
London, England EC2M 2SJ
* John T. Hartley Retired Chairman and Chief Executive Officer,
Harris Corporation currently Director, Harris Corporation
1025 NASA Boulevard (manufacturer of electronic, telephone and copying
Melbourne, FL 32919 systems)
* John H. F. Haskell, Jr. Director and Managing Director, SBC Warburg
Dillon, Read & Co., Inc. Dillon Read, Inc. (formerly Dillon, Read & Co.,
535 Madison Avenue Inc.) (investment banking firm)
New York, NY 10022
Michael Hegarty Senior Executive Vice President and Chief
Operating Officer; President and Chief Operating
Officer, The Equitable Life Assurance Society of
the United States
* Mary R. (Nina) Henderson President, Best Foods Grocery of CPC
CPC Specialty Markets Group International, Inc. (food manufacturer)
700 Sylvan Avenue
Englewood, NJ 07632
* W. Edwin Jarmain (3) President, Jarmain Group Inc. (private investment
Jarmain Group Inc. holding company)
Suite 2525
121 King Street West
Toronto, Ontario M5H 3T9
Canada
* Joseph J. Melone Chairman of the Executive Committee of the
Board; Chairman of the Executive Committee of
the Board, The Equitable Life Assurance Society of
the United States
* Edward D. Miller President and Chief Executive Officer; Chairman
and Chief Executive Officer, The Equitable Life
Assurance Society of the United States
Peter D. Noris Executive Vice President and Chief Investment
Officer; Executive Vice President and Chief
Investment Officer, The Equitable Life Assurance
Society of the United States
* Didier Pineau-Valencienne(1) Chairman and Chief Executive Officer, Schneider
64/70, avenue Jean Baptiste S.A. (electric equipment)
Clement
92646 Boulogne Cedex, France
* George J. Sella, Jr. Retired Chairman, President and Chief Executive
American Cyanamid Company Officer, American Cyanamid Company
P.O. Box 397 (manufacturer of pharmaceutical products and
Newton, NJ 07860 agricultural products)
Jose Suquet Executive Vice President; Executive Vice President
and Chief Distribution Officer; The Equitable Life
Assurance Society of the United States
Stanley B. Tulin Executive Vice President and Chief Financial
Officer; Senior Executive Vice President and Chief
Financial Officer, The Equitable Life Assurance
Society of the United States
* Dave H. Williams Chairman and Chief Executive Officer, Alliance
Alliance Capital Capital Management Corp. (investment adviser)
Management Corporation
1345 Avenue of the Americas
New York, NY 10105
- ------------
* Director
(1) Citizen of the Republic of France
(2) Citizen of United Kingdom
(3) Citizen of Canada
</TABLE>
SCHEDULE J
Members of Executive Committee and Supervisory Board
of
AXA-UAP
The names and titles (for the Executive Committee members) of the
Members of the Executive Committee and Supervisory Board of AXA-UAP and their
business addresses and principal occupations are set forth below. If no
address is given, the Member's business is 23, avenue Matignon, 75008 Paris,
France. Unless otherwise indicated, each occupation set forth opposite an
individual's name refers to AXA-UAP and each individual is a citizen of the
Republic of France.
Members of the Executive Committee
Name, Business Address Present Principal Occupation
- ---------------------- ----------------------------
Claude Bebear Chairman of the Executive Board
Donald Brydon (1) Senior Executive Vice President, AXA Asset
Management Europe
Henri de Castries Senior Executive Vice President, Financial
Services and Insurance Activities (U.S. and U.K.)
John Chalsty (2) Senior Executive Vice President; Chairman and
Chief Executive Officer, Donaldson, Lufkin &
Jenrette, Inc. (investment banking)
Francoise Colloch Senior Executive Vice President, Group Human
Resources and Communications
Jean-Pierre Gerard (3) Senior Executive Vice President; Chief Executive
Officer, Royale Beige (insurance)
Denis Kessler Senior Executive Vice President, Insurance
Activities outside France, U.K. and U.S.
Clause Kleyboldt (4) Senior Executive Vice President; Chairman of the
Executive Board of AXA Colonia (insurance)
Gerard de La Martiniere Senior Executive Vice President, Chief Financial
Officer
Joseph J. Melone (2) Chairman of the Executive Committee of the
Board, The Equitable Companies Incorporated
Edward D. Miller (2) Senior Executive Vice President; President and
Chief Executive Officer; The Equitable
Companies Incorporated
Jean-Louis Meunier Senior Executive Vice President, Central
Underwriting Officer
Michel Pinault Senior Executive Vice President, Group
Administration
Claude Tendil Senior Executive Vice President, French
Insurance Activities, international risks,
transborder insurance projects and information
systems policy
Geoff Tomlinson (5) Senior Executive Vice President; Managing
Director, National Mutual Holdings (insurance)
Dave H. Williams (2) Senior Executive Vice President; Chairman and
Chief Executive Officer, Alliance Capital
Management Corporation (investment adviser)
Mark Wood (1) Senior Executive Vice President; Managing
Director, Sun Life & Provincial Holdings plc
Members of the Supervisory Board
Name, Business Address Present Principal Occupation
- ---------------------- ----------------------------
Jacques Friedmann Chairman of the Supervisory Board
9, Place Vendome
75008 Paris, France
Jean-Louis Beffa Chairman and Chief Executive
"Les Miroirs" Officer, Compagnie de St. Gobain
Cedex 27 (industry)
92096 Paris La Defense, France
Antoine Bernheim General Partner, Lazard Freres et Cie
121, Avenue Haussman (investment banking); Chairman,
75008 Paris, France Assicurazioni Generali S.p.A.
(insurance)
Jacques Calvet Former Chairman of the Executive
75, avenue de la Grande Armee Board, Peugeot S.A. (auto
75116 Paris, France manufacturer)
David Dautreseme General Partner, Lazard Freres et Cie
121, Boulevard Haussman (investment banking)
75008 Paris, France
Guy Dejouany Honorary Chairman, Compagnie
52, rue d'Anjou Generaledes Eaux (industry and
75008 Paris, France services)
Paul Desmarais (7) Chairman and Chief Executive
751, Square Victoria Officer, Power Corporation (industry
Montreal Quebec and services)
H3Y 3JY Canada
Jean-Rene Fourtou Chairman and Chief Executive
25, quai Paul Doumer Officer, Rhone-Poulenc S.A.
93408 Courbevoie Cedex (industry)
France
Michel Francois-Poncet Chairman of the Supervisory Board,
5, Rue d'Antin Compagnie Financiere de Paribas
75002 Paris, France (financial services and banking)
Patrice Garnier Director, Finaxa
Latreaumont
76360 Baretin, France
Anthony J. Hamilton (1) General Partner, Fox-Pitt, Kelton
35 Wilson Street Group Limited (finance)
London, England EC2M 2SJ
Henri Hottinguer (6) Vice Chairman, Financier Hottinguer
38, rue de Provence (banking)
75009 Paris, France
Richard H. Jenrette (2) Senior Advisor, Donaldson, Lukfin &
c/o Donaldson, Lukfin & Jenrette, Jenrette, Inc. (investment banking)
Inc.
277 Park Avenue
New York, New York 10172
Henri Lachmann Chairman and Chief Executive
56, rue Jean Giraudoux Officer, Stafor Facom (office
67200 Strasbourg, France furniture)
Gerard Mestallet Chairman of the Executive Board
1, rue d'Astorg (finance) Suez Lyonnaise des Eaux
75008 Paris, France
Friedel Neuber Chairman of the Executive Board,
Girozentrade Herzogstrasse 15 WestDeutsche Landesbank (banking)
D40127 Dusseldorf, Germany
Alfred von Oppenheim (4) Chairman, Bank Oppenheim (banking)
Konsortium Oppenheim
Unter Sachsenrausen 4
50667 Koln, Germany
Michel Pebereau Chairman and Chief Executive
16, Boulevard des Italiens Officer, Banque Nationale de Paris
75009 Paris, France (banking)
Didier Pineau-Valencienne Chairman and Chief Executive
64-70, avenue Jean Baptiste Clement Officer, Schneider S.A. (electric
92646 Boulogne Cedex, France equipment)
Bruno Roger General Partner, Lazard Freres & Cie
121, Boulevard Hausmann (investment banking)
75008 Paris, France
Simone Rozes First Honorary President, Cour de
2, rue Villaret de Joyeuse Cassation (government)
75017 Paris, France
- ------------
(1) Citizen of the United Kingdom
(2) Citizen of the United States of America
(3) Citizen of Belgium
(4) Citizen of Germany
(5) Citizen of Australia
(6) Citizen of Switzerland
(7) Citizen of Canada
SCHEDULE K
Executive Officers and Members of Conseil d'Administration
of
FINAXA
The names of the Members of Conseil d'Administration and the names and
titles of the Executive Officers of Finaxa and their business addresses and
principal occupations are set forth below. If no address is given, the
Member's or Executive Officer's business address is that of Finaxa at 23,
avenue Matignon, 75008 Paris, France. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to Finaxa and each
individual is a citizen of the Republic of France.
<TABLE>
<CAPTION>
Name, Business Address Present Principal Occupation
---------------------- ----------------------------
<S> <C> <C>
* Claude Bebear Chairman and Chief Executive Officer; Chairman
of the Executive Board, AXA-UAP
* Henri de Clermont-Tonnerre Chairman of the Supervisory Board, Qualis SCA
4, avenue Van Dyke (transportation)
75008 Paris, France
* Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone-
25, quai Paul Doumer Poulenc S.A. (industry)
92408 Courbevoie Cedex
France
* Patrice Garnier Retired
Latreaumont
76360 Baretin, France
* Henri Hottinguer (1) Chairman and Chief Executive Officer, Banque
38, rue de Provence Hottinguer (banking)
75009 Paris, France
* Paul Hottinguer (1) Assistant Chairman and Chief Executive Officer,
38, rue de Provence Banque Hottinguer (banking)
75009 Paris, France
* Henri Lachmann Chairman and Chief Executive Officer, Strafor
56, rue Jean Giraudoux Facom (office furniture)
67000 Strasbourg, France
* Andre Levy-Lang Chief Executive Officer, Paribas (banking)
3, rue d'Antin
75002 Paris, France
Christien Manset Vice Chairman of the Supervisory Board, Banque
3, rue d'Antin Paribas
75002 Paris, France
* Georges Rousseau Retired
2, rue des Mouettes
76130 Mont Saint Aignan, France
Emilio Ybarra (2) Chairman, Banco Bilbao Vizcaya (banking)
Paseo de la Castillone, 8
28046 Madrid, Spain
- ------------
* Member, Conseil d'Administration
(1) Citizen of Switzerland
(2) Citizen of Spain
</TABLE>
SCHEDULE L
Executive Officers and Members of Conseil d'Administration
of
AXA ASSURANCES I.A.R.D. MUTUELLE
The names of the Members of Conseil d'Administration and the names and
titles of the Executive Officers of AXA Assurances I.A.R.D. Mutuelle and their
business addresses and principal occupations are set forth below. If no
address is given, the Member's or Executive Officer's business address is that
of AXA Assurances I.A.R.D. Mutuelle at 21, rue de Chateaudun, 75009 Paris,
France. Unless otherwise indicated, each occupation set forth opposite an
individual's name refers to AXA Assurances I.A.R.D. Mutuelle and each
individual is a citizen of the Republic of France.
<TABLE>
<CAPTION>
Name, Business Address Present Principal Occupation
---------------------- ----------------------------
<S> <C> <C>
* Claude Bebear Chairman; Chairman of the Executive Board,
23, avenue Matignon AXA-UAP
75008 Paris, France
Jean-Luc Bertozzi Executive Officer
* Jean-Pierre Chaffin Manager, Federation de la Metallurgie
5, rue la Bruyere (industry)
75009 Paris, France
* Gerard Coutelle Retired
* Henri de Castries Senior Executive Vice President, Financial Services
23, avenue Matignon and Life Insurance Activities (U.S. & U.K.), AXA-
75008 Paris, France UAP
* Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone-
25, quai Paul Doumer Poulenc S.A. (industry)
92408 Courbevoie Cedex
France
* Patrice Garnier Retired
Latreaumont
76360 Baretin, France
* Henri Lachmann Chairman and Chief Executive Officer, Strafor
56, rue Jean Giraudoux Facom (office furniture)
67000 Strasbourg, France
* Francois Richer Retired
* Georges Rousseau Retired
2, rue des Mouettes
76130 Mont Saint Aignan,
France
* Claude Tendil Chief Executive Officer; Senior Executive Vice
President, French Insurance Activities, AXA-UAP
* Nicolas Thiery Chairman and Chief Executive Officer,
6 Cite de la Chapelle Etablissements Jaillard (management consulting)
75018 Paris, France
* Francis Vaudour Chief Executive Officer, Segafredo Zanetti France
14, boulevard Industriel S.A. (coffee importing and processing)
76301 Sotteville les Rouen,
France
- ------------
* Member, Conseil d'Administration
</TABLE>
SCHEDULE M
Executive Officers and Members of Conseil d'Administration
of
AXA ASSURANCES VIE MUTUELLE
The names of the Members of Conseil d'Administration and the names and
titles of the Executive Officers of AXA Assurances Vie Mutuelle and their
business addresses and principal occupations are set forth below. If no
address is given, the Member's or Executive Officer's business address is that
of AXA Assurances Vie Mutuelle at 21, rue de Chateaudun, 75009 Paris, France.
Unless otherwise indicated, each occupation set forth opposite an individual's
name refers to AXA Assurances Vie Mutuelle and each individual is a citizen of
the Republic of France.
<TABLE>
<CAPTION>
Name, Business Address Present Principal Occupation
---------------------- ----------------------------
<S> <C> <C>
* Claude Bebear Chairman; Chairman of the Executive Board,
23, avenue Matignon AXA-UAP
75008 Paris, France
Jean-Luc Bertozzi Executive Vice President
* Jean-Pierre Chaffin Manager, Federation de la Metallurgie (industry)
11, rue de Rome
75008 Paris, France
* Henri de Castries Senior Executive Vice President, Financial Services
23, avenue Matignon and Life Insurance Activities (U.S. & U.K.), AXA-
75008 Paris, France UAP
* Henri de Clermont-Tonnerre Chairman of the Supervisory Board, Qualis SCA
4, avenue Van Dyke (transportation)
75008 Paris, France
* Gerard Coutelle Retired
* Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone-
25, quai Paul Doumer Poulenc S.A. (industry)
92408 Courbevoie Cedex
France
* Henri Lachmann Vice Chairman; Chairman and Chief Executive
56, rue Jean Giraudoux Officer, Strafor Facom (office furniture)
67000 Strasbourg, France
* Francois Richer Retired
* Georges Rousseau Retired
2, rue des Mouettes
76130 Mont Saint Aignan, France
* Claude Tendil Chief Executive Officer; Senior Executive Vice
Tour Assur 38 President, French Insurance Activities, AXA-UAP
92083 Paris La Defense, France
* Nicolas Thiery Chairman and Chief Executive Officer,
6 Cite de la Chapelle Etablissements Jaillard (management consulting)
75018 Paris, France
* Francis Vaudour Chief Executive Officer, Segafredo Zanetti France
14, boulevard Industriel S.A. (coffee importing and processing)
76301 Sotteville les Rouen, France
- ------------
* Member, Conseil d'Administration
</TABLE>
SCHEDULE N
Executive Officers and Members of Conseil d'Administration
of
AXA COURTAGE ASSURANCE MUTUELLE
The names of the Members of Conseil d'Administration and the names and
titles of the Executive Officers of AXA Courtage Assurance Mutuelle and their
business addresses and principal occupations are set forth below. If no
address is given, the Member's or Executive Officer's business address is that
of AXA Courtage Assurance Mutuelle at 26, rue de Louis-le-Grand, 75002 Paris,
France. Unless otherwise indicated, each occupation set forth opposite an
individual's name refers to AXA Courtage Assurance Mutuelle and each
individual is a citizen of the Republic of France.
<TABLE>
<CAPTION>
Name, Business Address Present Principal Occupation
---------------------- ----------------------------
<S> <C> <C>
* Claude Bebear Chairman; Chairman of the Executive Board,
23, avenue Matignon AXA-UAP
75008 Paris, France
* Francis Cordier Chairman and Chief Executive Officer, Group
rue Nicephore Niepce BP 232 Demay Lesieur (food industry)
76304 Sotteville Les Rouen,
France
* Gerard Coutelle Retired
* Henri de Castries Senior Executive Vice President, Financial Services
23, avenue Matignon and Life Insurance Activities (U.S. & U.K.), AXA-
75008 Paris, France UAP
* Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone-
25, quai Paul Doumer Poulenc S.A. (industry)
92408 Courbevoie Cedex
France
* Patrice Garnier Retired
Latreaumont
76360 Baretin, France
* Henri Lachmann Vice Chairman; Chairman and Chief Executive
56, rue Jean Giraudoux Officer, Strafor Facom (office furniture)
67000 Strasbourg, France
* Francis Magnan Chairman and Chief Executive Officer, Compagnie
50, boulevard des Dames Daher (air and sea transportation)
13002 Marseille, France
* Jean de Ribes Chairman and Chief Executive Officer, Banque
38, rue Fortuny Rivaud (banking)
75008 Paris, France
* Georges Rousseau Retired
2, rue des Mouettes
76130 Mont Saint Aignan, France
* Jean-Paul Saillard Manager, AXA-UAP
23, avenue Matignon
75008 Paris, France
* Claude Tendil Chief Executive Officer; Senior Executive Vice
Tour Assur 38 President, French Insurance Activities, AXA-UAP
92083 Paris La Defense, France
- ------------
* Member, Conseil d'Administration
</TABLE>
SCHEDULE O
Executive Officers and Members of Conseil d'Administration
of
ALPHA ASSURANCES VIE MUTUELLE
The names of the Members of Conseil d'Administration and the names and
titles of the Executive Officers of Alpha Assurances Vie Mutuelle and their
business addresses and principal occupations are set forth below. If no
address is given, the Member's or Executive Officer's business address is that
of Alpha Assurances Vie Mutuelle at Tour Franklin, 100/101 Terrasse Boieldieu,
Cedex 11, 92042 Paris La Defense, France. Unless otherwise indicated, each
occupation set forth opposite an individual's name refers to Alpha Assurances
Vie Mutuelle and each individual is a citizen of the Republic of France.
<TABLE>
<CAPTION>
Name, Business Address Present Principal Occupation
---------------------- ----------------------------
<S> <C> <C>
* Claude Bebear Chairman; Chairman of the Executive Board,
23, avenue Matignon AXA-UAP
75008 Paris, France
* Henri Brischoux Corporate Secretary; AXA Assurance France
Tour Assua 38
92083 Paris La Defense, France
* Bernard Cornille Audit Manager, AXA Assurances
21, rue de Chateaudun
75009 Paris, France
* Henri de Castries Senior Executive Vice President, Financial Services
23, avenue Matignon and Life Insurance Activities (U.S. & U.K.), AXA-
75008 Paris, France UAP
* Henri de Clermont-Tonnerre Chairman of the Supervisory Board, Qualis SCA
4, avenue Van Dyke (transportation)
75008 Paris, France
* Claude Fath Chairman of the Executive Board, UAP Vie
Tour Assur 28F
92083 Paris Las Defense, France
* Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone-
25, quai Paul Doumer Poulenc S.A. (industry)
92408 Courbevoie Cedex
France
* Patrice Garnier Retired
Latreaumont
76360 Baretin, France
* Henri Lachmann Vice Chairman; Chairman and Chief Executive
56, rue Jean Giraudoux Officer, Strafor Facom (office furniture)
67000 Strasbourg, France
* Georges Rousseau Retired
2, rue des Mouettes
76130 Mont Saint Aignan, France
* Claude Tendil Chief Executive Officer; Senior Executive Vice
Tour Assur 38 President, French Insurance Activities, AXA-UAP
92083 Paris La Defense, France
* Francis Vaudour Chief Executive Officer, Segafredo Zanetti France
14, boulevard Industriel S.A. (coffee importing and processing)
76301 Sotteville les Rouen,
France
- ------------
* Member, Conseil d'Administration
</TABLE>
[This page intentionally left blank.]
Facsimile copies of the Letter of Transmittal will be accepted. The
Letter of Transmittal and certificates for Shares and any other required
documents should be sent to the Depositary at one of the addresses set forth
below:
The Depositary for the Offer is:
BANKBOSTON, N.A.
<TABLE>
<S> <C>
By First Class Mail Only: By Registered, Certified, Express & Overnight Courier Only:
Boston EquiServe Boston EquiServe
Corporate Reorganization Corporate Reorganization
P.O. Box 8029 150 Royall Street
Boston, Massachusetts 02266-8029 Canton, Massachusetts 02021
</TABLE>
By Hand:
Securities Transfer & Reporting
Services, Inc.
1 Exchange Plaza/55 Broadway
New York, NY 10006
Confirm by Telephone:
(781) 575-3120
Questions or requests for assistance or additional copies of this Offer
to Purchase and the Letter of Transmittal may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers set forth below. Stockholders may also contact their broker, dealer,
commercial bank or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 425-1685
All Others Call Toll-Free: (800) 487-4870
The Dealer Manager for the Offer is:
Donaldson, Lufkin & Jenrette
277 Park Avenue
New York, New York 10172
(212) 892-7700
(call collect)
Exhibit (a) (2)
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
of
DeCrane Aircraft Holdings, Inc.
Pursuant to the Offer to Purchase
dated July 22, 1998
of
DeCrane Acquisition Co.
a company formed by
DLJ MERCHANT BANKING PARTNERS II, L.P.
and Affiliated Funds
- ------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON TUESDAY, AUGUST 25, 1998, UNLESS THE OFFER IS EXTENDED.
- ------------------------------------------------------------------------------
The Depositary for the Offer is:
BANKBOSTON, N.A.
<TABLE>
<S> <C>
By First Class Mail Only: By Registered, Certified, Express & Overnight Courier Only:
Boston EquiServe Boston EquiServe
Corporate Reorganization Corporate Reorganization
P.O. Box 8029 150 Royall Street
Boston, Massachusetts 02266-8029 Canton, Massachusetts 02021
</TABLE>
By Hand:
Securities Transfer & Reporting
Services, Inc.
1 Exchange Plaza/55 Broadway
New York, NY 10006
Confirm by Telephone:
(781) 575-3120
DESCRIPTION OF SHARES TENDERED
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s)
(Please fill in, if blank, exactly as name(s) Shares Tendered
appear(s) on Share Certificates) (Attach additional list if necessary)
- ----------------------------------------------------------------------------------------------------------------------
Total Number of Shares Number of
Certificate Represented by Shares
Number(s)* Certificate(s)* Tendered**
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
Total Shares
- ----------------------------------------------------------------------------------------------------------------------
- ------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented
by any certificates delivered to the Depositary are being tendered. See
Instruction 4.
</TABLE>
Delivery of this instrument to an address other than as set
forth above or transmission of instructions to a facsimile number other than
the ones listed above will not constitute a valid delivery.
This Letter of Transmittal is to be used by stockholders if
certificates for Shares (as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Purchase) is utilized,
if delivery of Shares is to be made by book-entry transfer to the Depositary's
account at The Depository Trust Company (hereinafter referred to as the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3 of the Offer to Purchase.
Stockholders who cannot deliver their Shares and all other
documents required hereby to the Depositary on or prior to the Expiration Date
(as defined in the Offer to Purchase) or who cannot complete the procedures
for book-entry transfer on a timely basis, must tender their Shares pursuant
to the guaranteed delivery procedure set forth in Section 3 of the Offer to
Purchase. See Instruction 2. Delivery of documents to the Book-Entry
Transfer Facility does not constitute delivery to the Depositary.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution _______________________________________
Account No. at The Depository Trust Company _________________________
Transaction Code No. ________________________________________________
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE
THE FOLLOWING:
Name(s) of Tendering Stockholder(s) _________________________________
Date of Execution of Notice of Guaranteed Delivery __________________
Name of Institution which Guaranteed Delivery _______________________
If delivery is by book-entry transfer:
Name of Tendering Institution ______________________________________
Account No. at The Depository Trust Company _________________________
Transaction Code No. ________________________________________________
------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to DeCrane Acquisition Co., a
Delaware corporation (the "Purchaser"), the above-described shares of Common
Stock, $0.01 par value (the "Shares"), of DeCrane Aircraft Holdings, Inc., a
Delaware corporation (the "Company"), pursuant to the Purchaser's offer to
purchase all outstanding Shares at a price of $23.00 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated July 22, 1998, receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which together constitute the
"Offer"). The Purchaser reserves the right to transfer or assign, in whole or
from time to time in part, to one or more of its affiliates the right to
purchase Shares tendered pursuant to the Offer.
Upon the terms and subject to the terms and conditions of the
Offer and effective upon acceptance for payment of and payment for the Shares
tendered herewith, the undersigned hereby sells, assigns and transfers to or
upon the order of the Purchaser all right, title and interest in and to all
the Shares that are being tendered hereby (and any and all other Shares or
other securities issued or issuable in respect thereof on or after July 22,
1998) and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (and all such
other Shares or securities), with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(a) deliver certificates for such Shares (and all such other Shares or
securities), or transfer ownership of such Shares (and all such other Shares
or securities) on the account books maintained by the Book-Entry Transfer
Facility, together, in any such case, with all accompanying evidences of
transfer and authenticity, to or upon the order of the Purchaser, (b) present
such Shares (and all such other Shares or securities) for transfer on the
books of the Company and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares (and all such other Shares or
securities), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Thompson Dean and
Timothy J. White and each of them, the attorneys and proxies of the
undersigned, each with full power of substitution, to exercise all voting and
other rights of the undersigned in such manner as each such attorney and proxy
or his substitute shall in his sole discretion deem proper, with respect to
all of the Shares tendered hereby which have been accepted for payment by the
Purchaser prior to the time of any vote or other action (and any and all other
Shares or other securities issued or issuable in respect thereof on or after
July 22, 1998), at any meeting of stockholders of the Company (whether annual
or special and whether or not an adjourned meeting), by written consent or
otherwise. This proxy is irrevocable and is granted in consideration of, and
is effective upon, the acceptance for payment of such Shares by the Purchaser
in accordance with the terms of the Offer. Such acceptance for payment shall
revoke any other proxy or written consent granted by the undersigned at any
time with respect to such Shares (and all such other Shares or securities),
and no subsequent proxies will be given or written consents will be executed
by the undersigned (and if given or executed, will not be deemed to be
effective).
The undersigned hereby represents and warrants that the
undersigned has full power and authority to tender, sell, assign and transfer
the Shares tendered hereby (and any and all other Shares or other securities
issued or issuable in respect thereof on or after July 22, 1998) and that when
the same are accepted for payment by the Purchaser, the Purchaser will acquire
good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claims.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Depositary or the Purchaser to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby (and all such other Shares or securities).
All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned, and any obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. Except as stated
in the Offer, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to
any one of the procedures described in Section 3 of the Offer to Purchase and
in the instructions hereto will constitute an agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer.
Unless otherwise indicated under "Special Payment
Instructions", please issue the check for the purchase price of any Shares
purchased, and return any Shares not tendered or not purchased, in the name(s)
of the undersigned (and, in the case of Shares tendered by book-entry
transfer, by credit to the account at the Book-Entry Transfer Facility).
Similarly, unless otherwise indicated under "Special Delivery Instructions",
please mail the check for the purchase price of any Shares purchased and any
certificates for Shares not tendered or not purchased (and accompanying
documents, as appropriate) to the undersigned at the address shown below the
undersigned's signature(s). In the event that both "Special Payment
Instructions" and "Special Delivery Instructions" are completed, please issue
the check for the purchase price of any Shares purchased and return any Shares
not tendered or not purchased in the name(s) of, and mail said check and any
certificates to, the person(s) so indicated. The undersigned recognizes that
the Purchaser has no obligation, pursuant to the "Special Payment
Instructions", to transfer any Shares from the name of the registered
holder(s) thereof if the Purchaser does not accept for payment any of the
Shares so tendered.
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 6, 7 and 8)
To be completed ONLY if the check for the Purchase
Price of Shares purchased (less the amount of any
federal income and backup withholding tax required to
be withheld) or certificates for Shares not tendered or
not purchased are to be issued in the name of someone
other than the undersigned.
Mail [ ] check
[ ] certificates to:
Name
-------------------------------------------
(Please Print)
Address
----------------------------------------
- ------------------------------------------------
(Zip Code)
- ------------------------------------------------
(Taxpayer Identification No.)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 6, 7 and 8)
To be completed ONLY if the check for the Purchase
Price of Shares purchased (less the amount of any
federal income and backup withholding tax required to
be withheld) or certificates for Shares not tendered or
not purchased are to be mailed to someone other than
the undersigned or to the undersigned at an address
other than that shown below the undersigned's
signature(s).
Mail [ ] check
[ ] certificates to:
Name
-------------------------------------------
(Please Print)
Address
----------------------------------------
- ------------------------------------------------
(Zip Code)
SIGN HERE
(Please complete Substitute Form W-9 below)
- -----------------------------------------------------
- -----------------------------------------------------
Signature(s) of Owners
Dated , 1998
----------------------------------------
- -----------------------------------------------------
Please Print
Capacity (full title)
-------------------------------
Address
---------------------------------------------
- -----------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
----------------------
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, agent, officer of a corporation
or other person acting in a fiduciary or representative capacity, please
set forth full title and see Instruction 5.)
Guarantee of Signatures(s)
(If required; see Instructions 1 and 5)
Name of Firm
----------------------------------------------------
Authorized Signature
--------------------------------------------
Dated , 1998
----------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE Part I Taxpayer Identification No. -- For All Accounts Part II For Payees Exempt
FORM W-9 ----------------------------------------------------------------- From Backup With-
holding (see
Department of the Treasury Enter your taxpayer identification ----------------------- enclosed Guidlines)
Internal Revenue Service number in the appropriate box. For
most individuals and sole proprietors, -----------------------
this is your Social Security Number. Social Security Number
For other entities, it is your Employer
Payer's Request for Identification Number. If you do OR
Taxpayer Identification No. not have a number, see "How to Obtain
a TIN" in the enclosed Guidelines -----------------------
Note: If the account is in more than
one name, see the chart on page 2 of -----------------------
the enclosed Guidelines to determine Employee Idendification
what number to enter. Number
- --------------------------------------------------------------------------------------------------------------------------------
Certification -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me) and either (a)
I have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office or (b) I intend to
mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within (60) days,
31% of all reportable payments made to me thereafter will be withheld
until I provide a number;
(2) I am not subject to backup withholding either because (a) I am exempt
from backup withholding, or (b) I have not been notified by the
Internal Revenue Service ("IRS") that I am subject to backup
withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject
to backup withholding; and
(3) Any information provided on this form is true, correct and complete.
- --------------------------------------------------------------------------------------------------------------------------------
SIGNATURE DATE , 1998
---------------------------------- ----------------------
- --------------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS
MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
</TABLE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm which is
a member of a recognized Medallion Program approved by The Securities Transfer
Associations, Inc. (an "Eligible Institution"). Signatures on this Letter of
Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed
by the registered holder(s) of the Shares (which term, for purposes of this
document, shall include any participant in one of the Book-Entry Transfer
Facilities whose name appears on a security position listing as the owner of
Shares) tendered herewith and such holder(s) have not completed the
instruction entitled "Special Payment Instructions" on this Letter of
Transmittal or (b) if such Shares are tendered for the account of an Eligible
Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Shares. This Letter of
Transmittal is to be used either if certificates are to be forwarded herewith
or, unless an Agent's Message is utilized, if delivery of Shares is to be made
by book-entry transfer pursuant to the procedures set forth in Section 3 of
the Offer to Purchase. Certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of all Shares delivered electronically, as well
as a properly completed and duly executed Letter of Transmittal (or facsimile
thereof or, in the case of a book-entry transfer, an Agent's Message) and any
other documents required by this Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth on the front page of this
Letter of Transmittal by the Expiration Date. Stockholders who cannot deliver
their Shares and all other required documents to the Depositary by the
Expiration Date must tender their Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedure: (a) such tender must be made by or through an Eligible Institution,
(b) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Purchaser must be received by the
Depositary by the Expiration Date and (c) the certificates for all physically
delivered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal (or facsimile thereof or, in the case of a book-entry
delivery, an Agent's Message) and any other documents required by this Letter
of Transmittal, must be received by the Depositary within three Nasdaq Stock
Market trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in Section 3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
notice.
The method of delivery of Shares and all other required
documents is at the option and risk of the tendering stockholder and the
delivery will be deemed made only when actually received by the Depositary.
If certificates for Shares are sent by mail, registered mail with return
receipt requested, properly insured, is recommended. In all cases, sufficient
time should be allowed to ensure timely delivery.
No alternative, conditional or contingent tenders will be
accepted, and no fractional Shares will be purchased. By executing this
Letter of Transmittal (or facsimile thereof), the tendering stockholder waives
any right to receive any notice of the acceptance for payment of the Shares.
3. Inadequate Space. If the space provided herein is inadequate,
the certificate numbers and/or the number of Shares should be listed on a
separate schedule attached hereto.
4. Partial Tenders (not applicable to stockholders who tender by
book-entry transfer). If fewer than all the Shares represented by any
certificate delivered to the Depositary are to be tendered, fill in the number
of Shares which are to be tendered in the box entitled "Number of Shares
Tendered". In such case, a new certificate for the remainder of the Shares
represented by the old certificate will be sent to the person(s) signing this
Letter of Transmittal, unless otherwise provided in the appropriate box on
this Letter of Transmittal, as promptly as practicable following the
expiration or termination of the Offer. All Shares represented by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and
Endorsements. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond with
the name(s) as written on the face of the certificates without alteration,
enlargement or any change whatsoever.
If any of the Shares tendered hereby is held of record by two
or more persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in
different names on different certificates, it will be necessary to complete,
sign and submit as many separate Letters of Transmittal (or facsimiles
thereof) as there are different registrations of certificates.
If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, no endorsements of certificates or
separate stock powers are required unless payment of the purchase price is to
be made, or Shares not tendered or not purchased are to be registered in the
name of, any person other than the registered holder(s), in which case the
certificates evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such certificates.
Signature(s) on any such certificates or stock powers must be guaranteed by an
Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than
the registered holder(s) of the Shares tendered hereby, certificates
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case, signed exactly as the name(s) of the
registered holder(s) appear(s) on the certificates for such Shares.
Signature(s) on any such certificates or stock powers must be guaranteed by an
Eligible Institution. See Instruction 1.
If this Letter of Transmittal or any certificate or stock power
is signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Purchaser of the authority of such person
so to act must be submitted.
6. Stock Transfer Taxes. The Purchaser will pay or cause to be paid
any stock transfer taxes with respect to the sale and transfer of any Shares
to it or its order pursuant to the Offer. If, however, payment of the
purchase price is to be made to, or Shares not tendered or not purchased are
to be registered in the name of, any person other than the registered
holder(s), or if the tendered Shares are registered in the name of any
person(s) signing this Letter of Transmittal returned in the name of, any
person other than the registered holder(s), or if a transfer tax is imposed for
any reason other than the sale or transfer of Shares to the Purchaser pursuant
to the Offer, then the amount of any stock transfer taxes (whether imposed on
the registered holder(s), such other person or otherwise), will be deducted
from the purchase price unless satisfactory evidence of the payment of such
taxes, or exemption therefrom, is submitted herewith. It will not be necessary
to affix transfer tax stamps to the certificates representing Shares tendered
hereby.
7. Special Payment and Delivery Instructions. If the check for the
purchase price of any Shares purchased is to be issued, or any Shares not
tendered or not purchased are to be returned, in the name of a person other
than the person(s) signing this Letter of Transmittal or if the check or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that
shown above, the appropriate boxes on this Letter of Transmittal should be
completed. Stockholders tendering Shares by book-entry transfer may request
that Shares not purchased be credited to such account at the Book-Entry
Transfer Facility. If no such instructions are given, any such Shares not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facility.
8. Substitute Form W-9. Under the federal income tax laws, the
Depositary will be required to withhold 31% of the amount of any payments made
to certain stockholders pursuant to the Offer. In order to avoid such backup
withholding, each tendering stockholder, and, if applicable, each other payee,
must provide the Depositary with such stockholder's or payee's correct
taxpayer identification number and certify that such stockholder or payee is
not subject to such backup withholding by completing the Substitute Form W-9
set forth above. In general, if a stockholder or payee is an individual, the
taxpayer identification number is the Social Security number of such
individual. If the Depositary is not provided with the correct taxpayer
identification number, the stockholder or payee may be subject to a $50
penalty imposed by the Internal Revenue Service. Certain stockholders or
payees (including, among others, all corporations and certain foreign
individuals) are not subject to these backup withholding and reporting
requirements. In order to satisfy the Depositary that a foreign individual
qualifies as an exempt recipient, such stockholder or payee must submit a
statement, signed under penalties of perjury, attesting to that individual's
exempt status. Such statements can be obtained from the Depositary. For
further information concerning backup withholding and instructions for
completing the Substitute Form W-9 (including how to obtain a taxpayer
identification number if you do not have one and how to complete the
Substitute Form W-9 if Shares are held in more than one name), consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by
itself, cause Shares to be deemed invalidly tendered, but may require the
Depositary to withhold 31% of the amount of any payments made pursuant to the
Offer. Backup withholding is not an additional federal income tax. Rather,
the federal income tax liability of a person subject to backup withholding
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained provided that the required
information is furnished to the Internal Revenue Service. NOTE: FAILURE TO
COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
9. Requests for Assistance or Additional Copies. Requests for
assistance or additional copies of the Offer to Purchase and this Letter of
Transmittal may be obtained from the Information Agent or the Dealer Manager
at their respective addresses or telephone numbers set forth below.
The Information Agent is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 425-1685
All Others Call Toll-Free: (800) 487-4870
The Dealer Manager is:
Donaldson, Lufkin & Jenrette
277 Park Avenue
New York, New York 10172
(212) 892-7700
(Call Collect)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer
- -- Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
For this type of Give the
account: SOCIAL SECURITY
number of --
- -------------------------------------------------------------------
1. An individual's The individual
account
2. Two or more The actual owner of the
individuals (joint account or, if combined
account) funds, any one of the
individuals(1)
3. Husband and wife The actual owner of the
(joint account) account or, if joint
funds, either person(1)
4. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
5. Adult and minor The adult or, if the
(joint account) minor is the only
contributor, the minor(1)
6. Account in the name The ward, minor, or
of guardian or incompetent person(3)
committee for a
designated ward,
minor, or
incompetent person
7. a. The usual The grantor-trustee(1)
revocable savings
trust account
(grantor is also
trustee)
b. So-called trust The actual owner(1)
account that is not
a legal or valid
trust under State
law
For this type of Give the
account: EMPLOYER
IDENTIFICATION
number of --
- -------------------------------------------------------------------
8. Sole proprietorship The owner(4)
account
9. A valid trust, estate, Legal entity (Do not
or pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title.)(5)
10. Corporate account The corporation
11. Religious, The organization
charitable, or
educational
organization
account
12. Partnership held in The partnership
the name of the
business
13. Association, club or The organization
other tax-exempt
organization
14. A broker or The broker or nominee
registered nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such public
entity as a State or
local governmental,
school district or
prison) that receives
agricultural
program payments.
- ------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5. Application for a Social Security Number Card, or
Form SS-4 Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include
the following:
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a), or an individual
retirement plan.
o The United States or any agency or instrumentality thereof.
o A State, The District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
o An international organization or any agency or instrumentality thereof.
o A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a).
o An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
o An entity registered at all times under the Investment Company Act of 1940.
o A foreign central bank of issue.
Payment of dividends and patronage dividends not generally subject to
backup withholding include the following:
o Payments to nonresident aliens subject to withholding under section 1441.
o Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one non-resident partner.
o Payments of patronage dividends where the amount renewed is not paid in
money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include
the following:
o Payments of interest on obligations issued by individuals. Note: You
may be subject to backup withholding if this interest is $600 or more and
is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
o Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
o Payments described in section 6049(b)(5) to non-resident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage
dividends that are not subject to information reporting are also not
subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041,
6041A(a), 6045, and 6050A.
Privacy Act Notice -- Section 6109 requires most recipients of
dividend, interest, or other payments to give taxpayer identification
numbers to payers who must report the payments to IRS. IRS uses the
numbers for identification purposes. Payers must be given the numbers
whether or not recipients are required to file tax returns. Payers must
generally withhold 31% of taxable interest, dividend, and certain other
payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number. If you
fail to furnish your taxpayer identification number to a payer, you
are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding. If
you make a false statement with no reasonable basis which results in
no imposition of backup withholding, you are subject to a penalty of
$500.
(3) Criminal Penalty for Falsifying Information. Falsifying
certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
Exhibit (a) (3)
NOTICE OF GUARANTEED DELIVERY
in respect of
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
DeCrane Aircraft Holdings, Inc.
at
$23.00 Net Per Share
by
DeCrane Acquisition Co.
a company formed by
DLJ MERCHANT BANKING PARTNERS II, L.P.
and Affiliated Funds
This form, or a form substantially equivalent to this form, must be used to
accept the Offer (as defined below) if the shares of Common Stock of DeCrane
Aircraft Holdings, Inc. and all other documents required by the Letter of
Transmittal cannot be delivered to the Depositary by the expiration of the
Offer. Such form may be delivered by hand or facsimile transmission, telex or
mail to the Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
BANKBOSTON, N.A.
<TABLE>
<S> <C> <C>
By Facsimile Transmission By Registered, Certified, Express &
By First Class Mail Only: For Eligible Institutions Only: Overnight Courier Only:
Boston EquiServe Boston EquiServe Boston EquiServe
Corporate Reorganization Corporate Reorganization Corporate Reorganization
P.O. Box 8029 (781) 575-2233/2232 150 Royall Street
Boston, Massachusetts 02266-8029 Canton, Massachusetts 02021
By Hand:
Securities Transfer & Reporting
Services, Inc.
1 Exchange Plaza/55 Broadway
New York, NY 10006
Confirm by Telephone:
(781) 575-3120
</TABLE>
Ladies and Gentlemen:
The undersigned hereby tenders to DeCrane Acquisition Co., a
Delaware corporation (the "Purchaser"), upon the terms and subject to the
conditions set forth in the Offer to Purchase dated July 22, 1998 and the
related Letter of Transmittal (which together constitute the "Offer"), receipt
of which is hereby acknowledged, ___________ shares of Common Stock, $0.01 par
value per share (the "Shares"), of DeCrane Aircraft Holdings, Inc., a Delaware
corporation, pursuant to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase.
Certificate Nos. (if available)
- --------------------------------------------------
- --------------------------------------------------
If shares will be tendered by book-entry transfer:
Name of Tendering Institution
- --------------------------------------------------
Account No. at The Depository Trust Company
- --------------------------------------------------
SIGN HERE
- -------------------------------------------------
Signature(s)
- -------------------------------------------------
(Address)
- -------------------------------------------------
(Name(s)) (Please Print)
- -------------------------------------------------
(Zip Code)
- -------------------------------------------------
(Area Code and Telephone No.)
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm which is a member of a registered
national securities exchange or the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States, guarantees (a) that the above named
person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4
under the Securities Exchange Act of 1934, (b) that such tender of Shares
complies with Rule 14e-4 and (c) to deliver to the Depositary the Shares
tendered hereby, together with a properly completed and duly executed Letter(s)
of Transmittal (or facsimile(s) thereof) or an Agent's Message (as defined in
the Offer to Purchase) in the case of a book-entry delivery and any other
required documents, all within three Nasdaq Stock Market trading days of the
date hereof.
---------------------------------
(Name of Firm)
---------------------------------
(Authorized Signature)
---------------------------------
(Name)
---------------------------------
(Address)
---------------------------------
(Zip Code)
---------------------------------
(Area Code and Telephone No.)
Dated: _______________, 1998.
Exhibit (a) (4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
DeCrane Aircraft Holdings, Inc.
at
$23.00 Net Per Share
by
DeCrane Acquisition Co.
a company formed by
DLJ MERCHANT BANKING PARTNERS II, L.P.
and Affiliated Funds
July 22, 1998
To Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees:
We have been appointed by DeCrane Acquisition Co., a Delaware
corporation (the "Purchaser") to act as Dealer Manager in connection with its
offer to purchase all outstanding shares of Common Stock, $0.01 par value (the
"Shares"), of DeCrane Aircraft Holdings, Inc., a Delaware corporation (the
"Company"), at $23.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase dated
July 22, 1998 and the related Letter of Transmittal (which together constitute
the "Offer").
For your information and for forwarding to your clients for
whom you hold Shares registered in your name or in the name of your nominee,
we are enclosing the following documents:
1. Offer to Purchase dated July 22, 1998;
2. Letter of Transmittal for your use and for the information of
your clients, together with Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9
providing information relating to backup federal income tax
withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
the Shares and all other required documents cannot be
delivered to the Depositary by the Expiration Date (as defined
in the Offer to Purchase);
4. A form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the
name of your nominee, with space provided for obtaining such
clients' instructions with regard to the Offer; and
5. Return envelope addressed to BankBoston, N.A., the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON TUESDAY, AUGUST 25, 1998, UNLESS THE OFFER IS EXTENDED.
The Purchaser will not pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager, the
Information Agent or the Depositary as described in the Offer to Purchase) for
soliciting tenders of Shares pursuant to the Offer. The Purchaser will,
however, upon request, reimburse brokers, dealers, commercial banks and trust
companies for reasonable and necessary costs and expenses incurred by them in
forwarding materials to their customers. The Purchaser will pay all stock
transfer taxes applicable to its purchase of Shares pursuant to the Offer,
subject to Instruction 6 of the Letter of Transmittal.
In order to accept the Offer a duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and any other required documents, should be
sent to the Depositary by 12:00 Midnight, New York City time, on Tuesday,
August 25, 1998.
Any inquiries you may have with respect to the Offer should be
addressed to, and additional copies of the enclosed materials may be obtained
from, the Information Agent or the undersigned at the addresses and telephone
numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
Donaldson, Lufkin & Jenrette
Securities Corporation
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL
CONSTITUTE YOU THE AGENT OF DECRANE ACQUISITION CO., THE DEALER MANAGER, THE
INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO
USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION
WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
Exhibit (a) (5)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
DeCrane Aircraft Holdings, Inc.
at
$23.00 Net Per Share
by
DeCrane Acquisition Co.
a company formed by
DLJ MERCHANT BANKING PARTNERS II, L.P.
and Affiliated Funds
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated
July 22, 1998 and the related Letter of Transmittal (which together constitute
the "Offer") in connection with the offer by DeCrane Acquisition Co., a
Delaware corporation (the "Purchaser"), to purchase for cash all outstanding
shares of Common Stock, $0.01 par value (the "Shares"), of DeCrane Aircraft
Holdings, Inc., a Delaware corporation (the "Company"). We are the holder of
record of Shares held for your account. A tender of such Shares can be made
only by us as the holder of record and pursuant to your instructions. The
Letter of Transmittal is furnished to you for your information only and cannot
be used by you to tender Shares held by us for your account.
We request instructions as to whether you wish us to tender any
or all of the Shares held by us for your account, upon the terms and subject
to the conditions set forth in the Offer to Purchase and the Letter of
Transmittal.
Your attention is invited to the following:
1. The tender price is $23.00 per Share, net to you in cash.
2. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on Tuesday, August 25, 1998, unless the Offer is
extended.
3. The Offer is conditioned upon, among other things, there being
validly tendered by the Expiration Date (as defined in the
Offer) and not withdrawn a number of Shares which, together
with the Shares then owned by the Purchaser, represents at
least a majority of the outstanding Shares on a fully diluted
basis.
4. Any stock transfer taxes applicable to the sale of Shares to the
Purchaser pursuant to the Offer will be paid by the Purchaser,
except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
If you wish to have us tender any or all of your Shares, please
so instruct us by completing, executing, detaching and returning to us the
instruction form on the detachable part hereof. An envelope to return your
instructions to us is enclosed. If you authorize tender of your Shares, all
such Shares will be tendered unless otherwise specified on the detachable part
hereof. Your instructions should be forwarded to us in ample time to permit
us to submit a tender on your behalf by the expiration of the Offer.
The Offer is not being made to, nor will tenders be accepted
from or on behalf of, holders of Shares in any jurisdiction in which the
making of the Offer or acceptance thereof would not be in compliance with the
laws of such jurisdiction.
Payment for Shares purchased pursuant to the Offer will in all
cases be made only after timely receipt by BANKBOSTON, N.A. (the "Depositary")
of (a) Share Certificates or timely confirmation of the book-entry transfer
of such Shares into the account maintained by the Depositary at The Depository
Trust Company (the "Book-Entry Transfer Facility"), pursuant to the procedures
set forth in Section 3 of the Offer to Purchase, (b) the Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with any
required signature guarantees or an Agent's Message (as defined in the Offer
to Purchase), in connection with a book-entry delivery, and (c) any other
documents required by the Letter of Transmittal. Accordingly, payment may not
be made to all tendering stockholders at the same time depending upon when
certificates for or confirmations of book-entry transfer of such Shares into
the Depositary's account at the Book-Entry Transfer Facility are actually
received by the Depositary.
Instructions with Respect to
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
DeCrane Aircraft Holdings, Inc.
The undersigned acknowledge(s) receipt of your letter and the
enclosed Offer to Purchase dated July 22, 1998, and the related Letter of
Transmittal, in connection with the offer by DeCrane Acquisition Co. to
purchase all outstanding shares of Common Stock, $0.01 par value per share
(the "Shares"), of DeCrane Aircraft Holdings, Inc.
This will instruct you to tender the number of Shares indicated
below held by you for the account of the undersigned, upon the terms and
subject to the conditions set forth in the Offer to Purchase and the related
Letter of Transmittal.
Number of Shares to be Tendered: SIGN HERE
_________________________Shares(*) ___________________________________
Signature(s)
Dated ______________________, 1998 ___________________________________
___________________________________
___________________________________
Please print name(s) and
addresses here
- ------------
(*) Unless otherwise indicated, it will be assumed that all Shares held by
us for your account are to be tendered.
Exhibit (a) (6)
FOR IMMEDIATE RELEASE
July 17, 1998
DLJ MERCHANT BANKING PARTNERS II AND DECRANE AIRCRAFT
HOLDINGS, INC. ANNOUNCE AGREEMENT FOR ACQUISITION OF
DECRANE AIRCRAFT HOLDINGS AT $23.00 PER SHARE
New York, NY, July 17, 1998 - Donaldson, Lufkin & Jenrette, Inc.
(NYSE:DLJ) and DeCrane Aircraft Holdings, Inc. (NASDAQ:DAHX), jointly
announced that DeCrane and an affiliate of DLJ Merchant Banking Partners
II, DeCrane Acquisition Co., have entered into a definitive merger
agreement pursuant to which DeCrane Acquisition Co. would acquire DeCrane
for $23.00 per share of common stock of DeCrane. The board of directors of
DeCrane has unanimously approved the transaction and resolved to recommend
that DeCrane shareholders accept the offer.
Pursuant to the merger agreement, DeCrane Acquisition Co. will promptly commence
a cash tender offer for all outstanding shares of common stock at $23.00 per
share, net to the seller in cash. The offer is conditioned upon, among other
things, a minimum of a majority of the shares being properly tendered and not
withdrawn prior to the expiration of the offer. The offer is also subject to
receipt of customary regulatory approvals.
In the merger to occur following the consummation of the tender offer, each
share of DeCrane common stock outstanding and not tendered pursuant to the offer
will be converted into the right to receive $23.00 in cash. There are currently
approximately 7,500,00 shares of DeCrane common stock outstanding.
DeCrane common stock is traded on the Nasdaq Stock Exchange. The last reported
sale price of the common stock on Thursday, July 16, 1998 was $17.625.
DeCrane Acquisition Co. expects that the necessary filings with the Securities
and Exchange Commission in connection with the tender offer will be made within
the next several days and that the offer documents will be mailed to DeCrane
shareholders promptly thereafter. DLJ Securities Corporation is acting as dealer
manager and D.F. King & Co., Inc. as the information agent in connection with
the tender offer.
R. Jack DeCrane, Chairman and CEO of DeCrane, stated, "This transaction allows
stockholders to receive cash for all their shares at a very attractive price
while DLJ Merchant Banking will be a source of capital for the company to pursue
acquisitions and implement its business plan."
Thompson Dean, Managing Partner of DLJ Merchant Banking Partners II, said, "We
are excited to invest in a company with such rapid growth prospects and industry
leading products. We look forward to providing management with the capital to
aggressively grow these businesses through both internal investment and
acquisitions."
DLJ Merchant Banking Partners II, a $3 billion fund dedicated to private equity
and equity-related investments, seeks significant capital appreciation through
domestic and international investments in common or preferred stock and debt or
other securities in leveraged acquisitions and corporate joint ventures. Since
its formation in November 1996, DLJ Merchant Banking Partners II has consummated
(or contracted to consummate) 22 transactions valued at approximately $10
billion, the largest of which include Ameriserve, DecisionOne, Duane Reade,
Thermadyne and Von Hoffman Press.
Donaldson, Lufkin & Jenrette is a leading integrated investment and merchant
bank serving institutional, corporate, government and individual clients. DLJ's
businesses include securities underwriting; sales and trading; merchant banking;
financial advisory services; investment research; venture capital; correspondent
brokerage services; online, interactive brokerage services; and asset
management. Founded in 1959 and headquartered in New York City, DLJ employs
approximately 7,700 people worldwide and maintains offices in 14 cities in the
United States and 10 cities in Europe, Latin America and Asia. The company's
common stock trades on the New York Stock Exchange under the ticker symbol DLJ.
For more information on Donaldson, Lufkin, & Jenrette, refer to the company's
world wide web site at http://www.dlj.com.
DeCrane Aircraft Holdings, Inc., based in El Segundo, California, is a leader in
the manufacturing and integration of avionics components primarily for the
commercial aircraft market, with the balance for the corporate, military, and
regional airplane sectors. The firm has grown rapidly, mainly through
acquisitions, and believes itself well positioned to participate in an ongoing
consolidation of the fragmented aerospace-supplier industry.
Exhibit (a) (7)
This announcement is not an offer to purchase or a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated
July 22, 1998 and the related Letter of Transmittal and is not being made
to, nor will tenders be accepted from or on behalf of, holders of Shares
in any jurisdiction in which the making of the Offer or acceptance thereof
would not be in compliance with the laws of such jurisdiction. In those
jurisdictions where the applicable laws require that the Offer be made by
a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by the Dealer Manager or one or more registered
brokers or dealers licensed under the laws of such jurisdiction
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
DeCrane Aircraft Holdings, Inc.
at
$23.00 Net per Share
by
DeCrane Acquisition Co.
a company formed by
DLJ MERCHANT BANKING
PARTNERS II, L.P.
and Affiliated Funds
DeCrane Acquisition Co., a Delaware corporation (the "Purchaser"), is
offering to purchase all outstanding shares of Common Stock, $0.01 par
value (the "Shares"), of DeCrane Aircraft Holdings, Inc., a Delaware
corporation (the "Company"), at $23.00 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated July 22, 1998 (the "Offer to Purchase") and in the
related Letter of Transmittal (which together constitute the "Offer").
- ------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, AUGUST 25, 1998, OR SUCH LATER DATE TO
WHICH THE OFFER IS EXTENDED (THE "EXPIRATION DATE").
- ------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT EACH OF
THE OFFER AND THE MERGER DESCRIBED IN THE OFFER TO PURCHASE IS FAIR TO, AND IN
THE BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS, HAS APPROVED THE
OFFER AND THE MERGER, AND RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the Expiration Date a number of Shares
which, together with the Shares then owned by the Purchaser, represents at
least a majority of the total voting power of outstanding Shares on a fully
diluted basis and (2) there being available to the Purchaser sufficient funds
to purchase the Shares pursuant to the Offer and to pay related fees and
expenses.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of July 16, 1998 (the "Merger Agreement") between the Company and the
Purchaser. The Merger Agreement provides, among other things, that as soon as
practicable after the consummation of the Offer, the Purchaser will be merged
with and into the Company (the "Merger"), with the Company continuing as the
surviving corporation (the "Surviving Corporation"). Pursuant to the Merger,
each outstanding Share (other than Shares held by the Parent, the Purchaser or
any other subsidiary of the Parent or Shares held by stockholders exercising
appraisal rights) will be converted into a right to receive $23.00 in cash,
without interest.
The Offer is subject to certain conditions set forth in the Offer to Purchase.
If any such condition is not satisfied, the Purchaser may (i) terminate the
Offer and return all tendered Shares to tendering stockholders, (ii) extend
the Offer and, subject to withdrawal rights as set forth below, retain all
such Shares until the expiration of the Offer as so extended or (iii) waive
such condition and, subject to any requirement to extend the time during which
the Offer is open, purchase all Shares validly tendered prior to the
Expiration Date and not withdrawn. The Purchaser reserves the right, at any
time or from time to time, to extend the period of time during which the Offer
is open by giving oral or written notice of such extension to the Depositary.
Any such extension will be followed as promptly as practicable by public
announcement thereof.
For purposes of the Offer, the Purchaser shall be deemed to have accepted for
payment tendered Shares when, as and if the Purchaser gives oral or written
notice to the Depositary of its acceptance of the tenders of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of certificates for such Shares
(or a confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase)), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other required documents.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable,
except that they may be withdrawn after September 19, 1998 unless
theretofore accepted for payment as provided in the Offer to Purchase. To
be effective, a written, telegraphic, telex or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of
its addresses set forth in the Offer to Purchase and must specify the name
of the person who tendered the Shares to be withdrawn and the number of
Shares to be withdrawn. If the Shares to be withdrawn have been delivered
to the Depositary, a signed notice of withdrawal with (except in the case
of Shares tendered by an Eligible Institution (as defined in the Offer to
Purchase)) signatures guaranteed by an Eligible Institution must be
submitted prior to the release of such Shares. In addition, such notice
must specify, in the case of Shares tendered by delivery of certificates,
the name of the registered holder (if different from that of the tendering
stockholder) and the serial numbers shown on the particular certificates
evidencing the Shares to be withdrawn or, in the case of Shares tendered by
book-entry transfer, the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act
of 1934 is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided the Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished
to brokers, banks and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
The Offer to Purchase and Letter of Transmittal contain important information
which should be read before any decision is made with respect to the Offer.
Requests for copies of the Offer to Purchase and the related Letter of
Transmittal and other tender offer materials may be directed to the
Information Agent or the Dealer Manager as set forth below, and copies will be
furnished promptly at the Purchaser's expense.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 425-1685
All Others Call Toll-Free (800) 487-4870
The Dealer Manager for the Offer is:
Donaldson, Lufkin & Jenrette
277 Park Avenue
New York, New York 10172
(212) 892-7700
(call collect)
July 22, 1998
Exhibit (b)
CONFIDENTIAL
------------
July 16, 1998
DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, New York 10172
Attention: Thompson Dean
DAH, Inc./DeCrane Aircraft Holding, Inc.
Commitment Letter
----------------------
Ladies and Gentlemen:
We understand that DLJ Merchant Banking Partners II, L.P., and
certain affiliated funds and entities (collectively, "DLJMB") will form a
new corporation ("Holdco II") which will be a wholly-owned subsidiary of a
second newly-formed corporation ("Holdco I"), for the purpose of acquiring
(the "Acquisition") all of the outstanding capital stock (the "Shares") of
DAH, Inc. ("DAH"). We understand that the Acquisition will be
accomplished, pursuant to the Agreement and Plan of Merger between a wholly
owned, newly-formed subsidiary of Holdco II ("Acquisition Co.") and DAH
(the "Merger Agreement") through a cash tender offer (the "Tender Offer")
by Acquisition Co. for up to 100% of the Shares at a price not to exceed
$23.00 per Share followed by a merger (the "Merger") of Acquisition Co.
with and into DAH in which any Shares not tendered prior to the Merger will
be cancelled in exchange for a cash consideration of $23.00 per Share. We
further understand that the Tender Offer will be conditioned on, among
other things, the tender and purchase of at least that number of Shares
required to permit Acquisition Co. to cause the Merger to occur (the
"Minimum Shares"). The Merger will be followed by a merger of Holdco II
with and into DAH (the "Holdco II Merger" and, collectively with the
Merger, the "Mergers"). Upon consummation of the Merger, DAH will be
controlled, through Holdco I, by DLJMB. The Acquisition, the Tender Offer
and the Mergers and all related transactions are herein collectively
referred to as the "Transaction".
DLJ Capital Funding, Inc. ("DLJ Capital Funding") is pleased to
inform you that it hereby commits to provide the entire $130.0 million of
the senior credit facilities described below (the "Credit Facilities"), and
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ Securities"), an
affiliate of DLJ Capital Funding, is pleased to inform you that it
undertakes to use reasonable commercial efforts to arrange a syndicate of
other financial institutions that will, together with DLJ Capital Funding,
participate in the Credit Facilities. DLJ Securities is sometimes referred
to herein as the "Arranger", and the financial institutions (including DLJ
Capital Funding) which participate in the Credit Facilities are referred to
herein as the "Lenders". DLJ Capital Funding will act as the syndication
agent (the "Syndication Agent") for the Lenders, and a financial
institution to be identified will act as the administrative agent (the
"Administrative Agent") for the Lenders. The Syndication Agent and the
Administrative Agent are sometimes referred to herein as the "Agents".
The Credit Facilities will consist of a tranche A term loan
facility of up to $35.0 million and a tranche B term loan facility of up to
$45.0 million (collectively, the "Term Facility"), an acquisition revolving
credit facility of up to $25.0 million (the "Acquisition Revolving
Facility")and a working capital revolving credit facility of up to $25.0
million (the "Working Capital Revolving Facility"), with a sublimit for
letters of credit to be mutually agreed upon (collectively, the "Revolving
Facility"). The Term Facility will be made available to Holdco II to
purchase Shares tendered in the Tender Offer, to refinance existing
indebtedness of DAH and its subsidiaries and to pay fees and expenses
arising in connection therewith and with the financings contemplated
hereby, and, concurrently with the consummation of the Mergers, will be
available to DAH for such purposes. "Borrower" as used herein shall refer
to Holdco II prior to the consummation of the Mergers and to DAH upon
consummation of the Mergers. We understand that the proceeds from the Term
Facility, together with up to $4.5 million (or, prior to the availability
of the cash of DAH referred to in (iv) below, up to $10.6 million) in
borrowings under the Working Capital Revolving Facility, and (i) not less
than approximately $65.0 million in cash common equity (the "Equity
Contribution") provided by DLJMB, (ii) gross proceeds of not less than
approximately $34.0 million from the issuance of PIK Preferred Stock of
Holdco I or, in lieu thereof, a bridge financing made available to Holdco
I, (iii) gross proceeds of not less than approximately $100.0 million from
the issuance of Senior Subordinated Notes of Holdco II or, in lieu thereof,
a subordinated bridge financing made available to Holdco II and (iv) after
consummation of the Merger, approximately $5.5 million in cash of DAH and
its subsidiaries, will be used to pay the consideration for the Shares
(including to retire outstanding stock options) pursuant to the Tender
Offer and the Merger in the aggregate maximum amount of approximately
$182.0 million, to refinance existing indebtedness in the aggregate maximum
amount of approximately $93.9 million and to pay fees and expenses arising
in connection therewith in an amount not to exceed $13.8 million, and that
proceeds of the Revolving Facility will also be used for post-closing
general corporate and working capital purposes of the Borrower and its
subsidiaries, including permitted acquisitions.
All commitments, undertakings and agreements hereunder are
subject to (a) the terms and conditions set forth herein and in the term
sheet annexed hereto as Annex I (the "Term Sheet") and the provisions set
forth in Annex II hereto, (b) the terms and conditions contained in the
confidential fee letter, dated the date hereof (the "Fee Letter"), between
you and the undersigned, (c) the absence of any material disruption of or
material adverse change in current financial, banking or capital market
conditions that would reasonably be expected to materially impair the
satisfactory syndication of the Credit Facilities and (d) there being no
facts, events or circumstances, now existing or hereafter arising, which
are inconsistent with the written information provided to the Arranger and
the Syndication Agent prior to the date hereof that come to the attention
of the Arranger or the Syndication Agent after the date hereof and which
would reasonably be expected to have a material adverse effect on the
business, assets, operations, financial position or prospects of DAH and
its subsidiaries, taken as a whole, or the consummation of the Transaction.
In the event any of the foregoing conditions, events or circumstances are
not satisfied, the Arranger and the Syndication Agent reserve the right to
either terminate their respective commitments, undertakings and agreements
hereunder (and thereafter have no other or further obligations hereunder or
in connection with the Credit Facilities) or to propose alternative
financing amounts or structures that assure adequate protection for the
Arranger, the Syndication Agent and the Lenders. Furthermore, as a
condition to the commitments, undertakings and agreements contained herein,
you agree that no other agents, co-agents or arrangers will be appointed,
no other titles will be awarded and no compensation (other than as
expressly set forth in the Term Sheet and the Fee Letter) will be paid in
connection with the Credit Facilities unless you and we shall so agree.
As we discussed, it is the intent of the Arranger to solicit
commitments from prospective Lenders promptly following the execution of
this commitment letter. Nonetheless, our commitments are not subject to
syndication of the Credit Facilities. The Arranger will manage all aspects
of the syndication, including decisions as to the selection of institutions
to be approached and when they will be approached, when their commitments
will be accepted, the allocations of the commitments among the Lenders and
the amount and distribution of fees among the Lenders. In that regard, you
agree to actively assist the Arranger, in all commercially reasonable
respects, in the syndication of the Credit Facilities, which assistance
will require, among other things, that you provide all information the
Arranger or Syndication Agent reasonably deem to be necessary to
successfully complete the syndication, including projections (the
"Projections") and other information prepared by you or on your behalf
relating to DAH and its subsidiaries and their businesses, assets,
financial condition, operations and prospects. You hereby represent and
covenant that (a) all factual information (the "Information") that has been
or will be made available to the Arranger or the Syndication Agent by you
or on your behalf is or will be, when furnished, taken as a whole, complete
and correct in all material respects and does not or will not, when
furnished, taken as a whole, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements contained therein not materially misleading in light of the
circumstances under which such statements are made and (b) the Projections
that have been or will be made available to the Arranger or the Syndication
Agent by you or on your behalf have been or will be prepared in good faith
based upon reasonable assumptions. In arranging and syndicating the Credit
Facilities, the Arranger will use and rely on the Information and
Projections without independent verification thereof. The Arranger
reserves the right to reallocate, in a mutually acceptable manner, amounts
among the tranche A term loan facility and the tranche B term loan
facility, and to adjust the amortization schedule and final maturity in
respect thereof, if, in the Arranger's judgment, such a reallocation would
result in a more successful syndication; provided, however, that no such
reallocation shall increase any fees specified in the Fee Letter.
In addition, you agree to use your reasonable efforts to make
certain members of the management of DAH and its subsidiaries, as well as
their consultants and advisors, available during regular business hours to
answer questions regarding the Credit Facilities, to review and assist in
the preparation of the syndication memorandum relating to the Credit
Facilities, to meet with prospective Lenders and to use your and their best
efforts to ensure that the Arranger's syndication efforts benefit from the
lending relationships of DAH and its subsidiaries.
By your signature below you hereby indemnify and hold harmless
the Arranger, each of the Agents, each other Lender committing to
participate in the Credit Facilities and each of their respective
affiliates, directors, officers, agents and employees, and agree to
promptly pay all of the fees and expenses, in each case following demand,
as set forth in Annex II hereto (with the terms and provisions of such
Annex II hereby being incorporated by reference), whether or not definitive
credit, security and other documentation (collectively, the "Credit
Documentation") is ultimately executed and delivered or any of the
transactions contemplated hereby or in connection therewith are ultimately
consummated.
This commitment letter, the Term Sheet, Annex II hereto and the
Fee Letter are delivered to you with the understanding that neither this
letter, the Term Sheet, such Annex II or the Fee Letter, nor the substance
hereof or thereof, shall be disclosed to any third party (including,
without limitation, other lenders, underwriters, placement agents, or
advisors or any similar persons), without the prior written consent of the
Arranger and the Syndication Agent, except in the case of those in a
confidential relationship to you, such as legal counsel or accountants, DAH
and its financial and legal advisors, or as required by law or any court or
governmental agency (and in each such event of permitted disclosure as
required by law, court or government agency you agree, to the extent
permitted by law, promptly to inform us).
Notwithstanding the foregoing, (i) this commitment letter, the Term
Sheet and Annex II (but not the Fee Letter or its contents) may be summarized or
otherwise described in any disclosure document relating to the Transaction that
is furnished to stockholders of Holdings, DAH or potential investors in the
Transaction, and copies thereof may be filed with the Securities Exchange
Commission or any other regulatory authority with whom, in the opinion of your
counsel or counsel to DAH, such filing is required by law and (ii) amounts
payable under the Fee Letter may be included in fees and expenses payable in
connection with the Transaction in any disclosure document to the extent, in the
opinion of your counsel or counsel to DAH, required by law. This commitment
letter, the Term Sheet, Annex II hereto and the Fee Letter constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and thereof and supersede any prior agreements, written or oral, with respect
hereto or thereto.
THIS COMMITMENT LETTER, THE TERM SHEET, ANNEX II HERETO AND THE
FEE LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK. EACH OF THE UNDERSIGNED PARTIES
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF OR IN CONNECTION WITH, THIS COMMITMENT LETTER, THE TERM
SHEET, ANNEX II HERETO AND THE FEE LETTER, AND ANY OTHER COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY
OF THE UNDERSIGNED PARTIES IN CONNECTION HEREWITH OR THEREWITH. IN NO
EVENT SHALL ANY PARTY TO THIS COMMITMENT LETTER BE LIABLE FOR CONSEQUENTIAL
DAMAGES.
If you agree with the foregoing, please sign and return to us the
enclosed copy of this commitment letter and the Fee Letter no later than
5:00 p.m., New York time, on July 17, 1998. All commitments, undertakings
and agreements of the undersigned will terminate at such time unless an
executed copy of this commitment letter and the Fee Letter, each signed by
you, has been delivered to the undersigned; provided, however, that, any
term or provision hereof to the contrary notwithstanding (i) all your
obligations hereunder in respect of indemnification, confidentiality and
fee and expense reimbursement shall survive any termination of the
commitments, undertakings and agreements of the Arranger and the
Syndication Agent pursuant to this paragraph, and (ii) all such
commitments, undertakings and agreements will terminate in any event at
5:00 p.m., New York time, on October 31, 1998 unless, on or prior to such
time, definitive Credit Documentation satisfactory to the Arranger, the
Syndication Agent and its counsel has been executed and delivered by you
and the Agents (with the date of such execution and delivery being referred
to as the "Closing Date").
[remainder of page intentionally left blank]
We look forward to working with you.
Very truly yours,
DLJ CAPITAL FUNDING, INC.
By: /s/ Eric Swanson
-----------------------------------
Title: Managing Director
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Eric Swanson
-----------------------------------
Title: Managing Director
Agreed to and Accepted
this 16 day of July, 1998
DLJ MERCHANT BANKING II, INC.
on behalf of:
DLJ Merchant Banking Partners II, L.P.
DLJ Offshore Partners II, C.V.
DLJ Diversified Partners, L.P.
DLJMB Funding II, Inc.
DLJ First ESC, L.P.
DLJ First ESC II, L.P.
UK Investment Plan 1997 Partners
DLJ Merchant Banking Partners II, A, L.P.
DLJ Diversified Partners, - A, L.P.
DLJ EAB Partners, L.P.
DLJ Millenium Partners
DLJ Millenium Partners - A, L.P.
By: /s/ Thompson Dean
--------------------------
Title: Managing Director
ANNEX I
TERM SHEET
----------
(Unless otherwise defined, terms used in this Term Sheet have the
meanings ascribed thereto in the commitment letter dated July 16, 1998 (the
"Commitment Letter"), to which this Term Sheet is annexed).
I. PARTIES
Borrower: The Term Facility will be made available to Holdco II
to be contributed to Acquisition Co. to purchase
Shares tendered in the Tender Offer, to refinance
existing indebtedness of DAH and its subsidiaries
and to pay fees and expenses arising in connection
therewith and with the financings contemplated
hereby, and, concurrently with the consummation of
the Mergers, will be available to DAH. "Borrower"
as used herein shall refer to Holdco II prior to
the consummation of the Mergers and to DAH upon
consummation of the Mergers.
Arranger: Donaldson, Lufkin & Jenrette Securities Corporation
or one or more of its affiliates ("DLJ Securities"
or the "Arranger").
Syndication Agent: DLJ Capital Funding, Inc. or one or more of its
affiliates ("DLJ Capital Funding" or the
"Syndication Agent").
Administrative
Agent: A financial institution to be agreed upon by the
Arranger, the Syndication Agent and the Borrower.
The Syndication Agent and the Administrative Agent
are herein collectively referred to as the
"Agents".
Letter of Credit Issuer: The Administrative Agent or other Lender under the
Revolving Facility (in such capacity, the "Issuer").
Lenders: DLJ Capital Funding and a group of financial
institutions (collectively, the "Lenders") as may
be approved by the Arranger, the Syndication Agent
and the Borrower, such approval not to be
unreasonably withheld.
II. THE CREDIT FACILITIES
Closing Date: No later than October 31, 1998.
General Description of
Credit Facilities: A maximum amount of $130.0 million in senior financing
to be provided to the Borrower pursuant to an
acquisition revolving credit facility (the
"Acquisition Revolving Facility"), a working
capital revolving credit facility (the "Working
Capital Revolving Facility" and, together with the
Acquisition Revolving Facility, the "Revolving
Facility") and a term loan facility (the "Term
Facility"). The Term Facility and the Revolving
Facility are collectively referred to herein as
the "Credit Facilities". Loans made under the
Credit Facilities are herein collectively referred
to as "Loans", with the Loans under the Term
Facility being herein collectively referred to as
the "Term Loans" and Loans under the Revolving
Facility being herein collectively referred to as
"Revolving Loans". The Credit Facilities will be
secured to the extent referred to under "Security"
below.
A. Acquisition Revolving
Facility: Pursuant to the Acquisition Revolving Facility
Revolving Loans may be borrowed, prepaid and
reborrowed by the Borrower from time to time on
and after the date of the consummation of the
Merger and prior to the Acquisition Revolving
Facility Loan Maturity Date (as set forth below).
Acquisition $25.0 million.
Revolving Facility
Commitment Amount:
Mandatory Reductions The Acquisition Revolving Facility Commitment Amount
in Commitment shall be subject to mandatory reductions on a
Amount: semi-annual basis in aggregate annual amounts as
follows:
Year Aggregate Annual Reduction
---- --------------------------
1 0%
2 0%
3 15%
4 15%
5 70%
---
100%
Notwithstanding the foregoing, prior to the
Acquisition Revolving Facility Loan Maturity Date,
no reduction in the Acquisition Revolving Facility
Commitment Amount and no prepayment of Revolving
Loans outstanding under the Acquisition Revolving
Facility shall be required to the extent at any
time the Acquisition Revolving Facility Commitment
Amount would be reduced below the aggregate amount
of Revolving Loans outstanding under the
Acquisition Revolving Facility.
Purpose: Proceeds of the Acquisition Revolving Facility
shall be used for acquisitions, subject to the
restrictions described under "Covenants".
Acquisition Revolving The fifth anniversary of the Closing Date.
Facility Loan Maturity
Date:
B. Working Capital Pursuant to the Working Capital Revolving Facility
Revolving Facility (i) Revolving Loans may be borrowed, prepaid and
and Swing Line reborrowed by the Borrower and (ii) letters of credit
Facility: ("Letters of Credit") may be issued, reimbursed
and re-issued on behalf of the Borrower and its
subsidiaries, in each case from time to time prior
to the Working Capital Revolving Facility
Commitment Termination Date (as set forth below).
The Working Capital Revolving Facility will be
available for swing line advances in an amount to
be mutually agreed upon (the "Swing Line Loans")
to be made by the Administrative Agent. Swing
Line Loans will constitute usage under the Working
Capital Revolving Facility (except for purposes of
calculation of the Commitment Fee as defined
below), and will reduce availability under the
Working Capital Revolving Facility dollar for
dollar.
Working Capital $25.0 million, subject to increase as provided below.
Revolving Facility
Commitment Amount:
Purpose: A borrowing of up to $4.5 million may be made under
the Working Capital Revolving Facility to purchase
Shares pursuant to the Tender Offer or the Merger.
Other borrowings made on or after the consummation
of the Merger under the Working Capital Revolving
Facility shall be used for general corporate and
working capital purposes of the Borrower and its
subsidiaries.
Working Capital The fifth anniversary of the Closing Date.
Revolving Facility
Commitment Termination
Date:
Letter of Credit Outstanding Letters of Credit and related
Sub-Facility reimbursement obligations may not exceed an amount
Availability: to be mutually agreed upon. Each issuance of a
Letter of Credit will constitute usage under the
Working Capital Revolving Facility and will reduce
availability of Revolving Loans thereunder dollar
for dollar. Letters of Credit must expire on the
earlier of (i) one year from the date of issuance
(subject, in certain cases, to customary
"evergreen" provisions) and (ii) the Working
Capital Revolving Facility Commitment Termination
Date.
Increase of Working At any time prior to the Working Capital Revolving
Capital Revolving Facility Commitment Termination Date, the Borrower
Facility Commitment: shall have the right, without the consent of any
Lender (other than with respect to clause (c)
below), to effectuate an increase in the Working
Capital Revolving Facility commitments by
requesting that the Syndication Agent arrange for
the Lenders to increase proportionally their
percentage of the Working Capital Revolving
Facility commitments or for other eligible
institutions (who shall, upon completion of
certain requirements, constitute "Lenders") to
provide additional Working Capital Revolving
Facility commitments so that such increased and
added Working Capital Revolving Facility
Commitments shall provide the additional Working
Capital Revolving Facility commitments effected
pursuant hereto; provided, such increase shall be
subject to certain mutually agreed upon
conditions, including that (a) the aggregate
amount of the additional Working Capital Revolving
Facility commitments shall not exceed $20.0
million, (b) before offering additional Working
Capital Revolving Facility commitments to non-
Lenders, the Syndication Agent shall first offer
the additional commitments to existing Lenders on
a pro rata basis followed, if necessary, by an
offer on a non-pro rata basis and (c) no Lender's
Working Capital Revolving Facility commitment
shall be increased without the consent of such
Lender.
C. Term Loan Facility: The Term Loan Facility pursuant to which non-
revolving Loans ("Term Loans") will be made, will
consist of tranche A term loans ("Tranche A Term
Loans") and tranche B term loans ("Tranche B Term
Loans") made available to purchase Shares tendered
pursuant to the Tender Offer and the Merger, to
refinance existing indebtedness of DAH and its
subsidiaries and to pay fees and expenses arising
in connection therewith and with the financings
contemplated hereby. Once repaid, the Term Loans
cannot be reborrowed.
Term Loan Facility
Commitment Amount:
Tranche A Term Loans: $35.0 million
Tranche B Term Loans: $45.0 million.
Purpose: Proceeds of the Term Loans, together with up to
$4.5 million (or, prior to the availability of the
cash of DAH referred to in (iv) below, up to $10.6
million) in borrowings under the Working Capital
Revolving Facility, and (i) not less than $65.0
million in cash common equity provided by DLJMB,
(ii) gross proceeds of not less than $34.0 million
from the issuance by Holdco I of its PIK Preferred
Stock or, in lieu thereof, a bridge financing made
available to Holdco I, (iii) gross proceeds of not
less than $100.0 million from the issuance by
Holdco II of its Senior Subordinated Notes or, in
lieu thereof, a subordinated bridge financing made
available to Holdco II and (iv) after consummation
of the Merger, approximately $5.5 million in cash
of DAH and its subsidiaries, will be used to pay
the consideration for the Shares (including to
retire outstanding stock options) pursuant to the
Tender Offer and the Merger in the aggregate
maximum amount of approximately $182.0 million, to
refinance existing indebtedness of DAH and its
subsidiaries in the aggregate maximum amount of
approximately $93.9 million and to pay fees and
expenses arising in connection therewith, in an
amount not to exceed $13.8 million.
Amortization of the Tranche A Term Loans. The Tranche A Term Loans will
Term Loan Facility: have a final maturity date of five years after the
Closing Date. Quarterly amortization will be
required in aggregate annual amounts to be
determined.
Tranche B Term Loans. The Tranche B Term Loans
will have a final maturity date of seven years
after the Closing Date. Quarterly amortization
will be required in aggregate annual amounts equal
to 1% of the original principal amount during each
of the first six years and to the remaining
balance thereof in the seventh year.
Interest Rate: At the Borrower's option, Loans will bear interest
at (i) the Administrative Agent's Base Rate or
(ii) reserve-adjusted LIBOR, plus, in each case,
the following applicable margins for the first six
months after the Closing Date:
Applicable Margin
-----------------
Base Rate LIBOR
--------- -----
Revolving Loans 1.00% 2.25%
and Tranche A Term Loans
Tranche B Term Loans 1.25% 2.50%
Following the six-month anniversary of the Closing
Date, the margins set forth above for Revolving
Loans and Term Loans will thereafter be subject to
reductions based on a grid (to be mutually agreed
upon) based on the ratio of total debt to EBITDA
(to be defined) ("Leverage Ratio").
Swing Line Loans shall bear interest at the Base
Rate plus the applicable margin for Revolving
Loans.
In the event that Merger Sub at any time after the
consummation of the Tender Offer holds less than
the Minimum Shares, the above interest rates will
be increased by 1.00% per annum during such period
of time.
As used herein, the terms "Base Rate", and
"reserve - adjusted LIBOR" shall have meanings
customary and appropriate for financings of this
type, and the basis for calculating accrued
interest and the interest periods for loans
bearing interest at reserve adjusted LIBOR
(collectively, "LIBOR Loans") shall be customary
and appropriate for financings of this type.
Interest Payment Dates: Interest periods for LIBOR Loans shall be, at the
Borrower's option, one, two, three, six or, if
available, nine or twelve months. Interest on
LIBOR Loans shall be payable on the last business
day of the applicable interest period for such
Loans and, if earlier, each third-month
anniversary of the commencement of such interest
period. Interest on Base Rate Loans shall be
payable quarterly in arrears.
Letter of Credit Fees A letter of credit fee equal to the applicable
and Payment Dates: LIBOR margin for Revolving Loans then in effect shall
accrue on the daily average amount of all
outstanding Letters of Credit and shall be payable
quarterly in arrears to the Administrative Agent
for distribution to each Lender under the Working
Capital Revolving Facility. In addition, a
fronting fee shall be payable to the Issuer for
its own account, as the Issuer of the Letters of
Credit, in an amount be to mutually agreed upon on
the stated amount of the applicable Letter of
Credit quarterly in arrears. In addition,
customary administrative, amendment, and drawing
fees shall be payable to the Issuer for its own
account, as the Issuer of the Letters of Credit.
Optional Prepayments: Outstanding Loans are voluntarily payable without
penalty; provided, however, that LIBOR breakage
costs, if any, shall be for the account of the
Borrower. Voluntary prepayments of the Term
Facility shall be applied ratably between the
Tranche A Term Loans and the Tranche B Term Loans
and shall be applied to the scheduled installments
thereof in a manner to be agreed upon.
Mandatory Prepayments: Upon consummation of the Merger, customary for the
type of transaction proposed and others to be
reasonably specified by the Arranger and the
Syndication Agent, including, without limitation,
an amount equal to (i) 100% of all debt issuances
(subject to certain exceptions), (ii) 100% of net
proceeds from permitted asset sales (subject to
certain exceptions), (iii) 50% of proceeds from
the issuance of equity securities and (iv) 50% of
excess cash flow (to be defined), provided that at
such time as the Borrower's Leverage Ratio is less
than or equal to 3.5x, prepayments from the
proceeds of equity issuances and excess cash flow
will no longer be required, in each case applied
first to the Term Loans, ratably between the
Tranche A Term Loans and the Tranche B Term Loans,
and to the scheduled installments thereof in
direct order of maturity, then to the repayment of
the outstanding principal amount of Revolving
Loans under, and a reduction (to be applied in
forward order to scheduled commitment reductions)
in, the Acquisition Revolving Facility Commitment
Amount, and then to the repayment of the
outstanding principal amount of Revolving Loans
under the Working Capital Revolving Facility
Commitment Amount (without resulting in any
reduction of the Working Capital Revolving
Facility Commitment Amount). Notwithstanding the
foregoing, in the case of any mandatory prepayment
to be applied to the Tranche B Term Loans,
Borrower may elect to offer the holders thereof
the opportunity to waive the right to receive the
amount of such mandatory prepayment. In the event
any such holders elect to waive such right, 50% of
the amount that would otherwise have been applied
as a mandatory prepayment of the Tranche B Term
Loans of such holders shall be applied to the
prepayment of the Tranche A Term Loans and the
remaining 50% of such amount shall be retained by
Borrower.
Security: The Credit Facilities will be secured on a
first-priority perfected lien basis by Holdco I's
pledge of the stock of Holdco II and by Holdco
II's pledge of the stock of Acquisition Co. Upon
consummation of the Mergers and assumption of the
Credit Facilities by DAH, the Credit Facilities
(and all existing and future interest rate hedging
arrangements provided by the Lenders and their
affiliates) will be secured by a first-priority
perfected lien on substantially all property and
assets (tangible and intangible) of the Borrower
and each of its subsidiaries (with exclusions to
be agreed upon), including, without limitation,
the capital stock of Borrower and each of the
Borrower's direct and indirect subsidiaries,
whenever acquired and wherever located; provided,
however, that no lien will be taken on the
property and assets of foreign subsidiaries and
that no more than 65% of the equity interests of
foreign subsidiaries will be required to be
pledged.
Guarantees: The Credit Facilities will be guaranteed by
Holdco I and by Acquisition Co. Upon consummation
of the Mergers, the Credit Facilities will be
guaranteed by all direct and indirect domestic
subsidiaries of the Borrower.
Commitment Fees: Commitment fees equal to a per annum percentage (the
"Commitment Fee") times the daily average unused
portion of the Revolving Facility shall accrue
from the Closing Date and shall be computed on the
basis of a 360-day year and payable quarterly in
arrears and upon the maturity of termination of
such Revolving Facility.
For the first six months following the Closing
Date, the Commitment Fee for the Working Capital
Revolving Facility shall equal 0.50% per annum.
For the first six months following the Closing
Date, the Commitment Fee for the Acquisition
Revolving Facility will be based on the
utilization of the Acquisition Revolving Facility
as follows:
Utilization Commitment Fee
----------- --------------
< 50% .75%
> 50% .50%
-
Following the six-month anniversary of the Closing
Date, such Commitment Fees for the Revolving
Facility will be subject to reductions based on a
grid (to be mutually agreed upon) based on the
Leverage Ratio.
Conditions Precedent to The conditions precedent set forth below together
Initial Extensions of with other reasonable and customary conditions
Credit: precedent, which are typical for transactions of
the type contemplated hereby, the terms of which
shall be mutually agreed upon by the Borrower, the
Arranger and the Agents:
1. Satisfactory Documentation. Execution and
delivery of reasonably satisfactory credit,
security, guarantee and other related
documentation embodying the structure, terms
and conditions contained herein.
2. Corporate Structure. The capital and
organizational structure of Holdco I and its
subsidiaries upon completion of the
Transaction shall be satisfactory to the
Arranger and the Syndication Agent in all
respects.
3. Acquisition Structure and Documentation. The
structure utilized to consummate the
Acquisition (including the Tender Offer and
the Mergers) and the definitive documentation
(including the Merger Agreement) relating
thereto (the "Definitive Acquisition
Documents") shall be in form and substance
satisfactory to the Agents and Lenders (it
being understood that the terms and conditions
of the Merger Agreement as delivered to the
Arranger and the Agents on or prior to the
date of the execution of this letter are
satisfactory) and the Definitive Acquisition
Documents shall be in full force and effect,
and no provision of the Definitive Acquisition
Documents shall be amended, supplemented,
waived or otherwise modified in any material
respect without the prior written consent of
the Agents and the Lenders.
4. Consummation of Tender Offer. Upon
consummation of the Tender Offer, Acquisition
Co. shall acquire not less than the Minimum
Shares pursuant to the Tender Offer, and all
other aspects of the Tender Offer shall be
consummated pursuant to the Definitive
Acquisition Documents. The Tender Offer and
the financing thereof shall be consummated in
compliance with all applicable laws and
regulations (including, without limitation,
Regulation U of the Board of Governors of the
Federal Reserve System).
5. Capitalization of Holdings. On or prior to
the Closing Date, Holdco I shall have received
(i) not less than approximately $65.0 million
in cash common equity contributions from
DLJMB, and (ii) not less than $34.0 million in
cash proceeds from the sale of PIK Preferred
Stock or, in lieu thereof, an unsecured bridge
financing made available to Holdco I, each on
terms and conditions satisfactory to Agents
and Lenders. The PIK Preferred Stock shall
pay no cash dividends for five years from the
Closing Date, and shall not be redeemable
sooner than six months after the seventh
anniversary of the Closing Date; no mandatory
redemption or prepayment shall apply to the
PIK Preferred Stock, which shall not be
guaranteed by the Borrower or any of its
subsidiaries.
6. Issuance of New Sub Debt Bridge Financing.
On or prior to the Closing Date, Holdco II
shall have issued $100.0 million of unsecured
New Sub Debt or, in lieu thereof $100.0
million of an unsecured subordinated bridge
financing on terms and conditions satisfactory
to Agents and Lenders. The New Sub Debt shall
not mature, and have no mandatory sinking fund
or prepayments, prior to the six months after
the seventh anniversary of the Closing Date.
7. Material Adverse Change. No material adverse
change in the financial condition, operations,
assets, business, properties or prospects of
DAH and its subsidiaries (excluding Avtech
Corporation), taken as a whole, since December
31, 1997 and with respect to Avtech
Corporation and its subsidiaries, taken as a
whole, since September 30, 1997.
8. Closing Certificates and Opinions. Receipt of
closing certificates, resolutions, opinions of
counsel, a solvency certificate, and other
documents customary for the type of
transaction proposed and in each case
satisfactory in form and substance to the
Arranger and the Syndication Agent.
9. Fees. The Lenders, the Arranger and the
Agents shall have received all fees and
expenses required to be paid on or before the
Closing Date.
10. Approvals. All material governmental and
third party approvals necessary or advisable
in connection with the Acquisition and related
transaction and the continuing operations of
DAH and its subsidiaries shall have been
obtained and be in full force and effect, and
all applicable waiting periods shall have
expired without any action being taken or
threatened by any competent authority which
would restrain, prevent or otherwise impose
adverse conditions on the Transaction.
11. Litigation. There shall exist no pending or
threatened material litigation, proceedings or
investigations which could reasonably be
expected to have a material adverse effect on
the financial condition, operations, assets,
business, properties or prospects of DAH and
its subsidiaries, taken as a whole, or which
would reasonably be expected to materially
adversely affect the consummation of the
Transaction.
12. Financial Statements. The Lenders shall have
received (i) audited financial statements of
DAH and its subsidiaries (excluding Avtech
Corporation) for the fiscal years ended
December 31, 1997, 1996 and 1995 and with
respect to Avtech Corporation and its
subsidiaries, September 30, 1997, 1996 and
1995, (ii) unaudited financial statements of
DAH and its subsidiaries for the fiscal
periods most recently ended at least 45 days
prior to the Closing Date (including without
limitation monthly financial statements for
any such period of less than three months, if
available), (iii) a pro-forma opening balance
sheet of the Borrower as of the date of such
most recent financial statement, reflecting
the proposed legal and capital structure and
(iv) projected financial statements (including
balance sheets and statements of operations,
and cash flows) of the Borrower and its
subsidiaries for the seven-year period after
the Closing Date which projected financial
statements to the extent delivered after the
date of this letter are substantially
consistent with the projections delivered to
the Arranger on or prior to the date hereof,
all of the foregoing to be in form reasonably
satisfactory to the Arranger and Syndication
Agent.
13. Existing Indebtedness. No later than the
consummation of the Merger, all existing
indebtedness of Borrower and its subsidiaries
shall have been repaid in full and commitments
thereunder terminated and any security
interests or liens securing such indebtedness
terminated and released or arrangements with
respect thereto satisfactory to the Agents
shall be in place.
Additional Conditions The making of each Loan and the issuance of each
Precedent: Letter of Credit will be conditioned upon (i) all
representations in the Credit Documentation being
true and correct in all material respects and (ii)
there being no event of default or condition
which, with the giving of notice or passage of
time (or both), would constitute an event of
default.
Representations and Customary for the type of transaction proposed and
Warranties: others to be reasonably agreed upon by the Borrower,
the Arranger and the Agents.
Covenants: Customary and appropriate affirmative and negative
covenants, including but not limited to
limitations on other indebtedness, liens,
investments, guarantees, restricted junior
payments (dividends, redemptions and payments on
subordinated debt), mergers, sales of assets,
capital expenditures, leases, transactions with
affiliates, conduct of business and other
provisions customary and appropriate for
financings of this type, including exceptions and
baskets to be mutually agreed upon.
Notwithstanding the foregoing, prior to the Merger
the Credit Facilities will not (i) prohibit the
sale or other disposition of the Shares held by
Acquisition Co. for cash at the fair value thereof
so long as the proceeds are held as cash or
approved cash equivalents and (ii) prohibit the
creation or existence of any lien or encumbrance
on or with respect to the Shares. Acquisitions
shall be permitted subject to the following: (i)
aggregate consideration for any single acquisition
shall not exceed $25.0 million, (ii) no potential
default or Event of Default shall exist after
giving effect to the acquisition (including pro
forma financial covenant compliance) and (iii) the
acquired company or assets shall be in a line of
business related to that of the Borrower or a
subsidiary. Financial performance covenants will
include a minimum fixed charge coverage test, a
minimum EBITDA test, a maximum leverage test and a
minimum interest coverage test. Holdco II shall
agree to cause the Merger to occur as soon as
practicable but in any event within 150 days after
consummation of the Tender Offer pursuant to the
Definitive Acquisition Documents, including in the
event that not less than 90% of the Shares are
tendered in the Tender Offer, causing a "short-
form" merger to occur promptly following the
payment for the Shares purchased in the Tender
Offer.
Events of Default: Customary and appropriate (subject to customary and
appropriate grace periods), including without
limitation failure to make payments when due,
defaults under other agreements or instruments of
material indebtedness, noncompliance with
covenants, breaches of representations and
warranties, bankruptcy, judgments in excess of
specified amounts, invalidity of guaranties,
impairment of security interests in collateral,
and "changes of control" (to be defined in a
mutually agreed upon manner).
Miscellaneous: Customary for the type of transaction proposed and
others to be reasonably agreed upon by the
Borrower, the Arranger and the Syndication Agent,
including the following:
1. Customary indemnity and capital adequacy
provisions, including but not limited to
compensation in respect of taxes (including
gross-up provisions for withholding taxes) and
decreased profitability resulting from changes
in U.S. or foreign capital adequacy
requirements, guidelines or policies or their
interpretation or application, and any other
customary yield and increased costs protection
deemed necessary by the Lenders to provide
customary protection.
2. The Lenders will be permitted to assign and
participate Loans, notes and commitments. Any
assignments would be by novation, would be in
a minimum amount to be agreed upon and would
require the consent of the Borrower, and,
except for assignments by either Agent, the
Administrative Agent (unless such assignment
was to another Lender or an affiliate of
another Lender), such consent, not to be
unreasonably withheld or delayed.
Participations shall be without restrictions
and participants will have the same benefits
as the Lenders with regard to increased costs,
capital adequacy, etc., and receipt of
information pursuant to the Credit
Documentation. Voting by participants will be
subject to customary limitations.
3. Indemnification of the Arranger, the Agents,
each of the Lenders and each of their
respective affiliates, directors, officers,
agents and employees (collectively, the
"Indemnified Parties") from and against any
losses, claims, damages, liabilities or other
expenses, substantially as set forth in Annex
II hereto.
4. The Borrower shall pay all of the fees and
out-of-pocket expenses as set forth in Annex
II hereto.
5. Amendments and waivers of the Credit
Documentation will require the approval of
Lenders holding 51% or more of the Loans and
commitments, except that the consent of all
the Lenders shall be required with respect to
certain customary issues.
6. Waiver of jury trial.
7. New York governing law; consent to New York
jurisdiction; appointment of New York process
agent.
Counsel to the Arranger O'Melveny & Myers LLP.
and the Syndication
Agent:
This Term Sheet is intended as an outline only and does not purport to
summarize all the conditions, covenants, representations, warranties and
other provisions which would be contained in the definitive Credit
Documentation. The commitments, undertakings and obligations described
herein will be subject to negotiation and execution of definitive Credit
Documentation in form and substance satisfactory to the Syndication Agent,
its legal counsel and the Lenders.
ANNEX II
INDEMNIFICATION PROVISIONS
--------------------------
Unless otherwise defined, terms used herein shall have the
meanings assigned thereto in the commitment letter (the "Commitment
Letter") and term sheet (the "Term Sheet") to which this Annex II is
attached.
DLJMB (the "Indemnitor") shall pay all reasonable fees, costs and
expenses (including all reasonable out-of-pocket costs and expenses arising
in connection with the syndication of the Credit Facilities and any due
diligence investigation performed by the Arranger or either Agent, and the
fees and expenses of a single legal counsel (and, if necessary, local
counsel) to the Arranger and the Administrative Agent), arising in
connection with the negotiation, preparation, execution or delivery of the
Commitment Letter, the Term Sheet, the Fee Letter and the definitive Credit
Documentation, and the Indemnitor shall be obligated to pay such fees and
expenses whether or not definitive Credit Documentation is executed or
delivered or the Loans are advanced by the Lenders.
In addition, the Indemnitor hereby indemnifies and holds harmless
all Indemnified Parties (as defined below) from and against all Liabilities
(as defined below). "Indemnified Party" shall mean the Arranger, the
Agents, each of the Lenders, each affiliate of any of the foregoing and the
respective directors, officers, agents and employees of each of the
foregoing, and each other person controlling any of the foregoing within
the meaning of either Section 15 of the Securities Act of 1933, as amended,
or Section 20 of the Securities Exchange Act of 1934, as amended.
"Liabilities" shall mean any and all losses, claims, damages, liabilities
or other costs or expenses to which an Indemnified Party may become subject
which arise out of or relate to or result from any claim, action,
litigation or proceeding related to or connected with the transactions
described in the Commitment Letter, Fee Letter or Term Sheet. In addition
to the foregoing, the Indemnitor agrees to reimburse each Indemnified Party
for all reasonable legal or other expenses incurred in connection with
investigating, defending or participating in any claim, action, litigation
or proceeding relating to any Liabilities (whether or not such Indemnified
Party is a party to any such action or proceeding).
Any terms or provisions of this Annex II to the contrary
notwithstanding, upon (i) the execution and delivery of definitive Credit
Documentation by the Borrower, the Arranger, the Agents and the Lenders and
(ii) the making of the initial Loans under the Credit Facilities, the terms
and provisions of this Annex II shall be superseded in their entirety by
the terms and provisions of such Credit Documentation, and the terms and
provisions of this Annex II shall be of no further force or effect
Exhibit (c) (1)
July 16, 1998
DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, N.Y. 10172
Attention: Mr. Thompson Dean
Managing Partner
Gentlemen:
You have advised DLJ Bridge Finance, Inc., a Delaware corporation
("DLJ Bridge"), that DeCrane Acquisition Corporation ("Acquisitionco"), a
company to be formed by DLJ Merchant Banking Partners II, Inc. and its
affiliates ("DLJMB" or the "Equity Investor") as a wholly-owned subsidiary of
[Holdco II] ("Holdco II"), which is a wholly-owned subsidiary of Holdings
("Holdco I"), both Holdco I and Holdco II to be formed by DLJMB, proposes to
acquire (the "Acquisition") DeCrane Aircraft Holdings, Inc. (the "Company" or
the "Target") pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") to be entered into between Acquisitionco and the Company. Pursuant
to the Merger Agreement, Acquisitionco will commence a tender offer for all the
shares of the Company at a price of $23.00 per share, net to the seller in cash
(the "Tender Offer"). Following successful completion of the Tender Offer,
Acquisitionco will merge (the "Merger") with and into the Company and all the
shares of common stock of the Company not purchased in the Tender Offer will be
converted into the right to receive $23.00 per share in cash in the Merger. We
understand that upon consummation of the Merger, Holdco II will be merged (the
"Holdco Merger") with and into the Company. We further understand that the
total purchase price for the Acquisition will not exceed $182.0 million. In
addition, in connection with the Tender Offer and the Merger, (i) the Company
will refinance (the "Refinancing") approximately $93.8 million of currently
outstanding indebtedness of the Target and its subsidiaries; and (ii) the
Company will pay estimated fees and expenses in connection with the Tender
Offer, the Merger, the Holdco Merger, the Refinancing, and related transactions
of approximately $13.8 million (the "Expenses"). As used herein, the term
"Transaction" shall refer, collectively, to the Tender Offer, the Merger, the
Holdco Merger, the Refinancing, and the Expenses. Furthermore, as used herein,
the term "Credit Group" shall refer, collectively, to Holdco I, Holdco II,
Acquisitionco, the Target, and the Company and their respective subsidiaries.
We understand that the total cash proceeds required to consummate
the Transaction are approximately $289.6 million which will be financed with the
proceeds of the following: (i) borrowings by Holdco II under a senior secured
term loan of $80.0 million (the "Term Loan Facility"); (ii) borrowings by Holdco
II of approximately $4.5 million (or, prior to the availability of the cash of
the Target referred to in (vi) below, up to $10.6 million) under a $50.0 million
senior secured revolving credit facility (the "Revolving Credit Facility," and
collectively with the Term Loan Facility, the "Bank Facilities"); (iii) the
issuance by Holdco II, for cash, of not more than $100.0 million of senior
subordinated increasing rate notes (the "Subordinated Bridge Notes"); (iv) the
issuance by Holdco I, for cash, of not more than $34.0 million of senior
pay-in-kind increasing rate notes (the "Holdco Bridge Notes" and together with
the Subordinated Bridge Notes, the "Bridge Securities"); (v) the issuance, for
cash proceeds of not less than $65.0 million, of common equity of Holdco I (the
"Common Stock") to be purchased by the Equity Investor; and (vi) after the
consummation of the Merger, cash on hand of the Target of $6.1 million.
DLJ Bridge hereby commits (the "Commitment") that it or one of
its affiliates will purchase at the request of Holdco I and Holdco II: (i) up
to $100.0 million of Subordinated Bridge Notes; and (ii) up to
$34.0 million of Holdco Bridge Notes, the proceeds of which will be used
to finance, in part, the consummation of the Transaction.
You have advised us that a copy of this letter (the "Bridge
Commitment Letter"), and the attached Summary of Terms and Conditions (the
"Summary of Terms and Conditions"), which is incorporated into and made a
part of this Bridge Commitment Letter, will be provided to the Target but
that you understand that our obligation to purchase any Bridge Securities
is subject expressly to (i) the execution and delivery of definitive
documentation, including without limitation one or more definitive
securities purchase agreements (the "Securities Purchase Agreement"),
reasonably satisfactory to us and covering the matters expressly referred
to herein and such other customary matters as we may reasonably request
(collectively, the "Definitive Documents"); and (ii) the satisfaction of
the other conditions precedent set out in the Summary of Terms and
Conditions.
The Equity Investor agrees to pay, or cause a member of the
Credit Group to pay, to DLJ Bridge the fees set forth in the bridge
financing fee letter (the "Fee Letter") executed by the parties hereto on
the date hereof in accordance with the terms of the Fee Letter.
The Commitment is not assignable by you other than to the
issuers of the Bridge Securities. Nothing in this Bridge Commitment
Letter, expressed or implied, shall give any person, other than the parties
hereto and the issuers of the Bridge Securities, any benefit or any legal
or equitable right, remedy or claim under this Bridge Commitment Letter.
The Equity Investor agrees to, or to cause a member of the
Credit Group to, indemnify and hold the DLJ Bridge Group, as defined in
Exhibit A hereto, harmless to the extent set forth in Exhibit A to this
Bridge Commitment Letter, and, upon demand from time to time, to reimburse
DLJ Bridge for all reasonable out-of-pocket costs, expenses and other
payments, including but not limited to reasonable legal fees and
disbursements incurred or made in connection with the Commitment, and the
preparation, execution and delivery of the Definitive Documents, regardless
of whether or not the Definitive Documents are executed, or the Commitment
expires or is terminated.
The Equity Investor hereby represents that, based on such review
as has been performed by it, to its knowledge (a) all information, other than
Projections based on such review as has been (as defined below), which has been
made available to DLJ Bridge by the Equity Investor, the Credit Group or any of
their representatives in connection with the transactions contemplated hereby
(together with information hereafter made available, the "Information"), as
supplemented as contemplated by the next sentence, taken as a whole, is (or will
be, in the case of Information made available after the date hereof) complete
and correct in all material respects and does not (or will not, as the case may
be) contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements contained therein not materially
misleading in light of the circumstances under which such statements were or are
made, and (b) all financial projections concerning the Credit Group that have
been or are hereafter made available to DLJ Bridge by the Equity Investor, the
Credit Group or any of their representatives in connection with the transactions
contemplated hereby (the "Projections") have been (or will be, in the case of
Projections made available after the date hereof) prepared in good faith based
upon reasonable assumptions. The Equity Investor agrees to supplement the
Information and Projections, to the extent the Equity Investor has been
furnished with such Information and Projections, from time to time until the
closing of the Transaction so that the representation and warranty in the
preceding sentence is correct on the closing date.
Until the successful completion of the Tender Offer, the
Equity Investor will be liable for its obligations set forth herein and
upon such closing, the Equity Investor shall be released from such
obligations to the extent that Holdco II has expressly assumed such
obligations.
This Bridge Commitment Letter and the attached Summary of
Terms and Conditions set forth the entire understanding of the parties as
to the scope of the Commitment and DLJ Bridge's obligations thereunder.
The Commitment will expire at 5:00 PM New York City time on July 17, 1998
unless accepted prior to such time. The Commitment will also expire at the
earlier of (i) the termination of the Merger Agreement; (ii) the closing
of the Tender Offer without the funding of any Bridge Securities; (iii)
the commencement by the Equity Investor or any member of the Credit Group
of the marketing of any securities relating to the Transaction for which
Donaldson Lufkin & Jenrette Securities Corporation ("DLJSC") or one of its
affiliates is not sole manager or sole agent, or, in the case of any bank-
style senior financing, syndication agent or arranger, as the case may be;
or (iv) 5:00 PM New York City time on October 31, 1998 if the closing of
the Tender Offer has not occurred by such time.
This Bridge Commitment Letter shall be governed by, and
construed in accordance with, the laws of the State of New York as applied
to contracts made and performed within such state, without giving effect to
the principles of conflicts of laws thereof. To the fullest extent
permitted by applicable law, each of the parties hereto hereby irrevocably
submits to the jurisdiction of any New York State court or Federal court
sitting in the Borough of Manhattan in New York City in respect of any
suit, action or proceeding arising out of or relating to the provisions of
this Bridge Commitment Letter or the making of the Commitment and
irrevocably agrees that all claims in respect of any such suit, action or
proceeding may be heard and determined in any such court. Each of the
parties hereto waives to the fullest extent permitted by applicable law,
any objection which it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding brought in any such court, and any
claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum.
Please indicate your acceptance of the Commitment and your
agreement to the matters contained in this Bridge Commitment Letter by
executing this document and returning it to us prior to the time of
expiration set forth above.
Sincerely,
DLJ Bridge Finance, Inc.
/s/ Paul Thompson, III
------------------------------------
By: Paul Thompson, III
Title: Chief Operating Officer
Accepted and Agreed to this
July 16, 1998
DLJ Merchant Banking II, Inc.
on behalf of:
DLJ Merchant Banking Partners II, L.P.
DLJ Offshore Partners II, C.V.
DLJ Diversified Partners, L.P.
DLJMB Funding II, Inc.
DLJ First ESC, L.P.
DLJ First ESC II, L.P.
UK Investment Plan 1997 Partners
DLJ Merchant Banking Partners II, A, L.P.
DLJ Diversified Partners - A, L.P.
DLJ EAB Partners, L.P.
DLJ Millenium Partners, L.P.
DLJ Millenium Partners - A, L.P.
/s/ Thompson Dean
- -------------------------------
By: Thompson Dean
Title: Managing Director
SUMMARY OF TERMS AND CONDITIONS
-------------------------------
Set forth below is a summary of the terms of each of the Bridge
Securities and the conditions to the obligation of DLJ Bridge to purchase any
Bridge Securities. Capitalized terms used herein and not otherwise defined
have the meaning set forth in the Bridge Commitment Letter to which this
Summary of Terms and Conditions is attached and of which it forms a part.
Senior Subordinated Increasing Rate Notes
-----------------------------------------
Issuer: Holdco II or, at the option of DLJ Bridge, such other
entity(ies) as shall at the relevant time be the
borrower(s) under the Bank Facilities.
Issue: Senior Subordinated Increasing Rate Notes (the
"Subordinated Bridge Notes").
Use of Proceeds: Proceeds will be used to finance in part the
consummation of the Transaction.
Principal Amount: Up to $100.0 million.
Price: 100% of principal amount.
Interest Rate: Interest shall be payable at the prime rate plus
a spread (the "Spread"). The Spread will initially be
150 basis points. If the Subordinated Bridge Notes are
not retired in whole by the end of the first six month
period following the date of funding of the
Subordinated Bridge Notes (the "Funding Date"), the
Spread will increase by 100 basis points and shall
continue to increase by an additional 50 basis points
at the end of each subsequent three month period until
the first anniversary of the Funding Date.
Commencing on the first anniversary of the Funding
Date, interest shall be payable at the greater of the
following as of the beginning of each quarterly period:
(i) the prime rate plus 350 basis points, increasing by
an additional 50 basis points at the end of each
subsequent three month period for so long as the
Subordinated Bridge Notes are outstanding; (ii) the
Treasury Rate (as defined below) plus 650 basis points,
increasing by an additional 50 basis points at the end
of each subsequent three month period for so long as
the Subordinated Bridge Notes are outstanding; (iii)
the DLJ High Yield Index Rate plus 250 basis points,
increasing by an additional 50 basis points at the end
of each subsequent three month period for so long as
the Subordinated Bridge Notes are outstanding; and (iv)
the rate in effect on the day immediately preceding the
first anniversary of the Funding Date plus 50 basis
points, increasing by an additional 50 basis points at
the end of each subsequent three month period for so
long as the Subordinated Bridge Notes are outstanding.
For purposes of this Summary of Terms and Conditions,
the "prime rate" means the prime or reference rate as
announced from time to time by The Bank of New York and
the "Treasury Rate" means the rate applicable to the
most recent auction of direct obligations of the United
States having a maturity closest to the Subordinated
Bridge Notes, as published by the Board of Governors of
the Federal Reserve System.
Notwithstanding anything to the contrary set forth
above, at no time shall the per annum interest rate on
the Subordinated Bridge Notes exceed seventeen percent
(17.00%), nor shall the per annum interest rate on the
Subordinated Bridge Notes be lower than ten percent
(10.00%). In addition, that portion, if any, of any
interest payment representing a per annum interest rate
in excess of fifteen percent (15.00%) may be paid by
increasing the principal amount of the Subordinated
Bridge Notes by an amount equal to such excess portion
of interest.
Maturity: The Subordinated Bridge Notes will mature on the
first anniversary of the Funding Date, provided
however, that the maturity of the Subordinated Bridge
Notes will be automatically extended until the date
which is six (6) months after the date of the original
final stated maturity of the Bank Facilities if, on the
first anniversary of the Funding Date, the following
conditions are met: (i) there shall exist no default
under the Subordinated Bridge Notes; (ii) there shall
have been no default under the Bank Facilities or any
other debt instrument of any member of the Credit
Group; and (iii) all fees and expenses due to DLJ
Bridge and DLJSC as of such date shall have been paid
in full.
Mandatory
Redemption: The Issuer will redeem or prepay the Subordinated Bridge
Notes with, subject to certain agreed exceptions, (i)
the net proceeds from the issuance of any debt or
equity securities or other indebtedness (other than
indebtedness under the Bank Facilities and the Holdco
Bridge Notes or the Common Stock issued in connection
with the Transaction) by any member of the Credit Group
(the "Permanent Financing"); or (ii) the net proceeds
from asset sales (other than sales of "margin stock" as
defined in Regulation U ("Margin Stock")) by any member
of the Credit Group in excess of the amount thereof
required to be paid to the banks under the Bank
Facilities, in each case at par plus accrued interest,
provided, that the redemption price shall be one
hundred three percent (103.0%) of par plus accrued
interest if the Subordinated Bridge Notes are redeemed
with or in anticipation of funds raised by any means
other than a transaction in which DLJSC or any of its
affiliates has acted as sole manager or sole agent to
the Credit Group or, in the case of any bank-style
senior financing, syndication agent or arranger;
provided further, that after the first anniversary of
the Funding Date, the Subordinated Bridge Notes may be
redeemed or prepaid at 100% of principal plus accrued
interest unless (a) (i) prior to such first
anniversary DLJSC delivered to a member of the Credit
Group a proposal to market securities of a member of
the Credit Group to one or more financially responsible
institutional investors (or a commitment from DLJSC to
underwrite the public sale of securities of a member of
the Credit Group, on a firm commitment basis), on
financial and other terms and conditions no less
favorable to the issuer than those generally available
in the United States capital markets to issuers of
securities having a creditworthiness comparable to that
of such issuer, in an amount sufficient to redeem all
the Subordinated Bridge Notes (a "Bona Fide Proposal"),
and (ii) such issuer did not authorize DLJSC to execute
such Bona Fide Proposal; it being understood that no
such proposal shall be deemed to be a Bona Fide
Proposal if DLJSC fails to execute such proposal on
substantially the terms proposed, or (b) the Company
and DLJSC have agreed in their reasonable judgment that
no such Bona Fide Proposal could be made.
Interest Payments: Interest on the Subordinated Bridge Notes
will be payable in cash, quarterly in arrears (except
as provided above).
Optional
Redemption: The Subordinated Bridge Notes will be callable, in
whole or in part, upon not less than 10 days written
notice, at the option of the Issuer at any time at par
plus accrued interest to the redemption date; provided,
that the redemption price shall be one hundred three
percent (103.0%) of par plus accrued interest if the
Subordinated Bridge Notes are refunded (whether at the
time of redemption or maturity) with or in anticipation
of funds raised by any means other than a transaction
in which DLJSC or any of its affiliates has acted as
sole agent or sole manager to the Credit Group or, in
the case of any bank-style senior financing,
syndication agent or arranger; provided further, that
after the first anniversary of the Funding Date, the
Subordinated Bridge Notes may be redeemed or prepaid at
100% of principal plus accrued interest unless DLJSC
has delivered a Bona Fide Proposal or the Issuer and
DLJSC have agreed in their reasonable judgment that no
such Bona Fide Proposal could be made.
Commencing on the earliest to occur of (i) the first
anniversary of the Funding Date and (ii) refusal by the
Issuer to execute a Bona Fide Proposal (such earlier
event, the "First Anniversary"), DLJ Bridge shall have
the right to resell the Subordinated Bridge Notes on a
fixed rate basis to unrelated third parties. In the
event that DLJ Bridge elects to proceed with such fixed
rate sale, the interest rate on any Subordinated Bridge
Notes may be fixed at a market rate to be determined by
DLJ Bridge provided that such rate will not exceed
seventeen percent (17.00%). In such event, any such
Subordinated Bridge Notes will be callable thereafter
at par plus accrued interest plus a make-whole premium
calculated on the basis of a discount rate equal to the
then Treasury Rate plus one-half percent (0.50%). DLJ
Bridge agrees that it shall give the Issuer ten (10)
days notice prior to fixing the rate of the Subordinate
Bridge Notes.
Subordination: The Subordinated Bridge Notes will be subordinated to
the Bank Facilities and certain refinancings thereof
(collectively, the "Designated Senior Debt"). See
Exhibit B to the Bridge Commitment Letter.
Guarantees: Acquisitionco will issue a senior subordinated
guarantee in favor of the Subordinated Bridge Notes.
Upon the occurrence of the Merger the direct and
indirect affiliates of the Credit Group which are
guarantors of the Bank Facilities will issue senior
subordinated guarantees in favor of the Subordinated
Bridge Notes.
Registration
Rights: The Issuer will file, and will use its best efforts
to cause to become effective, a "shelf" registration
statement with respect to the Subordinated Bridge Notes
as soon as practicable after the First Anniversary.
The Issuer will keep the registration statement for the
Subordinated Bridge Notes effective until all of the
Subordinated Bridge Notes have been redeemed or sold.
If a "shelf" registration statement for the
Subordinated Bridge Notes has either (i) not been filed
within 60 days after the First Anniversary, or (ii) not
been declared effective 120 days after the First
Anniversary, the interest rate on the Subordinated
Bridge Notes shall be increased by 50 basis points
until such time as such registration statement has
become effective. The interest rate on the
Subordinated Bridge Notes shall also be increased by 50
basis points for any period of time following the
effectiveness of such registration statement that the
registration statement is not available for resales
thereunder. In addition, the holders of the
Subordinated Bridge Notes will have the right to
"piggy-back" in the registration of any debt or equity
securities which are registered by the Company unless
all of the Subordinated Bridge Notes will be redeemed
from the proceeds of such securities.
Extension Fee: On the occurrence of the First Anniversary, the
Issuer shall pay to DLJ Bridge a cash duration fee (the
"Extension Fee") in an amount equal to three percent
(3.00%) of the principal amount of the Subordinated
Bridge Notes outstanding on such date. Upon payment of
the Extension Fee, the redemption price for the
Subordinated Bridge Notes in all cases shall be 100% of
principal plus accrued interest.
Right to Resell
Bridge Financing: DLJ Bridge shall have the absolute and unconditional
right to resell or assign the Subordinated Bridge Notes
in compliance with applicable law to any third party at
any time.
Representations and
Warranties: The Securities Purchase Agreement will contain
representations and warranties to DLJ Bridge and
holders of the Subordinated Bridge Notes which are
usual and customary for transactions of this nature or
required by DLJ Bridge for this Transaction in
particular, including, but not limited to: (i)
Corporate Existence and Power; (ii) Authorization,
Execution and Enforceability of Material Agreements;
(iii) Governmental Authorization; (iv) Non-
Contravention of Laws or Material Agreements; (v)
Financial Information; (vi) Litigation; (vii)
Taxes; (viii) Subsidiaries; (ix) Not an Investment
Company; (x) ERISA; (xi) Environmental; (xii)
Permits; (xiii) Leases; (xiv) Full Disclosure;
(xv) Capitalization; (xvi) Solicitation; Access to
Information; (xvii) Absence of Any Undisclosed
Liabilities; (xviii) Historical and Pro Forma
Financial Statements; (xix) No Material Adverse
Change; and (xx) Governmental Regulations. The
representations will reflect that the Refinancing may
occur after consummation of the Tender Offer.
Covenants: The Securities Purchase Agreement will contain usual
and customary covenants for securities of this nature
or required by DLJ Bridge including covenants with
respect to: (i) Furnishing of Information; (ii) Use
of Proceeds; (iii) Wholly Owned Subsidiaries; (iv)
Compliance with Laws; (v) Insurance; (vi)
Restrictions on Indebtedness; (vii) Restrictions on
Dividends and Redemptions and Repayment of Subordinated
Debt or Pari Passu Debt; (viii) Restrictions on the
Sale of Assets (other than sales of Margin Stock for
fair value in cash or cash equivalents); (ix)
Restrictions on Business Activities; (x) Restrictions
on Transactions with Affiliates; (xi) Restrictions on
Merger or Consolidation (other than the Merger); (xii)
Change of Control; (xiii) Restrictions on Liens
(other than Liens on Margin Stock); (xiv) Refinancing
of Subordinated Bridge Notes (including provision of
equity securities to the extent required to refinance
the Subordinated Bridge Notes); (xv) Restrictions on
Investments and Acquisitions; and (xvi) Additional
Covenants which will not include any financial
maintenance covenants or covenants regarding
accelerated buy-back or sinking fund requirements.
Event of Default: An Event of Default as defined for the Subordinated
Bridge Notes will include but not be limited to: (i)
the failure of the Issuer to pay principal on the
Subordinated Bridge Notes when due; (ii) the failure
of the Issuer to pay interest or fees on the
Subordinated Bridge Notes and the continuance of such
failure for 5 days; (iii) the failure of the Issuer or
any Guarantor to comply with any other provision,
condition, covenant, promise, warranty or
representation in the Securities Purchase Agreement or
the Subordinated Bridge Notes, provided that in certain
cases such failure continues for 30 days after notice;
(iv) a default under any instrument or instruments
governing indebtedness of any member of the Credit
Group when such default causes such indebtedness to
become accelerated and due prior to its stated maturity
or failure to pay any such indebtedness at its stated
maturity (with exceptions to be agreed); (v) final
judgments aggregating in excess of a threshold amount
to be agreed rendered against any member of the Credit
Group and not discharged or stayed within 60 days;
(vi) certain events of bankruptcy, insolvency or
reorganization with respect to any member of the Credit
Group; (vii) material misrepresentations in the
Securities Purchase Agreement; (viii) unenforceability
of any Guarantee; (ix) certain ERISA defaults; (x)
breach under the Engagement Letter (defined below) and
payment of fees to DLJ Bridge and DLJSC described in
the Fee Letter or the Engagement Letter; or (xi)
Change of Control of any member of the Credit Group.
In case an Event of Default shall occur and be
continuing, the holders of at least 33 1/3% (a majority
where DLJ Bridge, or its affiliates, hold a majority of
the aggregate principal amount of the Subordinated
Bridge Notes) in aggregate principal amount of the
Subordinated Bridge Notes then outstanding, by notice
in writing to the Company and the agent banks under the
Bank Facilities (the "Agent Banks") may declare the
principal of and all accrued interest on all
Subordinated Bridge Notes to be due and payable
immediately. If an Event of Default specified in
clause (vi) occurs, the principal of and accrued
interest on the Subordinated Bridge Notes will be
immediately due and payable without any notice,
declaration or other act on the part of the holders of
the Subordinated Bridge Notes. An acceleration notice
may be annulled and past defaults (except for monetary
defaults not yet cured) may be waived by the holders of
a majority in aggregate principal amount of the
Subordinated Bridge Notes.
If an Event of Default shall occur and for as long as
such Event of Default shall be continuing, DLJ Bridge
shall have the right to appoint one (1) representative
to sit on each of Holdco I's and the Issuer's Boards of
Directors provided, however, that such right shall
terminate if DLJ Bridge no longer retains at least 50%
of the outstanding Subordinated Bridge Notes; it being
understood that, should there be an Event of Default in
respect of each of the Bridge Securities, DLJ Bridge
shall be limited to one (1) such appointment.
Defeasance
Provision: None.
Governing Law: New York.
Senior Pay-in-Kind Increasing Rate Notes
----------------------------------------
Issuer: Holdco I.
Issue: Senior Pay-in-Kind Increasing Rate Notes (the "Holdco
Bridge Notes").
Use of Proceeds: Same as the Subordinated Bridge Notes.
Principal Amount: Up to $34.0 million.
Price: 100% of principal amount.
Interest Rate: Interest shall accrue at the prime rate plus a spread (the
"Spread"). The Spread will initially be 500 basis
points. If the Holdco Bridge Notes are not retired in
whole by the end of the first six month period
following the date of funding of the Holdco Bridge
Notes (the "Funding Date"), the Spread will increase by
100 basis points and shall continue to increase by an
additional 50 basis points at the end of each
subsequent three month period until the first
anniversary of the Funding Date.
Commencing on the first anniversary of the Funding
Date, interest shall accrue at the greater of the
following as of the beginning of each quarterly period:
(i) the prime rate plus 700 basis points, increasing by
an additional 50 basis points at the end of each
subsequent three month period for so long as the Holdco
Bridge Notes are outstanding; (ii) the Treasury Rate
(as defined below) plus 1000 basis points, increasing
by an additional 50 basis points at the end of each
subsequent three month period for so long as the Holdco
Bridge Notes are outstanding; (iii) the DLJ High Yield
Index Rate plus 600 basis points, increasing by an
additional 50 basis points at the end of each
subsequent three month period for so long as the Holdco
Bridge Notes are outstanding; and (iv) the rate in
effect on the day immediately preceding the first
anniversary of the Funding Date plus 50 basis points,
increasing by an additional 50 basis points at the end
of each subsequent three month period for so long as
the Holdco Bridge Notes are outstanding. For purposes
of this Summary of Terms and Conditions, the "prime
rate" means the prime or reference rate as announced
from time to time by The Bank of New York and the
"Treasury Rate" means the rate applicable to the most
recent auction of direct obligations of the United
States having a maturity closest to the Holdco Bridge
Notes, as published by the Board of Governors of the
Federal Reserve System.
Notwithstanding anything to the contrary set forth
above, at no time shall the per annum interest rate on
the Holdco Bridge Notes exceed seventeen percent
(17.00%), nor shall the per annum interest rate on the
Holdco Bridge Notes be lower than ten percent (10.00%).
Maturity: Same as the Subordinated Bridge Notes.
Mandatory
Redemption: Holdco I will redeem or prepay the Holdco Bridge Notes
with, subject to certain agreed exceptions, (i) the net
proceeds (other than proceeds used to redeem or prepay
the Subordinated Bridge Notes) from the issuance of any
debt or equity securities or other indebtedness (other
than indebtedness under the Bank Facilities and the
Subordinated Bridge Notes or the Common Stock issued in
connection with the Transaction) by any member of the
Credit Group (the "Permanent Financing"); or (ii) the
net proceeds from asset sales (other than sales of
Margin Stock) by any member of the Credit Group in
excess of the amount thereof required to be paid to the
banks under the Bank Facilities or the holders of the
Subordinated Bridge Notes, in each case at par plus
accrued interest, provided, that the redemption price
shall be one hundred three and one-half (103.5%) of par
plus accrued interest if the Holdco Bridge Notes are
redeemed with or in anticipation of funds raised by any
means other than a transaction in which DLJSC or any of
its affiliates has acted as sole agent or sole manager
to the Credit Group or, in the case of any bank-style
financing, syndication agent or arranger; and provided
further, that after the first anniversary of the
Funding Date, the Holdco Bridge Notes may be redeemed
at 100% of principal plus accrued interest unless DLJSC
has delivered a Bona Fide Proposal or Holdco I and
DLJSC have agreed in their reasonable judgment that no
such Bona Fide Proposal could be made.
Interest Payments: Interest on the Holdco Bridge Notes will be payable
quarterly, in arrears, by increasing the principal
amount of the Holdco Bridge Notes by the amount of
interest due on such interest payment date.
Optional
Redemption: The Holdco Bridge Notes will be callable, in whole or in
part, upon not less than 10 days written notice, at the
option of Holdco I, at any time at par plus accrued
interest to the redemption date; provided, that the
redemption price shall be one hundred three and one-
half (103.5%) of par plus accrued interest if the
Holdco Bridge Notes are refunded (whether at the time
of redemption or maturity) with or in anticipation of
funds raised by any means other than a transaction in
which DLJSC or any of its affiliates has acted as sole
agent or sole manager to the Credit Group or, in the
case of any bank-style financing, syndication agent or
arranger; provided further, that twelve (12) months
after the Funding Date, the Holdco Bridge Notes may be
redeemed or prepaid at 100% of principal plus accrued
interest unless DLJSC has delivered a Bona Fide
Proposal or Holdco I and DLJSC have agreed in their
reasonable judgment that no such Bona Fide Proposal
could be made.
Commencing on the earliest to occur of (i) the first
anniversary of the Funding Date and (ii) refusal by the
relevant issuer to execute a Bona Fide Proposal (such
earlier event, the "First Anniversary"), DLJ Bridge
shall have the right to resell the Holdco Bridge Notes
on a fixed rate basis. In the event that DLJ Bridge
elects to proceed with such fixed rate sale, the
interest rate on any Holdco Bridge Notes may be fixed
at a rate to be determined by DLJ Bridge provided that
such rate will not exceed seventeen percent (17.00%).
In conjunction with such fixed rate sale, DLJ Bridge
may use any unused Escrowed Warrants, as defined below,
in order to facilitate such sale. In such event, any
such Holdco Bridge Notes will be callable thereafter at
par plus accrued interest plus a make-whole premium
calculated on the basis of a discount rate equal to the
then Treasury Rate plus one-half percent (0.50%). DLJ
Bridge shall agree that they shall give Holdco I ten
(10) days notice prior to fixing the rate of the Holdco
Bridge Notes.
Ranking: The Holdco Bridge Notes will be subordinated to any
guarantees of the Bank Facility and the Subordinated
Bridge Notes or refinancings thereof and all Designated
Senior Debt and the Subordinated Bridge Notes, but will
rank senior to all other Holdco I debt.
Guarantees: None.
Registration
Rights: Same as the Subordinated Bridge Notes.
Extension Fee: Upon the occurrence of the First Anniversary, Holdco I
shall pay to DLJ Bridge a cash duration fee (the
"Holdco Extension Fee") in an amount equal to three and
one-half percent (3.50%) of the principal amount of the
Holdco Bridge Notes outstanding on such date. Upon
payment of the Holdco Extension Fee, the redemption
price for the Holdco Bridge Notes in all cases shall be
100% of principal plus accrued interest.
Right to Resell
Bridge Financing: Same as the Subordinated Bridge Notes.
Representations and
Warranties: Same as the Subordinated Bridge Notes.
Covenants: Same as the Subordinated Bridge Notes.
Event of Default: An Event of Default as defined for the Holdco
Bridge Notes will include but not be limited to: (i)
the failure of Holdco I to pay principal on the Holdco
Bridge Notes when due; (ii) the failure of Holdco I to
pay interest or fees on the Holdco Bridge Notes and the
continuance of such failure for 5 days; (iii) the
failure of Holdco I to comply with any other provision,
condition, covenant, promise, warranty or
representation in the Securities Purchase Agreement or
the Holdco Bridge Notes, provided that in certain cases
such failure continues for 30 days after notice; (iv)
a default under any instrument or instruments governing
indebtedness of Holdco I, the Company or any of its
subsidiaries when such default causes such indebtedness
to become due prior to its stated maturity or failure
to pay any such indebtedness at its stated maturity
(with exceptions to be agreed); (v) after consummation
of the Merger, a default under any instrument or
instruments governing indebtedness (other than
guarantees by Holdco I of indebtedness of the Company
or any of its subsidiaries) of Holdco I when such
default allows holders of such indebtedness to cause
such indebtedness to become due prior to its stated
maturity or failure to pay any such indebtedness at its
stated maturity in an aggregate principal amount
exceeding a threshold amount to be agreed; (vi) final
judgments aggregating in excess of a threshold amount
to be agreed rendered against any member of the Credit
Group and not discharged or stayed within 60 days;
(vii) certain events of bankruptcy, insolvency or
reorganization with respect to any member of the Credit
Group; (viii) material misrepresentations in the
Securities Purchase Agreement; (ix) certain ERISA
defaults; (x) breach under the Engagement Letter
(defined below) and payment of fees to DLJ Bridge and
DLJSC described in the Fee Letter or the Engagement
Letter; or (xi) Change of Control of any member of the
Credit Group.
In case an Event of Default shall occur and be
continuing, the holders of at least 33 1/3% (a majority
where DLJ Bridge or their affiliates, hold a majority
of the aggregate principal amount of the Holdco Bridge
Notes) in aggregate principal amount of the Holdco
Bridge Notes then outstanding, by notice in writing to
Holdco I and the Agent Banks may declare the principal
of and all accrued interest on all Holdco Bridge Notes
to be due and payable immediately. If an Event of
Default specified in clause (vii) occurs, the principal
of and accrued interest on the Holdco Bridge Notes will
be immediately due and payable without any notice,
declaration or other act on the part of the holders of
the Holdco Bridge Notes. An acceleration notice may be
annulled and past defaults (except for monetary
defaults not yet cured) may be waived by the holders of
a majority in aggregate principal amount of the Holdco
Bridge Notes.
If an Event of Default shall occur and for as long as
such Event of Default shall be continuing, DLJ Bridge
shall have the right to appoint one (1) representative
to sit on each of Holdco I's and the Company's Boards
of Directors provided, however, that such right shall
terminate if DLJ Bridge no longer retains at least 50%
of the outstanding Holdco Bridge Notes; it being
understood that, should there be an Event of Default in
respect of each of the Bridge Securities, DLJ Bridge
shall be limited to one (1) such appointment.
Equity Amount
Escrowed: On the Funding Date, warrants (the "Escrowed Warrants")
representing twenty five percent (25.00%) of the fully-
diluted common stock of Holdco I as determined in
accordance with GAAP will be placed in an escrow
account. To the extent necessary, the number of
warrants of Holdco I placed in escrow shall be
increased to ensure that upon consummation of the
Transaction, the number of Escrowed Warrants held in
the corporation surviving the Transaction shall
represent twenty five percent (25.00%) of the fully-
diluted common stock of the surviving corporation as
determined in accordance with GAAP.
The Escrowed Warrants will be exercisable at a price
equal to $0.01 per share for a period of seven (7)
years from the date such Escrowed Warrants are released
from escrow and will have customary anti-dilution
provisions, tag-along rights and "piggy-back"
registration rights.
If the refinancing of 100% of the Holdco Bridge Notes
is not completed within the periods following the
Funding Date set forth in Column A below, Escrowed
Warrants exercisable into the percentage of Holdco I's
fully-diluted common stock set forth in Column B shall
be released from escrow to holders of the Holdco Bridge
Notes pro rata in accordance with the principal amount
of Holdco Bridge Notes held by each such holder and
such holders shall be entitled to retain such released
Escrowed Warrants.
A B
------------------------ ---------
Up to 90 days 0.000%
91-180 days 1.000%
181-270 days 1.5000%
271-360 days 2.5000%
361-450 days 5.000%
451-540 days 0.750%
541-640 days 0.750%
641-730 days 1.500%
731-820 days 1.500%
821-910 days 1.875%
911-1000 days 1.875%
1001-1090 days 2.250%
1091-1180 days 2.250%
1181 days and thereafter 2.250%
------
25.000%
======
Any Escrowed Warrants to which the holders of the
Bridge Securities are not entitled as set forth above
shall be returned to Holdco I for cancellation.
Escrow: The Escrowed Warrants will be held, undated, in escrow
by Snoga, Inc., an affiliate of DLJ Bridge, from the
Funding Date.
Defeasance
Provision: None.
Governing Law: New York.
Securities Purchase Agreement
-----------------------------
The Commitment of DLJ Bridge to purchase the Bridge Securities
will be subject to the execution of definitive documentation including one or
more definitive securities purchase agreements (the "Securities Purchase
Agreement"), which will contain the terms and conditions set forth herein and
such other conditions precedent, covenants, representations, warranties,
events of default and other provisions as are customary for financings of this
kind.
Conditions to
Funding: The funding of the Bridge Securities will be subject to
concurrent satisfaction of the following conditions
precedent deemed appropriate by DLJ Bridge for
leveraged financing generally and for this transaction
in particular, including but not limited to the
following:
(i) The Tender Offer shall have been consummated in
accordance with the Merger Agreement and any
material related documentation, all of which will
be satisfactory in form and substance to DLJ
Bridge. DLJ Bridge acknowledges that the Merger
Agreement is currently satisfactory in form and
substance to DLJ Bridge. There shall not be any
amendment, modification or waiver of any of the
terms or conditions of the Merger Agreement or any
material related documentation without the prior
written consent of DLJ Bridge. In addition, all
loan documentation and other documentation
relating to the Bridge Securities shall have been
executed and shall be in form and substance
satisfactory to DLJ Bridge and in compliance with
all applicable laws and regulations;
(ii) Holdco I shall have issued not less than
$65.0 million in Common Stock to be
purchased, in cash, by the Equity Investor. In
addition, Holdco II will have in place the Term
Loan Facility and a commitment to provide the
Revolving Credit Facility to the Company, and
the covenants and other terms and conditions of
which shall be reasonably satisfactory in all
respects to DLJ Bridge, it being understood that
the terms and conditions set forth in the Bank
Facilities Commitment Letter dated July 16,
1998 are satisfactory to DLJ Bridge. The
aggregate indebtedness of the Credit Group at
closing shall not exceed $224.6$ million;
(iii) DLJ Bridge has completed, and is satisfied with
the results of, its business, tax, legal,
accounting, and environmental due diligence
investigations of the Company and its
subsidiaries. This condition is deemed satisfied
or waived unless any additional information is
disclosed to or discovered by DLJ Bridge which is
inconsistent with the information heretofore
provided to DLJ Bridge and which DLJ Bridge
reasonably deems materially adverse in respect of
the condition (financial or otherwise), business,
assets, liabilities, properties, results of
operations or prospects of the Company and its
subsidiaries. DLJ Bridge is not currently aware
of any such additional information referred to
above;
(iv) Receipt of (a) consolidated financial statements
of the Credit Group including balance sheets and
income and cash flow statements as of the end of
and for each of the last three fiscal years
audited by independent public accountants of
recognized national standing and prepared in
conformity with GAAP, together with the report
thereon; (b) unaudited selected financial
information of the Credit Group meeting the
requirements of Item 301 (a) of Regulation S-K for
the two fiscal years immediately preceding the
last three fiscal years; and (c) unaudited interim
financial statements of the Credit Group, prepared
in each case in the same manner as the historical
audited statements for the most recently ended
quarterly period and for the same quarterly period
during the most recently ended fiscal year;
(v) Receipt of a consolidating pro forma balance
sheet of Holdco I as of the closing date, giving
effect to the Transaction and the transactions
contemplated by the Tender Offer and reflecting
estimated transaction related accounting
adjustments, prepared by independent public
accountants of recognized national standing;
(vi) The corporate, tax, capital and ownership
structure (including articles of incorporation and
by-laws), shareholders agreements and management
of the Credit Group before and after the
Transaction shall be consistent with that
previously described to DLJ Bridge or otherwise
satisfactory to DLJ Bridge in all respects;
(vii) Receipt of solvency letters and solvency
certificates if, and to the extent that, any
lenders under the Bank Facilities are provided
such letters and certificates, in each case
addressed to DLJ Bridge;
(viii) Receipt of all material governmental, shareholder
and third party consents, (including Hart-Scott-
Rodino clearance, if required), and approvals
necessary or desirable in connection with the
Transaction and the related financings and other
transactions contemplated hereby and expiration of
all applicable waiting periods without any action
being taken by any competent authority that could
restrain, prevent or impose any materially adverse
conditions on the Transaction or such other
transactions or that could seek or threaten to
restrain, prevent or impose any materially adverse
conditions on any of the forgoing, and no law or
regulation shall be applicable which in the
judgment of DLJ Bridge could have any such effect;
(ix) Absence of any material adverse change in the
business, condition (financial or otherwise),
operations, performance or properties of any
member of the Credit Group since the end of the
most recently ended fiscal year for which audited
financial statements have been provided to DLJ
Bridge or in the facts and information as
represented to date;
(x) Absence of any action, suit, investigation,
litigation or proceeding pending or threatened in
any court or before any arbitrator or governmental
instrumentality that purports to affect the Bridge
Securities or the refinancing thereof or that
could reasonably be expected to have a material
adverse effect on the Transaction or the Bridge
Securities or any of the other transactions
contemplated hereby or on the property, financial
condition, operations or business of the Credit
Group;
(xi) DLJ Bridge shall have received reasonably
satisfactory opinions of counsel to the Credit
Group as to the transactions contemplated hereby
(including without limitation compliance with all
applicable securities laws), and such corporate
resolutions, certificates and other documents as
DLJ Bridge shall reasonably request;
(xii) Absence of any Event of Default or event that,
with notice and/or the passage of time, could
become an Event of Default and satisfaction as to
the accuracy of all representations and
warranties;
(xiii) A letter (the "Engagement Letter") shall have
been executed between the Credit Group and DLJSC;
(xiv) All fees and expenses due to DLJ Bridge in
connection with the purchase of the Bridge
Securities or to DLJSC as set forth in the
Engagement Letter or otherwise shall have been
paid in full;
(xv) Absence of any disruption or adverse change in
the financial or capital markets generally which
could reasonably be expected to materially
adversely affect the purchase of the Bridge
Securities or the refinancing thereof; and
(xvi) DLJ Bridge shall have received any required
consent from the Bank Facilities lenders
concerning the anticipated terms and conditions of
the Bridge Securities and the Permanent Financing
including the application of the proceeds from any
such financing. Such terms will include usual and
customary terms for securities of this type.
EXHIBIT A
---------
In consideration of the commitment given by DLJ Bridge Finance,
Inc., a Delaware corporation ("DLJ Bridge"), with respect to the Transaction
involving the Equity Investor and the Credit Group pursuant to the Bridge
Commitment Letter between the Equity Investor and DLJ Bridge of which this
Exhibit is a part (such Bridge Commitment Letter, together with all Exhibits
attached thereto, is referred to herein as the "Commitment"), the Equity
Investor (the "Indemnifying Party") agrees to indemnify and hold harmless DLJ
Bridge, its affiliates, and each person, if any, who controls DLJ Bridge, or
any of its affiliates, within the meaning of the Securities Act of 1933, as
amended (the "Act") or the Securities Exchange Act of 1934, as amended (a
"Controlling Person"), and the respective partners, agents, employees,
officers and directors of DLJ Bridge, its affiliates, and any such Controlling
Person (each an "Indemnified Party" and collectively, the "Indemnified
Parties" or the "DLJ Bridge Group"), from and against any and all losses,
claims, damages, liabilities and expenses (including, without limitation and
as incurred, reasonable costs of investigating, preparing or defending any
such claim or action, whether or not DLJ Bridge Group is a party thereto)
arising out of, or in connection with any activities contemplated by, the
Commitment or any other services rendered in connection therewith, including,
but not limited to, losses, claims, damages, liabilities or expenses arising
out of or based upon any untrue statement or any alleged untrue statement of a
material fact or any omission or any alleged omission to state a material fact
in any of the disclosure or offering or confidential information documents
(the "Disclosure Documents") pertaining to any of the transactions or proposed
transactions contemplated by the Commitment, including any eventual resale or
refinancing of any Subordinated Bridge Notes (as defined in the Commitment),
provided that the Indemnifying Party will not be responsible for any claims,
liabilities, losses, damages or expenses to the extent they are determined by
final judgment of a court of competent jurisdiction to result from DLJ Bridge
Group's gross negligence, willful misconduct or bad faith. The Indemnifying
Party also agrees that (i) DLJ Bridge Group shall have no liability (except
for breach of provisions of the Bridge Commitment Letter of which this Exhibit
A is a part) for claims, liabilities, damages, losses or expenses, including
legal fees, incurred by the Indemnifying Party except to the extent they are
determined by final judgment of a court of competent jurisdiction to result
from DLJ Bridge Group's gross negligence, willful misconduct or bad faith and
(ii) DLJ Bridge Group shall in no event have any liability to the Equity
Investor or any member of the Credit Group on any theory of liability for
punitive damages arising out of, in connection with, or as a result of, the
Bridge Commitment Letter.
In case any action shall be brought against DLJ Bridge Group
with respect to which indemnity may be sought against the Indemnifying Party
under this agreement, DLJ Bridge Group shall promptly notify the Indemnifying
Party in writing and the Indemnifying Party shall, if requested by DLJ Bridge
or if the Indemnifying Party desires to do so, assume the defense thereof,
including the employment of counsel reasonably satisfactory to DLJ Bridge and
payment of all reasonable fees and expenses. The failure to so notify the
Indemnifying Party shall not affect any obligations the Indemnifying Party may
have to DLJ Bridge Group under the Commitment or otherwise unless the
Indemnifying Party is materially adversely affected by such failure. DLJ
Bridge Group shall have the right to employ separate counsel in such action
and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of DLJ Bridge Group, unless: (i) the
Indemnifying Party has failed to assume the defense and employ counsel
reasonably satisfactory to DLJ Bridge or (ii) the named parties to any such
action (including any impleaded parties) include DLJ Bridge Group and the
Indemnifying Party, and DLJ Bridge Group shall have been advised by counsel
that there may be one or more legal defenses available to it which are
different from or additional to those available to the Indemnifying Party, in
which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense of such action or proceeding on behalf of such Indemnified Party,
provided, however, that the Indemnifying Party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the
same general allegations or circumstances, be responsible hereunder for the
reasonable fees and expenses of more than one such firm of separate counsel,
in addition to any local counsel, which counsel shall be designated by DLJ
Bridge. The Indemnifying Party shall not be liable for any settlement of any
such action effected without the written consent of the Indemnifying Party
(which shall not be unreasonably withheld) and the Indemnifying Party agrees
to indemnify and hold harmless DLJ Bridge Group from and against any loss or
liability by reasons of settlement of any action effected with the consent of
the Indemnifying Party. In addition, the Indemnifying Party will not, without
the prior written consent of DLJ Bridge, settle or compromise or consent to
the entry of any judgment in or otherwise seek to terminate any pending or
threatened action, claim, suit or proceeding in respect to which
indemnification or contribution may be sought hereunder (whether or not DLJ
Bridge is a party thereto) unless such settlement, compromise, consent or
termination includes an express unconditional release of DLJ Bridge and the
other Indemnified Parties, satisfactory in form and substance to DLJ Bridge,
from all liability arising out of such action, claim, suit or proceeding.
If for any reason the foregoing indemnity is unavailable to an
Indemnified Party or insufficient to hold an Indemnified Party harmless, then
in lieu of indemnifying such Indemnified Party, the Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such claims, liabilities, losses, damages, or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Party on the one hand and by DLJ Bridge on the other from the
Transaction contemplated by the Commitment or (ii) if the allocation provided
by clause (i) is not permitted under applicable law, in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnifying Party on the one hand and DLJ Bridge on the other, but also the
relative fault of the Indemnifying Party and DLJ Bridge as well as any other
relevant equitable considerations. Notwithstanding the provisions of this
Exhibit A, the aggregate contribution of all Indemnified Parties shall not
exceed the amount of fees actually received by DLJ Bridge pursuant to the
Commitment. It is hereby further agreed that the relative benefits to the
Indemnifying Party on the one hand and DLJ Bridge on the other with respect to
any Transaction shall be deemed to be in the same proportion as (i) the total
value of the Transaction bears to (ii) the fees paid to DLJ Bridge with
respect to such Transaction. The relative fault of the Indemnifying Party on
the one hand and DLJ Bridge on the other with respect to the Transaction shall
be determined by reference to, among other things, whether any untrue or
alleged untrue statement of material fact or the omission or alleged omission
to state a material fact related to information supplied by the Indemnifying
Party or by DLJ Bridge and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11 (f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
The indemnity, contribution and expense reimbursement
obligations set forth herein (i) shall be in addition to any liability the
Indemnifying Party may have to any Indemnified Party at common law or
otherwise, (ii) shall survive the termination of the Commitment, and (iii)
shall remain operative and in full force and effect regardless or any
investigation made by or on behalf of the DLJ Bridge or any other Indemnified
Party.
EXHIBIT B
---------
Subordination Provisions
------------------------
Set forth below is substantially the form of subordination
provisions for the Subordinated Bridge Notes (the "Financing") which will be
set forth in the Definitive Documents, subject to conforming changes.
(a) Notes Subordinated to Designated Senior Debt. The
Issuer for itself and its successors, and each Holder,
by its acceptance of the Financing, agrees that the
payment of the Subordinated Obligations [to be defined
to mean principal and interest (including post-petition
interest as provided below) on the Subordinated Bridge
Notes and any claim for rescission or damages in
respect thereof under any applicable law] by the Issuer
is subordinated, to the extent and in the manner
provided in this Section, to the prior payment of
Designated Senior Debt; provided that the provisions of
this Section do not apply to, and the Financing is not
subordinated in respect of, the proceeds of the
Permanent Financing.
This Section will constitute a continuing offer to all
persons who, in reliance upon its provisions, become
holders of, or continue to hold, Designated Senior
Debt, and such provisions are made for the benefit of
the holders of Designated Senior Debt, and such holders
are made obligees under this Section and they and/or
each of them may enforce its provisions.
(b) No Payment on Notes in Certain Circumstances.
(i) No payment will be made on account of the
Subordinated Obligations, or to acquire any of
the Notes for cash or property other than
capital stock of the Issuer, or on account of
the redemption provisions of the Financing (x)
upon the maturity of any Designated Senior Debt
by lapse of time, acceleration or otherwise,
unless and until all such Designated Senior Debt
shall first be paid in full or provided for in
cash or cash equivalents or such payment duly
provided for or (y) in the event that the Issuer
defaults in the payment of any principal of or
interest on or any other amounts payable on or
due in connection with any Designated Senior
Debt when it becomes due and payable, whether at
maturity or at a date fixed for prepayment or by
declaration or otherwise, unless and until such
default has been cured or waived in writing.
(ii) Upon the happening of any event of default (or
if an event of default would result upon any
payment with respect to the Subordinated
Obligations) with respect to any Designated
Senior Debt, as such event of default is defined
in the instruments evidencing such Designated
Senior Debt or under which it is outstanding,
permitting the holders to accelerate its
maturity (if the default is other than default
in payment of the principal of or interest on or
any other amount due in connection with such
Designated Senior Debt) upon written notice of
the event of default given to the Issuer by the
holders of such Designated Senior Debt, then,
unless and until such event of default has been
cured or waived in writing, no payment will be
made by the Issuer with respect to the
Subordinated Obligations or to acquire any of
the Notes for cash, property or securities;
provided that this paragraph (ii) will not
prevent the making of any payment for a period
of more than 179-days after the date the written
notice of the default is given unless such
Designated Senior Debt in respect of which such
event of default exists has been declared due
and payable in its entirety within that period,
and that declaration has not been rescinded. If
such Designated Senior Debt is not declared due
and payable within 179-days after the written
notice of the default is given, promptly after
the end of the 179-day period the Issuer will
pay all sums not paid during the 179-day period
because of this paragraph (ii) unless paragraph
(i) above is then applicable. During any 360-
day consecutive period only one such period
during which payment of principal of, or
interest on, the Financing may not be made may
commence and the duration of such period may not
exceed 179 days.
(iii) If any payment or distribution of assets of the
Issuer is received by any Holder in respect of
the Subordinated Obligations at a time when that
payment or distribution should not have been
made because of paragraph (i) or (ii), such
payment or distribution will be received and
held in trust for and will be paid over to the
holders of Designated Senior Debt which is due
and payable and remains unpaid or unprovided for
(pro rata as to each of such holders on the
basis of the respective amounts of Designated
Senior Debt which is due and payable held by
them) until all such Designated Senior Debt has
been paid in full or provided for in cash or
cash equivalents, after giving effect to any
concurrent payment or distribution or provision
therefor to the holders of such Designated
Senior Debt.
(c) Notes Subordinated to Prior Payment of all Designated
Senior Debt on Dissolution, Liquidation or
Reorganization. Upon any distribution of assets of the
Issuer upon any dissolution, winding up, liquidation or
reorganization of the Issuer (whether in bankruptcy,
insolvency, receivership or similar proceeding related
to the Issuer or its property or upon an assignment for
the benefit of creditors or otherwise):
(i) the holders of all Designated Senior Debt will
first be entitled to receive payment in full or
provision for payment in full in cash or cash
equivalents of the principal of and interest due
on Designated Senior Debt and other amounts due
in connection with Designated Senior Debt
(including interest accruing subsequent to an
event specified in Sections _____ [certain
bankruptcy events] and ___________ [winding up]
at the rate provided for in the documents
governing such Designated Senior Debt, whether
or not such interest is an allowed claim
enforceable against the debtor in a Bankruptcy
case under Title 11 of the United States Code),
before the Holders are entitled to receive any
payment on account of the principal of or
interest on the Notes;
(ii) any payment or distribution of assets of the
Issuer of any kind or character, whether in
cash, property or securities, to which the
Holders would be entitled except for the
provisions of this Section will be paid by the
liquidating trustee or agent or other person
making such a payment or distribution directly
to the holders of Designated Senior Debt or
their representatives to the extent necessary to
make payment in full or provision for payment in
full in cash or cash equivalents of all
Designated Senior Debt remaining unpaid, after
giving effect to any concurrent payment or
distribution or provision therefor to the
holders of such Designated Senior Debt ; and
(iii) if, notwithstanding the foregoing, any payment
or distribution of assets of the Issuer of any
kind or character, whether in cash, property or
securities is received by the Holders on account
of the Subordinated Obligations before all
Designated Senior Debt is paid in full or
provided for in cash or cash equivalents, such
payment or distribution will be received and
held in trust for and will be paid over to the
holders of the Designated Senior Debt remaining
unpaid or unprovided for or their
representatives for application to the payment
of such Designated Senior Debt until all such
Designated Senior Debt has been paid in full or
provided for in cash or cash equivalents, after
giving effect to any concurrent payment or
distribution or provision therefor to the
holders of such Designated Senior Debt.
The Issuer will give prompt written notice to
the Holders of any dissolution, winding up,
liquidation or reorganization of it or any
assignment for the benefit of its creditors and
of any event of default in respect of Designated
Senior Debt.
(d) For purposes of this Section, the words "cash,
property or securities" shall not be deemed to include
(x) shares of capital stock of the Issuer as
reorganized or readjusted, (y) securities of the Issuer
or any other corporation provided for by a plan of
reorganization or readjustment which are subordinated,
to at least the same extent as the Financing, to the
payment of all Designated Senior Debt then outstanding
or (z) any payment or distribution of securities of the
Issuer or any other corporation authorized by an order
or decree giving effect, and stating in such order or
decree that effect has been given, to subordination of
the Financing to Designated Senior Debt and made by a
court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy, insolvency
or similar law. For purposes of this Section, "payment
on the account of the Subordinated Obligations" shall
not include the Escrowed Warrants, any shares issued
upon exercise of the Escrowed Warrants or any sale or
transfer of any of the foregoing.
(e) Holders to be Subrogated to Rights of Holders of
Designated Senior Debt. Following the payment in full
or provision for payment in full of all Designated
Senior Debt, the Holders will be subrogated to the
rights of the holders of Designated Senior Debt to
receive payments or distributions of assets of the
Issuer applicable to the Designated Senior Debt until
all amounts owing on the Financing have been paid in
full, and for the purpose of such subrogation no such
payments or distributions to the holders of Designated
Senior Debt by or on behalf of the Issuer or by or on
behalf of the Holders by virtue of this Section which
otherwise would have been made to the Holders will, as
between the Issuer and the Holders, be deemed to be
payment by the Issuer to or on account of the
Designated Senior Debt, it being understood that the
provisions of this Section are and are intended solely
for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of Designated
Senior Debt, on the other hand.
(f) Obligations of the Issuer Unconditional. Nothing
contained in this Section or elsewhere in the Notes is
intended to or will impair, as between the Issuer and
the Holders, the obligations of the Issuer, which are
absolute and unconditional, to pay to the Holders the
Subordinated Obligations as and when they become due
and payable in accordance with their terms, or is
intended to or will affect the relative rights of the
Holders and creditors of the Issuer other than the
holders of the Designated Senior Debt, nor will
anything herein or therein prevent any Holder from
exercising all remedies otherwise permitted by
applicable law upon default under the Financing,
subject to the rights if any, under this Section of the
holders of Designated Senior Debt in respect of cash,
property or securities of the Issuer received upon the
exercise of any such remedy.
(g) Subordination Rights not Impaired by Acts or Omissions
of the Issuer or Holders of Designated Senior Debt. No
right of any present or future holders of any
Designated Senior Debt to enforce subordination as
provided herein will at any time or in any way be
prejudiced or impaired by any act or failure to act on
the part of the Issuer or by any act or failure to act
by any such holder, or by any noncompliance by the
Issuer with the terms of this Note, regardless of any
knowledge thereof which any such holder may have or
otherwise be charged with. The holders of Designated
Senior Debt may extend, renew, modify or amend the
terms of the Designated Senior Debt or any security
therefor and release, sell or exchange such security
and otherwise deal freely with the Issuer, all without
affecting the liabilities and obligations of the
parties to the document or the Holders. No amendment
to these provisions will be effective against the
holders of the Designated Senior Debt who have not
consented thereto in writing.
(h) Not to Prevent Events of Default. The failure to make
a payment on account of the Subordinated Obligations by
reason of any provision of this Section will not be
construed as preventing the occurrence of an Event of
Default.
Exhibit (c) (2)
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
dated as of
July 16, 1998
between
DECRANE AIRCRAFT HOLDINGS, INC.
and
DECRANE ACQUISITION CO.
TABLE OF CONTENTS(1)
-----------------
PAGE
----
ARTICLE 1
THE OFFER
SECTION 1.01. The Offer ...................................................1
SECTION 1.02. Company Action...............................................2
SECTION 1.03. Directors ...................................................3
ARTICLE 2
THE MERGER
SECTION 2.01. The Merger ..................................................4
SECTION 2.02. Conversion of Shares.........................................5
SECTION 2.03. Surrender and Payment........................................5
SECTION 2.04. Dissenting Shares............................................7
SECTION 2.05. Stock Options................................................7
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.01. Certificate of Incorporation.................................8
SECTION 3.02. Bylaws ......................................................8
SECTION 3.03. Directors and Officers.......................................8
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Corporate Existence and Power................................8
SECTION 4.02. Corporate Authorization......................................9
SECTION 4.03. Governmental Authorization...................................9
SECTION 4.04. Non-contravention............................................9
SECTION 4.05. Capitalization..............................................10
SECTION 4.06. Subsidiaries................................................10
SECTION 4.07. SEC Filings ................................................11
SECTION 4.08. Financial Statements........................................12
SECTION 4.09. Disclosure Documents........................................12
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(1) The Table of Contents is not a part of this Agreement.
SECTION 4.10. Absence of Certain Changes..................................13
SECTION 4.11. No Undisclosed Material Liabilities.........................15
SECTION 4.12. Litigation ................................................15
SECTION 4.13. Taxes ......................................................15
SECTION 4.14. ERISA ......................................................16
SECTION 4.15. Compliance with Laws........................................19
SECTION 4.16. Licenses and Permits........................................19
SECTION 4.17. Intellectual Property.......................................20
SECTION 4.18. Environmental Matters.......................................20
SECTION 4.19. Finders' Fees...............................................22
SECTION 4.20. Inapplicability of Certain Restrictions.....................22
SECTION 4.21. Rights Plan ................................................22
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 5.01. Corporate Existence and Power...............................22
SECTION 5.02. Corporate Authorization.....................................22
SECTION 5.03. Governmental Authorization..................................23
SECTION 5.04. Non-contravention...........................................23
SECTION 5.05. Disclosure Documents........................................23
SECTION 5.06. Litigation ................................................24
SECTION 5.07. Finders' Fees...............................................24
SECTION 5.08. Financing ................................................24
ARTICLE 6
COVENANTS OF THE COMPANY
SECTION 6.01. Conduct of the Company......................................25
SECTION 6.02. Stockholder Meeting; Proxy Material.........................27
SECTION 6.03. Access to Information.......................................28
SECTION 6.04. Other Offers................................................28
SECTION 6.05. Notices of Certain Events...................................31
ARTICLE 7
COVENANTS OF BUYER
SECTION 7.01. Confidentiality.............................................31
SECTION 7.02. Voting of Shares............................................32
SECTION 7.03. Director and Officer Liability..............................32
SECTION 7.04. Employee Matters............................................33
ARTICLE 8
COVENANTS OF BUYER AND THE COMPANY
SECTION 8.01. Best Efforts................................................33
SECTION 8.02. Certain Filings.............................................33
SECTION 8.03. Public Announcements........................................34
SECTION 8.04. Further Assurances..........................................34
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to the Obligations of Each Party.................34
SECTION 9.02. Conditions to the Obligations of Buyer......................35
ARTICLE 10
TERMINATION
SECTION 10.01. Termination................................................35
SECTION 10.02. Effect of Termination......................................36
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices ...................................................36
SECTION 11.02. Survival of Representations and Warranties.................38
SECTION 11.03. Amendments; No Waivers.....................................38
SECTION 11.04. Expenses...................................................39
SECTION 11.05. Successors and Assigns; Benefit............................39
SECTION 11.06. Governing Law..............................................39
SECTION 11.07. Counterparts; Effectiveness................................39
SECTION 11.08. Entire Agreement...........................................39
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of July 16, 1998 between DeCrane
Aircraft Holdings, Inc., a Delaware corporation (the "Company"), and DeCrane
Acquisition Co., a Delaware corporation ("Buyer").
WHEREAS, in furtherance of the acquisition of the Company by Buyer on
the terms and subject to the conditions set forth in this Agreement, Buyer
proposes to make an offer to purchase all of the outstanding shares of common
stock of the Company at a purchase price of $23.00 per share, net to seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, the respective Boards of Directors of the Company and Buyer
have approved the offer and the merger of Buyer with the Company upon the terms
and subject to the conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
ARTICLE 1
THE OFFER
SECTION 1.01. The Offer. (a) Provided that nothing shall have occurred
that had the Offer referred to below been commenced, would give rise to a right
to terminate the Offer pursuant to any of the conditions set forth in Annex I
hereto, Buyer shall, as promptly as practicable after the date hereof, but in no
event later than five business days following the public announcement of the
terms of this Agreement, commence an offer (the "Offer") to purchase all of the
outstanding shares of common stock, par value $.01 per share (the "Shares"), of
the Company at a price of $23.00 per Share, net to the seller in cash. The Offer
shall remain open for at least twenty-five business days, shall be subject to
the condition that there shall have been validly tendered in accordance with the
terms of the Offer prior to the expiration date of the Offer and not withdrawn a
number of Shares which, together with the Shares then owned by Buyer, represents
at least a majority of the Shares outstanding on a fully diluted basis (the
"Minimum Condition") and to the other conditions set forth in Annex I hereto.
Buyer expressly reserves the right to waive the Minimum Condition or any of the
other conditions to the Offer and to make any change in the terms or conditions
of the Offer; provided that no change may be made which changes the form of
consideration to be paid or decreases the price per Share or the number of
Shares sought in the Offer or which imposes conditions to the Offer in addition
to those set forth in Annex I or which otherwise materially and adversely
affects the Company or the holders of the Shares.
(b) As soon as practicable on the date of commencement of the Offer,
Buyer shall file with the SEC (as defined in Section 4.07) a Tender Offer
Statement on Schedule 14D-1 with respect to the Offer which will contain the
offer to purchase and form of the related letter of transmittal (together with
any supplements or amendments thereto, collectively the "Offer Documents"). Each
of Buyer and the Company agrees promptly to correct any information provided by
it for use in the Offer Documents if and to the extent that it shall have become
false or misleading in any material respect. Buyer agrees to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. The Company and its counsel
shall be given an opportunity to review and comment on the Schedule 14D-1 and
each amendment and supplement thereto, in each case prior to the filing thereof
with the SEC.
SECTION 1.02. Company Action. (a) The Company hereby consents to the
Offer and represents that its Board of Directors, at a meeting duly called and
held and acting on the unanimous recommendation of a special committee of the
Board of Directors of the Company comprised entirely of non-management
independent directors (the "Special Committee"), has (i) unanimously determined
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger (as defined in Section 2.01), are fair to and in the best
interest of the Company's stockholders, (ii) unanimously approved this Agreement
and the transactions contemplated hereby, including the Offer and the Merger,
which approval satisfies in full the requirements of the General Corporation Law
of the State of Delaware (the "Delaware Law") (including Section 203 thereof)
and the Certificate of Incorporation of the Company with respect to the
requisite approval of a board of directors, and (iii) unanimously resolved to
recommend acceptance of the Offer and approval and adoption of this Agreement
and the Merger by its stockholders; provided however, that such recommendation
may be withdrawn, modified or amended to the extent the Board of Directors of
the Company shall have concluded in good faith on the basis of written advice
from outside counsel that such action by the Board of Directors is required in
order to comply with the fiduciary duties of the Board of Directors to the
stockholders of the Company under applicable law. The Company further represents
that Warburg Dillon Read has delivered to the Company's Board of Directors its
opinion that the consideration to be paid in the Offer and the Merger is fair to
the holders of Shares from a financial point of view. The Company has been
advised that all of its directors and executive officers who own Shares intend
either to tender their Shares pursuant to the Offer or to vote in favor of the
Merger, unless its recommendation shall have been withdrawn or materially
modified as permitted by Section 6.04(a). The Company will promptly furnish
Buyer with a list of its stockholders, mailing labels and any available listing
or computer file containing the names and addresses of all record holders of
Shares and lists of securities positions of Shares held in stock depositories,
in each case true and correct as of the most recent practicable date, and will
provide to Buyer such additional information (including, without limitation,
updated lists of stockholders, mailing labels and lists of securities positions)
and such other assistance as Buyer may reasonably request in order to be able to
communicate the Offer to the holders of the Shares.
(b) As soon as practicable on the day that the Offer is commenced the
Company will file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") which shall reflect the recommendations of
the Company's Board of Directors referred to above. The Company and Buyer each
agree promptly to correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall have become false or misleading in any
material respect. The Company agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Buyer and its counsel shall be given an opportunity to
review and comment on the Schedule 14D-9 prior to its being filed with the SEC.
SECTION 1.03. Directors. (a) Effective upon the acceptance for payment
by Buyer of any Shares, Buyer shall be entitled to designate the number of
directors, rounded up to the next whole number, on the Company's Board of
Directors that equals the product of (i) the total number of directors on the
Company's Board of Directors (giving effect to the election of any additional
directors pursuant to this Section) and (ii) the percentage that the number of
Shares owned by Buyer (including Shares accepted for payment) bears to the total
number of Shares outstanding, and the Company shall take all action necessary to
cause Buyer's designees to be elected or appointed to the Company's Board of
Directors, including, without limitation, increasing the number of directors,
and seeking and accepting resignations of incumbent directors. At such times,
the Company will use its best efforts to cause individuals designated by Buyer
to constitute the same percentage as such individuals represent on the Company's
Board of Directors of (A) each committee of the Board (other than the Special
Committee or any committee of the Board established to take action under this
Agreement), (B) each board of directors of each Subsidiary (as defined in
Section 4.06) and (C) each committee of each such board. Notwithstanding the
foregoing, until such time as Buyer acquires a majority of the outstanding
Shares on a fully-diluted basis, the Company shall use its reasonable efforts to
ensure that all of the members of the Board of Directors and such boards and
committees as of the date hereof who are not employees of the Company shall
remain members of the Board of Directors and such boards and committees until
the Effective Time (as defined in Section 2.01).
(b) The Company's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Exchange Act (as defined in
Section 4.03) and Rule 14f-1 promulgated thereunder. The Company shall promptly
take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to
fulfill its obligations under this Section and shall include in the Schedule
14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations under this Section 1.03. Buyer will supply to the Company in writing
and be solely responsible for any information with respect to itself and its
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1.
(c) Following the election or appointment of Buyer's designees pursuant
to this Section 1.03 and until the Effective Time, the approval of a majority of
the directors of the Company then in office who were not designated by Buyer
(the "Continuing Directors") shall be required to authorize (and such
authorization shall constitute the authorization of the Board of Directors and
no other action on the part of the Company, including any action by any other
director or the Company, shall be required to authorize) any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the Board of Directors, and any waiver of compliance with any of the agreements
or conditions contained herein for the benefit of the Company.
ARTICLE 2
THE MERGER
SECTION 2.01. The Merger. (a) At the Effective Time, Buyer shall be
merged (the "Merger") with and into the Company in accordance with the Delaware
Law and this Agreement, whereupon the separate existence of Buyer shall cease,
and the Company shall be the surviving corporation (the "Surviving
Corporation").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, the Company and
Buyer will file a certificate of merger with the Secretary of State of the State
of Delaware and make all other filings or recordings required by Delaware Law in
connection with the Merger. The Merger shall become effective at such time as
the certificate of merger is duly filed with the Secretary of State of the State
of Delaware or at such later time as is specified in the certificate of merger
(the "Effective Time").
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restrictions, disabilities and duties of the Company and Buyer, all as
provided under Delaware Law.
SECTION 2.02. Conversion of Shares. At the Effective Time:
(a) each Share held by the Company as treasury stock or owned by Buyer
or any subsidiary of Buyer immediately prior to the Effective Time
shall be canceled, and no payment shall be made with respect thereto;
(b) each share of common stock of Buyer outstanding immediately prior
to the Effective Time shall be converted into and become one share of
common stock of the Surviving Corporation with the same rights, powers
and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation; and
(c) each Share outstanding immediately prior to the Effective Time
shall, except as otherwise provided in Section 2.02(a) or as provided
in Section 2.04 with respect to Shares as to which appraisal rights
have been perfected, be converted into the right to receive $23.00 in
cash or any higher price paid for each Share in the Offer, without
interest (the "Merger Consideration").
SECTION 2.03. Surrender and Payment. (a) Prior to the Effective Time,
Buyer shall appoint a national bank or trust company (or a subsidiary thereof)
reasonably acceptable to the Company to act as exchange agent (the "Exchange
Agent") for the purpose of exchanging certificates representing Shares for the
Merger Consideration. Buyer will make available to the Exchange Agent, as
needed, the Merger Consideration to be paid in respect of the Shares. For
purposes of determining the Merger Consideration to be made available, Buyer
shall assume that no holder of Shares will perfect his right to appraisal of his
Shares. Promptly after the Effective Time, Buyer will send, or will cause the
Exchange Agent to send, to each holder of Shares at the Effective Time a letter
of transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the certificates representing Shares to the Exchange Agent).
(b) Each holder of Shares that have been converted into the right to
receive the Merger Consideration, upon surrender to the Exchange Agent of a
certificate or certificates representing such Shares, together with a properly
completed letter of transmittal covering such Shares, will be entitled promptly
upon such surrender to receive the Merger Consideration payable in respect of
such Shares. Until so surrendered, each such certificate shall, after the
Effective Time, represent for all purposes, only the right to receive such
Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a Person other than the
registered holder of such Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. For purposes of
this Agreement, "Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
(d) After the Effective Time, there shall be no further registration
of transfers of Shares. If, after the Effective Time, certificates representing
Shares are presented to the Surviving Corporation, they shall be canceled and
exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article 2.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.03(a) that remains unclaimed by the holders
of Shares one year after the Effective Time shall be returned to the Surviving
Corporation, upon demand, and any such holder who has not exchanged his Shares
for the Merger Consideration in accordance with this Section prior to that time
shall thereafter look only to the Surviving Corporation for payment of the
Merger Consideration in respect of his Shares. Notwithstanding the foregoing,
Buyer shall not be liable to any holder of Shares for any amount paid to a
public official pursuant to applicable abandoned property laws. Any amounts
remaining unclaimed by holders of Shares two years after the Effective Time (or
such earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any governmental entity) shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation
free and clear of any claims or interest of any Person previously entitled
thereto.
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.03(a) to pay for Shares for which appraisal
rights have been perfected shall be returned to the Surviving Corporation, upon
demand.
(g) If any certificate representing Shares shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such certificate to be lost, stolen or destroyed and, if required by
Buyer, the posting by such Person of a bond in such reasonable amount as Buyer
may direct as indemnity against any claim that may be made against it with
respect to such certificate, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed certificate the Merger Consideration.
SECTION 2.04. Dissenting Shares. Notwithstanding Section 2.02, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with Delaware Law shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect or withdraws or otherwise loses his right to appraisal. If
after the Effective Time such holder fails to perfect or withdraws or loses his
right to appraisal, such Shares shall be treated as if they had been converted
as of the Effective Time into a right to receive the Merger Consideration. The
Company shall give Buyer prompt notice of any demands received by the Company
for appraisal of Shares prior to the Effective Time, and Buyer shall have the
right to participate in all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of Buyer,
make any payment with respect to, or settle or offer to settle, any such
demands.
SECTION 2.05. Stock Options. (a) At or immediately prior to the
Effective Time, each outstanding employee stock option to purchase Shares
granted under any employee stock option or compensation plan or arrangement of
the Company shall be canceled, and each holder of any such option, whether or
not then vested or exercisable, shall be paid by the Company promptly after the
Effective Time for each such option an amount determined by multiplying (i) the
excess, if any, of $23.00 per Share over the applicable exercise price of such
option by (ii) the number of Shares such holder could have purchased (assuming
full vesting of all options) had such holder exercised such option in full
immediately prior to the Effective Time.
(b) Prior to the Effective Time, the Company shall use its reasonable
best efforts (i) to obtain any consents from holders of options to purchase
Shares granted under the Company's stock option or compensation plans or
arrangements and (ii) make any amendments to the terms of such stock option or
compensation plans or arrangements that, in the case of either clauses
2.05(b)(i) or 2.05(b)(ii), are necessary to give effect to the transactions
contemplated by Section 2.05(a). Notwithstanding any other provision of this
Section, payment may be withheld in respect of any employee stock option until
necessary consents are obtained.
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.01. Certificate of Incorporation. The certificate of
incorporation of the Company in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.02. Bylaws. The bylaws of Buyer in effect at the Effective
Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.03. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law, (a) the directors of Buyer at the Effective Time shall be
the directors of the Surviving Corporation, and (b) the officers of the Company
(including the chief executive officer) at the Effective Time shall be the
officers of the Surviving Corporation.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer as of the date hereof and
as of the Effective Time that:
SECTION 4.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), business,
assets, results of operations or, insofar as can reasonably be foreseen,
prospects of the Company and the Subsidiaries taken as a whole ("Material
Adverse Effect"). The Company has heretofore delivered to Buyer true and
complete copies of the Company's certificate of incorporation and bylaws as
currently in effect.
SECTION 4.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate
powers and, except for any required approval by the Company's stockholders in
connection with the consummation of the Merger, have been duly authorized by all
necessary corporate action. This Agreement constitutes a valid and binding
agreement of the Company.
SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
by the Company require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing of a
certificate of merger in accordance with Delaware Law; (b) compliance with any
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR Act"); (c) compliance with any applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act"); and (d) compliance with any
applicable antitrust laws and regulations in Switzerland and the UK.
SECTION 4.04. Non-contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby do not and will not (a) contravene or
conflict with the certificate of incorporation or bylaws of the Company, (b)
assuming compliance with the matters referred to in Section 4.03, contravene or
conflict with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to the Company
or any Subsidiary, (c) except as set forth on Schedule 4.04 attached hereto,
constitute a default under or give rise to a right of termination, cancellation
or acceleration of any right or obligation of the Company or any Subsidiary or
to a loss of any benefit to which the Company or any Subsidiary is entitled
under any provision of any agreement, contract or other instrument binding upon
the Company or any Subsidiary or any license, franchise, permit or other similar
authorization held by the Company or any Subsidiary, or (d) except as set forth
on Schedule 4.04 attached hereto, result in the creation or imposition of any
Lien on any asset of the Company or any Subsidiary, except in the case of
clauses (b), (c) and (d), to the extent that any such contravention, conflict,
violation, failure to obtain any such consent or other action, default, right,
loss or Lien would not, individually or in the aggregate, be reasonably expected
to have a Material Adverse Effect. For purposes of this Agreement, "Lien" means,
with respect to any asset, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset.
SECTION 4.05. Capitalization. The authorized capital stock of the
Company consists of 9,924,950 shares of common stock, par value $.01 per share
(the "Common Stock") and 18,309,018 shares of preferred stock (the "Preferred
Stock"). As of July 15, 1998, there were outstanding 7,524,740 shares of Common
Stock and no shares of Preferred Stock and employee stock options to purchase an
aggregate of 536,260 Shares (of which options to purchase an aggregate of
215,204 Shares were exercisable). All outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in this Section and except for changes since
July 15, 1998 resulting from the exercise of employee stock options outstanding
on such date, there are outstanding (a) no shares of capital stock or other
voting securities of the Company, (b) no securities of the Company convertible
into or exchangeable for shares of capital stock or voting securities of the
Company, and (c) no options or other rights to acquire from the Company or any
Subsidiary, and no obligation of the Company or any Subsidiary to issue, any
capital stock, voting securities or securities convertible into or exchangeable
for capital stock or voting securities of the Company (the items in clauses
4.05(a), 4.05(b) and 4.05(c) being referred to collectively as the "Company
Securities"). There are no outstanding obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any Company Securities.
SECTION 4.06. Subsidiaries. (a) Each Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted, except to the extent the failure to have such
licenses, authorizations, consents and approvals would not, in the aggregate,
have a Material Adverse Effect, and, except as set forth on Schedule 4.06
attached hereto, is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where failure to be so qualified would
not, individually or in the aggregate, have a Material Adverse Effect. For
purposes of this Agreement, "Subsidiary" means any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are directly or indirectly owned by the Company. All Subsidiaries and
their respective jurisdictions of incorporation are identified in the Company's
annual report on Form 10-K for the fiscal year ended December 31, 1997 (the
"Company 10-K") or on Schedule 4.06 attached hereto.
(b) Except as set forth on Schedule 4.06 attached hereto, all of the
outstanding capital stock of, or other ownership interests in, each Subsidiary,
is owned by the Company, directly or indirectly, free and clear of any Lien
(other than Liens imposed by the lenders under the Company's bank credit
facilities) and free of any other limitation or restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests), except such limitations as may be imposed
by applicable securities laws. There are no outstanding (i) securities of the
Company or any Subsidiary convertible into or exchangeable for shares of capital
stock or other voting securities or ownership interests in any Subsidiary, and
(ii) options or other rights to acquire from the Company or any Subsidiary, and
no other obligation of the Company or any Subsidiary to issue, any capital
stock, voting securities or other ownership interests in, or any securities
convertible into or exchangeable for any capital stock, voting securities or
ownership interests in, any Subsidiary (the items in clauses 4.06(b)(i) and
4.06(b)(ii) being referred to collectively as the "Subsidiary Securities").
There are no outstanding obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities.
SECTION 4.07. SEC Filings. (a) The Company has delivered to Buyer (i)
the Company 10-K, (ii) its quarterly report on Form 10-Q for its fiscal quarter
ended March 31, 1998 (the "Company 10-Q"), (iii) its proxy or information
statements relating to meetings of, or actions taken without a meeting by, the
stockholders of the Company since January 1, 1997, and (iv) all of its other
reports, statements, schedules and registration statements filed with the
Securities and Exchange Commission (the "SEC") since January 1, 1997.
(b) As of its filing date, each such report or statement filed
pursuant to the Exchange Act did not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading except for such statements or omissions as may have been
modified by subsequent filings pursuant to the Exchange Act.
(c) Each such registration statement, as amended or supplemented, if
applicable, filed pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), as of the date such statement or amendment became effective
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading except for such statements or omissions as may have been
modified by subsequent filings pursuant to the Securities Act.
SECTION 4.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the Company 10-K and the quarterly report on Form 10-Q
referred to in Section 4.07 fairly present in all material respects, in
conformity with generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto and except as permitted
by Form 10-Q under the Exchange Act with respect to the unaudited consolidated
interim financial statements), the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in cash flows for the periods
then ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements). For purposes of this Agreement, "Balance Sheet"
means the consolidated balance sheet of the Company as of December 31, 1997 set
forth in the Company 10-K and "Balance Sheet Date" means December 31, 1997.
SECTION 4.09. Disclosure Documents. (a) Each document required to be
filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "Company Disclosure Documents"), including,
without limitation, the Schedule 14D-9, the proxy or information statement of
the Company containing information required by Regulation 14A under the Exchange
Act (the "Company Proxy Statement") and, if applicable, Rule 13e-3 and Schedule
13E-3 under the Exchange Act, if any, to be filed with the SEC in connection
with the Offer and/or the Merger, and any amendments or supplements thereto
will, when filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act, except that no representation or warranty is
made hereby with respect to any information supplied by Buyer expressly for
inclusion in the Company Disclosure Documents.
(b) At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company, at the time
such stockholders vote on adoption of this Agreement and at the Effective Time,
the Company Proxy Statement, as supplemented or amended, if applicable, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. At the time of the
filing of any Company Disclosure Document other than the Company Proxy Statement
and at the time of any distribution thereof, such Company Disclosure Document
will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 4.09(b) will not apply
to statements or omissions included in the Company Disclosure Documents based
upon information furnished to the Company in writing by Buyer specifically for
use therein.
(c) The information with respect to the Company or any Subsidiary that
the Company furnishes to Buyer in writing specifically for use in the Offer
Documents will not, at the time of the filing thereof, at the time of any
distribution thereof and at the time of the consummation of the Offer, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 4.10. Absence of Certain Changes. Except as set forth in
Schedule 4.10 hereto, in the Company 10-Q, or in the Prospectus included in
Amendment No. 1 to Registration Statement on Form S-1, File No.333-47457 filed
on March 11, 1998 (the "Prospectus"), since the Balance Sheet Date, the Company
and Subsidiaries have conducted their business in the ordinary course consistent
with past practice and there has not been:
(a) any event, occurrence or development of a state of circumstances
or facts which has had or reasonably would be expected to have a
Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the
Company, or any repurchase, redemption or other acquisition by the
Company or any Subsidiary of any outstanding shares of capital stock or
other securities of, or other ownership interests in, the Company or
any Subsidiary;
(c) any amendment of any material term of any outstanding security of
the Company or any Subsidiary;
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with
past practices;
(e) any creation or assumption by the Company or any Subsidiary of any
Lien on any material asset which would materially impair the use
thereof by the Company other than in the ordinary course of business
consistent with past practices;
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital
contributions to or investments in wholly-owned Subsidiaries made in
the ordinary course of business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company
or any Subsidiary which, individually or in the aggregate, has had or
would reasonably be expected to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any Subsidiary relating to its assets
or business (including the acquisition or disposition of any assets) or
any relinquishment by the Company or any Subsidiary of any contract or
other right, in either case, material to the Company and the
Subsidiaries taken as a whole, other than transactions and commitments
in the ordinary course of business consistent with past practice and
those contemplated by this Agreement;
(i) any change in any method of accounting or accounting practice by
the Company or any Subsidiary, except for any such change required by
reason of a concurrent change in generally accepted accounting
principles;
(j) except as set forth on Schedule 4.10(j), any (i) grant of any
severance or termination pay to any director or officer of the Company
or any Subsidiary, (ii) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such
existing agreement) with any director or officer of the Company or any
Subsidiary, (iii) increase in benefits payable under any existing
severance or termination pay policies or employment agreements or (iv)
increase in compensation, bonus or other benefits payable to directors
or officers of the Company or any Subsidiary, other than in the
ordinary course of business consistent with past practice;
(k) any labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof
to organize any employees of the Company or any Subsidiary, which
employees were not subject to a collective bargaining agreement at the
Balance Sheet Date, or any lockouts, strikes, slowdowns, work stoppages
or threats thereof by or with respect to such employees; or
(l) any cancellation of any licenses, sublicenses, franchises, permits
or agreements to which the Company or any Subsidiary is a party, or any
notification to the Company or any Subsidiary that any party to any
such arrangements intends to cancel or not renew such arrangements
beyond its expiration date as in effect on the date hereof, which
cancellation or notification, individually or in the aggregate, has had
or reasonably would be expected to have a Material Adverse Effect.
SECTION 4.11. No Undisclosed Material Liabilities. To the Company's
knowledge, there are no liabilities of the Company or any Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
which would reasonably be expected to result in such a liability, other than:
(a) liabilities disclosed or provided for in the Balance Sheet;
(b) liabilities incurred in the ordinary course of business consistent
with past practice since the Balance Sheet Date or in connection with
the acquisition by the Company of Avtech Corporation and Dettmers
Industries, Inc., which, in each case, would not be reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect;
and
(c) liabilities under this Agreement.
SECTION 4.12. Litigation. Except as set forth in Schedule 4.12 and the
Prospectus, to the knowledge of the Company there is no action, suit,
investigation or proceeding pending against, or threatened against or affecting,
the Company or any Subsidiary or any of their respective properties before any
court or arbitrator or any governmental body, agency or official which, if
determined or resolved adversely to the Company or any Subsidiary in accordance
with the plaintiff's demands, would reasonably be expected to have a Material
Adverse Effect or which in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the Offer or the Merger or any of the other
transactions contemplated hereby.
SECTION 4.13. Taxes. (a) Except as set forth in Schedule 4.13
attached hereto, and except where the failure to file such Return has not
had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, all tax returns, statements, reports
and forms (including estimated tax returns and reports and information
returns and reports) required to be filed with any taxing authority with
respect to any tax period (or portion thereof) ending on or before the
Effective Time (a "Pre-Closing Tax Period") by or on behalf of the Company
or any Subsidiary of the Company (collectively, the "Returns"), were filed
when due (including any applicable extension periods) in accordance with
all applicable laws.
(b) Except as set forth in Schedule 4.13, the Company and its
Subsidiaries have timely paid, or withheld and remitted to the appropriate
taxing authority, all taxes shown as due and payable on the Returns that have
been filed, except where the failure to so pay or withhold and remit has
not had and would not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect.
(c) The charges, accruals and reserves for taxes with respect to the
Company and any Subsidiary for any Pre-Closing Tax Period (including any
Pre-Closing Tax Period for which no Return has yet been filed) reflected on the
books of the Company and its Subsidiaries (excluding any provision for deferred
income taxes) are adequate to cover such taxes.
(d) Except as set forth in Schedule 4.13, there is no material claim
(including under any indemnification or tax-sharing agreement), audit, action,
suit, proceeding, or investigation now pending or threatened in writing against
or in respect of any tax or "tax asset" of the Company or any Subsidiary. For
purposes of this Section 4.13, the term "tax asset" shall include any net
operating loss, net capital loss, investment tax credit, foreign tax credit,
charitable deduction or any other credit or tax attribute which could reduce
taxes.
(e) There are no material Liens for taxes upon the assets of the
Company or its Subsidiaries except for Liens for current taxes not yet due.
(f) Neither the Company nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Internal Revenue Code of 1986, as amended (the "Code") during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
SECTION 4.14. ERISA. (a) The Company has provided Buyer with a list
identifying each "employee benefit plan", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), which (i) is subject
to any provision of ERISA and (ii) is maintained, administered or contributed to
by the Company or any affiliate (as defined below) and covers any employee or
former employee of the Company or any affiliate or under which the Company or
any affiliate has any liability. Copies of such plans (and, if applicable,
related trust agreements) and all amendments thereto and written interpretations
thereof have been furnished to Buyer together with (A) the three most recent
annual reports (Form 5500 including, if applicable, Schedule B thereto) prepared
in connection with any such plan and (B) the most recent actuarial valuation
report prepared in connection with any such plan. Such plans are referred to
collectively herein as the "Employee Plans". For purposes of this Section,
"affiliate" of any Person means any other Person which, together with such
Person, would be treated as a single employer under Section 414 of the Code. The
only Employee Plans which individually or collectively would constitute an
"employee pension benefit plan" as defined in Section 3(2) of ERISA (the
"Pension Plans") are identified as such in the list referred to above. The
Company has provided Buyer with complete age, salary, service and related data
as of a recent date for employees and former employees of the Company and any
affiliate covered under the Pension Plans.
(b) Except as otherwise indicated on Schedule 4.14(b), no Employee
Plan (i) constitutes a "multiemployer plan", as defined in Section 3(37) of
ERISA; (ii) is maintained in connection with any trust described in Section
501(c)(9) of the Code; or (iii) is subject to Title IV of ERISA. The Company
knows of no "reportable event", within the meaning of Section 4043 of ERISA, and
no event described in Section 4041, 4042, 4062 or 4063 of ERISA has occurred in
connection with any Employee Plan. Neither the Company nor any of its affiliates
has incurred any material liability under Title IV of ERISA arising in
connection with the termination of, or complete or partial withdrawal from, any
plan covered or previously covered by Title IV of ERISA. Nothing done or omitted
to be done and no transaction or holding of any asset under or in connection
with any Employee Plan has or will make the Company or any Subsidiary, or any
officer or director of the Company or any Subsidiary, subject to any liability
under Title I of ERISA or liable for any tax pursuant to Section 4975 of the
Code.
(c) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified during the period
from its adoption to date, and each trust forming a part thereof is exempt from
tax pursuant to Section 501(a) of the Code. The Company has furnished to the
Buyer copies of the most recent Internal Revenue Service determination letters
with respect to each such Plan. Each Employee Plan has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations, including but not limited
to ERISA and the Code, which are applicable to such Plan.
(d) There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company or any affiliate that, individually
or collectively, could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Sections 162(a)(1) or 280G of the Code.
(e) The Company has provided Buyer with a list of each employment,
severance or other similar contract, arrangement or policy and each plan or
arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits or
for deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (i) is not an Employee Plan, (ii) is
entered into, maintained or contributed to, as the case may be, by the Company
or any of its affiliates and (iii) covers any employee or former employee of the
Company or any of its affiliates. Such contracts, plans and arrangements as are
described above, copies or descriptions of all of which have been furnished
previously to Buyer are referred to collectively herein as the "Benefit
Arrangements". Each Benefit Arrangement has been maintained in substantial
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations that are applicable to such Benefit
Arrangement.
(f) The Company does not provide post-employment health or medical
benefits for former employees of the Company and its affiliates except as
required to avoid imposition of tax under Section 4980B of the Code. No
condition exists that would prevent the Company or any Subsidiary from amending
or terminating any Employee Plan or Benefit Arrangement providing health or
medical benefits in respect of any active employee of the Company or any
Subsidiary other than limitations imposed under the terms of a collective
bargaining agreement.
(g) Except as disclosed in writing to Buyer prior to the date hereof,
there has been no amendment to, written interpretation or announcement (whether
or not written) by the Company or any of its affiliates relating to, or change
in employee participation or coverage under, any Employee Plan or Benefit
Arrangement which would increase materially the expense of maintaining such
Employee Plan or Benefit Arrangement above the level of the expense incurred in
respect thereof for the fiscal year ended on the Balance Sheet Date.
(h) Except as set forth in Schedule 4.14(h), neither the Company nor
any Subsidiary is a party to or subject to any union contract or any employment
contract or arrangement providing for annual future compensation of $150,000 or
more with any officer, consultant, director or employee.
(i) Schedule 4.14(i) identifies each International Plan (as defined
below). The Company has furnished to Buyer copies of each International Plan.
Each International Plan has been maintained in substantial compliance with its
terms and with the requirements prescribed by any and all applicable statutes,
orders, rules and regulations (including any special provisions relating to
qualified plans where such Plan was intended to so qualify) and has been
maintained in good standing with applicable regulatory authorities. There has
been no amendment to, written interpretation of or announcement (whether or not
written) by the Company or any Subsidiary relating to, or change in employee
participation or coverage under, any International Plan that would increase
materially the expense of maintaining such International Plan above the level of
expense incurred in respect thereof for the most recent fiscal year ended prior
to the date hereof.
"International Plan" means any employment, severance or similar
contract or arrangement (whether or not written) or any plan, policy, fund,
program or arrangement or contract providing for severance, insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, pension or
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits that (i) is not an Employee
Plan or a Benefit Arrangement, (ii) is entered into, maintained, administered or
contributed to by the Company or any Subsidiary and (iii) covers any employee or
former employee of the Company or any Subsidiary.
SECTION 4.15. Compliance with Laws. To the Company's knowledge, neither
the Company nor any Subsidiary is in violation of, or has since January 1, 1997
violated, and to the knowledge of the Company none is under investigation with
respect to or has been threatened to be charged with or given notice of any
violation of, any applicable law, rule, regulation, judgment, injunction, order
or decree, except for violations that have not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 4.16. Licenses and Permits. The Company has previously
delivered to Buyer true and correct copies of each material license, franchise,
permit, certificate, approval or other similar authorization affecting, or
relating in any way to, the assets or business of the Company and its
Subsidiaries (the "Permits") together with the name of the government agency or
entity issuing such Permit. Except as set forth on the Schedule 4.16, (i) the
Permits are valid and in full force and effect, (ii) neither the Company nor any
Subsidiary is in material default under, and no condition exists that with
notice or lapse of time or both would constitute a material default under, the
Permits and (iii) none of the Permits will be terminated or impaired or become
terminable, in whole or in part, as a result of the transactions contemplated
hereby.
SECTION 4.17. Intellectual Property. (a) The Company and the
Subsidiaries own or possess adequate licenses or other rights to use all
Intellectual Property Rights necessary to conduct the business now operated by
them, except where the failure to own or possess such licenses or rights has not
had and would not be reasonably likely to have a Material Adverse Effect. To the
knowledge of the Company, the Intellectual Property Rights of the Company and
the Subsidiaries do not conflict with or infringe upon any Intellectual Property
Rights of others to the extent that, if sustained, such conflict or infringement
has had and would be reasonably likely to have a Material Adverse Effect. For
purposes of this Agreement, "Intellectual Property Right" means any trademark,
service mark, trade name, mask work, copyright, patent, software license, other
data base, invention, trade secret, know-how (including any registrations or
applications for registration of any of the foregoing) or any other similar type
of proprietary intellectual property right.
(b) The Company's data processing systems will recognize, manage and
manipulate data with respect to single-century formulas, multi-century formulas
and leap year formulas involving dates without giving rise to any invalid or
incorrect date whether used before, during or after the calendar year 2000.
SECTION 4.18. Environmental Matters. (a) Except as set forth on
Schedule 4.18 hereto and in the Prospectus:
(i) no notice, notification, demand, request for information,
citation, summons, complaint or order has been received by, or, to the
knowledge of the Company or any Subsidiary, is pending or threatened by
any Person against, the Company or any Subsidiary nor has any material
penalty been assessed against the Company or any Subsidiary with
respect to any (A) alleged violation of any Environmental Law or
liability thereunder, (B) alleged failure to have any permit,
certificate, license, approval, registration or authorization required
under any Environmental Law, (C) generation, treatment, storage,
recycling, transportation or disposal of any Hazardous Substance or (D)
discharge, emission or release of any Hazardous Substance;
(ii) no Hazardous Substance has been discharged, emitted, released or
is present at any property now or previously owned, leased or operated
by the Company or any Subsidiary, which circumstances, individually or
in the aggregate, could reasonably be expected to result in a Material
Adverse Effect; and
(iii) there are no Environmental Liabilities that have had or may
reasonably be expected to have a Material Adverse Effect.
(b) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has knowledge in
relation to the current or prior business of the Company or any property or
facility now or previously owned or leased by the Company or any Subsidiary
which has not been delivered to Buyer at least five days prior to the date
hereof.
(c) Neither the Company nor any Subsidiary owns or leases or has owned
or leased any real property in New Jersey or Connecticut.
(d) For purposes of this Section, the following terms shall have the
meanings set forth below:
(i) "Company" and "Subsidiary" shall include any entity which is, in
whole or in part, a predecessor of the Company or any Subsidiary;
(ii) "Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, codes, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and governmental
restrictions, relating to human health, the environment or to
emissions, discharges or releases of pollutants, contaminants or other
hazardous substances or wastes into the environment, including without
limitation ambient air, surface water, ground water or land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants or other hazardous substances or wastes or the clean-up or
other remediation thereof;
(iii) "Environmental Liabilities" means any and all liabilities of or
relating to the Company and any Subsidiary, whether contingent or
fixed, actual or potential, known or unknown, which (i) arise under or
relate to matters covered by Environmental Laws and (ii) relate to
actions occurring or conditions existing on or prior to the Effective
Time; and
(iv) "Hazardous Substances" means any toxic, radioactive, corrosive or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any
constituent elements displaying any of the foregoing characteristics,
which in any event is regulated under Environmental Laws.
SECTION 4.19. Finders' Fees. Except for Warburg Dillon Read LLC a copy
of whose engagement agreement has been provided to Buyer, there is no investment
banker, broker, finder or other intermediary which has been retained by or is
authorized to act on behalf, of the Company or any Subsidiary who might be
entitled to any fee or commission from Buyer or any of its affiliates or the
Company upon consummation of the transactions contemplated by this Agreement or
any alternative transaction.
SECTION 4.20. Inapplicability of Certain Restrictions. Section 203 of
the Delaware Law does not in any way restrict the acquisition of Shares pursuant
to the Offer, the consummation of the Merger or the other transactions
contemplated hereby. The adoption of this Agreement by the affirmative vote of
the holders of Shares entitling such holders to exercise at least a majority of
the voting power of the Shares is the only vote of holders of any class or
series of the capital stock of the Company required to adopt this Agreement, or
to approve the Merger or any of the other transactions contemplated hereby and
no higher or additional vote is required pursuant to of the Company's
Certificate of Incorporation or otherwise.
SECTION 4.21. Rights Plan. The Company has not entered into, and its
Board of Directors has not adopted or authorized the adoption of, a shareholder
rights or similar agreement, other than any such agreement which was terminated
prior to December 31, 1997 and which is of no further force or effect.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company as of the date hereof and
as of the Effective Time that:
SECTION 5.01. Corporate Existence and Power. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. Since the date of its incorporation, Buyer has
not engaged in any activities other than in connection with or as contemplated
by this Agreement or in connection with arranging any financing required to
consummate the transactions contemplated hereby.
SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby are within the corporate powers of Buyer and
have been duly authorized by all necessary corporate and stockholder action.
This Agreement constitutes a valid and binding agreement of Buyer.
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated by this Agreement require no action by or in respect
of, or filing with, any governmental body, agency, official or authority other
than (a) the filing of a certificate of merger in accordance with Delaware Law,
(b) compliance with any applicable requirements of the HSR Act; (c) compliance
with any applicable requirements of the Exchange Act; and (d) compliance with
any applicable antitrust laws and regulations in Switzerland and the U.K.
SECTION 5.04. Non-contravention. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby do not and will not (a) contravene or conflict
with the certificate of incorporation or bylaws of Buyer, (b) assuming
compliance with the matters referred to in Section 5.03, contravene or conflict
with any provision of law, regulation, judgment, order or decree binding upon
Buyer, or (c) constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or obligation of Buyer or
to a loss of any benefit to which Buyer is entitled under any agreement,
contract or other instrument binding upon Buyer.
SECTION 5.05. Disclosure Documents. (a) The information with respect to
Buyer and its subsidiaries that Buyer furnishes to the Company in writing
specifically for use in any Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (i) in the case of the Company Proxy
Statement at the time the Company Proxy Statement or any amendment or supplement
thereto is first mailed to stockholders of the Company, at the time the
stockholders vote on adoption of this Agreement and at the Effective Time, and
(ii) in the case of any Company Disclosure Document other than the Company Proxy
Statement, at the time of the filing thereof and at the time of any distribution
thereof.
(b) The Offer Documents, when filed, will comply as to form in all
material respects with the applicable requirements of the Exchange Act and will
not at the time of the filing thereof, at the time of any distribution thereof
or at the time of consummation of the Offer, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, provided, that this representation and warranty will not
apply to statements or omissions in the Offer Documents based upon information
furnished to Buyer in writing by the Company specifically for use therein.
SECTION 5.06. Litigation. To the knowledge of Buyer no action, suit,
investigation or proceeding pending against, or threatened against or affecting,
Buyer or any of its properties before any court or arbitrator or any
governmental body, agency or official, which in any manner challenges or seeks
to prevent, enjoin, alter or materially delay the Offer or the Merger or any of
the other transactions contemplated hereby.
SECTION 5.07. Finders' Fees. Except for Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJSC"), whose fees will be paid by Buyer, there is no
investment banker, broker, finder or other intermediary who might be entitled to
any fee or commission from the Company or any of its affiliates upon
consummation of the transactions contemplated by this Agreement.
SECTION 5.08. Financing. The Company has received copies of (a) a
commitment letter dated July 16, 1998 from DLJ Merchant Banking Partners II,
L.P. and certain related funds pursuant to which each of the foregoing has
committed, subject to the terms and conditions set forth therein, to purchase
equity securities of DeCrane Holdings Co., the indirect, newly formed parent
company of Buyer for an aggregate amount equal to $65,000,000, (b)(i) a letter
dated July 16, 1998 from DLJ Bridge Finance, Inc. ("DLJ Bridge Fund") pursuant
to which DLJ Bridge Fund has committed, subject to the terms and conditions set
forth therein, to purchase Senior Pay-In-Kind Notes of DeCrane Holdings Co., a
subsidiary of DeCrane Holdings Co. and the direct, newly formed parent company
of Buyer and Senior Subordinated Notes of DeCrane Finance Co. in an aggregate
amount of $134,000,000, and (ii) a commitment letter dated July 16, 1998 from
DLJ Capital Funding, Inc. ("DLJ Senior Debt Fund") pursuant to which DLJ Senior
Debt Fund has committed, subject to the terms and conditions set forth therein,
to enter into one or more credit agreements providing for loans to DeCrane
Finance Co. of up to $130,000,000. As used in this Agreement, the aforementioned
entities shall hereinafter be referred to as the "Financing Entities." The
aforementioned commitments shall be referred to as the "Financing Agreements"
and the financing to be provided thereunder shall be referred to as the
"Financing." The aggregate proceeds of the Financing are in an amount sufficient
to pay when due the aggregate purchase price for the Shares to be purchased in
the Offer and the Merger Consideration, to repay all of the Company's and its
Subsidiaries' indebtedness together with any interest, premium or penalties
payable in connection therewith, to provide a reasonable amount of working
capital financing and to pay related fees and expenses (such amounts, the
"Required Amounts"). As of the date hereof, none of the commitment letters
relating to the Financing Agreements referred to above has been withdrawn and
Buyer does not know of any facts or circumstances that may reasonably be
expected to result in any of the conditions set forth in the commitment letters
relating to the Financing Agreements not being satisfied.
ARTICLE 6
COVENANTS OF THE COMPANY
SECTION 6.01. Conduct of the Company. Except as expressly required by
this Agreement or with the prior consent of Buyer, from the date hereof until
the Effective Time, the Company and the Subsidiaries shall conduct their
business in all material respects in the ordinary course consistent with past
practice and shall use their reasonable best efforts to preserve substantially
intact their business organizations and relationships with third parties that
are material to the Company and the Subsidiaries taken as a whole and to keep
available the services of their present officers and employees. Without limiting
the generality of the foregoing, from the date hereof until the Effective Time
the Company will not, and will cause its Subsidiaries not to:
(a) adopt or propose any change in its certificate of incorporation
or bylaws;
(b) except pursuant to existing agreements or arrangements
(i) acquire (by merger, consolidation or acquisition of
stock or assets) any material corporation, partnership or
other business organization or division thereof, or sell,
lease or otherwise dispose of a material subsidiary or a
material amount of assets or securities;
(ii) make any investment other than in readily marketable
securities in an amount in excess of $750,000 in the aggregate
whether by purchase of stock or securities, contributions to
capital or any property transfer, or purchase for an amount in
excess of $750,000 in the aggregate, any property or assets of
any other individual or entity;
(iii) waive, release, grant, or transfer any rights of
value material to the Company and the Subsidiaries taken as a
whole;
(iv) modify or change in any material respect any existing
license, lease, contract, or other document material to the
Company and its Subsidiaries, taken as a whole;
(v) except to refund or refinance commercial paper,
incur, assume or prepay an amount of long-term or short-term
debt in excess of $5,000,000 in the aggregate;
(vi) assume, guarantee, endorse (other than endorsements
of negotiable instruments in the ordinary course of business)
or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other
person (other than any Subsidiary) which, are in excess of
$500,000 in the aggregate;
(vii) make any loans or advances to any other person (other
than any Subsidiary) which are in excess of $100,000 in the
aggregate or
(viii) authorize any new capital expenditures which,
individually, is in excess of $250,000 or, in the aggregate,
are in excess of $1,000,000;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of
its capital stock, other than cash dividends and distributions by a
wholly owned Subsidiary of the Company to the Company or to a
subsidiary all of the capital stock which is owned directly or
indirectly by the Company, or redeem, repurchase or otherwise acquire
or offer to redeem, repurchase, or otherwise acquire any of its
securities or any securities of its Subsidiaries;
(d) adopt or amend any bonus, profit sharing, compensation, severance,
termination, stock option, pension, retirement, deferred compensation,
employment or employee benefit plan, agreement, trust, plan, fund or
other arrangement for the benefit and welfare of any director, officer
or employee, or (except for normal increases in the ordinary course of
business that are consistent with past practices and that, in the
aggregate, do not result in a material increase in benefits or
compensation expense to the Company) increase in any manner the
compensation or fringe benefits of any director, officer or employee or
pay any benefit not required by any existing plan or arrangement
(including, without limitation, the granting of stock options or stock
appreciation rights or the removal of existing restrictions in any
benefit plans or agreements);
(e) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory in any material
manner or write-off of notes or accounts receivable in any material
manner;
(f) pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted,
contingent or otherwise) other than the payment, discharge or
satisfaction in the ordinary course of business, consistent with past
practices, of liabilities reflected or reserved against in the
consolidated financial statements of the Company or incurred since the
most recent date thereof pursuant to an agreement or transaction
described in this Agreement (including the schedules hereto) or
incurred in the ordinary course of business, consistent with past
practices;
(g) except as set forth on Schedule 6.01(g), make any tax election or
settle or compromise any material income tax liability;
(h) take any action other than in the ordinary course of business and
consistent with past practices with respect to accounting policies or
procedures other than any change in accounting policies (that is not
material to the Company and its Subsidiaries taken as a whole) that is
required by regulations of the SEC; or
(i) agree or commit to do any of the foregoing; or
(j) take or agree or commit to take any action that would make any
representation and warranty of the Company hereunder inaccurate in any
respect at, or as of any time prior to, the Effective Time.
SECTION 6.02. Stockholder Meeting; Proxy Material. The Company shall
cause a meeting of its stockholders (the "Company Stockholder Meeting") to be
duly called and held as soon as reasonably practicable for the purpose of voting
on the approval and adoption of this Agreement and the Merger unless a vote of
stockholders of the Company is not required by Delaware Law. The Directors of
the Company shall, subject to their fiduciary duties as advised by counsel,
recommend approval and adoption of this Agreement and the Merger by the
Company's stockholders. In connection with such meeting, the Company (a) will
promptly prepare and file with the SEC, will use its reasonable best efforts to
have cleared by the SEC and will thereafter mail to its stockholders as promptly
as practicable the Company Proxy Statement and all other proxy materials for
such meeting, (b) will use its reasonable best efforts to obtain the necessary
approvals by its stockholders of this Agreement and the transactions
contemplated hereby and (c) will otherwise comply with all legal requirements
applicable to such meeting.
SECTION 6.03. Access to Information. From the date hereof until the
Effective Time, the Company will give Buyer, its counsel, financial advisors,
auditors and other authorized representatives full access to the offices,
properties, books and records of the Company and the Subsidiaries, will furnish
to Buyer, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
Persons may reasonably request and will instruct the Company's employees,
counsel and financial advisors to cooperate with Buyer in its investigation of
the business of the Company and the Subsidiaries; provided, however, that the
Company shall not be required to grant any such access or furnish information to
Buyer to the extent that such information is subject to an attorney/client or
attorney work product privilege and breach thereof would have a Material Adverse
Effect; and provided, further, that no investigation pursuant to this Section
shall affect any representation or warranty given by the Company to Buyer
hereunder. Buyer and the Company acknowledge that such information is governed
by the terms of that certain confidentiality agreement between DLJ Merchant
Banking II, Inc. and the Company (the "Confidentiality Agreement"), and that
such Confidentiality Agreement remains in full force and effect.
SECTION 6.04. Other Offers. (a) Neither the Company nor any of its
Subsidiaries shall (whether directly or indirectly through advisors, agents or
other intermediaries), nor shall the Company or any of its Subsidiaries
authorize or permit any of its or their officers, directors, agents,
representatives, advisors or Subsidiaries to (i) solicit, initiate or take any
action knowingly to facilitate the submission of inquiries, proposals or offers
from any Third Party (as defined below) (other than Buyer) which constitutes or
would reasonably be expected to lead to (A) any acquisition or purchase of 30%
or more of the consolidated assets of the Company and its Subsidiaries or of
over 30% of any class of equity securities of the Company or any of its
Subsidiaries, (B) any tender offer (including a self tender offer) or exchange
offer that if consummated would result in any Third Party beneficially owning
30% or more of any class of equity securities of the Company or any of its
Subsidiaries, (C) any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its Subsidiaries whose assets,
individually or in the aggregate, constitute more than 30% of the consolidated
assets of the Company other than the transactions contemplated by this
Agreement, or (D) any other transaction the consummation of which would
reasonably be expected to interfere with in a material way, prevent or
materially delay the Merger or which would reasonably be expected to materially
dilute the benefits to Buyer of the transactions contemplated hereby
(collectively, "Acquisition Proposals"), or agree to or endorse any Acquisition
Proposal, (ii) enter into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any Third Party any information
with respect to its business, properties or assets or any of the foregoing, or
otherwise cooperate in any way with, or knowingly assist or participate in,
facilitate or encourage, any effort or attempt by any Third Party (other than
Buyer) to do or seek any of the foregoing, or (iii) grant any waiver or release
under any standstill or similar agreement with respect to any class of equity
securities of the Company or any of its Subsidiaries; provided, however, that
the foregoing shall not prohibit the Company (either directly or indirectly
through advisors, agents or other intermediaries) from (A) furnishing
information pursuant to an appropriate confidentiality letter (which letter
shall not be less favorable to the Company in any material respect (with respect
to duration and standstill provisions) than the Confidentiality Agreement, and a
copy of which shall be provided for informational purposes only to Buyer)
concerning the Company and its businesses, properties or assets to a Third Party
who has made or is seeking to initiate discussions with respect to a bona fide
Acquisition Proposal, (B) engaging in discussions or negotiations with such a
Third Party who has made a bona fide Acquisition Proposal, (C) following receipt
of a bona fide Acquisition Proposal, taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) under the Exchange Act or otherwise
making disclosure to its stockholders, (D) following receipt of a bona fide
Acquisition Proposal, failing to make or withdrawing or modifying its
recommendation referred to in Section 1.02(b) and/or Section 6.02 and/or (E)
taking any non-appealable, final action ordered to be taken by the Company by
any court of competent jurisdiction but in each case referred to in the
foregoing clauses (A) through (D) only to the extent that the Board of Directors
of the Company shall have concluded in good faith on the basis of written advice
from outside counsel that such action by the Board of Directors is required in
order to comply with the fiduciary duties of the Board of Directors to the
stockholders of the Company under applicable law; provided, further, that the
Board of Directors of the Company shall not take any of the foregoing actions
referred to in clauses (A) through (D) until after reasonable notice to Buyer
with respect to such action and that such Board of Directors shall continue to
advise Buyer after taking such action and, in addition, if the Board of
Directors of the Company receives an Acquisition Proposal, then the Company
shall promptly inform Buyer of the terms and conditions of such proposal and the
identity of the person making it. The Company will immediately cease and cause
its advisors, agents and other intermediaries to cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing, and shall use its reasonable best efforts
to cause any such parties in possession of confidential information about the
Company that was furnished by or on behalf of the Company to return or destroy
all such information in the possession of any such party or in the possession of
any agent or advisor of any such party. As used in this Agreement, the term
"Third Party" means any person, corporation, entity or "group," as defined in
Section 13(d) of the Exchange Act, other than Buyer or any of its affiliates.
(b) If a Payment Event (as hereinafter defined) occurs, the Company
shall pay to Buyer, within two business days following such Payment Event, a fee
of $6,900,000.
"Payment Event" means (x) the termination of this Agreement by
the Company or Buyer pursuant to Section 10.01(d); or (y) the occurrence of any
of the following events within 12 months of the termination of this Agreement
pursuant to Section 10.01(b) whereby stockholders of the Company receive,
pursuant to such event, cash, securities or other consideration having an
aggregate value, when taken together with the value of any securities of the
Company or its Subsidiaries otherwise held by the stockholders of the Company
after such event, in excess of $23.00 per Share: the Company is acquired by
merger or otherwise by a Third Party; a Third Party acquires more than 50% of
the total assets of the Company and its Subsidiaries, taken as a whole; a Third
Party acquires more than 50% of the outstanding Shares or the Company adopts and
implements a plan of liquidation, recapitalization or share repurchase relating
to more than 50% of the outstanding Shares or an extraordinary dividend relating
to more than 50% of the outstanding Shares or 50% of the assets of the Company
and its Subsidiaries, taken as a whole.
(c) Upon the termination of this Agreement for any reason (other than
a termination which would not have occurred but for the failure of Buyer to
fulfill its obligations under this Agreement) the Company shall reimburse Buyer
and its affiliates not later than two business days after submission of
reasonable documentation thereof for 100% of their documented out-of-pocket fees
and expenses (including the reasonable fees and expenses of counsel) up to
$4,250,000, in each case, actually incurred by any of them or on their behalf in
connection with this Agreement and the transactions contemplated hereby
(including the Merger and the arrangement, obtaining the commitment to provide
or obtaining the Financing for the transactions contemplated by this Agreement
(including fees payable to the Financing Entities and their respective
counsel)).
(d) The Company acknowledges that the agreements contained in this
Section 6.04 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Buyer would not enter into this
Agreement; accordingly, if the Company fails to promptly pay any amount due
pursuant to this Section 6.04, and, in order to obtain such payment, the other
party commences a suit which results in a judgment against the Company for the
fee or fees and expenses set forth in this Section 6.04, the Company shall also
pay to Buyer its costs and expenses incurred in connection with such litigation.
(e) This Section 6.04 shall survive any termination of this Agreement,
however caused.
SECTION 6.05. Notices of Certain Events. The Company shall promptly
notify Buyer of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating
to or involving or otherwise affecting the Company or any Subsidiary
which, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 4.12 or which
relate to the consummation of the transactions contemplated by this
Agreement.
ARTICLE 7
COVENANTS OF BUYER
Buyer agrees that:
SECTION 7.01. Confidentiality. Prior to the Effective Time and after
any termination of this Agreement Buyer will hold, and will use its best efforts
to cause its officers, directors, employees, accountants, counsel, consultants,
advisors and agents to hold, in confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of law, all
confidential documents and information concerning the Company and the
Subsidiaries furnished to Buyer in connection with the transactions contemplated
by this Agreement, including, without limitation, the stockholder lists
furnished by the Company pursuant to Section 1.02, except to the extent that
such information can be shown to have been (a) previously known on a
nonconfidential basis by Buyer, (b) in the public domain through no fault of
Buyer or (c) later lawfully acquired by Buyer from sources other than the
Company (provided that such sources are not known by Buyer to be under any
obligation of confidentiality to the Company with respect to such information);
provided that Buyer may disclose such information to its officers, directors,
employees, accountants, counsel, consultants, advisors and agents in connection
with the transactions contemplated by this Agreement and to its lenders in
connection with obtaining the financing for the transactions contemplated by
this Agreement so long as such Persons are informed by Buyer of the confidential
nature of such information and agree to treat such information confidentially.
Buyer's obligation to hold any such information in confidence shall be satisfied
if it exercises the same care with respect to such information as it would take
to preserve the confidentiality of its own similar information, it being
understood that Buyer shall remain responsible for breach of any such agreement.
If this Agreement is terminated, Buyer will, and will use its best efforts to
cause its officers, directors, employees, accountants, counsel, consultants,
advisors and agents to, destroy or deliver to the Company, upon request, all
documents and other materials, and all copies thereof, obtained by Buyer or on
its behalf from the Company in connection with this Agreement that are subject
to such confidence.
SECTION 7.02. Voting of Shares. Buyer agrees to vote all Shares
beneficially owned by it in favor of adoption of this Agreement at the Company
Stockholder Meeting.
SECTION 7.03. Director and Officer Liability. For six years after the
Effective Time, Buyer will cause the Surviving Corporation to (i) indemnify and
hold harmless the present and former officers and directors of the Company in
respect of acts or omissions occurring prior to the Effective Time (including
without limitation matters related to the transactions contemplated by this
Agreement) and (ii) retain limitations on personal liability of directors for
monetary damages in each case, to the fullest extent provided under the
Company's certificate of incorporation and bylaws in effect on the date hereof;
provided that such indemnification shall be subject to any limitation imposed
from time to time under applicable law. For six years after the Effective Time,
Buyer will cause the Surviving Corporation to use its best efforts to provide
officers' and directors' liability insurance in respect of acts or omissions
occurring prior to and including the Effective Time covering each such Person
currently covered by the Company's officers' and directors' liability insurance
policy on terms with respect to coverage and amount no less favorable than those
of such policy in effect on the date hereof, provided that in satisfying its
obligation under this Section, Buyer shall not be obligated to cause the
Surviving Corporation to pay premiums in excess of 150% of the amount per annum
the Company paid in its last full fiscal year, which amount has been disclosed
to Buyer. It is understood that such obligation to indemnify (but not to
maintain insurance) shall apply to claims of which the Surviving Corporation
shall have been notified prior to the expiration of such six-year period
regardless of when such claims shall have been disposed of.
SECTION 7.04. Employee Matters. Parent agrees that, for at least one
year from the Effective Time, subject to applicable law, the Surviving
Corporation and its Subsidiaries will provide benefits to their employees which
will, in the aggregate, be comparable to those currently provided by the Company
and its subsidiaries to their employees. Notwithstanding the foregoing, nothing
herein shall obligate or require the Surviving Corporation or any of its
subsidiaries to provide its employees with a plan or arrangement similar to any
equity based compensation plans currently maintained by the Company and nothing
herein shall otherwise limit the Surviving Corporation's right to amend, modify
or terminate any Employee Plan or Benefit Arrangement.
ARTICLE 8
COVENANTS OF BUYER AND THE COMPANY
The parties hereto agree that:
SECTION 8.01. Best Efforts. Subject to the terms and conditions of this
Agreement, each party will use its best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement.
SECTION 8.02. Certain Filings. The Company and Buyer shall cooperate
with one another (a) in connection with the preparation of the Company
Disclosure Documents and the Offer Documents, (b) in determining whether any
action by or in respect of, or filing with, any governmental body, agency or
official, or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this
Agreement and (c) in seeking any such actions, consents, approvals or waivers or
making any such filings, furnishing information required in connection therewith
or with the Company Disclosure Documents or the Offer Documents and seeking
timely to obtain any such actions, consents, approvals or waivers.
SECTION 8.03. Public Announcements. Buyer and the Company will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement and the transactions contemplated hereby and,
except as may be required by applicable law or any listing agreement with any
national securities exchange or the rules applicable to the Nasdaq Stock Market,
will not issue any such press release or make any such public statement prior to
such consultation.
SECTION 8.04. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Buyer, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Buyer, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger.
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to the Obligations of Each Party. The
obligations of the Company and Buyer to consummate the Merger are subject to
the satisfaction of the following conditions:
(a) if required by Delaware Law, this Agreement shall have been
adopted by the stockholders of the Company in accordance with such Law;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the
Merger;
(d) Buyer shall have purchased Shares pursuant to the Offer; and
(e) all actions by or in respect of or filings with any governmental
body, agency, official, or authority required to permit the
consummation of the Merger shall have been obtained.
SECTION 9.02. Conditions to the Obligations of Buyer. The obligations
of Buyer to consummate the Merger are subject to the satisfaction of the
following further conditions:
(a) the Company shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to
the Effective Time;
(b) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the
Merger; and
(c) Buyer shall have received all documents it may reasonably request
relating to the existence of the Company and the Subsidiaries and the
authority of the Company for this Agreement, all in form and substance
reasonably satisfactory to Buyer.
ARTICLE 10
TERMINATION
SECTION 10.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company):
(a) by mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer, if the Offer has not been
consummated by the date that is 60 days after the commencement of the
Offer; provided, however, that the right to terminate under this clause
(b) shall not be available if Buyer shall have failed to purchase
Shares in violation of the Offer;
(c) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining
Buyer or the Company from consummating the Merger is entered and such
judgment, injunction, order or decree shall become final and
nonappealable; or
(d) by the Company or Buyer, if the Board of Directors of the Company
shall have withdrawn or materially modified its recommendation as
permitted by clause (D) of the proviso of Section 6.04(a).
The party desiring to terminate this Agreement pursuant to clauses
10.01(b), 10.01(c) or 10.01(d) shall give written notice of such termination to
the other party in accordance with Section 11.01.
SECTION 10.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.01, this Agreement shall become void and of no effect
with no liability on the part of any party hereto, except that termination of
this Agreement shall be without prejudice to any rights any party may have
hereunder against any other party for wilful breach of this Agreement. The
agreements contained in Sections 6.04, 7.01, 11.04 and 11.06 shall survive the
termination hereof.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Buyer, to:
Thompson Dean
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Telecopy: 212-892-7272
with a copy to:
George R. Bason, Jr.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopy: (212) 450-4800
if to the Company, to:
R. Jack DeCrane
DeCrane Aircraft Holdings, Inc.
2361 Rosecrans Avenue
Suite 180
El Segundo, CA 90245
Telecopy: (310) 643-0746
with a copy to:
Melvin Epstein
Stroock & Stroock & Lavan
180 Maiden Lane
New York, NY 10038-4982
Telecopy: (212) 806-6006
and
Stephen A. Silverman
Spolin & Silverman
100 Wilshire Boulevard
Suite 940
Santa Monica, CA 90401-1113
Telecopy: 310-576-4844
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (a) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section.
SECTION 11.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement except for the
representations, warranties and agreements set forth in Sections 6.04, 7.01,
7.03, 10.02 and 11.04.
SECTION 11.03. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company and Buyer or in the case of a waiver, by the party against whom
the waiver is to be effective; provided that after the adoption of this
Agreement by the stockholders of the Company, no such amendment or waiver shall,
without the further approval of such stockholders, alter or change (i) the
amount or kind of consideration to be received in exchange for any shares of
capital stock of the Company, (ii) any term of the certificate of incorporation
of the Surviving Corporation or (iii) any of the terms or conditions of this
Agreement if such alteration or change would adversely affect the holders of any
shares of capital stock of the Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.04. Expenses. Except as provided in Section 6.04, all
costs and expenses incurred in connection with this Agreement shall be paid
by the party incurring such cost or expense.
SECTION 11.05. Successors and Assigns; Benefit. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that Buyer may
transfer or assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase shares pursuant to the Offer, but any such
transfer or assignment will not relieve Buyer of its obligations under the Offer
or prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer. Nothing in this
Agreement, expressed or implied, shall confer on any Person other than the
parties hereto, and their respective successors and assigns, any rights,
benefits, remedies, obligations, or liabilities under or by reason of this
Agreement, except that the present and former officers and directors of the
Company and their respective heirs and representatives shall have the rights and
benefits set forth in Section 7.03 hereof.
SECTION 11.06. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware, without giving
effect to the principles of conflicts of laws thereof.
SECTION 11.07. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
SECTION 11.08. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire agreement between the parties with respect to
the subject matter of this Agreement and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
DECRANE AIRCRAFT HOLDINGS, INC.
By: /s/ R. Jack DeCrane
------------------------------------
Name: R. Jack DeCrane
Title: Chairman and Chief Executive
Officer
DECRANE ACQUISITION CO.
By: /s/ Thompson Dean
------------------------------------
Name: Thompson Dean
Title: President
ANNEX I
Notwithstanding any other provision of the Offer, Buyer shall not be required to
accept for payment or pay for any Shares, and may terminate the Offer, if (i)
prior to the expiration date of the Offer, (A) less than a majority of the
outstanding Shares on a fully diluted basis has been tendered pursuant to the
Offer by the expiration of the Offer and not withdrawn, (B) the applicable
waiting period under the HSR Act in respect of any of the transactions
contemplated by the Merger Agreement shall not have expired or been terminated
or (C) the Required Amounts (as defined in the Merger Agreement) shall not have
been made available to Buyer as contemplated in Section 5.08 of the Merger
Agreement or (ii) at any time on or after ________, 1998 and prior to the
acceptance for payment of or payment for Shares, any of the following
conditions exist:
(a) there shall be instituted or pending any action or proceeding by
any government or governmental authority or agency, domestic or foreign, or by
any other person, domestic or foreign, before any court or governmental
authority or agency, domestic or foreign, (i) challenging or seeking to make
illegal, to delay materially or otherwise directly or indirectly to restrain or
prohibit the making of the Offer, the acceptance for payment of or payment for
some of or all the Shares by Buyer or the consummation by Buyer of the Merger,
or seeking to obtain material damages, (ii) seeking to restrain or prohibit
Buyer's ownership or operation (or that of its respective subsidiaries or
affiliates) of all or any material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or of Buyer and its
subsidiaries, taken as a whole, or to compel Buyer or any of its subsidiaries or
affiliates to dispose of or hold separate all or any material portion of the
business or assets of the Company and its subsidiaries, taken as a whole, or of
Buyer and its subsidiaries, taken as a whole, (iii) seeking to impose or confirm
material limitations on the ability of Buyer or any of its subsidiaries or
affiliates effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote any Shares acquired or owned by
Buyer or any of its subsidiaries or affiliates on all matters properly presented
to the Company's stockholders, or (iv) seeking to require divestiture by Buyer
or any of its subsidiaries or affiliates of any Shares, or (v) that otherwise,
in the reasonable judgment of Buyer, is likely to materially adversely affect
the Company and its subsidiaries, taken as a whole; or
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated, issued or
deemed applicable to the Offer or the Merger, by any court, government or
governmental authority or agency, domestic or foreign other than the application
of the waiting period provisions of the HSR Act to the Offer or the Merger,
that, in the reasonable judgment of Buyer, is likely, directly or indirectly, to
result in any of the consequences referred to in clauses (i) through (v) of
paragraph (a) above; or
(c) any change or material worsening of any existing condition shall
have occurred in the business, assets, liabilities, condition (financial or
otherwise), results of operations or, insofar as can be reasonably foreseen,
prospects of the Company and its subsidiaries taken as a whole that, in the
reasonable judgment of Buyer, is or is likely to be materially adverse to the
Company and its subsidiaries, taken as a whole; or
(d) a tender or exchange offer for more than 30% of the Shares at a
price per Share in excess of $23.00 shall have been made by another person, or
it shall have been publicly disclosed or Buyer shall have otherwise learned that
(i) any person or "group" (as defined in Section 13(d)(3) of the Exchange Act)
shall have acquired or proposed to acquire beneficial ownership of more than 30%
of any class or series of capital stock of the Company (including the Shares),
through the acquisition of stock, the formation of a group or otherwise, or
shall have been granted any option, right or warrant, conditional or otherwise,
to acquire beneficial ownership of more than 30% of any class or series of
capital stock of the Company (including the Shares) other than acquisitions for
bona fide arbitrage purposes only and other than as disclosed in a Schedule 13D
or 13G on file with the Commission on July 16, 1998, or (ii) any such person or
group which, prior to July 16, 1998, had filed such a Schedule with the
Commission shall have acquired or proposed to acquire beneficial ownership of
additional shares of any class or series of capital stock of the Company
(including the Shares), through the acquisition of stock, the formation of a
group or otherwise, constituting 10% or more of any such class or series, or
shall have been granted any option, right or warrant, conditional or otherwise,
to acquire beneficial ownership of additional shares of any class or series of
capital stock of the Company (including the Shares) constituting 10% or more of
any such class or series or (iii) any person or group shall have entered into a
definitive agreement or an agreement in principle with respect to a merger,
consolidation or other business combination with the Company; or
(e) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger Agreement,
or any of the representations and warranties of the Company set forth in the
Merger Agreement shall not be true in any material respect when made or at any
time prior to consummation of the Offer as if made at and as of such time; or
(f) The Fourth Amended and Restated Shareholders Agreement and the
Fifth Amended and Restated Registration Rights Agreement, in each case among the
Company and certain of its shareholders, shall not have been terminated; or
(g) the Merger Agreement shall have been terminated in accordance with
its terms; or
(h) the Board of Directors of the Company shall have withdrawn or
materially modified its approval or recommendation of the Offer or the Merger;
which, in the reasonable judgment of Buyer in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
Exhibit (c) (3)
June 15, 1998
VIA TELECOPIER
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DeCrane Aircraft Holdings, Inc.
2361 Rosecrans Avenue, Suite 180
El Segundo, CA, 90245
Attention: Mr. R. Jack DeCrane
Chairman and Chief Executive Officer
Gentlemen:
DeCrane Aircraft Holdings, Inc._("you" or the "Company") has
agreed to provide certain information concerning the Company to DLJ Merchant
Banking II, Inc.("we" or "DLJ") so that we may consider an investment in the
Company (a "Transaction").
We agree to treat confidentially all oral and written
information concerning the Company that we may receive from the Company or any
of its affiliates or agents (the "Evaluation Material") in connection with our
consideration of a Transaction. We also agree that prior to giving access to
the Evaluation Material to any of our employees, officers, directors, agents,
advisors or representatives (the "Representatives") we shall inform such
Representatives that they are bound by the terms set forth in this letter.
Evaluation Material shall include any information you provide
to us in the course of our consideration of a Transaction, whether in oral or
written form. Any reports, analyses, or notes we produce that are based on,
reflect or contain Evaluation Material ("Notes") shall also be held in
confidence. We shall not be required to maintain the confidentiality of
Evaluation Material if it (i) was or becomes generally available to the public
other than through disclosure by us in violation of this agreement; (ii) was
available to us on a non-confidential basis prior to your disclosure to us; or
(iii) becomes available to us from a source not known to us to have a duty of
confidentiality with regard to the information.
We agree to use Evaluation Material only to help us analyze and
evaluate a Transaction, and shall permit our Representatives access to
Evaluation Material only to the extent necessary to allow them to assist us in
that analysis or evaluation.
If we or our Representatives are requested to disclose any
Evaluation Material or Notes in connection with any legal or administrative
proceeding or investigation, to the extent practicable, we will notify you of
the request so that you may seek a protective order or other remedy or waive
our compliance with this agreement. We will cooperate with you on a
reasonable basis in your efforts to obtain a protective order or other remedy,
but we may disclose such of the Evaluation Material or Notes we are required
to disclose without liability to you upon the advice of our counsel.
We hereby acknowledge that we are aware, and our
Representatives will be made aware, that the securities laws of the United
States prohibit any person who has material, non-public information concerning
the Company or a possible Transaction involving the Company from purchasing or
selling securities in reliance upon such information or from communicating
such information to any other person or entity under circumstances in which it
is reasonably foreseeable that such person or entity is likely to purchase or
sell such securities in reliance upon such information.
We agree that, for a period of two years from the date of
this agreement, (which obligation shall survive any termination of this
letter agreement) unless such shall have been specifically invited in
writing by the Board of Directors of the Company, we will not, in any
manner, directly or indirectly, (a) effect or seek, offer or propose
(whether publicly or otherwise) to effect, or cause or participate in or in
any way assist any other person to effect or seek, offer or propose
(whether publicly or otherwise) to effect or participate in, (i) any
acquisition of any securities (or beneficial ownership thereof) or assets
of the Company or any of its subsidiaries; (ii) any tender or exchange
offer or merger or other business combination involving the Company or any
of its subsidiaries; (iii) any recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction with respect to
the Company or any of its subsidiaries; or (iv) any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the Securities and
Exchange Commission) or consents to vote any voting securities of the
Company, (b) form, join or in any way participate in a "group" (as defined
under the Securities Exchange Act of 1934, as amended), (c) otherwise act,
alone or in concert with others, to seek to control or influence the
management, Board of Directors or policies of the Company, (d) take any
action which might force the Company to make a public announcement
regarding any of the types of matters set forth in (a) above, or (e) enter
into any discussions or arrangements with any third party with respect to
any of the foregoing. We also agree during any such period not to request
the Company (or its directors, officers, employees or agents), directly or
indirectly, to amend or waive any provision of this paragraph (including
this sentence).
You may choose at any time to terminate our further access to
Evaluation Material, and, upon your request, we will destroy or return all
Evaluation Material previously delivered to us and all copies, summaries and
extracts of such Evaluation Material and will destroy all Notes.
Notwithstanding the foregoing, it is understood and agreed that
certain of our affiliates, including without limitation, Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC"), are full service securities firms
and as such, may, from time to time effect transactions for their own accounts
or the account of their customers, hold positions in securities of the Company
(information on which may be included in the Evaluation Material in each case
in the ordinary course of their respective businesses as broker-dealers,
investment advisers, block positioners, or investment bankers so long as (i)
they have established a "Chinese Wall" between individuals working on the
Transaction and those individuals involved in effectuating such dealings or
transactions, and (ii) and such purchases, sales or dealings are made only in
accordance with such "Chinese Wall" policies and procedures and in accordance
with applicable law. Nothing contained herein shall be deemed to limit or
restrict DLJSC or any such affiliates in the conduct of any such activities.
Neither you nor we shall be under any legal obligation with
respect to a Transaction unless and until a definitive agreement between us is
executed and delivered.
We acknowledge that you are free to conduct the process for a
Transaction as you may determine in your sole discretion. You may change the
procedures established for a Transaction at any time without notifying us and
you may accept or reject any proposal relating to a Transaction in your sole
discretion.
We acknowledge that money damages may not be sufficient remedy
for any breach of this agreement and agree that you shall be entitled to seek
specific performance and injunctive or other equitable relief for any such
breach.
This agreement shall be governed by the laws of the State of
New York, and may be amended or waived only in writing signed by both of us
and shall terminate one year from the date hereof.
Please indicate your agreement with the foregoing by signing
below and returning one copy of this Agreement.
Very truly yours
DLJ MERCHANT BANKING II, INC.
By: /s/ Thompson Dean
---------------------------------
Thompson Dean
Managing Director
Agreed and Accepted
DeCrane Aircraft Holdings, Inc.
By:
------------------------------------
R. Jack DeCrane
Chairman and Chief Executive Officer
