SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)(1)
AYDIN Corporation
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(Name of issuer)
COMMON STOCK, $1.00 PAR VALUE
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(Title of class of securities)
054681101
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(CUSIP number)
STEVEN WOLOSKY, ESQ.
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
505 Park Avenue
New York, New York 10022
(212) 753-7200
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(Name, address and telephone number of person
authorized to receive notices and communications)
September 18, 1998
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
/ /.
Note. six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
(Continued on following pages)
(Page 1 of 22 Pages)
Exhibit List on Page 10
- --------
(1) The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
<PAGE>
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CUSIP No. 054 68 1101 13D Page 2 of 22 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
STEEL PARTNERS II, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
DELAWARE
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 492,600
OWNED BY
EACH
REPORTING
PERSON WITH
----------------------------------------------------------------
8 SHARED VOTING POWER
-0-
----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
492,600
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
492,600
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.5%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 054 68 1101 13D Page 3 of 22 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
WARREN G. LICHTENSTEIN
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 492,600
OWNED BY
EACH
REPORTING
PERSON WITH
----------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
492,600
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
492,600
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.5%
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14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 054 68 1101 13D Page 4 of 22 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SANDERA PARTNERS, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
TEXAS
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 125,000
OWNED BY
EACH
REPORTING
PERSON WITH
----------------------------------------------------------------
8 SHARED VOTING POWER
-0-
----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
125,000
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
125,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.4%
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14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 054 68 1101 13D Page 5 of 22 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
NEWCASTLE PARTNERS, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
DELAWARE
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 3,100
OWNED BY
EACH
REPORTING
PERSON WITH
----------------------------------------------------------------
8 SHARED VOTING POWER
-0-
----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
3,100
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
3,100
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.1%
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14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 054 68 1101 13D Page 6 of 22 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
MARK E. SCHWARZ
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 128,100
OWNED BY
EACH
REPORTING
PERSON WITH
----------------------------------------------------------------
8 SHARED VOTING POWER
- 0 -
----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
128,100
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
128,100
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.5%
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14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 054 68 1101 13D Page 7 of 22 Pages
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The following constitutes Amendment No. 2 to the Schedule 13D filed on
July 30, 1998 (the "Schedule 13D"). Unless otherwise indicated, all defined
terms used herein shall have the same meanings respectively assigned to them in
the Schedule 13D.
Item 2 is amended to add the following paragraph:
Item 2. Identity & Background.
In connection with the Settlement Agreement (as defined in
Item 4), the Reporting Persons have obtained the agreement of the Company to the
appointment of two members of The Full Value Committee, Warren G. Lichtenstein
and Mark E. Schwarz to the Board of Directors of the Issuer, and the removal of
Ira Brind and Dr. Nev R. Gokcen from the Board. Accordingly, on September 18,
1998, The Full Value Committee was disbanded, and therefore The Full Value
Committee and Robert Frankfurt are no longer Reporting Persons.
Item 4 is amended to add the following paragraphs:
Item 4. Purpose of Transaction.
On September 18, 1998, the Reporting Persons entered into
Standstill and Settlement Agreement (the "Settlement Agreement") with the
Issuer, a copy of which is attached hereto as Exhibit 6. Reference is made to
Exhibit 6 for the complete terms of the Settlement Agreement. The Settlement
Agreement provides, among other things, for the Reporting Persons to refrain
from soliciting proxies or consents, forming a group or pursuing any
transactions with or including the Issuer other than those approved by the Board
of Directors of the Issuer, until April 30, 1999. In addition, upon compliance
with certain filing and mailing requirements under the Securities Exchange Act
of 1934, as amended, Warren G. Lichtenstein, Mark E. Schwarz and Keith Lane
Zucker shall be elected as directors of the Company in place of Ira Brind and
Dr. Nev A. Gokcen. Keith Lane Zucker, of SoGen International Fund, Inc., a large
stockholder of the Issuer, will serve on the Board as an independent director.
On September 18, 1998, the Issuer and the Reporting Persons
issued a joint press release (the "Joint Press Release"), pursuant to the terms
of the Settlement Agreement, copy of which is attached hereto as Exhibit 7.
Reference is made to Exhibit 7 for the complete text of the Joint Press Release.
Item 6 is amended to add the following:
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
On September 18, 1998, the Reporting Persons entered into the
Settlement Agreement, a copy of which is attached hereto as Exhibit 6. See Item
4 for a brief description of the Settlement Agreement.
Other than as described herein, there are no contracts,
arrangements or understandings among the Reporting Persons, or between the
Reporting Persons and any other Person, with respect to the securities of the
Issuer.
Item 7 is hereby amended in its entirety as follows:
Item 7. Material to be Filed as Exhibits.
1. Joint Filing Agreement between Steel Partners and
Warren G. Lichtenstein.
<PAGE>
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CUSIP No. 054 68 1101 13D Page 8 of 22 Pages
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2. Joint Filing Agreement between Steel Partners, Warren
Lichtenstein, Robert Frankfurt, Sandera Partners,
L.P., Newcastle Partners, L.P. and Mark E. Schwarz.
3. Preliminary Consent Solicitation Statement.
4. Letter from Warren G. Lichtenstein to I. Gary Bard
dated September 9, 1998.
5. Stockholder list demand letter and written consent.
6. Standstill and Settlement Agreement dated as of
September 18, 1998 by and among Aydin Corporation,
Steel Partners II, L.P., Warren G. Lichtenstein,
Sandera partners, L.P., Newcastle Partners, L.P.,
Mark E. Schwarz and Robert Frankfurt.
7. Joint Press Release dated September 18, 1998.
<PAGE>
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CUSIP No. 054 68 1101 13D Page 9 of 22 Pages
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SIGNATURES
After reasonable inquiry and to the best of his knowledge and
belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: September 22, 1998 STEEL PARTNERS II, L.P.
By: Steel Partners, L.L.C. General
Partner
By:/s/ Warren G. Lichtenstein
---------------------------------
Warren G. Lichtenstein
Chief Executive Officer
/s/ Warren G. Lichtenstein
---------------------------------
WARREN G. LICHTENSTEIN
SANDERA PARTNERS, L.P.
By: Sandera Capital Management L.P.
General Partner
By: Sandera Capital, L.L.C.
General Partner
By:/s/ Mark E. Schwarz
---------------------------------
Mark E. Schwarz
Vice President and Managing
Member
NEWCASTLE PARTNERS, L.P.
By:/s/ Mark E. Schwarz
---------------------------------
Mark E. Schwarz
General Partner
/s/ Mark E. Schwarz
------------------------------------
Mark E. Schwarz
<PAGE>
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CUSIP No. 054 68 1101 13D Page 10 of 22 Pages
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EXHIBIT INDEX
Exhibit Page
*1. Joint Filing Agreement
*2. Joint Filing and Solicitation Agreement dated
September 3, 1998
*3. Preliminary Consent Solicitation Statement
*4. Letter from Warren G. Lichtenstein to I. Gary
Bard dated September 9, 1998
*5. Stockholder list demand letter and written
consent
6. Standstill and Settlement Agreement dated as 11
of September 18, 1998 by and among Aydin
Corporation, Steel Partners II, L.P., Warren
G. Lichtenstein, Sandera partners, L.P.,
Newcastle Partners, L.P., Mark E. Schwarz and
Robert Frankfurt.
7. Joint Press Release dated September 18, 1998. 20
- --------------------
* Previously filed
<PAGE>
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CUSIP No. 054 68 1101 13D Page 11 of 22 Pages
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STANDSTILL AND SETTLEMENT AGREEMENT
THIS STANDSTILL AND SETTLEMENT AGREEMENT (this "Agreement") is
made and entered into effective as of September 18, 1998 by and among Aydin
Corporation, a Delaware corporation ("Aydin"), Steel Partners II, L.P., a
Delaware limited partnership ("Steel"), Warren G. Lichtenstein ("Lichtenstein"),
Sandera Partners, L.P., a Texas limited partnership ("Sandera"), Newcastle
Partners, L.P., a Texas limited partnership ("Newcastle"), Mark E. Schwarz
("Schwarz") and Robert Frankfurt ("Frankfurt") (herein, Steel, Lichtenstein,
Sandera, Newcastle, Schwarz and Frankfurt are sometimes collectively referred to
as the "Stockholders" or "The Full Value Committee" and individually as a
"Stockholder").
RECITALS
WHEREAS, the Stockholders own, either jointly or severally,
"Aydin Securities" as described in the Amendment (as defined below).
WHEREAS, on September 9, 1998, the Stockholders filed
Amendment No. 1 (the "Amendment") to Schedule 13D under the Securities Exchange
Act of 1934, as amended, amending the Schedule 13D filed on August 10, 1998 by
Steel and Lichtenstein. As stated in Item 4 of the Amendment, the Reporting
Persons (as defined in the Amendment):
"...entered into a Joint Filing and Solicitation Agreement, reflecting
their agreement to form The Full Value Committee and to seek to remove
certain members of the board of directors of the Issuer, including Ira
Brind, Dr. Nev A. Gokcen and Harry D. Train, II, and to elect Warren G.
Lichtenstein, Robert Frankfurt and Mark E. Schwarz in their place. On
or about September 9, 1998, Steel Partners II served the Issuer with a
request for a consent copy of a list of stockholders and related
information. On September 9, 1998, Steel Partners II also delivered its
written consent to the Issuer's Corporate Secretary. On September 9,
1998, The Full Value Committee filed a Preliminary Consent Solicitation
Statement with the Securities and Exchange Commission in order to
solicit consents from the stockholders of the Issuer in order to
effectuate such actions."
WHEREAS, Aydin and the Stockholders, individually and as the
members of The Full Value Committee, who constitute all of the Reporting Persons
in the Amendment, have agreed to enter into this Agreement on the terms and
conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing recitals,
and the covenants, payments of money or other consideration, and agreements set
forth below, the receipt and sufficiency of which are hereby acknowledged and
agreed to, the parties hereto agree as follows:
DEFINITIONS. Capitalized terms used in this Agreement
shall have the meanings set forth below:
"Effective Date" means the date upon which this
Agreement has been fully signed by all of the parties hereto
as noted below under the parties' respective signatures.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and all rules promulgated thereunder as in
effect on the Effective Date.
<PAGE>
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CUSIP No. 054 68 1101 13D Page 12 of 22 Pages
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"Group" has the same meaning as the term "group" set
forth in Section 13(d)(3) of the Exchange Act.
"Person" means any individual, firm, corporation,
partnership or other entity, including without limitation, any
"person" or "group" within the meaning of Section 13(d) under
the Exchange Act.
"Aydin Affiliate" means each "affiliate" or
"associate" of Aydin (as such terms are defined in Rule 12b-2
under the Exchange Act), whether or not such person is such an
Aydin Affiliate as of the Effective Date, and each officer,
director, employee, shareholder, consultant, agent,
representative, successor and assign, of either Aydin or any
Aydin Affiliate; excluding, however, the Stockholders and any
Stockholder Affiliate.
"Aydin Securities" means all common stock, preferred
stock, options, warrants, notes and debentures (whether senior
or subordinated, secured or unsecured, convertible or
nonconvertible), and any other securities, which have been
issued prior to the Effective Date or which are issued during
the Standstill Period, by Aydin.
"Standstill Period" means the period of time
beginning with the Effective Date and ending on April 30,
1999.
"Stockholder Affiliate" means each "affiliate" or
"associate" of a Stockholder (as such terms are defined in
Rule 12b-2 under the Exchange Act), whether or not such Person
is such a Stockholder Affiliate as of the Effective Date, and
each officer, director, employee, shareholder, successor and
assign, of either a Stockholder or any Stockholder Affiliate;
excluding, however Aydin and any Aydin Affiliate.
STANDSTILL COVENANTS OF STOCKHOLDERS. During the
Standstill Period, each of the Stockholders, severally but not jointly,
covenants that such Stockholder shall not, and such Stockholder shall cause each
of his or its Stockholder Affiliates (and each such Stockholder Affiliate's own
affiliates and associates), not to:
No Proxy Solicitation: except as a director of Aydin
and in connection with, and in support of, any action approved
by the Board of Directors of Aydin during the Standstill
Period (i) make, or in any way participate in, directly or
indirectly, along or in concert with others, any "solicitation
of proxies" (as such terms are defined or used in Regulation
14A under the Exchange Act) or become a "participant" in any
"election contest" (as such terms are defined or used in Rule
14a-11 under the Exchange Act) with respect to Aydin or any
Aydin Affiliate; or (ii) seek to advise or influence any
Person with respect to the voting of any Aydin Securities, or
(iii) initiate, propose or otherwise solicit holders of Aydin
Securities for the approval of one or more stockholder
proposals or induce or attempt to induce any other person to
initiate any stockholder proposal.
No Formation of a Group; No Influence: except for the
continued existence of The Full Value Committee (as defined in
the Amendment), which committee will take no action during the
Standstill Period in breach of this Agreement, take any
action,
<PAGE>
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CUSIP No. 054 68 1101 13D Page 13 of 22 Pages
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alone or in concert with any other Person, to (i) form, join
or in any way participate in a Group with respect to any of
the Aydin Securities; (ii) acquire or affect the control of
Aydin or any Aydin Affiliate; (iii) except as a director of
Aydin, control or influence the management, Board of
Directors, policies or affairs of Aydin or any Aydin
Affiliate; or (iv) participate in or encourage any Person to
take any action which is prohibited to be taken by the
Stockholders or any Stockholder Affiliate pursuant to this
Agreement.
No Statements: except (i) with respect to the press
release referred to in Section 4(c) hereof and as required by
law, and (ii) for Stockholder(s) referring people to Aydin or
the press release, make any statement or proposal, whether
written or oral, alone or in concert with any other Person, to
the Board of Directors of Aydin (other than in a Stockholder's
capacity as a director) or any Affiliate, to any director or
officer of Aydin or any Aydin Affiliate, to any shareholder,
note holder, securities holder or creditor of Aydin or any
Aydin Affiliate, or otherwise make any public announcement or
proposal whatsoever with respect to Aydin or any Aydin
Affiliate, including but not limited to a merger or other
business combination, sale or transfer or assets, liquidation
or other corporate transaction by Aydin or any Aydin
Affiliate.
No Tender Offers: make, solicit, encourage, discuss
or participate in, alone or in concert with any other person,
a tender offer for or exchange for any Aydin Securities.
No Asset Acquisition Offers: acquire, offer to
acquire or agree to acquire, directly or indirectly, alone or
in concert with other Person, by purchase, exchange or
otherwise (i) all or a substantial portion of the assets,
tangible or intangible, of Aydin or any Aydin Affiliate, or
(ii) direct or indirect rights, warrants or options to acquire
any assets of Aydin or any Aydin Affiliate.
No Call of Meeting: except as a member of the Board
of Directors of Aydin and as part of an action taken by the
Board, alone or in concert with any other Person (i) call, or
seek to call, any meeting of Aydin's stockholders, note
holders, securities holders and/or other creditors, or (ii)
except as a member of the Board of Directors of Aydin, make a
request to examine, copy or make extracts from any of Aydin's
books, records, or list of Shareholders.
No Announcement: announce an intention to do, or
enter into any agreement, arrangement or understanding with
any other Person to do, any of the actions restricted or
prohibited under this Section during the Standstill Period..
COVENANT NOT TO SUE. During the Standstill Period,
and except for a lawsuit alleging a breach of any covenant or agreement of Aydin
contained in this Agreement, each of the Stockholders, severally and not
jointly, covenants that such Stockholder shall not, and such Stockholder shall
cause each his or its Stockholder Affiliates (and each such Affiliate's own
affiliates and associates), not to, encourage, commence or participate in any
action, lawsuit, or any other legal proceeding against Aydin or any Aydin
Affiliates; provided, however, nothing contained herein shall limit the right of
Aydin (except as expressly provided in Section 8 hereof) to commence any lawsuit
or other legal proceeding against any Person.
<PAGE>
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CUSIP No. 054 68 1101 13D Page 14 of 22 Pages
- ---------------------------------- ---------------------------
NO PUBLIC STATEMENTS.
By Stockholders. During the Standstill Period, each
of the Stockholders severally but not jointly covenants that
such Stockholder shall not, and each Stockholder shall use his
or its best efforts to cause each of his or its Stockholder
Affiliates (and each such Affiliate's own affiliates and
associates) not to, make any public statements about Aydin or
any Aydin Affiliate excluding any statement or filing required
by law.
By Aydin. During the Standstill Period, Aydin
covenants that Aydin shall not, and Aydin shall cause each
Aydin Affiliate (and each such Affiliate's own affiliates and
associates) not to, make any public statements about the
Stockholders or any Stockholder Affiliate.
Joint Press Release. Notwithstanding the foregoing,
promptly upon the execution of this Agreement, Aydin and the
Stockholders will release a joint press release substantially
in the form attached hereto as Exhibit A.
SPECIFIC PERFORMANCE. Each of the Parties will be
entitled to an injunction to prevent a breach of the provisions of this
Agreement and to specific enforcement of its terms. Aydin and the Stockholders
consent, and shall use their best efforts to cause the Stockholder Affiliates to
consent, to personal jurisdiction in any action brought in any court in the
State of Delaware having subject matter jurisdiction and to service of process
upon them.
COVENANTS REGARDING BOARD REPRESENTATION
Aydin shall promptly file an Information Statement
pursuant to Section 14(f) of the Exchange Act (the "14(f)
Statement") and Rule 14f-1 thereunder, and transmit the 14(f)
Statement to the stockholders of Aydin as required by the
Exchange Act, but in no event shall such actions by Aydin take
place later than the close of business on September 25, 1998.
On the tenth (10th) day after the filing of the 14(f)
Statement (the "Board Reconstitution Date"), the Board of
Directors of Aydin will expand to five and will consist of the
following persons:
Of the existing four directors, two of such
directors (Mr. Ira Brind and Dr. Nev A. Gokcen) will
resign from the Board of Directors in accordance with
written resignations dated the Effective Date which
provide for their effectiveness as of the Board
Reconstitution Date, and the remaining two directors
(Messrs. Bard and Train) (the "Carryover Directors")
shall continue as directors;
The Carryover Directors will elect the
following persons as new directors:
(x) Lichtenstein and Schwarz (who are herein
referred to as the "Committee Designated
Directors"); and
(y) Keith Lane Zucker (herein referred to as
the "Independent Director").
If the Board Reconstitution Date has not occurred prior to the
close of business on October 9, 1998, then notwithstanding
anything else
<PAGE>
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CUSIP No. 054 68 1101 13D Page 15 of 22 Pages
- ---------------------------------- ---------------------------
herein to the contrary, this Agreement shall terminate and be
of no force and effect. On or after the Effective Date and
prior to the Board Reconstitution Date, the Committee
Designated Directors and the Independent Director shall be
required to execute confidentiality agreements in form and
substance satisfactory to counsel for Aydin as a condition to
receiving information about Aydin in anticipation of serving
as directors of Aydin.
If any vacancy should arise during the Standstill
Period with respect to any of the Carryover Directors, the
Committee Designated Directors or the Independent Director,
such vacancy shall be filled as follows (and Lichtenstein and
Schwarz, together with the initial Carryover Directors, and
their respective successor directors, shall vote together as
directors to cause such vacancy to be filled as herein set
forth):
In the case of a successor to a Carryover
Director, by a person designated by the
remaining Carryover Directors or their
successors;
In the case of a successor to a Committee
Designated Director, by a person designated
by the remaining Committee Designated
Directors or their successors; and
In the case of the successor to the
Independent Director, by the mutual
agreement of the Carryover Directors and the
Committee Designated Directors; provided,
however, if the Carryover Directors and the
Committee Designated Directors cannot reach
agreement on the selection of the successor
to the Independent Director within ten days
after the resignation, retirement or death
of the Independent Director, then the
Stockholders may designate a person to serve
as the Independent Director who shall be
representative of a significant stockholder
of Aydin for approval by the Carryover
Directors, which approval may not be
unreasonably withheld or delayed.
At the time of any designation as a director pursuant
to this Section 6, each such person will (i) affirm his or her
duty of confidentiality to Aydin with regard to any
non-public, confidential information through a confidentiality
agreement reasonably satisfactory to the parties and (ii)
agree to the terms of this Section 6(b) with respect to the
election of successor directors.
Aydin will furnish to the Committee Designated
Directors and the Independent Director all information that is
provided to the other directors of Aydin and any other
information reasonably requested by the Committee Designated
Directors for use in their capacity as directors or which is
required by law.
In the event at any time the Stockholders
beneficially own in the aggregate less than 5% of the
outstanding common stock of Aydin, the Committee Designated
Directors shall resign and the rights of the Stockholders
under this Section 6 shall terminate and be of no further
force and effect. The termination of the rights of the
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CUSIP No. 054 68 1101 13D Page 16 of 22 Pages
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Stockholders under this Section 6 pursuant to the immediately
preceding sentence shall not affect the restrictions imposed
on the Stockholders under other Sections of this Agreement.
Subject to early termination in accordance with
Section 6(e), above, the composition of the Board of Directors
of Aydin shall be as set forth in this Section 6 until the
earlier of (i) the 1999 Annual Meeting of Stockholders of
Aydin and (ii) June 30, 1999.
.
The Stockholders shall cause the withdrawal of the
recently filed preliminary consent solicitation statement
which is described in the Amendment..
1999 ANNUAL MEETING OF STOCKHOLDERS. The parties
hereto agree that Aydin will hold an annual meeting of stockholders for 1999 no
sooner than June 20, 1999, and no later than June 30, 1999, unless four or more
of the directors of Aydin approve an earlier date for such annual meeting of
stockholders. The slate for the annual meeting of stockholders for 1999 will be
nominated by the Board of Directors of Aydin who hold office on April 30, 1999,
unless four or more directors of Aydin approve an earlier date to establish the
slate of directors for the 1999 annual meeting of stockholders of Aydin.
Notwithstanding anything to the contrary contained herein, the Committee
Designated Directors, or their designees as successors, hereby reserve the right
after April 30, 1999, to make any proposal or take any other action deemed
necessary by them at Aydin's 1999 annual meeting of stockholders or in
preparation thereof.
COVENANTS OF AYDIN. In addition to the covenants and
agreements of Aydin contained elsewhere in this Agreement, Aydin covenants and
agrees as follows:
Aydin will not call any meeting of stockholders
without the approval of the Board of Directors of Aydin;
During the Standstill Period, and except for any
lawsuit alleging a breach by a Stockholder or a Stockholder
Affiliate of any covenant or agreement contained herein, Aydin
covenants that it shall not encourage, commence or participate
in any action, lawsuit, or any other legal proceeding against
any Stockholder or any Stockholder Affiliate; and
From and after the Effective Date and prior to the
Board Reconstitution Date, Aydin and its Board of Directors
shall take no Board action with respect to any matter which
may be presented to the Board of Directors, including without
limitation any matter relating to the sale or disposition of
all or any material part of the assets of Aydin or relating to
a merger or other form of transaction involving the business
and assets of Aydin except for the approval and implementation
of this Agreement and the following transactions which have
previously been announced by Aydin and approved at least in
principle by the Board of Directors of Aydin: (i) the sale of
the Microwave Division to Communications and Power Industries,
Inc., and (ii) the sale of the Displays Division to H.I.G.
Capital Management, Inc. or one or more of its affiliates.
Nothing contained herein shall affect, and not included within
the foregoing covenant are, the resolutions adopted by the
Board of Directors of Aydin relating to an executive retention
program, a copy of which is attached hereto as Exhibit B.
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CUSIP No. 054 68 1101 13D Page 17 of 22 Pages
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NO ASSIGNMENT. Since the Amendment and prior to the
Effective Date, the Stockholders represent and warrant that they have not sold,
gifted or transferred in any other manner any Aydin Securities.
CHOICE OF LAW. Aydin and Stockholders agree that this
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware.
PARTIAL INVALIDITY. Should any of the parts, terms,
clauses or provisions of this Agreement be declared or determined by any court
of competent jurisdiction to be illegal or invalid, the validity of the
remaining parts, terms, clauses and provisions shall not be affected thereby and
said invalid or illegal part, term, clause or provision shall be deemed not to
be a part of this Agreement.
MERGER. This Agreement supersedes all previous
negotiations, representations and discussions by the parties hereto concerning
the subject matter hereof, and integrates the whole of all of their agreements
and understanding concerning the subject matter hereof. No oral representations
or undertakings concerning the subject matter hereof shall operate to amend,
supersede, or replace any of the terms or conditions set forth in this
Agreement.
EARLY TERMINATION; TERM OF CERTAIN PROVISIONS.
If the Board Reconstitution Date has not occurred by
Friday, October 9, 1998, then notwithstanding anything else
herein to the contrary, this Agreement and the rights and
obligations of the parties hereunder shall terminate and be of
no further force and effect; provided, however, no such
termination shall affect any confidentiality agreements
entered into by the Committee Designated Directors or the
Independent Director prior to such date.
Notwithstanding anything else herein to the contrary,
the provisions of Sections 2, 3, 4 and 8 of this Agreement
shall expire as of the close of business on April 30, 1999,
and the provisions of Section 6 of this Agreement shall expire
as of the close of business on June 30, 1999, unless extended
by unanimous agreement of all of the Parties.
AMENDMENT. This Agreement may only be amended in
writing signed by authorized representatives of all the parties hereto. This
Agreement cannot be changed or terminated orally.
HEADINGS. Descriptive headings are for convenience
only and shall not control or affect the meaning or construction of any
provision of this Agreement.
COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties hereto
and each such executed counterpart shall be deemed to be an original instrument.
NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or mailed by certified or registered mail, postage prepaid,
return receipt requested, or delivered to a nationally recognized next business
day courier for delivery on the next business day, or by facsimile, with a copy
sent as aforesaid and in any instance addressed as follows:
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CUSIP No. 054 68 1101 13D Page 18 of 22 Pages
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IF TO AYDIN:
Aydin Corporation
700 Dresher Road
P.O. Box 349
Horsham, PA 19044
Attention: I. Gary Bard
WITH A COPY TO:
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103
Attention: Richard J. Braemer, Esq.
IF TO THE STOCKHOLDERS:
c/o The Full Value Committee
150 East 52nd Street, 21st Floor
New York, NY 10022
Attention: Warren G. Lichtenstein
WITH A COPY TO:
Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, NY 10022
Attention: Steven Wolosky, Esq.
or such other address as shall be furnished in writing by any of the parties,
and any such notice or communication shall be deemed to have been given as of
the date so delivered personally, so mailed, so delivered to the courier
service, or so transmitted by telecopy (except that a notice of change of
address shall not be deemed to have been given until received by the addressee).
EFFECT OF TERMINATION. From and after the end of the
Standstill Period, the covenants of the parties set forth herein shall be of no
further force or effect and the parties shall be under no further obligation
with respect thereto.
BINDING ON SUCCESSORS. This Agreement shall be
binding upon and shall inure to the benefit of the parties and their
representatives, heirs, successors, and assigns.
PERMITTED COMMUNICATIONS: Notwithstanding any of the
foregoing, the Stockholders may (i) file any documents required by the
Securities and Exchange Commission, provided that the content of any document(s)
so filed does not violate any of the other terms and conditions of this
Agreement; and (ii) respond to any legal subpoena, after notice to Aydin
immediately following service of such subpoena.
EXPENSES. Promptly after the execution of this
Agreement, Aydin agrees to reimburse the Stockholders for their out-of-pocket
legal and proxy solicitation fees and expenses incurred in connection with this
Agreement, provided that such reimbursement shall not exceed $75,000.00.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement on the date set forth below their respective signatures.
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CUSIP No. 054 68 1101 13D Page 19 of 22 Pages
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AYDIN CORPORATION
/S/ I. Gary Bard
-----------------------------------------
By: I. Gary Bard
Title:
Date of Execution:
STEEL PARTNERS II, L.P.
/s/ Warren G. Lichtenstein
-----------------------------------------
By: Warren G. Lichtenstein
Title:
Date of Execution:
/s/ Warren G. Lichtenstein
-----------------------------------------
Warren G. Lichtenstein
Date of Execution:
SANDERA PARTNERS, L.P.
/s/ Mark E. Schwarz
-----------------------------------------
By: Mark E. Schwarz
Title:
Date of Execution:
NEWCASTLE PARTNERS, L.P.
/s/ Mark E. Schwarz
-----------------------------------------
By: Mark E. Schwarz
Title:
Date of Execution:
/s/ Mark E. Schwarz
-----------------------------------------
Mark E. Schwarz
Date of Execution:
/s/ Robert Frankfurt
-----------------------------------------
Robert Frankfurt
Date of Execution:
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CUSIP No. 054 68 1101 13D Page 20 of 22 Pages
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Contact: I. Gary Bard
Aydin Corporation
700 Dresher Road
Horsham, Pennsylvania 19044
(215) 687-7510
Warren Lichtenstein
Steel Partners II, L.P.
150 East 52nd Street
New York, New York 10022
(212 813-1500
For Immediate Release
Aydin Corporation (NYSE: AYD) and The Full Value Committee today
announced that they have agreed to enter into a Settlement Agreement. As part of
the Settlement Agreement, the members of The Full Value Committee have agreed to
refrain from soliciting proxies or consents, forming a group or pursuing any
transactions with or including the Company other than those approved by the
Board of Directors of the Company until April 30, 1999. As soon as certain
filing and mailing requirements under the Securities Exchange Act of 1934, as
amended, are complied with, Warren G. Lichtenstein and Mark E. Schwarz, members
of The Full Value Committee, and Keith Lane Zucker, of SoGen International Fund,
Inc., will be elected as directors of the Company, I. Gary Bard and Harry D.
Train II will continue as directors of the Company, and Ira Brind and Dr. Nev A.
Gokcen will cease to serve as directors of the Company.
I. Gary Bard, President and Chief Executive Officer of Aydin
Corporation, stated "The Company committed itself to exploring strategic
alternatives and enhancing shareholder value when it retained
PricewaterhouseCoopers Securities, L.L.C. in late August of this year. The
Company's Board and senior management are committed to this
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CUSIP No. 054 68 1101 13D Page 21 of 22 Pages
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process and feel strongly that by entering into the Settlement Agreement the
Company will be able to focus all of its resources on its goal of maximizing
shareholder value. The addition to the Company's Board of representatives of
substantial shareholders of the Company will facilitate the Company in achieving
its objectives.".
Mr. Lichtenstein announced that "Steel Partners and Sandera Partners
have worked long and hard for all stockholders of Aydin Corporation in order to
maximize stockholder value. We have concluded that the terms of the Settlement
Agreement will allow us as Board members to actively pursue the sale of the
Company as an entirety or in parts in a manner which will provide the Company's
stockholders with the greatest return on their investment, and should be seen as
a first step toward our achievement of such goals in the best interests of all
stockholders."
Mr. Lichtenstein also announced that, in connection with the execution
of the Settlement Agreement, The Full Value Committee would withdraw its
solicitation of written consents to remove certain of the current directors of
the Company
Mr. Bard also expressed appreciation for the service to the Company of
Dr. Gokcen and Mr. Brind, who are resigning to facilitate the accomplishment of
the Settlement Agreement.
Aydin Corporation is a world-class provider of products and systems for
the acquisition and distribution of information over electronic communications
media. The Company designs, engineers, manufactures, markets, distributes and
installs technologically advanced communications products and systems, from
basic components to turnkey systems for military, space, government and
commercial organizations around the world.
Certain statements made in this press release are forward-looking and
are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Investors are cautioned that these
forward-looking statements reflect numerous
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CUSIP No. 054 68 1101 13D Page 22 of 22 Pages
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assumptions and involve risks and uncertainties which may affect Aydin's
business and prospects and cause actual results to differ materially from these
forward-looking statements, including loss of current customers, reductions in
orders from current customers, or delays in ordering by current customers,
failure to obtain anticipated contracts or orders from new customers, or
expected volume from such customers, higher material or labor costs, unfavorable
results in litigation against Aydin, the availability of adequate sources of
working capital, consummation of planned Division sales, and economic,
competitive, technological, governmental, and other factors discussed in Aydin's
filings with the Securities and Exchange Commission.
