Exhibit 10
MEMORANDUM OF UNDERSTANDING
This MEMORANDUM OF UNDERSTANDING is entered into as of August
18, 1998 among the plaintiff ("Plaintiff") in the Action (as defined herein),
and XxXxxxx Aircraft Holdings, Inc. ("XxXxxxx"), members of XxXxxxx'x Board of
Directors (including directors constituting the special committee ("Special
Committee")), Xxxxxxxxx Lufkin Xxxxxxxx, Inc. ("DLJ") and XxXxxxx Acquisition
Co. ("XxXxxxx Acquisition") (collectively, "Defendants") by the undersigned
attorneys. Except as otherwise stated in this Memorandum of Understanding,
capitalized terms herein have the meaning given them in the Agreement and Plan
of Merger dated as of July 16, 1998 among XxXxxxx and XxXxxxx Acquisition (the
"Merger Agreement").
WHEREAS, there is now pending an action in the Court of
Chancery of the State of Delaware, styled Taam Associates, Inc.
x. XxXxxxx, et al., C.A. No. 16551-NC ("the Action "); and
WHEREAS, the Action was filed as a putative class action on
behalf of the public holders of XxXxxxx common stock, relating to the proposed
merger (the "Transaction") of XxXxxxx into XxXxxxx Acquisition, as set forth in
the Merger Agreement; and
WHEREAS, the Action names as defendants XxXxxxx, DLJ, XxXxxxx
Acquisition, and individual members of the XxXxxxx Board of Directors; and
WHEREAS, the Action seeks declaratory and injunctive relief,
monetary damages and/or rescission with respect to the Transaction based upon
the allegation, inter alia, that the conduct of the members of the XxXxxxx Board
of Directors in connection with the Transaction constitutes a breach of their
fiduciary duties, aided and abetted by DLJ; and
WHEREAS, the defendants deny that they have committed or have
attempted to commit any violation of law or breach of duty, including breach of
any duty to DeCrane shareholders, or have otherwise acted in any improper
manner; and
WHEREAS, following document production and arms-length
negotiations between the parties, counsel for the parties have reached an
agreement in principle providing for the proposed settlement of the Action on
the terms and conditions set forth below (the "Settlement"); and
WHEREAS, counsel for the parties believe that the proposed
Settlement is in the best interests of the public shareholders of XxXxxxx;
NOW THEREFORE, IT IS HEREBY AGREED IN PRINCIPLE AS
FOLLOWS:
1. Principal terms of Settlement. Subject to the
additional conditions, terms and limitations described herein, as
a result of the bringing of the Action, the parties agree in
principle as follows:
a. Regardless of whether XxXxxxx is legally required to do so,
XxXxxxx agrees that it will promptly amend the Schedule 14D-9 dated July 22,
1998 to provide additional disclosure concerning further contacts and
negotiations with other potential acquirers of XxXxxxx.
x. XxXxxxx also agrees that it will promptly amend the
Schedule 14D-9 to provide additional disclosure regarding the financial analyses
presented to and considered by the Special Committee in evaluating the
Transaction, and the Special Committee's conclusions regarding later assertions
by XxXxxxx'x then-chief financial officer relating to the fairness opinion
received by XxXxxxx from its financial advisor.
x. XxXxxxx also agrees that it will promptly amend the
Schedule 14D-9 to provide additional disclosure regarding financial projections
disclosed to DLJ or other potential acquirers of XxXxxxx.
x. XxXxxxx also agrees that it will promptly amend the
Schedule 14D-9 to include information regarding the financial results of XxXxxxx
for the quarter ended June 30, 1998.
x. XxXxxxx agrees that it will mail the amended Schedule 14D-9
to XxXxxxx shareholders as soon as practicable.
f. Reasonably promptly following the execution of this
Memorandum of Understanding by the parties, XxXxxxx shall publicly disclose the
terms of the proposed Settlement set forth herein in a manner deemed reasonable
by XxXxxxx.
2. Stipulation of Settlement. The parties to the Action will
attempt in good faith to agree upon and execute an appropriate Stipulation of
Settlement (the "Stipulation") and such other documentation as may be required
in order to obtain Final Court Approval (as defined below) of the Settlement and
the dismissal of the Action upon the terms set forth in this Memorandum of
Understanding (collectively, the "Settlement Documents"). The Stipulation will
expressly provide, inter alia, that Plaintiff will petition the Court for
certification of a non-opt out settlement class pursuant to Delaware Court of
Chancery Rules 23(b)(1) and (b)(2) of XxXxxxx shareholders and their successors
in interest and transferees, immediate and remote, from July 16, 1998 through
and including the Effective Time (as defined in the Merger Agreement) (the
"Class"); for entry of a judgment dismissing the Action "with prejudice"; for a
complete release and settlement of all claims, whether asserted directly,
derivatively or otherwise, against defendants or any of their families, parent
entities, affiliates, subsidiaries, predecessors, successors or assigns, and
each and all of their respective past, present or future officers, directors,
associates, stockholders, controlling persons, representatives, employees,
attorneys, financial or investment advisors, consultants, accountants,
investment bankers, commercial bankers, engineers, advisors or agents, heirs,
executors, trustees, general or limited partners or partnerships, personal
representatives, estates or administrators, which have been, or could have been,
asserted relating to the Transaction or Merger Agreement, the actions of
XxXxxxx, the XxXxxxx Board (including each member of the XxXxxxx Board), DLJ or
XxXxxxx Acquisition relating to the Transaction, the related disclosure
materials, disclosures, facts and allegations that are or could (insofar as such
transactions, disclosures, facts and allegations relate to, or occurred in
connection with, the subject matter of the Action) be the subject of the Action;
that defendants have denied and continue to deny that they have committed or
attempted to commit any violations of law or breaches of duty of any kind; that
defendants are entering into the Stipulation solely because the proposed
Settlement as described above would eliminate the burden, risk and expense of
further litigation, and is in the best interests of XxXxxxx and all its
shareholders; and that any of the defendants shall have the right to withdraw
from the
proposed Settlement in the event that (x) any claims related to the Transaction
or the subject matter of the Action (whether direct, derivative or otherwise)
are commenced against any person in any court prior to Final Court Approval of
the Settlement, and such claims are not dismissed or stayed in contemplation of
dismissal or (y) any of the additional conditions set forth in paragraph 4 below
shall not have been satisfied. The parties agree to use their good faith efforts
to obtain the dismissal or stay in contemplation of dismissal of any action
covered by clause (x) in the foregoing sentence and further agree that the
defendants shall have the right to withdraw from this Memorandum of
Understanding if such efforts do not result in the dismissal or stay in
contemplation of dismissal of such an action.
3. Notice and Court Approval. Subject to prior Court approval
of the Stipulation and the form of the Settlement Documents, the parties to the
respective Action will present the Settlement Documents to the Delaware Court of
Chancery for approval as soon as practicable following appropriate notice of the
proposed Settlement to the XxXxxxx shareholders as to all claims asserted in the
Action by the named Plaintiff and the shareholders of XxXxxxx on whose behalf
the Action was brought, without costs to any party except as provided herein.
XxXxxxx shall pay the costs and expenses related to providing notice of the
Settlement to the XxXxxxx shareholders. As used herein, "Final Court Approval"
of the Settlement means that the Delaware Court of Chancery has entered an order
approving the Settlement and that such order is finally affirmed on appeal or is
no longer subject to appeal and the time for any petition for reargument, appeal
or review, by certiorari or otherwise, has expired. Plaintiff's counsel intend
to apply to the Delaware Court of Chancery for an award of attorneys' fees and
reasonable out-of-pocket disbursements. Subject to the terms and conditions of
this Memorandum of Understanding and the contemplated Stipulation of Settlement,
Plaintiff's counsel will apply for an award of fees and expenses in an amount
not exceeding $375,000, which the defendants and other releasees will not
oppose, to be paid by XxXxxxx to Xxxxxxxxx Xxxxxxxx & Lifshitz, as receiving
agent for Plaintiff's counsel within five (5) business days of Final Court
Approval of the Settlement.
4. Other Conditions. The consummation of the Settlement is
subject to: (a) consummation of the Transaction, as contemplated in the Merger
Agreement as such may be amended from time to time; (b) the drafting and
execution of the Settlement Documents and the other agreements necessary to
effectuate the terms of the proposed Settlement; (c) the completion by Plaintiff
of appropriate discovery in the Action reasonably satisfactory to Plaintiff's
counsel; and (d) Final Court Approval (as defined above) of the Settlement and
dismissal of the Action with prejudice and without awarding costs to any party,
except as provided herein. This Memorandum of Understanding shall be null and
void and of no force and effect if (i) any of these conditions are not met or
(ii) Plaintiff's counsel in the
Action determine that the Settlement is not fair and reasonable. In such event,
this Memorandum of Understanding shall not be deemed to prejudice in any way the
positions of the parties with respect to the Action, shall be subject to Rule
408 of the Delaware Rules of Evidence, and shall not entitle any party to
recover any costs or expenses incurred in connection with the implementation of
this Memorandum of Understanding.
5. Interim Stay of the Action. The parties to the Action agree
that except as expressly provided herein, the Action shall be stayed pending
submission of the proposed Settlement to the Court for its consideration.
Plaintiff's counsel agree that the defendants' time to answer or otherwise
respond to the amended complaint in the Action is extended without date. Counsel
shall enter into such documentation as shall be required to effectuate the
foregoing agreements.
6. Miscellaneous. (a) This Memorandum of Understanding may be
executed in counterparts by any of the signatories hereto and as so executed
shall constitute one agreement; (b) this Memorandum of Understanding and the
Settlement contemplated by it shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to that State's rules
concerning conflict of laws; (c) this Memorandum of Understanding shall be
binding upon and inure to the benefit of the parties and their respective
agents, executors, heirs, successors and assigns, subject to the conditions set
forth herein; (d) Plaintiff and its counsel represent and warrant that none of
the claims or causes of action asserted in the Action have been assigned,
encumbered or in any manner transferred, in whole or in part; (e) except as
provided herein, the defendants in the Action shall bear no expenses, costs,
damages or fees alleged or incurred by the Plaintiff, any member of the Class or
their respective attorneys, experts, advisors, agents or representatives; and
(f) the provisions contained in this Memorandum of Understanding shall not be
deemed a presumption, concession or admission by any defendant in the Action of
any breach of duty, liability, default or wrongdoing as to any facts or claims
alleged or asserted in the Action, or in any other actions or proceedings, and
shall not be interpreted, construed, deemed, invoked, offered or received in
evidence or otherwise used by any person in the Action or in any other action or
proceeding of any nature whatsoever.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
Xxxxxx Xxxxxxx
Suite 1401, Mellon Bank Center
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
(000) 000-0000
Attorneys for Plaintiff
Of Counsel:
XXXXXXXXX XXXXXXXX & LIFSHITZ
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
XXXXXX XXXXXXX ARSHT & XXXXXXX
Xxxx X. Xxxxx
Xxxxxxx X. Xxxxxxxx
0000 Xxxxx Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000
Attorneys for Defendant XxXxxxx, R. Xxxx
XxXxxxx, and X.X. XxxXxxxxx
Of Counsel:
SPOLIN & XXXXXXXXX
000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxxxxx, XX 00000
(000) 000-0000
POTTER XXXXXXXX & XXXXXXX LLP
Xxxxxxx X. Xxxxxxx
Xxxx X. Xxxxx
Xxxxxxxx Plaza
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000
Attorneys for Defendants Xxxx X. Xxxxxx,
Xxxxxxxx X. Xxxxx, Xxxxx X. Xxxxxxx, and
Xxxxxxxx X. Xxxxxxx
Of Counsel:
STROOCK & STROOCK & XXXXX LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
(000) 000-0000
XXXXXXXX, XXXXXX & FINGER, P.A.
Xxxxx X. Xxxxxxx, Xx.
Xxxxxxxx X. Xxxx
Xxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000
Attorneys for Defendants Xxxxxxxxx Lufkin Xxxxxxxx, Inc.
and XxXxxxx Acquisition Co.
Of Counsel:
XXXXX XXXX & XXXXXXXX 000 Xxxxxxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000
(000) 000-0000
