Decrane Aircraft Holdings Inc – ‘SC 14D9/A’ on 8/20/98 re: Decrane Aircraft Holdings Inc – EX-10

As of:  Thursday, 8/20/98   ·   Accession #:  1047469-98-32236   ·   File #:  5-52423

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Amendment to Tender-Offer Solicitation/Recommendation Statement   —   Schedule 14D-9
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC 14D9/A   Amendment to Tender-Offer                              9     48K 
                          Solicitation/Recommendation Statement                  
 2: EX-8        Opinion re: Tax Matters                               19    106K 
 3: EX-9        Voting Trust Agreement                                15     38K 
 4: EX-10       Material Contract                                      8     26K 

EX-10   —   Material Contract

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                                                                      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 DeCrane Aircraft Holdings, Inc. ("DeCrane"), members of DeCrane's Board of  
Directors (including directors constituting the special committee ("Special     
Committee")), Donaldson Lufkin Jenrette, Inc. ("DLJ") and DeCrane Acquisition   
Co. ("DeCrane 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 DeCrane and DeCrane 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.                 
v. DeCrane, 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 DeCrane common stock, relating to the proposed  
merger (the "Transaction") of DeCrane into DeCrane Acquisition, as set forth in 
the Merger Agreement; and                                                       

                 WHEREAS, the Action names as defendants DeCrane, DLJ, DeCrane
Acquisition, and individual members of the DeCrane 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 DeCrane 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                

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              WHEREAS, counsel for the parties believe that the proposed
Settlement is in the best interests of the public shareholders of DeCrane;      

      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 DeCrane is legally required to do so,
DeCrane 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 DeCrane.                         

          b. DeCrane 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 DeCrane's then-chief financial officer relating to the fairness opinion      
received by DeCrane from its financial advisor.                                 

          c. DeCrane 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 DeCrane.                       

          d. DeCrane also agrees that it will promptly amend the
Schedule 14D-9 to include information regarding the financial results of DeCrane
for the quarter ended June 30, 1998.                                            

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                  e. DeCrane agrees that it will mail the amended Schedule 14D-9
to DeCrane shareholders as soon as practicable.                                 

          f. Reasonably promptly following the execution of this
Memorandum of Understanding by the parties, DeCrane shall publicly disclose the 
terms of the proposed Settlement set forth herein in a manner deemed reasonable 
by DeCrane.                                                                     

                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 DeCrane 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        
DeCrane, the DeCrane Board (including each member of the DeCrane Board), DLJ or 
DeCrane 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 DeCrane and all its         
shareholders; and that any of the defendants shall have the right to withdraw   
from the                                                                        

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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 DeCrane shareholders as to all claims asserted in the
Action by the named Plaintiff and the shareholders of DeCrane on whose behalf   
the Action was brought, without costs to any party except as provided herein.   
DeCrane shall pay the costs and expenses related to providing notice of the     
Settlement to the DeCrane 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 DeCrane to Bernstein Liebhard & 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                                                 

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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.                                                                 

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Norman Monhait                                                                  
Suite 1401, Mellon Bank Center                                                  
P.O. Box 1070                                                                   
Wilmington, DE 19899-1070                                                       
(302) 656-4433                                                                  
Attorneys for Plaintiff                                                         

Of Counsel:                                                                     

BERNSTEIN LIEBHARD & LIFSHITZ                                                   
274 Madison Avenue                                                              
New York, New York 10016                                                        
(212) 779-1414                                                                  

MORRIS NICHOLS ARSHT & TUNNELL                                                  

Alan J. Stone                                                                   
William J. Lafferty                                                             
1201 North Market Street                                                        
P.O. Box 1347                                                                   

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Wilmington, Delaware 19899                                                      
(302) 658-9200                                                                  
                        Attorneys for Defendant DeCrane, R. Jack
           DeCrane, and R.G. MacDonald

Of Counsel:                                                                     

SPOLIN & SILVERMAN                                                              
100 Wilshire Boulevard                                                          
Suite 940                                                                       
Santa Monica, CA 90401                                                          
(310) 576-1221                                                                  

POTTER ANDERSON & CORROON LLP                                                   

Michael D. Goldman                                                              
John E. James                                                                   
Hercules Plaza                                                                  
P.O. Box 951                                                                    
Wilmington, Delaware 19899                                                      
(302) 984-6000                                                                  
                        Attorneys for Defendants Paul H. Cascio,
                        Mitchell I. Quain, James R. Bergman, and
   Jonathan A. Sweemer

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Of Counsel:                                                                     

STROOCK & STROOCK & LAVAN LLP                                                   
180 Maiden Lane                                                                 
New York, New York 10038-4982                                                   
(212) 806-5400                                                                  

RICHARDS, LAYTON & FINGER, P.A.                                                 

Allen M. Terrell, Jr.                                                           
Srinivas M. Raju                                                                
One Rodney Square                                                               
P.O. Box 551                                                                    
Wilmington, Delaware 19899                                                      
(302) 658-6541                                                                  

Attorneys for Defendants Donaldson Lufkin Jenrette, Inc.                        
and DeCrane Acquisition Co.                                                     

Of Counsel:                                                                     

DAVIS POLK & WARDWELL 450 Lexington Avenue New York, New York 10017             
(212) 450-4000                                                                  

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘SC 14D9/A’ Filing		Date		First		Last			Other Filings
Filed on:		8/20/98							SC 14D1/A
		8/18/98		1
		7/22/98		2					SC 14D1,  SC 14D9
		7/16/98		1		3			8-K
		6/30/98		2					10-Q
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