**Exhibit 4.3.2**

 

DeCrane Holdings Co.

 

Warrants to Purchase

155,000 Shares of Common Stock

 

Warrant Agreement

 

Dated as of October 5, 1998

 

State Street Bank And Trust Company

 

Warrant Agent

 

 

WARRANT AGREEMENT, dated as of October 5, 1998,between DeCrane Holdings Co., a Delaware corporation (the ***“Company”***), and StateStreet Bank and Trust Company, as warrant agent (the ***“Warrant Agent”***).

 

WHEREAS, the Company proposes to issue warrants (the ***“Warrants”***) toinitially purchase up to an aggregate of 155,000 shares of Common Stock, parvalue $.01 per share (the ***“CommonStock”***), of the Company (the Common Stock issuable on exerciseof the Warrants being referred to herein as the ***“Warrant Shares”***), in connection withthe offering (the ***“Offering”****)* by DeCrane Aircraft Holdings, Inc. (***“DeCrane”***) of 100,000Units (the ***“Units”***),each consisting of $1,000 principal amount at maturity of DeCrane’s 12% SeniorSubordinated Notes due 2008 (the ***“Notes”***) and one Warrant, each Warrantinitially representing the right to purchase 1.55 Warrant Shares.

 

WHEREAS, the Company desires the Warrant Agent to acton behalf of the Company, and the Warrant Agent is willing so to act inconnection with the issuance of Warrant Certificates (as defined) and othermatters as provided herein.

 

NOW, THEREFORE, in consideration of the premises andthe mutual agreements herein set forth, the parties hereto agree as follows:

 

**SECTION 1.         CERTAIN DEFINITIONS.**

 

As used in this Agreement, the following terms shallhave the following respective meanings:

*** ***

***“144A Global Warrant”*** means a globalWarrant substantially in the form of Exhibit A hereto bearing the GlobalWarrant Legend and the Private Placement Legend and deposited with or on behalfof, and registered in the name of, the Depositary or its nominee.

*** ***

***“Affiliate”*** of any Person means anyother Person directly or indirectly controlling or controlled by or underdirect or indirect common control with such Person. For purposes of thisdefinition, “control” (including, with correlative meanings, the terms “controlling,”“controlled by” and “under common control with”), as used with respect to anyPerson shall mean the possession, directly or indirectly, of the power todirect or cause the direction of the management or policies of such specifiedPerson, whether through the ownership of voting securities, by agreement orotherwise; *provided* thatbeneficial ownership of 10% or more of the voting securities of a Person shallbe deemed to be control.

** **

***“Applicable Procedures”*** means, withrespect to any transfer or exchange of or for beneficial interests in anyGlobal Warrant, the rules and procedures of the Depositary, Euroclear and CedelBank that apply to such transfer or exchange.

** **

***“Business Day”*** means any day otherthan a Legal Holiday.

** **

***“Cedel Bank”*** means Cedel Bank, SA.

** **

***“Closing Date”***means the date hereof.

** **

***“Commission”*** means the Securities andExchange Commission.

** **

***“Depositary”*** means, with respect tothe Warrants issuable or issued in whole or in part in global form, the Personspecified in Section 3.3 hereof as the Depositary with respect to the Warrants,and any and all successors thereto appointed as Depositary hereunder and havingbecome such pursuant to the applicable provision of the Indenture.

 

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***“Euroclear”*** means Morgan GuarantyTrust Company of New York, Brussels office, as operator of the Euroclearsystem.

*** ***

***“Exchange Act”*** means the SecuritiesExchange Act of 1934, as amended.

*** ***

***“Global Warrants”*** means, individuallyand collectively, each of the Restricted Global Warrants and the UnrestrictedGlobal Warrants, substantially, in the form of Exhibit A hereto issued inaccordance with Section 3.1(b) and 3.5 hereof.

*** ***

***“Global Warrant Legend”*** means thelegend set forth in Section 3.5(g)(ii), which is required to be placed on allGlobal Warrants issued under this Warrant Agreement.

 

***“Holder”*** means a person who is listedas the record owner of Registrable Securities.

 

***“IAI Global Warrant”*** means the globalWarrant substantially in the form of Exhibit A hereto bearing the GlobalWarrant Legend and the Private Placement Legend and deposited with or on behalfof and registered in the name of the Depositary or its nominee.

*** ***

***“Indenture”*** means the indenture, datedthe date hereof, between the DeCrane and State Street Bank and Trust Company,as trustee relating to the Notes.

*** ***

***“Indirect Participant”***means a Personwho holds a beneficial interest in a Global Warrant through a Participant.

*** ***

***“Initial Purchaser***” means Donaldson,Lufkin & Jenrette Securities Corporation.

*** ***

***“Institutional Accredited Investor”***means an institution that is an “accredited investor” as defined in Rule501(a)(1), (2), (3) or (7) under the Securities Act, which is not also a QIB.

*** ***

***“Legal Holiday”*** means a Saturday, aSunday or a day on which banking institutions in the City of New York or at aplace of payment are authorized by law, regulation or executive order to remainclosed. If a payment date is a Legal Holiday at a place of payment, Payment maybe made at that place on the next succeeding day that is not a Legal Holiday,and no interest shall accrue on such payment for the intervening period.

*** ***

***“Non-U.S. Person”*** means a Person whois not a U.S. Person.

*** ***

***“Officer”*** means, with respect to anyPerson, the Chairman of the Board, the Chief Executive Officer, the President,the Chief Operating Officer, the Chief Financial Officer, the Treasurer, anyAssistant Treasurer, the Controller, the Secretary or any Vice-President ofsuch Person.

 

***“Opinion of Counsel”*** means an opinionfrom legal counsel who is reasonably acceptable to the Warrant Agent in formand substance reasonably acceptable to the Warrant Agent. The counsel may be anemployee of or counsel to the Company, any subsidiary of the Company or theWarrant Agent.

 

***“Participant”*** means, with respect to theDepositary, Euroclear or Cedel, a Person who has an account with theDepositary, Euroclear or Cedel, respectively (and, with respect to TheDepository Trust Company, shall include Euroclear and Cedel).

 

***“Person”*** means any individual,corporation, partnership, joint venture, association, joint-stock company,trust, unincorporated organization or government or any agency or politicalsubdivision

 

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thereof, including any subdivision or ongoing business of any suchentity or substantially all of the assets of any such entity, subdivision orbusiness.

 

***“Private Placement Legend”*** means thelegend set forth in Section 3.5(g)(i) to be placed on all Warrants issued underthis Warrant Agreement except where otherwise permitted by the provisions ofthis Warrant Agreement.

*** ***

***“QIB”*** means a “qualified institutionalbuyer” as defined in Rule 144A.

*** ***

***“Registrable Securities”*** shall meanthe Warrants, the Warrant Shares and any other securities issued or issuablewith respect to the Warrants or the Warrant Shares by way of a stock dividendor stock split or in connection with a combination of shares, recapitalization,merger, consolidation or other reorganization; provided that a security ceasesto be a Registrable Security when it is no longer a Transfer RestrictedSecurity. The Registrable Securities are entitled to the benefits of theWarrant Registration Rights Agreement.

*** ***

***“Regulation S”*** means Regulation Spromulgated under the Securities Act.

*** ***

***“Regulation S Global Warrant”*** means aglobal Warrant in the form of Exhibit A hereto bearing the Global WarrantLegend, the Private Placement Legend and the Regulation S Legend and depositedwith or on behalf of and registered in the name of the Depositary or itsnominee.

*** ***

***“Regulation S Legend”*** means the legendset forth in Section 3.5(g)(iv) to be placed on all Registrable Securitiesissued pursuant to Regulation S.

*** ***

***“Restricted Definitive Warrant”*** meansa Definitive Warrant bearing the Private Placement Legend.

*** ***

***“Restricted Global Warrant”*** means aGlobal Warrant bearing the Private Placement Legend.

*** ***

***“Rule 144”*** means Rule 144 promulgatedunder the Securities Act.

*** ***

***“Rule 144A”*** means Rule 144Apromulgated under the Securities Act.

*** ***

***“Rule 903”*** means Rule 903 promulgatedunder the Securities Act.

*** ***

***“Rule 904”*** means Rule 904 promulgatedunder the Securities Act.

*** ***

***“Securities Act***” means the SecuritiesAct of 1933, as amended.

*** ***

***“Separation Date”*** means the earliestof (i) 180 days after the closing of the Offering, (ii) the date on which aregistration statement with respect to a registered exchange offer for theNotes is declared effective under the Securities Act, (iii) the date a shelfregistration statement with respect to the Notes is declared effective underthe Securities Act, (iv) such date as Donaldson, Lufkin & JenretteSecurities Corporation in its sole discretion shall determine and (v) theoccurrence of a Change of Control (as defined in the Indenture).

 

***“Transfer Restricted Securities”*** shallmean (a) each Warrant and Warrant Share held by an Affiliate of the Issuer and(b) each other Warrant and Warrant Share until the earlier to occur of (i) thedate on which such Warrant or Warrant Share (other than any Warrant Shareissued upon exercise of a Warrant in accordance with a Registration Statement(as defined in the Warrant Registration Rights Agreement has been disposed ofin accordance with a Registration Statement and (ii) the date on which 

 

 

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such Warrant or Warrant Share (or the related Warrant) is distributedto the public Pursuant to Rule 144 under the Act.

*** ***

***“Trustee”*** means the trustee under theIndenture.

*** ***

***“Unrestricted Global Warrant”*** means aglobal Warrant substantially in the form of Exhibit A attached hereto thatbears the Global Warrant Legend and that has the “Schedule of Exchanges ofInterests in the Global Warrant” attached thereto, and that is deposited withor on behalf of and registered in the name of the Depositary, representing aseries of Warrants that do not bear the Private Placement Legend.

*** ***

***“Unrestricted Definitive Warrant”***means one or more Definitive Warrants that do not bear and are not required tobear the Private Placement Legend.

*** ***

***“U.S. Person”***means a U.S. Person asdefined in Rule 902(o) under the Securities Act.

*** ***

***“Warrant Registration Rights Agreement”***means the registration rights agreement, dated as of October S, 1998, by andamong the Company and the Initial Purchaser relating to the Warrants and theWarrant Shares.

 

**SECTION 2.         APPOINTMENT OF WARRANT AGENT.**

 

The Company hereby appoints the Warrant Agent to actas agent for the Company in accordance with the instructions set forthhereinafter in this Agreement and the Warrant Agent hereby accepts suchappointment.

 

**SECTION 3.         ISSUANCE OF WARRANTS; WARRANT CERTIFICATES.**

 

**3.1.         Form AndDating.**

 

*(a)          General.*

 

The Warrants shall be substantially in the form ofExhibit A hereto (the ***“WarrantCertificates”***). The Warrants may have notations, legends orendorsements required by law, stock exchange rule or usage. Each Warrant shallbe dated the date of the countersignature.

 

The terms and provisions contained in the Warrantsshall constitute, and are hereby expressly made, a part of this WarrantAgreement. The Company and the Warrant Agent, by their execution and deliveryof this Warrant Agreement, expressly agree to such terms and provisions and tobe bound thereby. However, to the extent any provision of any Warrant conflictswith the express provisions of this Warrant Agreement, the provisions of thisWarrant Agreement shall govern and be controlling.

 

*(b)          Global Warrants.*

 

Warrants issued in global form shall be substantiallyin the form of Exhibit A attached hereto (including the Global Warrant Legendthereon and the “Schedule of Exchanges of Interests in the Global Warrant”attached thereto). Warrants issued in definitive form shall be substantially inthe form of Exhibit A attached hereto (but without the Global Warrant Legendthereon and without the “Schedule of Exchanges of Interests in the GlobalWarrant” attached thereto). Each Global Warrant shall represent such of theoutstanding Warrants as shall be specified therein and each shall provide thatit shall represent the number of outstanding Warrants from time to timeendorsed thereon and that the number of outstanding Warrants representedthereby may from time to time be reduced or increased, as appropriate, toreflect exchanges and redemptions. Any endorsement of a Global Warrant toreflect the amount of any increase or

 

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decrease in the number of outstanding Warrants represented therebyshall be made by the Warrant Agent in accordance with instructions given by theHolder thereof as required by Section 3.5 hereof.

 

(c)           *Euroclear and Cedel Procedures Applicable.*

 

The provisions of the “Operating Procedures of theEuroclear System” and “Terms and Conditions Governing Use of Euroclear” and the“General Terms and Conditions of Cedel Bank” and “Customer Handbook” of CedelBank shall be applicable to transfers of beneficial interests in the RegulationS Global Warrant that are held by Participants through Euroclear or Cedel Bank.

 

**3.2.**         **Execution.**

 

An Officer shall sign the Warrants for the Company bymanual or facsimile signature.

 

If the Officer whose signature is on a Warrant nolonger holds that office at the time a Warrant is countersigned, the Warrantshall nevertheless be valid.

 

A Warrant shall not be valid until countersigned bythe manual signature of the Warrant Agent. The signature shall be conclusiveevidence that the Warrant has been properly issued under this WarrantAgreement.

 

The Warrant Agent shall, upon a written order of theCompany signed by an Officer (a ***“Warrant Countersignature Order”***), countersign Warrantsfor original issue up to the number stated in the preamble hereto.

 

The Warrant Agent may appoint an agent acceptable tothe Company to countersign Warrants. Such an agent may countersign Warrantswhenever the Warrant Agent may do so. Each reference in this Warrant Agreementto a countersignature by the Warrant Agent includes a countersignature by suchagent. Such an agent has the same rights as the Warrant Agent to deal with theCompany or an Affiliate of the Company.

 

**3.3.         WarrantRegistrar.**

 

The Company shall maintain an office or agency whereWarrants may be presented for registration of transfer or for exchange (***“Warrant Registrar”***).The Warrant Registrar shall keep a register of the Warrants and of theirtransfer and exchange. The Company may appoint one or more co-WarrantRegistrars. The term “Warrant Registrar” includes any co-Warrant Registrar. TheCompany may change any Warrant Registrar without notice to any holder. TheCompany shall notify the Warrant Agent in writing of the name and address ofany agent not a party to this Warrant Agreement. If the Company fails toappoint or maintain another entity as Warrant Registrar, the Warrant Agentshall act as such. The Company or any of its subsidiaries may act as WarrantRegistrar.

 

The Company initially appoints The Depository TrustCompany (***“DTC”***)to act as Depositary with respect to the Global Warrants.

 

The Company initially appoints the Warrant Agent toact as the Warrant Registrar with respect to the Global Warrants.

 

**3.4.         HolderLists.**

 

The Warrant Agent shall preserve in as current a formas is reasonably practicable the most recent list available to it of the namesand addresses of all Holders. If the Warrant Agent is not the WarrantRegistrar, the Company shall promptly furnish to the Warrant Agent at suchtimes as the Warrant

 

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 Agent may request in writing, alist in such form and as of such date as the Warrant Agent may reasonablyrequire of the names and addresses of the Holders.

 

**3.5.         TransferAnd Exchange.**

 

*(a)          Transfer and Exchange of GlobalWarrants.*

 

A Global Warrant may not be transferred as a wholeexcept by the Depositary to a nominee of the Depositary, by a nominee of theDepositary to the Depositary or to another nominee of the Depositary, or by theDepositary or any such nominee to a Successor Depositary or a nominee of suchsuccessor Depositary. All Global Warrants will be exchanged by the Company forDefinitive Warrants if (i) the Company delivers to the Warrant Agent noticefrom the Depositary that it is unwilling or unable to continue to act asDepositary or that it is no longer a clearing agency registered under theExchange Act and, in either case, a successor Depositary is not appointed bythe Company within 120 days after the date of such notice from the Depositaryor (ii) the Company in its sole discretion determines that the Global Warrants(in whole but not in Pan) should be exchanged for Definitive Warrants anddelivers a written notice to such effect to the Warrant Agent. Upon theoccurrence of either of the preceding events in (i) or (ii) above, DefinitiveWarrants shall be issued in such names as the Depositary shall instruct theWarrant Agent. Global Warrants also may be exchanged or replaced, in whole orin pan, as provided in Sections 3.6 and 3.7 hereof. A Global Warrant may not beexchanged for another Warrant other than as provided in this Section 3.5(a),however, beneficial interests in a Global Warrant may be transferred andexchanged as provided in Section 3.5(b), (c) or (f) hereof.

 

*(b)          Transfer and Exchange of BeneficialInterests in the Global Warrants.*

 

The transfer and exchange of beneficial interests inthe Global Warrants shall be effected through the Depositary, in accordancewith the provisions of this Warrant Agreement and the Applicable Procedures.Beneficial interests in the Restricted Global Warrants shall be subject torestrictions on transfer comparable to those set forth herein to the extentrequired by the Securities Act Transfers of beneficial interests in the GlobalWarrants also shall require compliance with either subparagraph (i) or (ii)below, as applicable, as well as one or more of the other followingsubparagraphs, as applicable:

 

(i)            Transfer of Beneficial Interests inthe Same Global Warrant. Beneficial interests in any Restricted Global Warrantmay be transferred to Persons who take delivery thereof in the form of abeneficial interest in the same Restricted Global Warrant in accordance withthe transfer restrictions set forth in the Private Placement Legend. Beneficialinterests in any Unrestricted Global Warrant may be transferred to Persons whotake delivery thereof in the form of a beneficial interest in an UnrestrictedGlobal Warrant. No written orders or instructions shall be required to bedelivered to the Warrant Registrar to effect the transfers described in thisSection 3.5(b)(i).

 

(ii)           *AllOther Transfers and*Exchanges*ofBeneficial Interests in Global Warrants.* In connection with alltransfers and exchanges of beneficial interests that are not subject to Section3.5(b)(i) above, the transferor of such beneficial interest must deliver to theWarrant Registrar either (A) (1) a written order from a Participant or anIndirect Participant given to the Depositary in accordance with the ApplicableProcedures directing the Depositary to credit or cause to be credited abeneficial interest in another Global Warrant in an amount equal to thebeneficial interest to be transferred or exchanged and (2) instructions givenin accordance with the Applicable Procedures containing information regardingthe Participant account to be credited with such increase or (B) (1) a writtenorder from a Participant or an Indirect Participant given to the Depositary inaccordance with the Applicable Procedures directing the Depositary to cause to beissued a Definitive Warrant in an amount equal to the beneficial interest to be

 

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transferred or exchanged and (2) instructions given bythe Depositary to the Warrant Registrar containing information regarding thePerson in whose name such Definitive Warrant shall be registered. Uponeffectiveness of the Registration Statement (as defined in the WarrantRegistration Rights Agreement) by the Company in accordance with Section 3.5(f)hereof, the requirements of this Section 3.5(b)(ii) shall be deemed to havebeen satisfied upon receipt by the Warrant Registrar of a certificationrequired by the Company in connection with such Registration Statementdelivered by the Holder of such beneficial interests in the Restricted GlobalWarrants. Upon satisfaction of all of the requirements for transfer or exchangeof beneficial interests in Global Warrants contained in this Agreement and theWarrants or otherwise applicable under the Securities Act, the Warrant Agent shalladjust the principal amount of the relevant Global Warrant(s) pursuant toSection 3.5(h) hereof.

 

(iii)          *Transferof Beneficial Interests to Another Restricted Global Warrant.* Abeneficial interest in any Restricted Global Warrant may be transferred to aPerson who takes delivery thereof in the form of a beneficial interest inanother Restricted Global Warrant if the transfer complies with therequirements of Section 3.5(b)(ii) above and the Warrant Registrar receives thefollowing:

 

(A)          if the transferee will take deliveryin the form of a beneficial interest in the 144A Global Warrant, then thetransferor must deliver a certificate in the form of Exhibit B hereto,including the certifications in item (1) thereof;

 

(B)           if the transferee will take deliveryin the form of a beneficial interest in the Regulation S Global Warrant, thenthe transferor must deliver a certificate in the form of Exhibit B hereto,including the certifications in item (2) thereof; and

 

(C)           if the transferee will take deliveryin the form of a beneficial interest in the IAI Global Warrant, then thetransferor must deliver a certificate in the form of Exhibit B hereto,including the certifications and certificates and Opinion of Counsel requiredby item (3) thereof, if applicable.

 

(iv)          *Transferand Exchange of Beneficial Interests in a Restricted Global Warrant forBeneficial Interests in the Unrestricted Global Warrant.* Abeneficial interest in any Restricted Global Warrant may be exchanged by anyholder thereof for a beneficial interest in an Unrestricted Global Warrant ortransferred to a Person who takes delivery thereof in the form of a beneficialinterest in an Unrestricted Global Warrant if the exchange or transfer complieswith the requirements of Section 3.5(b)(ii) above and:

 

(A)          such transfer is effected pursuant tothe Registration Statement in accordance with the Warrant Registration RightsAgreement; or

 

(B)           the Warrant Registrar receives thefollowing:

 

(1)           if the holder of such beneficialinterest in a Restricted Global Warrant proposes to exchange such beneficialinterest for a beneficial interest in an Unrestricted Global Warrant, acertificate from such holder in the form of Exhibit C hereto, including thecertifications in item (1)(a) thereof; or

 

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(2)           if the holder of such beneficialinterest in a Restricted Global Warrant proposes to transfer such beneficialinterest to a Person who shall take delivery thereof in the form of abeneficial interest in an Unrestricted Global Warrant, a certificate from suchholder in the form of Exhibit B hereto, including the certifications in item(4) thereof;

 

and, in each such case set forth in this subparagraph(B), if the Warrant Registrar so requests or if the Applicable Procedures sorequire, an Opinion of Counsel in form reasonably acceptable to the WarrantRegistrar to the effect that such exchange or transfer is in compliance withthe Securities Act and that the restrictions on transfer contained herein andin the Private Placement Legend are no longer required in order to maintaincompliance with the Securities Act.

 

If any such transfer is effected pursuant tosubparagraph (B) above at a time when an Unrestricted Global Warrant has notyet been issued, the Company shall issue and, upon receipt of an WarrantCountersignature Order in accordance with Section 3.2 hereof, the Warrant Agentshall countersign one or more Unrestricted Global Warrants in the number equalto the number of beneficial interests transferred pursuant to subparagraph (B)above.

 

*(c)           Transfer and Exchange of BeneficialInterests for Definitive Warrants.*

 

(i)            *BeneficialInterests in Restricted Global Warrants to Restricted Definitive Warrants.*If any holder of a beneficial interest in a Restricted Global Warrant proposesto exchange such beneficial interest for a Restricted Definitive Warrant or totransfer such beneficial interest to a Person who takes delivery thereof in theform of a Restricted Definitive Warrant, then, upon receipt by the WarrantRegistrar of the following documentation:

 

(A)          if the holder of such beneficialinterest in a Restricted Global Warrant proposes to exchange such beneficialinterest for a Restricted Definitive Warrant, a certificate from such holder inthe form of Exhibit C hereto, including the certifications in item (2)(a)thereof;

 

(B)           if such beneficial interest is beingtransferred to a QIB in accordance with Rule 144A under the Securities Act, acertificate to the effect set forth in Exhibit B hereto, including thecertifications in item (1) thereof;

 

(C)           if such beneficial interest is beingtransferred to a Non-U.S. Person in an offshore transaction in accordance withRule 903 or Rule 904 under the Securities Act, a certificate to the effect setforth in Exhibit B hereto, including the certifications in item (2) thereof;

 

(D)          if such beneficial interest is beingtransferred pursuant to an exemption from the registration requirements of theSecurities Act in accordance with Rule 144 under the Securities Act, acertificate to the effect set forth in Exhibit B hereto, including thecertifications in item (3)(a) thereof;

 

(E)           if such beneficial interest is beingtransferred to an Institutional Accredited Investor in reliance on an exemptionfrom the registration requirements of the Securities Act other than thoselisted in subparagraphs (B) through (D) above, a certificate to the effect setforth in Exhibit B hereto, including the certifications, certificates andOpinion of Counsel required by item (3) thereof, if applicable;

 

 

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(F)           if such beneficial interest is beingtransferred to the Company or any of its Subsidiaries, a certificate to theeffect set forth in Exhibit B hereto, including the certifications in item(3)(b) thereof; or

 

(G)           if such beneficial interest is beingtransferred pursuant to an effective registration statement under theSecurities Act, a certificate to the effect set forth in Exhibit B hereto,including the certifications in item (3)(c) thereof,

 

the Warrant Agent shall cause, in accordance with thestanding instructions and procedures existing between the Depositary and theWarrant Agent, the number of Warrants represented by the Global Warrant to bereduced by the number of Warrants to be represented by the Definitive Warrantpursuant to Section 3.5(h) hereof, and the Company shall execute and theWarrant Agent shall countersign and deliver to the Person designated in theinstructions a Definitive Warrant in the appropriate amount. Any DefinitiveWarrant issued in exchange for a beneficial interest in a Restricted GlobalWarrant pursuant to this Section 3.5(c) shall be registered in such name ornames as the holder of such beneficial interest shall instruct the WarrantRegistrar through instructions from the Depositary and the Participant orIndirect Participant. The Warrant Agent shall deliver such Definitive Warrantsto the Persons in whose names such Warrants are so registered. Any DefinitiveWarrant issued in exchange for a beneficial interest in a Restricted GlobalWarrant pursuant to this Section 3.5(c)(i) shall bear the Private PlacementLegend and shall be subject to all restrictions on transfer contained therein.

 

(ii)           Beneficial Interests in RestrictedGlobal Warrants to Unrestricted Definitive Warrants. A holder of a beneficialinterest in a Restricted Global Warrant may exchange such beneficial interestfor an Unrestricted Definitive Warrant or may transfer such beneficial interestto a Person who takes delivery thereof in the form of an Unrestricted DefinitiveWarrant only if:

 

(A)          such transfer is effected pursuant tothe Registration Statement in accordance with the Warrant Registration RightsAgreement; or

 

(B)           the Warrant Registrar receives thefollowing:

 

(1)           if the holder of such beneficialinterest in a Restricted Global Warrant proposes to exchange such beneficialinterest for a Definitive Warrant that does not bear the Private PlacementLegend, a certificate from such holder in the form of Exhibit C hereto,including the certifications in item (1)(b) thereof; or

 

(2)           if the holder of such beneficialinterest in a Restricted Global Warrant proposes to transfer such beneficialinterest to a Person who shall take delivery thereof in the form of aDefinitive Warrant that does not bear the Private Placement Legend, acertificate from such holder in the form of Exhibit B hereto, including thecertifications in item (4) thereof;

 

and, in each such case set forth in this subparagraph(B), if the Warrant Registrar so requests or if the Applicable Procedures sorequire, an Opinion of Counsel in form reasonably acceptable to the WarrantRegistrar to the effect that such exchange or transfer is in compliance withthe Securities Act and that the restrictions on transfer

 

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contained herein and in the Private Placement Legendare no longer required in order to maintain compliance with the Securities Act.

 

(iii)          *BeneficialInterests in Unrestricted Global Warrants to Unrestricted Definitive Warrants.*If any holder of a beneficial interest in an Unrestricted Global Warrantproposes to exchange such beneficial interest for a Definitive Warrant or totransfer such beneficial interest to a Person who takes delivery thereof in theform of a Definitive Warrant, then, upon satisfaction of the conditions setforth in Section 3.5(b)(ii) hereof, the Warrant Agent shall cause the amount ofthe applicable Global Warrant to be reduced accordingly pursuant to Section3.5(h) hereof, and the Company shall execute and the Warrant Agent shallcountersign and deliver to the Person designated in the instructions aDefinitive Warrant in the appropriate principal amount. Any Definitive Warrantissued in exchange for a beneficial interest pursuant to this Section3.5(c)(iii) shall be registered in such name or names and in such authorizeddenomination or denominations as the holder of such beneficial interest shallinstruct the Warrant Registrar through instructions from the Depositary and theParticipant or Indirect Participant. The Warrant Agent shall deliver suchDefinitive Warrants to the Persons in whose names such Warrants are soregistered. Any Definitive Warrant issued in exchange for a beneficial interestpursuant to this Section 3.5(c)(iii) shall not bear the Private Placement Legend.

 

*(d)          Transfer and Exchange of DefinitiveWarrants for Beneficial Interests.*

 

(i)            *RestrictedDefinitive Warrants to Beneficial Interests in Restricted Global Warrants.*Ifany Holder of a Restricted Definitive Warrant proposes to exchange such Warrantfor a beneficial interest in a Restricted Global Warrant or to transfer suchRestricted Definitive Warrants to a Person who takes delivery thereof in theform of a beneficial interest in a Restricted Global Warrant, then, uponreceipt by the Warrant Registrar of the following documentation:

 

(A)          if the Holder of such RestrictedDefinitive Warrant proposes to exchange such Warrant for a beneficial interestin a Restricted Global Warrant, a certificate from such Holder in the form ofExhibit C hereto, including the certifications in item (2)(b) thereof;

 

(B)           if such Restricted Definitive Warrantis being transferred to a QIB in accordance with Rule 144A under the SecuritiesAct, a certificate to the effect set forth in Exhibit B hereto, including thecertifications in item (1) thereof;

 

(C)           if such Restricted Definitive Warrantis being transferred to a Non-U.S. Person in an offshore transaction inaccordance with Rule 903 or Rule 904 under the Securities Act, a certificate tothe effect set forth in Exhibit B hereto, including the certifications in item(2) thereof;

 

(D)          if such Restricted Definitive Warrantis being transferred pursuant to an exemption from the registrationrequirements of the Securities Act in accordance with Rule 144 under theSecurities Act, a certificate to the effect set forth in Exhibit B hereto,including the certifications in item (3)(a) thereof;

 

(E)           if such Restricted Definitive Warrantis being transferred to an Institutional Accredited Investor in reliance on anexemption from the

 

 

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registration requirements of the Securities Act otherthan those listed in subparagraphs (B) through (D) above, a certificate to theeffect set forth in Exhibit B hereto, including the certifications, certificatesand Opinion of Counsel required by item (3) thereof, if applicable;

 

(F)           if such Restricted Definitive Warrantis being transferred to the Company or any of its Subsidiaries, a certificateto the effect set forth in Exhibit B hereto, including the certifications initem (3)(b) thereof; or

 

(G)              if such Restricted DefinitiveWarrant is being transferred pursuant to an effective registration statementunder the Securities Act, a certificate to the effect set forth in Exhibit Bhereto, including the certifications in item (3)(c) thereof,

 

the Warrant Agent shall cancel the RestrictedDefinitive Warrant, increase or cause to be increased the amount of, in thecase of clause (A) above, the appropriate Restricted Global Warrant, in thecase of clause (B) above, the 144A Global Warrant, in the case of clause (C)above, the Regulation S Global Warrant, and in all other cases, the IAI GlobalWarrant.

 

(ii)           *RestrictedDefinitive Warrants to Beneficial Interests in Unrestricted Global Warrants.*A Holder of a Restricted Definitive Warrant may exchange such Warrant for abeneficial interest in an Unrestricted Global Warrant or transfer suchRestricted Definitive Warrant to a Person who takes delivery thereof in theform of a beneficial interest in an Unrestricted Global Warrant only if:

 

(A)          such transfer is effected pursuant tothe Registration Statement in accordance with the Registration RightsAgreement; or

 

(B)           the Warrant Registrar receives thefo1lowing:

 

(1)           if the Holder of such DefinitiveWarrants proposes to exchange such Warrants for a beneficial interest in theUnrestricted Global Warrant, a certificate from such Holder in the form ofExhibit C hereto, including the certifications in item (1)(c) thereof; or

 

(2)           if the Holder of such DefinitiveWarrants proposes to transfer such Warrants to a Person who shall take deliverythereof in the form of a beneficial interest in the Unrestricted GlobalWarrant, a certificate from such Holder in the form of Exhibit B hereto,including the certifications in item (4) thereof;

 

and, in each such case set forth in this subparagraph(D), if the Warrant Registrar so requests or if the Applicable Procedures sorequire, an Opinion of Counsel in form reasonably acceptable to the WarrantRegistrar to the effect that such exchange or transfer is in compliance withthe Securities Act and that the restrictions on transfer contained herein andin the Private Placement Legend are no longer required in order to maintaincompliance with the Securities Act.

 

Upon satisfaction of the conditions of any of thesubparagraphs in this Section 3.5(d)(ii), the Warrant Agent shall cancel theDefinitive Warrants and increase or cause to be increased the aggregateprincipal amount of the Unrestricted Global Warrant.

 

 

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(iii)          Unrestricted Definitive Warrants toBeneficial Interests in Unrestricted Global Warrants. A Holder of anUnrestricted Definitive Warrant may exchange such Warrant for a beneficialinterest in an Unrestricted Global Warrant or transfer such Definitive Warrantsto a Person who takes delivery thereof in the form of a beneficial interest inan Unrestricted Global Warrant at any time. Upon receipt of a request for suchan exchange or transfer, the Warrant Agent shall cancel the applicableUnrestricted Definitive Warrant and increase or cause to be increased theamount of one of the Unrestricted Global Warrants.

 

If any such exchange or transfer from a DefinitiveWarrant to a beneficial interest is effected pursuant to subparagraphs (ii)(B)or (iii) above at a time when an Unrestricted Global Warrant has not yet beenissued, the Company shall issue and, upon receipt of an WarrantCountersignature Order in accordance with Section 3.2 hereof, the Warrant Agentshall countersign one or more Unrestricted Global Warrants in the number equalto the number of beneficial interests of Definitive Warrants so transferred.

 

*(e)           Transfer and Exchange of DefinitiveWarrants for Definitive Warrants.*

 

Upon request by a Holder of Definitive Warrants andsuch Holder’s compliance with the provisions of this Section 3.5(e), theWarrant Registrar shall register the transfer or exchange of DefinitiveWarrants. Prior to such registration of transfer or exchange, the requestingHolder shall present or surrender to the Warrant Registrar the DefinitiveWarrants duly endorsed or accompanied by a written instruction of transfer inform satisfactory to the Warrant Registrar duly executed by such Holder or byits attorney, duly authorized in writing. In addition, the requesting Holdershall provide any additional certifications, documents and information, asapplicable, required pursuant to the following provisions of this Section3.5(e).

 

(i)            *RestrictedDefinitive Warrants to Restricted Definitive Warrants.*Any RestrictedDefinitive Warrant may be transferred to and registered in the name of Personswho take delivery thereof in the form of a Restricted Definitive Warrant if theWarrant Registrar receives the following:

 

(A)          if the transfer will be made pursuantto Rule 144A under the Securities Act, then the transferor must deliver acertificate in the form of Exhibit B hereto, including the certifications initem (1) thereof;

 

(B)           if the transfer will be made pursuantto Rule 903 or Rule 904, then the transferor must deliver a certificate in theform of Exhibit B hereto, including the certifications in item (2) thereof; or

 

(C)           if the transfer will be made pursuantto any other exemption from the registration requirements of the SecuritiesAct, then the transferor must deliver a certificate in the form of Exhibit Bhereto, including the certifications, certificates and Opinion of Counselrequired by item (3) thereof, if applicable.

 

(ii)           *RestrictedDefinitive Warrants to Unrestricted Definitive Warrants.* AnyRestricted Definitive Warrant may be exchanged by the Holder thereof for anUnrestricted Definitive Warrant or transferred to a Person or Persons who takedelivery thereof in the form of an Unrestricted Definitive Warrant if:

 

(A)          any such transfer is effected pursuantto the Registration Statement in accordance with the Warrant RegistrationRights Agreement; or

 

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(B)           the Warrant Registrar receives thefollowing:

 

(1)           if the Holder of such RestrictedDefinitive Warrants proposes to exchange such Warrants for an UnrestrictedDefinitive Warrant, a certificate from such Holder in the form of Exhibit Chereto, including the certifications in item (1)(d) thereof; or

 

(2)           if the Holder of such RestrictedDefinitive Warrants proposes to transfer such Warrants to a Person who shalltake delivery thereof in the form of an Unrestricted Definitive Warrant, acertificate from such Holder in the form of Exhibit B hereto, including thecertifications in item (4) thereof;

 

and, in each such case set forth in this subparagraph(B), if the Warrant Registrar so requests, an Opinion of Counsel in formreasonably acceptable to the Company to the effect that such exchange ortransfer is in compliance with the Securities Act and that the restrictions ontransfer contained herein and in the Private Placement Legend are no longerrequired in order to maintain compliance with the Securities Act.

 

(iii)          *Unrestricted Definitive Warrants to UnrestrictedDefinitive Warrants.* A Holder of Unrestricted Definitive Warrantsmay transfer such Warrants to a Person who takes delivery thereof in the formof an Unrestricted Definitive Warrant Upon receipt of a request to registersuch a transfer, the Warrant Registrar shall register the Unrestricted DefinitiveWarrants pursuant to the instructions from the Holder thereof.

 

*(f)            Registration Statement.*

 

Upon the effectiveness of the Registration Statementand sales of Warrants in connection therewith in accordance with the WarrantRegistration Rights Agreement, the Company shall issue and, upon receipt of aWarrant Countersignature Order in accordance with Section 3.2, the WarrantAgent shall countersign (i) one or more Unrestricted Global Warrants in anamount equal to the amount of the beneficial interests in the Restricted GlobalWarrants sold under such Registration Statement and (ii) Definitive Warrants inan amount equal to the amount of the beneficial interests of the RestrictedDefinitive Warrants sold under such Registration Statement. Concurrently with theissuance of such Warrants, the Warrant Agent shall cause the amount of theapplicable Restricted Global Warrants to be reduced accordingly, and theCompany shall execute and the Warrant Agent shall countersign and deliver tothe Persons designated by the Holders of Definitive Warrants so acceptedDefinitive Warrants in the appropriate amount.

 

(g)           Legends.

 

The following legends shall appear on the face of allGlobal Warrants and Definitive Warrants issued under this Warrant Agreementunless specifically stated otherwise in the applicable provisions of thisWarrant Agreement.

 

(i)            *PrivatePlacement Legend.*

 

(A)          Except as permitted by subparagraph(B) below, each Global Warrant and each Definitive Warrant (and all Warrantsissued in exchange therefor or substitution thereof) shall bear the legend insubstantially the following form:

 

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“THIS SECURITY (OR ITSPREDECESSOR) AND THE WARRANT SHARES TO BE ISSUED UPON ITS EXERCISE HAVE NOTBEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OROTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT ORBENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITSACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:

 

(1)           REPRESENTS THAT (A) IT IS A“QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIESACT) (A “QIB”), (B) IT HAS ACQUIRED THIS SECURITY IN AN OFFSHORE TRANSACTION INCOMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS ANINSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501(A)(l), (2), (3) OR(7) OF REGULATION D UNDER THE SECURITIES ACT (AN “IAI”),

 

(2)           AGREES THAT IT WILL NOT RESELL OROTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITSSUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIBPURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTIONMEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETINGTHE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSATIONMEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURTIES ACT, (E) TO AN IAITHAT, PRIOR TO SUCH TRANSFER, FURNISHES THE WARRANT AGENT A SIGNED LETTERCONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OFTHIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE WARRANT AGENT) AND,IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITYLESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCHTRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITHANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (ANDBASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TOAN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THEAPPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHERAPPLICABLE JURISDICTION,

 

(3)           AGREES NOT TO ENGAGE IN HEDGINGTRANSACTIONS UNLESS IN COMPLIANCE WITH THE SECURITIES ACT AND

 

(4)           AGREES THAT IT WILL DELIVER TO EACHPERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICESUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

 

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AS USED HEREIN, THE TERMS“OFFSHORE TRANSACTION” AND “UNITED STATES” HAVE THE MEANINGS GIVEN TO THEM BYRULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE WARRANT AGREEMENTCONTAINS A PROVISION REQUIRING THE WARRANT AGENT TO REFUSE TO REGISTER ANYTRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING.”

 

(B)           Notwithstanding the foregoing, anyGlobal Warrant or Definitive Warrant issued pursuant to subparagraphs (b)(iv),(c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section3.5 (and all Warrants issued in exchange therefor or substitution thereof)shall not bear the Private Placement Legend.

 

(ii)           *GlobalWarrant Legend.*Each Global Warrant shall bear a legend insubstantially the following form:

 

“THIS GLOBAL WARRANT ISHELD BY THE DEPOSITARY (AS DEFINED IN THE WARRANT AGREEMENT GOVERNING THISWARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERSHEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT(I) THE WARRANT AGENT MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIREDPURSUANT TO SECTION 3.5 OF THE WARRANT AGREEMENT, (II) THIS GLOBAL WARRANT MAYBE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 3.5(A) OF THE WARRANTAGREEMENT, (III) THIS GLOBAL WARRANT MAY BE DELIVERED TO THE WARRANT AGENT FORCANCELLATION PURSUANT TO SECTION 3.8 OF THE WARRANT AGREEMENT AND (IV) THISGLOBAL WARRANT MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIORWRI1TEN CONSENT OF THE COMPANY.”

 

(iii)          *UnitLegend* Each Warrant issued prior to the Separation Date shall bear alegend in substantially the following form:

 

“THE WARRANTS EVIDENCEDBY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN ISSUANCE OF UNITS (THE“UNITS”), EACH OF WHICH CONSIST OF $1,000 PRINCIPAL AMOUNT AT MATURITY OF THE12% SENIOR SUBORDINATED NOTES DUE 2008 OF DECRANE AIRCRAFT HOLDINGS, INC. (THE“NOTES”) AND ONE WARRANT (THE “WARRANTS”) INITIALLY ENTITLING THE HOLDERTHEREOF TO PURCHASE 1.55 SHARES, PAR VALUE $0.01 PER SHARE, OF DECRANE HOLDINGSCO.

 

PRIOR TO THE EARLIEST TOOCCUR OF (I) 180 DAYS AFTER THE CLOSING OF THE OFFERING OF THE UNITS, (II) THEDATE ON WHICH A REGISTRATION STATEMENT WITH RESPECT TO A REGISTERED EXCHANGEOFFER FOR THE NOTES IS DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (III) THEDATE A SHELF REGISTRATION STATEMENT WITH RESPECT TO THE NOTES IS DECLAREDEFFECTIVE UNDER THE SECURITIES ACT, (IV) SUCH DATE AS DONALDSON, LUFKIN &JENRETTE SECURITIES CORPORATION IN ITS SOLE DISCRETION SHALL DETERMINE AND (V)THE OCCURRENCE OF A CHANGE OF CONTROL (AS DEFINED IN THE INDENTURE GOVERNINGTHE NOTES), THE WARRANTS EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERREDOR EXCHANGED SEPARATELY

 

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FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLYTOGETHER WITH, THE NOTES.”

 

(iv)          *RegulationS. Legend.* Each Warrant that is a Registrable Security and issuedpursuant to Regulation S shall bear the following legend on the fact thereof:

 

“THIS WARRANT AND THESECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THESECURITIES ACT AND THE WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S.PERSON UNLESS REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE“SECURITIES ACT”) OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. IN ORDERTO EXERCISE THIS WARRANT, THE HOLDER MUST FURNISH TO THE COMPANY AND THEWARRANT AGENT EITHER (A) A WRITTEN CERTIFICATION THAT IT IS NOT A U.S. PERSONAND THE WARRANT IS NOT BEING EXERCISED ON BEHALF OF A U.S. PERSON OR (B) A WRITTENOPINION OF COUNSEL TO THE EFFECT THAT THE SECURITIES DELIVERED UPON EXERCISE OFTHE WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OR THAT THE DELIVERYOF SUCH SECURITIES IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THESECURITIES ACT. TERMS IN THIS LEGEND HAVE THE MEANINGS GIVEN TO THEM BYREGULATION S UNDER THE SECURITIES ACT.”

 

*(h)          Cancellation and/ or Adjustment ofGlobal Warrants.*

 

At such time as all beneficial interests in aparticular Global Warrant have been exercised or exchanged for DefinitiveWarrants or a particular Global Warrant has been exercised, redeemed,repurchased or canceled in whole and not in part, each such Global Warrantshall be returned to or retained and canceled by the Warrant Agent inaccordance with Section 3.8 hereof. At any time prior to such cancellation, ifany beneficial interest in a Global Warrant is exercised or exchanged for ortransferred to a Person who will take delivery thereof in the form of abeneficial interest in another Global Warrant or for Definitive Warrants, theamount of Warrants represented by such Global Warrant shall be reducedaccordingly and an endorsement shall be made on such Global Warrant by theWarrant Agent or by the Depositary at the direction of the Warrant Agent toreflect such reduction; and if the beneficial interest is being exchanged foror transferred to a Person who will take delivery thereof in the form of abeneficial interest in another Global Warrant, such other Global Warrant shallbe increased accordingly and an endorsement shall be made on such GlobalWarrant by the Warrant Agent or by the Depositary at the direction of theWarrant Agent to reflect such increase.

 

(i)            *General Provisions Relating to Transfers andExchanges.*

 

(i)            To permit registrations of transfersand exchanges, the Company shall execute and the Warrant Agent shallcountersign Global Warrants and Definitive Warrants upon the Company’s order orat the Warrant Registrar’s request.

 

(ii)           No service charge shall be made to aholder of a beneficial interest in a Global Warrant or to a holder of aDefinitive Warrant for any registration of transfer or exchange, but theCompany may require payment of a sum sufficient to cover any transfer tax orsimilar governmental charge payable in connection therewith.

 

(iii)          All Global Warrants and DefinitiveWarrants issued upon any registration of transfer or exchange of GlobalWarrants or Definitive Warrants shall be the duly authorized, executed andissued warrants for Common Stock of the Company,

 

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not subject to any preemptive rights, and entitled tothe same benefits under this Warrant Agreement, as the Global Warrants orDefinitive Warrants surrendered upon such registration of transfer or exchange.

 

(iv)          Prior to due presentment for theregistration of a transfer of any Warrant, the Warrant Agent, and the Companymay deem and treat the Person in whose name any Warrant is registered as theabsolute owner of such Warrant for all purposes and none of the Warrant Agent,or the Company shall be affected by notice to the contrary.

 

(v)           The Warrant Agent shall countersignGlobal Warrants and Definitive Warrants in accordance with the provisions ofSection 3.2 hereof.

* *

*(j)            Facsimile Submissions to WarrantAgent.*

 

All certifications, certificates and Opinions ofCounsel required to be submitted to the Warrant Registrar pursuant to thisSection 3.5 to effect a registration of transfer or exchange may be submittedby facsimile.

 

Notwithstanding anything herein to the contrary, as toany certificates and/or certifications delivered to the Warrant Registrarpursuant to this Section 3.5, the Warrant Registrar’s duties shall be limitedto confirming that any such certifications and certificates delivered to it arein the form of Exhibits B and C attached hereto. The Warrant Registrar shallnot be responsible for confirming the truth or accuracy of representations madein any such certifications or certificates. As to any Opinions of Counseldelivered pursuant to this Section 3.5, the Warrant Registrar may rely upon,and be fully protected in relying upon, such opinions.

** **

**3.6.         ReplacementWarrants.**

 

If any mutilated Warrant is surrendered to the WarrantAgent or the Company and the Warrant Agent receives evidence to itssatisfaction of the destruction, loss or theft of any Warrant, the Companyshall issue and the Warrant Agent, upon receipt of a Warrant CountersignatureOrder, shall countersign a replacement Warrant if the Warrant Agent’srequirements are met. If required by the Warrant Agent or the Company, anindemnity bond must be supplied by the Holder that is sufficient in thejudgment of the Warrant Agent and the Company to protect the Company, theWarrant Agent, any Agent and any agent for purposes of the countersignaturefrom any loss that any of them may suffer if a Warrant is replaced. The Companymay charge for its expenses in replacing a Warrant.

 

Every replacement Warrant is an additional warrant ofthe Company and shall be entitled to all of the benefits of this Warrant Agreementequally and proportionately with all other Warrants duly issued hereunder.

 

**3.7.         TemporaryWarrants.**

 

Until certificates representing Warrants are ready fordelivery, the Company may prepare and the Warrant Agent, upon receipt of aWarrant Countersignature Order, shall issue temporary Warrants. TemporaryWarrants shall be substantially in the form of certificated Warrants but mayhave variations that the Company considers appropriate for temporary Warrantsand as shall be reasonably acceptable to the Warrant Agent. Withoutunreasonable delay, the Company shall prepare and the Warrant Agent shallcountersign definitive Warrants in exchange for temporary Warrants.

 

Holders of temporary Warrants shall be entitled to allof the benefits of this Warrant Agreement.

 

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**3.8.         Cancellation.**

 

Subject to Section 3.5(h) hereof, the Company at anytime may deliver Warrants to the Warrant Agent for cancellation. The WarrantRegistrar and Warrant Paying Agent shall forward to the Warrant Agent anyWarrants surrendered to them for registration of transfer, exchange orexercise. The Warrant Agent and no one else shall cancel all Warrantssurrendered for registration of transfer, exchange, exercise, replacement orcancellation and shall destroy canceled Warrants (subject to the recordretention requirement of the Exchange Act). Certification of the destruction ofall canceled Warrants shall be delivered to the Company. The Company may notissue new Warrants to replace Warrants that have been exercised or that havebeen delivered to the Warrant Agent for cancellation.

 

**SECTION4.****                            SEPARATIONOF WARRANTS; TERMS OF WARRANTS; EXERCISE OF WARRANTS.**

 

(a)           TheNotes and Warrants will not be separately transferable until the SeparationDate. Subject to the terms of this Agreement, each Warrant holder shall havethe right, which may be exercised during the period commencing at the openingof business on the Separation Date and until 5:00 p.m. New York City time onSeptember 30, 2008 (the ***“ExercisePeriod”***), to receive from the Company the number of fully paidand nonassessable Warrant Shares which the holder may at the time be entitledto receive on exercise of such Warrants and payment of the exercise price (the ***“Exercise Price”***) (i)by tendering Notes having an aggregate principal amount at maturity, plusaccrued and unpaid interest, if any thereon to the date of exercise or (ii) incash, by wire transfer or by certified or official check payable to the orderof the Company, in each case, equal to the Exercise Price then in effect forsuch Warrant Shares; provided that holders shall be able to exercise theirWarrants only if a registration Statement relating to the Warrant Shares isthen in effect, or the exercise of such Warrants is exempt from theregistration requirements of the Securities Act of 1933, as amended (the ***“Securities Act”***), and such securitiesare qualified for sale or exempt from qualification under the applicablesecurities laws of the states in which the various holders of the Warrants orother persons to whom it is proposed that the Warrant Shares be issued onexercise of the Warrants reside. Each Warrant not exercised prior to 5:00 p.m.,New York City time, on September 30, 2008 (the ***“Expiration Date”***) shall become void andall rights thereunder and all rights in respect thereof under this agreementshall cease as of such time. No adjustments as to dividends will be made uponexercise of the Warrants.

 

(b)           Inorder to exercise all or any of the Warrants represented by a WarrantCertificate, the holder thereof must deliver to the Warrant Agent at itscorporate trust office set forth in Section 15 hereof the Warrant Certificateand the form of election to purchase on the reverse thereof duly filled in andsigned, which signature shall be medallion guaranteed by an institution whichis a member of a Securities Transfer Association recognized signature guaranteeprogram, and upon payment to the Warrant Agent for the account of the Companyof the Exercise Price, which is set forth in the form of Warrant Certificateattached hereto as Exhibit A, as adjusted as herein provided, for the number ofWarrant Shares in respect of which such Warrants are then exercised. Payment ofthe aggregate Exercise Price shall be made (i) in cash, by wire transfer or bycertified or official bank check payable to the order of the Company or (ii) bytendering Notes in the manner provided in Section 4(a) hereof.

 

(c)           Subjectto the provisions of Section 5 hereof, upon compliance with clause (b) above,the Warrant Agent shall deliver or cause to be delivered with all reasonabledispatch, to or upon the written order of the holder and in such name or namesas the Warrant holder may designate, a certificate or certificates for thenumber of whole Warrant Shares issuable upon the exercise of such Warrants orother securities or property to which such holder is entitled hereunder,together with cash as provided in Section 9 hereof; provided that if anyconsolidation, merger or lease or sale of assets is proposed to be effected bythe Company as described in Section 8(m) hereof, or a tender offer or anexchange offer for shares of Common Stock shall be made, upon such surrender ofWarrants and payment of the Exercise Price as aforesaid, the Warrant Agent shall,as soon as possible, but in any event not later than two business days

 

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thereafter, deliver or cause to be delivered the full number of WarrantShares issuable upon the exercise of such Warrants in the manner described inthis sentence or other securities or property to which such holder is entitledhereunder, together with cash as provided in Section 9 hereof. Such certificateor certificates shall be deemed to have been issued and any person so designatedto be named therein shall be deemed to have become a holder of record of suchWarrant Shares as of the date of the surrender of such Warrants and payment ofthe Exercise Price.

 

(d)           TheWarrants shall be exercisable, at the election of the holders thereof, eitherin full or from time to time in part. If less than all the Warrants representedby a Warrant Certificate are exercised, such Warrant Certificate shall besurrendered and a new Warrant Certificate of the same tenor and for the numberof Warrants which were not exercised shall be executed by the Company anddelivered to the Warrant Agent and the Warrant Agent shall countersign the newWarrant Certificate, registered in such name or names as may be directed inwriting by the holder, and shall deliver the new Warrant Certificate to thePerson or Persons entitled to receive the same.

 

(e)           AllWarrant Certificates surrendered upon exercise of Warrants shall be cancelledby the Warrant Agent. Such cancelled Warrant Certificates shall then bedisposed of by the Warrant Agent in a manner satisfactory to the Company. TheWarrant Agent shall account promptly to the Company with respect to Warrantsexercised and concurrently pay to the Company all monies received by theWarrant Agent for the purchase of the Warrant Shares through the exercise ofsuch Warrants.

 

(f)            TheWarrant Agent shall keep copies of this Agreement and any notices given orreceived hereunder available for inspection by the holders during normalbusiness hours at its office. The Company shall supply the Warrant Agent fromtime to time with such numbers of copies of this Agreement as the Warrant Agentmay request.

 

**SECTION 5.         PAYMENT OF TAXES.**

 

The Company will pay all documentary stamp taxesattributable to the initial issuance of Warrant Shares upon the exercise ofWarrants; provided that the Company shall not be required to pay any tax ortaxes which may be payable in respect of any transfer involved in the issue ofany Warrant Certificates or any certificates for Warrant Shares in a name otherthan that of the registered holder of a Warrant Certificate surrendered uponthe exercise of a Warrant, and the Company shall not be required to issue ordeliver such Warrant Certificates unless or until the person or personsrequesting the issuance thereof shall have paid to the Company the amount ofsuch tax or shall have established to the satisfaction of the Company that suchtax has been paid.

** **

**SECTION 6.         RESERVATION OF WARRANT SHARES.**

 

(a)           TheCompany will at all times reserve and keep available, free from preemptiverights, out of the aggregate of its authorized but unissued Common Stock or itsauthorized and issued Common Stock held in its treasury, for the purpose ofenabling it to satisfy any obligation to issue Warrant Shares upon exercise ofWarrants, the maximum number of shares of Common Stock which may then bedeliverable upon the exercise of all outstanding Warrants.

 

(b)           TheCompany or, if appointed, the transfer agent for the Common Stock (the ***“Transfer Agent”***) andevery subsequent transfer agent for any shares of the Company’s capital stockissuable upon the exercise of any of the rights of purchase aforesaid will beirrevocably authorized and directed at all times to reserve such number ofauthorized shares as shall be required for such purpose. The Company will keepa copy of this Agreement on file with the Transfer Agent and with everysubsequent transfer agent for any shares of the Company’s capital stockissuable upon the exercise of the rights of purchase represented by the Warrants.The Warrant Agent is hereby irrevocably authorized to requisition from time totime from such Transfer Agent the stock certificates required to honoroutstanding Warrants

 

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upon exercise thereof in accordance with the terms of this Agreement.The Company will supply such Transfer Agent with duly executed certificates forsuch purposes and will provide or otherwise make available any cash which maybe payable as provided in Section 9 hereof. The Company will furnish suchTransfer Agent a copy of all notices of adjustments, and certificates relatedthereto, transmitted to each holder pursuant to Section 11 hereof.

 

(c)           Beforetaking any action which would cause an adjustment pursuant to Section 8 hereof toreduce the Exercise Price below the then par value (if any) of the WarrantShares, the Company will take any corporate action which may, in the opinion ofits counsel (which may be counsel employed by the Company), be necessary inorder that the Company may validly and legally issue fully paid andnonassessable Warrant Shares at the Exercise Price as so adjusted.

 

(d)           TheCompany covenants that all Warrant Shares which may be issued upon exercise ofWarrants will, upon issue, be fully paid, nonassessable, free of preemptiverights and free from all taxes, liens, charges and security interests withrespect to the issuance thereof.

** **

**SECTION7.****                            OBTAININGSTOCK EXCHANGE LISTINGS.**

 

The Company will from time to time take all actionwhich may be necessary so that the Warrant Shares, immediately upon theirissuance upon the exercise of Warrants, will be listed on the principalsecurities exchanges, automated quotation systems or other markets within theUnited States of America, if any, on which other shares of Common Stock arethen listed, if any.

** **

**SECTION8.****                            ADJUSTMENTOF EXERCISE PRICE AND NUMBER OF WARRANT SHARES ISSUABLE.**

 

The Exercise Price and the number of Warrant Sharesissuable upon the exercise of each Warrant are subject to adjustment from timeto time upon the occurrence of the events enumerated in this Section 8. Forpurposes of this Section 8, ***“Common Stock”*** means shares now or hereafter authorizedof any class of common stock of the Company and any other stock of the Company,however designated, that has the right (subject to any prior rights of anyclass or series of preferred stock) to participate in any distribution of theassets or earnings of the Company without limit as to per share amount.

 

*(a)          Adjustment for Change in CapitalStock.*

 

If the Company (i) pays a dividend or makes adistribution on its Common Stock in shares of its Common Stock, (ii) subdividesits outstanding shares of Common Stock into a greater number of shares, (iii)combines its outstanding shares of Common Stock into a smaller number ofshares, (iv) makes a distribution on its Common Stock in shares of its capitalstock other than Common Stock or (v) issues by reclassification of its CommonStock any shares of its capital stock, then the Exercise Price in effectimmediately prior to such action shall be proportionately adjusted so that theholder of any Warrant thereafter exercised may receive the aggregate number andkind of shares of capital stock of the Company which he would have ownedimmediately following such action if such Warrant had been exercisedimmediately prior to such action.

 

The adjustment shall become effective immediatelyafter the record date in the case of a dividend or distribution and immediatelyafter the effective date in the case of a subdivision, combination orreclassification. If, after an adjustment, a holder of a Warrant upon exerciseof it may receive shares of two or more classes of capital stock of theCompany, the Company shall determine, in good faith, the allocation of theadjusted Exercise Price between the classes of capital stock. After suchallocation, the exercise privilege and the Exercise Price of each class ofcapital stock shall thereafter be subject to adjustment on terms comparable tothose applicable to Common Stock in this Section 8. Such adjustment shall bemade successively whenever any event listed above shall occur.

 

21

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*(b)          Adjustments for Rights Issue.*

 

If the Company distributes any rights, options orwarrants to all holders of its Common Stock entitling them for a periodexpiring within 45 days after the record date mentioned below to purchaseshares of Common Stock at a price per share less than the Fair Value (asdefined herein) per share on that record date, the Exercise Price shall beadjusted in accordance with the formula:
|                                         | O +    | N x P |
|----------------------------------------------|--------|-------|
| E’  =   E    x |   | M     |
|                                         | O + N  |

 

where:

 

E’            =              theadjusted Exercise Price.

 

E              =              thecurrent Exercise Price.

 

O             =              thenumber of shares of Common Stock outstanding on the record date.

 

N                                       =              the number of additional shares ofCommon Stock issued pursuant to such rights, options or warrants.

 

P              =              theaggregate price per share of the additional shares.

 

M            =              theFair Value per share of Common Stock on the record date.

 

The adjustment shall be made successively whenever anysuch rights, options or Warrants are issued and shall become effectiveimmediately after the record date for the determination of stockholdersentitled to receive the rights, options or Warrants. If at the end of theperiod during which such rights, options or Warrants are exercisable, not allrights, options or Warrants shall have been exercised, the Exercise Price shallbe immediately readjusted to what it would have been if “N” in the aboveformula had been the number of shares actually issued.

 

*(c)           Adjustment for Other Distributions.*

 

If the Company distributes to all holders of itsCommon Stock any of its assets or debt securities or any rights or Warrants topurchase debt securities of the Company, the Exercise Price shall be adjustedin accordance with the formula:

 
| E’  =   E   x | M - F |
|----------------------------------------|-------|
|                                   | M     |

 

where:

 

E’            =              the adjusted Exercise Price.

 

E              =              the current Exercise Price.

 

M            =              the Fair Value per share of CommonStock on the record date mentioned below.

 

22

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F                                         =              the fair market value on therecord date of the assets, securities, rights or warrants to be distributed  in respect of one share of Common Stock asdetermined in good faith by the Board of Directors of the Company (the ***“Board of Directors”***).

 

The adjustment shall be made successively whenever anysuch distribution is made and shall become effective immediately after therecord date for the determination of stockholders entitled to receive thedistribution.

 

This Section 8(c) does not apply to cash dividends orcash distributions paid out of consolidated current or retained earnings asshown on the books of the Company prepared in accordance with generallyaccepted accounting principles. Also, this Section 8(c) does not apply torights, options or warrants referred to in Section 8(b) hereof.

 

*(d)          Adjustment for Common Stock Issue.*

 

If the Company issues shares of Common Stock for aconsideration per share less than the Fair Value per share on the date theCompany fixes the offering price of such additional shares, the Exercise Priceshall be adjusted in accordance with the formula:
|                             |   |   | P |
|----------------------------------|--------|--------|---|
| E’  =   E  x | O      | +      | M |
|                             | A      |

 

where:

E’            =              the adjusted Exercise Price.

 

E              =              the then current Exercise Price.

 

O             =              the number of shares outstandingimmediately prior to the issuance of such additional shares.

 

P              =              the aggregate considerationreceived for the issuance of such additional shares.

 

M            =              the Fair Value per share on thedate of issuance of such additional shares.

 

A             =              the number of shares outstandingimmediately after the issuance of such additional shares.

 

The adjustment shall be made successively whenever anysuch issuance is made, and shall become effective immediately after suchissuance.

 

This subsection (d) does not apply to:

 

(1)           anyof the transactions described in: subsections (a), (b) and (c) of this Section8,

 

(2)           theexercise of Warrants, or the conversion or exchange of other securitiesconvertible or exchangeable for Common Stock the issuance of which caused anadjustment to be made under Section 8(e),

 

23

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(3)           CommonStock issued to the Company’s employees (or employees of its subsidiaries)under bona fide employee benefit plans adopted by the Board of Directors andapproved by the holders of Common Stock when required by law, if such CommonStock would otherwise be covered by this subsection (d) (but only to the extentthat the aggregate number of shares excluded hereby and issued after the dateof this Warrant Agreement shall not exceed 5% of the Common Stock outstandingat the time of the adoption of each such plan, exclusive of anti-dilutionadjustments thereunder),

 

(4)           CommonStock issued to shareholders of any Person which merges into the Company, orwith a subsidiary of the Company, in proportion to their stock holdings of suchperson immediately prior to such merger, upon such merger, provided that ifsuch person is an Affiliate of the Company, the Board of Directors shall haveobtained a fairness opinion from a nationally recognized investment banking,appraisal or valuation firm, which is not an Affiliate of the Company, statingthat the consideration received in such merger is fair to the Company from afinancial point of view, or

 

(5)           theissuance of shares of Common Stock pursuant to rights, options or warrantswhich were originally issued in a Non-Affiliate Sale (as defined below)together with one or more other securities as part of a unit at a price perunit.

 

(e)           Adjustmentfor Convertible Securities Issue.

 

If the Company issues any securities convertible intoor exchangeable for Common Stock (other than securities issued in transactionsdescribed in subsections (b) and (c) of this Section 8) for a consideration pershare of Common Stock initially deliverable upon conversion or exchange of suchsecurities less than the Fair Value per share on the date of issuance of suchsecurities, the Exercise Price shall be adjusted in accordance with thisformula:

 
|                             |   |   | P |
|----------------------------------|--------|--------|---|
| E’  =   E  x | O      | +      | M |
|                             | O + D  |

 

where:

 
| E’ |   | =      |   | the adjusted Exercise Price.                                                                                                              |
|---------|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|
|    |   |   |   |                                                                                                                                      |
| E       |   | =      |   | the then current Exercise Price.                                                                                                          |
|    |   |   |   |                                                                                                                                      |
| O       |   | =      |   | the number of shares outstanding immediately prior  to the issuance of such securities.                                                   |
|    |   |   |   |                                                                                                                                      |
| P       |   | =      |   | the aggregate consideration received for the  issuance of such securities.                                                                |
|    |   |   |   |                                                                                                                                      |
| M       |   | =      |   | the Fair Value per share on the date of issuance of  such securities.                                                                     |
|    |   |   |   |                                                                                                                                      |
| D       |   | =      |   | the maximum number of shares deliverable upon  conversion or in exchange for such securities at the initial conversion or  exchange rate. |

 

The adjustment shall be made successively whenever anysuch issuance is made, and shall become effective immediately after suchissuance.

 

If all of the Common Stock deliverable upon conversionor exchange of such securities have not been issued when such securities are nolonger outstanding, then the Exercise Price shall promptly

 

24

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be readjusted to the Exercise Price which would then be in effect hadthe adjustment upon the issuance of such securities been made on the basis ofthe actual number of shares of Common Stock issued upon conversion or exchangeof such securities.

 

This subsection (e) does not apply to convertiblesecurities issued to shareholders of any person which merges into the Company,or with a subsidiary of the Company, in proportion to their stock holdings ofsuch person immediately prior to such merger, upon such merger, provided thatif such person is an Affiliate of the Company, the Board of Directors shallhave obtained a fairness opinion from a nationally recognized investment banking,appraisal or valuation firm, which is not an Affiliate of the Company, statingthat the consideration received in such merger is fair to the Company from afinancial point of view.

 

*(f)            Consideration Received.*

 

For purposes of any computation respectingconsideration received pursuant to subsections (d), and (e) of this Section 8,the following shall apply:

 

(1)           inthe case of the issuance of shares of Common Stock for cash, the considerationshall be the amount of such cash, provided that in no case shall any deductionbe made for any commissions, discounts or other expenses incurred by theCompany for any underwriting of the issue or otherwise in connection therewith;

 

(2)           inthe case of the issuance of shares of Common Stock for a consideration in wholeor in part other than cash, the consideration other than cash shall be deemedto be the fair market value thereof as determined in good faith by the Board ofDirectors (irrespective of the accounting treatment thereof), whosedetermination shall be conclusive, and described in a Board resolution whichshall be filed with the Warrant Agent;

 

(3)           inthe case of the issuance of securities convertible into or exchangeable forshares, the aggregate consideration received therefor shall be deemed to be theconsideration received by the Company for the issuance of such securities plusthe additional minimum consideration. if any, to be received by the Companyupon the conversion or exchange thereof (the consideration in each case to bedetermined in the same manner as provided in clauses (1) and (2) of thissubsection); and

 

(4)           inthe case of the issuance of shares of Common Stock pursuant to rights. optionsor warrants which rights, options or warrants were originally issued togetherwith one or more other securities as part of a unit at a price per unit, theconsideration shall be deemed to be the fair value of such rights. options orwarrants at the time of issuance thereof as determined in good faith by theBoard of Directors whose determination shall be conclusive and described in aBoard resolution which shall be filed with the Warrant Agent plus theadditional minimum consideration, if any, to be received by the Company uponthe exercise, conversion or exchange thereof (as determined in the same manner asprovided in clauses (1) and (2) of this subsection).

* *

*(g)          Fair Value.*

* *

In Sections 8(d) and (e) hereof, the “Fair Value” persecurity at any date of determination shall be (1) in connection with a sale bythe Company to a party that is not an Affiliate of the Company in anarm’s-length transaction (a ***“Non-Affiliate Sale”***), the price per security at whichsuch security is sold and (2) in connection with any sale by the Company to anAffiliate of the Company, (a) the last price per security at which such securitywas sold in a Non-Affiliate Sale within the three-month period preceding suchdate of determination (it being understood that the sale of Common Stock of theCompany to DLJ Merchant Banking Partners II, L.P. and its Affiliates on August28, 1998 was a sale to a party not then an Affiliate of the Company andtherefore a Non-Affiliate Sale) or (b) if clause (a) is not applicable, thefair

 

25

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market value of such security determined in good faith by (i) amajority of the Board of Directors, including a majority of the DisinterestedDirectors, and approved in a Board resolution delivered to the Warrant Agent or(ii) a nationally recognized investment banking, appraisal or valuation firm,which is not an Affiliate of the Company, in each case, taking into account,among all other factors deemed relevant by the Board of Directors or suchinvestment banking, appraisal or valuation firm, the trading price and volumeof such security on any national securities exchange or automated quotationsystem on which such security is traded. Notwithstanding the foregoing, anysale to Donaldson, Lufkin & Jenrette Securities Corporation (or anysuccessor thereto) pursuant to an underwritten public offering registered underthe Securities Act shall be deemed to be and treated as a Non-Affiliate Sale.

 

In Sections 8(b) and (c) hereof, the “Fair Value” persecurity at any date of determination shall be (a) the last price per securityat which such security was sold by the Company in a Non-Affiliate Sale withinthe three-month period preceding such date of determination or (b) if clause(a) is not applicable, the fair market value of such security determined ingood faith by (i) a majority of the Board of Directors, including a majority ofthe Disinterested Directors, and approved in a Board resolution delivered tothe Warrant Agent or (ii) a nationally recognized investment banking, appraisalor valuation firm, which is not an Affiliate of the Company, in each case,taking into account, among all other factors deemed relevant by the Board ofDirectors or such investment banking,' appraisal or valuation firm, the tradingprice and volume of such security on any national securities exchange orautomated quotation system on which such security is traded.

 

For purposes of this Section 8(g), “DisinterestedDirector” means, in connection with any issuance of securities that gives riseto a determination of the Fair Value thereof, each member of the Board ofDirectors who is not an officer, employee, director or other Affiliate of theparty to whom the Company is proposing to issue the securities giving rise tosuch determination.

 

For purposes of this Section 8(g), ***“Affiliate”*** of anyspecified Person means (A) any other Person directly or indirectly controllingor controlled by or under direct or indirect common control with such specifiedPerson and (B) any director, officer or employee of such specified Person.  For purposes of this definition ***“control”*** (including,with correlative meanings, the terms ***“controlling,” “controlled by”*** and ***“under common control with”***)as used with respect to any Person, shall mean the possession, directly orindirectly, of the power to direct or cause the direction of the management orpolicies of such Person, whether through the ownership of voting securities, byagreement or otherwise.

 

*(h)          When De Minimis Adjustment May BeDeferred*

 

No adjustment in the Exercise Price need be madeunless the adjustment would require an increase or decrease of at least 1% in theExercise Price. Any adjustments that are not made shall be carried forward andtaken into account in any subsequent adjustment. All calculations under thisSection 8 shall be made to the nearest cent or to the nearest 1/100th of ashare, as the case may be, it being understood that no such rounding shall bemade under subsection (p).

 

*(i)           When No Adjustment Required.*

 

No adjustment need be made for a transaction referredto Section 8(a), (b), (c), (d), (e) or (f) hereof, if Warrant holders are toparticipate (without being required to exercise their Warrants) in thetransaction on a basis and with notice that the Board of Directors determinesto be fair and appropriate in light of the basis and notice on which holders ofCommon Stock participate in the transaction. No adjustment need be made for (i)rights to purchase Common Stock pursuant to a Company plan for reinvestment ofdividends or interest, (ii) a change in the par value or no par value of theCommon Stock or (iii) the issuance by the Company of warrants to DLJ MerchantBanking Partners II, L.P. and certain of its Affiliates on or about October 5,1998. To the extent the Warrants become convertible into cash, no adjustmentneed be made thereafter as to the cash. Interest will not accrue on the cash.

 

26

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*(j)            Notice of Adjustment.*

 

Whenever the Exercise Price is adjusted, the Companyshall provide the notices required by Section 10 hereof.

 

*(k)          Notice of Certain Transactions.*

 

If (i) the Company takes any action that would requirean adjustment in the Exercise Price pursuant to Section 8(a), (b), (c), (d),(e) or (f) hereof and if the Company does not arrange for Warrant holders toparticipate pursuant to Section 8(i) hereof, (ii) the Company takes any actionthat would require a supplemental Warrant Agreement pursuant to Section 8(l)hereof or (iii) there is a liquidation or dissolution of the Company, then theCompany shall mail to Warrant holders a notice stating the proposed record datefor a dividend or distribution or the proposed effective date of a subdivision,combination, reclassification, consolidation, merger, transfer, lease,liquidation or dissolution. The Company shall mail the notice at least 15 daysbefore such date. Failure to mail the notice or any defect in it shall notaffect the validity of the transaction.

* *

*(l)           Reorganization of Company.*

 

Immediately after the date hereof, if the Companyconsolidates or merges with or into, or transfers or leases all orsubstantially all its assets to, any person, upon consummation of suchtransaction the Warrants shall automatically become exercisable for the kindand amount of securities, cash or other assets which the holder of a Warrantwould have owned immediately after the consolidation, merger, transfer or leaseif the holder had exercised the Warrant immediately before the effective dateof the transaction. Concurrently with the consummation of such transaction, thecorporation formed by or surviving any such consolidation or merger if other thanthe Company, or the person to which such sale or conveyance shall have beenmade, shall enter into (i) a supplemental Warrant Agreement so providing andfurther providing for adjustments which shall be as nearly equivalent as may bepractical to the adjustments provided for in this Section 8(1) and (ii) asupplement to the Warrant Registration Rights Agreement providing for theassumption of the Company’s obligations thereunder. The successor Company shallmail to Warrant holders a notice describing the supplemental Warrant Agreementand Warrant Registration Rights Agreement. If the issuer of securitiesdeliverable upon exercise of Warrants under the supplemental Warrant Agreementis an affiliate of the formed, surviving, transferee or lessee corporation,that issuer shall join in the supplemental Warrant Agreement and WarrantRegistration Rights Agreement. If this Section 8(l) applies, Sections 8(a),(b), (c), (d), (e) and (f) hereof do not apply.

 

*(m)          Company Determination Final.*

 

Any determination that the Company or the Board ofDirectors must make pursuant to Section 8(a), (c), (d), (e), (f), (g), (h) or(i) hereof is conclusive.

 

*(n)          Warrant Agent’s Disclaimer.*

 

The Warrant Agent has no duty to determine when anadjustment under this Section 8 should be made, how it should be made or whatit should be. The Warrant Agent has no duty to determine whether any provisionsof a supplemental Warrant Agreement under Section 8(l) hereof are correct. TheWarrant Agent makes no representation as to the validity or value of anysecurities or assets issued upon exercise of Warrants. The Warrant Agent shallnot be responsible for the Company’s failure to comply with this Section 8.

 

27

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*(o)          When Issuance or Payment May BeDeferred*

 

In any case in which this Section 8 shall require thatan adjustment in the Exercise Price be made effective as of a record date for aspecified event, the Company may elect to defer until the occurrence of suchevent (i) issuing to the holder of any Warrant exercised after such record datethe Warrant Shares and other capital stock of the Company, if any, issuableupon such exercise over and above the Warrant Shares and other capital stock ofthe Company, if any, issuable upon such exercise on the basis of the ExercisePrice and (ii) paying to such holder any amount in cash in lieu of a fractionalshare pursuant to Section 10 hereof; provided that the Company shall deliver tosuch holder a due bill or other appropriate instrument evidencing such holder’sright to receive such additional Warrant Shares, other capital stock and cashupon the occurrence of the event requiring such adjustment.

* *

*(p)          Adjustment in Number of Shares.*

 

Upon each adjustment of the Exercise Price pursuant tothis Section 8, each Warrant outstanding prior to the making of the adjustmentin the Exercise Price shall thereafter evidence the right to receive uponpayment of the adjusted Exercise Price that number of shares of Common Stock(calculated to the nearest hundredth) obtained from the following formula:

 
| N’ |   | = |   | N |   | x |   | E |
|---------|--------|---|--------|---|--------|---|--------|---|
| E’ |

 

where:
| N’ |   | =      |   | the adjusted number of Warrant Shares issuable upon  exercise of a Warrant by payment of the adjusted Exercise Price.               |
|---------|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|
|    |   |   |   |                                                                                                                                |
| N       |   | =      |   | the number or Warrant Shares previously issuable  upon exercise of a Warrant by payment of the exercise Price prior to  adjustment. |
|    |   |   |   |                                                                                                                                |
| E’ |   | =      |   | the adjusted Exercise Price.                                                                                                        |
|    |   |   |   |                                                                                                                                |
| E       |   | =      |   | the Exercise Price prior to adjustment.                                                                                             |

 

*(q)          Form Of Warrants.*

 

Irrespective of any adjustments in the Exercise Priceor the number or kind of shares purchasable upon the exercise of the Warrants,Warrants theretofore or thereafter issued may continue to express the sameprice and number and kind of shares as are stated in the Warrants initiallyissuable pursuant to this Agreement.

** **

**SECTION 9.         FRACTIONAL INTERESTS.**

 

The Company shall not be required to issue fractionalWarrant Shares on the exercise of Warrants. If more than one Warrant shall bepresented for exercise in full at the same time by the same holder, the numberof full Warrant Shares which shall be issuable upon the exercise thereof shallbe computed on the basis of the aggregate number of Warrant Shares purchasableon exercise of the Warrants so presented. If any fraction of a Warrant Sharewould, except for the provisions of this Section 9, be issuable on the exerciseof any Warrants (or specified portion thereof), the Company shall pay an amountin cash equal to the Fair Value per Warrant Share, as determined on the dayimmediately preceding the date the Warrant is presented for exercise,multiplied by such fraction, computed to the nearest whole U.S. cent.

 

28

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**SECTION 10.       NOTICES TO WARRANT HOLDERS.**

 

(a)           Uponany adjustment of the Exercise Price pursuant to Section 8 hereof, the Companyshall promptly thereafter (i) cause to be filed with the Warrant Agent acertificate of a firm of independent public accountants of recognized standingselected by the Board of Directors of the Company (who may be the regularauditors of the Company) setting forth the Exercise Price after such adjustmentand setting forth in reasonable detail the method of calculation and the factsupon which such calculations are based and setting forth the number of WarrantShares (or portion thereof) issuable after such adjustment in the ExercisePrice, upon exercise of a Warrant and payment of the adjusted Exercise Price,which certificate shall be conclusive evidence of the correctness of thematters set forth therein, and (ii) cause to be given to each of the registeredholders of Warrants at the address appearing on the Warrant register for eachsuch registered holder written notice of such adjustments by first-class mail,postage prepaid. Where appropriate, such notice may be given in advance andincluded as a part of the notice required to be mailed under the otherprovisions of this Section 10.

 

(b)           Incase:

 

(i)            the Company shall authorize theissuance to all holders of shares of Common Stock of rights, options orwarrants to subscribe for or purchase shares of Common Stock or of any othersubscription rights or warrants;

 

(ii)           the Company shall authorize thedistribution to all holders of shares of Common Stock of evidences of itsindebtedness or assets (other than dividends or cash distributions paid out ofconsolidated current or retained earnings as shown on the books of the Companyprepared in accordance with generally accepted accounting principles ordividends payable in shares of Common Stock or distributions referred to in Section10(a) hereof);

 

(iii)          of any consolidation or merger towhich the Company is a party and for which approval of any stockholders of theCompany is required, or of the conveyance or transfer of the properties andassets of the Company substantially as an entirety, or of any reclassificationor change of Common Stock issuable upon exercise of the Warrants (other than achange in par value, or from par value to no par value, or from no par value topar value, or as a result of a subdivision or combination), or a tender offeror exchange offer for shares of Common Stock;

 

(iv)          of the voluntary or involuntarydissolution, liquidation or winding up of the Company; or

 

(v)           the Company proposes to take anyaction (other than actions of the character described in Section 8(a) hereof)which would require an adjustment of the Exercise Price pursuant to Section 8hereof;

 

then the Company shall cause to be filed with theWarrant Agent and shall cause to be given to each of the registered holders ofWarrants at his address appearing on the Warrant register, at least 20 days (or10 days in any case specified in clauses (i) or (ii) above) prior to theapplicable record date hereinafter specified, or promptly in the case of eventsfor which there is no record date, by first-class mail, postage prepaid, awritten notice stating (x) the date as of which the holders of record of sharesof Common Stock to be entitled to receive any such rights, options, Warrants ordistribution are to be determined, (y) the initial expiration date set forth inany tender offer or exchange offer for shares of Common Stock, or (z) the dateon which any such consolidation, merger, conveyance, transfer, dissolution,liquidation or winding up is expected to become

 

29

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effective or consummated, and the date as of which itis expected that holders of record of shares of Common Stock shall be entitledto exchange such shares for securities or other property, if any, deliverableupon such reclassification, consolidation, merger, conveyance, transfer,dissolution, liquidation or winding up. The failure to give the notice requiredby this Section 11 or any defect therein shall not affect the legality orvalidity of any distribution, right, option, warrant, consolidation, merger,conveyance, transfer, dissolution, liquidation or winding up, or the vote uponany action.

 

(c)           Nothingcontained in this Agreement or in any of the Warrant Certificates shall beconstrued as conferring upon the holders of Warrants the right to vote or toconsent or to receive notice as stockholders in respect of the meetings ofstockholders or the election of directors of the Company or any other matter,or any rights whatsoever as stockholders of the Company.

** **

**SECTION11.       MERGER, CONSOLIDATION OR CHANGEOF NAME OF WARRANT AGENT.**

 

(a)           Anycorporation into which the Warrant Agent may be merged or with which it may beconsolidated, or any corporation resulting from any merger or consolidation towhich the Warrant Agent shall be a party, or any corporation succeeding to thebusiness of the Warrant Agent, shall be the successor to the Warrant Agenthereunder without the execution or filing of any paper or any further act onthe part of any of the parties hereto, provided that such corporation would beeligible for appointment as a Successor Warrant agent under the provisions ofSection 13 hereof. In case at the time such successor to the Warrant Agentshall succeed to the agency created by this Agreement, and in case at that timeany of the Warrant Certificates shall have been countersigned but notdelivered, any such successor to the Warrant Agent may adopt thecountersignature of the original Warrant Agent; and in case at that time any ofthe Warrant Certificates shall not have been countersigned, any successor tothe Warrant Agent may countersign such Warrant Certificates either in the nameof the predecessor Warrant Agent or in the name of the successor to the WarrantAgent; and in all such cases such Warrant Certificates shall have the fullforce and effect provided in the Warrant Certificates and in this Agreement.

 

(b)           Incase at any time the name of the Warrant Agent shall be changed and at suchtime any of the Warrant Certificates shall have been countersigned but notdelivered, the Warrant Agent whose name has been changed may adopt thecountersignature under its prior name, and in case at that time any of theWarrant Certificates shall not have been countersigned, the Warrant Agent maycountersign such Warrant Certificates either in its prior name or in itschanged name, and in all such cases such Warrant Certificates shall have thefull force and effect provided in the Warrant Certificates and in thisAgreement.

 

**SECTION 12.       WARRANT AGENT.**

 

The Warrant Agent undertakes the duties and obligationsimposed by this Agreement upon the following terms and conditions, by all ofwhich the Company and the holders of Warrants, by their acceptance thereof,shall be bound:

 

(a)           Thestatements contained herein and in the Warrant Certificates shall be taken asstatements of the Company and the Warrant Agent assumes no responsibility forthe correctness of any of the same except such as describe the Warrant Agent oraction taken or to be taken by it. The Warrant Agent assumes no responsibilitywith respect to the distribution of the Warrant Certificates except as hereinotherwise provided.

 

(b)           TheWarrant Agent shall not be responsible for any failure of the Company to complywith any of the covenants contained in this Agreement or in the Warrant Certificatesto be complied with by the Company.

 

30

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(c)           TheWarrant Agent may consult at any time with counsel satisfactory to it (who maybe counsel for the Company) and the Warrant Agent shall incur no liability orresponsibility to the Company or to any holder of any Warrant Certificate inrespect of any action taken, suffered or omitted by it hereunder in good faithand in accordance with the opinion or the advice of such counsel.

 

(d)           TheWarrant Agent shall incur no liability or responsibility to the Company or toany holder of any Warrant Certificate for any action taken in reliance on anyWarrant Certificate, certificate of shares, notice, resolution, waiver,consent, order, certificate, or other paper, document or instrument believed byit to be genuine and to have been signed, sent or presented by the proper partyor parties.

 

(e)           TheCompany agrees to pay to the Warrant Agent reasonable compensation for allservices rendered by the Warrant Agent in the execution of this Agreement, toreimburse the Warrant Agent for all expenses, taxes and governmental chargesand other charges of any kind and nature incurred by the Warrant Agent in theexecution of this Agreement The Company shall indemnify the Warrant Agentagainst any and all losses, liabilities or expenses incurred by it arising outof or in connection with the acceptance or administration of its duties underthis Warrant Agreement, including the costs and expenses of enforcing thisWarrant Agreement against the Company and defending itself against any claim(whether asserted by the Company or any Holder or any other person) orliability in connection with the exercise or performance of any of its powersor duties hereunder, except to the extent any such loss, liability or expensemay be attributable to its negligence or bad faith. The Warrant Agent shallnotify the Company promptly of any claim for which it may seek indemnity.Failure by the Warrant Agent to so notify the Company shall not relieve the Companyof its obligations hereunder. The Company shall defend the claim and theWarrant Agent shall cooperate in the defense. The Warrant Agent may haveseparate counsel and the Company shall pay the reasonable fees and expenses ofsuch counsel. The Company need not pay for any settlement made without itsconsent, which consent shall not be unreasonably withheld.

 

(f)            TheWarrant Agent shall be under no obligation to institute any action, suit orlegal proceeding or to take any other action likely to involve expense unlessthe Company or one or more registered holders of Warrants shall furnish theWarrant Agent with reasonable security and indemnity for any costs and expenseswhich may be incurred, but this provision shall not affect the power of theWarrant Agent to take such action as it may consider proper, whether with orwithout any such security or indemnity. All rights of action under thisAgreement or under any of the Warrants may be enforced by the Warrant Agentwithout the possession of any of the Warrant Certificates or the productionthereof at any trial or other proceeding relative thereto, and any such action,suit or proceeding instituted by the Warrant Agent shall be brought in its nameas Warrant Agent and any recovery of judgment shall be for the ratable benefitof the registered holders of the Warrants, as their respective rights orinterests may appear.

 

(g)           TheWarrant Agent, and any stockholder, director, officer or employee of it, maybuy, sell or deal in any of the Warrants or other securities of the Company orbecome pecuniarily interested in any transaction in which the Company may beinterested, or contract with or lend money to the Company or otherwise act asfully and freely as though it were not Warrant Agent under this Agreement. Nothingherein shall preclude the Warrant Agent from acting in any other capacity forthe Company or for any other legal entity.

 

(h)           TheWarrant Agent shall act hereunder solely as agent for the Company, and itsduties shall be determined solely by the provisions hereof. The Warrant Agentshall not be liable for anything which it may do or refrain from doing inconnection with this Agreement except for its own negligence or bad faith.

 

(i)            TheWarrant Agent shall not at any time be under any duty or responsibility to anyholder of any Warrant Certificate to make or cause to be made any adjustment ofthe Exercise Price or number of the Warrant Shares or other securities orproperty deliverable as provided in this Agreement, or to determine whether anyfacts exist which may require any of such adjustments, or with respect to the

31

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nature or extent of any such adjustments, when made, or with respect tothe method employed in making the same. The Warrant Agent shall not beaccountable with respect to the validity or value or the kind or amount of anyWarrant Shares or of any securities or property which may at any time be issuedor delivered upon the exercise of any Warrant or with respect to whether anysuch Warrant Shares or other securities will when issued be validly issued andfully paid and nonassessable, and makes no representation with respect thereto.

** **

**SECTION 13.       CHANGE OF WARRANT AGENT.**

 

If the Warrant Agent shall become incapable of actingas Warrant Agent, the Company shall appoint a successor to such Warrant AgentIf the Company shall fail to make such appointment within a period of 30 daysafter it has been notified in writing of such incapacity by the Warrant Agentor by the registered holder of a Warrant Certificate, then the registeredholder of any Warrant may apply to any court of competent jurisdiction for theappointment of a successor to the Warrant Agent Pending appointment of asuccessor to such Warrant Agent, either by the Company or by such a court, theduties of the Warrant Agent shall be carried out by the Company. The holders ofa majority of the unexercised Warrants shall be entitled at any time to removethe Warrant Agent and appoint a successor to such Warrant Agent Such successorto the Warrant Agent need not be approved by the Company or the former WarrantAgent. After appointment the successor to the Warrant Agent shall be vestedwith the same powers, rights, duties and responsibilities as if it had beenoriginally named as Warrant Agent without further act or deed; provided thatthe former Warrant Agent shall deliver and transfer to the successor to theWarrant Agent any property at the time held by it hereunder and execute anddeliver any further assurance, conveyance, act or deed necessary for thepurpose. Failure to give any notice provided for in this Section 13, however,or any defect therein, shall not affect the legality or validity of theappointment of a successor to the Warrant Agent.

 

**SECTION 14.       REPORTS.**

 

(a)           Whetheror not required by the rules and regulations of the Commission, so long as anyWarrants or the Warrant Shares are outstanding, the Company shall furnish tothe Warrant Agent and the holders of Warrants or Warrant Shares (i) allquarterly and annual financial information that would be required to becontained in a filing with the Commission on Forms 10-Q and 10-K if the Companywere required to file such Forms, including a “Management’s Discussion andAnalysis of Financial Condition and Results of Operations” and, with respect tothe annual information only, a report thereon by the Company’s certifiedindependent accountants and (ii) all current reports that would be required tobe filed with the Commission on Form 8-K if the Company were required to filesuch reports. In addition, whether or not required by the rules and regulationsof the Commission, the Company shall file a copy of all such information andreports with the Commission for public availability (unless the Commissionshall not accept such a filing) and make such information available tosecurities analysts and prospective investors upon request.

 

(b)           TheCompany shall provide the Warrant Agent with a sufficient number of copies ofall such reports that the Warrant Agent may be required to deliver to theholders of the Warrants and the Warrant Shares under this Section 14.

 

 

32

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**SECTION 15.       NOTICES TO COMPANY AND WARRANT AGENT.**

 

Any notice or demand authorized by this Agreement tobe given or made by the Warrant Agent or by the registered holder of anyWarrant to or on the Company shall be sufficiently given or made when receivedif deposited in the mail, first class or registered, postage prepaid, addressed(until another address is filed in writing by the Company with the WarrantAgent) as follows:

 

DeCrane HoldingCo.

c/o DLJ MerchantBanking Partners

277 Park AvenueNew York, New York 10172

Telecopier No.:(212) 892-7272

Attention: TimothyWhite

 

With a copy to:

 

Davis Polk &Wardwell

450 Lexington Avenue

New York, New York10017

Telecopier No.:(212) 450-4800

Attention: RichardTruesdell, Jr., Esq.

 

In case the Company shall fail to maintain such officeor agency or shall fail to give such notice of the location or of any change inthe location thereof, presentations may be made and notices and demands may beserved at the principal office of the Warrant Agent.

 

Any notice pursuant to this Agreement to be given bythe Company or by the registered holder(s) of any Warrant to the Warrant Agentshall be sufficiently given when and if deposited in the mail, first-class orregistered, postage prepaid, addressed (until another address is filed inwriting by the Warrant Agent with the Company) to the Warrant Agent as follows:

 

State Street Bankand Trust Company

225 Asylum Street,23rd Floor

Hartford,Connecticut 06103

Telecopier No.:860-244-1889

Attention:Corporate Trust Department

 

**SECTION 16.       SUPPLEMENTS AND AMENDMENTS.**

 

The Company and the Warrant Agent may from time totime supplement or amend this Agreement without the approval of any holders ofWarrants in order to cure any ambiguity or to correct or supplement anyprovision contained herein which may be defective or inconsistent with anyother provision herein, or to make any other provisions in regard to matters orquestions arising hereunder which the Company and the Warrant Agent may deemnecessary or desirable and which shall not in any way adversely affect theinterests of the holders of Warrants. Any amendment or supplement to thisAgreement that has an adverse effect on the interests of the holders ofWarrants shall require the written consent of the holders of a majority of thethen outstanding Warrants (excluding Warrants held by the Company or any of itsaffiliates). The consent of each holder of Warrants affected shall be requiredfor any amendment pursuant to which the Exercise Price would be increased orthe number of Warrant Shares purchasable upon exercise of Warrants would bedecreased (other than pursuant to adjustments provided in this Agreement).

 

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**SECTION 17.       SUCCESSORS.**

 

All the covenants and provisions of this Agreement byor for the benefit of the Company or the Warrant Agent shall bind and inure tothe benefit of their respective successors and assigns hereunder.

** **

**SECTION 18.       TERMINATION.**

 

This Agreement shall terminate at 5:00 p.m., New YorkCity time on September 30, 2008. Notwithstanding the foregoing, this Agreementwill terminate on any earlier date if all Warrants have been exercised. Theprovisions of Section 12 shall survive such termination.

 

**SECTION 19.       GOVERNING LAW.**

 

This Agreement and each Warrant Certificate issuedhereunder shall be deemed to be a contract made under the laws of the State ofNew York and for all purposes shall be construed in accordance with theinternal laws of said State.

** **

**SECTION 20.       BENEFITS OF THIS AGREEMENT.**

 

Nothing in this Agreement shall be construed to giveto any person or corporation other than the Company, the Warrant Agent and theregistered holders of Warrants any legal or equitable right, remedy or claimunder this Agreement; but this Agreement shall be for the sole and exclusivebenefit of the Company, the Warrant Agent and the registered holders ofWarrants.

** **

**SECTION 21.       COUNTERPARTS.**

 

This Agreement may be executed in any number ofcounterparts and each of such counterparts shall for all purposes be deemed tobe an original, and all such counterparts shall together constitute but one andthe same instrument.

 

IN WITNESS WHEREOF, the parties hereto have causedthis Agreement be duly executed, as of the day and year first above written.

** **
|   | **DeCrane Holdings Co.**                 |   |
|--------|------------------------------------------|--------|
|   |                                     |   |
|   | By:                                      |   | /s/ | Timothy White |   |
|   | Name: Timothy  White                     |   |
|   | Title: Vice  President and Secretary     |   |
|   |                                     |   |
|   | **State Street Bank and Trust Company,** |   |
|   | as Warrant Agent                         |   |
|   |                                     |   |
|   | By:                                      |   | /s/ | Steven Cimalore |   |
|   | Name: Steven  Cimalore                   |   |
|   | Title: Vice  President                   |   |
|        |                                          |        |  |  |  |  |

 

 

34

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**EXHIBIT A**

 

[Form of Warrant Certificate]

 

[Face]

 

*UnitLegend.* Each Warrant issued prior to the Separation Dateshall bear the following legend (the ***“Unit Legend”***) on the face thereof:

 

THE WARRANTS EVIDENCED BY THS CERTIFICATE ARE INITIALLY ISSUED AS PARTOF AN ISSUANCE OF UNITS (THE “UNITS”), EACH OF WHICH CONSIST OF $1,000PRINCIPAL AMOUNT AT MATURITY OF THE 12% SENIOR SUBORDINATED NOTES DUE 2008 OFDECRANE AIRCRAFT HOLDINGS, INC. (THE “NOTES”) AND ONE WARRANT (THE “WARRANTS”)INITIALLY ENTITLING THE HOLDER THEREOF TO PURCHASE 1.55 SHARES, PAR VALUE $0.01PER SHARE, OF DECRANE HOLDINGS CO.

 

PRIOR TO THE EARLIEST TO OCCUR OF (I) 180 DAYS AFTER THE CLOSING OF THEOFFERING OF THE UNITS, (II) THE DATE ON WHICH A REGISTRATION STATEMENT WITHRESPECT TO A REGISTERED EXCHANGE OFFER FOR THE NOTES IS DECLARED EFFECTIVEUNDER THE SECURITIES ACT, (III) THE DATE A SHELF REGISTRATION STATEMENT WITHRESPECT TO THE NOTES IS DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (IV) SUCHDATE AS DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION IN ITS SOLEDISCRETION SHALL DETERMINE AND (V) THE OCCURRENCE OF A CHANGE OF CONTROL (ASDEFINED IN THE INDENTURE GOVERNING THE NOTES), THE WARRANTS EVIDENCED BY THISCERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BETRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE NOTES.

* *

*PrivatePlacement Legend:* Each Warrant issued pursuant to anexemption from the registration requirements of the Securities Act shall bearthe following legend (the ***“PrivatePlacement Legend”***) on the face thereof:

 

THIS SECURITY (OR ITS PREDECESSOR) AND THE WARRANTSHARES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE U.S.SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITEDSTATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SETFORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIALINTEREST HEREIN, THE HOLDER:

 

(1)           REPRESENTSTHAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDERTHE SECURITIES ACT) (A “QIB”), (B) IT HAS ACQUIRED THIS SECURITY IN AN OFFSHORETRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) ITIS AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501(A)(l), (2),(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT (AN “IAI”),

 

(2)           AGREESTHAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THECOMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLYBELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB INA TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORETRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT,(D) IN A TRANSATION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURTIESACT, (E) TO AN IAI

 

A-1

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THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE WARRANT AGENT A SIGNEDLETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THETRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE WARRANTAGENT) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OFSECURITY LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANYTHAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITHANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (ANDBASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TOAN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THEAPPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHERAPPLICABLE JURISDICTION,

 

(3)           AGREESNOT TO ENGAGE IN HEDGING TRANSACTIONS UNLESS IN COMPLIANCE WITH THE SECURITIESACT AND

 

(4)           AGREESTHAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREINIS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

 

AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION” AND “UNITED STATES”HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THESECURITIES ACT. THE WARRANT AGREEMENT CONTAINS A PROVISION REQUIRING THEWARRANT AGENT TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATIONOF THE FOREGOING.

 

| No. _______        |   | ________Warrants |
|--------------------|--------|------------------|
| CUSIP No.  _______ |   |             |

 

**Warrant Certificate**

 

**DECRANE HOLDINGS CO.**

 

This Warrant Certificate certifies that Cede &Co., or its registered assigns, is the registered holder of Warrants expiringSeptember 30, 2008 (the ***“Warrants”***)to purchase Common Stock, par value $.01 (the ***“Common Stock”***), of DeCrane HoldingsCo., a Delaware corporation (the ***“Company”***). Each Warrant entitles theregistered holder upon exercise at any time from 9:00 a.m. on the SeparationDate referred to below (the ***“Exercise Date”***) until 5:00 p.m. New York City Time onSeptember 30, 2008, to receive from the Company 1.55 fully paid andnonassessable shares of Common Stock (the ***“Warrant Shares”***) at the initial exerciseprice (the ***“ExercisePrice”***) of $23.00 per share payable upon surrender of thisWarrant Certificate and payment of the Exercise Price at the office or agencyof the Warrant Agent, but only subject to the conditions set forth herein andin the Warrant Agreement referred to on the reverse hereof. The Exercise Priceand number of Warrant Shares issuable upon exercise of the Warrants are subjectto adjustment upon the occurrence of certain events set forth in the WarrantAgreement.

 

No Warrant may be exercised after 5:00 p.m., New YorkCity Time on September 30, 2008, and to the extent not exercised by such timesuch Warrants shall become void.

 

A-2

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Reference is hereby made to the further provisions ofthis Warrant Certificate set forth on the reverse hereof and such furtherprovisions shall for all purposes have the same effect as though fully setforth at this place.

 

This Warrant Certificate shall not be valid unlesscountersigned by the Warrant Agent, as such term is used in the WarrantAgreement.

 

This Warrant Certificate shall be governed by andconstrued in accordance with the internal laws of the State of New York.

** **

**INWITNESS WHEREOF**, DeCrane Holdings Co. has caused this WarrantCertificate to be signed below.

 

**Dated:** October 5, 1998

 
|   | **DeCrane Holdings Co.** |
|--------|--------------------------|
|   |                     |
|   | By:                      |   |
|   | Name:                    |
|   | Title:                   |

 

Countersigned:

 
| **State Street Bank and Trust Company,** |                  |
|------------------------------------------|-----------------------|
| as Warrant Agent                         |                  |
|                                     |                  |
| By:                                      |                  |   |
|                                     | Authorized  Signature |
|                                          |                       |  |

 

A-3

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[Reverse of Warrant Certificate]

 

The Warrants evidenced by this Warrant Certificate arepart of a duly authorized issue of Warrants expiring at 5:00 p.m. New York Citytime on September 30, 2008 entitling the holder on exercise to receive sharesof Common Stock, and are issued or to be issued pursuant to a Warrant Agreementdated as of October 5, 1998 (the ***“Warrant Agreement”***), duly executed anddelivered by the Company to State Street Bank and Trust Company, as Warrantagent (the ***“WarrantAgent”***), which Warrant Agreement is hereby incorporated byreference in and made a part of this instrument and is hereby referred to for adescription of the rights, limitation of rights, obligations, duties andimmunities thereunder of the Warrant Agent, the Company and the holders (thewords “holders” or “holder” meaning the registered holders or registeredholder) of the Warrants. A copy of the Warrant Agreement may be obtained by theholder hereof upon written request to the Company.

 

Warrants may be exercised at any time on or after theSeparation Date and on or before 5:00 p.m. New York City time on September30,2008; provided that holders shall be able to exercise their Warrants only ifa registration statement relating to the Warrants Shares is then in effect, orthe exercise of such Warrants is exempt from the registration requirements ofthe Securities Act of 1933, as amended (the ***“Securities Act”***), and such securitiesare qualified for sale or exempt from qualification under the applicablesecurities laws of the states in which the various holders of the Warrants orother persons to whom it is proposed that the Warrant Shares be issued onexercise of the Warrants reside. In order to exercise all or any of theWarrants represented by this Warrant Certificate, the holder must deliver tothe Warrant Agent at its New York corporate trust office set forth in Section19 of the Warrant Agreement this Warrant Certificate and the form of electionto purchase on the reverse hereof duly filled in and signed, which signatureshall be medallion guaranteed by an institution which is a member of aSecurities Transfer Association recognized signature guarantee program, andupon payment to the Warrant Agent for the account of the Company of theExercise Price, as adjusted as provided in the Warrant Agreement, for thenumber of Warrant Shares in respect of which such Warrants are then exercised.No adjustment shall be made for any dividends on any Common Stock issuable uponexercise of this Warrant.

 

The Warrant Agreement provides that upon theoccurrence of certain events the Exercise Price set forth on the face hereofmay, subject to certain conditions, be adjusted. If the Exercise Price isadjusted, the Warrant Agreement provides that the number of shares of CommonStock issuable upon the exercise of each Warrant shall be adjusted. Nofractions of a share of Common Stock will be issued upon the exercise of anyWarrant, but the Company will pay the cash value thereof determined as providedin the Warrant Agreement.

 

The Company has agreed pursuant to a WarrantRegistration Rights Agreement dated as of October 5, 1998 (the ***“Warrant Registration RightsAgreement”***) to file within 120 days after the issuance of theWarrants and use its reasonable best efforts to make effective on or before 180days after such date a shelf registration Statement on the appropriate formunder the Securities Act, and to use its reasonable best efforts to keep suchregistration statement continuously effective under the Securities Act in orderto permit the resale of the Warrants and Warrant Shares by the holders thereoffor the period of time referred to in the immediately preceding sentence.

 

Warrant Certificates, when surrendered at the officeof the Warrant Agent by the registered holder thereof in person or by legalrepresentative or attorney duly authorized in writing, may be exchanged, in themanner and subject to the limitations provided in the Warrant Agreement, butwithout payment of any service charge, for another Warrant Certificate orWarrant Certificates of like tenor evidencing in the aggregate a like number ofWarrants.

 

Upon due presentation for registration of transfer ofthis Warrant Certificate at the office of the Warrant Agent a new WarrantCertificate or Warrant Certificates of like tenor and evidencing in theaggregate a like number of Warrants shall be issued to the transferee(s) inexchange for this Warrant

 

A-4

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Certificate, subject to the limitations provided in the WarrantAgreement, without charge except for any tax or other governmental chargeimposed in connection therewith.

 

The Company and the Warrant Agent may deem and treatthe registered holder(s) thereof as the absolute owner(s) of this WarrantCertificate (notwithstanding any notation of ownership or other writing hereonmade by anyone), for the purpose of any exercise hereof, of any distribution tothe holder(s) hereof, and for all other purposes, and neither the Company northe Warrant Agent shall be affected by any notice to the contrary. Neither theWarrants nor this Warrant Certificate entitles any holder hereof to any rightsof a stockholder of the Company.

 

A-5

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[Form of Election to Purchase]

 

(To Be Executed Upon Exercise Of Warrant)

 

The undersigned hereby irrevocably elects to exercisethe right, represented by this Warrant Certificate, to receive __________shares of Common Stock and herewith tenders payment for such shares to theorder of DECRANE HOLDINGS CO., in the amount of $__________ in accordance withthe terms hereof. The undersigned requests that a certificate for such sharesbe registered in the name of ____________________, whose address is____________________ and that such shares be delivered to ____________________,whose address is ____________________. If said number of shares is less thanall of the shares of Common Stock purchasable hereunder, the undersignedrequests that a new Warrant Certificate representing the remaining balance ofsuch shares be registered in the name of ____________________, whose address is____________________, and that such Warrant Certificate be delivered to whoseaddress is ____________________.

 
|   |                  |
|--------|-----------------------|
|   | Signature             |
|   |                  |
| Date:  |                  |
|   |                  |
|   | Signature  Guaranteed |

 

Signatures must be guaranteed by an “eligible guarantor institution”meeting the requirements of the Warrant Agent, which requirements includemembership or participation in the Security Transfer Agent Medallion Program (***“STAMP”***) or suchother “signature guarantee program” as may be determined by the Warrant Agentin addition to, or in substitution for, STAMP, all in accordance with theSecurities Exchange Act of 1934, as amended.

 

A-6

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SCHEDULE OF EXCHANGES OF INTERESTS OF GLOBAL WARRANTS

 

The following exchanges of a partof this Global Warrant have been made:

 
| Date of Exchange |   | Amount of  decrease in Number of warrants in this Global Warrant |   | Amount of  increase in Number of Warrants in this Global Warrant |   | Number of  Warrants in this Global Warrant following such decrease or increase |   | Signature of  authorized officer of Warrant Agent |
|------------------|--------|------------------------------------------------------------------|--------|------------------------------------------------------------------|--------|--------------------------------------------------------------------------------|--------|---------------------------------------------------|

 

A-7

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**EXHIBIT B**

 

FORM OF CERTIFICATE OF TRANSFER

 

DeCrane Holdings Co.

c/o DLJ Merchant Banking Partners

277 Park Avenue

New York, New York 10172

 

State Street Bank and Trust Company

225 Asylum Street, 23rd Floor

Hartford, Connecticut 06103

 

Re: Warrants

 

Reference is hereby made to the Warrant Agreement,dated as of October 5, 1998 (the ***“Warrant Agreement”***), between DeCraneHoldings Co., as issuer (the ***“Company”***), and State Street Bank and Trust Company, aswarrant agent. Capitalized terms used but not defined herein shall have the meaningsgiven to them in the Warrant Agreement.

 

____________________, (the ***“Transferor”***) ownsand proposes to transfer the Warrant(s) or interest in such Warrant(s)specified in Annex A hereto, in the principal amount at maturity of $__________in such Warrant(s) or interests (the ***“Transfer”***), to ____________________ (the ***“Transferee”***), asfurther specified in Annex A hereto. In connection with the Transfer, theTransferor hereby certifies that:

 

[CHECK ALL THAT APPL Y]

 

1.     o**    Check if Transferee will take delivery of a beneficialinterest in the 144A Global Warrant or a Definitive Warrant Pursuant to Rule144A.** The Transfer is being effected pursuant to and in accordance withRule 144A under the United States Securities Act of 1933, as amended (the ***“Securities Act”***),and, accordingly, the Transferor hereby further certifies that the beneficialinterest or Definitive Warrant is being transferred to a Person that theTransferor reasonably believed and believes is purchasing the beneficialinterest or Definitive Warrant for its own account, or for one or more accountswith respect to which such Person exercises sole investment discretion, andsuch Person and each such account is a “qualified institutional buyer” withinthe meaning of Rule 144A in a transaction meeting the requirements of Rule 144Aand such Transfer is in compliance with any applicable blue sky securities lawsof any state of die United States. Upon consummation of the proposed Transferin accordance with the terms of the Warrant Agreement, the transferredbeneficial interest or Definitive Warrant will be subject to the restrictionson transfer enumerated in the Private Placement Legend printed on the 144AGlobal Warrant and/or the Definitive Warrant and in the Warrant Agreement andthe Securities Act.

 

2.     o**    Check if Transferee will take delivery of a beneficialinterest in the Regulation S Global Warrant or a Definitive Warrant pursuant toRegulation S.** The Transfer is being effected pursuant to and inaccordance with Rule 903 or Rule 904 under the Securities Act and, accordingly,the Transferor hereby further certifies that (i) the Transfer is not being madeto a person in the United States and (x) at the time the buy order wasoriginated, the Transferee was outside the United States or such Transferor andany Person acting on its behalf reasonably believed and believes that theTransferee was outside the United States or (y) the transaction was executedin, on or through the facilities of a designated ‘offshore securities marketand neither such Transferor nor any Person acting on its behalf knows that thetransaction was prearranged with a buyer in the United States, (ii) no directedselling efforts have been made in contravention of the requirements of Rule903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) thetransaction is not part of a plan or scheme to evade the registrationrequirements

 

B-1

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of the Securities Act and(iv) if the proposed transfer is being made prior to the expiration of theRestricted Period, the transfer is not being made to a U.S. Person or for theaccount or benefit of a U.S. Person (other than an Initial Purchaser). Uponconsummation of the proposed transfer in accordance with the terms of theWarrant Agreement, the transferred beneficial interest or Definitive Warrantwill be subject to the restrictions on Transfer enumerated in the PrivatePlacement Legend printed on the Regulation S Global Warrant and/or theDefinitive Warrant and in the Warrant Agreement and the Securities Act.

 

3.     o    **Checkand complete if Transferee will take delivery of a beneficial interest in theIAI Global Warrant or a Definitive Warrant pursuant to any provision of theSecurities Act other than Rule 144A or Regulation S.** The Transferis being effected in compliance with the transfer restrictions applicable tobeneficial interests in Restricted Global Warrants and Restricted DefinitiveWarrants and pursuant to and in accordance with the Securities Act and anyapplicable blue sky securities laws of any state of the United States, andaccordingly the Transferor hereby further certifies that (check one):

 

(a)   o**   **such Transfer is being effected pursuant to and inaccordance with Rule 144 under the Securities Act;

 

or

 

(b)   o**   **such Transfer is being effected to the Company or asubsidiary thereof;

 

or

 

(c)   o**   **such Transfer is being effected pursuant to aneffective registration statement under the Securities Act and in compliancewith the prospectus delivery requirements of the Securities Act;

 

or

 

(d)   o**   **such Transfer is being effected to an InstitutionalAccredited Investor and pursuant to an exemption from the registrationrequirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904,and the Transferor hereby further certifies that it has not engaged in anygeneral solicitation within the meaning of Regulation D under, the SecuritiesAct and the Transfer complies with the transfer restrictions applicable tobeneficial interests in a Restricted Global Warrant or Restricted DefinitiveWarrants and the requirements of the exemption claimed, which certification issupported by (1) a certificate executed by the Transferee in the form ofExhibit D to the Warrant Agreement and (2) if the Company requests, an Opinionof Counsel provided by the Transferor or the Transferee (a copy of which theTransferor has attached to this certification), to the effect that suchTransfer is in compliance with the Securities Act. Upon consummation of theproposed transfer in accordance with the terms of the Warrant Agreement, thetransferred beneficial interest or Definitive Warrant will be subject to therestrictions on transfer enumerated in the Private Placement Legend printed onthe IAI Global Warrant and/or the Definitive Warrants and in the WarrantAgreement and the Securities Act.

 

4.     o**    Check if Transferee will take delivery of a beneficialinterest in an Unrestricted Global Warrant or of an Unrestricted DefinitiveWarrant.**

 

(a)   o**    Check if Transfer is pursuant to Rule 144.**  (i) The Transfer is being effected pursuantto and in accordance with Rule 144 under the Securities Act and in compliancewith the transfer restrictions contained in the Warrant Agreement and anyapplicable blue sky securities laws of any state of the United States and (ii)the restrictions on transfer contained in the Warrant Agreement and the PrivatePlacement Legend are not required in order to maintain compliance with theSecurities Act. Upon consummation of the proposed Transfer in accordance withthe terms of the

 

B-2

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Warrant Agreement,the transferred beneficial interest or Definitive Warrant will no longer besubject to the restrictions on transfer enumerated in the Private PlacementLegend printed on the Restricted Global Warrants, on Restricted DefinitiveWarrants and in the Warrant Agreement.

 

(b)   o**    Check if Transfer is Pursuant to Regulation S.** (i) TheTransfer is being effected pursuant to and in accordance with Rule 903 or Rule904 under the Securities Act and in compliance with the transfer restrictionscontained in the Warrant Agreement and any applicable blue sky securities lawsof any state of the United States and (ii) the restrictions on transfercontained in the Warrant Agreement and the Private Placement Legend are notrequired in order to maintain compliance with the Securities Act. Uponconsummation of the proposed Transfer in accordance with the terms of theWarrant Agreement, the transferred beneficial interest or Definitive Warrantwill no longer be subject to the restrictions on transfer enumerated in thePrivate Placement Legend printed on the Restricted Global Warrants, onRestricted Definitive Warrants and in the Warrant Agreement.

 

(c)   o**    Check if Transfer is Pursuant to Other Exemption.** (i)The Transfer is being effected pursuant to and in compliance with an exemptionfrom the registration requirements of the Securities Act other than Rule 144,Rule 903 or Rule 904 and in compliance with the transfer restrictions containedin the Warrant Agreement and any applicable blue sky securities laws of anyState of the United States and (ii) the restrictions on transfer contained inthe Warrant Agreement and the Private Placement Legend are not required inorder to maintain compliance with the Securities Act. Upon consummation of theproposed Transfer in accordance with the terms of the Warrant Agreement, thetransferred beneficial interest or Definitive Warrant will not be subject tothe restrictions on transfer enumerated in the Private Placement Legend printedon the Restricted Global Warrants or Restricted Definitive Warrants and in theWarrant Agreement.

 

This certificateand the statements contained herein are made for your benefit and the benefitof the Company.

 
|   |   |   |   |                        |
|--------|--------|--------|--------|-----------------------------|
|   |   |   |   | [Insert Name of Transferor] |
|   |   |   |   |                        |
|   |   |   | By:    |                        |
|   |   |   |   | Name:                       |
|   |   |   |   | Title:                      |
|   |   |   |   |                        |
| Date:  |   |   |   |                        |

 

B-3

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ANNEX A TO CERTIFICATE OF TRANSFER

 

1.             TheTransferor owns and proposes to transfer the following:

 

[CHECK ONE OF (a) OR (b)]

 

(a)           o**           **abeneficial interest in the:

 

(i)            o**           **144AGlobal Warrant, or

 

(ii)           o**           **RegulationS Global Warrant, or

 

(iii)          o            IAI Global Warrant; or

 

(b)           o            a Restricted Definitive Warrant.

 

2.             Afterthe Transfer the Transferee will hold:

 

[CHECK ONE]

 

(a)           o            a beneficial interest in the:

 

(i)            o            144A Global Warrant, or

 

(ii)           o            Regulation S Global Warrant, or

 

(iii)          o            IAI Global Warrant, or

 

(iv)          o            Unrestricted Global Warrant; or

 

(b)           o            a Restricted Definitive Warrant; or

 

(c)           o            an Unrestricted Definitive Warrant,

 

in accordance withthe terms of the Warrant Agreement.

 

B-4

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**EXHIBIT C**

 

FORM OF CERTIFICATE OF EXCHANGE

 

DeCrane Holdings Co.

c/o DLJ Merchant Banking Partners

277 Park Avenue

New York, New York 10172

 

State Street Bank and Trust Company

225 Asylum Street, 23rd Floor

Hartford, Connecticut 06103

 

Re: Warrants

 

(CUSIP __________)

 

Reference ishereby made to the Warrant Agreement, dated as of October 5, 1998 (the **“Warrant Agreement”**), between DeCraneHoldings Co., as issuer (the **“Company”**),and State Street Bank and Trust Company, as Warrant agent. Capitalized termsused but not defined herein shall have the meanings given to them in theWarrant Agreement.

 

____________________(the **“Owner”**) owns and proposes toexchange the Warrant(s) or interest in such Warrant(s) specified herein, in theamount of $_______________ in such Warrant(s) or interests (the **“Exchange”**). In connection with theExchange, the Owner hereby certifies that:

 

1. **Exchange of Restricted Definitive Warrants orBeneficial Interests in a Restricted Global Warrant for Unrestricted DefinitiveWarrants or Beneficial Interests in an Unrestricted Global Warrant**

 

(a)   o**    Check ifExchange is from beneficial interest in a Restricted Global Warrant tobeneficial interest in an Unrestricted Global Warrant.**  In connection with the Exchange of theOwner’s beneficial interest in a Restricted Global Warrant for a beneficialinterest in an Unrestricted Global Warrant in an equal principal amount, theOwner hereby certifies (i) the beneficial interest is being acquired for theOwner’s own account without transfer, (ii) such Exchange has been effected incompliance with the transfer restrictions applicable to the Global Warrants andpursuant to and in accordance with the United States Securities Act of 1933, asamended (the **“Securities Act”**),(iii) the restrictions on transfer contained in the Warrant Agreement and thePrivate Placement Legend are not required in order to maintain compliance withthe Securities Act and (iv) the beneficial interest in an Unrestricted GlobalWarrant is being acquired in compliance with any applicable blue sky securitieslaws of any State of the United States.

 

(b)   o**    Check ifExchange is from beneficial interest in a Restricted Global Warrant toUnrestricted Definitive Warrant.** In connection with the Exchange of theOwner’s beneficial interest in a Restricted Global Warrant for an UnrestrictedDefinitive Warrant, the Owner hereby certifies (i) the Definitive Warrant isbeing acquired for the Owner’s own account without transfer, (ii) such Exchangehas been effected in compliance with the transfer restrictions applicable tothe Restricted Global Warrants and pursuant to and in accordance with theSecurities Act, (iii) the restrictions on transfer contained in the WarrantAgreement and the Private Placement Legend are not required in order tomaintain compliance with the Securities Act and (iv) the Definitive Warrant isbeing acquired in compliance with any applicable blue sky securities laws ofany state of the United States.

 

C-1

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(c)   o**    Check ifExchange is from Restricted Definitive Warrant to beneficial interest in anUnrestricted Global Warrant.** In connection with the Owner’s Exchange of aRestricted Definitive Warrant for a beneficial interest in an UnrestrictedGlobal Warrant, the Owner hereby certifies (i) the beneficial interest is beingacquired for the Owner’s own account without transfer, (ii) such Exchange hasbeen effected in compliance with the transfer restrictions applicable toRestricted Definitive Warrants and pursuant to and in accordance with theSecurities Act, (iii) the restrictions on transfer contained in the WarrantAgreement and the Private Placement Legend are not required in order tomaintain compliance with the Securities Act and (iv) the beneficial interest isbeing acquired in compliance with any applicable blue sky securities laws ofany state of the United States.

 

(d)   o**Check if Exchange isfrom Restricted Definitive Warrant to Unrestricted Definitive Warrant.**In connection with the Owner’s Exchange of a Restricted Definitive Warrant foran Unrestricted Definitive Warrant, the Owner hereby certifies (i) theUnrestricted Definitive Warrant is being acquired for the Owner’s own accountwithout transfer, (ii) such Exchange has been effected in compliance with thetransfer restrictions applicable to Restricted Definitive Warrants and pursuantto and in accordance with the Securities Act, (iii) the restrictions ontransfer contained in the Warrant Agreement and the Private Placement Legendare not required in order to maintain compliance with the Securities Act and(iv) the Unrestricted Definitive Warrant is being acquired in compliance withany applicable blue sky securities laws of any state of the United States.

 

2. **Exchange of Restricted Definitive Warrants orBeneficial Interests in Restricted Global Warrants for Restricted DefinitiveWarrants or Beneficial Interests in Restricted Global Warrants**

 

(a)   o**    Check ifExchange is from beneficial interest in a Restricted Global Warrant toRestricted Definitive Warrant.** In connection with the Exchange of theOwner’s beneficial interest in a Restricted Global Warrant for a RestrictedDefinitive Warrant in a number equal to the number of beneficial interestsexchanged, the Owner hereby certifies that the Restricted Definitive Warrant isbeing acquired for the Owner’s own account without transfer. Upon consummationof the proposed Exchange in accordance with the terms of the Warrant Agreement,the Restricted Definitive Warrant issued will continue to be subject to therestrictions on transfer enumerated in the Private Placement Legend printed onthe Restricted Definitive Warrant and in the Warrant Agreement and theSecurities Act.

 

(b)   o**    Check if Exchange is from Restricted Definitive Warrant tobeneficial interest in a Restricted Global Warrant.** In connection with theExchange of the Owner’s Restricted Definitive Warrant for a beneficial interestin the [CHECK ONE] o144A Global Warrant, o Regulation SGlobal Warrant, o IAI GlobalWarrant in a number equal to the number of beneficial interests exchanged, theOwner hereby certifies (i) the beneficial interest is being acquired for theOwner’s own account without transfer and (ii) such Exchange has been effectedin compliance with the transfer restrictions applicable to the RestrictedGlobal Warrants and pursuant to and in accordance with the Securities Act, andin compliance with any applicable blue sky securities laws of any state of theUnited States. Upon consummation of the proposed Exchange in accordance withthe terms of the Warrant Agreement, the beneficial interest issued will besubject to the restrictions on transfer enumerated in the Private PlacementLegend printed on the relevant Restricted Global Warrant and in the WarrantAgreement and the Securities Act.

 

C-2

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This certificateand the statements contained herein are made for your benefit and the benefitof the Company.

 
|   |   |   |   |                        |
|--------|--------|--------|--------|-----------------------------|
|   |   |   |   | [Insert Name of Transferor] |
|   |   |   |   |                        |
|   |   |   | By:    |                        |
|   |   |   |   | Name:                       |
|   |   |   |   | Title:                      |
|   |   |   |   |                        |
| Date:  |   |   |   |                        |

 

C-3

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**EXIDBIT D**

 

FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

 

DeCrane Holdings Co.

c/o DLJ Merchant Banking Partners

277 Park Avenue

New York, New York 10172

 

State Street Bank and Trust Company

225 Asylum Street, 23rd Floor

Hartford, Connecticut 06103

 

Re: Warrants

 

Reference ishereby made to the Warrant Agreement, dated as of October 5, 1998 (the ***“Warrant Agreement”***),between DeCrane Holdings Co., as issuer (the***“Company”***), and StateStreet Bank and Trust Company, as warrant agent. Capitalized terms used but notdefined herein shall have the meanings given to them in the Warrant Agreement.

 

In connection withour proposed purchase of $ _______________ amount of:

 

(a)   o**   **abeneficial interest in a Global Warrant, or

 

(b)   o**   **aDefinitive Warrant,

 

we confirm that:

 

1.             We understand that any subsequenttransfer of the Warrants or any interest therein is subject to certain restrictionsand conditions set forth in the Warrant Agreement and the undersigned agrees tobe bound by, and not to resell, pledge or otherwise transfer the Warrants orany interest therein except in compliance with, such restrictions andconditions and the United States Securities Act of 1933, as amended (the ***“Securities Act”***).

 

2.             We understand that the offer andsale of the Warrants have not been registered under the Securities Act, andthat the Warrants and any interest therein may not be offered or sold except aspermitted in the following sentence. We agree, on our own behalf and on behalfof any accounts for which we are acting as hereinafter stated, that if weshould sell the Warrants or any interest therein, we will do so only (A) to theCompany or any subsidiary thereof, (B) in accordance with Rule 144A under theSecurities Act to a “qualified institutional buyer” (as defined therein), (C)to an institutional “accredited investor” (as defined below) that, prior tosuch transfer, furnishes (or has furnished on its behalf by a U.S.broker-dealer) to you and to the Company a signed letter substantially in theform of this letter and, if requested by the Company, an Opinion of Counsel inform reasonably acceptable to the Company to the effect that such transfer isin compliance with the Securities Act, (D) outside the United States inaccordance with Rule 904 of Regulation S under the Securities Act, (E) pursuantto the provisions of Rule 144(k) under the Securities Act or (F) pursuant to aneffective registration statement under the Securities Act, and we further agreeto provide to any person purchasing the Definitive Warrant or beneficialinterest in a Global Warrant from us in a transaction meeting the requirementsof clauses (A) through (E) of this paragraph a notice advising such purchaserthat resales thereof are restricted as stated herein.

 

D-1

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3.             We understand that, on any proposedresale of the Warrants or beneficial interest therein, we will be required tofurnish to you and the Company such certifications, legal opinions and otherinformation as you and the Company may reasonably require to confirm that theproposed sale complies with the foregoing restrictions. We further understandthat the Warrants purchased by us will bear a legend to the foregoing effect.

 

4.             We are an institutional “accreditedinvestor” (as defined in Rule 501(a)(l), (2), (3) or (7) of Regulation D underthe Securities Act) and have such knowledge and experience in financial andbusiness matters as to be capable of evaluating the merits and risks of ourinvestment in the Warrants, and we and any accounts for which we are acting areeach able to bear the economic risk of our or its investment.

 

5.             We are acquiring the Warrants orbeneficial interest therein purchased by us for our own account or for one ormore accounts (each of which is an institutional “accredited investor”) as toeach of which we exercise sole investment discretion.

 

We agree not toengage in any hedging transactions with regard to the Warrants unless suchhedging transactions are in compliance with the Securities Act.

 

You and theCompany are entitled to rely upon this letter and are irrevocably authorized toproduce this letter or a copy hereof to any interested party in anyadministrative or legal proceedings or official inquiry with respect to thematters covered hereby.

 
|   |   |   |   |                        |
|--------|--------|--------|--------|-----------------------------|
|   |   |   |   | [Insert Name of Transferor] |
|   |   |   |   |                        |
|   |   |   | By:    |                        |
|   |   |   |   | Name:                       |
|   |   |   |   | Title:                      |
|   |   |   |   |                        |
| Date:  |   |   |   |                        |

 

D-2

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