Document:

Exhibit 4.5.1.1

 

(Face of Note)

 

THIS SECURITY MAY BE ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR THE
PURPOSES OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.  HOLDERS THAT WISH TO OBTAIN INFORMATION ABOUT
THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO
MATURITY OF THE INSTRUMENT FOR PURPOSES OF U.S. TAX LAW MAY DO SO BY
CONTACTING: DeCrane Aircraft Holdings, Inc., 2361 Rosecrans Avenue, Suite 180
El Segundo, California  90245, Attention:  Chief Financial Officer.

 

CUSIP 243662 AE3

 

17% Senior Discount Notes due 2008

 

	
  No. 2

  	
   

  	
  $1,001,000

  

 

DECRANE AIRCRAFT
HOLDINGS, INC. (THE “ISSUER”)

 

promises
to pay to CEDE & CO., or registered assigns, the principal sum of One
Million and One Dollars ($1,001,000) on September 30, 2008.

 

	
   

  	
  Dated: September 9,
  2004

  
	
   

  	
   

  
	
   

  	
  DECRANE AIRCRAFT
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  RICHARD J. KAPLAN

  	
   

  
	
   

  	
   

  	
  Name:  Richard J. Kaplan

  
	
   

  	
   

  	
  Title:  Chief Financial Officer

  

 

This
is one of the

Notes referred to in the

within-mentioned Indenture:

 

	
  U.S.
  BANK NATIONAL ASSOCIATION

  
	
  as
  Trustee

  
	
   

  
	
   

  
	
  By:

  	
  /S/  CAUNA M. SILVA

  	
   

  
	
   

  	
  Name:

  	
  Cauna M. Silva

  
	
   

  	
  Title:

  	
  Vice President

  
				

 

 

(Back of Note)

 

17% Senior Discount Notes due 2008

 

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a)
OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF DECRANE AIRCRAFT HOLDINGS, INC.

 

THIS NOTE (OR ITS PREDECESSOR) HAS 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 UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION 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 SECURITIES ACT) (A
“QIB”), (B) IT HAS ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL “ACCREDITED
INVESTOR” (AS DEFINED IN RULE 501(A) (1), (2), (3) OR (7) OR REGULATION D UNDER
THE SECURITIES ACT (AN “IAI”), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE ISSUERS OR ANY OF ITS SUBSIDIARIES, (B) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE
903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH
TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM
OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT
OF AN AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF NOTES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS 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 THE SECURITIES ACT. THE INDENTURE
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER
OF THIS NOTE IN VIOLATION OF THE FOREGOING.

 

2

 

Capitalized terms
used herein shall have the meanings assigned to them in the Indenture referred
to below unless otherwise indicated.

 

1.                                       INTEREST.  No interest
shall accrue on this Note.  Instead, the
Accreted Value of the Note will accrete at a rate of 17% from the date of
issuance, compounded semiannually on each March 30 and September 30
(commencing September 30, 2004), to an aggregate Accreted Value of
$1,001,000, the full principal amount at maturity, on September 30,
2008.  The Issuer shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue principal and premium, if any, from time to time on demand at a rate
of 18% per annum.

 

2.                                       METHOD OF PAYMENT.  The Notes will be payable as to
principal, premium and interest on overdue principal, if any, at the office of
the Paying Agent and Registrar.  Holders
of Notes must surrender their Notes to the Paying Agent to collect principal
payments, and the Issuer may pay principal, premium and interest on overdue
principal, if any, by check and may mail checks to a Holder’s registered
address; provided that all payments with respect
to Global Notes and Definitive Notes, the Holders of which have given wire
transfer instructions to the Issuer, will be required to be made by wire
transfer of immediately available funds to the accounts specified by the
Holders thereof.  Such payment shall be
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.

 

3.                                       PAYING AGENT AND REGISTRAR. Initially, U.S. Bank National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar.  The Issuer may change any
Paying Agent or Registrar without notice to any Holder.  The Issuer or any of its Subsidiaries may act
in any such capacity.

 

4.                                       INDENTURE   The
Issuer issued the Notes under an Indenture dated as of July 23, 2004,
among the Issuer, the Guarantors and the Trustee, as supplemented by the First
Supplemental Indenture dated as of September 9, 2004 among the Issuer, the
Guarantors and the Trustee (“Indenture”).  The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S.
Code §§ 77aaa-77bbbb).  The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. 
To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and
be controlling.  The Notes are
obligations of the Issuer initially limited to $1,001,000 in aggregate principal
amount at maturity.  Subject to limits in
the Indenture, the Issuer may issue Additional Notes constituting the same
series as the Initial Notes.

 

5.                                       OPTIONAL REDEMPTION.

 

Prior to
September 30, 2004, the Notes may be redeemed at any time at the option of
the Issuer, in whole or in part, upon not less than 30 nor more than 60 days’
notice, in cash at a redemption price equal to 106% of Accreted Value.  Thereafter, the Notes will be subject to
redemption at any time at the option of the Issuer, in whole or in part, upon
not less than 30 nor more than 60 days’ notice, in cash at the redemption
prices (expressed as percentages of Accreted Value) set forth below, if
redeemed during the twelve month period beginning on September 30 of the
years indicated below, to the applicable redemption date:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2004

  	
   

  	
  104.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2005

  	
   

  	
  102.000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2006
  and thereafter

  	
   

  	
  100.000

  	
  %

  

 

3

 

6.                                       MANDATORY REDEMPTION.

 

Except as set
forth in paragraph 7 below, the Issuer is not required to make mandatory
redemption of, or sinking fund payments with respect to, the Notes.

 

7.                                       REPURCHASE AT OPTION OF HOLDER.

 

(a)                                  Upon
the occurrence of a Change of Control (such date being the ‘‘Change of
Control Payment’’), each Holder of Notes shall have the right to
require the Issuer to purchase all or any part (equal to $1,000 or an integral
multiple thereof) of such Holder’s Notes pursuant to an offer at an offer price
in cash equal to 101% of the aggregate Accreted Value thereof.  Within 60 days following any Change of
Control, subject to the provisions of the Indenture, the Issuer shall mail a
notice to each Holder of Notes at such Holder’s registered address setting
forth the procedures governing the offer as required by the Indenture.

 

(b)                                 When
the aggregate amount of Excess Proceeds exceeds $10.0 million, the Issuer will
be required to make an offer to all Holders of Notes to purchase the maximum
principal amount of Notes that may be purchased out of Excess Proceeds, at an
offer price in cash in an amount equal to 100% of the Accreted Value thereof in
accordance with the procedures set forth in the Indenture.  Holders of Notes that are subject to an offer
to purchase will receive an Asset Sale Offer from the Issuer prior to any
related purchase date and may elect to have such Notes purchased by completing
the form entitled “Option of Holder to Elect Purchase” on the reverse side of
this Note.

 

8.                                       NOTICE OF REDEMPTION.  
Notice of any redemption or offer to purchase will be mailed at least 30
days but not more than 60 days before the redemption or purchase date to each
Holder of Notes to be redeemed or purchased at such Holder’s registered
address.  Notes in denominations larger
than $1,000 principal amount at maturity may be redeemed in part but only in
whole multiples of $1,000 principal amount at maturity, unless all of the Notes
held by a Holder are to be redeemed.

 

9.                                       DENOMINATIONS, TRANSFER, EXCHANGE.  The Notes are in
registered form without coupons in denominations of $1,000 principal amount at
maturity and integral multiples thereof.  The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture.  The
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Issuer may require a
Holder to pay any taxes and fees required by law or permitted by the
Indenture.  The Issuer need not exchange or register the transfer of any
Note or portion of a Note selected for redemption, except for the unredeemed
portion of any Note being redeemed in part.  Also, the Issuer need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed.

 

10.                                 PERSONS DEEMED OWNERS. 
The registered Holder of a Note may be treated as its owner for all
purposes.

 

11.                                 AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions set forth in the Indenture, the Indenture, the Note Guarantees or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount at maturity of the Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture or

 

4

 

the Notes may be waived with the consent of the Holders of a majority
in principal amount at maturity of the then outstanding Notes (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes). 
Notwithstanding the foregoing, without the consent of any Holder of
Notes, the Issuer, the Guarantors and the Trustee may amend or supplement the
Indenture, the Note Guarantees or the Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place
of certificated Notes, to provide for the assumption of the Issuer’s
obligations to Holders of Notes in the case of a merger or consolidation or
sale of all or substantially all of the Issuer’s assets, to make any change
that would provide any additional rights or benefits to the Holders of Notes or
that does not materially adversely affect the legal rights under the Indenture
of any such Holder, or to comply with requirements of the Commission in order
to effect or maintain the qualification of the Indenture under the Trust
Indenture Act or to provide for additional Note Guarantees of the Notes.

 

12.                                 DEFAULTS AND REMEDIES. 

 

(a) Events of
Default include: (a) default in payment
when due of the principal of or premium, if any, on the Notes; (b) failure by
the Issuer or any of its Restricted Subsidiaries for 30 days after receipt of
notice from the Trustee or Holders of at least 25% in principal amount at
maturity of the Notes then outstanding to comply with the provisions of
Sections 4.07, 4.09, 4.10, 4.14 and Article 5 of the Indenture; (c)
failure by the Issuer for 60 days after notice from the Trustee or the Holders
of at least 25% in principal amount at maturity of the Notes then outstanding
to comply with any of their other agreements in the Indenture or the Notes; (d)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Issuer or any of its Restricted Subsidiaries (or the payment of
which is guaranteed by the Issuer or any of its Restricted Subsidiaries),
whether such Indebtedness or guarantee now exists, or is created after the date
of the Indenture, which default (i) is caused by a failure to pay Indebtedness
at its stated final maturity (after giving effect to any applicable grace
period provided in such Indebtedness) (a “Payment Default”) or (ii) results in
the acceleration of such Indebtedness prior to its stated final maturity and,
in each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$10.0 million or more; (e) failure by the Issuer or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess of $10.0 million (net
of any amounts with respect to which a reputable and creditworthy insurance
company has acknowledged liability in writing), which judgments are not paid,
discharged or stayed for a period of 60 days; (f) except as permitted by the
Indenture, any Note Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall
deny or disaffirm its obligations under its Note Guarantee; and (g) certain
events of bankruptcy or insolvency with respect to the Issuer or any of its
Restricted Subsidiaries that is a Significant Subsidiary.  If any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately.  Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Issuer or any of its Restricted
Subsidiaries that is a Significant Subsidiary, all outstanding Notes will
become due and payable without further action or notice.

 

(b) In the event
of a declaration of acceleration of the Notes because an Event of Default has occurred
and is continuing as a result of the acceleration of any Indebtedness described
in clause (d) of the preceding paragraph, the declaration of acceleration of
the Notes shall be automatically annulled if the holders of any Indebtedness
described in clause (d) have rescinded the declaration of acceleration in
respect of such Indebtedness within 30 days of the date of such declaration and
if (i) the annulment of the acceleration of the Notes would not conflict with
any judgment or decree of a court of competent

 

5

 

jurisdiction and (ii) all existing Events of Default, except
non-payment of principal or interest on the Notes that became due solely
because of the acceleration of the Notes, have been cured or waived.

 

13.                                 NOTE GUARANTEES. The payment of principal of, premium, and
interest and Liquidated Damages, if any, on the Notes are unconditionally
guaranteed, jointly and severally, by the Guarantors.

 

14.                                 ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES.  In addition to the rights provided to Holders
of Notes under the Indenture, Holders of Restricted Global Notes shall have the
rights set forth in the Registration Rights Agreement dated as of July 23,
2004, among the Issuer, the Guarantors and the parties named on the signature
pages thereof  (the “Registration
Rights Agreement”).

 

15.                                 TRUSTEE DEALINGS WITH ISSUER.  The Trustee, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Issuer or its Affiliates, and may otherwise deal with Issuer or its Affiliates,
as if it were not the Trustee.

 

16.                                 NO RECOURSE AGAINST OTHERS.  A director, officer,
employee, incorporator or stockholder, of the Issuer, as such, shall not have
any liability for any obligations of the Issuer under the Notes or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation.  Each
Holder by accepting a Note waives and releases all such liability.  The
waiver and release are part of the consideration for the issuance of the Notes.

 

17.                                 AUTHENTICATION.  This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

 

18.                                 ABBREVIATIONS.  Customary abbreviations may be used in
the name of a Holder or an assignee, such as:  TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).

 

19.                                 CUSIP NUMBERS. 
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. 
No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon. 

 

The Issuer will
furnish to any Holder upon written request and without charge a copy of the
Indenture and/or the Registration Rights Agreement.  Requests may be made to:

 

DeCrane Aircraft
Holdings, Inc.

2361 Rosecrans Avenue, Suite 180

El Segundo, California  90245

Attention: Chief Financial Officer

 

6

 

ASSIGNMENT FORM

 

To assign this Note, fill
in the form below: (I) or (we) assign and transfer this Note to 

 

	
   

  
	
  (Insert
  assignee’s soc. sec. or tax I.D. no.)

  
	
   

  
	
   

  
	
   

  
	
  (Print or type
  assignee’s name, address and zip code)

  
	
   

  
	
  and
  irrevocably appoint

  
	
  to
  transfer this Note on the books of the Issuer.  The agent may substitute
  another to act for him.

  
	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Your Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   (Sign exactly as your name

  
	
   

  	
   

  	
  appears on the face of
  this Note)

  
	
   

  	
   

  
	
   

  	
  Signature Guarantee:

  
								

 

7

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to
elect to have this Note purchased by the Issuer pursuant to Section 4.10
or 4.14 of the Indenture, check the box below:

 

o
Section 4.10                                                                 o
Section 4.14

 

If you want to
elect to have only part of the Note purchased by the Issuer pursuant to
Section 4.10 or Section 4.14 of the Indenture, state the principal
amount at maturity you elect to have purchased:
$           

 

 

	
  Date:

  	
   

  	
   

  	
  Your Signature:

  	
   

  	
   

  
	
   

  	
  (Sign
  exactly as your name appears on the Note)

  
	
   

  	
   

  
	
   

  	
  Tax Identification No:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature Guarantee:

  
								

 

8

 

SCHEDULE OF EXCHANGES OF INTERESTS IN THE
GLOBAL NOTE

 

The following
exchanges of a part of this Global Note for an interest in another Global Note
or for a Definitive Note, or exchanges of a part of another Global Note or
Definitive Note for an interest in this Global Note, have been made:

 

	
  Date of Exchange

  	
   

  	
  Amount of decrease

  in

  Principal Amount

  of this

  Global Note

  	
   

  	
  Amount of

  increase in

  Principal

  Amount of this

  Global Note

  	
   

  	
  Principal Amount

  of this Global Note

  following such

  decrease (or increase)

  	
   

  	
  Signature of

  authorized officer

  of Trustee or

  Note Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

9Exhibit 4.5.2

 

CERTIFICATE OF AMENDMENT

TO

CERTIFICATE OF DESIGNATIONS, PREFERENCES

AND RIGHTS OF 14% SENIOR REDEEMABLE EXCHANGEABLE

PREFERRED STOCK DUE 2009

(NOW DESIGNATED AS SENIOR REDEEMABLE EXCHANGEABLE

PREFERRED STOCK DUE 2009)

 

of

 

DECRANE HOLDINGS CO.

 

Pursuant to Section 242 of the General Corporation Law

of the State of Delaware

 

DeCrane Holdings Co., a Delaware corporation (the “Corporation”),
hereby certifies as follows:

 

A.                          The
undersigned, R. Jack DeCrane, is the duly elected Chief Executive Officer of
the Corporation.

 

B.                            Pursuant to Article Fourth
of the Corporation’s Certificate of Incorporation, as amended (the “Certificate of Incorporation”), the Board
of Directors of the Corporation (the “Board”)
is authorized to fix the powers, designations, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations and restrictions (collectively, “Rights
and Preferences”) of a series of the Corporation’s 2,500,000 shares
of preferred stock, $0.01 par value per share (the “Preferred Stock”).

 

C.                            Pursuant to a
Certificate of Designations, Preferences and Rights of 14% Senior Redeemable
Exchangeable Preferred Stock Due 2008 of the Corporation, as amended by the
filing of that certain Certificate of Amendment of Certificate of Incorporation
of the Corporation and that certain Certificate of Amendment of Certificate of Designations,
Preferences and Rights of 14% Senior Redeemable Exchangeable Preferred Stock
Due 2009 of the Corporation (the “Senior
Preferred Stock Certificate of Designations”), the Board fixed the
Rights and Preferences of the Corporation’s 14% Senior Redeemable Exchangeable
Preferred Stock Due 2009.

 

D.                           The Board, in
accordance with the provisions of Section 141(f) and Section 242 of
the General Corporation Law of the State of Delaware, has (a) declared
advisable that the Senior Preferred Stock Certificate of Designations be
amended and restated as set forth in this Certificate of Amendment to
Certificate of Designations (the “Certificate
of Amendment”), (b) recommended that this

 

 

Certificate
of Amendment be approved and adopted by the Corporation’s stockholders,
including the holders of the Corporation’s 14% Senior Redeemable Exchangeable
Preferred Stock Due 2009, and (c) submitted the Certificate of Amendment to
such stockholders for approval and adoption.

 

E.                             The Corporation’s
stockholders have duly approved and adopted this Certificate of Amendment in
accordance with the provisions of Section 228 and Section 242 of the
General Corporation Law of the State of Delaware, to amend and restate the
provisions of the Senior Preferred Stock Certificate of Designations as set
forth herein.

 

F.                             Pursuant
to the foregoing resolutions of the Board and the Corporation’s stockholders,
in accordance with Sections 103 and 242 of the General Corporation Law of the
State of Delaware, the Corporation hereby amends and restates the Senior
Preferred Stock Certificate of Designations in its entirety, with the effect
that, effective immediately upon the filing of this Certificate of Amendment
with the Secretary of State of Delaware, each outstanding share of 14% Senior
Redeemable Exchangeable Preferred Stock Due 2009 of the Corporation shall have
the powers, designations, preferences and relative, participating, optional and
other special rights, and the qualifications, limitations and restrictions, of
a share of Senior Redeemable Exchangeable Preferred Stock Due 2009 as set forth
below:

 

(1)                        Number and Designation. 
1,360,000 shares of the Preferred Stock of the Corporation shall be
designated as Senior Redeemable Exchangeable Preferred Stock Due 2009 (the “Senior Preferred Stock”).

 

(2)                        Rank.  The Senior
Preferred Stock shall, with respect to dividend rights, if any, and rights on
liquidation, dissolution and winding up, rank prior to all classes of or series
of common stock of the Corporation, including the Corporation’s common stock,
par value $0.01 per share (“Common Stock”),
and each other class of capital stock of the Corporation, the terms of which
provide that such class shall rank junior to the Senior Preferred Stock or the
terms of which do not specify any rank relative to the Senior Preferred
Stock.  All equity securities of the
Corporation to which the Senior Preferred Stock ranks prior (whether with respect
to dividends or upon liquidation, dissolution, winding up or otherwise),
including the Common Stock, are collectively referred to herein as the “Junior Securities.” All equity securities of the Corporation
with which the Senior Preferred Stock ranks on a parity
(whether with respect to dividends or upon liquidation, dissolution, winding up
or otherwise) are collectively referred to herein as the “Parity
Securities.”  The respective
definitions of Junior Securities and Parity Securities shall also include any
rights or options exercisable for or convertible into any of the Junior
Securities and Parity Securities, as the case may be.  The Senior Preferred Stock shall be subject
to the creation of Junior Securities and Parity Securities.

 

2

 

(3)                        Dividends. 
(a)  Dividends on each share of
Senior Preferred Stock shall accrue from and after July 23, 2004 (the “Amendment Date”), but shall not be payable (except to the
extent accrued dividends increase the Liquidation Value (as defined below)
payable hereunder), for each period beginning on the day after each Quarterly
Date (as defined below) (or, in the case of the Quarterly Period (as defined
below) ending on September 30, 2004, beginning on the Amendment Date and
ending on the next Quarterly Date at a rate equal to:

 

(A) except as
provided in clause (C) below, 0% per annum if the Consolidated EBITDA Ratio (as
defined below) as of the Quarterly Date immediately prior to the beginning of
such period is greater than or equal to 6.0;

 

(B) except as
provided in clause (C) below, 3.5% per annum (computed on the basis of a 360
day year) of the Liquidation Value if the Consolidated EBITDA Ratio as of the
Quarterly Date immediately prior to the beginning of such period is less than
6.0 but greater than or equal to 5.0; or

 

(C) 14% per
annum (computed on the basis of a 360 day year) of the Liquidation Value (i) if
the Consolidated EBITDA Ratio as of such first Quarterly Date is less than 5.0
or (ii) if and for so long as a Triggering Event (as defined below) shall have
occurred and be continuing.

 

Such 0%, 3.5% or 14% rate, as applicable, is referred to herein as the “Dividend Rate”.  If
the Corporation is unable or shall fail to discharge its obligation to redeem
all outstanding shares of Senior Preferred Stock pursuant to Section 5(b)
or 5(c) hereof, the Dividend Rate, if any, shall increase by .25 percent per
quarter (each, a “Default Dividend”)
for each quarter or portion thereof following the date on which such redemption
was required to be made until cured; provided that
the aggregate increase shall not exceed 5%. 
Such dividends, if any, shall accrue in the manner set forth above
quarterly from and after the Amendment Date on March 31, June 30, September 30
and December 31 of each year (unless such day is not a business day, in
which event on the next succeeding business day) (each of such dates being a “Quarterly Date” and each such quarterly period being a “Quarterly Period”). 
Such dividends shall be cumulative from the date of issue, whether or
not in any Quarterly Period or Periods there shall be funds of the Corporation
legally available for the payment of such dividends.

 

As used herein, (A) “Consolidated EBITDA Ratio”
means, on any Quarterly Date, the ratio of (a) Consolidated Total Debt plus the
aggregate Liquidation Value of all outstanding shares of Senior Preferred Stock
of DeCrane Aircraft Holdings, Inc. as of such Quarterly Date to (b)
Consolidated Cash Flow (as defined in the Indenture referenced below) for the
four consecutive Quarterly Periods ending on such Quarterly Date; (B) “Consolidated Total Debt” means, as at any date of
determination, the total amount of Indebtedness (as defined in

 

3

 

the Indenture referenced below) of DeCrane Aircraft Holdings, Inc. and
its subsidiaries, determined on a consolidated basis in accordance with
generally accepted accounting principles; (C) “Consolidated
Cash Flow” has the meaning set forth in the Indenture; (D) “Indenture” means the Indenture dated as of July 23,
2004 among DeCrane Aircraft Holdings, Inc., as issuer, each of the guarantors
party thereto and U.S. Bank National Association, as trustee, as in effect on the
Amendment Date; and (E) “Triggering Event”
means the Corporation is unable or shall fail to discharge any Mandatory
Redemption Obligation (as defined below).

 

(b)                        Holders
of shares of Senior Preferred Stock shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of the cumulative
dividends, as herein provided, on the Senior Preferred Stock.  Except as provided in this Section 3,
no interest, or sum of money in lieu of interest, shall be payable in respect
of any dividend payment or payments on the Senior Preferred Stock that accrue.

 

(c)                         So
long as any shares of the Senior Preferred Stock are outstanding, no dividends
shall be declared or paid or set apart for payment on Parity Securities for any
period.

 

(d)                        So
long as any shares of the Senior Preferred Stock are outstanding, no dividends
(other than dividends or distributions paid in shares of, or options, warrants
or rights to subscribe for or purchase shares of, Junior Securities) shall be
declared or paid or set apart for payment or other distribution declared or made
upon Junior Securities, nor shall any Junior Securities be redeemed, purchased
or otherwise acquired (other than a redemption, purchase or other acquisition
of shares of Common Stock made for purposes of an employee incentive or benefit
plan of the Corporation or any subsidiary) (all such dividends, distributions,
redemptions or purchases being hereinafter referred to as a “Junior Securities Distribution”) for any consideration (or
any moneys be paid to or made available for a sinking fund for the redemption
of any shares of any such stock) by the Corporation, directly or indirectly
(except by conversion into or exchange for Junior Securities), without the
written consent of a majority of the outstanding shares of Senior Preferred
Stock or the vote of holders of a majority of the outstanding shares of Senior
Preferred Stock.

 

(4)                        Liquidation Preference. 
(a)  In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, before any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or set apart for the
holders of Junior Securities, each holder of a share of Senior Preferred Stock
shall be entitled to receive an amount equal to the Liquidation Value of such
share.  “Liquidation
Value” on any date means, with respect to (x) any share of Senior
Preferred Stock other than any Additional Shares, the sum of (1) $225.37 per
share and (2) all dividends, if any, accrued but unpaid on such share from and
after the Amendment Date to such date in accordance with Section 3; provided that in the

 

4

 

event of an actual liquidation, dissolution or winding up of the
Corporation or the redemption of any shares of Senior Preferred Stock pursuant
to Section 5 hereunder, the amount referred to in (2) shall be calculated
by including dividends accreting to the actual date of such liquidation,
dissolution or winding up or the redemption date, as the case may be, rather
than the Quarterly Date referred to above. 
Except as provided in the preceding sentences, holders of shares of
Senior Preferred Stock shall not be entitled to any distribution in the event
of liquidation, dissolution or winding up of the affairs of the
Corporation.  If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of the shares of Senior
Preferred Stock shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any Parity Securities, then such assets,
or the proceeds thereof, shall be distributed among the holders of shares of
Senior Preferred Stock and any such other Parity Securities ratably in
accordance with the respective amounts that would be payable on such shares of
Senior Preferred Stock and any such other stock if all amounts payable thereon
were paid in full. For the purposes of this Section (4), (i) a
consolidation or merger of the Corporation with one or more corporations, or
(ii) a sale or transfer of all or substantially all of the Corporation’s
assets, shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, of the Corporation.

 

(b)                        Subject
to the rights of the holders of any Parity Securities, after payment shall have
been made in full to the holders of the Senior Preferred Stock, as provided in
this Section (4), any other series or class or classes of Junior
Securities shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets remaining to be
paid or distributed, and the holders of the Senior Preferred Stock shall not be
entitled to share therein.

 

(5)                        Redemption.  (a) Redemption At the Option of the Corporation.
To the extent the Corporation shall have funds legally available for such
payment, the Corporation may, at its option, redeem shares of Senior Preferred
Stock, at any time in whole but not in part, at redemption prices per share in
cash set forth in the table below:

 

	
  Year Beginning September 30,

  	
   

  	
  Percentage of Liquidation Value on

  Date of Redemption

  	
   

  
	
  2003

  	
   

  	
  107.000%

  	
   

  
	
  2004

  	
   

  	
  104.667%

  	
   

  
	
  2005

  	
   

  	
  102.333%

  	
   

  
	
  2006 and thereafter 

  	
   

  	
  100.000%

  	
   

  

 

(b)                        Redemption In the Event of a Change of Control. In the event
of a Change of Control, the Corporation shall, to the extent it shall have
funds legally available for such payment, offer to redeem all of the shares of
Senior Preferred

 

5

 

Stock then outstanding, and shall redeem the shares of Senior Preferred
Stock of any holder of such shares that shall consent to such redemption, upon
a date no later than 30 days following the Change in Control, at a redemption
price per share equal to 101% of the Liquidation Value, in cash, to the date of
redemption, without interest.

 

“Change of Control” means such time as:
(a) a “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended), other than any person or
group comprised solely of the Initial Investors, has become the beneficial
owner, by way of merger, consolidation or otherwise, of 30% or more of the
voting power of all classes of voting securities of the Corporation, and such
person or group has become the beneficial owner of a greater percentage of the
voting power of all classes of voting securities of the Corporation than that
beneficially owned by the Initial Investors; or (b) a sale or transfer of all
or substantially all of the assets of the Corporation to any person or group
(other than any group consisting solely of the Initial Investors or their
affiliates) has been consummated; or (c) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of the Corporation (together with any new directors whose election
was approved by a vote of a majority of the directors then still in office, who
either were directors at the beginning of such period or whose election or
nomination for the election was previously so approved) cease for any reason to
constitute a majority of the directors of the Corporation, then in office.

 

“Initial Investors” means the
Stockholders (determined as of the issuance of the Preferred Stock) and their
Permitted Transferees, each as defined in the Investors’ Agreement (as defined
below).

 

“Investors’ Agreement” means the Amended
and Restated Investors’ Agreement dated as of October 6, 2000 among
DeCrane Holdings Co., DeCrane Aircraft Holdings, Inc., DLJ Merchant Banking
Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore
Partners II, C.V., DLJ Diversified Partners, L.P., DLJ Diversified Partners-A,
L.P., DLJ Millennium Partners, L.P., DLJ Millennium Partners-A, L.P., DLJMB
Funding II, Inc., UK Investment Plan 1997 Partners, DLJ EAB Partners, L.P., DLJ
First ESC L.P., DLJ ESC II L.P., DLJ Investment Partners, L.P., DLJ Investment
Partners II, L.P., DLJ Investment Funding II, Inc. and certain other
stockholders named therein, as the same may be amended from time to time.

 

(c)                         Mandatory Redemption. To the extent the Corporation shall
have funds legally available for such payment, on September 30, 2009, if
any shares of the Senior Preferred Stock shall be outstanding, the Corporation
shall redeem all outstanding shares of the Senior Preferred Stock, at a
redemption price per share equal to the aggregate Liquidation Value, in cash,
to the date of redemption, without interest.

 

6

 

(d)                        Status of Redeemed Shares. Shares of Senior Preferred Stock
which have been issued and reacquired in any manner, including shares purchased
or redeemed, shall (upon compliance with any applicable provisions of the laws
of the State of Delaware) have the status of authorized and unissued shares of
the class of Preferred Stock undesignated as to series and may be redesignated
and reissued as part of any series of the Preferred Stock; provided
that no such issued and reacquired shares of Senior Preferred Stock shall be
reissued or sold as Senior Preferred Stock.

 

(e)                         Failure to Redeem. If the Corporation is unable or shall
fail to discharge its obligation to redeem all outstanding shares of Senior
Preferred Stock pursuant to Section (5)(b) or 5(c) (each, a “Mandatory Redemption Obligation”), such Mandatory Redemption
Obligation shall be discharged as soon as the Corporation is able to discharge
such Mandatory Redemption Obligation.  If
and so long as any Mandatory Redemption Obligation with respect to the Senior
Preferred Stock shall not be fully discharged, the Corporation shall not (i)
directly or indirectly, redeem, purchase, or otherwise acquire any Parity
Security or discharge any mandatory or optional redemption, sinking fund or
other similar obligation in respect of any Parity Securities (except in connection
with a redemption, sinking fund or other similar obligation to be satisfied pro
rata with the Senior Preferred Stock) or (ii) notwithstanding Section 3(d),
declare or make any Junior Securities Distribution, or, directly or indirectly,
discharge any mandatory or optional redemption, sinking fund or other similar
obligation in respect of the Junior Securities.

 

(f)                           Failure to Pay Dividends. Notwithstanding the foregoing
provisions of this Section (5), none of the shares of Senior Preferred
Stock shall be redeemed, and no sum shall be set aside for such redemption,
unless shares of Senior Preferred Stock are redeemed pro rata.

 

(6)                        Procedure for Redemption.  (a) In the event the Corporation shall redeem
shares of Senior Preferred Stock pursuant to Sections 5(a) or (c) hereof,
notice of such redemption shall be given by first class mail, postage prepaid,
mailed not less than 30 days nor more than 60 days prior to the redemption
date, to each holder of record of the shares to be redeemed at such holder’s
address as the same appears on the stock register of the Corporation; provided that neither the failure to give such notice nor
any defect therein shall affect the validity of the giving of notice for the
redemption of any share of Senior Preferred Stock to be redeemed except as to
the holder to whom the Corporation has failed to give said notice or except as
to the holder whose notice was defective. Each such notice shall state: (i) the
redemption date; (ii) the number of shares of Senior Preferred Stock to be
redeemed; (iii) the redemption price; (iv) the place or places where
certificates for such shares are to be surrendered for payment of the
redemption price; and (v) that dividends, if any, on the shares to be redeemed
will cease to accrue on such redemption date.

 

7

 

(b)                        In
the case of any redemption pursuant to Sections 5(a) or (c) hereof, notice
having been mailed as provided in Section 6(a) hereof, from and after the
redemption date (unless default shall be made by the Corporation in providing
money for the payment of the redemption price of the shares called for
redemption), dividends, if any, on the shares of Senior Preferred Stock so
called for redemption shall cease to accrue, and all rights of the holders
thereof as stockholders of the Corporation (except the right to receive from
the Corporation the redemption price) shall cease. Upon surrender in accordance
with said notice of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors of the Corporation
shall so require and the notice shall so state), such share shall be redeemed
by the Corporation at the redemption price aforesaid. In case fewer than all
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares without cost to the holder
thereof.

 

(c)                         In
the case of a redemption pursuant to Section 5(b) hereof, notice of such
redemption shall be given by first class mail, postage prepaid, mailed not more
than 10 days following the occurrence of the Change of Control and not less
than 20 days prior to the redemption date, to each holder of record of the
shares to be redeemed at such holder’s address as the same appears on the stock
register of the Corporation; provided that
neither the failure to give such notice nor any defect therein shall affect the
validity of the giving of notice for the redemption of any share of Senior
Preferred Stock to be redeemed except as to the holder to whom the Corporation
has failed to give said notice or except as to the holder whose notice was
defective. Each such notice shall state: (i) that a Change of Control has
occurred; (ii) the redemption date; (iii) the redemption price; (iv) that such
holder may elect to cause the Corporation to redeem all or any of the shares of
Senior Preferred Stock held by such holder; (v) the place or places where
certificates for such shares are to be surrendered for payment of the
redemption price; and (vi) that dividends, if any, on the shares the holder
elects to cause the Corporation to redeem will cease to accrue on such
redemption date.

 

Upon receipt of such notice, the holder shall, within 20 days of
receipt thereof, return such notice to the Corporation indicating the number of
shares of Senior Preferred Stock such holder shall elect to cause the
Corporation to redeem, if any.

 

(d)                        In
the case of a redemption pursuant to Section 5(b) hereof, notice having
been mailed as provided in Section 6(c) hereof, from and after the
redemption date (unless default shall be made by the Corporation in providing
money for the payment of the redemption price of the shares called for
redemption), dividends, if any, on such shares of Senior Preferred Stock as the
holder elects to cause the Corporation to redeem shall cease to accrue, and all
rights of the holders thereof as stockholders of the Corporation (except the
right to receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any shares so
redeemed (properly endorsed or assigned for transfer, if the Board of Directors
of the

 

8

 

Corporation shall so require and the notice shall so state), such share
shall be redeemed by the Corporation at the redemption price aforesaid. In case
fewer than all the shares represented by any such certificate are redeemed, a
new certificate shall be issued representing the unredeemed shares without cost
to the holder thereof.

 

(7)                        Exchange.  (a)
Subject to the provisions of this Section (7) the Corporation may, at its
option, at any time and from time to time on any Quarterly Date, exchange, to
the extent it is legally permitted to do so, all, but not less than all, outstanding
shares (and fractional shares) of Senior Preferred Stock, for Exchange
Debentures; provided that (i) no event of default
under the indenture (as defined in such indenture) governing the Exchange
Debentures shall have occurred and be continuing; and (ii) no shares of Senior
Preferred Stock are held on such date by the DLJMB Funds (as defined in the
Investors’ Agreement) or any of their Affiliates, or any of their Permitted
Transferees.  The principal amount of
Exchange Debentures deliverable upon exchange of a share of Senior Preferred
Stock, adjusted as hereinafter provided, shall be determined in accordance with
the Exchange Ratio (as defined below).

 

In no event shall the Corporation issue Exchange Debentures in
denominations other than $1,000 or in an integral multiple thereof. Cash will
be paid in lieu of any such fraction of an Exchange Debenture which would
otherwise have been issued (which shall be determined with respect to the
aggregate principal amount of Exchange Debentures to be issued to a holder upon
any such exchange). Interest will accrue on the Exchange Debentures from the
date of exchange.

 

Prior to effecting any exchange hereunder, the
Corporation shall appoint a trustee to serve in the capacity contemplated by an
indenture between the Corporation and such trustee, containing customary terms
and conditions.

 

The Exchange Ratio shall be, as of any Quarterly Date, $1.00 (or
fraction thereof) of principal amount of Exchange Debenture for each $1.00 of
Liquidation Value per share of Senior Preferred Stock held by a holder on the
applicable exchange date.

 

“Affiliates” shall have the meaning
ascribed to such term in the Investors’ Agreement.

 

“Exchange Debentures” means Senior
Subordinated Exchange Debentures due 2009 of the Corporation, accruing interest
at the rates established for dividends as provided herein but providing that
such interest shall not be payable in cash until the maturity date on September 30,
2009, to be issued pursuant to an indenture between the Corporation and a trustee,
containing customary terms and conditions approved by the Board of Directors.

 

9

 

“Permitted Transferees” shall have the
meaning ascribed to such term in the Investors’ Agreement.

 

(b)                        Procedure for Exchange. (i) In the event the Corporation
shall exchange shares of Senior Preferred Stock, notice of such exchange shall
be given by first class mail, postage prepaid, mailed not less than 30 days nor
more than 60 days prior to the exchange date, to each holder of record of the
shares to be exchanged at such holder’s address as the same appears on the
stock register of the Corporation; provided that
neither the failure to give such notice nor any defect therein shall affect the
validity of the giving of notice for the exchange of any share of Senior
Preferred Stock to be exchanged except as to the holder to whom the Corporation
has failed to give said notice or except as to the holder whose notice was
defective. Each such notice shall state: (A) the exchange date; (B) the number
of shares of Senior Preferred Stock to be exchanged and, if fewer than all the
shares held by such holder are to be exchanged, the number of shares to be
exchanged from such holder; (C) the Exchange Ratio; (D) the place or places
where certificates for such shares are to be exchanged for notes evidencing the
Exchange Debentures to be received by the exchanging holder; and (E) that
dividends, if any, on the shares to be exchanged will cease to accrue on such
exchange date.

 

(ii)                                   Prior
to giving notice of intention to exchange, the Corporation shall execute and
deliver with a bank or trust company selected by the Corporation an indenture
containing customary terms and conditions. The Corporation will cause the
Exchange Debentures to be authenticated on the Quarterly Date on which the
exchange is effective, and will pay interest on the Exchange Debentures at the
rate and on the dates specified in such indenture from the exchange date.

 

The Corporation will not give notice of its
intention to exchange under Section 7(b)(i) hereof unless it shall file at
the place or places (including a place in the Borough of Manhattan, The City of
New York) maintained for such purpose an opinion of counsel (who may be an
employee of the Corporation) to the effect that (i) the indenture has been duly
authorized, executed and delivered by the Corporation, has been duly qualified
under the Trust Indenture Act of 1939 (or that such qualification is not
necessary) and constitutes a valid and binding instrument enforceable against
the Corporation in accordance with its terms (subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors’ rights and to general equity principles,
and subject to such other qualifications as are then customarily contained in
opinions of counsel experienced in such matters), (ii) the Exchange Debentures
have been duly authorized and, when executed and authenticated in accordance
with the provisions of the indenture and delivered in exchange for the shares
of Senior Preferred Stock, will constitute valid and binding obligations of the
Corporation entitled to the benefits of the indenture (subject as aforesaid),
(iii) neither

 

10

 

the execution nor delivery of the indenture
or the Exchange Debentures nor compliance with the terms, conditions or
provisions of such instruments will result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or agreement or instrument, known to such counsel, to
which the Corporation or any of its subsidiaries is a party or by which it or
any of them is bound, or any decree, judgment, order, rule or regulation, known
to such counsel, of any court or governmental agency or body having
jurisdiction over the Corporation and such subsidiaries or any of their
properties, (iv) the Exchange Debentures have been duly registered for such
exchange with the Securities and Exchange Commission under a registration
statement that has become effective under the Securities Act of 1933 (the “Act”) or that the exchange of the Exchange Debentures for
the shares of Senior Preferred Stock is exempt from registration under the Act,
and (v) the Corporation has sufficient legally available funds for such
exchange such that such exchange is permitted under applicable law.

 

(iii)                                Notice having been
mailed as aforesaid, from and after the exchange date (unless default shall be
made by the Corporation in issuing Exchange Debentures in exchange for the
shares called for exchange), dividends, if any, on the shares of Senior
Preferred Stock so called for exchange shall cease to accrue, and all rights of
the holders thereof as stockholders of the Corporation (except the right to
receive from the Corporation the Exchange Debentures and any rights such
holder, upon the exchange, may have as a holder of the Exchange Debenture)
shall cease. Upon surrender in accordance with said notice of the certificates
for any shares so exchanged (properly endorsed or assigned for transfer, if the
Board of Directors of the Corporation shall so require and the notice shall so
state), such share shall be exchanged by the Corporation for the Exchange
Debentures at the Exchange Ratio. In case fewer than all the shares represented
by any such certificate are exchanged, a new certificate shall be issued
representing the unexchanged shares without cost to the holder thereof.

 

(iv)                               Each exchange shall be
deemed to have been effected immediately after the close of business on the
relevant Quarterly Date, and the person in whose name or names any Exchange
Debentures shall be issuable upon such exchange shall be deemed to have become
the holder of record of the Exchange Debentures represented thereby at such
time on such Quarterly Date.

 

(v)                                  Prior to the delivery
of any securities which the Corporation shall be obligated to deliver upon
exchange of the Senior Preferred Stock, the Corporation shall comply with all
applicable federal and state laws and regulations which require action to be
taken by the Corporation.

 

11

 

(c)                         The
Corporation will pay any and all documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of notes evidencing Exchange
Debentures on exchange of the Senior Preferred Stock pursuant hereto; provided that the Corporation shall not be required to pay
any tax which may be payable in respect of any transfer involved in the issue
or delivery of Exchange Debentures in a name other than that of the holder of
the Senior Preferred Stock to be exchanged and no such issue or delivery shall
be made unless and until the person requesting such issue or delivery has paid
to the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.

 

(8)                        Voting Rights. 
(a) The holders of record of shares of Senior Preferred Stock shall not
be entitled to any voting rights except as hereinafter provided in this Section (8),
as otherwise provided by law or as provided in the Investors’ Agreement.

 

(b)                        If
and whenever (i) for any reason (including the reason that funds are not
legally available for a redemption), the Corporation shall have failed to
discharge any Mandatory Redemption Obligation (including a redemption in the
Event of a Change of Control pursuant to Section 5(b) hereof), (ii) the
Corporation shall have failed to provide the notice required by Section 6(c)
hereof within the time period specified in such section or (iii) the
Corporation shall have failed to comply with Sections 3(c), 3(d) or 8(c)
hereof, the number of directors then constituting the Board of Directors shall
be increased by two and the holders of a majority of the outstanding shares of
Senior Preferred Stock, together with the holders of shares of every other
series of preferred stock upon which like rights have been conferred and are
exercisable (resulting from either the failure to pay dividends or the failure
to redeem) (any such series is referred to as the “Preferred
Shares”), voting as a single class regardless of series, shall be
entitled to elect the two additional directors to serve on the Board of
Directors at any annual meeting of stockholders or special meeting held in
place thereof, or at a special meeting of the holders of the Senior Preferred
Stock and the Preferred Shares called as hereinafter provided. Whenever (i) the
Corporation shall have fulfilled its Mandatory Redemption Obligation, (ii) the
Corporation shall have fulfilled its obligation to provide notice as specified
in Section 6(c) hereof, or (iii) the Corporation shall have complied with
Sections 3(c), 3(d), or 8(c) hereof, as the case may be, then the right of the
holders of the Senior Preferred Stock to elect such additional two directors
shall cease (but subject always to the same provisions for the vesting of such
voting rights in the case of any similar future (i) failure to fulfill any
Mandatory Redemption Obligation, (ii) failure to fulfill the obligation to
provide the notice required by Section 6(d) hereof within the time period specified
in such section or (iii) failure to comply with Sections 3(c), 3(d), or
8(c)) and the terms of office of all persons elected as directors by the
holders of the Senior Preferred Stock shall forthwith terminate and the number
of the Board of Directors shall be reduced accordingly. At any time after such
voting power shall have been so vested in the holders of shares of Senior
Preferred Stock and

 

12

 

the Preferred Shares, the secretary of the Corporation may, and upon
the written request of any holder of Senior Preferred Stock (addressed to the
secretary at the principal office of the Corporation) shall, call a special
meeting of the holders of the Senior Preferred Stock and of the Preferred
Shares for the election of the two directors to be elected by them as herein
provided, such call to be made by notice similar to that provided in the Bylaws
of the Corporation for a special meeting of the stockholders or as required by
law. If any such special meeting required to be called as above provided shall
not be called by the secretary within 20 days after receipt of any such
request, then any holder of shares of Senior Preferred Stock may call such
meeting, upon the notice above provided, and for that purpose shall have access
to the stock books of the Corporation. The directors elected at any such
special meeting shall hold office until the next annual meeting of the
stockholders or special meeting held in lieu thereof if such office shall not
have previously terminated as above provided. If any vacancy shall occur among
the directors elected by the holders of the Senior Preferred Stock and the
Preferred Shares, a successor shall be elected by the Board of Directors, upon
the nomination of the then-remaining director elected by the holders of the
Senior Preferred Stock and the Preferred Shares or the successor of such
remaining director, to serve until the next annual meeting of the stockholders
or special meeting held in place thereof if such office shall not have
previously terminated as provided above.

 

(c)                         Without
the written consent of a majority of the outstanding shares of Senior Preferred
Stock or the vote of holders of a majority of the outstanding shares of Senior
Preferred Stock at a meeting of the holders of Senior Preferred Stock called
for such purpose, the Corporation will not (i) amend, alter or repeal any
provision of the Certificate of Incorporation (by merger or otherwise) so as to
adversely affect the preferences, rights or powers of the Senior Preferred
Stock; provided that any such amendment that
decreases the dividend payable on or the Liquidation Value of the Senior
Preferred Stock shall require the affirmative vote of holders of each share of
Senior Preferred Stock at a meeting of holders of Senior Preferred Stock called
for such purpose or written consent of the holder of each share of Senior
Preferred Stock; or (ii) create, authorize or issue any class of stock ranking
prior to, or on a parity with, the Senior Preferred Stock with respect to
dividends or upon liquidation, dissolution, winding up or otherwise, or
increase the authorized number of shares of any such class or series, or reclassify
any authorized stock of the Corporation into any such prior or parity shares or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such prior or parity shares, except that
the Corporation may, without such approval, create authorize and issue Parity
Securities for the purpose of utilizing the proceeds from the issuance of such
Parity Securities for the redemption or repurchase of all outstanding shares of
Senior Preferred Stock in accordance with the terms hereof or of the Investors’
Agreement.

 

(d)                        In
exercising the voting rights set forth in this Section (8), each share of
Senior Preferred Stock shall have one vote per share, except that when

 

13

 

any other series
of preferred stock shall have the right to vote with the Senior Preferred Stock
as a single class on any matter, then the Senior Preferred Stock and such other
series shall have with respect to such matters one vote per $100 of Liquidation
Value or other liquidation preference. Except as otherwise required by
applicable law or as set forth herein, the shares of Senior Preferred Stock
shall not have any relative, participating, optional or other special voting
rights and powers and the consent of the holders thereof shall not be required
for the taking of any corporate action.

 

(9)                        Reports.  So long
as any of the Senior Preferred Stock is outstanding, the Corporation will
furnish the holders thereof with the quarterly and annual financial reports
that the Corporation is required to file with the Securities and Exchange
Commission pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 or, in the event the Corporation is not required to file
such reports, reports containing the same information as would be required in
such reports.

 

(10)                 General Provisions. 
(a) The term “Person” as used
herein means any corporation, limited liability company, partnership, trust,
organization, association, other entity or individual.

 

(b)                        The
term “outstanding”, when used with reference
to shares of stock, shall mean issued shares, excluding shares held by the
Corporation or a subsidiary.

 

(c)                         The
headings of the Sections, subsections, clauses and subclauses used herein are
for convenience of reference only and shall not define, limit or affect any of
the provisions hereof.

 

(d)                        Each
holder of Senior Preferred Stock, by acceptance thereof, acknowledges and
agrees that payments of dividends, interest, premium and principal on, and
exchange, redemption and repurchase of, such securities by the Corporation are
subject to restrictions on the Corporation contained in certain credit and
financing agreements.

 

14

 

IN WITNESS WHEREOF, DeCrane Holdings Co. has caused this Certificate of
Amendment to Certificate of Designations to be signed and attested by the
undersigned this 23 day of July, 2004.

 

	
   

  	
  DECRANE HOLDINGS CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ R. JACK DECRANE

  	
   

  
	
   

  	
   

  	
  Name:

  	
  R. Jack DeCrane

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
					

 

 

	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ RICHARD J. KAPLAN

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Richard J. Kaplan

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer and

  Assistant Secretary

  	
   

  
					

 

15

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