Document:

Exhibit
10.23

 

FORM OF CHANGE OF CONTROL
AGREEMENT

 

This Change of Control Agreement (the “Agreement”) is
made and entered into [**Date**], by and between DeCrane Aircraft Holdings,
Inc. (the “Company”) and [**Name of Executive**] (“Executive”) based on the
following facts:

 

A.                     Executive is
currently employed by the Company in the capacity as [**Executive’s Title**]
and is a key executive of the Company.

 

B.                       The Company
desires to define the terms and conditions of any termination of employment
upon a Change of Control (as defined herein) in the Company.

 

Based on the foregoing facts and circumstances and for
good and valuable consideration, receipt of which is hereby acknowledged, the
Company and Executive agree as follows:

 

	
  1.

  	
  Term of Agreement.  Except as otherwise provided herein, the
  term of this Agreement shall commence effective the date hereof and shall
  continue for one year (the “Term”).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  A.

  	
  Compensation Upon
  Termination Following a Change of Control.  In the event that (i) a Change of Control
  shall have occurred during the term of this Agreement and while Executive is
  employed by the Company and (ii) the Executive’s employment shall be
  involuntarily terminated for any reason on a date which is less than 2 years
  after the date of the Change of Control (whether during or after the term of
  this Agreement) other than for Cause, death or disability or Executive shall
  terminate his employment for Good Reason, then the Company shall make the
  following payments to Executive within 15 days following the date of such
  termination of employment (the “Termination Date”), subject in each
  case to any applicable payroll or other taxes required to be withheld.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
   

  	
  The Company shall pay
  Executive a lump sum amount in cash equal to the sum of (a) Executive’s
  monthly base salary multiplied by a number equal to 12 minus the number of
  whole months elapsed from the date of the Change of Control to the
  Termination Date (the “Multiplier”) and (b) Executive’s average annual
  bonus including in such average any such annual bonus earned (even though
  such bonus may be paid in the year following the year in which earned),
  (computed over the shorter of (x) the period of Executive’s employment by the
  Company or (y) five calendar years each as measured to the day-immediately
  preceding the Termination Date) divided by 12 and multiplied by the
  Multiplier.

  

 

1

 

	
   

  	
   

  	
  (2)

  	
   

  	
  The Company shall pay
  Executive a lump sum amount in cash equal to accrued but unpaid salary and
  bonus through the Termination Date, and unpaid salary with respect to any
  vacation days accrued but not taken as of the Termination Date.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Definitions.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
   

  	
  As used in this
  Agreement, “Change of Control” shall mean an event involving the Company of a
  nature that would be required to be reported in response to Item 6(e) of
  Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act
  of 1934, as amended (the “Exchange Act”), assuming that such Schedule,
  Regulation and Act applied to the Company, provided that such a Change of
  Control shall be deemed to have occurred at such time as:  (i) any “person” (as that term is used in
  Sections 13(d) and 14(d)(2) of the Exchange Act) (other than an Excluded
  Person (as defined below)) becomes, directly or indirectly, the “beneficial
  owner” (as defined in Rule 13d-3 under the Exchange Act) of securities
  representing 20% or more of the combined voting power for election of members
  of the Board of Directors of the then outstanding voting securities of the
  Company or any successor of the Company, excluding any person whose
  beneficial ownership of securities of the Company or any successor is
  obtained in a merger or consolidation not included in paragraph (iii) below;
  (ii) during any period of two consecutive years or less, individuals who at
  the beginning of such period constituted the Board of Directors of the
  Company cease, for any reason, to constitute at least a majority of the
  Board, unless the appointment, election or nomination for election of each
  new member of the Board (other than a director whose initial assumption of
  office is in connection with an actual or threatened election contest,
  including but not limited to a consent solicitation, relating to the election
  of directors of the Company) was approved by a vote of at least two-thirds of
  the members of the Board of Directors then still in office who were members
  of the Board at the beginning of the period or whose appointment, election or
  nomination was so approved since the beginning of such period; (iii) there is
  consummated any merger, consolidation or similar transaction to which the
  Company is a party as a result of which the persons who were equity holders
  of the Company immediately prior to the effective date of the merger or
  consolidation shall have beneficial ownership of less than 50% of the
  combined voting power for election of members of the Board of Directors (or
  equivalent) of the surviving entity or its

  

 

2

 

	
   

  	
   

  	
   

  	
   

  	
  parent following the
  effective date of such merger or consolidation; (iv) any sale or other
  disposition (or similar transaction) (in a single transaction or series of
  related transactions) of (x) 50% or more of the assets or earnings power of
  the Company or (y) business operations which generated a majority of the
  consolidated revenues (determined on the basis of the Company’s four most
  recently completed fiscal quarters for which reports have been completed) of
  the Company and its subsidiaries immediately prior thereto, other than a
  sale, other disposition, or similar transaction to an Excluded Person or to
  an entity of which equityholders of the Company beneficially own at least 50%
  of the combined voting power; (v) any liquidation of the Company.  For purposes of this definition of Change
  of Control, the term “Excluded Person” shall mean and include (i) any
  corporation beneficially owned by shareholders of the Company in
  substantially the same proportion as their ownership of shares of the Company
  and (ii) the Company.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)

  	
   

  	
  As used in this
  Agreement, “Good Reason” shall mean the occurrence, following a Change of
  Control, of anyone of the following events without Executive’s consent: (i)
  the Company assigns Executive to any duties substantially inconsistent with
  his position, duties, responsibilities, status or reporting responsibility
  with the Company immediately prior to the Change of Control, or assigns
  Executive to a position that does not provide Executive with substantially
  the same or better compensation, status, responsibilities and duties as
  Executive enjoyed immediately prior to the Change of Control; (ii) the
  Company reduces the amount of Executive’s base salary as in effect as of the
  date of the Change of Control or as the same may be increased thereafter from
  time to time, except for across-the-board salary reductions similarly
  affecting all senior executives of the Company; (iii) the Company fails to
  pay Executive an annual bonus consistent with past practices and bonuses
  consistent with past practices are paid to any other senior executives of the
  Company; (iv) the Company changes the location at which Executive is employed
  by more than 50 miles from the location at which Executive is employed as of
  the date of this Agreement; or (v) the Company breaches this Agreement in any
  material respect, including without limitation failing to obtain a succession
  agreement from any successor to assume and agree to perform this Agreement.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)

  	
   

  	
  For Cause.  As used in this Agreement, “Cause” shall
  mean (i) any material act of dishonesty constituting a felony (of which
  Executive is convicted or pleads guilty) which results or is

  

 

3

 

	
   

  	
   

  	
   

  	
   

  	
  intended to result
  directly or indirectly in substantial gain or personal enrichment to
  Executive at the expense of the Company, or (ii) after notice of breach
  delivered to Executive specifying in reasonable detail and a reasonable
  opportunity for Executive to cure the breaches specified in the notice, the
  Board, acting by a two thirds vote, after a meeting held for the purpose of
  making such determination and after reasonable notice to Executive and an
  opportunity for him together with his counsel to be heard before the Board,
  determines, in good faith, other than for reasons of physical or mental
  illness, Executive willfully and continually fails to substantially perform
  his duties pursuant to this Agreement and such failure results in
  demonstrable material injury to the Company. 
  The following shall not constitute Cause: (i) Executive’s bad judgment
  or negligence, (ii) any act or omission by Executive without intent of
  gaining therefrom directly or indirectly a profit to which Executive was not
  legally entitled, (iii) any act or omission by Executive with respect to
  which a determination shall have been made that Executive met the applicable
  standard of conduct prescribed for indemnification or reimbursement of
  payment of expenses under the By-Laws of the Company or the laws of the State
  of Delaware as in effect at the time of such act or omission.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Mitigation.  Executive is not required to seek other
  employment or otherwise mitigate the amount of any payments to be made by the
  Company pursuant to this Agreement.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Assignment.  Neither Company nor Executive shall have
  the right to assign its respective rights pursuant to this Agreement.  The Company shall require any proposed
  successor (whether direct or indirect, by purchase, merger, consolidation or
  otherwise) to all or substantially all of the business and/or assets of the
  Company, by agreement in form and substance reasonably satisfactory to
  Executive, to expressly assume and agree to perform this agreement in the
  same manner and to the same extent that the Company would be required to
  perform it if no such succession had taken place, concurrent with the
  execution of a definitive agreement with the Company to engage in such
  transaction.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  This Agreement shall be
  binding on the inure to the benefit of Executive and his heirs and the
  Company and any permitted assignee. 
  The Company shall not engage in any transaction, including a merger or
  sale of assets unless, as a condition to such transaction such successor
  organization assumes the obligations of the Company pursuant to this
  Agreement.

  

 

4

 

	
  6.

  	
  Notices.

  
	
   

  	
   

  
	
   

  	
  If to Company:

  	
  DeCrane Aircraft
  Holdings, Inc.

  
	
   

  	
   

  	
  2361 Rosecrans Avenue,
  Suite 180

  
	
   

  	
   

  	
  El Segundo, CA 90245

  
	
   

  	
   

  	
  Attention: Chief
  Financial Officer

  
	
   

  	
   

  	
  Fax: 310-643-0746

  
	
   

  	
   

  	
   

  
	
   

  	
  If to Executive:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Fax:

  
	
   

  	
   

  
	
  7.

  	
  Facsimile
  Signatures.  Execution and Delivery.  This Agreement shall be effective upon
  transmission of a signed facsimile by one party to the other.

  
	
   

  	
   

  
	
  8.

  	
  Miscellaneous.  This Agreement supersedes and makes void
  any prior agreement between the parties and sets forth the entire agreement
  and understanding of the parties hereto with respect to the matters covered
  hereby, and may not otherwise be amended or modified except by written
  agreement executed by the Company and the Executive.  This Agreement shall be governed by and
  construed in accordance with the laws of the State of California.

  

 

This Agreement has been
executed on the date specified in the first paragraph.

 

	
   

  	
  DECRANE AIRCRAFT
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [**Name of Executive**]

  

 

5Exhibit 10.10.6

 

DECRANE AIRCRAFT HOLDINGS, INC.

 

THIRD AMENDMENT

TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT

 

This THIRD AMENDMENT TO THIRD AMENDED AND
RESTATED CREDIT AGREEMENT (this “Amendment”) is dated as of
March 31, 2003 and entered into by and among DeCrane Aircraft Holdings, Inc., a
Delaware corporation (“Company”), the financial institutions
listed on the signature pages hereof (“Lenders”), Credit Suisse First Boston
(successor to DLJ Capital Funding, Inc.), as syndication agent for Lenders (“Syndication
Agent”), and Bank One, NA, as administrative agent for Lenders (“Administrative
Agent”), and is made with reference to that certain Third Amended
and Restated Credit Agreement, dated as of May 11, 2000, as amended by a First
Amendment to Third Amended and Restated Credit Agreement, dated as of
June 30, 2000, and as further amended by an Increased Commitments
Agreement to Third Amended and Restated Credit Agreement, dated as of April 27,
2001 and as further amended by a Second Amendment to Third Amended and Restated
Credit Agreement dated as of March 19, 2002 (the “Credit Agreement”), by and
among Company, the lenders listed on the signature pages thereof, Syndication
Agent and Administrative Agent. 
Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Credit Agreement.

 

RECITALS

 

WHEREAS,
Company and Lenders desire to amend the Credit Agreement to (i) consent to
the appointment of a successor administrative agent, (ii) increase the interest
rate margins applicable to the Loans, (iii) reduce the Revolving Loan
Commitments to $40,000,000, (iv) modify the financial covenants in certain
respects, (v) permit the sale of Company’s Specialty Avionics Group, (vi)
permit the issuance of Indebtedness of up to $100,000,000 and the repurchase of
Senior Subordinated Notes of up to $20,000,000, and (vii) make certain other
amendments as set forth below:

 

NOW, THEREFORE, in
consideration of the premises and the agreements, provisions and covenants
herein contained, the parties hereto agree as follows:

 

Section 1.                                          AMENDMENTS
TO THE CREDIT AGREEMENT

 

1.1                               Amendments
to Section 1: Definitions

 

A.                                   Subsection
1.1 of the Credit Agreement is hereby amended by adding thereto the following
definitions, which shall be inserted in proper alphabetical order:

 

“First
Lien Leverage Ratio” means, as of any date, the ratio of (a)
Net Senior Debt minus Permitted Indebtedness as of the last day of a
Fiscal Quarter to (b) Consolidated EBITDA for the consecutive four Fiscal
Quarters ending on the last day of such Fiscal Quarter.

 

 

“Holders of Permitted Indebtedness” means
the holders from time to time of any Permitted Indebtedness issued by Company
and their representatives.

 

“Intercreditor Agreement” means an
intercreditor agreement among Syndication Agent and the Holders of Permitted
Indebtedness, which shall be satisfactory in form and substance to Syndication
Agent and which shall provide, among other things, that (i) no Holder of
Permitted Indebtedness may take any enforcement action in respect of the
Permitted Indebtedness or the Collateral, or any portion thereof, unless the
Obligations have been paid in full in cash, all Letters of Credit have expired
or been surrendered to Issuing Lender or cash collateralized in a manner satisfactory
to Syndication Agent and the Revolving Loan Commitments have been terminated;
(ii) no payment may be made in respect of such Permitted Indebtedness on and
after the date that the Holders of Permitted Indebtedness have been notified in
writing by Syndication Agent that an Event of Default pursuant to subsection
8.1 hereof has occurred and is continuing; (iii) Syndication Agent and
Requisite Lenders may consent to any sale of assets and to the release of Liens
in respect of the Collateral without consent of the Holders of Permitted
Indebtedness; (iv) Syndication Agent and Requisite Lenders may consent to the
use of cash collateral and provide financing in any voluntary or involuntary
bankruptcy or insolvency proceeding in respect of Company or any Subsidiary on
terms acceptable to them, without consent of the Holders of Permitted
Indebtedness; (v) the Holders of Permitted Indebtedness may not initiate,
prosecute or participate in any claim, action or other proceeding challenging
the enforceability, validity, perfection or priority of the Obligations or any
Liens securing the payment of the Obligations; (vi) the Liens securing the
Permitted Indebtedness shall be subordinated to the Liens securing the
Obligations for all purposes; (vii) proceeds of the sale or other disposition
of the Collateral (pursuant to permitted asset sales, foreclosure or otherwise)
shall be applied in accordance with the terms of this Agreement or as otherwise
consented to by Syndication Agent and Requisite Lenders, without in any case
the consent of, or any accounting to, the Holders of Permitted Indebtedness;
and (viii) no amendments or changes to the documents evidencing the Permitted
Indebtedness shall be effective if the effect of such amendment or change is to
increase the interest rate on such Permitted Indebtedness, change (to earlier
dates) any dates upon which payments of principal or interest are due thereon,
change any event of default or condition to an event of default with respect
thereto (other than to eliminate any such event of default or increase any
grace period related thereto), change the redemption, prepayment or defeasance
provisions thereof, or change any collateral therefor (other than to release
such collateral) or if the effect of such amendment or change, together with
all other amendments or changes made, is to increase materially the obligations
of the obligor thereunder to the detriment of Lenders or to confer any
additional rights on the Holders of Permitted Indebtedness (or a trustee or
other representative on their behalf) which would be adverse to Lenders,
without the consent of Requisite Lenders.

 

“Permitted
Indebtedness”  means
up to $100,000,000 in aggregate principal amount of Indebtedness, which (a)
shall (i) provide for no scheduled redemptions, prepayments, sinking fund
installment payments or maturities prior to June 30, 2007 and (ii) not bear
cash interest in excess of 12% per annum, (b) may be secured by Liens on all or
a portion of the Collateral, as evidenced by an Intercreditor Agreement, and
(c) shall be issued pursuant to documentation containing covenants, defaults,
remedies and other material terms in form and substance satisfactory to
Syndication Agent.

 

2

 

“Rating Downgrade Period” means any period during which the
rating with respect to the Loans established by S&P is “CCC+” or lower, or
in which the rating established by Moody’s is “Caa1” or lower, or during which
either S&P or Moody’s does not provide a rating with respect to the Loans.

 

“Refurbishment
Project” means capital expenditures directly related to the
acquisition of facilities, equipment, tooling and startup of a refurbishment
business activity to corporate, VIP and head of state aircraft.

 

 “SAG Stock
Purchase Agreement” means the agreement between Odyssey Investment Partners LLC or its
affiliates and Company dated as of March 14, 2003, pursuant to which
Specialty Avionics Group is to be sold, as amended to the date of effectiveness
of the Third Amendment to this Agreement.

 

“SAG Sale” means the sale of all of the capital stock (or other equity interests)
of the Subsidiaries constituting the Specialty Avionics Group or the sale of
all of the assets of such Subsidiaries to Odyssey Investment Partners LLC or
its affiliates pursuant to the SAG Stock Purchase Agreement.

 

“Specialty Avionics Group” means the
specialty avionics business of Company that is conducted by Avtech, Aerospace
Display Systems, LLC and Tri-Star Electronics International, Inc.

 

“Subdebt Reduction Event” means the first
issuance after April 1, 2003 of Permitted Indebtedness in a principal amount
equal to or greater than $50 million.

 

B.                                     Subsection
1.1 of the Credit Agreement is hereby amended by adding an “and” and the
following at the end of the definition of “Permitted Acquisition”:

 

“(iii)
equity Securities of Parent issued as consideration with respect to any
acquisition consummated after April 1, 2003 shall be excluded from any such
calculation on any date.

 

Notwithstanding the
foregoing, no acquisition otherwise permitted hereby by Company or a Subsidiary
shall be a Permitted Acquisition if any consideration therefor consists of any
Cash, Indebtedness or other assets other than equity securities of Parent or
Earn-outs unless, after giving effect to such transaction, (A) the First Lien
Leverage Ratio is equal to or less than 2.5x for the four Fiscal Quarter period
for which financial statements have been delivered pursuant to subsection 6.1
ending immediately prior to the date of closing of such acquisition, as
evidenced by an Officer’s Certificate of Company delivered on such date of
closing to Syndication Agent showing the calculations therefor and (B) on the
date of closing of such acquisition, the difference between the aggregate
Revolving Commitments and the Total Utilization of Revolving Loan Commitments
is at least $15,000,000.”

 

3

 

1.2                               Amendments to Section 2: Amounts and
Terms of Commitments and Loans

 

A.                                    Subsection
2.1A(iii) of the Credit Agreement is hereby amended by adding the following at
the end thereof:

 

“Notwithstanding
the foregoing, the aggregate amount of the Revolving Loan Commitments is
$40,000,000; provided that the aggregate amount of the Revolving Loan
Commitments shall be reduced to $35,000,000 upon the Subdebt Reduction Event.”

 

B.                                    Subsection 2.2A(i)
of the Credit Agreement is hereby amended by deleting it in its entirety and
substituting the following therefor:

 

“(i)                               (a)                                  Subject
to the provisions of subsection 2.2E, the Tranche A Term Loans and the
Revolving Loans shall bear interest from March 31, 2003 through maturity as
follows:

 

(1)                                                       if
a Base Rate Loan, then at the sum of the Base Rate plus the Base Rate
Margin set forth in the table below opposite the Consolidated Leverage Ratio as
set forth in the most recent Margin Determination Certificate delivered
pursuant to subsection 6.1(iv); or

 

(2)                                                       if
a Eurodollar Rate Loan, then at the sum of the Adjusted Eurodollar Rate for the
Interest Period applicable to such Loan plus the Eurodollar Rate Margin
set forth in the table below opposite the Consolidated Leverage Ratio as set
forth in the most recent Margin Determination Certificate delivered pursuant to
subsection 6.1(iv):

 

	
  Consolidated Leverage Ratio

  	
   

  	
  Applicable

  Eurodollar Rate

  Margin

  	
   

  	
  Applicable
  Base

  Rate Margin

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Greater
  than or equal to 5.00:1.00

  	
   

  	
  5.25

  	
  %

  	
  4.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Greater
  than or equal to 4.50:1.00 but less than 5.00:1.00

  	
   

  	
  5.00

  	
  %

  	
  3.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Greater
  than or equal to 4.00:1.00 but less than 4.50:1.00

  	
   

  	
  4.75

  	
  %

  	
  3.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Greater
  than or equal to 3.50:1.00 but less than 4.00:1.00

  	
   

  	
  4.25

  	
  %

  	
  3.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Greater
  than or equal to 3.00:1.00 but less than 3.50:1.00

  	
   

  	
  4.00

  	
  %

  	
  2.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Less
  than 3.00:1.00

  	
   

  	
  3.50

  	
  %

  	
  2.25

  	
  %

  

 

4

 

provided that (i) during a Rating Downgrade Period each of the applicable
margins provided in the above table shall be increased by 0.5% and (ii) upon
the Subdebt Reduction Event each of the applicable margins provided in the
above table shall be decreased by 0.5%;

 

Changes
in the applicable margin for Tranche A Term Loans and Revolving Loans resulting
from a change in the Consolidated Leverage Ratio shall become effective as
provided in subsection 2.3C.

 

If at
any time a Margin Determination Certificate is not delivered at the time
required pursuant to subsection 6.1(iv), from the time such Margin
Determination Certificate was required to be delivered until delivery of such
Margin Determination Certificate, such applicable margins shall be the maximum
percentage amount for the relevant Loan set forth above.

 

(b)                                 Subject
to the provisions of subsection 2.2E, the Tranche B Term Loans shall bear
interest from March 31, 2003 through maturity as follows:

 

(1)                                  if
a Base Rate Loan, then at the sum of the Base Rate plus 4.25% per annum; provided that during a Rating Downgrade Period, such margin shall be increased by 0.5% per annum and if the Subdebt
Reduction Event occurs, such margin shall be decreased by 0.5%; or

 

(2)                                  if
a Eurodollar Rate Loan, then at the sum of the Adjusted Eurodollar Rate for the
Interest Period applicable for such Loan plus 5.50% per annum; provided that during a Rating Downgrade Period, such margin shall be increased by 0.5% per
annum and if the Subdebt Reduction Event occurs, such margin shall be decreased by 0.5%.

 

(c)                                  Subject
to the provisions of subsection 2.2E, the Tranche D Term Loans shall bear
interest from March 31, 2003 through maturity as follows:

 

(1)                                  if
a Base Rate Loan, then at the sum of the Base Rate plus 4.75% per annum; provided that during a Rating Downgrade Period, such margin shall be increased by 0.5% per
annum and if the Subdebt Reduction Event occurs, such margin shall be decreased
by 0.5%; or

 

(2)                                  if
a Eurodollar Rate Loan, then at the sum of the Adjusted Eurodollar Rate for the
Interest Period applicable to such 

 

5

 

Loan plus 6.00%
per annum; provided
that during a Rating Downgrade Period, such margin shall be increased by 0.5% per annum and if the Subdebt
Reduction Event occurs, such margin shall be decreased by 0.5%.”

 

C.                                    Subsection 2.4B(iii)(a) of the Credit
Agreement is hereby amended by adding at the end the following:

 

“provided that the
Net Asset Sale Proceeds from the SAG Sale shall be applied to prepay the Loans
as provided in subsection 2.4B(iv)(b) no later than the first Business Day
following the receipt thereof.”

 

D.                                    Subsection 2.4B(iii)(c) of the Credit
Agreement is hereby amended by
adding at the end the following:

 

“provided further
that, notwithstanding the foregoing, 50% of the Net Securities Proceeds from
the issuance of any Permitted Indebtedness shall be applied to prepay the Loans
as provided in subsection 2.4B(iv)(b) no later than the first Business Day
following the receipt thereof.”

 

E.                                      Subsection 2.4B(iv)(b) of the Credit
Agreement is hereby amended by adding at the end the following:

 

“provided that
$4,000,000 of the Net Asset Sale Proceeds from the SAG Sale shall be applied to
prepay the Revolving Loans, without a reduction in Revolving Loan Commitments,
and the remaining balance of such Net Asset Sale Proceeds shall be applied to
the prepayment of the Term Loans as provided in subsection 2.4B(iv)(c).”

 

1.3                               Amendment
to Section 6:  Company’s Affirmative
Covenants

 

Subsection 6.1 of the
Credit Agreement is hereby amended by adding the following at the end of
subsection 6.1(ii):

 

“provided that the report on Company’s
consolidated financial statements by independent certified public accountants
that is required to be delivered without Impermissible Qualification pursuant
to this subsection 6.1(ii) within 105 days of the end of the Fiscal Year ended
December 31, 2002 may be delivered by Company at any time on or prior to the
thirtieth day following consummation of the SAG Sale;”

 

1.4.                            Amendments to Section 7:  Company’s Negative Covenants

 

A.                                    Subsection 7.1 of
the Credit Agreement is hereby amended by adding an “and” and the following new
clause (x) immediately after subsection 7.1(ix) as follows:

 

“(x)                             Company
may become and remain liable with respect to Permitted Indebtedness; provided
that Company causes an opinion of counsel in form and substance reasonably
satisfactory to Administrative Agent to be delivered to 

 

6

 

Administrative Agent to
the effect that the incurrence and performance of the terms of such Permitted
Indebtedness do not conflict with or violate the terms of this Agreement or the
Senior Subordinated Note Indenture at or prior to the date such Permitted
Indebtedness is incurred.”

 

B.                                    Subsection
7.2A of the Credit Agreement is hereby amended by adding an “and” and the
following new clause (xi) immediately after subsection 7.2A(x) as follows:

 

“(xi)                          Liens
securing Permitted Indebtedness, such Liens to be subject to an Intercreditor
Agreement.”

 

C.                                    Subsection 7.2B of
the Credit Agreement is hereby amended by adding immediately after the
reference to the numeral “(viii)” the phrase “or (x)”.

 

D.                                    Subsection
7.5 of the Credit Agreement is hereby amended by adding an “and” and the
following new clause (vii) immediately after subsection 7.5(vi) as follows:

 

“(vii)                     Company may
purchase, redeem, or otherwise acquire or retire Subordinated Indebtedness in
an amount up to but not exceeding $20 million with proceeds from the issuance
of Subordinated Indebtedness permitted by subsection 7.1 or equity Securities
of Company.”

 

E.                                      Subsection 7.6 of
the Credit Agreement is hereby amended by deleting it in its entirety and
substituting the following therefor:

 

“7.6                        Financial
Covenants.

 

“A.                             Minimum
Fixed Charge Coverage Ratio. 
Company shall not permit the Consolidated Fixed Charge Coverage Ratio as
of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending
March 31, 2003, occurring during any period set forth below to be less than the
correlative ratio indicated:

 

	
  Period

  	
   

  	
  Minimum
  Fixed Charge

  Coverage Ratio

  	
   

  
	
  1st
  Fiscal Quarter, 2003

  	
   

  	
  1.15

  	
  x 

  
	
  2nd
  Fiscal Quarter, 2003

  	
   

  	
  0.75

  	
  x 

  
	
  3rd
  Fiscal Quarter, 2003

  	
   

  	
  0.70

  	
  x 

  
	
  4th
  Fiscal Quarter, 2003

  	
   

  	
  0.70

  	
  x 

  
	
  1st
  Fiscal Quarter, 2004

  	
   

  	
  0.75

  	
  x 

  
	
  2nd
  Fiscal Quarter, 2004

  	
   

  	
  0.75

  	
  x 

  
	
  3rd
  Fiscal Quarter, 2004

  	
   

  	
  0.70

  	
  x 

  
	
  4th
  Fiscal Quarter, 2004

  	
   

  	
  0.70

  	
  x 

  
	
  1st
  Fiscal Quarter, 2005 and thereafter

  	
   

  	
  1.20

  	
  x 

  

 

B.                                    Maximum
Leverage Ratio.  Company shall not
permit the Consolidated Leverage Ratio as of the last day of any Fiscal
Quarter, beginning with the Fiscal Quarter

 

7

 

ending March 31, 2003,
occurring during any period set forth below to exceed the correlative ratio
indicated:

 

	
  Period

  	
   

  	
  Maximum
  Consolidated

  	
   

  
	
  1st
  Fiscal Quarter, 2003

  	
   

  	
  6.40

  	
  x 

  
	
  2nd
  Fiscal Quarter, 2003

  	
   

  	
  8.25

  	
  x 

  
	
  3rd
  Fiscal Quarter, 2003

  	
   

  	
  9.95

  	
  x 

  
	
  4th
  Fiscal Quarter, 2003

  	
   

  	
  10.40

  	
  x 

  
	
  1st
  Fiscal Quarter, 2004

  	
   

  	
  10.25

  	
  x 

  
	
  2nd
  Fiscal Quarter, 2004

  	
   

  	
  9.10

  	
  x 

  
	
  3rd
  Fiscal Quarter, 2004

  	
   

  	
  8.65

  	
  x 

  
	
  4th
  Fiscal Quarter, 2004

  	
   

  	
  8.00

  	
  x 

  
	
  1st
  Fiscal Quarter, 2005 and thereafter

  	
   

  	
  3.00

  	
  x 

  

 

C.                                    Minimum
Consolidated EBITDA.  Company shall
not permit Consolidated EBITDA for the consecutive four-Fiscal-Quarter period
ending on the last day of any Fiscal Quarter, beginning with the Fiscal Quarter
ending March 31, 2003, occurring during any period set forth below to be less
than the correlative amount (the “Minimum
EBITDA Amount”) indicated:

 

	
  Quarter Ended

  	
   

  	
  Minimum
  EBITDA Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st
  Fiscal Quarter, 2003

  	
   

  	
  $

  	
  61,000,000

  	
   

  
	
  2nd
  Fiscal Quarter, 2003

  	
   

  	
  31,000,000

  	
   

  
	
  3rd
  Fiscal Quarter, 2003

  	
   

  	
  26,000,000

  	
   

  
	
  4th
  Fiscal Quarter, 2003

  	
   

  	
  23,500,000

  	
   

  
	
  1st
  Fiscal Quarter, 2004

  	
   

  	
  24,500,000

  	
   

  
	
  2nd
  Fiscal Quarter, 2004

  	
   

  	
  27,500,000

  	
   

  
	
  3rd
  Fiscal Quarter, 2004

  	
   

  	
  29,000,000

  	
   

  
	
  4th
  Fiscal Quarter, 2004

  	
   

  	
  30,500,000

  	
   

  
	
  1st
  Fiscal Quarter, 2005 and thereafter

  	
   

  	
  82,783,200

  	
   

  
					

 

; provided
that

 

(x)                                   the
Minimum EBITDA Amount for the consecutive four-Fiscal-Quarter period ending at
the last day of any Fiscal Quarter during any period set forth above shall be
increased by an amount equal to 80% of the Acquired Business EBITDA of each
Acquired Business whose Acquired Business Date falls during the period from and
including the day following the Third Amended and Restated Credit Agreement
Closing Date to and including the last day of such Fiscal Quarter; and

 

(y)                                 to
the extent the amount of Consolidated EBITDA for the immediately preceding
consecutive four-Fiscal-Quarter period exceeds the amount of EBITDA required to
be maintained for such consecutive four-Fiscal-Quarter period pursuant to this
subsection, an amount equal to 50% of such excess amount may be carried forward
to (but only to) the then current Fiscal Quarter (any such amount to be 

 

8

 

certified to
Administrative Agent in the Compliance Certificate delivered for the last
Fiscal Quarter of such consecutive four-Fiscal-Quarter period).

 

For
purposes of this subsection 7.6C, the following terms have the following
meanings:

 

“Acquired
Business” means any business acquired (whether through the purchase
of assets or shares of capital stock) by Company or any of its Subsidiaries
after the Second Amended and Restated Credit Agreement Closing Date.

 

“Acquired Business Date” means, with respect
to any Acquired Business, the date of consummation of the acquisition thereof
by Company or any of its Subsidiaries.

 

“Acquired
Business EBITDA” means, with respect to any Acquired Business, (x)
the consolidated net income of such Acquired Business for the consecutive
four-Fiscal-Quarter period ended on or most recently prior to its Acquired
Business Date and with respect to which financial statements are available on
the Acquired Business Date plus (y) to the extent deducted in determining such
consolidated net income for such period, the sum of (i) consolidated interest
expense, (ii) income taxes, (iii) depreciation, (iv) amortization, (v) any
extraordinary or non-recurring losses, and (vi) any non-cash items minus (z) to
the extent included in such consolidated net income, extraordinary gains.

 

D.                                    Minimum
Interest Coverage Ratio.  Company
shall not permit the Consolidated Interest Coverage Ratio as of the last day of
any Fiscal Quarter, beginning with the Fiscal Quarter ending March 31, 2003,
occurring during any period set forth below to be less than the correlative
ratio indicated:

 

	
  Period

  	
   

  	
  Minimum
  Interest

  Coverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st
  Fiscal Quarter, 2003

  	
   

  	
  1.95

  	
  x 

  
	
  2nd
  Fiscal Quarter, 2003

  	
   

  	
  1.30

  	
  x 

  
	
  3rd
  Fiscal Quarter, 2003

  	
   

  	
  1.05

  	
  x 

  
	
  4th
  Fiscal Quarter, 2003

  	
   

  	
  1.00

  	
  x 

  
	
  1st
  Fiscal Quarter, 2004

  	
   

  	
  1.05

  	
  x 

  
	
  2nd
  Fiscal Quarter, 2004

  	
   

  	
  1.15

  	
  x 

  
	
  3rd
  Fiscal Quarter, 2004

  	
   

  	
  1.20

  	
  x 

  
	
  4th
  Fiscal Quarter, 2004

  	
   

  	
  1.30

  	
  x 

  
	
  1st
  Fiscal Quarter, 2005 and thereafter

  	
   

  	
  3.00

  	
  x

  

 

E.                                      Maximum Net
Senior Debt Ratio.  Company shall not permit the Net Senior Debt Ratio as of the last day of
any Fiscal Quarter, beginning with the Fiscal Quarter ending March 31, 2003,
occurring during any period set forth below to be more than the correlative
ratio indicated:

 

9

 

	
  Period

  	
   

  	
  Maximum
  Net Senior Debt

  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st
  Fiscal Quarter, 2003

  	
   

  	
  4.75

  	
  x 

  
	
  2nd
  Fiscal Quarter, 2003

  	
   

  	
  5.05

  	
  x 

  
	
  3rd
  Fiscal Quarter, 2003

  	
   

  	
  6.05

  	
  x 

  
	
  4th
  Fiscal Quarter, 2003

  	
   

  	
  6.15

  	
  x 

  
	
  1st
  Fiscal Quarter, 2004

  	
   

  	
  6.20

  	
  x 

  
	
  2nd
  Fiscal Quarter, 2004

  	
   

  	
  5.50

  	
  x 

  
	
  3rd
  Fiscal Quarter, 2004

  	
   

  	
  5.20

  	
  x 

  
	
  4th
  Fiscal Quarter, 2004

  	
   

  	
  4.75

  	
  x 

  
	
  1st
  Fiscal Quarter, 2005 and thereafter

  	
   

  	
  3.00

  	
  x” 

  

 

F.                                      Subsection
7.8(i) of the Credit Agreement is hereby amended by deleting it in its entirety
and substituting the following therefor:

 

“(i)                               Company
will not, and will not permit any of its Subsidiaries to, make or commit to
make Consolidated Capital Expenditures in any Fiscal Year, except Consolidated
Capital Expenditures which do not aggregate in excess of the corresponding
amount set forth below opposite such Fiscal Year:

 

	
  Fiscal Year

  	
   

  	
  Consolidated

  Capital Expenditures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fiscal
  Year ending December 31, 2003

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
  Fiscal
  Year ending December 31, 2004

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
  Fiscal
  Year ending December 31, 2005

  	
   

  	
  $

  	
  7,000,000

  	
   

  

 

provided that (a)
if the aggregate amount of Consolidated Capital Expenditures actually made in
any such Fiscal Year shall be less than the limit with respect thereto set
forth above (before giving effect to any increase therein pursuant to this
proviso) (the “Base Amount”), then the amount of such shortfall (up to an
amount equal to 50% of the Base Amount for such Fiscal Year, without giving
effect to this proviso) may be added to the amount of such Consolidated Capital
Expenditures permitted for the immediately succeeding Fiscal Year and any such
amount carried forward to a succeeding Fiscal Year shall be deemed to be used
prior to Company and its Subsidiaries using the amount of capital expenditures
permitted by this section in such succeeding Fiscal Year, without giving effect
to such carryforward and (b) for any Fiscal Year (or portion thereof) following
any acquisition of a business (whether through the purchase of assets or of
shares of capital stock) permitted under subsection 7.7, the Base Amount
for such Fiscal Year (or portion) shall be increased, for each such
acquisition, by an amount equal to the product of (A) the lesser of
(x) $5,000,000 and (y) 4% of revenues of the business acquired in such
acquisition for the period of four Fiscal Quarters most recently ended on or
prior to the date of such Business Acquisition multiplied by (B) (x) in the
case of any partial Fiscal Year, a 

 

10

 

fraction, the numerator
of which is the number of days remaining in such Fiscal Year after the date of
such Business Acquisition and the denominator of which is 365 (or 366 in a leap
year), and (y) in the case of any full Fiscal Year, 1 and provided further that the Company may make
Consolidated Capital Expenditures in respect of the Refurbishment Project for
Fiscal Year 2003 in an additional amount not to exceed $4,000,000.”

 

1.5                               Amendment to Section 8:  Events of Default

 

Section 8 of the Credit
Agreement is hereby amended by adding an “or” and the following new subsection
8.14 immediately after subsection 8.13 as follows:

 

“8.14   SAG Sale.

 

(i)
The SAG Stock Purchase Agreement shall have been terminated without
consummation of the SAG Sale; or (ii) Company shall have failed to receive at
least $130,000,000 in proceeds from the SAG Sale and applied such proceeds to
prepayment of the Loans as set forth in subsection 2.4B on or prior to June 30,
2003.”

 

Section 2.                                          CONSENT TO
APPOINTMENT OF SUCCESSOR ADMINISTRATIVE AGENT

 

Bank One, NA has informed
Company and Lenders of its resignation as Administrative Agent.  In accordance with subsection 9.3 of the
Credit Agreement, the undersigned, constituting Requisite Lenders, and Company
hereby consent to the appointment of either U.S. Bancorp or CSFB as successor
Administrative Agent (in such capacity, the “Approved
Successor”), such appointment to become effective immediately upon
the later of the acceptance by an Approved Successor of such appointment and
the Third Amendment Effective Date. 
Such consent by Requisite Lenders and Company shall be effective after
the acceptance of such appointment by either Approved Successor if such
Approved Successor thereafter resigns and the other Approved Successor accepts
such appointment.  Upon such acceptance,
(a) the Approved Successor accepting such appointment shall (i) promptly notify
Lenders and Company of such acceptance and (ii) succeed to and become vested
with all the rights, power, privileges and duties of Administrative Agent as
provided in the Credit Agreement and the other Loan Documents, and (b) Bank One
NA or the other Approved Successor, if such other Approved Successor has
previously succeeded Bank One NA as Administrative Agent, shall be discharged
from its duties and obligations as Administrative Agent.

 

Section 3.                                          CONSENT TO
SALE OF SPECIALTY AVIONICS GROUP

 

Subject to the terms and
conditions set forth herein and in reliance on the representations and
warranties of Company herein contained, Lenders hereby (i) consent to the SAG
Sale, (ii) agree to the release of related Liens and Guaranties by
Administrative Agent and (iii) agree that subsection 7.7 of the Credit
Agreement is hereby amended to permit the SAG Sale; provided that (a)
the SAG Sale shall be consummated and the Net 

 

11

 

Asset Sale Proceeds thereof applied to prepay Loans on or before June
30, 2003; (b) the Net Asset Sale Proceeds received by the Company shall be Cash
in an amount not less than $130,000,000; (c) such Net Asset Sale Proceeds shall
be applied in accordance with subsection 2.4B of the Credit Agreement; and (d)
a certified copy of the executed SAG Stock Purchase Agreement is delivered to
Syndication Agent.

 

Section 4.                                          CONDITIONS
TO EFFECTIVENESS

 

Sections 1, 2 and 3 of
this Amendment shall become effective only upon the satisfaction on or prior to
March 31, 2003 of all of the following conditions precedent and the conditions
set forth in Section 7E hereof (the date of satisfaction of such conditions
being referred to herein as the “Third
Amendment Effective Date”):

 

A.                                    On or before the
Third Amendment Effective Date, Company shall deliver to Lenders (or to
Syndication Agent for Lenders with sufficient originally executed copies, where
appropriate, for each Lender and its counsel) the following, each, unless
otherwise noted, dated the Third Amendment Effective Date:

 

1                                          Resolutions
of its Board of Directors approving and authorizing the execution, delivery,
and performance of this Amendment, certified as of the Third Amendment
Effective Date by its corporate secretary or an assistant secretary as being in
full force and effect without modification or amendment;

 

2                                          Signature
and incumbency certificates of its officers executing this Amendment;

 

3                                          Executed
originals of this Amendment, executed by Company and by each Subsidiary Guarantor;
and

 

4                                          Certified
copy of the SAG Stock Purchase Agreement.

 

B.                                    Lenders shall have
received originally executed copies of one or more favorable written opinions
of Davis Polk & Wardwell, Spolin Silverman Cohen & Bartlett LLP and
other counsel reasonably acceptable to the Agents, each counsel for Company, in
form and substance reasonably satisfactory to Syndication Agent and its
counsel, dated as of the Third Amendment Effective Date and setting forth,
collectively, substantially the matters in the opinions designated in Annex A
to this Amendment.

 

C.                                    All documents
executed or submitted in connection with the transactions contemplated hereby
by or on behalf of Company or any of its Subsidiaries shall be reasonably
satisfactory in form and substance to Agents and their counsel; Agents and
their counsel shall have received all information, approvals, opinions,
documents or instruments that Agents or their counsel shall have reasonably
requested.

 

Section 5.                                          COMPANY’S
REPRESENTATIONS AND WARRANTIES

 

In order to induce
Lenders to enter into this Amendment and to amend the Credit Agreement in the
manner provided herein, Company represents and warrants to each 

 

12

 

Lender that the following
statements are true, correct and complete on and as of the Third Amendment
Effective Date:

 

A.                                    Corporate Power
and Authority.  Each of Company and
its Subsidiaries has all requisite corporate power and authority to enter into
this Amendment and the SAG Stock Purchase Agreement and to carry out the
transactions contemplated by, and perform its obligations under, (i) the Credit
Agreement as amended by this Amendment (the “Amended Agreement”) and (ii)
the SAG Stock Purchase Agreement.

 

B.                                    Authorization
of Agreements.  The execution and
delivery of this Amendment and by the SAG Stock Purchase Agreement and the
performance of the Amended Agreement and by the SAG Stock Purchase Agreement
have been duly authorized by all necessary corporate action on the part of each
of Company and its Subsidiaries.

 

C.                                    No
Conflict.  The execution, delivery
and performance by each of Company and each of its Subsidiaries of this
Amendment and the SAG Stock Purchase Agreement, and the performance by Company
of the Amended Agreement and the SAG Stock Purchase Agreement do not and will
not (i) violate any provision of (x) any law or any governmental rule or
regulation applicable to Company or any of its Subsidiaries where such
violations in the aggregate have had or could reasonably be expected to have a
Material Adverse Effect, (y) the Certificate or the Articles of Incorporation
or Bylaws of Parent, Company or any of Company’s Subsidiaries or (z) any order,
judgment or decree of any court or other agency of government binding on
Company or any of Company’s Subsidiaries where such violations in the aggregate
have had or could reasonably be expected to have a Material Adverse Effect,
(ii) conflict with, result in a breach of or constitute a default under
any Contractual Obligation of Parent, Company or any of its Subsidiaries where
such conflict, breach or default in the aggregate have had or could reasonably
be expected to have a Material Adverse Effect, (iii) result in or require
the creation or imposition of any Lien upon any of the properties or assets of
Company or any of Company’s Subsidiaries (other than Liens created under any of
the Loan Documents in favor of Administrative Agent on behalf of Lenders), or
(iv) require any approval of or consent of any Person under any
Contractual Obligation of Parent, Company or any of Company’s Subsidiaries,
except for this Amendment and such approvals or consents the failure of which
to obtain has not had and could not reasonably be expected to have a Material
Adverse Effect.

 

D.                                    Governmental
Consents.  The execution, delivery
and performance by each of Company and each of its Subsidiaries of this
Amendment and the SAG Stock Purchase Agreement and the performance by Company
of the Amended Agreement and the SAG Stock Purchase Agreement do not and will
not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other governmental authority
or regulatory body other than any such registrations, consents, approvals,
notices or other actions (x) that have been made, obtained or taken on or
prior to the date on which such registrations, consents, approvals, notices or
other actions are required to be made, obtained or taken, as the case may be,
and are in full force and effect or (y) the failure of which to make,
obtain or take has not had and could not reasonably be expected to have a
Material Adverse Effect.

 

13

 

E.                                      Binding
Obligation.  Each of this Amendment,
the SAG Stock Purchase Agreement and the Amended Agreement has been duly
executed and delivered by each Loan Party that is a party thereto and is the
legally valid and binding obligation of such Loan Party, enforceable against
such Loan Party in accordance with its respective terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.

 

F.                                      Incorporation
of Representations and Warranties From Credit Agreement.  The representations and warranties contained
in Section 5 of the Credit Agreement are and will be true, correct and
complete in all material respects on and as of the Third Amendment Effective
Date to the same extent as though made on and as of that date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.

 

G.                                    Absence of
Default.  No event has occurred and
is continuing or will result from the consummation of the transactions
contemplated by this Amendment that would constitute an Event of Default or a
Potential Event of Default.

 

Section 6.                                          ACKNOWLEDGEMENT
AND CONSENT

 

Each of Parent and the
Subsidiary Guarantors (each a “Guarantor”)
is a party to a Guaranty and each such Guarantor has guarantied the
Obligations.

 

Each Guarantor hereby
acknowledges that it has reviewed the terms and provisions of the Credit
Agreement and this Amendment and consents to the amendment of the Credit
Agreement effected pursuant to this Amendment. 
Each Guarantor hereby confirms that the Guaranty to which it is a party
or otherwise bound will continue to guaranty to the fullest extent possible the
payment and performance of all “Guarantied Obligations” as such term is defined
in the applicable Guaranty, including without limitation the payment and
performance of all such “Guarantied Obligations” in respect of the Obligations
of Company now or hereafter existing under or in respect of the Amended
Agreement.

 

Each Guarantor (a)
acknowledges and agrees that the Guaranty to which it is a party or otherwise
bound shall continue in full force and effect and that all of its obligations
thereunder shall be valid and enforceable and shall not be impaired or limited
by the execution or effectiveness of this Amendment;  (b) represents and warrants that all representations and
warranties contained in the Amended Agreement and in the Guaranty to which it
is a party or otherwise bound are true, correct and complete in all material
respects on and as of the Third Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date; and (c) acknowledges and agrees that (i) notwithstanding the
conditions to effectiveness set forth in this Amendment, such Guarantor is not
required by the terms of the Credit Agreement or any other Loan Document to
consent to the amendments to 

 

14

 

the Credit Agreement effected pursuant to this Amendment and
(ii) nothing in the Credit Agreement, this Amendment or any other Loan
Document shall be deemed to require the consent of such Guarantor to any future
amendments to the Credit Agreement.

 

Section 7.                                          MISCELLANEOUS

 

A.                                    Effect of
Amendment.  Reference to and effect
on the Credit Agreement and the other Loan Documents.

 

(i)                                     On
and after the Third Amendment Effective Date, each reference in the Credit
Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like
import referring to the Credit Agreement, and each reference in the other Loan
Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like
import referring to the Credit Agreement shall mean and be a reference to the
Amended Agreement.

 

(ii)                                  On
and after the Third Amendment Effective Date, each reference in the other Loan
Documents to the “Lenders,” “Commitments,” or words of like import shall mean
and be a reference to the Lenders and Commitments as amended by this Agreement.

 

(iii)                               Except
as specifically amended by this Amendment, the Credit Agreement and the other
Loan Documents shall remain in full force and effect and are hereby ratified
and confirmed.

 

(iv)                              The
execution, delivery and performance of this Amendment shall not, except as
expressly provided herein, constitute a waiver of any provision of, or operate
as a waiver of any right, power or remedy of Agents or any Lender under, the
Credit Agreement or any of the other Loan Documents.

 

B.                                    Fees and
Expenses.  Company acknowledges that
all costs, fees and expenses as described in subsection 10.2 of the Credit
Agreement incurred by Agents and their counsel with respect to this Amendment
and the documents and transactions contemplated hereby shall be for the account
of Company.

 

C.                                    Headings.  Section and subsection headings in this
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose or be given any
substantive effect.

 

D.                                    Applicable Law.  THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

 

15

 

E.                                      Counterparts;
Effectiveness.  This Amendment may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. 
This Amendment (other than the provisions of Sections 1, 2 and 3 hereof,
the effectiveness of which is governed by Section 4 hereof) shall become
effective upon the execution of a counterpart hereof by Company, Requisite
Lenders, Lenders holding at least 51% of the Term Loans, Syndication Agent and
the Guarantors and receipt by Company and Agents of written or telephonic
notification of such execution and authorization of delivery thereof.

 

[Remainder of page
intentionally left blank]

 

 

16

 

IN WITNESS WHEREOF,
the parties hereto have caused this Amended Agreement to be duly executed and
delivered by their respective officers thereunto duly authorized as of the date
first written above.

 

	
   

  	
  DECRANE AIRCRAFT HOLDINGS, INC.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief 

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AEROSPACE DISPLAY SYSTEMS, LLC., a 

  Delaware limited liability company (for 

  purposes of Section 6 only) as a Subsidiary 

  Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AUDIO INTERNATIONAL, INC., an 

  Arkansas corporation (for purposes of Section 6 

  only) as a Subsidiary Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AVTECH CORPORATION, a Washington 

  corporation (for purposes of Section 6 only) as a 

  Subsidiary Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and
  Chief

  Financial Officer

  

 

S-1

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CARL F. BOOTH & CO., LLC, a Delaware 

  limited liability company (for purposes of 

  Section 6 only) as a Subsidiary Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CUSTOM
  WOODWORK & PLASTICS, 

  LLC., a Delaware limited liability company (for 

  purposes of Section 6 only) as a Subsidiary 

  Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DAH-IP HOLDINGS, INC., a Delaware 

  corporation (for purposes of Section 6 only) as a 

  Subsidiary Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DAH-IP INFINITY, INC., a Delaware 

  corporation (for purposes of Section 6 only) as a 

  Subsidiary Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  

 

S-2

 

	
   

  	
  DECRANE AIRCRAFT FURNITURE CO., 

  L.P., a Texas limited partnership

  By: DAH-IP Holdings, Inc., a Delaware 

  corporation, its General Partner (for purposes of 

  Section 6 only) as a Subsidiary Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DECRANE AIRCRAFT SEATING 

  COMPANY, INC., a Wisconsin corporation 

  (for purposes of Section 6 only) as a Subsidiary 

  Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DECRANE CABIN INTERIORS, LLC, a 

  Delaware limited liability company (for 

  purposes of Section 6 only) as a Subsidiary 

  Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  HOLLINGSEAD INTERNATIONAL, INC., 

  a California corporation (for purposes of Section 6 

  only) as a Subsidiary Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  

 

S-3

 

	
   

  	
  PATS, INC., a Maryland corporation (for 

  purposes of Section 6 only) as a Subsidiary 

  Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PCI
  NEWCO., INC., a Kansas corporation (for 

  purposes of Section 6 only) as a 

  Subsidiary Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PPI
  HOLDINGS, INC., a Kansas 

  corporation(for purposes of Section 6 

  only) as a Subsidiary Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PRECISION
  PATTERN, INC., a Kansas 

  corporation (for purposes of Section 6 only) as a 

  Subsidiary Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  

 

S-4

 

	
   

  	
  THE
  INFINITY PARTNERS, LTD., a Texas 

  limited partnership

  
	
   

  	
  by: DAH-IP Holdings,
  Inc., a Delaware limited 

  partnership, its general partner (for purposes of 

  Section 6 only) as a Subsidiary Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TRI-STAR ELECTRONICS 

  INTERNATIONAL, INC., a California 

  corporation (for purposes of Section 6 only) as a 

  Subsidiary Guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DECRANE HOLDINGS CO., a Delaware 

  corporation (for purposes of Section 6 only) as a 

  guarantor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard
  J. Kaplan

  
	
   

  	
   

  	
  Name:

  	
   Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Assistant Secretary

  

 

S-5

 

	
   

  	
  CREDIT SUISSE FIRST BOSTON (successor to 

  DLJ Capital Funding, Inc.), as a Lender and 

  as Syndication Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BANK ONE, NA, as a Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANCORP, as a Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:  

  	
   

  

 

S-6

 

ANNEX A

 

MATTERS TO BE COVERED IN OPINION OF COUNSEL TO COMPANY

 

1.                                       Company
has been duly incorporated, and is validly existing in good standing under the
laws of the State of Delaware with corporate power to own its properties and
assets, to enter into the Amendment and to perform its obligations under the
Amendment.

 

2.                                       The
execution, delivery and performance of the Amendment by Company have been duly
authorized by all necessary corporate action on the part of Company, the
Amendment has been duly executed and delivered by Company, and the Amendment
and the Amended Agreement constitute the legally valid and binding obligations
of Company, enforceable against Company in accordance with their respective
terms except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors’ rights generally
(including, without limitation, fraudulent conveyance laws) and by general
principles of equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether considered in
a proceeding in equity or at law.

 

3.                                       Company’s
execution and delivery of the Amendment and the consummation of the
transactions contemplated by the Amendment do not and will not (i) violate
the Certificate of Incorporation or By-laws of Parent or of Company,
(ii) violate, breach or result in a default under any existing obligation
of Parent or of Company under any other agreement, (iii) breach or
otherwise violate any existing obligation of Company under any order, judgment
or decree of any New York, California or federal court or Governmental
Authority binding on Company or (iv) violate any New York, California or
federal statute or regulation.

 

4.                                       No
governmental consents, approvals, authorizations, registrations, declarations
or filings are required by Company in connection with the execution and
delivery by Company of the Amendment, and the performance by Company of the
Amended Agreement.

 

A-1

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