Document:

Exhibit 10.13.1

 

EXCHANGE AGREEMENT

dated as of

September 9, 2004

among

DECRANE AIRCRAFT HOLDINGS, INC.,

THE GUARANTORS SET FORTH ON THE SIGNATURE PAGES HERETO

and

THE HOLDERS SET FORTH ON THE SIGNATURE PAGES HERETO

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  	
   

  
	
  ISSUANCE AND EXCHANGE

  	
   

  
	
   

  	
   

  
	
  Section 1.01.  Issuance, Exchange And Delivery

  	
   

  
	
  Section 1.02.  Closing

  	
   

  
	
   

  	
   

  
	
  ARTICLE 2

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GUARANTORS

  	
   

  
	
   

  	
   

  
	
  Section 2.01.  No Default under the Credit Agreement

  	
   

  
	
  Section 2.02.  Authorizations

  	
   

  
	
  Section 2.03.  Governmental Authorization

  	
   

  
	
  Section 2.04.  Non-Contravention

  	
   

  
	
  Section 2.05.  No Registration

  	
   

  
	
  Section 2.06.  Litigation

  	
   

  
	
  Section 2.07.  Finder’s Fees

  	
   

  
	
   

  	
   

  
	
  ARTICLE 3

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES OF THE
  HOLDERS

  	
   

  
	
   

  	
   

  
	
  Section 3.01.  Ownership of Old Notes

  	
   

  
	
  Section 3.02.  Authorization of Exchange Agreement

  	
   

  
	
  Section 3.03.  Non-Contravention

  	
   

  
	
  Section 3.04.  Exchange for Investment

  	
   

  
	
  Section 3.05.  Restricted Securities

  	
   

  
	
  Section 3.06.  Inspections; No Other Representations

  	
   

  
	
  Section 3.07.  Finder’s Fees

  	
   

  
	
  Section 3.08.  Taxpayer Identification Numbers

  	
   

  
	
   

  	
   

  
	
  ARTICLE 4

  	
   

  
	
  COVENANTS

  	
   

  
	
   

  	
   

  
	
  Section 4.01.  Covenants of the Company

  	
   

  
	
  Section 4.02.  Covenants of the Holders

  	
   

  
	
   

  	
   

  
	
  ARTICLE 5

  	
   

  
	
  CONDITIONS TO THE CLOSING

  	
   

  
	
   

  	
   

  
	
  Section 5.01.  Conditions to Obligation of Each Party

  	
   

  
	
  Section 5.02.  Conditions to the Obligations of the
  Holders

  	
   

  
	
  Section 5.03.  Conditions to the Obligations of the
  Company

  	
   

  
	
   

  	
   

  
	
  ARTICLE 6

  	
   

  
	
  SURVIVAL; INDEMNIFICATION

  	
   

  
	
   

  	
   

  
	
  Section 6.01.  Survival

  	
   

  

 

 

	
  Section 6.02.  Indemnification

  	
   

  
	
   

  	
   

  
	
  ARTICLE 7

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  Section 7.01.  Notices

  	
   

  
	
  Section 7.02.  No Waivers; Amendments

  	
   

  
	
  Section 7.03.  Exclusivity

  	
   

  
	
  Section 7.04.  Termination

  	
   

  
	
  Section 7.05.  Successors And Assigns

  	
   

  
	
  Section 7.06.  Governing Law

  	
   

  
	
  Section 7.07.  Jurisdiction

  	
   

  
	
  Section 7.08.  WAIVER OF JURY TRIAL

  	
   

  
	
  Section 7.09.  Counterparts; Effectiveness

  	
   

  
	
  Section 7.10.  Expenses

  	
   

  
	
  Section 7.11.  Entire Agreement

  	
   

  
	
  Section 7.12.  Captions; Certain Definitions

  	
   

  
	
   

  	
   

  
	
  Schedule 1.02

  	
  -

  	
  Amount of Old Notes and New Notes; Taxpayer
  Identification Number

  	
   

  
				

 

ii

 

EXCHANGE AGREEMENT

 

AGREEMENT dated as of September 9, 2004, among DeCrane Aircraft
Holdings, Inc., a Delaware corporation (the “Company”),
the affiliates of the Company set forth on the signature pages hereto as
Guarantors (the “Guarantors”), and certain holders of the Company’s 12% Senior
Subordinated Notes due 2008 (the “Old Notes”)
set forth on the signature pages hereto (together with their successors and
assigns, the “Holders”).

 

W 
I  T  N  E  S  S  E 
T  H :

 

WHEREAS, the Holders are holders of a portion the Old Notes;

 

WHEREAS, the Holders and the Company desire that the Holders exchange
the Old Notes for new 17% Senior Discount Notes due 2008 of the Company (the “New Notes”)
guaranteed by each of the Guarantors, to be issued pursuant to the provisions
of an Indenture dated as of July 23, 2004 among the Company, the
Guarantors named therein and U.S. Bank National Association, as Trustee (the “Trustee”), as supplemented by the First
Supplemental Indenture dated as of September 9, 2004 among the Company,
the Guarantors named therein and the Trustee (the “Indenture”).

 

WHEREAS, the Company has entered into an amendment (the “Credit
Agreement Amendment”) to the Third Amended and Restated Credit
Agreement dated May 11, 2000 among the Company, the lenders party thereto and
Credit Suisse First Boston, as administrative agent and syndication agent for
the lenders (as amended, the “Credit Agreement”), which amendment will
permit such exchange; and

 

WHEREAS, the Company has entered into an amendment (the “Second Lien
Credit Agreement Amendment”) to the Second Lien Credit Agreement
dated December 22, 2003 among the Company, the lenders party thereto and
Credit Suisse First Boston, acting through its Cayman Islands Branch, as
administrative agent and syndication agent for the lenders (as amended, the “Second Lien
Credit
Agreement”), which amendment will permit such exchange.

 

NOW THEREFORE, the parties hereto agree as follows:

 

ARTICLE 1

ISSUANCE AND EXCHANGE

 

Section 1.01.  Issuance, Exchange And Delivery. Upon
the terms and subject to the terms and conditions of this Agreement, the
Company agrees to issue to each Holder, and each Holder agrees, severally but
not jointly, to accept from the Company at the Closing, the New Notes in
exchange for the surrender of the Old Notes, in each case in the principal
amounts set forth opposite such Holder’s name on Schedule 1.02 hereto.

 

Section 1.02.  Closing. 
The closing (the “Closing”)
of the issuance of the New Notes hereunder shall take place at the offices of
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York, as soon as
possible, but in no event later than five (5) Business Days after satisfaction
of the conditions set forth in Article 5, or at such other time or place
as Company and 

 

1

 

the Holders may agree, such date is
hereinafter referred to as the “Closing Date”.  At the Closing (a) each Holder shall surrender to the Company the
principal amount of the Old Notes set forth opposite such Holder’s name on
Schedule 1.02 hereto; and (b) the Company shall deliver to each Holder New
Notes with an initial accreted value equal to the amount  set forth opposite such Holder’s name on
Schedule 1.02 hereto, plus an amount in cash equal to the accrued and
unpaid interest on the Old Notes being exchanged to the Closing Date.

 

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE GUARANTORS

 

The Company and each of the Guarantors represents and warrants to each
Holder that:

 

Section 2.01.  No Default under the Credit Agreement.  As of the date hereof, (i) no
Potential Event of Default or Event of Default (each as defined in the Credit
Agreement) under the Credit Agreement has occurred and is continuing, and (ii)
the Company is able to satisfy the conditions to borrowing thereunder to permit
the Company to borrow at least $1 of additional debt thereunder pursuant to the
terms thereto on the date hereof.

 

Section 2.02.  Authorizations.  The execution, delivery and performance by the Company
and each of the Guarantors of this Agreement have been duly authorized by all
necessary corporate action on the part of the Company and each of the
Guarantors.  The New Notes have been
duly authorized and, when executed and authenticated in accordance with the
provisions of the Indenture and issued to the holders in exchange for the Old
Notes in accordance with the terms of this Agreement, will be valid and binding
obligations of the Company, enforceable in accordance with their terms, subject
to applicable bankruptcy, insolvency, fraudulent transfer and similar laws
affecting creditors’ rights generally and equitable principles of general
applicability, and will be entitled to the benefits of the Indenture; each of
the Guarantors has duly authorized its guarantee of the New Notes and, when the
New Notes have been executed and authenticated in accordance with the
provisions of the Indenture and issued to the holders in exchange for the Old
Notes in accordance with the terms of this Agreement, the guarantee of the New
Notes will be a valid and binding obligation of the each Guarantor, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent transfer and similar laws affecting creditors’ rights generally and
equitable principles of general applicability.  The Indenture has been
duly authorized by all necessary corporate action on the part of the Company
and each of the Guarantors, as applicable. 
Each of this Agreement and the Indenture is, a valid and binding
agreement of the Company and each of the Guarantors, as applicable, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent transfer and similar laws affecting creditors’ rights generally and
equitable principles of general applicability.

 

Section 2.03.  Governmental Authorization.  Assuming the accuracy of the
representations and warranties of the Holders and their compliance with the
covenants herein, the execution, delivery and performance by the Company and
each of the Guarantors of this Agreement, the Indenture and the New Notes
require no material order, license, consent, authorization, or approval of, or
exemption by, or action by or in respect of, or notice to, or filing or
registration with, any governmental body, agency or official, except as may be
required by Federal and state securities laws with respect to the Company’s
obligations under the 

 

2

 

Registration Rights Agreement (as defined
below) and except as may be required by state securities laws.

 

Section 2.04.  Non-Contravention.  The execution, delivery and performance by the Company
and each of the Guarantors of this Agreement, the Indenture and the New Notes
do not and will not (i) violate the certificate of incorporation or bylaws of
the Company or any Guarantor or any material agreement or other instrument
binding upon the Company or any Guarantor or (ii) violate any material applicable
law, rule, regulation, judgment, injunction, order or decree.

 

Section 2.05.  No Registration.  Assuming the accuracy of the representations and
warranties of the Holders and their compliance with the covenants herein, it is
not necessary in connection with the issuance of the New Notes to the Holders
in the manner contemplated by this Agreement to register the New Notes under
the Securities Act of 1933, as amended (the “Securities Act”) or to
qualify the Indenture under the Trust Indenture Act of 1939, as amended.

 

Section 2.06.  Litigation. 
There is no action, suit, investigation or proceeding pending
against, or to the knowledge of the Company or any Guarantor, threatened in
writing against or affecting the Company or any Guarantor or any of their
respective properties before any court or arbitrator or any governmental body,
agency or official which could reasonably be expected to have a material
adverse effect on the transactions contemplated by this Agreement.

 

Section 2.07.  Finder’s Fees.  Except
for Credit Suisse First Boston LLC, whose compensation in connection with the
exchange of the Old Notes for the New Notes will be paid by the Company, there
is no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of the Company or any of its
Affiliates (as defined in Rule 405 under the Securities Act) which might be
entitled to any fee or commission from any Holder, the Company or any of their
respective Affiliates upon consummation of the transactions contemplated by
this Agreement.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF
THE HOLDERS

 

Each Holder, severally as to itself and not jointly, represents,
warrants and agrees to the Company and the Guarantors as follows:

 

Section 3.01.  Ownership of Old Notes.  Such Holder has, and on the Closing Date
will have valid title to, or a valid “security entitlement” within the meaning
of Section 8-501 of the New York Uniform Commercial Code in respect of,
the Old Notes to be exchanged by such Holder free and clear of all security
interests, claims, liens, equities or other encumbrances and the legal right
and power, and all authorization and approval required by law, to enter into
this Agreement and to transfer and deliver the Old Notes to be exchanged by
such Holder or a security entitlement in respect of such Old Notes.

 

Section 3.02.  Authorization of Exchange Agreement.  The execution, delivery and
performance of this Agreement are within such Holder’s powers and have been
duly authorized 

 

3

 

by all requisite corporate action on the part of such Holder.  This Agreement constitutes a valid and
binding agreement of such Holder enforceable in accordance with its terms.  This Agreement has been duly executed and
delivered by such Holder.

 

Section 3.03.  Non-Contravention.  The execution and delivery by such Holder
of, and the performance by such Holder of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate of
incorporation, by-laws or other organizational document of such Holder or any
material agreement or other instrument binding upon such Holder, or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over such Holder.

 

Section 3.04.  Exchange for Investment.  Such Holder acknowledges that the
New Notes have not been registered under the Securities Act or any state
securities laws and that the issuance of the New Notes contemplated hereby is
to be effected pursuant to an exemption from the registration requirements
imposed by such laws, including Section 4(2) under the Securities
Act.  Such Holder is an “accredited
investor” within the meaning of Rule 501(a) under the Securities Act and the
New Notes to be received by it pursuant to this Agreement are being received
for its own account without a view toward distribution in violation of the
Securities Act and such Holder will not offer, sell, transfer, pledge,
hypothecate or otherwise dispose of the New Notes unless (i) pursuant to a
transaction either registered under, or exempt from registration pursuant to
Rule 144A and Regulation S under, the Securities Act or (ii) to an accredited
investor, provided that such accredited investor accepts delivery of such New
Notes in the form of a definitive note registered in the name of such
accredited investor.

 

Section 3.05.  Restricted Securities.  Such Holder acknowledges that the
New Notes have not been registered under the Securities Act and may not be
offered, sold, pledged or otherwise transferred prior to the expiration of the
applicable holding period of the New Notes under Rule 144 (k) of the Securities
Act, except (a) in accordance with Rule 144A or Regulation S under the
Securities Act or pursuant to another exemption from the registration
requirements of the Securities Act or (b) pursuant to an effective registration
statement under the Securities Act.  The
New Notes will bear a legend and will be subject to transfer restrictions as
set forth in the Indenture.

 

Section 3.06.  Inspections; No Other Representations.  Each Holder is an informed and
sophisticated purchaser, and has engaged expert advisors experienced in the
evaluation of the transactions contemplated hereunder.  Each Holder has undertaken such investigation
and has been provided with and has evaluated such documents and information as
it has deemed necessary to enable it to make an informed and intelligent
decision with respect to the execution, delivery and performance of this
Agreement.  Each Holder acknowledges
that the Company has given such Holder complete and open access (to the extent
requested by such Holder) to the key employees, and documents of the Company
and its subsidiaries.  Each Holder
agrees to accept the New Notes on the Closing Date based upon its own
inspection, examination and determination with respect thereto as to all
matters, and without reliance upon any express or implied representations or
warranties of any nature made by or on behalf of or imputed to the Company,
except as expressly set forth in this Agreement.  Without limiting the generality of the foregoing, each Holder
acknowledges that the Company makes no representation or warranty with respect
to (i) any projections, estimates or budgets delivered to or made available to
the 

 

4

 

Holder of future revenues, future results of operations (or any
component thereof), future cash flows or future financial condition (or any
component thereof) of the Company and the Guarantors or the future business and
operations of the Company and the Guarantors or (ii) any other information or
documents made available to such Holder or its 
advisors with respect to the Company or the Guarantors or their
respective businesses or operations, except as expressly set forth in this
Agreement.

 

Section 3.07.  Finder’s Fees.  There
is no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of such Holder or any of its
Affiliates which might be entitled to any fee or commission from such Holder,
the Company or any of their respective Affiliates upon consummation of the
transactions contemplated by this Agreement.

 

Section 3.08.  Taxpayer Identification Numbers.  The number set forth under “Taxpayer
Identification Number” on Schedule 1.02 hereto listed next to the name of
such Holder is such Holder’s federal taxpayer identification number.

 

ARTICLE 4

COVENANTS

 

Section 4.01.  Covenants of the Company.  In further consideration of the
agreements of the Holders contained in this Agreement, the Company covenants
with each of the Holders as follows:

 

(a)                        the
Company will use its commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement;

 

(b)                       the Company
will use its commercially reasonable efforts to obtain any consents, approvals
or waivers that are required to be obtained from third parties to any material
contracts, in connection with the consummation of the transactions contemplated
by this Agreement;

 

(c)                        prior to
the Closing Date, the Company agrees that, except as the Company and its
counsel reasonably determine to be required by law, it will not disclose the
identity of the Holders to any third party without the prior written consent of
such Holder, which consent shall not be unreasonably withheld, except that the
Company may disclose any Holder’s identity to its advisors and counsel or to
any other Holder that is a party to this Agreement (it being understood that
the Company will be required to publicly file this Agreement with the
Securities and Exchange Commission, which documents will identify each Holder);
and

 

(d)                                 to
the extent that the New Notes constitute Transfer Restricted Securities (as
defined in the Registration Rights Agreement), the Company will include any New
Notes held by the Holder in any Registration Statement (as defined in the
Registration Rights Agreement) that the Company files pursuant to the
Registration Rights Agreement dated July 23, 2004 among the Company, the
Guarantors and the holders listed therein.

 

5

 

Section 4.02.  Covenants of the Holders.  In further consideration of the
agreements of the Company contained in this Agreement, each Holder covenants
with the Company as follows:

 

(a)                        such
Holder and its Affiliates (as defined in Rule 405 under the Securities Act)
will hold, and will use their commercially reasonable efforts to cause their
respective officers, directors, employees, accountants, counsel, consultants,
advisors and agents to hold, in confidence, (i) the existence of this Agreement
or any facts relating to the transaction contemplated by this Agreement and
(ii) all confidential documents and information concerning the Company or any
Guarantor furnished to such Holder or its Affiliates in connection with the
transactions contemplated by this Agreement, except to the extent that such
information can be shown to have been (A) previously known on a
non-confidential basis by such Holder, (B) in the public domain through no
fault of such Holder or (C) later lawfully acquired by such Holder from sources
other than the Company or any Guarantor; provided that such Holder may disclose
such information to its officers, directors, employees, accountants, counsel,
consultants, advisors and agents in connection with the transactions
contemplated by this Agreement  so long
as such persons are informed by such Holder of the confidential nature of such
information and are directed by such Holder to treat such information
confidentially.  Each Holder shall be
responsible for any failure to treat such information confidentially by such
persons.  The obligation of each Holder
and its Affiliates to hold any such information in confidence shall be
satisfied if they exercise the same care with respect to such information as
they would take to preserve the confidentiality of their own similar information
and shall in any event expire six months from the Closing Date.  If this Agreement is terminated, each Holder
and its Affiliates will, and will use their commercially reasonable efforts to
cause their respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to the Company, upon
request, all documents and other materials, and all copies thereof, obtained by
such Holder or its Affiliates or on their behalf from the Company or any
Guarantor in connection with this Agreement that are subject to such
confidentiality provisions;

 

(b)                       unless this
Agreement is terminated in accordance with Section 7.04 hereof, such
Holder will not pledge, sell, contract to sell, grant any option, right or
warrant to purchase, lend or otherwise transfer or dispose of any of the Old
Notes or any right or interest (voting or otherwise and including any
participation interest) therein, except with the consent of the Company or
pursuant to Section 1.02 hereof; and

 

(c)                        such
Holder will use its commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement.

 

ARTICLE 5

CONDITIONS TO THE CLOSING

 

Section 5.01.  Conditions to Obligation of Each Party.  The obligations of each party
hereto to consummate the issuance of the New Notes in exchange for the Old
Notes is subject to the satisfaction (or, to the extent permitted by law,
waiver by such party), at or prior to the Closing Date, of the following
conditions:

 

6

 

(a)                        no
provision of any applicable law or regulation and no judgment, injunction,
order or decree shall prohibit the consummation of the Closing and there shall
not be threatened, instituted or pending any action, suit, investigation or
proceeding which could reasonably be expected to have a material adverse effect
on the transactions contemplated by this Agreement;

 

(b)                       the Credit
Agreement Amendment shall be in full force and effect; and

 

(c)                        the Second
Lien Credit Agreement Amendment shall be in full force and effect.

 

Section 5.02.  Conditions
to the Obligations of the Holders.  The
obligation of the Holders to exchange the Old Notes for the New Notes is
subject to the satisfaction (or, to the extent permitted by law, waiver by each
Holder), at or prior to the Closing Date, of the following additional
conditions:

 

(a)                        the representations and warranties
of the Company contained in this Agreement shall be true and correct in all
material respects, the Company shall have performed and complied with all
covenants and agreements required by this Agreement to be performed by it at or
prior to the Closing Date, and each Holder shall have received a certificate,
dated the Closing Date, signed by an authorized officer of the Company to the
foregoing effect;

 

(b)                       the Company shall have
delivered to each Holder an opinion of 
Davis Polk & Wardwell, special counsel to the Company, dated the
Closing Date, in form and substance reasonably satisfactory to the Holders, to
the effect that (subject to appropriate assumptions and limitations):

 

(i)                                     the
New Notes have been duly authorized by the Company and, when executed and
authenticated in accordance with the provisions of the Indenture and issued to
the Holders in exchange for the Old Notes in accordance with the terms of this
Agreement, will be entitled to the benefits of the Indenture and will be valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except (x) as such enforcement may be limited by
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors’ rights generally, (y) as such enforcement is subject to general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law) and (z) to the extent that a waiver of the
rights under any usury or stay law may be unenforceable, we express no opinion,
however, as to the applicability (and, if applicable, the effect) of
Section 548 of the United States Bankruptcy Code or any comparable
provision of state law to the questions addressed above or on the conclusions
expressed with respect thereto;

 

(ii)                                  the Indenture has been duly
authorized, executed and delivered by each of the Company and each of the
Guarantors organized under the laws of Delaware (the “Delaware Guarantors”) and is
a valid and binding agreement of the Company, and (assuming due authorization,
execution and delivery by each other Guarantor (the “Non-Delaware Guarantors”))
the Guarantors, enforceable in accordance with its terms; except (x) as
such enforcement may be limited by bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors’ rights generally, (y) as such
enforcement is subject to general principles of equity (regardless of whether
such enforceability is 

 

7

 

considered in a proceeding in equity or at law) and (z) to the extent
that a waiver of the rights under any usury or stay law may be unenforceable,
we express no opinion, however, as to the applicability (and, if applicable,
the effect) of Section 548 of the United States Bankruptcy Code or any
comparable provision of state law to the questions addressed above or on the
conclusions expressed with respect thereto; and

 

(iii)                               this Agreement has been duly
authorized, executed and delivered by each of the Company and the Delaware
Guarantors.

 

(c)                                  The
Holders shall have received copies of each of the Credit Agreement Amendment
and the Second Lien Credit Agreement Amendment, each of which shall be in full
force and effect and no term or condition thereof shall have been amended,
waived or otherwise modified without the prior consent of the Holders; and

 

(d)                                 each
Holder shall have received all documents reasonably requested by it relating to
the existence of the Company and the corporate authority for entering into this
Agreement and the consummation of the transactions contemplated hereby, all in
form and substance reasonably satisfactory to it.

 

Section 5.03.  Conditions to the Obligations of the
Company.  The obligations of
the Company to issue the New Notes to the Holders pursuant to this Agreement are
subject to the satisfaction (or, to the extent permitted by law, waiver by each
Holder), at or prior to the Closing Date, of the following conditions:

 

(a)                        the representations and
warranties of the Holders contained in this Agreement shall be true and correct
in all material respects and the Holders shall have performed and complied with
all covenants and agreements required by this Agreement to be performed by them
at or prior to the Closing Date; and

 

(b)                       the Company
shall have received all documents reasonably requested by it relating to the
existence of each Holder and the authority for entering into this Agreement and
the consummation of the transactions contemplated hereby, all in form and
substance reasonably satisfactory to it.

 

ARTICLE 6

SURVIVAL; INDEMNIFICATION

 

Section 6.01.  Survival. 
The representations and warranties of the parties hereto
contained in this Agreement, shall survive the execution and delivery of this
Agreement.  The covenants and agreements
of the parties contained in this Agreement shall survive the Closing in
accordance with their terms or, if no term is specified, indefinitely.

 

Section 6.02.  Indemnification.  (a) The Company hereby indemnifies each of the
Holders, each person, if any, who controls any Holder within the meaning of
either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, and each affiliate of any Holder within the
meaning of Rule 405 under the Securities Act against and agrees to hold each 

 

8

 

of them harmless from any and all losses, claims, damages, costs,
liabilities or expenses (or actions, suits or proceedings in respect thereof),
including reasonable expenses of investigation and reasonable attorneys’ fees
and expenses, in each case, in connection with any action, suit or proceeding
involving a third party (“Damages”)
incurred or suffered by any of them, in each case arising out of any
misrepresentation or breach of warranty, covenant or agreement made or to be
performed by the Company pursuant to this Agreement.

 

(b)                       The Company shall not be responsible for any
Damages to the extent a court of competent jurisdiction shall have finally
determined that such Damages resulted primarily from (i) such indemnified
person’s bad faith or gross negligence; (ii) any claims made by one or more of
the indemnified persons against another indemnified person or indemnified
persons in connection with the Transactions or (iii) any breach of the
representations and warranties of any of the Holders set forth in this
Agreement (clauses (i) through (iii), collectively, “Excluded Claims”).  If for any reason (other than that such liability is an Excluded
Claim) the foregoing indemnity is unavailable or insufficient to hold an
indemnified person harmless, then the Company shall contribute to amounts paid
or payable by such indemnified person in respect of such Damages in such
proportion as appropriately reflects the relative benefits received by, and
fault of, the Company and such indemnified person in connection with the
matters as to which such Damages relate and other equitable considerations.

 

(c)                        The party
seeking indemnification under this Section (the “Indemnified Party”) agrees to
give prompt notice to the party against whom indemnity is sought (the “Indemnifying
Party”) of the assertion of any claim, or the commencement of any
suit, action or proceeding (“Claim”) in respect of which indemnity may
be sought under such Section and will provide the Indemnifying Party such
information with respect thereto that the Indemnifying Party may reasonably
request. The failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder, except to the extent such
failure shall have adversely prejudiced the Indemnifying Party.

 

(d)                       The
Indemnifying Party shall be entitled to participate in the defense of any Claim
asserted by any third party (“Third Party Claim”) and, subject to the
limitations set forth in this Section, shall be entitled to control and appoint
lead counsel for such defense, in each case at its expense.

 

(e)                        If the
Indemnifying Party shall assume the control of the defense of any Third Party
Claim in accordance with the provisions of this Section the Indemnifying
Party shall obtain the prior written consent of the Indemnified Party (which
shall not be unreasonably withheld) before entering into any settlement of such
Third Party Claim and the Indemnified Party shall be entitled to participate in
the defense of such Third Party Claim and to employ separate counsel of its
choice for such purpose.  The fees and
expenses of such separate counsel shall be paid by the Indemnified Party.

 

(f)                          Each
party shall cooperate, and cause their respective Affiliates to cooperate, in
the defense or prosecution of any Third Party Claim and shall furnish or cause
to be furnished such records, information and testimony, and attend such
conferences, discovery proceedings, hearings, trials or appeals, as may be
reasonably requested in connection therewith.

 

9

 

ARTICLE 7

MISCELLANEOUS

 

Section 7.01.  Notices. 
All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission) and shall be
given,

 

if to the Holders, to:

 

The Putnam Advisory Company, LLC

The Putnam Fiduciary Trust Company

One Post Office Square

Boston , MA  02109

Attention:  James P. Miller

Facsimile:  (617) 760-8639

 

with a copy (which shall not constitute notice to any Holder) to:

 

Ropes & Gray LLP

One International Place

Boston, MA  02110

Attention:  Don De Amicis, Esq.

Facsimile:  (617) 951-7050

 

if to the Company, to:

 

DeCrane Aircraft Holdings, Inc.

2361 Rosecrans Avenue, Suite 180

El Segundo, California  90245

Attention:  Chief Financial Officer

Facsimile:  (310) 643-5106

 

with a copy (which shall not constitute notice to the Company) to:

 

Davis Polk & Wardwell

450 Lexington Avenue

New York, New York 10017

Attention:  Michael P. Kaplan, Esq.

Facsimile:  (212) 450-3800

 

All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a Business Day in the place of
receipt.  Otherwise, any such notice,
request or communication shall be deemed not to have been received until the
next succeeding business day in the place of receipt.

 

Section 7.02.  No Waivers; Amendments. (a)  No failure or delay on the
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the 

 

10

 

exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

(b)                       Any
provision of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by all parties hereto.

 

Section 7.03.  Exclusivity. After the Closing,
Article 6 will provide the exclusive remedy for Holders for any
misrepresentation, breach of warranty, covenant or other agreement or other
claim arising out of this Agreement or the transactions contemplated
hereby.  The Company shall retain all
remedies available at law for any misrepresentation, breach of warranty,
covenant or other agreement or other claim arising out of this Agreement or the
transactions contemplated hereby.

 

Section 7.04.  Termination. (a)   This Agreement shall terminate, prior to the Closing Date:

 

(i)                                     at
any time by mutual written agreement of the Company and the Holders; or

 

(ii)                                  if
there shall be any law or regulation that makes consummation of the
transactions contemplated by this Agreement illegal or otherwise prohibited or
if consummation of the transactions contemplated hereby would violate any
non-appealable final order, decree or judgment of any court or governmental
body having competent jurisdiction, if so determined by the Company or the
Holders.

 

The party desiring to terminate this Agreement pursuant to this
Section 7.04 shall give notice of such termination to the other parties.

 

(b)                       If this
Agreement is terminated as permitted by Section 7.04, such termination
shall be without liability of any party (or any stockholder, director, officer,
employee, agent, consultant or representative of such party) to the other
parties to this Agreement; provided
that if such termination shall result from the (i) willful failure of any party
to fulfill a condition to the performance of the obligations of the other
parties, (ii) failure to perform a covenant of this Agreement or (iii) breach
by any party hereto of any representation or warranty or agreement contained
herein, such party shall be fully liable for any and all damages incurred or
suffered by the other party as a result of such failure or breach.

 

Section 7.05.  Successors And Assigns. The
Company may not assign any of its rights and obligations hereunder without the
prior written consent of the Holders. 
No Holder may assign its rights or obligations hereunder without the
prior written consent of the Company. 
This Agreement shall be binding upon the Company and the Holders and
their respective successors and assigns.

 

Section 7.06.  Governing Law. This Agreement
shall be governed and construed in accordance with the laws of the State of New
York, without regard to the choice of law rules of such state.

 

11

 

Section 7.07.  Jurisdiction. Except as otherwise
expressly provided in this Agreement, the parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in the United States District Court for
the Southern District of New York or any New York State court sitting in New
York City, so long as one of such courts shall have subject matter jurisdiction
over such suit, action or proceeding, and that any cause of action arising out
of this Agreement shall be deemed to have arisen from a transaction of business
in the State of New York, and each of the parties hereby irrevocably consents
to the jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to
the fullest extent permitted by law, any objection that it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding which is brought in any
such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on
any party anywhere in the world, whether within or without the jurisdiction of
any such court.  Without limiting the
foregoing, each party agrees that service of process on such party as provided
in this Section shall be deemed effective service of process on such
party.

 

Section 7.08.  WAIVER OF JURY TRIAL. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 7.09.  Counterparts; Effectiveness.  This Agreement may be executed in
any number of counterparts each of which shall be an original with the same
effect as if the signatures thereto and hereto were upon the same
instrument.  This Agreement shall become
effective when each party hereto shall have received a counterpart hereof
signed by the other parties hereto.  No
provision of this Agreement is intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder

 

Section 7.10.  Expenses. 
Except as otherwise provided in Article 6 herein, all
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense.

 

Section 7.11.  Entire Agreement.  This Agreement, the Indenture and the New Notes
constitute the entire agreement and understanding among the parties hereto and
supersedes any and all prior agreements and understandings, written or oral,
relating to the subject matter hereof.

 

Section 7.12.  Captions; Certain Definitions. The
captions herein are included for convenience of reference only and shall be
ignored in the construction or interpretation hereof.  All references to “$”
or “dollars” shall be to United
States dollars and all references to “days”
shall be to calendar days unless otherwise specified.  Whenever the words “include,”
“includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words, “without limitation.”

 

[Remainder
of page intentionally left blank; next page is signature page]

 

12

 

IN WITNESS WHEREOF,
the parties hereto have caused this 
Exchange Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.

 

 

	
   

  	
  DECRANE AIRCRAFT
  HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/ RICHARD J. KAPLAN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Richard J. Kaplan

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President, Chief Financial Officer, 

  
	
   

  	
   

  	
   

  	
  Secretary and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AUDIO
  INTERNATIONAL, INC.

  
	
   

  	
  CARL F. BOOTH &
  CO., LLC

  
	
   

  	
  DECRANE AIRCRAFT
  SEATING COMPANY, INC.

  
	
   

  	
  DECRANE CABIN
  INTERIORS-CANADA, INC.

  
	
   

  	
  DECRANE CABIN
  INTERIORS, LLC

  
	
   

  	
  HOLLINGSEAD
  INTERNATIONAL, INC.

  
	
   

  	
  PATS AIRCRAFT, LLC

  
	
   

  	
  PCI NEWCO, INC.

  
	
   

  	
  PRECISION PATTERN,
  INC.

  
	
   

  	
  as Guarantors

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/ RICHARD J. KAPLAN

  	
   

  
	
   

  	
  Name:

  	
  Richard J. Kaplan

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
								

 

13

 

	
   

  	
  THE PUTNAM ADVISORY COMPANY, LLC on
  behalf of: 

  
	
   

  	
  THE NORTHROP GRUMAN PENSION MASTER TRUST  

  
	
   

  	
  ABBOTT LABORATORIES ANNUITY RETIREMENT 

  PLAN  

  
	
   

  	
  PUTNAM WORLD TRUST II - PUTNAM HIGH YIELD 

  BOND FUND

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

 

	
   

  	
  THE PUTNAM FIDUCIARY TRUST COMPANY
  on behalf of:

  
	
   

  	
  MARSH & MCLENNAN COMPANIES, INC. U.S. 

  
	
   

  	
  RETIREMENT PLAN - HIGH YIELD

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

14

 

SCHEDULE 1.02

 

	
  Holder

  	
   

  	
  Taxpayer Identification Number

  	
   

  	
  Principal
 Amount of Old Notes

  	
   

  	
  Initial
  Accreted Value of New Notes

  	
   

  
	
  The Putnam Advisory Company, LLC, on behalf of:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Northrop Grumman Pension Master Trust

  	
   

  	
   

  	
   

  	
  $

  	
  240,000

  	
   

  	
  $

  	
  240,000

  	
   

  
	
  Abbott Laboratories Annuity Retirement Plan

  	
   

  	
   

  	
   

  	
  $

  	
  90,000

  	
   

  	
  $

  	
  90,000

  	
   

  
	
  Putnam World Trust II – Putnam High Yield Bond
  Fund

  	
   

  	
   

  	
   

  	
  $

  	
  74,000

  	
   

  	
  $

  	
  74,000

  	
   

  
	
  The Putnam Fiduciary Trust Company on behalf of:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marsh & McLennan Companies, Inc. U.S.
  Retirement Plan – High Yield

  	
   

  	
   

  	
   

  	
  $

  	
  111,000

  	
   

  	
  $

  	
  111,000

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  $

  	
  515,000

  	
   

  	
  $

  	
  515,000

  	
   

  

 

15Exhibit
10.14

 

SENIOR PREFERRED STOCK AMENDMENT AGREEMENT

 

 

dated as of

 

 

July 23, 2004

 

 

among

 

 

DECRANE AIRCRAFT HOLDINGS, INC.,

 

DECRANE HOLDINGS CO.

 

and

 

THE HOLDERS SET FORTH ON THE SIGNATURE PAGES
HERETO

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  	
   

  
	
  AMENDMENT

  	
   

  
	
   

  	
   

  
	
  Section 1.01.  Consent to Amendment

  	
   

  
	
  Section 1.02.  Closing

  	
   

  
	
   

  	
   

  
	
  ARTICLE 2

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES OF THE
  COMPANY AND DECRANE HOLDINGS

  	
   

  
	
   

  	
   

  
	
  Section 2.01.  No Default Under Credit Agreement

  	
   

  
	
  Section 2.02.  Authorizations

  	
   

  
	
  Section 2.03 . Governmental Authorization

  	
   

  
	
  Section 2.04.  Non-Contravention

  	
   

  
	
  Section 2.05.  Litigation

  	
   

  
	
   

  	
   

  
	
  ARTICLE 3

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES OF THE HOLDERS

  	
   

  
	
   

  	
   

  
	
  Section 3.01.  Ownership of Existing Preferred Stock

  	
   

  
	
  Section 3.02.  Authorization of Agreement

  	
   

  
	
  Section 3.03.  Non-Contravention

  	
   

  
	
  Section 3.04.  Investment Purposes

  	
   

  
	
  Section 3.05.  Inspections; No Other Representations

  	
   

  
	
  Section 3.06 . Taxpayer Identification Number

  	
   

  
	
   

  	
   

  
	
  ARTICLE 4

  	
   

  
	
  COVENANTS

  	
   

  
	
   

  	
   

  
	
  Section 4.01.  Covenants of the Company and DeCrane Holdings

  	
   

  
	
  Section 4.02.  Covenants of the Holders

  	
   

  
	
   

  	
   

  
	
  ARTICLE 5

  	
   

  
	
  CONDITIONS TO THE CLOSING

  	
   

  
	
   

  	
   

  
	
  Section 5.01.  Conditions to Obligation of Each Party

  	
   

  
	
  Section 5.02.  Conditions
  to the Obligations of the Holders

  	
   

  
	
  Section 5.03.  Conditions to the Obligations of the Company and
  DeCrane Holdings

  	
   

  
	
   

  	
   

  
	
  ARTICLE 6

  	
   

  
	
  SURVIVAL; INDEMNIFICATION

  	
   

  
	
   

  	
   

  
	
  Section 6.01.  Survival

  	
   

  
	
  Section 6.02.  Indemnification

  	
   

  

 

 

	
  ARTICLE 7

  
	
  MISCELLANEOUS

  
	
   

  
	
  Section 7.01.  Notices

  	
   

  
	
  Section 7.02.  No Waivers; Amendments

  	
   

  
	
  Section 7.03.  Waiver of Warrant Requirements

  	
   

  
	
  Section 7.04.  Termination

  	
   

  
	
  Section 7.05.  Successors And Assigns

  	
   

  
	
  Section 7.06.  Limited Recourse and Non-Petition

  	
   

  
	
  Section 7.07.  Governing Law

  	
   

  
	
  Section 7.08.  Jurisdiction

  	
   

  
	
  Section 7.09.  WAIVER OF JURY TRIAL

  	
   

  
	
  Section 7.10.  Counterparts; Effectiveness

  	
   

  
	
  Section 7.11.  Expenses

  	
   

  
	
  Section 7.12.  Entire Agreement

  	
   

  
	
  Section 7.13.  Captions; Certain Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1.02

  	
  -

  	
  Taxpayer
  Identification Number; Shares of Existing

  Preferred Stock and Senior Preferred Stock; Shares of

  Common Stock to be Issued

  	
   

  
	
  Schedule 3.01

  	
  -

  	
  Ownership
  of Existing Preferred Stock

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Certificate of Amendment to Certificate of Designations

  	
   

  
	
  Exhibit B

  	
   

  	
  Form of Waiver

  	
   

  
	
  Exhibit C

  	
  -

  	
  Form of Registration Rights Agreement Amendment

  	
   

  
	
  Exhibit D

  	
  -

  	
  Form of Investors’ Agreement Amendment

  	
   

  

 

ii

 

SENIOR PREFERRED STOCK AMENDMENT AGREEMENT

 

AGREEMENT dated as of July 23, 2004, among DeCrane Aircraft
Holdings, Inc., a Delaware corporation (the “Company”),
DeCrane Holdings Co., a Delaware corporation (“DeCrane Holdings”), and the
other persons set forth on the signature pages hereto (together with their
successors and assigns, each a “Holder” and together the “Holders”).

 

W 
I  T  N  E  S  S  E 
T  H :

 

WHEREAS, the Holders are holders of all of the outstanding shares of
16% Senior Redeemable Exchangeable Preferred Stock Due 2009 of the Company (the
“Existing
Preferred Stock”);

 

WHEREAS, the Holders and the Company have agreed to amend certain terms
of the Existing Preferred Stock such that the powers, designations, preferences
and relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions of the Existing Preferred Stock as
amended (the “Senior Preferred Stock”) shall be as set forth in Exhibit A
(the “Certificate of Designations”);

 

WHEREAS, in connection with, and in consideration for, the amendment of
the Existing Preferred Stock, DeCrane Holdings will also issue certain shares
of common stock, par value $.01 per share, of DeCrane Holdings (the “Common Stock”)
to the Holders as provided herein;

 

WHEREAS, in connection with the amendment of the Existing Preferred
Stock, the Company will enter into an amendment (the “Credit Agreement Amendment”)
to the Third Amended and Restated Credit Agreement dated as of May 11, 2000
among the Company, the lenders party thereto and Credit Suisse First Boston (as
successor to DLJ Capital Funding, Inc.), as administrative agent and
syndication agent for the lenders (as amended prior to the date hereof and by
the Credit Agreement Amendment, the “Senior Credit Agreement”)

 

WHEREAS, in connection with the amendment of the Existing Preferred
Stock, the Company will enter into an amendment  (the “Second Lien Credit Agreement Amendment”) to
the Second Lien Credit Agreement dated as of December 22, 2003 among the
Company, the lenders party thereto and Credit Suisse First Boston, acting
through its Cayman Islands Branch, as administrative agent and syndication
agent for the lenders (as amended prior to the date hereof and by the Second
Lien Credit Agreement Amendment, the “Second Lien Credit Agreement”);

 

WHEREAS, concurrently with the amendment of the Existing Preferred
Stock, the Company will exchange a portion of the 12% Senior Subordinated Notes
Due 2008 (the “Old Notes”) for new 17% Senior Discount Notes Due 2008 (the “New Notes”)
to be issued pursuant to the provisions of an indenture, dated

 

 

as of the Closing Date (as defined herein) (the “Indenture”) among the
Company, the Guarantors named therein and U.S. Bank National Association, as
Trustee;

 

WHEREAS, concurrently with the amendment of the Existing Preferred
Stock, DeCrane Holdings will obtain waivers of certain rights from holders of
more than 99% of the outstanding shares of its 14% Senior Redeemable
Exchangeable Preferred Stock Due 2009 (the “Junior Preferred Stock”)
pursuant to a waiver substantially in the form attached hereto as Exhibit B
(the “Junior
Preferred Stock Waiver”); and

 

WHEREAS, the Holders and the Company will enter into Amendment No. 2 to
the Senior Preferred Stock Registration Rights Agreement dated as of
June 30, 2000 among the Company and the stockholders named therein (as the
same may be amended from time to time, the “Registration Rights Agreement”),
substantially in the form attached hereto as Exhibit C (the “Registration
Rights Agreement Amendment”) and DeCrane Holdings, with the approval of its
board of directors and the holders of at least 75% of the outstanding shares of
common stock and preferred stock of DeCrane Holdings, will enter into Amendment
No. 2 to the Amended and Restated Investors’ Agreement dated October 6,
2000 among DeCrane Holdings, the Company and the stockholders named therein (as
the same may be amended from time to time, the “Investors’ Agreement”),
substantially in the form attached hereto as Exhibit D (the “Investors’
Agreement Amendment”).

 

NOW THEREFORE, the parties hereto agree as follows:

 

ARTICLE 1

AMENDMENT

 

Section 1.01.  Consent to Amendment. Subject to
the terms and conditions set forth herein and in reliance on the
representations and warranties contained herein, the Company agrees to amend
the Certificate of Designations, Preferences and Rights of 16% Senior
Redeemable Exchangeable Preferred Stock Due 2009 so that the powers,
designations, preferences and relative, participating, optional and other
special rights, and the qualifications, limitations and restrictions of the
Senior Preferred Stock shall be as set forth in the Certificate of
Designations, and each Holder consents to such amendment, which amendment shall
be effective on the Closing Date (as defined herein).

 

Section 1.02.  Closing. 
The closing (the “Closing”)
of the amendment of the Existing Preferred Stock and the issuance of the Common
Stock hereunder, as consideration for the amendment of the Existing Preferred
Stock, shall take place at the offices of Davis Polk & Wardwell, 450
Lexington Avenue, New York, New York, as soon as possible, but in no event
later than five (5) business days after satisfaction of the conditions set
forth in Article 5, or at such other time or place 

 

2

 

as the Company, DeCrane Holdings and the Holders may agree, such date
is hereinafter referred to as the “Closing Date”.  On the Closing Date, the Company will file the Certificate of
Designations with the Secretary of State of Delaware.  At the Closing, each Holder, severally and not jointly, shall
surrender to the Company its Existing Preferred Stock certificates and the
Company shall deliver to each Holder (a) a new certificate for the same number
of shares of Senior Preferred Stock and (b) a certificate for a number of
shares of Common Stock determined by (i) dividing (A) the number of shares of
Existing Preferred Stock held by such Holder immediately prior to the Closing
by (B) the total number of outstanding shares of Existing Preferred Stock
immediately prior to the Closing and (ii) multiplying such quotient by 7.5% of
the total number of shares of Common Stock of DeCrane Holdings outstanding
immediately after the Closing (including for this purpose the total number of
shares of Common Stock issuable upon exercise of the Class A Warrants for the
Purchase of Shares of Common Stock of DeCrane Holdings and the Class B Warrants
for the Purchase of Shares of Common Stock of DeCrane Holdings (collectively,
the “Penny Warrants”)). 
Schedule 1.02 hereto sets forth the number of shares of Common
Stock that DeCrane Holdings will issue to each Holder, subject to any changes
that might result from any transfer of shares of the Existing Preferred Stock
and/or any changes in the total number of outstanding shares of Common Stock
between the date hereof and the Closing Date.

 

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND DECRANE HOLDINGS

 

The Company and DeCrane Holdings represent and warrant to each Holder
that:

 

Section 2.01.  No Default Under Credit Agreement.  As of the date hereof, (i) no
Potential Event of Default or Event of Default (each as defined in the Senior
Credit Agreement) has occurred and is continuing, and (ii) the Company is able
to satisfy the conditions to borrowing under the Senior Credit Agreement to
permit the Company to borrow at least $1 of additional debt thereunder pursuant
to the terms thereto on the date hereof.

 

Section 2.02.  Authorizations.  The execution, delivery and performance by the Company
and DeCrane Holdings of this Agreement have been duly authorized by all
necessary corporate action on the part of the Company and DeCrane
Holdings.  Upon the effectiveness of
this Agreement, the amendments to the terms of the Existing Preferred Stock as
set forth in the Certificate of Designations shall have been duly authorized by
all necessary corporate action on the part of the Company.  The
issuance of Common Stock to the Holders as provided herein has been duly
authorized by all necessary corporate action on the part of DeCrane
Holdings.  Each of the Registration
Rights Agreement Amendment and the Investors’ Agreement Amendment has been duly
authorized 

 

3

 

by all necessary corporate action on the part
of the Company and DeCrane Holdings, as applicable.  This Agreement is and, when executed and delivered on the Closing
Date, each of the Credit Agreement Amendment, Second Lien Credit Agreement
Amendment, Registration Rights Agreement Amendment and the Investors’ Agreement
Amendment will be, a valid and binding agreement of the Company and DeCrane
Holdings, as applicable, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent transfer and similar laws affecting
creditors’ rights generally and equitable principles of general applicability
and except as rights to indemnification and contribution under the Registration
Rights Agreement or the Investors’ Agreement may be limited under applicable
law.

 

Section 2.03.
Governmental Authorization.  Assuming
the accuracy of the representations and warranties of the Holders and their
compliance with the covenants herein, the execution, delivery and performance
by the Company and DeCrane Holdings of
this Agreement, the Registration Rights Agreement Amendment and the Investors’
Agreement Amendment and the consummation of the transactions contemplated
hereby require no material order, license, consent, authorization, or approval
of, or exemption by, or action by or in respect of, or notice to, or filing or
registration with, any governmental body, agency or official, other than the
filing of the Certificate of Designations with the Secretary of State of
Delaware and except as may be required by Federal and state securities laws
with respect to the Company’s obligations under the Registration Rights
Agreement and except as may be required by state securities laws.

 

Section 2.04.  Non-Contravention.  The execution, delivery and performance by the Company
and DeCrane Holdings of this Agreement, the Registration Rights Agreement
Amendment, the Investors’ Agreement Amendment and the Certificate of
Designations do not and will not (i) violate the certificate of incorporation
or bylaws of the Company or DeCrane Holdings or (ii) violate any material
applicable law, rule, regulation, judgment, injunction, order or decree, (iii)
upon obtaining the consents and taking the other actions required to satisfy
the conditions precedent set forth in Article 5, require any material
consent or other action by any person under, constitute a material default
under, or give rise to any material right of termination, cancellation or
acceleration of any right or obligation of the Company or DeCrane Holdings or
to a loss of any material benefit to which the Company or DeCrane Holdings are
entitled under any provision of any agreement or other instrument binding upon
the Company or DeCrane Holdings or any of the Company’s or DeCrane Holdings’
assets or properties or (iv) result in the creation or imposition of any
material lien on any property or assets of the Company or DeCrane Holdings.

 

Section 2.05.  Litigation. 
There is no action, suit, investigation or proceeding pending
against, or to the knowledge of the Company or DeCrane Holdings, threatened in
writing against or affecting the Company or DeCrane Holdings or any of their
respective properties before any court or arbitrator or any governmental body,
agency or official which could reasonably be expected to 

 

4

 

have a material adverse effect on the
transactions contemplated by this Agreement.

 

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE HOLDERS

 

Each Holder, severally and not jointly, as to itself only, represents
and warrants to the Company and DeCrane Holdings as follows:

 

Section 3.01.  Ownership of Existing Preferred Stock.  Except as set forth on
Schedule 3.01 with respect to a pledge prior to the date hereof, such
Holder has, and on the Closing Date will have valid title to, or a valid “security
entitlement” within the meaning of Section 8-501 of the New York Uniform
Commercial Code in respect of, the shares of Existing Preferred Stock shown on
Schedule 1.02, free and clear of all security interests, claims, liens,
equities or other encumbrances.

 

Section 3.02.  Authorization of Agreement.  The execution, delivery and
performance of this Agreement are within such Holder’s powers and have been
duly authorized by all requisite corporate action on the part of such
Holder.  This Agreement constitutes a
valid and binding agreement of such Holder enforceable in accordance with its
terms.  This Agreement has been duly
executed and delivered by such Holder, subject to applicable bankruptcy,
insolvency, fraudulent transfer and similar laws affecting creditors’ rights
generally and equitable principles of general applicability.

 

Section 3.03.  Non-Contravention.  The execution and delivery by such Holder
of, and the performance by such Holder of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate of
incorporation, by-laws or other organizational document of such Holder or any
material agreement or other instrument binding upon such Holder, or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over such Holder.

 

Section 3.04.  Investment Purposes. 
Such Holder acknowledges that the Senior Preferred Stock and
the Common Stock have not been registered under the Securities Act or any state
securities laws and that the amendment of the Existing Preferred Stock and the
issuance of the Common Stock contemplated hereby are to be effected pursuant to
an exemption from the registration requirements imposed by such laws, including
Section 4(2) under the Securities Act. 
Such Holder is an “accredited investor” within the meaning of Rule
501(a) under the Securities Act and the shares of Common Stock to be received
by it pursuant to this Agreement are being received for its own account without
a view toward distribution in violation of the Securities Act and such Holder
will not offer, sell, transfer, pledge, hypothecate or otherwise dispose of the
Senior Preferred Stock unless pursuant to a transaction either registered
under, or exempt from

 

5

 

registration under, the Securities Act, it
being agreed that Neon Capital Limited may grant a security interest in the
Senior Preferred Stock and the Common Stock for the benefit of the holders of
the Series 95 $5,929,820 Limited Recourse Pass-Through Secured Notes due 2013
(the “Neon
Notes”), subject to compliance with applicable securities laws.

 

Section 3.05.  Inspections; No Other Representations.  Each Holder is an informed and
sophisticated purchaser, and has engaged expert advisors, experienced in the
evaluation of the transactions contemplated hereunder.  Each Holder has undertaken such
investigation and has been provided with and has evaluated such documents and
information as it has deemed necessary to enable it to make an informed and
intelligent decision with respect to the execution, delivery and performance of
this Agreement.  Each Holder
acknowledges that the Company and DeCrane Holdings have given such Holder
complete and open access (to the extent requested by such Holder) to the key
employees and documents of the Company, DeCrane Holdings and their respective
subsidiaries.  Each Holder agrees to the
amendment of the Existing Preferred Stock and the issuance of the Common Stock
on the Closing Date based upon its own inspection, examination and
determination with respect thereto as to all matters, and without reliance upon
any express or implied representations or warranties of any nature made by or
on behalf of or imputed to the Company or DeCrane Holdings, except as expressly
set forth in this Agreement.  Without
limiting the generality of the foregoing, each Holder acknowledges that the
Company and DeCrane Holdings make no representation or warranty with respect to
(i) any projections, estimates or budgets delivered to or made available to the
Holder of future revenues, future results of operations (or any component
thereof), future cash flows or future financial condition (or any component
thereof) of the Company and DeCrane Holdings or the future business and
operations of the Company and DeCrane Holdings or (ii) any other information or
documents made available to such Holder or its advisors with respect to the
Company or DeCrane Holdings or their businesses or operations, except as
expressly set forth in this Agreement.

 

Section 3.06. Taxpayer
Identification Number.  The
number set forth under “Taxpayer Identification Number” on Schedule 1.02
hereto next to the name of such Holder is such Holder’s federal taxpayer
identification number.

 

ARTICLE 4

COVENANTS

 

Section 4.01.  Covenants of the Company and DeCrane
Holdings.  In further
consideration of the agreements of the Holders contained in this Agreement, the
Company and DeCrane Holdings covenant with each of the Holders as follows:

 

6

 

(a)        the Company and DeCrane
Holdings will use their commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement;

 

(b)        the Company and DeCrane
Holdings will use their commercially reasonable efforts to obtain or cause to
be obtained any consents, approvals or waivers that are required to be obtained
from third parties to any material contracts in connection with the
consummation of the transactions contemplated by this Agreement; and

 

(c)        in addition to the
obligations contained in Section 7.11(a) of the Securities Purchase
Agreement dated as of June 20, 2000 among the Company, DeCrane Holdings
and the purchasers party thereto (the “Securities Purchase Agreement”), prior to
the Closing Date, the Company and DeCrane Holdings agree that, except as the
Company or DeCrane Holdings and their counsel reasonably determine to be
required by law, they will not disclose the identity of the Holders to any
third party without the prior written consent of such Holder, which consent
shall not be unreasonably withheld, except that the Company or DeCrane Holdings
may disclose any Holder’s identity to their advisors and counsel or to any
other Holder that is a party to this Agreement (it being understood that the
Company will be required to publicly file this Agreement and the Registration
Rights Agreement Amendment and the Investors’ Agreement Amendment with the
Securities and Exchange Commission and that DeCrane Holdings will be required
to publicly file this Agreement and the Investors’ Agreement with the
Securities and Exchange Commission, which documents will identify each Holder).

 

Section 4.02.  Covenants of the Holders.  In further consideration of the
agreements of the Company and DeCrane Holdings contained in this Agreement,
each Holder covenants with the Company and DeCrane Holdings as follows:

 

(a)        in addition to the
obligations contained in Section 7.11(b) of the Securities Purchase
Agreement, such Holder and its Affiliates (as defined in Rule 405 under the
Securities Act) will hold, and will use their best efforts to cause their
respective officers, directors, employees, accountants, counsel, consultants,
advisors and agents to hold, in confidence, (i) the existence of this Agreement
or any facts relating to the transaction contemplated by this Agreement and
(ii) all confidential documents and information concerning the Company or
DeCrane Holdings furnished to such Holder or its Affiliates in connection with
the 

 

7

 

transactions contemplated by
this Agreement, except to the extent that such information can be shown to have
been (A) previously known on a nonconfidential basis by such Holder, (B) in the
public domain through no fault of such Holder or (C) later lawfully acquired by
such Holder from sources other than the Company or DeCrane Holdings; provided
that such Holder may disclose such information (1) to another Holder, (2) to
its officers, directors, employees, accountants, counsel, consultants, advisors
and agents in connection with the transactions contemplated by this Agreement
so long as such persons are informed by such Holder of the confidential nature
of such information and are directed by such Holder to treat such information
confidentially, (3) upon the request or demand of any governmental authority
having jurisdiction over such Holder, (4) in response to any order of any court
or other governmental authority or as may be required pursuant to any
requirement of law or (5) in connection with the exercise of any remedy
hereunder; provided
further that Neon Capital Limited (“Neon”) may disclose such
information to (i) the trustee with respect to the Neon Notes and (ii) to the
beneficiaries of the security interest granted by Neon with respect to the
Existing Preferred Stock.  Each Holder
shall be responsible for any failure to treat such information confidentially
by such persons.  The obligation of each
Holder and its Affiliates to hold any such information in confidence shall be
satisfied if they exercise the same care with respect to such information as
they would take to preserve the confidentiality of their own similar
information and shall in any event expire six months from the Closing
Date.  If this Agreement is terminated,
each Holder and its Affiliates will, and will use their best efforts to cause
their respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to the Company or
DeCrane Holdings, upon request, all documents and other materials, and all
copies thereof, obtained by such Holder or its Affiliates or on their behalf
from the Company or DeCrane Holdings in connection with this Agreement that are
subject to such confidentiality provisions;

 

(b)        such Holder will use its
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary or desirable under applicable
laws and regulations to consummate the transactions contemplated by this
Agreement; and

 

(c)        unless this Agreement is
terminated in accordance with Section 7.05 hereof, until the Existing
Preferred Stock is amended pursuant to the terms of this Agreement, such Holder
will not pledge, sell, contract to sell, grant any option, right or warrant to
purchase, lend or otherwise transfer or dispose of any shares of the Existing
Preferred Stock or any right or interest (voting or otherwise and including any
participation interest) therein, except with the consent of the Company and
DeCrane Holdings or pursuant to Section 1.02 hereof.

 

ARTICLE 5

CONDITIONS TO THE CLOSING

 

Section 5.01.  Conditions to Obligation of Each Party.  The Holders’ consent to the
amendment of the Existing Preferred Stock as set forth in the Certificate of
Designations and the obligations of the Company to amend the Existing Preferred
Stock and of DeCrane Holdings to issue the Common Stock hereunder are subject to
the satisfaction (or, to the extent permitted by law, waiver by such party), at
or prior to the Closing Date, of the following conditions:

 

8

 

(a)        no provision of any
applicable law or regulation and no judgment, injunction, order or decree shall
prohibit the consummation of the Closing and there shall not be threatened,
instituted or pending any action, suit, investigation or proceeding which could
reasonably be expected to have a material adverse effect on the transactions
contemplated by this Agreement;

 

(b)        the exchange of the Old
Notes for the New Notes shall have been consummated or shall be consummated
concurrently with the Closing;

 

(c)        the Credit Agreement
Amendment shall be in full force and effect; and

 

(d)        the Second Lien Credit
Agreement Amendment shall be in full force and effect.

 

Section 5.02.  Conditions to the Obligations of the
Holders.  The consent of the Holders to
the amendment of the Existing Preferred Stock as set forth in the Certificate
of Designations is subject to the satisfaction (or, to the extent permitted by
law, waiver by each Holder), at or prior to the Closing Date, of the following
additional conditions:

 

(a)        the representations and warranties of
the Company and DeCrane Holdings contained in this Agreement shall be true and
correct in all material respects, each of the Company and DeCrane Holdings
shall have performed and complied with all covenants and agreements required by
this Agreement to be performed by it or complied with by it at or prior to the
Closing Date, and each Holder shall have received a certificate, dated the
Closing Date, signed by an authorized officer of each of the Company and
DeCrane Holdings to the foregoing effect;

 

(b)        new certificates
representing the shares of Senior Preferred Stock and Common Stock to be issued
to the Holders hereunder shall have been prepared and made available for
delivery to the Holders in exchange for Existing Preferred Stock certificates
as provided in Section 1.02;

 

(c)        the Certificate of
Designations shall have been filed with the Secretary of State of Delaware
prior to or concurrently with the Closing;

 

(d)        the Company and the DLJ
Entities (as defined in the Investors’ Agreement) shall have executed and
delivered the Junior Preferred Stock Waiver;

 

(e)        the Company shall have
executed and delivered the Registration Rights Agreement Amendment and the
Investors’ Agreement Amendment and DeCrane Holdings, with the approval of its
board of directors and the holders of at least 75% of the outstanding shares of
common stock and preferred stock of DeCrane Holdings, shall have executed and
delivered the Investors’ Agreement Amendment;

 

9

 

(f)         The Holders shall have
received copies of each of the Credit Agreement Amendment, the Second Lien
Credit Agreement Amendment, the Exchange Agreement relating to the exchange of
the Old Notes for the New Notes and the Indenture for the New Notes, each of
which shall be in full force and effect and no term or condition thereof shall
have been amended, waived or otherwise modified without the prior consent of
the Holders;

 

(g)        the Company shall have
delivered to each Holder an opinion of 
Davis Polk & Wardwell, special counsel to the Company and DeCrane
Holdings, dated the Closing Date, in form and substance reasonably satisfactory
to the Holders, to the effect that (subject to appropriate assumptions and
limitations):

 

(i)            the Company and
DeCrane Holdings are validly existing and in good standing under the laws of
the State of Delaware with corporate power to enter into the amendment;

 

(ii)           the Common Stock to be
issued pursuant to this Agreement has been duly authorized by DeCrane Holdings
and, when issued and delivered to the Holders, will be fully paid and
nonassessable;

 

(iii)          the filing of the
Certificate of Designations by the Company in the State of Delaware and the
issuance by DeCrane Holdings of the Common Stock pursuant to this Agreement do
not (A) contravene the Certificate of Incorporation or By-laws of DeCrane
Holdings or of the Company, (B) contravene the Indenture, the indenture
governing the Old Notes, the Credit Agreement or the Second Lien Credit
Agreement or (C) violate any New York or federal law that in our experience are
normally applicable to transactions of this type; provided that Davis Polk
& Wardwell expresses no opinion as to federal or state securities laws;

 

(iv)          each of this Agreement,
the Investors’ Agreement Amendment and the Registration Rights Agreement
Amendment has been duly authorized, executed and delivered by each of the
Company and DeCrane Holdings (to the extent party thereto) and is a valid and
binding agreement of the Company and DeCrane Holdings (to the extent party
thereto) in each case enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent transfer and similar laws
affecting creditors’ rights generally and equitable principles of general
applicability and except (x) as such enforcement may be limited by bankruptcy, insolvency,
fraudulent conveyance or similar laws affecting creditors’ rights generally,
(y) as such enforcement is subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law) and (z) to the extent that a waiver of the rights under any usury or stay
law may be unenforceable, we express no opinion, however, as to the
applicability (and, if applicable, the effect) of Section 548 of the
United States Bankruptcy Code or any 

 

10

 

comparable
provision of state law to the questions addressed above or on the conclusions
expressed with respect thereto;

 

(v)           the Certificate of
Designations has been duly authorized by all necessary corporate action on the
part of the Company;

 

(vi)          the New Notes have been
duly authorized by the Company and, when executed and authenticated in
accordance with the provisions of the Indenture and issued to the Holders in
exchange for the Old Notes in accordance with the terms of the Exchange
Agreement, will be entitled to the benefits of the Indenture and will be valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except (x) as such enforcement may be limited by
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors’ rights generally, (y) as such enforcement is subject to general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law) and (z) to the extent that a waiver of the
rights under any usury or stay law may be unenforceable, we express no opinion,
however, as to the applicability (and, if applicable, the effect) of
Section 548 of the United States Bankruptcy Code or any comparable
provision of state law to the questions addressed above or on the conclusions
expressed with respect thereto;

 

(vii)         the Indenture has been duly authorized,
executed and delivered by each of the Company and each of the affiliates
of the Company set forth on the signature pages of the Indenture as Guarantors (the “Guarantors”) organized under
the laws of Delaware (the “Delaware Guarantors”) and is a valid and
binding agreement of the Company, and (assuming due authorization, execution
and delivery by each other Guarantor (the “Non-Delaware Guarantors”)) the Guarantors,
enforceable in accordance with its terms, except (x) as such enforcement
may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors’ rights generally, (y) as such enforcement is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and (z) to the extent that a
waiver of the rights under any usury or stay law may be unenforceable, we
express no opinion, however, as to the applicability (and, if applicable, the
effect) of Section 548 of the United States Bankruptcy Code or any
comparable provision of state law to the questions addressed above or on the
conclusions expressed with respect thereto; and

 

(viii)        each of the Delaware
Guarantors has duly authorized its Guarantee of the New Notes; assuming each of
the Non-Delaware Guarantors has duly authorized its Guarantee of the New Notes,
when the New Notes and the Guarantee evidenced thereon have been executed and
authenticated in accordance with the terms of the Indenture and issued to

 

11

 

 the Holders in exchange for the Old Notes in
accordance with the terms thereof, the Guarantee of each Guarantor will be the
legally valid and binding obligation of such Guarantor, enforceable against
such Guarantor in accordance with its terms, except (x) as such enforcement may
be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors’ rights generally, (y) as such enforcement is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and (z) to the extent that a
waiver of the rights under any usury or stay law may be unenforceable, we
express no opinion, however, as to the applicability (and, if applicable, the
effect) of Section 548 of the United States Bankruptcy Code or any
comparable provision of state law to the questions addressed above or on the
conclusions expressed with respect thereto.

 

(h)        all fees and expenses
payable to the Holders on or prior to the Closing Date shall have been paid in
full; and

 

(i)         each Holder shall have
received all documents reasonably requested by it relating to the existence of
the Company and DeCrane Holdings and the corporate authority for entering into
this Agreement and the consummation of the transactions contemplated hereby,
all in form and substance reasonably satisfactory to it.

 

Section 5.03.  Conditions to the Obligations of the Company
and DeCrane Holdings.  The
obligation of the Company to amend the Existing Preferred Stock and the
obligation of DeCrane Holdings to issue the Common Stock pursuant to this
Agreement are subject to the satisfaction (or, to the extent permitted by law,
waiver by each Holder), at or prior to the Closing Date, of the following
additional conditions:

 

(a)        the representations and warranties of
the Holders contained in this Agreement shall be true and correct in all
material respects;

 

(b)        the Holders shall have
executed and delivered the Registration Rights Agreement Amendment and the
Investors’ Agreement Amendment; and

 

(c)        the Company and DeCrane
Holdings shall have received all documents reasonably requested by it relating
to the existence of each Holder and the authority for entering into this
Agreement and the consummation of the transactions contemplated hereby, all in
form and substance reasonably satisfactory to it.

 

12

 

ARTICLE 6

SURVIVAL; INDEMNIFICATION

 

Section 6.01.  Survival. 
The representations and warranties of the parties hereto
contained in this Agreement shall survive the execution and delivery of this
Agreement.

 

Section 6.02.  Indemnification.  (a) The Company and DeCrane Holdings hereby indemnify,
jointly and severally, each Holder and its affiliates, limited partners,
general partners, directors, members, officers and employees against and agrees
to hold each of them harmless from any and all damage, loss, liability and
expense (including, without limitation, reasonable expenses of investigation
and reasonable attorneys’ fees and expenses in connection with any action, suit
or proceeding) (“Damages”) incurred or suffered by any such party arising out
of any misrepresentations or breach of warranty, covenant or agreement made or
to be performed by the Company and DeCrane Holdings pursuant to this Agreement.

 

(b)        After the Closing Date,
this Section 6.02 will provide the exclusive remedy for the Holders for
any misrepresentation, breach of warranty, covenant or other agreement or other
claim arising out of this Agreement or the transactions contemplated hereby
except to the extent any such claim is in respect of fraud.  The Company shall retain all remedies
available at law for any misrepresentation, breach of warranty, covenant or
other agreement or other claim arising out of this Agreement or the
transactions contemplated hereby.

 

ARTICLE 7

MISCELLANEOUS

 

Section 7.01.  Notices. 
All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission) and shall be
given,

 

if to the Holders, to:

 

DLJ Investment Partners II, L.P.

DLJ Investment Partners, L.P.

DLJIP II Holdings, L.P.

11 Madison Avenue 

New York, NY 10010

Attention:  Rob Petrini

Facsimile:  (212) 448-3220

 

with a copy (which shall not constitute notice to any Holder) to:

 

Cahill Gordon & Reindel LLP

80 Pine Street

13

 

 

New York, NY 10005

Attention:  John Schuster

Facsimile:  (212) 269-5420

 

and

 

Putnam Investment Management, LLC

Putnam Fiduciary Trust Company

One Post Office Square

Boston, MA 02109

Attention:  Michael DeFao, Senior Vice
President

Facsimile:  (617) 292-1625

 

with a copy (which shall not constitute notice to any Holder) to:

 

Ropes & Gray LLP

One International Place

Boston, MA 02110

Attention:  Don De Amicis, Esq.

Facsimile:  (617) 951-7050

 

and

 

Neon Capital Limited

P.O. Box 1984 GT

Elizabethan Square

Georgetown, Grand Cayman

Cayman Islands, British West Indies

Attention:  Neil Ross/Scott Macdonald

Facsimile:  (345) 949-5223

 

if to the Company, to:

 

DeCrane Aircraft Holdings, Inc.

2361 Rosecrans Avenue, Suite 180

El Segundo, California 90245

Attention:  Chief Financial Officer

Facsimile:  (310) 643-5106

 

with a copy (which shall not constitute notice to the Company) to:

 

Davis Polk & Wardwell

450 Lexington Avenue

New York, New York 10017

Attention:  Nancy L. Sanborn, Esq.

Facsimile:  (212) 450-3800

 

14

 

if to DeCrane Holdings, to:

 

DeCrane Holdings Co.

2361 Rosecrans Avenue, Suite 180

El Segundo, California 90245

Attention:  Chief Financial Officer

Facsimile:  (310) 643-5106

 

with a copy (which shall not constitute notice to DeCrane Holdings) to:

 

Davis Polk & Wardwell

450 Lexington Avenue

New York, New York 10017

Attention:  Nancy L. Sanborn, Esq.

Facsimile:  (212) 450-3800

 

All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a business day in the place of
receipt.  Otherwise, any such notice,
request or communication shall be deemed not to have been received until the
next succeeding business day in the place of receipt.

 

Section 7.02.  No Waivers; Amendments. (a)  No failure or delay on the
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.

 

(b)        Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by all parties hereto.

 

Section 7.03.  Waiver of Warrant Requirements.  In connection with the issuance of the
Common Stock, each Holder hereby waives the requirement that notice must be
given to such Holder under Sections (h)(2) and (h)(11) of the Penny Warrants
held by such Holder.  Each such Holder
also hereby waives the requirement that DeCrane Holdings file an officers’
certificate setting forth the adjusted exercise price for the Penny Warrants,
the facts requiring such adjustment and the manner of computing such adjustment
as required pursuant to Section (h)(11) of the Penny Warrants.   It is understood and agreed that there shall
be no adjustment to the exercise price of the Penny Warrants in connection with
the issuance of the Common Stock.

 

Section 7.04.  Termination. (a)   This Agreement
shall terminate, prior to the Closing Date:

 

15

 

(i)            at any time by mutual
written agreement of the Company, DeCrane Holdings and the Holders;

 

(ii)           if there shall be any
law or regulation that makes consummation of the transactions contemplated by
this Agreement illegal or otherwise prohibited or if consummation of the
transactions contemplated hereby would violate any non-appealable final order,
decree or judgment of any court or governmental body having competent
jurisdiction, if so determined by the Company, DeCrane Holdings or the Holders;
or

 

(iii)          on July 30, 2004,
unless extended to a later date by an instrument executed by the Company,
DeCrane Holdings and the Holders.

 

The party desiring to terminate this Agreement pursuant to 7.04 shall
give notice of such termination to the other parties.

 

(b)        If this Agreement is
terminated as permitted by 7.04, such termination shall be without liability of
any party (or any stockholder, director, officer, employee, agent, consultant
or representative of such party) to the other parties to this Agreement; provided that if such termination shall
result from the (i) willful failure of any party to fulfill a condition to the
performance of the obligations of the other parties, (ii) failure to perform a
covenant of this Agreement or (iii) breach by any party hereto of any
representation or warranty or agreement contained herein, such party shall be
fully liable for any and all damages incurred or suffered by the other party as
a result of such failure or breach.

 

Section 7.05.  Successors And Assigns. The
Company or DeCrane Holdings may not assign any of their respective rights and
obligations hereunder without the prior written consent of the Holders.  No Holder may assign any of its rights or
obligations hereunder without the prior written consent of the Company and
DeCrane Holdings.  This Agreement shall
be binding upon the Company, DeCrane Holdings and the Holders and their
respective successors and permitted assigns.

 

Section 7.06.  Limited Recourse and Non-Petition.  Claims against each Holder arising out of
this Agreement shall be limited to the economic value of such Holders’ Senior
Preferred Stock and any payments or distributions with respect to such Holder’s
Senior Preferred Stock, and the Company shall have no recourse against the
Holder for any obligation with respect to this Agreement beyond the economic
value of the Senior Preferred Stock and any payments or distributions with
respect to the Senior Preferred Stock, and should the amount of any such
obligation exceed the economic value of such Holder’s Senior Preferred Stock
and such payments or distributions, the Company shall not be entitled to
petition for the dissolution or winding-up of such Holder.

 

16

 

Section 7.07.  Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the State of New York,
without regard to the choice of law rules of such state.

 

Section 7.08.  Jurisdiction. Except as otherwise
expressly provided in this Agreement, the parties hereto agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in the United States District Court for
the Southern District of New York or any New York State court sitting in New
York City, so long as one of such courts shall have subject matter jurisdiction
over such suit, action or proceeding, and that any cause of action arising out
of this Agreement shall be deemed to have arisen from a transaction of business
in the State of New York, and each of the parties hereby irrevocably consents
to the jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to
the fullest extent permitted by law, any objection that it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding which is brought in any
such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on
any party anywhere in the world, whether within or without the jurisdiction of
any such court.  Without limiting the foregoing,
each party agrees that service of process on such party as provided in this
Section shall be deemed effective service of process on such party.

 

Section 7.09.  WAIVER OF JURY TRIAL. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 7.10.  Counterparts; Effectiveness.  This Agreement may be executed in
any number of counterparts each of which shall be an original with the same
effect as if the signatures thereto and hereto were upon the same
instrument.  This Agreement shall become
effective when each party hereto shall have received a counterpart hereof signed
by the other parties hereto.  No provision
of this Agreement is intended to confer upon any person other than the parties
hereto any rights or remedies hereunder

 

Section 7.11.  Expenses. 
Except as otherwise provided in Article 6 herein, all
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense; provided  however, that the Company
shall pay the reasonable fees and expenses of (i) Cahill Gordon & Reindel
LLP, special counsel to certain Holders and (ii) Ropes & Gray LLP, special counsel
to certain other Holders, in each case to the extent incurred in connection
with the negotiation, execution and delivery of this Agreement and the
transactions contemplated hereby; provided  further that the fees and
expenses payable by the 

 

17

 

Company pursuant to the foregoing proviso
shall not exceed $55,000 with respect to Cahill Gordon & Reindel LLP and
$20,000 with respect to Ropes & Gray LLP.

 

Section 7.12.  Entire Agreement.  This Agreement, the Registration Rights Agreement, the
Investors’ Agreement, the Certificate of Designations and the Securities
Purchase Agreement (including without limitation the indemnification provisions
contained therein and the Company’s and DeCrane Holdings’ covenants under
Article VI of the Securities Purchase Agreement), which shall survive the
execution and delivery of this Agreement) constitute the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, written or oral, relating to the subject matter
hereof.

 

Section 7.13.  Captions; Certain Definitions. The
captions herein are included for convenience of reference only and shall be
ignored in the construction or interpretation hereof.  All references to “$”
or “dollars” shall be to United
States dollars and all references to “days”
shall be to calendar days unless otherwise specified.  Whenever the words “include,”
“includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words, “without limitation.”

 

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18

 

IN WITNESS WHEREOF,
the parties hereto have caused this Senior Preferred Stock Amendment Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.

 

	
   

  	
  DECRANE AIRCRAFT
  HOLDINGS, INC.

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
    /s/  R. JACK
  DECRANE

  	
   

  	 

	
   

  	
   

  	
  Name:  /s/ R. Jack DeCrane

  	 

	
   

  	
   

  	
  Title:  Chief Executive Officer

  	 

	
   

  	
   

  	 

	
   

  	
  DECRANE HOLDINGS
  CO.

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
    /s/  R. JACK
  DECRANE

  	 

	
   

  	
   

  	
  Name:  /s/ R. Jack DeCrane

  	
   

  	 

	
   

  	
   

  	
  Title:  Chief Executive
  Officer

  	 

	
   

  	
   

  	 

	
   

  	
  DLJ INVESTMENT PARTNERS II, INC. on
  behalf of: 

  DLJ
  INVESTMENT PARTNERS II, L.P.

  DLJ INVESTMENT PARTNERS, L.P. 

  DLJIP II HOLDINGS, L.P.

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
    /S/  JOHN M. MORIARTY, JR.

  	
   

  	 

	
   

  	
   

  	
  Name:  John M. Moriarty, Jr.

  	 

	
   

  	
   

  	
  Title:  Managing Director

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  PUTNAM INVESTMENT
  MANAGEMENT, LLC on behalf of:

        PUTNAM VARIABLE TRUST- PUTNAM VT HIGH 

               YIELD
  FUND  

        PUTNAM HIGH YIELD TRUST

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
    /s/  MICHAEL E.
  DEFAO

  	
   

  	 

	
   

  	
   

  	
  Name:  Michael E. DeFao

  	 

	
   

  	
   

  	
  Title:  Senior Vice President

  	 

	
   

  	
   

  	 

	
   

  	
  NEON CAPITAL
  LIMITED

  	 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /S/  PAUL
  COPE

  	
   

  
	
   

  	
   

  	
  Name:  Paul Cope

  	
   

  
	
   

  	
   

  	
  Title:  Director

  	
   

  
													

 

 

SCHEDULE 1.02*

 

	
  Holder

  	
   

  	
  Taxpayer

  Identification

  Number

  	
   

  	
  Shares of
  Existing

  Preferred Stock

  and Senior

  Preferred Stock

  	
   

  	
  Shares of

  Common Stock to

  be Issued**

  	
   

  
	
  DLJ Investment Partners II, L.P.

  	
   

  	
  13-4048184

  	
   

  	
  113,651.2

  	
   

  	
  158,632

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DLJ Investment Partners, L.P.

  	
   

  	
  13-3868693

  	
   

  	
  50,512.0

  	
   

  	
  70,504

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DLJIP II Holdings, L.P.

  	
   

  	
  13-4192504

  	
   

  	
  35,836.8

  	
   

  	
  50,020

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Neon Capital Limited

  	
   

  	
   

  	
   

  	
  21,000.0

  	
   

  	
  29,311

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Putnam High Yield Trust

  	
   

  	
  04-6415410

  	
   

  	
  21,000.0

  	
   

  	
  29,311

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Putnam Variable Trust – Putnam VT High Yield Fund

  	
   

  	
  04-2986135

  	
   

  	
  8,000.0

  	
   

  	
  11,167

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  250,000.0

  	
   

  	
  348,945

  	
   

  

 

	
  *

  	
  Assumes
  no transfers after the date of this Agreement.

  
	
   

  	
   

  
	
  **
  

  	
  Assumes
  348,945 shares of Common Stock is equal to 7.5% of the Common Stock
  outstanding immediately after the Closing (calculated in accordance with
  Section 1.02).

  

 

 

SCHEDULE 3.01

 

The Existing Preferred Stock of Neon Capital Limited is subject to a
security agreement granted in favor of the trustee for the Neon Notes.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}]]