-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DBrX8tgnS8jn6VqpW5M0sr5ogMgxb9U1yDaLtVCQMcRatId1zgOW6ZuJ3q7Dh5Ui ss97LMR6enH/AKRvEX4sbw== /in/edgar/work/0000912057-00-049529/0000912057-00-049529.txt : 20001115 0000912057-00-049529.hdr.sgml : 20001115 ACCESSION NUMBER: 0000912057-00-049529 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DECRANE AIRCRAFT HOLDINGS INC CENTRAL INDEX KEY: 0000880765 STANDARD INDUSTRIAL CLASSIFICATION: [3728 ] IRS NUMBER: 341645569 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22371 FILM NUMBER: 763647 BUSINESS ADDRESS: STREET 1: 2361 ROSECRANS AVENUE STREET 2: SUITE 180 CITY: EL SEGUNDO STATE: CA ZIP: 90245-4910 BUSINESS PHONE: 3107259123 MAIL ADDRESS: STREET 1: 2361 ROSECRANS AVENUE STREET 2: SUITE 180 CITY: EL SEGUNDO STATE: CA ZIP: 90245-4910 10-Q 1 a2029395z10-q.txt 10-Q =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 Commission File Number 333-70365 ----------- DECRANE AIRCRAFT HOLDINGS, INC. (Exact name of registrant as specified in its charter) DELAWARE 34-1645569 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2361 ROSECRANS AVENUE, SUITE 180, EL SEGUNDO, CA 90245 (Address, including zip code, of principal executive offices) (310) 725-9123 (Registrant's telephone number, including area code) ----------- (NOT APPLICABLE) (Former address and telephone number of principal executive offices, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No The number of shares of Registrant's Common Stock, $.01 par value, outstanding as of October 31, 2000 was 100 shares. =============================================================================== DECRANE AIRCRAFT HOLDINGS, INC. INDEX
PAGE PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) Consolidated Balance Sheets as of December 31, 1999 and September 30, 2000 ........................................ 1 Consolidated Statements of Operations for the three months and nine months ended September 30, 1999 and 2000 ...... 2 Consolidated Statements of Stockholder's Equity for the nine months ended September 30, 2000 ...................... 3 Consolidated Statements of Cash Flows for the nine months ended September 30, 1999 and 2000 ...................... 4 Condensed Notes to Consolidated Financial Statements .......... 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ........................... 17 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .... 24 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS ............................................ 26 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibits ..................................................... 26 Reports on Form 8-K .......................................... 27
i PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DECRANE AIRCRAFT HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, SEPTEMBER 30, 1999 2000 ------------ ------------ (UNAUDITED) ASSETS Current assets Cash and cash equivalents .................................................................... $ 7,918 $ 1,848 Accounts receivable, net ..................................................................... 39,580 64,869 Inventories .................................................................................. 58,721 81,074 Deferred income taxes ........................................................................ 5,592 4,759 Prepaid expenses and other current assets..................................................... 2,114 1,420 ----------- ----------- Total current assets ....................................................................... 113,925 153,970 Property and equipment, net ..................................................................... 37,700 55,840 Other assets, principally intangibles, net ...................................................... 374,111 414,335 ----------- ----------- Total assets ............................................................................. $ 525,736 $ 624,145 =========== =========== LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND STOCKHOLDER'S EQUITY Current liabilities Current portion of long-term debt ............................................................ $ 5,070 $ 8,273 Accounts payable ............................................................................. 14,948 18,662 Accrued liabilities .......................................................................... 61,082 36,818 Income taxes payable ......................................................................... 3,576 3,903 ----------- ----------- Total current liabilities .................................................................. 84,676 67,656 Long-term debt .................................................................................. 310,581 380,316 Deferred income taxes ........................................................................... 21,249 32,078 Other long-term liabilities ..................................................................... 2,989 2,324 Commitments and contingencies (Note 10) Mandatorily redeemable preferred stock .......................................................... - 26,000 ----------- ----------- Stockholder's equity Cumulative convertible preferred stock, $.01 par value, 8,314,018 shares authorized; none issued and outstanding as of December 31, 1999 and September 30, 2000 ................. - - Undesignated preferred stock, $.01 par value, 10,000,000 and 9,300,000 shares authorized as of December 31, 1999 and September 30, 2000, respectively; none issued and outstanding as of December 31, 1999 and September 30, 2000 ................. - - Common stock, $.01 par value, 35,000,000 shares authorized; 100 shares issued and outstanding as of December 31, 1999 and September 30, 2000 ...................... - - Additional paid-in capital ................................................................... 117,158 124,190 Notes receivable for shares sold ............................................................. (2,468) (2,519) Accumulated deficit .......................................................................... (6,923) (3,291) Accumulated other comprehensive loss ......................................................... (1,526) (2,609) ----------- ----------- Total stockholder's equity ................................................................. 106,241 115,771 ----------- ----------- Total liabilities, mandatorily redeemable preferred stock and stockholder's equity ....... $ 525,736 $ 624,145 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. 1 DECRANE AIRCRAFT HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------------- ----------------------- 1999 2000 1999 2000 ---------- ----------- ---------- ----------- (UNAUDITED) Revenues .............................................................. $ 65,238 $ 93,149 $ 177,836 $ 254,421 Cost of sales ......................................................... 42,107 62,018 118,081 169,527 ----------- ----------- ----------- ----------- Gross profit ..................................................... 23,131 31,131 59,755 84,894 ----------- ----------- ----------- ----------- Operating expenses Selling, general and administrative ................................ 10,031 11,526 27,281 32,465 Amortization of intangible assets .................................. 4,048 4,699 9,506 12,949 ----------- ----------- ----------- ----------- Total operating expenses ......................................... 14,079 16,225 36,787 45,414 ----------- ----------- ----------- ----------- Income from operations ................................................ 9,052 14,906 22,968 39,480 Other expenses Interest expense ................................................... 7,155 11,264 19,884 29,977 Other expenses (income) ............................................ 282 55 (85) 228 ----------- ----------- ----------- ----------- Income before provision for income taxes .............................. 1,615 3,587 3,169 9,275 Provision for income taxes ............................................ 932 2,697 2,669 5,643 ----------- ----------- ----------- ----------- Net income ............................................................ 683 890 500 3,632 Accrued preferred stock dividends ..................................... - (1,000) - (1,000) ----------- ----------- ----------- ----------- Net income (loss) applicable to common stockholder .................... $ 683 $ (110) $ 500 $ 2,632 =========== =========== =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. 2 DECRANE AIRCRAFT HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (IN THOUSANDS, EXCEPT SHARE DATA)
NOTES ACCUMULATED CONVERTIBLE UNDESIGNATED COMMON STOCK ADDITIONAL RECEIVABLE OTHER PREFERRED PREFERRED -------------- PAID-IN FOR SHARES ACCUMULATED COMPREHENSIVE STOCK STOCK SHARES AMOUNT CAPITAL SOLD DEFICIT LOSS TOTAL ----------- ----------- ------ ------ ---------- ----------- ----------- ------------- -------- Balance, December 31, 1999 $ -- $ -- 100 $ -- $ 117,158 $ (2,468) $ (6,923) $ (1,526) $106,241 Comprehensive income Net income ............ -- -- -- -- -- -- 3,632 -- 3,632 Translation adjustment. -- -- -- -- -- -- -- (1,083) (1,083) -------- 2,549 -------- Capital contribution ... -- -- -- -- 7,976 -- -- -- 7,976 Accrued mandatorily redeemable preferred stock dividends ....... -- -- -- -- (1,000) -- -- -- (1,000) Mandatorily redeemable preferred stock issuance costs ........ -- -- -- -- (100) -- -- -- (100) Repurchase of common stock and cancellation of related note receivable ............ -- -- -- -- (101) 51 -- -- (50) Compensatory stock option expense ........ -- -- -- -- 257 -- -- -- 257 Notes receivable interest accrued ...... -- -- -- -- -- (102) -- -- (102) ----------- ----------- ------ ------ ---------- ----------- ----------- ------------- -------- Balance, September 30, 2000 (Unaudited) ...... $ -- $ -- 100 $ -- $ 124,190 $ (2,519) $ (3,291) $ (2,609) $115,771 ----------- ----------- ------ ------ ---------- ----------- ----------- ------------- --------
The accompanying notes are an integral part of the consolidated financial statements. 3 DECRANE AIRCRAFT HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30, ------------------------ 1999 2000 ---------- ----------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES Net income ................................................................................... $ 500 $ 3,632 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization ............................................................ 14,875 21,233 Deferred income taxes..................................................................... 462 4,019 Other, net ............................................................................... 176 797 Changes in assets and liabilities, net of effect from acquisitions Accounts receivable .................................................................... (2,598) (15,899) Inventories ............................................................................ 1,423 (9,011) Prepaid expenses and other assets ...................................................... (1,276) (1,162) Accounts payable ....................................................................... (1,967) 904 Accrued liabilities .................................................................... (3,792) (6,602) Income taxes payable ................................................................... 2,342 981 Other long-term liabilities ............................................................ 77 (1,108) ----------- ----------- Net cash provided by (used for) operating activities ................................. 10,222 (2,216) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for acquisitions, net of cash acquired ............................................. (116,790) (87,215) Capital expenditures ......................................................................... (4,752) (17,701) Other, net ................................................................................... 111 71 ----------- ----------- Net cash used for investing activities ............................................... (121,431) (104,845) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Term debt borrowings ......................................................................... 90,000 55,000 Proceeds from the sale of preferred stock .................................................... - 25,000 Net borrowings (repayments) under revolving credit facility .................................. 7,700 16,400 Capital contribution ......................................................................... 12,500 7,976 Other long-term borrowings ................................................................... 5,636 2,958 Principal payments on term debt, capitalized leases and other debt ........................... (1,824) (4,096) Deferred financing costs ..................................................................... (3,062) (2,000) Other, net ................................................................................... (21) (247) ----------- ----------- Net cash provided by financing activities ............................................ 110,929 100,991 ----------- ----------- Effect of foreign currency translation on cash .................................................. (99) - ----------- ----------- Net decrease in cash and cash equivalents ....................................................... (379) (6,070) Cash and cash equivalents at beginning of period ................................................ 3,518 7,918 ----------- ----------- Cash and cash equivalents at end of period ...................................................... $ 3,139 $ 1,848 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. 4 DECRANE AIRCRAFT HOLDINGS, INC. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS The consolidated interim financial statements included in this report are unaudited. The Company believes the interim financial statements are presented on a basis consistent with the audited financial statements. The Company also believes that the interim financial statements contain all adjustments necessary for a fair statement of the results for such interim periods. All of these adjustments are normal recurring adjustments. The results of operations for interim periods do not necessarily predict the operating results for the full year. The consolidated balance sheet as of December 31, 1999 has been derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles as permitted by interim reporting requirements. The information included in this report should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the audited financial statements and related notes included in the Company's 1999 Form 10-K. Some reclassifications have been made to prior periods' financial statements to conform to the 2000 presentation. NOTE 2 - ACQUISITIONS During the nine months ended September 30, 2000, the Company acquired: CABIN MANAGEMENT GROUP . substantially all of the assets of Carl F. Booth & Co., Inc., an Indiana-based manufacturer of wood veneer panels primarily used in aircraft interior cabinetry, on May 11, 2000; . all of the common stock of ERDA, Inc., a Wisconsin-based designer and manufacturer of aircraft seating, on June 30, 2000; and SPECIALTY AVIONICS GROUP . all of the common stock of Coltech, Inc., an Arizona-based designer and manufacturer of audio components for commercial and corporate aircraft, on August 31, 2000. The total purchase price was $58,682,000, including certain liabilities assumed of $1,586,000, but not including contingent consideration of $2,000,000 related to one of the acquisitions and an indeterminable amount for another. The contingent consideration is payable over three years based on future attainment of defined performance criteria. The acquisitions were accounted for as purchases and the assets acquired and liabilities assumed have been recorded at their estimated fair values, including $18,936,000 related to identifiable intangible assets. The $31,466,000 difference between the total purchase price and the fair value of the net assets acquired was recorded as goodwill. The purchase price allocations are preliminary and may change upon the completion of the final valuations of the net assets acquired. Goodwill is being amortized on a straight-line basis over thirty years. The amount of contingent consideration paid in the future, if any, will increase goodwill and will be amortized prospectively over the remaining period of the initial thirty-year term. The consolidated balance sheet as of September 30, 2000 reflects the financial position of the companies acquired and the consolidated statements of operations for the three months and nine months ended September 30, 2000 include their operating results subsequent to their respective acquisition dates. The acquisitions were funded with borrowings under the Company's senior credit facility as described in Note 7 and the proceeds from the sale of capital stock described in Note 9. 5 NOTE 3 - UNAUDITED PRO FORMA RESULTS OF OPERATIONS FOR 1999 AND 2000 ACQUISITIONS Unaudited pro forma consolidated results of operations are presented in the table below for nine months ended September 30, 1999 and 2000. The pro forma results of operations reflect the Company's 1999 acquisitions described in the 1999 audited financial statements and the 2000 Carl F. Booth and ERDA acquisitions described in Note 2 as if all of the transactions were consummated as of January 1, 1999. Amounts are in thousands.
PRO FORMA FOR THE NINE MONTHS ENDED SEPTEMBER 30, ------------------------- 1999 2000 ----------- ----------- (UNAUDITED) Revenues ......................................... $ 249,678 $ 275,726 EBITDA, as defined (Note 12) ..................... 55,936 65,971 Net income ....................................... 1,604 4,676
The pro forma results of operations do not purport to represent what actual results would have been if the transactions described above occurred on such dates or to project the results of operations for any future period. The above information reflects adjustments for inventory, depreciation, amortization, general and administrative expenses and interest expense based on the new cost basis and debt structure of the Company following the acquisitions. NOTE 4 - 1999 RESTRUCTURING OF THE SYSTEMS INTEGRATION GROUP In December 1999, the Company announced a plan to reorganize and restructure the operations of two subsidiaries within its Systems Integration Group. The restructuring was a result of management's decision to exit the manufacturing business at these subsidiaries and consolidate and relocate operations into one facility to more efficiently and effectively manage the business and be more competitive. In 1999, the Company recorded nonrecurring pre-tax charges to operations of $9,935,000 in connection with the restructuring plan as described below: . Inventory write-downs to net realizable value as a consequence of exiting the manufacturing business; . Certain property and equipment asset impairment write-downs to net realizable value related to the closing of a manufacturing facility; . Severance and other compensation costs related to the termination of approximately fifty manufacturing and administrative employees upon closing of the manufacturing facility, which ceased operations on June 2, 2000, and elimination of duplicate administrative personnel following the consolidation of the operations; . Lease termination and other related costs expected to be incurred during the remaining term of a long-term lease agreement at the facility being vacated following the restructuring, net of expected sublease income; and . Other exit costs, principally legal and consulting fees. The Company commenced the restructuring during 1999 and completed the plan in the third quarter of 2000. Of the total charge, $7,242,000 represented a noncash write-down of assets. As of December 31, 1999, $7,754,000 had been incurred and the remaining $2,181,000 was reflected as an accrued liability. Components of the amounts incurred through September 30, 2000 are as follows (amounts in thousands):
BALANCE AT BALANCE AT DECEMBER 31, AMOUNTS SEPTEMBER 30, 1999 INCURRED 2000 ------------ --------- ------------- (UNAUDITED) (UNAUDITED) Severance and other compensation costs ......................... $ 784 $ (784) $ - Lease termination and other related costs ...................... 721 (629) 92 Other exit costs ............................................... 676 (590) 86 ----------- ----------- ----------- Total ....................................................... $ 2,181 $ (2,003) $ 178 =========== =========== ===========
6 NOTE 4 - 1999 RESTRUCTURING OF THE SYSTEMS INTEGRATION GROUP (CONTINUED) Through September 30, 2000, severance and other compensation costs of approximately $1,077,000 have been paid to date to approximately fifty employees, of which $784,000 was incurred during the nine months ended September 30, 2000. The amounts paid to date have been primarily to manufacturing employees either terminated or subject to termination as the Company phases out of the manufacturing business. No significant adjustments have been made to the original estimates. The remaining balance of restructuring costs includes lease termination and other exit costs. The restructuring plan was completed in the third quarter of 2000, however, future cash payments will extend beyond this date due to future lease payments on the vacated facility and the incurrence of other exit costs. The cash payments will be funded from existing cash balances and internally generated cash from operations. NOTE 5 - INVENTORIES Inventories are comprised of the following (amounts in thousands):
DECEMBER 31, SEPTEMBER 30, 1999 2000 ------------ ------------ (UNAUDITED) Raw materials ................................. $ 28,249 $ 48,592 Work-in process ............................... 20,520 23,692 Finished goods ................................ 9,952 8,790 ----------- ----------- Total inventories .......................... $ 58,721 $ 81,074 =========== ===========
Inventoried costs are not in excess of estimated realizable value and include direct engineering, production and tooling costs, and applicable manufacturing overhead. In accordance with industry practice, inventoried costs include amounts relating to programs and contracts with long production cycles. Included above are engineering costs of $5,720,000 at December 31, 1999 and $7,530,000 at September 30, 2000 related to long-term contracts that will be recoverable based on future sales. Periodic assessments are performed to ensure recoverability of engineering costs and adjustments are made, if necessary, to reduce inventoried costs to estimated realizable value. No adjustments were required in 1999 and 2000. NOTE 6 - ACCRUED LIABILITIES Accrued liabilities are comprised of the following (amounts in thousands):
DECEMBER 31, SEPTEMBER 30, 1999 2000 ------------ ------------- (UNAUDITED) Acquisition related contingent consideration ......................... $ 29,825 $ - Salaries, wages, compensated absences and payroll related taxes ...... 8,673 12,095 Customer deposits .................................................... 8,072 11,879 Accrued interest ..................................................... 3,228 362 Other accrued liabilities ............................................ 11,284 12,482 ----------- ----------- Total accrued liabilities ......................................... $ 61,082 $ 36,818 =========== ===========
7 NOTE 7 - LONG-TERM DEBT Long-term debt includes the following amounts (amounts in thousands):
DECEMBER 31, SEPTEMBER 30, 1999 2000 ------------ ------------ (UNAUDITED) Senior credit facility $25 million working capital revolving line of credit ......................... $ - $ 6,900 $25 million acquisition revolving line of credit ............................. - 9,500 Term loans ................................................................... 213,213 265,075 12% senior subordinated notes ................................................... 100,000 100,000 Capital lease obligations and equipment term financing, with interest at 4.7% to 25.7%, secured by equipment .......................................... 2,411 2,452 Other ........................................................................... 27 4,662 ----------- ----------- Total long-term debt ......................................................... 315,651 388,589 Less current portion ......................................................... (5,070) (8,273) ----------- ----------- Long-term debt, less current portion ....................................... $ 310,581 $ 380,316 =========== ===========
During the nine months ended September 30, 2000, the Company amended its senior credit facility and borrowed an additional $55,000,000 under the term loan facility and used the proceeds to partially fund the acquisitions described in Note 2. The amendment increased the prime and Euro-Dollar interest rate margins charged on the loans. Currently, the applicable margins are 1.50% to 2.75% for prime rate borrowings and 2.75% to 4.00% for Euro-Dollar rate borrowings. NOTE 8 - INCOME TAXES The provision for income taxes differs from the amount determined by applying the applicable U.S. statutory federal rate to income before income taxes primarily due to the effects of state and foreign income taxes and non-deductible expenses, principally goodwill and other intangible asset amortization. The difference in the effective tax rates between periods is mostly a result of the relationship of non-deductible expenses to income before income taxes. 8 NOTE 9 - CAPITAL STRUCTURE During the nine months ended September 30, 2000, the Company and its parent company, DeCrane Holdings, sold capital stock and used the net proceeds to partially fund the acquisitions described in Note 2. MANDATORILY REDEEMABLE PREFERRED STOCK The Company is authorized to issue 10,000,000 shares of $.01 par value preferred stock. On June 30, 2000, the Company designated 700,000 of those shares as 16% Senior Redeemable Exchangeable Preferred Stock Due 2009 and sold 250,000 shares for $25,000,000 or $100.00 per share. The preferred stock has a $100.00 per share liquidation preference, plus accrued and unpaid cash dividends, and is non-voting. The Company's preferred stock dividend and redemption obligations rank senior to the DeCrane Holdings preferred stock obligations described in Note 10. Holders of the Company's senior redeemable preferred stock are entitled to receive, when, as and if declared, quarterly dividends at a rate equal to 16% per annum. Prior to June 30, 2005, the Company may, at its option, pay dividends either in cash or by the issuance of additional shares of preferred stock. For the three months ended September 30, 2000, the Company will elect to issue 10,000 additional shares in lieu of a cash dividend payment. The preferred stock is mandatorily redeemable on March 31, 2009. Upon the occurrence of a change in control, as defined, each holder has the right to require the Company to redeem all or part of such holder's shares at a price equal to 101% of the liquidation preference (116% if prior to July 1, 2001), plus accrued and unpaid cash dividends. PAID-IN CAPITAL AND NOTES RECEIVABLE FOR SHARES SOLD During the nine months ended September 30, 2000, the Company received an additional $7,976,000 cash capital contribution from DeCrane Holdings resulting from its sale of capital stock. DeCrane Holdings also repurchased 4,347 shares of its common stock from a former employee at $23.00 per share. NOTE 10 - COMMITMENTS AND CONTINGENCIES FUNDING OF DECRANE HOLDINGS PREFERRED STOCK OBLIGATIONS The Company is a wholly owned subsidiary of DeCrane Holdings whose capital structure also includes mandatorily redeemable preferred stock. Since the Company is DeCrane Holdings' only operating subsidiary and source of cash, the Company may be required to fund DeCrane Holdings' preferred stock dividend and redemption obligations in the future. The DeCrane Holdings preferred stock dividend and redemption obligations are subordinate to the Company's preferred stock obligations. DeCrane Holdings' preferred stock dividends are payable quarterly at a rate of 14% per annum. Prior to September 30, 2005, dividends are not paid in cash but instead accrete to the liquidation value of the preferred stock, which, in turn, increases the redemption obligation. On or after September 30, 2005, preferred stock dividends are paid in cash. The DeCrane Holdings preferred stock has a total redemption value of $45,655,000 as of September 30, 2000, including accumulated dividends. CONTINGENT ACQUISITION CONSIDERATION The maximum determinable contingent consideration payment obligations, resulting from the acquisitions described in Note 2, are as follows as of September 30, 2000:
(IN THOUSANDS) Based on future attainment of defined performance criteria for the year ending December 31, 2000 .............................................................. $ 21,575 2001 .............................................................. 1,450 2002 .............................................................. 1,350 2003 .............................................................. 750 ----------- Total maximum determinable obligation ........................... $ 25,125 ===========
Contingent consideration payable, if any, is payable during the first quarter of the following year. 9 NOTE 11 - CONSOLIDATED STATEMENTS OF CASH FLOWS Assets acquired and liabilities assumed in connection with acquisitions are as follows (amounts in thousands):
NINE MONTHS ENDED SEPTEMBER 30, ------------------------ 1999 2000 ----------- ----------- (UNAUDITED) Fair value of assets acquired .................................................. $ 136,359 $ 77,904 Liabilities assumed ............................................................ (20,324) (20,516) ----------- ----------- Cash paid ................................................................... 116,035 57,388 Less cash acquired .......................................................... (2,245) (292) ----------- ----------- Net cash paid for companies acquired during the period .................... 113,790 57,096 Contingent consideration paid for previously completed acquisitions ............ 3,000 29,825 Additional acquisition related expenses ........................................ - 294 ----------- ----------- Total cash paid for acquisitions ........................................ $ 116,790 $ 87,215 =========== ===========
NOTE 12 - BUSINESS SEGMENT INFORMATION During 1999, the Company reorganized its businesses into three separate groups: Cabin Management, Specialty Avionics and Systems Integration. As prescribed by SFAS No. 131, "Disclosure About Segments of an Enterprise and Related Information," the Company has restated disclosure information for earlier periods to reflect its three separate operating groups. The Company supplies products and services to the general aviation industry. The Company's subsidiaries are organized into three groups, each of which are strategic businesses that are managed separately because each business develops, manufactures and sells distinct products and services. The groups and a description of their businesses are as follows: . Cabin Management - provides interior cabin components for the corporate aircraft market, including furniture, cabinetry, seats and in-flight entertainment systems; . Specialty Avionics - designs, engineers and manufacturers electronic components, display devices and interconnect components and assemblies; and . Systems Integration - provides auxiliary fuel tanks, auxiliary power units and systems integration services. Management utilizes more than one measurement to evaluate group performance and allocate resources, however, management considers EBITDA to be the primary measurement of their overall economic returns and cash flows. Management defines EBITDA as earnings before interest, income taxes, depreciation and amortization, non-cash acquisition related charges and other non-operating costs. This is consistent with the manner in which the Company's lenders and ultimate investors measure its overall performance. 10 NOTE 12 - BUSINESS SEGMENT INFORMATION (CONTINUED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------- ----------- ---------- ----------- 1999 2000 1999 2000 ----------- ----------- ---------- ----------- (UNAUDITED, IN THOUSANDS) Revenues Cabin Management ................................................... $ 22,538 $ 50,303 $ 47,975 $ 127,081 Specialty Avionics ................................................. 26,045 28,164 85,783 81,006 Systems Integration ................................................ 17,005 14,870 45,224 47,262 Inter-group elimination (1) ........................................ (350) (188) (1,146) (928) ----------- ----------- ----------- ----------- Consolidated revenues ............................................ $ 65,238 $ 93,149 $ 177,836 $ 254,421 =========== =========== =========== =========== EBITDA (2) Cabin Management ................................................... $ 7,157 $ 12,234 $ 15,594 $ 33,615 Specialty Avionics ................................................. 6,389 7,491 20,902 19,622 Systems Integration ................................................ 3,608 3,925 6,614 10,881 Corporate (3) ...................................................... (1,465) (1,491) (4,289) (4,836) ----------- ----------- ----------- ----------- Consolidated EBITDA .............................................. $ 15,689 $ 22,159 $ 38,821 $ 59,282 =========== =========== =========== =========== Total assets (as of period end date) Cabin Management ............................................................................. $ 118,156 $ 285,372 Specialty Avionics ........................................................................... 225,255 229,198 Systems Integration .......................................................................... 95,273 81,604 Corporate .................................................................................... 20,079 27,971 ----------- ----------- Consolidated total assets .................................................................. $ 458,763 $ 624,145 =========== ===========
- ------------- (1) Inter-group sales are accounted for at prices comparable to sales to unaffiliated customers, and are eliminated in consolidation. (2) A reconciliation of consolidated EBITDA to income before income taxes is as follows:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------- ----------------------- 1999 2000 1999 2000 ----------- ----------- ---------- ----------- (UNAUDITED, IN THOUSANDS) Consolidated EBITDA .............................................. $ 15,689 $ 22,159 $ 38,821 $ 59,282 Depreciation and amortization (a) ................................ (5,633) (7,166) (13,643) (19,537) Non-cash acquisition related charges ............................. (513) - (1,606) - Other non-operating costs ........................................ (491) (87) (604) (265) Interest expense ................................................. (7,155) (11,264) (19,884) (29,977) Other (expenses) income .......................................... (282) (55) 85 (228) ----------- ----------- ----------- ----------- Consolidated income before income taxes ........................ $ 1,615 $ 3,587 $ 3,169 $ 9,275 =========== =========== =========== ===========
(a) Reflects depreciation and amortization of long-lived assets, goodwill and other intangible assets. Excludes amortization of deferred financing costs, which are classified as a component of interest expense, of $457,000 and $593,000 for the three months ended September 30, 1999 and 2000, respectively, and $1,232,000 and $1,696,000 for the nine months ended September 30, 1999 and 2000, respectively. (3) Reflects the Company's corporate headquarters costs and expenses not allocated to the groups. 11 NOTE 13 - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION In conjunction with the senior credit facility and 12% senior subordinated notes described in Note 7, the following condensed consolidating financial information is presented for the Company, segregating guarantor and non-guarantor subsidiaries. The accompanying financial information in the Guarantor Subsidiaries column reflects the financial position, results of operations and cash flows for those subsidiaries guaranteeing the senior credit facility and the notes. The guarantor subsidiaries are wholly-owned subsidiaries of the Company and their guarantees are full and unconditional on a joint and several basis. There are no restrictions on the ability of the guarantor subsidiaries to transfer funds to the issuer in the form of cash dividends, loans or advances. Separate financial statements of the guarantor subsidiaries are not presented because management believes that such financial statements would not be material to investors. Investments in subsidiaries in the following condensed consolidating financial information are accounted for under the equity method of accounting. Consolidating adjustments include the following: (1) Elimination of investments in subsidiaries. (2) Elimination of intercompany accounts. (3) Elimination of intercompany sales between guarantor and non-guarantor subsidiaries. (4) Elimination of equity in earnings of subsidiaries. BALANCE SHEETS
DECEMBER 31, 1999 ------------------------------------------------------------------------ NON- GUARANTOR GUARANTOR CONSOLIDATING CONSOLIDATED ISSUER SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS TOTAL ----------- ------------ ------------ ------------- -------------- (IN THOUSANDS) ASSETS Current assets Cash and cash equivalents ...................... $ 7,839 $ (323) $ 402 $ - $ 7,918 Accounts receivable, net ....................... - 38,201 1,379 - 39,580 Inventories .................................... - 57,072 1,649 - 58,721 Other current assets ........................... 6,645 938 123 - 7,706 ----------- ----------- ---------- ----------- ----------- Total current assets ......................... 14,484 95,888 3,553 - 113,925 Property and equipment, net ....................... 1,282 34,174 2,244 - 37,700 Other assets, principally intangibles, net ........ 17,065 344,986 12,060 - 374,111 Investments in subsidiaries ....................... 360,515 20,305 - (380,820)(1) - Intercompany receivables .......................... 77,566 17,334 2,612 (97,512)(2) - ----------- ----------- ---------- ------------ ----------- Total assets ............................... $ 470,912 $ 512,687 $ 20,469 $ (478,332) $ 525,736 =========== =========== ========== ============ =========== LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities Current portion of long-term debt .............. $ 4,640 $ 404 $ 26 $ - $ 5,070 Other current liabilities ...................... 10,237 68,691 678 - 79,606 ----------- ----------- ---------- ----------- ----------- Total current liabilities .................... 14,877 69,095 704 - 84,676 Long-term debt .................................... 309,836 712 33 - 310,581 Intercompany payables ............................. 17,797 79,384 331 (97,512)(2) - Other long-term liabilities ....................... 20,635 2,981 622 - 24,238 ----------- ----------- ---------- ----------- ----------- Stockholder's equity Paid-in capital ................................ 114,690 289,415 15,440 (304,855)(1) 114,690 Retained earnings (deficit) .................... (6,923) 71,100 4,865 (75,965)(1) (6,923) Accumulated other comprehensive loss ........... - - (1,526) - (1,526) ----------- ----------- ----------- ----------- ------------ Total stockholder's equity ................... 107,767 360,515 18,779 (380,820) 106,241 ----------- ----------- ---------- ------------ ----------- Total liabilities and stockholder's equity ..................... $ 470,912 $ 512,687 $ 20,469 $ (478,332) $ 525,736 =========== =========== ========== =========== ===========
12 NOTE 13 - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED) BALANCE SHEETS (CONTINUED)
SEPTEMBER 30, 2000 (UNAUDITED) ------------------------------------------------------------------------ NON- GUARANTOR GUARANTOR CONSOLIDATING CONSOLIDATED ISSUER SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS TOTAL ----------- ------------ ------------ ------------- -------------- (IN THOUSANDS) ASSETS Current assets Cash and cash equivalents ...................... $ 1,356 $ 273 $ 219 $ - $ 1,848 Accounts receivable, net ....................... - 63,638 1,231 - 64,869 Inventories .................................... - 78,397 2,677 - 81,074 Other current assets ........................... 4,934 1,005 240 - 6,179 ----------- ----------- ---------- ----------- ----------- Total current assets ......................... 6,290 143,313 4,367 - 153,970 Property and equipment, net ....................... 4,519 49,335 1,986 - 55,840 Other assets, principally intangibles, net ........ 17,449 387,073 9,813 - 414,335 Investments in subsidiaries ....................... 394,771 20,803 - (415,574)(1) - Intercompany receivables .......................... 147,984 - 3,352 (151,336)(2) - ----------- ----------- ---------- ----------- ----------- Total assets ............................... $ 571,013 $ 600,524 $ 19,518 $ (566,910) $ 624,145 =========== =========== ========== =========== =========== LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND STOCKHOLDER'S EQUITY Current liabilities Current portion on long-term debt .............. $ 6,935 $ 1,314 $ 24 $ - $ 8,273 Other current liabilities ...................... 12,290 46,405 688 - 59,383 ----------- ----------- ---------- ----------- ----------- Total current liabilities .................... 19,225 47,719 712 - 67,656 Long-term debt .................................... 375,634 4,670 12 - 380,316 Intercompany payables ............................. - 151,336 - (151,336)(2) - Other long-term liabilities ....................... 31,774 2,028 600 - 34,402 Mandatorily redeemable preferred stock ............ 26,000 - - - 26,000 ----------- ----------- ---------- ----------- ----------- Stockholder's equity Paid-in capital ................................ 121,671 316,311 15,440 (331,751)(1) 121,671 Retained earnings (deficit) .................... (3,291) 78,460 5,363 (83,823)(1) (3,291) Accumulated other comprehensive loss ........... - - (2,609) - (2,609) ----------- ----------- ---------- ----------- ----------- Total stockholder's equity ................... 118,380 394,771 18,194 (415,574) 115,771 ----------- ----------- ---------- ----------- ----------- Total liabilities, mandatorily redeemable preferred stock and stockholder's equity . $ 571,013 $ 600,524 $ 19,518 $ (566,910) $ 624,145 =========== =========== ========== =========== ===========
13 NOTE 13 - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED) STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) ------------------------------------------------------------------------ NON- GUARANTOR GUARANTOR CONSOLIDATING CONSOLIDATED ISSUER SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS TOTAL ----------- ------------ ------------ ------------- -------------- (IN THOUSANDS) Revenues .......................................... $ - $ 174,583 $ 8,591 $ (5,338)(3) $ 177,836 Cost of sales ..................................... - 116,546 6,873 (5,338)(3) 118,081 ----------- ----------- ---------- ----------- ----------- Gross profit ...................................... - 58,037 1,718 - 59,755 Selling, general and administrative expenses ...... 4,755 21,402 1,124 - 27,281 Amortization of intangible assets ................. 116 9,015 375 - 9,506 Interest expense .................................. 17,407 2,444 33 - 19,884 Intercompany charges .............................. (3,603) 3,475 128 - - Equity in earnings of subsidiaries ................ (11,619) (363) - 11,982 (4) - Other expenses (income) ........................... 226 61 (372) - (85) Provision (benefit) for income taxes .............. (7,782) 10,384 67 - 2,669 ----------- ----------- ---------- ----------- ----------- Net income ........................................ $ 500 $ 11,619 $ 363 $ (11,982) $ 500 =========== =========== ========== =========== ===========
NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED) ------------------------------------------------------------------------ NON- GUARANTOR GUARANTOR CONSOLIDATING CONSOLIDATED ISSUER SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS TOTAL ----------- ------------ ------------ ------------- -------------- (IN THOUSANDS) Revenues .......................................... $ - $ 252,477 $ 8,838 $ (6,894)(3) $ 254,421 Cost of sales ..................................... - 169,591 6,830 (6,894)(3) 169,527 ----------- ----------- ---------- ----------- ----------- Gross profit ...................................... - 82,886 2,008 - 84,894 Selling, general and administrative expenses ...... 5,535 25,969 961 - 32,465 Amortization of intangible assets ................. 152 12,479 318 - 12,949 Interest expense .................................. 23,051 6,923 3 - 29,977 Intercompany charges .............................. (5,184) 5,184 - - - Equity in earnings of subsidiaries ................ (13,210) (696) - 13,906 (4) - Other expenses (income) ........................... 261 61 (94) - 228 Provision (benefit) for income taxes .............. (14,237) 19,756 124 - 5,643 ----------- ----------- ---------- ----------- ----------- Net income ........................................ $ 3,632 $ 13,210 $ 696 $ (13,906) $ 3,632 =========== =========== ========== =========== ===========
14 NOTE 13 - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED) STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) ------------------------------------------------------------------------ NON- GUARANTOR GUARANTOR CONSOLIDATING CONSOLIDATED ISSUER SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS TOTAL ----------- ------------ ------------ ------------- -------------- (IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES Net income ..................................... $ 500 $ 11,619 $ 363 $ (11,982) $ 500 Adjustments to net income Non-cash net income adjustments .............. 1,851 13,041 621 - 15,513 Equity in earnings of subsidiaries ........... (11,619) (363) - 11,982 (4) - Changes in working capital ..................... 20,073 (25,286) (578) - (5,791) ----------- ----------- ---------- ----------- ----------- Net cash provided by (used for) operating activities........................ 10,805 (989) 406 - 10,222 ----------- ----------- ---------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for acquisitions, net of cash acquired (119,035) 2,245 - - (116,790) Capital expenditures and other ................. (66) (3,952) (623) - (4,641) ----------- ----------- ---------- ----------- ----------- Net cash used for investing activities ....... (119,101) (1,707) (623) - (121,431) ----------- ----------- ---------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Term debt borrowings ........................... 90,000 - - - 90,000 Capital contribution ........................... 12,500 - - - 12,500 Net revolving line of credit borrowings ........ 7,700 - - - 7,700 Customer advance ............................... - 5,000 - - 5,000 Other long-term borrowings ..................... 636 - - - 636 Deferred financing costs ....................... (3,062) - - - (3,062) Principal payments on long-term debt and leases .............................. (1,129) (675) (20) - (1,824) Other, net ..................................... - (180) 159 - (21) ----------- ----------- ---------- ----------- ----------- Net cash provided by financing activities .... 106,645 4,145 139 - 110,929 ----------- ----------- ---------- ----------- ----------- Effect of foreign currency translation on cash .... - - (99) - (99) ----------- ----------- ---------- ----------- ----------- Net increase (decrease) in cash and equivalents ... (1,651) 1,449 (177) - (379) Cash and equivalents at beginning of period ....... 2,458 762 298 - 3,518 ----------- ----------- ---------- ----------- ----------- Cash and equivalents at end of period ............. $ 807 $ 2,211 $ 121 $ - $ 3,139 =========== =========== ========== =========== ===========
15 NOTE 13 - SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED) STATEMENTS OF CASH FLOWS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED) ------------------------------------------------------------------------ NON- GUARANTOR GUARANTOR CONSOLIDATING CONSOLIDATED ISSUER SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS TOTAL ----------- ------------ ------------ ------------- -------------- (IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES Net income ..................................... $ 3,632 $ 13,210 $ 696 $ (13,906)(4) $ 3,632 Adjustments to net income (loss) Non-cash net income adjustments .............. 6,467 18,864 718 - 26,049 Equity in earnings of subsidiaries ........... (13,210) (696) - 13,906 (4) - Changes in working capital ..................... (11,146) (19,529) (1,222) - (31,897) ----------- ----------- ---------- ----------- ----------- Net cash provided by (used for) operating activities........................ (14,257) 11,849 192 - (2,216) ----------- ----------- ---------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for acquisition, net of cash acquired ................................ (87,507) 292 - - (87,215) Capital expenditures and other ................. (3,626) (13,642) (362) - (17,630) ----------- ----------- ---------- ----------- ----------- Net cash used for investing activities ....... (91,133) (13,350) (362) - (104,845) ----------- ----------- ---------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Debt financing for acquisitions ................ 55,000 - - - 55,000 Preferred stock financing for acquisitions...... 25,000 - - - 25,000 Line of credit borrowings ...................... 16,400 - - - 16,400 Capital contribution ........................... 7,976 - - - 7,976 Other long-term borrowings ..................... - 2,958 - - 2,958 Principal payments on long-term debt and capital leases ............................... (3,419) (664) (13) - (4,096) Deferred financing costs ....................... (2,000) - - - (2,000) Other, net ..................................... (50) (197) - - (247) ----------- ----------- ---------- ----------- ----------- Net cash provided by (used for) financing activities ....................... 98,907 2,097 (13) - 100,991 ----------- ----------- ---------- ----------- ----------- Effect of foreign currency translation on cash ............................ - - - - - ----------- ----------- ---------- ----------- ----------- Net increase (decrease) in cash and equivalents ................................ (6,483) 596 (183) - (6,070) Cash and equivalents at beginning of period ...................................... 7,839 (323) 402 - 7,918 ----------- ----------- ---------- ----------- ----------- Cash and equivalents at end of period ............. $ 1,356 $ 273 $ 219 $ - $ 1,848 =========== =========== ========== =========== ===========
16 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED IN THIS REPORT. OVERVIEW Our financial positions, results of operations and cash flows have been affected by our history of acquisitions. Since January 1, 1999, we have completed nine acquisitions and, as a result, our historical financial statements do not reflect the financial position, results of operations and cash flows of our current businesses. The companies we have acquired since January 1, 1999, which affect the comparability of the historical financial statements included herein, consist of: CABIN MANAGEMENT GROUP . PPI, acquired on April 23, 1999; . Custom Woodwork, acquired on August 5, 1999; . PCI NewCo, acquired on October 6, 1999; . International Custom Interiors, acquired on October 8, 1999; . The Infinity Partners, acquired on December 17, 1999; . Carl F. Booth, acquired on May 11, 2000; . ERDA, acquired on June 30, 2000; SPECIALTY AVIONICS GROUP . Coltech, acquired on August 31, 2000; and SYSTEMS INTEGRATION GROUP . PATS, acquired on January 22, 1999. Our historical financial statements reflect the financial position, results of operations and cash flows of the companies we acquired subsequent to their respective 1999 and 2000 acquisition dates. RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1999 REVENUES. Revenues increased $27.9 million, or 42.8%, to $93.1 million for the three months ended September 30, 2000 from $65.2 million for the three months ended September 30, 1999. The increase primarily results from the inclusion of revenues in 2000 from companies we acquired during 1999 and 2000. By segment, revenues changed as follows:
INCREASE (DECREASE) FROM 1999 ------------------------- AMOUNT PERCENT ------------ --------- (IN MILLIONS) Cabin Management ................... $ 27.8 123.6% Specialty Avionics ................. 2.1 8.0 Systems Integration ................ (2.1) (12.4) Inter-group elimination ............ 0.1 - ----------- Total ............................ $ 27.9 ===========
CABIN MANAGEMENT. Revenues increased by $27.8 million, or 123.6% over the prior year, due to: . the inclusion of $23.4 million of revenues resulting from our acquisitions of Custom Woodwork, PCI NewCo, International Custom Interiors and Infinity in 1999 and Carl F. Booth and ERDA in 2000; and . a $4.4 million increase in entertainment and cabin management product revenues primarily relating to volume growth. 17 SPECIALTY AVIONICS. Revenues increased by $2.1 million, or 8.0% over the prior year, due to volume growth for our commercial aircraft interconnect products. SYSTEMS INTEGRATION. Revenues decreased by $2.1 million, or 12.4% from the prior year, primarily due to the timing of when orders are received versus shipped. GROSS PROFIT. Gross profit increased $8.0 million, or 34.7%, to $31.1 million for the three months ended September 30, 2000. The increase primarily results from the inclusion of gross profit in 2000 from companies we acquired in 1999 and 2000. Gross profit as a percent of revenues decreased to 33.4% for the three months ended September 30, 2000 from 35.4% for the same period last year primarily as a result of companies acquired during 2000 and in 1999 that recorded lower margins. By segment, gross profit changed as follows:
INCREASE (DECREASE) FROM 1999 ------------------------ AMOUNT PERCENT ----------- -------- (IN MILLIONS) Cabin Management .......................... $ 6.1 66.4% Specialty Avionics ........................ 1.0 11.8 Systems Integration ....................... 0.9 16.7 ----------- Total ................................... $ 8.0 ===========
CABIN MANAGEMENT. Gross profit increased by $6.1 million, or 66.4% over the prior year, due to: . the inclusion of $7.7 million of gross profit resulting from our 1999 and 2000 acquisitions; offset by . a $1.6 million decrease resulting from higher engineering costs associated with developing of new entertainment system products. SPECIALTY AVIONICS. Gross profit increased by $1.0 million, or 11.8% from the prior year, primarily due to sales volume increases and product mix. SYSTEMS INTEGRATION. Gross profit increased by $0.9 million, or 16.7% over the prior year, due to auxiliary fuel tank manufacturing and installation efficiencies achieved and the 1999 restructuring and exit from the manufacturing business described in Note 4 to the unaudited consolidated financial statements. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses increased $1.5 million, or 15.0%, to $11.5 million for the three months ended September 30, 2000, from $10.0 million for the same period last year. The increase primarily results from the inclusion of $2.0 million of SG&A expenses in 2000 from companies we acquired during 1999 and 2000. SG&A expenses as a percent of revenues decreased to 12.4% for the three months ended September 30, 2000 compared to 15.3% for the same period last year. By segment, SG&A expenses changed as follows:
INCREASE (DECREASE) FROM 1999 --------------------------- AMOUNT PERCENT ------------- ---------- (IN MILLIONS) Cabin Management ......................... $ 1.5 55.6% Specialty Avionics ....................... 0.1 3.0 Systems Integration ...................... 0.1 5.0 Corporate ................................ (0.2) (10.0) ----------- Total .................................. $ 1.5 ===========
CABIN MANAGEMENT. SG&A expenses increased by $1.5 million, or 55.6% over the prior year, due to: . the inclusion of $2.0 million resulting from our 1999 and 2000 acquisitions; offset by . a $0.5 million decrease in expenses resulting from the centralization of administrative activities. SPECIALTY AVIONICS AND SYSTEMS INTEGRATION. The increases in SG&A expenses were insignificant. CORPORATE. SG&A expenses decreased by $0.2 million, or 10.0% from the prior year due to decreased spending on outside professional services. 18 DEPRECIATION AND AMORTIZATION OF INTANGIBLES. Depreciation and amortization expense, which includes amortization of goodwill and identifiable intangible assets, increased $1.6 million, or 28.6%, for the three months ended September 30, 2000. The increase results from the inclusion of $1.4 million of depreciation and amortization expense in 2000 from companies we acquired during 1999 and 2000 and additional depreciation reflecting our capital expenditures during the period. EBITDA AND OPERATING INCOME. EBITDA increased $6.5 million to $22.2 million, or 41.4%, for the three months ended September 30, 2000, from $15.7 million for the same period last year. The increase primarily results from the contribution to year 2000 results from companies we acquired during 1999 and 2000. EBITDA as a percent of revenues decreased to 23.8% for the three months ended September 30, 2000, from 24.1% for the same period last year. Operating income increased $5.8 million to $14.9 million, or 63.8%, for the three months ended September 30, 2000, from $9.1 million for the same period last year. By segment, EBITDA changed as follows:
INCREASE (DECREASE) FROM 1999 ------------------------- AMOUNT PERCENT ----------- ----------- (IN MILLIONS) EBITDA Cabin Management .................... $ 5.1 70.8% Specialty Avionics .................. 1.1 17.2 Systems Integration ................. 0.3 8.3 ----------- Total EBITDA ...................... 6.5 Depreciation and amortization ......... (1.6) Other non-operating costs ............. 0.9 ----------- Total operating income (loss) ..... $ 5.8 ===========
CABIN MANAGEMENT. EBITDA increased by $5.1 million, or 70.8% over the prior year, due to: . a $7.1 million increase resulting from our acquisitions; offset by . a $2.0 million decrease resulting from higher labor costs associated with developing of new entertainment system products. SPECIALTY AVIONICS. EBITDA increased by $1.1 million, or 17.2% from the prior year, due to: . $1.0 million of growth related to product sales; and . $0.1 million resulting from our acquisitions. SYSTEMS INTEGRATION. EBITDA increased by $0.3 million, or 8.3% over the prior year, due to the timing of when orders are received versus shipped. While not affecting the comparison of 1999 to 2000 results, we charged $0.7 million to the accrued liability established in 1999 for such restructuring; no adjustments have been made to our original 1999 estimates. INTEREST EXPENSE. Interest expense increased $4.1 million to $11.3 million for the three months ended September 30, 2000, from $7.2 million for the same period last year. Interest expense increased: . $3.6 million due to higher debt levels associated with our acquisition of companies during 1999 and 2000; and . $0.5 million due to higher average interest rates charged during 2000. PROVISION FOR INCOME TAXES. The provision for income taxes differs from the amount determined by applying the applicable U.S. statutory federal rate to the income before income taxes primarily due to the effects of state and foreign income taxes and non-deductible expenses, principally goodwill amortization. The difference in the effective tax rates between periods is mostly a result of the relationship of non-deductible expenses to income before income taxes. NET INCOME. Net income increased $0.2 million to $0.9 million for the three months ended September 30, 2000 compared to $0.7 million for the same period in 1999. 19 NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDER. Net income (loss) applicable to DeCrane Holdings, our common stockholder, decreased $0.8 million to a loss of $0.1 million for the three months ended September 30, 2000 compared to income of $0.7 million for the same period in 1999. The net decrease is attributable to: . a $1.0 million increase in accrued dividends resulting from DeCrane Aircraft's issuance of 16% mandatorily redeemable preferred stock on June 30, 2000; offset by . a $0.2 million increase in net income. BOOKINGS. Bookings increased $34.5 million, or 54.4%, to $97.9 million for the three months ended September 30, 2000 compared to $63.4 million for the same period in 1999. The increase in bookings for 2000 results from: . a $27.0 million increase associated with companies we acquired in 1999 and 2000; and . a $7.5 million increase related to business growth, principally in Cabin Management's furniture product lines. BACKLOG AT END OF PERIOD. Backlog increased $17.2 million, or 11.0%, to $173.3 million as of September 30, 2000 compared to $156.1 million as of December 31, 1999. The increase primarily results from the timing of receipt of customer orders. By segment, backlog changed as follows: . a $10.4 million increase related to Cabin Management companies acquired companies in 2000; . a $5.3 million increase related to Specialty Avionics, reflecting a recovery in demand for some of our commercial aircraft products; and . a $1.5 million increase related to Systems Integration, resulting from the timing of when orders are received versus when they are shipped. NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1999 REVENUES. Revenues increased $76.6 million, or 43.1%, to $254.4 million for the nine months ended September 30, 2000 from $177.8 million for the nine months ended September 30, 1999. The increase primarily results from the inclusion of revenues in 2000 from companies we acquired during 1999 and 2000. By segment, revenues changed as follows:
INCREASE (DECREASE) FROM 1999 ------------------------- AMOUNT PERCENT ---------- ---------- (IN MILLIONS) Cabin Management .......................... $ 79.1 165.1% Specialty Avionics ........................ (4.8) (5.6) Systems Integration ....................... 2.1 4.6 Inter-group elimination ................... 0.2 - ----------- Total ................................... $ 76.6 ===========
CABIN MANAGEMENT. Revenues increased by $79.1 million, or 165.1% over the prior year, due to: . the inclusion of $72.4 million of revenues resulting from our acquisitions of PPI, Custom Woodwork, PCI NewCo, International Custom Interiors and Infinity in 1999 and Carl F. Booth and ERDA in 2000; and . a $6.7 million increase in entertainment and cabin management product revenues reflecting primarily a higher volume of corporate jet production by original equipment manufacturers (OEM's). SPECIALTY AVIONICS. Revenues decreased by $4.8 million, or 5.6% from the prior year, due to somewhat lower demand for our commercial aircraft products during the first two quarters of the year. SYSTEMS INTEGRATION. Revenues increased by $2.1 million, or 4.6% over the prior year, due to the inclusion of PATS for the full nine months of 2000; PATS was acquired on January 22, 1999. 20 GROSS PROFIT. Gross profit increased $25.1 million, or 41.9%, to $84.9 million for the nine months ended September 30, 2000. The increase primarily results from the inclusion of gross profit in 2000 from companies we acquired in 1999 and 2000. Gross profit as a percent of revenues decreased to 33.4% for the nine months ended September 30, 2000 from 33.6% for the same period last year primarily as a result of lower margins in Cabin Management entertainment products and Specialty Avionics products. By segment, gross profit changed as follows:
INCREASE (DECREASE) FROM 1999 ----------------------- AMOUNT PERCENT ------------ --------- (IN MILLIONS) Cabin Management ..................... $ 22.6 109.7% Specialty Avionics ................... (3.2) (11.3) Systems Integration .................. 5.7 52.3 ----------- Total .............................. $ 25.1 ===========
CABIN MANAGEMENT. Gross profit increased by $22.6 million, or 109.7% over the prior year, due to: . a $25.0 million increase in gross profit resulting from our 1999 and 2000 acquisitions; offset by . lower margins in our entertainment systems products; and . production startup inefficiencies at a new manufacturing facility. SPECIALTY AVIONICS. Gross profit decreased by $3.2 million, or 11.3% from the prior year, due to somewhat lower demand for our commercial aircraft products as a result of lower commercial jet production by Boeing and price reductions to several large customers. SYSTEMS INTEGRATION. Gross profit increased by $5.7 million, or 52.3% over the prior year, due to: . a $5.2 million increase in gross profit resulting from favorable auxiliary fuel tank manufacturing and installation efficiencies achieved; and . a $0.5 million reduction in engineering costs attributable to project development. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses increased $5.2 million, or 19.0%, to $32.5 million for the nine months ended September 30, 2000, from $27.3 million for the same period last year. The increase primarily results from the inclusion of $5.2 million of SG&A expenses in 2000 from companies we acquired in 1999 and 2000. SG&A expenses as a percent of revenues decreased to 12.8% for the nine months ended September 30, 2000 compared to 15.4% for the same period last year. By segment, SG&A expenses changed as follows:
INCREASE (DECREASE) FROM 1999 -------------------------- AMOUNT PERCENT ----------- ---------- (IN MILLIONS) Cabin Management ......................... $ 4.4 62.9% Specialty Avionics ....................... (1.2) (11.8) Systems Integration ...................... 1.2 22.2 Corporate ................................ 0.8 17.0 ----------- Total .................................. $ 5.2 ===========
CABIN MANAGEMENT. SG&A expenses increased by $4.4 million, or 62.9% over the prior year, due to: . the inclusion of $4.9 million related to our 1999 and 2000 acquisitions; offset by . a $0.5 million decrease in expenses resulting from the consolidation of administrative activities. SPECIALTY AVIONICS. SG&A expenses decreased by $1.2 million, or 11.8% from the prior year, due to reduced selling costs related to lower sales. SYSTEMS INTEGRATION. SG&A expenses increased by $1.2 million, or 22.2% over the prior year, due to: . a $0.5 million increase in SG&A expenses resulting from an increase in engineering project management. . a $0.7 million increase in expenses from additional sales and program management resources. CORPORATE. SG&A expenses increased by $0.8 million, or 17.0% over the prior year due to increased spending for sales and marketing programs during the first two quarters. 21 DEPRECIATION AND AMORTIZATION OF INTANGIBLES. Depreciation and amortization expense, which includes amortization of goodwill and identifiable intangible assets, increased $5.9 million, or 43.3%, for the nine months ended September 30, 2000. The increase results from the inclusion of $3.7 million of depreciation and amortization expense in 2000 from companies we acquired during 1999 and 2000 and additional depreciation reflecting our capital expenditures during the period. EBITDA AND OPERATING INCOME. EBITDA increased $20.5 million to $59.3 million, or 52.8%, for the nine months ended September 30, 2000, from $38.8 million for the same period last year. The increase primarily results from the contribution to year 2000 results from companies we acquired during 1999 and 2000. EBITDA as a percent of revenues increased to 23.3% for the nine months ended September 30, 2000, from 21.8% for the same period last year. Operating income increased $16.5 million to $39.5 million, or 71.8%, for the nine months ended September 30, 2000, from $23.0 million for the same period last year. By segment, EBITDA changed as follows:
INCREASE (DECREASE) FROM 1999 ------------------------- AMOUNT PERCENT ------------ --------- (IN MILLIONS) EBITDA Cabin Management ...................... $ 18.0 115.4% Specialty Avionics .................... (1.3) (6.2) Systems Integration ................... 4.3 65.2 Corporate ............................. (0.5) (11.6) ------------ Total EBITDA ........................ 20.5 Depreciation and amortization ........... (5.9) Other non-operating costs ............... 1.9 ----------- Total operating income (loss) ....... $ 16.5 ===========
CABIN MANAGEMENT. EBITDA increased by $18.0 million, or 115.4% over the prior year, due to acquisitions and increased production of corporate jets by OEM's. SPECIALTY AVIONICS. EBITDA decreased by $1.3 million, or 6.2% from the prior year, due to somewhat lower demand for our commercial aircraft products as a result of lower commercial jet production by Boeing. SYSTEMS INTEGRATION. EBITDA increased by $4.3 million, or 65.2% from the prior year, due to: . a $1.7 million increase resulting primarily from favorable manufacturing efficiencies of auxiliary fuel tanks and power units; and . a $2.6 million increase resulting, in part, from improved operating results subsequent to our 1999 restructuring which included our exit from the manufacturing business. While not affecting the comparison of 1999 to 2000 results, we charged $2.0 million to the accrued liability established in 1999 for such restructuring; no adjustments have been made to our original 1999 estimates. CORPORATE. EBITDA decreased by $0.5 million, or 11.6% over the prior year, due to increased spending for sales and marketing programs during the first two quarters of 2000. INTEREST EXPENSE. Interest expense increased $10.1 million to $30.0 million for the nine months ended September 30, 2000, from $19.9 million for the same period last year. Interest expense increased: . $8.2 million due to higher debt levels associated with our acquisition of companies during 1999 and 2000; and . $1.9 million due to higher average interest rates charged during 2000. PROVISION FOR INCOME TAXES. The provision for income taxes differs from the amount determined by applying the applicable U.S. statutory federal rate to the income before income taxes primarily due to the effects of state and foreign income taxes and non-deductible expenses, principally goodwill amortization. The difference in the effective tax rates between periods is mostly a result of the relationship of non-deductible expenses to income before income taxes. NET INCOME (LOSS). Net income increased $3.1 million to $3.6 million for the nine months ended September 30, 2000 compared to $0.5 million for the same period in 1999. 22 NET INCOME APPLICABLE TO COMMON STOCKHOLDER. Net income applicable to DeCrane Holdings, our common stockholder, increased $2.1 million to $2.6 million for the nine months ended September 30, 2000 compared to $0.5 million for the same period in 1999. The net increase is attributable to: . a $3.1 million increase in net income; offset by . a $1.0 million increase in accrued dividends resulting from DeCrane Aircraft's issuance of 16% mandatorily redeemable preferred stock on June 30, 2000 BOOKINGS. Bookings increased $35.6 million, or 15.7%, to $262.0 million for the nine months ended September 30, 2000 compared to $226.4 million for the same period in 1999. The increase in bookings for 2000 results from: . a $15.7 million increase associated with companies we acquired in 1999 and 2000; and . a $19.9 million increase related to business growth, principally in Cabin Management's furniture product lines. LIQUIDITY AND CAPITAL RESOURCES We have required cash primarily to fund acquisitions and, to a lesser extent, to fund capital expenditures and for working capital. Our principal sources of liquidity have been cash flow from operations, third party borrowings and the issuance of common and preferred stock. For the nine months ended September 30, 2000, we used $2.2 million of cash for operating activities, which is the net of $29.7 million of cash generated from operations after adding back depreciation, amortization and other noncash items, $30.8 million used for working capital and $1.1 million resulting from a decrease in other liabilities. The following factors contributed to the $30.8 million working capital increase: . a $15.9 million accounts receivable increase due to higher revenues, timing differences relating to completing of projects and the associated collection; . a $9.0 million increase in inventory due to longer production lead times and inventory level increases to meet current and projected revenue growth; . a $1.2 million increase in prepaid and other assets; and . a $5.7 million net decrease in current liabilities; offset by . a $1.0 million increase in income taxes payable due to higher current taxable income. Cash used for investing activities was $104.8 million for the nine months ended September 30, 2000, and consisted of: . $57.0 million for our Carl Booth, ERDA and Coltech acquisitions; . $30.1 million for contingent consideration earned in 1999 and paid in 2000; and . $17.7 million for capital expenditures, including $5.7 million for the purchase of a furniture manufacturing facility for our Cabin Management Group. We anticipate spending $21.4 million for capital expenditures in 2000. Net cash provided by financing activities was $101.0 million for the nine months ended September 30, 2000 and was primarily used to fund our acquisitions. We obtained these funds by borrowing $71.4 million under our senior credit facility, selling $25.0 million of 16% mandatorily redeemable preferred stock and a $8.0 million capital contribution from DeCrane Holdings. We used $4.1 million to make principal payments on our senior term debt, capitalized leases and other debt, and paid $2.0 million of financing costs. 23 At September 30, 2000, senior credit facility borrowings totaling $281.5 million are at variable interest rates based on defined margins over the current prime or Euro-Dollar rates. At September 30, 2000 we had $86.3 million of working capital and had $18.1 million of borrowings available under our working capital credit facility and $15.5 million available under our acquisition credit facility. Although we cannot be certain, we believe that operating cash flow, together with borrowings under our bank credit facility, will be sufficient to meet our future short- and long-term operating expenses, working capital requirements, capital expenditures and debt service obligations for the next twelve months. However, our ability to pay principal or interest, to refinance our debt and to satisfy our other debt obligations will depend on our future operating performance. We will be affected by economic, financial, competitive, legislative, regulatory, business and other factors beyond our control. In addition, we are continually considering acquisitions that complement or expand our existing businesses or that may enable us to expand into new markets. Future acquisitions may require additional debt, equity financing or both. We may not be able to obtain any additional financing on acceptable terms. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to various market risks, including interest rates and changes in foreign currency exchange rates. Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates and foreign currency exchange rates. From time to time we use derivative financial instruments to manage and reduce risks associated with these factors. We do not enter into derivatives or other financial instruments for trading or speculative purposes. INTEREST RATE RISK. A significant portion of our capital structure is comprised of long-term variable- and fixed-rate debt. Market risk related to our variable-rate debt is estimated as the potential decrease in pre-tax earnings resulting from an increase in interest rates. The interest rates applicable to variable-rate debt are, at our option, based on defined margins over the current prime or Euro-Dollar rates. At September 30, 2000, the current prime rate was 9.50% and the current Euro-Dollar rate was 6.62%. Based on $281.5 million of variable-rate debt outstanding as of September 30, 2000, a hypothetical one percent rise in interest rates, to 10.50% for prime rate borrowings and 7.62% for Euro-Dollar borrowings, would reduce our pre-tax earnings by $2.8 million annually. Prior to December 31, 1997, we purchased interest rate cap contracts to limit our exposure related to rising interest rates on our variable-rate debt. While we have not entered into similar contracts since that date, we may do so in the future depending on our assessment of future interest rate trends. The estimated fair value of our $100.0 million fixed-rate long-term debt is approximately $92.0 million at September 30, 2000. Market risk related to our fixed-rate debt is deemed to be the potential increase in fair value resulting from a decrease in interest rates. For example, a hypothetical ten percent decrease in the interest rates, from 12.0% to 10.8%, would increase the fair value of our fixed-rate debt by approximately $7.0 million. FOREIGN CURRENCY EXCHANGE RATE RISK. Our foreign customers are located in various parts of the world, primarily Western Europe, the Far East and Canada, and two of our subsidiaries operate in Western Europe. To limit our foreign currency exchange rate risk related to sales to our customers, orders are primarily valued and sold in U.S. dollars. From time to time we have entered into forward foreign exchange contracts to limit our exposure related to foreign inventory procurement and operating costs. However, while we have not entered into any such contracts since 1998 and no such contracts are open as of September 30, 2000, we may do so in the future depending on our assessment of future foreign exchange rate trends. 24 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Some of the statements in this report discuss future expectations, beliefs or strategies, projections or other "forward-looking" information. These statements are subject to known and unknown risks. Many factors could cause actual company results, performance or achievements, or industry results, to be materially different from the projections expressed or implied by this report. We are vulnerable to a variety of risks that affect many businesses, such as: . fuel prices and general economic conditions that affect demand for aircraft and air travel, which in turn affect demand for our products and services; . our reliance on key customers and the adverse effect a significant decline in business from any one of them would have on our business; . changes in prevailing interest rates and the availability of financing to fund our plans for continued growth; . competition from larger companies; . Federal Aviation Administration prescribed standards and licensing requirements, which apply many of the products and services we provide; . inflation, and other general changes in costs of goods and services; . liability and other claims asserted against us that exceeds our insurance coverage; . the ability to attract and retain qualified personnel; . labor disturbances; and . changes in operating strategy, or our acquisition and capital expenditure plans. We cannot predict any of the foregoing with certainty, so our forward-looking statements are not necessarily accurate predictions. Also, we are not obligated to update any of these statements, to reflect actual results or report later developments. You should not rely on our forward-looking statements as if they were certainties. INCORPORATION OF DOCUMENTS BY REFERENCE We have filed with the Securities and Exchange Commission, and are including within this report by referring to it here, our Form 10-K for the year ended December 31, 1999. The Form 10-K includes our audited 1999 financial statements, which we refer to in this report. You may read and copy any reports, statements or other information we file at the SEC's reference room in Washington D.C. Please call the SEC at (202) 942-8090 for further information on the operation of the reference rooms. You can also request copies of these documents, upon payment of a duplicating fee, by writing to the SEC, or review our SEC filings on the SEC's EDGAR web site, which can be found at http:\\www.sec.gov. You may also write or call us at our corporate office located at 2361 Rosecrans Avenue, Suite 180, El Segundo, California 90245. Our telephone number is (310) 725-9123. 25 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Refer to the legal proceedings described in Item 3 of our Form 10-K for the year ended December 31, 1999. SWISSAIR All of the actions related to the Swissair matter described in Item 3 of our Form 10-K have been transferred to the United States District Court for the Eastern District of Pennsylvania and assigned under MDL Case No. 1269 to the Honorable James T. Giles for coordinated or consolidated pretrial proceedings. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits 3.3.1 Certificate of Formation and Certificate of Merger for Aerospace Display Systems, LLC * 3.3.2 Limited Liability Company Operating Agreement for Aerospace Display Systems, LLC * 3.19.1 Certificate of Formation and Certificate of Merger for Custom Woodwork & Plastics, LLC * 3.19.2 Limited Liability Company Operating Agreements for Custom Woodwork & Plastics, LLC * 3.25.1 Certificate of Formation and Certificate of Amendment of Carl F. Booth & Co., LLC * 3.25.2 Limited Liability Company Agreement of Carl F. Booth & Co., LLC * 3.26.1 Restated Articles of Incorporation of ERDA, Inc. * 3.26.2 Bylaws of ERDA, Inc. (formerly ERDA Acquisition Co., Inc.) * 3.27.1 Articles of Incorporation of Coltech, Inc. ** 3.27.2 Bylaws of Coltech, Inc. ** 4.1.3 Supplemental Indenture to be dated August 5, 1999 among CWP Acquisition, Inc. d/b/a Custom Woodwork & Plastics, Inc., the other guarantors under the Indenture, DeCrane Aircraft and State Street Bank and Trust Company ** 4.1.4 Supplemental Indenture to be dated October 6, 1999 among PCI Acquisition Co., Inc. d/b/a PCI Newco, Inc., the other guarantors under the Indenture, DeCrane Aircraft and State Street Bank and Trust Company ** 4.1.5 Supplemental Indenture to be dated October 8, 1999 among International Custom Interiors, Inc., the other guarantors under the Indenture, DeCrane Aircraft and State Street Bank and Trust Company ** 4.1.6 Supplemental Indenture to be dated December 17, 1999 among DAH-IP Acquisition, L.P. d/b/a Infinity Partners, L.P., DAH-IP Holdings, Inc., DAH-IP Infinity, Inc., the other guarantors under the Indenture, DeCrane Aircraft and State Street Bank and Trust Company ** 4.1.7 Supplemental Indenture to be dated May 11, 2000 among Booth Acquisition, LLC, the other guarantors under the Indenture, DeCrane Aircraft and State Street Bank and Trust Company ** 4.1.8 Supplemental Indenture to be dated June 16, 2000 among DeCrane Aircraft Furniture Co., L.P., the other guarantors under the Indenture, DeCrane Aircraft and State Street Bank and Trust Company ** 4.1.9 Supplemental Indenture to be dated June 30, 2000 among ERDA, Inc., the other guarantors under the Indenture, DeCrane Aircraft and State Street Bank and Trust Company ** 4.1.10 Supplemental Indenture to be dated August 31, 2000 among Coltech, Inc., the other guarantors under the Indenture, DeCrane Aircraft and State Street Bank and Trust Company ** 4.6 Certificate of Designations, Preferences and Rights of 16% Senior Redeemable Exchangeable Preferred Stock due 2009 * 4.6.1 Amendment to the Certificate of Designations, Preferences and Rights of 16% Senior Redeemable Exchangeable Preferred Stock due 2009 dated October 5, 2000 **
26 4.7 Senior Preferred Stock Registration Rights Agreement dated as of June 30, 2000 among DeCrane Aircraft Holdings, Inc. and the Holders of Senior Preferred Stock * 4.7.1 Amendment No. 1 to the Senior Preferred Stock Registration Rights Agreement dated as of June 30, 2000 among DeCrane Aircraft Holdings, Inc. and the Holders of Senior Preferred Stock dated October 6, 2000 ** 10.1 Securities Purchase Agreement dated as of June 30, 2000 among DeCrane Aircraft Holdings, Inc., DeCrane Holdings Co. and the purchasers named therein * 10.2 Amended and Restated Investors' Agreement dated as of October 6, 2000 by and among DeCrane Holdings Co., DeCrane Aircraft Holdings, Inc. and the stockholders named therein ** 10.10.3 Third Amended and Restated Credit Agreement dated as of May 11, 2000 among DeCrane Aircraft Holdings, Inc., the lenders listed therein, DLJ Capital Funding, Inc., as syndication agent, and Bank One NA, as administrative agent * 10.10.3.1 First Amendment to the Third Amended and Restated Credit Agreement dated as of May 11, 2000 among DeCrane Aircraft, the lenders listed therein, DLJ Capital Funding, Inc., as syndication agent, and Bank One NA, as administrative agent ** 10.22 Executive Deferred Compensation Plan * 21.1 List of Subsidiaries of Registrant ** 27 Financial Data Schedule **
- ---------------- * Previously filed ** Filed herewith b. Reports on Form 8-K . On May 25, 2000, we filed a Form 8-K dated May 11, 2000 regarding our acquisition of Carl F. Booth & Co., Inc. . On June 16, 2000, we filed Amendment No. 1 to our Form 8-K dated May 11, 2000 regarding our acquisition of Carl F. Booth & Co., Inc. . On July 13, 2000, we filed a Form 8-K dated June 30, 2000 regarding our acquisition of ERDA, Inc. . On August 2, 2000 we filed Amendment No. 1 to our Form 8-K dated June 30, 2000 regarding our acquisition of ERDA, Inc. 27 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DECRANE AIRCRAFT HOLDINGS, INC. (Registrant) November 14, 2000 By: /s/ RICHARD J. KAPLAN --------------------------- Name: Richard J. Kaplan Title: Senior Vice President, Chief Financial Officer, Secretary, Treasurer and Director 28 EX-3.27-1 2 a2029395zex-3_271.txt EXHIBIT 3.27-1 ARTICLES OF INCORPORATION Exhibit 3.27.1 OF COLTECH, INC. The undersigned natural person of the age of 18 years or more does hereby adopt the following Articles of Incorporation for such corporation: ARTICLE I. NAME The name of this corporation is COLTECH, INC. ARTICLE II. DURATION The period of its duration shall be perpetual. ARTICLE III. PURPOSE OR PURPOSES The purpose or purposes for which this corporation is organized are: (a) To conduct a communications manufacturing, and consultant business; (b) To purchase, receive by way of gift, subscribe for, invest in, and in all other ways acquire, import, lease, possess, maintain, handle on consignment, own, hold for investment or otherwise use, enjoy, exercise, operate, manage, conduct, perform, make, borrow, contract in respect of, trade and deal in, sell, exchange, let, lend, export, mortgage, pledge, deed in trust, hypothecate, encumber, transfer, assign, and in all other ways dispose of, design, develop, invent, improve, equip, repair, alter, fabricate, assemble, build, construct, operate, manufacture, plant, cultivate, produce, market, and in all other ways (whether like or unlike any of the foregoing), deal in and with property of every kind and character, real, personal, or mixed, tangible or intangible, wherever situated and however held, including, but not limited to, money, credits, chooses in action, securities, stocks, bonds, warrants, script, certificates, debentures, mortgages, notes, commercial paper, and other obligations and evidences of indebtedness of any government or subdivision or agency thereof, documents of title, and accompanying rights, and every other kind and character of personal property, real property (improved or unimproved), and the products and avails thereof, and every character of interest therein and appurtenance thereto, including, but not limited thereto, mineral, oil, gas and water rights, all or any part of any going business and its incidents, franchises, subsidies, charters, concessions, grants, rights, powers, or privileges, granted or conferred by any government or subdivision or agency thereof, and any interest in respect thereof all of the powers, rights, privileges, and immunities of individual owners or holders thereof; 1 (c) To hire and employ agents, servants, and employees, to enter into agreements of employment and collective bargaining agreements, and to act as agent, contractor, factor, or otherwise, either alone or in company To hire and with others; (d) To promote or aid in any manner, financially or otherwise, any person, firm, association, or corporation; (e) (i) To let concessions to others to do any of the things that this corporation is empowered to do, and to enter into, make, perform, and carry out, contracts and arrangements of every kind and character with any person, firm, association, or corporation, or any government or authority or subdivision or agency thereof; (e) (ii) This corporation cannot act as a trustee in any capacity; (e) (iii) This corporation does not have a primary purpose for the ownership of land but it shall have the secondary purpose for the ownership of land-to,be used in connection with its business operation; (f) To carry on any business whatsoever that this corporation may deem proper or convenient in connection with any of the foregoing purposes or otherwise, or that it may deem calculated, directly or indirectly, to improve the interests of this corporation, and to have and to exercise all powers conferred by the laws of the State of Texas on corporations formed under the laws pursuant to which and under which this corporation is formed, as such laws are now in effect or may at any time hereafter be amended, and to do any and all things hereinabove set forth to the same extent and as fully as natural persons might do or could do, either alone or in connection with other persons, firms. associations, or corporations, and in any part of the world. The foregoing statement of purposes shall be construed as a statement of both purposes and powers, shall be liberally construed in aid of the powers of this corporation, and the powers and purposes stated in each clause shall, except where otherwise stated, he in nowise limited or restricted by any term or provision of any other clause, and shall be regarded not only as independent purposes, but the purposes and powers stated shall be construed distributively as each object expressed, and the enumeration as to specific powers shall not be construed as to limit in any manner the aforesaid general powers, but are in furtherance of, and in addition to and not in limitation of said gcneral powers. ARTICLE IV. CAPITALIZATION This corporation is authorized to issue only one class of shares of stock. The total number of shares that this corporation is authorized to issue is one thousand (1,000) shares of common stock. The aggregate par value of the shares is One Thousand Dollars ($1,000.00) and the par value of each share is Ten Cents ($.10). No distinction shall exist between the shares or between the shareholders thereof. 2 ARTICLE V. ISSUANCE OF SHARES This corporation will not commence business until it has received for the issuance of its shares consideration of the value of One Thousand Dollars ($1,000.00), consisting of money, labor done, or property actually received, which sum is not less than One Thousand Dollars ($1,000.00). ARTICLE VI. REGISTERED OFFICE The post office address of its initial registered office is 6202 Pineview Rd., Dallas, Texas 75248 and the name of its initial registered agent at such address is COLE E. CUNNINGHAM. ARTICLE VII. DIRECTORS (a) The number of Director constituting the intial Board of Directors is two, and the names and addresses of the persons who are to serve as Directors until the first annual meeting of the shareholders or until their successors are elected and qualified are: NAME: ADDRESS: Cole E. Cunningham 6202 Pineview Rd. Dallas, Texas 75248 Joan L. Cunningham 6202 Pineview Rd. Dallas, Texas 75248 (b) The number of Directors of this corporation set forth in clause (a) of this Article VII, shall constitute the authorized number of Directors until changed by an amendment of a bylaw duly adopted by the vote or written consent of the holders of a majority of the then outstanding shares of stock of this corporation. ARTICLE VIII. INCORPORATOR The name and address of the incorporator is: NAME: ADDRESS: Ronald L. Hendricks 1605 Cross Bend Road 3 IN WITNESS WHEREOF, for the purpose of forming this corporation under the laws of the State of Texas, I, the undersigned, constituting the incorporator of this corporation, have executed these Articles of Incorporation this 14th day of May, 1982. /S/ RONALD L. HENDRICKS ------------------------------- INCORPORATOR STATE OF TEXAS COUNTY OF DALLAS I, Nancy Moore, Notary Public, do hereby certify that on this 14th day of May, 1982, personally appeared before me Ronald L. Hendricks, who being by me sworn, declared that he is person who signed the foregoing document as the incorporator, and that the statements made therein contained are true. /S/ NANCY MOORE ------------------------------- NANCY MOORE, Notary Public in and for Dollas County, Texas 4 EX-3.27-2 3 a2029395zex-3_272.txt EXHIBIT 3.27-2 BY-LAWS EXHIBIT 3.27.2 0F COLTECH, INC. ARTICILE I. OFFICES The principal office of the corporation in the State of Texas shall be located in the City Of Dallas, County of Dallas. The corporation may have such other offices, either within or without the State of Texas, as the Board of Directors may designate or as the business of the corporation may require from time to time. ARTICLE II. SHAREHOLDERS SECTION 1. Annual Meeting. The annual meeting of the shareholders shall be held on the second Friday in the month of September in each year, beginning with the year 1982 at the hour of 12:00 o'clock P.M., for the purpose of electing Directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Texas such meeting shall be held on the next succeeding business day. If the election of Directors shall not be held on the day designated herein for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as conveniently may be. SECTION 2. Special Meetings. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the President or by the Board of Directors, and shall be called by the President at the request the outstanding shares of the corporation entitled to vote at the meeting. SECTION 3. Place of Meeting. The Board of Directors may designate any place, either within or without the State of Texas unless otherwise prescribed by statute, as the place of meeting or for any annual meeting or for any special meeting called by the Board of Directors. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any place, either within or without the State of Texas unless otherwise prescribed by statute, as the place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal office of the corporation in the State of Texas. SECTION 4. Notice of Meeting. Written notice stating the place, day and hour of the meeting and in case of special meeting, the purpose or purposes for which the meeting is called, shall unless otherwise prescribed by statute be delivered not less than three (3) nor more than fourteen (14) days before the date of the meeting, either personally or by mail, by or at the direction of the President, or the Secretary, or the persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock transfer books of the corporation, with postage thereon prepaid. 1 SECTION 5. Closing of Transfer Books or Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment or declare any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case thirty (30) days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least forty-five (45) days and immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than forty-five (45) days and in case of a meeting of shareholders, not less than thirty (30) days prior to the date on which the particular action requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof. SECTION 6. Voting Lists. The officer or agent having charge of the stock transfer books for shares of the corporation shall make a complete list of the shareholders entitled to vote at each meeting of shareholders or any adjournment thereof, arranged held by each. Such list shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting for the purposes thereof. SECTION 7. Quorum. A majority of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented any, any business may be transacted which might have been transacted at the meeting as originally noticed. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. SECTION 8. Proxies. At all meetings of shareholders, a shareholder may vote in person or by proxy executed in writing by shareholder or by his duly authorized attorney in fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting. No proxy shall be valid alter six (6) months from the date of its execution, unless otherwise provided in the proxy. 2 SECTION 9. Voting of Shares. Subject to the provisions of Section 12 of this Article II, each outstanding share entitled to vote shal1 be entitled to one vote upon each matter submitted to a vote at a meeting of shareholders. SECTION 10. Voting of Shares by Certain Holders. Shares, officer, agent or proxy as the by-laws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine. Shares held by an administrator, executor, guardian or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name. Shares standing in the name of a receiver may be voted by such receiver. And shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority so to do be contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee. And thereafter the pledgee shall be entitled to vote the shares so transferred. Shares of its own stock belonging to the corporation shall not be voted, directly or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding shares at any given time. SECTION 11. Informal action by Shareholders. Unless otherwise provided by law, any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken shall be signed by all of the shareholders entitled to vote with respect to such action. SECTION 12. Cumulative Voting. Unless otherwise provided by law, at each election for Directors every shareholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are Directors to be elected and for whose election he has a right to vote, or to cumulate his votes by giving one candidate as many votes as the number of such Directors multiplied by the number of his shares shall equal, or by distributing such votes on the same principle among any number of candidates. ARTICLE III. BOARD OF DIRECTORS SECTION 1. General Powers. The business and affairs of the corporation shall be managed by its Board of Directors. SECTION 2. Number, Tenure and Qualifications. The number of directors of the corporation shall not be more than five (5) nor less than two (2). Each director shall hold office until the next annual meeting of shareholders and until his successor shall have been elected and qualified. 3 SECTION 3. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this by-law immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide by resolution the time and place for the holding of additional regular meetings without other notice than such resolution. SECTION 4. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the President or any two directors. The person or persons authorized to call special meetings of the Board of Directors may fix the place for holding a special meeting of the Board of Directors called by them. SECTION 5. Notice. Notice of any special meeting shall be given at least [text not legible] delivered personally or mailed to each director at his business address, or by telegram. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereof prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Any director may waive notice of any meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not 1awfully called or convened. SECTION 6. Quorum. A majority of the number of directors fixed by Section 2 of this Article III shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. SECTION 7. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. SECTION 8. Action Without a Meeting. Any action that may be taken by the Board of Directors at a meeting may be taken without a meeting if a consent in writing setting forth the action so to be taken shall be signed before such action by all of the Directors. SECTION 9. Vacancies. Any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of Directors. Unless otherwise provided by law. A director elected to [text not legible] predecessor in office. Any directorship to be filled by reason of an increase in the number of directors may be filled by election by the Board of Directors for a term of office continuing only until the next election of Directors by the shareholders. SECTION 10. Compensation. By resolution of the Board of the Directors, each Director may be paid his expenses, if any of attendance at each meeting of the Board of Directors, and may be paid a stated salary as director or a fixed sum for attendance at each meeting of the Board of Directors or both. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefore. 4 SECTION 11. Presumption of Assent. A director of the corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. ARTICLE IV. OFFICERS SECTION 1. Number. The officers of the corporation shall be a President, a Vice-President, a Secretary and a Treasurer, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. SECTION 2. Election and Term of Office. The officers of the corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. SECTION 3. Removal. Any officer or agent may be removed by the Board of Directors whenever in its judgment, the best interests of the corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. SECTION 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. SECTION 5. President. The President shall be the principal executive officer of the corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the corporation. He shall, when present preside at all meeting of the shareholders and of the Board of Directors. He may sign, with the Secretary or any other proper officer of the corporation thereunto authorized by the Board Directors, certificates for shares of the corporation, any deeds [text not legible] Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these By-Laws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. 5 SECTION 6. Vice-President. In the absence of the President or in event of his death, inability or refusal to act, the Vice-President shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Vice-President shall perform such other duties as from time to time may be assigned to him by President or by the Board of Directors. SECTION 7. Secretary. The Secretary shall: (a) keep the minutes of the proceedings or the shareholders and of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these By-Laws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents the execution which on behalf of the corporation under its seal is duly authorized; (d) keep a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (e) sign with the President, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general perform all duties incident to the office [text not legible] from time to time may be assigned to him by the President or by the Board of Directors. SECTION 8. Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name oil the corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of Article V of these By-Laws; and (c) in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the President or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum, and with such surety or sureties, as the Board of Directors shall determine. SECTION 9. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation. ARTICLE V. CONTRACTS, LOANS, CH-ICKS AND DEPOSITS SECTION 1. Contracts. The Board of Directors may authorize any officer or officers, agent or agents to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. SECTION 2. Loans. No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized a resolution of the Board of Directors. [text not legible] SECTION 3. Checks, drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be 6 signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. SECTION 4. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the Board of Directors may select. ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER SECTION 1. Certificates for Shares. Certificates representing shares of the corporation shall be in such form as shall be determined by the Board of Directors. Such certificates shall be signed by the President and by the Secretary or by such other officers authorized by law and by the Board of Directors so to do, and sealed with the corporate seal. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefore upon such terms and indemnity to the corporation as the Board of Directors may prescribe. SECTION 2. Transfer of Shares. Transfer of shares of the corporation shall be made only on the stock transfer books of the corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly-executed and filed with the Secretary of the corporation and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the corporation shall be deemed by the corporation to be the owner thereof for all purposes. ARTICLE VII. FISCAL YEAR The fiscal year of the corporation shall begin on the 1st day of June and end on the 31st day of May in each year. ARTICLE VIII. DIVIDENDS The Board of Directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its articles of incorporation. ARTICLE IX. CORPORATE SEAL The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation and the state of incorporation. 7 ARTICLE X. WAIVER OF NOTICE Unless otherwise provided by law, whenever any notice is required to be given to any shareholder or director of the corporation under the provisions of these By-Laws or under the provisions of the articles of incorporation or under the provisions of the Texas Business Corporation Act, a waiver thereof in writing, signed by the person or persons entitled to such [text not legible] the time stated therein shall be deemed equivalent to the giving of such notice. ARTICLE XI. AMENDMENTS These By-Laws may be altered, amended or repealed and new By-Laws may be adopted by the Board of Directors at any regular or special meeting of the Board of Directors. 8 EX-4.1-3 4 a2029395zex-4_13.txt EXHIBIT 4.1-3 SUPPLEMENTAL INDENTURE EXHIBIT 4.1.3 SUPPLEMENTAL INDENTURE (this "SUPPLEMENTAL INDENTURE"), dated as of August 5, 1999 among CWP Acquisition, Inc., a Delaware corporation d/b/a/ Custom Woodwork & Plastics, Inc. ("GUARANTOR"), a subsidiary of DeCrane Aircraft Holdings, Inc. (or its permitted successor), a Delaware corporation (the "ISSUER"), the other Guarantors (as defined in the Indenture referred to herein) and State Street Bank and Trust Company, as trustee under the Indenture referred to below (the "TRUSTEE"). W I T N E S S E T H WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture (the "INDENTURE"), dated as of October 5, 1998 providing for the issuance of an aggregate principal amount of up to $100.0 million of 12% Senior Subordinated Notes due 2008 (the "NOTES"); WHEREAS, the Indenture provides that under certain circumstances each Guarantor shall execute and deliver to the Trustee a supplemental indenture, pursuant to which the Guarantor shall unconditionally guarantee all of the Issuer's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "NOTE GUARANTEE"); and WHEREAS, pursuant to Section 9.06 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, each Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees as follows: (a) Along with all Guarantors named in the Indenture, to jointly and severally Guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of Issuer hereunder or thereunder, that: (i) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, is lawful, and all other obligations of the Issuer to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the 1 same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against Issuer, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (c) The following is hereby waived: diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever. (d) This Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture. (e) If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantors, or any Custodian, trustee, liquidator or other similar official acting in relation to either the Issuer or the Guarantors, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guarantor shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. (h) The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. (i) Pursuant to Section 11.03 of the Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article 11 of the Indenture shall result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. 3. EXECUTION AND DELIVERY. Each Guarantor agrees that the Note Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. 4. GUARANTOR MAY CONSOLIDATE ETC. ON CERTAIN TERMS. (a) No Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with such Guarantor unless: (i) subject to Section 5(a) hereof, the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) assumes all the obligations of such Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture and the Registration Rights Agreement; 2 (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) Issuer would, at the time of such transaction and after giving pro forma effect thereto and if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charger Coverage Ratio test set forth in Section 4.09 of the Indenture by virtue of Issuer's pro forma Cash Flow Coverage Ratio, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Cash Flow Coverage Ratio test set forth in Section 4.07 of the Indenture; PROVIDED THAT, the requirements of clause (iii) of this Section 4(a) will not apply in the case of a consolidation with or merger with or into the Issuer or another Guarantor. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture executed and delivered to the Trustee in the form of Exhibit E to the Indenture or otherwise satisfactory in form to the Trustee, of the Note Guarantee and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Guarantor, such successor Person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Issuer or another Guarantor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Issuer or another Guarantor. 5. RELEASES. (a) In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Guarantor, such Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Guarantor) will be released and relieved of any obligations under its Note Guarantee; PROVIDED that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation Section 4.10 of the Indenture. Upon delivery by the Issuer to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Issuer in accordance with the applicable provisions of the Indenture, including, without limitation, Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Note Guarantee. (b) Any Guarantor not released from its obligations under its Note Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 11 of the Indenture. 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guarantor, as such, shall have any liability for any obligations of the Issuer or any Guarantor under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and 3 releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by each Guarantor and the Issuer. SIGNATURES Dated as of August 5, 1999 DECRANE AIRCRAFT HOLDINGS, INC. BY: ------------------------------------ Name: Title: AEROSPACE DISPLAY SYSTEMS, INC. BY: ------------------------------------ Name: Title: 4 AUDIO INTERNATIONAL, INC. BY: ------------------------------------ Name: Title: AVTECH CORPORATION BY: ------------------------------------ Name: Title: CORY COMPONENTS, INC. BY: ------------------------------------ Name: Title: DETTMERS INDUSTRIES, INC. BY: ------------------------------------ Name: Title: 5 ELSINORE AEROSPACE SERVICES, INC. BY: ------------------------------------ Name: Title: ELSINORE ENGINEERING, INC. BY: ------------------------------------ Name: Title: HOLLINGSEAD INTERNATIONAL, INC. BY: ------------------------------------ Name: Title: TRI-STAR ELECTRONICS INTERNATIONAL, INC. BY: ------------------------------------ Name: Title: 6 PATS, INC. BY: ------------------------------------ Name: Title: PATRICK AIRCRAFT TANK SYSTEMS, INC. BY: ------------------------------------ Name: Title: PATS SUPPORT, INC. BY: ------------------------------------ Name: Title: PATS AIRCRAFT AND ENGINEERING CORPORATION BY: ------------------------------------ Name: Title: FLIGHT REFUELING, INC. BY: ------------------------------------ Name: Title: 7 CWP ACQUISITION, INC., d/b/a Custom Woodwork & Plastics, Inc. BY: ------------------------------------ Name: Title: STATE STREET BANK AND TRUST COMPANY BY: ------------------------------------ Name: Title: 8 EX-4.1-4 5 a2029395zex-4_14.txt EXHIBIT 4.1-4 SUPPLEMENTAL INDENTURE EXHIBIT 4.1.4 SUPPLEMENTAL INDENTURE (this "SUPPLEMENTAL INDENTURE"), dated as of October 6, 1999 among PCI Acquisition Co., Inc., a Kansas corporation d/b/a PCI Newco, Inc. ("GUARANTOR"), a subsidiary of DeCrane Aircraft Holdings, Inc. (or its permitted successor), a Delaware corporation (the "ISSUER"), the other Guarantors (as defined in the Indenture referred to herein) and State Street Bank and Trust Company, as trustee under the Indenture referred to below (the "TRUSTEE"). W I T N E S S E T H WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture (the "INDENTURE"), dated as of October 5, 1998 providing for the issuance of an aggregate principal amount of up to $100.0 million of 12% Senior Subordinated Notes due 2008 (the "NOTES"); WHEREAS, the Indenture provides that under certain circumstances each Guarantor shall execute and deliver to the Trustee a supplemental indenture, pursuant to which the Guarantor shall unconditionally guarantee all of the Issuer's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "NOTE GUARANTEE"); and WHEREAS, pursuant to Section 9.06 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, each Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees as follows: (a) Along with all Guarantors named in the Indenture, to jointly and severally Guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of Issuer hereunder or thereunder, that: (i) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, is lawful, and all other obligations of the Issuer to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the 1 same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against Issuer, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (c) The following is hereby waived: diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever. (d) This Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture. (e) If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantors, or any Custodian, trustee, liquidator or other similar official acting in relation to either the Issuer or the Guarantors, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guarantor shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. (h) The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. (i) Pursuant to Section 11.03 of the Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article 11 of the Indenture shall result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. 3. EXECUTION AND DELIVERY. Each Guarantor agrees that the Note Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. 4. GUARANTOR MAY CONSOLIDATE ETC. ON CERTAIN TERMS. (a) No Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with such Guarantor unless: (i) subject to Section 5(a) hereof, the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) assumes all the obligations of such Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture and the Registration Rights Agreement; 2 (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) Issuer would, at the time of such transaction and after giving pro forma effect thereto and if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charger Coverage Ratio test set forth in Section 4.09 of the Indenture by virtue of Issuer's pro forma Cash Flow Coverage Ratio, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Cash Flow Coverage Ratio test set forth in Section 4.07 of the Indenture; PROVIDED THAT, the requirements of clause (iii) of this Section 4(a) will not apply in the case of a consolidation with or merger with or into the Issuer or another Guarantor. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture executed and delivered to the Trustee in the form of Exhibit E to the Indenture or otherwise satisfactory in form to the Trustee, of the Note Guarantee and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Guarantor, such successor Person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Issuer or another Guarantor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Issuer or another Guarantor. 5. RELEASES. (a) In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Guarantor, such Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Guarantor) will be released and relieved of any obligations under its Note Guarantee; PROVIDED that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation Section 4.10 of the Indenture. Upon delivery by the Issuer to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Issuer in accordance with the applicable provisions of the Indenture, including, without limitation, Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Note Guarantee. (b) Any Guarantor not released from its obligations under its Note Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 11 of the Indenture. 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guarantor, as such, shall have any liability for any obligations of the Issuer or any Guarantor under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and 3 releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by each Guarantor and the Issuer. SIGNATURES Dated as of October 6, 1999 DECRANE AIRCRAFT HOLDINGS, INC. BY: _______________________ Name: Title: AEROSPACE DISPLAY SYSTEMS, INC. BY: _______________________ Name: Title: 4 AUDIO INTERNATIONAL, INC. BY: _______________________ Name: Title: AVTECH CORPORATION BY: _______________________ Name: Title: CORY COMPONENTS, INC. BY: _______________________ Name: Title: DETTMERS INDUSTRIES, INC. BY: _______________________ Name: Title: 5 ELSINORE AEROSPACE SERVICES, INC. BY: _________________________ Name: Title: ELSINORE ENGINEERING, INC. BY: _________________________ Name: Title: HOLLINGSEAD INTERNATIONAL, INC. BY: _________________________ Name: Title: TRI-STAR ELECTRONICS INTERNATIONAL, INC. BY: _________________________ Name: Title: 6 PATS, INC. BY: _________________________ Name: Title: PATRICK AIRCRAFT TANK SYSTEMS, INC. BY: _________________________ Name: Title: PATS SUPPORT, INC. BY: _________________________ Name: Title: PATS AIRCRAFT AND ENGINEERING CORPORATION BY: _________________________ Name: Title: FLIGHT REFUELING, INC. BY: _________________________ Name: Title: 7 CUSTOM WOODWORK & PLASTICS, INC. BY: _________________________ Name: Title: PCI ACQUISITION CO., INC., d/b/a PCI Newco, Inc. BY: _________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY BY: _________________________ Name: Title: 8 EX-4.1-5 6 a2029395zex-4_15.txt EXHIBIT 4.1-5 SUPPLEMENTAL INDENTURE Exhibit 4.1.5 SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of October 8, 1999 among International Custom Interiors, Inc., a Florida corporation ("Guarantor"), a subsidiary of DeCrane Aircraft Holdings, Inc. (or its permitted successor), a Delaware corporation (the "Issuer"), the other Guarantors (as defined in the Indenture referred to herein) and State Street Bank and Trust Company, as trustee under the Indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of October 5, 1998 providing for the issuance of an aggregate principal amount of up to $100.0 million of 12% Senior Subordinated Notes due 2008 (the "Notes"); WHEREAS, the Indenture provides that under certain circumstances each Guarantor shall execute and deliver to the Trustee a supplemental indenture, pursuant to which the Guarantor shall unconditionally guarantee all of the Issuer's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "Note Guarantee"); and WHEREAS, pursuant to Section 9.06 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, each Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees as follows: (a) Along with all Guarantors named in the Indenture, to jointly and severally Guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of Issuer hereunder or thereunder, that: (i) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, is lawful, and all other obligations of the Issuer to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against Issuer, any action to enforce the same or any other 1 circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (c) The following is hereby waived: diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever. (d) This Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture. (e) If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantors, or any Custodian, trustee, liquidator or other similar official acting in relation to either the Issuer or the Guarantors, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guarantor shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. (h) The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. (i) Pursuant to Section 11.03 of the Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article 11 of the Indenture shall result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. 3. EXECUTION AND DELIVERY. Each Guarantor agrees that the Note Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. 4. GUARANTOR MAY CONSOLIDATE ETC. ON CERTAIN TERMS. (a) No Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with such Guarantor unless: (i) subject to Section 5(a) hereof, the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) assumes all the obligations of such Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture and the Registration Rights Agreement; 2 (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) Issuer would, at the time of such transaction and after giving pro forma effect thereto and if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charger Coverage Ratio test set forth in Section 4.09 of the Indenture by virtue of Issuer's pro forma Cash Flow Coverage Ratio, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Cash Flow Coverage Ratio test set forth in Section 4.07 of the Indenture; provided that, the requirements of clause (iii) of this Section 4(a) will not apply in the case of a consolidation with or merger with or into the Issuer or another Guarantor. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture executed and delivered to the Trustee in the form of Exhibit E to the Indenture or otherwise satisfactory in form to the Trustee, of the Note Guarantee and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Guarantor, such successor Person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Issuer or another Guarantor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Issuer or another Guarantor. 5. RELEASES. (a) In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Guarantor, such Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation Section 4.10 of the Indenture. Upon delivery by the Issuer to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Issuer in accordance with the applicable provisions of the Indenture, including, without limitation, Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Note Guarantee. (b) Any Guarantor not released from its obligations under its Note Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 11 of the Indenture. 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guarantor, as such, shall have any liability for any obligations of the Issuer or any Guarantor under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and 3 releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by each Guarantor and the Issuer. SIGNATURES Dated as of October 8, 1999 DECRANE AIRCRAFT HOLDINGS, INC. BY: ______________________ Name: Title: AEROSPACE DISPLAY SYSTEMS, INC. BY: ______________________ Name: Title: 4 AUDIO INTERNATIONAL, INC. BY: ______________________ Name: Title: AVTECH CORPORATION BY: ______________________ Name: Title: CORY COMPONENTS, INC. BY: ______________________ Name: Title: DETTMERS INDUSTRIES, INC. BY: ______________________ Name: Title: 5 ELSINORE AEROSPACE SERVICES, INC. BY: ______________________ Name: Title: ELSINORE ENGINEERING, INC. BY: ______________________ Name: Title: HOLLINGSEAD INTERNATIONAL, INC. BY: ______________________ Name: Title: TRI-STAR ELECTRONICS INTERNATIONAL, INC. BY: ______________________ Name: Title: 6 PATS, INC. BY: __________________________ Name: Title: PATRICK AIRCRAFT TANK SYSTEMS, INC. BY: __________________________ Name: Title: PATS SUPPORT, INC. BY: __________________________ Name: Title: PATS AIRCRAFT AND ENGINEERING CORPORATION BY: __________________________ Name: Title: FLIGHT REFUELING, INC. BY: __________________________ Name: Title: 7 CUSTOM WOODWORK & PLASTICS, INC. BY: __________________________ Name: Title: PCI ACQUISITION CO., INC., d/b/a PCI Newco, Inc. BY: __________________________ Name: Title: INTERNATIONAL CUSTOM INTERIORS, INC. BY: __________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY BY: __________________________ Name: Title: 8 EX-4.1-6 7 a2029395zex-4_16.txt EXHIBIT 4.1-6 SUPPLEMENTAL INDENTURE EXHIBIT 4.1.6 SUPPLEMENTAL INDENTURE (this "SUPPLEMENTAL INDENTURE"), dated as of December 17, 1999 among DAH-IP Acquisition, L.P., a Texas limited partenrship d/b/a/ Infinity Partners, L.P., DAH-IP Holdings, Inc., a Delaware corporation., and DAH-IP Infinity, Inc., a Delaware corporation (each a "GUARANTOR" and collectively, "GUARANTORS"), a subsidiary of DeCrane Aircraft Holdings, Inc. (or its permitted successor), a Delaware corporation (the "ISSUER"), the other Guarantors (as defined in the Indenture referred to herein) and State Street Bank and Trust Company, as trustee under the Indenture referred to below (the "TRUSTEE"). W I T N E S S E T H WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture (the "INDENTURE"), dated as of October 5, 1998 providing for the issuance of an aggregate principal amount of up to $100.0 million of 12% Senior Subordinated Notes due 2008 (the "NOTES"); WHEREAS, the Indenture provides that under certain circumstances each Guarantor shall execute and deliver to the Trustee a supplemental indenture, pursuant to which the Guarantor shall unconditionally guarantee all of the Issuer's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "NOTE GUARANTEE"); and WHEREAS, pursuant to Section 9.06 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, each Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees as follows: (a) Along with all Guarantors named in the Indenture, to jointly and severally Guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of Issuer hereunder or thereunder, that: (i) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, is lawful, and all other obligations of the Issuer to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. 1 (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against Issuer, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (c) The following is hereby waived: diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever. (d) This Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture. (e) If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantors, or any Custodian, trustee, liquidator or other similar official acting in relation to either the Issuer or the Guarantors, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guarantor shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. (h) The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. (i) Pursuant to Section 11.03 of the Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article 11 of the Indenture shall result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. 3. EXECUTION AND DELIVERY. Each Guarantor agrees that the Note Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. 4. GUARANTOR MAY CONSOLIDATE ETC. ON CERTAIN TERMS. (a) No Guarantor may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with such Guarantor unless: (i) subject to Section 5(a) hereof, the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) assumes all the obligations of such Guarantor pursuant to a supplemental indenture in form and substance reasonably 2 satisfactory to the Trustee, under the Notes, the Indenture and the Registration Rights Agreement; (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) Issuer would, at the time of such transaction and after giving pro forma effect thereto and if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charger Coverage Ratio test set forth in Section 4.09 of the Indenture by virtue of Issuer's pro forma Cash Flow Coverage Ratio, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Cash Flow Coverage Ratio test set forth in Section 4.07 of the Indenture; PROVIDED THAT, the requirements of clause (iii) of this Section 4(a) will not apply in the case of a consolidation with or merger with or into the Issuer or another Guarantor. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture executed and delivered to the Trustee in the form of Exhibit E to the Indenture or otherwise satisfactory in form to the Trustee, of the Note Guarantee and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Guarantor, such successor Person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into the Issuer or another Guarantor, or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Issuer or another Guarantor. 5. RELEASES. (a) In the event of a sale or other disposition of all of the assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Guarantor, such Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of such Guarantor) will be released and relieved of any obligations under its Note Guarantee; PROVIDED that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation Section 4.10 of the Indenture. Upon delivery by the Issuer to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Issuer in accordance with the applicable provisions of the Indenture, including, without limitation, Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Note Guarantee. (b) Any Guarantor not released from its obligations under its Note Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 11 of the Indenture. 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guarantor, as such, shall have any liability for any obligations of the Issuer or any Guarantor under the Notes, any Note Guarantees, 3 the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by each Guarantor and the Issuer. SIGNATURES Dated as of December 17, 1999 DECRANE AIRCRAFT HOLDINGS, INC. BY: ____________________________ Name: Title: AEROSPACE DISPLAY SYSTEMS, INC. BY: ____________________________ Name: Title: 4 AUDIO INTERNATIONAL, INC. BY: ____________________________ Name: Title: AVTECH CORPORATION BY: ____________________________ Name: Title: CORY COMPONENTS, INC. BY: ____________________________ Name: Title: DETTMERS INDUSTRIES, INC. BY: ____________________________ Name: Title: 5 ELSINORE AEROSPACE SERVICES, INC. BY: ____________________________ Name: Title: ELSINORE ENGINEERING, INC. BY: ____________________________ Name: Title: HOLLINGSEAD INTERNATIONAL, INC. BY: ____________________________ Name: Title: TRI-STAR ELECTRONICS INTERNATIONAL, INC. BY: ____________________________ Name: Title: 6 PATS, INC. BY: ____________________________ Name: Title: PATRICK AIRCRAFT TANK SYSTEMS, INC. BY: ____________________________ Name: Title: PATS SUPPORT, INC. BY: ____________________________ Name: Title: PATS AIRCRAFT AND ENGINEERING CORPORATION BY: ____________________________ Name: Title: FLIGHT REFUELING, INC. BY: ____________________________ Name: Title: 7 CUSTOM WOODWORK & PLASTICS, INC. BY: ____________________________ Name: Title: PCI NEWCO, INC. BY: ____________________________ Name: Title: INTERNATIONAL CUSTOM INTERIORS, INC. BY: ____________________________ Name: Title: DAH-IP ACQUISITION, L.P., a Texas limited partnership, d/b/a Infinity Partners, L.P. By: DAH-IP Holdings, Inc., a Delaware corporation, its general partner By: _________________________ Name: Title: 8 DAH-IP HOLDINGS, INC. By: _________________________ Name: Title: DAH-IP INFINITY, INC. By: _________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY BY: _________________________ Name: Title: 9 EX-4.1-7 8 a2029395zex-4_17.txt EXHIBIT 4.1-7 SUPPLEMENTAL INDENTURE Exhibit 4.1.7 SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of May 11, 2000 among Booth Acquisition, LLC, a Delaware limited liability company ("Guarantor"), a subsidiary of DeCrane Aircraft Holdings, Inc. (or its permitted successor), a Delaware corporation (the "Issuer"), the other Guarantors (as defined in the Indenture referred to herein) and State Street Bank and Trust Company, as trustee under the Indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of October 5, 1998 providing for the issuance of an aggregate principal amount of up to $100.0 million of 12% Senior Subordinated Notes due 2008 (the "Notes"); WHEREAS, the Indenture provides that under certain circumstances Guarantor shall execute and deliver to the Trustee a supplemental indenture, pursuant to which Guarantor shall unconditionally guarantee all of the Issuer's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "Note Guarantee"); and WHEREAS, pursuant to Section 9.06 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees as follows: (a) Along with all Guarantors named in the Indenture, to jointly and severally Guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of Issuer hereunder or thereunder, that: (i) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, is lawful, and all other obligations of the Issuer to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against Issuer, any action to enforce the same or any other 1 circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (c) The following is hereby waived: diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever. (d) This Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture. (e) If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantor, or any Custodian, trustee, liquidator or other similar official acting in relation to either the Issuer or the Guarantor, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guarantor shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of this Note Guarantee. (h) The Guarantor shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. (i) Pursuant to Section 11.03 of the Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article 11 of the Indenture shall result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. 3. EXECUTION AND DELIVERY. The Guarantor agrees that the Note Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. 4. GUARANTOR MAY CONSOLIDATE ETC. ON CERTAIN TERMS. (a) Guarantor may not consolidate with or merge with or into (whether or not Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with Guarantor unless: (i) subject to Section 5(a) hereof, the Person formed by or surviving any such consolidation or merger (if other than Guarantor) assumes all the obligations of Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture and the Registration Rights Agreement; 2 (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) Issuer would, at the time of such transaction and after giving pro forma effect thereto and if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09 of the Indenture by virtue of Issuer's pro forma Cash Flow Coverage Ratio, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Cash Flow Coverage Ratio test set forth in Section 4.07 of the Indenture; provided that, the requirements of clause (iii) of this Section 4(a) will not apply in the case of a consolidation with or merger with or into the Issuer or another Guarantor. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture executed and delivered to the Trustee in the form of Exhibit E to the Indenture or otherwise satisfactory in form to the Trustee, of the Note Guarantee and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Guarantor, such successor Person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of Guarantor with or into the Issuer or another Guarantor, or shall prevent any sale or conveyance of the property of Guarantor as an entirety or substantially as an entirety to the Issuer or another Guarantor. 5. RELEASES. (a) In the event of a sale or other disposition of all of the assets of Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of Guarantor, Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation Section 4.10 of the Indenture. Upon delivery by the Issuer to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Issuer in accordance with the applicable provisions of the Indenture, including, without limitation, Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of Guarantor from its obligations under its Note Guarantee. (b) Any Guarantor not released from its obligations under its Note Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 11 of the Indenture. 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guarantor, as such, shall have any liability for any obligations of the Issuer or Guarantor under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and 3 releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by Guarantor and the Issuer. SIGNATURES Dated as of May 11, 2000 DECRANE AIRCRAFT HOLDINGS, INC. BY: __________________________ Name: Title: AEROSPACE DISPLAY SYSTEMS, INC. BY: __________________________ Name: Title: AUDIO INTERNATIONAL, INC. BY: __________________________ Name: Title: 4 AVTECH CORPORATION BY: __________________________ Name: Title: CORY COMPONENTS, INC. BY: __________________________ Name: Title: DETTMERS INDUSTRIES, INC. BY: __________________________ Name: Title: ELSINORE AEROSPACE SERVICES, INC. BY: __________________________ Name: Title: 5 ELSINORE ENGINEERING, INC. BY: __________________________ Name: Title: HOLLINGSEAD INTERNATIONAL, INC. BY: __________________________ Name: Title: TRI-STAR ELECTRONICS INTERNATIONAL, INC. BY: __________________________ Name: Title: PATS, INC. BY: __________________________ Name: Title: 6 PATRICK AIRCRAFT TANK SYSTEMS, INC. BY: __________________________ Name: Title: PATS SUPPORT, INC. BY: __________________________ Name: Title: PATS AIRCRAFT AND ENGINEERING CORPORATION BY: __________________________ Name: Title: FLIGHT REFUELING, INC. BY: __________________________ Name: Title: CUSTOM WOODWORK & PLASTICS, INC. BY: __________________________ Name: Title: 7 PCI NEWCO, INC. BY: __________________________ Name: Title: INTERNATIONAL CUSTOM INTERIORS, INC. BY: __________________________ Name: Title: DAH-IP ACQUISITION, L.P., a Texas limited partnership, d/b/a Infinity Partners, L.P. By: DAH-IP Holdings, Inc., a Delaware corporation, its general partner By: _________________________ Name: Title: DAH-IP HOLDINGS, INC. By: _________________________ Name: Title: 8 DAH-IP INFINITY, INC. By: _________________________ Name: Title: BOOTH ACQUISITION, LLC., d/b/a/ Carl F. Booth & Co., LLC By: _________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY BY: _________________________ Name: Title: 9 EX-4.1-8 9 a2029395zex-4_18.txt EXHIBIT 4.1-8 SUPPLEMENTAL INDENTURE EXHIBIT 4.1.8 (DeCrane Aircraft Furniture Co., L.P.) SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of June 16, 2000 among DeCrane Aircraft Furniture Co., L.P. a Texas limited partnership ("Guarantor"), a subsidiary of DeCrane Aircraft Holdings, Inc. (or its permitted successor), a Delaware corporation (the "Issuer"), the other Guarantors (as defined in the Indenture referred to herein) and State Street Bank and Trust Company, as trustee under the Indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of October 5, 1998 providing for the issuance of an aggregate principal amount of up to $100.0 million of 12% Senior Subordinated Notes due 2008 (the "Notes"); WHEREAS, the Indenture provides that under certain circumstances Guarantor shall execute and deliver to the Trustee a supplemental indenture, pursuant to which Guarantor shall unconditionally guarantee all of the Issuer's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "Note Guarantee"); and WHEREAS, pursuant to Section 9.06 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees as follows: (a) Along with all Guarantors named in the Indenture, to jointly and severally Guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of Issuer hereunder or thereunder, that: (i) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, is lawful, and all other obligations of the Issuer to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against Issuer, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. 1 (c) The following is hereby waived: diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever. (d) This Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture. (e) If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantor, or any Custodian, trustee, liquidator or other similar official acting in relation to either the Issuer or the Guarantor, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guarantor shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of this Note Guarantee. (h) The Guarantor shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. (i) Pursuant to Section 11.03 of the Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article 11 of the Indenture shall result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. 3. EXECUTION AND DELIVERY. The Guarantor agrees that the Note Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. 4. GUARANTOR MAY CONSOLIDATE ETC. ON CERTAIN TERMS. (a) Guarantor may not consolidate with or merge with or into (whether or not Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with Guarantor unless: (i) subject to Section 5(a) hereof, the Person formed by or surviving any such consolidation or merger (if other than Guarantor) assumes all the obligations of Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture and the Registration Rights Agreement; (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) Issuer would, at the time of such transaction and after giving pro forma effect thereto and if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09 of the Indenture by virtue of 2 Issuer's pro forma Cash Flow Coverage Ratio, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Cash Flow Coverage Ratio test set forth in Section 4.07 of the Indenture; provided that, the requirements of clause (iii) of this Section 4(a) will not apply in the case of a consolidation with or merger with or into the Issuer or another Guarantor. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture executed and delivered to the Trustee in the form of Exhibit E to the Indenture or otherwise satisfactory in form to the Trustee, of the Note Guarantee and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Guarantor, such successor Person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of Guarantor with or into the Issuer or another Guarantor, or shall prevent any sale or conveyance of the property of Guarantor as an entirety or substantially as an entirety to the Issuer or another Guarantor. 5. RELEASES. (a) In the event of a sale or other disposition of all of the assets of Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of Guarantor, Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation Section 4.10 of the Indenture. Upon delivery by the Issuer to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Issuer in accordance with the applicable provisions of the Indenture, including, without limitation, Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of Guarantor from its obligations under its Note Guarantee. (b) Any Guarantor not released from its obligations under its Note Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 11 of the Indenture. 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guarantor, as such, shall have any liability for any obligations of the Issuer or Guarantor under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 3 8. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by Guarantor and the Issuer. SIGNATURES Dated as of June 16, 2000 DECRANE AIRCRAFT HOLDINGS, INC. BY: ___________________________ Name: Title: AEROSPACE DISPLAY SYSTEMS, INC. BY: ___________________________ Name: Title: AUDIO INTERNATIONAL, INC. BY: ___________________________ Name: Title: AVTECH CORPORATION BY: ___________________________ Name: Title: CORY COMPONENTS, INC. BY: ___________________________ Name: Title: 4 DETTMERS INDUSTRIES, INC. BY: ___________________________ Name: Title: ELSINORE AEROSPACE SERVICES, INC. BY: ___________________________ Name: Title: ELSINORE ENGINEERING, INC. BY: ___________________________ Name: Title: HOLLINGSEAD INTERNATIONAL, INC. BY: ___________________________ Name: Title: TRI-STAR ELECTRONICS INTERNATIONAL, INC. BY: ___________________________ Name: Title: PATS, INC. BY: ___________________________ Name: Title: PATRICK AIRCRAFT TANK SYSTEMS, INC. BY: ___________________________ Name: Title: 5 PATS SUPPORT, INC. BY: ___________________________ Name: Title: PATS AIRCRAFT AND ENGINEERING CORPORATION BY: ___________________________ Name: Title: FLIGHT REFUELING, INC. BY: ___________________________ Name: Title: CUSTOM WOODWORK & PLASTICS, INC. BY: ___________________________ Name: Title: PCI NEWCO, INC. BY: ___________________________ Name: Title: INTERNATIONAL CUSTOM INTERIORS, INC. BY: ___________________________ Name: Title: THE INFINITY PARTNERS, LTD. a Texas limited partnership, By: DAH-IP Holdings, Inc., a Delaware corporation, its general partner BY: ___________________________ Name: Title: 6 DAH-IP HOLDINGS, INC. BY: ___________________________ Name: Title: DAH-IP INFINITY, INC. BY: ___________________________ Name: Title: CARL F. BOOTH & CO., LLC BY: ___________________________ Name: Title: DeCRANE AIRCRAFT FURNITURE CO., L.P. a Texas limited partnership, By: DAH-IP Holdings, Inc., a Delaware corporation, its general partner BY: ___________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY BY: ___________________________ Name: Title: 7 EX-4.1-9 10 a2029395zex-4_19.txt EXHIBIT 4-1-9 SUPPLEMENTAL INDENTURE Exhibit 4.1.9 (E R D A, Inc.) SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of June 30, 2000 among E R D A, Inc., a Wisconsin corporation ("Guarantor"), a subsidiary of DeCrane Aircraft Holdings, Inc. (or its permitted successor), a Delaware corporation (the "Issuer"), the other Guarantors (as defined in the Indenture referred to herein) and State Street Bank and Trust Company, as trustee under the Indenture referred to below (the "Trustee"). W I T N E S S E T H WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of October 5, 1998 providing for the issuance of an aggregate principal amount of up to $100.0 million of 12% Senior Subordinated Notes due 2008 (the "Notes"); WHEREAS, the Indenture provides that under certain circumstances Guarantor shall execute and deliver to the Trustee a supplemental indenture, pursuant to which Guarantor shall unconditionally guarantee all of the Issuer's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "Note Guarantee"); and WHEREAS, pursuant to Section 9.06 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees as follows: (a) Along with all Guarantors named in the Indenture, to jointly and severally Guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of Issuer hereunder or thereunder, that: (i) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, is lawful, and all other obligations of the Issuer to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against Issuer, any action to enforce the same or any other 1 circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (c) The following is hereby waived: diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever. (d) This Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture. (e) If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantor, or any Custodian, trustee, liquidator or other similar official acting in relation to either the Issuer or the Guarantor, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guarantor shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of this Note Guarantee. (h) The Guarantor shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. (i) Pursuant to Section 11.03 of the Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article 11 of the Indenture shall result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. 3. EXECUTION AND DELIVERY. The Guarantor agrees that the Note Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. 4. GUARANTOR MAY CONSOLIDATE ETC. ON CERTAIN TERMS. (a) Guarantor may not consolidate with or merge with or into (whether or not Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with Guarantor unless: (i) subject to Section 5(a) hereof, the Person formed by or surviving any such consolidation or merger (if other than Guarantor) assumes all the obligations of Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture and the Registration Rights Agreement; 2 (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) Issuer would, at the time of such transaction and after giving pro forma effect thereto and if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09 of the Indenture by virtue of Issuer's pro forma Cash Flow Coverage Ratio, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Cash Flow Coverage Ratio test set forth in Section 4.07 of the Indenture; provided that, the requirements of clause (iii) of this Section 4(a) will not apply in the case of a consolidation with or merger with or into the Issuer or another Guarantor. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture executed and delivered to the Trustee in the form of Exhibit E to the Indenture or otherwise satisfactory in form to the Trustee, of the Note Guarantee and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Guarantor, such successor Person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of Guarantor with or into the Issuer or another Guarantor, or shall prevent any sale or conveyance of the property of Guarantor as an entirety or substantially as an entirety to the Issuer or another Guarantor. 5. RELEASES. (a) In the event of a sale or other disposition of all of the assets of Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of Guarantor, Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of Guarantor) will be released and relieved of any obligations under its Note Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation Section 4.10 of the Indenture. Upon delivery by the Issuer to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Issuer in accordance with the applicable provisions of the Indenture, including, without limitation, Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of Guarantor from its obligations under its Note Guarantee. (b) Any Guarantor not released from its obligations under its Note Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 11 of the Indenture. 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guarantor, as such, shall have any liability for any obligations of the Issuer or Guarantor under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and 3 releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by Guarantor and the Issuer. SIGNATURES Dated as of June 30, 2000 DECRANE AIRCRAFT HOLDINGS, INC. BY: ___________________________ Name: Title: AEROSPACE DISPLAY SYSTEMS, INC. BY: ___________________________ Name: Title: AUDIO INTERNATIONAL, INC. BY: ___________________________ Name: Title: AVTECH CORPORATION BY: ___________________________ Name: Title: 4 CORY COMPONENTS, INC. BY: ___________________________ Name: Title: DETTMERS INDUSTRIES, INC. BY: ___________________________ Name: Title: ELSINORE AEROSPACE SERVICES, INC. BY: ___________________________ Name: Title: ELSINORE ENGINEERING, INC. BY: ___________________________ Name: Title: HOLLINGSEAD INTERNATIONAL, INC. BY: ___________________________ Name: Title: TRI-STAR ELECTRONICS INTERNATIONAL, INC. BY: ___________________________ Name: Title: PATS, INC. BY: ___________________________ Name: Title: 5 PATRICK AIRCRAFT TANK SYSTEMS, INC. BY: ___________________________ Name: Title: PATS SUPPORT, INC. BY: ___________________________ Name: Title: PATS AIRCRAFT AND ENGINEERING CORPORATION BY: ___________________________ Name: Title: FLIGHT REFUELING, INC. BY: ___________________________ Name: Title: CUSTOM WOODWORK & PLASTICS, INC. BY: ___________________________ Name: Title: PCI NEWCO, INC. BY: ___________________________ Name: Title: INTERNATIONAL CUSTOM INTERIORS, INC. BY: ___________________________ Name: Title: 6 THE INFINITY PARTNERS, LTD. a Texas limited partnership, By: DAH-IP Holdings, Inc., a Delaware corporation, its general partner BY: ___________________________ Name: Title: DAH-IP HOLDINGS, INC. BY: ___________________________ Name: Title: DAH-IP INFINITY, INC. BY: ___________________________ Name: Title: CARL F. BOOTH & CO., LLC BY: ___________________________ Name: Title: DeCRANE AIRCRAFT FURNITURE CO., L.P. a Texas limited partnership, By: DAH-IP Holdings, Inc., a Delaware corporation, its general partner BY: ___________________________ Name: Title: E R D A, Inc. BY: ___________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY BY: ___________________________ Name: Title: 7 EX-4.1-10 11 a2029395zex-4_110.txt EXHIBIT 4.1-10 SUPPLEMENTAL INDENTURE EXHIBIT 4.1.10 (COLTECH, INC.) SUPPLEMENTAL INDENTURE (this "SUPPLEMENTAL INDENTURE"), dated as of August 31, 2000 among Coltech, Inc., a Texas corporation ("GUARANTOR"), a subsidiary of DeCrane Aircraft Holdings, Inc. (or its permitted successor), a Delaware corporation (the "ISSUER"), the other Guarantors (as defined in the Indenture referred to herein) and State Street Bank and Trust Company, as trustee under the Indenture referred to below (the "TRUSTEE"). W I T N E S S E T H WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture (the "INDENTURE"), dated as of October 5, 1998 providing for the issuance of an aggregate principal amount of up to $100.0 million of 12% Senior Subordinated Notes due 2008 (the "NOTES"); WHEREAS, the Indenture provides that under certain circumstances Guarantor shall execute and deliver to the Trustee a supplemental indenture, pursuant to which Guarantor shall unconditionally guarantee all of the Issuer's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "NOTE GUARANTEE"); and WHEREAS, pursuant to Section 9.06 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: 1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. 2. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees as follows: (a) Along with all Guarantors named in the Indenture, to jointly and severally Guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of Issuer hereunder or thereunder, that: (i) the principal of and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, is lawful, and all other obligations of the Issuer to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. (b) The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against Issuer, any action to enforce the same or any other 1 circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (c) The following is hereby waived: diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever. (d) This Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture. (e) If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantor, or any Custodian, trustee, liquidator or other similar official acting in relation to either the Issuer or the Guarantor, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. (f) The Guarantor shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. (g) As between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of this Note Guarantee. (h) The Guarantor shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Guarantee. (i) Pursuant to Section 11.03 of the Indenture, after giving effect to any maximum amount and any other contingent and fixed liabilities that are relevant under any applicable Bankruptcy or fraudulent conveyance laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article 11 of the Indenture shall result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance. 3. EXECUTION AND DELIVERY. The Guarantor agrees that the Note Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee. 4. GUARANTOR MAY CONSOLIDATE ETC. ON CERTAIN TERMS. (a) Guarantor may not consolidate with or merge with or into (whether or not Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with Guarantor unless: (i) subject to Section 5(a) hereof, the Person formed by or surviving any such consolidation or merger (if other than Guarantor) assumes all the obligations of Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the Notes, the Indenture and the Registration Rights Agreement; 2 (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) Issuer would, at the time of such transaction and after giving pro forma effect thereto and if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09 of the Indenture by virtue of Issuer's pro forma Cash Flow Coverage Ratio, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Cash Flow Coverage Ratio test set forth in Section 4.07 of the Indenture; PROVIDED THAT, the requirements of clause (iii) of this Section 4(a) will not apply in the case of a consolidation with or merger with or into the Issuer or another Guarantor. (b) In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture executed and delivered to the Trustee in the form of Exhibit E to the Indenture or otherwise satisfactory in form to the Trustee, of the Note Guarantee and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Guarantor, such successor Person shall succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. All the Note Guarantees so issued shall in all respects have the same legal rank and benefit under the Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of the Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof. (c) Except as set forth in Articles 4 and 5 of the Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of Guarantor with or into the Issuer or another Guarantor, or shall prevent any sale or conveyance of the property of Guarantor as an entirety or substantially as an entirety to the Issuer or another Guarantor. 5. RELEASES. (a) In the event of a sale or other disposition of all of the assets of Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of Guarantor, Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of Guarantor) or the corporation acquiring the property (in the event of a sale or other disposition of all of the assets of Guarantor) will be released and relieved of any obligations under its Note Guarantee; PROVIDED that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture, including without limitation Section 4.10 of the Indenture. Upon delivery by the Issuer to the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Issuer in accordance with the applicable provisions of the Indenture, including, without limitation, Section 4.10 of the Indenture, the Trustee shall execute any documents reasonably required in order to evidence the release of Guarantor from its obligations under its Note Guarantee. (b) Any Guarantor not released from its obligations under its Note Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 11 of the Indenture. 6. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guarantor, as such, shall have any liability for any obligations of the Issuer or Guarantor under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and 3 releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. 7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 8. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 9. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof. 10. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by Guarantor and the Issuer. Dated as of August 31, 2000 AEROSPACE DISPLAY SYSTEMS, LLC BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer AUDIO INTERNATIONAL, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer AVTECH CORPORATION BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer CARL F. BOOTH & CO., LLC BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer 4 CORY COMPONENTS, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer CUSTOM WOODWORK & PLASTICS, LLC BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer DAH-IP HOLDINGS, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer DAH-IP INFINITY, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer DeCRANE AIRCRAFT FURNITURE CO., L.P. a Texas limited partnership, By: DAH-IP Holdings, Inc., a Delaware corporation, its general partner BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer DECRANE AIRCRAFT HOLDINGS, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer 5 DETTMERS INDUSTRIES, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer ELSINORE AEROSPACE SERVICES, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer ELSINORE ENGINEERING, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer E R D A, Inc. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer FLIGHT REFUELING, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer HOLLINGSEAD INTERNATIONAL, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer INTERNATIONAL CUSTOM INTERIORS, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer PATS, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer 6 PATRICK AIRCRAFT TANK SYSTEMS, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer PATS SUPPORT, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer PATS AIRCRAFT AND ENGINEERING CORPORATION BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer THE INFINITY PARTNERS, LTD. a Texas limited partnership, By: DAH-IP Holdings, Inc., a Delaware corporation, its general partner BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer TRI-STAR ELECTRONICS INTERNATIONAL, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer COLTECH, INC. BY: ____________________________ Name: Richard J. Kaplan Title: Chief Financial Officer 7 STATE STREET BANK AND TRUST COMPANY BY: ___________________________ Name: Title: 8 EX-4.6-1 12 a2029395zex-4_61.txt EXHIBIT 4.6-1 AMENDMENT TO THE Exhibit 4.6.1 CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF 16% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK DUE 2009 OF DECRANE AIRCRAFT HOLDINGS, INC. Pursuant to Sections 151 and 242 of the General Corporation Law of the State of Delaware We, the undersigned, R. Jack DeCrane, Chief Executive Officer, and Richard J. Kaplan, Senior Vice President, Chief Financial Officer, Secretary and Treasurer, of DeCrane Aircraft Holdings, Inc., a Delaware corporation (hereinafter called the "CORPORATION"), pursuant to the provisions of Sections 103, 151 and 242 of the General Corporation Law of the State of Delaware (the "DGCL"), do hereby make this Amendment (the "AMENDMENT") to the Certificate of Designations, filed with the State of Delaware on June 30, 2000 (the "CERTIFICATE OF DESIGNATIONS"), and do hereby state and certify that pursuant to the authority expressly vested in the Board of Directors of the Corporation by the Certificate of Incorporation, the Board of Directors certifies that: FIRST: The Board of Directors of the Corporation has duly adopted and filed, effective as of June 30, 2000, with the Secretary of State of the State of Delaware certain resolutions providing for the issuance of a series of its preferred stock, par value $0.01 per share, to be designated "16% Senior Redeemable Exchangeable Preferred Stock Due 2009." SECOND: That the Board of Directors of the Corporation amends paragraph (3) DIVIDENDS of the Corporation's Certificate of Designations relating to the Corporation's 16% Senior Redeemable Exchangeable Preferred Stock Due 2009 to insert the following at the end of the last sentence of subsection (a)(i) thereof: "; PROVIDED that if the holders of the shares of Senior Preferred Stock are not paid dividends on a Dividend Payment Date, then all such dividends shall accrue, whether or not declared, at the Dividend Rate from the date of such Dividend Payment Date until such time as such dividends are paid." THIRD: That the foregoing Amendment was duly adopted in accordance with the provisions of Sections 151 and 242 of the DGCL. IN WITNESS WHEREOF, the Corporation has caused this Amendment to be signed and attested by the undersigned on this 5th day of October, 2000. DECRANE AIRCRAFT HOLDINGS, INC. By: _______________________________ Name: Jack DeCrane Title: Chief Executive Officer By: _______________________________ Name: Richard J. Kaplan Title: Senior Vice President, Chief Financial Officer, Secretary and Treasurer ATTEST: By: ________________________ Name: Title: -2- EX-4.7-1 13 a2029395zex-4_71.txt EXHIBIT 4.7-1 Exhibit 4.7.1 AMENDMENT NO. 1 TO SENIOR PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT AMENDMENT (the "AMENDMENT") dated as of October 6, 2000 by and among DeCrane Aircraft Holdings, Inc., a Delaware corporation (the "COMPANY"), and the parties named on the signature pages hereto. WHEREAS, pursuant to the Securities Purchase Agreement dated as of October 6, 2000 (the "PURCHASE AGREEMENT") by and among DLJ Investment Partners, L.P., DLJ Investment Partners II, L.P., DLJ Investment Funding II, Inc. and DLJ ESC II, L.P. (collectively, the "SELLERS") and [Putnam High Yield Trust, Putnam Funds Trust - Putnam High Yield Trust II, Putnam High Yield Advantage Fund, Putnam Variable Trust - Putnam VT High Yield Fund, Putnam Strategic Income Fund and Putnam Diversified Income Trust] (the "PURCHASERS"), the Purchasers are purchasing (i) shares of the 16% Senior Redeemable Exchangeable Preferred Stock of the Company (the "PREFERRED STOCK") and (ii) warrants to purchase common stock, par value $0.01 per share, of DeCrane Holdings Co. (the "WARRANTS", and together with the Preferred Stock, the "PURCHASED SECURITIES"); WHEREAS, the Company has previously entered into a Senior Preferred Stock Registration Rights Agreement dated as of June 30, 2000 (the "REGISTRATION RIGHTS AGREEMENT") among the Company, the Sellers and the other parties thereto as of the date thereof; WHEREAS, the Registration Rights Agreement may be amended or otherwise modified by an instrument in writing executed by the Company with the approval of its board of directors and Holders (as defined therein) holding at least 75% of the outstanding Registrable Securities (as defined therein); WHEREAS, in connection with the execution of the Purchase Agreement and the purchase by the Purchasers of the Purchased Securities, the Company (with the approval of its board of directors) and Holders holding at least 75% of the outstanding Registrable Securities desire to amend or otherwise modify the Registration Rights Agreement as set forth in this Amendment; NOW, THEREFORE, in consideration of the agreements contained herein and in the Purchase Agreement, the parties hereto amend and otherwise modify the Registration Rights Agreement as follows: 1. From the date of this Amendment, the Purchasers shall be deemed to be parties to the Registration Rights Agreement and a Holder as defined in Section 3.03 thereof. 2. The following definition is added to Section 1.01 where such definition fits in alphabetical order: "PUTNAM" means, collectively, all entities advised by Putnam Investment Management, Inc. or its Affiliates and their successors and assigns. 3. The following text is added to Section 2.01(a) after the word "thereof" and before the comma on the fifth line of the first sentence of that Section: "; PROVIDED that for purposes of this Section 2.01 a written request by Putnam to sell all, but not less than all, of the Registrable Securities then owned by Putnam shall be deemed to be a request of the Requisite Holders". The following text is added to Section 2.01(a) after the last use of the word "Holders" at the end of the penultimate sentence thereof: "; PROVIDED, FURTHER that any demand by Putnam shall be counted as one of the two Demand Registrations described in the immediately preceding proviso". [SIGNATURE PAGES FOLLOW] -2- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written. DECRANE AIRCRAFT HOLDINGS, INC. By: __________________________ Name: Title: DLJ INVESTMENT PARTNERS II, L.P. By: DLJ INVESTMENT PARTNERS II, INC., as managing general partner By: __________________________ Name: Title: DLJ INVESTMENT PARTNERS, L.P. By: DLJ INVESTMENT PARTNERS, INC. as managing general partner By: __________________________ Name: Title: DLJ INVESTMENT FUNDING II, INC. By: __________________________ Name: Title: -3- DLJ ESC II, L.P. By: DLJ LBO PLANS MANAGEMENT CORPORATION, as managing general partner By: __________________________ Name: Title: Putnam High Yield Trust Putnam Funds Trust - Putnam High Yield Trust II Putnam High Yield Advantage Fund Putnam Variable Trust - Putnam VT High Yield Fund Putnam Strategic Income Fund Putnam Diversified Income Trust By: Putnam Investment Management, Inc. By: __________________________ Name: Title: -4- EX-10.2 14 a2029395zex-10_2.txt EXHIBIT 10.2 AMENDED AND RESTATED Exhibit 10.2 INVESTORS' AGREEMENT dated as of October 6, 2000 by and among DECRANE HOLDINGS CO., DECRANE AIRCRAFT HOLDINGS, INC. DLJ MERCHANT BANKING PARTNERS II, L.P., DLJ MERCHANT BANKING PARTNERS II-A, L.P., DLJ OFFSHORE PARTNERS II, C.V., DLJ DIVERSIFIED PARTNERS, L.P. DLJ DIVERSIFIED PARTNERS-A, L.P., DLJ MILLENNIUM PARTNERS, L.P. DLJ MILLENNIUM PARTNERS-A, L.P. DLJMB FUNDING II, INC., UK INVESTMENT PLAN 1997 PARTNERS, DLJ EAB PARTNERS, L.P., DLJ FIRST ESC L.P., DLJ ESC II L.P. DLJ INVESTMENT PARTNERS, L.P. DLJ INVESTMENT PARTNERS II, L.P. DLJ INVESTMENT FUNDING II, INC. and certain other Stockholders named herein TABLE OF CONTENTS
PAGE ARTICLE 1 Definitions SECTION 1.01. Definitions....................................................................2 ARTICLE 2 Corporate Governance SECTION 2.01. Composition of the Board......................................................11 SECTION 2.02. Removal.......................................................................11 SECTION 2.03. Vacancies.....................................................................11 SECTION 2.04. Meetings......................................................................11 SECTION 2.05. Action by the Board...........................................................11 SECTION 2.06. Board Observer................................................................12 SECTION 2.07. Conflicting Charter or Bylaw Provisions.......................................13 ARTICLE 3 Restrictions On Transfer SECTION 3.01. General.......................................................................14 SECTION 3.02. Legends.......................................................................14 SECTION 3.03. Permitted Transferees.........................................................15 SECTION 3.04. Restrictions on Transfers by Management Stockholders..........................15 SECTION 3.05. Restrictions on Transfers by the Investors, the DLJIP Entities and the Putnam Entities........................................16 ARTICLE 4 Tag-Along Rights; Drag-Along Rights SECTION 4.01. Rights to Participate in Transfer.............................................17 SECTION 4.02. Right to Compel Participation in Certain Transfers............................18 SECTION 4.03. Certain Rights................................................................19
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PAGE ARTICLE 5 Registration Rights SECTION 5.01. Demand Registration...........................................................20 SECTION 5.02. Incidental Registration.......................................................23 SECTION 5.03. Holdback Agreements...........................................................24 SECTION 5.04. Registration Procedures.......................................................25 SECTION 5.05. Indemnification by the Company................................................28 SECTION 5.06. Indemnification by Participating Stockholders.................................29 SECTION 5.07. Conduct of Indemnification Proceedings........................................29 SECTION 5.08. Contribution..................................................................30 SECTION 5.09. Participation in Public Offering..............................................32 SECTION 5.10. Other Indemnification.........................................................32 SECTION 5.11. Cooperation by the Company....................................................32 ARTICLE 6 Miscellaneous SECTION 6.01. Entire Agreement..............................................................33 SECTION 6.02. Binding Effect; Benefit.......................................................33 SECTION 6.03. Exclusive Financial and Investment Banking Advisor............................33 SECTION 6.04. Assignability.................................................................33 SECTION 6.05. Amendment; Waiver; Termination................................................34 SECTION 6.06. Notices.......................................................................34 SECTION 6.07. Headings......................................................................36 SECTION 6.08. Counterparts..................................................................37 SECTION 6.09. Applicable Law................................................................37 SECTION 6.10. Specific Enforcement..........................................................37 SECTION 6.11. Consent to Jurisdiction.......................................................37
ii AMENDED AND RESTATED INVESTORS' AGREEMENT AMENDED AND RESTATED INVESTORS' AGREEMENT dated as of October 6, 2000 (the "AGREEMENT") among (i) DeCrane Holdings Co., a Delaware corporation (the "COMPANY") and DeCrane Aircraft Holdings, Inc., a Delaware corporation and subsidiary of the Company ("OPCO"); (ii) DLJ Merchant Banking Partners II, L.P., a Delaware limited partnership, DLJ Offshore Partners II, C.V., a Netherlands Antilles limited partnership, DLJ Merchant Banking Partners II-A, L.P., a Delaware limited partnership, DLJ Diversified Partners, L.P., a Delaware limited partnership, DLJ Diversified Partners-A, L.P., a Delaware limited partnership, DLJ EAB Partners, L.P., a Delaware limited partnership, DLJ Millennium Partners, L.P., a Delaware limited partnership, DLJ Millennium Partners-A, L.P., a Delaware limited partnership, DLJMB Funding II, Inc., a Delaware corporation, UK Investment Plan 1997 Partners, a Delaware partnership, DLJ First ESC L.P., a Delaware limited partnership and DLJ ESC II L.P., a Delaware limited partnership (other than in its capacity as a DLJIP Entity), (each of the foregoing, a "DLJ ENTITY", and collectively, the "DLJ ENTITIES"); (iii) DLJ Investment Partners, L.P., a Delaware limited partnership, DLJ Investment Partners II, L.P., a Delaware limited partnership, DLJ Investment Funding II, Inc., a Delaware corporation, and DLJ ESC II, L.P., a Delaware limited partnership (solely in its capacity as a holder of Senior Preferred Stock, DLJIP Warrants and any Company Securities issued with respect thereto), (each of the foregoing, a "DLJIP ENTITY", and collectively, the "DLJIP ENTITIES"); (iv) Putnam High Yield Trust, a Massachusetts business trust, Putnam Funds Trust - Putnam High Yield Trust II, a Massachusetts business trust, Putnam High Yield Advantage Fund, a Massachusetts business trust, Putnam Variable Trust - Putnam VT High Yield Fund, a Massachusetts business trust, Putnam Strategic Income Fund, a Massachusetts business trust, and Putnam Diversified Income Trust, a Massachusetts business trust (collectively, the "PUTNAM ENTITIES"); and (v) certain other Stockholders named herein. W I T N E S S E T H WHEREAS, (i) the Company, the DLJ Entities and certain other Stockholders parties thereto have heretofore entered into an Amended and Restated Investors' Agreement dated as of October 2, 1998 (the "ORIGINAL AGREEMENT") and (ii) the Company, Opco, the DLJ Entities, the DLJIP Entities and certain other Stockholders parties thereto have heretofore amended and restated the Original Agreement as of June 30, 2000 (the "AMENDED AGREEMENT"); WHEREAS, pursuant to the Securities Purchase Agreement (the "PURCHASE AGREEMENT") dated as of the date hereof among the DLJIP Entities and the Putnam Entities, the Putnam Entities are acquiring from the DLJIP Entities (i) shares of 16% Senior Redeemable Exchangeable Preferred Stock due 2009 of Opco (the "SENIOR PREFERRED STOCK") and (ii) warrants to purchase common stock of the Company; WHEREAS, the parties hereto desire to amend and restate the Amended Agreement to govern certain of their rights, duties and obligations after consummation of the transactions contemplated by the Purchase Agreement; NOW, THEREFORE, in consideration of the covenants and agreements contained herein and in the Purchase Agreement, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS SECTION 1.1. DEFINITIONS. (a) The following terms, as used herein, have the following meanings: "ADVERSE PERSON" means any Person whom the Board determines is a competitor or a potential competitor of the Company or any of its Subsidiaries or to whom the Board determines a transfer of Shares would be inadvisable. "AFFILIATE" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person; PROVIDED that no stockholder of the Company shall be deemed an Affiliate of any other stockholder of the Company solely by reason of any investment in the Company. For the purpose of this definition, the term "CONTROL" (including with correlative meanings, the terms "CONTROLLING", "CONTROLLED BY" and "UNDER COMMON CONTROL WITH"), when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "AFFILIATED EMPLOYEE BENEFIT TRUST" means any trust that is a successor to the assets held by a trust established under an employee benefit plan subject to ERISA or any other trust established directly or indirectly under such plan or any other such plan having the same sponsor. "AGGREGATE OWNERSHIP" means, with respect to any Stockholder or group of Stockholders, and with respect to any class of Company Securities, the total 2 number or amount of such class of Company Securities "beneficially owned" (as such term is defined in Rule 13d-3 under the Exchange Act) (without duplication) by such Stockholder or group of Stockholders as of the date of such calculation (but adjusted in accordance with the proviso below), calculated on a Fully Diluted basis and taking into account any stock dividend, stock split or reverse stock split; PROVIDED that such number or amount of such class of Company Securities shall be increased (without duplication) with respect to any Stockholder, by any stock appreciation rights, options, warrants or other rights to purchase or subscribe for Common Shares of such Other Stockholder as and when such stock appreciation rights, options, warrants or other rights have vested. "BOARD" means the board of directors of the Company. "BUSINESS DAY" means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to close. "BYLAWS" means the Bylaws of the Company, as amended from time to time. "CHANGE OF CONTROL" means: (a) any "person" or "group of persons" (within the meaning of Section 13 or 14 of the Exchange Act), other than the DLJ Entities and/or their respective Permitted Transferees, acquires, directly or indirectly, by virtue of the consummation of any purchase, merger or other combination, beneficial ownership (within the meaning of Section 13(d)(3) of the Exchange Act) of securities of the Company representing more than 51% of the combined voting power of the Company's then outstanding voting securities with respect to matters submitted to a vote of the stockholders generally; or (b) a sale or transfer by the Company or any of its Subsidiaries of substantially all of the consolidated assets of the Company and its Subsidiaries to an entity which is not an Affiliate of the Company prior to such sale or transfer. "CHARTER" means the Certificate of Incorporation of the Company, as amended from time to time. "CLOSING DATE" means August 28, 1998. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMON STOCK" means the common stock, par value $0.01 per share, of the Company and any stock into which such Common Stock may thereafter be converted or changed, and "COMMON SHARES" means shares of Common Stock. 3 "COMPANY SECURITIES" means the Common Stock and securities convertible into or exchangeable for Common Stock, the Preferred Stock and options, warrants (including the Warrants) or other rights to acquire Common Stock, Preferred Stock or any other equity security issued by the Company. "DLJIP TRANSFEREE" means any Person to whom DLJIP Warrants, or Common Shares issued upon exercise of DLJIP Warrants, are transferred in accordance with the terms of this Agreement, upon execution by such Person of an agreement to be bound by this Agreement. "DLJIP WARRANTS" means the warrants issued by the Company to the DLJIP Entities pursuant to the Securities Purchase Agreement dated as of June 30, 2000 among the Company, Opco and the DLJIP Entities, for the purchase of an aggregate of 139,357 Common Shares (subject to adjustment as provided for therein), excluding the Putnam Warrants. "DLJ WARRANTS" means the warrants issued by the Company to the DLJ Entities for the purchase of an aggregate of 155,000 Common Shares (subject to adjustment as provided for therein). "DRAG-ALONG PORTION" means, with respect to any Other Stockholder and any class of Company Securities, the number of such class of Company Securities beneficially owned by such Other Stockholder on a Fully Diluted basis multiplied by a fraction, the numerator of which is the number of such class of Company Securities proposed to be sold by the DLJ Entities on behalf of the DLJ Entities and the Other Stockholders and the denominator of which is the total number of such class of Company Securities beneficially owned by the Stockholders on a Fully Diluted basis. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "FULLY DILUTED" means, with respect to Common Stock and without duplication, all outstanding Common Shares and all Common Shares issuable in respect of securities convertible into or exchangeable for Common Shares, stock appreciation rights, options, warrants (including the Warrants) and other rights to purchase or subscribe for Common Shares or securities convertible into or exchangeable for Common Shares; PROVIDED that, to the extent any of the foregoing stock appreciation rights, options, warrants or other rights to purchase or subscribe for Common Shares are subject to vesting, the Common Shares subject to vesting shall be included in the definition of "FULLY DILUTED" only upon and to the extent of such vesting. 4 "INITIAL OWNERSHIP" means, with respect to any Stockholder and any class of Company Securities, the number of shares or units of such class of Company Securities beneficially owned (and (without duplication) which such Persons have the right to acquire from any Person) as of the date such Person became a party to the Original Agreement, the Amended Agreement or this Agreement, as the case may be, taking into account any stock split, stock dividend, reverse stock split or similar event. "INITIAL PUBLIC OFFERING" means the initial sale after the date hereof of Registrable Securities pursuant to an effective registration statement under the Securities Act (other than a registration statement on Form S-8 or any successor form). "INVESTORS" means each investor in the Company's equity (other than the DLJ Entities, the DLJIP Entities, the DLJIP Transferees, the Putnam Entities, the Putnam Transferees, the Management Stockholders and their respective Permitted Transferees), who became or becomes a Stockholder after the date of the Original Agreement for so long as such investor shall beneficially own any Company Securities. "MANAGEMENT STOCKHOLDERS" means each of the members of management of the Company who became or becomes a Stockholder after the date of the Original Agreement for so long as such member of management shall beneficially own any Company Securities. "OTHER STOCKHOLDERS" means all Stockholders and their respective Permitted Transferees, other than the DLJ Entities and their respective Permitted Transferees. "PERMITTED TRANSFEREE" means: (i) in the case of any DLJ Entity (A) any other DLJ Entity, (B) any general or limited partner of any DLJ Entity (a "DLJ PARTNER"), and any corporation, partnership, Affiliated Employee Benefit Trust or other entity that is an Affiliate of any DLJ Partner (collectively, the "DLJ AFFILIATES"), (C) any managing director, director, general partner, limited partner, officer or employee of any DLJ Entity or of any DLJ Affiliate, or the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of any of the foregoing persons referred to in this clause (C) (collectively, the "DLJ ASSOCIATES"), (D) a trust, the beneficiaries of which, or a corporation, limited liability company or partnership, the stockholders, members or general or limited partners of which, include only DLJ Entities, DLJ Affiliates, DLJ Associates, their spouses or their lineal descendants or (E) a voting trustee for one or more DLJ Entities, DLJ Affiliates or DLJ Associates under the terms of a voting trust 5 designed to conform with the requirements of the Insurance Law of the State of New York; and (ii) in the case of any Other Stockholder (A) any Other Stockholder, (B) a Person to whom Shares are transferred from such Other Stockholder (1) by will or the laws of descent and distribution or (2) by gift without consideration of any kind; PROVIDED that, in the case of clause (2), such transferee is the issue or spouse of such Other Stockholder or (C) a trust that is for the exclusive benefit of such Other Stockholder or its Permitted Transferees under (B) above. "PERSON" means an individual, corporation, limited liability company, partnership, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "PREFERRED STOCK" means the 14% Senior Redeemable Exchangeable Preferred Stock, par value $0.01 per share, of the Company, and "PREFERRED SHARES" means shares of Preferred Stock. "PRO RATA PORTION" means the number of Common Shares a Stockholder holds multiplied by a fraction, the numerator of which is the number of Common Shares to be sold by the DLJ Entities and their Permitted Transferees in a Public Offering and the denominator of which is the total number of Common Shares, on a Fully Diluted basis, held in the aggregate by the DLJ Entities and their Permitted Transferees prior to such Public Offering. "PUBLIC OFFERING" means any primary or secondary public offering of Registrable Securities of the Company pursuant to an effective registration statement under the Securities Act other than pursuant to a registration statement filed in connection with a transaction of the type described in Rule 145 of the Securities Act or for the purpose of issuing securities pursuant to an employee benefit plan. "PUTNAM TRANSFEREE" means any Person to whom Putnam Warrants, or Common Shares issued upon exercise of Putnam Warrants, are transferred in accordance with the terms of this Agreement, upon execution by such Person of an agreement to be bound by this Agreement. "PUTNAM WARRANTS" means the warrants purchased by the Putnam Entities pursuant to the Purchase Agreement that provide for the purchase of an aggregate of 27,871.40 Common Shares (subject to adjustment as provided for therein). "REGISTRABLE SECURITIES" means at any time, with respect to any Stockholder or its Permitted Transferees, any Shares or Warrants and any securities issued or issuable in respect of such Shares or Warrants by way of 6 conversion, exchange, stock dividend, split or combination, recapitalization, merger, consolidation or other reorganization or otherwise until (i) a registration statement covering such Shares or Warrants has been declared effective by the SEC and such Shares or Warrants have been disposed of pursuant to such effective registration statement, (ii) such Shares or Warrants are sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met or (iii) such Shares or Warrants are otherwise transferred, the Company has delivered a new certificate or other evidence of ownership for such Shares or Warrants not bearing the legend required pursuant to this Agreement and such Shares or Warrants may be resold without subsequent registration under the Securities Act. "REGISTRATION EXPENSES" means (i) all registration and filing fees, (ii) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities registered), (iii) printing expenses, (iv) internal expenses of the Company (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), (v) reasonable fees and disbursements of counsel for the Company and customary fees and expenses for independent certified public accountants retained by the Company (including expenses relating to any comfort letters or costs associated with the delivery by independent certified public accountants of any comfort letter requested pursuant to Section 5.04(h) hereof), (vi) the reasonable fees and expenses of any special experts retained by the Company in connection with the applicable registration, (vii) reasonable fees and expenses of up to one counsel for the Stockholders participating in the offering selected (A) by the DLJ Entities, in the case of any offering in which such entities participate, or (B) in any other case, by the Other Stockholders holding the majority of the Shares or Warrants to be sold for the account of all Other Stockholders in the offering, (viii) fees and expenses in connection with any review of underwriting arrangements by the National Association of Securities Dealers, Inc. (the "NASD"), including fees and expenses of any "QUALIFIED INDEPENDENT UNDERWRITER", and (ix) fees and disbursements of underwriters customarily paid by issuers or sellers of securities; but shall not include any underwriting fees, discounts or commissions attributable to the sale of Registrable Securities, or any out-of-pocket expenses (except as set forth in clause (vii) above) of the Stockholders (or the agents who manage their accounts) or any fees and expenses of underwriter's counsel. "REQUISITE DLJIP ENTITIES" means holders of 50% of the Common Shares (and any securities issued or issuable in respect of such Common Shares by way of conversion, exchange, stock dividend, split or combination, recapitalization, merger, consolidation or other reorganization or otherwise) issued or issuable upon exercise of the DLJIP Warrants. 7 "RESTRICTION TERMINATION DATE" means the earlier to occur of (a) the second anniversary of the Initial Public Offering and (b) the fifth anniversary of the Closing Date. "SEC" means the Securities and Exchange Commission. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SHARES" means the Common Shares and the Preferred Shares. "SHELF REGISTRATION" means a shelf registration statement filed under Rule 415 under the Securities Act. "STOCKHOLDER" means each Person (other than the Company) who shall be a party to or bound by this Agreement, whether in connection with the execution and delivery hereof as of the date of the Original Agreement, pursuant to Section 6.04 or otherwise, so long as such Person shall beneficially own any Company Securities. "SUBSIDIARY" means, with respect to any Person, any entity of which ownership interests having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions are at the time directly or indirectly owned by such Person. "TAG-ALONG PORTION" means with respect to any Tagging Person or the Selling Person, as the case may be: (i) where the Selling Person is selling Common Shares, the number of Common Shares beneficially owned by such Tagging Person or the Selling Person, as the case may be, on a Fully Diluted Basis multiplied by a fraction, the numerator of which is the number of Common Shares proposed to be sold in the Tag-Along Sale pursuant to Section 4.01 and the denominator of which is the aggregate number of Common Shares beneficially owned by all Stockholders on a Fully Diluted basis, (ii) where the Selling Person is selling Preferred Shares, the number of Preferred Shares beneficially owned by such Tagging Person or the Selling Person, as the case may be, multiplied by a fraction, the numerator of which is the number of Preferred Shares proposed to be sold in the Tag-Along Sale pursuant to Section 4.01 and the denominator of which is the aggregate number of Preferred Shares beneficially owned by all Stockholders, and (iii) where the Selling Person is selling Warrants, the number of Common Shares beneficially owned (or, without duplication, acquirable under the Warrants) by such Tagging Person or the Selling Person, as the case may be, on a Fully Diluted Basis multiplied by a fraction, the numerator of which is the number 8 of Common Shares for which the Warrants proposed to be sold in the Tag-Along Sale pursuant to Section 4.01 are exercisable and the denominator of which is the aggregate number of Common Shares beneficially owned by the Stockholders on a Fully Diluted Basis; PROVIDED that, where a Tag-Along Right includes the right to sell Common Stock, any holder of Warrants may, in lieu of exercising such Warrants, transfer such Warrants for some or all of that number of Common Shares as would otherwise have constituted its Tag-Along Portion, in which event the price to be received with respect to each such Warrant shall be the price per Common Share applicable to the Tag-Along Offer, less the then applicable exercise price of the Warrants owned by such holder. "THIRD PARTY" means a prospective purchaser of Company Securities in an arm's-length transaction from a Stockholder where such purchaser is not a Permitted Transferee of such Stockholder. "UNDERWRITTEN PUBLIC OFFERING" means a firmly underwritten Public Offering. "WARRANTS" means the DLJ Warrants, the DLJIP Warrants and the Putnam Warrants. (b) The term "DLJ ENTITIES", to the extent such entities shall have transferred any of their Shares to "Permitted Transferees", shall mean the DLJ Entities and the Permitted Transferees of the DLJ Entities, taken together, and any right or action that may be taken at the election of the DLJ Entities may be taken at the election of the DLJ Entities and such Permitted Transferees. (c) The term "OTHER STOCKHOLDERS", to the extent such stockholders shall have transferred any of their Company Securities to "Permitted Transferees", shall mean the Other Stockholders and the Permitted Transferees of the Other Stockholders, taken together, and any right or action that may be taken at the election of the Other Stockholders may be taken at the election of the Other Stockholders and such Permitted Transferees. (d) Each of the following terms is defined in the Section set forth opposite such term:
TERM SECTION Agreement recitals Amended Agreement recitals Applicable Holdback Period 5.03 Black Out Notice 5.04 Black Out Period 5.01
9
TERM SECTION Company recitals Demand Registration 5.01(a) DLJ Entities recitals DLJIP Entities recitals DLJMB 2.01 DLJSC 6.03 Drag-Along Rights 4.02(a) Holders 5.01(a)(ii) Incidental Registration 5.02(a) Indemnified Party 5.07 Indemnifying Party 5.07 Independent Director 2.01(a) Inspectors 5.04(g) Maximum Offering Size 5.01(e) Nominee 2.03(a) Opco recitals Original Agreement recitals Public Offering Limitation 3.04(a) Purchase Agreement recitals Putnam Entities recitals Records 5.04(g) Section 4.01 Response Notice 4.01(a) Section 4.02 Notice 4.02(a) Section 4.02 Notice Period 4.02(a) Section 4.02 Sale 4.02(a) Section 4.02 Sale Price 4.02(a) Selling Person 4.01(a) Selling Stockholder 5.01(a) Senior Preferred Stock recitals Tag-Along Notice 4.01(a) Tag-Along Notice Period 4.01(a) Tag-Along Offer 4.01(a) Tag-Along Right 4.01(a) Tag-Along Sale 4.01(a) Tagging Person 4.01(a) transfer 3.01(a)
10 ARTICLE 2 CORPORATE GOVERNANCE SECTION 2.1. COMPOSITION OF THE BOARD. (a) The Board shall consist initially of six directors, all of whom shall be designated by DLJ Merchant Banking Partners II, L.P. ("DLJMB") and one of whom shall not be either an "Affiliate" or an "Associate" (as such terms are used within the meaning of Rule 12b-2 under the Exchange Act) of any of the DLJ Entities (the "INDEPENDENT DIRECTOR"). (b) Each Stockholder entitled to vote for the election of directors to the Board agrees that it will vote its Common Shares or execute written consents, as the case may be, and take all other necessary action (including causing the Company to call a special meeting of stockholders) in order to ensure that the composition of the Board is as set forth in this Section 2.01. SECTION 2.2. REMOVAL. Each Stockholder agrees that if, at any time, it is then entitled to vote for the removal of directors of the Company, it will not vote any of its Common Shares in favor of the removal of any director who shall have been designated or nominated pursuant to Section 2.01 unless such removal shall be for cause or the Persons entitled to designate or nominate such director shall have consented to such removal in writing. SECTION 2.3. VACANCIES. If, as a result of death, disability, retirement, resignation, removal (with or without cause) or otherwise, there shall exist or occur any vacancy of the Board: (a) the Person or Persons entitled under Section 2.01 to designate or nominate such director whose death, disability, retirement, resignation or removal resulted in such vacancy may designate another individual (the "NOMINEE") to fill such capacity and serve as a director of the Company; and (b) each Stockholder then entitled to vote for the election of the Nominee as a director of the Company agrees that it will vote its Common Shares, or execute a written consent, as the case may be, in order to ensure that the Nominee is elected to the Board. SECTION 2.4. MEETINGS. The Board shall hold a regularly scheduled meeting at least once every fiscal quarter. SECTION 2.5. ACTION BY THE BOARD. (a) A quorum of the Board shall consist of three directors. All actions of the Board shall require the affirmative vote of at least a majority of the directors present at a duly convened meeting of the Board at which a quorum is present or the unanimous written consent of the Board; PROVIDED that, in the event there is a vacancy on the Board and an 11 individual has been nominated to fill such vacancy, the first order of business shall be to fill such vacancy. (b) The Board may create executive, compensation and audit committees, as well as such other committees as it may determine. SECTION 2.6. BOARD OBSERVER. (a) So long as the DLJIP Entities shall beneficially own in aggregate at least 51% of the number of shares of the Senior Preferred Stock beneficially owned by them as of the date of the Amended Agreement, (i) the Company shall give DLJ Investment Partners II, L.P. written notice of each meeting of the Board and each committee thereof at the same time and in the same manner as notice is given to the directors, (ii) the Company will permit one representative of the DLJIP Entities (a "BOARD REPRESENTATIVE") to attend and fully participate in all meetings of the Board and all committees thereof and (iii) the Company shall consult with the Board Representative with respect to any fundamental change in the nature of the Company's business; PROVIDED that the Board Representative shall have no right to vote on any resolutions or other matters upon which members of the Board may vote; and PROVIDED FURTHER that in the case of telephonic meetings conducted in accordance with the Company's bylaws and applicable law, the Board Representative shall be given the opportunity to listen and fully participate in such telephonic meeting. The Board Representative shall also be provided with all written materials and other information (including, without limitation, copies of minutes of meetings) given to directors in connection with such meetings at the same time such materials and information are given to the directors. If the Company proposes to take any action by written consent in lieu of a meeting of the Board or any committee thereof, the Company shall give written notice thereof to the Board Representative promptly following the effective date of such consent describing in reasonable detail the nature and substance of such action. The Company shall pay the reasonable out-of-pocket expenses of the Board Representative incurred in connection with attending such board and committee meetings. (b) So long as the DLJIP Entities shall beneficially own in aggregate at least 51% of the number of shares of the Senior Preferred Stock beneficially owned by them as of the date of the Amended Agreement, at any reasonable time during normal business hours and from time to time, but not more frequently than once in any six-month period, upon five (5) days written notice, the Company will permit any one or more of the DLJIP Entities to examine the books and records of the Company; PROVIDED that the DLJIP Entities shall use all reasonable efforts to ensure that any such examination or visit results in a minimum of disruption to the operations of the Company. (c) Prior to receiving any written information or materials referred to in Section 2.06(a), attending any meetings of the Board or any of its committees, or examining any books or records pursuant to Section 2.06(b), each of the DLJIP 12 Entities shall be required to execute a confidentiality agreement in form and substance satisfactory to the Company and the DLJIP Entities and shall agree to use any such materials or information only for the purpose of evaluating and monitoring the investment of the DLJIP Entities in the Company and Opco and otherwise in compliance with applicable law. (c) Notwithstanding anything in this Agreement to the contrary, the DLJIP Entities may not assign their rights under this Section 2.06 to any other Person. SECTION 2.7. CONFLICTING CHARTER OR BYLAW PROVISIONS. Each Stockholder shall vote its Common Shares or execute written consents, as the case may be, and take all other actions necessary, to ensure that the Company's Charter and Bylaws facilitate and do not at any time conflict with any provision of this Agreement. 13 ARTICLE 3 RESTRICTIONS ON TRANSFER SECTION 3.1. GENERAL. (a) Each Stockholder understands and agrees that the Company Securities purchased pursuant to the applicable subscription agreement have not been registered under the Securities Act and are restricted securities. Each Stockholder agrees that it will not, directly or indirectly, sell, assign, transfer, grant a participation in, pledge or otherwise dispose of ("TRANSFER") any Company Securities (or solicit any offers to buy or otherwise acquire, or take a pledge of any Company Securities) except in compliance with the Securities Act and the terms and conditions of this Agreement. Subject to the Securities Act and Section 4.01, Company Securities may be freely transferred by any DLJ Entity. (b) Any attempt to transfer any Company Securities not in compliance with this Agreement shall be null and void and the Company shall not, and shall cause any transfer agent not to, give any effect in the Company's stock records to such attempted transfer. SECTION 3.2. LEGENDS. In addition to any other legend that may be required, each certificate for Shares or Warrants that is issued to any Stockholder shall bear a legend in substantially the following form: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE AMENDED AND RESTATED INVESTORS' AGREEMENT DATED AS OF OCTOBER 6, 2000, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM DECRANE HOLDINGS CO. OR ANY SUCCESSOR THERETO. If any Company Securities shall cease to be Registrable Securities under clause (i) or clause (ii) of the definition thereof, the Company shall, upon the written request of the holder thereof, issue to such holder a new certificate evidencing such securities without the first sentence of the legend required by this Section endorsed thereon. If any Company Securities shall cease to be subject to any and all restrictions on transfer set forth in this Agreement, the Company shall, upon the written request of the holder thereof, issue to such holder a new certificate 14 evidencing such securities without the second sentence of the legend required by this Section endorsed thereon. SECTION 3.3. PERMITTED TRANSFEREES. Notwithstanding anything in this Agreement to the contrary, any Stockholder may at any time transfer any or all of its Company Securities to one or more of its Permitted Transferees without the consent of the Board or any other Stockholder or group of Stockholders and without compliance with Sections 3.04, 3.05 and 4.01 so long as (a) such Permitted Transferee shall have agreed in writing to be bound by the terms of this Agreement and (b) the transfer to such Permitted Transferee is not in violation of applicable federal or state securities laws. SECTION 3.4. RESTRICTIONS ON TRANSFERS BY MANAGEMENT STOCKHOLDERS. (a) Except as provided in Section 3.03, each Management Stockholder and each Permitted Transferee of such Management Stockholder may transfer its Company Securities only as follows: (i) in a transfer made in compliance with Section 4.01 or 4.02, or as permitted or required by any employment contract between the Company or any Subsidiary and an employee; (ii) subject to the Public Offering Limitations, in a Public Offering in connection with the exercise of its rights under Section 5.02 hereof; (iii) in a transfer made at the conclusion of the Applicable Holdback Period (as defined in Section 5.03) following a Public Offering, in compliance with Rule 144 promulgated under the Securities Act; PROVIDED, HOWEVER, that until the Restriction Termination Date, the Aggregate Ownership of such Management Stockholder as a result of such transfer shall be equal to or exceed the greater of (x) 50% of such Management Stockholder's Initial Ownership and (y) the percentage of such Management Stockholder's Initial Ownership that is equal to the Aggregate Ownership of the DLJ Entities as a percentage of the DLJ Entities' Initial Ownership; or (iv) following the Restriction Termination Date, to any Third Party other than an Adverse Person for consideration consisting solely of cash; PROVIDED, HOWEVER, that the number of Common Shares transferred by such Management Stockholder pursuant to this Section 3.04(a)(iv) in any twelve month period shall not exceed 20% of such Management Stockholder's Aggregate Ownership at the beginning of such twelve month period. 15 For purposes of this Agreement, "PUBLIC OFFERING LIMITATIONS" means (A) no Management Stockholder shall be permitted to exercise its rights under Section 5.02 hereof (x) with respect to the Initial Public Offering and (y) until such time as the Aggregate Ownership of the DLJ Entities shall be less than 50% of their aggregate Initial Ownership and (B) in each Public Offering following the Initial Public Offering, such Management Stockholder shall be entitled to transfer a number of Shares not exceeding such Management Stockholder's Pro Rata Portion of such Management Stockholder's Shares. (b) The provisions of Section 3.04(a) shall terminate upon the earliest to occur of (i) the tenth anniversary of the Closing Date and (ii) a Change of Control. Notwithstanding the foregoing sentence, the provisions of Section 3.04(a) shall not terminate with respect to any Management Stockholder's Shares which shall have been pledged to the Company as security in connection with any indebtedness for borrowed money owed by such Management Stockholder to the Company unless the proceeds from the sale of such Shares are applied to repay such indebtedness in full. SECTION 3.5. RESTRICTIONS ON TRANSFERS BY THE INVESTORS, THE DLJIP ENTITIES AND THE PUTNAM ENTITIES. (a) Except as provided in Section 3.03, each of the Investors and its Permitted Transferees may transfer its Company Securities only as follows: (i) in a transfer made in compliance with Section 4.01 or 4.02; or (ii) in a Public Offering in connection with the exercise of its rights under Article 5 hereof. (b) Each of the DLJIP Entities and the DLJIP Transferees may transfer its Company Securities freely, subject only to compliance with Section 4.02. (c) Each of the Putnam Entities and the Putnam Transferees may transfer its Company Securities freely, subject only to compliance with Section 4.02. (d) The provisions of Sections 3.05(a), (b) and (c) shall terminate upon the earlier to occur of (i) the tenth anniversary of the Closing Date and (ii) a Change of Control. 16 ARTICLE 4 TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS SECTION 4.1. RIGHTS TO PARTICIPATE IN TRANSFER. (a If the DLJ Entities (the "SELLING PERSON") propose to transfer (other than transfers of Common Shares (i) in a Public Offering or (ii) to any Permitted Transferee of any of the DLJ Entities) a number of Company Securities equal to or exceeding 20% of the Aggregate Ownership of the DLJ Entities in a single transaction or in a series of related transactions on the date of the proposed sale (a "TAG-ALONG SALE"), the Other Stockholders may, at their option, elect to exercise their rights under this Section 4.01 (each such Stockholder, a "TAGGING PERSON"). In the event of such a proposed transfer, the Selling Person shall provide each Other Stockholder written notice of the terms and conditions of such proposed transfer ("TAG-ALONG NOTICE") and offer each Tagging Person the opportunity to participate in such sale. The Tag-Along Notice shall identify the number and type of Company Securities subject to the offer ("TAG-ALONG OFFER"), the cash price at which the transfer is proposed to be made, and all other material terms and conditions of the Tag-Along Offer. Each Tagging Person shall have the right (a "TAG-ALONG RIGHT"), exercisable by written notice ("SECTION 4.01 RESPONSE NOTICE") given to the Selling Person within 10 Business Days of the date of receipt of the Tag-Along Notice by such Tagging Person (the "TAG-ALONG NOTICE PERIOD"), to request that the Selling Person include in the proposed transfer the number and type of Company Securities held by such Tagging Person as is specified in such notice; PROVIDED that if the aggregate number of Company Securities proposed to be sold by the Selling Person and all Tagging Persons in such transaction exceeds the number of Company Securities which can be sold on the terms and conditions set forth in the Tag-Along Notice, then only the Tag-Along Portion of the Company Securities of each Tagging Person shall be sold pursuant to the Tag-Along Offer and the Selling Person shall sell its Tag-Along Portion of the Company Securities and such additional Company Securities as permitted by Section 4.01(d). Each Tagging Person shall deliver to the Selling Person, together with its Section 4.01 Response Notice, the certificate or certificates representing the Company Securities of such Tagging Person to be included in the transfer, together with a limited power-of-attorney authorizing the Selling Person to transfer such Company Securities on the terms set forth in the Tag-Along Notice. Delivery of such certificate or certificates representing the Company Securities to be transferred and the limited power-of-attorney authorizing the Selling Person to transfer such Company Securities shall constitute an irrevocable acceptance of the Tag-Along Offer by such Tagging Persons. If, at the end of a 120 day period after such delivery, the Selling Person has not completed the transfer of all of such Company Securities on substantially the same terms and conditions set forth in the Tag-Along Notice, the Selling Person shall return to each Tagging Person the limited power-of-attorney (and all copies thereof) together with certificates 17 representing the unsold Company Securities which such Tagging Person delivered for transfer pursuant to this Section 4.01. (b Concurrently with the consummation of the Tag-Along Sale, the Selling Person shall notify the Tagging Persons thereof, shall remit to the Tagging Persons the total consideration (by bank or certified check) for the Company Securities of the Tagging Persons transferred pursuant thereto, and shall, promptly after the consummation of such Tag-Along Sale, furnish such other evidence of the completion and time of completion of such transfer and the terms thereof as may be reasonably requested by the Tagging Persons. (c If at the termination of the Tag-Along Notice Period any Tagging Person shall not have elected to participate in the Tag-Along Sale, such Tagging Person will be deemed to have waived its rights under Section 4.01(a) with respect to the transfer of its Company Securities pursuant to such Tag-Along Sale. (d If any Tagging Person declines to exercise its Tag-Along Rights or elects to exercise its Tag-Along Rights with respect to less than such Tagging Person's Tag-Along Portion, the DLJ Entities shall be entitled to transfer, pursuant to the Tag-Along Offer, a number and type of Company Securities held by the DLJ Entities equal to the number and type of Company Securities constituting the portion of such Tagging Person's Tag-Along Portion with respect to which Tag-Along Rights were not exercised. (e The DLJ Entities and any Tagging Person who exercises the Tag-Along Rights pursuant to this Section 4.01 may sell the Company Securities subject to the Tag-Along Offer on the terms and conditions set forth in the Tag-Along Notice (PROVIDED, HOWEVER, that the cash price payable in any such sale may exceed the cash price specified in the Tag-Along Notice by up to 10%) within 120 days of the date on which Tag-Along Rights shall have been waived, exercised or expire. SECTION 4.2. RIGHT TO COMPEL PARTICIPATION IN CERTAIN TRANSFERS. (a If (i the DLJ Entities propose to transfer not less than 50% of their Initial Ownership of any class of Company Securities to a Third Party in a bona fide sale or (ii) the DLJ Entities propose a transfer in which the Company Securities to be transferred by the DLJ Entities and their Permitted Transferees constitute more than 50% of such class of outstanding Company Securities (a "SECTION 4.02 SALE"), the DLJ Entities may at their option require all Other Stockholders to sell the Drag-Along Portion of their Company Securities ("DRAG-ALONG RIGHTS"). DLJMB shall provide written notice of such Section 4.02 Sale to the Other Stockholders (a "SECTION 4.02 NOTICE") not later than 15 days prior to the proposed Section 4.02 Sale. The Section 4.02 Notice shall identify the proposed transferee for the Section 4.02 Sale, the number and type of Company Securities proposed to be transferred pursuant to the Section 4.02 Sale, the proposed 18 consideration for the Company Securities (the "SECTION 4.02 SALE PRICE") and all other material terms and conditions of the proposed Section 4.02 Sale. The number of Company Securities to be sold by each Other Stockholder will be the Drag-Along Portion of the Company Securities that such Other Stockholder owns. Subject to Sections 4.02 and 4.03, each Other Stockholder shall be required to participate in the Section 4.02 Sale on the terms and conditions set forth in the Section 4.02 Notice and to tender the Drag-Along Portion of its Company Securities as set forth below. The price payable in such transfer shall be the Section 4.02 Sale Price. Not later than the 10th day following the date of the Section 4.02 Notice (the "SECTION 4.02 NOTICE PERIOD"), each of the Other Stockholders shall deliver to a representative of DLJMB designated in the Section 4.02 Notice certificates representing the Drag Along Portion of such Other Stockholder's Company Securities, duly endorsed, together with all other documents required to be executed in connection with such Section 4.02 Sale. If any Other Stockholder should fail to deliver such certificates to DLJMB, the Company shall cause the books and records of the Company to show that the Drag-Along Portion of such Other Stockholder's Company Securities are bound by the provisions of this Section 4.02 and Section 4.03 and that such Company Securities shall be transferred to the purchaser of the Company Securities subject to the Section 4.02 Sale immediately upon surrender for transfer by the holder thereof. (b The DLJ Entities shall have a period of 90 days from the date of receipt of the Section 4.02 Notice to consummate the Section 4.02 Sale on the terms and conditions set forth in such Section 4.02 Sale Notice. If the Section 4.02 Sale shall not have been consummated during such period, DLJMB shall return to each of the Other Stockholders all certificates representing Company Securities that such Other Stockholder delivered for transfer pursuant hereto, together with any documents in the possession of DLJMB executed by the Other Stockholder in connection with such proposed Section 4.02 Sale, and all the restrictions on transfer contained in this Agreement or otherwise applicable at such time with respect to the Company Securities owned by the Other Stockholders shall again be in effect. (c Concurrently with the consummation of any Section 4.02 Sale pursuant to this Section 4.02 and Section 4.03, DLJMB shall give notice thereof to all Stockholders, shall remit to each Stockholder who has surrendered certificates in connection with such Section 4.02 Sale the total consideration (by bank or certified check) for the Company Securities represented by such Stockholder's certificates and shall furnish such other evidence of the completion and time of completion of such Section 4.02 Sale and the terms thereof as may be reasonably requested by such Stockholders. SECTION 4.3. CERTAIN RIGHTS. It is understood and agreed that the employment agreements or associated restricted stock purchase agreements 19 between one or more Management Stockholders and the Company or any Subsidiary may contain provisions permitting or requiring, under certain circumstances, such Management Stockholders to sell to the Company or a Subsidiary, and permitting or requiring, under certain circumstances, the Company or such Subsidiary to purchase from such Management Stockholder, Common Shares. Such provisions may, by the terms of such agreements, remain effective notwithstanding that the employment relationship created by such employment agreements has been terminated, in which event such provisions are deemed to be incorporated herein and made a part hereof, to the extent appropriate. ARTICLE 5 REGISTRATION RIGHTS SECTION 5.1. DEMAND REGISTRATION. (a If the Company shall receive a written request by any of (x) the DLJ Entities or their Permitted Transferees, (y) the Requisite DLJIP Entities or (z) the Putnam Entities (any such requesting Person, a "SELLING STOCKHOLDER") that the Company effect the registration under the Securities Act, which, in the case of the Requisite DLJIP Entities and the Putnam Entities, shall be a Shelf Registration, of all or a portion of such Selling Stockholder's Registrable Securities, and specifying the intended method of disposition thereof, then the Company shall promptly give written notice of such requested registration (a "DEMAND REGISTRATION") at least 10 days prior to the anticipated filing date of the registration statement relating to such Demand Registration to the Stockholders other than the Selling Stockholders and thereupon will use its best efforts to effect, as expeditiously as possible, the registration under the Securities Act of: (i the Registrable Securities then held by the Selling Stockholders which the Company has been so requested to register by the Selling Stockholders; and (ii subject to the restrictions set forth in Section 3.04, all other Registrable Securities of the same type as that to which the request by the Selling Stockholders relates which any other Stockholder entitled to request the Company to effect an Incidental Registration (as such term is defined in Section 5.02) pursuant to Section 5.02 (all such Stockholders, together with the Selling Stockholders, the "HOLDERS") has requested the Company to register by written request received by the Company within 5 days after the receipt by such Holders of such written notice given by the Company, 20 all to the extent necessary to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Securities so to be registered; PROVIDED that, subject to Section 5.01(d) hereof, (I) the Company shall not be obligated to effect more than six Demand Registrations for the DLJ Entities, (II) the Company shall not be obligated to effect more than one Demand Registration for the Requisite DLJIP Entities and (III) the Company shall not be obligated to effect more than one Demand Registration for the Putnam Entities; and PROVIDED, FURTHER, that the Company shall not be obligated to effect any Demand Registration for the DLJ Entities unless the aggregate proceeds expected to be received from the sale of Registrable Securities to be included in such Demand Registration, in the reasonable opinion of DLJMB exercised in good faith, equal or exceed (x) $25,000,000 if such Demand Registration would constitute the Initial Public Offering, or (y) $10,000,000 in all other cases. In no event will the Company be required to effect more than one Demand Registration within any four-month period. Notwithstanding anything in this Agreement to the contrary, the Putnam Entities may not assign their right to request a Demand Registration under this Section 5.01(a) to any other Person. (b Promptly after the expiration of the 5-day period referred to in Section 5.01(a)(ii) hereof, the Company will notify all the Holders to be included in the Demand Registration of the other Holders and the number of Registrable Securities requested to be included therein. The Selling Stockholders requesting a registration under this Section may, at any time prior to the effective date of the registration statement relating to such registration, revoke such request, without liability to any of the other Holders, by providing a written notice to the Company revoking such request, in which case such request, so revoked, shall be considered a Demand Registration unless the participating Stockholders reimburse the Company for all costs incurred by the Company in connection with such registration or unless such revocation arose out of the fault of the Company. (c The Company will pay all Registration Expenses in connection with any Demand Registration. (d A registration requested pursuant to this Section shall not be deemed to have been effected unless the registration statement relating thereto (A) has become effective under the Securities Act and (B) has remained effective for a period of at least 180 days (or such shorter period in which all Registrable Securities of the Holders included in such registration have actually been sold thereunder); PROVIDED that if (i) after any registration statement requested pursuant to this Section becomes effective (x) such registration statement is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court and (y) less than 75% of the Registrable Securities included in such registration statement is sold thereunder, or (ii) the Maximum Offering Size (as defined below) is reduced in accordance with Section 5.01(e) such that less than 66 2/3% of the Registrable Securities of the Selling Stockholders 21 sought to be included in such registration are included, such registration statement shall be at the sole expense of the Company and shall not be considered a Demand Registration; and PROVIDED FURTHER that, in the event of any Black Out Period (defined below), any Shelf Registration will remain effective for a period of time equal to 180 days plus the length of such Black Out Period. Notwithstanding the foregoing, the Company shall not be required to file, amend or supplement any Shelf Registration, any related prospectus or any document incorporated therein by reference, for a period (a "BLACK OUT PERIOD") not to exceed an aggregate of 60 days in any calendar year, in the event that (i) in the case of any amendment or supplement only, an event occurs and is continuing as a result of which the Shelf Registration, any related prospectus or any document incorporated therein by reference as then amended or supplemented would, in the Company's good faith judgment, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (ii) in all cases, (A) the Company determines in its good faith judgment that the disclosure of such event at such time would have a material adverse effect on the business, operations or prospects of the Company or (B) the disclosure otherwise relates to a material business transaction which has not yet been publicly disclosed; PROVIDED that such Black Out Period shall be extended for any period, not to exceed an aggregate of 30 days in any calendar year, during which the SEC is reviewing any proposed amendment or supplement to the Shelf Registration, any related prospectus or any document incorporated therein by reference which has been filed by the Company. (e If a Demand Registration involves an Underwritten Public Offering and the managing underwriter shall advise the Company and the Selling Stockholders that, in its view, (i) the number and/or type of Registrable Securities requested to be included in such registration (including any securities which the Company proposes to be included which are not Registrable Securities) or (ii) the inclusion of some or all of the Registrable Securities owned by the Holders, in any such case, exceeds the largest number and/or type of securities which can be sold without having an adverse effect on such offering, including the price at which such securities can be sold (the "MAXIMUM OFFERING SIZE"), the Company will include in such registration, in the priority listed below, up to the Maximum Offering Size: (A0 first, all Registrable Securities requested to be registered by the Selling Stockholders (allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among such Holders on the basis of the relative number of shares of Registrable Securities so requested to be registered); 22 (B0 second, all Registrable Securities requested to be included in such registration by any other Holder and their Permitted Transferees (allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among such Holders on the basis of the relative number of shares of Registrable Securities so requested to be included); and (C0 third, any securities proposed to be registered by the Company. (f If, in connection with any Demand Registration pursuant to this Section or any sale pursuant to Rule 144A under the Securities Act with respect to the Common Shares, Preferred Shares or shares of Senior Preferred Stock, any Selling Stockholder shall seek to transfer any Warrants together with Common Shares, Preferred Shares or shares of Senior Preferred Stock, the Company shall at the request of any such Selling Stockholder effect a registration of such Warrants to which the provisions of this Article 5 shall apply MUTATIS MUTANDIS and a registration, pursuant to a Shelf Registration, so as to permit the resale of the Common Shares for which any Warrants so transferred may be exercisable. The Company shall maintain the effectiveness of any such Shelf Registration, and take all actions necessary to permit resale of such Common Shares as may be required by applicable state securities laws. SECTION 5.2. INCIDENTAL REGISTRATION. (a If the Company proposes to register any Company Securities under the Securities Act (other than a registration of Common Shares (A) issuable upon exercise of employee stock options or in connection with any employee benefit or similar plan of the Company or (B) in connection with a direct or indirect acquisition by the Company of another company), whether or not for sale for its own account, it will each such time, subject to the provisions of Section 5.02(b), give prompt written notice at least 10 days prior to the anticipated filing date of the registration statement relating to such registration to each DLJ Entity and each Other Stockholder, which notice shall set forth such Stockholder's rights under this Section 5.02 and shall offer such Stockholders the opportunity to include in such registration statement such number of Registrable Securities of the same type as are proposed to be registered as each such Stockholder may request (an "INCIDENTAL REGISTRATION"). Upon the written request of any such Stockholder made within 5 days after the receipt of notice from the Company (which request shall specify the number of Registrable Securities intended to be disposed of by such Stockholder), the Company will use its best efforts to effect the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by such Stockholders, to the extent requisite to permit the disposition of the Registrable Securities so to be registered; PROVIDED that (1) if such registration involves an Underwritten Public Offering, all such Stockholders requesting to be included in the Company's registration must sell their Registrable Securities to the 23 underwriters selected as provided in Section 5.04(f) on the same terms and conditions as apply to the Company and (2) if, at any time after giving written notice of its intention to register any stock pursuant to this Section 5.02(a) and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register such securities, the Company shall give written notice to all such Stockholders and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (without prejudice, however, to the rights of any DLJ Entity under Section 5.01). No registration effected under this Section 5.02 shall relieve the Company of its obligations to effect a Demand Registration to the extent required by Section 5.01. The Company will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 5.02. (b If a registration pursuant to this Section 5.02 involves an Underwritten Public Offering (other than in the case of an Underwritten Public Offering requested by a Selling Stockholder in a Demand Registration, in which case the provisions with respect to priority of inclusion in such offering set forth in Section 5.01(e) shall apply) and the managing underwriter advises the Company that, in its view, the number and/or type of shares of Registrable Securities which the Company and the Stockholders intend to include in such registration exceeds the Maximum Offering Size, the Company will include in such registration, in the priority listed below, up to the Maximum Offering Size: (i first, so much of the securities proposed to be registered for the account of the Company as would not cause the offering to exceed the Maximum Offering Size; and (ii second, all Registrable Securities requested to be included in such registration pursuant to Section 5.02 (allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among such Stockholders on the basis of the relative number of shares of Registrable Securities requested to be so included). SECTION 5.3. HOLDBACK AGREEMENTS. If any registration of Registrable Securities shall be in connection with an Underwritten Public Offering, each Stockholder agrees not to effect any public sale or distribution, including any sale pursuant to Rule 144, or any successor provision, under the Securities Act, of any Registrable Securities, and not to effect any such public sale or distribution of any Common Shares or of any stock convertible into or exchangeable or exercisable for any Common Shares (in each case, other than as part of such Underwritten Public Offering) during the 14 days prior to the effective date of such registration statement (except as part of such registration) or during the period after such effective date equal to the lesser of (i) such period of time as agreed between such 24 managing underwriter and the Company and (ii) 180 days (such lesser period, the "APPLICABLE HOLDBACK PERIOD"). SECTION 5.4. REGISTRATION PROCEDURES. Whenever Stockholders request that any Registrable Securities be registered pursuant to Section 5.01 or 5.02, the Company will, subject to the provisions of such Sections, use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof as quickly as practicable, and in connection with any such request: (a The Company will as expeditiously as possible prepare and file with the SEC a registration statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of the Registrable Securities to be registered thereunder in accordance with the intended method of distribution thereof, and use its best efforts to cause such filed registration statement to become and remain effective for a period of not less than 180 days. (b The Company will, if requested, prior to filing a registration statement or prospectus or any amendment or supplement thereto, furnish to each Stockholder holding Registrable Securities covered by such registration statement and each underwriter, if any, of the Registrable Securities covered by such registration statement copies of such registration statement as proposed to be filed, and thereafter the Company will furnish to such Stockholder and underwriter, if any, such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such Stockholder or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Stockholder. (c After the filing of the registration statement, the Company will promptly notify each Stockholder holding Registrable Securities covered by such registration statement of any stop order issued or threatened by the SEC and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered. (d The Company will use its best efforts to (i) register or qualify the Registrable Securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions in the United States as any Stockholder holding such Registrable Securities reasonably (in light of such Stockholder's intended plan of distribution) requests and (ii) cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may 25 be reasonably necessary or advisable to enable such Stockholder to consummate the disposition of the Registrable Securities owned by such Stockholder; PROVIDED that the Company will not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (d), (B) subject itself to taxation in any such jurisdiction or (C) consent to general service of process in any such jurisdiction. (e The Company will immediately notify each Stockholder holding such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and promptly prepare and make available to each such Stockholder any such supplement or amendment. (f (i The DLJ Entities will have the right, in their sole discretion, to select an underwriter or underwriters in connection with any Public Offering resulting from the exercise by any such DLJ Entity or its Permitted Transferee of a Demand Registration, which underwriter or underwriters may include any Affiliate of any DLJ Entity and (ii) the Company will select an underwriter or underwriters in connection with any other Public Offering. In connection with any Public Offering, the Company will enter into customary agreements (including an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of Registrable Securities in any such Public Offering, including the engagement of a "qualified independent underwriter" in connection with the qualification of the underwriting arrangements with the NASD. (g Upon the execution of confidentiality agreements in form and substance satisfactory to the Company, the Company will make available for inspection by any Stockholder and any underwriter participating in any disposition pursuant to a registration statement being filed by the Company pursuant to this Section 5.04 and any attorney, accountant or other professional retained by any such Stockholder or underwriter (collectively, the "INSPECTORS"), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the "RECORDS") as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers, directors and employees to supply all information reasonably requested by any Inspectors in connection with such registration statement. Records that the Company determines, in good faith, to be confidential and that it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in such registration statement or (ii) the release of such Records is 26 ordered pursuant to a subpoena or other order from a court of competent jurisdiction. Each Stockholder agrees that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the Company Securities or its Affiliates unless and until such is made generally available to the public. Each Stockholder further agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential. (h The Company will furnish to each such Stockholder and to each such underwriter, if any, a signed counterpart, addressed to such underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a comfort letter or comfort letters from the Company's independent public accountants, each in customary form and covering such matters of the type customarily covered by opinions or comfort letters, as the case may be, as a majority of such Stockholders or the managing underwriter therefor reasonably requests. (i) The Company will otherwise use its best efforts to comply with all applicable rules and regulations of the SEC, and make available to its stockholders, as soon as reasonably practicable, an earnings statement covering a period of 12 months, beginning within three months after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act. The Company may require each such Stockholder to promptly furnish in writing to the Company such information regarding the distribution of the Registrable Securities as the Company may from time to time reasonably request and such other information as may be legally required in connection with such registration. Each such Stockholder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5.04(e), such Stockholder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Stockholder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 5.04(e), and, if so directed by the Company, such Stockholder will deliver to the Company all copies, other than any permanent file copies then in such Stockholder's possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice. In the event that the Company shall give such notice, the Company shall extend the period during which such registration statement shall be maintained effective (including the period referred to in Section 5.04(a)) by the number of days during the period from and including the date of the giving of notice pursuant to Section 5.04(e) to the date when the Company shall make available to such 27 Stockholder a prospectus supplemented or amended to conform with the requirements of Section 5.04(e). Each Stockholder agrees that, upon receipt of the notice from the Company of the commencement of a Black Out Period (in each case, a "BLACK OUT NOTICE"), such Person will forthwith discontinue disposition of Registrable Securities pursuant to the Shelf Registration until such Person is advised in writing by the Company of the termination of the Black Out Period. Each Person receiving a Black Out Notice hereby agrees that it will either (i) destroy any prospectuses, other than permanent file copies, then in such Person's possession which have been replaced by the Company with more recently dated prospectuses or (ii) deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Person's possession of the prospectus covering such Registrable Securities that was current at the time of receipt of the Black Out Notice. SECTION 5.5. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and hold harmless each Stockholder holding Registrable Securities covered by a registration statement, its officers, directors and agents, and each person, if any, who controls such Stockholder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities caused by any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus relating to the Registrable Securities (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to the Company by such Stockholder or on such Stockholder's behalf expressly for use therein; PROVIDED that with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus, or in any prospectus, as the case may be, the indemnity agreement contained in this paragraph shall not apply to the extent that any such loss, claim, damage, liability or expense results from the fact that a current copy of the prospectus (or, in the case of a prospectus, the prospectus as amended or supplemented) was not sent or given to the person asserting any such loss, claim, damage, liability or expense at or prior to the written confirmation of the sale of the Registrable Securities concerned to such person if it is determined that the Company has provided such prospectus and it was the responsibility of such Stockholder to provide such person with a current copy of the prospectus (or such amended or supplemented prospectus, as the case may be) and such current copy of the prospectus (or such 28 amended or supplemented prospectus, as the case may be) would have cured the defect giving rise to such loss, claim, damage, liability or expense. The Company also agrees to indemnify any underwriters of the Registrable Securities, their officers and directors and each person who controls such underwriters on substantially the same basis as that of the indemnification of the Stockholders provided in this Section 5.05. SECTION 5.6. INDEMNIFICATION BY PARTICIPATING STOCKHOLDERS. Each Stockholder holding Registrable Securities included in any registration statement agrees, severally but not jointly, to indemnify and hold harmless the Company, its officers, directors and agents and each Person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Stockholder, but only (i) with respect to information furnished in writing by such Stockholder or on such Stockholder's behalf expressly for use in any registration statement or prospectus relating to the Registrable Securities, or any amendment or supplement thereto, or any preliminary prospectus or (ii) to the extent that any loss, claim, damage, liability or expense described in Section 5.05 results from the fact that a current copy of the prospectus (or, in the case of a prospectus, the prospectus as amended or supplemented) was not sent or given to the Person asserting any such loss, claim, damage, liability or expense at or prior to the written confirmation of the sale of the Registrable Securities concerned to such Person if it is determined that it was the responsibility of such Stockholder to provide such Person with a current copy of the prospectus (or such amended or supplemented prospectus, as the case may be) and such current copy of the prospectus (or such amended or supplemented prospectus, as the case may be) would have cured the defect giving rise to such loss, claim, damage, liability or expense. Each such Stockholder also agrees to indemnify and hold harmless underwriters of the Registrable Securities, their officers and directors and each Person who controls such underwriters on substantially the same basis as that of the indemnification of the Company provided in this Section 5.06. As a condition to including Registrable Securities in any registration statement filed in accordance with Article 5 hereof, the Company may require that it shall have received an undertaking reasonably satisfactory to it from any underwriter to indemnify and hold it harmless to the extent customarily provided by underwriters with respect to similar securities. SECTION 5.7. CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Article 5, such Person (an "INDEMNIFIED PARTY") shall promptly notify the Person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and expenses; PROVIDED that the failure of any 29 Indemnified Party so to notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that the Indemnifying Party is materially prejudiced by such failure to notify. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) in the reasonable judgment of such Indemnified Party representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified Parties, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by the Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding. SECTION 5.8. CONTRIBUTION. If the indemnification provided for in this Article 5 is unavailable to the Indemnified Parties in respect of any losses, claims, damages or liabilities referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities (i) as between the Company and the Stockholders holding Registrable Securities covered by a registration statement on the one hand and the underwriters on the other, in such proportion as is appropriate to reflect the relative benefits received by the Company and such Stockholders on the one hand and the underwriters on the other, from the offering of the Registrable Securities, or if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits but also the relative fault of the Company and such Stockholders on the one hand and of such underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations and (ii) as between the Company on the one hand and each such Stockholder on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of each such Stockholder in connection with such 30 statements or omissions, as well as any other relevant equitable considerations. The relative benefits received by the Company and such Stockholders on the one hand and such underwriters on the other shall be deemed to be in the same proportion as the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by the Company and such Stockholders bear to the total underwriting discounts and commissions received by such underwriters, in each case as set forth in the table on the cover page of the prospectus. The relative fault of the Company and such Stockholders on the one hand and of such underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and such Stockholders or by such underwriters. The relative fault of the Company on the one hand and of each such Stockholder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Stockholders agree that it would not be just and equitable if contribution pursuant to this Section 5.08 were determined by pro rata allocation (even if the underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 5.08, no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and no Stockholder shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities of such Stockholder were offered to the public exceeds the amount of any damages which such Stockholder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Each such Stockholder's obligation to contribute pursuant to this Section 5.08 is several in the proportion that the proceeds of the offering received by such Stockholder bears to the total proceeds of the offering received by all such Stockholders and not joint. 31 SECTION 5.9. PARTICIPATION IN PUBLIC OFFERING. No Person may participate in any Public Offering hereunder unless such Person (a) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and the provisions of this Agreement in respect of registration rights. SECTION 5.10. OTHER INDEMNIFICATION. Indemnification similar to that specified herein (with appropriate modifications) shall be given by the Company and each Stockholder participating therein with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act. SECTION 5.11. COOPERATION BY THE COMPANY. In the event any Stockholder shall transfer any Registrable Securities pursuant to Rule 144A under the Securities Act, the Company shall cooperate, to the extent commercially reasonable, with such Stockholder and shall provide to such Stockholder such information as such Stockholder shall reasonably request. 32 ARTICLE 6 MISCELLANEOUS SECTION 6.1. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among the parties hereto and supersedes all prior agreements and understandings, oral and written, among the parties hereto with respect to the subject matter hereof. SECTION 6.2. BINDING EFFECT; BENEFIT. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, shall confer on any Person other than the parties hereto, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. SECTION 6.3. EXCLUSIVE FINANCIAL AND INVESTMENT BANKING ADVISOR. During the period from and including the date of the Original Agreement through and including the fifth anniversary of such date, Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC"), or any Affiliate of DLJSC that the DLJ Entities may choose in their sole discretion, shall be engaged as the exclusive financial and investment banking advisor of the Company. DLJSC or such Affiliate shall be entitled to reimbursement from the Company for all expenses incurred by DLJSC or such Affiliate (including, without limitation, fees and expenses of counsel) as financial and investment banking advisor of the Company. SECTION 6.4. ASSIGNABILITY. This Agreement shall not be assignable by any party hereto, except that any Person acquiring Company Securities who is required by the terms of this Agreement or any employment agreement or stock purchase, option, stock option or other compensation plan of the Company or any Subsidiary to become a party hereto shall (unless already bound hereby) execute and deliver to the Company an agreement to be bound by this Agreement and shall thenceforth be a "STOCKHOLDER"; PROVIDED that, except as otherwise provided in Section 2.06, the DLJIP Entities and the DLJIP Transferees may assign their rights and obligations under this Agreement to any Person acquiring Company Securities upon execution by such Person of an agreement to be bound by this Agreement, which Person shall thenceforth be a "STOCKHOLDER"; PROVIDED FURTHER that, except as otherwise provided in Section 5.01, the Putnam Entities and the Putnam Transferees may assign their rights and obligations under this Agreement to any Person acquiring Company Securities upon execution by such Person of an agreement to be bound by this Agreement, which Person shall thenceforth be a "STOCKHOLDER". Any Stockholder who ceases to own beneficially any Company Securities shall cease to be bound by the terms hereof (other than the provisions of 33 Sections 5.05, 5.06, 5.07, 5.08, and 5.10 applicable to such Stockholder with respect to any offering of Registrable Securities completed before the date such Stockholder ceased to own any Company Securities). SECTION 6.5. AMENDMENT; WAIVER; TERMINATION. No provision of this Agreement may be waived except by an instrument in writing executed by the party against whom the waiver is to be effective. No provision of this Agreement may be amended or otherwise modified except by an instrument in writing executed by the Company with the approval of the Board and Stockholders holding at least 75% of the outstanding Shares, calculated on a Fully-Diluted basis; PROVIDED that any such amendment or modification that materially and adversely affects the rights of the DLJIP Entities or the Putnam Entities shall also require the prior written consent the DLJIP Entities or the Putnam Entities, as the case may be (but only for so long as the affected holder holds Company Securities equal to at least (i) 1% of the outstanding Shares on a Fully-Diluted basis or (ii) its Initial Ownership (calculated for the purposes of this proviso, in the case of the DLJIP Entities, as of the date of this Agreement)). SECTION 6.6. NOTICES. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmissions and shall be given, 34 If to the Company, to: DeCrane Holdings, Co. 2361 Rosecrans Avenue Suite 180 El Segundo, CA 90245 Attention: R. Jack DeCrane Fax: (310) 643-0746 If to the Opco, to: DeCrane Aircraft Holdings, Inc. 2361 Rosecrans Avenue Suite 180 El Segundo, CA 90245 Attention: R. Jack DeCrane Fax: (310) 643-0746 If to the DLJ Entities, to: DLJ Merchant Banking Partners II, L.P. 277 Park Avenue New York, New York 10172 Attention: Thompson Dean Fax: (212) 892-7272 With a copy to: Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Attention: George R. Bason, Jr., Esq. Fax: (212) 450-4800 If to the DLJIP Entities, to: DLJ Investment Partners II, Inc. 277 Park Avenue New York, New York 10172 Attention: Michelle Bergman Fax: (212) 892-7272 35 with a copy to: Cahill Gordon & Reindel 80 Pine Street New York, New York 10005 Attention: John Schuster, Esq. Fax: (212) 269-5420 if to the Putnam Entities, to: Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 Attention: Jennifer Leichter Fax: (617) 292-1625 with a copy to: Ropes & Gray One International Place Boston, Massachusetts 02110 Attention: Gregory T. Pusch Fax: (617) 951-7050 All 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. Any notice, request or other written communication sent by facsimile transmission shall be confirmed by certified mail, return receipt requested, posted within one Business Day, or by personal delivery, whether courier or otherwise, made within two Business Days after the date of such facsimile transmission. Any Person who becomes a Stockholder shall provide its address and fax number to the Company, which shall promptly provide such information to each DLJ Entity and each other Stockholder. SECTION 6.7. HEADINGS. The headings contained in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement. 36 SECTION 6.8. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. SECTION 6.9. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAW RULES OF SUCH STATE. SECTION 6.10. SPECIFIC ENFORCEMENT. Each party hereto acknowledges that the remedies at law of the other parties for a breach or threatened breach of this Agreement would be inadequate and, in recognition of this fact, any party to this Agreement, without posting any bond, and in addition to all other remedies which may be available, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available. SECTION 6.11. CONSENT TO JURISDICTION. 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 other New York State court sitting in New York City, and each of the parties hereby consents to the exclusive 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 which 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 Section 6.06 shall be deemed effective service of process on such party. 37 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. DECRANE HOLDINGS CO. By:_______________________________ Name: Title: DECRANE AIRCRAFT HOLDINGS, INC. By:_______________________________ Name: Title: DLJ MERCHANT BANKING PARTNERS II, L.P. BY DLJ MERCHANT BANKING II, INC. Managing General Partner By:_______________________________ Name: Title: DLJ MERCHANT BANKING PARTNERS II-A, L.P. BY DLJ MERCHANT BANKING II, INC., Managing General Partner By:_______________________________ Name: Title: 38 DLJ OFFSHORE PARTNERS II, C.V. BY DLJ MERCHANT BANKING II, INC., Advisory General Partner By:_______________________________ Name: Title: DLJ DIVERSIFIED PARTNERS, L.P. BY DLJ DIVERSIFIED PARTNERS, INC., Managing General Partner By:_______________________________ Name: Title: DLJ DIVERSIFIED PARTNERS-A, L.P. BY DLJ DIVERSIFIED PARTNERS, INC., Managing General Partner By:_______________________________ Name: Title: DLJMB FUNDING II, INC. By:_______________________________ Name: Title: 39 DLJ EAB PARTNERS, L.P. BY DLJ LBO PLANS MANAGEMENT CORPORATION, General Partner By:_______________________________ Name: Title: DLJ MILLENNIUM PARTNERS, L.P. BY DLJ MERCHANT BANKING II, INC., Managing General Partner By:_______________________________ Name: Title: UK INVESTMENT PLAN 1997 PARTNERS BY UK INVESTMENT PLAN 1997, INC., General Partner By:_______________________________ Name: Title: DLJ FIRST ESC L.P. BY DLJ LBO PLANS MANAGEMENT CORPORATION, as General Partner By:_______________________________ Name: Title: 40 DLJ ESC II L.P. BY DLJ LBO PLANS MANAGEMENT CORPORATION, as General Partner By:_______________________________ Name: Title: DLJ MILLENNIUM PARTNERS-A, L.P. BY DLJ MERCHANT BANKING II, INC., Managing General Partner By:_______________________________ Name: Title: DLJ INVESTMENT PARTNERS, L.P. BY DLJ INVESTMENT PARTNERS, INC., as Managing General Partner By:_______________________________ Name: Title: DLJ INVESTMENT PARTNERS II, L.P. BY DLJ INVESTMENT PARTNERS II, INC., as Managing General Partner By:_______________________________ Name: Title: 41 DLJ INVESTMENT FUNDING II, INC. By:_______________________________ Name: Title: PUTNAM HIGH YIELD TRUST PUTNAM FUNDS TRUST - PUTNAM HIGH YIELD TRUST II PUTNAM HIGH YIELD ADVANTAGE FUND PUTNAM VARIABLE TRUST - PUTNAM VT HIGH YIELD FUND PUTNAM STRATEGIC INCOME FUND PUTNAM DIVERSIFIED INCOME TRUST By: PUTNAM INVESTMENT MANAGEMENT, INC. By:_______________________________ Name: Title: 42 EX-10.10-31 15 a2029395zex-10_1031.txt EXHIBIT 10.10-3-1 DECRANE AIRCRAFT HOLDINGS, INC. EXHIBIT 10.10.3.1 FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT This FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this "AMENDMENT") is dated as of June 30, 2000 and entered into by and among DeCrane Aircraft Holdings, Inc., a Delaware corporation ("COMPANY"), the financial institutions listed on the signature pages hereof ("LENDERS"), DLJ Capital Funding, Inc., as syndication agent for Lenders ("SYNDICATION AGENT"), and Bank One, NA, as administrative agent for Lenders ("ADMINISTRATIVE AGENT"), and is made with reference to that certain Third Amended and Restated Credit Agreement dated as of May 11, 2000 (the "CREDIT AGREEMENT"), by and among Company, the lenders listed on the signature pages thereof, Syndication Agent and Administrative Agent. Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement. RECITALS WHEREAS, Company and Lenders desire to amend the Credit Agreement to permit the issuance by Company of up to $25,000,000 of Senior Exchangeable Preferred Stock and to modify subsection 7.16 of the Credit Agreement regarding the acquisition of ERDA, Inc. in certain respects. NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT 1.1 AMENDMENTS TO SECTION 1: DEFINITIONS A. Subsection 1.1 of the Credit Agreement is hereby amended by adding thereto the following definition, which shall be inserted in proper alphabetical order: "`COMPANY PREFERRED STOCK' means the Senior Exchangeable Preferred Stock, which shall accrue dividends at the rate of 16.0% per annum and mature in 2009, issued by Company, the proceeds of which will be used as provided in subsection 7.16." B. Subsection 1.1 of the Credit Agreement is hereby amended by deleting the definition of "Change of Control" and inserting the following definition in lieu thereof, which shall be inserted in proper alphabetical order: "`CHANGE IN CONTROL' means (i) the failure of Parent at any time to own, directly or indirectly, free and clear of all Liens and encumbrances (other than Liens created under the Loan Documents and Liens described in clauses (i) and (iv) of the definition of "Permitted Encumbrances"), all right, title and interest in 100% of the capital stock of Company, other than the Company 1 Preferred Stock; (ii) the failure of the DLJMB and the Affiliates of any entity included in the definition of "DLJMB" to own at least 51% (on a fully diluted basis) of the economic and voting interest in the voting stock of Parent; (iii) the failure of DLJMB and the Affiliates of any entity included in the definition of "DLJMB" at any time to have the right to designate or nominate at least 51% of the Board of Directors of Parent; or (iv) the occurrence of a "Change of Control" as defined under any agreement governing any Subordinated Indebtedness issued by Company or the PIK Preferred Stock or PIK Notes issued by Parent." 1.2 AMENDMENTS TO SECTION 7: COMPANY'S NEGATIVE COVENANTS Subsection 7.16 is hereby amended by deleting it in its entirety and substituting the following therefor: "7.16 ERDA ACQUISITION. Company shall not, and shall not permit any of its Subsidiaries to, consummate, directly or indirectly, the acquisition of ERDA, Inc. unless (i) Company has received additional gross cash proceeds of at least $25,000,000 from the issuance of Company Preferred Stock and (ii) the aggregate purchase price (excluding Earn-Outs) for ERDA, Inc. does not exceed $34,000,000, and (iii) the documentation for such acquisition shall be in form and substance reasonably satisfactory to Syndication Agent." SECTION 2. CONDITIONS TO EFFECTIVENESS The amendments referred to in Section 1 are subject to the satisfaction on or prior to June 30, 2000 of all of the following conditions precedent and the conditions set forth in Section 5E hereof (the date of satisfaction of such conditions being referred to herein as the "FIRST AMENDMENT EFFECTIVE DATE"): A. On or before the First Amendment Effective Date, Company shall deliver to Lenders (or to Administrative Agent for Lenders with sufficient originally executed copies, where appropriate, for each Lender and its counsel) the following, each, unless otherwise noted, dated the First Amendment Effective Date: 1 Resolutions of its Board of Directors approving and authorizing the execution, delivery, and performance of this Amendment and the issuance of the Company Preferred Stock, certified as of the First Amendment Effective Date by its corporate secretary or an assistant secretary as being in full force and effect without modification or amendment; 2 Signature and incumbency certificates of its officers executing this Amendment; and 3 Executed originals of this Amendment, executed by Company and by each Subsidiary Guarantor. 2 B. Lenders shall have received originally executed copies of one or more favorable written opinions of Davis Polk & Wardwell, Spolin & Silverman and other counsel reasonably acceptable to the Agents, each counsel for Company, in form and substance reasonably satisfactory to Administrative Agent and its counsel, dated as of the First Amendment Effective Date and setting forth, collectively, substantially the matters in the opinions designated in ANNEX A to this Amendment. C. All documents executed or submitted in connection with the transactions contemplated hereby by or on behalf of Company or any of its Subsidiaries shall be reasonably satisfactory in form and substance to Agents and their counsel; Agents and their counsel shall have received all information, approvals, opinions, documents or instruments that Agents or their counsel shall have reasonably requested. SECTION 3. COMPANY'S REPRESENTATIONS AND WARRANTIES In order to induce Lenders to enter into this Amendment and to amend the Credit Agreement in the manner provided herein, Company represents and warrants to each Lender that the following statements are true, correct and complete on and as of the First Amendment Effective Date: A. CORPORATE POWER AND AUTHORITY. Each of Company and each of its Subsidiaries has all requisite corporate power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement as amended by this Amendment (the "AMENDED AGREEMENT"). B. AUTHORIZATION OF AGREEMENTS; COMPANY PREFERRED STOCK. The execution and delivery of this Amendment and the performance of the Amended Agreement have been duly authorized by all necessary corporate action on the part of each of Company and each of its Subsidiaries. The issuance of the Company Preferred Stock has been duly authorized by all requisite corporate action by Company and when issued, will be validly issued, fully paid and nonassessable. C. NO CONFLICT. The execution, delivery and performance by each of Company and each of its Subsidiaries of this Amendment, the performance by Company of the Amended Agreement and the issuance of the Company Preferred Stock do not and will not (i) violate any provision of (x) any law or any governmental rule or regulation applicable to Company or any of its Subsidiaries where such violations in the aggregate have had or could reasonably be expected to have a Material Adverse Effect, (y) the Certificate or the Articles of Incorporation or Bylaws of Parent, Company or any of Company's Subsidiaries or (z) any order, judgment or decree of any court or other agency of government binding on Company or any of Company's Subsidiaries where such violations in the aggregate have had or could reasonably be expected to have a Material Adverse Effect, (ii) conflict with, result in a breach of or constitute a default under any Contractual Obligation of Parent, Company or any of its Subsidiaries where such conflict, breach or default in the aggregate have had or could reasonably be expected to have a Material Adverse Effect, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of Company or any of Company's Subsidiaries (other than Liens created under any of the Loan Documents in favor 3 of Administrative Agent on behalf of Lenders), or (iv) require any approval of or consent of any Person under any Contractual Obligation of Parent, Company or any of Company's Subsidiaries, except for such approvals or consents the failure of which to obtain has not had and could not reasonably be expected to have a Material Adverse Effect. D. GOVERNMENTAL CONSENTS. The execution, delivery and performance by each of Company and each of its Subsidiaries of this Amendment, the performance by Company of the Amended Agreement and the issuance of the Company Preferred Stock do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body other than any such registrations, consents, approvals, notices or other actions (x) that have been made, obtained or taken on or prior to the date on which such registrations, consents, approvals, notices or other actions are required to be made, obtained or taken, as the case may be, and are in full force and effect or (y) the failure of which to make, obtain or take has not had and could not reasonably be expected to have a Material Adverse Effect. E. BINDING OBLIGATION. Each of this Amendment and the Amended Agreement has been duly executed and delivered by each Loan Party that is a party thereto and is the legally valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT AGREEMENT. The representations and warranties contained in Section 5 of the Credit Agreement are and will be true, correct and complete in all material respects on and as of the First Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date. G. ABSENCE OF DEFAULT. No event has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment that would constitute an Event of Default or a Potential Event of Default. SECTION 4. ACKNOWLEDGEMENT AND CONSENT Each of Parent and the Subsidiary Guarantors (each a "GUARANTOR") is a party to a Guaranty and each such Guarantor has guarantied the Obligations. Each Guarantor hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this Amendment and consents to the amendment of the Credit Agreement effected pursuant to this Amendment. Each Guarantor hereby confirms that the Guaranty to which it is a party or otherwise bound will continue to guaranty to the fullest extent possible the payment and performance of all "Guarantied Obligations" as such term is defined in the applicable Guaranty, including without limitation the payment and 4 performance of all such "Guarantied Obligations" in respect of the Obligations of Company now or hereafter existing under or in respect of the Amended Agreement. Each Guarantor (a) acknowledges and agrees that the Guaranty to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment; (b) represents and warrants that all representations and warranties contained in the Amended Agreement and in the Guaranty to which it is a party or otherwise bound are true, correct and complete in all material respects on and as of the First Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date; and (c) acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment, such Guarantor is not required by the terms of the Credit Agreement or any other Loan Document to consent to the amendments to the Credit Agreement effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, this Amendment or any other Loan Document shall be deemed to require the consent of such Guarantor to any future amendments to the Credit Agreement. SECTION 5. MISCELLANEOUS A. EFFECT OF AMENDMENT. Reference to and effect on the Credit Agreement and the other Loan Documents. (i) On and after the First Amendment Effective Date, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the "Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Agreement. (ii) Except as specifically amended by this Amendment, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. (iii) The execution, delivery and performance of this Amendment shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of Agents or any Lender under, the Credit Agreement or any of the other Loan Documents. B. FEES AND EXPENSES. Company acknowledges that all costs, fees and expenses as described in subsection 10.2 of the Credit Agreement incurred by Agents and their counsel with respect to this Amendment and the documents and transactions contemplated hereby shall be for the account of Company. 5 C. HEADINGS. Section and subsection headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect. D. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. E. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Amendment (other than the provisions of Section 1 hereof, the effectiveness of which is governed by Section 2 hereof) shall become effective upon the execution of a counterpart hereof by Company, Requisite Lenders, Syndication Agent, Administrative Agent, and the Guarantors and receipt by Company and Agents of written or telephonic notification of such execution and authorization of delivery thereof. [Remainder of page intentionally left blank] IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. DECRANE AIRCRAFT HOLDINGS, INC., a Delaware corporation By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer 6 AEROSPACE DISPLAY SYSTEMS, INC., a Delaware corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer AUDIO INTERNATIONAL, INC., an Arkansas corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer AVTECH CORPORATION, a Washington corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer BOOTH ACQUISITION, LLC, a Delaware limited liability corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Title: 7 CORY COMPONENTS, INC., a California corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer DETTMERS INDUSTRIES, INC., a Delaware corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer ELSINORE AEROSPACE SERVICES, INC., a California corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer 8 ELSINORE ENGINEERING,INC., a California corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer HOLLINGSEAD INTERNATIONAL, INC., a California corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer TRI-STAR ELECTRONICS INTERNATIONAL, INC., a California corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer PATS, INC., a Maryland corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer 9 PATS AIRCRAFT AND ENGINEERING CORPORATION, a Maryland corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer FLIGHT REFUELING, INC., a Maryland corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer PATRICK AIRCRAFT TANK SYSTEMS, INC., a Maryland corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer PATS SUPPORT, INC., a Maryland corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer 10 PPI HOLDINGS, INC., a Kansas corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer PRECISION PATTERN, INC., a Kansas corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer CUSTOM WOODWORK & PLASTICS, INC., a Delaware corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer INTERNATIONAL CUSTOM INTERIORS, INC., a Florida corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer 11 PCI ACQUISITION CO., INC., a Delaware corporation (for purposes of Section 4 only) as a Subsidiary Guarantor By:______________________________________ Name: Richard J. Kaplan Title: Senior Vice President and Chief Financial Officer DECRANE HOLDINGS CO., a Delaware corporation (for purposes of Section 4 only) as a guarantor By:______________________________________ Name:_______________________________ Title:______________________________ DLJ CAPITAL FUNDING, INC., as a Lender and as Syndication Agent By:______________________________________ Name:_______________________________ Title:______________________________ BANK ONE, NA, as a Lender and as Administrative Agent By:______________________________________ Name:_______________________________ Title:______________________________ 12 UNION BANK OF CALIFORNIA, N.A., as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ BHF (USA) CAPITAL CORPORATION, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ CITY NATIONAL BANK, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ U.S. BANK NATIONAL ASSOCIATION, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ 13 PARIBAS, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ By:______________________________________ Name:_______________________________ Title:______________________________ MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ NORSE CBO, LTD., as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ THE TRAVELERS INSURANCE COMPANY, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ 14 VAN KAMPEN SENIOR FLOATING RATE FUND, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ ARCHIMEDES FUNDING II, LTD., as a Lender By: ING Capital Advisors, LLC, as Collateral Manager By:_______________________________ Name:___________________________ Title:__________________________ ARCHIMEDES FUNDING III, LTD., as a Lender By: ING Capital Advisors, LLC, as Collateral Manager By:_______________________________ Name:___________________________ Title:__________________________ 15 BALANCED HIGH-YIELD FUND II LTD., as a Lender By: BHF (USA) Capital Corporation As Attorney-In-Fact By:_______________________________ Name:___________________________ Title:__________________________ By:_______________________________ Name:___________________________ Title:__________________________ KZH HIGHLAND-2 LLC, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ THE TRAVELERS CORPORATE LOAN FUND INC., as a Lender By: Travelers Asset Management International Corp. By:_______________________________ Name:___________________________ Title:__________________________ 16 ING HIGH INCOME PRINCIPAL PRESERVATION FUND HOLDINGS, LDC, as a Lender By: ING Capital Advisors LLC, as Investment Advisor By:_______________________________ Name:___________________________ Title:__________________________ SEQUILS-ING I (HBDGM), LTD., as a Lender By: ING Capital Advisors LLC, as Collateral Manager By:_______________________________ Name:___________________________ Title:__________________________ VAN KAMPEN PRIME RATE INCOME TRUST, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ 17 SAAR HOLDINGS CDO, LIMITED, as a Lender By: Massachusetts Mutual Life Insurance Company, as Collateral Manager By:_______________________________ Name:__________________________ Title:_________________________ KZH ING-3 LLC, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ KZH ING-2 LLC, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ 18 BALANCED HIGH-YIELD FUND I LTD., as a Lender By: BHF-BANK Aktiengesellschaft By:_______________________________ Name:__________________________ Title:_________________________ By:_______________________________ Name:__________________________ Title:_________________________ PERSEUS CDO I, LIMITED, as a Lender By: Massachusetts Mutual Life Insurance Company, as Collateral Manager By:_______________________________ Name:__________________________ Title:_________________________ KZH RIVERSIDE LLC, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ HIGHLAND CAPITAL MANAGEMENT, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ 19 KEMPER FLOATING RATE FUND, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ OLYMPIC FUNDING TRUST, SERIES 1999-1, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ SRF TRADING, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ STEIN ROE & FARNHAM CLO I LTD., as a Lender By: Stein Roe & Farnham Incorporated, as Portfolio Manager By:_______________________________ Name:__________________________ Title:_________________________ 20 OPPENHEIMER SENIOR FLOATING RATE FUND, as a Lender By:______________________________________ Name:_______________________________ Title:______________________________ LIBERTY - STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND, as a Lender, by Stein Roe & Farnham Incorporated, as Advisor By:______________________________________ Name:_______________________________ Title:______________________________ COLUMBUS LOAN FUNDING, LTD, as a Lender, By:______________________________________ Name:_______________________________ Title:______________________________ KEYPORT LIFE INSURANCE COMPANY, as a Lender By: Stein Roe & Farnham Incorporated, as agent By:_____________________________ Name:___________________________ Title:__________________________ 21 STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY, as a Lender By: ___________________________________ Name: ___________________________________ Title:___________________________________ MUIRFIELD TRADING LLC, as a Lender By: ___________________________________ Name: ___________________________________ Title:___________________________________ VAN KAMPEN SENIOR INCOME TRUST, as a Lender By: ___________________________________ Name: ___________________________________ Title:___________________________________ THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, as a Lender By: ___________________________________ Name: ___________________________________ Title:___________________________________ ELC (CAYMAN) LTD. 1999-III, as a Lender By: ___________________________________ Name: ___________________________________ Title:___________________________________ 22 ELC (CAYMAN) LTD. 2000-I, as a Lender By: ___________________________________ Name: ___________________________________ Title:___________________________________ NORTHWOODS CAPITAL, LIMITED, as a Lender By: Angelo, Gordon & Co., L.P., as Collateral Manager By: _________________________ Name: _________________________ Title: _________________________ NORTHWOODS CAPITAL II, LIMITED, as a Lender By: Angelo, Gordon & Co., L.P., as Collateral Manager By: _________________________ Name: _________________________ Title: _________________________ KZH SHOSHONE, as a Lender By: ___________________________________ Name: ___________________________________ Title:___________________________________ 23 MAPLEWOOD (CAYMAN) LIMITED, as a Lender By: ___________________________________ Name: ___________________________________ Title:___________________________________ 24 ANNEX A MATTERS TO BE COVERED IN OPINION OF COUNSEL TO COMPANY 1. Company has been duly incorporated, and is validly existing in good standing under the laws of the State of Delaware with corporate power to own its properties and assets, to enter into the Amendment, to issue the Company Preferred Stock, and to perform its obligations under the Amendment. 2. The execution, delivery and performance of the Amendment by Company and the issuance of the Company Preferred Stock have been duly authorized by all necessary corporate action on the part of Company, the Amendment has been duly executed and delivered by Company, and the Amendment and the Amended Credit Agreement constitute the legally valid and binding obligations of Company, enforceable against Company in accordance with their respective terms except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors' rights generally (including, without limitation, fraudulent conveyance laws) and by general principles of equity including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific performance or injunctive relief, regardless of whether considered in a proceeding in equity or at law. 3. When issued, the Company Preferred Stock will be validly issued fully paid and nonassessable. 4. Company's execution and delivery of the Amendment, the consummation of the transactions contemplated by the Amendment and the issuance of the Company Preferred Stock do not and will not (i) violate the Certificate of Incorporation or By-laws of Parent or of Company, (ii) violate, breach or result in a default under any existing obligation of Parent or of Company under any other agreement, (iii) breach or otherwise violate any existing obligation of Company under any order, judgment or decree of any New York, California or federal court or Governmental Authority binding on Company or (iv) violate any New York, California or federal statute or regulation. 5. No governmental consents, approvals, authorizations, registrations, declarations or filings are required by Company in connection with the execution and delivery by Company of the Amendment, the performance by Company of the Amended Credit Agreement and the issuance of the Company Preferred Stock. 25 EX-21.1 16 a2029395zex-21_1.txt EXHIBIT 21.1 LIST OF SUBSIDIARIES OF REGISTRANT EXHIBIT 21.1 SUBSIDIARIES OF DECRANE AIRCRAFT HOLDINGS, INC. AEROSPACE DISPLAY SYSTEMS, LLC, a Delaware limited liability company. AUDIO INTERNATIONAL, INC., an Arkansas corporation. AVTECH CORPORATION, a Washington corporation. CARL F. BOOTH & CO., LLC, a Delaware limited liability company. COLTECH, INC., a Texas corporation. CORY COMPONENTS, INC., a California corporation. CUSTOM WOODWORK & PLASTICS, LLC, a Delaware limited liability company. DAH-IP HOLDINGS, INC., a Delaware corporation. DAH-IP INFINITY, INC., a Delaware corporation. DECRANE AIRCRAFT FURNITURE CO., LP, a Texas limited partnership. DECRANE AIRCRAFT INTERNATIONAL SALES, INC., a Barbados corporation. DETTMERS INDUSTRIES, INC., a Delaware corporation. ELSINORE AEROSPACE SERVICES, INC., a California corporation. ELSINORE ENGINEERING, INC., a Delaware corporation. ERDA, INC., a Wisconsin Corporation. FLIGHT REFUELING, INC., a Maryland corporation. HOLLINGSEAD INTERNATIONAL, INC., a California corporation. HOLLINGSEAD INTERNATIONAL, LTD., a UK company. INTERNATIONAL CUSTOM INTERIORS, INC., a Florida corporation. PATRICK AIRCRAFT TANK SYSTEMS, INC., a Maryland corporation. PATS AIRCRAFT AND ENGINEERING CORPORATION, a Maryland corporation. PATS SUPPORT, INC., a Maryland corporation. PATS, INC., a Maryland corporation. PCI NEWCO, INC., a Delaware Corporation. PPI HOLDINGS, INC., a Kansas corporation. PRECISION PATTERN, INC., a Kansas corporation. THE INFINITY PARTNERS, LTD., a Texas limited partnership. TRI-STAR ELECTRONICS EUROPE S.A., a Swiss company. TRI-STAR ELECTRONICS INTERNATIONAL, INC., a California corporation. TRI-STAR TECHNOLOGIES, a California general partnership. EX-27 17 a2029395zex-27.txt EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 1,848 0 66,820 1,951 81,074 153,970 70,054 14,214 624,145 67,656 380,316 26,000 0 0 115,771 624,145 254,421 254,421 169,527 214,941 228 (143) 29,977 9,275 5,643 3,632 0 0 0 3,632 0 0
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