-----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, GG6dyhTCI3+YimQSsKujgk4z07SYtMZF8jsxZz6FJHNkTNAElijxRtUdOg90st7V 2DiZFISoMwA3x8Vsf2EnZA== 0000950103-98-000734.txt : 19980723 0000950103-98-000734.hdr.sgml : 19980723 ACCESSION NUMBER: 0000950103-98-000734 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19980722 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DECRANE AIRCRAFT HOLDINGS INC CENTRAL INDEX KEY: 0000880765 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 341645569 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-52423 FILM NUMBER: 98669589 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 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DECRANE ACQUISITION CO CENTRAL INDEX KEY: 0001066323 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 277 PAKR AVENUE CITY: NEW YORK STATE: NY ZIP: 10172 BUSINESS PHONE: 2128924460 MAIL ADDRESS: STREET 1: 277 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10172 SC 14D1 1 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- SCHEDULE 14D-1 Tender Offer Statement Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934 DECRANE AIRCRAFT HOLDINGS, INC. (Name of Subject Company) DECRANE ACQUISITION CO. (Bidder) COMMON STOCK (Title of Class of Securities) -------------- 243662103 (Cusip Number) Thompson Dean c/o DLJ Merchant Banking Partners II, L.P. 277 Park Avenue New York, NY 10172 Telephone: (212) 892-3000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) Copies to: George R. Bason, Jr. Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Telephone: (212) 450-4000 CALCULATION OF FILING FEE Transaction valuation* Amount of filing fee ---------------------- -------------------- $186,553,000 $37,310.60 * Value derived by multiplying 8,111,000 (number of shares of common stock of the subject company outstanding on a fully diluted basis) by $23.00 (the purchase price per share offered by the bidder). [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Not applicable. Form or Registration No.: Not applicable. Filing Party: Not applicable. Date Filed: Not applicable. =============================================================================== CUSIP No. 243662103 1 NAMES OF REPORTING PERSONS DeCrane Acquisition Co. S.S. or I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS BK; AF; WC; OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) OR 2(f) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None 8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ] 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) N/A 10 TYPE OF REPORTING PERSON CO Item l. Security and Subject Company (a) The name of the subject company is DeCrane Aircraft Holdings, Inc., a Delaware corporation (the "Company"), and the address of its principal executive offices is 2361 Rosecrans Avenue, Suite 180, El Segundo, CA 90245. (b) This Statement relates to the offer by DeCrane Acquisition Co., a Delaware corporation ("Bidder"), to purchase all outstanding shares of Common Stock, $0.01 par value (the "Shares"), of the Company at $23.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase (the "Offer to Purchase") and in the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(l) and (a)(2) (which are herein collectively referred to as the "Offer"). The information set forth in the introduction to the Offer to Purchase (the "Introduction") is incorporated herein by reference. (c) The information set forth in Section 6 "Price Range of Shares; Dividends" of the Offer to Purchase is incorporated herein by reference. Item 2. Identity and Background. (a)-(d) This Statement is filed by Bidder. The information set forth in the Introduction, Section 8 "Certain Information Concerning the Purchaser, Finance, Parent, DLJMB and the DLJMB Funds" and Schedules A-O of the Offer to Purchase is incorporated herein by reference. (e)-(f) Neither Bidder, nor, to the best knowledge of Bidder, any of the Reporting Entities (as defined in the Offer to Purchase) nor any of the persons listed in Schedules A-O of the Offer to Purchase, has during the last five years (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. Item 3. Past Contacts, Transactions or Negotiations with the Subject Company. (a)-(b) The information set forth in the Introduction and Section l0 "Background of the Offer; Past Contacts, Transactions or Negotiations with the Company" of the Offer to Purchase is incorporated herein by reference. Item 4. Source and Amount of Funds or Other Consideration. (a)-(b) The information set forth in Section 9 "Source and Amount of Funds" of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder. (a)-(e) The information set forth in the Introduction and Section 11 "Purpose of the Offer; Plans for the Company; Merger Agreement and Other Agreements" of the Offer to Purchase is incorporated herein by reference. (f)-(g) The information set forth in Section 12 "Effect of the Offer on the Market for the Shares; Registration Under the Exchange Act" of the Offer to Purchase is incorporated herein by reference. Item 6. Interest in Securities of the Subject Company. (a)-(b) The information set forth in the Introduction, Section 10 "Background of the Offer; Past Contacts, Transactions or Negotiations with the Company" and Schedules A-O of the Offer to Purchase is incorporated herein by reference. Item 7. Contracts, Arrangements, Understandings or Relationships with Respect to the Subject Company's Securities. The information set forth in the Introduction, Section 8 "Certain Information Concerning the Purchaser, Finance, Parent, DLJMB and the DLJMB Funds", Section 9 "Source and Amount of Funds", and Section 10 "Background of the Offer; Past Contacts, Transactions or Negotiations with the Company" of the Offer to Purchase is incorporated herein by reference. Item 8. Persons Retained, Employed or to be Compensated. The information set forth in Section 17 "Fees and Expenses" of the Offer to Purchase is incorporated herein by reference. Item 9. Financial Statements of Certain Bidders. Not applicable. Item 10. Additional Information. (a) None. (b)-(c) The information set forth in Section 16 "Certain Legal Matters; Regulatory Approvals" of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 9 "Source and Amount of Funds" of the Offer to Purchase is incorporated herein by reference. (e) The information set forth in the Introduction and Section 16 "Certain Legal Matters; Regulatory Approvals" of the Offer to Purchase is incorporated herein by reference. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal is incorporated herein by reference in its entirety. Item 11. Material to be Filed as Exhibits. (a)(l) Offer to Purchase dated July 22, 1998. (a)(2) Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9). (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Text of press release issued by Bidder and the Company dated July 17, 1998. (a)(7) Form of summary advertisement dated July 22, 1998. (b) Commitment letter from DLJ Bridge Finance, Inc. dated July 16, 1998 referred to in Section 9 "Source and Amount of Funds" of the Offer to Purchase. (c)(1) Commitment letter from DLJ Capital Funding, Inc. dated July 16, 1998 referred to in Section 9 "Source and Amount of Funds" of the Offer to Purchase. (c)(2) Agreement and Plan of Merger between DeCrane Aircraft Holdings, Inc. and DeCrane Acquisition Co. dated as of July 16, 1998. (c)(3) Confidentiality Agreement dated June 15, 1998 between DeCrane Aircraft Holdings, Inc. and DLJ Merchant Banking II, Inc. SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: July 22, 1998 DECRANE ACQUISITION CO. By: /s/ Timothy J. White ---------------------------- Name: Timothy J. White Title: Vice President EXHIBIT INDEX Exhibit No. Description Page No. - ----------- ----------- -------- (a)(l) Offer to Purchase dated July 22, 1998. (a)(2) Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9). (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Text of press release issued by Bidder and the Company dated July 17, 1998. (a)(7) Form of summary advertisement dated July 22, 1998. (b) Commitment letter from DLJ Capital Funding, Inc. dated July 16, 1998 referred to in Section 9 "Source and Amount of Funds" of the Offer to Purchase. (c)(1) Commitment letter from DLJ Bridge Finance, Inc. dated July 16, 1998 referred to in Section 9 "Source and Amount of Funds" of the Offer to Purchase. (c)(2) Agreement and Plan of Merger between DeCrane Aircraft Holdings, Inc. and DeCrane Acquisition Co. dated as of July 16, 1998. (c)(3) Confidentiality Agreement dated June 15, 1998 between DeCrane Aircraft Holdings, Inc. and DLJ Merchant Banking II, Inc.
EX-99.(A)(1) 2 Exhibit (a) (1) Offer to Purchase for Cash All Outstanding Shares of Common Stock of DeCrane Aircraft Holdings, Inc. at $23.00 Net Per Share by DeCrane Acquisition Co. a company formed by DLJ MERCHANT BANKING PARTNERS II, L.P. and Affiliated Funds THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, AUGUST 25, 1998, UNLESS THE OFFER IS EXTENDED. -------------- THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD OF DIRECTORS") HAS UNANIMOUSLY DETERMINED THAT EACH OF THE OFFER AND THE MERGER DESCRIBED HEREIN IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. -------------- THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN BY THE EXPIRATION DATE A NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE "SHARES") OF DECRANE AIRCRAFT HOLDINGS, INC. (THE "COMPANY") WHICH, TOGETHER WITH THE SHARES THEN OWNED BY DECRANE ACQUISITION CO. (THE "PURCHASER"), WOULD REPRESENT AT LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED BASIS AND (2) THERE BEING AVAILABLE TO THE PURCHASER SUFFICIENT FUNDS TO PURCHASE THE SHARES PURSUANT TO THE OFFER AND TO PAY RELATED FEES AND EXPENSES. -------------- Warburg Dillon Read LLC ("Warburg Dillon Read"), financial advisor to the Company, has delivered to the Board of Directors its written opinion to the effect that, as of the date of the Merger Agreement, the $23.00 in cash to be received by the holders of Shares in the Offer and the Merger described below is fair to such holders from a financial point of view. The full text of the written opinion of Warburg Dillon Read containing the assumptions made, the matters considered and the scope of the review undertaken in rendering such opinion as well as the limitations of such opinion is included with the Company's solicitation/recommendation statement on Schedule 14D-9, which is being mailed to stockholders concurrently herewith. Stockholders are urged to read the full text of such opinion in conjunction with this Offer. -------------- Any stockholder desiring to tender Shares should either (1) complete and sign the Letter of Transmittal (or facsimile thereof) in accordance with the instructions in the Letter of Transmittal and deliver it with the certificate(s) representing tendered Shares and all other required documents to the Depositary or tender such Shares pursuant to the procedures for book-entry transfer set forth in Section 3 or (2) request his or her broker, dealer, commercial bank, trust company or other nominee to effect the transaction for him or her. A stockholder having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such person if he or she desires to tender such Shares. Any stockholder who desires to tender Shares and cannot deliver such Shares and all other required documents to the Depositary by the expiration of the Offer or who cannot comply with the procedures for book-entry transfer on a timely basis must tender such Shares pursuant to the guaranteed delivery procedure set forth in Section 3. Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent, brokers, dealers, commercial banks or trust companies. -------------- The Dealer Manager for the Offer is: Donaldson, Lufkin & Jenrette July 22, 1998 ----------------- TABLE OF CONTENTS ----------------- Page ---- 1. Terms of the Offer; Expiration Date......................................2 2. Acceptance for Payment and Payment.......................................2 3. Procedure for Tendering Shares...........................................3 4. Withdrawal Rights........................................................5 5. Certain Tax Considerations...............................................5 6. Price Range of Shares; Dividends.........................................6 7. Certain Information Concerning the Company...............................6 8. Certain Information Concerning the Purchaser, Finance, Parent, DLJMB and the DLJMB Funds..............................10 9. Source and Amount of Funds..............................................13 10. Background of the Offer; Past Contacts, Transactions or Negotiations with the Company...........................15 11. Purpose of the Offer, Plans for the Company; Merger and Other Agreements....................................16 12. Effect of the Offer on the Market for the Shares; Registration under the Exchange Act.23 13. Distributions...........................................................24 14. Extension of Tender Period; Termination; Amendment...............................................................25 15. Certain Conditions of the Offer.........................................26 16. Certain Legal Matters; Regulatory Approvals.............................27 17. Fees and Expenses.......................................................28 18. Miscellaneous...........................................................29 Schedule A Directors and Executive Officers of the Purchaser, Finance and Parent Schedules B - O Directors and Executive Officers of the Reporting Entities INTRODUCTION To the Holders of Common Stock of DECRANE AIRCRAFT HOLDINGS, INC.: DeCrane Acquisition Co., a Delaware corporation (the "Purchaser") and a wholly-owned, indirect subsidiary of DeCrane Holdings Co., a Delaware corporation ("Parent"), a company formed by DLJ Merchant Banking Partners II, L.P. ("DLJMB") and certain affiliated funds (collectively with DLJMB and as further described in Section 8 hereof, the "DLJMB Funds"), hereby offers to purchase all outstanding shares of Common Stock, $0.01 par value (the "Shares"), of DeCrane Aircraft Holdings, Inc., a Delaware corporation (the "Company"), at $23.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"). Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The Purchaser will pay all charges and expenses of Donaldson, Lufkin & Jenrette Securities Corporation (the "Dealer Manager" or "DLJSC"), BankBoston, N.A. (the "Depositary") and D.F. King & Co., Inc. (the "Information Agent") incurred in connection with the Offer. See Section 17. The Offer is conditioned upon, among other things, (1) there being validly tendered and not withdrawn prior to the Expiration Date (as hereinafter defined) a number of Shares which, together with the Shares then owned by the Purchaser, would represent at least a majority of the total number of outstanding Shares on a fully diluted basis (the "Minimum Tender Condition") and (2) there being available to the Purchaser sufficient funds to purchase the Shares pursuant to the Offer and to pay related fees and expenses (the "Financing Condition"). The total amount of funds required by the Purchaser to purchase all of the Shares pursuant to the Offer, to refinance existing debt of the Company and to pay related fees and expenses is estimated to be approximately $289.6 million. It is anticipated that the purchase of the Shares will be financed with (i) borrowings of approximately $90.6 million by DeCrane Finance Co. ("Finance"), a wholly-owned subsidiary of Parent, under certain bank facilities; (ii) the issuance by Parent and Finance, for cash, of not more than $134.0 million in equity and debt securities; and (iii) the issuance, for cash proceeds of not less than $65.0 million, of common stock of Parent to be purchased by the DLJMB Funds (the "Equity Purchase" and, collectively, the "Financing"). See Section 9. THE BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT EACH OF THE OFFER AND THE MERGER DESCRIBED HEREIN IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. The Offer is being made pursuant to an Agreement and Plan of Merger dated as of July 16, 1998 (the "Merger Agreement") between the Company and the Purchaser. The Merger Agreement provides, among other things, that as soon as practicable after the consummation of the Offer, the Purchaser will be merged with and into the Company (the "Merger"), with the Company continuing as the surviving corporation (the "Surviving Corporation"). Pursuant to the Merger, each outstanding Share (other than Shares held by Parent, the Purchaser or any other subsidiary of Parent (collectively, the "Purchaser Companies") or Shares held by stockholders exercising appraisal rights) will be converted into a right to receive $23.00 in cash, or any higher price that may be paid per Share in the Offer, without interest. See Section 11. According to the Company, as of July 20, 1998, there were outstanding 7,524,740 Shares and not more than 586,260 Shares subject to issuance pursuant to the Company's stock option and incentive plans. As such, the Purchaser believes that the Minimum Tender Condition would be satisfied if more than approximately 4,055,500 Shares are validly tendered pursuant to the Offer and not withdrawn. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 1. Terms of the Offer; Expiration Date. Upon the terms and subject to the conditions set forth in the Offer, the Purchaser will accept for payment and pay for all Shares that are validly tendered by the Expiration Date and not withdrawn as provided in Section 4. The term "Expiration Date" shall mean 12:00 Midnight, New York City time, on Tuesday, August 25, 1998, unless the Purchaser shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. The Offer is subject to certain conditions set forth in Section 15, including the satisfaction of the Minimum Tender Condition, the satisfaction of the Financing Condition, and the expiration or termination of the waiting period applicable to the Purchaser's acquisition of Shares pursuant to the Offer and the Equity Purchase under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). If any such condition is not satisfied, the Purchaser may (i) terminate the Offer and return all tendered Shares to tendering stockholders, (ii) extend the Offer, subject to the Company's right to terminate the Merger Agreement if the Offer has not been consummated within 60 days of the commencement of the Offer and subject to withdrawal rights as set forth in Section 4, retain all such Shares until the expiration of the Offer as so extended, (iii) waive such condition and, subject to any requirement to extend the period of time during which the Offer is open, purchase all Shares validly tendered by the Expiration Date and not withdrawn or (iv) delay acceptance for payment or payment for Shares, subject to applicable law, until satisfaction or waiver of the conditions to the Offer. For a description of the Purchaser's right to extend the period of time during which the Offer is open and to amend, delay or terminate the Offer, see Sections 14 and 15. The Company has provided the Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares and will be furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. 2. Acceptance for Payment and Payment. Upon the terms and subject to the conditions of the Offer, the Purchaser will accept for payment and pay for all Shares validly tendered by the Expiration Date and not withdrawn as soon as practicable after the later of the Expiration Date and the satisfaction or waiver of the conditions set forth in Section 15. In addition, the Purchaser reserves the right, in its sole discretion and subject to applicable law, to delay the acceptance for payment or payment for Shares in order to comply in whole or in part with any applicable law. For a description of the Purchaser's right to terminate the Offer and not accept for payment or pay for Shares or to delay acceptance for payment or payment for Shares, see Section 14. For purposes of the Offer, the Purchaser shall be deemed to have accepted for payment tendered Shares when, as and if the Purchaser gives oral or written notice to the Depositary of its acceptance of the tenders of such Shares. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price with the Depositary, which will act as agent for the tendering stockholders for the purpose of receiving payments from the Purchaser and transmitting such payments to tendering stockholders. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares (or of a confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (as defined in Section 3)), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other required documents. For a description of the procedure for tendering Shares pursuant to the Offer, see Section 3. Accordingly, payment may be made to tendering stockholders at different times if delivery of the Shares and other required documents occur at different times. Under no circumstances will interest be paid by the Purchaser on the consideration paid for Shares pursuant to the Offer, regardless of any delay in making such payment. If the Purchaser increases the consideration to be paid for Shares pursuant to the Offer, the Purchaser will pay such increased consideration for all Shares purchased pursuant to the Offer. The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates the right to purchase Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer or prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment. If any tendered Shares are not purchased pursuant to the Offer for any reason, or if certificates are submitted for more Shares than are tendered, certificates for such unpurchased or untendered Shares will be returned (or, in the case of Shares tendered by book-entry transfer, such Shares will be credited to an account maintained at the Book-Entry Transfer Facility), without expense to the tendering stockholder, as promptly as practicable following the expiration or termination of the Offer. 3. Procedure for Tendering Shares. To tender Shares pursuant to the Offer, either a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by the Letter of Transmittal must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and either certificates for the Shares to be tendered must be received by the Depositary at one of such addresses or such Shares must be delivered pursuant to the procedures for book-entry transfer described below (and a confirmation of such delivery received by the Depositary including an Agent's Message (as defined below) if the tendering stockholder has not delivered a Letter of Transmittal), in each case by the Expiration Date, or the guaranteed delivery procedure described below must be complied with. The term "Agent's Message" means a message, transmitted by the Book-Entry Transfer Facility to and received by the Depositary and forming a part of a book-entry confirmation which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares which are the subject of such book-entry confirmation that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against such participant. Book Entry Delivery. The Depositary will establish an account with respect to the Shares at The Depository Trust Company (referred to as the "Book-Entry Transfer Facility") for purposes of the Offer within two business days after the date of this Offer to Purchase, and any financial institution that is a participant in the system of the Book-Entry Transfer Facility may make delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the procedures of the Book-Entry Transfer Facility. However, although delivery of Shares may be effected through book-entry transfer, the Letter of Transmittal (or facsimile thereof) properly completed and duly executed together with any required signature guarantees or an Agent's Message and any other required documents must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase by the Expiration Date, or the guaranteed delivery procedure described below must be complied with. Delivery of the Letter of Transmittal and any other required documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary. Signature Guarantees. Except as otherwise provided below, all signatures on a Letter of Transmittal must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) which is a member of a recognized Medallion Program approved by The Securities Transfer Association Inc., including the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York Stock Exchange, Inc. Medallion Signature Program (MSP) (an "Eligible Institution"). Signatures on a Letter of Transmittal need not be guaranteed (a) if the Letter of Transmittal is signed by the registered holder of the Shares tendered therewith and such holder has not completed the box entitled "Special Payment Instructions" on the Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to the Offer and cannot deliver such Shares and all other required documents to the Depositary by the Expiration Date, or such stockholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered if all of the following conditions are met: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Purchaser is received by the Depositary (as provided below) by the Expiration Date; and (iii) the certificates for such Shares (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantee or an Agent's Message and any other documents required by the Letter of Transmittal, are received by the Depositary within three Nasdaq Stock Market trading days after the date of execution of the Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, telex, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice. The method of delivery of Shares and all other required documents, including through the Book-Entry Transfer Facility, is at the option and risk of the tendering stockholder and the delivery will be deemed made only when actually received by the Depositary. If certificates for Shares are sent by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time (in the case of registered mail, up to ten days) should be allowed to ensure timely delivery. Under the federal income tax laws, the Depositary will be required to withhold 31% of the amount of any payments made to certain stockholders pursuant to the Offer. In order to avoid such backup withholding, each tendering stockholder must provide the Depositary with such stockholder's correct taxpayer identification number and certify that such stockholder is not subject to such backup withholding by completing the Substitute Form W-9 included in the Letter of Transmittal. If a stockholder is a non-resident alien or foreign entity not subject to back-up withholding, the stockholder must give the Depositary a completed Form W-8 Certificate of Foreign Status prior to receipt of any payment. By executing a Letter of Transmittal, a tendering stockholder irrevocably appoints designees of the Purchaser as such stockholder's proxies in the manner set forth in the Letter of Transmittal to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by the Purchaser (and any and all other Shares or other securities issued or issuable in respect of such Shares on or after July 22, 1998). All such proxies shall be irrevocable and coupled with an interest in the tendered Shares. Such appointment is effective only upon the acceptance for payment of such Shares by the Purchaser.( ) Upon such acceptance for payment, all prior proxies and consents granted by such stockholder with respect to such Shares and other securities will, without further action, be revoked, and no subsequent proxies may be given nor subsequent written consents executed by such stockholder (and, if given or executed, will not be deemed to be effective). Such designees of the Purchaser will be empowered to exercise all voting and other rights of such stockholder as they, in their sole discretion, may deem proper at any annual, special or adjourned meeting of the Company's stockholders, by written consent or otherwise. The Purchaser reserves the right to require that, in order for Shares to be validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares, the Purchaser is able to exercise full voting rights with respect to such Shares and other securities (including voting at any meeting of stockholders then scheduled or acting by written consent without a meeting). The tender of Shares pursuant to any one of the procedures described above will constitute the tendering stockholder's acceptance of the Offer, as well as the tendering stockholder's representation and warranty that (a) such stockholder owns the Shares being tendered within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (b) the tender of such Shares complies with Rule 14e-4, and (c) such stockholder has the full power and authority to tender and assign the Shares tendered, as specified in the Letter of Transmittal. The Purchaser's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and the Purchaser upon the terms and subject to the conditions of the Offer. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding. The Purchaser reserves the absolute right to reject any or all tenders of Shares determined by it not to be in proper form or the acceptance for payment of or payment for which may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right to waive any defect or irregularity in any tender of Shares. None of the Purchaser, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in tenders or incur any liability for failure to give any such notification. 4. Withdrawal Rights. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn after September 19, 1998 unless theretofore accepted for payment as provided in this Offer to Purchase. If the Purchaser extends the period of time during which the Offer is open, is delayed in accepting for payment or paying for Shares or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Depositary may, on behalf of the Purchaser, retain all Shares tendered, and such Shares may not be withdrawn except as otherwise provided in this Section 4. To be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn and the name of the registered holder of Shares, if different from that of the person who tendered such Shares. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with (except in the case of Shares tendered by an Eligible Institution) signatures guaranteed by an Eligible Institution must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered holder (if different from that of the tendering stockholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by again following one of the procedures described in Section 3 at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding. None of the Purchaser, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in any notice of withdrawal or incur any liability for failure to give any such notification. 5. Certain Tax Considerations. Sales of Shares by stockholders of the Company pursuant to the Offer will be taxable transactions for federal income tax purposes and may also be taxable transactions under applicable state and local and other tax laws. In general, a stockholder will recognize gain or loss equal to the difference between the tax basis of his or her Shares and the amount of cash received in exchange therefor. Such gain or loss will be capital gain or loss if the Shares are capital assets in the hands of the stockholder and will be long-term gain or loss if the holding period for the Shares is more than one year as of the date of the sale of such Shares. The foregoing discussion may not apply to stockholders who acquired their Shares pursuant to the exercise of stock options or other compensation arrangements with the Company or who are not citizens or residents of the United States or who are otherwise subject to special tax treatment under the Internal Revenue Code of 1986, as amended. The federal income tax discussion set forth above is included for general information only and is based upon present law. Due to the individual nature of tax consequences, stockholders are urged to consult their tax advisors as to the specific tax consequences to them of the Offer, including the effects of applicable state, local or other tax laws. 6. Price Range of Shares; Dividends. The Shares trade under the symbol "DAHX" and are quoted on the Nasdaq National Market System (the "Nasdaq National Market"). The following table sets forth for the periods indicated the high and low sale prices per Share as reported on the Nasdaq National Market, as reported in the Company's Annual Report on Form 10-K for the year ended December 31, 1997 (the "Company 10-K") with respect to 1997 and thereafter as reported in published financial sources. Bid prices represent quotations by dealers, do not reflect mark-ups, mark-downs or commissions and may not represent actual transactions. High Low ---- --- 1997 Second Quarter *.................. $14 7/8 $ 9 3/4 Third Quarter..................... 19 1/4 14 5/8 Fourth Quarter.................... 21 15 1/4 1998 First Quarter..................... 19 15 9/16 Second Quarter.................... 18 7/8 15 7/8 Third Quarter (through July 21)... 22 43/64 17 1/2
* from April 16, 1997 On July 16, 1998, the last full day of trading prior to the announcement of the Offer and the execution of the Merger Agreement, the reported closing sales price per Share on the Nasdaq National Market was $17 5/8. On July 21, 1998, the last full day of trading prior to the commencement of the Offer, the reported closing sales price per Share on the Nasdaq National Market was $22 5/8. According to the Company 10-K, the Company has never paid cash dividends on the Shares. Stockholders are urged to obtain current market quotations for the Shares. 7. Certain Information Concerning the Company. The Company is a Delaware corporation with its principal executive offices located at 2361 Rosecrans Avenue, Suite 180, El Segundo, CA 90245. According to the Company 10-K, the Company and its subsidiaries manufacture avionics components and provide avionics systems integration services in certain niche markets of the commercial and high-end corporate jet aircraft industries. The products and services offered by the Company are utilized primarily in commercial and corporate aircraft to connect, support and/or integrate various avionics systems, including cabin avionics systems and flight deck avionic systems. The Company's targeted markets consist of commercial aircraft and avionics original equipment manufacturers, the commercial aircraft retrofit market, the commercial aircraft aftermarket and high-end corporate jet market. The Company also sells products and services to the military aircraft market. The Company was formed in 1989 to capitalize on emerging trends in the aircraft market through acquisitions. Since its formation, the Company has completed eleven acquisitions of businesses or assets. A summary of these transactions follows: Recent Mergers and Acquisitions
Year of Transaction Target Principal Products and Services(1) ----------- ------ ---------------------------------- 1990 Hollingsead International, Inc. Avionics support structures 1991 Tri-Star Electronics International, Inc. Contacts & connectors 1991 Tri-Star Europe, S.A. Contact blanks 1991 Tri-Star Technologies, Inc. Wire marking equipment 1991 Cory Components, Inc. Connectors & harness assemblies 1996 Aerospace Display Systems, Inc. Dichroic LCD devices 1996 Elsinore Engineering services 1996 AMP Facility Contact blanks 1997 Audio International, Inc. Cabin management & entertainment products 1998 Avtech Corporation Cockpit audio, lighting, power & control 1998 Dettmers Corporation Corporate aircraft seats
- ------------ (1) At the time of the transaction. The following selected consolidated financial data relating to the Company and its subsidiaries has been taken or derived from the audited financial statements contained in the Company 10-K and the unaudited financial statements contained in the Company's quarterly report on form 10-Q for its fiscal quarter ended March 31, 1998 (the "Company 10-Q") and the Company's quarterly report on form 10-Q for its fiscal quarter ended March 31, 1997, respectively. More comprehensive financial information is included in such 10-K and 10-Qs and the other documents filed by the Company with the Securities and Exchange Commission (the "Commission"), and the financial data set forth below is qualified in its entirety by reference to such reports and other documents including the financial statements contained therein. Such reports and other documents may be examined and copies may be obtained from the offices of the Commission in the manner set forth below. DECRANE AIRCRAFT HOLDINGS, INC. SELECTED CONSOLIDATED FINANCIAL DATA
Three months ended March 31, Year ended December 31, (unaudited) ------------------------------------- -------------------------- 1995 1996(1) 1997(2) 1997 1998 -------- -------- -------- --------- ----------- (In thousands, except per share data) Income Statement Data: Revenues....................................... $ 55,839 $ 65,099 $108,903 $26,118 $ 29,128 43,463 49,392 80,247 20,107 20,141 -------- -------- -------- ------- -------- Cost of sales.................................. Gross profit................................... 12,376 15,707 28,656 6,011 8,987 Selling, general and administrative expenses... 9,426 10,747 15,756 3,384 4,879 Amortization intangible assets................. 1,115 709 905 207 379 -------- -------- -------- ------- -------- Operating income............................... 1,835 4,251 11,995 2,420 3,729 Interest expense............................... 3,821 4,248 3,154 1,592 786 Other (income) expense, net.................... 297 (85) 131 (118) (29) Minority interest.............................. 85 193 112 31 12 -------- -------- -------- ------- -------- Income (loss) before provision for income taxes and extraordinary item.................. (2,368) (105) 8,598 915 2,960 Provision for income taxes(3).................. 1,078 712 3,344 286 1,272 -------- -------- -------- ------- -------- Income (loss) before extraordinary item........ (3,446) (817) 5,254 629 1,688 Extraordinary loss from debt refinancing(4).... -- -- (2,078) -- -- Net income (loss).............................. $ (3,446) $ (817) $ 3,176 $ 629 $ 1,688 ======== ======== ======== ======= ======== Net income (loss) applicable to common stockholders.................................. $ (3,307) $ (6,357) $531 $249 $ 1,688 ======== ======== ======== ======= ======== Income (loss) per common share Basic Income (loss) before accounting change and extraordinary item.................... $ (38.45) $ (73.92) $ 0.69 $ 2.90 $ 0.32 Extraordinary loss(4)....................... -- -- (0.55) -- -- -------- -------- -------- ------- -------- Net income (loss)........................... $ (38.45) $ (73.92) $ 0.14 $ 2.90 $ 0.32 ======== ======== ======== ======= ======== Diluted Income (loss) before accounting change and extraordinary item.................... $ (38.45) $ (73.92) $ 0.62 $ 0.20 $ 0.30 Extraordinary loss(4)....................... -- -- -- (0.42) -- -------- -------- -------- ------- -------- Net income (loss)........................... $ (38.45) $ (73.92) $ 0.20 $ 0.20 $ 0.30 ======== ======== ======== ======= ======== Pro forma before extraordinary item(5) Basic....................................... $ 1.16 $ 0.27 $ 0.32 Diluted..................................... 1.10 0.25 0.30 Balance Sheet Data: Working capital................................ $12,583 $10,486 $24,772 $11,275 $ 33,092 Total assets................................... 36,329 69,266 99,137 72,611 103,599 Total debt..................................... 24,672 42,250 38,838 42,537 44,485 Mandatorily redeemable preferred stock and common stock warrants......................... 1,633 6,879 -- 6,879 -- Stockholders' equity (deficit)................. (1,697) 1,236 39,527 1,695 41,124
- ----------- (1) Includes the effect of the acquisition of the remaining 25% minority interest in Cory Components, Inc. ("Cory Components") beginning February 20, 1996, the date on which the transaction occurred, and the results of Aerospace Display Systems and Elsinore beginning September 18, 1996 and December 5, 1996, respectively, the dates on which they were acquired. (2) Includes the effect of: (i) the initial public offering ("IPO") and the application of the net proceeds therefrom on April 16, 1997; and (ii) the acquisition of Audio International, Inc. beginning November 14, 1997, the date on which it was acquired. (3) Prior to the acquisition of the remaining 25% minority interest in Cory Components in 1996, the Company did not consolidate the earnings of Cory Components for tax purposes. As such, despite a consolidated pre-tax loss in each of the years, the Company recorded a provision for income taxes from 1993 up to the date of the acquisition of the remaining 25% minority interest in 1996 which primarily relates to Cory Components. (4) Represents the write-off, net of an income tax benefit, of deferred financing costs, unamortized original issue discounts, a prepayment penalty and other related expenses incurred as a result of the repayment of debt by the Company with the proceeds from its IPO in 1997. (5) Pro forma for the recapitalization of the Company in April 1998, as described in the Company 10-Q, and the IPO in 1997 and the application of the net proceeds therefrom. The information concerning the Company contained herein has been taken from or is based upon reports and other documents on file with the Commission or otherwise publicly available. Although the Purchaser does not have any knowledge that would indicate that any statements contained herein based upon such reports and documents are untrue, the Purchaser does not take any responsibility for the accuracy or completeness of the information contained in such reports and other documents or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information but are unknown to the Purchaser. The Company is subject to the informational requirements of the Exchange Act and in accordance therewith files periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. The Company is required to disclose in such proxy statements certain information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company. Such reports, proxy statements and other information may be inspected at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and should also be available for inspection and copying at the regional offices of the Commission in New York (Seven World Trade Center, 13th Floor, New York, New York 10048), Los Angeles (Suite 500 East, Tishman Building, 5757 Wilshire Boulevard, Los Angeles, California 90036) and Chicago (Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661). Copies of such material can also be obtained from the Public Reference Section of the Commission in Washington, D.C. 20549, at prescribed rates. Such material also may be accessed electronically by means of the Commission's home page on the Internet (http://www.sec.gov). In the course of the discussions between representatives of DLJMB and the Company (see Section 10), certain projections of future operating performance were furnished to DLJMB's representatives. These projections were not prepared with a view to public disclosure or compliance with published guidelines of the Commission or the guidelines established by the American Institute of Certified Public Accountants regarding projections, and are included in this Offer to Purchase only because they were provided to DLJMB. None of DLJMB, the Purchaser, the Company, any of their financial advisors or the Dealer Manager assumes any responsibility for the accuracy of these projections. In addition, these projections are based upon a variety of assumptions relating to the businesses of the Company which may not be realized and are subject to significant competitive uncertainties and contingencies beyond the control of the Company. There can be no assurance that the projections will be realized, and actual results may vary materially from those shown. Set forth below is a summary of the projections. The projections should be read together with the financial statements of the Company referred to herein. DECRANE AIRCRAFT HOLDINGS, INC. PROJECTED FINANCIAL INFORMATION (In thousands)
1998 1999 2000 2001 2002 ------ ------ ------ ------ ------ Net Sales... $178.4 $206.8 $235.5 $263.2 $285.7 EBITDA*..... 39.1 44.3 51.1 57.7 64.9
- ------------ * Earnings before income tax, depreciation and amortization. 8. Certain Information Concerning the Purchaser, Finance, Parent, DLJMB and the DLJMB Funds. Parent is a Delaware corporation incorporated on July 14, 1998 and to date has engaged in no activities other than those incident to its formation and the transactions contemplated by the Merger Agreement (including the Financing). Parent is a wholly-owned subsidiary of DLJMB and, immediately prior to the consummation of the Offer, will become a wholly-owned subsidiary of the DLJMB Funds. The principal executive offices of Parent are located at c/o DLJ Merchant Banking II, Inc., 277 Park Avenue, New York, NY 10172. Finance, a wholly-owned subsidiary of Parent, is a Delaware corporation incorporated on July 15, 1998 and to date has engaged in no activities other than those incident to its formation and the transactions contemplated by the Merger Agreement (including the Financing). The principal executive offices of Finance are located at c/o DLJ Merchant Banking II, Inc., 277 Park Avenue, New York, New York 10172 The Purchaser is a Delaware corporation incorporated on July 14, 1998 and to date has engaged in no activities other than those incident to its formation, the execution and delivery of the Merger Agreement, the commencement of the Offer, and the other transactions contemplated by the Merger Agreement (including the Financing). The Purchaser is a wholly-owned subsidiary of Finance. The principal executive offices of the Purchaser are located at c/o DLJ Merchant Banking II, Inc., 277 Park Avenue, New York, NY 10172. The name, business address, principal occupation or employment, five year employment history and citizenship of each director and executive officer of Parent, Finance and the Purchaser and certain other information are set forth on Schedule A hereto. The DLJMB Funds consist of, and are beneficially owned by, the following entities: (1) DLJMB; (2) DLJ Merchant Banking Partners II-A, L.P. a Delaware limited partnership ("Partners II-A"); (3) DLJ Millennium Partners, L.P., a Delaware limited partnership ("Millennium"); (4) DLJ Millennium Partners-A, L.P., a Delaware limited partnership ("Millennium-A"); (5) DLJ Offshore Partners II, C.V., a Netherlands Antilles limited partnership ("Offshore II"); (6) DLJ EAB Partners, L.P., a Delaware limited partnership ("EAB"); (7) DLJ Merchant Banking II, LLC, a Delaware limited liability company ("MBII LLC"); (8) DLJ Merchant Banking II, Inc., a Delaware corporation ("MBII INC"); (9) DLJ Diversified Partners, L.P., a Delaware limited partnership ("Diversified"); (10) DLJ Diversified Partners-A, L.P., a Delaware limited partnership ("Diversified-A"); (11) DLJ Diversified Associates, L.P., a Delaware limited partnership ("Diversified Associates"); (12) DLJ Diversified Partners, Inc., a Delaware corporation ("Diversified Partners"); (13) DLJ First ESC L.P., a Delaware limited partnership ("ESC"); (14) DLJ ESC II L.P., a Delaware limited partnership ("ESC II"); (15) DLJ LBO Plans Management Corporation, a Delaware corporation ("LBO"); (16) DLJ MB Funding II, Inc., a Delaware corporation ("Funding II"); (17) DLJ Capital Investors, Inc., a Delaware corporation ("DLJCI"); (18) UK Investment Plan 1997 Partners, a Delaware general partnership ("1997 Partners") (19) UK Investment Plan 1997, Inc. ("Plan 1997" and together with the previously listed entities, the "DLJ Entities"); (20) Donaldson, Lufkin & Jenrette, Inc., a Delaware corporation ("DLJ"); (21) The Equitable Companies Incorporated, a Delaware corporation ("EQ"); (22) AXA-UAP, a societe anonyme organized under the laws of France ("AXA"); (23) Finaxa, a societe anonyme organized under the laws of France; (24) AXA Assurances I.A.R.D. Mutuelle, a mutual insurance company organized under the laws of France; (25) AXA Assurances Vie Mutuelle, a mutual insurance company organized under the laws of France; (26) AXA Courtage Assurance Mutuelle, a mutual insurance company organized under the laws of France; (27) Alpha Assurances Vie Mutuelle, a mutual insurance company organized under the laws of France; and (28) Claude Bebear, Patrice Garnier and Henri de Clermont-Tonnerre, trustees (the "AXA Voting Trustees") of a voting trust (the "AXA Voting Trust") established pursuant to a Voting Trust Agreement by and among AXA and the AXA Voting Trustees dated as of May 12, 1992, as amended January 22, 1997 (collectively, with the DLJ Entities, the "Reporting Entities"). DLJMB, Partners II-A, Millennium, Millennium-A, Offshore II, EAB, Diversified, Diversified-A, Funding II, 1997 Partners, ESC, and ESC II are collectively referred to as the "DLJMB Funds". DLJMB, Partners II-A, Millennium and Millennium-A are Delaware limited partnerships which make investments for long term appreciation. MBII LLC is the Associate General Partner of DLJMB and Partners II-A. MBII INC is the Managing General Partner of DLJMB and Partners II-A. MBII LLC and MBII INC make all of the investment decisions on behalf of DLJMB and Partners II-A. EAB is Delaware limited partnership which makes investments for long term appreciation. MBII LLC is the Associate General Partner of EAB and LBO is the Managing General Partner of EAB. MBII LLC and LBO make all of the investment decisions on behalf of EAB. Offshore II is a Netherlands Antilles limited partnership which makes investments for long term appreciation. MBII LLC is the Associate General Partner of Offshore II. MBII INC is the Advisory General Partner of Offshore II. MBII LLC and MBII INC make all of the investment decisions on behalf of Offshore II. MBII LLC is a Delaware limited liability company and is a registered investment adviser. As the Associate General Partner of DLJMB, Partners II-A, Millennium, Millennium-A, EAB and Offshore II, MBII LLC, in conjunction with MBII INC, participates in investment decisions made on behalf of these entities. MBII INC is the managing member of MBII LLC. MBII INC is a Delaware corporation and is a registered investment adviser. As the Managing General Partner of DLJMB, Partners II-A, Millennium and Millennium-A, and the Advisory General Partner Offshore II, MBII INC is responsible for the day to day management of these entities and, in conjunction with MBII LLC, participates in investment decisions made on behalf of these entities. MBII INC is a wholly owned subsidiary of DLJCI. Diversified and Diversified-A are Delaware limited partnerships which make investments for long term appreciation. A portion of Diversified and Diversified-A's capital commitments are dedicated to making side-by-side investments with DLJMB and Partners II-A, respectively. Diversified Associates is the Associate General Partner of Diversified and Diversified-A and Diversified Partners is the Managing General Partner of Diversified and Diversified-A. Diversified Partners is responsible for the day to day management of Diversified and Diversified-A. Diversified Associates is a Delaware limited partnership and a registered investment adviser. As the Associate General Partner of Diversified and Diversified-A, Diversified Associates, in conjunction with Diversified Partners and subject to the terms of the Diversified Agreement, participates in the management of investments of Diversified. Diversified Partners is the general partner of Diversified Associates. Diversified Partners is a Delaware corporation and a registered investment adviser. As the Managing General Partner of Diversified and Diversified-A, Diversified Partners is responsible for the day to day management of Diversified and Diversified-A. In conjunction with Diversified Associates, Diversified Partners participates in the investment decisions made on behalf of Diversified and Diversified-A. Diversified Partners is a wholly owned subsidiary of DLJCI. ESC and ESC II are Delaware limited partnerships and "employee securities companies" as defined in the Investment Company Act of 1940, as amended. LBO, as the Managing General Partner of ESC and ESC II, makes all of the investment decisions on behalf of ESC and ESC II. LBO is a Delaware corporation and a registered investment adviser. LBO is a wholly owned subsidiary of DLJCI. As the Managing General Partner of EAB, ESC and ESC II, LBO is responsible for the day-to-day management of EAB, ESC and ESC II. Funding II is a Delaware corporation which makes investments for long term appreciation generally side-by-side with Partners II. Funding II is a wholly owned subsidiary of DLJCI. DLJCI is a Delaware corporation a holding company. DLJCI is a wholly owned subsidiary of DLJ. 1997 Partners is a Delaware general partnership which makes investments for long term appreciation generally side-by-side with Partners II. Plan 1997 and DLJ are each general partners of 1997 Partners. Plan 1997 is a Delaware corporation. Plan 1997 is a wholly owned subsidiary of DLJ. DLJ is a publicly held Delaware corporation. DLJ directly owns all of the capital stock of DLJCI and Plan 1997. DLJ, acting on its own behalf or through its subsidiaries, is a registered broker/dealer and registered investment adviser engaged in investment banking, institutional trading and research, investment management and financial and correspondent brokerage services. EQ is a Delaware corporation and is a holding company. As of July 21, 1998, EQ owned, directly or indirectly, 72.8% of DLJ. AXA is a societe anonyme organized under the laws of France and a holding company for an international group of insurance and related financial services companies. As of March 1, 1998 approximately 59% of the outstanding common stock of EQ was beneficially owned by AXA. For insurance regulatory purposes, to insure that certain indirect minority stockholders of AXA will not be able to exercise control over EQ and certain of its insurance subsidiaries, the voting shares of EQ capital stock beneficially owned by AXA and its subsidiaries have been deposited into the AXA Voting Trust. For additional information regarding the AXA Voting Trust, reference is made to the Schedule 13D filed by AXA with respect to EQ. As of July 21, 1998, AXA directly owned 0.15% of DLJ. Finaxa is a societe anonyme organized under the laws of France and is a holding company. As of March 1, 1998, Finaxa controlled directly and indirectly approximately 21.4% of the issued ordinary shares (representing approximately 30.2% of the voting power) of AXA. Each of AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA Courtage Assurance Mutuelle, and Alpha Assurances Vie Mutuelle (collectively, the "Mutuelles AXA") is a mutual insurance company organized under the laws of France. Each of the Mutuelles AXA is owned by its policy holders. As of March 1, 1998, the Mutuelles AXA, as a group, control approximately 62.0% of the issued shares (representing approximately 74.0% of the voting power) of Finaxa. Including the ordinary shares owned by Finaxa, on March 1, 1998, the Mutuelles AXA directly or indirectly controlled 24.7% of the issued ordinary shares (representing 34.8% of the voting power) of AXA. Acting as a group, the Mutuelles AXA control AXA and Finaxa. Claude Bebear, Patrice Garnier and Henri de Clermont-Tonnerre, the AXA Voting Trustees, exercise all voting rights with respect to the shares of Equitable capital stock beneficially owned by AXA and its subsidiaries that have been deposited in the AXA Voting Trust. The business address, citizenship and present principal occupation of each of the AXA Voting Trustees are set forth on Schedule K attached hereto. The address of the principal business and office of each of the DLJ Entities and DLJ is 277 Park Avenue, New York, New York 10172. The address of the principal business and principal office of Equitable is 1290 Avenue of the Americas, New York, New York 10104. The name, business address, citizenship, present principal occupation and name and business address of any corporation or organization in which each such employment is conducted of each executive officer and director of the DLJ Entities are set forth in Schedules B-H, respectively, attached hereto. The address of the principal business and principal office of AXA and the AXA Voting Trustees is 9 Place Vendome, 75001 Paris, France. The address of Finaxa is 23, avenue Matignon, 75008 Paris, France; of each of AXA Assurances I.A.R.D. Mutuelle and AXA Assurances Vie Mutuelle is 21, rue de Chateaudun, 75009 Paris, France; of AXA Courtage Assurance Mutuelle is 26, rue Louis-le-Grand, 75006 Paris, France; and of Alpha Assurances Vie Mutuelle is Tour Franklin, 100/101 Terrasse Boieldieu, Cedex 11, 92042 Paris La Defense, France. The name, business address, citizenship, present principal occupation or employment and the name and business address of any corporation or organization in which each such employment is conducted, of each executive officer or member, as applicable, of the Board of Directors, Supervisory Board, or the Conseil d'Administration (French analogue of a Board of Directors) of Equitable, AXA, Finaxa and the Mutuelles AXA are set forth on Schedules I through O, respectively, attached hereto. Except as described in this Offer to Purchase, (i) none of the Reporting Entities or, to the best knowledge of the Purchaser, any of the persons listed in Schedules A through O to this Offer to Purchase or any associate or majority-owned subsidiary of the Purchaser or any of the persons so listed beneficially owns or has any right to acquire, directly or indirectly, any Shares and (ii) none of the Reporting Entities or, to the best knowledge of the Purchaser, any of the persons or entities referred to above nor any director, executive officer or subsidiary of any of the foregoing has effected any transaction in the Shares during the past 60 days. Except as provided in the Merger Agreement and as otherwise described in this Offer to Purchase, none of the Reporting Entities nor, to the best knowledge of the Purchaser, any of the persons listed in Schedules A through O to this Offer to Purchase, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or voting of such securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees of profits, division of profits or loss or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, since January 1, 1995, none of the Reporting Entities or, to the best knowledge of the Purchaser, any of the persons listed in Schedules A through O hereto, have had any business relationship or transaction with the Company or any of its executive officers, directors, or affiliates that is required to be reported under the rules and regulations of the Commission applicable to the Offer. Except as set forth in this Offer to Purchase, since January 1, 1995, there have been no contracts, negotiations or transactions between the Reporting Entities, or any of its subsidiaries or, to the best knowledge of the Purchaser, any of the persons listed in Schedules A through O to this Offer to Purchase, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets. 9. Source and Amount of Funds. The total amount of funds required by the Purchaser to purchase Shares pursuant to the Offer, refinance existing debt of the Company and pay related fees and expenses is estimated to be approximately $289.6 million. It is anticipated that the purchase of the Shares will be financed with (i) borrowings by Finance under a senior term loan of $80.0 million (the "Term Loan Facility"); (ii) borrowings by Finance of approximately $10.6 million under a $50.0 million revolving credit facility (the "Revolving Credit Facility," and collectively with the Term Loan Facility, the "Bank Facilities"); (iii) the issuance by Finance, for cash, of not more than $100.0 million of senior subordinated increasing rate notes (the "Senior Subordinated Notes"); (iv) the issuance by Parent, for cash, of not more than $34.0 million of senior pay-in-kind increasing rate notes (the "Senior PIK Notes" and together with the Subordinated Notes, the "Debt Securities"); and (v) the issuance, for cash proceeds of not less than $65.0 million, of common stock of Parent (the "Parent Common Stock") to be purchased by the DLJMB Funds. DLJMB has received commitment letters pursuant to which (i) DLJ Capital Funding, Inc. has indicated that it will fund, in part, and arrange a syndicate of financial institutions to participate in the Bank Facilities, and (ii) DLJ Bridge Finance, Inc. (the "DLJ Bridge Fund") has indicated that it or an affiliate will purchase the Debt Securities (collectively, the "Commitment Letters"). Each of the commitments set forth in the Commitment Letters is subject to a number of conditions, including the execution of satisfactory definitive documentation, the absence of material adverse changes and receipt of material governmental and other approvals. In lieu of issuing the Debt Securities to the DLJ Bridge Fund or its affiliate, Parent and Finance may elect to issue to the public pay-in-kind preferred stock of Parent ("Parent Preferred Stock") and senior subordinated notes of Finance ("Finance Notes"). It is expected that the Parent Preferred Stock would be mandatorily redeemable by Parent in 2008 and that dividends thereon would be payable in kind for the first five years, and thereafter in cash, at a rate to be determined. It is also expected that the Finance Notes would be due in 2008 and that interest thereon would be paid semi-annually at a rate to be determined. It is anticipated that the Term Loan Facility will consist of two tranches. Tranche A will consist of a term loan of $35 million, amortizing over and maturing in five years. For the first six months of the loan, the Tranche A term loan will bear interest, at the Surviving Corporation's option, at either the base rate plus 1.00% or LIBOR plus 2.25%. Tranche B will consist of a term loan of $45 million, amortizing over and maturing in seven years. One percent of the principal amount of the Tranche B term loan will be repayable in equal quarterly installments each year for six years, and the remainder of the principal on the Tranche B loan will be repayable in equal quarterly installments in the seventh year after the making of the loan. For the first six months of the loan, the Tranche B loan will bear interest, at the Surviving Corporation's option, at either the base rate plus 1.25% or LIBOR plus 2.50%. After six months, the applicable margins under the Tranche A and Tranche B loans will depend on the Surviving Corporation's ratio of total debt to EBITDA. The Revolving Credit Facility will mature on the fifth anniversary after the date the loan is made. $25 million of the Revolving Credit Facility is available for acquisitions by the Surviving Corporation and the remaining $25 million, which may take the form of letters of credit, is available for working capital purposes. For the first six months after the Closing Date, amounts outstanding under the Revolving Credit Facility will bear interest at the base rate plus 1.00% or LIBOR plus 2.25% and unused portions of the Revolving Credit Facility will be subject to a commitment fee. After six months, the applicable margins and commitment fee under the Revolving Credit Facility will depend on the Surviving Corporation's ratio of total debt to EBITDA. Amounts borrowed under the Bank Facilities will be secured by a first priority, perfected lien on all capital stock of Finance and the Purchaser and, upon the consummation of the Merger, substantially all property and assets of the Surviving Corporation and its domestic Subsidiaries, including all capital stock of its domestic Subsidiaries and up to 65% of the capital stock of its foreign Subsidiaries. All amounts outstanding under the Bank Facilities will also be guaranteed by the Parent and the Purchaser and, upon consummation of the Merger, by all direct and indirect domestic Subsidiaries of the Surviving Corporation. The Senior Subordinated Notes will bear interest at the prime rate plus a spread, which initially will equal 150 basis points. If the Senior Subordinated Notes are not retired in whole by the end of the first six months following their issuance, the spread will increase significantly over time. However, interest on the Senior Subordinated Notes will not exceed 17% per year (with the cash portion thereof limited to 15% per year) or be less than 10% per year. The Senior Subordinated Notes will mature on the first anniversary of their issuance but must be redeemed by Finance under certain circumstances, including, subject to certain exceptions, issuances of other debt by Finance. The Senior Subordinated Notes will be subordinated to the Bank Facilities. Finance's obligations under the Senior Subordinated Notes will be guaranteed on a subordinated basis by the Purchaser and, after the consummation of the Merger, all direct and indirect domestic Subsidiaries of the Surviving Corporation. The Senior PIK Notes will initially bear interest at the prime rate plus 500 basis points. After six months, the interest rate will increase significantly, and will depend upon prevailing interest rates. However, interest on the Senior PIK Notes will not exceed 17% per year or be lower than 10% per year. The Senior PIK Notes will be subordinated to the Parent's guarantees of the Bank Facilities and the Senior Subordinated Notes and certain refinancings thereof. On the date the Senior PIK Notes are issued, warrants representing 25% of the fully-diluted stock of the Company and exercisable at a price equal to $0.01 per Share shall be placed in escrow. If the refinancing of the Senior PIK Notes is not completed within 90 days from the date of issuance of the Senior PIK Notes, then such warrants will begin to be released to holders of the Senior PIK Notes in 90-day increments. It is anticipated that the definitive documentation relating to the Bank Facilities and Debt Securities will contain customary representations and warranties and certain covenants, including limitations on indebtedness, liens, restricted payments and similar matters, as well as certain mandatory prepayment obligations customary for transactions of this nature. It is anticipated that the debt incurred under the Bank Facilities and by the issuance of the Debt Securities will be refinanced or repaid from funds generated internally by the Purchaser (including, after consummation of the Merger with the Company, funds generated by the Company) or other sources, which may include the proceeds of the sale of debt or equity securities or the sale of assets (including, possibly, Shares or, after consummation of the Merger with the Company, securities or assets of the Company). Copies of the commitment letters of each of DLJ Capital Funding, Inc. and DLJ Bridge Fund are filed as exhibits to the Purchaser's Tender Offer Statement on Schedule 14D-1. Reference is made to such exhibits for a more complete description of the proposed terms and conditions of each of the Bank Facilities and the Debt Securities. 10. Background of the Offer; Past Contacts, Transactions or Negotiations with the Company. In the spring of 1998, the Company conducted a secondary offering of shares of Common Stock on behalf of certain of its stockholders. Representatives of DLJMB and DLJSC attended the management presentations conducted by the Company in connection with that offering and spoke with one of the Company's larger stockholders about the Company, its history, current performance and potential. At that time, DLJMB concluded that it was not interested in proposing to acquire the Company. In early June of 1998, DLJMB learned that the Company had entered into an agreement to acquire Avtech Corporation (see Section 7). At the suggestion of DLJSC, DLJMB began to consider the possibility of acquiring the Company. On or about June 15, 1998, the Company and DLJMB entered into a confidentiality agreement (the "Confidentiality Agreement"). The Confidentiality Agreement also provided that, for a two-year period, the Purchaser would not, without consent of the Company, acquire, or offer to acquire, Shares or any other interest in the Company or take certain other actions. During the period that followed, representatives of DLJMB conducted their due diligence investigation regarding the business and properties of the Company. In addition, DLJMB met with senior management of the Company to discuss the Company. Following the expression of interest in acquiring the Company expressed by DLJMB, the Board of Directors of the Company formed a special committee (the "Special Committee") consisting of three independent members of the Company's Board of Directors. The Special Committee retained counsel and a financial advisor, Warburg Dillon Read. During the period between June 29 and July 16, representatives of DLJMB and the Special Committee discussed the terms of a possible acquisition and negotiated the terms of the Merger Agreement. On July 16, 1998, the Purchaser offered to acquire the Company for a price of $23.00 in cash per Share, and following approval by the Special Committee and Board of Directors, the Merger Agreement was executed. 11. Purpose of the Offer; Plans for the Company; Merger and Other Agreements. Purpose of the Offer. The purpose of the Offer is to acquire control of, and an equity interest in, the Company. The purpose of the Merger is to acquire all outstanding Shares not tendered and purchased pursuant to the Offer. The Offer is being made pursuant to the Merger Agreement and the purchase of the Shares pursuant to the Offer will increase the likelihood that the Merger will be effected. If the Offer is successful, the Shares not acquired by the Purchaser pursuant to the Offer will be converted, subject to the terms of the Merger Agreement, into the right to receive cash in an amount equal to the price per share paid pursuant to the Offer. The Board of Directors of the Company has unanimously approved the Merger and adopted the Merger Agreement. Depending upon the number of Shares purchased by the Purchaser pursuant to the Offer, the Board may be required to submit the Merger Agreement to the Company's stockholders for approval at a stockholder's meeting convened for that purpose in accordance with the law of the State of Delaware ("Delaware Law"). If stockholder approval is required, the Merger Agreement must be approved by a majority of all votes entitled to be cast at such meeting. If the Minimum Tender Condition is satisfied, the Purchaser will have sufficient voting power to approve the Merger Agreement at the stockholders' meeting without the affirmative vote of any other stockholder. If the Purchaser acquires 90% of the Shares, the Merger may be consummated without a stockholders' meeting and without the approval of the Company's stockholders. The Merger Agreement provides that the Purchaser (the parent corporation) will be merged with and into the Company (the subsidiary corporation) following the Offer, and that the certificate of incorporation of the Company will be the certificate of incorporation of the Surviving Corporation following the Merger. Under Delaware Law, holders of Shares do not have appraisal rights as a result of the Offer. In connection with the Merger, however, stockholders of the Company may have the right to dissent and demand appraisal of their Shares under Delaware Law. Under Delaware Law, dissenting stockholders who comply with the applicable statutory procedures will be entitled to receive a judicial determination of the fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of such merger or similar business combination) and to receive payment of such fair value in cash. Any such judicial determination of the fair value of the Shares could be based upon considerations other than or in addition to the price paid in the Merger and the market value of the Shares. In Weinberger v. UOP, Inc., the Delaware Supreme Court stated, among other things, that "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court" should be considered in an appraisal proceeding. Stockholders should recognize that the value so determined could be higher or lower than the price per Share paid pursuant to the Offer or the consideration per Share paid in such a merger or other similar business combination. Moreover, the Purchaser may argue in an appraisal proceeding that, for purposes of such a proceeding, the fair value of the Shares is less than the price paid in the Offer. In addition, several decisions by Delaware courts have held that, in certain circumstances a controlling stockholder of a company involved in a merger has a fiduciary duty to other stockholders which requires that the merger be fair to such other stockholders. In determining whether a merger is fair to minority stockholders, Delaware courts have considered, among other things, the type and amount of consideration to be received by the stockholders and whether there was fair dealing among the parties. The Delaware Supreme Court stated in Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the remedy ordinarily available to minority stockholders in a cash-out merger is the right to appraisal described above. However, a damages remedy or injunctive relief may be available if a merger is found to be the product of procedural unfairness, including fraud, misrepresentation or other misconduct. If the Purchaser purchases Shares pursuant to the Offer and the Merger is consummated more than one year after the completion of the Offer or if an alternative merger transaction were to provide for the payment of consideration less than that paid pursuant to the Offer, compliance by the Purchaser with Rule 13e-3 under the Exchange Act would be required, unless the Shares were to be deregistered under the Exchange Act prior to such transaction. Rule 13e-3 requires, among other things, that certain financial information concerning the Company and certain information relating to the fairness of the proposed merger transaction and the consideration offered to minority stockholders therein be filed with the Commission and disclosed to minority stockholders prior to consummation of the merger transaction. Plans for the Company. Upon the completion of the Offer, the Purchaser understands that DLJMB, with the assistance of the Company's management, intends to conduct a detailed review of the Company and its assets, corporate structure, capitalization, operations, properties, policies, management and personnel to determine what changes, if any, would be desirable. Such changes may include extraordinary corporate transactions involving the Company or its subsidiaries, acquisitions of stock or assets, contributions of capital by DLJMB, issuances of debt or equity securities or similar transactions. The Purchaser expects that following the Effective Time (as defined below) (or at any earlier time permitted by the Merger Agreement) it will cause its designees to constitute a majority of the members of the Board of Directors. In the event the Offer is consummated, the Purchaser may designate a number of members to the Company's Board of Directors (as contemplated by the Merger Agreement), equal to the product of (i) the total number of directors on the Board of Directors (giving effect to the election of any additional directors designated by the Purchaser) and (ii) the percentage that the number of shares then owned by the Purchaser bears to the total number of Shares outstanding. The persons who may be designated by the Purchaser are listed on Schedule A, which also includes the information required to be disclosed by the Purchaser with respect to such designees under Rule 14f-1 under the Exchange Act. It is DLJMB's intention to afford certain key members of the Company's management the opportunity to purchase an equity participation in Parent. Such participation, however, is not a condition of the Offer or the transactions contemplated in the Merger Agreement. No agreement has been entered into between DLJMB, Parent or the Purchaser, on the one hand, and management of the Company, on the other, regarding such equity participation, and no discussions or negotiations regarding such equity participation are currently anticipated to occur during the pendency of the Offer. It is expected that, following the consummation of the Merger, Finance will be merged with and into the Company, and thus will become a direct, wholly-owned subsidiary of Parent. Except as described above or elsewhere in this Offer to Purchase, the Purchaser has no present plans or proposals that would relate to or result in an extraordinary corporate transaction involving the Company or any of its subsidiaries (such as a merger, reorganization, liquidation, relocation of any operations or sale or other transfer of a material amount of assets), any change in the Board of Directors or management, any material change in the Company's capitalization or dividend policy or any other material change in the Company's corporate structure or business. The Merger Agreement. The following is a summary of the Merger Agreement, a copy of which is filed as an Exhibit to the Schedule 14D-1. Such summary is qualified in its entirety by reference to the Merger Agreement. The Offer. The Merger Agreement provides for the making of the Offer. The obligation of the Purchaser to accept for payment Shares tendered pursuant to the Offer is subject to the satisfaction of the Minimum Tender Condition, the Financing Condition and certain other conditions that are described in Section 15. The Purchaser has agreed that no change in the Offer may be made which changes the form of consideration to be paid or decreases the price per Share or the number of Shares sought in the Offer, which imposes conditions to the Offer in addition to the Minimum Tender Condition, the Financing Condition and those conditions described in Section 15 or which otherwise materially and adversely affects the Company or the holders of the Shares. Recommendation. The Board of Directors, acting on the recommendation of the Special Committee, has (i) unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to and in the best interest of the Company's stockholders, (ii) unanimously approved the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger and (iii) unanimously resolved to recommend acceptance of the Offer and approval and adoption of the Merger Agreement and the Merger by the Company's stockholders (subject to the Board of Directors' right to withdraw, modify or amend the recommendation to the extent the Board of Directors of the Company shall have concluded in good faith on the basis of written advice from outside counsel that such action by the Board of Directors is required in order to comply with the fiduciary duties of the Board of Directors to the stockholders of the Company under applicable law). The Merger. The Merger Agreement provides that, upon the terms and subject to the conditions thereof, at the time at which the Company and the Purchaser file a certificate of merger with the Secretary of State of the State of Delaware and make all other filings or recordings required by Delaware Law in connection with the Merger, the Purchaser shall be merged with and into the Company in accordance with Delaware Law and the Merger Agreement. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such later time as is specified in the Certificate of Merger (the "Effective Time"). As a result of the Merger, the separate corporate existence of the Purchaser will cease and the Company will be the Surviving Corporation. At the Effective Time, (i) each issued and outstanding Share held in the treasury of the Company, or owned by the Purchaser Companies shall be canceled, and no payment shall be made with respect thereto; (ii) each share of common stock of the Purchaser then outstanding shall be converted into and become one share of common stock of the Surviving Corporation; and (iii) each Share outstanding immediately prior to the Effective Time shall, except as otherwise provided in (i) above or with respect to Shares as to which appraisal rights have been perfected, be converted into the right to receive $23.00 in cash without interest. The Merger Agreement provides that, at the Effective Time, the certificate of incorporation of the Company will be the certificate of incorporation of the Surviving Corporation and the bylaws of the Purchaser will be the bylaws of the Surviving Corporation. Employee Stock Options. At or immediately prior to the Effective Time, each outstanding employee stock option to purchase Shares granted under any employee stock option or compensation plan or arrangement of the Company will be canceled, and each holder of any such option, whether or not then vested or exercisable, shall be paid by the Company promptly after the Effective Time for each such option an amount determined by multiplying the excess, if any, of $23.00 per Share over the applicable exercise price of such option by the number of Shares such holder could have purchased (assuming full vesting of all options) had such holder exercised such option in full immediately prior to the Effective Time. Agreements of the Purchaser and the Company. The Merger Agreement provides that effective upon purchase and payment for any Shares by the Purchaser, the Purchaser shall be entitled to designate the number of directors, rounded up to the next whole number, on the Company's Board of Directors that equals the product of (i) the total number of directors on the Board of Directors (giving effect to the election of any additional directors pursuant to this paragraph) and (ii) the percentage that the number of Shares owned by the Purchaser (including Shares accepted for payment) bears to the total number of Shares outstanding, and the Company shall take all action necessary to cause the Purchaser's designees to be elected or appointed to the Board of Directors, including, without limitation, increasing the number of directors, and seeking and accepting resignations of its incumbent directors. Following the election or appointment of Purchaser's designees pursuant to the Merger Agreement and until the Effective Time, the approval of a majority of the directors of the Company then in office who were not designated by Purchaser shall be required to authorize (and such authorization shall constitute the authorization of the Board of Directors and no other action on the part of the Company, including any action by any other director or the Company, shall be required to authorize) any termination of the Merger Agreement by the Company, any amendment of the Merger Agreement requiring action by the Board of Directors, and any waiver of compliance with any of the agreements or conditions contained in the Merger Agreement for the benefit of the Company. Pursuant to the Merger Agreement, the Company shall cause a meeting of its stockholders (the "Company Stockholder Meeting") to be duly called and held as soon as reasonably practicable for the purpose of voting on the approval and adoption of the Merger Agreement and the Merger, unless a vote of stockholders by the Company is not required by Delaware Law. The Merger Agreement provides that the Company will promptly prepare and file with the Commission under the Exchange Act a proxy statement relating to the Company Stockholder Meeting (the "Proxy Statement") (unless the vote of the stockholders is not required under Delaware Law). The Company has agreed to use its reasonable best efforts to obtain the necessary approvals by its stockholders of the Merger Agreement and the transactions contemplated thereby. The Purchaser has agreed to vote and to cause each of its subsidiaries (including, without limitation, the Purchaser) to vote all Shares then owned by it in favor of adoption of the Merger Agreement. The Company has agreed that, prior to the Effective Time, the Company will not adopt or propose any change in its certificate of incorporation or bylaws. In addition, the Company has agreed that, prior to the Effective Time, the Company will not, and will not permit any of its subsidiaries (each, a "Subsidiary") to, except as expressly required by the Merger Agreement or with the prior consent of the Purchaser: (a) acquire (by merger, consolidation or acquisition of stock or assets) any material corporation, partnership or other business organization or division thereof, or sell, lease or otherwise dispose of a material subsidiary or a material amount of assets or securities; (b) make any investment other than in readily marketable securities in an amount in excess of $750,000 in the aggregate whether by purchase of stock or securities, contributions to capital or any property transfer, or purchase for an amount in excess of $750,000 in the aggregate, any property or assets of any other individual or entity; (c) waive, release, grant, or transfer any rights of value material to the Company and the Subsidiaries taken as a whole; (d) modify or change in any material respect any existing material license, lease, contract, or other document material to the Company and its subsidiaries taken as a whole; (e) except to refund or refinance commercial paper, incur, assume or prepay an amount of long-term or short-term debt in excess of $5,000,000 in the aggregate; (f) assume, guarantee, endorse (other than endorsements of negotiable instruments in the ordinary course of business) or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person (other than any Subsidiary) which, are in excess of $500,000 in the aggregate; (g) make any loans or advances to any other person (other than any Subsidiary) which are in excess of $100,000 in the aggregate or (h) authorize any new capital expenditures which, individually, is in excess of $250,000 or, in the aggregate, are in excess of $1,000,000. Furthermore, the Company has agreed that, prior to the Effective Time, the Company will not, and will not permit any Subsidiary to do any of the following: (i) split, combine or reclassify any shares of its capital stock, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, other than cash dividends and distributions by a wholly owned subsidiary of the Company to the Company or to a subsidiary all of the capital stock which is owned directly or indirectly by the Company, or redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any of its securities or any securities of its Subsidiaries; (ii) adopt or amend any bonus, profit sharing, compensation, severance, termination, stock option, pension, retirement, deferred compensation, employment or employee benefit plan, agreement, trust, plan, fund or other arrangement for the benefit and welfare of any director, officer or employee, or (except for normal increases in the ordinary course of business that are consistent with past practices and that, in the aggregate, do not result in a material increase in benefits or compensation expense to the Company) increase in any manner the compensation or fringe benefits of any director, officer or employee or pay any benefit not required by any existing plan or arrangement (including, without limitation, the granting of stock options or stock appreciation rights or the removal of existing restrictions in any benefit plans or agreements); (iii) revalue in any material respect any of its assets, including, without limitation, writing down the value of inventory in any material manner or write-off of notes or accounts receivable in any material manner; (iv) pay, discharge or satisfy any material claims, liabilities or obligations (whether absolute, accrued, asserted or unasserted, contingent or otherwise) other than the payment, discharge or satisfaction in the ordinary course of business, consistent with past practices, of liabilities reflected or reserved against in the consolidated financial statements of the Company or incurred since the most recent date thereof pursuant to an agreement or transaction described in the Merger Agreement or incurred in the ordinary course of business, consistent with past practices; (v) except as set forth in the Schedules to the Merger Agreement, make any tax election or settle or compromise any material income tax liability; (vi) take any action other than in the ordinary course of business and consistent with past practices with respect to accounting policies or procedures other than any change in accounting policies (that is not material to the Company and its Subsidiaries taken as a whole) that is required by regulations of the SEC; (vii) agree or commit to do any of the foregoing; or (viii) take or agree or commit to take any action that would make any representation and warranty of the Company hereunder inaccurate in any respect at, or as of any time prior to, the Effective Time. Non-Solicitation. Pursuant to the Merger Agreement the Company has agreed that from the date of the Merger Agreement until the termination thereof, the Company and its Subsidiaries will not, and will not authorize or permit, their respective officers, directors, agents, representatives, advisors or Subsidiaries to, directly or indirectly, (i) solicit, initiate or take any action knowingly to facilitate the submission of inquiries, proposals or offers which constitute or would reasonably be expected to lead to an Acquisition Proposal (as defined below) or (ii) enter into or participate in any discussions or negotiations regarding any of the foregoing, or furnish to any Third Party (as defined below) any information with respect to its business, properties or assets or any of the foregoing, or otherwise cooperate in any way with, or knowingly assist or participate in, facilitate or encourage, any effort or attempt by any Third Party to do or seek any of the foregoing, or (iii) grant any waiver or release under any standstill or similar agreement with respect to any class of equity securities of the Company or any of its Subsidiaries. The Company is not prohibited, however (either directly or indirectly through advisors, agents or other intermediaries) from (A) furnishing information pursuant to an appropriate confidentiality letter (which letter shall not be less favorable to the Company in any material respect (with respect to duration and standstill provisions) than the Confidentiality Agreement, and a copy of which shall be provided for informational purposes only to the Purchaser) concerning the Company and its businesses, properties or assets to a Third Party who has made or is seeking to initiate discussions with respect to a bona fide Acquisition Proposal, (B) engaging in discussions or negotiations with such a Third Party who has made a bona fide Acquisition Proposal, (C) following receipt of a bona fide Acquisition Proposal, taking and disclosing to its stockholders a position contemplated by Rule 14e-2(a) under the Exchange Act or otherwise making disclosure to its stockholders, (D) following receipt of a bona fide Acquisition Proposal, failing to make or withdrawing or modifying its recommendation referred to above and/or (E) taking any non-appealable, final action ordered to be taken by the Company by any court of competent jurisdiction but in each case referred to in the foregoing clauses (A) through (D) only to the extent that the Board of Directors of the Company shall have concluded in good faith on the basis of written advice from outside counsel that such action by the Board of Directors is required in order to comply with the fiduciary duties of the Board of Directors to the stockholders of the Company under applicable law. The Board of Directors of the Company shall not take any of the foregoing actions referred to in clauses (A) through (D) until after reasonable notice to the Purchaser with respect to such action, and the Board of Directors shall continue to advise the Purchaser after taking such action and, in addition, if the Board of Directors of the Company receives an Acquisition Proposal, then the Company shall promptly inform the Purchaser of the terms and conditions of such proposal and the identity of the person making it. "Acquisition Proposal" means any proposal or offer from any Third Party (as defined below) which constitutes or would reasonably be expected to lead to (A) any acquisition or purchase of 30% or more of the consolidated assets of the Company and its Subsidiaries or of over 30% of any class of equity securities of the Company or any of its Subsidiaries, (B) any tender offer (including a self tender offer) or exchange offer that if consummated would result in any Third Party beneficially owning 30% or more of any class of equity securities of the Company or any of its Subsidiaries, (C) any merger, consolidation, business combination, sale of substantially all assets, recapitalization, liquidation, dissolution or similar transaction involving the Company or any of its Subsidiaries whose assets, individually or in the aggregate, constitute more than 30% of the consolidated assets of the Company (other than the transactions contemplated by the Merger Agreement) or (D) any other transaction the consummation of which would be expected to interfere with in a material way, prevent or materially delay the Merger or which would reasonably be expected to materially dilute the benefits to the Purchaser of the transactions contemplated by the Merger Agreement. "Third Party" means any person, corporation, entity or "group," as defined in Section 13(d) of the Exchange Act, other than the Purchaser or any of its affiliates. Indemnification. The Purchaser and the Company have agreed that for six years after the Effective Time, the Purchaser will cause the Surviving Corporation to (i) indemnify and hold harmless the present and former officers and directors of the Company in respect of acts or omissions occurring prior to the Effective Time (including without limitation matters related to the transactions contemplated by this Agreement) and (ii) retain limitations on personal liability of directors for monetary damages, in each case to the fullest extent provided under the Company's certificate of incorporation and bylaws in effect on the date of the Merger Agreement, subject to any limitation imposed from time to time under applicable law. Such obligation shall apply to claims of which the Surviving Corporation shall have been notified prior to the expiration of such six-year period, regardless of when such claims shall have been disposed of. In addition, Parent has agreed that for six years after the Effective Time, the Purchaser will cause the Surviving Corporation to use its best efforts to provide officers' and directors' liability insurance in respect of acts or omissions occurring prior to and including the Effective Time covering each such Person currently covered by the Company's officers' and directors' liability insurance policy on terms with respect to coverage and amount no less favorable than those of such policy in effect on the date of the Merger Agreement. The Purchaser will not be obligated to cause the Surviving Corporation to pay premiums in excess of 150% of the amount per annum the Company paid in its last full fiscal year. Employees of the Company. The Purchaser has agreed that, for at least one year from the Effective Time, subject to applicable law, the Surviving Corporation and its Subsidiaries will provide benefits to their employees which will, in the aggregate, be comparable to those currently provided by the Company and its subsidiaries to their employees. Representations and Warranties. The Merger Agreement contains customary representations and warranties of the parties thereto including representations by the Company as to the absence of certain changes or events concerning its respective business, compliance with law, litigation, employee benefit plans, taxes and other matters. Conditions to Certain Obligations. The obligations of the Company and the Purchaser to consummate the Merger are subject to the satisfaction of the following conditions: (i) if required by Delaware Law, the adoption by the stockholders of the Company in accordance with such law; (ii) any applicable waiting period under the HSR Act relating to the Merger shall have expired or been terminated; (iii) no provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the consummation of the Merger; (iv) the Purchaser shall have purchased Shares pursuant to the Offer; and (v) all actions by or in respect of or filings with any governmental body, agency, official, or authority required to permit the consummation of the Merger shall have been obtained. In addition, the obligations of the Purchaser to consummate the Merger are subject to the satisfaction of the following conditions: (i) the Company shall have performed in all material respects all of its obligations under the Merger Agreement required to be performed by it at or prior to the Effective Time; (ii) no provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit consummation of the Merger; and (iii) the Purchaser shall have received all documents it may reasonably request relating to the existence of the Company and the Subsidiaries and the authority of the Company for this Agreement, all in form and substance reasonably satisfactory to the Purchaser. Termination. The Merger Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (notwithstanding any approval of the Merger Agreement by the stockholders of the Company) (i) by mutual written consent of the Company and the Purchaser or (ii) by either the Company or the Purchaser, if (A) the Offer has not been consummated by the date that is 60 days after the commencement of the Offer; provided, however, that such right to terminate is not available if Purchaser shall have failed to purchase Shares in violation of the Offer; (B) if there shall be any law or regulation that makes consummation of the Merger illegal or otherwise prohibited or if any judgment, injunction, order or decree enjoining the Purchaser or the Company from consummating the Merger is entered and such judgment, injunction, order or decree shall become final and nonappealable; or (C) if the Board of Directors of the Company shall have withdrawn or materially modified its recommendation as permitted under the Merger Agreement. If the Merger Agreement is terminated, the Merger Agreement will become void and of no effect with no liability on the part of the Company or the Purchaser (other than any rights any party may have against the other for wilful breach of the Merger Agreement) other than obligations of the Purchaser under certain provisions of the Merger Agreement with respect to the treatment of confidential non-public information concerning the Company and its Subsidiaries, and obligations of the Company under certain provisions of the Merger Agreement to pay certain fees to and expenses of the Purchaser (as described below). Fees and Expenses. The Company has agreed in the Merger Agreement that if a Payment Event (as defined below) occurs, the Company will pay to the Purchaser, within two business days following such Payment Event, a fee equal to $6,900,000 in immediately available funds. This obligation shall survive any termination of the Merger Agreement, however caused. "Payment Event" means (x) the termination of the Merger Agreement by the Company or Purchaser if the Board of Directors withdraws or materially modifies its recommendation with respect to the Merger; or (y) the occurrence of a Third Party Acquisition within 12 months of the termination of the Merger Agreement where the Offer shall not have been consummated within 60 days after commencement of the Offer. "Third Party Acquisition" means any of the following events, whereby stockholders of the Company receive, pursuant to such event, cash, securities or other consideration having an aggregate value, when taken together with the value of any securities of the Company or its Subsidiaries otherwise held by the stockholders of the Company after such event, in excess of $23.00 per Share: (i) the Company is acquired by merger or otherwise by a Third Party; (ii) a Third Party acquires more than 50% of the total assets of the Company and its Subsidiaries, taken as a whole; (iii) a Third Party acquires more than 50% of the outstanding Shares or (iv) the Company adopts and implements a plan of liquidation, recapitalization or share repurchase relating to more than 50% of the outstanding Shares or an extraordinary dividend relating to more than 50% of the outstanding Shares or 50% of the assets of the Company and its Subsidiaries, taken as a whole. In addition, the Company has agreed in the Merger Agreement that, upon termination of the Merger Agreement for any reason (subject to the following sentence), the Company shall, within two business days after submission of reasonable documentation of such expenses, reimburse the Purchaser for all documented out-of-pocket fees and expenses incurred by the Purchaser in connection with the Merger Agreement and transactions contemplated thereby (including the Merger and the arrangement of, obtaining the commitment to provide, or obtaining the financing for, the transactions contemplated by the Merger Agreement), provided that such reimbursement obligation shall not exceed $4,250,000. The Company is not required to make any such payment if the termination of the Merger Agreement would not have occurred but for the failure of the Purchaser to fulfill its obligations under the Merger Agreement. Except as described in the preceding paragraph, the Merger Agreement provides that the Company and the Purchaser shall each bear all expenses incurred by it in connection with the Merger Agreement and the transactions contemplated thereby. Amendment and Waivers. Any provision of the Merger Agreement may be amended or waived prior to the Effective Time if, and only if, such amendment or waiver is in writing and signed, and (i) in the case of an amendment, by the Company and the Purchaser or (ii) in the case of a waiver, by the party against whom the waiver is to be effective. After the adoption of the Merger Agreement by the stockholders of the Company, no such amendment or waiver shall alter or change, except with the further approval of such stockholders (i) the amount or kind of consideration to be received in exchange for any shares of capital stock of the Company, (ii) any term of the certificate of incorporation of the Surviving Corporation or (iii) any other terms and conditions of the Merger Agreement if such change would adversely affect the holders of any shares of capital stock of the Company. 12. Effect of the Offer on the Market for the Shares; Registration under the Exchange Act. The purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and may reduce the number of holders of Shares, which could adversely affect the liquidity and market value of the remaining Shares held by stockholders other than the Purchaser. The Purchaser cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the Shares or whether such reduction would cause future market prices to be greater or less than the Offer price. Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the standards for continued inclusion in the Nasdaq National Market. If, as a result of the purchase of Shares pursuant to the Offer, the Shares no longer meet the criteria for continuing inclusion in the Nasdaq National Market, the market for the Shares could be adversely affected. According to the Nasdaq National Market's published guidelines, in order for the Shares to be eligible for continued inclusion in the Nasdaq National Market, there must continue to be, among other things, at least 1,100,000 publicly held Shares, held by at least 400 round lot stockholders, with a market value of at least $8 million. If the Shares were no longer eligible for inclusion in the Nasdaq National Market, they may nevertheless continue to be included in the Nasdaq SmallCap Market unless, among other things, the number of publicly held Shares (excluding Shares held by officers, directors and beneficial owners of more than 10% of the Shares) was less than 100,000, or there were fewer than 300 holders in total. If the Shares are no longer eligible for inclusion in the Nasdaq National Market or the Nasdaq SmallCap Market, the Shares might still be quoted on the OTC Bulletin Board. According to the Company, there were approximately 29 holders of record of Shares as of July 20, 1998. If, as a result of the purchase of Shares pursuant to the Offer, the Shares no longer meet the requirements of The Nasdaq Stock Market, Inc. for continued listing and the listing of Shares is discontinued, the market for the Shares could be adversely affected. If the Nasdaq National Market were to delist the Shares (which the Purchaser intends to cause the Company to seek if it acquires control of the Company and the Shares no longer meet the Nasdaq National Market listing requirements), it is possible that the Shares would trade on another securities exchange or in the over-the-counter market and that price quotations for the Shares would be reported through the Nasdaq National Market or other sources. The extent of the public market for the Shares and availability of such quotations would, however, depend upon such factors as the number of holders and/or the aggregate market value of the publicly-held Shares at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration of the Shares under the Exchange Act and other factors. The Shares are currently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of such Shares. Depending upon factors similar to those described above regarding listing and market quotations, the Shares might no longer constitute "margin securities" for the purposes of the Federal Reserve Board's margin regulations and, therefore, could no longer be used as collateral for loans made by brokers. The Shares are currently registered under the Exchange Act. Such registration may be terminated upon application of the Company to the Commission if the Shares are neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of the registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to holders of Shares and to the Commission and would make certain of the provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy statement pursuant to Section 14(a) in connection with a stockholder's meeting and the related requirement of an annual report to stockholders and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, no longer applicable to the Shares. Furthermore, "affiliates" of the Company and persons holding "restricted securities" of the Company may be deprived of the ability to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933 (the "Securities Act"). If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities" or eligible for reporting on the Nasdaq National Market. The Purchaser intends to seek to cause the Company to terminate registration of the Shares under the Exchange Act as soon after consummation of the Offer as the requirements for termination of registration of the Shares are met. 13. Distributions. If on or after July 16, 1998, the Company should split, combine or otherwise change the Shares or its capitalization, acquire or otherwise cause a reduction in the number of outstanding Shares or issue or sell any additional Shares (other than Shares issued pursuant to and in accordance with the terms in effect on July 16, 1998 of employee stock options and convertible securities outstanding prior to such date), shares of any other class or series of capital stock, other voting securities or any securities convertible into, or options, rights, or warrants, conditional or otherwise, to acquire, any of the foregoing, then, without prejudice to the Purchaser's rights under Section 15, the Purchaser may, in its sole discretion, make such adjustments in the purchase price and other terms of the Offer as it deems appropriate including the number or type of securities to be purchased. 14. Extension of Tender Period; Termination; Amendment. The Purchaser reserves the right, at any time or from time to time, in its sole discretion and regardless of whether or not any of the conditions specified in Section 15 shall have been satisfied, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary and by making a public announcement of such extension or to amend the Offer in any respect by making a public announcement of such amendment; provided, however, that the Company has the right pursuant to the Merger Agreement to terminate the Merger Agreement and abandon the Merger if the Offer has not been consummated by the date that is 60 days after the commencement of the Offer. There can be no assurance that the Purchaser will exercise its right to extend or amend the Offer. If the Purchaser decreases the percentage of Shares being sought or increases or decreases the consideration to be paid for Shares pursuant to the Offer and the Offer is scheduled to expire at any time before the expiration of a period of 10 business days from, and including, the date that notice of such increase or decrease is first published, sent or given in the manner specified below, the Offer will be extended until the expiration of such period of 10 business days. If the Purchaser makes a material change in the terms of the Offer (other than a change in price or percentage of securities sought) or in the information concerning the Offer, or waives a material condition of the Offer, the Purchaser will extend the Offer, if required by applicable law, for a period sufficient to allow stockholders to consider the amended terms of the Offer. In a published release, the Commission has stated that in its view an offer must remain open for a minimum period of time following a material change in the terms of such offer and that the waiver of a condition such as the Minimum Tender Condition is a material change in the terms of an offer. The release states that an offer should remain open for a minimum of five business days from the date the material change is first published, sent or given to securityholders, and that if material changes are made with respect to information that approaches the significance of price and share levels, a minimum of 10 business days may be required to allow adequate dissemination and investor response. The term "business day" shall mean any day other than Saturday, Sunday or a federal holiday and shall consist of the time period from 12:01 A.M. through 12:00 Midnight, New York City time. The Purchaser also reserves the right, in its sole discretion, in the event any of the conditions specified in Section 15 shall not have been satisfied and so long as Shares have not theretofore been accepted for payment, to delay (except as otherwise required by applicable law) acceptance for payment of or payment for Shares or to terminate the Offer and not accept for payment or pay for Shares. If the Purchaser extends the period of time during which the Offer is open, is delayed in accepting for payment or paying for Shares or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Depositary may, on behalf of the Purchaser, retain all Shares tendered, and such Shares may not be withdrawn except as otherwise provided in Section 4. The reservation by the Purchaser of the right to delay acceptance for payment of or payment for Shares is subject to applicable law, which requires that the Purchaser pay the consideration offered or return the Shares deposited by or on behalf of stockholders promptly after the termination or withdrawal of the Offer. Any extension, termination or amendment of the Offer will be followed as promptly as practicable by a public announcement thereof. Without limiting the manner in which the Purchaser may choose to make any public announcement, the Purchaser will have no obligation (except as otherwise required by applicable law) to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. In the case of an extension of the Offer, the Purchaser will make a public announcement of such extension no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. 15. Certain Conditions of the Offer. Notwithstanding any other provision of the Offer, the Purchaser shall not be required to accept for payment or pay for any Shares, and may terminate the Offer as provided in Section 14, if prior to the acceptance for payment of or payment for any Shares (i) the Minimum Tender Condition shall not have been satisfied, (ii) the applicable waiting period under the HSR Act in respect of any of the transactions contemplated by the Merger Agreement shall not have expired or been terminated prior to the Expiration Date, (iii) the Financing Condition shall not have been satisfied or (iv) at any time on or after July 22, 1998, and prior to acceptance for payment or payment for the Shares, any of the following conditions exist: (a) there shall be instituted or pending any action or proceeding by any government or governmental authority or agency, domestic or foreign, or by any other person, domestic or foreign, before any court or governmental authority or agency, domestic or foreign, (i) challenging or seeking to make illegal, to delay materially or otherwise directly or indirectly to restrain or prohibit the making of the Offer, the acceptance for payment of or payment for some of or all the Shares by the Purchaser or the consummation by the Purchaser of the Merger, or seeking to obtain material damages, (ii) seeking to restrain or prohibit the Purchaser's ownership or operation (or that of its respective subsidiaries or affiliates) of all or any material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or of the Purchaser and its subsidiaries, taken as a whole, or to compel the Purchaser or any of its subsidiaries or affiliates to dispose of or hold separate all or any material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or of the Purchaser and its subsidiaries, taken as a whole, (iii) seeking to impose or confirm material limitations on the ability of the Purchaser or any of its subsidiaries or affiliates effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote any Shares acquired or owned by the Purchaser or any of its subsidiaries or affiliates on all matters properly presented to the Company's stockholders, or (iv) seeking to require divestiture by the Purchaser or any of its subsidiaries or affiliates of any Shares, or (v) that otherwise, in the reasonable judgment of the Purchaser, is likely to materially adversely affect the Company and its subsidiaries, taken as a whole; or (b) there shall be any action taken, or any statute, rule, regulation, injunction, order or decree proposed, enacted, enforced, promulgated, issued or deemed applicable to the Offer or the Merger, by any court, government or governmental authority or agency, domestic or foreign other than the application of the waiting period provisions of the HSR Act to the Offer or the Merger, that, in the reasonable judgment of the Purchaser, is likely, directly or indirectly, to result in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; or (c) any change or material worsening of any existing condition shall have occurred or been threatened in the business, assets, liabilities, condition (financial or otherwise), results of operations or, insofar as can be reasonably foreseen, prospects of the Company and its subsidiaries taken as a whole that, in the reasonable judgment of the Purchaser, is or is likely to be materially adverse to the Company and its subsidiaries, taken as a whole; or (d) a tender or exchange offer for more than 30% of the Shares at a price per Share in excess of $23.00 shall have been publicly proposed to be made or shall have been made by another person, or it shall have been publicly disclosed or the Purchaser shall have otherwise learned that (i) any person or "group" (as defined in Section 13(d)(3) of the Exchange Act) shall have acquired or proposed to acquire beneficial ownership of more than 30% of any class or series of capital stock of the Company (including the Shares), through the acquisition of stock, the formation of a group or otherwise, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of more than 30% of any class or series of capital stock of the Company (including the Shares) other than acquisitions for bona fide arbitrage purposes only and other than as disclosed in a Schedule 13D or 13G on file with the Commission on July 16, 1998, or (ii) any such person or group which, prior to July 16, 1998, had filed such a Schedule with the Commission shall have acquired or proposed to acquire beneficial ownership of additional shares of any class or series of capital stock of the Company (including the Shares), through the acquisition of stock, the formation of a group or otherwise, constituting 10% or more of any such class or series, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of additional shares of any class or series of capital stock of the Company (including the Shares) constituting 10% or more of any such class or series or (iii) any person or group shall have entered into a definitive agreement or an agreement in principle with respect to a merger, consolidation or other business combination with the Company; or (e) the Company shall have breached or failed to perform in any material respect any of its covenants or agreements under the Merger Agreement, or any of the representations and warranties of the Company set forth in the Merger Agreement shall not be true in any material respect when made or at any time prior to consummation of the Offer as if made at and as of such time; or (f) The Fourth Amended and Restated Shareholders Agreement and the Fifth Amended and Restated Registration Rights Agreement, in each case among the Company and certain of its stockholders, shall not have been terminated; or (g) the Merger Agreement shall have been terminated in accordance with its terms; or (h) the Board of Directors of the Company shall have withdrawn or materially modified its approval or recommendation of the Offer or the Merger; which, in the reasonable judgment of the Purchaser, in any such case, and regardless of the circumstances giving rise to any such condition, makes it inadvisable to proceed with such acceptance for payment or payment. 16. Certain Legal Matters; Regulatory Approvals. General. Based on its examination of publicly available information filed by the Company with the Commission and other publicly available information concerning the Company, the Purchaser is not aware of any governmental license or regulatory permit that appears to be material to the Company's business that might be adversely affected by the Purchaser's acquisition of Shares as contemplated herein or, except as set forth below, of any approval or other action by any government or governmental administrative or regulatory authority or agency, domestic or foreign, that would be required for the acquisition or ownership of Shares by the Purchaser as contemplated herein. Should any such approval or other action be required, the Purchaser currently contemplates that such approval or other action will be sought. There can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that if such approvals were not obtained or such other actions were not taken adverse consequences might not result to the Company's business or certain parts of the Company's business might not have to be disposed of, any of which could cause the Purchaser to elect to terminate the Offer without the purchase of Shares thereunder. The Purchaser's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions. See Section 15. On July 21, 1998, an action entitled Taam Associates, Inc. v. DeCrane, et al., C.A. No. 16551, was commenced in Delaware Chancery Court on behalf of a purported class of stockholders of the Company against the Company, its directors and various officers, Donaldson, Lufkin & Jenrette, Inc. and the Purchaser, alleging, among other things, that the directors had breached their fiduciary duties by entering into the Merger Agreement without engaging in an auction or "active market check" and therefore did not adequately inform themselves in agreeing to terms that are unfair and inadequate from the standpoint of the Company's stockholders. The complaint seeks a preliminary and permanent injunction barring defendants from proceeding with the transaction or, if the transaction is consummated, an order rescinding it or awarding damages, together with interest, and an award of attorneys' fees and litigation expenses. The Purchaser believes the action is without merit. Antitrust. Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (the "FTC"), certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice (the "Antitrust Division") and the FTC and certain waiting period requirements have been satisfied. The purchase of Shares pursuant to the Offer and the purchase of Parent Common Stock by the DLJMB Funds are subject to such requirements. Pursuant to the requirements of the HSR Act, the Purchaser expects to file Notification and Report Forms with respect to the Offer and the Equity Purchase with the Antitrust Division and the FTC on or about July 23, 1998. As a result, assuming such filings are made on July 23, 1998, the waiting periods applicable to the purchase of Shares pursuant to the Offer and the Equity Purchase are scheduled to expire at 11:59 P.M., New York City time, on Thursday, August 6, 1998 and Saturday, August 21, 1998, respectively. However, prior to such time, the Antitrust Division or the FTC may extend the waiting period by requesting additional information or documentary material relevant to the Offer from the Purchaser. If such a request is made, the waiting period will be extended until 11:59 P.M., New York City time, on the tenth day after substantial compliance by the Purchaser with such request. Thereafter, such waiting period can be extended only by court order. A request is being made pursuant to the HSR Act for early termination of the waiting period applicable to the Offer and the Equity Purchase. There can be no assurance, however, that the 15-day HSR Act waiting periods will be terminated early. Shares will not be accepted for payment or paid for pursuant to the Offer until the expiration or earlier termination of the applicable waiting periods under the HSR Act. See Section 15. Subject to Section 4, any extension of the waiting periods will not give rise to any withdrawal rights not otherwise provided for by applicable law. If the Purchaser's acquisition of Shares is delayed pursuant to a request by the Antitrust Division or the FTC for additional information or documentary material pursuant to the HSR Act, the Offer may, but need not, be extended. The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the acquisition of Shares by the Purchaser pursuant to the Offer. At any time before or after the consummation of any such transactions, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or seeking divestiture of the Shares so acquired or divestiture of substantial assets of the Purchaser or the Company. Private parties (including individual states) may also bring legal actions under the antitrust laws. The Purchaser does not believe that the consummation of the Offer will result in a violation of any applicable antitrust laws. However, there can be no assurance that a challenge to the Offer on antitrust grounds will not be made, or if such a challenge is made, what the result will be. See Section 15 for certain conditions to the Offer, including conditions with respect to litigation and certain governmental actions. Other Governmental Approvals. The Purchaser is currently evaluating whether any regulatory approvals or filing of information with governmental agencies will be required to be obtained or made in connection with the Offer or the Merger in the United Kingdom or Switzerland, where the Company maintains certain manufacturing facilities. If any such approvals are required to be obtained, there can be no assurance that they will be obtained or that, if obtained, they will be obtained prior to the scheduled expiration of the Offer. See Section 15. 17. Fees and Expenses. DLJSC is acting as financial advisor to the Purchaser and is acting as Dealer Manager in connection with the Offer. The Purchaser has agreed to pay DLJSC, as compensation for its services as financial advisor and as Dealer Manager in connection with the Offer, fees aggregating $3.0 million. The Purchaser has also agreed to reimburse DLJSC for certain reasonable out-of-pocket expenses incurred in connection with the Offer (including the fees and disbursements of outside counsel) and to indemnify DLJSC against certain liabilities, including certain liabilities under the federal securities laws. In addition, the Purchaser has agreed to pay DLJSC an annual advisory fee of $300,000 beginning on the consummation of the Offer for a period of five years. The Purchaser has retained D.F. King & Co., Inc. to act as the Information Agent and BankBoston, N.A. to act as the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telegraph and personal interviews and may request brokers, dealers and other nominee stockholders to forward materials relating to the Offer to beneficial owners. The Information Agent and the Depositary each will receive reasonable and customary compensation for their respective services, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities in connection therewith, including certain liabilities under the federal securities laws. The Purchaser will not pay any fees or commissions to any broker or dealer or any other person (other than the Dealer Manager, the Information Agent and the Depositary) for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by the Purchaser for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. 18. Miscellaneous. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. However, the Purchaser may, in its discretion, take such action as it may deem necessary to make the Offer in any such jurisdiction and extend the Offer to holders of Shares in such jurisdiction. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. The Purchaser has filed with the Commission a Tender Offer Statement on Schedule 14D-1, together with exhibits, pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, furnishing certain additional information with respect to the Offer. The Schedule 14D-1 and any amendments thereto, including exhibits, may be examined and copies may be obtained from the offices of the Commission in the manner set forth in Section 7 of this Offer to Purchase (except that such information will not be available at the regional offices of the Commission). DeCrane Acquisition Co. July 22, 1998 SCHEDULE A DIRECTORS AND EXECUTIVE OFFICERS 1. Directors and Executive Officers of Each of Parent, Finance and the Purchaser. The name, business address, present principal occupation or employment of each director and executive officer of Parent, Finance and the Purchaser and certain other information are set forth below. Unless otherwise indicated below, the address of each director and officer is c/o Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York, New York 10172. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to employment with each of Parent, Finance and the Purchaser. Name Present Principal Occupation or Employment - ---- ------------------------------------------ *Thompson Dean President, Treasurer *Timothy J. White Vice President and Secretary - ------------ * Director 2. Persons Who May Be Designated by the Purchasers to Serve as Directors on the Company's Board of Directors. The five-year employment history of each person who may be appointed to the Company's Board of Directors after the consummation of the Offer but prior to the Merger is as follows:
Present Principal Occupation and Name Five-Year Employment History Age - ---- ------------------------------- --- Thompson Dean Thompson Dean joined DLJMB in 1988 as a Vice 40 President and was named a Managing Director in 1991. Prior to joining DLJMB, he was a Vice President in the Special Finance Group (Leveraged Transactions) at Goldman, Sachs & Co. Mr. Dean currently serves as Chairman of the Board of Von Hoffman Press, Inc., and as a director of Arcade Holding Corp., CommVault Systems, Inc., Formica Corp., Manufacturers' Services Ltd. and Phase Metrics, Inc. He has previously served as Chairman of the Board of Fiberite, Inc. and Katz Media Group, Inc. and as a director of Evergreen Media Corp., Hampshire Chemical Corp., IVAC Corp., McGraw, Inc. and Nimbus CD International, Inc. Timothy J. White Timothy J. White has been a Vice President of DLJMB 36 since June 1998. From October 1994 to May 1998, Mr. White was an Associate and Vice President of DLJSC. From May 1994 to October 1994, Mr. White was an Associate Counsel in the Office of the Independent Counsel, United States Department of Justice. Prior to that time, Mr. White was an attorney with Davis Polk & Wardwell. Susan C. Schnabel Susan Schnabel joined DLJSC in 1990 and became a 36 Managing Director in 1996. During this time, she focused on mergers, acquisitions and financing of retail and consumer products companies. In 1997, she served as Chief Financial Officer of PETSMART, a high growth specialty retailer of pet products and supplies. Ms. Schnabel rejoined DLJ in her present capacity in 1998. Ms. Schnabel serves on the Board of Dick's Clothing and Sporting Goods. Dr. Paul B. Kaminski Dr. Kaminski is a Managing Director of Global 51 Technology Partners. In 1994, he was sworn in as the Under Secretary of Defense for Acquisition and Technology and served in this capacity until 1997. Dr. Kaminski has a continuing career involving advanced technology in both the private and public sectors, including positions as Founder, Chairman and CEO of Technology Strategies and Alliances, CEO of Technovation, Inc. and Chairman of the Defense Science Board.
SCHEDULE B Executive Officers and Directors of DLJ Merchant Banking II, Inc. The names of the Directors and the names and titles of the Executive Officers of DLJ Merchant Banking II, Inc. ("MBII INC") and their business addresses and principal occupations are set forth below. If no address is given, the Director's or Executive Officer's business address is that of MBII INC at 277 Park Avenue, New York, New York 10172. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to MBII INC and each individual is a United States citizen. Name, Business Address Present Principal Occupation ---------------------- ---------------------------- * Hamilton E. James Chairman; Managing Director, Donaldson, Lufkin & Jenrette, Inc. * Nicole S. Arnaboldi Managing Director * Thompson Dean Managing Director Carlos Garcia Managing Director * Peter T. Grauer Managing Director * David L. Jaffe Managing Director * Lawrence M.v.D. Schloss Managing Director and Chief Operating Officer * Karl R. Wyss Managing Director - ----------- * Director SCHEDULE C Executive Officers and Directors of DLJ Diversified Partners, Inc. The names of the Directors and the names and titles of the Executive Officers of DLJ Diversified Partners, Inc. ("DP INC") and their business addresses and principal occupations are set forth below. If no address is given, the Director's or Executive Officer's business address is that of DP INC at 277 Park Avenue, New York, New York 10172. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to DP INC and each individual is a United States citizen. Name, Business Address Present Principal Occupation ---------------------- ---------------------------- * Hamilton E. James Chairman; Managing Director, Donaldson, Lufkin & Jenrette, Inc. * Lawrence M.v.D. Schloss Managing Director and Chief Operating Officer; Managing Director and Chief Operating Officer, DLJ Merchant Banking II, Inc. * Marjorie S. White Secretary and Treasurer; Vice President and Secretary, Donaldson, Lufkin & Jenrette, Inc. - ------------ * Director SCHEDULE D Executive Officers and Directors of DLJMB Funding, II, Inc. The names of the Directors and the names and titles of the Executive Officers of DLJ MB Funding, II, Inc. ("Funding II") and their business addresses and principal occupations are set forth below. If no address is given, the Director's or Executive Officer's business address is that of Funding II at 277 Park Avenue, New York, New York 10172. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to Funding II and each individual is a United States citizen. Name, Business Address Present Principal Occupation ---------------------- ---------------------------- * Anthony F. Daddino President; Executive Vice President and Chief Financial Officer, Donaldson, Lufkin & Jenrette, Inc. * Charles J. Hendrickson Treasurer; Senior Vice President and Treasurer, Donaldson, Lufkin & Jenrette, Inc. Marjorie S. White Secretary; Vice President and Secretary, Donaldson, Lufkin & Jenrette, Inc. - ------------ * Director SCHEDULE E Executive Officers and Directors of DLJ LBO Plans Management Corporation The names of the Directors and the names and titles of the Executive Officers of DLJ LBO Plans Management Corporation ("LBO") and their business addresses and principal occupations are set forth below. Each Director's or Executive Officer's business address is that of LBO at 277 Park Avenue, New York, New York 10172. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to LBO and each individual is a United States citizen. Name, Business Address Present Principal Occupation ---------------------- ---------------------------- * Anthony F. Daddino President; Executive Vice President and Chief Financial Officer, Donaldson, Lufkin & Jenrette, Inc. * Vincent DeGiaimo Vice President; Senior Vice President and Managing Director, Donaldson, Lufkin & Jenrette, Inc. * Marjorie S. White Vice President and Secretary; Vice President, Donaldson, Lufkin & Jenrette, Inc. - ------------ * Director SCHEDULE F Executive Officers and Directors of DLJ Capital Investors, Inc. The names of the Directors and the names and titles of the Executive Officers of DLJ Capital Investors, Inc. ("DLJCI") and their business addresses and principal occupations are set forth below. If no address is given, the Director's or Executive Officer's business address is that of DLJCI at 277 Park Avenue, New York, New York 10172. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to DLJCI and each individual is a United States citizen. Name, Business Address Present Principal Occupation ---------------------- ---------------------------- * John S. Chalsty Chairman; Chairman and Chief Executive Officer, Donaldson, Lufkin & Jenrette, Inc. * Hamilton E. James Chief Executive Officer; Managing Director, Donaldson, Lufkin & Jenrette, Inc. * Joe L. Roby Chief Operating Officer; President and Chief Operating Officer, Donaldson, Lufkin & Jenrette, Inc. * Anthony F. Daddino Executive Vice President and Chief Financial Officer; Executive Vice President and Chief Financial Officer, Donaldson, Lufkin & Jenrette, Inc. * Marjorie S. White Secretary and Treasurer; Vice President and Secretary, Donaldson, Lufkin & Jenrette, Inc. - ------------ * Director SCHEDULE G Executive Officers and Directors of UK Investment Plan 1997, Inc. The names of the Directors and the names and titles of the Executive Officers of UK Investment Plan 1997, Inc. ("UKIP 1997 INC") and their business addresses and principal occupations are set forth below. If no address is given, the Director's or Executive Officer's business address is that of UKIP 1997 INC at 277 Park Avenue, New York, New York 10172. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to UKIP 1997 INC and each individual is a United States citizen. Name, Business Address Present Principal Occupation ---------------------- ---------------------------- Anthony F. Daddino President; Executive Vice President and Chief Financial Officer, Donaldson, Lufkin & Jenrette, Inc. * Marjorie S. White Vice President, Secretary and Treasurer; Vice President and Secretary, Donaldson, Lufkin & Jenrette, Inc. * Stuart S. Flamberg Director of Taxes; Senior Vice President and Director of Taxes, Donaldson, Lufkin & Jenrette, Inc. * Mark A. Competiello Tax Manager; Senior Vice President and Tax Manager, Donaldson, Lufkin & Jenrette, Inc. - ------------ * Director SCHEDULE H Executive Officers and Directors of Donaldson, Lufkin & Jenrette, Inc. The names of the Directors and the names and titles of the Executive Officers of Donaldson, Lufkin & Jenrette, Inc. ("DLJ") and their business addresses and principal occupations are set forth below. If no address is given, the Director's or Executive Officer's business address is that of DLJ at 277 Park Avenue, New York, New York 10172. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to DLJ and each individual is a United States citizen. Name, Business Address Present Principal Occupation ---------------------- ---------------------------- * John S. Chalsty Chairman and Chief Executive Officer * Joe L. Roby President and Chief Operating Officer * Claude Bebear (1) Chairman of the Executive Committee of AXA-UAP the Board, AXA- UAP 23, avenue Matignon 75008 Paris, France * Henri de Castries (1) Senior Executive Vice President AXA-UAP Financial Services and Life Insurance 23, avenue Matignon Activities (U.S. & U.K.), AXA-UAP 75008 Paris, France * Denis Duverne (1) Senior Vice President - International AXA-UAP Life, AXA- UAP 23, avenue Matignon 75008 Paris, France * Louis Harris Chairman and Chief Executive Officer, LH LH Research Research (research) 152 East 38th Street New York, New York 10016-2605 * Henri G. Hottinguer (2) Chairman and Chief Executive Officer, Banque Hottinguer Banque Hottinguer (banking) 38, rue de Provence 75009 Paris, France * W. Edwin Jarmain President, Jarmain Group Inc. (private Jarmain Group Inc. investment holding company) Suite 2525, Box 36 121 King Street, West Toronto, Ontario M5H 3T9 Canada * Francis Jungers Retired 19880 NW Estucca Drive Portland, Oregon 97229 * Joseph J. Melone Chairman of the Executive Committee of 1290 Avenue of the Americas the Board, The Equitable Companies New York, New York 10104 Incorporated * Edward D. Miller President and Chief Executive Officer, 1290 Avenue of the Americas Micro Devices Advanced New York, New York 10104 * Stanley B. Tulin Executive Vice President and Chief Financial Officer, The Equitable Companies Incorporated * John C. West Retired Bothea, Jordan & Griffin 23B Shelter Cove Hilton Head Island, SC 29928 * Carl B. Menges Vice Chairman of the Board * Hamilton E. James Managing Director * Richard S. Pechter Managing Director * Theodore P. Shen Managing Director * Anthony F. Daddino Executive Vice President and Chief Financial Officer - ------------ * Director (1) Citizen of the Republic of France (2) Citizen of Canada (3) Citizen of Switzerland SCHEDULE I Executive Officers and Directors of The Equitable Companies Incorporated The names of the Directors and the names and titles of the Executive Officers of The Equitable Companies Incorporated ("EQ") and their business addresses and principal occupations are set forth below. If no address is given, the Director's or Executive Officer's business address is that of EQ at 1290 Avenue of the Americas, New York, New York 10104. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to EQ and each individual is a United States citizen.
Name, Business Address Present Principal Occupation ---------------------- ---------------------------- * Claude Bebear (1) Chairman of the Board; Chairman of the Executive AXA-UAP Board, AXA-UAP 23, avenue Matignon 75008 Paris, France * John S. Chalsty Chairman and Chief Executive Officer, Donaldson, Donaldson, Lufkin & Jenrette, Inc. Lufkin & Jenrette, Inc. 277 Park Avenue New York, NY 10172 * Francoise Colloc'h (1) Senior Executive Vice President, Group Human AXA-UAP Resources and Communications, AXA-UAP 23, avenue Matignon 75008 Paris, France * Henri de Castries (1) Vice Chairman of the Board; Senior Executive Vice AXA-UAP President, Financial Services and Life Insurance 23, avenue Matignon Activities, U.S. & U.K.), AXA-UAP 75008 Paris, France * Joseph L. Dionne Chairman and Chief Executive Officer, The The McGraw-Hill Companies McGraw-Hill Companies (publishing) 1221 Avenue of the Americas New York, NY 10020 * William T. Esrey Chairman and Chief Executive Officer, Sprint Sprint Corporation Corporation (telecommunications) P.O. Box 11315 Kansas City, MO 64112 * Jean-Rene Fourtou (1) Chairman and Chief Executive Officer, Rhone- Rhone-Poulenc S.A. Poulenc S.A. (manufacturer of chemicals and 25 quai Paul Doumer agricultural products) 92408 Courbevoie Cedex France * Jacques Friedmann (1) Chairman of the Supervisory Board, AXA-UAP AXA-UAP 9, Place Vendome 75001 Paris France Robert E. Garber Executive Vice President and General Counsel; Executive Vice President and General Counsel, The Equitable Life Assurance Society of the United States Jerome S. Golden Executive Vice President * Donald J. Greene, Esq. Counselor-at-Law, Partner, LeBoeuf, Lamb, Greene LeBoeuf, Lamb, Greene & & MacRae, L.L.P. (law firm) MacRae, L.L.P. 125 West 55th Street New York, NY 10019 * Anthony J. Hamilton (2) Group Chairman and Chief Executive Officer, Fox- Fox-Pitt, Kelton Group Limited Pitt, Kelton Group Limited (finance) 35 Wilson Street London, England EC2M 2SJ * John T. Hartley Retired Chairman and Chief Executive Officer, Harris Corporation currently Director, Harris Corporation 1025 NASA Boulevard (manufacturer of electronic, telephone and copying Melbourne, FL 32919 systems) * John H. F. Haskell, Jr. Director and Managing Director, SBC Warburg Dillon, Read & Co., Inc. Dillon Read, Inc. (formerly Dillon, Read & Co., 535 Madison Avenue Inc.) (investment banking firm) New York, NY 10022 Michael Hegarty Senior Executive Vice President and Chief Operating Officer; President and Chief Operating Officer, The Equitable Life Assurance Society of the United States * Mary R. (Nina) Henderson President, Best Foods Grocery of CPC CPC Specialty Markets Group International, Inc. (food manufacturer) 700 Sylvan Avenue Englewood, NJ 07632 * W. Edwin Jarmain (3) President, Jarmain Group Inc. (private investment Jarmain Group Inc. holding company) Suite 2525 121 King Street West Toronto, Ontario M5H 3T9 Canada * Joseph J. Melone Chairman of the Executive Committee of the Board; Chairman of the Executive Committee of the Board, The Equitable Life Assurance Society of the United States * Edward D. Miller President and Chief Executive Officer; Chairman and Chief Executive Officer, The Equitable Life Assurance Society of the United States Peter D. Noris Executive Vice President and Chief Investment Officer; Executive Vice President and Chief Investment Officer, The Equitable Life Assurance Society of the United States * Didier Pineau-Valencienne(1) Chairman and Chief Executive Officer, Schneider 64/70, avenue Jean Baptiste S.A. (electric equipment) Clement 92646 Boulogne Cedex, France * George J. Sella, Jr. Retired Chairman, President and Chief Executive American Cyanamid Company Officer, American Cyanamid Company P.O. Box 397 (manufacturer of pharmaceutical products and Newton, NJ 07860 agricultural products) Jose Suquet Executive Vice President; Executive Vice President and Chief Distribution Officer; The Equitable Life Assurance Society of the United States Stanley B. Tulin Executive Vice President and Chief Financial Officer; Senior Executive Vice President and Chief Financial Officer, The Equitable Life Assurance Society of the United States * Dave H. Williams Chairman and Chief Executive Officer, Alliance Alliance Capital Capital Management Corp. (investment adviser) Management Corporation 1345 Avenue of the Americas New York, NY 10105 - ------------ * Director (1) Citizen of the Republic of France (2) Citizen of United Kingdom (3) Citizen of Canada
SCHEDULE J Members of Executive Committee and Supervisory Board of AXA-UAP The names and titles (for the Executive Committee members) of the Members of the Executive Committee and Supervisory Board of AXA-UAP and their business addresses and principal occupations are set forth below. If no address is given, the Member's business is 23, avenue Matignon, 75008 Paris, France. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to AXA-UAP and each individual is a citizen of the Republic of France. Members of the Executive Committee Name, Business Address Present Principal Occupation - ---------------------- ---------------------------- Claude Bebear Chairman of the Executive Board Donald Brydon (1) Senior Executive Vice President, AXA Asset Management Europe Henri de Castries Senior Executive Vice President, Financial Services and Insurance Activities (U.S. and U.K.) John Chalsty (2) Senior Executive Vice President; Chairman and Chief Executive Officer, Donaldson, Lufkin & Jenrette, Inc. (investment banking) Francoise Colloch Senior Executive Vice President, Group Human Resources and Communications Jean-Pierre Gerard (3) Senior Executive Vice President; Chief Executive Officer, Royale Beige (insurance) Denis Kessler Senior Executive Vice President, Insurance Activities outside France, U.K. and U.S. Clause Kleyboldt (4) Senior Executive Vice President; Chairman of the Executive Board of AXA Colonia (insurance) Gerard de La Martiniere Senior Executive Vice President, Chief Financial Officer Joseph J. Melone (2) Chairman of the Executive Committee of the Board, The Equitable Companies Incorporated Edward D. Miller (2) Senior Executive Vice President; President and Chief Executive Officer; The Equitable Companies Incorporated Jean-Louis Meunier Senior Executive Vice President, Central Underwriting Officer Michel Pinault Senior Executive Vice President, Group Administration Claude Tendil Senior Executive Vice President, French Insurance Activities, international risks, transborder insurance projects and information systems policy Geoff Tomlinson (5) Senior Executive Vice President; Managing Director, National Mutual Holdings (insurance) Dave H. Williams (2) Senior Executive Vice President; Chairman and Chief Executive Officer, Alliance Capital Management Corporation (investment adviser) Mark Wood (1) Senior Executive Vice President; Managing Director, Sun Life & Provincial Holdings plc Members of the Supervisory Board Name, Business Address Present Principal Occupation - ---------------------- ---------------------------- Jacques Friedmann Chairman of the Supervisory Board 9, Place Vendome 75008 Paris, France Jean-Louis Beffa Chairman and Chief Executive "Les Miroirs" Officer, Compagnie de St. Gobain Cedex 27 (industry) 92096 Paris La Defense, France Antoine Bernheim General Partner, Lazard Freres et Cie 121, Avenue Haussman (investment banking); Chairman, 75008 Paris, France Assicurazioni Generali S.p.A. (insurance) Jacques Calvet Former Chairman of the Executive 75, avenue de la Grande Armee Board, Peugeot S.A. (auto 75116 Paris, France manufacturer) David Dautreseme General Partner, Lazard Freres et Cie 121, Boulevard Haussman (investment banking) 75008 Paris, France Guy Dejouany Honorary Chairman, Compagnie 52, rue d'Anjou Generaledes Eaux (industry and 75008 Paris, France services) Paul Desmarais (7) Chairman and Chief Executive 751, Square Victoria Officer, Power Corporation (industry Montreal Quebec and services) H3Y 3JY Canada Jean-Rene Fourtou Chairman and Chief Executive 25, quai Paul Doumer Officer, Rhone-Poulenc S.A. 93408 Courbevoie Cedex (industry) France Michel Francois-Poncet Chairman of the Supervisory Board, 5, Rue d'Antin Compagnie Financiere de Paribas 75002 Paris, France (financial services and banking) Patrice Garnier Director, Finaxa Latreaumont 76360 Baretin, France Anthony J. Hamilton (1) General Partner, Fox-Pitt, Kelton 35 Wilson Street Group Limited (finance) London, England EC2M 2SJ Henri Hottinguer (6) Vice Chairman, Financier Hottinguer 38, rue de Provence (banking) 75009 Paris, France Richard H. Jenrette (2) Senior Advisor, Donaldson, Lukfin & c/o Donaldson, Lukfin & Jenrette, Jenrette, Inc. (investment banking) Inc. 277 Park Avenue New York, New York 10172 Henri Lachmann Chairman and Chief Executive 56, rue Jean Giraudoux Officer, Stafor Facom (office 67200 Strasbourg, France furniture) Gerard Mestallet Chairman of the Executive Board 1, rue d'Astorg (finance) Suez Lyonnaise des Eaux 75008 Paris, France Friedel Neuber Chairman of the Executive Board, Girozentrade Herzogstrasse 15 WestDeutsche Landesbank (banking) D40127 Dusseldorf, Germany Alfred von Oppenheim (4) Chairman, Bank Oppenheim (banking) Konsortium Oppenheim Unter Sachsenrausen 4 50667 Koln, Germany Michel Pebereau Chairman and Chief Executive 16, Boulevard des Italiens Officer, Banque Nationale de Paris 75009 Paris, France (banking) Didier Pineau-Valencienne Chairman and Chief Executive 64-70, avenue Jean Baptiste Clement Officer, Schneider S.A. (electric 92646 Boulogne Cedex, France equipment) Bruno Roger General Partner, Lazard Freres & Cie 121, Boulevard Hausmann (investment banking) 75008 Paris, France Simone Rozes First Honorary President, Cour de 2, rue Villaret de Joyeuse Cassation (government) 75017 Paris, France - ------------ (1) Citizen of the United Kingdom (2) Citizen of the United States of America (3) Citizen of Belgium (4) Citizen of Germany (5) Citizen of Australia (6) Citizen of Switzerland (7) Citizen of Canada SCHEDULE K Executive Officers and Members of Conseil d'Administration of FINAXA The names of the Members of Conseil d'Administration and the names and titles of the Executive Officers of Finaxa and their business addresses and principal occupations are set forth below. If no address is given, the Member's or Executive Officer's business address is that of Finaxa at 23, avenue Matignon, 75008 Paris, France. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to Finaxa and each individual is a citizen of the Republic of France.
Name, Business Address Present Principal Occupation ---------------------- ---------------------------- * Claude Bebear Chairman and Chief Executive Officer; Chairman of the Executive Board, AXA-UAP * Henri de Clermont-Tonnerre Chairman of the Supervisory Board, Qualis SCA 4, avenue Van Dyke (transportation) 75008 Paris, France * Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone- 25, quai Paul Doumer Poulenc S.A. (industry) 92408 Courbevoie Cedex France * Patrice Garnier Retired Latreaumont 76360 Baretin, France * Henri Hottinguer (1) Chairman and Chief Executive Officer, Banque 38, rue de Provence Hottinguer (banking) 75009 Paris, France * Paul Hottinguer (1) Assistant Chairman and Chief Executive Officer, 38, rue de Provence Banque Hottinguer (banking) 75009 Paris, France * Henri Lachmann Chairman and Chief Executive Officer, Strafor 56, rue Jean Giraudoux Facom (office furniture) 67000 Strasbourg, France * Andre Levy-Lang Chief Executive Officer, Paribas (banking) 3, rue d'Antin 75002 Paris, France Christien Manset Vice Chairman of the Supervisory Board, Banque 3, rue d'Antin Paribas 75002 Paris, France * Georges Rousseau Retired 2, rue des Mouettes 76130 Mont Saint Aignan, France Emilio Ybarra (2) Chairman, Banco Bilbao Vizcaya (banking) Paseo de la Castillone, 8 28046 Madrid, Spain - ------------ * Member, Conseil d'Administration (1) Citizen of Switzerland (2) Citizen of Spain
SCHEDULE L Executive Officers and Members of Conseil d'Administration of AXA ASSURANCES I.A.R.D. MUTUELLE The names of the Members of Conseil d'Administration and the names and titles of the Executive Officers of AXA Assurances I.A.R.D. Mutuelle and their business addresses and principal occupations are set forth below. If no address is given, the Member's or Executive Officer's business address is that of AXA Assurances I.A.R.D. Mutuelle at 21, rue de Chateaudun, 75009 Paris, France. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to AXA Assurances I.A.R.D. Mutuelle and each individual is a citizen of the Republic of France.
Name, Business Address Present Principal Occupation ---------------------- ---------------------------- * Claude Bebear Chairman; Chairman of the Executive Board, 23, avenue Matignon AXA-UAP 75008 Paris, France Jean-Luc Bertozzi Executive Officer * Jean-Pierre Chaffin Manager, Federation de la Metallurgie 5, rue la Bruyere (industry) 75009 Paris, France * Gerard Coutelle Retired * Henri de Castries Senior Executive Vice President, Financial Services 23, avenue Matignon and Life Insurance Activities (U.S. & U.K.), AXA- 75008 Paris, France UAP * Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone- 25, quai Paul Doumer Poulenc S.A. (industry) 92408 Courbevoie Cedex France * Patrice Garnier Retired Latreaumont 76360 Baretin, France * Henri Lachmann Chairman and Chief Executive Officer, Strafor 56, rue Jean Giraudoux Facom (office furniture) 67000 Strasbourg, France * Francois Richer Retired * Georges Rousseau Retired 2, rue des Mouettes 76130 Mont Saint Aignan, France * Claude Tendil Chief Executive Officer; Senior Executive Vice President, French Insurance Activities, AXA-UAP * Nicolas Thiery Chairman and Chief Executive Officer, 6 Cite de la Chapelle Etablissements Jaillard (management consulting) 75018 Paris, France * Francis Vaudour Chief Executive Officer, Segafredo Zanetti France 14, boulevard Industriel S.A. (coffee importing and processing) 76301 Sotteville les Rouen, France - ------------ * Member, Conseil d'Administration
SCHEDULE M Executive Officers and Members of Conseil d'Administration of AXA ASSURANCES VIE MUTUELLE The names of the Members of Conseil d'Administration and the names and titles of the Executive Officers of AXA Assurances Vie Mutuelle and their business addresses and principal occupations are set forth below. If no address is given, the Member's or Executive Officer's business address is that of AXA Assurances Vie Mutuelle at 21, rue de Chateaudun, 75009 Paris, France. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to AXA Assurances Vie Mutuelle and each individual is a citizen of the Republic of France.
Name, Business Address Present Principal Occupation ---------------------- ---------------------------- * Claude Bebear Chairman; Chairman of the Executive Board, 23, avenue Matignon AXA-UAP 75008 Paris, France Jean-Luc Bertozzi Executive Vice President * Jean-Pierre Chaffin Manager, Federation de la Metallurgie (industry) 11, rue de Rome 75008 Paris, France * Henri de Castries Senior Executive Vice President, Financial Services 23, avenue Matignon and Life Insurance Activities (U.S. & U.K.), AXA- 75008 Paris, France UAP * Henri de Clermont-Tonnerre Chairman of the Supervisory Board, Qualis SCA 4, avenue Van Dyke (transportation) 75008 Paris, France * Gerard Coutelle Retired * Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone- 25, quai Paul Doumer Poulenc S.A. (industry) 92408 Courbevoie Cedex France * Henri Lachmann Vice Chairman; Chairman and Chief Executive 56, rue Jean Giraudoux Officer, Strafor Facom (office furniture) 67000 Strasbourg, France * Francois Richer Retired * Georges Rousseau Retired 2, rue des Mouettes 76130 Mont Saint Aignan, France * Claude Tendil Chief Executive Officer; Senior Executive Vice Tour Assur 38 President, French Insurance Activities, AXA-UAP 92083 Paris La Defense, France * Nicolas Thiery Chairman and Chief Executive Officer, 6 Cite de la Chapelle Etablissements Jaillard (management consulting) 75018 Paris, France * Francis Vaudour Chief Executive Officer, Segafredo Zanetti France 14, boulevard Industriel S.A. (coffee importing and processing) 76301 Sotteville les Rouen, France - ------------ * Member, Conseil d'Administration
SCHEDULE N Executive Officers and Members of Conseil d'Administration of AXA COURTAGE ASSURANCE MUTUELLE The names of the Members of Conseil d'Administration and the names and titles of the Executive Officers of AXA Courtage Assurance Mutuelle and their business addresses and principal occupations are set forth below. If no address is given, the Member's or Executive Officer's business address is that of AXA Courtage Assurance Mutuelle at 26, rue de Louis-le-Grand, 75002 Paris, France. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to AXA Courtage Assurance Mutuelle and each individual is a citizen of the Republic of France.
Name, Business Address Present Principal Occupation ---------------------- ---------------------------- * Claude Bebear Chairman; Chairman of the Executive Board, 23, avenue Matignon AXA-UAP 75008 Paris, France * Francis Cordier Chairman and Chief Executive Officer, Group rue Nicephore Niepce BP 232 Demay Lesieur (food industry) 76304 Sotteville Les Rouen, France * Gerard Coutelle Retired * Henri de Castries Senior Executive Vice President, Financial Services 23, avenue Matignon and Life Insurance Activities (U.S. & U.K.), AXA- 75008 Paris, France UAP * Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone- 25, quai Paul Doumer Poulenc S.A. (industry) 92408 Courbevoie Cedex France * Patrice Garnier Retired Latreaumont 76360 Baretin, France * Henri Lachmann Vice Chairman; Chairman and Chief Executive 56, rue Jean Giraudoux Officer, Strafor Facom (office furniture) 67000 Strasbourg, France * Francis Magnan Chairman and Chief Executive Officer, Compagnie 50, boulevard des Dames Daher (air and sea transportation) 13002 Marseille, France * Jean de Ribes Chairman and Chief Executive Officer, Banque 38, rue Fortuny Rivaud (banking) 75008 Paris, France * Georges Rousseau Retired 2, rue des Mouettes 76130 Mont Saint Aignan, France * Jean-Paul Saillard Manager, AXA-UAP 23, avenue Matignon 75008 Paris, France * Claude Tendil Chief Executive Officer; Senior Executive Vice Tour Assur 38 President, French Insurance Activities, AXA-UAP 92083 Paris La Defense, France - ------------ * Member, Conseil d'Administration
SCHEDULE O Executive Officers and Members of Conseil d'Administration of ALPHA ASSURANCES VIE MUTUELLE The names of the Members of Conseil d'Administration and the names and titles of the Executive Officers of Alpha Assurances Vie Mutuelle and their business addresses and principal occupations are set forth below. If no address is given, the Member's or Executive Officer's business address is that of Alpha Assurances Vie Mutuelle at Tour Franklin, 100/101 Terrasse Boieldieu, Cedex 11, 92042 Paris La Defense, France. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to Alpha Assurances Vie Mutuelle and each individual is a citizen of the Republic of France.
Name, Business Address Present Principal Occupation ---------------------- ---------------------------- * Claude Bebear Chairman; Chairman of the Executive Board, 23, avenue Matignon AXA-UAP 75008 Paris, France * Henri Brischoux Corporate Secretary; AXA Assurance France Tour Assua 38 92083 Paris La Defense, France * Bernard Cornille Audit Manager, AXA Assurances 21, rue de Chateaudun 75009 Paris, France * Henri de Castries Senior Executive Vice President, Financial Services 23, avenue Matignon and Life Insurance Activities (U.S. & U.K.), AXA- 75008 Paris, France UAP * Henri de Clermont-Tonnerre Chairman of the Supervisory Board, Qualis SCA 4, avenue Van Dyke (transportation) 75008 Paris, France * Claude Fath Chairman of the Executive Board, UAP Vie Tour Assur 28F 92083 Paris Las Defense, France * Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone- 25, quai Paul Doumer Poulenc S.A. (industry) 92408 Courbevoie Cedex France * Patrice Garnier Retired Latreaumont 76360 Baretin, France * Henri Lachmann Vice Chairman; Chairman and Chief Executive 56, rue Jean Giraudoux Officer, Strafor Facom (office furniture) 67000 Strasbourg, France * Georges Rousseau Retired 2, rue des Mouettes 76130 Mont Saint Aignan, France * Claude Tendil Chief Executive Officer; Senior Executive Vice Tour Assur 38 President, French Insurance Activities, AXA-UAP 92083 Paris La Defense, France * Francis Vaudour Chief Executive Officer, Segafredo Zanetti France 14, boulevard Industriel S.A. (coffee importing and processing) 76301 Sotteville les Rouen, France - ------------ * Member, Conseil d'Administration
[This page intentionally left blank.] Facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal and certificates for Shares and any other required documents should be sent to the Depositary at one of the addresses set forth below: The Depositary for the Offer is: BANKBOSTON, N.A. By First Class Mail Only: By Registered, Certified, Express & Overnight Courier Only: Boston EquiServe Boston EquiServe Corporate Reorganization Corporate Reorganization P.O. Box 8029 150 Royall Street Boston, Massachusetts 02266-8029 Canton, Massachusetts 02021
By Hand: Securities Transfer & Reporting Services, Inc. 1 Exchange Plaza/55 Broadway New York, NY 10006 Confirm by Telephone: (781) 575-3120 Questions or requests for assistance or additional copies of this Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth below. Stockholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent for the Offer is: D.F. King & Co., Inc. 77 Water Street New York, New York 10005 Banks and Brokers Call Collect: (212) 425-1685 All Others Call Toll-Free: (800) 487-4870 The Dealer Manager for the Offer is: Donaldson, Lufkin & Jenrette 277 Park Avenue New York, New York 10172 (212) 892-7700 (call collect) EX-99.(A)(2) 3 Exhibit (a) (2) LETTER OF TRANSMITTAL To Tender Shares of Common Stock of DeCrane Aircraft Holdings, Inc. Pursuant to the Offer to Purchase dated July 22, 1998 of DeCrane Acquisition Co. a company formed by DLJ MERCHANT BANKING PARTNERS II, L.P. and Affiliated Funds - ------------------------------------------------------------------------------ THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, AUGUST 25, 1998, UNLESS THE OFFER IS EXTENDED. - ------------------------------------------------------------------------------ The Depositary for the Offer is: BANKBOSTON, N.A. By First Class Mail Only: By Registered, Certified, Express & Overnight Courier Only: Boston EquiServe Boston EquiServe Corporate Reorganization Corporate Reorganization P.O. Box 8029 150 Royall Street Boston, Massachusetts 02266-8029 Canton, Massachusetts 02021
By Hand: Securities Transfer & Reporting Services, Inc. 1 Exchange Plaza/55 Broadway New York, NY 10006 Confirm by Telephone: (781) 575-3120 DESCRIPTION OF SHARES TENDERED - ---------------------------------------------------------------------------------------------------------------------- Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank, exactly as name(s) Shares Tendered appear(s) on Share Certificates) (Attach additional list if necessary) - ---------------------------------------------------------------------------------------------------------------------- Total Number of Shares Number of Certificate Represented by Shares Number(s)* Certificate(s)* Tendered** - ---------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ Total Shares - ---------------------------------------------------------------------------------------------------------------------- - ------------ * Need not be completed by stockholders tendering by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the Depositary are being tendered. See Instruction 4.
Delivery of this instrument to an address other than as set forth above or transmission of instructions to a facsimile number other than the ones listed above will not constitute a valid delivery. This Letter of Transmittal is to be used by stockholders if certificates for Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if delivery of Shares is to be made by book-entry transfer to the Depositary's account at The Depository Trust Company (hereinafter referred to as the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3 of the Offer to Purchase. Stockholders who cannot deliver their Shares and all other documents required hereby to the Depositary on or prior to the Expiration Date (as defined in the Offer to Purchase) or who cannot complete the procedures for book-entry transfer on a timely basis, must tender their Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary. NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY [ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution _______________________________________ Account No. at The Depository Trust Company _________________________ Transaction Code No. ________________________________________________ [ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Tendering Stockholder(s) _________________________________ Date of Execution of Notice of Guaranteed Delivery __________________ Name of Institution which Guaranteed Delivery _______________________ If delivery is by book-entry transfer: Name of Tendering Institution ______________________________________ Account No. at The Depository Trust Company _________________________ Transaction Code No. ________________________________________________ ------------ NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to DeCrane Acquisition Co., a Delaware corporation (the "Purchaser"), the above-described shares of Common Stock, $0.01 par value (the "Shares"), of DeCrane Aircraft Holdings, Inc., a Delaware corporation (the "Company"), pursuant to the Purchaser's offer to purchase all outstanding Shares at a price of $23.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 22, 1998, receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together constitute the "Offer"). The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates the right to purchase Shares tendered pursuant to the Offer. Upon the terms and subject to the terms and conditions of the Offer and effective upon acceptance for payment of and payment for the Shares tendered herewith, the undersigned hereby sells, assigns and transfers to or upon the order of the Purchaser all right, title and interest in and to all the Shares that are being tendered hereby (and any and all other Shares or other securities issued or issuable in respect thereof on or after July 22, 1998) and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and all such other Shares or securities), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver certificates for such Shares (and all such other Shares or securities), or transfer ownership of such Shares (and all such other Shares or securities) on the account books maintained by the Book-Entry Transfer Facility, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of the Purchaser, (b) present such Shares (and all such other Shares or securities) for transfer on the books of the Company and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and all such other Shares or securities), all in accordance with the terms of the Offer. The undersigned hereby irrevocably appoints Thompson Dean and Timothy J. White and each of them, the attorneys and proxies of the undersigned, each with full power of substitution, to exercise all voting and other rights of the undersigned in such manner as each such attorney and proxy or his substitute shall in his sole discretion deem proper, with respect to all of the Shares tendered hereby which have been accepted for payment by the Purchaser prior to the time of any vote or other action (and any and all other Shares or other securities issued or issuable in respect thereof on or after July 22, 1998), at any meeting of stockholders of the Company (whether annual or special and whether or not an adjourned meeting), by written consent or otherwise. This proxy is irrevocable and is granted in consideration of, and is effective upon, the acceptance for payment of such Shares by the Purchaser in accordance with the terms of the Offer. Such acceptance for payment shall revoke any other proxy or written consent granted by the undersigned at any time with respect to such Shares (and all such other Shares or securities), and no subsequent proxies will be given or written consents will be executed by the undersigned (and if given or executed, will not be deemed to be effective). The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby (and any and all other Shares or other securities issued or issuable in respect thereof on or after July 22, 1998) and that when the same are accepted for payment by the Purchaser, the Purchaser will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and all such other Shares or securities). All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer, this tender is irrevocable. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute an agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. Unless otherwise indicated under "Special Payment Instructions", please issue the check for the purchase price of any Shares purchased, and return any Shares not tendered or not purchased, in the name(s) of the undersigned (and, in the case of Shares tendered by book-entry transfer, by credit to the account at the Book-Entry Transfer Facility). Similarly, unless otherwise indicated under "Special Delivery Instructions", please mail the check for the purchase price of any Shares purchased and any certificates for Shares not tendered or not purchased (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that both "Special Payment Instructions" and "Special Delivery Instructions" are completed, please issue the check for the purchase price of any Shares purchased and return any Shares not tendered or not purchased in the name(s) of, and mail said check and any certificates to, the person(s) so indicated. The undersigned recognizes that the Purchaser has no obligation, pursuant to the "Special Payment Instructions", to transfer any Shares from the name of the registered holder(s) thereof if the Purchaser does not accept for payment any of the Shares so tendered. SPECIAL PAYMENT INSTRUCTIONS (See Instructions 6, 7 and 8) To be completed ONLY if the check for the Purchase Price of Shares purchased (less the amount of any federal income and backup withholding tax required to be withheld) or certificates for Shares not tendered or not purchased are to be issued in the name of someone other than the undersigned. Mail [ ] check [ ] certificates to: Name ------------------------------------------- (Please Print) Address ---------------------------------------- - ------------------------------------------------ (Zip Code) - ------------------------------------------------ (Taxpayer Identification No.) SPECIAL DELIVERY INSTRUCTIONS (See Instructions 6, 7 and 8) To be completed ONLY if the check for the Purchase Price of Shares purchased (less the amount of any federal income and backup withholding tax required to be withheld) or certificates for Shares not tendered or not purchased are to be mailed to someone other than the undersigned or to the undersigned at an address other than that shown below the undersigned's signature(s). Mail [ ] check [ ] certificates to: Name ------------------------------------------- (Please Print) Address ---------------------------------------- - ------------------------------------------------ (Zip Code) SIGN HERE (Please complete Substitute Form W-9 below) - ----------------------------------------------------- - ----------------------------------------------------- Signature(s) of Owners Dated , 1998 ---------------------------------------- - ----------------------------------------------------- Please Print Capacity (full title) ------------------------------- Address --------------------------------------------- - ----------------------------------------------------- (Include Zip Code) Area Code and Telephone Number ---------------------- (Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5.) Guarantee of Signatures(s) (If required; see Instructions 1 and 5) Name of Firm ---------------------------------------------------- Authorized Signature -------------------------------------------- Dated , 1998 ----------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------- SUBSTITUTE Part I Taxpayer Identification No. -- For All Accounts Part II For Payees Exempt FORM W-9 ----------------------------------------------------------------- From Backup With- holding (see Department of the Treasury Enter your taxpayer identification ----------------------- enclosed Guidlines) Internal Revenue Service number in the appropriate box. For most individuals and sole proprietors, ----------------------- this is your Social Security Number. Social Security Number For other entities, it is your Employer Payer's Request for Identification Number. If you do OR Taxpayer Identification No. not have a number, see "How to Obtain a TIN" in the enclosed Guidelines ----------------------- Note: If the account is in more than one name, see the chart on page 2 of ----------------------- the enclosed Guidelines to determine Employee Idendification what number to enter. Number - -------------------------------------------------------------------------------------------------------------------------------- Certification -- Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me) and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within (60) days, 31% of all reportable payments made to me thereafter will be withheld until I provide a number; (2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and (3) Any information provided on this form is true, correct and complete. - -------------------------------------------------------------------------------------------------------------------------------- SIGNATURE DATE , 1998 ---------------------------------- ---------------------- - -------------------------------------------------------------------------------------------------------------------------------- NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
INSTRUCTIONS Forming Part of the Terms and Conditions of the Offer 1. Guarantee of Signatures. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a firm which is a member of a recognized Medallion Program approved by The Securities Transfer Associations, Inc. (an "Eligible Institution"). Signatures on this Letter of Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed by the registered holder(s) of the Shares (which term, for purposes of this document, shall include any participant in one of the Book-Entry Transfer Facilities whose name appears on a security position listing as the owner of Shares) tendered herewith and such holder(s) have not completed the instruction entitled "Special Payment Instructions" on this Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. See Instruction 5. 2. Delivery of Letter of Transmittal and Shares. This Letter of Transmittal is to be used either if certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if delivery of Shares is to be made by book-entry transfer pursuant to the procedures set forth in Section 3 of the Offer to Purchase. Certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof or, in the case of a book-entry transfer, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the front page of this Letter of Transmittal by the Expiration Date. Stockholders who cannot deliver their Shares and all other required documents to the Depositary by the Expiration Date must tender their Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by or through an Eligible Institution, (b) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Purchaser must be received by the Depositary by the Expiration Date and (c) the certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three Nasdaq Stock Market trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such notice. The method of delivery of Shares and all other required documents is at the option and risk of the tendering stockholder and the delivery will be deemed made only when actually received by the Depositary. If certificates for Shares are sent by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. No alternative, conditional or contingent tenders will be accepted, and no fractional Shares will be purchased. By executing this Letter of Transmittal (or facsimile thereof), the tendering stockholder waives any right to receive any notice of the acceptance for payment of the Shares. 3. Inadequate Space. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto. 4. Partial Tenders (not applicable to stockholders who tender by book-entry transfer). If fewer than all the Shares represented by any certificate delivered to the Depositary are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered". In such case, a new certificate for the remainder of the Shares represented by the old certificate will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the appropriate box on this Letter of Transmittal, as promptly as practicable following the expiration or termination of the Offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby is held of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the Shares tendered hereby are registered in different names on different certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal (or facsimiles thereof) as there are different registrations of certificates. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of certificates or separate stock powers are required unless payment of the purchase price is to be made, or Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder(s), in which case the certificates evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such certificates. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, certificates evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates for such Shares. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If this Letter of Transmittal or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Purchaser of the authority of such person so to act must be submitted. 6. Stock Transfer Taxes. The Purchaser will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder(s), or if the tendered Shares are registered in the name of any person(s) signing this Letter of Transmittal returned in the name of, any person other than the registered holder(s), or if a transfer tax is imposed for any reason other than the sale or transfer of Shares to the Purchaser pursuant to the Offer, then the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise), will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted herewith. It will not be necessary to affix transfer tax stamps to the certificates representing Shares tendered hereby. 7. Special Payment and Delivery Instructions. If the check for the purchase price of any Shares purchased is to be issued, or any Shares not tendered or not purchased are to be returned, in the name of a person other than the person(s) signing this Letter of Transmittal or if the check or any certificates for Shares not tendered or not purchased are to be mailed to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal at an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Stockholders tendering Shares by book-entry transfer may request that Shares not purchased be credited to such account at the Book-Entry Transfer Facility. If no such instructions are given, any such Shares not purchased will be returned by crediting the account at the Book-Entry Transfer Facility. 8. Substitute Form W-9. Under the federal income tax laws, the Depositary will be required to withhold 31% of the amount of any payments made to certain stockholders pursuant to the Offer. In order to avoid such backup withholding, each tendering stockholder, and, if applicable, each other payee, must provide the Depositary with such stockholder's or payee's correct taxpayer identification number and certify that such stockholder or payee is not subject to such backup withholding by completing the Substitute Form W-9 set forth above. In general, if a stockholder or payee is an individual, the taxpayer identification number is the Social Security number of such individual. If the Depositary is not provided with the correct taxpayer identification number, the stockholder or payee may be subject to a $50 penalty imposed by the Internal Revenue Service. Certain stockholders or payees (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order to satisfy the Depositary that a foreign individual qualifies as an exempt recipient, such stockholder or payee must submit a statement, signed under penalties of perjury, attesting to that individual's exempt status. Such statements can be obtained from the Depositary. For further information concerning backup withholding and instructions for completing the Substitute Form W-9 (including how to obtain a taxpayer identification number if you do not have one and how to complete the Substitute Form W-9 if Shares are held in more than one name), consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. Failure to complete the Substitute Form W-9 will not, by itself, cause Shares to be deemed invalidly tendered, but may require the Depositary to withhold 31% of the amount of any payments made pursuant to the Offer. Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of a person subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained provided that the required information is furnished to the Internal Revenue Service. NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. 9. Requests for Assistance or Additional Copies. Requests for assistance or additional copies of the Offer to Purchase and this Letter of Transmittal may be obtained from the Information Agent or the Dealer Manager at their respective addresses or telephone numbers set forth below. The Information Agent is: D.F. King & Co., Inc. 77 Water Street New York, New York 10005 Banks and Brokers Call Collect: (212) 425-1685 All Others Call Toll-Free: (800) 487-4870 The Dealer Manager is: Donaldson, Lufkin & Jenrette 277 Park Avenue New York, New York 10172 (212) 892-7700 (Call Collect) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Guidelines for Determining the Proper Identification Number to Give the Payer - -- Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer. For this type of Give the account: SOCIAL SECURITY number of -- - ------------------------------------------------------------------- 1. An individual's The individual account 2. Two or more The actual owner of the individuals (joint account or, if combined account) funds, any one of the individuals(1) 3. Husband and wife The actual owner of the (joint account) account or, if joint funds, either person(1) 4. Custodian account of The minor(2) a minor (Uniform Gift to Minors Act) 5. Adult and minor The adult or, if the (joint account) minor is the only contributor, the minor(1) 6. Account in the name The ward, minor, or of guardian or incompetent person(3) committee for a designated ward, minor, or incompetent person 7. a. The usual The grantor-trustee(1) revocable savings trust account (grantor is also trustee) b. So-called trust The actual owner(1) account that is not a legal or valid trust under State law For this type of Give the account: EMPLOYER IDENTIFICATION number of -- - ------------------------------------------------------------------- 8. Sole proprietorship The owner(4) account 9. A valid trust, estate, Legal entity (Do not or pension trust furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 10. Corporate account The corporation 11. Religious, The organization charitable, or educational organization account 12. Partnership held in The partnership the name of the business 13. Association, club or The organization other tax-exempt organization 14. A broker or The broker or nominee registered nominee 15. Account with the The public entity Department of Agriculture in the name of a public entity (such public entity as a State or local governmental, school district or prison) that receives agricultural program payments. - ------------ (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Obtaining a Number If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5. Application for a Social Security Number Card, or Form SS-4 Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. Payees Exempt from Backup Withholding Payees specifically exempted from backup withholding on ALL payments include the following: o A corporation. o A financial institution. o An organization exempt from tax under section 501(a), or an individual retirement plan. o The United States or any agency or instrumentality thereof. o A State, The District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. o A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. o An international organization or any agency or instrumentality thereof. o A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. o A real estate investment trust. o A common trust fund operated by a bank under section 584(a). o An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1). o An entity registered at all times under the Investment Company Act of 1940. o A foreign central bank of issue. Payment of dividends and patronage dividends not generally subject to backup withholding include the following: o Payments to nonresident aliens subject to withholding under section 1441. o Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one non-resident partner. o Payments of patronage dividends where the amount renewed is not paid in money. o Payments made by certain foreign organizations. o Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: o Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. o Payments of tax-exempt interest (including exempt-interest dividends under section 852). o Payments described in section 6049(b)(5) to non-resident aliens. o Payments on tax-free covenant bonds under section 1451. o Payments made by certain foreign organizations. o Payments made to a nominee. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends, and patronage dividends that are not subject to information reporting are also not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A. Privacy Act Notice -- Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. Penalties (1) Penalty for Failure to Furnish Taxpayer Identification Number. If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) Civil Penalty for False Information With Respect to Withholding. If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) Criminal Penalty for Falsifying Information. Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.(A)(3) 4 Exhibit (a) (3) NOTICE OF GUARANTEED DELIVERY in respect of Offer to Purchase for Cash All Outstanding Shares of Common Stock of DeCrane Aircraft Holdings, Inc. at $23.00 Net Per Share by DeCrane Acquisition Co. a company formed by DLJ MERCHANT BANKING PARTNERS II, L.P. and Affiliated Funds This form, or a form substantially equivalent to this form, must be used to accept the Offer (as defined below) if the shares of Common Stock of DeCrane Aircraft Holdings, Inc. and all other documents required by the Letter of Transmittal cannot be delivered to the Depositary by the expiration of the Offer. Such form may be delivered by hand or facsimile transmission, telex or mail to the Depositary. See Section 3 of the Offer to Purchase. The Depositary for the Offer is: BANKBOSTON, N.A. By Facsimile Transmission By Registered, Certified, Express & By First Class Mail Only: For Eligible Institutions Only: Overnight Courier Only: Boston EquiServe Boston EquiServe Boston EquiServe Corporate Reorganization Corporate Reorganization Corporate Reorganization P.O. Box 8029 (781) 575-2233/2232 150 Royall Street Boston, Massachusetts 02266-8029 Canton, Massachusetts 02021 By Hand: Securities Transfer & Reporting Services, Inc. 1 Exchange Plaza/55 Broadway New York, NY 10006 Confirm by Telephone: (781) 575-3120
Ladies and Gentlemen: The undersigned hereby tenders to DeCrane Acquisition Co., a Delaware corporation (the "Purchaser"), upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 22, 1998 and the related Letter of Transmittal (which together constitute the "Offer"), receipt of which is hereby acknowledged, ___________ shares of Common Stock, $0.01 par value per share (the "Shares"), of DeCrane Aircraft Holdings, Inc., a Delaware corporation, pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Certificate Nos. (if available) - -------------------------------------------------- - -------------------------------------------------- If shares will be tendered by book-entry transfer: Name of Tendering Institution - -------------------------------------------------- Account No. at The Depository Trust Company - -------------------------------------------------- SIGN HERE - ------------------------------------------------- Signature(s) - ------------------------------------------------- (Address) - ------------------------------------------------- (Name(s)) (Please Print) - ------------------------------------------------- (Zip Code) - ------------------------------------------------- (Area Code and Telephone No.) GUARANTEE (Not to be used for signature guarantee) The undersigned, a firm which is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States, guarantees (a) that the above named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, (b) that such tender of Shares complies with Rule 14e-4 and (c) to deliver to the Depositary the Shares tendered hereby, together with a properly completed and duly executed Letter(s) of Transmittal (or facsimile(s) thereof) or an Agent's Message (as defined in the Offer to Purchase) in the case of a book-entry delivery and any other required documents, all within three Nasdaq Stock Market trading days of the date hereof. --------------------------------- (Name of Firm) --------------------------------- (Authorized Signature) --------------------------------- (Name) --------------------------------- (Address) --------------------------------- (Zip Code) --------------------------------- (Area Code and Telephone No.) Dated: _______________, 1998. EX-99.(A)(4) 5 Exhibit (a) (4) Offer to Purchase for Cash All Outstanding Shares of Common Stock of DeCrane Aircraft Holdings, Inc. at $23.00 Net Per Share by DeCrane Acquisition Co. a company formed by DLJ MERCHANT BANKING PARTNERS II, L.P. and Affiliated Funds July 22, 1998 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by DeCrane Acquisition Co., a Delaware corporation (the "Purchaser") to act as Dealer Manager in connection with its offer to purchase all outstanding shares of Common Stock, $0.01 par value (the "Shares"), of DeCrane Aircraft Holdings, Inc., a Delaware corporation (the "Company"), at $23.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Purchaser's Offer to Purchase dated July 22, 1998 and the related Letter of Transmittal (which together constitute the "Offer"). For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, we are enclosing the following documents: 1. Offer to Purchase dated July 22, 1998; 2. Letter of Transmittal for your use and for the information of your clients, together with Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 providing information relating to backup federal income tax withholding; 3. Notice of Guaranteed Delivery to be used to accept the Offer if the Shares and all other required documents cannot be delivered to the Depositary by the Expiration Date (as defined in the Offer to Purchase); 4. A form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; and 5. Return envelope addressed to BankBoston, N.A., the Depositary. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, AUGUST 25, 1998, UNLESS THE OFFER IS EXTENDED. The Purchaser will not pay any fees or commissions to any broker or dealer or other person (other than the Dealer Manager, the Information Agent or the Depositary as described in the Offer to Purchase) for soliciting tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. The Purchaser will pay all stock transfer taxes applicable to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the Letter of Transmittal. In order to accept the Offer a duly executed and properly completed Letter of Transmittal and any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry delivery of Shares, and any other required documents, should be sent to the Depositary by 12:00 Midnight, New York City time, on Tuesday, August 25, 1998. Any inquiries you may have with respect to the Offer should be addressed to, and additional copies of the enclosed materials may be obtained from, the Information Agent or the undersigned at the addresses and telephone numbers set forth on the back cover of the Offer to Purchase. Very truly yours, Donaldson, Lufkin & Jenrette Securities Corporation NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE AGENT OF DECRANE ACQUISITION CO., THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. EX-99.(A)(5) 6 Exhibit (a) (5) Offer to Purchase for Cash All Outstanding Shares of Common Stock of DeCrane Aircraft Holdings, Inc. at $23.00 Net Per Share by DeCrane Acquisition Co. a company formed by DLJ MERCHANT BANKING PARTNERS II, L.P. and Affiliated Funds To Our Clients: Enclosed for your consideration are the Offer to Purchase dated July 22, 1998 and the related Letter of Transmittal (which together constitute the "Offer") in connection with the offer by DeCrane Acquisition Co., a Delaware corporation (the "Purchaser"), to purchase for cash all outstanding shares of Common Stock, $0.01 par value (the "Shares"), of DeCrane Aircraft Holdings, Inc., a Delaware corporation (the "Company"). We are the holder of record of Shares held for your account. A tender of such Shares can be made only by us as the holder of record and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Shares held by us for your account. We request instructions as to whether you wish us to tender any or all of the Shares held by us for your account, upon the terms and subject to the conditions set forth in the Offer to Purchase and the Letter of Transmittal. Your attention is invited to the following: 1. The tender price is $23.00 per Share, net to you in cash. 2. The Offer and withdrawal rights expire at 12:00 Midnight, New York City time, on Tuesday, August 25, 1998, unless the Offer is extended. 3. The Offer is conditioned upon, among other things, there being validly tendered by the Expiration Date (as defined in the Offer) and not withdrawn a number of Shares which, together with the Shares then owned by the Purchaser, represents at least a majority of the outstanding Shares on a fully diluted basis. 4. Any stock transfer taxes applicable to the sale of Shares to the Purchaser pursuant to the Offer will be paid by the Purchaser, except as otherwise provided in Instruction 6 of the Letter of Transmittal. If you wish to have us tender any or all of your Shares, please so instruct us by completing, executing, detaching and returning to us the instruction form on the detachable part hereof. An envelope to return your instructions to us is enclosed. If you authorize tender of your Shares, all such Shares will be tendered unless otherwise specified on the detachable part hereof. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf by the expiration of the Offer. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. Payment for Shares purchased pursuant to the Offer will in all cases be made only after timely receipt by BANKBOSTON, N.A. (the "Depositary") of (a) Share Certificates or timely confirmation of the book-entry transfer of such Shares into the account maintained by the Depositary at The Depository Trust Company (the "Book-Entry Transfer Facility"), pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (b) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase), in connection with a book-entry delivery, and (c) any other documents required by the Letter of Transmittal. Accordingly, payment may not be made to all tendering stockholders at the same time depending upon when certificates for or confirmations of book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility are actually received by the Depositary. Instructions with Respect to Offer to Purchase for Cash All Outstanding Shares of Common Stock of DeCrane Aircraft Holdings, Inc. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase dated July 22, 1998, and the related Letter of Transmittal, in connection with the offer by DeCrane Acquisition Co. to purchase all outstanding shares of Common Stock, $0.01 par value per share (the "Shares"), of DeCrane Aircraft Holdings, Inc. This will instruct you to tender the number of Shares indicated below held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal. Number of Shares to be Tendered: SIGN HERE _________________________Shares(*) ___________________________________ Signature(s) Dated ______________________, 1998 ___________________________________ ___________________________________ ___________________________________ Please print name(s) and addresses here - ------------ (*) Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered. EX-99.(A)(6) 7 Exhibit (a) (6) FOR IMMEDIATE RELEASE July 17, 1998 DLJ MERCHANT BANKING PARTNERS II AND DECRANE AIRCRAFT HOLDINGS, INC. ANNOUNCE AGREEMENT FOR ACQUISITION OF DECRANE AIRCRAFT HOLDINGS AT $23.00 PER SHARE New York, NY, July 17, 1998 - Donaldson, Lufkin & Jenrette, Inc. (NYSE:DLJ) and DeCrane Aircraft Holdings, Inc. (NASDAQ:DAHX), jointly announced that DeCrane and an affiliate of DLJ Merchant Banking Partners II, DeCrane Acquisition Co., have entered into a definitive merger agreement pursuant to which DeCrane Acquisition Co. would acquire DeCrane for $23.00 per share of common stock of DeCrane. The board of directors of DeCrane has unanimously approved the transaction and resolved to recommend that DeCrane shareholders accept the offer. Pursuant to the merger agreement, DeCrane Acquisition Co. will promptly commence a cash tender offer for all outstanding shares of common stock at $23.00 per share, net to the seller in cash. The offer is conditioned upon, among other things, a minimum of a majority of the shares being properly tendered and not withdrawn prior to the expiration of the offer. The offer is also subject to receipt of customary regulatory approvals. In the merger to occur following the consummation of the tender offer, each share of DeCrane common stock outstanding and not tendered pursuant to the offer will be converted into the right to receive $23.00 in cash. There are currently approximately 7,500,00 shares of DeCrane common stock outstanding. DeCrane common stock is traded on the Nasdaq Stock Exchange. The last reported sale price of the common stock on Thursday, July 16, 1998 was $17.625. DeCrane Acquisition Co. expects that the necessary filings with the Securities and Exchange Commission in connection with the tender offer will be made within the next several days and that the offer documents will be mailed to DeCrane shareholders promptly thereafter. DLJ Securities Corporation is acting as dealer manager and D.F. King & Co., Inc. as the information agent in connection with the tender offer. R. Jack DeCrane, Chairman and CEO of DeCrane, stated, "This transaction allows stockholders to receive cash for all their shares at a very attractive price while DLJ Merchant Banking will be a source of capital for the company to pursue acquisitions and implement its business plan." Thompson Dean, Managing Partner of DLJ Merchant Banking Partners II, said, "We are excited to invest in a company with such rapid growth prospects and industry leading products. We look forward to providing management with the capital to aggressively grow these businesses through both internal investment and acquisitions." DLJ Merchant Banking Partners II, a $3 billion fund dedicated to private equity and equity-related investments, seeks significant capital appreciation through domestic and international investments in common or preferred stock and debt or other securities in leveraged acquisitions and corporate joint ventures. Since its formation in November 1996, DLJ Merchant Banking Partners II has consummated (or contracted to consummate) 22 transactions valued at approximately $10 billion, the largest of which include Ameriserve, DecisionOne, Duane Reade, Thermadyne and Von Hoffman Press. Donaldson, Lufkin & Jenrette is a leading integrated investment and merchant bank serving institutional, corporate, government and individual clients. DLJ's businesses include securities underwriting; sales and trading; merchant banking; financial advisory services; investment research; venture capital; correspondent brokerage services; online, interactive brokerage services; and asset management. Founded in 1959 and headquartered in New York City, DLJ employs approximately 7,700 people worldwide and maintains offices in 14 cities in the United States and 10 cities in Europe, Latin America and Asia. The company's common stock trades on the New York Stock Exchange under the ticker symbol DLJ. For more information on Donaldson, Lufkin, & Jenrette, refer to the company's world wide web site at http://www.dlj.com. DeCrane Aircraft Holdings, Inc., based in El Segundo, California, is a leader in the manufacturing and integration of avionics components primarily for the commercial aircraft market, with the balance for the corporate, military, and regional airplane sectors. The firm has grown rapidly, mainly through acquisitions, and believes itself well positioned to participate in an ongoing consolidation of the fragmented aerospace-supplier industry. EX-99.(A)(7) 8 Exhibit (a) (7) This announcement is not an offer to purchase or a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase dated July 22, 1998 and the related Letter of Transmittal and is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. In those jurisdictions where the applicable laws require that the Offer be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by the Dealer Manager or one or more registered brokers or dealers licensed under the laws of such jurisdiction Notice of Offer to Purchase for Cash All Outstanding Shares of Common Stock of DeCrane Aircraft Holdings, Inc. at $23.00 Net per Share by DeCrane Acquisition Co. a company formed by DLJ MERCHANT BANKING PARTNERS II, L.P. and Affiliated Funds DeCrane Acquisition Co., a Delaware corporation (the "Purchaser"), is offering to purchase all outstanding shares of Common Stock, $0.01 par value (the "Shares"), of DeCrane Aircraft Holdings, Inc., a Delaware corporation (the "Company"), at $23.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 22, 1998 (the "Offer to Purchase") and in the related Letter of Transmittal (which together constitute the "Offer"). - ------------------------------------------------------------------------------ THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, AUGUST 25, 1998, OR SUCH LATER DATE TO WHICH THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). - ------------------------------------------------------------------------------ THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT EACH OF THE OFFER AND THE MERGER DESCRIBED IN THE OFFER TO PURCHASE IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS, HAS APPROVED THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. The Offer is conditioned upon, among other things, (1) there being validly tendered and not withdrawn prior to the Expiration Date a number of Shares which, together with the Shares then owned by the Purchaser, represents at least a majority of the total voting power of outstanding Shares on a fully diluted basis and (2) there being available to the Purchaser sufficient funds to purchase the Shares pursuant to the Offer and to pay related fees and expenses. The Offer is being made pursuant to an Agreement and Plan of Merger dated as of July 16, 1998 (the "Merger Agreement") between the Company and the Purchaser. The Merger Agreement provides, among other things, that as soon as practicable after the consummation of the Offer, the Purchaser will be merged with and into the Company (the "Merger"), with the Company continuing as the surviving corporation (the "Surviving Corporation"). Pursuant to the Merger, each outstanding Share (other than Shares held by the Parent, the Purchaser or any other subsidiary of the Parent or Shares held by stockholders exercising appraisal rights) will be converted into a right to receive $23.00 in cash, without interest. The Offer is subject to certain conditions set forth in the Offer to Purchase. If any such condition is not satisfied, the Purchaser may (i) terminate the Offer and return all tendered Shares to tendering stockholders, (ii) extend the Offer and, subject to withdrawal rights as set forth below, retain all such Shares until the expiration of the Offer as so extended or (iii) waive such condition and, subject to any requirement to extend the time during which the Offer is open, purchase all Shares validly tendered prior to the Expiration Date and not withdrawn. The Purchaser reserves the right, at any time or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary. Any such extension will be followed as promptly as practicable by public announcement thereof. For purposes of the Offer, the Purchaser shall be deemed to have accepted for payment tendered Shares when, as and if the Purchaser gives oral or written notice to the Depositary of its acceptance of the tenders of such Shares. Payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (as defined in the Offer to Purchase)), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other required documents. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn after September 19, 1998 unless theretofore accepted for payment as provided in the Offer to Purchase. To be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth in the Offer to Purchase and must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with (except in the case of Shares tendered by an Eligible Institution (as defined in the Offer to Purchase)) signatures guaranteed by an Eligible Institution must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered holder (if different from that of the tendering stockholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. The information required to be disclosed by paragraph (e)(1)(vii) of Rule 14d-6 of the General Rules and Regulations under the Securities Exchange Act of 1934 is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided the Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares and will be furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. The Offer to Purchase and Letter of Transmittal contain important information which should be read before any decision is made with respect to the Offer. Requests for copies of the Offer to Purchase and the related Letter of Transmittal and other tender offer materials may be directed to the Information Agent or the Dealer Manager as set forth below, and copies will be furnished promptly at the Purchaser's expense. The Information Agent for the Offer is: D.F. King & Co., Inc. 77 Water Street New York, New York 10005 Banks and Brokers Call Collect: (212) 425-1685 All Others Call Toll-Free (800) 487-4870 The Dealer Manager for the Offer is: Donaldson, Lufkin & Jenrette 277 Park Avenue New York, New York 10172 (212) 892-7700 (call collect) July 22, 1998 EX-99.(B) 9 Exhibit (b) CONFIDENTIAL ------------ July 16, 1998 DLJ Merchant Banking II, Inc. 277 Park Avenue New York, New York 10172 Attention: Thompson Dean DAH, Inc./DeCrane Aircraft Holding, Inc. Commitment Letter ---------------------- Ladies and Gentlemen: We understand that DLJ Merchant Banking Partners II, L.P., and certain affiliated funds and entities (collectively, "DLJMB") will form a new corporation ("Holdco II") which will be a wholly-owned subsidiary of a second newly-formed corporation ("Holdco I"), for the purpose of acquiring (the "Acquisition") all of the outstanding capital stock (the "Shares") of DAH, Inc. ("DAH"). We understand that the Acquisition will be accomplished, pursuant to the Agreement and Plan of Merger between a wholly owned, newly-formed subsidiary of Holdco II ("Acquisition Co.") and DAH (the "Merger Agreement") through a cash tender offer (the "Tender Offer") by Acquisition Co. for up to 100% of the Shares at a price not to exceed $23.00 per Share followed by a merger (the "Merger") of Acquisition Co. with and into DAH in which any Shares not tendered prior to the Merger will be cancelled in exchange for a cash consideration of $23.00 per Share. We further understand that the Tender Offer will be conditioned on, among other things, the tender and purchase of at least that number of Shares required to permit Acquisition Co. to cause the Merger to occur (the "Minimum Shares"). The Merger will be followed by a merger of Holdco II with and into DAH (the "Holdco II Merger" and, collectively with the Merger, the "Mergers"). Upon consummation of the Merger, DAH will be controlled, through Holdco I, by DLJMB. The Acquisition, the Tender Offer and the Mergers and all related transactions are herein collectively referred to as the "Transaction". DLJ Capital Funding, Inc. ("DLJ Capital Funding") is pleased to inform you that it hereby commits to provide the entire $130.0 million of the senior credit facilities described below (the "Credit Facilities"), and Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ Securities"), an affiliate of DLJ Capital Funding, is pleased to inform you that it undertakes to use reasonable commercial efforts to arrange a syndicate of other financial institutions that will, together with DLJ Capital Funding, participate in the Credit Facilities. DLJ Securities is sometimes referred to herein as the "Arranger", and the financial institutions (including DLJ Capital Funding) which participate in the Credit Facilities are referred to herein as the "Lenders". DLJ Capital Funding will act as the syndication agent (the "Syndication Agent") for the Lenders, and a financial institution to be identified will act as the administrative agent (the "Administrative Agent") for the Lenders. The Syndication Agent and the Administrative Agent are sometimes referred to herein as the "Agents". The Credit Facilities will consist of a tranche A term loan facility of up to $35.0 million and a tranche B term loan facility of up to $45.0 million (collectively, the "Term Facility"), an acquisition revolving credit facility of up to $25.0 million (the "Acquisition Revolving Facility")and a working capital revolving credit facility of up to $25.0 million (the "Working Capital Revolving Facility"), with a sublimit for letters of credit to be mutually agreed upon (collectively, the "Revolving Facility"). The Term Facility will be made available to Holdco II to purchase Shares tendered in the Tender Offer, to refinance existing indebtedness of DAH and its subsidiaries and to pay fees and expenses arising in connection therewith and with the financings contemplated hereby, and, concurrently with the consummation of the Mergers, will be available to DAH for such purposes. "Borrower" as used herein shall refer to Holdco II prior to the consummation of the Mergers and to DAH upon consummation of the Mergers. We understand that the proceeds from the Term Facility, together with up to $4.5 million (or, prior to the availability of the cash of DAH referred to in (iv) below, up to $10.6 million) in borrowings under the Working Capital Revolving Facility, and (i) not less than approximately $65.0 million in cash common equity (the "Equity Contribution") provided by DLJMB, (ii) gross proceeds of not less than approximately $34.0 million from the issuance of PIK Preferred Stock of Holdco I or, in lieu thereof, a bridge financing made available to Holdco I, (iii) gross proceeds of not less than approximately $100.0 million from the issuance of Senior Subordinated Notes of Holdco II or, in lieu thereof, a subordinated bridge financing made available to Holdco II and (iv) after consummation of the Merger, approximately $5.5 million in cash of DAH and its subsidiaries, will be used to pay the consideration for the Shares (including to retire outstanding stock options) pursuant to the Tender Offer and the Merger in the aggregate maximum amount of approximately $182.0 million, to refinance existing indebtedness in the aggregate maximum amount of approximately $93.9 million and to pay fees and expenses arising in connection therewith in an amount not to exceed $13.8 million, and that proceeds of the Revolving Facility will also be used for post-closing general corporate and working capital purposes of the Borrower and its subsidiaries, including permitted acquisitions. All commitments, undertakings and agreements hereunder are subject to (a) the terms and conditions set forth herein and in the term sheet annexed hereto as Annex I (the "Term Sheet") and the provisions set forth in Annex II hereto, (b) the terms and conditions contained in the confidential fee letter, dated the date hereof (the "Fee Letter"), between you and the undersigned, (c) the absence of any material disruption of or material adverse change in current financial, banking or capital market conditions that would reasonably be expected to materially impair the satisfactory syndication of the Credit Facilities and (d) there being no facts, events or circumstances, now existing or hereafter arising, which are inconsistent with the written information provided to the Arranger and the Syndication Agent prior to the date hereof that come to the attention of the Arranger or the Syndication Agent after the date hereof and which would reasonably be expected to have a material adverse effect on the business, assets, operations, financial position or prospects of DAH and its subsidiaries, taken as a whole, or the consummation of the Transaction. In the event any of the foregoing conditions, events or circumstances are not satisfied, the Arranger and the Syndication Agent reserve the right to either terminate their respective commitments, undertakings and agreements hereunder (and thereafter have no other or further obligations hereunder or in connection with the Credit Facilities) or to propose alternative financing amounts or structures that assure adequate protection for the Arranger, the Syndication Agent and the Lenders. Furthermore, as a condition to the commitments, undertakings and agreements contained herein, you agree that no other agents, co-agents or arrangers will be appointed, no other titles will be awarded and no compensation (other than as expressly set forth in the Term Sheet and the Fee Letter) will be paid in connection with the Credit Facilities unless you and we shall so agree. As we discussed, it is the intent of the Arranger to solicit commitments from prospective Lenders promptly following the execution of this commitment letter. Nonetheless, our commitments are not subject to syndication of the Credit Facilities. The Arranger will manage all aspects of the syndication, including decisions as to the selection of institutions to be approached and when they will be approached, when their commitments will be accepted, the allocations of the commitments among the Lenders and the amount and distribution of fees among the Lenders. In that regard, you agree to actively assist the Arranger, in all commercially reasonable respects, in the syndication of the Credit Facilities, which assistance will require, among other things, that you provide all information the Arranger or Syndication Agent reasonably deem to be necessary to successfully complete the syndication, including projections (the "Projections") and other information prepared by you or on your behalf relating to DAH and its subsidiaries and their businesses, assets, financial condition, operations and prospects. You hereby represent and covenant that (a) all factual information (the "Information") that has been or will be made available to the Arranger or the Syndication Agent by you or on your behalf is or will be, when furnished, taken as a whole, complete and correct in all material respects and does not or will not, when furnished, taken as a whole, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made and (b) the Projections that have been or will be made available to the Arranger or the Syndication Agent by you or on your behalf have been or will be prepared in good faith based upon reasonable assumptions. In arranging and syndicating the Credit Facilities, the Arranger will use and rely on the Information and Projections without independent verification thereof. The Arranger reserves the right to reallocate, in a mutually acceptable manner, amounts among the tranche A term loan facility and the tranche B term loan facility, and to adjust the amortization schedule and final maturity in respect thereof, if, in the Arranger's judgment, such a reallocation would result in a more successful syndication; provided, however, that no such reallocation shall increase any fees specified in the Fee Letter. In addition, you agree to use your reasonable efforts to make certain members of the management of DAH and its subsidiaries, as well as their consultants and advisors, available during regular business hours to answer questions regarding the Credit Facilities, to review and assist in the preparation of the syndication memorandum relating to the Credit Facilities, to meet with prospective Lenders and to use your and their best efforts to ensure that the Arranger's syndication efforts benefit from the lending relationships of DAH and its subsidiaries. By your signature below you hereby indemnify and hold harmless the Arranger, each of the Agents, each other Lender committing to participate in the Credit Facilities and each of their respective affiliates, directors, officers, agents and employees, and agree to promptly pay all of the fees and expenses, in each case following demand, as set forth in Annex II hereto (with the terms and provisions of such Annex II hereby being incorporated by reference), whether or not definitive credit, security and other documentation (collectively, the "Credit Documentation") is ultimately executed and delivered or any of the transactions contemplated hereby or in connection therewith are ultimately consummated. This commitment letter, the Term Sheet, Annex II hereto and the Fee Letter are delivered to you with the understanding that neither this letter, the Term Sheet, such Annex II or the Fee Letter, nor the substance hereof or thereof, shall be disclosed to any third party (including, without limitation, other lenders, underwriters, placement agents, or advisors or any similar persons), without the prior written consent of the Arranger and the Syndication Agent, except in the case of those in a confidential relationship to you, such as legal counsel or accountants, DAH and its financial and legal advisors, or as required by law or any court or governmental agency (and in each such event of permitted disclosure as required by law, court or government agency you agree, to the extent permitted by law, promptly to inform us). Notwithstanding the foregoing, (i) this commitment letter, the Term Sheet and Annex II (but not the Fee Letter or its contents) may be summarized or otherwise described in any disclosure document relating to the Transaction that is furnished to stockholders of Holdings, DAH or potential investors in the Transaction, and copies thereof may be filed with the Securities Exchange Commission or any other regulatory authority with whom, in the opinion of your counsel or counsel to DAH, such filing is required by law and (ii) amounts payable under the Fee Letter may be included in fees and expenses payable in connection with the Transaction in any disclosure document to the extent, in the opinion of your counsel or counsel to DAH, required by law. This commitment letter, the Term Sheet, Annex II hereto and the Fee Letter constitute the entire understanding among the parties hereto with respect to the subject matter hereof and thereof and supersede any prior agreements, written or oral, with respect hereto or thereto. THIS COMMITMENT LETTER, THE TERM SHEET, ANNEX II HERETO AND THE FEE LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. EACH OF THE UNDERSIGNED PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF OR IN CONNECTION WITH, THIS COMMITMENT LETTER, THE TERM SHEET, ANNEX II HERETO AND THE FEE LETTER, AND ANY OTHER COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THE UNDERSIGNED PARTIES IN CONNECTION HEREWITH OR THEREWITH. IN NO EVENT SHALL ANY PARTY TO THIS COMMITMENT LETTER BE LIABLE FOR CONSEQUENTIAL DAMAGES. If you agree with the foregoing, please sign and return to us the enclosed copy of this commitment letter and the Fee Letter no later than 5:00 p.m., New York time, on July 17, 1998. All commitments, undertakings and agreements of the undersigned will terminate at such time unless an executed copy of this commitment letter and the Fee Letter, each signed by you, has been delivered to the undersigned; provided, however, that, any term or provision hereof to the contrary notwithstanding (i) all your obligations hereunder in respect of indemnification, confidentiality and fee and expense reimbursement shall survive any termination of the commitments, undertakings and agreements of the Arranger and the Syndication Agent pursuant to this paragraph, and (ii) all such commitments, undertakings and agreements will terminate in any event at 5:00 p.m., New York time, on October 31, 1998 unless, on or prior to such time, definitive Credit Documentation satisfactory to the Arranger, the Syndication Agent and its counsel has been executed and delivered by you and the Agents (with the date of such execution and delivery being referred to as the "Closing Date"). [remainder of page intentionally left blank] We look forward to working with you. Very truly yours, DLJ CAPITAL FUNDING, INC. By: /s/ Eric Swanson ----------------------------------- Title: Managing Director DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION By: /s/ Eric Swanson ----------------------------------- Title: Managing Director Agreed to and Accepted this 16 day of July, 1998 DLJ MERCHANT BANKING II, INC. on behalf of: DLJ Merchant Banking Partners II, L.P. DLJ Offshore Partners II, C.V. DLJ Diversified Partners, L.P. DLJMB Funding II, Inc. DLJ First ESC, L.P. DLJ First ESC II, L.P. UK Investment Plan 1997 Partners DLJ Merchant Banking Partners II, A, L.P. DLJ Diversified Partners, - A, L.P. DLJ EAB Partners, L.P. DLJ Millenium Partners DLJ Millenium Partners - A, L.P. By: /s/ Thompson Dean -------------------------- Title: Managing Director ANNEX I TERM SHEET ---------- (Unless otherwise defined, terms used in this Term Sheet have the meanings ascribed thereto in the commitment letter dated July 16, 1998 (the "Commitment Letter"), to which this Term Sheet is annexed). I. PARTIES Borrower: The Term Facility will be made available to Holdco II to be contributed to Acquisition Co. to purchase Shares tendered in the Tender Offer, to refinance existing indebtedness of DAH and its subsidiaries and to pay fees and expenses arising in connection therewith and with the financings contemplated hereby, and, concurrently with the consummation of the Mergers, will be available to DAH. "Borrower" as used herein shall refer to Holdco II prior to the consummation of the Mergers and to DAH upon consummation of the Mergers. Arranger: Donaldson, Lufkin & Jenrette Securities Corporation or one or more of its affiliates ("DLJ Securities" or the "Arranger"). Syndication Agent: DLJ Capital Funding, Inc. or one or more of its affiliates ("DLJ Capital Funding" or the "Syndication Agent"). Administrative Agent: A financial institution to be agreed upon by the Arranger, the Syndication Agent and the Borrower. The Syndication Agent and the Administrative Agent are herein collectively referred to as the "Agents". Letter of Credit Issuer: The Administrative Agent or other Lender under the Revolving Facility (in such capacity, the "Issuer"). Lenders: DLJ Capital Funding and a group of financial institutions (collectively, the "Lenders") as may be approved by the Arranger, the Syndication Agent and the Borrower, such approval not to be unreasonably withheld. II. THE CREDIT FACILITIES Closing Date: No later than October 31, 1998. General Description of Credit Facilities: A maximum amount of $130.0 million in senior financing to be provided to the Borrower pursuant to an acquisition revolving credit facility (the "Acquisition Revolving Facility"), a working capital revolving credit facility (the "Working Capital Revolving Facility" and, together with the Acquisition Revolving Facility, the "Revolving Facility") and a term loan facility (the "Term Facility"). The Term Facility and the Revolving Facility are collectively referred to herein as the "Credit Facilities". Loans made under the Credit Facilities are herein collectively referred to as "Loans", with the Loans under the Term Facility being herein collectively referred to as the "Term Loans" and Loans under the Revolving Facility being herein collectively referred to as "Revolving Loans". The Credit Facilities will be secured to the extent referred to under "Security" below. A. Acquisition Revolving Facility: Pursuant to the Acquisition Revolving Facility Revolving Loans may be borrowed, prepaid and reborrowed by the Borrower from time to time on and after the date of the consummation of the Merger and prior to the Acquisition Revolving Facility Loan Maturity Date (as set forth below). Acquisition $25.0 million. Revolving Facility Commitment Amount: Mandatory Reductions The Acquisition Revolving Facility Commitment Amount in Commitment shall be subject to mandatory reductions on a Amount: semi-annual basis in aggregate annual amounts as follows: Year Aggregate Annual Reduction ---- -------------------------- 1 0% 2 0% 3 15% 4 15% 5 70% --- 100% Notwithstanding the foregoing, prior to the Acquisition Revolving Facility Loan Maturity Date, no reduction in the Acquisition Revolving Facility Commitment Amount and no prepayment of Revolving Loans outstanding under the Acquisition Revolving Facility shall be required to the extent at any time the Acquisition Revolving Facility Commitment Amount would be reduced below the aggregate amount of Revolving Loans outstanding under the Acquisition Revolving Facility. Purpose: Proceeds of the Acquisition Revolving Facility shall be used for acquisitions, subject to the restrictions described under "Covenants". Acquisition Revolving The fifth anniversary of the Closing Date. Facility Loan Maturity Date: B. Working Capital Pursuant to the Working Capital Revolving Facility Revolving Facility (i) Revolving Loans may be borrowed, prepaid and and Swing Line reborrowed by the Borrower and (ii) letters of credit Facility: ("Letters of Credit") may be issued, reimbursed and re-issued on behalf of the Borrower and its subsidiaries, in each case from time to time prior to the Working Capital Revolving Facility Commitment Termination Date (as set forth below). The Working Capital Revolving Facility will be available for swing line advances in an amount to be mutually agreed upon (the "Swing Line Loans") to be made by the Administrative Agent. Swing Line Loans will constitute usage under the Working Capital Revolving Facility (except for purposes of calculation of the Commitment Fee as defined below), and will reduce availability under the Working Capital Revolving Facility dollar for dollar. Working Capital $25.0 million, subject to increase as provided below. Revolving Facility Commitment Amount: Purpose: A borrowing of up to $4.5 million may be made under the Working Capital Revolving Facility to purchase Shares pursuant to the Tender Offer or the Merger. Other borrowings made on or after the consummation of the Merger under the Working Capital Revolving Facility shall be used for general corporate and working capital purposes of the Borrower and its subsidiaries. Working Capital The fifth anniversary of the Closing Date. Revolving Facility Commitment Termination Date: Letter of Credit Outstanding Letters of Credit and related Sub-Facility reimbursement obligations may not exceed an amount Availability: to be mutually agreed upon. Each issuance of a Letter of Credit will constitute usage under the Working Capital Revolving Facility and will reduce availability of Revolving Loans thereunder dollar for dollar. Letters of Credit must expire on the earlier of (i) one year from the date of issuance (subject, in certain cases, to customary "evergreen" provisions) and (ii) the Working Capital Revolving Facility Commitment Termination Date. Increase of Working At any time prior to the Working Capital Revolving Capital Revolving Facility Commitment Termination Date, the Borrower Facility Commitment: shall have the right, without the consent of any Lender (other than with respect to clause (c) below), to effectuate an increase in the Working Capital Revolving Facility commitments by requesting that the Syndication Agent arrange for the Lenders to increase proportionally their percentage of the Working Capital Revolving Facility commitments or for other eligible institutions (who shall, upon completion of certain requirements, constitute "Lenders") to provide additional Working Capital Revolving Facility commitments so that such increased and added Working Capital Revolving Facility Commitments shall provide the additional Working Capital Revolving Facility commitments effected pursuant hereto; provided, such increase shall be subject to certain mutually agreed upon conditions, including that (a) the aggregate amount of the additional Working Capital Revolving Facility commitments shall not exceed $20.0 million, (b) before offering additional Working Capital Revolving Facility commitments to non- Lenders, the Syndication Agent shall first offer the additional commitments to existing Lenders on a pro rata basis followed, if necessary, by an offer on a non-pro rata basis and (c) no Lender's Working Capital Revolving Facility commitment shall be increased without the consent of such Lender. C. Term Loan Facility: The Term Loan Facility pursuant to which non- revolving Loans ("Term Loans") will be made, will consist of tranche A term loans ("Tranche A Term Loans") and tranche B term loans ("Tranche B Term Loans") made available to purchase Shares tendered pursuant to the Tender Offer and the Merger, to refinance existing indebtedness of DAH and its subsidiaries and to pay fees and expenses arising in connection therewith and with the financings contemplated hereby. Once repaid, the Term Loans cannot be reborrowed. Term Loan Facility Commitment Amount: Tranche A Term Loans: $35.0 million Tranche B Term Loans: $45.0 million. Purpose: Proceeds of the Term Loans, together with up to $4.5 million (or, prior to the availability of the cash of DAH referred to in (iv) below, up to $10.6 million) in borrowings under the Working Capital Revolving Facility, and (i) not less than $65.0 million in cash common equity provided by DLJMB, (ii) gross proceeds of not less than $34.0 million from the issuance by Holdco I of its PIK Preferred Stock or, in lieu thereof, a bridge financing made available to Holdco I, (iii) gross proceeds of not less than $100.0 million from the issuance by Holdco II of its Senior Subordinated Notes or, in lieu thereof, a subordinated bridge financing made available to Holdco II and (iv) after consummation of the Merger, approximately $5.5 million in cash of DAH and its subsidiaries, will be used to pay the consideration for the Shares (including to retire outstanding stock options) pursuant to the Tender Offer and the Merger in the aggregate maximum amount of approximately $182.0 million, to refinance existing indebtedness of DAH and its subsidiaries in the aggregate maximum amount of approximately $93.9 million and to pay fees and expenses arising in connection therewith, in an amount not to exceed $13.8 million. Amortization of the Tranche A Term Loans. The Tranche A Term Loans will Term Loan Facility: have a final maturity date of five years after the Closing Date. Quarterly amortization will be required in aggregate annual amounts to be determined. Tranche B Term Loans. The Tranche B Term Loans will have a final maturity date of seven years after the Closing Date. Quarterly amortization will be required in aggregate annual amounts equal to 1% of the original principal amount during each of the first six years and to the remaining balance thereof in the seventh year. Interest Rate: At the Borrower's option, Loans will bear interest at (i) the Administrative Agent's Base Rate or (ii) reserve-adjusted LIBOR, plus, in each case, the following applicable margins for the first six months after the Closing Date: Applicable Margin ----------------- Base Rate LIBOR --------- ----- Revolving Loans 1.00% 2.25% and Tranche A Term Loans Tranche B Term Loans 1.25% 2.50% Following the six-month anniversary of the Closing Date, the margins set forth above for Revolving Loans and Term Loans will thereafter be subject to reductions based on a grid (to be mutually agreed upon) based on the ratio of total debt to EBITDA (to be defined) ("Leverage Ratio"). Swing Line Loans shall bear interest at the Base Rate plus the applicable margin for Revolving Loans. In the event that Merger Sub at any time after the consummation of the Tender Offer holds less than the Minimum Shares, the above interest rates will be increased by 1.00% per annum during such period of time. As used herein, the terms "Base Rate", and "reserve - adjusted LIBOR" shall have meanings customary and appropriate for financings of this type, and the basis for calculating accrued interest and the interest periods for loans bearing interest at reserve adjusted LIBOR (collectively, "LIBOR Loans") shall be customary and appropriate for financings of this type. Interest Payment Dates: Interest periods for LIBOR Loans shall be, at the Borrower's option, one, two, three, six or, if available, nine or twelve months. Interest on LIBOR Loans shall be payable on the last business day of the applicable interest period for such Loans and, if earlier, each third-month anniversary of the commencement of such interest period. Interest on Base Rate Loans shall be payable quarterly in arrears. Letter of Credit Fees A letter of credit fee equal to the applicable and Payment Dates: LIBOR margin for Revolving Loans then in effect shall accrue on the daily average amount of all outstanding Letters of Credit and shall be payable quarterly in arrears to the Administrative Agent for distribution to each Lender under the Working Capital Revolving Facility. In addition, a fronting fee shall be payable to the Issuer for its own account, as the Issuer of the Letters of Credit, in an amount be to mutually agreed upon on the stated amount of the applicable Letter of Credit quarterly in arrears. In addition, customary administrative, amendment, and drawing fees shall be payable to the Issuer for its own account, as the Issuer of the Letters of Credit. Optional Prepayments: Outstanding Loans are voluntarily payable without penalty; provided, however, that LIBOR breakage costs, if any, shall be for the account of the Borrower. Voluntary prepayments of the Term Facility shall be applied ratably between the Tranche A Term Loans and the Tranche B Term Loans and shall be applied to the scheduled installments thereof in a manner to be agreed upon. Mandatory Prepayments: Upon consummation of the Merger, customary for the type of transaction proposed and others to be reasonably specified by the Arranger and the Syndication Agent, including, without limitation, an amount equal to (i) 100% of all debt issuances (subject to certain exceptions), (ii) 100% of net proceeds from permitted asset sales (subject to certain exceptions), (iii) 50% of proceeds from the issuance of equity securities and (iv) 50% of excess cash flow (to be defined), provided that at such time as the Borrower's Leverage Ratio is less than or equal to 3.5x, prepayments from the proceeds of equity issuances and excess cash flow will no longer be required, in each case applied first to the Term Loans, ratably between the Tranche A Term Loans and the Tranche B Term Loans, and to the scheduled installments thereof in direct order of maturity, then to the repayment of the outstanding principal amount of Revolving Loans under, and a reduction (to be applied in forward order to scheduled commitment reductions) in, the Acquisition Revolving Facility Commitment Amount, and then to the repayment of the outstanding principal amount of Revolving Loans under the Working Capital Revolving Facility Commitment Amount (without resulting in any reduction of the Working Capital Revolving Facility Commitment Amount). Notwithstanding the foregoing, in the case of any mandatory prepayment to be applied to the Tranche B Term Loans, Borrower may elect to offer the holders thereof the opportunity to waive the right to receive the amount of such mandatory prepayment. In the event any such holders elect to waive such right, 50% of the amount that would otherwise have been applied as a mandatory prepayment of the Tranche B Term Loans of such holders shall be applied to the prepayment of the Tranche A Term Loans and the remaining 50% of such amount shall be retained by Borrower. Security: The Credit Facilities will be secured on a first-priority perfected lien basis by Holdco I's pledge of the stock of Holdco II and by Holdco II's pledge of the stock of Acquisition Co. Upon consummation of the Mergers and assumption of the Credit Facilities by DAH, the Credit Facilities (and all existing and future interest rate hedging arrangements provided by the Lenders and their affiliates) will be secured by a first-priority perfected lien on substantially all property and assets (tangible and intangible) of the Borrower and each of its subsidiaries (with exclusions to be agreed upon), including, without limitation, the capital stock of Borrower and each of the Borrower's direct and indirect subsidiaries, whenever acquired and wherever located; provided, however, that no lien will be taken on the property and assets of foreign subsidiaries and that no more than 65% of the equity interests of foreign subsidiaries will be required to be pledged. Guarantees: The Credit Facilities will be guaranteed by Holdco I and by Acquisition Co. Upon consummation of the Mergers, the Credit Facilities will be guaranteed by all direct and indirect domestic subsidiaries of the Borrower. Commitment Fees: Commitment fees equal to a per annum percentage (the "Commitment Fee") times the daily average unused portion of the Revolving Facility shall accrue from the Closing Date and shall be computed on the basis of a 360-day year and payable quarterly in arrears and upon the maturity of termination of such Revolving Facility. For the first six months following the Closing Date, the Commitment Fee for the Working Capital Revolving Facility shall equal 0.50% per annum. For the first six months following the Closing Date, the Commitment Fee for the Acquisition Revolving Facility will be based on the utilization of the Acquisition Revolving Facility as follows: Utilization Commitment Fee ----------- -------------- < 50% .75% > 50% .50% - Following the six-month anniversary of the Closing Date, such Commitment Fees for the Revolving Facility will be subject to reductions based on a grid (to be mutually agreed upon) based on the Leverage Ratio. Conditions Precedent to The conditions precedent set forth below together Initial Extensions of with other reasonable and customary conditions Credit: precedent, which are typical for transactions of the type contemplated hereby, the terms of which shall be mutually agreed upon by the Borrower, the Arranger and the Agents: 1. Satisfactory Documentation. Execution and delivery of reasonably satisfactory credit, security, guarantee and other related documentation embodying the structure, terms and conditions contained herein. 2. Corporate Structure. The capital and organizational structure of Holdco I and its subsidiaries upon completion of the Transaction shall be satisfactory to the Arranger and the Syndication Agent in all respects. 3. Acquisition Structure and Documentation. The structure utilized to consummate the Acquisition (including the Tender Offer and the Mergers) and the definitive documentation (including the Merger Agreement) relating thereto (the "Definitive Acquisition Documents") shall be in form and substance satisfactory to the Agents and Lenders (it being understood that the terms and conditions of the Merger Agreement as delivered to the Arranger and the Agents on or prior to the date of the execution of this letter are satisfactory) and the Definitive Acquisition Documents shall be in full force and effect, and no provision of the Definitive Acquisition Documents shall be amended, supplemented, waived or otherwise modified in any material respect without the prior written consent of the Agents and the Lenders. 4. Consummation of Tender Offer. Upon consummation of the Tender Offer, Acquisition Co. shall acquire not less than the Minimum Shares pursuant to the Tender Offer, and all other aspects of the Tender Offer shall be consummated pursuant to the Definitive Acquisition Documents. The Tender Offer and the financing thereof shall be consummated in compliance with all applicable laws and regulations (including, without limitation, Regulation U of the Board of Governors of the Federal Reserve System). 5. Capitalization of Holdings. On or prior to the Closing Date, Holdco I shall have received (i) not less than approximately $65.0 million in cash common equity contributions from DLJMB, and (ii) not less than $34.0 million in cash proceeds from the sale of PIK Preferred Stock or, in lieu thereof, an unsecured bridge financing made available to Holdco I, each on terms and conditions satisfactory to Agents and Lenders. The PIK Preferred Stock shall pay no cash dividends for five years from the Closing Date, and shall not be redeemable sooner than six months after the seventh anniversary of the Closing Date; no mandatory redemption or prepayment shall apply to the PIK Preferred Stock, which shall not be guaranteed by the Borrower or any of its subsidiaries. 6. Issuance of New Sub Debt Bridge Financing. On or prior to the Closing Date, Holdco II shall have issued $100.0 million of unsecured New Sub Debt or, in lieu thereof $100.0 million of an unsecured subordinated bridge financing on terms and conditions satisfactory to Agents and Lenders. The New Sub Debt shall not mature, and have no mandatory sinking fund or prepayments, prior to the six months after the seventh anniversary of the Closing Date. 7. Material Adverse Change. No material adverse change in the financial condition, operations, assets, business, properties or prospects of DAH and its subsidiaries (excluding Avtech Corporation), taken as a whole, since December 31, 1997 and with respect to Avtech Corporation and its subsidiaries, taken as a whole, since September 30, 1997. 8. Closing Certificates and Opinions. Receipt of closing certificates, resolutions, opinions of counsel, a solvency certificate, and other documents customary for the type of transaction proposed and in each case satisfactory in form and substance to the Arranger and the Syndication Agent. 9. Fees. The Lenders, the Arranger and the Agents shall have received all fees and expenses required to be paid on or before the Closing Date. 10. Approvals. All material governmental and third party approvals necessary or advisable in connection with the Acquisition and related transaction and the continuing operations of DAH and its subsidiaries shall have been obtained and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the Transaction. 11. Litigation. There shall exist no pending or threatened material litigation, proceedings or investigations which could reasonably be expected to have a material adverse effect on the financial condition, operations, assets, business, properties or prospects of DAH and its subsidiaries, taken as a whole, or which would reasonably be expected to materially adversely affect the consummation of the Transaction. 12. Financial Statements. The Lenders shall have received (i) audited financial statements of DAH and its subsidiaries (excluding Avtech Corporation) for the fiscal years ended December 31, 1997, 1996 and 1995 and with respect to Avtech Corporation and its subsidiaries, September 30, 1997, 1996 and 1995, (ii) unaudited financial statements of DAH and its subsidiaries for the fiscal periods most recently ended at least 45 days prior to the Closing Date (including without limitation monthly financial statements for any such period of less than three months, if available), (iii) a pro-forma opening balance sheet of the Borrower as of the date of such most recent financial statement, reflecting the proposed legal and capital structure and (iv) projected financial statements (including balance sheets and statements of operations, and cash flows) of the Borrower and its subsidiaries for the seven-year period after the Closing Date which projected financial statements to the extent delivered after the date of this letter are substantially consistent with the projections delivered to the Arranger on or prior to the date hereof, all of the foregoing to be in form reasonably satisfactory to the Arranger and Syndication Agent. 13. Existing Indebtedness. No later than the consummation of the Merger, all existing indebtedness of Borrower and its subsidiaries shall have been repaid in full and commitments thereunder terminated and any security interests or liens securing such indebtedness terminated and released or arrangements with respect thereto satisfactory to the Agents shall be in place. Additional Conditions The making of each Loan and the issuance of each Precedent: Letter of Credit will be conditioned upon (i) all representations in the Credit Documentation being true and correct in all material respects and (ii) there being no event of default or condition which, with the giving of notice or passage of time (or both), would constitute an event of default. Representations and Customary for the type of transaction proposed and Warranties: others to be reasonably agreed upon by the Borrower, the Arranger and the Agents. Covenants: Customary and appropriate affirmative and negative covenants, including but not limited to limitations on other indebtedness, liens, investments, guarantees, restricted junior payments (dividends, redemptions and payments on subordinated debt), mergers, sales of assets, capital expenditures, leases, transactions with affiliates, conduct of business and other provisions customary and appropriate for financings of this type, including exceptions and baskets to be mutually agreed upon. Notwithstanding the foregoing, prior to the Merger the Credit Facilities will not (i) prohibit the sale or other disposition of the Shares held by Acquisition Co. for cash at the fair value thereof so long as the proceeds are held as cash or approved cash equivalents and (ii) prohibit the creation or existence of any lien or encumbrance on or with respect to the Shares. Acquisitions shall be permitted subject to the following: (i) aggregate consideration for any single acquisition shall not exceed $25.0 million, (ii) no potential default or Event of Default shall exist after giving effect to the acquisition (including pro forma financial covenant compliance) and (iii) the acquired company or assets shall be in a line of business related to that of the Borrower or a subsidiary. Financial performance covenants will include a minimum fixed charge coverage test, a minimum EBITDA test, a maximum leverage test and a minimum interest coverage test. Holdco II shall agree to cause the Merger to occur as soon as practicable but in any event within 150 days after consummation of the Tender Offer pursuant to the Definitive Acquisition Documents, including in the event that not less than 90% of the Shares are tendered in the Tender Offer, causing a "short- form" merger to occur promptly following the payment for the Shares purchased in the Tender Offer. Events of Default: Customary and appropriate (subject to customary and appropriate grace periods), including without limitation failure to make payments when due, defaults under other agreements or instruments of material indebtedness, noncompliance with covenants, breaches of representations and warranties, bankruptcy, judgments in excess of specified amounts, invalidity of guaranties, impairment of security interests in collateral, and "changes of control" (to be defined in a mutually agreed upon manner). Miscellaneous: Customary for the type of transaction proposed and others to be reasonably agreed upon by the Borrower, the Arranger and the Syndication Agent, including the following: 1. Customary indemnity and capital adequacy provisions, including but not limited to compensation in respect of taxes (including gross-up provisions for withholding taxes) and decreased profitability resulting from changes in U.S. or foreign capital adequacy requirements, guidelines or policies or their interpretation or application, and any other customary yield and increased costs protection deemed necessary by the Lenders to provide customary protection. 2. The Lenders will be permitted to assign and participate Loans, notes and commitments. Any assignments would be by novation, would be in a minimum amount to be agreed upon and would require the consent of the Borrower, and, except for assignments by either Agent, the Administrative Agent (unless such assignment was to another Lender or an affiliate of another Lender), such consent, not to be unreasonably withheld or delayed. Participations shall be without restrictions and participants will have the same benefits as the Lenders with regard to increased costs, capital adequacy, etc., and receipt of information pursuant to the Credit Documentation. Voting by participants will be subject to customary limitations. 3. Indemnification of the Arranger, the Agents, each of the Lenders and each of their respective affiliates, directors, officers, agents and employees (collectively, the "Indemnified Parties") from and against any losses, claims, damages, liabilities or other expenses, substantially as set forth in Annex II hereto. 4. The Borrower shall pay all of the fees and out-of-pocket expenses as set forth in Annex II hereto. 5. Amendments and waivers of the Credit Documentation will require the approval of Lenders holding 51% or more of the Loans and commitments, except that the consent of all the Lenders shall be required with respect to certain customary issues. 6. Waiver of jury trial. 7. New York governing law; consent to New York jurisdiction; appointment of New York process agent. Counsel to the Arranger O'Melveny & Myers LLP. and the Syndication Agent: This Term Sheet is intended as an outline only and does not purport to summarize all the conditions, covenants, representations, warranties and other provisions which would be contained in the definitive Credit Documentation. The commitments, undertakings and obligations described herein will be subject to negotiation and execution of definitive Credit Documentation in form and substance satisfactory to the Syndication Agent, its legal counsel and the Lenders. ANNEX II INDEMNIFICATION PROVISIONS -------------------------- Unless otherwise defined, terms used herein shall have the meanings assigned thereto in the commitment letter (the "Commitment Letter") and term sheet (the "Term Sheet") to which this Annex II is attached. DLJMB (the "Indemnitor") shall pay all reasonable fees, costs and expenses (including all reasonable out-of-pocket costs and expenses arising in connection with the syndication of the Credit Facilities and any due diligence investigation performed by the Arranger or either Agent, and the fees and expenses of a single legal counsel (and, if necessary, local counsel) to the Arranger and the Administrative Agent), arising in connection with the negotiation, preparation, execution or delivery of the Commitment Letter, the Term Sheet, the Fee Letter and the definitive Credit Documentation, and the Indemnitor shall be obligated to pay such fees and expenses whether or not definitive Credit Documentation is executed or delivered or the Loans are advanced by the Lenders. In addition, the Indemnitor hereby indemnifies and holds harmless all Indemnified Parties (as defined below) from and against all Liabilities (as defined below). "Indemnified Party" shall mean the Arranger, the Agents, each of the Lenders, each affiliate of any of the foregoing and the respective directors, officers, agents and employees of each of the foregoing, and each other person controlling any of the foregoing within the meaning of either Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended. "Liabilities" shall mean any and all losses, claims, damages, liabilities or other costs or expenses to which an Indemnified Party may become subject which arise out of or relate to or result from any claim, action, litigation or proceeding related to or connected with the transactions described in the Commitment Letter, Fee Letter or Term Sheet. In addition to the foregoing, the Indemnitor agrees to reimburse each Indemnified Party for all reasonable legal or other expenses incurred in connection with investigating, defending or participating in any claim, action, litigation or proceeding relating to any Liabilities (whether or not such Indemnified Party is a party to any such action or proceeding). Any terms or provisions of this Annex II to the contrary notwithstanding, upon (i) the execution and delivery of definitive Credit Documentation by the Borrower, the Arranger, the Agents and the Lenders and (ii) the making of the initial Loans under the Credit Facilities, the terms and provisions of this Annex II shall be superseded in their entirety by the terms and provisions of such Credit Documentation, and the terms and provisions of this Annex II shall be of no further force or effect EX-99.(C)(1) 10 Exhibit (c) (1) July 16, 1998 DLJ Merchant Banking II, Inc. 277 Park Avenue New York, N.Y. 10172 Attention: Mr. Thompson Dean Managing Partner Gentlemen: You have advised DLJ Bridge Finance, Inc., a Delaware corporation ("DLJ Bridge"), that DeCrane Acquisition Corporation ("Acquisitionco"), a company to be formed by DLJ Merchant Banking Partners II, Inc. and its affiliates ("DLJMB" or the "Equity Investor") as a wholly-owned subsidiary of [Holdco II] ("Holdco II"), which is a wholly-owned subsidiary of Holdings ("Holdco I"), both Holdco I and Holdco II to be formed by DLJMB, proposes to acquire (the "Acquisition") DeCrane Aircraft Holdings, Inc. (the "Company" or the "Target") pursuant to an Agreement and Plan of Merger (the "Merger Agreement") to be entered into between Acquisitionco and the Company. Pursuant to the Merger Agreement, Acquisitionco will commence a tender offer for all the shares of the Company at a price of $23.00 per share, net to the seller in cash (the "Tender Offer"). Following successful completion of the Tender Offer, Acquisitionco will merge (the "Merger") with and into the Company and all the shares of common stock of the Company not purchased in the Tender Offer will be converted into the right to receive $23.00 per share in cash in the Merger. We understand that upon consummation of the Merger, Holdco II will be merged (the "Holdco Merger") with and into the Company. We further understand that the total purchase price for the Acquisition will not exceed $182.0 million. In addition, in connection with the Tender Offer and the Merger, (i) the Company will refinance (the "Refinancing") approximately $93.8 million of currently outstanding indebtedness of the Target and its subsidiaries; and (ii) the Company will pay estimated fees and expenses in connection with the Tender Offer, the Merger, the Holdco Merger, the Refinancing, and related transactions of approximately $13.8 million (the "Expenses"). As used herein, the term "Transaction" shall refer, collectively, to the Tender Offer, the Merger, the Holdco Merger, the Refinancing, and the Expenses. Furthermore, as used herein, the term "Credit Group" shall refer, collectively, to Holdco I, Holdco II, Acquisitionco, the Target, and the Company and their respective subsidiaries. We understand that the total cash proceeds required to consummate the Transaction are approximately $289.6 million which will be financed with the proceeds of the following: (i) borrowings by Holdco II under a senior secured term loan of $80.0 million (the "Term Loan Facility"); (ii) borrowings by Holdco II of approximately $4.5 million (or, prior to the availability of the cash of the Target referred to in (vi) below, up to $10.6 million) under a $50.0 million senior secured revolving credit facility (the "Revolving Credit Facility," and collectively with the Term Loan Facility, the "Bank Facilities"); (iii) the issuance by Holdco II, for cash, of not more than $100.0 million of senior subordinated increasing rate notes (the "Subordinated Bridge Notes"); (iv) the issuance by Holdco I, for cash, of not more than $34.0 million of senior pay-in-kind increasing rate notes (the "Holdco Bridge Notes" and together with the Subordinated Bridge Notes, the "Bridge Securities"); (v) the issuance, for cash proceeds of not less than $65.0 million, of common equity of Holdco I (the "Common Stock") to be purchased by the Equity Investor; and (vi) after the consummation of the Merger, cash on hand of the Target of $6.1 million. DLJ Bridge hereby commits (the "Commitment") that it or one of its affiliates will purchase at the request of Holdco I and Holdco II: (i) up to $100.0 million of Subordinated Bridge Notes; and (ii) up to $34.0 million of Holdco Bridge Notes, the proceeds of which will be used to finance, in part, the consummation of the Transaction. You have advised us that a copy of this letter (the "Bridge Commitment Letter"), and the attached Summary of Terms and Conditions (the "Summary of Terms and Conditions"), which is incorporated into and made a part of this Bridge Commitment Letter, will be provided to the Target but that you understand that our obligation to purchase any Bridge Securities is subject expressly to (i) the execution and delivery of definitive documentation, including without limitation one or more definitive securities purchase agreements (the "Securities Purchase Agreement"), reasonably satisfactory to us and covering the matters expressly referred to herein and such other customary matters as we may reasonably request (collectively, the "Definitive Documents"); and (ii) the satisfaction of the other conditions precedent set out in the Summary of Terms and Conditions. The Equity Investor agrees to pay, or cause a member of the Credit Group to pay, to DLJ Bridge the fees set forth in the bridge financing fee letter (the "Fee Letter") executed by the parties hereto on the date hereof in accordance with the terms of the Fee Letter. The Commitment is not assignable by you other than to the issuers of the Bridge Securities. Nothing in this Bridge Commitment Letter, expressed or implied, shall give any person, other than the parties hereto and the issuers of the Bridge Securities, any benefit or any legal or equitable right, remedy or claim under this Bridge Commitment Letter. The Equity Investor agrees to, or to cause a member of the Credit Group to, indemnify and hold the DLJ Bridge Group, as defined in Exhibit A hereto, harmless to the extent set forth in Exhibit A to this Bridge Commitment Letter, and, upon demand from time to time, to reimburse DLJ Bridge for all reasonable out-of-pocket costs, expenses and other payments, including but not limited to reasonable legal fees and disbursements incurred or made in connection with the Commitment, and the preparation, execution and delivery of the Definitive Documents, regardless of whether or not the Definitive Documents are executed, or the Commitment expires or is terminated. The Equity Investor hereby represents that, based on such review as has been performed by it, to its knowledge (a) all information, other than Projections based on such review as has been (as defined below), which has been made available to DLJ Bridge by the Equity Investor, the Credit Group or any of their representatives in connection with the transactions contemplated hereby (together with information hereafter made available, the "Information"), as supplemented as contemplated by the next sentence, taken as a whole, is (or will be, in the case of Information made available after the date hereof) complete and correct in all material respects and does not (or will not, as the case may be) contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not materially misleading in light of the circumstances under which such statements were or are made, and (b) all financial projections concerning the Credit Group that have been or are hereafter made available to DLJ Bridge by the Equity Investor, the Credit Group or any of their representatives in connection with the transactions contemplated hereby (the "Projections") have been (or will be, in the case of Projections made available after the date hereof) prepared in good faith based upon reasonable assumptions. The Equity Investor agrees to supplement the Information and Projections, to the extent the Equity Investor has been furnished with such Information and Projections, from time to time until the closing of the Transaction so that the representation and warranty in the preceding sentence is correct on the closing date. Until the successful completion of the Tender Offer, the Equity Investor will be liable for its obligations set forth herein and upon such closing, the Equity Investor shall be released from such obligations to the extent that Holdco II has expressly assumed such obligations. This Bridge Commitment Letter and the attached Summary of Terms and Conditions set forth the entire understanding of the parties as to the scope of the Commitment and DLJ Bridge's obligations thereunder. The Commitment will expire at 5:00 PM New York City time on July 17, 1998 unless accepted prior to such time. The Commitment will also expire at the earlier of (i) the termination of the Merger Agreement; (ii) the closing of the Tender Offer without the funding of any Bridge Securities; (iii) the commencement by the Equity Investor or any member of the Credit Group of the marketing of any securities relating to the Transaction for which Donaldson Lufkin & Jenrette Securities Corporation ("DLJSC") or one of its affiliates is not sole manager or sole agent, or, in the case of any bank- style senior financing, syndication agent or arranger, as the case may be; or (iv) 5:00 PM New York City time on October 31, 1998 if the closing of the Tender Offer has not occurred by such time. This Bridge Commitment Letter shall be governed by, and construed in accordance with, the laws of the State of New York as applied to contracts made and performed within such state, without giving effect to the principles of conflicts of laws thereof. To the fullest extent permitted by applicable law, each of the parties hereto hereby irrevocably submits to the jurisdiction of any New York State court or Federal court sitting in the Borough of Manhattan in New York City in respect of any suit, action or proceeding arising out of or relating to the provisions of this Bridge Commitment Letter or the making of the Commitment and irrevocably agrees that all claims in respect of any such suit, action or proceeding may be heard and determined in any such court. Each of the parties hereto waives to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court, and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Please indicate your acceptance of the Commitment and your agreement to the matters contained in this Bridge Commitment Letter by executing this document and returning it to us prior to the time of expiration set forth above. Sincerely, DLJ Bridge Finance, Inc. /s/ Paul Thompson, III ------------------------------------ By: Paul Thompson, III Title: Chief Operating Officer Accepted and Agreed to this July 16, 1998 DLJ Merchant Banking II, Inc. on behalf of: DLJ Merchant Banking Partners II, L.P. DLJ Offshore Partners II, C.V. DLJ Diversified Partners, L.P. DLJMB Funding II, Inc. DLJ First ESC, L.P. DLJ First ESC II, L.P. UK Investment Plan 1997 Partners DLJ Merchant Banking Partners II, A, L.P. DLJ Diversified Partners - A, L.P. DLJ EAB Partners, L.P. DLJ Millenium Partners, L.P. DLJ Millenium Partners - A, L.P. /s/ Thompson Dean - ------------------------------- By: Thompson Dean Title: Managing Director SUMMARY OF TERMS AND CONDITIONS ------------------------------- Set forth below is a summary of the terms of each of the Bridge Securities and the conditions to the obligation of DLJ Bridge to purchase any Bridge Securities. Capitalized terms used herein and not otherwise defined have the meaning set forth in the Bridge Commitment Letter to which this Summary of Terms and Conditions is attached and of which it forms a part. Senior Subordinated Increasing Rate Notes ----------------------------------------- Issuer: Holdco II or, at the option of DLJ Bridge, such other entity(ies) as shall at the relevant time be the borrower(s) under the Bank Facilities. Issue: Senior Subordinated Increasing Rate Notes (the "Subordinated Bridge Notes"). Use of Proceeds: Proceeds will be used to finance in part the consummation of the Transaction. Principal Amount: Up to $100.0 million. Price: 100% of principal amount. Interest Rate: Interest shall be payable at the prime rate plus a spread (the "Spread"). The Spread will initially be 150 basis points. If the Subordinated Bridge Notes are not retired in whole by the end of the first six month period following the date of funding of the Subordinated Bridge Notes (the "Funding Date"), the Spread will increase by 100 basis points and shall continue to increase by an additional 50 basis points at the end of each subsequent three month period until the first anniversary of the Funding Date. Commencing on the first anniversary of the Funding Date, interest shall be payable at the greater of the following as of the beginning of each quarterly period: (i) the prime rate plus 350 basis points, increasing by an additional 50 basis points at the end of each subsequent three month period for so long as the Subordinated Bridge Notes are outstanding; (ii) the Treasury Rate (as defined below) plus 650 basis points, increasing by an additional 50 basis points at the end of each subsequent three month period for so long as the Subordinated Bridge Notes are outstanding; (iii) the DLJ High Yield Index Rate plus 250 basis points, increasing by an additional 50 basis points at the end of each subsequent three month period for so long as the Subordinated Bridge Notes are outstanding; and (iv) the rate in effect on the day immediately preceding the first anniversary of the Funding Date plus 50 basis points, increasing by an additional 50 basis points at the end of each subsequent three month period for so long as the Subordinated Bridge Notes are outstanding. For purposes of this Summary of Terms and Conditions, the "prime rate" means the prime or reference rate as announced from time to time by The Bank of New York and the "Treasury Rate" means the rate applicable to the most recent auction of direct obligations of the United States having a maturity closest to the Subordinated Bridge Notes, as published by the Board of Governors of the Federal Reserve System. Notwithstanding anything to the contrary set forth above, at no time shall the per annum interest rate on the Subordinated Bridge Notes exceed seventeen percent (17.00%), nor shall the per annum interest rate on the Subordinated Bridge Notes be lower than ten percent (10.00%). In addition, that portion, if any, of any interest payment representing a per annum interest rate in excess of fifteen percent (15.00%) may be paid by increasing the principal amount of the Subordinated Bridge Notes by an amount equal to such excess portion of interest. Maturity: The Subordinated Bridge Notes will mature on the first anniversary of the Funding Date, provided however, that the maturity of the Subordinated Bridge Notes will be automatically extended until the date which is six (6) months after the date of the original final stated maturity of the Bank Facilities if, on the first anniversary of the Funding Date, the following conditions are met: (i) there shall exist no default under the Subordinated Bridge Notes; (ii) there shall have been no default under the Bank Facilities or any other debt instrument of any member of the Credit Group; and (iii) all fees and expenses due to DLJ Bridge and DLJSC as of such date shall have been paid in full. Mandatory Redemption: The Issuer will redeem or prepay the Subordinated Bridge Notes with, subject to certain agreed exceptions, (i) the net proceeds from the issuance of any debt or equity securities or other indebtedness (other than indebtedness under the Bank Facilities and the Holdco Bridge Notes or the Common Stock issued in connection with the Transaction) by any member of the Credit Group (the "Permanent Financing"); or (ii) the net proceeds from asset sales (other than sales of "margin stock" as defined in Regulation U ("Margin Stock")) by any member of the Credit Group in excess of the amount thereof required to be paid to the banks under the Bank Facilities, in each case at par plus accrued interest, provided, that the redemption price shall be one hundred three percent (103.0%) of par plus accrued interest if the Subordinated Bridge Notes are redeemed with or in anticipation of funds raised by any means other than a transaction in which DLJSC or any of its affiliates has acted as sole manager or sole agent to the Credit Group or, in the case of any bank-style senior financing, syndication agent or arranger; provided further, that after the first anniversary of the Funding Date, the Subordinated Bridge Notes may be redeemed or prepaid at 100% of principal plus accrued interest unless (a) (i) prior to such first anniversary DLJSC delivered to a member of the Credit Group a proposal to market securities of a member of the Credit Group to one or more financially responsible institutional investors (or a commitment from DLJSC to underwrite the public sale of securities of a member of the Credit Group, on a firm commitment basis), on financial and other terms and conditions no less favorable to the issuer than those generally available in the United States capital markets to issuers of securities having a creditworthiness comparable to that of such issuer, in an amount sufficient to redeem all the Subordinated Bridge Notes (a "Bona Fide Proposal"), and (ii) such issuer did not authorize DLJSC to execute such Bona Fide Proposal; it being understood that no such proposal shall be deemed to be a Bona Fide Proposal if DLJSC fails to execute such proposal on substantially the terms proposed, or (b) the Company and DLJSC have agreed in their reasonable judgment that no such Bona Fide Proposal could be made. Interest Payments: Interest on the Subordinated Bridge Notes will be payable in cash, quarterly in arrears (except as provided above). Optional Redemption: The Subordinated Bridge Notes will be callable, in whole or in part, upon not less than 10 days written notice, at the option of the Issuer at any time at par plus accrued interest to the redemption date; provided, that the redemption price shall be one hundred three percent (103.0%) of par plus accrued interest if the Subordinated Bridge Notes are refunded (whether at the time of redemption or maturity) with or in anticipation of funds raised by any means other than a transaction in which DLJSC or any of its affiliates has acted as sole agent or sole manager to the Credit Group or, in the case of any bank-style senior financing, syndication agent or arranger; provided further, that after the first anniversary of the Funding Date, the Subordinated Bridge Notes may be redeemed or prepaid at 100% of principal plus accrued interest unless DLJSC has delivered a Bona Fide Proposal or the Issuer and DLJSC have agreed in their reasonable judgment that no such Bona Fide Proposal could be made. Commencing on the earliest to occur of (i) the first anniversary of the Funding Date and (ii) refusal by the Issuer to execute a Bona Fide Proposal (such earlier event, the "First Anniversary"), DLJ Bridge shall have the right to resell the Subordinated Bridge Notes on a fixed rate basis to unrelated third parties. In the event that DLJ Bridge elects to proceed with such fixed rate sale, the interest rate on any Subordinated Bridge Notes may be fixed at a market rate to be determined by DLJ Bridge provided that such rate will not exceed seventeen percent (17.00%). In such event, any such Subordinated Bridge Notes will be callable thereafter at par plus accrued interest plus a make-whole premium calculated on the basis of a discount rate equal to the then Treasury Rate plus one-half percent (0.50%). DLJ Bridge agrees that it shall give the Issuer ten (10) days notice prior to fixing the rate of the Subordinate Bridge Notes. Subordination: The Subordinated Bridge Notes will be subordinated to the Bank Facilities and certain refinancings thereof (collectively, the "Designated Senior Debt"). See Exhibit B to the Bridge Commitment Letter. Guarantees: Acquisitionco will issue a senior subordinated guarantee in favor of the Subordinated Bridge Notes. Upon the occurrence of the Merger the direct and indirect affiliates of the Credit Group which are guarantors of the Bank Facilities will issue senior subordinated guarantees in favor of the Subordinated Bridge Notes. Registration Rights: The Issuer will file, and will use its best efforts to cause to become effective, a "shelf" registration statement with respect to the Subordinated Bridge Notes as soon as practicable after the First Anniversary. The Issuer will keep the registration statement for the Subordinated Bridge Notes effective until all of the Subordinated Bridge Notes have been redeemed or sold. If a "shelf" registration statement for the Subordinated Bridge Notes has either (i) not been filed within 60 days after the First Anniversary, or (ii) not been declared effective 120 days after the First Anniversary, the interest rate on the Subordinated Bridge Notes shall be increased by 50 basis points until such time as such registration statement has become effective. The interest rate on the Subordinated Bridge Notes shall also be increased by 50 basis points for any period of time following the effectiveness of such registration statement that the registration statement is not available for resales thereunder. In addition, the holders of the Subordinated Bridge Notes will have the right to "piggy-back" in the registration of any debt or equity securities which are registered by the Company unless all of the Subordinated Bridge Notes will be redeemed from the proceeds of such securities. Extension Fee: On the occurrence of the First Anniversary, the Issuer shall pay to DLJ Bridge a cash duration fee (the "Extension Fee") in an amount equal to three percent (3.00%) of the principal amount of the Subordinated Bridge Notes outstanding on such date. Upon payment of the Extension Fee, the redemption price for the Subordinated Bridge Notes in all cases shall be 100% of principal plus accrued interest. Right to Resell Bridge Financing: DLJ Bridge shall have the absolute and unconditional right to resell or assign the Subordinated Bridge Notes in compliance with applicable law to any third party at any time. Representations and Warranties: The Securities Purchase Agreement will contain representations and warranties to DLJ Bridge and holders of the Subordinated Bridge Notes which are usual and customary for transactions of this nature or required by DLJ Bridge for this Transaction in particular, including, but not limited to: (i) Corporate Existence and Power; (ii) Authorization, Execution and Enforceability of Material Agreements; (iii) Governmental Authorization; (iv) Non- Contravention of Laws or Material Agreements; (v) Financial Information; (vi) Litigation; (vii) Taxes; (viii) Subsidiaries; (ix) Not an Investment Company; (x) ERISA; (xi) Environmental; (xii) Permits; (xiii) Leases; (xiv) Full Disclosure; (xv) Capitalization; (xvi) Solicitation; Access to Information; (xvii) Absence of Any Undisclosed Liabilities; (xviii) Historical and Pro Forma Financial Statements; (xix) No Material Adverse Change; and (xx) Governmental Regulations. The representations will reflect that the Refinancing may occur after consummation of the Tender Offer. Covenants: The Securities Purchase Agreement will contain usual and customary covenants for securities of this nature or required by DLJ Bridge including covenants with respect to: (i) Furnishing of Information; (ii) Use of Proceeds; (iii) Wholly Owned Subsidiaries; (iv) Compliance with Laws; (v) Insurance; (vi) Restrictions on Indebtedness; (vii) Restrictions on Dividends and Redemptions and Repayment of Subordinated Debt or Pari Passu Debt; (viii) Restrictions on the Sale of Assets (other than sales of Margin Stock for fair value in cash or cash equivalents); (ix) Restrictions on Business Activities; (x) Restrictions on Transactions with Affiliates; (xi) Restrictions on Merger or Consolidation (other than the Merger); (xii) Change of Control; (xiii) Restrictions on Liens (other than Liens on Margin Stock); (xiv) Refinancing of Subordinated Bridge Notes (including provision of equity securities to the extent required to refinance the Subordinated Bridge Notes); (xv) Restrictions on Investments and Acquisitions; and (xvi) Additional Covenants which will not include any financial maintenance covenants or covenants regarding accelerated buy-back or sinking fund requirements. Event of Default: An Event of Default as defined for the Subordinated Bridge Notes will include but not be limited to: (i) the failure of the Issuer to pay principal on the Subordinated Bridge Notes when due; (ii) the failure of the Issuer to pay interest or fees on the Subordinated Bridge Notes and the continuance of such failure for 5 days; (iii) the failure of the Issuer or any Guarantor to comply with any other provision, condition, covenant, promise, warranty or representation in the Securities Purchase Agreement or the Subordinated Bridge Notes, provided that in certain cases such failure continues for 30 days after notice; (iv) a default under any instrument or instruments governing indebtedness of any member of the Credit Group when such default causes such indebtedness to become accelerated and due prior to its stated maturity or failure to pay any such indebtedness at its stated maturity (with exceptions to be agreed); (v) final judgments aggregating in excess of a threshold amount to be agreed rendered against any member of the Credit Group and not discharged or stayed within 60 days; (vi) certain events of bankruptcy, insolvency or reorganization with respect to any member of the Credit Group; (vii) material misrepresentations in the Securities Purchase Agreement; (viii) unenforceability of any Guarantee; (ix) certain ERISA defaults; (x) breach under the Engagement Letter (defined below) and payment of fees to DLJ Bridge and DLJSC described in the Fee Letter or the Engagement Letter; or (xi) Change of Control of any member of the Credit Group. In case an Event of Default shall occur and be continuing, the holders of at least 33 1/3% (a majority where DLJ Bridge, or its affiliates, hold a majority of the aggregate principal amount of the Subordinated Bridge Notes) in aggregate principal amount of the Subordinated Bridge Notes then outstanding, by notice in writing to the Company and the agent banks under the Bank Facilities (the "Agent Banks") may declare the principal of and all accrued interest on all Subordinated Bridge Notes to be due and payable immediately. If an Event of Default specified in clause (vi) occurs, the principal of and accrued interest on the Subordinated Bridge Notes will be immediately due and payable without any notice, declaration or other act on the part of the holders of the Subordinated Bridge Notes. An acceleration notice may be annulled and past defaults (except for monetary defaults not yet cured) may be waived by the holders of a majority in aggregate principal amount of the Subordinated Bridge Notes. If an Event of Default shall occur and for as long as such Event of Default shall be continuing, DLJ Bridge shall have the right to appoint one (1) representative to sit on each of Holdco I's and the Issuer's Boards of Directors provided, however, that such right shall terminate if DLJ Bridge no longer retains at least 50% of the outstanding Subordinated Bridge Notes; it being understood that, should there be an Event of Default in respect of each of the Bridge Securities, DLJ Bridge shall be limited to one (1) such appointment. Defeasance Provision: None. Governing Law: New York. Senior Pay-in-Kind Increasing Rate Notes ---------------------------------------- Issuer: Holdco I. Issue: Senior Pay-in-Kind Increasing Rate Notes (the "Holdco Bridge Notes"). Use of Proceeds: Same as the Subordinated Bridge Notes. Principal Amount: Up to $34.0 million. Price: 100% of principal amount. Interest Rate: Interest shall accrue at the prime rate plus a spread (the "Spread"). The Spread will initially be 500 basis points. If the Holdco Bridge Notes are not retired in whole by the end of the first six month period following the date of funding of the Holdco Bridge Notes (the "Funding Date"), the Spread will increase by 100 basis points and shall continue to increase by an additional 50 basis points at the end of each subsequent three month period until the first anniversary of the Funding Date. Commencing on the first anniversary of the Funding Date, interest shall accrue at the greater of the following as of the beginning of each quarterly period: (i) the prime rate plus 700 basis points, increasing by an additional 50 basis points at the end of each subsequent three month period for so long as the Holdco Bridge Notes are outstanding; (ii) the Treasury Rate (as defined below) plus 1000 basis points, increasing by an additional 50 basis points at the end of each subsequent three month period for so long as the Holdco Bridge Notes are outstanding; (iii) the DLJ High Yield Index Rate plus 600 basis points, increasing by an additional 50 basis points at the end of each subsequent three month period for so long as the Holdco Bridge Notes are outstanding; and (iv) the rate in effect on the day immediately preceding the first anniversary of the Funding Date plus 50 basis points, increasing by an additional 50 basis points at the end of each subsequent three month period for so long as the Holdco Bridge Notes are outstanding. For purposes of this Summary of Terms and Conditions, the "prime rate" means the prime or reference rate as announced from time to time by The Bank of New York and the "Treasury Rate" means the rate applicable to the most recent auction of direct obligations of the United States having a maturity closest to the Holdco Bridge Notes, as published by the Board of Governors of the Federal Reserve System. Notwithstanding anything to the contrary set forth above, at no time shall the per annum interest rate on the Holdco Bridge Notes exceed seventeen percent (17.00%), nor shall the per annum interest rate on the Holdco Bridge Notes be lower than ten percent (10.00%). Maturity: Same as the Subordinated Bridge Notes. Mandatory Redemption: Holdco I will redeem or prepay the Holdco Bridge Notes with, subject to certain agreed exceptions, (i) the net proceeds (other than proceeds used to redeem or prepay the Subordinated Bridge Notes) from the issuance of any debt or equity securities or other indebtedness (other than indebtedness under the Bank Facilities and the Subordinated Bridge Notes or the Common Stock issued in connection with the Transaction) by any member of the Credit Group (the "Permanent Financing"); or (ii) the net proceeds from asset sales (other than sales of Margin Stock) by any member of the Credit Group in excess of the amount thereof required to be paid to the banks under the Bank Facilities or the holders of the Subordinated Bridge Notes, in each case at par plus accrued interest, provided, that the redemption price shall be one hundred three and one-half (103.5%) of par plus accrued interest if the Holdco Bridge Notes are redeemed with or in anticipation of funds raised by any means other than a transaction in which DLJSC or any of its affiliates has acted as sole agent or sole manager to the Credit Group or, in the case of any bank-style financing, syndication agent or arranger; and provided further, that after the first anniversary of the Funding Date, the Holdco Bridge Notes may be redeemed at 100% of principal plus accrued interest unless DLJSC has delivered a Bona Fide Proposal or Holdco I and DLJSC have agreed in their reasonable judgment that no such Bona Fide Proposal could be made. Interest Payments: Interest on the Holdco Bridge Notes will be payable quarterly, in arrears, by increasing the principal amount of the Holdco Bridge Notes by the amount of interest due on such interest payment date. Optional Redemption: The Holdco Bridge Notes will be callable, in whole or in part, upon not less than 10 days written notice, at the option of Holdco I, at any time at par plus accrued interest to the redemption date; provided, that the redemption price shall be one hundred three and one- half (103.5%) of par plus accrued interest if the Holdco Bridge Notes are refunded (whether at the time of redemption or maturity) with or in anticipation of funds raised by any means other than a transaction in which DLJSC or any of its affiliates has acted as sole agent or sole manager to the Credit Group or, in the case of any bank-style financing, syndication agent or arranger; provided further, that twelve (12) months after the Funding Date, the Holdco Bridge Notes may be redeemed or prepaid at 100% of principal plus accrued interest unless DLJSC has delivered a Bona Fide Proposal or Holdco I and DLJSC have agreed in their reasonable judgment that no such Bona Fide Proposal could be made. Commencing on the earliest to occur of (i) the first anniversary of the Funding Date and (ii) refusal by the relevant issuer to execute a Bona Fide Proposal (such earlier event, the "First Anniversary"), DLJ Bridge shall have the right to resell the Holdco Bridge Notes on a fixed rate basis. In the event that DLJ Bridge elects to proceed with such fixed rate sale, the interest rate on any Holdco Bridge Notes may be fixed at a rate to be determined by DLJ Bridge provided that such rate will not exceed seventeen percent (17.00%). In conjunction with such fixed rate sale, DLJ Bridge may use any unused Escrowed Warrants, as defined below, in order to facilitate such sale. In such event, any such Holdco Bridge Notes will be callable thereafter at par plus accrued interest plus a make-whole premium calculated on the basis of a discount rate equal to the then Treasury Rate plus one-half percent (0.50%). DLJ Bridge shall agree that they shall give Holdco I ten (10) days notice prior to fixing the rate of the Holdco Bridge Notes. Ranking: The Holdco Bridge Notes will be subordinated to any guarantees of the Bank Facility and the Subordinated Bridge Notes or refinancings thereof and all Designated Senior Debt and the Subordinated Bridge Notes, but will rank senior to all other Holdco I debt. Guarantees: None. Registration Rights: Same as the Subordinated Bridge Notes. Extension Fee: Upon the occurrence of the First Anniversary, Holdco I shall pay to DLJ Bridge a cash duration fee (the "Holdco Extension Fee") in an amount equal to three and one-half percent (3.50%) of the principal amount of the Holdco Bridge Notes outstanding on such date. Upon payment of the Holdco Extension Fee, the redemption price for the Holdco Bridge Notes in all cases shall be 100% of principal plus accrued interest. Right to Resell Bridge Financing: Same as the Subordinated Bridge Notes. Representations and Warranties: Same as the Subordinated Bridge Notes. Covenants: Same as the Subordinated Bridge Notes. Event of Default: An Event of Default as defined for the Holdco Bridge Notes will include but not be limited to: (i) the failure of Holdco I to pay principal on the Holdco Bridge Notes when due; (ii) the failure of Holdco I to pay interest or fees on the Holdco Bridge Notes and the continuance of such failure for 5 days; (iii) the failure of Holdco I to comply with any other provision, condition, covenant, promise, warranty or representation in the Securities Purchase Agreement or the Holdco Bridge Notes, provided that in certain cases such failure continues for 30 days after notice; (iv) a default under any instrument or instruments governing indebtedness of Holdco I, the Company or any of its subsidiaries when such default causes such indebtedness to become due prior to its stated maturity or failure to pay any such indebtedness at its stated maturity (with exceptions to be agreed); (v) after consummation of the Merger, a default under any instrument or instruments governing indebtedness (other than guarantees by Holdco I of indebtedness of the Company or any of its subsidiaries) of Holdco I when such default allows holders of such indebtedness to cause such indebtedness to become due prior to its stated maturity or failure to pay any such indebtedness at its stated maturity in an aggregate principal amount exceeding a threshold amount to be agreed; (vi) final judgments aggregating in excess of a threshold amount to be agreed rendered against any member of the Credit Group and not discharged or stayed within 60 days; (vii) certain events of bankruptcy, insolvency or reorganization with respect to any member of the Credit Group; (viii) material misrepresentations in the Securities Purchase Agreement; (ix) certain ERISA defaults; (x) breach under the Engagement Letter (defined below) and payment of fees to DLJ Bridge and DLJSC described in the Fee Letter or the Engagement Letter; or (xi) Change of Control of any member of the Credit Group. In case an Event of Default shall occur and be continuing, the holders of at least 33 1/3% (a majority where DLJ Bridge or their affiliates, hold a majority of the aggregate principal amount of the Holdco Bridge Notes) in aggregate principal amount of the Holdco Bridge Notes then outstanding, by notice in writing to Holdco I and the Agent Banks may declare the principal of and all accrued interest on all Holdco Bridge Notes to be due and payable immediately. If an Event of Default specified in clause (vii) occurs, the principal of and accrued interest on the Holdco Bridge Notes will be immediately due and payable without any notice, declaration or other act on the part of the holders of the Holdco Bridge Notes. An acceleration notice may be annulled and past defaults (except for monetary defaults not yet cured) may be waived by the holders of a majority in aggregate principal amount of the Holdco Bridge Notes. If an Event of Default shall occur and for as long as such Event of Default shall be continuing, DLJ Bridge shall have the right to appoint one (1) representative to sit on each of Holdco I's and the Company's Boards of Directors provided, however, that such right shall terminate if DLJ Bridge no longer retains at least 50% of the outstanding Holdco Bridge Notes; it being understood that, should there be an Event of Default in respect of each of the Bridge Securities, DLJ Bridge shall be limited to one (1) such appointment. Equity Amount Escrowed: On the Funding Date, warrants (the "Escrowed Warrants") representing twenty five percent (25.00%) of the fully- diluted common stock of Holdco I as determined in accordance with GAAP will be placed in an escrow account. To the extent necessary, the number of warrants of Holdco I placed in escrow shall be increased to ensure that upon consummation of the Transaction, the number of Escrowed Warrants held in the corporation surviving the Transaction shall represent twenty five percent (25.00%) of the fully- diluted common stock of the surviving corporation as determined in accordance with GAAP. The Escrowed Warrants will be exercisable at a price equal to $0.01 per share for a period of seven (7) years from the date such Escrowed Warrants are released from escrow and will have customary anti-dilution provisions, tag-along rights and "piggy-back" registration rights. If the refinancing of 100% of the Holdco Bridge Notes is not completed within the periods following the Funding Date set forth in Column A below, Escrowed Warrants exercisable into the percentage of Holdco I's fully-diluted common stock set forth in Column B shall be released from escrow to holders of the Holdco Bridge Notes pro rata in accordance with the principal amount of Holdco Bridge Notes held by each such holder and such holders shall be entitled to retain such released Escrowed Warrants. A B ------------------------ --------- Up to 90 days 0.000% 91-180 days 1.000% 181-270 days 1.5000% 271-360 days 2.5000% 361-450 days 5.000% 451-540 days 0.750% 541-640 days 0.750% 641-730 days 1.500% 731-820 days 1.500% 821-910 days 1.875% 911-1000 days 1.875% 1001-1090 days 2.250% 1091-1180 days 2.250% 1181 days and thereafter 2.250% ------ 25.000% ====== Any Escrowed Warrants to which the holders of the Bridge Securities are not entitled as set forth above shall be returned to Holdco I for cancellation. Escrow: The Escrowed Warrants will be held, undated, in escrow by Snoga, Inc., an affiliate of DLJ Bridge, from the Funding Date. Defeasance Provision: None. Governing Law: New York. Securities Purchase Agreement ----------------------------- The Commitment of DLJ Bridge to purchase the Bridge Securities will be subject to the execution of definitive documentation including one or more definitive securities purchase agreements (the "Securities Purchase Agreement"), which will contain the terms and conditions set forth herein and such other conditions precedent, covenants, representations, warranties, events of default and other provisions as are customary for financings of this kind. Conditions to Funding: The funding of the Bridge Securities will be subject to concurrent satisfaction of the following conditions precedent deemed appropriate by DLJ Bridge for leveraged financing generally and for this transaction in particular, including but not limited to the following: (i) The Tender Offer shall have been consummated in accordance with the Merger Agreement and any material related documentation, all of which will be satisfactory in form and substance to DLJ Bridge. DLJ Bridge acknowledges that the Merger Agreement is currently satisfactory in form and substance to DLJ Bridge. There shall not be any amendment, modification or waiver of any of the terms or conditions of the Merger Agreement or any material related documentation without the prior written consent of DLJ Bridge. In addition, all loan documentation and other documentation relating to the Bridge Securities shall have been executed and shall be in form and substance satisfactory to DLJ Bridge and in compliance with all applicable laws and regulations; (ii) Holdco I shall have issued not less than $65.0 million in Common Stock to be purchased, in cash, by the Equity Investor. In addition, Holdco II will have in place the Term Loan Facility and a commitment to provide the Revolving Credit Facility to the Company, and the covenants and other terms and conditions of which shall be reasonably satisfactory in all respects to DLJ Bridge, it being understood that the terms and conditions set forth in the Bank Facilities Commitment Letter dated July 16, 1998 are satisfactory to DLJ Bridge. The aggregate indebtedness of the Credit Group at closing shall not exceed $224.6$ million; (iii) DLJ Bridge has completed, and is satisfied with the results of, its business, tax, legal, accounting, and environmental due diligence investigations of the Company and its subsidiaries. This condition is deemed satisfied or waived unless any additional information is disclosed to or discovered by DLJ Bridge which is inconsistent with the information heretofore provided to DLJ Bridge and which DLJ Bridge reasonably deems materially adverse in respect of the condition (financial or otherwise), business, assets, liabilities, properties, results of operations or prospects of the Company and its subsidiaries. DLJ Bridge is not currently aware of any such additional information referred to above; (iv) Receipt of (a) consolidated financial statements of the Credit Group including balance sheets and income and cash flow statements as of the end of and for each of the last three fiscal years audited by independent public accountants of recognized national standing and prepared in conformity with GAAP, together with the report thereon; (b) unaudited selected financial information of the Credit Group meeting the requirements of Item 301 (a) of Regulation S-K for the two fiscal years immediately preceding the last three fiscal years; and (c) unaudited interim financial statements of the Credit Group, prepared in each case in the same manner as the historical audited statements for the most recently ended quarterly period and for the same quarterly period during the most recently ended fiscal year; (v) Receipt of a consolidating pro forma balance sheet of Holdco I as of the closing date, giving effect to the Transaction and the transactions contemplated by the Tender Offer and reflecting estimated transaction related accounting adjustments, prepared by independent public accountants of recognized national standing; (vi) The corporate, tax, capital and ownership structure (including articles of incorporation and by-laws), shareholders agreements and management of the Credit Group before and after the Transaction shall be consistent with that previously described to DLJ Bridge or otherwise satisfactory to DLJ Bridge in all respects; (vii) Receipt of solvency letters and solvency certificates if, and to the extent that, any lenders under the Bank Facilities are provided such letters and certificates, in each case addressed to DLJ Bridge; (viii) Receipt of all material governmental, shareholder and third party consents, (including Hart-Scott- Rodino clearance, if required), and approvals necessary or desirable in connection with the Transaction and the related financings and other transactions contemplated hereby and expiration of all applicable waiting periods without any action being taken by any competent authority that could restrain, prevent or impose any materially adverse conditions on the Transaction or such other transactions or that could seek or threaten to restrain, prevent or impose any materially adverse conditions on any of the forgoing, and no law or regulation shall be applicable which in the judgment of DLJ Bridge could have any such effect; (ix) Absence of any material adverse change in the business, condition (financial or otherwise), operations, performance or properties of any member of the Credit Group since the end of the most recently ended fiscal year for which audited financial statements have been provided to DLJ Bridge or in the facts and information as represented to date; (x) Absence of any action, suit, investigation, litigation or proceeding pending or threatened in any court or before any arbitrator or governmental instrumentality that purports to affect the Bridge Securities or the refinancing thereof or that could reasonably be expected to have a material adverse effect on the Transaction or the Bridge Securities or any of the other transactions contemplated hereby or on the property, financial condition, operations or business of the Credit Group; (xi) DLJ Bridge shall have received reasonably satisfactory opinions of counsel to the Credit Group as to the transactions contemplated hereby (including without limitation compliance with all applicable securities laws), and such corporate resolutions, certificates and other documents as DLJ Bridge shall reasonably request; (xii) Absence of any Event of Default or event that, with notice and/or the passage of time, could become an Event of Default and satisfaction as to the accuracy of all representations and warranties; (xiii) A letter (the "Engagement Letter") shall have been executed between the Credit Group and DLJSC; (xiv) All fees and expenses due to DLJ Bridge in connection with the purchase of the Bridge Securities or to DLJSC as set forth in the Engagement Letter or otherwise shall have been paid in full; (xv) Absence of any disruption or adverse change in the financial or capital markets generally which could reasonably be expected to materially adversely affect the purchase of the Bridge Securities or the refinancing thereof; and (xvi) DLJ Bridge shall have received any required consent from the Bank Facilities lenders concerning the anticipated terms and conditions of the Bridge Securities and the Permanent Financing including the application of the proceeds from any such financing. Such terms will include usual and customary terms for securities of this type. EXHIBIT A --------- In consideration of the commitment given by DLJ Bridge Finance, Inc., a Delaware corporation ("DLJ Bridge"), with respect to the Transaction involving the Equity Investor and the Credit Group pursuant to the Bridge Commitment Letter between the Equity Investor and DLJ Bridge of which this Exhibit is a part (such Bridge Commitment Letter, together with all Exhibits attached thereto, is referred to herein as the "Commitment"), the Equity Investor (the "Indemnifying Party") agrees to indemnify and hold harmless DLJ Bridge, its affiliates, and each person, if any, who controls DLJ Bridge, or any of its affiliates, within the meaning of the Securities Act of 1933, as amended (the "Act") or the Securities Exchange Act of 1934, as amended (a "Controlling Person"), and the respective partners, agents, employees, officers and directors of DLJ Bridge, its affiliates, and any such Controlling Person (each an "Indemnified Party" and collectively, the "Indemnified Parties" or the "DLJ Bridge Group"), from and against any and all losses, claims, damages, liabilities and expenses (including, without limitation and as incurred, reasonable costs of investigating, preparing or defending any such claim or action, whether or not DLJ Bridge Group is a party thereto) arising out of, or in connection with any activities contemplated by, the Commitment or any other services rendered in connection therewith, including, but not limited to, losses, claims, damages, liabilities or expenses arising out of or based upon any untrue statement or any alleged untrue statement of a material fact or any omission or any alleged omission to state a material fact in any of the disclosure or offering or confidential information documents (the "Disclosure Documents") pertaining to any of the transactions or proposed transactions contemplated by the Commitment, including any eventual resale or refinancing of any Subordinated Bridge Notes (as defined in the Commitment), provided that the Indemnifying Party will not be responsible for any claims, liabilities, losses, damages or expenses to the extent they are determined by final judgment of a court of competent jurisdiction to result from DLJ Bridge Group's gross negligence, willful misconduct or bad faith. The Indemnifying Party also agrees that (i) DLJ Bridge Group shall have no liability (except for breach of provisions of the Bridge Commitment Letter of which this Exhibit A is a part) for claims, liabilities, damages, losses or expenses, including legal fees, incurred by the Indemnifying Party except to the extent they are determined by final judgment of a court of competent jurisdiction to result from DLJ Bridge Group's gross negligence, willful misconduct or bad faith and (ii) DLJ Bridge Group shall in no event have any liability to the Equity Investor or any member of the Credit Group on any theory of liability for punitive damages arising out of, in connection with, or as a result of, the Bridge Commitment Letter. In case any action shall be brought against DLJ Bridge Group with respect to which indemnity may be sought against the Indemnifying Party under this agreement, DLJ Bridge Group shall promptly notify the Indemnifying Party in writing and the Indemnifying Party shall, if requested by DLJ Bridge or if the Indemnifying Party desires to do so, assume the defense thereof, including the employment of counsel reasonably satisfactory to DLJ Bridge and payment of all reasonable fees and expenses. The failure to so notify the Indemnifying Party shall not affect any obligations the Indemnifying Party may have to DLJ Bridge Group under the Commitment or otherwise unless the Indemnifying Party is materially adversely affected by such failure. DLJ Bridge Group shall have the right to employ separate counsel in such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of DLJ Bridge Group, unless: (i) the Indemnifying Party has failed to assume the defense and employ counsel reasonably satisfactory to DLJ Bridge or (ii) the named parties to any such action (including any impleaded parties) include DLJ Bridge Group and the Indemnifying Party, and DLJ Bridge Group shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Indemnifying Party, in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense of such action or proceeding on behalf of such Indemnified Party, provided, however, that the Indemnifying Party shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be responsible hereunder for the reasonable fees and expenses of more than one such firm of separate counsel, in addition to any local counsel, which counsel shall be designated by DLJ Bridge. The Indemnifying Party shall not be liable for any settlement of any such action effected without the written consent of the Indemnifying Party (which shall not be unreasonably withheld) and the Indemnifying Party agrees to indemnify and hold harmless DLJ Bridge Group from and against any loss or liability by reasons of settlement of any action effected with the consent of the Indemnifying Party. In addition, the Indemnifying Party will not, without the prior written consent of DLJ Bridge, settle or compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened action, claim, suit or proceeding in respect to which indemnification or contribution may be sought hereunder (whether or not DLJ Bridge is a party thereto) unless such settlement, compromise, consent or termination includes an express unconditional release of DLJ Bridge and the other Indemnified Parties, satisfactory in form and substance to DLJ Bridge, from all liability arising out of such action, claim, suit or proceeding. If for any reason the foregoing indemnity is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless, then in lieu of indemnifying such Indemnified Party, the Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party as a result of such claims, liabilities, losses, damages, or expenses (i) in such proportion as is appropriate to reflect the relative benefits received by the Indemnifying Party on the one hand and by DLJ Bridge on the other from the Transaction contemplated by the Commitment or (ii) if the allocation provided by clause (i) is not permitted under applicable law, in such proportion as is appropriate to reflect not only the relative benefits received by the Indemnifying Party on the one hand and DLJ Bridge on the other, but also the relative fault of the Indemnifying Party and DLJ Bridge as well as any other relevant equitable considerations. Notwithstanding the provisions of this Exhibit A, the aggregate contribution of all Indemnified Parties shall not exceed the amount of fees actually received by DLJ Bridge pursuant to the Commitment. It is hereby further agreed that the relative benefits to the Indemnifying Party on the one hand and DLJ Bridge on the other with respect to any Transaction shall be deemed to be in the same proportion as (i) the total value of the Transaction bears to (ii) the fees paid to DLJ Bridge with respect to such Transaction. The relative fault of the Indemnifying Party on the one hand and DLJ Bridge on the other with respect to the Transaction shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of material fact or the omission or alleged omission to state a material fact related to information supplied by the Indemnifying Party or by DLJ Bridge and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11 (f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The indemnity, contribution and expense reimbursement obligations set forth herein (i) shall be in addition to any liability the Indemnifying Party may have to any Indemnified Party at common law or otherwise, (ii) shall survive the termination of the Commitment, and (iii) shall remain operative and in full force and effect regardless or any investigation made by or on behalf of the DLJ Bridge or any other Indemnified Party. EXHIBIT B --------- Subordination Provisions ------------------------ Set forth below is substantially the form of subordination provisions for the Subordinated Bridge Notes (the "Financing") which will be set forth in the Definitive Documents, subject to conforming changes. (a) Notes Subordinated to Designated Senior Debt. The Issuer for itself and its successors, and each Holder, by its acceptance of the Financing, agrees that the payment of the Subordinated Obligations [to be defined to mean principal and interest (including post-petition interest as provided below) on the Subordinated Bridge Notes and any claim for rescission or damages in respect thereof under any applicable law] by the Issuer is subordinated, to the extent and in the manner provided in this Section, to the prior payment of Designated Senior Debt; provided that the provisions of this Section do not apply to, and the Financing is not subordinated in respect of, the proceeds of the Permanent Financing. This Section will constitute a continuing offer to all persons who, in reliance upon its provisions, become holders of, or continue to hold, Designated Senior Debt, and such provisions are made for the benefit of the holders of Designated Senior Debt, and such holders are made obligees under this Section and they and/or each of them may enforce its provisions. (b) No Payment on Notes in Certain Circumstances. (i) No payment will be made on account of the Subordinated Obligations, or to acquire any of the Notes for cash or property other than capital stock of the Issuer, or on account of the redemption provisions of the Financing (x) upon the maturity of any Designated Senior Debt by lapse of time, acceleration or otherwise, unless and until all such Designated Senior Debt shall first be paid in full or provided for in cash or cash equivalents or such payment duly provided for or (y) in the event that the Issuer defaults in the payment of any principal of or interest on or any other amounts payable on or due in connection with any Designated Senior Debt when it becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise, unless and until such default has been cured or waived in writing. (ii) Upon the happening of any event of default (or if an event of default would result upon any payment with respect to the Subordinated Obligations) with respect to any Designated Senior Debt, as such event of default is defined in the instruments evidencing such Designated Senior Debt or under which it is outstanding, permitting the holders to accelerate its maturity (if the default is other than default in payment of the principal of or interest on or any other amount due in connection with such Designated Senior Debt) upon written notice of the event of default given to the Issuer by the holders of such Designated Senior Debt, then, unless and until such event of default has been cured or waived in writing, no payment will be made by the Issuer with respect to the Subordinated Obligations or to acquire any of the Notes for cash, property or securities; provided that this paragraph (ii) will not prevent the making of any payment for a period of more than 179-days after the date the written notice of the default is given unless such Designated Senior Debt in respect of which such event of default exists has been declared due and payable in its entirety within that period, and that declaration has not been rescinded. If such Designated Senior Debt is not declared due and payable within 179-days after the written notice of the default is given, promptly after the end of the 179-day period the Issuer will pay all sums not paid during the 179-day period because of this paragraph (ii) unless paragraph (i) above is then applicable. During any 360- day consecutive period only one such period during which payment of principal of, or interest on, the Financing may not be made may commence and the duration of such period may not exceed 179 days. (iii) If any payment or distribution of assets of the Issuer is received by any Holder in respect of the Subordinated Obligations at a time when that payment or distribution should not have been made because of paragraph (i) or (ii), such payment or distribution will be received and held in trust for and will be paid over to the holders of Designated Senior Debt which is due and payable and remains unpaid or unprovided for (pro rata as to each of such holders on the basis of the respective amounts of Designated Senior Debt which is due and payable held by them) until all such Designated Senior Debt has been paid in full or provided for in cash or cash equivalents, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Designated Senior Debt. (c) Notes Subordinated to Prior Payment of all Designated Senior Debt on Dissolution, Liquidation or Reorganization. Upon any distribution of assets of the Issuer upon any dissolution, winding up, liquidation or reorganization of the Issuer (whether in bankruptcy, insolvency, receivership or similar proceeding related to the Issuer or its property or upon an assignment for the benefit of creditors or otherwise): (i) the holders of all Designated Senior Debt will first be entitled to receive payment in full or provision for payment in full in cash or cash equivalents of the principal of and interest due on Designated Senior Debt and other amounts due in connection with Designated Senior Debt (including interest accruing subsequent to an event specified in Sections _____ [certain bankruptcy events] and ___________ [winding up] at the rate provided for in the documents governing such Designated Senior Debt, whether or not such interest is an allowed claim enforceable against the debtor in a Bankruptcy case under Title 11 of the United States Code), before the Holders are entitled to receive any payment on account of the principal of or interest on the Notes; (ii) any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, to which the Holders would be entitled except for the provisions of this Section will be paid by the liquidating trustee or agent or other person making such a payment or distribution directly to the holders of Designated Senior Debt or their representatives to the extent necessary to make payment in full or provision for payment in full in cash or cash equivalents of all Designated Senior Debt remaining unpaid, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Designated Senior Debt ; and (iii) if, notwithstanding the foregoing, any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities is received by the Holders on account of the Subordinated Obligations before all Designated Senior Debt is paid in full or provided for in cash or cash equivalents, such payment or distribution will be received and held in trust for and will be paid over to the holders of the Designated Senior Debt remaining unpaid or unprovided for or their representatives for application to the payment of such Designated Senior Debt until all such Designated Senior Debt has been paid in full or provided for in cash or cash equivalents, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Designated Senior Debt. The Issuer will give prompt written notice to the Holders of any dissolution, winding up, liquidation or reorganization of it or any assignment for the benefit of its creditors and of any event of default in respect of Designated Senior Debt. (d) For purposes of this Section, the words "cash, property or securities" shall not be deemed to include (x) shares of capital stock of the Issuer as reorganized or readjusted, (y) securities of the Issuer or any other corporation provided for by a plan of reorganization or readjustment which are subordinated, to at least the same extent as the Financing, to the payment of all Designated Senior Debt then outstanding or (z) any payment or distribution of securities of the Issuer or any other corporation authorized by an order or decree giving effect, and stating in such order or decree that effect has been given, to subordination of the Financing to Designated Senior Debt and made by a court of competent jurisdiction in a reorganization proceeding under any applicable bankruptcy, insolvency or similar law. For purposes of this Section, "payment on the account of the Subordinated Obligations" shall not include the Escrowed Warrants, any shares issued upon exercise of the Escrowed Warrants or any sale or transfer of any of the foregoing. (e) Holders to be Subrogated to Rights of Holders of Designated Senior Debt. Following the payment in full or provision for payment in full of all Designated Senior Debt, the Holders will be subrogated to the rights of the holders of Designated Senior Debt to receive payments or distributions of assets of the Issuer applicable to the Designated Senior Debt until all amounts owing on the Financing have been paid in full, and for the purpose of such subrogation no such payments or distributions to the holders of Designated Senior Debt by or on behalf of the Issuer or by or on behalf of the Holders by virtue of this Section which otherwise would have been made to the Holders will, as between the Issuer and the Holders, be deemed to be payment by the Issuer to or on account of the Designated Senior Debt, it being understood that the provisions of this Section are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of Designated Senior Debt, on the other hand. (f) Obligations of the Issuer Unconditional. Nothing contained in this Section or elsewhere in the Notes is intended to or will impair, as between the Issuer and the Holders, the obligations of the Issuer, which are absolute and unconditional, to pay to the Holders the Subordinated Obligations as and when they become due and payable in accordance with their terms, or is intended to or will affect the relative rights of the Holders and creditors of the Issuer other than the holders of the Designated Senior Debt, nor will anything herein or therein prevent any Holder from exercising all remedies otherwise permitted by applicable law upon default under the Financing, subject to the rights if any, under this Section of the holders of Designated Senior Debt in respect of cash, property or securities of the Issuer received upon the exercise of any such remedy. (g) Subordination Rights not Impaired by Acts or Omissions of the Issuer or Holders of Designated Senior Debt. No right of any present or future holders of any Designated Senior Debt to enforce subordination as provided herein will at any time or in any way be prejudiced or impaired by any act or failure to act on the part of the Issuer or by any act or failure to act by any such holder, or by any noncompliance by the Issuer with the terms of this Note, regardless of any knowledge thereof which any such holder may have or otherwise be charged with. The holders of Designated Senior Debt may extend, renew, modify or amend the terms of the Designated Senior Debt or any security therefor and release, sell or exchange such security and otherwise deal freely with the Issuer, all without affecting the liabilities and obligations of the parties to the document or the Holders. No amendment to these provisions will be effective against the holders of the Designated Senior Debt who have not consented thereto in writing. (h) Not to Prevent Events of Default. The failure to make a payment on account of the Subordinated Obligations by reason of any provision of this Section will not be construed as preventing the occurrence of an Event of Default. EX-99.(C)(2) 11 Exhibit (c) (2) CONFORMED COPY AGREEMENT AND PLAN OF MERGER dated as of July 16, 1998 between DECRANE AIRCRAFT HOLDINGS, INC. and DECRANE ACQUISITION CO. TABLE OF CONTENTS(1) ----------------- PAGE ---- ARTICLE 1 THE OFFER SECTION 1.01. The Offer ...................................................1 SECTION 1.02. Company Action...............................................2 SECTION 1.03. Directors ...................................................3 ARTICLE 2 THE MERGER SECTION 2.01. The Merger ..................................................4 SECTION 2.02. Conversion of Shares.........................................5 SECTION 2.03. Surrender and Payment........................................5 SECTION 2.04. Dissenting Shares............................................7 SECTION 2.05. Stock Options................................................7 ARTICLE 3 THE SURVIVING CORPORATION SECTION 3.01. Certificate of Incorporation.................................8 SECTION 3.02. Bylaws ......................................................8 SECTION 3.03. Directors and Officers.......................................8 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY SECTION 4.01. Corporate Existence and Power................................8 SECTION 4.02. Corporate Authorization......................................9 SECTION 4.03. Governmental Authorization...................................9 SECTION 4.04. Non-contravention............................................9 SECTION 4.05. Capitalization..............................................10 SECTION 4.06. Subsidiaries................................................10 SECTION 4.07. SEC Filings ................................................11 SECTION 4.08. Financial Statements........................................12 SECTION 4.09. Disclosure Documents........................................12 - -------- (1) The Table of Contents is not a part of this Agreement. SECTION 4.10. Absence of Certain Changes..................................13 SECTION 4.11. No Undisclosed Material Liabilities.........................15 SECTION 4.12. Litigation ................................................15 SECTION 4.13. Taxes ......................................................15 SECTION 4.14. ERISA ......................................................16 SECTION 4.15. Compliance with Laws........................................19 SECTION 4.16. Licenses and Permits........................................19 SECTION 4.17. Intellectual Property.......................................20 SECTION 4.18. Environmental Matters.......................................20 SECTION 4.19. Finders' Fees...............................................22 SECTION 4.20. Inapplicability of Certain Restrictions.....................22 SECTION 4.21. Rights Plan ................................................22 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER SECTION 5.01. Corporate Existence and Power...............................22 SECTION 5.02. Corporate Authorization.....................................22 SECTION 5.03. Governmental Authorization..................................23 SECTION 5.04. Non-contravention...........................................23 SECTION 5.05. Disclosure Documents........................................23 SECTION 5.06. Litigation ................................................24 SECTION 5.07. Finders' Fees...............................................24 SECTION 5.08. Financing ................................................24 ARTICLE 6 COVENANTS OF THE COMPANY SECTION 6.01. Conduct of the Company......................................25 SECTION 6.02. Stockholder Meeting; Proxy Material.........................27 SECTION 6.03. Access to Information.......................................28 SECTION 6.04. Other Offers................................................28 SECTION 6.05. Notices of Certain Events...................................31 ARTICLE 7 COVENANTS OF BUYER SECTION 7.01. Confidentiality.............................................31 SECTION 7.02. Voting of Shares............................................32 SECTION 7.03. Director and Officer Liability..............................32 SECTION 7.04. Employee Matters............................................33 ARTICLE 8 COVENANTS OF BUYER AND THE COMPANY SECTION 8.01. Best Efforts................................................33 SECTION 8.02. Certain Filings.............................................33 SECTION 8.03. Public Announcements........................................34 SECTION 8.04. Further Assurances..........................................34 ARTICLE 9 CONDITIONS TO THE MERGER SECTION 9.01. Conditions to the Obligations of Each Party.................34 SECTION 9.02. Conditions to the Obligations of Buyer......................35 ARTICLE 10 TERMINATION SECTION 10.01. Termination................................................35 SECTION 10.02. Effect of Termination......................................36 ARTICLE 11 MISCELLANEOUS SECTION 11.01. Notices ...................................................36 SECTION 11.02. Survival of Representations and Warranties.................38 SECTION 11.03. Amendments; No Waivers.....................................38 SECTION 11.04. Expenses...................................................39 SECTION 11.05. Successors and Assigns; Benefit............................39 SECTION 11.06. Governing Law..............................................39 SECTION 11.07. Counterparts; Effectiveness................................39 SECTION 11.08. Entire Agreement...........................................39 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER dated as of July 16, 1998 between DeCrane Aircraft Holdings, Inc., a Delaware corporation (the "Company"), and DeCrane Acquisition Co., a Delaware corporation ("Buyer"). WHEREAS, in furtherance of the acquisition of the Company by Buyer on the terms and subject to the conditions set forth in this Agreement, Buyer proposes to make an offer to purchase all of the outstanding shares of common stock of the Company at a purchase price of $23.00 per share, net to seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in this Agreement; WHEREAS, the respective Boards of Directors of the Company and Buyer have approved the offer and the merger of Buyer with the Company upon the terms and subject to the conditions set forth in this Agreement. NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, the parties hereto agree as follows: ARTICLE 1 THE OFFER SECTION 1.01. The Offer. (a) Provided that nothing shall have occurred that had the Offer referred to below been commenced, would give rise to a right to terminate the Offer pursuant to any of the conditions set forth in Annex I hereto, Buyer shall, as promptly as practicable after the date hereof, but in no event later than five business days following the public announcement of the terms of this Agreement, commence an offer (the "Offer") to purchase all of the outstanding shares of common stock, par value $.01 per share (the "Shares"), of the Company at a price of $23.00 per Share, net to the seller in cash. The Offer shall remain open for at least twenty-five business days, shall be subject to the condition that there shall have been validly tendered in accordance with the terms of the Offer prior to the expiration date of the Offer and not withdrawn a number of Shares which, together with the Shares then owned by Buyer, represents at least a majority of the Shares outstanding on a fully diluted basis (the "Minimum Condition") and to the other conditions set forth in Annex I hereto. Buyer expressly reserves the right to waive the Minimum Condition or any of the other conditions to the Offer and to make any change in the terms or conditions of the Offer; provided that no change may be made which changes the form of consideration to be paid or decreases the price per Share or the number of Shares sought in the Offer or which imposes conditions to the Offer in addition to those set forth in Annex I or which otherwise materially and adversely affects the Company or the holders of the Shares. (b) As soon as practicable on the date of commencement of the Offer, Buyer shall file with the SEC (as defined in Section 4.07) a Tender Offer Statement on Schedule 14D-1 with respect to the Offer which will contain the offer to purchase and form of the related letter of transmittal (together with any supplements or amendments thereto, collectively the "Offer Documents"). Each of Buyer and the Company agrees promptly to correct any information provided by it for use in the Offer Documents if and to the extent that it shall have become false or misleading in any material respect. Buyer agrees to take all steps necessary to cause the Offer Documents as so corrected to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. The Company and its counsel shall be given an opportunity to review and comment on the Schedule 14D-1 and each amendment and supplement thereto, in each case prior to the filing thereof with the SEC. SECTION 1.02. Company Action. (a) The Company hereby consents to the Offer and represents that its Board of Directors, at a meeting duly called and held and acting on the unanimous recommendation of a special committee of the Board of Directors of the Company comprised entirely of non-management independent directors (the "Special Committee"), has (i) unanimously determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger (as defined in Section 2.01), are fair to and in the best interest of the Company's stockholders, (ii) unanimously approved this Agreement and the transactions contemplated hereby, including the Offer and the Merger, which approval satisfies in full the requirements of the General Corporation Law of the State of Delaware (the "Delaware Law") (including Section 203 thereof) and the Certificate of Incorporation of the Company with respect to the requisite approval of a board of directors, and (iii) unanimously resolved to recommend acceptance of the Offer and approval and adoption of this Agreement and the Merger by its stockholders; provided however, that such recommendation may be withdrawn, modified or amended to the extent the Board of Directors of the Company shall have concluded in good faith on the basis of written advice from outside counsel that such action by the Board of Directors is required in order to comply with the fiduciary duties of the Board of Directors to the stockholders of the Company under applicable law. The Company further represents that Warburg Dillon Read has delivered to the Company's Board of Directors its opinion that the consideration to be paid in the Offer and the Merger is fair to the holders of Shares from a financial point of view. The Company has been advised that all of its directors and executive officers who own Shares intend either to tender their Shares pursuant to the Offer or to vote in favor of the Merger, unless its recommendation shall have been withdrawn or materially modified as permitted by Section 6.04(a). The Company will promptly furnish Buyer with a list of its stockholders, mailing labels and any available listing or computer file containing the names and addresses of all record holders of Shares and lists of securities positions of Shares held in stock depositories, in each case true and correct as of the most recent practicable date, and will provide to Buyer such additional information (including, without limitation, updated lists of stockholders, mailing labels and lists of securities positions) and such other assistance as Buyer may reasonably request in order to be able to communicate the Offer to the holders of the Shares. (b) As soon as practicable on the day that the Offer is commenced the Company will file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") which shall reflect the recommendations of the Company's Board of Directors referred to above. The Company and Buyer each agree promptly to correct any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have become false or misleading in any material respect. The Company agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. Buyer and its counsel shall be given an opportunity to review and comment on the Schedule 14D-9 prior to its being filed with the SEC. SECTION 1.03. Directors. (a) Effective upon the acceptance for payment by Buyer of any Shares, Buyer shall be entitled to designate the number of directors, rounded up to the next whole number, on the Company's Board of Directors that equals the product of (i) the total number of directors on the Company's Board of Directors (giving effect to the election of any additional directors pursuant to this Section) and (ii) the percentage that the number of Shares owned by Buyer (including Shares accepted for payment) bears to the total number of Shares outstanding, and the Company shall take all action necessary to cause Buyer's designees to be elected or appointed to the Company's Board of Directors, including, without limitation, increasing the number of directors, and seeking and accepting resignations of incumbent directors. At such times, the Company will use its best efforts to cause individuals designated by Buyer to constitute the same percentage as such individuals represent on the Company's Board of Directors of (A) each committee of the Board (other than the Special Committee or any committee of the Board established to take action under this Agreement), (B) each board of directors of each Subsidiary (as defined in Section 4.06) and (C) each committee of each such board. Notwithstanding the foregoing, until such time as Buyer acquires a majority of the outstanding Shares on a fully-diluted basis, the Company shall use its reasonable efforts to ensure that all of the members of the Board of Directors and such boards and committees as of the date hereof who are not employees of the Company shall remain members of the Board of Directors and such boards and committees until the Effective Time (as defined in Section 2.01). (b) The Company's obligations to appoint designees to the Board of Directors shall be subject to Section 14(f) of the Exchange Act (as defined in Section 4.03) and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this Section and shall include in the Schedule 14D-9 such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1 to fulfill its obligations under this Section 1.03. Buyer will supply to the Company in writing and be solely responsible for any information with respect to itself and its nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1. (c) Following the election or appointment of Buyer's designees pursuant to this Section 1.03 and until the Effective Time, the approval of a majority of the directors of the Company then in office who were not designated by Buyer (the "Continuing Directors") shall be required to authorize (and such authorization shall constitute the authorization of the Board of Directors and no other action on the part of the Company, including any action by any other director or the Company, shall be required to authorize) any termination of this Agreement by the Company, any amendment of this Agreement requiring action by the Board of Directors, and any waiver of compliance with any of the agreements or conditions contained herein for the benefit of the Company. ARTICLE 2 THE MERGER SECTION 2.01. The Merger. (a) At the Effective Time, Buyer shall be merged (the "Merger") with and into the Company in accordance with the Delaware Law and this Agreement, whereupon the separate existence of Buyer shall cease, and the Company shall be the surviving corporation (the "Surviving Corporation"). (b) As soon as practicable after satisfaction or, to the extent permitted hereunder, waiver of all conditions to the Merger, the Company and Buyer will file a certificate of merger with the Secretary of State of the State of Delaware and make all other filings or recordings required by Delaware Law in connection with the Merger. The Merger shall become effective at such time as the certificate of merger is duly filed with the Secretary of State of the State of Delaware or at such later time as is specified in the certificate of merger (the "Effective Time"). (c) From and after the Effective Time, the Surviving Corporation shall possess all the rights, privileges, powers and franchises and be subject to all of the restrictions, disabilities and duties of the Company and Buyer, all as provided under Delaware Law. SECTION 2.02. Conversion of Shares. At the Effective Time: (a) each Share held by the Company as treasury stock or owned by Buyer or any subsidiary of Buyer immediately prior to the Effective Time shall be canceled, and no payment shall be made with respect thereto; (b) each share of common stock of Buyer outstanding immediately prior to the Effective Time shall be converted into and become one share of common stock of the Surviving Corporation with the same rights, powers and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation; and (c) each Share outstanding immediately prior to the Effective Time shall, except as otherwise provided in Section 2.02(a) or as provided in Section 2.04 with respect to Shares as to which appraisal rights have been perfected, be converted into the right to receive $23.00 in cash or any higher price paid for each Share in the Offer, without interest (the "Merger Consideration"). SECTION 2.03. Surrender and Payment. (a) Prior to the Effective Time, Buyer shall appoint a national bank or trust company (or a subsidiary thereof) reasonably acceptable to the Company to act as exchange agent (the "Exchange Agent") for the purpose of exchanging certificates representing Shares for the Merger Consideration. Buyer will make available to the Exchange Agent, as needed, the Merger Consideration to be paid in respect of the Shares. For purposes of determining the Merger Consideration to be made available, Buyer shall assume that no holder of Shares will perfect his right to appraisal of his Shares. Promptly after the Effective Time, Buyer will send, or will cause the Exchange Agent to send, to each holder of Shares at the Effective Time a letter of transmittal for use in such exchange (which shall specify that the delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery of the certificates representing Shares to the Exchange Agent). (b) Each holder of Shares that have been converted into the right to receive the Merger Consideration, upon surrender to the Exchange Agent of a certificate or certificates representing such Shares, together with a properly completed letter of transmittal covering such Shares, will be entitled promptly upon such surrender to receive the Merger Consideration payable in respect of such Shares. Until so surrendered, each such certificate shall, after the Effective Time, represent for all purposes, only the right to receive such Merger Consideration. (c) If any portion of the Merger Consideration is to be paid to a Person other than the registered holder of the Shares represented by the certificate or certificates surrendered in exchange therefor, it shall be a condition to such payment that the certificate or certificates so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the Person requesting such payment shall pay to the Exchange Agent any transfer or other taxes required as a result of such payment to a Person other than the registered holder of such Shares or establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. For purposes of this Agreement, "Person" means an individual, a corporation, a limited liability company, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or any agency or instrumentality thereof. (d) After the Effective Time, there shall be no further registration of transfers of Shares. If, after the Effective Time, certificates representing Shares are presented to the Surviving Corporation, they shall be canceled and exchanged for the consideration provided for, and in accordance with the procedures set forth, in this Article 2. (e) Any portion of the Merger Consideration made available to the Exchange Agent pursuant to Section 2.03(a) that remains unclaimed by the holders of Shares one year after the Effective Time shall be returned to the Surviving Corporation, upon demand, and any such holder who has not exchanged his Shares for the Merger Consideration in accordance with this Section prior to that time shall thereafter look only to the Surviving Corporation for payment of the Merger Consideration in respect of his Shares. Notwithstanding the foregoing, Buyer shall not be liable to any holder of Shares for any amount paid to a public official pursuant to applicable abandoned property laws. Any amounts remaining unclaimed by holders of Shares two years after the Effective Time (or such earlier date immediately prior to such time as such amounts would otherwise escheat to or become property of any governmental entity) shall, to the extent permitted by applicable law, become the property of the Surviving Corporation free and clear of any claims or interest of any Person previously entitled thereto. (f) Any portion of the Merger Consideration made available to the Exchange Agent pursuant to Section 2.03(a) to pay for Shares for which appraisal rights have been perfected shall be returned to the Surviving Corporation, upon demand. (g) If any certificate representing Shares shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen or destroyed and, if required by Buyer, the posting by such Person of a bond in such reasonable amount as Buyer may direct as indemnity against any claim that may be made against it with respect to such certificate, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed certificate the Merger Consideration. SECTION 2.04. Dissenting Shares. Notwithstanding Section 2.02, Shares outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has demanded appraisal for such Shares in accordance with Delaware Law shall not be converted into a right to receive the Merger Consideration, unless such holder fails to perfect or withdraws or otherwise loses his right to appraisal. If after the Effective Time such holder fails to perfect or withdraws or loses his right to appraisal, such Shares shall be treated as if they had been converted as of the Effective Time into a right to receive the Merger Consideration. The Company shall give Buyer prompt notice of any demands received by the Company for appraisal of Shares prior to the Effective Time, and Buyer shall have the right to participate in all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Buyer, make any payment with respect to, or settle or offer to settle, any such demands. SECTION 2.05. Stock Options. (a) At or immediately prior to the Effective Time, each outstanding employee stock option to purchase Shares granted under any employee stock option or compensation plan or arrangement of the Company shall be canceled, and each holder of any such option, whether or not then vested or exercisable, shall be paid by the Company promptly after the Effective Time for each such option an amount determined by multiplying (i) the excess, if any, of $23.00 per Share over the applicable exercise price of such option by (ii) the number of Shares such holder could have purchased (assuming full vesting of all options) had such holder exercised such option in full immediately prior to the Effective Time. (b) Prior to the Effective Time, the Company shall use its reasonable best efforts (i) to obtain any consents from holders of options to purchase Shares granted under the Company's stock option or compensation plans or arrangements and (ii) make any amendments to the terms of such stock option or compensation plans or arrangements that, in the case of either clauses 2.05(b)(i) or 2.05(b)(ii), are necessary to give effect to the transactions contemplated by Section 2.05(a). Notwithstanding any other provision of this Section, payment may be withheld in respect of any employee stock option until necessary consents are obtained. ARTICLE 3 THE SURVIVING CORPORATION SECTION 3.01. Certificate of Incorporation. The certificate of incorporation of the Company in effect at the Effective Time shall be the certificate of incorporation of the Surviving Corporation until amended in accordance with applicable law. SECTION 3.02. Bylaws. The bylaws of Buyer in effect at the Effective Time shall be the bylaws of the Surviving Corporation until amended in accordance with applicable law. SECTION 3.03. Directors and Officers. From and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with applicable law, (a) the directors of Buyer at the Effective Time shall be the directors of the Surviving Corporation, and (b) the officers of the Company (including the chief executive officer) at the Effective Time shall be the officers of the Surviving Corporation. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Buyer as of the date hereof and as of the Effective Time that: SECTION 4.01. Corporate Existence and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. The Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except for those jurisdictions where the failure to be so qualified would not, individually or in the aggregate, have a material adverse effect on the condition (financial or otherwise), business, assets, results of operations or, insofar as can reasonably be foreseen, prospects of the Company and the Subsidiaries taken as a whole ("Material Adverse Effect"). The Company has heretofore delivered to Buyer true and complete copies of the Company's certificate of incorporation and bylaws as currently in effect. SECTION 4.02. Corporate Authorization. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby are within the Company's corporate powers and, except for any required approval by the Company's stockholders in connection with the consummation of the Merger, have been duly authorized by all necessary corporate action. This Agreement constitutes a valid and binding agreement of the Company. SECTION 4.03. Governmental Authorization. The execution, delivery and performance by the Company of this Agreement and the consummation of the Merger by the Company require no action by or in respect of, or filing with, any governmental body, agency, official or authority other than (a) the filing of a certificate of merger in accordance with Delaware Law; (b) compliance with any applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"); (c) compliance with any applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the "Exchange Act"); and (d) compliance with any applicable antitrust laws and regulations in Switzerland and the UK. SECTION 4.04. Non-contravention. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby do not and will not (a) contravene or conflict with the certificate of incorporation or bylaws of the Company, (b) assuming compliance with the matters referred to in Section 4.03, contravene or conflict with or constitute a violation of any provision of any law, regulation, judgment, injunction, order or decree binding upon or applicable to the Company or any Subsidiary, (c) except as set forth on Schedule 4.04 attached hereto, constitute a default under or give rise to a right of termination, cancellation or acceleration of any right or obligation of the Company or any Subsidiary or to a loss of any benefit to which the Company or any Subsidiary is entitled under any provision of any agreement, contract or other instrument binding upon the Company or any Subsidiary or any license, franchise, permit or other similar authorization held by the Company or any Subsidiary, or (d) except as set forth on Schedule 4.04 attached hereto, result in the creation or imposition of any Lien on any asset of the Company or any Subsidiary, except in the case of clauses (b), (c) and (d), to the extent that any such contravention, conflict, violation, failure to obtain any such consent or other action, default, right, loss or Lien would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect. For purposes of this Agreement, "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. SECTION 4.05. Capitalization. The authorized capital stock of the Company consists of 9,924,950 shares of common stock, par value $.01 per share (the "Common Stock") and 18,309,018 shares of preferred stock (the "Preferred Stock"). As of July 15, 1998, there were outstanding 7,524,740 shares of Common Stock and no shares of Preferred Stock and employee stock options to purchase an aggregate of 536,260 Shares (of which options to purchase an aggregate of 215,204 Shares were exercisable). All outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable. Except as set forth in this Section and except for changes since July 15, 1998 resulting from the exercise of employee stock options outstanding on such date, there are outstanding (a) no shares of capital stock or other voting securities of the Company, (b) no securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company, and (c) no options or other rights to acquire from the Company or any Subsidiary, and no obligation of the Company or any Subsidiary to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company (the items in clauses 4.05(a), 4.05(b) and 4.05(c) being referred to collectively as the "Company Securities"). There are no outstanding obligations of the Company or any Subsidiary to repurchase, redeem or otherwise acquire any Company Securities. SECTION 4.06. Subsidiaries. (a) Each Subsidiary is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted, except to the extent the failure to have such licenses, authorizations, consents and approvals would not, in the aggregate, have a Material Adverse Effect, and, except as set forth on Schedule 4.06 attached hereto, is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except for those jurisdictions where failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect. For purposes of this Agreement, "Subsidiary" means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are directly or indirectly owned by the Company. All Subsidiaries and their respective jurisdictions of incorporation are identified in the Company's annual report on Form 10-K for the fiscal year ended December 31, 1997 (the "Company 10-K") or on Schedule 4.06 attached hereto. (b) Except as set forth on Schedule 4.06 attached hereto, all of the outstanding capital stock of, or other ownership interests in, each Subsidiary, is owned by the Company, directly or indirectly, free and clear of any Lien (other than Liens imposed by the lenders under the Company's bank credit facilities) and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other ownership interests), except such limitations as may be imposed by applicable securities laws. There are no outstanding (i) securities of the Company or any Subsidiary convertible into or exchangeable for shares of capital stock or other voting securities or ownership interests in any Subsidiary, and (ii) options or other rights to acquire from the Company or any Subsidiary, and no other obligation of the Company or any Subsidiary to issue, any capital stock, voting securities or other ownership interests in, or any securities convertible into or exchangeable for any capital stock, voting securities or ownership interests in, any Subsidiary (the items in clauses 4.06(b)(i) and 4.06(b)(ii) being referred to collectively as the "Subsidiary Securities"). There are no outstanding obligations of the Company or any Subsidiary to repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities. SECTION 4.07. SEC Filings. (a) The Company has delivered to Buyer (i) the Company 10-K, (ii) its quarterly report on Form 10-Q for its fiscal quarter ended March 31, 1998 (the "Company 10-Q"), (iii) its proxy or information statements relating to meetings of, or actions taken without a meeting by, the stockholders of the Company since January 1, 1997, and (iv) all of its other reports, statements, schedules and registration statements filed with the Securities and Exchange Commission (the "SEC") since January 1, 1997. (b) As of its filing date, each such report or statement filed pursuant to the Exchange Act did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading except for such statements or omissions as may have been modified by subsequent filings pursuant to the Exchange Act. (c) Each such registration statement, as amended or supplemented, if applicable, filed pursuant to the Securities Act of 1933, as amended (the "Securities Act"), as of the date such statement or amendment became effective did not contain any 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 except for such statements or omissions as may have been modified by subsequent filings pursuant to the Securities Act. SECTION 4.08. Financial Statements. The audited consolidated financial statements and unaudited consolidated interim financial statements of the Company included in the Company 10-K and the quarterly report on Form 10-Q referred to in Section 4.07 fairly present in all material respects, in conformity with generally accepted accounting principles applied on a consistent basis (except as may be indicated in the notes thereto and except as permitted by Form 10-Q under the Exchange Act with respect to the unaudited consolidated interim financial statements), the consolidated financial position of the Company and its consolidated subsidiaries as of the dates thereof and their consolidated results of operations and changes in cash flows for the periods then ended (subject to normal year-end adjustments in the case of any unaudited interim financial statements). For purposes of this Agreement, "Balance Sheet" means the consolidated balance sheet of the Company as of December 31, 1997 set forth in the Company 10-K and "Balance Sheet Date" means December 31, 1997. SECTION 4.09. Disclosure Documents. (a) Each document required to be filed by the Company with the SEC in connection with the transactions contemplated by this Agreement (the "Company Disclosure Documents"), including, without limitation, the Schedule 14D-9, the proxy or information statement of the Company containing information required by Regulation 14A under the Exchange Act (the "Company Proxy Statement") and, if applicable, Rule 13e-3 and Schedule 13E-3 under the Exchange Act, if any, to be filed with the SEC in connection with the Offer and/or the Merger, and any amendments or supplements thereto will, when filed, comply as to form in all material respects with the applicable requirements of the Exchange Act, except that no representation or warranty is made hereby with respect to any information supplied by Buyer expressly for inclusion in the Company Disclosure Documents. (b) At the time the Company Proxy Statement or any amendment or supplement thereto is first mailed to stockholders of the Company, at the time such stockholders vote on adoption of this Agreement and at the Effective Time, the Company Proxy Statement, as supplemented or amended, if applicable, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. At the time of the filing of any Company Disclosure Document other than the Company Proxy Statement and at the time of any distribution thereof, such Company Disclosure Document will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties contained in this Section 4.09(b) will not apply to statements or omissions included in the Company Disclosure Documents based upon information furnished to the Company in writing by Buyer specifically for use therein. (c) The information with respect to the Company or any Subsidiary that the Company furnishes to Buyer in writing specifically for use in the Offer Documents will not, at the time of the filing thereof, at the time of any distribution thereof and at the time of the consummation of the Offer, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. SECTION 4.10. Absence of Certain Changes. Except as set forth in Schedule 4.10 hereto, in the Company 10-Q, or in the Prospectus included in Amendment No. 1 to Registration Statement on Form S-1, File No.333-47457 filed on March 11, 1998 (the "Prospectus"), since the Balance Sheet Date, the Company and Subsidiaries have conducted their business in the ordinary course consistent with past practice and there has not been: (a) any event, occurrence or development of a state of circumstances or facts which has had or reasonably would be expected to have a Material Adverse Effect; (b) any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company, or any repurchase, redemption or other acquisition by the Company or any Subsidiary of any outstanding shares of capital stock or other securities of, or other ownership interests in, the Company or any Subsidiary; (c) any amendment of any material term of any outstanding security of the Company or any Subsidiary; (d) any incurrence, assumption or guarantee by the Company or any Subsidiary of any indebtedness for borrowed money other than in the ordinary course of business and in amounts and on terms consistent with past practices; (e) any creation or assumption by the Company or any Subsidiary of any Lien on any material asset which would materially impair the use thereof by the Company other than in the ordinary course of business consistent with past practices; (f) any making of any loan, advance or capital contributions to or investment in any Person other than loans, advances or capital contributions to or investments in wholly-owned Subsidiaries made in the ordinary course of business consistent with past practices; (g) any damage, destruction or other casualty loss (whether or not covered by insurance) affecting the business or assets of the Company or any Subsidiary which, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect; (h) any transaction or commitment made, or any contract or agreement entered into, by the Company or any Subsidiary relating to its assets or business (including the acquisition or disposition of any assets) or any relinquishment by the Company or any Subsidiary of any contract or other right, in either case, material to the Company and the Subsidiaries taken as a whole, other than transactions and commitments in the ordinary course of business consistent with past practice and those contemplated by this Agreement; (i) any change in any method of accounting or accounting practice by the Company or any Subsidiary, except for any such change required by reason of a concurrent change in generally accepted accounting principles; (j) except as set forth on Schedule 4.10(j), any (i) grant of any severance or termination pay to any director or officer of the Company or any Subsidiary, (ii) entering into of any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any director or officer of the Company or any Subsidiary, (iii) increase in benefits payable under any existing severance or termination pay policies or employment agreements or (iv) increase in compensation, bonus or other benefits payable to directors or officers of the Company or any Subsidiary, other than in the ordinary course of business consistent with past practice; (k) any labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representative thereof to organize any employees of the Company or any Subsidiary, which employees were not subject to a collective bargaining agreement at the Balance Sheet Date, or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to such employees; or (l) any cancellation of any licenses, sublicenses, franchises, permits or agreements to which the Company or any Subsidiary is a party, or any notification to the Company or any Subsidiary that any party to any such arrangements intends to cancel or not renew such arrangements beyond its expiration date as in effect on the date hereof, which cancellation or notification, individually or in the aggregate, has had or reasonably would be expected to have a Material Adverse Effect. SECTION 4.11. No Undisclosed Material Liabilities. To the Company's knowledge, there are no liabilities of the Company or any Subsidiary of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances which would reasonably be expected to result in such a liability, other than: (a) liabilities disclosed or provided for in the Balance Sheet; (b) liabilities incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date or in connection with the acquisition by the Company of Avtech Corporation and Dettmers Industries, Inc., which, in each case, would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect; and (c) liabilities under this Agreement. SECTION 4.12. Litigation. Except as set forth in Schedule 4.12 and the Prospectus, to the knowledge of the Company there is no action, suit, investigation or proceeding pending against, or threatened against or affecting, the Company or any Subsidiary or any of their respective properties before any court or arbitrator or any governmental body, agency or official which, if determined or resolved adversely to the Company or any Subsidiary in accordance with the plaintiff's demands, would reasonably be expected to have a Material Adverse Effect or which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the Offer or the Merger or any of the other transactions contemplated hereby. SECTION 4.13. Taxes. (a) Except as set forth in Schedule 4.13 attached hereto, and except where the failure to file such Return has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, all tax returns, statements, reports and forms (including estimated tax returns and reports and information returns and reports) required to be filed with any taxing authority with respect to any tax period (or portion thereof) ending on or before the Effective Time (a "Pre-Closing Tax Period") by or on behalf of the Company or any Subsidiary of the Company (collectively, the "Returns"), were filed when due (including any applicable extension periods) in accordance with all applicable laws. (b) Except as set forth in Schedule 4.13, the Company and its Subsidiaries have timely paid, or withheld and remitted to the appropriate taxing authority, all taxes shown as due and payable on the Returns that have been filed, except where the failure to so pay or withhold and remit has not had and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. (c) The charges, accruals and reserves for taxes with respect to the Company and any Subsidiary for any Pre-Closing Tax Period (including any Pre-Closing Tax Period for which no Return has yet been filed) reflected on the books of the Company and its Subsidiaries (excluding any provision for deferred income taxes) are adequate to cover such taxes. (d) Except as set forth in Schedule 4.13, there is no material claim (including under any indemnification or tax-sharing agreement), audit, action, suit, proceeding, or investigation now pending or threatened in writing against or in respect of any tax or "tax asset" of the Company or any Subsidiary. For purposes of this Section 4.13, the term "tax asset" shall include any net operating loss, net capital loss, investment tax credit, foreign tax credit, charitable deduction or any other credit or tax attribute which could reduce taxes. (e) There are no material Liens for taxes upon the assets of the Company or its Subsidiaries except for Liens for current taxes not yet due. (f) Neither the Company nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Internal Revenue Code of 1986, as amended (the "Code") during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. SECTION 4.14. ERISA. (a) The Company has provided Buyer with a list identifying each "employee benefit plan", as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), which (i) is subject to any provision of ERISA and (ii) is maintained, administered or contributed to by the Company or any affiliate (as defined below) and covers any employee or former employee of the Company or any affiliate or under which the Company or any affiliate has any liability. Copies of such plans (and, if applicable, related trust agreements) and all amendments thereto and written interpretations thereof have been furnished to Buyer together with (A) the three most recent annual reports (Form 5500 including, if applicable, Schedule B thereto) prepared in connection with any such plan and (B) the most recent actuarial valuation report prepared in connection with any such plan. Such plans are referred to collectively herein as the "Employee Plans". For purposes of this Section, "affiliate" of any Person means any other Person which, together with such Person, would be treated as a single employer under Section 414 of the Code. The only Employee Plans which individually or collectively would constitute an "employee pension benefit plan" as defined in Section 3(2) of ERISA (the "Pension Plans") are identified as such in the list referred to above. The Company has provided Buyer with complete age, salary, service and related data as of a recent date for employees and former employees of the Company and any affiliate covered under the Pension Plans. (b) Except as otherwise indicated on Schedule 4.14(b), no Employee Plan (i) constitutes a "multiemployer plan", as defined in Section 3(37) of ERISA; (ii) is maintained in connection with any trust described in Section 501(c)(9) of the Code; or (iii) is subject to Title IV of ERISA. The Company knows of no "reportable event", within the meaning of Section 4043 of ERISA, and no event described in Section 4041, 4042, 4062 or 4063 of ERISA has occurred in connection with any Employee Plan. Neither the Company nor any of its affiliates has incurred any material liability under Title IV of ERISA arising in connection with the termination of, or complete or partial withdrawal from, any plan covered or previously covered by Title IV of ERISA. Nothing done or omitted to be done and no transaction or holding of any asset under or in connection with any Employee Plan has or will make the Company or any Subsidiary, or any officer or director of the Company or any Subsidiary, subject to any liability under Title I of ERISA or liable for any tax pursuant to Section 4975 of the Code. (c) Each Employee Plan which is intended to be qualified under Section 401(a) of the Code is so qualified and has been so qualified during the period from its adoption to date, and each trust forming a part thereof is exempt from tax pursuant to Section 501(a) of the Code. The Company has furnished to the Buyer copies of the most recent Internal Revenue Service determination letters with respect to each such Plan. Each Employee Plan has been maintained in substantial compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations, including but not limited to ERISA and the Code, which are applicable to such Plan. (d) There is no contract, agreement, plan or arrangement covering any employee or former employee of the Company or any affiliate that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Sections 162(a)(1) or 280G of the Code. (e) The Company has provided Buyer with a list of each employment, severance or other similar contract, arrangement or policy and each plan or arrangement (written or oral) providing for insurance coverage (including any self-insured arrangements), workers' compensation, disability benefits, supplemental unemployment benefits, vacation benefits, retirement benefits or for deferred compensation, profit-sharing, bonuses, stock options, stock appreciation or other forms of incentive compensation or post-retirement insurance, compensation or benefits which (i) is not an Employee Plan, (ii) is entered into, maintained or contributed to, as the case may be, by the Company or any of its affiliates and (iii) covers any employee or former employee of the Company or any of its affiliates. Such contracts, plans and arrangements as are described above, copies or descriptions of all of which have been furnished previously to Buyer are referred to collectively herein as the "Benefit Arrangements". Each Benefit Arrangement has been maintained in substantial compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations that are applicable to such Benefit Arrangement. (f) The Company does not provide post-employment health or medical benefits for former employees of the Company and its affiliates except as required to avoid imposition of tax under Section 4980B of the Code. No condition exists that would prevent the Company or any Subsidiary from amending or terminating any Employee Plan or Benefit Arrangement providing health or medical benefits in respect of any active employee of the Company or any Subsidiary other than limitations imposed under the terms of a collective bargaining agreement. (g) Except as disclosed in writing to Buyer prior to the date hereof, there has been no amendment to, written interpretation or announcement (whether or not written) by the Company or any of its affiliates relating to, or change in employee participation or coverage under, any Employee Plan or Benefit Arrangement which would increase materially the expense of maintaining such Employee Plan or Benefit Arrangement above the level of the expense incurred in respect thereof for the fiscal year ended on the Balance Sheet Date. (h) Except as set forth in Schedule 4.14(h), neither the Company nor any Subsidiary is a party to or subject to any union contract or any employment contract or arrangement providing for annual future compensation of $150,000 or more with any officer, consultant, director or employee. (i) Schedule 4.14(i) identifies each International Plan (as defined below). The Company has furnished to Buyer copies of each International Plan. Each International Plan has been maintained in substantial compliance with its terms and with the requirements prescribed by any and all applicable statutes, orders, rules and regulations (including any special provisions relating to qualified plans where such Plan was intended to so qualify) and has been maintained in good standing with applicable regulatory authorities. There has been no amendment to, written interpretation of or announcement (whether or not written) by the Company or any Subsidiary relating to, or change in employee participation or coverage under, any International Plan that would increase materially the expense of maintaining such International Plan above the level of expense incurred in respect thereof for the most recent fiscal year ended prior to the date hereof. "International Plan" means any employment, severance or similar contract or arrangement (whether or not written) or any plan, policy, fund, program or arrangement or contract providing for severance, insurance coverage (including any self-insured arrangements), workers' compensation, disability benefits, supplemental unemployment benefits, vacation benefits, pension or retirement benefits or for deferred compensation, profit-sharing, bonuses, stock options, stock appreciation rights or other forms of incentive compensation or post-retirement insurance, compensation or benefits that (i) is not an Employee Plan or a Benefit Arrangement, (ii) is entered into, maintained, administered or contributed to by the Company or any Subsidiary and (iii) covers any employee or former employee of the Company or any Subsidiary. SECTION 4.15. Compliance with Laws. To the Company's knowledge, neither the Company nor any Subsidiary is in violation of, or has since January 1, 1997 violated, and to the knowledge of the Company none is under investigation with respect to or has been threatened to be charged with or given notice of any violation of, any applicable law, rule, regulation, judgment, injunction, order or decree, except for violations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. SECTION 4.16. Licenses and Permits. The Company has previously delivered to Buyer true and correct copies of each material license, franchise, permit, certificate, approval or other similar authorization affecting, or relating in any way to, the assets or business of the Company and its Subsidiaries (the "Permits") together with the name of the government agency or entity issuing such Permit. Except as set forth on the Schedule 4.16, (i) the Permits are valid and in full force and effect, (ii) neither the Company nor any Subsidiary is in material default under, and no condition exists that with notice or lapse of time or both would constitute a material default under, the Permits and (iii) none of the Permits will be terminated or impaired or become terminable, in whole or in part, as a result of the transactions contemplated hereby. SECTION 4.17. Intellectual Property. (a) The Company and the Subsidiaries own or possess adequate licenses or other rights to use all Intellectual Property Rights necessary to conduct the business now operated by them, except where the failure to own or possess such licenses or rights has not had and would not be reasonably likely to have a Material Adverse Effect. To the knowledge of the Company, the Intellectual Property Rights of the Company and the Subsidiaries do not conflict with or infringe upon any Intellectual Property Rights of others to the extent that, if sustained, such conflict or infringement has had and would be reasonably likely to have a Material Adverse Effect. For purposes of this Agreement, "Intellectual Property Right" means any trademark, service mark, trade name, mask work, copyright, patent, software license, other data base, invention, trade secret, know-how (including any registrations or applications for registration of any of the foregoing) or any other similar type of proprietary intellectual property right. (b) The Company's data processing systems will recognize, manage and manipulate data with respect to single-century formulas, multi-century formulas and leap year formulas involving dates without giving rise to any invalid or incorrect date whether used before, during or after the calendar year 2000. SECTION 4.18. Environmental Matters. (a) Except as set forth on Schedule 4.18 hereto and in the Prospectus: (i) no notice, notification, demand, request for information, citation, summons, complaint or order has been received by, or, to the knowledge of the Company or any Subsidiary, is pending or threatened by any Person against, the Company or any Subsidiary nor has any material penalty been assessed against the Company or any Subsidiary with respect to any (A) alleged violation of any Environmental Law or liability thereunder, (B) alleged failure to have any permit, certificate, license, approval, registration or authorization required under any Environmental Law, (C) generation, treatment, storage, recycling, transportation or disposal of any Hazardous Substance or (D) discharge, emission or release of any Hazardous Substance; (ii) no Hazardous Substance has been discharged, emitted, released or is present at any property now or previously owned, leased or operated by the Company or any Subsidiary, which circumstances, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect; and (iii) there are no Environmental Liabilities that have had or may reasonably be expected to have a Material Adverse Effect. (b) There has been no environmental investigation, study, audit, test, review or other analysis conducted of which the Company has knowledge in relation to the current or prior business of the Company or any property or facility now or previously owned or leased by the Company or any Subsidiary which has not been delivered to Buyer at least five days prior to the date hereof. (c) Neither the Company nor any Subsidiary owns or leases or has owned or leased any real property in New Jersey or Connecticut. (d) For purposes of this Section, the following terms shall have the meanings set forth below: (i) "Company" and "Subsidiary" shall include any entity which is, in whole or in part, a predecessor of the Company or any Subsidiary; (ii) "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, codes, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and governmental restrictions, relating to human health, the environment or to emissions, discharges or releases of pollutants, contaminants or other hazardous substances or wastes into the environment, including without limitation ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants or other hazardous substances or wastes or the clean-up or other remediation thereof; (iii) "Environmental Liabilities" means any and all liabilities of or relating to the Company and any Subsidiary, whether contingent or fixed, actual or potential, known or unknown, which (i) arise under or relate to matters covered by Environmental Laws and (ii) relate to actions occurring or conditions existing on or prior to the Effective Time; and (iv) "Hazardous Substances" means any toxic, radioactive, corrosive or otherwise hazardous substance, including petroleum, its derivatives, by-products and other hydrocarbons, or any substance having any constituent elements displaying any of the foregoing characteristics, which in any event is regulated under Environmental Laws. SECTION 4.19. Finders' Fees. Except for Warburg Dillon Read LLC a copy of whose engagement agreement has been provided to Buyer, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf, of the Company or any Subsidiary who might be entitled to any fee or commission from Buyer or any of its affiliates or the Company upon consummation of the transactions contemplated by this Agreement or any alternative transaction. SECTION 4.20. Inapplicability of Certain Restrictions. Section 203 of the Delaware Law does not in any way restrict the acquisition of Shares pursuant to the Offer, the consummation of the Merger or the other transactions contemplated hereby. The adoption of this Agreement by the affirmative vote of the holders of Shares entitling such holders to exercise at least a majority of the voting power of the Shares is the only vote of holders of any class or series of the capital stock of the Company required to adopt this Agreement, or to approve the Merger or any of the other transactions contemplated hereby and no higher or additional vote is required pursuant to of the Company's Certificate of Incorporation or otherwise. SECTION 4.21. Rights Plan. The Company has not entered into, and its Board of Directors has not adopted or authorized the adoption of, a shareholder rights or similar agreement, other than any such agreement which was terminated prior to December 31, 1997 and which is of no further force or effect. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to the Company as of the date hereof and as of the Effective Time that: SECTION 5.01. Corporate Existence and Power. Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. Since the date of its incorporation, Buyer has not engaged in any activities other than in connection with or as contemplated by this Agreement or in connection with arranging any financing required to consummate the transactions contemplated hereby. SECTION 5.02. Corporate Authorization. The execution, delivery and performance by Buyer of this Agreement and the consummation by Buyer of the transactions contemplated hereby are within the corporate powers of Buyer and have been duly authorized by all necessary corporate and stockholder action. This Agreement constitutes a valid and binding agreement of Buyer. SECTION 5.03. Governmental Authorization. The execution, delivery and performance by Buyer of this Agreement and the consummation by Buyer of the transactions contemplated by this Agreement require no action by or in respect of, or filing with, any governmental body, agency, official or authority other than (a) the filing of a certificate of merger in accordance with Delaware Law, (b) compliance with any applicable requirements of the HSR Act; (c) compliance with any applicable requirements of the Exchange Act; and (d) compliance with any applicable antitrust laws and regulations in Switzerland and the U.K. SECTION 5.04. Non-contravention. The execution, delivery and performance by Buyer of this Agreement and the consummation by Buyer of the transactions contemplated hereby do not and will not (a) contravene or conflict with the certificate of incorporation or bylaws of Buyer, (b) assuming compliance with the matters referred to in Section 5.03, contravene or conflict with any provision of law, regulation, judgment, order or decree binding upon Buyer, or (c) constitute a default under or give rise to any right of termination, cancellation or acceleration of any right or obligation of Buyer or to a loss of any benefit to which Buyer is entitled under any agreement, contract or other instrument binding upon Buyer. SECTION 5.05. Disclosure Documents. (a) The information with respect to Buyer and its subsidiaries that Buyer furnishes to the Company in writing specifically for use in any Company Disclosure Document will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading (i) in the case of the Company Proxy Statement at the time the Company Proxy Statement or any amendment or supplement thereto is first mailed to stockholders of the Company, at the time the stockholders vote on adoption of this Agreement and at the Effective Time, and (ii) in the case of any Company Disclosure Document other than the Company Proxy Statement, at the time of the filing thereof and at the time of any distribution thereof. (b) The Offer Documents, when filed, will comply as to form in all material respects with the applicable requirements of the Exchange Act and will not at the time of the filing thereof, at the time of any distribution thereof or at the time of consummation of the Offer, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading, provided, that this representation and warranty will not apply to statements or omissions in the Offer Documents based upon information furnished to Buyer in writing by the Company specifically for use therein. SECTION 5.06. Litigation. To the knowledge of Buyer no action, suit, investigation or proceeding pending against, or threatened against or affecting, Buyer or any of its properties before any court or arbitrator or any governmental body, agency or official, which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the Offer or the Merger or any of the other transactions contemplated hereby. SECTION 5.07. Finders' Fees. Except for Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC"), whose fees will be paid by Buyer, there is no investment banker, broker, finder or other intermediary who might be entitled to any fee or commission from the Company or any of its affiliates upon consummation of the transactions contemplated by this Agreement. SECTION 5.08. Financing. The Company has received copies of (a) a commitment letter dated July 16, 1998 from DLJ Merchant Banking Partners II, L.P. and certain related funds pursuant to which each of the foregoing has committed, subject to the terms and conditions set forth therein, to purchase equity securities of DeCrane Holdings Co., the indirect, newly formed parent company of Buyer for an aggregate amount equal to $65,000,000, (b)(i) a letter dated July 16, 1998 from DLJ Bridge Finance, Inc. ("DLJ Bridge Fund") pursuant to which DLJ Bridge Fund has committed, subject to the terms and conditions set forth therein, to purchase Senior Pay-In-Kind Notes of DeCrane Holdings Co., a subsidiary of DeCrane Holdings Co. and the direct, newly formed parent company of Buyer and Senior Subordinated Notes of DeCrane Finance Co. in an aggregate amount of $134,000,000, and (ii) a commitment letter dated July 16, 1998 from DLJ Capital Funding, Inc. ("DLJ Senior Debt Fund") pursuant to which DLJ Senior Debt Fund has committed, subject to the terms and conditions set forth therein, to enter into one or more credit agreements providing for loans to DeCrane Finance Co. of up to $130,000,000. As used in this Agreement, the aforementioned entities shall hereinafter be referred to as the "Financing Entities." The aforementioned commitments shall be referred to as the "Financing Agreements" and the financing to be provided thereunder shall be referred to as the "Financing." The aggregate proceeds of the Financing are in an amount sufficient to pay when due the aggregate purchase price for the Shares to be purchased in the Offer and the Merger Consideration, to repay all of the Company's and its Subsidiaries' indebtedness together with any interest, premium or penalties payable in connection therewith, to provide a reasonable amount of working capital financing and to pay related fees and expenses (such amounts, the "Required Amounts"). As of the date hereof, none of the commitment letters relating to the Financing Agreements referred to above has been withdrawn and Buyer does not know of any facts or circumstances that may reasonably be expected to result in any of the conditions set forth in the commitment letters relating to the Financing Agreements not being satisfied. ARTICLE 6 COVENANTS OF THE COMPANY SECTION 6.01. Conduct of the Company. Except as expressly required by this Agreement or with the prior consent of Buyer, from the date hereof until the Effective Time, the Company and the Subsidiaries shall conduct their business in all material respects in the ordinary course consistent with past practice and shall use their reasonable best efforts to preserve substantially intact their business organizations and relationships with third parties that are material to the Company and the Subsidiaries taken as a whole and to keep available the services of their present officers and employees. Without limiting the generality of the foregoing, from the date hereof until the Effective Time the Company will not, and will cause its Subsidiaries not to: (a) adopt or propose any change in its certificate of incorporation or bylaws; (b) except pursuant to existing agreements or arrangements (i) acquire (by merger, consolidation or acquisition of stock or assets) any material corporation, partnership or other business organization or division thereof, or sell, lease or otherwise dispose of a material subsidiary or a material amount of assets or securities; (ii) make any investment other than in readily marketable securities in an amount in excess of $750,000 in the aggregate whether by purchase of stock or securities, contributions to capital or any property transfer, or purchase for an amount in excess of $750,000 in the aggregate, any property or assets of any other individual or entity; (iii) waive, release, grant, or transfer any rights of value material to the Company and the Subsidiaries taken as a whole; (iv) modify or change in any material respect any existing license, lease, contract, or other document material to the Company and its Subsidiaries, taken as a whole; (v) except to refund or refinance commercial paper, incur, assume or prepay an amount of long-term or short-term debt in excess of $5,000,000 in the aggregate; (vi) assume, guarantee, endorse (other than endorsements of negotiable instruments in the ordinary course of business) or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person (other than any Subsidiary) which, are in excess of $500,000 in the aggregate; (vii) make any loans or advances to any other person (other than any Subsidiary) which are in excess of $100,000 in the aggregate or (viii) authorize any new capital expenditures which, individually, is in excess of $250,000 or, in the aggregate, are in excess of $1,000,000; (c) split, combine or reclassify any shares of its capital stock, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, other than cash dividends and distributions by a wholly owned Subsidiary of the Company to the Company or to a subsidiary all of the capital stock which is owned directly or indirectly by the Company, or redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any of its securities or any securities of its Subsidiaries; (d) adopt or amend any bonus, profit sharing, compensation, severance, termination, stock option, pension, retirement, deferred compensation, employment or employee benefit plan, agreement, trust, plan, fund or other arrangement for the benefit and welfare of any director, officer or employee, or (except for normal increases in the ordinary course of business that are consistent with past practices and that, in the aggregate, do not result in a material increase in benefits or compensation expense to the Company) increase in any manner the compensation or fringe benefits of any director, officer or employee or pay any benefit not required by any existing plan or arrangement (including, without limitation, the granting of stock options or stock appreciation rights or the removal of existing restrictions in any benefit plans or agreements); (e) revalue in any material respect any of its assets, including, without limitation, writing down the value of inventory in any material manner or write-off of notes or accounts receivable in any material manner; (f) pay, discharge or satisfy any material claims, liabilities or obligations (whether absolute, accrued, asserted or unasserted, contingent or otherwise) other than the payment, discharge or satisfaction in the ordinary course of business, consistent with past practices, of liabilities reflected or reserved against in the consolidated financial statements of the Company or incurred since the most recent date thereof pursuant to an agreement or transaction described in this Agreement (including the schedules hereto) or incurred in the ordinary course of business, consistent with past practices; (g) except as set forth on Schedule 6.01(g), make any tax election or settle or compromise any material income tax liability; (h) take any action other than in the ordinary course of business and consistent with past practices with respect to accounting policies or procedures other than any change in accounting policies (that is not material to the Company and its Subsidiaries taken as a whole) that is required by regulations of the SEC; or (i) agree or commit to do any of the foregoing; or (j) take or agree or commit to take any action that would make any representation and warranty of the Company hereunder inaccurate in any respect at, or as of any time prior to, the Effective Time. SECTION 6.02. Stockholder Meeting; Proxy Material. The Company shall cause a meeting of its stockholders (the "Company Stockholder Meeting") to be duly called and held as soon as reasonably practicable for the purpose of voting on the approval and adoption of this Agreement and the Merger unless a vote of stockholders of the Company is not required by Delaware Law. The Directors of the Company shall, subject to their fiduciary duties as advised by counsel, recommend approval and adoption of this Agreement and the Merger by the Company's stockholders. In connection with such meeting, the Company (a) will promptly prepare and file with the SEC, will use its reasonable best efforts to have cleared by the SEC and will thereafter mail to its stockholders as promptly as practicable the Company Proxy Statement and all other proxy materials for such meeting, (b) will use its reasonable best efforts to obtain the necessary approvals by its stockholders of this Agreement and the transactions contemplated hereby and (c) will otherwise comply with all legal requirements applicable to such meeting. SECTION 6.03. Access to Information. From the date hereof until the Effective Time, the Company will give Buyer, its counsel, financial advisors, auditors and other authorized representatives full access to the offices, properties, books and records of the Company and the Subsidiaries, will furnish to Buyer, its counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information as such Persons may reasonably request and will instruct the Company's employees, counsel and financial advisors to cooperate with Buyer in its investigation of the business of the Company and the Subsidiaries; provided, however, that the Company shall not be required to grant any such access or furnish information to Buyer to the extent that such information is subject to an attorney/client or attorney work product privilege and breach thereof would have a Material Adverse Effect; and provided, further, that no investigation pursuant to this Section shall affect any representation or warranty given by the Company to Buyer hereunder. Buyer and the Company acknowledge that such information is governed by the terms of that certain confidentiality agreement between DLJ Merchant Banking II, Inc. and the Company (the "Confidentiality Agreement"), and that such Confidentiality Agreement remains in full force and effect. SECTION 6.04. Other Offers. (a) Neither the Company nor any of its Subsidiaries shall (whether directly or indirectly through advisors, agents or other intermediaries), nor shall the Company or any of its Subsidiaries authorize or permit any of its or their officers, directors, agents, representatives, advisors or Subsidiaries to (i) solicit, initiate or take any action knowingly to facilitate the submission of inquiries, proposals or offers from any Third Party (as defined below) (other than Buyer) which constitutes or would reasonably be expected to lead to (A) any acquisition or purchase of 30% or more of the consolidated assets of the Company and its Subsidiaries or of over 30% of any class of equity securities of the Company or any of its Subsidiaries, (B) any tender offer (including a self tender offer) or exchange offer that if consummated would result in any Third Party beneficially owning 30% or more of any class of equity securities of the Company or any of its Subsidiaries, (C) any merger, consolidation, business combination, sale of substantially all assets, recapitalization, liquidation, dissolution or similar transaction involving the Company or any of its Subsidiaries whose assets, individually or in the aggregate, constitute more than 30% of the consolidated assets of the Company other than the transactions contemplated by this Agreement, or (D) any other transaction the consummation of which would reasonably be expected to interfere with in a material way, prevent or materially delay the Merger or which would reasonably be expected to materially dilute the benefits to Buyer of the transactions contemplated hereby (collectively, "Acquisition Proposals"), or agree to or endorse any Acquisition Proposal, (ii) enter into or participate in any discussions or negotiations regarding any of the foregoing, or furnish to any Third Party any information with respect to its business, properties or assets or any of the foregoing, or otherwise cooperate in any way with, or knowingly assist or participate in, facilitate or encourage, any effort or attempt by any Third Party (other than Buyer) to do or seek any of the foregoing, or (iii) grant any waiver or release under any standstill or similar agreement with respect to any class of equity securities of the Company or any of its Subsidiaries; provided, however, that the foregoing shall not prohibit the Company (either directly or indirectly through advisors, agents or other intermediaries) from (A) furnishing information pursuant to an appropriate confidentiality letter (which letter shall not be less favorable to the Company in any material respect (with respect to duration and standstill provisions) than the Confidentiality Agreement, and a copy of which shall be provided for informational purposes only to Buyer) concerning the Company and its businesses, properties or assets to a Third Party who has made or is seeking to initiate discussions with respect to a bona fide Acquisition Proposal, (B) engaging in discussions or negotiations with such a Third Party who has made a bona fide Acquisition Proposal, (C) following receipt of a bona fide Acquisition Proposal, taking and disclosing to its stockholders a position contemplated by Rule 14e-2(a) under the Exchange Act or otherwise making disclosure to its stockholders, (D) following receipt of a bona fide Acquisition Proposal, failing to make or withdrawing or modifying its recommendation referred to in Section 1.02(b) and/or Section 6.02 and/or (E) taking any non-appealable, final action ordered to be taken by the Company by any court of competent jurisdiction but in each case referred to in the foregoing clauses (A) through (D) only to the extent that the Board of Directors of the Company shall have concluded in good faith on the basis of written advice from outside counsel that such action by the Board of Directors is required in order to comply with the fiduciary duties of the Board of Directors to the stockholders of the Company under applicable law; provided, further, that the Board of Directors of the Company shall not take any of the foregoing actions referred to in clauses (A) through (D) until after reasonable notice to Buyer with respect to such action and that such Board of Directors shall continue to advise Buyer after taking such action and, in addition, if the Board of Directors of the Company receives an Acquisition Proposal, then the Company shall promptly inform Buyer of the terms and conditions of such proposal and the identity of the person making it. The Company will immediately cease and cause its advisors, agents and other intermediaries to cease any and all existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing, and shall use its reasonable best efforts to cause any such parties in possession of confidential information about the Company that was furnished by or on behalf of the Company to return or destroy all such information in the possession of any such party or in the possession of any agent or advisor of any such party. As used in this Agreement, the term "Third Party" means any person, corporation, entity or "group," as defined in Section 13(d) of the Exchange Act, other than Buyer or any of its affiliates. (b) If a Payment Event (as hereinafter defined) occurs, the Company shall pay to Buyer, within two business days following such Payment Event, a fee of $6,900,000. "Payment Event" means (x) the termination of this Agreement by the Company or Buyer pursuant to Section 10.01(d); or (y) the occurrence of any of the following events within 12 months of the termination of this Agreement pursuant to Section 10.01(b) whereby stockholders of the Company receive, pursuant to such event, cash, securities or other consideration having an aggregate value, when taken together with the value of any securities of the Company or its Subsidiaries otherwise held by the stockholders of the Company after such event, in excess of $23.00 per Share: the Company is acquired by merger or otherwise by a Third Party; a Third Party acquires more than 50% of the total assets of the Company and its Subsidiaries, taken as a whole; a Third Party acquires more than 50% of the outstanding Shares or the Company adopts and implements a plan of liquidation, recapitalization or share repurchase relating to more than 50% of the outstanding Shares or an extraordinary dividend relating to more than 50% of the outstanding Shares or 50% of the assets of the Company and its Subsidiaries, taken as a whole. (c) Upon the termination of this Agreement for any reason (other than a termination which would not have occurred but for the failure of Buyer to fulfill its obligations under this Agreement) the Company shall reimburse Buyer and its affiliates not later than two business days after submission of reasonable documentation thereof for 100% of their documented out-of-pocket fees and expenses (including the reasonable fees and expenses of counsel) up to $4,250,000, in each case, actually incurred by any of them or on their behalf in connection with this Agreement and the transactions contemplated hereby (including the Merger and the arrangement, obtaining the commitment to provide or obtaining the Financing for the transactions contemplated by this Agreement (including fees payable to the Financing Entities and their respective counsel)). (d) The Company acknowledges that the agreements contained in this Section 6.04 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Buyer would not enter into this Agreement; accordingly, if the Company fails to promptly pay any amount due pursuant to this Section 6.04, and, in order to obtain such payment, the other party commences a suit which results in a judgment against the Company for the fee or fees and expenses set forth in this Section 6.04, the Company shall also pay to Buyer its costs and expenses incurred in connection with such litigation. (e) This Section 6.04 shall survive any termination of this Agreement, however caused. SECTION 6.05. Notices of Certain Events. The Company shall promptly notify Buyer of: (a) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement; (b) any notice or other communication from any governmental or regulatory agency or authority in connection with the transactions contemplated by this Agreement; and (c) any actions, suits, claims, investigations or proceedings commenced or, to the best of its knowledge threatened against, relating to or involving or otherwise affecting the Company or any Subsidiary which, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 4.12 or which relate to the consummation of the transactions contemplated by this Agreement. ARTICLE 7 COVENANTS OF BUYER Buyer agrees that: SECTION 7.01. Confidentiality. Prior to the Effective Time and after any termination of this Agreement Buyer will hold, and will use its best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information concerning the Company and the Subsidiaries furnished to Buyer in connection with the transactions contemplated by this Agreement, including, without limitation, the stockholder lists furnished by the Company pursuant to Section 1.02, except to the extent that such information can be shown to have been (a) previously known on a nonconfidential basis by Buyer, (b) in the public domain through no fault of Buyer or (c) later lawfully acquired by Buyer from sources other than the Company (provided that such sources are not known by Buyer to be under any obligation of confidentiality to the Company with respect to such information); provided that Buyer may disclose such information to its officers, directors, employees, accountants, counsel, consultants, advisors and agents in connection with the transactions contemplated by this Agreement and to its lenders in connection with obtaining the financing for the transactions contemplated by this Agreement so long as such Persons are informed by Buyer of the confidential nature of such information and agree to treat such information confidentially. Buyer's obligation to hold any such information in confidence shall be satisfied if it exercises the same care with respect to such information as it would take to preserve the confidentiality of its own similar information, it being understood that Buyer shall remain responsible for breach of any such agreement. If this Agreement is terminated, Buyer will, and will use its best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to, destroy or deliver to the Company, upon request, all documents and other materials, and all copies thereof, obtained by Buyer or on its behalf from the Company in connection with this Agreement that are subject to such confidence. SECTION 7.02. Voting of Shares. Buyer agrees to vote all Shares beneficially owned by it in favor of adoption of this Agreement at the Company Stockholder Meeting. SECTION 7.03. Director and Officer Liability. For six years after the Effective Time, Buyer will cause the Surviving Corporation to (i) indemnify and hold harmless the present and former officers and directors of the Company in respect of acts or omissions occurring prior to the Effective Time (including without limitation matters related to the transactions contemplated by this Agreement) and (ii) retain limitations on personal liability of directors for monetary damages in each case, to the fullest extent provided under the Company's certificate of incorporation and bylaws in effect on the date hereof; provided that such indemnification shall be subject to any limitation imposed from time to time under applicable law. For six years after the Effective Time, Buyer will cause the Surviving Corporation to use its best efforts to provide officers' and directors' liability insurance in respect of acts or omissions occurring prior to and including the Effective Time covering each such Person currently covered by the Company's officers' and directors' liability insurance policy on terms with respect to coverage and amount no less favorable than those of such policy in effect on the date hereof, provided that in satisfying its obligation under this Section, Buyer shall not be obligated to cause the Surviving Corporation to pay premiums in excess of 150% of the amount per annum the Company paid in its last full fiscal year, which amount has been disclosed to Buyer. It is understood that such obligation to indemnify (but not to maintain insurance) shall apply to claims of which the Surviving Corporation shall have been notified prior to the expiration of such six-year period regardless of when such claims shall have been disposed of. SECTION 7.04. Employee Matters. Parent agrees that, for at least one year from the Effective Time, subject to applicable law, the Surviving Corporation and its Subsidiaries will provide benefits to their employees which will, in the aggregate, be comparable to those currently provided by the Company and its subsidiaries to their employees. Notwithstanding the foregoing, nothing herein shall obligate or require the Surviving Corporation or any of its subsidiaries to provide its employees with a plan or arrangement similar to any equity based compensation plans currently maintained by the Company and nothing herein shall otherwise limit the Surviving Corporation's right to amend, modify or terminate any Employee Plan or Benefit Arrangement. ARTICLE 8 COVENANTS OF BUYER AND THE COMPANY The parties hereto agree that: SECTION 8.01. Best Efforts. Subject to the terms and conditions of this Agreement, each party will use its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the transactions contemplated by this Agreement. SECTION 8.02. Certain Filings. The Company and Buyer shall cooperate with one another (a) in connection with the preparation of the Company Disclosure Documents and the Offer Documents, (b) in determining whether any action by or in respect of, or filing with, any governmental body, agency or official, or authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement and (c) in seeking any such actions, consents, approvals or waivers or making any such filings, furnishing information required in connection therewith or with the Company Disclosure Documents or the Offer Documents and seeking timely to obtain any such actions, consents, approvals or waivers. SECTION 8.03. Public Announcements. Buyer and the Company will consult with each other before issuing any press release or making any public statement with respect to this Agreement and the transactions contemplated hereby and, except as may be required by applicable law or any listing agreement with any national securities exchange or the rules applicable to the Nasdaq Stock Market, will not issue any such press release or make any such public statement prior to such consultation. SECTION 8.04. Further Assurances. At and after the Effective Time, the officers and directors of the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of the Company or Buyer, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company or Buyer, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets of the Company acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger. ARTICLE 9 CONDITIONS TO THE MERGER SECTION 9.01. Conditions to the Obligations of Each Party. The obligations of the Company and Buyer to consummate the Merger are subject to the satisfaction of the following conditions: (a) if required by Delaware Law, this Agreement shall have been adopted by the stockholders of the Company in accordance with such Law; (b) any applicable waiting period under the HSR Act relating to the Merger shall have expired or been terminated; (c) no provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the consummation of the Merger; (d) Buyer shall have purchased Shares pursuant to the Offer; and (e) all actions by or in respect of or filings with any governmental body, agency, official, or authority required to permit the consummation of the Merger shall have been obtained. SECTION 9.02. Conditions to the Obligations of Buyer. The obligations of Buyer to consummate the Merger are subject to the satisfaction of the following further conditions: (a) the Company shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Effective Time; (b) no provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the consummation of the Merger; and (c) Buyer shall have received all documents it may reasonably request relating to the existence of the Company and the Subsidiaries and the authority of the Company for this Agreement, all in form and substance reasonably satisfactory to Buyer. ARTICLE 10 TERMINATION SECTION 10.01. Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (notwithstanding any approval of this Agreement by the stockholders of the Company): (a) by mutual written consent of the Company and Buyer; (b) by either the Company or Buyer, if the Offer has not been consummated by the date that is 60 days after the commencement of the Offer; provided, however, that the right to terminate under this clause (b) shall not be available if Buyer shall have failed to purchase Shares in violation of the Offer; (c) by either the Company or Buyer, if there shall be any law or regulation that makes consummation of the Merger illegal or otherwise prohibited or if any judgment, injunction, order or decree enjoining Buyer or the Company from consummating the Merger is entered and such judgment, injunction, order or decree shall become final and nonappealable; or (d) by the Company or Buyer, if the Board of Directors of the Company shall have withdrawn or materially modified its recommendation as permitted by clause (D) of the proviso of Section 6.04(a). The party desiring to terminate this Agreement pursuant to clauses 10.01(b), 10.01(c) or 10.01(d) shall give written notice of such termination to the other party in accordance with Section 11.01. SECTION 10.02. Effect of Termination. If this Agreement is terminated pursuant to Section 10.01, this Agreement shall become void and of no effect with no liability on the part of any party hereto, except that termination of this Agreement shall be without prejudice to any rights any party may have hereunder against any other party for wilful breach of this Agreement. The agreements contained in Sections 6.04, 7.01, 11.04 and 11.06 shall survive the termination hereof. ARTICLE 11 MISCELLANEOUS SECTION 11.01. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including telecopy or similar writing) and shall be given, if to Buyer, to: Thompson Dean c/o DLJ Merchant Banking II, Inc. 277 Park Avenue New York, NY 10172 Telecopy: 212-892-7272 with a copy to: George R. Bason, Jr. Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Telecopy: (212) 450-4800 if to the Company, to: R. Jack DeCrane DeCrane Aircraft Holdings, Inc. 2361 Rosecrans Avenue Suite 180 El Segundo, CA 90245 Telecopy: (310) 643-0746 with a copy to: Melvin Epstein Stroock & Stroock & Lavan 180 Maiden Lane New York, NY 10038-4982 Telecopy: (212) 806-6006 and Stephen A. Silverman Spolin & Silverman 100 Wilshire Boulevard Suite 940 Santa Monica, CA 90401-1113 Telecopy: 310-576-4844 or such other address or telecopy number as such party may hereafter specify for the purpose by notice to the other parties hereto. Each such notice, request or other communication shall be effective (a) if given by telecopy, when such telecopy is transmitted to the telecopy number specified in this Section and the appropriate telecopy confirmation is received or (b) if given by any other means, when delivered at the address specified in this Section. SECTION 11.02. Survival of Representations and Warranties. The representations and warranties and agreements contained herein and in any certificate or other writing delivered pursuant hereto shall not survive the Effective Time or the termination of this Agreement except for the representations, warranties and agreements set forth in Sections 6.04, 7.01, 7.03, 10.02 and 11.04. SECTION 11.03. Amendments; No Waivers. (a) Any provision of this Agreement may be amended or waived prior to the Effective Time if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Company and Buyer or in the case of a waiver, by the party against whom the waiver is to be effective; provided that after the adoption of this Agreement by the stockholders of the Company, no such amendment or waiver shall, without the further approval of such stockholders, alter or change (i) the amount or kind of consideration to be received in exchange for any shares of capital stock of the Company, (ii) any term of the certificate of incorporation of the Surviving Corporation or (iii) any of the terms or conditions of this Agreement if such alteration or change would adversely affect the holders of any shares of capital stock of the Company. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 11.04. Expenses. Except as provided in Section 6.04, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. SECTION 11.05. Successors and Assigns; Benefit. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other parties hereto except that Buyer may transfer or assign, in whole or from time to time in part, to one or more of its affiliates, the right to purchase shares pursuant to the Offer, but any such transfer or assignment will not relieve Buyer of its obligations under the Offer or prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. Nothing in this Agreement, expressed or implied, shall confer on any Person other than the parties hereto, and their respective successors and assigns, any rights, benefits, remedies, obligations, or liabilities under or by reason of this Agreement, except that the present and former officers and directors of the Company and their respective heirs and representatives shall have the rights and benefits set forth in Section 7.03 hereof. SECTION 11.06. Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of Delaware, without giving effect to the principles of conflicts of laws thereof. SECTION 11.07. Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto. SECTION 11.08. Entire Agreement. This Agreement and the Confidentiality Agreement constitute the entire agreement between the parties with respect to the subject matter of this Agreement and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement. 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 AIRCRAFT HOLDINGS, INC. By: /s/ R. Jack DeCrane ------------------------------------ Name: R. Jack DeCrane Title: Chairman and Chief Executive Officer DECRANE ACQUISITION CO. By: /s/ Thompson Dean ------------------------------------ Name: Thompson Dean Title: President ANNEX I Notwithstanding any other provision of the Offer, Buyer shall not be required to accept for payment or pay for any Shares, and may terminate the Offer, if (i) prior to the expiration date of the Offer, (A) less than a majority of the outstanding Shares on a fully diluted basis has been tendered pursuant to the Offer by the expiration of the Offer and not withdrawn, (B) the applicable waiting period under the HSR Act in respect of any of the transactions contemplated by the Merger Agreement shall not have expired or been terminated or (C) the Required Amounts (as defined in the Merger Agreement) shall not have been made available to Buyer as contemplated in Section 5.08 of the Merger Agreement or (ii) at any time on or after ________, 1998 and prior to the acceptance for payment of or payment for Shares, any of the following conditions exist: (a) there shall be instituted or pending any action or proceeding by any government or governmental authority or agency, domestic or foreign, or by any other person, domestic or foreign, before any court or governmental authority or agency, domestic or foreign, (i) challenging or seeking to make illegal, to delay materially or otherwise directly or indirectly to restrain or prohibit the making of the Offer, the acceptance for payment of or payment for some of or all the Shares by Buyer or the consummation by Buyer of the Merger, or seeking to obtain material damages, (ii) seeking to restrain or prohibit Buyer's ownership or operation (or that of its respective subsidiaries or affiliates) of all or any material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or of Buyer and its subsidiaries, taken as a whole, or to compel Buyer or any of its subsidiaries or affiliates to dispose of or hold separate all or any material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or of Buyer and its subsidiaries, taken as a whole, (iii) seeking to impose or confirm material limitations on the ability of Buyer or any of its subsidiaries or affiliates effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote any Shares acquired or owned by Buyer or any of its subsidiaries or affiliates on all matters properly presented to the Company's stockholders, or (iv) seeking to require divestiture by Buyer or any of its subsidiaries or affiliates of any Shares, or (v) that otherwise, in the reasonable judgment of Buyer, is likely to materially adversely affect the Company and its subsidiaries, taken as a whole; or (b) there shall be any action taken, or any statute, rule, regulation, injunction, order or decree proposed, enacted, enforced, promulgated, issued or deemed applicable to the Offer or the Merger, by any court, government or governmental authority or agency, domestic or foreign other than the application of the waiting period provisions of the HSR Act to the Offer or the Merger, that, in the reasonable judgment of Buyer, is likely, directly or indirectly, to result in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; or (c) any change or material worsening of any existing condition shall have occurred in the business, assets, liabilities, condition (financial or otherwise), results of operations or, insofar as can be reasonably foreseen, prospects of the Company and its subsidiaries taken as a whole that, in the reasonable judgment of Buyer, is or is likely to be materially adverse to the Company and its subsidiaries, taken as a whole; or (d) a tender or exchange offer for more than 30% of the Shares at a price per Share in excess of $23.00 shall have been made by another person, or it shall have been publicly disclosed or Buyer shall have otherwise learned that (i) any person or "group" (as defined in Section 13(d)(3) of the Exchange Act) shall have acquired or proposed to acquire beneficial ownership of more than 30% of any class or series of capital stock of the Company (including the Shares), through the acquisition of stock, the formation of a group or otherwise, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of more than 30% of any class or series of capital stock of the Company (including the Shares) other than acquisitions for bona fide arbitrage purposes only and other than as disclosed in a Schedule 13D or 13G on file with the Commission on July 16, 1998, or (ii) any such person or group which, prior to July 16, 1998, had filed such a Schedule with the Commission shall have acquired or proposed to acquire beneficial ownership of additional shares of any class or series of capital stock of the Company (including the Shares), through the acquisition of stock, the formation of a group or otherwise, constituting 10% or more of any such class or series, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of additional shares of any class or series of capital stock of the Company (including the Shares) constituting 10% or more of any such class or series or (iii) any person or group shall have entered into a definitive agreement or an agreement in principle with respect to a merger, consolidation or other business combination with the Company; or (e) the Company shall have breached or failed to perform in any material respect any of its covenants or agreements under the Merger Agreement, or any of the representations and warranties of the Company set forth in the Merger Agreement shall not be true in any material respect when made or at any time prior to consummation of the Offer as if made at and as of such time; or (f) The Fourth Amended and Restated Shareholders Agreement and the Fifth Amended and Restated Registration Rights Agreement, in each case among the Company and certain of its shareholders, shall not have been terminated; or (g) the Merger Agreement shall have been terminated in accordance with its terms; or (h) the Board of Directors of the Company shall have withdrawn or materially modified its approval or recommendation of the Offer or the Merger; which, in the reasonable judgment of Buyer in any such case, and regardless of the circumstances giving rise to any such condition, makes it inadvisable to proceed with such acceptance for payment or payment. EX-99.(C)(3) 12 Exhibit (c) (3) June 15, 1998 VIA TELECOPIER - -------------- DeCrane Aircraft Holdings, Inc. 2361 Rosecrans Avenue, Suite 180 El Segundo, CA, 90245 Attention: Mr. R. Jack DeCrane Chairman and Chief Executive Officer Gentlemen: DeCrane Aircraft Holdings, Inc._("you" or the "Company") has agreed to provide certain information concerning the Company to DLJ Merchant Banking II, Inc.("we" or "DLJ") so that we may consider an investment in the Company (a "Transaction"). We agree to treat confidentially all oral and written information concerning the Company that we may receive from the Company or any of its affiliates or agents (the "Evaluation Material") in connection with our consideration of a Transaction. We also agree that prior to giving access to the Evaluation Material to any of our employees, officers, directors, agents, advisors or representatives (the "Representatives") we shall inform such Representatives that they are bound by the terms set forth in this letter. Evaluation Material shall include any information you provide to us in the course of our consideration of a Transaction, whether in oral or written form. Any reports, analyses, or notes we produce that are based on, reflect or contain Evaluation Material ("Notes") shall also be held in confidence. We shall not be required to maintain the confidentiality of Evaluation Material if it (i) was or becomes generally available to the public other than through disclosure by us in violation of this agreement; (ii) was available to us on a non-confidential basis prior to your disclosure to us; or (iii) becomes available to us from a source not known to us to have a duty of confidentiality with regard to the information. We agree to use Evaluation Material only to help us analyze and evaluate a Transaction, and shall permit our Representatives access to Evaluation Material only to the extent necessary to allow them to assist us in that analysis or evaluation. If we or our Representatives are requested to disclose any Evaluation Material or Notes in connection with any legal or administrative proceeding or investigation, to the extent practicable, we will notify you of the request so that you may seek a protective order or other remedy or waive our compliance with this agreement. We will cooperate with you on a reasonable basis in your efforts to obtain a protective order or other remedy, but we may disclose such of the Evaluation Material or Notes we are required to disclose without liability to you upon the advice of our counsel. We hereby acknowledge that we are aware, and our Representatives will be made aware, that the securities laws of the United States prohibit any person who has material, non-public information concerning the Company or a possible Transaction involving the Company from purchasing or selling securities in reliance upon such information or from communicating such information to any other person or entity under circumstances in which it is reasonably foreseeable that such person or entity is likely to purchase or sell such securities in reliance upon such information. We agree that, for a period of two years from the date of this agreement, (which obligation shall survive any termination of this letter agreement) unless such shall have been specifically invited in writing by the Board of Directors of the Company, we will not, in any manner, directly or indirectly, (a) effect or seek, offer or propose (whether publicly or otherwise) to effect, or cause or participate in or in any way assist any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (i) any acquisition of any securities (or beneficial ownership thereof) or assets of the Company or any of its subsidiaries; (ii) any tender or exchange offer or merger or other business combination involving the Company or any of its subsidiaries; (iii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company or any of its subsidiaries; or (iv) any "solicitation" of "proxies" (as such terms are used in the proxy rules of the Securities and Exchange Commission) or consents to vote any voting securities of the Company, (b) form, join or in any way participate in a "group" (as defined under the Securities Exchange Act of 1934, as amended), (c) otherwise act, alone or in concert with others, to seek to control or influence the management, Board of Directors or policies of the Company, (d) take any action which might force the Company to make a public announcement regarding any of the types of matters set forth in (a) above, or (e) enter into any discussions or arrangements with any third party with respect to any of the foregoing. We also agree during any such period not to request the Company (or its directors, officers, employees or agents), directly or indirectly, to amend or waive any provision of this paragraph (including this sentence). You may choose at any time to terminate our further access to Evaluation Material, and, upon your request, we will destroy or return all Evaluation Material previously delivered to us and all copies, summaries and extracts of such Evaluation Material and will destroy all Notes. Notwithstanding the foregoing, it is understood and agreed that certain of our affiliates, including without limitation, Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC"), are full service securities firms and as such, may, from time to time effect transactions for their own accounts or the account of their customers, hold positions in securities of the Company (information on which may be included in the Evaluation Material in each case in the ordinary course of their respective businesses as broker-dealers, investment advisers, block positioners, or investment bankers so long as (i) they have established a "Chinese Wall" between individuals working on the Transaction and those individuals involved in effectuating such dealings or transactions, and (ii) and such purchases, sales or dealings are made only in accordance with such "Chinese Wall" policies and procedures and in accordance with applicable law. Nothing contained herein shall be deemed to limit or restrict DLJSC or any such affiliates in the conduct of any such activities. Neither you nor we shall be under any legal obligation with respect to a Transaction unless and until a definitive agreement between us is executed and delivered. We acknowledge that you are free to conduct the process for a Transaction as you may determine in your sole discretion. You may change the procedures established for a Transaction at any time without notifying us and you may accept or reject any proposal relating to a Transaction in your sole discretion. We acknowledge that money damages may not be sufficient remedy for any breach of this agreement and agree that you shall be entitled to seek specific performance and injunctive or other equitable relief for any such breach. This agreement shall be governed by the laws of the State of New York, and may be amended or waived only in writing signed by both of us and shall terminate one year from the date hereof. Please indicate your agreement with the foregoing by signing below and returning one copy of this Agreement. Very truly yours DLJ MERCHANT BANKING II, INC. By: /s/ Thompson Dean --------------------------------- Thompson Dean Managing Director Agreed and Accepted DeCrane Aircraft Holdings, Inc. By: ------------------------------------ R. Jack DeCrane Chairman and Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----