DeCRANE HOLDINGS CO.
and DeCRANE AIRCRAFT HOLDINGS, INC.
MANAGEMENT INCENTIVE PLANS
1. STOCK OPTION INCENTIVE PLAN
SECTION 1. PURPOSE. The purposes of the DeCrane Holdings Co. Management
Incentive Plan are to promote the interests of DeCrane Holdings Co. (the
"COMPANY") and its stockholders by (i) attracting and retaining exceptional
executive personnel and other key employees of the Company and its Subsidiaries,
as defined below; (ii) motivating such employees by means of performance-related
incentives to achieve longer-range performance goals; and (iii) enabling such
employees to participate in the long-term growth and financial success of the
Company.
SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall
have the meanings set forth below:
"AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
For purposes of this definition, the terms "control" (including with correlative
meanings, the terms "controlling", "controlled by" and "under common control
with"), when used with respect to any Person, means the possession, directly or
indirectly of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"AWARD" means any Option.
"AWARD AGREEMENT" means an agreement in substantially the Form attached
hereto as Exhibit A, or any other written agreement, contract, or other
instrument or document, designated by the Committee, evidencing any Award which
may, but need not, be executed or acknowledged by a Participant.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means (i) dishonesty by a Participant that results in substantial
personal enrichment at the expense of the Company; (ii) willful violations of a
Participant's obligations to the Company (including under any employment
agreement between the Participant and the Company) which result in material
injury to the Company; (iii) a Participant's conviction of any felony involving
the personal dishonesty of the Participant; or (iv) a Participant's chronic
alcoholism or abuse of controlled substances.
"CHANGE OF CONTROL" means:
(a) any "person" (as such term is used in Section 3(a)(9) and 13(d)(3)
of the Exchange Act) other than (A) the DLJ Entities and/or their
respective Permitted Transferees (as defined in the Investors'
Agreement) or (B) any "group" (within the meaning of such
Section 13(d)(3)) of which the DLJ Entities constitute a majority
(on the basis of ownership interest), acquires, directly or indirectly,
by virtue of the consummation of any purchase, merger or other
combination, securities of the Company representing more than 51% of the
combined voting power of the Company's then outstanding voting securities
with respect to matters submitted to a vote of the stockholders generally;
or
(b) a sale or transfer by the Company or any of its Subsidiaries of
substantially all of the consolidated assets of the Company and its
Subsidiaries to an entity which is not an Affiliate of the Company prior to
such sale or transfer.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMITTEE" means a committee of the Board designated by the Board to
administer the Plan. Until otherwise determined by the Board, the full Board
shall be the Committee under the Plan.
"DISABILITY" shall mean a Participant's inability to perform the duties of
his or her employment due to mental or physical incapacity for a period of six
consecutive months.
"EMPLOYEE" means an employee of the Company or any Subsidiary.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means with respect to the Shares, as of any given date
or dates, the average reported closing price of a share of such class of common
stock on such exchange or market as is the principal trading market for such
class of common stock for the three trading days immediately preceding such date
or dates. If such class of common stock is not traded on an exchange or
principal trading market on such date, the fair market value of a Share shall be
determined by the Committee in good faith taking into account as appropriate
recent sales of the Shares, recent valuations of the Shares and such other
factors as the Committee shall in its discretion deem relevant or appropriate.
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"INVESTORS' AGREEMENT" means the Amended and Restated Investors' Agreement
dated as of October 2, 1998 among (i) the Company, (ii) DLJ Merchant Banking
Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore
Partners II, C.V., DLJ Diversified Partners, L.P., DLJ Diversified Partners-A,
L.P., DLJ Millennium Partners, L.P., DLJ Millennium Partners-A, L.P., DLJMB
Funding II, Inc., UK Investment Plan 1997 Partners, DLJ EAB Partners, DLJ First
ESC, L.P. and DLJ ESC II, L.P. (collectively, the "DLJ ENTITIES") and (iii)
certain other Persons listed on the signature pages thereof.
"OPTION" means a right to purchase Shares from the Company granted under
Section 6 of the Plan.
"PARTICIPANT" means any Employee selected by the Committee to receive an
Award under the Plan (and to the extent applicable, any heirs or legal
representatives thereof).
"PERMITTED TRANSFEREE" shall have the meaning assigned to it in the
Investors' Agreement.
"PERSON" means any individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, government or political subdivision thereof or other entity.
"PLAN" means this DeCrane Holdings Co. Management Incentive Plan.
"SEC" means the Securities and Exchange Commission or any successor
thereto.
"SHARES" means shares of common stock, $0.01 par value, of the Company or
such other securities as may be designated by the Committee from time to time.
"SUBSIDIARY" shall mean, with respect to any Person, 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 at the time directly or indirectly owned by
such Person.
"SUBSTITUTE AWARDS" means Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company acquired by
the Company or with which the Company combines.
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SECTION 3. ADMINISTRATION.
(a) AUTHORITY OF COMMITTEE. The Plan shall be administered by the
Committee. Subject to the terms of the Plan, applicable law and contractual
restrictions affecting the Company, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, the Committee shall have
full power and authority to: (i) designate Participants; (ii) determine the type
or types of Awards to be granted to a Participant; (iii) determine the number of
Shares to be covered by, or with respect to which payments, rights, or other
matters are to be calculated in connection with, Awards; (iv) determine the
terms and conditions of any Award and Award Agreement; (v) determine whether, to
what extent, and under what circumstances Awards may be settled or exercised in
case, Shares, other securities, other Awards or other property, or canceled,
forfeited, or suspended and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other securities,
other Awards, other property, and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the holder thereof
or of the Committee; (vii) interpret and administer the Plan and any instrument
or agreement relating to, or Award made under, the Plan; (viii) establish,
amend, suspend, or waive such rules and regulations and appoint such agents as
it shall deem appropriate for the proper administration of the Plan; and (ix)
make any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.
(b) COMMITTEE DISCRETION BINDING. Unless otherwise expressly provided in
the Plan, all designations, determinations, interpretations, and other decisions
under or with respect to the Plan or any Award shall be within the sole
discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon all Persons, including the Company, any Subsidiary,
any Participant, any holder or beneficiary of any Award, any shareholder and any
Employee.
SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) SHARES AVAILABLE. Subject to adjustment as provided in Section 4(b)
and 4(c), the number of Shares with respect to which Awards may be granted
under the Plan shall be approved by resolution of the Board. If, after the
effective date of the Plan, any Shares covered by an Award granted under the
Plan or to which such an Award relates are forfeited, or if such an Award is
settled for cash or otherwise terminates or is canceled without the delivery
of Shares, then the Shares covered by such Award, or to which such Award
relates, or the number of Shares otherwise counted against the aggregate
number of Shares with respect to which Awards
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may be granted, to the extent of any such settlement, forfeiture, termination
or cancellation, shall, in the calendar year in which such settlement,
forfeiture, termination or cancellation occurs, again become Shares with
respect to which Awards may be granted unless any dividends have been paid
thereon prior to such settlement, forfeiture, termination or cancellation.
In addition, Shares tendered in satisfaction or partial satisfaction of the
exercise price of any Award or any tax withholding obligations will again
become Shares with respect to which Awards may be granted. Notwithstanding
the foregoing and subject to adjustment as provided in Section 4(b), no
Employee of the Company may receive Options in any calendar year that relate
to more than a number of Shares, if any, fixed by resolution of the Board
from time to time.
(b) ADJUSTMENTS. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, reclassification, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Shares or other securities of
the Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number of Shares of the Company (or number and kind of other securities
or property) with respect to which Awards may thereafter be granted, (ii) the
number of Shares or other securities of the Company (or number and kind of other
securities or property) subject to outstanding Awards, and (iii) the grant or
exercise price with respect to any Award, or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award.
(c) SUBSTITUTE AWARDS. Any Shares underlying Substitute Awards shall not
be counted against the Shares available for Awards under the Plan.
(d) SOURCES OF SHARES DELIVERABLE UNDER AWARDS. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.
SECTION 5. ELIGIBILITY. Any Employee, including any officer or
employee-director of the Company or any Subsidiary, shall be eligible to be
designated a Participant.
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SECTION 6. STOCK OPTIONS.
(a) GRANT. Subject to the provisions of the Plan and contractual
restrictions affecting the Company, the Committee shall have sole and complete
authority to determine the Employees to whom Options shall be granted, the
number of Shares to be covered by each Option, the exercise price therefor
and the conditions and limitations applicable to the exercise of the Option.
(b) EXERCISE PRICE. The Committee in its sole discretion shall establish
the exercise price at the time each Option is granted; PROVIDED, that in no
event shall the exercise price per Share be less than the Fair Market Value of a
Share on the date of grant.
(c) EXERCISE. Each Option shall be exercisable at such times and subject
to such terms and conditions as the Committee may, in its sole discretion,
specify in the applicable Award Agreement or thereafter. The Committee may
impose such conditions with respect to the exercise of Options, including
without limitation, any relating to the application of Federal or state
securities laws, as it may deem necessary or advisable.
(d) PAYMENT. No Shares shall be delivered pursuant to any exercise of an
Option until payment in full of the exercise price, or adequate provision
therefor, is received by the Company. Such payment may be made: (i) in cash;
(ii) in Shares owned by the Participant for at least six months (the value of
such Shares shall be their Fair Market Value on the date of exercise); (iii) by
a combination of cash and Shares; or (iv) in such other manner as permitted by
the Committee at the time of grant or thereafter.
SECTION 7. VESTING; TERMINATION OF EMPLOYMENT. Each Award Agreement shall
contain such terms as the Committee may in its sole discretion determine
concerning vesting, forfeiture, the Company's rights of repurchase of Shares
acquired upon exercise of an Option, and/or the effects of termination or
suspension of a Participant's employment upon the exercisability of any Option
granted thereunder.
SECTION 8. CHANGE OF CONTROL. The Committee, in its sole discretion, may
provide in an Award Agreement for the accelerated vesting of an Award in the
event of a Change of Control.
SECTION 9. AMENDMENT AND TERMINATION.
(a) AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that
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no such amendment, alteration, suspension, discontinuation or termination shall
be made without shareholder approval if such approval is necessary to comply
with any tax or regulatory requirement, including for these purposes any
approval requirement which is a prerequisite for exemptive relief from Section
16(b) of the Exchange Act, for which or with which the Board deems it necessary
or desirable to qualify or comply. Notwithstanding anything to the contrary
herein, the Committee may amend the Plan in such manner as may be necessary so
as to have the Plan conform with local rules and regulations in any jurisdiction
outside the United States.
(b) AMENDMENTS TO AWARDS. Subject to the terms of the Plan and applicable
law, the Committee may waive any conditions or rights under, amend any terms of,
or alter, suspend, discontinue, cancel or terminate, any Award theretofore
granted, prospectively or retroactively; provided that any such waiver,
amendment, alteration, suspension, discontinuance, cancellation or termination
that would adversely affect the rights Participant or any holder or beneficiary
of any Award theretofore granted shall not to that extent be effective without
the consent of the affected Participant, holder or beneficiary.
(c) CANCELLATION. Any provision of this Plan or any Award Agreement to
the contrary notwithstanding, in the event of a Change of Control or an offer to
Participants generally relating to the acquisition of Shares, including through
purchase, merger or otherwise, the Committee may cause any Award granted
hereunder to be canceled in consideration of a cash payment or alternative Award
made to the holder of such canceled Award equal in value to the Fair Market
Value of such canceled Award.
SECTION 10. GENERAL PROVISIONS.
(a) DIVIDEND EQUIVALENTS. In the sole and complete discretion of the
Committee, an Award may provide the Participant with dividends or dividend
equivalents, payable in cash, Shares, other securities or other property on a
current or deferred basis.
(b) NONTRANSFERABILITY. Except to the extent otherwise provided in an
Award Agreement, no Award shall be assigned, alienated, pledged, attached, sold
or otherwise transferred or encumbered by a Participant, except by will or the
laws of descent and distribution.
(c) NO RIGHTS TO AWARDS. No Employee, Participant or other Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or beneficiaries
of
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Awards. The terms and conditions of Awards need not be the same with respect to
each recipient.
(d) SHARE CERTIFICATES. Certificates issued in respect of Shares shall,
unless the Committee otherwise determines, be registered in the name of the
Participant or its Permitted Transferees and shall be deposited by such
Participant or Permitted Transferee, together with a stock power endorsed in
blank, with the Company. When the Participant ceases to be bound by any
transfer restrictions set forth herein or in the Investors' Agreement, the
Company shall deliver such certificates to the Participant upon request. Such
stock certificate shall carry such appropriate legends, and such written
instructions shall be given to the Company's transfer agent, as any be deemed
necessary or advisable by counsel to the Company in order to comply with the
requirements of the Securities Act of 1933, any state securities laws or any
other applicable laws and the Investor's Agreement. Subject to the provisions
of the Investors' Agreement, all certificates for Shares or other securities of
the Company or any Subsidiary delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations and other requirements of the Securities and Exchange Commission or
any stock exchange upon which such Shares or other securities are then listed
and any applicable laws or rules or regulations, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(e) WITHHOLDING. A Participant may be required to pay to the Company or
any Subsidiary, and the Company or any Subsidiary shall have the right and is
hereby authorized to withhold from any Award, from any payment due or transfer
made under any Award or under the Plan or from any compensation or other amount
owing to a Participant the amount (in cash, Shares, other securities, other
Awards or other property) of any applicable withholding taxes in respect of an
Award, its exercise, or any payment or transfer under an Award or under the Plan
and to take such other action as may be necessary in the opinion of the Company
to satisfy all obligations for the payment of such taxes. The Committee may
provide for additional cash payments to holders of Awards to defray or offset
any tax arising from any such grant, lapse, vesting, or exercise of any Award.
(f) AWARD AGREEMENTS. Each Award hereunder shall be evidenced by an Award
Agreement which shall be delivered to the Participant and shall specify the
terms and conditions of the Award and any rules applicable thereto.
(g) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the
Plan shall prevent the Company or any Subsidiary from adopting or continuing in
effect other compensation arrangements, which may, but need not,
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provide for the grant of options, restricted stock, Shares and other types of
Awards provided for hereunder (subject to shareholder approval if such approval
is required), and such arrangements may be either generally applicable or
applicable only in specific cases.
(h) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ or service of the
Company or any Subsidiary. Further, the Company or an Subsidiary may at any
time dismiss a Participant from employment or service, free from any liability
or any claim under the Plan, unless otherwise expressly provided in the Plan or
in any Award Agreement.
(i) RIGHTS AS A STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or holder or beneficiary of any Award shall have any
rights as a stockholder with respect to any Shares to be issued under the Plan
until he or she has become the holder of such Shares.
(j) GOVERNING LAW. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware.
(k) SEVERABILITY. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any Person or Award, or would disqualify the Plan or any Award under any law
deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform to the applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, Person or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.
(l) OTHER LAWS. The Committee may refuse to issue or transfer any Shares
or other consideration under an Award if, acting in its sole discretion, it
determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant in connection therewith shall
be promptly refunded to the relevant Participant, holder or beneficiary.
Without limiting the generality of the foregoing, no Award granted hereunder
shall be construed as an offer to sell securities of the Company, and no such
offer shall be outstanding, unless and until the Committee in its sole
discretion has determined that any such offer, if made, would be in compliance
with all applicable requirements of the U.S. federal securities laws and any
other laws to which such offer, if made, would be subject.
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(m) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Subsidiary and a Participant or any
other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Subsidiary pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Subsidiary.
(n) NO FRACTIONAL SHARES. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash or other securities or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
(o) TRANSFER RESTRICTIONS. Shares acquired hereunder may not be sold,
assigned, transferred, pledged or otherwise disposed of, except as provided in
the Plan, the applicable Award Agreement and the Investors' Agreement.
(p) HEADINGS. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.
SECTION 11. TERM OF THE PLAN.
(a) EFFECTIVE DATE. The Plan shall be effective as of April 30, 1999,
subject to approval by the shareholders of the Company. Awards may be granted
hereunder prior to such shareholder approval subject in all cases, however, to
such approval.
(b) EXPIRATION DATE. The Board and the Committee's authority to grant
Awards under the Plan shall terminate on the tenth anniversary of the Plan's
effective date. Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted hereunder may, and the authority
of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award or to waive any conditions or rights under any such
Award shall, continue after the authority for grant of new Awards hereunder has
been exhausted.
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EXHIBIT A
Form of
Award Agreement
under the
DeCrane Holdings Co.
Management Incentive Plan
Date of Grant: _________________, 1998
Name of Optionee: _______________________
Number of Shares: ______________
Exercise Price: $__________/share
Expiration Date: ________________, 2008
Operating Unit: _______________________
DeCrane Holdings Co., a Delaware corporation (the "COMPANY"), hereby grants
to the above named optionee (the "OPTIONEE") a performance-based vesting option
(the "OPTION") to purchase from the Company, for the price per share set forth
above, the number of shares of Common Stock, $0.01 par value (the "SHARES"), of
the Company set forth above pursuant to the DeCrane Holdings Co. Management
Incentive Plan (the "PLAN"). The Options are not intended to be treated as
incentive stock options under the Code.
Capitalized terms not otherwise defined herein shall have the same meanings
as in the Plan. The terms and conditions of the Option granted hereby, to the
extent not controlled by the terms and conditions contained in the Plan, are as
follows:
1. EXERCISE PRICE. The price at which each Share subject to this Option
may be purchased shall be the price set forth above.
2. NUMBER OF SHARES: EXERCISE. The number of Shares for which the Option
may be exercised are set forth above. To the extent this Option has become
vested in accordance with Section 3 below, the Option may be exercised at any
time until the Expiration Date, subject to the terms of the Plan and of Section
7 below.
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3. VESTING.
(a) To the extent not previously vested in accordance with paragraph (b)
below or Section 8, the Option shall become fully vested and exercisable on the
eighth anniversary of the Date of Grant, provided the Optionee is then in the
employ of the Company or a Subsidiary.
(b) (i) The Option shall become vested and exercisable with respect to
up to 25% of the Shares subject thereto on the thirtieth day following the
availability of audited financial statements for each of the four fiscal
years of the Company commencing with the fiscal year ending December 31, 1999
(each such day a "VESTING DATE"), provided the EBITDA of the operating unit
of the Company to which the Optionee is assigned on the first page hereof as
of the end of such fiscal year, calculated in accordance with Schedule A
hereto, is at least equal to the EBITDA target values for such fiscal year
set forth in such Schedule A, and provided further that the Optionee is in
the employ of the Company or a Subsidiary on such Vesting Date. (ii) If any
EBITDA target value set forth in Schedule A for any of the first three fiscal
years referred to above is not attained, the portion of the Option that would
otherwise have vested for such fiscal year shall be treated as vested and
exercisable as of the Vesting Date for any subsequent fiscal year ending on
or before December 31, 2002 for which the maximum EBITDA target value for
such subsequent year is attained, provided, the Optionee is in the employ of
the Company or a Subsidiary on such Vesting Date.
4. MANNER OF EXERCISE. The Optionee (or his representative, devisee or
heir, as applicable) may exercise any portion of this Option which has become
exercisable in accordance with the terms hereof as to all or any of the Shares
then available for purchase by delivering to the Company written notice
specifying:
(i) the number of whole Shares to be purchased together with
payment in full of the aggregate Exercise Price of such shares;
(ii) the address to which dividends, notices, reports, etc. are to
be sent; and
(iii) the Optionee's social security number.
Payment shall be in cash, by certified or bank cashier's check payable to the
order of the Company, free from all collection charges, or in unencumbered
Shares) provided such shares shall have been held by the Optionee for at least
six months unless the Committee determines in its sole discretion that such
six-month holding period is not necessary to comply with any accounting,
legal or regulatory requirement) having a Fair Market Value equal to the full
amount of the Exercise Price therefor, or such other form as may permitted by
the Committee. Only one
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stock certificate will be issued unless the Optionee otherwise requests in
writing. Shares purchased upon exercise of the Option will be issued in the
name of the Optionee or the Optionee's Permitted Transferee. No Shares shall
be issued hereunder unless and until the Optionee (or his representative,
devisee or heir, as applicable) executes and agrees to be bound by the
Investors' Agreement. The Optionee shall not be entitled to any rights as a
stockholder of the Company in respect of any Shares covered by this Option
until such Shares shall have been paid for in full and issued to the Optionee.
5. CERTIFICATES. Certificates issued in respect of Shares acquired upon
exercise of the Option shall, unless the Committee otherwise determines, be
registered in the name of the Optionee or its Permitted Transferee. When the
Optionee ceases to be bound by the provisions of the Investors' Agreement, the
Company shall deliver such certificates to the Optionee or its Permitted
Transferee upon request. Such stock certificate shall carry such appropriate
legends, and such written instructions shall be given to the Company's transfer
agent, as may be deemed necessary or advisable by counsel to the Company in
order to comply with the requirements of the Securities Act of 1933, any state
securities laws or any other applicable laws or the Investors' Agreement.
6. NONTRANSFERABILTY. This Option is personal to the Optionee and may be
exercised only by the Optionee or his or her representative in the event of the
Optionee's Disability or death. This Option shall not be transferable other
than by will or the laws of descent and distribution. Notwithstanding the
foregoing, this Option may be transferred to a trust solely for the benefit of
the Optionee or the Optionee's immediate family (which shall be deemed to
include the Optionee's spouse, parents, siblings, children, stepchildren and
grandchildren).
7. FORFEITURE OF OPTION: RIGHT OF REPURCHASE.
(a) If the Optionee's employment with the Company and its Subsidiaries
shall terminate for any reason other than by the Company or its Subsidiary for
Cause, then (i) to the extent not yet vested as of the date of termination of
employment, the Option shall immediately be forfeited; and (ii) to the extent
vested as of the date of termination of employment, the Option may be retained
and exercised, in accordance with the terms of the Plan and this Award
Agreement, [DURING THE SIX MONTH PERIOD FOLLOWING SUCH TERMINATION].
(b) If the Optionee's employment with the Company and its Subsidiaries
shall be terminated by the Company or its Subsidiary for Cause, then the entire
Option shall immediately be forfeited, ans all Shares previously acquired upon
exercise of the Option shall be subject to a right of repurchase by the Company
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from the Participant or his or her Permitted Transferee at a price equal to the
Exercise Price.
8. CHANGE OF CONTROL. Upon a Change of Control, the Option shall vest in
its entirety and become immediately exercisable.
9. SALE OF UNDERLYING SHARES. The Optionee's right to sell any Shares
acquired upon exercise of the Option (in the case of Optionees who are party
thereto) shall be subject to the terms of the Investors' Agreement.
10. EMPLOYMENT RIGHTS. This Option does not confer on the Optionee any
right to continue in the employ of the Company or any Subsidiary or interfere in
any way with the right of the Company or any Subsidiary to determine the terms
of the Optionee's employment.
11. TERMS OF PLAN; INTERPRETATIONS. This Option and the terms and
conditions herein set forth are subject in all respects to the terms and
conditions of the Plan, which shall be controlling. All interpretations or
determinations of the Committee and/or the Board shall be binding and conclusive
upon the Optionee and his legal representatives on any question arising
hereunder. The Optionee acknowledges that he has received and reviewed a copy
of the Plan.
12. DELEGATION. Optionee acknowledges that any powers, rights or
responsibilities of the Board and/or the Committee set forth herein may be
delegated to and exercised by any subcommittee thereof as permitted under the
Plan.
13. NOTICES. All notices hereunder to the party shall be delivered or
mailed to the following addresses:
If to the Company:
DeCrane Holdings Co.
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Thompson Dean
Fax: (212) 892-7272
and
14
DeCrane Holdings Co.
2361 Rosecrans Avenue
Suite 180
El Segundo, CA 90245
Attention: R. Jack DeCrane
Fax: (310) 643-0746
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr., Esq.
Fax: (212) 450-4800
If to the Optionee:
To the person and at the address specified on the signature page.
Such addresses for the service of notices may be changed at any time provided
notice of such change is furnished in advance to the other party.
14. ENTIRE AGREEMENT. This Agreement, together with the Plan and (in the
case of Optionees who are party thereto) the Investors Agreement, contains the
entire understanding of the parties hereto in respect of the subject matter
contained herein. This Agreement, the Plan and the Investors' Agreement
supersede all prior agreements and understandings between the parties hereto
with respect to the subject matter hereof.
15. GOVERNING LAW. This Award Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without application of the
conflict of laws principles thereof.
16. COUNTERPARTS. This Award 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.
15
IN WITNESS WHEREOF, the undersigned have caused this Award Agreement to be
duly executed as of the date first above written.
DECRANE HOLDINGS CO.
By:
----------------------
Name:
Title:
OPTIONEE:
-------------------------
Name:
Address: c/o DeCrane Holdings Co.
2361 Rosecrans Avenue
Suite 180
El Segundo, CA 90245
16
2. STOCK PURCHASE PLAN
DeCrane Holdings Co. (the "Company") has adopted a management stock
purchase plan ("Stock Purchase Plan") providing for the purchase of shares of
common stock of the Company as incentive compensation to designated executive
personnel and other key employees of the Company and its subsidiaries, with a
portion of the purchase price to be loaned to the participants by the
Company's subsidiary DeCrane Aircraft Holdings, Inc., available to persons
and in amounts determined by the compensation committee of the Board from
time to time, employing the attached forms of Subscription Agreement and
Promissory Note and Pledge to be entered into by individual participants.
The compensation committee of the Board has approved a one-time offer of
loans under that plan, for the purchase of up to 173,913 shares in the
aggregate (calculated on the basis of $4,000,000 divided by $23.00 per share)
at the price of $23.00 per share.
3. CASH INCENTIVE BONUS PLAN
The Company has approved a cash incentive bonus plan ("Incentive Bonus
Plan") providing for the allocation of a bonus pool each year for incentive
compensation to designated executive personnel and other key employees of the
Company and its subsidiaries, as the exclusive sources of elective merit
raises by the Company during the next four years, to persons and in amounts
determined by the compensation committee of the Board from time to time; with
the bonus pool for participants for the next four years to be based on EBITDA
and cash flow changes from year to year at the relevant participant's
operating unit; and in the case of the designated senior executives of
DeCrane Aircraft Holdings, Inc., from a pool adjusted for each performance
year by 5% of the change in consolidated EBITDA due to acquisitions during
the year (plus 3% of EBITDA of PATS, only for performance year 1999) and by
5% of 15% (representing cost of capital) of the EBITDA generated from
existing operations during the year, net of consolidated capital expenditures
and plus (or minus) consolidated working capital for such periods. For the
1999 performance year only, such awards to participants who have become
executives of the Company on after January 1, 1999, are limited to a maximum
of 100% of their base salary for 1999.
The Company additionally has adopted a 3% cost of living increase per
year to base salaries for participants in the foregoing plan.
17
FORM OF SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (this "AGREEMENT") dated as of October __, 1998, by
and among DeCrane Holdings Co., a Delaware corporation (the "COMPANY" and
___________ (the "INVESTOR").
WHEREAS, the Investor desires to subscribe for, and the Company desires to
issue to the Investor, the number of shares of common stock, par value $0.01 per
share (the "COMMON STOCK"), of the Company set forth on Exhibit A hereto (such
shares of Common Stock to be subscribed for by the Investor and issued to the
Investor by the Company, the "SHARES").
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
ISSUANCE OF SHARES; CONSIDERATION
Section 1.01. ISSUANCE OF SHARES. Upon the terms set forth in this
Agreement, the Company hereby agrees to issue to the Investor, and the Investor
hereby subscribes for, the Shares.
Section 1.02. SUBSCRIPTION. In consideration for the issuance by the
Company of the Shares, the Investor shall:
(a) pay to the Company, by wire transfer of immediately available
funds to an account specified by the Company, an amount equal to 50% of the
aggregate subscription price set forth on Exhibit A hereto; and
(b) execute and deliver to the Company a Promissory Note and Pledge
Agreement (the "PROMISSORY NOTE AND PLEDGE") in the form of Exhibit C
hereto in a principal amount equal to 50% of the aggregate subscription
price set forth on Exhibit A hereto.
Section 1.03. INVESTORS' AGREEMENT. As a condition to the issuance of the
Shares, the Investor shall execute and deliver to the Company an agreement in
the form of Exhibit B hereto, pursuant to which the Investor agrees to be bound
by the terms of the Amended and Restated Investors' Agreement, dated as of
October
2, 1998, by and among the Company and the stockholders of the Company named
therein (the "DLJ ENTITIES").
ARTICLE II
REPRESENTATIONS OF THE COMPANY
Section 2.01. 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. The Company has all corporate power to own its properties
and to carry on its business as now conducted.
Section 2.02. AUTHORITY AND APPROVAL. The execution and delivery of this
Agreement are within the corporate powers of the Company and have been duly
authorized by all necessary corporate action on the part of the Company. This
Agreement constitutes a legal, valid and binding agreement of the Company,
enforceable against it in accordance with its terms, except to the extent that
its enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
Section 2.03. SHARES. When issued to the Investor in accordance with the
terms hereof, the Shares will be duly authorized, validly issued, fully paid and
non-assessable.
Section 2.04. CAPITALIZATION. The authorized capital stock of the Company
(prior to giving effect to the issuance of the Shares) consists of (i) 3,500,000
shares of Common Stock, of which 2,826,087 shares are issued and outstanding as
of the date hereof, and (ii) 2,500,000 shares of Preferred Stock, of which
340,000 shares are issued and outstanding as of the date hereof. Except for (i)
the Preferred Stock, and (ii) warrants to purchase an aggregate of 155,000
shares of Common Stock issued to the DLJ Entities on October 2, 1998 and
warrants to purchase an aggregate of 155,000 shares of Common Stock issued in
connection with the Company's 12% Senior Subordinated Notes due 2008 on October
5, 1998, there are no outstanding securities convertible into or exchangeable
for the capital stock of the Company and no outstanding options, rights or
warrants to purchase or subscribe for any shares of the capital stock of the
Company.
2
ARTICLE III
REPRESENTATIONS OF THE INVESTOR
Section 3.01. AUTHORIZATION. The Investor has full power and authority to
enter into this Agreement and the Promissory Note and Pledge and to perform his
obligations hereunder and thereunder.
Section 3.02. ENFORCEABILITY. Each of this Agreement and the Promissory
Note and Pledge has been duly executed and delivered by the Investor and
constitutes a legal, valid and binding obligation of the Investor, enforceable
against the Investor in accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles.
Section 3.03. PRIVATE PLACEMENT. (a) The Investor understands that the
offering and sale of the Shares to the Investor as contemplated hereby is
intended to be exempt from registration under the Securities Act of 1933, as
amended (the "1933 ACT") pursuant to Regulation D and Section 4(2) thereunder.
(b) The Shares to be acquired by the Investor pursuant to this
Agreement are being acquired for his own account for investment and without
a view to the public distribution of the Shares or any interest therein.
The Investor understands that the Shares may not be transferred or sold
unless registered under the 1933 Act or an exemption from such registration
becomes available.
(c) The Investor has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks
of his investment in the Shares and the Investor is capable of bearing the
economic risks of such investment, including a complete loss of his
investment in the Shares.
(d) The Investor has been given the opportunity to ask questions of
and receive answers from the Company concerning the Company, the Shares and
other related matters. The Investor further represents and warrants to the
Company that he has been furnished with all information he deems necessary
or desirable to evaluate the merits and risks of the acquisition of the
Shares and that the Company has made available to the Investor or his
agents all documents and information relating to an investment in the
Shares requested by or on behalf of the Investor. In evaluating the
suitability of an investment in the Shares, the Investor has
3
not relied upon any other representations or other information (other than
as contemplated by the preceding sentences) whether oral or written made by
or on behalf of the Company.
(e) The Investor is an "Accredited Investor" as such term is defined
in Regulation D under the 1933 Act.
ARTICLE IV
MISCELLANEOUS
Section 4.01. NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission to the
recipient's then current facsimile number) and shall be given,
if to the Investor, to the address set forth on the signature page, and
if to the Company, to:
DeCrane Holdings Co.
2361 Rosecrans Avenue
Suite 180
El Segundo, Ca 90245
Attn: R. Jack DeCrane
Fax: (310) 643-0746
Section 4.02. AMENDMENTS AND WAIVERS. Any provision of this Agreement may
be amended modified, supplemented or waived if, but only if, such amendment or
waiver is in writing and is signed, in the case of an amendment, by each party
to this Agreement, or in the case of a waiver, by the party against whom the
waiver is to be effective.
Section 4.03. SUCCESSORS AND ASSIGNS. 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 each other party hereto.
Section 4.05. COUNTERPARTS; THIRD PARTY BENEFICIARIES. 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 a counterpart hereof signed by the other party hereto. No
provision
4
of this Agreement is intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
Section 4.06. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.
Section 4.07. CAPTIONS. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
Section 4.08. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with laws of the State of New York.
5
IN WITNESS WHEREOF, the Investor has executed this Agreement and the
Company has caused its corporate name to be hereunto subscribed by its officers
thereunto duly authorized, all as of the day and year first above written.
DECRANE HOLDINGS CO.
By:
---------------------------------
Name:
Title:
INVESTOR
By:
---------------------------------
Name:
Title:
Address:
Fax:
6
EXHIBIT A
- --------------------------------------------------------------------------------
NUMBER OF AMOUNT OF
SHARES OF SUBSCRIPTION PRICE
SUBSCRIBED FOR
- --------------------------------------------------------------------------------
COMMON STOCK - $ -
- --------------------------------------------------------------------------------
7
EXHIBIT B
FORM OF AGREEMENT TO BE BOUND
October ___, 1998
To the Parties to the Amended and Restated Investors'
Agreement dated as of October 2, 1998
Ladies and Gentlemen:
Reference is made to the Amended and Restated Investors' Agreement dated as
of October 2, 1998 (the "INVESTORS' AGREEMENT") among DeCrane Holdings Co. and
the other Persons listed on the signature pages thereof and each other Person
who has or shall become a party to the Investors' Agreement as provided therein.
Capitalized terms used herein and not defined have the meanings ascribed to them
in the Investors' Agreement.
In consideration of the covenants and agreements contained in the
Investors' Agreement, the undersigned hereby confirms and agrees that it shall
be bound as a "Stockholder" by all of the provisions thereof.
This letter shall be construed and enforced in accordance with the internal
laws of the State of Delaware.
Very truly yours,
8
FORM OF PROMISSORY NOTE AND PLEDGE
New York, New York
October ___, 1998
For value received, _________________ (the "INVESTOR") promises to pay to
the order of DeCrane Holdings Co., a Delaware corporation (the "COMPANY", also
referred to herein as the "LENDER"). $__________ (the "LOAN") the principal
amount of which will be repayable in full on the eighth anniversary of the date
hereof (the "PAYMENT DATE") subject to prepayment as set forth below; PROVIDED
that if at any time the Investor disposes of any shares of Common Stock, par
value $0.01 per share, of the Company (the "COMMON SHARES") pledged hereunder,
the proceeds of any such sale shall be used by the Investor as follows: first to
pay any accrued but unpaid interest on the Loan, and second to repay the
principal amount of the Loan (or portion thereof), promptly upon receipt of such
proceeds. The Investor promises to pay on the Payment Date, all accrued and
unpaid interest on the Loan on such date as well as all outstanding principal on
such date. Interest will accrue on the outstanding principal amount of the Loan,
and will be compounded annually, at a rate equal to the applicable federal rate
as published by the Treasury Department of the United States of America on
October ___, 1998. All payments of principal and interest shall be made in
lawful money of the United States in Federal or other immediately available
funds at the office of the Company c/o DLJ Merchant Banking Partners IL, L.P.,
277 Park Avenue, New York, New York 10172, or as otherwise notified to the
Investor by the Company. The Investor may pay the Loan without penalty in whole
at any time, or from time to time in part, by paying the principal amount to be
paid at such time, together with all accrued interest to the date of payment.
To secure payment of the principal of and all interest on the Loan, the
Investor hereby assigns, pledges and grants to DLJ Merchant Banking II, Inc.
(the "AGENT") for the ratable benefit of the Lender a security interest in and,
to the extent not previously delivered, delivers to the Agent (i) - Common
Shares acquired by the Investor from the Company as of the date hereof and all
other shares of capital stock acquired by the Investor from the Lender
(collectively, the "PLEDGED SHARES"), (ii) all rights and privileges with
respect to the Pledged Shares, (iii) all income and profits thereon, (iv) all
dividends, payments and other distributions with respect thereto, and (v) all
proceeds thereof and substitutions therefor other than any cash income, profits,
dividends, payments, distributions or proceeds so long as the Investor is not in
default hereunder (collectively, the "COLLATERAL"). The Investor is delivering
to the Agent certificates representing the Shares in pledge hereunder.
The Company's recourse under this Promissory Note and Pledge is limited
solely to the Collateral.
Certificates evidencing the Pledged Shares shall remain in the physical
custody of the Agent at all times until the Investor has made payment in full of
all principal of and interest on the Loan, except for transfers permitted
hereunder so long as the proceeds of such sale are applied as provided herein
and, in its reasonable discretion, the Agent determines that the remaining
Collateral is sufficient.
This Promissory Note and Pledge constitutes a security agreement for
purposes of the Uniform Commercial Code in all relevant jurisdictions. Upon the
nonpayment of principal or interest when due hereunder or under any other note
issued in connection with any other Loan (a "DEFAULT"), the Agent (i) may, by
notice to the Investor, declare the Loan (together with accrued and unpaid
interest thereon) to be, and the Loan shall thereupon become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Investor, and (ii) shall have all the
rights and remedies of a secured party provided in the Uniform Commercial Code
in force in New York.
The Pledged Shares are granted as security only and shall not subject the
Agent or the Company to, or in any way affect or modify, any obligation or
liability of the Investor with respect to any of its Collateral or any
transaction in connection therewith.
The Investor agrees that it will, at the Company's expense and in such
manner and from as the Agent may reasonably require, execute, deliver, file and
record any financing statement, specific assignment or other paper and take any
other action that may be reasonably necessary or desirable, or that the Agent
may reasonably request, in order to create, preserve, perfect or validate any
security interest or to enable the Agent to exercise and enforce its rights
hereunder with respect to any of the Collateral. To the extent permitted by
applicable law, the Investor hereby authorizes the Agent to execute and file, in
the name of the Investor or otherwise, Uniform Commercial Code financing
statements (which may be carbon, photographic, photostatic or other
reproductions of this Promissory Note and Pledge or of a financing statement
relating to this Promissory Note and Pledge) which the Agent in its sole
discretion may deem necessary or appropriate to further perfect its security
interest in the Collateral.
To the extent a Default shall have occurred and be continuing, the Agent
may cause any or all of the Pledged Shares to be transferred of record into the
name of the Agent or its nominee. The Investor will promptly give to the Agent
copies of any notices or other communications received by him with respect to
Pledged Shares registered in the name of the Investor, and the Agent will
promptly give to the Investor copies of any notices and communications received
by the Agent with respect to Pledged Shares registered in the name of the Agent
or its nominee.
If a Default shall have occurred and be continuing, the Agent shall have
the right to receive and to retain as Collateral hereunder for the benefit of
the Company all
2
dividends, interest and other payments and distributions made upon or with
respect to the Collateral, and the Investor shall take all such action as the
Agent may deem necessary or appropriate to give effect to such right.
Unless a Default shall have occurred and be continuing, the Investor shall
have the right, from time to time, to receive and retain all cash dividends,
interest and other payments and distributions made upon or with respect to the
Collateral and to vote and to give consents, ratifications and waivers with
respect to the Pledged Shares, and the Agent shall deliver to the Investor such
proxies, powers of attorney, consents, ratifications and waivers in respect of
any of the Pledged Shares which are registered in the name of the Agent or its
nominee as the Investor shall request.
If a Default shall have occurred and be continuing, the Agent shall have
the right to the extent permitted by law and the Investor shall take all such
action as may be necessary or appropriate to give effect to such right, to vote
and to give consents, ratifications and waivers, and take any other action with
respect to any or all of the Pledged Shares with the same force and effect as if
the Agent were the absolute and sole owner thereof.
The Investor hereby irrevocably appoints the Agent its true and lawful
attorney, with full power of substitution, in the name of the Investor, the
Agent or otherwise, for the sole use and benefit of the Agent, but at the
expense of the Agent, to the extent permitted by law, to exercise, at any time
and from time to time while a Default has occurred and is continuing, all or any
of the following powers with respect to all or any of the Collateral:
(i) to demand, sue for, collect, receive and give acquittance for any
and all monies due to become due upon or by virtue thereof;
(ii) to settle, compromise, compound, prosecute or defend any action or
proceeding with respect thereto;
(iii) to sell, transfer, assign or otherwise deal in or with the same or
the proceeds or avails thereof, as fully and effectually as if the Agent
were the absolute owner thereof; and
(iv) to extent the time of payment of any or all thereof and to make
any allowance and other adjustments with reference thereto;
PROVIDED that the Agent shall give the Investor not less than ten days' prior
written notice of the time and place of any sale or other intended disposition
of any of the Collateral. The Agent and the Investor agree that such notice
constitutes "reasonable notification" within the meaning of Section 9-504(3) of
the Uniform Commercial Code.
3
The Investor covenants and agrees that in the event that any of the
Collateral shall become subject to any lien or security interest other than
the liens and security interests in favor of the Agent created hereunder, or
the lien on and security interest in the Collateral in favor of the Agent
shall cease to be a first priority perfected security interest in and lien on
any of such Collateral except pursuant to a release herein contemplated, the
Investor will promptly take whatever reasonable action may be necessary to
release such other liens or security interests or to restore the Agent's lien
on and security interest in the Collateral as a first priority perfected
security interest or lien, as the case may be. The Investor acknowledges
that money damages would not be a sufficient remedy for the breach of the
Investor's covenant in this paragraph and that, in addition to all other
remedies that may be available, the Agent shall be entitled to specific
performance as a remedy for any such breach.
The Investor agrees that it will forthwith upon demand pay to the Agent and
the Company, as the case may be, the amount of any and all reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel and of any other experts, which the Agent or the Company may incur in
connection with (w) the enforcement of this Promissory Note and Pledge,
including such expenses as are incurred to preserve the value of the Collateral
and the validity, perfection, rank and value of any security interest, (x) the
collection, sale or other disposition of any of the Collateral, (y) the exercise
by the Agent of any of the rights conferred upon its hereunder or (z) any
Default; PROVIDED, HOWEVER, that in no event shall the total amount collected
pursuant to this paragraph exceed the value of the Collateral.
For the purpose of this Promissory Note and Pledge, notices and all other
communications provided for in this Promissory Note and Pledge shall be in
writing and shall be given to the respective addresses or telecopy numbers set
forth below:
if to the Investor, to the address set forth on the signature page hereof;
if to the Company, to: DeCrane Holdings Co.
2361 Rosecrans Avenue
Suite 180
El Segundo, CA 90245
Telefax: (310) 643-0746
if to the Agent, to: DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, NY 10172
Attention: Thompson Dean
Telefax: (212) 892-7272
4
PROVIDED, that all notices to the Company shall be directed to the attention of
the Board with a copy to the Secretary of the Company, or to such other address
as either party may have furnished to the other in writing in accordance
herewith. Each such notice or other communication shall be effective (i) if
given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this paragraph and telephonic confirmation of receipt thereof is
obtained, (ii) if given by prepaid overnight courier, one business day after
deposit with such courier or (iii) if given by United States certified or
registered mail, postage prepaid, three business days after deposit with the
United States postal service; PROVIDED that notice of change of address shall be
effective only upon receipt.
No failure or delay by the Agent 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.
Any provision of this Promissory Note and Pledge may be amended or waived
if, and only if, such amendment or waiver is in writing and is signed by the
Investor, the Company and the Agent. The provisions of this Promissory Note and
Pledge shall be binding upon the Investor and its successors, assigns, personal
representatives, estate and heirs and shall inure to the benefit of the Company
and its successors and assigns.
This Promissory Note and Pledge shall be governed by and construed in
accordance with the laws of the State of New York.
Upon the repayment in full of the principal of and interest on the Loan,
the security interest shall terminate and all rights to the Collateral shall
revert to the Investor, and the Agent shall take all actions which may
reasonably be requested by the Investor to reflect the termination of such
security interest. In addition, in the case of a transfer of the Collateral
permitted hereunder in which the proceeds are applied as provided herein, the
security interest in the Collateral so transferred shall terminate and the Agent
shall take all actions which may reasonably be requested by the Investor to
reflect the termination of such security interest.
5
This Promissory Note and Pledge constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof.
By:
------------------------------
Name:
Address:
Fax:
Agreed and Acknowledged:
DECRANE HOLDINGS CO.
By:
----------------------------
Name:
Title:
DLJ MERCHANT BANKING II, INC.
By:
----------------------------
Name:
Title:
6