DDL ELECTRONICS INC, 10-K, 1995-09-29

DDL ELECTRONICS INC
10-K, 1995-09-29
PRINTED CIRCUIT BOARDS

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended June 30, 1995

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission File Number 1-8101

DDL ELECTRONICS, INC.

(Exact name of Registrant as specified in its Charter)

Delaware 33-0213512
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

7320 SW Hunziker Rd., Suite 300, Tigard, Oregon 97223-2302
(Address of Principal Executive Offices)

Registrant's telephone number, including area code
(503) 620-1789

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on
which registered

Common Stock, .01 Par Value New York Stock Exchange
Pacific Stock Exchange

7% Convertible Subordinated
Debentures due May 15, 2001 New York Stock Exchange

8-1/2% Convertible Subordinated
Debentures due August 1, 2008 New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in this Form 10-K or any amendment to this Form 10-K.
[ ]

The aggregate market value of the voting stock held by
non-affiliates of the registrant based on the closing price as
reported by the New York Stock Exchange on September 15, 1995:
$34,637,179

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of September 15, 1995: 16,299,849

DOCUMENTS INCORPORATED BY REFERENCE

The Annual Report to Stockholders for the fiscal year ended June
30, 1995, is incorporated by reference in Part I and II hereof.
The Proxy Statement for the December 11, 1995 Annual Meeting of
Shareholders is incorporated by reference in Part III hereof.

EXHIBIT INDEX
See page 24

<PAGE>
PART I

Item 1. Business

DDL Electronics, Inc. ("DDL" or the "Company") is an
independent provider of electronic contract manufacturing ("ECM")
services and a fabricator of printed circuit boards ("PCB") for
use primarily in the computer, communications, and
instrumentation industries. The Company provides ECM services
for manufacturers of electronic equipment and fabricates
multilayer PCBs at its operations in Northern Ireland primarily
for customers in Europe.

The Company entered the ECM business by acquiring its
domestic ECM operations in 1985 and by organizing its European
ECM operations in 1990. In its PCB fabrication business, the
Company manufactures PCBs ranging from simple single and
double-sided boards to multilayer boards with more than 20
layers. Since the mid-1980s, the Company has increasingly
focused on the fabrication of advanced multilayer PCBs.
Management believes the market for these boards offers the
opportunity for more attractive margins than the market for less
complex, single and double-sided boards. Since 1985, the Company
has made substantial capital expenditures in its Northern Ireland
ECM and PCB fabrication facilities. In fiscal 1995, the Company
liquidated or sold many assets associated with its United States
PCB fabrication facility and its ECM operations. The Company
maintains its corporate headquarters in Tigard, Oregon.

The Company also has divested its non-ECM and non-PCB
businesses in recent years, including its communications
business, its pressure gauge and hose manufacturing operations,
its emergency lighting equipment manufacturing operations and its
engineering services operations.

RECENT DEVELOPMENTS

The Company incurred substantial operating losses in recent
years that have impaired operations and positive cash flows.
These losses totaled $4,970,000, $6,948,000, and $5,067,000, in
the fiscal years ended June 30, 1995, 1994, and 1993,
respectively. The Company realized net profits of $75,000 and
$1,073,000 in 1995 and 1993, respectively, and incurred a net
loss of $8,354,000 in the 1994 fiscal year. The fiscal 1995 net
profit, however, included an extraordinary gain of $2,441,000
recognized as a result of the extinguishment of the Company's
senior debt in fiscal year 1995, and a gain of $3,317 on a sale
of assets in fiscal year 1995. The fiscal 1993 net profit
included an extraordinary gains from exchanges of the Company's
7% and 8-1/2% convertible subordinated debentures ("CSDs") for
equity, and a $603,000 gain from the sale of a discontinued
business.

The losses in the Company's ECM and PCB fabrication
businesses have resulted from certain Company-specific factors,
including yield and quality problems, facility underutilization,
delays in meeting delivery schedules, collection problems and
management turnover, as well as from excess production capacity
in the industry putting extreme downward pressure on the
Company's prices and production volume. As a result, the Company
sold or liquidated its unprofitable United States operations and
concentrated efforts on its profitable European operations.

In addition to improving its operations, the Company must
also increase sales volume and improve margins in order to
maintain its continuing operations in a profitable position.
Notwithstanding the steps that have been taken to address the
Company's operating problems during the past several years, the
Company has only recently realized operating profits from its
continuing operations and there can be no assurance that such
profits will continue. Maintaining profitability while managing
the Company's working capital is required in order to ensure the
Company's liquidity and the Company's cash balances are at levels
required to operate its business. For management's response to
these operating issues, together with other significant events
and conditions occurring during the last three years, see the
1995 Annual Report to Stockholders under the caption
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 3 to 12 thereto.

In December 1994, the Company successfully consummated an
integrated plan retiring over $12,000,000 of its senior debt upon
the sale of certain assets of the Company's Aeroscientifc Corp.
subsidiary, located in Beaverton, Oregon, to Yamamoto
Manufacturing (USA), Inc. In addition, the liens of the
Company's two major senior lenders were contemporaneously
eliminated. The release of liens was achieved by the Company
concluding termination agreements with Sanwa Bank California
("Sanwa") which covered Sanwa's term loan to the Company, and
with The Tokai Bank Ltd. ("Tokai") regarding its letter of credit
issued to First Interstate Bank of Oregon, N.A. in connection
with Industrial Revenue Bonds ("IRBs") issued by the State of
Oregon.

A program of acquisitions and mergers is being pursued in an
effort to accelerate the turnaround of the Company's operating
position and to improve shareholder value. Given current and
anticipated market conditions, management believes that the
Company must develop faster ways of rebuilding and expanding its
customer base to withstand the impact of continued downsizing at
major customers. No assurance can be given that the revised
strategic plan will be successful.

FINANCIAL INFORMATION BY BUSINESS SEGMENT AND GEOGRAPHICAL AREA

The Company is principally engaged in two lines of business,
e.g., the provision of ECM services and the fabrication of PCBs.
Information for each of the Company's last three fiscal years,
with respect to the amounts of revenues from sales to
unaffiliated customers, operating profit or loss and identifiable
assets of these segments is set forth under the caption "Selected
Financial Data" appearing on pages 2 and 33 of the Company's 1995
Annual Report to Shareholders. Such information is incorporated
herein by this reference and is made a part hereof.

ELECTRONIC CONTRACT MANUFACTURING AND PRINTED CIRCUIT BOARD
FABRICATION BUSINESSES

The ECM and PCB fabrication industries and the markets in
which the Company's customers compete are characterized by rapid
technological change and product obsolescence. As a result, the
end services provided and products made by the Company's ECM and
PCB fabrication customers have relatively short product lives.
The Company believes that its future success in these industries
is dependent on its ability to continue to incorporate new
technology into its ECM and fabrication processes, to satisfy
increasing customer demands for quality and timely delivery, and
to be responsive to future changes in this dynamic market.

The PCB fabrication market is highly fragmented. Numerous
factors, however, have caused a shift toward consolidation in the
PCB fabrication industry, including extreme competition,
substantial excess production capacity experienced by the
industry prior to the current fiscal year, the greatly increased
capital and technical requirements to service the advanced
multilayer PCB fabrication market, and the inability of many PCB
fabricators to keep up with the changing demands and expectations
of customers on matters such as technical board characteristics,
quality, and timely delivery of product.

Description of Products and Services--ECM. The Company's ECM
operation provides turnkey ECM services using both surface mount
and through-hole interconnection technologies. Under the turnkey
process, the Company procures customer-specified components from
suppliers, assembles the components onto PCBs, and performs
post-assembly testing. The Company conducts the ECM portion of
its business through its DDL Electronics Limited ("DDL-E")
subsidiary servicing customers in Western Europe. DDL-E does not
fabricate any of the components or PCBs used in these processes.
However, it has, in the past, procured PCBs from the Company's
PCB fabricator. The ECM business represented approximately 47%,
59% and 55% of the Company's consolidated sales for the fiscal
years ended June 30, 1995, 1994, and 1993, respectively.

Since turnkey electronic contract manufacturing may be a
substitute for all or some portion of a customer's captive ECM
capability, continuous communication between the Company and the
customer is critical. To facilitate such communication, the
Company maintains a customer service department whose personnel
work closely with the customer throughout the assembly process.
The Company's engineering and service personnel coordinate with
the customer on the implementation of new and re-engineered
products, thereby providing the customer with feedback on such
issues as ease of assembly and anticipated production lead times.
Component procurement is commenced after component specifications
are verified and approved sources are confirmed with the
customer. Concurrently, assembly routing and procedures for
conformance with the workmanship standards of the Institute for
Interconnecting and Packaging Electronic Circuits ("IPC") are
defined and planned. Additionally, "in-circuit" test fixturing
is designed and developed. "In-circuit" tests are normally
performed on all assembled circuit boards for turnkey projects.
Such tests verify that components have been properly inserted and
meet certain functional standards and that electrical circuits
are properly completed. In addition, under protocols specified
by the customer, the Company performs customized functional tests
designed to ensure that the board or assembly will perform its
intended function. The Company's personnel monitor all stages of
the assembly process in an effort to provide flexible and rapid
responses to the customer's requirements, including changes in
design, order size, and delivery schedule.

The materials procurement element of the Company's turnkey
services consists of the planning, purchasing, expediting, and
financing of the components and materials required to assemble a
PCB or system-level assembly. Customers have increasingly
required the Company and other independent providers of ECM
services to purchase all or some components directly from
component manufacturers or distributors and to finance the
components and materials. In establishing a turnkey relationship
with an independent provider of ECM services, a customer must
incur expenses in qualifying that provider of ECM services and,
in some cases, its sources of component supply, refining product
design and ECM processes, and developing mutually compatible
information and reporting systems. With this relationship
established, the Company believes that customers experience
significant difficulty in expeditiously and effectively
reassigning a turnkey project to a new assembler or in taking on
the project themselves. Alternatively, the Company faces the
obstacle of attracting new customers away from existing ECM
providers or from performing services in-house.

Production of product for a customer is only performed when a
firm order is received. Revenue is recognized when product is
shipped. Customer cancellation of orders are infrequent and are
subject to cancellation charges. More often a customer will
delay shipment of orders based on its actual or anticipated
needs. Customer orders are produced based on one of two
production methods, either "Turnkey" (where DDL-E provides all
materials, labor and equipment associated with producing the
customers' product) or "Consigned" (DDL-E provides labor and
equipment only for manufacturing product). Material costs
customarily represents 70% of the turnkey method's sales price.
In other words, a change from turnkey to consigned orders at
DDL-E can result in a decline in sales volume without a reduction
in profit margin.

Description of Products and Services--PCB Fabrication. The
Company fabricates and sells advanced, multilayer PCBs based on
designs and specifications provided by the Company's customers.
These specifications are developed either solely through the
design efforts of the customer or through the design efforts of
the customer working together with the Company's design and
engineering staff. Customers submit requests for quotations on
each job and the Company prepares bids based on its own cost
estimates. The Company currently conducts the fabrication
portion of its PCB business through its Northern Ireland,
Irlandus Circuits Limited ("Irlandus") subsidiary. The Company's
fabrication facilities in Anaheim, California were shut down in
fiscal year 1992 and its Beaverton, Oregon facility was sold in
the current fiscal year. The PCB fabrication business
represented approximately 53%, 41% and 45% of DDL's consolidated
sales for the fiscal years ended June 30, 1995, 1994, and 1993,
respectively, with four or more layer boards constituting a
substantial portion of those sales.

PCBs range from simple single and double-sided boards to
multilayer boards with more than 20 layers. When PCBs are joined
with electronic components in the assembly process, they comprise
the basic building blocks for electronic equipment. Single-sided
PCBs are used in electronic games and automobile ignition
systems, whereas multilayer PCBs are used in more advanced
applications such as computers, office equipment, communications,
instrumentation, and defense systems.

PCBs consist of fine lines of a conductive material, such as
copper, which are bonded to a non-conductive panel, typically
rigid laminated epoxy glass. The conductive pathways in the PCBs
form electrical circuits and replace wire as a means of
connecting electronic components. On technologically advanced
multilayer boards, conductive pathways between layers are
connected with traditional plated through-holes and may
incorporate surface mount technology. "Through-holes" are holes
drilled entirely through the board that are plated with a
conductive material and constitute the primary connection between
the circuitry on the different layers of the board and the
electronic components attached to the boards later. "Surface
mount" boards are boards on which electrical components are
soldered instead of being inserted into through-holes. Although
substantially more complex and difficult to produce, surface
mount boards can substantially reduce wasted space associated
with through-hole technology and permit greatly increased surface
and inner layer densities. Complex boards may also have "via" or
"blind-via" holes that connect inner layers of multi-layer board
or connect an inner layer to the outside of the board.

The development of increasingly sophisticated electronic
equipment, which combines higher performance and reliability with
reduced size and cost, has created a demand for increased
complexity, miniaturization, and density in electronic circuitry.
In response to this demand, multilayer technology is advancing
rapidly on many fronts, including the widespread use of surface
mount technology. More sophisticated boards are being created by
decreasing the width of the tracks on the board and increasing
the amount of circuitry that can be placed on each layer.
Fabricating advanced multilayer PCBs requires high levels of
capital investment and complex, rapidly changing production
processes.

As the sophistication and complexity of PCBs increase,
manufacturing yields typically fall. Historically, the Company
relied on tactical quality procedures, in which defects are
assumed to exist and quality inspectors examine product lot by
lot and board by board to identify deficiencies, using automated
optical inspection and electrical test equipment. This
traditional approach to quality control is not adequate to
produce acceptably high yields in an advanced multilayer PCB
fabrication environment, as it focuses on identifying, rather
than preventing, defects. In recognition of this limitation,
Irlandus is striving to create a positive environment
encompassing management's awareness, process understanding, and
operator involvement in identifying and correcting production
problems before defects occur.

The International Standards Organization ("ISO") has
published internationally recognized standards of workmanship and
quality. Both Irlandus and DDL-E, the Company's ECM and PCB
operations in Northern Ireland, have achieved ISO 9002
certification which will be increasingly necessary to attract
business.

ECM Facilities. DDL-E conducts its operations from a 67,000
square foot facility in Northern Ireland that was purchased in
1989. Prior to DDL-E commencing operations in the Spring of
1990, approximately 1,600,000 pounds sterling (approximately
$2,700,000) was
expended on auto-insertion equipment, surface mount device
placement equipment, wave solder equipment, visual inspection
equipment, and automated test equipment. The Company believes
that this facility possesses the technology to compete
effectively and that the facility is capable of supporting
projected growth for up to the next two years.

Fabrication Facilities. Irlandus occupies a 63,000 square
foot production facility and an adjacent 9,000 square foot office
and storage facility. Irlandus' existing capacity is expected to
be adequate to meet anticipated order levels for the next three
years. Aeroscientific stopped recognizing revenue at its 44,000
square foot Beaverton, Oregon facility when it was sold to
Yamamoto in December 1994.

Marketing and Customers. The Company's sales in the ECM and
fabrication businesses and the percentage of its consolidated
sales to the principal end-user markets it serves for the last
three fiscal years were as follows (dollars in thousands):

Year Ended June 30,

Markets 1995 1994 1993

Computer $7,115 24.1% $23,905 49.3% $25,479 44.0%
Communications 6,926 23.4 8,396 17.3 14,881 25.7
Financial 2,067 7.0 - - - -
Industrial &
Instrumentation 6,044 20.4 6,196 12.8 6,555 11.3
Medical 4,668 15.8 6,533 13.4 6,582 11.4
Automotive 175 .6 889 1.8 1,035 1.8
Government/
Military 1,362 4.6 1,411 2.9 1,509 2.6
Other 1,219 4.1 1,199 2.5 1,842 3.2

Total $29,576 100.0% $48,529 100.0% $57,883 100.0%

The Company markets its ECM and PCB fabrication services
through both a direct sales force and independent manufacturers'
representatives. The Company's marketing strategy is to develop
close relationships with, and to increase sales to, certain
existing and new major ECM and fabrication customers. This
includes becoming involved at an early stage in the design of
PCBs for these customers' new products. DDL believes that this
strategy is necessary to keep abreast of rapidly changing
technological needs and to develop new ECM and fabrication
processes, thereby enhancing the Company's ECM and fabrication
capabilities and its position in the industry. As a result of
this strategy, however, fluctuations experienced by one or more
of these customers in demand for their products may have and have
had adverse effects on the Company's sales and profitability.

At the end of the fiscal year ended June 30, 1995, the
Company's ECM business had approximately 16 customers, all of
which were located in Western Europe, compared to 60 in fiscal
1994 and 37 in fiscal year 1993. At the end of fiscal year 1995,
the Company fabricated PCBs for approximately 98 customers,
substantially all of which are located in Western Europe,
compared to 211 in fiscal year 1994 and 169 in fiscal year 1993.
The Company's five largest customers accounted for 21%, 45% and
39% of consolidated sales during fiscal years 1995, 1994, and
1993, respectively. For all three fiscal years , no single PCB
fabrication customer accounted for more than 4% of the Company's
consolidated sales. The Company's largest European ECM customer
accounted for approximately 8% of consolidated sales in fiscal
year 1994. Dataproducts Corporation, the largest customer of the
Company's former domestic ECM operation, accounted for 13% of
consolidated sales in both fiscal years 1993 and 1994. No single
customer of the Company's domestic PCB or ECM discontinued
businesses accounted for more than 2% of consolidated sales in
fiscal year 1995.

Two customers of the Company's European ECM operation made
combined purchases equal to or in excess of 12% and 10% of
consolidated sales during fiscal years 1995 and 1994,
respectively. These two customers, GE Medical Systems, a General
Electric Company ("GE Medical") and DeLaRue Fortronic, LTD,
("Fortronic") comprised almost 90% of the Company's European ECM
sales in fiscal year 1994. This amount dropped in fiscal year
1995 to 36%. Sales to both of these customers diminished in the
latter part of fiscal year 1994. Fortronic's purchases declined
due to reduced orders of its magnetic card reader products in the
European market, while orders from GE Medical have been reduced
as that company relocated its headquarters to the United States.
Weakness in orders from these two customers continued into the
first half of fiscal year 1995, but orders increased in the last
half of fiscal year 1995.

The decreased number of customers in both the ECM and PCB
businesses reflects the impact of the Company's discontinuance of
business at several of its subsidiaries. The number of European
customers, however, has increased reflecting the Company's
change in marketing activities to increase its customer base in
smaller, higher margin entities and reduce the Company's
dependency on large run volume, low margin customers.

Raw Materials and Suppliers. In its ECM business, the
Company uses numerous suppliers of electronic components and
other materials. The Company's customers may specify the
particular manufacturers and components, such as the Intel 80486
microprocessor, to be used in the ECM process. To the extent
these components are not available on a timely basis or are in
short supply because of allocations imposed by the component
manufacturer, and the customer is unwilling to accept a
substitute component, delays may occur. Such delays are
experienced in the ECM business from time to time and have caused
sales and inventory fluctuations at the Company's ECM business.

The principal materials used by the Company in its
fabrication processes are copper laminate, epoxy glass, copper
alloys, gold and various chemicals, all of which are readily
available to the Company from various sources. The Company
believes that its sources of materials for its fabrication
business are adequate for its needs and that it is not
substantially dependent upon any one supplier.

Industry Conditions and Competition. The markets in which
the ECM and PCB fabrication businesses operate are intensely
competitive and have experienced excess production capacity
during the past few years. Seasonality is not a factor in the
ECM and PCB fabrication businesses. There has been significant
downward pressure on the prices that the Company is able to
charge for its ECM and fabrication services. More recently,
market conditions have improved which has resulted in an increase
in product demand. While the Company believes that market
conditions will continue to improve, it does not believe that
prices will increase as quickly. ECM and fabrication customers
are increasing their orders, but are reluctant to pay more for
such services primarily due to the industry's excess capacity and
price competition. Additionally, competition is principally
based on price, product quality, technical capability, and the
ability to deliver products on schedule. Both the price of and
the demand for ECM services and PCBs are sensitive to economic
conditions, changing technologies, and other factors. The
technology used in the ECM services and fabrication of PCBs is
widely available, and there are a large number of domestic and
foreign competitors. Many of these firms are larger than the
Company and have significantly greater financial, marketing, and
other resources. In addition, the Company faces a competitive
disadvantage against better financed competitors because the
Company's current financial situation causes certain customers to
be reluctant to do business with the Company's operating
subsidiaries. Many of the Company's competitors have also made
substantial capital expenditures in recent years and operate
technologically advanced ECM and fabrication facilities. In
addition, some of the Company's customers have substantial
in-house ECM capability, and to a lesser extent, PCB fabrication
capacity. There is a risk that when these customers are
operating at less than full capacity they will use their own
facilities rather than purchase from the Company. Despite this
risk, management believes that the Company has not experienced a
significant loss of business to in-house fabricators or
assemblers. There also are risks that other customers,
particularly in the ECM market, will develop their own in-house
capabilities, that additional competitors will acquire the
ability to produce advanced, multilayer boards in commercial
quantities, or the ability to provide ECM services, and that
foreign firms, including large, technologically advanced Japanese
firms, will increase their share of the United States or European
market.

Price competition in the computer marketplace which comprises
the Company's largest market is intense. This has caused price
erosion and lower margins, particularly in the Company's PCB
fabrication business. Significant improvement in the Company's
PCB gross margins may not be achieved in the near future due to
excess PCB production capacity worldwide and substantial
competitive pressures in the Company's principal market.
Generally, the Company's customers are reducing inventory levels
and seeking lower prices from their vendors, such as the Company,
to compete effectively.

GENERAL

Backlog. At June 30, 1995, 1994, and 1993, the Company's ECM
and PCB fabrication businesses had combined backlogs of
$9,247,000, $6,902,000 and $19,612,000, respectively. Backlog is
comprised of orders believed to be firm for products that have
scheduled shipment dates during the next 12 months. Some orders
in the backlog may be canceled under certain conditions.
Historically, a substantial portion of the Company's orders have
been for shipment within 90 days of the placement of the order
and, therefore, backlog information as of the end of a particular
period is not necessarily indicative of trends in the Company's
business. In addition, the timing of orders from major customers
may result in significant fluctuations in the Company's backlog
and operating results from period to period.

Backlog at June 30, 1995 included only the Company's European
subsidiaries. The increase from fiscal year 1994 reflects higher
order demand from existing ECM customers and new outstanding
orders from new ECM customers. The Company's European PCB
backlog increased slightly from the last fiscal year. The
fabrication group has and is expected to further increase sales
volume, but will not increase backlog as the sales increase is
expected to come from quick turn orders that are completed within
a one month accounting cycle and would, therefore, not be
included in the period end backlog.

Backlog at June 30, 1994 had declined from previous years
primarily due to the following reasons:

1. Loss of large customers and their projected orders in
the Company's ECM business. Total backlog for the Company's ECM
operations was $4,214,000 at fiscal year end 1994 versus
$17,612,000 at fiscal year end 1993.

2. Change in customer base in both the Company's ECM and
PCB units to a larger customer base with smaller, higher margin
purchase orders. Many of these customers have short notice,
quick turn requirements, and few orders in the Company's backlog
therefore extend beyond a one to two month period. Many of last
year's backlogged orders covered an eight to 12 month period.

On July 1, 1993, the largest customer at the Company's
domestic ECM operation in fiscal year 1993, Dataproducts
Corporation, ("Dataproducts") issued a temporary stop work order
on the bulk of its existing purchase orders. Dataproducts' total
purchases for the year ended June 30, 1993, were approximately
$7,703,000, or approximately 13% of the Company's consolidated
revenues for the year and $6,322,000 or 13% of fiscal year 1994
consolidated sales. Dataproducts' order backlog as of June 30,
1993 was approximately $5,747,000 or approximately 29% of the
Company's consolidated backlog at such date. Approximately
$700,000 of the Dataproducts backlog was canceled as a result of
the stop work order and the remaining orders were rescheduled for
delivery during the first six months of fiscal year 1994. There
were no Dataproducts orders in the fiscal year end 1994 backlog.
Because of the Dataproducts cancellation and reschedules, the
level of A.J.'s revenues were adversely affected in that year.
Events of this nature can materially delay or undermine the
Company's ability to complete a successful turnaround and achieve
operating profitability which is critical to the Company's
viability.

Environmental Regulation. Federal, state, and local
provisions relating to the protection of the environment affect
the Company's ECM and PCB fabrication businesses. Aeroscientific
has used or uses chemicals in the manufacture of their products
that are classified by the Environmental Protection Agency
("EPA") as hazardous substances. In the past, some of these
chemicals were either treated on site or removed from the
Company's facilities and disposed of elsewhere by arrangement
with the owners or operators of disposal sites. The Company's
current operation treats all hazardous substances on site and
reclaims, as reusable material, virtually 100% of the byproducts
produced. In late 1982, Aeroscientific-Anaheim received notice
from the EPA that it was regarded as a potentially responsible
party ("PRP") under federal environmental laws in connection with
a waste disposal site known as the "Stringfellow Superfund Site"
in Riverside County, California, which is presently being
considered by governmental authorities for remediation.
Aeroscientific-Anaheim has been named as a third party defendant
by other PRPs in a case brought in U.S. District Court for the
Southern District of California in 1984, by the United States
Government. The information developed during discovery and
investigation thus far indicates that Aeroscientific-Anaheim
supplied relatively small amounts of waste to the site as
compared to the many other defendants. As part of the currently
proposed Settlement Agreement, de minimis polluters would pay a
fixed amount plus an amount that varies based on volume of
material dumped at the site. Under these guidelines, the
Company's probable liability will be $120,000. Final settlement
and timing of payment are currently undeterminable, and no
assurances can be given that any settlement will be achieved.
The Company, however, has accrued sufficient liability reserves
to cover the proposed settlement as of fiscal year end 1995. Any
further remedial costs or damage awards in these cases may be
significant and management believes that the Company's allocated
share of such costs or damages could have a material adverse
effect on the Company's business or financial condition. The
actions are still in the pre-trial and discovery stages and a
prediction of outcome is difficult. There is, as in the case of
most environmental litigation, the theoretical possibility of
joint and several liability being imposed upon Aeroscientific for
damages which may be awarded. Total estimated cleanup costs for
the Stringfellow site have been estimated at $600 million. The
Company's possible range of liability is undeterminable, and the
reliability and precision of estimated cleanup costs are subject
to a myriad of factors which are not currently measurable.

The Company is aware of certain chemicals that exist in the
ground at its previously leased facility at 1240-1244 South
Claudina Street, Anaheim, California. The Company has notified
the appropriate governmental agencies and is proceeding with
remediation and investigative studies regarding soil and
groundwater contamination. The Company believes that it will be
required to implement a continuing remedial program for the site,
the cost of which is currently unknown. The installation of
water and soil extraction wells was completed in August 1994. A
plan for soil remediation was completed about the same time and
was submitted to regulatory authorities. The full extent of
potential ground water pollution could not be determined given
preliminary estimates. The Company retained the services of
Harding Lawson and Associates in May 1995 to begin the vapor
extraction of pollutant from the soil and to perform exploratory
hydro-punch testing to determine the full extent and cost of the
potential ground water contamination. These processes are in
their preliminary stages and a complete and accurate estimate of
the full and potential costs cannot be determined at this time.
The Company believes that the resolution of these matters will
require a significant cash outlay. Initial estimates from
Harding Lawson indicate that it could cost as much as $3,000,000
for full remediation of the site and take over ten years to
complete. The Company and Aeroscientific entered into an
agreement to share the costs of environmental remediation with
the landlord at the Anaheim facility. Under this agreement, the
Company is obligated to pay 80% of the site's total remediation
costs up to $725,000 (i.e., up to the Company's share of
$580,000) with any costs above $725,000 being shared equally
between the Company and the landlord. To date, the Company has
paid $239,000 as its share of the remediation costs. The Company
anticipates that its share of the final remediation cost should
approximate the amount it has presently reserved. Under the
current remediation agreement, the Company is making monthly
payments of approximately $18,000 through the end of the current
fiscal year. Management believes that the Company has the
ability to make these payments when due.

From time to time the Company is also involved in other waste
disposal remediation efforts and proceedings associated with its
other facilities. Based on information currently available to
the Company, management does not believe that the costs of such
efforts and proceedings will have a material adverse effect on
the Company's business or financial condition.

Headquarters Operations

The Company maintains its corporate headquarters in a 3,000
square foot leased building located in Tigard, Oregon. In
addition to executive officers, 5 employees work in the Company's
headquarters. The Company's headquarters operations include the
management of the Company's operating subsidiaries on a
consolidated basis, the arranging of financing for those
operations and capital expenditures and the management of the
remaining assets of the Company's discontinued United States
operations.

Employees. The Company currently employs approximately 340
persons.

Item 2. Properties

The following table lists principal plants and properties of
the Company and its subsidiaries:
Owned
Square or
Location Footage Leased

ECM and PCB fabrication businesses:

Tigard, Oregon 3,000 Leased
Chatsworth, California (sublet during
fiscal 1995) 48,000 Leased
Craigavon, Northern Ireland 63,000 Owned
Craigavon, Northern Ireland 67,000 Owned
Craigavon, Northern Ireland 9,000 Owned

The Northern Ireland properties are pledged as security
for installment loans payable to the Industrial Development Board
for Northern Ireland from which the properties were purchased.
These loans had an aggregate outstanding balance of approximately
$1,350,000 at June 30, 1995.

The Company's Tigard, Oregon headquarters facility is
leased for a two year term expiring on January 6, 1997 from an
unaffiliated third party. Rent on the headquarters is paid
monthly in advance. Management believes that the Tigard
facilities are adequate to meet the Company's needs for the
foreseeable future.

Item 3. Legal Proceedings

As to other litigation matters that are not specifically
described under the caption "General - Environmental Regulation',
Item 1 above, no material legal proceedings are presently pending
to which the Company or any of its property is subject, other
than ordinary routine litigation incidental to the Company's
business

Item 4. Submission of Matters to a Vote of Security Holders

At the Annual Meeting of Shareholders on May 31, 1995, Bernee
D.L. Strom and Erven Tallman were elected as Class II directors
by the shareholders, replacing former Class II directors Rockell
N. Hankin and John F. Coyne. Election of Directors was the only
matter proposed at the Annual Meeting of Shareholders. The
results of the election are as follows:
FOR WITHHELD

John F. Coyne 2,743,980 42,782
Rockell N. Hankin 2,744,980 41,782
Bernee D. L. Strom 9,988,812 28,458
Erven Tallman 9,988,812 28,458

In recognition of the shareholder vote, and prior to the
certification of the results by the independent inspectors of
election, John F. Coyne and Rockell N. Hankin resigned from the
Board of Directors immediately following the Annual Meeting of
Shareholders. At a meeting of the Board, the remaining Directors
accepted these resignations and elected Bernee D. L. Strom and
Erven Tallman to fill the vacancies and to serve as directors
pending certification of the election results. Solicitation for
election of Ms. Strom and Mr. Tallman as Class II Directors was
made by an opposition shareholder committee known as
"Shareholders Committee to Remove a Moribund Management"
("SCRMM"). A Settlement Agreement was entered into between the
departing Board members of management and SCRMM that, among other
things, provided for the election, without dispute, of Ms. Strom
and Mr. Tallman as Directors, required the resignation, without
dispute, of William E. Cook, the acceptance and recognition by
SCRMM of prior company employment and severance agreements with
management, and provision for payment of proxy solicitation
expenses of DDL up to $150,000 paid by the Company and a similar
amount paid for SCRMM's proxy solicitation expenses.
<PAGE>
PART II

Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters

The information set forth under the caption "Market
Information" on page 35 of the Company's 1995 Annual Report to
Shareholders is incorporated herein by reference and made a part
hereof.

Item 6. Selected Financial Data

The information set forth under the caption "Selected
Financial Data" on page 2 of the Company's 1995 Annual Report to
Shareholders is incorporated herein by reference and made a part
hereof.

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations

The information set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" on pages 3 through 12 of the Company's 1995 Annual
Report to Shareholders is incorporated herein by reference and
made a part hereof.

Item 8. Financial Statements and Supplementary Data

The consolidated financial statements set forth on page 14
through 34 of the Company's 1995 Annual Report to Shareholders,
and the report of independent public accountants set forth on
page 13 of said Annual Report, with respect to the consolidated
financial statements, are incorporated herein by reference and
made a part hereof.

Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure

Effective June 13, 1994, Price Waterhouse was dismissed as
DDL Electronic's Inc.'s independent accountants for fiscal
year-end 1994.

Price Waterhouse's report on the financial statements for the
fiscal years 1993 and 1992 contained no adverse opinion or
disclaimer of opinion, nor was it qualified or modified as to
audit scopes or accounting principles, except that as follows:

Price Waterhouse's report dated September 4, 1992 for the
fiscal year ended June 30, 1992 included the following
explanatory paragraph:

"The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note 1 to the financial statements, the Company has
suffered recurring losses from operations, has few alternative
financing sources, and has a net capital deficiency that raise
substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also
described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty."

The Company's management was given approval by its Board of
Directors and the Board's Audit Committee to retain another
certified accountant after Price Waterhouse required an 80%
increase in its annual service fees.

There has never been any and continues to be no disagreements
between the Company and Price Waterhouse on any matter of
accounting principles or practices, financial statement
disclosure or audit scope or procedure, including up until the
time of Price Waterhouse's dismissal. The Company has given
Price Waterhouse unlimited authority to discuss its audit
practices of the Company with the Company's successor auditor.

The Company retained KPMG Peat Marwick LLP as its new
independent auditors effective June 13, 1994. The Company did not
consult with KPMG Peat Marwick LLP on any accounting or tax
matter prior to Peat Marwick's appointment.

Attached to the Company's Form 8-K, filed June 13, 1994, was
Price Waterhouse's letter addressed to the Commission regarding
its response to Regulation S-K, Item 304. Furthermore, Price
Waterhouse was informed that statements in the Company's 8-K/A,
Item 4(a)(1)(iv) included the period up until the time of Price
Waterhouse's dismissal.
<PAGE>

PART III

Item 10. Directors and Executive Officers of the Registrant

Information called for in Item 10 is omitted because the
Company intends to file with the Securities and Exchange
Commission not later than 120 days after the close of the fiscal
year ended June 30, 1995 a definitive Proxy Statement pursuant to
Regulation 14A of the Commission.

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and
Management

Item 13. Certain Relationships and Related Transactions

<PAGE>
PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K

Reference (Page)
Form 10K 1995 Annual
Report to
Stockholders
(a)(1) List of Financial statements:
List of data incorporated by reference:

Consolidated balance sheet at June 30, 1995, and 1994* 14
Consolidated statement of operations for the years
ended June 30, 1995, 1994, and 1993 15
Consolidated statement of stockholders' equity for
the years ended June 30, 1995, 1994, and 1993 17
Consolidated statement of cash flows for the years
ended June 30, 1995, 1994, and 1993 16
Notes to consolidated financial statements 18
Report of KPMG Peat Marwick LLP on consolidated
financial statements 13

* The Company utilizes a 52-53 week fiscal year ending on the
Friday closest to June 30, which, for fiscal years 1995 and 1994,
fell on June 30 and July 1, respectively. For 10K filing
purposes, June 30, 1995, is utilized for the Company's fiscal
year end.

(a)(2) List of Financial statement schedules for the years
ended June 30, 1995, 1994, and 1993:**

Reports of KPMG Peat Marwick LLP and
Price Waterhouse on
financial statement schedules 14

VIII - Valuation and Qualifying
Accounts and Reserves 15
IX - Short-Term Bank Borrowings None

** Schedules other than those listed are omitted since they are
not applicable, not required, or the information required to be
set forth therein is included in the consolidated financial
statements or in the notes thereto.

(a)(3) List of Exhibits:
Exhibit Index 17

(b) Reports on Form 8-K:

During the fourth fiscal quarter, the following reports on
Form 8-K were filed:

On April 11, 1995, a Form 8-K/A was filed pursuant to item 2,
Acquisition or Disposition of Assets, for filing of pro forma
financial information pursuant to Regulation S-X.

On April 20, 1995, a Form 8-K was filed pursuant to item 5,
Other Events, for a press release announcing that William E.
Cook, the Company's Chairman and CEO, had exercised stock options
to purchase 300,000 shares of the Company's common stock.

On May 11, 1995, a Form 8-K was filed pursuant to item 5,
Other Events, for a press release that announced the Company's
fiscal third quarter ended March 31, 1995 operating results.

On June 7, 1995, a Form 8-K was filed pursuant to item 5,
Other Events, for a press release issued June 1, 1995 announcing
the resignation of William E. Cook, the Company's Chairman and
CEO and the results of the Company's annual meeting of
shareholders on May 31, 1995 in which five new directors were
added to the board replacing Mr. Cook and two existing directors.

On June 21, 1995, a Form 8-K was filed pursuant to item 1,
Changes in Control of Registrant, that announced the results of
the Company's May 31, 1995 annual meeting of shareholders and the
change in the Company's Board of Directors and management.
<PAGE>

REPORT OF INDEPENDENT
AUDITORS' ON FINANCIAL STATEMENT SCHEDULES

The Board of Directors
DDL Electronics, Inc.

Under date of August 18, 1995, we reported on the consolidated
balance sheets of DDL Electronics, Inc. and subsidiaries as of
June 30, 1995 and 1994, and the related consolidated statements
of operations, stockholders equity, and cash flows for the years
then ended, as contained in the 1995 annual report to
stockholders. These consolidated financial statements and our
report thereon are incorporated by reference in the Annual Report
on Form 10K for the year 1995. In connection with our audit of
the aforementioned consolidated financial statements, we also
audited the related consolidated financial statement schedule as
listed in Item 14(a)(2) of this Form 10K. This financial
statement schedule is the responsibility of the Company's
management. Our responsibility is to express and opinion on this
financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material
respects, the information set forth therein.

KPMG PEAT MARWICK LLP
Portland, Oregon
August 18, 1995

Consent of Independent Accountants

We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 pertaining to the 1975
Nonqualified Stock Option Plan, the 1980 Employee Stock Option
Plan, the 1981 Incentive Stock Plan, and the 1985 and 1987 Stock
Incentive Plans (No. 33-18356) and the 1991 Nonstatutory Stock
Option Plan (No. 33-45102) of DDL Electronics, Inc. of our Report
dated August 20, 1993, which is incorporated in this Annual
Report on Form 10-K. We also consent to the incorporation by
reference of our report on the Financial Statement Schedules,
which appears in this Form 10-K

Price Waterhouse LLP
September 28, 1995
<PAGE>

<TABLE>
DDL ELECTRONICS, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND
QUALIFYING ACCOUNTS AND RESERVES

Balance at Charged to Balance
Beginning Costs and at End
of Period Expenses Deductions of Period

Allowance for doubtful accounts -

Year ended:
<S> <C> <C> <C> <C>
June 30, 1993 $748,000 $570,000 $(373,000) $945,000

June 30, 1994 945,000 293,000 (705,000) 533,000

June 30, 1995 533,000 95,000 (446,000) 182,000

Inventory reserves -

Year ended:

June 30, 1993 $275,000 $780,000 $(881,000) $174,000

June 30, 1994 174,000 266,000 (56,000) 384,000

June 30, 1995 384,000 62,000 (290,000) 156,000
</TABLE>
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, DDL Electronics, Inc. has duly
caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.

DDL Electronics, Inc.

By__/s/ Don A. Raig____________
Don A.Raig Date: September 28, 1995
Interim President and Chief Operating
Officer and Director

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.

By___/s/ Don A. Raig_____________
Don A.Raig Date: September 28, 1995
Interim President and Chief Operating
Officer and Director

(Principal Financial and Accounting Officer)

_/s/___Erven Tallman_______________
Erven Tallman Date: September 28, 1995
Acting Chairman, Chief Executive Officer and Director

/s/___Rob Wilson____________________
Rob Wilson Date: September 28, 1995
Interim Vice President and Director

/s/____Philip H. Alspach____________
Philip H. Alspach Date: September 28, 1995
Director

/s/____Bernee D. L. Strom__________
Bernee D.L. Strom Date : September 28, 1995
Director

/s/____Melvin Foster______________
Melvin Foster Date: September 28, 1995
Director
<PAGE>
EXHIBIT INDEX

3-a Amended and Restated Certificate of Incorporation of
the Company (incorporated by reference to Exhibit 4.2 of the
Company's Registration Statement on Form S-8, Commission File No.
33-7440)

3-b Bylaws of the Company, amended and restated, effective
March 1995

3-c Certificate of Amendment of Certificate of
Incorporation of the Company to increase authorized number of
common shares (incorporated by reference to Exhibit 3-c of the
Company's 1990 Annual Report on Form 10-K)

3-d Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock of the Company
(incorporated by reference to Exhibit 4.2 of the Company's
Registration Statement on Form S-8, Commission File No. 33-7440)

3-e Certificate of Designation, Preferences and Rights of
Series B Convertible Preferred Stock of the Company (incorporated
by reference to Exhibit 4.2 of the Company's Registration
Statement on Form S-8, Commission File No. 33-7440)

4-a Indenture dated July 15, 1988, applicable to the
Company's 8-1/2% Convertible Subordinated Debentures due August
1, 2008 (incorporated by reference to Exhibit 4-c of the
Company's 1988 Annual Report on Form 10-K)

4-b Supplemental Indenture relating to the Company's 8-1/2%
Convertible Subordinated Debentures due August 1, 2008
(incorporated by reference to Exhibit 4-b of the Company's 1991
Annual Report on Form 10-K)

4-c Indenture relating to the Company's 7% Convertible
Subordinated Debentures due 2001 (incorporated by reference to
Exhibit 4-c of the Company's 1991 Annual Report on Form 10-K)

4-d Rights Agreement dated as of June 10, 1989, between the
Company and Bank of America, as Rights Agent (incorporated by
reference to Exhibit 1 to the Company's Report on Form 8-K dated
June 15, 1989)

4-e Amendment to Rights Agreement dated as of February 21,
1991, amending the Rights Agreement dated as of June 10, 1989,
between the Company and Bank of America, as Rights Agent
(incorporated by reference to Exhibit 4.7 of Registration
Statement No. 33-39115)

10-a Intentionally not used

10-b 1980 Employee Stock Option Plan (incorporated by
reference to Exhibit 1 of Registration Statement No. 2-69580)

10-c 1981 Incentive Stock Option Plan (incorporated by
reference to Exhibit 4 of Registration Statement No. 2-79576)

10-d 1985 Stock Incentive Plan (incorporated by reference to
Exhibit 4a of Registration Statement No. 33-3172)

10-e 1987 Stock Incentive Plan (incorporated by reference to
Exhibit 4a of Registration Statement No. 33-18356)

10-f Form of Indemnity Agreement with officers and directors
(incorporated by reference to Exhibit 10-o of the Company's 1987
Annual Report on Form 10-K)

10-g Consulting Agreement dated March 26, 1990, between the
Company and Thomas C. Beiseker (incorporated by reference to
Exhibit 10-s of the Company's 1990 Annual Report on Form 10-K)

10-h Standard Industrial Lease-Net dated August 1,
1984, among the Company, Aeroscientific Corp., and Bradmore
Realty Investment Company, Ltd. (incorporated by reference to
Exhibit 10-w of the Company's 1990 Annual Report on Form 10-K)

10-i Net Lease Agreement dated December 2, 1985, among the
Company, Catel Telecommunications, Inc. and Phoenix Mutual life
Insurance Company (incorporated by reference to Exhibit 10-x of
the Company's 1990 Annual Report on Form 10-K)

10-j Agreement dated March 10, 1992, between Irlandus
Circuits Limited and the Industrial Development Board for
Northern Ireland amending the Grant Agreement dated September 16,
1987, between Irlandus and the Industrial Development Board
(incorporated by reference to Exhibit 10-br of the Company's 1992
Annual Report on Form 10-K)

10-k Agreement dated September 10, 1991, between DDL
Electronics Limited and the Industrial Development Board for
Northern Ireland amending the Grant Agreement dated August 29,
1989, between DDL Electronics and the Industrial Development
Board (incorporated by reference to Exhibit 10-bt of the
Company's 1992 Annual Report on Form 10-K)

10-l Agreement dated November 22, 1991, between DDL
Electronics Limited and the Industrial Development Board for
Northern Ireland amending the Grant Agreement dated August 29,
1989, between DDL Electronics and the Industrial Development
Board (incorporated by reference to Exhibit 10-bu of the
Company's 1992 Annual Report on Form 10-K)

10-m Agreement dated March 9, 1992, between DDL Electronics
Limited and the Industrial Development Board for Northern Ireland
amending the Grant Agreement dated August 29, 1989, between DDL
Electronics and the Industrial Development Board (incorporated by
reference to Exhibit 10-bv of the Company's 1992 Annual Report on
Form 10-K)

10-n Agreement dated June 22, 1992, between DDL Electronics
Limited and the Industrial Development Board for Northern Ireland
amending the Grant Agreement dated August 29, 1989, between DDL
Electronics and the Industrial Development Board (incorporated by
reference to Exhibit 10-bw of the Company's 1992 Annual Report on
Form 10-K)

10-o Standard Offer, Agreement and Escrow Instructions for
Purchase of Real Estate dated July 15, 1992, between Mark Lainer
and/or Nominee and the Company's A.J. Electronics, Inc.
subsidiary (incorporated by reference to Exhibit 10.1 of the
Company's Quarterly Report on Form 10-Q for the quarter ended
October 2, 1992)

10-p Standard Industrial Lease - Net dated October 15, 1992,
between L.N.M. Corporation-Desert Land Managing Corp. and the
Company's A.J. Electronics, Inc. subsidiary (incorporated by
reference to Exhibit 10.2 of the Company's Quarterly Report on
Form 10-Q for the quarter ended October 2, 1993)

10-q Standard Offer, Agreement and Escrow Instructions for
Purchase of Real Estate dated October 19, 1992, between Business
Ventures Corporation and the Company (incorporated by reference
to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q
for the quarter ended January 1, 1993)

10-r Form of Exchange Agreement between certain holders of
the Company's 7% and 8-1/2% Convertible Subordinated Debentures
and the Company dated as of November 11, 1992 (incorporated by
reference to Exhibit 10.2 of the Company's Quarterly Report on
Form 10-Q for the quarter ended January 1, 1993)

10-s Warrant Agreement by and between the Company and
American Stock Transfer & Trust Company dated as of November 11,
1992 (incorporated by reference to Exhibit 28.2 of the Company's
Current Report on Form 8-K dated January 7, 1993)

10-t Lease Modification and Termination Agreement and
Promissory Note, dated April 28, 1993, between the Company and
Phoenix Home Life Mutual Insurance Company (incorporated by
reference to Exhibit 10.1 of the Company's Quarterly Report on
Form 10-Q for the quarter ended April 2, 1993)

10-u Form of Exchange Agreement between certain holders of
the Company's 7% and 8-1/2% Convertible Subordinated Debentures
and the Company dated May 14, 1993 (incorporated by reference to
Exhibit 28.2 of the Company's Current Report on Form 8-K dated
May 19, 1993)

10-v Amendment to Lease Modification and Termination
Agreement, dated June 11, 1993, between the Company and Phoenix
Home Life Mutual Insurance Company (incorporated by reference to
Exhibit 10-bz of Registration Statement No 33-63618)

10-w Form of Exchange Agreement between certain holders of
the Company's 7% and 8-1/2% Convertible Subordinated Debentures
and the Company dated June 24, 1993 (incorporated by reference to
Exhibit 10-ca of Registration Statement No. 33-63618)

10-x Stock Purchase Agreement, dated July 7, 1993, between
Meret Optical Communications, Inc. and the Company (incorporated
by reference to Exhibit 10-cb of Registration Statement No.
33-63618)

10-y Second Amendment to Lease among Bradmore Realty
Investment Company, Ltd., the Company and the Company's
Aeroscientific Corp. subsidiary, dated July 2, 1993 (incorporated
by reference to Exhibit 10-cd of Registration Statement No.
33-63618)

10-z 1991 General Nonstatutory Stock Option Plan adopted on
December 31, 1991 (incorporated by reference to Exhibit 10-cf of
the Company's 1993 Annual Report on Form 10-K)

10-aa Form of Series B preferred Stock Purchase
Agreement between the Company and the Industrial Development
Board for Northern Ireland (incorporated by reference to Exhibit
10.2 to the Company's Report on Form 8-K dated October 22, 1993)

10-ab Data-Design Laboratories, Inc. 1993 Stock
Incentive Plan (incorporated by reference to Exhibit 4.7 of the
Company's Registration Statement on Form S-8, Commission file No.
33-74400)

10-ac Data-Design Laboratories, Inc. Non-Employee
Directors Stock Option Plan (incorporated by reference to Exhibit
4.8 of the Company's Registration Statement on Form S-8,
Commission File No. 33-74400)

10-ad Form of Land Registry for the Company's Northern
Ireland subsidiaries dated November 4, 1993 (incorporated by
reference to Exhibit 10.1 of the Company's Quarterly Report of
Form 10-Q for the quarter ended September 30, 1993)

10-ae Form of Guaranty by the Company's Northern Ireland
subsidiaries dated November 4, 1993 in favor of The Tokai Bank,
Ltd. and First Interest Bank of Oregon (incorporated by reference
to Exhibit 10.2 of the Company's Quarterly Report of Form 10-Q
for the quarter ended September 30, 1993)

10-af Form of Guaranty by the Company's Northern Ireland
subsidiaries dated November 4, 1993 in favor of Sanwa Bank
California (incorporated by reference to Exhibit 10.3 of the
Company's Quarterly Report of Form 10-Q for the quarter ended
September 30, 1993)

10-ag Form of Severance Agreement for Key Employees of
the Company (incorporated by reference to the Company's 1994
Annual Report on Form 10-K)

10-ah Subscription Agreement for 760,000 shares of DDL
Electronics, Inc.'s Common Stock (incorporated by reference to
Exhibit 10a of the Company's Quarterly Report of Form 10Q for the
quarter ended September 30, 1994)

10-ai Asset Purchase Agreement by and between Yamamoto
Manufacturing USA Inc. ("Buyer") and Aeroscientific Corp.
("Seller") (incorporated by reference to Exhibit 10a of the
Company's Report on Form 8K dated November 2, 1994)

10-aj Asset Purchase Agreement by and between Raven
Industries, Inc., A.J. Electronics, Inc. and DDL Electronics,
Inc. (incorporated by reference to Exhibit 2.1 of the Company's
Report on Form 8K dated January 17, 1995)

10-ak Closing Settlement Statement executed by A.J.
Electronics Inc., DDL Electronics, Inc. and Raven Industries,
Inc. (incorporated by reference to Exhibit 2.2 of the Company's
Report on Form 8K dated January 17, 1995)

10-al Non-Competition and Non-Disclosure Agreement
between A.J. Electronics and Raven Industries, Inc. (incorporated
by reference to Exhibit 2.3 of the Company's Report of Form 8K
dated January 17, 1995)

10-am Payoff Agreement between Sanwa Bank California and
the Company dated December 29, 1994

10-an Termination Agreement between First Interstate
Bank of Oregon, N.A., the Tokai Bank Ltd. and the Company dated
December 29, 1994

10-ao Employment Agreement between DDL Electronics, Inc.
and William E. Cook

10-ap Settlement Agreement between DDL Electronics, Inc.
and opposition shareholders committee (SCRMM)

11 Statement re: Computation of Per Share Earnings.

13 Annual Report to security holders

16 Letter from Price Waterhouse regarding dismissal as
independent accountants (incorporated by reference to Exhibit 16
of the Company's 1994 Annual Report on Form 10K)

21 Subsidiaries of the Registrant

23a Consent of KPMG Peat Marwick, LLP

23b Consent of Price Waterhouse, LLP

27 Financial Schedule for electronic filers

99 Undertaking for Form S-8 Registration Statement

EXHIBIT 3B
DDL Electronics, Inc.
(a Delaware corporation)

BYLAWS

(Amended and Restated Effective March 21, 1995)

ARTICLE I

Offices

SECTION 1.01 Registered Office. The registered office of DDL
Electronics, Inc. (the "Corporation") in the State of Delaware
shall be at 1209 Orange Street, City of Wilmington, County of New
Castle, and the name of the registered agent in charge thereof
shall be The Corporation Trust Company.

SECTION 1.02 Other Offices. The Corporation may also have an
office or offices at such other place or places, either within or
without the State of Delaware, as the Board of Directors (the
"Board") may from time to time determine or as the business of
the Corporation may require.

ARTICLE II

Meetings of Stockholders

SECTION 2.01 Annual Meetings. Annual meetings of the
stockholders of the Corporation for the purpose of electing
directors and for the transaction of such other proper business
as may come before such meetings may be held at such time, date
and place as the Board shall determine by resolution.

SECTION 2.02 Special Meetings. A special meeting of the
stockholders for the transaction of any proper business may be
called at any time by the Board for a majority of the Board.
Special meetings may not be called by any other person or persons
or in any other manner.

SECTION 2.03 Place of Meetings. All meetings of the
stockholders shall be held at such places, within or without the
State of Delaware, as may from time to time be designated by the
person or persons calling the respective meeting and specified in
the respective notices or waivers of notice thereof.

SECTION 2.04 Notice of Meetings. Except as otherwise required
by law, notice of each meeting of the stockholders, whether
annual or special, shall be given not less than ten (10) nor more
than sixty (60) days before the date of the meeting to each
stockholder of record entitled to vote at such meeting by
delivering a typewritten or printed notice thereof to him
personally, or by depositing such notice in the United States
mail, in a postage prepaid envelope, directed to him at his post
office address furnished by him to the Secretary of the
Corporation for such purpose or, if he shall not have furnished
to the Secretary his address for such purpose, then at his post
office address last known to the Secretary, or by transmitting a
notice thereof to him at such address by telegraph, cable, or
wireless. Except as otherwise expressly required by law, no
publication of any notice of a meeting of the stockholders shall
be required. Every notice of a meeting of the stockholders shall
state the place, date and hour of the meeting, and, in the case
of a special meeting, shall also state the purpose or purposes
for which the meeting is called. Notice of any meeting of
stockholders shall not be required to be given to any stockholder
who shall have waived such notice and such notice shall be deemed
waived by any stockholder who shall attend such meeting in person
or by proxy, except as a stockholder who shall attend such
meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Except as otherwise
expressly required by law, notice of any adjourned meeting of the
stockholders need not be given if the time and place thereof are
announced at the meeting at which the adjournment is taken.

SECTION 2.05 Quorum. Except in the case of any meeting for the
election of directors summarily ordered as provided by law, the
holders of record of a majority in voting interest of the shares
of stock of the Corporation entitled to be voted thereat, present
in person or by proxy, shall constitute a quorum for the
transaction of business at any meeting of the stockholders of the
Corporation or any adjournment thereof. In the absence of a
quorum at any meeting or any adjournment thereof, a majority in
voting interest of the stockholders present in person or by proxy
and entitled to vote thereat, in the absence therefrom of all the
stockholders, any officer entitled to preside at, or to act as
secretary of, such meeting may adjourn such meeting from time to
time. At any such adjourned meeting at which a quorum is present
any business may be transacted which might have been transacted
at the meeting as originally called.

SECTION 2.06 Voting.
(a) Each stockholder shall, at each meeting of the stockholders,
be entitled to vote in person or by proxy each share or
fractional share of the stock of the Corporation having voting
rights on the matter in question and which shall have been held
by him and registered in his name on the books of the
Corporation:

(i) on the date fixed pursuant to Section 6.05 of these Bylaws as
the record date for the determination of stockholders entitled to
notice of and to vote at such meeting, or

(ii) if no such record date shall have been so fixed, then (a) at
the close of business on the day next preceding the day on which
notice of the meeting shall be given or (b) if notice of the
meeting shall be waived, at the close of business on the day next
preceding the day on which the meeting shall be held.

(b) Shares of its own stock belonging to the Corporation or to
another corporation, if a majority of the shares entitled to vote
in the election of directors in such other corporation is held,
directly or indirectly by the Corporation, shall neither be
entitled to vote nor be counted for quorum purposes. Persons
holding stock of the Corporation in a fiduciary capacity shall be
entitled to vote such stock. Persons whose stock is pledged
shall be entitled to vote, unless in the transfer by the pledgor
on the books of the Corporation he shall have expressly empowered
the pledgee to vote thereon, in which case only the pledgee, or
his proxy, may represent such stock and vote thereon. Stock
having voting power standing of record in the names of two or
more persons, whether fiduciaries, members of a partnership,
joint tenants in common, tenants by entirety or otherwise or with
respect to which two or more persons have the same fiduciary
relationship, shall be voted in accordance with the provisions of
the General Corporation Law of the State of Delaware.

(c) Any such voting rights may be exercised by the stockholder
entitled thereto in person or by his proxy appointed by an
instrument in writing, subscribed by such stockholder or by his
attorney thereunto authorized and delivered to the secretary of
the meeting; provided, however, that no proxy shall be voted or
acted upon after three years from its date unless said proxy
shall provide for a longer period. The attendance at any meeting
of a stockholder who may theretofore have given a proxy shall not
have the effect of revoking the same unless he shall in writing
so notify the secretary of the meeting prior to the voting of the
proxy. At any meeting of the stockholders all matters, except as
otherwise provided in the Certificate of Incorporation, in these
Bylaws or by law, shall be decided by the vote of a majority in
voting interest of the stockholders present in person or by proxy
and entitled to vote thereat and thereon, a quorum being present.
The voting at any meeting of the stockholders on any question
need not be by ballot, unless so directed by the chairman of the
meeting. On a vote by ballot each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy, and
it shall state the number of shares voted.

SECTION 2.07 List of Stockholders. The Secretary of the
Corporation shall prepare and make, at least ten (10) days before
every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting arranged in
alphabetical order, and showing the address of each stockholder
and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting during
ordinary business hours, for a period of at least ten (1O) days
prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is
present.

SECTION 2.08 Judges. If at any meeting of the stockholders a
vote by written ballot shall be taken on any question, the
chairman of such meeting may appoint a judge or judges to act
with respect to such vote. Each judge so appointed shall first
subscribe an oath faithfully to execute the duties of a judge at
such meeting with strict impartiality and according to the best
of his ability. Such judges shall decide upon the qualification
of the voters and shall report the number of shares represented
at the meeting and entitled to vote on such question shall
conduct and accept the votes, and, when the voting is completed,
shall ascertain and report the number of shares voted
respectively for and against the question. Reports of judges
shall be in writing and subscribed and delivered by them to the
Secretary of the Corporation. The judges need not be
stockholders of the Corporation, and any officer of the
Corporation may be a judge on any question other than a vote for
or against a proposal in which he shall have a material interest.

SECTION 2.09 No Action Without Meeting. No action may be taken
by stockholders except at an annual or special meeting of
stockholders. No action may be taken by stockholders by written
consent.

SECTION 2.10. Stockholder Proposals. Only stockholders of
record shall be entitled to present a stockholder proposal at any
meeting of the stockholders. Before a stockholder of record may
present such a proposal, the stockholder of record must deliver
timely notice of such proposal to the Company. To be timely, a
stockholder of record's notice of a proposal to be presented at
an annual meeting shall be delivered to the Secretary at the
principal executive offices of the Corporation not less than
sixty (60) days nor more than ninety (90) days prior to the first
anniversary of the preceding year's annual meeting of
stockholders; provided, however, that in the event that the date
of the annual meeting is more than thirty (30) days prior to or
more than sixty (60) days after such anniversary date, notice by
the stockholder of record to be timely must be so delivered not
earlier than the ninetieth (90th) day prior to such annual
meeting and not later than the close of business on the later of
the sixtieth (60th) day prior to such annual meeting or the tenth
(10th) day following the date on which public announcement of the
date of such meeting is first made. A stockholder of record's
notice of a proposal to be presented at a special meeting shall
be delivered to the Secretary at the principal executive offices
of the Corporation not earlier than the ninetieth (90th) day
prior to such special meeting and not later than the close of
business on the later of the sixtieth (60th) day prior to such
special meeting or the tenth (10th) day following the date on
which public announcement of the date of such special meeting is
first made.

ARTICLE III

Board of Directors

SECTION 3.01 General Powers. The property, business and affairs
of the Corporation shall be managed by the Board.

SECTION 3.02 Number and Term of Office. The number of directors
shall be four (4). Directors need not be stockholders. Each of
the directors of the Corporation shall hold office until his
successor shall have been duly elected and shall qualify or until
he shall resign or shall have been removed in the manner
hereinafter provided.

SECTION 3.03 Election of Directors. The directors shall be
elected annually by the stockholders of the Corporation and the
persons receiving the greatest number of votes, up to the number
of directors then to be elected, shall be the persons then
elected. The election of directors is subject to any provisions
contained in the Certificate of Incorporation relating thereto,
including any provisions for a classified Board and for
cumulative voting.

SECTION 3.04 Resignations. Any director of the Corporation may
resign at any time by giving written notice to the Board or to
the Secretary of the Corporation. Any such resignation shall
take effect at the time specified therein, or, if the time be not
specified, it shall take effect immediately upon its receipt; and
unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.

SECTION 3.05 Vacancies. Except as otherwise provided in the
Certificate of Incorporation, any vacancy in the Board, whether
because of death, resignation, disqualification, an increase in
the number of directors, or any other cause, can be filled only
by a vote of the majority of the remaining directors, although
less than a quorum. Subject to further Resolution of the Board
prescribing a shorter time, each director so chosen to fill a
vacancy shall hold office until his successor shall have been
elected and shall qualify or until he shall resign or shall have
been removed in the manner hereinafter provided.

SECTION 3.06 Place of Meeting, Etc. The Board may hold any of
its meetings at such place or places within or without the State
of Delaware as the Board may from time to time by resolution
designate or as shall be designated by the person or persons
calling the meeting or in the notice or a waiver of notice of any
such meeting. Directors may participate in any regular or
special meeting of the Board by means of conference telephone or
similar communications equipment pursuant to which all persons
participating in the meeting of the Board can hear each other,
and such participation shall constitute presence in person at
such meeting.

SECTION 3.07 First Meeting. The Board shall meet as soon as
practicable after each annual election of directors and notice of
such first meeting shall not be required.

SECTION 3.08 Regular Meetings. Regular meetings of the Board
may be held at such times as the Board shall from time to time by
resolution determine. If any day fixed for a regular meeting
shall be a legal holiday at the place where the meeting is to be
held, then the meeting shall be held at the same hour and place
on the next succeeding business day not a legal holiday. Except
as provided by law, notice of regular meetings need not be given.

SECTION 3.09 Special Meetings. Special meetings of the Board
shall be held whenever called by the President or a majority of
the authorized number of directors. Except as otherwise provided
by law or by these Bylaws, notice of the time and place of each
such special meeting shall be mailed to each director, addressed
to him at his residence or usual place of business, at least five
(5) days before the day on which the meeting is to be held, or
shall be sent to him at such place by telegraph or cable or be
delivered personally not less than forty-eight (48) hours before
the time at which the meeting is to be held. Except where
otherwise required by law or by these Bylaws, notice of the
purpose of a special meeting need not be given. Notice of any
meeting of the Board shall not be required to be given to any
director who is present at such meeting, except a director who
shall attend such meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.

SECTION 3.10 Quorum and Manner of Acting. Except as otherwise
provided in these Bylaws or by law, the presence of a majority of
the authorized number of directors shall be required to
constitute a quorum for the transaction of business at any
meeting of the Board, and all matters shall be decided at any
such meeting, a quorum being present, by the affirmative votes of
a majority of the directors present. In the absence of a quorum,
a majority of directors present at any meeting may adjourn the
same from time to time until a quorum shall be present. Notice
of any adjourned meeting need not be given. The directors shall
act only as a Board, and the individual directors shall have no
power as such.

SECTION 3.11 Action by Consent. Any action required or
permitted to be taken at any meeting of the Board or of any
committee thereof may be taken without a meeting if a written
consent thereto is signed by all members of the Board or of such
committee, as the case may be, and such written consent is filed
with the minutes of proceedings of the Board or committee.

SECTION 3.12 Removal of Directors. Subject to the provisions of
the Certificate of Incorporation, a director may be removed only
with cause and by the affirmative vote of the stockholders
holding a majority of the issued and outstanding shares of the
Corporation, given at a special meeting of the stockholders
called for the purpose.

SECTION 3.13 Compensation. The directors shall receive only
such compensation for their services as directors as may be
allowed by resolution of the Board. The Board may also provide
that the Corporation shall reimburse each such director for any
expense incurred by him on account of his attendance at any
meetings of the Board or Committees of the Board. Neither the
payment of such compensation nor the reimbursement of such
expenses shall be construed to preclude any director from serving
the Corporation or its subsidiaries in any other capacity and
receiving compensation therefor.

SECTION 3.14 Committees. The Board may, by resolution passed by
a majority of the whole Board, designate one or more committees,
each committee to consist of one or more of the directors of the
Corporation. Any such committee, to the extent provided in the
resolution of the Board and except as otherwise limited by law,
shall have and may exercise all the powers and authority of the
Board in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it. Any such committee
shall keep written minutes of its meetings and report the same to
the Board at the next regular meeting of the Board. In the
absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or
disqualified member.

ARTICLE IV

Officers

SECTION 4.01 Number. The officers of the Corporation shall be a
President, one or more Vice Presidents (the number thereof and
their respective titles to be determined by the Board), a
Secretary and a Treasurer.

SECTION 4.02 Election, Term of Office and Qualifications. The
officers of the Corporation, except such officers as may be
appointed in accordance with Section 4.03, shall be elected
annually by the Board at the first meeting thereof held after the
election thereof. Each officer shall hold office until his
successor shall have been duly chosen and shall qualify or until
his resignation or removal in the manner hereinafter provided.

SECTION 4.03 Assistants, Agents and Employees, Etc. In addition
to the officers specified in Section 4.01, the Board may appoint
other assistants, agents and employees as it may deem necessary
or advisable, including one or more Assistant Secretaries, and
one or more Assistant Treasurers, each of whom shall hold office
for such period, have such authority, and perform such duties as
the Board may from time to time determine. The Board may
delegate to any officer of the Corporation or any committee of
the Board the power to appoint, remove and prescribe the duties
of any such assistants, agents or employees.

SECTION 4.04 Removal. Any officer, assistant, agent or employee
of the Corporation may be removed, with or without cause, at any
time: (i) in the case of an officer, assistant, agent or employee
appointed by the Board, only by resolution of the Board; and (ii)
in the case of an officer, assistant, agent or employee, by any
officer of the Corporation or committee of the Board upon whom or
which such power of removal may be conferred by the Board.

SECTION 4.05 Resignations. Any officer or assistant may resign
at any time by giving written notice of his resignation to the
Board or the Secretary of the Corporation. Any such resignation
shall take effect at the time specified therein or, if the time
be not specified, upon receipt thereof by the Board or the
Secretary, as the case may be; and, unless otherwise specified
therein, the acceptance of such resignation shall not be
necessary to make it effective.

SECTION 4.06 Vacancies. A vacancy in any office because of
death, resignation, removal, disqualification, or other cause,
may be filled for the unexpired portion of the term thereof in
the manner prescribed in these Bylaws for regular appointments or
elections to such office.

SECTION 4.07 The President. The President of the Corporation
shall be the chief executive officer of the Corporation and shall
have, subject to the control of the Board, general and active
supervision and management over the business of the Corporation
and over its several officers, assistants, agents and employees.

SECTION 4.08 The Vice Presidents. Each Vice President shall
have such powers and perform such duties as the Board may from
time to time prescribe. At the request of the President, or in
case of the President's absence or inability to act upon the
request of the Board, a Vice President shall perform the duties
of the President and when so acting, shall have all the powers
of, and be subject to all the restrictions upon, the President.

SECTION 4.09 The Secretary. The Secretary shall, if present,
record the proceedings of all meetings of the Board, of the
stockholders, and of all committees of which a secretary shall
not have been appointed in one or more books provided for that
purpose; he shall see that all notices are duly given in
accordance with these Bylaws and as required by law; he shall be
custodian of the seal of the Corporation and shall affix and
attest the seal to all documents to be executed on behalf of the
Corporation under its seal; and, in general, he shall perform all
the duties incident to the office of Secretary and such other
duties as may from time to time be assigned to him by the Board.

SECTION 4.10 The Treasurer. The Treasurer shall have the
general care and custody of the funds and securities of the
Corporation, and shall deposit all such funds in the name of the
Corporation in such banks, trust companies or other depositories
as shall be selected by the Board. He shall receive, and give
receipts for, moneys due and payable to the Corporation from any
source whatsoever. He shall exercise general supervision over
expenditures and disbursements made by officers, agents and
employees of the Corporation and the preparation of such records
and reports in connection therewith as may be necessary or
desirable. He shall, in general, perform all other duties
incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the Board.

SECTION 4.11 Compensation. The compensation of the officers of
the Corporation shall be fixed from time to time by the Board.
None of such officers shall be prevented from receiving such
compensation by reason of the fact that he is also a director of
the Corporation. Nothing contained herein shall preclude any
officer from serving the Corporation, or any subsidiary
corporation, in any other capacity and receiving such
compensation by reason of the fact that he is also a director of
the Corporation. Nothing contained herein shall preclude any
officer from serving the Corporation, or any subsidiary
corporation, in any other capacity and receiving proper
compensation therefor.

ARTICLE V

Contracts, Checks, Drafts, Bank Accounts, Etc.

SECTION 5.01 Execution of Contracts. The Board, except as in
these Bylaws otherwise provided, may authorize any officer or
officers, agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the Corporation,
and such authority may be general or confined to specific
instances; and unless so authorized by the Board or by these
Bylaws, no officer, agent or employee shall have any power or
authority to bind the Corporation by any contract or engagement
or to pledge its credit or to render it liable for any purpose or
in any amount.

SECTION 5.02 Checks, Drafts, Etc. All checks, drafts or other
orders for payment of money, notes or other evidence of
indebtedness, issued in the name of or payable to the
Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be
determined by resolution of the Board. Each such officer,
assistant, agent or attorney shall give such bond, if any, as the
Board may require.

SECTION 5.03 Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the
credit of the Corporation in such banks, trust companies or other
depositories as the Board may select, or as may be selected by
any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such
power shall have been delegated by the Board. For the purpose of
deposit and for the purpose of collection for the account of the
Corporation, the President, any Vice President or the Treasurer
(or any other officer or officers, assistant or assistants, agent
or agents, or attorney or attorneys of the Corporation who shall
from time to time be determined by the Board) may endorse, assign
and deliver checks, drafts and other orders for the payment of
money which are payable to the order of the Corporation.

SECTION 5.04 General and Special Bank Accounts. The Board may
from time to time authorize the opening and keeping of general
and special bank accounts with such banks, trust companies or
other depositories as the Board may select or as may be selected
by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such
power shall have been delegated by the Board. The Board may make
such special rules and regulations with respect to such bank
accounts, not inconsistent with the provisions of these Bylaws,
as it may deem expedient.

ARTICLE VI

Shares and Their Transfer

SECTION 6.01 Certificates for Stock. Every owner of stock of
the Corporation shall be entitled to have a certificate or
certificates, to be in such form as the Board shall prescribe,
certifying the number and class of shares of the stock of the
Corporation owned by him. The certificates representing shares
of such stock shall be numbered in the order in which they shall
be issued and shall be signed in the name of the Corporation by
the President or a Vice President, and by the Secretary or an
Assistant Secretary or by the Treasurer or an Assistant
Treasurer. Any of or all of the signatures on the certificates
may be a facsimile. In case any officer, transfer agent or
registrar who has signed, or whose facsimile signature has been
placed upon, any such certificate, shall have ceased to be such
officer, transfer agent or registrar before such certificate is
issued, such certificate may nevertheless be issued by the
Corporation with the same effect as though the person who signed
such certificate, or whose facsimile signature shall have been
placed thereupon, were such officer, transfer agent or registrar
at the date of issue. A record shall be kept of the respective
names of the persons, firms or corporations owning the stock
represented by such certificates, the number and class of shares
represented by such certificates, respectively, and the
respective dates thereof, and in case of cancellation, the
respective dates of cancellation. Every certificate surrendered
to the Corporation for exchange or transfer shall be canceled,
and no new certificate or certificates shall be issued in
exchange for any existing certificate until such existing
certificate shall have been so canceled, except in cases provided
for in Section 6.04.

SECTION 6.02 Transfers of Stock. Transfers of shares of stock
of the Corporation shall be made only on the books of the
Corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed
with the Secretary, or with a transfer clerk or a transfer agent
appointed as provided in Section 6.03, and upon surrender of the
certificate or certificates for such shares properly endorsed and
the payment of all taxes thereon. The person in whose name
shares of stock stand on the books of the Corporation shall be
deemed the owner thereof for all purposes as regards the
Corporation. Whenever any transfer of shares shall be made for
collateral security, and not absolutely, such fact shall be so
expressed in the entry of transfer if, when the certificate or
certificates shall be presented to the Corporation for transfer,
both the transferor and the transferee request the Corporation to
do so.

SECTION 6.03 Regulations. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with these
Bylaws, concerning the issue, transfer and registration of
certificates for shares of the stock of the Corporation. It may
appoint, or authorize any officer or officers to appoint, one or
more transfer clerks or one or more transfer agents and one or
more registrars, and may require all certificates for stock to
bear the signature or signatures of any of them.

SECTION 6.04 Lost, Stolen, Destroyed, and Mutilated
Certificates. In any case of loss, theft, destruction, or
mutilation of any certificate of stock, another may be issued in
its place upon proof of such loss, theft, destruction, or
mutilation and upon the giving of a bond of indemnity to the
Corporation in such form and in such sum as the Board may direct;
provided, however, that a new certificate may be issued without
requiring any bond when, in the judgment of the Board, it is
proper so to do.

SECTION 6.05 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in
respect of any other change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board may fix, in
advance, a record date, which shall not be more than sixty (60)
nor less than ten (10) days before the date of such meeting, nor
more than sixty (60) days prior to any other action. If in any
case involving the determination of stockholders for any purpose
other than notice of or voting at a meeting of stockholders or
expressing consent to corporate action without a meeting the
Board shall not fix such a record date, the record date for
determining stockholders for such purpose shall be the close of
business on the day on which the Board shall adopt the resolution
relating thereto. A determination of stockholders entitled to
notice of or to vote at a meeting of stockholders shall apply to
any adjournment of such meeting; provided, however, that the
Board may fix a new record date for the adjourned meeting.

ARTICLE VII

Indemnification

SECTION 7.01 Actions, Etc. Other Than by or in the Right of the
Corporation. Any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed
action, suit, proceeding or investigation, whether civil,
criminal, administrative, and whether external or internal - to
the Corporation (other than an action by or in the right of the
Corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or, while serving
as a director or officer, is or was serving at the request of the
Corporation as a director, officer, employee, trustee or agent of
the Corporation or another corporation, partnership, joint
venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a
director, officer, trustee, employee or agent or in any other
capacity, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by law, including,
but not limited to, the Delaware General Corporation Law, as the
same exists or may thereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than
said Law permitted the Corporation to provide prior to such
amendment), against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the Corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any
criminal action or proceeding, that he had reasonable cause to
believe that his conduct was unlawful.

SECTION 7.02 Actions, Etc. by or in the Right of the
Corporation. Any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed
judicial action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is
or was a director or officer, employee or agent of the
Corporation, or, while serving as a director or officer, is or
was serving at the request of the Corporation as a director,
officer, employee, trustee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in
an official capacity as a director, officer, trustee, employee or
agent or in any other capacity, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by
law, including, but not limited to, the Delaware General
Corporation Law, as the same exists or may thereafter be amended
(but, in the case of any such amendment, only to the extent that
such amendment permits the Corporation to provide broader
indemnification rights than said Law permitted the Corporation to
provide prior to such amendment), against all expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit
if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation,
and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to
the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.

SECTION 7.03 Determination of Right of Indemnification. Any
indemnification under Section 7.01 or 7.02 (unless ordered by a
court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of
conduct set forth in Section 7.01 and 7.02. Such determination
shall be made (i) by the Board by a majority vote of a quorum
consisting of directors who were not parties to such action, suit
or proceeding, or (ii) if such a quorum is not obtainable, or,
even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or
(iii) by the stockholders.

SECTION 7.04 Indemnification Against Expenses of Successful
Party. Notwithstanding the other provisions of this Article, to
the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section
7.01 or 7.02, or in defense of any claim, issue or matter
therein, he shall be indemnified against all expenses (including
attorneys' fees) incurred by him in connection therewith.

SECTION 7.05 Prepaid Expenses. Expenses incurred by an officer
or director in defending a civil or criminal action, suit or
proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to
repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Corporation as authorized
in this Article. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as
the Board deems appropriate.

SECTION 7.06 Right to Indemnification Upon Application;
Procedure Upon Application. Any indemnification under or
advancement of expenses provided by, or granted pursuant to, this
Article shall be made promptly, and in any event within ninety
days, upon written request of the director or officer, employee
or agent, unless with respect to applications under Section 7.02
and 7.03, a determination is reasonably and promptly made by the
Board by a majority vote of quorum of disinterested directors
that such director or officer, employee or agent acted in a
manner set forth in such Sections as to justify the Corporation's
not indemnifying the director or officer, employee or agent. In
the event no quorum of disinterested directors is obtainable, the
Board shall promptly direct that independent legal counsel shall
decide whether the director or officer, employee or agent acted
in a manner set forth in such Sections as to justify the
Corporations not indemnifying or making an advance to the
director or officer or, in the case of indemnification, employee
or agent. The right to indemnification under or advancement of
expenses provided by this Article shall be enforceable by the
director, officer, employee or agent in any court of competent
jurisdiction, if the Board or independent legal counsel denies
the claim, in whole or in part, or if no disposition of such
claim is made within ninety days. The director's, officer's,
employee's or agent's expenses incurred in connection with
successfully establishing his right to indemnification or
advancement of expenses, in whole or in part, in any such
proceeding shall also be indemnified by the Corporation.

SECTION 7.07 Other Rights and Remedies. The indemnification
under and advancement of expenses provided by, or granted
pursuant to, this Article shall not be deemed exclusive of any
other rights to which those seeking indemnification or
advancement of expenses may be entitled under any Bylaws,
agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person. The right to be
indemnified or to the reimbursement or advancement of expenses
pursuant hereto (i) is a contract right based upon good and
valuable consideration, pursuant to which the person entitled
thereto may bring suit as if the provisions hereof were set forth
in a separate written contract between the Corporation and the
director or officer, employee or agent, (ii) is intended to be
retroactive and shall be available with respect to events
occurring prior to the adoption hereof, and (iii) shall continue
to exist after the rescission or restrictive modification hereof
with respect to events occurring prior thereto.

SECTION 7.08 Insurance. Upon resolution passed by the Board,
the Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the
Corporation, as a director, officer, employee, trustee or agent
of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the
provisions of this Article.

SECTION 7.09 Constituent Corporations. For the purposes of this
Article, references to "the Corporation" include any constituent
corporations absorbed in a consolidation or merger as well as the
resulting or surviving corporation, so that any person who is or
was a director, officer, employee, trustee or agent of such a
constituent corporation or is or was serving at the request of
such constituent corporation as a director, officer, employee,
trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise shall stand in the same
position under the provisions of this Article with respect to the
resulting or surviving corporation as he would if he had served
the resulting or surviving corporation in the same capacity.

SECTION 7.10 Other Enterprises, Fines, and Serving at
Corporation's Request. For purposes of this Article, references
to "other enterprises" shall include employee benefit plan;
references to "fines" shall include any excise taxes assessed on
a person with respect to any employee benefit plan; and
references to "serving at the request of the Corporation" shall
include any service as a director, officer, employee, trustee or
agent of the corporation which imposes duties on, or involves
services by, such director, officer, employee, trustee or agent
with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article.

SECTION 7.11 Savings Clause. If this Article or any portion
thereof shall be invalidated on any ground by any court of
competent jurisdiction, then the Corporation shall nevertheless
indemnify each director, officer, employee or agent as to
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit,
proceeding or investigation, whether civil, criminal or
administrative, and whether internal or external, including a
grand jury proceeding and an action or suit brought by or in the
right of the Corporation, to the full extent permitted by any
applicable portion of this Article that shall not have been
invalidated or by any other applicable law.

SECTION 7.12 Liability of Directors for Breaches of Fiduciary
Duty. Notwithstanding any provision to the contrary contained in
these Bylaws, to the fullest extent permitted by the Delaware
General Corporation Law as the same exists or may hereafter be
amended, a director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director.

ARTICLE VIII

Miscellaneous

SECTION 8.01 Seal. The Board shall provide a corporate seal,
which shall be in the form of a circle and shall bear the name of
the Corporation and words and figures showing that the
Corporation was incorporated in the State of Delaware and the
year of incorporation.

SECTION 8.02 Waiver of Notices. Whenever notice is required to
be given by these Bylaws or the Certificate of Incorporation or
by law, the person entitled to said notice may waive such notice
in writing, either before or after the time stated therein, and
such waiver shall be deemed equivalent to notice.

SECTION 8.03 Amendments. Notwithstanding any provision herein
to the contrary, these Bylaws, or any of them, may be altered,
amended or repealed, and new Bylaws may be made only (i) by the
Board, by the affirmative vote of a majority of the number of the
Board; or (ii) by the stockholders, by an affirmative vote of the
stockholders holding a majority of the issued and outstanding
shares of the Corporation given at any annual meeting or special
meeting of the stockholders, provided that notice of such
proposed amendment, modification, repeal or adoption is timely
given in the manner hereinabove provided. Any Bylaws made or
altered by the stockholders may be altered or repealed by either
the Board or the stockholders.

EXHIBIT 10-AM PAYOFF AGREEMENT

THIS PAYOFF AGREEMENT (this "Agreement") is made as of
this 29th day of December, 1994, by and among SANWA BANK
CALIFORNIA, a California corporation ("Sanwa"), and DDL
ELECTRONICS, INC., a Delaware corporation (formerly known as DATA
DESIGN LABORATORIES, INC., a Delaware corporation) ("DDL"),
AEROSCIENTIFIC CORP., an Oregon corporation ("Aero-Or"),
AEROSCIENTIFIC CORP., a California corporation ("Aero-Cal"), A.J.
ELECTRONICS, INC., a California corporation ("A.J."), DDL EUROPE
LIMITED ("DDL-E"), DDL ELECTRONICS LIMITED ("DDL-Ltd."), and
IRLANDUS CIRCUITS LIMITED ("Irlandus") (Aero-Or, Aero-Cal, A.J.,
DDL-E, DDL-Ltd., and Irlandus are collectively referred to herein
as the "DDL Affiliates"). Terms not otherwise defined in this
Agreement shall have the meanings ascribed to them in that
certain Amended and Restated Credit Agreement dated as of June 5,
1992 between Sanwa and DDL (the "Credit Agreement").

RECITALS

A. DDL and Sanwa entered into that certain Amended and Restated
Credit Agreement dated as of June 5, 1992 (the "Credit
Agreement").

B. To secure DDL's obligations under the Credit Agreement, DDL
and the DDL Affiliates executed certain General Security
Agreements dated as of June 5, 1992 in favor of Sanwa, and the
DDL Affiliates executed certain Continuing Guaranties dated as of
June 5, 1992 in favor of Sanwa.

C. Pursuant to the terms of the Credit Agreement, DDL is
indebted to Sanwa in the principal sum of $6,847,519.59 plus
accrued but unpaid interest, costs and expenses, together with
the other obligations set forth in the Credit Agreement
(collectively, the "Outstanding Debt").

D. DDL has experienced certain operating difficulties, which it
is currently attempting to resolve, but which make DDL unable to
comply with certain provisions of the Credit Agreement.

E. DDL has requested Sanwa to accept, and Sanwa has agreed to
accept, the sum of $4,500,000.00 in full and complete
satisfaction of the Outstanding Debt.

NOW, THEREFORE, in consideration of the above recitals and of the
mutual covenants contained herein, Sanwa, DDL and the DDL
Affiliates hereby agree as follows:

I.
AGREEMENT FOR PART PERFORMANCE

Sanwa hereby accepts payment of the sum of Four Million
Five Hundred Thousand Dollars ($4,500,000.00) from DDL in full
and complete satisfaction of the Outstanding Debt.

II.
RELEASE OF LIENS: TERMINATION OF AGREEMENTS

2.1 Release of Liens. Sanwa hereby releases any and all
liens, encumbrances and other security interests (collectively,
the "Security Interests") it may hold in the Collateral and Real
Property Collateral of DDL and/or the DDL Affiliates.
Concurrently with the execution of this Agreement, Sanwa shall
deliver or cause to be delivered to DDL, in form and substance
satisfactory to DDL and Sanwa, such statements terminating the
Security Interests, and such other documents as DDL may
reasonably deem necessary to assure itself that the Security
Interests have been released and terminated, including, without
limitation, the statements and documents identified on Exhibit 1
of this Agreement.

2.2 Termination of Agreements. The parties hereto agree
that all outstanding agreements and understandings between Sanwa
and DDL and/or the DDL Affiliates, other than this Agreement, are
hereby terminated and all obligations thereunder are completely
satisfied and released. Such agreements and understandings
include, without limitation, those identified on Exhibit 2 of
this Agreement.

2.3 Further Assurances. At DDL's and/or the DDL
Affiliates' sole expense, including reasonable attorneys' fees,
each party to this Agreement shall cooperate fully in the
execution of any and all other documents and in the completion of
any additional actions that may be necessary or appropriate to
give full force and effect to the terms and intent of this
Agreement, in form and substance satisfactory to DDL and Sanwa,
including, without limitation, execution of all documents
necessary or appropriate to release Sanwa's Security Interest in
Collateral and/or Real Property Collateral located in Northern
Ireland.

III.
MUTUAL RELEASE

3.1 Release. In consideration of this Agreement and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, DDL and the DDL Affiliates, on one
hand, and Sanwa, on the other, hereby and forever mutually
release and discharge one another and each of the other's
successors, subsidiaries, affiliates, parent companies,
employees, former employees, consultants, owners, officers,
directors, shareholders, general partners, limited partners,
predecessors, assigns, agents, attorneys, insurers, and
representatives from any and all causes of action, actions,
judgments, liens, indebtedness, damages, losses, claims,
liabilities, and demands of any nature whatsoever, known or
unknown, absolute or contingent, related or incidental to the
Outstanding Debt other than the obligations set forth in this
Agreement.

3.2 Release of Unknown Claims. It is the intention of the
parties in executing this Agreement that this Agreement shall be
effective as a bar to each and every claim, demand, and cause of
action that the parties may have against one another related or
incidental to the Outstanding Debt other than the obligations set
forth in this Agreement. In furtherance of this intention, the
parties hereby expressly waive any and all rights or benefits
conferred by the provisions of Section 1542 of the California
Civil Code, and by any similar provision of California or Federal
law now in effect or in effect in the future, and expressly
consent that this Agreement shall be given full force and effect
according to each and all of its express terms and conditions,
including those relating to unknown and unsuspected claims,
demands, and causes of action, if any:

A general release does not extend to claims which
the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if
known by him must have materially affected his settlement
with the debtor.

The parties acknowledge that they may hereafter
discover claims or facts in addition to or different from those
which they now know or believe to exist with respect to the
subject matter of this Agreement and which, if known or suspected
at the time of executing this Agreement, may have materially
affected this settlement. Nevertheless, the parties hereby waive
any rights, claims, or causes of action that might arise as a
result of such different or additional claims or facts. The
parties acknowledge that they understand the significance and
potential consequence of such a release of unknown claims and of
the specific waiver of their rights under Section 1542. The
parties intend that the claims released by them under this
Agreement be construed as broadly as possible.

IV.
MISCELLANEOUS

4.1 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of DDL, the DDL Affiliates and Sanwa and
their respective successors and assigns.

4.2 Governing Law: Waiver of Trial by Jury. This Agreement
shall be governed by and interpreted and construed in accordance
with the laws of the State of California. The parties hereto
consent to the jurisdiction of any state or federal court located
within Los Angeles County of the State of California. The parties
hereto waive the right to trial by jury in any action, suit,
proceeding or counterclaim of any kind arising out of or related
to this Agreement.

4.3 Recitals. All of the recitals are incorporated herein
and made a part hereof.

4.4 Warranty of Authorization. Each person whose signature
appears hereon warrants and guarantees that he or she has been
duly authorized and has full authority to execute this Agreement
on behalf of the entity on whose behalf this Agreement is
executed.

4.5 Entire Agreement. This Agreement constitutes and
contains the entire agreement and understanding between the
parties. This Agreement supersedes and replaces all prior
negotiations and all agreements, proposed or otherwise, whether
written or oral, concerning the subject matter hereof. This is a
fully integrated document. In executing this Agreement, no party
hereto has relied on any representation not contained within this
document. Each party hereto has been represented by counsel and
has relied solely on its counsel's advice as to the legal effect
hereof and its own knowledge and the terms of this document.

4.6 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute but one and the same
instrument.

4.7 Attorneys' Fees and Costs. In the event of litigation
in connection with or concerning the subject matter of this
Agreement or any breach of this Agreement, the prevailing party
shall be entitled to recover all costs and expenses incurred by
that party, including reasonable attorneys' fees and costs, in
addition to any other relief to which it may be entitled. The
parties further agree that the prevailing party shall be entitled
to recover all costs, including reasonable attorneys' fees and
costs, of collecting any costs and expenses awarded pursuant to
the prior sentence.

4.8 Headings. The headings set forth herein are solely for
the purpose of identification and have no legal significance.

IN WITNESS WHEREOF, this Agreement is executed as of the date
first written above.

SANWA BANK CALIFORNIA, a California corporation

By:________________________________
Its:_______________________________

DDL ELECTRONICS, INC., a Delaware corporation

By:______________________________
Its: ____________________________

AEROSCIENTIFIC CORP., an Oregon corporation

By:_______________________________
its:______________________________

AEROSCIENTIFIC CORP, a California
corporation

By:_______________________________
Its:______________________________

A.J. ELECTRONICS, INC., a California corporation

By:_______________________________
Its:______________________________

DDL EUROPE LIMITED

By:__________________________________
Its:_________________________________

DDL ELECTRONICS, LTD.

By:__________________________________
Its:_________________________________

<PAGE>
IRLANDUS CIRCUITS LIMITED

By:__________________________________
Its:_________________________________

EXHIBIT 1 TO PAYOFF AGREEMENT
Release of Liens

1. Request for Reconveyance of that certain Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing by
DDL to First American Title Insurance Company ("First
American") for the benefit of Sanwa, The Tokai Bank Ltd.
("Tokai") and First Interstate Bank of Oregon ("FIB") with
respect to that property commonly known as 223 North Crescent
Way, Anaheim, California;

2. Request for Reconveyance of that certain Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing by
A.J. to First American for the benefit of Sanwa, Tokai and FIB
with respect to that property commonly known as 20945 Plummer
Street, Chatsworth, California;

3. Request for Reconveyance of that certain Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing by
DDL to First American for the benefit of Sanwa, Tokai and FIB
with respect to that property commonly known as 7915 Center
Avenue, Cucamonga, California;

4. Request for Reconveyance of that certain Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing by
DDL to First American for the benefit of Sanwa and Tokai with
respect to that property known as Lot 11, Tract 11428, in the
City of Rancho Cucamonga, California;

5. Request for Reconveyance of that certain Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing by
DDL to First American for the benefit of Sanwa and Tokai with
respect to that property known as Lot 13, Tract 11428, in the
City of Rancho Cucamonga, California;

6. Request for Reconveyance of that certain Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing by DDL
to Fidelity National Title Insurance Company for the benefit of
Sanwa, Tokai and FIB with respect to that property commonly known
as 21423 North 11th Avenue, Phoenix, Arizona;

7. Request for Reconveyance of that certain Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing by
Aero-Or to First American for the benefit of Sanwa with respect
to that property commonly known as 1270 NW 167th Place,
Beaverton, Oregon;

8. Deed of Release among Irlandus, FIB, Tokai and Sanwa with
respect to that property located in Northern Ireland;

9. Deed of Release among DDL, FIB, Tokai and Sanwa with respect
to that property located in Northern Ireland;

10. Form UCC-3 Termination Statement terminating Sanwa's
security interest in the assets of DDL under that certain
Financing Statement filed in the Office of the Oregon Secretary
of State on June 23, 1992 as file number R12780;

11. Form UCC-3 Termination Statement terminating Sanwa's
security interest in the assets of Aero-Cal under that certain
Financing Statement filed in the Office of the California
Secretary of State on June 22, 1992 as file number 92134431;

12. Form UCC-3 Termination Statement terminating Sanwa's
security interest in the assets of Aero-Or under that certain
Financing Statement filed in the Office of the Oregon Secretary
of State on June 23, 1992 as file number R12781;

13. Form UCC-2 Termination Statement terminating Sanwa's
security interest in the assets of A.J. under that certain
Financing Statement filed in the Office of the California
Secretary of State on June 22, 1992 as file number 92134433;

14. Form UCC-2 Termination Statement terminating Sanwa's
security interest in the assets of DDL under that certain
Financing Statement filed in the Office of the California
Secretary of State on June 22, 1992 as file number 92134429;

15. Form UCC-3 Termination Statement terminating Sanwa's
security interest in the assets of DDL under that certain
Financing Statement filed in the Office of the Delaware Secretary
of State on June 23, 1992 as file number 9207522;

16. Notice of Assignment of Promissory Note to Omni Acquisition
Corp.;

17. Notice of Assignment of Promissory Note and Deed of Trust to
M. Peter Thomas and Lisa Thomas;

18. Notice of Assignment of Promissory Note and Deed of Trust to
Thomas J. Gullo and Linda G. Gullo;

19. Assignment of Deed of Trust (as collateral), assigning all
beneficial interest under that certain Second Deed of Trust and
Assignment of Rents with Request for Notice dated May 10, 1990
executed by M. Peter Thomas and Lisa Thomas recorded as
Instrument No. 90-286466 and further recorded as Instrument No.
90-375203.

20. Assignment of Deed of Trust (as collateral), assigning all
beneficial interest under that certain Second Deed of Trust and
Assignment of Rents with Request for Notice dated May 30, 1990
executed by Thomas J. Gullo and Linda C. Gullo recorded as
Instrument No. 90-314878 and further recorded as Instrument No.
90-372668.

21. Original Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing by A.J. to First American for the
benefit of Sanwa, Tokai and FIB with respect to that property
commonly known as 20945 Plummer Street, Chatsworth, California;

22. Original Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing by DDL to First American for the
benefit of Sanwa, Tokai and FIB with respect to that property
commonly known as 7915 Center Avenue, Cucamonga, California;

23. Original Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing by DDL to First American for the
benefit of Sanwa and Tokai with respect to that property known as
Lot 11, Tract 11428, in the City of Rancho Cucamonga, California;

24. Original Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing by DDL to First American for the
benefit of Sanwa and Tokai with respect to that property known as
Lot 13, Tract 11428, in the City of Rancho Cucamonga, California;

25. Original Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing by Aero-Or to First American for the
benefit of Sanwa with respect to that property commonly known as
1270 NW 167th Place, Beaverton, Oregon;

26. Original Second Deed of Trust and Assignment of Rents with
Request for Notice dated May 10, 1990 executed by M. Peter Thomas
and Lisa Thomas recorded as Instrument No. 90-286466 and further
recorded as Instrument No. 90-375203;

27. Original Second Deed of Trust and Assignment of Rents with
Request for Notice dated May 30, 1990 executed by Thomas J.
Gullo and Linda G. Gullo recorded as Instrument No. 90-314878
and further recorded as Instrument No. 90-372668;

28. Original Promissory Note Secured by Second Deed of Trust
dated May 10, 1990 in the principal amount of $560,000 executed
by M. Peter Thomas and Lisa Thomas;

29. Original Promissory Note Secured by Second Deed of Trust
dated May 30, 1990 in the principal amount of $250,000 executed
by Thomas J. Gullo and Linda C. Gullo;

30. Original Promissory Note dated February 28, 1992 in the
principal amount of $292,536.36 executed by Omni Acquisition
Corp.

EXHIBIT 2
TO
PAYOFF AGREEMENT
Termination of Agreements

1. The Credit Agreement;

2. Pledge and Security Agreement dated as of June 5, 1992 by
DDL in favor of Sanwa, Tokai and First Interstate Bank of Oregon,
N.A. ("FIB");

3. General Security Agreement dated as of June 5, 1992 by DDL
in favor of Sanwa;

4. General Security Agreement dated as of June 5, 1992 by Aero-
Or in favor of Sanwa;

5. General Security Agreement dated as of June 5, 1992 by
AeroCal in favor of Sanwa;

6. General Security Agreement dated as of June 5, 1992 by A.J.
in favor of Sanwa;

7. Continuing Guaranty dated as of June 5, 1992 by Aero-Or in
favor of Sanwa;

8. Continuing Guaranty dated as of June 5, 1992 by Aero-Cal in
favor of Sanwa; and

9. Continuing Guaranty dated as of June 5, 1992 by A.J. in
favor of Sanwa.

EXHIBIT 10-AN TERMINATION AGREEMENT

THIS TERMINATION AGREEMENT (this "Agreement") is made
as of the 29th day of December, 1994, by and among FIRST
INTERSTATE BANK OF OREGON, N.A., TRUSTEE ("FIB"), THE TOKAI BANK,
LTD., LOS ANGELES AGENCY ("Tokai"), AEROSCIENTIFIC CORP., an
Oregon corporation ("Aero-Or"), DDL ELECTRONICS, INC., a Delaware
corporation (formerly known as DATA DESIGN LABORATORIES, INC., a
Delaware corporation) ("DDL"), AEROSCIENTIFIC CORP., a California
corporation ("Aero-Cal"), A.J. ELECTRONICS, INC., a California
corporation ("A.J."), DDL EUROPE LIMITED ("DDL-E"), DDL
ELECTRONICS LIMITED ("DDL-Ltd."), and IRLANDUS CIRCUITS LIMITED
("Irlandus") (DDL, Aero-Cal, A.J., DDL-E, DDL-Ltd., and Irlandus
are collectively referred to herein as the "Aero-Or Affiliates").
Terms not otherwise defined in this Agreement shall have the
meanings ascribed to them in that certain Indenture of Trust
dated as of May 1, 1986 among the State of Oregon acting through
the Economic Development Commission (the "Issuer"), FIB and
Aero-Or.

RECITALS

A. Issuer issued Adjustable Tender Economic Development
Revenue Bonds (the "Bonds"), and loaned certain proceeds from the
sale of the Bonds to Aero-Or pursuant to that certain Indenture
of Trust dated as of May 1, 1986 (the "Indenture") among the
Issuer, Aero-Or and FIB, as trustee, and that certain Loan
Agreement dated as of May 1, 1986 (the "Loan Agreement") between
Issuer and Aero-Or.

B. For repayment of the loan made by Issuer to Aero-Or,
Aero-Or agreed to pay to FIB, for the account of Issuer, an
amount equal to the principal amount of the Bonds together with
interest in the amount set forth in the Loan Agreement. Said
repayment is secured by certain trust deeds, security agreements,
and guaranties executed by Aero-Or and the Aero-Or Affiliates.

C. Pursuant to a certain Reimbursement Agreement dated as
of May 1, 1986, as amended (the "Reimbursement Agreement"),
between Tokai and Aero-Or, Tokai issued a letter of credit dated
as of May 16, 1986, as amended (the "Letter of Credit"), for the
benefit of FIB as security for repayment of the Bonds.

D. Aero-Or is also the guarantor of certain credit
facilities extended by Sanwa Bank California ("Sanwa") to DDL.
DDL, Sanwa and FIB have entered into that certain Intercreditor
Agreement dated on or about June 5, 1992 (the "Intercreditor").

E. As of the date of this Agreement, Aero-Or has caused a
defeasance of the Bonds pursuant to Section 8.01 of the Indenture
(the "Defeasance"), by delivering to FIB (i) irrevocable
instructions from Aero-Or for redemption of the Bonds on February
1, 1995; (ii) irrevocable instructions from the Issuer for
redemption of the Bonds on February 1, 1995; (iii) the sum of
$5,387,820.27, which constitutes all principal and interest due
and payable, and thereafter to become due and payable, on the
Bonds; and (iii) an unqualified opinion of nationally recognized
bankruptcy counsel (which opinion is acceptable to Moody's
Investors Service, Inc.) that payment of such moneys does not
constitute an avoidable preference under Section 547 of the
Federal Bankruptcy Code, in satisfaction of the Indenture's
Available Moneys requirement.

F. In connection with the Defeasance, FIB has delivered
the original Letter of Credit to Tokai for cancellation,
accompanied by a permanent reduction certificate and letter
certificate of cancellation in form and content satisfactory to
Tokai, and FIB, Tokai and Sanwa have entered into a termination
letter with respect to the Intercreditor Agreement.

G. As of the date of this Agreement, Aero-Or has caused to
be paid to Tokai and FIB all of their fees and costs, including
trustee's and attorneys' fees and expenses incurred in connection
with the Bonds but separate and apart from the negotiation and
preparation of documents pertaining to the Defeasance, including,
without limitation, the following: (a) $14,131.26 as letter of
credit fees due and payable to Tokai; (b) 5,082.25 Pounds
Sterling for fees and costs of Irish counsel; and (c) other
attorneys fees and costs through October 31, 1994 in the amount
of $22,739.47.

H. As of the date of this Agreement, Aero-Or has caused to
be paid to FIB and Tokai all of FIB's and Tokai's reasonable fees
and expenses, including without limitation attorneys' fees,
incurred in connection with the Defeasance.

I. The parties to this Agreement agree and acknowledge
that the Defeasance constitutes full and complete satisfaction of
all obligations arising out of or related to the Bonds.

NOW, THEREFORE, in consideration of the above recitals
and of the mutual covenants contained herein, Tokai, FIB,
Aero-Or, and the Aero-Or Affiliates hereby agree as follows:

I.
RELEASE OF LIENS; TERMINATION OF AGREEMENTS

1.1 Release of Liens. In consideration of the Defeasance
and receipt of the funds and documents described in the above
recitals, FIB and Tokai hereby release any and all liens,
encumbrances and other security interests (collectively, the
"Security Interests") it may hold in the property of Aero-Or
and/or the Aero-Or Affiliates. Concurrently with the execution
of this Agreement, FIB and Tokai shall deliver or cause to be
delivered to Aero-Or, in form and substance satisfactory to
Aero-Or, FIB and Tokai, such statements terminating the Security
Interests, and such other documents as Aero-Or may reasonably
deem necessary to assure itself that the Security Interests have
been released and terminated, including, without limitation, the
statements and documents identified on Exhibit 1 of this
Agreement.

1.2 Termination of Agreements. Except as set forth below,
the parties hereto agree that all outstanding agreements and
understandings between FIB, Tokai, Aero-Or and/or the Aero-Or
Affiliates in any way arising out of or related to the Bonds,
other than this Agreement, are hereby terminated and all
obligations thereunder are completely satisfied and released.
Such agreements and understandings include, without limitation,
those identified on Exhibit 2 of this Agreement. Notwithstanding
the foregoing, all indemnities, representations, warranties,
covenants and agreements as to environmental issues, covenants
and liability pertaining to any collateral granted by Aero-Or
and/or any Aero-Or Affiliate to Tokai and/or FIB shall remain in
full force and effect and be fully enforceable against such
entities.

1.3 Further Assurances. At Aero-Or's and/or the Aero-Or
Affiliates' sole expense, including without limitation reasonable
attorneys' fees, each party to this Agreement shall cooperate
fully in the execution of any and all other documents and in the
completion of any additional actions that may be necessary or
appropriate to give full force and effect to the terms and intent
of this Agreement, in form and substance satisfactory to Aero-Or,
Tokai and FIB, including, without limitation, execution of all
documents necessary or appropriate to release FIB's and Tokai's
Security Interest in Aero-Or's and/or the Aero-Or Affiliates'
property located in Northern Ireland.

II.
MUTUAL RELEASE

2.1 Release. In consideration of this Agreement and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Aero-Or and the Aero-Or Affiliates,
on one hand, and FIB and Tokai, on the other, hereby and forever
mutually release and discharge one another and each of the
other's successors, subsidiaries, affiliates, parent companies,
employees, former employees, consultants, owners, officers,
directors, shareholders, general partners, limited partners,
predecessors, assigns, agents, attorneys, insurers, and
representatives from any and all causes of action, actions,
judgments, liens, indebtedness, damages, losses, claims,
liabilities, and demands of any nature whatsoever, known or
unknown, absolute or contingent, related or incidental to the
Bonds, other than the obligations set forth in this Agreement and
any and all indemnification granted in favor of FIB and/or Tokai
or liability of Aero-Or and/or any of the Aero-Or Affiliates with
respect to environmental issues or concerns relating to the
property commonly known as 1270 NW 167th Place, Beaverton, Oregon
(the "Property") and/or any of the other collateral granted by
Aero-Or and/or the Aero-Or Affiliates to Tokai and/or FIB.

2.2 Release of Unknown Claims. It is the intention of the
parties in executing this Agreement that this Agreement shall be
effective as a bar to each and every claim, demand, and cause of
action that the parties may have against one another related or
incidental to the Bonds, other than the obligations set forth in
this Agreement and any indemnification granted in favor of FIB
and/or Tokai with respect to environmental issues or concerns
relating to the Property. In furtherance of this intention, the
parties hereby expressly waive any and all rights or benefits
conferred by the provisions of Section 1542 of the California
Civil Code, and by any similar provision of California or Federal
law now in effect or in effect in the future, and expressly
consent that this Agreement shall be given full force and effect
according to each and all of its express terms and conditions,
including those relating to unknown and unsuspected claims,
demands, and causes of action, if any:

A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor
at the time of executing the release, which if known by
him must have materially affected his settlement with the
debtor.

III.
MISCELLANEOUS

3.1 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of Aero-Or, the Aero-Or Affiliates, FIB,
and Tokai and their respective successors and assigns.

3.2 Governing Law: Waiver of Trial by Jury. This Agreement
shall be governed by and interpreted and construed in accordance
with the laws of the State of California. The parties hereto
consent to the jurisdiction of any state or federal court located
within Los Angeles County of the State of California. The
parties hereto waive the right to trial by jury in any action,
suit, proceeding or counterclaim of any kind arising out of or
related to this Agreement.

3.3 Recitals. All of the recitals are incorporated herein
and made a part hereof and all parties acknowledge and agree that
the recitals are true and correct.

3.4 Warranty of Authorization. Each person whose signature
appears hereon warrants and guarantees that he or she has been
duly authorized and has full authority to execute this Agreement
on behalf of the entity on whose behalf this Agreement is
executed.

3.5 Entire Agreement. This Agreement constitutes and
contains the entire agreement and understanding between the
parties. This Agreement supersedes and replaces all prior
negotiations and all agreements, proposed or otherwise, whether
written or oral, concerning the subject matter hereof. This is a
fully integrated document. In executing this Agreement, no party
hereto has relied on any representation not contained within this
document. Each party hereto has been represented by counsel and
has relied solely on its counsel's advice as to the legal effect
hereof and its own knowledge and the terms of this document.

3.6 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute but one and the same
instrument.

3.7 Attorneys' Fees and Costs. In the event of litigation
in connection with or concerning the subject matter of this
Agreement or any breach of this Agreement, the prevailing party
shall be entitled to recover all costs and expenses incurred by
that party, including reasonable attorneys' fees and costs, in
addition to any other relief to which it may be entitled. The
parties further agree that the prevailing party shall be entitled
to recover all costs, including without limitation reasonable
attorneys' fees and costs whether incurred before trial, at trial
or in any appeal or bankruptcy proceeding, of collecting any
costs and expenses awarded pursuant to the prior sentence.

3.8 Headings. The headings set forth herein are solely for
the purpose of identification and have no legal significance.

3.9 Fiduciary Capacity of FIB. FIB executes this Agreement
solely in its fiduciary capacity as Trustee under the Indenture
and related documents.

IN WITNESS WHEREOF, this Agreement is executed as of the date
first written above

FIRST INTERSTATE BANK OF OREGON, N.A., TRUSTEE