<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended January 31, 1999
-----------------------------------
OR
[ ] 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 1-6357
------
ESTERLINE TECHNOLOGIES CORPORATION
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-2595091
--------------------------------- -------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
10800 NE 8th Street, Bellevue, Washington 98004
---------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code 425/453-9400
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
----- -----
As of March 3, 1999, 17,336,323 shares of the registrant's common stock were
outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
- ------- --------------------
ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEET
As of January 31, 1999 and October 31, 1998
(In thousands, except share amounts)
<TABLE>
<CAPTION>
January 31, October 31,
1999 1998
----------- -----------
(unaudited)
ASSETS
- ------
<S> <C> <C>
Current Assets
Cash and equivalents $ 62,046 $ 8,897
Accounts receivable, net of allowances
of $2,752 and $2,987 for doubtful accounts 64,953 77,477
Inventories
Raw materials and purchased parts 29,404 27,239
Work in process 34,150 33,284
Finished goods 11,142 11,312
-------- --------
74,696 71,835
-------- --------
Deferred income taxes 13,074 15,693
Prepaid expenses 5,278 4,055
-------- --------
Total Current Assets 220,047 177,957
-------- --------
Property, Plant and Equipment 209,050 206,104
Accumulated depreciation 115,537 112,042
-------- --------
93,513 94,062
-------- --------
Goodwill and Intangibles, net 98,370 99,344
Other Assets 16,000 15,816
-------- --------
$427,930 $387,179
======== ========
</TABLE>
<PAGE> 2
ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEET
As of January 31, 1999 and October 31, 1998
(continued)
<TABLE>
<CAPTION>
January 31, October 31,
1999 1998
----------- -----------
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
<S> <C> <C>
Current Liabilities
Accounts payable $ 18,886 $ 23,307
Accrued liabilities 59,201 68,275
Credit facilities 9,027 9,533
Current maturities of long-term debt 6,260 6,358
Federal and foreign income taxes -- 385
-------- --------
Total Current Liabilities 93,374 107,858
-------- --------
Long-Term Liabilities
Long-term debt 123,727 74,043
Deferred income taxes 10,253 8,902
Commitments and Contingencies -- --
Shareholders' Equity
Common stock, par value $.20 per share,
authorized 30,000,000 shares, issued and
outstanding 17,336,323 and 17,317,178 shares 3,467 3,463
Capital in excess of par value 46,797 46,793
Retained earnings 154,148 149,091
Cumulative translation adjustment (3,836) (2,971)
-------- --------
Total Shareholders' Equity 200,576 196,376
-------- --------
$427,930 $387,179
======== ========
</TABLE>
<PAGE> 3
ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended January 31, 1999 and 1998
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
January 31,
-------------------
1999 1998
-------- -------
<S> <C> <C>
Net Sales $108,698 $95,730
Costs and Expenses
Cost of sales 68,574 59,023
Selling, general and administrative 30,608 29,133
Interest income (630) (600)
Interest expense 2,173 824
-------- -------
100,725 88,380
-------- -------
Earnings Before Income Taxes 7,973 7,350
Income Tax Expense 2,916 2,514
-------- -------
Net Earnings $ 5,057 $ 4,836
======== =======
Net Earnings Per Share - Basic $ .29 $ .28
======== =======
Net Earnings Per Share - Diluted $ .29 $ .27
======== =======
</TABLE>
<PAGE> 4
ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months Ended January 31, 1999 and 1998
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
January 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Cash Flows Provided (Used) by Operating Activities
Net earnings $ 5,057 $ 4,836
Depreciation and amortization 5,073 4,422
Deferred income taxes 3,970 (1,591)
Working capital changes, net of effect of acquisitions
Accounts receivable 11,886 9,567
Inventories (3,365) (5,541)
Prepaid expenses 20 (332)
Accounts payable (4,217) (388)
Accrued liabilities (8,866) (4,611)
Federal and foreign income taxes (1,671) 2,528
Other, net (419) 331
-------- --------
7,468 9,221
-------- --------
Cash Flows Provided (Used) by Investing Activities
Capital expenditures (3,906) (5,902)
Capital dispositions 162 35
Acquisitions -- (20,309)
-------- --------
(3,744) (26,176)
-------- --------
Cash Flows Provided (Used) by Financing Activities
Net change in credit facilities (197) 2,784
Proceeds from sale of senior notes 100,000 --
Repayment of bridge facility (50,000) --
Repayment of long-term debt (203) (1,235)
-------- --------
49,600 1,549
-------- --------
Effect of Exchange Rates (175) (1,193)
-------- --------
Net Increase (Decrease) in Cash and Equivalents 53,149 (16,599)
Cash and Equivalents - Beginning of Period 8,897 56,045
-------- --------
Cash and Equivalents - End of Period $ 62,046 $ 39,446
======== ========
Supplemental Cash Flow Information
Cash paid during the period for
Interest expense $ 1,068 $ 1,371
Income taxes 367 1,260
</TABLE>
<PAGE> 5
ESTERLINE TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended January 31, 1999 and 1998
1. The consolidated balance sheet as of January 31, 1999 and the
consolidated statements of operations and cash flows for the quarters
ended January 31, 1999 and 1998 are unaudited, but in the opinion of
management all of the necessary adjustments have been made to present
fairly the financial statements referred to above. The results of
operations and cash flows for the interim periods presented are not
necessarily indicative of results for the full year.
2. The notes to the consolidated financial statements in the Company's
Annual Report on Form 10-K for the fiscal year ended October 31, 1998
provide a summary of significant accounting policies and additional
financial information that should be read in conjunction with this
Form 10-Q.
3. Classifications have been changed for certain amounts in the preceding
period to conform with the current year's financial presentation.
<PAGE> 6
Item 2. Management's Discussion and Analysis of Results of Operations,
- ------- --------------------------------------------------------------
Liquidity and Capital Resources
-------------------------------
Certain statements in the commentary contain forward-looking statements
within the meanings of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Such statements involve risks and uncertainties regarding matters that could
significantly affect expected results, including information about industry
trends, growth, Year 2000, orders, currency fluctuations, backlog, capital
expenditures and cash requirements. The Company is susceptible to economic
cycles and financial results can vary widely based on a number of factors,
including domestic and foreign economic conditions and developments
affecting specific industries and customers.
A significant portion of the sales and profitability of some Company
businesses is derived from telecommunications, electronics, computer,
automotive, aerospace and defense markets. The products sold by most of the
Company's businesses represent capital investment or support for capital
investment by either the initial customer or the ultimate end-user. Changes
in general economic conditions or conditions in these and other specific
industries, capital acquisition cycles and government policies, collectively
or individually, can have a significant effect on the Company's results of
operations and financial condition. Thus, actual results may vary
materially from these forward-looking statements. The Company does not
undertake any obligation to publicly release the results of any revisions
that may be made to these forward-looking statements to reflect any future
events or circumstances.
Results of Operations
- ---------------------
Quarter Ended January 31, 1999 Compared to Quarter Ended January 31, 1998
Net sales for the quarter ended January 31, by Group, were as follows:
(In thousands)
<TABLE>
<CAPTION>
Incr./(Decr.)
from prior year 1999 1998
--------------- -------- --------
<S> <C> <C> <C>
Automation (22)% $ 26,974 $34,475
Aerospace and Defense 56% 54,417 34,957
Instrumentation 4% 27,307 26,298
-------- -------
Total Net Sales $108,698 $95,730
======== =======
</TABLE>
Net sales for the first quarter of 1999 improved 14% overall compared to the
first quarter of 1998. While the addition of Kirkhill Rubber Co. into the
Aerospace/Defense Group accounted for much of the growth for the quarter;
<PAGE> 7
the Aerospace/Defense Group's other aerospace businesses continued to
increase revenues as well. Sales in the Instrumentation Group improved
slightly as sales to aerospace customers significantly offset the decline
experienced in general manufacturing markets served by the Group.
Automation Group sales experienced the dampening effects of a depressed
worldwide market for printed circuit board manufacturing equipment and
delayed ordering decisions in other capital goods markets.
Total gross margin as a percentage of net sales was 37% compared with 38%
during the same period in 1998. Gross margins by Group ranged from 28% to
41% in the first quarter of 1999 compared with 37% to 39% during the same
period in 1998. The decrease in the bottom range of the gross margins by
Group resulted from declining margins in the Automation Group, which
continued to be adversely affected by the economic instability in Asia, as
well as a general drop-off in capital goods purchases as many customers
postpone decisions to acquire new equipment.
Selling, general and administrative expenses decreased to 28% of net sales
from 30% during the same period in 1998. For the first quarter of 1999,
selling, general and administrative expenses totaled $30.6 million, an
increase of $1.5 million over last year's first quarter.
Interest expense increased $1.3 million to $2.2 million in the first quarter
of 1999, primarily due to a $100 million private placement of senior notes
("1999 Senior Notes") completed in November 1999.
The effective income tax rate for the first quarter of 1999 increased to 37%
from 34% during the same period in 1998, primarily as a result of
nondeductible goodwill related to fiscal 1998 acquisitions.
Orders for the first quarter of 1999 were $104.7 million, compared with
$112.9 million for the same period in 1998. Company-wide backlog at
January 31, 1999 was $164.4 million, compared with $171.3 million at
January 31, 1998, principally due to a reduced order rate for capital
equipment. Approximately $29 million in backlog is scheduled to ship after
fiscal 1999. All orders in backlog are subject to cancellation until
delivery.
Market balance has been and continues to be the Company's strategy. Market
cycles are expected to occur within the industries in which the Company's
businesses participate. The Company believes that by participating in
several markets and industries, more consistent total performance can be
sustained. Currently, the effect of this strategy is evident as
Aerospace/Defense and Instrumentation Groups' performance continues to
improve and offset the decline experienced in the Automation Group.
<PAGE> 8
On November 1, 1998, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 130, Reporting Comprehensive Income. SFAS No. 130
establishes new standards for reporting comprehensive income and its
components. The adoption of SFAS No. 130 has no impact on the Company's net
income or shareholders' equity other than providing additional presentation
of information. The Company's comprehensive income is as follows:
<TABLE>
<CAPTION>
Three Months Ended
January 31,
------------------
1999 1998
------ ------
<S> <C> <C>
Net Earnings $5,057 $4,836
Foreign Currency Translation Adjustments (865) (1,227)
------ ------
Comprehensive Income $4,192 $3,609
====== ======
</TABLE>
The Company has assessed the risk from failure of internal systems and those
of vendors and suppliers from the year 2000 ("Y2K") conversion as low. It
is the Company's belief that the impact of a failure at any one location
would not have a material impact due to its diversified and decentralized
nature. Because of this assessment, the Company has also not formalized any
contingency plans in the event of a system failure. The Company recognizes,
however, that not all of its internal computer systems are Y2K compliant and
is taking steps to resolve these issues. Currently, the Company believes
that its systems are materially Y2K compliant and all internal systems are
expected to be compliant by July 1999. The Company also understands and
expects that certain compliance efforts will continue throughout the year.
Based on current information available, it is estimated that the cost of
compliance will be less than $1 million.
The Company has not undertaken a complete assessment of third party exposure
for Y2K issues. The Company believes the effects of third party Y2K issues
will not be material due to the Company's decentralized structure which
minimizes its reliance on single product vendors and, the Company also
believes that most of its third party relationships are replaceable.
However, due to all of the uncertainties relating to Y2K, especially with
third party suppliers, the Company is unable to predict the ultimate impact
of Y2K non-compliance.
Liquidity and Capital Resources
- -------------------------------
The Company completed a $100 million private placement of 1999 Senior Notes
in November 1998. A portion of the cash received from this placement
retired the bridge facility utilized in August 1998 for the acquisition of
Kirkhill Rubber Co. Residual proceeds will be used for other internal
expansion and acquisition activities. The 1999 Senior Notes have maturities
ranging from 5 to 10 years and interest rates from 6% to 6.77%. Management
believes cash on hand and funds generated from operations will adequately
service operating cash requirements and capital expenditures through 1999.
<PAGE> 9
Cash and equivalents on hand at January 31, 1999 totaled $62 million
compared with $8.9 million at October 31, 1998. Net working capital
increased to $126.7 million at January 31, 1999 from $70.1 million at
October 31, 1998. Both increases are primarily related to the 1999 Senior
Notes.
Capital expenditures, consisting of machinery, equipment and computers, are
anticipated to be approximately $21 million during fiscal 1999, compared
with $29.8 million in fiscal 1998. Capital expenditures for the first
quarter ended January 31, 1999 totaled $3.9 million and were concentrated in
the Automation and Aerospace/Defense Groups for machinery and equipment,
including enhancements to information technology.
Total debt at January 31, 1999 was $139 million, an increase of
$49.1 million from October 31, 1998, principally related to the 1999 Senior
Notes placement. Of the total debt outstanding at January 31, 1999,
$100 million was outstanding under the Company's 1999 Senior Notes,
$22.9 million was outstanding under the Company's 8.75% Senior Notes,
$1.6 million was outstanding for revenue bonds and $14.5 million was
outstanding under various foreign currency debt agreements, including capital
lease obligations. The 8.75% Senior Notes have a scheduled annual payment of
$5.7 million, which will continue until maturity on July 30, 2002.
<PAGE> 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- ------- -----------------
The Company has various lawsuits and claims, both offensive and defensive,
and contingent liabilities arising from the conduct of its business, none of
which, in the opinion of management, is expected to have a material effect
on the Company's financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
At the Company's annual meeting of shareholders held on March 3, 1999,
shareholders approved the following proposals:
(a) The election of the following directors for three-year terms
expiring at the 2002 annual meeting:
<TABLE>
<CAPTION>
Votes Cast
----------------------
Name For Withheld
---- ---------- --------
<S> <C> <C>
Robert W. Cremin 15,644,993 45,826
E. John Finn 15,644,693 46,126
Robert F. Goldhammer 15,644,881 45,938
Jerry D. Leitman 15,643,893 46,926
</TABLE>
Current directors whose terms will continue after the 1999 annual
meeting are Richard R. Albrecht, Gilbert W. Anderson,
John F. Clearman, Wendell P. Hurlbut, Paul G. Schloemer and
Malcolm T. Stamper.
(b) The approval of an increase in the number of authorized shares of
common stock from 30,000,000 to 60,000,000 shares.
(14,483,601 votes For, 1,172,986 votes Against and 34,232 votes
Abstained).
(c) The selection of Deloitte & Touche LLP as independent auditors
for the fiscal year ending October 31, 1999. (15,660,126 votes
For, 4,801 votes Against and 25,892 votes Abstained).
There were no broker non-votes on any of the above proposals.
<PAGE> 11
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits.
Exhibit
Number Exhibit
- ------ -------
10.27 Note Purchase Agreement between Esterline Technologies
Corporation and various life insurance companies for Senior Notes
maturing from 2003-2008.
10.28 Executive Retirement Agreement between Esterline Technologies
Corporation and Wendell P. Hurlbut dated January 19, 1999.
11. Schedule setting forth computation of basic and diluted earnings
per common share for the three months ended January 31, 1999 and
1998.
27. Financial Data Schedule (EDGAR Only).
(b) Reports on Form 8-K.
The Company filed a report on Form 8-K under Item 5 on January 19, 1999.
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Esterline Technologies Corporation
(Registrant)
Date: March 15, 1999 By: /s/Robert W. Stevenson
------------------------------------
Executive Vice President,
Chief Financial Officer and
Secretary
(Principal Financial Officer)
By: /s/Robert D. George
------------------------------------
Robert D. George
Treasurer and Controller
(Principal Accounting Officer)
<PAGE> 13
Execution Copy
============================================================================
Esterline Technologies Corporation
Armtec Defense Products Co.
Auxitrol Technologies S.A.
Equipment Sales Co.
Excellon Automation Co.
Federal Products Co.
Hytek Finishes Co.
Kirkhill Rubber Co.
Korry Electronics Co.
Mason Electric Co.
Midcon Cables Co.
TA Mfg. Co.
W.A. Whitney Co.
$30,000,000 6.00% Senior Notes, Series A, due November 15, 2003
$30,000,000 6.40% Senior Notes, Series B, due November 15, 2005
and
$40,000,000 6.77% Senior Notes, Series C, due November 15, 2008
--------------
Note Purchase Agreement
---------------
Dated as of November 1, 1998
============================================================================
<PAGE>
Table of Contents
(NOT A PART OF THE AGREEMENT)
SECTION HEADING PAGE
Section 1. Authorization of Notes 2
Section 2. Sale and Purchase of Notes; Release of Obligors 2
Section 2.1. Sale and Purchase of Notes 2
Section 2.2. Release of Obligors 2
Section 3. Closing 3
Section 4. Conditions to Closing 4
Section 4.1. Representations and Warranties 4
Section 4.2. Performance; No Default. 4
Section 4.3. Compliance Certificates 4
Section 4.4. Opinions of Counsel 4
Section 4.5. Purchase Permitted By Applicable Law, Etc 5
Section 4.6. Sale of Other Notes 5
Section 4.7. Payment of Special Counsel Fees. 5
Section 4.8. Private Placement Number 5
Section 4.9. Changes in Corporate Structure 5
Section 4.10. Funding Instructions 5
Section 4.11. Proceedings and Documents 6
Section 5. Representations and Warranties of the Obligors 6
Section 5.1. Organization; Power and Authority 6
Section 5.2. Authorization, Etc 6
Section 5.3. Disclosure 6
Section 5.4. Organization and Ownership of Shares of
Subsidiaries; Affiliates 7
Section 5.5. Financial Statements 7
Section 5.6. Compliance with Laws, Other Instruments, Etc 8
Section 5.7. Governmental Authorizations, Etc 8
Section 5.8. Litigation; Observance of Agreements, Statutes
and Orders 8
Section 5.9. Taxes 8
Section 5.10. Title to Property; Leases 9
Section 5.11. Licenses, Permits, Etc 9
Section 5.12. Compliance with ERISA 9
Section 5.13. Private Offering by the Obligors 10
Section 5.14. Use of Proceeds; Margin Regulations 10
Section 5.15. Existing Debt; Future Liens 11
<PAGE> i
Section 5.16. Foreign Assets Control Regulations, Etc 11
Section 5.17. Status under Certain Statutes 11
Section 5.18. Notes Rank Pari Passu 11
Section 5.19. Environmental Matters 11
Section 5.20. Computer 2000 Compliant 12
Section 5.21. Existing Investments 12
Section 6. Representations of the Purchaser 12
Section 6.1. Purchase for Investment 12
Section 6.2. Source of Funds 13
Section 7. Information as to the Obligors 14
Section 7.1. Financial and Business Information 14
Section 7.2. Officer's Certificate 17
Section 7.3. Inspection 17
Section 8. Prepayment of the Notes 18
Section 8.1. Required Prepayments 18
Section 8.2. Optional Prepayments with Make-Whole Amount 18
Section 8.3. Allocation of Partial Prepayments 18
Section 8.4. Maturity; Surrender, Etc 18
Section 8.5. Purchase of Notes 18
Section 8.6. Make-Whole Amount 19
Section 8.7. Payment Free and Clear of Taxes 20
Section 9. Affirmative Covenants 20
Section 9.1. Compliance with Law 20
Section 9.2. Insurance 21
Section 9.3. Maintenance of Properties 21
Section 9.4. Payment of Taxes and Claims 21
Section 9.5. Corporate Existence, Etc 21
Section 9.6. Notes to Rank Pari Passu 22
Section 10. Negative Covenants 22
Section 10.1. Maintenance of Debt 22
Section 10.2. Subsidiary Debt 22
Section 10.3. Fixed Charges Ratios 23
Section 10.4. Minimum Consolidated Net Worth 23
Section 10.5. Liens 23
Section 10.6. Restrictions on Dividends of Subsidiaries 25
Section 10.7. Sale of Assets, Etc 25
Section 10.8. Merger, Consolidation, Etc 26
Section 10.9. Line of Business 27
Section 10.10. Transactions with Affiliates 27
<PAGE> ii
Section 10.11. Designation of Subsidiaries 27
Section 11. Events of Default 28
Section 12. Remedies on Default, Etc 30
Section 12.1. Acceleration 30
Section 12.2. Other Remedies 30
Section 12.3. Rescission 31
Section 12.4. No Waivers or Election of Remedies, Expenses, Etc 31
Section 12.5. Judgments 31
Section 13. Registration; Exchange; Substitution of Notes 32
Section 13.1. Registration of Notes 32
Section 13.2. Transfer and Exchange of Notes 32
Section 13.3. Replacement of Notes 32
Section 14. Payments on Notes 33
Section 14.1. Place of Payment 33
Section 14.2. Home Office Payment 33
Section 15. Expenses, Etc 33
Section 15.1. Transaction Expenses 33
Section 15.2. Survival 34
Section 16. Survival of Representations and Warranties;
Entire Agreement 34
Section 17. Amendment and Waiver 34
Section 17.1. Requirements 34
Section 17.2. Solicitation of Holders of Notes 34
Section 17.3. Binding Effect, Etc 35
Section 17.4. Notes Held by Obligors, Etc 35
Section 18. Notices 35
Section 19. Reproduction of Documents 36
Section 20. Confidential Information 36
Section 21. Substitution of Purchaser 37
<PAGE> iii
Section 22. Miscellaneous 37
Section 22.1. Successors and Assigns 37
Section 22.2. Payments Due on Non-Business Days 37
Section 22.3. Severability 38
Section 22.4. Construction 38
Section 22.5. Counterparts 38
Section 22.6. Governing Law 38
Section 22.7. Submission to Jurisdiction 38
Signature 40
<PAGE> iv
Attachments to Note Purchase Agreement:
SCHEDULE A - Information Relating to Purchasers
SCHEDULE B - Defined Terms
SCHEDULE 4.9 - Changes in Corporate Structure
SCHEDULE 5.3 - Disclosure Materials
SCHEDULE 5.4 - Subsidiaries of the Obligors and Ownership
of Subsidiary Stock
SCHEDULE 5.5 - Financial Statements
SCHEDULE 5.8 - Certain Litigation
SCHEDULE 5.11 - Patents, Etc.
SCHEDULE 5.14 - Use of Proceeds
SCHEDULE 5.15 - Existing Debt
SCHEDULE 5.19 - Environmental Matters
SCHEDULE 5.21 - Existing Investments
EXHIBIT 1 - Form of 6.00% Senior Note, Series A,
due November 15, 2003
EXHIBIT 2 - Form of 6.40% Senior Note, Series B,
Due November 15, 2005
EXHIBIT 3 - Form of 6.77% Senior Note, Series C,
due November 15, 2008
EXHIBIT 4.4(a) - Form of Opinion of Special Counsel for the Obligors
EXHIBIT 4.4(b) - Form of Opinion of Special Counsel for the Purchasers
<PAGE> v
Esterline Technologies Corporation
Armtec Defense Products Co.
Auxitrol Technologies S.A.
Equipment Sales Co.
Excellon Automation Co.
Federal Products Co.
Hytek Finishes Co.
Kirkhill Rubber Co.
Korry Electronics Co.
Mason Electric Co.
Midcon Cables Co.
TA Mfg. Co.
W.A. Whitney Co.
10800 NE 8TH STREET
BELLEVUE, WASHINGTON 98004
RE:
$30,000,000 6.00% Senior Notes, Series A, due November 15, 2003
$30,000,000 6.40% Senior Notes, Series B, due November 15, 2005
and
$40,000,000 6.77% Senior Notes, Series C, due November 15, 2008
Dated as of
November 1, 1998
TO THE PURCHASER LISTED IN
THE ATTACHED SCHEDULE A WHO
IS A SIGNATORY TO THIS AGREEMENT:
Ladies and Gentlemen:
ESTERLINE TECHNOLOGIES CORPORATION, a Delaware corporation
("Esterline"), ARMTEC DEFENSE PRODUCTS CO., a Delaware corporation
("Armtec"), AUXITROL TECHNOLOGIES S.A., a French Societe Anonyme
("Auxitrol"), EQUIPMENT SALES CO., a Connecticut corporation ("Equipment"),
EXCELLON AUTOMATION CO., a California corporation ("Excellon"), FEDERAL
PRODUCTS CO., a Delaware corporation ("Federal"), HYTEK FINISHES CO., a
Delaware corporation ("Hytek"), KIRKHILL RUBBER CO., a California corporation
("Kirkhill"), KORRY ELECTRONICS CO., a Delaware corporation ("Korry"), MASON
ELECTRIC CO., a Delaware corporation ("Mason"), MIDCON CABLES CO., a Delaware
corporation ("Midcon"), TA MFG. CO., a California corporation ("TA") and
W.A. WHITNEY CO., an Illinois corporation ("Whitney"; Whitney together with
Esterline, Armtec, Auxitrol, Equipment, Excellon, Federal, Hytek, Kirkhill,
Korry, Mason, Midcon and TA are each hereinafter individually referred to as
<PAGE>
an "Obligor" and collectively as the "Obligors"), jointly and severally
agree with you as follows
Section 1. Authorization of Notes.
The Obligors will authorize the issue and sale of (a) $30,000,000
aggregate principal amount of their 6.00% Senior Notes, Series A, due
November 15, 2003 (the "Series A Notes"), (b) $30,000,000 aggregate
principal amount of their 6.40% Senior Notes, Series B, due November 15, 2005
(the "Series B Notes") and (c) $40,000,000 aggregate principal amount of their
6.77% Senior Notes, Series C, due November 15, 2008 (the "Series C Notes";
the Series C Notes, together with the Series A Notes and the Series B Notes
shall be collectively referred to as the "Notes", such term to include any
such notes issued in substitution therefor pursuant to Section 13 of this
Agreement or the Other Agreements (as hereinafter defined)). The Notes shall
be substantially in the form set out in Exhibits 1, 2 and 3, respectively,
with such changes therefrom, if any, as may be approved by you and the
Obligors. Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.
Section 2. Sale and Purchase of Notes; Release of Obligors.
Section 2.1. Sale and Purchase of Notes. Subject to the terms and
conditions of this Agreement, the Obligors will issue and sell to you and
you will purchase from the Obligors, at the Closing provided for in Section
3, Notes in the principal amount and of the series specified opposite your
name in Schedule A at the purchase price of 100% of the principal amount
thereof. Contemporaneously with entering into this Agreement, the Obligors
are entering into separate Note Purchase Agreements (the "Other Agreements")
identical with this Agreement with each of the other purchasers named in
Schedule A (the "Other Purchasers"), providing for the sale at such Closing
to each of the Other Purchasers of Notes in the principal amount and of the
series specified opposite its name in Schedule A. Your obligation
hereunder, and the obligations of the Other Purchasers under the Other
Agreements, are several and not joint obligations, and you shall have no
obligation under any Other Agreement and no liability to any Person for the
performance or nonperformance by any Other Purchaser thereunder.
Section 2.2. Release of Obligors. (a) The holders of the Notes
agree to release any Obligor (other than Esterline) from its obligations
under this Agreement, the Other Agreements and the Notes upon the request of
Esterline (made concurrently with a request to release the obligations of
such Obligor under the Bank Credit Agreement, the 1992 Note Agreement and
all other Debt of Esterline with respect to which such Obligor is jointly
obligated); provided that (1) at the time of such release and after giving
effect thereto, including, without limitation, the effect of paragraph (c)
hereof no Default or Event of Default shall exist and (2) concurrently with
such release:
(i) the Bank Lenders, the 1992 Noteholders and the holders of
all other Debt of Esterline with respect to which such Obligor is
<PAGE> 2
jointly obligated shall have released and discharged, in the same
manner and to the same extent, the obligations of such Obligor,
(ii) Esterline and the other Obligors shall have entered into
all such amendments to this Agreement, the Other Agreements and the
Notes as may reasonably be deemed necessary by the Required Holders in
order to reflect the release of such Obligor,
(iii) a Responsible Officer of Esterline shall have certified
to the holders of the Notes, and shall have delivered, or cause to be
delivered, such additional evidence as the Required Holders may
reasonably request (including, without limitation, certifications of
the Bank Lenders and the 1992 Noteholders), demonstrating that (A)
the obligations of such Obligor have been terminated under the Bank
Credit Agreement, the 1992 Note Agreement and all other Debt of
Esterline and (B) the Notes rank pari passu with all other Senior
Debt of Esterline, and
(iv) Esterline shall have delivered to the holders of the
Notes all such certificates, corporate resolutions, legal opinions and
other showings required by the Required Holders in form and substance
satisfactory to the Required Holders.
(b) In the event any Obligor that has been released pursuant to
paragraph (a) of this Section 2.2 shall again become obligated, whether
directly or indirectly, under or with respect to the Bank Credit Agreement,
the 1992 Note Agreement or any other Debt of Esterline, then,
notwithstanding the provisions of Section 9.6, such Obligor shall ipso facto
again become obligated under this Agreement, the Other Agreements and the
Notes and Esterline, such Obligor and the other Obligors shall take all
actions reasonably required by the holders of the Notes to evidence such
Obligor's obligations.
(c) For purposes of Section 10.2, any Person being released from its
obligations as an Obligor hereunder, under the Other Agreements and under
the Notes shall be deemed, at the time of such release, to become a
"Restricted Subsidiary" on such date and to have incurred all of its then
outstanding Debt at the time of such release.
(d) No Obligor will, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee
or otherwise, to the Bank Lenders, the 1992 Noteholders or any other holder
of Debt as consideration for or as an inducement to its release of any
Obligor under such Debt, unless such remuneration is concurrently offered
and paid, on the same terms, to the holders of all Notes.
Section 3. Closing
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Chapman and Cutler, 111 West
Monroe St., Chicago, IL 60603, at 10:00 A.M. Chicago time, at a closing (the
"Closing") on November 17, 1998 or on such other Business Day thereafter on
or prior to November 20, 1998 as may be agreed upon by the Obligors and you
<PAGE> 3
and the Other Purchasers. At the Closing, the Obligors will deliver to you
the Notes of the series to be purchased by you in the form of a single Note
(or such greater number of Notes in denominations of at least $100,000 as
you may request) dated the date of the Closing and registered in your name
(or in the name of your nominee), against delivery by you to the Obligors or
their order of immediately available funds in the amount of the purchase
price therefor by wire transfer of immediately available funds for the
account of the Obligors to account number 12338-25699 at Bank of America,
Concord, California, ABA #121000358. If at the Closing the Obligors shall
fail to tender such Notes to you as provided above in this Section 3, or any
of the conditions specified in Section 4 shall not have been fulfilled to
your satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
Section 4. Conditions to Closing.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or
at the Closing, of the following conditions:
Section 4.1. Representations and Warranties. The representations
and warranties of each of the Obligors in this Agreement shall be correct
when made and at the time of the Closing.
Section 4.2. Performance; No Default Each of the Obligors shall
have performed and complied with all agreements and conditions contained in
this Agreement required to be performed or complied with by it prior to or
at the Closing, and after giving effect to the issue and sale of the Notes
(and the application of the proceeds thereof as contemplated by Schedule
5.14), no Default or Event of Default shall have occurred and be continuing.
None of the Obligors nor any Restricted Subsidiary shall have entered into
any transaction since the date of the Memorandum that would have been
prohibited by Sections 10.7, 10.8, 10.9 or 10.10 hereof had such Sections
applied since such date.
Section 4.3. Compliance Certificates.
(a) Officer's Certificate. Each of the Obligors shall have
delivered to you an Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 have
been fulfilled.
(b) Secretary's Certificate. Each of the Obligors shall have
delivered to you a certificate of its Secretary certifying as to the
resolutions attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Notes, this Agreement and the
Other Agreements.
Section 4.4. Opinions of Counsel. You shall have received opinions
in form and substance satisfactory to you, dated the date of the Closing (a)
from Perkins Coie LLP, counsel for the Obligors, covering the matters set
forth in Exhibit 4.4(a) and covering such other matters incident to the
<PAGE> 4
transactions contemplated hereby as you or your special counsel may
reasonably request (and the Obligors hereby instruct their counsel to
deliver such opinion to you) and (b) from Chapman and Cutler, your special
counsel in connection with such transactions, substantially in the form set
forth in Exhibit 4.4(b) and covering such other matters incident to such
transactions as you may reasonably request.
Section 4.5. Purchase Permitted By Applicable Law, Etc. On the date
of the Closing, your purchase of Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which you are subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment, (b) not
violate any applicable law or regulation (including, without limitation,
Regulation T, U or X of the Board of Governors of the Federal Reserve
System) and (c) not subject you to any tax, penalty or liability under or
pursuant to any applicable law or regulation, which law or regulation was
not in effect on the date hereof. If requested by you, you shall have
received an Officer's Certificate certifying as to such matters of fact as
you may reasonably specify to enable you to determine whether such purchase
is so permitted.
Section 4.6. Sale of Other Notes. Contemporaneously with the
Closing, the Obligors shall sell to the Other Purchasers, and the Other
Purchasers shall purchase, the Notes to be purchased by them at the Closing
as specified in Schedule A.
Section 4.7. Payment of Special Counsel Fees; Without limiting the
provisions of Section 15.1, the Obligors shall have paid on or before the
Closing the fees, charges and disbursements of your special counsel referred
to in Section 4.4 to the extent reflected in a statement of such counsel
rendered to the Obligors at least one Business Day prior to the Closing.
Section 4.8. Private Placement Number. A Private Placement Number
issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for each series of the Notes.
Section 4.9. Changes in Corporate Structure. Except as specified in
Schedule 4.9, no Obligor shall have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall not
have succeeded to all or any substantial part of the liabilities of any
other entity, at any time following the date of the most recent financial
statements referred to in Schedule 5.5.
Section 4.10. Funding Instructions. At least three Business Days
prior to the date of the Closing, you shall have received written
instructions executed by a Responsible Officer of each of the Obligors
directing the manner of the payment of funds and setting forth (a) the name
and address of the transferee bank, (b) such transferee bank's ABA number,
(c) the account name and number into which the purchase price for the Notes
is to be deposited, and (d) the name and telephone number of the account
representative responsible for verifying receipt of such funds.
<PAGE> 5
Section 4.11. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such transactions
shall be satisfactory to you and your special counsel, and you and your
special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.
Section 5. Representations and Warranties of the Obligors.
Each Obligor, jointly and severally, represents and warrants to you
that:
Section 5.1. Organization; Power and Authority. Each Obligor is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which
such qualification is required by law, other than those jurisdictions as to
which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each Obligor has the corporate power and authority to own
or hold under lease the properties it purports to own or hold under lease,
to transact the business it transacts and proposes to transact, to execute
and deliver this Agreement, the Other Agreements and the Notes and to
perform the provisions hereof and thereof.
Section 5.2. Authorization, Etc. This Agreement, the Other
Agreements and the Notes have been duly authorized by all necessary
corporate action on the part of each Obligor, and this Agreement and the
Other Agreements constitute, and upon execution and delivery thereof each
Note will constitute, a legal, valid and binding obligation of each Obligor
enforceable against such Obligor in accordance with its terms, except as
such enforceability may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 5.3. Disclosure. The Obligors, through their agent,
NationsBanc Montgomery Securities LLC (as successor to BancAmerica
Securities, Inc.), has delivered to you and each Other Purchaser a copy of a
Private Placement Memorandum, dated September 1998 (the "Memorandum"),
relating to the transactions contemplated hereby. The Memorandum fairly
describes, in all material respects, the general nature of the business and
principal properties of the Obligors and their Restricted Subsidiaries.
Except as disclosed in Schedule 5.3, this Agreement, the Memorandum, the
documents, certificates or other writings delivered to you by or on behalf
of the Obligors in connection with the transactions contemplated hereby and
the financial statements listed in Schedule 5.5, taken as a whole, do not
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made. Except as disclosed
in the Memorandum or as expressly described in Schedule 5.3, or in one of
the documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since October 31, 1997, there
has been no change in the financial condition, operations, business,
properties or prospects of the Obligors or any Restricted Subsidiary except
<PAGE> 6
changes that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. There is no fact known to the
Obligors that would reasonably be expected to have a Material Adverse Effect
that has not been set forth herein or in the Memorandum or in the other
documents, certificates and other writings delivered to you by or on behalf
of the Obligors specifically for use in connection with the transactions
contemplated hereby.
Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (1) of each Obligor's Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its organization,
and the percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Obligors and each other
Subsidiary, (2) of the Obligors' Affiliates, other than Subsidiaries, and
(3) of each Obligor's directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Restricted Subsidiary shown in Schedule 5.4 as being owned
by the Obligors and their Subsidiaries have been validly issued, are fully
paid and nonassessable and are owned by the Obligors or another Subsidiary
free and clear of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Restricted Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, and is
duly qualified as a foreign corporation or other legal entity and is in good
standing in each jurisdiction in which such qualification is required by
law, other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each such
Restricted Subsidiary has the corporate or other power and authority to own
or hold under lease the properties it purports to own or hold under lease
and to transact the business it transacts and proposes to transact.
(d) No Restricted Subsidiary is a party to, or otherwise subject to,
any legal restriction or any agreement (other than this Agreement and the
other Agreements, the agreements listed on Schedule 5.4 and customary
limitations imposed by corporate law statutes) restricting the ability of
such Restricted Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to the Obligors or any of their Restricted
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Restricted Subsidiary.
Section 5.5. Financial Statements. The Obligors have delivered to
each Purchaser copies of the financial statements of Esterline and its
Subsidiaries listed on Schedule 5.5. All of said financial statements
(including in each case the related schedules and notes) fairly present in
all material respects the consolidated financial position of Esterline and
its Subsidiaries as of the respective dates specified in such financial
statements and the consolidated results of their operations and cash flows
for the respective periods so specified and have been prepared in accordance
with GAAP consistently applied throughout the periods involved except as set
forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
<PAGE> 7
Section 5.6. Compliance with Laws, Other Instruments, Etc. (a) The
execution, delivery and performance by each Obligor of this Agreement, the
Other Agreements and the Notes will not (1) contravene, result in any breach
of, or constitute a default under, or result in the creation of any Lien in
respect of any property of such Obligor or any Restricted Subsidiary of such
Obligor under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any other
agreement or instrument to which such Obligor or any Restricted Subsidiary
of such Obligor is bound or by which such Obligor or any Restricted
Subsidiary of such Obligor or any of their respective properties may be
bound or affected, (2) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree, or ruling of
any court, arbitrator or Governmental Authority applicable to such Obligor
or any Restricted Subsidiary of such Obligor or (3) violate any provision of
any statute or other rule or regulation of any Governmental Authority
applicable to such Obligor or any Restricted Subsidiary of such Obligor.
(b) No Obligor nor any of its Restricted Subsidiaries is in
violation of any provision of any statute or other rule or regulation of any
Governmental Authority which violation could reasonably be expected to have
a Material Adverse Effect.
Section 5.7. Governmental Authorizations, Etc. No consent, approval
or authorization of, or registration, filing or declaration with, any
Governmental Authority is required in connection with the execution,
delivery or performance by any Obligor of this Agreement, the Other
Agreements or the Notes.
Section 5.8. Litigation; Observance of Agreements, Statutes and
Orders. (a) Except as disclosed in Schedule 5.8, there are no actions, suits
or proceedings pending or, to the knowledge of any Obligor, threatened
against or affecting any Obligor or any Restricted Subsidiary of such
Obligor or any property of any Obligor or any Restricted Subsidiary of such
Obligor in any court or before any arbitrator of any kind or before or by
any Governmental Authority that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(b) No Obligor nor any Restricted Subsidiary of any Obligor is in
default under any term of any agreement or instrument to which it is a party
or by which it is bound, or any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including without limitation
Environmental Laws) of any Governmental Authority, which default or
violation, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
Section 5.9. Taxes. Each Obligor and each of its Restricted
Subsidiaries has filed all tax returns that are required to have been filed
in any jurisdiction, and have paid all taxes shown to be due and payable on
such returns and all other taxes and assessments levied upon them or their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (a) the amount of which is
not individually or in the aggregate Material or (b) the amount,
applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which such Obligor or
such Restricted Subsidiary, as the case may be, has established adequate
<PAGE> 8
reserves in accordance with GAAP. Such Obligor knows of no basis for any
other tax or assessment that could reasonably be expected to have a Material
Adverse Effect. The charges, accruals and reserves on the books of each
Obligor and each of its Restricted Subsidiaries in respect of Federal, state
or other taxes for all fiscal periods are adequate. The Federal income tax
liabilities of each Obligor (other than Kirkhill and each of its Restricted
Subsidiaries) and each of its Restricted Subsidiaries have been determined
by the Internal Revenue Service and paid for all fiscal years up to and
including the fiscal year ended October 31, 1994. The Federal income tax
liabilities for Kirkhill and its Restricted Subsidiaries have been
determined by the Internal Revenue Service and paid for all fiscal years up
to and including the fiscal year ended December 31, 1994.
Section 5.10. Title to Property; Leases. Each Obligor and each of
its Restricted Subsidiaries has good and sufficient title to its respective
properties that individually or in the aggregate are Material, including all
such properties reflected in the most recent audited balance sheet referred
to in Section 5.5 (except Capital Leases reflected therein) or purported to
have been acquired by any Obligor or any Restricted Subsidiary after said
date (except as sold or otherwise disposed of in the ordinary course of
business), in each case free and clear of Liens prohibited by this
Agreement. All leases that individually or in the aggregate are Material
are valid and subsisting and are in full force and effect in all Material
respects.
Section 5.11. Licenses, Permits, Etc. Except as disclosed in
Schedule 5.11,
(a) each Obligor and each of its Restricted Subsidiaries owns or
possesses all licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or rights thereto,
that individually or in the aggregate are Material, without known conflict
with the rights of others;
(b) to the best knowledge of such Obligor, no product of any Obligor
infringes in any Material respect any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name or
other right owned by any other Person; and
(c) to the best knowledge of such Obligor, there is no Material
violation by any Person of any right of any Obligor or any of its Restricted
Subsidiaries with respect to any patent, copyright, service mark, trademark,
trade name or other right owned or used by such Obligor or any of its
Restricted Subsidiaries.
Section 5.12. Compliance with ERISA. (a) Each Obligor and each of
its ERISA Affiliates has operated and administered each Plan in compliance
with all applicable laws except for such instances of noncompliance as have
not resulted in and could not reasonably be expected to result in a Material
Adverse Effect. No Obligor nor any ERISA Affiliate has incurred any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined in
Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any
such liability by any Obligor or any ERISA Affiliate, or in the imposition
of any Lien on any of the rights, properties or assets of any Obligor or any
ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to any
<PAGE> 9
penalty or excise tax provisions or to Section 401(a)(29) or 412 of the
Code, other than such liabilities or Liens as could not be individually or
in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of the end
of such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent
actuarial valuation report, did not exceed the aggregate current value of
the assets of such Plan allocable to such benefit liabilities. The term
"benefit liabilities" has the meaning specified in Section 4001 of ERISA and
the terms "current value" and "present value" have the meaning specified in
Section 3 of ERISA.
(c) No Obligor nor any of its ERISA Affiliates has incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under Section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligations (determined as
of the last day of each Obligor's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage mandated
by Section 4980B of the Code) of the Obligors and their ERISA Affiliates is
not Material.
(e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that is
subject to the prohibitions of Section 406 of ERISA or in connection with
which a tax could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the
Code. The representation by each Obligor in the first sentence of this
Section 5.12(e) is made in reliance upon and subject to the accuracy of your
representation in Section 6.2 as to the sources of the funds used to pay the
purchase price of the Notes to be purchased by you.
Section 5.13. Private Offering by the Obligors. No Obligor nor
anyone acting on its behalf has offered the Notes or any similar Securities
for sale to, or solicited any offer to buy any of the same from, or
otherwise approached or negotiated in respect thereof with, any Person other
than you, the Other Purchasers and not more than 39 other Institutional
Investors, each of which has been offered the Notes at a private sale for
investment. No Obligor nor anyone acting on its behalf has taken, or will
take, any action that would subject the issuance or sale of the Notes to the
registration requirements of Section 5 of the Securities Act.
Section 5.14. Use of Proceeds; Margin Regulations. The Obligors will
apply the proceeds of the sale of the Notes as set forth in Schedule 5.14.
No part of the proceeds from the sale of the Notes hereunder will be used,
directly or indirectly, for the purpose of buying or carrying any margin
stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of buying or
carrying or trading in any Securities under such circumstances as to involve
any Obligor in a violation of Regulation X of said Board (12 CFR 224) or to
involve any broker or dealer in a violation of Regulation T of said Board
(12 CFR 220). Margin stock does not constitute more than 5% of the value of
the consolidated assets of the Obligors and their Subsidiaries and the
Obligors do not have any present intention that margin stock will constitute
<PAGE> 10
more than 5% of the value of such assets. As used in this Section, the
terms "margin stock" and "purpose of buying or carrying" shall have the
meanings assigned to them in said Regulation U.
Section 5.15. Existing Debt; Future Liens. (a) Except as described
therein, Schedule 5.15 sets forth a complete and correct list of all
outstanding Debt of the Obligors and their Restricted Subsidiaries as of
October 31, 1998 since which date there has been no Material change in the
amounts, interest rates, sinking funds, installment payments or maturities
of the Debt of the Obligors or their Restricted Subsidiaries. No Obligor
nor any of its Restricted Subsidiaries is in default and no waiver of
default is currently in effect, in the payment of any principal or interest
on any Debt of any Obligor or such Restricted Subsidiary and no event or
condition exists with respect to any Debt of any Obligor or any Restricted
Subsidiary that would permit (or that with notice or the lapse of time, or
both, would permit) one or more Persons to cause such Debt to become due and
payable before its stated maturity or before its regularly scheduled dates
of payment.
(b) Except as disclosed in Schedule 5.15, no Obligor nor any of its
Restricted Subsidiaries has agreed or consented to cause or permit in the
future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to a Lien
not permitted by Section 10.5.
Section 5.16. Foreign Assets Control Regulations, Etc. Neither the
sale of the Notes by the Obligors hereunder nor their use of the proceeds
thereof will violate the Trading with the Enemy Act, as amended, or any of
the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
Section 5.17. Status under Certain Statutes. No Obligor nor any of
its Restricted Subsidiaries is an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as
amended, or is subject to regulation under the Public Utility Holding
Company Act of 1935, as amended, the ICC Termination Act of 1995, as
amended, or the Federal Power Act, as amended.
Section 5.18. Notes Rank Pari Passu. The obligations of each Obligor
under this Agreement and the Notes rank at least pari passu in right of
payment with all other senior unsecured Debt (actual or contingent) of such
Obligor, including, without limitation, all senior unsecured Debt of such
Obligor described in Schedule 5.15 hereto.
Section 5.19. Environmental Matters. Except as set forth in Schedule
5.19, no Obligor nor any of its Restricted Subsidiaries has knowledge of any
claim or has received any notice of any claim, and no proceeding has been
instituted raising any claim against any Obligor or any of its Restricted
Subsidiaries or any of their respective real properties now or formerly
owned, leased or operated by any of them or other assets, alleging any
damage to the environment or violation of any Environmental Laws, except, in
each case, such as could not reasonably be expected to result in a Material
Adverse Effect. Except as otherwise disclosed to you in writing:
<PAGE> 11
(a) no Obligor nor any of its Restricted Subsidiaries has
knowledge of any facts which would give rise to any claim, public or
private, of violation of Environmental Laws or damage to the
environment emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by any of them or
to other assets or their use, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect;
(b) no Obligor nor any of its Restricted Subsidiaries has
stored any Hazardous Materials on real properties now or formerly
owned, leased or operated by any of them or has disposed of any
Hazardous Materials in a manner contrary to any Environmental Laws in
each case in any manner that could reasonably be expected to result in
a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by any Obligor or any of its Restricted Subsidiaries, to such
Obligor's knowledge, are in compliance with applicable Environmental
Laws, except where failure to comply could not reasonably be expected
to result in a Material Adverse Effect.
Section 5.20. Computer 2000 Compliant. Each Obligor's and each of
its Restricted Subsidiaries' internal computer systems will be year 2000
compliant in a timely manner and the advent of the year 2000 and its impact
on said internal computer systems could not reasonably be expected to result
in a Material Adverse Effect.
Section 5.21. Existing Investments. Schedule 5.21 sets forth a
complete and correct list of all outstanding Investments of each Obligor and
each of its Restricted Subsidiaries as of October 31, 1998, since which date
there has been no Material change in the amounts of such Investments.
Section 6. Representations of the Purchaser.
Section 6.1. Purchase for Investment. (a) You represent that you are
purchasing the Notes for your own account or for one or more separate
accounts maintained by you or for the account of one or more pension or
trust funds and not with a view to the distribution thereof; provided that
the disposition of your or their property shall at all times be within your
or their control.
(b) You understand that the Notes have not been registered under the
Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is
available, except under circumstances where neither such registration nor
such an exemption is required by law, and that the Obligors are not required
to register the Notes.
(c) You further understand and agree that you will not transfer any
Notes or any part of portion thereof held by you to any Competitor. It is
understood that in establishing compliance by you with the foregoing, you
may reasonably rely upon the written representation of the transferee of a
Note to the effect that such transferee is not a Competitor.
<PAGE> 12
Section 6.2. Source of Funds. You represent that at least one of the
following statements is an accurate representation as to each source of
funds (a "Source") to be used by you to pay the purchase price of the Notes
to be purchased by you hereunder:
(a) the Source is an "insurance company general account"
within the meaning of Department of Labor Prohibited Transaction
Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no
employee benefit plan, treating as a single plan, all plans maintained
by the same employer or employee organization, with respect to which
the amount of the general account reserves and liabilities for all
contracts held by or on behalf of such plan, exceed 10% of the total
reserves and liabilities of such general account (exclusive of
separate account liabilities) plus surplus, as set forth in the NAIC
Annual Statement filed with your state of domicile; or
(b) the Source is either (1) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued
January 29, 1990), or (2) a bank collective investment fund, within the
meaning of the PTE 91-38 (issued July 12, 1991) and, except as you have
disclosed to the Obligors in writing pursuant to this paragraph (b), no
employee benefit plan or group of plans maintained by the same employer
or employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment
fund; or
(c) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning
of Part V of the QPAM Exemption), no employee benefit plan's assets
that are included in such investment fund, when combined with the
assets of all other employee benefit plans established or maintained
by the same employer or by an affiliate (within the meaning of Section
V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, the conditions of Part l(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a
Person controlling or controlled by the QPAM (applying the definition
of "control" in Section V(e) of the QPAM Exemption) owns a 5% or more
interest in any Obligor and (1) the identity of such QPAM and (2) the
names of all employee benefit plans whose assets are included in such
investment fund have been disclosed to such Obligor in writing
pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Obligors in
writing pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
<PAGE> 13
As used in this Section 6.2, the terms "employee benefit plan,"
"governmental plan," "party in interest" and "separate account" shall have
the respective meanings assigned to such terms in Section 3 of ERISA.
Section 7. Information as to the Obligors.
Section 7.1. Financial and Business Information. The Obligors shall
deliver to each holder of Notes that is an Institutional Investor:
(a) Quarterly Statements - within 45 days after the end of each
quarterly fiscal period in each fiscal year of Esterline (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies of:
(1) a consolidated and consolidating balance sheet of
Esterline and its Subsidiaries as at the end of such quarter, and
(2) consolidated and consolidating statements of income,
changes in shareholders' equity and cash flows of Esterline and its
Subsidiaries for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with such
quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified by a Senior Financial Officer of
Esterline as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of operations
and cash flows, subject to changes resulting from year-end adjustments;
provided that delivery within the time period specified above of copies of
Esterline's Quarterly Report on Form 10-Q prepared in compliance with the
requirements therefor and filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements of this Section 7.1(a);
(b) Annual Statements - within 90 days after the end of each fiscal
year of Esterline, duplicate copies of:
(1) a consolidated and consolidating balance sheet of
Esterline and its Subsidiaries, as at the end of such year, and
(2) consolidated and consolidating statements of income,
changes in shareholders' equity and cash flows of Esterline and its
Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by:
(i) an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall
state that such financial statements present fairly, in all material
respects, the financial position of the companies being reported upon
and their results of operations and cash flows and have been prepared
in conformity with GAAP, and that the examination of such accountants
<PAGE> 14
in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such
audit provides a reasonable basis for such opinion in the
circumstances, and
(ii) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making their
audit, they have become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if they are aware
that any such condition or event then exists, specifying the nature
and period of the existence thereof (it being understood that such
accountants shall not be liable, directly or indirectly, for any
failure to obtain knowledge of any Default or Event of Default unless
such accountants should have obtained knowledge thereof in making an
audit in accordance with generally accepted auditing standards or did
not make such an audit),
provided that the delivery within the time period specified above of
Esterline's Annual Report on Form 10-K for such fiscal year (together with
the Esterline's annual report to shareholders, if any, prepared pursuant to
Rule 14a-3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and Exchange Commission,
together with the accountant's certificate described in clause (ii) above,
shall be deemed to satisfy the requirements of this Section 7.1(b);
(c) SEC and Other Reports - promptly upon their becoming available,
one copy of (1) each financial statement, report, notice or proxy statement
sent by any Obligor or any Subsidiary to public Securities holders
generally, and (2) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such holder),
and each prospectus and all amendments thereto filed by any Obligor or any
Subsidiary with the Securities and Exchange Commission and of all press
releases and other statements made available generally by any Obligor or any
Subsidiary to the public concerning developments that are Material;
(d) Notice of Default or Event of Default - promptly, and in any
event within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given
any notice or taken any action with respect to a claimed default hereunder
or that any Person has given any notice or taken any action with respect to
a claimed default of the type referred to in Section 11(f), a written notice
specifying the nature and period of existence thereof and what action the
Obligors are taking or proposes to take with respect thereto;
(e) ERISA Matters - promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any, that
the Obligors or an ERISA Affiliate proposes to take with respect thereto:
<PAGE> 15
(1) with respect to any Plan, any reportable event, as defined
in Section 4043(b) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in
effect on the date hereof; or
(2) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by any Obligor or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan; or
(3) any event, transaction or condition that could result in
the incurrence of any liability by any Obligor or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of
any Obligor or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material Adverse
Effect;
(f) Notices from Governmental Authority - promptly, and in any event
within 30 days of receipt thereof, copies of any notice to any Obligor or
any Subsidiary from any Federal or state Governmental Authority relating to
any order, ruling, statute or other law or regulation that could reasonably
be expected to have a Material Adverse Effect;
(g) Notices Regarding Litigation - promptly, and in any event within
five days of a Responsible Officer becoming aware of the existence of any
pending litigation which would reasonably be expected to have a Material
Adverse Effect, a written notice describing such litigation;
(h) Unrestricted Subsidiaries - at such time as either (1) the
aggregate amount of the total assets of all Unrestricted Subsidiaries
exceeds 10% of the consolidated total assets of Esterline and its
Subsidiaries determined in accordance with GAAP or (2) one or more
Unrestricted Subsidiaries account for more than 10% of the consolidated
gross revenues of Esterline and its Subsidiaries determined in accordance
with GAAP, within the respective periods provided in paragraphs (a) and (b)
above, financial statements of the character and for the dates and periods
as in said paragraphs (a) and (b) provided covering each Unrestricted
Subsidiary (or groups of Unrestricted Subsidiaries on a consolidated basis)
together with a table reflecting eliminations or adjustments required in
order to reconcile such financial statements to the corresponding financial
statements of Esterline and its Subsidiaries delivered pursuant to
paragraphs (a) and (b) above; and
(i) Requested Information - with reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Obligors or any of their
Subsidiaries or relating to the ability of the Obligors to perform their
obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes, including without
<PAGE> 16
limitation, such information as is required by SEC Rule 144A under the
Securities Act to be delivered to the prospective transferee of the Notes.
Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
of Esterline setting forth:
(a) Covenant Compliance - the information (including detailed
calculations) required in order to establish whether the Obligors
Were in compliance with the requirements of Section 10.1 through
Section 10.5 hereof, inclusive, Section 10.7 and Section 10.8 hereof,
during the quarterly or annual period covered by the statements then
being furnished (including with respect to each such Section, where
applicable, the calculations of the maximum or minimum amount, ratio
or percentage, as the case may be, permissible under the terms of such
Sections, and the calculation of the amount, ratio or percentage then
in existence); and
(b) Event of Default - a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be
made, under his or her supervision, a review of the transactions and
conditions of the Obligors and their Subsidiaries from the beginning
of the quarterly or annual period covered by the statements then
being furnished to the date of the certificate and that such review
shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default
or, if any such condition or event existed or exists (including,
without limitation, any such event or condition resulting from the
failure of any Obligor or any Restricted Subsidiary to comply with
any Environmental Law), specifying the nature and period of existence
thereof and what action the Obligors shall have taken or proposes to
take with respect thereto.
Section 7.3. Inspection. Each Obligor shall permit the
representatives of each holder of Notes that is an Institutional Investor:
(a) No Default - if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior
notice to such Obligor, to visit the principal executive office of
such Obligor, to discuss the affairs, finances and accounts of such
Obligor and its Subsidiaries with such Obligor's officers, and (with
the consent of such Obligor, which consent will not be unreasonably
withheld) its independent public accountants, and (with the consent
of such Obligor, which consent will not be unreasonably withheld) to
visit the other offices and properties of such Obligor and each of
its Subsidiaries, all at such reasonable times and as often as may be
reasonably requested in writing; and
(b) Default - if a Default or Event of Default then exists, at
the expense of such Obligor, to visit and inspect any of the offices
or properties of such Obligors or any of its Subsidiaries, to examine
all their respective books of account, records, reports and other
papers, to make copies and extracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision
<PAGE> 17
such Obligor authorizes said accountants to discuss the affairs,
finances and accounts of the Obligors and their Subsidiaries), all at
such times and as often as may be requested.
Section 8. Prepayment of the Notes.
Section 8.1. Required Prepayments. The Notes shall not be subject to
a required prepayment prior to the final maturity thereof.
Section 8.2. Optional Prepayments with Make-Whole Amount. The
Obligors may, at their option, upon notice as provided below, prepay at any
time all, or from time to time any part of, the Notes, in an amount not less
than $1,000,000, in the case of a partial prepayment, at 100% of the
principal amount so prepaid, together with interest accrued thereon to the
date of such prepayment, plus the Make-Whole Amount determined for the
prepayment date with respect to such principal amount. The Obligors will
give each holder of Notes written notice of each optional prepayment under
this Section 8.2 not less than 30 days and not more than 60 days prior to
the date fixed for such prepayment. Each such notice shall specify such
date, the aggregate principal amount of each series of Notes to be prepaid
on such date, the principal amount of each Note held by such holder to be
prepaid (determined in accordance with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount being
prepaid, and shall be accompanied by a certificate of a Senior Financial
Officer as to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two Business
Days prior to such prepayment, the Obligors shall deliver to each holder of
Notes a certificate of a Senior Financial Officer specifying the calculation
of such Make-Whole Amount as of the specified prepayment date.
Section 8.3. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes pursuant to Section 8.2, the principal
amount of the Notes to be prepaid shall be (a) allocated among each series
of Notes in proportion to the aggregate unpaid principal amount of each such
series of Notes and (b) allocated pro rata among all of the holders of each
series of Notes outstanding in accordance with the unpaid principal amount
thereof.
Section 8.4. Maturity; Surrender, Etc. In the case of each
prepayment of Notes pursuant to this Section 8, the principal amount of each
Note to be prepaid shall mature and become due and payable on the date fixed
for such prepayment, together with interest on such principal amount accrued
to such date and the applicable Make-Whole Amount, if any. From and after
such date, unless the Obligors shall fail to pay such principal amount when
so due and payable, together with the interest and Make-Whole Amount, if
any, as aforesaid, interest on such principal amount shall cease to accrue.
Any Note paid or prepaid in full shall be surrendered to the Obligors and
cancelled and shall not be reissued, and no Note shall be issued in lieu of
any prepaid principal amount of any Note.
Section 8.5. Purchase of Notes. The Obligors will not and will not
permit any Affiliate to purchase, redeem, prepay or otherwise acquire,
directly or indirectly, any series of the outstanding Notes or any part or
portion of any thereof except upon the payment or prepayment of each series
<PAGE> 18
of the Notes in accordance with the terms of this Agreement and the Notes.
The Obligors will promptly cancel all Notes acquired by them or any
Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant
to any provision of this Agreement and no Notes may be issued in
substitution or exchange for any such Notes.
Section 8.6. Make-Whole Amount. The term "Make-Whole Amount" means,
with respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the
Called Principal of such Note over the amount of such Called Principal;
provided that the Make-Whole Amount may in no event be less than zero. For
the purposes of determining the Make-Whole Amount, the following terms have
the following meanings:
"Called Principal" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2
or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
"Discounted Value" means, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their
respective scheduled due dates to the Settlement Date with respect to
such Called Principal, in accordance with accepted financial practice
and at a discount factor (applied on the same periodic basis as that
on which interest on the Notes is payable) equal to the Reinvestment
Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal
of any Note, 0.50% over the yield to maturity implied by (a) the
yields reported, as of 10:00 A.M. (New York City time) on the second
Business Day preceding the Settlement Date with respect to such Called
Principal, on the applicable "PX" page of the Bloomberg Financial
Markets Services Screen (or, if not available, any other national
recognized trading screen reporting on-line intraday trading in the
U.S. Treasury Securities) for actively traded on-the-run U.S. Treasury
Securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or (b) if such
yields are not reported as of such time or the yields reported as of
such time are not ascertainable, the Treasury Constant Maturity Series
Yields reported, for the latest day for which such yields have been so
reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical
Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury Securities having a constant maturity
equal to the Remaining Average Life of such Called Principal as of
such Settlement Date. Such implied yield will be determined, if
necessary, by (1) converting U.S. Treasury bill quotations to bond-
equivalent yields in accordance with accepted financial practice and
(2) interpolating linearly between (i) the actively traded U.S.
Treasury Security with the maturity closest to and greater than the
Remaining Average Life and (ii) the actively traded U.S. Treasury
Security with the maturity closest to and less than the Remaining
Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
<PAGE> 19
year) obtained by dividing (a) such Called Principal into (b) the sum
of the products obtained by multiplying (1) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (2) the number of years (calculated to the nearest one-twelfth
year) that will elapse between the Settlement Date with respect to
such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called
Principal were made prior to its scheduled due date; provided that if
such Settlement Date is not a date on which interest payments are due
to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
"Settlement Date" means, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
Section 8.7. Payment Free and Clear of Taxes Each payment by any
Obligor under this Agreement or the Notes shall be paid without setoff,
counterclaim or reduction and without deduction for, and free from, any and
all present or future taxes, levies, imposts, duties, fees, charges,
deductions, withholding or liabilities with respect thereto or any
restrictions or conditions of any nature other than any liability in respect
of any tax imposed by the United States or any State or political
subdivision thereof which is based on or measured by a Note holder's net
income or gross receipts. If any Obligor is required by law to make any
deduction or withholding on account of any tax or other withholding or
deduction from any sum payable by such Obligor hereunder, such Obligor shall
pay any such tax or other withholding or deduction and shall pay such
additional amount necessary to ensure that, after making any payment,
deduction or withholding, each holder of the Notes shall receive and retain
(free of any liability in respect of any payment, deduction or withholding
other than any liability in respect of any tax imposed by the United States
or any State or political subdivision thereof which is based on or measured
by such holder's net income or gross receipts) a net sum equal to what it
would have received and so retained hereunder had no such deduction,
withholding or payment been required to have been made.
Section 9. Affirmative Covenants.
Each Obligor, jointly and severally, covenants that so long as any of
the Notes are outstanding:
Section 9.1. Compliance with Law. Each Obligor will, and each
Obligor will cause each of its Restricted Subsidiaries to, comply with all
laws, ordinances or governmental rules or regulations to which each of them
is subject, including, without limitation, ERISA and all Environmental Laws,
and will obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the ownership
<PAGE> 20
of their respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that non-
compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 9.2. Insurance. Each Obligor will, and each Obligor will
cause each of its Restricted Subsidiaries to, maintain, with financially
sound and reputable insurers, insurance with respect to their respective
properties and businesses against such casualties and contingencies, of such
types, on such terms and in such amounts (including deductibles, co-
insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly
situated.
Section 9.3. Maintenance of Properties. Each Obligor will, and each
Obligor will cause each of its Restricted Subsidiaries to, maintain and
keep, or cause to be maintained and kept, their respective properties in
good repair, working order and condition (other than ordinary wear and
tear), so that the business carried on in connection therewith may be
properly conducted at all times; provided that this Section shall not
prevent any Obligor or any of its Restricted Subsidiaries from discontinuing
the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and such Obligor
has concluded that such discontinuance would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Section 9.4. Payment of Taxes and Claims. Each Obligor will, and
each Obligor will cause each of its Subsidiaries to, file all tax returns
required to be filed in any jurisdiction and to pay and discharge all taxes
shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable that
have or might become a Lien on properties or assets of such Obligor or any
of its Subsidiaries; provided that no Obligor nor any of its Subsidiaries
need pay any such tax or assessment or claims if (a) the amount,
applicability or validity thereof is contested by such Obligor or such
Subsidiary on a timely basis in good faith and in appropriate proceedings,
and such Obligor or such Subsidiary has established adequate reserves
therefor in accordance with GAAP on the books of such Obligor or such
Subsidiary or (b) the nonpayment of all such taxes and assessments in the
aggregate would not reasonably be expected to have a Material Adverse
Effect.
Section 9.5. Corporate Existence, Etc. Esterline will at all times
preserve and keep in full force and effect its corporate existence. Subject
to Sections 10.7 and 10.8, each Obligor will at all times preserve and keep
in full force and effect the corporate existence of each of its Restricted
Subsidiaries (unless merged into an Obligor or another Restricted
Subsidiary) and all rights and franchises of such Obligor and its Restricted
Subsidiaries unless, in the good faith judgment of such Obligor, the
termination of or failure to preserve and keep in full force and effect such
<PAGE> 21
corporate existence, right or franchise would not, individually or in the
aggregate, have a Material Adverse Effect.
Section 9.6. Notes to Rank Pari Passu. (a) The Notes and all other
obligations under this Agreement of each Obligor are and at all times shall
remain direct and unsecured obligations of such Obligor ranking pari passu
in right of payment with all other Notes from time to time issued and
outstanding hereunder without any preference among themselves and pari passu
with all other present and future unsecured Debt (actual or contingent) of
such Obligor which is not expressed to be subordinate or junior in rank to
any other unsecured Debt of such Obligor.
(b) Without limitation to the foregoing paragraph (a), if at any
time, pursuant to the terms and conditions of the Bank Credit Agreement, the
1992 Note Agreement or any other agreement or instrument in respect of Debt
of Esterline, any existing or newly acquired or formed Subsidiary becomes
obligated, directly or indirectly, under the Bank Credit Agreement, the 1992
Note Agreement or any other agreement or instrument in respect of Debt of
Esterline, (1) Esterline shall cause such Subsidiary to become an Obligor in
respect of this Agreement, the Other Agreements and the Notes, and (2)
Esterline shall deliver, or shall cause to be delivered, to the holders of
the Notes (i) all such certificates, corporate resolutions, legal opinions
and other showings required by the holders of the Notes in form and
substance satisfactory to the Required Holders, and (ii) all such amendments
to this Agreement, the Other Agreements and the Notes and any other
agreement as may reasonably be deemed necessary by the holders of the Notes,
and their counsel, in order to reflect the existence of such additional
Obligor.
(c) If at any time Esterline or any other Obligor requests the
holders of the Notes to release any Obligor from its obligations hereunder
or under the Notes, Esterline such Obligor and the other Obligors shall
comply with the requirements of Section 2.2 hereof.
Section 10. Negative Covenants.
Each Obligor, jointly and severally, covenants that so long as any of
the Notes are outstanding:
Section 10.1. Maintenance of Debt. No Obligor will, at any time,
permit Consolidated Debt to exceed 60% of Total Capitalization.
Section 10.2. Subsidiary Debt. No Obligor will at any time permit
any of its Restricted Subsidiaries to, directly or indirectly, create,
incur, assume, guarantee, have outstanding, or otherwise become or remain
directly or indirectly liable with respect to, any Debt other than:
(a) Debt of a Restricted Subsidiary that is an Obligor
evidenced by the Notes;
(b) Debt of a Restricted Subsidiary outstanding on the date
hereof and disclosed in Schedule 5.15 hereto, provided that such Debt
may not be extended, renewed or refunded except as otherwise permitted
by this Agreement;
<PAGE> 22
(c) Debt of a Restricted Subsidiary owed to an Obligor or to a
Wholly-Owned Restricted Subsidiary of an Obligor;
(d) Debt of a Restricted Subsidiary outstanding at the time
such Subsidiary becomes a Restricted Subsidiary, provided that (1)
such Debt shall not have been incurred in contemplation of such
Subsidiary becoming a Restricted Subsidiary and (2) immediately after
such Subsidiary becomes a Restricted Subsidiary no Default or Event of
Default shall exist, and provided, further, that such Debt may not be
extended, renewed or refunded except as otherwise permitted by this
Agreement; and
(e) Debt of a Restricted Subsidiary in addition to that
otherwise permitted by the foregoing provisions of this Section 10.2,
provided that on the date the Restricted Subsidiary incurs or
otherwise becomes liable with respect to any such additional Debt and
immediately after giving effect thereto and the concurrent retirement
of any other Debt:
(1) no Default or Event of Default exists, and
(2) Priority Debt does not exceed 20% of Consolidated
Net Worth determined at such time.
For the purposes of this Section 10.2, any Person becoming a Restricted
Subsidiary after the date hereof shall be deemed, at the time it becomes a
Restricted Subsidiary, to have incurred all of its then outstanding Debt,
and any Person extending, renewing or refunding any Debt shall be deemed to
have incurred such Debt at the time of such extension, renewal or refunding.
Section 10.3. Fixed Charges Coverage Ratio. No Obligor will permit
the Fixed Charges Coverage Ratio to be less than 1.50 to 1.00, determined as
of the last day of each fiscal quarter of Esterline.
Section 10.4. Minimum Consolidated Net Worth. No Obligor will, at
any time, permit Consolidated Net Worth to be less than the sum of (a)
$140,000,000, plus (b) an amount equal to 25% of its Consolidated Net Income
for the period from and after the date of the Closing to and including the
date of any determination hereunder (without reduction for losses).
Section 10.5. Liens. No Obligor will, nor will any Obligor permit
any of its Restricted Subsidiaries to, directly or indirectly create, incur,
assume or permit to exist (upon the happening of a contingency or otherwise)
any Lien on or with respect to any property or asset (including, without
limitation, any document or instrument in respect of goods or accounts
receivable) of such Obligor or any such Restricted Subsidiary, whether now
owned or held or hereafter acquired, or any income or profits therefrom, or
assign or otherwise convey any right to receive income or profits, except:
(a) Liens for taxes, assessments or other governmental
charges which are not yet due and payable or the payment of which is
not at the time required by Section 9.4;
<PAGE> 23
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in each
case, incurred in the ordinary course of business for sums not yet due
and payable or the payment of which is not at the time required by
Section 9.4;
(c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (1) in connection
with workers' compensation, unemployment insurance and other types of
social security or retirement benefits, or (2) to secure (or to obtain
letters of credit that secure) the performance of tenders, statutory
obligations, surety bonds, appeal bonds, bids, leases (other than
Capital Leases), performance bonds, purchase, construction or sales
contracts and other similar obligations, in each case not incurred or
made in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of
property;
(d) any attachment or judgment Lien, unless the judgment it
secures shall not, within 60 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not
have been discharged within 60 days after the expiration of any such
stay;
(e) leases or subleases granted to others, easements, rights-
of-way, restrictions and other similar charges or encumbrances, in
each case incidental to, and not interfering with, the ordinary
conduct of the business of such Obligor or any of its Restricted
Subsidiaries, provided that such Liens do not, in the aggregate,
materially detract from the value of such property;
(f) Liens on property or assets of such Obligor or any of its
Restricted Subsidiaries securing Debt owing to such Obligor or to a
Wholly-Owned Restricted Subsidiary of such Obligor;
(g) Liens existing on the date of the Closing and securing the
Debt of such Obligor and its Restricted Subsidiaries and described on
Schedule 5.15;
(h) any Lien created to secure all or any part of the purchase
price, or to secure Debt incurred or assumed to pay all or any part of
the purchase price or cost of construction, of property (or any
improvement thereon) acquired or constructed by such Obligor or any of
its Restricted Subsidiaries after the date of the Closing, provided
that
(1) any such Lien shall extend solely to the item or
items of such property (or improvement thereon) so acquired or
constructed,
(2) the principal amount of the Debt secured by any
such Lien shall at no time exceed an amount equal to the lesser
of (i) the cost to such Obligor or such Restricted Subsidiary of
the property (or improvement thereon) so acquired or constructed
and (ii) the Fair Market Value (as determined in good faith by
the board of directors of such Obligor) of such property (or
<PAGE> 24
improvement thereon) at the time of such acquisition or
construction, and
(3) any such Lien shall be created contemporaneously
with, or within 180 days after, the acquisition or construction
of such property;
(i) any Lien existing on property of a Person immediately
prior to its being consolidated with or merged into such Obligor or
any of its Restricted Subsidiaries or its becoming a Subsidiary of
such Obligor, or any Lien existing on any property acquired by an
Obligor or any of its Restricted Subsidiaries at the time such
property is so acquired (whether or not the Debt secured thereby shall
have been assumed), provided that (1) no such Lien shall have been
created or assumed in contemplation of such consolidation or merger or
such Person's becoming a Subsidiary of such Obligor or such
acquisition of property, and (2) each such Lien shall extend solely to
the item or items of property so acquired;
(j) any Lien renewing, extending or refunding any Lien
permitted by paragraph (g), (h) or (i) of this Section 10.5, provided
that (1) the principal amount of Debt secured by such Lien immediately
prior to such extension, renewal or refunding is not increased or the
maturity thereof reduced, (2) such Lien is not extended to any other
property, and (3) immediately after such extension, renewal or
refunding no Default or Event of Default would exist; and
(k) other Liens not otherwise permitted by paragraphs (a)
through (j), provided that, after giving effect thereto and to the
incurrence of any Debt secured thereby, Priority Debt does not exceed
20% of Consolidated Net Worth determined at such time.
Section 10.6. Restrictions on Dividends of Subsidiaries. No Obligor
will, nor will any Obligor permit any of its Restricted Subsidiaries to,
enter into any agreement which would restrict any Restricted Subsidiary's
ability or right to pay dividends to, or make advances to or Investments in,
such Obligor or, if such Restricted Subsidiary is not directly owned by such
Obligor, the "parent" Subsidiary of such Restricted Subsidiary.
Section 10.7. Sale of Assets, Etc. Except as permitted under
Section 10.8, no Obligor will, and no Obligor will permit any of its
Restricted Subsidiaries to, make any Asset Disposition unless:
(a) in the good faith opinion of Esterline, the Asset
Disposition is in exchange for consideration having a Fair Market
Value at least equal to that of the property exchanged and is in the
best interest of such Obligor or such Restricted Subsidiary; and
(b) immediately after giving effect to the Asset Disposition,
no Default or Event of Default would exist; and
<PAGE> 25
(c) immediately after giving effect to the Asset Disposition,
the Disposition Value of all property that was the subject of any
Asset Disposition occurring in the then current fiscal year of
Esterline would not exceed 10% of Consolidated Total Assets determined
as of the end of the then most recently ended fiscal year of
Esterline.
If the Net Proceeds Amount for any Transfer is applied to a Debt
Prepayment Application within 180 days after such Transfer or to a Property
Reinvestment Application within 180 days before or after such Transfer, then
such Transfer, only for the purpose of determining compliance with
subsection (c) of this Section 10.7 as of any date, shall be deemed not to
be an Asset Disposition.
Notwithstanding the foregoing, so long as no Default or Event of
Default shall exist, any Obligor may, and may permit any of its Restricted
Subsidiaries to, enter into any arrangement whereby such Obligor or such
Restricted Subsidiary shall Transfer any property acquired or constructed by
such Obligor or such Restricted Subsidiary to any Person other than such
Obligor or such Restricted Subsidiary and, within 180 days after acquisition
or completion of construction of such property, such Obligor or such
Restricted Subsidiary shall lease or intend to lease, as lessee, the same
property.
Section 10.8. Merger, Consolidation, Etc. No Obligor will, nor will
any Obligor permit any of its Restricted Subsidiaries to, consolidate with
or merge with any other corporation or convey, transfer or lease
substantially all of its assets in a single transaction or series of
transactions to any Person (except that (x) a Restricted Subsidiary of an
Obligor (other than a Restricted Subsidiary of an Obligor that is also an
Obligor) may consolidate with or merge with, or convey, transfer or lease
substantially all of its assets in a single transaction or series of
transactions to, an Obligor or a Wholly-Owned Restricted Subsidiary of an
Obligor, (y) an Obligor may consolidate with or merge with, or convey,
transfer or lease substantially all of its assets in a single transaction or
a series of related transactions to, another Obligor, so long as in any
consolidation or merger involving Esterline, Esterline shall be the
surviving or continuing corporation and (z) an Obligor (other than
Esterline) or a Restricted Subsidiary of an Obligor may convey, transfer or
lease all of its assets in compliance with the provisions of Section 10.7),
provided that the foregoing restriction does not apply to the consolidation
or merger of Esterline with, or the conveyance, transfer or lease of
substantially all of the assets of Esterline in a single transaction or
series of transactions to, any Person so long as:
(a) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of Esterline as an entirety, as
the case may be (the "Successor Corporation"), shall be a solvent
corporation organized and existing under the laws of the United States
of America, any State thereof or the District of Columbia;
(b) if Esterline is not the Successor Corporation, such
corporation shall have executed and delivered to each holder of Notes
its assumption of the due and punctual performance and observance of
each covenant and condition of this Agreement and the Notes (pursuant
<PAGE> 26
to such agreements and instruments as shall be reasonably satisfactory
to the Required Holders), and Esterline shall have caused to be
delivered to each holder of Notes an opinion of nationally recognized
independent counsel, or other independent counsel reasonably
satisfactory to the Required Holders, to the effect that all
agreements or instruments effecting such assumption are enforceable in
accordance with their terms and comply with the terms hereof; and
(c) immediately after giving effect to such transaction no
Default or Event of Default would exist.
No such conveyance, transfer or lease of substantially all of the assets of
Esterline shall have the effect of releasing Esterline or any Successor
Corporation from its liability under this Agreement or the Notes.
Section 10.9. Line of Business. No Obligor will, nor will any
Obligor permit any of its Restricted Subsidiaries to, engage in any business
if, as a result, the general nature of the business in which the Obligors
and their Restricted Subsidiaries, taken as a whole, would then be engaged
would be substantially changed from the general nature of the business in
which the Obligors and their Restricted Subsidiaries, taken as a whole, are
engaged on the date of this Agreement as described in the Memorandum.
Section 10.10. Transactions with Affiliates. No Obligor will, nor
will any Obligor permit any of its Restricted Subsidiaries to, enter into
directly or indirectly any transaction or Material group of related
transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than another Obligor or another Restricted Subsidiary),
except in the ordinary course and pursuant to the reasonable requirements of
such Obligor's or such Restricted Subsidiary's business and upon fair and
reasonable terms no less favorable to such Obligor or such Restricted
Subsidiary than would be obtainable in a comparable arm's-length transaction
with a Person not an Affiliate.
Section 10.11. Designation of Subsidiaries. Any Obligor may
designate any of its Subsidiaries to be a Restricted Subsidiary and may
designate any of its Restricted Subsidiaries to be an Unrestricted
Subsidiary by giving written notice to each holder of Notes that the Board
of Directors of Esterline has made such designation, provided, however, that
no Subsidiary may be designated a Restricted Subsidiary and no Restricted
Subsidiary may be designated an Unrestricted Subsidiary unless, at the time
of such action and after giving effect thereto,
(a) solely in the case of a Restricted Subsidiary being
designated an Unrestricted Subsidiary, such Restricted Subsidiary
being designated an Unrestricted Subsidiary shall not have any
continuing Investment in any Obligor or any Restricted Subsidiary, and
(b) no Default or Event of Default shall exist.
Any Restricted Subsidiary which has been designated an Unrestricted
Subsidiary and which has then been designated a Restricted Subsidiary again,
in each case in accordance with the provisions of the immediately preceding
sentence shall not at any time thereafter be designated an Unrestricted
Subsidiary. Any Unrestricted Subsidiary which has been designated a
<PAGE> 27
Restricted Subsidiary and which has then been designated an Unrestricted
Subsidiary again, in each case in accordance with the provisions of the
first sentence of this Section 10.11 shall not at any time thereafter be
designated a Restricted Subsidiary.
Notwithstanding the foregoing, no Obligor may designate any Subsidiary
of such Obligor an Unrestricted Subsidiary if such Subsidiary is also an
Obligor.
Section 11. Events of Default.
An "Event of Default" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) the Obligors default in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Obligors default in the payment of any interest on any
Note for more than five Business Days after the same becomes due and
payable; or
(c) the Obligors default in the performance of or compliance
with any term contained in Section 10; or
(d) the Obligors default in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11) and such default is
not remedied within 45 days after the earlier of (1) a Responsible
Officer obtaining actual knowledge of such default and (2) any Obligor
receiving written notice of such default from any holder of a Note
(any such written notice to be identified as a "notice of default" and
to refer specifically to this paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or
on behalf of any Obligor or by any officer of such Obligor in this
Agreement or in any writing furnished in connection with the
transactions contemplated hereby proves to have been false or
incorrect in any material respect on the date as of which made; or
(f) (1) any Obligor or any of its Restricted Subsidiaries is
in default (as principal or as guarantor or other surety) in the
payment of any principal of or premium or make-whole amount or
interest on any Debt that is outstanding in an aggregate principal
amount of at least $5,000,000 beyond any period of grace provided with
respect thereto, or (2) any Obligor or any of its Restricted
Subsidiaries is in default in the performance of or compliance with
any term of any evidence of any Debt in an aggregate outstanding
principal amount of at least $5,000,000 or of any mortgage, indenture
or other agreement relating thereto or any other condition exists, and
as a consequence of such default or condition such Debt has become, or
has been declared, due and payable before its stated maturity or
before its regularly scheduled dates of payment, or (3) as a
consequence of the occurrence or continuation of any event or
condition (other than the passage of time or the right of the holder
<PAGE> 28
of Debt to convert such Debt into equity interests), (i) any Obligor
or any of its Restricted Subsidiaries has become obligated to purchase
or repay Debt before its regular maturity or before its regularly
scheduled dates of payment in an aggregate outstanding principal
amount of at least $5,000,000, or (ii) one or more Persons have the
right to require any Obligor or any of its Restricted Subsidiaries so
to purchase or repay such Debt; or
(g) any Obligor or any of its Restricted Subsidiaries (1) is
generally not paying, or admits in writing its inability to pay, its
debts as they become due, (2) files, or consents by answer or
otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction,
(3) makes an assignment for the benefit of its creditors, (4) consents
to the appointment of a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any
substantial part of its property, (5) is adjudicated as insolvent or
to be liquidated, or (6) takes corporate action for the purpose of any
of the foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by any
Obligor or any of its Restricted Subsidiaries, a custodian, receiver,
trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation
or to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation
of any Obligor or any of its Restricted Subsidiaries, or any such
petition shall be filed against any Obligor or any of its Restricted
Subsidiaries and such petition shall not be dismissed within 60 days;
Or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $5,000,000 are rendered against one or more
of the Obligors and their Restricted Subsidiaries and which judgments
are not, within 60 days after entry thereof, bonded, discharged or
stayed pending appeal, or are not discharged within 60 days after the
expiration of such stay; or
(j) if (1) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under Section 412 of the Code, (2) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA Section 4042 to terminate or appoint a trustee
to administer any Plan or the PBGC shall have notified any Obligor or
any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (3) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of Section 4001(a)(18) of ERISA)
under all Plans, determined in accordance with Title IV of ERISA,
shall exceed $1,000,000, (4) any Obligor or any ERISA Affiliate shall
<PAGE> 29
have incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (5) any
Obligor or any ERISA Affiliate withdraws from any Multiemployer Plan,
or (6) any Obligor or any of its Restricted Subsidiaries establishes
or amends any employee welfare benefit plan that provides post-
employment welfare benefits in a manner that would increase the
liability of such Obligor or any of its Restricted Subsidiaries
thereunder; and any such event or events described in clauses
(1) through (6) above, either individually or together with any other
such event or events, would reasonably be expected to have a Material
Adverse Effect.
As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
Section 12. Remedies on Default, Etc.
Section 12.1. Acceleration. (a) If an Event of Default with respect
to any Obligor described in paragraph (g) or (h) of Section 11 (other than
an Event of Default described in clause (1) of paragraph (g) or described in
clause (6) of paragraph (g) by virtue of the fact that such clause
encompasses clause (1) of paragraph (g)) has occurred, all the Notes then
outstanding shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing,
any holder or holders of more than 51% in principal amount of the Notes at
the time outstanding may at any time at its or their option, by notice or
notices to an Obligor, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at
the time outstanding affected by such Event of Default may at any time, at
its or their option, by notice or notices to an Obligor, declare all the
Notes held by it or them to be immediately due and payable.
Upon any Note's becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Note will forthwith mature and the
entire unpaid principal amount of such Note, plus (1) all accrued and unpaid
interest thereon and (2) the Make-Whole Amount determined in respect of such
principal amount (to the full extent permitted by applicable law), shall all
be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. Each
Obligor acknowledges, and the parties hereto agree, that each holder of a
Note has the right to maintain its investment in the Notes free from
repayment by the Obligors (except as herein specifically provided for), and
that the provision for payment of a Make-Whole Amount by the Obligors in the
event that the Notes are prepaid or are accelerated as a result of an Event
of Default, is intended to provide compensation for the deprivation of such
right under such circumstances.
Section 12.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have
become or have been declared immediately due and payable under Section 12.1,
the holder of any Note at the time outstanding may proceed to protect and
<PAGE> 30
enforce the rights of such holder by an action at law, suit in equity or
other appropriate proceeding, whether for the specific performance of any
agreement contained herein or in any Note, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the exercise
of any power granted hereby or thereby or by law or otherwise.
Section 12.3. Rescission. At any time after any Notes have been
declared due and payable pursuant to clause (b) or (c) of Section 12.1, the
holders of not less than 51% in principal amount of the Notes then
outstanding, by written notice to an Obligor, may rescind and annul any such
declaration and its consequences if (a) the Obligors have paid all overdue
interest on the Notes, all principal of and Make-Whole Amount, if any, on
any Notes that are due and payable and are unpaid other than by reason of
such declaration, and all interest on such overdue principal and Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest in respect of the Notes, at the Default Rate, (b) all Events of
Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to Section 17, and (c) no judgment or decree has been entered for
the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.3 will extend to or affect
any subsequent Event of Default or Default or impair any right consequent
thereon.
Section 12.4. No Waivers or Election of Remedies, Expenses, Etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right,
power or remedy conferred by this Agreement or by any Note upon any holder
thereof shall be exclusive of any other right, power or remedy referred to
herein or therein or now or hereafter available at law, in equity, by
statute or otherwise. Without limiting the obligations of the Obligors
under Section 15, the Obligors will pay to the holder of each Note on demand
such further amount as shall be sufficient to cover all costs and expenses
of such holder incurred in any enforcement or collection under this Section
12, including, without limitation, reasonable attorneys' fees, expenses and
disbursements.
Section 12.5. Judgments. If, for the purpose of obtaining judgment
in any court against any Obligor hereunder, it becomes necessary to convert
into another currency (the "Judgment Currency") any amount payable hereunder
in the currency due hereunder (the "Currency of Account"), then the
conversion shall be made at the spot rate of exchange determined by Bank of
America NT&SA prevailing at the close of business on the day before the day
on which the judgment is given. In the event that there is a difference
between the rate of exchange at which such judgment is determined and the
rate prevailing on the date of payment, such Obligor will pay such
additional amount, if any, as may be necessary to ensure that the amount
paid on such date is the amount in the Judgment Currency which when
converted at the spot rate of exchange determined by Bank of America NT&SA
is the amount then due under this Agreement in the Currency of Account. Any
amount so due from such Obligor will be due as a separate debt and shall not
be affected by judgment being obtained for any other sum due under or in
respect of this Agreement. The spot rate of exchange shall mean the rate of
exchange at which Bank of America NT&SA would sell the Judgment Currency for
the Currency of Account in the interbank foreign currency markets.
<PAGE> 31
Section 13. Registration; Exchange; Substitution of Notes.
Section 13.1. Registration of Notes. The Obligors shall keep at the
principal executive office of Esterline a register for the registration and
registration of transfers of Notes. The name and address of each holder of
one or more Notes, each transfer thereof and the name and address of each
transferee of one or more Notes shall be registered in such register. Prior
to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and
holder thereof for all purposes hereof, and the Obligors shall not be
affected by any notice or knowledge to the contrary. The Obligors shall
give to any holder of a Note that is an Institutional Investor promptly upon
request therefor, a complete and correct copy of the names and addresses of
all registered holders of Notes.
Section 13.2. Transfer and Exchange of Notes. Upon surrender of any
Note at the principal executive office of Esterline for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of such Note or its attorney duly
authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Obligors shall execute and
deliver, at the Obligors' expense (except as provided below), one or more
new Notes (as requested by the holder thereof) in exchange therefor, of the
same series and in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially
in the form of Exhibit 1, 2 or 3, as applicable. Each such new Note shall
be dated and bear interest from the date to which interest shall have been
paid on the surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon. The Obligors may require payment of
a sum sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes. Notes shall not be transferred in
denominations of less than $100,000; provided that if necessary to enable
the registration of transfer by a holder of its entire holding of Notes, one
Note may be in a denomination of less than $100,000. Any transferee, by its
acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representation set forth in Section 6.2.
Section 13.3. Replacement of Notes. Upon receipt by the Obligors of
evidence reasonably satisfactory to them of the ownership of and the loss,
theft, destruction or mutilation of any Note (which evidence shall be, in
the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or mutilation),
and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such
Note is, or is a nominee for, an original Purchaser or another holder
of a Note with a minimum net worth of at least $5,000,000, such
Person's own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,the Obligors at their own expense shall execute and deliver,
<PAGE> 32
in lieu thereof, a new Note, dated and bearing interest from the date
to which interest shall have been paid on such lost, stolen, destroyed
or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.
Section 14. Payments on Notes.
Section 14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable
on the Notes shall be made in New York, New York at the principal office of
Bank of America NT&SA in such jurisdiction. The Obligors may at any time,
by notice to each holder of a Note, change the place of payment of the Notes
so long as such place of payment shall be either the principal office of an
Obligor in such jurisdiction or the principal office of a bank or trust
company in such jurisdiction.
Section 14.2. Home Office Payment. So long as you or your nominee
shall be the holder of any Note, and notwithstanding anything contained in
Section 14.1 or in such Note to the contrary, the Obligors will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and
interest by the method and at the address specified for such purpose below
your name in Schedule A, or by such other method or at such other address as
you shall have from time to time specified to the Obligors in writing for
such purpose, without the presentation or surrender of such Note or the
making of any notation thereon, except that upon written request of the
Obligors made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to Esterline at
its principal executive office or at the place of payment most recently
designated by the Obligors pursuant to Section 14.1. Prior to any sale or
other disposition of any Note held by you or your nominee you will, at your
election, either endorse thereon the amount of principal paid thereon and
the last date to which interest has been paid thereon or surrender such Note
to the Obligors in exchange for a new Note or Notes of the same series
pursuant to Section 13.2. The Obligors will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by you under this Agreement and that has
made the same agreement relating to such Note as you have made in this
Section 14.2.
Section 15. Expenses, Etc.
Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Obligors will pay all costs and
expenses (including reasonable attorneys' fees of a special counsel and, if
reasonably required, local or other counsel) incurred by you and each Other
Purchaser or holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of
this Agreement or the Notes (whether or not such amendment, waiver or
consent becomes effective), including, without limitation: (a) the costs and
expenses incurred in enforcing or defending (or determining whether or how
to enforce or defend) any rights under this Agreement or the Notes or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement or the Notes, or by reason
of being a holder of any Note, and (b) the costs and expenses, including
<PAGE> 33
financial advisors' fees, incurred in connection with the insolvency or
bankruptcy of any Obligor or any Subsidiary or in connection with any work-
out or restructuring of the transactions contemplated hereby and by the
Notes. The Obligors will pay, and will save you and each other holder of a
Note harmless from, all claims in respect of any fees, costs or expenses, if
any, of brokers and finders (other than those retained by you).
Section 15.2. Survival. The obligations of the Obligors under this
Section 15 will survive the payment or transfer of any Note, the
enforcement, amendment or waiver of any provision of this Agreement or the
Notes, and the termination of this Agreement.
Section 16. Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a
Note, regardless of any investigation made at any time by or on behalf of
you or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of any Obligor
pursuant to this Agreement shall be deemed representations and warranties of
such Obligor under this Agreement. Subject to the preceding sentence, this
Agreement and the Notes embody the entire agreement and understanding
between you and the Obligors and supersede all prior agreements and
understandings relating to the subject matter hereof.
Section 17. Amendment and Waiver.
Section 17.1. Requirements. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Obligors and the Required Holders, except that (a) no
amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21
hereof, or any defined term (as it is used therein), will be effective as
to you unless consented to by you in writing, and (b) no such amendment or
waiver may, without the written consent of the holder of each Note at the
time outstanding affected thereby, (1) subject to the provisions of Section
12 relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time
of payment or method of computation of interest or of the Make-Whole Amount
on, the Notes, (2) change the percentage of the principal amount of the
Notes the holders of which are required to consent to any such amendment or
waiver, or (3) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.
Section 17.2. Solicitation of Holders of Notes
(a) Solicitation. The Obligors will provide each holder of the
Notes (irrespective of the amount or series of Notes then owned by it) with
sufficient information, sufficiently far in advance of the date a decision
is required, to enable such holder to make an informed and considered
decision with respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof or of the Notes. The Obligors will
deliver executed or true and correct copies of each amendment, waiver or
<PAGE> 34
consent effected pursuant to the provisions of this Section 17 to each
holder of outstanding Notes promptly following the date on which it is
executed and delivered by, or receives the consent or approval of, the
requisite holders of Notes.
(b) Payment. The Obligors will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any holder
of any series of Notes as consideration for or as an inducement to the
entering into by any holder of Notes of any waiver or amendment of any of
the terms and provisions hereof unless such remuneration is concurrently
paid, or security is concurrently granted, on the same terms, ratably to
each holder of each series of Notes then outstanding even if such holder did
not consent to such waiver or amendment.
Section 17.3. Binding Effect, Etc. Any amendment or waiver consented
to as provided in this Section 17 applies equally to all holders of each
series of Notes and is binding upon them and upon each future holder of any
Note of any series and upon the Obligors without regard to whether such Note
has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default
or Event of Default not expressly amended or waived or impair any right
consequent thereon. No course of dealing between the Obligors and the
holder of any Note of any series nor any delay in exercising any rights
hereunder or under any Note of any series shall operate as a waiver of any
rights of any holder of such Note. As used herein, the term "this
Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
Section 17.4. Notes Held by Obligors, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes,
or have directed the taking of any action provided herein or in the Notes to
be taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes of any series
directly or indirectly owned by any Obligor or any of its Affiliates shall
be deemed not to be outstanding.
Section 18. Notices.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telefacsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Obligors in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Obligors
in writing, or
<PAGE> 35
(iii) if to the Obligors, c/o Esterline at its address set
forth at the beginning hereof to the attention of Executive Vice
President and Chief Financial Officer, or at such other address as the
Obligors shall have specified to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually
received.
Section 19. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to you, may be reproduced by
you by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and you may destroy any original
document so reproduced. Each Obligor agrees and stipulates that, to the
extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by you in the regular course of
business) and any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Obligors or any holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or
from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
Section 20. Confidential Information.
For the purposes of this Section 20, "Confidential Information" means
information delivered to you by or on behalf of any Obligor or any of its
Subsidiaries in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature and that
was clearly marked or labeled or otherwise adequately identified in writing
when received by you as being confidential information of such Obligor or
such Subsidiary; provided that such term does not include information that
(a) was publicly known or otherwise known to you prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or
omission by you or any Person acting on your behalf, (c) otherwise becomes
known to you other than through disclosure by any Obligor or any Subsidiary
or (d) constitutes financial statements delivered to you under Section 7.1
that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information
of third parties delivered to you; provided that you may deliver or disclose
Confidential Information to (1) your directors, trustees, officers,
employees, agents, attorneys and affiliates, (2) your financial advisors and
other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20,
(3) any other holder of any Note, (4) any Institutional Investor to which
you sell or offer to sell such Note or any part thereof or any participation
therein (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20),
<PAGE> 36
(5) any Person from which you offer to purchase any Security of the Obligors
(if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20),
(6) any Federal or state regulatory authority having jurisdiction over you,
(7) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires
access to information about your investment portfolio or (8) any other
Person to which such delivery or disclosure may be necessary or appropriate
(i) to effect compliance with any law, rule, regulation or order applicable
to you, (ii) in response to any subpoena or other legal process, (iii) in
connection with any litigation to which you are a party or (iv) if an Event
of Default has occurred and is continuing, to the extent you may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under your
Notes and this Agreement. Each holder of a Note, by its acceptance of a
Note, will be deemed to have agreed to be bound by and to be entitled to the
benefits of this Section 20 as though it were a party to this Agreement. On
reasonable request by the Obligors in connection with the delivery to any
holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that
is a party to this Agreement or its nominee), such holder will enter into an
agreement with the Obligors embodying the provisions of this Section 20.
Section 21. Substitution of Purchaser.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Obligors, which notice shall be signed by both you and
such Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon
receipt of such notice, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so
substituted as a purchaser hereunder and such Affiliate thereafter transfers
to you all of the Notes then held by such Affiliate, upon receipt by the
Obligors of notice of such transfer, wherever the word "you" is used in this
Agreement (other than in this Section 21), such word shall no longer be
deemed to refer to such Affiliate, but shall refer to you, and you shall
have all the rights of an original holder of the Notes under this Agreement.
Section 22. Miscellaneous.
Section 22.1. Successors and Assigns. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and
assigns (including, without limitation, any subsequent holder of a Note)
whether so expressed or not.
Section 22.2. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or Make-Whole Amount or interest on any Note that is due on a
date other than a Business Day shall be made on the next succeeding Business
Day without including the additional days elapsed in the computation of the
interest payable on such next succeeding Business Day.
<PAGE> 37
Section 22.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall (to the
full extent permitted by law) not invalidate or render unenforceable such
provision in any other jurisdiction.
Section 22.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant. Where any provision herein
refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such Person.
Where the character or amount of any asset or liability or item of income or
expense is required to be determined or any consolidation or other
accounting computation is required to be made by the Obligors for the
purposes of this Agreement, the same shall be done by the Obligors in
accordance with GAAP, to the extent applicable, except where such principles
are inconsistent with the requirements of this Agreement.
Section 22.5. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed
by all, of the parties hereto.
Section 22.6. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed
by, the law of the State of New York, excluding choice-of-law principles of
the law of such State that would require the application of the laws of a
jurisdiction other than such State.
Section 22.7. Submission to Jurisdiction. Each Obligor hereby
irrevocably submits to the non-exclusive jurisdiction of any State of New
York court or any Federal court located in New York, New York for the
adjudication of any matter arising out of or relating to this Agreement and
consents to the service of all writs, process and summonses by registered or
certified mail out of any such court or by service of process on the
Secretary of State of the State of New York which each Obligor hereby
irrevocably appoints as its attorney-in-fact and agent to receive, in its
name, place and stead, for it and on its behalf, service of process in any
action or proceeding in New York. Such service shall be deemed completed on
delivery to such process agent (whether or not it is forwarded to and
received by an Obligor) provided that notice of such service of process is
given by you or any transferee of your Notes to such Obligor. Nothing
contained herein shall affect your right or the right of any transferee of
your Notes to serve legal process in any other manner or to bring any
proceeding hereunder in any jurisdiction where any Obligor may be amenable
to suit. Each Obligor hereby irrevocably waives any objection to any suit,
action or proceeding in any State of New York court or Federal court located
in New York, New York on the grounds of venue and hereby further irrevocably
waives any claim that any such suit, action or proceeding brought in any
<PAGE> 38
such court has been brought in an inconvenient forum; and irrevocably and
unconditionally waives any right it or its properties may now or hereafter
have in respect of its obligations hereunder to any right of immunity from
suit, jurisdiction of any court, execution of a judgment, setoff, attachment
prior to judgment or attachment in aid of execution of a judgment.
* * * * *
<PAGE> 39
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to
the Obligors, whereupon the foregoing shall become a binding agreement
between you and the Obligors.
Very truly yours,
ESTERLINE TECHNOLOGIES CORPORATION
By /s/ Robert D. George
----------------------------------
Its Treasurer
----------------------------------
ARMTEC DEFENSE PRODUCTS CO.
By /s/ Robert D. George
----------------------------------
Its Treasurer
----------------------------------
AUXITROL TECHNOLOGIES S.A.
By /s/ R. W. Stevenson
----------------------------------
Its Director
----------------------------------
EQUIPMENT SALES CO.
By /s/ Robert D. George
----------------------------------
Its Treasurer
----------------------------------
EXCELLON AUTOMATION CO.
By /s/ Robert D. George
----------------------------------
Its Treasurer
----------------------------------
<PAGE> 40
FEDERAL PRODUCTS CO.
By /s/ Robert D. George
----------------------------------
Its Treasurer
----------------------------------
HYTEK FINISHES CO.
By /s/ Robert D. George
----------------------------------
Its Treasurer
----------------------------------
KIRKHILLL RUBBER CO
By /s/ Robert D. George
----------------------------------
Its Treasurer
----------------------------------
KORRY ELECTRONICS CO
By /s/ Robert D. George
----------------------------------
Its Treasurer
----------------------------------
MASON ELECTRIC CO.
By /s/ Robert D. George
----------------------------------
Its Treasurer
----------------------------------
MIDCON CABLES CO.
By /s/ Robert D. George
----------------------------------
Its Treasurer
----------------------------------
<PAGE> 41
TA MFG. CO.
By /s/ Robert D. George
----------------------------------
Its Treasurer
----------------------------------
W.A. WHITNEY CO
By /s/ Robert D. George
----------------------------------
Its Treasurer
----------------------------------
<PAGE> 42
Information Relating to Purchasers
NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT AND
SERIES OF
NOTES TO BE PURCHASED
Principal Life Insurance Company SERIES A NOTES
711 High Street Three Notes in the following amounts:
Des Moines, Iowa 50392-0800 $9,300,000
Attention: Investment
Department - Securities $1,000,000
Telefacsimile: (515) 248-2490 $9,700,000
Confirmation: (515) 248-3495
Payments
All payments on account of the Notes to be made by 12:00 noon (New York City
time) by wire transfer of immediately available funds to:
With respect to the $9,300,000 and $1,000,000 Series A Senior Notes:
ABA #073000228
Norwest Bank Iowa, N.A.
7th and Walnut Streets
Des Moines, Iowa 50309
For credit to Principal Life Insurance Company
Account No. 0000014752
OBI PFGSE (S) 1-B-61839()Esterline Technologies Corporation
With respect to the $9,700,000 Series A Senior Note:
ABA #073000228
Norwest Bank Iowa, N.A.
7th and Walnut Streets
Des Moines, Iowa 50309
For credit to Principal Life Insurance Company
Account No. 0000032395
OBI PFGSE (S) 16-B-61839() Esterline Technologies Corporation
In each case with sufficient information (including interest rate,
maturity date, interest amount, principal amount and premium amount,
if applicable) to identify the source and application of such funds.
Schedule A
(to Note Purchase Agreement)
<PAGE>
Notices
All notices with respect to payments to:
Principal Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0960
Attention: Investment Accounting - Securities
Telefacsimile: (515) 248-2643
Confirmation: (515) 247-0689
All other notices and communications to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Tax Identification No.: 42-0127290
<PAGE> A-2
NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT AND
SERIES OF
NOTES TO BE PURCHASED
United of Omaha Life Insurance Company SERIES A NOTES
Mutual of Omaha Plaza $6,500,000
Omaha, Nebraska 68175-1011
Attention: 4-Investment Loan Administration
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Esterline Technologies Corporation, 6.00% Series A Senior Notes due
November 15, 2003, PPN 29744# AA 4, principal, premium or interest") to:
Chase Manhattan Bank
ABA #021-000-021
Private Income Processing
for credit to: United of Omaha Life Insurance Company
Account Number 900-9000200
a/c G07097
PPN: 29744# AA 4
Interest Amount: 6.00%
Principal Amount: $6,500,000
Notices
All notices of payments, on or in respect of the Notes and written
confirmation of each such payment, corporate actions and reorganization
notifications to:
The Chase Manhattan Bank
4 New York Plaza-13th Floor
New York, New York 10004
Attention: Investment Processing-J. Pipperato
a/c: G07097
All other notices and communications (i.e., quarterly/annual reports, tax
filings, modifications, waivers regarding the indenture) to be addressed as
first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 47-0322111
<PAGE> A-3
NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT AND
SERIES OF
NOTES TO BE PURCHASED
Companion Life Insurance Company SERIES A NOTES
Mutual of Omaha Plaza $2,000,000
Omaha, Nebraska 68175
Attention: Investment Division
Telefacsimile: (402) 351-2913
Confirmation: (402) 351-2583
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Esterline Technologies Corporation, 6.00% Series A Senior Notes due
November 15, 2003, PPN 29744# AA 4, principal, premium or interest") to:
Chase Manhattan Bank
ABA #021-000-021
Private Income Processing
for credit to: Companion Life Insurance Company
Account Number 900-9000200
a/c G07903
PPN: 29744# AA 4
Interest Amount: 6.00%
Principal Amount: $2,000,000
Notices
All notices of payments, on or in respect of the Notes and written
confirmation of each such payment, corporate actions and reorganization
notifications to:
The Chase Manhattan Bank
4 New York Plaza-13th Floor
New York, New York 10004
Attention: Investment Processing-J. Pipperato
a/c: G07903
All other notices and communications (i.e., quarterly/annual reports, tax
filings, modifications, waivers regarding the indenture) to be addressed as
first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 13-6062916
<PAGE> A-4
NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT AND
SERIES OF
NOTES TO BE PURCHASED
TMG Life Insurance Company SERIES A NOTES
401 North Executive Drive $1,500,000
Brookfield, Wisconsin 53008-0980
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Esterline Technologies Corporation, 6.00% Series A Senior Notes due
November 15, 2003, PPN 29744# AA 4, principal, premium or interest") to:
Federal Reserve Bank Minneapolis
Norwest Bank MN/Trust (ABA #091000019)
Credit Account Number: 08-40-245
For credit to: TMG Life Universal
Account Number 13075700
Contact: Michael Eiynck
Notices
All notices and communications, including notices with respect to payments
and written confirmation of each such payment, to be addressed to:
Connie Keller
The Mutual Group (U.S.)
401 North Executive Drive
Brookfield, Wisconsin 53008-0980
Telephone Number: (414) 797-2305
Facsimile Number: (414) 797-2318
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 45-0208990
<PAGE> A-5
NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT AND
SERIES OF
NOTES TO BE PURCHASED
The Lincoln National Life
Insurance Company SERIES B NOTES
c/o Lincoln Investment
Management, Inc. Three Notes in the following amounts:
200 East Berry Street $5,000,000
Renaissance Square $5,000,000
Fort Wayne, Indiana 46802 $3,000,000
Attention: Investments
/Private Placements
Fax: (219) 455-5499
Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Esterline Technologies Corporation, 6.40% Series B Senior Notes due
November 15, 2005, PPN 29744# AB 2, principal, premium or interest") to:
Bankers Trust Company (ABA #021001033)
Private Placement Processing
New York, New York
Account Number 99-911-145
for further credit to: The Lincoln National Life Insurance Company
Custodial Account Number 98473
-----
Notices
All notices and communications, including notices with respect to payments
and written confirmation of each such payment, to be addressed as first
provided above with duplicate notices with respect to payments to:
Bankers Trust Company
P. O. Box 998
Bowling Green Station
New York, New York 10274
Attention: Private Placement Unit
Fax: (615) 835-2493/Crystal Jones, Private Placements
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 35-0472300
<PAGE> A-6
NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT AND
SERIES OF
NOTES TO BE PURCHASED
Lincoln Life & Annuity Company of New York SERIES B NOTES
c/o Lincoln Investment Management, Inc. $7,000,000
200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Fax: (219) 455-5499 Private Placements
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Esterline Technologies Corporation, 6.40% Series B Senior Notes due
November 15, 2005, PPN 29744# AB 2, principal, premium or interest") to:
Bankers Trust Company (ABA #021001033)
Private Placement Processing
New York, New York
Account Number 99-911-145
for further credit to: Lincoln Life & Annuity Company of New York
Custodial Account Number 98694
-----
Notices
All notices and communications, including notices with respect to payments
and written confirmation of each such payment, to be addressed as first
provided above with duplicate notices with respect to payments to:
Bankers Trust Company
P. O. Box 998
Bowling Green Station
New York, New York 10274
Attention: Private Placement Unit
Fax: (615) 835-2493/Crystal Jones, Private Placements
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 16-1505436
<PAGE> A-7
NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT AND
SERIES OF
NOTES TO BE PURCHASED
American United Life Insurance Company SERIES B NOTES
One American Square Two Notes in the following amounts:
Post Office Box 368 $2,125,000
Indianapolis, Indiana 46206 $2,125,000
Attention: Christopher D. Pahlke,
Securities Department
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Esterline Technologies Corporation, 6.40% Series B Senior Notes due
November 15, 2005, PPN 29744# AB 2" and identifying the breakdown of
principal and interest and the payment date) to:
Bank of New York
Attention: P&I Department
One Wall Street, 3rd Floor
Window A
New York, New York 10286
ABA #021000018, BNF:IOC566
Account #186683/AUL
Notices
All notices and communications, including notices with respect to payments
and written confirmation of each such payment, to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 35-0145825
<PAGE> A-8
NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT AND
SERIES OF
NOTES TO BE PURCHASED
AmerUS Life Insurance Company SERIES B NOTES
699 Walnut Street $4,250,000
Suite 1700
Des Moines, Iowa 50309
Attention: Steve Sweeney
Telephone: (515) 362-3542
Telefacsimile: (515) 283-3434
Payments
All payments on or in respect of the Notes to be by Federal Funds Wire
Transfer to:
Bankers Trust Company (ABA #021001033)
New York, New York
Credit Account #99911145
For Further Credit Account #093398
American Investors Life Insurance Co.
Ref: Esterline Technologies Corporation, 6.40% Series B Senior Notes
due November 15, 2005, PPN 29744# AB 2
Notices
All notices of payment on or in respect of the Notes and written
confirmation of each such payment to:
AmerUs Life Insurance Company
699 Walnut Street
Suite 1700
Des Moines, Iowa 50309
Attention: Dan Owens
Telephone: (515) 283-3431
Telefacsimile: (515) 283-3434
All other communications to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: Salkeld & Co.
Salkeld & Co. Taxpayer I.D. Number: 13-6065491
American Investors Life Insurance Co. Taxpayer I.D. Number: 48-0696320
<PAGE> A-9
NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT AND
SERIES OF
NOTES TO BE PURCHASED
Commercial Union Life Insurance Company SERIES B NOTES
of America $1,500,000
711 High Street
Des Moines, Iowa 50392-0800
Attention: Investment Department
- Securities - Jon Davidson
Telefacsimile: (515) 248-2490
Confirmation: (515) 248-3495
Payments
All payments on account of the Notes to be made by 12:00 noon (New York City
time) by wire transfer of immediately available funds to:
CoreStates Bank (Philadelphia)
ABA #031-0000-11
1500 Market Street
Philadelphia, Pennsylvania 19102-2509
Attn.: Joe Amen
DDA 0123-9806
For further credit to: Account No. 060073-02-4 (Commercial Union Life
Insurance Company of America/Principal)
OBI PFGSE (S) 400-B-61840()Esterline Technologies Corporation
With sufficient information (including interest rate, maturity date,
interest amount, principal amount and premium amount, if applicable)
to identify the source and application of such funds.
All notices with respect to payments to:
Commercial Union Life Insurance Company of America
711 High Street
Des Moines, Iowa 50392-0960
Attention: Investment Accounting - Securities
Telefacsimile: (515) 248-2643
Confirmation: (515) 247-0689
All other notices and communications to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Tax Identification No.: 42-2235236
<PAGE> A-10
NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT AND
SERIES OF
NOTES TO BE PURCHASED
Metropolitan Life Insurance Company SERIES C NOTES
One Madison Avenue $20,000,000
New York, New York 10010
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Esterline Technologies Corporation, 6.77% Series C Senior Notes due
November 15, 2008, PPN 29744# AC 0, principal, premium or interest") to:
The Chase Manhattan Bank, N.A.
ABA #021000021
New York, New York
for credit to: Metropolitan Life Insurance Company
Account Number 002-2-410591
with name and address of bank from which wire transfer was sent, a contact
name and telephone number.
Notices
All notices and communications, including notices with respect to payments
and written confirmation of each such payment, to be addressed to:
Metropolitan Life Insurance Company
334 Madison Avenue
Convent Station, New Jersey 07961-0633
Attention: Private Placement Unit
Fax Number: (973) 254-3050
with a copy to:
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010-3690
Attention: Legal Department - Area 6H
Fax Number: (212) 578-3916
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 13-5581829
<PAGE> A-11
NAME AND ADDRESS OF PURCHASER PRINCIPAL AMOUNT AND
SERIES OF
NOTES TO BE PURCHASED
The Northwestern Mutual Life SERIES C NOTES
Insurance Company $20,000,000
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Securities Department
Telecopier Number: (414) 299-7124
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Esterline Technologies Corporation, 6.77% Series C Senior Notes due
November 15, 2008, PPN 29744# AC 0, principal, premium or interest") to:
Bankers Trust Company (ABA #0210-01033)
16 Wall Street
Insurance Unit, 4th Floor
New York, New York 10005
for credit to: The Northwestern Mutual Life Insurance Company
Account Number 00-000-027
Notices
All notices and communications to be addressed as first provided above,
except notices with respect to payments and written confirmation of each
such payment to be addressed, Attention: Investment Operations, Fax Number:
(414) 299-5714.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 39-0509570
<PAGE> A-12
Defined Terms
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Acceptable Bank" means Bank of America NT&SA and any other bank or
trust company (a) which is organized under the laws of the United States of
America or any State thereof, (b) which has capital, surplus and undivided
profits aggregating at least $250,000,000, and (c) whose long-term unsecured
debt obligations (or the long-term unsecured debt obligations of the bank
holding company owning all of the capital stock of such bank or trust
company) shall have been given one of the two highest ratings by at least
one credit rating agency of recognized national standing.
"Affiliate" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or
more intermediaries Controls, or is Controlled by, or is under common
Control with, such first Person, (b) any other Person beneficially owning or
holding, directly or indirectly, 10% or more of any class of voting or
equity interests of such first Person or any other Person of which such
first Person beneficially owns or holds, in the aggregate, directly or
indirectly, 10% or more of any class of voting or equity interests and (c)
any officer or director of such first Person or any other Person fulfilling
an equivalent function of an officer or director. As used in this
definition, "Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting Securities, by contract or
otherwise. Unless the context otherwise clearly requires, any reference to
an "Affiliate" is a reference to an Affiliate of an Obligor.
"Agreement" means this Note Purchase Agreement.
"Armtec" means Armtec Defense Products Co., a Delaware corporation.
"Asset Disposition" means any Transfer except:
(a) any
(1) Transfer from a Restricted Subsidiary to an Obligor
or to a Wholly-Owned Restricted Subsidiary; and
(2) Transfer from an Obligor to a Wholly-Owned
Restricted Subsidiary,
so long as immediately before and immediately after the consummation
of any such Transfer and after giving effect thereto, no Default or
Event of Default would exist; and
SCHEDULE B
(to Note Purchase Agreement)
<PAGE>
(b) any Transfer made in the ordinary course of business and
involving only property that is either (1) inventory held for rent or sale
or (2) equipment, fixtures, supplies or materials no longer required in the
operation of the business of the Obligors or any of their Restricted
Subsidiaries or that is obsolete.
"Auxitrol" means Auxitrol Technologies S.A., a French Societe Anonyme.
"Bank Credit Agreement" means that certain Credit Agreement dated as of
October 31, 1996 among the Obligors, Bank of America National Trust and
Savings Association, as Agent, and the several banks and other financial
institutions from time to time parties thereto, as from time to time
extended, supplemented, amended, restated or otherwise modified, and
including any refinancing or replacement, in whole or in part, of such
credit facility.
"Bank Lenders" shall mean Bank of America National Trust and Savings
Association and each other bank and financial institution which is now, or
hereafter becomes, a lender under the Bank Credit Agreement.
"Business Day" means (a) for the purposes of Section 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New
York, New York are required or authorized to be closed, and (b) for the
purposes of any other provision of this Agreement, any day other than a
Saturday, a Sunday or a day on which commercial banks in Seattle, Washington
or New York, New York are required or authorized to be closed.
"Capital Lease" means a lease with respect to which the lessee is
required concurrently to recognize the acquisition of any assets and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligations" means with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lease
under the such Capital Lease which would, in accordance with GAAP, appear as
liability on the balance sheet of such Person.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to
time.
"Competitor" shall mean (a) any Person which is engaged in the
manufacture of highly-engineered products used in printed circuit board
manufacturing and metal fabrication, components for aerospace and defense
applications, and quality control measuring and monitoring applications, or
(b) any Person which at the time owns more than 50% or more of the Voting
Stock of any Person described in clause (a) above and in connection
therewith exercises control over management of such Person; provided in any
event that:
(1) the provision of investment advisory services by a Person
to a Plan which is owned or controlled by a Person which would
otherwise be a Competitor shall not in any event cause the Person
providing such services to be deemed to be a Competitor;
<PAGE> B-2
(2) in no event shall an Institutional Investor be deemed a
Competitor unless such Institutional Investor owns or holds more than
50% of the Voting Stock of, and in connection therewith exercises
control over management of, a Person that is engaged in the
manufacture of highly-engineered products used in printed circuit
board manufacturing and metal fabrication, components for aerospace
and defense applications, and quality control measuring and monitoring
applications;
(3) in no event shall an Institutional Investor be deemed a
Competitor if such Institutional Investor is a pension plan sponsored
by a Person which would otherwise be a Competitor but which is a
regular investor in privately placed Securities and such pension plan
has established procedures which will prevent confidential information
supplied to such pension plan by the Obligors from being transmitted
or otherwise made available to such plan sponsor; and
(4) an Institutional Investor that would otherwise be deemed a
Competitor pursuant to the foregoing provisions of this definition by
virtue of its ownership or control as a portfolio investment of the
equity Securities of any Person primarily engaged in, shall not be
deemed a Competitor if such Institutional Investor has established
procedures which will prevent confidential information supplied to
such Institutional Investor by the Obligors from being transmitted or
otherwise made available to such Person.
"Confidential Information" is defined in Section 20.
"Consolidated Debt" means, as of the date of any determination
thereof, all Debt of Esterline and its Restricted Subsidiaries, determined
on a consolidated basis eliminating intercompany items.
"Consolidated Net Income" for any period means the gross revenues of
Esterline and its Restricted Subsidiaries for such period less all expenses
and other proper charges (including taxes on income), determined on a
consolidated basis after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(a) any gains or losses on the sale or other disposition of
Investments or fixed or capital assets, and any taxes on such excluded
gains and any tax deductions or credits on account of any such
excluded losses;
(b) the net gain from the proceeds of any life insurance
policy;
(c) net earnings and losses of any Restricted Subsidiary of
Esterline accrued prior to the date it became a Restricted Subsidiary
of Esterline;
(d) net earnings and losses of any corporation (other than a
Restricted Subsidiary of Esterline), substantially all the assets of
which have been acquired in any manner by Esterline or any Restricted
Subsidiary of Esterline, realized by such corporation prior to the
date of such acquisition;
<PAGE> B-3
(e) in the case of a successor to Esterline by consolidation
or merger or as a transferee of its assets, any earnings of the
successor corporation prior to such consolidation, merger or transfer
of assets;
(f) net earnings of any business entity (other than a
Restricted Subsidiary of Esterline) in which Esterline or any
Restricted Subsidiary of Esterline has an ownership interest unless
such net earnings shall have actually been received by Esterline or
such Restricted Subsidiary in the form of cash distributions;
(g) any portion of the net earnings of any Restricted
Subsidiary of Esterline which for any reason is unavailable for
payment of dividends to Esterline or any other Restricted Subsidiary
of Esterline;
(h) earnings resulting from any reappraisal, revaluation or
write-up of assets;
(i) any deferred or other credit representing any excess of
the equity in any Restricted Subsidiary of Esterline at the date of
acquisition thereof over the amount invested in such Restricted
Subsidiary;
(j) any gain arising from the acquisition of any Securities of
Esterline or any Restricted Subsidiary of Esterline;
(k) any reversal of any contingency reserve, except to the
extent that provision for such contingency reserve shall have been
made from income arising during such period;
(l) any income or gain not fully convertible into U.S.
Dollars; and
(m) any other extraordinary gain or loss, including, without
limitation, any net income, gain or loss resulting from changes in
GAAP or any discontinued operations.
"Consolidated Net Income Available for Fixed Charges" for any period
means the sum of (a) Consolidated Net Income during such period plus (b) to
the extent deducted in determining Consolidated Net Income, all provisions
for any Federal, state or other income taxes made by Esterline and its
Restricted Subsidiaries during such period plus (c) Fixed Charges of
Esterline and its Restricted Subsidiaries during such period.
"Consolidated Net Worth" means, as of the date of any determination
thereof,
(a) the sum of (1) the par value (or value stated on the books
of the corporation) of the capital stock (but excluding treasury stock
and capital stock subscribed and unissued) of Esterline and its
Restricted Subsidiaries plus (2) the amount of the paid-in capital and
retained earnings of Esterline and its Restricted Subsidiaries, in
each case as such amounts would be shown on a consolidated balance
sheet of Esterline and its Restricted Subsidiaries as of such time
prepared in accordance with GAAP, minus
<PAGE> B-4
(b) to the extent included in clause (a) above, all amounts
properly attributable to Minority Interests, if any, in the stock and
surplus of Restricted Subsidiaries of Esterline, minus
(c) the book value of all Restricted Investments of Esterline
and its Restricted Subsidiaries in excess of an amount equal to 10% of
the amount determined pursuant to clauses (a) and (b) of this
definition.
"Consolidated Total Assets" means, as of the date of any determination
thereof, the total assets of Esterline and its Restricted Subsidiaries which
would be shown as assets on a consolidated balance sheet of Esterline and
its Restricted Subsidiaries as of such time determined prepared in
accordance with GAAP, after eliminating all amounts properly attributable to
Minority Interests, if any, in the stock and surplus of Restricted
Subsidiaries of Esterline.
"Currency of Account " is defined in Section 12.5.
"Debt" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising
in the ordinary course of business but including, without limitation,
all liabilities created or arising under any conditional sale or other
title retention agreement with respect to any such property);
(c) its Capital Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);
(e) all liabilities in respect of drawn letters of credit or
instruments servicing a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of
a type described in any of clauses (a) through (f) hereof.
Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
<PAGE> B-5
"Debt Prepayment Application" means, with respect to any Transfer of
property constituting an Asset Disposition, the application by any Obligor
of cash in an amount equal to the Net Proceeds Amount with respect to such
Transfer to pay Senior Debt (other than Senior Debt owing to any Obligor,
any of its Subsidiaries or any Affiliate).
"Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become
an Event of Default.
"Default Rate" means that rate of interest that is the greater of (a)
8.00% in the case of the Series A Notes, 8.40% in the case of the Series B
Notes, and 8.77% in the case of the Series C Notes or (b) 2% over the rate
of interest publicly announced by Bank of America NT&SA in New York, New
York as its "reference" rate.
"Disposition Value" means, at any time, with respect to any property
(a) in the case of property that does not constitute
Subsidiary Stock, the book value thereof, valued at the time of such
disposition in good faith by Esterline, and
(b) in the case of property that constitutes Subsidiary Stock,
an amount equal to that percentage of book value of the assets of the
Subsidiary that issued such Subsidiary Stock as is equal to the
percentage that the book value of such Subsidiary Stock represents of
the book value of all of the outstanding capital stock of such
Subsidiary (assuming, in making such calculations, that all Securities
convertible into such capital stock are so converted and giving full
effect to all transactions that would occur or be required in
connection with such conversion) determined at the time of the
disposition thereof, in good faith by Esterline.
"Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
but not limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.
"Equipment " means Equipment Sales Co., a Connecticut corporation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with any Obligor
under Section 414 of the Code.
"Esterline" means Esterline Technologies Corporation, a Delaware
corporation.
"Event of Default" is defined in Section 11.
<PAGE> B-6
"Excellon" means Excellon Automation Co., a California corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, as of any date of determination and with respect
to any property, the sale value of such property that would be realized in
an arm's-length sale at such time between an informed and willing buyer and
an informed and willing seller (neither being under a compulsion to buy or
sell).
"Federal" means Federal Products Co., a Delaware corporation.
"Fixed Charges" for any period means on a consolidated basis the sum
of (a) all Rentals (other than Rentals on Capital Leases, but including all
rents paid under any so-called "percentage leases") payable during such
period by Esterline and its Restricted Subsidiaries, and (b) all Interest
Expense on all Debt of Esterline and its Restricted Subsidiaries.
"Fixed Charges Coverage Ratio" means, as of the date of any
determination, the ratio of (a) Consolidated Net Income Available for Fixed
Charges for a period consisting of the immediately preceding four
consecutive fiscal quarters of Esterline ending on, or most recently ended
prior to, such time to (b) Fixed Charges for such period.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(1) the United States of America or any State or other
political subdivision thereof, or
(2) any jurisdiction in which any Obligor or any
Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any properties of any Obligor or any
Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments
for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any Debt, dividend or other obligation of any other Person in
any manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such Debt or obligation or any property
constituting security therefor;
<PAGE> B-7
(b) to advance or supply funds (1) for the purchase or payment
of such Debt or obligation, or (2) to maintain any working capital or
other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such Debt or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such Debt or
obligation of the ability of any other Person to make payment of the
Debt or obligation; or
(d) otherwise to assure the owner of such Debt or obligation
against loss in respect thereof.
In any computation of the Debt or other liabilities of the obligor under any
Guaranty, the Debt or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances, including all substances listed in or
regulated in any Environmental Law that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage,
seepage, or filtration of which is or shall be restricted, regulated,
prohibited or penalized by any applicable law (including, without
limitation, asbestos, urea formaldehyde foam insulation and polychlorinated
biphenyls).
"holder" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by Esterline pursuant to
Section 13.1.
"Hytek" means Hytek Finishes Co., a Delaware corporation.
"Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal
amount of the Notes then outstanding, and (c) any bank, trust company,
savings and loan association or other financial institution, any pension
plan, any investment company, any insurance company, any broker or dealer,
or any other similar financial institution or entity, regardless of legal
form.
"Interest Expense" means, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting
debits and credits between Esterline and its Restricted Subsidiaries and all
other items required to be eliminated in the course of the preparation of
consolidated financial statements of Esterline and its Restricted
Subsidiaries in accordance with GAAP): (a) all interest in respect of Debt
of Esterline and its Restricted Subsidiaries (including imputed interest on
Capital Leases) deducted in determining Consolidated Net Income for such
period, and (b) all debt discount and expense amortized or required to be
amortized in the determination of Consolidated Net Income for such period.
"Investment" means any investment, made in cash or by delivery of
property, by any Obligor or any of its Subsidiaries (a) in any Person,
<PAGE> B-8
whether by acquisition of stock, indebtedness or other obligation or
Security, or by loan, Guaranty, advance, capital contribution or otherwise,
or (b) in any property.
"Judgment Currency" is defined in Section 12.5.
"Kirkhill" means Kirkhill Rubber Co., a California corporation.
"Korry" means Korry Electronics Co., a Delaware corporation.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of
any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease,
upon or with respect to any property or asset of such Person (including in
the case of stock, stockholder agreements, voting trust agreements and all
similar arrangements).
"Make-Whole Amount" is defined in Section 8.6.
"Mason" means Mason Electric Co., a Delaware corporation.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Obligors and their
Subsidiaries, taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of
the Obligors and their Subsidiaries, taken as a whole, or (b) the ability of
the Obligors to perform its obligations under this Agreement and the Notes,
or (c) the validity or enforceability of this Agreement or the Notes.
"Memorandum" is defined in Section 5.3.
"Midcon" means Midcon Cables Co., a Delaware corporation.
"Minority Interests" means any shares of stock of any class of a
Restricted Subsidiary of Esterline (other than directors' qualifying shares
as required by law) that are not owned by Esterline and/or one or more of
its Restricted Subsidiaries of Esterline. Minority Interests shall be
valued by valuing Minority Interests constituting preferred stock at the
voluntary or involuntary liquidating value of such preferred stock,
whichever is greater, and by valuing Minority Interests constituting common
stock at the book value of capital and surplus applicable thereto adjusted,
if necessary, to reflect any changes from the book value of such common
stock required by the foregoing method of valuing Minority Interests in
Preferred Stock.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).
<PAGE> B-9
"Net Proceeds Amount" means, with respect to any Transfer of any
property by any Person, an amount equal to the difference of
(a) the aggregate amount of the consideration (valued at the
Fair Market Value of such consideration at the time of the
consummation of such Transfer) allocated to such Person in respect of
such Transfer, net of any applicable taxes incurred in connection with
such Transfer, minus
(b) all ordinary and reasonable out-of-pocket costs and
expenses actually incurred by such Person in connection with such
Transfer.
"1992 Note Agreement" means those certain Note Agreements dated as of
July 15, 1992 among the Obligors and the institutions named in Schedule I
thereto, as from time to time extended, supplemented, amended, restated or
otherwise modified.
"1992 Noteholders" shall mean each financial institution which is now,
or hereafter becomes, a holder of any Note issued under the 1992 Note
Agreement.
"Notes" is defined in Section 1.
"Obligors" is defined in the introductory paragraph hereof.
"Officer's Certificate" means, with respect to any Obligor, a
certificate of a Senior Financial Officer or of any other officer of such
Obligor whose responsibilities extend to the subject matter of such
certificate.
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by any Obligor or any ERISA
Affiliate or with respect to which any Obligor or any ERISA Affiliate may
have any liability.
"Preferred Stock" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation
as to the payment of dividends or the payment of any amount upon liquidation
or dissolution of such corporation.
<PAGE> B-10
"Priority Debt" means the aggregate amount of (a) in the case of any
Obligor, all Debt of such Obligor secured by Liens permitted by
Section 10.5(k) and (b) in the case of any Restricted Subsidiary of any
Obligor that is not also an Obligor, all Debt of such Restricted Subsidiary
(including, without limitation, Guaranties by such Restricted Subsidiary of
Debt of the Obligors).
"property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible,
choate or inchoate.
"Property Reinvestment Application" means, with respect to any
Transfer of property constituting an Asset Disposition, the application of
an amount equal to the Net Proceeds Amount with respect to such Transfer to
the acquisition by any Obligor or any of its Restricted Subsidiaries of
operating assets for the Obligors or any Restricted Subsidiary to be used in
the principal business of such Person.
"PTE" is defined in Section 6.2(a).
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"Rentals" means and include as of the date of any determination thereof
all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of
the property) payable by Esterline or a Restricted Subsidiary of Esterline, as
lessee or sublessee under a lease of real or personal property, but shall be
exclusive of any amounts required to be paid by Esterline or a Restricted
Subsidiary of Esterline (whether or not designated as rents or additional
rents) on account of maintenance, repairs, insurance, taxes and similar
charges. Fixed rents under any so-called "percentage leases" shall be
computed solely on the basis of the minimum rents, if any, required to be
paid by the lessee regardless of sales volume or gross revenues.
"Required Holders" means, at any time, the holders of at least 51% in
principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by any Obligor or any of its Affiliates).
"Responsible Officer" means, with respect to any Obligor, any Senior
Financial Officer and any other officer of such Obligor with responsibility
for the administration, with respect to such Obligor, of the relevant
portion of this Agreement.
"Restricted Investments" means all Investments except the following:
(a) property to be used in the ordinary course of business of
any Obligor and of its Restricted Subsidiaries;
(b) current assets arising from the sale of goods and services
in the ordinary course of business of any Obligor and its Restricted
Subsidiaries;
<PAGE> B-11
(c) Investments in one or more Restricted Subsidiaries of any
Obligor or any Person that concurrently with such Investment becomes a
Restricted Subsidiary of any Obligor;
(d) Investments existing on the date of the Closing and
disclosed in Schedule 5.21;
(e) Investments in United States Governmental Securities,
provided that such obligations mature within one year from the date of
acquisition thereof;
(f) Investments in obligations of any state of the United
States of America, or any municipality of any such state, in each case
rated one of the two highest ratings by at least one credit rating
agency of recognized national standing, provided that such obligations
mature within one year from the date of acquisition thereof;
(g) Investments in certificates of deposit or banker's
acceptances issued by an Acceptable Bank, provided that such
obligations mature within 365 days from the date of acquisition
thereof;
(h) Investments in commercial paper given one of the two
highest ratings by at least one credit rating agency of recognized
national standing and maturing not more than 270 days from the date of
creation thereof; and
(i) Investments in money market instrument programs which are
classified as current assets in accordance with GAAP, which money
market instrument programs are administered by an "investment company"
regulated under the Investment Company Act of 1940 and which money
market instrument programs hold only Investments satisfying the
criteria set forth in clauses (e), (f), (g) or (h) above; provided
that such Investments are classified as "current assets" in accordance
with GAAP.
As of any date of determination, each Restricted Investment shall be
valued at the greater of:
(1) the amount at which such Restricted Investment is shown on
the books of Esterline or any of its Restricted Subsidiaries (or zero
if such Restricted Investment is not shown on any such books); and
(2) either
(i) in the case of any Guaranty of the obligation of any
Person, the amount which any Obligor or any of its Restricted
Subsidiaries has paid on account of such obligation less any
recoupment by such Obligor or any such Restricted Subsidiary of
any such payments, or
(ii) in the case of any other Restricted Investment, the
excess of (A) the greater of (I) the amount originally entered
on the books of any Obligor or any of its Restricted
<PAGE> B-12
Subsidiaries with respect thereto and (II) the cost thereof to
such Obligor or any such Restricted Subsidiary over (B) any
return of capital (after income taxes applicable thereto) upon
such Restricted Investment through the sale or other liquidation
thereof or part thereof or otherwise.
"Restricted Subsidiary" means any Subsidiary (a) of which more than
80% of the equity or voting interests is beneficially owned either directly
or indirectly by any Obligor, (b) which is organized under the laws of the
United States, Canada, Mexico, Japan, South Korea, Singapore, Taiwan, New
Zealand, Australia or any country located in South America or any country
located in Europe that is a member of the Organization for Economic
Cooperation and Development other than Greece or Turkey and (c) which is
either (1) designated as a Restricted Subsidiary in Schedule 5.4 or (2)
designated a Restricted Subsidiary by the Board of Directors of the Obligors
in accordance with Section 10.11.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Security" has the meaning set forth in Section 2(1) of the Securities
Act of 1933, as amended.
"Senior Debt" means any Debt of any Obligor or any Restricted
Subsidiary, other than Subordinated Debt.
"Senior Financial Officer" means, with respect to any Obligor, the
chief financial officer, principal accounting officer, treasurer or
comptroller of such Obligor.
"Series A Notes" is defined in Section 1.
"Series B Notes" is defined in Section 1.
"Series C Notes" is defined in Section 1.
"Source" is defined in Section 6.2.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns
sufficient equity or voting interests to enable it or them (as a group)
ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such entity, and any
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries (unless such partnership
can and does ordinarily take major business actions without the prior
approval of such Person or one or more of its Subsidiaries). Unless the
context otherwise clearly requires, any reference to a "Subsidiary" is a
reference to a Subsidiary of any Obligor.
"Subordinated Debt" means any Debt of any Obligor (a) for which the
right of payment or security is subordinated in respect of Debt evidenced by
<PAGE> B-13
the Notes and (b) which has a weighted average life to maturity greater than
the weighted average life to maturity of each series of Notes.
"Subsidiary Stock" means, with respect to any Person, the stock (or
any options or warrants to purchase stock or other Securities exchangeable
for or convertible into stock) of any Subsidiary of such Person.
"Successor Corporation" is defined in Section 10.8.
"Swaps" shall mean, with respect to any Person, payment obligations
with respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount
of the obligation under any Swap shall be the amount determined in respect
thereof as of the end of the then most recently ended fiscal quarter of such
Person, based on the assumption that such Swap had terminated at the end of
such fiscal quarter, and in making such determination, if any agreement
relating to such Swap provides for the netting of amounts payable by and to
such Person thereunder or if any such agreement provides for the
simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligation shall be the net amount so determined.
For purposes of this Agreement, any such interest rate swap, currency swap,
or other similar obligation which is or will be entered into and is being or
will be used by such Person in the ordinary course of its business to hedge
an existing or future risk or exposure of such Person in respect of its
liabilities or assets (and not for speculative purposes) shall not be deemed
a "Swap" for purposes of this definition.
"TA" means TA Mfg. Co., a California corporation.
"Total Capitalization" means the sum of (a) Consolidated Debt plus (b)
Consolidated Net Worth.
"Transfer" means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers or leases (as lessor) any of its
property, including, without limitation, Subsidiary Stock. For purposes of
determining the application of the Net Proceeds Amount in respect of any
Transfer, any Obligor may designate any Transfer as one or more separate
Transfers each yielding a separate Net Proceeds Amount. In any such case,
(a) the Disposition Value of any property subject to each such separate
Transfer and (b) the amount of Consolidated Total Assets attributable to any
property subject to each such separate Transfer shall be determined by
ratably allocating the aggregate Disposition Value of, and the aggregate
Consolidated Total Assets attributable to, all property subject to all such
separate Transfers to each such separate Transfer on a proportionate basis.
"United States Governmental Security" means any direct obligation of,
or obligation guaranteed by, the United States of America, or any agency
controlled or supervised by or acting as an instrumentality of the United
States of America pursuant to authority granted by the Congress of the
United States of America, so long as such obligation or guarantee shall have
the benefit of the full faith and credit of the United States of America
which shall have been pledged pursuant to authority granted by the Congress
of the United States of America.
<PAGE> B-14
"Unrestricted Subsidiary" means any Subsidiary which is not a
Restricted Subsidiary.
"U.S. Dollars" or "$" means the form of money of the United States of
America in same day immediately available freely transferable funds, or, if
such funds are not available, the form of money of the United States of
America that is customarily used in the settlement of international banking
transactions on the date payment is due.
"Voting Stock" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors (or Persons performing
similar functions).
"Whitney" means W.A. Whitney Co., an Illinois corporation.
"Wholly-Owned Restricted Subsidiary" means any Restricted Subsidiary
which is a Wholly-Owned Subsidiary.
"Wholly-Owned Subsidiary" means any Subsidiary all of the equity
interests (except directors' qualifying shares) and voting interests and
Debt of which are owned by any one or more of the Obligors and the Obligors'
other Wholly-Owned Subsidiaries.
<PAGE> B-15
Form of Series A Note
Esterline Technologies Corporation
Armtec Defense Products Co.
Auxitrol Technologies S.A.
Equipment Sales Co.
Excellon Automation Co.
Federal Products Co.
Hytek Finishes Co.
Kirkhill Rubber Co.
Korry Electronics Co.
Mason Electric Co.
Midcon Cables Co.
TA Mfg. Co.
W.A. Whitney Co.
6.00% Senior Note, Series A, due November 15, 2003
No. AR_______ ___________, _____
$________________ PPN 29744# AA 4
FOR VALUE RECEIVED, the undersigned, Esterline Technologies
Corporation, a Delaware corporation ("Esterline"), Armtec Defense Products
Co., a Delaware corporation ("Armtec"), Auxitrol Technologies S.A., a French
Societe Anonyme ("Auxitrol"), Equipment Sales Co., a Connecticut corporation
("Equipment"), Excellon Automation Co., a California corporation
("Excellon"), Federal Products Co., a Delaware corporation ("Federal"),
Hytek Finishes Co., a Delaware corporation ("Hytek"), Kirkhill Rubber Co., a
California corporation ("Kirkhill"), Korry Electronics Co., a Delaware
corporation ("Korry"), Mason Electric Co., a Delaware corporation ("Mason"),
Midcon Cables Co., a Delaware corporation ("Midcon"), TA Mfg. Co., a
California corporation ("TA"), W.A. Whitney Co., an Illinois corporation
("Whitney"; Whitney together with Esterline, Armtec, Auxitrol, Equipment,
Excellon, Federal, Hytek, Kirkhill, Korry, Mason, Midcon and TA are each
hereinafter individually referred to as an "Obligor" and collectively as the
"Obligors"), jointly and severally agree to pay to _________________, or
registered assigns, the principal sum of _________________ DOLLARS on
November 15, 2003, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6.00%
per annum from the date hereof, payable semiannually, on the fifteenth day
of May and November in each year, commencing with the May 15 or November 15
next succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole Amount (as
defined in the Note Purchase Agreements referred to below), payable
semiannually as aforesaid (or, at the option of the registered holder
hereof, on demand), at a rate per annum from time to time equal to the
greater of (1) 8.00% or (2) 2% over the rate of interest publicly announced
EXHIBIT 1
(to Note Purchase Agreement)
<PAGE>
by Bank of America NT&SA from time to time in New York, New York as its
"reference" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at Bank of America NT&SA or at such other place as the Obligors
shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreements referred to below.
This Note is one of the 6.00% Senior Notes, Series A, due
November 15, 2003 (the "Series A Notes") of the Obligors in the aggregate
principal amount of $30,000,000, which together with the Obligors'
$30,000,000 aggregate principal amount of 6.40% Senior Notes, Series B, due
November 15, 2005 (the "Series B Notes") and the Obligors' $40,000,000
aggregate principal amount of 6.77% Senior Notes, Series C, due
November 15, 2008 (the "Series C Notes"; said Series C Notes, together with
the Series A Notes and the Series B Notes being hereinafter collectively
referred to as the "Notes") issued pursuant to separate Note Purchase
Agreements, each dated as of November 1, 1998 (as from time to time amended,
collectively, the "Note Purchase Agreements"), among the Obligors and the
respective Purchasers named therein and is entitled to the benefits thereof.
Each holder of this Note will be deemed, by its acceptance hereof, (i) to
have agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreements and (ii) to have made the representation set forth in
Section 6.2 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Obligors may treat the person in whose name
this Note is registered as the owner hereof for the purpose of receiving
payment and for all other purposes, and the Obligors will not be affected by
any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note
Purchase Agreements.
<PAGE> E-1-2
This Note shall be construed and enforced in accordance with, and the
rights and parties shall be governed by, the law of the State of New York,
excluding choice-of-law principles of the law of such State which would
require application of the laws of the jurisdiction other than such State.
ESTERLINE TECHNOLOGIES CORPORATION
By __________________________________
Its_______________________________
ARMTEC DEFENSE PRODUCTS CO.
By __________________________________
Its_______________________________
AUXITROL TECHNOLOGIES S.A.
By __________________________________
Its_______________________________
EQUIPMENT SALES CO.
By __________________________________
Its_______________________________
EXCELLON AUTOMATION CO.
By __________________________________
Its_______________________________
<PAGE> E-1-3
FEDERAL PRODUCTS CO.
By __________________________________
Its_______________________________
HYTEK FINISHES CO.
By __________________________________
Its_______________________________
KIRKHILL RUBBER CO.
By __________________________________
Its_______________________________
KORRY ELECTRONICS CO.
By __________________________________
Its_______________________________
MASON ELECTRIC CO.
By __________________________________
Its_______________________________
MIDCON CABLES CO.
By __________________________________
Its_______________________________
<PAGE> E-1-4
TA MFG. CO.
By __________________________________
Its_______________________________
W.A. WHITNEY CO.
By __________________________________
Its_______________________________
<PAGE> E-1-5
Form of Series B Note
Esterline Technologies Corporation
Armtec Defense Products Co.
Auxitrol Technologies S.A.
Equipment Sales Co.
Excellon Automation Co.
Federal Products Co.
Hytek Finishes Co.
Kirkhill Rubber Co.
Korry Electronics Co.
Mason Electric Co.
Midcon Cables Co.
TA Mfg. Co.
W.A. Whitney Co.
6.40% Senior Note, Series B, due November 15, 2005
No. BR-______ ___________, _____
$________________ PPN 29744# AB 2
FOR VALUE RECEIVED, the undersigned, Esterline Technologies
Corporation, a Delaware corporation ("Esterline"), Armtec Defense Products
Co., a Delaware corporation ("Armtec"), Auxitrol Technologies S.A., a French
Societe Anonyme ("Auxitrol"), Equipment Sales Co., a Connecticut corporation
("Equipment"), Excellon Automation Co., a California corporation
("Excellon"), Federal Products Co., a Delaware corporation ("Federal"),
Hytek Finishes Co., a Delaware corporation ("Hytek"), Kirkhill Rubber Co., a
California corporation ("Kirkhill"), Korry Electronics Co., a Delaware
corporation ("Korry"), Mason Electric Co., a Delaware corporation ("Mason"),
Midcon Cables Co., a Delaware corporation ("Midcon"), TA Mfg. Co., a
California corporation ("TA"), W.A. Whitney Co., an Illinois corporation
("Whitney"; Whitney, together with Esterline, Armtec, Auxitrol, Equipment,
Excellon, Federal, Hytek, Kirkhill, Korry, Mason, Midcon and TA are each
hereinafter individually referred to as an "Obligor" and collectively as the
"Obligors"), jointly and severally agree to pay to ________________, or
registered assigns, the principal sum of ________________ DOLLARS on
November 15, 2005, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6.40%
per annum from the date hereof, payable semiannually, on the fifteenth day
of May and November in each year, commencing with the May 15 or November 15
next succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole Amount (as
defined in the Note Purchase Agreements referred to below), payable
semiannually as aforesaid (or, at the option of the registered holder
hereof, on demand), at a rate per annum from time to time equal to the
greater of (1) 8.40% or (2) 2% over the rate of interest publicly announced
EXHIBIT 2
(to Note Purchase Agreement)
<PAGE>
by Bank of America NT&SA from time to time in New York, New York as its
"reference" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at Bank of America NT&SA or at such other place as the Obligors
shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreements referred to below.
This Note is one of the 6.40% Senior Notes, Series B, due
November 15, 2005 (the "Series B Notes") of the Obligors in the aggregate
principal amount of $30,000,000, which together with the Obligors' $30,000,000
aggregate principal amount of 6.00% Senior Notes, Series A, due
November 15, 2003 (the "Series A Notes") and the Obligors' $40,000,000
aggregate principal amount of 6.77% Senior Notes, Series C, due
November 15, 2008 (the "Series C Notes"; said Series C Notes, together with
the Series A Notes and the Series B Notes being hereinafter collectively
referred to as the "Notes") issued pursuant to separate Note Purchase
Agreements, each dated as of November 1, 1998 (as from time to time amended,
collectively, the "Note Purchase Agreements"), among the Obligors and the
respective Purchasers named therein and is entitled to the benefits thereof.
Each holder of this Note will be deemed, by its acceptance hereof, (i) to have
agreed to the confidentiality provisions set forth in Section 20 of the Note
Purchase Agreements and (ii) to have made the representation set forth in
Section 6.2 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Obligors may treat the person in whose name
this Note is registered as the owner hereof for the purpose of receiving
payment and for all other purposes, and the Obligors will not be affected by
any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note
Purchase Agreements.
<PAGE> E-2-2
This Note shall be construed and enforced in accordance with, and the
rights and parties shall be governed by, the law of the State of New York,
excluding choice-of-law principles of the law of such State which would
require application of the laws of the jurisdiction other than such State.
ESTERLINE TECHNOLOGIES CORPORATION
By __________________________________
Its_______________________________
ARMTEC DEFENSE PRODUCTS CO.
By __________________________________
Its_______________________________
AUXITROL TECHNOLOGIES S.A.
By __________________________________
Its_______________________________
EQUIPMENT SALES CO.
By __________________________________
Its_______________________________
EXCELLON AUTOMATION CO.
By __________________________________
Its_______________________________
FEDERAL PRODUCTS CO.
By __________________________________
Its_______________________________
<PAGE> E-2-3
HYTEK FINISHES CO.
By __________________________________
Its_______________________________
KIRKHILL RUBBER CO.
By __________________________________
Its_______________________________
KORRY ELECTRONICS CO.
By __________________________________
Its_______________________________
MASON ELECTRIC CO.
By __________________________________
Its_______________________________
MIDCON CABLES CO.
By __________________________________
Its_______________________________
TA MFG. CO.
By __________________________________
Its_______________________________
<PAGE> E-2-4
W.A. WHITNEY CO.
By __________________________________
Its_______________________________
<PAGE> E-2-5
Form of Series C Note
Esterline Technologies Corporation
Armtec Defense Products Co.
Auxitrol Technologies S.A.
Equipment Sales Co.
Excellon Automation Co.
Federal Products Co.
Hytek Finishes Co.
Kirkhill Rubber Co.
Korry Electronics Co.
Mason Electric Co.
Midcon Cables Co.
TA Mfg. Co.
W.A. Whitney Co.
6.77% Senior Note, Series C, due November 15, 2008
No. CR-______ ___________, _____
$________________ PPN 29744# AC 0
FOR VALUE RECEIVED, the undersigned, Esterline Technologies
Corporation, a Delaware corporation ("Esterline"), Armtec Defense Products
Co., a Delaware corporation ("Armtec"), Auxitrol Technologies S.A., a French
Societe Anonyme ("Auxitrol"), Equipment Sales Co., a Connecticut corporation
("Equipment"), Excellon Automation Co., a California corporation
("Excellon"), Federal Products Co., a Delaware corporation ("Federal"),
Hytek Finishes Co., a Delaware corporation ("Hytek"), Kirkhill Rubber Co., a
California corporation ("Kirkhill"), Korry Electronics Co., a Delaware
corporation ("Korry"), Mason Electric Co., a Delaware corporation ("Mason"),
Midcon Cables Co., a Delaware corporation ("Midcon"), TA Mfg. Co., a
California corporation ("TA"), W.A. Whitney Co., an Illinois corporation
("Whitney"; Whitney together with Esterline, Armtec, Auxitrol, Equipment,
Excellon, Federal, Hytek, Kirkhill, Korry, Mason, Midcon and TA are each
hereinafter individually referred to as an "Obligor" and collectively as the
"Obligors"), jointly and severally agree to pay to ________________, or
registered assigns, the principal sum of ________________ DOLLARS on
November 15, 2008, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6.77%
per annum from the date hereof, payable semiannually, on the fifteenth day
of May and November in each year, commencing with the May 15 or November 15
next succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole Amount (as
defined in the Note Purchase Agreements referred to below), payable
semiannually as aforesaid (or, at the option of the registered holder
hereof, on demand), at a rate per annum from time to time equal to the
greater of (1) 8.77% or (2) 2% over the rate of interest publicly announced
EXHIBIT 3
(to Note Purchase Agreement)
<PAGE>
by Bank of America NT&SA from time to time in New York, New York as its or
"reference" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at Bank of America NT&SA or at such other place as the Obligors
shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreements referred to below.
This Note is one of the 6.77% Senior Notes, Series C, due
November 15, 2008 (the "Series C Notes") of the Obligors in the aggregate
principal amount of $40,000,000, which together with the Obligors' $30,000,000
aggregate principal amount of 6.00% Senior Notes, Series A, due
November 15, 2003 (the "Series A Notes") and the Obligors' $30,000,000
aggregate principal amount of 6.40% Senior Notes, Series B, due
November 15, 2005 (the "Series B Notes"; said Series B Notes, together with
the Series A Notes and the Series C Notes being hereinafter collectively
referred to as the "Notes") issued pursuant to separate Note Purchase
Agreements, each dated as of November 1, 1998 (as from time to time amended,
collectively, the "Note Purchase Agreements"), among the Obligors and the
respective Purchasers named therein and is entitled to the benefits thereof.
Each holder of this Note will be deemed, by its acceptance hereof, (i) to
have agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreements and (ii) to have made the representation set forth in
Section 6.2 of the Note Purchase Agreements.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Obligors may treat the person in whose name
this Note is registered as the owner hereof for the purpose of receiving
payment and for all other purposes, and the Obligors will not be affected by
any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note
Purchase Agreements.
<PAGE> E-3-2
This Note shall be construed and enforced in accordance with, and the
rights and parties shall be governed by, the law of the State of New York,
excluding choice-of-law principles of the law of such State which would
require application of the laws of the jurisdiction other than such State.
ESTERLINE TECHNOLOGIES CORPORATION
By __________________________________
Its_______________________________
ARMTEC DEFENSE PRODUCTS CO.
By __________________________________
Its_______________________________
AUXITROL TECHNOLOGIES S.A.
By __________________________________
Its_______________________________
EQUIPMENT SALES CO.
By __________________________________
Its_______________________________
EXCELLON AUTOMATION CO.
By __________________________________
Its_______________________________
FEDERAL PRODUCTS CO.
By __________________________________
Its_______________________________
<PAGE> E-3-3
HYTEK FINISHES CO.
By __________________________________
Its_______________________________
KIRKHILLL RUBBER CO.
By __________________________________
Its_______________________________
KORRY ELECTRONICS CO.
By __________________________________
Its_______________________________
MASON ELECTRIC CO.
By __________________________________
Its_______________________________
MIDCON CABLES CO.
By __________________________________
Its_______________________________
TA MFG. CO.
By __________________________________
Its_______________________________
<PAGE> E-3-4
W.A. WHITNEY CO.
By __________________________________
Its_______________________________
<PAGE> E-3-5
Form of Opinion of Special Counsel
To The Obligors
The closing opinion of Perkins Coie LLP, counsel for the Obligors,
which is called for by Section 4.4 of the Agreement, shall be dated the date
of the Closing and addressed to you and the Other Purchasers, shall be
satisfactory in scope and form to you and the Other Purchasers and shall be
to the effect that:
1. Each Obligor is a corporation, duly incorporated, validly
existing and in good standing under the laws of its state of
incorporation, has the corporate power and the corporate authority to
execute and perform the Agreement and the Other Agreements and to
issue the Notes and has the full corporate power and the corporate
authority to conduct the activities in which it is now engaged and is
duly licensed or qualified and is in good standing as a foreign
corporation in each jurisdiction in which the character of the
properties owned or leased by it or the nature of the business
transacted by it makes such licensing or qualification necessary.
2. Each Restricted Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly licensed or qualified and is
in good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of the business
transacted by it makes such licensing or qualification necessary and
all of the issued and outstanding shares of capital stock of each such
Restricted Subsidiary have been duly issued, are fully paid and non-
assessable and are owned by the Obligors, by one or more Restricted
Subsidiaries, or by the Obligors and one or more Restricted
Subsidiaries.
3. The Agreement and the Other Agreements have been duly
authorized by all necessary corporate action on the part of each
Obligor, have been duly executed and delivered by each Obligor and
constitute the legal, valid and binding contracts of each Obligor
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a
proceeding in equity or at law).
4. The Notes have been duly authorized by all necessary
corporate action on the part of each Obligor, have been duly executed
and delivered by each Obligor and constitute the legal, valid and
binding obligations of each Obligor enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent conveyance
or similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
EXHIBIT 4.4(a)
(to Note Purchase Agreement)
<PAGE>
5. No approval, consent or withholding of objection on the
part of, or filing, registration or qualification with, any
governmental body, Federal, state or local, is necessary in connection
with the execution, delivery and performance of the Agreement, the
Other Agreements or the Notes.
6. The issuance and sale of the Notes and the execution,
delivery and performance by each Obligor of the Agreement and the
Other Agreements do not conflict with or result in any breach of any
of the provisions of or constitute a default under or result in the
creation or imposition of any Lien upon any of the property of such
Obligor pursuant to the provisions of the Certificate of Incorporation
or By-laws of such Obligor or any agreement or other instrument known
to such counsel to which such Obligor is a party or by which such
Obligor may be bound or any Federal, state or local law.
7. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Agreement and the Other Agreements
do not, under existing law, require the registration of the Notes
under the Securities Act of 1933, as amended, or the qualification of
an indenture under the Trust Indenture Act of 1939, as amended.
8. The issuance of the Notes and the use of the proceeds of
the sale of the Notes in accordance with the provisions of and
contemplated by the Agreement and the Other Agreements do not violate
or conflict with Regulation T, U or X of the Board of Governors of the
Federal Reserve System.
9. No Obligor is an "investment company" or a company
"controlled" by an "investment company" under the Investment Company
Act of 1940, as amended.
10. There is no litigation pending or, to the best knowledge
of such counsel, threatened which in such counsel's opinion could
reasonably be expected to have a materially adverse effect on any
Obligor's business or assets or which would impair the ability of such
Obligor to issue and deliver the Notes or to comply with the
provisions of the Agreement and the Other Agreements.
11. The choice of New York law as the governing law of the
Notes and Agreements shall be recognized by the courts of State of
Washington.
The opinion of Perkins Coie LLP shall cover such other matters relating to
the sale of the Notes as you and the Other Purchasers may reasonably
request. With respect to matters of fact on which such opinion is based,
such counsel shall be entitled to rely on appropriate certificates of public
officials and officers of the Obligors.
You and the Other Purchasers, together with subsequent holders of the Notes,
may rely on the opinion of Perkins Coie LLP.
<PAGE> E-4.4(a)-2
Form of Opinion of Special Counsel
To The Purchasers
The closing opinion of Chapman and Cutler, special counsel to you and
the Other Purchasers, called for by Section 4.4 of the Agreement, shall be
dated the date of the Closing and addressed to you and the Other Purchasers,
shall be satisfactory in form and substance to you and the Other Purchasers
and shall be to the effect that:
1. Each Obligor is a corporation, validly existing and in good
standing under the laws of its state of incorporation and has the
corporate power and the corporate authority to execute and deliver the
Agreement and the Other Agreements and to issue the Notes.
2. The Agreement and the Other Agreements have been duly
authorized by all necessary corporate action on the part of each
Obligor, have been duly executed and delivered by each Obligor and
constitute the legal, valid and binding contracts of each Obligor
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a
proceeding in equity or at law).
3. The Notes have been duly authorized by all necessary
corporate action on the part of each Obligor, have been duly executed
and delivered by each Obligor and constitute the legal, valid and
binding obligations of each Obligor enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent conveyance
or similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
4. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Agreement and the Other Agreements
do not, under existing law, require the registration of the Notes
under the Securities Act of 1933, as amended, or the qualification of
an indenture under the Trust Indenture Act of 1939, as amended.
The opinion of Chapman and Cutler shall also state that the opinion
of Perkins Coie LLP is satisfactory in scope and form to Chapman and Cutler
and that, in their opinion, you and the Other Purchasers are justified in
relying thereon.
In rendering the opinion set forth in paragraph 1 above, Chapman and
Cutler may rely solely upon an examination of the Articles/Certificate of
Incorporation certified by, and a certificate of good standing of each
Obligor from, the Secretary of its state of incorporation, the By-laws of
each Obligor and the general business corporation law of the respective
states of incorporation. The opinion of Chapman and Cutler is limited to
the laws of the State of New York, the general business corporation law of
the State of Delaware and the Federal laws of the United States.
EXHIBIT 4.4(b)
(to Note Purchase Agreement)
<PAGE>
With respect to matters of fact upon which such opinion is based, Chapman
and Cutler may rely on appropriate certificates of public officials and
officers of the Obligors.
<PAGE> E-4.4(b)-2
EXECUTIVE RETIREMENT AGREEMENT
THIS EXECUTIVE RETIREMENT AGREEMENT (the "Agreement") is dated and
made effective as of January 19, 1999. The parties to the Agreement (the
"Parties" and each a "Party") are ESTERLINE TECHNOLOGIES CORPORATION, a
Delaware corporation (the "Company"), and WENDELL P. HURLBUT, Chairman of
the Board and Chief Executive Officer of the Company ("Mr. Hurlbut").
A. Mr. Hurlbut has been employed by the Company and, previously, by
companies that the Company acquired, since November 1972. He has served as
the Company's Chief Executive Officer since May 1988, as a member of the
Company's Board of Directors since February 1989 and as Chairman of the
Board since January 1993. Mr. Hurlbut also served as President of the
Company from May 1988 until September 1997.
B. Mr. Hurlbut now desires to retire as an employee of the Company
and the Company is willing to accept Mr. Hurlbut's retirement. His
retirement is to occur on and be effective as of January 19, 1999 (the
"Retirement Date"). As part of and in connection with his retirement, the
Company desires to provide Mr. Hurlbut with certain compensation and other
benefits, in addition to those to which he already is entitled, in
recognition of Mr. Hurlbut's extensive service to the Company and the
financial growth and success experienced by the Company under Mr. Hurlbut's
leadership.
IN ORDER to carry out and give effect to the matters recited in the
prior paragraphs of this Agreement, and in consideration of the mutual
promises and undertakings set forth below, the Parties, intending to be
legally bound, agree as follows:
1. Retirement
On the terms and subject to the conditions stated in this Agreement,
Mr. Hurlbut's employment with the Company will terminate on the Retirement
Date. At that date, Mr. Hurlbut will cease to be the Chief Executive
Officer of the Company. While Mr. Hurlbut will continue to serve as a
member and Chairman of the Board of Directors of the Company, as provided in
this Agreement, he will then cease to be an officer of the Company.
<PAGE>
2. Payments and Benefits
On his retirement, Mr. Hurlbut will receive the payments and benefits
described in this Section 2. These payments and benefits will be made
effective or commence, as the case may be, on the day following the
Retirement Date, except as expressly provided otherwise. Mr. Hurlbut's
payments and benefits will be as follows:
2.1 Accrued Rights and Benefits
Mr. Hurlbut will be paid any and all salary, bonus, vacation, benefits
and other compensation earned or accrued through the Retirement Date.
Mr. Hurlbut will have and retain all rights and receive all benefits to
which he is otherwise entitled, including those identified and set forth in
succeeding provisions of this Section 2.
2.2 Incentive Compensation
Mr. Hurlbut was an appointee and member of the Company's Long-Term
Incentive Compensation Plan and its Corporate Management Incentive
Compensation Plan (individually and together, the "Incentive Plans")
throughout the Company's 1998 fiscal year. At the Retirement Date,
Mr. Hurlbut will have been an appointee and member of the Incentive Plans
for the first eighty days of the Company's 1999 fiscal year. Mr. Hurlbut
will be paid the entire annual amount of his award under each of the
Incentive Plans for the 1998 fiscal year and 80/365ths of the annual amount
of his award under each of the Incentive Plans for the 1999 fiscal year.
Payment for the 1998 fiscal year will be made prior to January 28, 1999, and
payment for the 1999 fiscal year will be made prior to March 1, 2000, in
each case in accordance with the Incentive Plans' provisions.
2.3 Stock Option Exercise Period
Mr. Hurlbut has unexercised, nonqualified options to acquire
181,000 shares (post-April 20, 1998 stock split) of the Company's common stock,
of which 114,250 were vested as of the Retirement Date, which options for stock
(the "Options") were granted pursuant to the Esterline Technologies
Corporation 1987 and 1997 Stock Option Plans (the "Stock Option Plans"). As
provided in the Stock Option Plans and subject to the insider trading rules,
all the Options vested at the Retirement Date may be exercised by
Mr. Hurlbut at any time or from time to time until the earlier of three
years after the Retirement Date or the expiration date of the Options.
<PAGE> 2
2.4 Retirement Plan Payments
Mr. Hurlbut is a participant and beneficiary under the Company's tax-
qualified defined benefit retirement plan (the "Qualified Plan"), covering
substantially all the Company's U.S. employees, and its Supplemental
Executive Retirement Plan (the "SERP"), covering certain of the Company's
executive officers. Mr. Hurlbut will receive benefits under the Qualified
Plan in accordance with its terms and his established benefits entitlement
(approximately $128,223 per year during his lifetime calculated on the basis
of the 50% Joint Survivor Spouse Option). The Company has agreed to
increase the benefits to Mr. Hurlbut under the SERP and provide him with
annual payments for his life and that of his wife having an annual benefit
of $318,154 during his lifetime, and following his death, 50% of such
amount, if his wife survives him, for the remainder of his wife's lifetime.
To effect this benefit, and in satisfaction of all obligations to
Mr. Hurlbut under the SERP:
(a) The Company, within 30 days of the Retirement Date, will deliver
to Mr. Hurlbut fully paid joint and survivor annuities for his life and the
life of his wife (the "Annuity") providing an annual after-tax payment of
$192,000 payable monthly to him during his remaining lifetime and, following
his death, 50% of such amount to his wife, if she survives him, for the
remainder of her lifetime, which equals $318,154 referred to above less tax
at the highest marginal rate of U.S. income tax currently in effect. The
Annuity will be purchased from two companies mutually and reasonably
acceptable to the Parties.
(b) The first of the monthly payments under the Annuity will be made
within 30 days of the Retirement Date. Succeeding monthly payments will be
made on the monthly anniversaries of this first payment.
(c) The Company will accompany its delivery of the Annuity with a
payment in an amount sufficient to fully reimburse Mr. Hurlbut for the
anticipated U.S. income tax cost to him (at the highest marginal rate of
U.S. income tax currently in effect) from receipt of the Annuity and this
reimbursement payment, consistent with Rev. Proc. 81-48, 1981-2 C. B. 623.
(d) The amounts due under the SERP provided in this Section 2.4 are
based upon Mr. Hurlbut's compensation earned through October 31, 1998 and
are in full payment and satisfaction of amounts due under the SERP without
further adjustment.
<PAGE> 3
2.5 Service as Chairman of the Board
As set forth in Section 3, Mr. Hurlbut will continue to serve as
Chairman of the Board until the second anniversary of the Retirement Date.
As compensation for the additional effort required for his service in this
capacity, and as additional recognition for his years of service to the
Company, Mr. Hurlbut will be paid a single lump-sum payment of $500,000.
This sum will be in addition to Mr. Hurlbut's compensation and expense
reimbursement in the normal and established course, commencing with the
Retirement Date, as one of the nonemployee members of the Company's Board of
Directors. Until the second anniversary of the Retirement Date, the Company
will also provide Mr. Hurlbut, without cost to him, with life, accidental
death and disability insurance coverage comparable to that provided to him
prior to his retirement.
2.6 Medical and Dental Benefits
Subject to the limits set forth below, Mr. Hurlbut and his wife will
be provided by the Company with lifetime medical and dental insurance
coverage without cost to either of them for premiums. The coverage, terms,
conditions and benefits will be substantially the same as the more favorable
of (a) those offered from time to time to senior executives of the Company
or (b) those available to Mr. Hurlbut and his wife immediately prior to the
Retirement Date. The maximum cumulative benefits payable to each of
Mr. Hurlbut and his wife shall be $100,000.
2.7 Estate Planning Benefits
Mr. Hurlbut and his wife will be eligible to receive, without cost to
either of them, lifetime estate planning and other financial planning
services comparable to those made available from time to time to the
Company's Chief Executive Officer, not to exceed a maximum of $15,000 per
year for such services.
2.8 Taxable Benefits
The benefits payable under this Agreement will be taxable to
Mr. Hurlbut and his wife to the extent required by law.
3. Board of Directors Service
Following the Retirement Date, Mr. Hurlbut will serve and continue to
serve as a nonofficer, nonemployee member of the Company's Board of
Directors, subject to the rights of the Company's stockholders to elect and
<PAGE> 4
remove Directors and Mr. Hurlbut's right to resign. Mr. Hurlbut will
continue to serve as Chairman of the Board until the second anniversary of
the Retirement Date. The following provisions will apply with respect to
Mr. Hurlbut's service:
3.1 Duties and Responsibilities
During his tenure as Chairman of the Board, Mr. Hurlbut will perform
the duties and carry out the responsibilities customary and usual for
persons occupying such a position. He will chair all meetings of the
Company's stockholders and Board of Directors at which he is present and be
an ex officio member of all committees of the Board of Directors.
Mr. Hurlbut will be eligible to chair one or more such committees.
Mr. Hurlbut and the Chief Executive Officer of the Company will meet and
confer on a regular basis at mutually convenient times concerning the
business and affairs of the Company. Mr. Hurlbut is to be kept fully
apprised of all matters relevant to the discharge of his duties and
responsibilities as Chairman and a member of the Board of Directors.
3.2 Support
So long as Mr. Hurlbut remains Chairman of the Board, he will be
provided with a senior executive private office at the Company's
headquarters, suitably equipped and furnished, together with secretarial and
administrative support. Thereafter, and continuing until the fifth
anniversary of the Retirement Date, Mr. Hurlbut will be provided with a
smaller private office, suitably equipped and furnished, together with
secretarial and administrative support. Until the second anniversary of the
Retirement Date, Mr. Hurlbut will be provided with an automobile comparable
to that currently used by him. All the support identified in the prior
three sentences will be provided without cost to Mr. Hurlbut, except only to
the extent that automobile costs must be borne by senior executives of the
Company pursuant to Internal Revenue Service requirements. In the event and
to the extent that Mr. Hurlbut agrees to perform, and incurs costs or
expenses in the course of performing, services for the Company requested or
authorized by the Board of Directors or the Company's Chief Executive
Officer, Mr. Hurlbut will be fully and promptly reimbursed for these costs
and expenses (including, if incurred, first-class airfare).
<PAGE> 5
3.3 Effect of Termination
In the event that Mr. Hurlbut voluntarily resigns as Chairman of the
Board prior to the second anniversary of the Retirement Date, unless done in
anticipation of or following a "change of control" of the Company (as
defined in the Termination Protection Agreement entered into by Mr. Hurlbut
and the Company as of December 3, 1990 and amended as of February 7, 1995),
he must reimburse the Company for any unearned portion of the $500,000
payment received by him under Section 2.5, determined by multiplying this
amount by a fraction, the numerator of which is the number of days from the
date of retirement as Chairman of the Board to the Retirement Date's second
anniversary and the denominator of which is 731. Subject only to the
preceding sentence, none of the payments, benefits, rights or provisions of
or for support set forth in Section 2 or this Section 3 will be limited,
reduced, modified, terminated or otherwise affected in any respect on, or in
the event or by reason of Mr. Hurlbut's resignation, removal or not being a
candidate or elected as, or otherwise ceasing to be a member or Chairman of
the Board of Directors, irrespective of the reason or cause.
4. Indemnification
4.1 Company Obligation
Except only in the circumstances described in Section 4.3, the Company
promises and agrees to indemnify and defend Mr. Hurlbut against, and hold
Mr. Hurlbut harmless from and in respect of, any and all expenses (including
attorneys' fees, disbursements and costs), judgments, fines, damages,
awards, penalties, assessments, contributions and amounts paid in settlement
directly or indirectly arising out of or relating to any action, suit or
proceeding, irrespective of whether threatened, pending or completed and
irrespective of whether civil, criminal, administrative or investigative in
nature, in which Mr. Hurlbut is a party, witness or other participant by
reasons of the fact that he was, is or may be serving (a) as an officer,
director, employee or agent of the Company or one or more of its
subsidiaries or other affiliates, or (b) at the request of the Company as an
officer, director, employee, trustee, manager or agent of another
corporation, partnership, joint venture, trust, limited liability company or
other enterprise (a "Proceeding"). The preceding indemnification
obligations and other requirements apply to and include a Proceeding by or
in the right of the Company.
<PAGE> 6
4.2 Advancement of Expenses
Mr. Hurlbut's expenses (including attorneys' fees, disbursements and
costs) must be paid or reimbursed promptly as incurred and in advance of any
final disposition of any Proceeding. If requested by the Company,
Mr. Hurlbut will give the Company his unsecured undertaking to repay these
expenses should he be found pursuant to Section 4.3 not to be entitled to
indemnification.
4.3 Wrongful Conduct
The Company will not be obligated to indemnify and defend Mr. Hurlbut
with respect to a Proceeding as set forth in Section 4.1 in the event, but
only in the event, that (a) the Proceeding is terminated by a judgment
against, order or conviction of, or plea of nolo contendere or its
equivalent, by Mr. Hurlbut and (b) the court or other tribunal hearing the
Proceeding expressly finds that Mr. Hurlbut (i) did not act in good faith or
in a manner which he reasonably believed to have been in or not opposed to
the best interests of the Company or, in the case of a criminal proceeding,
had reasonable cause to believe his conduct was unlawful and (ii) in view of
all the circumstances, is not entitled to be indemnified by the Company.
4.4 Additional Rights
The provisions of this Section 4, if broader in scope, are in addition
to, and not in lieu of, other rights and remedies that are or may be
available to Mr. Hurlbut, whether under the Company's certificate of
incorporation or bylaws, by operation of law or otherwise. Section 4.1 is
intended to be construed and interpreted as broadly as possible to the
extent permitted under Section 145(f) of the Delaware General Corporation
Law.
5. Representations and Warranties
Each Party represents and warrants to the other Party that (a) this
Agreement has been duly executed and delivered by the representing Party,
(b) is the legal, valid and binding obligation of the representing Party,
enforceable against the representing Party in accordance with its terms, and
(c) the representing Party has the absolute and unrestricted right, power
and authority to execute and deliver this Agreement and perform such Party's
obligations under this Agreement. Without limiting the preceding
provisions, the Company specifically represents and warrants that any and
all corporate action required to approve this Agreement, including obtaining
<PAGE> 7
approval of its Board of Directors by vote of disinterested Directors, has
been taken and obtained.
6. General Release of Claims
Mr. Hurlbut and the Company hereby fully release and discharge each
other, and the Company's officers, directors, stockholders, employees,
agents and representatives from any and all debts, obligations, promises,
actions or claims that have arisen in any way out of Mr. Hurlbut's
employment with the Company and the termination thereof. It is understood
that this release includes, but is not limited to, any claims for wages,
bonuses, employment benefits, damages of any kind whatsoever, arising out of
any contracts, express or implied, any covenant of good faith and fair
dealing, express or implied, any theory of wrongful discharge, any legal
restriction on the Company's right to terminate employees, or any federal,
state or other governmental statute or ordinance, including, without
limitation, Title VII of the Civil Rights Act of 1964, the federal Age
Discrimination in Employment Act, The Washington Law Against Discrimination
and any other legal limitation on the employment relationship. Mr. Hurlbut
represents that he has not filed any complaints, charges or lawsuits against
the Company with any governmental agency or any court and agrees that he
will not initiate, assist or encourage any such actions. This waiver and
release shall not waive or release claims where the events in dispute first
arise after execution of this Agreement, nor shall it preclude Mr. Hurlbut
or the Company from filing a lawsuit for the exclusive purpose of enforcing
their rights under this Agreement. Nothing is this paragraph nor in any
other paragraph of this Agreement shall constitute a release or waiver of
any claims or causes of action the Company has against Mr. Hurlbut or any
other person or entity with respect to any matter of thing arising out of or
in connection with Mr. Hurlbut's purchase or sale of any securities of the
Company. Nothing in this Agreement shall be used for any purposes in
connection with any such claims or causes of action. Mr. Hurlbut's release
of claims shall not affect any indemnification rights or obligations to
which he may be subject under Section 4 of this Agreement.
7. Review and Revocation Period
Mr. Hurlbut shall have 21 days to review this Agreement and consult
legal counsel if he so chooses, during which time the proposed terms of this
Agreement shall not be amended, modified or revoked by the Company.
Mr. Hurlbut may revoke this Agreement if he so chooses by providing notice
of his decision to revoke this Agreement to the Company within seven days
<PAGE> 8
following the date he signs this Agreement. This Agreement shall become
effective and enforceable on expiration of this seven-day revocation period.
8. Noncompetition, Nonsolicitation and Confidentiality
8.1 Scope of Competition
So long as Mr. Hurlbut serves as a director of the Company and for a
period of three years from the date on which he ceases to be a director of
the Company, Mr. Hurlbut agrees that he will not (except on behalf of or
with the prior written consent of the Company), directly or indirectly
(a) solicit, divert, appropriate to or accept on behalf of any Competing
Business (as hereinafter defined) or (b) attempt to solicit, divert,
appropriate to or accept on behalf of any Competing Business, any business
from any customer or actively sought prospective customer of the Company
with whom he has dealt, whose dealings with the Company have been supervised
by him or about whom he has acquired Confidential Information (as
hereinafter defined) in the course of his services for the Company. During
the same period, Mr. Hurlbut will not engage in, be employed by, perform
services for, participate in the ownership, management, control or operation
of, or otherwise be connected with, either directly or indirectly, any
Competing Business. For purposes of this Section 8, he will not be
considered to be connected with any Competing Business solely on account of
his ownership of less than 5% of the outstanding capital stock or equity
interests in any person carrying on the Competing Business. Mr. Hurlbut
agrees that this restriction is reasonable, but further agrees that, should
a court exercising a jurisdiction with respect to this Agreement find any
such restriction invalid or unenforceable due to unreasonableness, either in
period of time, geographical area, or otherwise, then in that event, such
restriction is to be interpreted and enforced to the maximum extent which
such court deems reasonable. "Competing Business" means any business whose
efforts are in competition with the efforts of the Company or any of its
subsidiaries or affiliates. A Competing Business includes any business
whose efforts involve any research and development, products or services in
competition with products or services which are, during or at the end of the
three year period specified above, either (a) produced, marketed or
otherwise commercially exploited by the Company or any of its subsidiaries
or affiliates or (b) related to actual or demonstrably anticipated research
or development by the Company or any of its subsidiaries or affiliates.
<PAGE> 9
8.2 Scope of Nonsolicitation
So long as Mr. Hurlbut serves as a director of the Company and for a
period of three years from the date on which he ceases to be a director of
the Company, Mr. Hurlbut will not induce, or attempt to induce, any employee
or independent contractor of the Company or any of its subsidiaries or
affiliates to cease such employment or relationship to engage in, be
employed by, perform services for, participate in the ownership, management,
control or operation of, or otherwise be connected with, either directly or
indirectly, any Competing Business.
8.3 Confidential Information
Except as required for the performance of his services for the Company
or as authorized in writing by the Company, Mr. Hurlbut will not use,
disclose, publish or distribute any material Confidential Information. At
such time as Mr. Hurlbut ceases to be a director of the Company, Mr. Hurlbut
will return all material Confidential Information and all other documents,
data and other materials of whatever nature and shall not retain or cause or
allow any third party to retain photocopies or other reproductions of the
foregoing. "Confidential Information" means any information that
(a) relates to the business of the Company, (b) is not generally available
to the public, and (c) is conceived, compiled, developed, discovered or
received by, or made available to, Mr. Hurlbut, whether solely or jointly
with others, and whether or not while engaged in performing services for the
Company. Confidential Information includes information, both written and
oral, relating to inventions, trade secrets and other proprietary
information, technical data, products, services, finances, business plans,
marketing plans, legal affairs, suppliers, clients, prospects,
opportunities, contracts or assets of the Company or any of its subsidiaries
or affiliates. Confidential Information also includes any information which
has been made available to the Company or any of its subsidiaries or
affiliates by or with respect to third parties of which the Company or any
of its subsidiaries or affiliates is obligated to keep confidential.
8.4 Equitable Relief
Mr. Hurlbut acknowledges that the provisions of this Section 8 are
essential to the Company, that the Company would not enter into this
Agreement if it did not include this Section 8 and that damages sustained by
the Company as a result of a breach of this Section 8 cannot be adequately
remedied by damages, and Mr. Hurlbut agrees that the Company,
notwithstanding any other provision of this Agreement, and in addition to
any other remedy it may have under this Agreement or at law, shall be
<PAGE> 10
entitled to injunctive and other equitable relief to prevent or curtail any
breach of any provision of this Agreement, including, without limitation,
this Section 8.
9. General Provisions
9.1 Public Announcements
A public announcement concerning this Agreement or its terms and
conditions may be made by, and only by, the Company. The Company agrees to
consult with Mr. Hurlbut concerning the content of any such announcement.
9.2 Knowing and Voluntary Agreement
Mr. Hurlbut represents and agrees that he has read this Agreement,
understands its terms and the fact that it releases any claim he might have
against the Company and its agents, understands that he has the right to
consult counsel of choice and has either done so or knowingly waived the
right to do so, and enters into this Agreement without duress or coercion
from any source. Each Party will bear its own costs and expenses associated
with this Agreement.
9.3 Notices
All notices, consents, waivers and other formal communications under
this Agreement must be in writing. They will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt),
(b) sent by telecopier (with written confirmation of receipt), provided that
a copy is mailed by certified mail, return receipt requested, or (c)
received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other addresses
and telecopier numbers as a Party may designate by notice to the other
Party):
If to the Company, to:
Esterline Technologies Corporation
Attn: Chief Executive Officer
10800 N.E. 8th Street
Bellevue, WA 98004
Fax: 425.453.2916
<PAGE> 11
with a copy to:
Perkins Coie LLP
Attn: J. Shan Mullin
1201 Third Avenue, 40th Floor
Seattle, WA 98101-3099
Fax: 206.583.8500
And if to Mr. Hurlbut, to:
Wendell P. Hurlbut
P.O. Box 341
Mercer Island, WA 98040-0341
<PAGE> 12
with a copy to:
Heller Ehrman White & McAuliffe
Attn: Bruce M. Pym
701 Fifth Avenue, Ste. 6100
Seattle, WA 98104-7098
Fax: 206.447.0849
9.4 Further Assurances
The Parties agree to (a) furnish on request to each other such further
information, (b) execute and deliver to each other such other documents and
(c) do such other acts and things, all as the other Party may reasonably
request for the purpose of carrying out the intent of this Agreement.
9.5 Waiver
The rights and remedies of the Parties are cumulative and not
alternative. Neither the failure nor any delay by either Party in
exercising any right, power or privilege under this Agreement will operate
as a waiver of such right, power or privilege, and no single or partial
exercise of any such right, power or privilege will preclude any other or
further exercise of such right, power or privilege or the exercise of any
other right, power or privilege.
9.6 Entire Agreement; Modification
This Agreement supersedes all prior agreements between the Parties
with respect to its subject matter and constitutes a complete and exclusive
statement of the terms of agreement between the Parties with respect to its
subject matter. This Agreement may not be amended except by a written
agreement executed by the Party to be charged with the amendment.
9.7 Successors and Third-Party Rights
This Agreement will apply to, be binding in all respects on and inure
to the benefit of the heirs, beneficiaries, successors and assigns of the
Parties. Nothing expressed or referred to in this Agreement will be
construed to give any person or entity other than the Parties any legal or
equitable right, remedy or claim under or with respect to this Agreement or
any provision of this Agreement. This Agreement and all its provisions and
<PAGE> 13
conditions are for the sole and exclusive benefit of the Parties and their
heirs, beneficiaries, successors and assigns.
9.8 Severability
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force
and effect to the extent not held invalid or unenforceable.
9.9 Section Headings; Construction
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation.
All references to "Section" or "Sections" refer to the corresponding Section
or Sections of this Agreement. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require. The
language of this Agreement has been negotiated and chosen by the Parties
jointly to express their mutual intent. No rule of construction based on
which Party drafted this Agreement or certain of its provisions will be
applied against either Party. Unless otherwise expressly provided, the word
"including" does not limit the preceding words or terms.
9.10 Time of Essence
Time is of the essence with regard to all dates and time periods set
forth or referred to in this Agreement.
9.11 Counterparts
This Agreement may be executed in one or more counterparts and may be
delivered by manually signed counterpart or, if followed by a manually
signed counterpart, by facsimile. Each counterpart will be deemed to be an
original copy of this Agreement and all of which, when taken together, will
be deemed to constitute one and the same agreement.
9.12 Attorneys' Fees
If any action, suit or proceeding is instituted by a Party with
respect to this Agreement or its performance, the prevailing Party, in
addition to any other recovery or relief as may be awarded, will be entitled
<PAGE> 14
to its or his costs, expenses and reasonable attorneys' fees as determined
by a trial court, arbitrator or, in the event of an appeal, the appellate
court.
ESTERLINE TECHNOLOGIES
CORPORATION
/s/ Robert W. Stevenson /s/ Wendell P. Hurlbut
By:_______________________________ ____________________________________
Robert W. Stevenson Wendell P. Hurlbut
Executive Vice President
<PAGE> 15
Glossary of Terms
Term Definition
- ---- ----------
Agreement Opening [Paragraph]
Annuity Section 2.4
Company Opening [Paragraph]
Competing Business Section 8.1
Confidential Information Section 8.3
Incentive Plans Section 2.2
Mr. Hurlbut Opening [Paragraph]
Options Section 2.3
Party and Parties Opening [Paragraph]
Proceeding Section 4.1
Qualified Plan Section 2.4
Retirement Date Recital [Paragraph] B
SERP Section 2.4
Stock Option Plans Section 2.3
<PAGE> 16
EXHIBIT 11
ESTERLINE TECHNOLOGIES CORPORATION
Computation of Basic and Diluted Earnings Per Common Share
For the Three Months Ended January 31, 1999 and 1998
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
January 31,
------------------
1999 1998
------- -------
<S> <C> <C>
Basic
- -----
Net Earnings $ 5,057 $ 4,836
======= =======
Weighted Average Number of Common Shares
Outstanding 17,327 17,286
======= =======
Net Earnings per Common Share - Basic $ .29 $ .28
======= =======
Diluted
- -------
Net Earnings $ 5,057 $ 4,836
======= =======
Weighted Average Number of Common Shares
Outstanding 17,327 17,286
Net Shares Assumed to be Issued
for Stock Options 414 396
------- -------
Weighted Average Number of Common Shares
and Common Equivalent Shares Outstanding 17,741 17,682
======= =======
Net Earnings per Common Share - Diluted $ .29 $ .27
======= =======
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule Contains Summary Financial Information Extracted From the Esterline
Technologies Corporation Consolidated Balance Sheet at January 31, 1999 and the
Related Consolidated Statements of Operations for the Nine Months then Ended and
is Qualified in its Entirety by Reference to Such Financial Statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 62,046
<SECURITIES> 0
<RECEIVABLES> 67,705
<ALLOWANCES> 2,752
<INVENTORY> 74,696
<CURRENT-ASSETS> 220,047
<PP&E> 209,050
<DEPRECIATION> 115,537
<TOTAL-ASSETS> 427,930
<CURRENT-LIABILITIES> 93,374
<BONDS> 123,727
0
0
<COMMON> 3,467
<OTHER-SE> 197,109
<TOTAL-LIABILITY-AND-EQUITY> 427,930
<SALES> 108,698
<TOTAL-REVENUES> 108,698
<CGS> 68,574
<TOTAL-COSTS> 68,574
<OTHER-EXPENSES> 30,608
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,543
<INCOME-PRETAX> 7,973
<INCOME-TAX> 2,916
<INCOME-CONTINUING> 5,057
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,057
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
<PAGE>
</TABLE>
