ESTERLINE TECHNOLOGIES CORP
10-K, EX-10.32, 2001-01-19
SPECIAL INDUSTRY MACHINERY, NEC
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CREDIT AGREEMENT

dated as of September 13, 2000

among

ESTERLINE TECHNOLOGIES CORPORATION

and

CERTAIN OF ITS SUBSIDIARIES THAT ARE PARTY HERETO,

BANK OF AMERICA, NATIONAL ASSOCIATION,

as Agent,

and

THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

Arranged by

BANC OF AMERICA SECURITIES LLC


TABLE OF CONTENTS

Section
    
   Page
ARTICLE I   DEFINITIONS   1

1.01
 
Certain Defined Terms
 
1
1.02   Other Interpretive Provisions   13
1.03   Accounting Principles   14

ARTICLE II
 
THE CREDITS
 
15

2.01
 
The Revolving Credit
 
15
2.02   Loan Accounts   15
2.03   Procedure for Borrowing   15
2.04   Conversion and Continuation Elections   16
2.05   Voluntary Termination or Reduction of Commitments   17
2.06   Optional Prepayments   17
2.07   Cash Collateralization; Mandatory Prepayments of Loans   18
2.08   Repayment   18
2.09   Interest   18
2.10   Fees   19
2.11   Computation of Fees and Interest   19
2.12   Payments by the Companies   19
2.13   Payments by the Banks to the Agent   20
2.14   Sharing of Payments, etc.   20

ARTICLE III
 
THE LETTERS OF CREDIT
 
21

3.01
 
The Letter of Credit Subfacility
 
21
3.02   Issuance, Amendment and Renewal of Letters of Credit   22
3.03   Existing Letters of Credit; Risk Participations, Drawings and Reimbursements   23
3.04   Repayment of Participations   25
3.05   Role of the Issuing Bank   25
3.06   Obligations Absolute   26
3.07   Cash Collateral Pledge   27
3.08   Letter of Credit Fees   27
3.09   Uniform Customs and Practice   27

ARTICLE IV
 
TAXES, YIELD PROTECTION AND ILLEGALITY
 
28

4.01
 
Taxes
 
28
4.02   Illegality   28
4.03   Increased Costs and Reduction of Return   29
4.04   Funding Losses   29
4.05   Inability to Determine Rates   30
4.06   Reserves on Offshore Rate Loans   30
4.07   Certificates of Banks   30
4.08   Survival   31

ARTICLE V
 
CONDITIONS PRECEDENT
 
31

5.01
 
Conditions of Initial Credit Extension
 
31
5.02   Conditions to All Credit Extensions   32

i


ARTICLE VI
 
REPRESENTATIONS AND WARRANTIES
 
33

6.01
 
Corporate Existence and Power
 
33
6.02   Corporate Authorization; No Contravention   33
6.03   Governmental Authorization   33
6.04   Binding Effect   33
6.05   Litigation   33
6.06   No Default   34
6.07   ERISA Compliance   34
6.08   Use of Proceeds; Margin Regulations   34
6.09   Title to Properties   34
6.10   Taxes   34
6.11   Financial Condition   35
6.12   Environmental Matters   35
6.13   Regulated Entities   35
6.14   No Burdensome Restrictions   35
6.15   Copyrights, Patents, Trademarks and Licenses, etc.   35
6.16   Subsidiaries   36
6.17   Insurance   36
6.18   Swap Obligations   36
6.19   Full Disclosure   36

ARTICLE VII
 
AFFIRMATIVE COVENANTS
 
36

7.01
 
Financial Statements
 
36
7.02   Certificates; Other Information   37
7.03   Notices   37
7.04   Preservation of Corporate and Partnership Existence, etc.   38
7.05   Maintenance of Property   39
7.06   Insurance   39
7.07   Payment of Obligations   39
7.08   Compliance with Laws; Joinder Agreements   39
7.09   Inspection of Property and Books and Records   40
7.10   Environmental Laws   40
7.11   Use of Proceeds   40

ARTICLE VIII
 
NEGATIVE COVENANTS
 
41

8.01
 
Limitation on Liens
 
41
8.02   Disposition of Assets   42
8.03   Consolidations and Mergers   43
8.04   Loans and Investments   43
8.05   Limitation on Indebtedness   44
8.06   Transactions with Affiliates   45
8.07   Use of Proceeds   45
8.08   Contingent Obligations   45
8.09   Restricted Payments   45
8.10   ERISA   46
8.11   Change in Business   46
8.12   Minimum Consolidated Net Worth   46
8.13   Maximum Leverage Ratio   47
8.14   Minimum Fixed Charge Coverage Ratio   47

ii


ARTICLE IX
 
EVENTS OF DEFAULT
 
47

9.01
 
Event of Default
 
47
9.02   Remedies   49
9.03   Rights Not Exclusive   49
9.04   Certain Financial Covenant Defaults   50

ARTICLE X
 
THE AGENT
 
50

10.01
 
Appointment and Authorization; "Agent"
 
50
10.02   Delegation of Duties   51
10.03   Liability of Agent   51
10.04   Reliance by Agent   51
10.05   Notice of Default   51
10.06   Credit Decision   52
10.07   Indemnification of Agent   52
10.08   Agent in Individual Capacity   52
10.09   Successor Agent   53
10.10   Withholding Tax   53

ARTICLE XI
 
MISCELLANEOUS
 
54

11.01
 
Amendments and Waivers
 
54
11.02   Notices   55
11.03   No Waiver; Cumulative Remedies   55
11.04   Costs and Expenses   55
11.05   Indemnity   56
11.06   Payments Set Aside   57
11.07   Successors and Assigns   57
11.08   Assignments, Participations, etc.   57
11.09   Confidentiality   59
11.10   Set-off   59
11.11   Notification of Addresses, Lending Offices, etc.   59
11.12   Termination of the Facility A Commitment under Existing Facility   59
11.13   Counterparts   60
11.14   Severability   60
11.15   No Third Parties Benefited   60
11.16   Governing Law and Jurisdiction   60
11.17   Waiver of Jury Trial   60
11.18   Guaranty   61
11.19   Entire Agreement   66

iii

SCHEDULES

A
 
Pricing Matrix
 
 
2.01   Commitments    
3.03   Existing Letters of Credit    
6.05   Litigation    
6.11   Financial Condition    
6.12   Environmental Matters    
6.16   Subsidiaries and Minority Interests    
6.17   Insurance Matters    
8.01(a)   Certain Permitted Liens    
8.05(b)   Certain Permitted Indebtedness    
8.08(c)   Contingent Obligations    
11.02   Lending Offices; Addresses for Notices    

EXHIBITS

A
 
Form of Notice of Borrowing
 
 
B   Form of Notice of Conversion/Continuation    
C   Form of Compliance Certificate    
D   Form of Legal Opinion of Companies' Counsel    
E   Form of Assignment and Acceptance    
F   Form of Promissory Note    
G   Form of Joinder Agreement    

iv


CREDIT AGREEMENT

    This CREDIT AGREEMENT, dated as of September 13, 2000, is among ESTERLINE TECHNOLOGIES CORPORATION, a Delaware corporation ("Esterline"), the Borrower Subsidiaries (as hereinafter defined) (together with Esterline, collectively, the "Companies" and each, individually, a "Company"), the several financial institutions party to this Agreement (collectively, the "Banks" and individually called a "Bank"), and BANK OF AMERICA, NATIONAL ASSOCIATION, as the Issuing Bank (as defined below) and as agent for itself, the Banks and the Issuing Bank (in such capacity, the "Agent").

    WHEREAS each of the Companies (a) has requested that the Banks make available to it Loans (as hereinafter defined) on a committed revolving loan basis from time to time in an aggregate principal amount for all of the Companies not to exceed at any time outstanding the aggregate total of the Commitments (as hereinafter defined) as in effect from time to time, and (b) has requested that the Issuing Bank issue Letters of Credit (as hereinafter defined) for its account in an aggregate amount for all of the Companies not to exceed at any time the L/C Commitment (as hereinafter defined); and

    WHEREAS the Banks have agreed severally to make available to the Companies a revolving credit facility and the Issuing Bank has agreed to issue Letters of Credit, in each case upon the terms and conditions set forth in this Agreement;

    NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows:


ARTICLE I

DEFINITIONS

    As used herein:

1

2

3

4

5

6

7

8

9

10

Offshore Rate =   IBOR
1.00 - Eurodollar Reserve Percentage

11

12

    (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

13

    (b) The words "hereof," "herein," "hereunder" and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and subsection, Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

    (c)  (i) The term "documents" includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced.

    (d) Unless otherwise expressly provided herein: (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document; and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation.

    (e) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

    (f)  This Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms. Unless otherwise expressly provided, any reference to any action of the Agent or the Banks by way of consent, approval or waiver shall be deemed modified by the phrase "in its/their sole discretion."

    (g) This Agreement and the other Loan Documents are the result of negotiations among, and have been reviewed by counsel to, the Agent, the Companies, the Banks, the Issuing Bank and the other parties, and are the products of all parties. Accordingly, they shall not be construed against the Banks, the Issuing Bank or the Agent merely because of the Agent's or the Banks' or the Issuing Bank's involvement in their preparation.

    (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP; provided that, if any change in GAAP results in a change in the operation or calculation of any of Sections 8.12, 8.13, or 8.14 or any of the defined terms used therein, the Companies shall promptly notify the Agent thereof and, upon notice to Esterline by the Agent on behalf of the Majority Banks, compliance with any such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn upon instruction from the Majority Banks or such covenant is amended in a manner satisfactory to the Companies and the Majority Banks.

    (b) References herein to "fiscal year" and "fiscal quarter" refer to such fiscal periods of the Companies.

14


ARTICLE II

THE CREDITS

    Each Bank severally agrees, on the terms and conditions set forth herein, to make loans to the Companies from time to time on any Business Day during the period from the Closing Date to the Revolving Termination Date, in an aggregate amount not to exceed at any time outstanding the amount set forth on Schedule 2.01 (such amount as the same may be reduced under Section 2.05 or as a result of one or more assignments under Section 11.08, the Bank's "Commitment"); provided that, after giving effect to any Credit Extension: (a) the Effective Amount of all outstanding Loans and L/C Obligations together shall not at any time exceed the combined Commitments; and (b) the participation of any Bank in the Effective Amount of all L/C Obligations plus the Effective Amount of the Loans of such Bank shall not at any time exceed such Bank's Commitment. Within the limits of each Bank's Commitment, and subject to the other terms and conditions hereof, any Company may borrow under this Section 2.01, prepay under Section 2.06 and reborrow under this Section 2.01.

    Each of the Companies understands and agrees that the commitments of the "Banks" under the Existing Facility to make advances under the Existing Facility terminate, without necessity of further act of the parties, upon execution of this Agreement by the Companies. Each of the Companies confirms and acknowledges its obligations to pay all amounts due under the Existing Facility, and each covenants and agrees that the proceeds of the initial borrowings under this Agreement shall be used to pay all principal and accrued interest (if any) and other amounts due under the Existing Facility.

    The Loans made by each Bank and the Letters of Credit Issued by the Issuing Bank shall be evidenced by one or more accounts or records maintained by such Bank or the Issuing Bank, as the case may be, in the ordinary course of business. The accounts or records maintained by the Agent, each Bank and the Issuing Bank, shall be conclusive absent manifest error of the amount of the Loans made by the Banks to any Company and the Letters of Credit Issued for the account of any Company, and the interest and payments thereon. Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of any Company hereunder to pay any amount owing with respect to the Loans or any Letter of Credit. Upon the reasonable request of any Bank made through the Agent, the Loans made by such Bank may be evidenced by one or more Notes (instead of or in addition to loan accounts). Each such Bank shall endorse on the schedules annexed to its Note(s) the date, amount and maturity of each Loan made by it and the amount of each payment of principal made by any Company with respect thereto. The Companies irrevocably authorize each Bank to endorse its Note(s), and each Bank's record shall be conclusive absent manifest error; provided that the failure of a Bank to make, or an error in making, a notation thereon with respect to any Loan shall not limit or otherwise affect the obligations of any Company hereunder or under any such Note to such Bank.

    (a) Each Borrowing shall be made upon any Company's irrevocable written notice delivered to the Agent in the form of a Notice of Borrowing (which notice must be received by the Agent prior to 9:00 a.m. (San Francisco time) (i) three Business Days prior to the requested Borrowing Date, in the case of Offshore Rate Loans; and (ii) one Business Day prior to the requested Borrowing Date, in the case of Base Rate Loans, specifying:

15

provided that, with respect to any Borrowing to be made on the Closing Date, the Notice of Borrowing shall be delivered to the Agent not later than 11:00 a.m. (San Francisco time) at least one Business Day before the Closing Date and such Borrowing will consist of Base Rate Loans only; and provided further that if so requested by the Agent, all Borrowings during the first 60 days following the Closing Date shall have the same Interest Period and shall be Base Rate Loans or Offshore Rate Loans for Interest Periods no longer than one month.

    (b) The Agent will promptly notify each Bank of its receipt of any Notice of Borrowing and of the amount of such Bank's Pro Rata Share of that Borrowing.

    (c) Each Bank will make the amount of its Pro Rata Share of each Borrowing available to the Agent for the account of the Companies at the Agent's Payment Office by 11:00 a.m. (San Francisco time) on the Borrowing Date requested by the applicable Company in funds immediately available to the Agent. The proceeds of all such Loans will then be made available to the applicable Company by the Agent at such office by crediting the account of the Company requesting such Borrowing on the books of Bank of America with the aggregate of the amounts made available to the Agent by the Banks and in like funds as received by the Agent, or if requested by such Company, by wire transfer in accordance with written instructions provided to the Agent by such Company of such funds as received by the Agent, less customary fees for such wire transfer.

    (d) After giving effect to any Borrowing, unless the Agent shall otherwise consent, there may not be more than five (5) different Interest Periods in effect.

    (a) Any Company may, upon irrevocable written notice to the Agent in accordance with Section 2.04(b):

provided that, if at any time the aggregate amount of Offshore Rate Loans in respect of any Borrowing is reduced, by payment, prepayment, or conversion of part thereof to be less than $5,000,000, then such Offshore Rate Loans shall automatically convert into Base Rate Loans, and on and after such date the right of any Company to continue such Loans as, and convert such Loans into, Offshore Rate Loans shall terminate.

    (b) Any applicable Company shall deliver a Notice of Conversion/Continuation to be received by the Agent not later than 9:00 a.m. (San Francisco time) at least (i) three Business Days in advance of

16

the Conversion/Continuation Date, if the Loans are to be converted into or continued as Offshore Rate Loans; and (ii) one Business Day in advance of the Conversion/ Continuation Date, if the Loans are to be converted into Base Rate Loans, specifying:

    (c) If, upon the expiration of any Interest Period applicable to any Company's outstanding Offshore Rate Loans, any Company shall have failed to select timely a new Interest Period to be applicable to such Company's outstanding Offshore Rate Loans, as the case may be, or if any Default or Event of Default then exists, then the Companies shall be deemed to have elected to convert such Offshore Rate Loans into Base Rate Loans effective as of the expiration date of such Interest Period, and all conditions to such conversion shall be deemed to have been satisfied.

    (d) The Agent will promptly notify each Bank of its receipt of a Notice of Conversion/Continuation, or, if a timely notice is not provided by any Company, the Agent will promptly notify each Bank of the details of any automatic conversion. All conversions and continuations shall be made ratably according to the respective outstanding principal amounts of the Loans with respect to which the notice was given held by each Bank.

    (e) Unless the Majority Banks otherwise consent, during the existence of a Default or Event of Default, no Company may elect to have a Loan converted into or continued as an Offshore Rate Loan.

    (f)  After giving effect to any conversion or continuation of Loans, unless the Agent shall otherwise consent, there may not be more than five (5) different Interest Periods in effect.

    Any Company may, upon five Business Days' prior notice to the Agent, terminate the Commitments, or permanently reduce the Commitments by an aggregate minimum amount of $5,000,000 or any multiple of $1,000,000 in excess thereof; unless, after giving effect thereto and to any prepayments of Loans made on the effective date thereof, the then-outstanding principal amount of the Loans would exceed the amount of the combined Commitments then in effect. Once reduced in accordance with this Section 2.05, the Commitments may not be increased. Any reduction of the Commitments shall be applied to each Bank according to its Pro Rata Share. All accrued commitment fees to the effective date of any reduction or termination of Commitments shall be paid on the effective date of such reduction or termination.

    Subject to Section 4.04, any Company may, at any time or from time to time, upon irrevocable notice received by the Agent, in the case of Offshore Rate Loans, not less than three Business Days prior to the requested prepayment date, and, in the case of Base Rate Loans, not less than one Business Day prior to the requested prepayment date, ratably prepay Loans in whole or in part, in minimum amounts of $5,000,000 or any multiple of $1,000,000 in excess thereof. Such notice of prepayment shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid. The Agent will promptly notify each Bank of its receipt of any such notice, and of such Bank's Pro Rata Share of such prepayment. If such notice is given by any Company, such Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to each such date on the amount prepaid and any amounts required pursuant to Section 3.04.

17

    If on any date the Effective Amount of L/C Obligations exceeds the L/C Commitment, the Companies shall Cash Collateralize on such date the outstanding Letters of Credit in an amount equal to the excess of the maximum amount then available to be drawn under the Letters of Credit over the L/C Commitment. Subject to Section 4.04, if on any date after giving effect to any Cash Collateralization made on such date pursuant to the preceding sentence, the Effective Amount of all Loans and L/C Obligations together exceeds the combined Commitments, the Companies shall immediately, and without notice or demand, prepay the outstanding principal amount of the Loans and L/C Advances by an amount equal to the applicable excess.

    The Companies shall repay to the Banks on the Revolving Termination Date the aggregate principal amount of all Loans outstanding on such date.

    (a) Each Loan shall bear interest on the outstanding principal amount thereof from the applicable Borrowing Date at a rate per annum equal to the Offshore Rate or the Base Rate, as the case may be (and subject to a Company's right to convert to other Types of Loans under Section 2.04), plus the Applicable Margin.

    (b) Interest on each Loan shall be paid in arrears on each Interest Payment Date. Interest shall also be paid on the date of any prepayment of Loans under Section 2.06 or 2.07 for the portion of the Loans so prepaid and upon payment (including prepayment) in full thereof and, during the existence of any Event of Default, interest shall be paid on demand of the Agent at the request or with the consent of the Majority Banks.

    (c) Notwithstanding subsection (a) of this Section, during the existence of any Event of Default under Section 9.01(a), or 9.01(e), 9.01(k), 9.01(m), or under 9.01(c) as a consequence of the failure of the any of the Companies to observe or perform or cause to be observed or performed any term, covenant or agreement contained in Section 7.11 or Article VIII, or after acceleration, the Companies shall pay interest (after as well as before any entry of judgment thereon to the extent permitted by law) on the principal amount of all outstanding Obligations, at a rate per annum which is determined by adding two and one-half percent (2.50%) per annum to the Applicable Margin then in effect for such Loans and, in the case of Obligations not subject to an Applicable Margin, at a rate per annum equal to the Base Rate plus two and one-half percent (2.50%); provided that, on and after the expiration of any Interest Period applicable to any Offshore Rate Loan outstanding on the date of occurrence of such Event of Default or acceleration, the principal amount of such Loan shall, during the continuation of such Event of Default or after acceleration, bear interest at a rate per annum equal to the Base Rate plus two and one-half percent (2.50%). All such interest shall be payable upon demand.

    (d) Anything herein to the contrary notwithstanding, the obligations of any Company to any Bank hereunder shall be subject to the limitation that payments of interest shall not be required for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such payment by such Bank would be contrary to the provisions of any law applicable to such Bank limiting the highest rate of interest that may be lawfully contracted for, charged or received by such Bank, and in such event the Companies shall pay such Bank interest at the highest rate permitted by applicable law.

18

    (a)  Agency Fees.  The Companies shall pay an agency fee to the Agent for the Agent's own account, as required by the letter agreement between the Companies and the Agent dated as of July 19, 2000 (the "Fee Letter").

    (b)  Commitment Fees.  The Companies shall pay to the Agent for the account of each Bank a commitment fee on the average daily unused portion of such Bank's Commitment, computed on a quarterly basis in arrears on the last Business Day of each calendar quarter based upon the daily utilization for that quarter as calculated by the Agent, equal to such unused portion as so calculated multiplied by the Applicable Commitment Fee Percentage for such period. Such commitment fee shall accrue from the Closing Date to the Revolving Termination Date and shall be due and payable quarterly in arrears on the last Business Day of each quarter commencing on October 31, 2000 through the Revolving Termination Date, with the final payment to be made on the Revolving Termination Date; provided that, in connection with any reduction or termination of Commitments under Section 2.05, the accrued and unpaid commitment fee calculated for the period ending on such date shall also be paid on the date of such reduction or termination, with the following quarterly payment being calculated on the basis of the period from such reduction or termination date to such quarterly payment date. The commitment fees provided in this Section shall accrue at all times after the Closing Date, including at any time during which one or more conditions in Article V are not met.

    (c)  Utilization Premium.  For each day on which the Effective Amount of all L/C Obligations and Loans together exceeds thirty-three percent (33%) of the combined Commitments, the Companies shall pay to the Agent for the account of each Bank a utilization premium calculated by multiplying the Effective Amount of all L/C Obligations and Loans together on such day by the Applicable Utilization Premium Percentage. Such utilization premium shall accrue and be payable for all periods from the Closing Date until all Obligations are repaid in full (including at any time during which one or more conditions in Article V are not met) and shall be due and payable quarterly in arrears on the last Business Day of each quarter commencing on October 31, 2000 through the Revolving Termination Date (and thereafter, if the Obligations are not repaid in full on the Revolving Termination Date, upon demand); provided that, in connection with any reduction or termination of Commitments under Section 2.05, the accrued and unpaid utilization premium calculated for the period ending on such date shall also be paid on the date of such reduction or termination, with the following quarterly payment being calculated on the basis of the period from such reduction or termination date to such quarterly payment date.

    (a) All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America's "prime rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year). Interest and fees shall accrue during each period during which interest or such fees are computed from the first day thereof to the last day thereof.

    (b) Each determination of an interest rate by the Agent shall be conclusive and binding on the Companies and the Banks in the absence of manifest error.

    (a) All payments to be made by the Companies shall be made without set-off, recoupment or counterclaim. Except as otherwise expressly provided herein, all payments by the Companies shall be made to the Agent for the account of the Banks at the Agent's Payment Office, and shall be made in dollars and in immediately available funds, no later than 11:00 a.m. (San Francisco time) on the date

19

specified herein. The Agent will promptly distribute to each Bank its Pro Rata Share (or other applicable share as expressly provided herein) of such payment in like funds as received. Any payment received by the Agent later than 11:00 a.m. (San Francisco time) shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue.

    (b) Subject to the provisions set forth in the definition of "Interest Period" contained herein, whenever any payment is due on a day other than a Business Day, such payment shall be made on the following Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be.

    (c) Unless the Agent receives notice from a Company prior to the date on which any payment is due to the Banks that the Companies will not make such payment in full as and when required, the Agent may assume that the Companies have made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent the Companies have not made such payment in full to the Agent, each Bank shall repay to the Agent on demand such amount distributed to such Bank, together with interest thereon at the Federal Funds Rate for each day from the date such amount is distributed to such Bank until the date repaid.

    (a) Unless the Agent receives notice from a Bank on or prior to the Closing Date or, with respect to any Borrowing after the Closing Date, at least one Business Day prior to the date of such Borrowing, that such Bank will not make available as and when required hereunder to the Agent for the account of the Companies the amount of that Bank's Pro Rata Share of the Borrowing, the Agent may assume that each Bank has made such amount available to the Agent in immediately available funds on the Borrowing Date and the Agent may (but shall not be so required), in reliance upon such assumption, make available to the applicable Company or Companies on such date a corresponding amount. If and to the extent any Bank shall not have made its full amount available to the Agent in immediately available funds and the Agent in such circumstances has made available to the applicable Company or Companies such amount, that Bank shall on the Business Day following such Borrowing Date make such amount available to the Agent, together with interest at the Federal Funds Rate for each day during such period. A notice of the Agent submitted to any Bank with respect to amounts owing under this subsection (a) shall be conclusive, absent manifest error. If such amount is so made available, such payment to the Agent shall constitute such Bank's Loan on the date of Borrowing for all purposes of this Agreement. If such amount is not made available to the Agent on the Business Day following the Borrowing Date, the Agent will notify the Companies of such failure to fund and, upon demand by the Agent, the Companies shall pay such amount to the Agent for the Agent's account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Loans comprising such Borrowing.

    (b) The failure of any Bank to make any Loan on any Borrowing Date shall not relieve any other Bank of any obligation hereunder to make a Loan on such Borrowing Date, but no Bank shall be responsible for the failure of any other Bank to make the Loan to be made by such other Bank on any Borrowing Date.

    If, other than as expressly provided elsewhere herein, any Bank shall obtain on account of the Loans or L/C Advances made by it any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its Pro Rata Share (or other share contemplated hereunder), such Bank shall immediately (a) notify the Agent of such fact, and (b) purchase from the

20

other Banks such participations in the Loans or L/C Advances made by them as shall be necessary to cause such purchasing Bank to share the excess payment pro rata with each of them; provided that if all or any portion of such excess payment is thereafter recovered from the purchasing Bank, such purchase shall to that extent be rescinded and each other Bank shall repay to the purchasing Bank the purchase price paid therefor, together with an amount equal to such paying Bank's ratable share (according to the proportion of (i) the amount of such paying Bank's required repayment to (ii) the total amount so recovered from the purchasing Bank) of any interest or other amount paid or payable by the purchasing Bank in respect of the total amount so recovered. Each Company agrees that any Bank so purchasing a participation from another Bank may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 11.10) with respect to such participation as fully as if such Bank were the direct creditor of each Company in the amount of such participation. The Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Banks following any such purchases or repayments.


ARTICLE III

THE LETTERS OF CREDIT

    (a) On the terms and conditions set forth herein (i) the Issuing Bank agrees, (A) from time to time on any Business Day during the period from the Closing Date to the Revolving Termination Date to issue Letters of Credit for the account of an L/C Borrower, and to amend or renew Letters of Credit previously issued by it, in accordance with Sections 3.02(c) and 3.02(d), and (B) to honor drafts under the Letters of Credit; and (ii) the Banks severally agree to participate in Letters of Credit Issued for the account of each L/C Borrower; provided that the Issuing Bank shall not be obligated to Issue, and no Bank shall be obligated to participate in, any Letter of Credit if as of the date of and after giving effect to the Issuance of such Letter of Credit (the "Issuance Date") (1) the Effective Amount of all L/C Obligations exceeds (or would exceed) the L/C Commitment, (2) the Effective Amount of all L/C Obligations and Loans together exceeds (or would exceed) the combined Commitments, or (3) the participation of any Bank in the Effective Amount of all L/C Obligations plus the Effective Amount of the Loans of such Bank exceeds (or would exceed) such Bank's Commitment. Within the foregoing limits, and subject to the other terms and conditions hereof, each L/C Borrower's ability to obtain Letters of Credit shall be fully revolving, and, accordingly, each L/C Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit which have expired or which have been drawn upon and reimbursed.

    (b) The Issuing Bank is under no obligation to Issue any Letter of Credit if:

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    (a) Each Letter of Credit shall be issued upon the irrevocable written request of an L/C Borrower received by the Issuing Bank (with a copy sent by the related L/C Borrower to the Agent) at least four days (or such shorter time as the Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of issuance. Each such request for issuance of a Letter of Credit shall be by facsimile, confirmed immediately in an original writing, in the form of an L/C Application, and shall specify in form and detail satisfactory to the Issuing Bank: (i) the proposed date of issuance of the Letter of Credit (which shall be a Business Day); (ii) the face amount of the Letter of Credit; (iii) the expiry date of the Letter of Credit; (iv) the name and address of the beneficiary thereof; (v) the documents to be presented by the beneficiary of the Letter of Credit in case of any drawing thereunder; (vi) the full text of any certificate to be presented by the beneficiary in case of any drawing thereunder; and (vii) such other matters as the Issuing Bank may require.

    (b) At least two Business Days prior to the Issuance of any Letter of Credit, the Issuing Bank will confirm with the Agent (by telephone or in writing) that the Agent has received a copy of the L/C Application or L/C Amendment Application from an L/C Borrower and, if not, the Issuing Bank will provide the Agent with a copy thereof. Unless the Issuing Bank has received notice on or before the Business Day immediately preceding the date the Issuing Bank is to issue a requested Letter of Credit from the Agent (A) directing the Issuing Bank not to issue such Letter of Credit because such issuance is not then permitted under Section 3.01(a) as a result of the limitations set forth in clauses (1) through (3) thereof or Section 3.01(b)(ii); or (B) that one or more conditions specified in Article V are not then satisfied; then, subject to the terms and conditions hereof, the Issuing Bank shall, on the requested date, issue a Letter of Credit for the account of such L/C Borrower in accordance with the Issuing Bank's usual and customary business practices.

    (c) From time to time while a Letter of Credit is outstanding and prior to the Revolving Termination Date, the Issuing Bank will, upon the written request of an L/C Borrower received by the Issuing Bank (with a copy sent by the related L/C Borrower to the Agent) at least four (4) days (or such shorter time as the Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of amendment, amend any Letter of Credit issued by it. Each such request for amendment of a Letter of Credit shall be made by facsimile, confirmed immediately in an original writing, made in the form of an L/C Amendment Application and shall specify in form and detail

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satisfactory to the Issuing Bank: (i) the Letter of Credit to be amended; (ii) the proposed date of amendment of the Letter of Credit (which shall be a Business Day); (iii) the nature of the proposed amendment; and (iv) such other matters as the Issuing Bank may require. The Issuing Bank shall be under no obligation to amend any Letter of Credit if: (A) the Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms of this Agreement; or (B) the beneficiary of any such Letter of Credit does not accept the proposed amendment to the Letter of Credit. The Agent will promptly notify the Banks of the receipt by it of any L/C Application or L/C Amendment Application.

    (d) The Issuing Bank and the Banks agree that, while a Letter of Credit is outstanding and prior to the Revolving Termination Date, at the option of an L/C Borrower and upon the written request of an L/C Borrower received by the Issuing Bank (with a copy sent by the related L/C Borrower to the Agent) at least five days (or such shorter time as the Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of notification of renewal, the Issuing Bank shall be entitled to authorize the renewal of any Letter of Credit issued by it. Each such request for renewal of a Letter of Credit shall be made by facsimile, confirmed immediately in an original writing, in the form of an L/C Amendment Application, and shall specify in form and detail satisfactory to the Issuing Bank: (i) the Letter of Credit to be renewed; (ii) the proposed date of notification of renewal of the Letter of Credit (which shall be a Business Day); (iii) the revised expiry date of the Letter of Credit; and (iv) such other matters as the Issuing Bank may require. The Issuing Bank shall be under no obligation to renew any Letter of Credit if: (A) the Issuing Bank would have no obligation at such time to issue or amend such Letter of Credit in its renewed form under the terms of this Agreement; or (B) the beneficiary of any such Letter of Credit does not accept the proposed renewal of the Letter of Credit. If any outstanding Letter of Credit shall provide that it shall be automatically renewed unless the beneficiary thereof receives notice from the Issuing Bank that such Letter of Credit shall not be renewed, and if at the time of renewal the Issuing Bank would be entitled to authorize the automatic renewal of such Letter of Credit in accordance with this Section 3.02(d) upon the request of an L/C Borrower but the Issuing Bank shall not have received any L/C Amendment Application from such L/C Borrower with respect to such renewal or other written direction by such L/C Borrower with respect thereto, the Issuing Bank shall nonetheless be permitted to allow such Letter of Credit to renew, and the Companies and the Banks hereby authorize such renewal, and, accordingly, the Issuing Bank shall be deemed to have received an L/C Amendment Application from such L/C Borrower requesting such renewal.

    (e) The Issuing Bank may, at its election (or as required by the Agent at the direction of the Majority Banks), deliver any notices of termination or other communications to any Letter of Credit beneficiary or transferee, and take any other action as necessary or appropriate, at any time and from time to time, in order to cause the expiry date of such Letter of Credit to be a date not later than the Revolving Termination Date.

    (f)  This Agreement shall control in the event of any conflict with any L/C-Related Document (other than any Letter of Credit).

    (g) The Issuing Bank will also deliver to the Agent, concurrently or promptly following its delivery of a Letter of Credit, or amendment to or renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and complete copy of each such Letter of Credit or amendment to or renewal of a Letter of Credit.

    (a) On and after the Closing Date, the Existing Letters of Credit shall be deemed for all purposes, including for purposes of the fees to be collected pursuant to Sections 3.08(a) and 3.08(c), and reimbursement of costs and expenses to the extent provided herein, Letters of Credit outstanding

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under this Agreement and entitled to the benefits of this Agreement and the other Loan Documents, and shall be governed by the applications and agreements pertaining thereto and by this Agreement. Each Bank acknowledges and agrees that the Existing Letters of Credit constitute Letters of Credit outstanding under this Agreement on and as of the Closing Date. Each Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Issuing Bank on the Closing Date a participation in each such Letter of Credit and each drawing thereunder in an amount equal to the product of (i) such Bank's Pro Rata Share times (ii) the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively. For purposes of Section 2.01 and Section 2.10(b), the Existing Letters of Credit shall be deemed to utilize pro rata the Commitment of each Bank.

    (b) Immediately upon the Issuance of each Letter of Credit in addition to those described in Section 3.03(a), each Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Issuing Bank a participation in such Letter of Credit and each drawing thereunder in an amount equal to the product of (i) the Pro Rata Share of such Bank, times (ii) the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively. For purposes of Section 2.01, each Issuance of a Letter of Credit shall be deemed to utilize the Commitment of each Bank by an amount equal to the amount of such participation.

    (c) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the Issuing Bank will promptly notify the related L/C Borrower. Such L/C Borrower shall reimburse the Issuing Bank prior to 10:00 a.m. (San Francisco time), on each date that any amount is paid by the Issuing Bank under any such Letter of Credit (each such date, an "Honor Date"), in an amount equal to the amount so paid by the Issuing Bank. In the event any L/C Borrower fails to reimburse the Issuing Bank for the full amount of any drawing under any Letter of Credit by 10:00 a.m. (San Francisco time) on the Honor Date, the Issuing Bank will promptly notify the Agent and the Agent will promptly notify each Bank thereof, and the Companies shall be deemed to have requested that Base Rate Loans be made by each of the Banks to be disbursed on the Honor Date under such Letter of Credit, subject to the amount of the unutilized portion of the aggregate Commitments and subject to the conditions set forth in Section 5.02. Any notice given by the Issuing Bank or the Agent pursuant to this Section 3.03(c) may be oral if immediately confirmed in writing (including by facsimile), provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

    (d) Each Bank shall upon any notice pursuant to Section 3.03(c) make available to the Agent for the account of the Issuing Bank an amount in Dollars and in immediately available funds equal to its Pro Rata Share of the amount of the drawing, whereupon the participating Banks shall (subject to Section 3.03(e)) each be deemed to have made a Loan consisting of a Base Rate Loan to the Companies in that amount. If any Bank so notified fails to make available to the Agent for the account of the Issuing Bank the amount of such Bank's Pro Rata Share of the amount of the drawing by no later than 2:00 p.m. (San Francisco time) on the Honor Date, then interest shall accrue on such Bank's obligation to make such payment, from the Honor Date to the date such Bank makes such payment, at a rate per annum equal to the Federal Funds Rate in effect from time to time during such period. The Agent will promptly give notice of the occurrence of the Honor Date, but failure of the Agent to give any such notice on the Honor Date or in sufficient time to enable any Bank to effect such payment on such date shall not relieve such Bank from its obligations under this Section 3.03.

    (e) With respect to any unreimbursed drawing that is not converted into Loans consisting of Base Rate Loans to the Companies in whole or in part because of any Company's failure to satisfy the conditions set forth in Section 5.02 or for any other reason, the Companies shall be deemed to have incurred from the Issuing Bank an L/C Borrowing in the amount of such drawing, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at a rate per annum equal to the Base Rate plus two and one-half percent (2.50%), and each Bank's payment to

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the Issuing Bank pursuant to Section 3.03(d) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Bank in satisfaction of its participation obligation under this Section 3.03.

    (f)  Each Bank's obligation in accordance with this Agreement to make the Loans or L/C Advances, as contemplated by this Section 3.03, as a result of a drawing under a Letter of Credit, shall be absolute and unconditional and without recourse to the Issuing Bank and shall not be affected by any circumstance, including (i) any set-off, counterclaim, recoupment, defense or other right which such Bank may have against the Issuing Bank, any Company, any guarantor or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default, an Event of Default or a Material Adverse Effect; or (iii) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; provided that, without limiting any Bank's obligation to make L/C Advances hereunder, each Bank's obligation to make Loans under this Section 3.03 is subject to the conditions set forth in Section 5.02.

    (a) Upon (and only upon) receipt by the Agent for the account of the Issuing Bank of immediately available funds from any Company (i) in reimbursement of any payment made by the Issuing Bank under the Letter of Credit with respect to which any Bank has paid the Agent for the account of the Issuing Bank for such Bank's participation in the Letter of Credit pursuant to Section 3.03 or (ii) in payment of interest thereon, the Agent will pay to each Bank, in like funds as those received by the Agent for the account of the Issuing Bank, the amount of such Bank's Pro Rata Share of such funds, and the Issuing Bank shall receive and retain the amount of the Pro Rata Share of such funds of any Bank that did not so pay the Agent for the account of the Issuing Bank.

    (b) If the Agent or the Issuing Bank is required at any time to return to any Company, or to a trustee, receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any portion of the payments made by any Company (or any other Person) to the Agent for the account of the Issuing Bank pursuant to Section 3.04(a) in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Bank shall, on demand of the Agent, forthwith return to the Agent or the Issuing Bank the amount of its Pro Rata Share of any amounts so returned by the Agent or the Issuing Bank plus interest thereon from the date such demand is made to the date such amounts are returned by such Bank to the Agent or the Issuing Bank, at a rate per annum equal to the Federal Funds Rate in effect from time to time.

    (a) Each Bank and each L/C Borrower agree that, in paying any drawing under a Letter of Credit, the Issuing Bank shall not have any responsibility to obtain any document (other than any sight draft and certificates expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document.

    (b) No Agent-Related Person nor any of the respective correspondents, participants or assignees of the Issuing Bank shall be liable to any Bank for: (i) any action taken or omitted in connection herewith at the request or with the approval of the Banks (including the Majority Banks, as applicable); (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any L/C-Related Document.

    (c) Each L/C Borrower jointly and severally hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit, provided that this assumption is not intended to, and shall not, preclude any L/C Borrower's pursuit of such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. No

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Agent-Related Person, nor any of the respective correspondents, participants or assignees of the Issuing Bank, shall be liable or responsible for any of the matters described in clauses (i) through (vii) of Section 3.06; provided that, anything in such clauses to the contrary notwithstanding, an L/C Borrower may have a claim against the Issuing Bank, and the Issuing Bank may be liable to an L/C Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by such L/C Borrower which such L/C Borrower proves were caused by the Issuing Bank's willful misconduct or gross negligence or the Issuing Bank's willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing: (i) the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; and (ii) the Issuing Bank shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

    The obligations of each L/C Borrower under this Agreement and any L/C-Related Document to reimburse the Issuing Bank for a drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing under a Letter of Credit converted into Loans, shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and each such other L/C-Related Document under all circumstances, including the following:

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    Upon (a) the request of the Agent, (i) if the Issuing Bank has honored any full or partial drawing request on any Letter of Credit and such drawing has resulted in an L/C Borrowing hereunder, or (ii) if, as of the Revolving Termination Date, any Letters of Credit may for any reason remain outstanding and partially or wholly undrawn, or (b) the occurrence of the circumstances described in Section 2.07 requiring any L/C Borrower to Cash Collateralize Letters of Credit, then such L/C Borrower shall immediately Cash Collateralize or cause to be Cash Collateralized the L/C Obligations in an amount equal to such L/C Obligations. Such amount, when received by the Agent, shall be held by the Agent and maintained in blocked deposit accounts at Bank of America as Cash Collateral for reimbursement obligations of any and all of the L/C Borrowers in respect of the L/C Obligations and for the other Obligations. Each of the Companies and each of the L/C Borrowers hereby grant to the Agent, for the benefit of the Agent, the Issuing Bank and the Banks, a security interest in all such cash, deposit accounts and deposit account balances. After payment in full of all L/C Obligations and the expiry of all Letters of Credit, the proceeds of any Cash Collateral shall be used to satisfy any other Obligations then outstanding. Each of the L/C Borrowers shall execute and cause to be executed such further agreements, documents and instruments and shall take and cause to be taken such further actions in connection with such Cash Collateralization as the Agent may reasonably request.

    (a) The Companies shall pay to the Agent for the account of each of the Banks a letter of credit fee based on the average daily maximum amount available to be drawn on outstanding Letters of Credit at a rate equal to the Applicable Margin for Offshore Rate Loans, adjusted as provided in the definition of "Applicable Margin," which fee shall be computed on a quarterly basis in arrears on the last Business Day of each calendar quarter based upon Letters of Credit outstanding for that quarter as calculated by the Agent. Such letter of credit fees shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter during which Letters of Credit are outstanding, commencing on the first such quarterly date to occur after the Closing Date, through the Revolving Termination Date (or such later date upon which the outstanding Letters of Credit shall expire), with the final payment to be made on the Revolving Termination Date (or such later expiration date, if any).

    (b) The Companies shall pay to the Issuing Bank a letter of credit fronting fee for each Letter of Credit Issued by the Issuing Bank equal to 0.125% per annum of the face amount (or increased face amount, as the case may be) of such Letter of Credit. Such Letter of Credit fronting fee shall be due and payable on each date of Issuance of a Letter of Credit.

    (c) Each L/C Borrower shall pay to the Issuing Bank from time to time on demand the normal issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the Issuing Bank relating to letters of credit as from time to time in effect.

    Unless otherwise expressly provided in any Letter of Credit, (a) the Uniform Customs and Practices for Documentary Credits as most recently published by the International Chamber of Commerce at the time of Issuance of any documentary Letter of Credit shall apply to such Letter of Credit and (b) the International Standby Practices 1998 most recently published by the Institute of

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International Banking Law & Practice, Inc. (or such later version thereof as may be then be in effect) at the time of Issuance of any standby Letter of Credit shall apply to such Letter of Credit.


ARTICLE IV

TAXES, YIELD PROTECTION AND ILLEGALITY

    (a) Any and all payments by any Company to each Bank or the Agent under this Agreement and any other Loan Document shall be made free and clear of, and without deduction or withholding for, any Taxes. In addition, the Companies shall pay all Other Taxes.

    (b) If any Company shall be required by law to deduct or withhold any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable hereunder to any Bank or the Agent, then:

    (c) The Companies agree to indemnify and hold harmless each Bank and the Agent for the full amount of (i) Taxes, (ii) Other Taxes, and (iii) Further Taxes in the amount that the respective Bank specifies as necessary to preserve the after-tax yield the Bank would have received if such Taxes, Other Taxes or Further Taxes had not been imposed, and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes, Other Taxes or Further Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30 days after the date the Bank or the Agent makes written demand therefor.

    (d) Within 30 days after the date of any payment by any Company of Taxes, Other Taxes or Further Taxes, the Companies shall furnish to each Bank or the Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to such Bank or the Agent.

    (e) If any Company is required to pay any amount to any Bank or the Agent pursuant to subsection (b) or (c) of this Section, then such Bank shall use reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its Lending Office so as to eliminate any such additional payment by the Companies which may thereafter accrue, if such change in the sole and absolute judgment of such Bank is not otherwise disadvantageous to such Bank.

    (a) If any Bank determines that the introduction of any Requirement of Law, or any change in any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for any Bank or its applicable Lending Office to make Offshore Rate Loans, then, on notice

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thereof by the Bank to the Companies through the Agent, any obligation of that Bank to make Offshore Rate Loans shall be suspended until the Bank notifies the Agent and the Companies that the circumstances giving rise to such determination no longer exist.

    (b) If a Bank determines that it is unlawful to maintain any Offshore Rate Loan, the Companies shall, upon its receipt of notice of such fact and demand from such Bank (with a copy to the Agent), prepay in full such Offshore Rate Loans of that Bank then outstanding, together with interest accrued thereon and amounts required under Section 4.04, either on the last day of the Interest Period thereof, if the Bank may lawfully continue to maintain such Offshore Rate Loans to such day, or immediately, if the Bank may not lawfully continue to maintain such Offshore Rate Loan. If any Company is required to so prepay any Offshore Rate Loan, then concurrently with such prepayment, the Companies shall borrow from the affected Bank, in the amount of such repayment, a Base Rate Loan.

    (c) If the obligation of any Bank to make or maintain Offshore Rate Loans has been so terminated or suspended, the Companies may elect, by giving notice to the Bank through the Agent that all Loans which would otherwise be made by the Bank as Offshore Rate Loans shall be instead Base Rate Loans.

    (a) If any Bank determines that, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance by that Bank with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to such Bank of agreeing to make or making, funding or maintaining any Loans or participating in Letters of Credit, or, in the case of the Issuing Bank, any increase in the cost to the Issuing Bank of agreeing to Issue, Issuing or maintaining any Letter of Credit or of agreeing to make or making, funding or maintaining any unpaid drawing under any Letter of Credit, then the Companies shall be liable for, and shall from time to time, upon demand (with a copy of such demand to be sent to the Agent), pay to the Agent for the account of such Bank or the Issuing Bank, additional amounts as are sufficient to compensate such Bank or such Issuing Bank for such increased costs.

    (b) If any Bank shall have determined that (i) the introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by the Bank (or its Lending Office) or any corporation controlling the Bank with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by the Bank or any corporation controlling the Bank and (taking into consideration such Bank's or such corporation's policies with respect to capital adequacy and such Bank's desired return on capital) determines that the amount of such capital is increased as a consequence of its Commitment, loans, credits or obligations under this Agreement, then, upon demand of such Bank to the Companies through the Agent, the Companies shall immediately pay to the Bank, from time to time as specified by the Bank, additional amounts sufficient to compensate the Bank for such increase.

    The Companies shall reimburse each Bank and hold each Bank harmless from any loss or expense which the Bank may sustain or incur as a consequence of:

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including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Offshore Rate Loans hereunder or from fees payable to terminate the deposits from which such funds were obtained. For purposes of calculating amounts payable by the Companies to the Banks under this Section and under Section 4.03(a), each Offshore Rate Loan made by a Bank (and each related reserve, special deposit or similar requirement) shall be conclusively deemed to have been funded at the IBOR used in determining the Offshore Rate for such Offshore Rate Loan by a matching deposit or other borrowing in the interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Offshore Rate Loan is in fact so funded.

    If the Agent determines that for any reason adequate and reasonable means do not exist for determining the Offshore Rate for any requested Interest Period with respect to a proposed Offshore Rate Loan, or that the Offshore Rate applicable pursuant to Section 2.09(a) for any requested Interest Period with respect to a proposed Offshore Rate Loan does not adequately and fairly reflect the cost to the Banks of funding such Loan, the Agent will promptly so notify the Companies and each Bank. Thereafter, the obligation of the Banks to make or maintain Offshore Rate Loans hereunder shall be suspended until the Agent upon the instruction of the Majority Banks revokes such notice in writing. Upon receipt of such notice, the Companies may revoke any Notice of Borrowing or Notice of Conversion/ Continuation then submitted by it. If the Companies do not revoke such Notice, the Banks shall make, convert or continue the Loans, as proposed by the Companies, in the amount specified in the applicable notice submitted by the Companies, but such Loans shall be made, converted or continued as Base Rate Loans instead of Offshore Rate Loans.

    The Companies shall pay to each Bank, as long as such Bank shall be required under regulations of the FRB to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as "Eurocurrency liabilities"), additional costs on the unpaid principal amount of each Offshore Rate Loan equal to the actual costs of such reserves allocated to such Loan by the Bank (as determined by the Bank in good faith, which determination shall be conclusive), payable on each date on which interest is payable on such Loan, provided the Companies shall have received at least 15 days prior written notice (with a copy to the Agent) of such additional costs from the Bank. If a Bank fails to give notice 15 days prior to the relevant Interest Payment Date, such additional interest shall be payable 15 days from receipt of such notice.

    Any Bank claiming reimbursement or compensation under this Article IV shall deliver to the Companies (with a copy to the Agent) a certificate setting forth in reasonable detail the amount

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payable to the Bank hereunder and such certificate shall be conclusive and binding on the Companies in the absence of manifest error.

    The agreements and obligations of the Companies in this Article IV shall survive the payment of all other Obligations.


ARTICLE V

CONDITIONS PRECEDENT

    The obligation of each Bank (including the Issuing Bank) to make its initial Credit Extension hereunder is subject to the condition that the Agent shall have received on or before the Closing Date all of the following, in form and substance satisfactory to the Agent and each Bank, and in sufficient copies for each Bank:

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provided that this Agreement shall not become effective or be binding on any party hereto unless each of the foregoing conditions is satisfied on or before September 15, 2000. The Agent shall promptly notify the Companies and the Banks of the Closing Date, and such notice shall be conclusive and binding on all parties hereto. The opinion referenced in Section 5.01(d) shall be dated as of the Closing Date; all other documents shall be dated as of a date reasonably near the Closing Date unless otherwise specified or the Agent shall otherwise agree.

    The obligation of each Bank to make any Loan to be made by it (including its initial Loan) or to continue or convert any Loan under Section 2.04 (other than pursuant to Section 2.04(c)) and the obligation of the Issuing Bank to Issue any Letter of Credit (including the initial Letter of Credit) is subject to the satisfaction of the following conditions precedent on the relevant Borrowing Date, Conversion/Continuation Date or Issuance Date:

Each Notice of Borrowing, Notice of Conversion/Continuation and L/C Application or L/C Amendment Application submitted by any Company hereunder shall constitute a representation and warranty by each of the Companies hereunder, as of the date of each such notice and as of each Borrowing Date, Conversion/Continuation Date or Issuance Date, as applicable, that the conditions in this Section 5.02 are satisfied.

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ARTICLE VI

REPRESENTATIONS AND WARRANTIES

    Each Company represents and warrants to the Agent and each Bank that:

    Each Company and each of its Subsidiaries: (a) is a corporation or partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation; (b) has the power and authority and all governmental licenses, authorizations, consents and approvals to own its assets, carry on its business and to execute, deliver, and perform its obligations under the Loan Documents; (c) is duly qualified as a foreign corporation or partnership and is licensed and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification or license except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (d) is in compliance with all Requirements of Law except to the extent to which the failure to comply would not reasonably be expected to have a Material Adverse Effect.

    The execution, delivery and performance by each Company of this Agreement and each other Loan Document to which each Company is party, have been duly authorized by all necessary corporate action, and do not and will not: (a) contravene the terms of any of such Company's Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, any document evidencing any Contractual Obligation to which any Company is a party or any order, injunction, writ or decree of any Governmental Authority to which any Company or its property is subject; or (c) violate any Requirement of Law.

    No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Company or any of its Subsidiaries of this Agreement or any other Loan Document.

    This Agreement and each other Loan Document to which any of the Companies is a party constitute the legal, valid and binding obligations of such Company, enforceable against such Company in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability.

    Except as specifically disclosed on Schedule 6.05, there are no actions, suits, proceedings, claims or disputes pending, or to the best knowledge of the Companies, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, against the Companies, or its Subsidiaries or any of their respective properties which: (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or thereby; or (b) if determined adversely to any Company or its Subsidiaries, would reasonably be expected to have a Material Adverse Effect. No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or

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performance of this Agreement or any other Loan Document, or directing that the transactions provided for herein or therein not be consummated as herein or therein provided.

    No Default or Event of Default exists or would result from the incurring of any Obligations by any Company. As of the Closing Date, none of the Companies nor any Subsidiary is in default under or with respect to any Contractual Obligation in any respect which, individually or together with all such defaults, could reasonably be expected to have a Material Adverse Effect, or that would, if such default had occurred after the Closing Date, create an Event of Default under Section 9.01(e).

    (a) As of the Closing Date, each Plan is in compliance with the applicable provisions of ERISA, the Code and other federal or state law except to the extent to which the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Plan which is intended to qualify under subsection 401(a) of the Code has received a favorable determination letter from the IRS and to the best knowledge of each Company, nothing has occurred which would cause the loss of such qualification. As of the Closing Date, each Company and each ERISA Affiliate has made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

    (b) As of the Closing Date, there are no pending or, to the best knowledge of each Company, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. As of the Closing Date, there has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect.

    (c) As of the Closing Date, (i) no ERISA Event has occurred or is reasonably expected to occur; and (ii) no event or circumstance has occurred or exists that, if such event or circumstance had occurred or arisen after the Closing Date, would create an Event of Default under Section 9.01(h).

    The proceeds of the Loans are to be used solely for the purposes set forth in and permitted by Section 7.11 and Section 8.07. None of the Companies nor any Subsidiary is generally engaged in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock.

    Each Company and each Subsidiary have good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of their respective businesses, except for such defects in title as could not, individually or in the aggregate, have a Material Adverse Effect. As of the Closing Date, the property of the Companies and their respective Subsidiaries is subject to no Liens other than Permitted Liens.

    The Companies and their respective Subsidiaries have filed all Federal and other material tax returns and reports required to be filed, and have paid all Federal and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties,

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income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against any Company or any Subsidiary that would, if made, have a Material Adverse Effect.

    (a) The audited consolidated financial statements of Esterline and its Subsidiaries dated October 31, 1999, and the related consolidated statements of income or operations, shareholders' equity and cash flows for the fiscal year ended on that date: (i) were prepared in accordance with GAAP; (ii) fairly present the financial condition of Esterline and its Subsidiaries as of the date thereof and results of operations for the period covered thereby; and (iii) except as specifically disclosed on Schedule 6.11, show all material indebtedness and other liabilities, direct or contingent, of Esterline and its consolidated Subsidiaries as of the date hereof, including liabilities for taxes, material commitments and Contingent Obligations required to be disclosed in accordance with GAAP.

    (b) Since October 31, 1999 (assuming that this Agreement were in effect on such date and thereafter), there has been no Material Adverse Effect.

    Each Company conducts in the ordinary course of business a review of the effect of existing Environmental Laws and existing Environmental Claims on its business, operations and properties, and as a result thereof each Company has reasonably concluded that, except as specifically disclosed on Schedule 6.12, such Environmental Laws and Environmental Claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

    None of the Companies, nor any Person controlling any Company, nor any Subsidiary is an "Investment Company" within the meaning of the Investment Company Act of 1940. No Company is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other Federal or state statute or regulation limiting its ability to incur Indebtedness.

    None of the Companies or any Subsidiary is a party to or bound by any Contractual Obligation, or subject to any restriction in any Organization Document, or any Requirement of Law, which could reasonably be expected to have a Material Adverse Effect.

    To the best of each Company's knowledge, each Company or its Subsidiaries own or are licensed or otherwise have the right to use all of the patents, trademarks, service marks, trade names, copyrights, contractual franchises, authorizations and other rights that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the best knowledge of each Company, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Company or any Subsidiary infringes upon any rights held by any other Person. Except as specifically disclosed on Schedule 6.05, no claim or litigation regarding any of the foregoing is pending or threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge of each Company, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect.

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    As of the Closing Date, no Company has any Subsidiaries other than those specifically disclosed in part (a) of Schedule 6.16 hereto, which shows the form of organization and ownership of each such Corporation, and has no equity investments in any other corporation or entity other than those specifically disclosed in part (b) of Schedule 6.16. Each Company other than Esterline is a Wholly Owned Subsidiary of Esterline.

    Except as specifically disclosed on Schedule 6.17, the properties of the Companies and their respective Subsidiaries are insured with financially sound and reputable insurance companies that are not Affiliates of any Company, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where any Company or such Subsidiary operates.

    None of the Companies or any Subsidiary has incurred any outstanding obligations under any Swap Contracts, other than Permitted Swap Obligations. Each Company has voluntarily entered into each Swap Contract to which it is a party based upon its own independent assessment of its consolidated assets, liabilities and commitments, in each case as an appropriate means of mitigating and managing risks associated with such matters, and has not relied on any swap counterparty or any Affiliate of any swap counterparty in determining whether to enter into any Swap Contract.

    To the best knowledge after due inquiry of any Responsible Officer of any of the Companies, none of the representations or warranties made by any Company or any Subsidiary in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in any exhibit, report, statement or certificate furnished by or on behalf of any Company or any Subsidiary in connection with the Loan Documents (including the offering and disclosure materials delivered by or on behalf of any Company to the Banks prior to the Closing Date), contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered.


ARTICLE VII

AFFIRMATIVE COVENANTS

    So long as any Bank shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks waive compliance in writing:

    The Companies shall deliver to the Agent, in form and detail satisfactory to the Agent and the Majority Banks, with sufficient copies for each Bank:

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    The Companies shall furnish to the Agent, with sufficient copies for each Bank:

    The Companies shall promptly notify the Agent and each Bank of:

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    Each notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein, and stating what action any Company or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under Section 7.03(a) shall describe with particularity any and all clauses or provisions of this Agreement or other Loan Document that have been (or foreseeably will be) breached or violated.

    Each Company shall, and shall cause each Subsidiary to:

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    Each Company shall maintain, and shall cause each Subsidiary to maintain, and preserve all its property which is used or useful in its business in good working order and condition, ordinary wear and tear excepted and make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. Each Company and each Subsidiary shall use the standard of care typical in the industry in the operation and maintenance of its facilities.

    Each Company shall maintain, and shall cause each Subsidiary to maintain, with financially sound and reputable independent insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.

    Each Company shall, and shall cause each Subsidiary to, pay and discharge as the same shall become due and payable, all their respective material obligations and liabilities, including: (a) all material tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by each Company or such Subsidiary; (b) all lawful material claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable (but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness), unless contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by each Company or such Subsidiary, except to the extent that the nonpayment thereof would not result in or reasonable be expected to result in a Material Adverse Effect.

    (a) Each Company shall comply, and shall cause each Subsidiary to comply, in all respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business or properties (including the Federal Fair Labor Standards Act), unless such noncompliance is being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by each Company or such Subsidiary with respect thereto, except to the extent any such noncompliance, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

    (b) If, at any time, the aggregate sales revenue of all Subsidiaries which are not Borrower Subsidiaries for the twelve consecutive calendar month period most recently ended exceeds ten percent (10%) of Esterline's consolidated sales revenue for its fiscal year immediately preceding such twelve consecutive calendar month period, then the Companies shall cause that number of such Persons to execute Joinder Agreements as is necessary so that, following the execution of such Joinder Agreements, the aggregate sales revenue of all Subsidiaries which are not Borrower Subsidiaries for the twelve consecutive calendar month period most recently ended is less than or equal to ten percent (10%) of Esterline's consolidated sales revenue for its fiscal year immediately preceding such twelve

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consecutive calendar month period. Any Joinder Agreement required pursuant to this Section 7.08(b) shall be executed and delivered to the Agent within fifteen (15) calendar days following the end of any such twelve month period.

    (c) If a Joinder Agreement is required to be executed and delivered pursuant to Section 7.08(b) or Section 8.04(e), each Company shall: (i) execute and cause the subject Person(s) to execute and deliver to the Agent a Joinder Agreement within the time period required by such Sections; and (ii) deliver or cause to be delivered, concurrently upon the delivery of such Joinder Agreement, such other documentation as the Agent may reasonably request in connection with the foregoing, which documentation may include certified resolutions and other organizational and authorizing documents of such Person(s) and a favorable opinion of counsel to such Person(s) which shall cover the legality, validity, binding effect and enforceability against such Person(s) of such Joinder Agreement and the other Loan Documents to which such Person(s) become(s) a party by virtue of such Joinder Agreement.

    Each Company shall maintain, and shall cause each Subsidiary to maintain, proper books of record and account, in which full, true and correct entries in conformity with GAAP shall be made of all financial transactions and matters involving the assets and business of each Company and such Subsidiary. Each Company shall permit, and shall cause each Subsidiary to permit, representatives and independent contractors of the Agent or any Bank to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Companies; provided that, when an Event of Default exists, the Agent or any Bank may do any of the foregoing at the expense of the Companies at any time during normal business hours and without advance notice.

    Each Company shall, and shall cause each Subsidiary to, conduct its operations and keep and maintain its property in compliance with all Environmental Laws, if any noncompliance, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

    The Companies shall use the proceeds of the Loans for working capital, other general corporate purposes and for non-hostile Acquisitions, in each case not in contravention of any Requirement of Law or of any Loan Document; provided that no Company shall directly or indirectly use the proceeds of the Loans for any Acquisition of any Person if such Acquisition has not been approved by the board of directors (or other body exercising similar authority) of such Person.

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ARTICLE VIII

NEGATIVE COVENANTS

    So long as any Bank shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks waive compliance in writing:

    The Companies shall not, and shall not suffer or permit any Subsidiary to, directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon or with respect to any part of its property, whether now owned or hereafter acquired, other than the following ("Permitted Liens"):

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    The Companies shall not, and shall not suffer or permit any Subsidiary to, directly or indirectly, sell, assign, lease, convey, transfer or otherwise dispose of (whether in one or a series of transactions) any property (including accounts and notes receivable, with or without recourse) or enter into any agreement to do any of the foregoing, except:

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    The Companies shall not, and shall not suffer or permit any Subsidiary to, liquidate, wind up or dissolve, or enter into any consolidation, merger or other combination, or agree to do any of the foregoing, except:

    The Companies shall not purchase or acquire, or suffer or permit any Subsidiary to purchase or acquire, or make any commitment therefor, any capital stock, equity interest, or any obligations or other securities of, or any interest in, any Person, or make or commit to make any Acquisitions, or make or commit to make any advance, loan, extension of credit or capital contribution to or any other investment in, or joint venture with, any Person including any Affiliate of any of the Companies (together, "Investments"), except for:

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    The Companies shall not, and shall not suffer or permit any Subsidiary to, create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness, except:

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    The Companies shall not, and shall not suffer or permit any Subsidiary to, enter into any transaction with any Affiliate of the Companies, except upon fair and reasonable terms no less favorable to such Company or such Subsidiary than would obtain in a comparable arm's-length transaction with a Person not an Affiliate of the Companies or such Subsidiary.

    (a) The Companies shall not, and shall not suffer or permit any Subsidiary to, use any portion of the Loan proceeds, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance indebtedness of the Companies or others incurred to purchase or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act.

    (b) The Companies shall not, directly or indirectly, use any portion of the Loan proceeds (i) knowingly to purchase Ineligible Securities from the Arranger during any period in which the Arranger makes a market in such Ineligible Securities, (ii) knowingly to purchase during the underwriting or placement period Ineligible Securities being underwritten or privately placed by the Arranger, or (iii) to make payments of principal or interest on Ineligible Securities underwritten or privately placed by the Arranger and issued by or for the benefit of any of the Companies or any Affiliate of the Companies. The Arranger is a registered broker-dealer and permitted to underwrite and deal in certain Ineligible Securities; and "Ineligible Securities"means securities that may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. §24, Seventh), as amended.

    The Companies shall not, and shall not suffer or permit any Subsidiary to, create, incur, assume or suffer to exist any Contingent Obligations except:

    The Companies shall not, and shall not suffer or permit any Subsidiary to, declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any shares of any class of its capital stock, or purchase, redeem or otherwise acquire for value any shares of its capital stock or any warrants, rights or options to acquire such shares, now or hereafter outstanding; except that any of the Companies may:

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    The Companies shall not, and shall not suffer or permit any of its ERISA Affiliates to: (a) engage in a prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan; (b) cause or permit any Plan which is qualified under subsection 401(a) of the Code to lose such qualification; or (c) fail to make all required contributions to any Plan subject to subsection 412 of the Code; but only to the extent that any such act or failure to act, separately or together with all other such acts or failures to act, in any of the foregoing clauses (a), (b) or (c) has resulted or could reasonably expected to result in liability of the Companies in an aggregate amount in excess of $1,000,000; or (d) engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA

    Except as permitted pursuant to Section 8.04, the Companies shall not, and shall not suffer or permit any Subsidiary to, engage in any material line of business substantially different from those lines of business carried on by the Companies and their respective Subsidiaries on the date hereof, including as a consequence of any Acquisition.

    The Companies shall not permit, as of the last day of any fiscal quarter, Consolidated Net Worth to be less than the sum of the following:

As used herein, "Net Securities Proceeds" means, with respect to any sale or issuance of equity securities (whether common or preferred, options, warrant or capital appreciation rights, but excluding any sales or issuances of stock pursuant to employee stock purchase plans, employee stock option plans or other employee benefit plans), the excess of (i) the gross cash and, to the extent acceptable to the Agent and the Majority Banks, noncash proceeds received or receivable by Esterline or any Subsidiary from such disposition minus (ii) the sum of (A) all reasonable Attorney Costs and underwriting and accounting fees and disbursements and government fees actually paid (or reasonably expected to be paid during the fiscal year in which such sale or issuance occurs) in connection with such sale or issuance which are not payable to Esterline or to any Affiliate of Esterline or any Subsidiary; (B) all taxes actually paid in connection with such sale or issuance; and (C) the value of such acceptable noncash proceeds.

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    The Companies shall not permit, as of the last day of any fiscal quarter, the Leverage Ratio to exceed 0.60 to 1.00.

    The Companies shall not permit, as of the last day of any fiscal quarter, the ratio of (a) the sum of (i) EBITDA, measured for the period consisting of the four consecutive fiscal quarters ending on such day, minus (ii) all taxes actually paid by the Companies (determined on a consolidated basis) in cash during such period, minus (iii) all Capital Expenditures actually made by the Companies (determined on a consolidated basis) during such period to (b) the sum of (i) interest expense, measured for the period consisting of the four consecutive fiscal quarters ending on such day, which was deductible in determining the Consolidated Net Income or Consolidated Net Loss, as applicable, for such period, plus the current portion (determined in accordance with GAAP) of Consolidated Funded Debt (such ratio, the "Fixed Charge Coverage Ratio"), to be less than: (A) on or prior to October 31, 2002, 1.75 to 1.00; and (B) thereafter, 2.00 to 1.00; provided that, if, as of the last day of any fiscal quarter, the Leverage Ratio is less than or equal to 0.50 to 1.00, then the Companies may exclude, for purposes of calculating the denominator of the Fixed Charge Coverage Ratio as of the last day of such fiscal quarter, the current portion (determined in accordance with GAAP) of the Consolidated Funded Debt of the Companies evidenced by the 1999 Senior Notes.


ARTICLE IX

EVENTS OF DEFAULT

    Any of the following shall constitute an "Event of Default":

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    If any Event of Default occurs, the Agent shall, at the request of, or may, with the consent of, the Majority Banks,

provided that, upon the occurrence of any event specified in subsection (f) or (g) of Section 9.01 (in the case of clause (i) of subsection (g) upon the expiration of the 60-day period mentioned therein), the obligation of each Bank to make Loans shall automatically terminate and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Agent or any Bank.

    The rights provided for in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising.

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    In the event that, after taking into account any extraordinary charge to earnings taken or to be taken as of the end of any fiscal period of any Company (a "Charge"), and if solely by virtue of such Charge, there would exist an Event of Default due to the breach of any of Sections 8.12, 8.13 or 8.14 as of such fiscal period end date, such Event of Default shall be deemed to arise upon the earlier of (a) the date after such fiscal period end date on which such Company announces publicly it will take, is taking or has taken such Charge (including an announcement in the form of a statement in a report filed with the SEC) or, if such announcement is made prior to such fiscal period end date, the date that is such fiscal period end date, and (b) the date such Company delivers to the Agent its audited annual or unaudited quarterly financial statements in respect of such fiscal period reflecting such Charge as taken.


ARTICLE X

THE AGENT

    (a) Each Bank hereby irrevocably (subject to Section 10.09) appoints, designates and authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" in this Agreement with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

    (b) The Issuing Bank shall act on behalf of the Banks with respect to any Letters of Credit Issued by it and the documents associated therewith until such time and except for so long as the Agent may agree at the request of the Majority Banks to act for such Issuing Bank with respect thereto; provided that the Issuing Bank shall have all of the benefits and immunities (i) provided to the Agent in this Article X with respect to any acts taken or omissions suffered by the Issuing Bank in connection with Letters of Credit Issued by it (including the Existing Letters of Credit) or proposed to be Issued by it and the application and agreements for letters of credit pertaining to the Letters of Credit as fully as if the term "Agent," as used in this Article X, included the Issuing Bank with respect to such acts or omissions, and (ii) as additionally provided in this Agreement with respect to the Issuing Bank.

    (c) Without limiting the generality of the foregoing subsections, the use of the term "agent" in this Agreement with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

    (d) The provisions of this Article X shall survive the payment of all Obligations hereunder and inure to the benefit of Bank of America, including after its resignation or replacement as the Agent, as to any actions taken or omitted to be taken by Bank of America while it was the Agent.

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    The Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care.

    None of the Agent-Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Banks for any recital, statement, representation or warranty made by any of the Companies or any Subsidiary or Affiliate of the Companies, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of the Companies or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of the Companies or any of their Subsidiaries or Affiliates.

    (a) The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Companies), independent accountants and other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Majority Banks as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Majority Banks and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Banks.

    (b) For purposes of determining compliance with the conditions specified in Section 4.01, each Bank that has executed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter either sent by the Agent to such Bank for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to the Bank.

    The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Agent for the account of the Banks, unless the Agent shall have received written notice from a Bank or a Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default." The Agent will notify the Banks of its

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receipt of any such notice. The Agent shall take such action with respect to such Default or Event of Default as may be requested by the Majority Banks in accordance with Article IX; provided that, unless and until the Agent has received any such request, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Banks.

    Each Bank acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by the Agent hereinafter taken, including any review of the affairs of the Companies and their respective Subsidiaries, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Bank. Each Bank represents to the Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and credit worthiness of the Companies and their respective Subsidiaries, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Companies hereunder. Each Bank also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and credit worthiness of the Companies and their respective Subsidiaries. Except for notices, reports and other documents expressly herein required to be furnished to the Banks by the Agent, the Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the business, prospects, operations, property, financial and other condition or credit worthiness of the Companies which may come into the possession of any of the Agent-Related Persons.

    Whether or not the transactions contemplated hereby are consummated, the Banks shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Companies and without limiting the obligation of the Companies to do so), pro rata, from and against any and all Indemnified Liabilities; provided that no Bank shall be liable for the payment to the Agent-Related Persons of any portion of such Indemnified Liabilities resulting from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Bank shall reimburse the Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Companies. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of the Agent.

    Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Companies and their respective Subsidiaries and Affiliates as though Bank of America were not the Agent hereunder and without notice to or

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consent of the Banks. The Banks acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding any of the Companies or their Affiliates (including information that may be subject to confidentiality obligations in favor of such Company or such Subsidiary) and acknowledge that the Agent shall be under no obligation to provide such information to them. With respect to its Loans, Bank of America shall have the same rights and powers under this Agreement as any other Bank and may exercise the same as though it were not the Agent, and the terms "Bank" and "Banks" include Bank of America in its individual capacity.

    The Agent may, and at the request of the Majority Banks shall, resign as Agent upon 30 days' notice to the Banks. If the Agent resigns under this Agreement, the Majority Banks shall appoint from among the Banks a successor agent for the Banks. If no successor agent is appointed prior to the effective date of the resignation of the Agent, the Agent may appoint, after consulting with the Banks and the Companies, a successor agent from among the Banks. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term "Agent" shall mean such successor agent and the retiring Agent's appointment, powers and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article X and Sections 11.04 and 11.05 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon become effective and the Banks shall perform all of the duties of the Agent hereunder until such time, if any, as the Majority Banks appoint a successor agent as provided for above.

    (a) If any Bank is a "foreign corporation, partnership or trust" within the meaning of the Code and such Bank claims exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such Bank agrees with and in favor of the Agent, to deliver to the Agent:

Such Bank agrees to promptly notify the Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

    (b) If any Bank claims exemption from, or reduction of, withholding tax under a United States tax treaty by providing IRS Form 1001 (or any successor applicable form, including Form W-8BEN) and such Bank sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of

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the Companies to such Bank, such Bank agrees to notify the Agent of the percentage amount in which it is no longer the beneficial owner of Obligations of the Companies to such Bank. To the extent of such percentage amount, the Agent will treat such Bank's IRS Form 1001 (or any successor applicable form, including Form W-8BEN) as no longer valid.

    (c) If any Bank claiming exemption from United States withholding tax by filing IRS Form 4224 (or any successor applicable form, including Form W-8ECI) with the Agent sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of the Companies to such Bank, such Bank agrees to undertake sole responsibility for complying with the withholding tax requirements imposed by Sections 1441 and 1442 of the Code.

    (d) If any Bank is entitled to a reduction in the applicable withholding tax, the Agent may withhold from any interest payment to such Bank an amount equivalent to the applicable withholding tax after taking into account such reduction. However, if the forms or other documentation required by subsection (a) of this Section are not delivered to the Agent, then the Agent may withhold from any interest payment to such Bank not providing such forms or other documentation an amount equivalent to the applicable withholding tax imposed by Sections 1441 and 1442 of the Code, without reduction.

    (e) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Bank (because the appropriate form was not delivered or was not properly executed, or because such Bank failed to notify the Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Bank shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section, together with all costs and expenses (including Attorney Costs). The obligation of the Banks under this subsection shall survive the payment of all Obligations and the resignation or replacement of the Agent.


ARTICLE XI

MISCELLANEOUS

    No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by the Companies or any applicable Subsidiary therefrom, shall be effective unless the same shall be in writing and signed by the Majority Banks (or by the Agent at the written request of the Majority Banks) and the Companies and acknowledged by the Agent, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no such waiver, amendment, or consent shall, unless in writing and signed by all the Banks and Companies and acknowledged by the Agent, do any of the following:

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provided further that (i) no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Majority Banks or all the Banks, as the case may be, affect the rights or duties of the Agent under this Agreement or any other Loan Document, and (ii) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed by the parties thereto.

    (a) All notices, requests, consents, approvals, waivers and other communications shall be in writing (including, unless the context expressly otherwise provides, by facsimile transmission, provided that any matter transmitted by the Companies by facsimile (i) shall be immediately confirmed by a telephone call to the recipient at the number specified on Schedule 11.02, and (ii) shall be followed promptly by delivery of a hard copy original thereof) and mailed, faxed or delivered, to the address or facsimile number specified for notices on Schedule 11.02; or, as directed to the Companies or the Agent, to such other address as shall be designated by such party in a written notice to the other parties, and as directed to any other party, at such other address as shall be designated by such party in a written notice to the Companies and the Agent.

    (b) All such notices, requests and communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next-day) delivery, or transmitted in legible form by facsimile machine, respectively, or if mailed, upon the third Business Day after the date deposited into the U.S. mail, or if delivered, upon delivery; except that notices pursuant to Article II or X to the Agent shall not be effective until actually received by the Agent.

    (c) Any agreement of the Agent and the Banks herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request of the Companies. The Agent and the Banks shall be entitled to rely on the authority of any Person purporting to be a Person authorized by any of the Companies to give such notice and the Agent and the Banks shall not have any liability to any of the Companies or other Person on account of any action taken or not taken by the Agent or the Banks in reliance upon such telephonic or facsimile notice. The obligation of the Companies to repay the Loans shall not be affected in any way or to any extent by any failure by the Agent and the Banks to receive written confirmation of any telephonic or facsimile notice or the receipt by the Agent and the Banks of a confirmation which is at variance with the terms understood by the Agent and the Banks to be contained in the telephonic or facsimile notice.

    No failure to exercise and no delay in exercising, on the part of the Agent or any Bank, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

    The Companies shall:

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    (a)  General Indemnity.  Whether or not the transactions contemplated hereby are consummated, the Companies shall indemnify, defend and hold the Agent-Related Persons, and each Bank and each of its respective officers, directors, employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time (including at any time following repayment of the Loans and the termination, resignation or replacement of the Agent or replacement of any Bank) be imposed on, incurred by or asserted against any such Person in any way relating to or arising out of this Agreement or any document contemplated by or referred to herein, or the transactions contemplated hereby, or any action taken or omitted by any such Person under or in connection with any of the foregoing, including with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to or arising out of this Agreement or the Loans or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); provided that the Companies shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities resulting solely from the gross negligence or willful misconduct of such Indemnified Person. The agreements in this Section shall survive payment of all other Obligations.

    (b)  Environmental Indemnity.  

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    (c)  Survival; Defense.  The obligations in this Section 11.05 shall survive payment of all other Obligations. At the election of any Indemnified Person, each of the Companies shall defend such Indemnified Person using legal counsel satisfactory to such Indemnified Person in such Person's sole discretion, at the sole cost and expense of the Companies.

    (d)  Existing Indemnification Rights.  All rights of the Agent and the Banks in respect of any indemnification and otherwise for reimbursement or payment of any losses, costs, charges, expenses or disbursements (including Attorney Costs) under or in respect of the Existing Facility shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

    To the extent that any of the Companies makes a payment to the Agent or the Banks, or the Agent or the Banks exercise their right of set-off, and such payment or the proceeds of such set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Agent or such Bank in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Bank severally agrees to pay to the Agent upon demand its pro rata share of any amount so recovered from or repaid by the Agent.

    The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that none of the Companies may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Agent and each Bank.

    (a) Any Bank may, with the written consent of the Agent and with the written consent of Esterline at all times other than during the existence of an Event of Default, which consent of Esterline, if required, shall not be unreasonably withheld, at any time assign and delegate to one or more Eligible Assignees (provided that no written consent of Esterline or the Agent shall be required in connection with any assignment and delegation by a Bank to an Eligible Assignee that is an Affiliate of such Bank) (each an "Assignee") all, or any ratable part of all, of the Loans, the Commitments and the other rights and obligations of such Bank hereunder, in a minimum amount of $5,000,000; provided that the Companies and the Agent may continue to deal solely and directly with such Bank in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee, shall have been given to Esterline and the Agent by such Bank and the Assignee; (ii) such Bank and its Assignee shall have delivered to Esterline and the Agent an Assignment and Acceptance in the form of Exhibit E ("Assignment and Acceptance") together with any Note or Notes subject to such assignment and (iii) the assignor Bank or Assignee has paid to the Agent a processing fee in the amount of $3,500. If the consent of the Agent and of Esterline shall be required for any such assignment, the Bank

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proposing to make such assignment shall give the Agent and Esterline no less than 20 calendar days notice of such requested consent.

    (b) From and after the date that the Agent notifies the assignor Bank that it has received (and provided its consent with respect to) an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under the Loan Documents.

    (c) Within five Business Days after its receipt of notice by the Agent that it has received an executed Assignment and Acceptance and payment of the processing fee and requesting new Notes (and provided that it consents to such assignment in accordance with Section 11.08(a)), the Companies shall execute and deliver to the Agent, new Notes evidencing such Assignee's assigned Loans and Commitment and, if the assignor Bank has retained a portion of its Loans and its Commitment, replacement Notes in the principal amount of the Loans retained by the assignor Bank (such Notes to be in exchange for, but not in payment of, the Notes held by such Bank). Immediately upon each Assignee's making its processing fee payment under the Assignment and Acceptance, this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Bank pro tanto.

    (d) Any Bank may, with the written consent of Esterline at all times other than during the existence of an Event of Default, which consent of Esterline, if required, shall not be unreasonably withheld, at any time sell to one or more commercial banks or other Persons not Affiliates of the Companies (a "Participant") participating interests in any Loans, the Commitment of that Bank and the other interests of that Bank (the "originating Bank") hereunder and under the other Loan Documents; provided that (i) the originating Bank's obligations under this Agreement shall remain unchanged, (ii) the originating Bank shall remain solely responsible for the performance of such obligations, (iii) the Companies and the Agent shall continue to deal solely and directly with the originating Bank in connection with the originating Bank's rights and obligations under this Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant any participating interest under which the Participant has rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment, consent or waiver would require unanimous consent of the Banks as pursuant to subsections (a), (b) or (c) of the first proviso to Section 11.01, in which event such Participant shall (if agreed by the originating Bank) be entitled to vote with respect to such amendment, consent or waiver. In the case of any such participation, the Participant shall be entitled to the benefit of Sections 4.01, 4.03 and 11.05 as though it were also a Bank hereunder, and if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Bank under this Agreement. If the consent of the Esterline shall be required for any such participation, the Bank proposing to make such participation shall give the Agent and Esterline no less than 20 calendar days notice of such requested consent.

    (e) Notwithstanding any other provision in this Agreement, any Bank may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement and the Note held by it in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR §203.14, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law.

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    Each Bank agrees to take and to cause its Affiliates to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information identified as "confidential" or "secret" by the Companies and provided to it by any of the Companies or any of their respective Subsidiaries, or by the Agent on such Company's or such Subsidiary's behalf, under this Agreement or any other Loan Document, and neither it nor any of its Affiliates shall use any such information other than in connection with or in enforcement of this Agreement and the other Loan Documents or in connection with other business now or hereafter existing or contemplated with any of the Companies or any of their respective Subsidiaries; except to the extent such information (i) was or becomes generally available to the public other than as a result of disclosure by the Bank, or (ii) was or becomes available on a nonconfidential basis from a source other than the Companies, so long as such source is not bound by a confidentiality agreement with the Companies known to the Bank; provided that any Bank may disclose such information (A)  at the request or pursuant to any requirement of any Governmental Authority to which the Bank is subject or in connection with an examination of such Bank by any such authority; (B) pursuant to subpoena or other court process; (C) when required to do so in accordance with the provisions of any applicable Requirement of Law; (D) to the extent reasonably required in connection with any litigation or proceeding to which the Agent, any Bank or their respective Affiliates may be party; (E) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Loan Document; (F) to such Bank's independent auditors and other professional advisors; (G) to any Participant or Assignee, actual or potential so long as such Person agrees in writing to keep such information confidential to the same extent required of the Banks hereunder; (H) as to any Bank or its Affiliate, as expressly permitted under the terms of any other document or agreement regarding confidentiality to which any of the Companies or any of their respective Subsidiaries is party to or is deemed party with such Bank or such Affiliate; and (I) to its Affiliates.

    In addition to any rights and remedies of the Banks provided by law, if an Event of Default exists or the Loans have been accelerated, each Bank is authorized at any time and from time to time, without prior notice to the Companies, any such notice being waived by the Companies to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Bank to or for the credit or the account of the Companies against any and all Obligations owing to such Bank, now or hereafter existing, irrespective of whether or not the Agent or such Bank shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured. Each Bank agrees promptly to notify the Companies and the Agent after any such set-off and application made by such Bank; provided that the failure to give such notice shall not affect the validity of such set-off and application.

    Each Bank shall notify the Agent in writing of any changes in the address to which notices to the Bank should be directed, of addresses of any Lending Office, of payment instructions in respect of all payments to be made to it hereunder and of such other administrative information as the Agent shall reasonably request.

    Pursuant to Section 2.05 of the Existing Facility, the Companies hereby terminate the Commitments (as that term is defined in the Existing Facility) as of the Closing Date, and the Banks that are "Banks" under the Existing Facility hereby waive the prior notice requirement in Section 2.05

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for such termination. The Company agrees to pay, on the date hereof, all accrued and unpaid commitment fees under the Existing Facility to the Closing Date.

    This Agreement may be executed in any number of separate counterparts, each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument.

    The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder.

    This Agreement is made and entered into for the sole protection and legal benefit of the Companies, the Banks, the Agent and the Agent-Related Persons, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents.

    (a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

    (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANIES, THE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANIES, THE AGENT AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANIES, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.

    THE COMPANIES, THE BANKS AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR

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OTHERWISE. THE COMPANIES, THE BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

    (a)  Guaranty.  Each of the Companies, in its capacity as a Guarantor, unconditionally and irrevocably guarantees to the Agent, the Issuing Bank and the Banks, and their respective successors, endorsees, transferees and assigns, the full and prompt payment when due (whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise) and performance of the Obligations of each Company (other than such Guarantor) to the Agent, the Issuing Bank and the Banks (the "Guaranteed Obligations"). The Guaranteed Obligations do not include any of the direct obligations or indebtedness of the Guarantor as a borrower (or an L/C Borrower) under the Credit Agreement to the Issuing Bank, any of the Banks or the Agent. The Guaranteed Obligations include interest which, but for an Insolvency Proceeding, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against any Company for such interest in any such Insolvency Proceeding.

    (b)  Separate Obligation.  Each Guarantor acknowledges and agrees (i) that the Guaranteed Obligations are separate and distinct from any indebtedness, obligations or liabilities arising under or in connection with any other agreement, instrument or guaranty, including under any provision of this Agreement other than this Section 11.18, executed at any time by the Guarantor in favor of the Agent, the Issuing Bank or any of the Banks, and (ii) the Guarantor shall pay and perform all of the Guaranteed Obligations as required under this Section 11.18, and the Agent, the Issuing Bank and the Banks may enforce any and all of their rights and remedies hereunder, without regard to any other agreement, instrument or guaranty, including any provision of this Agreement other than this Section 11.18, at any time executed by the Guarantor in favor of the Agent, the Issuing Bank or any of the Banks, regardless of whether or not any such other agreement, instrument or guaranty, or any provision thereof or hereof, shall for any reason become unenforceable or any of the indebtedness, obligations or liabilities thereunder shall have been discharged, whether by performance, avoidance or otherwise. Each Guarantor acknowledges that in providing benefits to the Companies and the Guarantor, the Agent, the Issuing Bank and the Banks are relying upon the enforceability of this Section 11.18 and the Guaranteed Obligations as separate and distinct indebtedness, obligations and liabilities of the Guarantor, and each Guarantor agrees that the Agent, the Issuing Bank and the Banks would be denied the full benefit of their bargain if at any time this Section 11.18 or the Guaranteed Obligations were treated any differently. The fact that the guaranty is set forth in this Agreement rather than in a separate guaranty document is for the convenience of the Companies and the Guarantors and shall in no way impair or adversely affect the rights or benefits of the Banks, the L/C Bank or the Agent under this Section 11.18. Each Guarantor agrees to execute and deliver a separate agreement, immediately upon request at any time of the Agent or any Bank, evidencing such Guarantor's obligations under this Section 11.18. Upon the occurrence of any Event of Default, a separate action or actions may be brought against the Guarantor, whether or not any other Company or any other guarantor or Person is joined therein or a separate action or actions are brought against any Company or any such other guarantor or Person.

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    (c)  Limitation of Guaranty.  To the extent that any court of competent jurisdiction shall impose by final judgment under applicable law (including the California Uniform Fraudulent Transfer Act and §§544 and 548 of the Bankruptcy Code) any limitations on the amount of the Guarantor's liability with respect to the Guaranteed Obligations which the Agent, the Issuing Bank or the Banks can enforce under this Section 11.18, the Agent, the Issuing Bank and the Banks by their acceptance hereof accept such limitation on the amount of the Guarantor's liability hereunder to the extent needed to make this Section 11.18 fully enforceable and nonavoidable.

    (d)  Liability of Guarantor.  The liability of the Guarantor under this Section 11.18 shall be irrevocable, absolute, independent and unconditional, and shall not be affected by any circumstance which might constitute a discharge of a surety or guarantor other than the indefeasible payment and performance in full of all Guaranteed Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows:

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    (e)  Consents of Guarantor.  Each Guarantor hereby unconditionally consents and agrees that, without notice to or further assent from the Guarantor:

    (f)  Guarantor's Waivers.  Each Guarantor waives and agrees not to assert:

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    (g)  Financial Condition of Borrower.  No Guarantor shall have any right to require the Agent, the Issuing Bank or the Banks to obtain or disclose any information with respect to: the financial condition or character of any Company or the ability of any Company to pay and perform the Guaranteed Obligations; the Guaranteed Obligations; any collateral or other security for any or all of the Guaranteed Obligations; the existence or nonexistence of any other guarantees of all or any part of the Guaranteed Obligations; any action or inaction on the part of the Agent, the Issuing Bank or the Banks or any other Person; or any other matter, fact or occurrence whatsoever. Each Guarantor hereby acknowledges that it has undertaken its own independent investigation of the financial condition of any Company and all other matters pertaining to this guaranty and further acknowledges that it is not relying in any manner upon any representation or statement of the Agent, the Issuing Bank or any Bank with respect thereto.

    (h)  Subrogation.  Until the Guaranteed Obligations shall be satisfied in full and the Commitments shall be terminated, the Guarantor shall not have, and shall not directly or indirectly exercise, (i) any rights that it may acquire by way of subrogation under this Section 11.18, by any payment hereunder or otherwise, (ii) any rights of contribution, indemnification, reimbursement or similar suretyship claims arising out of this Section 11.18 or (iii) any other right which it might otherwise have or acquire (in any way whatsoever) which could entitle it at any time to share or participate in any right, remedy or security of the Banks, the Issuing Bank or the Agent as against any Company or other guarantors, whether in connection with this Section 11.18, any of the other Loan Documents or otherwise. If any amount shall be paid to the Guarantor on account of the foregoing rights at any time when all the Guaranteed Obligations shall not have been paid in full, such amount shall be held in trust for the benefit of the Agent, the Issuing Bank and the Banks and shall forthwith be paid to the Agent to be credited and applied to the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms of the Loan Documents.

    (i)  Subordination.  All payments on account of all indebtedness, liabilities and other obligations of any of the Companies to the Guarantor, whether now existing or hereafter arising, and whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or undetermined (the "Subordinated Debt") shall be subject, subordinate and junior in right of payment and exercise of remedies, to the extent and in the manner set forth herein, to the prior payment in full in cash or cash equivalents of the Guaranteed Obligations. As long as any of the Guaranteed Obligations shall remain outstanding and unpaid, the Guarantor shall not accept or receive any payment or distribution by or on behalf of any Company, directly or indirectly, or assets of any Company, of any kind or character, whether in cash, property or securities, including on account of the purchase, redemption or other acquisition of Subordinated Debt, as a result of any collection, sale or other disposition of collateral, or by setoff, exchange or in any other manner, for or on account of the Subordinated Debt ("Subordinated Debt Payments"), except that prior to the occurrence of any Default, the Guarantor shall be entitled to accept and receive regularly scheduled payments on the Subordinated Debt, in accordance with past business practices of the Guarantor and the Companies and not in contravention of the terms of the Loan Documents.

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In the event that any Subordinated Debt Payments shall be received in contravention of this Section, such Subordinated Debt Payments shall be held in trust for the benefit of the Agent, the Issuing Bank and the Banks and shall be paid over or delivered to the Agent for application to the payment in full in cash or cash equivalents of all Guaranteed Obligations remaining unpaid to the extent necessary to give effect to this Section after giving effect to any concurrent payments or distributions to the Agent, the Issuing Bank and the Banks in respect of the Guaranteed Obligations.

    (j)  Continuing Guaranty.  This Guaranty is a continuing guaranty and agreement of subordination and shall continue in effect and be binding upon each Guarantor until termination of the Commitments and payment and performance in full of the Guaranteed Obligations, including Guaranteed Obligations which may exist continuously or which may arise from time to time under successive transactions, and each Guarantor expressly acknowledges that this Guaranty shall remain in full force and effect notwithstanding that there may be periods in which no Guaranteed Obligations exist. This Guaranty shall continue in effect and be binding upon each Guarantor until actual receipt by the Agent of written notice from such Guarantor of its intention to discontinue this Guaranty as to future transactions (which notice shall not be effective until noon on the day five Business Days following such receipt); provided that no revocation or termination of this Guaranty shall affect in any way any rights of the Agent, the Issuing Bank and the Banks hereunder with respect to any Guaranteed Obligations arising or outstanding on the date of receipt of such notice, including any subsequent continuation, extension, or renewal thereof, or change in the terms or conditions thereof, or any Guaranteed Obligations made or created after such date to the extent made or created pursuant to a legally binding commitment of any of the Issuing Bank or the Banks in existence as of the date of such revocation (collectively, "Existing Guaranteed Obligations"), and the sole effect of such notice shall be to exclude from this Guaranty Guaranteed Obligations thereafter arising which are unconnected to any Existing Guaranteed Obligations.

    (k)  Reinstatement.  This Guaranty shall continue to be effective or shall be reinstated and revived, as the case may be, if, for any reason, any payment of the Guaranteed Obligations by or on behalf of any Company (or receipt of any proceeds of collateral) shall be rescinded, invalidated, declared to be fraudulent or preferential, set aside, voided or otherwise required to be repaid to any Company, its estate, trustee, receiver or any other Person (including under the Bankruptcy Code or other state or federal law), or must otherwise be restored by the Agent, the Issuing Bank or any Bank, whether as a result of Insolvency Proceedings or otherwise. All losses, damages, costs and expenses that the Agent, the Issuing Bank or the Banks may suffer or incur as a result of any voided or otherwise set aside payments shall be specifically covered by the indemnity in favor of the Banks, the Issuing Bank and the Agent contained in Section 11.05.

    (l)  Substantial Benefits.  The funds that have been borrowed from the Banks by the Companies, and the Issuance of any Letter of Credit by the Issuing Bank, have been and are to be contemporaneously used for the benefit of the Companies and the Guarantor. It is the position, intent and expectation of the parties that the Companies and the Guarantor have derived and will derive significant and substantial benefits from the accommodations that have been made by the Banks and the Issuing Bank under the Loan Documents. The Guarantor has received at least "reasonably equivalent value" (as such phrase is used in §548 of the Bankruptcy Code, in §3439.04 of the California Uniform Fraudulent Transfer Act and in comparable provisions of other applicable law) and more than sufficient consideration to support its obligations hereunder in respect of the Guaranteed Obligations and under any of the Loan Documents to which it is a party. Immediately prior to and after and giving effect to the incurrence of the Guarantor's obligations under this Guaranty the Guarantor will be solvent.

    (m)  Knowing and Explicit Waivers.  EACH GUARANTOR ACKNOWLEDGES THAT IT EITHER HAS OBTAINED THE ADVICE OF LEGAL COUNSEL OR HAS HAD THE OPPORTUNITY TO OBTAIN SUCH ADVICE IN CONNECTION WITH THE TERMS AND

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PROVISIONS OF THIS SECTION 11.18. EACH GUARANTOR ACKNOWLEDGES AND AGREES THAT EACH OF THE WAIVERS AND CONSENTS SET FORTH HEREIN, ARE MADE WITH FULL KNOWLEDGE OF THEIR SIGNIFICANCE AND CONSEQUENCES, AND THAT ALL SUCH WAIVERS AND CONSENTS HEREIN ARE EXPLICIT AND KNOWING WHICH EACH GUARANTOR EXPECTS TO BE FULLY ENFORCEABLE.

If, while any Subordinated Debt is outstanding, any Insolvency Proceeding is commenced by or against any Company or its property, the Agent, when so instructed by the Issuing Bank and the Majority Banks, is hereby irrevocably authorized and empowered (in the name of the Issuing Bank and the Banks or in the name of the Guarantor or otherwise), but shall have no obligation, to demand, sue for, collect and receive every payment or distribution in respect of the Subordinated Debt and give acquittance therefor and to file claims and proofs of claim and take such other action (including voting the Subordinated Debt) as it may deem necessary or advisable for the exercise or enforcement of any of the rights or interests of the Agent the Issuing Bank and the Banks; and each Guarantor shall promptly take such action as the Agent (on instruction from the Issuing Bank and the Majority Banks) may reasonably request (A) to collect the Subordinated Debt for the account of the Issuing Bank and the Banks and to file appropriate claims or proofs of claim in respect of the Subordinated Debt, (B) to execute and deliver to the Agent, such powers of attorney, assignments and other instruments as it may request to enable it to enforce any and all claims with respect to the Subordinated Debt, and (C) to collect and receive any and all Subordinated Debt Payments.

    This Agreement, together with the other Loan Documents, embodies the entire agreement and understanding among the Companies, the Banks and the Agent, and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof.

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered in San Francisco, California by their proper and duly authorized officers as of the day and year first written above.

THE COMPANIES/THE GUARANTORS:

ESTERLINE TECHNOLOGIES CORPORATION
 
ADVANCED INPUT DEVICES CO.

By:
 
/s/ ROBERT D. GEORGE   
 
By:
 
/s/ ROBERT D. GEORGE   
Name:   Robert D. George   Name:   Robert D. George
Title:   Treasurer   Title:   Treasurer

ARMTEC DEFENSE PRODUCTS CO.
 
AUXITROL TECHNOLOGIES S.A.

By:
 
/s/ ROBERT D. GEORGE   
 
By:
 
/s/ ROBERT D. GEORGE   
Name:   Robert D. George   Name:   Robert D. George
Title:   Treasurer   Title:   Attorney-in-fact

EQUIPMENT SALES CO.
 
EXCELLON AUTOMATION CO.

By:
 
/s/ ROBERT D. GEORGE   
 
By:
 
/s/ ROBERT D. GEORGE   
Name:   Robert D. George   Name:   Robert D. George
Title:   Treasurer   Title:   Treasurer

HYTEK FINISHES CO.
 
KIRKHILL RUBBER CO.

By:
 
/s/ ROBERT D. GEORGE   
 
By:
 
/s/ ROBERT D. GEORGE   
Name:   Robert D. George   Name:   Robert D. George
Title:   Treasurer   Title:   Treasurer

KORRY ELECTRONICS CO.
 
MASON ELECTRIC CO.

By:
 
/s/ ROBERT D. GEORGE   
 
By:
 
/s/ ROBERT D. GEORGE   
Name:   Robert D. George   Name:   Robert D. George
Title:   Treasurer   Title:   Treasurer

MIDCON CABLES CO.
 
TA MFG. CO.

By:
 
/s/ ROBERT D. GEORGE   
 
By:
 
/s/ ROBERT D. GEORGE   
Name:   Robert D. George   Name:   Robert D. George
Title:   Treasurer   Title:   Treasurer

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W.A. WHITNEY CO.
 
 
 
 

By:
 
/s/ ROBERT D. GEORGE   
 
 
 
 
Name:   Robert D. George        
Title:   Treasurer        

THE AGENT, THE BANKS AND THE ISSUING BANK:

BANK OF AMERICA, NATIONAL ASSOCIATION,
as Agent, as Issuing Bank and as a Bank
 
 
 
 

By:
 
/s/ KEVIN LEADER   
 
 
 
 
Name:   Kevin Leader        
Title:   Managing Director        

U.S. BANK NATIONAL ASSOCIATION,
as a Bank
 
 
 
 

By:
 
/s/ JAMES R. FARMER   
 
 
 
 
Name:   James R. Farmer
        
Title:   Vice President
        

THE BANK OF NEW YORK,
as a Bank
 
 
 
 

By:
 
/s/ ELIZABETH T. YING   
 
 
 
 
Name:   Elizabeth T. Ying
        
Title:   Vice President
        

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as a Bank
 
 
 
 

By:
 
/s/ DONALD H. RALSTON   
 
 
 
 
Name:   Donald H. Ralston
        
Title:   Vice President
        

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Schedule A to Credit Agreement

Pricing Matrix

Level
   Consolidated Funded
Debt/EBITDA
   Commitment
Fee
Percentage
   Applicable
Margin
(Offshore Rate)
   Applicable
Margin
(Base Rate)
   Utilization
Premium
Percentage

1
 
Less than 1.50 to 1.00
 
30.0
 
100.0
 
00.0
 
12.5

2
 
Less than 2.00 to 1.00 but
greater than or equal to
1.50 to 1.00
 
35.0
 
112.5
 
00.0
 
12.5

3
 
Less than 2.50 to 1.00 but
greater than or equal to
2.00 to 1.00
 
40.0
 
125.0
 
00.0
 
12.5

4
 
Less than 3.00 to 1.00 but
greater than or equal to
2.50 to 1.00
 
45.0
 
150.0
 
00.0
 
25.0

5
 
Greater than or equal to
3.00 to 1.00
 
50.0
 
200.0
 
00.0
 
25.0


QuickLinks

TABLE OF CONTENTS
CREDIT AGREEMENT
ARTICLE I DEFINITIONS
ARTICLE II THE CREDITS
ARTICLE III THE LETTERS OF CREDIT
ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY
ARTICLE V CONDITIONS PRECEDENT
ARTICLE VI REPRESENTATIONS AND WARRANTIES
ARTICLE VII AFFIRMATIVE COVENANTS
ARTICLE VIII NEGATIVE COVENANTS
ARTICLE IX EVENTS OF DEFAULT
ARTICLE X THE AGENT
ARTICLE XI MISCELLANEOUS
Schedule A to Credit Agreement Pricing Matrix


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