EXHIBIT 10.1

AMENDMENT NO. 8 TO CREDIT AGREEMENT AND CONSENT

THIS AMENDMENT NO. 8 TO CREDIT AGREEMENT AND CONSENT (this “Amendment”), dated
as of April 30, 2010, is by and among ESTERLINE TECHNOLOGIES CORPORATION, a
Delaware corporation (the “Borrower”), the lenders party hereto and WELLS FARGO
BANK, NATIONAL ASSOCIATION (successor by merger to Wachovia Bank, National
Association), as Collateral Agent, Issuing Bank, Swingline Bank and
Administrative Agent (in such capacities, the “Administrative Agent”).

W I T N E S S E T H

WHEREAS, the Borrower, the lenders from time to time party thereto (the
“Lenders”) and the Administrative Agent are parties to that certain Credit
Agreement dated as of June 11, 2003 (as previously amended and as further
amended, modified, supplemented or restated from time to time, the “Existing
Credit Agreement”);

WHEREAS, the Borrower intends to restructure (a) certain operations in Canada as
set forth on Exhibit I (the “Canadian Restructuring Transactions”) and
(b) certain operations in France as set forth on Exhibit II attached hereto (the
“French Restructuring Transactions”, and together with the Canadian
Restructuring Transactions, collectively the “Restructuring Transactions”);

WHEREAS, the Borrower has requested certain amendments to the Credit Agreement
and requested that the Required Lenders consent to certain components of the
Restructuring Transactions; and

WHEREAS, the Required Lenders have agreed to such amendments and consented to
the Restructuring Transactions subject to the terms and conditions set forth
herein.

NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:

PART 1

CERTAIN DEFINITIONS

1.1      Certain Definitions.    Unless otherwise defined herein or the context
otherwise requires, the following terms used in this Amendment, including its
preamble and recitals, have the following meanings:

“Amended Credit Agreement” means the Existing Credit Agreement as amended
hereby.

“Amendment No. 8 Effective Date” has the meaning ascribed thereto in
Section 4.1.

1.2      Other Definitions.    Unless otherwise defined herein or the context
otherwise requires, terms used in this Amendment, including its preamble and
recitals, have the meanings provided in the Amended Credit Agreement.

PART 2

AMENDMENTS TO CREDIT AGREEMENT

 

 

Esterline Technologies Corporation

Amendment No. 8 to Credit Agreement and Consent

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2.1      Amendments to Section 2.01.    The following definitions are hereby
added to Section 1.01 of the Existing Credit Agreement in the appropriate
alphabetical order:

“Alberta” means Alberta ULC, a Canadian company.

“Amendment No. 8” means that certain Amendment No. 8 to Credit Agreement and
Consent dated as of April 30, 2010, among the Borrower, the Lenders and the
Administrative Agent.

“ECLP” means Esterline Canada Limited Partnership, a Canadian company.

“NewCanco” shall have the meaning set forth in Exhibit I to Amendment No. 8.

“NewCanco Creditor” has the meaning specified in Section 5.02(r).

“US LLC” shall have the meaning set forth in Exhibit I to Amendment No. 8.

2.2      Amendment to Section 5.02(r).    The lead in to Section 5.02(r) of the
Existing Credit Agreement is hereby amended to read as follows:

5.02(r)    Covenants Related to CMC Acquisition.    Except as contemplated by
the Canadian Restructuring Transactions, permit:

2.3      Amendment to Section 5.02.    A new clause (s) is hereby added to the
end of Section 5.02 of the Existing Credit Agreement to read as follows:

5.02(s)    Covenants Related to NewCanco.    Upon completion of the Canadian
Restructuring Transactions, permit:

(i)        NewCanco to incur any Debt other than Debt owed to another Subsidiary
of the Borrower (any such Subsidiary, a “NewCanco Creditor”);

(ii)      any NewCanco Creditor to incur any Debt other than Debt owed to a Loan
Party;

(iii)      NewCanco to hold any assets (other than the Equity Interests of
Alberta, ECLP and CMC) or conduct any business, operations or activities other
than those directly related to payments on Debt owed to a NewCanco Creditor;

(iv)      NewCanco to fail to own (A) 100% of the Equity Interests of Alberta at
any time, (B) 100% of the Equity Interests of CMC at any time and (C) 99.9% of
the Equity Interests of ECLP at any time, unless such interests are owned by the
Borrower or any other Loan Parties at such time;

(v)        unless such NewCanco Creditor is a Loan Party, any NewCanco Creditor
to hold any assets (other than the Debt owed by NewCanco) or conduct any
business, operations or activities other than those directly related to payments
on Debt owed to a Loan Party or Debt owed by NewCanco; or

 

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(vi)    the Equity Interests of NewCanco to be held by any Person other than US
LLC or any other Loan Parties, or the Equity Interests of any NewCanco Creditor
to be held by any Person other than a Loan Party.

2.4      Amendment to Section 5.02(e).    Section 5.02(e) is hereby amended by
adding the following clauses (viii) and (ix) to the end of such Section and by
making the necessary grammatical changes thereto:

(viii)    sales, transfers or other dispositions of assets among Subsidiaries
that are not Subsidiary Guarantors and other Subsidiaries that are not
Subsidiary Guarantors; and

(ix)       sales, transfers and dispositions of assets by any Subsidiary that is
not a Subsidiary Guarantor to the Borrower or any Subsidiary Guarantor.

PART 3

CONSENT

The Required Lenders hereby consent and the Administrative Agent approves (as
the case may be), on a one-time basis, to the Restructuring Transactions;
provided, that upon completion of the Restructuring Transactions:

(a)      None of the Restructuring Transactions shall be prohibited by the
Senior Subordinated Note Indenture or the 2007 Indenture.

(b)      All of the Canadian Restructuring Transactions shall have been
consummated by no later than November 30, 2010.

(c)      All of the French Restructuring Transactions shall have been
consummated by no later than June 30, 2012.

(d)      For purposes of the Canadian Restructuring Transactions set forth in
Section 1 of Exhibit I, (i) the guaranty of U.S. LLC (as successor to ECHC)
shall continue in full force and effect, and U.S. LLC shall continue to be a
Subsidiary Guarantor under the Credit Agreement, (ii) 100% of the Equity
Interests of U.S. LLC shall have been pledged to the Collateral Agent pursuant
to the terms of the Collateral Documents and (iii) the Administrative Agent
shall have received such organizational documents, legal opinions and other
items as it may reasonably request in connection therewith.

(e)      For purposes of the Canadian Restructuring Transactions set forth in
Section 2 of Exhibit I, (i) the consent of the Required Lenders to the
Investment in Alberta ULC shall be limited to the 0.1% ownership interest in
ECLP and (ii) the Administrative Agent shall have received such organizational
documents, legal opinions and other items as it may reasonably request in
connection therewith.

(f)      For purposes of the Canadian Restructuring Transactions set forth in
Section 4 of Exhibit I, (i) the consent of the Required Lenders to the
Investment in Alberta ULC shall be limited to the Investment consisting solely
of the ownership interests in Alberta ULC, ECLP and ECAS/CMC, (ii) 65% of the
Equity Interests of NewCanco shall have been pledged to the Collateral Agent
pursuant to the terms of the Collateral Documents and (iii) the Administrative
Agent shall have received such organizational documents, legal opinions and
other items (including Canadian legal opinions and collateral documents to the
extent requested by the Administrative Agent) as it may reasonably request in
connection therewith.

 

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(g)      For purposes of the Canadian Restructuring Transactions set forth in
Section 6 of Exhibit I, to the extent the Borrower shall own the Equity
Interests of NewCanco for greater than thirty (30) days prior to the transfer of
such Equity Interests to U.S. LLC, the Borrower shall have pledged 65% of the
Equity Interests of NewCanco to the Collateral Agent pursuant to the terms of
the Collateral Documents.

(h)      For purposes of the Canadian Restructuring Transactions set forth in
Section 7 of Exhibit I, (i) U.S. LLC shall pledge the Equity Interests it owns
in ECLP to the Collateral Agent and (ii) the Borrower shall pledge the Equity
Interests it owns in ECLP to the Collateral Agent, in each case pursuant to the
terms of the Collateral Documents.

(i)      For purposes of the Canadian Restructuring Transactions set forth in
Section 8 of Exhibit I, all payments or other consideration paid by U.S. LLC to
NewCanco in connection with the Subscription Agreement, the Debenture or
otherwise shall be promptly paid to the Borrower.

(j)      For purposes of the Canadian Restructuring Transactions set forth in
Section 8.5 of Exhibit I, 100% of the Equity Interests of U.S. LLC received by
the Borrower in connection with the Esterline Reinvestment Agreement shall be
promptly pledged to the Collateral Agent pursuant to the terms of the Collateral
Documents.

(k)      For purposes of the Canadian Restructuring Transactions set forth in
Section 8.6 of Exhibit I, 100% of the Equity Interests of NewCanco received by
U.S. LLC in connection with the U.S. LLC Reinvestment Agreement shall be
promptly pledged to the Collateral Agent pursuant to the terms of the Collateral
Documents (which shall include the delivery of any Canadian collateral documents
to the extent requested by the Administrative Agent).

(l)      For purposes of the Canadian Restructuring Transactions set forth in
Section 9 of Exhibit I, the consent of the Required Lenders to the transfer by
U.S. LLC of the ownership interest of ECLP to Alberta ULC shall be limited to
the transfer of 0.1% ownership interest in ECLP.

(m)      For purposes of the French Restructuring Transactions set forth in
Section 1 of Exhibit II, (i) ETD shall be dissolved on or before June 30, 2012,
(ii) 100% of the Equity Interests of ETHL (including, without limitation, those
received by ETD in connection with such transfer) shall have been pledged to the
Collateral Agent pursuant to the terms of the Collateral Documents and
(iii) upon the dissolution of ETD, all assets of ETD shall be distributed to the
Borrower.

(n)      For purposes of the French Restructuring Transactions set forth in
Section 2.1 of Exhibit II, 100% of the Equity Interests of EFH shall have been
pledged to the Collateral Agent pursuant to the terms of the Collateral
Documents.

(o)      For purposes of the French Restructuring Transactions set forth in
Section 2.6 of Exhibit II, (i) the consent of the Required Lenders to the
Investment by ETHL in EFH shall be limited to the Investment made on the
Amendment No. 8 Effective Date and shall not exceed USD $1,000,000 (the “Capital
Contribution”) and (ii) 100% of the proceeds of the Capital Contribution shall
be used to purchase the Equity Interests of (A) LIE France from Leach
International Corporation, (B) Auxitrol S.A. from ETHL and (C) ESS Asia from
EFH.

(p)      For purposes of the French Restructuring Transactions set forth in
Section 3.2 of Exhibit II, 100% of the proceeds of the EFH Loan shall be used to
acquire the ORA from Esterline.

 

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The consent set forth in this Part 3 shall be effective only to the extent
specifically set forth herein and shall not (a) be construed as a waiver of any
breach or default nor as a waiver of any breach or default of which the Lenders
have not been informed by the Borrower, (b) affect the right of the Lenders to
demand compliance by the Borrower and the other Loan Parties with all terms and
conditions of the Credit Agreement, except as specifically consented to pursuant
to the terms hereof, (c) be deemed a waiver of any transaction or future action
on the part of the Borrower or any other Loan Party requiring the Lenders’ or
the Required Lenders’ consent or approval under the Credit Agreement, or
(d) except as consented to and waived hereby, be deemed or construed to be a
waiver or release of, or a limitation upon, the Administrative Agent’s or the
Lenders’ exercise of any rights or remedies under the Credit Agreement or any
other Loan Document, whether arising as a consequence of any Event of Default
which may now exist or otherwise, all such rights and remedies hereby being
expressly reserved.

PART 4

CONDITIONS TO EFFECTIVENESS

4.1      Closing Conditions.

This Amendment shall become effective as of the date hereof (the “Amendment
No. 8 Effective Date”) upon satisfaction of the following conditions (in form
and substance reasonably acceptable to the Administrative Agent):

(a)      Executed Amendment.    Receipt by the Administrative Agent of a copy of
this Amendment duly executed by the Borrower and each of the Required Lenders
and acknowledged and agreed to by each Subsidiary Guarantor.

(b)      Expenses.    The Administrative Agent shall have received all expenses
of the Administrative Agent in connection with the preparation, execution and
delivery of this Amendment, including, without limitation, the fees and expenses
of Moore & Van Allen PLLC for which an invoice has been presented to the
Borrower.

(c)      Information.    The Administrative Agent shall not have become aware of
any material information or other matter that is inconsistent in a material and
adverse manner with any previous due diligence, information or matter (including
any financial information and projections previously delivered to the
Administrative Agent).

(d)      Other.    The Administrative Agent shall have received such other
documents, agreements or information which it may reasonably request relating to
the Loan Parties and the transactions contemplated by this Amendment and any
other matters relevant hereto or thereto, all in form and substance satisfactory
to the Administrative Agent.

 

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PART 5

MISCELLANEOUS

5.1      Amended Terms.    All references to the Credit Agreement in each of the
Loan Documents shall hereafter mean the Credit Agreement as amended by this
Amendment. Except as specifically amended hereby or otherwise agreed, the Credit
Agreement is hereby ratified and confirmed and shall remain in full force and
effect according to its terms.

5.2      Representations and Warranties.  Each Loan Party represents and
warrants as follows as of the date hereof:

(a)      It has taken all necessary action to authorize the execution, delivery
and performance of this Amendment.

(b)      This Amendment has been duly executed and delivered by such Loan Party
and constitutes such Loan Party’s valid and legally binding obligations,
enforceable in accordance with its terms, except as such enforceability may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).

(c)      No consent, approval, authorization or order of, or filing,
registration or qualification with, any Governmental Authority or third party is
required in connection with the execution, delivery or performance by such Loan
Party of this Amendment.

(d)      The representations and warranties set forth in Article IV of the
Credit Agreement are true and correct in all material respects as of the date
hereof (except for those which expressly relate to an earlier date).

(e)      There have been no changes to the organization documents (including, as
applicable, articles of incorporation, articles of formation, bylaws, operating
agreement or equivalent organizational documents) of any Subsidiary Guarantor
since the Amendment No. 7 Effective Date, other than amendments that could not
be reasonably expected to have a Material Adverse Effect or adversely affect the
rights and interests of the Lender Parties.

5.3      Loan Document.  This Amendment shall constitute a Loan Document under
the terms of the Credit Agreement.

5.4      Entirety.  This Amendment and the other Loan Documents embody the
entire agreement between the parties hereto and supersede all prior agreements
and understandings, oral or written, if any, relating to the subject matter
hereof.

5.5      Counterparts; Telecopy.    This Amendment may be executed in any number
of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
Delivery of an executed counterpart to this Amendment by telecopy shall be
effective as an original and shall constitute a representation that an original
will be delivered.

 

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5.6      GOVERNING LAW.      THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

5.7      Consent to Jurisdiction; Waiver of Jury Trial.    The jurisdiction and
waiver of jury trial provisions set forth in Sections 8.13 and 8.15 of the
Credit Agreement are hereby incorporated by reference, mutatis mutandis.

5.8      Fees.  The Borrower agrees to pay all fees and expenses of the
Administrative Agent in connection with the preparation, execution and delivery
of this Amendment, including, without limitation, the fees and expenses of
Moore & Van Allen PLLC.

[remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF the Borrower, the Lenders, and the Administrative Agent have
caused this Amendment to be duly executed on the date first above written.

 

BORROWER:  

ESTERLINE TECHNOLOGIES

CORPORATION,

     

  a Delaware corporation

     

 By:

 

  /s/ Robert D. George

 

   

 Name:

 

  Robert D. George

     

 Title:

 

  Vice President, Chief Financial Officer,

       

  Secretary and Treasurer

 

 

 

 

 

 

 

Esterline Technologies Corporation

Amendment No. 8 to Credit Agreement and Consent

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ADMINISTRATIVE AGENT,

COLLATERAL AGENT,

ISSUING BANK,

SWINGLINE BANK AND

        LENDER:    

 WELLS FARGO BANK,

 NATIONAL ASSOCIATION (successor by merger

 to Wachovia Bank, National Association),

   

 By:

 

  /s/ Russ Carson

 

   

 Name:

 

  Russ Carson

     

 Title:

 

 Vice President

 

 

 

 

 

 

 

Esterline Technologies Corporation

Amendment No. 8 to Credit Agreement and Consent

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LENDERS:   HSBC Bank USA, N.A.    

By:

 

  /s/ Simon Philp

   

Name:    Simon Philp

   

Title:    VP, Relationship Manager

    U.S. BANK NATIONAL ASSOCIATION    

By:

 

  /s/ Kurban H. Merchant

   

Name:    Kurban H. Merchant

   

Title:    Vice President

    THE BANK OF NEW YORK MELLON    

By:

 

  /s/ Robert Besser

   

Name:    Robert Besser

   

Title:    Vice President

    THE BANK OF NOVA SCOTIA, as a Lender    

By:

 

  /s/ Patrik G. Norris

   

Name:    Patrik G. Norris

   

Title:    Director

    BARCLAYS BANK PLC    

By:

 

  /s/ J. D. Oliver

   

Name:   J. D. Oliver

   

Title:    Relationship Director

    Bank of America, N.A.    

By:

 

  /s/ G. Scott Lambert

   

Name:    G. Scott Lambert

   

Title:    Vice President

    Commerzbank AG    

By:

 

  /s/ Matias Cruces

   

Name:    Matias Cruces

   

Title:    Vice President

   

By:

 

  /s/ Silke Soennecken

   

Name:    Silke Soennecken

   

Title:    Vice President

 

 

 

Esterline Technologies Corporation

Amendment No. 8 to Credit Agreement and Consent

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LENDERS:   JPMORGAN CHASE BANK, N.A.  

By:

 

  /s/ Matthew H. Massie

   

Name:   Matthew H. Massie

 

Title:    Managing Director

 

 

 

 

 

 

 

Esterline Technologies Corporation

Amendment No. 8 to Credit Agreement and Consent

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ACKNOWLEDGMENT AND CONSENT

The undersigned do hereby acknowledge and consent to the foregoing Amendment.
The undersigned do hereby confirm and agree that, after giving effect to such
Amendment, the Subsidiary Guaranty and each other Loan Document to which each of
the undersigned is a party is and shall continue to be in full force and effect
and is hereby confirmed and ratified in all respects.

 

ADVANCED INPUT DEVICES, INC.

ANGUS ELECTRONICS CO.

ARMTEC COUNTERMEASURES CO.

ARMTEC COUNTERMEASURES TNO CO.

ARMTEC DEFENSE PRODUCTS CO.

AVISTA, INCORPORATED

BVR TECHNOLOGIES CO.

CMC DATACOMM INC.

CMC ELECTRONICS ACTON INC.

CMC ELECTRONICS AURORA INC.

EA TECHNOLOGIES CORPORATION

ESTERLINE SENSORS SERVICES AMERICAS, INC.

(formerly known as Auxitrol Co.)

EQUIPMENT SALES CO.

H.A. SALES CO.

HAUSER, INC.

HYTEK FINISHES CO.

JANCO CORPORATION

KIRKHILL-TA CO.

KORRY ELECTRONICS CO.

LEACH HOLDING CORPORATION

LEACH INTERNATIONAL CORPORATION

LEACH TECHNOLOGY GROUP, INC.

MASON ELECTRIC CO.

MC TECH CO.

MEMTRON TECHNOLOGIES CO.

NORWICH AERO PRODUCTS, INC.

PALOMAR PRODUCTS, INC.

PRESSURE SYSTEMS, INC.

PRESSURE SYSTEMS INTERNATIONAL, INC.

UMM ELECTRONICS INC.

ESTERLINE CANADIAN HOLDING CORPORATION

ESTERLINE INTERNATIONAL COMPANY

NMC GROUP, INC.

RACAL ACOUSTICS, INC.

By:

 

  /s/ Robert D. George

Name:                Robert D. George

Its:                      Secretary

 

 

 

Esterline Technologies Corporation

Amendment No. 8 to Credit Agreement and Consent

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ESTERLINE TECHNOLOGIES HOLDINGS LIMITED

By:

 

  /s/ Robert D. George

Name:               Robert D. George

Its:                     Director

ESTERLINE TECHNOLOGIES LIMITED

By:

 

  /s/ Robert D. George

 

Robert D. George, Director

LEACH INTERNATIONAL MEXICO,

S. DE R.L. DE C.V.

By:

 

  /s/ Robert D. George

Name:  

Its:  

 

 

 

 

 

 

Esterline Technologies Corporation

Amendment No. 8 to Credit Agreement and Consent

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EXHIBIT I

Canadian Restructuring Plan

 

Esterline Technologies Corporation (“Esterline”) proposes to restructure certain
of its subsidiaries (with an emphasis on its Canadian subsidiaries) in order to
achieve tax benefits (the “Canadian Restructure”). References in this memorandum
to Esterline’s Credit Agreement are to the June 11, 2003 Credit Agreement that
was amended in its entirety on April 30, 2009 (the “Credit Agreement”). As used
in this memorandum, capitalized terms that are not otherwise defined herein
shall have the meanings given to them in the Credit Agreement and section
references are references to sections in the Credit Agreement unless otherwise
stated. Current and post-restructure organizational charts of Esterline and its
Canadian subsidiaries are depicted in Exhibit A and Exhibit B, respectively.
Many of the steps of the Canadian Restructure do not require consent of the
Lenders or the Administrative Agent. Esterline requests the consent the Required
Lenders and the Administrative Agent to the steps for which consent is required.

1.        CONVERSION OF ECHC TO U.S. LLC

      In Step 1 of the Canadian Restructure, Esterline Canadian Holding
Corporation (“ECHC”) would be converted into a U.S. limited liability company
(“U.S. LLC”). ECHC is a guarantor under the Credit Agreement and 100% of its
stock has been pledged as collateral to secure the obligations under the Credit
Agreement. Required Lender consent is requested for the conversion. U.S. LLC
would continue to guarantee the obligations of Esterline under the Credit
Agreement and the membership interests of U.S. LLC would be pledged as
collateral to secure the obligations under the Credit Agreement. It should be
noted that Section 11 of the Security Agreement precludes Esterline and the
Subsidiary Guarantors (including ECHC) from changing their names or types of
entities without providing the Administrative Agent at least 30 days prior
written notice and the taking of all actions required to maintain the perfection
of all security interests granted pursuant to the Security Agreement. Required
Lender consent is also requested to waive the 30-day notice.

2.        FORMATION OF ALBERTA ULC

      In Step 2 of the Canadian Restructure, U.S. LLC would form Alberta ULC,
which will be a disregarded entity for U.S. tax purposes. The intent is that
Alberta ULC would not become a Subsidiary Guarantor. Required Lender consent is
also requested to the formation of Alberta LLC. The value of the assets
transferred to Alberta ULC would not be significant given that according to the
step plan, its assets would be limited to a 0.1% ownership interest in the stock
of Esterline Canada Limited Partnership (see Step 9 below). Required Lender
consent is requested to form Alberta ULC, contribute a 0.1% ownership interest
in the stock of Esterline Canada Limited Partnership and to not pledge the
ownership units of Alberta ULC.

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3.         MODIFICATION OF ECLP PARTNERSHIP AGREEMENT

      In Step 3 of the Canadian Restructure, the partnership agreement of
Esterline Canada Limited Partnership (“ECLP”) would be modified to reflect that
income of ECLP is attributed to unit holders based upon the number of days
during the relevant period that they held units. Section 5.02(h) of the Credit
Agreement precludes Esterline and its subsidiaries from amending their
respective certificate of incorporation or bylaws or other constitutive or
governing documents other than amendments that could not be reasonably expected
to have a Material Adverse Effect or adversely affect the rights and interests
of the Lender Parties. It is assume that the proposed amendment would not have a
Material Adverse Effect or adversely affect the rights of the Lender Parties.
However, Required Lender consent is requested as an abundance of caution.

4.        FORMATION OF NEWCANCO

      In Step 4 of the Canadian Restructure, Esterline would form a new Canadian
corporation as a wholly owned subsidiary (“NewCanco”), which will be not be a
disregarded entity for U.S. tax purposes and therefore would not become a
Subsidiary Guarantor.

5.        TRANSFER OF ECAC TO NEWCANCO

      In Step 5 of the Canadian Restructure, Esterline would transfer 100% of
the stock of Esterline Canadian Acquisition Corporation (“ECAC”) to NewCanco in
exchange for the issuance of additional stock of NewCanco. Since NewCanco will
not be a Subsidiary Guarantor and given the value of NewCanco, Required Lender
consent to the equity contribution of ECAC by Esterline to NewCanco is
requested. It is assumed that this step would be characterized as a contribution
of ECAC stock by Esterline to the capital of NewCanco, as opposed to a sale of
assets under Section 5.02(e), but confirmation from the Required Lenders
requested. It should be noted that Esterline has pledged 65% of the stock of
ECAC to the Administrative Agent and Required Lender consent is requested for
the release of that pledge. The transfer of ECAC stock would also violate
Section 5.02(r)(vi), which requires that the stock of ECAC be held by Esterline.
Required Lender consent to this violation is requested. It is assumed that the
consent of the Required Lenders would be conditioned on the pledge of 65% of the
stock of NewCanco in order to replace the pledge of 65% of the stock of ECAC.
However, the pledge of 65% of the stock of NewCanco would be deferred until the
completion of Step 6 as described below since Step 6 is to occur on the same day
as Step 5.

6.        TRANSFER OF NEWCANCO TO U.S. LLC

In Step 6 of the Canadian Restructure, Esterline would transfer 100% of the
stock of NewCanco to U.S. LLC in exchange for the issuance of additional
ownership units of U.S. LLC. It is assumed that this step would be characterized
as a contribution of NewCanco stock by Esterline to the capital of U.S. LLC, as
opposed to a sale of assets under Section 5.02(e), but confirmation from the
Required Lenders is requested. Since U.S. LLC will be a Subsidiary Guarantor,
such transfer would be permitted under Section 5.02(f)(i)(B). As mentioned in
the discussion of Step 5, 65% of the stock of NewCanco would be pledged to the
Administrative Agent in order to replace the pledge of 65% of the stock of ECAC.

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7.        DISTRIBUTION BY U.S. LLC OF ECLP TO ESTERLINE

In Step 7 of the Canadian Restructure, U.S. LLC would distribute 9.9% of its 10%
ownership of the stock of ECLP to Esterline. Such distribution would presumably
constitute a “dividend” under the Credit Agreement and would be permitted by
Section 5.02(g). Since the ownership units of ECLP that are currently owned by
U.S. LLC have been pledged to the Administrative Agent, such pledge would have
to be released and Esterline would have to pledge to the Administrative Agent
the ownership units released.

8.        SALE OF ECLP BY ESTERLINE TO NEWCANCO          

 

8.1 Sale of ECLP and Issuance of Debenture

In Step 8 of the Canadian Restructure, Esterline would sell its 99.9% ownership
interest in ECLP to NewCanco at fair market value in exchange for a USD
denominated debenture in an amount equal to the USD equivalent of approximately
CAD $261,000,000 (the “Debenture”), approximately CAD $44,000,000 in stock of
NewCanco and other consideration.

(a)        To the extent that the Debenture is deemed to constitute “Debt” under
the Credit Agreement, it would be permitted pursuant to Section 5.02(b)(ii) of
the Credit Agreement, provided that such Debt (i) is on terms reasonably
acceptable to the Administrative Agent and (ii) is evidenced by promissory notes
in form and substance reasonably satisfactory to the Administrative Agent.
Administrative Agent approval is requested.

(b)        Required Lender consent is requested for the sale by Esterline of
99.9% of the ownership interests in ECLP to NewCanco.

(c)        Esterline would be expected to pledge 65% of the additional stock of
NewCanco issued to Esterline; provided, however, that the pledge of 65% of the
additional stock of NewCanco would be deferred until Step 11 as described below
is completed since Step 11 is to occur three days after Step 8

(d)        The acquisition by NewCanco from Esterline of 99.9% of the ownership
interests in ECLP would be permitted under Section 5.02(f)(i)(D) as an
investment by a non-guarantor subsidiary in another non-guarantor subsidiary.

(e)        Given the possible ambiguity over the nature of the Debenture,
Required Lender consent is requested for the possible future conversion of all
or portions of interest and principal of the Debenture into equity.

(f)        The Debenture would need to be pledged to the Administrative Agent as
security for the obligations of the Loan Parties under the Credit Agreement and
other Loan Documents as required by Sections 1, 4 and 8 of the Security
Agreement.

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8.2 Subscription Agreement

Concurrently with Step 8 of the Canadian Restructure, U.S. LLC and NewCanco
would enter into a subscription agreement (the “Subscription Agreement”),
whereby U.S. LLC would subscribe for stock of NewCanco in order to fund the
principal payments to Esterline under the Debenture. The subscription by
U.S. LLC would constitute an investment by a Subsidiary Guarantor in a
non-guarantor subsidiary and consequently Required Lender consent is requested.
In addition, 65% of any stock of NewCanco purchased by U.S. LLC would be pledged
as acquired.

 

8.3 Guarantee by Esterline

Concurrently with Step 8 of the Canadian Restructure, Esterline would guarantee
the obligations of U.S. LLC under the Subscription Agreement (the “Esterline
Guarantee”). This guarantee would be permitted by Section 5.02(b)(iii)(F), which
allows Contingent Obligations in respect of Debt or other obligations of a Loan
Party (which would include U.S. LLC).

 

8.4 Irrevocable Direction

Concurrently with Step 8 of the Canadian Restructure, NewCanco would direct
U.S. LLC to make payments under the Subscription Agreement directly to Esterline
to be applied by Esterline against the obligations of NewCanco under the
Debenture. The irrevocable direction is not prohibited by the Credit Agreement.

 

8.5 Preferred Stock Reinvestment Agreement - Esterline and U.S. LLC

Concurrently with Step 8 of the Canadian Restructure, Esterline and U.S. LLC
would enter into a preferred stock reinvestment agreement (the “Esterline
Reinvestment Agreement”), whereby Esterline would agree to transfer any
preferred stock in NewCanco that it receives under the Debenture in lieu of cash
to U.S. LLC in exchange for additional ownership units of U.S. LLC. It is
assumed that this step would be characterized as a contribution of NewCanco
preferred stock by Esterline to the capital of U.S. LLC, as opposed to a sale of
assets under Section 5.02(e), but confirmation from the Requested Lender is
requested. The contribution to the capital of U.S. LLC would constitute in an
Investment under the Credit Agreement that would be permitted by
Section 5.02(f)(i)(B) assuming that U.S LLC becomes a Subsidiary Guarantor. The
additional ownership units of U.S. LLC would have to be pledged to the
Administrative Agent and the 65% of additional stock of NewCanco would be
pledged to the Administrative Agent. A mechanism for the periodic pledging of
such equity interests should be established with the Administrative Agent.

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8.6 Preferred Stock Reinvestment Agreement - U.S. LLC and NewCanco

Concurrently with Step 8 of the Canadian Restructure, U.S. LLC and NewCanco
would enter into a preferred stock reinvestment agreement (the “U.S. LLC
Reinvestment Agreement”), whereby U.S. LLC would agree to transfer any preferred
stock in NewCanco that it receives under the Esterline Reinvestment Agreement in
exchange for common stock of NewCanco. This step essentially results in a trade
of preferred stock for common stock of NewCanco. It is assumed that this step
would be characterized as a contribution of NewCanco stock by Esterline to the
capital of U.S. LLC, as opposed to a sale of assets under Section 5.02(e), but
confirmation from the Required Lenders is requested. It is not clear whether
this step would be deemed to constitute an Investment by U.S. LLC under the
Credit Agreement, but Required Lender consent is requested. 65% of additional
stock of NewCanco would be pledged to the Administrative Agent. A mechanism for
the periodic pledging of such equity interests should be established with the
Administrative Agent.

 

8.7 Assignment for Security

Concurrently with Step 8 of the Canadian Restructure, NewCanco would assign to
Esterline, for security purposes, NewCanco’s rights under the Subscription
Agreement and the Esterline Guarantee. This assignment would not be precluded by
the Credit Agreement.

 

8.8 Escrow Agreement

Concurrently with Step 8 of the Canadian Restructure, NewCanco, U.S. LLC
Esterline and a third-party escrow agent would enter into an escrow agreement,
pursuant to which share certificates to be issued pursuant to the Subscription
Agreement are put into escrow. It should be noted that 65% of any stock of
NewCanco purchased by U.S. LLC pursuant to the Subscription Agreement would be
pledged as acquired and once release from escrow.

 

8.9 Interest Payments on Debentures

Interest on the Debentures will be payable in cash or, at the election of
NewCanco, the issuance of preferred stock of NewCanco to Esterline. In the event
interest is paid in preferred stock, the preferred stock would be transferred by
Esterline to U.S. LLC in exchange for ownership units of U.S. LLC pursuant to
the Esterline Reinvestment Agreement and the preferred stock of NewCanco would
be transferred by U.S. LLC to NewCanco in exchange for common stock of NewCanco.
See discussion in Sections 8.5 and 8.6 of this memorandum.

9.        TRANSFER OF 0.1% OF ECLP BY U.S. LLC TO ALBERTA ULC

In Step 9 of the Canadian Restructure, U.S. LLC would transfer 0.1% of the
ownership units of ECLP to Alberta ULC in exchange for the issuance of
additional stock of Alberta ULC. It is assumed that this step would be
characterized as a contribution of ECLP ownership units by U.S. LLC to the
capital of Alberta ULC, as opposed to a sale of assets under Section 5.02(e),
but confirmation from the Required Lenders is requested. Since Alberta ULC will
not become a Subsidiary Guarantor, Required Lender consent is requested for such
transfer.

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10.        TRANSFER OF ALBERTA ULC BY U.S. LLC TO NEWCANCO

In Step 10 of the Canadian Restructure, U.S. LLC would transfer 100% of the
stock of Alberta ULC to NewCanco in exchange for the issuance of additional
stock of NewCanco. It is assumed that this step would be characterized as a
contribution of Alberta ULC stock by U.S. LLC to the capital of NewCanco, as
opposed to a sale of assets under Section 5.02(e), but confirmation from the
Required Lenders is requested. Since NewCanco will not become a Subsidiary
Guarantor, Required Lender consent is requested for such transfer.

11.        TRANSFER OF NEWCANCO STOCK BY ESTERLINE TO U.S. LLC

In Step 11 of the Canadian Restructure, Esterline would transfer the stock of
NewCanco issued in connection with Step 8 to U.S. LLC in exchange for the
issuance of additional ownership units of U.S. LLC. It is assumed that this step
would be characterized as a contribution of NewCanco stock by Esterline to the
capital of U.S. LLC, as opposed to a sale of assets under Section 5.02(e), but
confirmation from the Required Lenders is requested. Since U.S. LLC would become
a Subsidiary Guarantor, such transfer would be permitted under
Section 5.02(f)(i)(B).

12.        PAYMENT OF ACCRUED INTEREST

In Step 12 of the Canadian Restructure, ECAC would pay accrued interest on its
indebtedness to ECLP. The payment of interest on inter-company debt is not
prohibited by the Credit Agreement.

13.        ECAC AMALGAMATION WITH CMC

In Step 13 of the Canadian Restructure, ECAC amalgamates with CMC, with CMC
being the surviving entity. It is assumed that an amalgamation under Canadian
law is a merger or consolidation under U.S. law, and accordingly, this step
would be permissible under Section 5.02(d)(ii) of the Credit Agreement, but
Required Lender consent is requested as an abundance of caution. The
amalgamation would violate Section 5.02(r)(iv) since the result of the
amalgamation would be that the stock of CMC would be owned by NewCanco.
Accordingly, Required Lender consent is requested for such violation.

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EXHIBIT A

Canadian Subsidiaries Current Structure

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EXHIBIT B

Canadian Subsidiaries Post-Restructure

 

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EXHIBIT II

French Restructuring Plan

Esterline Technologies Corporation (“Esterline”) proposes to restructure certain
of its subsidiaries (with an emphasis on its French subsidiaries) in order to
achieve tax benefits (the “French Restructure”). References in this memorandum
to Esterline’s Credit Agreement are to the June 11, 2003 Credit Agreement that
was amended in its entirety on April 30, 2009 (the “Credit Agreement”). As used
in this memorandum, capitalized terms that are not otherwise defined herein
shall have the meanings given to them in the Credit Agreement and section
references are references to sections in the Credit Agreement unless otherwise
stated. Current and post-restructure organizational charts of Esterline and its
French subsidiaries are depicted in Exhibit A and Exhibit B, respectively. Many
of the steps of the French Restructure do not require consent of the Lenders or
the Administrative Agent. Esterline requests the consent the Required Lenders
and the Administrative Agent to the steps for which consent is required. It
should be noted that each request for Required Lender approval would be without
the use of any investment or other baskets provided for in the Credit Agreement.

1.        TRANSFER OF ASSETS AND DISSOLUTION OF ETD

 

1.1 Transfer of ETD Assets

As a preliminary step of the French Restructure, Esterline Technologies Denmark
ApS (“ETD”) would transfer all of its assets to Esterline Technologies Holdings
Ltd. (“ETHL”), including its ownership interests in Auxitrol S.A., Auxitrol
Sensors Services Asia PTE Ltd. and ETL in exchange for shares of ETHL. It should
be noted that 100% of the shares of ETHL have been pledged to the Collateral
Agent. The ETHL shares that will be issued to ETD will be distributed to
Esterline and can again be pledged to the Collateral Agent once ETD is
dissolved. Section 5.02(e) of the Credit Agreement precludes Esterline and its
subsidiaries from transferring or otherwise disposing of assets with certain
exceptions, none of which apply to this proposed transfer. The transfer by ETD
to ETHL constitutes an Investment that would be permitted under
Section 5.02(f)(i)(B).

 

1.2 DISSOLUTION OF ETD

ETD would be dissolved in 2011 and the assets of ETD would be distributed to
Esterline. Although the dissolution of ETD does not seem to be precluded by the
Credit Agreement, the transfer of assets from ETD to Esterline is prohibited by
Section 5.02(e) and would require the consent of the Required Lenders.

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2.        TRANSFER OF ASSETS AND DISSOLUTION OF ETD

 

2.1 Creation of EFH

In Part I, Step 1 of the French restructure, ETHL would create Esterline French
Holdings SAS (“EFH”) as a wholly owned subsidiary. EFH would be disregarded for
U.S. federal income tax purposes, but would not become a Subsidiary Guarantor in
order to avoid issues related to the enforceability of guaranties from French
entities. Accordingly, to the extent that the creation of EFH would result in an
Investment under the Credit Agreement, such Investment would require the consent
of the Required Lenders. Since EFH will be a disregarded entity for tax
purposes, 100% of the equity interests of EFH could be pledged to the
Administrative Agent. Required Lender consent should be requested in order to
avoid using any Investment baskets in connection with the creation and transfer
of assets to EFH. The consent should be broad enough to allow EFH to directly
hold the following: 100% of the stock of Esterline French R&D SAS (“EF R&D”)
(see discussion in Section 2.2 below), 83% of the stock of Leach International
Europe S.A. (“LIE France”) (see discussion in Section 2.6 below), and 100% of
the stock of Auxitrol S.A. (see discussion in Section 2.7 below), and to receive
the cash contribution described in Section 2.5 below. The Required Lender
consent would not permit additional contributions to the capital of EFH without
the use of the Investment baskets provided for in Section 5.02(f)(i)(C) and
Section 5.02(f)(ix), except as described in Section 3.2 below as it relates to
the conversion of inter-company debt to equity.

 

2.2 Creation of French R&D SAS

Also in Part I, Step 1 of the French Restructure, EFH would create EF R&D as a
wholly owned subsidiary. EF R&D would not be a disregarded entity for U.S.
federal income tax purposes. The formation of EF R&D would be permitted by
Section 5.02(o). Required Lender consent is requested for the initial and future
Investment by EFH in EF R&D.

 

2.3 Complete Valuations

In Part I, Step 2 of the French Restructure, there would be a valuation of LIE
France and Auxitrol S.A. These valuations are not prohibited by the Credit
Agreement.

 

2.4 Loan from Esterline to ETHL

In Part I, Step 3 of the French Restructure, Esterline would make a short term
loan to ETHL (the “ETHL Loan”). ETHL would be permitted to obtain the ETHL Loan
pursuant to Section 5.02(b)(ii) provided that the ETHL Loan (a) is on terms
reasonably acceptable to the Administrative Agent and (b) is evidenced by a
promissory note in form and substance reasonably satisfactory to the
Administrative Agent. The ETHL Loan also constitutes an Investment by Esterline
in ETHL, which Investment would be permitted by Section 5.02(f)(i)(B).
Administrative Agent approval is requested of the terms of the ETHL Loan and the
form of promissory note evidencing the ETHL Loan.

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2.5 Contribution of Capital by ETHL to EFH

In Part I, Step 4 of the French Restructure, ETHL would make a capital
contribution of cash to EFH. Since EFH would not become a Subsidiary Guarantor
as described in Section 2.1 of this memorandum, consent of the Required Lenders
should be obtained in order to avoid using the Investment baskets for the cash
contribution.

 

2.6 Purchase of LIE Shares by EFH

In Part I, Step 5 of the French Restructure, the 83% of the shares of “LIE
France that are held by Leach International Corporation would be sold for cash.
Since the sale by Leach International Corporation would be for cash, the sale
would be permitted under Section 5.02(e)(v) so long as the sale price is for
fair market value and is less than or equal to $75,000,000. Required Lender
consent is requested for the purchase of LIE France shares by EFH.

 

2.7 Purchase of Auxitrol S.A. by EFH

Also in Part I, Step 5 of the French Restructure, ETHL would sell the 10.8% of
the shares of Auxitrol S.A. to EFH for cash. Since the sale by ETHL would be for
cash, the sale would be permitted under Section 5.02(e)(v) so long as the sale
price is for fair market value and is less than or equal to $75,000,000.
Required Lender consent is requested for the purchase of Auxitrol S.A. shares by
EFH.

 

2.8 Purchase of ESS Asia by EFH

In Part I, Step 6 of the French Restructure, ETHL would sell the 3% of the
shares of Auxitrol Sensors Services Asia PTE Ltd. (“ESS Asia”) to EFH for cash.
Since the sale by ETHL would be for cash, the sale would be permitted under
Section 5.02(e)(v) so long as the sale price is for fair market value and is
less than or equal to $75,000,000. Required Lender consent is requested for the
purchase of ESS Asia shares by EFH.

 

2.9 Contribution of ESS Asia Shares to Auxitrol S.A.

Also in Part I, Step 6 of the French Restructure, EFH would contribute its
shares in ESS Asia to Auxitrol S.A. Since Auxitrol S.A. cannot become a
Subsidiary Guarantor, Required Lender consent is requested for the equity
contribution by EFH to Auxitrol S.A.

 

2.10 Upstream of Cash

In Part I, Step 7 of the French Restructure, Leach International Corporation
would distribute cash to Leach Holding Corporation in the form of a dividend and
Leach Holding Corporation distributes cash to ETHL in the form of a dividend.
These upstream dividends payable to Loan Parties are permitted by
Section 5.02(g).

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2.11 Repayment of ETHL Loan

In Part I, Step 8 of the French Restructure, ETHL repays the ETHL Loan. This
step is not prohibited by the Credit Agreement.

 

2.12 Tax Consolidation

In Part I, Step 9 of the French Restructure, EFH, Auxitrol S.A. and EF R&D make
an election for tax consolidation. This step is not prohibited by the Credit
Agreement.

3.        REPLACEMENT OF ORA

 

3.1 Previous Transactions

As a result of past transactions, a hybrid debt instrument or convertible debt
(the “ORA”) in the initial principal amount of €45 million was issued by
Auxitrol Technologies, S.A. (“Auxitrol Tech”) to ETD. ETD transferred the ORA to
Esterline as partial payment of an inter-company loan from Esterline to ETD. The
obligations of Auxitrol Tech were assumed by Auxitrol S.A. by operation of law
when Auxitrol Tech was merged into Auxitrol S.A. on February 23, 2007. On
August 9, 2007, Esterline sold the interest receivable in the ORA to ETD in
exchange for a note payable to Esterline. ETD converted interest receivable on
the ORA into capital through a share capital increase in Auxitrol S.A. As
described in Part I, Step 2described in Section 1.2 above, ETD is to be
dissolved in 2011 and the assets of ETD will be distributed to Esterline.
Required Lender consent is requested for these past steps.

 

3.2 EFH Loan

In Part II, Step 1 of the French Restructure, EFH would obtain a long term Euro
denominated loan from Esterline (the “EFH Loan”). The EFH Loan would be
permitted pursuant to Section 5.02(b)(ii) of the Credit Agreement, with
Administrative Agent approval of (a) the terms of the EFH Loan and (b) the
Administrative Agent approves the form of promissory note evidencing the EFH
Loan. Administrative Agent approval is requested of the terms of the ETHL Loan
and the form of promissory note evidencing the ETHL Loan. Since EFH would not
become a Subsidiary Guarantor, Required Lender consent is requested in order to
permit Esterline to convert all or any portion of the EFH Loan (principal and
interest) to equity without the use of the Investment baskets.

 

3.3 Purchase of ORA by EFH

In Part II, Step 2 of the French Restructure, EFH would use the proceeds of the
EFH Loan to acquire the ORA from Esterline. Since EFH would not become a
Subsidiary Guarantor, the sale of the ORA would require the consent of the
Required Lenders.

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3.4 Contribution of ORA to Auxitrol S.A.

In Part II, Step 3 of the French Restructure, EFH would contribute the ORA to
the capital of Auxitrol S.A. Required Lender consent is requested for such
capital contribution.

 

3.5 Cancellation of ORA

In Part II, Step 4 of the French Restructure, Auxitrol S.A. would cancel the ORA
since it would then be the sole holder and sole obligor of the ORA. This step
would not be prohibited by the Credit Agreement.

4.        RESEARCH AND DEVELOPMENT EXPENDITURES

There are various incentives under French and UK law regarding related to
research and development costs and patents and patentable inventions. In order
to take advantage of such incentives, EF R&D will enter into a contract with
Weston Aerospace Limited (“Weston”) and Auxitrol S.A., whereby EF R&D will
manage all ongoing and future research and development projects for Weston and
Auxitrol S.A. and EF R&D would be the owner of patents and patentable inventions
that result from such work. EF R&D would license the intellectual property
derived from such research. Section 5.01(i) provides that Esterline shall
“Conduct, and cause each of its Subsidiaries to conduct, all transactions
otherwise permitted under the Loan Documents with any of their Affiliates on
terms that are fair and reasonable and no less favorable to the Borrower or such
Subsidiary than it would obtain in a comparable arm’s-length transaction with a
Person not an Affiliate.” So long as the agreements referred to above meet such
requirements, they would be permitted under the Credit Agreement.

5.        GROUP RELIEF – TAX RECEIVABLES

Although not specific to the French Restructure, Esterline and its subsidiaries
are seeking consent from the Required Lenders to, from time to time, convert to
equity principal and interest on inter-company debt incurred in connection with
tax receivables. Required Lender consent is requested for such conversions.

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EXHIBIT A

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EXHIBIT B

Esterline French Structure (Post-Restructure)

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