ESTERLINE TECHNOLOGIES CORP (Form: 10-K, Received: 12/17/2003 17:15:54)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended		October 31, 2003

[ ]

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

For the transition period from __________ to __________

Commission file number 1-6357

ESTERLINE TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)

Delaware	13-2595091
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

500 108 ^th Avenue NE Bellevue, Washington (Address of principal executive offices)	98004 (Zip code)

Registrant's telephone number, including area code	425/453-9400

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

Title of each class		Name of each exchange on which registered

Common Stock ($.20 par value)		New York Stock Exchange
Preferred Stock Purchase Rights		New York Stock Exchange

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

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

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). X Yes ______ No

<PAGE>

As of December 15, 2003, 21,074,928 shares of the Registrant's common stock were outstanding. The aggregate market value of shares of common stock held by non-affiliates as of May 2, 2003 was $377,594,689 (based upon the closing sales price of $18.10 per share).

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Annual Report to Shareholders for fiscal year ended October 31, 2003 - Parts I, II and IV.

Portions of Definitive Proxy Statement relating to the 2004 Annual Meeting of Shareholders, to be held on March 3, 2004 - Part III.

<PAGE> 2

PART I

This Report includes a number of forward-looking statements that reflect the Company's current views with respect to future events and financial performance. Please refer to the section addressing forward-looking information on page 11 for further discussion. In this report, "we," "our," "us," "Company," and "Esterline" refer to Esterline Technologies Corporation and subsidiaries, unless otherwise noted or context otherwise indicates.

Item 1. Business

(a) General Development of Business.

Esterline, a Delaware corporation formed in 1967, is a specialized manufacturing company principally serving aerospace and defense customers. We design, manufacture and market highly engineered products and systems for application within the industries we serve.

Our strategy is to maintain a leadership position in niche markets for the development and manufacture of highly engineered products that are essential to our customers. Our current business and strategic plan focuses on the continued development of these products in three key technology segments - avionics and controls, sensors and systems, and specialized high-performance elastomers and other complex materials, principally for aerospace and defense markets. Our products are often mission-critical equipment, which have been designed into particular military and commercial platforms and in certain cases can only be replaced by products of other manufacturers following a formal certification process.

Our products are found on most military and commercial aircraft, helicopters, and land-based systems. For example, our products are used on the majority of active and in-production U.S. military aircraft and on every Boeing commercial aircraft platform manufactured in the past 65 years. In addition, our products are supplied to Airbus, all of the major regional and business jet manufacturers, and the major aircraft engine manufacturers. We differentiate ourselves through our engineering and manufacturing capabilities and our reputation for quality, reliability, and innovation. We work closely with original equipment manufacturers ("OEMs") on new, highly engineered product designs which often results in our products being designed into their platforms; this integration often results in sole-source positions for OEM production and aftermarket business. In fiscal 2003, we estimate that 30% of our sales to commercial and military aerospace customers were derived from aftermarket business. Our aftermarket sales, including retrofits, spare parts, and repair services, historically carry a higher gross margin and have more stability than sales to OEMs. In many cases, aftermarket sales extend well beyond the OEM production period, supporting the platform during its entire life cycle.

Our sales are diversified across three broad markets: defense, commercial aerospace, and general industrial. For fiscal year 2002 and fiscal year 2003, we estimate that our sales were derived from each of these markets in the following approximate percentages:

<PAGE> 3

	Fiscal Year Ended October 25, 2002	Fiscal Year Ended October 31, 2003


Defense	40%	45%
Commercial aerospace	40%	35%
General industrial	20%	20%

In fiscal 2003, we completed three acquisitions in our Sensors & Systems segment at an aggregate cost of $111.7 million. For further information regarding these acquisitions, see Note 14 to the Company's Consolidated Financial Statements of the Annual Report to Shareholders for the fiscal year ended October 31, 2003. The Annual Report is included as Exhibit 13 to this report.

(b) Financial Information about Industry Segments.

A summary of net sales to unaffiliated customers, operating earnings and identifiable assets attributable to the Company's business segments for fiscal years 2003, 2002 and 2001 is reported in Note 15 to the Company's Consolidated Financial Statements of the Annual Report to Shareholders for the fiscal year ended October 31, 2003. The Annual Report is included as Exhibit 13 of this report.

(c) Narrative Description of Business.

Avionics & Controls

Our Avionics & Controls business segment focuses on technology interface systems for commercial and military aircraft and land- and sea-based military vehicles, and comparable products for secure communications systems, specialized medical equipment, and other industrial applications.

We develop, manufacture, and market sophisticated high-reliability technology interface systems for commercial and military aircraft. These products include lighted push-button and rotary switches, keyboards, lighted indicators, panels and displays that are used in a broad variety of control and display applications. They have been integrated into many existing aircraft designs, including every Boeing commercial aircraft platform currently in production. This large installed base provides us with a significant spare parts and retrofit business. In addition, we manufacture control sticks, grips and wheels, as well as specialized switching systems. In this area, we primarily serve commercial and military aviation, and airborne and ground-based military equipment manufacturing customers. For example, we are a leading manufacturer of pilot control grips for most types of military fighter jets and helicopters.

Our proprietary products meet critical operational requirements and provide customers with significant technological advantages in such areas as night vision compatibility (a technology enabling display screens to be read using night vision equipment), and backlighting for active-matrix liquid-crystal displays (a technology enabling pilots to read display screens in a variety of light conditions as well as from extreme angles). Our products are incorporated in a wide variety of programs including the AH-64 Apache and H-60 Black Hawk helicopters; the F-117 Nighthawk, C-17 Globemaster III, F-14 Tomcat, F-15 Eagle, F-16 Falcon, and F/A-18 Super Hornet fixed-wing military aircraft; Canadair regional jets; and Cessna, Gulfstream and Saab business jets. In fiscal 2003, some of our largest customers for these products included The Boeing Company, the U.S.

<PAGE> 4

Department of Defense, Smiths Industries, Honeywell, Lockheed Martin, Bombardier and United Technologies.

We are also a supplier of custom input integration with a full line of keyboard switch and input technologies for specialized medical equipment, communications systems and comparable equipment for military applications. These products include custom keyboards, keypads, and input devices that integrate cursor control devices, bar-code scanners, displays, laser pointers, and voice activation. We have developed a wide variety of technologies, including plastic and vinyl membranes that protect high-use switches and fully depressible buttons, and backlighted elastomer switch coverings that are resistant to exposure from harsh chemicals. These technologies now serve as the foundation for a small but growing portion of our product line. In fiscal 2003, some of our largest customers for these products included General Electric, Lockheed Martin, Siemens, Philips, IPC Information Systems, Benchmark Electronics and Dictaphone.

Sensors & Systems

Our Sensors & Systems business segment specializes in the development and manufacture of sensors and controls. We manufacture high-precision temperature and pressure sensing devices, fluid control components, micro-motors, motion control sensors, and other related systems used primarily in aerospace applications. For example, we are the sole-source supplier of temperature probes for use on all versions of the General Electric/Snecma CFM-56 jet engine. The CFM-56 has an installed base of over 13,000 engines, is standard equipment on new generation Boeing 737 aircraft and has been selected as the engine for approximately 40% of all Airbus aircraft delivered to date. In fiscal 2003, some of our largest customers for these products included Snecma, China National Energy Industry Corporation, the British Ministry of Defence, General Electric, BAE Systems, Goodrich and Air France.

Advanced Materials

Our Advanced Materials business segment specializes in the design and manufacture of high-performance elastomer products and in the manufacture of molded fiber cartridge cases, mortar increments, igniter tubing, other combustible ammunition components and electronic warfare countermeasure devices.

Our elastomer products are engineered to address specific customer requirements where superior performance in high temperature, high pressure, caustic, abrasive and other difficult environments is critical. These products include thermal fire barrier insulation products and precision metal components, seals, tubing and coverings designed in custom-molded shapes. Some of the products include proprietary elastomers that are specifically designed for use on or near a jet engine. We are a leading U.S. supplier of high-performance elastomer products to the aerospace industry, with our primary customers for these products being jet and rocket engine manufacturers, commercial and military airframe manufacturers, as well as commercial airlines. In fiscal 2003, some of the largest customers for these products included BAE Systems, Goodrich, The Boeing Company, Bombardier, General Electric, Honeywell, KAPCO, United Technologies, and Alliant Techsystems.

We develop and manufacture combustible ordnance components consisting of molded fiber cartridge cases, mortar increments, igniter tubing and other combustible ordnance components primarily for the U.S. Department of Defense. We are currently the sole supplier of combustible casings utilized by the U.S. Armed Forces. Sales are made either directly to the U.S. Department of Defense or through prime contractors, Alliant Techsystems and General Dynamics. These products include the

<PAGE> 5

combustible case for the U.S. Army's new generation 155mm Modular Artillery Charge System, the 120mm combustible case used with the main armament system on the U.S. Army's and Marine Corps' M1-A1/2 tanks, and the 60mm, 81mm and 120mm combustible mortar increments. We are also currently the only U.S. supplier of radar countermeasure chaff and a principal supplier to the U.S. Army of infrared decoy flares used by aircraft to help protect against radar and infrared guided missiles.

A summary of product lines contributing sales of 10% or more of total sales for fiscal years 2003, 2002 and 2001 is reported in Note 15 to the Consolidated Financial Statements of the Annual Report to Shareholders for the fiscal year ended October 31, 2003. The Annual Report is included as Exhibit 13 of this report.

Marketing and Distribution

We believe that a key to continued success is our ability to meet customer requirements both domestically and internationally. We have and will continue to improve our sales and distribution channels in order to provide a wider variety of products and to improve the effectiveness of our customers' supply chain. These enhancements include combining sales and marketing forces of our operating units where appropriate, cross-training our sales representatives on multiple product lines, and cross-stocking our spare parts and components.

In the technical and highly engineered product segments in which we compete, relationship selling is particularly appropriate in targeted marketing segments where customer and supplier design and engineering inputs need to be tightly integrated. Participation in industry trade shows is an effective method of meeting customers, introducing new products, and exchanging technical specifications. In addition to technical and industry conferences, our products are supported through direct internal international sales efforts, as well as through manufacturer representatives and selected distributors. Currently, 137 sales people, 196 representatives, and 107 distributors support our operations internationally.

Backlog

Backlog at October 31, 2003, was $300.9 million, compared with $281.7 million at October 25, 2002. We estimate that approximately $50.0 million of backlog is scheduled to be shipped after fiscal 2004.

Backlog is subject to cancellation until delivered, and therefore, we cannot assure that our backlog will be converted into revenue in any particular period or at all. Backlog does not include the total contract value of cost-plus reimbursable contracts, which are funded as we incur the costs. Except for the released portion, backlog also does not include fixed-price multi-year contracts.

Competition

Our products and services are affected by varying degrees of competition. We compete with other companies in most markets we serve, many of which have far greater sales volumes and financial resources. The principal competitive factors in the commercial markets in which we participate are product performance, service and price. Part of product performance requires expenditures in research and development that lead to product improvement. The market for many of our products may be affected by rapid and significant technological changes and new product introduction. Our principal competitors include Eaton, ECE and Eastprint in our Avionics & Controls segment;

<PAGE> 6

Ametek, MPC Products and Goodrich in our Sensors & Systems segment; and Transdigm, Dunlop Standard Aerospace Group and Meggitt in our Advanced Materials segment.

Research and Development

Currently, our product development and design programs utilize an extensive base of professional engineers, technicians and support personnel, supplemented by outside engineering and consulting firms when needed. In fiscal 2003, approximately $19.5 million was expended for research, development and engineering, compared with $15.4 million in fiscal 2002 and $14.2 million in fiscal 2001. We believe continued product development is key to our long-term growth, and consequently, we consistently invest in research and development. Examples include research and development projects relating to thermal fire barrier insulation products for the Boeing Delta IV rocket motor, as well as ice detectors and smoke and pollution concentration measurement devices. In addition, we actively participate in customer funded research and development programs, including flight controls and instrumentation on the Joint Strike Fighter and Eurofighter, Gulfstream V flight controls, deicing probes for next generation General Electric/Snecma CFM-56 jet engines and LED lighted cockpit switches for Airbus.

Foreign Operations

Our principal foreign operations consist of manufacturing facilities located in France and the United Kingdom. We also maintain sales, service, distribution and/or purchasing offices in the United Kingdom, France and Hong Kong. For further information regarding foreign operations, see Note 15 to the Consolidated Financial Statements of the Annual Report to Shareholders for the fiscal year ended October 31, 2003. The Annual Report is included as Exhibit 13 of this report.

Government Contracts and Subcontracts

As a contractor and subcontractor to the U.S. government (primarily the U.S. Department of Defense), we are subject to various laws and regulations that are more restrictive than those applicable to private sector contractors. Approximately 17% of our sales were made directly to the U.S. government in fiscal 2003. In addition, we estimate that our subcontracting activities to contractors for the U.S. government accounted for approximately 12% of sales during fiscal 2003. Therefore, we estimate that approximately 29% of our sales during the fiscal year were subject to government contracting regulations. Such contracts may be subject to termination, reduction or modification in the event of changes in government requirements, reductions in federal spending, and other factors.

Historically, our U.S. government contracts and subcontracts have been predominately fixed-price contracts. Generally, fixed-price contracts offer higher margins than cost-plus contracts in return for accepting the risk that increased or unexpected costs may reduce anticipated profits or cause us to sustain losses on the contracts. The accuracy and appropriateness of certain costs and expenses used to substantiate our direct and indirect costs for the U.S. government under both cost-plus and fixed-price contracts are subject to extensive regulation and audit by the Defense Contract Audit Agency, an arm of the U.S. Department of Defense. The contracts and subcontracts to which we are a party are also subject to profit and cost controls and standard provisions for termination at the convenience of the U.S. government. Upon termination, other than for our default, we will normally be entitled to reimbursement for allowable costs and to an allowance for profit. To date, none of our significant fixed-price contracts have been terminated.

<PAGE> 7

Patents and Licenses

Although we hold a number of patents and licenses, we do not believe that our operations are dependent on our patents and licenses. In general, we rely on technical superiority, continual product improvement, exclusive product features, superior lead-time, on-time delivery performance, quality and customer relationships to maintain competitive advantage.

Seasonality

The timing of our revenues is impacted by the purchasing patterns of our customers and as a result we do not generate revenues evenly throughout the year. Moreover, our first fiscal quarter, November through January, includes significant holiday vacation periods in both Europe and North America. This leads to decreased order and shipment activity; consequently, results are typically weaker than other quarters and not necessarily indicative of our performance in subsequent quarters.

Sources and Availability of Raw Materials and Components

Due to our diversification, the sources and availability of certain raw materials and components are not as critical as they would be for manufacturers of a single product line. However, certain components, supplies and raw materials for our operations are purchased from single sources. In such instances, we strive to develop alternative sources and design modifications to minimize the effect of business interruptions.

Environmental Matters

We are subject to federal, state, local and foreign laws, regulations and ordinances that (i) govern activities or operations that may have adverse environmental effects, such as discharges to air and water, as well as handling and disposal practices for solid and hazardous waste, and (ii) impose liability for the costs of cleaning up, and certain damages resulting from, sites or past spills, disposals or other releases of hazardous substances.

On August 29, 2002, our subsidiary Armtec acquired the radar countermeasures chaff and infrared decoy flare operations of the Electronic Warfare Passive Expendables Division of BAE Systems North America. At the time of our asset acquisition from BAE Systems, certain environmental remedial activities were required under a Part B Permit issued to the infrared decoy flare facility by the Arkansas Department of Environmental Quality under the Federal Resource Conservation and Recovery Act. The Part B Permit was transferred to Armtec, along with the remedial obligations. Under the terms of the asset purchase agreement, BAE Systems agreed to complete all remedial obligations at the infrared decoy flare facility and to indemnify us for all environmental liabilities to a maximum amount of $25 million.

At various times we have been identified as a potentially responsible party pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), and analogous state environmental laws, for the cleanup of contamination resulting from past disposals of hazardous wastes at certain sites to which we, among others, sent wastes in the past. CERCLA requires potentially responsible persons to pay for cleanup of sites from which there has been a release or threatened release of hazardous substances. Courts have interpreted CERCLA to impose strict, joint and several liability on all persons liable for cleanup costs. As a practical matter, however, at sites where there are multiple potentially responsible persons, the costs of cleanup typically are allocated among the parties according to a volumetric or other standard.

<PAGE> 8

We have accrued liabilities for environmental remediation costs expected to be incurred by our operating facilities. Environmental exposures are provided for at the time they are known to exist or are considered reasonably probable and estimable. No provision has been recorded for environmental remediation costs that could result from changes in laws or other circumstances we have not currently contemplated.

Employees

For our continuing operations, we had approximately 4,700 employees at October 31, 2003, of which 3,700 were based in the United States and 1,000 were in Europe. Approximately 12% of the U.S.-based employees were represented by a labor union. Our European operations are subject to national trade union agreements and to local regulations governing employment. For our discontinued Automation segment we had approximately 78 employees at October 31, 2003, of which approximately 74 were based in the United States.

(d) Financial Information About Foreign and Domestic Operations and Export Sales.

See Note 15 to the Consolidated Financial Statements of the Annual Report to Shareholders for the fiscal year ended October 31, 2003. The Annual Report is included as Exhibit 13 of this report.

(e) Available Information of the Registrant.

You can access financial and other information on our website, www.esterline.com . We make available through our website, free of charge, copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the Securities and Exchange Commission. Our Corporate Governance Guidelines, Code of Business Conduct and Ethics, and charters for our board committees will also be available on our website by January 1, 2004. The Guidelines, Code and charters are also available in print to any shareholder upon request. Our website and the information contained therein or connected thereto are not incorporated by reference into this Form 10-K.

Executive Officers of the Registrant

The names and ages of all executive officers of the Company and the positions and offices held by such persons as of December 15, 2003 are as follows:

Name	Position with the Company	Age

Robert W. Cremin	Chairman, President and Chief Executive Officer	63
Stephen E. Barton	Group Vice President	57
Robert D. George	Vice President, Chief Financial Officer, Secretary and Treasurer	47
Marcia J. M. Greenberg	Vice President, Human Resources	51
Larry A. Kring	Group Vice President	63
Stephen R. Larson	Vice President, Strategy & Technology	59

<PAGE> 9

Mr. Cremin has been Chairman since January 2001. In addition, he has served as Chief Executive Officer and President since January 1999 and September 1997, respectively. Mr. Cremin has an M.B.A. from the Harvard Business School and a B.S. degree in Metallurgical Engineering from Polytechnic Institute of Brooklyn. He has been a director of the Company since 1998.

Mr. Barton has been Group Vice President since July 2002. Previously, he was President and Chief Executive Officer of Kirkhill-TA Co., a subsidiary of the Company, from October 1998 to June 2002. From February 1998 to September 1998, he served as Group Vice President of AEA Management Group, an automotive component supplier. He was a consultant for Gleason Corporation, a consumer products manufacturer, from July 1997 to February 1998. Mr. Barton has an M.S. degree in Applied Statistics from Villanova University and a B.S. degree in Mathematics from the University of Maine.

Mr. George has been Vice President, Chief Financial Officer, Secretary and Treasurer since July 1999 and Treasurer and Controller from June 1997 until July 1999. Mr. George has an M.B.A. from the Fuqua School of Business at Duke University and a B.A. degree in Economics from Drew University.

Ms. Greenberg has been Vice President, Human Resources since March 1993. Ms. Greenberg has a J.D. degree from Northwestern University School of Law and a B.A. degree in Political Science from Portland State University.

Mr. Kring has been Group Vice President since August 1993. Mr. Kring has an M.B.A. from California State University at Northridge and a B.S. degree in Aeronautical Engineering from Purdue University.

Mr. Larson has been Vice President, Strategy & Technology since January 2000. Previously, he was Group Vice President from April 1991 through December 1999. Mr. Larson has an M.B.A. from the University of Chicago and a B.S. degree in Electrical Engineering from Northwestern University.

<PAGE> 10

Forward-Looking Statements and Risk Factors

This annual report on Form 10-K includes forward-looking statements. These statements may be identified by the use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "should" or "will" or the negative thereof or other variations thereon or comparable terminology. In particular, statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance contained in this report under the headings "Risks Relating to Our Business," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" are forward-looking statements.

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed in this report under the headings "Risks Relating to Our Business," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations are:

*		A significant downturn in the aerospace industry;
*		A significant reduction in defense spending;
*		A decrease in demand for our products as a result of competition, technological innovation or otherwise;
*		Our inability to identify future acquisition candidates or to integrate acquired operations; and
*		Loss of a significant customer or defense program.

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included or incorporated by reference into this report are made only as of the date hereof. We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect future events or developments.

Risks Relating to Our Business

A continued downturn in the aircraft market could adversely affect our business.

The aircraft industry is cyclical in nature and affected by many factors beyond our control. The current downturn in the aircraft market, which has been affected by the conflict in Iraq and the outbreak of SARS and is still being impacted by the events of September 11, 2001, has resulted in bankruptcy filings, restructurings and downsizing by the major commercial and regional airline carriers. This downturn has had and will likely continue to have an adverse effect on our business, financial condition and operating results.

The principal markets for manufacturers of commercial aircraft are the commercial and regional airlines, which are adversely affected by a number of factors, including fuel and labor costs, intense price competition, outbreak of infectious disease and terrorist attacks, as well as economic cycles, all

<PAGE> 11

of which can be unpredictable and are outside our control. Commercial aircraft production may increase or decrease in response to changes in customer demand caused by general economic conditions and the perceived safety and ease of airline travel.

The military aircraft industry is dependent upon the level of equipment expenditures by the armed forces of countries throughout the world, and especially those of the United States. Although the events of September 11, 2001 and the conflict in Iraq have increased the level of equipment expenditures by the U.S. Armed Forces, in the past this industry has been adversely affected by a number of factors, including the reduction in military spending since the end of the Cold War. Decreases in military spending could depress demand for military aircraft.

Any decrease in demand for new aircraft or use of existing aircraft will likely result in a decrease in demand of our products and services, and correspondingly, our revenues, thereby adversely affecting our business, financial condition and results of operations.

Implementing our acquisition strategy involves risks and our failure to successfully implement this strategy could have a material adverse effect on our business.

One of our key strategies is to grow our business by selectively pursuing acquisitions. Since 1996 we have completed over 20 acquisitions, and we are continuing to actively pursue additional acquisition opportunities, some of which may be material to our business and financial performance. Although we have been successful with this strategy in the past, we may not be able to grow our business in the future through acquisitions for a number of reasons, including:

*		Encountering difficulties identifying and executing acquisitions;
*		Increased competition for targets, which may increase acquisition costs;
*		Consolidation in our industry reducing the number of acquisition targets;
*		Acquisition financing not being available on acceptable terms or at all; and
*		Competition laws and regulations preventing us from making certain acquisitions.

In addition, there are potential risks associated with growing our business through acquisitions, including the failure to successfully integrate and realize the expected benefits of an acquisition. For example, with any past or future acquisition, there is the possibility that:

*		The business culture of the acquired business may not match well with our culture;
*		Technological and product synergies, economies of scale and cost reductions may not occur as expected;
*		Management may be distracted from overseeing existing operations by the need to integrate acquired businesses;
*		We may acquire or assume unexpected liabilities;
*		Unforeseen difficulties may arise in integrating operations and systems;
*		We may fail to retain and assimilate employees of the acquired business;
*		We may experience problems in retaining customers and integrating customer bases; and
*		Problems may arise in entering new markets in which we may have little or no experience.

Failure to continue implementing our acquisition strategy, including successfully integrating acquired businesses, could have a material adverse effect on our business, financial condition and results of operations.

<PAGE> 12

The loss of a significant customer or defense program could have a material adverse effect on our operating results.

Some of our operations are dependent on a relatively small number of customers and defense programs, which change from time to time. Significant customers in fiscal 2003 included the U.S. Department of Defense, The Boeing Company, General Dynamics, Snecma, Honeywell, Lockheed Martin and Smiths Industries. There can be no assurance that our current significant customers will continue to buy our products at current levels. The loss of a significant customer or the cancellation of orders related to a defense program could have a material adverse effect on our operating results if we were unable to replace the related sales.

Our operating results are subject to fluctuations that may cause our revenues to decline.

Our business is susceptible to seasonality and economic cycles, and as a result, our operating results have fluctuated widely in the past and are likely to continue to do so. Our revenue tends to fluctuate based on a number of factors, including domestic and foreign economic conditions and developments affecting the specific industries and customers we serve. For example, the events of September 11, 2001 and the continued downturn in commercial aviation, due to, among other things, the conflict in Iraq and the outbreak of SARS, have impacted our operations. It is possible that in the future our operating results in a particular quarter or quarters will not meet the expectations of securities analysts or investors, causing the market price of our common stock or senior subordinated notes to decline. We believe that quarter-to-quarter comparisons of our operating results are not a good indication of our future performance and should not be relied upon to predict our future performance.

Political and economic instability in foreign countries and markets may have a material adverse effect on our operating results.

Foreign sales were approximately 33% of our total sales in fiscal 2003, and we have manufacturing facilities in a number of foreign countries. Doing business in foreign countries is subject to numerous risks, including political and economic instability, restrictive trade policies of foreign governments, economic conditions in local markets, health concerns in foreign countries, inconsistent product regulation or unexpected changes in regulatory and other legal requirements by foreign agencies or governments, the imposition of product tariffs and the burdens of complying with a wide variety of international and U.S. export laws and differing regulatory requirements. To the extent that foreign sales are transacted in a foreign currency, we are subject to the risk of losses due to foreign currency fluctuations. In addition, we have substantial assets denominated in foreign currencies, primarily the U.K. pound and Euro, that are not offset by liabilities denominated in those foreign currencies. These net foreign currency investments are subject to material changes in the event of fluctuations in foreign currencies against the U.S. dollar.

To the extent that we operate outside the United States, we are subject to the Foreign Corrupt Practices Act, or FCPA, which generally prohibits U.S. companies and their intermediaries from bribing foreign officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment. In particular, we may be held liable for actions taken by our strategic or local partners even though our partners are not subject to the FCPA. Any determination that we have violated the FCPA could result in sanctions that could have a material adverse effect on our business, financial condition and results of operations.

<PAGE> 13

We may not be able to compete effectively.

Our products and services are affected by varying degrees of competition. We compete with other companies and divisions and units of larger companies in most markets we serve, many of which have greater sales volumes or financial, technological or marketing resources than we do. Our principal competitors include: Eaton, ECE and Eastprint in our Avionics & Controls segment; Ametek, MPC Products and Goodrich in our Sensors & Systems segment; and Transdigm, Dunlop Standard Aerospace Group and Meggitt in our Advanced Materials segment. The principal competitive factors in the commercial markets in which we participate are product performance, service and price. Maintaining product performance requires expenditures in research and development that lead to product improvement and new product introduction; companies with more substantial financial resources may have a better ability to make such expenditures. We cannot assure that we will be able to continue to successfully compete in our markets, which could adversely affect our business, financial condition and results of operations.

Our backlog is subject to modification or termination, which may reduce our sales in future periods.

We currently have a backlog of orders based on our contracts with customers. Under many of our contracts, our customers may unilaterally modify or terminate their orders at any time. In addition, the maximum contract value specified under a government contract awarded to us is not necessarily indicative of the sales that we will realize under that contract. For example, without the necessary annual Congressional appropriations, some of the contracts included in our backlog will remain unfunded. Therefore, our backlog may not result in actual sales in any particular period or at all.

The amount of debt we have outstanding, as well as any debt we may incur in the future, could have an adverse effect on our operational and financial flexibility.

As of October 31, 2003, we had $279.6 million of debt outstanding. Our primary U.S. dollar credit facility totals $60 million and is made available through a group of banks. The credit agreement is secured by substantially all of the Company's assets. In addition, we have unsecured foreign currency credit facilities that have been extended by foreign banks for up to $6.1 million. Available credit under the above credit facilities was $56.2 million at October 31, 2003, when reduced by outstanding foreign bank borrowings of $2.3 million and letters of credit of $7.6 million. The indenture governing the notes and our other debt agreements limit, but do not prohibit, us from incurring additional debt in the future. Our level of debt could have significant consequences to our business, including the following:

*		Depending on debt maturities, a substantial portion of our cash flow from operations could be dedicated to paying principal and interest on our debt, thereby reducing funds available for our acquisition strategy, capital expenditures or other purposes;
*		A significant amount of debt could make us more vulnerable to changes in economic conditions or increases in prevailing interest rates;
*		Our ability to obtain additional financing for acquisitions, capital expenditures or for other purposes could be impaired;
*		The increase in the amount of debt we have outstanding increases the risk of non-compliance with some of the covenants in our debt agreements which require us to maintain specified financial ratios; and
*		We may be more leveraged than some of our competitors, which may result in a competitive disadvantage.

<PAGE> 14

If we were unable to protect our intellectual property rights adequately, the value of our products could be diminished.

Our success is dependent in part on obtaining, maintaining and enforcing our proprietary rights and our ability to avoid infringing on the proprietary rights of others. While we take precautionary steps to protect our technological advantages and intellectual property and rely in part on patent, trademark, trade secret and copyright laws, we cannot assure that the precautionary steps we have taken will completely protect our intellectual property rights. Because patent applications in the United States are maintained in secrecy until a patent is issued, we may not be aware of third-party patents, patent applications and other intellectual property relevant to our products that may block our use of our intellectual property or may be used in third-party products that compete with our products and processes. In the event a competitor successfully challenges our products, processes, patents or licenses or claims that we have infringed upon their intellectual property, we could incur substantial litigation costs defending against such claims, be required to pay royalties, license fees or other damages or be barred from using the intellectual property at issue, any of which could have a material adverse effect on our business, operating results and financial condition.

In addition to our patent rights, we also rely on unpatented technology, trade secrets and confidential information. Others may independently develop substantially equivalent information and techniques or otherwise gain access to or disclose our technology. We may not be able to protect our rights in unpatented technology, trade secrets and confidential information effectively. We require each of our employees and consultants to execute a confidentiality agreement at the commencement of an employment or consulting relationship with us. However, these agreements may not provide effective protection of our information or, in the event of unauthorized use or disclosure, they may not provide adequate remedies.

The market for our products may be affected by our ability to adapt to technological change.

The rapid change of technology is a key feature of all of the markets in which our businesses operate. To succeed in the future, we will need to design, develop, manufacture, assemble, test, market, and support new products and enhancements to our existing products in a timely and cost-effective manner. Historically, our technology has been developed through internal research and development expenditures, as well as customer-sponsored research and development programs. There is no guarantee that we will continue to maintain, or benefit from, comparable levels of research and development in the future. In addition, our competitors may develop technologies and products that are more effective than those we develop or that render our technology and products obsolete or noncompetitive. Furthermore, our products could become unmarketable if new industry standards emerge. We cannot assure that our existing products will not require significant modifications in the future to remain competitive or that new products we introduce will be accepted by our customers, nor can we assure that we will successfully identify new opportunities and continue to have the needed financial resources to develop new products in a timely or cost-effective manner.

We may lose money or generate less than expected profits on our fixed-price contracts.

Our customers set demanding specifications for product performance, reliability and cost. Some of our government contracts and subcontracts provide for a predetermined, fixed price for the products we make regardless of the costs we incur. Therefore, fixed-price contracts require us to price our contracts by forecasting our expenditures. When making proposals for fixed-price contracts, we rely on our estimates of costs and timing for completing these projects. These estimates reflect

<PAGE> 15

management's judgments regarding our capability to complete projects efficiently and timely. Our production costs may, however, exceed forecasts due to unanticipated delays or increased cost of materials, components, labor, capital equipment or other factors. Additionally, manufacturing our products requires integrating a number of processes involving unique technical skill sets. As a result, we may not be able to achieve the forecasted product design or manufacturing efficiencies and may incur higher than expected costs, resulting in cost overruns or possibly order cancellations. Therefore, we may incur losses on fixed-price contracts that we had expected to be profitable, or such contracts may be less profitable than expected.

We depend on the continued contributions of our executive officers and other key management, each of whom would be difficult to replace.

Our future success depends to a significant degree upon the continued contributions of our senior management and our ability to attract and retain other highly qualified management personnel. We face competition for management from other companies and organizations. Therefore, we may not be able to retain our existing management personnel or fill new management positions or vacancies created by expansion or turnover at our existing compensation levels. Although we have entered into change of control agreements with some members of senior management, we do not have employment contracts with our key executives, nor have we purchased "key-person" insurance on the lives of any of our key officers or management personnel to reduce the impact to our company that the loss of any of them would cause. Specifically, the loss of any of our executive officers would disrupt our operations and divert the time and attention of our remaining officers. Additionally, failure to attract and retain highly qualified management personnel would damage our business prospects.

Our business is subject to government contracting regulations, and our failure to comply with such laws and regulations could harm our operating results and prospects.

We estimate that approximately 29% of our sales in fiscal 2003 were attributable to contracts in which we were either the prime contractor to, or a subcontractor to a prime contractor to, the U.S. government. As a contractor and subcontractor to the U.S. government, we must comply with laws and regulations relating to the formation, administration and performance of federal government contracts that affect how we do business with our clients and may impose added costs on our business. For example, these regulations and laws include provisions that contracts we have been awarded are subject to:

*		Protest or challenge by unsuccessful bidders; and
*		Unilateral termination, reduction or modification in the event of changes in government requirements.

The accuracy and appropriateness of certain costs and expenses used to substantiate our direct and indirect costs for the U.S. government under both cost-plus and fixed-price contracts are subject to extensive regulation and audit by the Defense Contract Audit Agency, an arm of the U.S. Department of Defense. Responding to governmental audits, inquiries or investigations may involve significant expense and divert management attention. Our failure to comply with these or other laws and regulations could result in contract termination, suspension or debarment from contracting with the federal government, civil fines and damages, and criminal prosecution and penalties, any of which could have a material adverse effect on our operating results.

<PAGE> 16

The airline industry is heavily regulated and if we fail to comply with applicable requirements, our results of operations could suffer.

Governmental agencies throughout the world, including the U.S. Federal Aviation Administration, or the FAA, prescribe standards and qualification requirements for aircraft components, including virtually all commercial airline and general aviation products, as well as regulations regarding the repair and overhaul of aircraft engines. Specific regulations vary from country to country, although compliance with FAA requirements generally satisfies regulatory requirements in other countries. We include, with the replacement parts that we sell to our customers, documentation certifying that each part complies with applicable regulatory requirements and meets applicable standards of airworthiness established by the FAA or the equivalent regulatory agencies in other countries. In order to sell our products, we and the products we manufacture must also be certified by our individual OEM customers. If any of the material authorizations or approvals qualifying us to supply our products is revoked or suspended, then the sale of the subject product would be prohibited by law, which would have an adverse effect on our business, financial condition and results of operations.

From time to time, the FAA or equivalent regulatory agencies in other countries propose new regulations or changes to existing regulations, which are usually more stringent than existing regulations. If these proposed regulations are adopted and enacted, we may incur significant additional costs to achieve compliance, which could have a material adverse effect on our business, financial condition and results of operations.

Environmental laws and regulations may subject us to significant liability.

Our business and our facilities are subject to a number of federal, state, local and foreign laws, regulations and ordinances governing, among other things, the use, manufacture, storage, handling and disposal of hazardous materials and certain waste products. Among these environmental laws are rules by which a current or previous owner or operator of land may be liable for the costs of investigation, removal or remediation of hazardous materials at such property. In addition, these laws typically impose liability regardless of whether the owner or operator knew of, or was responsible for, the presence of any hazardous materials. Persons who arrange for the disposal or treatment of hazardous materials may be liable for the costs of investigation, removal or remediation of such substances at the disposal or treatment site, regardless of whether the affected site is owned or operated by them.

Because we own and operate a number of facilities that use, manufacture, store, handle or arrange for the disposal of various hazardous materials, we may incur costs for investigation, removal and remediation, as well as capital costs, associated with compliance with environmental laws. Additionally, at the time of our asset acquisition of the Electronic Warfare Passive Expendables Division of BAE Systems North America, certain environmental remedial activities were required under a Part B Permit issued to the infrared decoy flare facility by the Arkansas Department of Environmental Quality under the Federal Resource Conservation and Recovery Act. The Part B Permit was transferred to our subsidiary, Armtec, along with the remedial obligations. Under the terms of the asset purchase agreement, BAE Systems agreed to complete all remedial obligations at the infrared decoy flare facility and to indemnify us for all environmental liabilities related to that facility to a maximum amount of $25.0 million. Although environmental costs have not been material in the past, we cannot assure that these matters, or any similar liabilities that arise in the future, will not exceed our resources, nor can we completely eliminate the risk of accidental contamination or injury from these materials.

<PAGE> 17

We may be required to defend lawsuits or pay damages in connection with the alleged or actual harm caused by our products.

We face an inherent business risk of exposure to product liability claims in the event that the use of our products is alleged to have resulted in harm to others or to property. For example, our operations expose us to potential liabilities for personal injury or death as a result of the failure of an aircraft component that has been designed, manufactured or serviced by us. We may incur significant liability if product liability lawsuits against us are successful. While we believe our current general liability and product liability insurance is adequate to protect us from future product liability claims, we cannot assure that coverage will be adequate to cover all claims that may arise. Additionally, we may not be able to maintain insurance coverage in the future at an acceptable cost. Any liability not covered by insurance or for which third-party indemnification is not available could have a material adverse effect on our business, financial condition and results of operations.

<PAGE> 18

Item 2. Properties

The following table summarizes our properties that are greater than 50,000 square feet, including identification of the business segment, as of October 31, 2003:

Location	Type of Facility	Business Segment	Approximate Square Footage	Owned or Leased


Continuing Operations:

Brea, CA	Office, Plant & Warehouse	Advanced Materials	429,000	Owned
East Camden, AR	Office & Plant	Advanced Materials	175,000	Leased
Seattle, WA	Office & Plant	Avionics & Controls	167,000	Leased
Coachella, CA	Office & Plant	Advanced Materials	112,000	Owned
Bourges, France	Office & Plant	Sensors & Systems	109,000	Leased
Farnborough, U.K.	Office & Plant	Sensors & Systems	105,000	Leased
Sylmar, CA	Office & Plant	Avionics & Controls	96,000	Leased
Kent, WA	Office & Plant	Advanced Materials	93,000	Owned
Valencia, CA	Office & Plant	Advanced Materials	88,000	Owned
Coeur d'Alene, ID	Office & Plant	Avionics & Controls	88,000	Leased
Taunton, MA	Office & Plant	Advanced Materials	85,000	Leased
Santa Fe Springs, CA	Office & Plant	Advanced Materials	81,000	Leased
London, U.K.	Office & Plant	Sensors & Systems	70,000	Leased
Norwich, NY	Office & Plant	Sensors & Systems	56,000	Owned
San Fernando, CA	Office & Plant	Avionics & Controls	50,000	Leased
Painesville, OH	Office & Plant	Sensors & Systems	50,000	Owned
Lillington, NC	Office & Plant	Advanced Materials	50,000	Leased


Discontinued Operations:

Rockford, IL	Office & Plant	Automation	294,000	Owned

In total, we own approximately 1,300,000 square feet and lease approximately 1,300,000 square feet of manufacturing facilities and properties.

Item 3. Legal Proceedings

From time to time we are involved in legal proceedings arising in the ordinary course of our business. We believe we have adequately reserved for these liabilities and that there is no litigation pending that could have a material adverse effect on our results of operations and financial condition.

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

No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year ended October 31, 2003.

<PAGE> 19

PART II

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

We hereby incorporate by reference the following information that appears in our Annual Report to Shareholders for the fiscal year ended October 31, 2003:

(a)		The high and low market sales prices of the Company's Common Stock for each quarterly period during fiscal years 2003 and 2002, respectively, is set forth under the section entitled "Market Price of Esterline Common Stock" of the Annual Report to Shareholders for the fiscal year ended October 31, 2003. The Annual Report is included as Exhibit 13 to this report.
(b)		Restrictions on the ability to pay future cash dividends is set forth in Note 10 to the Consolidated Financial Statements of the Annual Report to Shareholders for the fiscal year ended October 31, 2003. The Annual Report is included as Exhibit 13 to this report.

No cash dividends were paid during fiscal years 2003 and 2002. We currently intend to retain all future earnings for use to expand the business and retire debt. We are restricted from paying dividends under our current credit facility and do not anticipate paying any dividends in the foreseeable future.

On December 15, 2003, there were 606 holders of record of the Company's common stock.

The principal market for the Company's Common Stock is the New York Stock Exchange.

Item 6. Selected Financial Data

We hereby incorporate by reference the information set forth under the section entitled, "Selected Financial Data" of the Annual Report to Shareholders for the fiscal year ended October 31, 2003. The Annual Report is included as Exhibit 13 to this report.

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

We hereby incorporate by reference the information set forth under the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Continuing Operations" of the Annual Report to Shareholders for the fiscal year ended October 31, 2003. The Annual Report is included as Exhibit 13 to this report.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We have financial instruments that are subject to interest rate risk, principally debt obligations issued at a fixed rate. To the extent that sales are transacted in a foreign currency, we are also subject to foreign currency fluctuation risk. Furthermore, we have assets denominated in foreign currencies that are not offset by liabilities in such foreign currencies. Although we own significant operations in France and the United Kingdom, historically we have not experienced material gains or losses due to interest rate or foreign exchange fluctuations. In fiscal 2003, the foreign exchange rate for the Euro increased 18.6% relative to the U.S. dollar.

<PAGE> 20

Item 8. Financial Statements and Supplementary Data

The report of Ernst & Young LLP, Independent Auditors, and the consolidated financial statements are included in the Annual Report to Shareholders for the fiscal year ended October 31, 2003 and are hereby incorporated by reference. Quarterly results of operations are reported in Note 16 of the Company's Annual Report to Shareholders for the fiscal year ended October 31, 2003 and are hereby incorporated by reference. The Annual Report is included as Exhibit 13 to this report.

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

None.

Item 9A. Controls and Procedures

Our principal executive and financial officers evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of October 31, 2003. Based upon that evaluation, they concluded as of October 31, 2003, that our disclosure controls and procedures were effective to ensure that information we are required to disclose in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within time periods specified in Securities and Exchange Commission rules and forms.

During the three months ended October 31, 2003, there were no significant changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART III

Item 10. Directors and Executive Officers of the Registrant

(a) Directors.

We hereby incorporate by reference the information set forth under "Election of Directors," "Code of Ethics," and "Other Information to Directors - Audit Committee Financial Expert," in the definitive form of the Company's Proxy Statement, relating to its Annual Meeting of Shareholders to be held on March 3, 2004.

(b) Executive Officers.

Information regarding our executive officers required by this item appears in Item 1 of this report under "Executive Officers of the Registrant."

Item 11. Executive Compensation

We hereby incorporate by reference the information set forth under "Other Information as to Directors - Directors Compensation," "Executive Compensation," "Compensation Committee Report" and "Common Stock Price Performance Graph" in the definitive form of the Company's Proxy Statement, relating to its Annual Meeting of Shareholders to be held on March 3, 2004.

<PAGE> 21

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

We hereby incorporate by reference the information with respect to equity securities authorized for issuance under the Company's compensation plans set forth under "Equity Compensation Plan Information" in the definitive form of the Company's Proxy Statement, relating to its Annual Meeting of Shareholders to be held on March 3, 2004.

We hereby incorporate by reference the information with respect to stock ownership set forth under "Security Ownership of Certain Beneficial Owners and Management" in the definitive form of the Company's Proxy Statement, relating to its Annual Meeting of Shareholders to be held on March 3, 2004.

Item 13. Certain Relationships and Related Transactions

None.

Item 14. Principal Accountant Fees and Services

We hereby incorporate the information set forth under "Principal Accountant Fees and Services" in the definitive form of the Company's Proxy Statement relating to the 2004 Annual Meeting of Shareholders, to be held on March 3, 2004.

<PAGE> 22

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)(1) Financial Statements.

The following consolidated financial statements, together with the report thereon of Ernst & Young LLP, Independent Auditors, dated December 3, 2003, appearing in the Company's Annual Report to Shareholders for the fiscal year ended October 31, 2003.

		Annual Report Reference

	Consolidated Statement of Operations Fiscal years 2003, 2002, and 2001	*

	Consolidated Balance Sheet - October 31, 2003 and October 25, 2002	*

	Consolidated Statement of Cash Flows - Fiscal years 2003, 2002, and 2001	*

	Consolidated Statement of Shareholders' Equity and Comprehensive Income - Fiscal years 2003, 2002, and 2001	*

	Notes to Consolidated Financial Statements - October 31, 2003	*

	Report of Ernst & Young LLP, Independent Auditors	*

* Incorporated by reference to the Annual Report to Shareholders for the fiscal year ended October 31, 2003. The Annual Report is included as Exhibit 13 to this report.

Refer also to Part II, Item 8 - Financial Statements and Supplementary Data for additional information.

(a)(2) Financial Statement Schedules.

The following consolidated financial statement schedule of the Company is included as follows:

Schedule II - Valuation and Qualifying Accounts, see page 31.

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

(a)(3) Exhibits.

See Exhibit Index on pages 26-30.

(b) Reports on Form 8-K.

We did not file any reports on Form 8-K during the fourth quarter of fiscal year 2003.

<PAGE> 23

SIGNATURES

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

	ESTERLINE TECHNOLOGIES CORPORATION
	(Registrant)

	By	/s/ Robert D. George

		Robert D. George
		Vice President,
		Chief Financial Officer
		Secretary and Treasurer
		(Principal Financial and
		Accounting Officer)

Dated: December 17, 2003

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

/s/ Robert W. Cremin	Chairman, President and	December 17, 2003
	Chief Executive Officer
(Robert W. Cremin)	(Principal Executive Officer)	Date

/s/ Robert D. George	Vice President,	December 17, 2003
	Chief Financial Officer,
(Robert D. George)	Secretary and Treasurer	Date
	(Principal Financial and
	Accounting Officer)

/s/ Richard R. Albrecht	Director	December 17, 2003

(Richard R. Albrecht)		Date

/s/ Lewis E. Burns	Director	December 17, 2003

(Lewis E. Burns)		Date

/s/ Ross J. Centanni	Director	December 17, 2003

(Ross J. Centanni)		Date

<PAGE> 24

/s/ John F. Clearman	Director	December 17, 2003

(John F. Clearman)		Date

/s/ Robert S. Cline	Director	December 17, 2003

(Robert S. Cline)		Date

/s/ E. John Finn	Director	December 17, 2003

(E. John Finn)		Date

/s/ Anthony P. Franceschini	Director	December 17, 2003

(Anthony P. Franceschini)		Date

/s/ Wendell P. Hurlbut	Director	December 17, 2003

(Wendell P. Hurlbut)		Date

/s/ Jerry D. Leitman	Director	December 17, 2003

(Jerry D. Leitman)		Date

/s/ James L. Pierce	Director	December 17, 2003

(James L. Pierce)		Date

<PAGE> 25

Exhibit Number		Exhibit


3.1		Restated Certificate of Incorporation, dated June 6, 2002. (Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 26, 2002 [Commission File Number 1-6357].)

3.2		By-laws of the Company, as amended and restated December 4, 2003.

4.1		Rights Agreement dated as of December 11, 2002, between Esterline Technologies Corporation and Mellon Investor Services LLC, as Rights Agent, which includes as Exhibit A the Form of Certificate of Designation of Series B Serial Preferred Stock, as Exhibit B the Form of Rights of Certificate and as Exhibit C the Summary of Rights to Purchase Preferred Shares. (Incorporated by reference to Exhibit 4.1 to Esterline Technologies Corporation's Registration Statement on Form 8-A, as amended, filed on December 12, 2002 [Commission File Number 1-6357].)

4.2		Indenture relating to Esterline Technologies Corporation's 7.75% Senior Subordinated Notes due 2013, dated as of June 11, 2003. (Incorporated by reference to Exhibit 4.1 to Esterline Technologies Corporation's Form 10-Q for the quarter ended August 1, 2003 [Commission File Number 1-6357].)

10.1		Registration Rights Agreement among Esterline Technologies Corporation, its domestic subsidiaries listed on Schedule 1 thereto and Wachovia Securities, Inc., dated June 11, 2003. (Incorporated by reference to Exhibit 10.1 to 10-Q for fiscal quarter ended August 1, 2003 [Commission File Number 1-6357].)

10.2		Credit Agreement, dated as of June 11, 2003, among Esterline Technologies Corporation, the financial institutions referred to therein and Wachovia Bank, National Association, as Administrative and Collateral Agent. (Incorporated by reference to Exhibit 10.2 to 10-Q for the third quarter ended August 1, 2003 [Commission File Number 1-6357].)

10.4		Industrial Lease dated July 17, 1984, between 901 Dexter Associates and Korry Electronics Co., First Amendment to Lease dated May 10, 1985, Second Amendment to Lease dated June 20, 1986, Third Amendment to Lease dated September 1, 1987, and Notification of Option Exercise dated January 7, 1991, relating to the manufacturing facility of Korry Electronics at 901 Dexter Avenue N., Seattle, Washington. (Incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1991 [Commission File Number 1-6357].)

10.4a		Fourth Amendment dated July 27, 1994, to Industrial Lease dated July 17, 1984 between Houg Family Partnership, as successor to 901 Dexter Associates, and Korry Electronics Co. (Incorporated by reference to Exhibit 10.4a to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1994 [Commission File Number 1-6357].)

10.5		Industrial Lease dated July 17, 1984, between 801 Dexter Associates and Korry Electronics Co., First Amendment to Lease dated May 10, 1985, Second Amendment to Lease dated June 20, 1986, Third Amendment to Lease dated September 1, 1987, and

<PAGE> 26

Exhibit Number		Exhibit


		Notification of Option Exercise dated January 7, 1991, relating to the manufacturing facility of Korry Electronics at 801 Dexter Avenue N., Seattle, Washington. (Incorporated by reference to Exhibit 10.5 to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1991 [Commission File Number 1-6357].)

10.5a		Fourth Amendment dated March 28, 1994, to Industrial Lease dated July 17, 1984, between Michael Maloney and the Bancroft & Maloney general partnership, as successor to 801 Dexter Associates, and Korry Electronics Co. (Incorporated by reference to Exhibit 10.5a to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1994 [Commission File Number 1-6357].)

10.10		Compensation of Directors. (Incorporated by reference to first paragraph under "Other Information as to Directors" in the definitive form of the Company's Proxy Statement, relating to its 2004 Annual Meeting of Shareholders to be held on March 3, 2004, and to be filed with the Securities and Exchange Commission and the New York Stock Exchange on January 23, 2003.)

10.13		Amended and Restated 1987 Stock Option Plan. (Incorporated by reference to Exhibit 10 to Registration Statement of Form S-8 [No. 33-52851] filed March 28, 1994.)

10.15		Esterline Corporation Supplemental Retirement Income Plan for Key Executives. (Incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1989 [Commission File Number 1-6357].)

10.19		Executive Officer Termination Protection Agreement. (Incorporated by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1992 [Commission File Number 1-6357].)

10.19a		Amendment A to the Executive Officer Termination Protection Agreement, effective June 8, 2000. (Incorporated by reference to Exhibit 10.19a to the Company's Annual Report on Form 10-K for the fiscal year ended October 27, 2000 [Commission File Number 1-6357].)

<PAGE> 27

Exhibit Number		Exhibit


10.22		Real Property Lease and Sublease, dated June 28, 1996, between 810 Dexter L.L.C. and Korry Electronics Co. (Incorporated by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1996 [Commission File Number 1-6357].)

10.23		Single Tenant Industrial Lease, dated April 1, 1994, between G&G 8th Street Partners, Ltd., James and Loralee Cassidy and Mason Electric Co. (Incorporated by reference to Exhibit 10.23 to the Company's Quarterly Report on Form 10-Q for the quarter ended July 31, 1997 [Commission File Number 1-6357].)

10.23a		Single Tenant Industrial Sublease, dated August 1, 1996, between Mason Electric Company, Inc. and ME Acquisition Co. (Incorporated by reference to Exhibit 10.23a to the Company's Quarterly Report on Form 10-Q for the quarter ended July 31, 1997 [Commission File Number 1-6357].)

10.23b		Amendment of Lease, Estoppel, and Consent to Sublease, dated August 6, 1996, between G&G 8th Street Partners, Ltd., Mason Electric Company, Inc. and ME Acquisition Co. (Incorporated by reference to Exhibit 10.23b to the Company's Quarterly Report on Form 10-Q for the quarter ended July 31, 1997 [Commission File Number 1-6357].)

10.24		Esterline Technologies Corporation Amended and Restated 1997 Stock Option Plan. (Incorporated by reference to Annex B in the definitive form of the Company's Proxy Statement, relating to its 2003 Annual Meeting of Shareholders held on March 5, 2003, filed with the Securities and Exchange Commission and the New York Stock Exchange on January 23, 2003 [Commission File Number 1-6357].)

10.25		Property lease between Slibail Immobilier and Norbail Immobilier and Auxitrol S.A., dated April 29, 1997, relating to the manufacturing facility of Auxitrol at 5, allée Charles Pathé, 18941 Bourges Cedex 9, France, effective on the construction completed date (December 5, 1997). (Incorporated by reference to Exhibit 10.25 to the Company's Quarterly Report on Form 10-Q for the quarter ended January 31, 1998 [Commission File Number 1-6357].)

10.26		Industrial and build-to-suit purchase and sale agreement between The Newhall Land and Farming Company, Esterline Technologies Corporation and TA Mfg. Co., dated February 13, 1997 including Amendments. The agreement is for land and building located at 28065 West Franklin Parkway, Valencia, CA 91384, effective upon acceptance of construction completion (May 12, 1998). (Incorporated by reference to Exhibit 10.26 to the Company's Quarterly Report on Form 10-Q for the quarter ended July 31, 1998 [Commission File Number 1-6357].)

10.27		Note Purchase Agreement between Esterline Technologies Corporation and various life insurance companies for Senior Notes maturing in fiscal 2004-2009. (Incorporated by reference to Exhibit 10.27 to the Company's Quarterly Report on Form 10-Q for the quarter ended January 31, 1999 [Commission File Number 1-6357].)

<PAGE> 28

Exhibit Number		Exhibit


10.28		Executive Retirement Agreement between Esterline Technologies Corporation and Wendell P. Hurlbut dated January 19, 1999. (Incorporated by reference to Exhibit 10.28 to the Company's Quarterly Report on Form 10-Q for the quarter ended January 31, 1999 [Commission File Number 1-6357].)

10.30		Counterpart Underlease, dated January 4, 1993, between Openment Limited and Muirhead Vactric Components Limited, relating to premises located at Oakfield Road, Penge in the London Borough of Bromley. (Incorporated by reference to Exhibit 10.30 to the Company's Annual Report of Form 10-K for the fiscal year ended October 27, 2000 [Commission File Number 1-6357].)

10.31		Lease Agreement, dated as of February 27, 1998, between Glacier Partners and Advanced Input Devices, Inc., Lease Amendment #1, dated February 27, 1998. (Incorporated by reference to Exhibit 10.31 to the Company's Annual Report on Form 10-K for the fiscal year ended October 27, 2000 [Commission File Number 1-6357].)

10.33		Esterline Technologies Corporation 2002 Employee Stock Purchase Plan. (Incorporated by reference to Annex B in the definitive form of the Company's Proxy Statement, relating to its 2002 Annual Meeting of Shareholders held on March 5, 2002, filed with the Securities and Exchange Commission and the New York Stock Exchange on January 23, 2002 [Commission File Number 1-6357].)

10.34		Lease Agreement, dated as of August 6, 2003, by and between the Prudential Insurance Company of America and Mason Electric Co., relating to premises located at Sylmar, California.

10.35		Occupation Lease of Buildings known as Phases 3 and 4 on the Solartron Site at Victoria Road, Farnborough, Hampshire between J Sainsbury Developments Limited and Weston Aerospace Limited, dated July 21, 2000.

11		Schedule setting forth computation of earnings per share for the five fiscal years ended October 25, 2003.

12.1		Statement of Computation of Ratio of Earnings to Fixed Charges.

13		Portions of the Annual Report to Shareholders for the fiscal year ended October 31, 2003, incorporated by reference herein.

21		List of subsidiaries.

23		Consent of Independent Auditors.

31.1		Certification of Chief Executive Officer.

31.2		Certification of Chief Financial Officer.

<PAGE> 29

Exhibit Number		Exhibit


32.1		Certification (of Robert W. Cremin) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification (of Robert D. George) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

<PAGE> 30

ESTERLINE TECHNOLOGIES CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

Description		Balance at Beginning of Year	Charged to Costs and Expenses	Deductions		Balance at End of Year


Reserve for Doubtful
Accounts Receivable

Fiscal Years


2003		$2,700	$ 741	$ (772)	¹	$2,669


2002		$2,447	$1,327	$(1,074)	²	$2,700


2001		$2,423	$ 430	$ (406)	¹	$2,447


¹	Uncollectible accounts written off.

²	Uncollectible accounts written off, net of recoveries, of $364 and the reclassification of the reserve for doubtful accounts receivable to net assets of discontinued operations of $710.

<PAGE> 31

Exhibit 3.2

BY-LAWS

ESTERLINE TECHNOLOGIES CORPORATION

(Amended and Restated
as of December 4, 2003)

<PAGE> 1

BY-LAWS

ESTERLINE TECHNOLOGIES CORPORATION

ARTICLE I
Offices

Section 1.1 Registered Office . The registered office of the Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware, and the name of the registered agent in charge thereof is Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle, Delaware.

Section 1.2 Other Offices . The Corporation may also have offices at such other places as the Board of Directors may determine from time to time, or the business of the Corporation may require.

ARTICLE II
Stockholders' Meetings

Section 2.1 Place of Meetings . All meetings of stockholders for the election of directors shall be held in the City of New York, State of New York, at such place therein as the Board of Directors may designate, or at such other place, city and state as the Board of Directors may determine. All other meetings of the stockholders shall be held at such place or places within or without the State of Delaware as may from time to time be fixed by the Board of Directors and specified in the respective notices or waivers of notice of such meetings.

Section 2.2 Annual Meetings . The annual meeting of the shareholders for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held each year on the first Wednesday of March if not a legal holiday, and if a legal holiday, then on the day following, or on such other date as may be set by resolution of the Board of Directors. If the election of such directors shall not be held on the day designated for any such annual meeting, or if held, shall result in a failure to elect such directors, the directors shall cause such meeting to be held as soon thereafter as convenient.

Section 2.3 Special Meetings . Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be held upon call of the President or any Vice President or the Secretary, or the majority of the Board of Directors.

Section 2.4 Notice . Notice of the time and place of any meeting of stockholders shall be given by personally delivering or mailing written notice thereof not less than ten (10) nor more than sixty (60) days before such meeting, but meetings may be held without notice if all stockholders are present thereat, or if notice is waived by those not present. Notice of special meetings shall state the object or purposes thereof.

Section 2.5 Quorum . The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite to, and shall constitute, a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute, by the Certificate of Incorporation or by these By-laws. If, however, a

<PAGE> 2

quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At any such adjourned meeting at which a quorum shall be present or represented any business may be transacted at the meeting as originally noticed; provided, however, that if after the adjournment a new record date is fixed for the adjourned meeting, notice of such adjourned meeting shall be given in accordance with Section 2.4 of these By-laws.

Section 2.6 Organization . At each meeting of stockholders, the Chairman of the Board of Directors, or in his absence the President of the Corporation, shall act as Chairman of the meeting and preside thereat, and the Secretary or, in his absence, an Assistant Secretary or such other person whom the Chairman of the meeting shall appoint for such purposes, shall act as Secretary of such meeting and record the minutes thereof.

Section 2.7 Voting . At any meeting of the stockholders every stockholder having the right to vote shall be entitled to vote in person or by proxy appointed by any instrument in writing subscribed by such stockholder. Each stockholder shall have one vote for each share of stock having voting power, registered in his name on the books of the Corporation. At all meetings of the stockholders the voting may be viva voce . Except as otherwise required by statute, by the Certificate of Incorporation or by these By-laws, all matters shall be determined by a majority of the votes cast on such matter.

Section 2.8 Judges of Election . In the case of any vote by ballot, the directors, or in the case of their failure to do so, the meeting, shall appoint two or more persons to act as judges. The judges so appointed shall, before entering upon the discharge of their duties, be sworn faithfully to execute the duties as such judges with strict impartiality and according to the best of their ability, and the oath so taken shall be subscribed by them.

ARTICLE III
Directors

Section 3.1 Powers . Except as otherwise provided by law, by the Certificate of Incorporation or by these By-laws, the property, business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

Section 3.2 Number and Tenure . The Board of Directors shall be not less than three (3) nor more than fourteen (14) in number, as may be fixed from time to time by the Board of Directors, and the Board of Directors may increase or decrease the number of directors at any time within said limits, except as otherwise provided by the Certificate of Incorporation of the Corporation. Each director shall hold office until the next annual election and until his successor shall have been duly elected and shall have qualified, or until his prior death, resignation or removal. Directors need not be stockholders.

Section 3.3 Election of Directors . Except as otherwise provided by law or by the Certificate of Incorporation, at each meeting of stockholders for the election of directors at which a quorum shall be present, the persons receiving a plurality of the votes cast shall be elected directors.

Section 3.4 Regular Meetings . The Board of Directors shall meet for the election of officers and for the transaction of any other business as soon as practicable after the annual meeting of stockholders, at such place as shall have been previously fixed for that purpose by resolution by the Board. Other regular meetings of the Board may be held at such times and places as the Board

<PAGE> 3

may from time to time determine. No motion of any such annual or regular meeting of the Board need be given, provided that whenever the time or place of such meetings shall be fixed or changed, notice of such action shall be mailed promptly to each director who shall not have been present at the meeting at which such action was taken, addressed to him at his address appearing upon the books of the Corporation.

Section 3.5 Special Meetings . Special meetings of the Board of Directors shall be held whenever called by the President, the Secretary or any two directors. Notice of the time and place of any such special meeting of the Board of Directors shall be served personally upon each director or mailed, telegraphed or cabled to his address appearing upon the books of the Corporation at least two (2) days before the meeting. Notice of such special meetings need not be given to any director who is present thereat or who shall waive notice thereof, before or after such meeting, in writing.

Section 3.6 Action by Consent . Except as otherwise restricted by the Certificate of Incorporation or these By-laws, any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if prior to such action a written consent thereto is signed by all the members of the Board or of such committee and such written consent is filed with the minutes of proceedings of the Board of Directors or of such committee.

Section 3.7 Place of Meeting . Meetings of the Board of Directors may be held at such place or places within or without the State of Delaware as may be fixed by the Board or designated in the notice or waiver of notice of the meeting.

Section 3.8 Quorum . A majority of the directors (but in no case less than two directors), shall constitute a quorum for the transaction of business, but if, at any meeting of the Board, there be less than a quorum present, a majority of the directors present may, without further notice, adjourn the same from time to time until a quorum shall attend. A majority of such quorum shall decide any questions that may come before the meeting.

Section 3.9 Resignations . A resignation from the Board of Directors shall be deemed to take effect upon its receipt by the Corporation unless otherwise specified therein.

Section 3.10 Vacancies . Vacancies in the Board of Directors from any cause, and newly created directorships resulting from any increase in the authorized number of directors, shall be filled by a majority of the remaining directors, though less than a quorum, and the directors so chosen shall hold office until the next annual election and until their successors shall be duly elected and qualify, unless sooner displaced; provided, however, that if the directors then in office shall constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of shares of the capital stock of the Corporation at the time outstanding having the right to vote for directors, an election to fill any such vacancy or vacancies or newly created directorships or to replace the director or directors chosen by the directors then in office as aforesaid may be held as provided in Section 223 of the General Corporation Law of the State of Delaware.

Section 3.11 Removal . Except as otherwise provided by statute, at any special meeting of the stockholders, duly called as provided in these By-laws, any director or directors may, by the affirmative vote of the holders of a majority of all the shares of stock outstanding and entitled to vote for the election of directors, be removed from office, either with or without cause. At such

<PAGE> 4

meeting a successor or successors may be elected by a plurality of the votes cast, or if any such vacancy is not so filled, it may be filled by the directors as provided in Section 3.10.

Section 3.12 Compensation . Directors shall receive such reasonable compensation for their services as such, in the form of salary or a fixed fee for attendance at meetings, with expenses, if any, as the Board of Directors may from time to time determine. Nothing in this Section shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

Section 3.13 Committees . The Board of Directors, from time to time, by resolution adopted by a majority of the whole Board, may create such committee or committees of directors, consisting of two or more directors, for the purpose of advising with the Board in all such matters as the Board shall deem advisable and with such functions, powers and duties as the Board shall prescribe. A majority of all the members of any such committee may determine its action and fix the time and place of its meetings, unless the Board shall otherwise provide. Each such committee shall serve at the pleasure of the Board, which shall have the power at any time to change the members thereof, to fill vacancies therein, and to discharge any such committee, with or without cause. Committee members, or the chairman of a committee, shall receive such reasonable compensation for their or his services as such, in the form of salary or a fixed fee for attendance at meetings, with expenses, if any, as the Board of Directors may from time to time determine. Nothing herein contained shall be construed to preclude any committee member from serving the Corporation in any other capacity and receiving compensation therefor.

Section 3.14 Chairman of the Board . The Chairman of the Board shall preside at all meetings of the Board of Directors and stockholders at which he shall be present, and shall perform such other functions and responsibilities and have such other powers and duties as may be conferred upon him by the Board of Directors.

Section 3.15 Lead Independent Director . If appointed, the Lead Independent Director shall serve at times that the Board of Directors does not have a non-management Chairman of the Board. At such times, the Lead Independent Director shall (a) advise and coordinate with the Chairman of the Board on scheduling, agenda, and information provided to directors prior to and between Board meetings; (b) chair and develop the agenda for meetings of the non-management directors and, if necessary, meetings of the "independent" directors (as that term is defined by applicable securities laws and exchange regulations); (c) serve as principal liaison between the non-management directors and senior management; (d) serve as principal contact for inquiries and other concerns raised by the stockholders or other interested parties that are delivered to the Lead Independent Director in accordance with procedures adopted from time to time by the Board of Directors; and (e) perform such other functions and responsibilities and have such other powers and duties as may be conferred upon him by the Board of Directors.

Section 3.16 Nomination . Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors. Nominations for the election of directors may be made (a) by or at the direction of the Board of Directors or (b) by any stockholder of record entitled to vote for the election of directors at such meeting; provided, however, that a stockholder may nominate persons for election as directors only if written notice of such stockholder's intention to make such nominations is received by the Secretary not fewer than 120 nor more than 150 days prior to the date of the annual meeting established pursuant to Section 2.2 hereof (or if less than 120 days' notice or prior public disclosure of the date of the annual meeting is given or made to the shareholders, not later than the tenth day following the day on which such notice of the

<PAGE> 5

date of the annual meeting was mailed or such public disclosure was made). Any such stockholder's notice shall set forth (a) the name and address of the stockholder who intends to make a nomination; (b) a representation that the stockholder is entitled to vote at such meeting and a statement of the number of shares of the Corporation that are beneficially owned by the shareholder; (c) a representation that the stockholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (d) as to each person the shareholder proposes to nominate for election or re-election as a Director, the name and address of such person and such other information regarding such nominee as would be required in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had such nominee been nominated by or at the direction of the Board of Directors, and a description of any arrangements or understandings, between the stockholder and such nominee and any other persons (including their names), pursuant to which the nomination is to be made; and (e) the consent of each such nominee to serve as a director if elected. The procedures set forth in this Section 3.14 for nomination for the election of directors by stockholders are in addition to, and not in limitation of, any procedures now in effect or hereafter adopted by or at the direction of the Board of Directors or any committee thereof.

ARTICLE IV
Officers

Section 4.1 Officers . The officers of the Corporation shall be the Chairman of the Board, President and Chief Executive Officer, one or more Executive Vice Presidents, one or more Vice Presidents, a Secretary, a Treasurer and a Controller. The Board of Directors may also appoint one or more Assistant Secretaries, Assistant Treasurers and such other subordinate officers as it deems advisable, to hold office for such periods as are provided in these By-laws or as may be provided in the resolutions appointing them. The Board of Directors may delegate to any officer the power to appoint any such subordinate officers and to prescribe power to appoint any such subordinate officers and to prescribe their respective terms of office, functions and duties. Any such subordinate officers shall perform such functions and duties as may be conferred upon them by these By-laws, the Chief Executive Officer or the Board of Directors.

Section 4.2 Election, Term, Vacancies, etc. Each officer (except such subordinate officers as may be appointed in accordance with the provisions of Section 4.1) shall be elected by the Board of Directors. Each such officer (whether elected at the first meeting of the Board of Directors following the annual meeting of the stockholders or to fill a vacancy or otherwise) shall hold office until the first meeting of the Board of Directors after the next annual meeting of stockholders and until his successor shall have been elected, or until his death, resignation or removal. Any officer specifically designated in Section 4.1 may be removed at any time, with or without cause, at any meeting of the Board of Directors by the affirmative voice of a majority of all the directors then in office. Any subordinate office appointed in accordance with the provisions of Section 4.1 may be removed at any time, with or without cause, at any meeting of the Board of Directors by the affirmative vote of a majority of the directors present at such meeting, or by any superior officer upon whom such power of removal shall have been conferred by the Board of Directors. Any officer may resign at any time by giving written notice of his resignation to the Board of Directors or to the President or the Secretary. Such resignation shall take effect at the time specified therein, or if no time is so specified, at the time of receipt thereof. If an office becomes vacant for any reasons, the vacancy shall be filled for the unexpired portion of the term in the manner prescribed by these By-laws for regular election or appointment to such office.

Section 4.3 Compensation . The salaries of the officers of the Corporation shall be fixed from time to time by the Board of Directors, except that the Board of Directors may delegate to

<PAGE> 6

any officer the power to fix the salaries or other compensation of any officers appointed in accordance with the provisions of Section 4.1.

Section 4.4 Powers . The officers of the Corporation shall have the following powers and duties, except as modified by the Board of Directors, and such other powers and duties as generally pertain to their respective offices:

	(a) The Chairman of the Board, President and Chief Executive Officer shall perform and exercise such powers and responsibilities as normally pertain to such office and such other powers and duties as may be conferred upon him by these By-laws.

	(b) The Executive Vice Presidents and Vice Presidents shall, in such order of seniority as the Chief Executive Officer, or the Board of Directors may specify, in the absence or disability of the Chief Executive Officer, perform and exercise the duties of the Chief Executive Officer and shall have such other powers and duties as may be conferred upon them by these By-laws, the Chief Executive Officer or the Board of Directors.

	(c) The Treasurer shall administer the cash accounts of the Corporation and shall perform such functions and duties as normally pertain to such office by these By-laws, the Chief Executive Officer or the Board of Directors.

	(d) The Controller shall maintain the books and records of the Corporation, shall be the principal accounting officer of the Corporation and shall perform such functions and duties as normally pertain to such office and such additional duties as may be conferred upon him by these By-laws, the Chief Executive Officer or the Board of Directors.

	(e) The Secretary shall record the minutes of all meetings of the stockholders and directors at which he shall be present, shall have charge and custody of the minute books and corporate seal of the Corporation and shall perform such other duties and functions as normally pertain to this office and such additional duties as may be conferred upon him by these By-laws, the Chief Executive Officer or the Board of Directors.

ARTICLE V
Stock

Section 5.1 Certificates . The certificates of stock of the Corporation shall be in such form and executed in such manner as may be prescribed by law and by the Board of Directors and shall be numbered and entered in the books of the Corporation as they are issued. They shall contain the holder's name and the number of shares represented thereby and shall be signed by the President or a Vice President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary. If such certificate is countersigned (1) by a transfer agent other than the Corporation or its employee, or (2) by a registrar other than the Corporation or its employee, the signatures of the officers of the Corporation may be facsimiles.

Section 5.2 Transfer . Upon surrender to the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel

<PAGE> 7

the old certificate and record the transaction upon its books. The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning such rules and regulations as it may deem expedient concerning the issuance, registration and transfer of certificates of stock, and may appoint transfer agents or transfer clerks and registrars thereof.

Section 5.3 Lost or Destroyed Certificates . The Board of Directors may direct a new certificate or certificates to be issued in place of a certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to make affidavit of the fact of such loss, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 5.4 Record Date . The Board of Directors may fix, in advance, a date, which shall not be more than sixty (60) days or less than ten (10) days before the date of any meeting of stockholders or any adjournment thereof, or the date for payment of any dividend, or the date for any allotment of rights, or the date when any change, conversion or exchange of capital stock shall be effected, or the date when stockholders are entitled to express consent to any action or to take any other lawful action, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting or entitled to receive payment of any such dividend or any such allotment of rights or to exercise rights with respect to any such change, conversion or exchange of capital stock, or to stockholders of record on the date so fixed shall be entitled to notice of, and to vote at, such meeting or to receive payment of such dividend or allotment of rights, or to exercise such rights or to express consent or take such other action, notwithstanding any transfer on the books of the Corporation after such record date.

ARTICLE VI
Notices

Section 6.1 Manner of Notice . Whenever under the provisions of the statutes of the State of Delaware or the Certificate of Incorporation or of these By-laws notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice; but such notice may be given in writing by mail by depositing the same in a post office or letter box in a postpaid, sealed wrapper, addressed to such director or stockholder at such address as appears on the books of the Corporation and such notice shall be deemed to be given at the time when the same shall be thus mailed.

Section 6.2 Waiver . Any notice required to be given under these By-laws may be waived by a writing, signed by the person or persons entitled to said notice, whether before or after the time stated herein.

Section 6.3 When Notice Unlawful . Whenever any notice is required to be given by the Certificate of Incorporation or these By-laws to any person, and communication with such person is then made unlawful by any statute or by any rule, regulation, order or proclamation issued thereunder, the giving of such notice to such person shall not be required, and the Corporation shall be under no duty to apply for a license or permit for the giving of any such notice.

<PAGE> 8

ARTICLE VII
Depositories

The Board of Directors is authorized to select such depositories as it shall deem proper for the funds of the Corporation. The Board of Directors shall determine who shall be authorized in the Corporation's behalf to sign bills, notes, receipts, acceptances, endorsements, checks, releases, contracts and other documents.

ARTICLE VIII
Books, Inspection, Etc.

A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in his name, shall be prepared and made available for the inspection of stockholders, for any purpose germane to the meeting, at the place of such meeting, or in such other place within the city where the meeting is to be held as shall be specified in the notice of the meeting, for ten days before any such meeting and shall be produced and kept open at the meeting during the whole time thereof. Unless authorized by resolution of the Board of Directors, no stockholder shall have the right to examine the accounts or books of the Corporation (other than the stock ledger) except as such right may be specifically conferred by the laws of the State of Delaware or by these By-laws.

ARTICLE IX
Fiscal Year

The fiscal year of the Corporation shall be the twelve months ending on the last Friday of October in each year, provided that if a different accounting year is at any time selected by the Board for purposes of federal income taxes, or any other purpose, the accounting year shall be the year so selected.

ARTICLE X
Seal

The Board of Directors shall provide a suitable seal, having inscribed thereon the name of the Corporation, the year of incorporation and such other appropriate legend as may from time to time be determined by the Board. If deemed advisable by the Board of Directors, a duplicate seal or duplicate seals may be provided and kept for the necessary purposes of the Corporation. The seal may be used by causing it or a facsimile thereof to be impressed, affixed or otherwise reproduced.

ARTICLE XI
Amendments

These By-laws may be altered, repealed or amended at any regular meeting of the stockholders, or at any special meeting of the stockholders at which a quorum is present or represented, provided that notice of the proposed alteration or repeal be contained in the notice of such special meeting, by the affirmative vote of a majority of the entire Board of Directors at any regular meeting of the Board, or at any special meeting of the Board, if notice of the proposed alteration or repeal be contained in the notice of such special meeting.

<PAGE> 9

EXHIBIT 10.34

LEASE
(Multi Tenant)

between

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

and

MASON ELECTRIC CO., a DELAWARE CORPORATION

August 6, 2003

<PAGE>

TABLE OF CONTENTS

1.		Parties	1

2.		Premises, Parking and Common Areas	1
	2.1	Premises	1
	2.2	Vehicle Parking	2
	2.3	Common Areas - Definition	3
	2.4	Common Areas - Tenant's Rights	3
	2.5	Common Areas - Rules and Regulations	3
	2.6	Common Areas - Changes	4
	2.7	Measurement of Premises	5
	2.8	Access	5
	2.9	Rooftop Cooling Equipment	6
	2.10	Utility Room	6

3.		Term	6
	3.1	Term	6
	3.2	Delay in Possession	8
	3.3	Early Possession	8
	3.4	Consequences of Certain Terminations	8

4.		Rent	9
	4.1	Base Rent	9
	4.2	Operating Expenses	9
	4.3	Controllable Operating Expenses	15
	4.4	Certain Capital Items	16
	4.5	Capital Items Incurred by Tenant for Compliance Work	17

5.		Security Deposit	17

6.		Use	18
	6.1	Use	18
	6.2	Compliance with Law	18
	6.3	Conditions of Premises	19

7.		Maintenance, Repairs, Alterations and Common Area Services	20
	7.1	Landlord's Obligations	20
	7.2	Tenant's Obligations	21
	7.3	Alterations and Additions	22
	7.4	Utility Additions	27
	7.5	Condition of Premises Upon Termination; Additional Use Provisions	27

8.		Insurance; Indemnity	28

<PAGE> -i-

9.		Damage or Destruction	33
	9.1	Definitions	33
	9.2	Premises Partial Damage; Premises Building Partial Damage	34
	9.3	Premises Total Destruction; Premises Building Total Destruction	35
	9.4	Damage Near End of Term	36
	9.5	Abatement of Rent; Tenant's Remedies	36
	9.6	Termination - Advance Payments	37
	9.7	Waiver	37
	9.8	Recovery of Certain Costs	37

10.		Real Property Taxes	37
	10.1	Payment of Taxes	37
	10.2	Additional Improvements	37
	10.3	Definition of "Real Property Tax"	38
	10.4	Separate Assessment	38
	10.5	Personal Property and Specific Use Taxes	38
	10.6	Additional Provisions Regarding Real Property Taxes	39

11.		Utilities	39

12.		Assignment and Subletting	39
	12.1	Landlord's Consent Required	39
	12.2	Tenant Affiliate	41
	12.3	Tenants Other Than Individuals	42
	12.4	Terms and Conditions of Assignment	42
	12.5	Terms and Conditions Applicable to Subletting	43
	12.6	Attorney's Fees	45
	12.7	Permitted Occupants	45

13.		Default Remedies	45
	13.1	Default	45
	13.2	Remedies	47
	13.3	Default by Landlord	48
	13.4	Late Charges	49

14.		Condemnation	49

15.		Broker's Commissions	51

16.		Estoppel Certificate	51
	16.1	Delivery	51
	16.2	Failure to Deliver	51
	16.3	Financial Statements	52

17.		Landlord's Liability	52

<PAGE> -ii-

18.		Severability	52

19.		Interest on Past-due Obligations	52

20.		Time of Essence	53

21.		Additional Rent	53

22.		Incorporation of Prior Agreements; Amendments	53

23		Notices	53

24.		Waivers	55

25.		Recording	55

26.		Holding Over	55

27.		Cumulative Remedies	55

28.		[INTENTIONALLY OMITTED]	55

29.		Binding Effect; Choice of Law	55

30.		Subordination; Attornment; Non-Disturbance	56
	30.1	Subordination	56
	30.2	Attornment	56
	30.3	Non-Disturbance	56
	30.4	Self-Executing	56

31.		Attorney's Fees	57
	31.1	Attorney's Fees	57
	31.2	Notices of Default	57

32.		Landlord's Access	58

33.		Auctions	58

34.		Signs	58

35.		Merger	59

36.		Consents	59

37.		[Intentionally Omitted]	59

38.		Quiet Possession	59

<PAGE> -iii-

39.		Options	59
	39.1	Definition	59
	39.2	Options Personal	60
	39.3	Multiple Options	60
	39.4	Effect of Default on Options	60
	39.5	First Option	60
	39.6	Second Option	61
	39.7	Fair Market Rent	62

40.		Security Measures	64

41.		Easements	65

42.		Performance Under Protest	65

43.		Authority	65

44.		[Intentionally Omitted]	65

45.		Amendments to Lease	65

46.		Storage Tanks	66
	46.1	Storage Tanks	66
	46.2	Consultants	66

47.		Tenant's Covenants Regarding Hazardous Materials	66
	47.1	Landlord's Prior Consent	66
	47.2	Compliance with Hazardous Materials Laws	67
	47.3	Hazardous Materials Removal	67
	47.4	Notices	68
	47.5	Indemnification of Landlord	68
	47.6	Studies	68
	47.7	Preexisting Conditions	69
	47.8	Certain Permitted Hazardous Materials	70

48.		Recovery of Concessions Upon Early Termination	70

49.		Easements and Restrictions of Record	70

50.		No Offer or Reservation	70

51.		Waiver of Trial by Jury	71

52.		ERISA	71

53.		Roof Antenna	71

<PAGE> -iv-

54.	Guaranty	72

55.	Tenant's Rights to Terminate Lease	72

56.	Tenant's Right of First Offer	72

57.	Landlord Improvements	75

58.	Tenant Improvements	75

59.	Right to Make Repairs	75

60.	Rent Abatement Right	76

<PAGE> -v-

LEASE

1. Parties . This Lease (the "Lease"), dated, for reference purposes only, August 6, 2003, is made by and between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation (herein called "Landlord") and MASON ELECTRIC CO., a Delaware Corporation (herein called "Tenant").

2. Premises, Parking and Common Areas

2.1 Premises . Landlord hereby leases to Tenant and Tenant leases from Landlord for the term, at the rental, and upon all of the conditions set forth herein, that certain real property situated in the County of Los Angeles, State of California, commonly known as 13955 Balboa Blvd., Sylmar, California and described as the portion containing 96,372 square feet of the building located on the property shown on Exhibit "A" hereto, said 96,372 square feet herein referred to as the "Premises," and cross-hatched on Exhibit "A" attached hereto, including rights to the Common Areas as hereinafter specified but not including any rights to the roof of the Premises (except as otherwise specifically provided in paragraphs 2.9 or 53 of this Lease) or to any Building in the Industrial Center. The actual size of the Premises is subject to measurement, as provided herein, and the foregoing statement as to the size of the Premises shall not be binding on the parties until the confirmation thereof after measurement of the size of the Premises. The area of the Premises includes approximately 8,000 square feet of an existing mezzanine structure (the "Existing Mezzanine"). Tenant shall, in compliance with the terms and conditions in Exhibit "D" hereto (the "Work Letter"), construct an additional mezzanine within the Premises (the "Mezzanine Expansion"). The Mezzanine Expansion and the other tenant improvements constructed by Tenant pursuant to the Work Letter are referred to herein as the "Tenant Improvements." The rent and any other charges payable by Tenant shall not be increased as a result of that construction, the Mezzanine Expansion shall not be considered in determining Tenant's Share of Operating Expense, as the intent of the Parties is that Tenant shall not, during the initial or extension terms, pay rent or increased rent for or on account of the Mezzanine Expansion. The Premises are a portion of a building, herein referred to as the "Building." The Premises, the Building, the Common Areas, the land upon which the same are located, along with all other improvements thereon, are herein collectively referred to as the "Industrial Center." Tenant shall be granted access to the Building, the Tenant's Parking Area (as defined below) twenty-four (24) hours per day, seven (7) days per week, every day of the year, subject to temporary interruptions for maintenance and repairs. The Premises includes the space identified on Exhibit "A" as the "Excess Space." The Excess Space contains approximately 1,300 square feet of area. Even though the Excess Space forms a physical part of the Premises, the area of the Excess Space shall be ignored in determining (a) the area of the Premises, (b) the Base Rent, (c) Tenant's Share of Operating Expenses, and (d) the Fair Market Rental Rate. In addition, the additional

<PAGE> -1-

utility or rental value provided by the presence of additional dock high loading doors in the Excess Space shall be ignored in determining Fair Market Rental Rate.

2.2 Vehicle Parking . Tenant shall be entitled to, at no additional charge or rent other than payment of Operating Expenses, 252 vehicle parking spaces on those portions of the Common Areas designated by Landlord for Tenant's parking and shown on Exhibit "B" attached hereto ("Tenant's Parking Area") on an exclusive basis. Tenant shall have the right to post signs on Tenant's Parking Area designating such parking spaces as being for the exclusive use of Tenant, and Tenant shall have the right to tow any vehicles improperly parked in Tenant's Parking Area. Tenant shall indemnify and hold Landlord harmless from and against any and all costs, claims, losses, liability and expenses arising out of or in connection with Tenant's towing any vehicles parked in Tenant's Parking Area. At Tenant's written request, Landlord shall cooperate with Tenant, at no cost to Landlord, in Tenant's reasonable efforts to control use of Tenant's Parking Area, but Landlord shall have no obligation to commence any action or proceeding or declare any other tenant in the Industrial Center in default. Of Tenant's 252 parking spaces, 20 shall be tandem parking stalls created by restriping Tenant's unused loading dock area as shown on Exhibit "B" attached hereto. In the event that the Tenant is able to further restripe unused loading dock area to obtain more than 20 tandem parking stalls, those additional spaces shall not reduce the total of 252 parking spaces that constitute Tenant's Parking Area. Unless Landlord agrees in writing at its sole and absolute discretion, Tenant shall not use more parking spaces than said number. Said parking spaces shall be used only for parking by vehicles no larger than full size passenger automobiles or pick-up trucks, herein called "Permitted Size Vehicles." Vehicles other than Permitted Size Vehicles are herein referred to as "Oversized Vehicles." Tenant shall have the right to park Oversized Vehicles in the portion of Tenant's Parking Area that includes the loading dock area of the Premises. Landlord agrees to cooperate with Tenant, at no cost or expense to Landlord, in Tenant's efforts to obtain additional parking spaces at locations other than the Industrial Center. Notwithstanding the foregoing, Tenant's obligations under this Lease are not conditioned upon Tenant obtaining any additional parking. Based on the current striping of the parking areas of the Industrial Center, there are approximately 9 handicapped parking spaces located within Tenant's Parking Area. Tenant may relocate the handicapped parking spaces within Tenant's Parking Area provided that Tenant first obtains all necessary governmental approvals to that reallocation.

2.2.1 Tenant shall not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant's employees, suppliers, shippers, customers, or invitees to be loaded, unloaded, or parked in areas other than Tenant's Parking Area (which includes Tenant's loading dock area.)

2.2.2 If Tenant permits or allows any of the prohibited activities described in paragraph 2.2 of this Lease, then Landlord shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove or tow

<PAGE> -2-

away the vehicle involved and charge the cost to Tenant, which cost shall be immediately payable upon demand by Landlord.

2.3 Common Areas -- Definition . The term "Common Areas" is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Industrial Center that are provided and designated by the Landlord from time to time for the general non-exclusive use of Landlord, Tenant and of other tenants of the Industrial Center and their respective employees, suppliers, shippers, customers and invitees, including parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, driveways and landscaped areas.

2.4 Common Areas -- Tenant's Rights . Landlord hereby grants to Tenant, for the benefit of Tenant and its employees, suppliers, shippers, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Landlord under the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Industrial Center. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property, temporarily or permanently, in the Common Areas. Any such storage shall be permitted only by the prior written consent of Landlord or Landlord's designated agent, which consent may be revoked at any time upon reasonable prior written notice to Tenant. In the event that any unauthorized storage shall occur, then Landlord shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove the property and charge the cost to Tenant, which cost shall be immediately payable upon demand by Landlord.

2.5 Common Areas -- Rules and Regulations . Landlord or such other person(s) as Landlord may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to establish, modify, amend and enforce reasonable rules and regulations with respect thereto. Tenant agrees to abide by and conform to all such rules and regulations, and to cause its employees to so abide and conform. Tenant agrees to use its best efforts to cause its suppliers, shippers, customers, and invitees to so abide and conform to all such rules and regulations. Landlord shall not be responsible to Tenant for the non-compliance with said rules and regulations by other Tenants of the Industrial Center. Notwithstanding the foregoing, in the event Tenant notifies Landlord of any non-compliance with said rules and regulations by any other tenant of the Industrial Center which adversely affects Tenant's use and enjoyment of the Premises or the Common Areas, Landlord shall use its reasonable efforts to cause such other Tenant to comply with such rules and regulations; provided that Landlord shall have no obligation to commence or prosecute any action or proceeding against such other Tenant. Landlord shall enforce all rules and regulations in a non-discriminatory manner. Landlord shall not enforce the Rules and Regulations in an unreasonable manner or in a manner

<PAGE> -3-

which shall unreasonably interfere with the normal and customary use of the Premises by Tenant for its normal and customary operations. Landlord agrees that the Rules and Regulations shall not be changed, revised or enforced in any unreasonable way by Landlord, nor modified or added to by Landlord in such a way as to unreasonably interfere with Tenant's use of the Premises or Tenant's Parking Area.

2.6 Common Areas -- Changes . Provided that Tenant's access to and use of the Premises and Tenant's Parking Area are not unreasonably impaired, Tenant's rent is not increased thereby, or Tenant's obligations are not increased, subject to the terms and conditions hereof, Landlord shall have the right, in Landlord's sole discretion, from time to time:

(a) To make changes to the Common Areas, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas and walkways, provided, however, that such changes do not unreasonably and materially restrict Tenant's use of or access to the Premises and Tenant's Parking Area;

(b) To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises and Tenant's Parking Area remains available;

(d) To add additional buildings and improvements to the Common Areas;

(e) To use the Common Areas while engaged in making additional improvements, repairs or alterations to the Industrial Center, or any portion thereof;

(f) To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Industrial Center as Landlord may, in the exercise of sound business judgment, deem to be appropriate.

2.6.1 Landlord shall at all times provide to Tenant and the Premises the parking facilities required by applicable law and in no event shall the number of parking spaces that Tenant is entitled to under paragraph 2.2 be reduced or Tenant's access thereto unreasonably restricted. Landlord shall not move the location of Tenant's Parking Area.

<PAGE> -4-

2.7 Measurement of Premises . The term "Measurement Standard" shall mean measurement to the center line of demising walls between the Premises and the space of other tenants in the Building and to the "drip line" of the Building, with respect to all other dimensions that are not demising walls. Landlord shall, within ninety (90) days after Landlord has completed Landlord's Work, cause the rentable and usable areas of the Premises and the Building to be measured in accordance with the Measurement Standard by an architect selected by Landlord and cause the architect making that measurement to certify to Tenant that such determinations have been made in accordance with therewith. Tenant shall have the right, exercisable within ninety (90) days after the date Landlord gives Tenant written notice of the final field measurements of the Premises and the Building in accordance with the Measurement Standard, to have its architect remeasure the Premises and the Building within such ninety (90) day period. In the event that Tenant does not cause the Premises and the Building to be remeasured, within that time period, the measurements made by Landlord shall be final. In the event Tenant causes the Premises and the Building to be measured within those time periods, and the remeasurement by Tenant's architect and Landlord's architect differs by more than 1%, Landlord and Tenant shall meet along with their respective architects and attempt to resolve the discrepancy in their measurements. If Landlord and Tenant do not agree on a resolution of the discrepancy of those measurements within fifteen days of Tenant's notice to Landlord of its architect's calculations of the square footage of the Premises and the Building, Landlord and Tenant shall submit their measurements to a third architect selected as provided below who shall then determine the square footage of the Premises and the Building by selecting between Landlord's architect's measurement and Tenant's architect's measurement. The third architect shall be selected by Tenant from a list of at least three (3) architects provided by Landlord, each of which architects shall not have performed work for either Landlord or Tenant within five (5) years before the date of this Lease. If Tenant fails to select the third architect from the list provided by Landlord within ten (10) days after Landlord's delivery of that list to Tenant, Landlord may select the third architect from that list. That third architect shall reach a determination within thirty days after receipt of copies of Tenant's architect's and Landlord's architect's calculations. The cost of the third architect shall be paid by the person whose measurement is not selected by the third architect. Upon the parties agreement or the resolution of the size of the Premises and the Building by the third architect, the Base Rent and Tenant's Share shall be retroactively and prospectively adjusted to reflect that final determination of the number of square feet under the Measurement Standard in the Premises and Building and the parties shall execute an amendment to this Lease to confirm those modifications. All of the architects, including the third architect, shall be bound by the Measurement Standard.

2.8 Access . Notwithstanding anything to the contrary contained in the Lease, Tenant's parking privileges shall be available in Tenant's Parking Area

<PAGE> -5-

Tenant twenty-four (24) hours per day, seven (7) days per week, every day of the year. Tenant's parking shall be non-tandem except as otherwise provided in paragraph 2.2 .

2.9 Rooftop Cooling Equipment . Tenant may install on the roof of the Building cooling towers, cooling equipment and other customary equipment, subject to Landlord's approval as to location and design, as part of the Tenant Improvements, (the "Rooftop Equipment"); provided (a) Tenant pays the cost of reinforcing the roof to support the Rooftop Equipment to the extent recommended by Landlord's licensed structural engineer, (b) Tenant pays all costs and expenses in connection with the maintenance and repair of the roof determined by Landlord to arise from the installation, repair or removal of the Rooftop Equipment, (c) Tenant's access to the roof is subject to such rules and regulations as Landlord may impose from time to time, (d) the Rooftop Equipment is screened from view in a manner approved by Landlord, and (e) at the expiration or earlier termination of the Lease, Tenant, at Tenant's sole cost and expense, removes the Rooftop Equipment and repairs and restores the roof of the Building to the extent determined by Landlord as necessary to put the roof in as good a condition as would exist in the absence of the installation, maintenance and removal of the Rooftop Equipment.

2.10 Utility Room . In the event a utility room is constructed within the area indicated as the Premises, and that utility room provides or is intended to provide access to utilities for space in the Building other than the Premises, then the area of that utility room shall be allocated between Tenant and the balance of the Building in the same proportion that the area of the Premises (excluding the utility room) bears to the area of the Building (excluding the utility room).

3. Term .

3.1 Term . The term of this Lease shall be for ten (10) years commencing on the date (the "Commencement Date") that is the later of (a) January 1, 2004 (the "Early Date"), or (b) the date that is the earlier of (i) the date upon which Tenant occupies the Premises for the purposes of conducting its business, or (ii) April 1, 2004 (the "Late Date"), and ending at 5:00 p.m. Pacific Time on the date that is ten (10) years after the Commencement Date, unless sooner terminated pursuant to any provision hereof. In the event Landlord does not deliver the Premises to Tenant with Landlord's Work (as defined below), substantially completed by the Outside Delivery Date (as defined below), then the Early Date and the Late Date shall be extended by one day for each day after the Outside Delivery Date until Landlord substantially completes Landlord's Work. The "Outside Delivery Date" initially means November 1, 2003 but shall be delayed by one day for each day Landlord is delayed in completing Landlord's Work due to the acts or omissions of Tenant. If completion of the Tenant Improvements by Tenant is actually delayed by reason of a Landlord Delay or a Force Majeure Delay (each as defined below), the Early Date and the Late Date shall be delayed by one (1) day for each day that substantial completion

<PAGE> -6-

of the Tenant Improvements is actually delayed thereby. Tenant agrees to use commercially reasonable efforts to provide Landlord with written notice when it has actual knowledge of an event or circumstance which Tenant believes may constitute a Landlord Delay or a Force Majeure Delay, which notice shall set forth in reasonable detail the facts or circumstances resulting in such delay and the projected duration of such delay. Tenant agrees to take all commercially reasonable efforts to minimize the effect of such delay upon the completion of the Tenant Improvements. No Force Majeure Delay or Landlord Delay shall be deemed to occur for any day that the delay in completion of the Tenant Improvements (or any delay in Landlord's efforts to remedy any such delay) results from any act, omission or negligence of Tenant or its agents, employees or contractors. Notwithstanding anything to the contrary herein, no Landlord Delay or Force Majeure Delay shall be deemed to occur unless and until Tenant has provided written notice to Landlord specifying the event or circumstance constituting a delay. As used in this Lease, the term "Landlord Delay" means any actual delay in the completion of the Tenant Improvements which is due to (a) delays by Landlord in giving approvals or authorizations with respect to the Tenant Improvements beyond the time period set forth in the Work Letter for the applicable work; (b) delays in the completion of the Tenant Improvements caused by any unreasonable failure or refusal of Landlord to permit Tenant, its agents and contractors access to and use of the Premises and Tenant's Parking Area required for the orderly, continuous and expeditious performance of the work necessary to complete the Tenant Improvements; (c) delays in the progress of the Tenant Improvements caused by the presence of any New Hazardous Materials (as defined in the Work Letter) in the Premises not brought onto the Premises by Tenant or its agents, contractors, employees or invitees; (d) delays in the progress of the Tenant Improvements caused by Landlord's failure to pay the Tenant Improvement Allowance as and when required under the Work Letter; (e) delays in the progress of the Tenant Improvements caused by Landlord's breach of its warranties in Paragraph 6.2(a) and/or 6.3(a), below. As used in this Lease, the term "Force Majeure Delay" means any actual delay in the completion of the Tenant Improvements which is attributable to (i) any act of God, war, riot, sabotage, blockade, embargo, civil commotion, act of public enemy or casualty; (ii) lightening, earthquake, fire, storm, hurricane, tornado, flood, washout, explosion or any similar industry-wide cause beyond the reasonable control of Tenant, or any of its contractors or their representatives, or (iii) the delay in the approval by the Association (as defined in the Work Letter") of Tenant's plans beyond the date that is 15 business days after Tenant's submittal of those plans to the Association. Upon the determination of the Commencement Date and the final area of the Premises, Landlord and Tenant shall execute an amendment to this Lease in a form prepared by Landlord to confirm the Commencement Date, the area of the Premises and any necessary adjustments to the amounts in this Lease that are based on the area of the Premises, but failure to execute that amendment shall not affect the determination of the Commencement Date, the final area of the Premises or the adjustment of those amounts as provided in this Lease.

<PAGE> -7-

3.2 Delay in Possession . Notwithstanding Outside Delivery Date, if for any reason Landlord cannot deliver possession of the Premises to Tenant by the Outside Delivery Date, Landlord shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or the obligations of Tenant hereunder or extend the term hereof; provided, however, that if Landlord shall not have delivered possession of the Premises by the Out Date (as defined below), Tenant may at Tenant's option, by notice in writing to Landlord within fifteen (15) days thereafter, cancel this Lease, in which event the parties shall be discharged from all obligations hereunder; provided further, however, that if such written notice of Tenant is not received by Landlord within said fifteen (15) business day period, Tenant's right to cancel this Lease hereunder shall terminate and be of no further force or effect. The "Out Date" initially means December 1, 2003, but shall be delayed by one day for each day Landlord is delayed in completing Landlord's Work due to the acts or omissions of Tenant.

3.3 Early Possession . If Tenant occupies the Premises prior to the Outside Delivery Date for the purpose of preparing the Premises for Tenant's eventual use and operation of the Premises, such early occupancy shall be subject to all provisions of this Lease, such early occupancy shall not advance the commencement or termination date of the term of this Lease; provided, however, Tenant shall not be obligated to pay any Rent or perform Tenant's other monetary obligations hereunder for such period of early occupancy. Tenant shall be permitted to enter the Premises after the full execution and delivery of this Lease and prior to the Outside Delivery Date without the obligation for payment of rent for the purpose of constructing the Tenant Improvements; provided that (a) Tenant will not interfere with Landlord's construction of the Landlord's Work, (b) Tenant first provides Landlord with all insurance required by the terms of this Lease, and (c) all construction by Tenant shall be performed in accordance with the terms of this Lease. Without limiting any other provision of this Lease, Landlord shall not be responsible for damages or loss to any work performed by Tenant or to Tenant's personal property or the personal property of Tenant's contractor's, employees or agents which occurs during such period of early access.

3.4 Consequences of Certain Terminations . In the event this Lease is terminated by Tenant pursuant to paragraphs 3.2 or 47.6 of this Lease or paragraph 2.6 of the Work Letter, Landlord shall return to Tenant any prepayments of Base Rent and the Security Deposit promptly after receipt from Tenant of evidence of the termination of Tenant's contracts for construction of the Tenant Improvements and evidence of payment of all amounts due under those contracts and subcontracts, including unconditional lien releases on final payment in the form required by applicable law. In the event of such a termination, Tenant shall not be obligated to reimburse Landlord for the costs of any improvements made or other costs incurred by Landlord, Landlord shall not be obligated to reimburse Tenant for any improvements or other costs

<PAGE> -8-

incurred by Tenant and neither party shall have any further obligation under this Lease, except for any obligation under this Lease of Tenant to indemnify Landlord for mechanic's liens arising from Tenant's Work or for any personal injury that may have occurred in the course of Tenant's occupancy of the Premises.

4. Rent .

4.1 Base Rent . Tenant shall pay to Landlord, as base rent (the "Base Rent") for the Premises, without any offset or deduction, except as may be otherwise expressly provided in this Lease, on the first day of each month of the term hereof, monthly payments in advance in accordance with the following schedule:

Months	Monthly Base Rent	Monthly Base Rent Per Square Foot
1 - 4 5 - 10 11 - 24 25 - 48 49 - 72 73 - 96 97 - Expiration of initial term	Abated $25,381.82 $50,765.78 $54,280.97 $58,083.49 $62,171.20 $66,544.10	Abated $0.267 $0.534 $0.571 $0.611 $0.654 $0.700

Tenant shall pay Landlord upon the execution hereof $25,381.82 as Base Rent for the fifth month after the Commencement Date. Rent for any period during the term hereof which is for less than one month shall be a pro rata portion of the Base Rent. Rent shall be payable in lawful money of the United States to Landlord at the address stated herein or to such other persons or at such other places as Landlord may designate in writing. As an inducement to Tenant's entering into this Lease, the schedule of rent provided for in this paragraph 4.1 reflects a full abatement of Base Rent for the first four months after the Commencement Date and additional 180 days thereafter of a 50% abatement of Base Rent. Landlord and Tenant agree that for tax reporting purposes, none of the Base Rent due in periods in which the Base Rent is not being abated shall be allocated to any other period.

4.2 Operating Expenses . Tenant shall pay to Landlord during the term hereof, in addition to the Base Rent, Tenant's Share, as hereinafter defined, of all Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease, in accordance with the following provisions:

(a) "Tenant's Share" is defined, for purposes of this Lease, as 47.2257%.

<PAGE> -9-

(b) "Operating Expenses" is defined, for purposes of this Lease, as all actual costs incurred by Landlord relating to the ownership and operation of the Industrial Center, including but not limited to the following, but excluding the items set forth on Exhibit "E" hereto and any other item expressly excluded from Operating Expenses by the terms of this Lease:

(i) The operation, repair and maintenance, in neat, clean, good order and condition, of the following:

(aa) The Common Areas, including parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area lighting facilities, and fences and gates, elevators and roof.

(bb) Tenant directories and exterior signs;

(cc) Fire detection systems, including sprinkler system maintenance and repair.

(dd) Any other service to be provided by Landlord that is elsewhere in this Lease stated to be an "Operating Expense."

(ii) Trash disposal, property management and security services and the cost of any fire-life safety or building department inspections required by a governmental authority;

(iii) Any deductible portion of an insured loss concerning the Building or the Common Areas;

(iv) The cost of the premiums for the liability and property insurance policies maintained by Landlord under paragraph 8 hereof; provided that if Landlord elects to self-insure or includes the Premises under blanket insurance policies covering multiple properties, then the cost included in Operating Expenses shall include the portion of the reasonable cost of such self-insurance or blanket insurance that is logically and reasonably allocated to the Premises;

(v) The amount of the real property tax to be paid by Landlord under paragraph 10.1 hereof;

(vi) The cost of water, gas, electricity and telephone to service the Common Areas;

<PAGE> -10-

(vii) the cost of Landlord's performing the maintenance obligations described in paragraph 7.1 , including replacements to the extent not covered by a warranty;

(viii) the cost of operating, repairing, replacing and maintaining the Building, the roof, and any other utilities or equipment, wherever situated, that are for the common use of the tenants of the Building or Industrial Center to the extent not covered by a warranty; and

(ix) the cost of the Commercial General Liability policy of insurance obtained by Landlord pursuant to paragraph 8.3(d), excluding increases in premiums caused by the use of the Building by other tenants.

(c) The inclusion of the improvements, facilities and services set forth in paragraph 4.2(b) of the definition of Operating Expenses shall not be deemed to impose an obligation upon Landlord to either have said improvements or facilities or to provide those services unless the Industrial Center already has the same, Landlord already provides the services, or Landlord has agreed elsewhere in this Lease to provide the same or some of them.

(d) The percentage set forth in paragraph 4.2(a) has been determined by dividing the approximate square footage of the Premises (excluding any Mezzanine Expansion) by the total approximate square footage of rentable space contained in the Building (excluding any Mezzanine Expansion). It is understood and agreed that the percentage figure set forth in 4.2(a) is an approximation which Landlord and Tenant agree is reasonable and shall not be subject to revision except in connection with an actual change in the size of the Premises or a change in the space available for lease in the Building or pursuant to paragraph 2.7 .

(e) [Intentionally Omitted]

(f) Tenant's Share of Operating Expenses shall be payable by Tenant within ten (10) business days after a reasonably detailed statement of actual expenses is presented to Tenant by Landlord. At Landlord's option, however, an amount may be estimated by Landlord from time to time of Tenant's Share of annual Operating Expenses and the same shall be payable monthly, during each twelve-month period of the Lease term, on the same day as the Base Rent is due hereunder. Landlord shall deliver to Tenant within sixty (60) days after the expiration of each calendar year, or as soon thereafter as practicable (but in no event later than two (2) years after the expiration of the

<PAGE> -11-

applicable calendar year), a reasonably detailed statement showing Tenant's Share of the actual Operating Expenses incurred during the preceding year. If Tenant's payments under this paragraph 4.2(f) during said preceding year exceed Tenant's Share as indicated on said statement, Tenant shall be entitled to credit the amount of such overpayment against Tenant's Share of Operating Expenses next falling due. If Tenant's payments under this paragraph during said preceding year were less than Tenant's Share as indicated on said statement, Tenant shall pay to Landlord the amount of the deficiency within ten (10) days after delivery by Landlord to Tenant of said statement. Except with respect to real estate taxes, Landlord may not first seek reimbursement of an Operating Expense more than two (2) years after the end of the calendar year in which that Operating Expense is incurred by Landlord.

(g) If Tenant disputes the amount of Tenant's Share of Operating Expenses stated in the statement for that year (the "Statement"), Tenant may designate, within one hundred eighty (180) days after receipt of that Statement, an independent certified public accountant that is a member of a nationally or regionally recognized accounting firm and must not charge a fee based on the amount of Tenant's Share of Operating Expenses that the accountant is able to save Tenant by the inspection (a "Qualified Auditor") to inspect Landlord's records. In addition, during that one hundred eighty (180) day period, Tenant shall have the right, after reasonable notice and at reasonable times, to inspect and photocopy Landlord's accounting records; provided that Tenant maintains in strict confidence any and all information obtained from Landlord. Tenant is not entitled to request that inspection, however, if Tenant is then in default after the expiration of applicable notice and cure periods under this Lease. Tenant must give reasonable notice to Landlord of the request for inspection, and the inspection must be conducted in Landlord's offices at a reasonable time or times. Landlord shall be required to maintain records of all Operating Expenses for the entirety of the three-year period following Landlord's delivery to Tenant of each statement setting forth Tenant's Share of Operating Expenses. As a condition precedent to any inspection by Tenant's accountant, Tenant shall deliver to Landlord a copy of Tenant's written agreement with such accountant, which agreement shall include provisions which state that (i) Landlord is an intended third party beneficiary of such agreement, (ii) such accountant will not in any manner solicit or agree to represent any other tenant of the Industrial Center with respect to an audit or other review of Landlord's accounting records at the Industrial Center, and (iii) such accountant shall maintain in strict confidence any and all information obtained in connection with the review and shall not voluntarily disclose such information to any person or entity other than to the management personnel of Tenant. An overcharge of Operating Expenses by Landlord shall not entitle Tenant to terminate this Lease. If Tenant's auditor

<PAGE> -12-

finds errors or over or under charges in Landlord's Statement, said findings must be immediately and simultaneously reported to both Landlord and Tenant, with full written support for such findings and specific reference to the relevant Lease provisions disqualifying such expenses, if applicable. If Landlord agrees with said findings, appropriate rebates or charges shall be made to Tenant in accordance therewith. If Landlord does not agree, Landlord shall engage its own auditor to review the findings of Tenant's auditor and Landlord's books and records. The two auditors shall then meet to resolve any difference between the audits. If agreement cannot be reached within two (2) weeks after the auditors' initial meeting, then the auditors shall together select a third auditor (who shall be a Qualified Auditor) to which they shall each promptly submit their findings in a final report, with copies submitted simultaneously to the first two auditors, Tenant and Landlord. The third auditor shall leave submitted findings unopened for a period of two (2) weeks, during which time Landlord and Tenant may attempt to reach a negotiated settlement. If no settlement is reached, then within fifteen (15) days following the completion of such two-week period, the third auditor shall determine which of the two reports best meets the terms of this Lease, which report shall become the "Final Finding." The third auditor shall not have the option of selecting a compromise between the first two auditors' findings, nor to make any other finding. If the Final Finding determines that Landlord has overcharged Tenant, Landlord shall credit Tenant toward the payment of the Operating Expenses next due and payable under this Lease the amount of such overcharge. If the Final Finding determines that Tenant was undercharged, then within thirty (30) days after the Final Finding, Tenant shall reimburse Landlord the amount of such undercharge. If the Final Finding results in a credit to Tenant in excess of five percent (5%) of Tenant's Share of Operating Expenses, Landlord shall pay its own audit costs and reimburse Tenant for its costs associated with said audits. If the Final Finding results in a credit to Tenant of less than one percent (1%) of Tenant's Share of the total Operating Expense, Tenant shall pay its own costs and reimburse Landlord for its costs associated with said audits. In all other events, each party shall pay its own audit costs, including one half (1/2) of the cost of the third auditor.

(h) Landlord and Tenant shall promptly adjust between them by appropriate cash payment any balance determined to exist with respect to Tenant's Share of Operating Expenses after the end of the calendar year in which this Lease terminates, prorating for any partial year involved.

(i) Notwithstanding anything to the contrary in this paragraph 4.2 , (i) the property management fee payable by Tenant shall be calculated solely based on the gross rentals under this Lease, (ii) Tenant's Share with respect to such property management fee shall be deemed to be 100% to

<PAGE> -13-

reflect that only the portion of the property management fee attributable to the gross rentals under this Lease are payable by Tenant, and (iii) Tenant shall not be obligated to pay any property management fee attributable to the gross rentals under any other lease in the Industrial Center.

(j) Notwithstanding anything to the contrary in this Paragraph 4.2, Operating Expenses shall exclude Cascades Business Park Association Fees, which include without limitation, maintenance, security, insurance, association management fees and reserves for Cascades Business Park.

(k) Operating Expenses shall exclude all costs attributable to the maintenance, repair or replacement of the structural portions of the roof, walls and foundations of the Building. Operating Expenses shall also exclude all costs, which Landlord is reimbursed under any warranty provided by manufacturer or any other third party.

(l) Tenant's Share of certain of the Operating Expenses shall also be subject to the limitation contained in Paragraph 4.3, below.

(m) In the event any facilities, services or utilities used in connection with the Building are provided from another building owned or operated by Landlord or vice versa, the costs incurred by Landlord in connection therewith shall be allocated to Operating Expenses by Landlord on or reasonably equitable basis.

(n) Landlord further agrees that since one of the purposes of Operating Expenses and the gross up provision is to allow Landlord to require Tenant to pay for the costs attributable to its Premises, Landlord agrees that (i) Landlord will not collect or be entitled to collect Operating Expenses from all of its tenants in an amount which is in excess of one hundred percent (100%) of the Operating Expenses actually paid by Landlord in connection with the operation of the Building, and (ii) Landlord shall make no profit from Landlord's collections of Operating Expenses. All assessments which are not specifically charged to Tenant because of what Tenant has done, which can be paid by Landlord in installments, shall be paid by Landlord in the maximum number of installments permitted by law and not included as Operating Expenses except in the year in which the assessment installment is actually paid; provided, however, that if the prevailing practice in comparable Buildings is to pay such assessments on an earlier basis, and Landlord pays on such basis, such assessments or premiums shall be included in Operating Expenses as paid by Landlord.

<PAGE> -14-

(o) Each time Landlord provides Tenant with an actual and/or estimated statement of Operating Expenses, such statement shall be itemized on a general line item by line item basis, showing the applicable expense for the applicable year.

(p) Landlord shall in any year during which the Building is not one hundred percent (100%) occupied during the entire calendar year, adjust the variable portion of Operating Expenses to what the Operating Expenses would have been had the Building been one hundred percent (100%) occupied during the entire calendar year with all tenants paying full rent, as contrasted with free rent, half rent or the like.

4.3 Controllable Operating Expenses .

(a) As used herein the following terms shall have the following meanings:

(i) "Controllable Operating Expenses" shall mean the actual Operating Expenses for electrical, plumbing, roof maintenance, exterior painting, maintenance to the parking facility, building management, grounds and "other" contracts.

(ii) "First-Year Controllable Operating Expenses" shall mean the lesser of (A) an amount equal to $0.288 multiplied by the number of rentable square feet in the Premises (exclusive of the Mezzanine Expansion) and (B) the total amount of actual Controllable Operating Expenses incurred during the portion of the term in calendar year 2004 multiplied by a fraction, the numerator of which is three hundred sixty-five (365) and the denominator of which is the number of days from the Commencement Date to the last day of calendar year 2004.

(iii) "Controllable Operating Expenses Cap" means (1) with respect to calendar year 2004, the First Year Controllable Operating Expenses, and (2) with respect to calendar years after calendar year 2004, the First Year Controllable Operating Expenses multiplied by the applicable "Growth Factor" set forth in the following schedule for such 12-month calendar year:

Lease Year	Growth Factor

Calendar Year 2005	1.035
Calendar Year 2006	1.070
Calendar Year 2007	1.105
Calendar Year 2008	1.140

<PAGE> -15-

Calendar Year 2009	1.175
Calendar Year 2010	1.210
Calendar Year 2011	1.245
Calendar Year 2012	1.280
Calendar Year 2013	1.315

(b) In the event that during any calendar year during the initial ten (10) year term of this Lease, the Controllable Operating Expenses exceed the applicable Controllable Operating Expenses Cap, then (a) for purposes of calculating Tenant's Share, Operating Expenses shall be deemed reduced by the amount by which Controllable Operating Expenses exceed the applicable Controllable Operating Expenses Cap, and (b) such excess may be carried over into the following calendar years without interest for purposes of determining Tenant's Share with respect to such following calendar years by adding such excess to Controllable Operating Expenses for such following calendar years.

4.4 Certain Capital Items . As used herein, the term "Capital Item" means an item, the cost of which under generally accepted accounting principles, consistently applied, must be capitalized and not expensed. As used herein, the term "Amortized Capital Cost" means a repair, maintenance, replacement, alteration or improvement which (a) is a Capital Item, and (b) either (i) costs $5,000.00 or more with respect to a single Capital Item or (ii) has a cost that when added to other Capital Items which are not Amortized Capital Costs would cause the amount of costs for Capital Items that are not Amortized Capital Costs and that are paid by Tenant as Operating Expenses to exceed $25,000.00 in any calendar year. In any event, the replacement of the roof membrane and the replacement of the parking lot surface shall be treated as an Amortized Capital Cost for purposes of this Paragraph 4.4. As used herein, the term "Useful Life" means the useful life of the particular Capital Item determined under generally accepted industry standards. As to each Operating Expense otherwise payable by Tenant pursuant to this Lease that is an Amortized Capital Cost, the Amortized Capital Cost shall be included in Operating Expenses in a monthly amount (the "Monthly Recovery Amount") which equals the monthly amount that would fully amortize a loan having a principal balance equal to the Amortized Capital Cost and an interest rate equal to the Amortization Interest Rate (as defined below) in equal monthly payments over the number of months in the Useful Life of the applicable Capital Item. Commencing on the first day of the calendar month after the calendar month in which the applicable Capital Item is completed and on the first day of each month thereafter until the earlier of (A) the expiration of the term of the Lease, or (B) the expiration of the number of months in the item's Useful Life used to calculate the Monthly Recovery Amount, Tenant shall pay Landlord as part of Operating Expenses an amount equal to Tenant's Share of the Monthly Recovery Amount as to each Amortized Capital Cost. As used herein, the term "Amortization Interest Rate" means an interest rate equal to the LIBOR Rate plus 100 basis points,

<PAGE> -16-

where the "LIBOR Rate" means, for each month, the one (1) month LIBOR (London Interbank Offered Rate) Rate published in The Wall Street Journal (the "Reported Rate") on the first Publication Date (as defined below) of the applicable month. If The Wall Street Journal (i) publishes more than one (1) Reported Rate on any Publication Date, the average of such rates shall apply or (ii) publishes a retraction or correction of any Reported Rate, the corrected rate reported in such retraction or correction shall apply. If the Reported Rate is no longer published at least monthly, the LIBOR Rate shall be deemed to be such other London Interbank Offered Rate published in The Wall Street Journal as most reasonably approximates the Reported Rate. As used herein, the term "Publication Date" means any date on which the LIBOR Rate is published in The Wall Street Journal .

4.5 Capital Items Incurred by Tenant for Compliance Work . With respect to any Capital Item which is the obligation of Tenant pursuant to paragraph 6.2(b) of the Lease (other than Capital Items that are (i) related to or part of the Tenant Improvements or any alterations by Tenant or (ii) required due to Tenant's particular use of the Premises, Tenant's breach of the Lease or any alterations or other improvements to the Premises by Tenant) (each, a "Tenant Capital Cost"), Tenant may give notice to Landlord of the amount of the Tenant Capital Cost and that Tenant requires that Landlord reimburse Tenant for the entire cost of the Tenant Capital Cost and agrees to repay Landlord on a monthly basis in the same manner as if the Tenant Capital Cost were an Amortized Capital Cost under paragraph 4.4 . In lieu of reimbursing Tenant for the cost of the Tenant Capital Cost, Landlord may elect to perform the work giving rise to the Tenant Capital Cost itself, and seek reimbursement from Tenant pursuant to this paragraph 4.5 . If Tenant makes the election under this paragraph 4.5 , and Landlord does not elect to perform the work itself, Landlord shall reimburse Tenant for the entire cost of such Capital Item within thirty (30) days after Tenant's notice. As a condition to Landlord's obligation to make the payments to Tenant described in this paragraph, Tenant shall provide Landlord with reasonable evidence that the costs of such Capital Item was paid and unconditional mechanic's lien releases in the form required under California law from the contractor and subcontractors who installed the Capital Item.

5. Security Deposit . Tenant shall deposit with Landlord upon execution hereof $50,765.78 as security for Tenant's faithful performance of Tenant's obligations hereunder. If Tenant fails to pay rent or other charges due hereunder, or otherwise defaults beyond any applicable notice and cure with respect to any provision of this Lease, Landlord may use, apply or retain all or any portion of said deposit for the payment of any rent or other charge in default or for the payment of any other sum to which Landlord may become obligated by reason of Tenant's default, or to compensate Landlord for any loss or damage which Landlord may suffer thereby. If Landlord so uses or applies all or any portion of said deposit, Tenant shall within ten (10) days after written demand therefor deposit cash with Landlord in an amount sufficient to

<PAGE> -17-

restore said deposit to the full amount then required of Tenant and Tenant's failure to do so shall be a material breach of this Lease. If the monthly rent shall, from time to time, increase during the term of this Lease, Tenant shall, at the time of such increase, deposit with Landlord additional money as a security deposit so that the total amount of the security deposit held by Landlord shall at all times bear the same proportion to the then current Base Rent as the initial security deposit bears to the initial Base Rent set forth in paragraph 4 . Landlord shall not be required to keep said security deposit separate from its general accounts. If Tenant performs all of Tenant's obligations hereunder, said deposit, or so much thereof as has not theretofore been applied by Landlord, shall be returned, without payment of interest or other increment for its use, to Tenant (or, at Landlord's option, to the last assignee, if any, of Tenant's interest hereunder) at the expiration of the term hereof, and after Tenant has vacated the Premises. No trust relationship is created herein between Landlord and Tenant with respect to said Security Deposit.

6. Use .

6.1 Use . The Premises shall be used and occupied only for manufacturing, warehousing, and assembly of controls and related systems for the aircraft industry and general office use and other uses reasonably related thereto, and for a cafeteria for the employees of Tenant and for no other purpose unless consented to by Landlord in writing, which consent shall not be unreasonably withheld, delayed or conditioned. Tenant shall be solely responsible for (a) determining if and to the extent Tenant's use is permitted by applicable laws and regulations and (b) obtaining and maintaining all permits and licenses required by applicable laws and regulations for such use.

6.2 Compliance with Law .

(a) Landlord warrants to Tenant that the Premises (including the Existing Mezzanine), in the state existing on the date that the Lease term commences, but without regard to alterations by Tenant or to the use for which Tenant will occupy the Premises, does not violate any covenants or restrictions of record, or any applicable building code, regulation or ordinance in effect on such Lease term commencement date. In the event it is determined that this warranty has been violated, then it shall be the obligation of the Landlord, after written notice from Tenant, to promptly, at Landlord's sole cost and expense (and not as an Operating Expense), rectify any such violation. In the event Tenant does not give to Landlord written notice of the violation of this warranty within twelve (12) months from the date that the Lease term commences, the correction of same shall be the obligation of Tenant at Tenant's sole cost, subject to Paragraph 4.5.

<PAGE> -18-

(b) Except as provided in paragraph 6.2(a) Tenant shall, at Tenant's expense, promptly comply with all applicable statutes, ordinances, rules, regulations, orders, and requirements of any fire insurance underwriters or rating bureaus, now in effect or which may hereafter come into effect, whether or not they reflect a change in policy from that now existing, during the term or any part of the term hereof, relating in any manner to the Premises or the occupation and use by Tenant of the Premises and of the Common Areas. Tenant shall not violate the terms of any covenants or restrictions of record in effect prior to the date of this Lease and of which Tenant has received written notice (the "Applicable Covenants and Restrictions"). Tenant shall not use nor permit the use of the Premises or the Common Areas in any manner that will tend to create waste or a nuisance or shall tend to disturb other occupants of the Industrial Center. Tenant shall also be responsible for the cost of compliance with all laws and requirements that impose any fee (including without limitation any impact fees), obligation, order or duty on Landlord or Tenant in respect of the Common Area, the Industrial Center, or the Building, arising from or related to: (i) Tenant's use of the Premises for other than standard warehouse use; (ii) the manner of conduct of Tenant's business or operation of its installations, equipment or other property (for other than standard warehouse uses); (iii) any cause or condition created by or at the instance of Tenant including without limitation any improvement of or alteration to the Premises; or (iv) breach of any of Tenant's obligations hereunder; and Tenant shall pay all fees, costs, expenses, fines, penalties and damages imposed upon Landlord by reason of or arising out of Tenant's failure to fully and promptly comply with and observe the provision of this Paragraph 6.2. Where Tenant's compliance as required by this Paragraph 6.2 necessitates action by Tenant for which this Lease requires Landlord's consent, Tenant shall obtain such consent before taking such actions.

6.3 Conditions of Premises .

(a) Landlord shall deliver the Premises to Tenant clean and free of debris upon completion of Landlord's Work and Landlord warrants to Tenant that the plumbing, lighting, mechanical systems, sprinkler systems, windows, and loading doors in the Premises other than those portions constructed by Tenant shall be in good operating condition on the date Landlord delivers possession to Tenant after completion of Landlord's Work. In the event that it is determined that this warranty has been violated, then it shall be the obligation of Landlord, after receipt of written notice from Tenant setting forth with specificity the nature of the violation, to promptly, at Landlord's sole cost (and not as an Operating Expense), rectify such violation. Tenant's failure to give such written notice to Landlord within thirty (30) days after the Lease

<PAGE> -19-

Commencement Date shall cause the conclusive presumption that Landlord has complied with all of Landlord's obligations under this paragraph 6.3(a).

(b) Except as otherwise provided in this Lease, Tenant hereby accepts the Premises in their condition existing as of the date that Landlord delivers to Tenant possession of the Premises, subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises, and any matters of record and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Tenant acknowledges that neither Landlord nor Landlord's agent has made any representation or warranty as to the present or future suitability of the Premises for the conduct of Tenant's business.

(c) Notwithstanding anything to the contrary contained herein, in the event Landlord holds a warranty covering any work of repair or maintenance Tenant is obligated to perform under this Lease, Landlord shall, at Tenant's cost, assign such warranty to Tenant to the extent necessary to allow Tenant to obtain the benefit of that warranty for that repair or maintenance. Effective upon any termination of this Lease, any warranty to the extent so assigned to Tenant is hereby reassigned by Tenant to Landlord at no cost to Tenant.

7. Maintenance, Repairs, Alterations and Common Area Services .

7.1 Landlord's Obligations . Subject to the provisions of paragraph 4.2 (Operating Expenses), 6 (Use), 7.2 (Tenant's Obligations) 7.5 , (Condition of Premises Upon Termination) and 9 (Damage or Destruction) and except for damage caused by any negligent or intentional act or omission of Tenant, Tenant's employees, suppliers, shippers, customers, or invitees, in which event Tenant shall repair the damage, Landlord, at Landlord's expense, subject to reimbursement pursuant to paragraph 4.2 , shall keep in good condition and repair the (a) foundations, (b) exterior walls, (c) structural condition of interior (i) bearing walls, (ii) structural columns, (iii) structural beams and (iv) Existing Mezzanine, (d) roof (including roof membrane) of the Premises, and (e) parking lots, walkways, driveways, landscaping, fences, signs and utility installations of the Common Areas and all parts thereof. Landlord shall not, however, be obligated to paint the exterior or interior surface of exterior walls, nor shall Landlord be required to maintain, repair or replace windows, doors or plate glass of the Premises, or to maintain or repair anything required to be maintained by Tenant under paragraph 7.2 . Landlord shall have no obligation to make repairs under this paragraph 7.1 until a reasonable time after receipt of written notice from Tenant of the need for such repairs. Without limiting Tenant's self-help rights under Paragraph 59, below, Tenant expressly waives the benefits of any statute now or hereafter in effect which would otherwise afford Tenant the right to make repairs at Landlord's expense or to terminate this Lease because of Landlord's failure to keep

<PAGE> -20-

the Premises in good order, condition and repair. Landlord shall not be liable for damages or loss of any kind or nature by reason of Landlord's failure to furnish any Common Area services when such failure is caused by accident, breakage, repairs, strikes, lockout, or other labor disturbances or disputes of any character or by any other cause beyond the reasonable control of Landlord. In the event Landlord's failure to furnish any Common Area services is due to causes beyond the reasonable control of Landlord, Landlord will use reasonable efforts to reinstate those services as soon as reasonably possible given the circumstances.

7.2 Tenant's Obligations .

(a) Subject to the provisions of paragraphs 6 (Use), 7.1 (Landlord's Obligations), and 9 (Damage or Destruction), Tenant, at Tenant's expense, shall keep in good order, condition and repair the Premises and every part thereof (whether or not the damaged portion of the Premises or the means of repairing the same are reasonably or readily accessible to Tenant) including, without limiting the generality of the foregoing, the Mezzanine Expansion, any mechanical, plumbing, heating, ventilating and air conditioning systems (Tenant shall procure and maintain, at Tenant's expense, a ventilating and air conditioning system maintenance contract), electrical and lighting facilities and equipment within the Premises, or that serves only the Premises wherever situated, fixtures, interior walls and interior surfaces of exterior walls, ceilings, windows, doors, plate glass, and skylights located within the Premises. If Tenant fails or elects not to do so, Landlord reserves the right to procure and maintain the ventilating and air conditioning system maintenance contract at a commercially reasonable cost and expense with the appropriate standards of maintenance standards, and if Landlord so elects, Tenant shall reimburse Landlord, upon demand for the cost thereof.

(b) If Tenant fails to perform Tenant's obligations under this paragraph 7.2 or under any other paragraph of this Lease, Landlord may enter upon the Premises after ten (10) days' prior written notice to Tenant (except in the case of emergency, in which no notice shall be required) perform such obligations on Tenant's behalf and put the Premises in good order, condition and repair, and the cost thereof together with interest thereon at the maximum rate then allowable by law shall be due and payable as additional rent to Landlord together with Tenant's next Base Rent installment. Notwithstanding the foregoing, Landlord shall not enter the Premises to make such repairs if Tenant completes those repairs within that ten (10) day notice period, or, if the nature of the obligation is such that it cannot be reasonably completed with such ten (10)-day period, Tenant commences those repairs within that ten (10)-day period and diligently prosecutes the repairs to completion.

<PAGE> -21-

(c) On the last day of the term hereof, or on any sooner termination, Tenant shall surrender the Premises to Landlord in the same condition as received, ordinary wear and tear excepted, clean and free of debris. Any damage or deterioration of the Premises shall not be deemed ordinary wear and tear if the same could have been prevented by good maintenance practices. Tenant shall repair any damage to the Premises occasioned by the installation or removal of Tenant's trade fixtures, alterations, furnishings and equipment.

7.3 Alterations and Additions .

(a) Tenant shall not, without Landlord's prior written consent make any alterations, improvements, additions, or Utility Installations in, on or about the Premises, or the Industrial Center, except that no such consent shall be needed for the Tenant Improvements (other than is required in the Work Letter Agreement attached as Exhibit "D") and for nonstructural alterations to the Premises not exceeding $25,000 as to any single work of alteration or $100,000 in the aggregate in the five (5) year period during the term of this Lease (the "Threshold Amounts"). In any event, whether or not in excess of the Threshold Amounts, Tenant shall make no change or alteration to the exterior of the Premises nor the exterior of the Building nor the Industrial Center without Landlord's prior written consent. Notwithstanding the foregoing, Tenant may install a roof antenna as expressly permitted by Paragraph 53 of this Lease. Landlord agrees that Tenant may construct a cafeteria in the Premises, subject to Landlord's approval of the plans for that work and Tenant's compliance with the other requirements of this Paragraph 7.3 in connection with the construction of that cafeteria. If the cafeteria is constructed as part of the initial Tenant Improvements pursuant to the Tenant Work Letter, the terms and conditions of the Tenant Work Letter shall govern that construction. As used in this Lease, the term "Utility Installation" shall mean carpeting, window coverings, air lines, power panels, electrical distribution systems, lighting fixtures, space heaters, air conditioning, plumbing, and fencing. Unless otherwise agreed to by Landlord as provided in this paragraph 7.3(a) , Landlord may require that Tenant remove any or all of said alterations, improvements, additions or Utility Installations at the expiration or earlier termination of the term, and restore the Premises and the Industrial Center to their prior condition. Landlord may require Tenant to provide Landlord, at Tenant's sole cost and expense, a lien and completion bond in an amount equal to one and one-half times the estimated cost of such improvements, to insure Landlord against any liability for mechanic's and materialmen's liens and to insure completion of the work; provided that Landlord hereby agrees that so long as the initially named Tenant is the Tenant under this Lease, Tenant shall not be obligated to provide Landlord with a lien and completion bond. Should Tenant make any alterations, improvements, additions or Utility Installations without the prior

<PAGE> -22-

approval of Landlord, Landlord may, at any time during the term of the Lease, require that Tenant remove any or all of the same. Anything in this Lease to the contrary notwithstanding, at the time that Tenant requests Landlord's approval of any alteration, Tenant may also request that Landlord indicate in its approval whether the particular alteration will be required by Landlord to be removed at the end of the term. If that request is made by Tenant and Landlord's approval of the alteration does not require the removal of the alteration at the end of the term, then any provision of this Lease that would require removal of that alteration shall be deemed waived by Landlord with respect to that particular alteration. Notwithstanding the foregoing, so long as Landlord has had the opportunity to review and approve the plans therefor, Tenant shall not be obligated to remove from the Premises at the expiration or earlier termination of this Lease the Tenant Improvements (including without limitation the Mezzanine Expansion) or any cafeteria constructed by Tenant.

(b) Any alterations, improvements, additions, or Utility Installations made by Tenant during the term of this Lease shall be done in a good and workmanlike manner and of good and sufficient materials, and Tenant shall, within thirty (30) days after completion of such alteration, improvements, addition or Utility Installation, provide Landlord with as-built plans and specifications for same. Notwithstanding anything contained in this Lease to the contrary, Paragraphs 7.3(d)(i)(bb) and (cc) shall apply to non-structural alterations, improvements, additions or Utility Installations not exceeding the Threshold Amounts in cost.

(c) Any alterations, improvements, additions or Utility Installations in or about the Premises or the Industrial Center that Tenant shall desire to make and which requires the consent of the Landlord shall be presented to Landlord in written form, with proposed detailed plans. If Landlord shall give its consent, the consent shall be deemed conditioned upon Tenant acquiring a permit to do so from appropriate governmental agencies, the furnishing of a copy thereof to Landlord prior to the commencement of the work and the compliance by Tenant of all conditions of said permit in a prompt and expeditious manner.

(d) For any additions, alterations, improvements, or Utility Installations requiring Landlord's prior written consent (except those improvements for which Landlord's consent is not required under this Lease):

(i) Tenant shall:

(aa) Request Landlord's approval in writing at least ten (10) business days prior to proposed construction

<PAGE> -23-

(bb) Employ a California licensed architect, contractor and structural engineer in connection with the proposed construction.

(cc) Be fully responsible for the acts of Tenant's consultants, employees, contractors, subcontractors, invitees and agents, and cause them to fully comply with any applicable terms of this Lease and all applicable laws, rules and regulations.

(dd) Enter into written agreements with an architect and general contractor on standard American Institute of Architects (AIA) form or reasonable equivalent for the contract itself as well as payment schedules, change orders, etc. Copies of executed agreements will be forwarded to Landlord within five (5) business days of execution.

(ee) Cause to be obtained an applicable building permit for any and all construction and modifications, and construct the additions and alterations and perform the construction work in accordance with all applicable laws, including without limitation the Americans With Disabilities Act.

(ii) Tenant's architect shall:

(aa) Be licensed by the State of California.

(bb) Design and specify within the parameters of the building work letter (if any) and approved building specifications (if any) or have received specific written exceptions from Landlord.

(cc) Secure Landlord's written approval, which shall not be unreasonably withheld, delayed or conditioned, before submitting plans to the general contractor for bidding or to governmental agencies for approval.

(dd) Secure Landlord's written approval, which shall not be unreasonably withheld, delayed or conditioned, of any changes or alternates to the plans recommended by the general contractor or required by governmental agencies.

(ee) Submit a copy of the final application for permit and issued permit to Landlord.

<PAGE> -24-

(ff) Incorporate the building standard details (if any) supplied by Landlord onto the drawings.

(gg) Submit final plans for Landlord's written approval prior to construction.

(hh) Provide Landlord with prior notice of a final inspection date at job completion.

(ii) Secure Landlord's written approval of details of any changes in specifications or finishes during construction.

(jj) Provide samples and specifications as reasonably required by Landlord.

(kk) Sign off on the as-built drawings as the Architect's certification that the improvements have, in fact, been built substantially as per the Architect's design.

(iii) Tenant's general contractor and/or subcontractors shall:

(aa) Be licensed by the State of California.

(bb) Have substantial experience providing similar quality and quantity of improvements.

(cc) Have a bonding capacity equal to or exceeding the valuation of the job. Landlord may, at its sole option, require the job to be bonded; provided that Landlord agrees not to require the job to be bonded, so long as the initially named Tenant is the Tenant under this Lease at the time of the applicable work.

(dd) Maintain in full force and effect, throughout the duration of its performance under the contract with the Tenant, a Worker's Compensation insurance policy and a Commercial General Liability insurance policy issued by an insurer satisfactory to Landlord with liability coverage of not less than $1,000,000.00 for personal injury and $500,000.00 to cover property damage. The Commercial General Liability insurance policy shall include assumption of contractual liability. Certificates of insurance containing a thirty (30) day cancellation clause shall be furnished to Landlord prior to commencement of

<PAGE> -25-

performance under the construction contract naming Landlord and its managing agent as additional insureds.

(ee) Provide a construction schedule to Landlord prior to commencement of work and written progress reports at the end of every month.

(ff) Provide Landlord with as-built drawings of all improvements.

(iv) All approvals by Landlord, as herein provided for, shall not be unreasonably withheld, delayed or conditioned. All requests to be submitted to Landlord shall be submitted through Landlord's managing agent.

(e) Tenant shall pay, when due, all claims for labor or materials furnished to or for Tenant at or for use in the Premises, which claims are or may be secured by any mechanic's or materialmen's lien against the Premises, or the Industrial Center, or any interest therein. Tenant shall give Landlord not less than twenty (20) days' notice prior to the commencement of any work in the Premises, and Landlord shall have the right to post notices of non-responsibility in or on the Premises or the Building as provided by law. If Tenant shall, in good faith, contest the validity of any such lien, claim or demand, then Tenant shall, at its sole expense defend itself and Landlord against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Landlord or the Premises or the Industrial Center, upon the condition that if Landlord shall require, Tenant shall furnish to Landlord a surety bond satisfactory to Landlord in an amount equal to such contested lien claim or demand indemnifying Landlord against liability for the same and holding the Premises and the Industrial Center free from the effect of such lien or claim. In addition, Landlord may require Tenant to pay Landlord's actual, out-of-pocket attorneys fees and costs in participating in such action if Landlord shall decide it is to Landlord's best interest to do so.

(f) All alterations, improvements, additions and Utility Installations, which may be made on the Premises, shall be the property of Landlord and shall remain upon and be surrendered with the Premises at the expiration or earlier termination of the Lease term, unless Landlord requires their removal pursuant to paragraph 7.3(a) . Notwithstanding the provisions of this paragraph 7.3(f) , Tenant's machinery and equipment, other than that which is affixed to the Premises so that it cannot be removed without material damage to the Premises, and other than Utility Installations, shall remain the property of Tenant and may be removed by Tenant subject to the provisions of

<PAGE> -26-

paragraph 7.2 . Tenant's personal property, furniture, fixtures shall remain the property of Tenant regardless of whether their removal causes material damage, however, Tenant shall be obligated to repair any material damage caused by such removal.

7.4 Utility Additions . Landlord reserves the right, at Landlord's cost and expense, to install new or additional utility facilities throughout the Building and the Common Areas for the benefit of Landlord or Tenant, or any other tenant of the Industrial Center, including, but not by way of limitation, such utilities as plumbing, electrical systems, security systems, communication systems, and fire protection and detection systems, so long as such installations do not unreasonably interfere with Tenant's use of or access to the Premises and Tenant's Parking Area.

7.5 Condition of Premises Upon Termination; Additional Use Provisions .

(a) Tenant shall maintain the Premises as provided in Paragraph 7.2 and in accordance with the requirements of any Applicable Covenants and Restrictions as may from time to time be applicable to the Premises. Tenant, in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices and any damage or deterioration shall not be deemed "ordinary wear and tear" if the same could have been prevented by commercially standard maintenance practice. Tenant's obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. Notwithstanding anything contained in the Lease to the contrary, Tenant shall make all repairs whatsoever on the Premises necessitated by the negligence, misconduct or fault of Tenant, or its agents, licensees, contractors or invitees.

(b) Notwithstanding anything to the contrary in paragraph 7.2 of this Lease, upon termination of this Lease, Tenant shall leave all Utility Installations (including those constructed as part of the Tenant Improvements), on the Premises and in good condition and operating order, and Tenant shall upon demand pay to Landlord that portion of the cost to restore such items to good condition and operating order as may be reasonably allocable to Tenant's tenancy, subject to reasonable wear and tear.

(c) Notwithstanding anything to the contrary contained in this Lease, the Premises shall not be used for the warehousing or distribution of hazardous or explosive products, substances or materials, or of products, substances or materials that are detrimental to the Premises, the Industrial Center or other tenants thereof, except as expressly permitted under paragraph 47.

<PAGE> -27-

8. Insurance; Indemnity . Tenant hereby agrees to indemnify, defend and hold harmless Landlord, its successors, assigns, subsidiaries, directors, officers, agents and employees from and against any and all damage, loss, liability or expense including, but not limited to, attorney's fees and legal costs suffered by same directly or by reason of any claim, suit or judgment brought by or in favor of any person or persons for damage, loss or expense due to, but not limited to, bodily injury, including death resulting anytime therefrom, and property damage sustained by such person or persons which arises out of, is occasioned by or in any way attributable to the use or occupancy of the Premises by the Tenant, the acts or omission of the Tenant, its agents, employees or any other contractors or invitees brought onto said Premises by the Tenant, or any breach or default in the performance of any obligation on Tenant's part to be performed under the terms of this Lease, except to the extent caused by the sole gross negligence or willful misconduct of Landlord, its employees, and agents. If any action or proceeding is brought against Landlord by reason of any such claim, Tenant, upon notice from Landlord, shall defend same at Tenant's expense by counsel satisfactory to Landlord. Such loss or damage shall include, but not be limited to, any injury or damage to Landlord's personnel (including death resulting anytime therefrom) on the Premises. Landlord shall not be liable for any damages arising from any act or neglect of any other tenant, if any, of the building or industrial park in which the Premises are located. Tenant agrees that the obligations assumed herein shall survive the termination of this Lease, but only with respect to matters occurring prior to the later of the expiration of the term of this Lease or Tenant's surrender of possession of the Premises to Landlord.

8.1 Tenant hereby agrees to maintain in full force and effect at all times during the term of this Lease, at Tenant's own expense, for the protection of Tenant, Landlord and Landlord's property manager, as their interest may appear, policies of insurance issued by a responsible carrier or carriers which afford the following coverages:

(a) Workers' Compensation with statutory limits.

(b) Employers' Liability insurance with the following minimum limits:

Bodily injury by disease per person	$1,000,000
Bodily injury by accident policy limit	$1,000,000
Bodily injury by disease policy limit	$1,000,000

(c) Property insurance on a special causes of loss insurance form covering any and all personal property of Tenant including but not limited to furniture, trade fixtures, Utility Installations, and equipment in an amount not less than their full replacement cost. This policy should contain a waiver of subrogation. Prior to the completion of the Tenant Improvements to be constructed by Tenant pursuant to the Tenant Work Letter, Tenant shall cause the Tenant Improvements to be

<PAGE> -28-

insured pursuant to a builders risk policy of title insurance on a completed value form. Tenant shall not cancel that policy of builders risk insurance unless and until Landlord has confirmed that the Tenant Improvements have become Covered Tenant Improvements pursuant to Paragraph 8.3(a) .

(d) Commercial General Liability Insurance including Broad Form Property Damage and Contractual Liability with the following minimum limits:

General Aggregate	$2,000,000
Products/Completed Operations Aggregate	$2,000,000
Each Occurrence	$1,000,000
Personal & Advertising Injury	$1,000,000

(e) Umbrella/Excess Liability on a following form basis with the following minimum limits:

General Aggregate	$10,000,000
Each Occurrence	$10,000,000

The limits of said insurance in this Paragraph 8.2 shall not, however, limit the liability of Tenant hereunder.

8.2 Landlord shall, at all times during the term of this Lease, maintain the following insurance:

(a) a policy or policies of all-risk property insurance, issued by and binding upon some solvent insurance company, insuring for the full replacement cost of the building on the Premises and the Covered Tenant Improvements (as defined below). As used herein, the term "Covered Tenant Improvements" means the Existing Mezzanine, the Tenant Improvements constructed pursuant to the Work Letter, the Mezzanine Expansion, and any other improvements permanently attached to the Building that will become the property of Landlord on the expiration or earlier termination of this Lease and in any event excludes any furniture, trade fixtures, equipment or personal property; provided that no portion of the Tenant Improvements construed pursuant to the Tenant Work Letter or any subsequent alterations shall be Covered Tenant Improvements prior to their completion and delivery to Tenant by Tenant's contractor. Except as provided in the preceding sentence, Landlord shall not be obligated to insure, and shall not assume any liability or risk of loss for, any of Tenant's furniture, equipment, machinery, goods, supplies, utility

<PAGE> -29-

installations, improvements, or alterations upon the Premises. This policy shall contain an agreed amount endorsement and be written with no coinsurance. Landlord may, but shall not be obligated to, obtain earthquake and flood insurance.

(b) Rent insurance on an all-risk basis in an amount equal to all that is called for under Paragraph 4 of this Lease (Base Rent and any additional rents payable under this Lease including tax and insurance costs) for a period of at least twelve (12) months commencing with the date of loss.

(d) A Commercial General Liability policy of insurance, insuring Landlord, but not Tenant, against liability arising out of the ownership, use, occupancy or maintenance of the Industrial Center, in amounts determined by Landlord.

8.3 The Tenant shall deliver to Landlord prior to taking possession of the Premises, and thereafter at least thirty (30) days prior to expiration of such policy, certificates of insurance evidencing the above coverage with limits not less than those specified above. Insurance required hereunder shall be in companies holding a "General Policyholders Rating" of at least A-VIII as set forth in the most current issue of "Best's Insurance Guide". Such Certificates with the exception of Worker's Compensation, shall name Landlord, its subsidiaries, directors, agents and employees, and its property manager as additional insureds and shall expressly provide that the interest of same herein shall not be affected by a breach by Tenant of any insurance policy provision for which such Certificates evidence coverage. Further, all Certificates shall expressly provide that no less than thirty (30) days prior written notice shall be given to Landlord in the event of material alteration to or cancellation of the coverage evidenced by such Certificates.

8.4 Landlord may secure and maintain, as an Operating Expense, increased amounts of insurance and other insurance coverage in such limits, as Landlord may require in its reasonable judgment to afford Landlord adequate protection consistent with the practices of institutional owners of comparable properties.

8.5 Landlord makes no representation that the limits of liability specified to be carried by Tenant under the term of this Lease are adequate to protect Tenant against Tenant's undertaking under this Paragraph 8 and in the event Tenant believes that any such insurance coverage called for under this Lease is insufficient, Tenant shall provide, at its own expense, such additional insurance as Tenant deems adequate.

<PAGE> -30-

8.6 Anything in this Lease to the contrary notwithstanding, Landlord and Tenant hereby waive and release each other of and from any and all rights of recovery, claims, action or cause of action, against each other, their agents, officers and employees, for any loss or damage that may occur to the Premises, improvements to the building of which the Premises are a part, personal property (building contents) within the building on the Premises, any furniture, equipment, machinery, goods or supplies not covered by this Lease which Tenant may bring or obtain upon the Premises or any additional improvements which Tenant may construct on the Premises, by reason of fire, the elements or any other cause which could be insured against under the terms of all risk property insurance policies, regardless of cause or origin, including negligence of Landlord or Tenant and their agents, officers and employees. Because this Paragraph will preclude the assignment of any claim mentioned in it by way of subrogation (or otherwise) to an insurance company (or any other person) each party to this Lease agrees immediately to give to each insurance company, written notice of the terms of the mutual waivers contained in this Paragraph, and to have the insurance policies properly endorsed if necessary to prevent the invalidation of the insurance coverages by reason of the mutual waivers contained in this Paragraph. Tenant also waives and releases Landlord, its agents, officers and employees of and from any and all rights of recovery, claim, action or cause of action for any loss or damage insured against under any other policies of insurance carried by Tenant.

8.7 Payment of Premium Increase .

(a) After the term of this Lease has commenced, Tenant shall not be responsible for paying Tenant's Share of any increase in the property insurance premium for the Industrial Center specified by Landlord's insurance carrier as being caused by the use, acts or omissions of any other Tenant of the Industrial Center, or by the nature of such other Tenant's occupancy which create an extraordinary or unusual risk.

(b) Tenant, however, shall pay the entirety of any increase in the property insurance premium for the Industrial Center over what it was immediately prior to the Commencement Date of this Lease if the increase is specified by Landlord's insurance carrier as being caused by the nature of Tenant's occupancy or any act or omission of Tenant.

(c) Tenant shall also pay the entirety of any insurance premium and/or deductible allocable to the Covered Tenant Improvements.

8.8 Exemption of Landlord from Liability . Tenant hereby agrees that Landlord shall not be liable for injury to Tenant's business or any loss of income therefrom or for damage to the goods, wares, merchandise or other property of Tenant, Tenant's employees, invitees, customers, or any other person in or about the Premises

<PAGE> -31-

or the Industrial Center, nor shall Landlord be liable for injury to the person of Tenant, Tenant's employees, agents or contractors, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning, or lighting fixtures, or from any other cause, whether said damage or injury results from conditions arising upon the Premises or upon other portions of the Industrial Center, or from other sources or places and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessible to Tenant, Landlord shall not be liable for any damages arising from any act or neglect of any other tenant, occupant or user of the Industrial Center, nor from the failure of Landlord to enforce the provisions of any other lease of the Industrial Center. Notwithstanding Landlord's negligence or breach of this Lease, Landlord shall under no circumstances be liable for injury to Tenant's business or for any loss of income or profit therefrom. Subject to Paragraph 8.6, nothing in the foregoing provisions of this Paragraph 8.9 shall limit Landlord's liability for injuries to natural persons or damage to property to the extent caused by the sole active negligence or willful misconduct of Landlord, its employees, agents or contractors.

8.9 Self-Insurance . As an alternative to obtaining the insurance coverage under paragraph 8.2 , above, Tenant may elect to self-insure the risks and property described in paragraph 8.2 , above, so long as (a) Mason Electric Co., a Delaware Corporation ("Mason") is the tenant-in-possession, (b) the aggregate net worth of Mason and Guarantor (as defined in paragraph 54) satisfies the Net Worth Requirement (as defined below) and (c) such self-insurance provides for loss reserves which are actuarially derived in accordance with accepted standards of the insurance industry and accrued ( i.e. , charged against earnings) or otherwise funded. In the event Tenant notifies Landlord of Tenant's election to self-insure, Tenant's obligations under paragraph 8.2 above, shall be satisfied through Tenant's program of self-insurance, and, if there occurs an event for which a defense would have been provided to Landlord by a carrier providing the insurance specified in paragraph 8.2 (but for Tenant's election to self-insure), Tenant shall, at Tenant's sole cost, provide such defense. For the purposes of this Lease, the net worth of Tenant shall be determined by reference to a then current balance sheet which is certified by an independent certified public accountant (if such balance sheets of such entity are so certified) or by the chief financial officer of Tenant and Guarantor or by such other documentary evidence as to net worth which is reasonably satisfactory to Landlord. Any election by Tenant to self-insure shall not defeat or limit any indemnification obligation of Tenant pursuant to this Lease and shall be treated as if Tenant actually carried a policy of all required insurance. For example, the waiver of subrogation provisions set forth in paragraph 8.7 shall apply to such self-insurance as shall the provisions of paragraph 8.4 requiring that Landlord be named an additional insured. For purposes of this Lease, the "Net Worth Requirement" shall mean an unconsolidated, tangible net worth (established in accordance with generally accepted accounting principles

<PAGE> -32-

consistently applied) of at least Five Hundred Million Dollars ($500,000,000) as increased annually from the Commencement Date by the increase, if any, in the Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department of Labor for Urban Wage Earners and Clerical Workers, Los Angeles-Riverside-Orange County, California (1982-84=100) (the " CPI ").

8.10 Notwithstanding any provisions of Lease Sections 8.1, 8.2 and 8.9 to the contrary, to the extent any damage or repair obligation is covered by insurance obtained by Landlord as part of Operating Expenses, but is not covered by insurance obtained by Tenant, then Tenant shall be relieved of its indemnity obligation up to the amount of the insurance proceeds which Landlord is entitled to receive. Tenant's agreement to indemnify and hold Landlord harmless pursuant to Lease Sections 8.1, 8.2 or 8.9 and the exclusion from Tenant's indemnity are not intended to and shall not relieve any insurance carrier of its obligations under policies required to be carried by Landlord or Tenant, respectively, pursuant to the Lease to the extent that such policies cover the results of such acts, omissions or willful misconduct. If Landlord or Tenant has been or at any time hereafter is granted the right to self insure or if either party breaches this agreement by its failure to carry required insurance, such failure shall automatically be deemed to be a covenant and agreement by Landlord or Tenant, respectively, to self-insure to the full extent of such required coverage, with full waiver of subrogation.

8.11 The provisions of this Paragraph 8.12 will apply so long as the Landlord is other than The Prudential Insurance Company of America, a national insurance company, a national pension advisor, or an entity owned, controlled or advised by any of them. In the event this Paragraph 8.12 is applicable, the cost of Landlord's insurance for which Tenant reimburses Landlord as part of Operating Expenses shall not exceed in any material respect the costs of insurance being paid by institutional owners of comparable properties in comparable locations. Tenant shall have the burden of establishing that the cost of the insurance maintained by Landlord exceeds that limit.

9. Damage or Destruction .

9.1 Definitions .

(a) "Premises Partial Damage" shall mean if the Premises are damaged or destroyed to the extent that the cost of repair is less than fifty percent of the then replacement cost of the Premises.

(b) "Premises Total Destruction" shall mean if the Premises are damaged or destroyed to the extent that the cost of repair is fifty percent or more of the then replacement cost of the Premises.

<PAGE> -33-

(c) "Premises Building Partial Damage" shall mean if the Building of which the Premises are a part is damaged or destroyed to the extent that the cost to repair is less than fifty percent of the then replacement cost of the Building.

(d) "Premises Building Total Destruction" shall mean if the Building of which the Premises are a part is damaged or destroyed to the extent that the cost to repair is fifty percent or more of the then replacement cost of the Building.

(e) "Insured Loss" shall mean damage or destruction which was caused by an event required to be covered by the insurance described in paragraph 8 . Even though Landlord is not required to carry earthquake or flood insurance, if that insurance is being carried, damage or destruction from earthquake or flood, as applicable, shall be treated as an Insured Loss. The fact that an Insured Loss has a deductible amount shall not make the loss an uninsured loss.

(f) "Replacement Cost" shall mean the amount of money necessary to be spent in order to repair or rebuild the damaged area to the condition that existed immediately prior to the damage occurring excluding all improvements made by tenants (other than the Covered Tenant Improvements).

9.2 Premises Partial Damage; Premises Building Partial Damage .

(a) Insured Loss: Subject to the provisions of paragraphs 9.4 and 9.5 , if at any time during the term of this Lease there is damage which is an Insured Loss and which falls into the classification of either Premises Partial Damage or Premises Building Partial Damage, then Landlord shall, at Landlord's expense, repair such damage to the Premises, including the Covered Tenant Improvements, but not Tenant's trade fixtures, equipment, or tenant improvements or Utility Installations that are not Covered Tenant Improvements, as soon as reasonably possible and this Lease shall continue in full force and effect; provided, however, Tenant shall reimburse Landlord for the entire amount of any deductible allocable to the Covered Tenant Improvements and Landlord shall not be obligated to expend for such repair an amount in excess of the insurance proceeds recovered or recoverable as a result of such damage (or that would have been recoverable had Landlord carried the insurance required under paragraph 8.3 ). Landlord shall have no obligation to repair or restore any improvements or alterations made by Tenant that are not Covered Tenant Improvements. Upon completion of Landlord's restoration, Tenant shall promptly replace all of its trade fixtures, equipment and Tenant Improvements and alterations that are not Covered Tenant Improvements to substantially the same functional condition that existed prior to the damage.

<PAGE> -34-

(b) Uninsured Loss: Subject to the provisions of paragraphs 9.4 and 9.5 , if at any time during the term of this Lease there is damage which is not an Insured Loss and which falls within the classification of Premises Partial Damage or Premises Building Partial Damage, unless caused by a negligent or willful act of Tenant or its agents, contractors or invitees (in which event Tenant shall make the repairs at Tenant's expense), which damage prevents Tenant from using the Premises, Landlord may at Landlord's option either (i) repair such damage as soon as reasonably possible at Landlord's expense, in which event this Lease shall continue in full force and effect, or (ii) give written notice to Tenant within thirty (30) days after the date Landlord has actual knowledge of such damage of Landlord's intention to cancel and terminate this Lease as of the date of the occurrence of such damage. In the event Landlord elects to give such notice of Landlord's intention to cancel or terminate this Lease, Tenant shall have the right within ten (10) days after the receipt of such notice to give written notice to Landlord of Tenant's intention to repair such damage at Tenant's expense, without reimbursement from Landlord, in which event this Lease shall continue in full force and effect, and Tenant shall proceed to make such repairs as soon as reasonably possible. If Tenant does not give such notice within such 10-day period this Lease shall be cancelled and terminated as of the date of the occurrence of such damage.

9.3 Premises Total Destruction; Premises Building Total Destruction .

(a) Subject to the provisions of paragraphs 9.4 and 9.5 , if at any time during the term of this Lease there is damage, whether or not it is an Insured Loss, and which falls into the classifications of either (i) Premises Total Destruction, or (ii) Premises Building Total Destruction, then Landlord may at Landlord's option either (i) repair such damage or destruction including the Covered Tenant Improvements, but not Tenant's trade fixtures, equipment, or Utility Installations or any improvements or alterations that are not Covered Tenant Improvements as soon as reasonably possible at Landlord's expense, and this Lease shall continue in full force and effect, or (ii) give written notice to Tenant within thirty (30) days after the date Landlord has actual knowledge of the occurrence of such damage of Landlord's intention to cancel and terminate this Lease, in which case this Lease shall be cancelled and terminated as of the date of the occurrence of such damage.

<PAGE> -35-

9.4 Damage Near End of Term . If at any time during the last six (6) months of the term of this Lease there is Premises Partial Damage, whether or not an Insured Loss, which falls within the classification of Premises Partial Damage, Landlord may at Landlord's option cancel and terminate this Lease as of the date of occurrence of such damage by giving written notice to Tenant of Landlord's election to do so within thirty (30) days after the date Landlord has actual knowledge of the occurrence of such damage.

9.5 Abatement of Rent; Tenant's Remedies .

(a) Unless this Lease terminates in accordance with this Paragraph 9, the rent payable hereunder for the period during which such damage, repair or restoration continues shall be abated in proportion to the degree to which Tenant's use of the Premises is impaired to the extent Landlord receives proceeds from rent abatement insurance (or would have received those proceeds if it had maintained the insurance called for under Paragraph 8.3(b)). Except for abatement of rent, if any, Tenant shall have no claim against Landlord for any damage suffered by reason of any such damage, destruction, repair or restoration.

(b) If Landlord shall be obligated to repair or restore the Premises under the provisions of this paragraph 9 and shall not commence such repair or restoration within ninety (90) days after such obligation shall accrue, Tenant may at Tenant's option cancel and terminate this Lease by giving Landlord written notice of Tenant's election to do so at any time prior to the commencement of such repair or restoration. In such event this Lease shall terminate as of the date of such notice. In the event that Landlord shall be obligated to repair or restore the Premises pursuant to Paragraph 9 of this Lease and shall not commence such repair or restoration within ninety (90) days after such obligation shall accrue, the right of Tenant to terminate this Lease pursuant to this Paragraph 9.5(b) shall be the sole right and remedy of Tenant against Landlord, and Landlord shall have no other liability to Tenant, for damages, specific performance or otherwise, in connection with any such failure.

(c) Landlord shall promptly (in any event, within 30 days after becoming aware of any damage) notify Tenant in writing as to how long it will take to substantially restore the damage under the provisions of this paragraph 9 as estimated by Landlord's architect and/or contractor. Landlord's failure to so notify Tenant within such 30 day period, where such failure continues for an additional 10 days after notice thereof from Tenant, shall if Tenant so chooses be deemed to be the contractor's determination that such restoration will take longer than 270 days (measured from the date of the casualty).

<PAGE> -36-

(d) If any repair or restoration under the provisions of this Paragraph 9 is estimated by Landlord's architect or contractor to take more than 270 days from the event of damage to complete, either party at such party's election, may cancel and terminate this Lease by giving the other party written notice of the electing party's election to do so at any time prior to the commencement of such repair or restoration. In such event, this Lease shall terminate as of the date of such notice.

9.6 Termination -- Advance Payments . Upon termination of this Lease pursuant to this paragraph 9 , an equitable adjustment shall be made concerning advance rent and any advance payments made by Tenant to Landlord. Landlord shall, in addition, return to Tenant so much of Tenant's security deposit as has not theretofore been applied by Landlord.

9.7 Waiver . Landlord and Tenant waive the provisions of any statute which relate to termination of leases when leased property is destroyed and agree that such event shall be governed by the terms of this Lease.

9.8 Recovery of Certain Costs . In the event Landlord elects to expend more funds than are available from insurance proceeds for the restoration of the Industrial Center, the Building or the Covered Improvements, Landlord may not recover those excess costs from Tenant as Operating Expenses, except to the extent the deductible amount of the applicable insurance policy is includable in Operating Expenses if the casualty had been insured. In the event Landlord elects to proceed with restoration after damage or destruction that is not an Insured Loss, Landlord may not recover the costs of that restoration from Tenant as Operating Expenses. Nothing in this paragraph 9.8 shall limit Tenant's express obligation under this paragraph 9 to pay any restoration costs directly and not as part of Operating Expenses.

10. Real Property Taxes .

10.1 Payment of Taxes . Landlord shall pay the real property tax, as defined in paragraph 10.3 , applicable to the Industrial Center subject to reimbursement by Tenant of Tenant's Share of such taxes in accordance with the provisions of paragraph 4.2 , except as otherwise provided in paragraph 10.2 .

10.2 Additional Improvements . Tenant shall not be responsible for paying Tenant's Share of any increase in real property tax specified in the tax assessor's records and work sheets as being caused by additional improvements placed upon the Industrial Center by other tenants or by Landlord for the exclusive enjoyment of such other tenants. Tenant shall, however, pay to Landlord at the time that Operating Expenses are payable under paragraph 4.2(c) the entirety of any increase in real property tax if assessed solely by reason of additional improvements placed upon the Premises by Tenant or at Tenant's request.

<PAGE> -37-

10.3 Definition of "Real Property Tax" . As used herein, the term "real property tax" shall include any form of real estate tax or assessment, general, special, ordinary or extraordinary, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income or estate taxes) imposed on the Industrial Center or any portion thereof by any authority having the direct or indirect power to tax, including any city, county, state or federal government, or any school, agricultural, sanitary, fire, street, drainage or other improvement district thereof, as against any legal or equitable interest of Landlord in the Industrial Center or in any portion thereof, as against Landlord's right to rent or other income therefrom, and as against Landlord's business of leasing the Industrial Center. The term "real property tax" shall also include any tax, fee, levy, assessment or charge (i) in substitution of, partially or totally, any tax, fee, levy, assessment or charge hereinabove included within the definition of "real property tax," or (ii) the nature of which was hereinbefore included within the definition of "real property tax" or (iii) which is imposed for a service or right not charged prior to June 1, 1978, or, if previously charged, has been increased since June 1, 1978 or (iv) which is imposed as a result of a transfer, either partial or total, of Landlord's interest in the Industrial Center or which is added to a tax or charge hereinbefore included within the definition of real property tax by reason of such transfer, or (v) which is imposed by reason of this transaction, any modifications or changes hereto, or any transfers hereof. The term "real property tax" for purposes of this Lease shall exclude all (i) general income taxes, gift taxes, inheritance, succession and estate taxes, (ii) excess profits taxes, franchise taxes or capital stock taxes, (iii) any taxes that are measured by or reasonably attributable to the equipment, furniture, fixtures and other personal property of any other tenant of the Building; or (iv) any fine, penalty, cost or interest for any tax or assessment or part thereof, which Landlord failed to timely pay, except to the extent incurred as a result of Tenant's failure to timely pay Tenant's share of the real property taxes.

10.4 Separate Assessment . The Industrial Center is separately assessed.

10.5 Personal Property and Specific Use Taxes .

(a) Tenant shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Tenant contained in the Premises or elsewhere. When possible, Tenant shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord.

(b) If any of Tenant's said personal property shall be assessed with Landlord's real property, Tenant shall pay to Landlord the amounts

<PAGE> -38-

attributable to Tenant within ten (10) days after receipt of a written statement setting forth the taxes applicable to Tenant's property.

10.6 Additional Provisions Regarding Real Property Taxes . Landlord shall have the sole right to contest or appeal any real property taxes or assessments applicable to all or any portion of the Industrial Center and to seek a reduction in the assessed valuation of all or any portion of the Industrial Center (collectively, "Tax Contests"). Tenant may request that Landlord undertake a contest of the initial assessed valuation of the Tenant Improvements and any reassessment of the Building made by reason of the construction of the Tenant Improvements being deemed a "change of ownership" for purposes of the Revenue and Taxation Code (the "Construction Reassessment") at Tenant's sole cost and expense. Landlord agrees to undertake that Tax Contest, or permit Tenant to undertake that Tax Contest, with respect to the Construction Reassessment only unless Landlord's tax consultants advise Landlord against undertaking a Tax Contest with respect to the Construction Reassessment assessed valuations. Any refund of real property taxes resulting from any such Tax Contest shall be applied first to reimburse Landlord for its costs and expenses in connection with the Tax Contest (including, without limitation attorneys' fees and the costs of consultants), then to reimburse Tenant for its costs and expenses in connection with the Tax Contest Tenant undertakes with Landlord's permission under this Paragraph 10.6, and then, out of and to the extent of the balance of such refund, Landlord shall reimburse to Tenant the portion of such reduction attributable to the Premises and the term of this Lease, as and to the extent previously paid by Tenant as part of Tenant's Share of Operating Expenses. Fees payable to tax consultants and attorneys for consultation and contesting real property taxes shall be an Operating Expense.

11. Utilities . Tenant shall pay for all water, gas, heat, light, power, telephone and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered to the Premises, Tenant shall pay at Landlord's option, either Tenant's Share or a reasonable and justifiably applicable proportion to be determined by Landlord of all charges jointly metered with other premises in the Building.

12. Assignment and Subletting .

12.1 Landlord's Consent Required . Tenant shall not voluntarily or by operation of law assign, transfer, mortgage, sublet, or otherwise transfer or encumber all or any part of Tenant's interest in the Lease or in the Premises, without Landlord's prior written consent, which Landlord shall not unreasonably withhold, condition or delay. Landlord shall respond to Tenant's request for consent hereunder within five (5)

<PAGE> -39-

business days after Landlord's property managers receipt of a request for consent meeting the requirements of this Section 12.1. If Tenant so requests in writing, Landlord's Property Manager will make reasonable efforts to respond within five (5) business days to inform Tenant of any deficiency in its submission of its request for consent. Any attempted assignment, transfer, mortgage, encumbrance or subletting without Landlord's consent shall be void, and shall constitute a breach of this Lease unless cured by Tenant within two (2) business days after notice from Landlord. If at any time or from time to time during the term of this Lease, Tenant desires to assign or sublet all or any part of Tenant's interest in this Lease or in the Premises, Tenant shall give prior written notice to Landlord setting forth the terms of the proposed assignment or subletting and the space so proposed to be assigned or sublet. Such assignment or sublease shall be subject to, without limitation, all the conditions in this Paragraph 12 and the following conditions:

(a) The assignment or sublease shall be on substantially the business terms set forth in the notice given to Landlord. Any subsequent material changes or modifications to those business terms will require Landlord's prior written consent.

(b) Tenant acknowledges that Landlord's agreement to lease these Premises to Tenant at the rent and terms stated herein is made in material reliance upon Landlord's evaluation of this particular Tenant's background, experience and ability, as well as the nature of the use of the Premises by this Tenant as set forth in Paragraph 6 . In the event that Tenant shall request Landlord's written consent to assign or sublease the Premises as required in this Paragraph 12.1 , then each such request for consent shall be accompanied by the following:

(i) Financial statements of the proposed assignee or subtenant;

(ii) A statement of the specific uses for which the Premises will be utilized by the proposed assignee or subtenant; and

(iii) Preliminary plans prepared by an architect or civil engineer for all alterations to the Premises that are contemplated to be made by Tenant, the proposed assignee or subtenant.

(c) No assignment or sublease shall be valid and no assignee or subtenant shall take possession of the Premises assigned or subleased until an executed counterpart of such assignment or sublease has been delivered to Landlord.

<PAGE> -40-

(d) No subtenant or assignee shall have a right further to sublet or assign without Landlord's prior consent pursuant to this Paragraph 12.1,

(e) In the case of an assignment, 50% of any sums or other economic consideration received by Tenant for that assignment shall be paid to Landlord after first deducting (i) the unamortized cost of leasehold improvements paid for by Tenant in connection with such assignment, (ii) the cost of any real estate commissions incurred by Tenant in connection with such assignment, (iii) any improvement allowance or economic concession paid by Tenant to the assignee, (iv) reasonable attorneys' fees incurred in connection with documenting the assignment, and (v) reasonable advertising costs incurred in connection with the assignment.

(f) In the case of a subletting, 50% of any sums or economic consideration received by Tenant under the terms of the applicable sublease shall be paid to Landlord after first deducting (i) the rent due hereunder prorated to reflect only rent allocable to the sublet portion of the Premises, (ii) the cost of tenant improvements made to the sublet portion of the Premises at Tenant's cost in connection with such sublease and any improvement allowance or economic concession paid by Tenant to the sublessee, which shall be amortized over the term of the applicable sublease (iii) the cost of any real estate commissions incurred by Tenant in connection with such subletting, amortized over the term of the sublease, (iv) reasonable attorneys' fees incurred in connection with documenting the sublease, and (v) reasonable advertising expenses incurred in connection with the sublease.

(g) Without limiting any other basis upon which Landlord may withhold its consent to any assignment of this Lease, Landlord and Tenant agree that it shall be conclusively deemed to be reasonable for Landlord to withhold its consent to an assignment of this Lease to an assignee if the tangible net worth of the assignee and any guarantor of that assignee's obligations under this Lease, as determined by Landlord in its reasonable discretion in accordance with generally accepted accounting principles is less than $100,000,000.00, as increased annually from the Commencement Date by the increase, if any, in the CPI. For purposes of this Paragraph 12.1(g), if the Guarantor named in Paragraph 54 expressly agrees in writing for the benefit of Landlord that its guaranty of this Lease will continue in full force and effect and that it will not be released from any obligations by reason of the assignment, then the tangible net worth of the named Guarantor shall be taken into account under this Paragraph 12.1(g) as a "guarantor of assignee's obligations under this Lease."

12.2 Tenant Affiliate . Notwithstanding the provisions of paragraph 12.1 hereof, Tenant may assign or sublet the Premises, or any portion thereof, without Landlord's consent, to any corporation or other entity which controls,

<PAGE> -41-

is controlled by or is under common control with Tenant, or to any corporation or other entity resulting from the merger or consolidation with Tenant, or to any person or entity which acquires all the assets of Tenant as a going concern of the business that is being conducted on the Premises, all of which are referred to as "Tenant Affiliate," provided that (i) prior to such assignment or sublease, Tenant delivers to Landlord notice of the proposed transfer and the financial statements or other financial and background information of the assignee or sublessee as required for other transfers, including without limitation, sufficient information to determine that the proposed transferee is a Tenant Affiliate that meets the requirements of this Section 12.2; (ii) if the transfer is an assignment, the assignee assumes, in full, the obligations of Tenant under this Lease (or if a sublease, the sublessee of a portion of the Premises or term assumes, in full, the obligations of Tenant with respect to such portion); and (iii) unless Landlord consents to the same, the use of the Premises set forth herein remains unchanged. As used in this section, "control" (including, with its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies through ownership of at least 51% of the securities or partnership or other ownership interests of the entity subject to control. Any such assignment shall not, in any way, affect or limit the liability of Tenant under the terms of this Lease, even if after such assignment or subletting the terms of this Lease are materially changed or altered without the consent of Tenant, the consent of whom shall not be necessary.

12.3 Tenants Other Than Individuals.

(a) If Tenant is a partnership, a transfer of any interest of a general partner, a withdrawal of any general partner from the partnership, or the dissolution of the partnership, shall be deemed to be an assignment of this Lease.

(b) If Tenant is a corporation, unless Tenant is a public corporation whose stock is regularly traded on a national stock exchange, or is regularly traded in the over-the-counter market and quoted on NASDAQ, any sale or other transfer of a percentage of capital stock of Tenant which results in a change of control (as defined in paragraph 12.2), or the sale or other transfer of substantially all of the assets of Tenant, shall be deemed to be an assignment of this Lease. Notwithstanding the foregoing, so long as the initially named Tenant or any of its Tenant Affiliates is the Tenant under this Lease, no transfer of the stock of Tenant shall be deemed an assignment requiring Landlord's consent under this Lease.

12.4 Terms and Conditions of Assignment . Regardless of Landlord's consent, no assignment shall release Tenant of Tenant's obligations hereunder or alter the primary liability of Tenant to pay the Base Rent and Tenant's Share of Operating Expenses, and to perform all other obligations to be performed by Tenant hereunder.

<PAGE> -42-

Landlord may accept rent from any person other than Tenant pending approval or disapproval of such assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of rent shall constitute a waiver or estoppel of Landlord's right to exercise its remedies for the breach of any of the terms or conditions of this paragraph 12 of this Lease. Consent to one assignment shall not be deemed consent to any subsequent assignment. In the event of default by any assignee of Tenant or any successor of Tenant, in the performance of any of the terms hereof, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against said assignee, Landlord may consent to subsequent assignments of this Lease or amendments or modifications to this Lease with assignees of Tenant, without notifying Tenant, or any successor of Tenant, and without obtaining its or their consent thereto and such action shall not relieve Tenant of liability under this Lease; provided that Tenant shall not be liable for any increase in the obligations under this Lease resulting from an amendment or modification of this Lease to which Tenant has not consented.

12.5 Terms and Conditions Applicable to Subletting . Regardless of Landlord's consent, the following terms and conditions shall apply to any subletting by Tenant of all or any part of the Premises and shall be included in subleases:

(a) Tenant hereby assigns and transfers to Landlord all of Tenant's interest in all rentals and income arising from any sublease heretofore or hereafter made by Tenant, and Landlord may collect such rent and income and apply same toward Tenant's obligations under this Lease; provided, however, that until a default which continues beyond any applicable notice and cure period shall occur in the performance of Tenant's obligations under this Lease, Tenant may, subject to paragraphs 12.1(e) and 12.1(f) receive, collect and enjoy the rents accruing under such sublease. Landlord shall not, by reason of this or any other assignment of such sublease to Landlord nor by reason of the collection of the rents from a subtenant, be deemed liable to the subtenant for any failure of Tenant to perform and comply with any of Tenant's obligations to such subtenant under such sublease. Tenant hereby irrevocably authorizes and directs any such subtenant, upon receipt of a written notice from Landlord stating that a default exists in the performance of Tenant's obligations under this Lease which has continued beyond any applicable notice and cure period, to pay to Landlord the rents due and to become due under the sublease, Tenant agrees that such subtenant shall have the right to rely upon any such statement and request from Landlord, and that such subtenant shall pay such rents to Landlord without any obligation or right to inquire as to whether such default exists and notwithstanding any notice from or claim from Tenant to the contrary. Tenant shall have no right or claim against such subtenant or Landlord for any such rents so paid by said subtenant to Landlord.

<PAGE> -43-

(b) To the extent Landlord's approval is required under this Lease, no sublease entered into by Tenant shall be effective unless and until it has been approved in writing by Landlord. In entering into any sublease, Tenant shall use only such form of sublease as is satisfactory to Landlord, and once approved by Landlord, such sublease shall not be changed or modified without Landlord's prior written consent. Any subtenant shall, by reason of entering into a sublease under this Lease, be deemed, for the benefit of Landlord, to have assumed and agreed to conform and comply with each and every obligation herein to be performed by Tenant other than such obligations as are contrary to or inconsistent with provisions contained in a sublease to which Landlord has expressly consented in writing.

(c) The consent by Landlord to any subletting shall not release Tenant from its obligations or alter the primary liability of Tenant to pay the rent and perform and comply with all of the obligations of Tenant to be performed under this Lease.

(d) The consent by Landlord to any subletting shall not constitute a consent to any subsequent subletting by Tenant or to any assignment or subletting by the subtenant. However, Landlord may consent to subsequent sublettings and assignments of the sublease or any amendments or modifications thereto without notifying Tenant or anyone else liable on the Lease or sublease and without obtaining their consent and such action shall not relieve such persons from liability; provided that Tenant shall not be liable for any increase in the obligations under this Lease resulting from an amendment or modification of this Lease to which Tenant has not consented.

(e) In the event of any default under this Lease which continues beyond any applicable notice and cure period, Landlord may proceed directly against Tenant, any guarantors or any one else responsible for the performance of this Lease, including the subtenant, without first exhausting Landlord's remedies against any other person or entity responsible therefor to Landlord, or any security held by Landlord or Tenant.

(f) In the event Tenant shall default in the performance of its obligations under this Lease, Landlord, at its option and without any obligation to do so, may require any subtenant to attorn to Landlord, in which event Landlord shall undertake the obligations of Tenant under such sublease from the time of the exercise of said option to the termination of such sublease; provided, however, Landlord shall not be liable for any prepaid rents or security deposit paid by such subtenant to Tenant or for any other prior defaults of Tenant under such sublease.

<PAGE> -44-

(g) Each and every consent required of Tenant under a sublease shall also require the consent of Landlord.

(h) No subtenant shall further assign or sublet all or any part of the Premises without Landlord's prior written consent pursuant to this paragraph 12.

(i) Landlord's written consent to any subletting of the Premises by Tenant shall not constitute an acknowledgment that no default then exists under this Lease of the obligations to be performed by Tenant nor shall such consent be deemed a waiver of any then existing default, except as may be otherwise stated by Landlord at the time.

(j) With respect to any subletting to which Landlord has consented, Landlord agrees to deliver a copy of any notice of default by Tenant to the subtenant. Such subtenant shall have the right to cure a default of Tenant within ten (10) business days after service of said notice of default upon such subtenant, and the subtenant shall have a right of reimbursement and offset from and against Tenant for any such defaults cured by the subtenant.

12.6 Attorney's Fees . In the event Tenant shall assign or sublet the Premises or request the consent of Landlord to any assignment or subletting or if Tenant shall request the consent of Landlord for any act Tenant proposes to do then Tenant shall pay Landlord's actual, out-of-pocket, attorney's and/or consultants' fees incurred in connection therewith, such attorney's fees not to exceed $350.00 for each such request. Notwithstanding anything to the contrary in this Paragraph 12.6 , the parties agree that a payment of $750.00 is a reasonable fee for Landlord's review of Tenant's request to assign or sublet with respect to any assignment or subletting requiring Landlord's consent pursuant to this Lease.

12.7 Permitted Occupants . Tenant may allow any person or company which is a client or customer of Tenant or which is providing service to Tenant or one of Tenant's clients, to occupy portions of the Premises without such occupancy being deemed an assignment or subletting so long as (a) no new demising walls are constructed to accomplish such occupancy, (b) such relationship was not created as a subterfuge to avoid the obligations set forth in this Lease, and (c) the total area occupied by all persons under this Paragraph 12.7 does not exceed ten percent (10%) of the square footage of the Premises in the aggregate.

13. Default Remedies .

13.1 Default . The occurrence of any one or more of the following events shall constitute a material default of this Lease by Tenant:

(a) The abandonment of the Premises by Tenant.

<PAGE> -45-

(b) The failure by Tenant to make any payment of rent or any other payment required to be made by Tenant hereunder, as and when due, where such failure shall continue for a period of ten (10) days after written notice thereof from Landlord to Tenant. In the event that Landlord serves Tenant with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes such Notice to Pay Rent or Quit shall also constitute the notice required by this subparagraph.

(c) Except as otherwise provided in this Lease, the failure by Tenant to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Tenant, other than described in paragraph (b) above, where such failure shall continue for a period of thirty (30) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant's noncompliance is such that more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commenced such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion. To the extent permitted by law, such thirty (30) day notice shall constitute the sole and exclusive notice required to be given to Tenant under applicable Unlawful Detainer statutes.

(d) (i) The making by Tenant of any general arrangement or general assignment for the benefit of creditors; (ii) Tenant becomes a "debtor" as defined in 11 U.S.C. Section 101 or any successor statute thereto (unless, in the case of a petition filed against Tenant, the same is dismissed within sixty (60) days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where possession is not restored to Tenant within thirty (30) days; or (iv) the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure is not discharged within thirty (30) days. In the event that any provision of this paragraph 13.1(d) is contrary to any applicable law, such provision shall be of no force or effect.

(e) The discovery by Landlord that any financial statement given to Landlord by Tenant, any assignee of Tenant, any subtenant of Tenant, any successor in interest of Tenant or any guarantor of Tenant's obligations hereunder, was materially false.

(f) If the performance of Tenant's obligations under this Lease is guaranteed: (i) the dissolution of a guarantor, (ii) the termination of a guarantor's liability with respect to this Lease other than in accordance with the terms of such guaranty, (iii) a guarantor's becoming insolvent or the subject of a bankruptcy filing, (iv) a guarantor's refusal to honor the guaranty, or (v) a

<PAGE> -46-

guarantor's breach of its guaranty obligation on an anticipatory breach basis, and Tenant's failure, within sixty (60) days following written notice by or on behalf of Landlord to Tenant of any such event, to provide Landlord with written alternative assurance or security, which, when coupled with the then existing resources of Tenant, equals or exceeds the combined financial resources of Tenant and the guarantors that existed at the time of execution of this Lease.

13.2 Remedies . If Tenant fails to perform any affirmative duty or obligation of Tenant under this Lease, within thirty (30) days after written notice to Tenant (or in case of an emergency, without notice), Landlord may at its option (but without obligation to do so), perform such duty or obligation on Tenant's behalf including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. The costs and expenses of any such performance by Landlord shall be due and payable by Tenant to Landlord upon invoice therefor. In the event of a breach of this Lease by Tenant, as defined in Paragraph 13.1 , with or without further notice or demand, and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such breach, Landlord may:

(a) Terminate Tenant's right to possession of the Premises by any lawful means, in which case this Lease and the term hereof shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. In such event Landlord shall be entitled to recover from Tenant: (i) the worth at the time of the award of the unpaid rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Tenant proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Tenant proves could be reasonably avoided; and (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by the Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, reasonable attorneys' fees, and that portion of the leasing commission paid by Landlord applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provisions (i) and (ii) of the prior sentence shall be calculated based on an interest rate equal to the Interest Rate (as defined below) The worth at the time of award of the amount referred to in provision (iii) of the prior sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus

<PAGE> -47-

one percent. Efforts by Landlord to mitigate damages caused by Tenant's breach of this Lease shall not waive Landlord's right to recover damages under this Paragraph. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Landlord shall have the right to recover in such proceeding the unpaid rent and damages as are recoverable therein, or Landlord may reserve therein the right to recover all or any part thereof in a separate suit for such rent and/or damages. If a notice and grace period required under subparagraphs 13.1(b) , (c) or (d) was not previously given, a notice to pay rent or quit, or to perform or quit, as the case may be, given to Tenant under any statute authorizing the forfeiture of leases for unlawful detainer shall also constitute the applicable notice for grace period purposes required by subparagraphs 13.1(b) , (c) or (d) . In such case, the applicable grace period under subparagraphs 13.1(b) , (c) or (d) and under the unlawful detainer statute shall run concurrently after the one such statutory notice, and the failure of Tenant to cure the default within the greater of the two such grace periods shall constitute both an unlawful detainer and breach of this Lease entitling Landlord to the remedies provided for in this Lease and/or by said statute.

(b) Continue the Lease and Tenant's right to possession in effect (in California under California Civil Code Section 1951.4) after Tenant's breach and abandonment and recover the rent as it becomes due, provided Tenant has the right to sublet or assign, subject only to reasonable limitations. See Paragraphs 12 and 36 for the limitations on assignment and subletting which limitations Tenant and Landlord agree are reasonable. Acts of maintenance or preservation, efforts to relet the Premises, or the appointment of a receiver to protect the Landlord's interest under the Lease, shall not constitute a termination of the Tenant's right to possession.

(c) Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the State of California. Unpaid installments of rent and other unpaid monetary obligations of Tenant under the terms of this Lease shall bear interest from the date due at the Interest Rate.

(d) The expiration or termination of this Lease and/or the termination of Tenant's right to possession shall not relieve Tenant from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Tenant's occupancy of the Premises.

13.3 Default by Landlord . Landlord shall not be in default unless Landlord fails to perform obligations required of Landlord within a reasonable time, but in no event later than thirty (30) days after written notice by Tenant to Landlord and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have theretofore been furnished to Tenant in writing,

<PAGE> -48-

specifying wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for performance then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. Any damages or judgments arising out of Landlord's default of its obligations under this Lease shall be satisfied only out of Landlord's interest and estate in the Industrial Center, and Landlord shall have no personal liability beyond such interest and estate with respect to such damages or judgments.

13.4 Late Charges . Tenant hereby acknowledges that late payment by Tenant to Landlord of Base Rent, Tenant's Share of Operating Expenses or other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed on Landlord by the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of Base Rent, Operating Expenses or any other sum due from Tenant shall not be received by Landlord or Landlord's designee within ten (10) days after such amount shall be due, then, without any requirement for notice to Tenant, Tenant shall pay to Landlord a late charge equal to 6% of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder. Notwithstanding the foregoing provisions of Paragraph 13.4, the 6% late charge described in Paragraph 13.4 shall not be imposed with respect to the first late payment in any calendar year unless the applicable payment due from Tenant is not received by Landlord or Landlord's designee within ten (10) days following written notice from Landlord that such payment was not received when due. Following the first such written notice from Landlord in any calendar year (and regardless of whether such payment is then received within such 10-day period), a late charge will be imposed without notice for any subsequent payment due from Tenant during such calendar year which is not received within ten (10) days of its due date.

14. Condemnation . If the Premises or any portion thereof or the Industrial Center are taken under the power of eminent domain, or sold under the threat of the exercise of said power (all of which are herein called "condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than ten percent of the floor area of the Premises, or more than fifteen percent (15%) of Tenant's Parking Area is taken by condemnation (and with respect to the taking of Tenant's Parking Area, Landlord is not able to provide Tenant with comparable substitute parking so that Tenant has an area for parking that is at least ninety percent (90%) of the area of the original Tenant's

<PAGE> -49-

Parking Area), Tenant may, at Tenant's option, to be exercised in writing only within ten (10) days after Landlord shall have given Tenant written notice of such taking (or in the absence of such notice, within ten (10) days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Tenant does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the rent shall be reduced in the proportion that the floor area of the Premises taken bears to the total floor area of the Premises. No reduction of rent shall occur if the only area taken is that which does not have the Premises located thereon. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Landlord, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Tenant shall be entitled to any award for loss of or damage to Tenant's trade fixtures and removable personal property, provided, however, that in the event the court fixing the amount of the award determines the portion of the award attributable to the Tenant Improvements constructed pursuant to Exhibit "D" (the "Tenant Improvement Award"), the Tenant Improvement Award shall be shared by Landlord and Tenant on an equal priority basis, with Landlord receiving Landlord's Award Share (as defined below) of the Unamortized Tenant Improvement Award (as defined below) and Tenant receiving Tenant's Award Share (as defined below) of the Unamortized Tenant Improvement Award. As used herein, the term "Unamortized Tenant Improvement Award" means the amount of the Tenant Improvement Award multiplied by a fraction, the numerator of which is the number of months remaining in the initial Term of this Lease and the denominator of which is 120. As used herein, the term "Landlord's Award Share" means a fraction, the numerator of which is the amount of the Tenant Improvement Allowance and the denominator of which is the total amount expended by Tenant for the Tenant Improvements pursuant to Exhibit "D." As used herein, the term "Tenant's Award Share" means a fraction determined by subtracting Landlord's Award Share from 1. In the event that this Lease is not terminated by reason of such condemnation, Landlord shall to the extent of severance damages received by Landlord in connection with such condemnation, repair any damage to the Premises caused by such condemnation except to the extent that Tenant has been reimbursed therefor by the condemning authority. Tenant may pay any amount in excess of such severance damages required to complete such repair. In the event Tenant does not elect to contribute the amount of the shortfall in damages necessary for the repair, as provided in this Paragraph 14, Landlord may elect either to (a) fund the shortfall itself, in which event Landlord shall proceed with the repair and restoration or (b) terminate this Lease.

<PAGE> -50-

15. Broker's Commissions .

Tenant and Landlord each represent and warrant to the other that neither has had any dealings with any person, firm, broker or finder (other than those persons, if any, whose names are set forth at the end of this paragraph 15 ) in connection with the negotiation of this Lease and/or the consummation of the transaction contemplated hereby, and no other broker or other person, firm or entity is entitled to any commission or finder's fee in connection with said transaction and Tenant and Landlord do each hereby indemnify and hold the other harmless from and against any costs, expenses, attorneys' fees or liability for compensation, commission or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying party. Named brokers:

Landlord's Broker:	CB Richard Ellis
Tenant's Broker:	Grubb & Ellis (Jim Linn/Brad Wilson/Nigel Stout)

The commission payable to Landlord's Broker with respect to this Lease shall be pursuant to the terms of the separate commission agreement in effect between Landlord and Landlord's Broker. Landlord's Broker shall pay a portion of its commission to Tenant's Broker, as provided in a written agreement between Landlord's Broker and Tenant's Broker. Nothing in this Lease shall impose any obligation on Landlord to pay a commission or fee to any party other than Landlord's Broker.

16. Estoppel Certificate .

16.1 Delivery . Each party (as "responding party") shall at any time upon not less than ten (10) days' prior written notice from the other party, ("requesting party") execute, acknowledge and deliver to the requesting party a statement in writing (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the date to which the rent and other charges are paid in advance, if any, and (ii) acknowledging that there are not, to the responding party's knowledge, any uncured defaults on the part of the requesting party, or specifying such defaults if any are claimed. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrancer of the Premises or of the business of the requesting party.

16.2 Failure to Deliver . At the requesting party's option, the failure to deliver such statement within such time shall be a material default of this Lease by the party who is to respond, without any further notice to such party, or it shall be conclusive upon such party that (i) this Lease is in full force and effect, without modification except as may be represented by the requesting party, (ii) there are no

<PAGE> -51-

uncured defaults in the requesting party's performance, and (iii) if Landlord is the requesting party, not more than one month's rent has been paid in advance.

16.3 Financial Statements . Tenant shall deliver to Landlord at any time upon Landlord's request, Tenant's current audited financial statements, including a balance sheet and profit and loss statement for the most recent prior year (collectively, the "Financial Statements"), which Financial Statements shall accurately and completely reflect the financial condition of Tenant. Landlord shall have the right to deliver the same to any proposed purchaser of the Building or the Industrial Center and to any encumbrancer of all or any portion of the Building or the Industrial Center. The Financial Statements are represented and warranted by Tenant to be correct and to accurately and fully reflect Tenant's true financial condition as of the date of submission of any Financial Statements to Landlord. So long as this Lease is guaranteed by Guarantor and Guarantor is publicly traded and is a reporting company under the regulations of the Securities and Exchange Commission, the annual reports and other financial reports provided by the Guarantor to the Securities and Exchange Commission shall satisfy the requirements of this Paragraph 16.3 to deliver Financial Statements.

17. Landlord's Liability . The term "Landlord" as used herein shall mean only the owner or owners, at the time in question, of the fee title of the Industrial Center. Landlord herein named (and in case of any subsequent transfers then the grantor) shall be relieved from and after the date of such transfer of all liability as respects Landlord's obligations thereafter to be performed, provided that any funds in the hands of Landlord or the then grantor at the time of such transfer, in which Tenant has an interest, shall be delivered to the grantee and any grantee pursuant to a voluntary transfer of the Industrial Center assumes all Landlord's obligations to be performed after that transfer. The obligations contained in this Lease to be performed by Landlord shall, subject as aforesaid, be binding on Landlord's successors and assigns, only during their respective periods of ownership.

18. Severability . The invalidity of any provision of this Lease as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.

19. Interest on Past-due Obligations . Except as expressly herein provided, any amount due to Landlord not paid when due shall bear interest at the Interest Rate. Payment of such interest shall not excuse or cure any default by Tenant under this Lease; provided, however, that interest shall not be payable on late charges incurred by Tenant nor on any amounts upon which late charges are paid by Tenant. As used herein, the term "Interest Rate" means the lesser of (a) a floating annual interest rate equal to three percent (3%) over the prime rate (for corporate loans at large United States money center commercial banks) published in the Wall Street Journal on the first business day of each month, or (b) the maximum rate permitted by applicable law.

<PAGE> -52-

In the event that the Wall Street Journal fails to publish such a prime rate, the "prime rate" shall be the prime rate or reference rate quoted by a national bank having offices in California selected by Landlord in its sole discretion. In the event that any refund is determined to be due Tenant pursuant to paragraph 4.2(f) or (e) , and Landlord does not make that payment or credit, Tenant, within thirty (30) days after that final determination, then interest shall accrue on that unpaid or uncredited amount at the Interest Rate commencing on the thirty-first day after that determination.

20. Time of Essence . Time is of the essence with respect to the obligations to be performed under this Lease.

21. Additional Rent . All monetary obligations of Tenant to Landlord under the terms of this Lease, including but not limited to Tenant's Share of Operating Expenses and insurance and tax expenses payable shall be deemed to be rent.

22. Incorporation of Prior Agreements; Amendments . This Lease contains all agreements of the parties with respect to any matter mentioned herein. No prior or contemporaneous agreement or understanding pertaining to any such matter shall be effective. This Lease may be modified in writing only, signed by the parties in interest at the time of the modification. Except as otherwise stated in this Lease, Tenant hereby acknowledges that neither the real estate broker listed in paragraph 15 hereof nor any cooperating broker on this transaction nor the Landlord or any employee or agents of any of said persons has made any oral or written warranties or representations to Tenant relative to the condition or use by Tenant of the Premises or the Industrial Center.

23. Notices . Any notice required or permitted to be given hereunder shall be in writing and shall be personally delivered, delivered by Federal Express or comparable overnight courier, providing written evidence of delivery, or delivered by U.S. registered or certified mail, return receipt requested, postage prepaid to the addresses provided below. Upon Tenant's taking possession of the Premises, the Premises shall constitute Tenant's address for notice purposes. A copy of all notices required or permitted to be given to Landlord hereunder shall be concurrently transmitted to such party or parties at such addresses as Landlord may from time to time hereafter designate by notice to Tenant.

Landlord:
	The Prudential Insurance Company of America
	Four Embarcadero Center, Suite 2700
	San Francisco, CA 94111-4180
	Attn: Yvonne Skillings

<PAGE> -53-

With a copy by the same method to:

	c/o The Prudential Insurance Company of America
	8 Campus Drive, 4 ^th Floor
	Parsippany, New Jersey 07054
	Attn: Joan Hayden, Esquire

With a copy by the same method to:

	Unire Real Estate Group, Inc.
	10 Pointe Drive, Suite 150
	Brea, California 92821
	Attn: Mark Harryman

Tenant:

Prior to the Commencement Date:

	Mason Electric Co.
	605 8 ^th Street
	San Fernando, California 91340
	Attn: Roya Hadaegh, Director of Finance

After the Commencement Date:

	Mason Electric Co.
	13955 Balboa Boulevard
	Los Angeles (Sylmar), California
	Attn: Roya Hadaegh, Director of Finance

At all times, with a copy by the same method to:

	Esterline Technologies Corporation
	10800 N.E. 8th St., Suite 600
	Bellevue, Washington 98004
	Attn: Robert D. George

or such other address as either party may from time to time designate as its notice address by notifying the other party thereof. Notice so sent shall be deemed given (a) when personally delivered, or (b) on the first business day following deposit with Federal Express or a comparable overnight courier service providing written evidence of delivery, or (c) five business days following deposit in the United States mail, if notice is sent by registered or certified mail, return receipt requested, postage prepaid.

<PAGE> -54-

24. Waivers . No waiver by Landlord of any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Tenant of the same or any other provision. Landlord's consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Landlord's consent to or approval of any subsequent act by Tenant. The acceptance of rent hereunder by Landlord shall not be a waiver of any preceding breach by Tenant of any provision hereof, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. Landlord's acceptance of partial payment of rent does not constitute a waiver of any rights, including without limitation any right Landlord may have to recover possession of the Premises.

25. Recording . Tenant shall not record this Lease. Either Landlord or Tenant may record a Memorandum of Lease with respect to this Lease in the form of Exhibit "F", attached hereto. The parties agree to execute the Memorandum of Lease concurrently with the execution of the amendment confirming the Commencement Date described in the last sentence of Paragraph 3.1. The person requesting the recording shall pay all of the costs of that recording, including, without limitation, any documentary transfer tax.

26. Holding Over . If Tenant, with Landlord's consent, remains in possession of the Premises or any part thereof after the expiration of the term hereof, such occupancy shall be a tenancy from month to month upon all of the provisions of this Lease pertaining to the obligations of Tenant, except that the monthly rent shall be the Holdover Percentage (as defined below) of the rent payable in the last month of the lease term, but all Options, if any, granted under the terms of this Lease shall be deemed terminated and be of no further effect during said month to month tenancy. As used herein, the term "Holdover Percentage" means 100% with respect to the first sixty (60) days of the holdover and 125% with respect to any holding over in excess of sixty (60) days.

27. Cumulative Remedies . No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.

28. [INTENTIONALLY OMITTED]

29. Binding Effect; Choice of Law . Subject to any provisions hereof restricting assignment or subletting by Tenant and subject to the provisions of paragraph 17 , this Lease shall bind the parties, successors and assigns. This Lease shall be governed by the laws of the State where the Industrial Center is located and any litigation concerning this Lease between the parties hereto shall be initiated in the county in which the Industrial Center is located.

<PAGE> -55-

30. Subordination; Attornment; Non-Disturbance .

30.1 Subordination . Landlord represents and warrants to Tenant that as of the date of the mutual execution and delivery of this Lease, the Industrial Center is not encumbered by a Security Device (as defined below). This Lease and any Option granted hereby shall be subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, "Security Device"), now or hereafter placed upon the Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extensions thereof. Tenant agrees that the holders of any such Security Devices (in this Lease together referred to as "Landlord's Lender") shall have no liability or obligation to perform any of the obligations of Landlord under this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Tenant, whereupon this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof. Landlord warrants that there are no Security Devices encumbering the Premises on the date of this Lease.

30.2 Attornment . Subject to the non-disturbance provisions of Paragraph 30.3, Tenant agrees to attorn to a Lender or another party who acquires ownership of the Premises by reason of a foreclosure of a Security Device, and that in the event of such foreclosure, such new owner shall not; (i) be liable for any act or omission of any prior Landlord or with respect to events occurring prior to acquisition of ownership (provided that this clause (i) shall not relieve the new owner from its ongoing maintenance obligations under this Lease); (ii) be subject to any offsets or defenses which Tenant might have against any prior Landlord unless such obligations have been expressly assumed in writing by such new owner; or (iii) be bound by prepayment of more than one (1) month's rent; or (iv) have any obligation with respect to Tenant's security deposit, except to the extent that security deposit has been delivered to that new owner.

30.3 Non-Disturbance . With respect to Security Devices entered into by Landlord after the execution of this Lease, Tenant's subordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance Agreement provides that Tenant's possession of the Premises, and this Lease, including any options to extend the term hereof, will not be disturbed so long as Tenant is not in breach hereof and attorns to the record owner of the Premises.

30.4 Self-Executing . The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however, that upon written request from Landlord or a Lender in connection with a sale, financing or refinancing of the Premises, Tenant and Landlord shall execute such further writings as may be reasonably required to separately document any subordination, attornment and/or Non-Disturbance Agreement provided for herein.

<PAGE> -56-

31. Attorney's Fees .

31.1 Attorney's Fees . All costs and expenses, including reasonable attorneys' fees (whether or not legal proceedings are instituted), involved in collecting rents, enforcing the obligations of Tenant, or protecting the rights or interests of Landlord under this Lease, whether or not an action is filed, including without limitation the cost and expense of instituting and prosecuting legal proceedings or recovering possession of the Premises after default by Tenant or upon expiration or sooner termination of this Lease, shall be due and payable by Tenant on demand, as additional rent. In addition, and notwithstanding the foregoing, if either party hereto shall file any action or bring any proceeding against the other party arising out of this Lease or for the declaration of any rights hereunder, the prevailing party in such action shall be entitled to recover from the other party all costs and expenses, including reasonable attorneys' fees incurred by the prevailing party, as determined by the trier of fact in such legal proceeding. For purposes of this provision, the terms "attorneys' fees" or "attorneys' fees and costs," or "costs and expenses" shall mean the fees and expenses of legal counsel (including external counsel and in-house counsel) of the parties hereto, which include printing, photocopying, duplicating, mail, overnight mail, messenger, court filing fees, costs of discovery, and fees billed for law clerks, paralegals, investigators and other persons not admitted to the bar for performing services under the supervision and direction of an attorney. For purposes of determining in-house counsel fees, the same shall be considered as those fees normally applicable to a partner in a law firm with like experience in such field. In addition, the prevailing party shall be entitled to recover reasonable attorneys' fees and costs incurred in enforcing any judgment arising from a suit or proceeding under this Lease, including without limitation post-judgment motions, contempt proceedings, garnishment, levy and debtor and third party examinations, discovery and bankruptcy litigation, without regard to schedule or rule of court purporting to restrict such award. This post-judgment award of attorneys' fees and costs provision shall be severable from any other provision of this Lease and shall survive any judgment/award on such suit or arbitration and is not to be deemed merged into the judgment/award or terminated with the Lease.

31.2 Notices of Default . Landlord shall be entitled to attorney's fees, costs and expenses incurred in the preparation and service of notices of default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such default. Landlord and Tenant agree that $350.00 is a reasonable sum per occurrence for legal services and costs per preparation and service of a notice of default and that Landlord may include $350.00 as additional rent due in each such notice of default as an amount that must be paid to cure said default.

<PAGE> -57-

32. Landlord's Access . Landlord and Landlord's agents shall have the right to enter the Premises at reasonable times for the purpose of inspecting same, showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements or additions to the Premises or to the building of which they are part as Landlord may deem necessary or desirable. Landlord may at any time place on or about the Premises or the Building any ordinary free-standing "Building For Sale" signs and Landlord may at any time during the last 120 days of the term hereof place on or about the Premises any ordinary "For Lease" signs. All activities of Landlord pursuant to this paragraph shall be without abatement of rent, nor shall Landlord have any liability to Tenant for the same. Notwithstanding anything to the contrary in this Paragraph 32, except in the case of emergency or during periods in which Tenant is in default under this Lease, Landlord shall give Tenant notice at least two (2) business days in advance of Landlord's intent to enter the Premises and such entry shall be made during Tenant's business hours. Landlord agrees to exercise its rights under this Paragraph 32 in a manner designed to minimize to the extent reasonably possible disruption to Tenant's business and consistent with the practices of owners of similar properties in the Los Angeles area.

33. Auctions . Tenant shall not conduct, nor permit to be conducted, either voluntarily or involuntarily, any auction upon the Premises or the Common Areas without first having obtained Landlord's prior written consent. Notwithstanding anything to the contrary in this Lease, Landlord shall not be obligated to exercise any standard of reasonableness in determining whether to grant such consent.

34. Signs . Tenant shall not place any sign upon the Premises or the Industrial Center without Landlord's prior written consent. Under no circumstances shall Tenant place a sign on any roof of the Industrial Center. Tenant shall have the right, at its sole cost and expense, to install a sign on the exterior of the Building and/or on a monument sign identifying its name and logo. Tenant may also install signage with Tenant's own graphics at the entrance to the Premises. The graphics, materials, color, design, lettering, size, location and specifications of Tenant's signage shall be subject to the prior written approval of Landlord, which approval shall not be unreasonably withheld or delayed, and the approval of the City of Los Angeles. Landlord hereby approves of Tenant's signage shown on Exhibit "G". The signs shall be installed and maintained, at Tenant's sole cost and expense, pursuant to an installation and maintenance program approved and supervised by Landlord. At the expiration or earlier termination of this Lease, Landlord shall, at Tenant's sole cost and expense, cause the signs to be removed and the exterior of the Building and other areas affected by the signs to be restored to the condition existing prior to the installation of the signs. Landlord may disapprove any signage that contains a name which relates to an entity or individual which is of a character or reputation, or is associated with a political orientation or faction, which is materially inconsistent with the quality of the Industrial Center, or which would otherwise reasonably offend the landlord of a

<PAGE> -58-

comparable building or that would conflict with any covenants in leases of space in the Industrial Center. This signage right is personal to the initially named Tenant in this Lease and its Tenant Affiliates and any assignee of the Lease approved by Landlord pursuant to paragraph 12. Tenant may allow its subtenants to use Tenant's signage rights in lieu of Tenant's use or all or a portion of its signage rights such that the total amount of signage and area covered by that signage shall not increase beyond that shown on Exhibit "G" or otherwise permitted under this Lease.

35. Merger . The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, or a termination by Landlord, shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subtenancies or may, at the option of Landlord, operate as an assignment to Landlord of any or all of such subtenancies.

36. Consents . Except for paragraphs 33 , 34 (except as otherwise provided therein), 46 and 47 hereof, wherever in this Lease (including Exhibits) the consent of one party is required to an act of the other party, such consent shall not be unreasonably withheld, delayed or conditioned.

37. [Intentionally Omitted] .

38. Quiet Possession . Upon Tenant paying the rent for the Premises and observing and performing all of the covenants, conditions and provisions on Tenant's part to be observed and performed hereunder, Tenant shall have quiet possession of the Premises for the entire term hereof subject to all of the provisions of this Lease and all easements, covenants, conditions and restrictions of record. The individuals executing this Lease on behalf of Landlord represent and warrant to Tenant that they are fully authorized and legally capable of executing this Lease on behalf of Landlord and that such execution is binding upon all parties holding an ownership interest in the Industrial Center.

39. Options .

39.1 Definition . As used in this paragraph, the word "Option" has the following meaning: (1) the right or option to extend the term of this Lease or to renew this Lease or to extend or renew any lease that Tenant has on other property of Landlord; (2) the option or right of first refusal to lease the Premises or the right of first offer to lease the Premises or the right of first refusal to lease other space within the Industrial Center or other property of Landlord or the right of first offer to lease other space within the Industrial Center or other property of Landlord; (3) the right or option to purchase the Premises or the Industrial Center, or the right of first refusal to purchase the Premises or the Industrial Center, or the right of first offer to purchase the Premises or the Industrial Center, or the right or option to purchase other property of

<PAGE> -59-

Landlord, or the right of first refusal to purchase other property of Landlord or the right of first offer to purchaser other property of Landlord.

39.2 Options Personal . Each Option granted to Tenant in this Lease is personal to Tenant and may not be exercised or be assigned, voluntarily or involuntarily, by or to any person or entity other than Tenant, provided, however, the Option may be assigned to any Tenant Affiliate as defined in Paragraph 12.2 of this Lease who is an assignee of that Lease or any assignee of the Lease approved by Landlord pursuant to Paragraph 12. The Options herein granted to Tenant are not assignable separate and apart from this Lease.

39.3 Multiple Options . A later option to extend or renew this Lease cannot be exercised unless the prior option to extend or renew this Lease has been so exercised.

39.4 Effect of Default on Options .

(a) Tenant shall have no right to exercise an Option, notwithstanding any provision in the grant of Option to the contrary, (i) during the time commencing from the date Landlord gives to Tenant a factually correct notice of default pursuant to Paragraphs 13.1(a) , 13.1(b) , 13.1(c) or 13.1(e) and continuing until the default alleged in said notice of default is cured, or (ii) at any time after an event of default described in Paragraphs 13.1(d) or 13.1(f) (without any necessity of Landlord to give notice of such default to Tenant).

(b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Tenant's inability to exercise an Option because of the provisions of Paragraph 39.4(a) .

(c) All rights of Tenant under the provisions of an Option shall terminate and be of no further force or effect, notwithstanding Tenant's due and timely exercise of the Option, if, after such exercise and during the period before the first day of the applicable option period, a default occurs under this Lease that is not cured within the applicable notice and cure period provided for in Paragraph 13.1.

39.5 First Option . Landlord hereby grants to Tenant the option to extend the term of this Lease for a five (5) year period commencing on the date the prior term expires (the "First Option Period") upon each and all of the following terms and conditions:

(a) Tenant gives to Landlord, and Landlord actually receives, on a date which is prior to the date that the First Option Period would commence (if exercised) by at least nine (9) months, a written notice of exercise of the option to extend this Lease for said additional term, time being of the

<PAGE> -60-

essence. If said notification of the exercise of said option is not so given and received, this option shall automatically expire;

(b) The provisions of Paragraph 39 , including the provision relating to default of Tenant set forth in Paragraph 39.4 , of this Lease are conditions of this option;

(c) All of the terms and conditions of this Lease except where specifically modified by this option shall apply, except that Tenant shall have no further option to extend the term of this Lease other than for the Second Option Period;

(d) Any prior Tenant that has not been expressly released from liability under this Lease, and any guarantor of the Tenant's performance hereunder that has not been expressly released from liability under this Lease, expressly reaffirms in writing the extension of their liability for the term of the option; and

(e) The monthly Base Rent for each month of the First Option Period shall be equal to 95% of the then Fair Market Rental Rent (as defined below) of the Premises as of the commencement of the First Option Period, but in no event less than the monthly Base Rent scheduled to be paid during the month prior to the commencement of the First Option Period.

39.6 Second Option . Landlord hereby grants to Tenant the option to extend the term of this Lease for a five (5) year period commencing on the date the First Option Period expires (the "Second Option Period") upon each and all of the following terms and conditions:

(a) Tenant gives to Landlord, and Landlord actually receives, on a date which is prior to the date that the Second Option Period would commence (if exercised) by at least nine (9) months, a written notice of exercise of the option to extend this Lease for said additional term, time being of the essence. If said notification of the exercise of said option is not so given and received, this option shall automatically expire;

(b) The provisions of Paragraph 39 , including the provision relating to default of Tenant set forth in Paragraph 39.4 of this Lease are conditions of this option;

(c) All of the terms and conditions of this Lease except where specifically modified by this option shall apply, except that Tenant shall have no further option to extend the term of this Lease;

<PAGE> -61-

(e) The monthly Base Rent for each month of the Second Option Period shall be equal to 95% of the Fair Market Rental Rent of the Premises as of the commencement of the Second Option Period, but in no event less than the monthly Base Rent scheduled to be paid during the month prior to the commencement of the Second Option Period.

39.7 Fair Market Rent . For purposes of the Lease, the term "Fair Market Rental Rate" shall mean the annual amount per rentable square foot that a comparable landlord of a comparable building with comparable vacancy factors would accept in current transactions having commencement dates that are approximately the same as the date of the commencement of the applicable Option Period between non-affiliated parties from new, non-expansion, non-renewal and non-equity tenants of comparable credit-worthiness, for comparable space, for a comparable use, for a comparable period of time ("Comparable Transactions") in the Cascades Business Park, Sylmar and Van Nuys area. In any determination of Comparable Transactions appropriate consideration shall be given to the annual rental rates per rentable square foot, the standard of measurement by which the rentable square footage is measured, the ratio of rentable square feet to usable square feet, the type of escalation clause (e.g., whether increases in additional rent are determined on a net or gross basis, and if gross, whether such increases are determined according to a base year or a base dollar amount expense stop), the extent of Tenant's liability under the Lease, length of the lease term, size and location of premises being leased, the existence or absence of free rent, the existence or absence of a tenant improvement allowance, and other generally applicable conditions of tenancy for such Comparable Transactions. For purposes of determining what constitutes Comparable Transactions, the Premises shall be deemed to be improved with the Building shell improvements, the Existing Mezzanine, Landlord's Work and 15,000 square feet of finished offices (the "Assumed Improvements"). In addition, consideration shall be given to tenant improvement allowances provided for comparable transactions, taking into account the value of the Assumed Improvements. Other than to the extent they are part of the Assumed Improvements, no increases or decreases in the rental or useable value of the Premises by improvements or additions made by Tenant at Tenant's expense shall be taken into consideration. No deduction shall be given nor consideration given to allowances for real estate brokerage commissions. In addition, in determining what constitutes a Comparable Transaction, in the event that during the term of this Lease any capital improvements have been made to the Premises or the common areas (other than the Tenant Improvements described in the preceding sentence), the remaining useful life

<PAGE> -62-

of those capital improvements will be taken into consideration. If the Fair Market Rental Rate includes a component of free rent or tenant improvement allowance, Landlord may, at Landlord's sole option, elect to (a) grant some or all of the free rent and/or tenant improvement allowance to Tenant; and (b) reduce the Base Rent component of the Fair Market Rental Value to an effective rental rate that takes into consideration the total dollar value of that portion of the free rent and/or tenant improvement allowance that Landlord has elected not to grant to Tenant (in which event that portion of the free rent and/or tenant improvement allowance evidenced in the effective rental rate shall not be granted to Tenant). The intent is that, except as limited in this paragraph 39.7 , Tenant will obtain the same rent and other economic benefits that Landlord would otherwise give in Comparable Transactions and that Landlord will make, and receive the same economic payments and concessions that Landlord would otherwise make, and receive in Comparable Transactions.

39.7.1 Landlord shall determine the Fair Market Rental Rate by using its good faith judgment. Landlord shall provide written notice of such amount no less than eight months prior to the commencement of the applicable Option Term. Tenant shall have thirty (30) days ("Tenant's Review Period") after receipt of Landlord's notice of the new rental within which to accept such rental or to reasonably object thereto in writing. In the event Tenant objects, Landlord and Tenant shall attempt to agree upon such Fair Market Rental Rate using their best good faith efforts. If Landlord and Tenant fail to reach agreement within fifteen (15) days following Tenant's Review Period ("Outside Agreement Date"), then each party shall place in a separate sealed envelope their final proposal as to Fair Market Rental Rate and such determination shall be submitted to arbitration in accordance with Subsections 39.7.3-39.7.7 below. Failure of Tenant to so elect in writing within Tenant's Review Period shall conclusively be deemed its disapproval of the Fair Market Rental Rate determined by Landlord.

39.7.2 In the event that Landlord fails to timely generate the initial written notice of Landlord's opinion of the Fair Market Rental Rate which triggers the negotiation period hereof, then Tenant may commence such negotiations by providing the initial notice, in which event Landlord shall have fifteen (15) days ("Landlord's Review Period") after receipt of Tenant's notice of the new rental within which to accept such rental. In the event Landlord fails to accept in writing such rental proposed by Tenant, then such proposal shall be deemed rejected, and Landlord and Tenant shall attempt in good faith to agree upon such Fair Market Rental Rate using their best good faith efforts. If Landlord and Tenant fail to reach agreement within fifteen (15) days following Landlord's Review Period (which shall be, in such event, the "Outside Agreement Date" in lieu of the above definition of such date), then each party shall place in a separate sealed envelope their final proposal as to the Fair Market Rental Rate and such determination shall be submitted to arbitration in accordance with Subsections 39.7.3-39.7.7 below.

<PAGE> -63-

39.7.3 Landlord and Tenant shall meet with each other within five (5) business days of the Outside Agreement Date and exchange the sealed envelopes and then open such envelopes in each other's presence. If Landlord and Tenant do not mutually agree upon the Fair Market Rental Rate within five (5) business days of the exchange and opening of envelopes, then, within ten (10) business days of the exchange and opening of envelopes, Landlord and Tenant shall agree upon and jointly appoint a single arbitrator who shall by profession be a real estate lawyer or broker who shall have been active over the five (5) year period ending on the date of such appointment in the leasing of comparable properties in the vicinity of the Building. Neither Landlord nor Tenant shall consult with such broker or lawyer as to his or her opinion as to Fair Market Rental Rate prior to the appointment. The determination of the arbitrator shall be limited solely to the issue of whether Landlord's or Tenant's submitted Fair Market Rental Rate for the Premises is the closest to the actual Fair Market Rental Rate for the Premises as determined by the arbitrator, taking into account the requirements hereof. Such arbitrator may hold such hearings and require such briefs as the arbitrator, in his or her sole discretion, determines is necessary. In addition, Landlord or Tenant may submit to the arbitrator, with a copy to the other party, within five (5) business days after the appointment of the arbitrator any market data and additional information that such party deems relevant to the determination of the Fair Market Rental Rate ("FMRR Data") and the other party may submit a reply in writing within five (5) business days after receipt of such FMRR Data.

39.7.4 The arbitrator shall, within thirty (30) days of his or her appointment, reach a decision as to whether the parties shall use Landlord's or Tenant's submitted Fair Market Rental Rate, and shall notify Landlord and Tenant of such determination.

39.7.5 The decision of the arbitrator shall be binding upon Landlord and Tenant.

39.7.6 If Landlord and Tenant fail to agree upon and appoint an arbitrator, then the appointment of the arbitrator shall be made by the Presiding Judge of the Los Angeles Superior Court, or, if he or she refuses to act, by any judge having jurisdiction over the parties.

39.7.7 The cost of arbitration shall be paid by Landlord and Tenant equally.

40. Security Measures . Tenant hereby acknowledges that Landlord shall have no obligation whatsoever to provide guard service or other security measures for the benefit of the Premises or the Industrial Center. Tenant assumes all responsibility for the protection of Tenant, its agents and invitees and the property of Tenant and of Tenant's agents and invitees from acts of third parties and may provide its own security service for its Premises.. Nothing herein contained shall prevent Landlord at

<PAGE> -64-

Landlord's sole option, from providing security protection for the Industrial Center or any part thereof, in which event the cost thereof shall be included within the definition of Operating Expenses, as set forth in paragraph 4.2(b) . Tenant may designate certain areas of the Premises not to exceed 500 square feet in the aggregate as "Secured Areas" should Tenant require such areas for the purpose of securing certain valuable property or confidential information. Landlord may not enter such Secured Areas except in the case of emergency or in the event of a Landlord inspection, in which case Landlord shall provide Tenant with ten (10) days' prior written notice of the specific date and time of such Landlord inspection.

41. Easements . Landlord reserves to itself the right, from time to time, to grant such easements, rights and dedications that Landlord deems necessary or desirable, and to cause the recordation of Parcel Maps and restrictions, so long as such easements, rights, dedications, Maps and restrictions do not unreasonably interfere with the use of the Premises by Tenant or cause Tenant to incur additional costs or liabilities in connection therewith. Tenant shall sign any of the aforementioned documents upon request of Landlord and failure to do so shall constitute a material default of this Lease by Tenant without the need for further notice to Tenant.

42. Performance Under Protest . If at any time a dispute shall arise as to any amount or sum of money to be paid by one party to the other under the provisions hereof, the party against whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment, and there shall survive the right on the part of said party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said party to pay such sum or any part thereof, said party shall be entitled to recover such sum or so much thereof as it was not legally required to pay under the provisions of this Lease.

43. Authority . If Tenant is a corporation, trust, or general or limited partnership, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on behalf of said entity.

44. [Intentionally Omitted] .

45. Amendments to Lease . At such times as a rental adjustment is made to this Lease by virtue of any provision of this Lease, the parties shall execute a written amendment to this Lease to reflect said change. Tenant agrees to make any reasonable non-monetary modifications to this Lease that may be required by an institutional mortgagee of Landlord that do not materially increase Tenant's obligations or materially decrease the benefits under this Lease to Tenant.

<PAGE> -65-

46. Storage Tanks .

46.1 Storage Tanks . Notwithstanding anything to the contrary in Paragraph 7.3 hereof, Tenant shall not install storage tanks of any size or shape in the Premises, above or below ground, without the consent of the Landlord which can be withheld in Landlord's sole discretion. If Landlord elects to grant its consent, Landlord shall have the right to condition its consent upon Tenant agreeing to give to Landlord such assurances that Landlord, in its sole discretion, deems necessary to protect itself against potential problems concerning the installation, use, removal and contamination of the Premises as a result of the installation and/or use of such tank, including but not limited to the installation of a concrete encasement for said tank. Tenant shall comply at its expense with all applicable permit and/or registration requirements and repair any damage caused by the installation, maintenance or removal of such tank. Upon termination of the Lease, Tenant shall, at its sole cost and expense, remove any tank from the Premises, remove and replace any contaminated soil or materials (and compact or treat the same as then required by law) and repair any damage or change to the Premises caused by said installation and/or removal. Nothing contained herein shall be construed to diminish or reduce Tenant's obligations under Paragraph 47 .

46.2 Consultants . Landlord shall have the right to employ experts and/or consultants, at Tenant's expense, to advise Landlord with respect to the installation, operation, monitoring, maintenance and removal and restoration of any such tank.

47. Tenant's Covenants Regarding Hazardous Materials .

47.1 Landlord's Prior Consent . Notwithstanding anything contained in this Lease to the contrary, Tenant shall not cause or permit any "Hazardous Materials" (as defined in subparagraph 47.2 below) to be brought upon, kept, stored, discharged, released or used in, under or about the Premises by Tenant, its agents, employees, contractors, subcontractors, licensees or invitees, unless (1) such Hazardous Materials are reasonably necessary to Tenant's business and will be handled, used, kept, stored and disposed of in a manner which complies with all "Hazardous Materials Laws" (as defined in subparagraph 47.2 below); (2) Tenant will comply with such other rules or requirements as Landlord may from time to time impose, including without limitation that (i) such materials are in small quantities, properly labeled and contained, (ii) such materials are handled and disposed of in accordance with the highest accepted industry standards for safety, storage, use and disposal, (iii) such materials are for use in the ordinary course of business ( i.e. , as with office or cleaning supplies), (3) notice of and a copy of the current material safety data sheet is provided to Landlord for each such Hazardous Material, and (4) Landlord shall have granted its prior written consent to the use of such Hazardous Materials.

<PAGE> -66-

47.2 Compliance with Hazardous Materials Laws . As used herein, the term "Hazardous Materials" means any (1) oil, petroleum, petroleum products, flammable substances, explosives, radioactive materials, hazardous wastes or substances, toxic wastes or substances or any other wastes, materials or pollutants which (i) pose a hazard to the Premises or to persons on or about the Premises or (ii) cause the Premises to be in violation of any Hazardous Materials Laws (as hereinafter defined); (2) asbestos in any form, urea formaldehyde foam insulation, transformers or other equipment which contain dielectric fluid containing levels of polychlorinated biphenyls, or radon gas; (3) chemical, material or substance defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous waste," "restricted hazardous waste," or "toxic substances" or words of similar import under any applicable local, state or federal law or under the regulations adopted or publications promulgated pursuant thereto, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq .; the Resources Conservation Recovery Act, 42 U.S.C. Section 6901, et seq .; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section 1801, et seq .; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251, et seq .; Sections 25115, 25117, 25122.7, 25140, 25249.8, 25281, 25316 and 25501 of the California Health and Safety Code; and Title 22 of the California Code of Regulations, Division 4.5, Chapter 11; (4) other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority or may or could pose a hazard to the health and safety of the occupants of the Premises or the owners and/or occupants of property adjacent to or surrounding the Premises, or any other Person coming upon the Premises or adjacent property; and (5) other chemical, materials or substance which may or could pose a hazard to the environment. As used here the term "Hazardous Materials Laws" means any federal, state or local laws, ordinances, regulations or policies relating to the environment, health and safety, and Hazardous Materials (including, without limitation, the use, handling, transportation, production, disposal, discharge or storage thereof) or to industrial hygiene or the environmental conditions on, under or about the Premises, including, without limitation, soil, groundwater and indoor and ambient air conditions. Tenant shall at all times and in all respects comply with all Hazardous Materials Laws with respect to Tenant's activities and any Hazardous Materials brought onto the Premises by Tenant or any agent, contractor, employee, invitee, or subtenant of Tenant or any other person under the control of Tenant (collectively, the "Tenant Parties"),

47.3 Hazardous Materials Removal . Upon expiration or earlier termination of this Lease, Tenant shall, at Tenant's sole cost and expense, cause all Hazardous Materials brought on the Premises by Tenant or any Tenant Parties to be removed from the Premises in compliance with all applicable Hazardous Materials Laws. If Tenant or its employees, agents, or contractors violates the provisions of the foregoing two paragraphs, or if Tenant's acts, negligence, or business operations

<PAGE> -67-

contaminate, or expand the scope of contamination of, the Premises from such Hazardous Materials, then Tenant shall promptly, at Tenant's expense, take all investigatory and/or remedial action (collectively, the "Remediation") that is necessary in order to clean up, remove and dispose of such Hazardous Materials causing the violation on the Premises or the underlying groundwater or the properties adjacent to the Premises to the extent such contamination was caused by Tenant, in compliance with all applicable Hazardous Materials Laws. Tenant shall further repair any damage to the Premises caused by the Hazardous Materials contamination. Tenant shall provide prior written notice to Landlord of such Remediation, and Tenant shall commence such Remediation no later than thirty (30) days after such notice to Landlord and diligently and continuously complete such Remediation. Such written notice shall also include Tenant's method, time and procedure for such Remediation and Landlord shall have the right to require reasonable changes in such method, time or procedure of the Remediation. Tenant shall not take any Remediation in response to the presence of any Hazardous Materials in or about the Premises or enter into any settlement agreement, consent decree or other compromise in respect to any claims relating to any Hazardous Materials in any way connected with the Premises, without first notifying Landlord of Tenant's intention to do so and affording Landlord ample opportunity to appear, intervene or otherwise appropriately assert and protect Landlord's interests with respect thereto.

47.4 Notices . Tenant shall immediately notify Landlord in writing of: (i) any enforcement, cleanup, removal or other governmental or regulatory action threatened, instituted, or completed pursuant to any Hazardous Materials Laws with respect to the Premises; (ii) any claim, demand, or complaint made or threatened by any person against Tenant or the Premises relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials; and (iii) any reports made to any governmental authority arising out of any Hazardous Materials on or removed from the Premises. Landlord shall have the right (but not the obligation) to join and participate, as a party, in any legal proceedings or actions affecting the Premises initiated in connection with any Hazardous Materials Laws.

47.5 Indemnification of Landlord . Tenant shall indemnify, protect, defend and forever hold Landlord harmless from any and all damages, losses, expenses, liabilities, obligations and costs arising out of any failure of Tenant to observe any of the covenants contained in paragraphs 46 and 47. The provisions of paragraphs 46 and 47 shall survive the expiration or earlier termination of this Lease.

47.6 Studies . Tenant acknowledges receipt of a copy of that certain Final Environmental Site Assessment Cascades Business Park Lots 3, 4 and 19-24, Sylmar, California dated July 23, 1999 and prepared by Harding Lawson Associates and Environmental Site Assessment Update dated August 7, 2001, prepared by Harding ESE (collectively, "Hazardous Substance Reports"). Landlord, except as provided in the following sentence of this paragraph, makes no representations or

<PAGE> -68-

warranties whatsoever to Tenant regarding: (i) the Hazardous Substance Reports (including, without limitation, the contents and/or accuracy thereof); or (ii) the presence or absence of toxic or Hazardous Materials in, at, or under the Premises, the Building or the Industrial Center. Landlord does state to Tenant that: (i) Landlord has not authorized any other studies for hazardous or toxic materials at the Premises or Building other than the Hazardous Substance Reports; (ii) Landlord does not know of any surveys for toxic or Hazardous Materials at the Premises or the Building other than the Hazardous Substance Reports, and (iii) to Landlord's knowledge, the Hazardous Substances Reports delivered are true and complete copies of the original Hazardous Substances Reports. Notwithstanding the preceding sentence, Tenant: (a) shall not rely on and Tenant hereby represents to Landlord that it has not relied on the Hazardous Substance Reports; and (b) shall make such studies and investigations, conduct such tests and surveys, and engage such specialists as Tenant deems appropriate to fairly evaluate the Premises and any risks from hazardous or toxic materials. In connection with any inspections or tests to be conducted by Tenant at the Premises or Building, Tenant shall first notify Landlord of each proposed inspection or test and the scope, impact, and intent thereof and obtain Landlord's written consent to perform the same. Tenant shall restore the Premises and the property on which the leased premises are located to the condition existing immediately prior to any such test and/or inspection. Tenant may, at Tenant's sole cost and expense, obtain non-intrusive Phase I Environmental Report in accordance with the most recent ASTM Standards from a reputable environmental consultant (the "Updated Reports"). Landlord agrees to provide Tenant's environmental consultant with access to the Premises for purposes of preparing its Updated Reports and otherwise reasonably cooperate with that environmental consultant at no cost to Landlord; provided that in no event shall Landlord be obligated to make any representation or warranty or other statement as to the presence or absence of Hazardous Materials at the Industrial Center. In the event Tenant obtains the Updated Reports, then Tenant may elect at any time within thirty (30) days after the date of this Lease to terminate this Lease based on Tenant's review of the Updated Reports. No delay in obtaining the Updated Reports shall extend to that thirty (30) day period. Tenant shall not have the right to terminate the Lease pursuant to this Paragraph 47.6 if it elects to obtain a report other than the Updated Reports.

47.7 Preexisting Conditions . Notwithstanding anything to the contrary in this Lease, Tenant shall not be liable to Landlord under this Lease for any cost associated with Hazardous Materials, if any, to the extent that the Hazardous Materials existed on the Industrial Center prior to the date of this Lease and were not brought on to the Industrial Center by Tenant, its agents, employees, contractors, subcontractors, licensees or invitees (the "Preexisting Conditions"). Without limiting any other provision of this Lease, Tenant shall provide Landlord with the original of any notices or other documents received by Tenant in connection with the Preexisting Conditions.

<PAGE> -69-

47.8 Certain Permitted Hazardous Materials . Subject to Tenant's compliance with the terms and conditions of this Lease, Landlord consents to Tenant's use on the Premises of the items described in the CD-ROM disc attached hereto as Exhibit "H." Tenant shall give Landlord prior written notice of any material increase in the amounts of the Hazardous Materials described in Exhibit "H."

48. Recovery of Concessions Upon Early Termination . In the event that Tenant's right of possession of the Premises is terminated prior to the end of the initial term by reason of default, legal process, abandonment, or any other reason (other than mutual agreement of the parties or Tenant's exercise of its right to terminate under Paragraph 55), then immediately upon such termination, an amount shall be due and payable by Tenant to Landlord equal to the unamortized portion as of that date (which amortization shall exclude any Option Terms and shall be based on an interest rate equal to the Amortization Interest Rate in effect on the date of the termination) of the sum of (i) the value of the free Base Rent (i.e., the Base Rent stated in this Lease to be abated as an inducement to Tenant's entering into this Lease) enjoyed as of that date by Tenant, and (ii) the amount of all commissions paid by Landlord in order to procure this Lease in accordance with paragraph 15 of this Lease.

49. Easements and Restrictions of Record . Tenant accepts the Premises and Industrial Center subject to the easements and covenants or restrictions of record. Landlord and Tenant agree to cooperate and use their best efforts to participate in traffic management programs generally applicable to businesses located in the area which includes the Industrial Center and, initially, shall encourage and support van and car pooling by Tenant's employees to the fullest extent required by applicable laws. Neither this Paragraph nor any other provision in this Lease, however, is intended to or shall create any rights or benefits in any other person, firm, company, governmental entity or the public.

50. No Offer or Reservation . PREPARATION OF THIS LEASE BY LANDLORD OR LANDLORD'S AGENT OR REPRESENTATIVE AND SUBMISSION OF SAME TO TENANT FOR EXAMINATION OR EXECUTION BY TENANT SHALL NOT BE DEEMED AN OPTION OR OFFER TO LEASE THE PREMISES UPON THE TERMS AND CONDITIONS CONTAINED HEREIN OR A RESERVATION OF THE PREMISES IN FAVOR OF TENANT. THIS LEASE SHALL BECOME BINDING UPON LANDLORD AND TENANT ONLY WHEN FULLY EXECUTED BY LANDLORD AND TENANT AND DELIVERED BY LANDLORD TO TENANT. LANDLORD RESERVES THE RIGHT TO CONTINUE THE MARKETING OF THE PREMISES FOR LEASE TO OTHER TENANTS AND TO ENTER INTO LEASES OF THE PREMISES WITH OTHER PROSPECTIVE TENANTS AT ANY TIME PRIOR TO THE EXECUTION AND DELIVER OF THIS LEASE BY LANDLORD TO TENANT.

<PAGE> -70-

51. Waiver of Trial by Jury . LANDLORD AND TENANT HEREBY WAIVE TRIAL BY JURY AND CONSENT TO TRIAL WITHOUT A JURY IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER LANDLORD OR TENANT AGAINST THE OTHER IN CONNECTION WITH THIS LEASE.

52. ERISA . Tenant hereby represents and warrants to Landlord that (i) Tenant is not a "party in interest" (within the meaning of Section 3(14) of the Employee Retirement Income Security Act of 1974, as amended) or a "disqualified person" (within the meaning of Section 4975 of the Internal Revenue Code of 1986, as amended) with respect to any retirement or pension plan of The Prudential Insurance Company of America, and (ii) no portion of or interest in the Lease will be treated as a "plan asset" within the meaning of Regulation 29 CFR Section 2510.3-101 issued by the Department of Labor.

53. Roof Antenna . Tenant shall have the non-exclusive right to install a satellite and/or microwave dish antenna on the roof of the Building above the Premises at a location to be designated by Landlord in Landlord's reasonable discretion. Prior to such installation, Tenant shall obtain Landlord's reasonable written approval with respect to the size and design of such antenna, and such installation shall be at Tenant's sole expense and in accordance with all reasonable requirements and criteria imposed by Landlord in connection therewith. Without limiting the generality of the foregoing, Tenant shall pay all costs relating to connections from such antenna to the Premises and any required reinforcement of, or resulting damage to, the roof, but shall pay no additional Rent in connection therewith. Tenant shall also pay for all increase roof maintenance costs attributable to that antenna. Tenant shall include damage to such antenna, and liabilities relating to Tenant's installation, maintenance and use thereof, in the casualty and liability insurance policies maintained by Tenant in accordance with this Lease. Tenant shall be obligated to maintain such antenna in good condition and repair, and roof access by Tenant for any purpose shall require one (1) days' prior written notice to Landlord (except in the case of emergencies), and be subject to all rules and restrictions reasonably imposed by Landlord from time to time. Landlord shall be entitled to move such antenna to a different location on the roof from time to time so long as Landlord pays all costs incurred in connection with any such move. Tenant acknowledges that Landlord has made no representation or warranty to Tenant to the effect that transmission or reception by such antenna will not be interfered with by helicopters, other antennas or other structures or activities on or in the vicinity of the roof. Tenant's installation and use rights under this paragraph shall only apply with respect to the use of such antenna in connection with Tenant's operations in the Premises (as opposed to, e.g., a lease or license of such antenna by Tenant to any third party). On or before the expiration or earlier termination of this Lease, Tenant shall remove such antenna and repair any damage to the Building caused by such removal. In the event that Landlord enters into any master lease of the roof of the Building or

<PAGE> -71-

similar lease or license arrangement, Tenant shall execute any amendment to this Lease and/or other documents reasonably required by Landlord in furtherance of such master lease or similar arrangement so long as no such amendment or other document materially impairs Tenant's rights and interests under this paragraph or any other provision of this Lease.

54. Guaranty . The obligations of Tenant under this Lease shall be guarantied by Esterline Technologies Corporation, a Delaware corporation ("Guarantor"), pursuant to the Guaranty attached hereto as Exhibit "C" which shall be executed and delivered to Landlord concurrently with Tenant's execution and delivery of this Lease. In the event that this Lease is assigned with Landlord's consent as provided in Paragraph 12 to other than a Tenant Affiliate and the aggregate tangible net worth of the assignee and assignee's affiliates at the time of the proposed assignment, as determined by Landlord in its reasonable discretion in accordance with generally accepted accounting principles, exceeds $100,000,000.00, as increased annually from the Commencement Date by the increase, if any, in the CPI, then the guaranty of the Guarantor named in this Paragraph 54 shall not apply to any obligations first accruing after the effective date of that assignment. The provisions of this Paragraph 54 may not be amended or modified without the consent of the Guarantor named in this Paragraph 54.

55. Tenant's Rights to Terminate Lease . Tenant shall have the one-time right to terminate this Lease effective as of the date (the "Early Termination Date") that is sixty (60) months after the Commencement Date upon satisfaction of each of the conditions set forth in this Paragraph 55. If Tenant wishes to exercise its right to terminate this Lease, Tenant must (1) deliver written notice to Landlord by no later than the date (the "Termination Notice Date") that is fifty-four (54) months after the Commencement Date of its election to terminate; and (2) pay to Landlord in cash on or before the Termination Notice Date a termination fee equal to $927,885.00. If Tenant exercises its termination right in accordance with the terms of this Paragraph 55, the Early Termination Date shall thereafter be deemed the effective termination date for all purposes under this Lease and Tenant shall vacate the Premises prior to the Early Termination Date and shall comply with all terms of this Lease with respect to the condition of the Premises as of the expiration date and the terms of surrender thereof. The rights of Tenant under this Paragraph 55 shall be personal to the named Tenant hereunder and any Tenant Affiliate and any other assignee of the Lease approved by Landlord pursuant to Paragraph 12 of this Lease.

56. Tenant's Right of First Offer .

56.1 Landlord may from time to time give Tenant a written notice (the "Availability Notice") identifying space (the "Offer Space") in the Building that is Available (as defined below) and the date (the "Offer Space Delivery Date") the Offer Space is Available for delivery. As used herein, "Available" means that the space

<PAGE> -72-

(i) is not part of the Premises, (ii) is not then subject to a lease, (iii) is not then subject to any rights of tenant to renew their lease (in which event the space shall not be deemed Available until that right has expired without being exercised by that tenant), and (iv) is not then subject to any negotiations between Landlord and a prospective tenant or an existing tenant as evidenced by a signed letter of intent or lease proposal or a draft lease document and the bona fide efforts by Landlord and that prospective tenant or an existing tenant to negotiate the terms of the leasing of the applicable portion of the Offer Space. For purposes of this Article 56, space that is unleased as of the Commencement Date shall be considered to become Available only after the first anniversary of the Commencement Date. Until that date, Landlord shall have the right to lease such space without triggering Tenant's right of first offer.

56.2 Tenant may inform Landlord (the "Request Notice") not more than once in any twelve (12) month period and not within six (6) months after receipt of an Availability Notice that Tenant desires to lease additional space. Landlord shall, within ten (10) business days of receiving the properly given Request Notice, deliver to Tenant an Availability Notice identifying Offer Space that is Available.

56.3 If Tenant wishes to exercise Tenant's rights set forth in this Article 56 with respect to the Offer Space, then within ten (10) days of delivery of the Availability Notice to Tenant, Tenant shall deliver irrevocable notice to Landlord (the "First Offer Exercise Notice") offering to lease the Offer Space for a term coterminous with the terms of the Lease and proposing other terms upon which it wishes to lease the Offer Space (the "Offered Terms"). Within ten (10) days after receipt of the First Offer Exercise Notice, Landlord may either accept or reject the Offered Terms in the First Offer Exercise Notice. Landlord's failure to respond shall be deemed a rejection of the Offered Terms. If Landlord accepts the Offered Terms, then beginning on the Offer Space Delivery Date and continuing for the balance of the term (including any extensions):

(a) The Offer Space shall be part of the Premises under this Lease (so that the term "Premises" in this Lease shall refer to the space in the Premises immediately before the Offer Space Delivery Date plus the Offer Space);

(b) Tenant's Share shall be adjusted to reflect the increased rentable area of the Premises.

(d) The termination right in paragraph 55 will be null and void.

<PAGE> -73-

(e) Tenant's lease of the Offer Space shall be on the same terms and conditions as affect the original Premises from time to time, except as otherwise provided in this section. Tenant's obligation to pay Rent with respect to the Offer Space shall begin on the Offer Space Delivery Date. The Offer Space shall be leased to Tenant in its "as-is" condition and Landlord shall not be required to construct improvements in, or contribute any tenant improvement allowance for, the Offer Space, unless otherwise expressly stated to the contrary in the Offer Terms. Tenant's construction of any improvements in the Offer Space shall comply with the terms of this Lease concerning alterations.

(f) If requested by Landlord, Landlord and Tenant shall confirm in writing the addition of the Offer Space to the Premises on the terms and conditions set forth in this section, but Tenant's failure to execute or deliver such written confirmation shall not affect the enforceability of Landlord's acceptance of the First Offer Exercise Notice.

(g) The provision of paragraph 4.3 shall not apply to the Offer Space.

56.4 In the event Tenant fails to give a First Offer Exercise Notice in response to any Availability Notice or Landlord rejects Offered Terms, Tenant shall have no further rights to receive an Availability Notice for a period of six (6) months after the date upon which the Latest Availability Notice is delivered to Tenant; provided that if Tenant has affirmatively rejected Landlord's Offered Terms and provided Landlord in writing with Tenant's proposal of terms under which it would lease the applicable Offer Space (the "Tenant's Terms"), and if Landlord intends to enter into a transaction during that six (6) month period where the net present value (using a ten percent (10%) interest rate) of the economic terms benefiting Landlord would be reduced by more than ten percent (10%) from the economic terms included in Tenant's Terms, Landlord shall provide Tenant with an Availability Notice pursuant to Paragraph 56.3 with respect to that Offer Space (except that the Tenant's response time shall be five (5) days instead of ten (10) days). In the event that during such six (6) month period, the space ceases to be Available, Landlord shall have no obligation to provide an Availability Notice in response to a Request Notice until such time as the Offer Space again becomes Available.

56.5 Tenant's rights and Landlord's obligations under this Article 56 are expressly subject to and conditioned upon there not existing an Event of Default by Tenant under this Lease, either at the time of delivery of a Request Notice, the First Offer Exercise Notice, or at the time any Offer Space is to be added to the Premises.

56.6 It is understood and agreed that Tenant's rights under this Article 56 are personal to Tenant and Tenant's Affiliates and not transferable except to an assignee of Tenant's interest in this Lease approved by Landlord pursuant to

<PAGE> -74-

Paragraph 12. In the event of any assignment or subletting of the Premises or any part thereof (other than an assignment of the Lease to a Tenant Affiliate or to an assignee approved by Landlord pursuant to Paragraph 12 of this Lease), this expansion right shall automatically terminate and shall thereafter be null and void.

56.7 Tenant's rights and Landlord's obligations under this Article 56 are also expressly subject to and conditioned upon Tenant providing Landlord an additional security deposit in an amount equal to one (1) month's rent applicable to the Offer Space added to the Premises pursuant to Tenant's exercise of its rights under this Paragraph 56.

57. Landlord Improvements . Landlord shall, at Landlord's sole cost and expense (and not as part of the Tenant Improvement Allowance), in compliance with all applicable laws, construct and complete the following improvements in the Premises (the "Landlord's Work"):

(a) Demising wall between the Premises and the balance of the Building which demising wall shall be painted on the surface within the Premises and shall be constructed using metal studs and drywall.

(b) 2000 amp, 480 volt, 3 phase power to the electrical power panel within the Premises for Tenant's sole use (this power panel shall have a capacity for 3000 amps).

58. Tenant Improvements . Tenant will improve the Premises as provided in the Work Letter attached hereto as Exhibit "D".

59. Right to Make Repairs . Notwithstanding any provision set forth in the Lease to the contrary, if Tenant provides written notice (or oral notice in the event of an emergency) to Landlord of an event or circumstance which requires the action of Landlord with respect to repair and/or maintenance and Landlord's failure to perform that work will result in a material impairment of Tenant's business operations in the Premises, and Landlord fails to provide such action within a reasonable period of time, given the circumstances, after the receipt of such notice, but in any event not later than twenty-one (21) days after receipt of such notice, then Tenant may proceed to take the required action upon delivery of an additional ten (10) business days' notice to Landlord specifying that Tenant is taking such required action (provided, however, that neither of such notices shall be required in the event of an emergency which threatens life or where there is imminent danger of damage to property), and if such action was required under the terms of the Lease to be taken by Landlord and was not taken by Landlord within such ten (10) day period, then Tenant shall be entitled to prompt reimbursement by Landlord of Tenant's reasonable costs and expenses in

<PAGE> -75-

taking such action plus interest thereon at the Interest Rate. In the event Tenant takes such action, and such work will affect the Building structure and/or the Building systems, Tenant shall use only those contractors used by Landlord in the Building for work on such Building structure or Building systems unless such contractors are unwilling or unable to perform, or timely and competitively perform, such work, in which event Tenant may utilize the services of any other qualified contractor which normally and regularly performs similar work in comparable buildings. Furthermore, if Landlord does not deliver a detailed written objection to Tenant within thirty (30) days after receipt of an invoice by Tenant of its costs of taking action which Tenant claims should have been taken by Landlord, and if such invoice from Tenant sets forth a reasonably particularized breakdown of its costs and expenses in connection with taking such action on behalf of Landlord, then Tenant shall be entitled to deduct from Rent payable by Tenant under the Lease, the amount set forth in such invoice. If, however, Landlord delivers to Tenant, within thirty (30) days after receipt of Tenant's invoice, a written objection to the payment of such invoice, setting forth with reasonable particularity Landlord's reasons for its claim that such action did not have to be taken by Landlord pursuant to the terms of the Lease or that the charges are excessive (in which case Landlord shall pay the amount it contends would not have been excessive), then Tenant shall not then be entitled to such deduction from Rent, but as Tenant's sole remedy, Tenant may proceed to claim a default by Landlord. The provisions of this paragraph 59 shall not apply to any damage or destruction governed by paragraph 9 of this Lease.

60. Rent Abatement Right . Notwithstanding anything to the contrary in this Lease, if (a) Landlord fails to perform its maintenance obligations under this Lease (b) such failure is not due to any event beyond the direct control of Landlord or an event covered by paragraph 9 , (c) Tenant has given Landlord reasonably prompt written notice of such failure and (d) as a result of such failure all or any part of the Premises are rendered untenantable (and, as a result, all or such part of the Premises are not used by Tenant during the applicable period) for more than five (5) consecutive business days, or ten (10) non-consecutive business days in any twelve month period, then Tenant shall be entitled to an abatement of Rent proportional to the extent to which the Premises are thereby rendered unusable by Tenant, (x) in the event the applicable period is five (5) consecutive business days, commencing with the later of (i) the sixth business day during which such untenantability continues or (ii) the sixth business day after Landlord receives such notice from Tenant, or (y) in the event the applicable period is ten (10) non-consecutive business days in any twelve (12) month period, commencing with the later of (i) the tenth non-consecutive business day in any twelve (12) month period during which the untenantability continues or (ii) the second business day after Landlord receives such notice from Tenant that such untenantability has existed for more than ten (10) non-consecutive business days in any twelve (12) month period, and continuing until the Premises (or part thereof affected) are again usable or until Tenant again uses the Premises (or part thereof rendered unusable) in its

<PAGE> -76-

business, whichever first occurs. Without limiting any other limitation on Tenant's remedies expressly provided for in this Lease, if Tenant elects to receive the foregoing rental abatement, it shall be Tenant's exclusive remedy for Landlord's failure. Notwithstanding the foregoing, the provisions of paragraph 9 and not the provisions of this subsection shall govern in the event of casualty damage to the Premises or Building and the provisions of paragraph 14 and not the provisions of this paragraph shall govern in the event of condemnation of all or a part of the Premises or Building.

LANDLORD AND TENANT HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LANDLORD AND TENANT WITH RESPECT TO THE PREMISES.

"LANDLORD"		"TENANT"

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA		MASON ELECTRIC CO., a Delaware Corporation

By:	UNIRE REAL ESTATE GROUP, INC., Its Managing Agent	By:	/s/ Kent Byington
			Kent Byington, President
	By: /s/ Mark F. Harryman		[Printed Name and Title]

	Mark F. Harryman, President
	[Printed Name and Title]

	By: /s/ Thomas B. Hwang		By: /s/ Roya Hadaegh

	Thomas B. Hwang, Vice President, Prudential Real Estate Investors		Roya Hadaegh, Director of Finance
	[Printed Name and Title]		[Printed Name and Title]

<PAGE> -77-

	EXHIBIT 10.35

C L I F F O R D	LIMITED LIABILITY PARTNERSHIP
C H A N C E

	EXECUTION COPY

DATED 21 July 2000 (1) LANDLORD: J SAINSBURY DEVELOPMENTS LIMITED (2) TENANT: WESTON AEROSPACE LIMITED _____________________________ OCCUPATIONAL LEASE -OF- BUILDINGS KNOWN AS PHASES 3 AND 4 ON THE SOLARTRON SITE AT VICTORIA ROAD, FARNBOROUGH, HAMPSHIRE _____________________________

<PAGE>

CONTENTS

Clause		Page
Section 1 - Definitions and Interpretation		1
1.	Definitions	1
2.	Interpretation	4
Section 2 - Grant Of Lease		5
3.	Grant, Rights And Other Matters	5
Section 3 - Financial Provisions		7
4.	Rents	7
5.	Rent Review	7
6.	Interest	11
7.	Outgoings	12
8.	Value Added Tax	13
9.	Landlord's Costs	13
Section 4 - Repairs, Alternations And Signs		14
10.	Repairs, Decoration Etc.	14
11.	Yield Up	15
12.	Compliance With Notices	16
13.	Alterations	17
14.	Signs And Advertisements	18
Section 5 - Use		18
15.	Use Of Premises	18
16.	Use Restrictions	18
17.	Exclusion Of Warranty As To User	18
18.	General Restrictions	19
19.	Assignment	19
20.	Underletting	20
21.	Registration Of Dispositions	22
Section 6 - Legal Requirements		22
22.	Statutory Requirements	22
23.	Planning Acts	23
24.	Statutory Notices	24
25.	Fire Precautions And Equipment	25

<PAGE> -i-

26.	Defective Premises		25
Section 7 - Insurance			25
27.	Insurance Provisions		25
Section 8 - Default Of Tenant And Rights Of Re-Entry			27
28.	Default Of Tenant		27
Section 9 - Miscellaneous			29
29.	Quiet Enjoyment		29
Section 10 - Miscellaneous			29
30.	Reletting Notices		29
31.	Disclosure Of Information		30
32.	Representations		30
33.	Notices		30
34.	New Tenancy		30
35.	Invalidity Of Certain Provisions		30
36.	Third Party Rights		30
Schedule 1		Rights And Easements Granted	32
Schedule 2		Exceptions And Reservations	34
Schedule 3		Use Restrictions	35
Schedule 4		Matters To Which The Premises Are Subject	38
Schedule 5		Authorized Guarantee Agreement To Be Given By Tenant
		Pursuant To Clause 19	39

<PAGE> -ii-

	THIS LEASE is made on the 21 ^st day of July, 2000

	BETWEEN:-

1.	J SAINSBURY DEVELOPMENTS LIMITED (Company registration number 01322680) whose registered office is at Stamford House, Stamford Street, London SE1 (the "Landlord");

2.	WESTON AEROSPACE LIMITED (Company registration number 3817397) whose registered office is at Byron House, Cambridge Business Park, Cambridge CB4 4WZ (the " Tenant ").

NOW THIS DEED WITNESSES as follows:-

SECTION 1
DEFINITIONS AND INTERPRETATION

1.	DEFINITIONS

	In this Lease, unless the context requires otherwise, the following expressions shall have the following meanings:-

1.1	" Access Road " means the access road shown coloured red hatched black and hatched red on the Plan or such other access road as may be substituted therefor in the proposed location shown by blue cross hatching on the Plan or in such other location as shall be approved by the Tenant (such approval not to be unreasonably withheld or delayed);

1.2	" Additional Rent " mean all sums referred to in Clause 6 and all sums which are recoverable as rent in arrears;

1.3	" Adjoining Property " means the land shown edged green on the Plan together with any buildings erected on such land and each and every part of such land or buildings;

1.4	" Agreement " means an Agreement for Sale and grant of leases of even date and made between Solartron Group Limited (1) the Landlord (2) and the Tenant (3);

1.5	" Base Rate " means the base rate for the time being of Barchays Bank PLC or some other London clearing bank nominated from time to time by the Landlord or, in the event of base rate being abolished, such other comparable rate of interest as the Landlord shall reasonably specify;

1.6	" Conduits " means all drains, pipes, gullies, gutters, sewers, ducts, mains, channels, subways, wires, cables, conduits, flues, sprinkler systems, transformers, electricity substations and any other conducting media of whatsoever nature;

1.7	" Development " means development as defined in Section 55 of the Town and Country Planning Act 1990;

1.8	" Environment " means air, water, land, flora or fauna and humans;

<PAGE> -1-

1.9	" Environmental Investigations " means the investigations referred to in Clause 22 of the Agreement;

1.10	" Environmental Law " means all laws (including common law, statutes and subordinate legislation) directives, regulations, permits, codes of practice or guidance notes concerning the Environment and binding within the United Kingdom;

1.11	" Environmental Regulator " means any regulatory authority or body with powers or duties pursuant to Environmental Law;

1.12	" External Decoration Year " means the year ending 31 December 2004 and every subsequent fourth year after that date;

1.13	" Gross Internal Area " means the total floor area expressed in square feet measured in accordance with the current Code of Measuring Practice published on behalf of the Royal Institution of Chartered Surveyors and the Incorporated Society of Valuers and Auctioneers (Fourth Edition November 1993);

1.14	" Group Company " means any company which is, for the time being (a) a subsidiary of the relevant party or (b) the holding company of that party or (c) another subsidiary of the holding company of that party, in each case within the meaning of Section 736 of the Companies Act 1985, as amended by the Companies Act 1989;

1.15	" Hazardous or Polluting Substance " means any substance which may cause significant harm to the Environment or the presence of which has to be notified to an Environmental Regulator;

1.16	" Initial Rent " means the sum of five hundred and seventy five thousand pounds sterling ([Pound] 575,000) per annum;

1.17	" Insurance Rent " means the sums of which the Landlord pays from time to time for insuring the Premises and other items referred to in Clause 27.1;

1.18	" Insured Risks " means fire, storm, tempest, flood, earthquake, lightning, explosion, impact, aircraft (other than hostile aircraft) and other aerial devices and articles dropped from them, riot, civil commotion and malicious damage, bursting or overflowing of water tanks, apparatus or pipes, and (to the extent that any of the same are insurable in the European insurance market at reasonable cost and on usual commercial terms) such other normal commercial risks as the Landlord may, from time to time, reasonably determine or the Tenant may from time to time reasonably require;

1.19	" Internal Decoration Year " means the year ending 31 December 2005 and in every subsequent fifth year after that date;

1.20	" Landlord " means the person named herein as such and includes its successors in title;

1.21	" Landlord's Works " means the works to be carried out (inter alia) to the Premises pursuant to Clause 19 of the Agreement;

<PAGE> -2-

1.22	" this Lease " means this Lease and any document which is supplemental to it, whether or not it is expressly stated to be so;

1.23	" Permitted Use " means any use within Class B1, B2 or B8 of the Use Classes Order and purposes ancillary to such use;

1.24	" Phase 2 Lease " means the lease of the Adjoining Property of even date and made between the Landlord (1) and the Tenant (2);

1.25	" Phase 2 Tenant " means the tenant under the Phase 2 Lease;

1.26	" Plan " means the plan annexed to this Lease;

1.27	" Planning Acts " means the Town and Country Planning Act 1990, the Planning (Listed Buildings and Conservation Areas) Act 1990, the Planning (Hazardous Substances) Act 1990, the Planning (Consequential Provisions) Act 1990 and the Planning and Compensation Act 1991 and any other town and country planning or related legislation;

1.28	" Premises " means the land situated at Victoria Road Farnborough Hampshire together with the building erected on it or on part of it and known as Phases 3 and 4 of the Solartron Site and for the purpose of identification only shown edged red on the Plan and each and every part of the land and building, including:-

	1.28.1	any Conduits in, on, under or over and exclusively serving them, except those of any utility company;

	1.28.2	all landlord's fixtures, fittings, plant, machinery, apparatus and equipment now or after the date of this Lease in or upon the same including any boilers and central heating and air conditioning plant, any sprinklers and the water and sanitary apparatus; and

	1.28.3	any additions, alterations and improvements;

1.29	" Prescribed Rate " means three per cent (3%) per annum above the Base Rate;

1.30	" Present Tenant " means (in Schedule 5 ) the Tenant at the time the covenants on the part of the Present Tenant therein referred to are entered into;

1.31	" President " means the President for the time being of the Royal Institution of Chartered Surveyors (or in the event that such Institution ceases to exist such other independent body as the Landlord may reasonably nominate) and includes the duly appointed deputy of the President or any person authorised by the President or by the Institution or nominated body to make appointments on his or its behalf;

1.32	" Principal Rent " means the rent payable under Clause 4.1.1;

1.33	" Rent Commencement Date " means the date hereof;

1.34	" Rents " means the sums payable by the Tenant under Clause 4;

<PAGE> -3-

1.35	" Review Date " means 21 ^st July 2005 and every fifth anniversary of that date during the Term and " Relevant Review Date " shall be construed accordingly;

1.36	" Schedule of Condition " means the schedule of condition prepared by Reid Lamden signed by the Landlord and the Tenant and dated July 2000;

1.37	" Tenant " means the party named herein as such and subject to the provisions of the Landlord and Tenant (Covenants) Act 1995 includes the Tenant's successors in title and assigns and, in the case of an individual, his personal representatives;

1.38	" Term " means the term of years specified in Clause 3.1 and includes the period of any holding over or any extension or continuation, whether by statute or common law;

1.39	" Term Commencement Date " means 21 ^st July 2000;

1.40	" Use Classes Order " means the Town and Country Planning Use Classes Order 1987 (as amended);

1.41	" Utilities " means water, soil, stream, air, electricity, radio, television, gas, telegraphic, telephone, telecommunications and other services and supplies of whatsoever nature;

1.42	" Value Added Tax " means value added tax as defined in the Value Added Tax Act 1994 and any tax of a similar nature substituted for, or levied in addition to, such value added tax;

1.43	" Working Day " means any day, other than a Saturday or Sunday, on which clearing banks in the United Kingdom are open to the public for the transaction of business.

1.44	" 1985 Lease " means the lease of a pipeline dated 26 June 1985 and made between Rushmoor Borough Council and Schlumberger Electronics (UK) Limited.

2.	INTERPRETATION

	Unless there is something in the subject or context inconsistent with the same:-

2.1	every covenant by a party comprising more than one person shall be deemed to be made by such party jointly and severally;

2.2	words importing persons shall include firms, companies and corporations and vice versa;

2.3	any covenant not to do any act or thing shall include an obligation not (so far as is within the control of the relevant person) to permit or suffer such act or thing to be done;

2.4	any reference to the right of the Landlord to have access to, or to enter, the Premises shall be construed as extending to all persons authorized by the Landlord, including agents, professional advisers, contractors, workmen and others;

2.5	any reference to a statute (whether specifically named or not) shall include any amendment or re-enactment of it for the time being in force, and all instruments,

<PAGE> -4-

	orders, notices, regulations, directions, bye-laws, permissions and plans for the time being made, issued or given under it, or deriving validity from it;

2.6	all agreements and obligations by any party contained in this Lease (whether or not expressed to be covenants) shall be deemed to be, and shall be construed as, covenants by such party;

2.7	the words "including" and "include" shall be deemed to be followed by the words "without limitation";

2.8	the titles or headings appearing in this Lease are for reference only and shall not affect its construction;

2.9	any reference to a clause or schedule shall mean a clause or schedule of this Lease;

2.10	reference to any day which is not a Working Day shall mean the next Working Day.

SECTION 2
GRANT OF LEASE

3.	GRANT, RIGHTS AND OTHER MATTERS

3.1	Demise and Term
	In consideration of the rents, covenants and agreements reserved by, and contained in, this Lease to be paid and performed by the Tenant, the Landlord with full title guarantee leases the Premises to the Tenant from and including the Term Commencement Date for the term of twenty five (25) years the Tenant paying the Rents to the Landlord in accordance with Clause 4.

3.2	Rights and Easements
	There are granted the rights and easements set out in Schedule 1 .

3.3	Exceptions and reservations
	There are excepted and reserved out of this Lease the rights and easements set out in Schedule 2 .

3.4	Third party rights
	This Lease is granted subject to any rights, easements, reservations, privileges, covenants, restrictions, stipulations and other matters contained or referred to in the deeds and documents listed in Schedule 4 so far as any of them relate to the Premises and are still subsisting and capable of taking effect.

3.5	No implied easements
	Nothing contained in this Lease shall confer on, or grant to, the Tenant any easement, right or privilege, other than any expressly granted by this Lease.

3.6	Covenants affecting reversion
	The Tenant shall perform and observe the agreements, covenants, restrictions and stipulations contained or referred to in the deeds and documents listed in Schedule 4 so

<PAGE> -5-

	far as any of them relate to the Premises and are still subsisting and capable of taking effect at the date hereof.

3.7	Encroachments and easements
	The Tenant shall not stop up or obstruct any of the windows or lights belonging to the Premises and shall not permit any new window, light, opening, doorway, passage, Conduit or other encroachment or easement to be made or acquired into, on or over the Premises or any part of them. If any person shall attempt to make or acquire any encroachment or easement whatsoever, the Tenant shall give written notice of that fact to the Landlord as soon as practicable after it shall come to the notice of the Tenant and, at the request and cost of the Landlord adopt such means as may be reasonably required by the Landlord for preventing any encroachment or the acquisition of any easement.

3.8	Right of entry by Landlord
	The Tenant shall permit the Landlord with all necessary materials and appliances to enter and remain on the Premises:-

	3.8.1	to examine the condition of the Premises and to take details of the landlord's fixtures in them but (for the avoidance of doubt) not to carry out any intrusive soil or groundwater investigation or monitoring;

	3.8.2	to exercise any of the rights excepted and reserved by this Lease;

	3.8.3	for any other reasonable purpose connected with the interest of the Landlord in the Premises, including valuing or disposing of the Landlord's interest in them.

3.9	Terms of entry by Landlord
	In exercising any of the rights mentioned in Clause 3.8, the Landlord or the person exercising the right shall:-

	3.9.1	in the case of proposed works consult with any security staff on the relevant part of the Premises and have regard to their reasonable requirements;

	3.9.2	only exercise such right insofar as it cannot reasonably carry out any such work of repair and alteration from within the Adjoining Property;

	3.9.3	cause as little inconvenience as possible to the Tenant or any other permitted occupier of any part of the Premises and to the business carried on at the Premises; and

	3.9.4	acting in a reasonable and proper manner make good, as soon as reasonably possible, any physical damage caused to the Premises, fixtures or fittings.

<PAGE> -6-

SECTION 3
FINANCIAL PROVISIONS

4.	RENTS

4.1	Tenant's obligation to pay
	The Tenant covenants to pay to the Landlord at all times during the Term:-

	4.1.1	yearly, and proportionately for any fraction of a year, the Initial Rent and from and including each Review Date, such yearly rent as shall become payable under Clause 5;

	4.1.2	the Insurance Rent;

	4.1.3	the Additional Rent;

	4.1.4	any amounts due under Clause 7.3; and

	4.1.5	any Value Added Tax which may be chargeable in respect of the above.

4.2	Dates of payment of Principal Rent
	The Principal Rent and (subject to receipt of a VAT invoice) any Value Added Tax chargeable on it shall be paid in four (4) equal instalments in advance on each 25th March, 24th June, 29th September and 25th December in every year, the first payment, being a proportionate sum in respect of the period from and including the Rent Commencement Date to the day before the quarter day following the Rent Commencement Date, having been made on the date of this Lease.

4.3	Dates of payment of Additional Rent and Insurance Rent
	The Additional Rent, the Insurance Rent, any amounts due under Clause 7.3 and (subject to receipt of a VAT invoice) any Value Added Tax chargeable on either of them shall be paid within seven (7) days of demand.

4.4	No right of set-off
	Subject to any contrary statutory right, the Tenant shall not exercise any legal or equitable rights of set-off, deduction, abatement or counterclaim which it may have to reduce its liability for Rents.

5.	RENT REVIEW

5.1	Definitions
	In this Clause the following expressions shall have the following meanings:-

	5.1.1	"Open Market Rent" means the yearly rent which might reasonably be expected to become payable in respect of the Premises after the expiry of any rent free period, concessionary rent and/or after the giving of any other inducement (whether by means of a capital payment or otherwise) given in each case in connection with the fitting out of the Premises by the incoming tenant of such length or of such amount or nature as would be negotiated in the open market between a willing landlord and a willing tenant (to the intent

<PAGE> -7-

	that no discount, reduction or allowance shall be made in ascertaining the Open Market Rent to reflect such rent free period, concessionary rent or other inducement as would be negotiated as aforesaid or to compensate the Tenant for its absence) upon a letting of the Premises as a whole or if it would produce a higher rent the aggregate yearly rents obtainable from those parts of the Premises which are at the Review Date let or sublet in the open market with vacant possession at the Relevant Review Date by a willing landlord to a willing tenant and without the landlord receiving any premium or any other consideration for the grant of the lease for a term of years commencing on the Relevant Review Date and equal to the longer of (a) the residue of the Term remaining unexpired on the Relevant Review Date and (b) fifteen (15) years and otherwise on the terms and conditions and subject to the covenants and provisions contained in this Lease (other than the amount of the rent payable under this Lease but including like provisions for the review of rent contained in this Clause) and making the Assumptions but disregarding the Disregarded Matters;

5.1.2	" Assumptions " means the following assumptions (if not facts) at the Relevant Review Date:-

	(a)	that the Premises are fit for immediate occupation and use by the incoming tenant and may be lawfully used by any person for any of the purposes permitted by this Lease;

	(b)	that no work save any required by statute has been carried out to the Premises by the Tenant or any undertenant or their respective predecessors in title during the Term; which has diminished the rental value of the Premises;

	(c)	that if the Premises or any part of them have been destroyed or damaged, they have been fully rebuilt and reinstated;

	(d)	that all the covenants on the part of the Tenant and the Landlord contained in this Lease have been fully performed and observed;

5.1.3	" Disregarded Matters " means:-

	(a)	any effect on rent of the fact that the Tenant or any permitted undertenant or other permitted occupier may have been in occupation of the Premises or any part of them;

	(b)	any goodwill attached to the Premises by reason of the business then carried on at the Premises by the Tenant or any permitted undertenant or other permitted occupier;

	(c)	any increase in rental value of the Premises attributable to the existence, at the Relevant Review Date, of any improvement or other works to the Premises or any part of them carried out before or after the date of this

<PAGE> -8-

			Lease with all necessary consents (where required) by the Tenant or a Group Company of the Tenant or any permitted undertenant or other permitted occupier otherwise than in pursuance of an obligation to the Landlord or its predecessors in title (save where such obligation has arisen pursuant to statute but not so thereby to assume that the Premises do not comply with statutes) and for the avoidance of doubt any air cooling equipment serving the production area of the Premises shall be disregarded on review;

	5.1.4	" Review Surveyor " means an independent chartered surveyor of not less than ten (10) years standing, who is experienced in valuing and leasing property similar to the Premises and is acquainted with the market in the area in which the Premises are located appointed from time to time under this Clause to determine the Open Market Rent.

5.2	Rent reviews
	The Principal Rent shall be reviewed at each Review Date in accordance with the provisions of this Clause and from and including each Review Date the Principal Rent shall equal the higher of:-

	5.2.1	the Principal Rent contractually payable immediately before the Relevant Review Date (or which would be payable but for any suspension of rent (in whole or in part) under this Lease); and

	5.2.2	the Open Market Rent on the Relevant Review Date as agreed or determined pursuant to this Clause.

5.3	Agreement or determination of the reviewed rent
	The Open Market Rent at any Review Date may be agreed in writing at any time between the Landlord and the Tenant but if, for any reason, they have not so agreed, either party may (whether before or after the Relevant Review Date) by notice in writing to the other require the Open Market Rent to be determined by the Review Surveyor.

5.4	Appointment of Review Surveyor
	In default of agreement between the Landlord and the Tenant on the appointment of the Review Surveyor, the Review Surveyor shall be appointed by the President on the written application of either party, such application to be made not earlier than three (3) months before the Relevant Review Date and not later than the next succeeding Review Date.

5.5	Functions of Review Surveyor
	The Review Surveyor shall:-

	5.5.1	act as an arbitrator in accordance with the Arbitration Act 1996;

	5.5.2	have power to order on a provisional basis any relief which he would have power to grant in a final award;

<PAGE> -9-

	5.5.3	within sixty (60) days of the later of his appointment and the Relevant Review Date, or within such extended period as the Landlord and the Tenant may jointly agree in writing, give to each of them written notice of the amount of the Open Market Rent as determined by him.

5.6	Fees of Review Surveyor

	5.6.1	The fees and expenses of the Review Surveyor, including the fee payable for his nomination, shall be in the award of the Review Surveyor but, failing such award, the same shall be payable by the Landlord and the Tenant in equal shares who shall each bear their own costs, fees and expenses.

	5.6.2	If either party fails to pay that party's share of the fees and expenses of the Review Surveyor, including the fee payable for his nomination, within five (5) Working Days after being required in writing to do so, the other party may pay such fees and expenses, and the share of the defaulting party shall become a debt payable to the other party on written demand (and, if the defaulting party is the Tenant, recoverable by the Landlord as rent in arrears) with interest on such share at the Prescribed Rate from and including the date of payment by the other party to the date of reimbursement by the defaulting party.

5.7	Appointment of new Review Surveyor
	If the Review Surveyor fails to give notice of his determination within the allotted time, or if he dies, is unwilling to act, or becomes incapable of acting, or if, for any other reason, he is unable to act, the Landlord or the Tenant may request the President to discharge the Review Surveyor and appoint another surveyor in his place to act in the same capacity, which procedure may be repeated as many times as necessary.

5.8	Interim payments pending determination
	If the amount of the reviewed rent has not been agreed or determined by the Relevant Review Date (the date of agreement or determination being called the " Determination Date "), then:-

	5.8.1	in respect of the period (the " Interim Period ") beginning with the Relevant Review Date and ending on the day before the quarter day following the Determination Date, the Tenant shall pay to the Landlord the Principal Rent at the yearly rate payable immediately before the Relevant Review Date together with such further amounts (if any) as may be awarded by the Review Surveyor; and

	5.8.2	on the Determination Date, the Tenant shall pay to the Landlord as arrears of rent the amount by which the reviewed rent exceeds the rent actually paid during the Interim Period (apportioned on a daily basis) together with interest on such amount at the Base Rate, such interest to be calculated on the amount of each quarterly shortfall on a day-to-day basis from the date on which it would have been payable if the reviewed rent had then been agreed or determined to the Determination Date.

<PAGE> -10-

5.9	Rent Restrictions
	If, at any time during the Term, restrictions are imposed by any statute for the control of rent which prevent or prohibit wholly or partly the operation of the rent review provisions contained in this Clause or which operate to impose any limitation, whether in time or amount, on the collection and retention of any increase in the Principal Rent or any part then and in each case respectively:-

	5.9.1	the operation of the rent review provisions contained in this Clause shall be postponed to take effect on the first date on which such operation (whether wholly or partially and with or without limited effect) may occur and in the case of restrictions which partially prevent or prohibit such operation and/or limit its effect on each such date;

	5.9.2	the collection of any increase in the rent shall be postponed to take effect on the first date on which such increase may be collected and/or retained in whole or in part and on as many occasions as shall be required to ensure the collection of the whole increase

	and, until such restrictions shall be relaxed either wholly or partially, the Principal Rent shall be the maximum sum from time to time permitted by such restrictions.

5.10	Memoranda of reviewed rent
	Within ten (10) Working Days after the amount of any reviewed rent has been agreed or determined, memoranda recording that fact shall be prepared by the Landlord or its solicitors and shall be signed by or on behalf of the Landlord and the Tenant and any guarantor and annexed to this Lease and its counterpart. The parties shall each bear their own costs in relation to the preparation and signing of such memoranda.

5.11	Time not of the essence
	For the purpose of this Clause, time shall not be of the essence.

6.	INTEREST

6.1	Interest on late payments
	Without prejudice to any other right, remedy or power contained in this Lease or otherwise available to the Landlord, if any of the Rents (whether formally demanded or not in the case of the Principal Rent) or any other sum of money payable to the Landlord by the Tenant under this Lease shall not be paid:-

	6.1.1	in the case of the Principal Rent and any Value Added Tax chargeable on it, on the date when payment is due (or, if the due date is not a Working Day, the next Working Day after the due date); or

	6.1.2	in the case of any other Rents or sums, within five (5) Working Days of the date when payment is due

	the Tenant shall pay interest on such Rents and/or sums at the Prescribed Rate from and including the date when payment was due to the date of payment to the Landlord (both before and after any judgement).

<page> -11-

6.2	Interest on refused payments
	Without prejudice to any other right, remedy or power contained in this Lease or otherwise available to the Landlord, if the Landlord acting reasonably shall decline to accept any of the Rents so as not to waive any existing breach or alleged breach of covenant, the Tenant shall pay interest on such Rent at the Prescribed Rate from and including the date when payment was due (or, where applicable, would have been due if demanded on the earliest date on which it could have been demanded) to the date when payment is accepted by the Landlord.

7.	OUTGOINGS

7.1	Tenant's obligation to pay
	The Tenant shall pay, or indemnify the Landlord against, all existing and future rates, taxes, duties, charges, assessments, impositions and other outgoings whatsoever (whether parliamentary, parochial, local or of any other description and whether or not of a capital or non-recurring nature or of a wholly novel character) which are now or may at any time during the Term be charged, levied, assessed or imposed upon, or payable in respect of, the Premises or upon the owner or occupier of them (excluding any tax payable by the Landlord occasioned by any disposition of, or dealing with, the reversion of this Lease and excluding any tax (other than Value Added Tax) payable by the Landlord as a consequence of receipt of rent and other sums reserved by this Lease) and, in the absence of a direct assessment on the Premises, shall pay to the Landlord a fair proportion (to be reasonably determined by the Landlord) of any such outgoings.

7.2	Costs of utilities etc.
	The Tenant shall:-

	7.2.1	pay all charges for electricity, gas, water and other services consumed in the Premises, including any connection and hiring charges and meter rents; and

	7.2.2	perform and observe all present and future regulations and requirements of the electricity, gas, water and other supply companies or boards in respect of the supply and consumption of electricity, gas, water and other services on the Premises.

7.3	Common facilities
	The Tenant shall pay to the Landlord, within five (5) Working Days of written demand, a fair proportion (to be reasonably determined by the Landlord according to the use thereof) of all reasonable costs and expenses properly expended or incurred by the Landlord in repairing, maintaining, decorating, cleaning, lighting, making, laying or rebuilding, as the case may be, of the Access Road and any party walls or party structures, Conduits used or enjoyed by, the Premises in common with any Adjoining Property and, in default of payment, such costs and expenses shall be recoverable as rent in arrears.

<PAGE> -12-

8.	VALUE ADDED TAX

8.1	Sums Exclusive of VAT
	All sums payable under this Lease by the Tenant to the Landlord (with the exception of the rent reserved in Clause 4.1.5) shall be deemed to be exclusive of Value Added Tax.

8.2	Tenant to pay VAT
	Where pursuant to the terms of this Lease the Landlord makes a supply to the Tenant (other than a supply made in consideration for the payment of the Rents) and Value Added Tax is payable in respect of such supply, the Tenant shall subject to receipt of a valid Value Added Tax invoice duly addressed to the Tenant pay to the Landlord on the date of such supply a sum equal to the amount of Value Added Tax so payable.

8.3	VAT incurred by Landlord
	Where the Tenant is required by the terms of this Lease to reimburse the Landlord for the costs or expenses of any supplies made to the Landlord, the Tenant shall also at the same time pay or, as the case may be, indemnify the Landlord against all Value Added Tax input tax incurred by the Landlord in respect of those supplies save to the extent that the Landlord is entitled to repayment or credit in respect of such Value Added Tax input tax.

9.	LANDLORD'S COST
	Within five (5) Working Days of written demand, the Tenant shall pay, or indemnify the Landlord against, all reasonable costs, fees, charges, disbursements and expenses properly incurred by it, including those payable to solicitors, counsel, surveyors, architects and bailiffs:-

9.1	in relation to, or in proper contemplation of, the preparation and service of a notice under Section 146 of the Law of Property Act 1925 or any proceedings under Section 146 or Section 147 of that Act (whether or not any right of re-entry or forfeiture has been waived by the Landlord or a notice served under Section 146 is complied with by the Tenant or the Tenant has been relieved under the provisions of that Act and even though forfeiture may be avoided otherwise than by relief granted by the court);

9.2	in relation to, or in proper contemplation of, the preparation and service of all notices and schedules relating to any wants of repair, whether served during or within 3 months after the expiration of the Term (but relating in all cases only to such wants of repair which accrued not later than the expiration or earlier determination of the Term);

9.3	in connection with the recovery or attempted recovery of arrears of rent or other sums due from the Tenant, or in procuring the remedying of the breach of any covenant by the Tenant;

9.4	in relation to any application for consent required or made necessary by this Lease (such costs to include reasonable management fees and expenses) whether or not it is granted (except in cases where the Landlord is obliged not to withhold its consent

<PAGE> -13-

	unreasonably and the withholding of its consent is held by a competent Court to be unreasonable);

SECTION 4
REPAIRS, ALTERATIONS AND SIGNS

10.	REPAIRS, DECORATION ETC.

10.1	Repairs
	The Tenant shall:-

	10.1.1	keep the Premises in good and substantial repair and condition and (if necessary for the purposes of repair) replace any parts that are beyond repair; and

	10.1.2	as and when necessary, replace any of the landlord's fixtures and fittings which may be or become beyond repair with new ones which are similar in type and quality; and

	10.1.3	keep all parts of the Premises which are not built on in a good and clean condition, adequately surfaced and free from weeds, and any landscaped areas properly cultivated and maintained

10.2	Damage by the Insured Risks
	There shall be excepted from the obligations contained in Clause 10.1 any damage caused by the Insured Risks save to the extent that payment of the insurance monies shall be withheld by reason of any act, neglect or default of the Tenant, any undertenant or occupier of any part of the Premises.

10.3	Internal decorations
	The Tenant shall:-

	10.3.1	in every Internal Decoration Year and also in the last three (3) months of the Term (whether determined by passage of time or otherwise), in a good and workmanlike manner prepare and decorate with at least two coats of good quality paint or otherwise treat, as appropriate, all internal parts of the Premises, such decorations and treatment in the last year of the Term to be executed in such colours and materials as shall be approved in writing by the Landlord (such approval not to be unreasonably withheld or delayed);

	10.3.2	as often as may be reasonably necessary, wash down all tiles, glazed bricks and similar washable surfaces.

10.4	External decorations
	The Tenant shall:-

	10.4.1	in every External Decoration Year and also during the last six (6) months of the Term (whether determined by passage of time or otherwise) in a good and workmanlike manner prepare and decorate with at least two coats of good

<PAGE> -14-

		quality paint and to be approved in writing by the Landlord (such approval not to be unreasonably withheld or delayed), or otherwise treat as appropriate, all external parts of the Premises;

	10.4.2	as often as reasonably necessary, clean, make good and restore and, where appropriate, treat with suitable preservative any external cladding, brickwork, concrete, stonework or other finish of the Premises.

10.5	Plant and machinery
	The Tenant shall keep all boilers and central heating and air conditioning plant, sprinklers, and other plant, machinery, apparatus and equipment in the Premises properly maintained and in good working order and condition and for that purpose shall:-

	10.5.1	regularly inspect, maintain and service them;

	10.5.2	renew or replace all working and other parts as and when necessary;

	10.5.3	ensure, by directions to the Tenant's staff and otherwise, that such plant and machinery is properly operated; and

	shall in carrying out its industrial activities on the Premises comply with good industrial practice including relevant codes of practice.

10.6	Schedule of Condition
	10.6.1	The obligations of the Tenant contained in this Lease shall be subject to this Clause 10.6 and construed accordingly.

	10.6.2	The Tenant shall not be obliged:-

		(a)	to put the Premises in any better state or condition than they now are as evidenced by the Schedule of Condition; or

		(b)	to remediate the condition of the land comprised in the Premises to any better state and condition than as evidenced by the results of the Environmental Investigations (a copy of which, when issued shall be signed on behalf of the Landlord and the Tenant and appended to this Lease and the counterpart thereof).

10.7	Cleaning
	The Tenant shall keep the Premises in a clean and tidy condition.

11.	YIELD UP

11.1	Reinstatement of Premises
	Immediately prior to the expiration or earlier determination of the Term, the Tenant shall at its cost:-

	11.1.1	remove from the Premises any sign, writing or painting of the name or business of the Tenant or any occupier of them and all tenant's fixtures,

<PAGE> -15-

		fittings, furniture and effects and make good, to the reasonable satisfaction of the Landlord, all damage to the Premises caused by such removal;

	11.1.2	if so reasonably required by the Landlord, but not otherwise, remove and make good any alterations or additions made to the Premises during the Term, and well and substantially reinstate the Premises to the Landlord's reasonable satisfaction PROVIDED ALWAYS THAT:

		(i)	the Tenant shall not be required to reinstate the Premises to their original condition where the necessary materials, plant and equipment are unavailable but will reinstate the Premises to an equivalent standard of the original condition to the Landlord's reasonable satisfaction; and

		(ii)	the Tenant shall not be required to reinstate the Premises where such alterations or additions have been carried out in order to comply with Clauses 22.2, 23.1, 23.6, and 25.1.

11.2	Yielding up in good repair
	At the expiration or earlier determination of the Term, the Tenant shall quietly yield up the Premises to the Landlord in good and substantial repair and condition in accordance with the covenants by the Tenant contained in this Lease.

11.3	Environmental permits
	At the end of the Term the Tenant will if the Landlord shall so request and at the Landlord's cost use reasonable endeavours to procure the transfer of any permit, consent or authority applicable to the activities then carried on at the Property issued pursuant to Environmental Law to the Landlord.

12.	COMPLIANCE WITH NOTICES

12.1	Tenant to remedy breaches of covenant
	Whenever the Landlord shall give written notice to the Tenant of any material wants of repair or breaches of covenant, the Tenant shall, within thirty (30) days of such notice, or sooner if requisite and immediately in an emergency commence and then diligently proceed to make good such defects or wants of repair and remedy the breach of covenant to the reasonable satisfaction of the Landlord.

12.2	Failure of Tenant to repair
	If the Tenant shall fail to commence and then diligently proceed in accordance with Clause 12.1 or shall fail to continue to comply with such notice, the Landlord may enter the Premises and carry out, or cause to be carried out, any of the works referred to in such notice and all proper costs and expenses incurred as a result shall be paid by the Tenant to the Landlord on demand and, in default of payment, shall be recoverable as a debt.

<PAGE> -16-

13.	ALTERATIONS

13.1	No structural alterations without consent
	The Tenant shall not merge the Premises with any adjoining property nor without the consent of the Landlord (such consent not to be unreasonably withheld or delayed but which may be withheld among other reasons if such works would impair the structural integrity of the Building):-

	13.1.1	erect any new building or new structure on the Premises;

	13.1.2	alter or change the height, elevation or external design or appearance of the Premises;

	13.1.3	alter, cut into or remove any of the principal or load-bearing walls, floors, beams or columns of the Premises; or

	make any other alteration or addition of a structural nature to the Premises.

13.2	Alterations affecting structure not requiring consent
	The Tenant may without the consent of the Landlord (but not if such alterations would impair the structural integrity of the Building)

	13.2.1	affix any plant or machinery installed or to be installed in the Premises to the structure of the Premises; and

	13.2.2	install pipes and cables through the cladding and/or roof (but not through any structural parts) insofar as the same is required in connection with the operation of the Tenant's business at the Premises,

	provided that in carrying out any such works the Tenant shall comply with all statutory requirements, use only good and sound materials and complete the same in a good and workmanlike manner.

13.3	No alterations to Landlord's fixtures
	The Tenant shall not make any alteration or addition to any of the Landlord's fixtures in the Premises without the prior written consent of the Landlord (such consent not to be unreasonably withheld).

13.4	Non structural alterations and demountable partitioning
	The Tenant may make alterations or additions of a nonstructural nature to the Premises including (without limitation) the installation, alteration or removal of demountable partitioning without having to obtain the Landlord's consent but the Tenant shall comply with all statutory requirements applicable to the works being carried out and shall supply the Landlord with plans (if available) showing the same as soon as possible after completion.

13.5	Covenants by Tenant
	The Tenant shall enter into such covenants as the landlord may reasonably require regarding the execution of any works to which the Landlord consents under this

<PAGE> -17-

	Clause, and the reinstatement of the Premises at the end or earlier determination of the Term.

14.	SIGNS AND ADVERTISEMENTS
	The Tenant shall not erect or display on the exterior of the Premises or in the windows of them so as to be visible from the exterior, any advertisement, poster, notice, pole, flag, aerial, satellite dish or any other sign or thing, without the prior written approval of the Landlord to the size, style and position and the materials to be used, such approval not to be unreasonably withheld and PROVIDED THAT the Tenant will be permitted to put up a sign on the Premises showing its name, business, group structure and corporate logo, without the consent of the Landlord.

SECTION 5
USE

15.	USE OF PREMISES

15.1	Permitted use
	The Tenant shall not use the Premises or any part of them except for the Permitted Use.

15.2	Tenant not to leave Premises unoccupied
	The Tenant shall not leave the Premises continuously unoccupied for more than thirty (30) days without notifying the Landlord and providing, or paying for, such caretaking or security arrangements as the Landlord shall reasonably require in order to protect the Premises from vandalism, theft or unlawful occupation.

16.	USE RESTRICTIONS
	The Tenant shall perform and observe the obligations set out in Schedule 3 .

17.	EXCLUSION OF WARRANTY AS TO USER

17.1	No warranty by Landlord
	Nothing contained in this Lease, or in any consent or approval granted by the Landlord under this Lease, shall imply or warrant that the Premises may be used under the Planning Acts for the purpose permitted by this Lease or any purpose subsequently permitted.

17.2	Tenant's acknowledgement
	The Tenant acknowledges that neither the Landlord nor any person acting on behalf of the Landlord has at any time made any representation or given any warranty that any use permitted by this Lease is, will be, or will remain, a use authorised under the Planning Acts.

<PAGE> -18-

18.	GENERAL RESTRICTIONS

18.1	Alienation generally
	The Tenant shall not assign, underlet or part with possession or share the occupation of, or permit any person to occupy the whole or any part of the Premises, except as may be expressly permitted by this Clause and Clauses 19 and 20.

18.2	Sharing with a group company
	Nothing in this Clause or Clauses 19 or 20 shall prevent the Tenant from sharing occupation of the whole or any part of the Premises with any company which is, for the time being, a Group Company of the Tenant subject to (a) the Tenant giving to the Landlord written notice of the sharing of occupation and the name of the Group Company concerned within twenty (20) Working Days after the sharing begins (b) the Tenant and that Group Company remaining in the same relationship whilst the sharing lasts and (c) the sharing not creating the relationship of landlord and tenant between the Tenant and that Group Company.

19.	ASSIGNMENT

19.1	No Assignment of Part
	The Tenant shall not assign any part or parts (as distinct from the whole) of the Premises.

19.2	Circumstance in which consent to assignment may be withheld
	For the purposes of Section 19(1A) of the Landlord and Tenant Act 1927 it is agreed that the Landlord may withhold its consent to an assignment of the whole of the Premises where

	19.2.1	the proposed assignee is any person or entity who has the right to claim sovereign or diplomatic immunity or exemption from liability from the covenants on the part of the Tenant contained in this Lease; or

	19.2.2	the Tenant is in material breach of the provisions of this Lease.

19.3	Condition for Landlord's Consent
	For the purposes of Section 19(1A) of the Landlord and Tenant Act 1927 it is further agreed that any consent of the Landlord to an assignment of the whole of the Premises may be subject to a condition that the Tenant shall, prior to the proposed assignment being completed, execute and deliver to the Landlord a deed which shall be prepared by the Landlord's solicitors containing covenants on the part of a Tenant in the form of those contained in Schedule 5 (therein defined as the "Present Tenant") and if reasonably required by the Landlord that the Tenant shall procure that a guarantor or guarantors reasonably acceptable to the Landlord shall covenant with the Landlord in such form as the Landlord shall reasonably require that the assignee shall observe and perform the tenant's covenants in this Lease.

19.4	Assignment of the whole
	19.4.1	Without prejudice to the provisions of Clauses 18 to 19.3 inclusive the Tenant shall not assign the whole of the Premises without the prior written consent of

<PAGE> -19-

		the Landlord and except in relation to the circumstance mentioned in Clause 19.2 and the condition mentioned in Clause 19.3 such consent shall not be unreasonably withheld. The parties agree that in considering whether or not the Landlord is reasonably withholding such consent due and proper regard shall be had to the provisions and effect of the Landlord and Tenant (Covenants) Act 1995.

	19.4.2	When applying for such consent the Tenant shall supply the Landlord with such information and/or documentation regarding the assignee as the Landlord shall reasonably require.

20.	UNDERLETTING

20.1	Subletting Unit
	For the purpose of this Clause, " Subletting Unit " means each separate unit of accommodation which comprises a Gross Internal Area of not less than 20,000 sq. ft. and which is capable of being occupied and used as a separate and self-contained unit with all necessary and proper services.

20.2	Underletting of part
	The Tenant shall not underlet any part of the Premises other than on the following conditions:-

	20.2.1	the part of the Premises to be underlet shall comprise a Subletting Unit only;

	20.2.2	the Landlord's prior approval (not to be unreasonably withheld or delayed) is obtained to (i) the extent of the premises to be underlet and (ii) in the case of premises let for use within Class B1(b) or (c), B2 or B8 of the Use Classes Order the provisions in the underlease relating to the payment of service charge and the rights granted and excepted and reserved and (iii) in the case of a subletting for use within Class B1(a) of the Use Classes Order all the provisions of the underlease;

	20.2.3	the underlease shall incorporate an agreement, authorised beforehand by the Court, excluding Sections 24 to 28 of the Landlord and Tenant Act 1954 in relation to such underlease; and

	the Premises shall not at any time be in the occupation of more than three (3) persons, the Tenant and any Group Company which is permitted to share occupation under Clause 18.2 counting as one nor shall there be more than four (4) Subletting Units.

20.3	Underletting rent
	The Tenant shall not underlet the whole of the Premises or underlet a Subletting Unit at a fine or premium or at a rent less than the open market rent payable at the time of such underlease.

20.4	Direct covenants from undertenant
	Prior to any permitted underlease, the Tenant shall procure that the undertenant enters into the following direct covenants with the Landlord:-

<PAGE> -20-

	20.4.1	an unqualified covenant by the undertenant not to assign or charge any part of the premises to be underlet;

	20.4.2	an unqualified covenant by the undertenant not to underlet the whole or any part of the premises to be underlet nor (save by way of an assignment of the whole of the premises to be underlet) part with possession or share the occupation of the whole or any part of the premises to be underlet or permit any person to occupy them save for occupation by Group Companies in accordance with the provisions of Clause 18.2 as if the same were applicable to the undertenant and its Group Companies;

	20.4.3	a covenant by the undertenant not to assign, the whole of the premises to be underlet without the prior written consent of the Landlord, such consent not to be unreasonably withheld or delayed;

	20.4.4	a covenant by the undertenant to perform and observe all the tenant's covenants contained in (a) this Lease (other than the payment of the Rents) so far as the same are applicable to the premises to be underlet, and (b) the permitted underlease;

20.5	Contents of underlease
	Every permitted underlease shall contain:-

	20.5.1	provisions for the review of the rent payable under it on an upwards only basis corresponding both as to terms and dates with the rent review provisions in this Lease;

	20.5.2	a covenant by the undertenant (which the Tenant covenants to enforce) prohibiting the undertenant from doing or suffering any act or thing on, or in relation to, the premises underlet inconsistent with, or in breach of, this Lease;

	20.5.3	a condition for re-entry on breach of any covenant by the undertenant;

	20.5.4	the same restrictions as to assignment, charging and parting with or sharing the possession or occupation of the premises underlet, and the same provisions for direct covenants and registration, as are in this Lease (with any necessary changes); and

	20.5.5	in the case of an underlease of a Subletting Unit, a covenant by the undertenant as to the payment of a service charge providing for the recovery by the Tenant of a due proportion of the costs of repairs and services to the Premises.

20.6	Tenant to obtain Landlord's consent
	Without prejudice to the other provisions of this Clause, the Tenant shall not underlet the whole of the Premises or let a Subletting Unit without the prior written consent of the Landlord, such consent not to be unreasonably withheld.

<PAGE> -21-

20.7	Tenant to enforce obligations
	The Tenant shall use all reasonable endeavours to enforce the performance and observance of the covenants by the undertenant contained in any permitted underlease and shall not, at any time, either expressly or by implication, waive any breach of them.

20.8	Review of underlease rent
	The Tenant shall procure that the rent under any permitted underlease is reviewed in accordance with its terms but so that in the case of any premises sublet for use within Class B1(a) of the Use Classes Order (but not otherwise) the amount of any reviewed rent shall not be agreed without the prior consent of the Landlord (such consent not to be unreasonably withheld or delayed) and in such case the Tenant shall have proper and due regard to representations made by the Landlord prior to the agreement or determination of such reviewed rent.

20.9	No variation of terms
	The Tenant shall not vary the terms, of any permitted underlease, without the prior written consent of the Landlord, such consent not to be unreasonably withheld or delayed.

20.10	No reduction in rent
	The Tenant shall procure that the rent payable under any permitted underlease is not commuted or made payable more than one quarter in advance.

21.	REGISTRATION OF DISPOSITIONS
	Within fifteen (15) Working Days of every assignment, transfer, assent, underlease, assignment of underlease, mortgage, charge or any other disposition, whether mediate or immediate, of or relating to the Premises or any part, the Tenant shall provide the Landlord or its solicitors with a copy (certified as true) of the deed, instrument or other document evidencing or effecting such disposition and, on each occasion, shall pay to the Landlord or its solicitors a fee of Twenty-five pounds ([Pound] 25.00).

SECTION 6
LEGAL REQUIREMENTS

22.	STATUTORY REQUIREMENTS

22.1	Tenant to comply with statutes
	The Tenant shall, at its expense, comply in all respects with every statute now in force or which may, after the date of this Lease, be in force and any other obligation imposed by law and all regulations laws or directives binding on the United Kingdom made or issued by or with the authority of The European Commission and/or The Council of Ministers relating to the Premises or their use, including the Offices, Shops and Railway Premises Act 1963, the Fire Precautions Act 1971, the Defective Premises Act 1972, the Health and Safety at Work etc. Act 1974, the Environmental Protection Act 1990, the Water Resources Act 1991 and the Water Industry Act 1991.

<PAGE> -22-

22.2	Tenant to execute necessary works
	The Tenant shall execute all works and provide and maintain all arrangements on or in respect of the Premises or their use which are required by any statute now in force or which may after the date of this Lease be in force or by any government department, local, public or other competent authority or court of competent jurisdiction acting under or in pursuance of any statute, whether any of the same are required to be carried out by the landlord, tenant or occupier.

23.	PLANNING ACTS

23.1	Tenant's obligation to comply
	The Tenant shall comply with the Planning Acts and with any planning permission relating to, or affecting, the Premises, and indemnify the Landlord against all actions, proceedings, claims, demands, losses, costs, expenses, damages and liability whatsoever in respect of any non-compliance.

23.2	No application for planning permission without consent
	The Tenant shall not make any application for planning permission or for other consents required under the Planning Acts in respect of the Development of the Premises without the prior written consent of the Landlord, such consent not to be unreasonably withheld or delayed.

23.3	Tenant to obtain all permissions
	The Tenant shall, at its expense, obtain and, if appropriate, renew any planning permission and any other consent and serve all necessary notices required for the carrying out by the Tenant of any operations or the commencement or continuance of any use on the Premises.

23.4	Tenant to pay planning charges
	The Tenant shall pay and satisfy any charge or levy lawfully imposed under the Planning Acts in respect of any Development by the Tenant on the Premises.

23.5	No implementation of permission without approval
	The Tenant shall not implement any planning permission or consent required under the Planning Acts and obtained after the date of this Lease before it has been produced to, and approved in writing by, the Landlord, (such approval not to be unreasonably withheld or delayed).

23.6	Tenant to carry out works before end of Term
	Unless the Landlord shall otherwise direct in writing, the Tenant shall carry out and complete before the expiration or earlier determination of the Term:-

	23.6.1	any works required to be carried out to the Premises as a condition of any planning permission granted during the Term and implemented by the Tenant whether or not the date by which the planning permission requires such works to be carried out is within the Term; and

<PAGE> -23-

	23.6.2	any Development begun upon the Premises in respect of which the Landlord may be or become liable for any charge or levy under the Planning Acts.

24.	STATUTORY NOTICES

24.1	Notices Generally
	The Tenant shall:-

	24.1.1	within five (5) Working Days (or sooner if necessary having regard to the requirements of the notice or order in question or the time limits stated in it) of receipt of any notice or order or proposal for a notice or order given to the Tenant and relevant to the Premises or any occupier of them by any government department, local, public or other competent authority or court of competent jurisdiction, provide the Landlord with a true copy of it and any further particulars reasonably required by the Landlord;

	24.1.2	without delay, take all necessary steps to comply with the notice or order so far as the same is the responsibility of the Tenant; and

	24.1.3	at the reasonable request and cost of the Landlord, make or join with the Landlord in making such objection, complaint, representation or appeal against or in respect of any such notice, order or proposal as the Landlord acting reasonably shall deem expedient.

24.2	Notification of Environmental Matters
	The Tenant shall notify the Landlord on the Tenant becoming aware of any criminal, civil, judicial, regulatory or administrative proceeding, suit, notice, action or procedure brought or taken under Environmental Law taken or threatened against the Tenant by any Environmental Regulator or by any third party, or if the Tenant becomes aware of facts or circumstances which in the opinion of the Tenant are likely to lead to the same.

24.3	Party Wall etc. Act 1996
	The Tenant shall:-

	24.3.1	Forthwith after receipt by the Tenant of any notice served on the Tenant under the Party Wall etc. Act 1996 provide the Landlord with a true copy of it and of any further particulars reasonably required by the Landlord;

	24.3.2	At the reasonable request and cost of the Landlord make or join with the Landlord in making such objection complaint representation and in serving such counter notice against or in respect of any such notice as the Landlord acting reasonably shall deem expedient;

	24.3.3	At the reasonable request and cost of the Landlord make or join with the Landlord in serving any such notice on any adjoining owner under the Party Wall etc. Act 1996 as the Landlord may from time to time reasonably require.

<PAGE> -24-

25.	FIRE PRECAUTIONS AND EQUIPMENT

25.1	Compliance with requirements
	The Tenant shall comply with the requirements and recommendations of the fire authority and the insurers of the Premises and the reasonable requirements of the Landlord in relation to fire precautions affecting the Premises.

25.2	Fire fighting appliances to be supplied
	The Tenant shall keep the Premises equipped with such fire fighting appliances as shall be required by any statute, the fire authority or the insurers of the Premises, or as shall be reasonably required by the Landlord and the Tenant shall keep such appliances open to inspection and maintained to the reasonable satisfaction of the Landlord.

25.3	Access to be kept clear
	The Tenant shall not obstruct the access to, or means of working, any fire fighting appliances or the means of escape from the Premises in case of fire or other emergency.

26.	DEFECTIVE PREMISES
	Immediately upon becoming aware of the same, the Tenant shall give written notice to the Landlord of any defect in the Premises which might give rise to an obligation on the Landlord to do, or refrain from doing, any act or thing so as to comply with any duty of care imposed on the Landlord under the Defective Premises Act 1972, and shall display and maintain in the Premises all notices which the Landlord may, from time to time, reasonably require to be displayed in relation to any such matters.

SECTION 7
INSURANCE

27.	INSURANCE PROVISIONS

27.1	Landlord to insure
	The Landlord shall insure and keep insured with some insurance company or underwriters of repute, subject to such exclusions, excesses, limitations, terms and conditions as may be usually imposed by the insurers:-

	27.1.1	the Premises in their Full Reinstatement Cost against loss or damage by the Insured Risks;

	27.1.2	the loss of the Principal Rent from time to time payable, or reasonably estimated to be payable, under this Lease, taking account of any review of the rent which may become due under this Lease, for three (3) years;

	27.1.3	property owner's liability and third party risks in a reasonable sum.

27.2	Full Reinstatement Cost
	In this Clause, " Full Reinstatement Cost " means the full cost of reinstating the Premises at the time when such reinstatement is likely to take place, having regard to any possible increases in building costs, and including the cost of demolition, shoring

<PAGE> -25-

	up, site clearance, ancillary expenses and architects', surveyors' and other professional fees and any necessary Value Added Tax.

27.3	Noting of Interests
	The Landlord shall use reasonable endeavours to procure that the interest of the Tenant, any subtenant and on request their respective mortgages are noted on the policy.

27.4	Landlord to produce evidence of insurance
	At the request of the Tenant, made no more than once a year, the Landlord shall produce to the Tenant a copy of the insurance policy covering the Premises and a copy of the receipt for the last premium or (at the Landlord's option) reasonable evidence from the insurers of the terms of the insurance policy and the fact that the policy is subsisting and in effect.

27.5	Damage to the Premises
	If the Premises or any part of them or the access thereto shall be damaged or destroyed by any of the Insured Risks so as to render the Premises unfit for use and occupation or inaccessible then:-

	27.5.1	save to the extent that payment of any insurance monies shall be refused wholly or partly by reason of any act or default of the Tenant, any undertenant or occupier of any part of the Premises; and

	27.5.2	subject to the Landlord being able to obtain any necessary planning permission and all other necessary licences, approvals and consents, which the Landlord shall use reasonable endeavours to obtain but shall not be obliged to institute any appeals; and

	27.5.3	subject to any necessary labour and materials being and remaining available, which the Landlord shall use reasonable endeavours to obtain as soon as practicable

	the Landlord shall (subject to Clause 27.6) lay out the net proceeds of such insurance, (other than any in respect of loss of rent), in the reinstatement and rebuilding of the part of the Premises so damaged or destroyed substantially as it was prior to any such damage or destruction (but not so as to provide accommodation identical in layout if it would not be reasonably practical to do so) and the Landlord shall make up any deficiency out of its own monies.

27.6	Option to determine
	If, at any time during the Term the Premises or the Access Road for so long as the same is unadopted shall be destroyed or damaged by any of the Insured Risks so as to render the Premises unfit for use and occupation then if reinstatement of the Premises shall not have been completed within a period of three (3) years from the date of such damage or destruction the Tenant or the Landlord may at any time thereafter determine this Lease by giving written notice to the other such notice to take immediate effect but such determination shall be without prejudice to any claim which the Landlord may

<PAGE> -26-

	have against the Tenant or any guarantor or which the Tenant may have against the Landlord for any previous breach of covenant or sum previously accrued due.

27.7	Payment of insurance money refused
	If payment of any insurance is refused as a result of some act or default of the Tenant, any undertenant or occupier of any part of the Premises the Tenant shall pay to the Landlord, on written demand, the amount so refused with interest on that amount at the Prescribed Rate from and including the date of such refusal to the date of payment by the Tenant.

27.8	Suspension of rent payments
	If the Premises or any part of them or the access thereto shall be damaged or destroyed by any of the Insured Risks so as to render them unfit for use and occupation or inaccessible, the Rents, or a fair proportion of it according to the nature and extent of the damage sustained, shall not be payable until the earlier of the date Premises or the part damaged or destroyed shall be again rendered fit for use and occupation and accessible the date when the period of loss of rent insurance has expired. Any dispute regarding the suspension of payment of the Rents shall be referred to a single arbitrator to be appointed, in default of agreement, upon the application of either party, by the President in accordance with the Arbitration Act 1996.

27.9	Insurance Valuations
	The tenant shall reimburse the Landlord within five (5) Working Days of demand all proper costs properly incurred by the Landlord for valuations of the Premises for insurance purposes not more frequently than once in every two (2) years.

27.10	Insurance becoming void
	The Tenant shall not do, or omit to do anything which could cause any policy of insurance covering the Premises or any Adjoining Property owned by the Landlord to become wholly or partly void or voidable.

27.11	Requirements of insurers
	The Tenant shall, at all times, comply with any requirements and reasonable recommendations of the insurers of the Premises.

27.12	Notice by Tenant
	The Tenant shall give notice to the Landlord immediately on the happening of any event or thing which might affect any insurance policy relating to the Premises.

SECTION 8
DEFAULT OF TENANT AND RIGHTS OF RE-ENTRY

28.	DEFAULT OF TENANT

28.1	Re-entry
	Without prejudice to any other right, remedy or power contained in this Lease or otherwise available to the Landlord, on or at any time after the happening of any of the events mentioned in Clause 28.2, the Landlord may re-enter the Premises or any part

<PAGE> -27-

	of them in the name of the whole, and the Term shall then end, but without prejudice to any claim which the Landlord may have against the Tenant for any previous breach of covenant or sum previously accrued due.

28.2	Events of default
	The events referred to in Clause 28.1 are the following:-

	28.2.1	if the Rents or any part of them shall be unpaid for fourteen (14) Working Days after becoming payable (whether formally demanded or not); or

	28.2.2	if any of the covenants by the Tenant or any guarantor of the Tenant contained in this Lease shall not be performed and observed; or

	28.2.3	if the Tenant or (subject to the Tenant having first been given 21 days to provide to the Landlord a replacement guarantor acceptable to the Landlord (acting reasonably) and the Tenant having failed so to do) any guarantor of the Tenant, for the time being, (being a body corporate):-

		(a)	calls, or a nominee on its behalf calls, a meeting of any of its creditors; or makes an application to the Court under Section 425 of the Companies Act 1985; or submits to any of its creditors a proposal under Part I of the Insolvency Act 1986; or enters into any arrangement, scheme, compromise, moratorium or composition with any of its creditors (whether under Part I of the Insolvency Act 1986 or otherwise); or

		(b)	has an administrative receiver or a receiver or a receiver and manager appointed in respect of the Tenant's property or assets or any part; or

		(c)	resolves or the directors or shareholders resolve to present a petition for an administration order in respect of the Tenant; or an administrator is appointed; or

		(d)	had a winding-up petition or petition for an administration order presented against it; or passes a winding-up resolution (other than a voluntary winding-up whilst solvent for the purposes of an amalgamation or reconstruction); or calls a meeting of its creditors for the purposes of considering a resolution that it be wound-up voluntarily; or resolves to present its own winding-up petition; or is wound-up (whether in England or elsewhere); or has a liquidator or provisional liquidator appointed; or

		(e)	shall cease for any reason to maintain its corporate existence; or is struck off the register of companies; or otherwise ceases to exist; or

	28.2.4	if the Tenant, for the time being, (being an individual, or if more than one individual, then any one of them) makes an application to the Court for an interim order under Part VIII of the Insolvency Act 1986; or convenes a meeting of, or enters into any arrangement, scheme, compromise, moratorium

<PAGE> -28-

		or composition with, any of his creditors (whether under Part VIII of the Insolvency Act 1986 or otherwise); or is adjudged bankrupt (whether in England or elsewhere); or has a receiver appointed in respect of the Tenant's property or assets or any part; or

	28.2.5	if analogous proceedings or events to those referred to in this Clause shall be instituted or occur in relation to the Tenant, for the time being, elsewhere than in the United Kingdom; or

	28.2.6	if the Tenant, for the time being, suffers any distress or execution to be levied on the Premises which is not discharged in full within twenty one (21) days after the levy has been made; or becomes unable to pay its debts as and when they fall due.

SECTION 9
LANDLORD'S COVENANTS

29.	QUIET ENJOYMENT
	The Landlord covenants with the Tenant that the Tenant, paying the Rents and performing and observing the covenants on the part of the Tenant contained in this Lease, shall and may peaceably hold and enjoy the Premises during the Term without any interruption by the Landlord or any person lawfully claiming through, under, or in trust for it or by title paramount.

29.1	Access Road and Conduits
	The Landlord shall use reasonable endeavours to keep the Access Road and any Conduits on the Adjoining Property which serve the Premises in good and substantial repair and condition and so as to enable safe use of the Access Road free of obstruction.

29.2	Schedules 1 and 2 Rights
	The Landlord shall comply with the obligations of the Landlord specified in Schedules 1 and 2.

SECTION 10
MISCELLANEOUS

30.	RELETTING NOTICES

	The Tenant shall permit the Landlord, at all reasonable times during the last six (6) months of the Term, to enter the Premises and affix and retain, without interference, on any suitable parts of them (but not so as materially to affect the access of light or air to the Premises) notices for reletting them and the Tenant shall not remove or obscure such notices and shall permit all persons with the written authority of the Landlord to view the Premises at all reasonable hours in the daytime, upon prior appointment having been made.

<PAGE> -29-

31.	DISCLOSURE OF INFORMATION

	Upon making any application or request in connection with the Premises or this Lease, or upon written request by the Landlord from time to time, the Tenant shall disclose to the Landlord such information in relation to the Premises as the Landlord may reasonably require and, whenever the Landlord shall reasonably request, the Tenant shall supply full particulars of all occupations and derivative interests in the Premises, however remote or inferior.

32.	REPRESENTATIONS

	The Tenant acknowledges that this Lease has not been entered into in reliance, wholly or partly, on any statement or representation made by, or on behalf of, the Landlord, except any such statement or representation that is expressly set out in this Lease.

33.	NOTICES

33.1	Notices to Tenant
	Any demand or notice required to be made, given to, or served on the Tenant under this Lease shall be duly and validly made, given or served if addressed to the Tenant (and, if there shall be more than one of them, then any one of them) and delivered personally, or sent by pre-paid registered or recorded delivery mail, or sent by fax and addressed (in the case of a company) to its Company Secretary at its registered office.

33.2	Notices to Landlord
	Any notice required to be given to, or served on, the Landlord shall be duly and validly given or served if sent by pre-paid registered or recorded delivery mail, or sent by fax addressed to the Landlord at its registered office.

34.	NEW TENANCY

	This Lease constitutes a new tenancy for the purposes of the Landlord and Tenant (Covenants) Act 1995.

35.	INVALIDITY OF CERTAIN PROVISIONS

	If any term of this Lease or the application thereof to any person or circumstances shall to any extent be invalid or unenforceable the same shall be severable and the remainder of this Lease or the application of such term to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby and each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law.

36.	THIRD PARTY RIGHTS
	Subject to clause 3.4 a person who is not a party to this Lease has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Lease but this does not affect any right or remedy of a third party which exists or is available apart from that Act.

<PAGE> -30-

IN WITNESS whereof this Deed has been executed by the parties and is intended to be and is hereby delivered on the date first written above.

<PAGE> -31-

SCHEDULE 1
RIGHTS AND EASEMENTS GRANTED

1.	Until such time as the Landlord shall have relocated diverted or installed the Conduits referred to below in accordance with the obligations of the Landlord to carry out the Landlord's Works the right for the Tenant and all persons expressly or by implication authorised by the Tenant (in common only with the Phase 2 Tenant) to:-

1.1	occupy the telephone exchange situated within the Adjoining Property and to use all equipment housed therein together with associated Conduits as at the date hereof serving the Premises for the passage of telecommunications services to and from the Premises subject so far as used in common with the Phase 2 Tenant and not separately metered to payment of a fair and reasonable proportion according to usage of the total cost of telecommunication services; and

1.2	the free and uninterrupted passage of electricity and water to the Premises through the 11000 volt electricity ring main sprinkler system and waterpipes and other Conduits as at the date hereof situate within the Adjoining Property and serving the Premises.

2.	The right for the Tenant and all persons expressly or by implication authorised by the Tenant (in common with the Landlord and all persons having a similar right) at all times to use the Access Road with or without vehicles (including heavy goods vehicles) for the purpose of obtaining access to and egress from the Premises.

3.	The exclusive right for the Tenant and all persons expressly or by implication authorised by the Tenant to the free and uninterrupted passage and running of gas to and from the Premises through the gas pipe and ancillary equipment the approximate position of which is shown by a brown broken line on the Plan.

4.	The right for the Tenant and all persons expressly or by implication authorised by the Tenant to use all Conduits serving the Premises following completion of the Landlord's Works for the passage of Utilities to and from the Premises.

5.	The exclusive right to use the effluent pipeline more particularly described in the 1985 Lease subject to compliance in all respects with the provisions of the 1985 Lease.

6.	The right of support and protection from all parts of the Adjoining Property as is now enjoyed by the Premises.

7.	The right to enter such parts of the Adjoining Property as is reasonably necessary with workmen vehicles and equipment in order to carry out the works set out in this Schedule, works of repair or permitted alteration to the Premises (including the Specified Works), to lay inspect clean maintain repair replace or renew any of the Conduits or services referred to in this Schedule and situate under the Adjoining Property or to exercise any other rights granted to the Tenant under this Lease provided that the Tenant shall:-

<PAGE> -32-

7.1	(except in case of emergency):-

	(a)	give reasonable prior written notice to the Landlord and the occupier of such Adjoining Property of its intention to exercise such right; and

	(b)	in the case of proposed works have regard to the reasonable requirements of the occupier of the Adjoining Property.

7.2	only exercise such right insofar as it cannot reasonably carry out any such works of repair and alteration from within the Premises.

7.3	cause as little damage and disturbance as reasonably possible to the Adjoining Property.

7.4	acting in a reasonable and proper manner make good as soon as reasonably possible any physical damage caused to such Adjoining Property.

7.5	cause no interruption to the Landlord or other the occupier of the Adjoining Property and their businesses on the Adjoining Property.

7.6	procure that any such works are carried out in a good and workmanlike manner, using good and sound materials and equipment and in accordance with best construction practice.

8.	The right to erect a sign of a similar size as exists as at today's date on the Victoria Road frontage of the Access Road showing the names of Tenant and other occupiers of the Premises corporate logo and group structure in a form and position to be agreed (both parties acting reasonably) between the Landlord and the Tenant.

9.	Subject to the Tenant obtaining any necessary consents from adjoining owners to use a gate in such position as shall be agreed by the Landlord and the Tenant (both parties acting reasonably) and which is to be constructed as part of the Landlord's Works to gain pedestrian access to and from the adjoining Princes Mead Car Park.

10.	In the case of any diversion or relocation of any Conduits during the Term, each Conduits, as diverted or relocated, shall be deemed substituted for the Conduits which it replaced and shall mutatis mutandis be subject to the same rights as if the same were the Conduits referred to in this Lease.

11.	Any rights granted in this Schedule 1 over anything which is not in being at the date of this Lease shall be effective only in relation to any such thing which comes into being before the expiry of eighty (80) years from today, which shall be the perpetuity period applicable to this Lease.

<PAGE> -33-

SCHEDULE 2
EXCEPTIONS AND RESERVATIONS

1.	There are excepted and reserved to the Landlord, for the benefit of the Adjoining Property:-

1.1	until 30 June 2001 or determination of the Phase 2 Lease (if earlier) all rights of access enjoyed as at the date hereof (or which would have been enjoyed had the premises comprised in the Phase 2 Lease and the Premises been held in separate ownership) by the Adjoining Property;

1.2	the right upon reasonable written notice to the Tenant (except in emergency when no notice need be given) to enter and remain up on such part of the Premises as is necessary with or without tools, scaffolding materials, workmen and vehicles for the purposes of:

	(i)	inspecting, cleaning, altering, maintaining, renewing any adjoining or adjacent premises

	(ii)	complying with any covenants on the part of the Landlord contained in this Lease.

	and in exercising such rights the Landlord shall comply with the provisions of Clause 3.9.

2.	There are excepted and reserved for the benefit of the Adjoining Property the right of support and protection from all parts of the Premises as is now enjoyed by the Adjoining Property.

3.	The right for the Landlord to develop the Adjoining Property but not so as to materially affect the access of light or air to the Premises.

<PAGE> -34-

SCHEDULE 3
USE RESTRICTIONS

1.	Dangerous materials and use of machinery

	The Tenant shall not:-

1.1	keep in the Premises any article or thing which is or may become combustible, dangerous, explosive, inflammable, offensive or radio-active, or which might increase the risk of fire or explosion, other than reasonable quantities of oil required for the operation of any boiler, plant, machinery, equipment and apparatus which shall be stored in accordance with the requirements of any statute affecting the Premises and of any insurer of them;

1.2	keep or operate in the Premises any machinery which is unduly noisy or causes vibration, or which is likely to annoy or disturb any owner or occupier of any Adjoining Property,

	PROVIDED THAT these sub-clauses shall not apply in relation to any article thing or machinery which is used in the ordinary course of the business of the Tenant carried on from time to time in the Premises and kept and maintained in accordance with good industry practice.

2.	Overloading floors and services

	The Tenant shall not:-

2.1	overload the floors of the Premises nor suspend any excessive weight from any ceiling, roof, stanchion, structure or wall of them nor overload any Utility in or serving them;

2.2	do anything which may subject the Premises to any strain beyond that which they are designed to bear (with due margin for safety);

3.	Discharges

	The Tenant shall not cause, suffer or permit the discharge, release or emission into any Conduits of any Hazardous or Polluting Substance or any substance which may cause an obstruction or might be or become a source of danger, or which might damage any Conduit or the drainage system of the Premises or any Adjoining Property provided that the Tenant shall not be, or be deemed to be, in breach of the provisions of this paragraph if in the ordinary course of the Tenant's business it is discharging such a substance in accordance with the terms and conditions of a licence granted by an appropriate statutory or regulatory body.

4.	Disposal of refuse

	The Tenant shall not deposit on any part of the Premises any refuse, rubbish or trade empties of any kind other than in proper receptacles, and shall not burn any refuse or rubbish on the Premises.

<PAGE> -35-

5.	Storage of materials

	The Tenant shall not store, lay out or stack on any land forming part of the Premises any materials, equipment, plant, bins, crates, cartons, boxes or any other item which is or might become untidy, unclean, unsightly or in any way materially detrimental to the amenity of the Premises or the Adjoining Property Provided that storage of items in receptacles that are on the Premises at the date of the Lease shall not be deemed to be a breach of this provision.

6.	Obstruction of common areas

	The Tenant shall not do anything as a result of which any forecourt, path, road or other area on the Adjoining Property over which the Tenant may have rights of access or use may be damaged (other than in the proper carrying out of any works permitted by this Lease), or their fair use by others may be obstructed in any way.

7.	Loading and unloading

	The Tenant shall not load or unload any goods arriving at or dispatched from the Premises except on land forming part of the Premises and in such a way that access to or egress from the Adjoining Property is not obstructed.

8.	Access by vehicles and parking

	The Tenant shall not permit any vehicles belonging to the Tenant or any persons calling on the Premises expressly or by implication with the authority of the Tenant either:-

8.1	to enter and leave the Premises except at the vehicular access points constructed for that purpose; or

8.2	to park except within the parking spaces and loading areas within the Premises.

9.	Prohibited uses

	The Tenant shall not use the Premises for any public or political meeting, or public exhibition or public entertainment, show or spectacle; or for any dangerous, noisy, noxious or offensive business, occupation or trade; or for any illegal or immoral purpose; or for residential or sleeping purposes; or for betting, gambling, gaming or wagering; or as a betting office, or for any auction; or (save insofar as such uses are carried out in connection with any sports or social club provided for the benefit of the Tenant's employees) as a club; or for the sale of any beer, wines or spirits.

10.	Nuisance

	The Tenant shall not do anything in the Premises which may be or become a nuisance, or which may cause annoyance, damage, disturbance or inconvenience to, the Landlord or any owner or occupier of any Adjoining Property, or which may be injurious to the amenity, character, tone or value of the Premises Provided that the use of the Premises

<PAGE> -36-

for the purposes of the Permitted Use in accordance with good industry practice and otherwise in compliance with all covenants in this Lease shall not be or be deemed to be a breach of this sub-clause.

<PAGE> -37-

SCHEDULE 4
MATTERS TO WHICH THE PREMISES ARE SUBJECT

The covenants and other matters set out in the charges registers of Title Numbers HP5659321 and HP520658.

The 1985 lease.

<PAGE> -38-

SCHEDULE 5
AUTHORIZED GUARANTEE AGREEMENT TO BE GIVEN BY TENANT
PURSUANT TO CLAUSE 19

THIS DEED is made the [ ] day of [ ]

BETWEEN:-

(1)	[ ] whose registered office is at [ ] (registered number: [ ]) (the " Present Tenant ") and

(2)	[ ] whose registered office is at [ ] (registered number: [ ]) (the " Landlord ")

WHEREAS:-

(A)	This Agreement is made pursuant to the lease dated [ ] and made between [ ] (the " Lease ") which expression shall include (where the context so admits) all deeds and documents supplemental to it (whether expressed to be so or not) relating to the premises at [ ] (the " Premises ").

(B)	The Present Tenant holds the Premises under the Lease and wishes to assign the Lease to [ ] (the " Assignee "), and pursuant to the Lease the Landlord's consent is required to such assignment (the " Assignment ") and such consent is given subject to a condition that the Present Tenant is to enter into a deed in the form of this Deed.

NOW THIS DEED WITNESSES as follows:-

1.	Authorized Guarantee

	Pursuant to the condition referred to above, the Present Tenant covenants with the Landlord, as a primary obligation, that the Assignee or the Present Tenant shall, at all times during the period (the " Guarantee Period ") from the completion of the Assignment until the Assignee shall have ceased to be bound by the tenant covenants (which in this Deed shall have the meaning attributed by Section 28(1) of the Landlord and Tenant (Covenants) Act 1995 (the " 1995 Act ")) contained in the Lease (including the payment of the rents and all other sums payable under the Lease in the manner and at the times specified in the Lease), duly perform and observe the tenant covenants.

2.	Present Tenant's liability

2.1	The Present Tenant agrees that the Landlord, in the enforcement of its rights under this Deed, may proceed against the Present Tenant as if the Present Tenant were the sole or principal debtor in respect of the tenant covenant in question.

2.2	For the avoidance of doubt, notwithstanding the termination of the Guarantee Period the Present Tenant shall remain liable under this Deed in respect of any liabilities which may have accrued prior to such termination.

<PAGE> -39-

2.3	For the avoidance of doubt the Present Tenant shall be liable under this Deed for any costs and expenses incurred by the Landlord in enforcing the Present Tenant's obligations under this Deed.

3.	Disclaimer of Lease

	The Present Tenant further covenants with the Landlord that if the Crown or a liquidator or trustee in bankruptcy shall disclaim the Lease during the Guarantee period the Present Tenant shall, if the Landlord by notice in writing given to the Present Tenant within six (6) months after such disclaimer so requires, accept from, and execute and deliver to, the Landlord a counterpart of a new lease of the Premises for a term commencing on the date of the disclaimer and continuing for the residue then remaining unexpired of the term of the Lease, such new lease to be at the same rents and subject to the same covenants and provisions as are contained in the Lease.

4.	Supplementary provisions

	By way of provision incidental or supplementary to Clauses 1, 2, and 3 of this Deed:-

4.1	Postponement of claims by Present Tenant

	The Present Tenant further covenants with the Landlord that the Present Tenant shall:-

	4.1.1	not claim in any liquidation, bankruptcy, composition or arrangement of the Assignee in competition with the Landlord and shall remit to the Landlord the proceeds of all judgements and all distributions it may receive from any liquidator, trustee in bankruptcy or supervisor of the Assignee;

	4.1.2	hold for the benefit of the Landlord all security and rights the Present Tenant may have over assets of the Assignee whilst any liabilities of the Present Tenant or the Assignee to the Landlord remain outstanding; and

	4.1.3	not exercise any right or remedy in respect of any amount paid or any liability incurred by the Present Tenant in performing or discharging its obligations contained in this Deed, or claim any contribution from any other guarantor.

4.2	Postponement of participation by Present Tenant in security

	The Present Tenant shall not be entitled to participate in any security held by the Landlord in respect of the Assignee's obligations to the Landlord under the Lease or to stand in the place of the Landlord in respect of any such security until all the obligations of the Present Tenant or the Assignee to the Landlord under the Lease have been performed or discharged.

4.3	No release of Present Tenant

	None of the following, or any combination of them, shall release, determine, discharge or in any way lessen or affect the liability of the Present Tenant as principal obligor

<PAGE> -40-

	under this Deed or otherwise prejudice or affect the right of the Landlord to recover from the Present Tenant to the full extent of this guarantee:-

	4.3.1	any neglect, delay or forbearance of the Landlord in endeavouring to obtain payment of any rents or other amounts required to be paid by the Assignee or in enforcing the performance or observance of any of the obligations of the Assignee under the Lease;

	4.3.2	any refusal by the Landlord to accept rent tendered by or on behalf of the Assignee at a time when the Landlord was entitled (or would after the service of a notice under Section 146 of the Law of Property Act 1925 have been entitled) to re-enter the Premises;

	4.3.3	any extension of time given by the Landlord to the Assignee;

	4.3.4	any reviews of the rent payable under the Lease and (subject to Section 18 of the 1995 Act) any variation of the terms of the Lease or the transfer of the Landlord's reversion;

	4.3.5	any change in the constitution, structure or powers of either the Present Tenant, the Assignee or the Landlord or the liquidation, administration or bankruptcy (as the case may be) of either the Present Tenant or the Assignee;

	4.3.6	any legal limitation, or any immunity, disability or incapacity of the Assignee (whether or not known to the Landlord) or the fact that any dealings with the Landlord by the Assignee may be outside, or in excess of, the powers of the Assignee;

	4.3.7	any other deed, act, omission, failure, matter or thing whatsoever as a result of which, but for this provision, the Present Tenant would be exonerated either wholly or partly (other than a release executed and delivered as a deed by the Landlord or a release effected by virtue of the 1995 Act).

4.4	Costs of new lease

	The Landlord's reasonable costs in connection with any new lease granted pursuant to Clause 3 of this Deed shall be borne by the Present Tenant and paid to the Landlord (together with Value Added Tax) upon completion of such new lease.

5.	Invalidity of certain provisions

	If any term of this Deed or the application thereof to any person or circumstances shall to any extent be invalid or unenforceable the same shall be severable and the remainder of this Deed or the application of such term to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby and each term and provision of this Deed shall be valid and be enforced to the fullest extent permitted by law.

<PAGE> -41-

IN WITNESS whereof this deed has been executed by the Present Tenant and is intended to be and is hereby delivered on the date first above written.

<PAGE> -42-

Executed as a Deed by		)
J SAINSBURY DEVELOPMENTS		)
LIMITED acting by:		)

	Director		/s/ B. Henderson
	Director/Secretary		/s/ H. Burns

<PAGE> -43-

Signed as a deed by	)
ALFRED VAISEY	)
as attorney for WESTON AEROSPACE	)
LIMITED in the presence of:	)	/s/ A. Vaisey

Signature of witness		/s/ Ruth Robinson

Name of witness		RUTH ROBINSON

Address of witness		200 ALDERSGATE STREET LONDON EC1

Occupation of witness		SOLICITOR.

<PAGE> -43-

Exhibit 11

ESTERLINE TECHNOLOGIES CORPORATION
(In thousands, except per share amounts)

Computation of Earnings (Loss) Per Share - Basic

	2003	2002	2001	2000	1999


Income From Continuing
Operations	$29,741	$31,284	$42,639	$29,544	$30,241
Income (Loss) From
Discontinued Operations,
Net of Tax	(5,808)	(25,039)	(9,780)	3,043	(379)


Earnings Before Cumulative
Effect of a Change in
Accounting Principle	23,933	6,245	32,859	32,587	29,862

Cumulative Effect of a Change
in Accounting Principle,
Net of Tax	--	(7,574)	(403)	--	--


Net Earnings (Loss)	$23,933	$ (1,329)	$32,456	$32,587	$29,862


Weighted Average Number
of Shares
Outstanding - Basic	20,900	20,751	19,641	17,375	17,337


Earnings (Loss) Per Share - Basic:
Continuing operations	$ 1.42	$ 1.51	$ 2.17	$ 1.70	$ 1.74
Discontinued operations	(.27)	(1.21)	(.50)	.18	(.02)

Earnings per share before
cumulative effect of
a change in
accounting principle	1.15	.30	1.67	1.88	1.72
Cumulative effect of
a change in
accounting principle	--	(.37)	(.02)	--	--


Earnings (Loss) Per
Share - Basic	$ 1.15	$ (.07)	$ 1.65	$ 1.88	$ 1.72

<PAGE> 1

ESTERLINE TECHNOLOGIES CORPORATION
(In thousands, except per share amounts)

Computation of Earnings (Loss) Per Share - Diluted

	2003	2002	2001	2000	1999


Income From Continuing
Operations	$29,741	$31,284	$42,639	$29,544	$30,241
Income (Loss) From
Discontinued Operations,
Net of Tax	(5,808)	(25,039)	(9,780)	3,043	(379)


Earnings Before Cumulative
Effect of a Change in
Accounting Principle	23,933	6,245	32,859	32,587	29,862

Cumulative Effect of a Change
in Accounting Principle,
Net of Tax	--	(7,574)	(403)	--	--


Net Earnings (Loss)	$23,933	$ (1,329)	$32,456	$32,587	$29,862


Weighted Average Number
of Shares Outstanding	20,900	20,751	19,641	17,375	17,337

Net Shares Assumed to be
Issued for Stock Options	205	270	373	279	321


Weighted Average Number
of Shares and Equivalent
Shares Outstanding -
Diluted	21,105	21,021	20,014	17,654	17,658


Earnings (Loss) Per
Share - Diluted:
Continuing operations	$ 1.41	$ 1.49	$ 2.13	$ 1.68	$ 1.71
Discontinued operations	(.28)	(1.19)	(.49)	.17	(.02)

Earnings per share
before cumulative
effect of a change in
accounting principle	1.13	.30	1.64	1.85	1.69
Cumulative effect of
a change in accounting
principle	--	(.36)	(.02)	--	--

<PAGE> 2

	2003	2002	2001	2000	1999


Earnings (Loss) Per
Share - Diluted	$ 1.13	$ (.06)	$ 1.62	$ 1.85	$ 1.69


Earnings (Loss) Per
Share - Basic	$ 1.15	$ (.07)	$ 1.65	$ 1.88	$ 1.72


Dilutive Effect Per Share	$ .02	$ (.01)	$ .03	$ .03	$ .03

<PAGE> 3

Exhibit 12.1

ESTERLINE TECHNOLOGIES CORPORATION
(In thousands)

Statement of Computation of Ratio of Earnings to Fixed Charges

		2003	2002	2001	2000	1999


Income from continuing
operations before income taxes		$42,791	$41,745	$67,067	$45,308	$46,583

Fixed charges ¹
Interest expense		11,995	7,122	7,663	8,124	9,011
Amortization of debt issuance
cost		703	167	178	116	107
Interest included in rental expense		2,398	2,164	2,035	1,957	1,549


Total		15,096	9,453	9,876	10,197	10,667

Earnings ²		$57,887	$51,198	$76,943	$55,505	$57,250

Ratio of earnings available to cover
fixed charges		3.8	5.4	7.8	5.4	5.4

¹	Fixed charges consist of interest on indebtedness and amortization of debt issuance cost plus that portion of lease rental expense representative of the interest factor.

²	Earnings consist of income from continuing operations before income taxes plus fixed charges.

<PAGE>

Exhibit 13

Financial Highlights
In Thousands, Except Per Share Amounts

For Fiscal Years	2003	2002

Operating Results
Net sales	$562,454	$434,809
Segment earnings	68,187	59,317
Income from continuing operations	29,741	31,284
Loss from discontinued operations, net of tax	(5,808)	(25,039)
Cumulative effect of a change in accounting principle, net	--	(7,574)
Net earnings (loss)	23,933	(1,329)

Earnings (loss) per share - diluted:
Continuing operations	1.41	1.49
Discontinued operations	(.28)	(1.19)
Cumulative effect of a change in accounting principle	--	(.36)
Earnings (loss) per share	1.13	(.06)

Weighted average shares outstanding - diluted	21,105	21,021


Financial Position
Total assets	$800,630	$570,955
Property, plant and equipment, net	117,090	100,994
Long-term debt, net	246,792	102,133
Shareholders' equity	393,872	354,441

<PAGE> 1

Management's Discussion and Analysis of Financial Condition and Results of Continuing Operations

OVERVIEW

We view and operate our businesses in three segments: Avionics & Controls, Sensors & Systems and Advanced Materials. The Avionics & Controls segment designs and manufactures technology interface systems for military and commercial aircraft and land- and sea-based military vehicles, secure communications systems, specialized medical equipment, and other industrial applications. The Sensors & Systems segment produces high-precision temperature and pressure sensors, fluid control components, micro-motors, motion control sensors, and other related systems, principally for aerospace and defense customers. The Advanced Materials segment develops and manufactures high-performance elastomer products used in a wide range of commercial aerospace and military applications and combustible ordnance components and electronic warfare countermeasure devices for military customers. Sales in all segments are both domestic and international and include defense and commercial customers.

Our current business and strategic plan focuses on the continued development of our products in three key technology segments - avionics and controls, sensors and systems, and specialized high-performance elastomers and other complex materials, principally for aerospace and defense markets. We are concentrating our efforts to expand selectively our capabilities in these markets and strive to anticipate the global needs of our customers and respond to such needs with comprehensive solutions. These efforts focus on continual research and new product development, acquisitions and establishing strategic realignments of operations to expand our capability to become a one-stop-shop supplier to our customers across our entire product offering. In fiscal year 2003, we completed three acquisitions in our Sensors & Systems segment at an aggregate cost of $111.7 million.

On July 25, 2002, our Board of Directors adopted a formal plan for the sale of the assets and operations of our Automation segment. As a result, the consolidated financial statements present the Automation segment as a discontinued operation. In fiscal year 2002, we recorded an after-tax loss from discontinued operations of $25.0 million. An additional charge of $5.8 million, net of a $3.5 million tax benefit, was recorded in fiscal year 2003 for losses in our discontinued operations. This additional charge was precipitated by prolonged weakness in electronics, telecommunications and heavy equipment markets, which led to higher operating losses and longer-than-expected holding periods for the discontinued operations. On July 23, 2003, we sold the assets of our Excellon Automation subsidiary. We believe our discontinued operations loss reserves are adequate to cover the holding cost and the loss on disposal of the remainder of the segment.

Our operations serving the commercial aerospace market have been adversely affected by the current cyclical downturn in the airline industry, which was exacerbated by many factors, including the conflict in Iraq, the SARS outbreak and ongoing concerns of global terrorism. The decline in air traffic severely affected the profitability of the airline industry, which responded by curtailing flights, reducing aircraft fleet sizes, and deferring aircraft deliveries. A reduction in the number of flights and the size of fleets resulted in a decrease in repairs, retrofits, and

<PAGE> 2

maintenance of aircraft, which in turn led to lower orders for the spare or replacement parts that we produce. The deferral or cancellation of aircraft orders has had a direct impact on our sales of component parts to OEMs. Conversely, our operations serving defense customers have benefited from the recent increase in spending by the U.S. Department of Defense, which has resulted in an increase in demand for the products we supply for various air and ground military platforms.

<PAGE> 3

Results of Continuing Operations

Fiscal 2003 Compared with Fiscal 2002

Sales for fiscal 2003 increased 29.4% over the prior year. Sales by segment were as follows:

	Increase (Decrease)
Dollars In Thousands	From Prior Year	2003	2002

Avionics & Controls	15.5%	$198,249	$171,709
Sensors & Systems	40.1%	146,976	104,942
Advanced Materials	37.7%	216,655	157,384
Other	(25.8%)	574	774

Total		$562,454	$434,809

The 15.5% increase in Avionics & Controls principally reflected improved sales volumes of specialized medical equipment, technology interface systems for land-based military vehicles and cockpit switches for a defense retrofit program. Shipments under the retrofit program were substantially completed in November 2003. The increase also reflected sales of $10.6 million from acquisitions of Janco Corporation (Janco) and a small product line in the third and fourth quarters of fiscal 2002, respectively. Airline spare sales were comparable to fiscal 2002 but were lower than historical levels. After remaining stable through the first three quarters of fiscal 2003, orders declined 20.4% in the fourth quarter from the third quarter, primarily reflecting delays in orders for commercial aircraft cockpit displays and panels and multi-year orders received in the fourth quarter of fiscal year 2002. Full year order rates declined 1.2% compared with fiscal 2002. The decrease in full year orders reflected strong orders for specialized medical equipment offset by weak orders for commercial aircraft cockpit switches, displays and panels due to the airlines' decision to defer the acquisition of certain retrofit equipment.

The 40.1% increase in Sensors & Systems principally reflected $25.5 million in incremental sales from the Weston Group and BVR Aero Precision Corporation (BVR) acquisitions in the third and first quarters of fiscal 2003, respectively. The increase also reflects a stronger Euro relative to the U.S. dollar, as the average exchange rate from the Euro to the U.S. dollar increased from 0.92 in fiscal 2002 to 1.09 in fiscal 2003. Sales were also bolstered by increased sales volumes of a product line for which we act as a distributor to the British Ministry of Defence (British MOD). These shipments to the British MOD were completed in May 2003. The increase in Sensors & Systems sales was partially offset by lower aftermarket spares sales. Although fourth quarter order volume was down 13.1% from the third quarter, order volume for fiscal 2003 increased 38.8% over fiscal 2002, primarily reflecting the acquisition of the Weston Group and its backlog in the third quarter of fiscal 2003 and the stronger Euro relative to the U.S. dollar.

The 37.7% increase in Advanced Materials reflected incremental sales totaling $55.6 million from the acquisition of Burke Industries' Engineered Polymers Group (Polymers Group) in the third quarter of fiscal 2002 and the Electronic Warfare Passive Expendables Division of BAE SYSTEMS North America (Countermeasures) in the fourth quarter of fiscal 2002. Sales were also enhanced by increased sales of combustible ordnance components. These sales increases

<PAGE> 4

were partially offset by lower sales of elastomer material to commercial aerospace and industrial/commercial customers, principally reflecting the downturn in both markets as well as the suspension of NASA's shuttle flights.

Sales to foreign customers, including export sales by domestic operations, totaled $184.5 million and $140.1 million, and accounted for 32.8% and 32.2% of our sales for fiscal 2003 and 2002, respectively.

Overall, gross margin as a percentage of sales was 31.8% and 32.6% for fiscal 2003 and 2002, respectively. Gross margin by segment ranged from 28.3% to 34.0% in fiscal 2003, compared with 27.8% to 38.7% in the prior year. Avionics & Controls gross margin increased from fiscal 2002 due to solid sales to military OEMs, higher sales of input devices to medical and defense customers and improved cost control. Sensors & Systems gross margin declined from fiscal 2002 largely due to the effect of a weaker U.S. dollar compared to the Euro on U.S. dollar-denominated sales and Euro-based cost of sales and the increased sales of a product line for which we acted as a distributor and realized lower margins. In addition, Sensors & Systems gross margin was impacted by the shipment of acquired inventories of the Weston Group, which were valued at fair market value at acquisition in accordance with generally accepted accounting principles. The increase in Advanced Materials gross margin reflected higher sales volumes as well as improved product mix, and was partially offset by decreased recovery of fixed costs at our specialized metal finishing unit.

Selling, general and administrative expenses (which include corporate expenses) increased to $107.8 million in fiscal 2003 compared with $79.1 million in the prior year. As a percentage of sales, selling, general and administrative expenses were 19.2% and 18.2% in fiscal 2003 and 2002, respectively. The increase in selling, general and administrative expenses primarily reflected increased amortization of intangible assets, incremental expenses from acquisitions completed in fiscal 2002 and 2003, the effect of a stronger Euro relative to the U.S. dollar on selling, general and administrative expenses of our Sensors & Systems business, and increased pension and medical expenses.

Research, development and related engineering spending increased to $19.5 million, or 3.5% of sales, in fiscal 2003 compared with $15.4 million, or 3.5% of sales, in the prior year. This is consistent with our philosophy of continually investing in new products and capabilities regardless of the business cycle.

Segment earnings (which exclude corporate expenses) increased 15.0% during fiscal 2003 to $68.2 million compared to $59.3 million in the prior year. The 12.4% increase in Avionics & Controls reflected earnings from increased sales of specialized medical equipment, technology interface systems for land-based military vehicles, and cockpit switches to military OEMs, and was partially offset by higher selling, general and administrative expenses. The 18.3% decrease in Sensors & Systems was primarily due to the effect of a weaker U.S. dollar relative to the Euro on U.S. dollar-denominated sales and Euro-based operating expenses, integration expenses and the impact of the shipment of acquired inventories of the Weston Group, which were valued at fair market value at acquisition in accordance with generally accepted accounting principles. Advanced Materials earnings growth of 33.1% was principally from acquisitions and was

<PAGE> 5

partially offset by a three-week shutdown of a countermeasure facility in the second quarter of fiscal 2003. In addition, Advanced Materials earnings were impacted by lower sales of elastomer products to aerospace and industrial commercial customers, integration expenses and operating losses at our specialized metal finishing unit.

On June 11, 2003, we acquired a group of companies referred to as the Weston Group for U.K. [POUND]55.0 million in cash (approximately $94.5 million based on the closing exchange rate and including acquisition costs). We hedged the U.K. [POUND]55.0 million cash price using foreign currency forward contracts and recorded a foreign currency gain of approximately $2.7 million at closing of the acquisition and settlement of foreign currency forward contracts.

Interest income decreased to $0.9 million during fiscal 2003 compared with $1.8 million in the prior year, reflecting the use of cash and cash equivalents for acquisitions and a decline in prevailing interest rates. Interest expense increased to $12.0 million during fiscal 2003 compared with $7.1 million in the prior year, due to the issuance of $175.0 million in 7.75% Senior Subordinated Notes due June 15, 2013. In September 2003, we entered into an interest rate swap agreement on $75 million of our Senior Subordinated Notes due in 2013. The swap agreement exchanged the fixed interest rate for a variable interest rate on $75 million of the $175 million principal amount outstanding.

The effective income tax rate for continuing operations for fiscal 2003 was 30.5% compared with 25.1% in fiscal 2002. The effective tax rate differed from the statutory rate in fiscal 2003 and 2002, as both years benefited from various tax credits. In addition, in fiscal 2002, we recognized a $2.9 million reduction in income taxes associated with the favorable resolution of ongoing income tax audits. Additionally, the relative effect of the export tax benefits and research and development tax credits was higher in fiscal 2002 due to the reduction in income from continuing operations before income taxes.

Income from continuing operations was $29.7 million, or $1.41 per share on a diluted basis, compared with $31.3 million, or $1.49 per share, in the prior year. Net earnings were $23.9 million, or $1.13 per share on a diluted basis in fiscal 2003, compared with a net loss of $1.3 million, or ($.06) per share, in the prior year. Net earnings in fiscal 2003 included a loss of $5.8 million, or ($.28) per diluted share, from discontinued operations. The net loss in fiscal 2002 included a loss from discontinued operations of $25.0 million, or ($1.19) per diluted share and a $7.6 million charge, or ($.36) per diluted share, for the cumulative effect of an accounting change as a result of the adoption of Financial Accounting Standards Board No. 142, "Goodwill and Other Intangible Assets" (Statement No. 142).

Orders received in fiscal 2003 increased 17.5% to $581.6 million from $495.0 million in the prior year. Backlog at the end of fiscal 2003 was $300.9 million compared with $281.7 million at the end of the prior year. Backlog increased sequentially from the fourth quarter of fiscal 2002 to the third quarter of fiscal 2003, principally reflecting the increase in combustible ordnance component orders and the acquisition of the Weston Group on June 11, 2003. The acquisition of the Weston Group represented approximately $15.4 million of the increase in backlog from fiscal 2002. Avionics & Controls backlog declined sequentially from the end of the fourth quarter of fiscal 2002 to October 31, 2003, reflecting lower orders for cockpit switches, panels and displays.

<PAGE> 6

Approximately $50.0 million is scheduled to be delivered after fiscal 2004. Backlog is subject to cancellation until delivery.

<PAGE> 7

Fiscal 2002 Compared with Fiscal 2001

Sales for fiscal 2002 increased 0.9% over the prior year. Sales by segment were as follows:

	Increase (Decrease)
Dollars In Thousands	From Prior Year	2002	2001

Avionics & Controls	(0.5%)	$171,709	$172,547
Sensors & Systems	3.0%	104,942	101,916
Advanced Materials	4.0%	157,384	151,352
Other	(84.8%)	774	5,108

Total		$434,809	$430,923

Avionics & Controls sales were impacted by a continued reduction in new aircraft build rates and a decrease in aftermarket spare sales. Additionally, the decrease in sales reflected the sale of a small unit in 2001. These decreases were partially offset by an increase in components such as cockpit displays and controls, and sales of similar devices to the medical industry. Although Avionics & Controls order rates increased through the third quarter of fiscal 2002, order rates declined 11.7% from the third quarter to the fourth quarter, and fiscal 2002 order rates were down 2.5% over fiscal 2001. The decrease in fiscal 2002 order rates reflected current aerospace market conditions and was partially offset by the acquisition of Janco and a small product line.

The increase in Sensors & Systems sales reflected new product introductions for aerospace markets and increased volumes for industrial/commercial applications, and was partially offset by reductions in new aircraft build rates. Order rates in the fourth quarter increased over the previous three quarters and were even with the prior year fourth quarter. Fiscal 2002 order rates increased 9.8% over the prior year, due to the timing of receiving orders and increased orders for aerospace and industrial/commercial applications.

The increase in Advanced Materials sales reflected $25.8 million in incremental sales resulting from acquisitions of the Polymers Group in the third quarter of fiscal 2002 and the acquisition of Countermeasures in the fourth quarter of fiscal 2002. These sales gains were also partially offset by the decline in aircraft aftermarket spares, the decrease in airframe and jet engine build rates and the general economic slowdown. Advanced Materials order rates declined in the second quarter of fiscal 2002 and increased sequentially in both the third and fourth quarter. The increased order rates reflected the acquisition of the Polymers Group and Countermeasures.

Sales to foreign customers, including export sales by domestic operations, totaled $140.1 million and $134.0 million, and accounted for 32.2% and 31.1% of our sales for fiscal 2002 and 2001, respectively.

Overall, gross margin as a percentage of sales was 32.6% and 37.4% for fiscal 2002 and 2001, respectively. Gross margin by segment ranged from 27.8% to 38.7% in fiscal 2002, compared with 35.3% to 39.7% in the prior year. The decline in gross margin in Avionics & Controls was principally due to product mix and lower sales of aircraft aftermarket spares, and was partially offset by increased medical market margins from improved production efficiencies. The modest

<PAGE> 8

decrease in gross margin in Sensors & Systems principally reflected the introduction of new complex products and the consequent manufacturing learning curve. The decline in Advanced Materials gross margin reflected decreased margins in both elastomeric products and combustible ordnance components. The decrease in elastomeric product margins primarily reflected sales mix, pricing pressures and unabsorbed fixed costs. The primary contributors were the decline in aftermarket spares sales, reduced sales to OEM and industrial/commercial customers, and an aircraft retrofit program completed principally in the prior year. The decline in combustible ordnance margins was the result of a price decrease partially offset by effective cost control.

Selling, general and administrative expenses (which include corporate expenses) decreased to $79.1 million in fiscal 2002 compared with $81.1 million in the prior year. As a percentage of sales, selling, general and administrative expenses were 18.2% and 18.8% in fiscal 2002 and 2001, respectively. The decrease in selling, general and administrative expenses primarily reflected a $5.2 million decrease in amortization of goodwill due to the implementation of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (Statement No. 142), and was partially offset by incremental selling and administrative expenses associated with fiscal 2002 acquisitions, higher insurance expense and the reduction in the pension benefit.

Research, development and related engineering spending increased to $15.4 million, or 3.5% of sales, in fiscal 2002 compared with $14.2 million, or 3.3% of sales, in the prior year. This is consistent with our philosophy of continually investing in new products and capabilities regardless of the business cycle.

Segment earnings (which exclude corporate expenses) decreased 25.1% during fiscal 2002 to $59.3 million compared to $79.2 million in the prior year. The 15.4% decrease in Avionics & Controls reflected unfavorable product mix, principally due to the decrease in aircraft aftermarket sales. The 8.0% increase in Sensors & Systems was primarily due to foreign currency exchange gains and improved operating efficiencies. The 37.5% decline in Advanced Materials reflected unfavorable changes in aircraft sales mix, cancelled and delayed shipments, pricing pressures and unabsorbed fixed costs, and was partially offset by earnings of the newly acquired Polymers Group and Countermeasures.

In February 2001, we reached an agreement with several insurance companies settling an outstanding lawsuit that we brought to recover expenses associated with a disputed claim. We recorded a total recovery of $4.6 million of such expenses, of which $3.0 million was recorded in the second quarter of fiscal 2001 and the remaining $1.6 million was recorded in the third quarter of fiscal 2001.

During fiscal 2001, we recorded a $786,000 gain on derivative instruments from hedging against foreign currency exchange fluctuations arising from the sale of certain products in a currency other than its functional currency, which was consistent with our adoption of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (Statement No. 133). Interest income decreased to $1.8 million during fiscal 2002 compared with $3.3 million in the prior year, reflecting the decrease in cash and cash equivalents due to the acquisitions as well as

<PAGE> 9

the decline in prevailing interest rates. Interest expense decreased to $7.1 million during fiscal 2002 compared with $7.7 million in the prior year, mainly due to the repayment of long-term debt.

The effective income tax rate for continuing operations for fiscal 2002 was 25.1% compared with 36.4% in fiscal 2001. The effective tax rate differed from the statutory rate in fiscal 2002 and was approximately equal to the statutory rate in fiscal year 2001. The decrease in the effective tax rate from fiscal year 2001 reflected a $2.9 million reduction in income taxes associated with the favorable resolution of ongoing income tax audits. Further, the decrease resulted from no longer amortizing goodwill for financial statement purposes pursuant to Statement No. 142. Additionally, the relative effect of the export tax benefits and research and development tax credits increased in fiscal 2002 due to the reduction in income from continuing operations before income taxes.

Effective at the beginning of fiscal 2002, the Company adopted Statement No. 142. Under the new Statement, goodwill and intangible assets deemed to have indefinite lives are no longer amortized, but are subject to annual impairment tests in accordance with the Statement. The Company conducted its initial impairment tests and determined that goodwill associated with a reporting unit in the Avionics & Controls segment was impaired as a result of applying Statement No. 142. Due to increased competition in the electronic input industry, principally from companies headquartered in Asia, operating profits and cash flows were lower in fiscal 2001 for this reporting unit. Based upon this trend, the earnings forecast for the next five years was lowered. A goodwill impairment loss of $7,574,000, net of an income tax benefit of $1,542,000, or ($.36) per diluted share, was recognized and reported as a cumulative effect of a change in accounting principle upon the adoption of Statement No. 142 in the first quarter of fiscal 2002.

Income from continuing operations was $31.3 million, or $1.49 per share on a diluted basis, compared with $42.6 million, or $2.13 per share, in the prior year. The Company incurred a net loss in fiscal 2002 of $1.3 million, or ($.06) per share on a diluted basis, compared with net earnings of $32.5 million, or $1.62 per share, in the prior year.

Orders received in fiscal 2002 increased 13.6% to $495.0 million from $435.8 million in the prior year. Backlog at the end of fiscal 2002 was $281.7 million compared with $221.5 million at the end of the prior year. Backlog increased sequentially across all segments from the fourth quarter of fiscal 2001. The acquisitions of the Polymers Group and Countermeasures represented approximately $55 million of the increase in backlog.

<PAGE> 10

Liquidity and Capital Resources
Cash and cash equivalents on hand and short-term investments at the end of fiscal 2003 totaled $144.2 million, an increase of $121.6 million from the prior year, primarily due to the net proceeds from the issuance of $175.0 million in Senior Subordinated Notes and cash from operations and reduced by the $94.5 million acquisition of the Weston Group. Net working capital increased to $222.4 million at the end of fiscal 2003 from $121.2 million at the end of the prior year, principally reflecting an increase in cash and equivalents and short-term investments and reduced by the $30.0 million increase in current maturities of long-term debt.

Net accounts receivable were $98.4 million at the end of fiscal 2003 compared with $79.5 million at the end of the prior year. Inventories were $76.3 million at the end of fiscal 2003 compared to $71.3 million at the end of the prior year. The change in accounts receivable and inventories was primarily due to acquisitions. Accounts payable were $23.3 million at the end of fiscal 2003 compared with $28.0 million at the end of the prior year. The change in accounts payable primarily reflected payments made to BAE SYSTEMS as a result of the acquisition of Countermeasures.

Net property, plant and equipment was $117.1 million at the end of fiscal 2003 compared with $101.0 million at the end of the prior year. Capital expenditures for fiscal 2003 were $17.1 million (excluding acquisitions) and included machinery and equipment and enhancements to information technology systems. Capital expenditures are anticipated to approximate $21.0 million for fiscal 2004. We will continue to support expansion through investments in infrastructure including machinery, equipment, buildings and information systems.

Total debt increased $176.6 million from the prior year to $279.6 million at the end of fiscal 2003, principally due to the $175.0 million note issuance. Total debt outstanding at the end of fiscal 2003 consisted of $175.0 million under our Senior Subordinated Notes, $100.0 million under our 1999 Senior Notes and $4.6 million under various foreign currency debt agreements, including capital lease obligations. The Senior Subordinated Notes are due June 15, 2013 at an interest rate of 7.75%. In September 2003 we entered into an interest rate swap agreement on $75 million of our Senior Subordinated Notes due in 2013. The swap agreement exchanged the fixed interest rate for a variable interest rate on $75 million of the $175 million principal amount outstanding. The 1999 Senior Notes have maturities ranging from 5 to 10 years and interest rates from 6.00% to 6.77%; $30.0 million of the Senior Notes matured and was paid in November 2003. We believe cash on hand, funds generated from operations and other available debt facilities are sufficient to fund operating cash requirements and capital expenditures through fiscal 2004. In addition, we believe we have adequate access to capital markets to fund future acquisitions.

On June 11, 2003, we acquired the Weston Group from The Roxboro Group PLC for U.K. [POUND]55.0 million in cash (approximately $94.5 million based on the closing exchange rate and including acquisition costs). The acquisition was financed with a portion of the proceeds from the issuance of $175.0 million in 7.75% Senior Subordinated Notes due June 15, 2013. In addition, the existing $50 million revolving line of credit was replaced with a $60 million revolving line of credit. In November 2003, $30.0 million of long-term Senior Notes, Series A, was paid according to terms from available cash and cash equivalents.

<PAGE> 11

On December 1, 2003, we acquired all of the outstanding capital stock of Avista, Incorporated (Avista), a $10 million in sales Wisconsin-based developer of embedded avionics software, for approximately $6.5 million. A contingent purchase price is payable to the seller in December 2004 and 2005 based upon the achievement of financial results as defined in the Stock Purchase Agreement. Avista will provide a software engineering center to support our customers with such applications as primary flight displays, flight management systems, air data computers and engine control systems. Avista will be included in our Avionics & Controls segment.

Seasonality
The timing of our revenues is impacted by the purchasing patterns of our customers and, as a result, we do not generate revenues evenly throughout the year. Moreover, our first fiscal quarter, November through January, includes significant holiday vacation periods in both Europe and North America. This leads to decreased order and shipment activity; consequently, first quarter results are typically weaker than other quarters and not necessarily indicative of our performance in subsequent quarters.

Market Risk Exposure
We have financial instruments that are subject to interest rate risk, principally debt obligations issued at a fixed rate. To the extent that sales are transacted in a foreign currency, we are also subject to foreign currency fluctuation risk. Furthermore, we have assets denominated in foreign currencies that are not offset by liabilities in such foreign currencies. Although we own significant operations in France and the United Kingdom, historically we have not experienced material gains or losses due to interest rate or foreign exchange fluctuations. In fiscal 2003, the foreign exchange rate for the Euro increased 18.6% relative to the U.S. dollar.

Critical Accounting Policies
Our financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. Actual results may differ from estimates under different assumptions or conditions. These estimates and assumptions are affected by our application of accounting policies. Our critical accounting policies include revenue recognition, accounting for the allowance for doubtful accounts receivable, accounting for inventories at the lower of cost or market, accounting for tangible and intangible assets in business combinations, impairment of goodwill and long-lived assets, accounting for legal contingencies, and accounting for income taxes.

We record sales when title transfers to the buyer, which generally coincides with the shipment of products, or upon performance of services rendered.

<PAGE> 12

We establish an allowance for doubtful accounts for losses expected to be incurred on accounts receivable balances. Judgment is required in estimation of the allowance and is based upon specific identification, collection history and creditworthiness of the debtor.

We account for inventories on a first-in, first-out or average cost method of accounting at the lower of its cost or market as required under Accounting Research Bulletin No. 43 (ARB No. 43). The application of ARB No. 43 requires judgment in estimating the valuation of inventories. Such valuations require judgment in estimating future demand, selling prices and cost of disposal.

We account for business combinations, goodwill and intangible assets in accordance with Financial Accounting Standards No. 141, "Business Combinations" (Statement No. 141) and Statement No. 142. In addition, we account for the impairment of long-lived assets to be held and used in accordance with Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (Statement No. 144). Statement No. 141 specifies the types of acquired intangible assets that are required to be recognized and reported separate from goodwill. Statement No. 142 requires goodwill and certain intangible assets to be no longer amortized, but instead be tested for impairment at least annually. Statement No. 144 requires that a long-lived asset to be disposed of be reported at the lower of its carrying amount or fair value less cost to sell. The application of these statements requires judgment in estimating the valuation of assets and liabilities acquired in business combinations and current reporting units' tangible and intangible assets. Such valuations require judgment in estimating future cash flows, discount rates and estimated product life cycles. In making these judgments, we evaluate the financial health of the business, including such factors as industry performance, changes in technology and operating cash flows.

For business segments disposed of prior to the implementation of Statement No. 144 in fiscal 2003, namely the Automation segment, we accounted for discontinued operations in accordance with Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business and Extraordinary, Unusual and Infrequently Occurring Events and Transactions" (APB No. 30). APB No. 30 requires that if a loss is expected, it should be recorded at the measurement date when management commits to a plan to dispose of a segment of a business. The loss from discontinuance is based upon estimates of net realizable value and estimated losses from the measurement date to the expected disposal date. Judgment is required to estimate the selling price, selling expenses and future losses of the segment.

We are party to various lawsuits and claims, both as plaintiff and defendant, and have contingent liabilities arising from the conduct of business. We are covered by insurance for general liability, product liability, workers compensation and certain environmental exposures, subject to certain deductible limits. We are self-insured for amounts less than our deductible and where no insurance is available. Financial Accounting Standards No. 5, "Accounting for Contingencies," requires that an estimated loss from a contingency should be accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. Disclosure of a contingency is required if there is at least a reasonable possibility that a loss has been incurred. We evaluate, among other factors, the degree

<PAGE> 13

of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss.

We account for income tax in accordance with Financial Accounting Standards No. 109, "Accounting for Income Taxes." The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our financial statements or tax returns. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax returns. Variations in the actual outcome of these future tax consequences could materially impact our financial position and results of operations.

Recent Accounting Pronouncements
In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure" (Statement No. 148). This Statement amends the transition alternatives for companies choosing to adopt the fair value method of accounting for the compensation cost of options issued to employees and requires additional disclosure on all stock-based compensation plans. The Company adopted the disclosure provisions in the first quarter of fiscal 2003.

In October 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" (Statement No. 146), effective for exit or disposal activities initiated after December 31, 2002. Under Statement No. 146, a commitment to a plan to exit or dispose of a business activity no longer creates an obligation that meets the definition of a liability. A liability for a cost associated with an exit or disposal activity will be recognized when the liability is incurred. Adoption of Statement No. 146 in the first quarter of fiscal 2003 did not have a material effect on the Company's financial statements.

In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (Statement No. 144), effective for fiscal years beginning after December 15, 2002. The Statement supersedes Financial Accounting Standards Board Statement No. 121; however, it retains the fundamental provisions of Statement No. 121. Statement No. 144 also supersedes APB No. 30 and extends the reporting of a discontinued operation to a component of an entity. Also, Statement No. 144 requires operating losses from a component of an entity to be recognized in the period(s) in which they occur rather than as of the measurement date as previously required under APB No. 30. Adoption of Statement No. 144 in the first quarter of fiscal 2003 did not have a material effect on the Company's financial statements.

<PAGE> 14

Selected Financial Data
In Thousands, Except Per Share Amounts

For Fiscal Years	2003	2002	2001	2000	1999

Operating Results ¹
Net sales	$562,454	$434,809	$430,923	$372,551	$355,879
Cost of sales	383,825	293,236	269,582	229,516	212,062
Selling, general
and administrative	107,797	79,086	81,103	81,968	85,150
Research, development
and engineering	19,524	15,433	14,232	12,431	13,888
Loss (gain) on sale
of business	66	--	--	(2,591)	(7,956)
Insurance settlement	--	--	(4,631)	--	--
Loss (gain) on derivative
financial instruments	(2,676)	1	(786)	--	--
Interest income	(868)	(1,814)	(3,307)	(2,205)	(2,859)
Interest expense	11,995	7,122	7,663	8,124	9,011
Income tax expense	13,050	10,461	24,428	15,764	16,342
Income from
continuing operations	29,741	31,284	42,639	29,544	30,241
Income (loss) from discontinued
operations, net of tax	(5,808)	(25,039)	(9,780)	3,043	(379)
Cumulative effect of a change
in accounting principle	--	(7,574)	(403)	--	--
Net earnings (loss)	23,933	(1,329)	32,456	32,587	29,862

Earnings (loss) per share - diluted:
Continuing operations	$ 1.41	$ 1.49	$ 2.13	$ 1.68	$ 1.71
Discontinued operations	(.28)	(1.19)	(.49)	.17	(.02)
Cumulative effect
of a change in
accounting principle	--	(.36)	(.02)	--	--
Earnings (loss) per
share - diluted	1.13	(.06)	1.62	1.85	1.69

<PAGE> 15

Selected Financial Data
In Thousands, Except Per Share Amounts

For Fiscal Years		2003	2002	2001	2000	1999

Financial Structure
Total assets		$800,630	$570,955	$559,808	$474,339	$453,082
Long-term debt, net		246,792	102,133	102,125	108,172	116,966
Shareholders' equity		393,872	354,441	350,295	249,695	224,620

Weighted average shares
outstanding - diluted		21,105	21,021	20,014	17,654	17,658


¹	Operating results for 1999 through 2003 and balance sheet items for 2003 and 2002 reflect the segregation of continuing operations from discontinued operations. See Note 3 to the Consolidated Financial Statements.

<PAGE> 16

Market Price of Esterline Common Stock
In Dollars

For Fiscal Years	2003		2002
	High	Low	High	Low

Quarter
First	$19.90	$15.58	$17.23	$13.10
Second	18.10	14.70	23.70	16.40
Third	19.35	15.80	24.00	17.51
Fourth	22.79	17.40	20.60	15.55

Principal Market - New York Stock Exchange

At the end of fiscal 2003, there were approximately 608 holders of record of the Company's common stock.

No cash dividends were paid during fiscal 2003 and 2002. The Company currently intends to retain all future earnings for use to expand the business or retire debt. The Company is restricted from paying dividends under its current credit facility and does not anticipate paying any dividends in the foreseeable future.

<PAGE> 17

Consolidated Statement of Operations
In Thousands, Except Per Share Amounts

For Each of the Three Fiscal Years in the Period Ended October 31, 2003	2003	2002	2001

Net Sales	$562,454	$434,809	$430,923
Cost of Sales	383,825	293,236	269,582

	178,629	141,573	161,341

Expenses
Selling, general and administrative	107,797	79,086	81,103
Research, development
and engineering	19,524	15,433	14,232

Total Expenses	127,321	94,519	95,335

Operating Earnings From
Continuing Operations	51,308	47,054	66,006

Loss on sale of business	66	--	--
Insurance settlement	--	--	(4,631)
Loss (gain) on derivative
financial instruments	(2,676)	1	(786)
Interest income	(868)	(1,814)	(3,307)
Interest expense	11,995	7,122	7,663

Other (Income) Expense, Net	8,517	5,309	(1,061)


Income From Continuing Operations
Before Income Taxes	42,791	41,745	67,067
Income Tax Expense	13,050	10,461	24,428

Income From Continuing Operations	29,741	31,284	42,639

Loss From Discontinued Operations,
Net of Tax	(5,808)	(25,039)	(9,780)


Earnings Before Cumulative
Effect of a Change in Accounting Principle	23,933	6,245	32,859

Cumulative Effect of a Change in
Accounting Principle, Net of Tax	--	(7,574)	(403)


Net Earnings (Loss)	$ 23,933	$ (1,329)	$ 32,456

<PAGE> 18

Consolidated Statement of Operations
In Thousands, Except Per Share Amounts

For Each of the Three Fiscal Years in the Period Ended October 31, 2003	2003	2002	2001

Earnings (Loss) Per Share - Basic:
Continuing operations	$ 1.42	$ 1.51	$ 2.17
Discontinued operations	(.27)	(1.21)	(.50)

Earnings per share before
cumulative effect of a change in
accounting principle	1.15	.30	1.67
Cumulative effect of a change
in accounting principle	--	(.37)	(.02)


Earnings (Loss) Per Share - Basic	$ 1.15	$ (.07)	$ 1.65


Earnings (Loss) Per Share - Diluted:
Continuing operations	$ 1.41	$ 1.49	$ 2.13
Discontinued operations	(.28)	(1.19)	(.49)

Earnings per share before
cumulative effect of a change in
accounting principle	1.13	.30	1.64
Cumulative effect of a change
in accounting principle	--	(.36)	(.02)


Earnings (Loss) Per Share - Diluted	$ 1.13	$ (.06)	$ 1.62

See Notes to Consolidated Financial Statements.

<PAGE> 19

Consolidated Balance Sheet
In Thousands, Except Share and Per Share Amounts

As of October 31, 2003 and October 25, 2002	2003	2002

Assets

Current Assets
Cash and cash equivalents	$131,363	$ 22,511
Cash in escrow	4,536	3,500
Short-term investments	12,797	--
Accounts receivable, net of allowances
of $2,669 and $2,700	98,395	79,474
Inventories	76,345	71,305
Income tax refundable	7,677	6,180
Deferred income tax benefits	16,529	25,069
Prepaid expenses	7,030	6,193

Total Current Assets	354,672	214,232

Property, Plant and Equipment
Land	15,589	14,732
Buildings	59,995	52,644
Machinery and equipment	151,297	127,942

	226,881	195,318
Accumulated depreciation	109,791	94,324

	117,090	100,994

Net Assets of Discontinued Operations	--	13,576

Other Non-Current Assets
Goodwill	185,353	158,006
Intangibles, net	114,930	61,497
Debt issuance costs, net of accumulated
amortization of $244	6,301	--
Other assets	22,284	22,650

Total Assets	$800,630	$570,955

See Notes to Consolidated Financial Statements.

<PAGE> 20

As of October 31, 2003 and October 25, 2002	2003	2002

Liabilities and Shareholders' Equity

Current Liabilities
Accounts payable	$ 23,273	$ 28,018
Accrued liabilities	74,991	64,026
Credit facilities	2,312	424
Current maturities of long-term debt	30,473	435
Federal and foreign income taxes	1,184	92

Total Current Liabilities	132,233	92,995

Long-Term Liabilities
Long-term debt, net of current maturities	246,792	102,133
Deferred income taxes	27,325	21,386

Commitments and Contingencies	--	--
Net Liabilities of Discontinued Operations	408	--

Shareholders' Equity
Common stock, par value $.20 per share,
authorized 60,000,000 shares, issued and
outstanding 21,062,999 and 20,783,068 shares	4,213	4,157
Additional paid-in capital	116,761	113,537
Retained earnings	266,600	242,667
Accumulated other comprehensive income (loss)	6,298	(5,920)

Total Shareholders' Equity	393,872	354,441

Total Liabilities and Shareholders' Equity	$800,630	$570,955

See Notes to Consolidated Financial Statements.

<PAGE> 21

Consolidated Statement of Cash Flows
In Thousands

For Each of the Three Fiscal Years in the Period Ended October 31, 2003	2003	2002	2001

Cash Flows Provided (Used)
by Operating Activities
Net earnings (loss)	$ 23,933	$ (1,329)	$ 32,456
Depreciation and amortization	26,215	17,563	24,109
Deferred income tax (benefit)	8,709	(722)	2,352
Loss on disposal and holding period
loss on discontinued operations	9,282	22,718	--
Loss on sale of product line	66	--	--
Working capital changes, net of
effect of acquisitions
Accounts receivable	(9,516)	5,544	1,715
Inventories	6,322	2,936	(12,848)
Prepaid expenses	117	(457)	(1,301)
Accounts payable	(4,396)	5,049	(3,076)
Accrued liabilities	4,926	1,914	(5,985)
Federal and foreign income taxes	(923)	(10,197)	(3,271)
Other, net	197	9,937	(3,853)

	64,932	52,956	30,298


Cash Flows Provided (Used)
by Investing Activities
Purchases of capital assets	$ (17,130)	$ (15,709)	$ (15,758)
Proceeds from sale of business	9,480	--	--
Escrow deposit	(1,036)	(3,500)	--
Capital dispositions	766	559	277
Purchase of short-term investments	(12,797)	--	--
Acquisitions of businesses,
net of cash acquired	(111,735)	(124,649)	(6,885)

	(132,452)	(143,299)	(22,366)

<PAGE> 22

For Each of the Three Fiscal Years in the Period Ended October 31, 2003	2003	2002	2001

Cash Flows Provided (Used)
by Financing Activities
Net proceeds provided by sale
of common stock	--	--	66,736
Proceeds provided by stock issuance under
employee stock plans	3,280	--	--
Net change in credit facilities	2,279	(1,960)	(575)
Repayment of long-term debt	(732)	(6,346)	(6,389)
Debt and other issuance costs	(7,735)	--	--
Proceeds from note issuance	175,000	--	--

	172,092	(8,306)	59,772


Effect of foreign exchange rates on cash	4,280	1,220	1,348


Net increase (decrease) in
cash and cash equivalents	108,852	(97,429)	69,052
Cash and cash equivalents - beginning of year	22,511	119,940	50,888

Cash and cash equivalents - end of year	$ 131,363	$ 22,511	$ 119,940


Supplemental Cash Flow Information
Cash paid for interest	$ 6,945	$ 7,247	$ 7,792
Cash paid (refunded) for taxes	(558)	7,296	16,499

See Notes to Consolidated Financial Statements.

<PAGE> 23

Consolidated Statement of Shareholders'
Equity and Comprehensive Income
In Thousands, Except Per Share Amounts

For Each of the Three Fiscal Years in the Period Ended October 31, 2003	2003	2002	2001

Common Stock, Par Value $.20 Per Share
Beginning of year	$ 4,157	$ 4,143	$ 3,485
3,220,000 shares issued	--	--	644
Shares issued under stock option plans	56	14	14

End of year	4,213	4,157	4,143


Additional Paid-in Capital
Beginning of year	113,537	113,284	46,952
3,200,000 shares issued	--	--	66,092
Shares issued under stock option plans	3,224	253	240

End of year	116,761	113,537	113,284


Retained Earnings
Beginning of year	242,667	243,996	211,540
Net earnings (loss)	23,933	(1,329)	32,456

End of year	266,600	242,667	243,996


Accumulated Other Comprehensive Gain (Loss)
Beginning of year	(5,920)	(11,128)	(12,282)
Change in fair value of derivative
financial instruments, net of tax	61	(67)	87
Foreign currency translation adjustment	12,157	5,275	1,067

End of year	6,298	(5,920)	(11,128)

Total Shareholders' Equity	$393,872	$354,441	$350,295


Comprehensive Income
Net earnings (loss)	$ 23,933	$ (1,329)	$ 32,456
Change in fair value of derivative
financial instruments, net of tax	61	(67)	87
Foreign currency translation adjustment	12,157	5,275	1,067

Comprehensive Income	$ 36,151	$ 3,879	$ 33,610

See Notes to Consolidated Financial Statements.

<PAGE> 24

Notes to Consolidated Financial Statements

NOTE 1: Accounting Policies

Nature of Operations
Esterline Technologies Corporation (the Company) designs, manufactures and markets highly engineered products. The Company principally serves the aerospace and defense industry throughout the world, primarily in the United States and Europe.

Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of the Company and all subsidiaries. All significant intercompany accounts and transactions have been eliminated. Classifications have been changed for certain amounts in prior periods to conform with the current year's presentation. The Company's fiscal year ends on the last Friday of October.

Management Estimates
To prepare financial statements in conformity with accounting principles generally accepted in the United States, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition
Sales are generally recorded at the time of shipment of products or performance of services and are presented net of sales returns and allowances.

Derivative Financial Instruments
The Company is subject to risks associated with fluctuations in foreign currency exchange rates from the sale of products in currencies other than its functional currency. The Company's policy is to hedge a portion of its forecasted transactions using forward exchange contracts, with maturities up to fifteen months. These forward contracts have been designated as cash flow hedges. The portion of the net gain or loss on a derivative instrument that is effective as a hedge is reported as a component of other comprehensive income in shareholders' equity and is reclassified into earnings in the same period during which the hedged transaction affects earnings. The remaining net gain or loss on the derivative in excess of the present value of the expected cash flows of the hedged transaction is recorded in earnings immediately. If a derivative does not qualify for hedge accounting, or a portion of the hedge is deemed ineffective, the change in fair value is recorded in earnings. The amount of hedge ineffectiveness was not material. At October 31, 2003, the notional value of foreign currency forward contracts was $11.1 million and the fair value of these contracts was

<PAGE> 25

$173,000, which was an asset. The Company does not enter into any forward contracts for trading purposes.

Depending on the interest rate environment, the Company may enter into interest rate swap agreements to convert the fixed interest rates on notes payable to variable interest rates or terminate any swap agreements in place. These interest rate swap agreements have been designated as fair value hedges. Accordingly, gain or loss on swap agreements as well as the offsetting loss or gain on the hedged portion of notes payable are recognized in interest expense during the period of the change in fair values. The Company attempts to manage exposure to counterparty credit risk by only entering into agreements with major financial institutions which are expected to be able to fully perform under the terms of the agreement.

Foreign Currency Translation
Foreign currency assets and liabilities are translated into their U.S. dollar equivalents based on year-end exchange rates. Revenue and expense accounts are generally translated at average exchange rates. Aggregate exchange gains and losses arising from the translation of foreign assets and liabilities are included in shareholders' equity as a component of comprehensive income. Foreign currency transaction gains and losses are included in results of operations and have not been significant in amount in any of the three fiscal years in the period ended October 31, 2003.

Cash Equivalents and Cash in Escrow
Cash equivalents consist of highly liquid investments with maturities of three months or less at the date of purchase. Fair value of cash equivalents approximates carrying value. Cash in escrow represents amounts held in escrow pending finalization of a purchase transaction.

Short-term Investments
Short-term investments consist of highly liquid investments with maturities of more than three months at the date of purchase. Short-term investments are classified as trading securities and accordingly are reported at fair value with unrealized gains and losses included in earnings.

Accounts Receivable
Accounts receivable are recorded at the net invoice price for sales billed to customers. An allowance for doubtful accounts is established when losses are expected to be incurred.

Inventories
Inventories are stated at the lower of cost or market using the first-in, first-out (FIFO) or average cost method. Inventory cost includes material, labor and factory overhead.

<PAGE> 26

Property, Plant and Equipment, and Depreciation
Property, plant and equipment is carried at cost and includes expenditures for major improvements. Depreciation is generally provided on the straight-line method based upon estimated useful lives ranging from 3 to 30 years. Depreciation expense was $17,510,000, $13,106,000, and $12,108,000 for fiscal years 2003, 2002 and 2001, respectively.

Debt Issuance Costs
Costs incurred to issue debt are deferred and amortized as interest expense over the term of the related debt using a method that approximates the effective interest method.

Long-lived Assets
The carrying amount of long-lived assets is reviewed periodically for impairment. An asset (other than goodwill) is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not deemed recoverable, the asset is adjusted to its estimated fair value. Fair value is generally determined based upon estimated discounted future cash flows.

Goodwill and Intangibles
Beginning in fiscal 2002 with the adoption of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (Statement No. 142), goodwill is no longer amortized, but instead tested for impairment at least annually. Prior to fiscal 2002, goodwill was amortized on a straight-line basis over the period of expected benefit which ranged from 10 to 40 years. Due to continued poor operating results and prospects for the Automation segment, the Company wrote off the $2.9 million of goodwill and intangible assets related to that segment in the fourth quarter of fiscal 2001.

Intangible assets are amortized using the straight-line method over their estimated period of benefit, ranging from 2 to 20 years. The Company periodically evaluates the recoverability of intangible assets and takes into account events or circumstances that warrant revised estimates of useful lives or that indicate that an impairment exists.

Environmental
Environmental exposures are provided for at the time they are known to exist or are considered reasonably probable and estimable. No provision has been recorded for environmental remediation costs which could result from changes in laws or other circumstances currently not contemplated by the Company. Costs provided for future expenditures on environmental remediation are not discounted to present value.

<PAGE> 27

Product Warranties
Product warranty costs are recorded when the covered products are shipped to customers. Product warranty expense is based upon the terms of the warranty program and the estimated expense.

Earnings Per Share
Basic earnings per share is computed on the basis of the weighted average number of common shares outstanding during the year. Diluted earnings per share also includes the dilutive effect of stock options. The weighted average number of shares outstanding used to compute basic earnings per share was 20,900,000, 20,751,000, and 19,641,000 for the fiscal years 2003, 2002 and 2001, respectively. The weighted average number of shares outstanding used to compute diluted earnings per share was 21,105,000, 21,021,000, and 20,014,000 for the fiscal years 2003, 2002 and 2001, respectively.

<PAGE> 28

NOTE 2: Accounting Changes

Effective at the beginning of fiscal 2001, the Company adopted Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (Statement No. 133), as amended. The cumulative effect of the change in accounting principle was a charge of $403,000 (net of tax), or ($.02) per share on a diluted basis in fiscal 2001.

<PAGE> 29

The following comparative table sets forth reported net earnings and earnings per share for fiscal years 2003, 2002 and 2001, exclusive of amortization expense related to goodwill that is no longer being amortized as a result of the adoption of Statement No. 142.

In Thousands, Except Per Share Amounts

	2003	2002	2001

Net Earnings (Loss):
Continuing operations
As reported	$29,741	$ 31,284	$42,639
Add back: goodwill amortization	--	--	3,351

Adjusted	29,741	31,284	45,990

Discontinued operations
As reported	(5,808)	(25,039)	(9,780)
Add back: goodwill amortization	--	--	1,814

Adjusted	(5,808)	(25,039)	(7,966)

Adjusted earnings before
cumulative effect of a change
in accounting principle	23,933	6,245	38,024
Cumulative effect of a change
in accounting principle	--	(7,574)	(403)

Adjusted net earnings (loss)	$23,933	$ (1,329)	$37,621


Earnings (Loss) Per Share - Basic:
Continuing operations
As reported	$ 1.42	$ 1.51	$ 2.17
Add back: goodwill amortization	--	--	.18

Adjusted	1.42	1.51	2.35

Discontinued operations
As reported	(.27)	(1.21)	(.50)
Add back: goodwill amortization	--	--	.09

Adjusted	(.27)	(1.21)	(.41)

Adjusted earnings before
cumulative effect of a change
in accounting principle	1.15	.30	1.94
Cumulative effect of a change
in accounting principle	--	(.37)	(.02)

Adjusted earnings (loss) per share	$ 1.15	$ (.07)	$ 1.92

<PAGE> 30

	2003	2002	2001

Earnings (Loss) Per Share - Diluted:
Continuing operations
As reported	$ 1.41	$ 1.49	$ 2.13
Add back: goodwill amortization	--	--	.17

Adjusted	1.41	1.49	2.30

Discontinued operations
As reported	(.28)	(1.19)	(.49)
Add back: goodwill amortization	--	--	.09

Adjusted	(.28)	(1.19)	(.40)

Adjusted earnings before
cumulative effect of a change
in accounting principle	1.13	.30	1.90
Cumulative effect of a change
in accounting principle	--	(.36)	(.02)

Adjusted earnings (loss) per share	$ 1.13	$ (.06)	$ 1.88

<PAGE> 31

NOTE 3: Discontinued Operations

On July 25, 2002, the Board of Directors adopted a formal plan for the sale of the assets and operations of the Company's Automation segment. As a result, the consolidated financial statements present the Automation segment as a discontinued operation. The Company recorded an after-tax loss from discontinued operations of $5.8 million and $25.0 million in fiscal 2003 and 2002, respectively. The operating results of the discontinued segment for fiscal years 2003, 2002 and 2001 consist of the following:

In Thousands

	2003	2002	2001

Loss before taxes	$ --	$(16,343)	$(16,689)
Tax benefit	--	(6,071)	(6,909)

Net loss	--	(10,272)	(9,780)
Estimated loss on disposal,
including tax benefit
of $3,474 and $7,951	(5,808)	(14,767)	--

Loss from discontinued operations	$(5,808)	$(25,039)	$ (9,780)

The Company recorded a $5.8 million loss, net of a $3.5 million tax benefit, in the second quarter of fiscal 2003 for losses in its discontinued operations in excess of the earlier estimates precipitated by the prolonged weakness in electronics, telecommunications and heavy equipment markets. On July 23, 2003, the Company sold the assets of its Excellon Automation subsidiary. At October 31, 2003, working capital and property, plant and equipment of the remaining unit within the Automation segment aggregated $9,951,000 and the reserve for loss on disposal and losses during the phase-out period totaled $10,359,000. Management believes the Company's discontinued operations loss reserves are adequate to cover the holding cost and the loss on disposal of the remainder of the segment.

Sales of the Automation segment were $22,942,000, $32,896,000, and $60,312,000 in fiscal years 2003, 2002 and 2001, respectively.

<PAGE> 32

NOTE 4: Inventories

Inventories at the end of fiscal 2003 and 2002 consisted of the following:

In Thousands	2003	2002

Raw materials and purchased parts	$38,678	$36,152
Work in process	26,855	24,931
Finished goods	10,812	10,222

	$76,345	$71,305

<PAGE> 33

NOTE 5: Goodwill

The following table summarizes the changes in goodwill by segment for fiscal 2003 and 2002:

In Thousands

	Avionics &	Sensors &	Advanced
	Controls	Systems	Materials	Total


Balance, October 26, 2001	$57,514	$17,537	$60,318	$135,369
Goodwill from acquisitions	8,313	--	22,601	30,914
Foreign currency translation adjustment	--	839	--	839
Impairment loss	(9,116)	--	--	(9,116)


Balance, October 25, 2002	$56,711	$18,376	$82,919	$158,006
Goodwill from acquisitions	--	24,698	--	24,698
Purchase price allocation adjustment	477	--	446	923
Foreign currency translation adjustment	420	1,306	--	1,726

Balance, October 31, 2003	$57,608	$44,380	$83,365	$185,353

The $923,000 purchase price allocation adjustment in 2003 resulted from the finalization of the asset valuation and additional acquisition costs directly related to the purchase of Janco Corporation and the Electronic Warfare Passive Expendables Division of BAE SYSTEMS North America (BAE Systems) radar countermeasures chaff and infrared decoy flare operations.

As explained in Note 2, effective at the beginning of fiscal 2002, the Company adopted Statement No. 142, and recognized an impairment loss of $9,116,000.

<PAGE> 34

NOTE 6: Intangible Assets

Intangible assets at the end of fiscal 2003 and 2002 were as follows:

In Thousands

		2003		2002

	Weighted	Gross		Gross
	Average Years	Carrying	Accum.	Carrying	Accum.
	Useful Life	Amount	Amort.	Amount	Amort.

Amortized Intangible Assets
Programs	16	$100,020	$ 5,803	$52,154	$ 976
Core technology	15	8,709	827	8,703	272
Patents and other	7	22,087	16,448	17,381	15,493

Total		$130,816	$23,078	$78,238	$16,741


Indefinite-lived Intangible Assets
Trademark		$ 7,192		$ --

Amortization of intangible assets was $6,248,000, $1,522,000, and $84,000 in fiscal years 2003, 2002 and 2001, respectively.

Estimated amortization expense related to intangible assets for each of the next five fiscal years is as follows:

In Thousands
Fiscal Year

2004	$ 7,478
2005	7,331
2006	7,147
2007	7,141
2008	6,989

<PAGE> 35

NOTE 7: Accrued Liabilities

Accrued liabilities at the end of fiscal 2003 and 2002 consisted of the following:

In Thousands	2003	2002

Payroll and other compensation	$30,091	$24,669
Casualty and medical	9,348	9,579
Interest	7,667	2,950
Warranties	5,387	5,110
State and other tax accruals	6,623	6,081
Other	15,875	15,637

	$74,991	$64,026

<PAGE> 36

NOTE 8: Retirement Benefits

Pension benefits are provided for substantially all U.S. employees under a contributory pension plan and are based on years of service and five-year average compensation. The Company makes actuarially computed contributions as necessary to adequately fund benefits. To determine benefit obligations at the end of each fiscal year, the actuarial computations assumed discount rates of 6.5% and 6.75% for fiscal years 2003 and 2002, respectively. Assumed annual compensation increases were 4.5% for 2003 and 5.0% for 2002. The expected long-term rate of return on plan assets was 8.5% for each year. Plan assets primarily consist of publicly traded common stocks, bonds and government securities. The Company also has an unfunded supplemental retirement plan for key executives providing for periodic payments upon retirement.

The Company amended its defined benefit plan to add a cash balance formula effective January 1, 2003. Participants elected either to continue earning benefits under the current plan formula or to earn benefits under the cash balance formula. Effective January 1, 2003, all new participants will be enrolled in the cash balance formula.

Net periodic pension cost (benefit) for the Company's defined benefit plans at the end of each fiscal year consisted of the following:

In Thousands	2003	2002	2001

Components of Net Periodic Benefit Cost
Service cost	$ 3,524	$ 2,744	$ 2,465
Interest cost	7,088	6,822	6,803
Expected return on plan assets	(8,416)	(9,819)	(10,576)
Amortization of transition asset	77	81	81
Amortization of prior service cost	18	68	88
Amortization of actuarial loss (gain)	1,596	122	(305)
Recognition of gain due to curtailment	--	--	(141)

Net periodic cost (benefit)	$ 3,887	$ 18	$ (1,585)

<PAGE> 37

The funded status of the defined benefit pension plan at the end of fiscal 2003 and 2002 was as follows:

In Thousands	2003	2002

Benefit Obligation
Beginning balance	$107,337	$102,251
Service cost	3,524	2,744
Interest cost	7,088	6,822
Actuarial loss	3,194	1,229
Amendments	(487)	--
Benefits paid	(6,460)	(5,709)

Ending balance	$114,196	$107,337


Plan Assets - Fair Value
Beginning balance	$102,107	$118,352
Actual gain (loss) on plan assets	19,519	(10,572)
Company contributions	36	36
Benefits paid	(6,460)	(5,709)

Ending balance	$115,202	$102,107


Reconciliation of Funded Status to Net Amount Recognized
Funded status - plan assets relative to benefit obligation	$ 1,006	$ (5,230)
Unrecognized net actuarial loss	15,838	25,343
Unrecognized prior service costs	6	511
Unrecognized net transition obligations	--	77

Net amount recognized	$ 16,850	$ 20,701


Amount Recognized in the Consolidated Balance Sheet
Prepaid benefit cost	$ 18,980	$ 22,146
Accrued benefit liability	(2,130)	(1,445)

Net amount recognized	$ 16,850	$ 20,701

Employees may participate in certain defined contribution plans. The Company's contribution expense under these plans totaled $4,729,000, $3,068,000 and $3,074,000 in fiscal 2003, 2002 and 2001, respectively.

<PAGE> 38

NOTE 9: Income Taxes

Income tax expense from continuing operations for each of the fiscal years consisted of:

In Thousands	2003	2002	2001

Current
U.S. Federal	$11,181	$ 7,851	$17,043
State	600	(123)	1,500
Foreign	2,230	3,423	3,533

	14,011	11,151	22,076

Deferred
U.S. Federal	(1,939)	(386)	2,836
State	(202)	22	111
Foreign	1,180	(326)	(595)

	(961)	(690)	2,352

Income tax expense	$13,050	$10,461	$24,428

U.S. and foreign components of income from continuing operations before income taxes for each of the fiscal years were:

In Thousands	2003	2002	2001

U.S.	$35,868	$31,890	$55,670
Foreign	6,923	9,855	11,397

Income from continuing operations,
before income taxes	$42,791	$41,745	$67,067

Primary components of the Company's deferred tax assets (liabilities) at the end of the fiscal year resulted from temporary tax differences associated with the following:

In Thousands	2003	2002

Reserves and liabilities	$ 13,896	$ 16,657
Employee benefits	3,281	6,800

Total deferred tax assets	17,177	23,457

Depreciation and amortization	(13,061)	(9,703)
Intangibles and amortization	(6,875)	(2,509)
Retirement benefits	(6,194)	(7,555)
Other	(1,843)	(7)

Total deferred tax liabilities	(27,973)	(19,774)

Net deferred tax assets (liabilities)	$(10,796)	$ 3,683

No valuation allowance was considered necessary on deferred tax assets.

<PAGE> 39

A reconciliation of the U.S. federal statutory income tax rate to the effective income tax rate for each of the fiscal years was as follows:

In Thousands	2003	2002	2001

U.S. statutory income tax rate	35.0%	35.0%	35.0%
State income taxes	0.9	(0.2)	1.5
Foreign taxes	(0.7)	0.5	0.3
Export sales benefit	(1.9)	(2.4)	(0.5)
Tax exempt interest	--	(0.7)	(0.9)
Non-deductible goodwill	--	--	1.7
Research & development credits	(4.9)	(7.1)	(3.7)
Tax accrual adjustment	1.9	(0.3)	1.6
Other, net	0.2	0.3	1.4

Effective income tax rate	30.5%	25.1%	36.4%

The effective tax rate differed from the statutory rate in fiscal 2003 and 2002, as both years benefited from various tax credits. The effective rate was approximately equal to the statutory rate in fiscal 2001. In fiscal 2002, the Company recognized a $2.9 million reduction in income taxes associated with the favorable resolution of ongoing income tax audits. Also, the relative effect of the export tax benefits and research and development tax credits has varied due to the fluctuations in income from continuing operations before income taxes.

No provision for federal income taxes has been made on accumulated earnings of foreign subsidiaries, since such earnings are considered indefinitely reinvested or would be substantially offset by foreign tax credits if repatriated.

<PAGE> 40

NOTE 10: Debt

Long-term debt at the end of fiscal 2003 and 2002 consisted of the following:

In Thousands	2003	2002

7.75% Senior Subordinated Notes, due June 2013	$175,000	$ --
6.77% Senior Notes, due November 2008	40,000	40,000
6.40% Senior Notes, due November 2005	30,000	30,000
6.00% Senior Notes, due November 2003	30,000	30,000
Other	2,500	2,568

	277,500	102,568

Less fair value of interest rate swap agreement	235	--
Less current maturities	30,473	435

Carrying amount of long-term debt	$246,792	$102,133

In June 2003, the Company sold $175 million of 7.75% Senior Subordinated Notes due in 2013 and requiring semi-annual interest payments in December and June of each year until maturity. The net proceeds from this offering were used to acquire the Weston Group from The Roxboro Group PLC for U.K. [POUND]55.0 million in cash (approximately $94.5 million based on the closing exchange rate and including acquisition costs) and for general corporate purposes, including the repayment of debt and possible future acquisitions. The Senior Subordinated Notes are general unsecured obligations of the Company and are subordinated to all existing and future senior debt of the Company. In addition, the Senior Subordinated Notes are effectively subordinated to all existing and future senior debt and other liabilities (including trade payables) of the Company's foreign subsidiaries. The Senior Subordinated Notes are guaranteed, jointly and severally, by all the existing and future domestic subsidiaries of the Company unless designated as an "unrestricted subsidiary" under the indenture covering the Senior Subordinated Notes. The Senior Subordinated Notes are subject to redemption at the option of the Company, in whole or in part, on or after June 28, 2008 at redemption prices starting at 103.875% of the principal amount plus accrued interest during the period beginning June 28, 2003 and declining annually to 100% of principal and accrued interest on June 15, 2011. Any time prior to June 15, 2006, the Company may redeem up to 35% of the aggregate principal amount of the Senior Subordinated Notes with the proceeds of one or more public equity offerings at a redemption price of 107.75% of the principal amount plus accrued interest.

In September 2003, the Company entered into an interest rate swap agreement on $75 million of its Senior Subordinated Notes due in 2013. The swap agreement exchanged the fixed interest rate for a variable interest rate on $75 million of the $175 million principal amount outstanding. The variable interest rate is based upon LIBOR plus 2.555% and was 3.785% at October 31, 2003. The fair market value of the Company's interest rate swap was a $235,499 liability at October 31, 2003 and was estimated by discounting expected cash flows using quoted market interest rates.

<PAGE> 41

The Senior Notes due in fiscal years 2004, 2006 and 2009 require semi-annual interest payments in November and May of each year. The Senior Notes are unsecured.

Maturities of long-term debt at October 31, 2003, were as follows:

In Thousands
Fiscal Year

2004	$ 30,473
2005	446
2006	30,373
2007	365
2008	365
2009 and thereafter	215,478

	$277,500

Short-term credit facilities at the end of fiscal 2003 and 2002 consisted of the following:

In Thousands	2003		2002

	Outstanding Borrowings	Interest Rate	Outstanding Borrowings	Interest Rate

Foreign	$2,312	3.01%	$424	3.89%

	$2,312		$424

The Company's primary U.S. dollar credit facility totals $60,000,000 and is made available through a group of banks. The credit agreement is secured by substantially all of the Company's assets and interest is based on standard inter-bank offering rates. An additional $6,100,000 of unsecured foreign currency credit facilities have been extended by foreign banks for a total of $66,100,000 available companywide.

A number of underlying agreements contain various covenant restrictions which include maintenance of net worth, payment of dividends, interest coverage and limitations on additional borrowings. The Company was in compliance with these covenants at October 31, 2003. Available credit under the above credit facilities was $56,211,000 at fiscal 2003 year-end, when reduced by outstanding borrowings of $2,312,000 and letters of credit of $7,577,000.

The fair market value of the Company's long-term debt and short-term borrowings was estimated at $294,889,000 and $106,742,000 at fiscal year-end 2003 and 2002, respectively. These estimates were derived using discounted cash flows with interest rates currently available to the Company for issuance of debt with similar terms and remaining maturities.

<PAGE> 42

NOTE 11: Commitments and Contingencies

Rental expense for operating leases totaled $7,961,000, $6,493,000, and $6,106,000 in fiscal years 2003, 2002 and 2001, respectively.

At October 31, 2003, the Company's rental commitments for noncancelable operating leases with a duration in excess of one year were as follows:

In Thousands
Fiscal Year

2004	$ 7,842
2005	7,540
2006	6,867
2007	6,562
2008	6,592
2009 and thereafter	18,746

	$54,149

The Company is a party to various lawsuits and claims, both as plaintiff and defendant, and has contingent liabilities arising from the conduct of business, none of which, in the opinion of management, is expected to have a material effect on the Company's financial position or results of operations. The Company believes that it has made appropriate and adequate provisions for contingent liabilities.

Approximately 500 U.S.-based employees or 10% of total employees were represented by a labor union. An agreement covering about 250 employees expires in October 2004. Management believes that the Company has established a good relationship with these employees and a cooperative relationship with their union. The Company's European operations are subject to national trade union agreements and to local regulations governing employment.

<PAGE> 43

NOTE 12: Employee Stock Plans

In March 2002, the Company's shareholders approved the establishment of an Employee Stock Purchase Plan (ESPP) under which 300,000 shares of the Company's common stock are reserved for issuance to employees. The plan qualifies as a noncompensatory employee stock purchase plan under Section 423 of the Internal Revenue Code. Employees are eligible to participate through payroll deductions subject to certain limitations.

At the end of each offering period, usually six months, shares are purchased by the participants at 85% of the lower of the fair market value on the first day of the offering period or the purchase date. During fiscal 2003, employees purchased 54,952 shares at a fair market value price of $17.98 per share, leaving a balance of 245,048 shares available for issuance in the future. As of October 31, 2003, deductions aggregating $406,010 were accrued for the purchase of shares on December 15, 2003.

The Company also provides a nonqualified stock option plan for officers and key employees. At the end of fiscal 2003, the Company had 2,295,750 shares reserved for issuance to officers and key employees, of which 798,000 shares were available to be granted in the future.

The Board of Directors authorized the Compensation Committee to administer option grants and their terms. Awards under the 1997 plan may be granted to eligible employees of the Company over the 10-year period ending March 4, 2007. Options granted become exercisable over a period of four years following the date of grant and expire on the tenth anniversary of the grant. Option exercise prices are equal to the fair market value of the Company's common stock on the date of grant.

The following table summarizes the changes in outstanding options granted under the Company's stock option plans:

	2003		2002		2001

	Shares Subject to Option	Weighted Average Exercise Price	Shares Subject to Option	Weighted Average Exercise Price	Shares Subject to Option	Weighted Average Exercise Price
Outstanding,
beginning of year	1,618,125	$14.85	1,483,750	$13.71	1,481,250	$12.08
Granted	245,000	18.68	260,000	17.71	180,000	23.48
Exercised	(264,000)	8.83	(103,750)	4.94	(161,250)	9.54
Cancelled	(101,375)	19.05	(21,875)	18.46	(16,250)	14.75

Outstanding,
end of year	1,497,750	$16.25	1,618,125	$14.85	1,483,750	$13.71

Exercisable,
end of year	942,375	$14.94	1,052,500	$13.20	964,125	$11.44

<PAGE> 44

The Company accounts for its stock-based compensation plans in accordance with Accounting Principles Board Opinion No. 25. Additional disclosures as required under Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (Statement No. 123), are included below. The Black-Scholes option-pricing model was used to calculate the estimated compensation expense that would have been recognized under these guidelines.

As prescribed by Statement No. 123, including compensation cost for the Company's stock option and employee stock purchase plans, pro forma disclosures for fiscal years 2003, 2002 and 2001 would have been:

In Thousands, Except Per Share Amounts

	2003	2002	2001

Net earnings (loss) as reported	$23,933	$(1,329)	$32,456
Pro forma net earnings (loss)	22,396	(2,896)	30,986

Basic earnings (loss) per share as reported	$ 1.15	$ (.07)	$ 1.65
Pro forma basic earnings (loss) per share	1.07	(.14)	1.58

Diluted earnings (loss) per share as reported	$ 1.13	$ (.06)	$ 1.62
Pro forma diluted earnings (loss) per share	1.06	(.14)	1.55

The weighted average Black-Scholes value of options granted during fiscal years 2003, 2002 and 2001 was $11.96, $11.26, and $14.99, respectively. The assumptions used in the Black-Scholes option-pricing model for fiscal years 2003, 2002 and 2001 were as follows:

	2003	2002	2001

Volatility	66.3%	65.6%	65.1%
Risk-free interest rate	2.88 - 3.94%	2.79 - 4.03%	3.59 - 4.37%
Expected life (years)	5 - 8	5 - 8	5 - 8
Dividends	-	-	-

<PAGE> 45

The following table summarizes information for stock options outstanding at October 31, 2003:

	Options Outstanding			Options Exercisable

Range of Exercise Prices	Shares	Weighted Average Remaining Life (years)	Weighted Average Price	Shares	Weighted Average Price

$ 3.69 - 11.13	192,500	2.23	$ 9.01	190,000	$ 9.00
11.38 - 13.44	334,250	4.30	12.25	304,375	12.33
14.75 - 17.90	378,000	7.78	16.51	125,500	15.83
18.25 - 19.88	335,250	7.25	19.17	164,250	18.94
20.69 - 27.19	257,750	6.88	22.66	158,250	22.22

<PAGE> 46

NOTE 13: Capital Stock

The authorized capital stock of the Company consists of 25,000 shares of preferred stock ($100 par value), 475,000 shares of serial preferred stock ($1.00 par value), each issuable in series, and 60,000,000 shares of common stock ($.20 par value). At the end of fiscal 2003, there were no shares of preferred stock or serial preferred stock outstanding.

On February 21, 2001, the Company completed a public offering of 3.22 million shares of common stock, including shares sold under the underwriters' over-allotment option, priced at $22 per share, generating net proceeds of $66.7 million. The funds provided additional financial resources for general corporate purposes, including the acquisition of other companies.

Effective December 5, 2002, the Board of Directors adopted a Shareholder Rights Plan, providing for the distribution of one Series B Serial Preferred Stock Purchase Right (Right) for each share of common stock held as of December 23, 2002. Each Right entitles the holder to purchase one one-hundredth of a share of Series B Serial Preferred Stock at an exercise price of $161.00, as may be adjusted from time to time.

The Right to purchase shares of Series B Serial Preferred Stock is triggered once a person or entity (together with such person's or entity's affiliates) beneficially owns 15% or more of the outstanding shares of common stock of the Company (such person or entity, an Acquiring Person). When the Right is triggered, the holder may purchase one one-hundredth of a share of Series B Serial Preferred Stock at an exercise price of $161.00 per share. If after the Rights are triggered, (i) the Company is the surviving corporation in a merger or similar transaction with an Acquiring Person, (ii) the Acquiring Person beneficially owns more than 15% of the outstanding shares of common stock or (iii) the Acquiring Person engages in other "self-dealing" transactions, holders of the Rights can elect to purchase shares of common stock of the Company with a market value of twice the exercise price. Similarly, if after the Rights are triggered, the Company is not the surviving corporation of a merger or similar transaction or the Company sells 50% or more of its assets to another person or entity, holders of the Rights may elect to purchase shares of common stock of the surviving corporation or that person or entity who purchased the Company's assets with a market value of twice the exercise price.

<PAGE> 47

NOTE 14: Acquisitions and Divestiture

On June 11, 2003, the Company acquired a group of companies referred to as the Weston Group from The Roxboro Group PLC for U.K. [POUND]55.0 million in cash (approximately $94.5 million based on the closing exchange rate and including acquisition costs). The acquisition was financed with a portion of the proceeds from the issuance of $175.0 million in 7.75% Senior Subordinated Notes due June 15, 2013. The Company hedged the U.K. [POUND]55.0 million cash price using foreign currency forward contracts and recorded a foreign currency gain of approximately $2.7 million at closing of the acquisition and the settlement of foreign currency forward contracts.

The Weston Group supplies sensors and systems principally for the measurement of temperature, and also for rotational speed, torque, and density. The Weston Group's product offerings are sold primarily into the commercial aerospace market and to a lesser degree, the industrial gas turbine market. The acquisition is included in the Sensors & Systems segment and will complement the Company's existing product offerings. Integration of the Weston Group and certain required expense reductions in the Sensors & Systems segment are expected to result in severance expense of approximately $3.8 million in fiscal 2004, subject to regulatory approval. The severance covers approximately 60 employees in engineering, production, quality, research and development and administration functions.

The following summarizes the estimated fair market value of the assets acquired and liabilities assumed at the date of acquisition. The allocation of the purchase price was based upon a preliminary valuation report and accordingly, the allocation is subject to refinement.

In thousands
As of June 11, 2003


Current Assets		$ 16,838
Property, plant and equipment		13,020
Intangible assets subject to amortization
Programs (20 year weighted average useful life)		44,275
Patents (15 year weighted average useful life)		2,305
Other (10 year useful life)		707

		47,287
Trade names (not subject to amortization)		7,191
Goodwill		22,418
Other assets		487

Total assets acquired		107,241

Current liabilities assumed		7,840
Deferred tax liabilities		4,933

Net assets acquired		$ 94,468

<PAGE> 48

In the second quarter of fiscal 2003, the Company sold a product line in its Sensors & Systems segment and reported a gain on sale of $863,000. The sale of the business resulted in the closing of facilities and the termination of the affected employees. In accordance with Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Dispoal Activities," severance cost was recorded when the affected employees were notified and the amount of severance was determined. Employees were notified of this decision on June 4, 2003 and severance of $929,000 was recorded in the third quarter of fiscal 2003.

On January 2, 2003, the Company acquired the net assets of BVR Aero Precision Corporation (BVR), a manufacturer of precision gears and electronic data concentrators, for $11.4 million in cash. An additional payment of $3.9 million is contingent upon achievement of certain sales levels through fiscal 2006, as defined in the Asset Purchase Agreement. Any additional payment made, when the contingency is resolved, will be accounted for as additional consideration for the acquired assets. BVR is included in the Sensors & Systems segment and will enhance the Company's position in aerospace sensors.

On August 29, 2002, the Company's Armtec Defense Products Co. subsidiary (Armtec) acquired BAE Systems' radar countermeasures chaff and infrared decoy flare operations for approximately $71.4 million in cash, of which $3.5 million is held in an escrow account as of October 25, 2003. At the time of the asset acquisition from BAE Systems, certain environmental remedial activities were required under a Part B Permit issued to the infrared decoy flare facility by the State of Arkansas under the Federal Resource Conservation and Recovery Act. The Part B Permit was transferred to Armtec, along with the remedial obligations. Under the Asset Purchase Agreement, BAE Systems agreed to complete all remedial obligations at the infrared decoy flare facility and to indemnify Esterline on all environmental liabilities to a maximum amount of $25.0 million.

Radar countermeasure chaff is used by aircraft to help protect against radar-guided missiles. Aircraft-dispensable flares are designed to protect against infrared-guided missiles. The business operates as a division of Armtec and complements Armtec's position as the U.S. Army's sole-source provider of combustible ordnance components for tank, artillery, and mortar ammunition.

The following summarizes the estimated fair market values of the assets acquired and liabilities assumed at the date of acquisition. The amount allocated to goodwill is expected to be deductible for income tax purposes. In fiscal 2003, the Company finalized its purchase price allocation, which is reflected below:

<PAGE> 49

In Thousands
As of August 29, 2002

Current assets	$11,231
Property, plant and equipment	9,123
Intangible assets subject to amortization
Programs (17 year weighted average useful life)	38,221
Patents (10 year useful life)	941

	39,162
Goodwill	15,106

Total assets acquired	74,622

Current liabilities assumed	3,197

Net assets acquired	$71,425

On April 29, 2002, the Company acquired Burke Industries' Engineered Polymers Group (Polymers Group) for approximately $37.6 million in cash. The acquired group is a manufacturer of aerospace seals and similar high-performance products. The Polymers Group is included in the Advanced Materials segment. The acquisition adds to the Company's existing technology base and establishes the Company as a global leader in custom aerospace seals and similar high-performance products.

In Thousands
As of April 29, 2002

Current assets	$ 9,442
Property, plant and equipment	5,313
Intangible assets subject to amortization
Core technology (15 year useful life)	5,949
Programs (9 year weighted average useful life)	9,855

	15,804
Goodwill	7,942

Total assets acquired	38,501

Current liabilities assumed	864

Net assets acquired	$37,637

<PAGE> 50

On June 3, 2002, the Company acquired Janco Corporation (Janco) for approximately $13.8 million in cash. Janco manufactures aircraft rotary switches, potentiometers and sophisticated modular control systems. In addition, the Company acquired a small product line for approximately $5.7 million in cash.

The above acquisitions were accounted for under the purchase method of accounting and were funded with available cash. The results of operations were included from the effective date of each acquisition.

<PAGE> 51

NOTE 15: Business Segment Information

In the third quarter of fiscal 2002, the Company's Board of Directors approved a plan providing for the discontinuation of the Automation segment. Subsequent to that decision, management has redefined the Company's segments to correspond with the way the Company is now organized and managed. Accordingly, business segment information includes the segments of Avionics & Controls, Sensors & Systems and Advanced Materials. Operations within the Avionics & Controls segment focus on technology interface systems for commercial and military aircraft, and similar devices for land- and sea-based military vehicles, secure communications systems, specialized medical equipment and other industrial applications. Sensors & Systems includes operations that produce high-precision temperature and pressure sensors, fluid and motion control components and other related systems principally for aerospace and defense customers. The Advanced Materials segment focuses on high-performance elastomer products used in a wide range of commercial aerospace and military applications, and combustible ordnance and electronic warfare countermeasure devices. Sales in all segments are international and include military, defense and commercial customers.

Geographic sales information is based on product origin. The Company evaluates these segments based on segment profits prior to net interest, other income/expense, corporate expenses and federal/foreign income taxes.

<PAGE> 52

Details of the Company's operations by business segment for the last three fiscal years were as follows:

In Thousands	2003	2002	2001

Sales
Avionics & Controls	$198,249	$171,709	$172,547
Sensors & Systems	146,976	104,942	101,916
Advanced Materials	216,655	157,384	151,352
Other	574	774	5,108

	$562,454	$434,809	$430,923


Income From Continuing Operations
Avionics & Controls	$ 29,798	$ 26,501	$ 31,319
Sensors & Systems	10,090	12,352	11,439
Advanced Materials	29,120	21,884	34,987
Other	(821)	(1,420)	1,428

Segment Earnings	68,187	59,317	79,173

Corporate expense	(16,879)	(12,263)	(13,167)
Loss on sale of business	(66)	--	--
Insurance settlement	--	--	4,631
Gain (loss) on derivative
financial instruments	2,676	(1)	786
Interest income	868	1,814	3,307
Interest expense	(11,995)	(7,122)	(7,663)

	$ 42,791	$ 41,745	$ 67,067


Identifiable Assets
Avionics & Controls	$144,492	$145,296	$121,771
Sensors & Systems	219,247	98,624	91,527
Advanced Materials	262,001	257,408	149,889
Other	2	2	5
Automation	--	--	50,444
Discontinued operations	--	13,576	--
Corporate ¹	174,888	56,049	146,172

	$800,630	$570,955	$559,808


Capital Expenditures
Avionics & Controls	$ 2,744	$ 1,980	$ 3,580
Sensors & Systems	3,232	4,432	2,954
Advanced Materials	8,857	8,497	7,132
Other	--	--	--
Automation	--	--	1,816
Discontinued operations	62	580	--
Corporate	2,235	220	276

	$ 17,130	$ 15,709	$ 15,758

<PAGE> 53

Depreciation and Amortization
Avionics & Controls		$ 4,964	$ 4,060	$ 5,855
Sensors & Systems		6,449	3,083	3,713
Advanced Materials		11,982	7,156	7,266
Other		--	4	1
Automation		--	--	--
Discontinued operations		1,789	2,726	6,553
Corporate		1,031	534	721

		$ 26,215	$ 17,563	$ 24,109


¹	Primarily cash, prepaid pension expense (see Note 8) and deferred tax assets (see Note 9).

The Company's operations by geographic area for the last three fiscal years were as follows:

In Thousands	2003	2002	2001

Sales
Domestic
Unaffiliated customers - U.S.	$377,947	$294,693	$296,920
Unaffiliated customers - export	62,077	51,044	42,779
Intercompany	1,720	1,816	999

	441,744	347,553	340,698


France
Unaffiliated customers	54,857	54,944	49,267
Intercompany	3,182	3,652	6,175

	58,039	58,596	55,442


United Kingdom
Unaffiliated customers	61,998	20,354	40,516
Intercompany	65	--	--

	62,063	20,354	40,516


All Other Foreign
Unaffiliated customers	5,575	13,774	1,441
Intercompany	1,280	417	--

	6,855	14,191	1,441


Eliminations	(6,247)	(5,885)	(7,174)

	$562,454	$434,809	$430,923

<PAGE> 54

Segment Earnings ¹
Domestic		$ 61,271	$ 49,120	$ 67,883
France		4,716	7,608	8,587
United Kingdom		2,898	2,028	2,608
All other foreign		(698)	561	95

		$ 68,187	$ 59,317	$ 79,173


Identifiable Assets ²
Domestic		$448,780	$420,895	$335,231
France		42,828	46,683	42,834
United Kingdom		133,309	35,583	32,819
All other foreign		825	11,745	2,752

		$625,742	$514,906	$413,636


¹	Before corporate expense, shown on page 53.
²	Excludes corporate, shown on page 53.

The Company's principal foreign operations consist of manufacturing facilities located in France and the United Kingdom, and include sales and service operations located in Hong Kong and France. Sensors & Systems segment operations are dependent upon foreign sales, which represented $117.0 million, $87.8 million, and $84.3 million of Sensors & Systems sales in fiscal 2003, 2002 and 2001, respectively. Intercompany sales are at prices comparable with sales to unaffiliated customers. U.S. Government sales as a percent of Advanced Materials and Avionics & Controls sales were 36.1% and 7.4%, respectively, in fiscal 2003 and 16.8% of consolidated sales. In fiscal 2002, U.S. Government sales as a percent of Advanced Materials and Avionics & Controls sales were 23.6% and 5.8%, respectively, and 10.8% of consolidated sales. Sales to any single customer did not exceed 10% of consolidated sales in fiscal 2001.

Product lines contributing sales of 10% or more of total sales in any of the last three fiscal years were as follows:

	2003	2002	2001

Elastomeric products	18%	20%	19%
Sensors	16%	16%	16%
Aerospace switches and indicators	15%	17%	15%
Combustible ordnance components	10%	11%	11%

<PAGE> 55

NOTE 16: Quarterly Financial Data (Unaudited)

The following is a summary of unaudited quarterly financial information:

In Thousands, Except Per Share Amounts

Fiscal Year 2003	Fourth	Third		Second		First

Net sales	$160,326	$140,518		$135,281		$126,329
Gross margin	53,680	45,706		40,570		38,673

Income from continuing operations	9,412	8,444		6,042		5,843
Loss from discontinued operations,
net of tax	--	--		(5,808)		--

Earnings before cumulative effect
of a change in accounting principle	9,412	8,444	²	234	³	5,843
Cumulative effect of a change in
accounting principle	--	--		--		--

Net earnings	$ 9,412	$ 8,444	²	$ 234	³	$ 5,843


Earnings per share - basic
Continuing operations	$ .45	$ .40		$ .29		$ .28
Discontinued operations ¹	--	--		(.28)		--

Earnings per share before
cumulative effect of a change in
accounting principle - basic ¹	.45	.40		.01		.28
Cumulative effect of a change in
accounting principle - basic	--	--		--		--

Earnings per share - basic ¹	$ .45	$ .40		$ .01		$ .28


Earnings per share - diluted
Continuing operations ¹	$ .44	$ .40		$ .29		$ .28
Discontinued operations ¹	--	--		(.28)		--

Earnings per share before
cumulative effect of a change in
accounting principle - diluted ¹	.44	.40		.01		.28
Cumulative effect of a change in
accounting principle - diluted	--	--		--		--

Earnings per share - diluted ¹	$ .44	$ .40		$ .01		$ .28

<PAGE> 56

In Thousands, Except Per Share Amounts

Fiscal Year 2002	Fourth		Third	Second	First

Net sales	$124,887		$112,423	$100,681	$ 96,818
Gross margin	40,439		36,353	32,314	32,467

Income from continuing operations	10,505	⁴	6,926	7,215	6,638
Loss from discontinued operations,
net of tax	(2,925)		(17,529)	(2,292)	(2,293)

Earnings (loss) before cumulative effect
of a change in accounting principle	7,580	⁴	(10,603)	4,923	4,345
Cumulative effect of a change in
accounting principle	--		--	--	(7,574)

Net earnings (loss)	$ 7,580	⁴	$ (10,603)	$ 4,923	$ (3,229)


Earnings (loss) per share - basic
Continuing operations	$ .51		$ .33	$ .35	$ .32
Discontinued operations ¹	(.14)		(.84)	(.11)	(.11)

Earnings (loss) per share before
cumulative effect of a change in
accounting principle - basic ¹	.37		(.51)	.24	.21
Cumulative effect of a change in
accounting principle - basic	--		--	--	(.37)

Earnings (loss) per share - basic ¹	$ .37		$ (.51)	$ .24	$ (.16)


Earnings (loss) per share - diluted
Continuing operations ¹	$ .50		$ .33	$ .34	$ .32
Discontinued operations ¹	(.14)		(.83)	(.11)	(.11)

Earnings (loss) per share before
cumulative effect of a change in
accounting principle - diluted ¹	.36		(.50)	.23	.21
Cumulative effect of a change in
accounting principle - diluted	--		--	--	(.36)

Earnings (loss) per share - diluted ¹	$ .36		$ (.50)	$ .23	$ (.15)

¹	The sum of the quarterly per share amounts may not equal per share amounts reported for year-to-date periods. This is due to changes in the number of weighted average shares outstanding and the effects of rounding for each period.

²	Included the $2.7 million foreign currency gain recorded upon settlement of foreign currency forward contracts used to hedge the U.K. [POUND]55.0 million cash price for the Weston Group. Included $929,000 in severance incurred in connection with the closing of facilities and termination of affected employees of a product line in the Sensors & Systems segment.

³	Included an $863,000 gain on the sale of a product line in the Sensors & Systems segment.

⁴	Included the $2.9 million reduction in income taxes associated with the favorable resolution of ongoing income tax audits.

<PAGE> 57

NOTE 17: Guarantors

The following schedules set forth condensed consolidating financial information as required by Rule 3-10 of Securities and Exchange Commission Regulation S-X for fiscal 2003, 2002 and 2001 for (a) Esterline Technologies Corporation (the Parent); (b) on a combined basis, the subsidiary guarantors (Guarantor Subsidiaries) of the Senior Subordinated Notes which include Advanced Input Devices, Inc., Amtech Automated Manufacturing Technology, Angus Electronics Co., Armtec Countermeasures Co., Armtec Defense Products Co., Auxitrol Co., Boyar-Schultz Corporation, BVR Technologies Co., Equipment Sales Co., EA Technologies Corporation, Excellon U.K., Fluid Regulators Corporation, H.A. Sales Co., Hytek Finishes Co., Janco Corporation, Kirkhill-TA Co., Korry Electronics Co., Mason Electric Co., MC Tech Co., McTaws Corporation, Memtron Technologies Co., Norwich Aero Products, Inc., Pressure Systems, Inc., Pressure Systems International, Inc., SureSeal Corporation, Surftech Finishes Co., W. A. Whitney Co., and (c) on a combined basis, the subsidiary non-guarantors (Non-Guarantor Subsidiaries), which include Angelchance Ltd. (Weston), Auxitrol S.A., Auxitrol Technologies S.A., Auxitrol Asia PTE Ltd., Esterline Technologies DK Aps (Denmark), Esterline Technologies Ltd. (England), Esterline Technologies Ltd. (Hong Kong), Excellon Europa GmbH, Excellon Japan Co., Excellon France S.A.R.L., Muirhead Aerospace Ltd., Norcroft Dynamics Ltd., Pressure Systems International Ltd., W. A. Whitney Canada Ltd., and W. A. Whitney de Mexico S.A. The guarantor subsidiaries are direct and indirect wholly-owned subsidiaries of Esterline Technologies and have fully and unconditionally, jointly and severally, guaranteed the Senior Subordinated Notes.

<PAGE> 58

Condensed Consolidating Balance Sheet as of October 31, 2003

	Parent	Guarantor Subsidiaries	Non- Guarantor Subsidiaries	Eliminations	Total


Assets

Current Assets
Cash and cash equivalents	$109,834	$ 3,030	$ 18,499	$ --	$131,363
Cash in escrow	4,536	--	--	--	4,536
Short-term investments	12,797	--	--	--	12,797
Accounts receivable, net	95	69,297	29,003	--	98,395
Inventories	--	57,816	18,529	--	76,345
Income tax refundable	7,838	(160)	(1)	--	7,677
Deferred income tax benefits	17,490	--	(961)	--	16,529
Prepaid expenses	134	3,797	3,099	--	7,030

Total Current Assets	152,724	133,780	68,168	--	354,672

Property, Plant & Equipment, Net	2,332	89,160	25,598	--	117,090
Goodwill	--	151,696	33,657	--	185,353
Intangibles, Net	--	67,224	47,706	--	114,930
Debt Issuance Costs, Net	6,301	--	--	--	6,301
Other Assets	4,015	18,723	(454)	--	22,284
Amounts Due To/From
Subsidiaries	79,494	17,488	--	(96,982)	--
Investment in Subsidiaries	462,423	--	83	(462,506)	--

Total Assets	$707,289	$478,071	$174,758	$(559,488)	$800,630

<PAGE> 59

Condensed Consolidating Balance Sheet as of October 31, 2003

	Parent	Guarantor Subsidiaries	Non- Guarantor Subsidiaries	Eliminations	Total


Liabilities and Shareholders' Equity

Current Liabilities
Accounts payable	$ 138	$ 14,315	$ 8,820	$ --	$ 23,273
Accrued liabilities	22,168	38,913	13,910	--	74,991
Credit facilities	--	--	2,312	--	2,312
Current maturities of
long-term debt	30,000	75	398	--	30,473
Federal and foreign
income taxes	--	17	1,167	--	1,184

Total Current Liabilities	52,306	53,320	26,607	--	132,233

Long-Term Debt, Net	244,765	59	1,968	--	246,792
Deferred Income Taxes	27,325	--	--	--	27,325
Net Liabilities of
Discontinued Operations	--	2,719	(2,311)	--	408
Amounts Due To (From)
Subsidiaries	(10,979)	--	119,504	(108,525)	--
Shareholders' Equity	393,872	421,973	28,990	(450,963)	393,872

Total Liabilities and
Shareholders' Equity	$707,289	$478,071	$174,758	$(559,488)	$800,630

<PAGE> 60

Condensed Consolidating Statement of Operations for the fiscal year ended October 31, 2003

	Parent	Guarantor Subsidiaries	Non- Guarantor Subsidiaries	Eliminations	Total


Net Sales	$ --	$439,373	$124,638	$ (1,557)	$562,454
Cost of Sales	--	300,807	84,575	(1,557)	383,825

	--	138,566	40,063	--	178,629

Expenses
Selling, general
and administrative	--	82,247	25,550	--	107,797
Research, development
and engineering	--	9,306	10,218	--	19,524

Total Expenses	--	91,553	35,768	--	127,321

Operating Earnings from
Continuing Operations	--	47,013	4,295	--	51,308

Loss on sale of business	--	--	66	--	66
Gain on derivative
financial instruments	(2,676)	--	--	--	(2,676)
Interest income	(5,492)	(2,511)	(370)	7,505	(868)
Interest expense	11,624	2,530	5,346	(7,505)	11,995
Other expense (income)	(116)	96	20	--	--

Other Expense, Net	3,340	115	5,062	--	8,517

Income (Loss) from Continuing
Operations Before Taxes	(3,340)	46,898	(767)	--	42,791
Income Tax Expense (Benefit)	(868)	14,164	(246)	--	13,050

Income (Loss) From
Continuing Operations	(2,472)	32,734	(521)	--	29,741

Loss From Discontinued
Operations, Net of Tax	--	(5,808)	--	--	(5,808)
Equity in Net Income of
Consolidated Subsidiaries	26,405	--	--	(26,405)	--

Net Income (Loss)	$23,933	$ 26,926	$ (521)	$(26,405)	$ 23,933

<PAGE> 61

Condensed Consolidating Statement of Cash Flows for the fiscal year ended October 31, 2003

	Parent	Guarantor Subsidiaries	Non- Guarantor Subsidiaries	Eliminations	Total


Cash Flows Provided (Used) by Operating Activities
Net earnings (loss)	$ 23,933	$ 26,926	$ (521)	$(26,405)	$ 23,933
Depreciation & amortization	--	22,230	3,985	--	26,215
Deferred income tax (benefit)	13,525	(4,221)	(595)	--	8,709
Loss on disposal and holding
period loss on discontinued
operations	--	9,282	--	--	9,282
Loss on sale of product line	--	--	66	--	66
Working capital changes, net of
effect of acquisitions
Accounts receivable	154	(10,824)	1,154	--	(9,516)
Inventories	--	2,078	4,244	--	6,322
Prepaid expenses	(97)	(8)	222	--	117
Accounts payable	115	503	(5,014)	--	(4,396)
Accrued liabilities	7,905	1,155	(4,134)	--	4,926
Federal & foreign income taxes	(7,451)	6,639	(111)	--	(923)
Other, net	(1,754)	(2,397)	4,348	--	197

	36,330	51,363	3,644	(26,405)	64,932

Cash Flows Provided (Used) by Investing Activities
Purchases of capital assets	(2,235)	(12,334)	(2,561)	--	(17,130)
Proceeds from sale of business	--	3,850	5,630	--	9,480
Escrow deposit	(1,036)	--	--	--	(1,036)
Capital dispositions	38	581	147	--	766
Purchase of short-term
investments	(12,797)	--	--	--	(12,797)
Acquisitions of businesses, net	--	(32,767)	(78,968)	--	(111,735)

	(16,030)	(40,670)	(75,752)	--	(132,452)

<PAGE> 62

Condensed Consolidating Statement of Cash Flows for the fiscal year ended October 31, 2003

	Parent	Guarantor Subsidiaries	Non- Guarantor Subsidiaries	Eliminations	Total


Cash Flows Provided (Used) by Financing Activities
Proceeds provided by stock issuance under employee stock plans	3,280	--	--	--	3,280
Net change in credit facilities	--	--	2,279	--	2,279
Repayment of long-term debt	(235)	(76)	(421)	--	(732)
Debt and other issuance costs	(7,735)	--	--	--	(7,735)
Proceeds from note issuance	175,000	--	--	--	175,000
Investment in subsidiaries	(87,295)	(9,113)	70,003	26,405	--

	83,015	(9,189)	71,861	26,405	172,092

Effect of foreign exchange
rates on cash	(83)	41	4,322	--	4,280


Net increase in cash
and cash equivalents	103,232	1,545	4,075	--	108,852
Cash and cash equivalents
- beginning of year	6,602	1,485	14,424	--	22,511

Cash and cash equivalents
- end of year	$109,834	$ 3,030	$18,499	$ --	$ 131,363

<PAGE> 63

Condensed Consolidating Balance Sheet as of October 25, 2002

	Parent	Guarantor Subsidiaries	Non- Guarantor Subsidiaries	Eliminations	Total


Assets

Current Assets
Cash and cash equivalents	$ 6,602	$ 1,485	$14,424	$ --	$ 22,511
Cash in escrow	3,500	--	--	--	3,500
Accounts receivable, net	249	54,707	24,518	--	79,474
Inventories	--	55,536	15,769	--	71,305
Income tax refundable	387	5,793	--	--	6,180
Deferred income tax benefits	25,076	--	(7)	--	25,069
Prepaid expenses	37	3,681	2,475	--	6,193

Total Current Assets	35,851	121,202	57,179	--	214,232

Property, Plant & Equipment, Net	489	84,251	16,254	--	100,994
Net Assets of Discontinued
Operations	--	7,336	6,240	--	13,576
Goodwill	--	143,641	14,365	--	158,006
Intangibles, Net	--	61,124	373	--	61,497
Other Assets	1,495	21,703	(548)	--	22,650
Amounts Due To/From
Subsidiaries	36,799	--	--	(36,799)	--
Investment in Subsidiaries	415,479	--	70	(415,549)	--

Total Assets	$490,113	$439,257	$93,933	$(452,348)	$570,955

<PAGE> 64

Condensed Consolidating Balance Sheet as of October 25, 2002

	Parent	Guarantor Subsidiaries	Non- Guarantor Subsidiaries	Eliminations	Total


Liabilities and Shareholders' Equity

Current Liabilities
Accounts payable	$ 23	$ 17,310	$10,685	$ --	$ 28,018
Accrued liabilities	14,263	36,362	13,401	--	64,026
Credit facilities	--	--	424	--	424
Current maturities of
long-term debt	--	76	359	--	435
Federal and foreign
income taxes	--	--	92	--	92

Total Current Liabilities	14,286	53,748	24,961	--	92,995

Long-Term Debt, Net	100,000	134	1,999	--	102,133
Deferred Income Taxes	21,386	--	--	--	21,386
Amounts Due To/From
Subsidiaries	--	19,448	34,655	(54,103)	--
Shareholders' Equity	354,441	365,927	32,318	(398,245)	354,441

Total Liabilities and
Shareholders' Equity	$490,113	$439,257	$93,933	$(452,348)	$570,955

<PAGE> 65

Condensed Consolidating Statement of Operations for the fiscal year ended October 25, 2002

	Parent	Guarantor Subsidiaries	Non- Guarantor Subsidiaries	Eliminations	Total


Net Sales	$ --	$345,689	$90,400	$(1,280)	$434,809
Cost of Sales	--	238,524	55,992	(1,280)	293,236

	--	107,165	34,408	--	141,573

Expenses
Selling, general
and administrative	--	60,910	18,176	--	79,086
Research, development
and engineering	--	7,472	7,961	--	15,433

Total Expenses	--	68,382	26,137	--	94,519

Operating Earnings From
Continuing Operations	--	38,783	8,271	--	47,054

Loss on derivative
financial instruments	1	--	--	--	1
Interest income	(2,449)	166	(315)	784	(1,814)
Interest expense	6,841	(157)	1,222	(784)	7,122
Other expense (income)	--	479	(479)	--	--

Other Expense, Net	4,393	488	428	--	5,309

Income (Loss) From Continuing
Operations Before Taxes	(4,393)	38,295	7,843	--	41,745
Income Tax Expense (Benefit)	(1,838)	9,307	2,992	--	10,461

Income (Loss) From Continuing
Operations	(2,555)	28,988	4,851	--	31,284

Loss From Discontinued
Operations, Net of Tax	--	(24,624)	(415)	--	(25,039)
Cumulative Effect of a Change
in Accounting Principle,
Net of Tax	--	(7,574)	--	--	(7,574)
Equity in Net Income of
Consolidated Subsidiaries	1,226	--	--	(1,226)	--

Net Income (Loss)	$(1,329)	$ (3,210)	$ 4,436	$(1,226)	$ (1,329)

<PAGE> 66

Condensed Consolidating Statement of Cash Flows for the fiscal year ended October 25, 2002

	Parent	Guarantor Subsidiaries	Non- Guarantor Subsidiaries	Eliminations	Total


Cash Flows Provided (Used) by Operating Activities
Net earnings (loss)	$ (1,329)	$ (3,210)	$ 4,436	$(1,226)	$ (1,329)
Depreciation & amortization	--	15,152	2,411	--	17,563
Deferred income tax (benefit)	461	(1,190)	7	--	(722)
Loss on disposal and holding
period loss on discontinued
operations	--	22,718	--	--	22,718
Working capital changes, net of
effect of acquisitions
Accounts receivable	639	3,057	1,848	--	5,544
Inventories	--	(105)	3,041	--	2,936
Prepaid expenses	66	(1,683)	1,160	--	(457)
Accounts payable	(412)	4,020	1,441	--	5,049
Accrued liabilities	1,714	(350)	550	--	1,914
Federal & foreign income taxes	(1,662)	(7,514)	(1,021)	--	(10,197)
Other, net	314	16,279	(6,656)	--	9,937

	(209)	47,174	7,217	(1,226)	52,956

Cash Flows Provided (Used) by Investing Activities
Purchases of capital assets	(209)	(11,186)	(4,314)	--	(15,709)
Escrow deposit	(3,500)	--	--	--	(3,500)
Capital dispositions	24	140	395	--	559
Acquisitions of businesses, net	--	(118,995)	(5,654)	--	(124,649)

	(3,685)	(130,041)	(9,573)	--	(143,299)

<PAGE> 67

Condensed Consolidating Statement of Cash Flows for the fiscal year ended October 25, 2002

	Parent	Guarantor Subsidiaries	Non- Guarantor Subsidiaries	Eliminations	Total


Cash Flows Provided (Used) by Financing Activities
Net change in credit facilities	--	--	(1,960)	--	(1,960)
Repayment of long-term debt	(5,714)	(75)	(557)	--	(6,346)
Investment in subsidiaries	(91,314)	83,292	6,796	1,226	--

	(97,028)	83,217	4,279	1,226	(8,306)

Effect of foreign exchange
rates on cash	(68)	75	1,213	--	1,220


Net increase (decrease) in cash
and cash equivalents	(100,990)	425	3,136	--	(97,429)
Cash and cash equivalents
- beginning of year	107,592	1,060	11,288	--	119,940

Cash and cash equivalents
- end of year	$ 6,602	$ 1,485	$14,424	$ --	$ 22,511

<PAGE> 68

Condensed Consolidating Statement of Operations for the fiscal year ended October 26, 2001

	Parent	Guarantor Subsidiaries	Non- Guarantor Subsidiaries	Eliminations	Total


Net Sales	$ --	$346,964	$84,569	$ (610)	$430,923
Cost of Sales	--	219,741	50,451	(610)	269,582

		127,223	34,118	--	161,341

Expenses
Selling, general
and administrative	--	62,598	18,505	--	81,103
Research, development
and engineering	--	7,560	6,672	--	14,232

Total Expenses	--	70,158	25,177	--	95,335

Operating Earnings From
Continuing Operations	--	57,065	8,941	--	66,006

Interest income	(3,904)	--	(169)	766	(3,307)
Interest expense	7,347	4	1,078	(766)	7,663
Other expense (income)	(5,417)	434	(434)	--	(5,417)

Other (Income) Expense, Net	(1,974)	438	475	--	(1,061)

Income From Continuing
Operations Before Taxes	1,974	56,627	8,466	--	67,067
Income Tax Expense	142	21,123	3,163	--	24,428

Income From Continuing
Operations	1,832	35,504	5,303	--	42,639

Loss From Discontinued
Operations	--	(9,222)	(558)	--	(9,780)
Cumulative Effect of a Change
in Accounting Principle,
Net of Tax	(403)	--	--	--	(403)
Equity in Net Income of
Consolidated Subsidiaries	31,027	--	--	(31,027)	--

Net Income (Loss)	$32,456	$ 26,282	$ 4,745	$(31,027)	$ 32,456

<PAGE> 69

Condensed Consolidating Statement of Cash Flows for the fiscal year ended October 26, 2001

	Parent	Guarantor Subsidiaries	Non- Guarantor Subsidiaries	Eliminations	Total


Cash Flows Provided (Used) by Operating Activities
Net earnings	$ 32,456	$ 26,282	$ 4,745	$(31,027)	$ 32,456
Depreciation & amortization	--	21,771	2,338	--	24,109
Deferred income taxes	2,352	--	--	--	2,352
Working capital changes, net of
effect of acquisitions
Accounts receivable	(462)	2,220	(43)	--	1,715
Inventories	--	(9,533)	(3,315)	--	(12,848)
Prepaid expenses	(55)	(352)	(894)	--	(1,301)
Accounts payable	273	(4,460)	1,111	--	(3,076)
Accrued liabilities	(1,012)	(6,601)	1,628	--	(5,985)
Federal & foreign income taxes	(3,436)	1	164	--	(3,271)
Other, net	(119)	(2,633)	(1,101)	--	(3,853)

	29,997	26,695	4,633	(31,027)	30,298

Cash Flows Provided (Used) by Investing Activities
Purchases of capital assets	(270)	(12,971)	(2,517)	--	(15,758)
Capital dispositions	(1)	513	(235)	--	277
Acquisitions of businesses, net	--	(6,885)	--	--	(6,885)

	(271)	(19,343)	(2,752)	--	(22,366)

<PAGE> 70

Condensed Consolidating Statement of Cash Flows for the fiscal year ended October 26, 2001

	Parent	Guarantor Subsidiaries	Non- Guarantor Subsidiaries	Eliminations	Total


Cash Flows Provided (Used) by Financing Activities
Net proceeds provided by sale
of common stock	66,736	--	--	--	66,736
Net change in credit facilities	--	34	(609)	--	(575)
Repayment of long-term debt	(5,714)	(52)	(623)	--	(6,389)
Investment in subsidiaries	(26,958)	(7,445)	3,376	31,027	--

	34,064	(7,463)	2,144	31,027	59,772

Effect of foreign exchange
rates on cash	88	379	881	--	1,348


Net increase in cash
and cash equivalents	63,878	268	4,906	--	69,052
Cash and cash equivalents
- beginning of year	43,714	792	6,382	--	50,888

Cash and cash equivalents
- end of year	$107,592	$ 1,060	$11,288	$ --	$119,940

<PAGE> 71

Report of Ernst & Young LLP, Independent Auditors

To the Shareholders and the Board of Directors
Esterline Technologies Corporation
Bellevue, Washington

We have audited the accompanying consolidated balance sheets of Esterline Technologies Corporation and subsidiaries as of October 31, 2003 and October 25, 2002 and the related consolidated statements of operations, shareholders' equity and comprehensive income, and cash flows for each of the three fiscal years in the period ended October 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Esterline Technologies Corporation and subsidiaries at October 31, 2003 and October 25, 2002, and the consolidated results of their operations and their cash flows for each of the three fiscal years in the period ended October 31, 2003, in conformity with accounting principles generally accepted in the United States.

As discussed in Note 2 to the consolidated financial statements, effective October 27, 2001, the Company changed its method of accounting for goodwill in accordance with Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets."

Ernst & Young LLP

Seattle, Washington
December 3, 2003

<PAGE> 72

Exhibit 21

SUBSIDIARIES

The subsidiaries of the Company as of October 31, 2003 are as follows:

Name of Subsidiary			Jurisdiction of Incorporation


Advanced Input Devices, Inc.			Delaware
Memtron Technologies Co.			Delaware
Advanced Input Devices (UK) Ltd.			England

Armtec Defense Products Co.			Delaware
Armtec Countermeasures Co.			Delaware

Auxitrol Technologies S.A.			France
Auxitrol S.A.			France
Auxitrol Co.			Delaware
Fluid Regulators Corporation			Ohio

Muirhead Aerospace Limited			England

BVR Technologies Co.			Delaware

Equipment Sales Co.			Connecticut

Esterline Technologies (Hong Kong) Limited			Hong Kong

Hytek Finishes Co.			Delaware

Kirkhill - TA Co.			California

Korry Electronics Co.			Delaware

Mason Electric Co.			Delaware
Janco Corporation			California

W. A. Whitney Co.			Illinois

Weston Aerospace Ltd.			England
Norwich Aero Products Ltd.			New York
Pressure Systems, Inc.			Virginia

The above list excludes certain subsidiaries that, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary as of October 31, 2003.

<PAGE>

Exhibit 23

Consent of Independent Auditors

We consent to the incorporation by reference in this Annual Report (Form 10-K) of Esterline Technologies Corporation of our report dated December 3, 2003, included in the 2003 Annual Report to Shareholders of Esterline Technologies Corporation.

Our audits also included the financial statement schedule of Esterline Technologies Corporation listed in Item 15(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also consent to the incorporation by reference in the Registration Statements (Forms S-8 No. 333-43843, No. 33-58375, No. 333-62650, and No. 333-85440) pertaining to the 1997 Stock Option Plan, Non-Employee Directors' Stock Compensation Plan, Amended and Restated 1997 Stock Option Plan, and the 2002 Employee Stock Purchase Plan of Esterline Technologies Corporation of our report dated December 3, 2003, with respect to the consolidated financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of Esterline Technologies Corporation for the fiscal year ended October 31, 2003.

Ernst & Young LLP

Seattle, Washington
December 16, 2003

<PAGE>

Exhibit 31.1

CERTIFICATIONS

I, Robert W. Cremin, certify that:

1. I have reviewed this annual report on Form 10-K of Esterline Technologies Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	c)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: December 17, 2003			By:	/s/ Robert W. Cremin

				Robert W. Cremin
				Chairman, President and Chief Executive Officer
				(Principal Executive Officer)

<PAGE>

Exhibit 31.2

CERTIFICATIONS

I, Robert D. George, certify that:

1. I have reviewed this annual report on Form 10-K of Esterline Technologies Corporation;

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	c)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: December 17, 2003			By:	/s/ Robert D. George

				Robert D. George
				Vice President, Chief Financial Officer
				Secretary and Treasurer
				(Principal Financial
				and Accounting Officer)

<PAGE>

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Esterline Technologies Corporation (the " Company ") on Form 10-K for the fiscal year ended October 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Form 10-K" ), I, Robert W. Cremin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. [SECTION]1350, as adopted pursuant to [SECTION]906 of the Sarbanes-Oxley Act of 2002, that:

	(1)	The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

	(2)	The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: December 17, 2003

	By:	/s/ Robert W. Cremin

		Robert W. Cremin
		Chairman, President and Chief Executive Officer

<PAGE>

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Esterline Technologies Corporation (the " Company ") on Form 10-K for the fiscal year ended October 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "the Form 10-K" ), I, Robert D. George, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. [SECTION]1350, as adopted pursuant to [SECTION]906 of the Sarbanes-Oxley Act of 2002, that:

	(1)	The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

	(2)	The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: December 17, 2003

	By:	/s/ Robert D. George

		Robert D. George
		Vice President, Chief Financial Officer,
		Secretary and Treasurer

<PAGE>