Exhibit 10.2
 
EXECUTION VERSION
WOODWARD GOVERNOR COMPANY
$100,000,000 Series B Senior Notes due October 1, 2013
$50,000,000 Series C Senior Notes due October 1, 2015
$100,000,000 Series D Senior Notes due October 1, 2018
 
NOTE PURCHASE AGREEMENT

 
Dated October 1, 2008
 

 

 

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TABLE OF CONTENTS

              Page  
 
       
1. AUTHORIZATION OF NOTES
    1  
 
       
2. SALE AND PURCHASE OF NOTES
    1  
 
       
3. CLOSINGS
    2  
 
       
4. CONDITIONS TO CLOSINGS
    2  
 
       
4.1. Representations and Warranties
    2  
4.2. Performance; No Default
    3  
4.3. Compliance Certificates
    3  
4.4. Guaranty Agreement
    3  
4.5. Opinions of Counsel
    4  
4.6. Purchase Permitted by Applicable Law, etc.
    4  
4.7. Sale of Other Notes
    4  
4.8. Payment of Special Counsel Fees
    4  
4.9. Private Placement Numbers
    4  
4.10. Changes in Corporate Structure
    5  
4.11. Funding Instructions
    5  
4.12. Amendment and Restatement of Intercreditor Agreement
    5  
4.13. Amendment of Existing Note Purchase Agreement
    5  
4.14. Term Facility
    5  
4.15. Amendment of Revolving Facility
    5  
4.16. Proceedings and Documents
    5  
 
       
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
    6  
 
       
5.1. Organization; Power and Authority
    6  
5.2. Authorization, etc.
    7  
5.3. Disclosure
    6  
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates
    7  
5.5. Financial Statements; Material Liabilities
    8  
5.6. Compliance with Laws, Other Instruments, etc.
    8  
5.7. Governmental Authorizations, etc.
    8  
5.8. Litigation; Observance of Agreements, Statutes and Orders
    9  
5.9. Taxes
    9  
5.10. Title to Property; Leases
    9  
5.11. Licenses, Permits, etc.
    10  
5.12. Compliance with ERISA
    10  
5.13. Private Offering by the Company
    11  
5.14. Use of Proceeds; Margin Regulations
    11  
5.15. Existing Indebtedness; Future Liens
    11  
5.16. Foreign Assets Control Regulations, etc.
    12  
5.17. Status under Certain Statutes
    12  
5.18. Environmental Matters
    13  
 
       

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
6. REPRESENTATIONS OF THE PURCHASERS
    13  
 
       
6.1. Purchase for Investment
    13  
6.2. Accredited Investor
    14  
6.3. Source of Funds
    14  
 
       
7. INFORMATION AS TO COMPANY
    15  
 
       
7.1. Financial and Business Information
    15  
7.2. Officer’s Certificate
    18  
7.3. Visitation
    19  
 
       
8. PAYMENT AND PREPAYMENT OF THE NOTES
    19  
 
       
8.1. Maturity
    19  
8.2. Optional Prepayments with Make-Whole Amount
    20  
8.3. Prepayment Upon Change of Control
    20  
8.4. Prepayment in Connection with an Asset Disposition
    21  
8.5. Allocation of Partial Prepayments
    22  
8.6. Maturity; Surrender, etc.
    22  
8.7. Purchase of Notes
    23  
8.8. Make-Whole Amount
    23  
 
       
9. AFFIRMATIVE COVENANTS
    25  
 
       
9.1. Compliance with Law
    25  
9.2. Insurance
    25  
9.3. Maintenance of Properties
    25  
9.4. Payment of Taxes and Claims
    25  
9.5. Corporate Existence, etc.
    26  
9.6. Books and Records
    26  
9.7. Ranking of Obligations
    26  
9.8. Guaranty by Subsidiaries; Liens
    26  
9.9. Intercreditor Agreement
    29  
 
       
10. NEGATIVE COVENANTS
    29  
 
       
10.1. Transactions with Affiliates
    29  
10.2. Merger, Consolidation, etc.
    30  
10.3. Sale of Assets
    31  
10.4. Line of Business
    31  
10.5. Terrorism Sanctions Regulations
    31  
10.6. Liens
    32  
10.7. Minimum Consolidated Net Worth
    32  
10.8. Maximum Leverage Ratio
    32  
10.9. Priority Debt
    32  
10.10. Subsidiary Debt
    32  
10.11. Permitted Receivables Securitization Program
    33  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
11. EVENTS OF DEFAULT
    33  
 
       
12. REMEDIES ON DEFAULT, ETC.
    36  
 
       
12.1. Acceleration
    36  
12.2. Other Remedies
    37  
12.3. Rescission
    37  
12.4. No Waivers or Election of Remedies, Expenses, etc.
    37  
 
       
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
    38  
 
       
13.1. Registration of Notes
    38  
13.2. Transfer and Exchange of Notes
    38  
13.3. Replacement of Notes
    39  
 
       
14. PAYMENTS ON NOTES
    39  
 
       
14.1. Place of Payment
    39  
14.2. Home Office Payment
    39  
 
       
15. EXPENSES, ETC.
    40  
 
       
15.1. Transaction Expenses
    40  
15.2. Survival
    40  
 
       
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT; UPDATING
SCHEDULES
    40  
 
       
17. AMENDMENT AND WAIVER
    41  
 
       
17.1. Requirements
    41  
17.2. Solicitation of Holders of Notes
    41  
17.3. Binding Effect, etc.
    42  
17.4. Notes Held by Company, etc.
    42  
 
       
18. NOTICES
    42  
 
       
19. REPRODUCTION OF DOCUMENTS
    43  
 
       
20. CONFIDENTIAL INFORMATION
    43  
 
       
21. SUBSTITUTION OF PURCHASER
    44  
 
       
22. MISCELLANEOUS
    44  
 
       
22.1. Successors and Assigns
    44  
22.2. Payments Due on Non-Business Days
    45  
22.3. Accounting Terms
    45  
22.4. Severability
    45  
22.5. Construction, etc.
    45  
22.6. Counterparts
    45  
22.7. Governing Law
    46  
22.8. Jurisdiction and Process; Waiver of Jury Trial
    46  

 

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Schedule A
  —   Information Relating to Purchasers
 
       
Schedule B
  —   Defined Terms
 
       
Schedule 4.10
  —   Changes in Corporate Structure
 
       
Schedule 5.3
  —   Disclosure Materials
 
       
Schedule 5.4
  —   Subsidiaries of the Company and Ownership of Subsidiary Stock
 
       
Schedule 5.5
  —   Financial Statements
 
       
Schedule 5.15
  —   Existing Indebtedness
 
       
Schedule 10.6
  —   Existing Liens
 
       
Exhibit 1A
  —   Form of Series B Senior Note due October 1, 2013
 
       
Exhibit 1B
  —   Form of Series C Senior Note due October 1, 2015
 
       
Exhibit 1C
  —   Form of Series D Senior Note due October 1, 2018
 
       
Exhibit 2
  —   Form of Guaranty Agreement
 
       
Exhibit 4.5(a)
  —   Form of Opinion of General Counsel for the Company and the Closing
Guarantor
 
       
Exhibit 4.5(b)
  —   Form of Opinion of Special Counsel for the Company and the Closing
Guarantor
 
       
Exhibit 4.5(c)
  —   Form of Opinion of Special Counsel for the Purchasers

 

 

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Woodward Governor Company
1000 East Drake Road
Fort Collins, Colorado 80525
Series B Senior Notes due October 1, 2013
Series C Senior Notes due October 1, 2015
Series D Senior Notes due October 1, 2018
October 1, 2008
To Each of the Purchasers Listed in
Schedule A Hereto:
Ladies and Gentlemen:
Woodward Governor Company, a Delaware corporation (the “Company”), agrees with
each of the purchasers whose names appear at the end hereof (each, a “Purchaser”
and, collectively, the “Purchasers”) as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of (a) $100,000,000 aggregate
principal amount of its Series B Senior Notes due October 1, 2013 (the “Series B
Notes”), (b) $50,000,000 aggregate principal amount of its Series C Senior Notes
due October 1, 2015 (the “Series C Notes”) and (c) $100,000,000 aggregate
principal amount of its Series D Senior Notes due October 1, 2018 (the “Series D
Notes” and, together with the Series B Notes and the Series C Notes,
collectively, the “Notes”, such term to include any such notes issued in
substitution therefor pursuant to Section 13). The Series B Notes, Series C
Notes and Series D Notes shall be substantially in the forms set out in
Exhibit 1A, Exhibit 1B and Exhibit 1C, respectively. Certain capitalized and
other terms used in this Agreement are defined in Schedule B; and references to
a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or
an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will issue
and sell to each Purchaser and each Purchaser will purchase from the Company, at
the Closings provided for in Section 3, Notes in the principal amount, of the
Series and at the Closings specified opposite such Purchaser’s name in
Schedule A at the purchase price of 100% of the principal amount thereof. The
Purchasers’ obligations hereunder are several and not joint obligations and no
Purchaser shall have any liability to any Person for the performance or
non-performance of any obligation by any other Purchaser hereunder.
The obligations of the Company hereunder and under the Notes will be
unconditionally guarantied by Woodward FST, Inc., a Delaware corporation (the
“Closing Guarantor”), and each other Subsidiary required to guaranty the Notes
pursuant to Section 9.6 (together with the Closing Guarantor, each a “Guarantor”
and, collectively, the “Guarantors”), pursuant to that certain Guaranty
Agreement dated as of the date hereof (the “Guaranty Agreement”) substantially
in the form set forth in Exhibit 2.

 

 

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3. CLOSINGS.
The sale and purchase of the Notes to be purchased by the Purchasers shall occur
at the offices of Bingham McCutchen LLP, at 399 Park Avenue, New York, New York
10022, at 10:00 a.m., New York time, at two separate closings (each, a
“Closing”). The first Closing shall occur on October 1, 2008, unless the Company
and the First Closing Purchasers (as defined below) mutually agree that such
Closing shall occur on such other Business Day thereafter on or prior to
October 27, 2008 (the “First Closing”). The second Closing shall occur on
October 30, 2008, unless the Company and the Second Closing Purchasers (as
defined below) mutually agree that such Closing shall occur on such other
Business Day thereafter on or before November 10, 2008 (the “Second Closing”).
As specified in Schedule A, certain of the Notes shall be sold by the Company
and purchased by certain of the Purchasers (the “First Closing Purchasers”) at
the First Closing, while the remaining Notes shall be sold by the Company and
purchased by certain of the Purchasers (the “Second Closing Purchasers”) at the
Second Closing. At each Closing, the Company will deliver to each Purchaser the
Notes to be purchased by such Purchaser at such Closing, in the form of a single
Note for each Series (or such greater number of Notes for each Series in
denominations of at least $50,000 as such Purchaser may request) dated the date
of such Closing and registered in such Purchaser’s name (or in the name of its
nominee), against delivery by such Purchaser to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company to
account number 5513219 at JPMorgan Chase Bank, N.A., New York, NY, ABA #
021000021. If at either Closing the Company shall fail to tender the applicable
Notes to any Purchaser as provided above in this Section 3, or any of the
conditions specified in Section 4 with respect to such Closing shall not have
been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at its
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights such Purchaser may have by reason of such failure or
such nonfulfillment.
4. CONDITIONS TO CLOSINGS.
Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such
Purchaser at a Closing is subject to the fulfillment to such Purchaser’s
satisfaction, prior to or at such Closing, of the following conditions:
4.1. Representations and Warranties.
(a) The representations and warranties of the Company in this Agreement shall be
correct when made and (i) with respect to the First Closing Purchasers, at the
time of the First Closing and (ii) with respect to the Second Closing
Purchasers, at the time of the Second Closing.

 

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(b) The representations and warranties of the Closing Guarantor in the Guaranty
Agreement shall be correct when made and (i) with respect to the First Closing
Purchasers, at the time of the First Closing and (ii) with respect to the Second
Closing Purchasers, at the time of the Second Closing.
4.2. Performance; No Default.
The Company and the Closing Guarantor shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by the Company or the Closing Guarantor, respectively, prior to
or at such Closing and after giving effect to the issue and sale of the Notes
(and the application of the proceeds thereof as contemplated by Section 5.14) no
Default or Event of Default shall have occurred and be continuing. Prior to the
First Closing, neither the Company nor any Subsidiary shall have entered into
any transaction since the date of the Memorandum that would have been prohibited
by Sections 10.1, 10.2 or 10.3 had such Sections applied since such date.
4.3. Compliance Certificates.
(a) Officer’s Certificates.
(i) The Company shall have delivered to such Purchaser an Officer’s Certificate,
dated the date of such Closing, certifying that the conditions specified in
Sections 4.1(a), 4.2 and 4.10 have been fulfilled.
(ii) The Closing Guarantor shall have delivered to such Purchaser an Officer’s
Certificate, dated the date of such Closing, certifying that the conditions
specified in Sections 4.1(b) and 4.2 (as to the Closing Guarantor) have been
fulfilled.
(b) Secretary or Treasurer’s Certificates.
(i) The Company shall have delivered to such Purchaser a certificate of its
Secretary or Assistant Secretary, dated the date of such Closing, certifying as
to the resolutions attached thereto and other corporate proceedings relating to
the authorization, execution and delivery of the Notes and this Agreement.
(ii) The Closing Guarantor shall have delivered to such Purchaser a certificate
of its Treasurer, dated the date of such Closing, certifying as to the
resolutions attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Guaranty Agreement.
4.4. Guaranty Agreement.
The Guaranty Agreement shall have been duly authorized, executed and delivered
to each Purchaser by the Closing Guarantor, and shall be in full force and
effect.

 

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4.5. Opinions of Counsel.
Such Purchaser shall have received opinions in form and substance satisfactory
to such Purchaser, dated the date of such Closing (a) from A. Christopher Fawzy,
general counsel for the Company and the Closing Guarantor, covering the matters
set forth in Exhibit 4.5(a) and covering such other matters incident to the
transactions contemplated hereby as such Purchaser or its counsel may reasonably
request (and the Company hereby instructs its counsel to deliver such opinion to
the Purchasers), (b) from Jones Day, special counsel for the Company and the
Closing Guarantor, covering the matters set forth in Exhibit 4.5(b) and covering
such other matters incident to the transactions contemplated hereby as such
Purchaser or its counsel may reasonably request (and the Company hereby
instructs its counsel to deliver such opinion to the Purchasers) and (c) from
Bingham McCutchen LLP, the Purchasers’ special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.5(c) and covering
such other matters incident to such transactions as such Purchaser may
reasonably request.
4.6. Purchase Permitted by Applicable Law, etc.
On the date of such Closing such Purchaser’s purchase of Notes shall (a) be
permitted by the laws and regulations of each jurisdiction to which such
Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8)
of the New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular investment,
(b) not violate any applicable law or regulation (including, without limitation,
Regulation T, U or X of the Board of Governors of the Federal Reserve System)
and (c) not subject such Purchaser to any tax, penalty or liability under or
pursuant to any applicable law or regulation. If requested by such Purchaser,
such Purchaser shall have received an Officer’s Certificate certifying as to
such matters of fact as such Purchaser may reasonably specify to enable such
Purchaser to determine whether such purchase is so permitted.
4.7. Sale of Other Notes.
Contemporaneously with each Closing the Company shall sell to each other
Purchaser and each other Purchaser shall purchase the Notes to be purchased by
it at such Closing as specified in Schedule A.
4.8. Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, the Company shall have paid on
the date hereof and on or before each Closing the reasonable fees, charges and
disbursements of the Purchasers’ special counsel referred to in Section 4.5 to
the extent reflected in a statement of such counsel rendered to the Company at
least one Business Day prior to such date.
4.9. Private Placement Numbers.
A Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in
cooperation with the SVO) shall have been obtained for each Series of the Notes.

 

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4.10. Changes in Corporate Structure.
Except as set forth on Schedule 4.10, the Company shall not have changed its
jurisdiction of incorporation or organization, as applicable, or been a party to
any merger or consolidation or succeeded to all or any substantial part of the
liabilities of any other entity at any time following the date of the most
recent financial statements referred to in Schedule 5.5.
4.11. Funding Instructions.
At least three Business Days prior to the date of each Closing, each applicable
Purchaser shall have received written instructions signed by a Responsible
Officer on letterhead of the Company confirming the information specified in
Section 3 including (i) the name and address of the transferee bank, (ii) such
transferee bank’s ABA number and (iii) the account name and number into which
the purchase price for the applicable Notes is to be deposited.
4.12. Amendment and Restatement of Intercreditor Agreement.
The Company shall have delivered to the Purchasers’ special counsel on or before
the date of the First Closing a fully executed copy of the Amended and Restated
Intercreditor Agreement, by and among the Purchasers and each lender under each
Major Credit Facility outstanding on the date of the First Closing, certified by
a Responsible Officer as being true, correct and complete.
4.13. Amendment of Existing Note Purchase Agreement.
The Company shall have delivered to the Purchasers’ special counsel on or before
the date of the First Closing a fully executed copy of Amendment No. 1 to the
Existing Note Purchase Agreement certified by a Responsible Officer as being
true, correct and complete.
4.14. Term Facility.
The Company shall have delivered to the Purchasers’ special counsel on or before
the date of the First Closing a fully executed copy of the Term Facility
certified by a Responsible Officer as being true, correct and complete.
4.15. Amendment of Revolving Facility.
The Company shall have delivered to the Purchasers’ special counsel on or before
the date of the First Closing a fully executed copy of Amendment No. 2 to the
Revolving Facility certified by a Responsible Officer as being true, correct and
complete.
4.16. Proceedings and Documents.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to such Purchaser and its special
counsel, and such Purchaser and its special counsel shall have received all such
counterpart originals or certified or other copies of such documents as such
Purchaser or such special counsel may reasonably request.

 

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5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Purchaser on the date hereof, to the
First Closing Purchasers on the date of the First Closing and to the Second
Closing Purchasers on the date of the Second Closing that:
5.1. Organization; Power and Authority.
Each of the Company and the Closing Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation, and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each of the Company
and the Closing Guarantor has the corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease and to
transact the business it transacts and proposes to transact. The Company has the
corporate power and authority to execute and deliver this Agreement and the
Notes and to perform the provisions hereof and thereof, and the Closing
Guarantor has the corporate power and authority to execute and deliver the
Guaranty Agreement to perform the provisions thereof.
5.2. Authorization, etc.
(a) This Agreement and the Notes have been duly authorized by all necessary
corporate action on the part of the Company, and this Agreement constitutes, and
upon execution and delivery thereof each Note will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(b) The Guaranty Agreement has been duly authorized by all necessary corporate
action on the part of the Closing Guarantor, and the Guaranty Agreement
constitutes a legal, valid and binding obligation of the Closing Guarantor
enforceable against the Closing Guarantor in accordance with its terms, except
as such enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

 

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5.3. Disclosure.
The Company, through its agents, J.P. Morgan Securities Inc. and Deutsche Bank
Securities Inc., has delivered to each Purchaser a copy of a Private Placement
Memorandum, dated August 2008 (the “Memorandum”), relating to the transactions
contemplated hereby. The Memorandum fairly describes, in all material respects,
the general nature of the business and principal properties of the Company and
its Subsidiaries. This Agreement, the Guaranty Agreement, the Memorandum and the
documents, certificates or other writings delivered to the Purchasers by or on
behalf of the Company or the Closing Guarantor in connection with the
transactions contemplated hereby and identified in Schedule 5.3, and the
financial statements listed in Schedule 5.5 (this Agreement, the Guaranty
Agreement, the Memorandum and such documents, certificates or other writings and
such financial statements delivered to each Purchaser prior to September 11,
2008 being referred to, collectively, as the “Disclosure Documents”), taken as a
whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made. Except as disclosed in
the Disclosure Documents, since September 30, 2007, there has been no change in
the financial condition, operations, business, properties or prospects of the
Company or any Subsidiary except changes that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect. There is no
fact known to any Senior Financial Officer of the Company that could reasonably
be expected to have a Material Adverse Effect that has not been set forth herein
or in the Disclosure Documents.
5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete and correct lists
(i) of the Company’s Subsidiaries, showing, as to each Subsidiary, the correct
name thereof, the jurisdiction of its organization, and the percentage of shares
of each class of its capital stock or similar equity interests outstanding owned
by the Company and each other Subsidiary, (ii) of the Company’s Affiliates,
other than Subsidiaries and Undisclosed Affiliates, and (iii) of the Company’s
directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity interests
of each Subsidiary shown in Schedule 5.4 as being owned by the Company and its
Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned by the Company or another Subsidiary free and clear of any Lien (except as
otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal
entity duly organized, validly existing and, to the extent such concept is
applicable, in good standing under the laws of its jurisdiction of organization,
and is duly qualified as a foreign corporation or other legal entity and is in
good standing in each jurisdiction in which such qualification is required by
law, other than those jurisdictions as to which the failure to be so qualified
or in good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Subsidiary has the
corporate or other power and authority to own or hold under lease the properties
it purports to own or hold under lease and to transact the business it transacts
and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal, regulatory,
contractual or other restriction (other than this Agreement the agreements
listed on Schedule 5.4 and customary limitations imposed by corporate law or
similar statutes, whether foreign or domestic) restricting the ability of such
Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Company or any of its Subsidiaries that owns
outstanding shares of capital stock or similar equity interests of such
Subsidiary.

 

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5.5. Financial Statements; Material Liabilities.
The Company has delivered to each Purchaser copies of the consolidated financial
statements of the Company and its Subsidiaries listed on Schedule 5.5. All such
financial statements (including in each case the related schedules and notes)
fairly present in all material respects the consolidated financial position of
the Company and its Subsidiaries as of the respective dates specified in such
Schedule and the consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the
notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments and the absence of footnotes). The Company and its
Subsidiaries do not have any Material liabilities that are not disclosed on such
financial statements or otherwise disclosed in the Disclosure Documents.
5.6. Compliance with Laws, Other Instruments, etc.
(a) The execution, delivery and performance by the Company of this Agreement and
the Notes, and the execution, delivery and performance by the Closing Guarantor
of the Guaranty Agreement, will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound, (ii) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment, decree, or
ruling of any court, arbitrator or Governmental Authority applicable to the
Company or any Subsidiary or (iii) violate any provision of any statute or other
rule or regulation of any Governmental Authority applicable to the Company or
any Subsidiary. All obligations under this Agreement are direct and unsecured
obligations of the Company ranking pari passu as against the assets of the
Company with all other unsecured Indebtedness (actual or contingent) of the
Company which is not expressed to be subordinated or junior in rank to any other
unsecured Indebtedness of the Company.
(b) All obligations under the Guaranty Agreement are direct and unsecured
obligations of the Closing Guarantor ranking pari passu as against the assets of
the Closing Guarantor with all other unsecured Indebtedness (actual or
contingent) of the Closing Guarantor which is not expressed to be subordinated
or junior in rank to any other unsecured Indebtedness of the Closing Guarantor.
5.7. Governmental Authorizations, etc.
Except with respect to applicable and routine securities laws filings required
by the Exchange Act, no consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority is required in connection
with the execution, delivery or performance by the Company of this Agreement or
the Notes, or by the Closing Guarantor of the Guaranty Agreement.

 

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5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) There are no actions, suits, investigations or proceedings pending or, to
the knowledge of the Company, threatened against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any term of any
agreement or instrument to which it is a party or by which it is bound, or any
order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws or the USA Patriot
Act) of any Governmental Authority, which default or violation, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
5.9. Taxes.
The Company and its Subsidiaries have filed all income tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is not
individually or in the aggregate Material or (ii) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. No Senior
Financial Officer of the Company knows of any basis for any other tax or
assessment that could reasonably be expected to have a Material Adverse Effect.
The charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of Federal, state or other taxes for all fiscal periods
are adequate in accordance with GAAP. The United States Federal income tax
liabilities of the Company and its Subsidiaries have been finally determined
(whether by reason of completed audits or the statute of limitations having run)
for all fiscal years up to and including the fiscal year ended September 30,
2003.
5.10. Title to Property; Leases.
The Company and its Subsidiaries have good and sufficient title to their
respective properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or purported to have been acquired by the Company or
any Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens prohibited by
this Agreement. All leases that individually or in the aggregate are Material
are valid and subsisting and are in full force and effect in all material
respects.

 

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5.11. Licenses, Permits, etc.
(a) The Company and its Subsidiaries own or possess all licenses, permits,
franchises, authorizations, patents, copyrights, proprietary software, service
marks, trademarks and trade names, or rights thereto, that individually or in
the aggregate are Material, without known conflict with the rights of others,
except for those conflicts that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
5.12. Compliance with ERISA.
(a) The Company and each ERISA Affiliate have operated and administered each
Plan (which is not a Multiemployer Plan) in compliance with all applicable laws
except for such instances of noncompliance as have not resulted in and could not
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate has incurred any liability for failure to comply
with the provisions of Title I of ERISA or pursuant to Title IV of ERISA (other
than for premium payments to the PBGC paid in a timely manner) or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in section 3 of ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not be individually or in the aggregate
Material.
(b) The present value of the aggregate benefit liabilities under each of the
Plans subject to Title IV of ERISA (other than Multiemployer Plans), determined
as of the beginning of such Plan’s most recently ended plan year on the basis of
the actuarial assumptions specified for funding purposes in such Plan’s most
recent actuarial valuation report, did not exceed the aggregate current value as
of such determination date of the assets of such Plan allocable to such benefit
liabilities by more than $4,900,000 in the case of any single Plan and by more
than $7,000,000 in the aggregate for all Plans. The term “benefit liabilities”
has the meaning specified in section 4001 of ERISA and the terms “current value”
and “present value” have the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities under section 4201 or contingent withdrawal liabilities under
section 4204 of ERISA in respect of Multiemployer Plans that individually or in
the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as of the last
day of the Company’s most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.

 

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(e) The execution and delivery of this Agreement and the Guaranty Agreement and
the issuance and sale of the Notes at each Closing hereunder will not involve
any transaction that is subject to and not exempt from the prohibitions of
section 406 of ERISA or in connection with which a tax could be imposed pursuant
to section 4975(c)(1)(A)-(D) of the Code. The representation by the Company to
each Purchaser in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of the Purchasers’ representations in
Section 6.3 as to the sources of the funds used to pay the purchase price of the
Notes to be purchased by the Purchasers.
5.13. Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has offered the Notes or any
similar securities for sale to, or solicited any offer to buy any of the same
from, or otherwise approached or negotiated in respect thereof with, any person
other than the Purchasers and not more than 75 other Institutional Investors (as
defined in clause (c) to the definition of such term), each of which has been
offered the Notes at a private sale for investment. Neither the Company nor
anyone acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes to the registration requirements of
Section 5 of the Securities Act or to the registration requirements of any
securities or blue sky laws of any applicable jurisdiction. For purposes of this
Section 5.13 only, each reference to the Notes shall be deemed to include the
Guaranty Agreement.
5.14. Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes to finance the
acquisition of all of the outstanding shares of MPC Products Corporation, to
repay certain indebtedness and pay certain obligations of MPC Products
Corporation and to enable the Company and its Subsidiaries to have funds
available for general corporate purposes. No part of the proceeds from the sale
of the Notes hereunder will be used, directly or indirectly, for the purpose of
buying or carrying any margin stock within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System (12 CFR 221), or for the
purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). Margin stock does not constitute more
than 5% of the value of the consolidated assets of the Company and its
Subsidiaries and the Company does not have any present intention that margin
stock will constitute more than 5% of the value of such assets. As used in this
Section, the terms “margin stock” and “purpose of buying or carrying” shall have
the meanings assigned to them in said Regulation U.
5.15. Existing Indebtedness; Future Liens
(a) Except as described therein, Schedule 5.15 sets forth a complete and correct
list of all outstanding Indebtedness of the Company and its Subsidiaries as of
the date of the First Closing (including a description of the obligors and
obligees, principal amount outstanding and collateral therefor, if any, and
Guaranty thereof, if any), since which date there has been no Material change in
the amounts, interest rates, sinking funds, installment payments or maturities
of the Indebtedness of the Company or its Subsidiaries. Neither the Company nor
any Subsidiary is in default and no waiver of default is currently in effect, in
the payment of any principal or interest on any Indebtedness of the Company or
such Subsidiary and no event or condition exists with respect to any
Indebtedness of the Company or any Subsidiary the aggregate principal amount of
which exceeds $2,000,000 that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Indebtedness to
become due and payable before its stated maturity or before its regularly
scheduled dates of payment.

 

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(b) Except as disclosed in Schedule 5.15, neither the Company nor any Subsidiary
has agreed or consented to cause or permit in the future (upon the happening of
a contingency or otherwise) any of its property, whether now owned or hereafter
acquired, to be subject to a Lien not permitted by Section 10.6.
(c) Neither the Company nor any Subsidiary is a party to, or otherwise subject
to any provision contained in, any instrument evidencing Indebtedness of the
Company or such Subsidiary, any agreement relating thereto or any other
agreement (including, but not limited to, its charter or other organizational
document) which limits the amount of, or otherwise imposes restrictions on the
incurring of, Indebtedness of the Company, except as specifically indicated in
Schedule 5.15.
5.16. Foreign Assets Control Regulations, etc.
(a) Neither the sale of the Notes by the Company hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as amended, or any
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
(b) Neither the Company nor any Subsidiary (i) is a Person described or
designated in the Specially Designated Nationals and Blocked Persons List of the
Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or
(ii) to the knowledge of the Company, engages in any dealings or transactions
with any such Person. The Company and its Subsidiaries are in compliance, in all
material respects, with the USA Patriot Act.
(c) No part of the proceeds from the sale of the Notes hereunder will be used,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming
in all cases that such Act applies to the Company.
5.17. Status under Certain Statutes.
Neither the Company nor any Subsidiary is (a) required to register as an
“investment company,” as such term is defined in the Investment Company Act of
1940, as amended, or (b) subject to regulation under the Public Utility Holding
Company Act of 2005, as amended, the ICC Termination Act of 1995, as amended, or
the Federal Power Act, as amended.

 

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5.18. Environmental Matters.
(a) Neither the Company nor any Subsidiary has knowledge of any claim or has
received any notice of any claim, and no proceeding has been instituted raising
any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary has knowledge of any facts which
would give rise to any claim, public or private, of violation of Environmental
Laws or damage to the environment emanating from, occurring on or in any way
related to real properties now or formerly owned, leased or operated by any of
them or to other assets or their use, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect.
(c) Neither the Company nor any Subsidiary has stored any Hazardous Materials on
real properties now or formerly owned, leased or operated by any of them and has
not disposed of any Hazardous Materials in a manner contrary to any
Environmental Laws in each case in any manner that could reasonably be expected
to result in a Material Adverse Effect; and
(d) All buildings on all real properties now owned, leased or operated by the
Company or any Subsidiary are in compliance with applicable Environmental Laws,
except where failure to comply could not reasonably be expected to result in a
Material Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASERS.
6.1. Purchase for Investment.
Each Purchaser severally represents that it is purchasing the Notes for its own
account or for one or more separate accounts maintained by such Purchaser or for
the account of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of such Purchaser’s or such
pension or trust fund’s property shall at all times be within such Purchaser’s
or such pension or trust fund’s control. Each Purchaser understands that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required, nor does it intend, to register the Notes.

 

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6.2. Accredited Investor.
Each Purchaser represents that it is an “accredited investor” (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act acting
for its own account (and not for the account of others) or as a fiduciary or
agent for others (which others are also “accredited investors”). Each Purchaser
further represents that such Purchaser has had the opportunity to ask questions
of the Company and received answers concerning the terms and conditions of the
sale of the Notes.
6.3. Source of Funds.
Each Purchaser severally represents that at least one of the following
statements is an accurate representation as to each source of funds (a “Source”)
to be used by such Purchaser to pay the purchase price of the Notes to be
purchased by such Purchaser hereunder:
(a) the Source is an “insurance company general account” (as the term is defined
in the United States Department of Labor’s Prohibited Transaction
Class Exemption (“PTE”) 95-60, as amended) in respect of which the amount of the
reserves and liabilities (as defined by the annual statement for life insurance
companies approved by the National Association of Insurance Commissioners (the
“NAIC Annual Statement”)) for the general account contract(s) held by or on
behalf of any employee benefit plan (as defined in PTE 95-60, as amended)
together with the amount of the reserves and liabilities (as defined by the NAIC
Annual Statement) for the general account contract(s) held by or on behalf of
any other employee benefit plans maintained by the same employer (or affiliate
thereof as defined in PTE 95-60, as amended) or by the same employee
organization in the general account do not exceed 10% of the total reserves and
liabilities of the general account (exclusive of separate account liabilities)
plus surplus as set forth in the NAIC Annual Statement filed with such
Purchaser’s state of domicile; or
(b) the Source is a separate account of an insurance company that is maintained
solely in connection with the fixed contractual obligations of the insurance
company under which the amounts payable, or credited, to any employee benefit
plan (or its related trust) that has any interest in such separate account (or
to any participant or beneficiary of such plan (including any annuitant)) are
not affected in any manner by the investment performance of the separate
account; or
(c) the Source is either (i) an insurance company pooled separate account,
within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within
the meaning of the PTE 91-38, as amended and, except as disclosed by such
Purchaser to the Company in writing pursuant to this clause (c), no employee
benefit plan (as defined in such PTEs) or group of plans maintained by the same
employer or employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment fund; or

 

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(d) the Source constitutes assets of an “investment fund” (within the meaning of
Part V of PTE 84-14, as amended (the “QPAM Exemption”)) managed by a “qualified
professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM
Exemption), no assets of any employee benefit plan (as defined in the QPAM
Exemption) that are included in such investment fund, when combined with the
assets of all other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM
Exemption) of such employer or by the same employee organization and managed by
such QPAM, represent more than 20% of the total client assets managed by such
QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM (applying
the definition of “control” in Section V(e) of the QPAM Exemption) owns a 5% or
more interest in the Company and (i) the identity of such QPAM and (ii) the
names of all employee benefit plans whose assets are included in such investment
fund have been disclosed to the Company in writing pursuant to this clause (d);
or
(e) the Source constitutes assets of a “plan(s)” (within the meaning of
Section IV of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset
manager” or “INHAM” (within the meaning of Part IV of the INHAM Exemption), the
conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied,
neither the INHAM nor a person controlling or controlled by the INHAM (applying
the definition of “control” in Section IV(d) of the INHAM Exemption) owns a 5%
or more interest in the Company and (i) the identity of such INHAM and (ii) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have
been disclosed to the Company in writing pursuant to this clause (e); or
(f) the Source is a governmental plan; or
(g) the Source is one or more employee benefit plans, or a separate account or
trust fund comprised of one or more employee benefit plans, each of which has
been identified to the Company in writing pursuant to this clause (g); or
(h) the Source does not include assets of any employee benefit plan, other than
a plan exempt from the coverage of ERISA.
As used in this Section 6.3, the terms “employee benefit plan,” “governmental
plan,” and “separate account” shall, unless otherwise indicated, have the
respective meanings assigned to such terms in section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1. Financial and Business Information.
The Company shall deliver to each holder of Notes that is an Institutional
Investor:
(a) Quarterly Statements — within 60 days (or such shorter period as is 15 days
greater than the period applicable to the filing of the Company’s Quarterly
Report on Form 10-Q (the “Form 10-Q”) with the SEC regardless of whether the
Company is subject to the filing requirements thereof) after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of,

 

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(i) a consolidated balance sheet of the Company and its Subsidiaries as at the
end of such quarter, and
(ii) consolidated statements of earnings, shareholders’ equity and cash flows of
the Company and its Subsidiaries, for such quarter and (in the case of the
second and third quarters) for the portion of the fiscal year ending with such
quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments and the absence of footnotes, provided that delivery within the time
period specified above of copies of the Company’s Form 10-Q prepared in
compliance in all material respects with the requirements therefor and filed
with the SEC shall be deemed to satisfy the requirements of this Section 7.1(a),
provided, further, that the Company shall be deemed to have made such delivery
of such Form 10-Q if it shall have timely made such Form 10-Q available on
“EDGAR” and on its home page on the worldwide web (at the date of this Agreement
located at: http//www.woodward.com) and shall have given each Purchaser prior
notice of such availability on EDGAR and on its home page in connection with
each delivery (such availability and notice thereof being referred to as
“Electronic Delivery”);
(b) Annual Statements — within 100 days (or such shorter period as is 15 days
greater than the period applicable to the filing of the Company’s Annual Report
on Form 10-K (the “Form 10-K”) with the SEC regardless of whether the Company is
subject to the filing requirements thereof) after the end of each fiscal year of
the Company, duplicate copies of
(i) a consolidated balance sheet of the Company and its Subsidiaries as at the
end of such year, and
(ii) consolidated statements of earnings, shareholders’ equity and cash flows of
the Company and its Subsidiaries for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances, provided that
the delivery within the time period specified above of the Company’s Form 10-K
for such fiscal year (together with the Company’s annual report to shareholders,
if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in all
material respects in accordance with the requirements therefor and filed with
the SEC shall be deemed to satisfy the requirements of this Section 7.1(b),
provided, further, that the Company shall be deemed to have made such delivery
of such Form 10-K if it shall have timely made Electronic Delivery thereof;

 

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(c) SEC and Other Reports — promptly upon their becoming available, one copy of
(i) each financial statement, report, notice or proxy statement sent by the
Company or any Subsidiary to its public securities holders generally, and
(ii) each regular or periodic report, each registration statement (other than a
registration statement on Form S-8 and without exhibits except as expressly
requested by such holder), and each prospectus and all amendments thereto filed
by the Company or any Subsidiary with the SEC and of all press releases and
other statements made available generally by the Company or any Subsidiary to
the public concerning developments that are Material;
(d) Notice of Default or Event of Default — promptly, and in any event within
five days after a Responsible Officer becoming aware of the existence of any
Default or Event of Default or that any Person has given any written notice or
taken any action with respect to a claimed Default hereunder or that any Person
has given any notice or taken any action with respect to a claimed default of
the type referred to in Section 11(f), a written notice specifying the nature
and period of existence thereof and what action the Company is taking or
proposes to take with respect thereto;
(e) ERISA Matters — promptly, and in any event within five Business Days after a
Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan subject to Title IV of ERISA, any reportable event,
as defined in section 4043(c) of ERISA and the regulations thereunder, for which
notice thereof has not been waived pursuant to such regulations as in effect on
the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the threatening by the
PBGC of the institution of, proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from a Multi-employer
Plan that such action has been taken by the PBGC with respect to such
Multi-employer Plan; or

 

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(iii) any event, transaction or condition that could result in the incurrence of
any liability by the Company or any ERISA Affiliate for failure to comply with
the provisions of Title I of ERISA or pursuant to Title IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee benefit plans
(as defined in Section 3 of ERISA), or in the imposition of any Lien on any of
the rights, properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions, if such
liability or Lien, taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material Adverse Effect;
(f) Notices from Governmental Authority — promptly, and in any event within 30
days of receipt thereof, copies of any written notice to the Company or any
Subsidiary from any Federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect;
(g) Major Credit Facility — substantially concurrent with the transmission
thereof, copies (unless otherwise delivered pursuant to the other provisions of
this Section 7.1) of all financial statements, notices, reports and other
information given by or on behalf of the Company or any of its Subsidiaries to
the financial institutions party to any Major Credit Facility (excluding routine
matters such as borrowing requests); and
(h) Requested Information — with reasonable promptness, such other data and
information relating to the business, operations, affairs, financial condition,
assets or properties of the Company or any of its Subsidiaries (including, but
without limitation, actual copies of the Company’s Form 10-Q and Form 10-K) or
relating to the ability of the Company to perform its obligations hereunder and
under the Notes as from time to time may be reasonably requested by any such
holder of Notes.
7.2. Officer’s Certificate.
Each set of financial statements delivered to a holder of Notes pursuant to
Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a
Senior Financial Officer setting forth (which, in the case of Electronic
Delivery of any such financial statements, shall be by separate concurrent
delivery of such certificate to each holder of Notes):
(a) Covenant Compliance — the information (including detailed calculations)
required in order to establish whether the Company was in compliance with the
requirements of Section 10.3, and Section 10.6 through Section 10.11, inclusive,
during the quarterly or annual period covered by the statements then being
furnished (including with respect to each such Section, where applicable, the
calculations of the maximum or minimum amount, ratio or percentage, as the case
may be, permissible under the terms of such Sections, and the calculation of the
amount, ratio or percentage in existence as of the end of such period); and
(b) Event of Default — a statement that such Senior Financial Officer has
reviewed the relevant terms hereof and has made, or caused to be made, under his
or her supervision, a review of the transactions and conditions of the Company
and its Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the certificate
and that such review shall not have disclosed the existence during such period
of any condition or event that constitutes a Default or an Event of Default or,
if any such condition or event existed or exists, specifying the nature and
period of existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.

 

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7.3. Visitation.
The Company shall permit the representatives of each holder of Notes that is an
Institutional Investor:
(a) No Default — if no Default or Event of Default then exists, at the expense
of such holder and upon reasonable prior notice to the Company, to visit the
principal executive office of the Company, to discuss the affairs, finances and
accounts of the Company and its Subsidiaries with the Company’s officers, and
(with the consent of the Company, which consent will not be unreasonably
withheld) its independent public accountants, and (with the consent of the
Company, which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in writing; and
(b) Default — if a Default or Event of Default then exists, at the expense of
the Company to visit and inspect any of the offices or properties of the Company
or any Subsidiary, to examine all their respective books of account, records,
reports and other papers, to make copies and extracts therefrom, and to discuss
their respective affairs, finances and accounts with their respective officers
and independent public accountants (and by this provision the Company authorizes
said accountants to discuss the affairs, finances and accounts of the Company
and its Subsidiaries), all at such times and as often as may be requested.
8. PAYMENT AND PREPAYMENT OF THE NOTES.
8.1. Maturity.
(a) Series B Notes. As provided therein, the entire unpaid principal balance of
the Series B Notes shall be due and payable on October 1, 2013.
(b) Series C Notes. As provided therein, the entire unpaid principal balance of
the Series C Notes shall be due and payable on October 1, 2015.
(c) Series D Notes. As provided therein, the entire unpaid principal balance of
the Series D Notes shall be due and payable on October 1, 2018.

 

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8.2. Optional Prepayments with Make-Whole Amount.
The Company may, at its option, upon notice as provided below, prepay at any
time all, or from time to time any part of, the Notes of any Series (but, in the
case of a partial prepayment, in an amount not less than $1,000,000 of the
aggregate principal amount of the Notes then outstanding), at 100% of the
principal amount so prepaid, together with the interest so accrued to the date
of prepayment, plus the Make-Whole Amount determined for the prepayment date
with respect to such principal amount; provided, however, that the Company may
prepay all or any part of any Series (rather than all or any part of all Series)
of Notes only so long as (a) no Default or Event of Default shall have occurred
and be continuing and (b) such prepayment is not in connection with any
solicitation by the Company of any consent, waiver, amendment or other similar
transaction from any holder of Notes pursuant to Section 17. The Company will
give each holder of Notes written notice of each optional prepayment under this
Section 8.2 not less than 30 days and not more than 60 days prior to the date
fixed for such prepayment. Each such notice shall specify such date (which shall
be a Business Day), the aggregate principal amount of the Notes, designated by
Series, if applicable, to be prepaid on such date, the principal amount of each
Note held by such holder to be prepaid (determined in accordance with
Section 8.5), and the interest to be paid on the prepayment date with respect to
such principal amount being prepaid, and shall be accompanied by a certificate
of a Senior Financial Officer as to the estimated Make-Whole Amount due with
respect to each Series of Notes in connection with such prepayment (calculated
as if the date of such notice were the date of the prepayment), setting forth in
each case the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount
with respect to each Series of Notes as of the specified prepayment date.
8.3. Prepayment Upon Change of Control.
(a) Notice of Change of Control or Control Event; Offer to Prepay if Change of
Control has Occurred. The Company will, within five (5) Business Days after any
Responsible Officer has knowledge of the occurrence of any Change of Control or
Control Event, give written notice of such Change of Control or Control Event to
each holder of Notes. If a Change of Control has occurred, such notice shall
contain and constitute an offer to prepay Notes as described in clause (b) of
this Section 8.3 and shall be accompanied by the certificate described in clause
(e) of this Section 8.3.
(b) Offer to Prepay; Time for Payment. The offer to prepay Notes contemplated by
clause (a) of this Section 8.3 shall be an offer to prepay, in accordance with
and subject to this Section 8.3, all, but not less than all, of the Notes held
by each holder (in the case of this Section 8.3 only, “holder” in respect of any
Note registered in the name of a nominee for a disclosed beneficial owner shall
mean such beneficial owner) on a date specified in such offer (the “Proposed
Prepayment Date”). The Proposed Prepayment Date shall not be less than thirty
(30) days and not more than sixty (60) days after the date of such offer (if the
Proposed Prepayment Date shall not be specified in such offer, the Proposed
Prepayment Date shall be the forty-fifth (45th) day after the date of such
offer).
(c) Acceptance; Rejection. A holder of Notes may accept the offer to prepay made
pursuant to this Section 8.3 by causing a notice of such acceptance to be
delivered to the Company at least ten (10) calendar days prior to the Proposed
Prepayment Date. A failure by a holder of Notes to respond to an offer to prepay
made pursuant to this Section 8.3, or to accept an offer as to all of the Notes
held by the holder, within such time period, shall be deemed to constitute a
rejection of such offer by such holder.

 

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(d) Prepayment. Prepayment of the Notes to be prepaid pursuant to this Section
8.3 shall be at 100% of the principal amount of such Notes together with
interest on such Notes accrued to the date of prepayment, but without payment of
the Make-Whole Amount or any premium. The prepayment shall be made on the
Proposed Prepayment Date, except as provided in paragraph (e) of this
Section 8.3.
(e) Deferral Pending Change of Control. The obligation of the Company to prepay
Notes pursuant to the offers required by paragraph (b) and accepted in
accordance with paragraph (d) of this Section 8.3 is subject to the occurrence
of the Change of Control in respect of which such offers and acceptances shall
have been made. In the event that such Change of Control does not occur on the
Proposed Prepayment Date in respect thereof, the prepayment shall be deferred
until and shall be made on the date on which such Change of Controls occurs. The
Company shall keep each holder of Notes reasonably and timely informed of (i)
any such deferral of the date of prepayment, (ii) the date on which such Change
of Control and the prepayment are expected to occur, and (iii) any determination
by the Company that efforts to effect such Change of Control have ceased or been
abandoned (in which case the offers and acceptances made pursuant to this
Section 8.3 in respect of such Change of Control shall be deemed rescinded).
(f) Officer’s Certificate. Each offer to prepay the Notes pursuant to this
Section 8.3 shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date, (ii) that such offer is made pursuant to this
Section 8.3, (iii) that the entire principal amount of each Note is offered to
be prepaid without any Make-Whole Amount, (iv) the interest that would be due on
each Note offered to be prepaid, accrued to the Proposed Prepayment Date,
(v) that the conditions of this Section 8.3 required to be fulfilled prior to
the giving of such notice have been fulfilled and (vi) in reasonable detail, the
nature and date or proposed date of the Change of Control.
8.4. Prepayment in Connection with an Asset Disposition.
(a) Notice and Offer. In the event any Debt Prepayment Application is to be used
at the election of the Company to make an offer (a “Transfer Prepayment Offer”)
to prepay Notes pursuant to Section 10.3 of this Agreement (a “Debt Prepayment
Transfer”), the Company will give written notice of such Debt Prepayment
Transfer to each holder of Notes. Such written notice shall contain, and such
written notice shall constitute, an irrevocable offer to prepay, at the election
of each holder, a portion of the Notes held by such holder equal to such
holder’s Ratable Portion of the Net Proceeds Amount in respect of such Debt
Prepayment Transfer on a date specified in such notice (the “Transfer Prepayment
Date”) that is not less than thirty (30) days and not more than sixty (60) days
after the date of such notice, together with interest on the amount to be so
prepaid accrued to the Transfer Prepayment Date. If the Transfer Prepayment Date
shall not be specified in such notice, the Transfer Prepayment Date shall be the
forty-fifth (45th) day after the date of such notice.

 

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(b) Acceptance and Payment. To accept such Transfer Prepayment Offer, a holder
of Notes shall cause a notice of such acceptance to be delivered to the Company
not later than twenty (20) days after the date of such written notice from the
Company, provided, that failure to accept such offer in writing within twenty
(20) days after the date of such written notice shall be deemed to constitute a
rejection of the Transfer Prepayment Offer. If so accepted by any holder of a
Note, such offered prepayment (equal to such holder’s Ratable Portion of the Net
Proceeds Amount in respect of such Debt Prepayment Transfer) shall be due and
payable on the Transfer Prepayment Date. Such offered prepayment shall be made
at 100% of the principal amount of such Notes being so prepaid, together with
interest on such principal amount then being prepaid accrued to the Transfer
Prepayment Date determined as of the date of such prepayment. The prepayment
shall be made on the Transfer Prepayment Date.
(c) Other Terms. Each offer to prepay the Notes pursuant to this Section 8.4
shall be accompanied by a certificate, executed by a Senior Financial Officer of
the Company and dated the date of such offer, specifying (i) the Transfer
Prepayment Date, (ii) the Net Proceeds Amount in respect of the applicable Debt
Prepayment Transfer, (iii) that such offer is being made pursuant to this
Section 8.4 and Section 10.10 of this Agreement, (iv) the principal amount of
each Note offered to be prepaid, (v) the interest that would be due on each Note
offered to be prepaid, accrued to the Transfer Prepayment Date and (vi) in
reasonable detail, the nature of the Asset Disposition giving rise to such Debt
Prepayment Transfer and certifying that no Default or Event of Default exists or
would exist after giving effect to the prepayment contemplated by such offer.
8.5. Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes pursuant to Section 8.2, the
principal amount of the Notes to be prepaid shall be allocated among all of the
Notes of the Series to be prepaid at the time outstanding in proportion, as
nearly as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment; provided that, to the extent a Default or
Event of Default has occurred and is continuing or such prepayment is in
connection with any solicitation by the Company of any consent, waiver,
amendment or similar transaction from any holder of Notes pursuant to
Section 17, any such partial prepayment of Notes shall be allocated among all of
the Notes without regard to Series.
8.6. Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment (which shall be a Business Day),
together with interest on such principal amount accrued to such date and, in the
case of Section 8.2, the applicable Make-Whole Amount, if any. From and after
such date, unless the Company shall fail to pay such principal amount when so
due and payable, together with the interest and Make-Whole Amount, if any, as
aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and cancelled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.

 

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8.7. Purchase of Notes.
The Company will not and will not permit any Affiliate to purchase, redeem,
prepay or otherwise acquire, directly or indirectly, any of the outstanding
Notes except (a) upon the payment or prepayment of the Notes in accordance with
the terms of this Agreement and the Notes or (b) pursuant to an offer to
purchase made by the Company or an Affiliate pro rata to the holders of any
Series of Notes at the time outstanding upon the same terms and conditions;
provided that the Company may only make an offer to purchase an individual
Series of Notes (rather than all Notes) so long as no Default or Event of
Default has occurred and is continuing and such prepayment is not in connection
with any solicitation by the Company of any consent, waiver, amendment or
similar transaction from any holder of Notes pursuant to Section 17. Any such
offer shall provide each holder of such Series with sufficient information to
enable it to make an informed decision with respect to such offer, and shall
remain open for at least fifteen (15) Business Days. If the holders of more than
30% of the principal amount of the Notes of such Series then outstanding accept
such offer, the Company shall promptly notify the remaining holders of such
Series of such fact and the expiration date of such offer shall be extended by
the number of days necessary to give each such remaining holder at least five
(5) Business Days from its receipt of such notice to accept such offer. The
Company will promptly cancel all Notes acquired by it or any Affiliate pursuant
to any payment, prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or exchange for any
such Notes.
8.8. Make-Whole Amount.
“Make-Whole Amount” means, with respect to any Note of any Series, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note of such Series over
the amount of such Called Principal, provided that the Make-Whole Amount may in
no event be less than zero. For the purposes of determining the Make-Whole
Amount, the following terms have the following meanings:
“Called Principal” means, with respect to any Note of any Series, the principal
of such Note that is to be prepaid pursuant to Section 8.2 or has become or is
declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.
“Discounted Value” means, with respect to the Called Principal of any Note of
any Series, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on such Series of Notes is payable)
equal to the Reinvestment Yield with respect to such Called Principal.

 

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“Reinvestment Yield” means, with respect to the Called Principal of any Note of
any Series, 0.50% over the yield to maturity implied by (i) the yields reported
as of 10:00 a.m. (New York City time) on the second Business Day preceding the
Settlement Date with respect to such Called Principal, on the display designated
as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg
Financial Services Screen for the most recently issued actively traded on the
run U.S. Treasury securities having a maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date, or (ii) if such yields
are not reported as of such time or the yields reported as of such time are not
ascertainable (including by way of interpolation), the Treasury Constant
Maturity Series Yields reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release
H.15 (or any comparable successor publication) for U.S. Treasury securities
having a constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date.
In the case of each determination under clause (i) or clause (ii), as the case
may be, of the preceding paragraph, such implied yield will be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond equivalent
yields in accordance with accepted financial practice and (b) interpolating
linearly between (1) the applicable U.S. Treasury security with the maturity
closest to and greater than such Remaining Average Life and (2) the applicable
U.S. Treasury security with the maturity closest to and less than such Remaining
Average Life. The Reinvestment Yield shall be rounded to the number of decimal
places as appears in the interest rate of the applicable Series of Notes.
“Remaining Average Life” means, with respect to any Called Principal, the number
of years (calculated to the nearest one-twelfth year) obtained by dividing
(i) such Called Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
“Remaining Scheduled Payments” means, with respect to the Called Principal of
any Note of any Series, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is not a date on which
interest payments are due to be made under the terms of the Notes of such
Series, then the amount of the next succeeding scheduled interest payment will
be reduced by the amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to Section 8.2 or
Section 12.1.
“Settlement Date” means, with respect to the Called Principal of any Note, the
date on which such Called Principal is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.

 

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9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
9.1. Compliance with Law.
Without limiting Section 10.5, the Company will, and will cause each of its
Subsidiaries to, comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
ERISA, the USA Patriot Act and Environmental Laws, and will obtain and maintain
in effect all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case, to the extent
necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.2. Insurance.
The Company will, and will cause each of its Subsidiaries to, maintain, with
financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated.
9.3. Maintenance of Properties.
The Company will, and will cause each of its Subsidiaries to, maintain and keep,
or cause to be maintained and kept, their respective properties in good repair,
working order and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly conducted at all
times, provided that this Section 9.3 shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
9.4. Payment of Taxes and Claims.
The Company will, and will cause each of its Subsidiaries to, file all tax
returns required to be filed in any jurisdiction and to pay and discharge all
taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent the same have become due
and payable and before they have become delinquent and all claims for which sums
have become due and payable that have or might become a Lien on properties or
assets of the Company or any Subsidiary, provided that neither the Company nor
any Subsidiary need pay any such tax, assessment, charge, levy or claim if
(i) the amount, applicability or validity thereof is contested by the Company or
such Subsidiary on a timely basis in good faith and in appropriate proceedings,
and the Company or a Subsidiary has established adequate reserves therefor in
accordance with GAAP on the books of the Company or such Subsidiary or (ii) the
nonpayment of all such taxes, assessments, charges and levies in the aggregate
could not reasonably be expected to have a Material Adverse Effect.

 

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9.5. Corporate Existence, etc.
Subject to Section 10.2, the Company will at all times preserve and keep in full
force and effect its corporate existence. Subject to Sections 10.2 and 10.3, the
Company will at all times preserve and keep in full force and effect the
corporate existence of each of its Subsidiaries (unless merged into the Company
or a Wholly-Owned Subsidiary) and all rights and franchises of the Company and
its Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.
9.6. Books and Records.
The Company will, and will cause each of its Subsidiaries to, maintain proper
books of record and account in conformity with GAAP and all applicable
requirements of any Governmental Authority having legal or regulatory
jurisdiction over the Company or such Subsidiary, as the case may be.
9.7. Ranking of Obligations.
The Company will ensure that its payment obligations under this Agreement and
the Notes will at all times rank at least pari passu, without preference or
priority, with all other unsecured unsubordinated Indebtedness of the Company.
The Company will ensure that each Guarantor’s payment obligations under the
Guaranty Agreement will at all times rank at least pari passu, without
preference or priority, with all other unsecured unsubordinated Indebtedness of
such Guarantor.
9.8. Guaranty by Subsidiaries; Liens.
(a) If at any time, pursuant to the terms and conditions of any Major Credit
Facility, any existing or newly acquired or formed Subsidiary of the Company
becomes obligated as a guarantor or obligor under such Major Credit Facility,
the Company will, at its sole cost and expense, cause such Subsidiary to
concurrently therewith become a Guarantor in respect of this Agreement and the
Notes, and within ten (10) Business Days thereafter will deliver to each of the
holders of the Notes the following items:
(i) an executed supplement to the Guaranty Agreement in the form of Exhibit A
thereto (a “Guaranty Supplement”);
(ii) such documents and evidence with respect to such Subsidiary as the Required
Holders may reasonably request in order to establish the existence and good
standing of such Subsidiary and the authorization of the transactions
contemplated by such Guaranty Supplement; and
(iii) an opinion of counsel to the Company and such Subsidiary in form and
substance satisfactory to the Required Holders to the effect that (x) such
Guaranty Supplement has been duly authorized, executed and delivered by such
Subsidiary, (y) the Guaranty Agreement as supplemented by such Guaranty
Supplement constitutes the legal, valid and binding contract and agreement of
such Subsidiary, enforceable in accordance with its terms (except as enforcement
of such terms may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles) and (z) the
execution, delivery and performance by such Subsidiary of such Guaranty
Supplement do not (A) violate any law, rule or regulation applicable to such
Subsidiary, or (B) (1) conflict with or result in any breach of any of the
provisions of or constitute a default under or result in the creation or
imposition of any Lien not permitted by Section 10.6 or (2) conflict with or
result in any breach of any of the provisions of or constitute a default under
(I) the provisions of the charter, bylaws, certificate of formation, operating
agreement or other constitutive documents of such Subsidiary, or (II) any
agreement or other instrument to which such Subsidiary is a party or by which
such Subsidiary may be bound;

 

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provided, that notwithstanding anything contained in this Section 9.8(a) to the
contrary, the Company shall be under no obligation to (but may in its sole
discretion) require any Foreign Subsidiary to become a Guarantor in respect of
this Agreement and the Notes to the extent such Foreign Subsidiary’s obligations
under all Major Credit Facilities consist solely of direct borrowings solely to
such Foreign Subsidiary (a “Foreign Borrowing”) or guaranties of a Foreign
Borrowing by another Foreign Subsidiary.
(b) If at any time, pursuant to the terms and conditions of all of the Major
Credit Facilities, any Guarantor is discharged and released from its Guaranty of
Indebtedness under all of the Major Credit Facilities and (i) such Guarantor is
not a co-obligor under any of the Major Credit Facilities and (ii) the Company
will have delivered to each holder of Notes an Officer’s Certificate certifying
that (x) the condition specified in clause (i) above has been satisfied and
(y) immediately preceding the release of such Guarantor from the Guaranty
Agreement and after giving effect thereto, no Default or Event of Default will
have existed or would exist, then, upon receipt by the holders of Notes of such
Officer’s Certificate, such Guarantor will be discharged and released,
automatically and without the need for any further action, from its obligations
under the Guaranty Agreement; provided that, if in connection with any release
of a Guarantor from its Guaranty of Indebtedness under any Major Credit Facility
any fee or other consideration (excluding, for the avoidance of doubt, any
repayment of the principal or interest under any Major Credit Facility in
connection with such release) is paid or given to any holder of Indebtedness
under such Major Credit Facility in connection with such release, each holder of
a Note shall receive equivalent consideration on a pro rata basis in connection
with such Guarantor’s release from the Guaranty Agreement. Without limiting the
foregoing, for purposes of further assurance, each of the holders of the Notes
agrees to provide to the Company and such Guarantor, if reasonably requested by
the Company or such Guarantor and at the Company’s expense, written evidence of
such discharge and release signed by such holder.
(c) If at any time, pursuant to the terms and conditions of any other Major
Credit Facility, the Company or any of its Subsidiaries are required to or elect
to grant Liens on any of their assets to secure the Indebtedness evidenced by
such Major Credit Facility, the Company will, at its sole cost and expense,
grant, or cause such Subsidiary to grant, Liens on such assets in favor of the
holders of the Notes (or in favor of a collateral agent reasonably acceptable to
the Required Holders for the benefit of the holders of the Notes), and within
ten (10) Business Days thereafter will deliver to each of the holders of the
Notes the following items:
(i) such security documents as the Required Holders deem reasonably necessary or
advisable to grant to the holders of Notes (or such collateral agent for the
benefit of the holders of Notes) a perfected first priority security interest to
(or for the benefit of) the holders of Notes;

 

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(ii) such documents and evidence with respect to such Liens as the Required
Holders may reasonably request in order to establish the existence and priority
of such Liens and the authorization of the transactions contemplated by such
security documents; and
(iii) an opinion of counsel to the Company or such Subsidiary in form and
substance satisfactory to the Required Holders to the effect that (x) such
security documents have been duly authorized, executed and delivered by the
Company or such Subsidiary, (y) such security documents constitute the legal,
valid and binding contract and agreement of the Company or such Subsidiary,
enforceable in accordance with their terms (except as enforcement of such terms
may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and similar laws affecting the enforcement of creditors’ rights
generally and by general equitable principles) and (z) the execution, delivery
and performance by the Company or such Subsidiary of such security documents do
not violate (A) any law, rule or regulation applicable to the Company or such
Subsidiary, or (B)(1) conflict with or result in any breach of any of the
provisions of or constitute a default under or result in the creation or
imposition of any Lien not permitted by Section 10.6 or (2) conflict with or
result in any breach of any of the provisions of or constitute a default under
(I) the provisions of the charter, bylaws, certificate of formation, operating
agreement or other constitutive documents of the Company or such Subsidiary, or
(II) any agreement or other instrument to which the Company or such Subsidiary
is a party or by which such Subsidiary may be bound;
(d) If at any time, pursuant to the terms and conditions of any Major Credit
Facility, Liens granted by the Company or any Subsidiary are released under all
of the Major Credit Facilities and the Company will have delivered to each
holder of Notes an Officer’s Certificate certifying that immediately preceding
the release of such Liens and after giving effect thereto, no Default or Event
of Default will have existed or would exist, then, upon receipt by the holders
of Notes of such Officer’s Certificate, such Liens in favor of the holders of
Notes will be discharged and released, automatically and without the need for
any further action; provided that, if in connection with any release of such
Liens under any Major Credit Facility any fee or other consideration (excluding,
for the avoidance of doubt, any repayment of the principal or interest under any
Major Credit Facility in connection with such release) is paid or given to any
holder of Indebtedness under such Major Credit Facility in connection with such
release, each holder of a Note shall receive equivalent consideration on a pro
rata basis in connection with such release of Liens securing the Indebtedness
evidenced by this Agreement and the Notes. Without limiting the foregoing, for
purposes of further assurance, each of the holders of the Notes agrees to
provide to the Company, if reasonably requested by the Company and at the
Company’s expense, written evidence of such discharge and release signed by such
holder (or the collateral agent appointed by the holders of Notes).

 

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9.9. Intercreditor Agreement.
If at any time, pursuant to the terms and conditions of any Major Credit
Facility, (a) Subsidiaries of the Company are required to provide a Guaranty of
the Company’s Indebtedness under such Major Credit Facility and such
Subsidiaries are required to become a Guarantor in respect of this Agreement and
the Notes or (b) the Company or any of its Subsidiaries are required to grant
Liens on any of their assets to secure the Indebtedness evidenced by any Major
Credit Facility, and the Company or such Subsidiaries are required to grant
Liens to secure the Indebtedness evidenced by this Agreement and the Notes, then
the Company will, concurrently with the execution thereof or the granting of
such Guaranties and/or Liens, cause the lenders under such Major Credit Facility
to enter into, and the holders of Notes hereby agree to enter into, an
intercreditor agreement in form and substance (including, without limitation, as
to the sharing of recoveries and set offs) reasonably satisfactory to the
Required Holders (the “Intercreditor Agreement”) with the holders of Notes, or
enter into a joinder agreement to such Intercreditor Agreement in form and
substance reasonably satisfactory to the Required Holders (it being acknowledged
and agreed that the form of Amended and Restated Intercreditor Agreement being
entered into on October 1, 2008 is in form and substance satisfactory to the
Required Holders with respect to the granting of Guaranties). Within ten
(10) Business Days following the execution of any such Intercreditor Agreement
(or any joinder thereto), the Company will deliver an executed copy thereof to
each holder of Notes.
10. NEGATIVE COVENANTS.

     
The Company covenants that so long as any of the Notes are outstanding:
   
10.1. Transactions with Affiliates.

The Company will not and will not permit any Subsidiary to enter into directly
or indirectly any Material transaction or group of related Material transactions
(including without limitation the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Subsidiary), except in the ordinary course
and pursuant to the reasonable requirements of the Company’s or such
Subsidiary’s business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would be obtainable in a comparable
arm’s-length transaction with a Person not an Affiliate.

 

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10.2. Merger, Consolidation, etc.
The Company will not, and will not permit any of its Subsidiaries to,
consolidate with or merge with any other Person or convey, transfer or lease all
or substantially all of its assets in a single transaction or series of
transactions to any Person (except that, so long as no Default or Event of
Default exists or would result therefrom, a Subsidiary of the Company may
(x) consolidate with or merge with, or convey, transfer or lease all or
substantially all of its assets in a single transaction or series of
transactions to, the Company or another Subsidiary, so long as in each case
involving a Guarantor, the survivor of such merger or consolidation or the
transferee of such assets shall have assumed such Guarantor’s obligations under
the Guaranty Agreement (and to the extent the Guarantor is not the survivor or
transferee, the Company shall cause the successor thereto to comply with clauses
(a) and (b) of this Section 10.2 as if the Successor Company (as defined below)
were the successor to such Guarantor) and (y) convey, transfer or lease all of
its assets in compliance with the provisions of Section 10.3), provided that the
foregoing restriction does not apply to the consolidation or merger of the
Company with, or the conveyance, transfer or lease of substantially all of the
assets of the Company in a single transaction or series of transactions to, any
Person so long as:
(a) the successor formed by such consolidation or the survivor of such merger or
the Person that acquires by conveyance, transfer or lease all or substantially
all of the assets of the Company as an entirety, as the case may be (the
“Successor Company”), will be a solvent corporation or limited liability company
organized and existing under the laws of the United States of America, any State
thereof or the District of Columbia;
(b) if the Company is not the Successor Company, such Successor Company will
have executed and delivered to each holder of Notes its assumption of the due
and punctual performance and observance of each covenant and condition of this
Agreement and the Notes (pursuant to such agreements and instruments as shall be
reasonably satisfactory to the Required Holders), and the Company will have
caused to be delivered to each holder of Notes an opinion of nationally
recognized independent counsel, or other independent counsel reasonably
satisfactory to the Required Holders, to the effect that all agreements or
instruments effecting such assumption are enforceable in accordance with their
terms (except as enforcement of such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles);
(c) immediately after giving effect to such transaction:
(i) no Default or Event of Default would exist, and
(ii) the Successor Company would be permitted by the provisions of Section 10.8
hereof to incur at least $1.00 of additional Indebtedness (determined on a pro
forma basis based upon EBITDA for the four (4) fiscal quarter period most
recently ended for which financial statements have been provided to holders of
Notes); and
(d) each Guarantor confirms in writing its obligations under and pursuant to the
Guaranty Agreement;
provided, however, that no such conveyance, transfer or lease of all or
substantially all of the assets of the Company will have the effect of releasing
the Company (or any Successor Company) from its liability under this Agreement
or the Notes, or of releasing any Guarantor (or any successor) from its
liability under the Guaranty Agreement.

 

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10.3. Sale of Assets.
Except as permitted under Section 10.2, the Company will not, and will not
permit any of its Subsidiaries to, make any Asset Disposition unless:
(a) in the good faith opinion of the Company, the Asset Disposition is in
exchange for consideration having a Fair Market Value at least equal to that of
the property exchanged and is in the best interest of the Company or such
Subsidiary; and
(b) immediately after giving effect to the Asset Disposition, no Default or
Event of Default would exist and the Company would be permitted by the
provisions of Section 10.8 hereof to incur at least $1.00 of additional
Indebtedness (determined on a pro forma basis based upon EBITDA for the four
(4) fiscal quarter period most recently ended for which financial statements
have been provided to holders of Notes); and
(c) immediately after giving effect to the Asset Disposition, the Disposition
Value of all property that was the subject of any Asset Disposition occurring
during the then current fiscal year of the Company, would not exceed an amount
equal to 15% of Consolidated Total Assets determined as of the end of the then
most recently ended fiscal year of the Company.
If the Net Proceeds Amount from any Transfer is applied to a Debt Prepayment
Application or a Property Reinvestment Application within 365 days after such
Transfer, then such Transfer, only for the purpose of determining compliance
with subsection (c) of this Section 10.3 as of any date, shall be deemed not to
be an Asset Disposition as of the date of such application.
10.4. Line of Business.
The Company will not and will not permit any Subsidiary to engage in any
business if, as a result, the general nature of the business in which the
Company and its Subsidiaries, taken as a whole, would then be engaged would be
substantially changed from the general nature of the business in which the
Company and its Subsidiaries, taken as a whole, are engaged on the date of this
Agreement as described in the Memorandum.
10.5. Terrorism Sanctions Regulations.
The Company will not and will not permit any Subsidiary (a) to become a Person
described or designated in the Specially Designated Nationals and Blocked
Persons List of the Office of Foreign Assets Control or in Section 1 of the
Anti-Terrorism Order or (b) to the knowledge of the Company, to engage in any
dealings or transactions with any such Person.

 

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10.6. Liens.
The Company will not, and will not permit any of its Subsidiaries to, create,
incur, assume or permit to exist (upon the happening of a contingency or
otherwise) any Lien on or with respect to any property or asset (including,
without limitation, any document or instrument in respect of goods or accounts
receivable) of the Company or any such Subsidiary, whether now owned or held or
hereafter acquired, or any income or profits therefrom, except:
(a) Permitted Liens; and
(b) Liens in addition to those permitted by clause (a) of this Section 10.6,
provided that at the time of incurrence of such other Liens and after giving
effect thereto, (i) the total amount of Indebtedness secured by Liens pursuant
to this clause (b) at no time exceeds an amount equal to 15% of Consolidated Net
Worth and (ii) the Company is in compliance with the terms of Section 10.9.
10.7. Minimum Consolidated Net Worth.
The Company will not permit its Consolidated Net Worth at any time to be less
than the sum of (a) $425,000,000 plus (b) an aggregate amount equal to 50% of
its Consolidated Net Earnings (but, in each case, only if a positive number) for
each completed fiscal year beginning with the fiscal year ending September 30,
2008.
10.8. Maximum Leverage Ratio.
The Company and its consolidated Subsidiaries will not permit the ratio (the
“Leverage Ratio”) of (a) Net Indebtedness to (b) EBITDA to be greater than
(x) 4.0 to 1.0 during any Material Acquisition Period or (y) 3.5 to 1.0 at any
other time. The Leverage Ratio will be calculated, in each case, determined as
of the last day of each fiscal quarter of the Company based upon (i) for Net
Indebtedness, Net Indebtedness as of the last day of such fiscal quarter; and
(ii) for EBITDA, the actual amount for the four (4) fiscal quarter period ending
on such date.
10.9. Priority Debt.
The Company will not at any time permit Priority Debt to exceed 20% of
Consolidated Net Worth (determined as of the then most recently ended fiscal
quarter of the Company).
10.10. Subsidiary Debt.
The Company will not at any time permit any Subsidiary to, create, incur,
assume, guaranty, permit to exist or otherwise become or remain directly or
indirectly liable with respect to any Indebtedness other than:
(a) Indebtedness of a Subsidiary outstanding on the date of this Agreement
described on Schedule 5.15 and any extension, renewal or refunding thereof if
the principal amount thereof is not increased in connection with such extension,
renewal or refunding;
(b) Indebtedness of a Subsidiary owed to the Company or a Wholly-Owned
Subsidiary;

 

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(c) Guaranties by a Subsidiary of Indebtedness of another Subsidiary that is
otherwise permitted under the terms of this Agreement;
(d) Indebtedness evidenced by (i) any Guaranty Agreement (as the same may be
supplemented from time to time by any Guaranty Supplement) or (ii) any Guaranty
of any Major Credit Facility so long as such Subsidiary has executed and
delivered a Guaranty Agreement and the Company has complied with the provisions
of Section 9.8 and Section 9.9;
(e) Indebtedness of a Subsidiary in connection with a Permitted Receivables
Securitization program permitted pursuant to Section 10.11;
(f) Indebtedness of a Subsidiary outstanding at the time such Subsidiary becomes
a Subsidiary provided that (i) such Indebtedness shall not have been incurred in
contemplation of such Subsidiary becoming a Subsidiary and (ii) immediately
after such Subsidiary becomes a Subsidiary no Default or Event of Default shall
exist, and provided, further, that such Indebtedness may not be extended,
renewed or refunded except as otherwise permitted by this Agreement; and
(g) additional Indebtedness of a Subsidiary; provided that on the date the
Subsidiary incurs or otherwise becomes liable with respect to any such
additional Indebtedness and immediately after giving effect thereto and to the
application of the proceeds thereof,
(i) no Default or Event of Default shall exist;
(ii) such Indebtedness can be incurred within the applicable limitations
provided in Sections 10.8 and 10.9; and
(iii) the total amount of all Indebtedness permitted under this Section 10.10(g)
at no time exceeds an amount equal to 20% of Consolidated Net Worth.
10.11. Permitted Receivables Securitization Program.
The Company will not, and will not permit any Subsidiary to, sell any
Securitization Assets pursuant to a Permitted Receivables Securitization program
or otherwise unless (a) immediately before and after giving effect to such sale,
no Default or Event of Default exists, (b) after giving effect to such sale, the
aggregate outstanding face amount of Securitization Assets sold by the Company
or a Subsidiary pursuant to a Permitted Receivables Securitization program does
not exceed an amount equal to 15% of Consolidated Total Assets (determined as of
the then most recently ended fiscal quarter of the Company) and (c) immediately
after the giving effect to such sale, the Company would be permitted by the
provisions of Section 10.8 hereof to incur at least $1.00 of additional
Indebtedness (determined on a pro forma basis based upon EBITDA for the four
(4) fiscal quarter period most recently ended for which financial statements
have been provided to holders of Notes).
11. EVENTS OF DEFAULT.
An “Event of Default” shall exist if any of the following conditions or events
shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-Whole Amount,
if any, on any Note or any Guarantor defaults in the payment under the Guaranty
Agreement when the same becomes due and payable, whether at maturity or at a
date fixed for prepayment or by declaration or otherwise; or

 

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(b) the Company defaults in the payment of any interest on any Note for more
than five (5) Business Days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with any term
contained in Section 7.1(d) or Section 10; or
(d) the Company defaults in the performance of or compliance with any term
contained herein (other (x) than those referred to in Sections 11(a), (b) and
(c) and (y) the failure of the Company to consummate the Second Closing in
accordance with the terms of this Agreement) and such default is not remedied
within thirty (30) days after the earlier of (i) a Responsible Officer obtaining
actual knowledge of such default and (ii) the Company receiving written notice
of such default from any holder of a Note (any such written notice to be
identified as a “notice of default” and to refer specifically to this
Section 11(d)); or
(e) any representation or warranty made in writing by or on behalf of the
Company or by any officer of the Company in this Agreement or in any writing
furnished in connection with the transactions contemplated hereby proves to have
been false or incorrect in any material respect on the date as of which made; or
(f) (i) the Company or any Significant Subsidiary is in default (as principal or
as guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Indebtedness that is outstanding in an
aggregate principal amount of at least $25,000,000 beyond any period of grace
provided with respect thereto, or (ii) the Company or any Significant Subsidiary
is in default in the performance of or compliance with any Material Covenant of
any evidence of any Indebtedness in an aggregate outstanding principal amount of
at least $25,000,000, and as a consequence of such default such Indebtedness has
become, or has been declared (or one or more Persons are entitled to declare
such Indebtedness to be), due and payable before its stated maturity or before
its regularly scheduled dates of payment, or (iii) the Company or any
Significant Subsidiary is in default in the performance of or compliance with
any term of any evidence of any Indebtedness in an aggregate outstanding
principal amount of at least $25,000,000 or any mortgage, indenture or other
agreement relating thereto or any other condition exists, and as a consequence
of such default or condition such Indebtedness has become, or has been declared,
due and payable before its stated maturity or before its regularly scheduled
dates of payment, or (iv) as a consequence of the occurrence or continuation of
any event or condition (other than the passage of time or the right of the
holder of Indebtedness to convert such Indebtedness into equity interests),
(x) the Company or any Significant Subsidiary has become obligated to purchase
or repay Indebtedness before its regular maturity or before its regularly
scheduled dates of payment in an aggregate outstanding principal amount of at
least $25,000,000, or (y) one or more Persons have the right to require the
Company or any Significant Subsidiary so to purchase or repay such Indebtedness
as a result of a default in the performance of or compliance with any Material
Covenant by the Company or any Significant Subsidiary; or

 

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(g) the Company or any Significant Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
(h) a court or Governmental Authority of competent jurisdiction enters an order
appointing, without consent by the Company or any of its Significant
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Company or any of its
Significant Subsidiaries, or any such petition shall be filed against the
Company or any of its Significant Subsidiaries and such petition shall not be
dismissed within sixty (60) days; or
(i) a final judgment or judgments for the payment of money aggregating in excess
of $25,000,000 are rendered against one or more of the Company and its
Significant Subsidiaries (except to the extent covered by independent third
party insurance as to which the insurer has acknowledged coverage) and which
judgments are not, within sixty (60) days after entry thereof, bonded,
discharged or stayed pending appeal, or are not discharged within sixty
(60) days after the expiration of such stay; or
(j) if (i) any Plan subject to Title IV of ERISA or Section 412 of the Code
shall fail to satisfy the minimum funding standards of ERISA or the Code for any
plan year or part thereof or a waiver of such standards or extension of any
amortization period is sought or granted under section 412 of the Code, (ii) a
notice of intent to terminate any Plan subject to Title IV of ERISA shall have
been or is reasonably expected to be filed with the PBGC or the PBGC shall have
instituted proceedings under ERISA section 4042 to terminate or appoint a
trustee to administer any Plan or the PBGC shall have notified in writing the
Company or any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate “amount of unfunded benefit liabilities”
(within the meaning of section 4001(a)(18) of ERISA) under all Plans (other than
Multiemployer Plans) subject to Title IV of ERISA, determined in accordance with
Title IV of ERISA, shall exceed $15,000,000, (iv) the Company or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any liability
for the failure to comply with the provisions of Title I of ERISA or pursuant to
Title IV of ERISA or the penalty or excise tax provisions of the Code relating
to employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from
any Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or
amends any employee welfare benefit plan that provides post-employment welfare
benefits in a manner that would increase the liability of the Company or any
Subsidiary thereunder; and any such event or events described in clauses
(i) through (vi) above, either individually or together with any other such
event or events, could reasonably be expected to have a Material Adverse Effect;
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(k) (i) a default shall occur under the Guaranty Agreement and such default
shall continue beyond the period of grace, if any, allowed with respect thereto
or (ii) except as expressly permitted under Section 9.8(b), the Guaranty
Agreement shall cease to be in full force and effect for any reason whatsoever
with respect to one or more Guarantors, including, without limitation, a
determination by any Governmental Authority or court that such agreement is
invalid, void or unenforceable with respect to one or more Guarantors or any
Guarantor shall contest or deny in writing the validity or enforceability of any
of its obligations under the Guaranty Agreement.
As used in Section 11(j), the terms “employee benefit plan” and “employee
welfare benefit plan” shall have the respective meanings assigned to such terms
in section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. Acceleration.
(a) If an Event of Default with respect to the Company or any Guarantor
described in Section 11(g) or (h) (other than an Event of Default described in
clause (i) of Section 11(g) or described in clause (vi) of Section 11(g) by
virtue of the fact that such clause encompasses clause (i) of Section 11(g)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.
(b) If any other Event of Default has occurred and is continuing, the Required
Holders may at any time at their option, by notice or notices to the Company,
declare all the Notes then outstanding to be immediately due and payable.
(c) If any Event of Default described in Section 11(a) or (b) has occurred and
is continuing, any holder or holders of Notes at the time outstanding affected
by such Event of Default may at any time, at its or their option, by notice or
notices to the Company, declare all the Notes held by it or them to be
immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon (including, but not limited to, interest accrued thereon at the Default
Rate upon the occurrence and during the continuance of an Event of Default) and
(y) the applicable Make-Whole Amount, if any, determined in respect of such
principal amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount, if any, by the Company if the Notes are prepaid or are
accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.

 

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12.2. Other Remedies.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
12.3. Rescission.
At any time after any Notes have been declared due and payable pursuant to
Section 12.1(b) or (c), the Required Holders, by written notice to the Company,
may rescind and annul any such declaration and its consequences if (a) the
Company has paid all overdue interest on the Notes, all principal of and
applicable Make-Whole Amount, if any, on any Notes that are due and payable and
are unpaid other than by reason of such declaration, and all interest on such
overdue principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) neither the Company nor any other Person shall have paid any amounts
which have become due solely by reason of such declaration, (c) all Events of
Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to Section 17, and (d) no judgment or decree has been entered for the
payment of any monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.
12.4. No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder’s rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including, without limitation,
reasonable attorneys’ fees, expenses and disbursements.

 

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13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. Registration of Notes.
The Company shall keep at its principal executive office a register for the
registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of a
Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.
13.2. Transfer and Exchange of Notes.
Upon surrender of any Note to the Company at the address and to the attention of
the designated officer (all as specified in Section 18(iii)), for registration
of transfer or exchange (and in the case of a surrender for registration of
transfer accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or such holder’s attorney duly authorized in
writing and accompanied by the relevant name, address and other information for
notices of each transferee of such Note or part thereof), within ten Business
Days thereafter, the Company shall execute and deliver, at the Company’s expense
(except as provided below), one or more new Notes of the same Series (as
requested by the holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note. Each such
new Note shall be payable to such Person as such holder may request and, in the
case of a Series B Note, shall be substantially in the form of Exhibit 1A, in
the case of a Series C Note, shall be substantially in the form of Exhibit 1B,
or, in the case of a Series D Note, shall be substantially in the form of
Exhibit 1C. Each such new Note shall be dated and bear interest from the date to
which interest shall have been paid on the surrendered Note or dated the date of
the surrendered Note if no interest shall have been paid thereon. The Company
may require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $50,000, provided that if necessary to
enable the registration of transfer by a holder of its entire holding of Notes,
one Note may be in a denomination of less than $50,000. Any transferee, by its
acceptance of a Note registered in its name (or the name of its nominee), shall
be deemed to have made the representation set forth in Section 6.3.
The Notes have not been registered under the Securities Act or under the
securities laws of any state and may not be transferred or resold unless
registered under the Securities Act and all applicable state securities laws or
unless an exemption from the requirement for such registration is available.

 

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13.3. Replacement of Notes.
Upon receipt by the Company at the address and to the attention of the
designated officer (all as specified in Section 18(iii)) of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and such
loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or another holder of a Note with a minimum net worth
of at least $50,000,000 or a Qualified Institutional Buyer, such Person’s own
unsecured agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof,
within fifteen (15) Business Days thereafter, the Company at its own expense
shall execute and deliver, in lieu thereof, a new Note of the same Series, dated
and bearing interest from the date to which interest shall have been paid on
such lost, stolen, destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest shall have been paid thereon.
14. PAYMENTS ON NOTES.
14.1. Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, and
interest becoming due and payable on the Notes shall be made in Fort Collins,
Colorado at the principal office of the Company in such jurisdiction. The
Company may at any time, by notice to each holder of a Note, change the place of
payment of the Notes so long as such place of payment shall be either the
principal office of the Company in such jurisdiction or the principal office of
a bank or trust company in such jurisdiction.
14.2. Home Office Payment.
So long as any Purchaser or its nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below such Purchaser’s name in Schedule A, or by such
other commercially reasonable method or at such other address as such Purchaser
shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of any
notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, such Purchaser shall surrender such Note for cancellation, reasonably
promptly after any such request, to the Company at its principal executive
office or at the place of payment most recently designated by the Company
pursuant to Section 14.1. Prior to any sale or other disposition of any Note
held by a Purchaser or its nominee, such Purchaser will, at its election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by a Purchaser under this Agreement
and that has made the same agreement relating to such Note as the Purchasers
have made in this Section 14.2.

 

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15. EXPENSES, ETC.
15.1. Transaction Expenses.
Whether or not the transactions contemplated hereby are consummated, the Company
will pay all costs and expenses (including reasonable attorneys’ fees of a
special counsel and, if reasonably required by the Required Holders, local or
other counsel) incurred by the Purchasers and each other holder of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement, the Guaranty Agreement or the
Notes (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights
under this Agreement, the Guaranty Agreement or the Notes or in responding to
any subpoena or other legal process or informal investigative demand issued in
connection with this Agreement, the Guaranty Agreement or the Notes, or by
reason of being a holder of any Note, (b) the costs and expenses, including
financial advisors’ fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Subsidiary or in connection with any work-out
or restructuring of the transactions contemplated hereby and by the Notes and
(c) the costs and expenses incurred in connection with the initial filing of
this Agreement and all related documents and financial information with the SVO,
provided that such costs and expenses under this clause (c) shall not exceed
$3,000. The Company will pay, and will save each Purchaser and each other holder
of a Note harmless from, all claims in respect of any fees, costs or expenses,
if any, of brokers and finders (other than those, if any, retained by a
Purchaser or other holder in connection with its purchase of the Notes).
In furtherance of the foregoing, on the date hereof and on the date of each
Closing the Company will pay the reasonable fees and disbursements and other
charges (including estimated unposted disbursements and other charges as of such
date) of Purchasers’ special counsel which are reflected in the statement of
such special counsel submitted to the Company at least one Business Day prior to
such date.
15.2. Survival.
The obligations of the Company under this Section 15 will survive the payment or
transfer of any Note, the enforcement, amendment or waiver of any provision of
this Agreement, the Guaranty Agreement or the Notes, and the termination of this
Agreement or the Guaranty Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT; UPDATING
SCHEDULES.
All representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the Notes, the purchase or transfer by any
Purchaser of any Note or portion thereof or interest therein and the payment of
any Note, and may be relied upon by any subsequent holder of a Note, regardless
of any investigation made at any time by or on behalf of such Purchaser or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company or any Guarantor pursuant to
this Agreement shall be deemed representations and warranties of the Company or
such Guarantor under this Agreement. Subject to the preceding sentence, this
Agreement and the Notes embody the entire agreement and understanding between
each Purchaser and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.

 

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Notwithstanding any of the foregoing, at any time during the period commencing
on the date hereof and ending on the Second Closing, the Company may deliver to
the Purchasers updates to Schedule 4.10 (solely with respect to any liabilities
of another entity assumed by the Company since the date hereof) and Schedule 5.4
to this Agreement, each as a result of changes occurring after the date hereof,
in which case the existing Schedules 4.10 and 5.4 shall be deemed to include the
information set forth in such updated Schedules as of the date of such updated
Schedules.
17. AMENDMENT AND WAIVER.
17.1. Requirements.
This Agreement and the Notes may be amended, and the observance of any term
hereof or of the Notes may be waived (either retroactively or prospectively),
with (and only with) the written consent of the Company and the Required
Holders, except that (a) no amendment or waiver of any of the provisions of
Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used
therein), will be effective as to any Purchaser unless consented to by such
Purchaser in writing, and (b) no such amendment or waiver may, without the
written consent of the holder of each Note at the time outstanding affected
thereby, (i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, (iii) amend any of Sections 8, 11(a),
11(b), 12, 17 or 20 or (iv) release any Guarantor from the Guaranty Agreement
(other than in compliance with Section 9.8(b)).
17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, or grant any security or provide other credit support, to any holder
of Notes as consideration for or as an inducement to the entering into by any
holder of Notes of any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security is
concurrently granted or other credit support concurrently provided, on the same
terms, ratably to each holder of Notes then outstanding even if such holder did
not consent to such waiver or amendment.

 

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(c) Consent in Contemplation of Transfer. Any consent made pursuant to this
Section 17 by a holder of Notes that has transferred or has agreed to transfer
its Notes to the Company, any Subsidiary or any Affiliate of the Company and has
provided or has agreed to provide such written consent as a condition to such
transfer shall be void and of no force or effect except solely as to such holder
of Notes, and any amendments effected or waivers granted or to be effected or
granted that would not have been or would not be so effected or granted but for
such consent (and the consents of all other holders of Notes that were acquired
under the same or similar conditions) shall be void and of no force or effect
except solely as to such holder of Notes.
17.3. Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 17 applies
equally to all holders of Notes and is binding upon them and upon each future
holder of any Note and upon the Company without regard to whether such Note has
been marked to indicate such amendment or waiver. No such amendment or waiver
will extend to or affect any obligation, covenant, agreement, Default or Event
of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
“this Agreement” and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
17.4. Notes Held by Company, etc.
Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding approved
or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in writing and
sent (a) by telecopy if the sender on the same day sends a confirming copy of
such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:
(i) if to any Purchaser or its nominee, to such Purchaser or nominee at the
address specified for such communications in Schedule A, or at such other
address as such Purchaser or nominee shall have specified to the Company in
writing,

 

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(ii) if to any other holder of any Note, to such holder at such address as such
other holder shall have specified to the Company in writing, or
(iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of the Chief Financial Officer, or at such
other address as the Company shall have specified to the holder of each Note in
writing.
Notices under this Section 18 will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating hereto, including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed,
(b) documents received by any Purchaser at either Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to any Purchaser, may be reproduced by such
Purchaser by any photographic, photostatic, electronic, digital, or other
similar process and such Purchaser may destroy any original document so
reproduced. The Company agrees and stipulates that, to the extent permitted by
applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by such
Purchaser in the regular course of business) and any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence. This Section 19 shall not prohibit the Company or any other holder of
Notes from contesting any such reproduction to the same extent that it could
contest the original, or from introducing evidence to demonstrate the inaccuracy
of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, “Confidential Information” means
information delivered to any Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Purchaser as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to such Purchaser prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or omission by such
Purchaser or any person acting on such Purchaser’s behalf, (c) otherwise becomes
known to such Purchaser other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to such Purchaser
under Section 7.1 that are otherwise publicly available. Each Purchaser will
maintain the confidentiality of such Confidential Information in accordance with
procedures adopted by such Purchaser in good faith to protect confidential
information of third parties delivered to such Purchaser, provided that such
Purchaser may deliver or disclose Confidential Information to (i) its directors,
officers, employees, agents, attorneys, trustees and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by its Notes), (ii) its financial advisors and other professional
advisors who agree to hold confidential the Confidential Information

 

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substantially in accordance with the terms of this Section 20, (iii) any other
holder of any Note, (iv) any Institutional Investor to which it sells or offers
to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (v) any Person
from which it offers to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (vi) any federal or state
regulatory authority having jurisdiction over such Purchaser, (vii) the NAIC or
the SVO or, in each case, any similar organization, or any nationally recognized
rating agency that requires access to information about such Purchaser’s
investment portfolio, or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to such Purchaser, (x) in response to
any subpoena or other legal process, (y) in connection with any litigation to
which such Purchaser is a party or (z) if an Event of Default has occurred and
is continuing, to the extent such Purchaser may reasonably determine such
delivery and disclosure to be necessary or appropriate in the enforcement or for
the protection of the rights and remedies under such Purchaser’s Notes and this
Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed to
have agreed to be bound by and to be entitled to the benefits of this Section 20
as though it were a party to this Agreement. On reasonable request by the
Company in connection with the delivery to any holder of a Note of information
required to be delivered to such holder under this Agreement or requested by
such holder (other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the Company embodying
the provisions of this Section 20.
21. SUBSTITUTION OF PURCHASER.
Each Purchaser shall have the right to substitute any one of its Affiliates as
the purchaser of the Notes that it has agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both such Purchaser and
such Affiliate, shall contain such Affiliate’s agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, any reference to such Purchaser in this Agreement (other than in
this Section 21), shall be deemed to refer to such Affiliate in lieu of such
original Purchaser. In the event that such Affiliate is so substituted as a
Purchaser hereunder and such Affiliate thereafter transfers to such original
Purchaser all of the Notes then held by such Affiliate, upon receipt by the
Company of notice of such transfer, any reference to such Affiliate as a
“Purchaser” in this Agreement (other than in this Section 21), shall no longer
be deemed to refer to such Affiliate, but shall refer to such original
Purchaser, and such original Purchaser shall again have all the rights of an
original holder of the Notes under this Agreement.
22. MISCELLANEOUS.
22.1. Successors and Assigns.
All covenants and other agreements contained in this Agreement by or on behalf
of any of the parties hereto bind and inure to the benefit of their respective
successors and assigns (including, without limitation, any subsequent holder of
a Note) whether so expressed or not.

 

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22.2. Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary notwithstanding (but
without limiting the requirement in Section 8.6 that the notice of any optional
prepayment specify a Business Day as the date fixed for such prepayment), any
payment of principal of or Make-Whole Amount or interest on any Note that is due
on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day; provided that if the
maturity date of any Note is a date other than a Business Day, the payment
otherwise due on such maturity date shall be made on the next succeeding
Business Day and shall include the additional days elapsed in the computation of
interest payable on such next succeeding Business Day.
22.3. Accounting Terms.
All accounting terms used herein which are not expressly defined in this
Agreement have the meanings respectively given to them in accordance with GAAP.
Except as otherwise specifically provided herein, (i) all computations made
pursuant to this Agreement shall be made in accordance with GAAP, and (ii) all
financial statements shall be prepared in accordance with GAAP.
22.4. Severability.
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.5. Construction, etc.
Each covenant contained herein shall be construed (absent express provision to
the contrary) as being independent of each other covenant contained herein, so
that compliance with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with any other covenant. Where any
provision herein refers to action to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such Person.
For the avoidance of doubt, all Schedules and Exhibits attached to this
Agreement shall be deemed to be a part hereof.
22.6. Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be an original but all of which together shall constitute one instrument.
Each counterpart may consist of a number of copies hereof, each signed by less
than all, but together signed by all, of the parties hereto.

 

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22.7. Governing Law.
This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would permit
the application of the laws of a jurisdiction other than such State.
22.8. Jurisdiction and Process; Waiver of Jury Trial.
(a) The Company irrevocably submits to the non-exclusive jurisdiction of any New
York State or federal court sitting in the Borough of Manhattan, The City of New
York, over any suit, action or proceeding arising out of or relating to this
Agreement or the Notes. To the fullest extent permitted by applicable law, the
Company irrevocably waives and agrees not to assert, by way of motion, as a
defense or otherwise, any claim that it is not subject to the jurisdiction of
any such court, any objection that it may now or hereafter have to the laying of
the venue of any such suit, action or proceeding brought in any such court and
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
(b) The Company consents to process being served by or on behalf of any holder
of Notes in any suit, action or proceeding of the nature referred to in
Section 22.8(a) by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, return receipt
requested, to it at its address specified in Section 18 or at such other address
of which such holder shall then have been notified pursuant to said Section. The
Company agrees that such service upon receipt (i) shall be deemed in every
respect effective service of process upon it in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by applicable law, be
taken and held to be valid personal service upon and personal delivery to it.
Notices hereunder shall be conclusively presumed received as evidenced by a
delivery receipt furnished by the United States Postal Service or any reputable
commercial delivery service.
(c) Nothing in this Section 22.8 shall affect the right of any holder of a Note
to serve process in any manner permitted by law, or limit any right that the
holders of any of the Notes may have to bring proceedings against the Company in
the courts of any appropriate jurisdiction or to enforce in any lawful manner a
judgment obtained in one jurisdiction in any other jurisdiction.
(d) The parties hereto hereby waive trial by jury in any action brought on or
with respect to this Agreement, the Guaranty Agreement the Notes or any other
document executed in connection herewith or therewith.
[Remainder of page left intentionally blank. Next page is signature page.]

 

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If you are in agreement with the foregoing, please sign the form of agreement on
a counterpart of this Agreement and return it to the Company, whereupon this
Agreement shall become a binding agreement between you and the Company.

            Very truly yours,

WOODWARD GOVERNOR COMPANY
      By:   /s/ Robert F. Weber, Jr.         Robert F. Weber, Jr.        Chief
Financial Officer and Treasurer   

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

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This Agreement is hereby
accepted and agreed to as
of the date thereof.
METROPOLITAN LIFE INSURANCE COMPANY
METLIFE INSURANCE COMPANY OF CONNECTICUT
By: Metropolitan Life Insurance Company, its Investment Manager
METLIFE INVESTORS INSURANCE COMPANY
By: Metropolitan Life Insurance Company, its Investment Manager
NEW ENGLAND LIFE INSURANCE COMPANY
By: Metropolitan Life Insurance Company, its Investment Manager

         
By:
  /s/ Judith A. Gulotta    
 
 
 
Name: Judith A. Gulotta    
 
  Title: Managing Director    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

         
By:
  /s/ James G. Lowery    
 
 
 
Name: James G. Lowery    
 
  Title: Assistant Vice President, Investments    
 
       
By:
  /s/ Tad Anderson    
 
 
 
Name: Tad Anderson    
 
  Title: Assistant Vice President, Investments    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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LONDON LIFE INSURANCE COMPANY

         
By:
  /s/ B.R. Allison    
 
 
 
Name: B.R. Allison    
 
  Title: Authorized Signatory    
 
       
By:
  /s/ D.B.E. Ayers    
 
 
 
Name: D.B.E. Ayers    
 
  Title: Authorized Signatory    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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THE CANADA LIFE ASSURANCE COMPANY

         
By:
  /s/ James G. Lowery    
 
 
 
Name: James G. Lowery    
 
  Title: Assistant Vice President, Investments    
 
       
By:
  /s/ Tad Anderson    
 
 
 
Name: Tad Anderson    
 
  Title: Assistant Vice President, Investments    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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NEW YORK LIFE INSURANCE COMPANY

         
By:
  /s/ Kathleen A. Haberkern    
 
 
 
Name: Kathleen A. Haberkern    
 
  Title: Corporate Vice President    
 
        NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
By:
  New York Life Investment Management LLC,    
 
  Its Investment Manager    

         
By:
  /s/ Kathleen A. Haberkern    
 
 
 
Name: Kathleen A. Haberkern    
 
  Title: Director    

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE ACCOUNT
By: New York Life Investment Management LLC,
       Its Investment Manager

         
By: /s/
  Kathleen A. Haberkern    
 
 
 
Name: Kathleen A. Haberkern    
 
  Title: Director    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

         
By:
  /s/ Matthew W. Reed    
 
 
 
Name: Matthew W. Reed    
 
  Title: Vice President    

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY

         
By:
  /s/ Matthew W. Reed    
 
 
 
Name: Matthew W. Reed    
 
  Title: Vice President    

PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY
By: Prudential Investment Management, Inc., as Investment Manager

         
By:
  /s/ Matthew W. Reed    
 
 
 
Name: Matthew W. Reed    
 
  Title: Vice President    

GATEWAY RECOVERY TRUST
By: Prudential Investment Management, Inc., as Asset Manager

         
By:
  /s/ Matthew W. Reed    
 
 
 
Name: Matthew W. Reed    
 
  Title: Vice President    

ZURICH AMERICAN INSURANCE COMPANY
By: Prudential Private Placement Investors, L.P., as Investment Advisor
        By: Prudential Private Placement Investors, Inc., as its General Partner

         
By:
  /s/ Matthew W. Reed    
 
 
 
Name: Matthew W. Reed    
 
  Title: Vice President    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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HARTFORD LIFE INSURANCE COMPANY
TRUMBULL INSURANCE COMPANY
SENTINEL INSURANCE COMPANY, LTD.
TWIN CITY FIRE INSURANCE COMPANY
By: Hartford Investment Management Company, their Agent and Attorney-in-Fact

         
By:
  /s/ Matthew J. Poznar    
 
 
 
Name: Matthew J. Poznar    
 
  Title: Senior Vice President    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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ING LIFE INSURANCE AND ANNUITY COMPANY
ING USA ANNUITY AND LIFE INSURANCE COMPANY
SECURITY LIFE OF DENVER INSURANCE COMPANY
RELIASTAR LIFE INSURANCE COMPANY
By: ING Investment Management LLC, as Agent

         
By:
  /s/ James V. Wittich    
 
 
 
Name: James V. Wittich    
 
  Title: Senior Vice President    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By: Babson Capital Management LLC, as Investment Adviser

         
By:
  /s/ Emeka O. Onukwugha    
 
 
 
Name: Emeka O. Onukwugha    
 
  Title: Managing Director    

MASSMUTUAL ASIA LIMITED
By: Babson Capital Management LLC, as Investment Adviser

         
By:
  /s/ Emeka O. Onukwugha    
 
 
 
Name: Emeka O. Onukwugha    
 
  Title: Managing Director    

C.M. LIFE INSURANCE COMPANY
By: Babson Capital Management LLC, as Investment Sub-Adviser

         
By:
  /s/ Emeka O. Onukwugha    
 
 
 
Name: Emeka O. Onukwugha    
 
  Title: Managing Director    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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          AXA EQUITABLE LIFE INSURANCE COMPANY    
 
       
By:
  /s/ Amy Judd
 
Name: Amy Judd    
 
  Title: Investment Officer    
 
        MONY LIFE INSURANCE COMPANY    
 
       
By:
  /s/ Amy Judd
 
Name: Amy Judd    
 
  Title: Investment Officer    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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              PRINCIPAL LIFE INSURANCE COMPANY    
 
            By:   Principal Global Investors, LLC
a Delaware limited liability company,
its authorized signatory    
 
           
 
  By:   /s/ Alan P. Kress
 
Name: Alan P. Kress    
 
      Title: Counsel    
 
           
 
  By:   /s/ Joellen J. Watts
 
Name: Joellen J. Watts    
 
      Title: Counsel    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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              AMERICAN UNITED LIFE INSURANCE COMPANY    
 
            By:   /s/ Kent R. Adams                   Name: Kent R. Adams      
  Title: V.P. Fixed Income Securities    
 
            THE STATE LIFE INSURANCE COMPANY     By:   American United Life
Insurance Company, its Agent    
 
           
 
  By:   /s/ Kent R. Adams
 
Name: Kent R. Adams    
 
      Title: V.P. Fixed Income Securities    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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          PHOENIX LIFE INSURANCE COMPANY    
 
       
By:
  /s/ Christopher Wilkos
 
Name: Christopher Wilkos    
 
  Title: Sr. Vice President    
 
        PHL VARIABLE INSURANCE COMPANY    
 
       
By:
  /s/ Christopher Wilkos
 
Name: Christopher Wilkos    
 
  Title: Sr. Vice President    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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          UNITED OF OMAHA LIFE INSURANCE COMPANY    
 
       
By:
  /s/ Justin P. Kavan
 
Name: Justin P. Kavan    
 
  Title: Vice President    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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          MODERN WOODMEN OF AMERICA    
 
       
By:
  /s/ Nick S. Coin
 
Name: Nick S. Coin    
 
  Title: Treasurer & Investment Manager    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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              AMERITAS LIFE INSURANCE CORP.
THE UNION CENTRAL LIFE INSURANCE COMPANY     By:   Summit Investment Partners,
as Agent    
 
           
 
  By:   /s/ Andrew S. White
 
Name: Andrew S. White    
 
      Title: Managing Director Private Placements    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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          NATIONAL GUARDIAN LIFE INSURANCE COMPANY    
 
       
By:
  /s/ Robert A. Mucci
 
Name: Robert A. Mucci    
 
  Title: Senior Vice President & Treasurer    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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          THE OHIO NATIONAL LIFE INSURANCE COMPANY    
 
       
By:
  /s/ Jed R. Martin
 
Name: Jed R. Martin
Title: Vice President, Private Placements    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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          STATE FARM LIFE INSURANCE COMPANY    
 
       
By:
  /s/ Julie Hoyer
 
Name: Julie Hoyer    
 
  Title: Senior Investment Officer    
 
       
By:
  /s/ Jeffrey T. Attwood
 
Name: Jeffrey T. Attwood    
 
  Title: Investment Officer    

[Signature Page to Note Purchase Agreement — Woodward Governor Company]

 

 

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Schedule A
(to Note Purchase Agreement)
[Intentionally Removed]

 

Schedule A-63

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Schedule B
(to Note Purchase Agreement)
Defined Terms
As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:
“Acquisition” means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Company or any
of its Subsidiaries (other than transactions involving solely the Company and
its Subsidiaries) (a) acquires all or substantially all of the assets of any
firm, corporation, limited liability company or division thereof, whether
through purchase of assets, merger or otherwise or (b) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the Capital Stock of
an entity which have ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage of voting power) of the outstanding
Equity Interests of another Person.
“Affiliate” means, at any time, and with respect to any Person, any other Person
that at such time directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, such first
Person, and, with respect to the Company, shall include any Person beneficially
owning or holding, directly or indirectly, 10% or more of any class of voting or
equity interests of the Company or any Subsidiary or any corporation of which
the Company and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity interests.
Unless the context otherwise clearly requires, any reference to an “Affiliate”
is a reference to an Affiliate of the Company.
“Anti-Terrorism Order” means Executive Order No. 13,224 of September 23, 2001,
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49079 (2001), as amended.
“Applicable Rate” means, with respect to (a) any Series B Note, (i) 6.38% per
annum during any fiscal quarter following a fiscal quarter on the last day of
which the Leverage Ratio is greater than 3.5 to 1.0 and (ii) 5.63% per annum at
all other times, (b) any Series C Note, (i) 6.67% per annum during any fiscal
quarter following a fiscal quarter on the last day of which the Leverage Ratio
is greater than 3.5 to 1.0 and (ii) 5.92% per annum at all other times and
(c) any Series D Note, (i) 7.14% per annum during any fiscal quarter following a
fiscal quarter on the last day of which the Leverage Ratio is greater than 3.5
to 1.0 and (ii) 6.39% per annum at all other times.
“Asset Disposition” means any Transfer except:
(a) any Transfer in the ordinary course of business that is:
(i) from a Subsidiary to the Company or another Subsidiary, and
(ii) from the Company to a Subsidiary,
in each case so long as immediately before and immediately after the
consummation of any such Transfer and after giving effect thereto, no Default or
Event of Default exists;

 

Schedule B-1

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(b) any Transfer made in the ordinary course of business and involving only
property that is either (i) inventory held for sale or (ii) equipment, fixtures,
supplies or materials no longer required in the operation of the business of the
Company or any of its Subsidiaries or that is obsolete; and
(c) any Transfer made pursuant to a Permitted Receivables Securitization
permitted pursuant to Section 10.11.
“Business Day” means (a) for the purposes of Section 8.8 only, any day other
than a Saturday, a Sunday or a day on which commercial banks in New York, New
York are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in New York, New York or Chicago, Illinois are
required or authorized to be closed.
“Capital Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
“Capital Lease Obligations” of a Person means the amount of the obligations of
such Person under Capital Leases which would be capitalized on a balance sheet
of such Person prepared in accordance with GAAP.
“Capital Stock” means (a) in the case of a corporation, corporate stock, (b) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) evidencing
ownership thereof, (c) in the case of a limited liability company, membership
interests, (d) in the case of a partnership, partnership interests (whether
general or limited) and (e) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person; provided, however, that “Capital
Stock” shall not include any debt securities convertible into equity securities
prior to such conversion.
“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guarantied by the governments of the United States of America
and backed by the full faith and credit of the United States government;
(b) domestic and Eurocurrency certificates of deposit and time deposits,
bankers’ acceptances and floating rate certificates of deposit issued by any
commercial bank organized under the laws of the United States, any state
thereof, the District of Columbia, any foreign bank, or its branches or
agencies, the long-term indebtedness of which institution at the time of
acquisition is rated BBB (or better) by S&P or Fitch or Baa (or better) by
Moody’s), and which certificates of deposit and time deposits are fully
protected against currency fluctuations for any such deposits with a term of
more than ninety (90) days; (c) shares of money market, mutual or similar funds
having assets in excess of $100,000,000 and the investments of which are limited
to investment grade securities (i.e., securities rated BBB (or better) by S&P or
Fitch or Baa (or better) by Moody’s; and (d) commercial paper of United States
of America and foreign banks and bank holding companies and their subsidiaries
and United States and foreign finance, commercial industrial or utility
companies which, at the time of acquisition, are rated A-2 (or better) by S&P,
P-2 (or better) by Moody’s, or F-2 (or better) by Fitch; provided that the
maturities of such Cash Equivalents (other than as described in clause (c)
above) shall not exceed three hundred sixty-five (365) days from the date of
acquisition thereof.

 

Schedule B-2

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“Change of Control” shall be deemed to have occurred if any person (as such term
is used in Section 13(d) and Section 14(d)(2) of the Exchange Act as in effect
on the date hereof) or related persons constituting a group (as such term is
used in Rule 13d-5 under the Exchange Act), become the “beneficial owners” (as
such term is used in Rule 13d-3 under the Exchange Act as in effect on the date
hereof), directly or indirectly, of more than 50% of the total voting power of
all classes then outstanding of the Company’s voting stock.
“Closing” is defined in Section 3.
“Closing Guarantor” is defined in Section 2.
“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.
“Company” means Woodward Governor Company, a Delaware corporation or any
successor that becomes such in the manner prescribed in Section 10.2.
“Confidential Information” is defined in Section 20.
“Consolidated Net Earnings” means, with reference to any period, the net
earnings (or loss) of the Company and its Subsidiaries for such period (taken as
a cumulative whole), as determined in accordance with GAAP, after eliminating
all offsetting debits and credits between the Company and its Subsidiaries and
all other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP, provided that there shall be excluded therefrom (to the
extent included in determining such net earnings) (a) any extraordinary gains
and losses and (b) any equity interest of the Company or any Subsidiary in the
unremitted earnings of a Person that is not a Subsidiary.
“Consolidated Net Worth” shall mean the stockholders’ equity of the Company and
its Subsidiaries determined on a consolidated basis in accordance with GAAP.
“Consolidated Total Assets” shall mean the total assets of the Company and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
“Contingent Obligation”, as applied to any Person, means any Contractual
Obligation, contingent or otherwise, providing for the guaranty of, or having
the same economic effect as providing a guaranty of, any Indebtedness of another
or other obligation or liability of another, including, without limitation, any
such Indebtedness, obligation or liability of another directly or indirectly
guarantied, endorsed (otherwise than for collection or deposit in the ordinary
course of business), co-made or discounted or sold with recourse by that Person,
or in respect of which that Person is otherwise directly or indirectly liable,
including Contractual Obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such Indebtedness,
obligation or liability or any security therefor, or to provide funds for the
payment or discharge thereof (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain solvency, assets,
level of income, or other financial condition, or to make payment other than for
value received. The amount of any Contingent Obligation shall be equal to the
amount of the obligation so guarantied or otherwise supported in the case of
known or recurring obligations and, in all other cases, the maximum reasonably
anticipated liability in respect of the portion of the obligation so guarantied
or otherwise supported; provided that Contingent Obligations shall not include
endorsements for collection in the ordinary course of business.

 

Schedule B-3

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“Contractual Obligation”, as applied to any Person, means any provision of any
equity or debt securities issued by that Person or any indenture, mortgage, deed
of trust, security agreement, pledge agreement, guaranty, contract, undertaking,
agreement or instrument, in any case in writing, to which that Person is a party
or by which it or any of its properties is bound, or to which it or any of its
properties is subject.
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
“Control Event” means:
(a) the execution by the Company or any of its Subsidiaries or Affiliates of any
agreement or letter of intent with respect to any proposed transaction or event
or series of transactions or events which, individually or in the aggregate, may
reasonably be expected to result in a Change of Control,
(b) the execution of any written agreement which, when fully performed by the
parties thereto, would result in a Change of Control, or
(c) the making of any written offer by any person (as such term is used in
Section 13(d) and Section 14(d)(2) of the Exchange Act as in effect on the date
hereof) or related persons constituting a group (as such term is used in
Rule 13d-5 under the Exchange Act as in effect on the date hereof) to the
holders of the common stock of the Company, which offer, if accepted by the
requisite number of holders, would result in a Change of Control.
“Debt Prepayment Application” means, with respect to any Transfer of property,
the application by the Company of cash in an amount equal to the Net Proceeds
Amount with respect to such Transfer to pay Senior Indebtedness (other than
(a) Indebtedness owing to the Company, any of the Company’s Subsidiaries or any
Affiliate of the Company and (b) Indebtedness in respect of any revolving credit
or similar credit facility providing the Company or any of its Subsidiaries with
the right to obtain loans or other extensions of credit from time to time,
except to the extent that in connection with such payment of Senior Indebtedness
the availability of credit under such credit facility is permanently reduced by
an amount not less than the amount of such proceeds applied to the payment of
such Senior Indebtedness), provided that in the course of making such
application the Company shall offer to prepay each outstanding Note, in
accordance with Section 8.4, in a principal amount which equals the Ratable
Portion of such Note in respect of such Transfer. If any holder of a Note
rejects such offer of prepayment, then, for purposes of the preceding sentence
only, the Company and the applicable Subsidiary nevertheless will be deemed to
have paid Senior Indebtedness in an amount equal to the Ratable Portion of the
holder of such Note in respect of such Transfer.

 

Schedule B-4

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“Debt Prepayment Transfer” is defined in Section 8.4(a).
“Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
“Default Rate” means, with respect to any Note, that rate of interest that is
the greater of (a) 2.00% per annum above the Applicable Rate with respect to
such Note or (b) 2.00% over the rate of interest publicly announced by JPMorgan
Chase Bank, N.A. in New York, New York as its “base” or “prime” rate.
“Disposition Value” means, at any time, with respect to any property:
(a) in the case of property that does not constitute Subsidiary Equity
Interests, the book value thereof, valued at the time of such disposition in
good faith by the Company, and
(b) in the case of property that constitutes Subsidiary Equity Interests, an
amount equal to that percentage of book value of the assets of the Subsidiary
that issued such equity interests as is equal to the percentage that the book
value of such Subsidiary Equity Interests represents of the book value of all of
the outstanding equity interests of such Subsidiary (assuming, in making such
calculations, that all Securities convertible into such equity interests are so
converted and giving full effect to all transactions that would occur or be
required in connection with such conversion) determined at the time of the
disposition thereof, in good faith by the Company.
“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option
of the holder thereof, in whole or in part, on or prior to the date that is
ninety-one (91) days after the maturity date of the Series D Notes.
“EBITDA” means, for any period, on a consolidated basis for the Company and its
Subsidiaries, the sum of the amounts for such period, without duplication, of
(a) Net Income, plus (b) Interest Expense to the extent deducted in computing
Net Income, plus (c) charges against income for foreign, federal, state and
local taxes to the extent deducted in computing Net Income, plus
(d) depreciation expense to the extent deducted in computing Net Income, plus
(e) amortization expense, including, without limitation, amortization of
goodwill and other intangible assets to the extent deducted in computing Net
Income, plus (f) any unusual non-cash charges to the extent deducted in
computing Net Income, minus (g) any unusual non-cash gains to the extent added
in computing Net Income. EBITDA shall be calculated on a pro forma basis giving
effect to Material Acquisitions and Material Asset Dispositions on a four
(4) fiscal quarter basis on the assumption that any Material Acquisition or
Material Asset Disposition shall be deemed to have occurred on the first day of
the fourth full fiscal quarter preceding the date of determination, using
historical financial statements containing reasonable adjustments satisfactory
to the Required Holders, broken down by fiscal quarter in the Company’s
reasonable judgment. As used herein, “Material Acquisition” means one or more
related Acquisitions the net consideration for which is in excess of $20,000,000
individually or in the aggregate and “Material Asset Disposition” means any
Asset Disposition or series of Asset Dispositions the Fair Market Value of which
is equal to or greater than $20,000,000 individually or in the aggregate.

 

Schedule B-5

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“Electronic Delivery” is defined in Section 7.1(a).
“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to Hazardous Materials.
“Equity Interests” means Capital Stock and all warrants, options or other rights
to acquire Capital Stock (but excluding any debt security that is convertible
into, or exchangeable for, Capital Stock).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is treated as a single employer together with the Company under section 414 of
the Code.
“Event of Default” is defined in Section 11.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Existing Note Purchase Agreement” means that certain Note Purchase Agreement,
dated as of October 15, 2001, by and among the Company and the purchasers listed
in Schedule A attached thereto, as such agreement may be further amended,
restated, supplemented, modified, refinanced, extended or replaced.
“Fair Market Value” means, at any time and with respect to any property, the
sale value of such property that would be realized in an arm’s-length sale at
such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).
“First Closing” is defined in Section 3.
“First Closing Purchasers” is defined in Section 3.
“Fitch” means Fitch Investors Service, L.P., together with its successors and
assigns.

 

Schedule B-6

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“Foreign Borrowing” is defined in Section 9.8(a).
“Foreign Subsidiary” means any Subsidiary of the Company which is not organized
under the laws of the United States of America, any State thereof or the
District of Columbia.
“Form 10-K” is defined in Section 7.1(b).
“Form 10-Q” is defined in Section 7.1(a).
“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States of America.
“Governmental Authority” means:
(a) the government of:
(i) the United States of America or any State or other political subdivision
thereof, or
(ii) any other jurisdiction in which the Company or any Subsidiary conducts all
or any part of its business, or which asserts jurisdiction over any properties
of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.
“Guarantor” and “Guarantors” are defined in Section 2.
“Guaranty” means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guarantying or in effect guarantying any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property constituting
security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation;
(c) to lease properties or to purchase properties or services primarily for the
purpose of assuring the owner of such indebtedness or obligation of the ability
of any other Person to make payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation against
loss in respect thereof.

 

Schedule B-7

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In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
“Guaranty Agreement” is defined in Section 2.
“Guaranty Supplement” is defined in Section 9.8.
“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or
other substances that might pose a hazard to health and safety, the removal of
which may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage or filtration of which is or
shall be restricted, prohibited or penalized by any applicable law including,
but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar
restricted, prohibited or penalized substances.
“Hedging Arrangements” means agreements, devices or arrangements designed to
protect at least one of the parties thereto from the fluctuations of interest
rates, commodity prices, exchange rates or forward rates applicable to such
party’s assets, liabilities or exchange transactions, including, but not limited
to, dollar-denominated or cross-currency interest rate exchange agreements,
forward currency exchange agreements, interest rate cap or collar protection
agreements, forward rate currency or interest rate options, puts and warrants or
any similar derivative transactions.
“Hedging Obligations” of a Person means any and all obligations of such Person,
whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (a) any and all Hedging Arrangements
and (b) any and all cancellations, buy backs, reversals, terminations or
assignments of any Hedging Arrangements.
“Holder” means, with respect to any Note the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 13.1.
“Indebtedness” of a Person means, without duplication, such Person’s:
(a) obligations for borrowed money, including, without limitation, subordinated
indebtedness,
(b) obligations representing the deferred purchase price of property or services
(other than accounts payable arising in the ordinary course of such Person’s
business payable on terms customary in the trade and other than earn-outs or
other similar forms of contingent purchase prices),
(c) obligations, whether or not assumed, secured by Liens on or payable out of
the proceeds or production from property or assets now or hereafter owned or
acquired by such Person,

 

Schedule B-8

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(d) obligations which are evidenced by notes, acceptances, or other instruments,
(e) Capital Lease Obligations,
(f) Contingent Obligations with respect to the Indebtedness of other Persons,
(g) obligations with respect to letters of credit,
(h) Off-Balance Sheet Liabilities,
(i) Receivables Facility Attributed Indebtedness,
(j) Disqualified Stock, and
(k) net Hedging Obligations, calculated on a marked-to-market basis.
The amount of Indebtedness of any Person at any date shall be without
duplication (i) the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability of any such Contingent
Obligations at such date and (ii) in the case of Indebtedness of others secured
by a Lien to which the property or assets owned or held by such Person is
subject, the lesser of the Fair Market Value at such date of any asset subject
to a Lien securing the Indebtedness of others and the amount of the Indebtedness
secured.
“Institutional Investor” means (a) any Purchaser of a Note, (b) any holder of a
Note holding (together with one or more of its affiliates) more than 5% of the
aggregate principal amount of the Notes then outstanding, (c) any bank, trust
company, savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form, and (d) any Related Fund of any holder of any Note.
“Intercreditor Agreement” is defined in Section 9.9.
“Interest Expense” means, without duplication, for any period, the total
interest expense of the Company and its consolidated Subsidiaries, whether paid
or accrued (including the interest component of Capital Leases, commitment,
facility and letter of credit fees, Off-Balance Sheet Liabilities and net
payments or receipts (if any) pursuant to Hedging Arrangements relating to
interest rate protection), all as determined in conformity with GAAP.
“Leverage Ratio” is defined in Section 10.8.
“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement or Capital Lease, upon or with respect
to any property or asset of such Person (including in the case of stock,
stockholder agreements, voting trust agreements and all similar arrangements).

 

Schedule B-9

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“Major Credit Facility” means (a) the Revolving Facility, (b) the Term Facility,
(c) the Existing Note Purchase Agreement and (d) any other credit, loan or
borrowing facility or note purchase agreement by the Company or any Subsidiary
providing, in each case, for the incurrence of Senior Indebtedness in a
principal amount equal to or greater than $25,000,000, in each case under
clauses (a) through (d) as amended, restated, supplemented or otherwise modified
and together with increases, refinancings and replacements thereof.
“Make-Whole Amount” is defined in Section 8.8.
“Material” means material in relation to the business, operations, affairs,
financial condition, assets, properties, or prospects of the Company and its
Subsidiaries taken as a whole.
“Material Acquisition Period” means each period of four (4) consecutive fiscal
quarters of the Company commencing with the fiscal quarter in which one or more
of the Company and any Subsidiary has consummated (a) one or more Acquisitions
of equity interests in entities that become Subsidiaries upon such Acquisition
or (b) one or more acquisitions from an entity of a business or a brand, if the
consideration paid for such Acquisitions under clause (a) and/or (b) (including,
without limitation, Indebtedness of the new Subsidiary and, without duplication,
any Indebtedness of such entity that is assumed by any one or more of the
Company and its Subsidiaries), taken together with the aggregate consideration
(including assumed Indebtedness as aforesaid) paid for all other such
Acquisitions consummated during the immediately preceding three (3) fiscal
quarters of the Company, is equal to at least $25,000,000; provided that a new
Material Acquisition Period may not be commenced until such time as at least two
(2) complete consecutive fiscal quarters have elapsed since the expiration of
the last previous Material Acquisition Period.
“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, affairs, financial condition, assets or properties of the Company
and its Subsidiaries taken as a whole, or (b) the ability of the Company to
perform its obligations under this Agreement and the Notes, or (c) the validity
or enforceability of this Agreement or the Notes.
“Material Covenant” means any covenant or similar term contained in any evidence
of any Indebtedness in respect of or that contains provisions that are the same
as or similar to (or address the same topic as) the covenants set forth in
Sections 10.2, 10.3, 10.6, 10.7, 10.8, 10.9 or 10.10 or any other financial
covenant contained in such Indebtedness.
“Memorandum” is defined in Section 5.3.
“Moody’s” means Moody’s Investors Service, Inc., together with its successors
and assigns.
“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term
is defined in section 4001(a)(3) of ERISA).
“NAIC” means the National Association of Insurance Commissioners or any
successor thereto.

 

Schedule B-10

--------------------------------------------------------------------------------

 

“Net Income” means, for any period, the net income (or loss) after taxes of the
Company and its Subsidiaries on a consolidated basis for such period taken as a
single accounting period determined in conformity with GAAP.
“Net Indebtedness” means, as of any date of determination, the excess, if any,
of (a) Indebtedness of the Company and its consolidated Subsidiaries as of such
date over (b) the Unrestricted Domestic Cash Amount as of such date.
“Net Proceeds Amount” means, with respect to any Transfer of any property by any
Person, an amount equal to the difference of
(a) the aggregate amount of the consideration (valued at the Fair Market Value
of such consideration at the time of the consummation of such Transfer) received
by such Person in respect of such Transfer, minus
(b) all taxes actually paid on account of such Transfer and all ordinary and
reasonable out-of-pocket costs and expenses actually incurred by such Person in
connection with such Transfer.
“Notes” is defined in Section 1.
“Off-Balance Sheet Liabilities” of a Person means (a) any Receivables Facility
Attributed Indebtedness and repurchase obligations or liabilities of such Person
or any of its Subsidiaries with respect to Receivables or notes receivable sold
by such Person or any of its Subsidiaries, (b) any liabilities of such Person or
any of its Subsidiaries under any sale and leaseback transactions which do not
create liabilities on the consolidated balance sheet of such Person, (c) any
liabilities of such Person or any of its Subsidiaries under any financing lease
or Synthetic Lease transaction, or (d) any obligations of such Person or any of
its Subsidiaries arising with respect to any other transaction which is the
functional equivalent of or takes the place of borrowing but which, in the case
of the foregoing clauses (a) through (d), does not constitute a liability on the
consolidated balance sheets of such Person and its Subsidiaries.
“Officer’s Certificate” means a certificate of a Senior Financial Officer or of
any other officer of the Company whose responsibilities extend to the subject
matter of such certificate.
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.
“Permitted Liens” means the following:
(a) Liens for taxes, assessments or other governmental charges which are not yet
due and payable or the payment of which is not at the time required by
Section 9.4;
(b) any attachment or judgment Lien, unless the judgment it secures shall not,
within thirty (30) days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within thirty (30) days after the expiration of any such stay;

 

Schedule B-11

--------------------------------------------------------------------------------

 

(c) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen and other similar Liens, in each case, incurred in the ordinary
course of business for sums not yet due and payable;
(d) Liens (other than any Lien imposed by ERISA) incidental to the normal
conduct of the business of the Company or any Subsidiary or the ownership of its
property which are not incurred or made in connection with the incurrence of
Indebtedness and which do not, individually or in the aggregate, materially
impair the use of such property in the operation of the business of the Company
and its Subsidiaries, taken as a whole, or the value of such property for the
purposes of such business;
(e) leases or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case incidental
to, and not interfering with, the ordinary conduct of the business of the
Company or any of its Subsidiaries, and which do not in the aggregate materially
impair the use of such property in the operation of the business of the Company
and its Subsidiaries, taken as a whole, or the value of such property for the
purposes of such business;
(f) minor survey exceptions and similar Liens, provided that such Liens do not,
in the aggregate, materially detract from the value of such property in the
operation of the business of the Company and its Subsidiaries;
(g) Liens on property or assets of the Company or any Subsidiary securing
Indebtedness owing to the Company or another Subsidiary;
(h) Liens existing on the date hereof and reflected in Schedule 10.6;
(i) any Liens existing on the property of a Person at the time such Person is
merged into or consolidated with the Company or a Subsidiary or its becoming a
Subsidiary or at the time of a sale, lease or other disposition of the
properties of a Person as an entirety to the Company or a Subsidiary, or any
Lien existing on any property acquired by the Company or any Subsidiary at the
time such property is so acquired (whether or not the Indebtedness secured
thereby shall have been assumed), provided that (w) such Liens were not
incurred, extended or renewed in contemplation of such merger, consolidation or
acquisition of property, (x) each such Lien shall attach solely to the assets so
acquired or purchased, (y) the aggregate principal amount of Indebtedness
secured by such Liens is otherwise permitted by the terms of this Agreement, and
(z) the aggregate principal amount of Indebtedness secured by such Liens shall
not exceed 100% of the Fair Market Value of the related property;
(j) Liens incurred after the date of the First Closing on any property acquired,
improved or constructed by the Company or a Subsidiary and created
contemporaneously with or within one hundred eighty (180) days of such
acquisition, improvement or construction which secure all or any part of the
purchase price or cost of construction or improvement of such property, provided
that (i) any such Lien shall extend solely to the item or items of such property
(or improvement thereon) so acquired or constructed and, if required by the
terms of the instrument originally creating such Lien, other property (or
improvement thereon) which is an improvement to or is acquired for specific use
in connection with such acquired or constructed property (or improvement
thereon) or which is real property being improved by such acquired or
constructed property (or improvement thereon), (ii) the aggregate principal
amount of Indebtedness secured by such Lien and all other Indebtedness secured
by any other Lien on such property or such improvement does not exceed in the
aggregate 100% of the lesser of (y) the cost of such property or improvement or
(z) the Fair Market Value thereof at the time of incurrence, and (iii) all such
Indebtedness is otherwise permitted by the terms of this Agreement;

 

Schedule B-12

--------------------------------------------------------------------------------

 

(k) Liens incurred pursuant to a Permitted Receivables Securitization program,
provided that such Permitted Receivables Securitization program is permitted
pursuant to Section 10.11;
(l) Liens (i) in favor of the holders of the Notes (or in favor of a collateral
agent reasonably satisfactory to the Required Holders) created to secure the
Indebtedness evidenced by this Agreement and the Notes pursuant to
Section 9.8(c) and (ii) granted to secure the Indebtedness evidenced by any
Major Credit Facility, in each case under clauses (i) and (ii) in compliance
with Section 9.9; and
(m) any Lien renewing, extending or refunding any Lien permitted by clauses (h),
(i) or (j) of this definition, provided that (i) the principal amount of
Indebtedness secured by such Lien immediately prior to such extension, renewal
or refunding is not increased or the maturity thereof reduced, (ii) such Lien is
not extended to any other property, and (iii) immediately after such extension,
renewal or refunding no Default or Event of Default would exist.
“Permitted Receivables Securitization” means a financing program providing for
the sale or transfer of accounts receivable (and related assets) by the Company
and its Subsidiaries, in transactions purporting to be sales (and treated as
sales for GAAP purposes), to one or more limited purpose financing companies,
special purpose entities and/or other financial institutions, in each case, on a
limited recourse basis as to the Company and its Subsidiaries (not inconsistent
with treatment as a sale for GAAP purposes).
“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, business entity or
Governmental Authority.
“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA)
subject to Title I of ERISA that is or, within the preceding five years, has
been established or maintained, or to which contributions are or, within the
preceding five years, have been made or required to be made, by the Company or
any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate
may have any liability.
“Priority Debt” means (a) all unsecured Indebtedness of any Subsidiary other
than Indebtedness permitted by clauses (a) through (f), inclusive, of
Section 10.10, and (b) Indebtedness of the Company or any Subsidiary secured by
Liens other than Permitted Liens.
“Property” or “properties” means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.

 

Schedule B-13

--------------------------------------------------------------------------------

 

“Property Reinvestment Application” means, with respect to any Transfer of
property, the application of an amount equal to the Net Proceeds Amount with
respect to such Transfer to the acquisition by the Company or any Subsidiary of
property of a similar nature (excluding, for the avoidance of doubt, cash and
Cash Equivalents), and of at least equivalent Fair Market Value to the property
so Transferred, to be used in the ordinary course of business of such Person.
“Proposed Prepayment Date” is defined in Section 8.3(b).
“PTE” is defined in Section 6.3(a).
“Purchaser” is defined in the first paragraph of this Agreement.
“Qualified Institutional Buyer” means any Person who is a “qualified
institutional buyer” within the meaning of such term as set forth in
Rule 144A(a)(1) under the Securities Act.
“Ratable Portion” means, in respect of any holder of any Note and any Transfer
contemplated by the definition of Debt Prepayment Application, an amount equal
to the product of:
(a) the Net Proceeds Amount being offered to be applied to the payment of Senior
Indebtedness, multiplied by
(b) a fraction, the numerator of which is the outstanding principal amount of
such Note, and the denominator of which is the aggregate outstanding principal
amount of all Senior Indebtedness at the time of such Transfer determined on a
consolidated basis in accordance with GAAP.
“Receivable(s)” means and includes all of the Company’s and each Subsidiary’s
presently existing and hereafter arising or acquired accounts, accounts
receivable, and all present and future rights of the Company or such Subsidiary
to payment for goods sold or leased or for services rendered in the ordinary
course of the Company’s or such Subsidiary’s business (except those evidenced by
instruments or chattel paper), whether or not they have been earned by
performance, and all rights in any merchandise or goods which any of the same
may represent, and all rights, title, security and guaranties with respect to
each of the foregoing, including, without limitation, any right of stoppage in
transit.
“Receivables Facility Attributed Indebtedness” means the amount of obligations
outstanding under a receivables purchase facility on any date of determination
that would be characterized as principal if such facility were structured as a
secured lending transaction rather than as a purchase.
“Related Fund” means, with respect to any holder of any Note, any fund or entity
that (i) invests in Securities or bank loans, and (ii) is advised or managed by
such holder, the same investment advisor as such holder or by an affiliate of
such holder or such investment advisor.
“Required Holders” means, at any time, the holders of greater than 50% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates); provided that, for purposes of
Section 17.1 hereof, Required Holders shall also be deemed to include each
Second Closing Purchaser for the period commencing on the First Closing and
ending on November 10, 2008.

 

Schedule B-14

--------------------------------------------------------------------------------

 

“Responsible Officer” means any Senior Financial Officer and any other officer
of the Company with responsibility for the administration of the relevant
portion of this Agreement.
“Revolving Facility” means that certain Second Amended and Restated Credit
Agreement, dated as of October 25, 2007, among the Company, the Foreign
Subsidiary Borrowers from time to time parties thereto, the institutions from
time to time parties thereto as Lenders, and JPMorgan Chase Bank, National
Association, as Administrative Agent for itself and the other Lenders, as such
agreement may be further amended, restated, supplemented, modified, refinanced,
extended or replaced.
“S&P” means Standard and Poor’s Ratings Group, a division of The McGraw-Hill
Companies, together with its successors and assigns.
“SEC” shall mean the Securities and Exchange Commission of the United States, or
any successor thereto.
“Second Closing” is defined in Section 3.
“Second Closing Purchasers” is defined in Section 3.
“Securities” or “Security” shall have the meaning specified in Section 2(1) of
the Securities Act.
“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.
“Securitization Assets” means all accounts receivable, general intangibles,
instruments, documents, chattel paper and investment property (whether now
existing or arising in the future) of the Company or any of its Subsidiaries
which are sold or transferred pursuant to a Permitted Receivables
Securitization, and any assets related thereto, including without limitation
(a) all such assets constituting collateral given by any of the foregoing,
(b) all such assets constituting contracts and all guaranties (but not by the
Company or any of its Subsidiaries) or other obligations directly related to any
of the foregoing, (c) other related assets set forth in the Securitization
Documents, and (d) proceeds of all of the foregoing.
“Securitization Documents” means all documentation relating to any Permitted
Receivables Securitization.
“Senior Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
“Senior Indebtedness” means all Indebtedness evidenced by the Notes and all
other Indebtedness of the Company or its Subsidiaries for money borrowed ranking
pari passu or senior in right of payment with the Indebtedness evidenced by the
Notes and the Guaranty Agreement.

 

Schedule B-15

--------------------------------------------------------------------------------

 

“Series” means any series of Notes issued under this Agreement.
“Series B Notes” is defined in Section 1.
“Series C Notes” is defined in Section 1.
“Series D Notes” is defined in Section 1.
“Significant Subsidiary” means at any time any Subsidiary that would at such
time constitute a “significant subsidiary” (as such term is defined in
Regulation S-X of the Securities and Exchange Commission as in effect on the
date hereof) of the Company.
“Subsidiary” means, as to any Person, any other Person in which such first
Person or one or more of its Subsidiaries or such first Person and one or more
of its Subsidiaries owns sufficient equity or voting interests to enable it or
them (as a group) ordinarily, in the absence of contingencies, to elect a
majority of the directors (or Persons performing similar functions) of such
second Person, and any partnership or joint venture if more than a 50% interest
in the profits or capital thereof is owned by such first Person or one or more
of its Subsidiaries or such first Person and one or more of its Subsidiaries
(unless such partnership or joint venture can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
“Subsidiary” is a reference to a Subsidiary of the Company.
“Subsidiary Equity Interests” means, with respect to any Person, the Capital
Stock (or any options or warrants to purchase capital stock or similar equity
interests or other Securities exchangeable for or convertible into Capital
Stock) of any Subsidiary of such Person.
“SVO” means the Securities Valuation Office of the NAIC or any successor to such
Office.
“Synthetic Lease” means, at any time, any lease (including leases that may be
terminated by the lessee at any time) of any property (a) that is accounted for
as an operating lease under GAAP and (b) in respect of which the lessee retains
or obtains ownership of the property so leased for U.S. federal income tax
purposes, other than any such lease under which such Person is the lessor.
“Term Facility” means that certain Term Loan Credit Agreement, dated as of
October 1, 2008, among the Company, the institutions from time to time parties
thereto as Lenders, and JPMorgan Chase Bank, National Association, as
Administrative Agent for itself and the other Lenders, as such agreement may be
further amended, restated, supplemented, modified, refinanced, extended or
replaced.
“Transfer” means, with respect to any Person, any transaction in which such
Person sells, conveys, transfers or leases (as lessor) any of its property,
including, without limitation, Subsidiary Equity Interests. For purposes of
determining the application of the Net Proceeds Amount in respect of any
Transfer, the Company may designate any Transfer as one or more separate
Transfers each yielding a separate Net Proceeds Amount; in any such case, the
Disposition Value of any property subject to each such separate Transfer shall
be determined by ratably allocating the aggregate Disposition Value of all
property subject to such separate Transfers to each such separate Transfer on a
proportionate basis.

 

Schedule B-16

--------------------------------------------------------------------------------

 

“Transfer Prepayment Date” is defined in Section 8.4(a).
“Transfer Prepayment Offer” is defined in Section 8.4(a).
“Undisclosed Affiliate” means, at any time and with respect to the Company, any
Person (a) that beneficially owns or holds, directly or indirectly, 10% or more
of any class of voting or equity interests of the Company or (b) that is an
Affiliate of any such Person; provided that, at such time, (i) in the case of
clause (a), such Person shall not have given written notice to the Company of
its 10% or greater holding in the Company and, in the case of clause (b), such
Affiliate of such Person shall not have given the Company written notice of its
affiliation to the Company and (ii) the Company shall not otherwise have
knowledge of such holding or affiliation to the Company.
“Unrestricted Domestic Cash Amount” means, as of any date of determination, that
portion of the Company’s and its consolidated Subsidiaries’ aggregate cash and
Cash Equivalents in excess of $10,000,000 that is on deposit with one or more
lenders under any Major Credit Facility in the United States of America and that
is not encumbered by or subject to any Lien (including, without limitation, any
Lien permitted hereunder), setoff (other than ordinary course setoff rights of a
depository bank arising under a bank depository agreement for customary fees,
charges and other account-related expenses due to such depository bank
thereunder), counterclaim, recoupment, defense or other right in favor of any
Person; provided, however, that notwithstanding the actual amount of the
Unrestricted Domestic Cash Amount, no more than $20,000,000 of the Unrestricted
Domestic Cash Amount may be deducted in the calculation of Net Indebtedness.
“USA Patriot Act” means United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.
“Wholly-Owned Subsidiary” means, at any time, any Subsidiary one hundred percent
of all of the equity interests (except directors’ qualifying shares) and voting
interests of which are owned by any one or more of the Company and the Company’s
other Wholly-Owned Subsidiaries at such time.

 

Schedule B-17

--------------------------------------------------------------------------------

 

Schedules 4.10, 5.3, 5.4, 5.5, 5.15 and 10.6
(to Note Purchase Agreement)
[Intentionally Removed]

 

Schedule A-63

--------------------------------------------------------------------------------

 

Exhibit 1A
(to Note Purchase Agreement)
[Form of Series B Senior Note]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR PURSUANT TO THE SECURITIES OR “BLUE SKY” LAWS OF ANY
STATE OR FOREIGN JURISDICTION. THIS NOTE IS SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT IN ACCORDANCE WITH AND SUBJECT TO ALL
THE TERMS AND CONDITIONS OF THE NOTE PURCHASE AGREEMENT (AS DEFINED BELOW) AND
PURSUANT TO (A) A REGISTRATION STATEMENT WITH RESPECT TO THIS NOTE THAT IS
EFFECTIVE UNDER THE SECURITIES ACT, (B) RULE 144 UNDER THE SECURITIES ACT OR
(C) ANY OTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
Woodward Governor Company
Series B Senior Note Due October 1, 2013

No. RB-[                    ]
$[                    ]   [Date]
PPN: 980745 A@2

For Value Received, the undersigned, WOODWARD GOVERNOR COMPANY (herein called
the “Company”), a Delaware corporation, hereby promises to pay to
[                    ], or registered assigns, the principal sum of
[                    ] DOLLARS ($[                    ]) (or so much thereof as
shall not have been prepaid) on October 1, 2013, with interest (computed on the
basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
hereof at the Applicable Rate (as defined in the Note Purchase Agreement
referred to below) with respect to this Note from the date hereof, payable
semiannually, on the first (1st) day of October and April in each year,
commencing with the October or April next succeeding the date hereof, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law, on any overdue payment of interest and, during the continuance
of an Event of Default, on such unpaid balance and on any overdue payment of any
Make-Whole Amount, at a rate per annum from time to time equal to the Default
Rate, payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand).
Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at the
principal office of the Company in Fort Collins, Colorado or at such other place
as the Company shall have designated by written notice to the holder of this
Note as provided in the Note Purchase Agreement referred to below.

 

Exhibit 1A-1

--------------------------------------------------------------------------------

 

This Note is one of a series of Series B Senior Notes (herein called the
“Notes”) issued pursuant to the Note Purchase Agreement, dated as of October 1,
2008 (as from time to time amended, the “Note Purchase Agreement”), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof, and guarantied pursuant to that certain Guaranty Agreement,
dated as of October 1, 2008, by Woodward FST, Inc. and the other Guarantors
party thereto, as from time to time amended. Each holder of this Note will be
deemed, by its acceptance hereof, to have (i) agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreement and (ii) made
the representation set forth in Section 6.3 of the Note Purchase Agreement.
Unless otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer accompanied by a
written instrument of transfer duly executed, by the registered holder hereof or
such holder’s attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the Company
will not be affected by any notice to the contrary.
This Note is subject to prepayment, in whole or from time to time in part, at
the times and on the terms specified in the Note Purchase Agreement, but not
otherwise.
If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the
Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the rights of
the Company and the holder of this Note shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such State
that would permit the application of the laws of a jurisdiction other than such
State.

            Woodward Governor Company
      By:           [Name]        [Title]     

 

Exhibit 1A-2

--------------------------------------------------------------------------------

 

Exhibit 1B
(to Note Purchase Agreement)
[Form of Series C Senior Note]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR PURSUANT TO THE SECURITIES OR “BLUE SKY” LAWS OF ANY
STATE OR FOREIGN JURISDICTION. THIS NOTE IS SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT IN ACCORDANCE WITH AND SUBJECT TO ALL
THE TERMS AND CONDITIONS OF THE NOTE PURCHASE AGREEMENT (AS DEFINED BELOW) AND
PURSUANT TO (A) A REGISTRATION STATEMENT WITH RESPECT TO THIS NOTE THAT IS
EFFECTIVE UNDER THE SECURITIES ACT, (B) RULE 144 UNDER THE SECURITIES ACT OR
(C) ANY OTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
Woodward Governor Company
Series C Senior Note Due October 1, 2015

      No. RC-[                    ]
$[                    ]   [Date]
PPN: 980745 B*3

For Value Received, the undersigned, WOODWARD GOVERNOR COMPANY (herein called
the “Company”), a Delaware corporation, hereby promises to pay to
[                    ], or registered assigns, the principal sum of
[                    ] DOLLARS ($[                    ]) (or so much thereof as
shall not have been prepaid) on October 1, 2015, with interest (computed on the
basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
hereof at the Applicable Rate (as defined in the Note Purchase Agreement
referred to below) with respect to this Note from the date hereof, payable
semiannually, on the first (1st) day of October and April in each year,
commencing with the October or April next succeeding the date hereof, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law, on any overdue payment of interest and, during the continuance
of an Event of Default, on such unpaid balance and on any overdue payment of any
Make-Whole Amount, at a rate per annum from time to time equal to the Default
Rate, payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand).
Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at the
principal office of the Company in Fort Collins, Colorado or at such other place
as the Company shall have designated by written notice to the holder of this
Note as provided in the Note Purchase Agreement referred to below.

 

Exhibit 1B-1

--------------------------------------------------------------------------------

 

This Note is one of a series of Series C Senior Notes (herein called the
“Notes”) issued pursuant to the Note Purchase Agreement, dated as of October 1,
2008 (as from time to time amended, the “Note Purchase Agreement”), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof, and guarantied pursuant to that certain Guaranty Agreement,
dated as of October 1, 2008, by Woodward FST, Inc. and the other Guarantors
party thereto, as from time to time amended. Each holder of this Note will be
deemed, by its acceptance hereof, to have (i) agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreement and (ii) made
the representation set forth in Section 6.3 of the Note Purchase Agreement.
Unless otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer accompanied by a
written instrument of transfer duly executed, by the registered holder hereof or
such holder’s attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the Company
will not be affected by any notice to the contrary.
This Note is subject to prepayment, in whole or from time to time in part, at
the times and on the terms specified in the Note Purchase Agreement, but not
otherwise.
If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the
Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the rights of
the Company and the holder of this Note shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such State
that would permit the application of the laws of a jurisdiction other than such
State.

            Woodward Governor Company
      By:           [Name]        [Title]     

 

Exhibit 1B-2

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Exhibit 1C
(to Note Purchase Agreement)
[Form of Series D Senior Note]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR PURSUANT TO THE SECURITIES OR “BLUE SKY” LAWS OF ANY
STATE OR FOREIGN JURISDICTION. THIS NOTE IS SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT IN ACCORDANCE WITH AND SUBJECT TO ALL
THE TERMS AND CONDITIONS OF THE NOTE PURCHASE AGREEMENT (AS DEFINED BELOW) AND
PURSUANT TO (A) A REGISTRATION STATEMENT WITH RESPECT TO THIS NOTE THAT IS
EFFECTIVE UNDER THE SECURITIES ACT, (B) RULE 144 UNDER THE SECURITIES ACT OR
(C) ANY OTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
Woodward Governor Company
Series D Senior Note Due October 1, 2018

      No. RD-[                    ]
$[                    ]   [Date]
PPN: 980745 B@1

For Value Received, the undersigned, WOODWARD GOVERNOR COMPANY (herein called
the “Company”), a Delaware corporation, hereby promises to pay to
[                    ], or registered assigns, the principal sum of
[                    ] DOLLARS ($[                    ]) (or so much thereof as
shall not have been prepaid) on October 1, 2018, with interest (computed on the
basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance
hereof at the Applicable Rate (as defined in the Note Purchase Agreement
referred to below) with respect to this Note from the date hereof, payable
semiannually, on the first (1st) day of October and April in each year,
commencing with the October or April next succeeding the date hereof, until the
principal hereof shall have become due and payable, and (b) to the extent
permitted by law, on any overdue payment of interest and, during the continuance
of an Event of Default, on such unpaid balance and on any overdue payment of any
Make-Whole Amount, at a rate per annum from time to time equal to the Default
Rate, payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand).
Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at the
principal office of the Company in Fort Collins, Colorado or at such other place
as the Company shall have designated by written notice to the holder of this
Note as provided in the Note Purchase Agreement referred to below.

 

Exhibit 1C-1

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This Note is one of a series of Series D Senior Notes (herein called the
“Notes”) issued pursuant to the Note Purchase Agreement, dated as of October 1,
2008 (as from time to time amended, the “Note Purchase Agreement”), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof, and guarantied pursuant to that certain Guaranty Agreement,
dated as of October 1, 2008, by Woodward FST, Inc. and the other Guarantors
party thereto, as from time to time amended. Each holder of this Note will be
deemed, by its acceptance hereof, to have (i) agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase Agreement and (ii) made
the representation set forth in Section 6.3 of the Note Purchase Agreement.
Unless otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer accompanied by a
written instrument of transfer duly executed, by the registered holder hereof or
such holder’s attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the Company
will not be affected by any notice to the contrary.
This Note is subject to prepayment, in whole or from time to time in part, at
the times and on the terms specified in the Note Purchase Agreement, but not
otherwise.
If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the
Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the rights of
the Company and the holder of this Note shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such State
that would permit the application of the laws of a jurisdiction other than such
State.

            Woodward Governor Company
      By:           [Name]        [Title]     

 

Exhibit 1C-2

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Exhibit 2
(to Note Purchase Agreement)
[Form of Guaranty Agreement]
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this “Agreement” or this “Guaranty”) dated as of
October 1, 2008, is entered into on a joint and several basis by each party
listed on the signature pages hereto together with any entity which may become a
party hereto by execution and delivery of a Guaranty Supplement in substantially
the form set forth as Exhibit A hereto (a “Guaranty Supplement”) (each such
party individually, a “Guarantor” and collectively, the “Guarantors”). Woodward
Governor Company, a Delaware corporation (the “Company”), is entering into that
certain Note Purchase Agreement dated the date hereof (the “Note Purchase
Agreement”) by and among the Company and each of the institutional investors
named on Schedule A attached to such Note Purchase Agreement (the “Note
Purchasers”), providing for, among other things, the issue and sale by the
Company to the Note Purchasers of (a) $100,000,000 aggregate principal amount of
its Series B Senior Notes due October 1, 2013 (the “Series B Notes”), (b)
$50,000,000 aggregate principal amount of its Series C Senior Notes due
October 1, 2015 (the “Series C Notes”) and (c) $100,000,000 aggregate principal
amount of its Series D Senior Notes due October 1, 2018 (the “Series D Notes”
and, together with the Series B Notes and the Series C Notes, collectively, the
“Notes”). The Note Purchasers together with their respective successors and
assigns are collectively referred to herein as the “Secured Parties.”
Capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Note Purchase Agreement.
The Note Purchasers have required as a condition of their purchase of the Notes
that the Company cause each of the undersigned to enter into this Guaranty and,
in accordance with Section 9.8 of the Note Purchase Agreement, cause each
Subsidiary which from time to time becomes obligated as a guarantor or obligor
under any Major Credit Facility to enter into a Guaranty Supplement, in each
case as security for the Notes, and the Company has agreed to cause each of the
undersigned to execute this Guaranty and, in accordance with Section 9.8 of the
Note Purchase Agreement, to cause each Subsidiary which from time to time
becomes obligated as a guarantor or obligor under any Major Credit Facility to
execute a Guaranty Supplement, in each case in order to induce the Note
Purchasers to purchase the Notes and thereby benefit the Company and its
Subsidiaries by providing funds to the Company. Notwithstanding anything
contained in Section 9.8(a) of the Note Purchase Agreement to the contrary, the
Company shall be under no obligation to (but may in its sole discretion) require
any Foreign Subsidiary to become a Guarantor in respect of the Note Purchase
Agreement and the Notes to the extent such Foreign Subsidiary’s obligations
under all Major Credit Facilities consist solely of Foreign Borrowing or
guaranties of a Foreign Borrowing by another Foreign Subsidiary. Each of the
Guarantors is a Wholly-Owned Subsidiary of the Company and acknowledges that it
will derive substantial benefit from the purchase of Notes by the Note
Purchasers. As consideration therefor and in order to induce the Note Purchasers
to purchase Notes, the Guarantors are willing to execute this Agreement.

 

 

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Accordingly, each Guarantor hereby agrees as follows:
SECTION 1. Guaranty. Each Guarantor unconditionally guaranties, jointly with the
other Guarantors and severally, as a primary obligor and not merely as a surety,
(a) the due and punctual payment of (i) the principal of and premium, if any,
the Make-Whole Amount, if any, and interest (including interest accruing during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Notes, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise and (ii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), owed by the Company to the Secured Parties under
the Note Purchase Agreement and the Notes and (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Company under or pursuant to the Note Purchase Agreement and the Notes (all the
monetary and other obligations referred to in the preceding clauses (a) and
(b) being collectively referred to herein as the “Obligations”). Each Guarantor
further agrees that the Obligations may be extended or renewed, in whole or in
part, without notice to or further assent from it, and that it will remain bound
upon its guaranty notwithstanding any extension or renewal of any Obligation.
Anything contained in this Agreement to the contrary notwithstanding, the
obligations of each Guarantor hereunder shall be limited to a maximum aggregate
amount equal to the greatest amount that would not render such Guarantor’s
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
provisions of applicable state law (collectively, the “Fraudulent Transfer
Laws”), in each case after giving effect to all other liabilities of such
Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, to the extent permitted by
applicable law, any liabilities of such Guarantor (a) in respect of intercompany
indebtedness to the Company or Affiliates of the Company to the extent that such
indebtedness would be discharged in an amount equal to the amount paid by such
Guarantor hereunder and (b) under any guaranty of senior unsecured Indebtedness
or Indebtedness subordinated in right of payment to the Obligations which
guaranty contains a limitation as to maximum amount similar to that set forth in
this paragraph, pursuant to which the liability of such Guarantor hereunder is
included in the liabilities taken into account in determining such maximum
amount) and after giving effect as assets to the value (as determined under the
applicable provisions of the Fraudulent Transfer Laws) of any rights to
subrogation, contribution, reimbursement, indemnity or similar rights of such
Guarantor pursuant to (i) applicable law or (ii) any agreement providing for an
equitable allocation among such Guarantor and other Affiliates of the Company of
obligations arising under guaranties by such parties.
SECTION 2. Obligations Not Waived. To the fullest extent permitted by applicable
law, each Guarantor waives presentment to, demand of payment from and protest to
the Company of any of the Obligations, and also waives notice of acceptance of
this Guaranty and notice of protest for nonpayment. To the fullest extent
permitted by applicable law, the obligations of each Guarantor hereunder shall
not be affected by (a) the failure of any Secured Party to assert any claim or
demand or to enforce or exercise any right or remedy against the Company, any
other Guarantor or any other Person under the provisions of the Note Purchase
Agreement, the Notes or otherwise, (b) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of this
Agreement, the Note Purchase Agreement, the Notes, any guaranty or any other
agreement, including with respect to any other Guarantor under this Agreement or
(c) the failure to perfect any security interest in, or the release of, any of
the security, if any, held by or on behalf of any Secured Party.

 

 

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SECTION 3. Security. Each of the Guarantors authorizes each of the Secured
Parties to (a) take and hold security for the payment of this Guaranty and the
Obligations and exchange, enforce, waive and release any such security,
(b) apply such security and direct the order or manner of sale thereof as they
in their sole discretion may determine and (c) release or substitute any one or
more endorsees, other guarantors or other obligors.
SECTION 4. Guaranty of Payment. Each Guarantor further agrees that this Guaranty
constitutes a guaranty of payment when due and not of collection, and waives any
right to require that any resort be had by any Secured Party to the Company, any
other Guarantor or any other Person, to any of the security held for payment of
the Obligations or to any balance of any deposit account or credit on the books
of any Secured Party in favor of the Company or any other Person.
SECTION 5. No Discharge or Diminishment of Guaranty. The obligations of each
Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment in
full in cash of the Obligations or, with respect to any Guarantor, the release
of such Guarantor pursuant to Section 9.8(b) of the Note Purchase Agreement),
including any claim of waiver, release, surrender, alteration or compromise of
any of the Obligations, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of each Guarantor hereunder
shall not be discharged or impaired or otherwise affected by the failure of any
Secured Party to assert any claim or demand or to enforce any remedy under the
Note Purchase Agreement, the Notes or any other agreement, by any waiver or
modification of any provision of any thereof, by any default, failure or delay,
willful or otherwise, in the performance of the Obligations, or by any other act
or omission that may or might in any manner or to any extent vary the risk of
any Guarantor or that would otherwise operate as a discharge of any Guarantor as
a matter of law or equity (other than the indefeasible payment in full in cash
of all the Obligations).
SECTION 6. Defenses of Company Waived. To the fullest extent permitted by
applicable law, each of the Guarantors waives any defense based on or arising
out of any defense of the Company or the unenforceability of the Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Company, other than the final and indefeasible payment in full
in cash of the Obligations. The Secured Parties may, at their election,
foreclose on any security held by one or more of them by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with the Company, any other Guarantor or any other Person or
exercise any other right or remedy available to them against the Company or any
other Guarantor, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Obligations have been fully,
finally and indefeasibly paid in cash. Pursuant to applicable law, each of the
Guarantors waives any defense arising out of any such election even though such
election operates, pursuant to applicable law, to impair or to extinguish any
right of reimbursement or subrogation or other right or remedy of such Guarantor
against the Company, any other Guarantor or any other Person, as the case may
be, or any security.

 

 

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SECTION 7. Agreement to Pay; Subordination. In furtherance of the foregoing and
not in limitation of any other right that any Secured Party has at law or in
equity against any Guarantor by virtue hereof, upon the failure of the Company
to pay any Obligation when and as the same shall become due, whether at
maturity, by acceleration, after notice of prepayment or otherwise, each
Guarantor hereby promises to and will forthwith pay, or cause to be paid, to
such Secured Party as designated thereby in cash the amount of such unpaid
Obligations. Upon payment by any Guarantor of any sums to any Secured Party as
provided above, all rights of such Guarantor against the Company arising as a
result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior in right
of payment to the prior indefeasible payment in full in cash of all the
Obligations. In addition, any indebtedness of the Company or any Guarantor now
or hereafter held by any Guarantor is hereby subordinated in right of payment to
the prior payment in full of the Obligations. If any amount shall erroneously be
paid to any Guarantor on account of (i) such subrogation, contribution,
reimbursement, indemnity or similar right or (ii) any such indebtedness of the
Company or any other Guarantor, such amount shall be held in trust for the
benefit of the Secured Parties and shall forthwith be paid to the Secured
Parties to be credited against the payment of the Obligations, whether matured
or unmatured, in accordance with the terms of the Note Purchase Agreement and
the Notes.
SECTION 8. Information. Each of the Guarantors assumes all responsibility for
being and keeping itself informed of the Company’s financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the risks that such
Guarantor assumes and incurs hereunder, and agrees that no Secured Party will
have any duty to advise any of the Guarantors of information known to it or any
of them regarding such circumstances or risks.
SECTION 9. Representations and Warranties. Each of the Guarantors represents and
warrants as to itself that all representations and warranties relating to it
contained in the Note Purchase Agreement are true and correct.
SECTION 10. Termination. This Guaranty (a) shall terminate when all the
Obligations have been indefeasibly paid in full in cash and (b) shall continue
to be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any Obligation is rescinded or must otherwise be restored
by any Secured Party or any Guarantor upon the bankruptcy or reorganization of
the Company, any Guarantor or otherwise; provided however, that this Guaranty
shall terminate as to any Guarantor upon satisfaction of the requirements
specified in Section 9.8(b) of the Note Purchase Agreement with respect to such
Guarantor.
SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantors that are contained in
this Agreement shall bind and inure to the benefit of each Secured Party and
their respective successors and assigns. This Agreement shall become effective
as to any Guarantor when a counterpart hereof has been executed on behalf of
such Guarantor and thereafter shall be binding upon such Guarantor and its
successors and assigns (provided that no Guarantor shall have the right to
assign its obligations under this Agreement without the consent of each holder
of a Note and any such attempted assignment shall be void) and shall inure to
the benefit of the Secured Parties and their respective successors and assigns.
Promptly after the execution hereof or of any Guaranty Supplement, the
Guarantors shall deliver a copy thereof to each holder of a Note. This Agreement
shall be construed as a separate agreement with respect to each Guarantor and
may be amended, modified, supplemented, waived or released with respect to any
Guarantor without the approval of any other Guarantor and without affecting the
obligations of any other Guarantor hereunder.

 

 

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SECTION 12. Waivers; Amendment.
a. No failure or delay of any Secured Party in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
any Secured Party hereunder and under the Note Purchase Agreement and the Notes
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Guarantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on any Guarantor in any case shall entitle such
Guarantor to any other or further notice or demand in similar or other
circumstances.
b. Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to a written agreement entered into between the
Guarantors with respect to which such waiver, amendment or modification relates
and the Required Holders; provided that any Guarantor shall be released from
this Guaranty upon satisfaction of the requirements set forth in Section 9.8(b)
of the Note Purchase Agreement with respect to such Guarantor.
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH
STATE THAT WOULD PERMIT THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN
SUCH STATE.
SECTION 14. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 18 of the Note Purchase Agreement. All
communications and notices hereunder to a Guarantor shall be given to it in care
of the Company at the address set forth in Section 18 of the Note Purchase
Agreement.
SECTION 15. Survival of Agreement, Severability.
a. All covenants, agreements, representations and warranties made by the
Guarantors herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement, the Note Purchase
Agreement or the Notes shall be considered to have been relied upon by each Note
Purchaser and each other holder of a Note and shall survive the purchase of the
Notes and any transfer thereof, including successive transfers, regardless of
any investigation made by any Note Purchaser or other holder of a Note or on
their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Note or any other fee or amount
payable under this Agreement, the Note Purchase Agreement or any Note is
outstanding.

 

 

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b. In the event any one or more of the provisions contained in this Agreement,
the Note Purchase Agreement or the Notes shall be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 16. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 11. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 17. Jurisdiction and Process; Waiver of Jury Trial.
a. Each Guarantor hereby irrevocably submits to the non-exclusive jurisdiction
of any New York State or federal court sitting in the Borough of Manhattan, The
City of New York, over any suit, action or proceeding arising out of or relating
to this Agreement, the Note Purchase Agreement or the Notes. To the fullest
extent permitted by applicable law, each Guarantor irrevocably waives and agrees
not to assert, by way of motion, as a defense or otherwise, any claim that such
Guarantor is not subject to the jurisdiction of any such court, any objection
that such Guarantor may now or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in any such court and any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.
b. Each Guarantor consents to process being served by or on behalf of any
Secured Party in any suit, action or proceeding of the nature referred to in
Section 17(a) by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, return receipt requested,
to it at the address specified in Section 14 or at such other address of which
such Secured Party shall then have been notified pursuant to such Section. Each
Guarantor agrees that such service upon receipt (i) shall be deemed in every
respect effective service of process upon such Guarantor in any such suit,
action or proceeding and (ii) shall, to the fullest extent permitted by
applicable law, be taken and held to be valid personal service upon and personal
delivery to such Guarantor. Notices hereunder shall be conclusively presumed
received as evidenced by a delivery receipt furnished by the United States
Postal Service or any reputable commercial delivery service.

 

 

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c. Nothing in this Agreement shall affect the right of any Secured Party to
serve process in any manner permitted by law, or limit any right that any
Secured Party may have to bring proceedings against any Guarantor in the courts
of any appropriate jurisdiction or to enforce in any lawful manner a judgment
obtained in one jurisdiction in any other jurisdiction.
d. The parties hereto hereby waive trial by jury in any action brought on or
with respect to this Agreement, the Note Purchase Agreement, the Notes or any
other document executed in connection herewith or therewith.
SECTION 18. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Secured Party is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other Indebtedness at any time owing by such Secured Party to or for
the credit or the account of any Guarantor against any or all the obligations of
such Guarantor now or hereafter existing under this Agreement, the Note Purchase
Agreement or the Notes held by such Secured Party, irrespective of whether or
not such Secured Party shall have made any demand under this Agreement, the Note
Purchase Agreement or the Notes and although such obligations may be unmatured.
The rights of each Secured Party under this Section 18 are in addition to other
rights and remedies (including other rights of setoff) which such Secured Party
may have.
SECTION 19. Additional Guarantors. Pursuant to Section 9.8(a) of the Note
Purchase Agreement, certain Subsidiaries of the Company are required to enter
into a Guaranty Supplement and become a party to this Agreement. Upon execution
and delivery, after the date hereof, by any such Subsidiary of a Guaranty
Supplement, such Subsidiary shall become a Guarantor hereunder with the same
force and effect as if originally named as a Guarantor herein. The execution and
delivery of any instrument adding an additional Guarantor as a party to this
Agreement shall not require the consent of any other Guarantor hereunder. The
rights and obligations of each Guarantor hereunder shall remain in full force
and effect notwithstanding the addition of any new Guarantor as a party to this
Agreement.

 

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

            WOODWARD FST, INC.
      By:           Name:           Title:        

 

 

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EXHIBIT A
(to Form of Guaranty Agreement)
GUARANTY SUPPLEMENT
To the Secured Parties (as defined in the hereinafter
   defined Guaranty Agreement)
Ladies and Gentlemen:
WHEREAS, Woodward Governor Company, a Delaware corporation (the “Company”), has
entered into that certain Note Purchase Agreement dated as of October 1, 2008
(the “Note Purchase Agreement”) among the Company and each of the institutional
investors named on Schedule A attached to said Note Purchase Agreement (the
“Note Purchasers”), providing for, among other things, the issue and sale by the
Company to the Note Purchasers of (a) $100,000,000 aggregate principal amount of
its Series B Senior Notes due October 1, 2013 (the “Series B Notes”), (b)
$50,000,000 aggregate principal amount of its Series C Senior Notes due
October 1, 2015 (the “Series C Notes”) and (c) $100,000,000 aggregate principal
amount of its Series D Senior Notes due October 1, 2018 (the “Series D Notes”
and, together with the Series B Notes and the Series C Notes, collectively, the
“Notes”). Capitalized terms used herein shall have the meanings set forth in the
hereinafter defined Guaranty Agreement unless herein defined or the context
shall otherwise require.
WHEREAS, as a condition precedent to their purchase of the Notes, the Note
Purchasers required that from time to time certain subsidiaries of the Company
enter into a Guaranty Agreement as security for the Notes (the “Guaranty
Agreement”).
Pursuant to Section 9.8(a) of the Note Purchase Agreement, the Company has
agreed to cause the undersigned,  _____ , a [corporation] organized under the
laws of  _____  (the “Additional Guarantor”), to join in the Guaranty Agreement.
In accordance with the requirements of the Guaranty Agreement, the Additional
Guarantor does hereby become a party to the Guaranty Agreement and desires to
amend the definition of Guarantor (as the same may have been heretofore amended)
set forth in the Guaranty Agreement attached hereto so that at all times from
and after the date hereof, the Additional Guarantor is and shall be bound by the
terms of the Guaranty Agreement and shall be jointly and severally liable as set
forth in the Guaranty Agreement for the obligations of the Company under the
Note Purchase Agreement and Notes to the extent and in the manner set forth in
the Guaranty Agreement.
The undersigned is the duly elected  _____  of the Additional Guarantor, a
subsidiary of the Company, and is duly authorized to execute and deliver this
Guaranty Supplement to each of you. The execution by the undersigned of this
Guaranty Supplement shall evidence its consent to and acknowledgment and
approval of the terms set forth herein and in the Guaranty Agreement and by such
execution the Additional Guarantor shall be deemed to have made in favor of the
Secured Parties the representations and warranties set forth in Section 9 of the
Guaranty Agreement.
Upon execution of this Guaranty Supplement, the Guaranty Agreement shall be
deemed to be amended as set forth above. Except as amended herein, the terms and
provisions of the Guaranty Agreement are hereby ratified, confirmed and approved
in all respects.

 

Exhibit 2-1

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Any and all notices, requests, certificates and other instruments (including the
Notes) may refer to the Guaranty Agreement without making specific reference to
this Guaranty Supplement, but nevertheless all such references shall be deemed
to include this Guaranty Supplement unless the context shall otherwise require.
Dated:                                         , 20        .

            [NAME OF ADDITIONAL GUARANTOR]
      By:           Name:           Title:        

 

 

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Exhibit 4.5(a)
(to Note Purchase Agreement)
[Form of Opinion of General Counsel
for the Company and the Closing Guarantor]
[Intentionally Removed]

 

Exhibit 4.5(a)-1

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Exhibit 4.5(b)
(to Note Purchase Agreement)
[Form of Opinion of Special Counsel
for the Company and the Closing Guarantor]
[Intentionally Removed]

 

Exhibit 4.5(b)-1

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Exhibit 4.5(c)
(to Note Purchase Agreement)
[Form of Opinion of Special Counsel
for the Purchasers]
[Intentionally Removed]

 

Exhibit 4.5(c)-1