EX-10.2






Exhibit 10.2




$200,000,000



Chicago, Illinois



December 21, 2012



FOR VALUE RECEIVED, WOODWARD, INC. (the “Borrower”) HEREBY PROMISES TO PAY to the order of
JPMORGAN CHASE BANK, N.A. (the “Bank”), at its offices located at 1111 Polaris Parkway, Columbus,
Ohio 43240, or at such other place as the Bank or any holder hereof may from time to time
designate, the lesser of (i) the principal sum of TWO HUNDRED MILLION DOLLARS ($200,000,000) and
(ii) the aggregate unpaid principal amount of the Loans (as hereinafter defined) evidenced hereby,
in lawful money of the United States, on December 20, 2013 (the “Maturity Date”) (or such earlier
date as shall be specified by the Bank in accordance with the terms of this Note), together with
interest on the unpaid principal balance of each Loan at a rate equal to the Applicable Interest
Rate (as hereinafter defined).



Interest



Each Loan shall bear interest at the interest rate agreed between the Borrower and the Bank as
the interest rate to be paid to the Bank on such Loan in accordance with the terms of this Note
(each such rate, the “Applicable Interest Rate”). The Applicable Interest Rate for any Loan shall
be, at the Borrower’s option and in accordance herewith, (a) the CB Floating Rate plus the
Applicable Margin (as hereinafter defined) (the “CB Floating Rate Loan(s)”) or (b) the Adjusted
LIBO Rate (as hereafter defined) plus the Applicable Margin (as hereinafter defined) (the “LIBOR
Loan(s)”, and, together with the CB Floating Rate Loans, collectively, “Loans”). Interest on each
Loan shall be payable in arrears on the last day of the applicable Interest Period for such Loan
and, if such Interest Period is in excess of three (3) months, on the last day of each three (3)
month interval after the date such Loan is made, at maturity (whether at stated maturity, by
acceleration or otherwise) and thereafter, on demand. Any Loan not paid when due shall bear
interest at a rate two percent (2%) per annum above the Bank’s CB Floating Rate plus the Applicable
Margin, but in no event higher than the maximum permitted under applicable law. All interest
hereunder shall be computed for actual number of days elapsed on the basis of a 360-day year.



The Bank is authorized to enter on the Bank’s books and records, which may be electronic in
nature, and, at the Bank’s sole and absolute discretion, on a schedule attached to this Note:
(i) the amount of each Loan, (ii) the date on which each Loan is made, (iii) the date on which each
Loan shall be due and payable to the Bank, provided that all Loans shall be due and payable no
later than the Maturity Date, (iv) the Applicable Interest Rate to be paid to the Bank on each
Loan, (v) the amount of each payment made hereunder and the Loans to which such payment shall be
applied (which shall be at the discretion of the Bank), and (vi) the outstanding principal balance
of the Loans from time to time. At the discretion of the Bank, any such entries may aggregate
Loans (and payments thereon) with the same interest rate and tenor and, if made on a given date,
may show only the Loans outstanding on such date. Any such entries shall be conclusive in the
absence of manifest error. The failure by the Bank to make any or all such entries shall not
relieve the Borrower from its obligation to pay any and all amounts due hereunder.



Prepayment



The Borrower shall not have the right to prepay any LIBOR Loan prior to the last day of the
applicable Interest Period. In the event the Borrower does prepay a LIBOR Loan prior to the last
day of the Interest Period applicable thereto, the Borrower shall reimburse the Bank on demand for
any loss incurred or to be incurred by it. CB Floating Rate Loans may be prepaid by the Borrower
without premium or penalty.



Discretionary Loans by the Bank



The Bank, pursuant to a letter dated of even date herewith, has approved an uncommitted line
of credit to the Borrower in a principal amount not to exceed the face amount of this Note. The
execution and delivery of this Note and the acceptance by the Bank of this Note shall not be deemed
or construed to create any contractual commitment to lend to the Borrower on the part of the Bank.
The line of credit is in the form of Loans made from time to time by the Bank in its sole and
absolute discretion to the Borrower. This Note evidences the Borrower’s obligations to repay those
Loans. The aggregate outstanding principal amount of the Loans evidenced by this Note is the
amount so reflected from time to time in the records of the Bank or a schedule attached hereto.
Each LIBOR Loan shall be in a minimum principal amount of $1,000,000 and in increments of $500,000.
Each CB Floating Rate Loan shall be in a minimum principal amount of $500,000 and in increments of
$100,000. Each request for a Loan shall be made by an officer of the Borrower or other person
designated in writing by an officer of the Borrower, all of whom are hereby designated and
authorized by the Borrower to request Loans and agree to the terms thereof (including without
limitation the Applicable Interest Rate and Interest Period with respect thereto). The Borrower
shall give the Bank notice not later than 11:00a.m. (Eastern time) (i) in the case of a LIBOR
Loan, at least three (3) Business Days (as hereinafter defined) prior to the date (which shall be a
Business Day) of the proposed borrowing of (or continuation of any existing LIBOR Loan or
conversion of any CB Floating Rate Loan to) such LIBOR Loan, specifying the Interest Period
applicable thereto, and (ii) in the case of a CB Floating Rate Loan, by noon (Eastern time) on the
date (which shall be a Business Day) of the proposed borrowing of such CB Floating Rate Loan,
specifying the Interest Period applicable thereto. If no election as to the type of Loan or
Interest Period is specified, any requested Loan shall be deemed to bear interest at the applicable
CB Floating Rate plus the Applicable Margin and shall have an Interest Period of one month. If no
election as to the Interest Period is specified in the case of a LIBOR Loan, the LIBOR Loan shall
be deemed to have an Interest Period of one month. The principal amount of each Loan shall be
repaid on the earliest to occur of (i) the Maturity Date, (ii) the end of the Interest Period
applicable to such Loan, and (iii) the date upon which the entire unpaid balance hereof shall
otherwise become due and payable.



Increased Costs



If any there is any change, after the date of this Note, to any applicable domestic or foreign
law, treaty, government rule or regulation or the interpretation or administration thereof by a
governmental authority charged with such interpretation or administration, or compliance by the
Bank with any guideline, request or directive of such an authority (whether or not having the force
of law), and such change shall (a) affect the basis of taxation of payments to the Bank of any
amounts payable by the Borrower under or otherwise with respect to this Note or any other
agreements or instruments executed in connection herewith (together with this Note, collectively
the “Related Documents”) (other than taxes imposed on the overall net income of the Bank by the
jurisdiction of its lending office or by any political subdivision or taxing authority of the
jurisdiction in which the Bank has its principal office), or (b) impose, modify or deem applicable
any reserve, special deposit or similar requirement (including, without limitation, any compulsory
loan requirement, insurance charge or other assessment) against assets of, deposits with or for
the account of, or credit extended by, the Bank (except any such reserve requirement reflected in
the Adjusted LIBO Rate), or (c) impose on the Bank any other condition, cost or expense with
respect to this Note or the other Related Documents and the result of any of the foregoing is to
increase the cost to the Bank of extending, maintaining or funding any LIBOR Loan or to reduce the
amount of any sum receivable by the Bank under this Note or any Related Document, or (d) affect the
amount of capital or liquidity required or expected to be maintained by the Bank (or the Bank’s
holding company) and the Bank determines that the amount of such capital or liquidity is increased
by or based upon the existence of the Bank’s obligations under this Note or the other Related
Documents and the increase has the effect of reducing the rate of return on the Bank’s (or the
Bank’s holding company’s) capital or liquidity as a consequence of the obligations under this Note
or the other Related Documents to a level below that which the Bank (or the Bank’s holding company)
could have achieved but for such circumstances (taking into consideration its and its holding
company’s policies with respect to capital adequacy and liquidity) by an amount deemed by the Bank
to be material, then the Borrower shall pay to the Bank, from time to time, upon request by the
Bank, additional amounts sufficient to compensate the Bank for the increased cost or reduction
suffered. Whenever the Bank shall learn of circumstances described in this section which are likely
to result in additional costs to the Borrower, the Bank shall give prompt written notice to the
Borrower of the basis for and the estimated amount of any such anticipated additional costs. A
statement as to the amount of the increased cost or reduced sum receivable, prepared in good faith
and in reasonable detail by the Bank and submitted by the Bank to the Borrower, shall be conclusive
and binding for all purposes absent manifest error. Notwithstanding the foregoing, (x) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines,
requirements or directives promulgated by the Bank for International Settlements, the Basel
Committee on Banking Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, in each case pursuant to Basel III, shall be deemed to be a “change
after the date of this Note” regardless of the date enacted, adopted, issued or implemented.



Illegality



If any applicable domestic or foreign law, treaty, rule or regulation now or hereafter in
effect (whether or not it now applies to the Bank) or the interpretation or administration thereof
by a governmental authority charged with such interpretation or administration, or compliance by
the Bank with any guideline, request or directive of such an authority (whether or not having the
force of law), shall make it unlawful or impossible for the Bank to maintain or fund the LIBOR
Loans, then, upon notice to the Borrower by the Bank, the outstanding principal amount of the LIBOR
Loans, together with accrued interest and any other amounts payable to the Bank under this Note or
the other Related Documents on account of the LIBOR Loans shall be repaid (a) immediately upon the
Bank’s demand if such change or compliance with such requests, in the Bank’s judgment, requires
immediate repayment, or (b) at the expiration of the last Interest Period to expire before the
effective date of any such change or request. The option of the Borrower to request LIBOR Loans
shall be suspended until the Bank notifies the Borrower that such Loans are no longer unlawful or
impossible.



Indemnity



The Borrower shall indemnify the Bank against (i) any loss or expense which the Bank may
sustain or incur as a consequence of the occurrence of any Event of Default (as hereinafter
defined) and (ii) any loss or expense sustained or incurred including, without limitation, in
connection with obtaining, liquidating or employing deposits from third parties as a consequence of
the conversion of any Loan from one interest rate to another or the payment of any principal of any
LIBOR Loan by the Borrower (in either case, whether pursuant to a default, change in legality or
otherwise) on any day other than the last day of the applicable Interest Period therefor, or the
failure by the Borrower to borrow, prepay, convert or continue any LIBOR Loan or part thereof on
the date specified therefor in any notice given by the Borrower. The Bank shall provide to the
Borrower a statement, supported where applicable by documentary evidence, setting forth the amount
of any such loss or expense, which statement shall be conclusive absent manifest error.



Inability to Determine Interest Rate



If the Bank determines (which determination shall be conclusive absent manifest error) that
(a) adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO
Rate, as applicable, or (b) the relevant interest rates referred to in the definition of LIBO Rate
do not accurately cover the cost to the Bank of making, funding or maintaining LIBOR Loans, then
the Bank shall, at the Bank’s option, notify the Borrower of such circumstances, whereupon (i) the
option of the Borrower to request LIBOR Loans shall be suspended until the Bank notifies the
Borrower that the circumstances giving rise to the suspension no longer exist, and (ii) the
Borrower shall repay in full the then outstanding principal amount of each LIBOR Loan, together
with accrued interest, on the last day of the then current Interest Period applicable to such LIBOR
Loan. If the Bank determines (which determination shall be conclusive absent manifest error) on
any day that quotations of interest rates for the relevant deposits referred to in the definition
of Adjusted One Month LIBOR Rate are not being provided for purposes of determining the interest
rate on any CB Floating Rate Loan as provided in this Note, then each CB Floating Rate Loan shall
bear interest at the Prime Rate (as hereinafter defined) plus the Applicable Margin for CB Floating
Rate Loans until the Bank determines that quotations of interest rates for the relevant deposits
referred to in the definition of Adjusted One Month LIBOR Rate are being provided.



Events of Default



If any of the following events (each, an “Event of Default” and, collectively, the “Events of
Default”) shall occur: (i) any failure by the Borrower to pay any principal, interest, fees, or
other obligations when due under this Note or any other Related Document , (ii) any other violation
or failure to comply with any other provision of this Note or any other Related Document, (iii) any
warranty, representation or statement of fact made in writing to the Bank at any time by an officer
or authorized agent of the Borrower is false or misleading in any material respect when made, (iv)
a “Default” (as defined in the below-defined Credit Agreement) has occurred and is continuing under
that certain Third Amended and Restated Credit Agreement dated as of January 4, 2012, (the “Credit
Agreement”) among Borrower, the foreign subisidiary borrowers from time to time party thereto, the
other lenders party thereto, and Bank, as Administrative Agent, or, if the Credit Agreement has
been terminated or expired, a Default would have occurred if the Credit Agreement had not expired
or been terminated (and if the Credit Agreement has terminated or expired, the reference to the
Credit Agreement shall refer to the Credit Agreement in the form it was in immediately prior to
such termination or expiration), (v) Borrower or any Subsidiary shall grant liens over any
substantial part of their property securing the obligations under the Credit Agreement or any
amendment, restatement or refinance thereof, and the obligations of Borrower under this Note are
not secured on a pari passu basis with the lenders under the Credit Agreement or such amendment,
restatement, or refinance, (vi) the aggregate commitments (whether used or unused) of lenders
under the Credit Agreement or any amendment, restatement or refinance thereof are reduced to an
amount of less than $400,000,000, or (vii) any petition is filed by or against the Borrower or any
Subsidiary under the Federal Bankruptcy Code or similar state or foreign law, and, in the case of a
petition filed against Borrower or any Subsidiary, such petition is not dismissed, stayed, bonded
or discharged within sixty (60) days after commencement of the case, then and in any such
event, in addition to all rights and remedies of the Bank under applicable law and otherwise, all
such rights and remedies being cumulative, not exclusive and enforceable alternatively,
successively and concurrently, the Bank may, at its option, declare any and all of the amounts
owing under this Note to be due and payable, whereupon the maturity of the then unpaid balance
hereof shall be accelerated and the same, together with all interest accrued hereon, shall
forthwith become due and payable provided, however, that if a bankruptcy event
specified in subsection (vii) above shall have occurred with respect to the Borrower or any
Subsidiary, all amounts owing under this Note shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are expressly waived by the
Borrower. Further, acceptance of any payments shall not waive or affect any prior demand or
acceleration of amounts due hereunder, and each such payment made shall be applied first to the
payment of accrued interest, then to the aggregate unpaid principal or otherwise as determined by
the Bank in its sole and absolute discretion. “Subsidiary” means (i) any corporation if more than
50% of the outstanding securities having ordinary voting power is owned or controlled, directly or
indirectly, by the Borrower or by one or more of its Subsidiaries, or (ii) any partnership,
association, joint venture or similar business organization if more than 50% of the ownership
interests having ordinary voting power are so owned or controlled.



Definitions



A. Adjusted LIBO Rate




“Adjusted LIBO Rate” means, with respect to any LIBOR Loan for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16
of 1%) equal to (i) the LIBO Rate in effect for such Interest Period multipled by
(ii) the Statutory Reserve Rate.



B. Adjusted One Month LIBOR Rate




“Adjusted One Month LIBOR Rate” means, for any day, an interest rate per annum
equal to the sum of (i) 2.50% per annum plus (ii) the Adjusted LIBO Rate for a one
month Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day); provided that, for the avoidance of
doubt, the Adjusted LIBO Rate for any day shall be based on the rate appearing on
the Reuters BBA LIBOR Page 3750 (or on any successor or substitute page) at
approximately 11:00 a.m. London time on such day (without any rounding).




C. Applicable Margin




Applicable Margin means 0.0% per annum with respect to any CB Floating Rate
Loan and 0.87% per annum with respect to any LIBOR Loan.




D. Business Day




“Business Day” means any day other than a Saturday, Sunday or other day on
which the Bank is authorized or required by law or regulation to remain closed,
provided that, when used in connection with a LIBOR Loan, the term “Business Day”
shall also exclude any day on which banks are not open for dealings in dollar
deposits on the London interbank market.




E. CB Floating Rate




“CB Floating Rate” means the Prime Rate; provided that the CB Floating Rate
shall never be less than the Adjusted One Month LIBOR Rate on such day (or if such
day is not a Business Day, the immediately preceding Business Day). Any change in
the CB Floating Rate due to a change in the Prime Rate or the Adjusted One Month
LIBOR Rate shall be effective from and including the effective date of such change
in the Prime Rate or the Adjusted One Month LIBOR Rate, respectively.



F. Interest Period




(i) With respect to LIBOR Loans, “Interest Period” means the period
commencing on the date of such Loan and ending on the numerically
corresponding day that is 1calendar month thereafter (as selected by the
Borrower and agreed to by the Bank), and recorded on the Bank’s records
(which may be electronic in nature) or a schedule attached hereto; and




(ii) With respect to CB Floating Rate Loans, “Interest Period” shall
mean the period agreed to by the parties hereto;




provided, in each case, that (a) if any Interest Period would end on a day
which is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of a LIBOR Loan only, such next
succeeding Business Day would fall in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (b) the Interest
Period for any LIBOR Loan that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of the
last calendar month of such Interest Period, and (c) no Interest Period may extend
beyond the Maturity Date.




G. LIBO Rate




“LIBO Rate” means, with respect to any LIBOR Loan for any Interest Period, the
rate appearing on Reuters BBA LIBOR Rates Page 3750 (the “Page”) or any successor or
substitute page providing rate quotations comparable to those currently provided on
such Page, as determined by the Bank from time to time for purposes of providing
quotations of interest rates applicable to dollar deposits in the London interbank
market at approximately 11:00 a.m. London time, two Business Days prior to the
commencement of the Interest Period for dollar deposits with a maturity comparable
to such Interest Period. In the event that such rate is not available at such time
for any reason, then the LIBO Rate for the relevant Interest Period shall instead be
the rate at which dollar deposits of $5,000,000 and for a maturity comparable to
such Interest Period are offered by the principal London office of the Bank in
immediately available funds in the London interbank market at approximately 11:00
a.m. (London time) two Business Days prior to the commencement of such Interest
Period.




	 	H.	 	Prime Rate






“Prime Rate” means the rate of interest publicly announced by the Bank from time to
time as its prime rate in effect at its principal office in New York, New York; each
change in the Prime Rate is effective from and including the date such change is
publicly announced as being effective. THE PRIME RATE IS A REFERENCE RATE AND MAY
NOT BE THE BANK’S LOWEST RATE.




	 	I.	 	Statutory Reserve Rate






“Statutory Reserve Rate” means a fraction (the numerator of which is the number
one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special emergency or
supplemental reserves) expressed as a decimal established by the Board of Governors
of the Federal Reserve System (the “Board”) and any other banking authority to which
the Bank is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board).
Such reserve percentage shall include those imposed pursuant to such Regulation D.
LIBOR Loans shall be deemed to constitute Eurocurrency liabilities to be subject to
such reserve requirements without benefit of or credit for proration, exceptions or
offsets that may be available from time to time to the Bank under such Regulation D
or any comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.



Set-Off



The Borrower hereby gives to the Bank a right of set-off against all moneys, securities and
other property of the Borrower and the proceeds thereof, now or hereafter delivered to, remaining
with or in transit in any manner to the Bank, its correspondents, affiliates (including J.P Morgan
Securities LLC) or agents from or for the Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise or coming into possession, control or custody of the Bank or
its correspondents, affiliates or agents in any way, and also, any balance of any deposit accounts
and credits of the Borrower with, and any and all claims of the Borrower against the Bank at any
time existing, hereby authorizing the Bank at any time or times, without prior notice, to apply
such balances, credits or claims, or any part thereof, to the obligations of the Borrower under
this Note in such amounts as it may select, whether contingent, unmatured or otherwise.



Miscellaneous



The Borrower hereby waives diligence, demand, presentment, protest and notice of any kind, and
consents to extensions of the time of payment, release, surrender or substitution of security, or
forbearance or other indulgence, without notice.



This Note may not be changed, modified or terminated orally, but only by an agreement in
writing signed by the Borrower and the Bank.



The Bank reserves the right to assign or sell participations in the Loans or this Note to any
entity (including to any Federal Reserve Bank in accordance with applicable law), with, in the case
of an assignment only, the prior written consent of the Borrower, which shall not be unreasonably
withheld or delayed, provided, that, such consent shall not be necessary at any time an Event of
Default has occurred and is continuing.



The Borrower hereby authorizes the Bank and any other holder of an interest in this Note (a
“Holder”) to disclose confidential information relating to the financial condition or operations of
the Borrower (i) to any director, officer, or employee of the Bank, any Holder or any affiliate of
the Bank or any Holder, (ii) to any assignee, participant, or any other purchaser or prospective
assignee, participant or other purchaser of an interest in any Loan or this Note that agrees to
keep such confidential information confidential on customary terms, (iii) to legal counsel,
accountants, and other professional advisors to the Bank or any Holder, (iv) to regulatory
officials, (v) as requested or required by law, regulation, or legal process or (vi) in connection
with any legal proceeding concerning enforcement of the Note to which the Bank or any other Holder
is a party.



In the event the Bank or any Holder shall refer this Note to an attorney for collection, the
Borrower agrees to pay, in addition to unpaid principal and interest, all the costs and expenses
incurred in attempting or effecting collection hereunder, including reasonable attorney’s fees of
internal or outside counsel, whether or not suit is instituted.



In the event of any litigation with respect to this Note or any other Related Document, THE
BORROWER WAIVES THE RIGHT TO A TRIAL BY JURY and all rights of setoff and rights to interpose
counter-claims and cross-claims. The Borrower hereby irrevocably consents to the jurisdiction of
the courts of the State of Illinois and of any Federal court located in Chicago, Illinois in
connection with any action or proceeding arising out of or relating to this Note or any other
Related Document. The execution and delivery of this Note has been authorized by the Board of
Directors or other governing body of the Borrower and by any necessary vote or consent of the
shareholders, partners or members of the Borrower. The Borrower hereby authorizes the Bank to
complete this Note in any particulars according to the terms of the loan evidenced hereby. This
Note shall be governed by and construed in accordance with the laws of the State of Illinois
applicable to contracts made and to be performed in such State, and shall be binding upon the
successors and assigns of the Borrower and inure to the benefit of the Bank, its successors,
endorsees and assigns.



If any term or provision of this Note shall be held invalid, illegal or unenforceable the
validity of all other terms and provisions hereof shall in no way be affected thereby.



WOODWARD, INC.



By: /s/ Robert F. Weber, Jr.

Title: Vice Chairman, Chief Financial

Officer and Treasurer