Filed by Bowne Pure Compliance





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




 






 


 









 







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	 






 


 ii 









 





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	 





 



 iii 









 





	 	 	 	 	 
	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







 


 









 







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.


 


 









 





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.


 


-5-









 





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).


 


-6-









 





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; or


 


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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


 


-43-









 





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.]



 


-46-









 





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]





 


-47-












 




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]





 


 









 







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]





 


 









 







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]





 


 









 







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]





 


 









 







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]





 


 









 







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]





 


 









 







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]





 


 









 







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]









 


 









 










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]





 


 












 





	 	 	 	 	 
	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]




 


 









 







	 	 	 	 	 	 	 
	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]




 


 









 





	 	 	 	 	 	 	 
	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]




 


 









 





	 	 	 	 	 
	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]




 


 









 





	 	 	 	 	 
	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]




 


 









 





	 	 	 	 	 
	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]




 


 









 





	 	 	 	 	 	 	 
	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]




 


 









 





	 	 	 	 	 
	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]




 


 









 





	 	 	 	 	 
	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]




 


 









 





	 	 	 	 	 
	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]





 


 











 




Schedule A

(to Note Purchase Agreement)




[Intentionally Removed]





 


Schedule A-63









 







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









 






(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









 





“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









 





“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









 





“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









 





“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









 





“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









 





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









 






(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









 





“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









 







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









 





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









 







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.


 


 









 





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.


 


 









 





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.


 


 









 





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.


 


 









 





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.


 


 









 






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.


 


 









 






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.


 


 









 





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:  	 	 
	 




 


 









 







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









 





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:  	 	 
	 




 


 









 







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









 







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









 







Exhibit 4.5(c)

(to Note Purchase Agreement)

[Form of Opinion of Special Counsel 

for the Purchasers]

[Intentionally Removed]





 


Exhibit 4.5(c)-1