10-Q

SECURITIES & EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended September 30, 2001.
[ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. For the Transition period from _______________ to _______________.
Commission File Number 0-14714
Astec Industries, Inc.
(Exact Name of Registrant as Specified in its Charter)
Tennessee	62-0873631
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4101 Jerome Avenue, Chattanooga, Tennessee	37407
(Address of Principal Executive Offices)	(Zip Code)
(423) 867-4210
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES X	NO _______
Indicate the number of shares outstanding of each of the registrant's classes of stock as of the latest practicable date.
Class	Outstanding at November 13, 2001
Common Stock, par value $0.20	19,586,850

ASTEC INDUSTRIES, INC.
INDEX
Page Number
PART I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2001 and December 31, 2000		1
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2001 and 2000	2
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2001 and 2000	3
Notes to Unaudited Consolidated Financial Statements	4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	8
Item 3. Quantitative and Qualitative Disclosures about Market Risk	12
PART II - Other Information
Item 1. Legal Proceedings	12
Item 6. Exhibits and Reports on Form 8-K	13

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Astec Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands)
Account Description	September 30, 2001 (Unaudited)	December 31, 2000 (Note 1)
ASSETS
Current Assets
Cash and cash equivalents	$ 24,650	$ 7,053
Receivables - net	87,553	83,159
Inventories	120,602	126,308
Prepaid expenses and other	15,541	15,473
Total current assets	248,346	231,993
Property and equipment - net	128,943	126,928
Goodwill	35,535	37,208
Other assets	11,445	6,177
Total assets	$424,269	$402,306
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable	$ 3,241	$ 1,445
Current maturities of long-term debt	556	542
Accounts payable - trade	25,037	35,585
Other accrued liabilities	34,509	38,686
Total current liabilities	63,343	76,258
Long-term debt, less current maturities	146,789	118,511
Other non-current liabilities	9,861	12,466
Minority interest in consolidated subsidiary	436	448
Total shareholders' equity	203,840	194,623
Total liabilities and shareholders' equity	$424,269	$402,306

Astec Industries, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands)
(Unaudited)
	Three months ended					Nine months ended
	September 30,				September 30,
	2001	2000				2001		2000
Net sales	$103,124			$103,036			$372,721		$403,634
Cost of sales	85,932			78,428			294,784		304,410
Gross profit	17,192			24,608			77,937		99,224
Selling, general, administrative and engineering expenses	17,606			17,955			58,201		55,927
Income (loss) from operations	(414)			6,653			19,736		43,297
Interest expense	2,105			1,916			6,668		6,204
Other income, net of expense	131			596			1,239		3,485
Income (loss) before income taxes	(2,388)			5,333			14,307		40,578
Income taxes	(1,070)			1,926			5,308		15,825
Minority interest in earnings	28			--			89		--
Net (loss) income	$(1,346)			$3,407			$8,910		$24,753
Earnings (loss) per common share
Basic	$(0.07)		$0.18				$0.46		$1.29
Diluted	$(0.07)		$0.17				$0.45		$1.25
Weighted average common shares outstanding
Basic	19,469,473		19,181,748				19,392,251		19,180,756
Diluted	19,820,209		19,608,758				19,735,532		19,763,262

Astec Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
	Nine months ended September 30,
	2001	2000
Cash flows from operating activities:
Net income	$ 8,910	$24,753
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	12,896	11,602
Provision for doubtful accounts	142	365
Provision for inventory reserve	958	600
Provision for warranty reserve	2,246	2,519
(Gain) on sale and disposition of fixed assets	(12)	(66)
(Gain) on sale of lease portfolio	(992)	(2,119)
Minority interest in earnings of subsidiary	(12)	--
Provision for pension reserve	273	--
(Increase) decrease in:
Trade receivables	(9,698)	985
Finance receivables	(2,648)	(13,938)
Inventories	4,748	(13,902)
Prepaid expenses and other	(68)	(859)
Other receivables	3,076	(1,357)
Other non-current assets	(479)	(4,141)
Increase (decrease) in:
Accounts payable	(10,548)	(7,008)
Accrued product warranty	(3,593)	(2,867)
Other accrued liabilities	(7,433)	(5,977)
Income taxes payable	3,056	4,025
Foreign currency transaction (gain)	(810)	--
Other operating charges	(764)	--
Net cash (used) by operating activities	(752)	(7,385)
Cash flows from investing activities:
Proceeds from sale of property and equipment - net	55	124
Proceeds from sale and repayment of lease portfolio	30,134	56,055
Expenditures for property and equipment	(6,406)	(13,743)
Expenditures for equipment on operating lease	(36,481)	(44,221)
Net cash (used) by investing activities	(12,698)	(1,785)
Cash flows from financing activities:
Net borrowings (repayments) under revolving credit agreement	(51,200)	3,294
Net borrowings under loan and note agreements	81,307	4,074
Proceeds from issuance of common stock	742	834
Net cash provided by financing activities	30,849	8,202
Effect of exchange rate changes on cash	198	(34)
Net increase (decrease) in cash	17,597	(1,002)
Cash at beginning of period	7,053	3,725
Cash at end of period	$24,650	$ 2,723

ASTEC INDUSTRIES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated under the Securities Act of 1933. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals), as well as the accounting change to adopt Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001.

The balance sheet at December 31, 2000 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

Certain reclassifications were made to the prior year presentation to conform to the current year presentation. For further information, refer to the consolidated financial statements and footnotes thereto included in the Astec Industries, Inc. and subsidiaries annual report on Form 10-K for the year ended December 31, 2000.

Note 2. Receivables.

Receivables are net of allowance for doubtful accounts of $2,343,000 and $2,105,000 for September 30, 2001 and December 31, 2000, respectively.

Note 3. Inventories

Inventories are stated at the lower of first-in, first-out cost or market and consist of the following:

(In thousands)

	September 30, 2001	December 31, 2000
Raw Materials	$43,089	$ 41,784
Work-in-Process	22,419	27,521
Finished Goods	55,094	57,003
Total	$120,602	$126,308

Note 4. Property and Equipment

Property and equipment is stated at cost. Property and equipment is net of accumulated depreciation of $65,327,000 and $56,453,000 for September 30, 2001 and December 31, 2000, respectively.

Note 5. Earnings Per Share

Basic and diluted earnings per share are calculated in accordance with SFAS No. 128. Basic earnings per share exclude any dilutive effects of options, warrants and convertible securities.

Notes to Unaudited Financial Statements - Continued

The following table sets forth the computation of basic and diluted earnings (loss) per share:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2001	2000	2001	2000
Numerator:
Net income (loss)	$ (1,346,000)	$ 3,407,000	$ 8,910,000	$ 24,753,000
Denominator:
Denominator for basic earnings per share	19,469,473	19,181,748	19,392,251	19,180,756
Effect of dilutive securities:
Employee stock options	350,736	427,010	343,281	582,506
Denominator for diluted earnings per share	19,820,209	19,608,758	19,735,532	19,763,262
Earnings (loss) per common share: Basic Diluted	$ (0.07) $ (0.07)	$ 0.18 $ 0.17	$ 0.46 $ 0.45	$ 1.29 $ 1.25

Note 6. Comprehensive Income

Total comprehensive loss for the three months ended September 30, 2001 was $2,086,000, and was comprised of a net loss of $1,346,000, accumulated net decrease in fair value of derivative financial instruments of approximately $121,000, and a net decrease in foreign currency translation of approximately $619,000. For the third quarter of 2000, total comprehensive income was $3,407,000, equal to net income for the same period.

Total comprehensive income for the nine months ended September 30, 2001 was $7,123,000, comprised of net income of $8,910,000, accumulated net decrease in fair value of derivative financial instruments of approximately $764,000 and a net decrease in foreign currency translation adjustment of approximately $1,023,000.

Note 7. Contingent Matters

Certain customers have financed purchases of Astec products through arrangements in which the Company is contingently liable for customer debt aggregating approximately $12,892,000 at September 30, 2001 and $18,816,000 at December 31, 2000.

Note 8. Segment Information

	(In thousands)
	Three months ended September 30, 2001
	Asphalt Group	Aggregate and Mining Group	Mobile Asphalt Paving Group	Underground Group	All Others	Total
Revenues from external customers	$26,149	$42,533	$19,082	$14,369	$991	$103,124
Intersegment revenues	5,630	2,822	1,831	6	357	10,646
Segment profit	(1,468)	815	1,867	(542)	(1,718)	(1,046)

Notes to Unaudited Financial Statements - Continued

	Three months ended September 30, 2000
	Asphalt Group	Aggregate and Mining Group	Mobile Asphalt Paving Group	Underground Group	All Others	Total
Revenues from external customers	$41,785	$31,401	$10,840	$17,971	$1,039	$103,036
Intersegment revenues	6,686	5,776	167	99	716	13,444
Segment profit	3,788	1,981	553	1,896	(4,255)	3,963

	Nine months ended September 30, 2001
	Asphalt Group	Aggregate and Mining Group	Mobile Asphalt Paving Group	Underground Group	All Others	Total
Revenues from external customers	$118,609	$148,695	$63,654	$39,380	$2,383	$372,721
Intersegment revenues	16,887	11,274	2,793	12	2,434	33,400
Segment profit	8,831	7,892	8,077	(1,984)	(12,909)	9,907

	Nine months ended September 30, 2000
	Asphalt Group	Aggregate and Mining Group	Mobile Asphalt Paving Group	Underground Group	All Others	Total
Revenues from external customers	$150,484	$143,262	$51,340	$56,664	$1,884	$403,634
Intersegment revenues	12,670	12,859	221	505	2,624	28,879
Segment profit	17,022	15,803	8,006	5,207	(21,411)	24,627

Reconciliations of the reportable segment totals for profit or loss to the Company's consolidated totals are as follows:

(In thousands)

	Three months ended September 30,		Nine months ended September 30,
	2001	2000	2001	2000
Profit:
Total profit for reportable segments	$672	$8,218	$22,816	$46,038
Other profit (loss)	(1,718)	(4,255)	(12,909)	(21,411)
Equity in (loss)/income of joint venture	(23)	5	(92)	(34)
Minority interest in earnings	(28)	-	(89)	-
Elimination of intersegment (profit) loss	(249)	(561)	(816)	160
Total consolidated net income (loss)	(1,346)	3,407	8,910	24,753

Note 9. Legal Matters

There have been no material developments in legal proceedings previously reported. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Contingencies" in Part I - Item 2 of this Report.

Notes to Unaudited Financial Statements - Continued

Note 10. Seasonality

Approximately 75 - 80% of the Company's business volume typically occur during the first nine months of the year.

Note 11. Financial Instruments

Effective January 1, 2001, the Company adopted SFAS No. 133, which requires the Company to recognize derivative instruments on the balance sheet at fair value. The statement also establishes new accounting rules for hedging instruments, which depend on the nature of the hedge relationship. The Company has two cash flow hedges which require that the effective portion of the change in the fair value of the derivative instrument be recognized in Other Comprehensive Income (OCI), a component of Shareholders' Equity, and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the hedge, if any, is recognized in current operating earnings during the period of change in fair value.

The Company's captive finance subsidiary, Astec Financial Services, Inc. ("AFS") entered into an interest rate swap agreement on April 6, 2000, to fix interest rates on variable rate debt. The swap agreement is effective for five years with a notional amount of $7,500,000. The objective of the hedge is to offset the variability of cash flows relating to the interest payments on the variable rate debt outstanding under the Company's revolving credit facility. The sole source of the variability in the hedged cash flows results from changes in the benchmark market interest rate, three-month U.S. Dollar LIBOR. Changes in the cash flows of the interest rate swap are expected to be highly effective at offsetting the changes in overall cash flows (i.e., changes in interest rate payments) attributable to fluctuations in the benchmark market interest rate on the variable rate debt being hedged.

Effective January 2, 2001 the Company entered into a one-year swap agreement with a notional amount of $40,000,000 to fix interest rates on variable rate debt. The objective of the hedge is to eliminate the variability of cash flows relating to the interest payments on $40,000,000 of the variable rate debt outstanding under the Company's revolving credit facility. The sole source of the variability in the hedged cash flows results from changes in the benchmark market interest rate, three-month U.S. Dollar LIBOR. Changes in the cash flows of the interest rate swap are expected to exactly offset the changes in cash flows (i.e., changes in interest rate payments) attributable to fluctuations in the benchmark market interest rate on the of the variable rate debt being hedged.

During the three-month and nine-month periods ended September 30, 2001, there was no material ineffectiveness related to the Company's derivative holdings and there was no component of the derivative instruments' gain or loss excluded from the assessment of hedge effectiveness.

Note 12. Recent Pronouncements

In June 2001 the Financial Accounting Standards Board issued Statements No. 141, Business Combinations and No. 142, Goodwill and Other Intangible Assets. The provisions of Statement 141 are effective for any business combination that is completed after June 30, 2001, while the provisions of Statement 142 are required to be applied with fiscal years beginning after December 15, 2001.

Statement 141 eliminates the pooling-of-interests method of accounting for business combinations and supersedes APB Opinion No. 16, Business Combinations. This statement changes significantly the purchase price allocation of business combinations to recognize intangible assets apart from goodwill. Under Statement 141, intangible assets with indefinite lives would no longer be subject to amortization, but would be tested for impairment.

Notes to Unaudited Financial Statements - Continued

Statement 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, Intangible Assets. This statement addresses how intangible assets should be accounted for in financial statements upon acquisition and how goodwill and other intangible assets should be valued in the financial statements of periods subsequent to acquisition. Because goodwill and some intangible assets will no longer be amortized, the reported amounts of goodwill and intangible assets will not decrease in the same manner as under previous standards. There may be more volatility in reported income under the new standards than under previous standards since impairment losses can occur irregularly and in varying amounts.

The Company has adopted SFAS 141, Business Combinations and will adopt SFAS 142, Goodwill and Other Intangible Assets in the fiscal year that begins January 1, 2002. At this time, the effect of Statements No. 141 and 142 on the financial statements of the Company is not known.

Item 2. Management's Discussion and Analysis Of Financial Condition And Results Of Operations

When used in this report, press releases and elsewhere by management or the Company from time to time, the words, "believes," "anticipates," and "expects" and similar expressions are intended to identify forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that involve certain risks and uncertainties. Statements in this 10-Q that are forward looking include, without limitation, statements regarding the Company's expected capital expenditures in 2001 and the ability of the Company to meet its working capital and capital expenditure requirements through September 30, 2002. A variety of factors could cause actual results to differ materially from those anticipated in the Company's forward-looking statements, which include the risk factors that are discussed from time to time herein and in the Company's reports filed with the SEC, most recently in the Company's 2000 Annual Report on Form 10-K. Readers are cautioned not to place und ue reliance on these forward-looking statements, which speak only as of the date such statements are made. The Company undertakes no obligations to update the forward-looking statements.

Results of Operations

For the three months ended September 30, 2001, net sales increased $88,000 or 0.1%, to $103,124,000 from $103,036,000 for the three months ended September 30, 2000. Net sales for the quarter ended September 30, 2001 for companies acquired during the third quarter of 2000 were $6,318,000 of the consolidated net sales for the third quarter of 2001. Excluding the net sales generated from those acquisitions, net sales for the second quarter of 2001 were $96,806,000, a decrease of 6.0% from the same period in 2000. International sales by domestic subsidiaries for the third quarter of 2001 increased to $18,427,000 from $12,194,000 for the same period of 2000. Total international sales for the quarter ended September 30, 2001, including sales from foreign subsidiaries, were $25,000,000, compared to $13,426,000 for the third quarter of 2000. Third quarter 2001 sales of Osborn Engineered Products SA (PTY) Ltd. located in South Africa acquired during the last quarter of 2000 and internationa l sales of aggregate and soil purification systems by Astec Systems, were the primary contributors to the increase in international sales for the third quarter of 2001 over the same period of 2000.

For the nine months ended September 30, 2001, net sales decreased to $372,721,000 from $403,634,000 for the nine months ended September 30, 2000, representing a 7.7% decrease. Net sales for the nine months ended September 30, 2001, for companies acquired during the third quarter of 2000, were $22,531,000. Excluding the net sales generated from those acquisitions, net sales for the first nine months of 2001 were $350,190,000, a decrease of 13.2% from the same period in 2000. The Company believes that the decreases in net sales during the three-month and nine-month periods ending September 30, 2001 are due to customers delaying equipment purchases as a result of uncertainty about their profits, their markets and the economy in general. International sales by domestic subsidiaries for the nine months ended September 30, 2001 increased to $51,256,000 from $36,366,000 for the same period of 2000. Total international sales for the nine months ended September 30, 2001, including sales from fo reign subsidiaries, were $75,085,000, compared to $42,318,000 for the same period of 2000. The increase in total international sales for the three quarters ended September 30, 2001 over the same period of 2000 relates primarily to sales generated by Osborn Engineered Products SA (PTY) Ltd. of South Africa which was acquired in the fourth quarter of 2000 and increased international sales of aggregate and soil purification systems by Astec Systems.

Management's Discussion and Analysis of Financial Condition And Results of Operations - Continued

Gross profit for the three months ended September 30, 2001 decreased to $17,192,000 from $24,608,000 for the three months ended September 30, 2000, while the gross profit percentage for the three months ended September 30, 2001 decreased to 16.7% from 23.9% for the same period of 2000. With the exception of the Mobile Asphalt Paving Group, which had a third quarter increase in gross margin dollars, each of the Company's operating segments experienced decreased gross margin dollars and percentages for the third quarter of 2001 compared to the third quarter of 2000.

Gross profit for the nine months ended September 30, 2001 decreased to $77,937,000 from $99,224,000 for the nine months ended September 30, 2000, while the gross profit percentage for the nine months ended September 30, 2001 decreased to 20.9% from 24.6% for the same period of 2000. Decreased gross margins for the three and nine months ended September 30, 2001 compared to the same periods in 2000, resulted primarily from under-utilization of plant capacity related to reduced sales volume which the Company believes was caused by economic uncertainty of the Company's customers, and to a lesser extent from competitive pricing pressures.

Selling, general, administrative and engineering expenses for the three months ended September 30, 2001 were $17,606,000 or 17.1% of net sales, compared to $17,955,000 or 17.4% of net sales for the three months ended September 30, 2000, a decrease of $349,000 or 1.9%. Selling, general, administrative and engineering expenses for the third quarter of 2001 of companies acquired during the last quarter of 2000 were $1,169,000. Selling, general, administrative and engineering expenses for the quarter ended September 30, 2001, excluding those companies acquired in the prior year, was $16,437,000 compared to $17,955,000 for the quarter ended September 30, 2000, a decrease of $1,518,000 or 8.5%. The decrease in selling, general, administrative and engineering expenses for the third quarter of 2001 compared to the same period in 2000, related primarily to various cost reduction measures initiated throughout the Company and to decreased sales commissions related to the reduction in sales volume .

Selling, general, administrative and engineering expenses for the nine months ended September 30, 2001 were $58,201,000 or 15.6% of net sales, compared to $55,927,000 or 13.9% of net sales for the same period in 2000, an increase of $2,274,000. Approximately $3,585,000 of the increase in selling, general, administrative and engineering expenses for the nine months ended September 30, 2001 compared to the same period in 2000 related to selling, general, administrative and engineering expenses of companies acquired late in 2000. Excluding companies acquired during the prior year, selling, general, administrative and engineering expenses decreased $1,311,000 for the nine months ended September 30, 2001 compared to the nine months ended September 30, 2000. The increase in selling, general, administrative and engineering expenses as a percent of sales related primarily to the decrease in sales volume for 2001 compared to 2000.

Interest expense increased to $2,105,000 for the quarter ended September 30, 2001 from $1,916,000 for the quarter ended September 30, 2000. Interest expense as a percentage of net sales was approximately 2.0% and 1.9% for the three months ended September 30, 2001 and 2000, respectively.

Interest expense increased to $6,668,000 for the nine months ended September 30, 2001 from $6,204,000 for the nine months ended September 30, 2000. Interest expense as a percent of net sales was approximately 1.8% for the nine months ended September 30, 2001 compared to 1.5% for the nine months ended September 30, 2000. The increase in interest expense for the three and nine months ended September 30, 2001 compared to the same periods in 2000, related primarily to borrowings required for the acquisitions of Osborn Engineering of South Africa and Carlson Paving Products, Inc. during the last quarter of 2000.

Other income, net of other expense, was $131,000, or 0.1% of net sales for the quarter ended September 30, 2001, compared to $596,000, or 0.6% of net sales for the quarter ended September 30, 2000. Other income, net of other expense, was $1,239,000, or 0.3% of net sales for the nine months ended September 30, 2001, compared to $3,485,000, or 0.9% of net sales for the nine months ended September 30, 2000. The decrease in other income, net

Management's Discussion and Analysis of Financial Condition And Results of Operations - Continued

of other expense for the three and nine months ended September 30, 2001 compared to the same period of 2000, related primarily to decreased income from the sale of lease and loan portfolios by Astec Financial Services, Inc., the Company's captive finance company. Other income, net of expense was also negatively impacted for the three and nine months ended September 30, 2001, but to a lesser degree, by increased goodwill amortization over that of the same period in the prior year.

For the three months ended September 30, 2001, the Company had an income tax benefit of $1,070,000 compared to income tax expense of $1,926,000 for the three months ended September 30, 2000, a decrease of $2,996,000, or 155.6%. The tax benefit was 1.0% of net sales for the three months ended September 30, 2001 and the tax expense was 1.9% of net sales for the three months ended September 30, 2000.

Income tax expense for the nine months ended September 30, 2001 decreased to $5,308,000 from $15,825,000 for the nine months ended September 30, 2000, a decrease of $10,517,000, or 66.5%. Tax expense was 1.4% and 3.9% of net sales for the nine months ended September 30, 2001 and 2000, respectively. The effective tax rate for the nine months ended September 30, 2001 was 37.1% while the effective tax rate for the nine months ended September 30, 2000 was 39.0%. The decrease in the income tax expense in the three-month and nine-month periods ended September 30, 2001 was primarily due to the decrease in net income during those periods.

Backlog of orders at September 30, 2001 was $45,793,000 compared to $64,481,000 at September 30, 2000, restated for 2000 acquisitions. The decrease in the backlog of orders at September 30, 2001 compared to September 30, 2000 relates primarily to the decreased backlog of the Company's Aggregate Processing segment of its business. Management believes that this decline is reflective of the current economic conditions in the United States and the hesitancy of the Company's customers to commit to capital equipment purchases. The Company is unable to determine whether this backlog effect was experienced by the industry as a whole.

Liquidity and Capital Resources

On September 10, 2001, the Company entered into an unsecured $125,000,000 participatory revolving credit facility that expires on September 10, 2004. This agreement replaced the Company's previous revolving credit facility for $150,000,000. As part of the revolving credit facility, Astec Industries, Inc. may borrow up to $125,000,000 while Astec Financial Services, Inc., the Company's captive finance company, may borrow up to $50,000,000, with the total borrowing by both companies limited to $125,000,000. Advances to Astec Financial Services, Inc. under this line of credit are limited to "Eligible Receivables" of Astec Financial Services, Inc. as defined in the credit agreement that governs the credit facility. Borrowings under the credit facility bear interest at a rate equal to LIBOR plus from 1.0% to 1.875% depending on the leverage ratio as defined by the agreement, applied to a sliding scale. At September 30, 2001 $47,500,000 was outstanding under the revolving credit facility . The Company was in compliance with all financial covenants related to the revolving credit facility at September 30, 2001.

On September 10, 2001 the Company and Astec Financial Services, Inc., entered into a Note Purchase Agreement for $80,000,000 of Senior Secured Notes, placed with private institutions, due September 11, 2011 at a fixed rate of interest of 7.56%. On September 10, 2005 and on each September 10 thereafter through the due date, the Company must make a principal payment of $10,714,286. Interest will be due and payable semiannually on each March 10 and September 10. As part of this agreement, the Company must maintain certain net worth and fixed charge coverage ratios. The Company was not in compliance with one of the Senior Secured Note financial covenants at September 30, 2001. The covenant, which is measured on a quarterly basis, requires maintenance of a minimum debt to consolidated operating cash flow ratio. As of September 30, 2001, the Company had used approximately $61,000,000 cash of the $80,000,000 raised from the sale of the Senior Secured Notes to reduce the outstanding balance on the revolving credit facility to $47,500,000. At September 30, 2001, the Company continued to have $47,500,000 outstanding that was being held in connection with the Company's two interest rate swap agreements totaling $47,500,000. On October 1, 2001, the Company used proceeds of $21,800,000, including proceeds remaining from the sale of the Senior Secured Notes, to further reduce the outstanding balance on the revolving credit facility. Assuming the Company had reduced the amounts outstanding under its credit facility on September 30, 2001 rather than October 1, 2001, the Company would have been in compliance with the debt to consolidated operating cash flow ratio covenant on September 30, 2001. A provision to net excess cash against the outstanding debt under the revolving credit facility, reducing the outstanding debt for the covenant calculations, was included in the revolving credit facility agreement. A comparable provision was not provided in the Senior Note Agreement. A waiver for non-compliance wit h the debt to consolidated operating cash flow ratio covenant for the third quarter of 2001 was received from the Senior Note holders. Even though the Company received a waiver for its non-compliance and even though the Company decreased its outstanding debt on October 1, 2001, there can be no assurances that the Company will comply with the debt to consolidated operating cash flow ratio covenant or that other violations of the Senior Secured Notes will not occur in the future.

Management's Discussion and Analysis of Financial Condition And Results of Operations - Continued

As of September 30, 2001, the Company had working capital of $185,004,000 compared to $155,735,000 at December 31, 2000. Total short-term borrowings, including current maturities of long-term debt, were $3,797,000 at September 30, 2001 compared to $1,987,000 at December 31, 2000. A financing agreement for imported, purchased inventory items accounted for $2,716,000 of the short-term borrowings at September 30, 2001, while outstanding Industrial Development Revenue Bonds accounted for $500,000 of the current maturities of long-term debt at September 30, 2001 and December 31, 2000. Net cash used by operating activities for the nine months ended September 30, 2001 was approximately $752,000 compared to net cash used by operating activities of $7,385,000 for the nine months ended September 30, 2000.

Long-term debt, less current maturities, increased to $146,789,000 at September 30, 2001 from $118,511,000 at December 31, 2000. At September 30, 2001, $80,000,000 was outstanding under Senior Secured Note Agreement, $47,500,000 was outstanding under the revolving credit facility and $19,200,000 was outstanding under the long-term principal portion of Industrial Revenue Bonds. At September 30, 2001 the Company had approximately $24,000,000 cash on hand. On October 1, 2001 cash of $21,800,000 was used to reduce the credit facility as described above. The increase in debt from December 31, 2000 related primarily to funding of working capital needs for the Company.

Capital expenditures in 2001 for plant expansion and for further modernization of the Company's manufacturing processes are expected to be approximately $10,700,000. The Company expects to finance these expenditures using the revolving credit facility and internally generated funds. Capital expenditures for the nine months ended September 30, 2001 were $6,406,000, compared to $13,743,000 at September 30, 2000.

Subject to the matters discussed above regarding the Company's ability to comply with its Senior Secured Notes or to obtain additional waivers related thereto, the Company believes that its current working capital, cash flows generated from future operations and availability remaining under its credit facility will be sufficient to meet the Company's working capital and capital expenditure requirements through September 30, 2002.

Contingencies

The Company is engaged in certain pending litigation involving claims or other matters arising in the ordinary course of business. Most of these claims involve product liability or other tort claims for property damage or personal injury against which the Company is insured. As a part of its litigation management program, the Company maintains adequate general liability insurance coverage for product liability and other similar tort claims. The coverage is subject to a substantial self-insured retention under the terms of which the Company has the right to coordinate and control the management of its claims and the defense of these actions.

Management has reviewed all claims and lawsuits and, upon the advice of its litigation counsel, has made provision for any estimable losses. Notwithstanding the foregoing, the Company is unable to predict the ultimate outcome of any outstanding claims and lawsuits.

Risk Factors

The information contained in this Form 10-Q is not a complete description of our business or the risks associated with an investment in us. In addition to the risks discussed in this Form 10-Q, including without limitation, the risks associated with the Company's failure to comply with a covenant in its senior Secured Notes or to obtain waivers thereof, readers are referred to documents filed by Astec with the Securities and Exchange Commission, including its 2000 Form 10-K, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, some of which include: uncertainty in the economy, rising oil and liquid asphalt prices, rising interest rates, decreased funding for highway projects, the timing of large contracts, production capacity, general business conditions in the industry, the ability to integrate acquisitions, demand for the Company's products, seasonality and cyclicality in operating results, seasona lity of sales volumes, and competitive activity.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have no material changes to the disclosure on this matter made in our Annual Report on Form 10-K for the year ended December 31, 2000.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

There have been no material developments in the legal proceedings previously reported by the registrant since the filing of its Annual Report on Form 10-K for the year ended December 31, 2000. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Contingencies" in Part I - Item 2 of this Report.

Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit No.	Description
3.1 Restated Charter of the Company (incorporated by reference to the Company's Registration Statement on Form S-1, effective June 18, 1986, File No. 33-5348).
3.2 Articles of Amendment to the Restated Charter of the Company, effective September 12, 1988 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714).
3.3 Articles of Amendment to the Restated Charter of the Company, effective June 8, 1989 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714).
3.4 Articles of Amendment to the Restated Charter of the Company, effective January 15, 1999 (incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, File No. 0-14714).
3.5 Amended and Restated Bylaws of the Company, adopted March 14, 1990 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714).
4.1 Trust Indenture between City of Mequon and FirstStar Trust Company, as Trustee, dated as of February 1, 1994 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714).
4.2 Indenture of Trust, dated April 1, 1994, by and between Grapevine Industrial Development Corporation and Bank One, Texas, NA, as Trustee (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714).
4.3 Shareholder Protection Rights Agreement, dated December 22, 1995 (incorporated by reference to the Company's Current Report on Form 8-K dated December 22, 1995, File No. 0-14714).
10.36 Credit Agreement, dated September 10, 2001, between the Company and Astec Financial Services, Inc. as Borrowers and the Named Lenders with Bank One, NA as Agent.
10.37 Note Purchase Agreement, dated September 10, 2001 between the Company and Astec Financial Services, Inc. and Names Private Institutional Investors.
27 Financial Data Schedule (EDGAR Filing Only).
Reports on Form 8-K:
No reports on Form 8-K have been filed during the quarter ended September 30, 2001.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ASTEC INDUSTRIES, INC.
(Registrant)
Date 8/14/2001	/s/ J. Don Brock
	J. Don Brock Chairman of the Board and President
Date 8/14/2001	/s/ F. McKamy Hall
	F. McKamy Hall Vice President and Chief Financial Officer

EX-10

Astec Industries, Inc.
and
Astec Financial Services, Inc.

$80,000,000

7.56% Senior Secured Notes due September 10, 2011

Note Purchase Agreement

Dated September 10, 2001

Astec Industries, Inc.
and
Astec Financial Services, Inc.
4101 Jerome Avenue
Chattanooga, Tennessee 37407

7.56% Senior Secured Notes due September 10, 2011

Dated as of September 10, 2001

To each of the Purchasers listed in

the attached Schedule A:

Ladies and Gentlemen:

Astec Industries, Inc., a Tennessee corporation (the "Company"), and Astec Financial Services, Inc., a Tennessee corporation ("Financial," and the Company and Financial are hereinafter referred to, individually, as an "Obligor" and, collectively, as the "Obligors"), jointly and severally, agree with you as follows:

Section 1. Authorization of Notes.
The Obligors will authorize the issue and sale of $80,000,000 aggregate principal amount of their 7.56% Senior Secured Notes due September 10, 2011 (the "Notes", such term to include any such notes issued in substitution therefor pursuant to Section 13 of this Agreement or the Other Agreements (as hereinafter defined)). The Notes shall be substantially in the form set out in Exhibit 1, with such changes therefrom, if any, as may be approved by you and the Obligors. Certain capitalized terms used in this Agreement are defined in Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

Section 2. Sale and Purchase of Notes; Security.
Section 2.1. Sale and Purchase of Notes. Subject to the terms and conditions of this Agreement, the Obligors will issue and sell to you and you will purchase from the Obligors, at the Closing provided for in Section 3, Notes in the principal amount specified opposite your name in Schedule A at the purchase price of 100% of the principal amount thereof. Contemporaneously with entering into this Agreement, the Obligors are entering into separate Note Purchase Agreements (the "Other Agreements") identical with this Agreement with each of the other purchasers named in Schedule A (the "Other Purchasers"), providing for the sale at such Closing to each of the Other Purchasers of Notes in the principal amount specified opposite its name in Schedule A. Your obligation hereunder, and the obligations of the Other Purchasers under the Other Agreements, are several and not joint obligations, and you shall have no obligation under any Other Agreement and no liability t o any Person for the performance or nonperformance by any Other Purchaser thereunder.
Section 2.2. Security. The Notes will be entitled to the benefit of and will be secured by the Pledge Agreement dated as of September 10, 2001, by and between the Obligors, the Banks and Bank One, N.A., as Collateral Agent, substantially in the form of Exhibit 5 attached hereto and made a part hereof (as the same may be further amended, supplemented or otherwise modified from time to time, the "Pledge Agreement").
The enforcement of the rights and benefits in respect of the Pledge Agreement and the allocation of proceeds thereof will be subject to a Collateral Agency and Intercreditor Agreement dated as of September 10, 2001 entered into by the Banks, the Collateral Agent and you, substantially in the form of Exhibit 6 attached hereto and made a part hereof (as the same may be further amended, supplemented or otherwise modified from time to time, the "Intercreditor Agreement").

Section 3. Closing.
The sale and purchase of the Notes to be purchased by you and the Other Purchasers shall occur at the offices of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, at 10:00 a.m. Chicago time, at a closing (the "Closing") on September 10, 2001 or on such other Business Day thereafter on or prior to September 14, 2001 as may be agreed upon by the Obligors and you and the Other Purchasers. At the Closing the Obligors will deliver to you the Notes to be purchased by you in the form of a single Note (or such greater number of Notes in denominations of at least $1,000,000 as you may request) dated the date of the Closing and registered in your name (or in the name of your nominee), against delivery by you to the Obligors or their 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 5506875 at Bank One, NA, Chicago, Illinois ABA 071000013. If at the Cl osing the Obligors shall fail to tender such Notes to you as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to your satisfaction, you shall, at your election, be relieved of all further obligations under this Agreement, without thereby waiving any rights you may have by reason of such failure or such nonfulfillment.

Section 4. Conditions to Closing.
Your obligation to purchase and pay for the Notes to be sold to you at the Closing is subject to the fulfillment to your satisfaction, prior to or at the Closing, of the following conditions:
Section 4.1. Representations and Warranties. (a) The representations and warranties of the Obligors in this Agreement shall be correct when made and at the time of the Closing.
(b) The representations and warranties of the Company in the Pledge Agreement shall be correct when made and at the time of Closing.
Section 4.2. Performance; No Default. Each Obligor shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing and the Company shall have performed and complied with all agreements and conditions contained in the Pledge Agreement required to be performed or complied with by it prior to or at the 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. Neither of the Obligors nor any of their Subsidiaries shall have entered into any transaction since the date of the Memorandum that would have been prohibited by Section 10.1 or Sections 10.8 through 10.10 hereof had such Sections applied since such date.
Section 4.3. Compliance Certificates.
(a) Officer's Certificate. Each Obligor shall have delivered to you an Officer's Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
(b) Secretary's Certificate. Each Obligor shall have delivered to you a certificate certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Notes and the Agreements.
Section 4.4. Opinions of Counsel. You shall have received opinions in form and substance satisfactory to you, dated the date of the Closing (a) (i) from Chambliss, Bahner & Stophel, P.C., Special Counsel for the Obligors, covering the matters set forth in Exhibit 4.4(a) and covering such other matters incident to the transactions contemplated hereby as you or your counsel may reasonably request (and the Obligors hereby instruct their counsel to deliver such opinion to you), (ii) from special Canadian counsel for the Company, covering the matters set forth in Exhibit 4.4(c) and covering such other matters incident to the transactions contemplated hereby as you or your counsel may reasonably request (and the Obligors hereby instruct their counsel to deliver such opinion to you), and (b)  from Chapman and Cutler, your special counsel in connection with such transactions, substantially in the form set forth in Exhibit 4.4(b) and covering such other matters incident to such transactions as you may reasonably request.
Section 4.5. Purchase Permitted by Applicable Law, etc. On the date of the Closing your purchase of Notes shall (i) be permitted by the laws and regulations of each jurisdiction to which you are 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, (ii) 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 (iii) not subject you to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by you, you shall have received an Officer's Certificate certifying as to such matters of fact as you may reasonably specify to enable you to determine whether such purchase is so permitted.
Section 4.6. Sale of Other Notes. Contemporaneously with the Closing, the Obligors shall sell to the Other Purchasers, and the Other Purchasers shall purchase, the Notes to be purchased by them at the Closing as specified in Schedule A.
Section 4.7. Payment of Special Counsel Fees.; Without limiting the provisions of Section 15.1, the Obligors shall have paid on or before the Closing the fees, charges and disbursements of your special counsel referred to in Section 4.4 to the extent reflected in a statement of such counsel rendered to the Obligors at least one Business Day prior to the Closing.
Section 4.8. Private Placement Number. A Private Placement Number issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained for the Notes.
Section 4.9. Changes in Corporate Structure. Neither of the Obligors shall have changed its jurisdiction of incorporation or been a party to any merger or consolidation and shall not have 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.
Section 4.10. Pledge Agreement and Intercreditor Agreement. Both the Pledge Agreement and the Intercreditor Agreement shall be in form and substance satisfactory to you and your special counsel, shall have been duly executed and delivered by the parties thereto and shall be in full force and effect and you shall have received true, correct and complete copies of each thereof.
Section 4.11. Filing and Recording. The Pledge Agreement (and/or financing statements or similar notices thereof if and to the extent permitted or required by applicable law) and the collateral described therein shall have been recorded or filed for record in such public offices or otherwise maintained in the possession of the appropriate party, as the case may be, as may be deemed necessary or appropriate by you or your special counsel in order to perfect the Liens and security interests granted or conveyed thereby.
Section 4.12. 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 you and your special counsel, and you and your special counsel shall have received all such counterpart originals or certified or other copies of such documents as you or they may reasonably request.

Section 5. Representations and Warranties of the Obligors.
The Obligors, jointly and severally, represent and warrant to you that:
Section 5.1. Organization; Power and Authority. Each Obligor is a corporation duly organized, validly existing and in good standing under the laws of its 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 Obligor has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver the Financing Documents to which it is a party and to perform the provisions hereof and thereof.
Section 5.2. Authorization, etc. Each Financing Document has been duly authorized by all necessary corporate action on the part of each Obligor, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of each Obligor party thereto enforceable against such Obligor 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).
Section 5.3. Disclosure. The Obligors, through their agent, Banc One Capital Markets, Inc., have delivered to you and each Other Purchaser a copy of a Private Placement Memorandum, dated July 2001 (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 Obligors and their Subsidiaries. This Agreement, the Memorandum and the financial statements listed in Schedule 5.5, 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. Since December 31, 2000, there has been no change in the financial condition, operations, business, properties or prospects of the Obligors or any Subsidiary except changes that individually or in the aggregate could not reasonably be expected to have a M aterial Adverse Effect. There is no fact known to the Obligors that could reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Memorandum.
Section 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 Subsidiaries of each Obligor, 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 each Obligor and each other Subsidiary, (ii) of the Affiliates of each Obligor, other than Subsidiaries, and (iii) of the directors and senior officers of each Obligor.
(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 Obligors and their Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Obligors or another Subsidiary free and clear of any Lien other than the Lien granted to you and the Other Purchasers pursuant to the Pledge Agreement (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 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 restriction or any agreement (other than this Agreement, the agreements listed on Schedule 5.4 and customary limitations imposed by corporate law statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Obligors or any of their Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary.
Section 5.5. Financial Statements. The Obligors have delivered to you and each Other Purchaser copies of the financial statements of the Company and its Subsidiaries listed on Schedule 5.5. All of said 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).
Section 5.6. Compliance with Laws, Other Instruments, etc. The execution, delivery and performance by the Obligors of each Financing Document to which it is a party 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 either Obligor 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 either Obligor or any Subsidiary is bound or by which either Obligor or any Subsidiary or any of their respective properties may be bound or affected, (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 either Obligor or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Auth ority applicable to either Obligor or any Subsidiary.
Section 5.7. Governmental Authorizations, etc. 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 either Obligor of each Financing Document to which it is a party.
Section 5.8. Litigation; Observance of Agreements, Statutes and Orders. (a) There are no actions, suits or proceedings pending or, to the knowledge of either Obligor, threatened against or affecting either Obligor or any Subsidiary or any property of either Obligor 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 of the Obligors nor any of their Subsidiaries 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) of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
Section 5.9. Taxes. Each of the Obligors and their Subsidiaries have filed all 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 such Obligor or such Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. Neither of the Obligors 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 Obligors and their Subsidiaries in respect of Federal, state or other taxes for all fiscal periods are adequate. The Obligors and their Subsidiaries have never been audited by the Internal Revenue Service, but the consolidated Federal income tax returns of the Company for the fiscal year ending December 31, 1998, are presently being audited.
Section 5.10. Title to Property; Leases. The Obligors and their Subsidiaries have good and sufficient title to their respective properties, 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 either of the Obligors 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.
Section 5.11. Licenses, Permits, etc. (a)  the Obligors and their Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, 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;
(b) to the best knowledge of the Obligors, no product of either of the Obligors or any of their Subsidiaries infringes in any Material respect any license, permit, franchise, authorization, patent, copyright, service mark, trademark, trade name or other right owned by any other Person; and
(c) to the best knowledge of the Obligors, there is no Material violation by any Person of any right of either of the Obligors or any of their Subsidiaries with respect to any patent, copyright, service mark, trademark, trade name or other right owned or used by either of the Obligors or any of their Subsidiaries.
Section 5.12. Compliance with ERISA. (a) Each Obligor and each ERISA Affiliate have operated and administered each 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 of the Obligors nor any ERISA Affiliate has incurred any liability pursuant to Title I or 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), 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 either Obligor or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of either Obligor 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 (other than Multiemployer Plans), determined as of the end 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 of the assets of such Plan allocable to such benefit liabilities. The term "benefit liabilities" has the meaning specified in section 4001 of ERISA and the terms "current value" and "present value" have the meanings specified in section 3 of ERISA.
(c) Neither of the Obligors nor any of their ERISA Affiliates have incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as of the last day of each Obligor'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 each Obligor and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the Pledge Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to 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 each Obligor in the first sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of your representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Notes to be purchased by you.
Section 5.13. Private Offering by the Obligors. Neither of the Obligors nor anyone acting on their 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 you, the Other Purchasers and not more than 60 other Institutional Investors, each of which has been offered the Notes at a private sale for investment. Neither of the Obligors nor anyone acting on their 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.
Section 5.14. Use of Proceeds; Margin Regulations. The Obligors will use the proceeds of the sale of the Notes to refinance existing indebtedness and 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 207), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Obligors 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 5.00% of the value of the consolidated assets of the Obligors and their Subsidiaries and the Obligors do not have any present intention that margin stock will constitute more than 5.00% of the value of such assets. A s 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.
Section 5.15. Existing Indebtedness; Future Liens. (a) Schedule 5.15 sets forth a complete and correct list of all outstanding Indebtedness of the Obligors and their Subsidiaries as of June 30, 2001, 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 Obligors or their Subsidiaries. Neither of the Obligors 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 Obligors or such Subsidiary and no event or condition exists with respect to any Indebtedness of the Obligors or any Subsidiary 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.
(b) Except as disclosed in Schedule 5.15, neither of the Obligors 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 10.8.
Section 5.16. Foreign Assets Control Regulations, etc. Neither the sale of the Notes by the Obligors 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.
Section 5.17. Status under Certain Statutes. Neither of the Obligors nor any of their Subsidiaries is an "investment company" registered or required to be registered under the Investment Company Act of 1940, as amended, or is subject to regulation under the Public Utility Holding Company Act of 1935, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.
Section 5.18. Environmental Matters. Neither of the Obligors nor any of their Subsidiaries has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Obligors or any of their 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. Except as otherwise disclosed to you in writing:
(a) neither of the Obligors nor any of their Subsidiaries 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;
(b) neither of the Obligors nor any of their Subsidiaries has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them or has 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
(c) all buildings on all real properties now owned, leased or operated by either of the Obligors or any of their Subsidiaries are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect.
Section 5.19. Pledge Agreement. The provisions of the Pledge Agreement are effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in all right, title and interest of the Obligors in the pledged stock described therein, and when the Collateral Agent receives possession of the stock certificates representing the shares of pledged stock described therein with respect to which the Collateral Agent has been granted a first priority security interest, registered in the name of the Collateral Agent or otherwise accompanied by undated stock powers duly executed in blank, the Pledge Agreement shall constitute a fully perfected and continuing first priority Lien on and security interest in all right, title and interest of the Company in the pledged stock described therein. The interest of the Collateral Agent in the pledged stock has described therein has been duly registered on the books and records of t he issuers thereof.

Section 6. Representations of the Purchaser.
Section 6.1. Purchase for Investment. You represent that you are purchasing the Notes for your own account or for one or more separate accounts maintained by you 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 your or their property shall at all times be within your or their control. You understand 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 Obligors are not required to register the Notes.
Section 6.2. Source of Funds. You represent that at least one of the following statements is an accurate representation as to each source of funds (a "Source") to be used by you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) the Source is an "insurance company general account" within the meaning of Department of Labor Prohibited Transaction Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no employee benefit plan, treating as a single plan, all plans maintained by the same employer or employee organization, with respect to which the amount of the general account reserves and liabilities for all contracts held by or on behalf of such plan, exceed ten percent (10%) of the total reserves and liabilities of such general account (exclusive of separate account liabilities) plus surplus, as set forth in the NAIC Annual Statement filed with your state of domicile; or
(b) the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed to the Obligors in writing pursuant to this paragraph (b), no employee benefit plan 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
(c) the Source constitutes assets of an "investment fund" (within the meaning of Part V of the QPAM Exemption) managed by a "qualified professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption), no employee benefit plan's assets 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, exceed 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 either Obligor and (i) the identity of such QPAM and (ii) the names of all employee benefit plans wh ose assets are included in such investment fund have been disclosed to the Obligors in writing pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) 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 Obligors in writing pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.
If you or any subsequent transferee of the Notes indicates that you or such transferee are relying on any representation contained in paragraph (b), (c) or (e) above, the Obligors shall deliver on the date of Closing and on the date of any applicable transfer a certificate, which shall either state that (i) it is neither a party in interest nor a "disqualified person" (as defined in section 4975(e)(2) of the Internal Revenue Code of 1986, as amended), with respect to any plan identified pursuant to paragraphs (b) or (e) above, or (ii) with respect to any plan, identified pursuant to paragraph (c) above, neither it nor any "affiliate" (as defined in Section V(c) of the QPAM Exemption) has at such time, and during the immediately preceding one year, exercised the authority to appoint or terminate said QPAM as manager of any plan identified in writing pursuant to paragraph (c) above or to negotiate the terms of said QPAM's management agreement on behalf of any such identified plan. As u sed in this Section 6.2, the terms "employee benefit plan", "governmental plan", "party in interest" and "separate account" shall have the respective meanings assigned to such terms in section 3 of ERISA.

Section 7. Information as to the Obligors.
Section 7.1. Financial and Business Information. The Obligors shall deliver to each holder of Notes that is an Institutional Investor:
(a) Quarterly Statements - within 60 days 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:
(i) a consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in 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, provided that delivery within the time period specified above of copies of the Company's Quarterly Report on Form 10-Q prepared in compliance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of this Section 7.1(a);
(b) Annual Statements - within 105 days 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 income, changes in 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 certified 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 Annual Report on 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 Exc hange Act) prepared in accordance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of this Section 7.1(b);
(c) SEC and Other Reports - promptly upon their becoming available, one copy of (i) each financial statement, report, notice or proxy statement sent by either Obligor or any Subsidiary to public securities holders generally, and (ii) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such holder), and each prospectus and all amendments thereto filed by either Obligor or any Subsidiary with the Securities and Exchange Commission and of all press releases and other statements made available generally by an Obligor 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 (5) Business Days after a Responsible Officer of either Obligor becoming aware of the existence of any Default or Event of Default or that any Person has given any 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 Obligors are taking or propose to take with respect thereto;
(e) ERISA Matters - promptly, and in any event within five (5) Business Days after a Responsible Officer of either Obligor becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that either Obligor or an ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined in section 4043(b) 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 either Obligor or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result in the incurrence of any liability by either Obligor or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of either Obligor 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 notice to either Obligor 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; and
(g) Requested Information - with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of either Obligor or any of their Subsidiaries or relating to the ability of either Obligors to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of Notes.
Section 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) hereof shall be accompanied by a certificate of a Senior Financial Officer of each of the Obligors setting forth:
(a) Covenant Compliance - the information (including detailed calculations) required in order to establish whether the Obligors were in compliance with the requirements of Sections 10.2 through 10.4, 10.6 and 10.7 hereof, 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 then in existence); and
(b) Event of Default - a statement that such 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 Obligors and their 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 (including, without limitation, any such event or condition resulting from the failure of either Obligor or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Obligors shall have taken or propose to take with respect thereto.
Section 7.3. Inspection. Each Obligor 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 such Obligor, to visit the principal executive office of such Obligor, to discuss the affairs, finances and accounts of such Obligor and its Subsidiaries with such Obligor's officers, and (with the consent of such Obligor, which consent will not be unreasonably withheld) to discuss relevant accounting matters (such as a qualified opinion or a change in accounting method) with its independent public accountants, and (with the consent of such Obligor, which consent will not be unreasonably withheld) to visit the other offices and properties of such Obligor and each of its Subsidiaries, 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 Obligors, to visit and inspect any of the offices or properties of such Obligor or any of its Subsidiaries, 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 such Obligor authorizes said accountants to discuss the affairs, finances and accounts of such Obligor and its Subsidiaries), all at such times and as often as may be requested.

Section 8. Prepayment of the Notes.
Section 8.1. Required Prepayments. On September 10, 2005 and on each September 10 thereafter to and including September 10, 2010 the Obligors will prepay $10,714,286 principal amount (or such lesser principal amount as shall then be outstanding) of the Notes at par and without payment of the Make-Whole Amount or any premium, provided that upon any partial prepayment of the Notes pursuant to Section 8.2 or 8.3 or purchase of the Notes permitted by Section 8.5 the principal amount of each required prepayment of the Notes becoming due under this Section 8.1 on and after the date of such prepayment or purchase shall be reduced in the same proportion as the aggregate unpaid principal amount of the Notes is reduced as a result of such prepayment or purchase.
Section 8.2. Optional Prepayments with Make-Whole Amount. The Obligors may, at their option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes, in an amount not less than 5.00% of the aggregate principal amount of the Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid, together with interest accrued thereon to the date of such prepayment, plus the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Obligors 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, the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with Section 8.3), and the interest to b e 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 in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Obligors shall deliver to each holder of Notes a certificate of a Senior Financial Officer of each Obligor specifying the calculation of such Make-Whole Amount as of the specified prepayment date.
Section 8.3. Prepayment of Notes Upon Change of Control.
(a) Condition to Obligors Action. Within five (5) days of a Change of Control, the Obligors shall have given to each holder of Notes written notice containing and constituting an offer to prepay Notes as described in subparagraph (b) of this Section 8.3, accompanied by the certificate described in subparagraph (e) of this Section 8.3.
(b) Offer to Prepay Notes. The offer to prepay Notes contemplated by subparagraph (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, the Notes held by each holder (in this case 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 the date specified in such offer (the "Proposed Prepayment Date") that is not less than 30 days and not more than 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 first Business Day which is at least 45 days 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 Obligors at least 10 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 shall be deemed to constitute a rejection of such offer by such holder.
(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. The prepayment shall be made on the Proposed Prepayment Date.
(e) 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 each of the Obligors 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) the principal amount of each Note offered to be prepaid; (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 have been fulfilled; and (vi) in reasonable detail, the nature and date or proposed date of the Change of Control.
Section 8.4. Allocation of Partial Prepayments. In the case of each partial prepayment of the Notes pursuant to Sections 8.1 and 8.2, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof.
Section 8.5. 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, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the Obligors 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 Obligors and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.
Section 8.6. Purchase of Notes. The Obligors will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes. The Obligors 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.
Section 8.7. Make-Whole Amount. The term "Make-Whole Amount" means, with respect to any Note, 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 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, 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, 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 the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of any Note, 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 "USD" on the Bloomberg Financial Market Services Screen (or such other display as may replace USD of the Bloomberg Financial Market Services Screen) for actively traded 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, 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 (519) (or any co mparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. 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 actively traded U.S. Treasury security with the maturity closest to and greater than the Remaining Average Life and (2) the actively traded U.S. Treasury security with the maturity closest to and less than the Remaining Average Life.
"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, 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, 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 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.

Section 9. Affirmative Covenants.
The Obligors covenant, jointly and severally, that so long as any of the Notes are outstanding:
Section 9.1. Compliance with Law. Each Obligor 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, 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.
Section 9.2. Insurance. Each Obligor 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.
Section 9.3. Maintenance of Properties. Each Obligor 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 shall not prevent such Obligor or any of its Subsidiaries from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and such Obligor has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 9.4. Payment of Taxes and Claims. Each Obligor 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 such taxes and assessments 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 such Obligor or any of its Subsidiaries, provided that neither Obligors nor any of its Subsidiaries need pay any such tax or assessment or claims if (i) the amount, applicability or validity thereof is contested by such Obligor or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and such Obligor or such Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of such Obligor or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in the aggregate could not reasonably be expected to have a Material Adverse Effect.
Section 9.5. Corporate Existence, etc. Each Obligor will at all times preserve and keep in full force and effect their corporate existence. Subject to Sections 10.9 and 10.10, each Obligor will at all times preserve and keep in full force and effect the corporate existence of each of its Subsidiaries and all rights and franchises of such Obligor and its Subsidiaries unless, in the good faith judgment of such Obligor, 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.
Section 9.6. Ownership of Financial. Financial will at all times be and remain a Subsidiary of the Company.
Section 9.7. Additional Security Pledge. If at any time an Obligor grants to the Banks additional security (or Guaranty) of any kind or other credit support of any kind in respect of such Obligor's obligations relative to the Bank Credit Agreement, including but not limited to Sections 6.27 and 6.28 of the Bank Credit Agreement, then such Obligor shall grant (or cause such Subsidiary to grant) to the holders of the Notes the same security so that the holders of the Notes shall at all times be secured on an equal and pro rata basis with the Banks. All such additional security shall be subject to the provisions of Section 2.2.

Section 10. Negative Covenants.
The Obligors covenant, jointly and severally, that so long as any of the Notes are outstanding:
Section 10.1. Transactions with Affiliates. Each Obligor will not and will not permit any Subsidiary to enter into, directly or indirectly, any transaction (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 an Obligor or another Subsidiary), except in the ordinary course and pursuant to the reasonable requirements of such Obligor's or such Subsidiary's business and upon fair and reasonable terms no less favorable to such Obligor or such Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate.
Section 10.2. Consolidated Net Worth. The Obligors will not, at any time, permit Consolidated Net Worth to be less than the sum of (a) $160,000,000, plus (b) an aggregate amount equal to 40% of Consolidated Net Earnings (but, in each case, only if a positive number) for each completed fiscal quarter beginning with the fiscal quarter ending September 30, 2001.
Section 10.3. Consolidated Total Debt Coverage. The Obligors will not permit, as at the end of each fiscal quarter, the ratio of Consolidated Total Debt to Consolidated Operating Cash Flow to exceed (a) 3.50 to 1.00 for the fiscal quarters ending on or prior to December 31, 2002 or (b) 3.25 to 1.00 for the fiscal quarters ending on or after March 31, 2003, in each case for the immediately preceding four quarter period, taken as a single accounting period ending on the date of calculation.
Section 10.4. Fixed Charge Coverage. The Obligors will not permit, as at the end of each fiscal quarter, the ratio of Consolidated Earnings Available for Fixed Charges to Consolidated Fixed Charges to be less than 1.75 to 1.00 for the immediately preceding four quarter period, taken as a single accounting period ending on the date of calculation.
Section 10.5. Permitted Investments. Each Obligor will not, and will not permit any Subsidiary to, make, authorize or have any Investment other than Permitted Investments.
Section 10.6. Priority Debt. The Obligors will not, at any time, permit Priority Debt to exceed 25% of Consolidated Net Worth.
Section 10.7. Subsidiary Debt. In addition to and not in limitation of any other applicable restrictions herein, including Section 10.3, the Obligors will not, at any time, permit any Subsidiary (other than Financial) to, directly or indirectly, create, incur, assume, guarantee, have outstanding, 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 Closing and any extension, renewal or refunding thereof, provided that the principal amount thereof is not increased;
(b) Indebtedness of a Subsidiary owed to the Company or a Wholly-Owned Subsidiary;
(c) Indebtedness of one or more Special Purpose Subsidiaries incurred in connection with the Permitted Receivables Securitization Program, which Indebtedness shall not at any time exceed $150,000,000 aggregate principal amount aggregating all such Special Purpose Subsidiaries; and
(d) if and so long as no Default or Event of Default exists hereunder, including, without limitation, under Section 10.6, Indebtedness of a Subsidiary in addition to that otherwise permitted by the foregoing provisions.
Section 10.8. Liens. Each Obligor will not, and will not permit any Subsidiary to, create, assume, incur or suffer to be created, assumed or incurred or to exist any Lien in respect of any Property, whether now owned or hereafter acquired, except:
(a) Liens for taxes or assessments or other governmental charges or levies, provided that payment thereof is not required by Section 9.1 or 9.4;
(b) Liens created by or resulting from any litigation or legal proceeding which is currently being contested in good faith by appropriate proceedings, provided that payment thereof is not required by Section 9.1 or 9.4;
(c) other Liens incidental to the normal conduct of the business of the Obligors and their Subsidiaries or the ownership of their property which are not incurred in connection with the incurrence of Indebtedness and which do not, in the aggregate, materially impair the use of such property in the operation of the business of the Obligors and their Subsidiaries taken as a whole or the value of such property for the purposes of such business;
(d) minor survey exceptions or minor encumbrances which are necessary for the conduct of the activities of the Obligors and their Subsidiaries or which customarily exist on properties of corporations engaged in similar activities, which do not materially impair their use in operations of the business of the Obligors and their Subsidiaries;
(e) the Lien of the Pledge Agreement and other existing Liens at the time of the issuance of the Notes as described on Schedule 5.15;
(f) the extension, renewal or replacement of any Lien permitted by the foregoing paragraph (e) in respect of the same property subject thereto or the extension, renewal of such replacement liens (without increase of principal amount of the Indebtedness secured);
(g) (i) any Lien in property or in rights relating thereto to secure any rights granted with respect to such property in connection with the provision of all or a part of the purchase price or cost of the construction of such property created contemporaneously with, or within 180 days after, such acquisition or the completion of such construction, or
(ii) any Lien in property existing in such property at the time of acquisition thereof, whether or not the Indebtedness secured thereby is assumed by an Obligor or such Subsidiary, or
(iii) any Lien existing in the property of a corporation at the time such corporation is merged into or consolidated with an Obligor or a Subsidiary or at the time of a sale, lease or other disposition of the properties of a corporation or firm as an entirety or substantially as an entirety to an Obligor or a Subsidiary, provided, however, that all of such Liens described in this Section 10.8(g) shall not exceed, in the aggregate, 100% of the fair market value on the related property;
(h) Liens, security obligations of a Subsidiary to the Company or a Wholly-Owned Subsidiary;
(i) Liens on assets of Special Purpose Subsidiaries securing Indebtedness of such Special Purpose Subsidiaries pursuant to the Permitted Receivables Securitization Program; and
(j) if and so long as no Default or Event of Default exists hereunder, including, without limitation under Section 10.6, Liens securing Indebtedness of any Obligor or any Subsidiary in addition to those described in clauses (a) through (i) above.
Section 10.9. Merger, Consolidation, etc. Each Obligor will not, and will not permit any Subsidiary to, consolidate with or merge with any other corporation or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to any Person (except that any Subsidiary may merge with or into, or convey, transfer or lease substantially all of its assets to, any Obligor or any Wholly-Owned Subsidiary if (1) in any such merger or consolidation involving an Obligor, the Obligor is the survivor and (2) immediately after giving effect to any such merger, consolidation or conveyance, transfer or lease, no Default or Event of Default would exist) unless:
(a) the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease substantially all of the assets of such Obligor or such Subsidiary as an entirety, as the case may be, shall be a solvent corporation organized and existing under the laws of the United States or any State thereof (including the District of Columbia), and, in the case of any such transaction involving an Obligor, if such Obligor is not such corporation, (i) such corporation shall have executed and delivered to each holder of any Notes its assumption of the due and punctual performance and observance of each covenant and condition of any Financing Documents to which it is a party and (ii) shall have caused to be delivered to each holder of any 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 and comply with the terms hereof;
(b) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing.
No such conveyance, transfer or lease of substantially all of the assets of such Obligor or such Subsidiary shall have the effect of releasing such Obligor or such Subsidiary or any successor corporation that shall theretofore have become such in the manner prescribed in this Section 10.9 from its liability under any Financing Documents to which it is a party.
Section 10.10. Sale of Assets. Except as permitted under Section 10.9 and without limiting the provisions of the Pledge Agreement, each Obligor will not, and will not permit any Subsidiary to, make any Asset Disposition unless:
(a) in the good faith opinion of the Obligor or Subsidiary making the Asset Disposition, the Asset Disposition is in exchange for consideration having a fair market value at least equal to that of the property exchanged;
(b) immediately after giving effect to the Asset Disposition, no Default or Event of Default would exist; and
(c) immediately after giving effect to such Asset Disposition, the Obligors could incur at least $1.00 of additional Debt pursuant to Section 10.3 and Section 10.4 assuming such Asset Disposition occurred as of the end of the immediately preceding fiscal quarter; and
(d) the sum of (i) the Disposition Value of the property subject to such Asset Disposition, plus (ii) the aggregate Disposition Value for all other property that was the subject of an Asset Disposition during the period of 365 days immediately preceding such Asset Disposition would not exceed 15% of Consolidated Total Assets determined as of the end of the most recently ended calendar month preceding such Asset Disposition.
To the extent that the Net Sales Amount consisting of cash for any Transfer to a Person other than an Obligor or a Subsidiary is applied to a Debt Prepayment Application or applied or committed to be applied to a Property Reinvestment Application within one year after such Transfer, then such Transfer (or, if less than all such Net Sales Amount is applied as contemplated hereinabove, the pro rata percentage thereof which corresponds to the Net Sales Amount so applied), only for the purpose of determining compliance with subsection (d) of this Section 10.10 as of any date, shall be deemed not to be an Asset Disposition.
Section 10.11. Nature of Business. Each Obligor will not, and will not permit any Subsidiary to, engage to any substantial extent in any business other than the businesses in which the Obligors and their Subsidiaries are engaged on the date of this Agreement as described in the Memorandum and businesses reasonably related thereto or in furtherance thereof.

Section 11. Events of Default.
An "Event of Default" shall exist if any of the following conditions or events shall occur and be continuing:
(a) an Obligor defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b) an Obligor defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable; or
(c) an Obligor defaults in the performance of or compliance with any term contained in Section 10 or in the Pledge Agreement; or
(d) an Obligor defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 11) and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) an Obligor 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 paragraph (d) of Section 11); or
(e) any representation or warranty made in writing by or on behalf of either Obligor or by any officer of either Obligor in a Financing Document or in any writing furnished in connection with the transactions contemplated by any Financing Document proves to have been false or incorrect in any material respect on the date as of which made; or
(f) (i) either Obligor or any 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 $10,000,000 beyond any period of grace provided with respect thereto, or (ii) either Obligor or any 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 $10,000,000 or of 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 (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) as a consequence of the occurrence or continuation of any event or condition (o ther than the passage of time or the right of the holder of Indebtedness to convert such Indebtedness into equity interests), (x) an Obligor or any 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 $10,000,000, or (y) one or more Persons have the right to require an Obligor or any Subsidiary so to purchase or repay such Indebtedness; or
(g) an Obligor or any 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 an Obligor or any Subsidiary, 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 either Obligor or any Subsidiary, or any such petition shall be filed against an Obligor or any Subsidiary and such petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money aggregating in excess of $15,000,000 are rendered against one or more of the Obligors and their Subsidiaries (net of insurance proceeds whereunder a solvent insurer with an investment grade long term bond rating has acknowledged in writing its obligation to satisfy such judgment) and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal; or
(j) if (i) any Plan 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 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 either Obligor 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, determined in accordance with Title IV of ERISA, shall exceed $15,000,000, (iv) either Obligor or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the pe nalty or excise tax provisions of the Code relating to employee benefit plans, (v) either Obligor or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) either Obligor 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 either Obligor 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.
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.

Section 12. Remedies on Default, etc.
Section 12.1. Acceleration. (a) If an Event of Default with respect to an Obligor described in paragraph (g) or (h) of Section 11 (other than an Event of Default described in clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by virtue of the fact that such clause encompasses clause (i) of paragraph (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, any holder or holders of more than 50% in principal amount of the Notes at the time outstanding may at any time at its or their option, by notice or notices to the Obligors, declare all the Notes then outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of Section 11 has occurred and is continuing, any holder of Notes at the time outstanding affected by such Event of Default may at any time, at its option, by notice or notices to an Obligor, declare all the Notes held by it to be immediately due and payable.
Upon any Note's becoming due and payable under this Section 12.1, whether automatically or by declaration, such Note will forthwith mature and the entire unpaid principal amount of such Note, plus (i) all accrued and unpaid interest thereon and (ii) the Make-Whole Amount 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 Obligors acknowledge, 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 Obligors (except as herein specifically provided for), and that the provision for payment of a Make-Whole Amount by the Obligors in the event that 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.
Section 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.
Section 12.3. Rescission. At any time after any Notes have been declared due and payable pursuant to clause (b) or (c) of Section 12.1, the holders of not less than 51% in principal amount of the Notes then outstanding, by written notice to an Obligor, may rescind and annul any such declaration and its consequences if (a) the Obligors have paid all overdue interest on the Notes, all principal of and 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) 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 (c) no judgment or decree has been entered for the payment of a ny 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.
Section 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 Obligors under Section 15, the Obligors 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.

Section 13. Registration; Exchange; Substitution of Notes.
Section 13.1. Registration of Notes. The Obligors shall keep at the principal executive office of the Company 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 Obligors shall not be affected by any notice or knowledge to the contrary. The Obligors 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.
Section 13.2. Transfer and Exchange of Notes. Upon surrender of any Note at the principal executive office of the Company for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or its attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Obligors shall execute and deliver, at the Obligors' expense (except as provided below), one or more new Notes (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 shall be substantially in the form of Exhibit 1. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrender ed Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Obligors 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 $1,000,000, 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 $100,000. Any transferee of a Note, or purchaser of a participation therein, shall, by its acceptance of such Note be deemed to make the same representations to the Obligors regarding the Note or participation as you and the Other Purchasers have made pursuant to Section 6.2, provided that such entity may (in reliance upon information provided by the Obligors, which shall not be unreasonably withheld) make a representation to the effect that the purchase by such entity of any Note will not constitute a non-exempt prohibited transaction under section 406(a) of ERISA. In the event of any transfer or exchange of any Note, the Company shall give written notice of such transfer or exchange to the Collateral Agent within five (5) Business Days of any such event, as defined under the Pledge Agreement.
Section 13.3. Replacement of Notes. Upon receipt by the Obligors of evidence reasonably satisfactory to the Obligors 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 the Obligors (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 $10,000,000, 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,
the Obligors at their own expense shall execute and deliver, in lieu thereof, a new Note, 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.

Section 14. Payments on Notes.
Section 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 Chicago, Illinois at the principal office of Bank One, N.A. in such jurisdiction. The Obligors 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 an Obligor in such jurisdiction or the principal office of a bank or trust company in such jurisdiction.
Section 14.2. Home Office Payment. So long as you or your nominee shall be the holder of any Note, and notwithstanding anything contained in Section 14.1 or in such Note to the contrary, the Obligors 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 your name in Schedule A, or by such other method or at such other address as you shall have from time to time specified to the Obligors 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 Obligors made concurrently with or reasonably promptly after payment or prepayment in full of any Note, you shall surrender such Note for cancellation, reasonably promptly after any such request, to the Obligors at their principal executive office or at the place of payment most recently designated by the Obligors pursuant to Sectio n 14.1. The Obligors 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 you under this Agreement and that has made the same agreement relating to such Note as you have made in this Section 14.2.

Section 15. Expenses, etc.
Section 15.1. Transaction Expenses. (a) Whether or not the transactions contemplated hereby are consummated, the Obligors, jointly and severally, will pay all costs and expenses (including reasonable attorneys' fees of a special counsel and, if reasonably required, local or other counsel) incurred by you and each Other Purchaser or 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 Pledge Agreement, the Intercreditor 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 Pledge Agreement, the Intercreditor Agreement or the Notes or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, th e Pledge Agreement, the Intercreditor Agreement or the Notes, or by reason of being a holder of any Note, and (b) the costs and expenses, including financial advisors' fees, incurred in connection with the insolvency or bankruptcy of an Obligor or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes. The Obligors will pay, and will save you 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 retained by you).
(b) Without limiting the foregoing, the Obligors agree to pay all fees of the Collateral Agent in connection with the preparation, execution and delivery of the Intercreditor Agreement and the Pledge Agreement and the transactions contemplated thereby, including but not limited to attorneys fees; to pay to the Collateral Agent from time to time reasonable compensation for all services rendered by it under the Intercreditor Agreement and the Pledge Agreement; to indemnify the Collateral Agent for, and to hold it harmless against, any loss, liability or expense incurred without gross negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of the Intercreditor Agreement and the Pledge Agreement, including, but not limited to, the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties thereunder.
Section 15.2. Survival. The obligations of the Obligors 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 Pledge Agreement, the Intercreditor Agreement or the Notes, and the termination of this Agreement.

Section 16. Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein shall survive the execution and delivery of this Agreement, the Pledge Agreement, the Intercreditor Agreement and the Notes, the purchase or transfer by you 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 you or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Obligors pursuant to this Agreement shall be deemed representations and warranties of the Obligors under this Agreement. Subject to the preceding sentence, this Agreement, the Pledge Agreement, the Intercreditor Agreement and the Notes embody the entire agreement and understanding between you and the Obligors and supersede all prior agreements and understandings relating to the subject matter hereof.

Section 17. Amendment and Waiver.
Section 17.1. Requirements. (a) 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 Obligors 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 you unless consented to by you 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 N otes the holders of which are required to consent to any such amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.
(b) The Pledge Agreement and the Intercreditor Agreement may be amended in the manner prescribed in the Intercreditor Agreement, and all amendments to the Pledge Agreement and the Intercreditor Agreement obtained in conformity with such requirements shall bind all holders of the Notes.
Section 17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Obligors 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, of the Pledge Agreement, of the Intercreditor Agreement or of the Notes. The Obligors 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 Obligors 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, 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 or of the Notes unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each holder of Notes then outstanding whether or not such holder consented to such waiver or amendment.
Section 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 Obligors 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 Obligors 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.
Section 17.4. Notes Held by Obligors, 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, the Pledge Agreement, the Intercreditor 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 either Obligor or any of their Affiliates shall be deemed not to be outstanding.

Section 18. Notices.
All notices and communications provided for hereunder shall be in writing and sent (a) by telefacsimile 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 you or your nominee, to you or it at the address specified for such communications in Schedule A, or at such other address as you or it shall have specified to the Obligors in writing,
(ii) if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Obligors in writing, or
(iii) if to any Obligor, to the Company at its address set forth at the beginning hereof to the attention of Chief Financial Officer, or at such other address as the Obligors shall have specified to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.

Section 19. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by you at the Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to you, may be reproduced by you by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and you may destroy any original document so reproduced. The Obligors agree and stipulate 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 you 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 Obligors 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.

Section 20. Confidential Information.
For the purposes of this Section 20, "Confidential Information" means information delivered to you by or on behalf of either Obligor or any of their Subsidiaries 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 you as being confidential information of such Obligor or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to you prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by you or any Person acting on your behalf, (c) otherwise becomes known to you other than through disclosure by either Obligor or any of their Subsidiaries or (d) constitutes financial statements delivered to you under Section 7.1 that are otherwise publicly available. You will maintain the confidentiality of such Co nfidential Information in accordance with procedures adopted by you in good faith to protect confidential information of third parties delivered to you, provided that you may deliver or disclose Confidential Information to (i) your directors, trustees, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by your Notes), (ii) your financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor to which you sell or offer 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 you offer to purchase any security of the Obligors (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 you, (vii) the National Association of Insurance Commissioners or any similar organization, or any nationally recognized rating agency that requires access to information about your 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 you, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which you are a party or (z) if an Event of Default has occurred and is continuing, to the extent you 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 your Notes and t his 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 Obligors 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 or any other holder that shall have previously delivered such a confirmation), such holder will confirm in writing that it is bound by the provisions of this Section 20.

Section 21. Substitution of Purchaser.
You shall have the right to substitute any one of your Affiliates as the purchaser of the Notes that you have agreed to purchase hereunder, by written notice to the Obligors, which notice shall be signed by both you 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, wherever the word "you" is used in this Agreement (other than in this Section 21), such word shall be deemed to refer to such Affiliate in lieu of you. In the event that such Affiliate is so substituted as a purchaser hereunder and such Affiliate thereafter transfers to you all of the Notes then held by such Affiliate, upon receipt by the Obligors of notice of such transfer, wherever the word "you" is used in this Agreement (other than in this Section 21), such word shall no longer be deemed to refer to such Affiliate, but shall refe r to you, and you shall have all the rights of an original holder of the Notes under this Agreement.

Section 22. Miscellaneous.
Section 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.
Section 22.2. Payments Due on Non-Business Days. Anything in this Agreement or the Notes to the contrary notwithstanding, 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.
Section 22.3. 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.
Section 22.4. Construction. 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.
Section 22.5. 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 fewer than all, but together signed by all, of the parties hereto.
Section 22.6. 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 Illinois excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.

Section 23. Company Guaranty.
Section 23.1 Guaranty of Payment and Performance of Obligations of Financial. The Company hereby guarantees to the holders, as a primary obligor and not merely as a surety, the full and punctual payment when due (whether at maturity, by acceleration or otherwise), as well as the performance, of all of the obligations incurred or owed by or chargeable to Financial (the "Financial Obligations"). The Company's obligation under this Section 23 is an absolute, unconditional and continuing guaranty of the full and punctual payment and performance of all of the Financial Obligations and not of their collectability only and is in no way conditioned upon any requirement that any holders first attempt to collect any of the Financial Obligations from Financial or resort to any collateral security of any holder in favor of Financial or any other Person or other means of obtaining payment. Should Financial default in the payment or performance of any of the Financial Obligations, the holder s may cause the obligations of the Company (as guarantor) hereunder with respect to such Financial Obligations to become forthwith due and payable to the holders, without demand or notice of any nature, all of which are expressly waived by the Company.
Section 23.2 Additional Amounts. The Company further agrees, as the primary obligor and not as a guarantor only, to pay to the holders, forthwith upon demand in funds immediately available to the holders, all reasonable costs and expenses (including court costs and legal fees and expenses) incurred or expended by the holders in connection with the Financial Obligations, this Section 23 and the enforcement thereof, together with interest on amounts recoverable under this Section 23 from the time when such amounts become due until payment, at a rate of interest equal to the Default Rate.
Section 23.3. Waivers by the Company: Holders' Freedom to Act. The Company waives notice of acceptance of this Section 23, notice of any action taken or omitted by any holder in reliance on this Section 23, and any requirement that any holder be diligent or prompt in making demands under this Section 23, giving notice of any default by Financial or asserting any other rights of any holder under this Section 23. The Company also irrevocably waives all defenses that at any time may be available in respect of the Financial Obligations by virtue of any statute of limitations, valuation, stay, moratorium law or other similar law now or hereafter in effect. the Company also irrevocably waives any benefit of any collateral which may from time to time secure the Financial Obligations and authorizes the holders to take any action or exercise any remedy with respect thereto which they in their discretion shall determine, without notice to the Company. The Company agrees that the validity and enforceability of this Section 23 shall not be impaired or affected by any of the following: (a) any extension, modification or renewal of, or indulgence with respect to, or substitutions for, the Financial Obligations or any part thereof or any agreement relating thereto at any time; (b) any failure or omission to enforce any right, power or remedy with respect to the Financial Obligations or any part thereof or any agreement relating thereto, or any collateral securing the Financial Obligations or any part thereof; (c) any waiver of any right, power or remedy or of any default with respect to the Financial Obligations or any part thereof or any agreement relating thereto; (d) any release, surrender, compromise, settlement, waiver, subordination or modification, with or without consideration, of any other obligation of any Person with respect to the Financial Obligations or any part thereof; (e) the enforceability or validity of the Financial Obligations or any part thereof or the genuinen ess, enforceability or validity of any agreement relating thereto or with respect to the Financial Obligations or any part thereof; (f) the application of payments received from any source to the payment of Indebtedness other than the Financial Obligations, any part thereof or amounts which are not covered by this Section 23 even though any Purchaer might lawfully have elected to apply such payments to any part or all of the Financial Obligations or to amounts which are not covered by this Section 23 or (g) the existence of any claim, setoff or other rights which the Company may have at any time against any of Financial in connection herewith or any unrelated transaction, all whether or not the Company shall have had notice or knowledge of any act or omission referred to in the foregoing clauses (a) through (g) of this Section 23.3.
Section 23.4. Unenforceability of Financial Obligations Against Financial. Notwithstanding (a) any change of ownership of Financial or the insolvency, bankruptcy or any other change in the legal status of Financial; (b) the change in or the imposition of any law, decree, regulation or other governmental act which does or might impair, delay or in any way affect the validity, enforceability or the payment when due of the Financial Obligations; (c) the failure of Financial or the undersigned to maintain in full force, validity or effect or to obtain or renew when required all governmental and other approvals, licenses or consents required in connection with Financial Obligations or this Section 23, or to take any other action required in connection with the performance of all obligations pursuant to the Financial Obligations or this Section 23; or (d) if any of the moneys included in the Financial Obligations have become irrecoverable from Financial for any other reason other than indefeasible payment in full of the Financial Obligations in accordance with their terms, this Section 23 shall nevertheless be binding on the Company. This Section 23 shall be in addition to any other guaranty or other security for the Financial Obligations, and it shall not be rendered unenforceable by the invalidity of any such other guaranty or security. In the event that acceleration of the time for payment of any of the Financial Obligations is stayed upon the insolvency, bankruptcy or reorganization of Financial, or for any other reason, all such amounts otherwise subject to acceleration under the terms of this Agreement, the Other Agreements or any other agreement evidencing, securing or otherwise executed in connection with the Financial Obligations shall be immediately due and payable by the Company.
Section 23.5. Subrogation; Subordination. The Company shall not enforce or otherwise exercise any right of subrogation to any of the rights of any holder against Financial until all of the Financial Obligations are indefeasibly paid in full. The payment of any amounts due with respect to any indebtedness of Financial now or hereafter owed to the Company is hereby subordinated to the prior payment in full of all of the Financial Obligations. The Company agrees that, after the occurrence of any default in the payment or performance of any of the Financial Obligations, the Company will not demand, sue for or otherwise attempt to collect any such indebtedness of Financial to the Company until all of the Financial Obligations shall have been paid in full. If, notwithstanding the foregoing sentence, the Company shall collect, enforce or receive any amounts in respect of such indebtedness while Financial Obligations are still outstanding, such amounts shall be collected, enforced and received by the Company as trustee for the holders and be paid over to the holders on account of the Financial Obligations without affecting in any manner the liability of the Company under the other provisions of this Section 23. The provisions of this Section 23.5 shall be supplemental to and not in derogation of any rights and remedies of the holders under any separate subordination agreement which the holders may at any time and from time to time enter into with the Company.
Section 23.6. Termination. The Company's obligations hereunder shall continue in full force and effect until Financial Obligations are indefeasibly paid in full and this Agreement is terminated, provided that this Section 23 shall continue to be effective or shall be reinstated, as the case may be, if at any time payment or other satisfaction of any of the Financial Obligations is rescinded or must otherwise be restored or returned upon the bankruptcy, insolvency, or reorganization of Financial, or otherwise, as though such payment had not been made or other satisfaction occurred, whether or not any holder is in possession of this Agreement. No invalidity, irregularity or unenforceability by reason of the federal bankruptcy code or any insolvency or other similar law, or any law or order of any government or agency thereof purporting to reduce, amend or otherwise affect the Financial Obligations shall impair, affect, be a defense to or claim against the obligations of the Compa ny under this Section 23.
Section 23.7. Effect of Bankruptcy. The Company's obligations under this Section 23 shall survive the insolvency of Financial and the commencement of any case or proceeding by or against Financial under the federal bankruptcy code or other federal, state or other applicable bankruptcy, insolvency or reorganization statutes. No automatic stay under the federal bankruptcy code or other federal, state or other applicable bankruptcy, insolvency or reorganization statutes to which any Financial is subject shall postpone the obligations of the Company under this Section 23.
Section 23.8. Setoff. Regardless of the other means of obtaining payment of any of the Financial Obligations, each of the holders is hereby authorized at any time and from time to time, without notice to the Company (any such notice being expressly waived by the Company) and to the fullest extent permitted by law, to set off and apply such deposits and other sums against the obligations of the Company under this Section 23, whether or not the holders shall have made any demand under this Section 23 and although such obligations may be contingent or unmatured.
Section 23.9. Further Assurances. The Company agrees to do all such things and execute all such documents as the holders may consider necessary or desirable to give full effect to this Section 23 and to perfect and preserve the rights and powers of the holders hereunder.
 
If you are in agreement with the foregoing, please sign the form of agreement on the accompanying counterpart of this Agreement and return it to the Obligors, whereupon the foregoing shall become a binding agreement between you and the Obligors.

Very truly yours,

Astec Industries, Inc.

By /s/ Richard W. Bethea

Name: Richard W. Bethea

Title: Executive Vice President

Astec Financial Services, Inc.

/s/ Albert E. Guth

Name: Albert E. Guth

Title: President

The foregoing is hereby agreed
to as of the date thereof.
[Variation]
 

Information Relating to Purchasers

Principal Amount of Notes to be Purchased $3,000,000

Name and Address of Purchaser

American United Life Insurance Company

One American Square

Post Office Box 368

Indianapolis, Indiana 46206-0368

Attention: Christopher D. Pahlke, Securities Department

Overnight mailing address:

One American Square

Indianapolis, Indiana 46282

Payments
All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Astec Industries, Inc. and Astec Financial Services, Inc., 7.56% Senior Secured Notes due 2011, PPN 04623# AA 3" and identifying the breakdown of principal and interest and the payment date) to:

Bank of New York

Attention: P&I Department

One Wall Street, 3rd Floor

Window A

New York, New York 10286

ABA #021000018, BNF:IOC566

Notices
All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 35-0145825
 

Principal Amount of Notes to be Purchased $5,000,000, $5,000,000, $2,500,000

Name and Address of Purchaser

The Guardian Life Insurance Company of America

7 Hanover Square

New York, New York 10004-2616

Attention: Raymond J. Henry, Investment Department 20-D

Fax Number: (212) 919-2656/2658

Payments
All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Astec Industries, Inc. and Astec Financial Services, Inc., 7.56% Senior Secured Notes due 2011, PPN 04623# AA 3, principal, premium or interest") to:

The Chase Manhattan Bank

FED ABA #021000021

CHASE/NYC/CTR/BNF

A/C 900-9-000200

Reference A/C #G05978, Guardian Life

And the name and CUSIP for which payment is being made

Notices
All notices of payments, on or in respect of the Notes and written confirmation of each such payment to:

The Guardian Life Insurance Company of America

7 Hanover Square

New York, New York 10004-2616

Attention: Investment Accounting Dept. 17-B

Fax Number: (212) 598-7011

All notices and communications other than those in respect to payments to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: CUDD & CO.
Taxpayer I.D. Number: 13-6022143
 

Principal Amount of Notes to be Purchased $1,000,000

Name and Address of Purchaser

The Guardian Insurance & Annuity Company, Inc.

c/o The Guardian Life Insurance Company of America

7 Hanover Square

New York, New York 10004-2616

Attention: Raymond J. Henry, Investment Department 20-D

Fax Number: (212) 919-2656/2658

Payments
All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Astec Industries, Inc. and Astec Financial Services, Inc., 7.56% Senior Secured Notes due 2011, PPN 04623# AA 3, principal, premium or interest") to:

The Chase Manhattan Bank

FED ABA #021000021

CHASE/NYC/CTR/BNF

A/C 900-9-000200

Reference A/C #G53637, GIAC - Guardian Tradition

And the name and CUSIP for which payment is being made

Notices
All notices of payments, on or in respect of the Notes and written confirmation of each such payment to:

The Guardian Insurance & Annuity Company, Inc.

c/o The Guardian Life Insurance Company of America

7 Hanover Square

New York, New York 10004-2616

Attention: Investment Accounting Dept. 17-B

Fax Number: (212) 598-7011

All notices and communications other than those in respect to payments to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: CUDD & CO.
Taxpayer I.D. Number: 13-6022143
 

Principal Amount of Notes to be Purchased $1,000,000

Name and Address of Purchaser

Fort Dearborn Life Insurance Company

c/o Guardian Asset Management Corp.

7 Hanover Square

New York, New York 10004-2616

Attention: Raymond J. Henry, Fixed Income Securities 20-D

Fax Number: (212) 919-2656/2658

Payments
All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Astec Industries, Inc. and Astec Financial Services, Inc., 7.56% Senior Secured Notes due 2011, PPN 04623# AA 3, principal, premium or interest") to:

Bank One

ABA #044000037

For further credit to Bank One

Account #980401787

Attn: A/C #2600218700 Ft. Dearborn Life Insurance - Guardian ISP

All notices of payments, on or in respect of the Notes and written confirmation of each such payment to:

Fort Dearborn Life Insurance Company

c/o The Guardian Life Insurance Company of America

7 Hanover Square

New York, New York 10004-2616

Attention: Investment Accounting Dept. 17-B

Fax Number: (212) 598-7011

All notices and communications other than those in respect to payments to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: Bank One & Co.
Taxpayer I.D. Number: 362598882
 

Principal Amount of Notes to be Purchased $500,000

Name and Address of Purchaser

Fort Dearborn Life Insurance Company

c/o Guardian Asset Management Corp.

7 Hanover Square

New York, New York 10004-2616

Attention: Raymond J. Henry, Fixed Income Securities 20-D

Fax Number: (212) 919-2656/2658

Payments
All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Astec Industries, Inc. and Astec Financial Services, Inc., 7.56% Senior Secured Notes due 2011, PPN 04623# AA 3, principal, premium or interest") to:

Bank One

ABA #044000037

For further credit to Bank One

Account #980401787

Attn: A/C #2600218703 Ft. Dearborn Life Insurance Company - Guardian MVA

All notices of payments, on or in respect of the Notes and written confirmation of each such payment to:

Fort Dearborn Life Insurance Company

c/o The Guardian Life Insurance Company of America

7 Hanover Square

New York, New York 10004-2616

Attention: Investment Accounting Dept. 17-B

Fax Number: (212) 598-7011

All notices and communications other than those in respect to payments to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: Bank One & Co.
Taxpayer I.D. Number: 362598882
 

Principal Amount of Notes to be Purchased $4,000,000

Name and Address of Purchaser

National Life Insurance Company

One National Life Drive

Montpelier, Vermont 05604

Attention: Private Placements

Fax Number: (802) 223-9332

Payments
All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Astec Industries, Inc. and Astec Financial Services, Inc., 7.56% Senior Secured Notes due 2011, PPN 04623# AA 3, principal, premium or interest") to:

J.P. Morgan Chase & Co.

New York, NY 10010

ABA #021000021

Account No. 910-4-017752

Notices
All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 03-0144090
 

Principal Amount of Notes to be Purchased $3,000,000

Name and Address of Purchaser

Life Insurance Company of the Southwest

c/o National Life Insurance Company

One National Life Drive

Montpelier, Vermont 05604

Attention: Private Placements

Fax Number: (802) 223-9332

Payments
All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Astec Industries, Inc. and Astec Financial Services, Inc., 7.56% Senior Secured Notes due 2011, PPN 04623# AA 3, principal, premium or interest") to:

J.P. Morgan Chase & Co.

New York, NY 10010

ABA #021000021

Account No. 910-2-754349

Notices
All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 75-0953004
 

Principal Amount of Notes to be Purchased $15,000,000

Name and Address of Purchaser

Unum Life Insurance Company of America

c/o Provident Investment Management, LLC

One Fountain Square

Chattanooga, Tennessee 37402

Attention: Private Placements

Telephone: (423) 755-1172

Fax: (423) 755-3351

All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds to:

CUDD & CO.

c/o The Chase Manhattan Bank

New York, New York

ABA #021-000-021

SSG Private Income Processing

For credit to: A/C #900-9-000200

Custodial Account Number G08287

Please reference: Issuer

PPN 04623# AA 3

Coupon

Maturity

Principal=$__________

Interest=$___________

Notices
All notices and communications, including notices with respect to payments and written confirmation of each such payment, to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: CUDD & CO.
Taxpayer I.D. Number for CUDD & Co.: 13-6022143
 

Principal Amount of Notes to be Purchased $13,000,000

Name and Address of Purchaser

United of Omaha Life Insurance Company

Mutual of Omaha Plaza

Omaha, Nebraska 68175-1011

Attention: 4-Investment Loan Administration

Payments
All principal and interest payments on the Notes shall be made by wire transfer of immediately available funds to:

Chase Manhattan Bank

ABA #021-000-021

Private Income Processing

for credit to: United of Omaha Life Insurance Company

Account Number 900-9000200

a/c G07097

Cusip/PPN: 04623# AA 3

Interest Amount:

Principal Amount:

Notices
All notices of payments, on or in respect of the Notes and written confirmation of each such payment, corporate actions and reorganization notifications to:
The Chase Manhattan Bank
4 New York Plaza-11th Floor
New York, New York 10004
Attention: Income Processing-J. Pipperato
a/c: G07097
All other notices and communications (i.e., quarterly/annual reports, tax filings, modifications, waivers regarding the indenture) to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 47-0322111
 

Principal Amount of Notes to be Purchased $2,000,000

Name and Address of Purchaser

Companion Life Insurance Company

c/o Mutual of Omaha Insurance Company

Mutual of Omaha Plaza

Omaha, Nebraska 68175-1011

Attention: 4 - Investment Loan Administration

Telefacsimile: (402) 351-2913

Confirmation: (402) 351-2583

Payments

All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds to:

Chase Manhattan Bank

ABA #021000021

Private Income Processing

for credit to: Companion Life Insurance Company

Account Number 900-9000200

a/c G07903

Cusip/PPN: 04623# AA 3

Interest Amount:

Principal Amount:

Notices
All notices of payments, on or in respect of the Notes and written confirmation of each such payment, corporate actions and reorganization notifications to:
The Chase Manhattan Bank
4 New York Plaza-11th Floor
New York, New York 10004
Attention: Investment Processing-J. Pipperato
a/c: G07903

All other notices and communications (i.e., quarterly/annual reports, tax filings, modifications, waivers regarding the indenture) to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 13-1595128

Principal Amount of Notes to be Purchased $5,000,000

Name and Address of Purchaser

Nationwide Life Insurance Company

One Nationwide Plaza (1-33-07)

Columbus, Ohio 43215-2220

Attention: Corporate Fixed-Income Securities

Facsimile: (614) 249-4553

Payments
All notices of payment on or in respect of the Notes and written confirmation of each such payment to:

The Bank of New York

ABA #021-000-018

BNF: IOC566

F/A/O Nationwide Life Insurance Company

Attention: P&I Department

PPN #04623# AA 3

Security Description: ______________________

Notices

All notices of payment on or in respect of the Notes and written confirmation of each such payment to:

Nationwide Life Insurance Company

c/o The Bank of New York

P. O. Box 19266

Newark, New Jersey 07195

Attention: P&I Department

With a copy to:

Nationwide Life Insurance Company

One Nationwide Plaza (1-32-05)

Columbus, Ohio 43215-2220

Attention: Investment Accounting

All notices and communications other than those in respect to payments to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 31-4156830
 

Principal Amount of Notes to be Purchased $2,000,000

Name and Address of Purchaser

Nationwide Life and Annuity Insurance Company

One Nationwide Plaza (1-33-07)

Columbus, Ohio 43215-2220

Attention: Corporate Fixed-Income Securities

Facsimile: (614) 249-4553

Payments

All notices of payment on or in respect of the Notes and written confirmation of each such payment to:

The Bank of New York

ABA #021-000-018

BNF: IOC566

F/A/O Nationwide Life and Annuity Insurance Company

Attention: P&I Department

PPN #04623# AA 3

Security Description: __________________

Notices

All notices of payment on or in respect of the Notes and written confirmation of each such payment to:

Nationwide Life and Annuity Insurance Company

c/o The Bank of New York

P. O. Box 19266

Newark, New Jersey 07195

Attention: P&I Department

With a copy to:

Nationwide Life and Annuity Insurance Company

One Nationwide Plaza (1-32-05)

Columbus, Ohio 43215-2220

Attention: Investment Accounting

All notices and communications other than those in respect to payments to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 31-1000740
 

Principal Amount of Notes to be Purchased $18,000,000

Name and Address of Purchaser

Teachers Insurance and Annuity Association of America

730 Third Avenue

New York, New York 10017-3206

Payments

All payments on or in respect of the Notes shall be made in immediately available funds at the opening of business on the due date by electonic funds transfer through the Automated Clearing House System to:

Chase Manhattan Bank

ABA #021-000-021

Account of: Teachers Insurance and Annuity Association of America

Account Number 900-9-000200

For further credit to the TIAA Account Number: G07040

Reference: PPN#/Issuer/Mat. Date/Coupon Rate/P&I Breakdown

Notices

Contemporaneous with the above electronic funds transfer, advice setting forth (1) the full name, private placement number and interest rate of the Notes; (2) allocation of payment between principal, interest, premium and any special payment; and (3) name and address of Bank (or Trustee) from which wire transfer was sent, shall be delivered, mailed or faxed to:

Teachers Insurance and Annuity Association of America

730 Third Avenue

New York, New York 10017-3206

Attention: Securities Accounting Division

Telephone: (212) 916-6004

Fax: (212) 916-6955

All other notices and communications shall be delivered or mailed to:
Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, New York 10017-3206
Attention: Securities Division, Private Placements
Telephone: (212) 916-5725 (Estelle Simsolo)
(212) 490-9000 (General Number)
Fax: (212) 916-6582 (Team Fax Number)
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 13-1624203

Defined Terms
Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, the same shall be done in accordance with GAAP, to the extent applicable, except where such principles are inconsistent with the express requirements of this Agreement.
Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether the action in question is taken directly or indirectly by such Person.
As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:
"Affiliate" means, at any time, and with respect to any Person, (a) 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 (b) any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of an Obligor or any Subsidiary or any corporation of which an Obligor and such Obligor's Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests. As used in this definition, "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. Unless the context otherwise clearly requires, any reference to an "Affiliate" is a reference to an Affiliate of the Obligors.
"Asset Disposition" means any Transfer except:
(a) any
(i) Transfer from a Subsidiary to an Obligor or a Subsidiary; and
(ii) Transfer from an Obligor to a Subsidiary,
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; and
(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 an Obligor or any Subsidiary or that is obsolete or (iii) receivables owned by an Obligor or a Subsidiary being transferred to a Special Purpose Subsidiary for fair market value pursuant to the Permitted Receivables Securitization Program.
"Bank Credit Agreement" means that certain Credit Agreement dated as of April 7, 2000 among Bank One, N.A., as agent, the other parties thereto and the Obligors, as amended, modified, refinanced, replaced or supplemented.
"Banks" means the several banks and other financial institutions from time to time parties to the Bank Credit Agreement.
"Business Day" means (a) for the purposes of Section 8.7 only, any day other than a Saturday, a Sunday or a day on which commercial banks in New York City 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 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.
"Change of Control" means the direct or indirect beneficial ownership (whether by way of an amalgamation, merger or otherwise) by any Person or group of Persons acting in concert of more than 25% of the issued and outstanding Voting Stock of the Company.
"Closing" is defined in Section 3.
"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 Astec Industries, Inc., a Tennessee corporation.
"Confidential Information" is defined in Section 20.
"Consolidated Earnings Available for Fixed Charges" means, with respect to any period, Consolidated Net Earnings for such period plus (to the extent deducted to calculate Consolidated Net Earnings):
(a) all provisions for income taxes; and
(b) Consolidated Fixed Charges for such period,
provided that, in the event any Person (or the assets thereof) is acquired by the Company or any Subsidiary (whether by merger, consolidation, asset or stock acquisition or otherwise) at any time during the period of calculation, such acquisition shall be deemed to have been made on the first day of such calculation period.
"Consolidated Fixed Charges" means, with respect to any period, the sum of (i) Interest Expense for such period plus (ii) Lease Rentals for such period, determined on a consolidated basis for the Company and its Subsidiaries (excluding Special Purpose Subsidiaries), provided that, in the event any Person (or the assets thereof) is acquired by the Company or any Subsidiary (whether by merger, consolidation, asset or stock acquisition or otherwise) at any time during the period of calculation, such acquisition shall be deemed to have been made on the first day of such calculation period.
"Consolidated Net Earnings" means the net earnings (or loss) of the Company and its Subsidiaries (excluding Special Purpose Subsidiaries) for such period (taken as a cumulative whole), as determined in accordance with GAAP, excluding (to the extent deducted to calculate Consolidated Net Earnings):
(i) extraordinary gain and losses; and
(ii) any equity interest of the Company on the unremitted earnings of any Person that is not a Subsidiary.
"Consolidated Net Worth" means the value of stockholders' equity of the Company and its Subsidiaries (excluding Special Purpose Subsidiaries) determined on a consolidated basis in accordance with GAAP.
"Consolidated Operating Cash Flow" means Consolidated Net Earnings for the previous four quarters plus (to the extent deducted to calculate Consolidated Net Earnings):
(i) provisions for federal, state and local income taxes;
(ii) Interest Expense; and
(iii) depreciation and amortization, all in accordance with GAAP,
provided that, in the event any Person (or the assets thereof) is acquired by the Company or any Subsidiary (whether by merger, consolidation, asset or stock acquisition or otherwise) at any time during the period of calculation, such acquisition shall be deemed to have been made on the first day of such calculation period.
"Consolidated Total Assets" means the total assets of the Company and its Subsidiaries (excluding Special Purpose Subsidiaries), determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Debt" means, without duplication, all Indebtedness of the Company and its Subsidiaries (excluding Special Purpose Subsidiaries), including current maturities of such obligations, determined on a consolidated basis in accordance with GAAP.
"Debt Prepayment Application" means, with respect to any Transfer of property, the application by an Obligor or any Subsidiary (excluding Special Purpose Subsidiaries) of cash in an amount equal to the Net Sales Amount (or portion thereof) with respect to such Transfer to pay Senior Debt of an Obligor or any Subsidiary, (excluding Special Purpose Subsidiaries) (other than Senior Debt in respect of any revolving credit or similar credit facility providing an Obligor or any Subsidiary 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 Debt 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 Debt), provided that in the course of making such application such Obligor or such Subsidiary shall offer to prepay each outstanding Note in a principal amount which, when added to the Make-Whole Am ount applicable thereto, equals the Ratable Portion for such Note (which offer shall be in writing and shall offer to prepay the Ratable Portion of the Notes on a date which is not less than 30 days after the date of the notice of offer). If any holder of a Note fails to accept in writing such offer of prepayment within 15 day of receipt of the notice of offer, then, for purposes of the preceding sentence only, such Obligor or such Subsidiary nevertheless will be deemed to have paid Senior Funded Debt in an amount equal to the Ratable Portion for such Note. "Ratable Portion" for any Note means an amount equal to the product of (x) the Net Sales Amount being so applied to the payment of Senior Debt multiplied by (y) a fraction the numerator of which is the outstanding principal amount of such Note and the denominator of which is the aggregate principal amount of Senior Debt of the Company and its Subsidiaries (excluding Special Purpose Subsidiaries).
"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 that rate of interest that is the greater of (i) 2.00% per annum above the rate of interest stated in clause (a) of the first paragraph of the Notes or (ii) 2.00% over the rate of interest publicly announced by Bank One, N.A. in Chicago, Illinois as its "prime" rate.
"Disposition Value" means, at any time, with respect to any property
(a) in the case of property that does not constitute stock of a Subsidiary, the book value thereof, valued at the time of such disposition in good faith by the Obligors, and
(b) in the case of property that constitutes stock of a Subsidiary, an amount equal to that percentage of book value of the assets of the Subsidiary that issued such stock as is equal to the percentage that the book value of such stock represents of the book value of all of the outstanding capital stock of such Subsidiary (assuming, in making such calculations, that all securities convertible into such capital stock 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 Obligors.
"Environmental Laws" means any and all applicable 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 substances or wastes, air emissions and discharges to waste or public systems.
"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 either Obligor 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.
"Financing Documents" shall mean and include this Agreement, the other Agreements, the Notes and the Pledge Agreement, in each case, as amended or modified.
"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 jurisdiction in which an Obligor or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of an Obligor or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.
"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 guaranteeing or in effect guaranteeing 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.
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.
"Hazardous Material" means any and all pollutants, toxic or hazardous wastes or any other substances that might pose a hazard to health or 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, without limitation, asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls).
"holder" means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Obligors pursuant to Section 13.1.
"Indebtedness" with respect to any Person means, at any time, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property);
(c) all liabilities appearing on its balance sheet in accordance with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money) to the extent, in each case, such letters of credit or instruments have been drawn upon; and
(f) any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such Person of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP.
"Institutional Investor" means (a) any original purchaser of a Note, (b) any holder of a Note holding more than 10% of the aggregate principal amount of the Notes then outstanding, and (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.
"Intercreditor Agreement" is defined in Section 2.2.
"Interest Expense" means, for any period, the interest expense of the Company and its Subsidiaries, other than Special Purpose Subsidiaries, (including imputed interest in respect of Capital Leases), in respect of all Consolidated Total Debt, and all debt discount and expense amortized or required to be amortized in the determination of Consolidated Net Earnings for such period.
"Investment" means any investment, made in cash or by delivery of property, by either of the Obligors or any of their Subsidiaries (i) in any Person, whether by acquisition of stock, debt or other obligation or security, or by loan, Guaranty, advance, capital contribution or otherwise, or (ii) in any property.
"Lease Rentals" means, with respect to any period, the sum of the rentals and other obligations required to be paid during such period by the Company or any Subsidiary as lessee under all leases of real or personal property (other than Capital Leases), excluding any amount required to be paid by the lessee on the count of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges, provided, that, if at the date of determination, any such rental or other obligations are contingent or not otherwise definitely determinable by the terms of the related lease, the amount of such obligations (i) shall be assumed to be equal to the amount of such obligations for the period of 12 consecutive calendar months immediately preceding the date of determination or (ii) if the related lease was not in effect during such preceding 12-month period, shall be the amount estimated by a Senior Financial Officer of the Company on a reasonable basis and in good faith.
"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).
"Make-Whole Amount" is defined in Section 8.7.
"Material" means material in relation to the business, operations, affairs, financial condition, assets, properties, or prospects of the Obligors and their Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Obligors and their Subsidiaries taken as a whole, or (b) the ability of either Obligor to perform its obligations under any of the Financing Documents, or (c) the validity or enforceability of this Agreement or the Notes.
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Net Sales Amount" means, with respect to any Transfer of any property by an Obligor or any Subsidiary, an amount equal to the difference of:
(a) the aggregate amount of consideration (valued at the fair market value thereof by such Obligor or such Subsidiary in good faith) received by such Obligor or such Subsidiary in respect of such Transfer minus
(b) all ordinary and reasonable out-of-pocket costs and expenses actually incurred by such Obligor or such Subsidiary in connection with such Transfer.
"Notes" is defined in Section 1.
"Officer's Certificate" means with respect to an Obligor, a certificate of a Senior Financial Officer or of any other officer of such Obligor whose responsibilities extend to the subject matter of such certificate.
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.
"Permitted Investments" means and includes:
(a) Investments in property to be used in the ordinary course of business of the Obligors and their Subsidiaries;
(b) Investments in current assets arising from the sale of goods and services in the ordinary course of business of the Obligors and their Subsidiaries (other than Special Purpose Subsidiaries);
(c) Investments existing as of the date of the Note Agreement and described on Schedule 10.5;
(d) Investment in or advances to one or more Subsidiaries (other than Special Purpose Subsidiaries) or any Person that concurrently with such investment becomes a Subsidiary (other than Special Purpose Subsidiaries);
(e) Investments by the Obligors and their Subsidiaries in Special Purpose Subsidiaries consisting solely of the minimum equity investment reasonably necessary to conduct the Permitted Receivables Securitization Program;
(f) Investments by Special Purpose Subsidiaries in receivables purchased by such Special Purpose Subsidiaries from an Obligor or another Subsidiary pursuant to the Permitted Receivables Securitization Program (and the proceeds from such receivables);
(g) certificates of deposit and banker's acceptances with final maturities of one year or less issued by U.S., Canadian or South African commercial banks having capital and surplus in excess of $100,000,000;
(h) commercial paper with a minimum rating of "A1" or "P1" by either Standard & Poor's Corporation or Moody's Investors Service, respectively, and maturing not more than 270 days from the date acquired;
(i) direct obligations of the United States or United States agency obligations with a maturity of one year or less;
(j) Investments in repurchase agreements;
(k) tax exempt state or municipal general obligation bonds rated "AA" or better by Standard & Poor's Corporation, "Aa2" or better by Moody's Investors Services or an equivalent rating by any other credit rating agency of recognized national standing, provided that such obligations mature within 365 days from the date of acquisition thereof; and
(l) other Investments not to exceed, in the aggregate, 15% of Consolidated Net Worth.
For purposes of applying the limitations set forth in Section 10.5, Permitted Investments shall be valued at the original cost thereof less any amount repaid or recovered in cash on account of capital or principal.
"Permitted Receivables Securitization Program" means one or more transactions wherein the Company and/or a Subsidiary transfers under a true sale transaction receivables of the Company and/or such Subsidiary to a Special Purpose Subsidiary which issues or incurs Indebtedness secured solely by such receivables, provided however, that (i) such Indebtedness is recourse only to such receivables, (ii) the aggregate principal amount of all Indebtedness outstanding of all Special Purpose Subsidiaries pursuant to such transactions shall not at any time exceed $150,000,000 and (iii) at the time of any such transaction and immediately after giving effect thereto, no Default or Event of Default would exist.
"Person" means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) 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 an Obligor or any ERISA Affiliate or with respect to which an Obligor or any ERISA Affiliate may have any liability.
"Pledge Agreement" is defined in Section 2.2.
"Priority Debt" means the sum, without duplication, of (i) Indebtedness of the Obligors secured by Liens not otherwise permitted by clauses (a) through (i) of Section 10.8; and (ii) all Indebtedness of all Subsidiaries (other than Financial and any Special Purpose Subsidiary) not otherwise permitted by clauses (a), (b) or (c) of Section 10.7.
"property" or "properties" means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.
"Property Reinvestment Application" means, with respect to any Asset Disposition of property, the application of the Net Sales Amount (or a portion thereof) with respect to such Asset Disposition to the acquisition by an Obligor or any Subsidiary (other than a Special Purpose Subsidiary) of operating assets of such Obligor or such Subsidiary to be used in the business of such person.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14 issued by the United States Department of Labor.
"Required Holders" means, at any time, the holders of at least 51% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by an Obligor or any of its Affiliates).
"Responsible Officer" means, with respect to an Obligor, any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this Agreement.
"Secured Parties" has the meaning provided in the Intercreditor Agreement.
"Securities Act" means the Securities Act of 1933, as amended from time to time.
"Senior Debt" means and includes (i) any Debt of an Obligor owing to any Person which is not a Subsidiary or Affiliate and which is not expressed to be junior or subordinate to any other Debt of such Obligor and (ii) Debt of any Subsidiary (excluding Special Purpose Subsidiaries) due and owing to any Person other than an Obligor, another Subsidiary or an Affiliate.
"Senior Financial Officer" means, with respect to an Obligor, the chief financial officer, principal accounting officer, treasurer or comptroller of the Company.
"Special Purpose Subsidiary" means a Wholly-Owned Subsidiary organized under the laws of the United States or any State thereof and authorized solely to (i) purchase receivables from the Company or a Subsidiary and issue Indebtedness with recourse solely to such receivables and (ii) engage in activities reasonably necessary to effectuate the transactions referred to in clause (i).
"Subsidiary" means, as to any Person, any corporation, association or other business entity in which such Person or one or more of its Subsidiaries or such 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 entity, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership 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.
"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 any disposition of any capital stock of any Subsidiary or the assets of any Subsidiary, whether by merger, consolidation or otherwise.
"Voting Stock" means capital stock of any class or classes of a corporation having power under ordinary circumstances to vote for the election of members of the board of directors of such corporation, or persons performing similar functions (irrespective of whether or not at the time stock of any of the class or classes shall have or might have special voting power or rights by reason of the happening of any contingency).
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one hundred percent (100%) of all of the equity interests (except directors' qualifying shares) and voting interests of which are owned by any one or more of an Obligor and the Obligor's other Wholly-Owned Subsidiaries at such time.

Subsidiaries of the Obligors and Ownership of Subsidiary Stock

Owned	Jurisdiction of Organization	Percent of Stock Owned
AI Development Group, Inc.	Minnesota	100
AI Enterprises, Inc.	Minnesota	100
American Augers, Inc.	Delaware	100
Astec Export Company, Inc.	Barbados	100
Astec Financial Services, Inc.	Tennessee	100
Astec Holdings, Inc.	Tennessee	100
Astec, Inc.	Tennessee	100
Astec Investments, Inc.	Tennessee	100
Astec Systems, Inc.	Tennessee	100
Astec Transportation, Inc.	Tennessee	100
Breaker Technology, Inc.	Tennessee	100
Breaker Technology, Ltd.	Ontario	100
Carlson Paving Products, Inc.	Washington	100
CEI Enterprises, Inc.	Tennessee	100
Heatec, Inc.	Tennessee	100
Johnson Crushers International, Inc.	Tennessee	100
Kolberg-Pioneer, Inc.	Tennessee	100
Osborn Engineered Products (Pty) Ltd	South Africa	88
Production Engineered Products, Inc.	Nevada	100
RI Properties, Inc.	Minnesota	100
Roadtec, Inc.	Tennessee	100
Superior Industries of Morris, Inc.	Minnesota	100
TI Services, Inc.	Minnesota	100
Telsmith, Inc	Delaware	100
Trencor, Inc.	Texas	100

Financial Statements
Consolidated Financial Statements dated as of the year ended December 31, 2000.
Consolidated Financial Statements dated as of June 30, 2001.

Existing Indebtedness
as of 8/30/01 of Astec and Subsidiaries

	Description	Balance
Astec Industries, Inc.	Existing Bank One Credit Agreement	$70,500,000
Telsmith, Inc.	Industrial Revenue Bonds	2,500,000
Trencor, Inc.	Industrial Revenue Bonds	8,000,000
Kolberg-Pioneer, Inc.	Industrial Revenue Bonds	9,200,000
Superior Industries of Morris, Inc.	Notes Payable	69,128
Astec Industries, Inc.	Notes Payable	164,670
Breaker Technology Ltd	Toku Notes Payable (as of 7/31/01)	3,289,787
Other Notes Payable		20,500

 
Contingent Obligations
 
Guaranty by Astec Industries, Inc. of $1,250,000 line of credit for Pavement Technology, Inc.
Guaranty by Astec Industries, Inc. of R30,000,000 ($3,750,000) line of credit for Osborn Engineered Products (Pty) Ltd.

Letters of Credit: See attached Schedule.
Schedule

CUSTOMER	COMPANY	LETTER OF CREDIT NO.	MAXIMUM AMOUNT (US Dollars)	LETTER OF CREDIT EXPIRATION DATE
Haitai International	Trencor	00315546	$425,323.08
Bank One-Dallas	Trencor	00315672	$8,105,206.00	November 22, 2002
Chuquicamata	Breaker Tech	00322183	$38,500.00	April 30, 2002
Diavik Diamond Mines	Breaker Tech.	00323653	$17,560.15	April 30, 2004
Gehouba Group	Breaker Tech	00323756	$24,202.00	September 30, 2002
Leighton Contractors	Trencor	00323759	$282,000.00	December 31, 2001
Jiangsu Sumec	American Augers	00323908	$288,876.75	October 30, 2001
Bilfinger+Berger	Astec, Inc.	00325167	$480,000.00	October 15, 2001
Royal Bank of Canada	Breaker Tech	00325288	$50,113.09	June 27, 2002 (Evergreen)
Earth Products	Pavement Tech	00325331	$7,700.00	February 28, 2002
Toronto Dominion Bank	Breaker Tech	00325332	$36,206.50	October 31, 2002
Luossavaara-Kiirunavaara	Breaker Tech	00325513	$50,000.00	January 31, 2002
Luossavaara-Kiirunavaara	Breaker Tech	00325514	$50,000.00	June 15, 2001
Luossavaara-Kiirunavaara	Breaker Tech	00325515	$50,000.00	April 30, 2002
Luossavaara-Kiirunavaara	Breaker Tech	00325516	$50,000.00	March 30, 2002
Sinochem Intern'l	Astec, Inc.	00325578	$157,817.30	May 25, 2002
Shandong Machinery	Breaker Tech	00325591	$12,000.00	January 10, 2002
First National Bank of Chicago	Kolberg-Pioneer	00352637	$9,338,000.00	November 21, 2002
Toronto-Dominion Bank	Breaker Tech.	00352868	$169,867.70	August 31, 2002
Corporacion Nacional	Breaker Tech	00323392	$21,942.31	July 30, 2002
Corporacion Nacional	Breaker Tech	00323394	$34,862.00	August 30, 2002
M & I	Telsmith		$2,500,000.00	February 2006

[Form of Note]
Astec Industries, Inc.
Astec Financial Services, Inc.

7.56% Senior Secured Note due September 10, 2011
No. [_________] [Date]
$[____________] PPN 04623# AA 3

For Value Received, the undersigned, Astec Industries, Inc. (herein called the "Company"), a corporation organized and existing under the laws of the State of Tennessee and Astec Financial Services, Inc., a corporation organized and existing under the laws of the State of Tennessee (together with the Company, the "Obligors"), hereby, jointly and severally, promise to pay to [________________], or registered assigns, the principal sum of [________________] Dollars on September 10, 2011, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 7.56% per annum from the date hereof, payable semiannually, on each March 10 and September 10 in each year, commencing with the March 10 or September 10 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 (including any overdue prepayment) of pri ncipal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreements referred to below), payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 9.56% or (ii) 2.00% over the rate of interest publicly announced by Bank One, N.A. from time to time in Chicago, Illinois as its "prime" rate.
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 Bank One, N.A., Chicago, Illinois or at such other place as the Obligors shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreements referred to below.
This Note is one of a series of Senior Secured Notes (herein called the "Notes") issued pursuant to separate Note Purchase Agreements, dated as of September 10, 2001 (as from time to time amended, the "Note Purchase Agreements"), between the Obligors and the respective Purchasers named therein and is entitled to the benefits thereof. The payment and performance hereof is secured by that certain Pledge Agreement dated as of September 10, 2001 from the Company to Bank One, N.A., as Pledgee. Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to have made the representation set forth in Section 6.2 of the Note Purchase Agreements, provided that such holder may (in reliance upon information provided by the Obligors, which shall not be unreasonably withheld) make a representation to the effect that the purchase by such holder of any Note will not constitute a non-exempt prohibited transaction under section 406(a) of ERISA.
This Note is a registered Note and, as provided in the Note Purchase Agreements, upon surrender of this Note for registration of transfer, duly endorsed, or 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 Obligors 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 Obligors will not be affected by any notice to the contrary.
The Obligors will make required prepayments of principal on the dates and in the amounts specified in the Note Purchase Agreements. This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements, 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 Agreements.
This Note shall be construed and enforced in accordance with, and the rights and parties shall be governed by, the law of the State of Illinois, excluding choice-of-law principles of the law of such State which would require application of the laws of a jurisdiction other than such State.
Astec Industries, Inc.
 
 
By
Name:
Title:
 
Astec Financial Services, Inc.
 
 
By
Name:
Title:

Description of Opinion of Special Counsel to the Obligors

The closing opinion of Chambliss, Bahner & Stophel, P.C., Special Counsel for the Obligors, which is called for by Section 4.4(a) of the Note Purchase Agreements, shall be dated the date of the Closing and addressed to the Purchasers, shall be satisfactory in scope and form to the Purchasers and shall be to the effect that:
1. Each Obligor is a corporation, duly incorporated, validly existing and in good standing under the laws of the State of Tennessee, has the corporate power and the corporate authority to execute and perform the Note Purchase Agreements and the Pledge Agreement and to issue the Notes and has the full corporate power and the corporate authority to conduct the activities in which it is now engaged and is duly licensed or qualified and is in good standing as a foreign corporation in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary.
2. Each Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary and all of the issued and outstanding shares of capital stock of each such Subsidiary have been duly issued, are fully paid and non-assessable and are owned by the Company, by one or more Subsidiaries, or by the Company and one or more Subsidiaries.
3. Each Note Purchase Agreement has been duly authorized by all necessary corporate action on the part of each Obligor, has been duly executed and delivered by each Obligor and constitutes the legal, valid and binding contract of each Obligor enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law).
4. The Notes have been duly authorized by all necessary corporate action on the part of each Obligor, have been duly executed and delivered by each Obligor and constitute the legal, valid and binding obligations of each Obligor enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law).
5. The Pledge Agreement has been duly authorized by all necessary corporate action of the part of the Company, has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligations of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law). The Pledge Agreement creates a Lien on the Pledged Assets (as defined therein) in favor of the Collateral Agent free and clear of all other Liens. The Pledged Assets have been delivered to the Collateral Agent and/or U.C.C. filings have been made in respect of the security interest of the Collateral Agent and no other delivery, filing or recording is necessary to perfect the Lien of the Pledge Agreement or the Pledged Assets against the creditors of, and purchasers from, the Com pany.
6. No approval, consent or withholding of objection on the part of, or filing, registration or qualification with, any governmental body, Federal or state, is necessary in connection with the execution and delivery of the Note Purchase Agreements, the Pledge Agreement or the Notes.
7. The issuance and sale of the Notes and the execution, delivery and performance by the Obligors of the Note Purchase Agreements and by the Company of the Pledge Agreements do not 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 upon any of the property of either Obligor pursuant to the provisions of the Articles of Incorporation or By-laws of either Obligor or any agreement or other instrument known to such counsel to which either Obligor is a party or by which either Obligor may be bound (other than the lien of Pledge Agreement.
8. The issuance, sale and delivery of the Notes under the circumstances contemplated by the Note Purchase Agreements do not, under existing law, require the registration of the Notes under the Securities Act of 1933, as amended, or the qualification of an indenture under the Trust Indenture Act of 1939, as amended.
The opinion of Chambliss, Bahner & Stophel, P.C. shall cover such other matters relating to the sale of the Notes as the Purchasers may reasonably request. With respect to matters of fact on which such opinion is based, such counsel shall be entitled to rely on appropriate certificates of public officials and officers of the Obligors.

Description of Opinion of Special Counsel
to the Purchasers

The closing opinion of Chapman and Cutler, special counsel to the Purchasers, called for by Section 4.4(b) of the Note Purchase Agreements, shall be dated the date of the Closing and addressed to the Purchasers, shall be satisfactory in form and substance to the Purchasers and shall be to the effect that:
1. Each Obligor is a corporation, validly existing and in good standing under the laws of the State of Tennessee and has the corporate power and the corporate authority to execute and deliver the Note Purchase Agreements and to issue the Notes.
2. Each Note Purchase Agreement constitutes the legal, valid and binding contract of each Obligor enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law).
3. The Notes constitute the legal, valid and binding obligations of each Obligor enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law).
4. The Pledge Agreement constitutes the legal, valid and binding contract of each Obligor enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance and similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law)
5. The issuance, sale and delivery of the Notes under the circumstances contemplated by the Note Purchase Agreements do not, under existing law, require the registration of the Notes under the Securities Act of 1933, as amended, or the qualification of an indenture under the Trust Indenture Act of 1939, as amended.
The opinion of Chapman and Cutler shall also state that the opinion of Chambliss, Bahner & Stophel, P.C. is satisfactory in scope and form to Chapman and Cutler and that, in their opinion, the Purchasers are justified in relying thereon.
In rendering the opinion set forth in paragraph 1 above, Chapman and Cutler may rely solely upon an examination of the Articles of Incorporation certified by, and a certificate of good standing of each Obligor from, the Secretary of State of the State of Tennessee and the By-laws of each Obligor. The opinion of Chapman and Cutler is limited to the laws of the State of Illinois and the Federal laws of the United States.
With respect to matters of fact upon which such opinion is based, Chapman and Cutler may rely on appropriate certificates of public officials and officers of the Obligor and upon representations of the Obligors and the Purchasers delivered in connection with the issuance and sale of the Notes.

EX-10

EXECUTION COPY

CREDIT AGREEMENT

AMONG

ASTEC INDUSTRIES, INC. and

ASTEC FINANCIAL SERVICES, INC.

as Borrowers,

THE LENDERS NAMED HEREIN,

and

BANK ONE, NA

as Agent

DATED AS OF

September 10, 2001

SUNTRUST BANK,

as Syndication Agent

AMSOUTH BANK,

as Co-Agent

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS

ARTICLE II THE CREDITS	2
2.1. Revolving Commitment.	19
2.1.1 Tranche A Commitment	19
2.1.2 Tranche B Commitment	19
2.1.3 Limitations on Obligations	19
2.2. Loans.	20
2.2.1 Ratable Loans; Types of Advances	20
2.2.2 Minimum Amount of Each Advance	20
2.2.3 Method of Selecting Types and Interest Periods for New Advances	20
2.2.4 Conversion and Continuation of Outstanding Advances	20
2.2.5 Changes in Interest Rate, etc	21
2.2.6 Interest Payment Dates; Interest and Fee Basis	21
2.2.7 Notification of Advances, Interest Rates, Prepayments and Commitment Reductions	22
2.2.8 Rates Applicable After Default	22
2.3. Swing Line Loans.	22
2.3.1 Making of Swing Line Loans.	22
2.3.2 Conversions of and Participations in Swing Line Loans.	23
2.4. Fees; Reductions and Increases in Aggregate Commitment.	24
2.4.1 Fees.	2425
2.4.2 Voluntary Reductions; Prepayments; Increases.	26
2.4.3 Mandatory Reductions in Aggregate Commitment.	27
2.4.4 Mandatory Reduction of Tranche B Loans	27
2.5. Method of Payment	27
2.6. Notes; Telephonic Notices
2.7. Lending Installations
2.8. Non-Receipt of Funds by the Agent
2.9. [Intentionally Omitted].
2.10. Application of Payments
2.11. Facility Letters of Credit.
2.11.1 Obligation to Issue
2.11.2 Conditions for Issuance
2.11.3 Procedure for Issuance of Facility Letters of Credit.
2.11.4 Reimbursement Obligations.
2.11.5 Participation.
2.11.6 Compensation for Facility Letters of Credit
2.11.7 Letter of Credit Collateral Account
2.11.8 Nature of Obligations.
2.11.9 Existing Letters of Credit
ARTICLE III TAXES; YIELD PROTECTION
3.1. Taxes
3.2. Yield Protection
3.3. Changes in Capital Adequacy Regulations
3.4. Availability of Types of Advances
3.5. Funding Indemnification
3.6. Lender Statements; Survival of Indemnity
ARTICLE IV CONDITIONS PRECEDENT
4.1. Initial Credit Extension
4.2. Each Credit Extension
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BORROWERS
5.1. Corporate Existence and Standing
5.2. Authorization and Validity
5.3. No Conflict; Government Consent
5.4. Financial Statements
5.5. Material Adverse Change
5.6. Taxes
5.7. Litigation and Contingent Obligations
5.8. Subsidiaries and Affiliates
5.9. ERISA
5.10. Accuracy of Information
5.11. Regulation U
5.12. Material Agreements
5.13. Compliance With Laws
5.14. Environmental Warranties
5.15. Ownership of Properties
5.16. Investment Company Act
5.17. Public Utility Holding Company Act
5.18. Plan Assets; Prohibited Transactions
5.19. Intellectual Property
5.20. Solvency
5.21. Licenses
5.22. Pledge Agreement
5.23. Insurance
ARTICLE VI COVENANTS
6.1. Financial Reporting
6.2. Use of Proceeds
6.3. Notice of Default
6.4. Conduct of Business
6.5. Taxes
6.6. Insurance
6.7. Compliance with Laws
6.8. Maintenance of Properties
6.9. Inspection
6.10. Dividends
6.11. Indebtedness
6.12. Merger
6.13. Sale of Assets
6.14. Sale of Accounts
6.15. Sale and Leaseback
6.16. Investments and Acquisitions
6.17. Contingent Obligations
6.18. Liens
6.19. Transactions with Affiliates
6.20. Amendments to Certain Agreements
6.21. Financial Covenants.
6.21.1 Leverage Ratio
6.21.2 Consolidated Tangible Net Worth
6.21.3 Rentals
6.21.4 Fixed Charge Coverage Ratio
6.21.5 AFS Leases
6.22. Fixed Asset Expenditures
6.23. Subordinated Indebtedness
6.24. Accounting Method
6.25. Environmental Covenant
6.26. Litigation and Other Notices
6.27. Pledge of Stock of Foreign Subsidiaries
6.28. Material Subsidiaries
ARTICLE VII DEFAULTS
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration.
8.2. Amendments
8.3. Preservation of Rights
ARTICLE IX GENERAL PROVISIONS
9.1. Survival of Representations
9.2. Governmental Regulation
9.3. Taxes
9.4. Headings
9.5. Entire Agreement
9.6. Several Obligations; Benefits of this Agreement
9.7. Expenses; Indemnification
9.8. Numbers of Documents
9.9. Accounting
9.10. Severability of Provisions
9.11. Nonliability of Lenders
9.12. Confidentiality
9.13. Interest Limitation
9.14. Loan Documents
9.15. Interpretation
9.16. Nonreliance
9.17. Disclosure
ARTICLE X THE AGENT
10.1. Appointment; Nature of Relationship
10.2. Powers
10.3. General Immunity
10.4. No Responsibility for Loans, Recitals, etc
10.5. Action on Instructions of Lenders
10.6. Employment of Agents and Counsel
10.7. Reliance on Documents; Counsel
10.8. Agent's Reimbursement and Indemnification
10.9. Rights as a Lender
10.10. Lender Credit Decision
10.11. Successor Agent
10.12. Notice of Default
10.13. Delegation to Affiliates
10.14. Execution of Collateral Documents
10.15. Collateral Releases
ARTICLE XI SETOFF; RATABLE PAYMENTS
11.1. Setoff
11.2. Ratable Payments
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns
12.2. Participations.
12.2.1 Permitted Participants; Effect
12.2.2 Voting Rights
12.2.3 Benefit of Setoff
12.3. Assignments.
12.3.1 Permitted Assignments
12.3.2 Effect; Effective Date
12.4. Dissemination of Information
12.5. Tax Treatment
ARTICLE XIII NOTICES
13.1. Giving Notice
13.2. Change of Address
ARTICLE XIV COUNTERPARTS
ARTICLE XV CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL
15.1. CHOICE OF LAW
15.2. CONSENT TO JURISDICTION
15.3. WAIVER OF JURY TRIAL
ARTICLE XVI ASTEC GUARANTY
16.1. Guaranty of Payment and Performance of Obligations of AFS
16.2. Additional Amounts
16.3. Waivers by Astec: Agent's and Lenders' Freedom to Act
16.4. Unenforceability of AFS Obligations Against AFS
16.5. Subrogation; Subordination
16.6. Termination
16.7. Effect of Bankruptcy
16.8. Setoff
16.9. Further Assurances

EXHIBITS 

EXHIBIT A Compliance Certificate

EXHIBIT B-1 Tranche A Note

EXHIBIT B-2 Tranche B Note

EXHIBIT B-3 Swing Line Note

EXHIBIT C-1 Form of Opinion of Counsel to Astec

EXHIBIT C-2 Form of Opinion of Special Canadian Counsel

EXHIBIT D Pledge Agreement

EXHIBIT E Assignment Agreement

EXHIBIT F Borrowing Base Certificate

SCHEDULES

Schedule 1 Revolving Commitments/Percentages
Schedule 2.11.9 Existing Letters of Credit
Schedule 5.7 Litigation
Schedule 5.8 Subsidiaries and Affiliates
Schedule 5.14 Environmental Matters
Schedule 5.15 Properties and Liens
Schedule 5.19 Intellectual Property
Schedule 6.11 Indebtedness

CREDIT AGREEMENT

This Credit Agreement (the "Agreement"), dated as of September 10, 2001, is among Astec Industries, Inc., a Tennessee corporation, Astec Financial Services, Inc., a Tennessee corporation, the financial institutions from time to time parties hereto as Lenders and Bank One, NA, a national banking association having its principal office in Chicago, Illinois, as Agent. The parties hereto agree as follows:

1. 
   
   DEFINITIONS

As used in this Agreement:

"Acquisition" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which any Credit Party (a) acquires any going business or all or substantially all of the assets of any firm, corporation 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 securities of a corporation 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 or voting power) of the outstanding ownership interests of a partnership or limited liability company.

"Adjusted EBITDA" means for any period EBITDA for such period calculated on a proforma basis assuming that any Acquisition occurring during such period and permitted under this Agreement occurred on and as of the first day of such period.

"Advance" means a borrowing hereunder, (i) made by the Lenders on the same Borrowing Date, or (ii) converted or continued by the Lenders on the same date of conversion or continuation, consisting, in either case of the several Loans of the same Type and, in the case of Eurodollar Loans, for the same Interest Period.

"Affiliate" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise.

"AFS" means Astec Financial Services, Inc., a Tennessee corporation and a Borrower hereunder, its successors and assigns.

"Agent" means Bank One in its capacity as contractual representative of the Lenders pursuant to Article X, and not in its individual capacity as a Lender, and any successor Agent appointed pursuant to Article X.

"Aggregate Commitment" means $125,000,000 as such amount may be increased or reduced from time to time pursuant to the terms hereof.

"Agreement" means this Credit Agreement, as it may be amended or modified and in effect from time to time.

"Aggregate Tranche A Sublimit" means $125,000,000, as such amount may be increased pursuant to Section 2.4.2(b) or reduced from time to time pursuant to the terms hereof.

"Aggregate Tranche B Sublimit" means $50,000,000, as such amount may be reduced from time to time pursuant to the terms hereof.

"Agreement Accounting Principles" means generally accepted accounting principles as in effect from time to time, applied in a manner consistent with that used in preparing the financial statements referred to in Section 5.4.

"Alternate Base Rate" means, for any day, a rate of interest per annum equal to the higher of (a) the Prime Rate for such day and (b) the sum of Federal Funds Effective Rate for such day plus 1/2% per annum.

"Applicable Margin" means, with respect to the Commitment Fee, Letter of Credit Fee and each Type of Loan described below, the rate of interest per annum shown below for the range of Leverage Ratios specified below:

	Level 1	Level 2	Level 3	Level 4	Level 5	Level 6
Leverage Ratio	< 1.5:1.0	1.5:1.0<X<2.0:1.0	2.0:1.0<X<2.25:1.0	2.25:1.0<X<2.5:1.0	2.5:1.0<X<3.0:1.0	>3.0:1.0
Eurodollar Advances	1.00%	1.125%	1.25%	1.375%	1.625%	1.875%
Floating Rate Advances	0.00%	0.125%	0.25%	0.375%	0.625%	0.875%
Letter of Credit Fee	1.00%	1.125%	1.25%	1.375%	1.625%	1.875%
Commitment Fee	0.25%	0.25%	0.25%	0.375%	0.375%	0.50%

The Leverage Ratio shall be calculated as of the end of each fiscal quarter, and shall be reported to the Agent pursuant to a Compliance Certificate executed by an Authorized Officer of Astec and delivered in accordance with Section 6.1(d) hereof. Not later than five (5) Business Days after receipt by the Agent of each Compliance Certificate delivered by Astec in accordance with Section 6.1(d) for each fiscal quarter or fiscal year, as applicable, Astec, subject to the approval of the Agent, shall determine the Leverage Ratio for the applicable period and shall promptly notify the Agent, who shall in turn promptly notify the Lenders of such determination and of any change in each Applicable Margin resulting therefrom. Each Applicable Margin shall be adjusted (upwards or downwards, as appropriate), if necessary, based on the Leverage Ratio as of the end of the fiscal quarter immediately preceding the date of determination. The adjustment, if any, to the Applicable Margin shall be effective as to all Advances and Commitment Fees commencing on the fifth (5th) Business Day after the delivery of such quarterly or annual financial statements delivered in accordance with Sections 6.1(a) and 6.1(b) and such related Compliance Certificate of an Authorized Officer of Astec delivered in accordance with Section 6.1(d) and shall be effective from and including the fifth (5th) Business Day after the date the Agent receives such Compliance Certificate to but excluding the fifth (5th) Business Day after the date on which the next Compliance Certificate is required to be delivered pursuant to Section 6.1(d); provided, however, that, in the event that Astec shall fail at any time to furnish to the Lenders such financial statements and any such Compliance Certificate required to be delivered pursuant to Sections 6.1(a), 6.1(b) and 6.1(d), the Applicable Margin set forth in Level 6 above shall apply until the fifth (5th) Business Day after such time as all such financial statements and each such Compliance Certificate are so delivered to the Agent and the Lenders. Each determination of the Leverage Ratio by Astec (subject to approval by the Agent) and each determination of the Applicable Margin by the Agent in accordance with this definition shall be conclusive and binding on the parties absent manifest error. Until delivery of the Compliance Certificate for the fiscal quarter ending September 30, 2001, the Applicable Margin shall be that applicable to "Level 5" on the preceding table.

"Arranger" means Banc One Capital Markets, Inc., a Delaware corporation, and its successors, in its capacity as Lead Arranger and Sole Book Runner.

"Article" means an article of this Agreement unless another document is specifically referenced.

"Asset Disposition" means any sale, lease or other disposition of any asset of any Credit Party in a single transaction or in a series of related transactions, other than (a) the sale of inventory in the ordinary course of business, (b) sales, leases or other dispositions by any Credit Party to Astec or any Wholly-Owned Subsidiary of Astec, (c) sales, leases or other dispositions of used, worn-out or surplus equipment in the ordinary course of business, (d) other sales, leases and dispositions of any Property in a single transaction or series of related transactions to the extent that (x) the fair market value of the Property transferred in any such single transaction or series of related transactions does not exceed $1,000,000 and (y) the aggregate fair market value of all such Property transferred after the date hereof does not exceed $5,000,000, (e) Permitted Recourse Lease Sales, (f) sales by AFS of financing or operating leases (including Qualifying Financing Leases and Qualifying Ope rating Leases) and other chattel paper (including Qualifying Chattel Paper), on a non-recourse basis provided that the Tranche B Revolving Loans at no time exceed the Tranche B Borrowing Base and (g) sales of assets pursuant to a Permitted Securitization.

"Astec" means Astec Industries, Inc., a Tennessee corporation and a Borrower hereunder, its successors and assigns.

"Authorized Officer" means any of the President, Vice President and Corporate Counsel, or Vice President and Corporate Controller of a Borrower acting singly, or other employee of a Borrower designated in writing to the Lenders.

"Bank One" means Bank One, NA, a national banking association having its principal office in Chicago, Illinois, in its individual capacity, and its successors.

"Bond Transactions" means (a) the issuance of the Trencor Letter of Credit and (b) the issuance of Variable Rate Demand Industrial Revenue Bonds Series 1994 in the approximate value of $6,000,000 to finance the expansion of Telsmith, Inc.'s Mequon, Wisconsin facility and the acquisition of equipment to be used in the operating of Telsmith, Inc.'s business.

"Borrowers" means collectively Astec and AFS. Reference to a Borrower hereunder shall mean each of Astec and AFS unless the context specifically refers to one of them. Reference to Borrowers hereunder shall mean both of Astec and AFS jointly and severally.

"Borrowing Base Certificate" means a Borrowing Base Certificate in substantially the form of Exhibit F hereto.

"Borrowing Date" means a date on which an Advance is made hereunder.

"Borrowing Notice" is defined in Section 2.2.3.

"Business Day" means (a) with respect to any borrowing, payment or rate selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago, Illinois and New York, New York for the conduct of substantially all of their commercial lending activities, interbank wire transfers can be made on the Fedwire system and dealings in United States dollars are carried on in the London interbank market and (b) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago, Illinois for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system.

"Capitalized Lease" of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.

"Capitalized Lease Obligations" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.

"CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time.

"CERCLIS" means the Comprehensive Environmental Response Compensation Liability Information System List, as amended from time to time.

"Change in Control" means the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of twenty-five percent (25%) or more of the outstanding shares of voting stock of Astec.

"Closing Date" is defined in Section 4.1.

"Code" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.

"Collateral" has the meaning attributed to such term in the Pledge Agreement.

"Collateral Agent" means Bank One, in its capacity as Collateral Agent under the Pledge Agreement, for the ratable benefit of the Agent, the Lenders and the holders of the Senior Notes.

"Collateral Shortfall Amount" is defined in Section 8.1(a).

"Commitment Fee" is defined in Section 2.4.1.

"Compliance Certificate" means a compliance certificate, in substantially the form of Exhibit A hereto, with appropriate insertions, signed by Astec's Chief Financial Officer, showing the calculations necessary to determine compliance with this Agreement and stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, describing the nature and status thereof and any action the Borrowers are taking or propose to take with respect thereto.

"Condemnation" is defined in Section 7.8.

"Conduit Securitization" means a Permitted Securitization effected through the issuance of commercial paper through a commercial paper conduit.

"Consolidated Funded Debt" means for the Credit Parties on a consolidated basis at any time the sum of (w) items (a) through (e) of the definition of Indebtedness, plus (x) Contingent Obligations (other than Contingent Obligations for notes and accounts receivable sold of up to $5,000,000 and Contingent Obligations relating to Conduit Securitizations) plus (y) unreimbursed drawings on Subsidiary Letters of Credit (but excluding other Letters of Credit) plus (z) outstanding principal balances of commercial paper issued pursuant to Conduit Securitizations, whether or not any such amount in clauses (w) through (z) is due or payable at such time.

"Consolidated Net Income" means, for any period, the consolidated net income of the Credit Parties determined on a consolidated basis in accordance with Agreement Accounting Principles, provided that any cumulative effect adjustment resulting from adoption of an accounting principle shall be excluded from such calculation.

"Consolidated Net Revenue" means the consolidated net revenue of the Credit Parties for the most recently completed fiscal year determined on a consolidated basis in accordance with Agreement Accounting Principles.

"Consolidated Tangible Net Worth" means at any date the consolidated stockholders' equity of the Credit Parties determined in accordance with Agreement Accounting Principles, less their consolidated Intangible Assets, all determined as of such date, provided that any cumulative effect adjustment resulting from adoption of an accounting principle shall be excluded from such calculation. For purposes of this definition, "Intangible Assets" means the amount (to the extent reflected in determining such consolidated stockholders' equity) of all unamortized debt discount and expense, unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, organizational or developmental expenses and other intangible items, all determined in accordance with Agreement Accounting Principles.

"Contingent Obligation" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, guaranty of payment in connection with a Permitted Securitization, take-or-pay contract, application for a Letter of Credit or the obligations of any such Person as general partner of a partnership with respect to the liabilities of the partnership.

"Controlled Group" means all members of a controlled group of corporations or other business entities and all trades or businesses (whether or not incorporated) under common control which, together with any Credit Party, are treated as a single employer under Section 414 of the Code.

"Conversion/Continuation Notice" is defined in Section 2.2.4.

"Credit Extension" means the making of any Advance or the issuance of any Facility Letter of Credit or Swing Line Loan pursuant to this Agreement.

"Credit Extension Date" means the date on which any Credit Extension is made hereunder.

"Credit Parties" means Astec, AFS and each Subsidiary of Astec and AFS.

"Default" means an event described in Article VII.

"Discount" means as of any day and with respect to any commercial paper or term note issued pursuant to a Permitted Securitization, the Interest Component which has accrued up to and including such day. For purposes of this definition, the portion of the Interest Component which has accrued shall be computed by multiplying the total Interest Component for such commercial paper by a fraction, the numerator of which is the number of days elapsed that such commercial paper has been outstanding up to and including such day, and the denominator of which is the number of days such commercial paper or term note is scheduled to be outstanding.

"Domestic Subsidiary" means each Subsidiary of Astec that is organized under the laws of the United States or any state thereof.

"EBITDA" means for any period Consolidated Net Income plus (a) current and deferred income taxes, plus (b) the amount of all amortization of intangibles and depreciation that was deducted in arriving at Consolidated Net Income, plus (c) Interest Expense (including Interest Expense associated with Capitalized Lease Obligations and Interest Expense in connection with Permitted Securitizations even though not directly incurred by a Credit Party), plus (d) unusual non-cash charges, minus (e) equity in net income of Affiliates, and minus (f) interest income (except for interest income of AFS), in each case on a consolidated basis for the Credit Parties.

"Eligible Leased Equipment Amount" means the book value of equipment subject to Qualifying Operating Leases.

"Eligible Equipment Receivable Amount" means the receivable amount reflected on the financial statements of AFS from time to time due from lessees/purchasers under Qualifying Financing Leases or Qualifying Chattel Paper.

"Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (i) the protection of the environment, (ii) the effect of the environment on human health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder.

"Eurodollar Advance" means an Advance which, except as otherwise provided in Section 2.2.8, bears interest at the Eurodollar Rate.

"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the relevant Interest Period, the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters Screen FRBD as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, provided that, (i) if Reuters Screen FRBD is not available to the Agent for any reason, the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the applicable British Bankers' Association Interest Settlement Rate for deposits in U.S. dollars as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, and (ii) if no such British Bankers' Association Interest Settlement Rate is available to the Agent, the applicable E urodollar Base Rate for the relevant Interest Period shall instead be the rate determined by the Agent to be the rate at which Bank One or one of its Affiliate banks offers to place deposits in U.S. dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, in the approximate amount of Bank One's relevant Eurodollar Loan and having a maturity equal to such Interest Period.

"Eurodollar Loan" means a Loan which, except as otherwise provided in Section 2.2.8, bears interest at the Eurodollar Rate.

"Eurodollar Rate" means, with respect to a Eurodollar Advance for the relevant Interest Period, the sum of (a) the quotient of (i) the Eurodollar Base Rate applicable to such Interest Period, divided by (ii) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (b) the Applicable Margin.

"Excluded Taxes" means, in the case of each Lender or applicable Lending Installation and the Agent, taxes imposed on its overall net income, and franchise taxes imposed on it, by (i) the jurisdiction under the laws of which such Lender or the Agent is incorporated or organized or (ii) the jurisdiction in which the Agent's or such Lender's principal executive office or such Lender's applicable Lending Installation is located.

"Facility Letter of Credit" means a Letter of Credit issued by the Issuer pursuant to Section 2.11.

"Facility Letter of Credit Limit" means the lesser of (i) $25,000,000, and (ii) the Aggregate Tranche A Sublimit at any time, as the same may be reduced pursuant to the terms of this Agreement.

"Facility Letter of Credit Obligations" means, as at the time of determination thereof, all liabilities, whether actual or contingent, of Astec with respect to the Facility Letters of Credit, including the sum of (a) Reimbursement Obligations and (b) the aggregate undrawn face amount of the outstanding Facility Letters of Credit.

"Facility Termination Date" means September 10, 2004.

"Federal Funds Effective Rate" means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10 a.m. (Chicago time) on such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion.

"Floating Rate" means, for any day, a rate per annum equal to the sum of (a) the Alternate Base Rate for such day, plus (b) the Applicable Margin, in each case changing when and as the Alternate Base Rate changes.

"Floating Rate Advance" means an Advance which, except as otherwise provided in Section 2.2.8, bears interest at the Floating Rate.

"Floating Rate Loan" means a Loan which, except as otherwise provided in Section 2.2.8, bears interest at the Floating Rate.

"Foreign Plan" is defined in Section 5.9.

"Foreign Subsidiary" means each Subsidiary of Astec that is not a Domestic Subsidiary.

"Governmental Agency" means any government (foreign or domestic) or any state or other political subdivision thereof or any governmental body, agency, authority, department or commission (including, without limitation, any taxing authority or political subdivision) or any instrumentality or officer thereof (including, without limitation, any court or tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation, partnership or other entity directly or indirectly owned or controlled by or subject to the control of any of the foregoing.

"Hazardous Materials" means (a) any chemical, material or substance defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous waste," "restricted hazardous waste," "toxic pollutants," "contaminants," "pollutants," "toxic substances" or words of similar import under any applicable local, state or federal law or under the regulations adopted or publications promulgated pursuant thereto, including Environmental Laws, (b) any oil, petroleum or petroleum derived substances, any drilling fluids, produced waters or other wastes associated with the exploration, development or production of crude oil, any flammable substances or explosives, any radioactive materials, any hazardous wastes or substances, any toxic wastes or substances or any other materials or pollutants which (i) pose a hazard to any Property of any Credit Party or to Persons on or about such Properties, or (ii) cause such properties to be in violation of any Environmental Laws, (c) asbestos in any form which is or could become friable, radon gas, urea, formaldehyde, foam insulation, or polychlorinated biphenyls, and (d) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority.

"Indebtedness" of a Person means, without duplication, such Person's (a) obligations for borrowed money, (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), (c) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (d) obligations which are evidenced by notes, acceptances, or other instruments, (e) Capitalized Lease Obligations, (f) Contingent Obligations, (g) obligations for which such Person is obligated pursuant to or in connection with a Letter of Credit or Reimbursement Agreement, (h) obligations of such Person under conditional sale or other title retention agreement relating to Property purchased by such Person, (i) Rate Hedging Obligations and (j) obligations arising out of Permitted Securitizations.

"Interest Component" means the portion of the face amount of commercial paper issued on a discount basis representing the discount incurred in respect thereof.

"Interest Expense" means, for any period, the aggregate amount paid as interest or Discount by Astec and its consolidated Subsidiaries during such period as determined in accordance with Agreement Accounting Principles together with, without duplication, the aggregate amount paid as interest or Discount during such period by any conduit or special purpose entity with respect to any commercial paper issued in connection with all outstanding Permitted Securitizations.

"Interest Period" means, with respect to a Eurodollar Advance, a period of one, two, three or six months commencing on a Business Day selected by a Borrower pursuant to this Agreement. Such Interest Period shall end on (but exclude) the day which corresponds numerically to such date one, two, three or six months thereafter; provided, however, that if there is no such numerically corresponding day in such next, second, third or sixth succeeding month, such Interest Period shall end on the last Business Day of such next, second, third or sixth succeeding month. If an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day, provided, however, that if said next succeeding Business Day falls in a new calendar month, such Interest Period shall end on the immediately preceding Business Day.

"Investment" of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person to any other Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities owned by such Person; any deposit account and certificate of deposit owned by such Person; and structured notes, derivative financial instruments and other similar instruments or contracts owned by such Person.

"Issuer" means Bank One, in its capacity as issuer of Facility Letters of Credit under Section 2.11.

"KPI Letter of Credit" means that certain Irrevocable Transferable Letter of Credit, or its successor, issued by Bank One in connection with the issuance of Industrial Development Revenue Bonds in the approximate amount of $9,200,000 to finance certain manufacturing facilities to be used in the operation of Kolberg-Pioneer, Inc.'s business, all pursuant to the Prior Credit Agreement.

"LC Issuance Request" is defined in Section 2.11.3.

"Lease Rentals" means, with respect to any period, the sum of the rentals and other obligations required to be paid during such period by Astec or any Subsidiary as lessee under all leases of real or personal property (other than Capitalized Leases), excluding any amount required to be paid by the lessee on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges, provided, that, if at the date of determination, any such rental or other obligations are contingent or not otherwise definitely determinable by the terms of the related lease, the amount of such obligations (i) shall be assumed to be equal to the amount of such obligations for the period of twelve (12) consecutive calendar months immediately preceding the date of determination or (ii) if the related lease was not in effect during such preceding twelve (12) month period, shall be the amount estimated by the Chief Financial Officer of Astec on a reasonable basis and in good faith.

"Lenders" means the lending institutions listed on the signature pages of this Agreement and their respective successors and assigns.

"Lending Installation" means, with respect to a Lender or the Agent, any office, branch, Subsidiary or Affiliate of such Lender or the Agent listed on the signatures pages hereof or on a Schedule or otherwise selected by such Lender or the Agent pursuant to Section 2.7.

"Letter of Credit" of a Person means a letter of credit or similar instrument which is issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable.

"Letter of Credit Collateral Account" is defined in Section 2.11.7.

"Leverage Ratio" means, as at any date of determination thereof, the ratio of (a) Consolidated Funded Debt of the Credit Parties minus the amount of any cash collateral held by the Collateral Agent to (b) Adjusted EBITDA of the Credit Parties for the four (4) most recently ended fiscal quarters, all calculated on a consolidated basis in accordance with Agreement Accounting Principles.

"Lien" means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement).

"Loan" means, with respect to a Lender, such Lender's portion of any Advance.

"Loan Documents" means this Agreement, the Notes, the Pledge Agreement, the Reimbursement Agreements, the documents relating to the Subsidiary Letters of Credit (including the Trencor LC Agreement) and the other documents and agreements contemplated hereby and executed by any Credit Party in favor of the Agent or any Lender or otherwise in connection with any Loan, Facility Letter of Credit or Swing Line Loan, as the same may be amended, restated, supplemented or otherwise modified from time to time.

"Margin Stock" is defined in Section 5.11.

"Material Adverse Effect" means a material adverse effect on (a) the business, Property, condition (financial or otherwise), results of operations, or prospects of the Credit Parties taken as a whole, (b) the ability of any Credit Party to perform its obligations under any Loan Document to which it is a party, or (c) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Agent or the Lenders thereunder.

"Material Subsidiary" means any Subsidiary of Astec with either (a) assets having a book value equal to or in excess of $1,000,000 or (b) annual EBITDA equal to or in excess of $500,000.

"Multiemployer Plan" means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which any Credit Party or any member of the Controlled Group is a party to which more than one employer is obligated to make contributions.

"Net Available Proceeds" means, with respect to an Asset Disposition, the sum of cash or readily marketable cash equivalents received (including by way of a cash generating sale or discounting of a note or receivable, but excluding any other consideration received in the form of assumption by the acquiring Person of debt or other obligations relating to the properties or assets so disposed of or received in any other non-cash form) therefrom, whether at the time of such disposition or subsequent thereto, net of all legal, title and recording tax expenses, commissions and other fees and all costs and expenses incurred and all federal, state, local and other taxes required to be accrued as a liability as a consequence of such transactions and of all payments made by any Credit Party on any Indebtedness which is secured by such assets pursuant to a permitted Lien upon or with respect to such assets or which must by the terms of such Lien, or in order to obtain a necessary consent to such Asse t Disposition or by applicable law, be repaid out of the proceeds from such Asset Disposition.

"Note Purchase Agreements" means those certain Note Purchase Agreements, dated as of September 10, 2001, by and among the Borrowers and the various purchasers named therein, as such agreements may be amended, restated or refinanced from time to time, pursuant to which Senior Notes are issued in an original aggregate principal amount of $80,000,000.

"Notes" means the Revolving Notes and the Swing Line Notes.

"Notice of Swing Line Loan" is defined in Section 2.3.1(d).

"Obligations" means all unpaid principal of and accrued and unpaid interest on the Notes (including all interest accruing after the commencement of any proceeding against or with respect to any Borrower under the United States Bankruptcy Code, Title 11 of the United States Code, or any other federal or state bankruptcy, insolvency, receivership or similar law, at the rates specified in this Agreement), all accrued and unpaid fees, all Facility Letter of Credit Obligations and all expenses, reimbursements, indemnities and other obligations of any Credit Party to the Lenders or to any Lender, the Agent, the Collateral Agent or any indemnified party hereunder arising under the Loan Documents.

"Other Taxes" is defined in Section 3.1(ii).

"Participants" is defined in Section 12.2.1.

"Payment Date" means the first day of each March, June, September and December.

"PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto.

"Percentage" means, for each Lender the percentage set forth opposite its name on Schedule 1 attached hereto, as such percentage (and such schedule) may be modified from time to time pursuant to the terms hereof, including but not limited to the provisions of Section 12.3.2.

"Permitted Acquisition" means an Acquisition of the capital stock or equity interests in a Person or the assets of a Person engaged in the production of aggregate processing or mining equipment, hot mix asphalt production equipment, thermal heating or storage equipment, mobile road construction equipment, trenching, underground construction, utility or related equipment or pavement analyzing equipment, that has been approved or consented to by the board of directors or equivalent governing body of such Person.

"Permitted Securitization" means any financing program providing for the sale of lease receivables (including rights in respect of true leases and financing leases) and related rights by AFS to a Securitization Subsidiary in transactions purporting to be true sales (and treated as true sales for GAAP purposes), which Securitization Subsidiary shall finance the purchase of such assets by the sale, transfer, conveyance, lien or pledge of such assets to one or more limited purpose financing companies, special purpose entities and/or other financial institutions, in each case pursuant to documentation in form and substance reasonably satisfactory to the Collateral Agent; provided that at the time of the execution of the documentation establishing such Permitted Securitization and immediately after giving effect thereto, no Default or Unmatured Default would exist.

"Permitted Recourse Lease Sales" means recourse sales of leases or accounts or notes receivable relating to leases by AFS.

"Person" means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof.

"Plan" means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which any Credit Party or any member of the Controlled Group may have any liability.

"Pledge Agreement" means that certain Pledge Agreement, in substantially the form of Exhibit D hereto, executed and delivered by Astec in favor of the Collateral Agent, for the ratable benefit of the Collateral Agent, the Agent, the Lenders and the holders of the Senior Notes, as the same may be amended, restated, supplemented or otherwise modified from time to time, together with any supplemental pledge agreement entered into pursuant to Section 6.28.

"Prime Rate" means a rate per annum equal to the prime rate of interest announced from time to time by Bank One or its parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes.

"Prior Credit Agreement" means that Third Amended and Restated Credit Agreement, dated as of April 7, 2000, by and among the Borrowers, the several lenders named therein and the Agent, as amended from time to time.

"Property" of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person.

"Purchasers" is defined in Section 12.3.1.

"Qualifying Chattel Paper" means valid and enforceable written installment notes financing the purchase of products manufactured or distributed by the Subsidiaries or other third parties together with any accessories, attachments or equipment relating thereto, secured by written security agreements, which are payable to the order of AFS, payments under which are not more than ninety (90) days past due.

"Qualifying Operating Leases" means valid and enforceable written operating leases of equipment legally and beneficially owned by AFS and leased to third parties not Affiliates of AFS, payments under which are not more than ninety (90) days past due.

"Qualifying Financing Leases" means valid and enforceable written financing leases of equipment between AFS and third parties not Affiliates of AFS, payments under which are not more than ninety (90) days past due. Qualifying Financing Leases shall not include any leases or related obligations sold in a Permitted Recourse Lease Sale or otherwise.

"Rate 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 Rate Hedging Transactions and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Rate Hedging Transactions.

"Rate Hedging Transactions" means any transaction (including an agreement with respect thereto) now existing or hereafter entered into between any Credit Party and any Lender or Affiliate thereof which is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

"Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System.

"Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System.

"Reimbursement Agreement" means a reimbursement agreement, substantially in such form as the Issuer may employ in the ordinary course of business, with such modifications thereto as may be agreed upon by the Issuer and Astec; provided, however, that in the event of any conflict between the terms of any Reimbursement Agreement and this Agreement, the terms of this Agreement shall control.

"Reimbursement Obligations" means, at any time, the aggregate of the obligations of Astec to the Lenders and the Issuer in respect of all unreimbursed payments or disbursements made by the Issuer and the Lenders under or in respect of the Facility Letters of Credit (including, without limitation, Astec's obligation to reimburse the Issuer for draws on Facility Letters of Credit pursuant to Section 2.11.4(b)).

"Release" means a "release", as such term is defined in CERCLA.

"Rentals" of a Person means the aggregate fixed amounts payable by such Person under any lease of Property having an original term (including any required renewals or any renewals at the option of the lessor or lessee) of one year or more.

"Reportable Event" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event; provided, however, that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code.

"Required Lenders" means Lenders in the aggregate having at least 67% of the Aggregate Commitment or, if the Aggregate Commitment has been terminated, Lenders in the aggregate holding at least 67% of the Revolving Loan Obligations.

"Reserve Requirement" means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities.

"Revolving Advance" means a borrowing under Section 2.1.1 or 2.1.2 consisting of the aggregate amount of the several Revolving Loans (including Tranche A Revolving Loans and Tranche B Revolving Loans) made by the Lenders to a Borrower of the same Type and, in the case of Eurodollar Advances, for the same Interest Period.

"Revolving Commitment" means, for each Lender, the obligation of such Lender to make Loans (including Tranche A Revolving Loans and Tranche B Revolving Loans) and participate in Facility Letters of Credit and Swing Line Loans not exceeding an amount equal to the product of (a) the then existing Aggregate Commitment and (b) the Percentage applicable to such Lender.

"Revolving Loans" is defined in Section 2.1.2.

"Revolving Notes" means the Tranche A Notes and the Tranche B Notes.

"Revolving Loan Obligations" means, at any particular time, the sum of (a) the outstanding principal amount of the Advances under Section 2.1.1 and Section 2.1.2 at any time, plus (b) the outstanding principal amount of the Swing Line Loans at such time, plus (c) the Facility Letter of Credit Obligations at such time.

"Schedule" refers to a specific schedule to this Agreement, unless another document is specifically referenced.

"Section" means a numbered section of this Agreement, unless another document is specifically referenced.

"Securitization Subsidiary" means a special purpose, bankruptcy remote, Wholly-Owned Domestic Subsidiary of Astec formed for the sole and exclusive purpose of engaging in activities in connection with the purchase, sale and financing of lease receivables (including rights in respect of true leases and financing leases) and related rights in connection with and pursuant to a Permitted Securitization.

"Senior Note Documents" means the Note Purchase Agreements and the Pledge Agreement.

"Senior Notes" means the 7.56% notes of the Borrowers, due September 10, 2011, issued in an aggregate principal amount of $80,000,000 pursuant to the Note Purchase Agreements.

"Single Employer Plan" means a Plan maintained by any Credit Party or any member of the Controlled Group for employees of any Credit Party or any member of the Controlled Group.

"Subordinated Indebtedness" of a Person means any Indebtedness of such Person the payment of which is subordinated to payment of the Obligations to the written satisfaction of the Lenders.

"Subsidiary" of a Person means (a) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (b) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of Astec. At all times during the term of this Agreement all references to Subsidiaries of Astec shall include AFS.

"Subsidiary Letters of Credit" means (a) the Trencor Letter of Credit, (b) the KPI Letter of Credit, and (c) that certain letter of credit issued by M&I Marshall and Ilsley Bank for the account of Telsmith, Inc. in connection with the issuance of Variable Rate Demand Industrial Revenue Bonds Series 1994 in the approximate value of $6,000,000 to finance the construction and acquisition of a facility and equipment to be used in the operation of Telsmith, Inc.'s business.

"Substantial Portion" means, with respect to the Property of any Credit Party, Property which (a) represents more than 10% of the consolidated assets of the Credit Parties as would be shown in the consolidated financial statements of the Credit Parties as at the beginning of the twelve-month period ending immediately prior to the month in which such determination is made, or (b) is responsible for more than ten percent (10%) of the consolidated net sales or of the consolidated net income of the Credit Parties as reflected in the consolidated financial statements referred to in clause (a) above.

"Swing Line Lender" means Bank One in its capacity as Swing Line Lender under Section 2.3.1.

"Swing Line Limit" means the lesser of (a) $10,000,000, and (b) the Aggregate Tranche A Sublimit at any time, as the same may be reduced pursuant to the terms of this Agreement.

"Swing Line Loan" is defined in Section 2.3.1.

"Swing Line Note" means a promissory note, in substantially the form of Exhibit B-3 hereto, duly executed by Astec and payable to the order of the Swing Line Lender in the amount of the Swing Line Limit, including any amendment, restatement, modification, renewal or replacement of such Swing Line Note.

"Taxes" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, but excluding Excluded Taxes and Other Taxes.

"Tranche A Commitment" means, for each Lender, the obligation of such Lender to make Loans and participate in Facility Letters of Credit and Swing Line Loans not exceeding an amount equal to the product of (a) the then existing Aggregate Tranche A Sublimit and (b) the Percentage applicable to such Lender.

"Tranche A Loan Obligations" means, at any particular time, the sum of (a) the outstanding principal amount of Advances under Section 2.1.1, plus (b) the outstanding principal amount of the Swing Line Loans at such time, plus (c) the Facility Letter of Credit Obligations at such time.

"Tranche A Notes" means a promissory note, in substantially the form of Exhibit B-1 hereto, duly executed by Astec and payable to the order of a Lender in the amount of its Tranche A Commitment, including any amendment, modification, renewal or replacement of such promissory note.

"Tranche A Revolving Loan" is defined in Section 2.1.1.

"Tranche B Borrowing Base" means 85% of the sum of (a) the Eligible Leased Equipment Amount and (b) the Eligible Equipment Receivable Amount.

"Tranche B Commitment" means, for each Lender, the obligation of such Lender to make Loans not exceeding an amount equal to the product of (a) the then existing Aggregate Tranche B Sublimit and (b) the Percentage applicable to such Lender.

"Tranche B Notes" means a promissory note, in substantially the form of Exhibit B-2 hereto, duly executed by AFS and payable to the order of a Lender in the amount of its Tranche B Commitment, including any amendment, modification, renewal or replacement of such promissory note.

"Tranche B Revolving Loan" is defined in Section 2.1.2.

"Transferee" is defined in Section 12.4.

"Trencor LC Agreement" means the Letter of Credit Agreement between Bank One and Trencor Jetco, Inc. (now known as Trencor, Inc.), dated as of April 1, 1994, as amended from time to time, pursuant to which the Trencor Letter of Credit was issued.

"Trencor Letter of Credit" means that certain Irrevocable Transferable Letter of Credit No. 00315672, or its successor, issued by Bank One for the account of Astec in connection with the issuance of Industrial Development Revenue Bonds in the approximate amount of $8,000,000 to finance the construction and acquisition of a facility and equipment to be used in the operation of Trencor, Inc.'s business, all pursuant to the Trencor LC Agreement.

"Type" means, with respect to any Advance, its nature as a Floating Rate Advance or a Eurodollar Advance.

"Unfunded Liabilities" means the amount (if any) by which the present value of all vested and unvested accrued benefits under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans using PBGC actuarial assumptions for single employer plan terminations.

"Unmatured Default" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default.

"Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of the outstanding voting securities of which shall at the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of such Person, or (b) any partnership, limited liability company, association, joint venture or similar business organization 100% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.

The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.

2. 
   
   THE CREDITS
1. Revolving Commitment.
1. Tranche A Commitment. From and including the Closing Date to (but excluding) the Facility Termination Date, each Lender severally agrees, on the terms and conditions set forth in this Agreement, to (a) make Loans (each, a "Tranche A Revolving Loan") to Astec, (b) to participate in Facility Letters of Credit for the account of Astec up to but not exceeding the Facility Letter of Credit Limit, (c) to participate in Swing Line Loans for the account of Astec up to but not exceeding the Swing Line Limit, each from time to time in amounts not to exceed in the aggregate at any one time outstanding the lesser of (x) such Lender's Tranche A Commitment, a nd (y) such Lender's Revolving Commitment (less such Lender's Percentage of any Revolving Loan Obligations at such time). Subject to the terms of this Agreement, Astec may borrow, repay and reborrow, and Astec may request the issuance of Facility Letters of Credit, at any time prior to the Facility Termination Date. The Tranche A Commitment shall expire on the Facility Termination Date.
2. Tranche B Commitment. From and including the Closing Date to (but excluding) the Facility Termination Date, each Lender severally agrees, on the terms and conditions set forth in this Agreement, to make Loans (each, a "Tranche B Revolving Loan" and collectively with Tranche A Revolving Loans, the "Revolving Loans") to AFS from time to time in amounts not to exceed in the aggregate at any one time outstanding the least of (a) such Lender's Percentage of the Tranche B Borrowing Base, (b) such Lender's Tranche B Commitment and (c) such Lender's Revolving Commitment (less such Lender's Percentage of any Revolving Loan Obligations at such time). Subject to the terms of this Agr eement, AFS may borrow, repay and reborrow, at any time prior to the Facility Termination Date. The Tranche B Commitment shall expire on the Facility Termination Date.
3. Limitations on Obligations. Notwithstanding anything to the contrary contained in this Agreement or in any other Loan Document, (a) the Revolving Loan Obligations shall at no time exceed the Aggregate Commitment, (b) Tranche A Loan Obligations shall at no time exceed the Aggregate Tranche A Sublimit and (c) Tranche B Revolving Loans shall at no time exceed the Aggregate Tranche B Sublimit. The Borrowers agree that if at any time any such excess shall arise, the applicable Borrower(s) shall immediately pay to the Agent (or deposit into the Letter of Credit Collateral Account, to the extent that all Loans have been fully repaid) the amount necessary to eliminate such excess, without presentment, demand, protest or notice of any kind from the Agent or any Lender, all of which the Borrowers each hereby expressly waive. The Borrowers acknowledge that the Aggregate Commitment is less than the sum of the Aggregate Tranche A Sublimit and the Aggregate Tranche B Sublimit and that consequently the Borrowers may be in violation of clause (a) without being in violation of clauses (b) and (c), in which case, Astec shall immediately pay to the Agent (or deposit into the Letter of Credit Collateral Account, to the extent that all Loans have been fully repaid) the amount necessary to eliminate such excess, but have the option to designate the application of payment of such excess and in absence of such designation, the payment thereof shall be applied to the Tranche A Loan Obligations.
2. Loans.
1. Ratable Loans; Types of Advances. Each Advance hereunder shall consist of Loans made from the several Lenders each ratably in proportion to its respective Percentage. Any reduction in the Aggregate Commitment shall reduce ratably each of the Tranche A Commitment and the Tranche B Commitment of each Lender. The Advances may be Floating Rate Advances or Eurodollar Advances, or a combination thereof, selected by the applicable Borrower in accordance with Sections 2.2.3 and 2.2.4.
2. Minimum Amount of Each Advance. Each Eurodollar Advance shall be in the minimum amount of $100,000 (and in multiples of $100,000 if in excess thereof), and each Floating Rate Advance shall be in the minimum amount of $100,000 (and in multiples of $100,000 if in excess thereof); provided, however, that any Floating Rate Advance may be in the amount of the unused Aggregate Commitment, subject to the limitations set forth in Section 2.1.
3. Method of Selecting Types and Interest Periods for New Advances. The applicable Borrower shall select the Type of Advance and, in the case of each Eurodollar Advance, the Interest Period applicable to each Advance from time to time. The applicable Borrower shall give the Agent irrevocable notice (a "Borrowing Notice") not later than 11:00 a.m. (Chicago time) on the same Business Day as the Borrowing Date of each Floating Rate Advance and three (3) Business Days before the Borrowing Date for each Eurodollar Advance, specifying:

(a) the Borrowing Date, which shall be a Business Day, of such Advance,
(b) the aggregate amount of such Advance,
(c) the Type of Advance selected,
(d) the Borrower and commitment to which such Advance applies, and
(e) in the case of each Eurodollar Advance, the Interest Period applicable thereto.

Not later than noon (Chicago time) on each Borrowing Date, each Lender shall make available its Loan or Loans, in funds immediately available in Chicago to the Agent at its address specified pursuant to Article XIII. The Agent will make the funds so received from the Lenders available to the applicable Borrower at the Agent's aforesaid address.

4. Conversion and Continuation of Outstanding Advances. Floating Rate Advances shall continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into Eurodollar Advances. Each Eurodollar Advance shall continue as a Eurodollar Advance until the end of the then applicable Interest Period therefor, at which time such Eurodollar Advance shall be automatically converted into a Floating Rate Advance unless the applicable Borrower shall have given the Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such Interest Period, such Eurodollar Advance continue as a Eurodollar Advance for the same or another I nterest Period. Subject to the terms of Section 2.2.2 and except as limited by Section 2.3.1(b), the applicable Borrower may elect from time to time to convert all or any part of an Advance of any Type into any other Type or Types of Advances; provided, however, that any conversion of any Eurodollar Advance shall be made on, and only on, the last day of the Interest Period applicable thereto. The applicable Borrower shall give the Agent irrevocable notice (a "Conversion/Continuation Notice") of each conversion of an Advance or continuation of a Eurodollar Advance not later than 11:00 a.m. (Chicago time) at least three (3) Business Days prior to the date of the requested conversion or continuation, specifying:

(a) the requested date, which shall be a Business Day, of such conversion or continuation;

(b) the aggregate amount and Type of the Advance which is to be converted or continued; and

(c) the amount and Type(s) of Advance(s) into which such Advance is to be converted or continued and, in the case of a conversion into or continuation of a Eurodollar Advance, the duration of the Interest Period applicable thereto.

5. Changes in Interest Rate, etc. Each Floating Rate Advance shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Advance is made or is converted from a Eurodollar Advance into a Floating Rate Advance pursuant to Section 2.2.4 to but excluding the date it becomes due or is converted into a Eurodollar Advance pursuant to Section 2.2.4, at a rate per annum equal to the Floating Rate for such day. Changes in the rate of interest on any Floating Rate Advance will take effect simultaneously with each change in the Alternate Base Rate. Each Eurodollar Advance shall bear interest from and including the first day of the Interest Period applicable thereto to (but not including) the la st day of such Interest Period at the interest rate determined as applicable to such Eurodollar Advance. No Interest Period may end after the Facility Termination Date or, with respect to any Advance required to be repaid to satisfy the mandatory reduction requirements of Section 2.4.3, the date of such mandatory reduction.
6. Interest Payment Dates; Interest and Fee Basis. Interest accrued on each Floating Rate Advance shall be payable in arrears (a) on each Payment Date, commencing with the first such date to occur after the date hereof, on (b) any date the Floating Rate Advance is prepaid due to acceleration and (c) at maturity. Interest accrued on that portion of the outstanding principal amount of any Floating Rate Advance converted into a Eurodollar Advance on a day other than a Payment Date shall be payable on the date of conversion. Interest accrued on each Eurodollar Advance shall be payable in arrears (x) on the last day of its applicable Interest Period, (y) on any date on which the Eurodollar Advance is prepaid, whether by acceleration or otherwise, and (z) at maturity. Interest accrued on each Eurodollar Advance having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period. Interest for Advances and fees shall be calculated for actual days elapsed on the basis of a 360-day year. Interest shall be payable for the day an Advance is made but not for the day of any payment on the amount paid if payment is received prior to noon (Chicago time) at the place of payment. If any payment of principal of or interest on an Advance shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment.
7. Notification of Advances, Interest Rates, Prepayments and Commitment Reductions. Promptly after receipt thereof, the Agent will notify each Lender of the contents of each Aggregate Commitment reduction notice, Borrowing Notice, Conversion/Continuation Notice, and repayment notice received by it hereunder. The Agent will notify each Lender of the interest rate applicable to each Eurodollar Advance promptly upon determination of such interest rate and will give each Lender prompt notice of each change in the Alternate Base Rate.
8. Rates Applicable After Default. Notwithstanding anything to the contrary contained in Section 2.2.3 or 2.2.4, during the continuance of a Default or Unmatured Default the Required Lenders may, at their option, by notice to Astec (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates), declare that no Advance may be made as, converted into or continued as a Eurodollar Advance. During the continuance of a Default, the Required Lenders may, at their option, by notice to Astec (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requir ing unanimous consent of the Lenders to changes in interest rates), declare that (a) each Eurodollar Advance shall bear interest for the remainder of the applicable Interest Period at the rate otherwise applicable to such Interest Period plus 2% per annum and (b) each Floating Rate Advance shall bear interest at a rate per annum equal to the Floating Rate otherwise applicable to the Floating Rate Advance plus 2% per annum.
3. Swing Line Loans.
1. Making of Swing Line Loans.
1. Subject to the terms and conditions of this Agreement, the Swing Line Lender agrees, at any time and from time to time on and after the Closing Date and prior to the Facility Termination Date, to make a loan or loans on a revolving basis (each, a "Swing Line Loan") to Astec, which Swing Line Loans in the aggregate shall not at any time exceed the Swing Line Limit; provided that no Swing Line Loan shall be made hereunder if, after giving effect to any Swing Line Loan and the use of proceeds thereof, (i) the aggregate outstanding balance of the Tranche A Loan Obligations would exceed the Aggregate Tranche A Sublimit or (ii) the Revolving Loan Obligations would exceed the Aggregate Commitment. Notwithstanding the foregoing, no Swing Line Loans shall be made hereunder if, after giving effect to any Swing Line Loan and the use of proceeds thereof, the aggregate outstanding principal amount of Swing Line Loans would exceed the Swing Line Limit, or to the extent that the Swing Line Limit of t he Swing Line Lender would exceed the Tranche A Commitment of such Lender at such time. The Swing Line Limit shall terminate on the Facility Termination Date without further action being required on the part of the Agent or the Swing Line Lender. No more than five (5) Swing Line Loans shall be outstanding at any time.
2. Swing Line Loans may, subject to the terms of this Agreement, be repaid and reborrowed. All Swing Line Loans shall be made as Floating Rate Loans and shall not be entitled to be converted into Eurodollar Loans. Swing Line Loans made on any date shall be in an aggregate minimum amount of $10,000 and integral multiples of $10,000 in excess of that amount.
3. If, after giving effect to any assignment pursuant to Section 12.3 or reduction in Tranche A Commitments pursuant to the terms of this Agreement, the remaining Tranche A Commitment of the Swing Line Lender is less than the Swing Line Limit, the Swing Line Limit shall be permanently reduced by an amount equal to such difference.
4. Interest accrued on each Swing Line Loan shall be payable in arrears (a) on the last Business Day of each calendar quarter, (b) on any date when a Swing Line Loan is prepaid due to acceleration and (c) on the Facility Termination Date.
5. Whenever Astec desires to make a borrowing of Swing Line Loans under this Section 2.3.1, Astec shall give the Agent and the Swing Line Lender (no later than 3:30 p.m. (Chicago time) on the proposed date for such Advance) notice by telephone (confirmed promptly in writing) or notice in writing of such Advance (a "Notice of Swing Line Loan"), which shall be irrevocable and shall specify (i) the aggregate principal amount of the Swing Line Loans to be made pursuant to such Advance, (ii) the date of such Advance (which shall be a Business Day), (iii) the maturity date for such Swing Line Loan (which shall be on demand and in any event no later than seven days after the making thereof or, if earlier, the Facility Termination Date), (iv) the account to which such Advance is to be funded and (v) confirming that such Swing Line Loan shall be a Floating Rate Loan.
2. Conversions of and Participations in Swing Line Loans.
1. The Swing Line Lender shall, in its sole and absolute discretion, be entitled to require an Advance of Tranche A Revolving Loans hereunder, the proceeds of which shall be applied to the pro rata prepayment of all Swing Line Loans then outstanding by giving notice (by telephone promptly confirmed in writing or in writing) to the Agent, Astec and the Lenders to such effect, which notice shall set forth the aggregate outstanding principal amount of such Swing Line Loans. Upon the giving of such notice, Astec shall be deemed to have timely given a Borrowing Notice to the Agent requesting Tranche A Revolving Loans which are Floating Rate Loans on the Business Day following such notice, and the Lenders shall, on such date, make Tranche A Revolving Loans which are Floating Rate Loans in the amount of such Swing Line Loans, the proceeds of which shall be applied by the Agent to the prepayment of such Swing Line Loans; provided, however, that for the purposes solely of such Advanc e the conditions precedent set forth in Section 4.2 shall not be applicable. Unless Astec shall have notified the Agent and the Swing Line Lender prior to 11:00 a.m. (Chicago time) on the date which is six days following the date on which any Swing Line Loan has been made by the Swing Line Lender that Astec intends to reimburse the Swing Line Lender with funds other than the proceeds of Tranche A Revolving Loans, the Agent shall give such notice on behalf of the Swing Line Lender.
2. Upon the giving of notice to the Agent and each Lender by the Swing Line Lender in its sole and absolute discretion, any deemed Borrowing Notice given under this Section 2.3.2 pursuant to which no Advance has been made shall be deemed cancelled and each Lender shall be deemed to, and hereby agrees to, have irrevocably purchased from the Swing Line Lender a participation in Swing Line Loans made by the Swing Line Lender in an aggregate outstanding principal amount equal to such Lender's Percentage of such Swing Line Loans, and shall make available to the Swing Line Lender an amount equal to its respective participation in the Swing Line Lender's Swing Line Loans in immediately available funds, at the office of the Swing Line Lender specified by notice to the Agent and each Lender in such notice, not later than 1:00 p.m. (Chicago time) on the second Business Day after the giving of such notice. In the event that any Lender fails to make available to the Swing Line Lender the amoun t of such Lender's participation as provided in this Section 2.3.2(b), the Swing Line Lender shall be entitled to recover such amount on demand from such Lender together with interest at the Federal Funds Effective Rate for three (3) Business Days and thereafter at the Floating Rate, and the Swing Line Lender shall, until such time as all such amounts have been paid, be deemed to have outstanding a Swing Line Loan in the amount of such unpaid participation for all purposes of this Agreement other than those provisions requiring Lenders to purchase an interest therein. The Swing Line Lender shall distribute to each other Lender which has paid all amounts payable by it under this Section 2.3.2(b) with respect to Swing Line Loans made by the Swing Line Lender such other Lender's Percentage of all payments received by the Swing Line Lender in respect of such Swing Line Loans when such payments are received.
3. The obligations of the Lenders under Section 2.3.2(b) above shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances including, without limitation, the fact that a Default or Unmatured Default shall have occurred and be continuing or any other circumstance or happening whatsoever.
4. Fees; Reductions and Increases in Aggregate Commitment.
1. Fees.
1. Commitment Fees. The Borrowers agree to pay to the Agent for the account of each Lender in accordance with their Percentage a commitment fee (the "Commitment Fee") for each day accruing at a rate per annum equal to the Applicable Margin (determined for the Commitment Fee in accordance with the definition of Applicable Margin) on the daily unused portion of such Lender's Revolving Commitment from the Closing Date to and including the Facility Termination Date, payable in arrears on each Payment Date hereafter and on the Facility Termination Date. For the purpose of calculating the Commitment Fee, Swing Line Loans shall be considered usage of the Swing Line Lender's Tranche A Commitment. All accrued Commitment Fees shall be payable on the effective date of any termination of the obligations of the Lenders to make Credit Extensions hereunder.
2. Agent's Fees. The Borrower agrees to pay to the Agent, for its own account, the fees agreed to by the Borrower in that certain letter agreement dated July 31, 2001, or as otherwise agreed from time to time.
2. Voluntary Reductions; Prepayments; Increases.
1. The Borrowers may permanently reduce the Aggregate Commitment in whole, or in part ratably among the Lenders in a minimum amount of $5,000,000 and in integral multiples of $1,000,000 in excess thereof, upon at least one (1) Business Day's written notice to the Agent, which notice shall specify the amount of any such reduction; provided, however, that (a) the amount of the Aggregate Commitment may not be reduced below the Revolving Loan Obligations at such time, (b) the Tranche A Commitment may not be reduced below the Tranche A Loan Obligations at such time and (c) the Tranche B Commitment may not be reduced below the Tranche B Revolving Loans at such time. Any reduction of the Aggregate Commitment shall automatically reduce, at the option of the Borrowers, either the Aggregate Tranche A Sublimit or the Aggregate Tranche B Sublimit (or a combination thereof) as designated by Astec, or in absence of such designa tion, such reduction shall reduce ratably the Aggregate Tranche A Sublimit and the Aggregate Tranche B Sublimit. The Borrowers may from time to time prepay, without penalty or premium, all of its outstanding Floating Rate Advances, or, in a minimum aggregate amount of $100,000, any portion of its outstanding Floating Rate Advances upon notice to the Agent prior to 10:00 a.m. (Chicago time) on the proposed date for such prepayment. A Eurodollar Advance may not be paid prior to the last day of the applicable Interest Period, unless, at the time of such payment, (a) the applicable Borrower has given the Agent three (3) Business Days' prior written notice of such prepayment, (b) such prepayment is in a minimum amount of $1,000,000 or in integral multiples of $500,000 in excess thereof and (c) the applicable Borrower pays to the Agent pursuant to Section 3.5 below all losses and costs incurred by the Lenders as the result of such payment. Any outstanding Advances and all other unpaid Obligations shall be paid in full by the Borrowers on the Facility Termination Date.
2. The Borrowers may, with the consent of each Lender, on up to two occasions, seek to increase the Aggregate Commitment by up to an aggregate amount of $50,000,000 (resulting in a maximum Aggregate Commitment of $175,000,000) upon at least three (3) Business Days' written notice to the Agent, which notice shall specify the amount of any such increase and shall be delivered at a time when no Default or Unmatured Default has occurred and is continuing. Any increase in the Aggregate Commitment shall be allocated to the Aggregate Tranche A Sublimit. The Borrowers may, after giving such notice, offer the increase (which may be declined by any Lender in its sole discretion) in the Aggregate Commitment on either a ratable basis to the Lenders or on a non pro-rata basis to one or more Lenders and/or to other banks or entities reasonably acceptable to the Agent. No increase in the Aggregate Commitment shall become effective until the existing or new Lenders extending such incremental Commitment a mount and the Borrowers shall have delivered to the Agent a document in form reasonably satisfactory to the Agent pursuant to which any such existing Lender states the amount of its Commitment increase, any such new Lender states its Commitment amount and agrees to assume and accept the obligations and rights of a Lender hereunder and the Borrowers accept such incremental Commitments. The Lenders (new or existing) shall accept an assignment from the existing Lenders, and the existing Lenders shall make an assignment to the new or existing Lender accepting a new or increased Revolving Commitment, of an interest in each then outstanding Advance such that, after giving effect thereto, all Advances are held ratably by the Lenders in proportion to their respective Revolving Commitments. Assignments pursuant to the preceding sentence shall be made in exchange for the principal amount assigned plus accrued and unpaid interest and Commitment Fees. The Borrowers shall make any payments under Section 3.5 result ing from such assignments.
3. Mandatory Reductions in Aggregate Commitment.
1. Sale of Assets. On each date after the Closing Date on which any Credit Party receives any Net Available Proceeds in respect of any Asset Disposition, the Aggregate Commitment shall automatically be permanently reduced in an amount equal to one hundred percent (100%) of the Net Available Proceeds of such Asset Disposition; provided, that with respect to no more than $20,000,000 in the aggregate of such Net Sale Proceeds in any fiscal year of Astec, the Net Available Proceeds therefrom shall not be required to be so applied on such date to the extent that no Default or Unmatured Default then exists at the time of receipt of such proceeds and Borrowers deliver a certificate to Agent stating that such Net Available Proceeds shall be used or contractually committed to be used to purchase fixed assets used or to be used in the Borrower's business within 365 days following the date of such Asset Disposition (which certificate shall set forth the estimates of the proceeds to be so expended), provided, further, that (1) if all or any portion of such Net Sale Proceeds not so applied to the repayment of Loans are not so used (or contractually committed to be used) within such 365 day period, the Aggregate Commitment shall be permanently reduced in an amount equal to such remaining portion on the last day of such 365 day period as provided above in this Section 2.4.3(a) and (2) if all or any portion of such Net Available Proceeds are not required to be applied on the 365th day referred to above because such amount is contractually committed to be used and subsequent to such date such contract is terminated or expires without such portion being so used, then the Aggregate Commitment shall be permanently reduced in an amount equal to such remaining portion on the date of such termination or expiration as provided in this Section 2.4.3(a).
2. Issuance of Debt. On each date after the Closing Date on which any Credit Party incurs, or issues any instruments relating to, any Indebtedness (other than Indebtedness borrowed by the Borrowers under this Agreement or permitted to be borrowed by any Credit Party pursuant to Section 6.11 of this Agreement), the Aggregate Commitment shall be automatically and permanently reduced in an amount equal to one hundred percent (100%) of the cash proceeds realized therefrom, in each case net of underwriting discounts, commissions and other reasonable costs and expenses directly attributable to such incurrence or issuance.
3. Issuance of Equity. On each date after the Closing Date on which any Credit Party issues and sells any common stock, preferred stock, warrant or other equity securities of any Credit Party to any Person other than another Credit Party, the Aggregate Commitment shall be automatically and permanently reduced in an amount equal to fifty percent (50%) of the cash proceeds (other than up to $10,000,000 of cash proceeds in any fiscal year from the exercise of employee and director stock options of a Credit Party issued in the ordinary course of business in favor of employees, officers or directors) realized therefrom ("Equity Proceeds"), in each case net of any brokerage commissions and any other reasonable costs or expenses directly attributable to such issuance.
4. Application of Mandatory Prepayments. The Aggregate Commitment shall be reduced by the full amount required in Sections 2.4.3(a), (b) and (c) even if there are not sufficient Loans outstanding for such amount to be applied as a prepayment. All proceeds to be applied to reduce the outstanding Loans and the Aggregate Commitment under Sections 2.4.3(a), (b) and (c) above shall be applied (i) to Tranche A Revolving Loans (and reduction of the Aggregate Tranche A Sublimit) in the case of sales of assets, issuance of debt or issuance of equity by any Credit Party (other than AFS), and (ii) to Tranche B Revolving Loans (and the reduction of Aggregate Tranche B Sublimit) in the case of sales of assets, issuance of debt or issuance of equity by AFS. Any reduction of the Aggregate Tranche A Sublimit or the Aggregate Tranche B Sublimit shall automatically reduce the Aggregate Commitment by the same amount.
5. Permitted Transactions. Nothing in this Section 2.4 shall be construed to constitute the Required Lenders' consent to any transaction referred to in Section 2.4 above which is not expressly permitted by the terms of this Agreement.
4. Mandatory Reduction of Tranche B Loans. If at anytime the Tranche B Revolving Loans exceed the Tranche B Borrowing Base, AFS shall immediately pay to the Agent the amount necessary to eliminate such excess, which amount shall be applied to the outstanding Tranche B Revolving Loans.
5. Method of Payment. All payments of the Obligations hereunder shall be made, without setoff, deduction, or counterclaim, in immediately available funds to the Agent at the Agent's address specified pursuant to Article XIII, or at any other Lending Installation of the Agent specified in writing by the Agent to Astec, by noon (Chicago time) on the date when due and shall be applied ratably by the Agent among the Lenders. Each payment delivered to the Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the same type of funds that the Agent received at its address specified pursuant to Article XIII or at any Lending Installation specified in a notice received by the Agent from such Lender. Th e Agent is hereby authorized to charge any account of the Borrowers maintained with Bank One for each payment of principal, interest and fees as it becomes due hereunder.
6. Notes; Telephonic Notices. Each Lender is hereby authorized to record the principal amount of each of its Loans and each repayment on the schedule attached to its Notes; provided, however, that the failure to so record (or any error in such recording) shall not affect the Borrowers' obligations under each such Note. The Borrowers hereby authorize the Lenders and the Agent to extend, convert or continue Advances, effect selections of Types of Advances and to transfer funds based on telephonic notices made by any person or persons the Agent or any Lender in good faith believes to be acting on behalf of the Borrowers. Each Borrower agrees to deliver promptly to the Agent a written confirmation, if such confirmation is requested by the Agent or an y Lender, of each telephonic notice signed by one of its Authorized Officers. If the written confirmation differs in any material respect from the action taken by the Agent and the Lenders, the records of the Agent and the Lenders shall govern absent manifest error.
7. Lending Installations. Each Lender may book its Loans and participations in Facility Letters of Credit and Swing Line Loans at any Lending Installation selected by such Lender and may change its Lending Installation from time to time. All terms of this Agreement shall apply to any such Lending Installation and the Notes shall be deemed held by each Lender for the benefit of such Lending Installation. Each Lender may, by written or telex notice to the Agent and Astec, designate a Lending Installation through which Loans will be made and participations in Facility Letters of Credit and Swing Line Loans purchased by it and for whose account Loan payments are to be mad e.
8. Non-Receipt of Funds by the Agent. Unless a Borrower or a Lender, as the case may be, notifies the Agent prior to the date on which it is scheduled to make payment to the Agent of (a) in the case of a Lender, the proceeds of a Loan or a payment under Section 2.11.5(b) or (b) in the case of a Borrower, a payment of principal, interest, fees or Reimbursement Obligations to the Agent for the account of the Lenders, that it does not intend to make such payment, the Agent may assume that such payment has been made. The Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If suc h Lender or Borrower, as the case may be, has not in fact made such payment to the Agent, the recipient of such payment shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to (x) in the case of payment by a Lender, the Federal Funds Effective Rate for such day for the first three (3) days and, thereafter, the interest rate applicable to the relevant Loan or (y) in the case of payment by a Borrower, the interest rate applicable to the relevant Loan or Reimbursement Obligation or if no such interest rate is specified, at the Floating Rate.
9. [Intentionally Omitted].
10. Application of Payments. The Borrowers irrevocably waive the right to direct the application of payments and collections received by the Agent for the account of any of the Lenders from or on behalf of the Borrowers, and the Borrowers agree that the Agent and the Lenders shall have the continuing exclusive right to apply and reapply any and all such payments and collections against the Obligations in such manner as the Agent and the Lenders may deem appropriate, notwithstanding any entry by the Agent or any of the Lenders upon any of its respective books and records; provided, however, that so long as the Borrowers are not delinquent in the payment to the Agent or any Lender of any amounts (including principal, interest and fees) owing under the Loans, this Agreement and any of the other Loan Documents, nothing contained herein shall limit a Borrower's rights under Section 2.2.4 above. To the extent that a Borrower makes a payment or payments to the Agent for the account of any of the Lenders, which payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy act, state or federal law, common law or equitable cause, then, to the extent of such payment received, the Obligations or part thereof intended to be satisfied shall be revived and shall continue in full force and effect, as if such payments had not been received by the Agent for the account of any of the Lenders.
11. Facility Letters of Credit.
1. Obligation to Issue. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of the Borrowers herein set forth, the Issuer hereby agrees to issue upon the request of and for the account of Astec, through such of the Issuer's Lending Installations or Affiliates as the Issuer and Astec may jointly agree, one or more Facility Letters of Credit in accordance with this Section 2.11, from time to time during the period, commencing on the Closing Date and ending on the fifth Business Day prior to the Facility Termination Date.
2. Conditions for Issuance. In addition to being subject to the satisfaction of the conditions contained in Section 4.2, the obligation of the Issuer to issue any Facility Letter of Credit is subject to the satisfaction in full of the following conditions:

(a) the aggregate maximum amount then available for drawing under Facility Letters of Credit issued by the Issuer, after giving effect to the Facility Letter of Credit requested hereunder, shall not exceed (i) any limit imposed by law or regulation upon the Issuer or (ii) the Facility Letter of Credit Limit;

(b) after giving effect to the requested issuance of any Facility Letter of Credit, (i) the Tranche A Loan Obligations shall not exceed the Aggregate Tranche A Sublimit and (ii) the Revolving Loan Obligations shall not exceed the Aggregate Commitment;

(c) the requested Facility Letter of Credit has an expiration date not later than each of (i) one year after the date of issuance and (ii) the fifth Business Day prior to the Facility Termination Date; provided that any Facility Letter of Credit that expires on the day one year after the date of issuance may provide for the renewal thereof for additional one year periods which shall in no event extend beyond the date referred to in clause (ii) above;

(d) if required by the Issuer, Astec shall have delivered to the Issuer, at such times and in such manner as the Issuer may reasonably prescribe, a Reimbursement Agreement and such other documents and materials as may be required by the Issuer pursuant to the terms of the proposed Facility Letter of Credit and the proposed Facility Letter of Credit shall be satisfactory to the Issuer as to form and content and shall be consistent with the Issuer's ordinary practice with respect to terms of its letters of credit; and

(e) as of the date of issuance, no order, judgment or decree of any court, arbitrator or governmental authority shall purport by its terms to enjoin or restrain the Issuer from issuing the Facility Letter of Credit and no law, rule or regulation applicable to the Issuer and no request or directive (whether or not having the force of law) from any governmental authority with jurisdiction over the Issuer shall prohibit or request that the Issuer refrain from the issuance of Letters of Credit generally or the issuance of that Facility Letter of Credit.

3. Procedure for Issuance of Facility Letters of Credit.

(a) Astec shall give the Issuer three (3) Business Days' prior written notice of any requested issuance of a Facility Letter of Credit under this Agreement. Such notice (the "LC Issuance Request") shall be on such standard form as may be prescribed by the Issuer, shall be irrevocable and shall specify (i) the stated amount of the Facility Letter of Credit requested, (ii) the effective date (which day shall be a Business Day) of issuance of such requested Facility Letter of Credit, (iii) the date on which such requested Facility Letter of Credit is to expire (which date shall be a Business Day and shall in no event be later than the date described in Section 2.11.2(c)), (iv) the purpose for which such Facility Letter of Credit is to be issued, (v) the Person for whose benefit the requested Facility Letter of Credit is to be issued, (vi) the amount of Facility Letter of Credit Obligations and Obligations then outstanding, (vii) the then unused portions of the Aggregate Commitment a nd the Aggregate Tranche A Sublimit and (viii) the terms on which the Facility Letter of Credit is to be issued. At the time such LC Issuance Request is delivered, Astec shall also provide the Issuer with a copy of the form of the Facility Letter of Credit it is requesting be issued. The Issuer shall promptly forward to the Agent and the Lenders a copy of the LC Issuance Request.

(b) Subject to the terms and conditions of this Section 2.11.3 and provided that the applicable conditions set forth in Sections 4.2 and 2.11.2 hereof have been satisfied, the Issuer shall, on the requested date, issue a Facility Letter of Credit on behalf of Astec in accordance with the Issuer's usual and customary business practices.

(c) The Issuer shall not extend or amend any Facility Letter of Credit unless the requirements of this Section 2.11.3 are met as though a new Facility Letter of Credit was being requested and issued.

4. Reimbursement Obligations.

(a) Notwithstanding any provisions to the contrary in any Reimbursement Agreement:

(i) Astec shall reimburse the Issuer for drawings under a Facility Letter of Credit issued by it no later than the earlier of (1) the time specified in such Reimbursement Agreement and (2) three (3) Business Days after the payment by the Issuer of such drawing; and

(ii) any Reimbursement Obligation with respect to any Facility Letter of Credit shall bear interest from the date of the relevant drawing under the pertinent Facility Letter of Credit at the higher of the interest rate (1) specified in the applicable Reimbursement Agreement with respect to such amount, and (2) for past due Floating Rate Loans calculated in accordance with Section 2.2.8 above.

(b) Astec agrees to pay to the Agent the amount of all Reimbursement Obligations, interest and other amounts payable to the Agent under or in connection with such Facility Letter of Credit immediately when due, irrespective of any claim, set-off, defense or other right which Astec or any Subsidiary or Affiliate of Astec may have at any time against the Issuer or any other Person, under all circumstances, including, without limitation, any of the following circumstances:

(i) any lack of validity or enforceability of this Agreement or any of the other Loan Documents;

(ii) the existence of any claim, setoff, defense or other right which Astec or any Subsidiary or Affiliate of Astec may have at any time against a beneficiary named in a Facility Letter of Credit or any transferee of any Facility Letter of Credit (or any Person for whom any such transferee may be acting), the Issuer, any Lender, or any other Person, whether in connection with this Agreement, any Facility Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transactions between Astec, or any Subsidiary or Affiliate of Astec and the beneficiary named in any Facility Letter of Credit);

(iii) any draft, certificate or any other document presented under the Facility Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect (except to the extent any such invalidity or insufficiency is found in a final judgment of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Agent);

(iv) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents; and

(v) the occurrence of any Default or Unmatured Default.

5. Participation.

(a) Immediately upon issuance by the Issuer of any Facility Letter of Credit in accordance with the procedures set forth in Section 2.11.3, each Lender shall be deemed to have irrevocably and unconditionally purchased and received from the Issuer, without recourse or warranty, an undivided interest and participation equal to its Percentage of such Facility Letter of Credit (including, without limitation, all obligations of Astec with respect thereto) and any security therefor or guaranty pertaining thereto.

(b) In the event that the Issuer makes any payment under any Facility Letter of Credit and Astec shall not have repaid such amount to the Issuer pursuant to Section 2.11.4, the Issuer shall promptly notify each Lender of such failure, and each Lender shall promptly and unconditionally pay to the Agent for the account of the Issuer the amount of such Lender's Percentage of the unreimbursed amount of any such payment. If any Lender fails to make available to the Issuer any amounts due to the Issuer pursuant to this Section 2.11.5(b), the Issuer shall be entitled to recover such amount, together with interest thereon at the Federal Funds Effective Rate, for the first three (3) Business Days after such Lender receives such notice and thereafter, at the Floating Rate, payable (i) on demand, (ii) by setoff against any payments made to the Issuer for the account of such Lender or (iii) by payment to the Issuer by the Agent of amounts otherwise payable to such Lender under this Ag reement. The failure of any Lender to make available to the Agent its Percentage of the unreimbursed amount of any such payment shall not relieve any other Lender of its obligation hereunder to make available to the Agent its Percentage of the unreimbursed amount of any payment on the date such payment is to be made, but no Lender shall be responsible for the failure of any other Lender to make available to the Agent its Percentage of the unreimbursed amount of any payment on the date such payment is to be made.

(c) Whenever the Issuer or the Agent receives a payment on account of a Reimbursement Obligation, including any interest thereon, it shall promptly pay to each Lender which has funded its participating interest therein, in immediately available funds, an amount equal to such Lender's Percentage thereof.

(d) The obligations of a Lender to make payments to the Agent with respect to a Facility Letter of Credit shall be absolute, unconditional and irrevocable, not subject to any counterclaim, set-off, qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances.

(e) In the event any payment by Astec or any Subsidiary or Affiliate of Astec received by the Issuer or the Agent with respect to a Facility Letter of Credit and distributed by the Issuer or the Agent to the Lenders on account of their participations is thereafter set aside, avoided or recovered from the Issuer or the Agent in connection with any receivership, liquidation, reorganization or bankruptcy proceeding, each Lender which received such distribution shall, upon demand by the Issuer or the Agent, contribute such Lender's Percentage of the amount set aside, avoided or recovered together with interest at the rate required to be paid by the Issuer or the Agent upon the amount required to be repaid by it.

6. Compensation for Facility Letters of Credit. Astec shall pay letter of credit fees with respect to each Facility Letter of Credit equal to (a) a rate per annum equal to 0.125% of the face amount of such Facility Letter of Credit, payable to the Issuer on the date when such Facility Letter of Credit is issued (the "Issuer Fronting Fee"), and (b) (i) the applicable rate per annum set forth in the "Letter of Credit Fee" row in the grid found in the definition of Applicable Margin, times (ii) the face amount of such Facility Letter of Credit, payable to the Agent for the account of the Lenders (including the Issuer), in each case payable in arrears on each Payment Date. In addition to the foregoing, Astec shall pay to the I ssuer any other processing, issuance, amendment and other similar fees customarily charged by it in respect of Facility Letters of Credit issued by it, including, without limitation, customary fees charged by it in connection with commercial Facility Letters of Credit, together with the Issuer's out-of-pocket costs of issuing and servicing Facility Letters of Credit. Notwithstanding anything to the contrary contained in Section 2.4(b) of the Trencor LC Agreement, the Letter of Credit Fees described therein shall be calculated as described in this Section 2.11.6. All other fees described in Section 2.4 of the Trencor LC Agreement shall remain unchanged.
7. Letter of Credit Collateral Account. Astec agrees that it will, until the final expiration date of any Facility Letter of Credit and thereafter as long as any amount is payable to the Lenders in respect of any Facility Letter of Credit, maintain a special collateral account (the "Letter of Credit Collateral Account") at the Agent's office at the address specified pursuant to Article XIII, in the name of Astec but under the sole dominion and control of the Agent, for the benefit of the Lenders and in which Astec shall have no interest other than as set forth in Section 8.1. The Agent will invest any funds on deposit from time to time in the Letter of Credi t Collateral Account in certificates of deposit of the Agent having a maturity not exceeding thirty (30) days. Nothing in this Section 2.11.7 shall either obligate the Agent to require Astec to deposit any funds in the Letter of Credit Collateral Account or limit the right of the Agent to release any funds held in the Letter of Credit Collateral Account other than as required by Section 8.1.
8. Nature of Obligations.

(a) In addition to amounts payable as elsewhere provided in this Section 2.11, Astec hereby agrees to protect, indemnify, pay and save the Issuer, the Agent and the Lenders harmless from and against any and all loss, liability, damage and expense (including attorneys' fees and expenses) which the Issuer, the Agent or the Lenders may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of a Facility Letter of Credit, other than as a result of the Issuer, the Agent or the Lenders' gross negligence or willful misconduct, or (ii) the failure of the Issuer to honor a drawing under such Facility Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto governmental authority.

(b) As among Astec, the Issuer, the Agent and the Lenders, Astec assumes all risks of the acts and omissions of, or misuse of the Facility Letters of Credit by, the respective beneficiaries of the Facility Letters of Credit. In furtherance and not in limitation of the foregoing, the Issuer, the Agent and the Lenders shall not be responsible for (i) the forms, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any Facility Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Facility Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of a Facility Letter of Credit to comply fully with conditions required in order to draw upon such Facility Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages by mail, cable, telegraph, telex or otherwise; (v) errors in interpretation of technical terms; (vi) misapplication by the beneficiary of a Facility Letter of Credit of the proceeds of any drawing under such Facility Letter of Credit; (viii) any consequences arising from causes beyond the control of the Issuer, the Agent or the Lenders, except in each case caused solely by the gross negligence or willful misconduct of the Issuer, the Agent or the Lenders.

(c) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by the Issuer, the Agent or any Lender under or in connection with the Facility Letters of Credit or any related certificates, if taken or omitted in good faith, shall not put the Issuer, the Agent or such Lender under any resulting liability to Astec or relieve Astec of any of its obligations hereunder to the Issuer, the Agent or any Lender.

9. Existing Letters of Credit. The Trencor Letter of Credit, the KPI Letter of Credit and each letter of credit listed on Schedule 2.11.9 shall be deemed a Facility Letter of Credit under this Agreement and shall count against the Facility Letter of Credit Limit, and the Issuer shall be deemed for all purposes of this Agreement to have sold to each Lender, and each Lender shall be deemed, without further action by any party hereto, to have purchased from the Issuer, a participation interest equal to its Percentage of the face amount of the Trencor Letter of Credit, the KPI Letter of Credit and each letter of credit listed on Schedule 2.11.9 and the related Facility Letter of Credit Obligations. Except as provided in Sectio n 2.11.6 above, the terms and conditions (including the provisions relating to reimbursements for drawings) of the Trencor LC Agreement shall govern the Trencor Letter of Credit. Astec agrees that this Agreement shall be the "Credit Agreement" defined in the Trencor LC Agreement for all purposes from and after the Original Closing Date. Bank One hereby agrees that, during the term of this Agreement and any extensions or renewals hereof, the Trencor Letter of Credit will be extended or renewed upon request of Astec and Trencor, Inc.; provided, however, that Astec and Trencor, Inc. have satisfied and complied with the terms and conditions for extension and renewal contained herein and in the Trencor LC Agreement.
3. 
   
   TAXES; YIELD PROTECTION
1. Taxes. (i) All payments by the Borrowers to or for the account of any Lender or the Agent hereunder or under any Note shall be made free and clear of and without deduction for any and all Taxes. If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender or the Agent, (a) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.1) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (b) such Borrower shall make such deductions, (c) such Borrower shall pay the full amount deducted to the relevant authority in accordance with applicable law and (d) such Borrower shall furnish to the Agent the original copy of a receipt evidencing payment thereof within thirty (30) days after such payment is made.

(ii) In addition, the Borrowers hereby agree to pay any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note ("Other Taxes").

(iii) The Borrowers hereby agree to indemnify the Agent and each Lender for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed on amounts payable under this Section 3.1) paid by the Agent or such Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. Payments due under this indemnification shall be made within thirty (30) days of the date the Agent or such Lender makes demand therefor pursuant to Section 3.6.

(iv) Each Lender that is not incorporated under the laws of the United States of America or a state thereof (each a "Non-U.S. Lender") agrees that it will, not more than ten (10) Business Days after the date of this Agreement, (i) deliver to each of Astec and the Agent two (2) duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI, certifying in either case that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, and (ii) deliver to each of Astec and the Agent a United States Internal Revenue Form W-8 or W-9, as the case may be, and certify that it is entitled to an exemption from United States backup withholding tax. Each Non-U.S. Lender further undertakes to deliver to each of Astec and the Agent (x) renewals or additional copies of such form (or any successor form) on or before the date that such form expires or becomes obsolete, and (y) after the occurrence of any eve nt requiring a change in the most recent forms so delivered by it, such additional forms or amendments thereto as may be reasonably requested by Astec or the Agent. All forms or amendments described in the preceding sentence shall certify that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form or amendment with respect to it and such Lender advises Astec and the Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax.

(v) For any period during which a Non-U.S. Lender has failed to provide Astec with an appropriate form pursuant to clause (iv) above (unless such failure is due to a change in treaty, law or regulation, or any change in the interpretation or administration thereof by any governmental authority, occurring subsequent to the date on which a form originally was required to be provided), such Non-U.S. Lender shall not be entitled to indemnification under this Section 3.5 with respect to Taxes imposed by the United States; provided that, should a Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of withholding tax become subject to Taxes because of its failure to deliver a form required under clause (iv) above, the Borrowers shall take such steps as such Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover such Taxes.

(vi) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any Note pursuant to the law of any relevant jurisdiction or any treaty shall deliver to the Borrowers (with a copy to the Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate.

(vii) If the U.S. Internal Revenue Service or any other governmental authority of the United States or any other country or any political subdivision thereof asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered or properly completed, because such Lender failed to notify the Agent of a change in circumstances which rendered its exemption from withholding ineffective, or for any other reason), such Lender shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax, withholding therefor, or otherwise, including penalties and interest, and including taxes imposed by any jurisdiction on amounts payable to the Agent under this subsection, together with all costs and expenses related thereto (including attorneys' fees and time charges of attorneys for the Agent, which attorneys may be employees of the Agent). The obligations of the Lenders under this Section 3.1(vii) shall survive the payment of the Obligations and termination of this Agreement.

2. Yield Protection. If, on or after the date of this Agreement, the adoption of any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any change in the interpretation or administration thereof by any governmental or quasi-governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender or applicable Lending Installation with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency:

(i) subjects any Lender or any applicable Lending Installation to any Taxes, or changes the basis of taxation of payments (other than with respect to Excluded Taxes) to any Lender in respect of its Eurodollar Loans or Facility Letters of Credit (or participations therein), or

(ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation (other than reserves and assessments taken into account in determining the interest rate applicable to Eurodollar Advances), or

(iii) imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation of making, funding or maintaining its Eurodollar Loans or Facility Letters of Credit (or participations therein) or reduces any amount receivable by any Lender or any applicable Lending Installation in connection with its Eurodollar Loans or in connection with Facility Letters of Credit (or participations therein), or requires any Lender or any applicable Lending Installation to make any payment calculated by reference to the amount of Eurodollar Loans held, Facility Letters of Credit issued or participated in, or interest received, by it, by an amount deemed material by such Lender,

and the result of any of the foregoing is to increase the cost to such Lender or applicable Lending Installation of making or maintaining its Eurodollar Loans or Revolving Commitment or of issuing or participating in Facility Letters of Credit or to reduce the return received by such Lender or applicable Lending Installation in connection with such Eurodollar Loans, Revolving Commitment or Facility Letters of Credit, then, within fifteen (15) days of demand by such Lender, the Borrowers shall pay such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction in amount received.

3. Changes in Capital Adequacy Regulations. If a Lender determines the amount of capital required or expected to be maintained by such Lender, any Lending Installation of such Lender or any corporation controlling such Lender is increased as a result of a Change, then, within fifteen (15) days of demand by such Lender, the Borrowers shall pay such Lender the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender determines is attributable to this Agreement, its Loans, its Revolving Commitment or its Facility Letters of Credit (or participations therein) (after taking into account such Lender's policies as to capital adequacy). "Change" means (i) any change after the date of this Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement which affects the amount of capital required or expected to be maintained by any Lender or any Lending Installation or any corporation controlling any Lender. "Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement.
4. Availability of Types of Advances. If any Lender determines that maintenance of its Eurodollar Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or if the Required Lenders determine that (i) deposits of a type and maturity appropriate to match fund Eurodollar Advances are not available or (ii) the interest rate applicable to Eurodollar Advances does not accurately reflect the cost of making or maintaining Eurodollar Advances, then the Agent shall suspend the availability of Eurodollar Advances and require any affected Eurodollar Advances to be repaid or converted to Floating Rate Advances, subject to the paym ent of any funding indemnification amounts required by Section 3.5.
5. Funding Indemnification. If any payment of a Eurodollar Advance occurs on a date which is not the last day of the applicable Interest Period, whether because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not made on the date specified by a Borrower for any reason other than default by the Lenders, such Borrower will indemnify each Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain such Eurodollar Advance.
6. Lender Statements; Survival of Indemnity. To the extent reasonably possible, each Lender shall designate an alternate Lending Installation with respect to its Eurodollar Loans to reduce any liability of the Borrowers to such Lender under Sections 3.1, 3.2 and 3.3 or to avoid the unavailability of Eurodollar Advances under Section 3.4, so long as such designation is not, in the judgment of such Lender, disadvantageous to such Lender. Each Lender shall deliver a written statement of such Lender to Astec (with a copy to the Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.3 or 3.5. Such written statement shall set forth in reasonable detail the calculations upon which such L ender determined such amount and shall be final, conclusive and binding on the Borrowers in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurodollar Loan shall be calculated as though each Lender funded its Eurodollar Loan through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the Eurodollar Rate applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement of any Lender shall be payable on demand after receipt by Astec of such written statement. The obligations of the Borrowers under Sections 3.1, 3.2, 3.3 and 3.5 shall survive payment of the Obligations and termination of this Agreement.
4. 
   
   CONDITIONS PRECEDENT
1. Initial Credit Extension. The Lenders shall not be required to make the initial Credit Extension hereunder and this Agreement shall not become effective unless the Borrowers have furnished to the Agent with sufficient copies for the Lenders the following items (and the date upon which all such items shall have been so furnished is referred to as the "Closing Date"):
1. Copies of the articles of incorporation together with all amendments thereto, and a certificate of good standing of each of the Borrowers, all certified by the appropriate governmental officer in each Borrower's jurisdiction of incorporation.
2. Copies certified by the Secretary or Assistant Secretary of each Borrower, of their respective by-laws and of their respective Board of Directors' resolutions (and resolutions of other bodies, if any are deemed necessary by counsel for the Agent) authorizing the execution, delivery and performance of the Loan Documents to which such Borrower is a party.
3. An incumbency certificate, executed by the Secretary or Assistant Secretary of each Borrower, which shall identify by name and title and bear the signature of the officers of each Borrower authorized to sign the Loan Documents to which such Borrower is a party and to make borrowings hereunder, upon which certificate the Agent and the Lenders shall be entitled to rely until informed of any change in writing by Astec.
4. A certificate, signed by the Chief Financial Officer of Astec, stating that on the initial Borrowing Date, the representations and warranties contained in this Agreement are true and correct and that no Default or Unmatured Default has occurred and is continuing.
5. A written opinion of counsel for the Borrowers, in substantially the form of Exhibit C-1 hereto and of special Canadian counsel to Astec, in substantially the form of Exhibit C-2 hereto, in each case addressed to the Agent and the Lenders.
6. Notes payable to the order of each Lender duly executed by the applicable Borrower and a Swing Line Note payable to the order of the Swing Line Lender duly executed by Astec.
7. The Pledge Agreement duly executed by Astec, together with certificates representing the capital stock pledged pursuant thereto and customary duly executed blank stock powers with respect thereto.
8. A UCC-3 termination statement for filing with the Secretary of State of Tennessee releasing Bank One's interest in the Collateral as granted pursuant to the terms of the Prior Credit Agreement.
9. A UCC-1 financing statement suitable for filing with the Secretary of State of Tennessee showing Astec as a debtor and the Collateral Agent as secured party covering the Collateral.
10. Evidence that Astec shall have paid all fees, costs and expenses required to be paid by it pursuant to Section 9.7 hereof and for which an invoice has been submitted to it.
11. The insurance certificate described in Section 5.23.
12. Executed copies of the Note Purchase Agreements, the Pledge Agreement and such other documents executed in connection with the Senior Notes as the Agent, Lenders or their counsel may reasonably request.
13. Evidence that on the Closing Date, the Borrowers have repaid all Tranche A Revolving Loans (as defined in the Prior Credit Agreement) and Tranche B Revolving Loans (as defined in the Prior Credit Agreement) outstanding under the Prior Credit Agreement, together with accrued and unpaid interest thereon and all amounts required to be paid pursuant to Section 3.5 of the Prior Credit Agreement in connection with the repayment of such Tranche A Revolving Loans and Tranche B Revolving Loans on the Closing Date and the Aggregate Commitment under the Prior Credit Agreement shall have been terminated and all Liens thereunder released.
14. Such other documents as the Lenders or their counsel may have reasonably requested.
2. Each Credit Extension. The Lenders shall not be required to make any Credit Extension and the Issuer shall not be required to issue any Facility Letter of Credit, and the Swing Line Lender shall not be required to required to make any Swing Line Loan, unless on the applicable Credit Extension Date:

(a) There exists no Default or Unmatured Default.

(b) The representations and warranties contained in Article V of this Agreement and in Section 3 of the Pledge Agreement are true and correct as of such Credit Extension Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall be true and correct on and as of such earlier date.

(c) All legal matters incident to the making of such Credit Extension shall be satisfactory to the Lenders and their counsel.

Each Borrowing Notice or LC Issuance Request or Notice of Swing Line Loan with respect to each such Credit Extension shall constitute a representation and warranty by the Borrowers that the conditions contained in Sections 4.2(a) and (b) have been satisfied. The Agent may require a duly completed Compliance Certificate as a condition to making a Credit Extension.

5. 
   
   REPRESENTATIONS AND WARRANTIES OF THE BORROWERS

The Borrowers jointly and severally represent and warrant to the Lenders that:

1. Corporate Existence and Standing. Each Credit Party is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite authority, including all licenses, registrations, permits, franchises, patents, copyrights, trademarks, tradenames, consents and approvals, to own its property and assets and consummate the transactions contemplated hereby and to conduct its business, and is qualified to do business and is in good standing or otherwise authorized to conduct business in each jurisdiction in which its business is conducted and where such qualification is necessary.
2. Authorization and Validity. Each Borrower has the corporate power and authority and legal right to execute and deliver the Loan Documents to which it is a party and to perform its obligations thereunder. The execution and delivery by each Borrower of the Loan Documents to which it is a party and the performance of its obligations hereunder and thereunder have been duly authorized by proper corporate proceedings, and the Loan Documents to which it is a party constitute legal, valid and binding obligations of each Borrower, enforceable against such Borrower in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally.< /A>
3. No Conflict; Government Consent. Neither the execution and delivery by either Borrower of the Loan Documents to which it is a party, nor the consummation of the transactions therein contemplated, nor compliance with the provisions thereof will violate any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on any Credit Party or any Credit Party's articles of incorporation or by-laws or the provisions of any indenture, instrument or agreement to which any Credit Party is a party or is subject, or by which it, or its Property, is bound, or conflict with or constitute a default thereunder, or result in, or require, the creation or imposition of any Lien in, of or on the Property of any Credit Party pursuant to the t erms of any such indenture, instrument or agreement. No order, consent, adjudication, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, any of the Loan Documents.
4. Financial Statements. The December 31, 2000 consolidated financial statements of the Credit Parties heretofore delivered to the Agent and the Lenders were prepared in accordance with Agreement Accounting Principles in effect on the date such statements were prepared and fairly present the consolidated financial condition and operations of the Credit Parties at such date and the consolidated results of their operations for the period then ended. All financial projections will be prepared by the Borrowers in good faith, based upon information and assumptions reasonably believed to be sound and accurate and represent reasonable forecasts of the Credit Parties' future operations and financial performance.
5. Material Adverse Change. Since December 31, 2000, there has been no change in the business, Property, prospects, condition (financial or otherwise) or results of operations of the Credit Parties, which could have a Material Adverse Effect.
6. Taxes. Each Credit Party has filed all United States federal tax returns and all other tax returns which are required to be filed and have paid all taxes due pursuant to said returns or pursuant to any assessment received by any Credit Party, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided in accordance with Agreement Accounting Principles and as to which no Lien exists. No tax liens have been filed and no claims are being asserted with respect to any such taxes. The charges, accruals and reserves on the books of each Credit Party in respect of any taxes or other governmental charges are adequate.
7. Litigation and Contingent Obligations. Except as listed on Schedule 5.7 hereto, there is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the best knowledge of any of their officers, threatened against or affecting any Credit Party which could have a Material Adverse Effect or which seeks to prevent, enjoin or delay the making of any Credit Extension. Other than any liability incident to such litigation, arbitration or proceedings, no Credit Party has any material contingent obligations not provided for or disclosed in the financial statements referred to in Section 5.4.
8. Subsidiaries and Affiliates. Schedule 5.8 hereto contains an accurate and complete list of all presently existing Subsidiaries of Astec setting forth their respective jurisdictions of incorporation or organization and the percentage of their respective capital stock or other ownership interests owned by Astec or other Subsidiaries. All of the issued and outstanding shares of capital stock of such Subsidiaries are free from Liens (except for the Lien of the Pledge Agreement) and have been duly authorized and issued and are fully paid and non-assessable. All of such Subsidiaries (including AFS) are Wholly-Owned Subsidiaries. AFS has no Subsidiaries.
9. ERISA. The Unfunded Liabilities of all Single Employer Plans do not in the aggregate exceed $5,000,000. No Credit Party nor any other member of the Controlled Group has incurred, or is reasonably expected to incur, any withdrawal liability to Multiemployer Plans in excess of $1,000,000 in the aggregate. Each Plan complies in all material respects with all applicable requirements of law and regulations, no Reportable Event has occurred with respect to any Plan, no Credit Party nor any other members of the Controlled Group has withdrawn from any Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Plan. Each foreign employee benefit plan sponsored or maintained by any Credi t Party or any other member of the Controlled Group, or with respect to which any Credit Party or any other member of the Controlled Group has any material liability (a "Foreign Plan"), is in compliance in all material respects with all applicable laws. No Credit Party or any other member of the Controlled Group has incurred or expects to incur any liability with respect to a Foreign Plan which could have a Material Adverse Effect.
10. Accuracy of Information. All factual information heretofore or contemporaneously furnished by or on behalf of any Credit Party to the Agent or the Lenders for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all other such factual information hereafter furnished by or on behalf of any Credit Party to the Agent or the Lenders will be, true and accurate (taken as a whole) on the date as of which such information is dated or certified and not incomplete by omitting to state any material fact necessary to make such information (taken as a whole) not misleading at such time.
< /P>
11. Regulation U. No Credit Party is engaged principally, or as one of its important activities, in the business of purchasing or carrying margin stock (as defined in Regulation U) ("Margin Stock"). Neither the Loans nor any of the proceeds thereof, are for the purpose, whether immediate, incidental or ultimate of (a) buying or carrying Margin Stock, or (b) extending credit to others for the purpose of buying or carrying Margin Stock, or (c) refunding indebtedness originally incurred for such purpose, or for any purpose which entails a violation of, or which is inconsistent with, the provisions of Regulations of the Board of Governors of the Federal Reserve System, including Regulation U. Both before and after giving effect to any stock repur chases permitted by Section 6.10, Margin Stock constitutes less than twenty-five percent (25%) of the value of those assets of all Credit Parties which are subject to any limitation on sale, pledge or other restriction hereunder.
12. Material Agreements. No Credit Party is a party to any agreement or instrument or subject to any charter or other corporate restriction which could have a Material Adverse Effect. No Credit Party is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (i) any agreement to which it is a party, which default could have a Material Adverse Effect or (ii) any agreement or instrument evidencing or governing Indebtedness, including, without limitation, Contingent Obligations.
13. Compliance With Laws. Each Credit Party has complied with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any instrumentality or agency thereof, having jurisdiction over the conduct of their respective businesses or the ownership of their respective Properties, including, without limitation, Environmental Laws and ERISA. No Credit Party has received any notice to the effect that its operations are not in material compliance with any of the requirements of applicable foreign, federal, state and local environmental, health and safety statutes and regulations or the subject of any federal or state investigation evaluating whether any remedial action is needed to respond to a Release of any Hazardous Materials into the environment, which non-compliance or remedial action could have a Material Adverse Effect.
14. Environmental Warranties. Except as set forth on Schedule 5.14 hereto:

(a) all facilities and property (including underlying groundwater) owned or leased by any Credit Party has been, and continues to be, owned or leased by such entity in material compliance with all Environmental Laws;

(b) there has been no past, and there are no pending or threatened (1) claims, complaints, notices or requests for information received by any Credit Party with respect to any alleged violation of any Environmental Law, or (ii) complaints, notices or inquiries to any Credit Party regarding potential liability under any Environmental Law which, in either case, have caused or could reasonably be expected to cause liabilities in excess of $1,000,000;

(c) there have been no Releases of Hazardous Materials at, on or under any property now or previously owned or leased by any Credit Party that, singly or in the aggregate, have, or may reasonably be expected to have, a Material Adverse Effect;

(d) each Credit Party has been issued and is in compliance with all permits, certificates, approvals, licenses and other authorizations relating to environmental matters and necessary or desirable for their businesses;

(e) no property now or previously owned or leased by any Credit Party is listed or proposed for listing (with respect to owned property only) on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list of sites requiring investigation or clean-up;

(f) there are no underground storage tanks, active or abandoned, including petroleum storage tanks, at, on or under any property now or previously owned or leased by any Credit Party that, singly or in the aggregate, have, or may reasonably be expected to have, a Material Adverse Effect;

(g) no Credit Party has directly transported or directly arranged for the transportation of any Hazardous Material to any location which is listed or proposed for listing on the National Priorities List pursuant to CERCLA, on CERCLIS or on any similar state list or which is the subject of federal, state or local enforcement actions or other investigations which may lead to material claims against any Credit Party for any remedial work, damage to natural resources or personal injury, including, but not limited to, claims under CERCLA;

(h) there are no polychlorinated biphenyls or friable asbestos present at any property now or previously owned or leased by any Credit Party that, singly or in the aggregate, have, or may reasonably be expected to have, a Material Adverse Effect; and

(i) in the ordinary course of its business, the officers of Astec consider the effect of Environmental Laws on the business of Astec and its Subsidiaries, in the course of which they identify and evaluate potential risks and liabilities accruing to the Credit Parties due to Environmental Laws. On the basis of this consideration, Astec has concluded that Environmental Laws cannot reasonably be expected to have a Material Adverse Effect.

15. Ownership of Properties. Except as set forth on Schedule 5.15 hereto, on the date of this Agreement, each Credit Party will have good title, free of all Liens other than those permitted by Section 6.18, to all of the Property and assets reflected in the most recent consolidated financial statements provided to the Agent as owned by them.
16. Investment Company Act. No Credit Party is an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended.
17. Public Utility Holding Company Act. No Credit Party is a "holding company" or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended.
18. Plan Assets; Prohibited Transactions. Neither Borrower is an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975 of the Code), and neither the execution of this Agreement nor any Credit Extension gives rise to a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code.
19. Intellectual Property. Each Credit Party owns or possesses all of the patents, trademarks, service marks, trade names, copyrights and licenses necessary for the present and planned future conduct of its respective business except as set forth on Schedule 5.19.
20. Solvency. (a) No Credit Party (other than Astec Export Company, Inc., a Barbados corporation, and Astec Investments, Inc., a Tennessee corporation) is insolvent and the consummation of the transactions contemplated herein will not render any Credit Party insolvent. Immediately after the consummation of the transactions to occur on the date hereof and immediately following the making of each Credit Extension, if any, made on the date hereof and after giving effect to the application of the proceeds of such Credit Extensions, (i) the fair value of the assets of the Credit Parties on a consolidated basis, at a fair valuation, will exceed the debts and liabilities, whether or not subordinated, absolute, fixed or contingent, material or immaterial, liquidated or unliquidated or otherwise (taking into account, with respect to all contingent liabilities, the likelihood of such liabilities becoming actual), of the Credit Parties on a consolidated basis; (ii) the present fair saleable value of the property of the Credit Parties on a consolidated basis will be greater than the amount that will be required to pay the probable liability of the Credit Parties on a consolidated basis on their debts and other liabilities, whether or not subordinated, absolute, fixed or contingent, material or immaterial, liquidated or unliquidated or otherwise (taking into account, with respect to all contingent liabilities, the likelihood of such liabilities becoming actual), as such debts and other liabilities become absolute and matured; (iii) the Credit Parties on a consolidated basis will be able to pay their debts and liabilities, whether or not subordinated, absolute, fixed or contingent, material or immaterial, liquidated or unliquidated or otherwise (taking into accoun t, with respect to all contingent liabilities, the likelihood of such liabilities becoming actual), as such debts and liabilities become absolute and matured; and (iv) the Credit Parties on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted after the date hereof.

(b) The Borrowers do not intend to, or to permit any Credit Party to, and the Borrowers do not believe that they or any Credit Party will, incur debts beyond its ability to pay such debts as they mature, taking into account the timing of and amounts of cash to be received by it or any such Credit Party and the timing of the amounts of cash to be payable on or in respect of its Indebtedness or the Indebtedness of any such Credit Party.

21. Licenses. Each Credit Party possesses adequate assets, licenses, permits, authorizations, patents, patent applications, copyrights, trademarks, trademark applications and tradenames to continue to conduct its business as heretofore conducted. No event has occurred which permits, or after notice or lapse of time or both would permit, the revocation or termination of any of the foregoing which taken in isolation or when considered with all other such revocations or terminations could have a Material Adverse Effect. The Borrowers have no notice or knowledge of any fact or any past, present or threatened occurrence th at could preclude or impair any Credit Party's ability to retain or obtain any authorization necessary for the operation of their respective businesses.
22. Pledge Agreement. The provisions of the Pledge Agreement are effective to create, in favor of the Collateral Agent, for the benefit of itself, the Agent, the Lenders and the holders of the Senior Notes, a legal, valid and enforceable security interest in the Collateral.
23. Insurance. The certificate signed by an Authorized Officer of Astec that attests to the existence and adequacy of, and summarizes, the property and casualty insurance program carried by Astec with respect to Astec and its Subsidiaries and that has been furnished by Astec to the Agent and the Lenders, is complete and accurate. This summary includes the insurer's or insurers' name(s), policy number(s), expiration date(s), amount(s) of coverage, type(s) of coverage, exclusion(s) and deductible(s). This summary also includes similar information, and describes any reserves, relating to any self-insurance program that is in effect.
6. 
   
   COVENANTS

During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing, the Borrowers hereby jointly and severally make the following agreements for themselves and on behalf of each Credit Party.

1. Financial Reporting. The Borrowers will and will cause each Credit Party to maintain a system of accounting established and administered in accordance with Agreement Accounting Principles, and furnish to the Lenders:

(a) Within one hundred five (105) days after the close of each of its fiscal years, an unqualified (except for qualifications relating to changes in accounting principles or practices reflecting changes in generally accepted principles of accounting and required or approved by Astec's independent certified public accountants) audit report certified by independent certified public accountants, acceptable to the Lenders, prepared in accordance with Agreement Accounting Principles as in effect at such time on a consolidated and consolidating basis (consolidating statements need not be certified by such accountants) for itself and the Credit Parties including without limitation balance sheets as of the end of such period, related profit and loss and reconciliation of surplus statements, and a statement of cash flows, accompanied by (a) any management letter prepared by said accountants, (b) a certificate of said accountants that, in the course of their examination necessary for their certif ication of the foregoing, they have obtained no knowledge of any Default or Unmatured Default, or if, in the opinion of such accountants, any Default or Unmatured Default shall exist, stating the nature and status thereof and (c) a letter from said accountants addressed to the Lenders acknowledging that such Lenders are extending credit in primary reliance on such financial statements and authorizing such reliance.

(b) Within forty-five (45) days after the close of each of the first three quarterly periods of each of its fiscal years, for Astec, consolidated and consolidating unaudited balance sheets as at the close of each such period and consolidated and consolidating profit and loss and a statement of cash flows for such quarter and for the period from the beginning of such fiscal year to the end of such quarter, all certified by Astec's Chief Financial Officer.

(c) As soon as available, but in any event within sixty (60) days after the beginning of each fiscal year of Astec, a copy of the plan and forecast (including, without limitation, a projected consolidated and consolidating balance sheet, income statement and funds flow statement) of the Credit Parties for such fiscal year, certified by Astec's Chief Financial Officer.

(d) Together with the financial statements required under Sections 6.1(a) and (b), a Compliance Certificate.

(e) Within two hundred seventy (270) days after the close of each Plan year, a statement of the Unfunded Liabilities of each Single Employer Plan.

(f) As soon as possible and in any event within five (5) days after any Borrower knows that any Reportable Event has occurred with respect to any Plan, a statement, signed by Astec's Chief Financial Officer, describing said Reportable Event and the action which Astec proposes to take with respect thereto.

(g) Without limitation to Section 6.26, as soon as possible and in any event within ten (10) days after receipt by any Credit Party, a copy of (a) any notice or claim to the effect that any Credit Party is or may be liable to any Person as a result of the Release by any Credit Party, or any other Person of any Hazardous Materials into the environment, and (b) any notice alleging any violation of any Environmental Law by any Credit Party which, in either case, could reasonably be expected to have a Material Adverse Effect.

(h) Promptly upon the furnishing thereof to the shareholders of Astec, copies of all financial statements, reports and proxy statements so furnished.

(i) Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which Astec files with the Securities and Exchange Commission or with the Federal Trade Commission.

(j) Within 30 days after the end of each calendar month, a Borrowing Base Certificate .

(k) Such other information (including, without limitation, non-financial information) as the Agent or any Lender may from time to time reasonably request.

2. Use of Proceeds. Astec will use the proceeds of Loans made under the Tranche A Commitment (i) in the case of the initial Advance, to repay in part the Tranche A Revolving Loans (as defined in the Prior Credit Agreement) outstanding under the Prior Credit Agreement, (ii) for Acquisitions permitted by Section 6.16, and (iii) for general corporate purposes. AFS will use the proceeds of Loans under the Tranche B Commitment (a) in the case of the initial Advance, to repay in part the Tranche B Revolving Loans (as defined in the Prior Credit Agreement) outstanding under the Prior Credit Agreement, and (b) to finance Qualifying Financing Leases, Qualifying Operating Leases and Qualifying Chattel Paper. The Borrowers will not, nor will they per mit any Subsidiary to, use any of the proceeds of the Loans to purchase or carry any Margin Stock.
3. Notice of Default. The Borrowers will, and will cause each Credit Party to, give prompt notice in writing to the Agent and the Lenders of the occurrence of any Default or Unmatured Default and of any other development, financial or otherwise, which could reasonably be expected to have a Material Adverse Effect.
4. Conduct of Business. The Borrowers will, and will cause each Credit Party to, (i) carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted, (ii) do all things necessary to remain duly incorporated, validly existing and in good standing as a domestic corporation in its jurisdiction of incorporation and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted, and (iii) do or cause to be done all things necessary to preserve, renew and keep in full force and effect the rights, licenses, registrations, authorization, permits, franchises, patents, copyrights, trademarks and tradenames material to the con duct of its business.
5. Taxes. The Borrowers will, and will cause each Credit Party to, pay when due all taxes, assessments and governmental charges and levies upon it or its income, profits or Property, and pay all charges for labor and materials which if unpaid might give rise to liens on such Property, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside in accordance with Agreement Accounting Principles.
6. Insurance. The Borrowers will, and will cause each Credit Party to, maintain with financially sound and reputable insurance companies insurance on all their Property in such amounts and covering such risks as is consistent with sound business practice, including, without limitation, casualty, liability and worker's compensation insurance, and each Borrower will furnish to any Lender upon request full information as to the insurance carried by it and each Credit Party. All such insurance policies shall contain provisions providing that the insurance shall not be cancelable except on thirty (30) days' prior notice to the Lenders.
7. Compliance with Laws. The Borrowers will, and will cause each Credit Party to, comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, including, without limitation, Environmental Laws, ERISA and laws and regulations governing Foreign Plans.
8. Maintenance of Properties. The Borrowers will, and will cause each Credit Party to, do all things necessary to maintain, preserve, protect and keep its Property in good repair, working order and condition, and make all necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times.
9. Inspection. The Borrowers will, and will cause each Credit Party to, permit the Lenders, by their respective representatives and agents, to inspect any of the Property, corporate books and financial records of each Credit Party, to examine and make copies of their respective books of accounts and other financial records, and to discuss the affairs, finances and accounts of each Credit Party with, and to be advised as to the same by, their respective officers at such reasonable times and intervals as the Lenders may designate.
10. Dividends. The Borrowers will not, nor will they permit any Credit Party to, declare or pay, directly or indirectly, any dividends or make any other distributions, whether in cash or property, or a combination thereof, on its capital stock or other equity interests (other than dividends payable in its own capital stock) or redeem, repurchase or otherwise acquire or retire any of its capital stock or other equity interests at any time outstanding, except that (a) any Subsidiary of Astec may declare and pay dividends to Astec or to a Wholly-Owned Subsidiary of Astec, and (b) Astec may repurchase in accordance with applicable law and Regulation U up to 1,500,000 shares of its common stock if after giving effect to such repurchase, the Borrowers a re in compliance with all of the terms hereof, including, without limitation, Section 6.22.1 on a pro forma basis and Section 5.11.
11. Indebtedness. The Borrowers will not, nor will they permit any Credit Party to, create, incur or suffer to exist any Indebtedness, except:
1. The Credit Extensions;
2. Indebtedness described in Schedule 6.11 hereto;
3. Indebtedness of any Subsidiary to Astec or to any Wholly-Owned Subsidiary of Astec;
4. Indebtedness incurred in the ordinary course of business with respect to customer deposits, trade payables and all other unsecured current liabilities not the result of borrowing and not evidenced by any note or any other similar instrument;
5. Indebtedness assumed in connection with Acquisitions permitted by Section 6.16(i); provided, however, that any such Indebtedness assumed in connection therewith does not exceed in the aggregate $10,000,000 at any time;
6. Indebtedness in respect of Rate Hedging Obligations incurred on an unsecured basis on terms and in amounts satisfactory to the Agent;
7. Indebtedness in connection with industrial revenue bond financings where the Letter of Credit thereunder is issued pursuant to Section 2.11;
8. Contingent Obligations permitted by Section 6.17;
9. Indebtedness evidenced by the Senior Notes as in existence on the Closing Date in an aggregate principal amount not to exceed $80,000,000, as reduced by any repayments of principal thereof;
10. Indebtedness in connection with Permitted Securitizations such that the aggregate outstanding principal amount of commercial paper or term notes issued in connection with all such Permitted Securitizations does not exceed $150,000,000.
11. Other Indebtedness (including up to $10,000,000 of Indebtedness incurred by Credit Parties, whether guaranteed or not guaranteed by the Borrowers) not to exceed $20,000,000 at any time.
12. Merger. The Borrowers will not, and will not permit any Credit Party to, consolidate with or merge with any other corporation or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to any Person (except that (x) a Securitization Subsidiary may transfer its assets in connection with a Permitted Securitization and (y) any Credit Party may merge with or into, or convey, transfer or lease substantially all of its assets to, any Borrower or any Wholly-Owned Subsidiary if (1) in any such merger or consolidation involving a Borrower, such Borrower is the survivor and (2) immediately after giving effect to any such merger, consolidation or conveyance, transfer or lease, no Default or Unmatured Default would exist) unless:
1. the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease substantially all of the assets of such Borrower or such Credit Party as an entirety, as the case may be, shall be a solvent corporation organized and existing under the laws of the United States or any State thereof (including the District of Columbia), and, in the case of any such transaction involving a Borrower, if such Borrower is not such successor corporation, (i) such successor corporation shall have executed and delivered to the Agent its assumption of the due and punctual performance and observance of each covenant and condition of any Loan Documents to which it is a party and (ii) shall have caused to be delivered to the Agent an opinion of nationally recognized independent counsel, or other independent counsel reasonably satisfactory to the Agent, to the effect that all agreements or instruments effecting such assumption are enforceable in a ccordance with their terms and comply with the terms hereof;
2. immediately after giving effect to such transaction, no Default or Unmatured Default shall have occurred and be continuing.

No such conveyance, transfer or lease of substantially all of the assets of such Borrower or such Credit Party shall have the effect of releasing such Borrower or such Credit Party or any successor corporation that shall theretofore have become such in the manner prescribed in this Section 6.12 from its liability under any Loan Documents to which it is a party.

13. Sale of Assets. The Borrowers will not, nor will they permit any Credit Party to, lease, sell or otherwise dispose of its Property to any other Person except for (a) sales of inventory in the ordinary course of business, (b) leases, sales or other dispositions of its Property that, together with all other Property of the Credit Parties previously leased, sold or disposed of (other than inventory in the ordinary course of business) as permitted by this Section during the twelve-month period ending with the month in which any such lease, sale or other disposition occurs, do not constitute a Substantial Portion of the Property of the Credit Parties and do not materially adversely affect the busi ness or operations of the Credit Parties, (c) Permitted Recourse Lease Sales, (d) other sales by AFS of financing and operating leases (including Qualifying Operating Leases and Qualifying Financing Leases) and other chattel paper (including Qualifying Chattel Paper) on a non-recourse basis provided that the Tranche B Revolving Loans at no time exceed the Tranche B Borrowing Base and (e) sales of accounts receivable, lease receivables, notes, chattel paper and other similar property pursuant to a Permitted Securitization. Each of the Subsidiaries of Astec shall at all times be a Wholly-Owned Subsidiary of Astec.
14. Sale of Accounts. Except for Permitted Recourse Lease Sales and sales pursuant to Permitted Securitizations, the Borrowers will not, nor will they permit any Credit Party to, sell or otherwise dispose of any leases or notes or accounts receivable, with recourse.
15. Sale and Leaseback. The Borrowers will not, nor will they permit any Credit Party to, sell or transfer any of its Property in order to concurrently or subsequently lease as lessee such or similar Property.
16. Investments and Acquisitions. The Borrowers will not, nor will they permit any Credit Party to, make or suffer to exist any Investments (including, without limitation, loans and advances to, and other Investments in, its Subsidiaries), or commitments therefor, or to create any Subsidiary or to become or remain a partner in any partnership or joint venture, or to make any Acquisition of any Person, except:

(a) Short-term obligations of, or fully guaranteed by, the United States of America.

(b) Commercial paper rated A-1 or better by Standard and Poor's Rating Group, a division of McGraw-Hill Corporation or P-1 or better by Moody's Investors Service, Inc.

(c) Demand deposit accounts maintained in the ordinary course of business.

(d) Certificates of deposit issued by and time deposits with commercial banks (whether domestic or foreign) having capital and surplus in excess of $100,000,000.

(e) Existing Investments in Subsidiaries and other Investments in existence on the date hereof and described in Schedule 5.8 hereto.

(f) Additional Investments or capital contributions in AFS, subsequent to the Closing Date not to exceed $20,000,000 in the aggregate.

(g) Investments in (i) Securitization Subsidiaries in an aggregate amount not to exceed $5,000,000, (b) captive insurance companies of the Borrowers in an aggregate amount not to exceed $6,000,000 and (iii) other domestic Wholly-Owned Subsidiaries of Astec, other than AFS.

(h) Such other Investments, subject to the reasonable approval of the Required Lenders.

(i) Permitted Acquisitions by Astec; provided, however, that (i) the aggregate purchase price (including any portion thereof that is deferred) of such Acquisitions, including consideration in the form of cash, cash equivalents and common stock and assumed Indebtedness and Indebtedness paid at the time of the consummation thereof, does not exceed $60,000,000 during any one fiscal year, (ii) the aggregate purchase price (including any portion thereof that is deferred) of such Acquisitions, including consideration in the form of cash and cash equivalents only and assumed Indebtedness and Indebtedness paid at the time of the consummation thereof, does not exceed $25,000,000 during any one fiscal year, (iii) no Unmatured Default or Default has occurred and is continuing or will result therefrom and Astec submits a certificate to the Agent at the time of the consummation of each such Acquisition to such effect and certifying that the Credit Parties are and will be in compliance on a pro forma basis with the financial and other covenants hereunder after giving effect to such Acquisition, (iv) 100% of the outstanding capital stock or other equity interests in each Subsidiary acquired or formed in connection with each such Acquisition shall be and, except as permitted by Section 6.13, shall remain directly owned by Astec, and (v) the Collateral Agent, for the ratable benefit of the Agent, the Lenders and the holders of the Senior Notes, shall have, pursuant to the Pledge Agreement, a perfected first priority security interest in 100% of the capital stock or other equity interests in each Domestic Subsidiary acquired or formed in connection with each such Acquisition and 65% (or such greater percentage in which a security interest may be granted without resulting in adverse tax consequences to Astec under the Code as in effect from time to time) of each Foreign Subsidiary acquired or formed in connection with each such Acquisition, and Astec shall deliver to the Agent a supplement to Sched ule A to the Pledge Agreement describing such capital stock or other equity interests, the certificates, if any, representing such capital stock or other equity interests, customary duly executed blank stock powers with respect thereto and such other documentation as the Agent shall request to effect the perfection of such security interest, together with such evidence of requisite corporate action and opinions of counsel as the Agent may reasonably request.

17. Contingent Obligations. Except as permitted pursuant to Section 6.11(d), the Borrowers will not, nor will they permit any Credit Party to, make or suffer to exist any Contingent Obligation (including, without limitation, any Contingent Obligation with respect to the obligations of a Subsidiary), except (a) by endorsement of instruments for deposit or collection in the ordinary course of business, (b) the guaranty by Astec of the Obligations of AFS pursuant to Article XVI, (c) Contingent Obligations relating to Permitted Recourse Lease Sales, and (d) other Contingent Obligations to the extent that the aggregate amount of such Contingent Obligations plus the Contingent Obligations existing as permitted under clause (c) does not exc eed twenty percent (20%) of the Borrowers' Consolidated Tangible Net Worth determined as of the end of the most recently ended fiscal quarter of the Borrowers for which financial statements are available.
18. Liens. The Borrowers will not, nor will they permit any Credit Party to, create, incur, assume or suffer to exist any Lien in, of or on its Property (now owned or hereafter acquired) or income of any Credit Party, except:

(a) Liens for taxes, assessments or governmental charges or levies on its Property in the ordinary course of business if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles shall have been set aside on its books.

(b) Liens imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than sixty (60) days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on its books.

(c) Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation.

(d) Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of any Credit Party.

(e) Liens existing on the date hereof and described in Schedule 5.15 hereto.

(f) Liens securing Indebtedness permitted under Section 6.11(e); provided, however, that such Liens encumber only assets purchased in connection with any such Acquisition and not any other Property of any Credit Party.

(g) Liens arising under the Pledge Agreement.

(h) Liens securing the Obligations.

(i) Liens arising out of (i) Permitted Recourse Lease Sales or (ii) permitted sales by AFS of financing or operating leases (including Qualifying Operating Leases and Qualifying Financing Leases) or other chattel paper (including Qualifying Chattel Paper) on a non-recourse basis; provided, however, that such Liens pertain only to assets purchased in connection with such sales.

(j) Purchase money security interests on any Property acquired or held by the Company or its Subsidiaries, securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such Property; provided that (i) any such Lien attaches to such Property concurrently with or within 20 days after the acquisition thereof, (ii) such Lien attaches solely to the Property so acquired in such transaction, (iii) the principal amount of the debt secured thereby does not exceed 100% of the cost of such Property, and (iv) the principal amount of the Indebtedness secured by any and all such purchase money security interests shall not at any time exceed $10,000,000.

(k) Liens upon assets of any Securitization Subsidiary relating to any Permitted Securitization.

(l) Liens granted by Kolberg-Pioneer, Inc. in its assets in favor of Astec Holdings, Inc. or another Credit Party securing intercompany loans made to Kolberg-Pioneer, Inc. in connection with the Portec Acquisition.

(m) Liens granted by Breaker Technology, Inc. and Breaker Technology, Ltd., in their respective assets in favor of Astec Holdings, Inc. or another Credit Party securing intercompany loans made to Breaker Technology, Inc. and Breaker Technology, Ltd. in connection with the acquisition of certain assets from Teledyne Industries Canada Limited and Teledyne CM Products, Inc.

19. Transactions with Affiliates. The Borrowers will not, nor will they permit any Credit Party to, enter into any transaction (including, without limitation, the purchase or sale of any Property or service) with, or make any payment or transfer to, any Affiliate except Permitted Securitizations and transactions in the ordinary course of business and pursuant to the reasonable requirements of such Credit Party's and such Affiliate's business and upon fair and reasonable terms no less favorable to such Credit Party or such Affiliate than such Credit Party or such Affiliate would obtain in a comparable arms-length transaction.
20. Amendments to Certain Agreements. The Borrowers will not, nor will they permit any Credit Party to, amend or waive any substantive term or provision of its certificate or articles of incorporation or by-laws, without in each case, the prior written consent of the Required Lenders.
21. Financial Covenants.
1. Leverage Ratio. At all times after the date hereof, the Borrowers will cause to be maintained a Leverage Ratio of not more than the following during each of the following periods, measured as of the end of each fiscal quarter during each such period.

Period	Leverage Ratio
Prior to and including January 1, 2003	3.25:1.0
January 2, 2003 and thereafter	3.0:1.0

2. Consolidated Tangible Net Worth. The Borrowers will at all times cause to be maintained a minimum Consolidated Tangible Net Worth of not less than $63,500,000, plus fifty percent (50%) of positive Consolidated Net Income for each fiscal quarter of the Borrowers ending on or after September 30, 2001, plus the cash proceeds from the issuance and sale of any common stock, preferred stock, warrant or other equity securities of the Credit Parties, net of any brokerage commissions and any other reasonable costs or expenses directly attributable to such issuance.
3. Rentals. The Borrowers will not, nor will they permit any Credit Party to, create, incur or suffer to exist obligations for Rentals in excess of $6,000,000 during any one fiscal year on a non-cumulative basis in the aggregate for the Credit Parties.
4. Fixed Charge Coverage Ratio. The Borrowers will cause to be maintained, as at the last day of each fiscal quarter, a ratio of (a) Consolidated Net Income, minus extraordinary gains or plus extraordinary losses, plus income tax expense, plus Interest Expense (including any Interest Expense relating to commercial paper issued in connection with a Permitted Securitization even though not directly incurred by a Credit Party), plus Lease Rentals to (b) Interest Expense (including any Interest Expense relating to commercial paper issued in connection with a Permitted Securitization even though not directly incurred by a Credit Party) of the Credit Parties on a consolidated basis, plus Lease Rentals, for the four most recently ended fiscal quarters of not less than 2.0 to 1.0.
5. AFS Leases. AFS shall not retain financing and operating leases (including Qualifying Financing Leases and Qualifying Operating Leases) with respect to which the aggregate residual value of the equipment leased at the end of the term of such leases exceeds in the aggregate $20,000,000 at any time.
22. Fixed Asset Expenditures. The Borrowers will not, nor will they permit any Credit Party to, expend, or be committed to expend, in the acquisition of fixed assets, in excess of eight percent (8%) of Consolidated Net Revenue during any one fiscal year on a non-cumulative basis in the aggregate for the Credit Parties.
23. Subordinated Indebtedness. The Borrowers will not, and will not permit any Credit Party to, make any amendment or modification to the indenture, note or other agreement evidencing or governing any Subordinated Indebtedness, or directly or indirectly voluntarily prepay, defease or in substance defease, purchase, redeem, retire or otherwise acquire, any Subordinated Indebtedness.
24. Accounting Method. The Borrowers will not, and will not permit any Credit Party to, change its fiscal year or method of accounting, except as required by Agreement Accounting Principles.
25. Environmental Covenant. The Borrowers will, and will cause each Credit Party to:

(a) use and operate all of its facilities and properties in compliance with all Environmental Laws, keep all necessary environmental permits, approvals, certificates and licenses in effect and remain in compliance therewith, and handle all Hazardous Materials in compliance with all applicable Environmental Laws;

(b) immediately notify the Lenders and provide copies upon receipt of all written claims, complaints, notices or inquiries relating to the environmental condition of its facilities and properties or compliance with Environmental Laws, and promptly cure and have dismissed with prejudice any such actions and proceedings to the satisfaction of the Lenders; and

(c) provide such information and certifications which any Lender may reasonably request from time to time to insure compliance with this Section 6.26.

26. Litigation and Other Notices. The Borrowers will, and will cause each Credit Party to, give the Lenders prompt written notice of the following:

(a) the issuance by any court or governmental agency or authority of any injunction, order, decision or other restraint prohibiting, or having the effect of prohibiting, the making of the Advances or other Credit Extensions or the initiation of any litigation or similar proceeding seeking any such injunction, order or other restraint; and

(b) the filing or commencement of any action, suit or proceeding against any Credit Party whether at law or in equity or by or before any court or any federal, state, municipal or other governmental agency or authority and which, if adversely determined against any Credit Party, as the case may be, is likely to (in such Borrower's reasonable judgment) result in liability in excess of $2,000,000 in the aggregate.

27. Pledge of Stock of Foreign Subsidiaries. In the event that a Default or Unmatured Default has occurred and is continuing, Astec will, at the request of the Agent, grant to the Collateral Agent, for the ratable benefit of the Collateral Agent, the Agent, the Lenders and the holders of the Senior Notes, pursuant to the Pledge Agreement, a security interest in each Foreign Subsidiary's capital stock or other equity interests in which it does not then have a security interest, and will deliver to the Collateral Agent the certificates, if any, representing such capital stock or other equity interests, customary duly executed stock powers with respect thereto and such other documentation as the Collateral Agent shall request to effect such grant of a security interest and the perfection thereof, together with such evidence of requisite corporate action and opinions of counsel as the Collateral Agent may reasonably request.
28. Material Subsidiaries. Effective upon any Person becoming a Material Subsidiary of Astec or any of its Subsidiaries, Astec shall, and shall cause each Domestic Subsidiary to, pledge the stock or other equity interests thereof held by it to the Collateral Agent pursuant to pledge documentation reasonably acceptable to the Collateral Agent; provided that the equity interests of Securitization Subsidiaries and a captive insurance company of the Borrowers need not be pledged at any time; provided further that, subject to Section 6.27, only 65% (or such greater percentage in which a security interest may be granted without resulting in adverse tax consequences to Astec under the Code as in effect from time to time) of the equity interests of any Foreign Subsidiary directly owned by Astec, any Domestic Subsidiary or combination thereof shall be required to be pledged. In connection w ith such pledge, Astec shall cause to be provided to the Collateral Agent such opinions of counsel and other documentation as the Collateral Agent shall reasonably request.
7. 
   
   DEFAULTS

The occurrence of any one or more of the following events shall constitute a Default:

7.1. Any representation or warranty made or deemed made by or on behalf of any Credit Party to the Lenders or the Agent under or in connection with this Agreement, any other Loan Document, any Credit Extension, or any certificate or information delivered in connection with this Agreement or any other Loan Document shall be materially false or misleading on the date as of which made.

7.2. Nonpayment of (a) principal of any Note or of any Reimbursement Obligation when due (including, without limitation, failure to make any payment required by Section 2.1.3), or (b) interest upon any Note or of any commitment fee or other obligation under any of the Loan Documents within five (5) days after the same becomes due.

7.3. The breach by any Borrower of any of the terms or provisions of any of Sections 6.2, 6.4, 6.10, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.22.1, 6.22.2, 6.22.3, 6.22.4, 6.23, 6.24 or 6.28.

7.4. The breach by any Borrower (other than a breach which constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or provisions of this Agreement which is not remedied within twenty (20) days after written notice from the Agent or any Lender, provided that if such breach is not capable of being cured within such twenty (20) day period, such cure period shall be extended for a period of sixty (60) additional days so long as such Borrower has diligently begun to cure such breach and diligently pursues such cure thereafter.

7.5. Failure of any Credit Party to pay any Indebtedness, including, without limitation, the Senior Notes and any Contingent Obligation, when due; or the default by any Credit Party in the performance of any term, provision or condition contained in any agreement under which any Indebtedness, including, without limitation, any Contingent Obligation, was created or is governed, after the expiration of all applicable cure periods, or any other event shall occur or condition exist, the effect of which is to cause, or to permit the holder or holders of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturi ty; or any Indebtedness of any Credit Party shall be declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the stated maturity thereof; or any Credit Party shall not pay, or admit in writing its inability to pay, its debts generally as they become due.

7.6. Any Credit Party shall (a) have an order for relief entered with respect to it under the Federal bankruptcy laws as now or hereafter in effect or similar state or foreign laws, (b) make an assignment for the benefit of creditors, (c) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its Property, (d) institute any proceeding seeking an order for relief under the Federal bankruptcy laws as now or hereafter in effect or similar state or foreign laws, or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, windi ng up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (e) take any corporate action to authorize or effect any of the foregoing actions set forth in this Section 7.6 or (f) fail to contest in good faith any appointment or proceeding described in Section 7.7.

7.7. Without the application, approval or consent of any Credit Party, a receiver, trustee, examiner, liquidator or similar official shall be appointed for any Credit Party or any Substantial Portion of their respective Property, or a proceeding described in Section 7.6(d) shall be instituted against any Credit Party and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of sixty (60) consecutive days.

7.8. Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of (each a "Condemnation"), all or any portion of the Property of any Credit Party which, when taken together with all other Property of the Credit Parties so condemned, seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such Condemnation occurs, constitutes a Substantial Portion of.

7.9. Any Credit Party shall fail within thirty (30) days to pay, bond or otherwise discharge one or more (a) judgments or orders for the payment of money in excess of $500,000 (or the equivalent thereof in currencies other than U.S. Dollars) in the aggregate, or (b) nonmonetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgment(s), in any such case, is/are not stayed on appeal or otherwise being appropriately contested in good faith.

7.10. The Unfunded Liabilities of all Single Employer Plans shall exceed in the aggregate $5,000,000, any Reportable Event shall occur in connection with any Plan or any Credit Party or any member of the Controlled Group incurs liability under a Foreign Plan which could have a Material Adverse Effect.

7.11. Any Credit Party or any other member of the Controlled Group shall have been notified by the sponsor of a Multiemployer Plan that it has incurred withdrawal liability to such Multiemployer Plan in an amount which, when aggregated with all other amounts required to be paid to Multiemployer Plans by any Credit Party or any other member of the Controlled Group as withdrawal liability (determined as of the date of such notification), exceeds $500,000 or requires payments exceeding $100,000 per annum.

7.12. Any Credit Party or any other member of the Controlled Group shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, if as a result of such reorganization or termination the aggregate annual contributions of such Credit Party and the other members of the Controlled Group (taken as a whole) to all Multiemployer Plans which are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the respective plan years of each such Multiemployer Plan immediately pre ceding the plan year in which the reorganization or termination occurs by an amount exceeding $1,000,000.

7.13. Any Credit Party shall be the subject of any proceeding pertaining to the release by (i) any Credit Party, (ii) any Person acting on any Credit Party's behalf or (iii) any predecessor in interest to the assets and properties of any Credit Party of Hazardous Material into the environment, or any violation of any Environmental Laws which, in either case, could have a Material Adverse Effect.

7.14. Any Change in Control shall occur.

7.15. The occurrence of any "default" or "event of default", as defined in any Loan Document (other than this Agreement) or the breach of any of the terms or provisions of any Loan Document (other than this Agreement), which default or breach continues beyond any period of grace therein provided.

7.16. Nonpayment by any Credit Party of any Rate Hedging Obligation or the breach by any Credit Party of any term, provision or condition contained in any agreement, device or arrangement giving rise to any Rate Hedging Obligation.

7.17. The Agent shall fail to have a valid and perfected first priority security interest in all of the capital stock or other equity interests of each Subsidiary of Astec (or such lesser amount in the case of Foreign Subsidiaries as is required by this Agreement) and in all other Collateral, except as permitted by the terms of the Pledge Agreement, the Pledge Agreement shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability thereof, or Astec shall fail to comply with any of the terms or provisions of the Pledge Agreement.

7.18. An event shall have occurred that could give rise to a Material Adverse Effect.

7.19. The representations and warranties set forth in Section 5.18 shall at any time not be true and correct.

7.20. Any of the Loan Documents shall cease, for any reason, to be in full force and effect, or any party to any Loan Document shall so assert.

8. 
   
   ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
1. Acceleration.

(a) If any Default described in Section 7.6 or 7.7 occurs with respect to any Credit Party, (i) the obligations of the Lenders to make Loans hereunder and the obligations of the Issuer to issue Facility Letters of Credit shall automatically terminate and the Obligations shall immediately become due and payable without presentment, demand, protest or notice of any kind, all of which each Borrower hereby expressly waives and without any election or action on the part of the Agent or any Lender and (ii) each Borrower will be and become thereby unconditionally obligated, without the need for demand or the necessity of any act or evidence, to deliver to the Agent, at its address specified pursuant to Article XIII, for deposit into the Letter of Credit Collateral Account, an amount (the "Collateral Shortfall Amount") equal to the excess, if any, of

(A) 100% of the sum of the aggregate maximum amount remaining available to be drawn under the Facility Letters of Credit (assuming compliance with all conditions for drawing thereunder) issued by the Issuer and outstanding as of such time, over

(B) the amount on deposit in the Letter of Credit Collateral Account at such time that is free and clear of all rights and claims of third parties and that has not been applied by the Lenders against the Obligations.

(b) If any Default occurs and is continuing (other than a Default described in Section 7.6 or 7.7), (i) the Required Lenders may terminate or suspend the obligations of the Lenders to make Loans and the obligation of the Issuer to issue Facility Letters of Credit hereunder, or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Borrowers hereby expressly waive and (ii) the Required Lenders may, upon notice delivered to Astec and in addition to the continuing right to demand payment of all amounts payable under this Agreement, make demand on Astec to deliver (and Astec will, forthwith upon demand by the Required Lenders and without necessity of further act or evidence, be and become thereby unconditionally and jointly and severally obligated to deliver), to the Agent, at its address specified pursuant to Article XIII, fo r deposit into the Letter of Credit Collateral Account an amount equal to the Collateral Shortfall Amount.

(c) If at any time while any Default is continuing, the Agent determines that the Collateral Shortfall Amount at such time is greater than zero, the Agent may make demand on Astec to deliver (and Astec will, forthwith upon demand by the Agent and without necessity of further act or evidence, be and become thereby unconditionally obligated to deliver), to the Agent as additional funds to be deposited and held in the Letter of Credit Collateral Account an amount equal to such Collateral Shortfall Amount at such time.

(d) The Agent may at any time or from time to time after funds are deposited in the Letter of Credit Collateral Account, apply such funds to the payment of the Obligations and any other amounts as shall from time to time have become due and payable by the Borrowers to the Lenders under the Loan Documents.

(e) At any time while any Default is continuing, neither the Borrowers nor any Person claiming on behalf of or through the Borrowers shall have any right to withdraw any of the funds held in the Letter of Credit Collateral Account. After all of the Obligations have been indefeasibly paid in full, any funds remaining in the Letter of Credit Collateral Account shall be returned by the Agent to Astec or paid to whoever may be legally entitled thereto at such time.

(f) The Agent shall exercise reasonable care in the custody and preservation of any funds held in the Letter of Credit Collateral Account and shall be deemed to have exercised such care if such funds are accorded treatment substantially equivalent to that which the Agent accords its own property, it being understood that the Agent shall not have any responsibility for taking any necessary steps to preserve rights against any Persons with respect to any such funds.

2. Amendments. Subject to the provisions of this Article VIII, the Required Lenders (or the Agent with the consent in writing of the Required Lenders) and the Borrowers may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Borrowers hereunder or waiving any Default hereunder; provided, however, that no such supplemental agreement shall, without the consent of each Lender directly or indirectly affected thereby:

(a) Extend the maturity of any Loan or Note or forgive all or any portion of the principal amount thereof, or reduce the rate or extend the time of payment of interest or fees thereon.

(b) Reduce or extend the Reimbursement Obligations, or reduce the rate or change the time of payment of any fees related to Facility Letters of Credit or Swing Line Loans;

(c) Reduce the percentage specified in the definition of Required Lenders.

(d) Extend the Facility Termination Date, or reduce the amount or extend the payment date for the scheduled or mandatory commitment reductions or prepayments required under Sections 2.1.3 and 2.4, or increase the amount of the Revolving Commitment, the Tranche A Commitment or the Tranche B Commitment of any Lender hereunder, or permit either Borrower to assign its rights under this Agreement.

(e) Amend this Section 8.2.

1. Release all or substantially all of the Collateral.
2. Release Astec's guaranty found in Article XVI.

No amendment of any provision of this Agreement relating to the Agent, the Issuer or the Swing Line Lender shall be effective without the written consent of the Agent, the Issuer or the Swing Line Lender, as the case may be. The Agent may waive payment of the fee required under Section 12.3.2 without obtaining the consent of any other party to this Agreement.

1. Preservation of Rights. No delay or omission of the Lenders or the Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Credit Extension notwithstanding the existence of a Default or the inability of any Borrower to satisfy the conditions precedent to such Credit Extension shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the Lenders req uired pursuant to Section 8.2, and then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Agent and the Lenders until the Obligations have been paid in full.

1. 
   
   GENERAL PROVISIONS
1. Survival of Representations. All representations and warranties of the Borrowers contained in this Agreement shall survive delivery of the Notes and the making of the Loans herein contemplated.
2. Governmental Regulation. Anything contained in this Agreement to the contrary notwithstanding, no Lender shall be obligated to extend credit to any Borrower in violation of any limitation or prohibition provided by any applicable statute or regulation.
3. Taxes. Any Taxes (excluding Excluded Taxes) or other similar assessments or charges made by any governmental or revenue authority in respect of the Loan Documents shall be paid by the Borrowers, together with interest and penalties, if any.
4. Headings. Section headings in the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents.
5. Entire Agreement. The Loan Documents, together with the letter agreement referred to in Section 2.4.1(b), embody the entire agreement and understanding among the Borrowers, the Agent and the Lenders and supersede all prior agreements and understandings among the Borrowers, the Agent and the Lenders relating to the subject matter thereof.
6. Several Obligations; Benefits of this Agreement. The respective obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which the Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns; provided, however, that the parties hereto expressly agree that the Arranger shall enjoy the benefits of the provisions of Sections 9.7, 9.11 and 10.10 to the extent specifically set forth therein and shall have the right to enforce such provisions on its own behalf and in its own name to the same extent as if it were a party to this Agreement.
7. Expenses; Indemnification. The Borrowers shall reimburse the Agent and the Arranger for any and all costs, internal charges and out-of-pocket expenses (including without limitation attorneys' fees and time charges of attorneys for the Agent, which attorneys may be employees of the Agent) paid or incurred by the Agent or the Arranger in connection with the preparation, negotiation, execution, delivery, syndication, review, amendment, modification and administration of the Loan Documents. The Borrowers also agree to reimburse the Agent, the Arranger and the Lenders for any costs, internal charges and out-of-pocket expenses (including attorneys' fees and time charges of attorneys for the Agent, the Arranger and the Lenders, which attorneys may be employees of the Agent, the Arranger or the Lenders) paid or incurred by the Agent, the Arranger or any Lender in connection with the collection and enforcement of the Loan Documents. The Borrowers further agree to indemnify the Agent, the Arranger, each Lender, their respective affiliates, and each of their directors, officers and employees against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor whether or not the Agent, the Arranger, any Lender or any affiliate is a party thereto) which any of them may pay or incur arising out of or relating to (i) this Agreement, (ii) the other Loan Documents, (iii) the transactions contemplated hereby, (iv) the direct or indirect application or proposed application of the proceeds of any Loan hereunder or the use of any Facility Le tter of Credit, (v) the Release of Hazardous Materials in, onto or from any Credit Party's owned or leased property and (vi) any violation of Environmental Laws. The obligations of the Borrowers under this Section shall survive the termination of this Agreement and the payment and performance of the Obligations.
8. Numbers of Documents. All statements, notices, closing documents, and requests hereunder shall be furnished to the Agent with sufficient counterparts so that the Agent may furnish one to each of the Lenders.
9. Accounting. Except as provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with Agreement Accounting Principles.
10. Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable.
11. Nonliability of Lenders. The relationship between the Borrowers, on the one hand, and the Lenders and the Agent, on the other, shall be solely that of borrower and lender. Neither the Agent, the Arranger nor any Lender shall have any fiduciary responsibilities to the Borrowers. Neither the Agent, the Arranger nor any Lender undertakes any responsibility to the Borrowers to review or inform the Borrowers of any matter in connection with any phase of any Credit Party's business or operations. The Borrowers agree that neither the Agent, the Arranger nor any Lender shall have liability to any Credit Party (whether sounding in tort, contract or otherwise) for losses suffered by any Credit Party in connection with, arising out of, or in any way rela ted to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined by a court of competent jurisdiction in a final and non-appealable order that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought. Neither the Agent, the Arranger nor any Lender shall have any liability with respect to, and each Borrower hereby waives, releases and agrees not to sue for, any special, indirect or consequential damages suffered by it in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby.
12. Confidentiality. Each Lender agrees to hold any confidential information which it may receive from the Borrowers pursuant to this Agreement in confidence, except for disclosure (a) to other Lenders and their respective Affiliates, (b) to legal counsel, accountants, and other professional advisors to that Lender or to a Transferee each of whom shall be subject to the restrictions set forth in this Section, (c) to regulatory officials, (d) to any Person as requested pursuant to or as required by law, regulation, or legal process, (e) to any Person in connection with any legal proceeding to which that Lender is a party, (f) to such Lender's direct or indirect contractual counterparties in swap agreements or to legal counsel, accountants and other professional advisors to such counterparties, each of whom shall be subject to the restrictions set forth in this Section, and (g) as permitted by Section 12.4.
13. Interest Limitation. Anything in this Agreement, the Notes or any other Loan Document to the contrary notwithstanding, a Borrower shall never be required to pay interest at a rate in excess of the highest lawful rate, and if the effective rate of interest that would otherwise be payable under this Agreement, the Notes or any other Loan Document would exceed the highest lawful rate, or if any holder of any Note shall receive monies that are deemed to constitute interest which would increase the effective rate of interest payable under this Agreement, the Notes or any other Loan Document to a rate in excess of the highest lawful rate, then (a) the amount of interest that would otherwise be payable under this Agreement, the Notes and the other Loan Documents shall be reduced to the amount allowed under applicable law, and (b) any interest paid in excess of the highest lawful rate shall, at the option of the holder of such Note, be either refunded to the payor or credited on the principal of the Note.
14. Loan Documents. In the event of any conflict or inconsistency between the terms and provisions of this Agreement and those of any other Loan Document, the terms and provisions of this Agreement shall govern and control to the extent of such conflict or inconsistency.
15. Interpretation. In this Agreement and each other Loan Document, unless a clear contrary intention appears:

(a) The singular number includes the plural number and vice versa;

(b) Reference to any Person includes such Person's successors and assigns but, if applicable, only if such successors and assigns are permitted by the Loan Documents, and reference to a Person in a particular capacity excludes such Person in any other capacity;

(c) reference to either gender includes the other gender;

(d) reference to any agreement (including this Agreement and the Schedules and Exhibits and the other Loan Documents), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof and the other Loan Documents, and reference to any promissory note includes any promissory note which is an extension or renewal thereof or a substitute or replacement therefor; and

(e) reference to any law, rule, regulation, order, decree, requirement, policy, guideline, directive or interpretation means as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect on the determination date, including rules and regulations promulgated thereunder.

16. Nonreliance. Each Lender hereby represents that it is not relying on or looking to any Margin Stock for the repayment of the Loans or the Reimbursement Obligations provided for herein.
17. Disclosure. The Borrowers and the Lenders hereby (a) acknowledge and agree that Bank One and/or its Affiliates from time to time may hold investments in, make other loans to or have other relationships with the Borrowers and their Affiliates, and (b) waive any liability of Bank One or such Affiliate of Bank One to the Borrowers or any Lender, respectively, arising out of or resulting from such investments, loans or relationships other than liabilities arising out of the gross negligence or willful misconduct of Bank One or its Affiliates.
2. 
   
   THE AGENT
1. Appointment; Nature of Relationship. Bank One, NA is hereby appointed by each of the Lenders as its contractual representative (herein referred to as the "Agent") hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the Agent to act as the contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Loan Documents. The Agent agrees to act as such contractual representative upon the express conditions contained in this Article X. Notwithstanding the use of the defined term "Agent," it is expressly understood and agreed that the Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan Document and that the Agent is merely acting as the contractual representative of the Lenders with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as the Lenders' contractual representative, the Agent (i) does not hereby assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of the Lenders within the meaning of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Lenders hereby agrees to assert no claim against the Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender hereby waives.
2. Powers. The Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the Lenders, or any obligation to the Lenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Agent.
3. General Immunity. Neither the Agent nor any of its directors, officers, agents or employees shall be liable to any Borrower, the Lenders or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is determined in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Person.
4. No Responsibility for Loans, Recitals, etc. Neither the Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (a) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (b) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Lender; (c) the satisfaction of any condition specified in Article IV, except receipt of items required to be delivered solely to the Agent; (d) the existence or possible ex istence of any Default or Unmatured Default; (e) the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith; (f) the value, sufficiency, creation, perfection or priority of any Lien in any collateral security; or (g) the financial condition of any Borrower or any guarantor of any of the Obligations or of any of Astec's or any such guarantor's respective Subsidiaries. The Agent shall have no duty to disclose to the Lenders information that is not required to be furnished by a Borrower to the Agent at such time, but is voluntarily furnished by a Borrower to the Agent (either in its capacity as Agent or in its individual capacity).
5. Action on Instructions of Lenders. The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Lenders or the Lenders, as the case may be, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders and on all holders of Notes. The Lenders hereby acknowledge that the Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the Required Lenders. The Agen t shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action.
6. Employment of Agents and Counsel. The Agent may execute any of its duties as Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Agent and the Lenders and all matters pertaining to the Agent's duties hereunder and under any other Loan Document.
7. Reliance on Documents; Counsel. The Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent.
8. Agent's Reimbursement and Indemnification. The Lenders agree to reimburse and indemnify the Agent ratably in proportion to their respective Revolving Commitments (or, if the Revolving Commitments have been terminated, in proportion to their Revolving Commitments immediately prior to such termination) (i) for any amounts not reimbursed by the Borrowers for which the Agent is entitled to reimbursement by the Borrowers under the Loan Documents, (ii) for any other expenses incurred by the Agent on behalf of the Lenders, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the Agent in connection with any dispute between the Agent and any Lender or between two or more of the Lenders) and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby (including, without limitation, for any such amounts incurred by or asserted against the Agent in connection with any dispute between the Agent and any Lender or between two or more of the Lenders), or the enforcement of any of the terms of the Loan Documents or of any such other documents, provided that (i) no Lender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court o f competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Agent and (ii) any indemnification required pursuant to Section 3.1(vii) shall, notwithstanding the provisions of this Section 10.8, be paid by the relevant Lender in accordance with the provisions thereof. The obligations of the Lenders under this Section 10.8 shall survive payment of the Obligations and termination of this Agreement.
9. Rights as a Lender. In the event the Agent is a Lender, the Agent shall have the same rights and powers hereunder and under any other Loan Document with respect to its Revolving Commitment and its Loans as any Lender and may exercise the same as though it were not the Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a Lender, unless the context otherwise indicates, include the Agent in its individual capacity. The Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with Astec or any of its Subsidia ries in which Astec or such Subsidiary is not restricted hereby from engaging with any other Person. The Agent, in its individual capacity, is not obligated to remain a Lender.
10. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent, the Arranger or any other Lender and based on the financial statements prepared by Astec and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Agent, the Arranger or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Docu ments.
11. Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and Astec, such resignation to be effective upon the appointment of a successor Agent or, if no successor Agent has been appointed, forty-five days after the retiring Agent gives notice of its intention to resign. The Agent may be removed at any time with or without cause by written notice received by the Agent from the Required Lenders, such removal to be effective on the date specified by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint, on behalf of the Borrowers and the Lenders, a successor Agent. If no successor Agent shall have bee n so appointed by the Required Lenders within thirty days after the resigning Agent's giving notice of its intention to resign, then the resigning Agent may appoint, on behalf of the Borrowers and the Lenders, a successor Agent. Notwithstanding the previous sentence, the Agent may at any time without the consent of the Borrowers or any Lender, appoint any of its Affiliates which is a commercial bank as a successor Agent hereunder. If the Agent has resigned or been removed and no successor Agent has been appointed, the Lenders may perform all the duties of the Agent hereunder and the Borrowers shall make all payments in respect of the Obligations to the applicable Lender and for all other purposes shall deal directly with the Lenders. No successor Agent shall be deemed to be appointed hereunder until such successor Agent has accepted the appointment. Any such successor Agent shall be a commercial bank having capital and retained earnings of at least $100,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Agent. Upon the effectiveness of the resignation or removal of the Agent, the resigning or removed Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Agent, the provisions of this Article X shall continue in effect for the benefit of such Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Agent hereunder and under the other Loan Documents. In the event that there is a successor to the Agent by merger, or the Agent assigns its duties and obligations to an Affiliate pursuant to this Se ction 10.11, then the term "Prime Rate" as used in this Agreement shall mean the prime rate, base rate or other analogous rate of the new Agent.
12. Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Unmatured Default hereunder unless the Agent has received written notice from a Lender or a Borrower referring to this Agreement describing such Default or Unmatured Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Lenders.
13. Delegation to Affiliates. The Borrowers and the Lenders agree that the Agent may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled to the same benefits of the indemnification, waiver and other protective provisions to which the Agent is entitled under Articles IX and X.
14. Execution of Collateral Documents. The Lenders hereby empower and authorize the Agent to execute and deliver to Astec on their behalf the Pledge Agreement and all related financing statements and any financing statements, agreements, documents or instruments as shall be necessary or appropriate to effect the purposes of the Pledge Agreement.
15. Collateral Releases. The Lenders hereby empower and authorize the Collateral Agent to execute and deliver to Astec on their behalf any agreements, documents or instruments as shall be necessary or appropriate to effect any releases of Collateral which shall be permitted by the terms hereof or of any other Loan Document or which shall otherwise have been approved by the Required Lenders (or, if required by the terms of Section 8.2, all of the Lenders) in writing.
3. 
   
   SETOFF; RATABLE PAYMENTS
1. Setoff. In addition to, and without limitation of, any rights of the Lenders under applicable law, if any Borrower becomes insolvent, however evidenced, or any Default or Unmatured Default occurs, any and all deposits (including all account balances, whether provisional or final and whether or not collected or available) and any other Indebtedness at any time held or owing by any Lender or any Affiliate of any Lender to or for the credit or account of any Borrower may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part thereof, shall then be due.
2. Ratable Payments. If any Lender, whether by setoff or otherwise, has payment made to it upon its Loans or participations in Facility Letters of Credit or Swing Line Loans (other than payments received pursuant to Sections 3.1, 3.2, 3.3 or 3.5) in a greater proportion than that received by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Loans or participations in Facility Letters of Credit or Swing Line Loans held by the other Lenders so that after such purchase each Lender will hold its ratable proportion of Loans and participations in Facility Letters of Credit. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral o r other protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to their Loans, Facility Letters of Credit and Swing Line Loans. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made.
4. 
   
   BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
1. Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of the Borrowers and the Lenders and their respective successors and assigns, except that (a) no Borrower shall have the right to assign its rights or obligations under the Loan Documents and (b) any assignment by any Lender must be made in compliance with Section 12.3. The parties to this Agreement acknowledge that clause (b) of this Section relates only to absolute assignments and does not prohibit assignments creating security interests, including, without limitation, (x) any pledge or assignment by any Lender of all or any portion of its rights under this Agreement and its Notes to a Federal Reserve Bank or (y) in t he case of a Lender which is a fund, any pledge or assignment of all or any portion of its rights under this Agreement or any Note to its trustee in support of its obligations to its trustee; provided, however, that no such pledge or assignment creating a security interest shall release the transferor Lender from its obligations hereunder unless and until the parties thereto have complied with the provisions of Section 12.3. The Agent may treat the Person which made any Loan or which holds any Note as the owner thereof for all purposes hereof unless and until such Person complies with Section 12.3; provided, however, that the Agent may in its discretion (but shall not be required to) follow instructions from the Person which made any Loan or which holds any Note to direct payments relating to such Note to another Person. Any assignee of the rights to any Loan or any Note agrees by acceptance of such assignment to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the owner of the rights to any Loan (whether or not a Note has been issued in evidence thereof), shall be conclusive and binding on any subsequent holder or assignee of the rights to such Loan.
2. Participations.
1. Permitted Participants; Effect. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any Loan owing to such Lender, any participation in Facility Letters of Credit owned by such Lender, any Note held by such Lender, any Revolving Commitment of such Lender or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the holder of any such Note for all purposes under the Loan Documents, all amounts payable by the Borrowers under this Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrowers and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents.
2. Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Loan, Facility Letter of Credit, Swing Line Loan or Revolving Commitment in which such Participant has an interest which forgives principal, interest or fees or reduces the interest rate or fees payable with respect to any such Loan, Facility Letter of Credit, Swing Line Loan or Revolving Commitment, postpones any date fixed for any regularly-scheduled payment of principal of, or interest or fees on, any such Loan, Facility Letter of Credit, Swing Line Loan or Revolving Commitment, releases any guarantor of any such Loan, Facility Letter of Credit or Swing Line Loan or releases any substantial portion of collateral, if any, securing any such Loan, Facility Letter of Credit or Swing Line Loan.
3. Benefit of Setoff. The Borrowers agree that each Participant shall be deemed to have the right of setoff provided in Section 11.1 in respect of its participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents, provided that each Lender shall retain the right of setoff provided in Section 11.1 with respect to the amount of participating interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 11.1, agrees to share with each Lender, any amount received pursuant to the exercise of its right o f setoff, such amounts to be shared in accordance with Section 11.2 as if each Participant were a Lender.
3. Assignments.
1. Permitted Assignments. Any Lender may, in the ordinary course of its business and in accordance with applicable law, and with the consent of the Agent and the Issuer, at any time assign to one or more banks or other entities ("Purchasers") all or any part of its rights and obligations under the Loan Documents, provided that no such assignment shall be of less than $5,000,000 of such selling Lender's Revolving Commitment or (if the Aggregate Commitment has been terminated) of aggregate principal amount of such selling Lender's Loans, unless such assignment is of the entire remaining amount of such selling Lender's Revolving Commitment and Loans. All assignments shall include a pro rata portion of such Lender's Tranche A Commitment (and the Tranche A Loan Obligations) and Tranche B Commitment (and the Tranche B Revolving Loans). Such assignment shall be substantially in the form of Exhibit E hereto or in such other form as may be agreed to by the parties thereto and the Agent. The consent of the Agent shall be required prior to an assignment becoming effective with respect to a Purchaser which is not a Lender or an Affiliate thereof, which consent shall not be unreasonably withheld or delayed. A fee of $4,000 shall be payable to the Agent by either the assigning Lender or the Purchaser for each assignment.
2. Effect; Effective Date. Upon (i) delivery to the Agent of an assignment, together with any consents required by Section 12.3.1, and (ii) payment of the $4,000 fee to the Agent for processing such assignment (unless such fee is waived by the Agent), such assignment shall become effective on the effective date specified in such assignment. The assignment shall contain a representation by the Purchaser to the effect that none of the consideration used to make the purchase of the Revolving Commitment, Loans, participation in Facility Letters of Credit and Swing Line Loans under the applicable assignment agreement constitutes "plan assets" as defined under ERISA and that the rights and interests of the Purchaser in and under the Loan Documen ts will not be "plan assets" under ERISA. On and after the effective date of such assignment, such Purchaser shall for all purposes be a party to this Agreement and any other Loan Document executed by or on behalf of the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by the Borrowers, the Lenders or the Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Commitment, Loans, participation in Facility Letters of Credit and Swing Line Loans assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 12.3.2, the transferor Lender, the Agent and the Borrowers shall make appropriate arrangements so that replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in each case in principal amounts re flecting their Revolving Commitment, as adjusted pursuant to such assignment. In addition, within a reasonable time after the effective date of any assignment, the Agent shall, and is hereby authorized and directed to, revise Schedule 1 reflecting the revised Percentages of each of the Lenders and shall distribute such revised Schedule 1 to each of the Lenders and Astec and such revised Schedule 1 shall replace the old Schedule 1 and become part of this Agreement.
4. Dissemination of Information. The Borrowers authorize each Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a "Transferee") and any prospective Transferee any and all information in such Lender's possession concerning the creditworthiness of the Credit Parties; provided that each Transferee and prospective Transferee agrees to be bound by Section 9.12 of this Agreement.
5. Tax Treatment. If any interest in any Loan Document is transferred to any Transferee which is organized under the laws of any jurisdiction other than the United States or any State thereof, the transferor Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 2.9.
5. 
   
   NOTICES
1. Giving Notice. Except as otherwise permitted by Section 2.6 with respect to borrowing notices, all notices, requests and other communications to any party hereunder shall be in writing (including electronic transmission, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of a Borrower or the Agent, at its address or facsimile number set forth on the signature pages hereof, (y) in the case of any Lender, at its address or facsimile number set forth below its signature hereto or in its administrative information sheet or (z) in the case of any party, at such other address or facsimile number as such party may hereafter specify for the purpose by notice to the Agent and Astec in accordance with th e provisions of this Section 13.1. Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (ii) if given by mail, seventy-two (72) hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered (or, in the case of electronic transmission, received) at the address specified in this Section; provided that notices to the Agent under Article II shall not be effective until received.
2. Change of Address. A Borrower, the Agent and any Lender may change the address for service of notice upon it by a notice in writing to the other parties hereto.
6. 
   
   COUNTERPARTS

This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when (a) it has been executed by the Borrowers, the Agent and the Lenders and each party has either notified the Agent, by telex or telephone, that it has taken such action and (b) the conditions precedent set forth in Section 4.1 have been satisfied.

7. 
   
   CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL
1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCS SECTION 105/5-1 ET SEQ, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
2. CONSENT TO JURISDICTION. EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION ANY BORROWER MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY BORROWER IN THE COURTS OF ANY OTHER J URISDICTION. ANY JUDICIAL PROCEEDING BY ANY BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
3. WAIVER OF JURY TRIAL. EACH BORROWER, THE AGENT AND EACH LENDER HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER. THE TERMS AND PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.
8. 
   
   ASTEC GUARANTY
1. Guaranty of Payment and Performance of Obligations of AFS. Astec hereby guarantees to the Agent and the Lenders, as a primary obligor and not merely as a surety, the full and punctual payment when due (whether at maturity, by acceleration or otherwise), as well as the performance, of all of the Obligations incurred or owed by or chargeable to AFS (the "AFS Obligations"). Astec's obligation under this Article XVI is an absolute, unconditional and continuing guaranty of the full and punctual payment and performance of all of the AFS Obligations and not of their collectability only and is in no way conditioned upon any requirement that the Agent or the Lenders first attempt to collect any of the AFS Obligations from AFS or resort to any c ollateral security, any balance of any deposit account or credit on the books of any Lender in favor of AFS or any other Person or other means of obtaining payment. Should AFS default in the payment or performance of any of the AFS Obligations, the Agent may cause the obligations of Astec (as guarantor) hereunder with respect to such AFS Obligations to become forthwith due and payable to the Agent and the Lenders, without demand or notice of any nature, all of which are expressly waived by Astec.
2. Additional Amounts. Astec further agrees, as the primary obligor and not as a guarantor only, to pay to the Agent and the Lenders, forthwith upon demand in funds immediately available to the Agent and the Lenders, all reasonable costs and expenses (including court costs and legal fees and expenses) incurred or expended by the Agent and the Lenders in connection with the AFS Obligations, this Article XVI and the enforcement thereof, together with interest on amounts recoverable under this Article XVI from the time when such amounts become due until payment, at a rate of interest equal to the rate after default for Floating Rate Advances set forth in Section 2.2.8.
3. Waivers by Astec: Agent's and Lenders' Freedom to Act. Astec waives notice of acceptance of this Article XVI, notice of any action taken or omitted by the Agent or any Lender in reliance on this Article XVI, and any requirement that the Agent or the Lenders be diligent or prompt in making demands under this Article XVI, giving notice of any default by AFS or asserting any other rights of the Agent or any Lender under this Article XVI. Astec also irrevocably waives all defenses that at any time may be available in respect of the AFS Obligations by virtue of any statute of limitations, valuation, stay, moratorium law or other similar law now or hereafter in effect. Astec also irrevocably waives any benefit of any coll ateral which may from time to time secure the AFS Obligations and authorizes the Agent and the Lenders to take any action or exercise any remedy with respect thereto which they in their discretion shall determine, without notice to Astec. Astec agrees that the validity and enforceability of this Article XVI shall not be impaired or affected by any of the following: (a) any extension, modification or renewal of, or indulgence with respect to, or substitutions for, the AFS Obligations or any part thereof or any agreement relating thereto at any time; (b) any failure or omission to enforce any right, power or remedy with respect to the AFS Obligations or any part thereof or any agreement relating thereto, or any collateral securing the AFS Obligations or any part thereof; (c) any waiver of any right, power or remedy or of any default with respect to the AFS Obligations or any part thereof or any agreement relating thereto; (d) any release, surrender, compromise, settlement, waiver, subordination or modification, with or without consideration, of any other obligation of any Person with respect to the AFS Obligations or any part thereof; (e) the enforceability or validity of the AFS Obligations or any part thereof or the genuineness, enforceability or validity of any agreement relating thereto or with respect to the AFS Obligations or any part thereof; (f) the application of payments received from any source to the payment of Indebtedness other than the AFS Obligations, any part thereof or amounts which are not covered by this Article XVI even though the Lenders or the Agent might lawfully have elected to apply such payments to any part or all of the AFS Obligations or to amounts which are not covered by this Article XVI or (g) the existence of any claim, setoff or other rights which Astec may have at any time against any of AFS in connection herewith or any unrelat ed transaction, all whether or not Astec shall have had notice or knowledge of any act or omission referred to in the foregoing clauses (a) through (g) of this Section 16.3.
4. Unenforceability of AFS Obligations Against AFS. Notwithstanding (a) any change of ownership of AFS or the insolvency, bankruptcy or any other change in the legal status of AFS; (b) the change in or the imposition of any law, decree, regulation or other governmental act which does or might impair, delay or in any way affect the validity, enforceability or the payment when due of the AFS Obligations; (c) the failure of AFS or the undersigned to maintain in full force, validity or effect or to obtain or renew when required all governmental and other approvals, licenses or consents required in connection with AFS Obligations or this Article XVI, or to take any other action required in connection with the performance of all obligations purs uant to the AFS Obligations or this Article XVI; or (d) if any of the moneys included in the AFS Obligations have become irrecoverable from AFS for any other reason other than indefeasible payment in full of the AFS Obligations in accordance with their terms, this Article XVI shall nevertheless be binding on Astec. This Article XVI shall be in addition to any other guaranty or other security for the AFS Obligations, and it shall not be rendered unenforceable by the invalidity of any such other guaranty or security. In the event that acceleration of the time for payment of any of the AFS Obligations is stayed upon the insolvency, bankruptcy or reorganization of AFS, or for any other reason, all such amounts otherwise subject to acceleration under the terms of this Agreement, the other Loan Documents or any other agreement evidencing, securing or otherwise executed in connection with the AFS Obligations shall be immediately due and payable by Astec.< /LI>
5. Subrogation; Subordination. Astec shall not enforce or otherwise exercise any right of subrogation to any of the rights of any Lender against AFS until all of the AFS Obligations are indefeasibly paid in full. The payment of any amounts due with respect to any indebtedness of AFS now or hereafter owed to Astec is hereby subordinated to the prior payment in full of all of the AFS Obligations. Astec agrees that, after the occurrence of any default in the payment or performance of any of the AFS Obligations, Astec will not demand, sue for or otherwise attempt to collect any such indebtedness of AFS to Astec until all of the AFS Obligations shall have been paid in full. If, notwithstanding the foregoing sentence, Astec shall collect, enforce or re ceive any amounts in respect of such indebtedness while AFS Obligations are still outstanding, such amounts shall be collected, enforced and received by Astec as trustee for the Agent and the Lenders and be paid over to the Agent on account of the AFS Obligations without affecting in any manner the liability of Astec under the other provisions of this Article XVI. The provisions of this Section 16.5 shall be supplemental to and not in derogation of any rights and remedies of the Agent and the Lenders under any separate subordination agreement which the Agent and the Lenders may at any time and from time to time enter into with Astec.
6. Termination. Astec's obligations hereunder shall continue in full force and effect until AFS Obligations are indefeasibly paid in full and this Agreement is terminated, provided that this Article XVI shall continue to be effective or shall be reinstated, as the case may be, if at any time payment or other satisfaction of any of the AFS Obligations is rescinded or must otherwise be restored or returned upon the bankruptcy, insolvency, or reorganization of AFS, or otherwise, as though such payment had not been made or other satisfaction occurred, whether or not the Lenders or the Agent is in possession of this Agreement. No invalidity, irregularity or unenforceability by reason of the federal bankruptcy code or any insolvency or ot her similar law, or any law or order of any government or agency thereof purporting to reduce, amend or otherwise affect the AFS Obligations shall impair, affect, be a defense to or claim against the obligations of Astec under this Article XVI.
7. Effect of Bankruptcy. Astec's obligations under this Article XVI shall survive the insolvency of AFS and the commencement of any case or proceeding by or against AFS under the federal bankruptcy code or other federal, state or other applicable bankruptcy, insolvency or reorganization statutes. No automatic stay under the federal bankruptcy code or other federal, state or other applicable bankruptcy, insolvency or reorganization statutes to which any AFS is subject shall postpone the obligations of Astec under this Article XVI.
8. Setoff. Regardless of the other means of obtaining payment of any of the AFS Obligations, each of the Agent and the Lenders is hereby authorized at any time and from time to time, without notice to Astec (any such notice being expressly waived by Astec) and to the fullest extent permitted by law, to set off and apply such deposits and other sums against the obligations of Astec under this Article XVI, whether or not the Agent and the Lenders shall have made any demand under this Article XVI and although such obligations may be contingent or unmatured.
9. Further Assurances. Astec agrees to do all such things and execute all such documents as the Agent and the Lenders may consider necessary or desirable to give full effect to this Article XVI and to perfect and preserve the rights and powers of the Agent and the Lenders hereunder.

[Signature Pages Follow]

In Witness Whereof, the Borrowers, the Lenders and the Agent have executed this Agreement as of the date first above written.

ASTEC INDUSTRIES, INC.
By:
Print Name:
Title:

Address: 4101 Jerome Avenue
Chattanooga, Tennessee 37407
Facsimile: (423) 867-4127
Telephone: (423) 867-4210
Attention: F. McKamy Hall

ASTEC FINANCIAL SERVICES, INC.
By:
Print Name:
Title:

Address: 1725 Shepherd Road
Chattanooga, Tennessee 37421
Facsimile: (423) 899-4456
Telephone: (423) 899-5898
Attention: Albert E. Guth

BANK ONE, NA,
individually and as Agent
By:
Print Name:
Title:
Address: 1 Bank One Plaza
Chicago, Illinois 60670
Facsimile: (312) 732-5296
Telephone: (312) 732-5730
Attention: David T. McNeela

SUNTRUST BANK

By:
Print Name:
Title:
Address: 201 Fourth Avenue North
Nashville, Tennessee 37219
Facsimile: (615) 748-5269
Telephone: (615) 748-5745
Attention: Jim Sloan

AMSOUTH BANK

By:
Print Name:
Title:
Address: 601 Market Center
Chattanooga, Tennessee 37402
Facsimile: (423) 752-1558
Telephone: (423) 752-1535
Attention: Tracy Brown

BRANCH BANK & TRUST CO.


By:
Print Name:
Title:

Address: Corporate Accounts Division
P.O. Box 15008
Winston-Salem, North Carolina
27113
Facsimile: (336) 733-3254
Telephone: (336) 733-3251
Attention: James Stallings

FIRSTAR BANK

By:
Print Name:
Title:
Address: 150 Fourth Avenue North, 2d Floor
Nashville, Tennessee 37219
Facsimile: (615) 251-9247
Telephone: (615) 251-9280
Attention: Russell Rogers

Schedule 1
Revolving Commitments/Percentages

Lender	Revolving Commitment	Tranche A Commitment*	Tranche B Commitment*	Percentage
Bank One, NA	$40,000,000	$40,000,000	$16,000,000	32.00%
Suntrust	$30,000,000	$30,000,000	$12,000,000	24.00%
AmSouth Bank	$25,000,000	$25,000,000	$10,000,000	20.00%
Branch Bank & Trust Co.	$15,000,000	$15,000,000	$6,000,000	12.00%
Firstar Bank	$15,000,000	$15,000,000	$6,000,000	12.00%
Total	$125,000,000	$125,000,000*	$50,000,000*	100%

*The Tranche A Commitment and Tranche B Commitment of any Lender are sublimits of the Revolving Commitment of such Lender and the obligation of any Lender to make Loans under the Tranche A Commitment and the Tranche B Commitment is limited by the Revolving Commitment of such Lender and the limitations, terms and conditions set forth in Section 2.1.